OLYMPIC FINANCIAL LTD, 10-Q, 1996-05-08

OLYMPIC FINANCIAL LTD
10-Q, 1996-05-08
SHORT-TERM BUSINESS CREDIT INSTITUTIONS

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<PAGE>

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 1996 Commission file number 0- 20526

OLYMPIC FINANCIAL LTD.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Minnesota 41-1664848
--------- ----------
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) Number)

7825 Washington Avenue South, Minneapolis, MN 55439-2435
- --------------------------------------------------------------------------------
(Address of principal executive office)

Registrant's telephone number, including area code (612) 942-9880
--------------

Indicate by checkmark whether the Registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
----- -----

The number of shares of the Common Stock of the registrant outstanding as of
May 3, 1996 was 32,517,437.

<PAGE>

FORM 10-Q INDEX

PART I FINANCIAL INFORMATION PAGE
- ------ ----

Item 1. Consolidated Financial Statements . . . . . . . . . . . . . . . 3

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . 12

PART II OTHER INFORMATION
- -------

Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 23

Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . 23

Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . 23

Item 4. Submission of Matters to a Vote of Security Holders . . . . . . 23

Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . 23

Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . 23-24

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

EXHIBIT INDEX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

The financial information for the interim periods presented herein is unaudited.
In the opinion of management, all adjustments necessary (which are of a normal
recurring nature) have been included for a fair presentation of the results of
operations. The results of operations for an interim period are not necessarily
indicative of the results that may be expected for a full year or any other
interim period.

SAFE HARBOR STATEMENT UNDER THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This Form 10-Q for quarter ended March 31, 1996 contains certain forward-looking
statements as defined in the Private Securities Litigation Reform Act of 1995,
which may be identified by the use of forward-looking terminology such as "may,"
"will," "expect," "anticipate," "estimate," "goal," "continue," or comparable
terminology, that involve risks or uncertainties and that are qualified in their
entirety by the cautions and risk factors contained in the Company's Form 8-K
dated February 20, 1996 and other documents filed with the Securities and
Exchange Commission.

2
<PAGE>

OLYMPIC FINANCIAL LTD.
CONSOLIDATED BALANCE SHEETS

(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS) (UNAUDITED) DECEMBER 31,
MARCH 31, 1996 1995
-------------- --------------
ASSETS
<S> <C> <C>
Cash and cash equivalents. . . . . . . . . . . . . $ 22,552 $ 1,340
Due from securitization trust. . . . . . . . . . . 115,000 ----
Auto loans held for sale . . . . . . . . . . . . . 82,857 118,556
Finance income receivable. . . . . . . . . . . . . 311,786 249,581
Furniture, fixtures and equipment. . . . . . . . . 9,587 6,346
Advances due to servicer . . . . . . . . . . . . . 8,435 9,046
Deferred debt issuance costs . . . . . . . . . . . 5,280 4,444
Investment in subordinated certificates. . . . . . 3,048 2,811
Servicing fee receivable . . . . . . . . . . . . . 2,115 1,855
Prepaid expenses . . . . . . . . . . . . . . . . . 1,839 1,545
Other assets . . . . . . . . . . . . . . . . . . . 3,238 2,270
-------------- --------------
Total assets . . . . . . . . . . . . . . . . . . $ 565,737 $ 397,794
-------------- --------------
-------------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Amounts due under warehouse facilities . . . . . . $ 127,224 $ 26,530
Senior term notes. . . . . . . . . . . . . . . . . 145,000 145,000
Subordinated notes . . . . . . . . . . . . . . . . 46,595 13,005
Capital lease obligations. . . . . . . . . . . . . 6,635 3,924
Deferred income taxes. . . . . . . . . . . . . . . 26,085 18,700
Accounts payable and accrued liabilities . . . . . 21,633 9,822
-------------- --------------
Total liabilities. . . . . . . . . . . . . . . . 373,172 216,981

Commitments and contingencies

Shareholders' equity:
Capital stock, $.01 par value, 100,000,000
shares authorized:

8% Cumulative Convertible Exchangeable
Preferred Stock, 889,378 and 1,071,036
shares issued and outstanding, respectively. . . 9 11
Common stock 23,224,357 and 22,038,567
shares issued and outstanding, respectively. . . 232 220
Additional paid-in capital . . . . . . . . . . . . 158,312 157,204
Retained earnings. . . . . . . . . . . . . . . . . 34,012 23,378
-------------- --------------
Total shareholders' equity . . . . . . . . . . . 192,565 180,813
-------------- --------------
Total liabilities and shareholders' equity . . . $ 565,737 $ 397,794
-------------- --------------
-------------- --------------
</TABLE>

SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.

3
<PAGE>

OLYMPIC FINANCIAL LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1996 1995
-------------- --------------
<S> <C> <C>
REVENUES:
Net interest margin. . . . . . . . . . . . . . . . . $ 12,300 $ 4,538
Gain on sale of loans. . . . . . . . . . . . . . . . 25,229 9,057
Servicing fee income . . . . . . . . . . . . . . . . 5,743 2,300
Other non interest income. . . . . . . . . . . . . . 724 159
-------------- --------------
Total revenues . . . . . . . . . . . . . . . . . 43,996 16,054
EXPENSES:
Salaries and benefits. . . . . . . . . . . . . . . . 9,097 3,945
Other operating expense. . . . . . . . . . . . . . . 10,919 4,495
-------------- --------------
Total operating expenses . . . . . . . . . . . . 20,016 8,440
Long-term debt and other interest expense. . . . . . 5,516 1,845
-------------- --------------
Total expenses . . . . . . . . . . . . . . . . . 25,532 10,285
-------------- --------------
Operating income before income tax and
extraordinary item . . . . . . . . . . . . . . . . 18,464 5,769
Provision for income taxes . . . . . . . . . . . . . 7,386 2,307
-------------- --------------
Income before extraordinary item . . . . . . . . . . 11,078 3,462
Extraordinary item . . . . . . . . . . . . . . . . . ---- (3,344)
-------------- --------------
Net income . . . . . . . . . . . . . . . . . . . $ 11,078 $ 118
-------------- --------------
-------------- --------------
PRIMARY EARNINGS PER SHARE:
Net income per common share before
extraordinary item . . . . . . . . . . . . . . . . $ 0.41 $ 0.23
Extraordinary item per common share. . . . . . . . . ---- (0.27)
-------------- --------------
Net income (loss) per common share . . . . . . . $ 0.41 $ (0.04)
-------------- --------------
-------------- --------------
FULLY DILUTED EARNINGS PER SHARE:
Net income per share before extraordinary item . . . $ 0.37 $ 0.19
Extraordinary item per share . . . . . . . . . . . . ---- (0.18)
-------------- --------------
Net income per share . . . . . . . . . . . . . . $ 0.37 $ 0.01
-------------- --------------
-------------- --------------

Weighted average common and common
equivalent shares outstanding:
Primary. . . . . . . . . . . . . . . . . . . . . . . 25,741,672 12,505,372
Fully diluted. . . . . . . . . . . . . . . . . . . . 30,218,329 18,185,965

</TABLE>

See notes to unaudited consolidated financial statements.

4
<PAGE>

OLYMPIC FINANCIAL LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

(DOLLARS IN THOUSANDS) THREE MONTHS ENDED
MARCH 31,
-----------------------------
1996 1995
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,078 $ 118
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . 832 242
Loss on sale of furniture, fixtures and equipment . . . . . . . . . . . . . 1 153
(Increase) decrease in assets:
Automobile loans held for sale:
Purchases of automobile loans . . . . . . . . . . . . . . . . . . . (633,506) (439,592)
Sales of automobile loans . . . . . . . . . . . . . . . . . . . . . 655,845 458,408
Repayments of automobile loans. . . . . . . . . . . . . . . . . . . 13,360 4,552
Finance income receivable . . . . . . . . . . . . . . . . . . . . . . . (62,204) (35,226)
Due from securitization trusts. . . . . . . . . . . . . . . . . . . . . (115,000) (46,532)
Advances due to servicer. . . . . . . . . . . . . . . . . . . . . . . . 611 (804)
Servicing fee receivable. . . . . . . . . . . . . . . . . . . . . . . . (260) (356)
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . (294) 126
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (968) 314
Increase (decrease) in liabilities:
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . 7,385 79
Accounts payable and accrued liabilities. . . . . . . . . . . . . . . . 11,810 2,841
-------------- --------------
Total cash used in operating activities. . . . . . . . . . (111,310) (55,677)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of furniture, fixtures and equipment . . . . . . . . . . . 2 37
Purchase of furniture, fixtures and equipment. . . . . . . . . . . . . . . . . (546) (238)
Purchase of subordinated certificates. . . . . . . . . . . . . . . . . . . . . (537) (328)
Collections on subordinated certificates . . . . . . . . . . . . . . . . . . . 300 79
-------------- --------------
Total cash used in investing activities. . . . . . . . . . (781) (450)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of Common Stock . . . . . . . . . . . . . . . . . . 876 345
Payment of dividends on 8% Convertible Preferred Stock . . . . . . . . . . . . (444) (565)
Proceeds from borrowings under warehouse facilities. . . . . . . . . . . . . . 595,686 477,625
Repayment of borrowings under warehouse facilities . . . . . . . . . . . . . . (494,992) (452,997)
Net proceeds from issuance of subordinated notes . . . . . . . . . . . . . . . 33,590 2,015
Repayments of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . ---- (30,000)
Proceeds from issuance of Senior Notes . . . . . . . . . . . . . . . . . . . . ---- 50,000
Deferred debt issuance cost, net . . . . . . . . . . . . . . . . . . . . . . . (836) (1,034)
Reduction of capital lease obligations . . . . . . . . . . . . . . . . . . . . (577) (225)
-------------- --------------
Total cash provided by financing activities. . . . . . . . 133,303 45,164
-------------- --------------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . 21,212 (10,963)
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . 1,340 16,617
-------------- --------------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . $ 22,552 $ 5,654
-------------- --------------
-------------- --------------
Supplemental disclosures of cash flow information:
Non cash activities:. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions to capital leases . . . . . . . . . . . . . . . . . . . . . . $ 3,288 $ 464
Cash paid for:
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,457 $ 2,800
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ---- $ ----

</TABLE>

See notes to unaudited consolidated financial statements.

5
<PAGE>

OLYMPIC FINANCIAL LTD.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 1996
------------------------------------------------------------------------------------------
NUMBER OF NUMBER OF ADDITIONAL RETAINED
PREFERRED COMMON PREFERRED COMMON PAID IN EARNINGS
SHARES SHARES PAR VALUE PAR VALUE CAPITAL (DEFICIT) TOTAL
------------ ------------ ------------ ------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS, EXCEPT
SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1995 . . . . . . . 1,071,036 22,038,567 $ 11 $ 220 $ 157,204 $ 23,378 $ 180,813

Exercise of options and warrants . . . . ---- 189,587 ---- 2 874 ---- 876

Issuance of Common Stock:
Benefit plans . . . . . . . . . . . ---- 149,316 ---- 2 (2) ---- ----

Amortization of deferred
compensation. . . . . . . . . . . . ---- ---- ---- ---- 242 ---- 242

Preferred Stock conversion to
Common Stock. . . . . . . . . . . . (181,658) 846,887 (2) 8 (6) ---- ----

Payment of dividends on 8%
Convertible Preferred Stock . . . . ---- ---- ---- ---- ---- (444) (444)

Net income . . . . . . . . . . . . . . . ---- ---- ---- ---- ---- 11,078 11,078
------------ ------------ ------------ ------------ ------------ ------------ ------------
BALANCE, MARCH 31, 1996. . . . . . . . . 889,378 23,224,357 $ 9 $ 232 $ 158,312 $ 34,012 $ 192,565
------------ ------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------ ------------

</TABLE>

See notes to unaudited consolidated financial statements.

<PAGE>

OLYMPIC FINANCIAL LTD.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED MARCH 31, 1995

1. BASIS OF PRESENTATION

The interim financial statements have been prepared by the Company pursuant
to the rules and regulations of the Securities and Exchange Commission
applicable to quarterly reports on Form 10-Q. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although management believes that the
disclosures present fairly the financial position of the Company and its
subsidiaries for the periods presented. These financial statements should be
read in conjunction with the audited consolidated financial statements and
related notes and schedules included in the Company's 1995 Annual Report filed
on Form 10-K/A-2 filed March 18, 1996.

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.

Certain reclassifications have been made to the March 31, 1995 balances to
conform to current period presentation.

2. FINANCE INCOME RECEIVABLE

Finance income receivable includes the estimated present value of future
amounts permitted to be withdrawn from spread accounts established in connection
with securitization transactions. During the three months ended March 31, 1996,
the Company securitized $655.8 million of its automobile loans held for sale.
The Company may be required to repurchase certain automobile loans if such loans
default or fail to meet other specific criteria as defined within the terms of
the securitization transactions. In accordance with SFAS No. 77, "Reporting by
Transferors for Transfers of Receivables with Recourse," the Company has
estimated its potential obligations under such recourse provisions based on its
own historical experience and available industry data and has included such
estimates in its determination of gain on sale. The related allowance for such
obligations is included as a component of the finance income receivable.

(DOLLARS IN THOUSANDS) AT AT
MARCH 31, DECEMBER 31,
1996 1995
---------------- ----------------
<S> <C> <C>
Estimated cash flows on loans sold, net
of estimated prepayments (1) $ 432,024 $ 349,097

Less:
Discount to present value (22,277) (19,466)
Deferred servicing income (42,892) (37,780)
Reserve for loan losses (55,069) (42,270)
---------------- ----------------
$ 311,786 $ 249,581
---------------- ----------------
---------------- ----------------

</TABLE>

--------------------------------------
(1) Included in estimated cash flows is the anticipated return to the Company
of restricted cash in required spread accounts. Actual spread account
balances were $79.6 million at March 31, 1996 and $65.4 million at
December 31, 1995.

7
<PAGE>

The following represents the roll-forward of the finance income receivable
balance:

(DOLLARS IN THOUSANDS)

<S> <C>
BALANCE, DECEMBER 31, 1995 $ 249,581
Excess cash flows on loans sold, net of estimated
prepayments . . . . . . . . . . . . . . . . . . . . . . 64,974
Return of excess cash flows (1). . . . . . . . . . . . . . (6,510)
Recognition of present value effect of cash flows. . . . . 3,741
---------------
BALANCE, MARCH 31, 1996 $ 311,786
---------------
---------------

</TABLE>

(1) Includes approximately $2.3 million of cash released to the Company
from remaining spread account balances associated with three
securitization transactions initiated in 1992 and closed out during the
first quarter of 1996.

3. SUBORDINATED NOTES

(DOLLARS IN THOUSANDS)
AT AT
MARCH 31, 1996 DECEMBER 31, 1995
------------------ ------------------
<S> <C> <C>
Senior subordinated notes, Series 1996-A $ 30,000 $ ----
Junior subordinated notes 16,595 13,005
------------------ ------------------
$ 46,595 $ 13,005
------------------ ------------------
------------------ ------------------
</TABLE>

In March 1996, the Company sold to the public $30.0 million aggregate
principal amount of its 10.125% Subordinated Notes, Series 1996-A due 2001 (the
"Senior Subordinated Notes"). Interest on the Senior Subordinated Notes is
payable monthly beginning May 15, 1996. The Subordinated Notes may not be
redeemed prior to May 15, 1998. At any time on such date or thereafter, the
Company may at its option elect to redeem the Senior Subordinated Notes, in
whole or in part, at 101.5% of the principal amount of Senior Subordinated Notes
redeemed, or 100% thereof on or after May 15, 1999, plus accrued interest to and
including the redemption date. The Senior Subordinated Notes are unsecured
general obligations of the Company and are subordinated in right of payment to
all existing and future Senior Debt (as defined in the indenture governing the
Senior Subordinated Notes).

4. SUBSEQUENT EVENT

In April 1996, the Company completed a public offering of 8,050,000 shares
of its Common Stock at $19.25 per share including an over-allotment option of
1,050,000 shares.

On April 22, 1996, the Company received net proceeds from the issuance of
the Common Stock of approximately $147.5 million. Unaudited pro forma financial
information giving effect to the subsequent event discussed above, is provided
on the following pages.

8
<PAGE>

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

Unaudited pro forma consolidated financial information for the periods
indicated is set forth in the following tables. The unaudited pro forma
consolidated financial data gives effect to the issuance of 8,050,000 shares of
Common Stock and the application of the net proceeds received as described in
the supplemental notes to the unaudited pro forma tables.

OLYMPIC FINANCIAL LTD.
UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET
MARCH 31, 1996

(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
PRO FORMA
PRO FORMA BALANCE
ACTUAL ADJUSTMENTS (1) SHEET
--------------- --------------- ---------------
ASSETS
<S> <C> <C> <C>
Cash and cash equivalents. . . . . . . . . . . . . . . $ 22,552 $ 20,260 $ 42,812
Due from securitization trust. . . . . . . . . . . . . 115,000 ---- 115,000
Auto loans held for sale . . . . . . . . . . . . . . . 82,857 ---- 82,857
Finance income receivable. . . . . . . . . . . . . . . 311,786 ---- 311,786
Other assets . . . . . . . . . . . . . . . . . . . . . 33,542 ---- 33,542
--------------- --------------- ---------------
Total assets . . . . . . . . . . . . . . . . . . . $ 565,737 $ 20,260 $ 585,997
--------------- --------------- ---------------
--------------- --------------- ---------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Amounts due under warehouse facilities . . . . . . . . $ 127,224 $ (127,224) $ ----
Senior term notes. . . . . . . . . . . . . . . . . . . 145,000 ---- 145,000
Subordinated notes . . . . . . . . . . . . . . . . . . 46,595 ---- 46,595
Capital lease obligations. . . . . . . . . . . . . . . 6,635 ---- 6,635
Deferred income taxes. . . . . . . . . . . . . . . . . 26,085 ---- 26,085
Other liabilities. . . . . . . . . . . . . . . . . . . 21,633 ---- 21,633
--------------- --------------- ---------------
Total liabilities. . . . . . . . . . . . . . . . . 373,172 (127,224) 245,948

Shareholder's equity:
Capital stock, $.01 par value, 100,000,000 shares
authorized:
8% Cumulative Convertible Exchangeable Preferred
Stock, 889,378 and 889,378 shares issued and
outstandingly, respectively. . . . . . . . . . . . 9 ---- 9

Common stock 23,224,357 and 31,274,357 pro forma
shares issued and outstandingly, respectively. . . 232 81 313
Additional paid in capital . . . . . . . . . . . . . . 158,312 147,403 305,715
Retained earnings. . . . . . . . . . . . . . . . . . . 34,012 ---- 34,012
--------------- --------------- ---------------
Total shareholders' equity . . . . . . . . . . . . 192,565 147,484 340,049
--------------- --------------- ---------------
Total liabilities and shareholders' equity . . . . $ 565,737 $ 20,260 $ 585,997
--------------- --------------- ---------------
--------------- --------------- ---------------

</TABLE>

- ---------------------------------------
(1) Pro forma entries give effect at March 31, 1996 to the net proceeds from
the issuance of 8,050,000 shares of Common Stock and application of a
portion of such proceeds to repay outstanding amounts due under
warehouse facilities.

9
<PAGE>

OLYMPIC FINANCIAL LTD.
UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA STATEMENT OF
ACTUAL ADJUSTMENTS (1) OPERATIONS
--------------- --------------- ---------------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C>
REVENUES:
Net interest margin. . . . . . . . . . . . . . . . . . . . $ 31,192 $ 8,800 $ 39,992
Gain on sale of loans. . . . . . . . . . . . . . . . . . . 62,182 ---- 62,182
Servicing fee income . . . . . . . . . . . . . . . . . . . 13,987 ---- 13,987
Other non interest income. . . . . . . . . . . . . . . . . 1,371 ---- 1,371
--------------- --------------- ---------------
Total revenues . . . . . . . . . . . . . . . . . . . . 108,732 8,800 117,532

EXPENSES:
Salaries and benefits. . . . . . . . . . . . . . . . . . . 20,079 ---- 20,079
Other operating expense. . . . . . . . . . . . . . . . . . 22,648 ---- 22,648
Interest expense on long-term debt . . . . . . . . . . . . 17,170 ---- 17,170
--------------- --------------- ---------------
Total expense. . . . . . . . . . . . . . . . . . . . . 59,897 ---- 59,897
--------------- --------------- ---------------

Operating income before income taxes and extraordinary
item . . . . . . . . . . . . . . . . . . . . . . . . . . 48,835 8,800 57,635
Provision for income taxes . . . . . . . . . . . . . . . . 19,518 3,520 23,038
--------------- --------------- ---------------
Income before extraordinary item . . . . . . . . . . . . . 29,317 5,280 34,597
Extraordinary item . . . . . . . . . . . . . . . . . . . . (3,856) ---- (3,856)
--------------- --------------- ---------------
Net income . . . . . . . . . . . . . . . . . . . . . . $ 25,461 $ 5,280 $ 30,741
--------------- --------------- ---------------
--------------- --------------- ---------------

PRIMARY EARNINGS PER SHARE:
Net income per common share before extraordinary item. . . $ 1.35 $ 1.15
Extraordinary item per common share. . . . . . . . . . . . (0.19) (0.13)
--------------- ---------------
Net income per common share. . . . . . . . . . . . . . $ 1.16 $ 1.02
--------------- ---------------
--------------- ---------------

FULLY DILUTED EARNINGS PER SHARE:
Net income per share before extraordinary item . . . . . . $ 1.11 $ 1.00
Extraordinary item per share . . . . . . . . . . . . . . . (0.15) (0.11)
--------------- ---------------
Net income per share . . . . . . . . . . . . . . . . . $ 0.96 $ 0.89
--------------- ---------------
--------------- ---------------

Weighted average common and common equivalent shares
outstanding:
Primary. . . . . . . . . . . . . . . . . . . . . . . . . . 20,029,769 8,050,000 28,079,769
Fully diluted. . . . . . . . . . . . . . . . . . . . . . . 26,455,876 8,050,000 34,505,876

</TABLE>

- ---------------------------------------
(1) Pro forma earnings is computed giving effect to the issuance of
8,050,000 shares of Common Stock on January 1, 1995, and the
application of a portion of the proceeds received therefrom to repay
in full the average amount outstanding under the Company's warehouse
facilities.

10
<PAGE>

OLYMPIC FINANCIAL LTD.
UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996

<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA STATEMENT OF
ACTUAL ADJUSTMENTS (1) OPERATIONS
--------------- --------------- ---------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
REVENUES:
Net interest margin. . . . . . . . . . . . . . . . . . . . $ 12,300 $ 2,200 $ 14,500
Gain on sale of loans. . . . . . . . . . . . . . . . . . . 25,229 ---- 25,229
Servicing fee income . . . . . . . . . . . . . . . . . . . 5,743 ---- 5,743
Other non interest income. . . . . . . . . . . . . . . . . 724 ---- 724
--------------- --------------- ---------------
Total revenues . . . . . . . . . . . . . . . . . . . . 43,996 2,200 46,196

EXPENSES:
Salaries and benefits. . . . . . . . . . . . . . . . . . . 9,097 ---- 9,097
Other operating expense. . . . . . . . . . . . . . . . . . 10,919 ---- 10,919
Interest expense on long-term debt . . . . . . . . . . . . 5,516 ---- 5,516
--------------- --------------- ---------------
Total expenses . . . . . . . . . . . . . . . . . . . . 25,532 ---- 25,532
--------------- --------------- ---------------
Operating income before income taxes and extraordinary
item . . . . . . . . . . . . . . . . . . . . . . . . . . 18,464 2,200 20,664
Provision for income taxes . . . . . . . . . . . . . . . . 7,386 880 8,266
--------------- --------------- ---------------
Income before extraordinary item . . . . . . . . . . . . . 11,078 1,320 12,398
Extraordinary item . . . . . . . . . . . . . . . . . . . . ---- ---- ----
--------------- --------------- ---------------
Net income . . . . . . . . . . . . . . . . . . . . . . $ 11,078 $ 1,320 $ 12,398
--------------- --------------- ---------------
--------------- --------------- ---------------

Primary Earnings Per Share:
Net income per common share before extraordinary item. . . $ 0.41 $ 0.35
Extraordinary item per common share. . . . . . . . . . . . ---- ----
--------------- ---------------
Net income per common share. . . . . . . . . . . . . . $ 0.41 $ 0.35
--------------- ---------------
--------------- ---------------

Fully Diluted Earnings Per Share:
Net income per share before extraordinary item . . . . . . $ 0.37 $ 0.32
Extraordinary item per share . . . . . . . . . . . . . . . ---- ----
--------------- ---------------
Net income per share . . . . . . . . . . . . . . . . . $ 0.37 $ 0.32
--------------- ---------------
--------------- ---------------

Weighted average common and common equivalent shares
outstanding:
Primary. . . . . . . . . . . . . . . . . . . . . . . . . . 25,741,672 8,050,000 33,791,672
Fully diluted. . . . . . . . . . . . . . . . . . . . . . . 30,218,329 8,050,000 38,268,329

</TABLE>

11
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

OVERVIEW

Substantially all of the Company's earnings are derived from the purchase,
securitization and servicing of consumer automobile loans originated primarily
by new car dealers affiliated with major foreign and domestic manufacturers. At
March 31, 1996, the Company had purchased loans from more than 5,800 dealers in
38 states, a substantial majority of which sell loans to the Company on a
regular basis. Loans are purchased through 16 regional buying centers,
supplemented by a network of dealer development representatives ("DDRs") serving
various markets, or "spokes", surrounding the buying center "hubs". DDRs
operating in these "spokes" generate loans in their assigned market, and all
administrative functions, including credit approval and loan processing, are
performed at the "hub" or at the Company's headquarters in Minneapolis,
Minnesota.

THREE MONTHS ENDED MARCH 31, 1996 AND 1995

RESULTS OF OPERATIONS

NET INTEREST MARGIN. The components of net interest margin for each of the
three month periods ended March 31 were:

1996 1995
----------- -----------
<S> <C> <C>
Interest income on loans, net of interest expense
on warehouse facilities. . . . . . . . . . . . . . . . $ 5,206 $ 1,821
Interest income on short-term investments, spread
accounts and other cash accounts . . . . . . . . . . . 3,446 1,720
Recognition of present value discount. . . . . . . . . . 3,741 1,012
Provision for credit losses on loans held for sale . . . (93) (15)
----------- -----------
Net interest margin . . . . . . . . . . . . . . . . . $ 12,300 $ 4,538
----------- -----------
----------- -----------
</TABLE>

Net interest margin increased 171% during the three months ended March 31,
1996, compared with the same period a year ago. The rise in net interest margin
is primarily due to higher average balances of loans held for sale pending
securitization, lower warehousing costs and growth in the volume of the
Company's loan purchases and subsequent securitizations, partially off-set by a
decline in the weighted average interest rate earned on loan purchases.

Since March 31, 1995, the Company has opened two additional regional buying
centers and has expanded its dealer network to more than 5,800 dealers at March
31, 1996, compared to 3,014 dealers at March 31, 1995. As a result, automobile
loan purchases increased 44.1% during the first quarter of 1996 compared with
the same period a year ago. Loan purchases under the Company's Premier and
Classic loan programs for each of the three month periods ended March 31 were:

1996 1995
----------- -----------
<S> <C> <C>
Premier. . . . . . . . . . . . . . . . . . . . . . . . . $ 493,188 $ 371,109
Classic. . . . . . . . . . . . . . . . . . . . . . . . . 140,318 68,484
----------- -----------
Total loans purchased. . . . . . . . . . . . . . . . . $ 633,506 $ 439,593
----------- -----------
----------- -----------

</TABLE>

12
<PAGE>

The increased loan purchasing volume and timing of securitization
transactions resulted in an increase of approximately 128% in the average
balance of loans held for sale pending securitization, on which the Company
earns interest income until such loans are securitized. The effect of the higher
average balance of loans held for sale was partially off-set by a decline in the
annual percentage interest rate ("APR") paid by the obligors on loans purchased
during the first three months of 1996 to 13.85% compared with 14.69% in the same
period a year ago. The decline in APR is principally due to decreases in the
short-term consumer finance rates during most of 1995 and early 1996. The
Company mitigated part of the effect of the lower APRs through an increased
penetration of its higher yielding Classic loans which grew from 16% of total
loan purchases in the first quarter of 1995 to 22% in the first quarter of 1996.

In addition, improved liquidity allowed the Company to decrease the average
amount of its borrowings under warehouse arrangements as a percentage of loan
purchasing volume to 25.7% during the first quarter of 1996 compared with 28.6%
during the first quarter of 1995. This decrease produced lower warehousing
costs and increased the net interest rate spread earned on loans held for sale.

The rise in interest income on short-term investments, spread accounts and
other cash accounts established in connection with securitization transactions
and the increase in the recognition of the present value discount associated
with the gain on sale of loans is attributable to an increase of 43.1% in loans
securitized during the first quarter of 1996 compared with the same period in
1995.

GAIN ON SALE OF LOANS. Gain on sale of loans provided net revenues of $25.2
million and $9.1 million during the three month periods ended March 31, 1996 and
1995, respectively, representing an increase of 179%. The increase in gain on
sale of loans primarily resulted from growth in the volume of loans securitized
and increased gross interest rate spreads. The Company securitized $655.8
million of loans held for sale during the first quarter of 1996 compared with
$458.4 million in the same period a year ago. The increase in the gross
interest rate spread earned on securitized loans is primarily due to a decrease
in the Company's weighted average securitization rate reflecting the general
market decline in short-term financing rates and the continued refinement of the
Company's securitization strategies, partially off-set by a decline in the
weighted average APR on loans purchased and subsequently securitized (see
discussion of net interest margin above).

The following table summarizes the Company's gross interest rate spreads for
each of the three month periods ended March 31:

1996 1995
----------- -----------
<S> <C> <C>
Weighted average APR of loans securitized. . . . . . 13.81% 14.59%
Weighted average securitization rate . . . . . . . . 5.82 7.51
----------- -----------
Gross interest rate spread (1) . . . . . . . . . . . 7.99% 7.08%
----------- -----------
----------- -----------
</TABLE>

- ---------------------------------------
(1) Before gains/losses on hedging transactions.

Gains on sales of loans were further increased by $1.9 million of realized
gains on hedging transactions during the first quarter of 1996 compared with
$3.4 million of realized losses on hedging transactions during the same period
in 1995. There were no realized losses during the first quarter of 1996 and no
realized gains during the first quarter of 1995.

13
<PAGE>

SERVICING FEE INCOME. The Company increased its servicing fee income to
$5.7 million during the three months ended March 31, 1996 from $2.3 million in
the first three months of 1995. This increase was directly related to an
increase in the Company's servicing portfolio outstanding. The following table
reflects the growth in the Company's servicing portfolio from March 31, 1995 to
March 31, 1996.

(DOLLARS IN THOUSANDS, EXCEPT AS NOTED) AT MARCH 31,
------------------------
1996 1995
----------- -----------
<S> <C> <C>
Principal balance of automobile loans held for sale. . . $ 81,552 $ 479
Principal balance of loans serviced under
securitizations. . . . . . . . . . . . . . . . . . . . . 2,563,588 1,176,690
----------- -----------

Servicing portfolio. . . . . . . . . . . . . . . . . . . $2,645,140 $1,177,169
----------- -----------
----------- -----------
Average unpaid principal balance (actual dollars). . . . $ 12,407 $ 11,653
Number of loans serviced . . . . . . . . . . . . . . . . 213,193 101,022

</TABLE>

The Company's March 31, 1996 servicing portfolio increased 125% over
March 31, 1995 reflecting significant growth in the volume of the Company's loan
purchases and subsequent securitizations.

OPERATING EXPENSES. Salaries and benefits expense increased to $9.1 million
in the first quarter of 1996, up 131% from $3.9 million during the same period
in 1995. The increase in salaries and benefits is primarily attributable to an
increase in the number of employees to 751 at March 31, 1996 from 387 at March
31, 1995. Increased staffing has been necessary to accommodate the rise in loan
purchasing volume and the subsequent servicing of such loans and is also due to
the opening of two additional regional buying centers since March 31, 1995.

Other operating costs including, occupancy, depreciation and amortization,
servicing and collection expenses, also increased during the first quarter of
1996 to $10.9 million, up 143% from $4.5 million in the same period of 1995.
The rise in other operating costs is primarily due to the growth in regional
buying centers and continued growth in loan purchasing. As loan purchasing
volume increases, the Company incurs incremental increases in costs associated
with underwriting, servicing and collecting of such loans. Also included in
operating expenses during the first quarter of 1996 are expenses to expand our
servicing and collection capabilities to provide for the seasoning of the
Company's loan portfolio and to prepare for the higher percentage of Classic
loans in the portfolio.

Although the dollar amount of operating expenses increased, total annualized
operating expenses as a percentage of average servicing portfolio declined to
3.25% in the first quarter of 1996 compared to 3.36% during the same period in
1995 reflecting economies of scale from increased loan purchases and growth in
the Company's servicing portfolio.

LONG-TERM DEBT AND OTHER INTEREST EXPENSE. Long-term debt and other
interest expense increased 199% to $5.5 million during the first quarter of 1996
compared to $1.8 million during the same period in 1995 primarily due to the
issuance of $145.0 of Senior Term Notes in April 1995.

14
<PAGE>

FINANCIAL CONDITION

AUTOMOBILE LOANS HELD FOR SALE. Prior to securitization, the Company holds
automobile loans in its portfolio. The Company's portfolio of loans held for
sale decreased 30.1% to $82.9 million at March 31, 1996 from $118.6 million at
December 31, 1995 due to the timing in delivery of loans associated with the
Company's securitizations.

FINANCE INCOME RECEIVABLE. Finance income receivable increased to $311.8
million at March 31, 1996 from $249.6 million at December 31, 1995. This 24.9%
increase is a result of the increase in loan securitization volume and increased
gain on sale of loans.

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES. Accounts payable and accrued
liabilities increased 120% to $21.6 million at March 31, 1996 as compared with
$9.8 million at December 31, 1995. This increase is primarily due to accrued
securitization expenses associated with the Company's first quarter
securitization transaction, 1996-A, as well as increased accruals for salary,
occupancy and various operating expenses reflecting the continued growth in the
Company's staffing, facilities, loan purchases and servicing portfolio.

15
<PAGE>

DELINQUENCY, CREDIT LOSS AND REPOSSESSION EXPERIENCE

The following tables describe the Company's delinquency, credit loss and
repossession experience for the periods indicated. A delinquent loan may result
in the repossession and foreclosure of the collateral for the loan. Losses
resulting from repossession and foreclosure of loans are charged against
applicable allowances.

MARCH 31, DECEMBER 31,
DELINQUENCY EXPERIENCE (1): 1996 1995
--------------------------- ---------------------------
NUMBER OF NUMBER OF
LOANS BALANCE LOANS BALANCE
------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Servicing portfolio at end of period 213,193 $2,645,140 185,241 $2,267,107
Delinquencies:
31-60 days. . . . . . . . . . . . . . . 1,767 $ 22,763 1,536 $ 17,667
61-90 days. . . . . . . . . . . . . . . 854 11,412 520 5,694
91 days or more . . . . . . . . . . . . 839 10,409 614 6,881
------------ ------------ ------------ ------------
Total automobile loans delinquent 31 or
more days . . . . . . . . . . . . . . . 3,460 $ 44,584 2,670 $ 30,242
Delinquencies as a percentage of
number of loans and amount
outstanding at end of period (2). . . . 1.62 % 1.69 % 1.44 % 1.33 %
Amount in repossession (3). . . . . . . . 2,079 $ 23,683 1,489 $ 17,676
------------ ------------ ------------ ------------
Total delinquencies and amount in
repossession (2). . . . . . . . . . . . 5,539 $ 68,267 4,159 $ 47,918
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Total delinquencies and amount in
repossession as a percentage of
servicing portfolio outstanding at end
of period . . . . . . . . . . . . . . . 2.60 % 2.58 % 2.25 % 2.11 %

</TABLE>

(2) Amounts shown do not include loans which are less than 31 days delinquent.

(3) Amount in repossession represents financed automobiles which have been
repossessed but not yet liquidated.

16
<PAGE>

The Company's credit loss and repossession statistics are presented below
under a dual format. The first table labeled "Industry Method" has been
provided to conform the gross charge-off presentation format adopted by the
Company as of January 1, 1996, which the Company believes is the predominant
presentation format within the auto finance industry. This format, which nets
anticipated recoveries against loan principal balances remaining at the time of
charge-off, will be the basis for future delinquency, loan loss and repossession
disclosures by the Company.

INDUSTRY METHOD THREE MONTHS ENDED
MARCH 31,
-------------------------------
CREDIT LOSS/REPOSSESSION EXPERIENCE (1): 1996 1995
-------------- --------------
<S> <C> <C>
Average servicing portfolio outstanding during the period. . . . . . . . . $ 2,461,267 $ 1,003,320
Average number of loans outstanding during the period. . . . . . . . . . . 199,596 87,277
Number of repossessions. . . . . . . . . . . . . . . . . . . . . . . . . . 2,755 450
Annualized repossessions as a percentage of average number of
loans outstanding. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.52 % 2.06 %
Gross charge-offs (2). . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,965 $ 1,802
Recoveries (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 295
-------------- --------------
Net losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,860 $ 1,507
-------------- --------------
-------------- --------------
Annualized gross charge-offs as a percentage of average servicing
portfolio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.81 % 0.72 %
Annualized net losses as a percentage of average servicing portfolio . . . 0.79 % 0.60 %

</TABLE>

- ---------------------------------------
(1) All amounts and percentages are based on the principal amount scheduled
to be paid on each loan. The information in the table includes
previously sold loans which the Company continues to service.
(2) Gross charge-offs represent principal amounts which management
estimated to be uncollectable after the consideration of anticipated
proceeds from the disposition of repossessed assets. When estimating
the value of repossessed inventory management utilizes industry
published reports listing retail and wholesale values of used
automobiles and determines estimated proceeds within a range that
management believes reflects the then current market conditions and the
Company's disposition strategy for such inventory.
(3) Includes post-disposition amounts received on repossessed assets, net
of selling expenses.

HISTORICAL METHOD THREE MONTHS ENDED
MARCH 31,
-------------------------------
CREDIT LOSS/REPOSSESSION EXPERIENCE (1): 1996 1995
-------------- --------------
<S> <C> <C>
Average servicing portfolio outstanding during the period. . . . . . . . . $ 2,461,267 $ 1,003,320
Average number of loans outstanding during the period. . . . . . . . . . . 199,596 87,277
Number of repossessions. . . . . . . . . . . . . . . . . . . . . . . . . . 2,755 450
Annualized repossessions as a percentage of average number of
loans outstanding. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.52 % 2.06 %
Gross charge-offs (2). . . . . . . . . . . . . . . . . . . . . . . . . . . $ 34,899 $ 5,123
Recoveries (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,039 3,616
-------------- --------------
Net losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,860 $ 1,507
-------------- --------------
-------------- --------------

Annualized gross charge-offs as a percentage of average servicing
portfolio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.67 % 2.04 %
Annualized net losses as a percentage of average servicing portfolio . . . 0.79 % 0.60 %

</TABLE>

17
<PAGE>

The Company believes the rise in delinquency, repossession rates and
annualized net losses reflected in the tables above are primarily due to the
introduction and expansion of the Company's Classic loan program and the
seasoning of the Company's servicing portfolio to include a greater proportion
of loans in the period of highest probability for defaults.

In February 1996, the Company elected to increase, over time depending on
market conditions, the percentage of the Company's aggregate loan purchases that
may be purchased through its Classic program up to a limit of 50% of
originations from the Company's current percentage of approximately 22% of
originations. The purposes of the Company's increased emphasis on the Classic
program are to provide the Company with the opportunity for greater interest
rate spreads relative to its previous loan mix and, as the Company offers lower
dealer participations on Classic loans, to reduce costs in comparison to the
Premier program. The Company has determined that the pricing advantages and
ability to expand the Company's prime lending market under the Classic loan
program offsets anticipated increases in delinquency and repossession rates,
which the Company expects to continue to increase as the Classic loans purchased
in 1995 continue to season in 1996. To account for the anticipated increase in
delinquency and repossession rates, the Company has established higher reserves
following the introduction of the Classic program and has increased these
reserves as the proportion of Classic loans has increased in the Company's total
portfolio. The Company's total reserves at March 31, 1996 were $55.1 million or
2.08% of the Company's servicing portfolio compared with $42.3 million at
December 31, 1995 or 1.86% of the Company's servicing portfolio. Although the
introduction and expansion of the Classic program has contributed to an increase
in total portfolio delinquencies, repossession rates, and annualized net loss
rates, these increases have been anticipated and within the reserves established
by the Company.

LIQUIDITY

The Company's business requires substantial cash to support its operating
activities. The principal cash requirements include (i) amounts necessary to
purchase and finance automobile loans pending securitization, (ii) dealer
participations, (iii) cash held from time to time in restricted spread accounts
to support securitizations and other securitization expenses, (iv) interest
advances to securitization trusts and (v) interest expense. The Company also
uses significant amounts of cash for operating expenses and payment of preferred
stock dividends. Cash is returned to the Company principally from excess cash
flow received from securitization trusts and from fees earned through servicing
of loans held by such trusts. The Company has operated on a negative operating
cash flow basis and expects to continue to do so in the foreseeable future. The
Company has historically funded, and expects to continue to fund, these negative
operating cash flows, subject to limitations in various debt covenants,
principally through borrowings from financial institutions, sales of equity
securities and sales of senior and subordinated notes, among other resources,
although there can be no assurance that the Company will have access to capital
markets in the future or that financing will be available to satisfy the
Company's operating and debt service requirements or to fund its future growth.
See "Capital Resources."

PRINCIPAL USES OF CASH IN OPERATING ACTIVITIES

PURCHASES AND FINANCING OF AUTOMOBILE LOANS. Automobile loan purchases
represent the Company's most significant cash flow requirement. The Company
funds the purchase price of

18
<PAGE>

loans primarily through the use of warehouse facilities. However, because
advance rates under the warehouse facilities generally provide funds from 90% to
99.9% of the principal balance of the loans, the Company is required to fund the
remainder of all purchases with other available cash resources. The Company
purchased $633.5 million of loans during the first three months of 1996 compared
to $439.6 million during the same period in 1995.

DEALER PARTICIPATIONS. Consistent with industry practice, the Company pays
dealers participations for selling loans to the Company. These participations
typically require the Company to advance an up-front amount to dealers, which
currently range from 3.80% to 4.08% of the principal balance of loans purchased.
Participations paid by the Company to dealers during the three months ended
March 31, 1996 were $24.7 million, compared with $17.4 million during the same
period in 1995. When loans are securitized, the related dealer participation is
expensed. The Company has the ability to recover these amounts from the dealers
by offset against future participations in the event of prepayment or default on
the loan within a specified period of time. However, to the extent the loan does
not prepay or default within that period of time, the Company expects to recover
the cash used to pay dealer participations over the estimated life of the
underlying loans through the return to the Company of excess cash flow. This
relationship between the up-front payment of cash to the dealers and the
deferred recovery through collection of excess cash flow will continue to
represent an increasing demand on capital resources to the extent the Company
continues to expand its volume of loan purchases.

SECURITIZATION OF AUTOMOBILE LOANS. In connection with securitizations,
the Company is required to fund spread accounts related to each transaction.
The Company funds these spread accounts by foregoing receipt of excess cash flow
until these spread accounts exceed predetermined levels. The Company had $79.6
million of restricted cash in spread accounts at March 31, 1996, compared with
$65.4 million at December 31, 1995. Restricted cash is included as a component
of finance income receivable.

The Company also incurs certain expenses in connection with
securitizations, including underwriting fees, credit enhancement fees, trustee
fees and other costs, which approximate 0.5% per annum of the principal amount
of the asset-backed securities.

NET INTEREST MARGIN. Although the Company records net interest margin as
earned, the interest income component is generally received in cash from excess
cash flow, while the interest expense component (primarily warehousing interest)
is paid prior to securitization.

ADVANCES DUE TO SERVICER. As the servicer of loans sold in
securitizations, the Company periodically makes interest advances to the
securitization trusts to provide for temporary delays in the receipt of required
interest payments by borrowers. In accordance with servicing agreements, the
Company makes advances only in the event it expects to recover them through the
ultimate payments from the obligor on the loan.

PRINCIPAL SOURCES OF CASH IN OPERATING ACTIVITIES

EXCESS CASH FLOW. The Company receives excess cash flow from
securitization trusts, including the realization of gain on sale, the recovery
of dealer participations, and the recovery of accrued interest receivable
earned, but not yet collected, on loans held for sale. Recovery of dealer
participations and accrued interest receivable, which occur throughout the life
of the

19
<PAGE>

securitization, result in a reduction of the finance income receivable and,
because they have been considered in the original determination of the gain on
sale of loans, have no effect on the Company's results of operations in the year
in which the participations and interest are recovered from the securitization
trust. During the first quarter of 1996, the Company received $4.2 million of
excess cash flow, compared with $4.6 million during the first three months in
1995. Included in excess cash flows during the first quarter of 1995, is
approximately $1.7 million of cash received from the sale of interest-only
securities related to securitization transactions. There were no interest-only
securities issued during the first quarter of 1996. The Company received an
additional $2.3 million of cash during the first quarter of 1996 which was
released from spread accounts associated with three securitization transactions
initiated in 1992 and closed-out during the current quarter of 1996.

SERVICING FEES. The Company also receives servicing fee income with
respect to loans held by securitization trusts equal to 1% per annum of the
remaining principal balance, which amounted to $5.7 million and $2.3 million
during the three months ended March 31 1996 and 1995, respectively. Servicing
fee income is reflected in the Company's revenues as earned.

CAPITAL RESOURCES

The Company finances the acquisition of automobile loans primarily through
(i) warehouse facilities, pursuant to which loans are sold or financed generally
on a temporary basis and (ii) the securitization of loans, pursuant to which
loans are sold as asset-backed securities. Additional financing is required to
fund the Company's operations.

WAREHOUSE FACILITIES. Automobile loans held for sale are funded primarily
through warehouse facilities. At March 31, 1996, the Company had warehouse
facilities in place with various financial institutions and institutional
lenders with an aggregate capacity of $670.0 million, of which $542.8 million
was available. Amounts due under warehouse facilities increased to $127.2
million at March 31, 1996 from $26.5 million at December 31, 1995, primarily due
to increased loan purchasing volume and timing of securitization transactions.
Proceeds from securitizations, generally received within seven to ten days
following the cut-off date established for the transaction, are applied to repay
amounts outstanding under warehouse facilities.

SECURITIZATION PROGRAM. An important capital resource for the Company has
been its ability to sell automobile loans in the secondary markets through
securitizations. The following table summarizes the Company's securitization
transaction for the three months ended March 31, 1996, which was publicly issued
and rated "AAA/Aaa".

(DOLLARS IN THOUSANDS)
REMAINING REMAINING
BALANCE AS BALANCE AS A CURRENT WEIGHTED GROSS
OF PERCENTAGE OF WEIGHTED AVERAGE INTEREST
ORIGINAL MARCH 31, ORIGINAL AVERAGE SECURITIZATION RATE
DATE BALANCE 1996 BALANCE APR RATE SPREAD
- -------------- -------------- ------------- ------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
March 96 (1) $ 600,000 $ 409,756 68.40% 14.03% 5.89% 8.14%

</TABLE>

- ---------------------------------------
(1) At March 31, 1996, $420,971,925 of automobile loans had been delivered
to the trust and $179,028,075 cash remained in the pre-funded portion
of the trust.

20
<PAGE>

OTHER CAPITAL RESOURCES

Historically, the Company has utilized various debt and equity financings to
offset negative operating cash flows and support the continued growth in loan
volume, increased dealer participations, securitizations and general operating
expenses.

In April 1996, the Company sold to the public 8,050,000 shares of Common
Stock. Net proceeds received from the offering of Common Stock approximated
$147.5 million.

In March 1996, the Company sold to the public $30.0 million aggregate
principal amount of 10.125% Subordinated Notes Series 1996-A, due 2001 (the
"Senior Subordinated Notes"). Net proceeds received from the offering of Senior
Subordinated Notes approximated $29.0 million.

The terms of the Company's 13% Senior Term Note Indenture (the "Indenture")
limit the incurrence of additional indebtedness by the Company and restrict
certain payments, including dividends on common or preferred stock (other than
dividends on the Company's 8% Cumulative Convertible Exchangeable Preferred
Stock) subject to the Company's ability to meet certain tests as set forth in
the Indenture. If the Company's Fixed Charge Coverage Ratio, as defined in the
Indenture, is less than 2.0 to 1 for a four quarter period, the Company is
restricted from paying dividends on common and preferred stock (other than
dividends on it's 8% Cumulative Convertible Exchangeable Preferred Stock) and
unable to incur additional indebtedness (excluding indebtedness under warehouse
facilities). The Fixed Charge Coverage Ratio for the four-quarter period ended
March 31, 1996 was:

FOUR
QUARTERS ENDED
MARCH 31, 1996
--------------
(IN THOUSANDS)
<S> <C>
Operating Cash Receipts:
Excess cash flows received from securitization trusts. . . $ 22,914
Servicing fee income . . . . . . . . . . . . . . . . . . . 16,232
Other cash income. . . . . . . . . . . . . . . . . . . . . 3,196
--------------
Total Operating Cash Receipts . . . . . . . . . . . . 42,342
Less Cash Expenses:
Payment of dealer participations . . . . . . . . . . . . 93,796
Cash operating expenses. . . . . . . . . . . . . . . . . 59,678
Interest paid on warehouse and other debt. . . . . . . . 20,065
Preferred dividends. . . . . . . . . . . . . . . . . . . 2,093
--------------
Total Cash Expenses . . . . . . . . . . . . . . . . . 175,632
--------------
Consolidated Cash Flow . . . . . . . . . . . . . . . . . . (133,290)
Fixed Charges included in Cash Expenses. . . . . . . . . . 22,158
--------------
Adjusted Consolidated Cash Flow. . . . . . . . . . . . . $ (111,132)
--------------
--------------
Fixed Charges:
Interest expense (accrued or paid) . . . . . . . . . . . $ 30,623
Preferred dividends. . . . . . . . . . . . . . . . . . . 2,093
--------------
Total Fixed Charges . . . . . . . . . . . . . . . . . $ 32,716
--------------
--------------
</TABLE>

21
<PAGE>

The Company has had, and expects to continue to have, negative Consolidated
Cash Flow (as defined in the Indenture) and does not expect to be able to meet
the Fixed Charge Coverage Ratio test for the foreseeable future.

The Company may incur additional indebtedness under the terms of the
Indenture, without regard to the Fixed Charge Coverage Ratio, if total
indebtedness (excluding indebtedness under warehouse facilities) would not
exceed 200% of Consolidated Net Worth (as defined in the Indenture). As of
March 31, 1996, the Company would be able to incur additional indebtedness under
the Consolidated Net Worth test, provided that such new indebtedness has a
Weighted Average Life to Maturity (as defined in the Indenture) equal to or
longer than the Senior Term Notes.

22
<PAGE>

PART II - OTHER INFORMATION

Item 1. Legal Proceedings
The Company is party to litigation in the ordinary course of business,
generally involving actions against borrowers to collect amounts on
loans or recover vehicles. The Company does not expect any pending
proceedings to have a material adverse effect on the Company or its
results of operations.

Item 2. Changes in Securities
None

Item 3. Defaults Upon Senior Securities
None

Item 4. Submission of Matters to a Vote of Security Holders
None

Item 5. Other Information
None

Item 6. Exhibits and Reports on Form 8-K

(a) EXHIBITS

The following exhibits are filed in response to Item 601 of Regulation S-K.

EXHIBIT NO. DESCRIPTION
----------- -----------

10.1 Series 1996-A Supplement, dated March 14, 1996, to Spread Account
Agreement, dated as of March 25, 1995, as amended and restated as
of December 6, 1995, among the Company, Olympic Receivables
Finance Corp., Financial Security Assurance Inc. and Norwest Bank
Minnesota, National Association, as Trustee and Collateral Agent.

10.2 Insurance and Indemnity Agreement, dated as of March 14, 1996,
among the Company, Financial Security Assurance Inc., Olympic
Automobile Receivables Trust, 1996-A, Olympic First GP Inc.,
Olympic Second GP Inc. and Olympic Receivables Finance Corp.

11.1 Computation of Earnings Per Share

12.1 Computation of Ratio of Earnings to Fixed Charges

12.2 Computation of Ratio of Earnings to Fixed Charges and Preferred
Stock Dividends

23
<PAGE>

(b) REPORTS ON FORM 8-K

The Company filed a Current Report on Form 8-K, filed and dated
February 20, 1996, reporting a Cautionary Statement under the "Safe
Harbor" provisions of the Private Securities Litigation Reform Act of
1995.

On March 29, 1996, the Company filed a Current Report on Form 8-K, dated
March 15, 1996, reporting an amendment to the Credit Agreement under which
First Bank, National Association, along with a syndicate of other banking
institutions have agreed to lend the Company, on a revolving basis, up to
$250.0 million for the purchasing of automobile loans.

On March 17, 1996, the Company filed a Current Report on Form 8-K, dated
March 16, 1996, reporting the public offering of 8,050,000 shares of its
Common Stock.

24
<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

OLYMPIC FINANCIAL LTD.

SIGNATURE TITLE DATE
- ------------------------- --------------------------- --------------------

/s/ Jeffrey C. Mack
- -------------------------
Jeffrey C. Mack President, Chief Executive May 7, 1996
Officer, and Director

/s/ John A. Witham
- -------------------------
John A. Witham Executive Vice President May 7, 1996
and Chief Financial
Officer (Principal
Financial Officer)

/s/ Brian S. Anderson
- -------------------------
Brian S. Anderson Senior Vice President, May 7, 1996
Corporate Controller and
Assistant Secretary
(Principal Accounting
Officer)

25
<PAGE>

EXHIBIT INDEX

EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ----

10.1 Series 1996-A Supplement, dated March 14, 1996 to
Spread Account Agreement, dated as of March 25, 1995,
as amended and restated as of December 6, 1995, among
the Company, Olympic Receivables Finance Corp.,
Financial Security Assurance Inc. and Norwest Bank
Minnesota, National Association, as Trustee and
Collateral Agent.

10.2 Insurance and Indemnity Agreement, dated as of March 14,
1996, among the Company, Financial Security Assurance
Inc., Olympic Automobile Receivables Trust, 1996-A,
Olympic First GP Inc., Olympic Second GP Inc. and Olympic
Receivables Finance Corp.

11.1 Computation of Earnings Per Share

12.1 Computation of Ratio of Earnings to Fixed Charges

12.2 Computation of Ratio of Earnings to Fixed Charge and
Preferred Stock Dividends

27 Financial Data Schedule

<PAGE>

SERIES 1996-A SUPPLEMENT

dated as of March 14, 1996

SPREAD ACCOUNT AGREEMENT

dated as of March 25, 1993,

as amended and restated

as of December 6, 1995

among

OLYMPIC FINANCIAL LTD.

OLYMPIC RECEIVABLES FINANCE CORP.

FINANCIAL SECURITY ASSURANCE INC.

and

NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,

as Trustee and as Collateral Agent

<PAGE>

TABLE OF CONTENTS

Page

ARTICLE I

DEFINITIONS
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Rules of Interpretation . . . . . . . . . . . . . . 7

ARTICLE II

CREDIT ENHANCEMENT FEE; SERIES SUPPLEMENTS; THE COLLATERAL

Section 2.1 Series 1996-A Credit Enhancement Fee. . . . . . . . 7
Section 2.2 Series Supplements. . . . . . . . . . . . . . . . . 7
Section 2.3 Grant of Security Interest by OFL and the Seller. . 7

ARTICLE III

SPREAD ACCOUNT

Section 3.1 Establishment of Series 1996-A Spread Account;
Initial Deposit into Series 1996-A Spread
Account . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.2 Spread Account Additional Deposits. . . . . . . . . 9

ARTICLE IV

MISCELLANEOUS

Section 4.1 Further Assurances. . . . . . . . . . . . . . . . . 9
Section 4.2 Governing Law . . . . . . . . . . . . . . . . . . . 9
Section 4.3 Counterparts. . . . . . . . . . . . . . . . . . . . 9
Section 4.4 Headings. . . . . . . . . . . . . . . . . . . . . . 9

<PAGE>

SERIES 1996-A SUPPLEMENT

SERIES 1996-A SUPPLEMENT, dated as of March 14, 1996 (the "Series 1996-A
Supplement"), by and among OLYMPIC FINANCIAL LTD., a Minnesota corporation
("OFL"), OLYMPIC RECEIVABLES FINANCE CORP., a Delaware corporation (the
"Seller"), FINANCIAL SECURITY ASSURANCE INC., a New York stock insurance
company ("Financial Security"), and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association, in its capacities as Trustee
under each Pooling and Servicing Agreement and as Indenture Trustee under
each Indenture referred to in the Spread Account Agreement (as defined
below), in such capacity as agent for the Noteholders and Certificateholders
with respect to the related Series (in each of such capacities, the
"Trustee") and as Collateral Agent hereunder.

RECITALS

1. The parties hereto have previously entered into a Spread Account
Agreement, dated as of March 25, 1993, as amended and restated as of December
6, 1995 (the "Spread Account Agreement"), and, as contemplated by Section
2.02 of the Spread Account Agreement, this Series 1996-A Supplement
constitutes a Series Supplement to the Spread Account Agreement so that
hereafter this Series 1996-A Supplement shall form a part of the Spread
Account Agreement for all purposes thereof, and all references herein and
hereafter to the Spread Account Agreement shall mean the Spread Account
Agreement, as supplemented hereby.

2. Olympic Automobile Receivables Trust, 1996-A (the "Series 1996-A
Trust") is being formed contemporaneously herewith pursuant to the Series
1996-A Trust Agreement (as defined herein).

3. Pursuant to the Series 1996-A Sale and Servicing Agreement, the
Seller is selling to the Series 1996-A Trust all of its right, title and
interest in and to the Initial Receivables (as defined in the Series 1996-A
Sale and Servicing Agreement) and certain other Trust Property (as defined in
the Series 1996-A Trust Agreement).

4. Pursuant to the Series 1996-A Trust Agreement, the Series 1996-A
Trust is issuing the Series 1996-A Certificates (as defined herein).
Pursuant to the Series 1996-A Indenture, the Series 1996-A Trust is issuing
the Series 1996-A Notes (as defined herein).

5. The Seller has requested that Financial Security issue the Series
1996-A Note Policy to the Trustee to guarantee payment of the Scheduled
Payments (as defined in such Policy) on each Payment Date in respect of the
Series 1996-A Notes, and has requested that Financial Security issue the
Series 1996-A Certificate Policy to Mellon Bank (DE), National Association,
as Owner Trustee under the Series 1996-A Trust Agreement, to guarantee
payment of the Guaranteed Distributions (as defined in such Policy) on each
Distribution Date in respect of the Series 1996-A Certificates.

<PAGE>

6. In partial consideration of the issuance of the Series 1996-A Note
Policy and the Series 1996-A Certificate Policy, the Seller has agreed that
Financial Security shall have certain rights as Controlling Party, to the
extent set forth in the Spread Account Agreement and the Series 1996-A
Indenture.

7. The Seller is a wholly owned special purpose subsidiary of OFL.
The Series 1996-A Trust has agreed to pay the Series 1996-A Credit
Enhancement Fee to the Seller in consideration of the obligations of the
Seller and OFL pursuant hereto and in consideration of the obligations of OFL
pursuant to the Series 1996-A Insurance Agreement (such obligations forming
part of the Series 1996-A Insurer Secured Obligations as referred to herein).
The Series 1996-A Insurer Secured Obligations form part of the consideration
to Financial Security for its issuance of the Series 1996-A Policies.

8. In order to secure the performance of the Series 1996-A Secured
Obligations, to further effect and enforce the subordination provisions to
which the Series 1996-A Credit Enhancement Fee is subject, and in
consideration of the receipt of the Series 1996-A Credit Enhancement Fee, OFL
and the Seller have agreed to pledge the Series 1996-A Collateral as
Collateral to the Collateral Agent for the benefit of Financial Security and
for the benefit of the Trustee on behalf of the Trust, upon the terms and
conditions set forth herein.

AGREEMENTS

In consideration of the premises, and for other good and valuable
consideration, the adequacy, receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 DEFINITIONS. All terms defined in Section 1.1 of the
Series 1996-A Sale and Servicing Agreement shall have the same meaning with
respect to this Series 1996-A Supplement. The following terms shall have the
following meanings:

"COLLECTION ACCOUNT SHORTFALL" means, with respect to Series 1996-A and
any Distribution Date, the Deficiency Claim Amount, as defined in the Series
1996-A Sale and Servicing Agreement, with respect to such Distribution Date.

"INITIAL PRINCIPAL AMOUNT" means $600,000,000 with respect to Series
1996-A.

"INITIAL SPREAD ACCOUNT DEPOSIT" means $0.00 for Series 1996-A.

"INITIAL SPREAD ACCOUNT MAXIMUM AMOUNT" means, with respect to Series
1996-A and any Distribution Date, an amount equal to the greater of (i) 6% of
the Series 1996-A Balance

<PAGE>

as of the close of business on such Distribution Date and (ii) the Spread
Account Minimum Amount as of the close of business on such Distribution Date.

"SERIES 1996-A BALANCE" means, with respect to Series 1996-A and any
Distribution Date, the sum of the aggregate principal amount of the Series
1996-A Notes and the Certificate Balance with respect to Series 1996-A
Certificates as of such Distribution Date (after giving effect to the
distributions in respect of principal on the Notes and on the Certificates
made on such Distribution Date).

"SERIES 1996-A CERTIFICATE POLICY" means the financial guaranty
insurance policy issued by Financial Security with respect to the Series
1996-A Certificates.

"SERIES 1996-A CERTIFICATES" means the Certificates issued on the date
hereof pursuant to the Series 1996-A Trust Agreement.

"SERIES 1996-A COLLATERAL" has the meaning specified in Section 2.3(a)
hereof.

"SERIES 1996-A CREDIT ENHANCEMENT FEE" means the amount distributable
on each Distribution Date pursuant to Section 4.6(viii) and (ix) of the
Series 1996-A Sale and Servicing Agreement.

"SERIES 1996-A INDENTURE" means the Indenture, dated as of March 1,
1996, among the Series 1996-A Trust, the Trustee and the Indenture Collateral
Agent.

"SERIES 1996-A NOTE POLICY" means the financial guaranty insurance
policy issued by Financial Security with respect to the Series 1996-A Notes.

"SERIES 1996-A NOTES" means the Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, and Class A-6 Notes issued pursuant to the Series 1996-A
Indenture.

"SERIES 1996-A OWNER TRUSTEE" means Mellon Bank (DE), National
Association, not in its individual capacity but solely as Owner Trustee, or
its successor in interest, and any successor Owner Trustee appointed as
provided in the Series 1996-A Trust Agreement.

"SERIES 1996-A RECEIVABLE" means each Receivable referenced on the
Schedule of Receivables attached to the Series 1996-A Sale and Servicing
Agreement, as supplemented from time to time during the Funding Period by one
or more Subsequent Transfer Agreements.

"SERIES 1996-A RESERVE ACCOUNT" means the Reserve Account established
pursuant to Section 4.1(d) of the Series 1996-A Sale and Servicing Agreement.

"SERIES 1996-A SALE AND SERVICING AGREEMENT" means the Sale and
Servicing Agreement, dated as of March 1, 1996, and attached hereto as
Exhibit A, among the Series 1996-A Trust, OFL, in its individual capacity and
as Servicer, the Seller and the Backup Servicer, as such agreement may be
supplemented, amended or modified from time to time.

3
<PAGE>

"SERIES 1996-A SECURED OBLIGATIONS" means the Insurer Secured
Obligations and the Trustee Secured Obligations with respect to Series 1996-A.

"SERIES 1996-A SECURITIES" means the Series 1996-A Notes and the Series
1996-A Certificates, collectively.

"SERIES 1996-A SPREAD ACCOUNT" means the Spread Account established
pursuant to Section 3.1(a) hereof.

"SERIES 1996-A SUPPLEMENT" means this Series 1996-A Supplement which
constitutes a Series Supplement to the Spread Account Agreement.

"SERIES 1996-A TRUST AGREEMENT" means the Trust Agreement, dated as of
March 1, 1996, among the Seller, Olympic First GP Inc., Olympic Second GP
Inc., Financial Security and the Series 1996-A Owner Trustee.

"SPREAD ACCOUNT ADDITIONAL DEPOSIT" means, with respect to Series
1996-A and any Subsequent Transfer Date, an amount equal to 0.00% of the
aggregate Principal Balance (as of the related Subsequent Cutoff Date) of the
Subsequent Receivables being transferred to the Series 1996-A Trust on such
Subsequent Transfer Date or such greater amount as required by the Rating
Agencies to confirm that the rating assigned to the Series 1996-A Notes and
the Series 1996-A Certificates will be in the highest category by such Rating
Agencies.

"SPREAD ACCOUNT MAXIMUM AMOUNT" means, with respect to Series 1996-A
and any Distribution Date:

(i) if no Insurance Agreement Event of Default with respect to
Series 1996-A has occurred and is continuing, no Capture Event has
occurred and is continuing, no Trigger Event has occurred on the
related Determination Date, and if any Trigger Event with respect to
Series 1996-A has occurred as of a prior Determination Date, such
Trigger Event is Deemed Cured as of the related Determination Date,
the Initial Spread Account Maximum Amount with respect to Series 1996-A
and such Distribution Date;

(ii) if (A) a Trigger Event with respect to Series 1996-A has
occurred as of the Determination Date or (B) a Trigger Event with respect
to Series 1996-A has occurred as of a prior Distribution Date and is not
Deemed Cured as of the related Determination Date, and no Insurance
Agreement Event of Default with respect to Series 1996-A has occurred
and is continuing and no Capture Event has occurred and is continuing,
the Spread Account Maximum Amount shall be equal to the greater of (i)
10% of the Series 1996-A Balance as of the close of business on such
Distribution Date and (ii) the Spread Account Minimum Amount as of the
close of business on such Distribution Date; or

(iii) if (A) an Insurance Agreement Event of Default with
respect to Series 1996-A has occurred and is continuing or (B) a Capture
Event has occurred and is continuing as of the related Determination
Date, the Spread Account Maximum

4
<PAGE>

Amount shall be equal to the greater of (i) 25% of the Series 1996-A
Balance as of the close of business on such Distribution Date and (ii)
the Spread Account Minimum Amount as of the close of business on
such Distribution Date.

"SPREAD ACCOUNT MINIMUM AMOUNT" means, with respect to Series 1996-A
and any Distribution Date, an amount equal to the greater of:

(i) $100,000, and

(ii) the lesser of:

(A) 1% of the Initial Principal Amount of Series 1996-A, and

(B) the Series 1996-A Balance.

"SPREAD ACCOUNT WITHDRAWAL FLOOR" means, with respect to Series 1996-A
and any Determination Date, an amount equal to the greater of:

(i) the Spread Account Minimum Amount, and

(ii) 3% of the Series 1996-A Balance.

"TRIGGER EVENT" means, with respect to Series 1996-A and as of a
Determination Date, the occurrence of any of the following events:

(i) the Delinquency Ratio for such Determination Date shall be
equal to or greater than 5%;

(ii) the Average Delinquency Ratio for such Determination Date
shall be equal to or greater than 4%;

(iii) the Cumulative Default Rate shall be equal to or greater
than (A) 3.15%, with respect to any Determination Date
occurring prior to or during the sixth calendar month
succeeding the Series 1996-A Closing Date, (B) 5.50%, with
respect to any Determination Date occurring after the sixth,
and prior to or during the 12th, calendar month succeeding the
Series 1996-A Closing Date, (C) 7.0%, with respect to any
Determination Date occurring after the 12th, and prior to
or during the 18th, calendar month succeeding the Series
1996-A Closing Date, (D) 7.5%, with respect to any
Determination Date occurring after the 18th, and prior to
or during the 24th, calendar month succeeding the Series
1996-A Closing Date, (E) 8.15%, with respect to any
Determination Date occurring after the 24th, and prior
to or during the 30th, calendar month succeeding the Series
1996-A Closing Date, (F) 8.75%, with respect to any
Determination Date occurring after the 30th, and prior to
or during the 36th, calendar month succeeding the Series
1996-A Closing Date, (G) 9.0%, with respect to any

<PAGE>

Determination Date occurring after the 36th, and prior to
or during the 42nd, calendar month succeeding the Series
1996-A Closing Date, (H) 9.25%, with respect to any
Determination Date occurring after the 42nd, and prior to
or during the 48th, calendar month succeeding the Series
1996-A Closing Date, (I) 9.50%, with respect to any
Determination Date occurring after the 48th, and prior to
or during the 54th, calendar month succeeding the Series
1996-A Closing Date, (J) 9.75%, with respect to any
Determination Date occurring after the 54th, and prior to
or during the 60th calendar month succeeding the Series
1996-A Closing Date, (K) 9.9%, with respect to any
Determination Date occurring after the 60th, and prior to
or during the 66th, calendar month succeeding the Series
1996-A Closing Date, or (L) 10.0%, with respect to any
Determination Date occurring after the 66th, and prior to
or during the 72nd, calendar month succeeding the Series
1996-A Closing Date; or

(iv) the Cumulative Net Loss Rate shall be equal to or greater
than (A) 1.25%, with respect to any Determination Date
occurring prior to or during the sixth calendar month
succeeding the Series 1996-A Closing Date, (B) 2.0%, with
respect to any Determination Date occurring after the sixth,
and prior to or during the 12th, calendar month succeeding the
Series 1996-A Closing Date, (C) 2.75%, with respect to any
Determination Date occurring after the 12th, and prior to or
during the 18th, calendar month succeeding the Series 1996-A
Closing Date, (D) 3.0%, with respect to any Determination Date
occurring after the 18th, and prior to or during the 24th,
calendar month succeeding the Series 1996-A Closing Date, (E)
3.25%, with respect to any Determination Date occurring after
the 24th, and prior to or during the 30th, calendar month
succeeding the Series 1996-A Closing Date, (F) 3.5%, with
respect to any Determination Date occurring after the 30th,
and prior to or during the 36th, calendar month succeeding the
Series 1996-A Closing Date, (G) 3.6%, with respect to any
Determination Date occurring after the 36th, and prior to or
during the 42nd, calendar month succeeding the Series 1996-A
Closing Date, (H) 3.7%, with respect to any Determination Date
occurring after the 42nd, and prior to or during the 48th,
calendar month succeeding the Series 1996-A Closing Date, (I)
3.8%, with respect to any Determination Date occurring after
the 48th, and prior to or during the 54th, calendar month
succeeding the Series 1996-A Closing Date, (J) 3.9%, with
respect to any Determination Date occurring after the 54th,
and prior to or during the 60th, calendar month succeeding the
Series 1996-A Closing Date, (K) 3.95%, with respect to any
Determination Date occurring after the 60th, and prior to or
during the 66th, calendar month succeeding the Series 1996-A
Closing Date, or (L) 4.0%, with respect to any Determination
Date occurring after the 66th, and prior to or during the
72nd, calendar month succeeding the Series 1996-A Closing Date.

<PAGE>

Section 1.2 RULES OF INTERPRETATION. The terms "hereof," "herein,"
"hereto" or "hereunder," unless otherwise modified by more specific
reference, shall refer to this Series 1996-A Supplement. Unless otherwise
indicated in context, the terms "Article," "Section" or "Exhibit" shall refer
to an Article or Section of, or Exhibit to, this Series 1996-A Supplement.
The definition of a term shall include the singular, the plural, the past,
the present, the future, the active and the passive forms of such term. A
term defined herein and used herein preceded by a Series designation, shall
mean such term as it relates to the Series designated.

ARTICLE II

CREDIT ENHANCEMENT FEE; SERIES SUPPLEMENTS; THE COLLATERAL

Section 2.1 SERIES 1996-A CREDIT ENHANCEMENT FEE. The Series 1996-A
Sale and Servicing Agreement provides for the payment to the Seller of the
Series 1996-A Credit Enhancement Fee, to be paid to the Seller by
distribution of such amounts to the Collateral Agent for deposit and
distribution pursuant to this Agreement. The Seller and OFL hereby agree
that payment of the Series 1996-A Credit Enhancement Fee in the manner and
subject to the conditions set forth herein and in the Series 1996-A Sale and
Servicing Agreement is adequate consideration and the exclusive consideration
to be received by the Seller or OFL for the obligations of the Seller
pursuant hereto and the obligations of OFL pursuant hereto (including,
without limitation, the transfer by the Seller to the Collateral Agent of the
Initial Spread Account Deposit with respect to Series 1996-A) and pursuant to
the Series 1996-A Insurance Agreement. The Seller and OFL hereby agree with
the Trustee and with Financial Security that payment of the Series 1996-A
Credit Enhancement Fee to the Seller is expressly conditioned on
subordination of the Series 1996-A Credit Enhancement Fee to payments on the
Notes (if any) and Certificates of any Series, payments of amounts due to
Financial Security and the other obligations of the Trusts, in each case to
the extent provided in Section 4.6 of the Standard Terms and Conditions or
Section 4.6 of the related Sale and Servicing Agreement, as applicable, and
Section 3.03 of the Spread Account Agreement, and the Security Interest of
the Secured Parties in the Series 1996-A Collateral is intended to effect and
enforce such subordination and to provide security for the Series 1996-A
Secured Obligations and subject to the terms hereof the Secured Obligations
with respect to other Series.

Section 2.2 SERIES SUPPLEMENTS. As provided in and subject to the
conditions specified in Section 2.02 of the Spread Account Agreement, the
parties hereto are entering into this Series 1996-A Supplement with respect
to the Series 1996-A Securities.

Section 2.3 GRANT OF SECURITY INTEREST BY OFL AND THE SELLER.

(a) In order to secure the performance of the Secured Obligations with
respect to each Series, the Seller (and OFL, to the extent it may have any
rights therein) hereby pledges, assigns, grants, transfers and conveys to the
Collateral Agent, on behalf of and for the benefit of the Secured Parties to
secure the Secured Obligations, a lien on and security interest in (which
lien and security interest is intended to be prior to all other liens,
security interests or other

7
<PAGE>

encumbrances), all of its right, title and interest in and to the following
(all being collectively referred to herein as the "Series 1996-A Collateral"):

(i) the Series 1996-A Credit Enhancement Fee and all rights
and remedies that the Seller may have to enforce payment of the Series
1996-A Credit Enhancement Fee whether under the Series 1996-A Sale
and Servicing Agreement or otherwise;

(ii) the Series 1996-A Spread Account established pursuant to
Section 3.1 of this Series 1996-A Supplement and Section 3.01 of the
Spread Account Agreement, and each other account owned by the Seller and
maintained by the Collateral Agent (including, without limitation, all
monies, checks, securities, investments and other documents from time to
time held in or evidencing any such accounts);

(iii) all of the Seller's right, title and interest in and to
investments made with proceeds of the property described in clauses (i)
and (ii) above, or made with amounts on deposit in the Series 1996-A
Spread Account; and

(iv) all distributions, revenues, products, substitutions,
benefits, profits and proceeds, in whatever form, of any of the foregoing.

(b) In order to effectuate the provisions and purposes of this Series
1996-A Supplement, including for the purpose of perfecting the security
interests granted hereunder, the Seller represents and warrants that it has,
prior to the execution of this Series 1996-A Supplement, executed and filed
an appropriate Uniform Commercial Code financing statement in Minnesota
sufficient to ensure that the Collateral Agent, as agent for the Secured
Parties, has a first priority perfected security interest in all Series
1996-A Collateral which can be perfected by the filing of a financing
statement.

ARTICLE III

SPREAD ACCOUNT

Section 3.1 ESTABLISHMENT OF SERIES 1996-A SPREAD ACCOUNT; INITIAL
DEPOSIT INTO SERIES 1996-A SPREAD ACCOUNT.

(a) On or prior to the Closing Date relating to the Series 1996-A
Certificates, the Collateral Agent shall establish with respect to Series
1996-A, at its office or at another depository institution or trust company,
an Eligible Account, designated "Spread Account--Series 1996-A--Norwest Bank
Minnesota, National Association, as Collateral Agent for Financial Security
Assurance Inc. and another Secured Party" (the "Series 1996-A Spread
Account").

8
<PAGE>

(b) On the Closing Date relating to the Series 1996-A, the Collateral
Agent shall deposit the Initial Spread Account Deposit with respect to Series
1996-A received from the Seller into the Series 1996-A Spread Account.

Section 3.2 SPREAD ACCOUNT ADDITIONAL DEPOSITS. On each Subsequent
Transfer Date, the Series 1996-A Trust will, pursuant to Section 2.4 of the
Series 1996-A Sale and Servicing Agreement, deliver on behalf of the Seller
the Spread Account Additional Deposit for such Subsequent Transfer Date to
the Collateral Agent. The Collateral Agent shall deposit each such Spread
Account Additional Deposit received from the Series 1996-A Trust into the
Series 1996-A Spread Account.

ARTICLE IV

MISCELLANEOUS

Section 4.1 FURTHER ASSURANCES. Each party hereto shall take such
action and deliver such instruments to any other party hereto, in addition to
the actions and instruments specifically provided for herein, as may be
reasonably requested or required to effectuate the purpose or provisions of
this Series 1996-A Supplement or to confirm or perfect any transaction
described or contemplated herein.

Section 4.2 GOVERNING LAW. This Series 1996-A Supplement shall be
governed by and construed, and the obligations, rights and remedies of the
parties hereunder shall be determined, in accordance with the laws of the
State of New York.

Section 4.3 COUNTERPARTS. This Series 1996-A Supplement may be
executed in two or more counterparts by the parties hereto, and each such
counterpart shall be considered an original and all such counterparts shall
constitute one and the same instrument.

Section 4.4 HEADINGS. The headings of sections and paragraphs and the
Table of Contents contained in this Series 1996-A Supplement are provided for
convenience only. They form no part of this Series 1996-A Supplement and
shall not affect its construction or interpretation.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Series 1996-A
Supplement as of the date set forth on the first page hereof.

OLYMPIC FINANCIAL LTD.

By _________________________________________
Name: John A. Witham
Title: Executive Vice President and
Chief Financial Officer

OLYMPIC RECEIVABLES FINANCE CORP.

By _________________________________________
Name: John A. Witham
Title: Senior Vice President and
Chief Financial Officer

FINANCIAL SECURITY ASSURANCE INC.

By _________________________________________
Name:
Title:

NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee

By _________________________________________
Name: Thomas D. Wraalstad
Title: Account Manager

NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Collateral Agent

By _________________________________________
Name: Thomas D. Wraalstad
Title: Account Manager

<PAGE>

- ---------------------------------------------------------------------------

INSURANCE AND INDEMNITY AGREEMENT

among

FINANCIAL SECURITY ASSURANCE INC.,

OLYMPIC AUTOMOBILE RECEIVABLES TRUST, 1996-A,

OLYMPIC FIRST GP INC.,

OLYMPIC SECOND GP INC.,

OLYMPIC RECEIVABLES FINANCE CORP.

and

OLYMPIC FINANCIAL LTD.

Dated as of March 14, 1996

- ---------------------------------------------------------------------------

Olympic Automobile Receivables Trust, 1996-A

5.25% Class A-1 Money Market Automobile Receivables-Backed Notes

5.45% Class A-2 Automobile Receivables-Backed Notes

5.70% Class A-3 Automobile Receivables-Backed Notes

5.85% Class A-4 Automobile Receivables-Backed Notes

6.00% Class A-5 Automobile Receivables-Backed Notes

6.05% Class A-6 Automobile Receivables-Backed Notes

5.90% Automobile Receivables-Backed Certificates

- ---------------------------------------------------------------------------

<PAGE>

TABLE OF CONTENTS

Page

ARTICLE I

DEFINITIONS

Section 1.01. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE II

REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 2.01. REPRESENTATIONS AND WARRANTIES OF THE TRUST . . . . . . 8
Section 2.02. AFFIRMATIVE COVENANTS OF THE TRUST. . . . . . . . . . . 11
Section 2.03. NEGATIVE COVENANTS OF THE TRUST . . . . . . . . . . . . 16
Section 2.04. REPRESENTATIONS AND WARRANTIES OF OFL AND OF THE
CLASS GP CERTIFICATEHOLDERS . . . . . . . . . . . . . . 18
Section 2.05. AFFIRMATIVE COVENANTS OF OFL AND EACH CLASS GP
CERTIFICATEHOLDER. . . . . . . . . . . . . . . . . . . 21
Section 2.06. NEGATIVE COVENANTS OF OFL AND EACH CLASS GP
CERTIFICATEHOLDER . . . . . . . . . . . . . . . . . . . 25
Section 2.07. REPRESENTATIONS AND WARRANTIES OF OFL AND THE SELLER. . 26
Section 2.08. AFFIRMATIVE COVENANTS OF OFL AND THE SELLER . . . . . . 31
Section 2.09. NEGATIVE COVENANTS OF OFL AND THE SELLER. . . . . . . . 36
Section 2.10. REPRESENTATIONS AND WARRANTIES OF OFL . . . . . . . . . 37
Section 2.11. AFFIRMATIVE COVENANTS OF OFL. . . . . . . . . . . . . . 40
Section 2.12. NEGATIVE COVENANTS OF OFL . . . . . . . . . . . . . . . 43

ARTICLE III

THE POLICIES; REIMBURSEMENT; INDEMNIFICATION

Section 3.01. CONDITIONS PRECEDENT TO ISSUANCE OF THE POLICIES. . . . 45
Section 3.02. PAYMENT OF FEES AND PREMIUM . . . . . . . . . . . . . . 50
Section 3.03. REIMBURSEMENT AND ADDITIONAL PAYMENT OBLIGATION . . . . 51
Section 3.04. CERTAIN OBLIGATIONS NOT RECOURSE TO OFL; RECOURSE TO
TRUST PROPERTY. . . . . . . . . . . . . . . . . . . . . 52
Section 3.05. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 52
Section 3.06. PAYMENT PROCEDURE . . . . . . . . . . . . . . . . . . . 54
Section 3.07. SUBROGATION . . . . . . . . . . . . . . . . . . . . . . 55

ARTICLE IV

FURTHER AGREEMENTS; MISCELLANEOUS

<PAGE>

Page

Section 4.01. EFFECTIVE DATE; TERM OF AGREEMENT . . . . . . . . . . . 55
Section 4.02. FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS . . . . . 55
Section 4.03. OBLIGATIONS ABSOLUTE. . . . . . . . . . . . . . . . . . 55
Section 4.04. ASSIGNMENTS; REINSURANCE; THIRD-PARTY RIGHTS. . . . . . 57
Section 4.05. LIABILITY OF FINANCIAL SECURITY . . . . . . . . . . . . 57

ARTICLE V

EVENTS OF DEFAULT; REMEDIES

Section 5.01. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . 58
Section 5.02. REMEDIES; WAIVERS . . . . . . . . . . . . . . . . . . . 61

ARTICLE VI

MISCELLANEOUS

Section 6.01. AMENDMENTS, ETC.. . . . . . . . . . . . . . . . . . . . 62
Section 6.02. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 6.03. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . 64
Section 6.04. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . 64
Section 6.05. CONSENT TO JURISDICTION . . . . . . . . . . . . . . . . 64
Section 6.06. CONSENT OF FINANCIAL SECURITY . . . . . . . . . . . . . 65
Section 6.07. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . 65
Section 6.08. HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . 65
Section 6.09. TRIAL BY JURY WAIVED. . . . . . . . . . . . . . . . . . 65
Section 6.10. LIMITED LIABILITY . . . . . . . . . . . . . . . . . . . 66
Section 6.11. LIMITED LIABILITY OF MELLON BANK (DE), NATIONAL
ASSOCIATION . . . . . . . . . . . . . . . . . . . . . . 66
Section 6.12. ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . 66

<PAGE>

INSURANCE AND INDEMNITY AGREEMENT

INSURANCE AND INDEMNITY AGREEMENT dated as of March 14, 1996, among
FINANCIAL SECURITY ASSURANCE INC., a New York stock insurance company
("Financial Security"), OLYMPIC AUTOMOBILE RECEIVABLES TRUST, 1996-A, a
Delaware business trust (the "Trust"), OLYMPIC FIRST GP INC., a Delaware
corporation ("First Class GP Certificateholder"), OLYMPIC SECOND GP INC., a
Delaware corporation ("Second Class GP Certificateholder" and collectively
with First Class GP Certificateholder, the "Class GP Certificateholders"),
OLYMPIC RECEIVABLES FINANCE CORP., a Delaware corporation (the "Seller"), and
OLYMPIC FINANCIAL LTD., a Minnesota corporation (when referred to
individually hereunder, "OFL", when referred to as servicer under the Sale
and Servicing Agreement referred to below, the "Servicer").

INTRODUCTORY STATEMENTS

1. The Seller is the owner of the Receivables. The Seller proposes to
sell to the Trust all of its right, title and interest in and to the
Receivables and certain other property pursuant to the Sale and Servicing
Agreement. The Trust will issue Certificates pursuant to the Trust Agreement
and Notes pursuant to the Indenture.

2. Each Certificate will represent a fractional undivided interest in
the Trust. Each Note will be secured by the Indenture Property. The Trust
has requested that Financial Security issue two financial guaranty insurance
policies guarantying respectively certain distributions of interest and
principal on the Certificates and the Notes on each Distribution Date
(including any such distributions subsequently avoided as a preference under
applicable bankruptcy law) upon the terms, and subject to the conditions,
provided herein.

3. OFL and the Seller have previously entered into and may in the
future enter into one or more pooling and servicing agreements or sale and
servicing agreements with a trust and Seller has previously entered into a
Repurchase Agreement dated as of August 1, 1994 among the Seller and
Telluride Funding Corp., in each case, pursuant to which the Seller sold or
will sell all of its right, title and interest in and to receivables and the
other trust property and in connection therewith Financial Security has and
may in the future issue additional policies with respect to certain
guaranteed distributions on the corresponding certificates, the corresponding
notes or both.

4. The parties hereto desire to specify the conditions precedent to the
issuance of the Policies by Financial Security, the payment of premium in
respect of the Policies, the

<PAGE>

indemnity and reimbursement to be provided to Financial Security in respect
of amounts paid by Financial Security under the Policies or otherwise and
certain other matters.

In consideration of the premises and of the agreements herein
contained, Financial Security, the Trust, the Class GP Certificateholders,
OFL, individually and as Servicer, and the Seller hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01. DEFINITIONS. All words and phrases defined in the Trust
Agreement, the Sale and Servicing Agreement or in the Spread Account
Agreement shall have the same meanings in this Agreement. Unless otherwise
specified, if a word or phrase defined in the Trust Agreement, the Sale and
Servicing Agreement or in the Spread Account Agreement can be applied with
respect to one or more Series, such a word or phrase shall be used herein as
applied to Series 1996-A. In addition, the following words and phrases shall
have the following respective meanings:

"ACCUMULATED FUNDING DEFICIENCY" shall have the meaning provided in
Section 412 of the Code and Section 302 of ERISA, whether or not waived.

"AGREEMENT" means this Insurance and Indemnity Agreement, as the same
may be amended, modified or supplemented from time to time.

"AUTHORIZED OFFICER" means, with respect to a corporation, the
president, the chief financial officer or any vice president.

"CERTIFICATES" means the Certificates issued under the Trust Agreement.

"CERTIFICATE POLICY" means the financial guaranty insurance policy,
including any endorsements thereto, issued by Financial Security with respect
to the Certificates, substantially in the form attached as Exhibit B hereto.

"CODE" means the Internal Revenue Code of 1986, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.

"COMMISSION" means the Securities and Exchange Commission.

"COMMONLY CONTROLLED ENTITY" means with respect to the Trust, the
Seller or OFL, as the case may be, each entity, whether or not incorporated,
which is affiliated with the Trust, the Seller or OFL, as the case may be,
pursuant to Section 414(b), (c), (m) or (o) of the Code.

"DEFAULT" means any event which results, or which with the giving of
notice or the lapse of time or both would result, in an Event of Default.

<PAGE>

"DEMAND NOTES" means the Series 1993-C Demand Notes, the Series 1993-D
Demand Notes, the Series 1994-A Demand Notes, the Series 1994-B Demand Notes,
the Series 1995-B Demand Notes, Series 1995-C Demand Notes, the Series 1995-D
Demand Notes, the Series 1995-E Demand Notes and the Series 1996-A Demand
Notes.

"ERISA" means the Employee Retirement Income Security Act of 1974,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.

"EVENT OF DEFAULT" means any event of default specified in Section 5.01
of this Agreement.

"EXPIRATION DATE" means, with respect to each Policy, the final date of
the Term of such Policy, as specified therein.

"FINANCIAL SECURITY" means Financial Security Assurance Inc., a New
York stock insurance company, its successors and assigns.

"FINANCIAL STATEMENTS" means with respect to OFL the audited
consolidated balance sheets as of December 31, 1995, December 31, 1994 and
December 31, 1993 and the related audited consolidated statements of income,
retained earnings and cash flows for the 12-month periods then ended and the
notes thereto.

"FISCAL AGENT" means the Fiscal Agent, if any, designated pursuant to
the terms of the Policies.

"INDENTURE COLLATERAL AGENT" means initially, Norwest Bank Minnesota,
National Association, in its capacity as collateral agent on behalf of
Financial Security and the Indenture Trustee on behalf of the Noteholders
pursuant to the Indenture, its successor in interest and any successor
Indenture Collateral Agent under the Indenture.

"INDENTURE PROPERTY" means the property pledged to the Indenture
Collateral Agent on behalf of Financial Security and the Indenture Trustee on
behalf of the Noteholders pursuant to the Indenture.

"INSURANCE AGREEMENT INDENTURE CROSS DEFAULT" means an Event of
Default specified in clause (a), (f), (g), (h) or (i) of Section 5.01.

"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.

"IRS" means the Internal Revenue Service.

"LATE PAYMENT RATE" means the greater of (i) a per annum rate equal to
3 percent in excess of Financial Security's cost of funds, determined on a
monthly basis, or (ii) a per

<PAGE>

annum rate equal to 3 percent in excess of the arithmetic average of the
prime or base lending rates publicly announced by The Chase Manhattan Bank,
N.A. (New York, New York) and Citibank, N.A. (New York, New York), as in
effect on the last day of the month for which interest is being computed,
but, in either case, in no event greater than the maximum rate permitted by
law.

"LIEN" means, as applied to the property or assets (or the income or
profits therefrom) of any Person, in each case whether the same is consensual
or nonconsensual or arises by contract, operation of law, legal process or
otherwise: (a) any mortgage, lien, pledge, attachment, charge, lease,
conditional sale or other title retention agreement, or other security
interest or encumbrance of any kind; or (b) any arrangement, express or
implied, under which such property or assets are transferred, sequestered or
otherwise identified for the purpose of subjecting or making available the
same for the payment of debt or performance of any other obligation in
priority to the payment of the general, unsecured creditors of such Person.

"MATERIAL ADVERSE CHANGE" means, in respect of any Person, a material
adverse change in (i) the business, financial condition, results of
operations, or properties of such Person and its Subsidiaries taken as a
whole, (ii) the ability of such Person to perform its obligations under any
of the Transaction Documents to which it is a party or (iii) the ability of
Financial Security or the Trust to realize the benefits or security afforded
under the Transaction Documents.

"MULTIEMPLOYER PLAN" means a multiemployer plan (within the meaning of
Section 4001(a)(3) of ERISA) in respect of which a Commonly Controlled Entity
makes contributions or has liability.

"NOTE POLICY" means the financial guaranty insurance policy, including
any endorsements thereto, issued by Financial Security with respect to the
Notes, substantially in the form attached as Exhibit A hereto.

"NOTICE OF CLAIM" means the Notice of Claim and Certificate in the form
attached as Exhibit A to Endorsement No. 1 to each Policy.

"OTHER TRUST PROPERTY" means the property conveyed by the Seller to the
Trust pursuant to the Sale and Servicing Agreement and any Subsequent
Transfer Agreement.

"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency, corporation or instrumentality of the United States to which the
duties and powers of the Pension Benefit Guaranty Corporation are transferred.

"PLAN" means any pension plan (other than a Multiemployer Plan) covered
by Title IV of ERISA, which is maintained by a Commonly Controlled Entity or
in respect of which a Commonly Controlled Entity has liability.

"POLICIES" means the Note Policy and the Certificate Policy.

<PAGE>

"PORTFOLIO PERFORMANCE EVENT OF DEFAULT" means an Event of Default
specified in clause (j), (k), (l) or (m) of Section 5.01.

"PREMIUM" means the premium payable in accordance with Section 3.02 of
this Agreement.

"PREMIUM LETTER" means the side letter between Financial Security and
OFL dated the date hereof in respect of the premium payable by OFL in
consideration of the issuance of the Policies.

"PREMIUM SUPPLEMENT" means a non-refundable premium, in addition to the
premium payable in accordance with Section 3.02 of this Agreement, payable by
OFL to Financial Security in monthly installments commencing on the first
Distribution Date following the Premium Supplement Commencement Date and on
each Distribution Date thereafter, payable in accordance with the terms of
the Premium Letter.

"PREMIUM SUPPLEMENT COMMENCEMENT DATE" means the date of occurrence of
an Event of Default in respect of which the Premium Supplement shall have
been declared due and payable in accordance with Section 5.02 of this
Agreement.

"PREVIOUS SERIES TRANSACTION DOCUMENTS" means the transaction documents
as defined in each of the insurance and indemnity agreements related to
Olympic Automobile Receivables Trust, 1993-A, Olympic Automobile Receivables
Trust, 1993-B, Olympic Automobile Receivables Trust, 1993-C, and Olympic
Automobile Receivables Trust, 1993-D, Olympic Automobile Receivables Trust,
1994-A, Olympic Automobile Receivables Trust, 1994-B, Olympic Automobile
Receivables Trust, 1995-A, Olympic Automobile Receivables Trust, 1995-B,
Olympic Automobile Receivables Trust, 1995-C, Olympic Automobile Receivables
Trust, 1995-D, Olympic Automobile Receivables Trust, 1995-E, and the
Warehousing Notes.

"PROSPECTUS" has the meaning set forth in Section 2.07(o) of this
Agreement.

"RELATED DOCUMENTS" means the Transaction Documents except for the Sale
and Servicing Agreement.

"REGISTRATION STATEMENT" has the meaning set forth in Section 2.07(o)
of this Agreement.

"REPORTABLE EVENT" means any of the events set forth in Section 4043(b)
of ERISA or the regulations thereunder.

"RESTRICTIONS ON TRANSFERABILITY" means, as applied to the property or
assets (or the income or profits therefrom) of any Person, in each case
whether the same is consensual or nonconsensual or arises by contract,
operation of law, legal process or otherwise, any material condition to, or
restriction on, the ability of such Person or any transferee therefrom to
sell, assign, transfer or otherwise liquidate such property or assets in a
commercially reasonable time

5
<PAGE>

and manner or which would otherwise materially deprive such Person or any
transferee therefrom of the benefits of ownership of such property or assets.

"SALE AND SERVICING AGREEMENT" means the Sale and Servicing Agreement
dated as of March 1, 1996 among the Seller, OFL, in its individual capacity
and as Servicer, the Back-up Servicer and the Trust pursuant to which the
Initial Receivables are to be sold, serviced and administered, as the same
may be amended from time to time.

"SECURITIES ACT" means the Securities Act of 1933, including, unless
the context otherwise requires, the rules and regulations thereunder, as
amended from time to time.

"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.

"SENIOR NOTE INDENTURE" means the Indenture dated as of April 28, 1995
between OFL and Norwest Bank Minnesota, National Association, as amended or
supplemented, relating to OFL's $145,000,000 13% Senior Notes due 2000.

"SERIES 1993-C DEMAND NOTES" means each of the Demand Notes, dated
August 17, 1993, issued by OFL to First Class GP Certificateholder and the
Demand Note, dated August 17, 1993, issued by OFL to Second Class GP
Certificateholder.

"SERIES 1993-D DEMAND NOTES" means each of the Demand Notes, dated
December 2, 1993, issued by OFL to First Class GP Certificateholder and the
Demand Note, dated December 2, 1993, issued by OFL to Second Class GP
Certificateholder.

"SERIES 1994-A DEMAND NOTES" means each of the Demand Notes, dated
April 5, 1994, issued by OFL to First Class GP Certificateholder and the
Demand Note, dated April 5, 1994, issued by OFL to Second Class GP
Certificateholder.

"SERIES 1994-B DEMAND NOTES" means each of the Demand Notes, dated
September 23, 1994, issued by OFL to Class B-GP Certificateholder and the
Demand Note, dated September 23, 1994, issued by OFL to Class I-GP
Certificateholder.

"SERIES 1995-B DEMAND NOTES" means each of the Demand Notes, dated
March 15, 1995, issued by OFL to the Class GP Certificateholders.

"SERIES 1995-C DEMAND NOTES" means each of the Demand Notes, dated June
15, 1995, issued by OFL to the Class GP Certificateholders.

"SERIES 1995-D DEMAND NOTES" means each of the Demand Notes, dated
September 21, 1995, issued by OFL to the Class GP Certificateholders.

"SERIES 1995-E DEMAND NOTES" means each of the Demand Notes, dated
December 6, 1995, issued by OFL to the Class GP Certificateholders.

6
<PAGE>

"SERIES 1996-A" means the Series of Certificates and Notes issued on
the date hereof pursuant to the Trust Agreement and the Indenture,
respectively.

"SERIES 1996-A DEMAND NOTES" means each of the Demand Notes, dated
March 14, 1996, issued by OFL to the Class GP Certificateholders.

"SERIES OF CERTIFICATES", "SERIES OF NOTES" or "SERIES" means Series
1996-A or any, or as the context may require, all, additional series of
certificates or notes or both issued as described in paragraph 3 of the
Introductory Statements hereto.

"SERVICER TERMINATION SIDE LETTER" means the letter from Financial
Security to the Servicer dated as of March 14, 1996, with regard to the
renewal of the term of the Servicer.

"SPREAD ACCOUNT AGREEMENT" means the Spread Account Agreement, dated as
of March 25, 1993, as amended and restated as of December 6, 1995 as
supplemented in accordance with the terms thereof, among OFL, the Seller,
Financial Security, the Indenture Trustee and the Collateral Agent.

"STOCK PLEDGE AGREEMENT" means the Second Amended and Restated Stock
Pledge Agreement, as amended and restated, dated as of August 26, 1994, among
Financial Security, OFL, and the Collateral Agent, as the same may be amended
from time to time.

"SUBSIDIARY" means, with respect to any Person, any corporation of
which a majority of the outstanding shares of capital stock having ordinary
voting power for the election of directors is at the time owned by such
Person directly or through one or more Subsidiaries.

"TERM OF THE POLICY" means, with respect to each Policy, the meaning
provided therein.

"TERM OF THIS AGREEMENT" shall be determined as provided in Section
4.01 of this Agreement.

"TRANSACTION" means the transactions contemplated by the Transaction
Documents, including the transactions described in the Registration Statement.

"TRANSACTION DOCUMENTS" means this Agreement, the Sale and Servicing
Agreement, the Trust Agreement, the Certificate of Trust, the Indenture, the
Underwriting Agreement, the Purchase Agreement, the Premium Letter, the Stock
Pledge Agreement, the Lockbox Agreement, the Depository Agreements, the
Custodian Agreement, the Servicer Termination Side Letter, the Spread Account
Agreement and the Administration Agreement.

"TRUST AGREEMENT" means the Trust Agreement, dated as of March 1, 1996,
among the Seller, the Class GP Certificateholders, Financial Security and
Mellon Bank (DE), National Association, as Owner Trustee.

7
<PAGE>

"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, including,
unless the context otherwise requires, the rules and regulations thereunder,
as amended from time to time.

"UNDERFUNDED PLAN" means any Plan that has an Underfunding.

"UNDERFUNDING" means, with respect to any Plan, the excess, if any, of
(a) the present value of all benefits under the Plan (based on the
assumptions used to fund the Plan pursuant to Section 412 of the Code) as of
the most recent valuation date over (b) the fair market value of the assets
of such Plan as of such valuation date.

"UNDERWRITERS" means Donaldson, Lufkin & Jenrette Securities
Corporation and Bear Stearns & Co., Inc.

"UNDERWRITING AGREEMENT" means the Pricing Agreement, dated March __,
1996, among OFL and the Seller and the Underwriters.

"WAREHOUSING NOTES" means the Notes issued pursuant to the Warehousing
Series Indenture dated as of August 1, 1994 between Telluride Funding Corp.,
as the issuer, and Norwest Bank Minnesota, National Association, as trustee.

ARTICLE II

REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 2.01. REPRESENTATIONS AND WARRANTIES OF THE TRUST. The Trust
represents, warrants and covenants, as of the date hereof and as of the
Closing Date, as follows:

(a) DUE ORGANIZATION AND QUALIFICATION. The Trust is duly formed and
validly existing as a Delaware statutory business trust and is in good
standing under the laws of the State of Delaware, with power and authority to
own its properties and to conduct its business. The Trust is duly qualified
to do business, is in good standing and has obtained all necessary licenses,
permits, charters, registrations and approvals (together, "approvals")
necessary for the conduct of its business as described in the Prospectus and
the performance of its obligations under the Transaction Documents, in each
jurisdiction in which the failure to be so qualified or to obtain such
approvals would render the Receivables in such jurisdiction or any
Transaction Document unenforceable in any respect or would otherwise have a
material adverse effect upon the Transaction.

(b) POWER AND AUTHORITY. The Trust has all necessary trust power and
authority to conduct its business as described in the Prospectus, to execute,
deliver and perform its obligations under this Agreement and each other
Transaction Document to which the Trust is a party and to carry out the terms
of each such agreement, and has full power and authority to issue the Notes
and the Certificates and pledge and assign its assets pursuant to the
Indenture

8
<PAGE>

and has duly authorized the issuance of the Notes and Certificates and the
assignment of its assets by all necessary trust proceedings.

(c) DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement and each other Transaction Document to which the Trust is a
party has been duly authorized by all necessary action on the part of the
Trust and does not require any additional approvals or consents or other
action by or any notice to or filing with any Person by or on behalf of the
Trust, including, without limitation, any governmental entity.

(d) NONCONTRAVENTION. Neither the execution and delivery of this
Agreement and each other Transaction Document to which the Trust is a party,
the consummation of the Transaction nor the satisfaction of the terms and
conditions of this Agreement and each other Transaction Document to which the
Trust is a party,

(i) conflicts with or results in any breach or violation of any
provision of the Certificate of Trust or the Trust Agreement or any
law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award currently in effect having applicability to
the Trust or any of its properties, including regulations issued by
an administrative agency or other governmental authority having
supervisory powers over the Trust,

(ii) constitutes a default by the Trust under or a breach of any
provision of any loan agreement, mortgage, indenture or other
agreement or instrument to which the Trust is a party or by which
it or any of its properties is or may be bound or affected, or

(iii) results in or requires the creation of any Lien upon or in
respect of any of the Trust's assets except as otherwise expressly
contemplated by the Transaction Documents.

(e) PENDING LITIGATION OR OTHER PROCEEDING. There is no action,
proceeding or investigation pending, or, to the Trust's best knowledge,
threatened, before any court, regulatory body, administrative agency,
arbitrator or governmental agency or instrumentality having jurisdiction over
the Trust or its properties: (A) asserting the invalidity of this Agreement
or any other Transaction Document to which the Trust is a party, (B) seeking
to prevent the issuance of the Certificates, the Notes or the consummation of
the Transaction, (C) seeking any determination or ruling that might
materially and adversely affect the validity or enforceability of this
Agreement or any other Transaction Document to which the Trust is a party,
(D) which might result in a Material Adverse Change with respect to the Trust
or (E) which might adversely affect the federal or state tax attributes of
the Certificates, the Notes or the Trust.

(f) VALID AND BINDING OBLIGATIONS. Each of the Transaction Documents
to which the Trust is a party, when executed and delivered by the Trust, and
assuming due authorization, execution and delivery by the other parties
thereto, will constitute the legal, valid and binding obligation of the Trust
enforceable in accordance with its terms, except as such

9
<PAGE>

enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
general equitable principles. The Certificates, when executed, authenticated
and delivered in accordance with the Trust Agreement, will be validly issued
and outstanding and entitled to the benefits of the Trust Agreement and will
evidence the entire beneficial ownership interest in the Trust. The Notes,
when executed, authenticated and delivered in accordance with the Indenture,
will be entitled to the benefits of the Indenture and will constitute legal,
valid and binding obligations of the Trust, enforceable in accordance with
their terms.

(g) NO CONSENTS. No consent, license, approval or authorization from,
or registration, filing or declaration with, any regulatory body,
administrative agency, or other governmental instrumentality, nor any
consent, approval, waiver or notification of any creditor, lessor or other
non-governmental person, is required in connection with the execution,
delivery and performance by the Trust of this Agreement or of any other
Transaction Document to which the Trust is a party, except (in each case)
such as have been obtained and are in full force and effect.

(h) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed or proposed to be employed by the Trust in the conduct of its
business violates any law, regulation, judgment, agreement, order or decree
applicable to the Trust which, if enforced, would result in a Material
Adverse Change with respect to the Trust.

(i) ERISA. The Trust does not maintain or contribute to, or have any
obligation to maintain or contribute to, any Plan. The Trust is not subject
to any of the provisions of ERISA.

(j) COLLATERAL. On the Closing Date, and on each Subsequent Transfer
Date, the Trust will have good and marketable title to each item of Other
Trust Property conveyed on such date and will own each such item free and
clear of any Lien (other than Liens contemplated under the Indenture) or any
equity or participation interest of any other Person.

(k) PERFECTION OF LIENS AND SECURITY INTEREST. On the Closing Date,
the Lien and security interest in favor of the Indenture Collateral Agent
with respect to Indenture Property will be perfected by the filing of
financing statements on Form UCC-1 in each jurisdiction where such recording
or filing is necessary for the perfection thereof, the delivery of the
Receivable Files for the Receivables to the Custodian, and the establishment
of the Collection Account, the Subcollection Account, the Lockbox Account,
the Pre-Funding Account, the Reserve Account and the Note Distribution
Account in accordance with the provisions of the Transaction Documents, and
no other filings in any jurisdiction or any other actions (except as
expressly provided herein) are necessary to perfect the Collateral Agent's
Lien on and security interest in the Collateral as against any third parties.

(l) SECURITY INTEREST IN FUNDS AND INVESTMENTS. Assuming the
retention of funds in the Accounts (other than the Certificate Distribution
Account) and the acquisition of Eligible Investments in accordance with the
Transaction Documents, such funds and Eligible Investments will be subject to
a valid and perfected, first priority security interest in favor of

10
<PAGE>

the Collateral Agent on behalf of the Indenture Trustee (on behalf of the
Noteholders) and Financial Security.

(m) COMPLIANCE WITH INVESTMENT COMPANY ACT. The Trust is not required
to be registered as an "investment company" under the Investment Company Act.

(n) INCORPORATION OF CERTAIN REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Trust set forth in each Transaction
Document are (in each case) true and correct as if set forth herein.

(o) SPECIAL PURPOSE ENTITY.

(i) The capital of the Trust is adequate for the business and
undertakings of the Trust.

(ii) Except as contemplated by the Transaction Documents, the Trust
is not engaged in any business transactions with OFL, the Seller or any
Affiliate of either of them.

(iii) The Trust's funds and assets are not, and will not be,
commingled with the funds of any other Person, except as provided in
the Transaction Documents.

(p) SOLVENCY; FRAUDULENT CONVEYANCE. The Trust is solvent and will
not be rendered insolvent by the Transaction or by the performance of its
obligations under the Transaction Documents and, after giving effect to such
Transaction, the Trust will not be left with an unreasonably small amount of
capital with which to engage in its business. The Trust does not intend to
incur, or believe that it has incurred, debts beyond its ability to pay such
debts as they mature. The Trust does not contemplate the commencement of
insolvency, bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or similar
official in respect of the Trust or any of its assets.

Section 2.02. AFFIRMATIVE COVENANTS OF THE TRUST. The Trust hereby
agrees that during the Term of the Agreement, unless Financial Security shall
otherwise expressly consent in writing:

(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. The Trust will
comply with all terms and conditions of this Agreement and each other
Transaction Document to which it is a party and with all material
requirements of any law, rule or regulation applicable to it. The Trust will
not cause or permit to become effective any amendment to or modification of
any of the Transaction Documents to which it is a party unless (i) (so long
as no Insurer Default shall have occurred and be continuing) Financial
Security shall have previously approved in writing the form of such amendment
or modification or (ii) if an Insurer Default shall have occurred and be
continuing, such amendment would not adversely affect the interests of
Financial Security. The Trust shall not take any action or fail to take any
action that would interfere with the enforcement of any rights under this
Agreement or the other Transaction Documents.

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<PAGE>

(b) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION. The
Trust shall keep or cause to be kept in reasonable detail books and records
of account of the Trust's assets and business, which shall be furnished to
Financial Security upon request. The Trust shall furnish to Financial
Security, simultaneously with the delivery of such documents to the Indenture
Trustee, the Noteholders or the Certificateholders, as the case may be,
copies of all reports, certificates, statements, financial statements or
notices furnished to the Indenture Trustee, the Noteholders or the
Certificateholders, as the case may be, pursuant to the Transaction
Documents.

(i) ANNUAL FINANCIAL STATEMENTS. As soon as available, and in
any event within 90 days after the close of each fiscal year of the
Trust, the audited balance sheets of the Trust as of the end of such
fiscal year and the audited statements of income, changes in
equityowners' equity and cash flows of the Trust for such fiscal
year, all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in the
preceding fiscal year, prepared in accordance with generally accepted
accounting principles, consistently applied, and accompanied by the
certificate of the Trust's independent accountants (who shall be
acceptable to Financial Security) and by the certificate specified in
Section 2.02(c) hereof.

(ii) QUARTERLY FINANCIAL STATEMENTS. As soon as available, and in
any event within 45 days after the close of each of the first three
quarters of each fiscal year of the Trust, the unaudited balance sheets
of the Trust as of the end of such quarter and the unaudited statements
of income, changes in equityowners' equity and cash flows of the Trust
for the portion of the fiscal year then ended, all in reasonable detail
and stating in comparative form the respective figures for the
corresponding date and period in the preceding fiscal year, prepared in
accordance with generally accepted accounting principles consistently
applied (subject to normal year-end adjustments), and accompanied by
the certificate specified in Section 2.02(c) hereof.

(iii) ACCOUNTANTS' REPORTS. Promptly upon receipt thereof, copies of
any reports or comment letters submitted to the Trust by its
independent accountants in connection with any examination of the
financial statements of the Trust.

(iv) CERTAIN INFORMATION. Not less than ten days prior to the date
of filing with the IRS of any tax return or amendment thereto, copies
of the proposed form of such return or amendment and, promptly after
the filing or sending thereof, (i) copies of each tax return and
amendment thereto that the Trust files with the IRS and (ii) copies of
all financial statements, reports, and registration statements which
the Trust files with, or delivers to, any federal government agency,
authority or body which supervises the issuance of securities by the
Trust.

(v) OTHER INFORMATION. Promptly upon the request of Financial
Security, copies of all schedules, financial statements or other
similar reports delivered to or by the Trust pursuant to the terms of
this Agreement and the other Transaction Documents and such other data
as Financial Security may reasonably request.

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<PAGE>

(c) COMPLIANCE CERTIFICATE. The Trust shall deliver to Financial
Security and, upon request, any Noteholder or Certificateholder, concurrently
with the delivery of the financial statements required pursuant to Section
2.02 (b)(i) and (ii) hereof, a certificate signed by an Authorized Officer of
the Administrator stating that:

(i) a review of the Trust's performance under the Transaction
Documents during such period has been made under such officer's
supervision;

(ii) to the best of such individual's knowledge following reasonable
inquiry, no Default or Event of Default has occurred and is continuing
or, if a Default or Event of Default has occurred and is continuing,
specifying the nature thereof and, if the Trust has a right to cure
pursuant to Section 5.01, stating in reasonable detail the steps, if
any, being taken by the Trust to cure such Default or Event of Default
or to otherwise comply with the terms of the agreement or agreements
to which such Default or Event of Default relates; and

(iii) the financial reports submitted in accordance with Section
2.02(b)(i) or (ii) hereof, as applicable, are complete and correct in
all material respects and present fairly the financial condition and
results of operations of the Trust as of the dates and for the periods
indicated, in accordance with generally accepted accounting principles
consistently applied (subject as to interim statements to normal
year-end adjustments).

(d) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS. The
Trust shall, upon the request of Financial Security, permit Financial
Security or its authorized agents (i) to inspect the books and records of the
Trust as they may relate to the Notes, the Certificates, the Receivables and
the Other Trust Property, the obligations of the Trust under the Transaction
Documents, the Trust's business and the Transaction and (ii) to discuss the
affairs, finances and accounts of the Trust with any of its personnel and
representatives, including its Independent Accountants. Such inspections and
discussions shall be conducted during normal business hours and shall not
unreasonably disrupt the business of the Trust. The books and records of the
Trust will be maintained at the address of the Trust designated herein for
receipt of notices, unless the Trust shall otherwise advise the parties
hereto in writing.

(e) NOTICE OF MATERIAL EVENTS. The Trust shall promptly inform
Financial Security in writing of the occurrence of any of the following:

(i) the submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation
against the Trust involving potential damages or penalties in an
uninsured amount in excess of $100,000 in any one instance or $500,000
in the aggregate;

(ii) any change in the location of Trust's principal office or any
change in the location of the Trust's books and records;

(iii) the occurrence of any Default or Event of Default;

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<PAGE>

(iv) the commencement or threat of any rule making or disciplinary
proceedings or any proceedings instituted by or against the Trust in
any federal, state or local court or before any governmental body or
agency, or before any arbitration board, or the promulgation of any
proceeding or any proposed or final rule which, if adversely
determined, would result in a Material Adverse Change with respect to
the Trust;

(v) the commencement of any proceedings by or against the Trust
under any applicable bankruptcy, reorganization, liquidation,
rehabilitation, insolvency or other similar law now or hereafter in
effect or of any proceeding in which a receiver, liquidator,
conservator, trustee or similar official shall have been, or may be,
appointed or requested for the Trust or any of its assets;

(vi) the receipt of notice that (A) the Trust is being placed under
regulatory supervision, (B) any license, permit, charter, registration
or approval necessary for the conduct of the Trust's business is to
be, or may be, suspended or revoked, or (C) the Trust is to cease and
desist any practice, procedure or policy employed by the Trust in the
conduct of its business, and such cessation may result in a Material
Adverse Change with respect to the Trust; or

(vii) any other event, circumstance or condition that has resulted,
or has a material possibility of resulting, in a Material Adverse
Change in respect of the Trust.

(f) FURTHER ASSURANCES. The Trust will file all necessary financing
statements, assignments or other instruments, and any amendments or
continuation statements relating thereto, necessary to be kept and filed in
such manner and in such places as may be required by law to preserve and
protect fully the Lien and security interest in, and all rights of the
Indenture Collateral Agent with respect to the Indenture Property, under the
Indenture. In addition, the Trust shall, upon the request of Financial
Security (so long as no Insurer Default has occurred and is continuing), from
time to time, execute, acknowledge and deliver and, if necessary, file such
further instruments and take such further action as may be reasonably
necessary to effectuate the intention, performance and provisions of the
Transaction Documents to which the Trust is a party or to protect the
interest of the Indenture Collateral Agent in the Indenture Property under
the Indenture. The Trust agrees to cooperate with the Rating Agencies in
connection with any review of the Transaction which may be undertaken by the
Rating Agencies after the date hereof.

(g) MAINTENANCE OF LICENSES. The Trust shall maintain all licenses,
permits, charters and registrations which are material to the performance by
the Trust of its obligations under this Agreement and each other Transaction
Document to which the Trust is a party or by which the Trust is bound.

(h) RETIREMENT OF NOTES AND CERTIFICATES. The Trust shall, upon
retirement of the Certificates and upon retirement of the Notes furnish to
Financial Security a notice of such retirement, and, upon such retirement and
the expiration of the term of the applicable Policy, surrender the applicable
Policy to Financial Security for cancellation.

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<PAGE>

(i) DISCLOSURE DOCUMENT. Each Prospectus delivered with respect to
the Notes and the Certificates shall clearly disclose that the Policies are
not covered by the property/casualty insurance security fund specified in
Article 76 of the New York Insurance Law. In addition, each Prospectus
delivered with respect to the Notes and the Certificates which include
financial statements of Financial Security prepared in accordance with
generally accepted accounting principles (other than a Prospectus that only
incorporates such financial statements by reference) shall include the
following statement immediately preceding such financial statements:

The New York State Insurance Department recognizes only
statutory accounting practices for determining and reporting
the financial condition and results of operations of an
insurance company, for determining its solvency under the New
York Insurance Law, and for determining whether its financial
condition warrants the payment of a dividend to its
stockholders. No consideration is given by the New York State
Insurance Department to financial statements prepared in
accordance with generally accepted accounting principles in
making such determinations.

(j) SPECIAL PURPOSE ENTITY.

(i) The Trust shall conduct its business solely in its own name
through its duly authorized officers or agents so as not to mislead
others as to the identity of the entity with which those others are
concerned, and particularly will use its best efforts to avoid the
appearance of conducting business on behalf of OFL, the Seller, or any
other Affiliates thereof or that the assets of the Trust are available
to pay the creditors of OFL, the Seller, or any other Affiliates
thereof. Without limiting the generality of the foregoing, all oral
and written communications, including, without limitation, letters,
invoices, purchase orders, contracts, statements and loan
applications, will be made solely in the name of the Trust.

(ii) The Trust shall maintain trust records and books of account
separate from those of OFL, the Seller, each Class GP
Certificateholder and Affiliates of any of them.

(iii) The Trust shall obtain proper authorization from its equity
owners of all trust action requiring such authorization, and copies of
each such authorization and the minutes or other written summary of
each such meeting shall be delivered to Financial Security within two
weeks of such authorization or meeting as the case may be.

(iv) Although the organizational expenses of the Trust have been
paid by OFL, operating expenses and liabilities of the Trust shall be
paid from its own funds.

<PAGE>

(v) The annual financial statements of the Trust shall disclose
the effects of the Trust's transactions in accordance with generally
accepted accounting principles and shall disclose that the assets of
the Trust are not available to pay creditors of OFL, the Seller,
either Class GP Certificateholder or any Affiliate of any of them.

(vi) The resolutions, agreements and other instruments of the
Trust underlying the transactions described in this Agreement and in
the other Transaction Documents shall be continuously maintained by
the Trust as official records of the Trust separately identified and
held apart from the records of OFL, the Seller, each Class GP
Certificateholder and each Affiliate of any of them.

(vii) The Trust shall maintain an arm's-length relationship with
OFL, the Seller, each Class GP Certificateholder and each Affiliate of
any of them and will not hold itself out as being liable for the debts
of any such Person.

(viii) The Trust shall keep its assets and its liabilities wholly
separate from those of all other entities, including, but not limited
to, OFL, the Seller, each Class GP Certificateholder and each
Affiliate of any of them except, in each case, as contemplated by the
Transaction Documents.

(k) CLOSING DOCUMENTS. The Trust shall provide or cause to be
provided to Financial Security an executed original copy of each document
executed in connection with the Transaction within 10 days after the Closing
Date, except that the Seller shall cause a copy of the Trust Agreement, the
Sale and Servicing Agreement, the Series 1996-A Supplement, the Indenture, the
Administration Agreement and each Transaction Document to which Financial
Security is a party to be provided to Financial Security on the Closing Date.

(l) TAX MATTERS. The Trust will take all actions necessary to ensure
that the Trust is taxable as a partnership for federal and state income tax
purposes and not as an association (or publicly traded partnership), taxable
as a corporation.

(m) SECURITIES LAWS. The Trust shall comply in all material respects
with all applicable provisions of state and federal securities laws, including
blue sky laws and the Securities Act, the Exchange Act and the Investment
Company Act and all rules and regulations promulgated thereunder for which
non-compliance would result in a Material Adverse Change with respect to the
Trust.

(n) INCORPORATION OF COVENANTS. The Trust agrees to comply with each
of the covenants of the Trust set forth in the Transaction Documents and
hereby incorporates such covenants by reference as if each were set forth
herein.

Section 2.03. NEGATIVE COVENANTS OF THE TRUST. The Trust hereby
agrees that during the Term of this Agreement, unless Financial Security shall
otherwise give its prior express written consent:

<PAGE>

(a) WAIVER, AMENDMENTS, ETC. The Trust shall not waive, modify,
amend, supplement or consent to any waiver, modification, amendment of or
supplement to, any of the provisions of the Certificate of Trust, the Trust
Agreement or any of the other Transaction Documents unless, if no Insurer
Default shall have occurred and be continuing, Financial Security shall have
consented thereto in writing.

(b) CREATION OF INDEBTEDNESS; GUARANTEES. The Trust shall not
create, incur, assume or suffer to exist any indebtedness or assume,
guarantee, endorse or otherwise be or become directly or contingently liable
for the obligations of any Person by, among other things, agreeing to purchase
any obligation of another Person, agreeing to advance funds to such Person or
causing or assisting such Person to maintain any amount of capital, except as
contemplated by the Transaction Documents.

(d) NO LIENS. The Trust shall not, except as contemplated by the
Transaction Documents create, incur, assume or suffer to exist any Lien of any
nature upon or with respect to any of its properties or assets, now owned or
hereafter acquired, or sign or file under the Uniform Commercial Code of any
jurisdiction any financing statement that names the Trust as debtor, or sign
any security agreement authorizing any secured party thereunder to file such a
financing statement.

(e) IMPAIRMENT OF RIGHTS. The Trust shall not take any action, or
fail to take any action, if such action or failure to take action may
interfere with the enforcement of any rights under the Transaction Documents
that are material to the rights, benefits or obligations of the Indenture
Trustee, the Noteholders, the Certificateholders or Financial Security.

(f) NO MERGERS. The Trust shall not consolidate with or merge into
any Person or transfer all or any material amount of its assets to any Person
(except as contemplated by the Transaction Documents) or liquidate or dissolve.

(g) ERISA. The Trust shall not contribute or incur any obligation to
contribute to, or incur any liability in respect of, any Plan or Multiemployer
Plan.

(h) OTHER ACTIVITIES. The Trust shall not:

(i) sell, pledge, transfer, exchange or otherwise dispose of any
of its assets except as permitted under the Transaction Documents; or

(ii) engage in any business or activity except as contemplated by
the Transaction Documents and as permitted by its Certificate of Trust.

(i) INSOLVENCY. The Trust shall not commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief

<PAGE>

entered with respect to it, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, consolidation or other
relief with respect to it or (B) seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or any substantial part
of its assets or make a general assignment for the benefit of its creditors.
The Trust shall not take any action in furtherance of, or indicating the
consent to, approval of, or acquiescence in any of the acts set forth above.
The Trust shall not admit in writing its inability to pay its debts.

(j) SUCCESSOR PARTIES. The Trust will not remove or replace, or
cause to be removed or replaced, the Servicer, the Indenture Trustee, the
Owner Trustee or the Administrator.

Section 2.04. REPRESENTATIONS AND WARRANTIES OF OFL AND OF THE CLASS
GP CERTIFICATEHOLDERS. Each of OFL and each Class GP Certificateholder (with
respect to) represents and warrants as of the date hereof and as of the
Closing Date, as follows:

(a) DUE ORGANIZATION AND QUALIFICATION. Each Class GP
Certificateholder is a corporation duly organized and validly existing and in
good standing under the laws of the State of Delaware, with power and
authority to own its properties and to conduct its business. Each Class GP
Certificateholder is duly qualified to do business, is in good standing and
has obtained all necessary licenses, permits, charters, registrations and
approvals (together, "approvals") necessary for the conduct of its business as
described in the Transaction Documents and the performance of its obligations
under the Transaction Documents.

(b) POWER AND AUTHORITY. Each Class GP Certificateholder has all
necessary corporate power and authority to conduct its business as described
in the Transaction Documents, to execute, deliver and perform its obligations
under this Agreement and each other Transaction Document to which it is a
party and to carry out the terms of each such agreement.

(c) DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement and each other Transaction Document to which each Class GP
Certificateholder is a party has been duly authorized by all necessary
corporate action on the part of such Class GP Certificateholder and does not
require any additional approvals or consents or other action by or any notice
to or filing with any Person by or on behalf of such Class GP
Certificateholder, including, without limitation, any governmental entity or
such Class GP Certificateholder's stockholder.

(d) NONCONTRAVENTION. Neither the execution and delivery of this
Agreement and each other Transaction Document to which each Class GP
Certificateholder is a party, the consummation of the Transaction nor the
satisfaction of the terms and conditions of this Agreement and each other
Transaction Document to which it is a party,

(i) conflicts with or results in any breach or violation of any
provision of the charter or bylaws of such Class GP Certificateholder
or any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award currently in effect having
applicability to such Class GP Certificateholder or any

<PAGE>

of its properties, including regulations issued by an administrative
agency or other governmental authority having supervisory powers over
it,

(ii) constitutes a default by such Class GP Certificateholder
under or a breach of any provision of any loan agreement, mortgage,
indenture or other agreement or instrument to which such Class GP
Certificateholder is a party or by which it or any of its or their
properties is or may be bound or affected, or

(iii) results in or requires the creation of any Lien upon or in
respect of any of such Class GP Certificateholder's assets except as
otherwise expressly contemplated by the Transaction Documents.

(e) PENDING LITIGATION OR OTHER PROCEEDING. There is no action,
proceeding or investigation pending, or, to OFL's or either Class GP
Certificateholder's best knowledge, threatened, before any court, regulatory
body, administrative agency, arbitrator or governmental agency or
instrumentality having jurisdiction over either Class GP Certificateholder or
its properties: (A) asserting the invalidity of this Agreement or any other
Transaction Document to which either Class GP Certificateholder is a party,
(B) seeking to prevent the issuance of the Certificates or the Notes, or the
consummation of the Transaction, (C) seeking any determination or ruling that
might materially and adversely affect the validity or enforceability of this
Agreement or any other Transaction Document to which either Class GP
Certificateholder is a party, (D) which might result in a Material Adverse
Change with respect to such Class GP Certificateholder or (E) which might
adversely affect the federal or state tax attributes of the Notes, the
Certificates or of the Trust.

(f) VALID AND BINDING OBLIGATIONS. Each of the Transaction Documents
to which each Class GP Certificateholder is a party, when executed and
delivered by such Class GP Certificateholder, and assuming due authorization,
execution and delivery by the other parties thereto, will constitute the
legal, valid and binding obligation of such Class GP Certificateholder
enforceable in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and general equitable principles.

(g) NO CONSENTS. No consent, license, approval or authorization
from, or registration, filing or declaration with, any regulatory body,
administrative agency, or other governmental instrumentality, nor any consent,
approval, waiver or notification of any creditor, lessor or other
non-governmental person, is required in connection with the execution,
delivery and performance by each Class GP Certificateholder of this Agreement
or of any other Transaction Document to which either Class GP
Certificateholder is a party, except (in each case) such as have been obtained
and are in full force and effect.

(h) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed or proposed to be employed by either Class GP Certificateholder in
the conduct of its business violates any law, regulation, judgment, agreement,
order or decree applicable to such Class GP Certificateholder which, if
enforced, would result in a Material Adverse Change with respect to such Class
GP Certificateholder.

<PAGE>

(i) SPECIAL PURPOSE ENTITY.

(i) The capital of each Class GP Certificateholder is adequate
for the business and undertakings of such Class GP Certificateholder.

(ii) Other than with respect to the ownership by OFL of the
stock of each Class GP Certificateholder, the issuance of the Demand
Notes by OFL to each Class GP Certificateholder, and except for its
ownership of the Series 1993-C Class B Certificates, the Series 1993-D
Class B Certificates, the Series 1994-A Class B Certificates, the
Series 1994-B Class B-GP and Class I-GP Certificates, the Series
1995-B Class GP Certificates, the Series 1995-C Class GP Certificates,
the Series 1995-D Class B-GP and Class I-GP Certificates, the Series
1995-E Class GP Certificates and the Series 1996-A Class GP
Certificates, it is not engaged in any business transactions with OFL
or any Affiliate of OFL.

(iii) At least one executive officer and one director of each
Class GP Certificateholder shall be a person who is not, and will not
be, a director, officer, employee or holder of any equity securities
of OFL, the Seller, or any Affiliate of either of them.

(iv) Each Class GP Certificateholder's funds and assets are not,
and will not be, commingled with the funds of any other Person.

(v) The by-laws of each Class GP Certificateholder require it
to maintain (A) correct and complete minute books and records of
account, and (B) minutes of the meetings and other proceedings of its
shareholders and board of directors.

(j) SOLVENCY; FRAUDULENT CONVEYANCE. Each Class GP Certificateholder
is solvent and will not be rendered insolvent by the Transaction and, after
giving effect to such Transaction, such Class GP Certificateholder will not be
left with an unreasonably small amount of capital with which to engage in its
business. Neither Class GP Certificateholder intends to incur, or believes
that it has incurred, debts beyond its ability to pay such debts as they
mature. Neither Class GP Certificateholder contemplates the commencement of
insolvency, bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or similar
official in respect of such Class GP Certificateholder or any of its assets.

(k) CAPITAL STRUCTURE. The shares of stock of each Class GP
Certificateholder which have been pledged pursuant to the Stock Pledge
Agreement constitute all of the issued and outstanding shares of such Class GP
Certificateholder. All of the outstanding equity securities of the Trust in
which each Class GP Certificateholder owns an interest are owned by such Class
GP Certificateholder free and clear of any Lien.

(l) ERISA. Each Class GP Certificateholder is in compliance with
ERISA and has not incurred and does not reasonable expect to incur any
liability to any Plan or to PBGC in connection with any Plan or to contribute
now or in the future in respect of any Plan.

<PAGE>

(m) SECURITIES LAWS COMPLIANCE. Neither Class GP Certificateholder
is required to be registered as an "investment company" under the Investment
Company Act of 1940. Neither Class GP Certificateholder is subject to the
information reporting requirements of the Exchange Act.

(n) TRANSACTION DOCUMENTS. All of the representations and warranties
made by each Class GP Certificateholder in the Transaction Documents are
incorporated by reference herein as if set forth herein and each such
representation and warranty is true and correct as of the Closing Date.

Section 2.05. AFFIRMATIVE COVENANTS OF OFL AND EACH CLASS GP
CERTIFICATEHOLDER. OFL and each Class GP Certificateholder (with respect to
itself) hereby agrees that during the Term of the Agreement, unless Financial
Security shall otherwise expressly consent in writing:

(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. Such Class GP
Certificateholder will comply with all terms and conditions of this Agreement
and each other Transaction Document to which it is a party and with all
material requirements of any law, rule or regulation applicable to it. Each
Class GP Certificateholder will not cause or permit to become effective any
amendment to or modification of any of the Transaction Documents to which it
is a party unless (i) (so long as no Insurer Default shall have occurred and
be continuing) Financial Security shall have previously approved in writing
the form of such amendment or modification or (ii) if an Insurer Default shall
have occurred and be continuing, such amendment would not adversely affect the
interests of Financial Security. Each Class GP Certificateholder shall not
take any action or fail to take any action that would interfere with the
enforcement of any rights under this Agreement or the other Transaction
Documents.

(b) CORPORATE EXISTENCE. Each Class GP Certificateholder shall
maintain its corporate existence and shall at all times continue to be duly
organized under the laws of Delaware and duly qualified and duly authorized
(as described in Sections 2.04(a), (b) and (c) hereof) and shall conduct its
business in accordance with the terms of its corporate charter and bylaws.

(c) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION.
Each Class GP Certificateholder shall keep or cause to be kept in reasonable
detail books and records of account of such Class GP Certificateholder's
assets and business. Each Class GP Certificateholder shall furnish to
Financial Security as soon as available, and in any event within 90 days after
the close of each fiscal year of such Class GP Certificateholder, the
unaudited balance sheet of such Class GP Certificateholder as of the end of
such fiscal year and the unaudited statements of income, changes in
shareholders' equity and cash flows of such Class GP Certificateholder for
such fiscal year, all in reasonable detail and stating in comparative form the
respective figures for the preceding fiscal year, prepared in accordance with
generally accepted accounting principles, consistently applied.

(d) COMPLIANCE CERTIFICATE. Each Class GP Certificateholder shall
deliver to Financial Security, within 90 days after the close of each fiscal
year of such Class GP Certificateholder, a certificate signed by an Authorized
Officer of such Class GP

<PAGE>

Certificateholder stating that (i) a review of such Class GP
Certificateholder's performance under the Transaction Documents during such
period has been made under such officer's supervision; (ii) to the best of
such individual's knowledge following reasonable inquiry, no Default or Event
of Default has occurred, or if a Default or Event of Default has occurred,
specifying the nature thereof and, if such Class GP Certificateholder has or
had a right to cure pursuant to Section 5.01, stating in reasonable detail the
steps, if any, taken or being taken by such Class GP Certificateholder to cure
such Default or Event of Default or to otherwise comply with the terms of the
Transaction Document to which such Default or Event of Default relates; and
(iii) the financial statements submitted in accordance with Section 2.05(c)
hereof, as applicable, are complete and correct in all material respects and
present fairly the financial condition and results of operations of such Class
GP Certificateholder as of the dates and for the periods indicated, in
accordance with generally accepted accounting principles consistently applied.

(e) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS.
Each Class GP Certificateholder shall, upon the request of Financial Security,
permit Financial Security or its authorized agents (i) to inspect the books
and records of such Class GP Certificateholder as they may relate to the
obligations of such Class GP Certificateholder under the Transaction
Documents, such Class GP Certificateholder's business and the Transaction and
(ii) to discuss the affairs, finances and accounts of such Class GP
Certificateholder with any of its officers, directors and representatives,
including its Independent Accountants. Each inspections and discussions shall
be conducted during normal business hours and shall not unreasonably disrupt
the business of such Class GP Certificateholder. The books and records of
each Class GP Certificateholder will be maintained at the address designated
herein for receipt of notices, unless such Class GP Certificateholder shall
otherwise advise the parties hereto in writing.

(f) NOTICE OF MATERIAL EVENTS. OFL and each Class GP
Certificateholder shall promptly inform Financial Security in writing of the
occurrence of any of the following:

(i) the submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation
against such Class GP Certificateholder involving potential damages or
penalties in an uninsured amount in excess of $5,000 in any one
instance or $25,000 in the aggregate;

(ii) any change in the location of such Class GP
Certificateholder's principal office or any change in the location of
such Class GP Certificateholder's books and records;

(iii) the occurrence of any Default or Event of Default;

(iv) the commencement or threat of any rule making or
disciplinary proceedings or any proceedings instituted by or against
such Class GP Certificateholder in any federal, state or local court
or before any governmental body or agency, or before any arbitration
board, or the promulgation of any proceeding or any proposed or final
rule which, if adversely determined, would result in a Material
Adverse Change with respect to such Class GP Certificateholder or the
Trust;

<PAGE>

(v) the commencement of any proceedings by or against such Class
GP Certificateholder under any applicable bankruptcy, reorganization,
liquidation, rehabilitation, insolvency or other similar law now or
hereafter in effect or of any proceeding in which a receiver,
liquidator, conservator, trustee or similar official shall have been,
or may be, appointed or requested for such Class GP Certificateholder
or any of its assets;

(vi) the receipt of notice that (A) such Class GP
Certificateholder is being placed under regulatory supervision, (B)
any license, permit, charter, registration or approval necessary for
the conduct of such Class GP Certificateholder's business is to be, or
may be, suspended or revoked, or (C) such Class GP Certificateholder
is to cease and desist any practice, procedure or policy employed by
such Class GP Certificateholder in the conduct of its business, and
such cessation may result in a Material Adverse Change with respect to
such Class GP Certificateholder or the Trust; or

(vii) any other event, circumstance or condition that has
resulted, or has a material possibility of resulting, in a Material
Adverse Change in respect of such Class GP Certificateholder or the
Trust.

(g) MAINTENANCE OF LICENSES. Such Class GP Certificateholder shall
maintain all licenses, permits, charters and registrations which are material
to the performance by such Class GP Certificateholder of its obligations under
this Agreement and each other Transaction Document to which the Seller is a
party or by which such Class GP Certificateholder is bound.

(h) SPECIAL PURPOSE ENTITY.

(i) Such Class GP Certificateholder shall conduct its business
solely in its own name through its duly authorized officers or agents
so as not to mislead others as to the identity of the entity with
which those others are concerned, and particularly will use its best
efforts to avoid the appearance of conducting business on behalf of
the Trust, OFL, the Seller or any other Affiliate of any of them or
that, except as expressly provided in the Transaction Documents, the
assets of such Class GP Certificateholder are available to pay the
creditors of OFL, the Seller or any Affiliate of any of them. Without
limiting the generality of the foregoing, all oral and written
communications, including, without limitation, letters, invoices,
purchase orders, contracts, statements and loan applications, will be
made solely in the name of such Class GP Certificateholder.

(ii) Such Class GP Certificateholder shall maintain corporate
records and books of account separate from those of OFL, the Trust,
the Seller and any Affiliate of any of them.

(iii) Such Class GP Certificateholder shall obtain proper
authorization from its board of directors of all corporate action
requiring such authorization, meetings of the board of directors of
such Class GP Certificateholder shall be

<PAGE>

held not less frequently than three times per annum and copies of the
minutes of each such board meeting shall be delivered to Financial
Security within two weeks of such meeting.

(iv) Such Class GP Certificateholder shall obtain proper
authorization from its shareholders of all corporate action requiring
shareholder approval, meetings of the shareholders of such Class GP
Certificateholder shall be held not less frequently than one time per
annum and copies of each such authorization and the minutes of each
such shareholder meeting shall be delivered to Financial Security
within two weeks of such authorization or meeting, as the case may be.

(v) Although the organizational expenses of such Class GP
Certificateholder have been paid by OFL, operating expenses and
liabilities of such Class GP Certificateholder shall be paid from its
own funds.

(vi) The annual financial statements of such Class GP
Certificateholder shall disclose the effects of such Class GP
Certificateholder's transactions in accordance with generally accepted
accounting principles and shall disclose that the assets of such Class
GP Certificateholder are not available except as expressly provided in
the Transaction Agreements to pay creditors of OFL, the Seller or any
Affiliate of either of them.

(vii) The resolutions, agreements and other instruments of such
Class GP Certificateholder underlying the transactions described in
this Agreement and in the other Transaction Documents shall be
continuously maintained by such Class GP Certificateholder as official
records of such Class GP Certificateholder separately identified and
held apart from the records of OFL, the Seller, the Trust and any
Affiliate of any of them.

(viii) Except as expressly provided in the Transaction Documents
such Class GP Certificateholder shall maintain an arm's-length
relationship with OFL, the Seller and any Affiliate of either of them
and will not hold itself out as being liable for the debts of OFL, the
Seller or any Affiliate of either of them.

(ix) Such Class GP Certificateholder shall keep its assets and
its liabilities wholly separate from those of all other entities,
including, but not limited to, OFL, the Seller and any Affiliate of
either of them except, in each case, as contemplated by the
Transaction Documents.

(i) RETIREMENT OF NOTES AND CERTIFICATES. Such Class GP
Certificateholder shall cause the Trust, upon retirement of the Notes or
Certificates, to furnish to Financial Security a notice of such retirement,
and, upon such retirement and the expiration of the term of the Note Policy or
Certificate Policy, to surrender such Note Policy or Certificate Policy, as
applicable, to Financial Security for cancellation.

<PAGE>

(j) INCORPORATION OF COVENANTS. Each Class GP Certificateholder
agrees to comply with each of the covenants of such Class GP Certificateholder
set forth in the Transaction Documents and hereby incorporates such covenants
by reference as if each were set forth herein.

(k) TAX MATTERS. As of the Closing Date, the Trust is, and shall
remain during the Term of this Agreement, taxable as a partnership for federal
and state income tax purposes and not as an association (or publicly traded
partnership) taxable as a corporation.

Section 2.06. NEGATIVE COVENANTS OF OFL AND EACH CLASS GP
CERTIFICATEHOLDER. Each of OFL and each Class GP Certificateholder (with
respect to itself) hereby agrees that during the Term of this Agreement,
unless Financial Security shall otherwise give its prior express written
consent:

(a) WAIVER, AMENDMENTS, ETC. Each Class GP Certificateholder shall
not waive, modify, amend, supplement or consent to any waiver, modification,
amendment of or supplement to, any of the provisions of any of the Transaction
Documents or of its certificate of incorporation or by-laws (i) unless, if no
Insurer Default shall have occurred and be continuing, Financial Security
shall have consented thereto in writing or (ii) if an Insurer Default shall
have occurred and be continuing, which would adversely affect the interests of
Financial Security.

(b) CREATION OF INDEBTEDNESS; GUARANTEES. Neither Class GP
Certificateholder shall create, incur, assume or suffer to exist any
indebtedness or assume, guarantee, endorse or otherwise be or become directly
or contingently liable for the obligations of any Person by, among other
things, agreeing to purchase any obligation of another Person, agreeing to
advance funds to such Person or causing or assisting such Person to maintain
any amount of capital, except as contemplated by the Transaction Documents or,
with the prior written consent of Financial Security, as permitted by its
certificate of incorporation.

(d) NO LIENS. Neither Class GP Certificateholder shall, except as
contemplated by the Transaction Documents, create, incur, assume or suffer to
exist any Lien of any nature upon or with respect to any of its properties or
assets, now owned or hereafter acquired, or sign or file under the Uniform
Commercial Code of any jurisdiction any financing statement that names such
Class GP Certificateholder as debtor, or sign any security agreement
authorizing any secured party thereunder to file such a financing statement.

(e) ISSUANCE OF STOCK. Neither Class GP Certificateholder shall
issue any shares of capital stock or rights, warrants or options in respect of
its capital stock or securities convertible into or exchangeable for its
capital stock, other than the shares of common stock which have been pledged
to Financial Security under the Stock Pledge Agreement.

<PAGE>

(f) IMPAIRMENT OF RIGHTS. Neither Class GP Certificateholder shall
take any action, or fail to take any action, if such action or failure to take
action may interfere with the enforcement of any rights under the Transaction
Documents that are material to the rights, benefits or obligations of the
Trust, the Indenture Trustee, the Certificateholders, the Noteholders or
Financial Security.

(g) NO MERGERS. Neither Class GP Certificateholder shall consolidate
with or merge into any Person or transfer all or any material amount of its
assets to any Person (except as contemplated by the Transaction Documents) or
liquidate or dissolve.

(h) ERISA. Neither Class GP Certificateholder shall contribute or
incur any obligation to contribute to, or incur any liability in respect of,
any Plan or Multiemployer Plan.

(i) OTHER ACTIVITIES. Neither Class GP Certificateholder shall:

(i) sell, pledge, transfer, exchange or otherwise dispose of
any of its assets except as permitted under the Transaction Documents;

(ii) engage in any business or activity except as contemplated
by the Transaction Documents and as permitted by its certificate of
incorporation; or

(iii) declare or make payment of (a) any divided or other
distribution on any shares of its capital stock or (b) any payment on
account of the purchase, redemption, retirement or acquisition of (1)
any shares of its capital stock or (2) any option, warrant or other
right to acquire shares of its capital stock unless (in each case) at
the time of such declaration or payment (and after giving effect
thereto) the aggregate net worth of the two Class GP
Certificateholders would be greater than the Minimum Net Worth.

(j) INSOLVENCY. Neither Class GP Certificateholder shall commence
any case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, consolidation or other
relief with respect to it or the Trust or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for it or for the Trust
or for all or any substantial part of its assets or make a general assignment
for the benefit of its creditors. Neither Class GP Certificateholder shall
take any action in furtherance of, or indicating the consent to, approval of,
or acquiescence in any of the acts set forth above. Neither Class GP
Certificateholder shall admit in writing its inability to pay its debts.

Section 2.07. REPRESENTATIONS AND WARRANTIES OF OFL AND THE SELLER.
Each of OFL and the Seller represent and warrant as of the date hereof and as
of the Closing Date, as follows:

(a) DUE ORGANIZATION AND QUALIFICATION. The Seller is a corporation
duly organized and validly existing and in good standing under the laws of the
State of Delaware,

<PAGE>

with power and authority to own its properties and to conduct its business.
The Seller is duly qualified to do business, is in good standing and has
obtained all necessary licenses, permits, charters, registrations and
approvals (together, "approvals") necessary for the conduct of its business as
currently conducted and as described in the Prospectus and the performance of
its obligations under the Transaction Documents, in each jurisdiction in which
the failure to be so qualified or to obtain such approvals would render the
Receivables in such jurisdiction or any Transaction Document unenforceable in
any respect or would otherwise have a material adverse effect upon the
Transaction.

(b) POWER AND AUTHORITY. The Seller has all necessary corporate
power and authority to conduct its business as currently conducted and as
described in the Prospectus, to execute, deliver and perform its obligations
under this Agreement and each other Transaction Document to which the Seller
is a party and to carry out the terms of each such agreement, and has full
power and authority to sell and assign the Receivables and the Other Trust
Property to the Trust and has duly authorized such sale and assignment to the
Trust by all necessary corporate action.

(c) DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement and each other Transaction Document to which the Seller is a
party has been duly authorized by all necessary corporate action on the part
of the Seller and does not require any additional approvals or consents or
other action by or any notice to or filing with any Person by or on behalf of
the Seller, including, without limitation, any governmental entity or the
Seller's stockholder.

(d) NONCONTRAVENTION. Neither the execution and delivery of this
Agreement and each other Transaction Document to which the Seller is a party,
the consummation of the Transaction nor the satisfaction of the terms and
conditions of this Agreement and each other Transaction Document to which the
Seller is a party,

(i) conflicts with or results in any breach or violation of any
provision of the charter or bylaws of the Seller or any law, rule,
regulation, order, writ, judgment, injunction, decree, determination
or award currently in effect having applicability to the Seller or any
of its properties, including regulations issued by an administrative
agency or other governmental authority having supervisory powers over
the Seller,

(ii) constitutes a default by the Seller under or a breach of
any provision of any loan agreement, mortgage, indenture or other
agreement or instrument to which the Seller is a party or by which it
or any of its properties is or may be bound or affected, or

(iii) results in or requires the creation of any Lien upon or in
respect of any of the Seller's assets except as otherwise expressly
contemplated by the Transaction Documents.

(e) PENDING LITIGATION OR OTHER PROCEEDING. There is no action,
proceeding or investigation pending, or, to the Seller's or OFL's best
knowledge, threatened, before any

<PAGE>

court, regulatory body, administrative agency, arbitrator or governmental
agency or instrumentality having jurisdiction over the Seller or its
properties: (A) asserting the invalidity of this Agreement or any other
Transaction Document to which the Seller is a party, (B) seeking to prevent
the issuance of the Notes or the Certificates or the consummation of the
Transaction, (C) seeking any determination or ruling that might materially and
adversely affect the validity or enforceability of this Agreement or any other
Transaction Document to which the Seller is a party, (D) which might result in
a Material Adverse Change with respect to the Seller or (E) which might
adversely affect the federal or state tax attributes of the Notes, the
Certificates or the Trust.

(f) VALID AND BINDING OBLIGATIONS. Each of the Transaction Documents
to which the Seller is a party, when executed and delivered by the Seller, and
assuming due authorization, execution and delivery by the other parties
thereto, will constitute the legal, valid and binding obligation of the Seller
enforceable in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and general equitable principles.
The Certificates, when executed, authenticated and delivered in accordance
with the Trust Agreement, will be validly issued and outstanding and entitled
to the benefits of the Trust Agreement and will evidence the entire beneficial
ownership interest in the Trust. The Notes, when executed, authenticated and
delivered in accordance with the Indenture, will be entitled to the benefits
of the Indenture and will constitute legal, valid and binding obligations of
the Trust, enforceable in accordance with their terms.

(g) NO CONSENTS. No consent, license, approval or authorization from,
or registration, filing or declaration with, any regulatory body,
administrative agency, or other governmental instrumentality, nor any consent,
approval, waiver or notification of any creditor, lessor or other
non-governmental person, is required in connection with the execution,
delivery and performance by the Seller of this Agreement or of any other
Transaction Document to which the Seller is a party, except (in each case)
such as have been obtained and are in full force and effect.

(h) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed or proposed to be employed by the Seller in the conduct of its
business violates any law, regulation, judgment, agreement, order or decree
applicable to the Seller which, if enforced, would result in a Material
Adverse Change with respect to the Seller.

(i) GOOD TITLE; VALID TRANSFER; ABSENCE OF LIENS; SECURITY INTEREST.
Immediately prior to the sale of the Initial Receivables and related Other
Trust Property to the Trust pursuant to the Sale and Servicing Agreement, the
Seller was the owner of, and had good and marketable title to, such property
free and clear of all Liens and Restrictions on Transferability, and had full
right, corporate power and lawful authority to assign, transfer and pledge the
Initial Receivables and the related Other Trust Property. The Sale and
Servicing Agreement constitutes a valid sale, transfer and assignment of the
Other Trust Property to the Trust enforceable against creditors of and
purchasers of the Seller. In the event that, in contravention of the
intention of the parties, the transfer of the Other Trust Property by the
Seller to the Trust is characterized as other than a sale, such transfer shall
be characterized as

<PAGE>

a secured financing, and the Trust shall have a valid and perfected first
priority security interest in the Other Trust Property free and clear of all
Liens and Restrictions on Transferability.

(j) ACCURACY OF INFORMATION. Neither the Transaction Documents nor
any documents, agreements, instruments, schedules, certificates, statements,
cash flow schedules, number runs or other writings or data (collectively, the
"Documents") furnished to Financial Security by the Seller or OFL with respect
to either of them, their Subsidiaries, the Receivables or the Transaction
contain any statement of a material fact which was untrue or misleading in any
material respect when made (except insofar as any Document was corrected or
superseded by a subsequent Document and Financial Security has not
detrimentally relied on the original Document). There is no fact known to the
Seller or OFL which has a material possibility of causing a Material Adverse
Change with respect to the Seller or OFL, or which has a material possibility
of impairing the value or marketability of the Receivables, taken as a whole,
or decreasing the probability that amounts due in respect of the Receivables
will be collected as due. Since the furnishing of the Transaction Documents,
there has been no change or any development or event involving a prospective
change known to the Seller or OFL which would render any representation or
warranty or other statement made by either of them in any of the Transaction
Documents untrue or misleading in a material respect.

(k) COMPLIANCE WITH INVESTMENT COMPANY ACT. The Seller is not
required to be registered as an "investment company" under the Investment
Company Act.

(l) INCORPORATION OF CERTAIN REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Seller set forth in the Transaction
Documents are (in each case) true and correct as if set forth herein.

(m) SPECIAL PURPOSE ENTITY.

(i) The capital of the Seller is adequate for the business and
undertakings of the Seller.

(ii) Other than with respect to the ownership by OFL of the
stock of the Seller and as provided in the Previous Series Transaction
Documents, the Purchase Agreement, the Sale and Servicing Agreement,
and the Spread Account Agreement, the Seller is not engaged in any
business transactions with OFL or any Affiliate of OFL.

(iii) At least one director of the Seller shall be a person who
is not, and will not be, a director, officer, employee or holder of
any equity securities of OFL or any of its Affiliates or Subsidiaries.

(iv) The Seller's funds and assets are not, and will not be,
commingled with the funds of any other Person, except as provided in
the Transaction Documents.

(v) The by-laws of the Seller require it to maintain (A)
correct and complete minute books and records of account, and (B)
minutes of the meetings and other proceedings of its shareholders and
board of directors.

29
<PAGE>

(n) SOLVENCY; FRAUDULENT CONVEYANCE. The Seller is solvent and will
not be rendered insolvent by the Transaction and, after giving effect to such
Transaction, the Seller will not be left with an unreasonably small amount of
capital with which to engage in its business. The Seller does not intend to
incur, or believe that it has incurred, debts beyond its ability to pay such
debts as they mature. The Seller does not contemplate the commencement of
insolvency, bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or similar
official in respect of the Seller or any of its assets. The amount of
consideration being received by the Seller upon the sale of the Initial
Receivables and related Other Trust Property and contemplated to be received
upon the Sale of the Subsequent Receivables and related Other Trust Property
constitutes reasonably equivalent value and fair consideration for interest
in such Receivables and such Other Trust Property. The Seller is not
transferring the Other Trust Property to the Trust, or selling the
Certificates, as provided in the Transaction Documents, with any intent to
hinder, delay or defraud any of the Seller's creditors.

(o) REGISTRATION STATEMENT; PROSPECTUS. The Seller has filed with the
Securities and Exchange Commission (the "Commission") registration statements
on Form S-3 (No. 33-97608), including a preliminary prospectus and prospectus
supplement for the registration of the Certificates and the Notes under the
Securities Act, has filed such amendments thereto, and such amended
preliminary prospectuses and prospectus supplements as may have been required
to the date hereof, and will file such additional amendments thereto and such
amended prospectuses and prospectus supplements as may hereafter be required.
Such registration statement (as amended, if applicable) and the prospectus,
together with the prospectus supplement relating to the Certificates and the
Notes, constituting a part thereof (including in each case all documents, if
any, incorporated by reference therein and the information, if any, deemed to
be part thereof pursuant to the rules and regulations of the Commission under
the Securities Act (the "Rules and Regulations"), as from time to time
amended or supplemented pursuant to the Securities Act or otherwise, are
hereinafter referred to as the "Registration Statement" and the "Prospectus,"
respectively, except that if any revised prospectus or prospectus supplement
shall be provided by the Seller for use in connection with the offering of
the Certificates and the Notes which differs from the Prospectus filed with
the Commission pursuant to Rule 424 of the Rules and Regulations (whether or
not such revised prospectus is required to be filed by the Seller pursuant to
Rule 424 of the Rules and Regulations), the term "Prospectus" shall refer to
such revised prospectus and prospectus supplement from and after the time it
is first provided to the Underwriter for such use. The Registration
Statement at the time it became effective complied, and at each time that the
Prospectus is provided to the Underwriters for use in connection with the
offering or sale of any Certificate or Note will comply, in all material
respects with the requirements of the Securities Act and the Rules and
Regulations. The Registration Statement and the Prospectus at the time the
Registration Statement became effective did not and on the date hereof does
not, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading and the Prospectus at the time it was first
provided to the Underwriters for use in connection with the offering of the
Certificates and the Notes did not, and on the date hereof does not, contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein in light of the circumstances under
which they were made not misleading, except that the representations and

30
<PAGE>

warranties in this subparagraph shall not apply to statements in or omissions
from the Registration Statement or the Prospectus or any preliminary
prospectus made in reliance upon information furnished to the Seller in
writing by Financial Security expressly for use therein or the financial
statements (including the related notes thereto) of Financial Security.

(p) ERISA. The Seller is in compliance with ERISA and has not
incurred and does not reasonably expect to incur any liabilities to the PBGC
under ERISA in connection with any Plan or Multiemployer Plan or to
contribute now or in the future in respect of any Plan or Multiemployer Plan.

(q) PLEDGE OF SHARES. The shares of stock of the Seller which have
been pledged pursuant to the Stock Pledge Agreement constitute all of the
issued and outstanding shares of the Seller.

(r) PERFECTION OF LIENS AND SECURITY INTEREST. On the Closing Date,
the Lien and security interest in favor of the Indenture Collateral Agent
with respect to Indenture Property will be perfected by the filing of
financing statements on Form UCC-1 in each jurisdiction where such recording
or filing is necessary for the perfection thereof, the delivery of the
Receivable Files for the Receivables to the Custodian, and the establishment
of the Collection Account, the Subcollection Account, the Lockbox Account,
the Pre-Funding Account, the Reserve Account and the Note Distribution
Account in accordance with the provisions of the Transaction Documents, and
no other filings in any jurisdiction or any other actions (except as
expressly provided herein) are necessary to perfect the Collateral Agent's
Lien on and security interest in the Collateral as against any third parties.

(s) SECURITY INTEREST IN FUNDS AND INVESTMENTS. Assuming the
retention of funds in the Accounts (other than the Certificate Account) and
the acquisition of Eligible Investments in accordance with the Transaction
Documents, such funds and Eligible Investments will be subject to a valid and
perfected, first priority security interest in favor of the Collateral Agent
on behalf of the Indenture Trustee (on behalf of the Noteholders) and
Financial Security.

Section 2.08. AFFIRMATIVE COVENANTS OF OFL AND THE SELLER. Each of
OFL and the Seller hereby agree that during the Term of the Agreement, unless
Financial Security shall otherwise expressly consent in writing:

(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. The Seller will
comply with all terms and conditions of this Agreement and each other
Transaction Document to which it is a party and with all material
requirements of any law, rule or regulation applicable to it. The Seller
will not cause or permit to become effective any amendment to or modification
of any of the Transaction Documents to which it is a party unless (i) (so
long as no Insurer Default shall have occurred and be continuing) Financial
Security shall have previously approved in writing the form of such amendment
or modification or (ii) if an Insurer Default shall have occurred and be
continuing, such amendment would not adversely affect the interests of
Financial Security. The Seller shall not take any action or fail to take any
action that would interfere with the enforcement of any rights under this
Agreement or the other Transaction Documents.

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(b) CORPORATE EXISTENCE. The Seller shall maintain its corporate
existence and shall at all times continue to be duly organized under the laws
of Delaware and duly qualified and duly authorized (as described in Sections
2.07(a), (b) and (c) hereof) and shall conduct its business in accordance
with the terms of its corporate charter and bylaws.

(c) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION. The
Seller shall keep or cause to be kept in reasonable detail books and records
of account of the Seller's assets and business, and shall clearly reflect
therein the transfer of the Receivables and the Other Trust Property to the
Trust and the sale of the Receivables as a sale to the Trust of the Seller's
interest in the Receivables and the Other Trust Property. The Seller shall
furnish to Financial Security, simultaneously with the delivery of such
documents to the Trustee, the Noteholders or the Certificateholders, as the
case may be, copies of all reports, certificates, statements, financial
statements or notices furnished to the Trustee, the Noteholders or the
Certificateholders, as the case may be, pursuant to the Transaction
Documents. The Seller shall furnish to Financial Security as soon as
available, and in any event within 90 days after the close of each fiscal
year of the Seller, the unaudited balance sheet of the Seller as of the end
of such fiscal year and the unaudited statements of income, changes in
shareholders' equity and cash flows of the Seller for such fiscal year, all
in reasonable detail and stating in comparative form the respective figures
for the preceding fiscal year, prepared in accordance with generally accepted
accounting principles, consistently applied.

(d) COMPLIANCE CERTIFICATE. The Seller shall deliver to Financial
Security, within 90 days after the close of each fiscal year of the Seller, a
certificate signed by an Authorized Officer of the Seller stating that:

(i) a review of the Seller's performance under the Transaction
Documents during such period has been made under such officer's
supervision; and

(ii) to the best of such individual's knowledge following
reasonable inquiry, no Default or Event of Default has occurred, or if
a Default or Event of Default has occurred, specifying the nature
thereof and, if the Seller has or had a right to cure pursuant to
Section 5.01, stating in reasonable detail the steps, if any, taken or
being taken by the Seller to cure such Default or Event of Default or
to otherwise comply with the terms of the Transaction Document to
which such Default or Event of Default relates.

(iii) the financial reports submitted in accordance with Section
2.08(c) hereof, are complete and correct in all material respects and
present fairly the financial condition and results of operations of
the Seller as of the dates and for the periods indicated, in
accordance with generally accepted accounting principles consistently
applied.

(e) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS. The
Seller shall, upon the request of Financial Security, permit Financial
Security or its authorized agents (i) to inspect the books and records of the
Seller as they may relate to the Notes, the Certificates, the Receivables and
the Other Trust Property, the obligations of the Seller under the Transaction
Documents, the Seller's business and the Transaction and (ii) to discuss the

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affairs, finances and accounts of the Seller with any of its officers,
directors and representatives, including its Independent Accountants. Such
inspections and discussions shall be conducted during normal business hours
and shall not unreasonably disrupt the business of the Seller. The books and
records of the Seller will be maintained at the address of the Seller
designated herein for receipt of notices, unless the Seller shall otherwise
advise the parties hereto in writing.

(f) NOTICE OF MATERIAL EVENTS. The Seller shall promptly inform
Financial Security in writing of the occurrence of any of the following:

(i) the submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation
against the Seller involving potential damages or penalties in an
uninsured amount in excess of $5,000 in any one instance or $25,000 in
the aggregate;

(ii) any change in the location of Seller's principal office or
any change in the location of the Seller's books and records;

(iii) the occurrence of any Default or Event of Default;

(iv) the commencement or threat of any rule making or disciplinary
proceedings or any proceedings instituted by or against the Seller in
any federal, state or local court or before any governmental body or
agency, or before any arbitration board, or the promulgation of any
proceeding or any proposed or final rule which, if adversely
determined, would result in a Material Adverse Change with respect to
the Seller or the Trust;

(v) the commencement of any proceedings by or against the Seller
under any applicable bankruptcy, reorganization, liquidation,
rehabilitation, insolvency or other similar law now or hereafter in
effect or of any proceeding in which a receiver, liquidator,
conservator, trustee or similar official shall have been, or may be,
appointed or requested for the Seller or any of its assets;

(vi) the receipt of notice that (A) the Seller is being placed under
regulatory supervision, (B) any license, permit, charter, registration
or approval necessary for the conduct of the Seller's business is to
be, or may be, suspended or revoked, or (C) the Seller is to cease and
desist any practice, procedure or policy employed by the Seller in the
conduct of its business, and such cessation may result in a Material
Adverse Change with respect to the Seller or the Trust; or

(vii) any other event, circumstance or condition that has resulted,
or has a material possibility of resulting, in a Material Adverse Change
in respect of the Seller or the Trust.

(g) FURTHER ASSURANCES. The Seller will file all necessary financing
statements, assignments or other instruments, and any amendments or
continuation statements relating thereto, necessary to be kept and filed in
such manner and in such places as may be required by

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law to preserve and protect fully the Lien and security interest in, and all
rights of the Trust with respect to Other Trust Property, under the Sale and
Servicing Agreement. In addition, the Seller shall, upon the request of
Financial Security (so long as no Insurer Default has occurred and is
continuing), from time to time, execute, acknowledge and deliver and, if
necessary, file such further instruments and take such further action as may
be reasonably necessary to effectuate the intention, performance and
provisions of the Transaction Documents to which the Seller is a party or to
protect the interest of the Trust in the Receivables under the Sale and
Servicing Agreement. The Seller agrees to cooperate with the Rating Agencies
in connection with any review of the Transaction which may be undertaken by
the Rating Agencies after the date hereof.

(h) MAINTENANCE OF LICENSES. The Seller shall maintain all licenses,
permits, charters and registrations which are material to the performance by
the Seller of its obligations under this Agreement and each other Transaction
Document to which the Seller is a party or by which the Seller is bound.

(i) DISCLOSURE DOCUMENT. Each Prospectus delivered with respect to
the Notes and Certificates shall clearly disclose that the Policies are not
covered by the property/casualty insurance security fund specified in Article
76 of the New York Insurance Law. In addition, each Prospectus delivered
with respect to the Notes and Certificates which includes financial
statements of Financial Security prepared in accordance with generally
accepted accounting principles (other than a Prospectus that only
incorporates such financial statements by reference) shall include the
following statement immediately preceding such financial statements:

(j) SPECIAL PURPOSE ENTITY.

(i) The Seller shall conduct its business solely in its own name
through its duly authorized officers or agents so as not to mislead
others as to the identity of the entity with which those others are
concerned, and particularly will use its best efforts to avoid the
appearance of conducting business on behalf of OFL or any other
Affiliate thereof or that the assets of the Seller are available to
pay the creditors of OFL or any Affiliate thereof. Without limiting
the generality of the foregoing, all oral and written communications,
including, without limitation, letters, invoices, purchase orders,
contracts, statements and loan applications, will be made solely in
the name of the Seller.

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(ii) The Seller shall maintain corporate records and books of
account separate from those of OFL and the other Affiliates thereof.

(iii) The Seller shall obtain proper authorization from its board of
directors of all corporate action requiring such authorization,
meetings of the board of directors of the Seller shall be held not
less frequently than three times per annum and copies of the minutes
of each such board meeting shall be delivered to Financial Security
within two weeks of such meeting.

(iv) The Seller shall obtain proper authorization from its
shareholders of all corporate action requiring shareholder approval,
meetings of the shareholders of the Seller shall be held not less
frequently than one time per annum and copies of each such
authorization and the minutes of each such shareholder meeting shall
be delivered to Financial Security within two weeks of such
authorization or meeting, as the case may be.

(v) Although the organizational expenses of the Seller have been
paid by OFL, operating expenses and liabilities of the Seller shall be
paid from its own funds.

(vi) The annual financial statements of the Seller shall disclose
the effects of the Seller's transactions in accordance with generally
accepted accounting principles and shall disclose that the assets of
the Seller are not available to pay creditors of OFL or any other
Affiliate thereof.

(vii) The resolutions, agreements and other instruments of the Seller
underlying the transactions described in this Agreement and in the
other Transaction Documents shall be continuously maintained by the
Seller as official records of the Seller separately identified and
held apart from the records of OFL and each other Affiliate thereof.

(viii) The Seller shall maintain an arm's-length relationship with OFL
and the other Affiliates thereof and will not hold itself out as being
liable for the debts of OFL or any Affiliate thereof.

(ix) The Seller shall keep its assets and its liabilities wholly
separate from those of all other entities, including, but not limited
to OFL and the other Affiliates thereof except, in each case, as
contemplated by the Transaction Documents.

(k) CLOSING DOCUMENTS. The Seller shall provide or cause to be
provided to Financial Security an executed original copy of each document
executed in connection with the Transaction within 10 days after the Closing
Date, except that the Seller shall cause a copy of the Trust Agreement, the
Sale and Servicing Agreement, the Series 1996-A Supplement, the Indenture,
the Administration Agreement and each Transaction Document to which Financial
Security is a party to be provided to Financial Security on the Closing Date.

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<PAGE>

(l) SUBSEQUENT RECEIVABLES: GOOD TITLE; VALID TRANSFER; ABSENCE OF
LIENS; SECURITY INTEREST. Immediately prior to the sale to the Trust
pursuant to a Subsequent Transfer Agreement, the Seller will be the owner of,
and shall have good and marketable title to, the Subsequent Receivables
transferred thereby and the related Other Trust Property free and clear of
all Liens and Restrictions on Transferability, and shall have full right,
corporate power and lawful authority to assign, transfer and pledge such
property.

(m) INCORPORATION OF COVENANTS. The Seller agrees to comply with each
of the Seller's covenants set forth in the Transaction Documents and hereby
incorporates such covenants by reference as if each were set forth herein.

Section 2.09. NEGATIVE COVENANTS OF OFL AND THE SELLER. Each of OFL
and the Seller hereby agrees that during the Term of this Agreement, unless
Financial Security shall otherwise give its prior express written consent:

(a) WAIVER, AMENDMENTS, ETC. The Seller shall not waive, modify,
amend, supplement or consent to any waiver, modification, amendment of or
supplement to, any of the provisions of any of the Transaction Documents or
Previous Series Transaction Documents or of its certificate of incorporation
or by-laws (i) unless, if no Insurer Default shall have occurred and be
continuing, Financial Security shall have consented thereto in writing or
(ii) if an Insurer Default shall have occurred and be continuing, which would
adversely affect the interests of Financial Security.

(b) CREATION OF INDEBTEDNESS; GUARANTEES. The Seller shall not
create, incur, assume or suffer to exist any indebtedness or assume,
guarantee, endorse or otherwise be or become directly or contingently liable
for the obligations of any Person by, among other things, agreeing to
purchase any obligation of another Person, agreeing to advance funds to such
Person or causing or assisting such Person to maintain any amount of capital,
except as contemplated by the Transaction Documents or as contemplated by the
documents relating to a Series of Certificates or Notes.

(d) NO LIENS. The Seller shall not, except as contemplated by the
Transaction Documents or as contemplated by the documents relating to a
Series of Certificates or Notes, create, incur, assume or suffer to exist any
Lien of any nature upon or with respect to any of its properties or assets,
now owned or hereafter acquired, or sign or file under the Uniform Commercial
Code of any jurisdiction any financing statement that names the Seller as
debtor, or sign any security agreement authorizing any secured party
thereunder to file such a financing statement.

(e) ISSUANCE OF STOCK. The Seller shall not issue any shares of
capital stock or rights, warrants or options in respect of its capital stock
or securities convertible into or exchangeable for its capital stock, other
than the shares of common stock which have been pledged to Financial Security
under the Seller Stock Pledge Agreement.

<PAGE>

(f) IMPAIRMENT OF RIGHTS. The Seller shall not take any action, or
fail to take any action, if such action or failure to take action may
interfere with the enforcement of any rights under the Transaction Documents
that are material to the rights, benefits or obligations of the Trust, the
Indenture Trustee, the Certificateholders, the Noteholders or Financial
Security.

(g) NO MERGERS. The Seller shall not consolidate with or merge into
any Person or transfer all or any material amount of its assets to any Person
(except as contemplated by the Transaction Documents or the documents
relating to a Series of Certificates or Notes).

(h) ERISA. The Seller shall not contribute or incur any obligation to
contribute to, or incur any liability in respect of, any Plan or
Multiemployer Plan.

(i) OTHER ACTIVITIES. The Seller shall not:

(i) sell, pledge, transfer, exchange or otherwise dispose of any
of its assets except as permitted under the Transaction Documents or
the documents relating to a Series of Certificates or Notes; or

(ii) engage in any business or activity except as contemplated by
the Transaction Documents or as contemplated by the documents relating
to a Series of Certificates or Notes and as permitted by its
certificate of incorporation.

(j) INSOLVENCY. The Seller shall not commence any case, proceeding
or other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect
to it, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, consolidation or other relief with respect to it or
the Trust or (B) seeking appointment of a receiver, trustee, custodian or
other similar official for it or for the Trust or for all or any substantial
part of its assets or the Collateral related to any or all Series, or make a
general assignment for the benefit of its creditors. The Seller shall not
take any action in furtherance of, or indicating the consent to, approval of,
or acquiescence in any of the acts set forth above. The Seller shall not
admit in writing its inability to pay its debts.

(k) DIVIDENDS. The Seller shall not declare or make payment of (i)
any dividend or other distribution on any shares of its capital stock, or
(ii) any payment on account of the purchase, redemption, retirement or
acquisition of any option, warrant or other right to acquire shares of its
capital stock, unless (in each case) at the time of such declaration or
payment (and after giving effect thereto) no amount payable by the Seller
under any Transaction Document with respect to any Series is then due and
owing but unpaid.

Section 2.10. REPRESENTATIONS AND WARRANTIES OF OFL. OFL represents
and warrants, as of the date hereof and as of the Closing Date, as follows:

(a) DUE ORGANIZATION AND QUALIFICATION. OFL and each of its
Subsidiaries is a corporation, duly organized, validly existing and in good
standing under the laws of the State of its respective incorporation with
power and authority to own its properties and conduct its

37
<PAGE>

business. OFL and each of its Subsidiaries is duly qualified to do business
and is in good standing in each jurisdiction in which the failure to be so
qualified would render any of the Receivables unenforceable in any respect or
would otherwise have a material adverse effect upon the Transaction. OFL and
each of its Subsidiaries has obtained all licenses, permits, charters,
registrations and approvals necessary for the conduct of its business as
currently conducted and as described in the Prospectus and for the
performance of its obligations under the Transaction Documents.

(b) POWER AND AUTHORITY. OFL has all necessary corporate power and
authority to conduct its business as currently conducted and as described in
the Prospectus, to execute, deliver and perform its obligations under this
Agreement and each other Transaction Document to which it is a party and to
carry out the terms of each such agreement.

(c) DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement and each other Transaction Document to which OFL is a party
has been duly authorized by all necessary corporate action and does not
require any additional approvals or consents or other action by or any notice
to or filing with any Person, including, without limitation, any governmental
entity or OFL's stockholders.

(d) NONCONTRAVENTION. Neither the execution and delivery of this
Agreement and each other Transaction Document to which OFL is a party, the
consummation of the Transaction, nor the satisfaction of the terms and
conditions of this Agreement and each other Transaction Document to which OFL
is a party,

(i) conflicts with or results in any breach or violation of any
provision of the corporate charter or bylaws of OFL or any law, rule,
regulation, order, writ, judgment, injunction, decree, determination
or award currently in effect having applicability to OFL or any of its
properties, including regulations issued by an administrative agency
or other governmental authority having supervisory powers over OFL,

(ii) constitutes a default by OFL under or a breach of any
provision of any loan agreement, mortgage, indenture or other
agreement or instrument to which OFL or any of its Subsidiaries is a
party or by which it or any of its or their properties is or may be
bound or affected, or

(iii) results in or requires the creation of any Lien upon or in
respect of any of OFL's assets, except as otherwise expressly
contemplated by the Transaction Documents.

(e) PENDING LITIGATION OR OTHER PROCEEDING. There is no action,
proceeding or investigation pending, or, to OFL's best knowledge, threatened,
before any court, regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over OFL or its properties:
(A) asserting the invalidity of this Agreement or any other Transaction
Document to which OFL is a party, (B) seeking to prevent the issuance of the
Notes, the Certificates or the consummation of the Transaction, (C) seeking
any determination or ruling that

<PAGE>

might materially and adversely affect the validity or enforceability of, this
Agreement or any other Transaction Document to which OFL is a party, (D)
which might result in a Material Adverse Change with respect to OFL or (E)
which might adversely affect the federal or state tax attributes of the
Notes, the Certificates or the Trust.

(f) VALID AND BINDING OBLIGATIONS. The Purchase Agreement
constitutes a valid sale, transfer, and assignment of the Receivables and
Other Trust Property to the Seller, enforceable against creditors of and
purchasers from OFL. Each of the other Transaction Documents to which OFL is
a party when executed and delivered by OFL, and assuming the due
authorization, execution and delivery by the other parties thereto, will
constitute the legal, valid and binding obligation of OFL enforceable in
accordance with its respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and general equitable
principles.

(g) NO CONSENTS. No consent, license, approval or authorization
from, or registration, filing or declaration with, any regulatory body,
administrative agency, or other governmental instrumentality, nor any
consent, approval, waiver or notification of any creditor, lessor or other
non-governmental person, is required in connection with the execution,
delivery and performance by OFL of this Agreement or of any other Transaction
Document to which OFL is a party, except (in each case) such as have been
obtained and are in full force and effect.

(h) FINANCIAL STATEMENTS. The Financial Statements of OFL, copies of
which have been furnished to Financial Security, (i) are, as of the dates and
for the periods referred to therein, complete and correct in all material
respects, (ii) present fairly the financial condition and results of
operations of OFL as of the dates and for the periods indicated and (iii)
have been prepared in accordance with generally accepted accounting
principles consistently applied, except as noted therein (subject as to
interim statements to normal year-end adjustments and the absence of notes).
Since the date of the most recent Financial Statements, there has been no
material adverse change in such financial condition or results of operations.
Except as disclosed in the Financial Statements, OFL is not subject to any
contingent liabilities or commitments that, individually or in the aggregate,
have a reasonable likelihood of causing a Material Adverse Change in respect
of OFL.

(i) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed or proposed to be employed by OFL in the conduct of its business
violates any law, regulation, judgment, agreement, order or decree applicable
to OFL which, if enforced, would result in a Material Adverse Change with
respect to OFL.

(j) TAXES. OFL has, and each of its Subsidiaries have, filed all
federal and state tax returns and paid all taxes to the extent that such
taxes have become due. Any taxes, fees and other governmental charges
payable by OFL in connection with the Transaction, the execution and delivery
of the Transaction Documents and the issuance of the Notes and Certificates
have been paid or shall have been paid at or prior to the Closing Date.

(k) ERISA. OFL is in compliance with ERISA and has not incurred and
does not reasonably expect to incur any liabilities to the PBGC under ERISA
in connection with any

39
<PAGE>

Plan or Multiemployer Plan or to contribute now or in the future in respect
of any Plan or Multiemployer Plan except in accordance with the provisions of
Section 2.12(e) hereof.

(l) INCORPORATION OF CERTAIN REPRESENTATIONS AND WARRANTIES. OFL
represents and warrants to Financial Security that the representations and
warranties of OFL set forth in the Transaction Documents are (in each case)
true and correct as if set forth herein.

Section 2.11. AFFIRMATIVE COVENANTS OF OFL. OFL hereby agrees that
during the Term of the Agreement, unless Financial Security shall otherwise
expressly consent in writing:

(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. OFL will comply
with all terms and conditions of this Agreement and each other Transaction
Document to which it is a party and all material requirements of any law,
rule or regulation applicable to it. OFL will not cause or permit to become
effective any amendment to or modification of any Transaction Document to
which it is a party (i) unless, so long as no Insurer Default shall have
occurred and be continuing, Financial Security shall have previously approved
in writing the form of such amendment or modification or (ii) if an Insurer
Default shall have occurred and be continuing, such amendment would not
adversely affect the interests of Financial Security. OFL shall not take any
action or fail to take any action that would interfere with the enforcement
of any rights under this Agreement or the other Transaction Documents.

(b) CORPORATE EXISTENCE. OFL shall maintain its corporate existence
and shall at all times continue to be duly organized under the laws of
Minnesota and duly qualified and duly authorized (as described in Sections
2.10(a), (b) and (c) hereof) and shall conduct its business in accordance
with the terms of its corporate charter and bylaws.

(c) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION.
OFL shall keep or cause to be kept in reasonable detail books and records of
account of OFL's assets and business. OFL, so long as it shall be the
Servicer, shall furnish to Financial Security, simultaneously with the
delivery of such documents to the Owner Trustee, Indenture Trustee, the
Noteholders or the Certificateholders, as the case may be, copies of all
reports, certificates, statements or notices furnished to the Owner Trustee,
Indenture Trustee, the Noteholders or the Certificateholders, as the case
may be, pursuant to the Transaction Documents. OFL shall also furnish or
cause to be furnished to Financial Security:

(i) ANNUAL FINANCIAL STATEMENTS. As soon as available, and
in any event within 90 days after the close of each fiscal year of
OFL, the audited balance sheets of OFL and its subsidiaries as of the
end of such fiscal year and the audited consolidated statements of
income, changes in shareholders' equity and cash flows of OFL for such
fiscal year, all in reasonable detail and stating in comparative form
the respective figures for the corresponding date and period in the
preceding fiscal year, prepared in accordance with generally accepted
accounting principles, consistently applied, and accompanied by the
certificate of OFL's independent accountants (which, so long as no
Insurer Default shall have occurred and be continuing, shall be
acceptable to Financial Security) and by the certificate specified in
Section 2.11(d) hereof.

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<PAGE>

(ii) QUARTERLY FINANCIAL STATEMENTS. As soon as available, and
in any event within 45 days after the close of each of the first three
quarters of each fiscal year of OFL, the unaudited consolidated
balance sheets of OFL as of the end of such quarter and the unaudited
consolidated statements of income, changes in shareholders' equity and
cash flows of OFL for the portion of the fiscal year then ended, all
in reasonable detail and stating in comparative form the respective
figures for the corresponding date and period in the preceding fiscal
year, prepared in accordance with generally accepted accounting
principles consistently applied (subject to normal year-end
adjustments), and accompanied by the certificate specified in Section
2.11(d) hereof.

(iii) ACCOUNTANTS' REPORTS. Promptly upon receipt thereof, copies
of any reports submitted to OFL by its independent accountants in
connection with any examination of the financial statements of OFL.

(iv) CERTAIN INFORMATION. Promptly after the filing or sending
thereof, copies of all proxy statements, financial statements, reports
and registration statements which OFL files, or delivers to, the IRS,
the Commission, or any other federal government agency, authority or
body which supervises the issuance of securities by OFL or any
national securities exchange.

(d) COMPLIANCE CERTIFICATE. OFL shall deliver to Financial Security
within 90 days after the close of each fiscal year of OFL, a certificate
signed by an Authorized Officer of OFL stating that:

(i) a review of OFL's performance under the Transaction Documents
during such period has been made under such officer's supervision;

(ii) to the best of such individual's knowledge following reasonable
inquiry, no Default or Event of Default has occurred, or if a Default
or Event of Default has occurred, specifying the nature thereof and,
if OFL has or had a right to cure pursuant to Section 5.01, stating in
reasonable detail the steps, if any, taken or being taken by OFL to
cure such Default or Event of Default or to otherwise comply with the
terms of the Transaction Document to which such Default or Event of
Default relates; and

(iii) the financial statements submitted in accordance with Section
2.11(c) hereof, as applicable, are complete and correct in all
material respects and present fairly the financial condition and
results of operations of OFL as of the dates and for the periods
indicated, in accordance with generally accepted accounting principles
consistently applied (subject as to interim statements to normal
year-end adjustments and the absence of notes).

(e) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS. OFL
shall, upon the request of Financial Security, permit Financial Security or
its authorized agents (i) to inspect the books and records of OFL as they may
relate to the Notes, the Certificates, the Receivables, the obligations of
OFL as Servicer under the Transaction Documents, its business

41
<PAGE>

and the Transaction and (ii) to discuss the affairs, finances and accounts of
OFL with any of its officers, directors and representatives, including its
Independent Accountants. Such inspections and discussions shall be conducted
during normal business hours and shall not unreasonably disrupt the business
of OFL. The books and records of OFL will be maintained at the address of
OFL designated herein for receipt of notices, unless OFL shall otherwise
advise the parties hereto in writing.

(f) NOTICE OF MATERIAL EVENTS. OFL shall promptly inform Financial
Security in writing of the occurrence of any of the following:

(i) the submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation
against OFL involving potential damages or penalties in an uninsured
amount in excess of $10,000 in any one instance or $25,000 in the
aggregate;

(ii) any change in the location of OFL's principal office or any
change in the location of the OFL's books and records;

(iii) the occurrence of any Default or Event of Default;

(iv) the commencement or threat of any rule making or disciplinary
proceedings or any proceedings instituted by or against OFL in any
federal, state or local court or before any governmental body or
agency, or before any arbitration board, or the promulgation of any
proceeding or any proposed or final rule which, if adversely
determined, would result in a Material Adverse Change with respect to
OFL;

(v) the commencement of any proceedings by or against OFL under
any applicable bankruptcy, reorganization, liquidation,
rehabilitation, insolvency or other similar law now or hereafter in
effect or of any proceeding in which a receiver, liquidator,
conservator, trustee or similar official shall have been, or may be,
appointed or requested for OFL or any of its assets;

(vi) the receipt of notice that (A) OFL is being placed under
regulatory supervision, (B) any license, permit, charter, registration
or approval necessary for the conduct of OFL's business is to be, or
may be, suspended or revoked, or (C) OFL is to cease and desist any
practice, procedure or policy employed by OFL in the conduct of its
business, and such cessation may result in a Material Adverse Change
with respect to OFL; or

(vii) any other event, circumstance or condition that has
resulted, or has a material possibility of resulting, in a Material
Adverse Change in respect of OFL.

(g) MAINTENANCE OF LICENSES. OFL shall maintain all licenses,
permits, charters and registrations which are material to the performance by
OFL of its obligations under this Agreement and each other Transaction
Document to which OFL is a party or by which OFL is bound.

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(h) ERISA. OFL shall give Financial Security prompt notice of each of
the following events (but in no event more than 30 days after the occurrence
of the event): (i) an Accumulated Funding Deficiency, (ii) the failure to
make a required contribution to a Plan or Multiemployer Plan, (iii) a
Reportable Event, (iv) any action by a Commonly Controlled Entity to
terminate any Plan or withdraw from any Multiemployer Plan, (v) any action by
the PBGC to terminate or appoint a trustee to administer a Plan, (vi) the
reorganization or insolvency of any Multiemployer Plan and (vii) an aggregate
Underfunding for all Underfunded Plans in excess of $100,000. In addition,
OFL shall promptly (but in no case more than 30 days following issuance or
receipt by the Commonly Controlled Entity) provide to Financial Security a
copy of all correspondence between a Commonly Controlled Entity and the PBGC,
IRS, Department of Labor or the administrators of a Multiemployer Plan
relating to any of the events described in the preceding sentence or the
underfunded status, termination or possible termination of a Plan or a
Multiemployer Plan.

(i) THIRD-PARTY BENEFICIARY. OFL agrees that Financial Security
shall have all rights of a third-party beneficiary in respect of the Sale and
Servicing Agreement, it being understood that the remedies of Financial
Security with respect to the representations and warranties set forth in
Section 2.4(b) and the covenants set forth in Section 3.6(a) shall be limited
to the remedies set forth in the Sale and Servicing Agreement.

(j) INCORPORATION OF COVENANTS. OFL agrees to comply with each of
OFL's covenants set forth in the Transaction Documents and hereby
incorporates such covenants by reference as if each were set forth herein.

Section 2.12. NEGATIVE COVENANTS OF OFL. OFL hereby agrees that
during the Term of this Agreement, unless Financial Security shall otherwise
give its express written consent:

(a) RESTRICTIONS ON LIENS. OFL shall not create, incur or suffer to
exist, or agree to create, incur or suffer to exist, or consent to cause or
permit in the future (upon the happening of a contingency or otherwise) the
creation, incurrence or existence of any Lien or Restriction on
Transferability on the Receivables and the Other Trust Property except for
the Liens in favor of the Seller, the Trust and the Indenture Collateral
Agent for the benefit of the Indenture Trustee and Financial Security
contemplated by the Transaction Documents and the Restrictions on
Transferability imposed by the Purchase Agreement and the Sale and Servicing
Agreement.

(b) Impairment of Rights. OFL shall not take any action, or fail to
take any action, if such action or failure to take action may interfere with
the enforcement of any rights under the Transaction Documents that are
material to the rights, benefits or obligations of the Seller, the Trust, the
Indenture Trustee, the Noteholders, the Certificateholders or Financial
Security.

(c) LIMITATION ON MERGERS. OFL shall not consolidate with or merge
with or into any Person or transfer all or any material part of its assets to
any Person (except as contemplated by the Transaction Documents) or liquidate
or dissolve, provided that OFL may

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consolidate with, merge with or into, or transfer all or a material part of
its assets to, another corporation if (i) the acquiror of its assets, or the
corporation surviving such merger or consolidation, shall be organized and
existing under the laws of any state and shall be qualified to transact
business in each jurisdiction in which failure to qualify would render any
Transaction Document unenforceable or would result in a Material Adverse
Change in respect of OFL or the Trust Property; (ii) after giving effect to
such consolidation, merger or transfer of assets, no Default or Event of
Default shall have occurred or be continuing; (iii) such acquiring or
surviving entity can lawfully perform the obligations of OFL under the
Transaction Documents and shall expressly assume in writing all of the
obligations of OFL, including, without limitation, its obligations under the
Transaction Documents; and (iv) such acquiring or surviving entity and the
consolidated group of which it is a part shall each have a net worth
immediately subsequent to such consolidation, merger or transfer of assets at
least equal to the net worth of OFL immediately prior to such consolidation,
merger or transfer of assets; and OFL shall give Financial Security written
notice of any such consolidation, merger or transfer of assets on the earlier
of: (A) the date upon which any publicly available filing or release is made
with respect to such action or (B) 10 Business Days prior to the date of
consummation of such action. OFL shall furnish to Financial Security all
information requested by it that is reasonably necessary to determine
compliance with this paragraph.

(d) WAIVER, AMENDMENTS, ETC. OFL shall not waive, modify, amend,
supplement or consent to any waiver, modification, amendment of or supplement
to, any of the provisions of any of the Transaction Documents without the
prior written consent of Financial Security (i) unless, so long as no Insurer
Default shall have occurred and be continuing, Financial Security shall have
consented thereto in writing or (ii) if an Insurer Default shall have
occurred and be continuing, which would adversely affect the interests of
Financial Security.

(e) ERISA. OFL shall not contribute or incur any obligation to
contribute to, or incur any liability in respect of, any Plan or
Multiemployer Plan, except that OFL may make such a contribution or incur
such a liability provided that neither OFL nor any Commonly Controlled Entity
will:

(i) terminate any Plan so as to incur any material liability to
the PBGC;

(ii) knowingly participate in any "prohibited transaction" (as
defined in ERISA) involving any Plan or Multiemployer Plan or any
trust created thereunder which would subject any of them to a material
tax or penalty on prohibited transactions imposed under Section 4975
of the Code or ERISA;

(iii) fail to pay to any Plan or Multiemployer Plan any contribution
which it is obligated to pay under the terms of such Plan or
Multiemployer Plan, if such failure would cause such Plan to have any
material Accumulated Funding Deficiency, whether or not waived; or

(iv) allow or suffer to exist any occurrence of a Reportable Event,
or any other event or condition, which presents a material risk of
termination by the PBGC

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<PAGE>

of any Plan or Multiemployer Plan, to the extent that the occurrence
or nonoccurrence of such Reportable Event or other event or condition
is within the control of it or any Commonly Controlled Entity.

(f) INSOLVENCY. OFL shall not commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, consolidation or other relief with respect to the
Seller or either Class GP Certificateholder or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for the Seller or for
either Class GP Certificateholder. OFL shall not take any action in
furtherance of, or indicating the consent to, approval of, or acquiescence in
any of the acts set forth above.

ARTICLE III

THE POLICIES; REIMBURSEMENT; INDEMNIFICATION

Section 3.01. CONDITIONS PRECEDENT TO ISSUANCE OF THE POLICIES.
Financial Security agrees to issue the Policies subject to satisfaction of
the conditions set forth below.

(a) The obligation of Financial Security to issue the Policies is
subject to the following having occurred or being true (as the case may be):
(i) Financial Security shall have received evidence satisfactory to it that
the Seller shall have assigned, conveyed and transferred, or caused to be
assigned, conveyed and transferred, the Initial Receivables to the Trust,
(ii) the Seller shall have created a valid security interest in, and Lien on,
the Receivables in favor of the Trust, (iii) the Trust shall have created a
valid security interest in, and Lien on, the Indenture Property in favor of
the Indenture Collateral Agent on behalf of the Indenture Trustee (on behalf
of the Noteholders) and Financial Security (iv) the initial Premium shall
have been paid in accordance with Section 3.02 hereof, (v) the
representations and warranties of the Trust, the Class GP Certificateholders,
the Seller and of OFL and the Servicer set forth or incorporated by reference
in this Agreement shall be true and correct on and as of the Closing Date,
and (vi) each Transaction Document shall be in full force and effect and no
Default thereunder shall have occurred and be continuing.

(b) The obligation of Financial Security to issue the Policies is
further subject to the condition precedent that Financial Security shall have
received on the Closing Date, or, in its sole and absolute discretion,
received the opportunity to review prior to and on the Closing Date, the
following, each dated the Closing Date and in full force and effect on such
date, except as otherwise provided herein, in form and substance satisfactory
to Financial Security and its counsel:

(i) a certificate of an Authorized Officer of each of the Seller
and OFL stating that nothing has come to the attention of such entity
to indicate that the Registration Statement or the Prospectus, on the
date the Registration Statement became effective, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not

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<PAGE>

misleading, or that the Prospectus on any date on which it was
forwarded to the Underwriter for use in connection with the offering
of the Notes and the Certificates contained, or on the Closing Date
contains, any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not
misleading;

(ii) copies, certified to be true copies by an Authorized Officer
of the Owner Trustee, of (i) the resolutions of the board of directors
of the Owner Trustee authorizing the execution, delivery and
performance by the Owner Trustee of this Agreement and each other
Transaction Document to which the Owner Trustee is a party and all
transactions and documents contemplated hereby and thereby, and of all
other documents evidencing any other necessary action of the Owner
Trustee (which certification shall state that such resolutions have
not been modified, are in full force and effect and constitute the
only resolutions adopted by the Owner Trustee's board of directors or
any committee thereof with respect thereto and (ii) the Certificate of
Trust, certified by the Secretary of State or other appropriate
official of the State of Delaware;

(iii) with respect to each Class GP Certificateholder, copies,
certified to be true copies by an Authorized Officer of such Class GP
Certificateholder, of (i) the resolutions of the board of directors of
such Class GP Certificateholder authorizing the execution, delivery
and performance of this Agreement and each other Transaction Document
to which such Class GP Certificateholder is a party and all other
transactions and documents evidencing any other necessary action of
such Class GP Certificateholder (which certification shall state that
such resolutions have not been modified, are in full force and effect
and constitute the only resolutions adopted by such Class GP
Certificateholder's board of directors or any committee thereof with
respect thereto), (ii) the corporate charter of such Class GP
Certificateholder and (iii) the by-laws, as amended, of such Class GP
Certificateholder.

(iv) copies, certified to be true copies by an Authorized Officer
of the Seller, of (i) the resolutions of the board of directors of the
Seller authorizing the execution, delivery and performance of this
Agreement and each other Transaction Document to which the Seller is a
party and all transactions and documents contemplated hereby and
thereby, and of all other documents evidencing any other necessary
action of the Seller (which certification shall state that such
resolutions have not been modified, are in full force and effect and
constitute the only resolutions adopted by the Seller's board of
directors or any committee thereof with respect thereto), (ii) the
corporate charter of the Seller and (iii) the by-laws, as amended, of
the Seller;

(v) copies, certified to be true copies by an Authorized Officer
of OFL, of (i) the resolutions of the board of directors of OFL
authorizing the execution, delivery and performance of this Agreement
and each other Transaction Document to which OFL is a party and all
other transactions and documents contemplated hereby and thereby, and
of all documents evidencing any other necessary action of OFL (which
certification shall state that such resolutions have not been
modified, are in full force and effect and constitute the only
resolutions adopted by OFL's board of directors or any committee

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<PAGE>

thereof with respect thereto), (ii) the corporate charter of OFL and
(iii) the by-laws, as amended, of OFL;

(vi) a certificate of an Authorized Officer of the Owner Trustee
stating that (i) all consents, licenses and approvals necessary for
the Owner Trustee to execute, deliver and perform this Agreement, the
other Transaction Documents to which the Owner Trustee is a party and
all other documents and instruments on the part of the Owner Trustee
to be delivered pursuant hereto or thereto have been obtained, and
(ii) all such consents, licenses and approvals are in full force and
effect, the Owner Trustee has not received any notice of any
proceeding for the revocation of any such license, charter, permit or
approval, and, to the Owner Trustee's knowledge, there is no
threatened action or proceeding or any basis therefor;

(vii) with respect to each Class GP Certificateholder, a certificate
of an Authorized Officer of such Class GP Certificateholder stating
that (i) all consents, licenses and approvals necessary for such Class
GP Certificateholder to execute, deliver and perform this Agreement,
the other Transaction Documents to which such Class GP
Certificateholder is a party and all other documents and instruments
on the part of such Class GP Certificateholder to be delivered
pursuant hereto or thereto have been obtained, and (ii) all such
consents, licenses and approvals are in full force and effect, such
Class GP Certificateholder has not received any notice of any
proceeding for the revocation of any such license, charter, permit or
approval, and, to such Class GP Certificateholder's knowledge, there
is no threatened action or proceeding or any basis therefor;

(viii) a certificate of an Authorized Officer of the Seller stating
that (i) all consents, licenses and approvals necessary for the Seller
to execute, deliver and perform this Agreement, the other Transaction
Documents to which the Seller is a party and all other documents and
instruments on the part of the Seller to be delivered pursuant hereto
or thereto have been obtained, and (ii) all such consents, licenses
and approvals are in full force and effect, the Seller has not
received any notice of any proceeding for the revocation of any such
license, charter, permit or approval, and, to the Seller's knowledge,
there is no threatened action or proceeding or any basis therefor;

(ix) a certificate of an Authorized Officer of OFL stating that
(i) all consents, licenses and approvals necessary for OFL to execute,
deliver and perform this Agreement, the other Transaction Documents to
which OFL is a party and all other documents and instruments on the
part of OFL to be delivered pursuant hereto or thereto have been
obtained, and (ii) all such consents, licenses and approvals are in
full force and effect, OFL has not received any notice of any
proceeding for the revocation of any such license, charter, permit or
approval, and, to OFL'S knowledge, there is no threatened action or
proceeding or any basis therefor;

(x) a certificate of an Authorized Officer of the Owner Trustee
certifying (i) the names and true signatures of the officers of the
Owner Trustee executing and delivering this Agreement, the other
Transaction Documents to which the Owner Trustee is a party and the
other documents to be executed and delivered by the

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<PAGE>

Owner Trustee hereunder and thereunder, (ii) that approval by the
Owner Trustee's equity holders of the execution and delivery of this
Agreement, the other Transaction Documents and all other such
documents to be executed and delivered, by the Owner Trustee
hereunder, has been obtained or is not required, and (iii) that no
action for the dissolution of the Owner Trustee has been adopted or
contemplated and that no such proceedings have been commenced or are
contemplated;

(xi) with respect to each Class GP Certificateholder, a certificate
of an Authorized Officer of such Class GP Certificateholder certifying
(i) the names and true signatures of the officers of such Class GP
Certificateholder executing and delivering this Agreement, the other
Transaction Documents to which such Class GP Certificateholder is
party and the other documents to be executed and delivered by such
Class GP Certificateholder hereunder and thereunder, (ii) that
approval of such Class GP Certificateholder stockholders of the
execution and delivery of this Agreement, the other Transaction
Documents and all other such documents to be executed and delivered,
by such Class GP Certificateholder hereunder, has been obtained or is
not required, and (iii) that no resolution for the dissolution of such
Class GP Certificateholder has been adopted or contemplated and that
no such proceedings have been commenced or are contemplated;

(xii) a certificate of an Authorized Officer of the Seller certifying
(i) the names and true signatures of the officers of the Seller
executing and delivering this Agreement, the other Transaction
Documents to which the Seller is a party and the other documents to be
executed and delivered by the Seller hereunder and thereunder, (ii)
that approval by the Seller's stockholder of the execution and
delivery of this Agreement, the other Transaction Documents and all
other such documents to be executed and delivered, by the Seller
hereunder, has been obtained or is not required, and (iii) that no
resolution for the dissolution of the Seller has been adopted or
contemplated and that no such proceedings have been commenced or are
contemplated;

(xiii) a certificate of an Authorized Officer of OFL certifying
(i) the names and true signatures of the officers of OFL executing and
delivering this Agreement, the other Transaction Documents to which
OFL is a party and the other documents to be executed and delivered by
OFL hereunder and thereunder, (ii) that approval by OFL's stockholders
of the execution and delivery of this Agreement, the other Transaction
Documents and all other such documents to be executed and delivered,
by OFL hereunder, has been obtained or is not required, and (iii) that
no resolution for the dissolution of OFL has been adopted or
contemplated and that no such proceedings have been commenced or are
contemplated;

(xiv) a certificate of an Authorized Officer of the Trust to the
effect that (x) the representations and warranties of the Trust set
forth or incorporated by reference in this Agreement are true and
correct on and as of the Closing Date and (y) confirming that the
conditions precedent set forth herein with respect to the Trust are
satisfied;

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<PAGE>

(xv) with respect to each Class GP Certificateholder, a certificate
of an Authorized Officer of such Class GP Certificateholder to the
effect that (x) the representations and warranties of such Class GP
Certificateholder set forth or incorporated by reference int his
Agreement are true and correct on and as of the Closing Date, and (y)
confirming that the conditions precedent set forth herein with respect
to such Class GP Certificateholder are satisfied;

(xvi) a certificate of an Authorized Officer of the Seller to the
effect that (x) the representations and warranties of the Seller set
forth or incorporated by reference in this Agreement are true and
correct on and as of the Closing Date and (y) confirming that the
conditions precedent set forth herein with respect to the Seller are
satisfied;

(xvii) a certificate of an Authorized Officer of OFL to the effect
that (x) the representations and warranties of OFL set forth or
incorporated by reference in this Agreement are true and correct on
and as of the Closing Date, and (y) confirming that the conditions
precedent set forth herein with respect to OFL are satisfied;

(xviii) favorable opinions of counsel and special Texas counsel to the
Seller and OFL in form and substance satisfactory to Financial
Security and its counsel;

(xix) a favorable opinion of counsel to each of the Trust, the Class
GP Certificateholders, the Owner Trustee, the Indenture Trustee and
the Collateral Agent and the Indenture Collateral Agent, in form and
substance satisfactory to Financial Security and its counsel;

(xx) evidence that amounts due and payable Financial Security under
Section 3.02 of this Agreement have been paid or that acceptable
provisions therefor have been made;

(xxi) a fully executed copy of each of the Transaction Documents;

(xxii) evidence that all actions necessary or, in the opinion of
Financial Security, desirable to perfect and protect the interests
transferred by the Sale and Servicing Agreement, the liens and
security interests created with respect to the Spread Account, the
Liens and security interest created in favor of the Indenture
Collateral Agent with respect to the Indenture Property pursuant to
the Indenture, including, without limitation, the filing of any
financing statements required by Financial Security or its counsel,
have been taken;

(xxiii) a certificate or opinion of Independent Accountants addressed
to Financial Security in form and substance satisfactory to Financial
Security;

(xxiv) evidence that the Seller shall have deposited, or caused to
have been deposited, the deposits required under the Sale and
Servicing Agreement and the Spread Account Agreement, and any other
deposits required to be made on the Closing Date under the Transaction
Documents to which the Seller is a party; and

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<PAGE>

(xxv) such other documents, instruments, approvals (and, if requested
by Financial Security, certified duplicates of executed copies
thereof) or opinions as Financial Security may reasonably request.

(c) ISSUANCE OF RATINGS. Financial Security shall have received
confirmation that the risk secured by the Policies constitutes an investment
grade risk by Standard and Poor's Corporation ("S&P") and an insurable risk
by Moody's Investors Service, Inc. ("Moody's") and that the Class A-1 Notes,
when issued, will be rated "A-1+" by S&P and "P-1" by Moody's, and that the
Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5
Notes, the Class A-6 Notes and the Certificates, when issued, will be rated
"AAA" by S&P and "Aaa" by Moody's.

(d) DELIVERY OF DOCUMENTS. Financial Security shall have received
evidence satisfactory to it that delivery has been made to the Trust or to a
Custodian of the Receivable Files required to be so delivered pursuant to
Section 2.2 of the Sale and Servicing Agreement.

(e) NO DEFAULT. No Default or Event of Default shall have occurred
and be continuing.

(f) NO LITIGATION, ETC. No suit, action or other proceeding,
investigation, or injunction or final judgment relating thereto, shall be
pending or threatened before any court or governmental agency in which it is
sought to restrain or prohibit or to obtain damages or other relief in
connection with any of the Transaction Documents or the consummation of the
Transaction.

(g) LEGALITY. No statute, rule, regulation or order shall have been
enacted, entered or deemed applicable by any government or governmental or
administrative agency or court which would make the transactions contemplated
by any of the Transaction Documents illegal or otherwise prevent the
consummation thereof.

(h) SATISFACTION OF CONDITIONS OF UNDERWRITING AGREEMENT. All
conditions in the Underwriting Agreement to the Underwriter's obligation to
purchase the Notes and Certificates (other than the issuance of the Policies)
shall have been concurrently satisfied.

Section 3.02. PAYMENT OF FEES AND PREMIUM.

(a) LEGAL FEES. On the Closing Date, OFL shall pay or cause to be
paid legal fees and disbursements incurred by Financial Security in
connection with the issuance of the Policies up to an amount not to exceed
$20,000.00, plus disbursements.

(b) RATING AGENCY FEES. The initial fees of S&P and Moody's with
respect to the Notes and Certificates and the Transaction shall be paid by
OFL in full on the Closing Date. All periodic and subsequent fees of S&P or
Moody's with respect to, and directly allocable to, the Notes and
Certificates shall be for the account of, shall be billed to, and shall be
paid by OFL. The fees for any other rating agency shall be paid by the party
requesting such other agency's rating, unless such other agency is a
substitute for S&P or Moody's in the event

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<PAGE>

that S&P or Moody's is no longer rating the Notes or Certificates, in which
case the cost for such agency shall be paid by OFL.

(c) AUDITORS' FEES. In the event that Financial Security's auditors
are required to provide information or any consent in connection with the
Registration Statement fees therefor shall be paid by OFL. Any additional
fees incurred by Financial Security after the Closing Date in respect of any
additional consents shall be paid by OFL on demand.

(d) PREMIUM. In consideration of the issuance by Financial Security
of the Policies, OFL shall pay Financial Security the Premium and Premium
Supplement, if any, as and when due in accordance with the terms of the
Premium Letter. The Premium and Premium Supplement, if any, paid hereunder
or under the Sale and Servicing Agreement shall be nonrefundable without
regard to whether Financial Security makes any payment under the Policies or
any other circumstances relating to the Notes or the Certificates or
provision being made for payment of the Notes or the Certificates prior to
maturity. Although the Premium is fully earned by Financial Security as of
the Closing Date, the Premium shall be payable in periodic installments as
provided in the Premium Letter. Anything herein or in any of the Transaction
Documents notwithstanding, upon the occurrence of an Event of Default, the
entire outstanding balance of further installments of the Premium and Premium
Supplement shall be immediately due and payable. All payments of Premium and
Premium Supplement, if any, shall be made by wire transfer to an account
designated from time to time by Financial Security by written notice to the
Seller and OFL.

Section 3.03. REIMBURSEMENT AND ADDITIONAL PAYMENT OBLIGATION. Each of
OFL and the Trust agrees to pay to Financial Security as follows:

(a) a sum equal to the total of all amounts paid by Financial Security
under the Policies;

(b) any and all charges, fees, costs and expenses which Financial
Security may reasonably pay or incur, including, but not limited to,
attorneys' and accountants' fees and expenses, in connection with (i) any
accounts established to facilitate payments under the Policies to the extent
Financial Security has not been immediately reimbursed on the date that any
amount is paid by Financial Security under the Policies, (ii) the
administration, enforcement, defense or preservation of any rights in respect
of any of the Transaction Documents, including defending, monitoring or
participating in any litigation, proceeding (including any insolvency or
bankruptcy proceeding in respect of any Transaction participant or any
Affiliate thereof), restructuring or engaging in any protective measures or
monitoring activities relating to any of the Transaction Documents, any party
to any of the Transaction Documents or the Transaction, (iii) the foreclosure
against, sale or other disposition of any collateral securing any obligations
under any of the Transaction Documents or otherwise in the discretion of
Financial Security, or pursuit of any other remedies under any of the
Transaction Documents, to the extent such costs and expenses are not
recovered from such foreclosure, sale or other disposition (iv) any
amendment, waiver or other action with respect to, or related to, any
Transaction Document whether or not executed or completed, (v) preparation of
bound volumes of the Transaction Documents, (vi) any review or investigation
made by Financial Security in those circumstances

<PAGE>

where its approval or consent is sought under any of the Transaction
Documents; (vii) any federal, state or local tax (other than taxes payable in
respect of the gross income of Financial Security) or other governmental
charge imposed in connection with the issuance of the Policies; and (viii)
Financial Security reserves the right to charge a reasonable fee as a
condition to executing any amendment, waiver or consent proposed in respect
of any of the Transaction Documents (for the purpose of this paragraph (b),
costs and expenses shall include a reasonable allocation of compensation and
overhead attributable to time of employees of Financial Security spent in
connection with the actions described in the foregoing clauses (ii) and (iii));

(c) interest on any and all amounts described in this Section 3.03 from
the date payable to or paid by Financial Security until payment thereof in
full, and interest on any and all amounts described in Section 3.02, in each
case payable to Financial Security at the Late Payment Rate per annum; and

(d) any payments made by Financial Security on behalf of, or advanced
to, the Seller, OFL, the Indenture Trustee, the Owner Trustee or the Trust
including, without limitation, any amounts payable by OFL in its capacity as
Servicer or by the Trust, in respect of the Notes or the Certificates and any
other amounts owed pursuant to any Transaction Documents; and any payments
made by Financial Security as, or in lieu of, any servicing, administration,
management, trustee, custodial, collateral agency or administrative fees
payable, in the sole discretion of Financial Security to third parties in
connection with the Transaction.

All such amounts are to be immediately due and payable without demand.
Financial Security shall notify OFL of amounts due hereunder.

Section 3.04. CERTAIN OBLIGATIONS NOT RECOURSE TO OFL; RECOURSE TO
TRUST PROPERTY.

(a) Notwithstanding any provision of Section 3.03 to the contrary, the
payment obligations provided in Section 3.03(a), b(iii) and (d) (to the
extent of advances to the Trust in respect of distributions on the
Certificates or to the Indenture Trustee in respect of payments on the
Notes), in each case, to the extent that such payment obligations do not
arise from any failure or default in the performance by OFL or the Seller of
any of its obligations under the Transaction Documents, and any interest on
the foregoing in accordance with Section 3.03(c), shall not be recourse to
OFL, but shall be payable in the manner and in accordance with priorities
provided in the Sale and Servicing Agreement.

(b) Financial Security covenants and agrees that it shall not be
entitled to any payment from the Trust Property with respect to amounts owed
under this Agreement other than as set forth in Section 4.6 and Section 9.1
of the Sale and Servicing Agreement and Section 5.06 of the Indenture.

Section 3.05. INDEMNIFICATION.

(a) INDEMNIFICATION BY OFL. In addition to any and all rights of
reimbursement, indemnification, subrogation and any other rights pursuant
hereto or under law

<PAGE>

or in equity, OFL agrees to pay, and to protect, indemnify and save harmless,
Financial Security and its officers, directors, shareholders, employees,
agents and each Person, if any, who controls Financial Security within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all claims, losses, liabilities
(including penalties), actions, suits, judgments, demands, damages, costs or
expenses (including, without limitation, fees and expenses of attorneys,
consultants and auditors and reasonable costs of investigations) of any
nature arising out of or relating to the Transaction by reason of:

(i) any statement, omission or action (other than of or by
Financial Security) in connection with the offering, issuance, sale or
delivery of the Notes or the Certificates;

(ii) the negligence, bad faith, willful misconduct, misfeasance,
malfeasance or theft committed by any director, officer, employee or
agent of the Trust, either Class GP Certificateholder, the Seller or
OFL in connection with the Transaction;

(iii) the violation by the Trust, either Class GP Certificateholder,
the Seller or OFL of any federal, state or foreign law, rule or
regulation, or any judgment, order or decree applicable to it;

(iv) the breach by the Trust, either Class GP Certificateholder,
the Seller or OFL of any representation, warranty or covenant under any
of the Transaction Documents or the occurrence, in respect of the Trust,
either Class GP Certificateholder, the Seller or OFL, under any of the
Transaction Documents of any event of default or any event which, with
the giving of notice or the lapse of time or both, would constitute
any event of default; or

(v) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus
or in any amendment or supplement thereto or any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except
insofar as such claims arise out of or are based upon any untrue statement
or omission (A) included in the Registration Statement or the Prospectus
and furnished by Financial Security in writing expressly for use therein
(all such information so furnished being referred to herein as "Financial
Security Information"), it being understood that the Financial Security
Information is limited to the information included under the caption
"Financial Security Assurance Inc.," and the financial statements of
Financial Security included in the Registration Statement or the
Prospectus or (B) included in the information set forth under the
caption "Underwriting" in the Prospectus.

(b) CONDUCT OF ACTIONS OR PROCEEDINGS. If any action or proceeding
(including any governmental investigation) shall be brought or asserted
against Financial Security, any officer, director, shareholder, employee or
agent of Financial Security or any Person controlling Financial Security
(individually, an "Indemnified Party" and, collectively, the "Indemnified
Parties") in respect of which indemnity may be sought from OFL hereunder,
Financial Security shall promptly notify OFL in writing, and OFL shall assume
the defense thereof, including the

<PAGE>

employment of counsel satisfactory to Financial Security and the payment of
all expenses. The Indemnified Party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof at the
expense of the Indemnified Party; PROVIDED, HOWEVER, that the fees and
expenses of such separate counsel shall be at the expense of OFL if (i) OFL
has agreed to pay such fees and expenses, (ii) OFL shall have failed to
assume the defense of such action or proceeding and employ counsel
satisfactory to Financial Security in any such action or proceeding or (iii)
the named parties to any such action or proceeding (including any impleaded
parties) include both the Indemnified Party and the Trust, the Class GP
Certificateholders, the Seller or OFL, and the Indemnified Party shall have
been advised by counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to
the Trust, either Class GP Certificateholder, the Seller or OFL (in which
case, if the Indemnified Party notifies OFL in writing that it elects to
employ separate counsel at the expense of OFL, OFL shall not have the right
to assume the defense of such action or proceeding on behalf of such
Indemnified Party, it being understood, however, that OFL shall not, in
connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for the Indemnified Parties, which firm shall be
designated in writing by Financial Security). OFL shall not be liable for
any settlement of any such action or proceeding effected without its written
consent to the extent that any such settlement shall be prejudicial to it,
but, if settled with its written consent, or if there be a final judgment for
the plaintiff in any such action or proceeding with respect to which OFL
shall have received notice in accordance with this subsection (c) OFL agrees
to indemnify and hold the Indemnified Parties harmless from and against any
loss or liability by reason of such settlement or judgment.

(c) CONTRIBUTION. To provide for just and equitable contribution if
the indemnification provided by OFL is determined to be unavailable for
any Indemnified Party (other than due to application of this Section), OFL
shall contribute to the losses incurred by the Indemnified Party on the
basis of the relative fault of OFL, on the one hand, and the Indemnified
Party, on the other hand.

Section 3.06. PAYMENT PROCEDURE. In the event of the incurrence by
Financial Security of any cost or expense or any payment by Financial
Security for which it is entitled to be reimbursed or indemnified as provided
above OFL agrees to accept the voucher or other evidence of payment as prima
facie evidence of the propriety thereof and the liability therefor to
Financial Security. All payments to be made to Financial Security under this
Agreement shall be made to Financial Security in lawful currency of the
United States of America in immediately available funds to the account number
provided in the Premium Letter before 1:00 p.m. (New York, New York time) on
the date when due or as Financial Security shall otherwise direct by written
notice to OFL. In the event that the date of any payment to Financial
Security or the expiration of any time period hereunder occurs on a day which
is not a Business Day, then such payment or expiration of time period shall
be made or occur on the next succeeding Business Day with the same force and
effect as if such payment was made or time period expired on the scheduled
date of payment or expiration date. Payments to be made to Financial Security
under this Agreement shall bear interest at the Late Payment Rate from the
date when due to the date paid.

<PAGE>

Section 3.07. SUBROGATION. Subject only to the priority of payment
provisions of the Sale and Servicing Agreement, each of the Trust, the
Indenture Trustee, the Seller and OFL acknowledges that, to the extent of any
payment made by Financial Security pursuant to the Policies, Financial
Security is to be fully subrogated to the extent of such payment and any
additional interest due on any late payment, to the rights of the Noteholders
and the Certificateholders to any moneys paid or payable in respect of the
Notes or the Certificates respectively under the Transaction Documents or
otherwise. Each of the Trust, the Indenture Trustee, the Seller and OFL
agrees to such subrogation and, further, agrees to execute such instruments
and to take such actions as, in the sole judgment of Financial Security, are
necessary to evidence such subrogation and to perfect the rights of Financial
Security to receive any such moneys paid or payable in respect of the Notes
or the Certificates under the Transaction Documents or otherwise.

ARTICLE IV

FURTHER AGREEMENTS; MISCELLANEOUS

Section 4.01. EFFECTIVE DATE; TERM OF AGREEMENT. This Agreement shall
take effect on the Closing Date and shall remain in effect until the later of
(a) such time as Financial Security is no longer subject to a claim under the
Policies and the Policies shall have been surrendered to Financial Security
for cancellation and (b) all amounts payable to Financial Security, the
Noteholders, and the Certificateholders under the Transaction Documents and
under the Notes and the Certificates have been paid in full; PROVIDED,
HOWEVER, that the provisions of Sections 3.02, 3.03, 3.04, 3.05, 3.06 and
4.03 hereof shall survive any termination of this Agreement.

Section 4.02. FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS. To the
extent permitted by law, each of the Trust, each Class GP Certificateholder,
the Seller and OFL agree that it will, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such supplements hereto and such further instruments as Financial Security
may request and as may be required in Financial Security's judgment to
effectuate the intention of or facilitate the performance of this Agreement.

Section 4.03. OBLIGATIONS ABSOLUTE.

(a) The obligations of the Trust, each Class GP Certificateholder, the
Seller and OFL hereunder shall be absolute and unconditional, and shall be
paid or performed strictly in accordance with this Agreement under all
circumstances irrespective of:

(i) any lack of validity or enforceability of, or any amendment
or other modifications of, or waiver with respect to any of the
Transaction Documents, the Notes, the Certificates or the Policies;
PROVIDED, that Financial Security shall not have consented to any such
amendment, modification or waiver;

(ii) any exchange or release of any other obligations hereunder;

<PAGE>

(iii) the existence of any claim, setoff, defense, reduction,
abatement or other right which the Trust, either Class GP
Certificateholder, the Seller or OFL may have at any time against
Financial Security or any other Person;

(iv) any document presented in connection with the Policies
proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;

(v) any payment by Financial Security under the Policies against
presentation of a certificate or other document which does not strictly
comply with terms of the Policies;

(vi) any failure of the Seller or the Trust to receive the
proceeds from the Sale of the Notes to receive the proceeds from the
sale of the Certificates;

(vii) any breach by the Trust, the Class GP Certificateholders,
the Seller or OFL of any representation, warranty or covenant contained
in any of the Transaction Documents; or

(viii) any other circumstances, other than payment in full, which
might otherwise constitute a defense available to, or discharge of, the
Trust, either Class GP Certificateholder, the Seller or OFL in respect
of any Transaction Document.

(b) The Trust, each Class GP Certificateholder, Seller and OFL and any
and all others who are now or may become liable for all or part of the
obligations of any of them under this Agreement agree to be bound by this
Agreement and (i) to the extent permitted by law, waive and renounce any and
all redemption and exemption rights and the benefit of all valuation and
appraisement privileges against the indebtedness and obligations evidenced by
any Transaction Document or by any extension or renewal thereof; (ii) waive
presentment and demand for payment, notices of nonpayment and of dishonor,
protest of dishonor and notice of protest; (iii) waive all notices in
connection with the delivery and acceptance hereof and all other notices in
connection with the performance, default or enforcement of any payment
hereunder except as required by the Transaction Documents other than this
Agreement; (iv) waive all rights of abatement, diminution, postponement or
deduction, or to any defense other than payment, or to any right of setoff or
recoupment arising out of any breach under any of the Transaction Documents,
by any party thereto or any beneficiary thereof, or out of any obligation at
any time owing to the Trust, either Class GP Certificateholder, the Seller or
OFL; (v) agree that its liabilities hereunder shall, except as otherwise
expressly provided in this Section 4.03, be unconditional and without regard
to any setoff, counterclaim or the liability of any other Person for the
payment hereof; (vi) agree that any consent, waiver or forbearance hereunder
with respect to an event shall operate only for such event and not for any
subsequent event; (vii) consent to any and all extensions of time that may be
granted by Financial Security with respect to any payment hereunder or other
provisions hereof and to the release of any security at any time given for
any payment hereunder, or any part thereof, with or without substitution, and
to the release of any Person or entity liable for any such payment; and
(viii) consent to the addition of any and all other makers, endorsers,
guarantors and other obligors for any payment

<PAGE>

hereunder, and to the acceptance of any and all other security for any
payment hereunder, and agree that the addition of any such obligors or
security shall not affect the liability of the parties hereto for any payment
hereunder.

(c) Nothing herein shall be construed as prohibiting the Trust, either
Class GP Certificateholder, Seller or OFL from pursuing any rights or
remedies it may have against any other Person in a separate legal proceeding.

Section 4.04. ASSIGNMENTS; REINSURANCE; THIRD-PARTY RIGHTS.

(a) This Agreement shall be a continuing obligation of the parties
hereto and shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither the
Trust, First Class GP Certificateholder, Second Class GP Certificateholder,
the Seller nor OFL may assign its rights under this Agreement, or delegate
any of its duties hereunder, without the prior written consent of Financial
Security. Any assignment made in violation of this Agreement shall be null
and void.

(b) Financial Security shall have the right to give participations in
its rights under this Agreement and to enter into contracts of reinsurance
with respect to the Policies upon such terms and conditions as Financial
Security may in its discretion determine; PROVIDED, HOWEVER, that no such
participation or reinsurance agreement or arrangement shall relieve Financial
Security of any of its obligations hereunder or under the Policies.

(c) In addition, Financial Security shall be entitled to assign or
pledge to any bank or other lender providing liquidity or credit with respect
to the Transaction or the obligations of Financial Security in connection
therewith any rights of Financial Security under the Transaction Documents or
with respect to any real or personal property or other interests pledged to
Financial Security, or in which Financial Security has a security interest,
in connection with the Transaction.

(d) Except as provided herein with respect to participants and
reinsurers, nothing in this Agreement shall confer any right, remedy or
claim, express or implied, upon any Person, including, particularly, any
Noteholder or Certificateholder (except to the extent provided herein and
without limitation of their rights to receive payments with respect to the
Trust Property, including without limitation payments under the respective
Policies), other than Financial Security, against the Trust, either Class GP
Certificateholder, the Seller, OFL or the Servicer, and all the terms,
covenants, conditions, promises and agreements contained herein shall be for
the sole and exclusive benefit of the parties hereto and their successors and
permitted assigns. Neither the Trustee, the Owner Trustee nor any Noteholder
or Certificateholder shall have any right to payment from any premiums paid
or payable hereunder or from any other amounts paid by the Seller or OFL
pursuant to Section 3.02, 3.03 or 3.04 hereof (without limitation to the
rights of the Noteholders and the Certificateholders to receive payments with
respect to the Trust Property, as provided in the Indenture and the Trust
Agreement).

Section 4.05. LIABILITY OF FINANCIAL SECURITY. Neither Financial
Security nor any of its officers, directors or employees shall be liable or
responsible for: (a) the use which may

<PAGE>

be made of the Policies by the Owner Trustee or the Indenture Trustee or for
any acts or omissions of the Owner Trustee or the Indenture Trustee in
connection therewith; or (b) the validity, sufficiency, accuracy or
genuineness of documents delivered to Financial Security (or its Fiscal
Agent) in connection with any claim under the Policies, or of any signatures
thereon, even if such documents or signatures should in fact prove to be in
any or all respects invalid, insufficient, fraudulent or forged (unless
Financial Security shall have actual knowledge thereof). In furtherance and
not in limitation of the foregoing, Financial Security (or its Fiscal Agent)
may accept documents that appear on their face to be in order, without
responsibility for further investigation.

ARTICLE V

EVENTS OF DEFAULT; REMEDIES

Section 5.01. EVENTS OF DEFAULT. The occurrence of any of the
following events shall constitute an Event of Default hereunder:

(a) any demand for payment shall be made under either of the Policies;

(b) any representation or warranty made by the Trust, either of the
Class GP Certificateholders, the Seller, OFL or the Servicer under any of the
Related Documents, or in any certificate or report furnished under any of the
Related Documents, shall prove to be untrue or incorrect in any material
respect;

(c) (i) the Trust, either Class GP Certificateholder, the Seller, OFL
or the Servicer shall fail to pay when due any amount payable by the Seller,
OFL or the Servicer under any of the Related Documents (other than payments
of principal and interest on the Notes and the Certificates); (ii) the Trust,
either Class GP Certificateholder, the Seller, OFL or the Servicer shall have
asserted that any of the Transaction Documents to which it is a party is not
valid and binding on the parties thereto; or (iii) any court, governmental
authority or agency having jurisdiction over any of the parties to any of the
Transaction Documents or property thereof shall find or rule that any
material provision of any of the Transaction Documents is not valid and
binding on the parties thereto.

(d) the Trust, either Class GP Certificateholder, the Seller, OFL or
the Servicer shall fail to perform or observe any other covenant or agreement
contained in any of the Related Documents (except for the obligations
described under clause (b) or (c) above) and such failure shall continue for
a period of 30 days after written notice given to the Trust, either Class GP
Certificateholder, the Seller, OFL or the Servicer (as applicable); PROVIDED
that, if such failure shall be of a nature that it cannot be cured within
30 days, such failure shall not constitute an Event of Default hereunder if
within such 30-day period such party shall have given notice to Financial
Security of corrective action it proposes to take, which corrective action is
agreed in writing by Financial Security to be satisfactory and such party
shall thereafter pursue such corrective action diligently until such default
is cured;

<PAGE>

(e) there shall have occurred an "Event of Default" as specified in
Section 6.01(i) or 6.01(ii) of the Senior Note Indenture or the unpaid
principal amount of, premium, if any, and accrued and unpaid interest on the
Securities (as defined in the Senior Note Indenture) shall have, upon the
declaration of the holders of the Securities, as specified in Section 6.02 of
the Senior Note Indenture, become immediately due and payable;

(f) the Trust shall adopt a voluntary plan of liquidation or shall fail
to pay its debts generally as they come due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment for
the benefit of creditors, or shall institute any proceeding seeking to
adjudicate the Trust insolvent or seeking a liquidation, or shall take
advantage of any insolvency act, or shall commence a case or other proceeding
naming the Trust as debtor under the United States Bankruptcy Code or similar
law, domestic or foreign, or a case or other proceeding shall be commenced
against the Trust under the United States Bankruptcy Code or similar law,
domestic or foreign, or any proceeding shall be instituted against the Trust
seeking liquidation of its assets and the Trust shall fail to take
appropriate action resulting in the withdrawal or dismissal of such
proceeding within 30 days or there shall be appointed or the Trust consent
to, or acquiesce in, the appointment of a receiver, liquidator, conservator,
trustee or similar official in respect of the Trust or the whole or any
substantial part of its properties or assets, or the Trust shall take any
corporate action in furtherance of any of the foregoing or the Trust
terminates pursuant to Section 9.2 of the Trust Agreement;

(g) the Trust becomes taxable as an association (or publicly traded
partnership) taxable as a corporation for federal or state income tax
purposes;

(h) on any Distribution Date, the sum of Available Funds with respect
to such Distribution Date and the amounts available in the Series 1996-A
Spread Account (prior to any deposits into such Spread Account from Spread
Accounts related to any other Series) and the amount that may be
withdrawn from the Reserve Account pursuant to Section 5.1 of the Sale and
Servicing Agreement is less than the sum of the amounts payable on such
Distribution Date pursuant to clauses (i) through (viii) of Section 4.6
of the Sale and Servicing Agreement;

(i) any default in the observance or performance of any covenant or
agreement of the Trust made in the Indenture (other than a default in the
payment of the interest or principal on any Note when due) or any
representation or warranty of the Trust made in the Indenture or in any
certificate or other writing delivered pursuant thereto or in connection
therewith proving to have been incorrect in any material respect as of the
time when the same shall have been made, and such default shall continue or
not be cured, or the circumstance or condition in respect of which such
misrepresentation or warranty was incorrect shall not have been eliminated or
otherwise cured, for a period of 30 days after there shall have been given,
by registered or certified mail, to the Trust and the Indenture Trustee by
Financial Security, a written notice specifying such default or incorrect
representation or warranty and requiring it to be remedied;

(j) the Delinquency Ratio with respect to any Determination Date shall
have been equal to or greater than 7%;

<PAGE>

(k) the Average Delinquency Ratio with respect to any Determination
Date shall have been equal to or greater than 5%;

(l) the Cumulative Default Rate shall be equal to or greater than
(A) 4.4%, with respect to any Determination Date occurring prior to or during
the sixth calendar month succeeding the Series 1996-A Closing Date, (B) 8.15%,
with respect to any Determination Date occurring after the sixth, and prior
to or during the 12th, calendar month succeeding the Series 1996-A Closing
Date, (C) 11.25%, with respect to any Determination Date occurring after the
12th, and prior to or during the 18th, calendar month succeeding the Series
1996-A Closing Date, (D) 12.5%, with respect to any Determination Date
occurring after the 18th, and prior to or during the 24th, calendar month
succeeding the Series 1996-A Closing Date, (E) 13.75%, with respect to any
Determination Date occurring after the 24th, and prior to or during the 30th,
calendar month succeeding the Series 1996-A Closing Date, (F) 14.4%, with
respect to any Determination Date occurring after the 30th, and prior to or
during the 36th, calendar month succeeding the Series 1996-A Closing Date,
(G) 15.0%, with respect to any Determination Date occurring after the 36th,
and prior to or during the 42nd, calendar month succeeding the Series 1996-A
Closing Date, (H) 15.65%, with respect to any Determination Date occurring
after the 42nd, and prior to or during the 48th, calendar month succeeding
the Series 1996-A Closing Date, (I) 16.25%, with respect to any Determination
Date occurring after the 48th, and prior to or during the 54th, calendar
month succeeding the Series 1996-A Closing Date, (J) 16.9%, with respect to
any Determination Date occurring after the 54th, and prior to or during the
60th calendar month succeeding the Series 1996-A Closing Date, (K) 17.25%,
with respect to any Determination Date occurring after the 60th, and prior to
or during the 66th, calendar month succeeding the Series 1996-A Closing Date,
or (L) 17.5%, with respect to any Determination Date occurring after the
66th, and prior to or during the 72nd, calendar month succeeding the Series
1996-A Closing Date;

(m) the Cumulative Net Loss Rate shall be equal to or greater than
(A) 1.75%, with respect to any Determination Date occurring prior to or
during the sixth calendar month succeeding the Series 1996-A Closing Date,
(B) 3.25%, with respect to any Determination Date occurring after the sixth,
and prior to or during the 12th, calendar month succeeding the Series 1996-A
Closing Date, (C) 4.5%, with respect to any Determination Date occurring
after the 12th, and prior to or during the 18th, calendar month succeeding
the Series 1996-A Closing Date, (D) 5.0%, with respect to any Determination
Date occurring after the 18th, and prior to or during the 24th, calendar
month succeeding the Series 1996-A Closing Date, (E) 5.5%, with respect to
any Determination Date occurring after the 24th, and prior to or during the
30th, calendar month succeeding the Series 1996-A Closing Date, (F) 5.75%,
with respect to any Determination Date occurring after the 30th, and prior to
or during the 36th, calendar month succeeding the Series 1996-A Closing Date,
(G) 6.0%, with respect to any Determination Date occurring after the 36th,
and prior to or during the 42nd, calendar month succeeding the Series 1996-A
Closing Date, (H) 6.25%, with respect to any Determination Date occurring
after the 42nd, and prior to or during the 48th, calendar month succeeding
the Series 1996-A Closing Date, (I) 6.5%, with respect to any Determination
Date occurring after the 48th, and prior to or during the 54th, calendar
month succeeding the Series 1996-A Closing Date, (J) 6.75%, with respect to
any Determination Date occurring after the 54th, and prior to or during the
60th, calendar month succeeding the Series 1996-A Closing Date, (K) 6.9%,
with respect to any

<PAGE>

Determination Date occurring after the 60th, and prior to or during the 66th,
calendar month succeeding the Series 1996-A Closing Date, or (L) 7.0%, with
respect to any Determination Date occurring after the 66th, and prior to or
during the 72nd, calendar month succeeding the Series 1996-A Closing Date;

(n) the occurrence of an Event of Servicing Termination under the Sale
and Servicing Agreement; or

(o) the occurrence of an "Event of Default" under and as defined in any
Insurance and Indemnity Agreement among Financial Security, OFL, the Seller
and any other parties thereto, which "Event of Default" is not defined as a
"Portfolio Performance Event of Default" in such Insurance and Indemnity
Agreement.

Section 5.02. REMEDIES; WAIVERS.

(a) Upon the occurrence of an Event of Default, Financial Security may
exercise any one or more of the rights and remedies set forth below:

(i) declare the Premium Supplement to be immediately due and
payable, and the same shall thereupon be immediately due and payable,
whether or not Financial Security shall have declared an "Event of
Default" or shall have exercised, or be entitled to exercise, any other
rights or remedies hereunder;

(ii) exercise any rights and remedies available under the
Transaction Documents in its own capacity or in its capacity as the Person
entitled to exercise the rights of Controlling Party under the Transaction
Documents; or

(iii) take whatever action at law or in equity as may appear
necessary or desirable in its judgment to enforce performance of any
obligation of the Trust, each Class GP Certificateholder, the Seller or
OFL under the Transaction Documents; PROVIDED, HOWEVER, that Financial
Security shall not be entitled hereunder to file any petition with
respect to the Trust or the Trust Property under any bankruptcy or
insolvency law.

(b) Unless otherwise expressly provided, no remedy herein conferred
upon or reserved is intended to be exclusive of any other available remedy,
but each remedy shall be cumulative and shall be in addition to other
remedies given under the Transaction Documents or existing at law or in
equity. No delay or failure to exercise any right or power accruing under
any Transaction Document upon the occurrence of any Event of Default or
otherwise shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to
time and as often as may be deemed expedient. In order to entitle Financial
Security to exercise any remedy reserved to Financial Security in this
Article, it shall not be necessary to give any notice.

(c) If any proceeding has been commenced to enforce any right or remedy
under this Agreement, and such proceeding has been discontinued or abandoned
for any reason,

<PAGE>

or has been determined adversely to Financial Security, then and in every
such case the parties hereto shall, subject to any determination in such
proceeding, be restored to their respective former positions hereunder, and,
thereafter, all rights and remedies of Financial Security shall continue as
though no such proceeding had been instituted.

(d) Financial Security shall have the right, to be exercised in its
complete discretion, to waive any covenant, Default or Event of Default by a
writing setting forth the terms, conditions and extent of such waiver signed
by Financial Security and delivered to the Seller and OFL. Any such waiver
may only be effected in writing duly executed by Financial Security, and no
other course of conduct shall constitute a waiver of any provision hereof.
Unless such writing expressly provides to the contrary, any waiver so granted
shall extend only to the specific event or occurrence so waived and not to
any other similar event or occurrence which occurs subsequent to the date of
such waiver.

ARTICLE VI

MISCELLANEOUS

Section 6.01. AMENDMENTS, ETC. This Agreement may be amended, modified
or terminated only by written instrument or written instruments signed by
the parties hereto. No act or course of dealing shall be deemed to constitute
an amendment, modification or termination hereof.

Section 6.02. NOTICES. All demands, notices and other communications
to be given hereunder shall be in writing (except as otherwise specifically
provided herein) and shall be mailed by registered mail or overnight carrier,
personally delivered or telecopied (with confirmation by registered mail) to
the recipient as follows:

(a) To Financial Security:

Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
Attention: Surveillance Department
Confirmation: (212) 826-0100
Telecopy Nos.: (212) 339-3518
(212) 339-3529

(in each case in which notice or other communication to Financial
Security refers to an Event of Default, a claim on either Policy
or with respect to which failure on the part of Financial Security
to respond shall be deemed to constitute consent or acceptance,
then a copy of such notice or other communication should also be
sent to the attention of each of the General Counsel and the
Head--Financial Guaranty Group and shall be marked to indicate
"URGENT MATERIAL ENCLOSED.")

<PAGE>

(b) To the Seller:

Olympic Receivables Finance Corp.
7825 Washington Avenue South, Suite 410
Minneapolis, Minnesota 55439-2435
Telephone: (612) 942-9888
Telecopier: (612) 942-6730

Olympic Financial Ltd.
7825 Washington Avenue South
Minneapolis, Minnesota 55439-2435
Telephone: (612) 942-9880
Telecopier: (612) 942-6730

(d) To First Class GP Certificateholder:

Olympic First GP Inc.
7825 Washington Avenue South
Minneapolis, Minnesota 55439-2435
Telephone: (612) 942-9880
Telecopier: (612) 942-6730

(e) To Second Class GP Certificateholder:

Olympic Second GP Inc.
7825 Washington Avenue South
Minneapolis, Minnesota 55439-2435
Telephone: (612) 942-9880
Telecopier: (612) 942-6730

(f) To the Trust:
Olympic Automobile Receivables Trust, 1996-A
c/o Mellon Bank (DE), National Association,
as Owner Trustee
919 North Market Street, Second Floor
Wilmington, Delaware 19801
Attention: Robert H. Bell
Telephone: (302) 421-2283
Telecopier: (302) 421-2323

<PAGE>

with a copy to:

Mellon Bank, National Association
Two Mellon Bank Center
Room 325
Pittsburgh, Pennsylvania 15259
Attention: Kent Christman
Telephone: (412) 234-5737
Telecopier: (412) 234-9196

A party may specify an additional or different address or addresses by
writing mailed or delivered to the other party as aforesaid. All such
notices and other communications shall be effective upon receipt.

Section 6.03. SEVERABILITY. In the event that any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof. The
parties hereto further agree that the holding by any court of competent
jurisdiction that any remedy pursued by any party hereto is unavailable or
unenforceable shall not affect in any way the ability of such party to pursue
any other remedy available to it.

Section 6.04. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

Section 6.05. CONSENT TO JURISDICTION.

(a) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES
THERETO HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE
STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK, AND ANY
APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT
AGAINST IT AND TO OR IN CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS OR
THE TRANSACTION OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE
PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ALL CLAIMS
IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD OR DETERMINED IN
SUCH NEW YORK STATE COURT OR IN SUCH FEDERAL COURT. THE PARTIES HERETO AGREE
THAT A FINAL JUDGMENT IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PROVIDED BY LAW. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE AND AGREE NOT TO ASSERT BY
WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR
PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION
OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING

<PAGE>

IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR
PROCEEDING IS IMPROPER OR THAT THE RELATED DOCUMENTS OR THE SUBJECT MATTER
THEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURTS.

(b) To the extent permitted by applicable law, the parties hereto shall
not seek and hereby waive the right to any review of the judgment of any such
court by any court of any other nation or jurisdiction which may be called
upon to grant an enforcement of such judgment.

(c) Each of the Class GP Certificateholders, OFL and the Seller hereby
irrevocably appoints and designates CT Corporation System, whose address is
1633 Broadway, New York, New York 10019, as its true and lawful attorney and
duly authorized agent for acceptance of service of legal process. Each of
the Class GP Certificateholders, the Seller and OFL agrees that service of
such process upon such Person shall constitute personal service of such
process upon it.

(d) Nothing contained in the Agreement shall limit or affect Financial
Security's right to serve process in any other manner permitted by law or to
start legal proceedings relating to any of the Transaction Documents against
the Seller or OFL or its property in the courts of any jurisdiction.

Section 6.06. CONSENT OF FINANCIAL SECURITY. In the event that
Financial Security's consent is required under any of the Transaction
Documents, the determination whether to grant or withhold such consent shall
be made by Financial Security in its sole discretion without any implied duty
towards any other Person, except as otherwise expressly provided therein.

Section 6.07. COUNTERPARTS. This Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.

Section 6.08. HEADINGS. The headings of articles and sections and the
table of contents contained in this Agreement are provided for convenience
only. They form no part of this Agreement and shall not affect its
construction or interpretation. Unless otherwise indicated, all references
to articles and sections in this Agreement refer to the corresponding articles
and sections of this Agreement.

Section 6.09. TRIAL BY JURY WAIVED. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN
CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS OR THE TRANSACTION. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT IT WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THE

<PAGE>

TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THIS
WAIVER.

Section 6.10. LIMITED LIABILITY. No recourse under any Transaction
Document shall be had against, and no personal liability shall attach to, any
officer, employee, director, affiliate or shareholder of any party hereto, as
such, by the enforcement of any assessment or by any legal or equitable
proceeding, by virtue of any statute or otherwise in respect of any of the
Transaction Documents, the Notes, the Certificates or the Policies, it being
expressly agreed and understood that each Transaction Document is solely a
corporate obligation of each party hereto, and that any and all personal
liability, either at common law or in equity, or by statute or constitution,
of every such officer, employee, director, affiliate or shareholder for
breaches by any party hereto of any obligations under any Transaction
Document is hereby expressly waived as a condition of and in consideration
for the execution and delivery of this Agreement.

Section 6.11. LIMITED LIABILITY OF MELLON BANK (DE), NATIONAL
ASSOCIATION. It is expressly understood and agreed by the parties hereto
that (a) this Agreement is executed and delivered by Mellon Bank (DE),
National Association, not individually or personally but solely as Owner
Trustee on behalf of the Trust, (b) each of the representations, undertakings
and agreements herein made on the part of the Trust is made and intended not
as personal representations, undertakings and agreements by Mellon Bank (DE),
National Association, but are made and intended for the purpose of binding
only the Trust Estate, (c) nothing herein contained shall be construed as
creating any liability on Mellon Bank (DE), National Association,
individually or personally, to perform any covenant of the Trust either
expressed or implied contained herein, all such liability, if any, being
expressly waived by the parties hereto and by any person claiming by, through
or under such parties and (d) under no circumstances shall Mellon Bank (DE),
National Association be personally liable for the payment of any indebtedness
or expenses of the Trust or be liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken by the
Trust under this Agreement.

Section 6.12. ENTIRE AGREEMENT. This Agreement and the Policies set
forth the entire agreement between the parties with respect to the subject
matter thereof, and this Agreement supersedes and replaces any agreement or
understanding that may have existed between the parties prior to the date
hereof in respect of such subject matter.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Insurance and Indemnity Agreement, all as of the day and year first
above written.

FINANCIAL SECURITY ASSURANCE INC.

By: /s/ Robert P. Cochran
-----------------------------------
Name: Robert P. Cochran
Title: Authorized Officer

OLYMPIC AUTOMOBILE RECEIVABLES
TRUST, 1996-A

By: Mellon Bank (DE), National
Association, not in its individual
capacity, but solely in its capacity
as Owner Trustee under the Trust
Agreement

By: /s/ E.D. Renn
-----------------------------------
Name: E.D. Renn
Title: Assistant Vice President

OLYMPIC FIRST GP INC.

By:
-----------------------------------
Name: John A. Witham
Title: Vice President and Chief
Financial Officer

OLYMPIC SECOND GP INC.

By:
-----------------------------------
Name: John A. Witham
Title: Vice President and Chief
Financial Officer

OLYMPIC FINANCIAL LTD.

By:
-----------------------------------
Name: John A. Witham
Title: Executive Vice President and
Chief Financial Officer

OLYMPIC RECEIVABLES FINANCE CORP.

By:
-----------------------------------
Name: John A. Witham
Title: Senior Vice President and
Chief Financial Officer

<PAGE>

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Insurance and Indemnity Agreement, all as of the day and year first
above written.

FINANCIAL SECURITY ASSURANCE INC.

By:
-----------------------------------
Name:
Title: Authorized Officer

OLYMPIC AUTOMOBILE RECEIVABLES
TRUST, 1996-A

By: Mellon Bank (DE), National
Association, not in its individual
capacity, but solely in its capacity
as Owner Trustee under the Trust
Agreement

By:
-----------------------------------
Name: E.D. Renn
Title: Assistant Vice President

OLYMPIC FIRST GP INC.

By: /s/ John A. Witham
-----------------------------------
Name: John A. Witham
Title: Vice President and Chief
Financial Officer

OLYMPIC SECOND GP INC.

By: /s/ John A. Witham
-----------------------------------
Name: John A. Witham
Title: Vice President and Chief
Financial Officer

OLYMPIC FINANCIAL LTD.

By: /s/ John A. Witham
-----------------------------------
Name: John A. Witham
Title: Executive Vice President and
Chief Financial Officer

OLYMPIC RECEIVABLES FINANCE CORP.

By: /s/ John A. Witham
-----------------------------------
Name: John A. Witham
Title: Senior Vice President and
Chief Financial Officer

<PAGE>

EXHIBIT 11.1

OLYMPIC FINANCIAL LTD.
COMPUTATION OF EARNINGS PER SHARE
(DOLLARS IN THOUSANDS)

THREE MONTHS ENDED
MARCH 31,
-------------------------------
PRIMARY: 1996 1995
-------------- --------------
<S> <C> <C>
Income before extraordinary item and preferred dividends . . . $ 11,078 $ 3,462
Less preferred dividends . . . . . . . . . . . . . . . . . . . (444) (565)
-------------- --------------
Net income before extraordinary item applicable to common
stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,634 2,897
Less extraordinary item. . . . . . . . . . . . . . . . . . . . ---- (3,344)
-------------- --------------
Net income (loss) applicable to common stock . . . . . . . . $ 10,634 $ (447)
-------------- --------------
-------------- --------------

Weighted average number of commons shares outstanding. . . . . 23,138,424 10,035,675
Net effect of assumed exercise of stock options and
warrants . . . . . . . . . . . . . . . . . . . . . . . . . . 2,603,248 2,469,697
-------------- --------------
Weighted average primary shares. . . . . . . . . . . . . . . 25,741,672 12,505,372
-------------- --------------
-------------- --------------

Net income per common share before extraordinary item. . . . . $ 0.41 $ 0.23
Extraordinary item per common share. . . . . . . . . . . . . . ---- (0.27)
-------------- --------------
Net income (loss) per common share . . . . . . . . . . . . . $ 0.41 $ (0.04)
-------------- --------------
-------------- --------------

FULLY DILUTED:
Income before extraordinary item and preferred dividends . . . $ 11,078 $ 3,462
Less extraordinary item. . . . . . . . . . . . . . . . . . . . ---- (3,344)
-------------- --------------
Net income, as adjusted. . . . . . . . . . . . . . . . . . . $ 11,078 $ 118
-------------- --------------
-------------- --------------

Weighted average number of common shares outstanding . . . . . 23,138,424 10,035,675
Net effect of assumed exercise of stock options and
warrants . . . . . . . . . . . . . . . . . . . . . . . . . . 2,933,625 2,886,892
Net effect of assumed conversion of 8% Cumulative
Convertible Exchangeable Preferred stock . . . . . . . . . . 4,146,280 5,263,398
-------------- --------------
Weighted average fully diluted shares. . . . . . . . . . . . 30,218,329 18,185,965
-------------- --------------
-------------- --------------

Net income per common share before extraordinary item. . . . . $ 0.37 $ 0.19
Extraordinary item per common share. . . . . . . . . . . . . . ---- (0.18)
-------------- --------------
Net income per common share. . . . . . . . . . . . . . . . . $ 0.37 $ 0.01
-------------- --------------
-------------- --------------

</TABLE>

<PAGE>

EXHIBIT 12.1
OLYMPIC FINANCIAL LTD.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------------- -------------------------
1996 1995 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
COMPUTATION OF INCOME:
Income (loss) before income taxes and
extraordinary item. . . . . . . . . . . . . . . $ 18,464 $ 5,769 $ 48,835 $ 6,030
Capitalized interest . . . . . . . . . . . . . . . ---- ---- ---- ----
----------- ----------- ----------- -----------
Income before income taxes and
capitalized interest. . . . . . . . . . . . . . 18,464 5,769 48,835 6,030

Fixed charges. . . . . . . . . . . . . . . . . . . 5,787 1,974 17,789 5,670
----------- ----------- ----------- -----------
Total income (loss) for computation. . . . . . . . $ 24,251 $ 7,743 $ 66,624 $ 11,700
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

COMPUTATION OF FIXED CHARGES:
Portion of rentals deemed
representative of interest (a). . . . . . . . . $ 271 $ 123 $ 614 $ 284

INTEREST:
Interest on long-term debt . . . . . . . . . . . . 4,738 1,677 15,529 5,254

Interest other than funding of purchase
of auto loans . . . . . . . . . . . . . . . . . 522 150 945 112

Amortization of debt
placement . . . . . . . . . . . . . . . . . . . 256 24 701 20
Capitalized interest . . . . . . . . . . . . . . . ---- ---- ---- ----
----------- ----------- ----------- -----------
Total fixed charges. . . . . . . . . . . . . . . . $ 5,787 $ 1,974 $ 17,789 $ 5,670
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Ratio of earnings to fixed
charges . . . . . . . . . . . . . . . . . . . . 4.19x 3.92x 3.75x 2.06x
Deficiency in earnings to fixed charges . . . . . --- ---- ---- ----

ADDITIONAL INFORMATION:
Net rental expense . . . . . . . . . . . . . . . . $ 813 $ 370 $ 1,842 $ 861
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<CAPTION>
PERIOD FROM
MARCH 8, 1990
SIX MONTHS (DATE OF
YEAR ENDED DECEMBER 31, ENDED INCORPORATION)
------------------------- DECEMBER 31, TO JUNE 30,
1993 1992 1991 1991
----------- ----------- -------------- ----------------
<S> <C> <C> <C> <C>
COMPUTATION OF INCOME:
Income (loss) before income taxes and
extraordinary item. . . . . . . . . . . . . . . $ 1,395 ($1,342) ($1,158) ($1,525)
Capitalized interest . . . . . . . . . . . . . . . ---- ---- ---- ----
----------- ----------- -------------- ----------------
Income before income taxes and
capitalized interest. . . . . . . . . . . . . . 1,395 (1,342) (1,158) (1,525)
Fixed charges. . . . . . . . . . . . . . . . . . . 1,946 896 96 191
----------- ----------- -------------- ----------------
Total income (loss) for computation. . . . . . . . $ 3,341 ($446) ($1,062) ($1,334)
----------- ----------- -------------- ----------------
----------- ----------- -------------- ----------------

COMPUTATION OF FIXED CHARGES:
Portion of rentals deemed
representative of interest (a). . . . . . . . . $ 129 $ 68 $ 24 $ 30
INTEREST:
Interest on long-term debt . . . . . . . . . . . . 1,734 740 ---- ----
Interest other than funding of purchase
of auto loans . . . . . . . . . . . . . . . . . 63 70 70 58

Amortization of debt
placement . . . . . . . . . . . . . . . . . . . 20 18 2 103
Capitalized interest . . . . . . . . . . . . . . . ---- ---- ---- ----
----------- ----------- -------------- ----------------
Total fixed charges. . . . . . . . . . . . . . . . $ 1,946 $ 896 $ 96 $ 191
----------- ----------- -------------- ----------------
----------- ----------- -------------- ----------------
Ratio of earnings to fixed
charges . . . . . . . . . . . . . . . . . . . . 1.72x ---- ---- ----

Deficiency in earnings to fixed charges . . . . . ---- ($1,342) ($1,158) ($1,525)

ADDITIONAL INFORMATION:
Net rental expense . . . . . . . . . . . . . . . . $ 391 $ 207 $ 73 $ 91
----------- ----------- -------------- ----------------
----------- ----------- -------------- ----------------

</TABLE>

(a) Portion of rental deemed representative of interest equals one third of
rental expense.

<PAGE>

EXHIBIT 12.2
OLYMPIC FINANCIAL LTD.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(DOLLARS IN THOUSANDS)

THREE MONTHS ENDED MARCH 31, YEAR ENDED DECEMBER 31,
---------------------------- ---------------------------
1996 1995 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
COMPUTATION OF INCOME:
Income (loss) before income taxes and extraordinary item . . . . $ 18,464 $ 5,769 $ 48,835 $ 6,030
Capitalized interest . . . . . . . . . . . . . . . . . . . . . . ---- ---- ---- ----
------------ ------------ ------------ ------------
Income before income taxes and capitalized interest. . . . . . . 18,464 5,769 48,835 6,030
Fixed charges. . . . . . . . . . . . . . . . . . . . . . . . . . 6,528 2,915 21,477 5,670
------------ ------------ ------------ ------------
Total income (loss) for computation. . . . . . . . . . . . . . . $ 24,992 $ 8,684 $ 70,312 $ 11,700
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

COMPUTATION OF FIXED CHARGES:
Portion of rentals deemed representative of interest (a) . . . . $ 271 $ 123 $ 614 $ 284
INTEREST:
Interest on long-term debt . . . . . . . . . . . . . . . . . . . 4,738 1,677 15,529 5,254
Interest other than funding of purchase of auto loans. . . . . . 522 150 945 112
Amortization of debt placement . . . . . . . . . . . . . . . . . 256 24 701 20
Capitalized interest . . . . . . . . . . . . . . . . . . . . . . ---- ---- ---- ----
------------ ------------ ------------ ------------
Total fixed charges. . . . . . . . . . . . . . . . . . . . . . . $ 5,787 $ 1,974 $ 17,789 $ 5,670
Preferred stock dividends in a pre-tax basis . . . . . . . . . . 741 941 3,688 3,286
------------ ------------ ------------ ------------
Total combined fixed charges and preferred stock dividends . . . $ 6,528 $ 2,915 $ 21,477 $ 8,956
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Ratio of earnings to combined fixed charges and preferred
stock dividends. . . . . . . . . . . . . . . . . . . . . . . . 3.83x 2.98x 3.27x 1.31x
Deficiency in earnings to combined fixed charges and
preferred stock dividends. . . . . . . . . . . . . . . . . . . ---- ---- ---- ----

ADDITIONAL INFORMATION:
Net rental expense . . . . . . . . . . . . . . . . . . . . . . . $ 813 $ 370 $ 1,842 $ 861
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
<CAPTION>
PERIOD FROM
MARCH 8, 1990
SIX MONTHS (DATE OF
YEAR ENDED DECEMBER 31, ENDED INCORPORATION)
-------------------------- DECEMBER 31, TO JUNE 30,
1993 1992 1991 1991
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
COMPUTATION OF INCOME:
Income (loss) before income taxes and extraordinary item . . . . $ 1,395 ($1,342) ($1,158) ($1,525)
Capitalized interest . . . . . . . . . . . . . . . . . . . . . . ---- ---- ---- ----
------------ ------------ ------------ ------------
Income before income taxes and capitalized interest. . . . . . . 1,395 (1,342) (1,158) (1,525)
Fixed charges. . . . . . . . . . . . . . . . . . . . . . . . . . 1,946 896 96 191
------------ ------------ ------------ ------------
Total income (loss) for computation. . . . . . . . . . . . . . . $ 3,341 ($446) ($1,062) ($1,334)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

COMPUTATION OF FIXED CHARGES:
Portion of rentals deemed representative of interest (a) . . . . $ 129 $ 68 $ 24 $ 30
INTEREST:
Interest on long-term debt . . . . . . . . . . . . . . . . . . . 1,734 740 ---- ----
Interest other than funding of purchase of auto loans. . . . . . 63 70 70 58
Amortization of debt placement . . . . . . . . . . . . . . . . . 20 18 2 103
Capitalized interest . . . . . . . . . . . . . . . . . . . . . . ---- ---- ---- ----
------------ ------------ ------------ ------------
Total fixed charges. . . . . . . . . . . . . . . . . . . . . . . $ 1,946 $ 896 $ 96 $ 191
Preferred stock dividends in a pre-tax basis . . . . . . . . . . 192 ---- ---- ----
------------ ------------ ------------ ------------
Total combined fixed charges and preferred stock dividends . . . $ 2,138 $ 896 $ 96 $ 191
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Ratio of earnings to combined fixed charges and preferred
stock dividends. . . . . . . . . . . . . . . . . . . . . . . . 1.56x ---- ---- ----
Deficiency in earnings to combined fixed charges and
preferred stock dividends. . . . . . . . . . . . . . . . . . . ---- ($1,342) ($1,158) ($1,525)

ADDITIONAL INFORMATION:
Net rental expense . . . . . . . . . . . . . . . . . . . . . . . $ 391 $ 207 $ 73 $ 91
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

</TABLE>

(a) Portion of rental deemed representative of interest equals one third of
rental expense.

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 3/31/96
FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 22,552
<SECURITIES> 0
<RECEIVABLES> 509,643
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23,955
<PP&E> 12,044
<DEPRECIATION> 2,457
<TOTAL-ASSETS> 565,737
<CURRENT-LIABILITIES> 174,942
<BONDS> 198,230
9
0
<COMMON> 232
<OTHER-SE> 192,324
<TOTAL-LIABILITY-AND-EQUITY> 565,737
<SALES> 0
<TOTAL-REVENUES> 43,996
<CGS> 0
<TOTAL-COSTS> 20,016
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,516
<INCOME-PRETAX> 18,464
<INCOME-TAX> 7,386
<INCOME-CONTINUING> 11,078
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,078
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0.37

</TABLE>