EXECUTION COPY





                             NOTE PURCHASE AGREEMENT

                          Dated as of October 14, 1997

                                      Among

                             AFG CREDIT CORPORATION

                                  as Transferor

                      VARIABLE FUNDING CAPITAL CORPORATION

                                 as a Purchaser

                        FIRST UNION CAPITAL MARKETS CORP.

                                  as Deal Agent





                                AFG MASTER TRUST
                               Series 1997-1 Notes



<PAGE>



                                TABLE OF CONTENTS

                                                                         Page


ARTICLE I  DEFINITIONS........1
         Section 1.1 Certain Defined Terms.................................1
         Section 1.2 Other Terms...........................................4
         Section 1.3 Computation of Time Periods...........................4

ARTICLE II  PURCHASE OF THE NOTE...........................................5
         Section 2.1 Sale and Delivery of the Note.........................5
         Section 2.2 Acceptance and Custody of Note........................6
         Section 2.3 Selection of Tranche Periods..........................6

ARTICLE III  CONDITIONS OF PURCHASE........................................7
         Section 3.1 Conditions Precedent..................................7

ARTICLE IV  REPRESENTATIONS AND WARRANTIES.................................7
         Section 4.1 Representations and Warranties of the Transferor......7
         Section 4.2 Representations, Warranties and Agreements of the 
         Purchaser..................................9

ARTICLE V  GENERAL COVENANTS..9
         Section 5.1 General Covenants of the Transferor...................9

ARTICLE VI  INDEMNIFICATION...10
         Section 6.1 Indemnities by the Transferor.........................10

ARTICLE VII  THE DEAL AGENT...11
         Section 7.1 Authorization and Action of the Deal Agent............11
         Section 7.2 Delegation of Duties..................................11
         Section 7.3 Exculpatory Provisions................................11
         Section 7.4 Reliance..............................................12
         Section 7.5 Non-Reliance on Deal Agent and Other Purchasers.......12
         Section 7.6 Deal Agent in its Individual Capacity.................12
         Section 7.7 Successor Deal Agent..................................12

ARTICLE VIII  MISCELLANEOUS...13
         Section 8.1 Amendments and Waivers................................13
         Section 8.2 Notices, Etc..........................................14
         Section 8.3 No Waiver; Remedies...................................14
         Section 8.4 Binding Effect........................................14
         Section 8.5 Term of this Agreement................................14
         Section 8.6 GOVERNING LAW.........................................15
         Section 8.7 WAIVER OF JURY TRIAL..................................15
         Section 8.8 Costs, Expenses and Taxes.............................15
         Section 8.9 No Proceedings........................................16
         Section 8.10 Recourse Against Certain Parties.....................16
         Section 8.11 Ratable Payments.....................................16
         Section 8.12 Confidentiality......................................17
         Section 8.13 Execution in Counterparts; Severability; Integration..17



LIST OF EXHIBITS AND SCHEDULES

EXHIBITS

EXHIBIT A                  Form of VFCC's Cost Funds Form


SCHEDULES

SCHEDULE I                 Conditions Precedent to Initial Purchase



<PAGE>


         NOTE  PURCHASE  AGREEMENT  (the  "Agreement"),  dated as of October 14,
1997, by and among:

                  (1)  AFG  CREDIT  CORPORATION,  a  Delaware  corporation  (the
                  "Transferor");

                  (2)  VARIABLE   FUNDING   CAPITAL   CORPORATION,   a  Delaware
                  corporation   (together   with  its  successors  and  assigns,
                  "VFCC"); and

                  (3) FIRST UNION CAPITAL MARKETS CORP. ("FCMC"),  as agent (the
                  "Deal Agent").


                           IT IS AGREED as follows:


                                    ARTICLE I

                                   DEFINITIONS

         Section 1.1       Certain Defined Terms.

         (a)......Certain  capitalized  terms used throughout this Agreement are
defined  above or in this Section 1.1. In addition,  capitalized  terms used but
not defined herein have the meanings given to such terms in the AFG Master Trust
Pooling and Servicing  Agreement and Indenture of Trust dated as of July 1, 1995
(the "Base"),  among the Transferor,  American  Finance Group,  Inc., a Delaware
corporation,  as  Servicer,  and  Bankers  Trust  Company,  as Trustee  (in such
capacity,  the  "Trustee")  and as  Collateral  Trustee (in such  capacity,  the
"Collateral  Trustee"),  as amended by Amendment No. 1, dated as of September 1,
1995,  Amendment  No. 2, dated as of December 5, 1995 and Amendment No. 3, dated
as of October 14, 1997 and as  supplemented  by the Series  1997-1  Supplemental
Indenture  (the  "Supplement"),  dated as of October 14, 1997,  by and among the
Transferor,  the  Servicer,  the Deal  Agent,  the  Collateral  Trustee  and the
Trustee. The Base, as amended,  and the Supplement are collectively  referred to
as the "Indenture."

         (b)......As  used in this  Agreement  and its  exhibits,  the following
terms shall have the following  meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):

Act:  The  Securities  Act of 1933,  as  amended,  together  with the  rules and
regulations thereunder.

Base Rate:  For any day,  a rate per annum  equal to the lesser of (a) the Prime
Rate in effect on such day and (b) the sum of the Federal Funds  Effective  Rate
in effect on such day and 1.00% per annum.  Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds  Effective Rate shall be effective
on the opening of business on the date of such change.

Collection  Date: The date following the Termination Date on which the Principal
Amount has been  reduced to zero,  the  Purchaser  has  received  all amounts of
interest  due in respect of the Note and other  amounts due to the  Purchaser in
connection with this Agreement and the Indenture and the Deal Agent has received
all amounts due to it in connection with this Agreement.

Commercial  Paper: On any day, any commercial  paper note issued by VFCC for the
purpose of financing or maintaining  its  investment in the Note,  including all
such commercial  paper notes so issued to re-finance  matured  commercial  paper
notes issued by VFCC that were originally issued to finance VFCC's investment in
the Note.

CP Disruption Event: The inability of the Purchaser,  at any time,  whether as a
result  of a  prohibition,  a  contractual  restriction  or any  other  event or
circumstance  whatsoever,  to raise funds through the issuance of its commercial
paper notes (whether or not constituting  Commercial Paper) in the United States
commercial paper market.

Deal Documents:  This Agreement, the Indenture, the Liquidity Purchase Agreement
and each other  document,  agreement,  certificate,  schedule  or other  writing
entered into or delivered in connection  with the foregoing,  as the same may be
amended,  supplemented,  restated,  replaced or otherwise  modified from time to
time.

Eurodollar  Reserve  Percentage:  For any Tranche Period, the reserve percentage
applicable  during such  Tranche  Period  (or, if more than one such  percentage
shall be so applicable,  the daily average of such percentages for those days in
such Tranche  Period during which any such  percentage  shall be so  applicable)
under  regulations  issued  from time to time by the Board of  Governors  of the
Federal  Reserve System (or any successor) for  determining  the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal  reserve  requirement)  for First Union  National  Bank with respect to
liabilities or assets  consisting of or including  Eurocurrency  Liabilities (as
defined in Regulation D of the Board of Governors of the Federal Reserve System,
as in effect from time to time) and having a term equal to such Tranche Period.

Facility  Termination  Date:  October  13,  1998 or such later date to which the
Facility Termination Date may be extended,  if extended,  in the sole discretion
of VFCC in accordance with the terms of Section 2.1(c).

Federal Funds Effective Rate: For any day, the weighted  average of the rates on
overnight federal funds  transactions with members of the Federal Reserve System
arranged by federal funds brokers,  as published on the next succeeding Business
Day by the  Federal  Reserve  Bank  of New  York,  or,  if  such  rate is not so
published on the next succeeding Business Day, the average of the quotations for
the day of such transactions received by the Deal Agent from three federal funds
brokers of recognized standing selected by it.

Fee Letter:  The Transferor Fee Letter Agreement,  dated as of October 13, 1997,
between the Transferor and the Deal Agent.

Investors:  Has the  meaning  given  to  such  term  in the  Liquidity  Purchase
Agreement.

LIBOR: For any Tranche Period, a per annum interest rate determined  pursuant to
the following formula:

         LIBOR  =                   LIBOR Rate
                              1 - Eurodollar Reserve Percentage

LIBOR Rate:  With respect to any Tranche  Period of one, two or three months and
for which VFCC's Cost of Funds is calculated by reference to LIBOR,  an interest
rate per annum equal to the average (rounded upward to the nearest one-sixteenth
(1/16) of one  percent)  per annum rate of  interest  determined  by First Union
National Bank at its principal office in Charlotte,  North Carolina as its LIBOR
Rate (each such  determination,  absent  manifest  error,  to be conclusive  and
binding on all parties hereto and their assignees) as the rate at which deposits
in immediately available funds in U.S. dollars are being, have been, or would be
offered or quoted by First Union  National Bank to major banks in the applicable
interbank  market for  Eurodollar  deposits at or about  11:00 a.m.  (Charlotte,
North Carolina  time) on the Business Day which is the Business Day  immediately
preceding the first day of such Tranche Period, for delivery on the first day of
such Tranche Period, for a term of equal to such Tranche Period and in an amount
approximately  equal to the  portion  of the  Principal  Amount  related to such
Tranche  Period.  If no such offers or quotes are  generally  available for such
amount,  then the LIBOR Rate shall be the rate  appearing on the  Telerate  Page
3750 as of 11:00 A.M.  (London  time) on the  Business Day which is the Business
Day immediately  preceding the first day of such Tranche Period for a term equal
to such Tranche Period.

Liquidity  Agent:  Has the meaning given to such term in the Liquidity  Purchase
Agreement.

Liquidity  Purchase:  Any purchase made by an investor pursuant to the terms and
conditions of the Liquidity Purchase Agreement.

Liquidity  Purchase  Agreement:  The Liquidity Purchase  Agreement,  dated as of
October 14, 1997, by and among VFCC, as seller  thereunder,  the Investors named
therein,  FCMC,  as Deal  Agent and as  Documentation  Agent,  and  First  Union
National Bank, as Liquidity Agent.

Person: An individual,  partnership,  corporation  (including a business trust),
joint stock company,  limited liability  company,  limited  partnership,  trust,
association,  joint venture,  any governmental  authority or any other entity of
any nature.

Prime Rate: At any time, the rate of interest per annum publicly  announced from
time to time by First Union National Bank at its principal  office in Charlotte,
North  Carolina  as its prime  rate.  Each  change in the  Prime  Rate  shall be
effective as of the opening of business on the day such change in the Prime Rate
occurs. The parties hereto acknowledge that the rate announced publicly by First
Union  National  Bank as its  prime  rate is an index or base rate and shall not
necessarily be its lowest or best rate charged to its customers or other banks.

Principal  Limit:  On any day,  an amount  equal to the product of (i) the Asset
Base on such day and (ii) the Series Percentage.

Purchase:  The initial purchase of the Note.

Purchase Limit: $125,000,000;  provided, however, that at all times, on or after
the Termination Date, the Purchase Limit shall mean the Principal Amount.

Purchaser:  Collectively,  VFCC and any other Person that may agree from time to
time to  purchase  any  interest  in the Note  from  VFCC and  their  respective
successors and assigns.

Termination  Date:  The earliest of (a) the Facility  Termination  Date, (b) the
occurrence of a Pay Out Event,  (c) the occurrence of the  Amortization  Date or
(d) the occurrence of a Series Pay Out Event.

Tranche Period:  For any portion of the Principal Amount,  any period determined
pursuant to Section 2.3.

UCC:  The Uniform Commercial Code as in effect in the applicable jurisdiction.

United States:  The United States of America.

VFCC's Cost of Funds:  For any Tranche  Period and any portion of the  Principal
Amount assigned thereto, VFCC's Cost of Funds (including fees paid or payable to
dealers in, or placement agents for,  Commercial  Paper, if applicable),  as set
forth in the  most  recent  VFCC's  Cost of Funds  Form,  which  shall be (A) if
Commercial   Paper  is  available  (as  determined  in  the  Deal  Agent's  sole
discretion), VFCC's Cost of Funds in connection with such Commercial Paper which
shall be calculated  based upon the interest rate  applicable to such Commercial
Paper, or if such Commercial Paper is sold at a discount,  the interest rate per
annum  resulting  from  converting  such  discount  rate to an  interest-bearing
equivalent  rate, or (B) if Commercial Paper is not available for any reason (as
determined in the Deal Agent's sole  discretion)  and the Tranche Period is one,
two or three months,  LIBOR, or (C) if Commercial Paper is not available for any
reason (as  determined  in the Deal  Agent's  sole  discretion)  and the Tranche
Period is less than one month, the Prime Rate.

VFCC's Cost of Funds Form:  A  certificate  delivered to the Trustee by the Deal
Agent on behalf of VFCC substantially in the form of Exhibit B hereto.

         Section 1.2       Other Terms.

         All accounting terms not specifically defined herein shall be construed
in accordance with GAAP. All terms used in the UCC in effect in the State of New
York and not specifically defined herein are used herein as defined therein.

         Section 1.3       Computation of Time Periods.

         Unless  otherwise  stated in this  Agreement,  in the  computation of a
period of time from a specified date to a later  specified date, the word "from"
means  "from and  including"  and the words "to" and  "until"  each mean "to but
excluding."


                                   ARTICLE II

                              PURCHASE OF THE NOTE

         Section 2.1       Sale and Delivery of the Note.

         (a)......On the basis of the representations and warranties and subject
to the terms and conditions  herein set forth, the Transferor  agrees to deliver
to the  Purchaser,  on the  Closing  Date,  the Note,  which  Note shall be duly
executed by the Transferor,  duly authenticated by the Trustee and registered in
the name of the  Deal  Agent,  as agent  for the  Purchasers.  The Note  will be
delivered  to the Deal  Agent,  as  custodian  for VFCC  against  payment of the
purchase price therefor to the Transferor in same day funds, by wire transfer to
the account  specified  to the Deal Agent by the  Transferor  in writing for the
purpose of.

         (b)......On the terms and conditions hereinafter set forth, and subject
to the terms and  conditions  of the  Supplement,  the  Transferor  may,  at its
option,  request that the Purchasers  make  Increases.  On each day prior to the
Termination  Date and subject to the  satisfaction  of the terms and  conditions
hereinafter  set  forth,  VFCC  agrees to make each  such  Increase  on the date
requested  by the  Transferor  in an amount not to exceed  the sum (such  amount
being the "Adjusted  Increase  Amount") of (i) the net proceeds from the sale of
Commercial  Paper on such date plus (b) the proceeds of  Liquidity  Purchases on
such date. Notwithstanding anything to the contrary herein contained, VFCC shall
have no  obligation  to make any  Increase  (i) in an  amount  in  excess of the
Adjusted  Increase Amount or (ii) if, after giving effect to such Increase,  the
Principal  Amount would  exceed the lesser of (x) the Purchase  Limit or (y) the
Principal  Limit.  In addition,  VFCC shall have no obligation to make available
any Adjusted  Increase Amount if on the date such Adjusted Increase Amount would
be  paid,  (1) the sum of (A) the  product  of (I) the  Asset  Base and (II) the
Series  Percentage and (B) accrued and unpaid interest on the Notes to such date
is  less  than  (2) the sum of (A) the  net  proceeds  of all  Commercial  Paper
outstanding  in the  case of  Commercial  Paper  issued  at a  discount  and the
principal  balance of all Commercial Paper outstanding in the case of Commercial
Paper issued on an interest bearing basis and (B) accrued and unpaid discount to
such date in the case of Commercial Paper  outstanding  issued at a discount and
accrued  and  unpaid  interest  to such  date in the  case of  Commercial  Paper
outstanding issued on an interest bearing basis.

         (c)......The Transferor may, within 60 days, but no later than 45 days,
prior to the then  Facility  Termination  Date,  by  written  notice to the Deal
Agent,  make written  request for VFCC and the  Investors to extend the Facility
Termination Date for an additional  period of 364 days. The Deal Agent will give
prompt  notice to VFCC and to the Liquidity  Agent under the Liquidity  Purchase
Agreement  of its  receipt  of  such  request  for  extension  of  the  Facility
Termination  Date. VFCC shall make a  determination,  in its sole discretion and
after a full credit review,  not less than 15 days prior to the then  applicable
Facility  Termination  Date as to  whether  or not it will  agree to extend  the
Facility Termination Date; provided, however, that the failure of VFCC to make a
timely  response  to  the  Seller's   request  for  extension  of  the  Facility
Termination  Date  shall be  deemed  to  constitute  a  refusal  by VFCC and the
Investors to extend the Facility Termination Date. The Facility Termination Date
shall only be  extended  upon the  consent of both (i) VFCC and (ii) 100% of the
Investors.

         Section 2.2       Acceptance and Custody of Note.

         On the Closing Date, the Deal Agent shall take delivery of the Note and
maintain custody thereof on behalf of the Purchasers.

         Section 2.3       Selection of Tranche Periods.

         The  Transferor  may,  subject  to the Deal  Agent's  approval  and the
limitations  described below and in the  Supplement,  select Tranche Periods and
allocate a portion of the Principal Amount to each selected  Tranche Period,  so
that the full Principal  Amount is at all times  allocated to a Tranche  Period.
Each subsequent Tranche Period shall commence on the last day of the immediately
preceding  Tranche Period,  and the duration of and interest  applicable to such
subsequent  Tranche  Period shall be such as the Transferor has selected and the
Deal Agent has approved on the  Business  Day prior to such last day;  provided,
however,  that if the Deal  Agent  has not,  by 3 p.m.  (New  York  time) on the
Business Day immediately preceding the last day of a Tranche Period (i) received
from the  Transferor  notice of the  Transferor's  selection of the next Tranche
Period(s)  and the amount of Principal  Amount to be allocated  thereto and (ii)
approved such selection and  allocation,  then the Deal Agent shall, in its sole
discretion,  choose such Tranche Period(s) and make such allocation. Any Tranche
Period which would  otherwise  end on a day which is not a Business Day shall be
extended to the next succeeding  Business Day; provided,  however,  that if such
next succeeding  Business Day is in the next calendar  month,  then such Tranche
Period shall end on the next preceding  Business Day. In addition,  whenever any
Tranche  Period  commences  on the last  Business Day in a month or on a day for
which  there is no  numerically  corresponding  day in the  month in which  such
Tranche Period ends, the last day of such Tranche Period shall occur on the last
Business Day of the month in which such Tranche  Period ends. Any Tranche Period
for which  interest on the Note  accrues at a rate based upon LIBOR shall have a
duration of one, two or three months only. In no event shall the duration of any
Tranche  Period exceed [90] days.  Furthermore,  if a CP Disruption  Event shall
have occurred and be continuing, the Purchaser, or the Deal Agent on its behalf,
may, upon notice to the Transferor and the Trustee, terminate any Tranche Period
then in effect if the Purchaser  has funded any portion of the Principal  Amount
allocated  to such Tranche  Period by issuing its  commercial  paper notes.  Any
Tranche Period which commences  before the Termination  Date and would otherwise
end on a date occurring after the Termination  Date shall end on the Termination
Date. On or after the  Termination  Date, the Deal Agent shall have the right to
allocate  outstanding  Principal  Amount to Tranche  Periods of such duration as
shall be selected by the Deal Agent.  The Purchaser  shall,  on the first day of
each Tranche  Period,  notify the Deal Agent of the rate of interest  upon which
VFCC's  Cost of Funds will accrue for the  Principal  Amount  allocated  to such
Tranche Period.


                                   ARTICLE III

                             CONDITIONS OF PURCHASE

         Section 3.1       Conditions Precedent.

         The Purchase hereunder is subject to the satisfaction, on or before the
date of such  purchase,  as  determined  by the Deal  Agent,  of each  condition
precedent listed in Schedule I.


                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

         Section 4.1       Representations and Warranties of the Transferor.

         The Transferor represents and warrants as follows:

         (a)......Organization.  It is a company,  duly  organized  and  validly
existing  in good  standing  under  the laws of the State of  Delaware,  is duly
qualified and in good standing as a foreign entity and authorized to do business
in all other jurisdictions  wherein the nature of its business or property makes
such qualification materially necessary, and has full power and authority to own
its properties and to conduct its business as presently conducted.

         (b)......Licenses and Approvals. It has obtained all necessary licenses
and approvals in all  jurisdictions  in which the ownership or lease of property
or the conduct of its business requires such licenses and approvals except where
the failure to have such licenses and approvals does not have a material adverse
affect on its financial  condition or on its ability to perform its  obligations
under the Deal Documents.

         (c)......Authority.  It has full power and  authority  to  execute  and
deliver,  and perform each of its obligations  under, each of the Deal Documents
to  which it is a party,  including  the  Transferor's  use of the  proceeds  of
Purchases, and it has duly authorized the execution, delivery and performance of
each of the foregoing and the sale of the Note to the Purchaser by all necessary
corporate action.

         (d)......Enforceability.  Each of the Deal  Documents  to which it is a
party constitutes its legal, valid and binding obligations,  enforceable against
it in accordance  with its  respective  terms,  except as limited by bankruptcy,
reorganization,  insolvency, fraudulent conveyance, moratorium and other similar
laws and equitable principles affecting creditors' rights and remedies.

         (e)......No   Conflicts.   The   consummation   of   the   transactions
contemplated  by the  fulfillment  of the terms of the Deal  Documents  will not
conflict  with,  result in any breach of any of the terms and  provisions of, or
constitute  (with or without notice,  lapse of time or both) a default under its
memorandum of association,  by-laws or any indenture,  agreement, mortgage, deed
of trust or other  material  instrument to which it is a party or by which it is
bound,  or result in the  creation  or  imposition  of any Lien  (other  than as
contemplated  by this  Agreement or the  Indenture)  upon any of its  properties
pursuant to the terms of such indenture,  agreement,  mortgage, deed of trust or
other such instrument,  other than the Deal Documents, or violate any law, rule,
regulation or any order applicable to it of any court or of any regulatory body,
administrative agency or other governmental  instrumentality having jurisdiction
over it or any of its properties.

         (f)......Legal Proceedings.  There are no proceedings or investigations
to which it is a party pending,  or, to its best knowledge,  threatened,  before
any  court,  regulatory  body,   administrative  agency  or  other  tribunal  or
governmental instrumentality (a) asserting the invalidity of the Deal Documents,
(b) seeking to prevent the consummation of any of the transactions  contemplated
by the Deal  Documents,  (c)  seeking  any  determination  or ruling  that would
materially and adversely affect the performance by it of its obligations  under,
or the validity or enforceability of, the Deal Documents or (d) which would have
a material  adverse effect on its ability to perform its  obligations  under the
Deal Documents.

         (g)......Consents   and  Approvals.   All  approvals,   authorizations,
consents,  orders  or  other  actions  of  any  Person,   corporation  or  other
organization, or of any court, governmental agency or body or official, required
in  connection  with  the  execution,  delivery  and  performance  of  the  Deal
Documents, have been received or taken, as the case may be.

         (h)......Information.  No information,  exhibit,  financial  statement,
document,  book, record or report furnished or to be furnished by it to the Deal
Agent or a Purchaser (i) is or will be inaccurate in any material  respect as of
the  date it is or  shall be dated or  (except  as  otherwise  disclosed  to the
recipient  thereof  at the time of  delivery  or  thereafter)  as of the date so
furnished  and (ii) no such  document  contains  or will  contain  any  material
misstatement  of fact or omits or shall omit to state a material fact  necessary
to make  the  statements  contained  therein  not  misleading  in  light  of the
statements made therein.

         (i)......Accuracy    of    Representations    and   Warranties.    Each
representation and warranty made by it contained herein or in any certificate or
other  document  furnished by it pursuant  hereto or to any Deal  Document or in
connection herewith or therewith is true and correct in all material respects.

         (j)......Offer  and Sale.  Neither the Transferor nor any person acting
on its behalf has  offered to sell the Note by any form of general  solicitation
or general advertising. The Transferor has not offered or sold the Note or other
similar  security in any manner that would  render the  issuance and sale of the
Note a violation of the Act, or require  registration  pursuant thereto, nor has
it authorized nor will it authorize any person to act in such manner.

         (k)......Representations  and Warranties. The Transferor hereby repeats
each of the  representations and warranties made by it in the Indenture and made
in  any  officer's  certificate  of the  Transferor  delivered  pursuant  to the
Indenture as if each such representation and warranty was set forth herein.

         Section  4.2   Representations,   Warranties   and  Agreements  of  the
Purchaser.

         The Purchaser  hereby  represents and warrants to, and agrees with, the
Transferor that:

         (a)......The  Purchaser  understands  that the Note purchased by it has
not been  registered  under the Act or the securities  laws of any State and, if
the Note is not then registered  under  applicable  federal and State securities
law (which  registration the Transferor is not obligated to effect), it will not
offer to sell,  transfer or otherwise dispose of the Note or any portion thereof
except in a transaction which is exempt from such registration.

         (b)......The  Purchaser is acquiring the Note for its own account,  and
not as a nominee for any other  person,  and the  Purchaser is not acquiring the
Note with a view to or for sale or transfer in connection with any  distribution
of the Note under the Act, but subject,  nevertheless, to any requirement of law
that the disposition of its property shall at all times be within its control.

         (c)......The  Purchaser  is an  "accredited  investor"  as  defined  in
Regulation D under the Act.

         (d)......The  Purchaser is not, and is not purchasing for, or on behalf
of, a "benefit plan  investor" as such term is defined in 29 C.F.R.  2510.3-101,
unless the transfer to, or holding of the Note by, such Person will either:  (i)
not  result  in  any  prohibited  transaction  under  Title  I of  the  Employee
Retirement  Income  Security  Act of 1974,  as  amended,  or excise  taxes under
Section 4975 of the Internal Revenue Code of 1986, as amended, or (ii) result in
a  prohibited  transaction,  but  any  such  transaction  will be  eligible  for
exemptive relief under Prohibited  Transaction  Class Exemption 91-38 (regarding
investments  by bank  collective  trust  funds),  Prohibited  Transaction  Class
Exemption 90-1 (relating to investments by insurance company separate accounts),
Prohibited  Transaction  Class  Exemption  95-60  (relating  to  investments  by
insurance  company general  accounts),  Prohibited  Transaction  Class Exemption
84-14  (relating to investments  by qualified  professional  asset  managers) or
Prohibited  Transaction  Class  Exemption  96-23  (relating  to  investments  by
in-house asset managers).

         (e)......Neither  the Purchaser nor any person acting on its behalf has
offered  to  sell  the  Note by any  form of  general  solicitation  or  general
advertising.  The  Purchaser  has not  offered the Note in any manner that would
render the  issuance  and sale of the Note a  violation  of the Act,  or require
registration  pursuant thereto,  nor has it authorized nor will it authorize any
person to act in such manner.


                                    ARTICLE V

                                GENERAL COVENANTS

         Section 5.1       General Covenants of the Transferor.

         (a)......The Transferor hereby agrees to notify the Deal Agent, as soon
as  possible,  and in any  event  within  five  (5)  days  after  notice  to the
Transferor,  of (a) the  occurrence  of any Pay Out Event and/or  Series Pay Out
Event,  (b) the  occurrence  of any  Accelerated  Payment  Event,  (c) any fact,
condition  or event  which,  with the giving of notice or the passage of time or
both,  could become a Pay Out Event and/or a Series Pay Out Event, (d) any fact,
condition  or event  which,  with the giving of notice or the passage of time or
both,  could  become  an  Accelerated  Payment  Event,  (e) the  failure  of the
Transferor to observe any of its material  undertakings under the Deal Documents
or (f) any change in the status or  condition of the  Transferor  or the Manager
that would  reasonably be expected to adversely  affect the  Transferor's or the
Manager's ability to perform its obligations under the Deal Documents.

         (b)......The  Transferor  agrees not to sell, offer for sale or solicit
offers to buy or  otherwise  negotiate in respect of any security (as defined in
the Act) that  would be  integrated  with the sale of the Note in a manner  that
would require the registration under the Act of the sale to the Purchaser of the
Note.

         (c)......The  Transferor  agrees to  deliver  to the Deal Agent on each
Distribution  Date a copy of the Monthly  Statement related to such Distribution
Date.


                                   ARTICLE VI

                                 INDEMNIFICATION

         Section 6.1       Indemnities by the Transferor.

         Without  limiting any other rights which the Deal Agent, the Purchasers
or any of their  respective  Affiliates may have  hereunder or under  applicable
law,  the  Transferor  hereby  agrees to indemnify  each of the Deal Agent,  the
Purchasers  and  each  of  their  respective  Affiliates,  together  with  their
respective successors and permitted assigns (each of the foregoing Persons being
individually  called  an  "Indemnified  Party")  from  and  against  any and all
damages, losses, claims,  liabilities and related costs and expenses,  including
reasonable  attorneys'  fees  and  disbursements  (all  of the  foregoing  being
collectively  referred to as "Indemnified  Amounts") awarded against or incurred
by any of them arising out of, or relating to this Agreement,  any Deal Document
or the Note,  excluding,  however,  Indemnified  Amounts to the extent resulting
from gross  negligence  or willful  misconduct  on the part of such  Indemnified
Party.

         Any amounts subject to the  indemnification  provisions of this Section
6.1 shall be paid by the  Transferor  to the Deal Agent within ten (10) Business
Days following the Deal Agent's demand therefor.


                                   ARTICLE VII

                                 THE DEAL AGENT

         Section 7.1       Authorization and Action of the Deal Agent.

         Each  Purchaser  hereby  designates  and  appoints  FCMC as Deal  Agent
hereunder,  and  authorizes  the Deal Agent to take such actions as agent on its
behalf and to  exercise  such powers as are  delegated  to the Deal Agent by the
terms of this Agreement  together with such powers as are reasonably  incidental
thereto.  The Deal Agent shall not have any duties or  responsibilities,  except
those  expressly  set  forth  herein,  or any  fiduciary  relationship  with any
Purchaser,  and  no  implied  covenants,  functions,  responsibilities,  duties,
obligations or liabilities on the part of the Deal Agent shall be read into this
Agreement or otherwise exist for the Deal Agent. In performing its functions and
duties  hereunder,  the Deal Agent shall act solely as agent for the  Purchasers
and does not  assume  nor shall be  deemed to have  assumed  any  obligation  or
relationship  of  trust  or  agency  with  or for the  Transferor  or any of its
successors  or assigns.  The Deal Agent shall not be required to take any action
which exposes the Deal Agent to personal  liability or which is contrary to this
Agreement,  any other  agreement by which the Deal Agent is bound or  applicable
law. The  appointment  and authority of the Deal Agent hereunder shall terminate
on the Collection Date.

         Section 7.2       Delegation of Duties.

         The Deal Agent may execute any of its duties under this Agreement by or
through agents or  attorneys-in-fact  and shall be entitled to advice of counsel
concerning  all matters  pertaining to such duties.  The Deal Agent shall not be
responsible for the negligence or misconduct of any agents or  attorneys-in-fact
selected by it with reasonable care.

         Section 7.3       Exculpatory Provisions.

         Neither the Deal Agent nor any of its  directors,  officers,  agents or
employees  shall be (i) liable for any  action  lawfully  taken or omitted to be
taken by it or them under or in connection with this Agreement  (except for its,
their or such  Person's own gross  negligence  or willful  misconduct),  or (ii)
responsible in any manner to any of the Purchasers for any recitals, statements,
representations or warranties made by the Transferor contained in this Agreement
or in any  certificate,  report,  statement  or other  document  referred  to or
provided for in, or received under or in connection  with, this Agreement or for
the value, validity, effectiveness,  genuineness,  enforceability or sufficiency
of this Agreement or any other document furnished in connection herewith, or for
any failure of the Transferor to perform its obligations  hereunder,  or for the
satisfaction of any condition specified in Article III. The Deal Agent shall not
be under any  obligation  to any  Purchaser to ascertain or to inquire as to the
observance or performance of any of the agreements or covenants contained in, or
conditions of, this Agreement, or to inspect the properties, books or records of
the  Transferor.  The Deal Agent  shall not be deemed to have  knowledge  of any
Event of Default or Accelerated Payment Event unless the Deal Agent has received
written notice from the Transferor or a Purchaser.

         Section 7.4       Reliance.

         The Deal Agent  shall in all cases be  entitled  to rely,  and shall be
fully protected in relying,  upon any document or conversation believed by it to
be  genuine  and  correct  and to have been  signed,  sent or made by the proper
Person or Persons and upon advice and  statements of legal  counsel  (including,
without  limitation,  counsel to the  Transferor),  independent  accountants and
other experts  selected by the Deal Agent.  The Deal Agent shall in all cases be
fully  justified in failing or refusing to take any action under this  Agreement
or any other  document  furnished in connection  herewith  unless it shall first
receive  such  advice  or  concurrence  of  VFCC  or all of the  Purchasers,  as
applicable,  as it deems  appropriate  or it shall first be  indemnified  to its
satisfaction  by the  Purchasers,  provided that unless and until the Deal Agent
shall have received such advice,  the Deal Agent may take or refrain from taking
any action,  as the Deal Agent shall deem advisable and in the best interests of
the Purchasers.  The Deal Agent shall in all cases be fully protected in acting,
or in refraining from acting, in accordance with a request of VFCC or all of the
Purchasers,  as applicable,  and such request and any action taken or failure to
act pursuant thereto shall be binding upon all the Purchasers.

         Section 7.5       Non-Reliance on Deal Agent and Other Purchasers.

         Each Purchaser  expressly  acknowledges  that none of the Deal Agent or
any of its respective officers, directors, employees, agents,  attorneys-in-fact
or affiliates has made any  representations  or warranties to such Purchaser and
that no act by the Deal Agent hereafter taken,  including,  without  limitation,
any review of the affairs of the  Transferor,  shall be deemed to constitute any
representation  or warranty by the Deal Agent.  Each  Purchaser  represents  and
warrants  to the Deal  Agent  that it has and will,  independently  and  without
reliance upon the Deal Agent or any other  Purchaser and based on such documents
and  information  as it has deemed  appropriate,  made its own  appraisal of and
investigation into the business, operations,  property, prospects, financial and
other  conditions  and  creditworthiness  of the  Transferor  and  made  its own
decision to enter into this Agreement.

         Section 7.6       Deal Agent in its Individual Capacity.

         Any of the Deal  Agent and its  Affiliates  may make  loans to,  accept
deposits from and generally  engage in any kind of business with the  Transferor
or any  Affiliate of the  Transferor  as though the Deal Agent were not the Deal
Agent  hereunder.  With respect to the  acquisition of any Note pursuant to this
Agreement,  each of the Deal Agent and its Affiliates shall have the same rights
and powers under this  Agreement as any  Purchaser  and may exercise the same as
though it were not the Deal  Agent and the terms  "Purchaser"  and  "Purchasers"
shall include the Deal Agent in its individual capacity, if the Deal Agent shall
become a Purchaser hereunder.

         Section 7.7       Successor Deal Agent.

         The Deal  Agent  may,  upon 5 days'  notice to the  Transferor  and the
Purchasers, and the Deal Agent will, upon the direction of all of the Purchasers
(other than the Deal Agent, in its individual  capacity),  resign as Deal Agent.
If the Deal Agent shall resign, then VFCC during such 5-day period shall appoint
from among the Purchasers a successor Deal Agent. If for any reason no successor
Deal Agent is appointed by VFCC during such 5-day period,  then  effective  upon
the termination of such five day period, the Purchasers shall perform all of the
duties of the Deal Agent  hereunder  and the  Transferor  shall for all purposes
shall  deal  directly  with the  Purchasers.  After any  retiring  Deal  Agent's
resignation  hereunder  as Deal Agent,  the  provisions  of this Article VII and
Article VI shall inure to its  benefit as to any actions  taken or omitted to be
taken by it while it was Deal Agent under this Agreement.


                                  ARTICLE VIII

                                  MISCELLANEOUS

         Section 8.1       Amendments and Waivers.

         (a) No amendment or  modification  of any  provision of this  Agreement
shall be effective without the written agreement of the Transferor,  each of the
Purchasers and the Deal Agent,  and no termination or waiver of any provision of
this Agreement or consent to any departure  therefrom by the Transferor shall be
effective without the written concurrence of each of the Purchasers and the Deal
Agent.  Any waiver or consent shall be effective  only in the specific  instance
and for the specific purpose for which given.

         (b)......No  provision of this Agreement may be amended,  supplemented,
modified or waived except in writing in accordance  with the  provisions of this
Section  8.1(b).  VFCC, the Transferor and the Deal Agent may enter into written
amendments,  modifications  or  waivers  of any  provisions  of this  Agreement,
provided, however, that no such amendment, modification or waiver shall:

                  (i) without the consent of each affected Purchaser, (A) reduce
         the interest rate (or change any component  thereof,  including without
         limit,  the period for which such interest rate is  calculated)  or any
         fee  payable to the Deal Agent for the benefit of the  Purchasers,  (B)
         consent to or permit the  assignment  or transfer by the  Transferor of
         any  of  its  rights  and  obligations  under  this  Agreement  or  the
         Indenture, (C) consent to the amendment,  modification or waiver of, or
         otherwise  agree to  amend,  modify  or  waive,  any  provision  of the
         Indenture  requiring  consent to the holder of the Note or (D) amend or
         modify  any  defined  term  (or  any  defined  term  used  directly  or
         indirectly  in such defined term) used in clauses (A) through (C) above
         in a manner which would  circumvent  the intention of the  restrictions
         set forth in such clauses; or

                  (ii)  without  the  written  consent  of the then Deal  Agent,
         amend,  modify or waive any  provision of this  Agreement if the effect
         thereof is to affect the rights or duties of such Deal Agent.

Notwithstanding  the  foregoing,  without  the  consents  of any of the  parties
hereto,  the Deal  Agent and each of the  Purchasers  may amend  this  Agreement
solely to add additional  Persons as Purchasers  hereunder.  Any modification or
waiver shall apply to each of the  Purchasers  equally and shall be binding upon
the Transferor, the Purchasers and the Deal Agent.

         (c)......The  Deal Agent shall  provide  prompt  written  notice of the
nature of each amendment to this Agreement, and shall, simultaneously therewith,
deliver a copy of such amendment to each Rating Agency.

         Section 8.2       Notices, Etc.

         All notices and other  communications  provided  for  hereunder  shall,
unless otherwise stated herein, be in writing (including telex communication and
communication by facsimile copy) and mailed, telexed,  transmitted or delivered,
as to each  party  hereto,  at its  address  set  forth  under  its  name on the
signature  pages hereof or at such other  address as shall be designated by such
party in a written  notice to the other  parties  hereto.  All such  notices and
communications shall be effective, upon receipt, or in the case of (a) notice by
mail,  upon  receipt,  (b)  notice by telex,  when  telexed  against  receipt of
answerback,  or (c) notice by  facsimile  copy,  when  verbal  communication  of
receipt is obtained,  except that notices and communications pursuant to Article
II shall not be effective until received with respect to any notice sent by mail
or telex.

         Section 8.3       No Waiver; Remedies.

         No failure on the part of the Deal Agent or a  Purchaser  to  exercise,
and no delay in  exercising,  any  right  hereunder  shall  operate  as a waiver
thereof;  nor  shall any  single  or  partial  exercise  of any right  hereunder
preclude  any other or further  exercise  thereof or the  exercise  of any other
right.  The remedies  herein  provided are  cumulative  and not exclusive of any
remedies provided by law.

         Section 8.4       Binding Effect.

         This  Agreement  shall be binding  upon and inure to the benefit of the
Transferor,  the Deal Agent, the Purchasers and their respective  successors and
permitted assigns.

         Section 8.5       Term of this Agreement.

         This  Agreement,   including,   without  limitation,  the  Transferor's
obligations  to observe its covenants  and  agreements  set forth herein,  shall
remain in full force and effect until the Collection  Date;  provided,  however,
that the  obligations of the Transferor  under Section 2.2, the  indemnification
and  payment  provisions  of Article VI and the  provisions  of Section  8.9 and
Section 8.10 and the  agreements of the parties  contained in Sections 8.6, 8.7,
8.8 and 8.12 shall be  continuing  and shall  survive  any  termination  of this
Agreement.

         Section 8.6       GOVERNING LAW.

         THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE  WITH,
THE LAWS OF THE STATE OF NORTH  CAROLINA  (WITHOUT  REGARD TO  CONFLICT  OF LAWS
PRINCIPLES).

         Section 8.7       WAIVER OF JURY TRIAL.

         TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PURCHASERS,  THE
TRANSFEROR  AND THE DEAL AGENT  WAIVES ANY RIGHT TO HAVE A JURY  PARTICIPATE  IN
RESOLVING ANY DISPUTE,  WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE BETWEEN
THE PARTIES HERETO ARISING OUT OF, CONNECTED WITH,  RELATED TO, OR INCIDENTAL TO
THE  RELATIONSHIP  BETWEEN ANY OF THEM IN CONNECTION  WITH THIS AGREEMENT OR THE
TRANSACTIONS  CONTEMPLATED  HEREBY.  INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT
WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

         Section 8.8       Costs, Expenses and Taxes.

         In addition to the rights of indemnification granted to the Deal Agent,
the  Purchasers and their  respective  Affiliates  under Article VI hereof,  the
Transferor  agrees  to pay on  demand  all  costs  and  expenses  incurred  by a
Purchaser or the Deal Agent,  and their  respective  Affiliates,  successors  or
assigns,  with  respect to  enforcing  their  respective  rights and remedies as
against the Transferor under this Agreement,  the Indenture, any Note, any other
Deal Document and the other documents to be delivered hereunder or in connection
herewith  provided,  however,  that none of the Deal Agent, any Purchaser or any
affiliate thereof shall be entitled to any such payment (and shall reimburse the
Transferor  for any such payments  previously  received) if such person has been
determined  by a court of competent  jurisdiction  to not be entitled to receive
indemnification   pursuant  to  Article  VI  hereof  in  connection   with  such
enforcement.  The Transferor also agrees to pay on demand all costs and expenses
of  the  Purchasers  and  the  Deal  Agent,  and  their  respective  Affiliates,
successors or assigns, if any (including  reasonable counsel fees and expenses),
incurred in connection  with the  negotiation,  execution,  and delivery of this
Agreement and the transactions  contemplated hereby, any removal of the Facility
and/or the enforcement,  administration (including periodic auditing), amendment
or  modification  of, or any waiver or consent issued in connection  with,  this
Agreement,  the  Indenture,  the Note,  any other  Deal  Document  and the other
documents to be delivered hereunder or thereunder,  or in connection herewith or
therewith.   The  Transferor  also  agrees  to  pay  on  demand  all  reasonable
out-of-pocket  costs and expenses incurred by a Purchaser in connection with the
administration   (including   rating  agency   requirements,   modification  and
amendment) of this  Agreement,  the Deal Documents and the other documents to be
delivered  hereunder,  including,  without  limitation,  the reasonable fees and
out-of-pocket  expenses of counsel for Purchaser and the Deal Agent with respect
thereto and with respect to advising the Purchaser as to its rights and remedies
under this  Agreement,  the Deal  Documents  and the other  agreements  executed
pursuant hereto. Any amounts subject to the provisions of this Section 8.8 shall
be paid by the  Transferor  to the Deal  Agent  within  ten (10)  Business  Days
following the Deal Agent's demand therefor.

         Section 8.9       No Proceedings.

         Each of the Transferor, the Deal Agent and the Purchasers hereby agrees
that it will not  institute,  or join any other Person in  instituting,  against
VFCC  any  bankruptcy,   insolvency,  winding  up,  dissolution,   receivership,
conservatorship  or other similar proceeding or action so long as any commercial
paper  issued by VFCC shall be  outstanding  or there shall not have elapsed one
year and one day  since the last day on which any such  commercial  paper  shall
have been outstanding.

         Section 8.10      Recourse Against Certain Parties.

         No  recourse  under or with  respect  to any  obligation,  covenant  or
agreement (including,  without limitation,  the payment of any fees or any other
obligations) of any of the  Transferor,  VFCC any Purchaser or the Deal Agent as
contained  in this  Agreement  or any other  agreement,  instrument  or document
entered  into by it  pursuant  hereto  or in  connection  herewith  shall be had
against  any  administrator  of  such  party  or  any  incorporator,  affiliate,
stockholder,  officer,  employee  or  director  of  such  party  or of any  such
administrator,  as such, by the enforcement of any assessment or by any legal or
equitable proceeding,  by virtue of any statute or otherwise; it being expressly
agreed  and  understood  that the  agreements  of such party  contained  in this
Agreement and all of the other  agreements,  instruments  and documents  entered
into by it pursuant hereto or in connection  herewith are, in each case,  solely
the  corporate  obligations  of  such  party,  and  that no  personal  liability
whatsoever shall attach to or be incurred by any  administrator of such party or
any incorporator,  stockholder, affiliate, officer, employee or director of such
party or of any such administrator,  as such, or any of them, under or by reason
of any of the  obligations,  covenants or agreements of such party  contained in
this Agreement or in any other such  instruments,  documents or  agreements,  or
which are implied  therefrom,  and that any and all personal  liability of every
such administrator of such party and each incorporator,  stockholder, affiliate,
officer, employee or director of such party or of any such administrator, or any
of them,  for  breaches  by such  party of any such  obligations,  covenants  or
agreements,  which  liability  may arise  either at common law or at equity,  by
statute or constitution, or otherwise, is hereby expressly waived as a condition
of and in consideration for the execution of this Agreement.

         Section 8.11      Ratable Payments.

         If any Purchaser,  whether by setoff or otherwise,  has payment made to
it with respect to any portion of any amount of the principal amount of the Note
or other amount owing to such Purchaser (other than payments  received  pursuant
to  Article  VI) in a  greater  proportion  than  that  received  by  any  other
Purchaser,  such  Purchaser  agrees,  promptly  upon demand,  to pay to the Deal
Agent,  for  distribution  ratably  to all other  Purchasers  the amount of such
excess such that all  Purchasers  shall receive  their  ratable  portion of such
payment.

         Section 8.12      Confidentiality.

         (a)......Each  of the Deal Agent,  the  Purchasers  and the  Transferor
shall  maintain and shall cause each of its  employees  and officers to maintain
the  confidentiality  of this Agreement and the other  confidential  proprietary
information  with  respect  to the other  parties  hereto  and their  respective
businesses   obtained  by  it  or  them  in  connection  with  the  structuring,
negotiating and execution of the transactions  contemplated herein,  except that
each such party and its officers and employees may (i) disclose such information
to its external  accountants  and attorneys  and as required by applicable  law,
applicable  accounting  requirements or order of any judicial or  administrative
proceeding  and (ii)  disclose  the  existence  of this  Agreement,  but not the
financial terms thereof.

         (b)......Anything   herein  to  the   contrary   notwithstanding,   the
Transferor  hereby consents to the disclosure of any nonpublic  information with
respect  to it (i) to the  Deal  Agent,  the  Liquidity  Agent,  the  Investors,
prospective  Investors (provided that each such prospective Investor has entered
into a confidentiality  agreement  reasonably  acceptable to both the Deal Agent
and the Transferor) or a Purchaser by each other,  (ii) by the Deal Agent or the
Purchasers to any  prospective or actual  assignee or participant of any of them
or (iii) by the Deal Agent to any rating  agency that  provides a rating for the
Commercial  Paper,  Commercial  Paper dealer or placement agent or provider of a
surety,  guaranty or credit or liquidity  enhancement  to a Purchaser and to any
officers, directors,  employees, outside accountants and attorneys of any of the
foregoing,  provided each such Person is informed of the confidential  nature of
such  information and agrees to keep such information  confidential  pursuant to
the terms of this Section  8.12.  In addition,  the  Purchasers,  the  Liquidity
Agent,  the  Investors  and the Deal  Agent  may  disclose  any  such  nonpublic
information pursuant to any law, rule, regulation,  direction,  request or order
of any judicial,  administrative or regulatory authority or proceedings (whether
or not having the force or effect of law). As used herein, the terms "Investors"
and the "Liquidity  Agent" shall have their respective  meanings as set forth in
the Liquidity Purchase Agreement.

         Section 8.13      Execution in Counterparts; Severability; Integration.

         This  Agreement  may be executed in any number of  counterparts  and by
different  parties  hereto  in  separate  counterparts,  each of  which  when so
executed  shall be deemed to be an original and all of which when taken together
shall  constitute  one and the  same  agreement.  In case  any  provision  in or
obligation  under this Agreement shall be invalid,  illegal or  unenforceable in
any  jurisdiction,  the validity,  legality and  enforceability of the remaining
provisions  or  obligations,  or of such  provision or  obligation  in any other
jurisdiction,  shall  not in any  way be  affected  or  impaired  thereby.  This
Agreement  contains the final and complete  integration of all prior expressions
by the  parties  hereto  with  respect to the  subject  matter  hereof and shall
constitute  the entire  agreement  among the parties  hereto with respect to the
subject matter hereof, superseding all prior oral or written understandings.




                             [Signatures to Follow]




<PAGE>



         IN WITNESS  WHEREOF,  the  parties  have caused  this  Agreement  to be
executed by their respective officers thereunto duly authorized,  as of the date
first above written.


THE TRANSFEROR:                    AFG CREDIT CORPORATION


                                   By
                                   Title:

                                   Attn:
                                   Facsimile:



VFCC:                              VARIABLE FUNDING CAPITAL CORPORATION

                                   By First Union Capital Markets
                                   Corp., as attorney-in-fact


                                   By
                                   Title:

                                         Variable Funding Capital Corporation
                                         c/o First Union Capital Markets Corp.
                                         One First Union Center, TW6
                                         Charlotte, North Carolina  28288
                                         Attention: Bo Weatherly
                                         Facsimile  No.: 704-383-6036


THE DEAL AGENT:                     FIRST UNION CAPITAL MARKETS CORP.


                                    By
                                    Title:

                                         First Union Capital Markets Corp.
                                         One First Union Center, TW6
                                         Charlotte, North Carolina  28288
                                         Attention:  Darrell Baber
                                         Facsimile  No.: 704-383-6036


<PAGE>


                                     SCHEDULE I

                        CONDITIONS PRECEDENT TO PURCHASE

                  As  required  by  Section  3.1 of the  Agreement,  each of the
following  items must be  delivered  to the Deal Agent  prior to the date of the
Purchase:

                  (a) The Notes shall have been duly  authorized,  executed  and
delivered by the Transferor and authenticated by the Trustee.

                  (b) A copy of this  Agreement  and the  Supplement,  each duly
executed by the Transferor and all other parties thereto.

                  (c) A certificate  of the Secretary or Assistant  Secretary of
the  Transferor  dated  the  Closing  Date,  certifying  (i) the  names and true
signatures  of  its  respective  incumbent  officers  authorized  to  sign  this
Agreement  and the other  documents to be  delivered  by it hereunder  (on which
certificate the Deal Agent and the Purchasers may  conclusively  rely until such
time as the Deal Agent shall receive from the  Transferor a revised  certificate
meeting  the  requirements  of this  paragraph  (c),  (ii)  that  copies  of its
certificate of  incorporation  attached  thereto are complete and correct copies
and that such  certificate of  incorporation  has not been amended,  modified or
supplemented and is in full force and effect, (iii) that the copy of its by-laws
attached  thereto is a complete  and correct copy and that such by-laws have not
been amended, modified or supplemented and are in full force and effect and (iv)
the  resolutions  of its  board  of  directors  approving  and  authorizing  the
execution,  delivery and  performance  by it of this Agreement and the documents
related hereto and thereto.

                  (d)  Certified  copies  of  the  Transferor's  certificate  of
incorporation.

                  (e)  Copies of the  Indenture,  and all other  Deal  Documents
(other than this  Agreement),  in form and  substance  satisfactory  to the Deal
Agent, each duly executed and delivered by each party thereto.

                  (f)  Copies  of  all  certificates  and  opinions  of  counsel
delivered  pursuant to or in  connection  with the execution and delivery of the
other Deal  Documents,  which shall be in form and content  satisfactory  to and
each  addressed  to the  Trustee  or to the Deal  Agent for the  benefit  of the
Purchasers.

                  (g) An officer's  certificate of a responsible  officer of the
Transferor  to the effect that each of the  conditions  to the initial  Purchase
hereunder and to the  authentication  of the Note to be delivered on the Closing
Date has been satisfied.

                  (h) An  opinion  of  counsel  to  the  Trustee  as to the  due
organization of the Trustee,  the enforceability of the Indenture and as to such
other matters as the Deal Agent may reasonably request.

                  (i) All fees and expenses required by this Agreement,  the Fee
Letter  and the other  documents  to be  delivered  hereunder  or in  connection
herewith to be paid on or before the Closing Date.



<PAGE>


                                    EXHIBIT A



                        Form of VFCC's Cost of Funds Form


                                [to be provided]