Associates First Capital Corp – ‘S-4’ on 2/29/00

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Registration of Securities Issued in a Business-Combination Transaction   —   Form S-4
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-4         Registration of Securities Issued in a               204   1.17M 
                          Business-Combination Transaction                       
 2: EX-5        Opinion re: Legality                                   3     12K 
 3: EX-12       Statement re: Computation of Ratios                    1      8K 
 4: EX-23.1     Consent of Experts or Counsel                          1      7K 
 5: EX-23.2     Consent of Experts or Counsel                          1      6K 
 6: EX-24       Power of Attorney                                      2±    12K 
 7: EX-25       Statement re: Eligibility of Trustee                   5     24K 
 8: EX-27       Financial Data Schedule (Pre-XBRL)                     2     10K 
 9: EX-99.2     Miscellaneous Exhibit                                  1      8K 
10: EX-99.3     Miscellaneous Exhibit                                  2     13K 

S-4   —   Registration of Securities Issued in a Business-Combination Transaction
Document Table of Contents

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 1, 2000 

                                                 REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM S-4
REGISTRATION STATEMENT
UNDER 
THE SECURITIES ACT OF 1933
------------------------

ASSOCIATES FIRST CAPITAL CORPORATION
(Exact name of Registrant as specified in its charter)

                                                        [Enlarge/Download Table]
                                                                                     
            DELAWARE                         6141                    06-0876639      
(State or other jurisdiction of  (Primary Standard Industrial     (I.R.S. Employer   
         incorporation)          Classification Code Number)   Identification Number)

250 EAST CARPENTER FREEWAY
IRVING, TEXAS 75062 
(972) 652-4000
(Address, including zip code, and telephone number, including 
area code, of Registrant's principal executive offices) 
CHESTER D. LONGENECKER, ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
ASSOCIATES FIRST CAPITAL CORPORATION
250 EAST CARPENTER FREEWAY
IRVING, TEXAS 75062 
(972) 652-4000
(Name, address, including zip code, and telephone number, 
including area code, of agent for service)
------------------------------

with copies to: 

                                                                [Download Table]
                                                       
 ALAN D. SCHNITZER, ESQ.    WILLIAM J. GRANT, JR., ESQ.
SIMPSON THACHER & BARTLETT    WILLKIE FARR & GALLAGHER 
   425 LEXINGTON AVENUE          787 SEVENTH AVENUE    
 NEW YORK, NEW YORK 10017     NEW YORK, NEW YORK 10019 
      (212) 455-2000               (212) 728-8000      

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At the 
effective time of the merger of a wholly owned subsidiary of the Registrant with
and into Arcadia Financial Ltd., which shall occur as soon as practicable after 
the effective date of this Registration Statement and the satisfaction of or    
waiver of all conditions to the closing of such merger.                         

If the securities being registered on this form are being offered in    
connection with the formation of a holding company and there is compliance with 
the General Instruction G, check the following box: / /                         

If this form is filed to register additional securities for an offering 
pursuant to Rule 462(b) under the Securities Act registration statement number  
of the earlier effective registration statement for the same offering. / /      

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act   
registration statement number of the effective registration statement for the   
same offering. / /                                                              
------------------------------

CALCULATION OF REGISTRATION FEE 

                                                        [Enlarge/Download Table]

                                                                      PROPOSED         PROPOSED                          
                                                                       MAXIMUM          MAXIMUM                          
           TITLE OF SECURITIES TO                  AMOUNT TO       OFFERING PRICE      AGGREGATE           AMOUNT OF     
                BE REGISTERED                  BE REGISTERED(1)     PER SHARE(2)   OFFERING PRICE(2)  REGISTRATION FEE(3)
                                                                                                                         
                                              45,644,630 Residual                                                        
Residual Value Obligations...................  Value Obligations        $0.00            $0.00               $0.00       

(1) Based upon the maximum number of Residual Value Obligations which may be    
  issued in connection with the merger described herein to holders of Common
Stock and to holders of options to purchase Common Stock of Arcadia     
Financial Ltd.                                                          

(2) Estimated solely for purposes of calculating the registration fee in        
   accordance with Rules 457(c) and 457(f)(1) and (3) of the Securities Act of
    1933, as amended, based upon the market value of the Common Stock of Arcadia
Financial Ltd. on February 28, 2000.                                    

(3) In connection with the transactions described herein, Arcadia               
Financial Ltd. paid a fee of $44,732 at the time of the filing of       
preliminary proxy materials on Schedule 14A on December 23, 1999.       
------------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION       
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF  
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME   
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), 
MAY DETERMINE.                                                                  

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ARCADIA FINANCIAL LTD.
7825 WASHINGTON AVENUE SOUTH
MINNEAPOLIS, MN 55439 

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS 
TO BE HELD ON MARCH 31, 2000

   We will hold a special meeting of shareholders of Arcadia Financial Ltd. at
10:00 a.m., local time, on March 31, 2000 at The Waldorf-Astoria Hotel, 301 Park
Avenue, New York, New York, for the following purpose:                          

1. To consider and vote upon a proposal to approve the merger agreement 
among Associates First Capital Corporation, AFCC Newco, Inc., a wholly owned    
subsidiary of Associates, and Arcadia, and the merger of AFCC Newco, Inc. into  
Arcadia pursuant to the merger agreement, under which Arcadia will become a     
wholly owned subsidiary of Associates and each outstanding share of Arcadia     
common stock, except for shares owned by Associates or any wholly owned         
subsidiary of Associates, shares owned by Arcadia and shares owned by           
shareholders who exercise and preserve their dissenters' rights in accordance   
with Minnesota law, will be converted into the right to receive $4.90 in cash,  
without interest, and one residual value obligation of Associates, the terms of 
which are described in the accompanying proxy statement/prospectus; and         

 2. To transact any other business as may properly come before the special
meeting or any adjournments of the special meeting.                             

Your board of directors, based in part upon the unanimous approval of a 
special committee of disinterested directors, has determined that the terms of  
the merger are advisable and fair to, and in the best interests of, Arcadia and 
you, and unanimously recommends that you vote to approve the merger and the     
merger agreement.                                                               

We describe the merger more fully in the accompanying proxy             
statement/prospectus, which we urge you to read.                                

Completion of the merger is subject to a number of business and legal   
conditions, including the receipt of required Arcadia shareholder approval. Only
Arcadia shareholders of record at the close of business on February 28, 2000 are
entitled to notice of and to vote at the special meeting or any adjournments of 
the special meeting.                                                            

If the merger is completed, shareholders of Arcadia who dissent from the
merger and comply with all the requirements of Minnesota law have the right to  
receive the "fair value" of their shares in cash. See "The Merger--Dissenters'  
Rights" in the accompanying proxy statement/prospectus for a summary of the     
rights of dissenting shareholders and a description of the procedures required  
to be followed by them to obtain the "fair value" for their shares in cash. A   
copy of the relevant provisions of Minnesota law are attached to this proxy     
statement/prospectus as Appendix E.                                             

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 Your vote is important. To assure that your shares are represented at the
special meeting, we urge you to complete, date and sign the enclosed proxy card 
and mail it promptly in the postage-paid envelope provided, whether or not you  
plan to attend the special meeting in person. You may also vote your shares by  
telephone or on the internet. If you choose to vote your shares by telephone or 
on the internet, please follow the instructions on the enclosed proxy card. You 
may revoke your proxy in the manner described in the accompanying proxy         
statement/prospectus at any time before it has been voted at the special        
meeting. You may vote in person at the special meeting even if you have returned
a proxy, provided that you first revoke your proxy.                             

                                                                [Download Table]
                                                         
By: Order of the Board of Directors                      
James Atkinson                                           
SECRETARY                                                

Minneapolis, Minnesota                                                          
March 3, 2000                                                                   

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                                                                [Download Table]
                                                                        
ARCADIA FINANCIAL LTD.              ASSOCIATES FIRST CAPITAL CORPORATION
    PROXY STATEMENT                              PROSPECTUS             

MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT

   The boards of directors of Associates First Capital Corporation and Arcadia
Financial Ltd. have agreed that Associates will acquire Arcadia by means of a   
merger. After the merger, Arcadia will be a wholly owned subsidiary of          
Associates.                                                                     

   In the merger, your shares of Arcadia common stock, except for shares owned
by shareholders who exercise and preserve their dissenters' rights, will be     
converted into the right to receive:                                            

- $4.90 in cash, without interest; and                                  

- one residual value obligation of Associates, the terms of which are   
described in this proxy statement/prospectus.                       

IT IS UNCLEAR IF ANY PAYMENTS WILL BE MADE ON THE RESIDUAL VALUE        
OBLIGATIONS; CONSEQUENTLY, THE RESIDUAL VALUE OBLIGATIONS MAY HAVE NO VALUE. SEE
"PROXY STATEMENT/PROSPECTUS SUMMARY--PAYMENTS ON THE RESIDUAL VALUE             
OBLIGATIONS." THE MERGER WILL BE A TAXABLE TRANSACTION FOR ARCADIA SHAREHOLDERS 
FOR U.S. FEDERAL INCOME TAX PURPOSES.                                           

  After consummation of the merger, Arcadia shareholders will no longer have
any equity interest in Arcadia and will not have an equity interest in          
Associates.                                                                     

Arcadia common stock is traded on the New York Stock Exchange under the 
symbol "AAC". On February 28, 2000, the closing price per share of Arcadia      
common stock was $4.69.                                                         

    Arcadia will hold a special meeting of its shareholders to consider and vote
upon the merger proposal and other matters. The special meeting will be held on 
March 31, 2000 at 10:00 a.m., local time, at The Waldorf-Astoria Hotel, 301 Park
Avenue, New York, New York. In order to complete the merger, the holders of a   
majority of the outstanding shares of Arcadia common stock must approve the     
merger and the merger agreement.                                                

Your board of directors, based in part upon the unanimous approval of a 
special committee of disinterested directors, has determined that the terms of  
the merger are advisable and fair to, and in the best interests of, Arcadia and 
you, and unanimously recommends that you approve the merger and the merger      
agreement. J.P. Morgan Securities Inc., financial advisor to Arcadia, has issued
an opinion to the effect that, as of the date of the opinion and based upon and 
subject to matters stated in the opinion, the consideration to be received in   
the merger by you is fair to you from a financial point of view.                
------------------------

Neither the Securities and Exchange Commission nor any state securities 
commission has approved or disapproved the residual value obligations of        
Associates to be issued in the merger or determined if this proxy               
statement/prospectus is accurate or adequate. Any representation to the contrary
is a criminal offense.                                                          
------------------------

proxy statement/prospectus dated March 3, 2000
and first mailed to shareholders on March 3, 2000 

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TABLE OF CONTENTS 

                                                                [Download Table]

                                                                PAGE  
                                                              --------
                                                                      
QUESTIONS AND ANSWERS ABOUT THE MERGER......................  iii     
PROXY STATEMENT/PROSPECTUS SUMMARY..........................  1       
MARKET PRICE INFORMATION....................................  10      
RISK FACTORS................................................  12      
  Risks Relating to the Transaction.........................  12      
  Risks Relating to the Residual Value Obligations..........  14      
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE.............  21      
THE SPECIAL MEETING.........................................  22      
  General...................................................  22      
  Date, Time and Place......................................  22      
  Matters to Be Considered at the Special Meeting...........  22      
  Record Date...............................................  22      
  Voting of Proxies.........................................  22      
  Votes Required............................................  22      
  Quorum; Abstentions and Broker Non-Votes..................  23      
  Solicitation of Proxies and Expenses......................  23      
  Board Recommendation......................................  23      
THE MERGER..................................................  25      
  Background of the Merger..................................  25      
  Reasons for the Merger; Recommendation of the Board of              
    Directors...............................................  29      
  Opinion of Financial Advisor..............................  31      
  Interests of Directors and Officers in the Merger.........  35      
  Certain Federal Income Tax Considerations.................  36      
  Anticipated Accounting Treatment..........................  38      
  Dissenters' Rights........................................  39      
  Listing of Residual Value Obligations.....................  41      
  Operations Following the Merger...........................  41      
DESCRIPTION OF RESIDUAL VALUE OBLIGATIONS...................  42      
  General...................................................  42      
  RVO Payments..............................................  42      
  Allocations of Residual Cash Flow.........................  43      
  Payments on, and Exchanges and Transfers of, the Residual           
    Value Obligations.......................................  44      
  Servicing of Auto Loan Receivables Subject to the                   
    Designated Securitization Transactions..................  45      
  Amendment to Designated Securitization Transactions.......  45      
  Reporting Requirements....................................  45      
  Paying Agent and Registrar................................  45      
  Transfer and Exchange.....................................  45      
  Optional Redemption.......................................  46      
  Merger and Consolidation..................................  46      
  Assignment................................................  47      
  Events of Default.........................................  48      
  Amendments and Waivers....................................  49      
  No Personal Liability of Directors, Officers, Employees             
    and Stockholders........................................  50      
  Concerning the Trustee....................................  50      
  Determinations of Associates Final........................  50      
  Governing Law.............................................  50      
  Certain Definitions.......................................  51      

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                                                                [Download Table]

                                                                PAGE  
                                                              --------
                                                                      
THE MERGER AGREEMENT AND RELATED AGREEMENTS.................  56      
  The Merger................................................  56      
  Effective Time............................................  56      
  Directors and Officers of Arcadia After the Merger........  56      
  Conversion of Arcadia Shares in the Merger................  56      
  Stock Options.............................................  56      
  Restricted Stock..........................................  57      
  Warrants..................................................  57      
  The Exchange Agent........................................  57      
  Transfer of Ownership; Distributions with Respect to                
    Unexchanged Shares......................................  57      
  Representations and Warranties............................  58      
  Arcadia's Conduct of the Business Pending the Merger......  59      
  Regulatory Matters........................................  62      
  No Solicitation of Transactions...........................  62      
  Director and Officer Indemnification and Insurance........  63      
  Conditions to Completion of the Merger....................  63      
  Termination of the Merger Agreement.......................  64      
  Payment of Fees and Expenses..............................  64      
  Extension, Waiver and Amendment of the Merger Agreement...  66      
  Voting Agreement..........................................  66      
  Asset Purchase Agreement..................................  66      
  Servicing Agreement.......................................  67      
LEGAL PROCEEDINGS...........................................  68      
WHERE YOU CAN FIND MORE INFORMATION.........................  69      
EXPERTS.....................................................  71      
SHAREHOLDER PROPOSALS.......................................  71      
LEGAL MATTERS...............................................  71      
APPENDIX A  --  THE MERGER AGREEMENT                                  
APPENDIX B  --  FORM OF RESIDUAL VALUE OBLIGATIONS AGREEMENT          
APPENDIX C  --  FAIRNESS OPINION OF J.P. MORGAN SECURITIES,           
  INC.                                                                
APPENDIX D  --  THE VOTING AGREEMENT                                  
APPENDIX E  --  SECTIONS 302A.471 AND 302A.473 OF THE                 
                MINNESOTA BUSINESS CORPORATION ACT                    
APPENDIX F  --  FINANCIAL DATA RELATING TO THE RECEIVABLES            
                UNDERLYING THE RESIDUAL VALUE OBLIGATIONS             

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QUESTIONS AND ANSWERS ABOUT THE MERGER

Q: WHAT WILL I RECEIVE IN THE MERGER?                                           

A: If the merger is completed and you do not exercise and preserve your 
dissenters' rights under Minnesota law, you will receive $4.90 in cash and one  
residual value obligation of Associates for each share of Arcadia common stock  
you own.                                                                        

Q: WHAT IS A RESIDUAL VALUE OBLIGATION?                                         

A: A residual value obligation is a general unsecured obligation of     
Associates to make payments to the holder of the residual value obligation      
generally based on the performance of receivables which have been securitized by
Arcadia. There are no minimum payments on the residual value obligations, and   
depending on the performance of the underlying receivables and other factors,   
there may be no payments on the residual value obligations. These securities are
described in more detail under the caption "Description of Residual Value       
Obligations" beginning on page 42.                                              

Q: WHAT WILL HAPPEN TO ARCADIA AFTER THE MERGER?                                

A: After the merger, Arcadia will be a wholly owned subsidiary of       
Associates.                                                                     

Q: WHEN DO YOU EXPECT TO COMPLETE THE MERGER?                                   

A: We are working to complete the merger in April of 2000. Because the  
merger is subject to various conditions, however, we cannot predict the exact   
timing.                                                                         

Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?                                  

 A: No. After we complete the merger, Associates will send instructions to
Arcadia shareholders explaining how to exchange their shares of Arcadia common  
stock for the merger consideration.                                             

Q: HOW DO I VOTE?                                                               

 A: Mail your signed proxy card in the enclosed return envelope as soon as
possible so that your shares may be represented at the special shareholders     
meeting. You may also vote your shares by telephone or on the internet. If you  
choose to vote your shares by telephone or on the internet, please follow the   
instructions on the enclosed proxy card. You may also attend the meeting in     
person instead of submitting a proxy. If your shares are held in "street name"  
by your broker, your broker will vote your shares only if you provide           
instructions on how to vote. You should follow the directions provided by your  
broker regarding how to instruct your broker to vote your shares. If you do not 
return your card or vote via telephone or the internet, or if you do not        
instruct your broker how to vote any shares held for you in "street name," the  
effect will be a vote AGAINST the merger proposal.                              

Q: DOES THE BOARD OF DIRECTORS RECOMMEND VOTING IN FAVOR OF THE MERGER?         

A: Yes. After careful consideration, Arcadia's board of directors       
unanimously recommends that you vote to approve the merger and the merger       
agreement. For a more complete description of the recommendation of the board of
directors of Arcadia, see page 29.                                              

Q: AM I ENTITLED TO DISSENTERS' RIGHTS?                                         

    A: Yes. You are entitled to dissenters' rights in connection with the merger
by properly complying with the requirements of Minnesota law. For a more        
complete description of dissenters' rights, see the information under the       
caption "Dissenters' Rights" beginning on page 39. In addition, we have         

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attached to this proxy statement/prospectus the full text of the applicable     
provisions of Minnesota law as Appendix E.                                      

Q: CAN I CHANGE MY VOTE AFTER SUBMITTING MY PROXY?                              

    A: Yes. You may change your vote by delivering a signed notice of revocation
or a later-dated, signed proxy card to the corporate secretary of Arcadia before
the vote at the special meeting. If you vote your proxy by telephone or via the 
internet, following the procedures outlined on the enclosed proxy card, you may 
change your vote in accordance with the above instructions or by voting again by
telephone or via the internet.                                                  

Q: WHO CAN I CALL WITH QUESTIONS?                                               

A: If you have questions about the merger, please call MacKenzie        
Partners, Inc., Arcadia's proxy solicitor, at 1-800-322-2885.                   

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PROXY STATEMENT/PROSPECTUS SUMMARY

    This brief summary does not contain all of the information that is important
to you. You should carefully read this entire proxy statement/prospectus,       
including the appendices, and the other documents we refer to for a more        
complete understanding of the merger. See "Where You Can Find More Information" 
beginning on page 69.                                                           

THE MERGER (PAGE 25)                                                            

 Associates and Arcadia have entered into a merger agreement that provides
for the merger of Arcadia and a newly formed subsidiary of Associates. As a     
result of the merger, Arcadia will become a wholly owned subsidiary of          
Associates. We expect to complete the merger in April of 2000. We urge you to   
read the merger agreement, which is included as Appendix A to this proxy        
statement/prospectus, carefully and in its entirety.                            

EACH ARCADIA SHARE WILL BE EXCHANGED FOR $4.90 IN CASH AND ONE RESIDUAL 
VALUE OBLIGATION OF ASSOCIATES (PAGE 56)                                        

 Upon completion of the merger, each share of Arcadia common stock, except
for shares owned by Associates or any wholly owned subsidiary of Associates,    
shares owned by Arcadia and shares owned by shareholders who properly exercise  
and preserve their dissenters' rights under Minnesota law, will be converted    
into the right to receive $4.90 in cash, without interest, and one residual     
value obligation of Associates.                                                 

PAYMENTS ON THE RESIDUAL VALUE OBLIGATIONS (PAGE 42)                            

THERE ARE NO MINIMUM PAYMENTS ON THE RESIDUAL VALUE OBLIGATIONS, AND    
ASSOCIATES EXPECTS THAT THERE WILL NOT BE ANY PAYMENTS ON THE RESIDUAL VALUE    
OBLIGATIONS.                                                                    

Arcadia believes that there may be payments on the residual value       
obligations. Payments will not be made on the residual value obligations unless 
cash from specified sources in excess of $512 million plus interest from        
September 30, 1999 and other expenses, less other specified amounts, is released
to Associates or its subsidiaries. The specified sources of cash are:           

- cash released from spread accounts established in connection with     
  Arcadia's existing securitizations of automobile loan receivables; and

- cash generated by receivables which were securitized by Arcadia as of 
      September 30, 1999 but are no longer included in the securitization trusts
     on the cash release date, less specified amounts. This component is meant
  to approximate the cash generated by a formerly securitized receivable
   that would have been available to Associates or its subsidiaries if the
receivable had not been transferred out of the securitization trust.

Finance income receivable is an asset on Arcadia's balance sheet which  
generally represents Arcadia's view of the present value of the cash it expects 
to be released from these spread accounts and other loans. Arcadia expects that 
the book value of the finance income receivable on its financial statements as  
of December 31, 1999 will be approximately $557 million. Based on this valuation
and disregarding specified costs and other expenses which will reduce payments  
on the residual value obligations, holders of residual value obligations would  
receive payments with a present value of approximately $0.53 per residual value 
obligation (assuming exercise of all outstanding Arcadia stock options prior to 
closing).                                                                       

Any amounts paid on the residual value obligations will be paid over a  
period of time, and, if there are payments, it is unlikely that there would be  
any payments prior to January 1, 2004. For a discussion of the matters that may 
affect whether and to what extent payments are made on the residual value       
obligations, see "Risk Factors--Risks Relating to the Residual Value            
Obligations."                                                                   

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SUMMARY EFFECTS OF THE MERGER (PAGE 56)                                         

    When we complete the merger, your shares of Arcadia common stock, except for
shares owned by shareholders who properly exercise and preserve their           
dissenters' rights under Minnesota law, will be converted into the right to     
receive the merger consideration of $4.90 in cash and one residual value        
obligation of Associates.                                                       

Following the merger, Associates will own all of Arcadia's outstanding  
shares of common stock. Associates will have complete control over the          
management and conduct of Arcadia's business, all income generated by Arcadia   
and any future increase in Arcadia's value. Similarly, Associates will also bear
the risk of any losses incurred in the operation of Arcadia and any decrease in 
the value of Arcadia. As a result of the merger, Arcadia will be privately held 
and there will be no public market for Arcadia's common stock. When we complete 
the merger, Arcadia's common stock will no longer be listed on the New York     
Stock Exchange and will no longer be registered under the Securities Exchange   
Act of 1934, as amended.                                                        

THE RESIDUAL VALUE OBLIGATIONS, WHICH MAY HAVE NO VALUE (PAGE 42)               

The residual value obligations are general unsecured obligations of     
Associates to make payments to the holders generally based on the performance of
automobile loan receivables which have been securitized by Arcadia. Attached as 
Appendix F to this proxy statement/prospectus is information about the          
historical performance of the receivables. The securitization transactions that 
will be the basis for payments on the residual value obligations are designated 
on Annex I to the form of Residual Value Obligations Agreement which is attached
as Appendix B to this proxy statement/prospectus. There are no minimum payments 
on the residual value obligations, and depending on the performance of the      
underlying receivables and other factors, there may be no payments on the       
residual value obligations.                                                     

We do not expect to list the residual value obligations on any national 
securities exchange or to seek their quotation on any automated dealer quotation
system. We have been advised by J.P. Morgan Securities Inc. that following      
completion of the merger, J.P. Morgan intends to make a market in the residual  
value obligations. However, it is not obligated to do so and any market-making  
activities with respect to the residual value obligations may be discontinued at
any time without notice.                                                        

You should refer to the detailed description of the residual value      
obligations under the caption "Description of Residual Value Obligations"       
beginning on page 42 as well as the risk factors relating to the residual value 
obligations under the caption "Risk Factors--Risks Relating to the Residual     
Value Obligations" beginning on page 14.                                        

THE TRANSACTION WILL BE A TAXABLE EVENT FOR ARCADIA SHAREHOLDERS (PAGE 36)      

  The receipt of cash and residual value obligations in exchange for Arcadia
common stock pursuant to the merger will be a taxable transaction for Arcadia   
shareholders for United States federal income tax purposes and may also be a    
taxable transaction under applicable state, local and foreign tax laws. There   
are no authorities considering the tax treatment of instruments that are        
substantially the same as the residual value obligations. As a result, the tax  
treatment is unclear. You will most likely be required to recognize gain or loss
equal to the difference between the amount of cash received ($4.90 per share)   
and the fair market value of the residual value obligations received in the     
merger and the adjusted basis in your Arcadia common stock surrendered in the   
merger. The gain or loss will be a long-term capital gain or loss if you have   
held the Arcadia common stock for more than one year. If you are a non-corporate
shareholder a long-term capital gain will be subject to a maximum federal tax   
rate of 20%. Each residual value obligation received in exchange for your       
Arcadia common stock would then have a basis equal to its fair market value at  
the time of the exchange. Although there may be other possible tax treatments,  
if you receive a payment on a residual value obligation, a portion of that      
payment will be characterized as imputed interest and the balance as principal. 
For a more detailed                                                             

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description of the federal tax consequences of the merger, you should refer to  
the discussion under the caption "Certain Federal Income Tax Considerations" on 
page 36.                                                                        

You should consult your own tax advisors regarding all of the tax       
consequences of the merger.                                                     

ARCADIA'S FINANCIAL ADVISOR BELIEVES THE TRANSACTION IS FAIR TO THE SHAREHOLDERS
OF ARCADIA (PAGE 31)                                                            

In deciding to approve the merger and the merger agreement, the Arcadia 
board of directors considered, among various other factors described below in   
"The Merger--Reasons for the Merger; Recommendation of the Board of Directors," 
an opinion from J.P. Morgan Securities Inc., Arcadia's financial advisor. On    
November 12, 1999, J.P. Morgan delivered to the Arcadia board its oral opinion, 
which opinion was subsequently confirmed in writing, to the effect that, as of  
that date and based upon and subject to the matters stated in the opinion, the  
consideration Arcadia shareholders will receive in the merger is fair to the    
shareholders from a financial point of view. The full text of the written       
opinion of J.P. Morgan Securities Inc., dated November 12, 1999, which describes
assumptions made, matters considered and limitations on the review undertaken in
connection with the opinion, is attached as Appendix C to this proxy            
statement/prospectus. We urge you to read this opinion in its entirety.         

  In consideration for services rendered in connection with the transactions
contemplated by the merger agreement, Arcadia has paid J.P. Morgan an initial   
fee of $500,000 and, commencing in July 1999, a retainer fee of $100,000 per    
month. In addition, Arcadia has agreed to continue to pay J.P. Morgan the       
monthly retainer fee until closing, to pay J.P. Morgan a fee of 1.0% of the     
total transaction value of the merger, which fee will be reduced by a portion of
the total retainer fee, and to reimburse J.P. Morgan for its reasonable expenses
up to $100,000.                                                                 

ARCADIA SHAREHOLDERS HAVE DISSENTERS' RIGHTS (PAGE 39)                          

   You have the right to demand the "fair value" of your shares in cash and to
receive a cash amount that a court of competent jurisdiction in Hennepin County,
Minnesota decides is the "fair value" of your Arcadia shares. This amount may be
more or less than the value of the merger consideration you would receive       
pursuant to the merger agreement. This right is known as your "dissenter's      
right."                                                                         

  If you wish to exercise your dissenter's right, you must not vote in favor
of the merger and must take a series of steps which are summarized on pages     
39 - 41 and set out in full in Appendix E to this proxy statement/prospectus.   

    Associates' obligation to effect the merger is subject to the condition that
dissenters' rights are exercised by the holders of less than 10% of Arcadia's   
common stock.                                                                   

THE COMPANIES                                                                   

ASSOCIATES FIRST CAPITAL CORPORATION                                            
250 East Carpenter Parkway                                                      
Irving, Texas 75062                                                             
972-652-4000                                                                    

    Associates is a leading, diversified finance organization providing finance,
leasing and related services to individual consumers and businesses in the      
United States and internationally. Associates had 2,952 offices worldwide and   
32,981 employees as of September 30, 1999. Associates' corporate headquarters   
are located in Irving, Texas.                                                   

   For the year ended December 31, 1998, Associates had total managed revenues
of $10.0 billion and net earnings of $1.2 billion, and for the nine months ended
September 30, 1999, Associates had total managed revenues of $9.7 billion and   
net earnings of $1.1 billion. As of September 30, 1999,                         

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Associates had managed finance receivables of $81.7 billion, total managed      
assets of $92.3 billion and stockholders' equity of $9.5 billion. Associates    
believes that it is the largest publicly traded finance company in the United   
States based on market capitalization.                                          

ARCADIA FINANCIAL LTD.                                                          
7825 Washington Avenue South                                                    
Minneapolis, Minnesota 55439                                                    
612-942-9880                                                                    

Arcadia purchases, securitizes and services consumer automobile loans   
originated primarily by car dealers affiliated with major foreign and domestic  
manufacturers. Loans are purchased through 17 regional buying centers located in
14 states, supplemented by a network of dealer development representatives which
develop and maintain relationships with car dealers operating in each regional  
buying center's immediate market area or in surrounding market areas. Credit    
approval and loan processing are generally performed at the regional buying     
center or at Arcadia's headquarters in Minneapolis, Minnesota. Arcadia acts as  
the servicer of all loans originated and securitized by it in return for a      
monthly servicing fee.                                                          

THE SPECIAL MEETING (PAGE 22)                                                   

The Special Meeting will be held on March 31, 2000 at 10:00 a.m., local 
time, at The Waldorf-Astoria Hotel, 301 Park Avenue, New York, New York. At the 
special meeting or any adjournment of the special meeting, you will be asked to 
consider and vote upon a proposal to approve the merger and the merger          
agreement.                                                                      

RECORD DATE; VOTE REQUIRED (PAGE 22)                                            

    You can vote at the special meeting if you owned Arcadia common stock at the
close of business on February 28, 2000. On that date, there were 39,428,580     
shares of Arcadia common stock outstanding and entitled to vote. You can cast   
one vote for each share of Arcadia common stock that you owned on that date. In 
order to approve the merger and the merger agreement, the holders of a majority 
of the outstanding shares of Arcadia common stock must vote in favor of doing   
so. Pursuant to a voting agreement in the form attached to this proxy           
statement/prospectus as Appendix D, directors and executive officers of Arcadia 
beneficially owning an aggregate of 2,647,637 shares of Arcadia common stock as 
of November 12, 1999, not including any shares issuable upon the exercise of    
options, or 6.71% of the shares of Arcadia common stock outstanding on that     
date, have agreed to vote their shares of Arcadia common stock in favor of the  
merger and the merger agreement.                                                

In addition, all other directors and executive officers of Arcadia, who 
beneficially own an aggregate of 3,213,135 shares of Arcadia common stock as of 
February 28, 2000, not including any shares issuable upon the exercise of       
options, or 8.15% of the shares of Arcadia common stock outstanding on that     
date, have indicated their intention to vote their shares of Arcadia common     
stock in favor of the merger and the merger agreement.                          

WE RECOMMEND THAT ARCADIA SHAREHOLDERS APPROVE THE MERGER (PAGE 29)             

    The Arcadia board of directors, based in part upon the unanimous approval of
a special committee of disinterested directors, has determined that the terms   
and conditions of the merger are fair to you and in your best interests and     
unanimously recommends that you vote "FOR" approval of the merger and the merger
agreement.                                                                      

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OFFICERS AND DIRECTORS HAVE SOME INTERESTS IN THE MERGER THAT ARE DIFFERENT FROM
OR IN ADDITION TO THEIR INTERESTS AS SHAREHOLDERS (PAGE 35)                     

When considering the recommendation of the Arcadia board, you should be 
aware that some directors and officers of Arcadia have interests in the merger  
that are different from, or in addition to, yours. As a result, these directors 
and officers may be more likely to vote to approve the merger than Arcadia      
shareholders generally.                                                         

CONDITIONS TO COMPLETION OF THE MERGER (PAGE 63)                                

 The completion of the merger depends on a number of conditions being met,
including approval of the merger and the merger agreement by Arcadia's          
shareholders.                                                                   

   Where the law permits, a party to the merger agreement could elect to waive
a condition to its obligation to complete the merger although that condition has
not been satisfied. We cannot be certain when (or if) the conditions to the     
merger will be satisfied or waived or that the merger will be completed.        

WE MAY AMEND THE TERMS OF THE MERGER (PAGE 66)                                  

    We may jointly amend the terms of the merger. However, after you approve the
merger, you must approve any amendment which changes the amount or form of      
consideration to be received by you.                                            

WE MAY DECIDE NOT TO COMPLETE THE MERGER (PAGE 64)                              

We can agree at any time not to complete the merger, even if Arcadia's  
shareholders have approved it. Also, either of us can decide, without the       
consent of the other, not to complete the merger in a number of other           
situations, including:                                                          

- if the merger is not completed, without the fault of the terminating  
party, by May 10, 2000; or                                          

- if the Arcadia shareholders do not approve the merger and the merger  
agreement at the Arcadia special meeting.                           

In addition, Arcadia may terminate the merger agreement prior to the    
approval of the merger and the merger agreement by its shareholders in order to 
accept an unsolicited superior proposal.                                        

Furthermore, Associates may terminate the merger agreement if any of the
following occur:                                                                

 - Arcadia's board withdraws or materially changes or modifies in a manner
  adverse to Associates its recommendation to approve the merger and the
merger agreement;                                                   

- Arcadia's board recommends or accepts another transaction proposal;   

   - following a request by Associates, Arcadia's board fails to reconfirm its
approval and recommendation of the merger and the merger agreement; 

    - following public announcement of an alternative transaction which contains
    a proposal as to price, Arcadia's board fails to reject the proposal; or

  - Associates or any of its affiliates triggers Arcadia's rights agreement.

IF THE MERGER AGREEMENT IS TERMINATED, ARCADIA HAS AGREED TO PAY ASSOCIATES A   
TERMINATION FEE AND EXPENSES (PAGE 64)                                          

 Arcadia has agreed to pay Associates a termination fee of $8.0 million in
addition to reimbursing Associates for up to $1.0 million for its out-of-pocket 
expenses if the merger agreement is terminated under the circumstances that are 
described in the section "The Merger Agreement and Related Agreements--Payments 
of Fees and Expenses."                                                          

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ASSOCIATES DOES NOT HAVE TO COMPLETE THE MERGER WITHOUT THE REQUIRED REGULATORY 
APPROVALS (PAGE 63)                                                             

 The obligation of Associates to consummate the merger is conditioned upon
the receipt of all requisite regulatory approvals. While we do not know of any  
reason why we would not obtain the requisite regulatory approvals in a timely   
manner, we cannot be certain when or if we will obtain them.                    

SHAREHOLDER LITIGATION RELATING TO THE MERGER (PAGE 68)                         

    On November 16, 1999, November 24, 1999 and December 9, 1999, three lawsuits
were brought against Arcadia by shareholders of Arcadia in Minnesota state      
court. On January 18, 2000, these three suits were consolidated into one action,
in Minnesota state court. The consolidated action is purportedly a class action 
on behalf of all public shareholders of Arcadia and names Arcadia and its board 
of directors as defendants. In the consolidated action, plaintiffs allege that  
the defendants breached their fiduciary duties to Arcadia's public shareholders 
in connection with the execution of the merger agreement. After an initial      
review, Arcadia believes that the consolidated complaint is without merit and   
intends to defend it vigorously.                                                

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COMPARATIVE PER SHARE DATA

The comparative share data presented below should be read in conjunction
with our historical financial statements and related notes contained in the     
annual and other reports that we file with the Securities and Exchange          
Commission.                                                                     

    The following table shows on a pro forma basis unaudited data concerning the
net income, dividends and book value per share for Associates after giving      
effect to the merger, assuming that the merger occurred as of the beginning of  
the periods presented:                                                          

PRO FORMA BASIS:                                                                

                                                        [Enlarge/Download Table]

                                                             YEAR ENDED    NINE MONTHS  
                                                              DECEMBER   ENDED SEPTEMBER
                                                              31, 1998      30, 1999    
                                                             ----------  ---------------
                                                                                        
Basic net income per share..................................   $  1.67       $  1.49    
Diluted net income per share................................   $  1.66       $  1.48    
Dividends declared per share................................   $ 0.205       $ 0.165    
Book value per share at end of period.......................   $ 11.72       $ 13.01    

   The following tables set forth historical per share data for Associates and
Arcadia:                                                                        

ASSOCIATES:                                                                     

                                                        [Enlarge/Download Table]

                                                             YEAR ENDED    NINE MONTHS  
                                                              DECEMBER   ENDED SEPTEMBER
                                                              31, 1998      30, 1999    
                                                             ----------  ---------------
                                                                           (UNAUDITED)  
                                                                                        
HISTORICAL PER SHARE DATA:                                                              
Basic net income per share..................................   $  1.76       $  1.49    
Diluted net income per share................................   $  1.75       $  1.48    
Dividends declared per share................................   $ 0.205       $ 0.165    
Book value per share at end of period.......................   $ 11.72       $ 13.01    

ARCADIA:                                                                        

                                                        [Enlarge/Download Table]

                                                              YEAR ENDED    NINE MONTHS  
                                                               DECEMBER   ENDED SEPTEMBER
                                                               31, 1998      30, 1999    
                                                              ----------  ---------------
                                                                            (UNAUDITED)  
                                                                                         
HISTORICAL PER SHARE DATA:                                                               
Basic net income/(loss) per common share before cumulative                               
  effect (1)................................................    $(2.13)        $0.89     
Diluted net income/(loss) per common share before cumulative                             
  effect (1)................................................    $(2.13)        $0.88     
Basic net income/(loss) per common share after cumulative                                
  effect (1)................................................    $(2.13)        $0.79     
Diluted net income/(loss) per common share after cumulative                              
  effect (1)................................................    $(2.13)        $0.78     
Dividends declared per share................................     --           --         
Book value per share at end of period.......................    $ 6.86         $6.33     

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

(1) Effective January 1, 1999 Arcadia changed its accounting method for         
recognition of sales of asset-backed securities. Previously, Arcadia    
  recognized sales of asset-backed securities once an irrevocable commitment
  had been received, the loans to be sold had been identified and segregated
   from loans held for sale, and cash proceeds had been placed in the trust by
a third party. Arcadia now records sales of asset-backed securities upon
physical settlement, which generally occurs within 5 to 10 days of the  
segregation of the loans to be sold.                                    

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SELECTED FINANCIAL DATA OF ASSOCIATES 

  The following is a summary of consolidated financial information regarding
Associates' financial position and operating results as of the dates and for the
periods indicated. This information is only a summary and should be read in     
conjunction with the financial statements and other information Associates has  
filed with the Securities and Exchange Commission. See "Where You Can Find More 
Information" on page 69.                                                        

                                                        [Enlarge/Download Table]

                                                    NINE MONTHS                                                             
                                                    ENDED OR AT                                                             
                                                   SEPTEMBER 30,                                                            
                                                   -------------                 YEAR ENDED OR AT DECEMBER 31,              
                                                    (UNAUDITED)    ---------------------------------------------------------
                                                       1999          1998        1997        1996        1995        1994   
                                                    -----------    ---------   ---------   ---------   ---------   ---------
                                                                (DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)              
                                                                                                                            
STATEMENT OF OPERATIONS DATA:                                                                                               
  Total revenues..................................   $ 8,975.0     $ 9,376.8   $ 8,278.6   $ 7,098.2   $ 6,107.2   $ 4,925.8
  Earnings before provision for income taxes......     1,730.5       1,940.5     1,640.0     1,404.6     1,198.1     1,017.4
  Net earnings....................................     1,081.7       1,223.5     1,031.7       857.0       723.1       603.3
  Basic earnings per share........................        1.49          1.76        1.49        1.24        1.04            
  Diluted earnings per share......................        1.48          1.75        1.48        1.23        1.04            

BALANCE SHEET DATA:                                                                                                         
  Finance receivables.............................   $67,917.1     $60,939.0   $55,215.6   $46,512.9   $39,702.5   $33,685.7
  Total assets....................................    84,958.8      75,175.4    57,232.7    48,268.4    41,303.9    35,283.5
  Total long-term debt............................    42,878.7      37,596.7    28,228.0    24,029.5    21,372.6    17,306.2
  Stockholders' equity............................     9,471.9       8,526.5     6,268.6     5,437.5     4,801.1     4,436.8

SELECTED DATA AND RATIOS:                                                                                                   
  Total debt to equity............................       6.9:1         7.4:1       7.8:1       7.5:1       7.2:1       6.6:1
  Total debt to adjusted equity...................       7.6:1         8.1:1       8.8:1       8.8:1       9.0:1       8.5:1
  Total debt to tangible equity...................      11.4:1         9.5:1       9.5:1       9.7:1       9.9:1       9.6:1
  Ratio of earnings to fixed charges..............        1.59          1.60        1.59        1.57        1.55        1.61
  Allowance for losses to net finance                                                                                       
    receivables...................................       3.20%         3.25%       3.53%       3.36%       3.20%       3.15%
  Allowance for losses to net credit losses.......       1.63x         1.74x       1.59x       1.77x       2.03x       2.09x

Due to the change in Associates' capital structure as a result of its   
initial public offering, share and per share data for 1994 is not comparable to,
or meaningful in the context of, future periods. In addition, per share         
information has been adjusted to give retroactive effect to Associates two for  
one stock split on December 23, 1998, which was effected by a dividend of one   
share of Associates common stock for each share of Associates common stock      
outstanding.                                                                    

For all periods, the total debt to equity ratios are net of short-term  
investments. In addition, the debt to adjusted equity for all periods excludes  
the push-down goodwill created by Ford Motor Company's direct acquisition of    
foreign affiliates of Associates in 1989 in connection with Ford's acquisition  
of Associates. In the ratio of total debt to tangible equity, for all periods,  
tangible equity is defined as equity minus goodwill. In addition, the 1999 debt 
to equity ratios reflect the reclassification of a $500 million debt security   
from debt to equity.                                                            

 The allowance for losses to net credit losses is calculated as a ratio of
the allowance for losses to related annualized or trailing net credit losses on 
receivables owned at the end of the period.                                     

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SELECTED FINANCIAL DATA OF ARCADIA

  The following is a summary of consolidated financial information regarding
Arcadia's financial position and operating results as of the dates and for the  
periods indicated. This information is only a summary and should be read in     
conjunction with the financial statements and other information Arcadia has     
filed with the Securities and Exchange Commission. See "Where You Can Find More 
Information" on page 69.                                                        

                                                        [Enlarge/Download Table]

                                                 NINE MONTHS                                                                 
                                                 ENDED OR AT                                                                 
                                                SEPTEMBER 30,                  YEAR ENDED OR AT DECEMBER 31,                 
                                                -------------  --------------------------------------------------------------
                                                 (UNAUDITED)                (RESTATED)   (RESTATED)   (RESTATED)   (RESTATED)
                                                    1999          1998         1997         1996         1995         1994   
                                                -------------  ----------   ----------   ----------   ----------   ----------
                                                                      (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)        
                                                                                                                             
STATEMENT OF OPERATIONS DATA:                                                                                                
  Total revenues..............................    $  205,661   $  146,383   $  133,570   $  198,687   $  101,280    $ 27,089 
  Operating income (loss) before extraordinary                                                                               
    items and cumulative effect...............        35,011      (92,476)     (69,663)      81,196       41,383       4,331 
  Net income (loss)...........................        31,035      (83,241)     (59,018)      50,987       20,990       3,006 
  Income (loss) per share before extraordinary                                                                               
    items, net of tax.........................          0.89        (2.13)       (1.12)        1.61         1.28        0.07 
  Net income (loss) per share.................          0.79        (2.13)       (1.53)        1.61         1.06        0.07 

BALANCE SHEET DATA:                                                                                                          
  Cash and cash equivalents...................    $   16,093   $   10,827   $   17,274   $   16,507   $    1,340    $ 16,617 
  Finance income receivable...................       629,115      587,946      602,454      481,934      240,430      78,249 
  Total long-term debt........................       452,672      421,939      421,780      206,418      161,929      46,804 
  Total preferred shareholders' equity........            --           --           --           --       25,379      27,279 
  Total common shareholders' equity...........       249,591      268,809      335,454      378,114      149,784      32,404 

OPERATING DATA:                                                                                                              
  Automobile loan purchases...................    $1,807,027   $2,193,380   $2,862,821   $2,750,553   $2,052,413    $743,256 
  Automobile loan securitizations.............     1,700,605    2,198,326    2,864,120    2,787,412    1,933,525     712,211 

SERVICING DATA:                                                                                                              
  Servicing portfolio (at period end).........    $5,260,794   $5,096,222   $4,956,090   $3,791,857   $2,267,107    $837,095 
  Net losses as a percentage of average                                                                                      
    servicing portfolio during the period.....          4.11%        4.62%        3.48%        0.99%        0.67%       0.66%

  Due to changes in the risk-free interest rate and actual expenses incurred
in the fourth quarter of 1999, Arcadia expects to reduce the amount of the      
finance income receivable to approximately $557 million as of December 31, 1999.

   In conjunction with the adoption of Financial Accounting Standards No. 125,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishment  
of Liabilities," effective January 1, 1997, Arcadia began recognizing collection
fees and interest on collection accounts earned by Arcadia as servicer of the   
loans as a component of servicing fee income. Previously, collection fees and   
interest on collection accounts had been included as components of non-interest 
income and net interest margin, respectively. The Statement of Operations Data  
for the years ended December 31, 1994 through December 31, 1997 have been       
restated for this reclassification. This reclassification had no impact on total
revenues or net income (loss).                                                  

   Extraordinary items relate to prepayment fees and charge-off of capitalized
debt financing costs in connection with early extinguishment of debt            
obligations.                                                                    

    With respect to Servicing Data, changes to Arcadia's estimated recovery rate
for repossessed inventory during 1998 and 1997 resulted in a write-down of      
existing inventory and an increase in net losses during the years ended         
December 31, 1998 and 1997.                                                     

Effective January 1, 1999 Arcadia changed its accounting method for     
recognition of sales of asset-backed securities. Previously, Arcadia recognized 
sales of asset-backed securities once an irrevocable commitment had been        
received, the loans to be sold had been identified and segregated from loans    
held for sale, and cash proceeds had been placed in the trust by a third party. 
Arcadia now records sales of asset-backed securities upon physical settlement,  
which generally occurs within 5 to 10 days of the segregation of the loans to be
sold.                                                                           

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MARKET PRICE INFORMATION

ASSOCIATES MARKET PRICE DATA                                                    

  Associates common stock is traded on the New York Stock Exchange under the
symbol "AFS". The following table sets forth the range of high and low sales    
prices reported on the New York Stock Exchange for Associates common stock for  
the periods indicated.                                                          

                                                                [Download Table]

                                                               HIGH      LOW   
                                                             --------  --------
                                                                               
Calendar Year 1997                                                             
  First Quarter.............................................  $26.31   $ 21.25 
  Second Quarter............................................   29.69     21.06 
  Third Quarter.............................................   33.13     27.63 
  Fourth Quarter............................................   36.28     29.38 

Calendar Year 1998                                                             
  First Quarter.............................................  $41.31   $ 32.88 
  Second Quarter............................................   42.75     35.69 
  Third Quarter.............................................   43.38     28.09 
  Fourth Quarter............................................   43.69     22.66 

Calendar Year 1999                                                             
  First Quarter.............................................  $47.50   $ 36.44 
  Second Quarter............................................   49.00     38.50 
  Third Quarter.............................................   43.88     33.69 
  Fourth Quarter............................................   39.81     26.19 
Calendar Year 2000                                                             
  First Quarter (through February 28, 2000).................  $27.69   $ 17.06 

ARCADIA MARKET PRICE DATA                                                       

Arcadia common stock is traded on the New York Stock Exchange under the 
symbol "AAC". The following table sets forth the high and low sales prices as   
reported on the New York Stock Exchange for the Arcadia common stock for the    
periods indicated.                                                              

                                                                [Download Table]

                                                               HIGH      LOW   
                                                             --------  --------
                                                                               
Calendar Year 1997                                                             
  First Quarter.............................................  $19.38    $8.88  
  Second Quarter............................................   11.38     6.75  
  Third Quarter.............................................   11.88     8.50  
  Fourth Quarter............................................   12.44     6.25  
Calendar Year 1998                                                             
  First Quarter.............................................  $ 7.81    $5.81  
  Second Quarter............................................   10.50     6.19  
  Third Quarter.............................................    8.25     3.31  
  Fourth Quarter............................................    5.44     3.00  
Calendar Year 1999                                                             
  First Quarter.............................................  $ 5.38    $3.38  
  Second Quarter............................................    8.38     4.50  
Third Quarter...............................................    9.81     4.19  
  Fourth Quarter............................................    5.25     3.50  
Calendar Year 2000                                                             
  First Quarter (through February 28, 2000).................  $ 4.75    $4.44  

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RECENT CLOSING PRICES                                                           

On November 12, 1999, the last trading day before announcement of the   
proposed merger, the closing prices per share of the common stock of Associates 
and Arcadia on the New York Stock Exchange were as follows:                     

                                                                [Download Table]

                                                             ASSOCIATES  ARCADIA 
                                                             ----------  --------
                                                                                 
Closing Price Per Share.....................................   $34.00     $3.75  

    On February 28, 2000, the latest practicable trading day before the printing
of this proxy statement/prospectus, the closing prices per share of Associates  
common stock and Arcadia common stock on the New York Stock Exchange were as    
follows:                                                                        

                                                                [Download Table]

                                                             ASSOCIATES  ARCADIA 
                                                             ----------  --------
                                                                                 
Closing Price Per Share.....................................   $19.38     $4.69  

We urge shareholders to obtain current market quotations for Associates 
common stock and Arcadia common stock. No assurance can be given as to the      
future prices or markets for Associates common stock or Arcadia common stock.   

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RISK FACTORS

In addition to the other information contained in this proxy            
statement/prospectus, you should carefully consider the following risk factors  
in deciding whether to vote for the merger.                                     

RISKS RELATING TO THE TRANSACTION                                               

    FAILURE TO COMPLETE THE MERGER COULD NEGATIVELY IMPACT ARCADIA'S STOCK PRICE
AND FUTURE BUSINESS OPERATIONS.                                                 

  Several conditions must be satisfied or waived to complete the merger. The
conditions are described under "The Merger Agreement and Related                
Agreements--Conditions to Completion of the Merger" and in detail in the merger 
agreement, which is attached to this proxy statement/prospectus as Appendix A.  
The conditions, including Arcadia shareholder approval, may not be satisfied. If
the conditions are not satisfied or waived, the merger will not occur or will be
delayed.                                                                        

 If the merger is not completed or is delayed for any reason including the
failure of Arcadia shareholders to approve the merger and the merger agreement, 
Arcadia may be subject to a number of material risks, including the risk that   
Arcadia will be unable to finance its operations on a going-forward basis. If   
the merger is terminated, Arcadia would have to obtain new financing under      
warehouse facilities and would have to successfully access the securitization   
markets in order to provide required cash. Arcadia may not be able to obtain    
sufficient financing to allow it to finance its operations on a going-forward   
basis.                                                                          

In addition, Arcadia may be subject to a number of other material risks,
including the following:                                                        

- Arcadia may be required under circumstances specified in the merger   
agreement to pay Associates a termination fee of $8.0 million and   
   reimburse Associates up to $1.0 million for its out-of-pocket expenses;

- the price of Arcadia common stock may decline to the extent that the  
     current market price of Arcadia common stock reflects a market assumption
that the merger will be completed; and                              

- costs related to the merger, such as legal, accounting and financial  
advisor fees, must be paid even if the merger is not completed.     

In addition, dealers with whom Arcadia customarily does business, in    
response to the announcement of the merger, may delay or defer decisions or     
transactions concerning Arcadia. Any delay or deferral in those decisions or    
transactions by these dealers could have a material adverse effect on Arcadia's 
business if the merger is not completed. Similarly, current and prospective     
Arcadia employees may experience uncertainty about their future roles with      
Arcadia until Associates' strategies with regard to Arcadia are announced or    
executed. This may adversely affect Arcadia's ability to attract and retain key 
management, sales, marketing and technical personnel.                           

Further, if the merger is terminated and Arcadia's board of directors   
determines to seek another merger or business combination, there can be no      
assurance that it will be able to find a partner willing to pay an equivalent or
more attractive price than the price to be paid in the merger. In addition,     
while the merger agreement is in effect and subject to very narrowly defined    
exceptions, Arcadia is prohibited from soliciting, initiating, encouraging or   
entering into specified extraordinary transactions, such as a merger, sale of   
assets or other business combination, with any party other than Associates.     

Finally, under the continuous asset purchase and sale agreement between 
Associates and Arcadia described in this proxy statement/prospectus under the   
caption "The Merger Agreement and Related Agreements--Asset Purchase Agreement,"
Associates has the right, but is not obligated, to purchase Arcadia's interest  
in motor vehicle retail installment contracts, including retail installment     
sales contracts, promissory notes and loan agreements payable to Arcadia, each  
secured by a motor vehicle.                                                     

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At Associates' sole discretion, it has the right to purchase up to $75 million  
of Arcadia's interests in these contracts in any semi-monthly period. The       
purchase price for these contracts is less than the price typically charged by  
Arcadia to a purchaser of these contracts. If the merger agreement is terminated
for any reason, Arcadia has the right to repurchase all of the unpaid motor     
vehicle retail installment sales contracts purchased by Associates pursuant to  
the continuous asset purchase and sale agreement, excluding those contracts     
purchased by Associates on November 24, 1999. There is, however, no guarantee   
that Arcadia will have the necessary funds available to repurchase these        
contracts from Associates, or if these contracts are repurchased, that Arcadia  
will be able to resell these contracts to another purchaser.                    

 ARCADIA'S OFFICERS AND DIRECTORS HAVE CONFLICTS OF INTEREST THAT MAY MAKE
THEM MORE LIKELY TO SUPPORT OR APPROVE THE MERGER THAN IF THEY DID NOT HOLD     
THESE INTERESTS.                                                                

  The directors and officers of Arcadia participate in arrangements and have
continuing indemnification against liabilities that provide them with interests 
in the merger that are different from, or in addition to, yours, including the  
following:                                                                      

- The executive officers and directors of Arcadia own stock options to  
purchase an aggregate of 4,355,937 shares of Arcadia common stock.  
  Immediately prior to the effective time, all stock options will become
fully exercisable;                                                  

- The executive officers and directors of Arcadia own 286,303 shares of 
     restricted Arcadia common stock. Immediately prior to the effective time,
all of these shares will become fully vested;                       

    - Upon completion of the merger, Arcadia will be obligated to pay additional
      insurance premiums, up to $115,000 in the aggregate per year through 2005,
   on life insurance policies owned by some executive officers of Arcadia;
and                                                                 

   - Associates has agreed to cause the surviving corporation in the merger to
  indemnify each present and former Arcadia officer and director against
liabilities arising out of each person's services as an officer or  
 director. Associates will cause the surviving corporation to maintain
officers' and directors' liability insurance to cover any of these  
liabilities for the next six years.                                 

For these reasons, the directors and officers of Arcadia could be more  
likely to vote to approve the merger and the merger agreement than if they did  
not hold these interests. You should consider whether these interests may have  
influenced these directors and officers to support or recommend the merger and  
the merger agreement. Furthermore, the directors and officers that entered into 
the voting agreement with Associates, attached to this proxy                    
statement/prospectus as Appendix D, are contractually obligated to vote to      
approve the merger and the merger agreement. You should consider whether these  
obligations may have influenced these directors and officers to support or      
recommend the merger and the merger agreement.                                  

THE FAIRNESS OPINION OBTAINED BY ARCADIA WILL NOT REFLECT CHANGES IN THE
RELATIVE VALUE OF ARCADIA SINCE THE MERGER AGREEMENT WAS SIGNED.                

Arcadia does not intend to obtain an updated fairness opinion from J.P. 
Morgan, Arcadia's financial advisor. Changes in the operations and prospects of 
Arcadia, general market and economic conditions, and other factors which are    
beyond the control of Arcadia, on which the opinion of J.P. Morgan is based, may
have altered the relative value of Arcadia. Therefore, the opinion of J.P.      
Morgan does not address the fairness of the merger consideration at the time the
merger will be completed.                                                       

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RISKS RELATING TO THE RESIDUAL VALUE OBLIGATIONS                                

  IF ASSOCIATES' CURRENT VALUATION OF ARCADIA'S FINANCE INCOME RECEIVABLE IS
CORRECT, THERE WILL BE NO PAYMENTS ON THE RESIDUAL VALUE OBLIGATIONS.           

 There are no minimum payments on the residual value obligations. Payments
will not be made on the residual value obligations unless cash from specified   
sources in excess of $512 million plus interest from September 30, 1999 and     
other expenses, less other specified amounts, is released to Associates or its  
subsidiaries. The specified sources of cash are:                                

- cash released from spread accounts established in connection with     
  Arcadia's existing securitizations of automobile loan receivables; and

- cash generated by receivables which were securitized by Arcadia as of 
      September 30, 1999 but are no longer included in the securitization trusts
     on the cash release date, less specified amounts. This component is meant
  to approximate the cash generated by a formerly securitized receivable
   that would have been available to Associates or its subsidiaries if the
receivable had not been transferred out of the securitization trust.

 We expect that the majority of cash released from these sources will come
from the spread accounts, which we discuss in more detail below. Finance income 
receivable is an asset on Arcadia's balance sheet which generally represents    
Arcadia's view of the present value of the cash it expects to be released from  
these sources. Due to changes in the risk-free interest rate and actual expenses
incurred in the fourth quarter of 1999, Arcadia expects to reduce the amount of 
the finance income receivable to approximately $557 million as of December 31,  
1999. Finance income receivable is calculated based on assumptions and estimates
that management believes are reasonable at the time concerning future           
delinquency, default, prepayment, repossession and net loss rates on the        
securitized receivables. These assumptions are based on historical experience,  
externally generated industry information, market conditions and expectations of
future performance and present value discount rates. However, people may        
reasonably differ on the assumptions that underlie this type of valuation.      
Associates has reviewed the assumptions underlying the valuation of Arcadia's   
finance income receivable and, based on what it believes to be a conservative   
view, expects to reduce the balance of the finance income receivable, probably  
to an amount less than $512 million. See "--Even if cash is released from the   
spread accounts and from loans no longer in the securitization trusts, there may
be no payments on the residual value obligations."                              

   THERE WILL BE NO PAYMENTS ON THE RESIDUAL VALUE OBLIGATIONS UNLESS THERE IS
SUFFICIENT CASH RELEASED FROM SPREAD ACCOUNTS AND FROM LOANS IN THE             
SECURITIZATION TRUSTS.                                                          

   The residual value obligations represent the right to receive payments from
Associates based, in part, on the amount of cash released from specified sources
to Associates or its subsidiaries. The specified sources of cash are:           

- cash released from spread accounts established in connection with     
  Arcadia's existing securitizations of automobile loan receivables; and

- cash generated by receivables which were securitized by Arcadia as of 
      September 30, 1999 but are no longer included in the securitization trusts
     on the cash release date, less specified amounts. This component is meant
  to approximate the cash generated by a formerly securitized receivable
   that would have been available to Associates or its subsidiaries if the
receivable had not been transferred out of the securitization trust.

 We expect that the majority of cash released from these sources will come
from spread accounts established to cover possible shortfalls in payments on the
asset-backed securities issued by the securitization trusts and the payment of  
expenses associated with the securitization and servicing of the receivables.   
Collections from the underlying receivables will be deposited in the spread     
accounts after                                                                  

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the securitization trusts have used the collections from the underlying         
receivables to satisfy specified obligations. These obligations include, among  
others,                                                                         

    - the payment of interest, principal and other amounts due to the holders of
    all of the asset-backed securities of the securitization trusts that own
the receivables; and                                                

   - the payment of expenses associated with the securitizations and servicing
of the receivables.                                                 

In general, no amounts will be available for release from the spread    
accounts unless:                                                                

    - the holders of the asset-backed securities have received all principal and
interest amounts and other amounts that are due;                    

- specified other expenses have been paid, including the fees of, and   
      indemnities payable to, one or more servicers, trustees, collateral agents
and others;                                                         

   - the insurer of the asset-backed securities has been reimbursed for claims
  under financial guaranty insurance policies issued with respect to the
    securities and has received all premiums relating to those policies; and

    - the amounts on deposit in the spread accounts exceed predetermined minimum
amounts.                                                            

  The predetermined minimum amounts for the spread accounts may be increased
or decreased over time based on the performance of the related pool of          
receivables. We discuss the spread accounts and the receivables performance     
tests in more detail below under "--Increased delinquency, default and net loss 
rates on securitized loans may delay, reduce and/or eliminate the amount of     
payments on the residual value obligations."                                    

Anything that affects the timing or amount of releases from the spread  
accounts will also affect the timing and amount of payments on the residual     
value obligations.                                                              

The timing and amount of cash deposited into, and available for release 
from, the spread accounts varies based on a number of factors, including, among 
others,                                                                         

  - whether the obligors on the receivables make payments on the receivables
at all or on a timely basis;                                        

   - how quickly the repossessed vehicles of defaulted borrowers can be resold
and the price at which this is accomplished;                        

  - the terms of the receivables and the time that the receivables have been
outstanding; and                                                    

- the levels of voluntary prepayments.                                  

If there is a negative change in any of these factors it could reduce or
eliminate the cash releases from the spread accounts and, as a result, could    
delay, reduce and/or eliminate the amount of payments on the residual value     
obligations. Arcadia has in the past experienced interruptions in the cash      
released from spread accounts and interruptions may occur again in the future.  
Historical data on the performance of the receivables underlying the residual   
value obligations is included as Appendix F to this proxy statement/prospectus. 

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  EVEN IF CASH IS RELEASED FROM THE SPREAD ACCOUNTS AND FROM LOANS NO LONGER
IN THE SECURITIZATION TRUSTS, THERE MAY BE NO PAYMENTS ON THE RESIDUAL VALUE    
OBLIGATIONS.                                                                    

 Payments on the residual value obligations, if any, will be less than the
amount of cash released from the spread accounts and from loans no longer in the
securitization trusts. In determining the amount and timing of payments on the  
residual value obligations, if any, Associates will, on a monthly basis,        
allocate the amount of cash released from spread accounts and the applicable    
amount of cash generated by receivables no longer in the securitization trusts, 
and will deduct from that amount specified amounts prior to allocating any      
amounts to make payments on the residual value obligations. You should refer to 
"Description of Residual Value Obligations" beginning on page 42 for a more     
detailed discussion of these allocations.                                       

   First, specified expenses related to the issuance and administration of the
residual value obligations will be deducted from the amount of cash released.   

 Second, specified litigation expenses will be deducted from the amount of
cash released. In particular, litigation expenses include all damages,          
judgments, settlements and other expenses paid or incurred by Associates,       
Arcadia or any of their affiliates after November 12, 1999 in connection with   
any litigation brought by or on behalf of shareholders of Arcadia or by or in   
the right of Arcadia, net of insurance proceeds. In connection with the payment 
of litigation expenses, a litigation reserve of $10 million will be established 
to which amounts of cash released must be allocated before Associates will make 
any payments on the residual value obligations. We describe current lawsuits    
involving Arcadia and its shareholders under "Legal Proceedings" beginning on   
page 68. Additional lawsuits resulting in litigation expenses may be commenced. 

 Third, the aggregate amount of cash released from the spread accounts and
from loans no longer in the securitization trusts after allocation of the above 
amounts must exceed a specified threshold. This amount generally will equal:    

- $512 million; plus                                                    

- prescribed amounts of interest on this amount; less                   

  - the amount of cash released on and after September 30, 1999 and prior to
the effective time of the merger; less                              

    - the amount of cash released following the effective date of the merger and
allocated to reduce the threshold amount.                           

   If the total amount of cash released over time from spread accounts and the
applicable amount of cash generated by receivables no longer in the             
securitization trusts is less than the sum of these items, no payment will be   
made on the residual value obligations.                                         

  INCREASED DELINQUENCY, DEFAULT AND NET LOSS RATES ON SECURITIZED LOANS MAY
DELAY, REDUCE AND/OR ELIMINATE THE AMOUNT OF PAYMENTS ON THE RESIDUAL VALUE     
OBLIGATIONS.                                                                    

All of the securitization trusts Arcadia has sponsored have been        
credit-enhanced through financial guaranty insurance policies issued by         
Financial Security Assurance Inc. These policies insure payments of principal   
and interest due on the related asset-backed securities issued by these         
securitization trusts.                                                          

Each securitization trust has portfolio performance tests that relate to
levels of delinquencies, defaults and net losses on the related pool of         
receivables. These portfolio performance tests require that the receivable      
portfolio of each securitization trust have:                                    

- an average delinquency ratio not equal to or in excess of a specified 
percentage,                                                         

- a cumulative default rate not equal to or in excess of a specified    
    percentage, which varies based on the aging of the receivable portfolio,
and                                                                 

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- a cumulative net loss rate not equal to or in excess of a specified   
    percentage, which varies based on the aging of the receivable portfolio.

If the receivables in any securitization trust perform worse than is    
required by any of these tests, the amount of cash that has to be retained in   
the related spread account or accounts increases significantly until the        
receivable portfolio has performed at the required levels for a specified       
period, generally three to five months. Some securitization transactions have   
been in violation of these portfolio performance tests in the past, and some    
transactions are still in violation of these tests. Financial Security Assurance
can waive, and in the past has waived, a violation of these portfolio           
performance tests but is not required to do so. In the future, however,         
Financial Security Assurance might not do so.                                   

    In addition, under agreements with Financial Security Assurance, each of the
spread accounts is cross-collateralized with the spread accounts of other       
trusts. As a result, cash received by one securitization trust that is in excess
of the amount needed to make payments specifically related to that trust, and to
replenish that trust's spread account, may be used to support negative cash flow
from, or to replenish the spread account related to, another securitization     
trust. As a result, the cash flow from the receivables must be sufficient to    
replenish all spread accounts up to the prescribed minimum balances in order for
amounts to be released from any of the spread accounts.                         

    Accordingly, the poor performance of a pool of receivables underlying one or
more securitization trusts may delay or prevent the release of cash from the    
related spread account and/or the spread accounts of the other securitization   
trusts. If this happens, payments on the residual value obligations could be    
delayed, reduced and/or eliminated.                                             

    ARRANGEMENTS WITH FINANCIAL SECURITY ASSURANCE MAY ADVERSELY AFFECT THE CASH
FLOW FROM THE SPREAD ACCOUNTS.                                                  

   The arrangements with Financial Security Assurance allow it to take actions
that may delay, reduce and/or eliminate the release of cash from the spread     
accounts and, in turn, may delay, reduce and/or eliminate payments on the       
residual value obligations.                                                     

 Arcadia's agreements with Financial Security Assurance specify that there
will be an "insurance agreement event of default" if various events occur with  
respect to any series of securities issued by an insured securitization trust.  
These events include, among others:                                             

- events of default under the indenture governing the asset-backed      
securities of the related securitization trust, including events of 
      default relating to the failure of the securitization trust to pay amounts
due on the asset-backed securities,                                 

 - the failure of Arcadia, the securitization trust or the servicer of the
receivables to perform obligations under the related securitization 
transaction, and                                                    

 - receivable portfolio performance tests similar to those described above
but at higher levels.                                               

In addition, each of the securitization transactions provides that an   
insurance agreement event of default for that transaction includes an insurance 
agreement event of default under any other securitization transaction. As a     
result, the failure of one pool of receivables to meet portfolio performance    
tests, or any other insurance agreement event of default, will cause the other  
securitization transactions to be in default, even if there are no other        
problems with those securitization transactions.                                

Following an insurance agreement event of default, Financial Security   
Assurance may:                                                                  

    - suspend distributions of cash flow from the spread accounts related to the
    securitization trusts until the amount of cash in each account reaches a
  preset level, generally 25% of the balance of outstanding asset-backed
securities in the related series,                                   

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- increase its premiums,                                                

- replace the servicer of the receivables owned by the insured          
securitization trusts, and                                          

- foreclose on its collateral security interest in the stock of Arcadia 
  Receivables Finance Corp., a subsidiary of Arcadia and the entity that
receives the distributions from the spread accounts.                

Some of the securitization trusts have not met the portfolio performance
thresholds in the past, but to date Financial Security Assurance has waived the 
defaults. A further deterioration in the performance of the receivables might   
result in one or more additional securitization trusts failing to meet          
performance thresholds. If this were to occur, further waivers may not be       
available.                                                                      

   Any action that Financial Security Assurance might take in the absence of a
waiver could have a material adverse effect on the amount and timing of cash    
releases from the spread accounts and could delay, reduce and/or eliminate      
payments on the residual value obligations. The securitization transactions give
Financial Security Assurance broad powers. For example, in specified            
circumstances Financial Security Assurance may foreclose on its security        
interest in the stock of Arcadia Receivables Finance Corp. If Financial Security
Assurance forecloses on its security interest, Associates or any of its         
subsidiaries will no longer be entitled to receive any cash released from the   
spread accounts and, as a result, no more payments on the residual value        
obligations would occur. In addition, if the servicer is terminated, the        
servicing of the receivables might be disrupted and delinquencies and losses on 
the receivables may increase. This would likely have an adverse effect on the   
timing and amount of releases from the spread accounts. Further, if there is an 
event of default under the indenture governing the asset-backed securities of   
the securitization trusts, Financial Security Assurance can control the sale of 
the trust property, including the receivables, securing the asset-backed        
securities. This could reduce, delay and/or eliminate payments on the residual  
value obligations.                                                              

  THE RATES AT WHICH THE OBLIGORS ON THE RECEIVABLES UNDERLYING THE RESIDUAL
VALUE OBLIGATIONS DEFAULT OR DELAY IN MAKING PAYMENTS, OR MAKE PREPAYMENTS, ON  
THE RECEIVABLES IN THE FUTURE MAY BE DIFFERENT FROM THE HISTORICAL RATES.       

We have provided historical data on the performance of the receivables  
underlying the residual value obligations in Appendix F to this proxy           
statement/prospectus. However, the receivables may not perform consistently with
past experience. This may make it difficult to value the residual value         
obligations and, if an active trading market for the residual value obligations 
develops, may result in unexpected changes in the trading price.                

 A DETERIORATION IN ECONOMIC CONDITIONS MAY DELAY, REDUCE AND/OR ELIMINATE
PAYMENTS ON THE RESIDUAL VALUE OBLIGATIONS.                                     

Periods of economic slowdown or recession, whether general, regional or 
industry-related, may increase the risk that the obligors on the receivables    
underlying the residual value obligations may default or delay in making        
payments. Any increase in defaults or delays could have a material adverse      
effect on the amount and timing of cash releases from the spread accounts and   
cash generated by the receivables no longer in the securitization trusts and    
could delay, reduce and/or eliminate payments on the residual value obligations.

In addition, during certain fiscal periods of 1998 and 1999, Arcadia    
experienced a slight increase in the percentage of obligors on the receivables  
underlying the securitizations that defaulted in making payments. This increase 
in defaults during a period of economic growth indicates that an increase in    
default rates is not limited to periods of economic slowdown or recession.      

   Cash flow on receivables underlying the residual value obligations includes
the net proceeds from the sale of automobiles securing the receivables following
default by the obligor. During periods of economic slowdown or recession, there 
is generally decreased consumer demand for automobiles and as a result, a       
decline in the value of automobiles securing the receivables. This may lead to a
decrease in                                                                     

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the net proceeds from the sales of automobiles securing receivables on which    
there has been a default. This, in turn, may have an adverse effect on Arcadia's
portfolio performance and lead to a decrease in the amount or delay in the      
timing of cash released from spread accounts and cash generated by the          
receivables no longer in the securitization trusts. This could delay, reduce    
and/or eliminate the amount of payments on the residual value obligations.      

  IF FOLLOWING THE MERGER, ARCADIA, AS A SUBSIDIARY OF ASSOCIATES, IS NOT AS
SUCCESSFUL AS ARCADIA HAS BEEN HISTORICALLY IN SERVICING THE RECEIVABLES        
UNDERLYING THE RESIDUAL VALUE OBLIGATIONS, IT WOULD ADVERSELY AFFECT PAYMENTS ON
THE RESIDUAL VALUE OBLIGATIONS.                                                 

    The amount of cash flow generated by the receivables underlying the residual
value obligations depends, in part, on Arcadia's ability, following the merger, 
to maintain efficient collection and repossession procedures and attract and    
retain an adequate number of qualified servicing and collection personnel.      
Following the merger, Arcadia's collection and repossession procedures and its  
ability to attract and retain an adequate number of qualified servicing and     
collection personnel may not be as good as Arcadia's procedures and ability have
been historically. In addition, if in the future Associates consolidates        
Arcadia's servicing and collection operations into its own, servicing of the    
receivables may be disrupted. The ability to attract and retain qualified       
personnel may also be adversely affected by low unemployment rates driven by    
economic growth and the continued expansion of the consumer credit markets.     

    In addition, the servicing of the receivables is subject to numerous federal
and state consumer protection laws and regulations. Among other things, these   
laws and regulations:                                                           

  - require the servicer to obtain and maintain licenses and qualifications;
and                                                                 

 - define the servicer's rights to repossess and sell collateral vehicles.

   Changes in existing laws or regulations, or in their interpretation, or the
promulgation of additional laws or regulations could impose significant new     
restrictions on the way in which servicing can be performed. If this happens, it
could have a material adverse effect on the amount of cash released from spread 
accounts and cash generated by the receivables no longer in the securitization  
trusts and, as a result, could delay, reduce and/or eliminate the amount of     
payments on the residual value obligations.                                     

If, following the merger, Arcadia is terminated as the servicer of the  
receivables, the servicing of the receivables may be disrupted and delinquencies
and losses on the receivables may increase. In addition, cash released from     
spread accounts and cash generated by the receivables no longer in the          
securitization trusts may decrease because some costs and expenses of the       
securitization trusts, such as servicing fees and some indemnities, might       
increase. Financial Security Assurance has the right to terminate the servicer, 
to the extent discussed above under "--Arrangements with Financial Security     
Assurance may adversely affect the residual cash flow from the spread accounts" 
or if the servicer does not perform its servicing duties under the relevant     
servicing documents. If, following the merger, Arcadia is terminated as servicer
of the receivables, this would likely have a material adverse effect on the     
amount and timing of cash released from spread accounts and cash generated by   
the receivables no longer in the securitization trusts and of payments on the   
residual value obligations.                                                     

    THE TRADING MARKET FOR THE RESIDUAL VALUE OBLIGATIONS MAY BE ILLIQUID AND/OR
VOLATILE.                                                                       

  Before the issuance of the residual value obligations in the merger, there
will have been no market for these securities or, to our knowledge, any similar 
security. As a result, it may be difficult for you and other investors to value 
the residual value obligations.                                                 

We do not expect to list the residual value obligations on any national 
securities exchange or to seek their quotation on any automated dealer quotation
system. We have been advised by J.P. Morgan that following completion of the    
merger, J.P. Morgan intends to make a market in the residual value              

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obligations. However, it is not obligated to do so and any market-making        
activities with respect to the residual value obligations may be discontinued at
any time without notice. Accordingly, there may not be an active trading market 
for the residual value obligations and you may not be able to sell your residual
value obligations. Even if an active trading market does develop, the trading   
price of the residual value obligations may change rapidly.                     

 The liquidity and volatility of the trading market for the residual value
obligations may also be adversely affected by the frequency with which          
information regarding the performance of the auto loan receivables underlying   
the residual value obligations and the amount of money allocated to make        
payments on the residual value obligations is made available. Holders of        
receivables-backed securities customarily receive information about the         
performance of the underlying receivables on a monthly basis. Associates        
currently intends to make available information about the performance of the    
receivables underlying the residual value obligations only on a quarterly basis,
when it files its annual and quarterly reports with the Securities and Exchange 
Commission.                                                                     

YOU WILL HAVE LIMITED REMEDIES IF THERE IS AN EVENT OF DEFAULT UNDER THE
RESIDUAL VALUE OBLIGATIONS.                                                     

You will have limited remedies if there is an event of default under the
residual value obligations, including the failure to make payments when due and 
an insolvency of Associates. The residual value obligations are general         
unsecured obligations of Associates. You will not have any right to the         
receivables underlying the residual value obligations, to the actual cash flows 
generated by the receivables, whether or not those receivables are still in the 
securitization trusts, or to any amounts released from the spread accounts and  
any cash generated by the receivables no longer in the securitization trusts.   

   In addition, the terms of the residual value obligations do not provide for
any minimum payments and, as a result, the agreement governing the residual     
value obligations does not provide for the acceleration of payments following an
event of default. Accordingly, you do not have all of the rights upon an event  
of default that a holder of a conventional debt instrument of Associates would  
have.                                                                           

YOU SHOULD CONSIDER THE TAX CONSEQUENCES OF OWNING RESIDUAL VALUE       
OBLIGATIONS.                                                          

You should carefully consider the tax consequences of investing in the  
residual value obligations. No statutory, judicial or administrative authority  
directly addresses the characterization of the residual value obligations or    
instruments similar to the residual value obligations for United States federal 
income tax purposes. As a result, significant aspects of the United States      
federal income tax consequences of an investment in the residual value          
obligations are not certain. Arcadia does not anticipate requesting a ruling    
from the Internal Revenue Service with respect to the residual value            
obligations, and the Internal Revenue Service may not agree with the conclusions
expressed under the caption "Certain Federal Income Tax Considerations"         
beginning on page 36.                                                           

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FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE 

   Some of the statements contained in this proxy statement/prospectus contain
forward-looking information. These statements are found in the sections entitled
"Questions and Answers About the Merger," "The Merger--Background of the        
Merger," "--Reasons for the Merger; Recommendation of the Board of Directors,"  
"--Opinion of Financial Advisor," "--Certain Federal Income Tax Considerations,"
"--Anticipated Accounting Treatment," and "Legal Proceedings." They include     
statements concerning:                                                          

- when the merger will be completed,                                    

- the potential benefits of the merger to Arcadia and its shareholders, 

- the tax consequences of the merger,                                   

- the ability of Arcadia to prevail in pending legal proceedings and    

- the effect of pending or threatened litigation on Arcadia's financial 
condition, results of operations and liquidity.                     

    You can identify these statements by forward-looking words such as "expect,"
"believe," "plan," "intend," and "may" or similar words. You should be aware    
that these statements are subject to known and unknown risks, uncertainties and 
other factors that could cause actual results to differ materially from those   
suggested by the forward-looking statements, including those discussed in the   
section entitled "Risk Factors."                                                

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THE SPECIAL MEETING 

GENERAL                                                                         

We are furnishing this proxy statement/prospectus to holders of Arcadia 
common stock in connection with the solicitation of proxies by the Arcadia board
of directors for use at the special meeting of shareholders of Arcadia to be    
held on March 31, 2000, and any adjournment thereof.                            

   This proxy statement/prospectus is first being furnished to shareholders of
Arcadia on or about March 3, 2000. This proxy statement/prospectus is also      
furnished to Arcadia shareholders as a prospectus in connection with the        
issuance by Associates of residual value obligations as contemplated by the     
merger agreement.                                                               

DATE, TIME AND PLACE                                                            

The special meeting will be held on March 31, 2000 at 10:00 a.m., local 
time, at The Waldorf-Astoria Hotel, 301 Park Avenue, New York, New York.        

MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING                                 

  At the Arcadia special meeting and any adjournment of the special meeting,
Arcadia shareholders will be asked:                                             

- to consider and vote upon the approval of the merger and the merger   
agreement; and                                                      

- to transact any other business as may properly come before the special
meeting or any adjournment of the special meeting.                  

RECORD DATE                                                                     

   Arcadia's board has fixed the close of business on February 28, 2000 as the
record date for determination of Arcadia shareholders entitled to notice of and 
to vote at the special meeting.                                                 

VOTING OF PROXIES                                                               

  To assure that your shares are represented at the special meeting, we urge
you to complete, date and sign the enclosed proxy and promptly return it in the 
enclosed envelope or otherwise mail it to Arcadia. You may also vote your shares
by telephone or on the internet. If you choose to vote your shares by telephone 
or on the internet, please follow the instructions on the enclosed proxy. If    
your shares are held in "street name" by your broker, your broker will vote your
shares only if you provide instructions on how to vote. Your broker will provide
directions on how to instruct the broker to vote your shares. All properly      
executed proxies that Arcadia receives prior to the vote at the special meeting,
and that are not revoked, will be voted in accordance with the instructions     
indicated on the proxies or, if no direction is indicated, to approve the merger
and the merger agreement. Arcadia's board does not currently intend to bring any
other business before the special meeting, and so far as Arcadia's board knows, 
no other matters are to be brought before the special meeting.                  

Shareholders may revoke their proxies at any time prior to their use by 
delivering to the Secretary of Arcadia a signed notice of revocation or a       
later-dated, signed proxy. Attendance at the special meeting does not in itself 
constitute the revocation of a proxy.                                           

VOTES REQUIRED                                                                  

As of the close of business on February 28, 2000, there were 39,428,580 
shares of Arcadia common stock outstanding and entitled to vote. The holders of 
a majority of the outstanding shares of Arcadia                                 

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common stock entitled to vote must affirmatively approve the merger and the     
merger agreement. Arcadia shareholders have one vote per share of Arcadia common
stock owned on the record date.                                                 

Pursuant to a voting agreement in the form attached to this proxy       
statement/prospectus as Appendix D, directors and executive officers of Arcadia 
beneficially owning an aggregate of 2,647,637 shares of Arcadia common stock as 
of November 12, 1999, not including any shares issuable upon the exercise of    
options, or 6.71% of the shares of Arcadia common stock outstanding on that     
date, have agreed to vote their shares of Arcadia common stock in favor of the  
merger and the merger agreement.                                                

In addition, all other directors and executive officers of Arcadia, who 
beneficially own an aggregate of 3,213,135 shares of Arcadia common stock as of 
February 28, 2000, not including any shares issuable upon the exercise of       
options, or 8.15% of the shares of Arcadia common stock outstanding on that     
date, have indicated their intention to vote their shares of Arcadia common     
stock in favor of the merger and the merger agreement. As of February 28, 2000, 
directors and executive officers of Associates owned no shares of Arcadia common
stock. See "The Merger--Interests of Directors and Officers in the Merger."     

QUORUM; ABSTENTIONS AND BROKER NON-VOTES                                        

  The required quorum for the transaction of business at the special meeting
is holders, present in person or by proxy, of a majority of the shares of       
Arcadia common stock issued and outstanding on the record date. Abstentions and 
broker non-votes each will be included in determining the number of shares      
present and voting at the meeting for the purpose of determining the presence of
a quorum. Because approval of the merger and the merger agreement and the       
completion of the merger requires the affirmative vote of a majority of the     
outstanding shares of Arcadia common stock entitled to vote, abstentions and    
broker non-votes will have the same effect as votes against the approval of the 
merger and the merger agreement. In addition, the failure of an Arcadia         
shareholder to return a proxy or vote in person will have the effect of a vote  
against the approval of the merger and the merger agreement. Brokers holding    
shares for beneficial owners cannot vote on the actions proposed in this proxy  
statement/prospectus without the owners' specific instructions. Accordingly, we 
urge you to return the enclosed proxy card marked to indicate your vote or      
provide your broker with instructions on how your shares should be voted.       

SOLICITATION OF PROXIES AND EXPENSES                                            

  Arcadia has retained the services of MacKenzie Partners, Inc. to assist in
the solicitation of proxies from its shareholders. The fees to be paid by       
Arcadia to MacKenzie for these services are not expected to exceed $15,000 plus 
reasonable out-of-pocket expenses. Arcadia will bear its own expenses in        
connection with the solicitation of proxies for the special meeting of          
shareholders, except that Arcadia and Associates each will pay one-half of all  
filing and other fees paid to the SEC in connection with the registration       
statement and this proxy statement/prospectus.                                  

  In addition to solicitation by mail, the directors, officers and employees
of Arcadia may solicit proxies from their shareholders by telephone, facsimile  
or in person. Brokerage houses, nominees, fiduciaries and other custodians will 
be requested to forward soliciting materials to beneficial owners and will be   
reimbursed for their reasonable expenses incurred in sending proxy materials to 
beneficial owners.                                                              

BOARD RECOMMENDATION                                                            

   The Arcadia board has determined, based in part upon the unanimous approval
of a special committee of disinterested directors, that the merger is advisable 
and fair to, and in the best interests of, Arcadia and its shareholders.        
Accordingly, the board unanimously has approved the merger and the merger       
agreement and unanimously recommends that shareholders vote for approval of the 
merger and                                                                      

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the merger agreement. In considering this recommendation, you should be aware   
that some Arcadia directors and officers have interests in the merger that are  
different from, or in addition to, yours. See "The Merger--Interests of         
Directors and Officers in the Merger."                                          

   The matters to be considered at the special meeting are of great importance
to you as a shareholder of Arcadia. Accordingly, we urge you to read and        
carefully consider the information presented in this proxy statement/prospectus,
and to complete, date, sign and promptly return the enclosed proxy in the       
enclosed postage-paid envelope, or to vote your shares by telephone or on the   
internet, following the instructions outlined on the enclosed proxy.            

You should not send any stock certificates with your proxy card. A      
transmittal form with instructions for the surrender of Arcadia common stock    
certificates will be mailed to you promptly after completion of the merger.     

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THE MERGER

    This section of the proxy statement/prospectus describes material aspects of
the proposed merger, including the merger agreement. While we believe that the  
description covers the material terms of the merger and the related             
transactions, this summary may not contain all of the information that is       
important to you. You should read the entire merger agreement, which is attached
to this proxy statement/prospectus as Appendix A, and the other documents we    
refer to carefully and in their entirety for a more complete understanding of   
the merger.                                                                     

BACKGROUND OF THE MERGER                                                        

GENERAL                                                                 

Arcadia's board of directors has periodically reviewed Arcadia's cash   
consumption and its access to cash resources. Arcadia's securitization-based    
business requires substantial cash to fund operations. The principal uses for   
this cash have included:                                                        

- funding that portion of loan purchases not covered by advances from   
    warehouse facilities, which limit their advance rates to less than 100%;

- providing initial cash deposits into securitization-related spread    
  accounts at the level required by Financial Security Assurance for the
relevant transaction;                                               

- various other expenses related to the purchase and securitization of  
   automobile receivables, including dealer participations, securitization
      expenses such as credit enhancement and trustee fees, interest advances to
    serviced securitization trusts under some circumstances and the costs of
maintaining repossessed inventory;                                  

- interest expenses; and                                                

- operating expenses.                                                   

Arcadia's rate of cash consumption depends on many factors, including loan      
purchase volume, warehouse facility advance rates and the required level of cash
initial deposits, including the availability of any alternatives to the use of  
cash. Early in 1999, following a review of projected cash flows and cash        
consumption, Arcadia's management decided to explore means for conserving       
Arcadia's cash position or enhancing Arcadia's access to cash. In connection    
with this, at its February 23, 1999 meeting, Arcadia's board of directors       
authorized the retention of J.P. Morgan Securities Inc. as Arcadia's exclusive  
financial advisor to explore financial and strategic alternatives.              

    J.P. Morgan and Arcadia subsequently entered into an engagement letter dated
as of March 25, 1999. In this letter, Arcadia engaged J.P. Morgan to act as its 
exclusive financial advisor to explore strategic and financial alternatives     
available to Arcadia. Potential transactions included establishing partnership  
or joint-venture structures, a sale, merger or other business combination       
involving all or a portion of Arcadia's stock, assets or business, and a        
financial restructuring, reorganization or recapitalization.                    

    From March 25 to November 12, 1999, representatives of J.P. Morgan contacted
approximately 32 potential strategic investors in or acquirors of Arcadia. These
representatives also contacted approximately 125 potential purchasers of        
securities to be issued by a special-purpose credit enhancement trust.          
Approximately 14 of the potential strategic investors and acquirors signed      
confidentiality agreements with Arcadia and received financial information and  
other documents relating to Arcadia. These contacts are chronicled in greater   
detail below.                                                                   

  From January to June 1999 and again from July to August 1999, Arcadia held
direct discussions with two parties regarding alternate credit enhancement      
facilities for Arcadia-sponsored securitization trusts. These facilities would  
have enabled Arcadia either to eliminate or reduce initial cash deposits        

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into spread accounts or to obtain early releases of cash from spread accounts.  
Both of these entities ultimately terminated their negotiations with Arcadia.   

    In addition, to raise cash Arcadia also consummated a sale of whole loans in
May 1999 and a sale of deficiency balances in August 1999.                      

By September 1999 only two entities continued to express interest in a  
transaction with Arcadia. One of these was Associates. The other was an entity  
interested in a strategic investment in Arcadia.                                

APRIL-MAY 1999                                                          

    In April 1999, representatives of J.P. Morgan contacted Associates regarding
a possible change of control transaction with Arcadia. On May 3, 1999 Arcadia   
and Associates executed a confidentiality agreement and Associates received     
financial information and other documents relating to Arcadia. On May 19, 1999  
representatives of Associates and its advisors visited Arcadia's data room in   
Minneapolis, Minnesota, established to facilitate due diligence activities, and 
met with members of Arcadia's senior management regarding Arcadia's operations, 
financial condition and prospects.                                              

    At its May 26, 1999 meeting, Arcadia's board of directors received an update
from management regarding the status of meetings with possible funding sources  
J.P. Morgan had referred to Arcadia. In addition, management presented other    
potential sources of capital, including the sale of senior notes.               

JUNE-JULY 1999                                                          

In early June 1999, Financial Security Assurance advised Arcadia that it
expected to be unable to continue to provide arrangements similar to those that 
Arcadia had utilized during 1998 and the first quarter of 1999 to eliminate or  
significantly reduce the amount of cash required for initial deposit into the   
spread accounts. At the same time, Financial Security Assurance advised Arcadia 
that for future securitization transactions it expected to require a higher     
level of initial cash deposits into the spread accounts and higher maximum      
levels for the spread accounts. Arcadia's management concluded that these       
changes could significantly increase the cash cost to Arcadia of continuing to  
sponsor securitizations using Financial Security Assurance as provider of credit
enhancement.                                                                    

    On June 8, 1999, representatives of a potential purchaser of preferred stock
of Arcadia met with members of Arcadia's senior management regarding Arcadia's  
operations, financial condition and prospects.                                  

    In mid-June 1999, Associates informed J.P. Morgan that it was not interested
in pursuing a merger or other change of control transaction with Arcadia.       

 At the June 29, 1999 meeting of Arcadia's board of directors, J.P. Morgan
discussed various strategic alternatives available to Arcadia and recommended   
that the board consider four potential transactions. Of these four, the board   
instructed J.P. Morgan to pursue the following three:                           

- a private sale of $100 to $150 million of preferred stock;            

   - an issuance of senior notes by a newly-created special-purpose trust that
      would supply credit enhancement to Arcadia-sponsored securitization trusts
and enable Arcadia to obtain early releases of cash from the related
spread accounts; and                                                

- a public offering of approximately $50 million of senior notes.       

 On July 19, 1999, representatives of the potential purchaser of preferred
stock again met with members of Arcadia's management regarding Arcadia's        
operations, financial condition and prospects.                                  

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At its July 28, 1999 meeting, Arcadia's board of directors received an  
update from management regarding the status of the three potential transactions.
The board directed management to continue to pursue these transactions.         

On the same day Arcadia filed its Quarterly Report on Form 10-Q for the 
quarter ended June 30, 1999. The financial statements in this Form 10-Q included
a change to the method for estimating the present value of Arcadia's future     
excess cash flows. This change reduced the value of Arcadia's main asset, its   
finance income receivable, which represents Arcadia's retained interest in the  
loans it has sold. This, in turn, reduced Arcadia's net worth to a level such   
that Arcadia was no longer able, under the terms of its existing senior notes,  
to issue additional debt securities as previously proposed.                     

AUGUST-SEPTEMBER 1999                                                   

On August 10, 1999, senior management of the potential purchaser of     
preferred stock again met with Arcadia's senior management regarding Arcadia's  
operations, financial condition and prospects.                                  

    On August 11, 1999, Standard & Poor's Ratings Services downgraded the rating
of Arcadia's senior notes from "B" to "B-". With this rating, any further       
downgrade would cause a default under Arcadia's warehouse facilities.           

In mid-August the potential purchaser of preferred stock informed J.P.  
Morgan that it was no longer interested in pursuing that transaction.           

   At the August 25, 1999 meeting of Arcadia's board of directors, management:

    - reported that negotiations with the potential purchaser of preferred stock
had been terminated;                                                

    - recommended, in light of Arcadia's net worth and the terms of its existing
  senior notes, that Arcadia no longer pursue the issuance of additional
senior notes; and                                                   

 - recommended pursuing the potential offering of credit enhancement trust
debt securities, but at an increased $100 million dollar level.     

The board authorized management to pursue a transaction involving the   
issuance of up to $100 million of debt securities by a special-purpose credit   
enhancement trust.                                                              

During the period from mid-August 1999 until mid-September 1999,        
representatives of J.P. Morgan contacted approximately 125 potential purchasers 
of these debt securities. However, only the former potential purchaser of       
preferred stock, which J.P. Morgan contacted in early September 1999, expressed 
serious interest in purchasing them.                                            

In late August 1999, representatives of J.P. Morgan contacted Associates
regarding the possible purchase of a loan portfolio from Arcadia. Associates and
Arcadia subsequently exchanged loan portfolio data electronically and via hard  
copy. Following review of this data, Associates approached Arcadia, seeking to  
expand the discussions to include the potential purchase of a greater number of 
Arcadia's loans. In response, Arcadia provided Associates with additional data  
relating to Arcadia's loan production. After reviewing this data, Associates    
expressed the desire to investigate a broader transaction, potentially including
a change of control transaction.                                                

At the September 28, 1999 meeting of Arcadia's board of directors,      
representatives of J.P. Morgan reported on the status of the transactions it was
pursuing on Arcadia's behalf. The board directed J.P. Morgan to continue        
negotiations.                                                                   

SEPTEMBER-NOVEMBER 1999                                                 

From October 6 through October 8, 1999, representatives of Associates   
visited Arcadia's data room in connection with Associates' consideration of both
the purchase of a loan portfolio and a potential                                

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change of control transaction. After this, the parties resumed conversations    
regarding a potential merger or other change of control transaction.            

From October 14 through October 21, 1999, representatives of Associates 
again visited Arcadia's data room. During this period, representatives of       
Associates and its financial advisors met with Arcadia's senior management      
regarding Arcadia's operations, financial condition and prospects.              
Representatives of Associates also visited other Arcadia offices to conduct due 
diligence. At the same time, J.P. Morgan conducted financial due diligence on   
Associates by reviewing public documents.                                       

From October 6 to November 10, 1999, there were numerous telephone      
conversations between the legal advisors for the two companies regarding due    
diligence, as well as conversations between the companies' financial advisors   
regarding financial diligence and financial analysis of Arcadia.                

    On October 15, 1999, Arcadia's senior management met with representatives of
the former potential purchaser of Arcadia preferred stock and its legal advisor 
in connection with the potential purchase of credit enhancement trust debt      
securities and warrants to purchase shares of Arcadia's common stock.           

On October 27, 1999, Associates delivered to Arcadia a preliminary      
indication of interest in acquiring Arcadia.                                    

At the October 27, 1999 meeting of Arcadia's board of directors,        
representatives of J.P. Morgan reported on the status of the transactions being 
pursued on Arcadia's behalf. Representatives of J.P. Morgan then made a         
presentation regarding the financial terms of the proposed merger with          
Associates and a summary of the methodology used by J.P. Morgan to evaluate the 
proposed merger. The board directed J.P. Morgan to continue negotiations with   
Associates and the potential purchaser of credit enhancement trust debt         
securities and warrants.                                                        

J.P. Morgan continued to negotiate with both these entities during the  
period from October 27 to November 12, 1999.                                    

 Between November 4 and November 11, 1999, Associates and Arcadia, through
their respective attorneys and financial advisors, exchanged drafts of, and     
comments on, a merger agreement and related documents and engaged in discussions
and negotiations regarding the terms of a potential business combination.       

 On November 12, 1999, the potential purchaser of credit enhancement trust
debt securities and warrants delivered to Arcadia an indication of interest     
letter which was open until 5:00 P.M. on that day. This letter proposed the     
purchase, for total consideration of $150 million, of:                          

  - $140 million of debt securities to be issued by a special-purpose credit
      enhancement trust, a portion of the proceeds of which would be released to
Arcadia as immediately usable cash; and                             

    - warrants to purchase a number of shares of Arcadia's common stock equal to
approximately 40% of its then-outstanding shares.                   

NOVEMBER 12-NOVEMBER 15, 1999                                           

    Following the close of trading on Friday, November 12, 1999, Arcadia's board
of directors convened a special meeting. At this meeting the board first        
discussed recent events which had affected Arcadia's financial condition.       
Director Warren Kantor then updated the board in general terms on the status of 
negotiations with respect to the two potential transactions. Next,              
representatives of J.P. Morgan reviewed in detail the terms of the two proposed 
transactions, including the various advantages and disadvantages of each. This  
presentation included the delivery of an oral opinion that, as of that date and 
based on and subject to various stated matters, the consideration to be received
by Arcadia                                                                      

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shareholders in the merger was fair from a financial point of view. This opinion
was later confirmed in writing and is attached as Appendix C to this proxy      
statement/prospectus.                                                           

    A representative of Willkie Farr & Gallagher, Arcadia's legal advisors, then
made a presentation to the board in which he explained the material terms of the
proposed merger agreement. He then reviewed with the board various legal issues 
raised by the proposed merger and advised the board with respect to its         
fiduciary duties.                                                               

    The board then formed a special committee under Section 673 of the Minnesota
Business Corporation Act to approve or disapprove the proposed merger and the   
related agreements for purposes of Section 673. The special committee consisted 
of directors Robert J. Cresci and James L. Davis, the only directors of Arcadia 
who qualified as disinterested directors under the terms of Section 673.        

    The committee members had participated in the March, May, June, July, August
and September board meetings, had received information and updates from         
Arcadia's management and legal and financial advisors and were familiar with the
course of the merger negotiations. At their meeting, the special committee      
members again reviewed with Arcadia's executive officers and legal and financial
advisors various aspects of the merger, including the material terms of the     
merger agreement and the voting agreement and the status of potential           
alternative transactions. After a thorough discussion and an opportunity to ask 
questions of Arcadia's management and legal and financial advisors, the         
committee unanimously approved the merger, the merger agreement, the voting     
agreement and the transactions contemplated by them for purposes of             
Section 673.                                                                    

The full Arcadia board then reconvened.                                 

 Following additional discussion, including a discussion of the advantages
and potential risks of the proposed merger as described in this proxy           
statement/prospectus under "--Reasons for the Merger; Recommendation of the     
Board of Directors" and a discussion of the advantages and potential risks of   
the proposed transaction involving trust debt securities and warrants, the board
unanimously:                                                                    

- decided that the merger transaction was preferable to the proposed    
   transaction involving trust debt securities and warrants because, among
 other things, of the relatively low amount of available cash that the
other transaction would provide;                                    

- determined that the merger agreement, the merger and the other        
      transactions contemplated in connection with the merger were advisable and
  fair to and in the best interests of Arcadia and its shareholders; and

- approved the merger and the merger agreement, with those changes or   
additions that any officer of Arcadia might approve.                

 On November 12 and 13, 1999, Associates and Arcadia, in consultation with
their legal and financial advisors, finalized the terms of the merger, the      
merger agreement and other related agreements. The parties subsequently executed
the merger agreement and the related transaction documents and, on the morning  
of Monday, November 15, 1999 Associates and Arcadia jointly announced the       
merger.                                                                         

REASONS FOR THE MERGER; RECOMMENDATION OF THE BOARD OF DIRECTORS                

 The Arcadia board, based in part upon the unanimous approval of a special
committee of disinterested directors formed for purposes of Section 673 of the  
Minnesota Business Corporation Act, has concluded that the merger is advisable  
and fair to, and in the best interests of, Arcadia and its shareholders and has 
approved the merger and the merger agreement by unanimous vote of all directors.

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The decisions by Arcadia's board were each based on a number of factors,
including the following material factors, each of which the board viewed as     
indicating the potential benefits of the merger:                                

- the number and quality of potential merger and investment partners    
 contacted and the unlikelihood of realizing superior benefits through
alternative strategies;                                             

   - the cash consideration to be received by Arcadia shareholders represented
      a premium of 30.67% over the closing sales price per share on the New York
  Stock Exchange on November 12, 1999, the last trading day prior to the
public announcement of the merger;                                  

   - discussions with J.P. Morgan regarding the financial terms of the merger,
and J.P. Morgan's opinion described below, to the effect that the   
  consideration to be received by Arcadia shareholders in the merger was
fair to them from a financial point of view; and                    

   - the belief that the terms of the merger agreement, including the parties'
  representations, warranties and covenants, and the conditions to their
respective obligations, were reasonable.                            

The Arcadia board also identified and considered a number of potentially
negative factors in its deliberations concerning the merger, including the      
following:                                                                      

   - the significant costs involved in connection with consummating the merger
   and the substantial management time and effort required to complete the
merger;                                                             

   - the risk that the merger might not be completed based upon the failure to
satisfy specified covenants or closing conditions;                  

  - the possible effects of the provisions regarding termination fees on the
  ability of a third party to make an unsolicited superior proposal; and

  - the other risks described in this proxy statement/prospectus under "Risk
Factors."                                                           

    Arcadia's board concluded, however, that, on balance, the merger's potential
benefits to Arcadia and its shareholders outweighed the related risks. This     
discussion of the information and factors considered by Arcadia's board is not  
intended to be exhaustive. In view of the variety of factors considered in      
connection with the evaluation of the merger, Arcadia's board did not find it   
practicable to, and did not qualify or otherwise assign relative weight to, the 
specific factors considered in reaching its determination.                      

    In reaching its determinations, Arcadia's board of directors also considered
and evaluated, among other things:                                              

   - the results and scope of the due diligence review conducted by members of
the management of Arcadia and its financial and legal advisors with 
respect to the business and operations of Associates;               

- information with respect to recent and historical trading prices and  
trading multiples of Arcadia common stock;                          

  - information concerning the results of operations, performance, financial
condition and prospects of Arcadia;                                 

- the competitive and regulatory environment for Arcadia;               

- the continuing availability of the securitization market for Arcadia; 

- the likelihood that Arcadia will have reduced access to cash in the   
immediate future;                                                   

    - the terms of the merger agreement and the other agreements contemplated by
the merger agreement;                                               

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- the structure of the merger; and                                      

- the tax consequences of the merger.                                   

For the reasons discussed above, Arcadia's board of directors has       
unanimously approved the merger and the merger agreement and has determined that
the merger is advisable and fair to, and in the best interests of, Arcadia and  
its shareholders and unanimously recommends that Arcadia shareholders vote "FOR"
approval of the merger and the merger agreement.                                

In considering the recommendation of Arcadia's board with respect to the
merger and the merger agreement, Arcadia shareholders should be aware that some 
of the directors and officers of Arcadia have interests in the merger that are  
different from, or are in addition to, yours. Please see "The Merger--Interests 
of Directors and Officers in the Merger."                                       

OPINION OF FINANCIAL ADVISOR                                                    

 At the meeting of Arcadia's board of directors on November 12, 1999, J.P.
Morgan gave its oral opinion, subsequently confirmed in writing, to the board of
directors that, as of that date and based upon and subject to the various       
considerations set forth in the opinion, the consideration to be paid pursuant  
to the merger agreement was fair from a financial point of view to Arcadia's    
shareholders. Arcadia's board of directors did not limit J.P. Morgan in any way 
in the investigations it made or the procedures it followed in giving its       
opinion.                                                                        

  We have attached as Appendix C to this proxy statement/prospectus the full
text of J.P. Morgan's written opinion. This opinion sets forth the assumptions  
made, matters considered and limits on the review undertaken. We incorporate    
J.P. Morgan's opinion into this document by reference and urge you to read the  
opinion in its entirety. J.P. Morgan addressed its opinion to the Arcadia board.
The opinion addresses only the consideration to be paid pursuant to the merger  
agreement and is not a recommendation to you as to how you should vote with     
respect to the merger.                                                          

In arriving at its opinion, J.P. Morgan reviewed:                       

- the merger agreement;                                                 

   - various publicly available information concerning the business of Arcadia
    and of several other companies engaged in businesses comparable to those
      of Arcadia, and the reported market prices for other companies' securities
deemed comparable;                                                  

- the terms of various transactions involving companies comparable to   
Arcadia and the consideration received for these companies;         

- current and historical market prices of Arcadia's common stock;       

- the audited financial statements of Arcadia for the fiscal year ended 
December 31, 1998;                                                  

- the unaudited financial statements of Arcadia for the period ended    
September 30, 1999;                                                 

    - certain agreements with respect to outstanding indebtedness or obligations
of Arcadia;                                                         

   - certain internal financial analyses and forecasts prepared by Arcadia and
its management; and                                                 

    - the terms of other business combinations that J.P. Morgan deemed relevant.

   J.P. Morgan also held discussions with several members of the management of
Arcadia and Associates on numerous aspects of the merger, the past and current  
business operations of Arcadia, the financial condition and future prospects and
operations of Arcadia, the effects of the merger on the financial condition and 
future prospects of Arcadia, and other matters that J.P. Morgan believed        
necessary or appropriate to its inquiry. In addition, J.P. Morgan reviewed other
financial studies and analyses and considered other information that it deemed  
appropriate for the purposes of its opinion.                                    

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  J.P. Morgan relied upon and assumed, without independent verification, the
accuracy and completeness of all information that was publicly available or that
was furnished to it by Arcadia. J.P. Morgan has not assumed any responsibility  
or liability for this information. J.P. Morgan did not conduct any valuations or
appraisal of any assets or liabilities, and valuations or appraisals were not   
provided to J.P. Morgan. J.P. Morgan was not requested to review individual     
credit files or make any independent assessment as to the future performance or 
non-performance of Arcadia's assets. In relying on financial analyses and       
forecasts provided to it, J.P. Morgan has assumed that they were reasonably     
prepared based on assumptions reflecting the best currently available estimates 
and judgments by management as to the expected future results of operations and 
financial conditions of Arcadia to which those analyses or forecasts relate.    
J.P. Morgan also assumed that, in the course of obtaining regulatory and third  
party consents for the merger and the other transactions contemplated by the    
merger agreement, no restriction will be imposed that will have a material      
adverse effect on the future results of operations or financial conditions of   
Arcadia. J.P. Morgan also assumed that the merger will have the tax consequences
described in discussions with representatives of Arcadia and Associates. These  
consequences appear in this proxy statement/prospectus under the caption        
"Certain Federal Income Tax Considerations" beginning on page 36. J.P. Morgan   
relied as to all legal matters relevant to rendering its opinion upon the advice
of counsel.                                                                     

 The projections furnished to J.P. Morgan for Arcadia were prepared by the
management of Arcadia. Arcadia does not typically publicly disclose internal    
management projections of the type provided to J.P. Morgan in connection with   
J.P. Morgan's analysis of the merger, and the projections were not prepared with
a view toward public disclosure. The projections were based on numerous         
variables and assumptions that are inherently uncertain and may be beyond the   
control of management, including, without limitation, factors related to general
economic and competitive conditions and prevailing interest rates. Accordingly, 
actual results could vary significantly from those described in the projections.

    As is customary in the rendering of fairness opinions, J.P. Morgan based its
opinion on economic, market and other conditions as in effect on, and the       
information made available to J.P. Morgan as of, November 12, 1999. Subsequent  
developments may affect the opinion, and J.P. Morgan does not have any          
obligation to update, revise, or reaffirm its opinion. J.P. Morgan expressed no 
opinion as to the price at which Arcadia's common stock or the residual value   
obligation to be received by Arcadia's shareholders as partial consideration in 
the merger will trade at any future time.                                       

  J.P. Morgan reviewed Arcadia's historical and forecasted capital structure
and financial condition and analyzed detailed projections of Arcadia's cash     
flows and capital requirements. J.P. Morgan also analyzed Arcadia's business    
model, its relationships with its credit providers and the potential            
consequences of a failure by Arcadia to improve its liquidity position. J.P.    
Morgan determined that Arcadia's existing debt levels and previous downgrades by
rating agencies of Arcadia's debt had adversely affected Arcadia's access to the
capital markets. J.P. Morgan believes that, without completion of a sale or     
other capital infusion, Arcadia would likely experience additional liquidity    
problems in early 2000, which problems could have a material adverse effect on  
Arcadia's business, potentially including a liquidation of Arcadia. J.P. Morgan 
also considered the potential value that Arcadia might realize if it attempted  
to liquidate its finance income receivable. J.P. Morgan believes that, given the
lack of a secondary market for trading in residuals of sub-prime auto lender    
securitizations and the limited time horizon for executing such a sale, due to  
the aforementioned liquidity concerns, Arcadia would not be able to realize its 
recorded book value upon such a distressed liquidation.                         

 Over a period of several months, J.P. Morgan conducted a broad search for
potential partners and investors on Arcadia's behalf. Based on the alternatives 
available to Arcadia pursuant to this process, J.P. Morgan believes that the    
merger with Associates represents the only whole-company, strategic equity-based
transaction available to Arcadia.                                               

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In accordance with customary investment banking practice, J.P. Morgan   
employed generally accepted valuation methods in reaching its opinion. The      
following is a summary of the material financial analyses that J.P. Morgan      
utilized in providing its opinion.                                              

OFFER VALUATION.  J.P. Morgan reviewed the terms of the proposed merger,
including the historical price of Arcadia and the aggregate transaction value.  
J.P. Morgan calculated that based on the cash portion of Associates' proposal,  
Arcadia's common stockholders would receive a premium of 30.7% to the $3.75     
closing price of Arcadia's common stock on November 11, 1999.                   

    PUBLIC TRADING MULTIPLES.  Using publicly available information, J.P. Morgan
compared selected financial data of Arcadia with similar data for selected      
publicly traded companies engaged in businesses that J.P. Morgan judged to be   
reasonably comparable to that of Arcadia. These companies were selected because 
of their operating, organizational and overall business similarities with       
Arcadia. The companies were:                                                    

- AmeriCredit Corporation                                               

- Credit Acceptance Corporation                                         

- Onyx Acceptance Corporation                                           

- Ugly Duckling Corporation                                             

- Union Acceptance Corporation                                          

- WFS Financial, Inc.                                                   

  These companies are not experiencing the same degree of liquidity pressure
and limitation on their access to capital as Arcadia. As a result, J.P. Morgan  
determined that a public trading multiples analysis would not provide a         
meaningful indication of value for Arcadia.                                     

  SELECTED TRANSACTION ANALYSIS.  Using publicly available information, J.P.
Morgan examined a select list of specialty finance transactions, each of which  
was announced since March 1, 1996. Included among the list were the following   
transactions within the auto finance sector:                                    

                                                        [Enlarge/Download Table]

                    BUYER                                         SELLER                    
---------------------------------------------  ---------------------------------------------
                                                                                            
    -  Ford Motor Credit Company               -  Triad Financial Corporation               
                                                      (ContiFinancial Corporation)          

    -  Household International, Inc.           -  ACC Consumer Finance Corporation          

    -  Norwest Corporation                     -  Fidelity Acceptance Corporation           

    -  Search Financial Services, Inc.         -  MS Financial, Inc.                        

    -  Barnett Banks, Inc.                     -  Oxford Resources Corp.                    

    -  Associates First Capital Corporation    -  Fleetwood Credit Receivables Corp.        

    -  Southern National Corporation           -  Regional Acceptance Corporation           

    -  Bay View Capital Corporation            -  CTL Credit, Inc.                          

    J.P. Morgan calculated the median premiums represented by the purchase price
paid in these acquisitions to the last 12 months' earnings per share, book value
per share and total managed assets.                                             

   These transactions did not necessarily involve sales of companies that were
experiencing financial problems. As a result, J.P. Morgan determined that the   
transactions were not directly comparable to the proposed transaction involving 
Arcadia and that a comparable transactions analysis would therefore not provide 
a meaningful indication of value for Arcadia.                                   

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  This summary does not purport to be a complete description of the analyses
or data presented by J.P. Morgan. The preparation of a fairness opinion is a    
complex process and is not necessarily susceptible to partial analysis or       
summary description. J.P. Morgan believes that one must consider its opinion,   
the summary and its analyses as a whole. Selecting portions of this summary and 
these analyses, without considering the analyses as a whole, would create an    
incomplete view of the processes underlying the analyses and opinion. In        
arriving at its opinion, J.P. Morgan considered the results of all of the       
analyses as a whole. No single factor or analysis was determinative of J.P.     
Morgan's fairness determination. Rather, the totality of the factors considered 
and analyses performed operated collectively to support its determination. J.P. 
Morgan based its analyses on assumptions that it deemed reasonable, including   
those concerning general business and economic conditions and industry-specific 
factors. This summary sets forth under the description of each analysis the     
other principal assumptions upon which J.P. Morgan based that analysis. J.P.    
Morgan's analyses are not necessarily indicative of actual values or actual     
future results that either company or the combined company might achieve, which 
values may be higher or lower than those indicated. Analyses based upon         
forecasts of future results are inherently uncertain, as they are subject to    
numerous factors or events beyond the control of the parties and their advisors.
Accordingly, these forecasts and analyses are not necessarily indicative of     
actual future results, which may be significantly more or less favorable than   
suggested by those analyses. Therefore, none of Arcadia, Associates, J.P. Morgan
or any other person assumes responsibility if future results are materially     
different from those forecasted. Moreover, J.P. Morgan's analyses are not and do
not purport to be appraisals or otherwise reflective of the prices at which     
businesses actually could be bought or sold.                                    

    As a part of its investment banking business, J.P. Morgan and its affiliates
are continually engaged in the valuation of businesses and their securities in  
connection with mergers and acquisitions, investments for passive and control   
purposes, negotiated underwritings, secondary distributions of listed and       
unlisted securities, private placements, and valuations for estate, corporate   
and other purposes. Arcadia selected J.P. Morgan to advise it and deliver a     
fairness opinion with respect to the merger on the basis of such experience and 
its familiarity with Arcadia.                                                   

On March 30, 1999 Arcadia paid J.P. Morgan an initial fee of $500,000.  
Starting in July 1999, Arcadia has paid J.P. Morgan a retainer fee of $100,000  
per month and is contractually obligated to do so until the closing date.       
Arcadia has agreed to pay J.P. Morgan a fee of 1.0% of the total transaction    
value of the merger, including total consideration received by the shareholders 
of Arcadia and the amount of Arcadia term debt with maturity greater than one   
year assumed by Associates, upon consummation of the merger. However, this fee  
will be reduced by the amounts paid to J.P. Morgan by Arcadia in the three      
months prior to closing. Arcadia also agreed to reimburse J.P. Morgan for its   
reasonable expenses, including the fees and disbursements of counsel, up to     
$100,000, and to indemnify J.P. Morgan against various liabilities, including   
liabilities which might arise under the federal securities laws.                

   In the past, J.P. Morgan has participated in Arcadia's warehouse facilities
and securitizations, and, in 1997, served as an underwriter of Arcadia's senior 
notes. J.P. Morgan and its affiliates have also provided financial advisory,    
capital markets and credit services to Associates, for which J.P. Morgan and its
affiliates have received customary fees. In the ordinary course of their        
businesses, J.P. Morgan and its affiliates may actively trade the debt and      
equity securities of Arcadia or Associates for their own accounts or for the    
accounts of customers and, accordingly, they may at any time hold long or short 
positions in such securities.                                                   

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INTERESTS OF DIRECTORS AND OFFICERS IN THE MERGER                               

  STOCK OPTIONS.  As of the record date, executive officers and directors of
Arcadia owned stock options to purchase 4,355,937 shares of Arcadia common      
stock. Under the merger agreement, immediately prior to the effective time of   
the merger, each Arcadia stock option which is outstanding and unexercised,     
whether or not then exercisable, will become vested and exercisable. At the     
effective time, each stock option will be canceled by Arcadia, and each holder  
of a canceled stock option will be entitled to receive from Arcadia in          
consideration for the cancellation of the stock option:                         

- an amount in cash equal to the product of:                            

 - the number of shares of Arcadia common stock subject to the stock
option; and                                                   

 - the excess, if any, of $4.90 over the exercise price per share of
       Arcadia common stock subject to the stock option, less any applicable
withholding taxes; and                                        

- one residual value obligation for each share of Arcadia common stock  
subject to the stock option;                                        

  provided, that a holder of a canceled stock option will not be entitled to
receive any residual value obligations in consideration for the cancellation of 
the stock option if the exercise price per share of Arcadia common stock subject
to the stock option equals or exceeds $4.90.                                    

The table below identifies:                                             

    - the number of stock options held by each executive officer and director of
Arcadia as of February 28, 2000;                                    

    - the cash payment to be received by the person, subject to tax withholding,
for the options; and                                                

- the number of residual value obligations to be received by the person,
assuming no stock options are exercised by the person prior to the  
effective time.                                                     

                                                        [Enlarge/Download Table]

                                                                               NUMBER OF   
                                                                             RESIDUAL VALUE
                                            NUMBER OF ARCADIA   TOTAL CASH    OBLIGATIONS  
NAME                                          STOCK OPTIONS       PAYMENT    TO BE RECEIVED
----                                        ------------------  -----------  --------------
                                                                                           
Warren Kantor..............................       869,310       $146,250.00     162,500    
Robert E. Cresci...........................       145,225       $33,750.00       37,500    
James L. Davis.............................       123,400       $33,750.00       37,500    
Richard A. Greenawalt......................     1,800,001       $360,000.00     400,000    
Scott A. Anderson..........................       367,001       $122,452.90     129,501    
James D. Atkinson III......................       130,000       $22,500.00       25,000    
Cortes E. DeRussy..........................       175,000       $67,500.00       75,000    
Robert A. Marshall.........................       200,000       $180,000.00     200,000    
Duane E. White.............................       250,000       $67,500.00       75,000    
John A. Witham.............................       296,000       $68,650.00      121,000    

  RESTRICTED STOCK.  As of the record date, executive officers and directors
of Arcadia owned 286,303 shares of restricted Arcadia common stock. Immediately 
prior to the effective time, each of these shares which is outstanding will     
become vested. At the effective time, each share of restricted Arcadia common   
stock will be converted into the right to receive $4.90 in cash, without        
interest, and one residual value obligation.                                    

   INDEMNIFICATION.  The surviving corporation has agreed to indemnify present
and former officers and directors of Arcadia and its subsidiaries against all   
losses, expenses, claims, damages or liabilities arising out of actions or      
omissions occurring at or prior to the effective time of the merger to the      

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fullest extent that Arcadia and its subsidiaries would have been permitted under
applicable law and its charter documents to indemnify these persons. The merger 
agreement provides that all rights to indemnification set forth in Arcadia's    
charter documents for present and former officers and directors of Arcadia will 
also be included in the charter documents of the surviving corporation for a    
period of six years from the effective time, subject to exceptions specified in 
the merger agreement. Associates also has agreed to maintain insurance for      
Arcadia's directors and officers equivalent to Arcadia's current directors' and 
officers' liability insurance for six years after the effective time, subject to
limitations specified in the merger agreement.                                  

  LIFE INSURANCE PREMIUM PAYMENTS.  Upon completion of the merger, under the
terms of various split dollar life insurance agreements, Arcadia is obligated to
make additional insurance premium payments, up to an aggregate amount of        
$115,000 per year through 2005, for life insurance policies owned by some       
executive officers of Arcadia.                                                  

 As a result, these directors and executive officers may be more likely to
approve the merger and the merger agreement than Arcadia shareholders generally.
Furthermore, the directors and executive officers who entered into the voting   
agreement with Associates are contractually obligated to approve the merger and 
the merger agreement.                                                           

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS                                       

    The following discussion describes certain federal income tax considerations
relevant to the exchange of shares of Arcadia common stock for the merger       
consideration pursuant to the merger that are generally applicable to holders of
Arcadia common stock. This discussion is based on currently existing provisions 
of the Internal Revenue Code, existing treasury regulations enacted pursuant the
Internal Revenue Code and current administrative rulings and court decisions,   
all of which are subject to change. Any change in the above, which may or may   
not be retroactive, could alter the tax consequences to Arcadia shareholders as 
described in the following discussion.                                          

    Arcadia shareholders should be aware that this discussion does not deal with
all federal income tax considerations that may be relevant to particular        
shareholders in light of their particular circumstances, such as shareholders   
who or which:                                                                   

- are dealers in securities;                                            

- are subject to the alternative minimum tax provisions of the Internal 
Revenue Code;                                                       

- are non-U.S. persons;                                                 

- do not hold their Arcadia common stock as capital assets; or          

 - acquired their shares in connection with stock option or stock purchase
plans or in other compensatory transactions.                        

   In addition, the following discussion does not address the tax consequences
of the merger under foreign, state or local tax laws, the tax consequences of   
transactions, if any, effectuated prior or subsequent to, or concurrently with, 
the merger, whether or not these transactions are undertaken in connection with 
the merger, including without limitation any transaction in which shares of     
Arcadia common stock are acquired or residual value obligations are disposed of.
Accordingly, we urge you to consult your own tax advisors as to the specific tax
consequences to you of the merger, including the applicable federal, state,     
local and non-U.S. tax consequences.                                            

  There are no authorities considering the tax treatment of instruments that
are substantially the same as the residual value obligations. As a result, the  
tax treatment is unclear, and could differ from the treatment described in this 
discussion. You should consult your own tax advisors regarding the              

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federal, state, local and non-U.S. tax consequences to you of the receipt,      
ownership and disposition of the residual value obligations.                    

    CHARACTERIZATION OF THE RESIDUAL VALUE OBLIGATIONS.  The receipt of cash and
the residual value obligations in exchange for Arcadia common stock pursuant to 
the merger will be a taxable transaction for Arcadia shareholders for United    
States federal income tax purposes. Although the tax treatment to an Arcadia    
shareholder is unclear, each Arcadia shareholder most likely will recognize gain
or loss equal to the difference between the amount of cash and the fair market  
value of the residual value obligations received in the merger and the          
shareholder's adjusted basis in the Arcadia common stock surrendered in exchange
for the merger consideration. See "--Other Possible Tax Treatments" below. The  
gain or loss will be long-term capital gain or loss if you have held the Arcadia
common stock for more than one year. Capital gain of a non-corporate holder is  
generally subject to a maximum federal tax rate of 20% in respect of property   
held for more than one year.                                                    

 Each shareholder who receives a residual value obligation in exchange for
Arcadia common stock and applies the foregoing tax treatment will have a tax    
basis in the residual value obligation equal to its fair market value at the    
time of the exchange. The holding period for the residual value obligation will 
begin on the day following the date of the exchange.                            

   Given the wholly contingent nature of the residual value obligations, it is
not anticipated that the residual value obligations will be treated as debt     
instruments for federal income tax purposes.                                    

Therefore, when a payment is subsequently received on a residual value  
obligation, the present value of that payment will be determined under the      
principles of Section 483 of the Internal Revenue Code at the time of the       
exchange using a discount rate equal to the applicable federal rate, described  
below. The amount of the payment in excess of its present value will then be    
characterized as imputed interest and the balance will be treated as principal  
and reduce your basis in the residual value obligation. If your basis in a      
residual value obligation is reduced to zero, any additional principal payments 
on the residual value obligation should be treated as gain from the sale or     
exchange of the residual value obligation rather than from the sale or exchange 
of the Arcadia common stock. The imputed interest must be included in income by 
a holder under its regular method of accounting. Therefore, a holder using the  
cash method of accounting would include the imputed interest in income when     
payment on a residual value obligation is received, and a holder using the      
accrual method would include the imputed interest when all events have occurred 
which fix the right to receive the payment.                                     

  In general, the applicable federal rate is a rate reflecting an average of
market yields on Treasury debt obligations for different ranges of maturities   
that is published monthly by the Internal Revenue Service. The relevant         
applicable federal rate will be the lower of the lowest applicable federal rate 
in effect during the three-month period ending with November 1999 or the lowest 
applicable federal rate in effect during the three-month period ending with the 
month that includes the effective time. In each case, the maturity range of the 
relevant applicable federal rate will correspond to the period from the         
effective time to the date the amount is received or deemed received.           

    Upon a sale of a residual value obligation, a portion of the amount received
will be treated under the principles of Section 483 as interest income that is  
ordinary income to the holder. The balance of the amount will be treated as     
sales proceeds. The interest amount will equal the excess of the amount received
over its present value as of the date of the exchange, calculated using a       
discount rate equal to the applicable federal rate. You will recognize gain or  
loss equal to the difference between the amount treated as sales proceeds and   
your adjusted tax basis in the residual value obligation. The gain or loss will 
be treated as capital gain or loss which will be long-term if you have held the 
residual value obligation for more than one year.                               

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    OTHER POSSIBLE TAX TREATMENTS.  The U.S. federal income tax treatment may be
different than that described above. For example:                               

   - It is possible that residual value obligations might not be includable in
income as part of the taxable amount realized for the Arcadia common
   stock. In that case, payments would be included under the principles of
  Section 483 described above, and payments received would be treated as
      gain from the sale or exchange of Arcadia common stock. In this event, any
loss on the exchange of Arcadia common stock for residual value     
obligations generally would be deferred until final payment on the  
residual value obligations is received.                             

- It is possible that the fair market value of the residual value       
      obligations received in the merger will be includable in income as part of
  the taxable amount realized for the Arcadia common stock, but that any
      subsequent payments received on the residual value obligation would not be
    subject to the principles of Section 483 discussed above. In that event,
   you will have a tax basis in the residual value obligation equal to the
  fair market value at the time received, and subsequent payments on the
    residual value obligation would be treated first as recovery of basis in
  that residual value obligation, and any payment in excess of the basis
      would be treated as gain or loss from the sale or exchange of the residual
value obligation.                                                   

   - It is possible that the Internal Revenue Service might take the view that
     residual value obligations represent debt instruments. In that event, the
tax treatment outlined above would differ in that:                  

       - you would be required to include original issue discount in income each
year, irrespective of whether cash payments are received;     

- inclusions of original issue discount and gain from the sale of 
residual value obligations would be ordinary income; and      

     - adjustments would be made, generally in later periods, to reflect the
actual pattern of cash payments, if any, on the residual value
obligations.                                                  

You should consult your tax advisors regarding the alternative possible 
treatments of the transaction.                                                  

 LACK OF CASH RECOVERY.  If an identifiable event occurs which establishes
the worthlessness of a residual value obligation, you would be entitled to      
deduct as a capital loss, in the year of the identifiable event, your adjusted  
tax basis in your residual value obligation.                                    

BACK-UP WITHHOLDING AND INFORMATION REPORTING.  You may be subject to a 
back-up withholding tax of 31% on the receipt of the merger consideration. In   
general, back-up withholding will only apply if you fail to comply with         
identification requirements. Back-up withholding is not additional tax and may  
be claimed as a credit against your U.S. federal income tax liability, provided 
that the required information is furnished to the Internal Revenue Service. You 
should consult your tax advisors regarding your qualification for exemption from
back-up withholding and the procedure for obtaining any applicable exemption. In
addition, amounts paid on the sale, exchange, redemption or satisfaction of a   
residual value obligation will also be subject to information reporting unless  
an exemption applies.                                                           

ANTICIPATED ACCOUNTING TREATMENT                                                

Associates intends that the merger be accounted for under the purchase  
method of accounting in accordance with generally accepted accounting           
principles.                                                                     

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DISSENTERS' RIGHTS                                                              

Sections 302A.471 and 302A.473 of the Minnesota Business Corporation Act
entitle any shareholder of Arcadia as of February 28, 2000, in lieu of receiving
the payment to which the shareholder would otherwise be entitled pursuant to the
merger agreement, to dissent from the merger and obtain payment in cash for the 
"fair value" of the shares of stock held by the shareholder. If you are         
contemplating the exercise of dissenters' rights, you should review carefully   
the provisions of Sections 302A.471 and 302A.473 of the Minnesota Business      
Corporation Act, copies of which are attached as Appendix E to this proxy       
statement/prospectus, particularly the specific procedural steps required to    
perfect these rights. These rights will be lost if the procedural requirements  
of Section 302A.473 are not fully and precisely satisfied.                      

Set forth below is a brief description of the procedures relating to the
exercise of dissenters' rights. The following description does not purport to be
a complete statement of the provisions of Section 302A.473 and is qualified in  
its entirety by reference to this section. Please read this description in      
conjunction with the full text of Section 302A.473 appearing in Appendix E to   
this proxy statement/ prospectus.                                               

   Under Section 302A.473, Subd. 3, a shareholder as of the record date of the
shareholders meeting to consider the merger who wishes to exercise dissenters'  
rights must file with Arcadia, at Arcadia's address, 7825 Washington Avenue     
South, Minneapolis, Minnesota 55439, Attention: James D. Atkinson, III,         
Secretary, before the vote on the merger, a written notice of intent to demand  
the "fair value" of Arcadia's shares owned by the shareholder. In addition, the 
shareholder must not vote his or her shares in favor of the merger. A vote      
against the merger will not in itself constitute written notice, and a failure  
to vote will not affect the validity of a timely written notice. However, the   
submission of a blank proxy will constitute a vote in favor of the merger and a 
waiver of statutory dissenters' rights.                                         

   If the merger is approved by the shareholders of Arcadia, Arcadia will send
to all dissenters who filed the necessary notice of intent to demand the fair   
value of their shares, and who did not vote their shares in favor of the merger,
a notice containing the information required by Section 302A.473, Subd. 4,      
including without limitation:                                                   

- the address to which a dissenter must send a demand for payment and   
      certificates representing shares in order to obtain payment for the shares
and the date by which they must be received; and                    

- a form to be used to certify the date on which the dissenter, or the  
 beneficial owner on whose behalf the dissenter dissents, acquired the
  shares of common stock (or an interest in them) and to demand payment.

  In order to receive the fair value of the shares under Section 302A.473, a
dissenter must demand payment and deposit certificates representing shares      
within 30 days after notice by Arcadia is given. Under Minnesota law, notice by 
mail is given by Arcadia when deposited in the United States mail. A shareholder
who fails to make demand for payment and to deposit certificates as required by 
Section 302A.473, Subd. 4, will not be a dissenter and will lose the right to   
receive the fair value of his or her shares under that section despite the      
timely filing of notice of intent to demand payment under Section 302A.473,     
Subd. 3, but will be entitled to the merger consideration payable under the     
merger agreement, which may be more or less than or equal to the fair value of  
the shares determined under Minnesota Business Corporation Act                  
Section 302A.473.                                                               

  Under Section 302A.471, Subd. 2, beneficial owners of shares who desire to
exercise statutory dissenters' rights themselves must obtain and submit the     
registered owner's written consent at or before the time they file the notice of
intent to demand fair value. Under Section 302A.471, Subd. 2, you may not assert
dissenters' rights with respect to less than all of the shares of common stock  
registered in                                                                   

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your name, unless you dissent with respect to all shares beneficially owned by  
another person and disclose the name and address of that other person.          

Except as provided below, if demand for payment and deposit of stock    
certificates is duly made by a dissenter with Arcadia as required by the notice,
then after the effective time of the merger or the receipt of the demand,       
whichever is later, Arcadia will pay the dissenter an amount which Arcadia      
estimates to be the fair value of the dissenter's shares of common stock, with  
interest, if any. For the purpose of a dissenter's rights under Sections        
302A.471 and 302A.473, "fair value" means the value of the shares of common     
stock immediately before the effective date of the merger and "interest" means  
interest commencing five days after the effective date of the merger until the  
date of payment, calculated at the rate provided in Minnesota Statutes          
Section 549.09, presently 5%. The payment must be accompanied by Arcadia's      
closing balance sheet and statement of income for a fiscal year ending not more 
than 16 months before the effective time, Arcadia's latest available interim    
financial statements and a brief description of the method used by Arcadia to   
reach such an estimate. If the dissenter believes the payment received from     
Arcadia is less than the fair value of the shares of common stock, with         
interest, if any, the dissenter must give written notice to Arcadia of his or   
her own estimate of the fair value of the shares of common stock, with interest,
if any, within 30 days after the date of Arcadia's remittance and must demand   
payment of the difference between his or her estimate and Arcadia's remittance. 
If the dissenter fails to give written notice of the estimate to Arcadia within 
the 30-day time period, the dissenter will be entitled only to the amount       
remitted by Arcadia.                                                            

  Arcadia may withhold the remittance with respect to shares of common stock
for which the dissenter demanding payment was not the registered owner or the   
person on whose behalf the dissenter acts was not a beneficial owner as of      
November 15, 1999. As to each dissenter who was not a beneficial owner as of    
November 15, 1999 who has validly demanded payment, following the effective time
or the receipt of demand, whichever is later, Arcadia will mail its estimate of 
the fair value of the dissenter's shares of common stock and offer to pay this  
amount with interest, if any, to the dissenter upon receipt of the dissenter's  
agreement to accept this amount in full satisfaction. If the dissenter believes 
that Arcadia's offer is for less than the fair value of the shares of common    
stock, with interest, if any, the dissenter must give written notice to Arcadia 
of his or her own estimate of the fair value of the shares of common stock, with
interest, if any, and demand payment of this amount within 30 days after the    
mailing of Arcadia's offer. If the dissenter fails to give written notice of    
this estimate to Arcadia within the 30-day time period, the dissenter will be   
entitled only to the amount offered by Arcadia.                                 

If Arcadia and any dissenter who objects to Arcadia's estimate of "fair 
value" cannot settle the dissenter's demand within 60 days after Arcadia        
receives the dissenter's estimate of the fair value of his or her shares of     
common stock, then Arcadia will file a petition in a court of competent         
jurisdiction in Hennepin County, Minnesota, requesting that the court determine 
the statutory fair value of common stock with interest, if any. All dissenters  
whose demands are not settled within the applicable 60-day settlement period    
will be made parties to this proceeding.                                        

  The court will then determine whether each dissenter in question has fully
complied with the provisions of Section 302A.473 and, for all dissenters who    
have fully complied and not forfeited statutory dissenters' rights, will        
determine the fair value of the shares, taking into account any and all factors 
the court finds relevant, including, without limitation, the recommendation of  
any appraisers which may have been appointed by the court, computed by any      
method or combination of methods that the court, in its discretion, sees fit to 
use, whether or not used by Arcadia or a dissenter. The fair value of the shares
as determined by the court is binding on all shareholders and may be less than, 
equal to or greater than the price to be paid to shareholders who are not       
dissenters or dissenting shareholders who have settled with Arcadia. Each       
dissenter who is a party to the proceeding is entitled to judgment in cash for  
the amount by which the fair value of the shares of common stock as determined  
by the court, plus interest, exceeds the estimated payment previously remitted  
by Arcadia to the dissenter. However, under the statute, dissenters are not     
liable to Arcadia for the amount, if any, by which                              

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payments remitted by Arcadia to the dissenters exceed the fair value of the     
shares determined by the court, plus interest. The costs and expenses of this   
court proceeding will be assessed against Arcadia, except that the court may    
assess part or all of those costs and expenses against a dissenter whose action 
in demanding payment is found to be arbitrary, vexatious or not in good faith.  

If the court finds that Arcadia has failed to comply substantially with 
Section 302A.473, the court also may assess against Arcadia the fees and        
expenses, if any, of attorneys and experts as the court deems equitable. These  
fees and expenses may also be assessed against any person who has acted         
arbitrarily, vexatiously or not in good faith in bringing the proceeding, and   
may be awarded to a party injured by those actions.                             

  Under Section 302A.471, Subd. 4, you have no right at law or equity to set
aside the adoption of the merger agreement or the consummation of the merger,   
except if the adoption or consummation is fraudulent with respect to you or     
Arcadia.                                                                        

    Associates' obligation to effect the merger is subject to the condition that
dissenters' rights are exercised by the holders of less than 10% of Arcadia's   
common stock.                                                                   

LISTING OF RESIDUAL VALUE OBLIGATIONS                                           

We do not expect to list the residual value obligations on any national 
securities exchange or to seek their quotation on any automated dealer quotation
system. We have been advised by J.P. Morgan that following completion of the    
merger, J.P. Morgan intends to make a market in the residual value obligations. 
However, it is not obligated to do so and any market-making activities with     
respect to the residual value obligations may be discontinued at any time       
without notice.                                                                 

OPERATIONS FOLLOWING THE MERGER                                                 

  Following the merger, Arcadia will operate as a wholly owned subsidiary of
Associates. Associates does not currently plan on assuming or guaranteeing any  
of the current indebtedness of Arcadia. Upon completion of the merger, it is    
anticipated that the current directors of AFCC Newco, Inc. will be the members  
of Arcadia's board.                                                             

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DESCRIPTION OF RESIDUAL VALUE OBLIGATIONS 

Associates will issue the residual value obligations under the Residual 
Value Obligations Agreement between Associates and The Chase Manhattan Bank, as 
trustee, to be dated as of the effective date of the merger. The terms of the   
residual value obligations include those expressly set forth in the RVO         
Agreement and those made part of the RVO Agreement by reference to the Trust    
Indenture Act of 1939, as amended.                                              

 This description of residual value obligations is intended to be a useful
overview of the material provisions of the residual value obligations and the   
RVO Agreement. Because this description of residual value obligations is only a 
summary, you should refer to the RVO Agreement for a complete description of the
obligations of Associates and your rights as a holder of residual value         
obligations. We have included a copy of the form of RVO Agreement as Appendix B 
to this proxy statement/ prospectus.                                            

    The section entitled "--Certain Definitions" includes the definitions of the
capitalized terms used in this description. References to "Associates" in this  
section mean only Associates First Capital Corporation and not its subsidiaries.

GENERAL                                                                         

The residual value obligations:                                         

- are general unsecured obligations of Associates;                      

   - will be issued in a maximum amount equal to one residual value obligation
    for each outstanding share of Arcadia common stock outstanding as of the
effective date of the merger plus any additional residual value     
  obligations issued in satisfaction of dissenters' rights following the
effective date of the merger; and                                   

  - will be issued in denominations of a whole residual value obligation and
integral multiples of whole residual value obligations.             

We do not expect to list the residual value obligations on any national 
securities exchange or to seek their quotation on any automated dealer quotation
system. We have been advised by J.P. Morgan that following completion of the    
merger, J.P. Morgan intends to make a market in the residual value obligations. 
However, it is not obligated to do so and any market-making activities with     
respect to the residual value obligations may be discontinued at any time       
without notice.                                                                 

    Investments in the residual value obligations involve a high degree of risk.
Risks associated with holding the residual value obligations are discussed under
"Risk Factors" in this proxy statement/ prospectus.                             

RVO PAYMENTS                                                                    

There are no minimum payments on the residual value obligations, and    
depending on the performance of the underlying receivables and other factors,   
there may be no payments on the residual value obligations. If ultimately there 
are payments on the residual value obligations, it is unlikely payments will    
commence prior to January 1, 2004. Payments on the residual value obligations,  
if any, will:                                                                   

    - be paid on the Payment Dates occurring in January, April, July and October
of each year; and                                                   

    - be payable to the holders of record on the December 1, March 1, June 1 and
September 1 immediately preceding the related Payment Dates.        

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    On each Payment Date on which the Accrued RVO Payment Amount is greater than
zero, Associates will be required to make a payment (an "RVO Payment") with     
respect to each residual value obligation in an amount equal to the quotient of:

- the then-effective Accrued RVO Payment Amount, DIVIDED BY             

- the total number of residual value obligations outstanding.           

  If the Accrued RVO Payment Amount on a Payment Date is zero, there will be
no RVO Payment on that Payment Date.                                            

Notwithstanding the foregoing, Associates will not, except in connection
with the payment of RVO Payments on a redemption date, be required to make      
payments on any residual value obligation if the amount of the payment that     
would otherwise be made on that residual value obligation would be less than    
$0.05. Any amounts not paid in accordance with the foregoing and any amounts not
paid in breach of the terms of the residual value obligations will be carried   
over to the next Payment Date and continue to accrue interest as provided in the
second paragraph below.                                                         

The "Accrued RVO Payment Amount" as of any date means the sum of:       

 - the aggregate of the amount of Residual Cash Flow allocated pursuant to
      priority clause (D) under the "Initial Allocation Priorities" described in
      the next sub-section, or priority clause (B) of the "Additional Allocation
  Priorities" described in the next sub-section, to make payments on the
residual value obligations, and                                     

    - interest accrued on such amounts pursuant to the next paragraph, provided,
    that the Accrued RVO Payment Amount will be reduced on each Payment Date
  by the amount of the aggregate RVO Payments made on such Payment Date.

    On the business day after each Securitization Distribution Date occurring on
or after the effective date of the merger (each, an "Allocation Date"),         
Associates will be required to determine whether to increase the then-effective 
Accrued RVO Payment Amount by making the allocations of Residual Cash Flow      
described below. In general, amounts allocated on an Allocation Date to increase
the Accrued RVO Payment Amount pursuant to priority clause (D) of the "Initial  
Allocation Priorities" and priority clause (B) of the "Additional Allocation    
Priorities" described in the next sub-section will accrue interest from and     
including the Allocation Date to but excluding the date the accrued amounts are 
paid on the residual value obligations, at a rate equal to One-Month LIBOR.     

ALLOCATIONS OF RESIDUAL CASH FLOW                                               

INITIAL ALLOCATION OF RESIDUAL CASH FLOW. On each Allocation Date,      
Associates will be required to make the following allocations of the Residual   
Cash Flow, if any, as of that Allocation Date, in the following order of        
priority (the "Initial Allocation Priorities"):                                 

(A) 100% to reduce RVO Expenses incurred after the third preceding      
      Securitization Distribution Date and on or prior to the second preceding
     Securitization Distribution Date (provided, that (i) in the case of the
initial Allocation Date, the allocation will be 100% to reduce RVO
    Expenses incurred on or after November 12, 1999 and on or prior to the
       second preceding Securitization Distribution Date and (ii) in the case of
     the final Allocation Date, the allocation will be 100% of the remaining
       Residual Cash Flow, if any, to reduce (x) RVO Expenses incurred after the
      third preceding Securitization Distribution Date and on or prior to such
      Allocation Date and (y) RVO Expenses which Associates reasonably expects
     to incur thereafter), PLUS(except in the case of the initial Allocation
Date) any RVO Expenses incurred on or prior to the third preceding
      Securitization Distribution Date and on or after November 12, 1999 which
     were not previously reduced by a prior allocation of Residual Cash Flow
pursuant to this priority clause (A), until such amounts have been
reduced to zero, then                                             

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  (B) 100% of the remaining Residual Cash Flow, if any, to reduce Litigation
     Expenses incurred after the third preceding Securitization Distribution
      Date and on or prior to the second preceding Securitization Distribution
     Date (provided that (i) in the case of the initial Allocation Date, the
     allocation will be 100% of the remaining Residual Cash Flow, if any, to
      reduce Litigation Expenses incurred on or after November 12, 1999 and on
   or prior to the second preceding Securitization Distribution Date and
   (ii) in the case of the final Allocation Date, the allocation will be
    100% of the remaining Residual Cash Flow, if any, to reduce Litigation
     Expenses incurred after the third preceding Securitization Distribution
       Date and on or prior to such Allocation Date), PLUS(except in the case of
       the initial Allocation Date) any Litigation Expenses incurred on or prior
     to the third preceding Securitization Distribution Date and on or after
       November 12, 1999 which were not previously reduced by a prior allocation
   of Available Residual Cash Flow pursuant to this priority clause (B),
until such amounts have been reduced to zero, then                

(C) 100% of remaining Residual Cash Flow, if any, to reduce the         
      then-effective AFCC Amount until the then-effective AFCC Amount has been
reduced to zero, then                                             

    (D) 50% of the remaining Residual Cash Flow, if any, to increase the Accrued
RVO Payment Amount.                                               

ADDITIONAL ALLOCATION OF RESIDUAL CASH FLOW. In addition to, and after  
giving effect to, the allocation of Residual Cash Flow pursuant to the Initial  
Allocation Priorities, on the second Allocation Date following the final        
disposition of all litigation giving rise to Damages and the final determination
of all related legal fees and expenses, an amount equal to the excess, if any,  
of                                                                              

  - the aggregate amount of Residual Cash Flow allocated on or prior to such
Allocation Date to reduce Litigation Expenses pursuant to priority  
clause (B) above OVER                                               

- the aggregate amount of Damages (the "Excess Litigation Reserve"),    

must be allocated by Associates in the following order of priority (the 
"Additional Allocation Priorities"):                                            

  (A) 100% to reduce the then-effective AFCC Amount (calculated after giving
    effect to the allocation of Residual Cash Flow pursuant to the Initial
      Allocation Priorities on that Allocation Date) until the AFCC Amount has
been reduced to zero, then                                        

(B) 50% of remaining Excess Litigation Reserve, if any, to increase the 
Accrued RVO Payment Amount.                                       

APPLICATION OF FUNDS PURSUANT TO ALLOCATION PROVISIONS. The allocation  
provisions described under the Initial Allocation Priorities and the Additional 
Allocation Priorities do not require any actual or specific use of funds by     
Associates or its subsidiaries. The allocations are made solely for purposes of 
determining whether, and to what extent, Associates is required to make payments
on the residual value obligations. You will not have any right to the           
receivables underlying the residual value obligations or to the actual residual 
cash flows generated by the receivables.                                        

PAYMENTS ON, AND EXCHANGES AND TRANSFERS OF, THE RESIDUAL VALUE OBLIGATIONS     

    The residual value obligations may be exchanged or transferred at the office
or agency of Associates in the Borough of Manhattan, The City of New York (which
initially will be the corporate trust office of the trustee in New York, New    
York). At the option of Associates, RVO Payments may be made by check mailed to 
the address of the holders as their addresses appear in the register for the    
residual value obligations. RVO Payments on residual value obligations in global
form registered in the name of or held by The Depository Trust Company ("DTC"), 
the depositary for the global residual value obligations, or its nominee will be
made in immediately available funds to DTC or its nominee,                      

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as the case may be, as the registered holder of the global residual value       
obligation. No service charge will be made for any registration of transfer or  
exchange of residual value obligations, but Associates may require payment of a 
sum sufficient to cover any transfer tax or other similar governmental charge   
payable in connection with the transfer or exchange.                            

SERVICING OF AUTO LOAN RECEIVABLES                                              

The RVO Agreement requires Associates to, or to cause its affiliates to,
service or arrange for the servicing of the receivables securitized pursuant to 
the Designated Securitization Transactions (subject to the right of other       
entities under the Designated Securitization Transactions to terminate the      
servicer of the receivables) and any Other Transaction Receivables in accordance
with customary business practices and Associates' applicable policies and       
procedures and, if Associates or any of its subsidiaries is then servicing, or  
arranging for the servicing of, indirectly originated automobile loans,         
consistent with that servicing.                                                 

AMENDMENT TO DESIGNATED SECURITIZATION TRANSACTIONS                             

   Associates may not, and may not permit its subsidiaries to, amend or modify
the terms of any agreement entered into in connection with the Designated       
Securitization Transactions unless such an amendment or modification is made in 
accordance with reasonable business practices and with a good faith intent other
than to reduce RVO Payments. In addition, Associates may not, and may not permit
its subsidiaries to, amend or modify the terms of any agreement entered into in 
connection with the Designated Securitization Transactions to increase the      
servicing fees payable thereunder unless such increased servicing fees are      
payable to an entity other than Associates and its subsidiaries and Associates  
or its subsidiaries have been terminated as servicer by Financial Security      
Assurance Inc. or any other entity in accordance with the terms of the          
Designated Securitization Transactions.                                         

REPORTING REQUIREMENTS                                                          

Unless the Securities and Exchange Commission requires Associates to    
disclose different information, Associates has agreed to publicly disclose in   
respect of each fiscal quarter of Associates, not later than the time it files  
its Quarterly Report on Form 10-Q with the Securities and Exchange Commission in
respect of each of its first three fiscal quarters in each fiscal year and not  
later than the time it files its Annual Report on Form 10-K in respect of its   
fourth fiscal quarter in each fiscal year (or, in the event Associates is not   
then required to make such filings with the Securities and Exchange Commission, 
not later than the time it would be required to make such filings if it were so 
required), information specified in the Residual Value Obligations Agreement.   

PAYING AGENT AND REGISTRAR                                                      

    The trustee will initially act as paying agent and registrar. Associates may
change the paying agent or registrar without prior notice to the holders of the 
residual value obligations, and Associates or any of its subsidiaries may act as
paying agent or registrar.                                                      

TRANSFER AND EXCHANGE                                                           

  A holder may transfer or exchange residual value obligations in accordance
with the RVO Agreement. The registrar and the trustee may require a holder,     
among other things, to furnish appropriate endorsements and transfer documents, 
and Associates may require a holder to pay any taxes and fees required by law or
permitted by the RVO Agreement.                                                 

   The registered holder of a residual value obligation will be treated as the
owner of it for all purposes.                                                   

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OPTIONAL REDEMPTION                                                             

Except as described below, Associates may not redeem the residual value 
obligations.                                                                    

    At Associates' option, Associates may redeem the residual value obligations,
in whole but not in part, on any Payment Date when the total aggregate principal
balance of the auto loan receivables that were securitized pursuant to the      
Designated Securitization Transactions as of the effective date of the merger is
less than or equal to 5% of the total aggregate principal balance of those      
receivables as of the effective date of the merger. Associates may make this    
redemption upon not less than 30 nor more than 60 days' prior notice mailed by  
first-class mail to each holder's registered address. The optional redemption   
price will equal the fair value (as of the date of a resolution of the Board of 
Directors of Associates relating to the redemption) of the outstanding residual 
value obligations, as determined in good faith by the Board of Directors of     
Associates and set forth in the Board resolution. The Board of Directors of     
Associates will determine the fair value of the residual value obligations      
assuming the prior payment of the RVO Payment, if any, to be made on the        
redemption date.                                                                

The redemption date, if any, will also be a Payment Date. Accrued RVO   
Payments Amounts, if any, as of the Payment Date coinciding with the redemption 
date will be paid to the person in whose name the residual value obligation is  
registered at the close of business on the related record date.                 

After the redemption date, no further RVO Payments will be made on the  
residual value obligations as long as Associates has deposited with the paying  
agent funds in satisfaction of the optional redemption price, and any RVO       
Payments to be made on such redemption date, pursuant to the RVO Agreement.     

Holders must surrender residual value obligations to a paying agent to  
collect redemption payments.                                                    

   Associates is not required to make mandatory redemption payments or sinking
fund payments with respect to the residual value obligations.                   

MERGER AND CONSOLIDATION                                                        

Associates will not consolidate with or merge with or into, or convey,  
transfer or lease all or substantially all its assets to, any Person, UNLESS:   

    - the resulting, surviving or transferee Person (the "Successor Company") is
    a corporation, partnership, trust or limited liability company organized
     and existing under the laws of the United States of America, any State of
    the United States or the District of Columbia and the Successor Company,
     if not Associates, expressly assumes, by supplemental agreement, executed
      and delivered to the trustee, in form satisfactory to the trustee, all the
  obligations, duties, commitments and covenants of Associates under the
residual value obligations and the RVO Agreement;                   

    - immediately after giving effect to the transaction, no Default or Event of
Default has occurred and is continuing; and                         

 - Associates has delivered to the trustee an Officers' Certificate and an
Opinion of Counsel, each stating that the consolidation, merger or  
 transfer and such supplemental agreement, if any, comply with the RVO
     Agreement and that all conditions precedent provided in the RVO Agreement
relating to the transaction have been complied with.                

For purposes of this covenant, the sale, lease, conveyance, assignment, 
transfer, or other disposition of all or substantially all of the properties and
assets of one or more Subsidiaries of Associates, which properties and assets,  
if held by Associates instead of such Subsidiaries, would constitute all or     
substantially all of the properties and assets of Associates on a consolidated  
basis, will be deemed to be the transfer of all or substantially all of the     
properties and assets of Associates.                                            

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The Successor Company will succeed to, and be substituted for, and may  
exercise every right and power of, Associates under the RVO Agreement.          

Although there is a limited body of case law interpreting the phrase    
"substantially all," there is no precise established definition of the phrase   
under applicable law. Accordingly, there may be a degree of uncertainty as to   
whether a particular transaction would involve "all or substantially all" of the
property or assets of a Person.                                                 

Notwithstanding the preceding, Associates may, subject to only the      
conditions described in the first and third bullet points above, merge with an  
affiliate incorporated solely for the purpose of reincorporating Associates in  
another jurisdiction to realize tax or other benefits.                          

   Any consolidation, merger, conveyance, transfer or lease that complies with
the terms of the RVO Agreement described in this section will not be restricted 
by the terms of the RVO Agreement described under "--Assignment."               

ASSIGNMENT                                                                      

   Associates will not assign its obligations under the RVO Agreement or under
the residual value obligations to any Person, UNLESS:                           

    - the assignee (the "Assignee Company") is a corporation, partnership, trust
     or limited liability company organized and existing under the laws of the
    United States of America, any State of the United States or the District
   of Columbia and the Assignee Company expressly assumes, by supplemental
     agreement, executed and delivered to the trustee, in form satisfactory to
   the trustee, all the obligations of Associates under the residual value
obligations and the RVO Agreement;                                  

    - immediately after giving effect to the transaction, no Default or Event of
Default has occurred and is continuing;                             

- either (A) immediately after giving effect to such transaction, the   
   Assignee Company has a consolidated net worth that is not less than the
      lower of (1) $1 billion or (2) the consolidated net worth of Associates at
   such time or (B) Associates remains secondarily liable, by guarantee or
    otherwise, for the payment obligations of the Assignee Company under the
RVO Agreement and the residual value obligations;                   

 - Associates has delivered to the trustee an Officers' Certificate and an
     Opinion of Counsel, each stating that the assignment and the supplemental
     agreement comply with the RVO Agreement and that all conditions precedent
provided in the RVO Agreement relating to the transaction have been 
complied with; and                                                  

- the Assignee Company or one of its affiliates is the successor to     
    Associates' and its subsidiaries' interest in the Residual Cash Flow and
the Designated Securitization Transactions.                         

The Assignee Company will succeed to, and be substituted for, and may   
exercise every right and power of Associates under the RVO Agreement.           

Nothing in the RVO Agreement or in the residual value obligations, other
than the foregoing provision, restricts Associates' ability to assign its rights
and/or obligations under the RVO Agreement and/or the residual value            
obligations.                                                                    

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EVENTS OF DEFAULT                                                               

Each of the following is an "Event of Default":                         

(1) default in any payment of any RVO Payment on any residual value     
obligation when due, and such default continues for 30 days;      

  (2) default in the payment of the optional redemption price, when the same
becomes due and payable, as described above under "--Optional     
Redemption";                                                      

   (3) failure by Associates to comply for 60 days after notice with its other
agreements contained in the RVO Agreement; or                     

    (4) certain events of bankruptcy, insolvency or reorganization of Associates
(the "bankruptcy provisions").                                    

However, a default under clause (3) of this paragraph will not constitute an    
Event of Default until the trustee or the holders of 50% of the outstanding     
residual value obligations notify Associates of the default and Associates does 
not cure such default within the time specified in clause (3) of this paragraph 
after receipt of such notice.                                                   

    Subject to the provisions of the RVO Agreement relating to the duties of the
trustee, if an Event of Default occurs and is continuing, the trustee will be   
under no obligation to exercise any of the rights or powers under the RVO       
Agreement at the request or direction of any of the holders unless those holders
have offered to the trustee reasonable indemnity or security against any loss,  
liability or expense. Except to enforce the right to receive payments on the    
residual value obligations, no holder may pursue any remedy with respect to the 
RVO Agreement or the residual value obligations UNLESS:                         

(1) the holder has previously given the trustee notice that an Event of 
Default is continuing;                                            

(2) the holders of at least 25% of the outstanding residual value       
obligations have requested the trustee to pursue the remedy;      

 (3) the holders have offered the trustee reasonable security or indemnity
against any loss, liability or expense;                           

  (4) the trustee has not complied with the request within 60 days after the
receipt of the request and the offer of security or indemnity; and

   (5) the holders of a majority of the outstanding residual value obligations
have not given the trustee a direction that, in the opinion of the
 trustee, is inconsistent with the request within the 60-day period.

Subject to restrictions specified in the RVO Agreement, the holders of a
majority of the outstanding residual value obligations are given the right to   
direct the time, method and place of conducting any proceeding for any remedy   
available to the trustee or of exercising any trust or power conferred on the   
trustee. The RVO Agreement provides that in the event that an Event of Default  
has occurred and is continuing, the trustee will be required in the exercise of 
its powers to use the degree of care that a prudent person would use in the     
conduct of its own affairs. The trustee, however, may refuse to follow any      
direction that conflicts with law or the RVO Agreement or that the trustee      
determines is unduly prejudicial to the rights of any other holder or that would
involve the trustee in personal liability. Prior to taking any action under the 
RVO Agreement, the trustee will be entitled to indemnification satisfactory to  
it in its sole discretion against all losses and expenses caused by taking or   
not taking such action.                                                         

   The RVO Agreement does not provide for the acceleration of any payment as a
remedy upon an Event of Default.                                                

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   The holders of a majority of the outstanding residual value obligations may
waive an existing Default or Event of Default and its consequences, except with 
respect to                                                                      

- nonpayment of amounts due on the residual value obligations, or       

    - a Default or Event of Default with respect to a provision that may only be
amended with the consent of each holder affected.                   

    The RVO Agreement provides that if a Default occurs and is continuing and is
known to the trustee, the trustee must mail to each holder notice of the Default
within 90 days after it occurs. Except in the case of a Default in the payment  
of amounts due on any residual value obligation, the trustee may withhold notice
if and so long as a committee of trust officers of the trustee in good faith    
determines that withholding notice is in the interests of the holders. In       
addition, Associates is required to deliver to the trustee, within 120 days     
after the end of each fiscal year, a certificate indicating whether the signers 
of the certificate know of any Default that occurred during the previous year.  
Associates also is required to deliver to the trustee, within 5 days after      
Associates becomes aware of the occurrence of any Event of Default or an event  
which, with notice or the lapse of time or both, would constitute an Event of   
Default, an Officers' Certificate setting forth the details of such Event of    
Default or Default and the action which Associates proposes to take.            

AMENDMENTS AND WAIVERS                                                          

  Subject to exceptions specified in the RVO Agreement, the RVO Agreement or
the residual value obligations may be amended with the consent of the holders of
a majority of the outstanding residual value obligations, including consents    
obtained in connection with a purchase of, or tender offer or exchange offer    
for, residual value obligations, and, subject to exceptions specified in the RVO
Agreement, any past default or compliance with any provisions may be waived with
the consent of the holders of a majority of the residual value obligations then 
outstanding, including consents obtained in connection with a purchase of, or   
tender offer or exchange offer for, residual value obligations. However, without
the consent of each holder of an outstanding residual value obligation affected,
no amendment may, among other things:                                           

  (1) reduce the percentage of residual value obligations whose holders must
consent to an amendment;                                          

(2) reduce the amount of an RVO Payment or extend the stated time for   
payment of an RVO Payment;                                        

(3) reduce the amount payable upon the redemption of any residual value 
      obligation or change the time at which any residual value obligation may
   be redeemed as described above under "--Optional Redemption", whether
through an amendment or waiver of provisions in the covenants,    
definitions or otherwise;                                         

(4) make any residual value obligation payable in money other than that 
stated in the residual value obligation;                          

    (5) impair the right of any holder to receive payment on his or her residual
      value obligations on or after the due dates or to institute suit for the
  enforcement of any payment on or with respect to his or her residual
value obligations; or                                             

    (6) make any change in the amendment or waiver provisions which require each
holder's consent.                                                 

   Without the consent of any holder, Associates and the trustee may amend the
RVO Agreement or the residual value obligations to:                             

(1) cure any ambiguity, omission, defect or inconsistency;              

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(2) provide for the assumption by a successor corporation, partnership, 
trust or limited liability company, or an Assignee Company, of the
obligations of Associates under the RVO Agreement;                

   (3) provide for uncertificated residual value obligations in addition to or
in place of certificated residual value obligations;              

(4) add guarantees with respect to the residual value obligations,      
     including, without limitation, as contemplated by "--Assignment" above;

(5) secure the residual value obligations;                              

(6) add to the covenants of Associates for the benefit of the holders or
surrender any right or power conferred upon Associates;           

    (7) make any change that does not adversely affect the rights of any holder;
or                                                                

    (8) comply with any requirement of the Securities and Exchange Commission in
    connection with the qualification of the RVO Agreement under the Trust
Indenture Act.                                                    

The consent of the holders is not necessary under the RVO Agreement to  
approve the particular form of any proposed amendment. It is sufficient if such 
consent approves the substance of the proposed amendment. After an amendment    
under the RVO Agreement becomes effective, Associates is required to mail to the
holders a notice briefly describing the amendment. However, the failure to give 
this notice to all the holders, or any defect in the notice, will not impair or 
affect the validity of the amendment.                                           

NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS        

  No director, officer, employee, incorporator or stockholder of Associates,
as such, will have any liability for any obligations of Associates under the    
residual value obligations or the RVO Agreement or for any claim based on, in   
respect of, or by reason of, such obligations or their creation. Each holder by 
accepting a residual value obligation waives and releases all such liability.   
The waiver and release are part of the consideration for issuance of the        
residual value obligations. This waiver may not be effective to waive           
liabilities under the federal securities laws and it is the view of the         
Securities and Exchange Commission that such a waiver is against public policy. 

CONCERNING THE TRUSTEE                                                          

    The Chase Manhattan Bank is the trustee under the RVO Agreement and has been
appointed by Associates as registrar and paying agent with regard to the        
residual value obligations.                                                     

DETERMINATIONS OF ASSOCIATES FINAL                                              

The residual value obligations provide that, in general, Associates'    
calculations and determinations of all amounts and other matters in connection  
with the residual value obligations will be final and conclusive in the absence 
of manifest error. However, Associates will be required to engage its           
independent auditors to review the calculations and determinations made by      
Associates under the residual value obligations and under the RVO Agreement     
substantially to the same extent as Associates engages its independent auditors 
to perform a similar function with respect to securitization transactions       
effected by or for the benefit of Associates and its subsidiaries.              

GOVERNING LAW                                                                   

  The RVO Agreement provides that it and the residual value obligations will
be governed by, and construed in accordance with, the laws of the State of New  
York.                                                                           

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CERTAIN DEFINITIONS                                                             

    "AFCC Amount" means an amount equal to (A) $512 million PLUS (B) interest at
1.25% per month on $512 million (calculated on the basis of a 360-day year of   
twelve 30-day months) from September 30, 1999 up to but excluding the effective 
date of the merger less (C) the amount of Residual Cash Flow generated on and   
after September 30, 1999 and prior to the effective date of the merger;         
provided, that this amount will be (i) INCREASED on each Securitization         
Distribution Date following the effective date by the amount of AFCC Amount     
Interest for the period ending on and including the day prior to such           
Securitization Distribution Date and beginning on and including the immediately 
preceding Securitization Distribution Date (or in the case of the initial       
Securitization Distribution Date occurring after the effective date, beginning  
on and including the effective date) and (ii) DECREASED on each Allocation Date 
by the amount of Residual Cash Flow allocated on such date pursuant to priority 
clause (C) under the Initial Allocation Priorities, or priority clause (A) under
the Additional Allocation Priorities, to the reduction of the AFCC Amount.      

  "AFCC Amount Interest", for any period, means interest accrued during such
period at the rate of 1.25% per month on the average daily AFCC Amount during   
such period (after giving effect to any increase in the AFCC Amount on the first
day of such period). AFCC Amount Interest will be required to be calculated on  
the basis of a 360-day year of twelve 30-day months.                            

"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banking institutions are authorized or required by law to close
in New York City; provided, that with respect to the determinations in          
connection with the definition of One-Month LIBOR, such day is also a day for   
trading by and between banks in U.S. dollar deposits in the interbank eurodollar
market.                                                                         

"Damages" has the meaning set forth in the definition of "Litigation    
Expenses."                                                                      

 "Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.                                             

   "Designated Securitization Transactions" means the auto loan securitization
transactions specified on Annex I to the form of RVO Agreement attached as      
Appendix B to this proxy statement/prospectus.                                  

   "Designated Spread Accounts" means the spread accounts established pursuant
to each of the Designated Securitization Transactions.                          

"Liquidated Other Transaction Receivables" means each Other Transaction 
Receivable as to which (i) 91 days have elapsed since the servicer (or          
Associates or any of its subsidiaries, if there is no servicer of the Other     
Transaction Receivable) repossessed the related financed vehicle, (ii) the      
servicer (or Associates, if there is no servicer of the Other Transaction       
Receivable) has determined in good faith that all amounts it expects to recover 
have been received or (iii) all or any portion of a scheduled payment shall have
become more than 180 days past due.                                             

    "Litigation Expenses" means the sum of (i) $10,000,000 (which amount will be
deemed to have been incurred, for purposes of priority clause (B) under the     
Initial Allocation Priorities, on November 12, 1999) and (ii) the amount of all 
damages, judgments, settlements, defense costs and other expenses paid or       
incurred by Arcadia, Associates or any of their affiliates after November 12,   
1999 in connection with any litigation brought by or on behalf of shareholders  
of Arcadia or by or in the right of Arcadia, net of related insurance proceeds, 
if any (the amount referred to in this clause (ii) being referred to herein as  
"Damages"); PROVIDED, that the aggregate amount of Damages will be deemed to be 
INCREASED on each Securitization Distribution Date following the effective date 
by the amount of Litigation Interest for the period ending on and including the 
day prior to such Securitization Distribution Date and beginning on and         
including the immediately preceding Securitization Distribution Date (or, in the
case of the initial Securitization Distribution Date occurring after the        
effective date, beginning on and including November 12, 1999).                  

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 "Litigation Interest", for any period, means interest accrued during such
period on the average daily amount of aggregate Damages during such period      
(regardless of whether incurred prior to or during such period and after giving 
effect to any increase in Damages on the first day of such period) at One-Month 
LIBOR; PROVIDED, that solely for the purpose of calculating Litigation Interest,
the aggregate amount of Damages will be DECREASED on each Allocation Date by the
amount of Residual Cash Flow allocated on such date pursuant to priority        
clause (B) of the Initial Allocation Priorities to the reduction of Litigation  
Expenses; and, PROVIDED, further, that the aggregate amount of Damages will not 
be so decreased on any Allocation Date as contemplated by the immediately       
preceding proviso unless, as of such date, the aggregate amount of Residual Cash
Flow allocated to reduce Litigation Expenses pursuant to priority clause (B) of 
the Initial Allocation Priorities equals or exceeds $10,000,000.                

    "Litigation Reserve Interest", for any period, means interest accrued during
such period on the excess, if any, of                                           

 - the aggregate amount of Residual Cash Flow, if any, allocated to reduce
 Litigation Expenses pursuant to priority clause (B) under the Initial
Allocation Priorities, over                                         

 - the aggregate amount of Damages (such excess being calculated as of the
 day after the Allocation Date during such period) at One-Month LIBOR.

    "Officers' Certificate" means a certificate signed by the Chairman or a Vice
Chairman of the Board of Directors, the President or a Vice President (however  
designated), and by the Treasurer, an Assistant Treasurer, the Comptroller, an  
Assistant Comptroller, the Secretary or an Assistant Secretary, of Associates.  

 "One-Month LIBOR", for any period, means the rate per annum determined on
the basis of the rate for deposits in U.S. dollars for a 30-day period          
commencing on the first day of such period appearing on Page 3750 of the Dow    
Jones Markets screen of 11:00 A.M., London time, two Business Days prior to the 
beginning of such period. In the event that such rate does not appear on Page   
3750 of the Dow Jones Markets screen (or otherwise on such screen), One-Month   
LIBOR will be determined by reference to such other comparable publicly         
available service for displaying eurodollar rates as may be selected by         
Associates or, in the absence of such availability, by reference to the rate at 
which the trustee is offered U.S. dollar deposits at or about 11:00 A.M., New   
York City time, two Business Days prior to the beginning of such period in the  
interbank eurodollar market where its eurodollar and foreign currency and       
exchange operations are then being conducted for delivery on the first day of   
such period for the number of days comprised therein. All amounts calculated    
based on One-Month LIBOR will be calculated on the basis of the actual number of
days elapsed and a 360-day year.                                                

"Opinion of Counsel" means a written opinion from legal counsel who is  
acceptable to the trustee. The counsel may be an employee of or counsel to      
Associates or the trustee.                                                      

  "Other Transaction Receivable" has the meaning set forth in the definition
of "Residual Cash Flow."                                                        

  "Other Transaction Receivables Collected Funds" means, with respect to any
period and without duplication, the amount of funds received by the Company or  
any of its Subsidiaries representing collections on the Other Transaction       
Receivables during such period, including, but not limited to, payments by or on
behalf of the obligor, bankruptcy trustee payments, dealer payments, dealer     
refunds for life and/or disability insurance and other soft adds funded under   
the Other Transaction Receivables, GAP Insurance or waiver proceeds from        
whatever source, comprehensive and physical damage proceeds, sales tax refunds, 
legal proceeding recoveries, vendor single interest self-insurance proceeds,    
blanket vendor single interest insurance proceeds, warranty refunds and all     
Other Transaction Receivable Liquidation Proceeds.                              

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"Other Transaction Receivable Liquidation Proceeds" means all amounts   
realized by Associates or any of its Subsidiaries with respect to a Liquidated  
Other Transaction Receivable net of (i) reasonable expenses paid or reimbursed  
by Associates or any of its Subsidiaries to an auction house in connection with 
the repossession and disposition of the financed vehicle and (ii) amounts that  
are required to be refunded to the obligor on such Other Transaction Receivable.
The Other Transaction Receivable Liquidation Proceeds with respect to any Other 
Transaction Receivable shall in no event be less than zero.                     

 "Other Transaction Receivables Residual Cash Flow" means, with respect to
any period and without duplication,                                             

   - the SUM of (i) any Other Transaction Receivables Collected Funds received
    by Associates or any of its Subsidiaries during such period with respect
     to the Other Transaction Receivables (other than amounts which constitute
      Collected Funds as defined in the Sale and Servicing Agreements or Pooling
    and Servicing Agreements, as the case may be, entered into in connection
   with the Designated Securitization Transactions), and (ii) any proceeds
     received by Associates or any of its Subsidiaries during such period from
the sale of any Other Transaction Receivable to an entity other than
Associates or any of its Subsidiaries,                              

- MINUS, without duplication,                                           

        (v) all amounts received by Associates or any of its Subsidiaries during
such period with respect to such Other Transaction Receivables that are 
    allocable to principal in accordance with the terms of the Other Transaction
Receivables;                                                            

      (w) for each Other Transaction Receivable that has become a Liquidated
Other Transaction Receivable during such period, the principal balance  
    outstanding on the date it became a Liquidated Other Transaction Receivable;

     (x) an amount to cover estimated servicing expenses and funding costs
(including, without limitation, interest, credit enhancement insurance  
 premiums and indenture and owner trustees', and other agents', fees) that
  would have been payable with respect to such Other Transaction Receivables
for such period, assuming that each such Other Transaction Receivable   
continued to be subject to its related Designated Securitization        
Transaction, which estimates, in the case of the credit enhancement     
    insurance premiums and other fees, shall be based on the contractual rate as
    in effect on the date such Receivable became an Other Transaction Receivable
  and, in the case of other funding costs, shall be based on the contractual
 rate that would have been in effect on the date of determination assuming
the Other Transaction Receivable continued to be subject to its related 
Designated Securitization Transaction;                                  

       (y) if such period is the period in which a Receivable becomes an Other
   Transaction Receivable, any amount other than the principal balance of such
Receivable that was paid to the related Designated Securitization       
Transaction in connection with its purchase from that Designated        
Securitization Transaction (determined at the time of such purchase in  
 accordance with the Sale and Servicing Agreement or Pooling and Servicing
  Agreement, as the case may be, entered into in connection with the related
Designated Securitization Transaction); and                             

  (z) if such period is the period in which Associates or any of its
    Subsidiaries sells such Other Transaction Receivable to an entity other than
   Associates or any of its Subsidiaries, an amount equal to (I) the principal
   balance of such Other Transaction Receivable on the date sold, PLUS (II) if
the Other Transaction Receivable was not purchased from a Designated    
  Securitization Transaction at the option of Associates, an amount equal to
 the reasonable costs incurred by Associates or any of its Subsidiaries in
   connection with the sale of such Other Transaction Receivable by Associates
    or its Subsidiaries; PROVIDED that (A) amounts shall be deducted pursuant to
   this clause (z) only if such sale is in accordance with reasonable business
practices and with a                                                    

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    good faith intent other than to reduce RVO Payments, (B) no amounts shall be
   deducted pursuant to this clause (z) if the principal balance of such Other
Transaction Receivable has already been deducted pursuant to clause (w) 
  above and (C) the amount deducted pursuant to this clause (z) with respect
to any Other Transaction Receivable that had been purchased from a      
  Designated Securitization Transaction at the option of Associates shall in
no event exceed the gross amount realized by the seller upon the sale of
such Other Transaction Receivable.                                      

"Payment Date" means the second Business Day after the Securitization   
Distribution Dates in April, July, October and January, commencing on the first 
such day following the effective date of the merger (or, if the effective date  
is after the record date in respect of such first Payment Date, then on the next
succeeding Payment Date).                                                       

"Person" means any individual, corporation, partnership, joint venture, 
association, joint-stock company, trust, unincorporated organization, limited   
liability company, government, agency or political subdivision thereof or other 
entity.                                                                         

  "Receivable" shall have the meaning ascribed thereto in the Spread Account
Agreement.                                                                      

    "Residual Cash Flow", as of any Allocation Date, means, without duplication,
the sum of the following:                                                       

  (a) the sum of (i) all cash actually released to Associates or its
  Subsidiaries on the immediately preceding Securitization Distribution Date
 from the Designated Spread Accounts pursuant to the section of the Spread
 Account Agreement (as supplemented, in the case of each Designated Spread
  Account, by the related Spread Account Agreement Supplement) which permits
 the release of such amounts to Associates or its Subsidiaries, (ii) other
    than amounts included in clause (i) of this definition on a prior Allocation
   Date, all cash actually released to Associates or its Subsidiaries from the
   Designated Spread Accounts during the calendar month preceding the month in
 which such Allocation Date occurs (PROVIDED, that (x) the foregoing shall
  exclude any cash so released prior to the effective date of the merger and
(y) in the case of the final Allocation Date, the period covered by this
   clause (ii) will begin on the first day of the calendar month preceding the
month in which the final Allocation Date occurs and will continue to and
   include such final Allocation Date) and (iii) all cash actually released to
Associates or its Subsidiaries from a Program Spread Account or a Tag   
Account (each as defined in the Spread Account Agreement) during the    
calendar month preceding the month in which such Allocation Date occurs 
  (PROVIDED, that (x) the foregoing shall exclude any cash so released prior
to the effective date of the merger and (y) in the case of the final    
  Allocation Date, the period covered by this clause (iii) will begin on the
first day of the calendar month preceding the month in which the final  
Allocation Date occurs and will continue to and include such final      
   Allocation Date), but only to the extent such cash would have been included
    as Residual Cash Flow but for clause (C) of the following proviso; PROVIDED,
    that Residual Cash Flow will not include any of the foregoing amounts to the
   extent that (A) such amounts are contractually required, pursuant to one or
more agreements entered into in connection with the Designated          
   Securitization Transactions, to be applied other than as provided under the
Initial Allocation Priorities and the Additional Allocation Priorities, 
 (B) such amounts are released to one of Associates' Subsidiaries and such
    Subsidiary is not permitted, pursuant to one or more agreements entered into
  in connection with the Designated Securitization Transactions, to dividend
such amounts to its parent free from any liens or encumbrances or other 
contractual restrictions or (C) such amounts have been transferred to a 
Program Spread Account or Tag Account (as defined in the Spread Account 
Agreement) established in connection with the Designated Securitization 
Transactions;                                                           

(b) any Other Transaction Receivables Residual Cash Flow for the
calendar month preceding the month in which such Allocation Date occurs 
(PROVIDED, that (x) the foregoing will exclude any Other Transaction    
 Receivable Residual Cash Flow received prior to the effective time of the

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   merger and (y) in the case of the final Allocation Date, the period covered
by this clause (b) will begin on the first day of the calendar month    
preceding the month in which the final Allocation Date occurs and will  
continue to and include such final Allocation Date) with respect to all 
   receivables which were securitized as of September 30, 1999 pursuant to the
    Designated Securitization Transactions but are no longer included, as of the
end of such preceding calendar month, in the Designated Securitization  
Transactions for any reason ("Other Transaction Receivables"); and      

     (c) the amount of Litigation Reserve Interest, if any, for the period
ending on and including the day prior to the Securitization Distribution
Date immediately preceding such Allocation Date and beginning on and    
   including the second Securitization Distribution Date immediately preceding
such Allocation Date (it being understood that the amount of Litigation 
Reserve Interest as of the initial Allocation Date will be zero).       

"RVO Expenses" means the sum of the following:                          

   (a) the reasonable out-of-pocket fees and expenses paid or incurred
directly or indirectly by Associates or its Subsidiaries relating to the
 issuance and administration of the residual value obligations (including,
   without limitation, fees and expenses of printing certificates representing
the residual value obligations; fees and expenses of the trustee, the   
 registrar and the paying agent for the residual value obligations and any
    other agents engaged in accordance with the RVO Agreement; and related legal
  expenses), but excluding accounting fees and expenses, audit fees, if any,
the fees and expenses relating to the listing of the residual value     
    obligations on a national securities exchange and legal expenses relating to
the negotiating of the terms of the residual value obligations and the  
drafting of the RVO Agreement; and                                      

     (b) the reasonable actual or reasonably imputed cost to Associates or
   its Subsidiaries of providing alternative credit support in connection with
the early release of cash to Associates or its Subsidiaries from the    
    Designated Spread Accounts; PROVIDED, that such costs shall only be included
    as RVO Expenses to the extent that, in Associates' good faith judgment, such
    costs do not exceed the benefits of such release, and PROVIDED, FURTHER,that
   the costs referenced in this clause (b) will be included as RVO Expenses as
such costs are incurred (or deemed to be incurred if imputed) or, at    
Associates' election, in a lump sum calculated on a present value basis 
(discounted at the rate of 1.25% per month) at the time of the related  
release of cash.                                                        

   "Securitization Distribution Date" shall mean the 15th day of each calendar
month, or if such 15th day is not a Business Day, the next succeeding Business  
Day.                                                                            

  "Spread Account Agreement" means the Spread Account Agreement, dated as of
March 25, 1993, as amended and restated as of September 22, 1999, among Arcadia 
Financial Ltd., Arcadia Receivables Finance Corp., Financial Security           
Assurance Inc., The Chase Manhattan Bank and Norwest Bank Minnesota, National   
Association, as such agreement may be amended from time to time.                

  "Spread Account Agreement Supplements" means the Series Supplements to the
Spread Account Agreement entered into in connection with each of the Designated 
Securitization Transactions, as in effect from time to time.                    

   "Subsidiary" of any Person means any corporation, association, partnership,
joint venture, limited liability company or other business entity of which more 
than 50% of the total voting power of shares of capital stock or other interests
(including partnership and joint venture interests) entitled (without regard to 
the occurrence of any contingency) to vote in the election of directors,        
managers or trustees thereof is at the time owned or controlled, directly or    
indirectly, by (1) such Person, (2) such Person and one or more Subsidiaries of 
such Person or (3) one or more Subsidiaries of such Person. Unless otherwise    
specified herein, each reference to a Subsidiary will refer to a Subsidiary of  
Associates.                                                                     

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THE MERGER AGREEMENT AND RELATED AGREEMENTS 

 The following is a brief summary of the material provisions of the merger
agreement, a copy of which is attached as Appendix A to this proxy              
statement/prospectus and incorporated by reference into this proxy              
statement/prospectus. We urge you to read the merger agreement in its entirety  
for a more complete description of the merger. In the event of any discrepancy  
between the terms of the merger agreement or other agreements and the following 
summary, the agreement will control.                                            

THE MERGER                                                                      

  AFCC Newco, Inc., a Minnesota corporation and a wholly owned subsidiary of
Associates, will merge with and into Arcadia following:                         

- the approval of the merger and the merger agreement by the Arcadia    
shareholders; and                                                   

- the satisfaction or waiver of the other conditions to the merger.     

Arcadia will be the surviving corporation and become a wholly owned     
subsidiary of Associates following the merger.                                  

EFFECTIVE TIME                                                                  

 At the closing of the merger, the parties will cause the merger to become
effective by filing articles of merger with the Secretary of State of the State 
of Minnesota. Associates and Arcadia are working toward completing the merger as
soon as possible and hope to complete the merger during April of 2000. Because  
the merger is subject to a number of conditions, however, we cannot predict the 
exact timing.                                                                   

DIRECTORS AND OFFICERS OF ARCADIA AFTER THE MERGER                              

Unless otherwise agreed by Associates and Arcadia prior to the effective
time, the directors and officers of AFCC Newco, Inc. will become the new        
directors and officers, respectively, of Arcadia at the effective time. The     
directors of AFCC Newco, Inc. currently are Matthew L. Hollingsworth, Frederic  
C. Liskow and Patrick Gray. The officers of AFCC Newco, Inc. currently are      
Matthew L. Hollingsworth, John F. Hughes, Roy A. Guthrie, Chester D.            
Longenecker, Judy K. Winkel, Frederic C. Liskow, Patrick J. Greene, Patrick C.  
Smith and Karen L. Robb.                                                        

CONVERSION OF ARCADIA SHARES IN THE MERGER                                      

Upon completion of the merger, each outstanding share of Arcadia common 
stock, except for shares owned by Associates or any wholly owned subsidiary of  
Associates, shares owned by Arcadia and shares owned by shareholders who        
exercise and preserve their dissenters' rights in accordance with Minnesota law,
will automatically be converted into the right to receive $4.90 in cash, without
interest, and one residual value obligation of Associates.                      

STOCK OPTIONS                                                                   

All of the outstanding and unexercised Arcadia stock options will become
vested and exercisable immediately prior to the effective time, regardless of   
whether the stock options are currently exercisable, except that there will be  
no cashless exercises of stock options with an exercise price per share         
exceeding $4.90. At the effective time, each of your Arcadia stock options will 
be canceled by                                                                  

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Arcadia. In consideration for the cancellation of each of your stock options you
will be entitled to receive:                                                    

- an amount in cash equal to the product of:                            

 - the number of shares of Arcadia common stock subject to the stock
option; and                                                   

 - the excess, if any, of $4.90 over the exercise price per share of
       Arcadia common stock subject to the stock option, less any applicable
withholding taxes; and                                        

- one residual value obligation for each share of Arcadia common stock  
subject to the stock option.                                        

If the exercise price per share of Arcadia common stock subject to your stock   
options exceeds $4.90, you will not receive any residual value obligations in   
consideration for the cancellation of your stock options.                       

  If the exercise price per share of any of your stock options exceeds $4.90
and you wish to receive $4.90 in cash, without interest, and one residual value 
obligation for each share of Arcadia common stock that is subject to these stock
options, you must exercise these stock options prior to the effective time. As  
described above, all Arcadia stock options will become vested and exercisable   
immediately prior to the effective time.                                        

RESTRICTED STOCK                                                                

 Immediately prior to the effective time, each share of restricted Arcadia
common stock held by an employee, consultant or director of Arcadia or its      
subsidiaries which is outstanding will become vested. At the effective time,    
each of these shares of restricted Arcadia common stock will be converted into  
the right to receive $4.90 in cash, without interest, and one residual value    
obligation.                                                                     

WARRANTS                                                                        

   After the effective time, any warrants to purchase shares of Arcadia common
stock that were outstanding will no longer be exercisable, upon payment of the  
exercise price, for shares of Arcadia common stock. Instead, as of the effective
time, each outstanding warrant to purchase shares of Arcadia common stock will  
become exercisable, upon payment of the exercise price, for the amount of cash  
and residual value obligations which the holder of the warrant would have owned 
immediately after the effective time if the holder had exercised the warrant    
immediately prior to the effective time.                                        

THE EXCHANGE AGENT                                                              

   At or prior to the effective time, Associates is required to deposit with a
bank or trust company cash and certificates representing the residual value     
obligations to be exchanged for shares of Arcadia common stock. Promptly after  
the effective time, the exchange agent will mail you a letter of transmittal and
instructions for surrendering your Arcadia stock certificates in exchange for   
the merger consideration.                                                       

 YOU SHOULD NOT SUBMIT YOUR STOCK CERTIFICATES FOR EXCHANGE UNTIL YOU HAVE
RECEIVED THE LETTER OF TRANSMITTAL AND INSTRUCTIONS REFERRED TO ABOVE.          

TRANSFER OF OWNERSHIP; DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES         

  Associates will issue a residual value obligation in a name other than the
name registered for the surrendered Arcadia stock certificate only if the       
exchange agent is given all documents required:                                 

- to show and effect the unrecorded transfer of ownership; and          

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- to show that any applicable stock transfer taxes have been paid.      

  You are not entitled to receive any payments on residual value obligations
with a record date after the merger is completed until you have surrendered your
Arcadia stock certificates in exchange for the merger consideration.            

  If there are any payments on residual value obligations with a record date
after the merger, you will receive, only following surrender of your Arcadia    
stock certificates, the payments payable with respect to the residual value     
obligations issued in exchange for your Arcadia stock certificates.             

REPRESENTATIONS AND WARRANTIES                                                  

 The merger agreement contains various representations and warranties with
respect to Arcadia and its subsidiaries relating to, among other things:        

- their organization, qualification to business and good standing;      

- the validity of their organizational documents;                       

- their capitalization;                                                 

  - the authorization, execution and enforceability of the merger agreement;

- the effect of the merger and the merger agreement on obligations;     

- governmental consents and approvals in connection with the merger;    

  - their possession of and compliance with permits and licenses required to
conduct their business;                                             

- their compliance with applicable laws, rules and regulations of       
governmental entities;                                              

- their filings and reports with the SEC;                               

- brokers' fees and expenses;                                           

- changes in their business operations since September 30, 1999;        

- legal proceedings;                                                    

- taxes;                                                                

- labor matters;                                                        

- financial statements;                                                 

- material contracts and obligations;                                   

- regulatory matters;                                                   

- investment securities;                                                

- interest rate risk management instruments;                            

- liabilities;                                                          

- environmental matters;                                                

- insurance;                                                            

- Year 2000 compliance of software and equipment;                       

- intellectual property;                                                

- inapplicability of state anti-takeover statutes to the merger; and    

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- receivables.                                                          

Associates and AFCC Newco made representations and warranties about the 
following topics:                                                               

- their organization, qualification to do business and good standing;   

- validity of their organizational documents;                           

  - the authorization, execution and enforceability of the merger agreement;

- the effect of the merger and the merger agreement on obligations;     

- governmental consents and approvals in connection with the merger;    

- brokers' fees and expenses; and                                       

- Associates' availability of funds in connection with the merger.      

  The representations and warranties in the merger agreement are complicated
and not easily summarized. We urge you to read carefully the sections in the    
merger agreement entitled "Representations and Warranties of Company" and       
"Representations and Warranties of Parent and Sub."                             

ARCADIA'S CONDUCT OF THE BUSINESS PENDING THE MERGER                            

Arcadia has agreed that, until the completion of the merger or unless   
Associates consents in writing, Arcadia and its subsidiaries will:              

- conduct their businesses in the usual, regular and ordinary course of 
business consistent with past practices and in compliance with all  
applicable laws;                                                    

- use reasonable efforts to maintain and preserve intact its business   
      organization, employees and business relationships and retain the services
of its key officers and key employees; and                          

 - take no action which would adversely affect or delay in any respect the
     ability of either Associates or Arcadia to obtain any necessary approvals
  of any regulatory agency or other governmental entity required for the
  transactions contemplated under the merger agreement or to perform its
covenants and agreements under the merger agreement.                

    Except as permitted or required under the merger agreement, Arcadia has also
agreed that until the completion of the merger, without the prior written       
consent of Associates, it will not, nor will it permit its subsidiaries to:     

- incur any indebtedness other than to refinance existing short-term    
   indebtedness, pursuant to credit facilities existing on the date of the
merger agreement and additional indebtedness not in excess of       
$20 million;                                                        

 - make or commit to make capital expenditures in excess of $50,000 or, in
the aggregate, $500,000;                                            

- reclassify or modify any of its capital stock;                        

- declare, set aside or pay dividends or other distributions, except    
      distributions from Arcadia's subsidiaries to Arcadia or other subsidiaries
paid in the ordinary course of business;                            

- issue, sell, pledge or encumber shares of Arcadia capital stock or    
      securities exchangeable for Arcadia capital stock, other than the issuance
 of Arcadia common stock pursuant to the exercise of outstanding stock
options or warrants as of the date of the merger agreement;         

  - grant any third party any right to acquire any shares of Arcadia capital
stock or any similar rights;                                        

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    - enter into any agreement, understanding or arrangement with respect to the
sale or voting of its capital stock;                                

 - sell, transfer, encumber or dispose of any of its property or assets to
any third party other than a wholly owned subsidiary;               

 - cancel, release or assign indebtedness to any third party except in the
    ordinary course of business consistent with past business or pursuant to
     contractual requirements existing as of the date of the merger agreement;

    - securitize or dispose of receivables owned by Arcadia or its subsidiaries,
   subject to exceptions described under "The Merger Agreement and Related
Agreements--Related Agreements;"                                    

- make any material investment in any other entity, other than a wholly 
owned subsidiary;                                                   

- acquire any interests in any other entity;                            

- commence any new line of business;                                    

- enter into any contract, arrangement or understanding which limits    
     Arcadia's or its subsidiaries' ability to compete in any line of business
or in any geographic region;                                        

- enter into any contract, arrangement or understanding the benefits of 
    which will be paid or increased, or the vesting of the benefits of which
will be accelerated, by the delivery of the merger agreement;       

    - enter into any contract, arrangement or understanding which would prohibit
    or materially delay the consummation of the transactions contemplated by
the merger agreement;                                               

- modify or terminate any existing material contract;                   

    - enter into any contract, arrangement or understanding involving payment or
 receipts by Arcadia or any of its subsidiaries in excess of $100,000;

- increase or accelerate compensation payable to directors, officers,   
employees, consultants or independent contractors of Arcadia or its 
  subsidiaries, subject to exceptions set forth in the merger agreement;

    - grant any severance or termination pay to any director, officer, employee,
consultant or independent contractor of Arcadia or its subsidiaries,
subject to exceptions set forth in the merger agreement;            

- loan or advance any money or other property to any director, officer, 
employee, consultant or independent contractor of Arcadia or its    
subsidiaries;                                                       

- establish, adopt, enter into, amend or terminate any employee benefit 
plan;                                                               

- amend any Arcadia stock option, except in accordance with the merger  
agreement;                                                          

  - pay, discharge or satisfy any obligations other than current obligations
    in the ordinary course of business and consistent with past practice and
liabilities disclosed pursuant to the merger agreement;             

  - settle any litigation, other than settlements where the payment does not
      exceed $50,000 and does not include additional non-monetary obligations on
Arcadia or its subsidiaries;                                        

- modify its accounting policies and procedures;                        

  - materially change its underwriting, servicing or collection policies and
procedures;                                                         

- change any material tax elections or settlements or compromise any    
material tax liability;                                             

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- amend any of Arcadia's articles of incorporation, bylaws or any other 
organizational documents;                                           

 - enter into any plan of consolidation, reorganization or merger with any
person other than a wholly owned subsidiary;                        

- materially restructure or change its investment portfolio, hedging    
strategy or gap position;                                           

- adopt a plan of complete or partial liquidation, dissolution,         
reorganization or recapitalization;                                 

- authorize or take any action that is intended or could reasonably be  
 expected to result in any of Arcadia's representations and warranties
      being or becoming untrue in any material respect, any of the conditions of
    the merger agreement not being satisfied, or any provision of the merger
agreement being violated; or                                        

- agree to, or make any commitment to, take or authorize any of the     
foregoing actions.                                                  

Arcadia has also agreed, among other things:                            

- to consult with Associates on strategic and operational matters and to
      provide Associates reasonable access to its facilities, records, officers,
employees, accountants, counsel and other representatives; and      

- to use its reasonable best efforts to make available to the officers, 
    employees, accountants, counsel and other representatives of Associates,
    upon reasonable notice, representatives of Financial Security Assurance,
the guarantor under Arcadia's securitization transactions.          

Associates has agreed, among other things:                              

- to pay all transfer taxes imposed on either Arcadia or Associates in  
connection with the merger;                                         

    - for one year following the effective time, to provide employees of Arcadia
 and its subsidiaries who continue their employment with the surviving
   corporation with employee benefits which, in the aggregate, are no less
favorable than the benefits provided to such employees by Arcadia   
immediately prior to the effective time;                            

- to use all reasonable efforts to have the residual value obligations  
approved for quotation on a national securities exchange; and       

   - to engage Ernst & Young to conduct procedures on the books and records of
      Arcadia relating to testing of customer account information and testing of
     the ability of Arcadia's system to accurately age, recompute the interest
    amortization of and the reduction of principal on customer accounts, and
to render a report to Associates with respect to its findings.      

Each of Associates and Arcadia has also agreed, among other things:     

 - to use their reasonable best efforts to take, or cause to be taken, all
actions necessary, proper and advisable to comply with all legal    
    requirements which may be imposed on Associates and Arcadia with respect
to the merger and to consummate the transactions contemplated by the
merger agreement; and                                               

- to use their reasonable best efforts to promptly make all necessary   
     filings and obtain any permits, consents, approvals and authorizations as
   may be required in connection with the merger and the merger agreement.

 The agreements related to the conduct of Arcadia's business in the merger
agreement are complicated and not easily summarized. We urge shareholders to    
carefully read the sections in the merger agreement entitled "Covenants Relating
to Conduct of Business" and "Additional Agreements."                            

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REGULATORY MATTERS                                                              

   The merger agreement provides that the obligation of Associates and Arcadia
to complete the merger is conditioned upon expiration of the applicable waiting 
periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as      
amended. In addition, the obligation of Associates to complete the merger is    
conditioned upon the receipt of all other requisite regulatory approvals. We    
cannot assure you that all governmental agencies will approve or take the other 
required actions with respect to the merger.                                    

NO SOLICITATION OF TRANSACTIONS                                                 

    Until the merger is completed or the merger agreement is terminated, Arcadia
has agreed not to directly or indirectly:                                       

- solicit, initiate, encourage, accept, agree to, approve or endorse the
      submission of any inquiries, proposals or offers that constitute or may be
      reasonably expected to lead to a transaction proposal by a third party; or

- participate in any discussions regarding a transaction proposal or    
otherwise cooperate in any way in connection with the making of a   
transaction proposal.                                               

A "transaction proposal" as it relates to Arcadia, includes:            

   - any acquisition or purchase of any assets or equity securities of Arcadia
or its subsidiaries;                                                

- any tender offer or exchange offer;                                   

- any merger, consolidation, business combination, reorganization,      
recapitalization, liquidation, dissolution or similar transaction   
involving Arcadia or any of its material subsidiaries; and          

   - any other transaction the consummation of which would or would reasonably
  be expected to impede, interfere with, prevent or materially delay the
merger.                                                             

Arcadia may, however, in response and with respect to a bona fide       
unsolicited written proposal from a third party submitted after the date of the 
merger agreement which constitutes a "superior proposal", enter into or         
participate in discussions or negotiations with such third party, provided that,
among other things, based on the advice of Arcadia's outside counsel, Arcadia's 
board of directors determines in good faith that failure to take such action in 
response to such a proposal would constitute a breach by the board of directors 
of its fiduciary duties under applicable law.                                   

A "superior proposal," as it relates to Arcadia, is a bona fide written 
transaction proposal for at least a majority of the outstanding fully diluted   
shares of Arcadia's common stock or for all or substantially all of the         
consolidated assets of Arcadia, made by a third party after the date of the     
merger agreement, for which all necessary financing is committed in full and    
which, if accepted, is reasonably likely to be consummated and is financially   
superior to the holders of Arcadia's common stock as compared to the merger.    

If Arcadia receives a transaction proposal or a request for nonpublic   
information by any third party considering making or who has made a transaction 
proposal, it shall immediately inform Associates of the terms and conditions of 
any such proposal and the identity of the party making it, and will keep        
Associates informed of the status and details of any such transaction proposal  
or request.                                                                     

   Nothing in the merger agreement prohibits Arcadia's board of directors from
taking and disclosing to their shareholders a position with respect to a        
transaction proposal by a third party to the extent required under the Exchange 
Act, including Rules 14e-2 and 14d-9 thereunder, or from making such disclosure 
to Arcadia's shareholders which, based on advice of outside counsel, the board  
determines in good faith is required under applicable law.                      

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DIRECTOR AND OFFICER INDEMNIFICATION AND INSURANCE                              

The surviving corporation has agreed to indemnify present and former    
officers and directors of Arcadia and its subsidiaries against all losses,      
expenses, claims, damages or liabilities arising out of actions or omissions    
occurring on or prior to the effective time of the merger to the fullest extent 
that Arcadia and its subsidiaries would have been permitted under applicable law
and its charter documents to indemnify such persons. The merger agreement       
provides that all rights to indemnification set forth in Arcadia's charter      
documents for present and former officers and directors of Arcadia shall also be
included in the charter documents of the surviving corporation for a period of  
six years from the effective time, subject to exceptions specified in the merger
agreement. Associates also has agreed to maintain insurance for Arcadia's       
directors and officers equivalent to Arcadia's current directors' and officers' 
liability insurance for six years after the effective time, subject to          
limitations specified in the merger agreement.                                  

CONDITIONS TO COMPLETION OF THE MERGER                                          

 The completion of the merger depends on a number of conditions being met,
including approval of the merger and the merger agreement by Arcadia's          
shareholders, as well as the prior satisfaction or waiver of each of the        
following conditions before completion of the merger:                           

   - the registration statement relating to the issuance of the residual value
 obligations as contemplated by the merger agreement has been declared
effective by the SEC;                                               

- no court of competent jurisdiction or governmental entity has enacted,
 issued or entered any statute, rule, regulation, order, injunction or
      decree that prohibits, prevents, materially restricts or makes illegal its
completion;                                                         

    - our respective representations and warranties in the merger agreement must
      have been materially true and correct at the date the merger agreement was
    executed and must remain materially true and correct as of the effective
time;                                                               

- we have performed and complied in all material respects with our      
      respective obligations required by the merger agreement to be performed or
complied with on or prior to the effective time; and                

- any waiting period under the antitrust laws that applies to the       
consummation of the merger has expired or been terminated.          

Associates' obligations to complete the merger are subject to the       
satisfaction or waiver of each of the following additional conditions before    
completion of the merger:                                                       

- all consents or approvals of or filings with any third party which are
necessary to consummate the transactions contemplated by the merger 
   agreement must be obtained by Arcadia, except where a failure to obtain
     any such consent or approval or make any such filing could not reasonably
be expected to have a material adverse effect on Arcadia;           

- all regulatory approvals or consents required to consummate the       
transactions contemplated by the merger agreement must be obtained; 

  - dissenters' rights may not be exercised by the holders of 10% or more of
Arcadia's common stock;                                             

 - Arcadia's rights agreement must not be triggered in connection with the
merger and the transactions contemplated thereby; and               

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- any consent required of, or notice or other document required to be   
  delivered to, Financial Security Assurance Inc. in connection with the
    merger or the transactions contemplated thereby shall have been obtained
or given.                                                           

TERMINATION OF THE MERGER AGREEMENT                                             

   Either of us may terminate the merger agreement at any time, even after the
Arcadia shareholders vote to approve it, under the following circumstances:     

- if prior to the effective time the other party fails to perform in any
    material respect any of its obligations under the merger agreement to be
 performed at or prior to such date of termination, and the failure to
 perform is not cured within ten days after receipt of written notice;

    - if prior to the effective time any representation or warranty of the other
     party is not true and correct, except for failures to be true and correct
    which are not reasonably likely to have a material adverse effect on the
other party's ability to complete the merger;                       

- if the merger is not completed, without the fault of the terminating  
party, by May 10, 2000;                                             

- if any required regulatory approval is denied and the denial is not   
appealable;                                                         

    - if any governmental entity has taken any action prohibiting the merger and
the action is not appealable; or                                    

- if the Arcadia shareholders do not approve the merger and the merger  
agreement at the Arcadia special meeting.                           

In addition, Arcadia may terminate the merger agreement prior to the    
approval of the merger and the merger agreement by its shareholders in order to 
accept an unsolicited superior proposal.                                        

Furthermore, Associates may terminate the merger agreement if any of the
following occur:                                                                

 - Arcadia's board withdraws or materially changes or modifies in a manner
    adverse to Associates its recommendation as to the merger and the merger
agreement;                                                          

- Arcadia's board recommends or accepts another transaction proposal;   

   - following a request by Associates, Arcadia's board fails to reconfirm its
approval and recommendation of the merger and the merger agreement; 

  - following public announcement of a transaction proposal which contains a
     proposal as to price, Arcadia's board fails to reject the proposal within
10 business days after announcement; or                             

  - Associates or any of its affiliates triggers Arcadia's rights agreement.

PAYMENT OF FEES AND EXPENSES                                                    

Except as set forth below, whether or not the merger is consummated, all
costs and expenses incurred in connection with the merger and the merger        
agreement will be paid by the party incurring the expense, except that          
Associates and Arcadia will share equally all expenses of printing and mailing  
the registration statement and the proxy statement/prospectus and all filing and
other fees paid to the SEC in connection with the merger.                       

   Arcadia has agreed to pay Associates a cash termination fee of $8.0 million
in addition to reimbursing Associates up to $1.0 million for its out-of-pocket  
expenses in the following circumstances:                                        

   - Arcadia terminates the merger agreement in order to accept an unsolicited
superior proposal;                                                  

- Associates terminates the merger agreement because Arcadia's board has
    failed to reconfirm its recommendation of the merger following a request
by Associates;                                                      

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- Associates terminates the merger agreement because Arcadia's board has
 withdrawn or modified its recommendation of the merger and the merger
agreement in a manner adverse to Associates;                        

- Associates terminates the merger agreement because Arcadia's board has
recommended or accepted another transaction proposal;               

- Associates terminates the merger agreement because Arcadia's board has
     failed to reject a transaction proposal within 10 business days after its
     public announcement, which transaction proposal contains a proposal as to
price; or                                                           

- Associates terminates the merger agreement because of a triggering of 
      Arcadia's rights agreement resulting from the transactions contemplated by
the merger agreement.                                               

   Arcadia has agreed to pay Associates a cash termination fee of $8.0 million
if:                                                                             

   - a transaction proposal relating to more than 15% of the outstanding fully
     diluted common stock, or any other class of the capital stock of Arcadia,
 or more than 15% of the consolidated assets of Arcadia, is commenced,
     publicly disclosed or otherwise communicated to Arcadia at any time on or
      after the date of the merger agreement and prior to the termination of the
merger agreement;                                                   

 - within 12 months following termination of the merger agreement, Arcadia
   enters into a definitive agreement with respect to, or consummates, any
   transaction proposal relating to more than 15% of its outstanding fully
  diluted common stock, or any other class of its capital stock, or more
than 15% of its consolidated assets; and                            

- the merger agreement is terminated in any one of the following        
circumstances:                                                      

    - the merger is not completed, without the fault of the terminating party,
 within 180 days after the execution of the merger agreement and the
Arcadia special meeting has not been held;                        

- the Arcadia shareholders do not approve the merger and the merger   
agreement at the Arcadia special meeting; or                      

- Associates terminates the merger agreement as a result of:          

 - a breach of the terms of the merger agreement described under the
caption "No Solicitation of Transactions;"                    

      - a willful failure of Arcadia to perform any other obligation under the
merger agreement; or                                          

     - a willful act or omission by Arcadia which causes a representation or
warranty not to be true.                                      

  In addition, Associates has agreed to reimburse Arcadia for any prepayment
penalty, totaling $2,427,980, paid by Arcadia resulting from a failure to       
deliver receivables to the prefunded Securitization Trust 1999-C if the merger  
agreement is terminated for any of the following reasons, provided that no      
amount shall be payable by Associates if Arcadia is obligated to pay Associates 
any termination fee:                                                            

    - pursuant to a failure by a party to perform in any material respect any of
     its obligations under the merger agreement to be performed at or prior to
   the date of termination, and the failure to perform is not cured within
ten days after receipt of written notice;                           

  - pursuant to a failure of any representation or warranty of a party to be
   true and correct, except for such failures to be true and correct which
are not reasonably likely to materially adversely affect the party's
ability to complete the merger;                                     

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- if the merger is not completed, without the fault of the terminating  
party, within 180 days after the execution of the merger agreement; 

  - if any governmental entity whose approval is a condition to consummation
    of the merger has denied that approval and the denial is not appealable;

    - if any governmental entity has taken any action prohibiting the merger and
the action is not appealable; or                                    

- if the Arcadia shareholders do not approve the merger and the merger  
agreement at the Arcadia special meeting.                           

EXTENSION, WAIVER AND AMENDMENT OF THE MERGER AGREEMENT                         

  Associates and Arcadia may amend the merger agreement before completion of
the merger; provided, however, after the Arcadia shareholders approve the merger
and the merger agreement, no change may be made which changes the amount or form
of consideration to be delivered to holders of Arcadia common stock under the   
merger agreement.                                                               

    Either Associates or Arcadia may, in writing, extend the other's time for or
waive compliance with the performance of any of the obligations or other acts   
under the merger agreement, waive any inaccuracies in the other's               
representations and warranties and waive compliance by the other with any of the
agreements or conditions contained in the merger agreement.                     

VOTING AGREEMENT                                                                

  In connection with the merger, four directors and officers of Arcadia have
entered into a voting agreement with Associates. The terms of the voting        
agreement provide that these directors and officers will vote all shares of     
Arcadia common stock beneficially owned by them, or any new shares of Associates
or Arcadia stock they may acquire, in favor of the approval of the merger and   
the merger agreement and the transactions contemplated by the merger agreement. 
In connection with the voting agreement, each of the directors and officers has 
executed an irrevocable proxy to vote their shares in favor of the approval of  
the merger and the merger agreement. As of November 12, 1999, the Arcadia       
directors and officers who entered into the voting agreement collectively held  
2,647,637 shares of Arcadia common stock, not including any shares issuable upon
the exercise of options, which represented 6.71% of the outstanding Arcadia     
common stock. None of the directors and officers who are parties to the voting  
agreement was paid additional consideration in connection with the execution of 
the voting agreement.                                                           

ASSET PURCHASE AGREEMENT                                                        

Associates and Arcadia entered into a continuous asset purchase and sale
agreement, dated as of November 12, 1999. Under this agreement, on November 24, 
1999, Associates purchased motor vehicle retail installment sales contracts from
Arcadia totaling approximately $300 million in outstanding, unpaid balances.    
Additionally, Arcadia has agreed to sell and, Associates, in its sole           
discretion, has the option to purchase, up to $75 million of retail installment 
sales contracts in any semi-monthly period. The purchase price paid by          
Associates for these contracts is 104.5% of the aggregate unpaid balances of the
contracts on the applicable purchase date, plus any accrued, unpaid interest and
fees, not to exceed 59 days' interest.                                          

To date, Associates has purchased substantially all of the retail       
installment sales contracts originated by Arcadia since October 1, 1999.        
Associates and Arcadia expect that Associates will continue to purchase         
substantially all of the contracts originated by Arcadia until the merger is    
consummated or the merger agreement is terminated. However, there can be no     
assurance that Associates will do so.                                           

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If Arcadia is not in material default of its obligations under the      
continuous asset purchase and sale agreement and Associates does not purchase   
the full $75 million per semi-monthly period of these contracts from Arcadia,   
Arcadia has the right to securitize any receivables owned by or loans owed to it
or any of its subsidiaries, in the amount of the principal amount of the        
unpurchased contracts, up to a maximum amount of $150 million per month. In     
addition, if Associates is in material default of its obligations under the     
continuous asset purchase and sale agreement, Arcadia may securitize up to a    
maximum of $150 million a month in amount of receivables owned by or loans owed 
to it or any of its subsidiaries.                                               

   If the merger agreement is terminated for any reason, Arcadia has the right
to repurchase all of the unpaid motor vehicle retail installment sales contracts
purchased by Associates pursuant to the continuous asset purchase and sale      
agreement, excluding those contracts purchased by Associates on November 24,    
1999. Also, Associates must pay to Arcadia an additional 1.5% of the original   
unpaid balance of all contracts not repurchased by Arcadia including the initial
$300 million purchase. The additional 1.5% payment is subject to downward       
adjustment if the weighted average annual percentage rate of all contracts      
retained by Associates is not at least 17.5%.                                   

SERVICING AGREEMENT                                                             

Associates and Arcadia entered into a servicing agreement dated as of   
November 12, 1999. Under the terms of the servicing agreement, Arcadia acts as  
the custodian of and servicer for any and all motor vehicle retail installment  
sales contracts purchased by Associates from Arcadia pursuant to the continuous 
asset purchase and sale agreement. Arcadia, as custodian and servicer, is       
responsible for maintaining any and all records and documentation relating to   
such contracts. In addition, Arcadia, as Associates' agent, manages, services,  
administers and makes collections on such contracts and perform various other   
functions as required under the servicing agreement. In return for these        
services, Associates pays to Arcadia a monthly amount equal to one-twelfth of   
1.25% of the aggregate principal balance represented by these contracts.        

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LEGAL PROCEEDINGS 

SHAREHOLDER LITIGATION RELATING TO THE MERGER. On November 16, 1999, a  
lawsuit was commenced against Arcadia by a shareholder of Arcadia in Minnesota  
state court (RICHARD RUOHONEN AND ALL OTHERS SIMILARLY SITUATED VS. ARCADIA     
FINANCIAL LTD. ET AL.). A similar lawsuit was filed on November 24, 1999 in     
Minnesota state court (MICHELLE LEMIRE AND ALL OTHERS SIMILARLY SITUATED VS.    
ARCADIA FINANCIAL LTD. ET AL.). An additional lawsuit was filed on December 9,  
1999 in Minnesota state court (JOHN A. HALPERN AND ALL OTHER SIMILARLY SITUATED 
VS. ARCADIA FINANCIAL LTD. ET AL.). On January 18, 2000, these three suits were 
consolidated into one action, IN RE ARCADIA FINANCIAL LTD. SHAREHOLDER          
LITIGATION, in Minnesota state court. The consolidated action is purportedly a  
class action on behalf of all public shareholders of Arcadia and names Arcadia  
and its board of directors as defendants. In the consolidated action, plaintiffs
allege that the defendants breached their fiduciary duties to the Arcadia's     
public shareholders in connection with the execution of the merger agreement.   
Plaintiffs seek to enjoin the merger and to obtain an unspecified amount of     
compensatory damages. Arcadia has begun to review the consolidated complaint and
believes that the claims are without merit and intends to defend them           
vigorously. There can, however, be no assurance that Arcadia will prevail in its
defense.                                                                        

  OTHER SHAREHOLDER LITIGATION. On March 4, 1997, a shareholder commenced an
action against Arcadia and named directors and officers of Arcadia entitled     
TARAN V. OLYMPIC FINANCIAL LTD. ET AL. in the United States District Court for  
the District of Minnesota. Four similar lawsuits, three of them in the United   
States District Court for the District of Minnesota (FRANK DIBELLA, ON BEHALF OF
HIMSELF AND ALL OTHERS SIMILARLY SITUATED VS. OLYMPIC FINANCIAL LTD. ET AL.,    
MICHAEL DIEMER VS. OLYMPIC FINANCIAL LTD. ET AL. AND HOWARD PISNOY VS. OLYMPIC  
FINANCIAL LTD. ET AL.) and one in the United States District Court for the      
Eastern District of New York (NORTH RIVER TRADING, LLC, AND ALLAN FARKAS, AND   
ALL OTHERS SIMILARLY SITUATED VS. OLYMPIC FINANCIAL LTD. ET AL.) were filed     
after that time. These suits have been consolidated in one suit, IN RE OLYMPIC  
FINANCIAL LTD. SECURITIES LITIGATION,in the United States District Court for the
District of Minnesota. Plaintiffs in the consolidated action allege that during 
the period from July 20, 1995 through March 3, 1997 the defendants, in violation
of federal securities laws, engaged in a scheme that had the effect of          
artificially inflating, maintaining and otherwise manipulating the value of     
Arcadia's common stock by, among other things, making baseless, false and       
misleading statements about the current state and future prospects of Arcadia,  
particularly with respect to Arcadia's classic program and the refinancing of   
repossessed automobiles. Plaintiffs allege that this scheme included making     
false and misleading statements and/or concealing material adverse facts. The   
parties have begun discovery. Arcadia has reviewed the complaint in the         
consolidated action and believes that the consolidated action is without merit  
and intends to defend it vigorously. There can, however, be no assurance that   
Arcadia will prevail in its defense or that any order, judgment, settlement or  
decree arising out of this litigation will not have a material adverse effect on
Arcadia's financial condition, results of operations or liquidity.              

   POTENTIAL EFFECT ON PAYMENTS UNDER THE RESIDUAL VALUE OBLIGATION. Any costs
and expenses incurred by Arcadia in connection with the litigation described    
above and costs and expenses incurred in connection with any other shareholder  
litigation may reduce, delay and/or eliminate payments on the residual value    
obligations. For a more detailed description of the effect of litigation        
expenses on payments under the residual value obligations, you should refer to  
"Risk Factors--Risks Relating to the Residual Value Obligations" beginning on   
page 14 and "Description of Residual Value Obligations" beginning on page 42.   

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WHERE YOU CAN FIND MORE INFORMATION 

    Associates and Arcadia are each subject to the informational requirements of
the Exchange Act and, accordingly, file reports, proxy statements and other     
information with the SEC. These reports, proxy statements and other information 
filed by Associates and Arcadia can be inspected and copied at the public       
reference facilities of the SEC located at:                                     

                                                                [Download Table]
                                                                        
Judiciary Plaza        Citicorp Center          Seven World Trade Center
Room 1024              500 West Madison Street  13th Floor              
450 Fifth Street, N.W. Suite 1400               New York, NY 10048      
Washington, DC 20549   Chicago, IL 60661                                

    Copies of these materials can also be obtained from the SEC Public Reference
Section at the address noted above at prescribed rates. Information regarding   
the operation of the Public Reference Room may be obtained by calling the SEC at
1-800-SEC-0330. The SEC maintains an internet site that contains reports, proxy 
and information statements and other information regarding registrants that file
electronically with the SEC. The address of the internet site is                
http://www.sec.gov.                                                             

    Associates' and Arcadia's common stock is each quoted for trading on the New
York Stock Exchange and, accordingly, reports, proxy statements and other       
information concerning Associates or Arcadia, as the case may be, may be        
inspected at:                                                                   

New York Stock Exchange 
120 Broad Street
New York, New York 10005

    Associates has filed with the SEC a registration statement on Form S-4 under
the Securities Act with respect to the residual value obligations offered by    
this proxy statement/prospectus. This proxy statement/prospectus does not       
contain all of the information set forth in the registration statement and the  
exhibits to the registration statement. For further information with respect to 
Associates, reference is made to the registration statement and the exhibits    
filed with the registration statement. Statements contained in this prospectus  
as to the contents of any contract or any other document referred to are not    
necessarily complete, and in each instance reference is made to the copy of the 
contract or other document filed as an exhibit to the registration statement,   
each statement being qualified in all respects by this reference. A copy of the 
registration statement may be inspected without charge at the offices of the SEC
Public Reference Room at the address noted above. This proxy                    
statement/prospectus is a part of that registration statement and constitutes a 
prospectus of Associates in addition to being a proxy statement of Arcadia for  
use at its special meeting.                                                     

Associates has supplied all information contained in this proxy         
statement/prospectus relating to Associates, and Arcadia has supplied all       
information contained in this proxy statement/prospectus relating to Arcadia.   
Neither Associates nor Arcadia warrants the accuracy or completeness of         
information relating to the other.                                              

The SEC allows Associates and Arcadia to incorporate by reference       
information into this proxy statement/prospectus, which means that Associates   
and Arcadia can disclose important information to you by referring you to       
another document filed separately with the SEC. The information incorporated by 
reference is deemed to be part of this proxy statement/prospectus, except for   
any information superseded by information contained directly in this proxy      
statement/prospectus or in later filed documents incorporated by reference in   
this proxy statement/prospectus.                                                

    The following documents previously filed by Associates with the SEC pursuant
to the Exchange Act (file number 2-44197) are incorporated into this proxy      
statement/prospectus by this reference:                                         

1.  Associates' Annual Report on Form 10-K for the fiscal year ended    
December 31, 1998;                                                

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    2.  Associates' Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 1999, June 30, 1999 and September 30, 1999;             

3.  Associates' Current Reports on Form 8-K filed January 6, 1999,      
January 7, 1999, January 19, 1999, March 10, 1999, March 15, 1999,
   March 16, 1999, April 13, 1999, April 27, 1999, May 21, 1999, May 28,
      1999, June 14, 1999, July 13, 1999, October 12, 1999, November 15, 1999,
   December 16, 199, January 27, 2000, January 27, 2000 and February 15,
2000; and                                                         

4.  Associates' Current Report on Form 8-K/A filed January 6, 1999.     

  All documents filed by Associates pursuant to Section 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this proxy                  
statement/prospectus and prior to the date the offering of residual value       
obligations by Associates pursuant to this proxy statement/prospectus is        
terminated shall be deemed to be incorporated by reference in this proxy        
statement/prospectus and to be a part of this proxy statement/prospectus from   
the date any such document is filed.                                            

    The following documents previously filed by Arcadia with the SEC pursuant to
the Exchange Act (file number 0-20526) are incorporated into this proxy         
statement/prospectus by this reference:                                         

1.  Arcadia's Annual Report on Form 10-K for the fiscal year ended      
December 31, 1998;                                                

  2.  Arcadia's Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 1999, June 30, 1999 and September 30, 1999;             

   3.  Arcadia's Quarterly Reports on Form 10-Q/A for the fiscal quarter ended
March 31, 1999; and                                               

4.  Arcadia's Current Reports on Form 8-K filed March 3, 1999; March 8, 
    1999, May 21, 1999, June 16, 1999, October 20, 1999, October 20, 1999,
October 20, 1999 and November 16, 1999.                           

All documents filed by Arcadia pursuant to Section 13(a), 13(c), 14 and 
15(d) of the Exchange Act subsequent to the date of this proxy                  
statement/prospectus and prior to the date of the special meeting shall be      
deemed to be incorporated by reference into this proxy statement/prospectus and 
to be a part of this proxy statement/prospectus from the date any such document 
is filed.                                                                       

  You may have received some of the documents incorporated by reference, but
you can obtain any of them through Associates, Arcadia or the SEC or the SEC's  
internet site described above. Documents incorporated by reference are available
from Associates and Arcadia without charge, excluding all exhibits unless       
specifically incorporated by reference as exhibits in this proxy statement/     
prospectus. You may obtain documents incorporated by reference in this proxy    
statement/prospectus, without charge, by requesting them in writing from the    
appropriate party at the following address:                                     

Associates First Capital Corporation                                    
250 East Carpenter Parkway                                              
Irving, Texas 75062                                                     
Attention: Secretary                                                    

Arcadia Financial Ltd.                                                  
7825 Washington Avenue South                                            
Minneapolis, Minnesota 55439                                            

Attention: Secretary                                                    

    If you would like to request documents from Associates or Arcadia, please do
so by March 23, 2000 to receive them before the special meeting.                

You should rely only on the information contained or incorporated by    
reference in this proxy statement/prospectus to vote your shares at the special 
meeting. Neither Associates nor Arcadia has                                     

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authorized anyone to provide you with information that is different from what is
contained in this proxy statement/prospectus. This proxy statement/prospectus is
dated March 3, 2000. You should not assume the information contained in this    
proxy statement/prospectus is accurate as of any date other than that date, or  
any other date as this proxy statement/prospectus indicates. Neither the mailing
of this proxy statement/prospectus to you nor the issuance of residual value    
obligations in the merger creates any implication to the contrary.              

EXPERTS 

    The consolidated financial statements of Associates at December 31, 1998 and
1997, and for each of the three years in the period ended December 31, 1998,    
included in the Annual Report on Form 10-K of Associates for the year ended     
December 31, 1998, have been audited by PricewaterhouseCoopers LLP, independent 
auditors, as set forth in their report incorporated by reference in this proxy  
statement/prospectus, and are incorporated in this proxy statement/prospectus in
reliance upon this report given on the authority of PricewaterhouseCoopers LLP  
as experts in accounting and auditing.                                          

 The consolidated financial statements of Arcadia at December 31, 1998 and
1997, and for each of the three years in the period ended December 31, 1998,    
included in the Annual Report on Form 10-K of Arcadia for the year ended        
December 31, 1998, have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report to these financial statements incorporated by      
reference in this proxy statement/prospectus, and are incorporated in this proxy
statement/prospectus in reliance upon this report given on the authority of     
Ernst & Young LLP as experts in accounting and auditing.                        

SHAREHOLDER PROPOSALS 

   Proposals submitted by shareholders of Arcadia for presentation at the 2000
annual meeting of shareholders, to be held if the merger has not been           
consummated prior thereto, must have been received by the Secretary of Arcadia  
no later than December 15, 1999 for inclusion in the proxy statement and form of
proxy relating to the 2000 annual meeting of shareholders.                      

LEGAL MATTERS 

The validity of the residual value obligations offered by this proxy    
statement/prospectus will be passed upon for Associates by Simpson Thacher &    
Bartlett, New York, New York.                                                   

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APPENDIX A
THE MERGER AGREEMENT

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

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

ASSOCIATES FIRST CAPITAL CORPORATION, 

AFCC NEWCO, INC.

AND 

ARCADIA FINANCIAL LTD.

DATED AS OF NOVEMBER 12, 1999 

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TABLE OF CONTENTS 

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                                  ARTICLE I                                   
                                  THE MERGER                                  

1.1    The Merger..................................................       1   
1.2    Closing.....................................................       1   
1.3    Effective Time..............................................       1   
1.4    Effects of the Merger.......................................       2   
1.5    Conversion of Company Common Stock..........................       2   
1.6    Options and Restricted Stock................................       3   
1.7    Articles of Incorporation...................................       3   
1.8    Bylaws......................................................       3   
1.9    Directors and Officers of Surviving Corporation.............       4   

                                  ARTICLE II                                  
                              EXCHANGE OF SHARES                              

2.1    Establishment of Exchange Fund..............................       4   
2.2    Exchange of Shares..........................................       4   

                                 ARTICLE III                                  
                  REPRESENTATIONS AND WARRANTIES OF COMPANY                   

3.1    Corporate Organization......................................       5   
3.2    Capitalization..............................................       7   
3.3    Authority; No Violation.....................................       8   
3.4    Consents and Approvals......................................       9   
3.5    Regulatory Reports..........................................      10   
3.6    Broker's Fees; Opinion of Company Financial Advisor.........      10   
3.7    Absence of Certain Changes or Events........................      10   
3.8    Legal Proceedings...........................................      10   
3.9    Taxes and Tax Returns.......................................      10   
3.10   Employees...................................................      12   
3.11   SEC Reports.................................................      14   
3.12   Financial Statements........................................      14   
3.13   Licenses; Compliance with Applicable Law....................      14   
3.14   Certain Contracts...........................................      15   
3.15   Agreements with Regulatory Agencies.........................      16   
3.16   Investment Securities.......................................      16   
3.17   Interest Rate Risk Management Instruments...................      16   
3.18   Undisclosed Liabilities.....................................      16   
3.19   Environmental Liability.....................................      16   
3.20   Information Supplied........................................      17   
3.21   Insurance...................................................      17   
3.22   Year 2000 Compliance........................................      17   
3.23   Intellectual Property.......................................      17   
3.24   Rights Agreement............................................      18   
3.25   State Anti-Takeover Statutes................................      18   
3.26   Properties..................................................      18   
3.27   Receivables.................................................      18   

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                                  ARTICLE IV                                  
               REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB               

4.1    Corporate Organization......................................      19   
4.2    Authority; No Violation.....................................      19   
4.3    Consents and Approvals......................................      20   
4.4    Broker's Fees...............................................      20   
4.5    Funds.......................................................      21   
4.6    Information Supplied........................................      21   

                                      ARTICLE V                               
                      COVENANTS RELATING TO CONDUCT OF BUSINESS               

5.1    Conduct of Company Businesses Prior to the Effective Time...      21   
5.2    Forbearances of Company.....................................      21   
5.3    Transition..................................................      24   
5.4    Notification of Tax Proceedings.............................      25   
5.5    Transfer Taxes..............................................      25   

                                  ARTICLE VI                                  
                            ADDITIONAL AGREEMENTS                             

6.1    Company Shareholders Meeting; Preparation of Proxy                25   
       Statement...................................................           
6.2    Reasonable Best Efforts.....................................      26   
6.3    Access to Information.......................................      27   
6.4    Employee Benefits...........................................      27   
6.5    Indemnification; Directors' and Officers' Insurance.........      28   
6.6    Additional Agreements.......................................      29   
6.7    Advice of Changes...........................................      29   
6.8    No Solicitation.............................................      29   
6.9    Publicity...................................................      30   
6.10   Stockholder Litigation......................................      31   
6.11   Anti-Takeover Provisions....................................      31   
6.12   Stop Transfer...............................................      31   
6.13   [Intentionally Omitted].....................................      31   
6.14   Agreed Upon Procedures......................................      31   
6.15   [Intentionally Omitted].....................................      31   
6.16   Tax Schedules...............................................      31   
6.17   Listing.....................................................      31   
6.18   Employee Retention..........................................      31   

                                 ARTICLE VII                                  
                             CONDITIONS PRECEDENT                             

7.1    Conditions to Each Party's Obligation To Effect the               32   
       Merger......................................................           
7.2    Conditions to Company's Obligations to Effect the Merger....      32   
7.3    Conditions to Parent's and Sub's Obligations to Effect the        32   
       Merger......................................................           

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                                 ARTICLE VIII                                 
                          TERMINATION AND AMENDMENT                           

8.1    Termination.................................................      33   
8.2    Effect of Termination.......................................      34   
8.3    Amendment...................................................      36   
8.4    Extension; Waiver...........................................      36   

                                     ARTICLE IX                               
                                 GENERAL PROVISIONS                           

9.1    Nonsurvival of Representations, Warranties and Agreements...      36   
9.2    Expenses....................................................      36   
9.3    Notices.....................................................      36   
9.4    Interpretation..............................................      37   
9.5    Counterparts; Facsimile.....................................      37   
9.6    Entire Agreement............................................      38   
9.7    Governing Law...............................................      38   
9.8    Severability................................................      38   
9.9    Assignment; Third Party Beneficiaries.......................      38   
9.10   Enforcement.................................................      38   
9.11   Schedules...................................................      38   

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AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated as of November 12, 1999 (this       
"AGREEMENT"), by and among ASSOCIATES FIRST CAPITAL CORPORATION, a Delaware     
corporation ("PARENT"), AFCC NEWCO, INC., a Minnesota corporation and a         
wholly-owned subsidiary of Parent ("SUB"), and ARCADIA FINANCIAL LTD., a        
Minnesota corporation ("COMPANY").                                              

   WHEREAS, the respective Boards of Directors of Parent, Sub and Company have
determined that the merger of Sub with and into Company (the "MERGER"), with    
Company as the surviving corporation of the Merger (the "SURVIVING              
CORPORATION"), each upon the terms and subject to the conditions set forth in   
this Agreement, are advisable and fair to and in the best interests of their    
respective stockholders;                                                        

    WHEREAS, as an inducement and condition to Parent and Sub entering into this
Agreement, and concurrently with the execution of this Agreement, certain       
affiliates of Company are executing and delivering to Parent a Voting Agreement 
(the "SUPPORT AGREEMENT") dated as of the date hereof; and                      

  WHEREAS, simultaneously with the execution of this Agreement, an affiliate
of Parent and Company entered into a Continuous Asset Purchase Agreement (the   
"PURCHASE AGREEMENT") and a Master Servicing Agreement (together with the       
Purchase Agreement, the "RECEIVABLES AGREEMENTS");                              

   WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain          
conditions therefor.                                                            

  NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound   
hereby, the parties agree as follows:                                           

ARTICLE I 
THE MERGER

   1.1  THE MERGER.  Subject to the terms and conditions of this Agreement and
in accordance with the Minnesota Business Corporation Act (the "MBCA"), at the  
Effective Time (as defined in Section 1.3), Sub shall merge with and into       
Company. Company shall be the Surviving Corporation in the Merger and shall     
continue its corporate existence under the laws of the State of Minnesota. Upon 
consummation of the Merger, the separate corporate existence of Sub shall       
terminate.                                                                      

1.2  CLOSING.  Unless this Agreement shall have been terminated and the 
transactions herein contemplated shall have been abandoned pursuant to          
Section 8.1, the closing of the Merger (the "CLOSING") shall take place at 10:00
a.m., New York City time, on the second business day after satisfaction or      
waiver of the conditions (excluding conditions that, by their terms, cannot be  
satisfied until the Closing Date (as defined in this Section 1.2), but subject  
to satisfaction or waiver of such conditions on the Closing Date) set forth in  
Article VII (the "CLOSING DATE"), at the offices of Simpson Thacher & Bartlett, 
425 Lexington Avenue, New York, New York 10017, unless another date, time or    
place is agreed to in writing by the parties hereto.                            

  1.3  EFFECTIVE TIME.  Upon the Closing, the parties shall file articles of
merger (the "ARTICLES OF MERGER") with the Secretary of State of the State of   
Minnesota and shall make all other filings or recordings required under the     
MBCA. The Merger shall become effective at such time as the Articles of Merger  
shall have been duly filed with the Secretary of State of the State of          
Minnesota, or at such later time as is agreed by Parent and Company and         
specified in the Articles of Merger (the time the Merger becomes effective being
the "EFFECTIVE TIME").                                                          

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1.4  EFFECTS OF THE MERGER.  At and after the Effective Time, the Merger
shall have the effects set forth in Section 302A.641 of the MBCA.               

    1.5  CONVERSION OF COMPANY COMMON STOCK.  At the Effective Time by virtue of
the Merger and without any action on the part of Parent, Sub, Company or the    
holder of any of the following securities:                                      

  (a) Each share of common stock, par value $0.01 per share, of Company (the
"COMPANY COMMON STOCK"), together with the associated preferred stock purchase  
rights (the "COMPANY RIGHTS") under the Company Rights Agreement (as defined in 
Section 3.24) issued and outstanding immediately prior to the Effective Time    
(other than shares of Company Common Stock canceled pursuant to Section 1.5(c)  
and Dissenting Shares (as defined in Section 1.5(d))) shall be converted into   
the right to receive (i) $4.90 in cash payable to the holder thereof, without   
interest thereon (the "CASH CONSIDERATION") and (ii) one residual value         
obligation (each, a "RVO") having the principal terms described in Exhibit A    
hereto (the "RVO CONSIDERATION", and, together with the Cash Consideration, the 
"MERGER CONSIDERATION").                                                        

   (b) All of the shares of Company Common Stock and Company Rights issued and
outstanding immediately prior to the Effective Time shall no longer be          
outstanding and shall automatically be canceled and shall cease to exist as of  
the Effective Time, and each certificate (each a "COMMON CERTIFICATE")          
previously representing any such shares of Company Common Stock and Company     
Rights (other than shares canceled pursuant to Section 1.5(c) and Dissenting    
Shares) shall thereafter represent solely the right to receive the Merger       
Consideration into which the shares of Company Common Stock and Company Rights  
represented by such Common Certificate have been converted pursuant to this     
Section 1.5.                                                                    

   (c) At the Effective Time, all shares of Company Common Stock that are held
by Company as treasury stock, if any, or by Parent or any of Parent's           
wholly-owned Subsidiaries (as defined in Section 3.1) shall automatically be    
canceled and shall cease to exist, and no cash, stock of Parent or other        
consideration shall be delivered in exchange therefor.                          

 (d) Notwithstanding anything in this Agreement to the contrary, shares of
Company Common Stock issued and outstanding immediately prior to the Effective  
Time held by holders (if any) who have not voted in favor of this Agreement or  
consented thereto in writing and who have demanded dissenters' rights with      
respect thereto in accordance with Sections 302A.471 and 302A.473 of the MBCA   
and, as of the Effective Time, have not failed to perfect or have not           
effectively withdrawn or lost their dissenters' rights under Sections 302A.471  
and 302A.473 of the MBCA ("DISSENTING SHARES") shall not be converted into the  
right to receive the Merger Consideration as described in Section 1.5(a), but   
holders of such shares shall be entitled to receive payment of the fair value of
such Dissenting Shares in accordance with the provisions of Sections 302A.471   
and 302A.473 of the MBCA (but only after the amount thereof shall be agreed upon
or finally determined pursuant to the provisions of the MBCA), except that any  
Dissenting Shares held by a holder who shall have failed to perfect or shall    
have effectively withdrawn or lost its dissenter's rights under Sections        
302A.471 and 302A.473 of the MBCA shall thereupon be deemed to have been        
converted into the right to receive the Merger Consideration and shall no longer
be considered Dissenting Shares. Company shall give Parent (i) prompt notice of 
any written demands for dissenter's rights, attempted withdrawals of such       
demands and any other instruments served pursuant to the MBCA received by       
Company relating to dissenting shareholders' rights and (ii) the opportunity to 
direct all negotiations and proceedings with respect to demands for fair value  
under the MBCA. Company shall not, except with the prior written consent of     
Parent, voluntarily make any payment with respect to any demands for fair value 
for capital stock of Company, offer to settle or settle any such demands or     
approve any withdrawal of any such demands.                                     

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 (e) Each share of capital stock of Sub issued and outstanding immediately
prior to the Effective Time shall be converted into one identical share of the  
capital stock of the Surviving Corporation and shall constitute the only issued 
and outstanding capital stock of the Surviving Corporation following the        
Effective Time.                                                                 

  1.6  OPTIONS AND RESTRICTED STOCK.  (a) Immediately prior to the Effective
Time, each employee, consultant and director stock option to purchase shares of 
Company Common Stock (each, a "COMPANY OPTION") which is then outstanding and   
unexercised, whether or not then exercisable, shall be (or, if not previously   
vested and exercisable, shall become) vested and exercisable (provided that any 
exercise of a Company Option as to which the per share exercise price exceeds   
the Cash Consideration shall be for cash) and such Company Options immediately  
thereafter shall be canceled by Company pursuant to this Section 1.6, and each  
holder of a canceled Company Option shall be entitled to receive at the         
Effective Time or as soon as practicable thereafter from Company in             
consideration for the cancellation of such Company Option (i) an amount in cash 
equal to the product of (A) the number of shares of Company Common Stock        
previously subject to such Company Option and (B) the excess, if any, of the    
Cash Consideration over the exercise price per share of Company Common Stock    
previously subject to such Company Option, less any applicable withholding taxes
and (ii) one RVO for each share of Company Common Stock previously subject to   
such Company Option; provided, that a holder of a cancelled Company Option shall
not be entitled to receive any RVO in respect of the cancellation thereof if the
exercise price per share of Company Common Stock previously subject to such     
Company Option exceeds the Cash Consideration.                                  

(b) Immediately prior to the Effective Time, each share of restricted   
Company Common Stock held by an employee, consultant or director of the Company 
or its Subsidiaries ("COMPANY RESTRICTED STOCK"), which is then outstanding and 
restricted, shall become vested and such Company Restricted Stock immediately   
thereafter shall be converted into the right to receive Merger Consideration.   

    (c) Company shall (i) take all actions necessary and appropriate so that all
stock or other equity based plans maintained with respect to Company Common     
Stock (the "COMPANY STOCK PLANS"), including, without limitation, the plans     
listed in Section 3.10(a) of the Company Disclosure Schedule, shall terminate as
of the Effective Time and that any other Employee Plan (as hereinafter defined  
in Section 3.10) (including the Company's employee stock purchase plan)         
providing for the issuance, transfer or grant of any capital stock of Company or
any interest in respect of any capital stock of Company shall be amended to     
provide that no further issuances, transfer or grants shall be permitted as of  
the Effective Time and (ii) provide that, following the Effective Time, no      
holder of a Company Option or Company Restricted Stock or any participant in any
Company Stock Plan shall have any right thereunder to acquire or receive any    
capital stock of Company, Parent or the Surviving Corporation (except as        
otherwise set forth in Sections 1.5 or 1.6(a) or (b) above). Prior to the       
Effective Time, Company shall (x) obtain all necessary consents from, and       
provide (in a form reasonably acceptable to Parent) any required notices to,    
holders of Company Options and Company Restricted Stock and (y) amend the terms 
of the applicable Company Stock Option, Company Restricted Stock, Company Stock 
Plan and the Company's employee stock purchase plan, in each case, as is        
necessary to give effect to the provisions of this Section 1.6.                 

    1.7  ARTICLES OF INCORPORATION.  Subject to the terms and conditions of this
Agreement, at the Effective Time, the articles of incorporation of Company, as  
in effect immediately prior to the Effective Time, shall be the articles of     
incorporation of the Surviving Corporation until thereafter amended as provided 
therein and by the MBCA.                                                        

   1.8  BYLAWS.  Subject to the terms and conditions of this Agreement, at the
Effective Time, the bylaws of Company, as in effect immediately prior to the    
Effective Time, shall, subject to the provisions                                

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of Section 6.5, be the bylaws of the Surviving Corporation until thereafter     
amended as provided therein and by the MBCA.                                    

1.9  DIRECTORS AND OFFICERS OF SURVIVING CORPORATION.  At the Effective 
Time, the directors and officers of Sub immediately prior to the Effective Time 
shall be the directors and officers, respectively, of the Surviving Corporation 
following the Merger, to hold office in accordance with the Surviving           
Corporation's bylaws and applicable law.                                        

ARTICLE II
EXCHANGE OF SHARES

 2.1  ESTABLISHMENT OF EXCHANGE FUND.  Prior to the Effective Time, Parent
shall designate First Chicago Trust Company of New York or such other bank or   
trust company reasonably acceptable to Company, to act as exchange agent (the   
"EXCHANGE AGENT") for the payment of the Merger Consideration. At or prior to   
the Effective Time, Parent shall deposit, or shall cause to be deposited, with  
the Exchange Agent, for the benefit of the holders of Common Certificates, for  
exchange in accordance with this Article II, cash and certificates representing 
the RVOs (such cash and certificates being hereinafter referred to as the       
"EXCHANGE FUND") to be paid pursuant to Section 2.2(a) in exchange for          
outstanding shares of Company Common Stock.                                     

2.2  EXCHANGE OF SHARES.  (a) As soon as practicable after the Effective
Time, the Exchange Agent shall mail to each holder of record as of the Effective
Time of one or more Common Certificates (other than with respect to shares of   
Company Common Stock canceled pursuant to Section 1.5(c)) a letter of           
transmittal (which shall specify that delivery shall be effected, and risk of   
loss and title to the Common Certificates shall pass, only upon delivery of the 
Common Certificates to the Exchange Agent) and instructions for use in effecting
the surrender of the Common Certificates in exchange for the Merger             
Consideration. Upon proper surrender of a Common Certificate for exchange and   
cancellation to the Exchange Agent, together with such properly completed letter
of transmittal, duly executed, covering such Common Certificate, the holder of  
such Common Certificate shall be entitled to receive in exchange therefor a     
check representing the amount of the Cash Consideration and a certificate       
representing the RVO Consideration, and the Common Certificate so surrendered   
shall forthwith be canceled. No interest will be paid or accrued on the Merger  
Consideration payable to holders of Common Certificates.                        

(b) If the payment of the Merger Consideration is to be made to a person
other than the registered holder of the Common Certificate surrendered in       
exchange therefor, it shall be a condition to the payment thereof that the      
Common Certificate so surrendered shall be properly endorsed (or accompanied by 
an appropriate instrument of transfer) and otherwise in proper form for         
transfer, and that the person requesting such exchange shall pay to the Exchange
Agent in advance any transfer or other taxes required by reason of the issuance,
delivery or payment of such Merger Consideration to any person other than the   
registered holder of the Common Certificate surrendered, or required for any    
other reason, or shall establish to the satisfaction of the Exchange Agent that 
such tax has been paid or is not payable.                                       

(c) After the Effective Time, there shall be no transfers on the stock  
transfer books of Company of the shares of Company Common Stock which were      
issued and outstanding immediately prior to the Effective Time. If, after the   
Effective Time, Common Certificates representing such shares are presented for  
transfer to the Exchange Agent, they shall be canceled and exchanged for the    
applicable Merger Consideration as provided in this Article II.                 

(d) Any portion of the Exchange Fund that remains unclaimed by the      
shareholders of Company for 6 months after the Effective Time shall be paid to  
Parent. Any shareholders of Company who have not theretofore complied with this 
Article II shall thereafter look only to Parent for payment of the              

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Merger Consideration, without any interest thereon. Notwithstanding the         
foregoing, none of the Surviving Corporation, Parent, the Exchange Agent or any 
other person shall be liable to any former holder of shares of Company Common   
Stock for any Merger Consideration delivered to a public official pursuant to   
applicable abandoned property, escheat or similar laws.                         

(e) In the event any Common Certificate shall have been lost, stolen or 
destroyed, upon the making of an affidavit of that fact by the person claiming  
such Common Certificate to be lost, stolen or destroyed and, if reasonably      
required by Parent, the posting by such person of a bond in such amount as      
Parent may determine is reasonably necessary as indemnity against any claim that
may be made against it with respect to such Common Certificate, the Exchange    
Agent will issue in exchange for such lost, stolen or destroyed Common          
Certificate the Merger Consideration.                                           

   (f) All cash and RVOs paid upon the surrender of the Common Certificates in
accordance with the terms of Articles I and II shall be deemed to have been paid
in full satisfaction of all rights pertaining to the shares of the Company      
Common Stock and Company Rights theretofore represented by such Common          
Certificates; SUBJECT, HOWEVER, to the Surviving Corporation's obligation, with 
respect to shares of Company Common Stock outstanding immediately prior to the  
Effective Time, to pay any dividends or make any other distributions with a     
record date prior to the Effective Time which may have been declared or made by 
Company on such shares of Company Common Stock in accordance with the terms of  
this Agreement or prior to the date of this Agreement and which remain unpaid at
the Effective Time.                                                             

(g) The Exchange Agent shall invest any funds in the Exchange Fund as   
directed by Parent. Any interest and other income resulting from such           
investments shall be paid to Parent.                                            

    (h) No distributions or other payments declared or made with respect to RVOs
after the Effective Time shall be paid to the holder of any unsurrendered Common
Certificate with respect to the RVOs that such holder would be entitled to      
receive upon surrender of such Common Certificate until such holder shall       
surrender such Common Certificate in accordance with Section 2.2(a). Subject to 
the effect of applicable laws, following surrender of any such Common           
Certificate, there shall be paid to such holder of RVOs issuable in exchange    
therefor, without interest, (i) the amount of distributions or other payments   
declared after the Effective Time theretofore paid with respect to such RVOs and
(ii) at the appropriate payment date, the amount of distributions or other      
payments declared but not paid or with a record date after the Effective Time   
but prior to such surrender with a payment date subsequent to such surrender    
payable with respect to such RVOs.                                              

ARTICLE III 
REPRESENTATIONS AND WARRANTIES OF COMPANY 

Company hereby represents and warrants to Parent and Sub as follows:    

  3.1  CORPORATE ORGANIZATION.  (a) Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Minnesota. 
Company has all requisite corporate power and authority to own or lease all of  
its properties and assets and to carry on its business as it is now being       
conducted, and is duly licensed or qualified to do business and in good standing
in each jurisdiction (whether federal, state, local or foreign) in which the    
nature of the business conducted by it or the character or location of the      
properties and assets owned or leased by it makes such licensing or             
qualification necessary other than in such jurisdictions where the failure so to
qualify would not have, individually or in the aggregate, a Material Adverse    
Effect on the Company. As used in this Agreement, (i) the term "MATERIAL ADVERSE
EFFECT" means, with respect to Company, a material adverse effect on the        
business, assets (tangible or intangible), liabilities, operations, condition   
(financial or otherwise) or results of operations of Company and its            
Subsidiaries either individually or taken as a whole, or on the ability of      
Company to perform its obligations under                                        

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and to consummate the transactions contemplated by this Agreement on a timely   
basis, excluding any material adverse effect that arises from or is attributable
to (A) general economic conditions, (B) conditions (political, economic,        
regulatory, competitive or otherwise) that adversely affect the industry in     
which Company operates, (C) actions taken by lenders, rating agencies or others 
as a direct result of the announcement of the execution of this agreement (but  
not excluding the effect of such actions on the business, assets (tangible or   
intangible), liabilities, operations, condition (financial or otherwise),       
results of operations or prospects of Company and its Subsidiaries either       
individually or taken as a whole, or on the ability of Company to perform its   
obligations under and to consummate the transactions contemplated by this       
Agreement on a timely basis) or (D) impairment of Company's ability to finance  
its operations, including as a result of a lowering of Company's credit ratings,
a reduction or elimination of a warehouse line of credit or actions taken by    
lenders or guarantors (but not excluding the effect of any such impairment on   
the business, assets (tangible or intangible), liabilities, operations,         
condition (financial or otherwise), results of operations or prospects of       
Company and its Subsidiaries either individually or taken as a whole, or on the 
ability of Company to perform its obligations under and to consummate the       
transactions contemplated by this Agreement on a timely basis); and (ii) the    
term "SUBSIDIARY" when used with respect to any party means any corporation or  
other organization, whether incorporated or unincorporated, (x) of which such   
party or any other Subsidiary of such party is a general partner (excluding     
partnerships, the general partnership interests of which held by such party or  
any Subsidiary of such party do not have a majority of the voting interests in  
such partnership), or (y) a majority of the securities or other interests of    
which having by their terms ordinary voting power to elect a majority of the    
board of directors or other body performing similar functions with respect to   
such corporation or other organization is directly or indirectly owned or       
controlled by such party or by any one or more of its Subsidiaries, or by such  
party and one or more of its Subsidiaries and (iii) the term "KNOWLEDGE" means, 
when used with respect to Company, the actual knowledge, after due inquiry, of  
any executive officer listed on Section 3.1(a) of the Company Disclosure        
Schedule (as defined below). Section 3.1(a) of the Company disclosure schedule  
delivered to Parent concurrently herewith (the "COMPANY DISCLOSURE SCHEDULE")   
contains true and complete copies of the articles of incorporation and bylaws of
Company, as in effect as of the date of this Agreement. Such organizational     
documents are in full force and effect and no other organizational documents are
applicable to or binding upon Company. Company is not in violation of any of the
provisions of its articles of incorporation or bylaws.                          

    (b) Part I of Section 3.1(b) of the Company Disclosure Schedule sets forth a
complete and correct list of all of Company's Subsidiaries (each a "COMPANY     
SUBSIDIARY" and collectively the "COMPANY SUBSIDIARIES") and indicates, as to   
each such Subsidiary, the number and type of outstanding shares of capital stock
or other equity securities of each such Subsidiary, any issued and outstanding  
options, warrants, stock appreciation rights, scrip, rights to subscribe to,    
calls or commitments of any character whatsoever relating to, or securities or  
rights convertible into, shares of any capital stock or other equity securities 
of such Subsidiary, and any contracts, commitments, understandings or           
arrangements by which such Subsidiary may become bound to issue additional      
shares of its capital stock or other equity securities, or options, warrants,   
scrip on rights to purchase, acquire, subscribe to, calls on or commitments for 
any shares of its capital stock or other equity securities and the identity of  
the parties to any such agreements or arrangements. All of the outstanding      
shares of capital stock or other securities evidencing ownership of the Company 
Subsidiaries have been duly authorized and validly issued and are fully paid and
non-assessable with no personal liability attaching to the ownership thereof and
such shares or other securities are owned by Company or its wholly-owned        
Subsidiaries free and, except as set forth on Section 3.1(b) of the Company     
Disclosure Schedule, clear of any lien, claim, charge, option, encumbrance,     
mortgage, pledge or security interest (a "LIEN") with respect thereto. Each     
Company Subsidiary (i) is a duly organized and validly existing corporation,    
partnership or limited liability company or other legal entity under the laws of
its jurisdiction of organization, (ii) is duly licensed or qualified to do      
business and in good standing in all jurisdictions                              

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(whether federal, state, local or foreign) where its ownership or leasing of    
property or the conduct of its business requires it to be so qualified other    
than in such jurisdictions where the failure so to qualify would not have,      
individually or in the aggregate, a Material Adverse Effect on the Company and  
(iii) has all requisite corporate power and authority to own or lease all of its
properties and assets and to carry on its business as now conducted. Except for 
(i) the ownership interests set forth in Part II of Section 3.1(b) of the       
Company Disclosure Schedule and (ii) the ownership interests in its Subsidiaries
disclosed in Part I of Section 3.1(b) of the Company Disclosure Schedule,       
Company does not own, directly or indirectly, any capital stock or other        
ownership interest, and does not have any option or similar right to acquire any
equity or other ownership interest. Part III of Section 3.1(b) of the Company   
Disclosure Schedule provides a complete and accurate description of all         
partnership, joint venture and similar investments held by Company or any       
Company Subsidiary, including, without limitation, all such investments in which
any Company employee or affiliate serves as a director. Company has provided or 
made available to Parent a complete and accurate copy of all such partnership,  
joint venture or similar agreements to which Company or any Company Subsidiary  
is a party. Except as set forth on Section 3.1(b) of the Company Disclosure     
Schedule, neither Company nor any Company Subsidiary is subject to any          
obligation or requirement to provide funds to, or make any investment (in the   
form of a loan, capital contribution or otherwise) in, any entity.              

   (c) Company has made available to Parent the minute books of Company, which
accurately reflect in all material respects all corporate meetings and actions  
held or taken since January 1, 1996 by its shareholders and Board of Directors  
(including committees of the Board of Directors of Company).                    

 3.2  CAPITALIZATION.  The authorized capital stock of Company consists of
55,000,000 shares of Company Common Stock, 90,000 shares of Class A Preferred   
Stock, par value $0.01 per share ("CLASS A PREFERRED STOCK"), and 44,010,000    
undesignated shares, par value $0.01 per share ("UNDESIGNATED STOCK"). As of    
September 30, 1999, (i) 39,443,693 shares of Company Common Stock were issued   
and outstanding, (ii) no shares of Company Common Stock were held in treasury,  
(iii) no shares of Class A Preferred were issued or outstanding, (iv) 90,000    
shares of Class A Preferred Stock were reserved for issuance upon the exercise  
of the Company Rights and (v) 2,052,000 shares of Company Common Stock were     
reserved for issuance upon the exercise of warrants to purchase 2,052,000 shares
of Company Common Stock ("COMPANY WARRANTS"). All of the issued and outstanding 
shares of Company Common Stock have been duly authorized and validly issued and 
are fully paid, non-assessable and free of preemptive rights, with no personal  
liability attaching to the ownership thereof. The shares of Company Common Stock
which are issuable upon exercise of Company Options or Company Warrants have    
been duly authorized and reserved for issuance and, if and when issued pursuant 
to the terms thereof, will be validly issued, fully paid and non-assessable and 
free of preemptive rights, with no personal liability attaching to the ownership
thereof. As of the Effective Time, each Company Warrant shall become exercisable
for the amount of cash and number of RVOs which the holder of such Company      
Warrant would have owned immediately after the Effective Time if such holder had
exercised such Company Warrant immediately prior to the Effective Time. Part I  
of Section 3.2 of the Company Disclosure Schedule sets forth, in each case as of
September 30, 1999, (i) the number of shares of Company Common Stock that were  
reserved for issuance upon the exercise of authorized but unissued stock options
pursuant to the Company Stock Plans, (ii) the number of shares of Company Common
Stock issuable upon the exercise of outstanding Company Options pursuant to the 
Company Stock Plans and (iii) the number of shares of Company Common Stock that 
were reserved for issuance under Company's restricted stock election plans and  
Employee Stock Purchase Plan or otherwise. Part III of Section 3.2 of the       
Company Disclosure Schedule sets forth a list, as of September 30, 1999, of the 
holders of record of the Company Warrants the number of shares subject to each  
such Company Warrant, the expiration date of each such Company Warrant and the  
price at which each such Company Warrant may be exercised. Except as set forth  
above in this Section 3.2 or in Part I or Part II of Section 3.2 of the Company 
Disclosure Schedule, no other shares of Company Common Stock, capital stock or  
other equity or voting securities of Company were                               

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outstanding or reserved for issuance. Part II of Section 3.2 of the Company     
Disclosure Schedule sets forth a list, as of September 30, 1999, of the holders 
of Company Options, the date of grant of each Company Option granted and        
outstanding, the number of shares subject to each such option, the expiration   
date of each such option, the vesting schedule of each such option and the price
at which each such option may be exercised under the applicable Company Stock   
Plan or otherwise. Except as set forth in Part IV of Section 3.2 of the Company 
Disclosure Schedule, since September 30, 1999, Company has not (i) issued any   
shares of its capital stock or other equity or voting securities or any         
securities convertible into or exercisable or exchangeable for any shares of its
capital stock or other equity or voting securities, other than shares of Company
Common Stock issued upon the exercise or conversion of Company Options          
outstanding as of September 30, 1999 as described in the immediately preceding  
sentence or (ii) taken any action which would cause an antidilution adjustment  
under any outstanding options or warrants. There are no outstanding bonds,      
debentures, notes or other indebtedness or other securities (other than the     
Company Options and the Company Warrants) of Company having the right to vote   
(or convertible into, or exchangeable or exercisable for, securities having the 
right to vote) on any matters on which shareholders of Company may vote. Except 
as set forth above in this Section 3.2 and as set forth in Section 3.2 of the   
Company's Disclosure Schedule, there are no outstanding securities, options,    
warrants, calls, rights, commitments, agreements, arrangements or undertakings  
of any kind to which Company or any of its Subsidiaries is a party or by which  
any of them is bound obligating Company or any of its Subsidiaries to issue,    
deliver or sell, or cause to be issued, delivered or sold, additional shares of 
capital stock or other equity or voting securities of Company or of any of its  
Subsidiaries or obligating Company or any of its Subsidiaries to issue, grant,  
extend or enter into any such security, option, warrant, call, right,           
commitment, agreement, arrangement or undertaking. There are no outstanding     
contractual obligations, commitments, understandings or arrangements of Company 
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares
of capital stock of Company or any of its Subsidiaries. Except as set forth in  
Part VI of Section 3.2 of the Company's Disclosure Schedule, there are no       
agreements or arrangements pursuant to which Company is or could be required to 
register shares of Company Common Stock or other securities under the Securities
Act of 1933, as amended (the "SECURITIES ACT"), or other agreements or          
arrangements with or among any securityholders of Company with respect to       
securities of Company. Except as set forth in Part VII of Section 3.2 of the    
Company Disclosure Schedule, there are no voting, sale, transfer or other       
similar agreements to which Company or any of its Subsidiaries is a party with  
respect to the capital stock of Company or its Subsidiaries or any other        
securities of Company or its Subsidiaries which are convertible or exchangeable 
into or exercisable for shares of the capital stock of Company or its           
Subsidiaries. None of the shares of Company Common Stock are held, directly or  
indirectly, by any of the Company Subsidiaries.                                 

3.3  AUTHORITY; NO VIOLATION.  (a) Company has full corporate power and 
authority to execute and deliver this Agreement and to consummate the           
transactions contemplated hereby. The Board of Directors of Company, at a       
meeting duly called and held, has unanimously (i) determined that this Agreement
and the transactions contemplated hereby, including the Merger, are advisable   
and fair to and in the best interests of the holders of shares of Company Common
Stock, (ii) duly approved and adopted a resolution containing this Agreement and
approved the execution and delivery of this Agreement and the transactions      
contemplated hereby, including the Merger, and approved the execution and       
performance of the Support Agreement and the Receivables Agreements and         
(iii) resolved to recommend that the holders of shares of Company Common Stock  
vote to approve and adopt this Agreement (the "COMPANY BOARD RECOMMENDATION"). A
committee of the Board of Directors of Company consisting of all of Company's   
disinterested (as such term is defined in Subdivision 1(d)(3) of Section        
302A.673 of the MBCA) directors of Company, formed in accordance with           
Subdivision 1(d) of Section 302A.673 of the MBCA, duly approved the execution   
and performance of this Agreement, the Support Agreement and the Receivables    
Agreements and the transactions contemplated hereby and thereby. The Board of   
Directors of Company has directed that this                                     

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Agreement be submitted to Company's shareholders for approval at a meeting of   
such shareholders and, except for the adoption of this Agreement by the         
affirmative vote of the holders of a majority of the outstanding shares of      
Company Common Stock entitled to vote thereon in connection with the Merger (the
"COMPANY SHAREHOLDER APPROVAL"), no other corporate proceedings on the part of  
Company or the Board of Directors of the Company and no other votes or consents 
of any holders of Company securities are necessary to approve this Agreement and
to consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Company and (assuming due authorization,  
execution and delivery by Parent and Sub) constitutes the valid and binding     
obligation of Company, enforceable against Company in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,        
reorganization, moratorium and other similar laws relating to or affecting      
creditors' rights generally, and general equitable principles (whether          
considered in a proceeding in equity or at law).                                

(b) Except as set forth in Section 3.3(b) of the Company Disclosure     
Schedule, neither the execution and delivery of this Agreement or the           
Receivables Agreements by Company nor the consummation by Company of the        
transactions contemplated hereby or thereby, nor compliance by Company with any 
of the terms or provisions hereof or thereof, will (i) violate any provision of 
the articles of incorporation or bylaws (or other constituent documents) of     
Company or any Company Subsidiary or (ii) assuming that the consents and        
approvals referred to in Section 3.4 are duly obtained, violate any statute,    
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction  
applicable to Company or any of its Subsidiaries or any of their respective     
properties or assets, or violate, conflict with, result in a breach of any      
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,   
accelerate the performance required by or rights or obligations under, or result
in the creation of any Lien upon any of the respective properties or assets of  
Company or any of its Subsidiaries under, any of the terms, conditions or       
provisions of any note, bond, mortgage, indenture, deed of trust, permit,       
concession, franchise, license, lease, agreement, contract, pooling and         
servicing agreement or other Securitization Agreement (as defined in Section    
3.14) or other instrument or obligation to which Company or any of its          
Subsidiaries is a party, or by which they or any of their respective properties 
or assets are bound, except as to (ii), for any such violations, conflicts,     
breaches, losses, terminations, cancellations, accelerations or Liens that could
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.                                                  

3.4  CONSENTS AND APPROVALS.  Except for (i) the filing of any required 
applications or notices with governmental agencies or authorities as set forth  
in Schedule 3.4 of the Company Disclosure Schedule and approval of such         
applications and notices (the "REGULATORY APPROVALS"), (ii) the filing with the 
SEC of the Form S-4 (as defined in Section 6.1(a)) containing the Proxy         
Statement/Prospectus (as defined in Section 6.1(a)), (iii) the filing of the    
Articles of Merger with the Secretary of State of the State of Minnesota        
pursuant to the MBCA, (iv) the expiration of any applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR  
ACT"), (v) the Company Shareholder Approval, (vi) the filing with the SEC of    
such reports under the Securities Exchange Act of 1934, as amended (the         
"EXCHANGE ACT"), as may be required in connection with the execution and        
delivery of this Agreement and the transactions contemplated hereby and (vii)   
such other consents, approvals, filings and registrations the failure to obtain 
which would not, individually or in the aggregate, reasonably be expected to    
result in a Material Adverse Effect on Company, no consents or approvals of or  
filings or registrations with any court, administrative agency or commission or 
other governmental or regulatory authority or instrumentality (each a           
"GOVERNMENTAL ENTITY"), are necessary in connection with the execution and      
delivery by Company of this Agreement or the Receivables Agreements or the      
consummation by Company of the transactions contemplated hereby or thereby.     
Company has no reason to believe that any regulatory approvals or consents      
required to consummate the transactions contemplated by this Agreement (the     
"REQUISITE REGULATORY APPROVALS") will not be obtained on a timely basis.       

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  3.5  REGULATORY REPORTS.  Company and each of its Subsidiaries have timely
filed all regulatory reports, schedules, forms, registrations and other         
documents, together with any amendments required to be made with respect        
thereto, that they were required to file since January 1, 1996 with (i) the     
Securities and Exchange Commission (the "SEC"), (ii) any domestic or foreign    
industry self-regulatory organization ("SRO") and (iii) any other federal, state
or foreign governmental or regulatory agency or authority (collectively with the
SEC and all SROs, "REGULATORY AGENCIES"), and have timely paid all taxes, fees  
and assessments due and payable in connection therewith, except as to (ii) and  
(iii), for such filings and payments that the failure to make, individually or  
in the aggregate, could not reasonably be expected to have a Material Adverse   
Effect on Company. Except as disclosed in Section 3.5 of the Company Disclosure 
Schedule and for normal examinations conducted by a Regulatory Agency in the    
regular course of the business of Company and its Subsidiaries, no Regulatory   
Agency has initiated any proceeding or, to the knowledge of Company,            
investigation into the business or operations of Company or any of its          
Subsidiaries since January 1, 1996. Except as set forth in Section 3.5 of the   
Company Disclosure Schedule, there is no material unresolved violation or       
exception by any Regulatory Agency with respect to any report or statement      
relating to any examinations of Company or any of its Subsidiaries.             

 3.6  BROKER'S FEES; OPINION OF COMPANY FINANCIAL ADVISOR.  (a) No broker,
finder or investment banker (other than J.P. Morgan & Co. (the "COMPANY         
FINANCIAL ADVISOR")) is entitled to any brokerage, finder's or other fee or     
commission in connection with the transactions contemplated by this Agreement.  
Company has attached as Section 3.6 of the Company Disclosure Schedule a        
complete and correct copy of all agreements between Company and the Company     
Financial Advisor pursuant to which such firm would be entitled to any payment  
relating to the transactions contemplated hereby.                               

  (b) Company has received the oral opinion of the Company Financial Advisor
as of the date of this Agreement, to the effect that the Merger Consideration is
fair to the holders of the Company Common Stock from a financial point of view, 
a signed copy of which opinion will be delivered to Parent.                     

3.7  ABSENCE OF CERTAIN CHANGES OR EVENTS.  (a) Except as set forth on  
Section 3.7 of the Company Disclosure Schedule, since September 30, 1999, no    
event, change or circumstance has occurred which has had, or would reasonably be
expected to result in, individually or in the aggregate, a Material Adverse     
Effect on Company.                                                              

  (b) Except as set forth on Section 3.7 of the Company Disclosure Schedule,
since September 30, 1999, Company and its Subsidiaries have, in all material    
respects, carried on their respective businesses only in the ordinary and usual 
course consistent with their past practices.                                    

(c) Except as disclosed in Section 3.7(c) of the Company Disclosure     
Schedule, since September 30, 1999, there has not occurred any event which, if  
it had taken place following the execution of this Agreement, would not have    
been permitted by Section 5.2 without the prior consent of Parent.              

  3.8  LEGAL PROCEEDINGS.  Except as set forth in Section 3.8 of the Company
Disclosure Schedule, there are no suits, actions, counterclaims, proceedings    
(whether judicial, arbitral, administrative or other) or governmental, or       
regulatory investigations pending or, to the knowledge of Company, threatened   
against or affecting Company or any of its Subsidiaries that could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Company. There is not any judgment, decree, injunction, rule or order of any    
Governmental Entity or arbitrator outstanding against Company or any of its     
Subsidiaries having, or which individually or in the aggregate would reasonably 
be expected to have, a Material Adverse Effect on Company.                      

3.9  TAXES AND TAX RETURNS.  Except as set forth in Section 3.9 of the  
Company Disclosure Schedule:                                                    

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 (a) Company and each of its Subsidiaries, and any consolidated, combined,
unitary or aggregate group for tax purposes of which Company or any of its      
Subsidiaries is or has been a member, has filed or will file all material Tax   
Returns (as defined below) required to be filed by it in the manner provided by 
law. If not yet filed, such Tax Returns will be filed within the time prescribed
by law (including extensions of time permitted by the appropriate Taxing        
Authority, as defined below). All such Tax Returns are true, correct and        
complete in all material respects. Company and each of its Subsidiaries has paid
or will pay on a timely basis all material Taxes (as defined below) whether or  
not shown thereon to be due other than Taxes which (i) are being contested in   
good faith, (ii) have not been finally determined and (iii) for which an        
adequate reserve has been provided in accordance with GAAP. None of Company or  
any of its Subsidiaries is aware of any investigation pending or threatened by  
any Taxing Authority for any jurisdiction where the Company and its Subsidiaries
do not file Tax Returns with respect to a given Tax that may lead to an         
assertion by such Taxing Authority that Company or any Subsidiary is or may be  
subject to such Tax in such jurisdiction.                                       

   (b) There are no examinations, audits, actions, proceedings, investigations
or disputes pending, or claims asserted, for material Taxes upon Company or any 
of its Subsidiaries. No closing agreements, private letter rulings, technical   
advice memoranda or similar agreements or rulings have been entered into or     
issued by any Taxing Authority with respect to Company or any of its            
Subsidiaries that have an impact on any material Taxes for any taxable period   
ending after the Closing Date.                                                  

    (c) Proper and accurate amounts for all material Taxes have been withheld by
Company and its Subsidiaries in connection with amounts paid or owing to any    
employee, officer, creditor, shareholder, independent contractor or other person
in compliance with the Tax withholding provisions of applicable federal, state  
and local laws and have either been paid, remitted or deposited to or with the  
appropriate Taxing Authorities, or, if not yet due, set aside in accounts for   
such purposes and accrued on the books of Company or any Subsidiary as          
applicable.                                                                     

   (d) There are no Tax liens upon any property or assets of Company or any of
its Subsidiaries except liens for Taxes not yet due and payable.                

  (e) None of Company and its Subsidiaries has filed a consent under section
341(f) of the Code (as defined below) concerning collapsible corporations. None 
of Company and its Subsidiaries (i) has received approval to make or agreed to a
change in accounting method that would materially affect any taxable period of  
Company or any of its Subsidiaries ending after the Closing Date, or (ii) has   
any application pending with any Taxing Authority requesting permission for any 
change in accounting method. None of Company and its Subsidiaries has been      
required to include in income any adjustment pursuant to section 481 of the Code
(or any similar provision of state, local or foreign tax law) by reason of a    
voluntary change in accounting method initiated by Company or any of its        
Subsidiaries, and the IRS has not initiated or proposed any such adjustment or  
change in accounting method.                                                    

   (f) Neither Company nor any of its Subsidiaries (i) has been a member of an
affiliated group filing consolidated federal income tax return (other than a    
group the common parent of which was Company), (ii) is a party to a Tax         
allocation or Tax sharing agreement (other than an agreement solely among       
members of a group the common parent of which is Company), or (iii) has any     
liability for the Taxes of any person (other than any of Company or its         
Subsidiaries) under Treasury Regulation section 1.1502-6 (or any similar        
provision of state, local or foreign law), as a transferee or successor, by     
contract or otherwise.                                                          

  (g) For the 1998 Tax year, the Company and its Subsidiaries reported a net
operating loss of $200, 162,111 on its U.S. federal income Tax Return. As of the
date hereof, and subject to matters raised as of the date hereof in any audits  
disclosed in Section 3.9 of the Company Disclosure Schedule, the net operating  
losses of the Company and its subsidiaries for U.S. federal income tax purposes 
are not less than $180 million. Except as set forth in Section 3.9 of the       
Company Disclosure Schedule, prior to the Closing Date, there has not been, and 
there will not be, any change of ownership of Company or any                    

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of its Subsidiaries within the meaning of Section 382 of the Code and the       
Treasury Regulations thereunder or any limitation on the utilization of such net
operating losses under Treasury Regulation 1.1502-21 or Temporary Treasury      
Regulation 1.1502-21T. To the extent such a change of ownership or such         
limitation on the utilization of such net operating losses has or will occur    
prior to the Closing Date, Section 3.9 of the Company Disclosure Schedule       
accurately describes in reasonable detail the event(s) constituting such change 
in ownership and such limitation on the utilization of such net operating       
losses. As of September 30, 1999 the net deferred tax liability of Company and  
the Subsidiaries (excluding any net operating loss carryforwards) was not       
greater than $200,000,000.                                                      

   For purposes of this Agreement, "CODE" shall mean the U.S. Internal Revenue
Code of 1986, as amended, or any successor law. For purposes of this Agreement, 
"TAX" or "TAXES" shall mean any taxes of any kind, including but not limited to 
those on or measured by or referred to as income, gross receipts, capital,      
sales, use, ad valorem, franchise, profits, license, withholding, payroll,      
employment, excise, severance, stamp, occupation, premium, value added, property
or windfall profits taxes, customs, duties or similar fees, assessments or      
charges of any kind whatsoever, together with any interest and any penalties,   
additions to tax or additional amounts imposed by any governmental authority,   
domestic or foreign. For purposes of this Agreement, "TAXING AUTHORITY" shall   
mean, with respect to any Tax, the government entity or political subdivision   
thereof that imposes such Tax and the agency (if any) charged with the          
collection of such Tax for such entity or subdivision. For purposes of this     
Agreement, "TAX RETURN" shall mean any return, report or statement required to  
be filed with any governmental authority with respect to Taxes, including any   
schedule or attachment thereto or amendment thereof. For purposes of this       
Agreement, "TREASURY REGULATIONS" shall mean the Treasury Regulations           
promulgated under the Code.                                                     

3.10  EMPLOYEES.  (a) Section 3.10(a) of the Company Disclosure Schedule
identifies each "employee benefit plan" (as defined in Section 3(3) of the      
Employee Retirement Income Security Act of 1974, as amended, and the rules and  
regulations promulgated thereunder ("ERISA")) and each employment, severance or 
similar contract or arrangement (whether or not written) and each plan, policy, 
fund, program, contract or arrangement (whether or not written) providing for   
compensation, bonus, profit-sharing, stock options, other stock related rights, 
other forms of incentive or deferred compensation, vacation benefits, insurance 
coverage (including any self-insured arrangements), health or medical benefits, 
disability benefits, workers' compensation, supplemental unemployment benefits, 
severance benefits, or post-employment or retirement benefits (i) for or        
pursuant to which the Company, any of its Subsidiaries, or any entity which,    
together with Company or any of its Subsidiaries, would be treated as a single  
employer under Section 414 of the Code (each such entity, an "ERISA AFFILIATE") 
has any current or contingent liability and (ii) that covers any current or     
former employee, consultant, independent contractor or director of or with      
respect to Company or any of its Subsidiaries (each, an "EMPLOYEE PLAN").       
Company has furnished or made available to Parent accurate and complete copies  
of the Employee Plans (or, to the extent no copy exists, an accurate description
thereof) (and, if applicable, related trust agreements), all amendments thereto,
all written interpretations thereof, as well as, with respect to each Employee  
Plan (if applicable), (i) the two most recent annual reports (Form 5500 and     
attached schedules), (ii) audited financial statements for the two most recent  
years, (iii) actuarial valuation reports for the two most recent years,         
(iv) nondiscrimination testing results for the two most recent years,           
(v) contracts with third party administrators, and (vi) any summary plan        
description and other written communications (or a description of any material  
oral communications) by Company or its Subsidiaries to their employees          
concerning the extent of the benefits provided under an Employee Plan.          

  (b) None of Company, any of its Subsidiaries or any ERISA Affiliate has at
any time (i) maintained or contributed to any plan subject to Title IV of ERISA 
or Section 412 of the Code, (ii) been required to contribute to any             
multi-employer plan (as defined in Section 3(37) of ERISA), or (iii) incurred   
any current or projected liability or made promises or guarantees in respect of 
the                                                                             

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payment or funding of post-employment or post-retirement health, medical or life
insurance benefits for current, former or retired employees of Company or any of
its Subsidiaries, except, in the case of this clause (iii), (x) as required to  
avoid an excise tax under Section 4980B of the Code, (y) except as required by  
any other applicable federal state or local law or (z) as set forth in Section  
3.10(b) of the Company Disclosure Schedule.                                     

(c) Each Employee Plan that is intended to be qualified under Section   
401(a) of the Code has been determined by the Internal Revenue Service to be so 
qualified; each trust created under any such Employee Plan has been determined  
by the Internal Revenue Service to be exempt from tax under Section 501(a) of   
the Code and no event has occurred, either by reason of any action or failure to
act, which could reasonably be expected to adversely affect the qualified status
of any such Employee Plan or trust. Company has provided Parent with the most   
recent determination letter or application for determination letter from the    
Internal Revenue Service relating to each such Employee Plan. Each Employee Plan
has been maintained in substantial compliance with its terms and with the       
requirements prescribed by any and all applicable statutes, orders, rules and   
regulations, including but not limited to ERISA and the Code and has been       
maintained in good standing with applicable regulatory authorities. No event has
occurred and no condition exists that would subject the Company or its          
Subsidiaries, either directly or by reason of their affiliation with an ERISA   
Affiliate, to any material tax, fine, lien, penalty or other liability imposed  
by ERISA, the Code or other applicable laws, rules and regulations. No          
"prohibited transaction" (as such term is defined in ERISA section 406 and Code 
section 4975) has occurred with respect to any Employee Plan. The Company and   
its Subsidiaries have timely made all contributions and timely paid all premiums
with respect to each Employee Plan as required by such Employee Plan, applicable
law, collective bargaining agreement or any other binding obligation.           

(d) Except as set forth in Section 3.10(d) of the Company Disclosure    
Schedule, there has been no amendment to, written interpretation of or          
announcement (whether or not written) by Company or any of its Subsidiaries or  
ERISA Affiliates relating to, or any change in employee participation or        
coverage under, any Employee Plan that would increase materially the expense of 
maintaining such Employee Plan above the level of the expense incurred in       
respect thereof for the most recent fiscal year ended prior to the date hereof. 

(e) Except as set forth in Section 3.10(e) of the Company Disclosure    
Schedule, there is no contract, plan or arrangement (written or otherwise)      
covering any employee or former employee of Company or any of its Subsidiaries  
that, individually or collectively, obligates Company to make a payment of any  
amount or provision of any benefit that would not be deductible pursuant to the 
terms of Section 162 or 280G of the Code.                                       

 (f) No Employee Plan is maintained outside the jurisdiction of the United
States, or covers any employee residing or working outside the United States.   

   (g) Section 3.10(g) of the Company Disclosure Schedule specifies, on a plan
by plan basis, the unfunded liabilities, (for the purposes of GAAP) as of the   
date of this Agreement, of each of the Employee Plans providing deferred        
compensation.                                                                   

    (h) Neither Company nor any of its Subsidiaries is a party to any collective
bargaining or other labor union contracts or is the subject of any proceeding   
asserting that it or any subsidiary has committed an unfair labor practice.     
There is no pending or, to the knowledge of Company, threatened labor dispute   
(other than an individual employee grievance), strike or work stoppage against  
Company or any of its Subsidiaries which would interfere with the respective    
business activities of Company or its Subsidiaries. There is no action, suit,   
complaint, charge, arbitration, inquiry, proceeding, grievance or investigation 
by or before any court, government agency, administrative agency or commission  
brought by or on behalf of any employee, prospective employee, former employee, 
retiree or other representative of Company's employees pending or, to the       
knowledge of Company, threatened against Company or any of its Subsidiaries     
other than any which would not, individually or in the aggregate,               

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have a Material Adverse Effect on Company. Neither Company nor any of its       
Subsidiaries is a party to or otherwise bound by, any consent, decree, or       
citation by any government entity relating to employees or employment practices.

 (i) Company and its Subsidiaries are in compliance with their obligations
pursuant to the Worker Adjustment and Retraining Notification Act of 1988 (the  
"WARN ACT"). Except as set forth in Section 3.10(i) of the Company Disclosure   
Schedule, the Subsidiaries have not effectuated a "mass layoff" or "plant       
closing" (as defined under the WARN Act) affecting in whole or in part any site 
of employment, facility, operating unit or employees of either Company or any of
its Subsidiaries.                                                               

3.11  SEC REPORTS.  Company has made available to Parent an accurate and
complete copy of each (a) final registration statement, prospectus, report,     
schedule, form and definitive proxy statement filed since January 1, 1996 by    
Company with the SEC pursuant to the Securities Act or the Exchange Act         
(collectively, and in each case including all exhibits and schedules thereto and
documents incorporated by reference therein, the "COMPANY REPORTS") and         
(b) communication mailed by Company to its shareholders since January 1, 1996.  
As of their respective dates of filing or mailing, as the case may be, each     
Company Report and each such communication complied in all material respects    
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and the rules and regulations of the SEC promulgated thereunder applicable  
to such Company Report or communication, and as of such dates no such Company   
Report or communication (including any and all financial statements included    
therein) contained any untrue statement of a material fact or omitted to state  
any material fact required to be stated therein or necessary in order to make   
the statements therein, in light of the circumstances in which they were made,  
not misleading. Section 3.11 of the Company Disclosure Schedule sets forth true 
and correct copies of all communications (excluding Company Reports) between    
Company, or any person on behalf of Company, on the one hand, and the SEC on the
other hand, in each case since January 1, 1996.                                 

  3.12  FINANCIAL STATEMENTS.  Each of the consolidated financial statements
(including the notes thereto) included in the Company Reports complied as to    
form, as of their respective dates of filing with the SEC, in all material      
respects with applicable accounting requirements and the published rules and    
regulations of the SEC with respect thereto, have been prepared in accordance   
with generally accepted accounting principles ("GAAP"), including, without      
limitation, SFAS No. 125 (except, in the case of unaudited consolidated         
quarterly statements, as permitted by Form 10-Q of the SEC), applied on a       
consistent basis during the periods involved (except as may be indicated in the 
notes thereto) and fairly present the consolidated financial position of Company
and its Subsidiaries as of the dates thereof and the consolidated results of    
their operations and cash flows for the periods then ended, except as otherwise 
noted therein (subject, in the case of unaudited statements, to normal and      
recurring immaterial year-end adjustments). The books and records of Company and
its Subsidiaries have been, and are being, maintained in all material respects  
in accordance with GAAP and any other applicable legal and accounting           
requirements. Company has made available to Parent true and correct copies of,  
or excerpts from, the books and records of the Company from which the amount of 
finance income receivable, and the cash flows related thereto, as set forth in  
the Company Reports was calculated.                                             

   3.13  LICENSES; COMPLIANCE WITH APPLICABLE LAW.  (a) Except as set forth in
Section 3.13 of the Company Disclosure Schedule, Company and its Subsidiaries   
hold, and are in compliance with, all permits, licenses, variances, exemptions, 
authorizations, orders and approvals ("PERMITS") of all Governmental Entities   
necessary for the operation of their respective businesses, except to the extent
that the failure to so hold or comply with such Permits would not, individually 
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
Company, and there are no proceedings pending or, to the knowledge of Company,  
threatened or contemplated by any Governmental Entity seeking to terminate,     
revoke or materially limit any such permit, license, exemption, order or        
approval. To the extent Company or any of its Subsidiaries has not been in      

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compliance with all Permits of all Governmental Entities necessary for the      
operation of its business, such failure to be in compliance, alone or together  
with all such other failures, could not reasonably be expected to have a        
Material Adverse Affect on Company.                                             

 (b) Neither Company nor any of its Subsidiaries nor the conduct of any of
their respective businesses is in conflict with, or in default or violation of, 
any statutes, laws, regulations, ordinances, Permits, rules, judgments, decrees 
or arbitration awards of any Governmental Entity applicable to Company or any of
its Subsidiaries or by which its or any of their respective properties are bound
or affected, except for such conflicts, defaults or violations that could not   
reasonably be expected, individually or in the aggregate, to have a Material    
Adverse Effect on Company.                                                      

 3.14  CERTAIN CONTRACTS.  Section 3.14 of the Company Disclosure Schedule
includes a list of each (i) contract, arrangement, commitment or understanding  
with respect to the employment of any directors, executive officers or key      
employees, or with any consultants (for purposes of this clause (i), other than 
consultants for computer and information systems) involving the payment of      
$100,000 or more per annum, (ii) contract, arrangement, commitment or           
understanding which is a "material contract" (as such term is defined in Item   
601(b)(10) of Regulation S-K of the SEC) that has not been filed as an exhibit  
to a Company Report, (iii) contract, arrangement, commitment or understanding   
which limits in any way the ability of Company or any of its Subsidiaries to    
compete in any line of business, in any geographic area or with any person, or  
which requires referrals of any business, (iv) contract, arrangement, commitment
or understanding with or to a labor union or guild (including any collective    
bargaining agreement), (v) contract, arrangement, commitment or understanding   
(including, without limitation, any Company Employee Plan but excluding options,
warrants and other securities identified in Section 3.2 or in Section 3.2 of the
Company Disclosure Schedule) any of the benefits of which will be paid or       
increased, or the vesting of the benefits of which will be accelerated, by the  
delivery of this Agreement or the occurrence of any of the transactions         
contemplated by this Agreement, or the value of any of the benefits of which    
will be calculated on the basis of any of the transactions contemplated by this 
Agreement, (vi) contract, arrangement, commitment or understanding which would  
prohibit or materially delay the consummation of any of the transactions        
contemplated by this Agreement, (vii) loan agreement, indenture, mortgage,      
pledge, conditional sale or title retention agreement, security agreement,      
guaranty, standby letter of credit (to which Company or any of its Subsidiaries 
is the responsible party), material equipment lease or lease purchase agreement 
to which the Company or any of its Subsidiaries is a party or by which any of   
them is bound, (viii) contract, arrangement, commitment or understanding to     
which Company or any of its Subsidiaries is a party or by which any of them or  
any of their respective properties or assets are bound or effected entered into 
in connection with the securitization by Company or any of its Subsidiaries of  
receivables (including, without limitation, (A) contracts, arrangements,        
commitments or understandings regarding credit support provided by Financial    
Security Assurance Inc. ("FSA") and any modification agreement, waiver or       
consent related thereto and (B) sale and servicing agreements) ("SECURITIZATION 
AGREEMENTS"), (ix) contract, agreement, arrangement or understanding between any
affiliate of Company (other than any wholly-owned Subsidiary of Company), on the
one hand, and Company or any Subsidiary of Company, on the other hand, and (x)  
any other contract, arrangement, commitment or understanding that is material to
the business, assets, liabilities, financial condition or results of operations 
of Company and its Subsidiaries, taken as a whole (PROVIDED, that for purposes  
of this clause (ix) any contract, arrangement, commitment or understanding      
involving payments or receipts by Company or any of its Subsidiaries in excess  
of $250,000 over the term thereof shall be deemed to be material). Company has  
previously made available to Parent complete and accurate copies of all Company 
Contracts (as defined below). Each contract, arrangement, commitment or         
understanding of the type described in this Section 3.14, whether or not set    
forth in Section 3.14 of the Company Disclosure Schedule, is referred to herein 
as a "COMPANY CONTRACT". None of Company or any of its Subsidiaries is in       
material breach of or default in the performance of its obligations under any   
Company Contract, and no material breach or default, alleged breach or default  
or event which would                                                            

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(with the passage of time, notice or both) constitute a material breach or      
default thereunder by Company or any of its Subsidiaries (or, to the knowledge  
of Company, any other party or obligor with respect thereto) has occurred, or as
a result of its performance will occur. To the extent that Company or any of its
Subsidiaries has been, since January 1, 1996, in material breach of or default  
in performance of its obligations under any Company Contract, such breach or    
default, together with all such other breaches or defaults, could not reasonably
be expected to have a Material Adverse Effect on Company. To the knowledge of   
Company, each Company Contract is in full force and effect.                     

  3.15  AGREEMENTS WITH REGULATORY AGENCIES.  Neither Company nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is 
a party to any written agreement, consent agreement or memorandum of            
understanding with, or is a party to any commitment letter or similar           
undertaking to, or is subject to any order or directive issued by, or is a      
recipient of any supervisory letter from or has adopted any board resolutions at
the request of, any Regulatory Agency or other Governmental Entity that         
restricts the conduct of its business or that in any manner relates to its      
capital adequacy, its credit policies, its management or its business (each,    
whether or not set forth in the Company Disclosure Schedule, a "COMPANY         
REGULATORY AGREEMENT"), nor has Company or any of its Subsidiaries been advised 
since January 1, 1996 by any Regulatory Agency or other Governmental Entity that
it is considering issuing or requesting any such Company Regulatory Agreement.  

   3.16  INVESTMENT SECURITIES.  Each of Company and its Subsidiaries has good
and marketable title to all investment securities held by it, free and clear of 
any Lien, except to the extent such securities are pledged in the ordinary      
course of business to secure obligations of Company or any of its Subsidiaries. 
Such investment securities are valued on the books of Company in accordance with
GAAP.                                                                           

3.17  INTEREST RATE RISK MANAGEMENT INSTRUMENTS.  Section 3.17 of the   
Company Disclosure Schedule sets forth the notional amount and fair value of    
each interest rate swap, cap, floor and option agreement and other interest rate
risk management arrangement, and such instruments, whether entered into for the 
account of Company or one of its Subsidiaries, were entered into in the ordinary
course of business and with counterparties reasonably believed by Company to be 
financially responsible at the time and are legal, valid and binding obligations
of Company or one of its Subsidiaries enforceable in accordance with their terms
(except as may be limited by bankruptcy, insolvency, moratorium, reorganization 
or similar laws affecting the rights of creditors generally and the availability
of equitable remedies), and are in full force and effect. Company and each of   
its Subsidiaries have duly performed in all material respects all of their      
material obligations thereunder to the extent that such obligations to perform  
have accrued, and, to Company's knowledge, there are no material breaches,      
violations or defaults or allegations or assertions of such by any party        
thereunder.                                                                     

 3.18  UNDISCLOSED LIABILITIES.  Except for (i) those liabilities that are
fully reflected or reserved for in the consolidated balance sheet of Company    
included in its Quarterly Report on Form 10-Q for the quarter ended             
September 30, 1999, as filed with the SEC, (ii) liabilities disclosed in Section
3.18 of the Company Disclosure Schedule and (iii) liabilities incurred (A) in   
the ordinary course of business consistent with past practice, and (B) outside  
the ordinary course not in excess, in the aggregate, of $50,000, at             
September 30, 1999, neither Company nor any of its Subsidiaries had, and since  
such date none of them has incurred, any liabilities or obligations of any      
nature whatsoever (whether accrued, absolute, contingent or otherwise and       
whether or not required to be reflected in Company's financial statements in    
accordance with GAAP).                                                          

    3.19  ENVIRONMENTAL LIABILITY.  There are no legal, administrative, arbitral
or other proceedings, claims, actions, causes of action, private environmental  
investigations or remediation activities or governmental investigations of any  
nature seeking to impose, or that could reasonably result in the imposition, on 
Company or any of its Subsidiaries of any material liability or obligation      

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arising under common law or under any local, state or federal environmental     
statute, regulation or ordinance relating to the protection of the environment  
or human health including, without limitation, the Comprehensive Environmental  
Response, Compensation and Liability Act of 1980, as amended ("Environmental    
Laws"), pending or, to Company's knowledge, threatened against Company or any of
its Subsidiaries. To the knowledge of Company, there is no reasonable basis for 
any such proceeding, claim, action or governmental investigation that would     
impose any material liability or obligation. Company is, and has been, in       
compliance with applicable Environmental Laws in all material respects. Wastes  
or other materials regulated under, or that could result in material liability  
under, Environmental Laws, including without limitation petroleum and petroleum 
products, asbestos, and polychlorinated biphenyls, have not been generated,     
transported, treated, stored, disposed of, arranged to be disposed of, released 
or threatened to be released at, on, from or under any of the properties or     
facilities currently or formerly owned, leased or otherwise used by the Company 
in violation of, or in a manner or to a location that could reasonably be       
expected to give rise to material liability to Company under or relating to, any
Environmental Laws.                                                             

    3.20  INFORMATION SUPPLIED.  None of the information supplied by Company for
inclusion or incorporation by reference in the Form S-4, containing the Proxy   
Statement/Prospectus to be sent to the shareholders of Company in connection    
with the Company Shareholders Meeting (as defined in Section 6.1(a)), will, at  
the date it is first mailed to Company's shareholders or at the time of the     
Company Shareholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in   
order to make the statements therein, in light of the circumstances under which 
they are made, not misleading except that no representation is made by Company  
with respect to statements made or incorporated by reference therein based on   
information supplied by Parent or Sub in writing for inclusion in such document.
The Form S-4 and Proxy Statement/Prospectus will comply as to form in all       
material respects with the requirements of the Exchange Act and the Securities  
Act and the rules and regulations of the SEC thereunder. Company shall promptly 
inform Parent of the discovery of any information which should be set forth in a
supplement to the Form S-4, containing the Proxy Statement/Prospectus.          

  3.21  INSURANCE.  Company and its Subsidiaries maintain insurance policies
and performance bonds on their respective properties and assets, and with       
respect to their employees and operations, with reputable insurance carriers,   
and such insurance policies and bonds are identified in Section 3.21 of the     
Company Disclosure Schedule. Company and its Subsidiaries are not in material   
default under any of their insurance policies and have paid all premiums owed   
thereunder, and no material claims for coverage thereunder have been denied.    

3.22  YEAR 2000 COMPLIANCE.  Except as would not, individually or the   
aggregate, have a Material Adverse Effect on Company, all computer hardware,    
software, databases, systems and other computer equipment (collectively,        
"SOFTWARE") owned, held and/or used by Company or any Company Subsidiary can be 
used prior to, during and after the calendar year 2000, and will operate during 
each such time period, either on a stand-alone basis, or by interacting or      
interoperating with year 2000 compliant third-party Software without error      
relating to the processing, calculating, comparing, sequencing or other use of  
correctly inputted data.                                                        

3.23  INTELLECTUAL PROPERTY.  Company and its Subsidiaries own or have a
valid license to use all trademarks, trade names, service marks, copyrights,    
patents, trade secrets and other intellectual property (collectively,           
"INTELLECTUAL PROPERTY") that are material to the conduct of their business. All
applications, registrations and patents for such Intellectual Property owned,   
used or licensed by the Company are identified in Section 3.23 of the Company   
Disclosure Schedule. Except as set forth in Section 3.23 of the Company         
Disclosure Schedule, neither Company nor any of its Subsidiaries is bound by or 
subject to any license or other agreement with respect to any such Intellectual 
Property (including, without limitation, the rights to the name "Arcadia" and   
any variations thereof). Neither Company nor any of its Subsidiaries has        
received any notice or other communication alleging that its usage of such      
Intellectual Property violates the intellectual property rights of any other    
person.                                                                         

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  3.24  RIGHTS AGREEMENT.  The Board of Directors of Company has approved an
amendment to the Rights Agreement, dated as of November 1, 1996, as amended (the
"COMPANY RIGHTS AGREEMENT"), between Company and Norwest Bank Minnesota, N.A.,  
to the effect that neither Parent, Sub nor any of their affiliates shall become 
an "Acquiring Person", that no "Stock Acquisition Date", "Distribution Date", or
"Triggering Event" (as such terms are defined in the Company Rights Agreement)  
will occur pursuant to the Company Rights Agreement by reason of, and the Rights
Agreement shall not be applicable to, the approval, execution or delivery of    
this Agreement or the consummation of the transactions contemplated hereby, and 
will cause the trustee under the Company Rights Agreement to execute such       
amendment as of the date hereof.                                                

   3.25  STATE ANTI-TAKEOVER STATUTES.  The restrictions contained in Sections
302A.671, 302A.673 and 302A.675 of the MBCA are inapplicable to this Agreement, 
the Support Agreement, the Receivables Agreements and the transactions          
contemplated hereby and thereby. No provision of Company's articles of          
incorporation, bylaws or other governing instruments of Company or any of its   
Subsidiaries would restrict or impair the ability of Parent to vote, or         
otherwise exercise the rights of a shareholder with respect to, shares of       
Company or any of its Subsidiaries.                                             

    3.26  PROPERTIES.  (a) (i) None of Company or its Subsidiaries owns any real
property.                                                                       

(b) Pursuant to the leases and subleases (the "REAL PROPERTY LEASES") of
Company and its Subsidiaries with respect to all material real property which is
leased or subleased by Company or its Subsidiaries (the "LEASED REAL PROPERTY"),
Company and its Subsidiaries hold good and valid leasehold title to the Leased  
Real Property, in each case in accordance with the provisions of the applicable 
Real Property Lease and free of all Liens, in each case except, individually or 
in the aggregate, as would not have a Material Adverse Effect on Company. Each  
of the Real Property Leases is enforceable against Company or its Subsidiary, as
the case may be, and, to the knowledge of Company, against the other party      
thereto, in accordance with its terms, subject to the effects of bankruptcy,    
insolvency, fraudulent conveyance, reorganization, moratorium and other similar 
laws relating to or affecting creditors' rights generally, and general equitable
principles (whether considered in a proceeding in equity or at law) and except  
for such failures to be enforceable as would not, individually or in the        
aggregate, have a Material Adverse Effect on Company.                           

  3.27  RECEIVABLES.  Except as would not, individually or in the aggregate,
have a Material Adverse Effect on Company, (a) Company or any trust to which    
Company has transferred title of any Receivables has good title and original    
documents evidencing the Receivables, free and clear of any Liens; no person,   
firm, corporation or association has any claim whatsoever to any such           
Receivables. For purposes of this Section 3.27, "RECEIVABLE" means any          
receivable owned by Company or any of its Subsidiaries or securitized pursuant  
to any securitization transaction entered into by, or for the benefit of,       
Company or any of its Subsidiaries.                                             

(b) There exists a file pertaining to each Receivable, and such file    
contains (i) a fully executed original of the Receivable, (ii) a certificate of 
insurance, application form for insurance signed by the obligor under such      
Receivable (the "OBLIGOR"), or a signed representation letter from the Obligor  
named in the Receivable pursuant to which the Obligor has agreed to obtain      
physical damage insurance for the related financial vehicle, or copies thereof, 
(iii) the original certificate of title, lien card or application therefor and  
(iv) a credit application signed by the Obligor, or a copy thereof. The records 
of Company maintained in electronic format and provided to Parent relating to   
the Receivables of Company as of September 30, 1999 accurately reflect the      
information purported to be reflected therein.                                  

(c) Company is not a party to and there is no pending or, to Company's  
knowledge, threatened litigation, legal or administrative proceeding, or        
otherwise.                                                                      

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 (d) Each Receivable is genuine, valid and complete in all respects and is
enforceable in accordance with its terms, except as its enforceability may be   
limited by applicable bankruptcy, insolvency, or similar laws affecting the     
rights of creditors.                                                            

  (e) As of the closing date of each securitization transaction entered into
by, or for the benefit of, Company or any of its Subsidiaries, each motor       
vehicle that is security for a Receivable was covered by a comprehensive and    
collision insurance policy (i) in an amount at least equal to the lesser of     
(A) its maximum insurable value or (B) the principal amount due from the Obligor
under the related Receivable, (ii) naming Company as loss payee and             
(iii) insuring against loss and damage due to fire, transportation, collision   
and other risks generally covered by comprehensive and collision coverage. Each 
Receivable requires the Obligor to maintain physical loss and damage insurance  
naming Company and its successors and assigns as additional insured parties, and
each Receivable permits the holder thereof to obtain physical loss and damage   
insurance at the expense of the Obligor if the Obligor fails to do so. No such  
motor vehicle was or had previously been insured under a policy of force-placed 
insurance on any such closing date.                                             

(f) The collateral for each of the Receivables that is secured is the   
collateral described in the applicable security agreement or other security     
document. Each security interest in titled personal property collateral         
constitutes a valid, enforceable and perfected purchase money first lien on the 
collateral described in the Receivable file.                                    

    (g) Each Receivable was originated, has been serviced and currently complies
in all material respects with all applicable state, federal and local laws and  
regulations, including but not limited to all consumer protection and insurance 
laws, the Truth-In-Lending Act, ECOA, RESPA and the FCRA.                       

  (h) Company has paid or caused to be paid any and all licenses, franchise,
business privilege use, intangible stamp or other Taxes or fees due and owing,  
if any, arising from the acquisition, origination, collection or holding of each
Receivable.                                                                     

ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUB 

  Parent and, with respect to Sections 4.1 and 4.2, Sub hereby represent and
warrant to Company as follows:                                                  

4.1  CORPORATE ORGANIZATION.  Parent is a corporation duly organized,   
validly existing and in good standing under the laws of the State of Delaware.  
Sub is a corporation duly organized, validly existing and in good standing under
the laws of the State of Minnesota. Each of Parent and Sub has all requisite    
corporate power and authority to own or lease all of its properties and assets  
and to carry on its business as it is now being conducted, and is duly licensed 
or qualified to do business and in good standing in each jurisdiction in which  
the nature of the business conducted by it or the character or location of the  
properties and assets owned or leased by it makes such licensing or             
qualification necessary, except where the failure to be so licensed or qualified
(individually or in the aggregate) would not reasonably be expected to have a   
material adverse effect on the ability of Parent or Sub to perform its          
obligations under and to consummate the transactions contemplated by this       
Agreement on a timely basis.                                                    

    4.2  AUTHORITY; NO VIOLATION.  (a) Each of Parent and Sub has full corporate
power and authority to execute and deliver this Agreement and to consummate the 
transactions contemplated hereby. The execution and delivery of this Agreement  
by Parent and Sub and the consummation of the transactions contemplated hereby  
have been duly and validly authorized by the Board of Directors of each of      
Parent and Sub and by Parent in its capacity as sole shareholder of Sub. No     
other corporate proceedings on the part of Parent or Sub and no other votes or  
consents of any holders of Parent                                               

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securities are necessary on the part of Parent or Sub to approve this Agreement 
and to consummate the transactions contemplated hereby. This Agreement has been 
duly and validly executed and delivered by each of Parent and Sub and (assuming 
due authorization, execution and delivery by Company) constitutes the valid and 
binding obligations of Parent and Sub, enforceable against each of them in      
accordance with its terms, subject to the effects of bankruptcy, insolvency,    
fraudulent conveyance, reorganization, moratorium and other similar laws        
relating to or affecting creditors' rights generally, and general equitable     
principles (whether considered in a proceeding in equity or at law).            

 (b) Neither the execution and delivery of this Agreement by Parent or Sub
nor the consummation by Parent or Sub of the transactions contemplated hereby,  
nor compliance by Parent or Sub with any of the terms or provisions hereof, nor 
the execution and delivery of the Receivables Agreements by the affiliate of    
Company party thereto, nor the consummation by such affiliate of the            
transactions contemplated thereby, nor compliance by such affiliate with any of 
the terms or provisions thereof, will (i) violate any provision of the          
certificate or articles of incorporation or bylaws of Parent or Sub, as         
applicable, or (ii) assuming that the consents and approvals referred to in     
Section 4.3 are duly obtained, violate any statute, code, ordinance, rule,      
regulation, judgment, order, writ, decree or injunction applicable to Parent or 
any of its material Subsidiaries or any of their respective properties or       
assets, or violate, conflict with, result in a breach of any provision of or the
loss of any benefit under, constitute a default (or an event which, with notice 
or lapse of time, or both, would constitute a default) under, result in the     
termination of or a right of termination or cancellation under, accelerate the  
performance required by or rights or obligations under, or result in the        
creation of any Lien upon any of the respective properties or assets of Parent  
or any of its material Subsidiaries under, any of the terms, conditions or      
provisions of any material note, bond, mortgage, indenture, deed of trust,      
permit, concession, franchise, license, lease, agreement, contract, or other    
instrument or obligation to which Parent or any of its material Subsidiaries is 
a party, or by which they or any of their respective properties, assets or      
business activities may be bound or affected, except (in the case of clause     
(ii) above) for such violations, conflicts, breaches or defaults which, either  
individually or in the aggregate, would not reasonably be expected to result in 
a material adverse effect on the ability of Parent or Sub to perform its        
obligations under and to consummate the transactions contemplated by this       
Agreement on a timely basis.                                                    

4.3  CONSENTS AND APPROVALS.  Except for (i) the Regulatory Approvals,  
(ii) the filing with the SEC of the Form S-4 containing the Proxy               
Statement/Prospectus, (iii) the filing of the Articles of Merger with the       
Secretary of State of the State of Minnesota pursuant to the MBCA, (iv) the     
expiration of any applicable waiting period under the HSR Act, (v) the Company  
Shareholder Approval, (vi) the filing with the SEC of such reports under the    
Exchange Act as may be required in connection with the execution and delivery of
this Agreement and the transactions contemplated hereby and (vii) such other    
consents, approvals and registrations the failure to obtain which would not,    
individually or in the aggregate, reasonably be expected to have a material     
adverse effect on the ability of Parent or Sub to perform its obligations under 
and to consummate the transactions contemplated by this Agreement on a timely   
basis, no consents or approvals of or filings or registrations with any         
Governmental Entity, or of or with any third party, are necessary in connection 
with the execution and delivery by Parent of this Agreement or the consummation 
by Parent of the transactions contemplated by this Agreement or in connection   
with the execution and delivery by the affiliate of Parent party thereto of the 
Receivables Agreements or the consummation by such affiliate of the transactions
contemplated thereby. Parent has no reason to believe that any Requisite        
Regulatory Approvals will not be obtained on a timely basis.                    

    4.4  BROKER'S FEES.  Parent has not engaged any broker, finder or investment
banker (other than Goldman, Sachs & Co., whose fee shall be paid by Parent) that
would be entitled to any brokerage, finder's or other fee or commission in      
connection with the transactions contemplated by this Agreement.                

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4.5  FUNDS.  Either Parent or Sub has, or will have prior to the        
consummation of the Merger, sufficient funds available to satisfy the obligation
to pay the Cash Consideration in the Merger.                                    

  4.6  INFORMATION SUPPLIED.  None of the information supplied by Parent for
inclusion or incorporation by reference in the Form S-4 containing the Proxy    
Statement/Prospectus to be sent to the shareholders of Company in connection    
with the Company Shareholders Meeting, will not, at the date it is first mailed 
to Company's shareholders or at the time of the Company Shareholders Meeting,   
contain any untrue statement of a material fact or omit to state any material   
fact required to be stated therein or necessary in order to make the statements 
therein, in light of the circumstances under which they are made, not misleading
except that no representation is made by Parent with respect to statements made 
or incorporated by reference therein based on information supplied by Company   
for inclusion or incorporation by reference in such document. The Form S-4 and  
the Proxy Statement/ Prospectus will comply as to form in all material respects 
with the requirements of the Exchange Act and the Securities Act and the        
rules and regulations of the SEC thereunder.                                    

ARTICLE V 
COVENANTS RELATING TO CONDUCT OF BUSINESS 

   5.1  CONDUCT OF COMPANY BUSINESSES PRIOR TO THE EFFECTIVE TIME.  During the
period from the date of this Agreement to the Effective Time, except as         
expressly required or permitted by this Agreement, Company shall, and shall     
cause each of its Subsidiaries to, (a) conduct its business in the usual,       
regular and ordinary course consistent with past practice and in compliance in  
all respects with applicable laws, (b) use reasonable efforts to maintain and   
preserve intact its business organization, employees and business relationships 
and retain the services of its key officers and key employees and (c) take no   
action which would adversely affect or delay in any respect the ability of      
either Parent or Company to obtain any necessary approvals of any Regulatory    
Agency or other Governmental Entity required for the transactions contemplated  
hereby or to perform its covenants and agreements under this Agreement.         

5.2  FORBEARANCES OF COMPANY.  During the period from the date of this  
Agreement to the Effective Time, except as set forth in Section 5.2 of the      
Company Disclosure Schedule and except as expressly required or permitted by    
this Agreement, Company shall not, and shall not permit any of its Subsidiaries 
to, without the prior written consent of Parent (which consent, in the case of  
clause (h) below, shall not be unreasonably withheld):                          

(a) (i) incur any indebtedness for borrowed money (other than           
(A) short-term indebtedness incurred (x) to refinance existing short-term       
indebtedness or (y) pursuant to lines of credit and credit facilities existing  
on the date of this agreement and (B) indebtedness of Company or any of its     
Subsidiaries owed to Company or any of its other wholly-owned Subsidiaries and  
(C) indebtedness in the aggregate not in excess of $20,000,000 incurred pursuant
to that Indenture, dated as of July 1, 1994, as amended and restated by a First 
Amendment and Restatement, dated as of April 28, 1995, between Company and      
Norwest Bank Minnesota, N.A., as trustee, as amended, provided that any         
indebtedness incurred pursuant to this clause (C) shall be prepayable without   
premium on at least 30 but not more than 60 days' notice to the holders         
thereof), assume, guarantee, endorse or otherwise as an accommodation become    
responsible for the obligations of any other individual, corporation or other   
entity, or make any loan, advance or capital contribution (other than to Company
or any of its wholly-owned Subsidiaries) or (ii) make or commit to make any     
capital expenditures in excess of $50,000 for any single or related group of    
capital expenditures, or $500,000 in the aggregate for all capital expenditures;

(b) (i) adjust, split, combine or reclassify any of its capital stock;  
(ii) make, declare, set aside or pay any dividend (except for dividends paid in 
the ordinary course of business by any wholly-owned Subsidiaries of Company to  
Company or to any other of its wholly-owned Subsidiaries) or make any           

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other distribution on, or directly or indirectly redeem, purchase or otherwise  
acquire, any shares of its capital stock or any securities or obligations       
convertible into or exchangeable for any shares of its capital stock;           
(iii) grant any individual, corporation or other entity any right to acquire any
shares of its capital stock or any stock appreciation or similar rights except  
as permitted by Section 5.2(i); (iv) issue or authorize the issuance of,        
deliver, sell, transfer, pledge or otherwise encumber any additional shares of  
capital stock or any securities or obligations convertible into or exchangeable 
for any shares of its capital stock, other than the issuance of Company Common  
Stock pursuant to the exercise of stock options or warrants disclosed in        
Section 3.2 of the Company Disclosure Schedule as being outstanding on the date 
of this Agreement and granted pursuant to the Company Stock Plans; or (v) enter 
into any agreement, understanding or arrangement with respect to the sale or    
voting of its capital stock;                                                    

 (c) (i) sell, transfer, mortgage, encumber or otherwise dispose of any of
its properties or assets, including, without limitation, capital stock in any   
Company Subsidiary, to any individual, corporation or other entity other than a 
direct or indirect wholly-owned Subsidiary, or cancel, release or assign any    
indebtedness to any such person or any claims held by any such person, except in
the ordinary course of business consistent with past practice or pursuant to    
contractual requirements under contracts existing on the date of this Agreement 
and identified in Section 3.14 of the Company Disclosure Schedule; or           
(ii) securitize or otherwise dispose of any receivables owned by, or loans owed 
to, Company or any of its Subsidiaries, except for sales or other dispositions  
of receivables or any such loans to Parent or any of its Subsidiaries; provided,
however, that Company may securitize receivables owned by, or loans owed to,    
Company or any of its Subsidiaries under the following conditions: (i) if Parent
is in material default of its obligations under the Receivables Agreements,     
Company may securitize up to a maximum of $150 million a month in amount (as    
reflected on the books and records of the Company) of receivables owned by, or  
loans owed to, Company or any of its Subsidiaries and (ii) for so long as       
Company is not in default under the Purchase Agreement in any material respect, 
Company may securitize or otherwise dispose of receivables owned by, or loans   
owed to, Company or any of its Subsidiaries in the amount of the principal      
amount of Retail Installment Sales Contracts (as defined in the Purchase        
Agreement) which Seller has available for sale, and which Buyer has the right to
purchase, under the Purchase Agreement and which up to a maximum of             
$150 million a month in amount (as reflected on the books and records of the    
Company) of Buyer has elected not to purchase.                                  

   (d) make any material investment either by purchase of stock or securities,
contributions to capital, property transfers, or purchase of any property or    
assets of any other individual, corporation, limited partnership or other       
entity, other than an investment in a wholly-owned Subsidiary of Company;       

(e) acquire or agree to acquire by merging or consolidating with, or by 
purchasing a substantial portion of the stock or assets of, or by any other     
manner, any business or any corporation, partnership, joint venture, association
or other business organization or division thereof;                             

 (f) acquire or agree to acquire voting or non-voting equity securities or
similar ownership interests in any person (other than a Subsidiary);            

(g) commence, undertake or engage in any new line of business;          

    (h) enter into any contract, arrangement, commitment or understanding of the
types described in clause (iii), (v) or (vi) of Section 3.14; make any change in
or terminate any of its existing contracts, arrangements, commitments or        
understandings disclosed pursuant to Section 3.14; or enter into any contract,  
agreement, arrangement or understanding involving payments or receipts by       
Company or any of its Subsidiaries in excess of $100,000 over the term thereof; 

  (i) (i) increase or accelerate the compensation or benefits of any present
or former director, officer, consultant, independent contractor or employee of  
Company or its Subsidiaries (except for increases in salary or wages in the     
ordinary course of business consistent with past practice for persons other than
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(A) Company may accelerate the vesting of previously granted restricted shares  
attributable to fiscal 1999 to Company officers and employees pursuant to       
Company's 1998-2000 Restricted Stock Election Plan as in effect on the date of  
this Agreement; (B) Company may commit to pay cash bonuses to the persons and in
the amounts set forth in Part I of Section 5.2(i) of the Company Disclosure     
Schedule, provided, in the case of any such person, such person (x) is employed 
by Company on the 60th day following the Effective Time, (y) is, following the  
Effective Time and prior to such 60th day, terminated without cause (as defined 
below) or (z) following the Effective Time and prior to such 60th day terminates
his or her employment for good reason (as defined below); (C) Company may pay   
the bonuses to the persons and in the amounts set forth in Part II of Section   
5.2(i) of the Company Disclosure and (D) Company may pay bonuses to persons     
other than those identified in Part II of Section 5.2(i) of the Company         
Disclosure Schedule in an aggregate amount not to exceed $7 million pursuant to 
Company's bonus and incentive policies in effect on the date hereof, (ii) grant 
any severance or termination pay to any present or former director, officer,    
consultant, independent contractor or employee of Company or its Subsidiaries   
other than as provided under an Employee Plan in existence as of the date of    
this Agreement and identified in Section 3.10(a) or 3.14, as the case may be, of
the Company Disclosure Schedule, (iii) loan or advance any money or other       
property to any present or former director, officer, consultant, independent    
contractor or employee of Company or its Subsidiaries (iv) establish, adopt,    
enter into, amend or terminate any Employee Plan or any plan, agreement,        
program, policy, trust, fund or other arrangement that would be an Employee Plan
if it were in existence as of the date of this Agreement or (v) amend any term  
of a Company Option, except in accordance with Section 1.6 hereof. For purposes 
of Section 5.2(i)(A)(Y), a person may be terminated for "CAUSE" upon his or her 
(i) substantial failure to perform duties, which failure is not cured within 10 
business days following written notice, (ii) commission of a (x) felony or (y)  
crime involving moral turpitude, (iii) malfeasance or misconduct which is       
injurious to the Surviving Corporation or (iv) breach of the material terms of  
his or her employment, including without limitation any non-compete,            
non-solicitation or confidentiality obligations; PROVIDED, HOWEVER, that if such
person is subject to an employment agreement with the Company, and such         
agreement includes a definition of cause, such definition will supercede the    
foregoing definition. For purposes of Section 5.2(i)(A)(Z), a person may        
terminate employment for "GOOD REASON" upon (i) a failure of Parent to pay      
compensation or benefits when due to such person, (ii) a reduction of such      
person's base salary or a failure of Parent to provide employee benefits in     
accordance with Section 6.4 hereof, (iii) a relocation of such person's         
principal place of employment by more that 35 miles from his or her current     
principal place of employment or (iv) a substantial change in such person's     
duties, other than as a result of poor job performance; PROVIDED, HOWEVER, that 
it shall only be good reason if, in each case, Parent does not cure such good   
reason within 10 business days following the Parent's receipt of written notice 
from such person of the acts or omissions alleged to be good reason; PROVIDED,  
FURTHER, that if such person is subject to an employment agreement with the     
Company, and such agreement includes a definition of good reason, such          
definition will supercede the foregoing definition.                             

(j) pay, discharge or satisfy any claims, liabilities or obligations    
(absolute, accrued, asserted or unasserted, contingent or otherwise), except for
the payment, discharge or satisfaction of (i) current liabilities or            
obligations, in accordance with their terms, in the ordinary course of business 
consistent with past practice and (ii) liabilities disclosed pursuant to this   
agreement and the schedules hereto, to the extent required by their terms, or   
waive, release, grant, or transfer any rights of value or modify or change any  
existing license, lease, contract or other document in any manner that would be 
material to Company and its Subsidiaries;                                       

  (k) settle or compromise any litigation (whether or not commenced prior to
the date of this Agreement), other than settlements or compromises of litigation
where the amount paid does not exceed $50,000 for any single litigation matter  
or related group of litigation matters (provided such settlement or compromise  
agreements do not involve any non-monetary obligations on the part of Company or
any of its Subsidiaries);                                                       

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(l) (i) change any accounting principle used by it (including, without  
limitation, any assumptions used for purposes of computing finance income       
receivable), except for such changes as may be required to be implemented       
following the date of this Agreement pursuant to generally accepted accounting  
principles or rules and regulations of the SEC promulgated following the date   
hereof, as concurred in by Company's independent auditors; or (ii) materially   
change or amend Company's underwriting, servicing or collection policies,       
procedures or standards;                                                        

(m) change any material Tax election, change any annual Tax accounting  
period, change any material method of Tax accounting, file any amended Tax      
Return, enter into any closing agreement relating to any material Tax, settle   
any material Tax claim or assessment, surrender any right to claim a material   
Tax refund or consent to any extension or waiver of the limitations period      
applicable to any material Tax claim or assessment;                             

(n) adopt or implement any amendment to its articles of incorporation or
bylaws or other comparable organizational documents, or enter into any plan of  
consolidation, merger or reorganization with any person other than a            
wholly-owned Subsidiary of Company;                                             

 (o) materially restructure or materially change its investment securities
portfolio, its hedging strategy or its gap position, through purchases, sales or
otherwise, or the manner in which the portfolio is classified or reported or    
materially alter the credit or risk concentrations associated with its          
businesses; or repurchase any receivables disposed of by Company or any of its  
Subsidiaries in connection with any Securitization Transaction;                 

    (p) adopt a plan of complete or partial liquidation or resolutions providing
for or authorizing such a liquidation or a dissolution, restructuring,          
recapitalization or reorganization;                                             

    (q) take any action that is intended or may reasonably be expected to result
in any of its representations and warranties set forth in this Agreement being  
or becoming untrue in any material respect, or in any of the conditions to the  
Merger set forth in Article VIII not being satisfied or in a violation of any   
provision of this Agreement, except, in each case, as may be required by        
applicable law; or                                                              

(r) agree to, or make any commitment to, take, or authorize, any of the 
actions prohibited by this Section 5.2.                                         

5.3  TRANSITION.  In order to facilitate an orderly transition of the   
management of the business of Company and its Subsidiaries to Parent and in     
order to facilitate the integration of the operations of Company and Parent and 
their Subsidiaries and to permit the coordination of their related operations on
a timely basis, and in an effort to accelerate to the earliest time possible    
following the Effective Time the realization of synergies, operating            
efficiencies and other benefits expected to be realized by Parent and Company as
a result of the Merger, on and after the earlier of (i) the 45th day after the  
date of this Agreement and (ii) the day, if any, on which Parent waives its     
right to terminate this Agreement pursuant to Section 8.1(d)(vi) (the date of   
the earlier of such days, the "ACCESS DATE"), Company shall and shall cause its 
Subsidiaries to consult with Parent on all strategic and operational matters to 
the extent such consultation is not in violation of applicable laws, including  
laws regarding the exchange of information and other laws regarding competition.
Without in any way limiting the provisions of Section 6.3, Parent, its          
Subsidiaries, officers, employees, counsel, financial advisors and other        
representatives shall on and after the Access Date, upon reasonable notice to   
Company and subject to applicable laws relating to the exchange of information, 
be entitled to review the operations and visit the facilities of Company and its
Subsidiaries at all times as may be deemed reasonably necessary by Parent in    
order to accomplish the foregoing arrangements (provided such access does not,  
in Company's reasonable opinion, unreasonably interfere with Company's business 
options). Notwithstanding the foregoing, nothing contained in this Agreement    
shall give Parent, directly or indirectly, the right to control or direct       
Company's operations prior to the Effective Time. Prior to the                  

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Effective Time, each of Company and Parent shall exercise, consistent with the  
terms and conditions of this Agreement, complete control and supervision over   
its and its Subsidiaries' respective operations.                                

 5.4  NOTIFICATION OF TAX PROCEEDINGS.  From the date of this Agreement to
the Effective Time, to the extent Company or any Subsidiary becomes aware of the
commencement or scheduling of any Tax audit, the assessment of any material Tax,
the issuance of any notice of material Tax due or any bill for collection of any
material Tax due or any material lien for Taxes, or the commencement or         
scheduling of any other administrative or judicial proceeding with respect to   
the determination, assessment, or collection of any material Tax on Company or  
any Subsidiary, Company shall provide prompt notice to Parent of such matter    
setting forth information (to the extent known) describing any asserted Tax     
liability in reasonable detail and including copies of any notice or other      
documentation received from the applicable Tax Authority with respect of the    
matter.                                                                         

    5.5  TRANSFER TAXES.  All Transfer Taxes imposed on Company or Parent or any
of their affiliates in connection with this Agreement shall be paid by Parent.  
For this purpose, "Transfer Taxes" means any Stock transfer taxes, real property
transfer, transfer gains or similar taxes (including without limitation, any New
York State Real Estate Transfer Tax) payable in connection with this Agreement. 

ARTICLE VI
ADDITIONAL AGREEMENTS 

  6.1  COMPANY SHAREHOLDERS MEETING; PREPARATION OF PROXY STATEMENT. Company
shall cause a meeting of its shareholders (the "COMPANY SHAREHOLDERS MEETING")  
to be duly called and held as soon as practicable after the date hereof for the 
purpose of approving the adoption of this Agreement. As promptly as practicable 
following the date hereof, Parent and Company shall prepare and file with the   
SEC preliminary proxy materials which shall constitute the Proxy                
Statement/Prospectus (such proxy statement/prospectus, and any amendments       
thereto, the "PROXY STATEMENT/PROSPECTUS") and Parent shall prepare and file    
with the SEC a registration statement on Form S-4 with respect to the issuance  
of the RVOs in the Merger (the "FORM S-4"). The Proxy Statement/Prospectus will 
be included in the Form S-4 as Parent's prospectus. The Form S-4 and the Proxy  
Statement/Prospectus shall comply as to form in all material respects with the  
applicable provisions of the Securities Act and the Exchange Act and the        
rules and regulations of the SEC thereunder. Each of Parent and Company shall   
use its reasonable best efforts to have the Form S-4 declared effective under   
the Securities Act as promptly as practicable after filing with the SEC and to  
keep the Form S-4 effective as long as is necessary to consummate the Merger.   
Parent and Company shall, as promptly as possible after receipt thereof, provide
copies of any written comments received from the SEC with respect to the Proxy  
Statement/Prospectus to the other party and advise the other party of any oral  
comments with respect to the Proxy Statement/Prospectus received from the SEC.  
Company shall use its reasonable best efforts to cause the Proxy                
Statement/Prospectus to be mailed to Company's shareholders as promptly as      
practicable after the FormS-4 is declared effective under the Securities Act.   
Each of Company and Parent will inform the other party, promptly after it       
receives notice thereof, of any request by the SEC for an amendment to the      
Form S-4 or the Proxy Statement/ Prospectus, as the case may be, or requests for
additional information. No amendment or supplement to the Form S-4 or the Proxy 
Statement/Prospectus shall be filed without the approval of both parties, which 
approvals shall not be unreasonably withheld or delayed. The Board of Directors 
of Company shall (i) include in the Proxy Statement/Prospectus (x) the Company  
Board Recommendation unless based on the advice of Company's outside counsel,   
the Board of Directors of Company determines in good faith that inclusion of    
such recommendation would constitute a breach by the Board of Directors of      
Company of its fiduciary duties under applicable law and (y) the opinion of the 
Company Financial Advisor referred to in Section 3.6(b) and (ii) use its        
reasonable best efforts to obtain the necessary vote in favor of the adoption of
this Agreement by its shareholders. The Board of Directors of Company           

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shall not withdraw, amend, modify or materially qualify in a manner adverse to  
Parent the Company Board Recommendation (or announce publicly its intention to  
do so) unless based on the advice of Company's outside counsel, the Board of    
Directors of Company determines in good faith that failure to do so would       
constitute a breach by Board of Directors of Company of its fiduciary duties    
under applicable law. Subject to its right to terminate this Agreement in       
accordance with the terms hereof, Company shall be required to satisfy all its  
obligations under this Agreement, including, without limitation, its obligations
under this Section 6.1(a), whether or not the Board of Directors of Company     
shall have withdrawn, amended, modified or qualified in a manner adverse to     
Parent the Company Board Recommendation or announced publicly its intention to  
do so.                                                                          

6.2  REASONABLE BEST EFFORTS.  (a) Each of Parent and Company shall, and
shall cause their respective Subsidiaries to, use their reasonable best efforts 
to take, or cause to be taken, all actions necessary, proper or advisable to    
comply promptly with all legal requirements which may be imposed on such party  
or any of its Subsidiaries with respect to the Merger and, subject to the       
conditions set forth in Article VII hereof, to consummate the transactions      
contemplated by this Agreement.                                                 

(b) The parties hereto shall cooperate with each other and use their    
reasonable best efforts to promptly prepare and file all necessary              
documentation, to effect all applications, notices, petitions and filings, to   
identify and obtain as promptly as practicable all permits, consents, approvals 
and authorizations of all Governmental Entities and any other third parties     
which are necessary or advisable to consummate the transactions contemplated by 
this Agreement (including, without limitation, the Merger), and to comply fully 
with the terms and conditions of all such permits, consents, approvals and      
authorizations of all such Governmental Entities. Without limiting the          
generality of the foregoing, within 20 days of the date of this Agreement,      
Company shall deliver to Parent a schedule setting forth in reasonable detail   
those third party consents, approvals and filings which are necessary to        
consummate the transactions contemplated by this Agreement. Parent and Company  
shall have the right to review in advance, and, to the extent practicable, each 
will consult with the other on, in each case subject to applicable laws relating
to the exchange of information, all the information relating to Company or      
Parent, as the case may be, and any of their respective Subsidiaries, which     
appear in any filing made with, or written materials submitted to, any          
Governmental Entity or any other third party in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the  
parties hereto shall act reasonably and as promptly as practicable. The parties 
hereto agree that they will consult with each other with respect to the         
obtaining of all permits, consents, approvals and authorizations of all         
Governmental Entities and other third parties necessary or advisable to         
consummate the transactions contemplated by this Agreement and each party will  
keep the other apprised of the status of matters relating to completion of the  
transactions contemplated hereby. Without limiting the generality of the        
foregoing, Parent and Company agree that if all of the conditions to Closing set
forth in Article VII have been satisfied or waived other than the condition set 
forth in Section 7.3(c) and if, and to the extent that, it would result in the  
condition set forth in Section 7.3(c) being satisfied, Parent and Company shall 
use reasonable efforts to effect the sale by Company or one or more of its      
Subsidiaries to Parent or one or more of its Subsidiaries of receivables owned  
by Company or its Subsidiaries at a purchase price of 100% of the amount of the 
receivables as reflected on the books and records of Parent or the applicable   
Subsidiary of Parent. In the event that the actions contemplated by the         
immediately preceding sentence would require more than reasonable efforts or    
would not result in the satisfaction of the condition set forth in              
Section 7.3(c), Parent and Company shall cooperate in good faith and use        
reasonable efforts to cause the condition set forth in Section 7.3(c) to be     
satisfied.                                                                      

(c) Parent and Company shall, upon request, furnish each other with all 
information concerning themselves, their Subsidiaries, directors, officers and  
stockholders and such other matters as may be reasonably necessary or advisable 
in connection with the Form S-4 and the Proxy Statement/Prospectus              

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or any other statement, filing, notice or application made by or on behalf of   
Parent, Company or any of their respective Subsidiaries to any Governmental     
Entity in connection with the Merger and the other transactions contemplated by 
this Agreement.                                                                 

6.3  ACCESS TO INFORMATION.  (a) On and after the Access Date, upon     
reasonable notice and subject to applicable laws relating to the exchange of    
information, Company shall, and shall cause its Subsidiaries to, afford to the  
officers, employees, accountants, counsel and other representatives of Parent,  
reasonable access, during normal business hours during the period prior to the  
Effective Time, to all its personnel, properties, books, contracts, commitments 
and records (provided that such access does not, in the Company's reasonable    
opinion, unreasonably interfere with the Company's business operations and that 
such access is coordinated through Company's senior management) and, during such
period, Company shall, and shall cause its Subsidiaries to, make available to   
Parent and such other parties (i) a copy of each report, schedule, registration 
statement and other document filed or received by it during such period pursuant
to the requirements of federal securities laws or other federal or state laws   
(other than reports or documents which Company is not permitted to disclose     
under applicable law) and (ii) all other information concerning its business,   
properties and personnel as Parent may reasonably request, in all cases so that 
Parent may have full opportunity to make such reasonable investigations as it   
desires of the affairs and assets of Company. Neither Company nor any of its    
Subsidiaries shall be required to provide access to or to disclose information  
where such access or disclosure would violate or prejudice the rights of its    
customers, jeopardize the attorney-client privilege of Company or any of its    
Subsidiaries or contravene any law, rule, regulation, order, judgment, decree,  
or binding agreement entered into prior to the date of this Agreement. The      
parties hereto will make appropriate substitute disclosure arrangements under   
circumstances in which the restrictions of the preceding sentence apply.        

(b) Company shall use its reasonable efforts to make available to the   
officers, employees, accountants, counsel and other representatives of Parent,  
during normal business hours during the period prior to the Effective Time,     
representatives of Financial Security Assurance Inc. ("FSA") for the purpose of 
discussing the impact of the transactions contemplated hereby on the            
securitization transactions effected by Company and its Subsidiaries and such   
other matters as shall be reasonably raised by Parent, provided, that such      
access shall be coordinated through Company's senior management and that        
representatives of Company shall be permitted to attend all meetings and        
participate in all phone calls with representatives of FSA.                     

(c) Parent shall, and shall cause its representatives to, hold all      
information furnished by or on behalf of Company or any of Company's            
Subsidiaries or representatives pursuant to Section 6.3(a) in confidence to the 
extent required by, and in accordance with, the provisions of the               
confidentiality agreement, dated April 30, 1999 between Parent and Company (the 
"CONFIDENTIALITY AGREEMENT").                                                   

(d) No investigation by Parent or its representatives shall affect the  
representations and warranties of Company set forth herein.                     

6.4  EMPLOYEE BENEFITS.  (a) For one year following the Effective Time, 
employees of Company and its Subsidiaries who continue their employment with the
Surviving Corporation, Parent or any of their respective Subsidiaries           
("CONTINUED EMPLOYEES") will be provided employee benefits which, in the        
aggregate, are no less favorable than the benefits provided under Company's     
Employee Plans to the Continued Employees immediately prior to the Effective    
Time; PROVIDED, HOWEVER, that nothing contained herein shall constitute a       
commitment or obligation on the part of Parent, the Surviving Corporation or any
of their respective subsidiaries to adopt or continue any individual benefit    
arrangement or term thereof and that nothing herein shall interfere with the    
Surviving Corporation's right to take any action or refrain from taking any     
action which Company or any of its Subsidiaries could take or refrain from      
taking prior to the Effective Time.                                             

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(b) To the extent that Continuing Employees are eligible participate in 
employee benefit plans of Parent, such Continuing Employee shall be given credit
for service with Company and its Subsidiaries, to the same extent as such       
service was credited for such purpose by Company under comparable Company       
Employee Plans, for purposes of eligibility and vesting. If Continuing Employees
become eligible to participate in a medical, dental or health plan of Parent or 
its subsidiaries, Parent shall cause such plan to (i) waive any preexisting     
condition limitations for conditions covered under the comparable medical,      
health or dental plans which are Company Employee Plans and (ii) honor any      
deductible and out of pocket expenses incurred and paid by the Continuing       
Employees under the comparable medical, health or dental plans which are Company
Employee Plans during the portion of the calendar year prior to such            
participation. Notwithstanding the foregoing, in no event shall any Continuing  
Employee be entitled to any credit for service, deductibles or out of pocket    
expenses to the extent that it would result in a duplication of benefits with   
respect to the same period of service, deductible or out of pocket expenses.    

   6.5  INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.  (a) The articles
of incorporation and bylaws of the Surviving Corporation shall contain, to the  
extent permitted by law, the provisions with respect to indemnification set     
forth in the articles of incorporation and bylaws of Company on the date hereof,
which provisions shall not be amended, repealed or otherwise modified for a     
period of six years after the Effective Time in any manner that would adversely 
affect the rights thereunder of the persons who at any time prior to the        
Effective Time were entitled to such indemnification under the articles of      
incorporation or bylaws of Company in respect of actions or omissions occurring 
at or prior to the Effective Time (including, without limitation, the           
transactions contemplated hereby), unless such modification is required by law; 
PROVIDED, that the articles of incorporation and bylaws of the Surviving        
Corporation shall not be required to contain such provisions if Parent otherwise
provides the same level of indemnification for such individuals as contained in 
the articles of incorporation and bylaws of the Surviving Corporation.          

   (b) The Surviving Corporation shall indemnify, defend and hold harmless the
present and former officers and directors of Company or any of Company's        
Subsidiaries in their capacities as such (each an "INDEMNIFIED PARTY") after the
Effective Time against all losses, expenses, claims, damages or liabilities     
arising out of actions or omissions occurring on or prior to the Effective Time 
to the fullest extent that Company and its Subsidiaries would have been         
permitted under Minnesota law and their respective articles of incorporation or 
bylaws, to indemnify such Indemnified Parties.                                  

(c) Parent shall use its reasonable best efforts to cause the persons   
serving as officers and directors of Company immediately prior to the Effective 
Time to be covered for a period of six years from the Effective Time by the     
directors' and officers' liability insurance policy maintained by Company       
(provided that Parent may substitute therefor policies of at least the same     
coverage and amounts containing terms and conditions which are not less         
advantageous than such policy) with respect to acts or omissions occurring prior
to the Effective Time which were committed by such officers and directors in    
their capacity as such; PROVIDED, HOWEVER, that in no event shall Parent be     
required to expend more than 200% of the current amount expended by Company (the
"INSURANCE AMOUNT") to maintain or procure insurance coverage pursuant hereto   
and further PROVIDED, that if Parent is unable to maintain or obtain the        
insurance called for by this Section 6.5(c), Parent shall use its reasonable    
best efforts to obtain as much comparable insurance as available for the        
Insurance Amount.                                                               

(d) In the event Parent, the Surviving Corporation or any of their      
respective successors or assigns (i) consolidates with or merges into any other 
person and shall not be the continuing or surviving corporation or entity of    
such consolidation or merger, or (ii) transfers or conveys all or substantially 
all of its properties and assets to any person, then, and in each such case, to 
the extent necessary, proper provision shall be made so that the successors and 
assigns of Parent or the Surviving Corporation, as the case may be, assume the  
obligations set forth in this section. From and after the Effective Time,       

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Parent shall unconditionally guarantee the timely payment of any funds owing by,
and the timely performance of all other obligations of, the Surviving           
Corporation under this Section 6.5.                                             

 (e) The provisions of this Section 6.5 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.                                                                

 6.6  ADDITIONAL AGREEMENTS.  In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this  
Agreement (including, without limitation, any other merger between a Subsidiary 
of Company and a Subsidiary of Parent) or to vest the Surviving Corporation with
full title to all properties, assets, rights, approvals, immunities and         
franchises of any of the parties to the Merger, the proper officers and         
directors of each party to this Agreement and their respective Subsidiaries     
shall take all such necessary action as may be reasonably requested by Parent.  

   6.7  ADVICE OF CHANGES.  Parent and Company shall promptly advise the other
party of any change or event that could reasonably be expected to have a        
Material Adverse Effect on it or to delay or impede the ability of Parent, Sub  
or Company, respectively, to perform their respective obligations pursuant to   
this Agreement and to effect the consummation of the transactions contemplated  
hereby; PROVIDED, HOWEVER, that the delivery of any notice pursuant to this     
Section 6.7 shall not limit or otherwise affect the remedies available hereunder
to any party receiving such notice.                                             

    6.8  NO SOLICITATION.  (a) Neither Company nor any of its Subsidiaries shall
(whether directly or indirectly through advisors, agents or other               
intermediaries), nor shall Company or any of its Subsidiaries authorize or      
permit any of its or their officers, directors, agents, representatives or      
advisors to, (a) solicit, initiate, encourage (including by way of furnishing   
information) or take any action knowingly to facilitate the submission of any   
inquiries, proposals or offers (whether or not in writing) from any person other
than Parent that constitutes or may reasonably be expected to lead to, (i) any  
acquisition or purchase of any assets of Company or any of its Subsidiaries     
(including through the formation of a joint venture) or of any equity securities
of Company or any of its Subsidiaries (except in the case of a transaction      
permitted by Section 5.2(c)(i)), (ii) any tender offer or exchange offer        
(including a self-tender offer) for any class of equity securities of Company or
any of its material Subsidiaries, (iii) any merger, consolidation, business     
combination, reorganization, recapitalization, liquidation, dissolution or      
similar transaction involving Company or any of its material Subsidiaries or    
(iv) any other transaction the consummation of which would or would reasonably  
be expected to impede, interfere with, prevent or materially delay the Merger   
(any of the foregoing, a "TRANSACTION PROPOSAL"), or accept, agree to, approve  
or endorse any Transaction Proposal or (b) enter into or participate in any     
discussions or negotiations regarding any of the foregoing, or otherwise        
cooperate in any way with, or knowingly assist or participate in, facilitate or 
encourage, any effort or attempt by any other person to do or seek any of the   
foregoing; PROVIDED, that Company may, in response and with respect to a bona   
fide unsolicited written proposal from a third party submitted after the date of
this Agreement which constitutes a Superior Proposal (as defined below), engage 
in the activities specified in clause (b), if (i) based on the advice of        
Company's outside counsel, the Board of Directors of Company determines in good 
faith that failure to take such action in response to such a proposal would     
constitute a breach by the Board of Directors of Company of its fiduciary duties
under applicable law, (ii) Company has received from such third party an        
executed confidentiality agreement with terms not materially less favorable to  
Company than those contained in the Confidentiality Agreement and (iii) Company 
has complied in all material respects with this Section 6.8. If Company receives
a Transaction Proposal, or a request for nonpublic information relating to      
Company or any of its Subsidiaries or for access to the properties, books or    
records of Company or any of its Subsidiaries by any Person who is considering  
making or has made a Transaction Proposal, it shall immediately inform Parent   
orally and shall as promptly as practicable (and in any event within one day)   
inform Parent in writing of the terms and conditions of such proposal and the   
identity of the person making it, forwarding a copy of any written              
communications relating thereto. Company will keep Parent                       

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informed on as prompt a basis as is practicable of the status and details of any
such Transaction Proposal or request and any related discussions or             
negotiations, including by forwarding copies of any material written            
communications relating thereto. Company will immediately cease and cause its   
Subsidiaries, and its and their officers, directors, agents, representatives and
advisors, to cease any and all existing activities, discussions or negotiations 
with any parties conducted heretofore with respect to any of the foregoing, and 
shall use its reasonable efforts to cause any such parties in possession of     
confidential information about Company or its Subsidiaries that was furnished by
or on behalf of Company or its Subsidiaries in connection with any of the       
foregoing to return or destroy all such information in the possession of any    
such party or in the possession of any agent or advisor of any such party.      
Company agrees not to release any third party from, or waive any provisions of, 
any confidentiality or standstill agreement to which it or its Subsidiaries is a
party. Company shall ensure that the officers, directors and employees of       
Company and its Subsidiaries and any investment banker or other advisor or      
representative retained by such party are aware of and instructed to comply with
the restrictions described in this Section 6.8. Nothing in this Section 6.8     
shall prohibit Company or its Board of Directors from taking and disclosing to  
Company's shareholders a position with respect to a Transaction Proposal by a   
third party to the extent required under the Exchange Act, including            
Rules 14e-2 and 14d-9 thereunder, or from making such disclosure to Company's   
shareholders which, based on the advice of Company's outside counsel, the Board 
of Directors of Company determines in good faith, is required under applicable  
law; PROVIDED, that nothing in this sentence shall affect the obligations of    
Company and its Board of Directors under any other provision of this Agreement. 
For purposes of this Agreement, a "SUPERIOR PROPOSAL" means a bona fide written 
Transaction Proposal for at least a majority of the outstanding fully-diluted   
shares of Company Common Stock or for all or substantially all of the           
consolidated assets of Company made by a Third Party after the date hereof for  
which all necessary financing is committed in full and which, if accepted, is   
reasonably likely to be consummated and taking into account all legal, financial
and regulatory aspects of the proposal and the person making such proposal,     
including the relative expected consummation date, is financially superior to   
the holders of Company Common Stock as compared to the Merger.                  

(b) Unless this Agreement shall have been terminated in accordance with 
Section 8.1 Company shall not amend, modify or waive any provision of the       
Company Rights Agreement, and shall not take any action to redeem the Company   
Rights or render the Company Rights inapplicable to any transaction other than  
the transactions to be effected pursuant to this Agreement, which is reasonably 
likely to reduce the likelihood of or delay the consummation of the Merger, or  
result in any increase in the costs or decrease in the benefits to Parent of the
Merger, or affect the capitalization of Parent or any of its affiliates after   
the Merger.                                                                     

   6.9  PUBLICITY.  Company, on the one hand, and Parent and Sub, on the other
hand, will consult with each other before holding any press conferences, analyst
calls or other meetings or discussions and before issuing any press releases or 
other public announcements or statements regarding the transactions contemplated
hereby or by the Support Agreement or the Receivables Agreements. The parties   
will provide each other the opportunity to review and comment upon any press    
release or other public announcement or statement with respect to the           
transactions contemplated by this Agreement, the Support Agreement or the       
Receivables Agreements, including the Merger, and shall not issue any such press
release or other public announcement or statement prior to such consultation,   
except as may be required by applicable law, court process or by obligations    
pursuant to any listing agreement with any national securities exchange. The    
parties agree that the initial press release or releases to be issued with      
respect to the transactions contemplated by this Agreement shall be mutually    
agreed upon prior to the issuance thereof. In addition, Company shall, and shall
cause its Subsidiaries to, (a) consult with Parent regarding communications with
shareholders and employees relating to the transactions contemplated hereby,    
(b) provide Parent with shareholder lists of Company and (c) allow and          
facilitate Parent contact with shareholders of Company.                         

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    6.10  STOCKHOLDER LITIGATION.  The parties to this Agreement shall cooperate
and consult with one another, to the fullest extent possible, in connection with
any stockholder litigation against any of them or any of their respective       
directors or officers with respect to the transactions contemplated by this     
Agreement, the Support Agreement or the Receivables Agreements. In furtherance  
of and without in any way limiting the foregoing, each of the parties shall use 
its respective reasonable best efforts to prevail in such litigation so as to   
permit the consummation of the transactions contemplated by this Agreement in   
the manner contemplated by this Agreement. Notwithstanding the foregoing,       
Company agrees that it will not compromise or settle any litigation commenced   
against it or its directors or officers relating to this Agreement, the Support 
Agreement or the Receivables Agreements or the transactions contemplated hereby 
or thereby (including the Merger) without Parent's prior written consent, which 
shall not be unreasonably withheld.                                             

6.11  ANTI-TAKEOVER PROVISIONS.  (a) Each party will take all steps     
necessary to exempt (or continue the exemption of) the Merger and the other     
transactions contemplated hereby and by the Support Agreement and the           
Receivables Agreements from, and challenge the validity of the MBCA (including  
Sections 302A.671, 302A.673 and 302A.675 thereof), as now or hereafter in       
effect.                                                                         

(b)  The Board of Directors of Company shall take all further action (in
addition to that referred to in Section 3.24), if any, necessary in order to    
render the Company Rights inapplicable to the Merger and the other transactions 
contemplated by this Agreement.                                                 

6.12  STOP TRANSFER.  Company acknowledges and agrees to be bound by and
comply with the provisions of Section 3(c) of the Support Agreement as if a     
party thereto with respect to transfers of record ownership of shares of Company
Common Stock and agrees to notify the transfer agent for any such shares and    
provide such documentation and do such other things as may be necessary to      
effectuate the provisions of such agreement.                                    

6.13  [Intentionally Omitted]                                           

    6.14  AGREED UPON PROCEDURES.  Immediately after the date of this Agreement,
Parent shall engage Ernst & Young LLP ("E&Y"), at Parent's expense, to conduct  
the procedures set forth in Exhibit B hereto and to render to Parent in writing 
(with a copy to Company) a report with respect thereto. Parent shall instruct   
E&Y to complete its report as promptly as practicable, but in any event within  
40 days of the date of this Agreement.                                          

6.15  [Intentionally Omitted]                                           

6.16  TAX SCHEDULES.  Prior to the Closing Date, Company shall use      
reasonable best efforts to cooperate with Parent and assist Parent in preparing 
schedules reasonably acceptable to Parent that accurately set forth as of the   
Effective Time (i) the tax basis of the assets held by Company and its          
Subsidiaries; (ii) the amount of each item of deferred tax liability and        
deferred tax assets included on Company's audited financial statements for      
fiscal 1998; and (iii) details of any accrual for contingent tax liabilities of 
Company and its Subsidiaries. Parent shall engage, at Parent's expense, Ernst & 
Young LLP or another accounting firm reasonably acceptable to Company to prepare
the Schedules described in this Section 6.16.                                   

6.17  LISTING.  Prior to the Effective Time, Parent shall file a listing
application with a national securities exchange with respect to the RVOs issued 
or issuable in connection with the Merger and shall use all reasonable efforts  
to have such RVOs approved for quotation on such national securities exchange.  

   6.18  EMPLOYEE RETENTION.  Prior to the Effective Time, at Parent's request
Company shall establish a key employee retention program upon terms reasonably  
satisfactory to Parent and Company. Company shall establish a liability in      
accordance with GAAP on its books and records in connection with any such       
retention program.                                                              

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ARTICLE VII 
CONDITIONS PRECEDENT

7.1  CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.  The   
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:     

 (a)  COMPANY SHAREHOLDER APPROVAL. The Company Shareholder Approval shall
have been obtained in accordance with applicable law.                           

    (b)  NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No statute, rule, regulation,
order, injunction or decree shall have been enacted, entered, promulgated,      
issued or enforced by any court of competent jurisdiction or Governmental Entity
which prohibits, prevents, materially restricts or makes illegal the            
consummation of the Merger or the Receivables Agreements, which has not been    
vacated, dismissed or withdrawn prior to the Effective Time. Parent and Company 
shall use their reasonable best efforts to have any of the foregoing, vacated,  
dismissed or withdrawn by the Effective Time.                                   

(c)  HSR ACT. The applicable waiting period under the HSR Act shall have
expired or been terminated.                                                     

 (d)  EFFECTIVENESS OF THE FORM S-4. The Form S-4 shall have been declared
effective by the SEC under the Securities Act. No stop order suspending the     
effectiveness of the Form S-4 shall have been issued by the SEC and no          
proceedings for that purpose shall have been initiated by the SEC and not       
concluded or withdrawn.                                                         

7.2  CONDITIONS TO COMPANY'S OBLIGATIONS TO EFFECT THE MERGER.  The     
obligations of Company to effect the Merger are subject to the satisfaction at  
or prior to the Effective Time of the following additional conditions:          

(a)  The representations of Parent and Sub contained in this Agreement, 
shall have been true and correct (in all material respects, in the case of      
representations and warranties not already qualified as to materiality by their 
terms) when made and shall be true and correct (in all material respects, in the
case of representations and warranties not already qualified as to materiality  
by their terms) at and as of the Effective Time as though made on and as of such
date (except (i) for changes specifically permitted by this Agreement and       
(ii) that those representations and warranties which address matters only as of 
a particular date shall remain true and correct as of such date), and Company   
shall have received a certificate of the Chief Executive Officer or the         
President and Chief Operating Officer of Parent to the foregoing effect.        

  (b)  Parent and Sub shall have performed and complied with in all material
respects their obligations under this Agreement to be performed or complied with
on or prior to the Effective Time, and Company shall have received a certificate
of the Chief Executive Officer or the President and Chief Operating Officer of  
Parent to the foregoing effect.                                                 

   7.3  CONDITIONS TO PARENT'S AND SUB'S OBLIGATIONS TO EFFECT THE MERGER. The
obligations of Parent and Sub to effect the Merger are subject to the           
satisfaction at or prior to the Effective Time of the following additional      
conditions:                                                                     

  (a)  The representations of Company contained in this Agreement shall have
been true and correct when made and shall be true and correct (in all material  
respects, in the case of representations and warranties not already qualified as
to materiality by their terms) at and as of the Effective Time as though made on
and as of such date (except (i) for changes specifically permitted by this      
Agreement and (ii) that those representations and warranties which address      
matters only as of a particular date shall remain true and correct as of such   
date), and Parent shall have received a certificate of the Chief                

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Executive Officer, the Senior Executive Vice President and Chief Financial      
Officer or the Executive Vice President, Controller and Chief Accounting Officer
of Company to the foregoing effect.                                             

    (b)  Company shall have performed and complied with in all material respects
its obligations under this Agreement to be performed or complied with on or     
prior to the Effective Time, and Parent shall have received a certificate of the
Chief Executive Officer, the Senior Executive Vice President and Chief Financial
Officer or the Executive Vice President, Controller and Chief Accounting Officer
of Company to the foregoing effect.                                             

  (c)  All Requisite Regulatory Approvals shall have been obtained and be in
effect at the Effective Time.                                                   

 (d)  Neither Parent, Sub nor any of their affiliates shall have become an
"Acquiring Person", and no "Stock Acquisition Date", "Distribution Date", or    
"Triggering Event" (as such terms are defined in the Company Rights Agreement)  
shall have occurred pursuant to the Company Rights Agreement.                   

   (e)  The number of Dissenting Shares as of the Effective Time shall be less
than 10% of the number of shares of Company Common Stock outstanding at the     
Effective Time.                                                                 

(f)  Any consent required of, or notice or other document required to be
delivered to, FSA in connection with the transactions contemplated hereby or by 
the Receivables Agreements pursuant to the Securitization Agreements shall have 
been obtained or given and be in effect at the Effective Time.                  

   (g)  All consents or approvals of or filings with any third party which are
necessary to consummate the transactions contemplated by this Agreement shall   
have been obtained and shall be in full force and effect, other than such       
consents, approvals or filings the failure of which to have been obtained or    
made could not, individually or in the aggregate, be reasonably expected to have
a Material Adverse Effect on Company or the Surviving Corporation.              

ARTICLE VIII
TERMINATION AND AMENDMENT 

    8.1  TERMINATION.  This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval by the shareholders of Company 
of the matters presented in connection with the Merger:                         

(a)  by mutual consent of Parent and Company;                           

(b)  by either Parent or the Board of Directors of Company if (i) any   
Governmental Entity of competent jurisdiction which must grant a Requisite      
Regulatory Approval the receipt of which is a condition to the Obligations of   
Parent and Sub pursuant to Section 7.3(c) has denied such approval and such     
denial has become final and nonappealable or any Governmental Entity of         
competent jurisdiction shall have issued an order, decree or ruling or taken any
other action permanently restraining, enjoining or otherwise prohibiting the    
transactions contemplated by this Agreement, and such order, decree, ruling or  
other action shall have become final and nonappealable, PROVIDED, HOWEVER, that 
the right to terminate this Agreement under this Section 8.1(b)(i) shall not be 
available to any party whose failure to comply with Section 6.2 or any other    
provision of this Agreement has been the cause of such action, (ii) the Company 
Shareholder Approval shall not have been received at the Company Shareholders   
Meeting duly called and held or (iii) the Effective Time shall not have occurred
on or before 180 days after the execution by all parties of this Agreement (the 
"TERMINATION DATE"), PROVIDED, HOWEVER, that the right to terminate this        
Agreement under this Section 8.1(b)(iii) shall not be available to any party    
whose failure to fulfill any obligations under this Agreement has been the      
primary cause of the failure of the Effective Time to occur on or before the    
Termination Date until ten business days after such failure has been cured.     

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(c)  by the Board of Directors of Company, if, prior to Effective Time, 
(i) Parent or Sub shall have failed to perform in any material respect any of   
their obligations under this Agreement to be performed at or prior to such date 
of termination, which failure to perform is not cured or is incapable of being  
cured within 10 days after the receipt by Parent of written notice of such      
failure, (ii) any representation or warranty of Parent or Sub contained in this 
Agreement shall not be true and correct (except for changes permitted by this   
Agreement and those representations which address matters only as of a          
particular date shall remain true and correct as of such date), except, in any  
case, such failures to be true and correct which are not reasonably likely to   
materially adversely affect Parents's or Sub's ability to complete the Merger,  
PROVIDED, that such failure to be true and correct is not cured or is incapable 
of being cured within 10 days after the receipt by Parent of written notice of  
such failure or (iii) prior to the Company Shareholder Approval, upon five      
business days' prior irrevocable written notice to Parent, in order to accept an
unsolicited Superior Proposal; PROVIDED, HOWEVER, that (A) such notice shall    
include a copy of any proposed or definitive documentation relating to such     
Superior Proposal (including all financing documentation), and shall otherwise  
specify all material terms, conditions and other information with respect       
thereto and (B) prior to any such termination, Company shall, if requested by   
Parent in connection with any revised proposal Parent might make, negotiate in  
good faith for such five business day period with Parent, and such third party  
proposal remains a Superior Proposal after taking into account any revised      
proposal during such five business day period; and PROVIDED, FURTHER, that it   
shall be a condition to termination pursuant to this Section 8.1(c)(iii) that   
Company shall have made the payment of the fee to Parent required by Section    
8.2(c) and the payment in respect of Parent Expenses required by Section 8.2(b);

  (d)  by Parent, if, prior to Effective Time, (i) Company shall have failed
to perform in any material respect any of its obligations under this Agreement  
to be performed at or prior to such date of termination, which failure to       
perform is not cured or is incapable of being cured within 10 days after the    
receipt by Company of written notice of such failure, (ii) any representation or
warranty of Company contained in this Agreement shall not be true and correct   
(except for changes permitted by this Agreement and those representations which 
address matters only as of a particular date shall remain true and correct as of
such date), except, in any case, such failures to be true and correct which are 
not reasonably likely to materially adversely affect Company's ability to       
complete the Merger, PROVIDED, that such failure to be true and correct is not  
cured or is incapable of being cured within ten days after the receipt by       
Company of written notice of such failure, (iii) the Board of Directors of      
Company withdraws or materially modifies or changes its recommendation of this  
Agreement and/or transactions contemplated hereby (including the Merger) in a   
manner adverse to Parent or Sub or approves, accepts or recommends another      
Transaction Proposal or fails to reconfirm such recommendation if so requested  
by Parent, within 10 business days following such request; (iv) (A) if a        
Transaction Proposal that is publicly disclosed shall have been commenced,      
publicly proposed or communicated to Company which contains a proposal as to    
price (without regard to the specificity of such price proposal) and            
(B) Company shall not have rejected such Acquisition Proposal within 10 business
days after the date its existence first becomes publicly disclosed; (v) Parent, 
Sub or any of their affiliates shall have become an "Acquiring Person", or a    
"Stock Acquisition Date", "Distribution Date", or "Triggering Event" (as such   
terms are defined in the Company Rights Agreement) shall have occurred pursuant 
to the Company Rights Agreement; or (vi) the conclusions of E&Y set forth in its
report rendered to Parent pursuant to Section 6.14 hereof shall not be          
reasonably consistent with information previously provided E&Y or Parent by     
Company; PROVIDED, HOWEVER, that any termination by Parent pursuant to Section  
8.1(d) (vi) must occur within 45 days after the date of this Agreement.         

8.2  EFFECT OF TERMINATION.  (a) In the event of termination of this    
Agreement by either Parent or Company as provided in Section 8.1, written notice
thereof shall forthwith be given to the other party or parties specifying the   
provision hereof pursuant to which such termination is made, and this Agreement 
shall forthwith become void and have no effect, and none of Parent, Company, any
of                                                                              

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their respective affiliates or any of the officers or directors of any of them  
shall have any liability of any nature whatsoever hereunder, or in connection   
with the transactions contemplated hereby, except that (i) Section 6.3(c), this 
Section 8.2 and Article IX shall survive any termination of this Agreement,     
(ii) notwithstanding anything to the contrary contained in this Agreement,      
neither Parent nor Company shall be relieved or released from any liabilities or
damages arising out of its breach of any provision of this Agreement and        
(iii) Company shall pay to Parent the Termination Fee (as defined below) and    
Parent Expenses (as defined below), if applicable, in accordance with this      
Section 8.2.                                                                    

(b)  In addition to any other amounts which may be payable to Parent    
pursuant to any other paragraph of this Section 8.2, Company shall, following   
the termination of this Agreement pursuant to Section 8.1(c)(iii) or pursuant to
Section 8.1(d)(iii), (iv) or (v) promptly, but in no event later than one       
business day following written notice thereof, together with reasonable         
supporting documentation, reimburse Parent, in an aggregate amount of up to $1  
million, for all out-of-pocket expenses and fees (including reasonable fees     
payable to all counsel, accountants, financial advisors, financial printers,    
experts and consultants), whether incurred prior to, concurrently with or after 
the execution of this Agreement (up to the date of termination), in connection  
with the preparation, negotiation and execution of this Agreement and the other 
agreements contemplated hereby and the consummation of the transactions         
contemplated by this Agreement (collectively, the "PARENT EXPENSES").           

 (c)  In the event that this Agreement is terminated by Parent pursuant to
clause (d)(iii), (d)(iv) or (d)(v) of Section 8.1 or by Company pursuant to     
Section 8.1(c)(iii), Company shall pay to Parent by wire transfer of immediately
available funds to an account designated by Parent on the next business day     
following such termination an amount equal to $8 million (the "TERMINATION      
FEE").                                                                          

   (d)  If a Transaction Proposal relating to more than 15% of the outstanding
fully diluted Company Common Stock or any other class of equity securities or   
more than 15% of the consolidated assets of Company is commenced, publicly      
disclosed, publicly proposed or otherwise communicated or made known to Company 
at any time on or after the date of this Agreement and prior to the termination 
hereof, and this Agreement is terminated pursuant to clause (b)(ii) or (b)(iii) 
(but, in the case of clause (b)(iii), only if the Company Shareholders Meeting  
has not been duly held) of Section 8.1; clause (d)(i) of Section 8.1 based on a 
breach of Section 6.8 or a willful failure to perform any other obligation      
hereunder; or clause (d)(ii) of Section 8.1 based on a willful act or omission  
causing a representation or warranty not to be true, and within 12 months of the
date of such termination, Company enters into a definitive agreement with       
respect to, or consummates, any Transaction Proposal relating to more than 15%  
of the outstanding fully diluted Company Common Stock or any other class of     
equity securities or more than 15% of the consolidated assets of Company, then  
Company shall pay to Parent an amount equal to the Termination Fee, plus any    
amount paid by Parent pursuant to Section 8.2(d), concurrently with the earlier 
of the execution of such definitive agreement or the consummation of such       
Transaction Proposal.                                                           

(e)  In the event that this Agreement is terminated pursuant to clause  
(b)(i), (b)(ii), (b)(iii), (c)(i), (c)(ii), (d)(i), (d)(ii) or (d)(vi) of       
Section 8.1 and Company paid a prepayment penalty resulting from a failure to   
deliver receivables to the prefunded Securitization Trust 1999-C originated by  
Company, Parent shall pay to Company the amount of such penalty paid by Company 
(but not in excess of $3,759,560), provided, that no amount shall be payable    
pursuant to this Section 8.2(e) in the event that Company is obligated to pay   
the Termination Fee.                                                            

 (f)  If Company or Parent fails to pay any amounts due under this Section
8.2 within the time periods specified herein, such party shall pay to the other 
all costs and expenses (including legal fees and expenses) incurred by the other
party in connection with any action or proceeding (including the filing of any  
lawsuit) taken by it to collect such unpaid amounts, together with interest on  
such unpaid amounts at the publicly announced prime or base lending rate of The 
Chase Manhattan Bank from the date such amounts were required to be paid until  
the date actually received by Parent.                                           

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  8.3  AMENDMENT.  Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by action taken or authorized by their    
respective Boards of Directors, at any time before or after approval of the     
matters presented in connection with the Merger by the shareholders of Company; 
PROVIDED, HOWEVER, that after any approval of the transactions contemplated by  
this Agreement by the shareholders of Company, there may not be, without further
approval of such shareholders, any amendment of this Agreement which changes the
amount or the form of the consideration to be delivered to the holders of       
Company Common Stock hereunder other than as contemplated by this Agreement.    
This Agreement may not be amended except by an instrument in writing signed on  
behalf of each of the parties hereto.                                           

8.4  EXTENSION; WAIVER.  At any time prior to the Effective Time, the   
parties hereto, by action taken or authorized by their respective Boards of     
Directors, may, to the extent legally allowed, (a) extend the time for the      
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained      
herein or in any document delivered pursuant hereto or (c) waive compliance with
any of the agreements or conditions contained herein; PROVIDED, HOWEVER, that   
after any approval of the transactions contemplated by this Agreement by the    
shareholders of Company, there may not be, without further approval of such     
shareholders, any extension or waiver of this Agreement or any portion thereof  
which reduces the amount or changes the form of the consideration to be         
delivered to the holders of Company Common Stock hereunder other than as        
contemplated by this Agreement. Any agreement on the part of a party hereto to  
any such extension or waiver shall be valid only if set forth in a written      
instrument signed on behalf of such party, but such extension or waiver or      
failure to insist on strict compliance with an obligation, covenant, agreement  
or condition shall not operate as a waiver of, or estoppel with respect to, any 
subsequent or other failure.                                                    

ARTICLE IX
GENERAL PROVISIONS

    9.1  NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.  None of the
representations, warranties, covenants and agreements in this Agreement or in   
any instrument delivered pursuant to this Agreement (other than pursuant to the 
Support Agreement and the Receivables Agreements, which shall terminate in      
accordance with their respective terms) shall survive the Effective Time, except
for those covenants and agreements contained herein and therein which by their  
terms apply in whole or in part after the Effective Time.                       

  9.2  EXPENSES.  Subject to Section 8.2(b), all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expense; PROVIDED, HOWEVER, that the costs  
and expenses of printing and mailing the Form S-4 and the Proxy                 
Statement/Prospectus, and all filing and other fees paid to the SEC in          
connection with the Merger, shall be borne equally by Company and Parent.       

 9.3  NOTICES.  All notices and other communications hereunder shall be in
writing and shall be deemed given (i) when delivered personally to the          
recipient, (ii) when sent to the recipient by telecopy (receipt electronically  
confirmed by sender's telecopy machine) if during normal business hours of the  
recipient, otherwise on the next business day, (iii) one business day after the 
date when sent to the recipient by reputable express courier service (charges   
prepaid), or (iv) seven business days after the date when mailed to the         
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prepaid. Such notices and other communications shall be sent to the parties at  
the following addresses (or at such other address for a party as shall be       
specified by like notice):                                                      

(a) if to Parent, to:                                           

Associates First Capital Corporation              
250 Carpenter Freeway                             
Irving, TX 75062                                  
Attention: General Counsel                        
Fax: (972) 652-5798                               

with a copy to:                                   

Simpson Thacher & Bartlett                        
425 Lexington Avenue                              
New York, NY 10017                                
Attention: David J. Sorkin, Esq.                  
Fax: (212) 455-2502                               

and                                               

(b) if to Company, to:                                          

Arcadia Financial Ltd.                            
7825 Washington Avenue South                      
Minneapolis, MN 55439                             
Attention: General Counsel                        
Fax: (612) 996-0671                               

with copies to:                                   

Willkie Farr & Gallagher                          
787 Seventh Avenue                                
New York, NY 10019                                
Attention: William J. Grant, Jr., Esq.            
Fax: (212) 728-8111                               

and                                               

Dorsey & Whitney LLP                              
220 South Sixth Street                            
20th Floor                                        
Minneapolis, MN 55402-1498                        
Attention: William B. Payne, Esq.                 
Fax: (612) 340-2868                               

9.4  INTERPRETATION.  When a reference is made in this Agreement to     
Sections, Exhibits or Schedules, such reference shall be to a Section of or     
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of  
contents and headings contained in this Agreement are for reference purposes    
only and shall not affect in any way the meaning or interpretation of this      
Agreement. Whenever the words "include," "includes" or "including" are used in  
this Agreement, they shall be deemed to be followed by the words "without       
limitation". No provision of this Agreement shall be construed to require       
Company, Parent or any of their respective Subsidiaries or affiliates to take   
any action which would violate any applicable law, rule or regulation.          

9.5.  COUNTERPARTS; FACSIMILE.  This Agreement may be executed in       
counterparts, all of which shall be considered one and the same agreement and   
shall become effective when counterparts                                        

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have been signed by each of the parties and delivered to the other parties, it  
being understood that all parties need not sign the same counterpart. This      
Agreement may be executed by facsimile signatures of the parties hereto.        

9.6  ENTIRE AGREEMENT.  This Agreement (including the documents and the 
instruments referred to herein) constitutes the entire agreement and supersedes 
all prior agreements and understandings, both written and oral, among the       
parties with respect to the subject matter hereof other than the Support        
Agreement, the Confidentiality Agreement and the Receivables Agreements (each of
which is enforceable in accordance with the specific terms of the respective    
agreement).                                                                     

9.7  GOVERNING LAW.  Except to the extent that the laws of the State of 
Minnesota are mandatorily applicable to the Merger, this Agreement shall be     
governed and construed in accordance with the laws of the State of New York,    
without regard to any applicable principles of conflicts of law.                

    9.8  SEVERABILITY.  Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be         
ineffective to the extent of such invalidity or unenforceability without        
rendering invalid or unenforceable the remaining terms and provisions of this   
Agreement or affecting the validity or enforceability of any of the terms or    
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.                                          

   9.9  ASSIGNMENT; THIRD PARTY BENEFICIARIES.  Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of   
the parties hereto (whether by operation of law or otherwise) without the prior 
written consent of the other parties. Subject to the preceding sentence, this   
Agreement will be binding upon, inure to the benefit of and be enforceable by   
the parties and their respective successors and assigns. Except as otherwise    
specifically provided in Section 6.5, this Agreement (including the documents   
and instruments referred to herein) is not intended to confer upon any person   
other than the parties hereto any rights or remedies hereunder.                 

    9.10  ENFORCEMENT.  The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in    
accordance with their specific terms or were otherwise breached. It is          
accordingly agreed that the parties shall be entitled to an injunction or       
injunctions to prevent breaches of this Agreement and to enforce specifically   
the terms and provisions of this Agreement in any Federal court or New York     
State court sitting in the Borough of Manhattan, City of New York, this being in
addition to any other remedy to which they are entitled at law or in equity.    

9.11  SCHEDULES.  The disclosure of any item in a Disclosure Schedule to
this Agreement shall be deemed to be a disclosure for all purposes of this      
Agreement on any other Schedule on which it is specifically referenced or       
identified, but shall expressly not be deemed to constitute an admission by     
either party, or to otherwise imply or concede that any item is material or     
would (or would be reasonably likely to) have a Material Adverse Effect for     
purposes of this Agreement.                                                     

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    IN WITNESS WHEREOF, Parent, Sub and Company have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date  
first above written.                                                            

                                                                [Download Table]
                                               
ASSOCIATES FIRST CAPITAL CORPORATION           

By:  /s/ ROY GUTHRIE                           
     ----------------------------------------- 
     Name: Roy Guthrie                         
     Title: Senior Executive Vice President and
            Chief Financial Officer            

AFCC NEWCO, INC.                               

By:  /s/ ROY GUTHRIE                           
     ----------------------------------------- 
     Name: Roy Guthrie                         
     Title: Senior Executive Vice President and
            Chief Financial Officer            

ARCADIA FINANCIAL LTD.                         

By:  /s/ RICHARD GREENAWALT                    
     ----------------------------------------- 
     Name: Richard Greenawalt                  
     Title: Chief Executive Officer            

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                                                                       EXHIBIT A

TERMS OF RESIDUAL VALUE OBLIGATION

                                                        [Enlarge/Download Table]
                                                                                       
PAYMENT RIGHT:                      Each RVO shall represent the right to receive an   
                                    amount in cash equal to a PRO RATA share of 50% of 
                                    the Residual Cash Flow remaining after application 
                                    of the Residual Cash Flow to the AFCC Amount, RVO  
                                    Expenses and Litigation Expenses, calculated       
                                    pursuant to, and subject to, the terms below.      

PAYMENT DATES:                      Amounts allocated for payment on the RVOs as       
                                    provided below under "Application of Residual Cash 
                                    Flow", if any, will be paid on the second business 
                                    day after the Distribution Dates in April, July,   
                                    October and January to holders of record on the    
                                    immediately preceding March 1, June 1, September 1 
                                    or December 1, respectively, commencing with the   
                                    first payment date following the Effective Time    
                                    (or, if the Effective Time is after the record date
                                    in respect of such first payment date, then on the 
                                    next succeeding payment date).                     

APPLICATION OF RESIDUAL CASH FLOW:  On the business day after each Distribution Date   
                                    occurring after the Effective Time (each such day, 
                                    an "ALLOCATION DATE"), the Residual Cash Flow      
                                    received on such Distribution Date (including as a 
                                    result of the addition of Litigation Reserve       
                                    Interest) shall be allocated as follows:           

                                    1. 100% to reduce RVO Expenses incurred after the  
                                    third preceding Distribution Date and on or prior  
                                    to the second preceding Distribution Date          
                                    (provided, that, in the case of the first          
                                    allocation date occurring after the Effective Time,
                                    the allocation shall be 100% to reduce RVO Expenses
                                    incurred on or after November 12, 1999 and on or   
                                    prior to the second preceding Distribution Date),  
                                    PLUS any RVO Expenses incurred on or prior to the  
                                    third preceding Distribution Date which were not   
                                    previously reduced by a prior allocation of        
                                    Residual Cash Flow, until such amounts have been   
                                    reduced to zero, then                              

                                    2. 100% of the remaining Residual Cash Flow, if    
                                    any, to reduce Litigation Expenses incurred after  
                                    the third preceding Distribution Date and on or    
                                    prior to the second preceding Distribution Date    
                                    (provided, that, in the case of the first          
                                    allocation date occurring after the Effective Time,
                                    the allocation shall be 100% to reduce Litigation  
                                    Expenses incurred on or after November 12, 1999 and
                                    on or prior to the second preceding Distribution   
                                    Date), PLUS any Litigation Expenses incurred on or 
                                    prior to the third preceding Distribution Date     
                                    which were not previously reduced by a prior       
                                    allocation of Residual Cash Flow, until such       
                                    amounts have been reduced to zero, then            

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                                                                [Download Table]
                                                                        
                     3. 100% of remaining Residual Cash Flow, if any, to
                     reduce the AFCC Amount until the AFCC Amount has   
                     been reduced to zero, then                         

                     4. 50% of remaining Residual Cash Flow, if any, to 
                     make payments on the RVOs.                         

                     In addition to, and after giving effect to, the    
                     allocation of Residual Cash Flow described above,  
                     on the second allocation date following the final  
                     disposition of all litigation giving rise to       
                     Damages and the final determination of all legal   
                     fees and expenses related thereto, an amount equal 
                     to the excess, if any, of (i) the aggregate amount 
                     of Residual Cash Flow allocated to reduce          
                     Litigation Expenses pursuant to clause 2 above     
                     (calculated after giving effect to the allocation  
                     of Residual Cash Flow described above on such      
                     allocation date) over (ii) the aggregate amount of 
                     Damages, shall be allocated as follows:            

                     1. 100% to reduce the AFCC Amount (calculated after
                     giving effect to the allocation of Residual Cash   
                     Flow described above on such allocation date) until
                     the AFCC Amount has been reduced to zero, then     

                     2. 50% of remaining Residual Cash Flow, if any, to 
                     make payments on the RVOs.                         

                     Amounts allocated on an Allocation Date to make    
                     payments on the RVOs shall accrue interest from and
                     including such Allocation Date through and         
                     including the day prior to the payment of such     
                     amounts at 30-day LIBOR as in effect at the end of 
                     the day on such Allocation Date.                   

                     Notwithstanding the foregoing, Parent shall not be 
                     required to make payments on the RVOs on any       
                     payment date if the amount of the payment that     
                     would otherwise be made on each RVO would be less  
                     than $0.05. Any amounts not paid in accordance with
                     this paragraph shall (i) be carried over to the    
                     next payment date, (ii) continue to accrue interest
                     as provided in the immediately preceding paragraph 
                     and (iii) subject to the immediately preceding     
                     sentence, be allocated 100% to make payments on the
                     RVOs.                                              

RESIDUAL CASH FLOW:  "RESIDUAL CASH FLOW" means the cash actually       
                     released from the "spread accounts" established in 
                     connection with the securitization transactions    
                     listed on Annex 1 to this Exhibit A on or after    
                     September 30, 1999 and the cash flow (net of       
                     losses, servicing expenses and funding costs       
                     pursuant to the terms of the related securitization
                     transactions) from any receivables which were      
                     securitized as of September 30, 1999 in connection 

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                                                        [Enlarge/Download Table]
                                                                                       
                                    with such securitization transactions but are no   
                                    longer securitized for any reason; PROVIDED, that  
                                    Residual Cash Flow shall be INCREASED on each      
                                    Distribution Date after the Effective Time by the  
                                    amount of Litigation Reserve Interest, if any, for 
                                    the period ending on the day prior to such         
                                    Distribution Date and beginning on the immediately 
                                    preceding Distribution Date; and, PROVIDED,        
                                    FURTHER, that Residual Cash Flow shall be decreased
                                    on each Distribution Date after September 30, 1999 
                                    by all cash actually released from the "spread     
                                    accounts" established in connection with the       
                                    securitization transactions listed on Annex 1 to   
                                    this Exhibit A during the period ending on the day 
                                    prior to such Distribution Date and beginning on   
                                    the immediately preceding Distribution Date which  
                                    cash is contractually required to be applied other 
                                    than as provided above under "Application of       
                                    Residual Cash Flow". In calculating Residual Cash  
                                    Flow, GAP insurance will be included and           
                                    repossession expenses (other than repossession     
                                    expenses paid to an auction house) will be         
                                    excluded.                                          

                                    "LITIGATION RESERVE INTEREST", for any period,     
                                    means interest accrued during such period on the   
                                    excess, if any, of (i) the aggregate amount of     
                                    Residual Cash Flow allocated to reduce Litigation  
                                    Expenses over (ii) the aggregate amount of Damages 
                                    (such excess being calculated as of the day after  
                                    the allocation date during such period) at 30-day  
                                    LIBOR as of the end of the first day of such       
                                    period.                                            

AFCC AMOUNT; AFCC AMOUNT INTEREST:  "AFCC AMOUNT" means $512 million; PROVIDED, that   
                                    such amount shall be (i) DECREASED on the Closing  
                                    Date by the amount of the Residual Cash Flow       
                                    generated on and after September 30, 1999 and prior
                                    to the Closing Date, (ii) INCREASED on each        
                                    Distribution Date by the amount of AFCC Amount     
                                    Interest for the period ending on the day prior to 
                                    such Distribution Date and beginning on the        
                                    immediately preceding Distribution Date and (iii)  
                                    DECREASED (but without duplication of any decrease 
                                    pursuant to clause (i) above) on each allocation   
                                    date by the amount of Residual Cash Flow allocated 
                                    to the reduction of the AFCC Amount on such date as
                                    provided above under "Application of Residual Cash 
                                    Flow".                                             

                                    "AFCC AMOUNT INTEREST", for any period, means      
                                    interest accrued during such period at the rate of 
                                    1.25% per month on the AFCC Amount as of the first 
                                    day of such period (after giving effect to any     
                                    increase in the AFCC Amount on such date). AFCC    
                                    Amount Interest shall be calculated on a 30/360 day
                                    basis.                                             

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                                                                [Download Table]
                                                                                 
LISTING:                      Parent shall use reasonable efforts to arrange for 
                              the listing of the RVOs on a national securities   
                              exchange.                                          

NUMBER OF RVOS TO BE ISSUED:  In accordance with the Agreement to which this     
                              Exhibit A is attached. The RVOs shall be issued    
                              pursuant to a RVO agreement between Parent and a   
                              trustee (or person acting in a similar capacity)   
                              reasonably acceptable to Company.                  

MINIMUM PAYMENT:              None.                                              

DETERMINATIONS:               Parent's determination of all amounts and other    
                              matters shall be final and conclusive in the       
                              absence of manifest error; PROVIDED, that Parent   
                              shall engage its independent auditors to review the
                              calculations and determinations made by Parent to  
                              the same extent as Parent engages its independent  
                              auditors to perform a similar function with respect
                              to securitization transactions effected by or for  
                              the benefit of Parent and its Subsidiaries.        

                              All interest amounts other than AFCC Amount        
                              Interest shall be calculated on the basis of the   
                              actual number of days elapsed and a 360-day year.  

SERVICING:                    Parent shall, or shall cause its affiliates to,    
                              service or arrange for the servicing of the        
                              receivables giving rise to Residual Cash Flow in   
                              accordance with customary business practices and   
                              Parent's applicable policies and procedures and, if
                              Parent or any of its Subsidiaries is then          
                              servicing, or arranging for the servicing of,      
                              indirectly originated automobile loans, consistent 
                              with such servicing.                               

CLEAN-UP CALL:                Parent shall have an option to purchase for fair   
                              value (as determined in good faith by Parent) all  
                              outstanding RVOs at any time when the amount of the
                              receivables remaining in the securitization trusts 
                              listed in Annex 1 to this Exhibit A is less than or
                              equal to 5% of the amount of the receivables       
                              remaining in the securitization Trusts listed in   
                              Annex 1 to this Exhibit A as of the Closing Date.  

DEFINITIONS:                                                                     

TERMS NOT DEFINED:            Capitalized terms used in this Exhibit A without   
                              definition shall have the definitions assigned     
                              thereto in the Agreement to which this Exhibit A is
                              attached.                                          

DISTRIBUTION DATE:            Each "distribution date" in connection with the    
                              securitization transactions listed on Annex 1 to   
                              this Exhibit A.                                    

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                                                        [Enlarge/Download Table]
                                                                                              
RVO EXPENSES:                              "RVO EXPENSES" means the sum of (i) the out-of-    
                                           pocket fees and expenses paid or incurred directly 
                                           or indirectly by Parent relating to the issuance   
                                           and administration of the RVOs (including, without 
                                           limitation, fees and expenses of printing          
                                           certificates representing the RVOs; fees and       
                                           expenses of the transfer agent and                 
                                           registrar/trustee for the RVOs; and related legal  
                                           expenses), but excluding accounting fees and       
                                           expenses, audit fees, if any, and the fees and     
                                           expenses relating to the listing of the RVOs on a  
                                           national securities exchange and (ii) the          
                                           reasonable actual or reasonably imputed cost to    
                                           Parent of providing alternative credit support in  
                                           connection with the early release of cash from the 
                                           "spread accounts" established in connection with   
                                           the securitization transactions listed on Annex 1  
                                           to this Exhibit A; PROVIDED, that the costs        
                                           referenced in this clause (ii) shall be included as
                                           RVO Expenses as such costs are incurred (or deemed 
                                           to be incurred if imputed) or, at Parent's         
                                           election, in a lump sum calculated on a present    
                                           value basis (discounted at the rate of 1.25% per   
                                           month) at the time of the related release of cash. 

LITIGATION EXPENSES; LITIGATION INTEREST:  "LITIGATION EXPENSES" means the sum of (i)         
                                           $10,000,000 and (ii) the, amount of all damages,   
                                           judgments, settlements, defense costs and other    
                                           expenses paid or incurred by Company, Parent or any
                                           of their Affiliates after the date of the Agreement
                                           to which this Exhibit A is attached in connection  
                                           with any litigation brought by or on behalf of     
                                           shareholders of Company or by or in the right of   
                                           Company, net of insurance proceeds, if any (the    
                                           amount referred to in this clause (ii) being       
                                           referred to herein as, "DAMAGES"); PROVIDED, that  
                                           the aggregate amount of the Damages shall be deemed
                                           to be INCREASED on each Distribution Date by the   
                                           amount of Litigation Interest for the period ending
                                           on the day prior to such Distribution Date and     
                                           beginning on the immediately preceding Distribution
                                           Date.                                              

                                           "LITIGATION INTEREST", for any period, means       
                                           interest accrued during such period on the amount  
                                           of Damages as of the first day of such period      
                                           (after giving effect to any increase in Damages on 
                                           such date) at 30-day LIBOR as of the end of the    
                                           first day of such period.                          

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                                                                [Download Table]
                                                                 
ANNEX 1                                                          

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                     

Olympic Automobile Receivables Trust, 1996-A                     

Olympic Automobile Receivables Trust, 1996-B                     

Olympic Automobile Receivables Trust, 1996-C                     

Olympic Automobile Receivables Trust, 1996-D                     

Olympic Automobile Receivables Trust, 1997-A                     

Arcadia Automobile Receivables Trust, 1997-B                     

Arcadia Automobile Receivables Trust, 1997-C                     

Arcadia Automobile Receivables Trust, 1997-D                     

Arcadia Automobile Receivables Trust, 1998-A                     

Arcadia Automobile Receivables Trust, 1998-B                     

Arcadia Automobile Receivables Trust, 1998-C                     

Arcadia Automobile Receivables Trust, 1998-D                     

Arcadia Automobile Receivables Trust, 1998-E                     

Arcadia Automobile Receivables Trust, 1999-A                     

Arcadia Automobile Receivables Trust, 1999-B                     

Arcadia Automobile Receivables Trust, 1999-C                     

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APPENDIX B

FORM OF RESIDUAL VALUE OBLIGATIONS AGREEMENT

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                                                                      APPENDIX B
                                    FORM OF RESIDUAL VALUE OBLIGATIONS AGREEMENT
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

ASSOCIATES FIRST CAPITAL CORPORATION

AND 

THE CHASE MANHATTAN BANK, 

AS TRUSTEE

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

RESIDUAL VALUE OBLIGATIONS AGREEMENT

DATED AS OF [            ], 2000

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

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

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TABLE OF CONTENTS 

                                                                [Download Table]

                                                                PAGE  
                                                              --------
                                                                      
ARTICLE I                                                             
Definitions and Incorporation by Reference..................      1   
  SECTION 1.1. Definitions..................................      1   
  SECTION 1.2. Other Definitions............................      3   
  SECTION 1.3. Incorporation by Reference of Trust Indenture          
    Act.....................................................      3   
  SECTION 1.4. Rules of Construction........................      4   

ARTICLE II                                                            
The RVOs....................................................      4   
  SECTION 2.1. Form, Dating.................................      5   
  SECTION 2.2. Execution and Authentication.................      6   
  SECTION 2.3. Registrar and Paying Agent...................      6   
  SECTION 2.4. Paying Agent To Hold Money in Trust..........      6   
  SECTION 2.5. Lists of Holders.............................      6   
  SECTION 2.6. Transfer and Exchange........................      6   
  SECTION 2.7. Mutilated, Destroyed, Lost or Stolen RVOs....      7   
  SECTION 2.8. Outstanding RVOs.............................      8   
  SECTION 2.9. Cancellation.................................      8   
  SECTION 2.10. RVO Payments................................      8   
  SECTION 2.11. CUSIP Numbers...............................      9   

ARTICLE III                                                           
Covenants...................................................      9   
  SECTION 3.1. Payment of RVOs..............................      9   
  SECTION 3.2. Maintenance of Office or Agency..............      9   
  SECTION 3.3. Corporate Existence..........................      9   
  SECTION 3.4. Compliance Certificate.......................     10   
  SECTION 3.5. Further Instruments and Acts.................     10   
  SECTION 3.6. Statement by Officers as to Default..........     10   
  SECTION 3.7. Servicing of Receivables.....................     10   
  SECTION 3.8. Amendment to Designated Securitization                 
    Transactions............................................     10   
  SECTION 3.9. Use of Program Spread Account and Tag                  
    Accounts................................................     10   
  SECTION 3.10. Disclosure..................................     11   

ARTICLE IV                                                            
Successor Company...........................................     11   
  SECTION 4.1. Merger and Consolidation.....................     11   
  SECTION 4.2. Assignment...................................     11   

ARTICLE V                                                             
Redemption of RVOs..........................................     12   
  SECTION 5.1. Optional Redemption..........................     12   
  SECTION 5.2. Election to Redeem...........................     12   
  SECTION 5.3. Notice of Redemption.........................     12   
  SECTION 5.4. Deposit of Redemption Price..................     13   
  SECTION 5.5. RVOs Payable on Redemption Date..............     13   

ARTICLE VI                                                            
Defaults and Remedies.......................................     13   
  SECTION 6.1. Events of Default............................     13   
  SECTION 6.2. Other Remedies...............................     14   
  SECTION 6.3. Waiver of Past Defaults......................     14   
  SECTION 6.4. Control by Majority..........................     14   
  SECTION 6.5. Limitation on Suits..........................     14   

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                                                                [Download Table]

                                                                PAGE  
                                                              --------
                                                                      
  SECTION 6.6. Rights of Holders to Receive Payment.........     15   
  SECTION 6.7. Collection Suit by Trustee...................     15   
  SECTION 6.8. Trustee May File Proofs of Claim.............     15   
  SECTION 6.9. Priorities...................................     15   
  SECTION 6.10. Undertaking for Costs.......................     15   

ARTICLE VII                                                           
Trustee.....................................................     16   
  SECTION 7.1. Duties of Trustee............................     16   
  SECTION 7.2. Rights of Trustee............................     16   
  SECTION 7.3. Individual Rights of Trustee.................     17   
  SECTION 7.4. Trustee's Disclaimer.........................     17   
  SECTION 7.5. Notice of Defaults...........................     17   
  SECTION 7.6. Reports by Trustee to Holders................     17   
  SECTION 7.7. Compensation and Indemnity...................     17   
  SECTION 7.8. Replacement of Trustee.......................     18   
  SECTION 7.9. Successor Trustee by Merger..................     19   
  SECTION 7.10. Eligibility; Disqualification...............     19   
  SECTION 7.11. Trustee's Application for Instruction from            
    the Company.............................................     19   

ARTICLE VIII                                                          
Amendments..................................................     19   
  SECTION 8.1. Without Consent of Holders...................     19   
  SECTION 8.2. With Consent of Holders......................     20   
  SECTION 8.3. Compliance with Trust Indenture Act..........     20   
  SECTION 8.4. Revocation and Effect of Consents and                  
    Waivers.................................................     20   
  SECTION 8.5. Notation on or Exchange of RVOs..............     21   
  SECTION 8.6. Trustee To Sign Amendments...................     21   
  SECTION 8.7. Payment for Consents.........................     21   

ARTICLE IX                                                            
Miscellaneous...............................................     21   
  SECTION 9.1. Trust Indenture Act Controls.................     21   
  SECTION 9.2. Notices......................................     21   
  SECTION 9.3. Communication by Holders with other                    
    Holders.................................................     22   
  SECTION 9.4. Certificate and Opinion as to Conditions               
    Precedent...............................................     22   
  SECTION 9.5. Statements Required in Certificate or                  
    Opinion.................................................     22   
  SECTION 9.6. When RVOs Disregarded........................     22   
  SECTION 9.7. Rules by Trustee, Paying Agent and                     
    Registrar...............................................     23   
  SECTION 9.8. Legal Holidays...............................     23   
  SECTION 9.9. GOVERNING LAW................................     23   
  SECTION 9.10. No Recourse Against Others..................     23   
  SECTION 9.11. Successors..................................     23   
  SECTION 9.12. Multiple Originals..........................     23   
  SECTION 9.13. Variable Provisions.........................     23   
  SECTION 9.14. Qualification of Agreement..................     23   
  SECTION 9.15 Security for Purposes of Uniform Commercial            
    Code....................................................     23   
  SECTION 9.16. Table of Contents; Headings.................     23   

EXHIBIT A  Form of Residual Value Obligation                          
ANNEX I    Designated Securitization Transactions                     

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CROSS-REFERENCE TABLE 

                                                                [Download Table]

                                                              INDENTURE 
TIA SECTION                                                    SECTION  
-----------                                                   ----------
                                                                        
310(a)(1)...................................................  7.10      
   (a)(2)...................................................  7.10      
   (a)(3)...................................................  N.A.      
   (a)(4)...................................................  N.A.      
   (b)......................................................  7.8;  7.10
   (c)......................................................  N.A.      
311(a)......................................................  7.11      
   (b)......................................................  7.11      
   (c)......................................................  N.A.      
312(a)......................................................  2.5       
   (b)......................................................  9.3       
   (c)......................................................  9.3       
313(a)......................................................  7.6       
   (b)(1)...................................................  N.A.      
   (b)(2)...................................................  7.6       
   (c)......................................................  7.6       
   (d)......................................................  7.6       
314(a)......................................................  3.2; 9.2  
   (b)......................................................  N.A.      
   (c)(1)...................................................  9.4       
   (c)(2)...................................................  9.4       
   (c)(3)...................................................  N.A.      
   (d)......................................................  N.A.      
   (e)......................................................  9.5       
315(a)......................................................  7.1       
   (b)......................................................  7.5; 9.2  
   (c)......................................................  7.1       
   (d)......................................................  7.1       
   (e)......................................................  6.10      
316(a)(last sentence).......................................  9.6       
   (a)(1)(A)................................................  6.4       
   (a)(1)(B)................................................  6.3       
   (a)(2)...................................................  N.A.      
   (b)......................................................  6.6       
317(a)(1)...................................................  6.7       
   (a)(2)...................................................  6.8       
   (b)......................................................  2.4       
318(a)......................................................  9.1       

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

N.A. means Not Applicable.                                                      

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be    
part of this Agreement.                                                         

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RESIDUAL VALUE OBLIGATIONS AGREEMENT, dated as of [            ], 2000, between 
ASSOCIATES FIRST CAPITAL CORPORATION, a Delaware corporation (the "COMPANY"),   
and The Chase Manhattan Bank, a New York banking corporation (the "TRUSTEE"), as
Trustee.                                                                        

  The Company has duly authorized the creation of an issue of residual value
obligations (hereinafter called "RVOS"), of substantially the tenor and amount  
hereinafter set forth (including in the form of RVO attached hereto as          
Exhibit A), and to provide therefor the Company has duly authorized the         
execution and delivery of this Agreement.                                       

    Pursuant to the Agreement and Plan of Merger, by and among the Company, AFCC
Newco, Inc. and Arcadia Financial Ltd., dated as of November 12, 1999 (the      
"MERGER AGREEMENT"), the Company proposes to issue and deliver RVOs to holders  
of common stock of Arcadia Financial Ltd. as part of the Merger Consideration   
(as defined in the Merger Agreement) payable pursuant to the terms and          
conditions of the Merger Agreement.                                             

Each party hereto agrees as follows for the benefit of the other party  
hereto and for the equal and ratable benefit of the Holders (as defined below). 

ARTICLE I 
DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.1.  DEFINITIONS.                                              

    "Accrued RVO Payment Amount" shall have the meaning specified in the form of
RVO attached as Exhibit A.                                                      

"Affiliate" of any specified Person means any other Person, directly or 
indirectly, controlling or controlled by or under direct or indirect common     
control with such specified Person. For the purposes of this definition,        
"control" when used with respect to any Person means the power to direct the    
management and policies of such Person, directly or indirectly, whether through 
the ownership of voting securities, by contract or otherwise; and the terms     
"controlling" and "controlled" have meanings correlative to the foregoing.      

"Agreement" means this Agreement as amended or supplemented from time to
time.                                                                           

    "Board of Directors" means, as to any Person, the board of directors of such
Person or any duly authorized committee thereof.                                

"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banking institutions are authorized or required by law to close
in New York City; PROVIDED, that with respect to the determinations in          
connection with the definition of One-Month LIBOR, such day is also a day for   
trading by and between banks in U.S. dollar deposits in the interbank eurodollar
market.                                                                         

"Closing Date" means the date on which the closing takes place under the
Merger Agreement.                                                               

"Code" means the Internal Revenue Code of 1986, as amended.             

"Company" means Associates First Capital Corporation or a successor.    

 "Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.                                             

    "Designated Securitization Transactions" shall have the meaning specified in
the form of RVO attached as Exhibit A.                                          

   "DTC" means The Depository Trust Company, its nominees and their respective
successors and assigns, or such other depository institution hereinafter        
appointed by the Company.                                                       

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"Exchange Act" means the Securities Exchange Act of 1934, as amended.   

"Excess Litigation Reserve" shall have the meaning specified in         
Section 2(a)(ii) of the form of RVO attached as Exhibit A.                      

   "Fiscal Year" means the fiscal year of the Company ending on December 31 of
each year.                                                                      

  "GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the date of this Agreement, including those set   
forth in the opinions and pronouncements of the Accounting Principles Board of  
the American Institute of Certified Public Accountants and statements and       
pronouncements of the Financial Accounting Standards Board or in such other     
statements by such other entity as approved by a significant segment of the     
accounting profession.                                                          

"Holder" means the Person in whose name a RVO is registered in the RVO  
Register.                                                                       

"Legal Holiday" has the meaning ascribed to it in SECTION 9.8.          

   "Merger Agreement" shall have the meaning specified in the preamble hereto.

    "Officer" means the Chairman of the Board, the President, any Vice President
(however designated), the Treasurer or the Secretary of the Company.            

    "Officers' Certificate" means a certificate signed by the Chairman or a Vice
Chairman of the Board of Directors, the President or a Vice President (however  
designated), and by the Treasurer, an Assistant Treasurer, the Comptroller, an  
Assistant Comptroller, the Secretary or an Assistant Secretary, of the Company. 

 "Opinion of Counsel" means an opinion in writing signed by legal counsel,
who may be an employee of or counsel to the Company.                            

   "Optional Redemption Price" shall have the meaning specified in the form of
RVO attached as Exhibit A.                                                      

   "Payment Date" shall have the meaning specified in the form of RVO attached
as Exhibit A.                                                                   

"Person" means any individual, corporation, partnership, joint venture, 
association, joint-stock company, trust, unincorporated organization, limited   
liability company, government, agency or political subdivision thereof or other 
entity.                                                                         

   "Redemption Date" means, with respect to the redemption of RVOs pursuant to
ARTICLE V, the date of redemption with respect thereto, which date must be a    
Payment Date.                                                                   

"Residual Cash Flow" shall have the meaning specified in the form of RVO
attached as Exhibit A.                                                          

"RVO" shall have the meaning specified in the preamble hereto.          

   "RVO Payments" shall have the meaning specified in the form of RVO attached
as Exhibit A.                                                                   

"RVO Register" means the register of RVOs, maintained by the Trustee,   
pursuant to SECTION 2.3.                                                        

"SEC" means the Securities and Exchange Commission.                     

"Securities Act" means the Securities Act of 1933, as amended.          

"Securitization Distribution Date" shall mean the 15(th) day of each    
calendar month, or if such 15(th) day is not a Business Day, the next succeeding
Business Day.                                                                   

   "Subsidiary" of any Person means any corporation, association, partnership,
joint venture, limited liability company or other business entity of which more 
than 50% of the total voting power of shares of capital stock or other interests
(including partnership and joint venture interests) entitled (without regard to 
the occurrence of any contingency) to vote in the election of directors,        
managers or trustees                                                            

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thereof is at the time owned or controlled, directly or indirectly, by (1) such 
Person, (2) such Person and one or more Subsidiaries of such Person or (3) one  
or more Subsidiaries of such Person. Unless otherwise specified herein, each    
reference to a Subsidiary will refer to a Subsidiary of the Company.            

"TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939 (15
U.S.C. SectionSection77aaa-77bbbb), as amended and as in effect on the date of  
this Agreement.                                                                 

   "Trustee" means the party named as such in this Agreement until a successor
replaces it and, thereafter, means the successor.                               

"Trust Officer" shall mean, when used with respect to the Trustee, any  
officer within the corporate trust department of the Trustee, including any vice
president, assistant vice president, assistant secretary, assistant treasurer,  
trust officer or any other officer of the Trustee who customarily performs      
functions similar to those performed by the Persons who at the time shall be    
such officers, respectively, or to whom any corporate trust matter is referred  
because of such person's knowledge of and familiarity with the particular       
subject and who shall have direct responsibility for the administration of this 
Agreement.                                                                      

SECTION 1.2.  OTHER DEFINITIONS.                                        

                                                                [Download Table]

TERM                                                          DEFINED IN
----                                                          ----------
                                                                        
"Agent Member"..............................................  Section2.1
"Assignee Company"..........................................  Section4.2
"Authenticating Agent"......................................  Section2.2
"Bankruptcy Custodian"......................................  Section6.1
"Bankruptcy Law"............................................  Section6.1
"Company Order".............................................  Section2.2
"Corporate Trust Office"....................................  Section3.2
"Event of Default"..........................................  Section6.1
"Global RVOs"...............................................  Section2.1
"Paying Agent"..............................................  Section2.3
"Registrar".................................................  Section2.3
"Spread Account Agreement"..................................  Exhibit A 
"Successor Company".........................................  Section4.1

SECTION 1.3.  INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.  This  
Agreement is subject to the mandatory provisions of the TIA which are           
incorporated by reference in and made a part of this Agreement. The following   
TIA terms have the following meanings:                                          

"Commission" means the SEC.                                             

"indenture securities" means the RVOs.                                  

"indenture security holder" means a Holder.                             

"indenture to be qualified" means this Agreement.                       

"indenture trustee" or "institutional trustee" means the Trustee.       

"obligor" on the indenture securities means the Company and any other   
obligor on the indenture securities.                                            

All other TIA terms used in this Agreement that are defined by the TIA, 
defined in the TIA by reference to another statute or defined by SEC rule have  
the meanings assigned to them by such definitions.                              

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    SECTION 1.4.  RULES OF CONSTRUCTION.  Unless the context otherwise requires:

(1) a term has the meaning assigned to it;                              

   (2) an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP;                                                        

(3) "including" means including without limitation; and                 

    (4) words in the singular include the plural and words in the plural include
the singular.                                                                   

ARTICLE II

THE RVOS

SECTION 2.1.  FORM, DATING AND TERMS.  (a) The RVOs shall be issued     
substantially in the form of EXHIBIT A (which is hereby incorporated by         
reference and made a part of this Agreement), including appropriate legends as  
set forth in SECTION 2.1(C).                                                    

Payments on the RVOs shall be payable, at the option of the Company, by 
(i) check mailed to addresses of the Persons entitled thereto as such addresses 
shall appear on the RVO Register or (ii) wire transfer to an account located in 
the United States maintained by the payee. Payments in respect of RVOs          
represented by a global RVO certificate registered in the name of DTC (the      
"GLOBAL RVOS") will be made by wire transfer of immediately available funds to  
the accounts specified by DTC.                                                  

    The RVO certificates may have notations, legends or endorsements required by
law, stock exchange rule or usage, in addition to those set forth on EXHIBIT A  
and in SECTION 2.1(C). The Company and the Trustee shall approve the forms of   
the RVO certificates and any notation, endorsement or legend on them. Each RVO  
certificate shall be dated the date of its authentication. The terms of the RVOs
set forth in EXHIBIT A are part of the terms of this Agreement and, to the      
extent applicable, the Company and the Trustee, by their execution and delivery 
of this Agreement, expressly agree to be bound by such terms.                   

   (b) DENOMINATIONS. The RVOs shall be issuable only in fully registered form
and only in denominations of a whole RVO and any integral multiple thereof.     

   (c) DTC LEGEND. If requested or required by or on behalf of DTC, the Global
RVOs shall bear the following legend on the face thereof:                       

    "UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW 
   YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
   PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
    OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS    
  REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL 
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST    
HEREIN."                                                                

(d) BOOK-ENTRY PROVISIONS. (i) This SECTION 2.1(D) shall apply only to  
Global RVOs deposited with the Trustee, as custodian for DTC.                   

    (ii) Each Global RVO initially shall (x) be registered in the name of DTC or
the nominee of DTC, (y) be delivered to the Trustee as custodian for DTC and    
(z) bear the legend set forth in SECTION 2.1(C).                                

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 (iii) Members of, or participants in, DTC ("AGENT MEMBERS") shall have no
rights under this Agreement with respect to any Global RVO held on their behalf 
by DTC or by the Trustee as the custodian of DTC or under such Global RVO, and  
DTC may be treated by the Company, the Trustee and any agent of the Company or  
the Trustee as the absolute owner of such Global RVO for all purposes           
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the     
Company, the Trustee or any agent of the Company or the Trustee from giving     
effect to any written certification, proxy or other authorization furnished by  
DTC or impair, as between DTC and its Agent Members, the operation of customary 
practices of DTC governing the exercise of the rights of a Holder of a          
beneficial interest in any Global RVO.                                          

  (iv) The registered Holder of a Global RVO may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold         
interests through Agent Members, to take any action which a Holder is entitled  
to take under this Agreement or the RVOs.                                       

   (e) DEFINITIVE RVOS. In connection with the exchange of a portion of an RVO
in certificated form (a "DEFINITIVE RVO") for a beneficial interest in a Global 
RVO, the Trustee shall cancel such Definitive RVO, and the Company shall        
execute, and the Trustee shall authenticate and deliver, to the transferring    
Holder a new Definitive RVO representing the amount of RVOs not so transferred. 

SECTION 2.2.  EXECUTION AND AUTHENTICATION.  One Officer shall sign the 
certificates representing the RVOs for the Company by manual or facsimile       
signature. If an Officer whose signature is on a RVO certificate no longer holds
that office at the time the Trustee authenticates the RVO certificate, the RVO  
certificate shall be valid nevertheless.                                        

 A RVO certificate shall not be valid until an authorized signatory of the
Trustee manually authenticates the RVO certificate. The signature of the Trustee
on a RVO certificate shall be conclusive evidence that such RVO has been duly   
and validly authenticated and issued under this Agreement.                      

   On the Closing Date and on each date thereafter as necessary, in connection
with satisfying the rights of persons holding Dissenting Shares (as defined in  
the Merger Agreement), the Trustee shall authenticate and make available for    
delivery RVOs for original issue, upon a written order of the Company signed by 
two Officers or by an Officer and either an Assistant Treasurer or an Assistant 
Secretary of the Company (the "COMPANY ORDER"). Such Company Order shall specify
the number of RVOs to be authenticated and the date on which the original issue 
of RVOs is to be authenticated. The aggregate number of RVOs which may be       
authenticated and delivered under this Agreement is limited to the number of    
RVOs specified in such Company Order or Orders, except for RVOs authenticated   
and delivered upon registration or transfer of, or in exchange for, or in lieu  
of, other RVOs pursuant to SECTION 2.1, SECTION 2.2, SECTION 2.6, SECTION 2.7 OR
SECTION 8.5. Notwithstanding anything to the contrary contained in this         
Agreement, all RVOs issued under this Agreement shall vote and consent together 
on all matters as one class.                                                    

The Trustee may appoint an agent (the "AUTHENTICATING AGENT") reasonably
acceptable to the Company to authenticate the RVOs. Unless limited by the terms 
of such appointment, any such Authenticating Agent may authenticate RVOs        
whenever the Trustee may do so. Each reference in this Agreement to             
authentication by the Trustee includes authentication by the Authenticating     
Agent.                                                                          

    In case the Company, pursuant to ARTICLE IV, shall be consolidated or merged
with or into any other Person or shall convey, transfer, lease or otherwise     
dispose of its properties and assets substantially as an entirety to any Person 
or shall assign its rights hereunder or under the RVOs to any Person, and the   
successor Person resulting from such consolidation, or surviving such merger, or
into which the Company shall have been merged, or the Person which shall have   
received a conveyance, transfer, lease or other disposition as aforesaid or the 
Assignee Company, as the case may be, shall have executed a supplement hereto   
with the Trustee pursuant to ARTICLE IV, any of the RVOs authenticated or       
delivered prior to such consolidation, merger, conveyance, transfer, lease or   
other                                                                           

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disposition may, from time to time, at the request of the successor Person      
(including an Assignee Company), be exchanged for other RVOs executed in the    
name of the successor Person with such changes in phraseology and form as may be
appropriate, but otherwise in substance of like tenor as the RVOs surrendered   
for such exchange and representing a like amount of RVOs; and the Trustee, upon 
Company Order of the successor Person, shall authenticate and deliver RVOs as   
specified in such order for the purpose of such exchange. If RVOs shall at any  
time be authenticated and delivered in any new name of a successor Person       
pursuant to this SECTION 2.2 in exchange or substitution for or upon            
registration of transfer of any RVOs, such successor Person, at the option of   
the Holders but without expense to them, shall provide for the exchange of all  
RVOs at the time outstanding for RVOs authenticated and delivered in such new   
name.                                                                           

SECTION 2.3.  REGISTRAR AND PAYING AGENT.  The Company shall maintain an
office or agency where RVOs may be presented for registration of transfer or for
exchange (the "REGISTRAR") and an office or agency where RVOs may be presented  
for payment (the "PAYING AGENT"). The Company shall cause each of the Registrar 
and the Paying Agent to maintain an office or agency in the Borough of          
Manhattan, The City of New York. The Registrar shall keep a register of the RVOs
and of their transfer and exchange (the "RVO REGISTER"). The Company may have   
one or more co-registrars and one or more additional paying agents. The term    
"Paying Agent" includes any additional paying agent.                            

The Company shall enter into an appropriate agency agreement with any   
Registrar, Paying Agent or co-registrar not a party to this Agreement, which    
shall incorporate the terms of the TIA. The agreement shall implement the       
provisions of this Agreement that relate to such agent. The Company shall notify
the Trustee of the name and address of each such agent. If the Company fails to 
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to SECTION 7.7. The      
Company or any of its Subsidiaries may act as Paying Agent, Registrar,          
co-registrar or transfer agent.                                                 

    The Company initially appoints the Trustee as Registrar and Paying Agent for
the RVOs.                                                                       

  SECTION 2.4.  PAYING AGENT TO HOLD MONEY IN TRUST.  By no later than 10:00
a.m (New York City time) on the date on which any payment on any RVO is due and 
payable, the Company shall deposit with the Paying Agent a sum sufficient to    
make such payment when due. The Company shall require each Paying Agent (other  
than the Trustee) to agree in writing that such Paying Agent shall hold in trust
for the benefit of Holders of RVOs or the Trustee all money held by such Paying 
Agent for payments on the RVOs and shall notify the Trustee in writing of any   
default by the Company in making any such payment. If the Company or a          
Subsidiary acts as Paying Agent, it shall segregate the money held by it as     
Paying Agent and hold it as a separate trust fund. The Company at any time may  
require a Paying Agent (if other than the Trustee) to pay all money held by it  
to the Trustee and to account for any funds disbursed by such Paying Agent. Upon
complying with this Section, the Paying Agent (if other than the Trustee, the   
Company or a Subsidiary) shall have no further liability for the money delivered
to the Trustee. Upon any bankruptcy, reorganization or similar proceeding with  
respect to the Company, the Trustee shall serve as Paying Agent for the RVOs.   

   SECTION 2.5.  LISTS OF HOLDERS.  The Trustee shall preserve in as current a
form as is reasonably practicable the most recent list available to it of the   
names and addresses of Holders. If the Trustee is not the Registrar, or to the  
extent otherwise required under the TIA, the Company shall furnish to the       
Trustee, in writing at least seven Business Days before each Payment Date and at
such other times as the Trustee may request in writing, a list in such form and 
as of such date as the Trustee may reasonably require of the names and addresses
of Holders.                                                                     

SECTION 2.6.  TRANSFER AND EXCHANGE.                                    

(a) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF RVOS.        

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 (i) When RVOs are presented to the Registrar with a request to register a
transfer or to exchange them for RVOs representing an equal number of RVOs in   
other denominations, the Registrar, subject to the other terms and conditions of
this ARTICLE II, shall register the transfer or make the exchange if its or the 
Company's reasonable requirements for such transfer or exchange are met. To     
permit registrations of transfers and exchanges, the Company shall, subject to  
the other terms and conditions of this ARTICLE II, execute and the Trustee shall
authenticate RVOs at the Registrar's or co-registrar's request.                 

(ii) No service charge shall be made to a Holder for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, assessments or similar governmental charge payable in   
connection therewith (other than any such transfer taxes, assessments or similar
governmental charges payable upon exchange or transfer pursuant to              
SECTION 8.5).                                                                   

    (iii) Prior to the due presentation for registration of transfer of any RVO,
the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar   
may deem and treat the person in whose name a RVO is registered as the absolute 
owner of such RVO for the purpose of receiving payments on such RVO and for all 
other purposes whatsoever and none of the Company, the Trustee, the Paying      
Agent, the Registrar or any co-registrar shall be affected by notice to the     
contrary.                                                                       

   (iv) All RVOs issued upon any transfer or exchange pursuant to the terms of
this Agreement shall evidence the same obligations and shall be entitled to the 
same benefits under this Agreement as the RVOs surrendered upon such transfer or
exchange.                                                                       

(b) NO OBLIGATION OF THE TRUSTEE. (i) The Trustee shall have no         
responsibility or obligation to any beneficial owner of a Global RVO, any member
of, or any participant in, DTC or any other Person with respect to the accuracy 
of the records of DTC or its nominee or of any participant or member thereof,   
with respect to any ownership interest in the RVOs or with respect to the       
delivery to any participant, member, beneficial owner or other Person (other    
than DTC) of any notice (including any notice of redemption) or the payment of  
any amount or delivery of any RVOs (or other security or property) under or with
respect to such RVOs. All notices and communications to be given to the Holders 
and all payments to be made to Holders in respect of the RVOs shall be given or 
made only to or upon the order of the registered Holders (which shall be DTC or 
its nominee in the case of a Global RVO). The rights of beneficial owners in any
Global RVO shall be exercised only through DTC subject to the applicable rules  
and procedures of DTC. The Trustee may rely and shall be fully protected in     
relying upon information furnished by DTC with respect to its members,          
participants and any beneficial owners.                                         

  (ii) The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this   
Agreement or under applicable law with respect to any transfer of any interest  
in any RVO (including any transfers between or among DTC participants, members  
or beneficial owners in any Global RVO) other than to require delivery of such  
certificates and other documentation or evidence as are expressly required by,  
and to do so if and when expressly required by, the terms of this Agreement, and
to examine the same to determine substantial compliance as to form with the     
express requirements hereof.                                                    

    SECTION 2.7.  MUTILATED, DESTROYED, LOST OR STOLEN RVOS.  If a mutilated RVO
is surrendered to the Registrar or if the Holder of a RVO claims that the RVO   
has been lost, destroyed or wrongfully taken, the Company shall, if the         
requirements of Section 8-405 of the Uniform Commercial Code are met, issue and 
the Trustee shall authenticate a replacement RVO so long as the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or 
the Company, such Holder shall furnish an indemnity bond sufficient in the      
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a RVO is replaced, and, in the absence of notice to the Company or
the Trustee that such RVO has been acquired by a bona fide purchaser, the       
Company shall execute and upon                                                  

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Company Order the Trustee shall authenticate and make available for delivery, in
exchange for any such mutilated RVO or in lieu of any such destroyed, lost or   
stolen RVO, a new RVO of like tenor and amount of RVOs, bearing a number not    
contemporaneously outstanding.                                                  

  In case any such mutilated, destroyed, lost or stolen RVO has become or is
about to become due and payable pursuant to ARTICLE V, the Company in its       
discretion may, instead of issuing a new RVO, pay such RVO.                     

    Upon the issuance of any new RVO under this Section, the Company may require
the payment of a sum sufficient to cover any tax or other governmental charge   
that may be imposed in relation thereto and any other expenses (including the   
fees and expenses of the Trustee) in connection therewith.                      

Every new RVO issued pursuant to this Section in lieu of any mutilated, 
destroyed, lost or stolen RVO shall constitute an original additional           
contractual obligation of the Company and any other obligor upon the RVOs,      
whether or not the mutilated, destroyed, lost or stolen RVO shall be at any time
enforceable by anyone, and shall be entitled to all benefits of this Agreement  
equally and proportionately with any and all other RVOs duly issued hereunder.  

The provisions of this Section are exclusive and shall preclude (to the 
extent lawful) all other rights and remedies with respect to the replacement or 
payment of mutilated, destroyed, lost or stolen RVOs.                           

  SECTION 2.8.  OUTSTANDING RVOS.  RVOs outstanding at any time are all RVOs
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation and those described in this Section as not outstanding. A   
RVO shall not cease to be outstanding in the event the Company or a Subsidiary  
of the Company holds the RVO, PROVIDED, HOWEVER, that (i) for purposes of       
determining which are outstanding for consent or voting purposes hereunder, RVOs
shall cease to be outstanding in the event the Company or an Affiliate of the   
Company holds the RVO and (ii) in determining whether the Trustee shall be      
protected in making a determination whether the Holders of the requisite number 
of outstanding RVOs are present at a meeting of Holders of RVOs for quorum      
purposes or have consented to or voted in favor of any request, demand,         
authorization, direction, notice, consent, waiver, amendment or modification    
hereunder, or relying upon any such quorum, consent or vote, only RVOs which a  
Trust Officer of the Trustee actually knows to be held by the Company or an     
Affiliate of the Company shall not be considered outstanding.                   

 If a RVO is replaced pursuant to SECTION 2.7, it ceases to be outstanding
unless the Trustee and the Company receive proof satisfactory to them that the  
replaced RVO is held by a bona fide purchaser.                                  

  If the Paying Agent segregates and holds in trust, in accordance with this
Agreement on a redemption date, money sufficient to pay all amounts payable on  
that date with respect to the RVOs to be redeemed and the Paying Agent is not   
prohibited from paying such money to the Holders on that date pursuant to the   
terms of this Agreement, then on and after that date such RVOs cease to be      
outstanding and no additional RVO Payments shall be made.                       

    SECTION 2.9.  CANCELLATION.  The Company at any time may deliver RVOs to the
Trustee for cancellation. The Registrar and the Paying Agent shall forward to   
the Trustee any RVOs surrendered to them for registration of transfer, exchange 
or payment. The Trustee and no one else shall cancel all RVOs surrendered for   
registration of transfer, exchange, payment or cancellation and dispose of such 
RVOs in accordance with its internal policies. The Trustee shall provide        
evidence of destruction to the Company upon request. The Company may not issue  
new RVOs to replace RVOs it has paid or delivered to the Trustee for            
cancellation for any reason other than in connection with a transfer or         
exchange.                                                                       

    SECTION 2.10.  RVO PAYMENTS.  RVO Payments on any RVO which are payable, and
are punctually paid or duly provided for, on any Payment Date shall be paid to  
the Person in whose name                                                        

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such RVO (or one or more predecessor RVOs) is registered at the close of        
business on the regular record date for such RVO Payments.                      

SECTION 2.11.  CUSIP NUMBERS.  The Company in issuing the RVOs may use  
"CUSIP" numbers (if then generally in use) and, if so, the Trustee shall use    
"CUSIP" numbers in notices as a convenience to Holders; PROVIDED, HOWEVER, that 
any such notice may state that no representation is made as to the correctness  
of such numbers either as printed on the RVOs or as contained in any notice and 
that reliance may be placed only on the other identification numbers printed on 
the RVOs, and any such notice or action shall not be affected by any defect in  
or omission of such CUSIP numbers. The Company shall promptly notify the Trustee
of any change in the CUSIP numbers.                                             

ARTICLE III 
COVENANTS 

  SECTION 3.1.  PAYMENT OF RVOS.  The Company shall promptly pay the amounts
payable, if any, on the RVOs on the dates and in the manner provided in the RVOs
and in this Agreement. Amounts payable on the RVOs shall be considered paid on  
the date due if on such date the Trustee or the Paying Agent holds in accordance
with this Agreement money sufficient to pay all such amounts then due and the   
Trustee or the Paying Agent, as the case may be, is not prohibited from paying  
such money to the Holders of the RVOs on that date pursuant to the terms of this
Agreement.                                                                      

 Notwithstanding anything to the contrary contained in this Agreement, the
Company may, to the extent it is required to do so by law, deduct or withhold   
income or other similar taxes or charges imposed by the United States of America
from amounts payable hereunder or under the RVOs.                               

  SECTION 3.2.  MAINTENANCE OF OFFICE OR AGENCY.  The Company shall maintain
in The City of New York, an office or agency where the RVOs may be presented or 
surrendered for payment, where, if applicable, the RVOs may be surrendered for  
registration of transfer or exchange and where notices and demands to or upon   
the Company in respect of the RVOs and this Agreement may be served. The office 
or agency maintained by the Trustee in The City of New York (the "CORPORATE     
TRUST OFFICE"), shall be such office or agency of the Company, unless the       
Company shall designate and maintain some other office or agency for one or more
of such purposes. The Company shall give prompt written notice to the Trustee of
any change in the location of any such office or agency. If at any time the     
Company shall fail to maintain any such required office or agency or shall fail 
to furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the  
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.                            

  The Company may also from time to time designate one or more other offices
or agencies (in or outside of The City of New York) where the RVOs may be       
presented or surrendered for any or all such purposes and may from time to time 
rescind any such designation; PROVIDED, HOWEVER, that no such designation or    
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in The City of New York for such purposes. The Company will 
give prompt written notice to the Trustee of any such designation or rescission 
and any change in the location of any such other office or agency.              

   SECTION 3.3.  CORPORATE EXISTENCE.  Subject to ARTICLE IV, the Company will
do or cause to be done all things necessary to preserve and keep in full force  
and effect its corporate existence and the material corporate rights (charter   
and statutory) licenses and franchises of the Company; PROVIDED, HOWEVER, that  
the Company shall not be required to preserve any such right, license or        
franchise if the Board of Directors of the Company shall determine that the     
preservation thereof is no longer desirable in the conduct of the business of   
the Company and that the loss thereof is not, and will not be, disadvantageous  
in any material respect to the Holders, and provided, further, the Company may  
merge in accordance with SECTION 4.1.                                           

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SECTION 3.4.  COMPLIANCE CERTIFICATE.  The Company shall deliver to the 
Trustee within 120 days after the end of each Fiscal Year of the Company an     
Officers' Certificate stating that in the course of the performance by the      
signers of their duties as Officers of the Company they would normally have     
knowledge of any Default or Event of Default and whether or not the signers know
of any Default or Event of Default that occurred during such period. If one     
exists, the certificate shall describe the Default or Event of Default, its     
status and what action the Company is taking or proposes to take with respect   
thereto. The Company also shall comply with TIA Section 314(a)(4).              

 SECTION 3.5.  FURTHER INSTRUMENTS AND ACTS.  Upon request of the Trustee,
the Company will execute and deliver such further instruments and do such       
further acts as may be reasonably necessary or proper to carry out more         
effectively the purpose of this Agreement.                                      

SECTION 3.6.  STATEMENT BY OFFICERS AS TO DEFAULT.  The Company shall   
deliver to the Trustee, as soon as possible and in any event within five days   
after the Company becomes aware of the occurrence of any Event of Default or an 
event which, with notice or the lapse of time or both, would constitute an Event
of Default, an Officers' Certificate setting forth the details of such Event of 
Default or Default and the action which the Company proposes to take with       
respect thereto.                                                                

  SECTION 3.7.  SERVICING OF RECEIVABLES.  The Company shall, or shall cause
its Affiliates to, service or arrange for the servicing of the receivables      
securitized pursuant to the Designated Securitization Transactions (subject to  
the right of Financial Security Assurance Inc. or any other Person under the    
Designated Securitization Transactions to terminate the servicer of the         
receivables) and any Other Transaction Receivables in accordance with customary 
business practices and the Company's applicable policies and procedures and, if 
the Company or any of its Subsidiaries is then servicing, or arranging for the  
servicing of, indirectly originated motor vehicle retail installment sales      
contracts, consistent in all material respects with such servicing.             

SECTION 3.8.  AMENDMENT TO DESIGNATED SECURITIZATION TRANSACTIONS.  The 
Company shall not, and shall not permit its Subsidiaries to, amend or modify the
terms of any agreement entered into in connection with the Designated           
Securitization Transactions unless such an amendment or modification is made in 
accordance with reasonable business practices and with a good faith intent other
than to reduce RVO Payments; PROVIDED, that the Company shall not, and shall not
permit its Subsidiaries to, amend or modify the terms of any agreement entered  
into in connection with the Designated Securitization Transactions to increase  
the servicing fees payable thereunder unless such increased servicing fees are  
payable to a Person other than the Company and its Subsidiaries and the Company 
or its Subsidiaries have been terminated as servicer by Financial Security      
Assurance Inc. or any other Person in accordance with the terms of the          
Designated Securitization Transactions.                                         

  SECTION 3.9.  USE OF PROGRAM SPREAD ACCOUNT AND TAG ACCOUNTS.  The Company
and its subsidiaries on any day may not:                                        

(i) transfer from the Program Spread Account (as defined in the Spread  
        Account Agreement) to any and all Tag Accounts (as defined in the Spread
        Account Agreement) amounts in excess of those required by the agreements
entered into in connection with the Designated Securitization   
Transactions or specified in Section 2.09 of the Spread Account 
      Agreement (provided that such amounts may be rounded up to the nearest
      thousand dollars); provided, that the Company and its Subsidiaries may
    transfer from the Program Spread Account to any and all Tag Accounts
       amounts consistent with the practices of Arcadia Financial Ltd. and its
subsidiaries prior to the date of this Agreement, or            

(ii) keep on deposit in the Program Spread Account amounts in excess of 
        those that may be necessary or advisable in the reasonable judgment of
 the Company for the transactions described in clause (i) above;
provided, that the Company and its subsidiaries may keep on   

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    deposit in the Program Spread Accounts amounts consistent with the
       practices of Arcadia Financial Ltd. and its subsidiaries prior to the
date of this Agreement.                                       

SECTION 3.10.  DISCLOSURE.  Unless the SEC shall require differently by 
rule, regulation, order or interpretation or otherwise, the Company shall       
publicly disclose in respect of each fiscal quarter of the Company, not later   
than the time it files its Quarterly Report on Form 10-Q with the SEC in respect
of each of its first three fiscal quarters in each fiscal year and not later    
than the time it files its Annual Report on Form 10-K in respect of its fourth  
fiscal quarter in each fiscal year (or, in the event the Company is not then    
required to make such filings with the SEC, not later than the time it would be 
required to make such filings if it were so required), the information          
contemplated to be disclosed by the form of certificate attached hereto as      
Exhibit B, such disclosure to be substantially in the form of such certificate. 

ARTICLE IV
SUCCESSOR COMPANY 

  SECTION 4.1.  MERGER AND CONSOLIDATION.  The Company shall not consolidate
with or merge with or into, or convey, transfer or lease all or substantially   
all its assets to, any Person, unless:                                          

 (i) the resulting, surviving or transferee Person (the "SUCCESSOR
 COMPANY") shall be a corporation, partnership, trust or limited liability
company organized and existing under the laws of the United States of   
America, any State thereof or the District of Columbia and the Successor
Company (if not the Company) shall expressly assume, by supplemental    
 agreement, executed and delivered to the Trustee, in form satisfactory to
  the Trustee, all the obligations, duties, commitments and covenants of the
Company under the RVOs and this Agreement;                              

       (ii) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing; and             

  (iii) the Company shall have delivered to the Trustee an Officers'
    Certificate and an Opinion of Counsel, each stating that such consolidation,
    merger or transfer and such supplemental agreement, if any, comply with this
    Agreement and that all conditions precedent herein provided relating to such
transaction have been complied with.                                    

  For purposes of this SECTION 4.1, the sale, lease, conveyance, assignment,
transfer, or other disposition of all or substantially all of the properties and
assets of one or more Subsidiaries of the Company, which properties and assets, 
if held by the Company instead of such Subsidiaries, would constitute all or    
substantially all of the properties and assets of the Company on a consolidated 
basis, shall be deemed to be the transfer of all or substantially all of the    
properties and assets of the Company.                                           

The Successor Company will succeed to, and be substituted for, and may  
exercise every right and power of, the Company under this Agreement.            

 Notwithstanding anything in this SECTION 4.1 to the contrary, the Company
may subject only to clauses (i) and (iii) above, merge with an Affiliate        
incorporated solely for the purpose of reincorporating the Company in another   
jurisdiction to realize tax or other benefits.                                  

   Any consolidation, merger, conveyance, transfer or lease in compliance with
this SECTION 4.1 shall not be restricted by SECTION 4.2.                        

SECTION 4.2.  ASSIGNMENT.  The Company shall not assign its obligations 
hereunder or under the RVOs to any Person, unless:                              

 (i) the assignee (the "ASSIGNEE COMPANY") shall be a corporation,
    partnership, trust or limited liability company organized and existing under
the laws of the United States of America, any State                     

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    thereof or the District of Columbia and the Assignee Company shall expressly
    assume, by supplemental agreement, executed and delivered to the Trustee, in
  form satisfactory to the Trustee, all the obligations of the Company under
the RVOs and this Agreement;                                            

       (ii) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing;                 

     (iii) either (A) immediately after giving effect to such transaction,
 the Assignee Company shall have a consolidated net worth that is not less
 than the lower of (1) $1 billion or (2) the consolidated net worth of the
   Company at such time or (B) the Company shall remain secondarily liable, by
   guarantee or otherwise, for the payment obligations of the Assignee Company
under this Agreement and the RVOs;                                      

 (iv) the Company shall have delivered to the Trustee an Officers'
    Certificate and an Opinion of Counsel, each stating that such assignment and
such supplemental agreement comply with this Agreement and that all     
   conditions precedent herein provided relating to such transaction have been
complied with; and                                                      

        (v) the Assignee Company or one of its Affiliates shall be the successor
 to the Company's and its Subsidiaries' interest in the Residual Cash Flow
and the Designated Securitization Transactions.                         

The Assignee Company will succeed to, and be substituted for, and may   
exercise every right and power of, the Company under this Agreement.            

  Nothing in this Agreement or in the RVOs other than this SECTION 4.2 shall
restrict the Company's ability to assign its rights and/or obligations under    
this Agreement and/or the RVOs.                                                 

ARTICLE V 
REDEMPTION OF RVOS

   SECTION 5.1.  OPTIONAL REDEMPTION.  The RVOs may be redeemed on any Payment
Date, in whole but not in part, at the option of the Company and subject to and 
in accordance with the terms and conditions set forth in this ARTICLE V and in  
SECTION 6 of the form of RVOs attached as EXHIBIT A hereto, which are hereby    
incorporated by reference and made a part of this Agreement.                    

    SECTION 5.2.  ELECTION TO REDEEM.  The election of the Company to redeem the
RVOs pursuant to SECTION 5.1 shall be evidenced by a Board Resolution.          

   SECTION 5.3.  NOTICE OF REDEMPTION.  Notice of redemption shall be given in
the manner provided for in SECTION 9.2 not less than 30 nor more than 60 days   
prior to the Redemption Date, to each Holder. The Trustee shall give notice of  
redemption in the Company's name and at the Company's expense; PROVIDED,        
HOWEVER, that the Company shall deliver to the Trustee, at least 45 days prior  
to the Redemption Date, an Officers' Certificate notifying the Trustee of the   
Redemption Date, requesting that the Trustee give such notice of redemption to  
each Holder and setting forth the information to be stated in such notice.      

All notices of redemption shall state:                                  

(1) the Redemption Date,                                        

(2) the Optional Redemption Price,                              

  (3) that on the Redemption Date the Optional Redemption Price will
become due and payable and, unless the Company defaults in making the   
redemption payment and any RVO Payment due and payable on the Redemption
   Date, that, following the Redemption Date, no further RVO Payments shall be
made,                                                                   

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        (4) the place or places where the RVOs are to be surrendered for payment
of the Optional Redemption Price, if any,                               

(5) the name and address of the Paying Agent,                   

    (6) that RVOs must be surrendered to the Paying Agent to collect the
Optional Redemption Price, and                                          

       (7) the CUSIP number of the RVOs, and that no representation is made as
  to the accuracy or correctness of the CUSIP number, if any, listed in such
notice or printed on the RVOs.                                          

 SECTION 5.4.  DEPOSIT OF REDEMPTION PRICE.  Prior to the Redemption Date,
the Company shall deposit with the Trustee or with a Paying Agent (or, if the   
Company is acting as its own Paying Agent, segregate and hold in trust as       
provided in SECTION 2.4) an amount of money sufficient to pay the Optional      
Redemption Price.                                                               

   SECTION 5.5.  RVOS PAYABLE ON REDEMPTION DATE.  Notice of redemption having
been given as aforesaid, the RVOs shall, on the Redemption Date, become due and 
payable at the Optional Redemption Price and from and after such date (unless   
the Company shall default in the payment of the Optional Redemption Price and   
any RVO Payments due on and payable on such date) no further RVO Payments shall 
be made. Upon surrender of any such RVO for redemption in accordance with said  
notice, such RVO shall be paid by the Company at the Optional Redemption Price. 

ARTICLE VI
DEFAULTS AND REMEDIES 

SECTION 6.1.  EVENTS OF DEFAULT.  An "EVENT OF DEFAULT" occurs if:      

     (1) the Company defaults in the payment of any RVO Payment on any RVO
when the same becomes due and payable, and such default continues for a 
period of 30 days;                                                      

        (2) the Company defaults in the payment of the Optional Redemption Price
 on any RVO when the same becomes due and payable pursuant to ARTICLE V of
this Agreement and SECTION 6 of the RVO;                                

  (3) the Company fails to comply with any of its other covenants or
agreements in the RVOs or this Agreement and such failure continues for 
   60 days after the notice specified below (with such notice only given after
the expiry of the periods permitted to perform an obligation);          

  (4) by the order of a court of competent jurisdiction a Bankruptcy
    Custodian (as defined below) of the Company or of any of the property of the
    Company shall be appointed and such Bankruptcy Custodian shall not have been
 discharged within a period of 60 days, or, by decree of such a court, the
  Company shall be adjudicated bankrupt or insolvent or any substantial part
  of the property of the Company shall have been sequestered and such decree
    shall have continued undischarged and unstayed for a period of 60 days after
 the entry thereof, or a petition to declare bankrupt or to reorganize the
   Company pursuant to any of the provisions of the Bankruptcy Law (as defined
   below), as it now exists, or as it may hereafter be amended, or pursuant to
   any other similar statute applicable to the Company, as now or hereafter in
effect, shall be filed against the Company (and, in the case of any such
petition filed pursuant to any provision of a statute which requires the
    approval of such petition by a court, shall be approved by such a court) and
shall not be dismissed within 60 days after such filing; or             

       (5) the Company shall file a petition in voluntary bankruptcy under any
provision of any bankruptcy law or shall consent to the filing of any   
  bankruptcy or reorganization petition against it under any similar law, or
 (without limitation of the generality of the foregoing) the Company shall
   file a petition or answer or consent seeking relief or assisting in seeking
relief for the Company in                                               

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 a proceeding under any of the provisions of the Bankruptcy Law, as it now
  exists or as it may hereafter be amended, or pursuant to any other similar
statute applicable to the Company, as now or hereafter in effect, or an 
   answer admitting the material allegations of a petition filed against it in
such a proceeding, or the Company or its directors or stockholders shall
    take action looking to the dissolution or liquidation of the Company (except
  in connection with a consolidation, merger, sale or conveyance pursuant to
    ARTICLE IV hereof), or shall admit in writing its inability to pay its debts
generally as they become due, or shall consent to the appointment of a  
Bankruptcy Custodian of it or of all or any part of its property.       

    The term "BANKRUPTCY LAW" means Title 11, UNITED STATES CODE, or any similar
Federal law for the relief of debtors. The term "BANKRUPTCY CUSTODIAN" means any
receiver, trustee, liquidator or similar official under any Bankruptcy Law.     

Notwithstanding the foregoing, a Default under clause (3) of this       
SECTION 6.1 will not constitute an Event of Default until the Trustee or the    
Holders of at least 50% of the then outstanding RVOs notify the Company of the  
Default and the Company does not cure such Default within the time specified in 
said clause (3) after receipt of such notice. Such notice must specify the      
Default, demand that it be remedied and state that such notice is a "Notice of  
Default".                                                                       

SECTION 6.2.  OTHER REMEDIES.  If an Event of Default occurs and is     
continuing, the Trustee may pursue any available remedy to collect the payments 
payable on the RVOs or to enforce the performance of any provision of the RVOs  
or this Agreement.                                                              

    The Trustee may maintain a proceeding even if it does not possess any of the
RVOs or does not produce any of them in the proceeding. A delay or omission by  
the Trustee or any Holder in exercising any right or remedy accruing upon an    
Event of Default shall not impair the right or remedy or constitute a waiver of 
or acquiescence in the Event of Default. No remedy is exclusive of any other    
remedy. All available remedies are cumulative.                                  

SECTION 6.3.  WAIVER OF PAST DEFAULTS.  The Holders of a majority of the
outstanding RVOs by notice to the Trustee may waive, by their consent           
(including, without limitation consents obtained in connection with a purchase  
of, or tender offer or exchange offer for, RVOs), an existing Default or Event  
of Default and its consequences except (i) a Default or Event of Default in the 
payment of amounts payable on a RVO or (ii) a Default or Event of Default in    
respect of a provision that under SECTION 8.2 cannot be amended without the     
consent of each Holder affected. When a Default or Event of Default is waived,  
it is deemed cured, but no such waiver shall extend to any subsequent or other  
Default or Event of Default or impair any consequent right.                     

SECTION 6.4.  CONTROL BY MAJORITY.  The Holders of a majority of the    
outstanding RVOs may direct the time, method and place of conducting any        
proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. However, the Trustee may refuse to follow any   
direction that conflicts with law or this Agreement or, subject to SECTIONS 7.1 
AND 7.2, that the Trustee determines is unduly prejudicial to the rights of     
other Holders or would involve the Trustee in personal liability; PROVIDED,     
HOWEVER, that the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction. Prior to taking any action        
hereunder, the Trustee shall be entitled to reasonable indemnification          
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.                                            

    SECTION 6.5.  LIMITATION ON SUITS.  Subject to SECTION 6.6, a Holder may not
pursue any remedy with respect to this Agreement or the RVOs unless:            

        (1) the Holder gives to the Trustee written notice stating that an Event
of Default is continuing;                                               

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      (2) the Holders of at least 25% of the outstanding RVOs make a request
to the Trustee to pursue the remedy;                                    

      (3) such Holder or Holders offer to the Trustee reasonable security or
indemnity against any loss, liability or expense;                       

     (4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of security or indemnity; and      

     (5) the Holders of a majority of the outstanding RVOs do not give the
Trustee a direction that, in the opinion of the Trustee, is inconsistent
with such request during such 60-day period.                            

A Holder may not use this Agreement to prejudice the rights of another  
Holder or to obtain a preference or priority over another Holder.               

SECTION 6.6.  RIGHTS OF HOLDERS TO RECEIVE PAYMENT.  Notwithstanding any
other provision of this Agreement (including, without limitation, SECTION 6.5), 
the right of any Holder to receive payments on the RVOs held by such Holder, on 
or after the respective due dates expressed in the RVOs, or to bring suit for   
the enforcement of any such payment on or after such respective dates, shall not
be impaired or affected without the consent of such Holder.                     

   SECTION 6.7.  COLLECTION SUIT BY TRUSTEE.  If an Event of Default specified
in SECTION 6.1(1) OR (2) occurs and is continuing, the Trustee may recover      
judgment in its own name and as trustee of an express trust against the Company 
for the whole amount then due and owing and the amounts provided for in         
SECTION 7.7.                                                                    

  SECTION 6.8.  TRUSTEE MAY FILE PROOFS OF CLAIM.  The Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable  
in order to have the claims of the Trustee and the Holders allowed in any       
judicial proceedings relative to the Company, its Subsidiaries or its or their  
respective creditors or properties and, unless prohibited by law or applicable  
regulations, may vote on behalf of the Holders in any election of a trustee in  
bankruptcy or other Person performing similar functions, and any Bankruptcy     
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any  
amount due it for the reasonable compensation, expenses, disbursements and      
advances of the Trustee, its agents and its counsel, and any other amounts due  
the Trustee under SECTION 7.7.                                                  

SECTION 6.9.  PRIORITIES.  If the Trustee collects any money or property
pursuant to this ARTICLE VI, it shall pay out the money or property in the      
following order:                                                                

FIRST: to the Trustee for amounts due under SECTION 7.7;                

   SECOND: to Holders for amounts due and unpaid on the RVOs, ratably, without
preference or priority of any kind, according to the amounts due and payable on 
the RVOs; and                                                                   

THIRD: to the Company.                                                  

The Trustee may fix a record date and payment date for any payment to   
Holders pursuant to this Section. At least 15 days before such record date, the 
Company shall mail to each Holder and the Trustee a notice that states the      
record date, the payment date and amount to be paid.                            

 SECTION 6.10.  UNDERTAKING FOR COSTS.  In any suit for the enforcement of
any right or remedy under this Agreement or in any suit against the Trustee for 
any action taken or omitted by it as Trustee, a court in its discretion may     
require the filing by any party litigant in the suit of an undertaking to pay   
the costs of the suit, and the court in its discretion may assess reasonable    
costs, including reasonable attorneys' fees, against any party litigant in the  
suit, having due regard to the merits and good faith of the claims or defenses  
made by the party litigant. This Section does not apply to a suit by the        
Trustee, a suit by the Company, a suit by a Holder pursuant to SECTION 6.6 or a 
suit by Holders of more than 10% of the outstanding RVOs.                       

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ARTICLE VII 
TRUSTEE 

 SECTION 7.1.  DUTIES OF TRUSTEE.  (a) If an Event of Default has occurred
and is continuing, the Trustee shall exercise the rights and powers vested in it
by this Agreement and use the same degree of care and skill in their exercise as
a prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.                                                      

(b) Except during the continuance of an Event of Default:       

      (1) the Trustee undertakes to perform such duties and only such duties
   as are specifically set forth in this Agreement and no implied covenants or
obligations shall be read into this Agreement against the Trustee; and  

(2) in the absence of bad faith on its part, the Trustee may    
   conclusively rely, as to the truth of the statements and the correctness of
  the opinions expressed therein, upon certificates or opinions furnished to
  the Trustee and conforming to the requirements of this Agreement. However,
in the case of any such certificates or opinions which by any provisions
    hereof are specifically required to be furnished to the Trustee, the Trustee
shall examine such certificates and opinions to determine whether or not
  they conform on their face to the requirements of this Agreement (but need
not confirm or investigate the accuracy of mathematical calculations or 
other facts stated therein).                                            

(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own wilful misconduct, except   
that:                                                                           

     (1) this paragraph does not limit the effect of paragraph (b) of this
Section;                                                                

     (2) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer unless it is proved that the Trustee was  
negligent in ascertaining the pertinent facts; and                      

       (3) the Trustee shall not be liable with respect to any action it takes
    or omits to take in good faith in accordance with a direction received by it
pursuant to SECTION 6.4.                                                

    (d) Every provision of this Agreement that in any way relates to the Trustee
is subject to paragraphs (a), (b) and (c) of this Section.                      

    (e) The Trustee shall not be liable for interest on any money received by it
except as the Trustee may agree in writing with the Company.                    

(f) Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.                                     

 (g) No provision of this Agreement shall require the Trustee to expend or
risk its own funds or otherwise incur financial liability in the performance of 
any of its duties hereunder or in the exercise of any of its rights or powers,  
if it shall have reasonable grounds to believe that repayment of such funds or  
adequate indemnity against such risk or liability is not reasonably assured to  
it.                                                                             

  (h) Every provision of this Agreement relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the 
provisions of this Section and to the provisions of the TIA.                    

 (i) Unless otherwise specifically provided in this Agreement, any demand,
request, direction or notice from the Company shall be sufficient if signed by  
an Officer of the Company.                                                      

 SECTION 7.2.  RIGHTS OF TRUSTEE.  Subject to SECTION 7.1, (a) The Trustee
may conclusively rely on any document (whether in its original or facsimile     
form) reasonably believed by it to be genuine and to                            

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have been signed or presented by the proper party or parties. The Trustee need  
not investigate any fact or matter stated in the document.                      

(b) Before the Trustee acts or refrains from acting, it may require an  
Officers' Certificate and/or an Opinion of Counsel. The Trustee shall not be    
liable for any action it takes or omits to take in good faith in reliance on an 
Officers' Certificate or Opinion of Counsel.                                    

 (c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due    
care.                                                                           

    (d) The Trustee shall not be liable for any action it takes or omits to take
in good faith which it believes to be authorized or within its rights or powers,
unless the Trustee's conduct constitutes wilful misconduct or negligence.       

    (e) The Trustee may consult with counsel of its selection, and the advice or
opinion of counsel with respect to legal matters relating to this Agreement and 
the RVOs shall be full and complete authorization and protection from liability 
in respect to any action taken, omitted or suffered by it hereunder in good     
faith and in accordance with the advice or opinion of such counsel.             

  SECTION 7.3.  INDIVIDUAL RIGHTS OF TRUSTEE.  The Trustee in its individual
or any other capacity may become the owner or pledgee of RVOs and may otherwise 
deal with the Company or its Affiliates with the same rights it would have if it
were not Trustee. Any Paying Agent, Registrar, co-registrar or co-paying agent  
may do the same with like rights. However, the Trustee must comply with SECTIONS
7.10 and 7.11.                                                                  

 SECTION 7.4.  TRUSTEE'S DISCLAIMER.  The Trustee shall not be responsible
for and makes no representation as to the validity or adequacy of this Agreement
or the RVOs, it shall not be accountable for the Company's use of the proceeds  
from the RVOs, and it shall not be responsible for any statement of the Company 
in this Agreement or in any document issued in connection with the sale of the  
RVOs or in the RVOs other than the Trustee's certificate of authentication.     

  SECTION 7.5.  NOTICE OF DEFAULTS.  If a Default or Event of Default occurs
and is continuing and if a Trust Officer has actual knowledge thereof, the      
Trustee shall mail to each Holder notice of the Default or Event of Default     
within 90 days after it occurs. Except in the case of a Default or Event of     
Default in payment of amounts payable on any RVO (including payments pursuant to
the optional redemption provisions of such RVO), the Trustee may withhold the   
notice if and so long as its board of directors, a committee of its board of    
directors or a committee of its Trust Officers in good faith determines that    
withholding the notice is in the interests of Holders of RVOs.                  

SECTION 7.6.  REPORTS BY TRUSTEE TO HOLDERS.  Within 60 days after each 
May 15, beginning with the May 15 following the date of this Agreement, the     
Trustee shall mail to each Holder of RVOs a brief report dated as of such       
May 15 in accordance with, and to the extent required under Section 313 of the  
TIA.                                                                            

  The Company agrees to notify promptly the Trustee whenever the RVOs become
listed on any stock exchange and of any delisting thereof.                      

SECTION 7.7.  COMPENSATION AND INDEMNITY.  The Company shall pay to the 
Trustee from time to time reasonable compensation for its acceptance of this    
Agreement and services hereunder as the Company and the Trustee shall from time 
to time agree in writing. The Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Company shall         
reimburse the Trustee upon request for all reasonable out-of-pocket expenses    
incurred or made by it, including costs of collection, costs of preparing and   
reviewing reports, certificates and other documents, costs of preparation and   
mailing of notices to Holders and reasonable costs and expenses of counsel      
retained by the Trustee, in addition to the compensation for its services. Such 
expenses shall include the                                                      

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reasonable compensation and expenses, disbursements and advances of the         
Trustee's agents, counsel, accountants and experts.                             

    The Company shall indemnify the Trustee for and hold it harmless against any
and all loss, liability, damages, claims or expense (including reasonable       
attorneys' fees and expenses) incurred by it without negligence or wilful       
misconduct on its part in connection with the acceptance and administration of  
this trust and the performance of its duties hereunder, including the costs and 
expenses of enforcing this Agreement (including this SECTION 7.7) and of        
defending itself against any claims (whether asserted by any Holder, the Company
or otherwise). The Trustee shall notify the Company promptly of any claim for   
which it may seek indemnity. Failure by the Trustee to so notify the Company    
shall not relieve the Company of its obligations hereunder. The Company need not
reimburse any expense or indemnify against any loss, liability or expense       
incurred by the Trustee through the Trustee's own wilful misconduct or          
negligence.                                                                     

To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the RVOs on all money or property held or collected  
by the Trustee other than money or property held in trust to make payments on   
particular RVOs.                                                                

    The Company's payment obligations pursuant to this Section shall survive the
discharge of this Agreement. When the Trustee incurs expenses after the         
occurrence of a Default specified in SECTION 6.1(4) or (5) with respect to the  
Company, the expenses are intended to constitute expenses of administration     
under any Bankruptcy Law.                                                       

    SECTION 7.8.  REPLACEMENT OF TRUSTEE.  The Trustee may resign at any time by
so notifying the Company. The Holders of a majority of the outstanding RVOs may 
remove the Trustee by so notifying the Trustee and may appoint a successor      
Trustee. The Company shall remove the Trustee if:                               

(1) the Trustee fails to comply with SECTION 7.10;                      

(2) the Trustee is adjudged bankrupt or insolvent;                      

 (3) a receiver or other public officer takes charge of the Trustee or its
property; or                                                      

(4) the Trustee otherwise becomes incapable of acting.                  

  If the Trustee resigns or is removed by the Company or by the Holders of a
majority of the outstanding RVOs and such Holders do not reasonably promptly    
appoint a successor Trustee, or if a vacancy exists in the office of the Trustee
for any reason (the Trustee in such event being referred to herein as the       
retiring Trustee), the Company shall promptly appoint a successor Trustee.      

    A successor Trustee shall deliver a written acceptance of its appointment to
the retiring Trustee and to the Company. Thereupon the resignation or removal of
the retiring Trustee shall become effective, and the successor Trustee shall    
have all the rights, powers and duties of the Trustee under this Agreement. The 
successor Trustee shall mail a notice of its succession to Holders of RVOs. The 
retiring Trustee shall promptly transfer all property held by it as Trustee to  
the successor Trustee, subject to the lien provided for in SECTION 7.7.         

If a successor Trustee does not take office within 60 days after the    
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of  
10% of the outstanding RVOs may petition, at the Company's expense, any court of
competent jurisdiction for the appointment of a successor Trustee.              

If the Trustee fails to comply with SECTION 7.10, any Holder of RVOs may
petition any court of competent jurisdiction for the removal of the Trustee and 
the appointment of a successor Trustee.                                         

    Notwithstanding the replacement of the Trustee pursuant to this Section, the
Company's obligations under SECTION 7.7 shall continue for the benefit of the   
retiring Trustee.                                                               

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SECTION 7.9.  SUCCESSOR TRUSTEE BY MERGER.  If the Trustee consolidates 
with, merges or converts into, or transfers all or substantially all its        
corporate trust business or assets to, another Person, the resulting, surviving 
or transferee Person without any further act shall be the successor Trustee.    

 In case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this        
Agreement, any of the RVOs shall have been authenticated but not delivered, any 
such successor to the Trustee may adopt the certificate of authentication of any
predecessor trustee, and deliver such RVOs so authenticated; and in case at that
time any of the RVOs shall not have been authenticated, any successor to the    
Trustee may authenticate such RVOs either in the name of any predecessor        
hereunder or in the name of the successor to the Trustee; and in all such cases 
such certificates shall have the full force which it is anywhere in the RVOs or 
in this Agreement provided that the certificate of the Trustee shall have.      

SECTION 7.10.  ELIGIBILITY; DISQUALIFICATION.  The Trustee shall at all 
times satisfy the requirements of TIA Section310(a). The Trustee shall have a   
combined capital and surplus of at least $50 million as set forth in its most   
recent published annual report of condition. The Trustee shall comply with      
TIA Section310(b); PROVIDED, HOWEVER, that there shall be excluded from the     
operation of TIA Section310(b)(1) any indenture or indentures under which other 
securities or certificates of interest or participation in other securities of  
the Company are outstanding if the requirements for such exclusion set forth in 
TIA Section310(b)(1) are met.                                                   

   SECTION 7.11.  TRUSTEE'S APPLICATION FOR INSTRUCTION FROM THE COMPANY.  Any
application by the Trustee for written instructions from the Company may, at the
option of the Trustee, set forth in writing any action proposed to be taken or  
omitted by the Trustee under this Agreement and the date on and/or after which  
such action shall be taken or such omission shall be effective. The Trustee     
shall not be liable for any action taken or suffered by, or omission of, the    
Trustee in accordance with a proposal included in such application on or after  
the date specified in such application (which date shall not be less than three 
Business Days after the date any Officer actually receives such application,    
unless any such Officer shall have consented in writing to any earlier date)    
unless prior to taking any such action (or the effective date in the case of an 
omission), the Trustee shall have received written instructions in response to  
such application specifying the action to be taken, suffered or omitted.        

ARTICLE VIII
AMENDMENTS

  SECTION 8.1.  WITHOUT CONSENT OF HOLDERS.  The Company and the Trustee may
amend this Agreement or the RVOs without notice to or consent of any Holder:    

(1) to cure any ambiguity, omission, defect or inconsistency;   

(2) to comply with ARTICLE IV in respect of the assumption by a 
Successor Company or an Assignee Company of an obligation of the Company
under this Agreement;                                                   

    (3) to provide for uncertificated RVOs in addition to or in place of
certificated RVOs; PROVIDED, HOWEVER, that the uncertificated RVOs are  
    issued in registered form for purposes of Section 163(f) of the Code or in a
manner such that the uncertificated RVOs are described in               
Section 163(f)(2)(B) of the Code;                                       

     (4) to add guarantees with respect to the RVOs or to secure the RVOs,
including without limitation, as contemplated by SECTION 4.2;           

 (5) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the    
Company;                                                                

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 (6) to comply with any requirements of the SEC in connection with
qualifying this Agreement under the TIA; or                             

       (7) to make any change that does not adversely affect the rights of any
Holder.                                                                 

  After an amendment under this Section becomes effective, the Company shall
mail to Holders a notice briefly describing such amendment. The failure to give 
such notice to all Holders, or any defect therein, shall not impair or affect   
the validity of an amendment under this Section.                                

SECTION 8.2.  WITH CONSENT OF HOLDERS.  The Company and the Trustee may 
amend this Agreement or the RVOs without notice to any Holder but with the      
written consent of the Holders of at least a majority of the RVOs then          
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, RVOs). However, without   
the consent of each Holder affected, an amendment may not:                      

        (1) reduce the percentage of outstanding RVOs whose Holders must consent
to an amendment;                                                        

     (2) reduce the amount of an RVO Payment or extend the stated time for
payment of an RVO Payment;                                              

      (3) reduce the amount payable upon the redemption of any RVO or change
   the time at which any RVO may or shall be redeemed as described above under
ARTICLE V or any similar provision, whether through an amendment to or  
waiver of ARTICLE V, a definition or otherwise;                         

    (4) make any RVO payable in money other than that stated in the RVO;

 (5) impair the right of any Holder to receive any payment on such
 Holder's RVOs on or after the due dates therefor or to institute suit for
   the enforcement of any payment on or with respect to such Holder's RVOs; or

       (6) make any change to the amendment or waiver provisions which require
each Holder's consent.                                                  

   It shall not be necessary for the consent of the Holders under this Section
to approve the particular form of any proposed amendment, but it shall be       
sufficient if such consent approves the substance thereof.                      

  After an amendment under this Section becomes effective, the Company shall
mail to Holders a notice briefly describing such amendment. The failure to give 
such notice to all Holders, or any defect therein, shall not impair or affect   
the validity of an amendment under this Section.                                

   SECTION 8.3.  COMPLIANCE WITH TRUST INDENTURE ACT.  Every amendment to this
Agreement or the RVOs shall comply with the TIA as then in effect.              

  SECTION 8.4.  REVOCATION AND EFFECT OF CONSENTS AND WAIVERS.  A consent to
an amendment or a waiver by a Holder shall bind the Holder and every subsequent 
Holder of that RVO or portion of the RVO that evidences the same debt as the    
consenting Holder's RVO, even if notation of the consent or waiver is not made  
on the RVO. However, any such Holder or subsequent Holder may revoke the consent
or waiver as to such Holder's RVO or portion of the RVO if the Trustee receives 
the notice of revocation before the date the amendment or waiver becomes        
effective. After an amendment or waiver becomes effective, it shall bind every  
Holder. An amendment or waiver shall become effective upon the execution of such
amendment or waiver by the Trustee.                                             

 The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to give their consent or take any   
other action described above or required or permitted to be taken pursuant to   
this Agreement. If a record date is fixed, then notwithstanding the immediately 
preceding paragraph, those Persons who were Holders at such record date (or     
their duly                                                                      

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designated proxies), and only those Persons, shall be entitled to give such     
consent or to revoke any consent previously given or to take any such action,   
whether or not such Persons continue to be Holders after such record date. No   
such consent shall become valid or effective more than 120 days after such      
record date.                                                                    

   SECTION 8.5.  NOTATION ON OR EXCHANGE OF RVOS.  If an amendment changes the
terms of a RVO, the Trustee may require the Holder of the RVO to deliver it to  
the Trustee. The Trustee may place an appropriate notation on the RVO regarding 
the changed terms and return it to the Holder. Alternatively, if the Company or 
the Trustee so determines, the Company in exchange for the RVO shall issue and  
the Trustee shall authenticate a new RVO that reflects the changed terms.       
Failure to make the appropriate notation or to issue a new RVO shall not affect 
the validity of such amendment.                                                 

SECTION 8.6.  TRUSTEE TO SIGN AMENDMENTS.  The Trustee shall sign any   
amendment authorized pursuant to this ARTICLE VIII if the amendment does not    
adversely affect the rights, duties, liabilities or immunities of the Trustee.  
If it does, the Trustee may but need not sign it. In signing such amendment the 
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to SECTIONS 7.1 AND 7.2) shall be fully authorized,    
protected and incur no liability in relying upon, an Officers' Certificate and  
an Opinion of Counsel stating that such amendment is authorized or permitted by 
this Agreement.                                                                 

  SECTION 8.7.  PAYMENT FOR CONSENTS.  Neither the Company nor any Affiliate
of the Company shall, directly or indirectly, pay or cause to be paid any       
consideration, whether by way of interest, fee or otherwise, to any Holder for  
or as an inducement to any consent, waiver or amendment of any of the terms or  
provisions of this Agreement or the RVOs unless such consideration is offered to
be paid to all Holders that so consent, waive or agree to amend (and, if        
appropriate, tender their RVOs) in the time frame set forth in solicitation     
documents relating to such consent, waiver or agreement.                        

ARTICLE IX
MISCELLANEOUS 

SECTION 9.1.  TRUST INDENTURE ACT CONTROLS.  If any provision of this   
Agreement limits, qualifies or conflicts with another provision which is        
required or deemed to be included in this Agreement by the TIA, the provision   
required or deemed by the TIA shall control.                                    

   SECTION 9.2.  NOTICES.  Any notice or communication shall be in writing and
delivered in person or mailed by first-class mail addressed as follows:         

                                                                [Download Table]
                                    
if to the Company:                  

Associates First Capital Corporation
250 Carpenter Freeway               
Irving, TX 75062                    
Attention: General Counsel          
Fax: (972) 652-5798                 

With a copy to:                     

Simpson Thacher & Bartlett          
425 Lexington Avenue                
New York, NY 10017                  
Attn: Alan D. Schnitzer, Esq.       
Fax: (212) 455-2502                 

if to the Trustee:                  

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                                                                [Download Table]
                                  
The Chase Manhattan Bank          
Capital Markets Fiduciary Services
450 W. 33(rd) Street              
New York, NY 10001                
Attn: Andrew M. Deck              
Fax: (212) 946-8162               

  The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.                

    Any notice or communication mailed to a registered Holder shall be mailed to
the Holder at the Holder's address as it appears on the registration books of   
the Registrar and shall be sufficiently given if so mailed within the time      
prescribed.                                                                     

 Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. If a notice or  
communication is mailed in the manner provided above, it is duly given, whether 
or not the addressee receives it.                                               

SECTION 9.3.  COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.  Holders may 
communicate pursuant to TIA Section 312(b) with other Holders with respect to   
their rights under this Agreement or the RVOs. The Company, the Trustee, the    
Registrar and anyone else shall have the protection of TIA Section 312(c).      

   SECTION 9.4.  CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.  Upon any
request or application by the Company to the Trustee to take or refrain from    
taking any action under this Agreement, the Company shall furnish to the        
Trustee:                                                                        

(1) an Officers' Certificate in form and substance reasonably   
    satisfactory to the Trustee stating that, in the opinion of the signers, all
    conditions precedent, if any, provided for in this Agreement relating to the
proposed action have been complied with; and                            

       (2) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee stating that, in the opinion of such counsel, all such   
conditions precedent have been complied with.                           

SECTION 9.5.  STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.  Each      
certificate or opinion with respect to compliance with a covenant or condition  
provided for in this Agreement shall include:                                   

      (1) a statement that the individual making such certificate or opinion
has read such covenant or condition;                                    

      (2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such   
certificate or opinion are based;                                       

    (3) a statement that, in the opinion of such individual, he has made
  such examination or investigation as is necessary to enable him to express
    an informed opinion as to whether or not such covenant or condition has been
complied with; and                                                      

        (4) a statement as to whether or not, in the opinion of such individual,
such covenant or condition has been complied with.                      

    In giving such Opinion of Counsel, counsel may rely as to factual matters on
an Officers' Certificate or on certificates of public officials.                

   SECTION 9.6.  WHEN RVOS DISREGARDED.  In determining whether the Holders of
the required number of RVOs have concurred in any direction, waiver or consent, 
RVOs owned by the Company or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company shall 
be disregarded and deemed not to be outstanding, except that, for the purpose of
determining whether the Trustee shall be protected in relying on any such       
direction, waiver                                                               

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or consent, only RVOs which the Trustee knows are so owned shall be so          
disregarded. Also, subject to the foregoing, only RVOs outstanding at the time  
shall be considered in any such determination.                                  

    SECTION 9.7.  RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR.  The Trustee may
make reasonable rules for action by, or a meeting of, Holders. The Registrar and
the Paying Agent may make reasonable rules for their functions.                 

   SECTION 9.8.  LEGAL HOLIDAYS.  A "LEGAL HOLIDAY" is a Saturday, a Sunday or
other day on which commercial banking institutions are authorized or required to
be closed in New York City. If a payment date is a Legal Holiday, payment shall 
be made on the next succeeding day that is not a Legal Holiday, and no amounts  
shall accrue pursuant to Section 2(b)(i) of each RVO for the intervening period.
If a record date is a Legal Holiday, the record date shall not be affected.     

SECTION 9.9.  GOVERNING LAW.  THIS AGREEMENT AND THE SECURITIES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW     
YORK.                                                                           

  SECTION 9.10.  NO RECOURSE AGAINST OTHERS.  Except to the extent otherwise
required by applicable law an incorporator, director, officer, employee,        
stockholder or controlling person, as such, of the Company shall not have any   
liability for any obligations of the Company under the RVOs, this Agreement or  
for any claim based on, in respect of or by reason of such obligations or their 
creation. By accepting an RVO, each Holder of an RVO shall waive and release all
such liability. The waiver and release shall be part of the consideration for   
the issue of the RVOs.                                                          

   SECTION 9.11.  SUCCESSORS.  All agreements of the Company in this Agreement
and the RVOs shall bind their respective successors. All agreements of the      
Trustee in this Agreement shall bind its successors.                            

SECTION 9.12.  MULTIPLE ORIGINALS.  The parties may sign any number of  
copies of this Agreement. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this  
Agreement.                                                                      

SECTION 9.13.  VARIABLE PROVISIONS.  The Company initially appoints the 
Trustee as Paying Agent and Registrar for the RVOs and as custodian with respect
to any Global RVOs.                                                             

  SECTION 9.14.  QUALIFICATION OF AGREEMENT.  The Company shall qualify this
Agreement under the TIA and shall pay all reasonable costs and expenses         
(including attorneys' fees and expenses for the Company, the Trustee and the    
Holders) incurred in connection therewith, including, but not limited to, costs 
and expenses of qualification of this Agreement and the RVOs and printing this  
Agreement and the RVOs. The Trustee shall be entitled to receive from the       
Company any such Officers' Certificates, Opinions of Counsel or other           
documentation as it may reasonably request in connection with any such          
qualification of this Agreement under the TIA.                                  

SECTION 9.15.  SECURITY FOR PURPOSES OF UNIFORM COMMERCIAL CODE.  The   
parties agree that the RVOs are securities governed by Article 8 of the Uniform 
Commercial Code in effect in the State of New York.                             

SECTION 9.16.  TABLE OF CONTENTS; HEADINGS.  The table of contents,     
cross-reference sheet and headings of the Articles and Sections of this         
Agreement have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.                                                           

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly   
executed as of the date first written above.                                    

                                                                [Download Table]
                                         

ASSOCIATES FIRST CAPITAL CORPORATION     

By:                                      
     ------------------------------------
     Name:                               
     Title:                              

THE CHASE MANHATTAN BANK, as Trustee     

By:                                      
     ------------------------------------
     Name:                               
     Title:                              

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                                                                       EXHIBIT A

   [FORM OF FACE OF RESIDUAL VALUE OBLIGATION]

[Depository Legend, if applicable]

No. [    ]                                        Number of RVOs:               

                                                             CUSIP NO. _________

RESIDUAL VALUE OBLIGATIONS

Associates First Capital Corporation, a Delaware corporation (the       
"Company"), promises to pay to [            ], or registered assigns, any       
amounts payable on ______ of the Company's Residual Value Obligations ("RVOs")  
on each Payment Date, in accordance with the terms and conditions specified on  
the reverse hereof.                                                             

 Additional provisions of the RVOs are set forth on the other side of this
RVO certificate.                                                                

                                        ASSOCIATES FIRST CAPITAL CORPORATION

       By:
--------------------------------------------------------------------------------

TRUSTEE'S CERTIFICATE OF AUTHENTICATION                                         

The Chase Manhattan Bank as Trustee, certifies that this is one of the RVO      
certificates referred to in the Residual Value Obligations Agreement.           

By ____________________________                                                 

Authorized Signatory                          Date:                     

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   [FORM OF REVERSE SIDE OF RESIDUAL VALUE OBLIGATION]

RESIDUAL VALUE OBLIGATION 

1. DEFINITIONS.                                                                 

(a) Capitalized terms used herein and not defined herein shall have the 
meanings assigned thereto in the Residual Value Obligations Agreement, dated as 
of ______, 2000, between the Company and The Chase Manhattan Bank, as Trustee,  
as the same may be amended, modified or supplemented from time to time (the "RVO
AGREEMENT").                                                                    

(b) As used in this RVO certificate, the following terms shall have the 
following meanings:                                                             

"Accrued RVO Payment Amount" means the sum of (i) the aggregate of the  
amounts allocated pursuant to priority clause (D) of Section 2(a)(i) of this RVO
certificate or priority clause (B) of Section 2(a)(ii) of this RVO certificate  
to make payments on the RVOs and (ii) interest accrued on such amounts pursuant 
to Section 2(b)(i) of this RVO certificate, PROVIDED, that the Accrued RVO      
Payment Amount shall be reduced on each Payment Date by the amount of the       
aggregate RVO Payments made on such Payment Date.                               

    "AFCC Amount" means $______ million [$512 million plus interest at 1.25% per
month on $512 million (calculated on the basis of a 360-day year of twelve      
30-day months) from September 30, 1999 up to but excluding the Closing Date,    
less the amount of Residual Cash Flow generated on and after September 30, 1999 
and prior to the Closing Date]; PROVIDED, that such amount shall be             
(i) INCREASED on each Securitization Distribution Date following the Closing    
Date by the amount of AFCC Amount Interest for the period ending on and         
including the day prior to such Securitization Distribution Date and beginning  
on and including the immediately preceding Securitization Distribution Date (or 
in the case of the initial Securitization Distribution Date occurring after the 
Closing Date, beginning on and including the Closing Date) and (ii) decreased on
each Allocation Date by the amount of Residual Cash Flow allocated on such date 
pursuant to priority clause (C) of Section 2(a)(i) of this RVO certificate or   
priority clause (A) of Section 2(a)(ii) of this RVO certificate to the reduction
of the AFCC Amount.                                                             

  "AFCC Amount Interest", for any period, means interest accrued during such
period at the rate of 1.25% per month on the average daily AFCC Amount during   
such period (after giving effect to any increase in the AFCC Amount on the first
day of such period). AFCC Amount Interest shall be calculated on the basis of a 
360-day year of twelve 30-day months.                                           

   "Damages" shall have the meaning set forth in the definition of "Litigation
Expenses."                                                                      

 "Designated Securitization Transactions" means each of the securitization
transactions specified on Annex I to the RVO Agreement, including the           
transactions specified in the related Sale and Servicing Agreement or Pooling   
and Servicing Agreement, as the case may be, and the Related Documents (as      
defined in such Sale and Servicing Agreement or the Pooling and Servicing       
Agreement, as the case may be).                                                 

 "Designated Spread Accounts" means the Spread Accounts (as defined in the
Spread Account Agreement) established in connection with the Designated         
Securitization Transactions.                                                    

"Liquidated Other Transaction Receivables" means each Other Transaction 
Receivable as to which (i) 91 days have elapsed since the servicer (or the      
Company or any of its Subsidiaries, if there is no servicer of the Other        
Transaction Receivable) repossessed the related financed vehicle, (ii) the      
servicer (or the Company, if there is no servicer of the Other Transaction      
Receivable) has determined in good faith that all amounts it expects to recover 
have been received or (iii) all or any portion of a scheduled payment shall have
become more than 180 days past due.                                             

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  "Litigation Expenses" means the sum of (i) $10,000,000 (which amount shall
be deemed to have been incurred, for purposes of Section 2(a)(i)(B) of this RVO 
certificate, on November 12, 1999) and (ii) the amount of all damages,          
judgments, settlements, defense costs and other expenses paid or incurred by    
Arcadia Financial Ltd, the Company or any of their Affiliates after             
November 12, 1999 in connection with any litigation brought by or on behalf of  
shareholders of Arcadia Financial Ltd. or by or in the right of Arcadia         
Financial Ltd., net of related insurance proceeds, if any (the amount referred  
to in this clause (ii) being referred to herein as "DAMAGES"); PROVIDED, that   
the aggregate amount of Damages shall be deemed to be INCREASED on each         
Securitization Distribution Date following the Closing Date by the amount of    
Litigation Interest for the period ending on and including the day prior to such
Securitization Distribution Date and beginning on and including the immediately 
preceding Securitization Distribution Date (or, in the case of the initial      
Securitization Distribution Date occurring after the Closing Date, beginning on 
and including November 12, 1999).                                               

 "Litigation Interest", for any period, means interest accrued during such
period on the average daily amount of aggregate Damages during such period      
(regardless of whether incurred prior to or during such period and after giving 
effect to any increase in Damages on the first day of such period) at One-Month 
LIBOR; PROVIDED, that solely for the purpose of calculating Litigation Interest,
the aggregate amount of Damages shall be DECREASED on each Allocation Date by   
the amount of Residual Cash Flow allocated on such date pursuant to priority    
clause (B) of Section 2(a)(i) of this RVO certificate to the reduction of       
Litigation Expenses; and, PROVIDED, FURTHER, that the aggregate amount of       
Damages shall not be so decreased on any Allocation Date as contemplated by the 
immediately preceding proviso unless, as of such date, the aggregate amount of  
Residual Cash Flow allocated to reduce Litigation Expenses pursuant to priority 
clause (B) of Section 2(a)(i) of this RVO certificate equals or exceeds         
$10,000,000.                                                                    

    "Litigation Reserve Interest", for any period, means interest accrued during
such period on the excess, if any, of (i) the aggregate amount of Residual Cash 
Flow, if any, allocated to reduce Litigation Expenses pursuant to priority      
clause (B) of Section 2(a)(i) of this RVO certificate over (ii) the aggregate   
amount of Damages (such excess being calculated as of the day after the         
Allocation Date during such period) at One-Month LIBOR.                         

    "Optional Redemption Price" shall have the meaning set forth in Section 6 of
this RVO certificate.                                                           

 "One-Month LIBOR", for any period, means the rate per annum determined on
the basis of the rate for deposits in U.S. dollars for a 30-day period          
commencing on the first day of such period appearing on Page 3750 of the Dow    
Jones Markets screen of 11:00 A.M., London time, two Business Days prior to the 
beginning of such period. In the event that such rate does not appear on Page   
3750 of the Dow Jones Markets screen (or otherwise on such screen), One-Month   
LIBOR shall be determined by reference to such other comparable publicly        
available service for displaying eurodollar rates as may be selected by the     
Company or, in the absence of such availability, by reference to the rate at    
which the Trustee is offered U.S. dollar deposits at or about 11:00 A.M., New   
York City time, two Business Days prior to the beginning of such period in the  
interbank eurodollar market where its eurodollar and foreign currency and       
exchange operations are then being conducted for delivery on the first day of   
such period for the number of days comprised therein. All amounts calculated    
based on One-Month LIBOR shall be calculated on the basis of the actual number  
of days elapsed and a 360-day year.                                             

"Other Transaction Receivable" shall have the meaning set forth in the  
definition of "Residual Cash Flow."                                             

  "Other Transaction Receivables Collected Funds" means, with respect to any
period and without duplication, the amount of funds received by the Company or  
any of its Subsidiaries representing collections on the Other Transaction       
Receivables during such period, including, but not limited to, payments by or on
behalf of the obligor, bankruptcy trustee payments, dealer payments, dealer     
refunds                                                                         

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for life and/or disability insurance and other soft adds funded under the Other 
Transaction Receivables, GAP insurance or waiver proceeds from whatever source, 
comprehensive and physical damage insurance proceeds, sales tax refunds, legal  
proceeding recoveries, vendor single interest self-insurance proceeds, blanket  
vendor single interest insurance proceeds, warranty refunds and all Other       
Transaction Receivable Liquidation Proceeds.                                    

"Other Transaction Receivable Liquidation Proceeds" means all amounts   
realized by the Company or any of its Subsidiaries with respect to a Liquidated 
Other Transaction Receivable net of (i) reasonable expenses paid or reimbursed  
by the Company or any of its Subsidiaries to an auction house in connection with
the repossession and disposition of the financed vehicle and (ii) amounts that  
are required to be refunded to the obligor on such Other Transaction Receivable;
PROVIDED, HOWEVER, that the Other Transaction Receivable Liquidation Proceeds   
with respect to any Other Transaction Receivable shall in no event be less than 
zero.                                                                           

 "Other Transaction Receivables Residual Cash Flow" means, with respect to
any period and without duplication, the sum of (i) any Other Transaction        
Receivables Collected Funds received by the Company or any of its Subsidiaries  
during such period with respect to the Other Transaction Receivables (other than
amounts which constitute Collected Funds as defined in the Sale and Servicing   
Agreements or Pooling and Servicing Agreements, as the case may be, entered into
in connection with the Designated Securitization Transactions) and (ii) any     
proceeds received by the Company or any of its Subsidiaries during such period  
from the sale of any Other Transaction Receivable to a Person other than the    
Company or any of its Subsidiaries MINUS, without duplication,                  

 (v) all amounts received by the Company or any of its Subsidiaries during
such period with respect to such Other Transaction Receivables that are         
allocable to principal in accordance with the terms of the Other Transaction    
Receivables;                                                                    

    (w) for each Other Transaction Receivable that has become a Liquidated Other
Transaction Receivable during such period, the Principal Balance outstanding on 
the date it became a Liquidated Other Transaction Receivable;                   

(x) an amount to cover estimated servicing expenses and funding costs   
(including, without limitation, interest, credit enhancement insurance premiums 
and indenture and owner trustees', and other agents', fees) that would have been
payable with respect to such Other Transaction Receivables for such period,     
assuming that each such Other Transaction Receivable continued to be subject to 
its related Designated Securitization Transaction, which estimates, in the case 
of the credit enhancement insurance premiums and other fees, shall be based on  
the contractual rate as in effect on the date such Receivable became an Other   
Transaction Receivable and, in the case of other funding costs, shall be based  
on the contractual rate that would have been in effect during such period       
assuming the Other Transaction Receivable continued to be subject to its related
Designated Securitization Transaction;                                          

(y) if such period is the period in which a Receivable becomes an Other 
Transaction Receivable, any amount other than the Principal Balance of such     
Receivable that was paid to the related Designated Securitization Transaction in
connection with its purchase from that Designated Securitization Transaction    
(determined at the time of such purchase in accordance with the Sale and        
Servicing Agreement or Pooling and Servicing Agreement, as the case may be,     
entered into in connection with the related Designated Securitization           
Transaction); and                                                               

(z) if such period is the period in which the Company or any of its     
Subsidiaries sells such Other Transaction Receivable to a Person other than the 
Company or any of its Subsidiaries, an amount equal to (I) the Principal Balance
of such Other Transaction Receivable on the date sold, PLUS (II) if the Other   
Transaction Receivable was not purchased from a Designated Securitization       
Transaction at the option of the Company, an amount equal to the reasonable     
costs incurred by the Company or any of its Subsidiaries in connection with the 
sale of such Other Transaction Receivable by the Company or its Subsidiaries;   
PROVIDED that (A) amounts shall be deducted pursuant to this clause (z) only if 
such sale is                                                                    

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in accordance with reasonable business practices and with a good faith intent   
other than to reduce RVO Payments, (B) no amounts shall be deducted pursuant to 
this clause (z) if the Principal Balance of such Other Transaction Receivable   
has already been deducted pursuant to clause (w) above and (C) the amount       
deducted pursuant to this clause (z) with respect to any Other Transaction      
Receivable that had been purchased from a Designated Securitization Transaction 
at the option of the Company shall in no event exceed the gross amount realized 
by the seller upon the sale of such Other Transaction Receivable.               

"Payment Date" means the second Business Day after the Securitization   
Distribution Dates in April, July, October and January, commencing [Insert the  
first such day following the Effective Time (or, if the Effective Time is after 
the record date in respect of such first Payment Date, then on the next         
succeeding Payment Date)].                                                      

    "Principal Balance" means, with respect to any Other Transaction Receivable,
as of any date of determination (i) the aggregate amount advanced under such    
Other Transaction Receivable (whether before or after such Receivable became an 
other Transaction Receivable) toward the purchase price of the financed vehicle 
and related costs, including amounts advanced in respect of accessories,        
insurance premiums, service and warranty contracts, other items customarily     
financed as part of retail automobile installment sale contracts or promissory  
notes and related costs (provided that the foregoing shall not include any      
Insurance Add-On Amounts, as defined in the Sale and Servicing Agreement or     
Pooling and Servicing Agreement, as the case may be, entered into in connection 
with the related Designated Securitization Transaction) MINUS (ii) (A) the      
portion of all amounts received on or prior to such date (whether before or     
after such Receivable became an Other Transaction Receivable) and allocable to  
principal in accordance with the terms of the Other Transaction Receivable and  
(B) any Cram Down Loss (as defined in the Sale and Servicing Agreement or       
Pooling and Servicing Agreement, as the case may be, entered into in connection 
with the related Designated Securitization Transaction) in respect of such Other
Transaction Receivable (whether before or after such Receivable became an Other 
Transaction Receivable).                                                        

  "Receivable" shall have the meaning ascribed thereto in the Spread Account
Agreement.                                                                      

    "Residual Cash Flow", as of any Allocation Date, means, without duplication,
the sum of the following:                                                       

(a) the sum of (i) all cash actually released to the Company or its Subsidiaries
on the immediately preceding Securitization Distribution Date from the  
Designated Spread Accounts pursuant to priority EIGHTH, clause SECOND of
Section 3.03(b) of the Spread Account Agreement (as supplemented, in the
case of each Designated Spread Account, by the related Spread Account   
Agreement Supplement), (ii) other than amounts included in clause (i) of
 this definition on a prior Allocation Date, all cash actually released to
  the Company or its Subsidiaries from the Designated Spread Accounts during
   the calendar month preceding the month in which such Allocation Date occurs
  (PROVIDED, that (x) the foregoing shall exclude any cash so released prior
 to the Closing Date and (y) in the case of the final Allocation Date, the
period covered by this clause (ii) shall begin on the first day of the  
    calendar month preceding the month in which the final Allocation Date occurs
   and shall continue to and include such final Allocation Date) and (iii) all
cash actually released to the Company or its Subsidiaries from a Program
    Spread Account or a Tag Account (as defined in the Spread Account Agreement)
   during the calendar month preceding the month in which such Allocation Date
   occurs (PROVIDED, that (x) the foregoing shall exclude any cash so released
   prior to the Closing Date and (y) in the case of the final Allocation Date,
   the period covered by this clause (iii) shall begin on the first day of the
    calendar month preceding the month in which the final Allocation Date occurs
  and shall continue to and include such final Allocation Date), but only to
   the extent such cash would have been included as Residual Cash Flow but for
    clause (C) of the following proviso; PROVIDED, that Residual Cash Flow shall
    not include any of the foregoing amounts to the extent that (A) such amounts
are contractually required, pursuant to one                             

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or more agreements entered into in connection with the Designated       
  Securitization Transactions, to be applied other than as provided pursuant
  to Sections 2(a)(i) and 2(a)(ii) of this RVO certificate, (B) such amounts
    are released to one of the Company's Subsidiaries and such Subsidiary is not
permitted, pursuant to one or more agreements entered into in connection
    with the Designated Securitization Transactions, to dividend such amounts to
its parent free from any liens or encumbrances or other contractual     
  restrictions or (C) such amounts have been transferred to a Program Spread
Account or Tag Account (as defined in the Spread Account Agreement)     
  established in connection with the Designated Securitization Transactions;

(b) any Other Transaction Receivables Residual Cash Flow for the calendar month 
preceding the month in which such Allocation Date occurs (PROVIDED, that
 (x) the foregoing shall exclude any Other Transaction Receivable Residual
Cash Flow received prior to the Closing Date and (y) in the case of the 
   final Allocation Date, the period covered by this clause (b) shall begin on
  the first day of the calendar month preceding the month in which the final
Allocation Date occurs and shall continue to and include such final     
  Allocation Date) with respect to all Receivables which were securitized as
    of September 30, 1999 pursuant to the Designated Securitization Transactions
   but are no longer included, as of the end of such preceding calendar month,
in the Designated Securitization Transactions for any reason ("Other    
Transaction Receivables"); and                                          

(c) the amount of Litigation Reserve Interest, if any, for the period ending on 
and including the day prior to the Securitization Distribution Date     
 immediately preceding such Allocation Date and beginning on and including
the second Securitization Distribution Date immediately preceding such  
  Allocation Date (it being understood that the amount of Litigation Reserve
Interest as of the initial Allocation Date shall be zero).              

"RVO Expenses" means the sum of the following:                          

(a) the reasonable out-of-pocket fees and expenses paid or incurred directly or 
  indirectly by the Company or its Subsidiaries relating to the issuance and
    administration of the RVOs (including, without limitation, fees and expenses
of printing certificates representing the RVOs; fees and expenses of the
Trustee, the Registrar and the Paying Agent for the RVOs and any other  
agents engaged in accordance with the RVO Agreement; and related legal  
  expenses), but excluding accounting fees and expenses, audit fees, if any,
the fees and expenses relating to the listing of the RVOs on a national 
 securities exchange and legal expenses relating to the negotiating of the
terms of the RVOs and the drafting of the RVO Agreement; and            

(b) the reasonable actual or reasonably imputed cost to the Company or its      
   Subsidiaries of providing alternative credit support in connection with the
    early release of cash to the Company or its Subsidiaries from the Designated
Spread Accounts; PROVIDED, that such costs shall only be included as RVO
Expenses to the extent that, in the Company's good faith judgment, such 
costs do not exceed the benefits of such release, and PROVIDED, FURTHER,
that the costs referenced in this clause (b) shall be included as RVO   
 Expenses as such costs are incurred (or deemed to be incurred if imputed)
  or, at the Company's election, in a lump sum calculated on a present value
    basis (discounted at the rate of 1.25% per month) at the time of the related
release of cash.                                                        

    "RVO Payments" means the payments of Accrued RVO Payment Amounts pursuant to
Section 2(b) of this RVO certificate.                                           

  "Spread Account Agreement" means the Spread Account Agreement, dated as of
March 25, 1993, as amended and restated as of September 22, 1999, among Arcadia 
Financial Ltd., Arcadia Receivables Finance Corp., Financial Security           
Assurance Inc., The Chase Manhattan Bank and Norwest Bank Minnesota, National   
Association, as such agreement may be amended from time to time.                

  "Spread Account Agreement Supplements" means the Series Supplements to the
Spread Account Agreement entered into in connection with each of the Designated 
Securitization Transactions, as in effect from time to time.                    

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2. RVO PAYMENTS                                                                 

(a) ALLOCATIONS OF RESIDUAL CASH FLOW; DETERMINATION OF ACCRUED RVO PAYMENT     
AMOUNTS.                                                                

   (i) On the Business Day after each Securitization Distribution Date
occurring on or after the Closing Date (each such day, an "ALLOCATION   
DATE"), the Company shall make the following allocations of the Residual
Cash Flow as of such Allocation Date, if any, in the following order of 
priority:                                                               

(A) 100% to reduce RVO Expenses incurred after the third preceding
    Securitization Distribution Date and on or prior to the second
           preceding Securitization Distribution Date (PROVIDED, that (i) in the
          case of the initial Allocation Date, the allocation shall be 100% to
          reduce RVO Expenses incurred on or after November 12, 1999 and on or
        prior to the second preceding Securitization Distribution Date and
         (ii) in the case of the final Allocation Date, the allocation shall
    be 100% of the remaining Residual Cash Flow, if any, to reduce
        (x) RVO Expenses incurred after the third preceding Securitization
   Distribution Date and on or prior to such Allocation Date and
    (y) RVO Expenses which the Company reasonably expects to incur
           thereafter), PLUS (except in the case of the initial Allocation Date)
  any RVO Expenses incurred on or prior to the third preceding
        Securitization Distribution Date and on or after November 12, 1999
         which were not previously reduced by a prior allocation of Residual
        Cash Flow pursuant to this priority clause (A), until such amounts
have been reduced to zero, then                           

(B) 100% of the remaining Residual Cash Flow, if any, to reduce   
           Litigation Expenses incurred after the third preceding Securitization
Distribution Date and on or prior to the second preceding 
        Securitization Distribution Date (PROVIDED that (i) in the case of
      the initial Allocation Date, the allocation shall be 100% of the
         remaining Residual Cash Flow, if any, to reduce Litigation Expenses
          incurred on or after November 12, 1999 and on or prior to the second
        preceding Securitization Distribution Date and (ii) in the case of
    the final Allocation Date, the allocation shall be 100% of the
         remaining Residual Cash Flow, if any, to reduce Litigation Expenses
         incurred after the third preceding Securitization Distribution Date
           and on or prior to such Allocation Date), PLUS (except in the case of
         the initial Allocation Date) any Litigation Expenses incurred on or
          prior to the third preceding Securitization Distribution Date and on
       or after November 12, 1999 which were not previously reduced by a
      prior allocation of Residual Cash Flow pursuant to this priority
    clause (B), until such amounts have been reduced to zero, then

(C) 100% of remaining Residual Cash Flow, if any, to reduce the   
         then-effective AFCC Amount until the then-effective AFCC Amount has
been reduced to zero, then                                

  (D) 50% of the remaining Residual Cash Flow, if any, to increase the
Accrued RVO Payment Amount.                               

  (ii) In addition to, and after giving effect to, the allocation of
  Residual Cash Flow pursuant to Section 2(a)(i) of this RVO certificate, on
    the second Allocation Date following the final disposition of all litigation
giving rise to Damages and the final determination of all legal fees and
   expenses related thereto, an amount equal to the excess, if any, of (i) the
aggregate amount of Residual Cash Flow allocated on or prior to such    
Allocation Date to reduce Litigation Expenses pursuant to priority      
clause (B) above OVER (ii) the aggregate amount of Damages (the "EXCESS 
 LITIGATION RESERVE"), shall be allocated by the Company, in the following
order of priority:                                                      

 (A) 100% to reduce the then-effective AFCC Amount (calculated after
       giving effect to the allocation of Residual Cash Flow pursuant to
      Section 2(a)(i) of this RVO certificate on such Allocation Date)
until the AFCC Amount has been reduced to zero, then      

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     (B) 50% of remaining Excess Litigation Reserve, if any, to increase the
Accrued RVO Payment Amount.                               

(b) PAYMENTS ON PAYMENT DATES.                                                  

   (i) Except as provided in Section 9.8 of the RVO Agreement, amounts
allocated on an Allocation Date pursuant to priority clause (D) of      
Section 2(a)(i) of this RVO certificate or priority clause (B) of       
    Section 2(a)(ii) of this RVO certificate to increase the Accrued RVO Payment
   Amount shall accrue interest from and including such Allocation Date to but
excluding the date such amounts are paid pursuant to Section 2(b)(ii) of
this RVO certificate at a rate equal to One-Month LIBOR.                

      (ii) On each Payment Date (including the Redemption Date, if any), the
   Company shall make a payment with respect to the RVOs represented hereby in
    an amount equal to the product of (A) the then-effective Accrued RVO Payment
Amount and (B) the quotient of (i) the number of RVOs represented hereby
divided by (2) the total number of RVOs outstanding. There shall be no  
minimum payment on the RVOs.                                            

     (iii) Notwithstanding the foregoing, the Company shall not, except in
connection with the payment of RVO Payments on a Redemption Date, be    
required to make payments on this RVO certificate if the amount of the  
  payment that would otherwise be made on this RVO certificate would be less
 than $0.05 per RVO represented hereby. Any amounts not paid in accordance
with this clause (iii) and any amounts not paid in breach of the terms  
  hereof shall (A) be carried over to the next Payment Date and (B) continue
to accrue interest as provided in Section 2(b)(i).                      

(c) APPLICATION OF FUNDS PURSUANT TO ALLOCATION PROVISIONS                      

It is understood and agreed that the allocation provisions contained in 
Section 2(a) of this RVO certificate do not require any actual or specific use  
of funds by the Company.                                                        

3. METHOD OF PAYMENT                                                            

 No later than 10:00 a.m. (New York City time) on the date on which an RVO
Payment on this RVO certificate is due and payable, the Company shall           
irrevocably deposit with the Trustee or the Paying Agent money sufficient to pay
such RVO Payment. The Company will pay RVO Payments to the Persons who are      
registered Holders of RVOs at the close of business on the March 1, June 1,     
September 1, or December 1, respectively, next preceding each Payment Date even 
if RVOs are registered for transfer, cancelled, repurchased or redeemed after   
the record date and on or before the Payment Date. The Company will pay RVO     
Payments in money of the United States that at the time of payment is legal     
tender for payment of public and private debts and otherwise in accordance with 
the RVO Agreement.                                                              

4. PAYING AGENT AND REGISTRAR                                                   

Initially, The Chase Manhattan Bank (the "TRUSTEE") will act as Trustee,
Paying Agent and Registrar. The Company may appoint and change any Paying Agent,
Registrar or co-registrar without notice to any Holder. The Company or any of   
its Subsidiaries may act as Paying Agent, Registrar or co-registrar.            

5. RVO AGREEMENT                                                                

The Company has issued this RVO certificate under the RVO Agreement. The
terms of the RVOs include those stated in the RVO Agreement and those made part 
of the RVO Agreement by reference to the Trust Indenture Act of 1939 (15 U.S.C. 
SectionSection 77aaa-77bbbb), as amended and as in effect on the date of the RVO
Agreement (the "ACT"). The RVOs are subject to all such terms, and Holders are  
referred to the RVO Agreement and the Act for a statement of those terms.       

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The RVOs are general unsecured obligations of the Company payable in the
amounts determined hereunder.                                                   

6. OPTIONAL REDEMPTION                                                          

   Except as set forth below, the RVOs will not be redeemable at the option of
the Company.                                                                    

  At the Company's option, the outstanding RVOs will be redeemable, in whole
but not in part, on any Payment Date when the total Aggregate Principal Balance 
(as defined in the Designated Securitization Transactions) of the Receivables   
that were securitized pursuant to the Designated Securitization Transactions as 
of the Closing Date is less than or equal to 5% of the total Aggregate Principal
Balance of such Receivables as of the Closing Date, upon not less than 30 nor   
more than 60 days prior notice mailed by first-class mail to each Holder's      
registered address, at a redemption price equal to the fair value of the        
outstanding RVOs as of the date of the Board Resolution passed pursuant to      
Section 5.2 of the RVO Agreement (which fair value shall be determined assuming 
the prior payment of the RVO Payment, if any, to be made on the Redemption      
Date), as determined in good faith by the Board of Directors of the Company and 
set forth in the Board Resolution passed pursuant to Section 5.2 of the RVO     
Agreement (the "OPTIONAL REDEMPTION PRICE").                                    

    After the redemption date, no further RVO Payments shall be made on the RVOs
as long as the Company has satisfied its obligations under Section 5.4 of the   
RVO Agreement. If the Company shall not have satisfied its obligations under    
Section 5.4 of the RVO Agreement, (i) the RVOs shall continue to be outstanding 
and RVO Payments shall continue to accrue thereon as provided in this RVO       
certificate and (ii) any RVO Payments payable on such redemption date that are  
not so paid shall be carried over to the next Payment Date and shall continue to
accrue interest as provided in Section 2(b)(i) of this RVO certificate.         

 Holders must surrender the certificates representing the RVOs to a Paying
Agent to collect redemption payments.                                           

7. DENOMINATIONS; TRANSFER; EXCHANGE                                            

    The RVO certificates are in registered form without coupons in denominations
of whole RVOs and integral multiples thereof. A Holder may transfer or exchange 
RVOs in accordance with the RVO Agreement. The Registrar may require a Holder,  
among other things, to furnish appropriate endorsements or transfer documents   
and to pay any taxes and fees required by law or permitted by the RVO Agreement.

8. PERSONS DEEMED OWNERS                                                        

   The registered Holder of this RVO may be treated as the owner of it for all
purposes.                                                                       

9. UNCLAIMED MONEY                                                              

   If money for the payment of an RVO Payment or the Optional Redemption Price
remains unclaimed for two years, the Trustee or Paying Agent shall pay the money
back to the Company at its written request unless an abandoned property law     
designates another Person. After any such payment, Holders entitled to the money
must look only to the Company and not to the Trustee or Paying Agent for        
payment.                                                                        

10. AMENDMENT, WAIVER                                                           

 Subject to certain exceptions set forth in the RVO Agreement, (i) the RVO
Agreement or the RVOs may be amended with the written consent of the Holders of 
at least a majority of the then outstanding RVOs and (ii) any Default (other    
than with respect to nonpayment or in respect of a provision that cannot be     
amended without the written consent of each Holder affected) or                 

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noncompliance with any provision may be waived with the written consent of the  
Holders of a majority of the then outstanding RVOs. Subject to certain          
exceptions set forth in the RVO Agreement, without the consent of any Holder,   
the Company and the Trustee may amend the RVO Agreement or the RVOs to cure any 
ambiguity, omission, defect or inconsistency, or to comply with ARTICLE IV of   
the RVO Agreement, or to provide for uncertificated RVOs in addition to or in   
place of certificated RVOs, or to add guarantees with respect to the RVOs or to 
secure the RVOs, or to add additional covenants of the Company, or surrender    
rights and powers conferred on the Company, or to comply with any request of the
SEC in connection with qualifying the RVO Agreement under the Act, or to make   
any change that does not adversely affect the rights of any Holder.             

11. DEFAULTS AND REMEDIES                                                       

  Under the RVO Agreement, Events of Default include (i) default for 30 days
in payment of RVO Payments when due on the RVOs; (ii) default in payment of the 
Optional Redemption Price upon optional redemption pursuant to Article V of the 
RVO Agreement and paragraph 6 of the RVOs; (iii) the failure by the Company to  
comply for 60 days after notice with its other agreements contained in the RVO  
Agreement or under the RVOs (other than those referred to in (i) or             
(ii) above); or (iv) certain events of bankruptcy, insolvency or reorganization 
of the Company. However, a default under clause (iii) will not constitute an    
Event of Default until the Trustee or the Holders of at least 50% of the        
outstanding RVOs notify the Company of the default and the Company does not cure
such default within the time specified in clause (iii) hereof after receipt of  
such notice.                                                                    

   Holders may not enforce the RVO Agreement or the RVOs except as provided in
the RVO Agreement. The Trustee may refuse to enforce the RVO Agreement or the   
RVOs unless it receives reasonable indemnity or security. Subject to certain    
limitations, Holders of a majority of the outstanding RVOs may direct the       
Trustee in its exercise of any trust or power. The Trustee may withhold from    
Holders notice of any continuing Default or Event of Default (except a Default  
or Event of Default with respect to payments on the RVOs) if it determines that 
withholding notice is in the Holders' interest.                                 

12. TRUSTEE DEALINGS WITH THE COMPANY                                           

  Subject to certain limitations set forth in the RVO Agreement, the Trustee
under the RVO Agreement, in its individual or any other capacity, may become the
owner or pledgee of RVOs and may otherwise deal with and collect obligations    
owed to it by the Company or its Affiliates and may otherwise deal with the     
Company or its Affiliates with the same rights it would have if it were not     
Trustee.                                                                        

13. RESTRICTIVE COVENANTS.                                                      

   The RVO Agreement imposes certain limitations on the ability of the Company
to, among other things, consolidate with or merge or into any Person or transfer
all or substantially all of its properties and assets to another Person In      
addition, the RVO Agreement imposes (i) certain limitations on the ability of   
the Company to assign its obligations under the RVO Agreement or under the RVOs 
to another Person and (ii) certain obligations on the Company to arrange for the
servicing of the receivables securitized pursuant to the Designated             
Securitization Transactions.                                                    

14. DETERMINATIONS.                                                             

 (a) The Company agrees that, in computing Collected Funds for purposes of
the Designated Securitization Transactions or in computing Other Transaction    
Receivables Collected Funds, it shall include the proceeds paid to the Company  
or any of its Subsidiaries under the blanket GAP insurance policy maintained by 
Arcadia Financial Ltd., and it shall deduct the premiums on, and the costs to   
enforce, such policy. In addition, to the extent relevant in calculating        
Liquidation Proceeds for purposes                                               

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of the Designated Securitization Transactions, the Company agrees that it shall 
not deduct repossession expenses, except for repossession expenses paid or      
reimbursed to an auction house.                                                 

(b) Except to the extent that this RVO certificate or the RVO Agreement 
expressly provides to the contrary and except to the extent otherwise required  
by applicable law, the Company's calculations and determinations of all amounts 
and other matters in connection with the RVOs shall be final and conclusive in  
the absence of manifest error and the Trustee shall be fully authorized and     
protected and incur no liability in reliance thereon; PROVIDED, that the Company
shall engage its independent auditors to review the calculations and            
determinations made by the Company hereunder and under the RVO Agreement        
substantially to the same extent as the Company engages its independent auditors
to perform a similar function with respect to securitization transactions       
effected by or for the benefit of the Company and its Subsidiaries.             

15. NO RECOURSE AGAINST OTHERS                                                  

   Except to the extent otherwise required by applicable law, an incorporator,
director, officer, employee, stockholder or controlling person, as such, of the 
Company shall not have any liability for any obligations of the Company under   
the RVOs or the RVO Agreement or for any claim based on, in respect of or by    
reason of such obligations or their creation. By accepting a RVO, each Holder   
waives and releases all such liability. The waiver and release are part of the  
consideration for the issue of the RVOs.                                        

16. AUTHENTICATION                                                              

    This RVO certificate shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent acting on its behalf) manually signs the    
certificate of authentication on the other side of this RVO certificate.        

17. ABBREVIATIONS                                                               

   Customary abbreviations may be used in the name of a Holder or an assignee,
such as TEN COM (=tenants in common), TEN ENT (=tenants by the entirety), JT TEN
(=joint tenants with rights of survivorship and not as tenants in common), CUST 
(=custodian) and U/G/M/A (=Uniform Gift to Minors Act).                         

18. CUSIP NUMBERS                                                               

Pursuant to a recommendation promulgated by the Committee on Uniform    
Security Identification Procedures the Company has caused CUSIP numbers to be   
printed on the RVO certificates and has directed the Trustee to use CUSIP       
numbers in notices of redemption as a convenience to Holders. No representation 
is made as to the accuracy of such numbers either as printed on the RVO         
certificates or as contained in any notice of redemption and reliance may be    
placed only on the other identification numbers placed thereon.                 

19. GOVERNING LAW                                                               

    This RVO certificate shall be governed by, and construed in accordance with,
the laws of the State of New York.                                              

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ASSIGNMENT FORM 

To assign this RVO certificate, fill in the form below:                 

I or we assign and transfer this RVO certificate to                     

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

(Print or type assignee's name, address and zip code) 

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

(Insert assignee's soc. sec. or tax I.D. No.) 

and irrevocably appoint agent to transfer this RVO certificate on the books of  
the Company. The agent may substitute another to act for him.                   

Date:____________________________________ Your                                  
Signature:____________________________________                                  

Signature Guarantee:________________________________________________________    
(Signature must be guaranteed)

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

    Sign exactly as your name appears on the other side of this RVO certificate.

  The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with      
membership in an approved signature guarantee medallion program), pursuant to   
S.E.C. Rule 17Ad-15.                                                            

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[TO BE ATTACHED TO GLOBAL RVOs] 

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL RVO

The following increases or decreases in this Global RVO have been made: 

                                                        [Enlarge/Download Table]

                                                               RVOS REPRESENTED BY                            
                  AMOUNT OF DECREASE   AMOUNT OF INCREASE        THIS GLOBAL RVO       SIGNATURE OF AUTHORIZED
                  IN RVOS REPRESENTED  IN RVOS REPRESENTED          FOLLOWING           SIGNATORY OF TRUSTEE  
DATE OF EXCHANGE  BY THIS GLOBAL RVO   BY THIS GLOBAL RVO   SUCH DECREASE OR INCREASE       OR CUSTODIAN      
----------------  -------------------  -------------------  -------------------------  -----------------------
                                                                                                              

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                                                                         Annex I

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                                    

Olympic Automobile Receivables Trust, 1996-A                                    

Olympic Automobile Receivables Trust, 1996-B                                    

Olympic Automobile Receivables Trust, 1996-C                                    

Olympic Automobile Receivables Trust, 1996-D                                    

Olympic Automobile Receivables Trust, 1997-A                                    

Arcadia Automobile Receivables Trust, 1997-B                                    

Arcadia Automobile Receivables Trust, 1997-C                                    

Arcadia Automobile Receivables Trust, 1997-D                                    

Arcadia Automobile Receivables Trust, 1998-A                                    

Arcadia Automobile Receivables Trust, 1998-B                                    

Arcadia Automobile Receivables Trust, 1998-C                                    

Arcadia Automobile Receivables Trust, 1998-D                                    

Arcadia Automobile Receivables Trust, 1998-E                                    

Arcadia Automobile Receivables Trust, 1999-A                                    

Arcadia Automobile Receivables Trust, 1999-B                                    

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APPENDIX C
FAIRNESS OPINION OF J.P. MORGAN SECURITIES, INC.

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November 12, 1999                                                               

Board of Directors                                                              

Arcadia Financial Ltd.                                                          
7825 Washington Avenue South                                                    
Minneapolis, MN 55439                                                           

Attention:  Warren Kantor                                                       

Chairman of the Board                                   

Gentlemen:                                                                      

    You have requested our opinion as to the fairness, from a financial point of
view, to the stockholders of Arcadia Financial Ltd. (the "Company") of the      
consideration proposed to be paid to them in connection with the proposed merger
(the "Merger") of the Company with AFCC Newco Inc. ("Sub"), a wholly-owned      
subsidiary of Associates First Capital Corporation (the "Buyer"). Pursuant to   
the Agreement and Plan of Merger, dated as of November 12, 1999 (the            
"Agreement"), by and among the Company, the Buyer and Sub, Sub will merge with  
and into the Company, the Company will be the surviving corporation in the      
Merger, and each share of common stock, par value $0.01 per share, of the       
Company issued and outstanding immediately prior to the effective time of the   
Merger (other than certain shares to be canceled pursuant to the Agreement and  
other than dissenting shares) will be converted into the right to receive $4.90 
in cash and one residual value obligation (the "RVO") having the principal terms
described in Exhibit A to the Agreement.                                        

In arriving at our opinion, we have reviewed (i) the Agreement;         
(ii) certain publicly available information concerning the business of the      
Company and of certain other companies engaged in businesses comparable to those
of the Company, and the reported market prices for certain other companies'     
securities deemed comparable; (iii) publicly available terms of certain         
transactions involving companies comparable to the Company and the consideration
received for such companies; (iv) current and historical market prices of the   
common stock of the Company; (v) the audited financial statements of the Company
for the fiscal year ended December 31, 1998, and the unaudited financial        
statements of the Company for the period ended September 30, 1999; (vi) certain 
agreements with respect to outstanding indebtedness or obligations of the       
Company; (vii) certain internal financial analyses and forecasts prepared by the
Company and its management; and (viii) the terms of other business combinations 
that we deemed relevant.                                                        

    In addition, we have held discussions with certain members of the management
of the Company and the Buyer with respect to certain aspects of the Merger, the 
past and current business operations of the Company, the financial condition and
future prospects and operations of the Company, the effects of the Merger on the
financial condition and future prospects of the Company, and certain other      
matters we believed necessary or appropriate to our inquiry. We have reviewed   
such other financial studies and analyses and considered such other information 
as we deemed appropriate for the purposes of this opinion. In giving our        
opinion, we have relied upon and assumed, without independent verification, the 
accuracy and completeness of all information that was publicly available or was 
furnished to us by the Company or otherwise reviewed by us, and we have not     
assumed any responsibility or liability therefor. We have not conducted any     
valuation or appraisal of any assets or liabilities, nor have any such          
valuations or appraisals been provided to us. In relying on financial analyses  
and forecasts provided to us, we have assumed that they have been reasonably    
prepared based on assumptions reflecting the best currently available estimates 
and judgments by management as to the expected future results of operations and 
financial condition of the Company to which such analyses or forecasts relate.  
We have relied as to all legal matters relevant to rendering our opinion upon   
the advice of counsel.                                                          

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    Our opinion is necessarily based on economic, market and other conditions as
in effect on, and the information made available to us as of, the date hereof.  
It should be understood that subsequent developments may affect this opinion and
that we do not have any obligation to update, revise, or reaffirm this opinion. 
We are expressing no opinion herein as to the price at which the RVO will trade 
at any future time.                                                             

We have acted as financial advisor to the Company with respect to the   
proposed Merger and will receive a fee from the Company for our services. We    
will also receive an additional fee if the proposed Merger is consummated. In   
the past, J.P. Morgan has participated in the Company's conduit financing and   
securitizations, and has been an underwriter of the Company's bonds. As you are 
aware, in the past we and our affiliates have also provided financial advisory, 
capital markets and credit services to the Buyer, for which we and our          
affiliates have received customary fees. In the ordinary course of their        
businesses, J.P. Morgan Securities Inc. and its affiliates may actively trade   
the debt and equity securities of the Company or the Buyer for their own account
or for the accounts of customers and, accordingly, they may at any time hold    
long or short positions in such securities.                                     

 On the basis of and subject to the foregoing, it is our opinion as of the
date hereof that the consideration to be paid to the Company's stockholders in  
the proposed Merger is fair, from a financial point of view, to such            
stockholders.                                                                   

This letter is provided to the Board of Directors of the Company in     
connection with and for the purposes of its evaluation of the Merger. This      
opinion does not constitute a recommendation to any stockholder of the Company  
as to how such stockholder should vote with respect to the Merger. This opinion 
may be reproduced in full in any proxy or information statement mailed to       
stockholders of the Company.                                                    

Very truly yours,                                                               

                                                                [Download Table]
                                                    
J.P. MORGAN SECURITIES INC.                         

                 /s/ JOHN P. MULLEN                 
     -----------------------------------------      
                Name: John P. Mullen                
              Title: Managing Director              
By:                                                 

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APPENDIX D
THE VOTING AGREEMENT

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VOTING AGREEMENT

This AGREEMENT, dated as of November 12, 1999, among ASSOCIATES FIRST   
CAPITAL CORPORATION, a Delaware corporation ("PARENT"), AFCC NEWCO, INC., a     
Minnesota corporation ("SUB"), on the one hand, and the other parties signatory 
hereto (each a "SHAREHOLDER", and collectively, the "SHAREHOLDERS"), on the     
other hand.                                                                     

WHEREAS Parent, Sub and ARCADIA FINANCIAL LTD., a Minnesota corporation 
("COMPANY"), propose to enter into an Agreement and Plan of Merger, dated as of 
the date hereof (the "MERGER AGREEMENT"; capitalized terms used but not defined 
herein shall have the meanings set forth in the Merger Agreement) providing for 
a merger of Sub with and into Company, upon the terms and subject to the        
conditions set forth in the Merger Agreement; and                               

  WHEREAS each Shareholder beneficially owns the number of shares of Company
Common Stock set forth opposite such Shareholder's name on the signature page of
this Agreement (such shares of Company Common Stock, together with any other    
shares of Company Common Stock that such Shareholder acquires beneficial        
ownership of after the date hereof and during the term of this Agreement,       
whether upon the exercise of options, warrants or rights, the conversion or     
exchange of convertible or exchangeable securities, or by means of purchase,    
dividend, distribution or otherwise, being collectively referred to herein as   
the "SUBJECT SHARES"); and                                                      

  WHEREAS, as a condition to the willingness of Parent and Sub to enter into
the Merger Agreement, Parent and Sub have requested that the Shareholders enter 
into this Agreement.                                                            

    NOW, THEREFORE, to induce Parent and Sub to enter into, and in consideration
of its entering into, the Merger Agreement, and in consideration of the premises
and the representations, warranties and agreements contained herein, the parties
agree as follows:                                                               

 1.  REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.  Each Shareholder
hereby, severally and not jointly, represents and warrants to Parent and Sub as 
of the date hereof as follows:                                                  

     (a)  AUTHORITY; NO CONFLICTS.  Such Shareholder has full right, power
 and authority to execute and deliver this Agreement and to consummate the
  transactions contemplated hereby. This Agreement has been duly and validly
 authorized, executed and delivered by such Shareholder, and (assuming due
authorization, execution and delivery by Parent and Sub) constitutes the
 valid and binding obligation of such Shareholder enforceable against such
Shareholder in accordance with its terms, subject to the effects of     
 bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
    and other similar laws relating to or affecting creditors' rights generally,
and general equitable principles (whether considered in a proceeding in 
   equity or at law). No filing with, and no permit, authorization, consent or
 approval of, any Governmental Entity or any other person is necessary for
   the execution of this Agreement by such Shareholder and the consummation by
  such Shareholder of the transactions contemplated hereby, except where the
    failure to make such filing or to obtain such permit, authorization, consent
    or approval would not prevent or delay the performance by the Shareholder of
   its obligations under this Agreement. None of the execution and delivery of
this Agreement by such Shareholder, the consummation of the transactions
    contemplated hereby and compliance with the terms hereof by such Shareholder
will conflict with, result in any violation of, or default (or an event 
 which, with notice or lapse of time, or both, would constitute a default)
under, result in the termination of or a right of termination or        
cancellation under, accelerate the performance required by or rights or 
obligations under, or result in the creation of any Lien upon any of the
    properties or assets of such Shareholder under, any of the terms, conditions
  or provision of any trust agreement, loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit,      
 concession, franchise, license, judgment, order, notice, decree, statute,
    law, ordinance, rule or regulation applicable to such Shareholder or to such
    Shareholder's property or assets, except for any such conflicts, violations,

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defaults or other occurrences that would not prevent or delay the       
  performance by the Shareholder of its obligations under this Agreement. If
    such Shareholder is married and such Shareholder's Subject Shares constitute
community property or otherwise need spousal or other approval for this 
Agreement to be legal, valid and binding upon such Subject Shares, this 
Agreement has been duly authorized, executed and delivered by, and      
constitutes a valid and binding agreement of, such Shareholder's spouse,
    enforceable against such spouse in accordance with its terms, subject to the
 effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
    moratorium and other similar laws relating to or affecting creditors' rights
generally, and general equitable principles (whether considered in a    
proceeding in equity or at law). No trust of which such Shareholder is a
trustee requires the consent of any beneficiary to the execution and    
delivery of this Agreement or to the consummation of the transactions   
contemplated hereby.                                                    

     (b)  THE SUBJECT SHARES.  Such Shareholder is the beneficial owner of
    the Subject Shares. Such Shareholder does not beneficially own any shares of
capital stock of Company or securities convertible or exchangeable for  
    shares of capital stock of Company, other than the Subject Shares. Except to
  the extent such shares are pledged as of the date hereof, such Shareholder
   has the sole right and power to vote and dispose of the Subject Shares, and
none of such Subject Shares is subject to any voting trust or other     
    agreement, arrangement or restriction with respect to the voting or transfer
of any of the Subject Shares, except as contemplated by this Agreement. 

 2.  REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.  Each of Parent and
Sub hereby represents and warrants to the Shareholders that it is a corporation 
duly organized, validly existing and in good standing under the laws of the     
jurisdiction of its incorporation and has full corporate power and authority to 
execute and deliver this Agreement and to consummate the transactions           
contemplated hereby. This Agreement has been duly and validly authorized,       
executed and delivered by each of Parent and Sub and (assuming due              
authorization, execution and delivery by the Shareholders) constitutes the valid
and binding obligations of Parent and Sub, enforceable against each of them in  
accordance with its terms, subject to the effects of bankruptcy, insolvency,    
fraudulent conveyance, reorganization, moratorium and other similar laws        
relating to or affecting creditors' rights generally, and general equitable     
principles (whether considered in a proceeding in equity or at law). No filing  
with, and no permit, authorization, consent or approval of, any Governmental    
Entity or any other person is necessary for the execution of this Agreement by  
Parent and Sub and the consummation by Parent and Sub of the transactions       
contemplated hereby, except where the failure to make such filing or to obtain  
such permit, authorization, consent or approval would not prevent or delay the  
performance by Parent of its obligations under this Agreement. None of the      
execution and delivery of this Agreement by Parent and Sub, the consummation of 
the transactions contemplated hereby nor the compliance with the terms hereof by
Parent and Sub will conflict with, or result in any violation of, or default (or
an event which, with notice or lapse of time, or both, would constitute a       
default) under, result in the termination of or a right of termination or       
cancellation under, accelerate the performance required by or rights or         
obligations under, or result in the creation of any Lien upon any of the        
properties or assets of Parent or Sub under, any of the terms, conditions or    
provision of, the certificate or articles of incorporation or bylaws of Parent  
or Sub, as applicable, any trust agreement, loan or credit agreement, note,     
bond, mortgage, indenture, lease or other agreement, instrument, permit,        
concession, franchise, license, judgment, order, notice, decree, statute, law,  
ordinance, rule or regulation applicable to Parent or Sub or to Parent's or     
Sub's property or assets, except for any such conflicts, violations, defaults or
other occurrences that would not prevent or delay the performance by Parent of  
its obligations under this Agreement.                                           

   3.  COVENANTS OF THE SHAREHOLDERS.  Until the termination of this Agreement
in accordance with Section 7, each Shareholder, severally and not jointly,      
agrees as follows:                                                              

 (a)  VOTING OF SUBJECT SHARES.  At any meeting of shareholders of
    Company called to vote upon the Merger and/or the Merger Agreement or at any
adjournment thereof or in any other                                     

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    circumstances upon which a vote or other approval with respect to the Merger
and/or the Merger Agreement is sought, such Shareholder shall vote the  
    Subject Shares in favor of the Merger, the adoption by Company of the Merger
Agreement and the approval of the terms thereof and each of the other   
   transactions contemplated by the Merger Agreement. The agreements set forth
   in the immediately preceding sentence shall equally apply if such approvals
were to be sought by the solicitation of written consents.              

       At any meeting of shareholders of Company or at any adjournment thereof
    or in any other circumstances upon which such Shareholder's vote, consent or
other approval is sought, such Shareholder shall vote the Subject Shares
against (i) any action or agreement that would result in a breach in any
 material respect of any covenant, representation or warranty or any other
obligation or agreement of Company under the Merger Agreement and (ii), 
except with the prior written consent of Parent, any action or agreement
 that would adversely effect or delay the Merger in any respect including,
but not limited to: (A) any Transaction Proposal; (B) any amendment of  
Company's articles of incorporation or by-laws or other proposal or     
    transaction involving Company or any of its subsidiaries, which amendment or
    other proposal or transaction would in any manner impede, frustrate, prevent
    or nullify the Merger, the Merger Agreement or any of the other transactions
contemplated by the Merger Agreement or change in any manner the voting 
  rights of any class of Company's capital stock; (C) any material change in
  the present capitalization or dividend policy of Company; or (D) any other
material change in Company's corporate structure or business. Such      
Shareholder further agrees not to commit or agree to take any action    
inconsistent with the foregoing.                                        

   (b)  PROXIES.  Such Shareholder hereby grants to Parent, and to any
  officer of Parent designated by Parent, a proxy to vote the Subject Shares
   as indicated in Section 3(a) above. Such Shareholder agrees that this proxy
    shall be irrevocable and coupled with an interest and will take such further
  action or execute such other instruments as may be necessary to effectuate
  the intent of this proxy and hereby revoke any proxy previously granted by
such Shareholder with respect to the Subject Shares.                    

     (c)  TRANSFER RESTRICTIONS.  Such Shareholder agrees not to (i) sell,
   transfer, pledge (except to the extent that such Subject Shares are pledged
   as of the date hereof), encumber, assign or otherwise dispose of (including
  by gift) (collectively, "TRANSFER"), or enter into any contract, option or
other arrangement or understanding (including any profit sharing        
  arrangement) with respect to the Transfer of, any of the Subject Shares to
   any person other than pursuant to the Merger Agreement, (ii) enter into any
  voting arrangement or understanding, whether by proxy, voting agreement or
otherwise or (iii) take any action that would make any of its           
  representations or warranties contained herein untrue or incorrect or have
  the effect of preventing or disabling such Shareholder from performing its
obligations under this Agreement.                                       

      (d)  APPRAISAL RIGHTS.  Such Shareholder hereby irrevocably waives any
    rights of appraisal with respect to the Merger or rights to dissent from the
Merger that such Shareholder may have.                                  

      (e)  NO SOLICITATION.  Such Shareholder shall not (whether directly or
    indirectly through advisors, agents or other intermediaries), nor shall such
Shareholder authorize or permit any of such Shareholder's agents,       
   representatives or advisors to, (x) solicit, initiate, encourage (including
    by way of furnishing information) or take any action knowingly to facilitate
the submission of any inquiries, proposals or offers (whether or not in 
writing) from any person other than Parent relating to a Transaction    
Proposal, or agree to, approve or endorse any Transaction Proposal or   
  (y) enter into or participate in any discussions or negotiations regarding
  any of the foregoing, or otherwise cooperate in any way with, or knowingly
   assist or participate in, facilitate or encourage, any effort or attempt by
any other person to do or seek any of the foregoing; PROVIDED, that such
 Shareholder may act as a representative of Company in connection with any
activity the Company                                                    

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  is permitted to undertake pursuant to Section 6.8 of the Merger Agreement.
   If such Shareholder receives or becomes aware of a Transaction Proposal, or
a request for nonpublic information relating to Company or any of its   
    Subsidiaries or for access to the properties, books or records of Company or
   any of its Subsidiaries by any Person who is considering making or has made
   a Transaction Proposal, it shall immediately inform Parent orally and shall
  as promptly as practicable (and in any event within one day) inform Parent
   in writing of the terms and conditions of such proposal and the identity of
the person making it, forwarding a copy of any written communications   
   relating thereto. Such Shareholder will keep Parent informed on as prompt a
 basis as is practicable of the status and details of any such Transaction
  Proposal or request and any related discussions or negotiations, including
by forwarding copies of any material written communications relating    
thereto. Such Shareholder will immediately cease and cause its agents,  
representatives and advisors, to cease any and all existing activities, 
discussions or negotiations with any parties conducted heretofore with  
respect to any of the foregoing. If such Shareholder is a member of the 
  Board of Directors of Company, nothing in this Section 3(e) shall prohibit
such Shareholder, acting in such capacity, from taking and disclosing to
   Company's shareholders a position with respect to a Transaction Proposal by
a third party to the extent required under the Exchange Act, including  
Rules 14e-2 and 14d-9 thereunder, or from making such disclosure to     
Company's shareholders which Company's Board of Directors determines is 
required under applicable law pursuant to Section 6.8 of the Merger     
Agreement; PROVIDED, that nothing in this sentence shall affect the     
    obligations of such Shareholder under any other provision of this Agreement.

4.  FURTHER ASSURANCES.  Each of the Shareholders, severally and not    
jointly, agrees to, from time to time, execute and deliver, or cause to be      
executed and delivered, such additional or further consents, documents and other
instruments as Parent may reasonably request for the purpose of effectively     
carrying out the transactions contemplated by this Agreement.                   

5.  STOP TRANSFER ORDER.  Each of the Shareholders hereby authorizes    
Company's counsel to notify Company's transfer agent that there is a stop       
transfer order with respect to all of the Subject Shares (and that this         
Agreement places limits on the voting of the Subject Shares).                   

  6.  ASSIGNMENT; THIRD PARTY BENEFICIARIES.  Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of   
the parties hereto (whether by operation of law or otherwise) without the prior 
written consent of the other parties. Subject to the preceding sentence, this   
Agreement will be binding upon, inure to the benefit of and be enforceable by   
the parties and their respective successors and assigns. This Agreement         
(including the documents and instruments referred to herein) is not intended to 
confer upon any person other than the parties hereto any rights or remedies     
hereunder.                                                                      

 7.  TERMINATION.  This Agreement shall terminate, and no party shall have
any rights or obligations hereunder and this Agreement shall become null and    
void and have no further effect upon the first to occur of (a) the Effective    
Time and (b) the termination of the Merger Agreement pursuant to Section 8.1 of 
the Merger Agreement. Nothing in this Section 7 shall relieve any party of      
liability for breach of this Agreement.                                         

8.  GENERAL PROVISIONS.                                                 

(a)  AMENDMENTS.  This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.   

        (b)  NOTICE.  All notices and other communications hereunder shall be in
   writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt   
   requested) or delivered by an express courier (with confirmation) to Parent
  and Sub in accordance with Section 9.3 of the Merger Agreement and to each
Shareholder                                                             

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    at the address set forth under such Shareholder's name on the signature page
of this Agreement (or at such other address for a party as shall be     
specified by like notice).                                              

   (c)  INTERPRETATION.  When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless 
otherwise indicated. The headings contained in this Agreement are for   
reference purposes only and shall not affect in any way the meaning or  
  interpretation of this Agreement. Wherever the words "include", "includes"
or "including" are used in this Agreement, they shall be deemed to be   
  followed by the words "without limitation". No provision of this Agreement
shall be construed to require Parent, Sub or any of their respective    
Subsidiaries or affiliates, or any Shareholder to take any action which 
would violate any applicable law, rule or regulation.                   

(d)  COUNTERPARTS; FACSIMILE.  This Agreement may be executed in
  counterparts, all of which shall be considered one and the same agreement,
    and shall become effective when counterparts have been signed by each of the
parties and delivered to the other parties, it being understood that all
  parties need not sign the same counterpart. This Agreement may be executed
by facsimile signatures of the parties hereto.                          

       (e)  GOVERNING LAW.  This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.                  

    (f)  SEVERABILITY.  Any term or provision of this Agreement which is
    invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
   be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of
this Agreement or affecting the validity or enforceability of any of the
terms or provisions of this Agreement in any other jurisdiction. If any 
provision of this Agreement is so broad as to be unenforceable, the     
provision shall be interpreted to be only so broad as is enforceable.   

       9.  ENFORCEMENT.  The parties agree that irreparable damage would occur
    in the event that any of the provisions of this Agreement were not performed
 in accordance with their specific terms or were otherwise breached. It is
 accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce        
    specifically the terms and provisions of this Agreement in any Federal court
or New York State court sitting in the Borough of Manhattan, City of New
   York, this being in addition to any other remedy to which they are entitled
    at law or in equity. In addition, each of the parties hereto (i) consents to
   submit such party to the personal jurisdiction of any Federal court located
in the State of New York or any New York state court in the event any   
    dispute arises out of this Agreement or any of the transactions contemplated
   hereby, (ii) agrees that such party will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such
 court, (iii) agrees that such party will not bring any action relating to
 this Agreement or the transactions contemplated hereby in any court other
 than a Federal court sitting in the state of New York or a New York state
  court and (iv) waives any right to trial by jury with respect to any claim
or proceeding related to or arising out of this Agreement or any of the 
transactions contemplated hereby.                                       

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IN WITNESS WHEREOF, Parent, Sub, and each Shareholder has caused this   
Agreement to be executed on its behalf as of the date first written above.      

                                                                [Download Table]
                                                                          
                           ASSOCIATES FIRST CAPITAL CORPORATION           

                           By:  /s/ ROY GUTHRIE                           
                                ----------------------------------------- 
                                Name:  Roy Guthrie                        
                                Title: Senior Executive Vice President and
                                       Chief Financial Officer            

                           AFCC NEWCO, INC.                               

                           By:  /s/ ROY GUTHRIE                           
                                ----------------------------------------- 
                                Name:  Roy Guthrie                        
                                Title: Senior Executive Vice President and
                                       Chief Financial Officer            

Number of Subject Shares:                                                 

430,282                                                                   
                           /s/ WARREN KANTOR                              
                           ---------------------------------------------  
                           Warren Kantor                                  
                           7825 Washington Avenue South                   
                           Minneapolis, MN 55439                          

Number of Subject Shares:                                                 

799,387                                                                   
                           /s/ ROBERT J. CRESCI                           
                           ---------------------------------------------  
                           Robert J. Cresci                               
                           7825 Washington Avenue South                   
                           Minneapolis, MN 55439                          

Number of Subject Shares:                                                 

838,519                                                                   
                           /s/ JAMES L. DAVIS                             
                           ---------------------------------------------  
                           James L. Davis                                 
                           7825 Washington Avenue South                   
                           Minneapolis, MN 55439                          

Number of Subject Shares:                                                 

579,449                                                                   
                           /s/ RICH A. GREENAWALT                         
                           ---------------------------------------------  
                           Rich A. Greenawalt                             
                           7825 Washington Avenue South                   
                           Minneapolis, MN 55439                          

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APPENDIX E

SECTIONS 302A.471 AND 302A.473 OF THE MINNESOTA BUSINESS CORPORATION ACT

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302A.471 RIGHTS OF DISSENTING SHAREHOLDERS.--Subdivision 1.                     

 Actions creating rights. A shareholder of a corporation may dissent from,
and obtain payment for the fair value of the shareholder's shares in the event  
of, any of the following corporate actions:                                     

  (a) An amendment of the articles that materially and adversely affects the
rights or preferences of the shares of the dissenting shareholder in that it:   

(1) alters or abolishes a preferential right of the shares;     

      (2) creates, alters, or abolishes a right in respect of the redemption
of the shares, including a provision respecting a sinking fund for the  
redemption or repurchase of the shares;                                 

      (3) alters or abolishes a preemptive right of the holder of the shares
to acquire shares, securities other than shares, or rights to purchase  
shares or securities other than shares;                                 

      (4) excludes or limits the right of a shareholder to vote on a matter,
    or to cumulate votes, except as the right may be excluded or limited through
  the authorization or issuance of securities of an existing or new class or
   series with similar or different voting rights; except that an amendment to
the articles of an issuing public corporation that provides that        
    section 302A.671 does not apply to a control share acquisition does not give
rise to the right to obtain payment under this section;                 

 (b) A sale, lease, transfer, or other disposition of all or substantially
all of the property and assets of the corporation, but not including a          
transaction permitted without shareholder approval in section 302A.661,         
subdivision 1, or a disposition in dissolution described in section 302A.725,   
subdivision 2, or a disposition pursuant to an order of a court, or a           
disposition for cash on terms requiring that all or substantially all of the net
proceeds of disposition be distributed to the shareholders in accordance with   
their respective interests within one year after the date of disposition;       

  (c) A plan of merger, whether under this chapter or under chapter 322B, to
which the corporation is a (1)CONSTITUENT ORGANIZATION, except as provided in   
subdivision 3;                                                                  

    (d) A plan of exchange, whether under this chapter or under chapter 322B, to
which the corporation is a party as the corporation whose shares will be        
acquired by the acquiring corporation, if the shares of the shareholder are     
entitled to be voted on the plan; or                                            

(e) Any other corporate action taken pursuant to a shareholder vote with
respect to which the articles, the bylaws, or a resolution approved by the board
directs that dissenting shareholders may obtain payment for their shares.       

    Subd. 2.  Beneficial owners.  (a) A shareholder shall not assert dissenters'
rights as to less than all of the shares registered in the name of the          
shareholder, unless the shareholder dissents with respect to all the shares that
are beneficially owned by another person but registered in the name of the      
shareholder and discloses the name and address of each beneficial owner on whose
behalf the shareholder dissents. In that event, the rights of the dissenter     
shall be determined as if the shares as to which the shareholder has dissented  
and the other shares were registered in the names of different shareholders.    

(b) A beneficial owner of shares who is not the shareholder may assert  
dissenters' rights with respect to shares held on behalf of the beneficial      
owner, and shall be treated as a dissenting shareholder under the terms of this 
section and section 302A.473, if the beneficial owner submits to the corporation
at the time of or before the assertion of the rights a written consent of the   
shareholder.                                                                    

 Subd. 3.  Rights not to apply.  (a) Unless the articles, the bylaws, or a
resolution approved by the board otherwise provide, the right to obtain payment 
under this section does not apply to a shareholder                              

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of the surviving corporation in a merger, if the shares of the shareholder are  
not entitled to be voted on the merger.                                         

    (b) If a date is fixed according to section 302A.445, subdivision 1, for the
determination of shareholders entitled to receive notice of and to vote on an   
action described in sub division 1, only shareholders as of the date fixed, and 
beneficial owners as of the date fixed who hold through shareholders, as        
provided in subdivision 2, may exercise dissenters' rights.                     

   Subd. 4.  Other rights.  The shareholders of a corporation who have a right
under this section to obtain payment for their shares do not have a right at law
or in equity to have a corporate action described in subdivision 1 set aside or 
rescinded, except when the corporate action is fraudulent with regard to the    
complaining shareholder or the corporation. (Last amended by Ch. 85, L. '99,    
eff. 4-23-99.)                                                                  

302A.473 PROCEDURES FOR ASSERTING DISSENTERS' RIGHTS.--Subdivision 1.   
Definitions.  (a) For purposes of this section, the terms defined in this       
subdivision have the meanings given them.                                       

   (b) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action referred to in section 302A.471, subdivision 1 or the      
successor by merger of that issuer.                                             

(c) "Fair value of the shares" means the value of the shares of a       
corporation immediately before the effective date of the corporate action       
referred to in section 302A.471, subdivision 1.                                 

   (d) "Interest" means interest commencing five days after the effective date
of the corporate action referred to in section 302A.471, subdivision 1 up to and
including the date of payment, calculated at the rate provided in               
section 549.09 for interest on verdicts and judgments.                          

    Subd. 2.  Notice of action.  If a corporation calls a shareholder meeting at
which any action described in section 302A.471, subdivision 1 is to be voted    
upon, the notice of the meeting shall inform each shareholder of the right to   
dissent and shall include a copy of section 302A.471 and this section and a     
brief description of the procedure to be followed under these sections.         

    Subd. 3.  Notice of dissent.  If the proposed action must be approved by the
shareholders, a shareholder WHO IS ENTITLED TO DISSENT UNDER SECTION 302A.471   
AND who wishes to exercise dissenters' rights must file with the corporation    
before the vote on the proposed action a written notice of intent to demand the 
fair value of the shares owned by the shareholder and must not vote the shares  
in favor of the proposed action.                                                

 Subd. 4.  Notice of procedure; deposit of shares.  (a) After the proposed
action has been approved by the board and, if necessary, the shareholders, the  
corporation shall send to all shareholders who have complied with subdivision 3 
and to all shareholders entitled to dissent if no shareholder vote was required,
a notice that contains:                                                         

 (1) The address to which a demand for payment and certificates of
  certificated shares must be sent in order to obtain a payment and the date
by which they must be received;                                         

   (2) Any restrictions on transfer of uncertificated shares that will
apply after the demand for payment is received;                         

      (3) A form to be used to certify the date on which the shareholder, or
   the beneficial owner on whose behalf the shareholder dissents, acquired the
shares or an interest in them and to demand payment; and                

       (4) A copy of section 302A.471 and this section and a brief description
of the procedures to be followed under these sections.                  

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(b) In order to receive the fair value of the shares, a dissenting      
shareholder must demand payment and deposit certificated shares or comply with  
any restrictions on transfer of uncertificated shares within 30 days after the  
notice was given, but the dissenter retains all other rights of a shareholder   
until the proposed action takes effect.                                         

  Subd. 5.  Payment; return of shares.  (a) After the corporate action takes
effect, or after the corporation receives a valid demand for payment, whichever 
is later, the corporation shall remit to each dissenting shareholder who has    
complied with subdivision 3 and 4 the amount the corporation estimates to be the
fair value of the shares, plus interest, accompanied by:                        

       (1) the corporation's closing balance sheet and statement of income for
 a fiscal year ending not more than 16 months before the effective date of
  the corporate action, together with the latest available interim financial
statements;                                                             

        (2) an estimate by the corporation of the fair value of the shares and a
brief description of the method used to reach the estimate; and         

        (3) a copy of section 302A.471 and this section, and a brief description
of the procedure to be followed in demanding supplemental payment.      

  (b) The corporation may withhold the remittance described in paragraph (a)
from a person who was not a shareholder on the date the action dissented from   
was first announced to the public or who is dissenting on behalf of a person who
was not a beneficial owner on that date. If the dissenter has complied with     
subdivision 3 and 4, the corporation shall forward to the dissenter the         
materials described in paragraph (a), a statement of the reason for withholding 
the remittance, and an offer to pay to the dissenter the amount listed in the   
materials if the dissenter agrees to accept that amount in full satisfaction.   

   The dissenter may decline the offer and demand payment under subdivision 6.
Failure to do so entitles the dissenter only to the amount offered. If the      
dissenter makes demand, subdivisions 7 and 8 apply.                             

   (c) If the corporation fails to remit payment within 60 days of the deposit
of certificates or the imposition of transfer restrictions on uncertificated    
shares, it shall return all deposited certificates and cancel all transfer      
restrictions. However, the corporation may again give notice under              
subdivision 4 and require deposit or restrict transfer at a later time.         

 Subd. 6.  Supplemental payment; demand.  If a dissenter believes that the
amount remitted under subdivision 5 is less than the fair value of the shares   
plus interest, the dissenter may give written notice to the corporation of the  
dissenter's own estimate of the fair value of the shares, plus interest, within 
30 days after the corporation mails the remittance under subdivision 5, and     
demand payment of the difference. Otherwise, a dissenter is entitled only to the
amount remitted by the corporation.                                             

Subd. 7.  Petition; determination.  If the corporation receives a demand
under subdivision 6, it shall, within 60 days after receiving the demand, either
pay to the dissenter the amount demanded or agreed to by the dissenter after    
discussion with the corporation or file in court a petition requesting that the 
court determine the fair value of the shares, plus interest. The petition shall 
be filed in the county in which the registered office of the corporation is     
located, except that a surviving foreign corporation that receives a demand     
relating to the shares of a constituent domestic corporation shall file the     
petition in the county in this state in which the last registered office of the 
constituent corporation was located. The petition shall name as parties all     
dissenters who have demanded payment under subdivision 6 and who have not       
reached agreement with the corporation. The corporation shall, after filing the 
petition, serve all parties with a summons and copy of the petition under the   
rules of civil procedure. Nonresidents of this state may be served by registered
or certified mail or by publication as provided by law. Except a otherwise      
provided, the rules of civil procedure apply to this                            

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proceeding. The jurisdiction of the court is plenary and exclusive. The court   
may appoint appraisers, with powers and authorities the court deems proper, to  
receive evidence on and recommend the amount of the fair value of the shares.   
The court shall determine whether the shareholder or shareholders in question   
have fully complied with the requirements of this section, and shall determine  
the fair value of the shares, taking into account any and all factors the court 
finds relevant, computed by any method or combination of methods that the court,
in its discretion, sees fit to use, whether or not used by the corporation or by
a dissenter. The fair value of the shares as determined by the court is binding 
on all shareholders, wherever located. A dissenter is entitled to judgment in   
cash for the amount by which the fair value of the shares as determined by the  
court, plus interest, exceeds the amount, if any, remitted under subdivision 5, 
but shall not be liable to the corporation for the amount, if any, by which the 
amount, if any, remitted to the dissenter under subdivision 5 exceeds the fair  
value of the shares as determined by the court, plus interest.                  

 Subd. 8.  Costs; fees; expenses.  (a) The court shall determine the costs
and expenses of a proceeding under subdivision 7, including the reasonable      
expenses and compensation of any appraisers appointed by the court, and shall   
assess those costs and expenses against the corporation, except that the court  
may assess part or all of those costs and expenses against a dissenter whose    
action in demanding payment under subdivision 6 is found to be arbitrary,       
vexatious, or not in good faith.                                                

(b) If the court finds that the corporation has failed to comply        
substantially with this section, the court may assess all fees and expenses of  
any experts or attorneys as the court deems equitable. These fees and expenses  
may also be assessed against a person who has acted arbitrarily, vexatiously, or
not in good faith in bringing the proceeding, and may be awarded to a party     
injured by those actions.                                                       

    (c) The court may award, in its discretion, fees and expenses to an attorney
for the dissenters out of the amount awarded to the dissenters, if any. (Last   
amended by Chd. 10, L. '97, eff. 8-1-97.)                                       

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APPENDIX F
FINANCIAL DATA RELATING TO THE RECEIVABLES UNDERLYING THE 
RESIDUAL VALUE OBLIGATIONS

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DESCRIPTIONS OF TABLES IN APPENDIX F

   1)  CUMULATIVE DEFAULT RATES:  This table shows each securitization trust's
cumulative defaults divided by the original principal balance of each pool on a 
monthly basis.                                                                  

2)  CUMULATIVE LOSS RATES:  This table shows each securitization trust's
cumulative losses divided by the original principal balance of each pool on a   
monthly basis.                                                                  

    3)  NOTEHOLDERS BALANCE BY MONTH/POOL:  This table shows each securitization
trust's pool balance, which is the sum of the principal balance of the          
receivables and the cash on deposit in prefunding accounts, on a monthly basis. 
The amount of cash in the prefunding account for each securitization trust is at
any time equal to the proceeds from the sale of securities sold by the trust    
less principal balances of the receivables delivered to the trust on or prior to
such date.                                                                      

  4)  POOL FACTOR:  This table shows each securitization trust's outstanding
pool balance divided by the original pool balance, at the beginning of the      
transaction, of each pool on a monthly basis.                                   

  5)  ABS PREPAYMENT LIFE-TO-DATE (%):  This table shows each securitization
trust's Life-to-Date ABS Prepayment Speeds on a monthly basis. On a monthly     
basis, ABS Prepayment Speed represents the number of contracts which prepaid    
that month as a percentage of the original number of contracts in the pool as of
the origination of the contracts; ABS Prepayment Speed may also be equivalently 
calculated from the dollar amount of prepayments using the average amortized    
contract balance to impute the number of contracts which prepaid. Life-to-Date  
ABS Prepayment Speeds are calculated by solving for the average monthly ABS     
Prepayment Speed at which the pool would have had to prepay since inception in  
order to reach the current number of surviving contracts.                       

    6)  SELECTED FINANCIAL DATA:  This table shows the listed data for each pool
as of September 30, 1999. The Life-to-Date Cumulative Loss Rate is the dollar   
amount of total losses for each pool divided by the original amount securitized.
The Life-to-Date Cumulative Default Rate is the dollar amount of total defaulted
loans for each pool divided by the original amount securitized.                 

7)  SPREAD ACCOUNT INFORMATION:                                         

        a)  SPREAD ACCOUNT BALANCE ($):  is the balance of the spread account as
   of the end of each monthly period. During 1998, Arcadia and its provider of
asset-backed securities insurance entered into two separate agreements  
  whereby Arcadia was allowed to receive an aggregate of $60 million of cash
from certain spread accounts sooner than it would have absent such      
arrangement.                                                            

    b)  SPREAD ACCOUNT DISTRIBUTION ($):  is the amount of cash released
from the spread account as of the end of each monthly period.           

        c)  SPREAD ACCOUNT DEPOSIT/(DRAW) ($):  is the amount actually deposited
    into (or, if negative, withdrawn from) each of the spread accounts as of the
end of each monthly period.                                             

8)  PROGRAM SPREAD TAG ACCOUNT INFORMATION:                             

   Pursuant to an arrangement between Arcadia and its provider of asset-backed
securities insurance, if any insured securitization trust exceeds a specified   
portfolio performance test as defined within the trust agreement, Arcadia may,  
in lieu of retaining excess cash from that securitization trust in the related  
spread accounts, pledge an equivalent amount of cash, which has the effect of   
preventing the violation of the portfolio performance test. Restrictions on such
pledged amounts may be lifted if the portfolio performance for the related      
securitization trusts tests are met and maintained as defined in the            
arrangement, the violations are waived, or the loans within the securitization  
trust are repurchased by Arcadia at the end of the securitization term.         

  a)  PROGRAM SPREAD TAG ACCOUNT BALANCE ($):  is the balance of the
program spread tag account as of the end of each monthly period.        

    b)  PROGRAM SPREAD TAG ACCOUNT ACTIVITY ($):  is the amount actually
   deposited into (or, if negative, withdrawn from) each of the program spread
tag accounts as of the end of each monthly period.                      

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SECURITIZATION TRUSTS 

CUMULATIVE DEFAULT RATES                                                        

                                                        [Enlarge/Download Table]

MONTH          1994-B     1995-A     1995-B     1995-C     1995-D     1995-E     1996-A     1996-B     1996-C     1996-D 
-----         --------   --------   --------   --------   --------   --------   --------   --------   --------   --------
                                                                                                                         
 1..........    0.00%      0.01%      0.00%      0.00%      0.01%      0.08%      0.02%      0.01%      0.00%      0.00% 
 2..........    0.01%      0.03%      0.01%      0.03%      0.11%      0.38%      0.16%      0.04%      0.05%      0.04% 
 3..........    0.05%      0.09%      0.03%      0.13%      0.29%      0.71%      0.55%      0.21%      0.15%      0.13% 
 4..........    0.08%      0.22%      0.17%      0.37%      0.83%      1.20%      0.88%      0.56%      0.47%      0.52% 
 5..........    0.17%      0.72%      0.53%      0.72%      1.40%      1.79%      1.31%      1.05%      0.91%      0.81% 
 6..........    0.30%      1.09%      1.03%      1.25%      1.73%      2.17%      1.83%      1.59%      1.36%      1.39% 
 7..........    0.49%      1.50%      1.53%      2.08%      2.31%      2.94%      2.42%      2.20%      1.92%      1.98% 
 8..........    0.78%      2.03%      2.20%      2.71%      2.81%      3.51%      3.03%      2.71%      2.57%      2.24% 
 9..........    1.08%      2.68%      2.93%      3.11%      3.29%      4.17%      3.69%      3.26%      3.13%      2.55% 
 10.........    1.47%      3.32%      4.03%      3.53%      3.82%      4.73%      4.24%      3.78%      3.69%      3.25% 
 11.........    1.79%      4.19%      4.22%      3.92%      4.26%      5.30%      4.74%      4.30%      4.02%      3.83% 
 12.........    2.25%      4.41%      4.64%      4.39%      4.79%      5.85%      5.27%      4.92%      4.43%      4.42% 
 13.........    2.59%      5.23%      5.38%      4.91%      5.33%      6.37%      5.72%      5.55%      4.99%      5.18% 
 14.........    3.02%      5.57%      5.86%      5.45%      5.88%      6.89%      6.28%      5.97%      5.54%      5.86% 
 15.........    3.47%      5.99%      6.36%      5.83%      6.41%      7.36%      6.89%      6.30%      6.13%      6.58% 
 16.........    4.15%      6.38%      6.87%      6.30%      6.91%      7.85%      7.39%      6.87%      6.69%      7.26% 
 17.........    4.56%      6.78%      7.84%      6.75%      7.25%      8.43%      7.92%      7.43%      7.27%      7.99% 
 18.........    4.88%      7.11%      7.98%      7.19%      7.69%      8.92%      8.29%      7.94%      7.85%      8.58% 
 19.........    5.13%      7.42%      8.27%      7.60%      8.11%      9.42%      8.80%      8.50%      8.50%      9.20% 
 20.........    5.42%      7.82%      8.68%      8.06%      8.55%      9.79%      9.20%      9.09%      9.18%      9.75% 
 21.........    5.67%      8.07%      9.03%      8.43%      8.94%     10.07%      9.63%      9.57%      9.74%     10.50% 
 22.........    5.89%      8.34%      9.36%      8.73%      9.40%     10.48%     10.04%     10.07%     10.27%     11.05% 
 23.........    6.11%      8.63%      9.87%      9.11%      9.78%     10.93%     10.50%     10.61%     10.81%     11.71% 
 24.........    6.42%      9.07%      9.99%      9.49%     10.01%     11.33%     10.98%     11.06%     11.38%     12.13% 
 25.........    6.70%      9.36%     10.12%      9.86%     10.40%     11.71%     11.45%     11.58%     11.88%     12.41% 
 26.........    6.92%      9.67%     10.45%     10.20%     10.73%     12.13%     11.88%     11.96%     12.40%     12.91% 
 27.........    7.17%      9.92%     10.75%     10.42%     11.00%     12.55%     12.28%     12.45%     12.84%     13.30% 
 28.........    7.36%     10.32%     11.07%     10.70%     11.33%     12.93%     12.67%     12.83%     13.14%     13.66% 
 29.........    7.55%     10.59%     11.29%     11.00%     11.69%     13.27%     13.00%     13.31%     13.60%     14.11% 
 30.........    7.80%     10.81%     11.47%     11.33%     12.05%     13.58%     13.42%     13.67%     13.94%     14.59% 
 31.........    8.06%     11.01%     11.73%     11.64%     12.38%     13.92%     13.72%     14.03%     14.24%     14.92% 
 32.........    8.31%     11.19%     12.02%     11.89%     12.68%     14.21%     14.11%     14.43%     14.54%     15.26% 
 33.........    8.53%     11.40%     12.27%     12.14%     12.99%     14.48%     14.35%     14.65%     14.89%     15.57% 
 34.........    8.75%     11.62%     12.53%     12.39%     13.23%     14.79%     14.57%     14.86%     15.15%     15.91% 
 35.........    8.91%     11.88%     12.71%     12.68%     13.46%     15.09%     14.84%     15.12%     15.44%     16.14% 
 36.........    9.03%     12.04%     12.96%     12.96%     13.76%     15.33%     15.01%     15.42%     15.75%     16.41% 
 37.........    9.19%     12.29%     13.21%     13.21%     14.00%     15.46%     15.20%     15.61%     16.04%            
 38.........    9.35%     12.53%     13.45%     13.43%     14.26%     15.80%     15.40%     15.83%     16.26%            
 39.........    9.52%     12.75%     13.74%     13.63%     14.45%     15.96%     15.66%     16.05%     16.49%            
 40.........    9.71%     12.92%     13.95%     13.87%     14.57%     16.08%     15.82%     16.26%                       
 41.........    9.85%     13.07%     14.13%     14.21%     14.80%     16.22%     16.00%     16.41%                       
 42.........   10.02%     13.26%     14.33%     14.30%     14.97%     16.42%     16.18%     16.57%                       
 43.........   10.20%     13.45%     14.51%     14.62%     15.07%     16.58%     16.35%                                  
 44.........   10.36%     13.64%     14.68%     14.86%     15.19%     16.74%     16.50%                                  
 45.........   10.50%     13.84%     15.00%     14.86%     15.36%     16.90%     16.64%                                  
 46.........   10.63%     14.01%     15.14%     14.89%     15.48%     17.05%                                             
 47.........   10.77%     14.08%     15.36%     14.92%     15.61%     17.12%                                             
 48.........   10.87%     14.18%     15.42%     15.08%     15.75%     17.24%                                             
 49.........   10.98%     14.27%     15.41%     15.16%     15.86%                                                        
 50.........   11.12%     14.38%     15.45%     15.27%     15.93%                                                        
 51.........   11.29%     14.50%     15.54%     15.36%     16.01%                                                        
 52.........   11.43%     14.66%     15.63%     15.44%                                                                   
 53.........   11.53%     14.72%     15.72%     15.60%                                                                   
 54.........   11.57%     14.80%     15.82%     15.65%                                                                   
 55.........   11.57%     14.89%     15.97%                                                                              
 56.........   11.58%     14.96%     16.07%                                                                              
 57.........   11.66%     15.10%     16.09%                                                                              
 58.........   11.72%     15.14%                                                                                         
 59.........   11.78%                                                                                                    
 60.........   11.83%                                                                                                    
 61.........   11.86%                                                                                                    
 62.........   11.91%                                                                                                    
 63.........   11.97%                                                                                                    


MONTH         1997-A     1997-B     1997-C     1997-D     1998-A     1998-B     1998-C     1998-D     1998-E     1999-A  
-----        --------   --------   --------   --------   --------   --------   --------   --------   --------   -------- 
                                                                                                                         
 1..........   0.02%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%  
 2..........   0.03%      0.00%      0.01%      0.00%      0.00%      0.01%      0.01%      0.00%      0.00%      0.00%  
 3..........   0.09%      0.03%      0.03%      0.04%      0.05%      0.11%      0.10%      0.01%      0.02%      0.03%  
 4..........   0.39%      0.21%      0.10%      0.13%      0.16%      0.28%      0.19%      0.12%      0.07%      0.18%  
 5..........   0.49%      0.43%      0.27%      0.36%      0.41%      0.66%      0.47%      0.29%      0.25%      0.43%  
 6..........   0.70%      0.81%      0.67%      0.77%      0.92%      1.08%      0.86%      0.62%      0.56%      0.87%  
 7..........   1.20%      1.36%      1.24%      1.33%      1.65%      1.44%      1.33%      1.11%      1.00%      1.45%  
 8..........   1.72%      2.08%      1.83%      1.89%      2.36%      2.07%      1.85%      1.58%      1.61%      1.87%  
 9..........   2.34%      2.82%      2.43%      2.75%      3.01%      2.64%      2.37%      2.06%      2.21%      2.40%  
 10.........   3.06%      3.59%      3.00%      3.58%      3.51%      3.15%      2.87%      2.67%      2.91%             
 11.........   3.65%      4.41%      3.62%      4.38%      4.12%      3.71%      3.43%      3.27%      3.43%             
 12.........   4.33%      5.14%      4.38%      5.01%      4.62%      4.25%      3.93%      3.68%      4.07%             
 13.........   5.08%      5.75%      5.20%      5.40%      5.16%      4.70%      4.45%      4.05%                        
 14.........   5.79%      6.34%      5.84%      5.99%      5.68%      5.10%      4.91%                                   
 15.........   6.50%      7.11%      6.39%      6.51%      6.25%      5.59%      5.48%                                   
 16.........   7.16%      7.86%      6.80%      7.05%      6.68%      6.04%                                              
 17.........   7.78%      8.64%      7.38%      7.59%      7.22%      6.48%                                              
 18.........   8.53%      9.30%      7.84%      8.22%      7.80%      7.00%                                              
 19.........   9.20%      9.70%      8.28%      8.65%      8.31%                                                         
 20.........   9.87%     10.30%      8.83%      9.12%      8.71%                                                         
 21.........  10.38%     10.80%      9.36%      9.68%      9.18%                                                         
 22.........  10.75%     11.30%      9.76%     10.18%                                                                    
 23.........  11.26%     11.82%     10.15%     10.60%                                                                    
 24.........  11.68%     12.33%     10.65%     11.07%                                                                    
 25.........  12.14%     12.75%     11.14%                                                                               
 26.........  12.62%     13.18%     11.75%                                                                               
 27.........  13.11%     13.62%     11.98%                                                                               
 28.........  13.50%     14.08%                                                                                          
 29.........  13.95%     14.42%                                                                                          
 30.........  14.24%     14.80%                                                                                          
 31.........  14.62%                                                                                                     
 32.........  15.03%                                                                                                     
 33.........  15.26%                                                                                                     
 34.........                                                                                                             
 35.........                                                                                                             
 36.........                                                                                                             
 37.........                                                                                                             
 38.........                                                                                                             
 39.........                                                                                                             
 40.........                                                                                                             
 41.........                                                                                                             
 42.........                                                                                                             
 43.........                                                                                                             
 44.........                                                                                                             
 45.........                                                                                                             
 46.........                                                                                                             
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 48.........                                                                                                             
 49.........                                                                                                             
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 56.........                                                                                                             
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 59.........                                                                                                             
 60.........                                                                                                             
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 62.........                                                                                                             
 63.........                                                                                                             


MONTH         1999-B     1999-C                                                                                          
-----        --------   --------                                                                                         
                                                                                                                         
 1..........   0.00%      0.00%                                                                                          
 2..........   0.02%      0.01%                                                                                          
 3..........   0.09%      0.08%                                                                                          
 4..........   0.30%                                                                                                     
 5..........   0.59%                                                                                                     
 6..........   1.01%                                                                                                     
 7..........                                                                                                             
 8..........                                                                                                             
 9..........                                                                                                             
 10.........                                                                                                             
 11.........                                                                                                             
 12.........                                                                                                             
 13.........                                                                                                             
 14.........                                                                                                             
 15.........                                                                                                             
 16.........                                                                                                             
 17.........                                                                                                             
 18.........                                                                                                             
 19.........                                                                                                             
 20.........                                                                                                             
 21.........                                                                                                             
 22.........                                                                                                             
 23.........                                                                                                             
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 25.........                                                                                                             
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 39.........                                                                                                             
 40.........                                                                                                             
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 42.........                                                                                                             
 43.........                                                                                                             
 44.........                                                                                                             
 45.........                                                                                                             
 46.........                                                                                                             
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 48.........                                                                                                             
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 50.........                                                                                                             
 51.........                                                                                                             
 52.........                                                                                                             
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 54.........                                                                                                             
 55.........                                                                                                             
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 59.........                                                                                                             
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 62.........                                                                                                             
 63.........                                                                                                             

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SECURITIZATION TRUSTS 

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                        CUMULATIVE LOSS RATES                                                                                      
                        -----------------------------------------------------------------------------------------------------------
        MONTH            1994-B     1995-A     1995-B     1995-C     1995-D     1995-E     1996-A     1996-B     1996-C     1996-D 
---------------------   --------   --------   --------   --------   --------   --------   --------   --------   --------   --------
                                                                                                                                   
 1                        0.00%      0.00%      0.00%      0.00%      0.01%      0.08%      0.01%      0.01%      0.00%      0.00% 
 2                        0.01%      0.01%      0.00%      0.02%      0.08%      0.35%      0.12%      0.03%      0.05%      0.03% 
 3                        0.05%      0.06%      0.01%      0.09%      0.20%      0.50%      0.44%      0.17%      0.12%      0.11% 
 4                        0.05%      0.13%      0.09%      0.24%      0.55%      0.81%      0.65%      0.44%      0.39%      0.44% 
 5                        0.10%      0.49%      0.31%      0.35%      0.94%      1.02%      0.90%      0.77%      0.73%      0.62% 
 6                        0.14%      0.48%      0.59%      0.61%      0.90%      1.00%      1.27%      1.15%      1.03%      1.04% 
 7                        0.18%      0.70%      0.67%      1.05%      1.15%      1.39%      1.57%      1.53%      1.37%      1.40% 
 8                        0.33%      0.75%      0.85%      1.24%      1.24%      1.68%      1.90%      1.85%      1.72%      1.41% 
 9                        0.45%      0.95%      1.23%      1.20%      1.37%      2.01%      2.35%      2.13%      2.00%      1.44% 
 10                       0.63%      1.19%      1.77%      1.34%      1.53%      2.24%      2.57%      2.32%      2.26%      1.64% 
 11                       0.71%      1.58%      1.49%      1.33%      1.67%      2.41%      2.78%      2.59%      2.27%      1.90% 
 12                       0.94%      1.37%      1.41%      1.45%      1.85%      2.74%      2.95%      2.84%      2.38%      2.23% 
 13                       0.91%      1.66%      1.80%      1.63%      2.05%      2.92%      3.05%      3.07%      2.47%      2.75% 
 14                       0.98%      1.66%      1.78%      1.89%      2.21%      3.12%      3.33%      3.10%      2.68%      3.18% 
 15                       1.22%      1.67%      1.87%      1.99%      2.50%      3.21%      3.61%      3.06%      2.99%      3.49% 
 16                       1.55%      1.83%      2.03%      2.06%      2.66%      3.35%      3.74%      3.13%      3.31%      3.80% 
 17                       1.65%      1.88%      2.72%      2.20%      2.71%      3.60%      3.88%      3.35%      3.63%      4.06% 
 18                       1.67%      1.99%      2.56%      2.43%      2.84%      3.74%      3.86%      3.59%      3.87%      4.29% 
 19                       1.67%      2.10%      2.55%      2.61%      2.92%      3.84%      3.92%      3.91%      4.15%      4.49% 
 20                       1.63%      2.25%      2.71%      2.87%      3.10%      3.86%      4.04%      4.26%      4.42%      4.65% 
 21                       1.68%      2.27%      2.86%      2.99%      3.20%      3.85%      4.18%      4.36%      4.64%      4.97% 
 22                       1.71%      2.38%      2.95%      2.94%      3.30%      3.90%      4.37%      4.53%      4.86%      5.12% 
 23                       1.76%      2.43%      3.24%      3.09%      3.44%      4.10%      4.64%      4.72%      5.06%      5.46% 
 24                       1.92%      2.72%      3.11%      3.23%      3.45%      4.26%      4.80%      4.95%      5.32%      5.62% 
 25                       1.98%      2.68%      2.93%      3.33%      3.50%      4.44%      4.96%      5.15%      5.49%      5.76% 
 26                       2.03%      2.74%      3.02%      3.38%      3.58%      4.65%      5.10%      5.27%      5.76%      6.04% 
 27                       2.17%      2.82%      3.15%      3.39%      3.69%      4.81%      5.29%      5.47%      5.93%      6.22% 
 28                       2.22%      2.99%      3.28%      3.39%      3.86%      4.94%      5.43%      5.62%      6.08%      6.39% 
 29                       2.29%      3.08%      3.26%      3.48%      4.07%      5.05%      5.56%      5.88%      6.32%      6.63% 
 30                       2.41%      3.14%      3.28%      3.61%      4.25%      5.17%      5.75%      6.02%      6.50%      6.89% 
 31                       2.48%      3.17%      3.33%      3.78%      4.36%      5.30%      5.85%      6.27%      6.65%      7.06% 
 32                       2.56%      3.14%      3.47%      3.89%      4.46%      5.40%      6.07%      6.50%      6.80%      7.23% 
 33                       2.63%      3.25%      3.57%      3.99%      4.57%      5.55%      6.17%      6.58%      7.00%      7.29% 
 34                       2.69%      3.37%      3.72%      4.07%      4.64%      5.69%      6.30%      6.66%      7.13%      7.51% 
 35                       2.72%      3.54%      3.78%      4.19%      4.73%      5.85%      6.45%      6.79%      7.29%      7.67% 
 36                       2.71%      3.59%      3.89%      4.31%      4.88%      5.96%      6.51%      6.95%      7.36%      7.81% 
 37                       2.75%      3.69%      3.97%      4.39%      4.99%      6.00%      6.60%      7.05%      7.55%            
 38                       2.78%      3.77%      4.06%      4.49%      5.12%      6.24%      6.72%      7.17%      7.69%            
 39                       2.86%      3.85%      4.21%      4.58%      5.19%      6.31%      6.88%      7.19%      7.83%            
 40                       2.94%      3.91%      4.29%      4.69%      5.25%      6.35%      6.97%      7.33%                       
 41                       3.01%      3.94%      4.39%      4.94%      5.39%      6.41%      7.06%      7.43%                       
 42                       3.07%      4.05%      4.48%      4.93%      5.49%      6.52%      7.06%      7.52%                       
 43                       3.14%      4.16%      4.55%      5.20%      5.51%      6.59%      7.18%                                  
 44                       3.22%      4.21%      4.64%      5.37%      5.58%      6.70%      7.27%                                  
 45                       3.29%      4.34%      4.90%      5.29%      5.68%      6.69%      7.35%                                  
 46                       3.35%      4.43%      4.97%      5.27%      5.74%      6.79%                                             
 47                       3.42%      4.46%      5.12%      5.26%      5.81%      6.84%                                             
 48                       3.46%      4.50%      5.13%      5.34%      5.79%      6.91%                                             
 49                       3.51%      4.55%      5.06%      5.37%      5.87%                                                        
 50                       3.58%      4.60%      5.08%      5.42%      5.91%                                                        
 51                       3.71%      4.69%      5.11%      5.37%      5.95%                                                        
 52                       3.80%      4.77%      5.15%      5.42%                                                                   
 53                       3.87%      4.79%      5.21%      5.57%                                                                   
 54                       3.86%      4.83%      5.18%      5.57%                                                                   
 55                       3.82%      4.81%      5.30%                                                                              
 56                       3.82%      4.85%      5.37%                                                                              
 57                       3.86%      4.95%      5.36%                                                                              
 58                       3.88%      4.96%                                                                                         
 59                       3.91%                                                                                                    
 60                       3.86%                                                                                                    
 61                       3.89%                                                                                                    
 62                       3.93%                                                                                                    
 63                       3.97%                                                                                                    


                       CUMULATIVE LOSS RATES                                                                                       
                       ----------------------------------------------------------------------------------------------------------- 
        MONTH           1997-A     1997-B     1997-C     1997-D     1998-A     1998-B     1998-C     1998-D     1998-E     1999-A  
---------------------  --------   --------   --------   --------   --------   --------   --------   --------   --------   -------- 
                                                                                                                                   
 1                       0.02%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%  
 2                       0.02%      0.00%      0.00%      0.00%      0.00%      0.01%      0.00%      0.00%      0.00%      0.00%  
 3                       0.06%      0.01%      0.01%      0.02%      0.02%      0.04%      0.04%      0.01%      0.01%      0.01%  
 4                       0.31%      0.09%      0.04%      0.06%      0.07%      0.11%      0.07%      0.06%      0.03%      0.06%  
 5                       0.30%      0.20%      0.14%      0.17%      0.21%      0.27%      0.19%      0.11%      0.09%      0.15%  
 6                       0.37%      0.43%      0.38%      0.43%      0.43%      0.44%      0.36%      0.24%      0.21%      0.32%  
 7                       0.57%      0.82%      0.76%      0.78%      0.76%      0.63%      0.55%      0.46%      0.41%      0.57%  
 8                       0.90%      1.31%      1.11%      1.07%      1.08%      0.95%      0.77%      0.65%      0.65%      0.76%  
 9                       1.27%      1.73%      1.48%      1.50%      1.37%      1.17%      1.00%      0.85%      0.92%      1.00%  
 10                      1.77%      2.17%      1.77%      1.83%      1.64%      1.39%      1.23%      1.14%      1.22%             
 11                      2.13%      2.58%      2.02%      2.16%      1.93%      1.65%      1.47%      1.45%      1.50%             
 12                      2.47%      2.95%      2.27%      2.42%      2.13%      1.89%      1.69%      1.66%      1.77%             
 13                      2.82%      3.14%      2.54%      2.58%      2.37%      2.08%      1.92%      1.78%                        
 14                      3.10%      3.29%      2.81%      2.83%      2.59%      2.26%      2.18%                                   
 15                      3.45%      3.54%      3.01%      3.03%      2.85%      2.44%      2.43%                                   
 16                      3.64%      3.76%      3.18%      3.28%      3.03%      2.68%                                              
 17                      3.83%      4.11%      3.48%      3.55%      3.31%      2.92%                                              
 18                      4.12%      4.35%      3.67%      3.88%      3.55%      3.17%                                              
 19                      4.34%      4.52%      3.88%      4.07%      3.82%                                                         
 20                      4.63%      4.83%      4.14%      4.31%      4.06%                                                         
 21                      4.85%      5.05%      4.44%      4.52%      4.29%                                                         
 22                      5.02%      5.31%      4.64%      4.80%                                                                    
 23                      5.30%      5.57%      4.84%      5.06%                                                                    
 24                      5.47%      5.82%      5.02%      5.30%                                                                    
 25                      5.71%      6.03%      5.31%                                                                               
 26                      5.96%      6.26%      5.76%                                                                               
 27                      6.23%      6.40%      5.79%                                                                               
 28                      6.44%      6.68%                                                                                          
 29                      6.66%      6.92%                                                                                          
 30                      6.71%      7.10%                                                                                          
 31                      6.94%                                                                                                     
 32                      7.24%                                                                                                     
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                       CUMULATIVE LOSS RATES                                                                                       
                       -------------------                                                                                         
        MONTH           1999-B     1999-C                                                                                          
---------------------  --------   --------                                                                                         
                                                                                                                                   
 1                       0.00%      0.00%                                                                                          
 2                       0.01%      0.00%                                                                                          
 3                       0.02%      0.03%                                                                                          
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ARCADIA FINANCIAL LTD                                                           
NOTEHOLDERS BALANCES BY MONTH/POOL                                              
AS OF NOVEMBER 30, 1999                                                         

SECURITIZATION TRUSTS 

                                                        [Enlarge/Download Table]

MONTH                   1994-B       1995-A       1995-B       1995-C       1995-D       1995-E       1996-A                
-----                 -----------  -----------  -----------  -----------  -----------  -----------  -----------             
                                                                                                                            
Sep-94............... 375,148,268                                                                                           
Oct-94............... 369,909,316                                                                                           
Nov-94............... 362,030,669                                                                                           
Dec-94............... 352,655,114                                                                                           
Jan-95............... 341,725,120                                                                                           
Feb-95............... 330,145,153  158,408,371  300,000,000                                                                 
Mar-95............... 316,597,687  153,807,411  295,117,684                                                                 
Apr-95............... 305,631,109  149,033,083  286,195,483                                                                 
May-95............... 294,581,696  144,310,883  277,249,555                                                                 
Jun-95............... 284,809,195  139,483,091  268,587,376  470,000,000                                                    
Jul-95............... 275,779,582  134,966,019  260,408,419  463,374,585                                                    
Aug-95............... 265,243,252  130,712,959  250,824,472  450,179,726  525,000,000                                       
Sep-95............... 256,375,874  126,097,125  242,819,671  434,914,503  517,467,986                                       
Oct-95............... 246,521,545  121,768,601  232,874,435  422,175,193  501,875,871                                       
Nov-95............... 237,258,894  117,244,803  224,023,619  407,043,569  488,940,216  599,999,888                          
Dec-95............... 228,275,793  112,738,238  215,325,582  393,459,570  475,129,727  588,666,333                          
Jan-96............... 219,320,878  108,631,935  208,457,193  379,528,859  459,642,011  572,140,906                          
Feb-96............... 211,559,822  105,143,186  201,172,476  366,584,267  445,206,808  555,129,664  600,000,000             
Mar-96............... 203,194,372  100,502,513  192,603,432  354,546,055  429,205,237  537,365,371  589,436,548             
Apr-96............... 194,792,603   96,694,018  184,562,501  341,424,639  413,606,902  517,980,347  570,399,655             
May-96............... 187,155,223   92,942,991  177,386,313  328,277,034  399,144,290  501,018,410  552,529,496             
Jun-96............... 180,174,488   89,373,224  170,365,724  315,982,566  385,292,938  483,413,206  536,424,816             
Jul-96............... 172,825,033   86,005,519  162,014,059  304,508,582  371,065,147  466,532,322  519,026,351             
Aug-96............... 165,722,288   82,676,591  156,241,059  292,039,920  357,338,951  450,090,975  501,295,707             
Sep-96............... 158,986,658   79,719,249  150,857,656  281,494,966  344,506,655  434,913,057  485,417,259             
Oct-96............... 152,553,655   76,707,925  144,699,982  271,280,758  330,886,396  418,666,488  468,748,995             
Nov-96............... 146,880,937   73,966,383  139,144,270  260,637,181  319,253,738  404,059,801  452,653,437             
Dec-96............... 141,300,082   71,511,446  134,341,041  251,650,787  307,926,086  389,884,546  437,667,137             
Jan-97............... 135,794,069   68,650,165  129,058,023  242,987,062  297,783,249  376,507,213  423,440,882             
Feb-97............... 130,079,980   65,882,083  123,359,713  234,049,204  287,179,351  363,163,575  409,327,369             
Mar-97............... 123,802,198   63,454,184  118,119,859  224,988,446  274,600,725  348,491,921  393,449,383             
Apr-97............... 117,629,217   60,808,075  112,330,723  215,514,217  261,871,989  331,607,276  376,499,263             
May-97............... 112,215,332   58,065,715  106,990,956  205,409,933  250,654,203  317,164,065  361,839,918             
Jun-97............... 106,782,426   55,239,158  101,915,402  196,171,695  238,602,865  303,396,949  347,651,552             
Jul-97............... 101,640,081   52,703,042   97,637,309  187,281,413  228,372,690  291,789,650  333,566,747             
Aug-97...............  97,069,417   50,511,759   93,962,646  179,229,541  219,916,747  281,461,248  322,263,672             
Sep-97...............  92,403,078   48,479,224   89,869,281  172,327,308  210,568,772  270,137,721  309,872,183             
Oct-97...............  87,783,733   46,418,113   85,738,990  165,148,558  201,436,939  258,777,510  298,380,078             
Nov-97...............  83,816,329   44,177,430   82,218,206  157,728,372  193,944,296  249,130,886  288,228,608             
Dec-97...............  79,468,023   42,313,790   78,284,356  151,213,191  185,513,128  238,681,443  276,938,084             
Jan-98...............  75,730,447   40,352,476   75,018,129  144,447,245  177,141,924  228,446,383  266,774,091             
Feb-98...............  71,956,883   38,571,182   71,246,325  138,408,537  168,945,459  218,756,120  256,025,813             
Mar-98...............  67,631,542   36,752,359   67,350,785  132,355,498  160,505,714  207,925,611  243,860,596             
Apr-98...............  63,784,873   34,733,788   64,195,304  125,871,366  153,151,480  198,749,352  233,297,497             
May-98...............  60,485,752   33,084,116   60,929,904  119,612,965  145,941,947  190,170,147  223,200,105             
Jun-98...............  56,791,208   31,417,501   57,725,083  113,784,767  138,554,339  180,934,231  212,822,288             
Jul-98...............  53,326,112   29,731,521   54,793,123  107,635,380  131,564,361  172,387,483  203,270,300             
Aug-98...............  50,304,226   28,095,308   51,959,561  102,150,706  124,891,323  164,124,438  193,940,612             
Sep-98...............  47,280,388   26,624,963   49,291,836   97,027,195  119,030,886  156,212,369  185,612,395             
Oct-98...............  44,292,554   25,057,273   46,693,329   92,203,765  112,879,115  148,531,710  176,459,246             
Nov-98...............  41,282,970   23,455,237   43,768,245   86,841,839  107,220,395  141,486,233  168,485,879             
Dec-98...............  38,647,256   22,093,535   41,373,437   82,804,012  102,390,075  135,316,550  161,129,513             
Jan-99...............  36,105,103   20,941,112   38,866,079   77,858,867   97,304,647  128,502,723  154,093,142             
Feb-99...............  33,856,609   19,808,284   36,782,187   73,434,292   92,054,200  122,183,933  147,117,232             
Mar-99...............  31,467,030   18,665,868   34,557,432   70,048,487   86,753,826  115,328,269  139,095,325             
Apr-99...............  29,335,844   17,426,788   32,516,095   65,778,309   81,806,618  109,354,322  132,119,031             
May-99...............  27,285,434   16,295,412   30,696,448   62,053,929   77,107,713  103,868,157  125,290,099             
Jun-99...............  25,148,282   15,124,406   28,501,057   58,386,346   72,384,465   97,629,435  118,392,738             
Jul-99...............  23,183,180   14,086,033   26,635,587   54,736,000   68,005,399   92,208,394  112,295,199             
Aug-99...............  21,304,136   13,156,170   24,767,400   51,290,882   63,521,384   86,294,267  105,581,677             
Sep-99...............  19,675,855   12,216,699   22,925,437   47,904,238   59,748,775   81,199,602   99,875,569             
Oct-99...............  18,106,850   11,428,391   21,263,713   45,033,978   56,428,343   76,785,761   94,718,131             
Nov-99...............  16,390,753   10,509,811   19,816,451   41,942,295   52,642,314   72,087,035   89,265,741             


MONTH                   1996-B       1996-C       1996-D       1997-A       1997-B       1997-C       1997-D                
-----                 -----------  -----------  -----------  -----------  -----------  -----------  -----------             
                                                                                                                            
Sep-94...............                                                                                                       
Oct-94...............                                                                                                       
Nov-94...............                                                                                                       
Dec-94...............                                                                                                       
Jan-95...............                                                                                                       
Feb-95...............                                                                                                       
Mar-95...............                                                                                                       
Apr-95...............                                                                                                       
May-95...............                                                                                                       
Jun-95...............                                                                                                       
Jul-95...............                                                                                                       
Aug-95...............                                                                                                       
Sep-95...............                                                                                                       
Oct-95...............                                                                                                       
Nov-95...............                                                                                                       
Dec-95...............                                                                                                       
Jan-96...............                                                                                                       
Feb-96...............                                                                                                       
Mar-96...............                                                                                                       
Apr-96...............                                                                                                       
May-96............... 650,000,000                                                                                           
Jun-96............... 641,444,110                                                                                           
Jul-96............... 623,699,024                                                                                           
Aug-96............... 608,055,110  725,000,000                                                                              
Sep-96............... 591,612,401  715,190,190                                                                              
Oct-96............... 574,237,446  696,312,376                                                                              
Nov-96............... 557,419,989  681,029,833  730,000,000                                                                 
Dec-96............... 540,368,203  664,248,274  720,779,497                                                                 
Jan-97............... 525,213,267  646,780,269  705,824,218                                                                 
Feb-97............... 509,227,503  629,864,236  689,430,675  775,000,000                                                    
Mar-97............... 492,328,123  610,546,937  670,652,126  766,436,096                                                    
Apr-97............... 473,999,126  590,112,803  653,442,306  748,515,203                                                    
May-97............... 456,834,088  570,743,443  635,095,000  731,800,782  775,000,000                                       
Jun-97............... 440,912,220  552,588,666  616,532,000  714,052,540  768,180,163                                       
Jul-97............... 426,375,052  536,378,124  600,489,048  697,854,296  751,565,008                                       
Aug-97............... 413,928,279  521,043,678  585,345,620  681,729,711  736,614,181  775,000,000                          
Sep-97............... 399,417,725  504,654,883  566,024,118  662,645,576  719,814,271  767,125,507                          
Oct-97............... 385,094,525  488,016,973  548,957,611  643,157,005  703,310,718  752,048,946                          
Nov-97............... 373,226,004  473,356,984  533,109,398  626,341,571  687,210,651  738,893,463  600,000,000             
Dec-97............... 360,058,861  457,525,938  515,067,063  607,279,421  668,706,582  723,878,312  595,524,778             
Jan-98............... 347,289,207  442,169,899  498,865,610  590,083,261  650,674,948  709,178,428  586,323,214             
Feb-98............... 334,816,585  427,517,428  482,455,171  571,698,656  631,038,037  692,578,616  574,865,429             
Mar-98............... 320,737,667  410,131,040  463,427,414  549,961,271  609,378,344  672,054,685  561,232,238             
Apr-98............... 307,718,640  394,546,300  446,377,390  530,746,449  588,976,342  653,455,269  548,744,938             
May-98............... 295,641,344  380,132,228  431,523,123  512,944,595  569,514,588  635,326,536  535,458,329             
Jun-98............... 282,912,361  364,754,177  414,575,127  493,921,276  550,413,617  615,837,631  520,290,697             
Jul-98............... 270,912,765  350,264,617  399,046,295  476,620,635  532,164,024  596,393,161  504,800,025             
Aug-98............... 258,901,509  336,294,771  382,938,158  459,012,466  513,126,609  577,158,362  488,035,683             
Sep-98............... 248,055,436  323,256,380  368,823,000  442,500,525  495,303,121  557,479,129  473,084,186             
Oct-98............... 237,058,257  309,625,469  353,569,924  426,104,459  477,006,793  539,943,237  457,426,725             
Nov-98............... 227,034,641  297,165,518  340,262,000  411,057,654  459,636,826  522,464,911  442,915,747             
Dec-98............... 217,884,310  286,829,427  328,895,000  397,812,515  445,803,771  507,399,543  430,127,645             
Jan-99............... 208,418,417  275,126,324  316,598,000  384,009,195  430,558,741  492,039,927  417,101,656             
Feb-99............... 199,663,518  263,846,978  304,358,000  369,886,723  415,302,255  476,366,369  402,995,543             
Mar-99............... 189,909,351  251,476,932  290,565,000  353,829,407  398,264,747  458,149,789  387,418,093             
Apr-99............... 180,592,842  240,245,775  277,530,000  338,627,926  381,939,215  441,111,404  374,016,246             
May-99............... 172,022,742  229,724,091  265,496,315  325,337,258  367,204,339  425,685,292  361,053,478             
Jun-99............... 163,172,105  218,383,387  253,532,842  310,509,382  351,834,698  409,429,544  347,723,829             
Jul-99............... 155,268,947  208,045,387  242,824,605  297,255,680  337,877,991  394,367,668  335,699,105             
Aug-99............... 147,062,427  196,887,721  231,587,743  284,406,058  323,258,966  377,837,851  322,074,141             
Sep-99............... 140,081,444  187,841,292  221,236,044  272,501,914  310,216,037  363,744,936  310,849,914             
Oct-99............... 133,595,041  179,626,274  212,023,088  260,636,475  298,409,641  348,604,172  300,128,904             
Nov-99............... 126,535,446  170,700,598  203,300,595  249,680,233  285,968,995  335,863,541  288,273,262             


MONTH                   1998-A       1998-B       1998-C       1998-D       1998-E       1999-A       1999-B       1999-C   
-----                 -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
                                                                                                                            
Sep-94...............                                                                                                       
Oct-94...............                                                                                                       
Nov-94...............                                                                                                       
Dec-94...............                                                                                                       
Jan-95...............                                                                                                       
Feb-95...............                                                                                                       
Mar-95...............                                                                                                       
Apr-95...............                                                                                                       
May-95...............                                                                                                       
Jun-95...............                                                                                                       
Jul-95...............                                                                                                       
Aug-95...............                                                                                                       
Sep-95...............                                                                                                       
Oct-95...............                                                                                                       
Nov-95...............                                                                                                       
Dec-95...............                                                                                                       
Jan-96...............                                                                                                       
Feb-96...............                                                                                                       
Mar-96...............                                                                                                       
Apr-96...............                                                                                                       
May-96...............                                                                                                       
Jun-96...............                                                                                                       
Jul-96...............                                                                                                       
Aug-96...............                                                                                                       
Sep-96...............                                                                                                       
Oct-96...............                                                                                                       
Nov-96...............                                                                                                       
Dec-96...............                                                                                                       
Jan-97...............                                                                                                       
Feb-97...............                                                                                                       
Mar-97...............                                                                                                       
Apr-97...............                                                                                                       
May-97...............                                                                                                       
Jun-97...............                                                                                                       
Jul-97...............                                                                                                       
Aug-97...............                                                                                                       
Sep-97...............                                                                                                       
Oct-97...............                                                                                                       
Nov-97...............                                                                                                       
Dec-97...............                                                                                                       
Jan-98...............                                                                                                       
Feb-98............... 525,000,000                                                                                           
Mar-98............... 519,983,579                                                                                           
Apr-98............... 511,151,521                                                                                           
May-98............... 502,217,530  550,000,000                                                                              
Jun-98............... 492,303,091  545,643,591                                                                              
Jul-98............... 481,271,208  535,166,847                                                                              
Aug-98............... 468,667,065  524,667,471  600,000,000                                                                 
Sep-98............... 455,259,264  514,691,052  595,338,532                                                                 
Oct-98............... 442,084,425  502,892,850  585,237,110  200,000,000                                                    
Nov-98............... 429,678,573  491,366,829  573,800,728  197,229,142  225,000,000                                       
Dec-98............... 417,962,333  480,400,108  563,417,083  193,023,729  224,034,320                                       
Jan-99............... 406,684,527  468,406,411  552,043,610  189,318,699  220,524,802                                       
Feb-99............... 394,075,653  455,584,810  538,816,661  185,157,145  216,955,989  550,000,000                          
Mar-99............... 380,102,890  440,908,271  522,669,277  180,033,782  211,983,207  543,763,773                          
Apr-99............... 367,490,998  427,820,992  507,742,155  174,767,763  207,272,110  533,067,708                          
May-99............... 355,344,303  415,057,192  494,185,890  169,756,123  202,448,371  523,553,253  650,000,000             
Jun-99............... 342,747,497  402,061,965  479,108,563  164,343,462  196,754,243  511,885,856  642,073,694             
Jul-99............... 330,966,269  389,831,837  464,709,657  159,282,185  191,274,011  500,849,584  631,106,727             
Aug-99............... 318,515,438  376,704,121  449,719,423  153,767,922  185,377,967  487,504,203  618,544,212  438,524,038
Sep-99............... 307,749,137  364,911,611  436,381,417  149,014,923  179,889,390  474,172,544  606,522,143  432,835,598
Oct-99............... 298,076,889  353,551,114  423,265,742  144,430,145  174,941,404  462,174,875  593,352,165  425,797,463
Nov-99............... 287,545,506  340,838,034  409,071,176  139,410,037  169,470,169  449,221,725  578,470,197  418,080,269

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ARCADIA FINANCIAL LTD                                                           
POOL FACTORS                                                                    
AS OF NOVEMBER 30, 1999                                                         

SECURITIZATION TRUSTS 

                                                        [Enlarge/Download Table]

                      430,000,000  158,400,000  300,000,000  470,000,000  525,000,000  600,000,000  600,000,000             
MONTH                   1994-B       1995-A       1995-B       1995-C       1995-D       1995-E       1996-A                
-----                 -----------  -----------  -----------  -----------  -----------  -----------  -----------             
                                                                                                                            
Sep-94...............     87.2%                                                                                             
Oct-94...............     86.0%                                                                                             
Nov-94...............     84.2%                                                                                             
Dec-94...............     82.0%                                                                                             
Jan-95...............     79.5%                                                                                             
Feb-95...............     76.8%       100.0%       100.0%                                                                   
Mar-95...............     73.6%        97.1%        98.4%                                                                   
Apr-95...............     71.1%        94.1%        95.4%                                                                   
May-95...............     68.5%        91.1%        92.4%                                                                   
Jun-95...............     66.2%        88.1%        89.5%       100.0%                                                      
Jul-95...............     64.1%        85.2%        86.8%        98.6%                                                      
Aug-95...............     61.7%        82.5%        83.6%        95.8%       100.0%                                         
Sep-95...............     59.6%        79.6%        80.9%        92.5%        98.6%                                         
Oct-95...............     57.3%        76.9%        77.6%        89.8%        95.6%                                         
Nov-95...............     55.2%        74.0%        74.7%        86.6%        93.1%       100.0%                            
Dec-95...............     53.1%        71.2%        71.8%        83.7%        90.5%        98.1%                            
Jan-96...............     51.0%        68.6%        69.5%        80.8%        87.6%        95.4%                            
Feb-96...............     49.2%        66.4%        67.1%        78.0%        84.8%        92.5%       100.0%               
Mar-96...............     47.3%        63.4%        64.2%        75.4%        81.8%        89.6%        98.2%               
Apr-96...............     45.3%        61.0%        61.5%        72.6%        78.8%        86.3%        95.1%               
May-96...............     43.5%        58.7%        59.1%        69.8%        76.0%        83.5%        92.1%               
Jun-96...............     41.9%        56.4%        56.8%        67.2%        73.4%        80.6%        89.4%               
Jul-96...............     40.2%        54.3%        54.0%        64.8%        70.7%        77.8%        86.5%               
Aug-96...............     38.5%        52.2%        52.1%        62.1%        68.1%        75.0%        83.5%               
Sep-96...............     37.0%        50.3%        50.3%        59.9%        65.6%        72.5%        80.9%               
Oct-96...............     35.5%        48.4%        48.2%        57.7%        63.0%        69.8%        78.1%               
Nov-96...............     34.2%        46.7%        46.4%        55.5%        60.8%        67.3%        75.4%               
Dec-96...............     32.9%        45.1%        44.8%        53.5%        58.7%        65.0%        72.9%               
Jan-97...............     31.6%        43.3%        43.0%        51.7%        56.7%        62.8%        70.6%               
Feb-97...............     30.3%        41.6%        41.1%        49.8%        54.7%        60.5%        68.2%               
Mar-97...............     28.8%        40.1%        39.4%        47.9%        52.3%        58.1%        65.6%               
Apr-97...............     27.4%        38.4%        37.4%        45.9%        49.9%        55.3%        62.7%               
May-97...............     26.1%        36.7%        35.7%        43.7%        47.7%        52.9%        60.3%               
Jun-97...............     24.8%        34.9%        34.0%        41.7%        45.4%        50.6%        57.9%               
Jul-97...............     23.6%        33.3%        32.5%        39.8%        43.5%        48.6%        55.6%               
Aug-97...............     22.6%        31.9%        31.3%        38.1%        41.9%        46.9%        53.7%               
Sep-97...............     21.5%        30.6%        30.0%        36.7%        40.1%        45.0%        51.6%               
Oct-97...............     20.4%        29.3%        28.6%        35.1%        38.4%        43.1%        49.7%               
Nov-97...............     19.5%        27.9%        27.4%        33.6%        36.9%        41.5%        48.0%               
Dec-97...............     18.5%        26.7%        26.1%        32.2%        35.3%        39.8%        46.2%               
Jan-98...............     17.6%        25.5%        25.0%        30.7%        33.7%        38.1%        44.5%               
Feb-98...............     16.7%        24.4%        23.7%        29.4%        32.2%        36.5%        42.7%               
Mar-98...............     15.7%        23.2%        22.5%        28.2%        30.6%        34.7%        40.6%               
Apr-98...............     14.8%        21.9%        21.4%        26.8%        29.2%        33.1%        38.9%               
May-98...............     14.1%        20.9%        20.3%        25.4%        27.8%        31.7%        37.2%               
Jun-98...............     13.2%        19.8%        19.2%        24.2%        26.4%        30.2%        35.5%               
Jul-98...............     12.4%        18.8%        18.3%        22.9%        25.1%        28.7%        33.9%               
Aug-98...............     11.7%        17.7%        17.3%        21.7%        23.8%        27.4%        32.3%               
Sep-98...............     11.0%        16.8%        16.4%        20.6%        22.7%        26.0%        30.9%               
Oct-98...............     10.3%        15.8%        15.6%        19.6%        21.5%        24.8%        29.4%               
Nov-98...............      9.6%        14.8%        14.6%        18.5%        20.4%        23.6%        28.1%               
Dec-98...............      9.0%        13.9%        13.8%        17.6%        19.5%        22.6%        26.9%               
Jan-99...............      8.4%        13.2%        13.0%        16.6%        18.5%        21.4%        25.7%               
Feb-99...............      7.9%        12.5%        12.3%        15.6%        17.5%        20.4%        24.5%               
Mar-99...............      7.3%        11.8%        11.5%        14.9%        16.5%        19.2%        23.2%               
Apr-99...............      6.8%        11.0%        10.8%        14.0%        15.6%        18.2%        22.0%               
May-99...............      6.3%        10.3%        10.2%        13.2%        14.7%        17.3%        20.9%               
Jun-99...............      5.8%         9.5%         9.5%        12.4%        13.8%        16.3%        19.7%               
Jul-99...............      5.4%         8.9%         8.9%        11.6%        13.0%        15.4%        18.7%               
Aug-99...............      5.0%         8.3%         8.3%        10.9%        12.1%        14.4%        17.6%               
Sep-99...............      4.6%         7.7%         7.6%        10.2%        11.4%        13.5%        16.6%               
Oct-99...............      4.2%         7.2%         7.1%         9.6%        10.7%        12.8%        15.8%               
Nov-99...............      3.8%         6.6%         6.6%         8.9%        10.0%        12.0%        14.9%               


                      650,000,000  725,000,000  730,000,000  775,000,000  775,000,000  775,000,000  600,000,000             
MONTH                   1996-B       1996-C       1996-D       1997-A       1997-B       1997-C       1997-D                
-----                 -----------  -----------  -----------  -----------  -----------  -----------  -----------             
                                                                                                                            
Sep-94...............                                                                                                       
Oct-94...............                                                                                                       
Nov-94...............                                                                                                       
Dec-94...............                                                                                                       
Jan-95...............                                                                                                       
Feb-95...............                                                                                                       
Mar-95...............                                                                                                       
Apr-95...............                                                                                                       
May-95...............                                                                                                       
Jun-95...............                                                                                                       
Jul-95...............                                                                                                       
Aug-95...............                                                                                                       
Sep-95...............                                                                                                       
Oct-95...............                                                                                                       
Nov-95...............                                                                                                       
Dec-95...............                                                                                                       
Jan-96...............                                                                                                       
Feb-96...............                                                                                                       
Mar-96...............                                                                                                       
Apr-96...............                                                                                                       
May-96...............    100.0%                                                                                             
Jun-96...............     98.7%                                                                                             
Jul-96...............     96.0%                                                                                             
Aug-96...............     93.5%       100.0%                                                                                
Sep-96...............     91.0%        98.6%                                                                                
Oct-96...............     88.3%        96.0%                                                                                
Nov-96...............     85.8%        93.9%       100.0%                                                                   
Dec-96...............     83.1%        91.6%        98.7%                                                                   
Jan-97...............     80.8%        89.2%        96.7%                                                                   
Feb-97...............     78.3%        86.9%        94.4%       100.0%                                                      
Mar-97...............     75.7%        84.2%        91.9%        98.9%                                                      
Apr-97...............     72.9%        81.4%        89.5%        96.6%                                                      
May-97...............     70.3%        78.7%        87.0%        94.4%       100.0%                                         
Jun-97...............     67.8%        76.2%        84.5%        92.1%        99.1%                                         
Jul-97...............     65.6%        74.0%        82.3%        90.0%        97.0%                                         
Aug-97...............     63.7%        71.9%        80.2%        88.0%        95.0%       100.0%                            
Sep-97...............     61.4%        69.6%        77.5%        85.5%        92.9%        99.0%                            
Oct-97...............     59.2%        67.3%        75.2%        83.0%        90.7%        97.0%                            
Nov-97...............     57.4%        65.3%        73.0%        80.8%        88.7%        95.3%       100.0%               
Dec-97...............     55.4%        63.1%        70.6%        78.4%        86.3%        93.4%        99.3%               
Jan-98...............     53.4%        61.0%        68.3%        76.1%        84.0%        91.5%        97.7%               
Feb-98...............     51.5%        59.0%        66.1%        73.8%        81.4%        89.4%        95.8%               
Mar-98...............     49.3%        56.6%        63.5%        71.0%        78.6%        86.7%        93.5%               
Apr-98...............     47.3%        54.4%        61.1%        68.5%        76.0%        84.3%        91.5%               
May-98...............     45.5%        52.4%        59.1%        66.2%        73.5%        82.0%        89.2%               
Jun-98...............     43.5%        50.3%        56.8%        63.7%        71.0%        79.5%        86.7%               
Jul-98...............     41.7%        48.3%        54.7%        61.5%        68.7%        77.0%        84.1%               
Aug-98...............     39.8%        46.4%        52.5%        59.2%        66.2%        74.5%        81.3%               
Sep-98...............     38.2%        44.6%        50.5%        57.1%        63.9%        71.9%        78.8%               
Oct-98...............     36.5%        42.7%        48.4%        55.0%        61.5%        69.7%        76.2%               
Nov-98...............     34.9%        41.0%        46.6%        53.0%        59.3%        67.4%        73.8%               
Dec-98...............     33.5%        39.6%        45.1%        51.3%        57.5%        65.5%        71.7%               
Jan-99...............     32.1%        37.9%        43.4%        49.5%        55.6%        63.5%        69.5%               
Feb-99...............     30.7%        36.4%        41.7%        47.7%        53.6%        61.5%        67.2%               
Mar-99...............     29.2%        34.7%        39.8%        45.7%        51.4%        59.1%        64.6%               
Apr-99...............     27.8%        33.1%        38.0%        43.7%        49.3%        56.9%        62.3%               
May-99...............     26.5%        31.7%        36.4%        42.0%        47.4%        54.9%        60.2%               
Jun-99...............     25.1%        30.1%        34.7%        40.1%        45.4%        52.8%        58.0%               
Jul-99...............     23.9%        28.7%        33.3%        38.4%        43.6%        50.9%        55.9%               
Aug-99...............     22.6%        27.2%        31.7%        36.7%        41.7%        48.8%        53.7%               
Sep-99...............     21.6%        25.9%        30.3%        35.2%        40.0%        46.9%        51.8%               
Oct-99...............     20.6%        24.8%        29.0%        33.6%        38.5%        45.0%        50.0%               
Nov-99...............     19.5%        23.5%        27.8%        32.2%        36.9%        43.3%        48.0%               


                      525,000,000  550,000,000  600,000,000  199,999,999  224,999,999  549,999,998  650,000,000  600,000,000
MONTH                   1998-A       1998-B       1998-C       1998-D       1998-E       1999-A       1999-B       1999-C   
-----                 -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
                                                                                                                            
Sep-94...............                                                                                                       
Oct-94...............                                                                                                       
Nov-94...............                                                                                                       
Dec-94...............                                                                                                       
Jan-95...............                                                                                                       
Feb-95...............                                                                                                       
Mar-95...............                                                                                                       
Apr-95...............                                                                                                       
May-95...............                                                                                                       
Jun-95...............                                                                                                       
Jul-95...............                                                                                                       
Aug-95...............                                                                                                       
Sep-95...............                                                                                                       
Oct-95...............                                                                                                       
Nov-95...............                                                                                                       
Dec-95...............                                                                                                       
Jan-96...............                                                                                                       
Feb-96...............                                                                                                       
Mar-96...............                                                                                                       
Apr-96...............                                                                                                       
May-96...............                                                                                                       
Jun-96...............                                                                                                       
Jul-96...............                                                                                                       
Aug-96...............                                                                                                       
Sep-96...............                                                                                                       
Oct-96...............                                                                                                       
Nov-96...............                                                                                                       
Dec-96...............                                                                                                       
Jan-97...............                                                                                                       
Feb-97...............                                                                                                       
Mar-97...............                                                                                                       
Apr-97...............                                                                                                       
May-97...............                                                                                                       
Jun-97...............                                                                                                       
Jul-97...............                                                                                                       
Aug-97...............                                                                                                       
Sep-97...............                                                                                                       
Oct-97...............                                                                                                       
Nov-97...............                                                                                                       
Dec-97...............                                                                                                       
Jan-98...............                                                                                                       
Feb-98...............    100.0%                                                                                             
Mar-98...............     99.0%                                                                                             
Apr-98...............     97.4%                                                                                             
May-98...............     95.7%       100.0%                                                                                
Jun-98...............     93.8%        99.2%                                                                                
Jul-98...............     91.7%        97.3%                                                                                
Aug-98...............     89.3%        95.4%       100.0%                                                                   
Sep-98...............     86.7%        93.6%        99.2%                                                                   
Oct-98...............     84.2%        91.4%        97.5%       100.0%                                                      
Nov-98...............     81.8%        89.3%        95.6%        98.6%       100.0%                                         
Dec-98...............     79.6%        87.3%        93.9%        96.5%        99.6%                                         
Jan-99...............     77.5%        85.2%        92.0%        94.7%        98.0%                                         
Feb-99...............     75.1%        82.8%        89.8%        92.6%        96.4%       100.0%                            
Mar-99...............     72.4%        80.2%        87.1%        90.0%        94.2%        98.9%                            
Apr-99...............     70.0%        77.8%        84.6%        87.4%        92.1%        96.9%                            
May-99...............     67.7%        75.5%        82.4%        84.9%        90.0%        95.2%       100.0%               
Jun-99...............     65.3%        73.1%        79.9%        82.2%        87.4%        93.1%        98.8%               
Jul-99...............     63.0%        70.9%        77.5%        79.6%        85.0%        91.1%        97.1%               
Aug-99...............     60.7%        68.5%        75.0%        76.9%        82.4%        88.6%        95.2%        73.1%  
Sep-99...............     58.6%        66.3%        72.7%        74.5%        80.0%        86.2%        93.3%        72.1%  
Oct-99...............     56.8%        64.3%        70.5%        72.2%        77.8%        84.0%        91.3%        71.0%  
Nov-99...............     54.8%        62.0%        68.2%        69.7%        75.3%        81.7%        89.0%        69.7%  

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Just 194th
ABS PREPAYMENT LIFE-TO-DATE                                                     

SECURITIZATION TRUSTS 

                                                        [Enlarge/Download Table]

    MONTH    1994-B     1995-A     1995-B     1995-C     1995-D     1995-E     1996-A     1996-B     1996-C     1996-D 
    -----   --------   --------   --------   --------   --------   --------   --------   --------   --------   --------
                                                                                                                       
1             0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00% 
2             0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00% 
3             0.00%      2.04%      2.04%      2.27%      1.47%      1.87%      2.02%      1.45%      1.16%      1.30% 
4             0.00%      2.09%      2.01%      2.03%      1.58%      1.95%      1.90%      1.53%      1.28%      1.48% 
5             0.00%      2.05%      1.96%      2.13%      1.73%      2.08%      1.94%      1.61%      1.36%      1.47% 
6             1.71%      2.00%      2.06%      2.11%      1.76%      2.05%      1.99%      1.64%      1.38%      1.52% 
7             1.95%      2.03%      2.03%      2.12%      1.85%      2.07%      1.96%      1.67%      1.47%      1.56% 
8             1.89%      2.02%      2.12%      2.10%      1.91%      2.07%      1.97%      1.65%      1.56%      1.53% 
9             1.94%      2.04%      2.15%      2.06%      1.92%      2.06%      1.97%      1.65%      1.62%      1.49% 
10            1.92%      2.06%      2.17%      2.06%      1.93%      2.03%      1.95%      1.68%      1.64%      1.53% 
11            1.88%      2.05%      2.11%      2.08%      1.94%      2.04%      1.93%      1.73%      1.62%      1.55% 
12            1.88%      2.00%      2.08%      2.07%      1.94%      2.02%      1.91%      1.76%      1.60%      1.54% 
13            1.89%      2.05%      2.11%      2.06%      1.94%      2.00%      1.93%      1.77%      1.60%      1.57% 
14            1.91%      2.03%      2.12%      2.06%      1.95%      1.97%      1.97%      1.76%      1.61%      1.57% 
15            1.91%      2.02%      2.11%      2.04%      1.93%      1.95%      1.97%      1.72%      1.60%      1.58% 
16            1.91%      2.01%      2.10%      2.01%      1.91%      1.95%      1.97%      1.72%      1.60%      1.62% 
17            1.94%      1.99%      2.13%      2.00%      1.88%      1.99%      1.97%      1.72%      1.60%      1.63% 
18            1.88%      1.97%      2.09%      1.97%      1.86%      2.00%      1.93%      1.70%      1.59%      1.63% 
19            1.88%      1.94%      2.05%      1.94%      1.87%      2.00%      1.92%      1.69%      1.62%      1.64% 
20            1.87%      1.92%      2.04%      1.92%      1.89%      1.97%      1.90%      1.68%      1.62%      1.65% 
21            1.90%      1.90%      2.02%      1.90%      1.89%      1.94%      1.87%      1.67%      1.62%      1.66% 
22            1.84%      1.86%      1.98%      1.90%      1.90%      1.93%      1.86%      1.68%      1.63%      1.65% 
23            1.83%      1.85%      1.96%      1.90%      1.89%      1.91%      1.84%      1.68%      1.63%      1.66% 
24            1.85%      1.84%      1.95%      1.90%      1.87%      1.89%      1.83%      1.68%      1.63%      1.65% 
25            1.84%      1.81%      1.93%      1.89%      1.87%      1.87%      1.83%      1.68%      1.63%      1.63% 
26            1.82%      1.80%      1.94%      1.88%      1.84%      1.86%      1.82%      1.68%      1.63%      1.62% 
27            1.76%      1.79%      1.93%      1.85%      1.82%      1.84%      1.81%      1.68%      1.62%      1.62% 
28            1.77%      1.79%      1.92%      1.84%      1.81%      1.84%      1.80%      1.67%      1.61%      1.62% 
29            1.75%      1.79%      1.90%      1.82%      1.79%      1.82%      1.79%      1.67%      1.60%      1.62% 
30            1.73%      1.77%      1.87%      1.81%      1.79%      1.80%      1.78%      1.66%      1.59%      1.62% 
31            1.73%      1.75%      1.85%      1.79%      1.78%      1.79%      1.77%      1.65%      1.59%      1.61% 
32            1.73%      1.73%      1.84%      1.77%      1.76%      1.78%      1.76%      1.64%      1.59%      1.61% 
33            1.72%      1.72%      1.82%      1.75%      1.75%      1.77%      1.75%      1.62%      1.58%      1.60% 
34            1.71%      1.71%      1.80%      1.74%      1.74%      1.76%      1.73%      1.62%      1.58%      1.59% 
35            1.70%      1.69%      1.78%      1.73%      1.73%      1.74%      1.71%      1.61%      1.58%      1.58% 
36            1.69%      1.68%      1.77%      1.72%      1.72%      1.73%      1.70%      1.61%      1.58%      1.57% 
37            1.68%      1.66%      1.76%      1.71%      1.71%      1.71%      1.69%      1.60%      1.56%            
38            1.67%      1.66%      1.74%      1.70%      1.69%      1.69%      1.68%      1.59%      1.56%            
39            1.66%      1.64%      1.73%      1.69%      1.68%      1.68%      1.67%      1.59%      1.55%            
40            1.65%      1.63%      1.71%      1.67%      1.66%      1.67%      1.66%      1.58%                       
41            1.63%      1.62%      1.70%      1.67%      1.65%      1.65%      1.65%      1.56%                       
42            1.62%      1.61%      1.69%      1.65%      1.63%      1.64%      1.64%      1.55%                       
43            1.61%      1.60%      1.67%      1.64%      1.62%      1.63%      1.62%                                  
44            1.61%      1.59%      1.66%      1.63%      1.61%      1.61%      1.62%                                  
45            1.59%      1.59%      1.65%      1.61%      1.60%      1.61%      1.61%                                  
46            1.59%      1.58%      1.63%      1.60%      1.59%      1.59%                                             
47            1.58%      1.57%      1.62%      1.59%      1.58%      1.58%                                             
48            1.57%      1.56%      1.61%      1.58%      1.58%      1.57%                                             
49            1.56%      1.54%      1.60%      1.57%      1.55%                                                        
50            1.56%      1.54%      1.58%      1.56%      1.55%                                                        
51            1.55%      1.53%      1.57%      1.55%      1.54%                                                        
52            1.54%      1.52%      1.57%      1.53%                                                                   
53            1.53%      1.51%      1.56%      1.52%                                                                   
54            1.52%      1.50%      1.55%      1.52%                                                                   
55            1.51%      1.50%      1.53%                                                                              
56            1.50%      1.48%      1.53%                                                                              
57            1.50%      1.48%      1.52%                                                                              
58            1.49%      1.48%                                                                                         
59            1.49%                                                                                                    
60            1.48%                                                                                                    
61            1.47%                                                                                                    
62            1.47%                                                                                                    
63            1.47%                                                                                                    


    MONTH   1997-A     1997-B     1997-C     1997-D     1998-A     1998-B     1998-C     1998-D     1998-E     1999-A  
    -----  --------   --------   --------   --------   --------   --------   --------   --------   --------   -------- 
                                                                                                                       
1            0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%  
2            0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%      0.00%  
3            1.21%      0.98%      0.77%      0.97%      0.79%      1.00%      0.79%      0.90%      0.71%      0.84%  
4            1.29%      1.11%      0.90%      1.15%      0.89%      0.96%      0.89%      1.02%      1.02%      1.05%  
5            1.26%      1.14%      0.93%      1.16%      1.00%      1.06%      1.00%      1.23%      1.10%      1.08%  
6            1.24%      1.15%      1.01%      1.20%      1.13%      1.10%      1.13%      1.36%      1.15%      1.21%  
7            1.32%      1.23%      1.17%      1.29%      1.25%      1.11%      1.25%      1.42%      1.26%      1.28%  
8            1.38%      1.27%      1.24%      1.37%      1.33%      1.15%      1.33%      1.49%      1.33%      1.30%  
9            1.38%      1.34%      1.28%      1.46%      1.36%      1.21%      1.36%      1.53%      1.41%      1.34%  
10           1.42%      1.42%      1.34%      1.49%      1.38%      1.29%      1.38%      1.60%      1.44%             
11           1.43%      1.48%      1.39%      1.54%      1.38%      1.33%      1.38%      1.59%      1.45%             
12           1.45%      1.51%      1.43%      1.55%      1.41%      1.36%      1.41%      1.61%      1.48%             
13           1.52%      1.54%      1.47%      1.55%      1.47%      1.39%      1.47%      1.63%                        
14           1.55%      1.55%      1.48%      1.54%      1.49%      1.40%      1.49%                                   
15           1.57%      1.58%      1.49%      1.56%      1.51%      1.43%      1.51%                                   
16           1.59%      1.59%      1.48%      1.59%      1.53%      1.43%                                              
17           1.60%      1.61%      1.48%      1.60%      1.54%      1.44%                                              
18           1.61%      1.62%      1.47%      1.60%      1.56%      1.46%                                              
19           1.62%      1.60%      1.50%      1.61%      1.55%                                                         
20           1.62%      1.59%      1.51%      1.61%      1.55%                                                         
21           1.62%      1.59%      1.51%      1.62%      1.55%                                                         
22           1.60%      1.60%      1.52%      1.60%                                                                    
23           1.59%      1.61%      1.52%      1.60%                                                                    
24           1.59%      1.61%      1.54%      1.60%                                                                    
25           1.59%      1.61%      1.52%                                                                               
26           1.60%      1.61%      1.54%                                                                               
27           1.60%      1.61%      1.53%                                                                               
28           1.60%      1.59%                                                                                          
29           1.60%      1.59%                                                                                          
30           1.60%      1.59%                                                                                          
31           1.58%                                                                                                     
32           1.58%                                                                                                     
33           1.58%                                                                                                     
34                                                                                                                     
35                                                                                                                     
36                                                                                                                     
37                                                                                                                     
38                                                                                                                     
39                                                                                                                     
40                                                                                                                     
41                                                                                                                     
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49                                                                                                                     
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54                                                                                                                     
55                                                                                                                     
56                                                                                                                     
57                                                                                                                     
58                                                                                                                     
59                                                                                                                     
60                                                                                                                     
61                                                                                                                     
62                                                                                                                     
63                                                                                                                     


    MONTH   1999-B     1999-C                                                                                          
    -----  --------   --------                                                                                         
                                                                                                                       
1            0.00%      0.00%                                                                                          
2            0.00%      0.00%                                                                                          
3            1.04%      0.87%                                                                                          
4            1.00%                                                                                                     
5            1.05%                                                                                                     
6            1.15%                                                                                                     
7                                                                                                                      
8                                                                                                                      
9                                                                                                                      
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63                                                                                                                     

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ARCADIA FINANCIAL LTD.
SELECTED FINANCIAL DATA 
AS OF SEPT. 30, 1999

                                                                [Download Table]

                                                        LIFE-TO-DATE  LIFE-TO-DATE 
SECURITIZATION    ORIGINAL     REMAINING    MTHS SINCE   CUMULATIVE    CUMULATIVE  
    TRUST       POOL BALANCE  POOL BALANCE  INCEPTION    LOSS RATES   DEFAULT RATES
--------------  ------------  ------------  ----------  ------------  -------------
                                                                                   
 1994-B         430,000,000    23,024,937       61          3.89%          11.86%  
 1995-A         158,400,000    11,428,391       56          4.85%          14.96%  
 1995-B         300,000,000    22,925,431       55          5.30%          15.97%  
 1995-C         470,000,000    45,033,978       52          5.42%          15.44%  
 1995-D         525,000,000    59,748,726       49          5.87%          15.86%  
 1995-E         600,000,000    81,199,490       46          6.79%          17.05%  
 1996-A         600,000,000    99,861,708       43          7.18%          16.35%  
 1996-B         650,000,000   140,081,410       40          7.33%          16.26%  
 1996-C         725,000,000   187,841,283       37          7.55%          16.04%  
 1996-D         730,000,000   221,229,611       34          7.51%          15.91%  
 1997-A         775,000,000   272,501,908       31          6.94%          14.62%  
 1997-B         775,000,000   310,216,034       28          6.68%          14.08%  
 1997-C         775,000,000   363,744,934       25          5.31%          11.14%  
 1997-D         600,000,000   310,849,912       22          4.80%          10.18%  
 1998-A         525,000,000   307,749,137       19          3.82%           8.31%  
 1998-B         550,000,000   364,911,601       16          2.68%           6.04%  
 1998-C         600,000,000   436,366,999       13          1.92%           4.45%  
 1998-D         200,000,000   149,014,883       11          1.45%           3.27%  
 1998-E         225,000,000   179,889,389       10          1.22%           2.91%  
 1999-A         550,000,000   474,172,544        7          0.57%           1.45%  
 1999-B         650,000,000   606,522,143        4          0.10%           0.30%  
 1999-C   (1)   600,000,000   432,835,598        1          0.00%           0.00%  

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

(1) At Sept. 30, 1999, $438.52 million of automobile loans had been delivered to
  the trust and the remaining prefunded portion will be delivered in the 4th
quarter of 1999.                                                        

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ARCADIA FINANCIAL LTD.                                                          
SPREAD ACCOUNT BALANCE                                                          

SECURITIZATION TRUSTS 

                                                        [Enlarge/Download Table]

        MONTH             1994-B      1995-A      1995-B      1995-C      1995-D      1995-E      1996-A      1996-B  
---------------------   ----------   ---------  ----------  ----------  ----------  ----------  ----------  ----------
                                                                                                                      
Sep-94                                                                                                                
Oct-94                                                                                                                
Nov-94                     986,231                                                                                    
Dec-94                   2,229,459                                                                                    
Jan-95                   4,755,156                                                                                    
Feb-95                   5,902,119     561,747                                                                        
Mar-95                   6,969,021   1,204,243     441,323                                                            
Apr-95                   7,553,263   1,831,403   2,584,204                                                            
May-95                   8,203,028   2,379,086   4,090,212                                                            
Jun-95                   8,699,088   2,515,157   5,578,902   1,571,995                                                
Jul-95                   9,456,976   3,125,026   6,382,926   4,384,750                                                
Aug-95                   9,515,710   3,367,388   6,976,721   6,724,547                                                
Sep-95                  10,770,263   3,876,778   8,157,181   8,807,255   2,247,696                                    
Oct-95                  11,407,621   4,050,881   8,857,134  10,774,798   5,239,026                                    
Nov-95                  11,455,618   4,174,800   8,906,041  12,030,582   7,360,261                                    
Dec-95                  11,274,768   4,193,059   8,695,065  12,103,706   8,046,727   2,325,713                        
Jan-96                  11,759,127   5,032,355  10,739,466  13,486,568   8,576,825   5,252,197                        
Feb-96                  12,560,336   5,054,380  12,073,831  15,894,440  11,357,933   7,726,781                        
Mar-96                  13,233,594   5,395,738  12,121,164  17,170,376  12,086,187   8,861,910   2,598,782            
Apr-96                  14,218,437   5,776,083  12,919,375  19,250,006  13,861,998  10,750,973   6,119,651            
May-96                  14,783,513   5,952,228  12,417,042  18,958,954  15,480,790  14,061,066   7,472,032            
Jun-96                  14,758,974   6,020,386  11,925,601  18,270,515  16,521,080  14,370,318   9,418,582   2,102,950
Jul-96                  14,156,944   5,787,361  11,340,984  17,522,395  17,883,030  15,490,598  11,208,929   6,769,370
Aug-96                  13,575,124   5,580,347  10,936,874  16,889,698  18,898,178  16,162,068  12,165,480   9,632,620
Sep-96                  13,023,375   5,369,555  10,560,036  16,276,846  19,613,419  17,274,336  13,083,170  11,333,778
Oct-96                  12,496,416   5,177,647  10,128,999  15,638,231  19,853,181  18,719,456  13,941,501  12,892,970
Nov-96                  12,031,736   5,005,801   9,740,099  15,099,047  19,155,233  19,038,762  14,005,891  13,741,706
Dec-96                  11,574,581   4,805,512   9,403,873  14,579,224  18,475,562  19,430,525  14,421,265  13,792,679
Jan-97                  11,123,557   4,611,746   9,034,062  14,042,952  17,866,992  20,366,710  15,645,297  14,773,897
Feb-97                  10,655,488   4,441,793   8,635,180  13,499,307  17,230,758  21,613,723  16,557,902  15,452,970
Mar-97                  10,141,244   4,256,565   8,268,390  12,930,853  16,476,041  20,909,509  18,122,991  16,967,559
Apr-97                   9,635,585   4,064,600   7,863,151  12,324,596  15,712,316  19,896,430  18,336,509  17,633,030
May-97                   9,192,107   3,866,741   7,489,367  11,770,302  15,039,249  19,029,837  18,507,226  18,374,372
Jun-97                   8,747,071   3,689,213   7,134,078  11,236,885  14,316,169  18,203,810  19,782,112  19,420,031
Jul-97                   8,325,836   3,535,823   6,834,612  10,753,772  13,702,359  17,507,372  20,013,173  21,762,262
Aug-97                   7,951,431   3,393,546   6,577,385  10,339,638  13,195,002  16,887,668  19,334,989  24,083,838
Sep-97                   7,569,188   3,249,268   6,290,850   9,908,913  12,634,123  16,208,257  18,591,499  23,965,062
Oct-97                   7,190,795   3,092,420   6,001,729   9,463,702  12,086,213  15,526,644  17,901,973  23,105,669
Nov-97                   6,865,806   2,961,965   5,755,274   9,072,791  11,636,655  14,947,846  17,292,885  22,393,558
Dec-97                   6,509,615   2,824,673   5,479,905   8,666,835  11,130,785  14,320,880  16,615,453  21,603,530
Jan-98                   6,203,452   2,699,983   5,251,269   8,304,512  10,628,513  13,706,776  16,005,614  20,837,350
Feb-98                   5,894,340   2,572,665   4,987,243   7,941,330  10,136,725  13,125,360  15,360,717  20,088,993
Mar-98                   5,540,031   2,431,365   4,714,555   7,552,282   9,630,340  12,475,530  14,630,804  19,244,258
Apr-98                   5,224,931   2,315,888   4,493,671   7,176,778   9,189,086  11,924,954  13,997,018  18,463,116
May-98                   4,954,684   2,199,225   4,265,093   6,827,086   8,756,514  11,410,202  13,391,175  17,738,479
Jun-98                   4,652,046   2,081,207   4,040,756   6,458,123   8,313,257  10,856,047  12,768,506  16,974,740
Jul-98                   4,368,203   1,966,672   3,835,519   6,129,042   7,893,859  10,343,242  12,195,386  16,254,764
Aug-98                   4,300,000   1,863,747   3,637,169   5,821,632   7,493,476   9,847,460  11,635,605  15,534,089
Sep-98                   4,300,000   1,754,009   3,450,429   5,532,226   7,141,850   9,372,735  11,135,912  14,883,324
Oct-98                   4,300,000   1,641,867   3,268,533   5,210,510   6,772,744   8,911,896  10,586,723  14,223,493
Nov-98                   4,300,000   1,584,084   3,063,774   4,968,241   6,433,221   8,489,167  10,108,321  13,622,076
Dec-98                   4,300,000   1,584,084   3,000,000   4,671,532   6,143,402   8,118,986   9,666,939  13,073,057
Jan-99                   4,300,000   1,584,084   3,000,000   4,700,000   5,838,276   7,710,156   9,244,757  12,505,103
Feb-99                   4,300,000   1,584,084   3,000,000   4,700,000   5,523,249   7,331,029   8,826,202  11,979,809
Mar-99                   4,300,000   1,584,083   3,000,000   4,700,000   5,250,000   6,919,689   8,344,888  11,394,559
Apr-99                   4,300,000   1,584,084   3,000,000   4,700,000   5,250,000   6,561,253   7,926,310  10,835,569
May-99                   4,300,000   1,584,084   3,000,000   4,700,000   5,975,844   8,049,774   9,504,649  10,321,362
Jun-99                   4,300,000   1,584,084   3,000,000   4,700,000   5,609,792   7,566,272   9,174,363   9,790,324
Jul-99                   4,300,000   1,584,084   3,000,000   4,700,000   5,270,415   7,146,142   8,701,804  12,033,341
Aug-99                   4,300,000   1,584,084   3,000,000   4,700,000   5,250,000   6,687,797   8,181,506  11,397,336
Sep-99                   4,300,000   1,584,084   3,000,000   4,700,000   5,249,999   6,292,960   7,739,282  10,856,309
Oct-99                   4,300,000   1,584,084   3,000,000   4,700,000   5,250,000   5,999,999   7,339,581  10,353,613
Nov-99                   4,300,000   1,584,084   3,000,000   4,700,000   5,250,000   5,999,999   6,917,021   9,806,494


        MONTH            1996-C       1996-D      1997-A      1997-B      1997-C      1997-D      1998-A      1998-B  
---------------------  ----------   ----------  ----------  ----------  ----------  ----------  ----------  ----------
                                                                                                                      
Sep-94                                                                                                                
Oct-94                                                                                                                
Nov-94                                                                                                                
Dec-94                                                                                                                
Jan-95                                                                                                                
Feb-95                                                                                                                
Mar-95                                                                                                                
Apr-95                                                                                                                
May-95                                                                                                                
Jun-95                                                                                                                
Jul-95                                                                                                                
Aug-95                                                                                                                
Sep-95                                                                                                                
Oct-95                                                                                                                
Nov-95                                                                                                                
Dec-95                                                                                                                
Jan-96                                                                                                                
Feb-96                                                                                                                
Mar-96                                                                                                                
Apr-96                                                                                                                
May-96                                                                                                                
Jun-96                                                                                                                
Jul-96                                                                                                                
Aug-96                                                                                                                
Sep-96                  9,641,904                                                                                     
Oct-96                 14,597,889                                                                                     
Nov-96                 18,194,743                                                                                     
Dec-96                 19,227,449    8,101,126                                                                        
Jan-97                 20,836,140   14,202,019                                                                        
Feb-97                 22,084,634   18,953,861                                                                        
Mar-97                 23,098,110   21,523,578   7,899,536                                                            
Apr-97                 23,722,399   24,494,033  13,148,603                                                            
May-97                 24,848,403   25,496,574  18,534,113                                                            
Jun-97                 26,324,285   27,132,959  21,906,393  11,961,863                                                
Jul-97                 29,649,235   31,477,489  27,174,901  18,057,977                                                
Aug-97                 31,654,233   34,916,042  30,850,625  23,505,328                                                
Sep-97                 34,202,296   37,639,441  34,198,379  28,922,358   1,163,323                                    
Oct-97                 34,161,188   38,427,031  36,135,467  33,266,135   7,132,165                                    
Nov-97                 33,134,988   37,317,656  36,820,132  35,712,130  12,295,619                                    
Dec-97                 32,026,815   36,054,692  37,107,775  37,559,721  18,277,858     243,321                        
Jan-98                 30,951,892   34,920,593  38,639,037  38,719,845  23,334,135   4,851,082                        
Feb-98                 29,926,219   33,771,862  39,552,836  39,511,622  26,194,545   9,670,167           0            
Mar-98                 28,709,172   32,439,919  38,497,289  40,633,029  28,561,870  14,373,994   1,314,142            
Apr-98                 27,618,240   31,246,417  37,152,251  41,145,137  30,113,820  17,667,939   5,773,472            
May-98                 26,609,255   22,206,619  26,906,121  31,866,021  31,638,459  20,106,266  10,205,455            
Jun-98                 25,532,792   21,020,259  25,574,489  30,528,953  34,270,549  22,630,975  14,726,578   1,080,861
Jul-98                 24,518,523   19,933,241  24,363,444  29,251,481  36,924,097  24,946,607  18,301,766   6,267,824
Aug-98                 23,540,633   18,805,671  23,130,872  27,918,862  39,055,963  25,905,264  21,014,093  10,809,668
Sep-98                 22,627,946   17,817,626  21,975,036  26,671,218  39,023,539  27,515,091  23,183,874  15,179,400
Oct-98                 21,673,782   16,749,895  20,827,312  25,390,475  27,796,026  16,474,996  12,518,633  18,494,050
Nov-98                 20,801,586   15,818,306  19,774,035  24,174,578  26,572,544  18,437,037  14,746,163  21,962,128
Dec-98                 20,078,059   15,022,630  18,846,876  23,206,264  25,517,968  17,608,935  16,312,625  24,496,498
Jan-99                 19,258,842   14,161,806  17,880,643  22,139,112  24,442,795  16,697,116  15,967,917  26,956,973
Feb-99                 18,469,288   13,305,048  16,892,070  21,071,158  23,345,646  15,709,688  15,085,296  29,226,483
Mar-99                 17,603,385   12,339,559  15,768,058  19,878,532  22,070,485  14,619,266  14,107,202  31,980,010
Apr-99                 16,817,204   12,427,091  15,703,954  19,735,745  20,877,798  13,681,137  13,224,370  33,947,295
May-99                 16,080,686   12,584,270  15,773,608  19,704,303  19,797,970  12,773,743  12,374,101  33,204,575
Jun-99                 15,286,837   12,746,792  15,735,656  19,628,429  18,660,068  11,840,668  11,492,325  32,164,956
Jul-99                 18,203,971   17,246,617  15,807,897  19,651,459  17,605,737  10,998,937  10,667,639  31,186,546
Aug-99                 17,227,675   17,263,377  15,908,424  19,628,127  16,448,649  10,045,190   9,796,081  30,136,329
Sep-99                 16,436,112   17,357,591  16,075,133  19,715,122  15,462,145   9,259,494   9,042,440  29,192,928
Oct-99                 15,717,298   17,551,485  16,244,552  19,888,675  15,402,292   9,009,023   8,865,382  28,284,088
Nov-99                 14,936,302   17,692,124  20,847,020  25,022,287  15,510,448   9,179,128   9,128,185  27,267,042


        MONTH            1998-C       1998-D      1998-E      1999-A      1999-B      1999-C                          
---------------------  ----------   ----------  ----------  ----------  ----------  ----------                        
                                                                                                                      
Sep-94                                                                                                                
Oct-94                                                                                                                
Nov-94                                                                                                                
Dec-94                                                                                                                
Jan-95                                                                                                                
Feb-95                                                                                                                
Mar-95                                                                                                                
Apr-95                                                                                                                
May-95                                                                                                                
Jun-95                                                                                                                
Jul-95                                                                                                                
Aug-95                                                                                                                
Sep-95                                                                                                                
Oct-95                                                                                                                
Nov-95                                                                                                                
Dec-95                                                                                                                
Jan-96                                                                                                                
Feb-96                                                                                                                
Mar-96                                                                                                                
Apr-96                                                                                                                
May-96                                                                                                                
Jun-96                                                                                                                
Jul-96                                                                                                                
Aug-96                                                                                                                
Sep-96                                                                                                                
Oct-96                                                                                                                
Nov-96                                                                                                                
Dec-96                                                                                                                
Jan-97                                                                                                                
Feb-97                                                                                                                
Mar-97                                                                                                                
Apr-97                                                                                                                
May-97                                                                                                                
Jun-97                                                                                                                
Jul-97                                                                                                                
Aug-97                                                                                                                
Sep-97                                                                                                                
Oct-97                                                                                                                
Nov-97                                                                                                                
Dec-97                                                                                                                
Jan-98                                                                                                                
Feb-98                                                                                                                
Mar-98                                                                                                                
Apr-98                                                                                                                
May-98                                                                                                                
Jun-98                                                                                                                
Jul-98                                                                                                                
Aug-98                                                                                                                
Sep-98                  1,462,661                                                                                     
Oct-98                  6,413,476                                                                                     
Nov-98                 12,051,054    1,924,323                                                                        
Dec-98                 16,311,428    3,798,957   1,687,500                                                            
Jan-99                 20,889,195    5,790,838   3,978,145                                                            
Feb-99                 24,101,421    7,223,198   6,107,351                                                            
Mar-99                 27,652,261    8,812,416   8,202,693   1,995,485                                                
Apr-99                 30,394,801   10,008,310   9,829,945   7,593,582                                                
May-99                 32,707,891   10,875,784  11,209,694  12,072,977                                                
Jun-99                 35,913,043   12,048,520  12,728,531  17,115,423   2,523,601                                    
Jul-99                 38,250,922   12,947,696  13,758,522  20,940,420   8,462,489                                    
Aug-99                 40,474,748   13,759,076  14,836,103  24,478,147  14,353,020                                    
Sep-99                 39,274,328   13,411,343  15,660,931  27,075,786  18,935,209  25,850,901                        
Oct-99                 38,093,917   12,998,713  15,744,726  29,857,073  22,952,034  29,285,478                        
Nov-99                 36,816,406   12,546,903  15,252,315  32,763,194  27,158,766  32,423,344                        

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ARCADIA FINANCIAL LTD.                                                          
SPREAD ACCOUNT DISTRIBUTIONS                                                    

SECURITIZATION TRUSTS 

                                                        [Enlarge/Download Table]

        MONTH    1994-B      1995-A     1995-B      1995-C      1995-D      1995-E      1996-A      1996-B      1996-C   
        -----   ---------   --------   ---------   ---------   ---------   ---------   ---------   ---------   --------- 
                                                                                                                         
Sep-94                                                                                                                   
Oct-94                                                                                                                   
Nov-94                                                                                                                   
Dec-94                                                                                                                   
Jan-95                                                                                                                   
Feb-95                                                                                                                   
Mar-95                                                                                                                   
Apr-95                                                                                                                   
May-95                                                                                                                   
Jun-95                                                                                                                   
Jul-95                                                                                                                   
Aug-95                                                                                                                   
Sep-95                                                                                                                   
Oct-95                                                                                                                   
Nov-95                                                                                                                   
Dec-95                                                                                                                   
Jan-96                                                                                                                   
Feb-96                                                                                                                   
Mar-96                                                                                                                   
Apr-96                  0         0      243,223           0                                                             
May-96                  0         0    1,233,122   1,723,683                                                             
Jun-96            612,710   208,336      840,094   1,581,669                                                             
Jul-96          1,113,122   440,666            0   1,351,555                                                             
Aug-96            607,340   411,719    1,790,892   1,931,625                                                             
Sep-96            898,896   280,103    1,169,646   1,870,350           0           0                                     
Oct-96            971,613   503,116      729,081   1,537,688     688,528           0                                     
Nov-96            453,204   324,277      665,590     937,311     829,100           0                                     
Dec-96            490,960   289,161      468,773     651,088     832,761           0                                     
Jan-97            751,798    18,966      131,083     693,524   1,979,827           0                                     
Feb-97            376,087   454,947    1,268,895   1,105,094   1,177,919           0                                     
Mar-97            661,893   334,860    1,520,766   2,004,923   1,701,881   1,794,526                                     
Apr-97            583,408   287,945      652,173   1,023,558   1,011,506   1,177,132                                     
May-97            521,143   123,167      491,782     966,690   1,359,519   1,740,464                                     
Jun-97            661,038   273,374      515,980   1,161,921   1,481,454   2,029,745           0           0             
Jul-97            748,730   285,193      839,471   1,333,537   1,126,973   2,267,161     945,405           0             
Aug-97            826,794   285,965      642,280   1,281,446   1,535,428   2,179,326   2,436,223           0             
Sep-97            616,559   405,125      611,079   1,470,422   1,454,713   2,045,435   2,237,546   2,083,656             
Oct-97            647,920   184,009      348,398   1,569,548   1,175,550     955,967   1,517,451   1,592,866             
Nov-97            538,088    91,737      272,082     559,392     751,836     831,187   1,113,553     914,510             
Dec-97            359,360    55,984      271,726     467,399     643,885     952,406   1,189,921     909,275             
Jan-98            395,538   216,008      437,726     731,989     403,526     702,246     592,186     486,564           0 
Feb-98            307,045   108,850      290,407     599,791     354,366     764,135     970,180   1,802,782           0 
Mar-98            357,619   168,286      391,422     818,827     819,034   1,127,134   1,267,496   1,669,258   1,681,031 
Apr-98            242,611   102,587      240,189     465,971     689,409     986,419     962,891   1,089,840   1,164,600 
May-98            220,273   151,133       71,208     373,851     568,766     832,358     696,077     806,464   1,484,561 
Jun-98            343,692   204,335      290,401     712,711     881,992     906,573   1,072,499   1,146,674   1,798,832 
Jul-98            267,401    63,622      189,611     470,203     689,258     927,729     990,355   1,505,679   1,669,789 
Aug-98            141,533    42,319      211,509     469,359     307,526     583,890     517,906     810,741     926,580 
Sep-98             12,836   133,848      239,944     297,516     407,717     546,000     947,955   1,086,914   1,576,810 
Oct-98                  0        (0)     144,302          (0)    299,341     344,886     195,099     254,070     799,284 
Nov-98              2,887         0            0     792,532     583,596     574,107     842,171     956,518   1,367,256 
Dec-98                  0    46,659       47,642           0     464,033     856,869     475,848           0   1,103,408 
Jan-99                  0    30,598            0           0     183,197           0     477,428     243,325     842,758 
Feb-99            217,317        (0)     157,885     749,845     289,253     641,301     853,227   1,011,928     884,610 
Mar-99            350,165         0      391,984     525,710     633,757     869,684     700,353   1,170,034   1,311,319 
Apr-99            165,875         0      128,238     399,154      78,651     557,990     397,332     644,506     950,143 
May-99                  0         0        3,888           0           0     225,989           0     234,863     445,239 
Jun-99             73,712    38,504       54,712     247,465     530,789     668,639     565,263     943,856   1,279,844 
Jul-99             25,259         0           (0)     75,156     361,575     333,754     512,914     517,517     713,672 
Aug-99            306,217    89,265      226,199     554,277     499,970   1,000,212   1,153,260   1,365,051   1,651,397 
Sep-99             32,921         0            0      91,028           0     318,811     358,295     475,232     545,827 
Oct-99                  0         0            0           0      73,058     414,957     304,492     509,323     659,000 
Nov-99                  0    27,030      141,888     238,049     137,426       1,732     508,085     655,076     796,657 


        MONTH    1996-D      1997-A      1997-B      1997-C      1997-D      1998-A      1998-B      1998-C      1998-D  
        -----  ----------   ---------   ---------   ---------   ---------   ---------   ---------   ---------   ---------
                                                                                                                         
Sep-94                                                                                                                   
Oct-94                                                                                                                   
Nov-94                                                                                                                   
Dec-94                                                                                                                   
Jan-95                                                                                                                   
Feb-95                                                                                                                   
Mar-95                                                                                                                   
Apr-95                                                                                                                   
May-95                                                                                                                   
Jun-95                                                                                                                   
Jul-95                                                                                                                   
Aug-95                                                                                                                   
Sep-95                                                                                                                   
Oct-95                                                                                                                   
Nov-95                                                                                                                   
Dec-95                                                                                                                   
Jan-96                                                                                                                   
Feb-96                                                                                                                   
Mar-96                                                                                                                   
Apr-96                                                                                                                   
May-96                                                                                                                   
Jun-96                                                                                                                   
Jul-96                                                                                                                   
Aug-96                                                                                                                   
Sep-96                                                                                                                   
Oct-96                                                                                                                   
Nov-96                                                                                                                   
Dec-96                                                                                                                   
Jan-97                                                                                                                   
Feb-97                                                                                                                   
Mar-97                                                                                                                   
Apr-97                                                                                                                   
May-97                                                                                                                   
Jun-97                                                                                                                   
Jul-97                                                                                                                   
Aug-97                                                                                                                   
Sep-97                                                                                                                   
Oct-97                                                                                                                   
Nov-97                                                                                                                   
Dec-97                                                                                                                   
Jan-98                  0                                                                                                
Feb-98            123,381                                                                                                
Mar-98          2,335,057                                                                                                
Apr-98          2,036,213                                                                                                
May-98         10,159,996                                                                                                
Jun-98          2,685,217   2,077,389           0                                                                        
Jul-98          2,684,913   2,984,654           0                                                                        
Aug-98          1,245,434   1,892,215   1,453,935           0           0           0                                    
Sep-98          2,459,589   2,477,931   2,958,724   2,061,923           0           0                                    
Oct-98            931,223   1,590,132   1,830,613   3,065,332                                                            
Nov-98          2,066,581   2,103,188   2,592,709   3,699,392           0           0                                    
Dec-98          1,757,781   1,950,093   2,426,763   3,025,605   2,787,952           0                                    
Jan-99          1,102,500   1,544,354   1,845,623   2,660,028   2,556,044   2,527,370                                    
Feb-99          1,439,152   1,905,091   1,961,865   2,744,199   2,676,822   2,891,027                                    
Mar-99          1,729,514   1,615,858   2,117,263   3,358,963   2,764,475   3,115,517                                    
Apr-99                  0     189,643     596,358   2,106,949   2,043,214   2,616,740           0                        
May-99                  0           0     268,243   1,458,939   1,284,226   2,077,320   2,510,958                        
Jun-99            459,616     724,626   1,180,514   2,964,581   2,789,048   3,180,349   3,923,972                        
Jul-99             56,840       9,457     425,033   2,262,720   1,921,247   2,036,961   3,157,025                        
Aug-99          1,174,902   1,511,478   1,256,859   2,512,944   2,181,552   2,357,584   3,444,186     507,833           0
Sep-99                  0           0          (0)  1,264,650   1,383,307   1,820,391   2,652,316   3,435,614           0
Oct-99            169,330           0     123,535           0     838,582   1,169,405   2,143,645   2,715,037     495,956
Nov-99            156,436     737,522           0   2,170,168     638,827     921,414   2,649,158   3,392,998   1,535,437


        MONTH   1998-E      1999-A      1999-B     1999-C                                                                
        -----  ---------   ---------   --------   --------                                                               
                                                                                                                         
Sep-94                                                                                                                   
Oct-94                                                                                                                   
Nov-94                                                                                                                   
Dec-94                                                                                                                   
Jan-95                                                                                                                   
Feb-95                                                                                                                   
Mar-95                                                                                                                   
Apr-95                                                                                                                   
May-95                                                                                                                   
Jun-95                                                                                                                   
Jul-95                                                                                                                   
Aug-95                                                                                                                   
Sep-95                                                                                                                   
Oct-95                                                                                                                   
Nov-95                                                                                                                   
Dec-95                                                                                                                   
Jan-96                                                                                                                   
Feb-96                                                                                                                   
Mar-96                                                                                                                   
Apr-96                                                                                                                   
May-96                                                                                                                   
Jun-96                                                                                                                   
Jul-96                                                                                                                   
Aug-96                                                                                                                   
Sep-96                                                                                                                   
Oct-96                                                                                                                   
Nov-96                                                                                                                   
Dec-96                                                                                                                   
Jan-97                                                                                                                   
Feb-97                                                                                                                   
Mar-97                                                                                                                   
Apr-97                                                                                                                   
May-97                                                                                                                   
Jun-97                                                                                                                   
Jul-97                                                                                                                   
Aug-97                                                                                                                   
Sep-97                                                                                                                   
Oct-97                                                                                                                   
Nov-97                                                                                                                   
Dec-97                                                                                                                   
Jan-98                                                                                                                   
Feb-98                                                                                                                   
Mar-98                                                                                                                   
Apr-98                                                                                                                   
May-98                                                                                                                   
Jun-98                                                                                                                   
Jul-98                                                                                                                   
Aug-98                                                                                                                   
Sep-98                                                                                                                   
Oct-98                                                                                                                   
Nov-98                                                                                                                   
Dec-98                                                                                                                   
Jan-99                                                                                                                   
Feb-99                                                                                                                   
Mar-99                                                                                                                   
Apr-99                                                                                                                   
May-99                                                                                                                   
Jun-99                                                                                                                   
Jul-99                                                                                                                   
Aug-99                 0           0         0          0                                                                
Sep-99                 0           0         0          0                                                                
Oct-99                 0           0         0          0                                                                
Nov-99           444,725           0         0          0                                                                

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SECURITIZATION TRUSTS 

ARCADIA FINANCIAL LTD.                                                          
SPREAD ACCOUNT DEPOSIT/(DRAW)                                                   

                                                        [Enlarge/Download Table]

        MONTH           1994-B      1995-A     1995-B      1995-C      1995-D      1995-E      1996-A      1996-B      1996-C   
---------------------  ---------   --------   ---------   ---------   ---------   ---------   ---------   ---------   --------- 
                                                                                                                                
Sep-94                        (0)                                                                                               
Oct-94                        (0)                                                                                               
Nov-94                   986,231                                                                                                
Dec-94                 1,243,228                                                                                                
Jan-95                 2,525,697                                                                                                
Feb-95                 1,146,963    561,747                                                                                     
Mar-95                 1,066,901    642,496     441,323                                                                         
Apr-95                   584,242    627,160   2,142,881                                                                         
May-95                   649,765    547,683   1,506,007                                                                         
Jun-95                   496,061    136,071   1,488,690   1,571,995                                                             
Jul-95                   757,888    609,869     804,024   2,812,755                                                             
Aug-95                    58,734    242,362     593,796   2,339,797                                                             
Sep-95                 1,254,553    509,390   1,180,459   2,082,709   2,247,696                                                 
Oct-95                   637,358    174,103     699,953   1,967,542   2,991,330                                                 
Nov-95                    47,997    123,919      48,907   1,255,784   2,121,235                                                 
Dec-95                  (180,850)    18,259    (210,975)     73,124     686,466   2,325,713                                     
Jan-96                   484,359    839,297   2,044,400   1,382,861     530,098   2,926,483                                     
Feb-96                   801,209     22,025   1,334,366   2,407,873   2,781,108   2,474,584                                     
Mar-96                   673,258    341,357      47,333   1,275,936     728,254   1,135,129   2,598,782                         
Apr-96                   984,843    380,346   1,041,433   2,079,630   1,775,811   1,889,064   3,520,869                         
May-96                   565,076    176,145     730,789   1,432,631   1,618,792   3,310,093   1,352,381                         
Jun-96                   588,171    276,494     348,653     893,230   1,040,291     309,252   1,946,550   2,102,950             
Jul-96                   511,092    207,641    (584,616)    605,436   1,361,950   1,120,280   1,790,348   4,666,420             
Aug-96                    25,520    204,705   1,386,782   1,298,927   1,015,148     671,470     956,551   2,863,250             
Sep-96                   347,148     69,310     792,808   1,257,498     715,241   1,112,268     917,690   1,701,157   2,391,904 
Oct-96                   444,654    311,208     298,044     899,073     928,290   1,445,120     858,331   1,559,192   4,955,985 
Nov-96                   (11,477)   152,431     276,691     398,127     131,152     319,306      64,389     848,736   3,596,854 
Dec-96                    33,805     88,872     132,547     131,265     153,090     391,762     415,374      50,973   1,032,706 
Jan-97                   300,774   (174,800)   (238,728)    157,252   1,371,256     936,186   1,224,032     981,217   1,608,691 
Feb-97                   (91,982)   284,994     870,014     561,448     541,685   1,247,012     912,605     679,073   1,248,494 
Mar-97                   147,649    149,633   1,153,976   1,436,469     947,164   1,090,311   1,565,089   1,514,590   1,013,476 
Apr-97                    77,748     95,980     246,934     417,301     247,782     164,054     213,518     665,471     624,288 
May-97                    77,665    (74,692)    117,999     412,396     686,452     873,872     170,717     741,342   1,126,004 
Jun-97                   216,002     95,846     160,691     628,505     758,374   1,203,718   1,274,886   1,045,659   1,475,882 
Jul-97                   327,496    131,803     540,004     850,425     513,163   1,570,724   1,176,466   2,342,231   3,324,950 
Aug-97                   452,388    143,687     385,054     867,312   1,028,071   1,559,622   1,758,038   2,321,576   2,004,998 
Sep-97                   234,316    260,848     324,543   1,039,697     893,835   1,366,023   1,494,056   1,964,880   2,548,062 
Oct-97                   269,527     27,161      59,278   1,124,337     627,640     274,354     827,925     733,474   1,300,143 
Nov-97                   213,099    (38,718)     25,627     168,481     302,277     252,390     504,465     202,399      67,880 
Dec-97                     3,169    (81,308)     (3,644)     61,442     138,014     325,440     512,489     119,247     538,350 
Jan-98                    89,375     91,317     209,090     369,667     (98,746)     88,143     (17,654)   (279,616)    518,691 
Feb-98                    (2,066)   (18,468)     26,381     236,608    (137,422)    182,719     325,284   1,054,425     503,111 
Mar-98                     3,309     26,986     118,734     429,779     312,650     477,303     537,583     824,523     509,732 
Apr-98                   (72,488)   (12,890)     19,306      90,467     248,155     435,844     329,105     308,699      73,668 
May-98                   (49,974)    34,470    (157,370)     24,159     136,194     317,605      90,233      81,826     475,576 
Jun-98                    41,054     86,317      66,063     343,748     438,736     352,418     449,830     382,935     722,368 
Jul-98                   (16,442)   (50,913)    (15,626)    141,123     269,859     414,924     417,236     785,703     655,520 
Aug-98                    73,330    (60,605)     13,159     161,948     (92,856)     88,107     (41,875)     90,066     (51,309)
Sep-98                    12,836     24,110      53,203       8,111      56,091      71,276     448,261     436,149     664,123 
Oct-98                         0   (112,142)    (37,594)   (321,716)    (69,765)   (115,953)   (354,089)   (405,760)   (154,880)
Nov-98                     2,887    (57,783)   (204,759)    550,262     244,073     151,378     363,769     355,101     495,059 
Dec-98                         0     46,659     (16,132)   (296,709)    174,214     486,688      34,466    (549,020)    379,882 
Jan-99                         0     30,598          (0)     28,468    (121,929)   (408,830)     55,246    (324,629)     23,541 
Feb-99                   217,317         (0)    157,885     749,845     (25,774)    262,174     434,672     486,634      95,055 
Mar-99                   350,165         (1)    391,984     525,710     360,507     458,344     219,039     584,784     445,416 
Apr-99                   165,875          0     128,238     399,154      78,651     199,553     (21,246)     85,515     163,962 
May-99                         0         (0)      3,888          (0)    725,844   1,714,510   1,578,338    (279,343)   (291,279)
Jun-99                    73,712     38,505      54,712     247,465     164,738     185,138     234,977     412,818     485,995 
Jul-99                    25,259          0          (0)     75,156      22,198     (86,377)     40,355   2,760,533   3,630,806 
Aug-99                   306,217     89,265     226,199     554,277     479,555     541,867     632,962     729,045     675,101 
Sep-99                    32,921          0          (0)     91,028          (0)    (76,025)    (83,929)    (65,795)   (245,736)
Oct-99                         0         (0)         (0)         (0)     73,058     121,996     (95,210)      6,627     (59,814)
Nov-99                         0     27,030     141,888     238,049     137,426       1,732      85,525     107,957      15,660 


        MONTH           1996-D      1997-A      1997-B      1997-C      1997-D      1998-A      1998-B      1998-C      1998-D  
---------------------  ---------   ---------   ---------   ---------   ---------   ---------   ---------   ---------   ---------
                                                                                                                                
Sep-94                                                                                                                          
Oct-94                                                                                                                          
Nov-94                                                                                                                          
Dec-94                                                                                                                          
Jan-95                                                                                                                          
Feb-95                                                                                                                          
Mar-95                                                                                                                          
Apr-95                                                                                                                          
May-95                                                                                                                          
Jun-95                                                                                                                          
Jul-95                                                                                                                          
Aug-95                                                                                                                          
Sep-95                                                                                                                          
Oct-95                                                                                                                          
Nov-95                                                                                                                          
Dec-95                                                                                                                          
Jan-96                                                                                                                          
Feb-96                                                                                                                          
Mar-96                                                                                                                          
Apr-96                                                                                                                          
May-96                                                                                                                          
Jun-96                                                                                                                          
Jul-96                                                                                                                          
Aug-96                                                                                                                          
Sep-96                                                                                                                          
Oct-96                                                                                                                          
Nov-96                                                                                                                          
Dec-96                   801,126                                                                                                
Jan-97                 6,100,894                                                                                                
Feb-97                 4,751,842                                                                                                
Mar-97                 2,569,717     149,536                                                                                    
Apr-97                 2,970,455   5,249,066                                                                                    
May-97                 1,002,541   5,385,510                                                                                    
Jun-97                 1,636,384   3,372,280     336,863                                                                        
Jul-97                 4,344,531   5,268,508   6,096,115                                                                        
Aug-97                 3,438,552   3,675,723   5,447,351                                                                        
Sep-97                 2,723,399   3,347,754   5,417,030   1,163,323                                                            
Oct-97                 1,846,454   1,937,088   4,343,777   5,968,843                                                            
Nov-97                   681,985     684,665   2,445,995   5,163,453                                                            
Dec-97                  (128,048)    287,643   1,847,591   5,982,240     243,321                                                
Jan-98                   390,148   1,531,262   1,160,124   5,056,277   4,607,760                                                
Feb-98                   765,263     913,800     791,777   2,860,409   4,819,085                                                
Mar-98                 1,003,114   1,115,791   1,121,408   2,367,325   4,703,827   1,314,142                                    
Apr-98                   842,711   1,062,813     512,107   1,551,950   3,293,945   4,459,330                                    
May-98                 1,120,197     581,387     976,038   1,524,639   2,438,327   4,431,983                                    
Jun-98                 1,498,858   2,089,050   2,683,703   2,632,090   2,524,709   4,521,124   1,080,861                        
Jul-98                 1,597,895   1,773,609   2,768,399   2,653,549   2,315,632   3,575,188   5,186,962                        
Aug-98                   117,864     659,643   1,424,521   2,131,865     958,657   2,712,326   4,541,844                        
Sep-98                 1,471,543   1,322,095   1,711,080   2,029,499   1,609,827   2,169,782   4,369,732   1,462,661            
Oct-98                  (136,508)    442,407     549,870   1,837,820   1,459,908   1,834,759   3,314,650   4,950,815            
Nov-98                 1,134,992   1,049,912   1,376,811   2,475,909   1,962,041   2,227,530   3,468,078   5,637,578     424,323
Dec-98                   962,105   1,022,933   1,458,449   1,971,029   1,959,850   1,566,462   2,534,370   4,260,374   1,874,634
Jan-99                   241,676     578,122     778,471   1,584,855   1,644,225   2,182,662   2,460,476   4,577,767   1,991,881
Feb-99                   582,393     916,517     893,911   1,647,050   1,689,394   2,008,405   2,269,509   3,212,226   1,432,359
Mar-99                   764,025     491,846     924,637   2,083,802   1,674,053   2,137,423   2,753,527   3,550,841   1,589,219
Apr-99                    87,532     125,539     453,571     914,262   1,105,085   1,733,908   1,967,285   2,742,539   1,195,894
May-99                   157,179      69,653     236,801     379,111     376,832   1,227,051   1,768,238   2,313,090     867,474
Jun-99                   622,138     686,675   1,104,639   1,826,678   1,855,973   2,298,572   2,884,354   3,205,152   1,172,736
Jul-99                 4,556,664      81,698     448,063   1,208,388   1,079,516   1,212,275   2,178,615   2,337,879     899,176
Aug-99                 1,191,662   1,612,005   1,233,527   1,355,856   1,227,805   1,486,026   2,393,969   2,731,659     811,380
Sep-99                    94,214     166,709      86,995     278,146     597,611   1,066,750   1,708,915   2,235,194     627,736
Oct-99                   363,224     169,419     297,087     (59,853)    588,112     992,348   1,234,805   1,534,626     607,857
Nov-99                   297,075   5,339,989   5,133,613   2,278,324     808,932   1,184,217   1,632,111   2,115,487   1,083,627


        MONTH           1998-E      1999-A      1999-B      1999-C                                                              
---------------------  ---------   ---------   ---------   ---------                                                            
                                                                                                                                
Sep-94                                                                                                                          
Oct-94                                                                                                                          
Nov-94                                                                                                                          
Dec-94                                                                                                                          
Jan-95                                                                                                                          
Feb-95                                                                                                                          
Mar-95                                                                                                                          
Apr-95                                                                                                                          
May-95                                                                                                                          
Jun-95                                                                                                                          
Jul-95                                                                                                                          
Aug-95                                                                                                                          
Sep-95                                                                                                                          
Oct-95                                                                                                                          
Nov-95                                                                                                                          
Dec-95                                                                                                                          
Jan-96                                                                                                                          
Feb-96                                                                                                                          
Mar-96                                                                                                                          
Apr-96                                                                                                                          
May-96                                                                                                                          
Jun-96                                                                                                                          
Jul-96                                                                                                                          
Aug-96                                                                                                                          
Sep-96                                                                                                                          
Oct-96                                                                                                                          
Nov-96                                                                                                                          
Dec-96                                                                                                                          
Jan-97                                                                                                                          
Feb-97                                                                                                                          
Mar-97                                                                                                                          
Apr-97                                                                                                                          
May-97                                                                                                                          
Jun-97                                                                                                                          
Jul-97                                                                                                                          
Aug-97                                                                                                                          
Sep-97                                                                                                                          
Oct-97                                                                                                                          
Nov-97                                                                                                                          
Dec-97                                                                                                                          
Jan-98                                                                                                                          
Feb-98                                                                                                                          
Mar-98                                                                                                                          
Apr-98                                                                                                                          
May-98                                                                                                                          
Jun-98                                                                                                                          
Jul-98                                                                                                                          
Aug-98                                                                                                                          
Sep-98                                                                                                                          
Oct-98                                                                                                                          
Nov-98                                                                                                                          
Dec-98                                                                                                                          
Jan-99                 2,290,645                                                                                                
Feb-99                 2,129,206                                                                                                
Mar-99                 2,095,342   1,995,485                                                                                    
Apr-99                 1,627,252   5,598,097                                                                                    
May-99                 1,379,749   4,479,395                                                                                    
Jun-99                 1,518,837   5,042,446   2,523,601                                                                        
Jul-99                 1,029,991   3,824,998   5,938,889                                                                        
Aug-99                 1,077,581   3,537,727   5,890,530                                                                        
Sep-99                   824,828   2,597,638   4,582,189   2,117,320                                                            
Oct-99                   738,241   2,781,288   4,016,825   3,434,577                                                            
Nov-99                   985,368   2,906,120   4,206,732   3,316,645                                                            

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PROGRAM SPREAD BALANCES                                                         
INCEPTION TO MONTH END NOV. 1999                                                

SECURITIZATION TRUSTS 

                                                        [Enlarge/Download Table]

MONTH                                      1994-B     1995-A     1995-B      1995-C      1995-D      1995-E      1996-A     
-----                                     --------   --------   ---------   ---------   ---------   ---------   ---------   
                                                                                                                            
Dec-97...................................    0             0      271,726           0           0           0           0   
Jan-98...................................    0             0      709,451     731,989     403,526     702,246           0   
Feb-98...................................    0             0      998,067   1,328,080     755,707   1,461,668           0   
Mar-98...................................    0             0    1,387,815   2,143,404   1,571,238   2,583,981           0   
Apr-98...................................    0             0    1,628,005   2,609,375   2,260,647   3,570,136           0   
May-98...................................    0             0    1,699,212   2,983,226           0           0           0   
Jun-98...................................    0             0    1,731,752   3,695,937           0           0           0   
Jul-98...................................    0             0    1,643,794           0           0           0           0   
Aug-98...................................    0             0           (0)          0           0     583,890           0   
Sep-98...................................    0       133,848           (0)    297,516           0   1,129,891           0   
Oct-98...................................    0       133,848      137,850     297,516           0   1,459,350           0   
Nov-98...................................    0       133,848      137,850   1,054,715     557,578   2,007,862           0   
Dec-98...................................    0       176,851      181,762           0     985,253   2,797,592           0   
Jan-99...................................    0       205,594      181,762           0   1,157,339   2,797,592           0   
Feb-99...................................    0       205,594      339,541     749,340   1,446,397   3,438,463     852,653   
Mar-99...................................    0       205,594      731,405   1,274,886   2,079,956   4,307,876   1,552,787   
Apr-99...................................    0        45,541      251,609   1,505,392   2,157,223   4,374,168   1,943,129   
May-99...................................    0             0           (0)          0           0           0           0   
Jun-99...................................    0             0           (0)          0           0           0           0   
Jul-99...................................    0             0           (0)          0           0           0           0   
Aug-99...................................    0             0           (0)          0           0           0           0   
Sep-99...................................    0             0           (0)          0           0           0           0   
Oct-99...................................    0             0           (0)          0           0           0           0   
Nov-99...................................    0             0           (0)          0      14,227           0           0   


MONTH                                      1996-B      1996-C      1996-D      1997-A       1997-B      1997-C      1997-D  
-----                                     ---------   ---------   ---------   ---------   ----------   ---------   ---------
                                                                                                                            
Dec-97...................................         0           0           0           0            0           0           0
Jan-98...................................         0           0           0           0            0           0           0
Feb-98...................................         0           0           0           0            0           0           0
Mar-98...................................         0           0           0           0            0           0           0
Apr-98...................................         0           0           0           0            0           0           0
May-98...................................         0           0           0           0    2,255,150           0           0
Jun-98...................................         0           0           0           0    6,275,921           0           0
Jul-98...................................         0           0           0           0   10,321,792           0           0
Aug-98...................................         0           0           0           0           (0)          0           0
Sep-98...................................         0           0           0           0           (0)          0           0
Oct-98...................................         0           0           0           0           (0)          0           0
Nov-98...................................         0           0           0           0           (0)          0           0
Dec-98...................................         0           0           0           0           (0)          0           0
Jan-99...................................         0           0           0           0           (0)          0           0
Feb-99...................................         0     884,015   1,438,184           0           (0)          0           0
Mar-99...................................         0   2,194,924   3,167,157           0           (0)          0           0
Apr-99...................................         0   3,128,352   4,052,842           0           (0)          0           0
May-99...................................   198,725   3,505,083   4,453,821           0           (0)          0           0
Jun-99................................... 1,142,581   4,784,928   5,913,438           0           (0)          0           0
Jul-99...................................         0           0           0   1,009,457           (0)          0           0
Aug-99...................................         0           0           0   3,520,935    2,256,859           0           0
Sep-99...................................         0           0           0   4,308,828    3,115,878           0           0
Oct-99...................................         0           0           0   4,624,011    4,265,505           0           0
Nov-99...................................         0     784,970           0           0           (0)  3,138,332   1,629,456


MONTH                                       TOTAL                                                                           
-----                                     ----------                                                                        
                                                                                                                            
Dec-97...................................    271,726                                                                        
Jan-98...................................  2,547,213                                                                        
Feb-98...................................  4,543,523                                                                        
Mar-98...................................  7,686,438                                                                        
Apr-98................................... 10,068,162                                                                        
May-98...................................  6,937,588                                                                        
Jun-98................................... 11,703,611                                                                        
Jul-98................................... 11,965,586                                                                        
Aug-98...................................    583,890                                                                        
Sep-98...................................  1,561,255                                                                        
Oct-98...................................  2,028,564                                                                        
Nov-98...................................  3,891,854                                                                        
Dec-98...................................  4,141,458                                                                        
Jan-99...................................  4,342,287                                                                        
Feb-99...................................  9,354,186                                                                        
Mar-99................................... 15,514,585                                                                        
Apr-99................................... 17,458,257                                                                        
May-99...................................  8,157,629                                                                        
Jun-99................................... 11,840,947                                                                        
Jul-99...................................  1,009,457                                                                        
Aug-99...................................  5,777,794                                                                        
Sep-99...................................  7,424,706                                                                        
Oct-99...................................  8,889,516                                                                        
Nov-99...................................  5,566,985                                                                        

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PROGRAM SPREAD ACTIVITY                                                         
INCEPTION TO MONTH END NOV. 1999                                                

SECURITIZATION TRUSTS 

                                                        [Enlarge/Download Table]

MONTH                   1994-B      1995-A      1995-B       1995-C       1995-D       1995-E       1996-A       1996-B   
-----                 ----------   --------   ----------   ----------   ----------   ----------   ----------   ---------- 
                                                                                                                          
Dec-97...............                            271,726                                                                  
Jan-98...............                            437,726      731,989      403,526      702,246                           
Feb-98...............                            288,616      596,091      352,180      759,422                           
Mar-98...............                            389,748      815,324      815,531    1,122,313                           
Apr-98...............                            240,189      465,971      689,409      986,155                           
May-98...............                             71,208      373,851   (2,260,647)  (3,570,136)                          
Jun-98...............                             32,540      712,711                                                     
Jul-98...............                            (87,959)  (3,695,937)                                                    
Aug-98...............                         (1,643,794)                               583,890                           
Sep-98...............               133,848                   297,516                   546,000                           
Oct-98...............                    --      137,850           --                   329,459                           
Nov-98...............                    --           --      757,199      557,578      548,512                           
Dec-98...............                43,003       43,912   (1,054,715)     427,674      789,730                           
Jan-99...............                28,743           --           --      172,086           --                           
Feb-99...............                    --      157,779      749,340      289,059      640,871      852,653              
Mar-99...............                    --      391,865      525,546      633,558      869,413      700,134           -- 
Apr-99...............              (160,052)    (479,796)     230,505       77,267       66,292      390,342           -- 
May-99...............               (45,541)    (251,609)  (1,505,392)  (2,157,223)  (4,374,168)  (1,943,129)     198,725 
Jun-99...............                                                                                             943,856 
Jul-99...............                                                                                          (1,142,581)
Aug-99...............                                                                                                     
Sep-99...............                                                                                                     
Oct-99...............                                                                                                     
Nov-99...............                                                       14,227                                        


MONTH                   1996-C       1996-D       1997-A       1997-B       1997-C      1997-D        TOTAL               
-----                 ----------   ----------   ----------   -----------   ---------   ---------   -----------            
                                                                                                                          
Dec-97...............                                                                                  271,726            
Jan-98...............                                                                                2,275,488            
Feb-98...............                                                                                1,996,309            
Mar-98...............                                                                                3,142,915            
Apr-98...............                                                                                2,381,724            
May-98...............                                          2,255,150                            (3,130,574)           
Jun-98...............                                          4,020,771                             4,766,022            
Jul-98...............                                          4,045,871                               261,975            
Aug-98...............                                        (10,321,792)                          (11,381,696)           
Sep-98...............                                                                                  977,365            
Oct-98...............                                                                                  467,309            
Nov-98...............                                                                                1,863,290            
Dec-98...............                                                                                  249,604            
Jan-99...............                                                                                  200,829            
Feb-99...............    884,015    1,438,184                                                        5,011,900            
Mar-99...............  1,310,909    1,728,973                                                        6,160,399            
Apr-99...............    933,429      885,685                                                        1,943,671            
May-99...............    376,731      400,980                                                       (9,300,627)           
Jun-99...............  1,279,844    1,459,617                                                        3,683,317            
Jul-99............... (4,784,928)  (5,913,438)   1,009,457                                         (10,831,490)           
Aug-99...............                            2,511,478     2,256,859                             4,768,337            
Sep-99...............                              787,892       859,020                             1,646,912            
Oct-99...............                              315,183     1,149,627                             1,464,810            
Nov-99...............    784,970                (4,624,011)   (4,265,505)  3,138,332   1,629,456    (3,322,531)           

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PART II 
INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.                             

Section 145 of the General Corporation Law of the State of Delaware (the
"Delaware Law") empowers a Delaware corporation to indemnify any persons who    
are, or are threatened to be made, parties to any threatened, pending or        
completed legal action, suit or proceeding, whether civil, criminal,            
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer or director 
of such corporation, or is or was serving at the request of such corporation as 
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in   
connection with such action, suit or proceeding, provided that such officer or  
director acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the corporation's best interests, and, for criminal        
proceedings, had no reasonable cause to believe his or her conduct was illegal. 
A Delaware corporation may indemnify officers and directors against expenses    
(including attorneys' fees) in connection with the defense or settlement of an  
action by or in the right of the corporation under the same conditions, except  
that no indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or       
director is successful on the merits or otherwise in the defense of any action  
referred to above, the corporation must indemnify him or her against the        
expenses which such officer or director actually and reasonably incurred.       

In accordance with the Delaware Law, the Restated Certificate of        
Incorporation of Associates contains a provision to limit the personal liability
of the directors of Associates for violations of their fiduciary duty. This     
provision eliminates each director's liability to Associates for violations of  
their fiduciary duty. This provision eliminates each director's liability to    
Associates or its stockholders for monetary damages except (i) for any breach of
the director's duty of loyalty to Associates or its stockholders, (ii) for acts 
or omissions not in good faith or which involve intentional misconduct or a     
knowing violation of law (iii) under Section 174 of the Delaware Law providing  
for liability of directors for unlawful payment of dividends or unlawful stock  
purchases or redemptions, or (iv) for any transaction from which a director     
derived an improper personal benefit. The effect of this provision is to        
eliminate the personal liability of directors for monetary damages for actions  
involving a breach of their fiduciary duty of care, including any such actions  
involving gross negligence.                                                     

The directors and officers of Associates are covered by directors' and  
officers' insurance policies relating to Associates and its subsidiaries.       

The Restated Certificate of Incorporation of Associates provides for    
indemnification of the officers and directors of Associates to the full extent  
permitted by applicable law.                                                    

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ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.                            

(a) Exhibits                                                            

                                                                [Download Table]

       EXHIBIT                                                                     
       NUMBER                                  DESCRIPTION                         
---------------------  ------------------------------------------------------------
                                                                                   
         2.1           -- Agreement and Plan of Merger, dated as of November 12,   
                       1999, by and among Associates First Capital Corporation,    
                          AFCC Newco, Inc. and Arcadia Financial Ltd. (included as 
                          Appendix A to the proxy statement/prospectus contained in
                          this registration statement).                            

         2.2           -- Voting Agreement, dated as of November 12, 1999, by and  
                       among Associates First Capital Corporation and certain      
                          affiliated shareholders of Arcadia Financial Ltd.        
                          (included as Appendix D to the proxy statement/prospectus
                          contained in this registration statement).               

           4           -- Form of Residual Value Obligations Agreement between     
                       Associates First Capital Corporation and The Chase Manhattan
                          Bank, as Trustee (included as Appendix B to the proxy    
                          statement/prospectus contained in this registration      
                          statement).                                              

           5           -- Opinion of Simpson Thacher & Bartlett as to the legality 
                       of the securities being registered.                         

          12           -- Statement regarding computation of ratio of earnings to  
                          fixed charges.                                           

        23.1           -- Consent of PricewaterhouseCoopers LLP, Independent       
                          Auditors.                                                

        23.2           -- Consent of Ernst & Young LLP, Independent Auditors.      

        23.3           -- Consent of Simpson Thacher & Bartlett (included in       
                          Exhibit 5).                                              

          24           -- Power of Attorney.                                       

          25           -- Statement on Form T-1 of eligibility of Trustee.         

          27           -- Financial Data Schedule.                                 

        99.1           -- Opinion of J.P. Morgan Securities Inc. (included as      
                       Appendix C to the proxy statement/ prospectus contained in  
                          this registration statement).                            

        99.2           -- Consent of J.P. Morgan Securities Inc.                   

        99.3           -- Form of Proxy Card of Arcadia Financial Ltd.             

(b) Schedules                                                           

 All schedules are omitted as the required information is presented in the
Registrant's consolidated financial statements or related notes or such         
schedules are not applicable.                                                   

(c) See Exhibit 99.1 in Item 21(a) above.                               

ITEM 22. UNDERTAKINGS.                                                          

The undersigned Registrant hereby undertakes:                           

        (1) that, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to  
 Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as
amended that is incorporated by reference in the registration statement 
shall be deemed to be a new registration statement relating to the      
securities offered therein, and                                         

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the offering of such securities at that time shall be deemed to be the  
initial bona fide offering thereof;                                     

     (2) that, prior to any public reoffering of the securities registered
  hereunder through use of a prospectus which is a part of this Registration
   Statement, by any person or party who is deemed to be an underwriter within
    the meaning of Rule 145(c) of the Securities Act, such reoffering prospectus
   will contain the information called for by the applicable registration form
 with respect to reofferings by persons who may be deemed underwriters, in
   addition to the information called for by the other items of the applicable
form;                                                                   

      (3) that every prospectus: (i) that is filed pursuant to paragraph (2)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act and is used in connection with an
 offering of securities subject to Rule 415, will be filed as a part of an
amendment to this Registration Statement and will not be used until such
   amendment is effective, and that, for purposes of determining any liability
    under the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered   
    therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof;                              

  (4) to respond to requests for information that is incorporated by
 reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this
 Form S-4, within one business day of receipt of such request, and to send
the incorporated documents by first class mail or other equally prompt  
   means. This includes information contained in documents filed subsequent to
the effective date of this Registration Statement through the date of   
responding to the request; and                                          

    (5) to supply by means of a post-effective amendment all information
  concerning a transaction, and the company being acquired involved therein,
    that was not the subject of and included in this Registration Statement when
it became effective.                                                    

   Insofar as indemnification for liabilities arising under the Securities Act
of may be permitted to directors, officers and controlling persons of the       
Registrant pursuant to the provisions described in Item 20 above, or otherwise, 
the Registrant has been advised that in the opinion of the Securities and       
Exchange Commission such indemnification is against public policy as expressed  
in the Securities Act, and is, therefore, unenforceable. In the event that a    
claim for indemnification against such liabilities (other than payment by the   
Registrant of expenses incurred or paid by a director, officer or controlling   
person of the Registrant in the successful defense of any action, suit or       
proceeding) is asserted by such director, officer or controlling person in      
connection with the securities being registered, the Registrant will, unless in 
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such         
indemnification by it is against public policy as expressed in the Securities   
Act and will be governed by the final adjudication of such issue.               

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SIGNATURES

   PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE            
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW   
YORK ON MARCH 1, 2000.                                                          

                                                                [Download Table]
                                               
ASSOCIATES FIRST CAPITAL CORPORATION           

By:  /s/ JOHN F. STILLO                        
     ----------------------------------------- 
     Name: John F. Stillo                      
     Title:  Senior Vice President, Comptroller
     and Principal Accounting Officer          

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS        
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE          
CAPACITIES INDICATED.                                                           

                                                        [Enlarge/Download Table]

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

-------------------------------                                                                   
Keith W. Hughes                                                                                   
                                         Chairman of the Board, Principal            March 1, 2000
                                           Executive Officer and Director                         

-------------------------------          Director                                    March 1, 2000
J. Carter Bacot                                                                                   

-------------------------------          Director                                    March 1, 2000
Eric S. Dobkin                                                                                    

-------------------------------          Director                                    March 1, 2000
William M. Issac                                                                                  

-------------------------------          Director                                    March 1, 2000
Judy Jolley Mohraz                                                                                

-------------------------------          Director                                    March 1, 2000
H. James Toffey, Jr.                                                                              

-------------------------------          Director                                    March 1, 2000
Kenneth Whipple                                                                                   

-------------------------------                                                                   
Roy A. Guthrie                                                                                    
                                         Director, Senior Executive Vice             March 1, 2000
                                           President and Principal Financial                      
                                           Officer                                                

-------------------------------                                                                   
John F. Stillo                                                                                    
                                         Senior Vice President, Comptroller and      March 1, 2000
                                           Principal Accounting Officer                           

* by signing his name hereto, Chester D. Longenecker signs this document on behalf of each of the 
persons indicated above pursuant to powers of attorney duly executed by such persons.             

                                                                [Download Table]
                                              
By:  /s/ CHESTER D. LONGENECKER               
     ---------------------------------------  
     (ATTORNEY-IN-FACT)                       

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