<PAGE>   1

                                                                   EXHIBIT 10.88


               REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT

                                      AMONG

                      NATIONAL FINANCIAL AUTO FUNDING TRUST,

                       NATIONAL AUTO FINANCE COMPANY, INC.

                                       AND


                            FIRST UNION NATIONAL BANK





                           DATED AS OF MARCH 31, 1999


<PAGE>   2

               REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT

                               TABLE OF CONTENTS

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SECTION 1. DEFINITIONS ..................................................      1
      1.1  Defined Terms ................................................      1

SECTION 2. COMMITMENT TO LEND ...........................................     18
      2.1  Establishment of Line of Credit ..............................     18
      2.2  Term Loan ....................................................     18
      2.3  Special Provisions Regarding Lender's Model Amount ...........     18
      2.4  Use of Proceeds ..............................................     19
      2.5  Removal of Underlying Transactions from the Borrowing Base ...     19

SECTION 3. BORROWING PROCEDURES; CERTAIN LOAN TERMS .....................     19
      3.1  Borrowing Procedures for Revolving Loans; Deemed Requests
           for Amounts Due on each Payment Date .........................     19
      3.2  Conversion to Term Loan; Swap Agreement Requirement ..........     21
      3.3  Capital Adequacy .............................................     21

SECTION 4. INTEREST AND FEES ............................................     22
      4.1  Revolving Loans ..............................................     22
      4.2  Term Loan ....................................................     22
      4.3  Method of Calculating Interest and Fees ......................     22

SECTION 5. REPAYMENT OF PRINCIPAL .......................................     22
      5.1  Principal Payments and Prepayments ...........................     22
      5.2  Term Loan Principal Payments .................................     23
      (c)  Put Option; Release of Lien ..................................     23

SECTION 6. APPLICATION OF AMOUNTS ON DEPOSIT IN ACCOUNTS ................     24
      6.1  Application of Amounts .......................................     24
      6.2  Taxes ........................................................     25

SECTION 7. BORROWER'S AND NAFI'S REPRESENTATIONS AND WARRANTIES .........     26
      7.1  Existence and Power ..........................................     26
      7.2  Transaction Documents Authorized; Binding Obligations ........     26
      7.3  No Conflict; Legal Compliance ................................     26
      7.4  Executive Offices ............................................     26
      7.5  Litigation ...................................................     27
      7.6  Consents and Approvals .......................................     27
      7.7  Other Agreements .............................................     27
      7.8  Margin Regulations ...........................................     29
</TABLE>


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    7.9  Taxes ...............................................................     29
    7.10 Solvency ............................................................     30
    7.11 Material Adverse Change .............................................     30
    7.12 Good Title to the Collateral; First Priority Security Interest ......     30
    7.13 Investment Company Act ..............................................     30
    7.14 Early Amortization Events ...........................................     30
    7.15 FSA Indebtedness ....................................................     30
    7.16 Representations with respect to NAFI ................................     31
    7.17 Delivery of Physical Certificates ...................................     33
    7.19 Survival of Representations and Warranties ..........................     33

SECTION 8. AFFIRMATIVE COVENANTS OF THE BORROWER AND NAFI ....................     33
    8.1  Borrowing Base Certificates; Additional Access and Information ......     33
    8.2  Existence; Compliance with Law, Books and Records, Commingling
         of Funds ............................................................     34
    8.3  Reserved ............................................................     34
    8.4  Notice of Liens .....................................................     34
    8.5  Obligations with Respect to Contracts  ..............................     34
    8.6  Preservation of Security Interest ...................................     35
    8.7  Reserved ............................................................     35
    8.8  Separately Taxable Entity ...........................................     35
    8.9  Taxable Income from the Contracts ...................................     35
    8.10 Maintenance of Swap Agreement .......................................     35
    8.11 Enforcement of Underlying Documents .................................     35
    8.12 Borrower's Identity .................................................     35
    8.13 Audit Reports .......................................................     35
    8.14 Financial Statements ................................................     36
    8.15 Inspection ..........................................................     36
    8.16 Covenants With Respect to NAFI ......................................     36
    8.17 Cooperation in Connection with Participations .......................     37
    8.18 Agreement to Hold in Trust ..........................................     37
    8.19 Communication with Accountants ......................................     37
    8.20 Performance of Servicing Duties .....................................     37
    8.21 Joint and Several Liability .........................................     37
    8.22 Maintenance of Lockbox ..............................................     38

SECTION 9. NEGATIVE COVENANTS OF THE BORROWER AND NAFI .......................     38
    9.1  Liens; Negative Pledges; and Encumbrances ...........................     38
    9.2  Expenditures and Acquisitions .......................................     38
    9.3  Disposition of Assets ...............................................     38
    9.4  Indebtedness and Guarantees .........................................     38
    9.5  No Subsidiaries .....................................................     38
    9.6  Amendments of Charter Documents; Transaction Documents ..............     38
    9.7  No Use of Lender's Name .............................................     39
</TABLE>


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    9.8   Limitation on Activities of Borrower .....................     39
    9.9   Insolvency Proceedings ...................................     39
    9.10  No Redemption ............................................     39
    9.11  No Advances ..............................................     39
    9.12  Guarantees ...............................................     39
    9.13  ERISA ....................................................     39

SECTION 10. GRANTS OF SECURITY INTEREST; THE COLLATERAL ............     40
   10.1   Security Interest ........................................     40
   10.2   Creation of Accounts; Investments ........................     42

SECTION 11. RELATIONSHIP AMONG THE BANKS ...........................     42
   11.1   Appointment and Authorization ............................     42
   11.2   Delegation of Duties .....................................     43
   11.3   Liability of Agent .......................................     43
   11.4   Reliance by the Agent ....................................     43
   11.5   Notice of Default ........................................     44
   11.6   Credit Decision ..........................................     44
   11.7   Indemnification by Banks .................................     44
   11.8   Reserved .................................................     45
   11.9   Successor Agent ..........................................     45
   11.10  Collateral Matters .......................................     46
   11.11  No Petition Covenant .....................................     46
   11.12  Documents ................................................     46
   11.13  Indemnification by Borrower ..............................     46
   11.14  Costs and Expenses .......................................     47
   11.15  Reliance by the Banks ....................................     48

SECTION 12. CONDITIONS PRECEDENT TO ALL REVOLVING LOANS ............     48
   12.1   Notice ...................................................     48
   12.2   Default ..................................................     48
   12.3   Warranties ...............................................     48
   12.4   Additional Documents; Financing Statements ...............     48
   12.5   No Material Adverse Change ...............................     48

SECTION 13. CONDITIONS PRECEDENT TO INITIAL REVOLVING LOAN .........     48
   13.1   Note .....................................................     48
   13.2   Other Agreements and Financing Statements ................     48
   13.3   Resolutions ..............................................     50
   13.4   Incumbency Certificate ...................................     51
   13.5   By-laws ..................................................     51
   13.6   Certificate of Incorporation .............................     51
   13.7   Good Standing ............................................     51
   13.8   UCC Searches .............................................     51
</TABLE>


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   13.9   Fees and Costs .............................................     51
   13.10  Other Transaction Document Conditions ......................     52
   13.11  Due Diligence ..............................................     52
   13.12  Reliance Letters ...........................................     52
   13.13  Reserved ...................................................     52
   13.14  No Material Adverse Change .................................     52
   13.15  Reserved ...................................................     52
   13.16  Opinions ...................................................     52
   13.17  Certified Copies of Underlying Transaction Documents .......     52

SECTION 14. EVENTS OF DEFAULT AND REMEDIES ...........................     53
   14.1   Events of Default ..........................................     53
   14.2   Waiver of Default ..........................................     54
   14.3   Remedies ...................................................     54
   14.4   Rights and Remedies Cumulative .............................     56
   14.5   Intercreditor Agreement; Limitation on Amounts Due .........     56

SECTION 15. EXPENSES AND INDEMNITIES .................................     57
   15.1   Expenses ...................................................     57
   15.2   Indemnification ............................................     58
          (a) General Indemnity ......................................     58
          (b) Procedures for Suits ...................................     58
          (c) Survival; Defense ......................................     59

SECTION 16. MISCELLANEOUS ............................................     59
   16.1   Survival ...................................................     59
   16.2   No Waiver by Lender ........................................     59
   16.3   Notices ....................................................     59
   16.4   Headings ...................................................     60
   16.5   Severability ...............................................     60
   16.6   Entire Agreement; Construction; Amendments and Waivers .....     60
   16.7   Reliance by Lender .........................................     60
   16.8   Marshaling; Payments Set Aside .............................     60
   16.9   No Set-Offs by Borrower or NAFI ............................     61
   16.10  Binding Effect, Assignment and Transfer ....................     61
   16.11  Counterparts ...............................................     61
   16.12  Equitable Relief ...........................................     61
   16.13  Governing Law ..............................................     62
   16.14  Consent to Jurisdiction ....................................     62
   16.15  Waiver of Jury Trial .......................................     62
   16.16  No Petition by Lender or Agent .............................     62
   16.18  General Interpretive Principles ............................     63
</TABLE>


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                                INDEX OF EXHIBITS

Exhibit A      Form of Note
Exhibit B      Form of Request for Borrowing
Exhibit C      Form of Borrowing Base Report
Exhibit D      Form of Payment Schedule
Exhibit E      Borrower's Swap Account Information
Exhibit F      Definitions of "Available Amounts"
Exhibit G      Form of Irrevocable Instruction Letter
Exhibit H      Exceptions to Sections 7.5 and 7.18(c)
               Litigation Concerning NAFI and or the Borrower


                                      -v-
<PAGE>   7



               REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT

         THIS REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT is dated as of
March 31, 1999, by and among National Financial Auto Funding Trust, a Delaware
business trust ("Borrower"), National Auto Finance Company, Inc. ("NAFI") and
First Union National Bank ("Lender").


                                    RECITALS

         A. Borrower desires to obtain from Lender a revolving credit facility
in the principal amount of up to the Facility Amount for a period of up to two
years, which shall then convert to a term loan for up to a four year period, in
either case secured by, among other things, all Free Cash Flow (as defined
herein) payable to the Borrower from various securitization entities
affiliated with the Borrower, and other amounts, all as more particularly
described below; and

         B. Lender has agreed to make such loans to Borrower, but only upon the
terms and subject to the conditions hereinafter set forth and in reliance on the
representations and warranties set forth herein.


                                    AGREEMENT

         NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants hereinafter set forth, and intending to be legally bound, the
parties hereto agree as follows:

SECTION 1. DEFINITIONS.

         1.1 DEFINED TERMS. As used herein, the following terms have the
following meanings:

         "1995-1 INSURANCE AND INDEMNITY AGREEMENT" means the Insurance and
Indemnity Agreement, dated as of November 21, 1995, among NAFI, the Borrower and
FSA, as amended.

         "1995-1 POOLING AND SERVICING AGREEMENT" means the Pooling and
Servicing Agreement, dated as of October 1, 1995, among the Borrower, as
transferor, NAFI, as master servicer, and Harris, as trustee and collateral
agent, as amended.

         "1995-1 TRANSACTION" means the transactions contemplated and put into
effect by the Underlying Transaction Documents related to the 1995-1 Pooling and
Servicing Agreement and the 1995-1 Insurance and Indemnity Agreement.

         "1996-1 INSURANCE AND INDEMNITY AGREEMENT" means the Insurance and
Indemnity Agreement, dated as of November 13, 1996, among NAFI, the Borrower and
FSA as amended.

         "1996-1 POOLING AND SERVICING AGREEMENT" means the Pooling and
Servicing Agreement, dated as of October 21, 1996, among the Borrower, NAFI, as
servicer, and Harris, as trustee and collateral agent, as amended.


<PAGE>   8
                                      -2-


         "1996-1 TRANSACTION" means the transactions contemplated and put into
effect by the Underlying Transaction Documents related to the 1996-1 Pooling and
Servicing Agreement and the 1996-1 Insurance and Indemnity Agreement.

         "1997-1 INSURANCE AND INDEMNITY AGREEMENT" means the Insurance and
Indemnity Agreement, dated as of July 23, 1997, among FSA, National Auto Finance
1997-1 Trust, the Borrower and NAFI, as amended.

         "1997-1 INDENTURE" means the Indenture, dated June 29, 1997, between
National Auto Finance 1997-1 Trust, as issuer, and Harris, as indenture trustee,
as amended.

         "1997-1 SALE AND SERVICING AGREEMENT" means the Sale and Servicing
Agreement, dated as of June 20, 1997, among National Auto Finance 1997-1 Trust,
as issuer, the Borrower, as seller, NAFI, as servicer, and Harris, as trust
collateral agent and back-up servicer, as amended.

         "1997-1 TRANSACTION" means the transactions contemplated and put into
effect by the Underlying Transaction Documents related to the 1997-1 Sale and
Servicing Agreement and the 1997-1 Insurance and Indemnity Agreement.

         "1998-1 INSURANCE AND INDEMNITY AGREEMENT" means the Insurance and
Indemnity Agreement, dated as of January 20, 1998, among FSA, National Auto
Finance 1998-1 Trust, the Borrower and NAFI, as amended.

         "1998-1 INDENTURE" means the Indenture, dated as of December 15, 1997,
between National Auto Finance 1998-1 Trust, as Issuer, and Harris, as Indenture
Trustee, as amended.

         "1998-1 SALE AND SERVICING AGREEMENT" means the Sale and Servicing
Agreement, dated as of December 15, 1997, among National Auto Finance 1998-1
Trust, as issuer, the Borrower, as seller, NAFI, as servicer, and Harris, as
trust collateral agent and back-up servicer, as amended.

         "1998-1 TRANSACTION" means the transactions contemplated and put into
effect by the Underlying Transaction Documents related to the 1998-1 Sale and
Servicing Agreement and the 1998-1 Insurance and Indemnity Agreement.

         "ACCRUED INTEREST" means, for any Payment Date, an amount equal to the
sum of the product of one-three hundred sixtieth of the Interest Rate and the
outstanding principal balance of each of the Loans on each day of the Collection
Period related thereto.

         "AFFILIATE" means, with respect to any Person, each Person that
controls, is controlled by or is under common control with such Person or any
affiliate of such Person, provided, however, that in no case shall Lender be
deemed to be an Affiliate of Borrower for purposes of this Agreement. For the
purpose of this definition, "control" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise.

<PAGE>   9
                                      -3-


         "AGENT" has the meaning set forth in Section 11.1 hereof.

         "AGENT-RELATED PERSONS" means the Lender and any successor Agent
appointed pursuant to Section 11.9, together with their respective Affiliates
and the officers, directors, employees, agents and attorneys-in-fact of such
Persons and Affiliates.

         "AGGREGATE CONTRACT BALANCE" means at any time of determination and for
one or more Underlying Transactions, as the context may require, an amount equal
to the sum of the Contract Balances of all of the Contracts.

         "AGREEMENT" means this Revolving Credit, Term Loan and Security
Agreement dated as of March 31, 1999, including all amendments, modifications
and supplements hereto, renewals, extensions or restatements hereof, and all
appendices, exhibits and schedules to any of the foregoing, and shall refer to
the Agreement as the same may be in effect from time to time.

         "AMORTIZATION PERIOD BORROWING BASE" means the product of the Borrowing
Base multiplied by the Conversion Date Borrowing Base Ratio.

         "AVAILABLE FUNDS" means, as of the date of determination, an amount
equal to the lesser of (a) the Borrowing Base; and (b) the Facility Amount minus
the Borrowed Funds.

         "BACK-UP SERVICER" shall mean, initially, CSC LOGIC/MSA LLP d/b/a Loan
Servicing Enterprise, and thereafter, the Person appointed by the Servicer and
acceptable to Lender to perform the duties of Back-up Servicer.

         "BANK" means an assignee of the Lender to whom the Lender transfers all
or part of the Loans pursuant to either a sale or a participation agreement.

         "BANKRUPTCY CODE" means the Bankruptcy Code of 1978, as amended, as
codified under Title 11 of the United States Code, and the Bankruptcy Rules
promulgated thereunder, as the same may be in effect from time to time.

         "BORROWER" shall mean National Financial Auto Funding Trust, a Delaware
business trust.

         "BORROWER'S ACCOUNT" shall mean the account specified in Exhibit E
hereto, or such other account as may be specified from time to time by Borrower
in writing.

         "BORROWED FUNDS" means, as of the date of determination, the aggregate
amount of all Loans hereunder minus any amounts thereof that the Borrower has
previously repaid to the Lender as provided herein.

         "BORROWING BASE" means, as of and for any date of determination, an
amount equal, in each instance as reported on the most recently submitted
Borrowing Base Report, to the least of

<PAGE>   10
                                      -4-


(i) the product of (x) 0.26 and (y), with respect to the related Due Period, the
sum of (1) all of the amounts deposited in (A) all of the Underlying Spread
Accounts and (B) any other deposit, trust or reserve accounts created for any
Original Underlying Transaction the purpose and mechanics of which are
materially similar to those of the Spread Accounts and from which funds are sent
directly to the Lender and (2) the sum of the following amounts as determined
with respect to each Original Underlying Transaction subject, as of the date of
determination, to the Lien of this Agreement: the excess of (A) the aggregate
outstanding Principal Balance of all Contracts in the related Original
Underlying Transaction over (B) the aggregate outstanding principal balance of
the securities issued to securityholders other than NAFI or any Affiliates of it
in the related Original Underlying Transaction, (ii) the product of (x) 0.055
and (y) all outstanding principal balance due to be paid by each Underlying
Trustee related to an Original Underlying Transaction, with respect to the
1995-1 Transaction and 1996-1 Transaction, to senior certificateholders under
the 1995-1 Pooling and Servicing Agreement and the 1996-1 Pooling and Servicing
Agreement, respectively, and, with respect to the 1997-1 Transaction and 1998-1
Transaction, to the noteholders pursuant to the 1997-1 Indenture and the 1998-1
Indenture, respectively, (iii) the Lender's Model Amount and (iv) the Facility
Amount.

         "BORROWING BASE CERTIFICATE" means a properly completed certificate,
which certificate shall be substantially in the form set forth in Exhibit C
hereto and executed by a Responsible Officer of Borrower, together with the
accompanying report with appropriate insertions setting forth the components of
the Borrowing Base as of the date of determination for which such report is
submitted.

         "BUSINESS DAY" means, except when used with respect to LIBOR, any day
which is not a Saturday, Sunday or a legal holiday under the laws of the State
of Florida, Delaware or North Carolina and is not a day on which banking
institutions located in the State of Florida or North Carolina are authorized or
permitted by law or other governmental action to close, and when used with
respect to LIBOR, a day upon which dealings may be effected in deposits of U.S.
dollars in the London interbank foreign currency deposits market and on which
banks may conduct business in London, England, New York, New York, Charlotte,
North Carolina and Jacksonville, Florida.

         "CALCULATION DATE" means, with respect to a Collection Period, the
close of business on the last day of such Collection Period.

         "CHARGES" means all federal, state, county, city, municipal, local,
foreign or other governmental taxes, levies, assessments, charges or claims, in
each case then due and payable, upon or relating to (a) the Loan (but not with
respect to Lender), (b) Borrower's employees, payroll, income or gross receipts,
(c) Borrower's ownership or use of any of its Properties or (d) any other aspect
of Borrower's business.

         "CHASE" means Chase Manhattan Bank Delaware, a Delaware banking
corporation.

         "CLOSING DATE" means April 7, 1999.

<PAGE>   11
                                      -5-


         "CODE" means the Internal Revenue Code of 1986, as amended, the
Treasury Regulations adopted thereunder, as the same may be in effect from time
to time.

         "COLLATERAL" has the meaning set forth in Section 10.1 hereof.

         "COLLECTION PERIOD" means with respect to any Payment Date, the period
of time commencing upon the opening of business on the immediately preceding
Payment Date thereto (or, with respect to the first Collection Period, the
Closing Date) and concluding at the close of business on the Business Day
immediately preceding such Payment Date.

         "COMMITMENT EXPIRATION DATE" means March 31, 2001.

         "CONTRACT" with respect to the 1995-1 Transaction and the 1996-1
Transaction, has the respective meanings set forth in the Underlying Transaction
Documents therefor as of the date the related Underlying Transaction,
respectively, closed, and, with respect to the 1997-1 Transaction and the 1998-1
Transaction, has the meaning set forth in the definition of "Receivable" set
forth in the Underlying Transaction Documents therefor as of the date the
related Underlying Transaction, respectively, closed.

         "CONTRACT BALANCE" means, with respect to the 1995-1 Transaction and
the 1996-1 Transaction, the "Outstanding Principal Balance" as defined therein
as of the date the related Underlying Transaction, respectively, closed, and,
with respect to the 1997-1 Transaction and the 1998-1 Transaction, the
"Principal Balance", as defined therein as of the date the related Underlying
Transaction, respectively, closed, of any Contract.

         "CONTRACT FILES" means the files containing documents that the
Custodian for each Underlying Transaction is required to keep pursuant to the
Underlying Transaction Documents.

         "CONVERSION DATE" means the earliest of (1) the Commitment Expiration
Date, (2) the day that an Event of Default occurs, and (3) the day that an Early
Amortization Event occurs.

         "CONVERSION DATE BORROWING BASE RATIO" means a fraction, the numerator
of which is the outstanding principal amount of the Note on the Conversion Date
and the denominator of which is the Borrowing Base on the same date.

         "CUSTODIAN" shall mean the Person performing the duties of Custodian
under the Custodian Agreement, initially, Harris.

         "CUSTODIAN AGREEMENT" shall mean the Custodian Agreement, dated as of
October 15, 1998, among the Custodian, Harris, in its capacity as Underlying
Trustee, and NAFI, as administrator.

         "CUT-OFF DATE" means the date upon which the initial advance of a Loan
is made hereunder.

<PAGE>   12
                                      -6-


         "DELIVERY" means the physical delivery of the certificates
representing the Pledged Certificates to the Lender, endorsed to the Lender or
in blank.

         "DUE PERIOD" means, with respect to any Payment Date, the calendar
month immediately preceding such Payment Date.

         "EARLY AMORTIZATION EVENT" means the occurrence of any one of the
following:

                  (i)      A "Servicer Default" occurs, as such term is defined
                           in the respective Underlying Transaction Document, as
                           amended through the Closing Date and as may be
                           thereafter amended by the parties thereto with Lender
                           consent.

                  (ii)     The Borrower fails to maintain the Borrowing Base
                           required pursuant to this Agreement for more than
                           three Business Days.

                  (iii)    Any event that would otherwise constitute an
                           "Insurance Agreement Event of Default" (except as
                           irrevocably waived on the Closing Date by FSA for
                           purposes of this Agreement), as defined in and with
                           respect to, any one or more of the Underlying
                           Transactions or any other specifically quantifiable
                           event or test contained in any Underlying Transaction
                           Document relating to the delinquency, net loss or
                           default rate of the pool of Contracts therein occurs
                           that, with either notice, knowledge or the passage of
                           time, would entitle either the securityholders, the
                           Underlying Trustee on behalf of the securityholders
                           or a guarantor or other credit support provider to
                           liquidate the receivables pool securing the
                           securities or to terminate the servicer thereunder
                           (even though such liquidation or termination may not
                           actually occur), however, the percentage, if any,
                           used to trigger such Insurance Agreement Event of
                           Default or other such event shall be deemed for the
                           purposes hereof to be one percent (1%) less than such
                           percentage set forth in the related Underlying
                           Document, (for the purposes of this clause (iii), a
                           "Percentage Test"); provided, however, that, upon
                           either the occurrence of a cure of such Insurance
                           Agreement Event of Default or other test or event is
                           cured within any grace period afforded by the
                           applicable Underlying Transaction Document or receipt
                           of the written irrevocable waiver to such Insurance
                           Agreement Event of Default, test or event, such Early
                           Amortization Event shall be deemed cured hereunder
                           and any Conversion Date triggered thereby not to have
                           occurred. Notwithstanding any provision to the
                           contrary contained in any Underlying Transaction
                           Document or amendment thereto affecting, waiving, or
                           suspending any underlying test, such Percentage Test


<PAGE>   13
                                      -7-


                           shall itself remain operative and effective until the
                           termination of this agreement.

         "ELIGIBLE INVESTMENT" means any of:

         (a) negotiable instruments or securities represented by instruments in
bearer or registered or book-entry form which evidence:

         (i)      obligations which have the benefit of the full faith and
                  credit of the United States of America, including depository
                  receipts issued by a bank as custodian with respect to any
                  such instrument or security held by the custodian for the
                  benefit of the holder of such depository receipt,

         (ii)     demand deposits or time deposits in, or bankers' acceptances
                  issued by, any depositary institution or trust company
                  incorporated under the laws of the United States of America or
                  any state thereof and subject to supervision and examination
                  by Federal or state banking or depositary institution
                  authorities; provided that at the time of investment or
                  contractual commitment to invest therein, the certificates of
                  deposit or short-term deposits (if any) or long-term
                  unsecured debt obligations (other than such obligation whose
                  rating is based on collateral or on the credit of a Person
                  other than such institution or trust company) of such
                  depositary institution or trust company) of such depositary
                  institution or trust company has a credit rating from S&P of
                  "A-1+" or higher, in the case of the certificates of deposit
                  or short-term deposits, or are rated "AA" or higher by S&P in
                  the case of long-term unsecured debt obligations,

         (iii)    certificates of deposit having, at the time of investment (or
                  contractual commitment to invest therein), a rating from S&P
                  of "A-1+" or higher, or

         (iv)     investments in money market funds which are (or which are
                  composed of instruments or other investments which are) rated
                  "AA" or higher by S&P at the time of investment therein;

         (b) demand deposits in the name of the Lender in any depositary
institution or trust company referred to in clause (a)(ii) above;

         (c) commercial paper (having original or remaining maturities of no
more than 270 days) having, at the time of investment or contractual commitment
to invest therein, a credit rating from S&P of "A-1+" or higher;

         (d) Eurodollar time deposits that are obligations of institutions whose
time deposits carry a credit rating from S&P of "AA" or higher; and

<PAGE>   14
                                      -8-


         (e) repurchase agreements involving any Eligible Investment described
in any of clauses (a)(i), (a)(iii) or (d) above, so long as the other party to
the repurchase agreement has a credit rating from S&P of "AA" or higher.

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

         "EVENT OF DEFAULT" means any of the events set forth in Section 14.1.

         "EXTENDED CONTRACT" means a Contract that has had its original maturity
date extended.

         "FACILITY AMOUNT" means an amount equal to $8,000,000.00.

         "FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System and any successor thereto.

         "FILING LOCATIONS" means the jurisdictions in which UCC financing
statements are required to be filed in order to perfect a security interest in
the Collateral.

         "FINAL INSURANCE TERMINATION DATE" means the last to occur of the
Insurance Termination Dates.

         "FIRST PRIORITY COLLATERAL" has the meaning set forth in Section 8.4.

         "FREE CASH FLOW" has the meaning given to it in the Irrevocable
Instruction Letter.

         "FSA" means Financial Security Assurance Inc.

         "FUNB TERMINATION DATE" has the meaning set forth in Section 13.2.

         "GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar function of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.

         "GOVERNMENTAL AUTHORITY" means (a) any federal, state, county,
municipal or foreign government, or political subdivision thereof, (b) any
governmental or quasi-governmental agency, authority, board, bureau, commission,
department, instrumentality or public body, (c) any



<PAGE>   15
                                      -9-


court or administrative tribunal or (d) with respect to any Person, any
arbitration tribunal or other non-governmental authority to the jurisdiction of
which such Person has consented.

         "HARRIS" means Harris Trust and Savings Bank.

         "INCOME TAXES" means any federal, state, local or foreign taxes based
upon, measured by, or imposed upon gross or net income, gross or net receipts,
capital, net worth, or the privilege of doing business, including but not
limited to the Michigan single business tax, the Massachusetts excise tax, and
the Kentucky license tax, and any minimum taxes or withholding taxes based upon
any of the foregoing, including any penalties, interest or additions to tax
imposed with respect thereto.

         "INDEBTEDNESS" means, as to any Person, (a) all indebtedness of such
Person for borrowed money, (b) all leases of equipment of such Person as lessee,
(c) to the extent not included in clause (b), above, all capital leases of such
Person as lessee, (d) any obligation of such Person for the deferred purchase
price of Property or services (other than trade or other accounts payable in the
ordinary course of business and not more than ninety (90) days past due), (e)
any obligation of such Person that is secured by a Lien on assets of such
Person, whether or not that Person has assumed such obligation or whether or not
such obligation is nonrecourse to the credit of such Person, (f) obligations of
such Person arising under acceptance facilities or under facilities for the
discount of accounts receivable of such Person and (g) any obligation of such
Person to reimburse the issuer of any letter of credit issued for the account of
such Person upon which a draw has been made.

         "INDEMNIFIED LIABILITIES" has the meaning set forth in Section 15.2(a).

         "INDEMNIFIED MATTERS" has the meaning set forth in Section 11.13.

         "INDEMNIFIED PERSON" has the meaning set forth in Section 15.2(a).

         "INDEMNITEE" has the meaning set forth in Section 11.13.

         "INDEX MATURITY" means deposits in dollars having a maturity of one
month.

         "INSURANCE POLICY" means with respect to any Contract, an insurance
policy covering physical damage to the related Vehicle or the collectibility of
the payments under the Contract; but shall not include any policy issued by FSA
under any of the 1995-1 Insurance and Indemnity Agreement, the 1996-1 Insurance
and Indemnity Agreement, 1997-1 Insurance and Indemnity Agreement or the 1998-1
Insurance and Indemnity Agreement.

         "INSURANCE PROCEEDS" means, depending on the context, any amounts
payable or any payments made, to the Servicer, the Borrower, or, if NAFI is not
the Servicer hereunder, NAFI under an Insurance Policy.


<PAGE>   16
                                      -10-


         "INSURANCE TERMINATION DATE" means, in the singular, the termination
date (as defined on the Closing Date with such amendments as have been consented
to by the Lender) of the 1995-1 Insurance and Indemnity Agreement, the 1996-1
Insurance and Indemnity Agreement, the 1997-1 Insurance and Indemnity Agreement
or the 1998-1 Insurance and Indemnity Agreement, in each case as such agreement
terminates in accordance with its terms pursuant to Section 4.01 of such
agreement, and in the plural, all of such termination dates but such Insurance
Termination Dates shall be determined without regard to the existence of any
other transactions involving FSA and any member of the NAFI Group.

         "INTANGIBLES" means goodwill and other items shown as intangible on
NAFI's balance sheet.

         "INTERCREDITOR AGREEMENT" means the Subordination and Intercreditor
Agreement among Lender, FSA, Borrower, NAFI, the Trustee and the Underlying
Trusts dated as of the Closing Date.

         "INTEREST ARREARAGE" means, with respect to any Payment Date, any
Accrued Interest and previously accumulated but unpaid Interest Arrearage due on
the immediately preceding Payment Date, but remaining unpaid as of such Payment
Date, together with interest thereon at the Interest Rate.

         "INTEREST RATE" means the LIBOR Rate plus 500 basis points.

         "INTEREST RESERVE ACCOUNT" means the account established by Lender
pursuant to Section 10.2 hereof.

         "INTEREST RESERVE ACCOUNT DEPOSIT AMOUNT" means the amount of aggregate
interest due on the Loan during the six immediately succeeding Collection
Periods, as calculated by the Lender in its good faith and reasonable commercial
judgment, and after giving effect to all outstanding advances made upon such
date and any advances requested by the Borrower as of such date as if such
borrowings were themselves advances, provided that, the Interest Reserve Account
Deposit Amount shall be recalculated on a timely basis with respect to amounts
deposited to the Interest Reserve Account in respect of any such requested
advances made by the Borrower which do not become actual advances made
hereunder, and such deposited amounts that so fail to become related to amounts
that become advances hereunder shall be promptly reimbursed to the Borrower.

         "INVESTMENT" means, when used in connection with any Person, any
investment by or of that Person, whether by means of purchase or other
acquisition of stock or other securities of any other Person or by means of loan
or advance, capital contribution, guaranty or other debt or equity participation
or interest, or otherwise, in any other Person, including any partnership and
joint venture interests of such Person in any other Person or in any item of
transportation-related equipment, owned by a Person unaffiliated with Borrower
and on lease to another third party, in which Borrower acquires a right to
share, directly or indirectly.

<PAGE>   17
                                      -11-


         "INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended (15 U.S.C. 80a-1 et seq.), as the same may be in effect from time to
time, or any successor statute thereto.

         "IRREVOCABLE INSTRUCTION LETTER" means the Irrevocable Instruction
Letter, executed by NAFI, the Borrower, the Co-trustees of the Borrower,
Wilmington and the Underlying Trustees, in the form attached as Exhibit G
hereto.

         "ISSUING TRUST" means when used with respect to an Underlying Trust,
such Underlying Trust that has issued outstanding securities as of the date of
determination that are insured by FSA.

         "IRS" means the Internal Revenue Service and any successor thereto.

         "KNOWLEDGE GAP" means the period, if any, commencing with the
occurrence of an Early Amortization Event hereunder and terminating upon the
awareness of either the Borrower or NAFI of such Early Amortization Event.

         "LENDER'S MODEL AMOUNT" means the amount derived from the model used by
the Lender to calculate on the Closing Date and each Calculation Date the
Borrowing Base. The Lender's Model Amount (with such changes as are needed in
the Lender's reasonable business judgment and good faith to correct any manifest
errors) shall be re-run from time to time after reasonable consultation with the
Borrower at the office of the Lender. The inclusion of any amount in the
Borrowing Base based on the Lender's Model Amount shall not be deemed a
determination by the Lender as to the actual value of the Collateral; it being
the Borrower's responsibility to determinate the value/collectibility of the
Collateral, and the Borrower shall bear all risks concerning the same. Without
limiting the foregoing, the Borrower acknowledges that it has received and
reviewed the Lender's Model, and expressly approves the Lender's Model Amount
for all purposes of this Agreement, including for purposes of calculating the
Borrowing Base.

         "LIBOR DETERMINATION DATE" means, with respect to any LIBOR Period, the
day that is two Business Days in London, England prior to the first day of such
LIBOR Period.

         "LIBOR PERIOD" means a Collection Period; provided that (i) no LIBOR
Period with respect to any Loans shall extend beyond the Maturity Date and (ii)
each determination by the Lender of any LIBOR Period shall, in the absence of
manifest error, be conclusive, and at the Borrower's reasonable request the
Lender shall demonstrate the basis for such determination.

         "LIBOR RATE" means, with respect to the related LIBOR Period, the
offered rates for deposits in Dollars having the Index Maturity commencing on
the related LIBOR Determination Date which appears on the Dow Jones Telerate
Service Page 3750 as of approximately 11:00 a.m. London time, on the LIBOR
Determination Date. If the Dow Jones Telerate Service Page 3750 is not
available, the LIBOR Rate with respect to such LIBOR Period will be determined
at approximately 11:00 a.m., London time, on such LIBOR Determination Date on
the basis of the rate

<PAGE>   18
                                      -12-


at which deposits in Dollars having the Index Maturity are offered to prime
banks in the London interbank market selected by the Agent and in a principal
amount equal to an amount of not less than $1,000,000 and that is representative
for a single transaction in such market at such time. The Agent will request the
principal London office of each of such banks to provide a quotation of its
rate. If at least two such quotations are provided, the LIBOR Rate will be the
arithmetic mean (rounded upwards as aforesaid) of such quotations. If fewer than
2 quotations are provided, the LIBOR Rate with respect to such LIBOR Period will
be the arithmetic mean (rounded upwards as aforesaid) of the rates quoted at
approximately 11:00 a.m., New York City time, on such LIBOR Determination Date
by three major banks in New York, New York selected by the Agent for loans in
United States dollars to leading European banks having the Index Maturity and in
a principal amount of not less than $1,000,000 and that is representative for a
single transaction in such market at such time; provided, however, that if the
banks selected as aforesaid are not quoting as described in this sentence, the
LIBOR Rate in effect for the applicable LIBOR Period will be the LIBOR Rate in
effect for the immediately preceding LIBOR Period.

         "LIEN" means any mortgage, pledge, hypothecation, assignment for
security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise,
affecting any Property, including any agreement to grant any of the foregoing,
any conditional sale or other title retention agreement, any lease in the nature
of a security interest, and the filing of or agreement to file or deliver any
financing statement (other than a precautionary financing statement with respect
to a lease that is not in the nature of a security interest) under the UCC or
comparable law of any jurisdiction.

         "LOAN" means the Revolving Loans and the Term Loan.

         "MATERIAL ADVERSE EFFECT" means any set of circumstances or events
which, individually or in the aggregate, (a) has or would reasonably be expected
to have any material adverse effect upon the validity or enforceability of any
Transaction Document or Underlying Transaction Document, (b) is or would
reasonably be expected to be material and adverse to the condition (financial or
otherwise) or business operations of Borrower, or (c) materially impairs or
would reasonably be expected to materially impair the ability of Lender to
enforce any of its legal remedies pursuant to the Transaction Documents.

         "MATURITY DATE" means the later of (i) the Final Insurance Termination
Date and (ii) December 31, 2004.

         "NAFI" means National Auto Finance Company, Inc., a Delaware
corporation.

         "NAFI GROUP" means, as of any relevant date, the affiliated group
within the meaning of section 1504 of the Code of which NAFI, or any successor
thereto, is the common parent, or of which the Borrower is a member, and shall
mean any group eligible to file consolidated, combined or unitary returns for
state, local or foreign tax purposes which includes the Borrower, regardless of
the identity of the common parent.

<PAGE>   19
                                      -13-


         "NON-RECOURSE DEBT" means Indebtedness of any Person either (a) for
borrowed money that, at all times, (i) is secured by Liens on specific assets
of such Person and the proceeds of such assets that constitute the sole source
of repayment to the lender or obligee of such Indebtedness, and (ii) as to which
such Person is not otherwise liable for repayment in the event of a deficiency
or default in payment except for liability for misrepresentations by such
Person, defects in title caused by such Person or impairment of the obligee's or
lender's Lien caused by such Person or (b) for which such Person has only
partial liability for repayment of any deficiency and the balance of which is
debt described in clause (a) above.

         "NOTE" means the Borrower's note in the form of Exhibit A hereto, and
any and all replacements, extensions, substitutions and renewals thereof.

         "OBLIGATIONS" has the meaning set forth in Section 10.1.

         "OBLIGOR" means with respect to any Contract, the Person or Persons
obligated to make payments with respect to such Contract, including any
guarantor thereof.

         "ORIGINAL UNDERLYING TRANSACTION DOCUMENTS" means the agreements,
contracts, documents, amendments, consents, instruments, certificates and other
papers executed in connection with the Original Underlying Transactions
including, but not limited to, the 1995-1 Insurance and Indemnity Agreement, the
1996-1 Insurance and Indemnity Agreement, the 1997-1 Insurance and Indemnity
Agreement, the 1998-1 Insurance and Indemnity Agreement, the 1995-1 Pooling and
Servicing Agreement, the 1996-1 Pooling and Servicing Agreement, the 1997-1 Sale
and Servicing Agreement, the 1998-1 Sale and Servicing Agreement, the 1997-1
Indenture (as defined in the Irrevocable Instruction Letter) and the 1998-1
Indenture (as defined in the Irrevocable Instruction Letter), and as the same
may have been or may hereafter be amended.

         "ORIGINAL UNDERLYING TRANSACTIONS" means when used in the singular,
any of, and when used in the plural all of, the 1995-1 Transaction, the 1996-1
Transaction, the 1997-1 Transaction and the 1998-1 Transaction.

         "OTHER TAXES" has the meaning set forth in Section 6.2(b).

         "PAY-OFF AMOUNT" has the meaning set forth in Section 5.1(a)(ii)
hereof.

         "PAYMENT DATE" means the 21st day of each calendar month, or if such
day is not a Business Day, the immediately following Business Day, commencing on
April 21, 1999.

         "PERMITTED LIENS" means Liens granted in favor of Lender under this
Agreement and Liens granted to any of an Underlying Trustee, a bond insurer,
back-up servicer, custodian or collateral agent under any Underlying Transaction
Document.


<PAGE>   20
                                      -14-


         "PERMITTED OUTSTANDING BORROWINGS" means the maximum amount that the
Borrower is permitted to borrow at any one time in accordance with this
Agreement, which in no case shall exceed the Borrowing Base.

         "PERMITTED PURPOSE" has the meaning set forth in Section 2.4.

         "PERSON" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, firm, joint stock company, estate,
entity or Governmental Authority.

         "PLAN" means any pension plan (as defined in Section 3(2) of ERISA)
covered by Title IV of ERISA or section 412 of the Tax Code or section 302 of
ERISA, which is maintained by a Commonly Controlled Entity or in respect of
which a Commonly Controlled Entity has liability or any welfare plan (as defined
in section 3(3) of ERISA which requires contributions or payments to be made on
account of persons who are no longer employees except as required by section
4980B of the Tax Code).

         "PLEDGED CERTIFICATES" means the certificates evidencing beneficial
ownership interests in either the National Auto Finance 1997-1 Trust or the
National Auto Finance 1998-1 Trust.

         "POTENTIAL EVENT OF DEFAULT" means the occurrence of any of the events
or conditions specified in Section 14.1, whether or not any requirement for
notice or lapse of time or other condition precedent has been satisfied.

         "PRINCIPAL BALANCE" means with respect to any date of determination the
sum of the following principal balances as of the last day of the Due Period
immediately preceding such date of determination: (1) the "Pool Outstanding
Principal Balance" of each of the 1995-1 Transaction and the 1996-1 Transaction,
each as defined in its related Underlying Transaction as of the closing date
related thereto and (2) the "Principal Balance" of each of the 1997-1
Transaction and the 1998-1 Transaction, each as also defined in its related
Underlying Transaction as of the closing date related thereto.

         "PROPERTY" means any interest in any kind of property or asset, whether
real, personal or mixed, whether tangible or intangible.

         "REGULATIONS T, U AND X" means, collectively, Regulations T, U and X
adopted by the Federal Reserve Board (12 C.F.R. Parts 220, 221 and 224,
respectively) and any other regulation in substance substituted therefor.

         "RESPONSIBLE OFFICER" means with respect to NAFI, the President, Senior
Vice President, Vice President, Chief Executive Officer, Executive Vice
President, Chief Financial Officer, Treasurer or Corporate Controller of NAFI;
and with respect to the Borrower, any trust officer, trustee or co-trustee of
the Borrower.

<PAGE>   21
                                      -15-


         "REVOLVING LOANS" has the meaning set forth in Section 2.1 hereof.

         "S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill
Inc.

         "SEC" means the Securities and Exchange Commission and any successor
thereto.

         "SERVICER" means the Person performing the duties of the Servicer under
the Underlying Transaction Documents, initially, NAFI.

         "SERVICER DEFAULT" has, with respect to any Underlying Transaction, the
meaning specified as either "Servicer Default" or "Servicer Termination Event",
as the case may be, in the related Underlying Transaction Documents.

         "SOLVENT" means, as to any Person at any time, that (1) when used in
Section 3.2(c), Section 14.5 hereof, any cross-reference thereto or the
Intercreditor Agreement, (a) the fair value of the Property of such Person is
greater than the fair value of such Person's liabilities (excluding disputed,
contingent and unliquidated liabilities (but including any such liabilities for
which reserves have been established under GAAP)) as such value is established
in the reasonable judgment of the Lender and liabilities evaluated in the
reasonable judgment of the Lender for purposes of Section 101(31) of the
Bankruptcy Code; (b) the present fair saleable value of the Property of such
Person in an orderly liquidation of such Person is greater than the amount that
will be required to pay the probable liability of such Person on its debts as
they become absolute and matured; (c) such person is able to pay its debts and
other liabilities (excluding disputed, contingent and unliquidated liabilities
(but including any such liabilities for which reserves have been established
under GAAP)) as they mature in the normal course of business and (d) such Person
is not engaged in business or a transaction, and is not about to engage in
business or a transaction, for which such Person's Property would, in the
reasonable judgment of the Lender, constitute unreasonably small capital; and
(2) when used in any other context means (a) the fair value of the Property of
such Person is greater than the amount of such Person's liabilities (including
disputed, contingent and unliquidated liabilities) as such value is established
and liabilities evaluated for purposes of Section 101(31) of the Bankruptcy
Code; (b) the present fair saleable value of the Property of such Person in an
orderly liquidation of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured; (c) such Person is able to realize upon its
Property and pay its debts and other liabilities (including disputed, contingent
and unliquidated liabilities) as they mature in the normal course of business;
(d) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature; and (e) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's Property would constitute unreasonably small capital.

         "STATUTORY RESERVES" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including, without
limitation, any marginal, special, emergency or supplemental reserves),
expressed as a decimal, established by the Board of Governors of the

<PAGE>   22
                                      -16-


Federal Reserve System any other banking authority to which the Lender is
subject for Eurocurrency Liabilities (as defined in Regulation D of the Board of
Governors of the Federal Reserve System). Such reserve percentages shall
include, without limitation, those imposed under such Regulation D. The Loans
shall be deemed to constitute Eurocurrency Liabilities and as such shall be
deemed to be subject to such reserve requirements without benefit of or credit
for proration, exceptions or offsets which may be available from time to time to
the Lender under such Regulation D. Statutory, Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.

         "SWAP AGREEMENT" means an interest rate swap agreement or a combination
of other derivatives which have the net effect of creating a synthetic interest
rate swap agreement between the Borrower and the Swap Counterparty providing for
payment of LIBOR to Borrower in return for a fixed rate of interest by Borrower,
in each case, on a notional amount based on the outstanding principal balance of
the Loan, on terms reasonably satisfactory to the Lender.

         "SWAP BREAKAGE COSTS" means the payment, if any, necessary in order to
induce the Swap Counterparty to (i) decrease the notional amount of the Swap
Agreement or to enter into a revised Swap Agreement in order to provide for an
effective notional amount equal to the outstanding principal balance of the Loan
or (ii) terminate the Swap Agreement in the event of a full prepayment of the
Term Loan.

         "SWAP COUNTERPARTY" means the Lender.

         "SWAP COUNTERPARTY ACCOUNT" shall mean the account specified in the
Swap Agreement for payments to the Swap Counterparty.

         "TERM LOAN" has the meaning set forth in Section 2.2 hereof.

         "TERM LOAN MONTHLY PRINCIPAL" means, with respect to a Payment Date
occurring on or after the Conversion Date, the greater of (A) the amount of
principal due on the Notes necessary to maintain the limits of the Amortization
Period Borrowing Base or (B) an amount equal to the quotient of (1) the
outstanding principal amount of the Term Loan on the Conversion Date divided by
(2) forty-eight, provided that (i) the Term Loan Monthly Principal shall equal
the entire outstanding principal balance of the Term Loan on the Maturity Date,
and (ii) that the Term Loan Monthly Principal shall never exceed the outstanding
principal balance of the Note.

         After the Conversion Date, in the event that the Borrower shall have
failed to deliver all of the documents required by Section 3.2 hereof, the Term
Loan Monthly Principal shall equal all amounts collected by the Servicer for its
own account on the Contracts after payment of the amounts set forth in clauses
(1) through (6) of Section 6.1(b) until such documents are delivered to the
Lender; provided that the Term Loan Monthly Principal shall never exceed the
outstanding principal balance of the Note.

<PAGE>   23
                                      -17-


         "TERM LOAN MONTHLY PRINCIPAL ARREARAGE" means, for any Payment Date,
that portion of the Term Loan Monthly Principal payment that was due on the
immediately preceding Payment Date, that was not paid on such immediately
preceding Payment Date.

         "TRANSACTION DOCUMENT", when used in the singular, and "TRANSACTION
DOCUMENTS" when used in the plural, means any and all of this Agreement, the
Note, the Irrevocable Instruction Letter, any and all other agreements,
amendments, consents, documents and instruments executed and delivered by or on
behalf of Borrower, NAFI, Lender, or any of their respective authorized
designees evidencing or otherwise relating to the Loan and the Liens granted to
Lender with respect to the Loan, as the same may from time to time be amended,
modified, supplemented or renewed.

         "TRANSACTION PAYMENT DOCUMENTS" has the meaning set forth in Section
8.18.

         "UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the applicable jurisdiction; provided, however, in the
event that, by reason of mandatory provisions of law, any and all of the
attachment, perfection or priority of the Lien of Lender in and to the
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the applicable jurisdiction the term "UCC" shall mean
the Uniform Commercial Code as in effect in such other jurisdiction for purposes
of the provisions hereof relating to such attachment, perfection or priority and
for purposes of definitions related to such provisions.

         "UNDERLYING DETERMINATION DATE" means the close of business of the last
day of the Due Period, or if such day is not a Business Day, the immediately
preceding Business Day.

         "UNDERLYING SPREAD ACCOUNT" means, in the singular, any one of, and in
the plural, all of the Spread Accounts as defined in each of the Underlying
Transactions.

         "UNDERLYING TRANSACTION" means, in the singular, any one of, and, in
the plural, all of the Original Underlying Transactions and any other
transaction subject to the Lien of Section 10.1.

         "UNDERLYING TRANSACTION DOCUMENTS" means the agreements, contracts,
documents, amendments, consents, instruments, certificates and other papers
executed in connection with the Underlying Transactions, as the same may have
been or may hereafter be amended, including, with respect to the Original
Underlying Transaction Documents.

         "UNDERLYING TRUST" means, in the singular, any of National Auto Finance
1995-1 Trust, National Auto Finance 1996-1 Trust, National Auto Finance 1997-1
Trust or National Auto Finance 1998-1 Trust and, in the plural, all of such
trusts.

         "UNDERLYING TRUSTEE" means, in the singular, either Chase or Harris,
and in the plural, both of them, in their capacities as trustees, trust
collateral agents or collateral agents in the Underlying Transactions and any
other trustee designated with respect to an Underlying Transaction.

<PAGE>   24
                                      -18-


         "UNSCHEDULED PRINCIPAL PAYMENTS" with respect to any Payment Date, any
and all unscheduled amounts received first by an Underlying Trustee on behalf of
the Borrower and second, paid by such Underlying Trustee to the Lender pursuant
to the Irrevocable Instruction Letter.

         "VEHICLE" means the vehicle relating to a Contract.

         "WILMINGTON" means Wilmington Trust Company.

         SECTION 2. COMMITMENT TO LEND.

         2.1 ESTABLISHMENT OF LINE OF CREDIT. Subject to the terms and
conditions hereof, and in reliance upon the representations and warranties
contained herein, the Lender hereby establishes a revolving credit facility
(collectively the "Revolving Loans") convertible into a Term Loan in favor of
the Borrower as set forth in Section 2.2. Under the Revolving Loans, subject to
the terms and conditions hereof, the Borrower may borrow from the Lender from
time to time prior to the Conversion Date an aggregate principal amount at any
time not in excess of the Permitted Outstanding Borrowings.

         2.2 TERM LOAN. On the Conversion Date, the Revolving Loans shall
convert to a term loan (the "Term Loan").

         2.3 SPECIAL PROVISIONS REGARDING LENDER'S MODEL AMOUNT. Each of the
Borrower and NAFI acknowledges and agrees that the Lender's Value Model is
proprietary information. The Borrower and NAFI shall hold all non-public
information relating to the Lender's Value Model obtained by it under this
Agreement in confidence, and in no case less than in accordance with its
customary procedures for holding information of that nature. In order to
facilitate the Borrower's, NAFI's and the Lender's calculation of the applicable
Borrowing Base the Lender has delivered to the Borrower or NAFI the full text of
the formulas used in the Lender's Value Model. The Borrower and NAFI each hereby
covenants to and agrees with the Lender that (i) it will hold the Lender's Value
Model in confidence and not disclose or deliver it in any form or variation to
any third party, except those persons in the Borrower's or NAFI's organization
or its advisors, provided that the Borrower's and NAFI's advisors shall agree in
writing to hold the Lender's Value Model in confidence prior to its disclosure
to such advisors who need to know such information in order to periodically
calculate the Borrower Base (the "Permitted Purpose"), unless such information
becomes public knowledge or is otherwise required to be disclosed by law, (ii)
the Borrower or NAFI, as the case may be, shall use the Lender's Value Model
solely for the Permitted Purpose and (iii) upon termination of this Agreement,
the Borrower and NAFI, as applicable, will return the full text of the formulas
used in the Lender's Value Model to the Lender. Without limiting the foregoing,
the Borrower and NAFI covenants to and agrees with the Lender that neither the
Borrower nor NAFI shall duplicate, copy or in any manner make extracts from the
Lender's Value Model. THE BORROWER AND NAFI HEREBY AGREES TO INDEMNIFY THE
LENDER FOR ANY AND ALL DAMAGES, LOSSES, COSTS OR EXPENSES INCURRED BY THE LENDER
BY REASON OF THE BORROWER'S OR NAFI'S BREACH OF THE PROVISIONS OF THIS
SUBSECTION 2.3.

<PAGE>   25
                                      -19-


         2.4 USE OF PROCEEDS. The Borrower shall apply the proceeds of each
advance made to it hereunder, either (i) for either NAFI or the Borrower to
acquire new receivables or new Contracts or (ii) for the general working capital
purposes of NAFI or the Borrower. Irrespective of what Borrower or NAFI may
otherwise be permitted, the Borrower and NAFI each hereby covenants and agrees
that neither of them nor any affiliate of either of them shall apply the
proceeds of any advance made hereunder to pay dividends, debtholders, other
securityholders or any acceleration of payments that exist with respect to
either NAFI, the Borrower or any Affiliate of either of them. Other than as
expressly set forth herein, the Borrower will not, and will not permit any
Affiliate to, directly or indirectly, use any part of such proceeds (i) for the
purpose of making any payment other than those permitted by Section 6.1 hereof,
or (ii) for any other purpose which would violate any provision of any
applicable statute, regulation, order or restriction. This restriction shall not
apply to payment obligations of NAFI, as Seller or Servicer of Contracts or
other receivables, or of Borrower or any other Affiliate under the Underlying
Transaction Documents.

         2.5 REMOVAL OF UNDERLYING TRANSACTIONS FROM THE BORROWING BASE. At any
time that, but for the transactions contemplated by the Transaction Documents,
an Underlying Transaction would have been terminated pursuant to the terms of
such Underlying Transaction Documents, the Lender may, in its sole discretion,
deliver to the Borrower a written notice declaring its intention to irrevocably
remove such Underlying Transaction from any calculation made hereunder with
respect to the Borrowing Base; and, immediately upon presentation to the
Borrower of such notice, the Borrowing Base hereunder shall from that time forth
be calculated without computation of such Underlying Transaction and the
Contracts related to it. Notwithstanding any other provision contained in any
Transaction Document, upon receipt of such notice by the Borrower, the Borrower
may redeem the securities related to such Underlying Transaction and terminate
the related Insurance and Indemnity Agreement, Pooling and Servicing Agreement,
Indenture, or Sale and Servicing Agreement, as the case may be, to the extent
permitted by the terms of the Underlying Transaction Documents. Within five (5)
Business Days after receipt by the Lender of the prepayment required by Section
5.2(c), the Lender shall release its Lien upon that portion of the Collateral
directly relating to such Underlying Transaction for which the Borrower has
prepaid.

         In the event that an Underlying Transaction is so removed from the
Borrowing Base, the Borrower shall nonetheless be obligated to maintain the
Permitted Outstanding Borrowings in accordance with the terms of Section 3.1(g)
hereto.

SECTION 3. BORROWING PROCEDURES; CERTAIN LOAN TERMS.

         3.1 BORROWING PROCEDURES FOR REVOLVING LOANS; DEEMED REQUESTS FOR
AMOUNTS DUE ON EACH PAYMENT DATE.

         (a) On and after the Closing Date, and prior to the Conversion Date,
subject to the terms and conditions set forth herein, Lender shall make
available to Borrower by wire transfer to Borrower's Account a Revolving Loan in
the amount not to exceed the Available Funds.

<PAGE>   26
                                      -20-


         (b) On or after the Closing Date and prior to the Conversion Date, on
any date during any Collection Period, Borrower may request a Revolving Loan in
an amount not to exceed the Available Funds. The Borrower may not request more
than one Revolving Loan during any calendar week.

         (c) Reserved.

         (d) Borrower shall give Lender three Business Days prior written notice
of each requested Revolving Loan under Section 3.1(b) hereof. Each such notice
shall be in the form of Exhibit B-1 hereto and shall specify (i) the borrowing
date (which shall be a Business Day), and (ii) the amount of the Revolving Loan
requested. Each request for a Revolving Loan shall be received by Lender not
later than 11:00 a.m., Charlotte time one (1) Business Day prior to the
borrowing date with respect to such requested Revolving Loan. Each Revolving
Loan shall be made by the Lender in an amount as requested by the Borrower,
provided that (i) each such Revolving Loan shall be in a minimum amount of
$500,000 and integral multiples of $50,000 in excess thereof and (ii) that such
amount shall not be in excess of the Available Funds on such date. Each such
written notice shall be irrevocable. With respect to all Revolving Loans
outstanding as of the first day of any LIBOR Period, the effective LIBOR Rate
shall be reset to the LIBOR Rate then in effect on the Payment Date occurring in
such LIBOR Period.

         (e) On or before 11:00 a.m. Charlotte time on the borrowing date
specified for a requested Revolving Loan, provided that all conditions precedent
set forth in Section 12 and all other terms and conditions of this Agreement to
the making of such requested Revolving Loan have been satisfied (unless waived
in accordance with the provisions of this Agreement), Lender shall make funds
available in the amount of such requested Revolving Loan to Borrower by wire
transfer to Borrower's Account.

         (f) Subject to the terms and conditions of this Agreement, on each
Payment Date and the Conversion Date, Borrower, without any action, shall be
deemed to have irrevocably requested a Revolving Loan in an amount equal to the
Accrued Interest due on such Payment Date and any Interest Arrearage for such
Payment Date, to the extent that such amounts have not previously been paid and
funds are not available therefor as described in Section 6.1(a) hereof. Lender
shall remit the proceeds of such Revolving Loan on such Payment Date in the
manner set forth in Section 6.1(a) hereof.

         (g) Subject to the Intercreditor Agreement and Section 14.5 hereof, if
the Loan at any time exceeds the Permitted Outstanding Borrowings, calculated
using the Borrowing Base, or after the Conversion Date, the Amortization Period
Borrowing Base as of the date of determination, the Borrower shall, within one
Business Day after either the Borrower or NAFI becomes aware of such occurrence,
inform the Lender in writing of such calculation and, subject to Section 5.2(c),
immediately pay to the Lender amounts in cash sufficient to reduce the Loan to
be equal to or less than the Permitted Outstanding Borrowings as of the date of
payment.

<PAGE>   27
                                      -21-


         3.2 CONVERSION TO TERM LOAN; SWAP AGREEMENT REQUIREMENT.

         (a) The Revolving Loans shall convert to the Term Loan on the
Conversion Date. On or prior to the Conversion Date, the Borrower shall inform
the Lender in writing of the fixed rate of interest that will be payable to the
Swap Counterparty under the Swap Agreement.

         (b) No later than 11:00 a.m. Charlotte time on the Conversion Date,
Borrower shall deliver a completed Borrowing Base Certificate to Lender
reflecting the Borrowing Base on the Conversion Date. On the Conversion Date, at
the request of the Borrower and if no Early Amortization Event or Event of
Default has occurred, Lender shall make a final Revolving Loan in the amount
equal to the amount, if any, by which (i) the lesser of (A) the Available Funds,
calculated with respect to the most recent Borrowing Base Certificate and (B)
the Facility Amount, exceeds (ii) the outstanding principal balance of the Loan,
taking into account the final Revolving Loan made on the Conversion Date
pursuant to Section 3.1(f).

         (c) On or prior to the Conversion Date, Borrower shall arrange for and
enter into the Swap Agreement with the Swap Counterparty; provided, that no Swap
Agreement shall be entered into by the Borrower before the Final Insurance
Termination Date without the consent of FSA, which consent shall not be
unreasonably withheld so long as FSA is satisfied that the Swap Agreement does
not impair the special-purpose or bankruptcy-remote characteristics of the
Borrower, cannot under any reasonably foreseeable circumstances cause the
Borrower to be not Solvent, and cannot materially impair the rights and remedies
of FSA or any securityholder that has the benefit of any FSA financial guaranty
insurance policy or any fiduciary or agent of either of them under the
Underlying Transaction Documents. Borrower shall deliver the related payment
schedule no later than the second Business Day prior to Conversion Date. If FSA
consents as set forth above, Borrower shall deliver a copy of the executed Swap
Agreement as soon as practicable, but in no event later than the second day
prior to the Conversion Date.

         3.3 CAPITAL ADEQUACY. On or prior to the Conversion Date, if Lender
shall reasonably determine that the application or adoption of any law, rule,
regulation, directive, interpretation, treaty or guideline regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof, whether or not having the force of law (including, without limitation,
application of changes to Regulation H and Regulation Y of the Federal Reserve
Board issued by the Federal Reserve Board on January 19, 1989 and regulations of
the Comptroller of the Currency, Department of the Treasury, 12 C.F.R. Part 3,
Appendix A, issued by the Comptroller of the Currency on January 27, 1989)
increases the amount of capital required or expected to be maintained by Lender
or any Person controlling Lender, and such increase is based upon the existence
of Lender's obligations hereunder to make the Revolving Loans and other
commitments of this type, then from time to time, within 10 days after demand
from Lender accompanied by the certificate described in the second following
sentence, Borrower shall pay to Lender such amount or amounts as will reasonably
compensate Lender or such controlling Person, as the case may be, for such
increased capital requirement. Subject to the Intercreditor Agreement and
Section 14.5, Lender shall make such demand within 90 days after Lender first
becomes aware of such increase. The determination of any amount to be paid by
Borrower under this Section 3.3 shall take into

<PAGE>   28

                                      -22-


consideration the policies of Lender or any Person controlling Lender with
respect to capital adequacy and shall be based upon reasonable averaging,
attribution and allocation methods. A certificate of Lender setting forth the
calculation of the amount or amounts as shall be necessary to reasonably
compensate Lender as specified in this Section 3.3 shall be delivered to
Borrower and shall be conclusive in the absence of manifest error.

SECTION 4. INTEREST AND FEES.

         4.1 REVOLVING LOANS. Subject to the Intercreditor Agreement and Section
14.5, the Accrued Interest and any Interest Arrearage shall be due and payable
in arrears on each Payment Date prior to the Conversion Date with respect to the
Revolving Loans.

         4.2 TERM LOAN. Subject to the Intercreditor Agreement and Section 14.5,
the Accrued Interest and any Interest Arrearage with respect to the Term Loan
shall be due and payable, in arrears, on each Payment Date after the Conversion
Date and at the Maturity Date.

         4.3 METHOD OF CALCULATING INTEREST AND FEES. Interest and any fees
shall be computed on the basis of a year consisting of 360 days and paid for
actual days elapsed; provided, however, that in no event shall interest on the
Note exceed the highest lawful rate permissible under any law applicable
thereto.

SECTION 5. REPAYMENT OF PRINCIPAL.

         5.1 PRINCIPAL PAYMENTS AND PREPAYMENTS.

         (a) Mandatory Payments. Subject to the Intercreditor Agreement and
Section 14.5, there shall be mandatory payments of principal:

                (i)     (A)  prior to the Conversion Date, principal shall
                             be due and payable on each Payment Date in an
                             amount equal to the excess, if any, of (x) all
                             outstanding principal balance of the Revolving
                             Loans over (y) the Borrowing Base;

                        (B)  on and after the Conversion Date and prior to the
                             Maturity Date (other than as set forth in paragraph
                             (ii) immediately below), as set forth in Section
                             5.2 hereof; and

                        (C)  on the Maturity Date, all outstanding principal on
                             all of the Loan(s) shall be immediately due and
                             payable.

                (ii)    If an Event of Default has been declared hereunder, on
                        the date that any acceleration of the Revolving Loans
                        pursuant to Section 14.3 hereof has been declared with
                        respect thereto, the entire aggregate outstanding
                        principal balance of the Loan, plus any accrued and


<PAGE>   29
                                      -23-


                        unpaid interest thereon (the "Payoff Amount"), shall be
                        due and payable.

                (iii)   If at any time the outstanding principal balance of the
                        Note is less than $100,000.00, the Borrower shall make
                        prepayment within five (5) Business Days thereafter of
                        an amount equal to such outstanding principal balance of
                        the Note.

         (b) Optional Prepayments. Subject to the Intercreditor Agreement and
Section 14.5, the Borrower may from time to time, upon at least one Business
Day's prior written notice received by the Lender, prepay the principal of the
Revolving Loans in whole or in part; provided that any partial prepayment shall
be in an amount not less than $50,000, or in integral multiples of $50,000 in
excess thereof.

         5.2 TERM LOAN PRINCIPAL PAYMENTS.

         (a) Mandatory Scheduled Prepayments and Arrearages. Subject to the
Intercreditor Agreement and Section 14.5, the Term Loan Monthly Principal shall
be payable on each Payment Date after the Conversion Date; provided that the
entire outstanding principal balance of the Term Loan shall be due and payable
on the Maturity Date or upon a declaration of acceleration as provided in
Section 14.3 hereof.

         (b) Optional Prepayments. Subject to the Intercreditor Agreement and
Section 14.5 hereof, on any Payment Date after the Conversion Date, the Borrower
may in an amount not less than $500,000 upon at least ten Business Days' prior
written notice received by the Lender, prepay the principal of the Term Loan in
whole or in part; provided that (i) such prepayment shall be made after payment
of the amounts described in clauses (1) through (7) of Section 6.1(b) hereof,
and (ii) Borrower shall have paid any Swap Breakage Costs incurred in connection
with any corresponding reduction in the notional balance on the Swap Agreement.
Optional prepayments of principal under this Section 5.2(b) shall not be deemed
to include any amounts included in the definition of Term Loan Monthly Principal
as it relates to such Payment Date.

         (c) Put Option; Release of Lien. (i) Subject to the Intercreditor
Agreement and Section 14.5, within five (5) Business Days of the Lender's
request to remove an Underlying Transaction from the Borrowing Base pursuant to
Section 2.5, the Borrower shall prepay or cause the prepayment of the amount of
the outstanding principal balance of the Loan necessary to maintain all of the
Borrowing Base amounts required by this Agreement, including but not limited to
Section 3.1(9) hereto.


<PAGE>   30
                                      -24-


SECTION 6. APPLICATION OF AMOUNTS ON DEPOSIT IN ACCOUNTS.

         6.1 APPLICATION OF AMOUNTS.

         (a) Subject to the Intercreditor Agreement, on each Payment Date prior
to the Conversion Date, the Lender shall apply the Free Cash Flow received by
it, if any to pay the following amounts in the following priority:

         (1)      to the Lender, any Interest Arrearage for such Payment Date;

         (2)      to the Lender, the Accrued Interest for such Payment Date;

         (3)      to the Lender, any amount payable to the Lender pursuant to
                  Sections 5.1(a)(i), 6.2, 8.15, 14.3 and 15 hereof;

         (4)      to the Borrower, any amount remaining.

         (b) Subject to the Intercreditor Agreement, on each Payment Date on or
after the Conversion Date, provided that an Event of Default has not occurred
hereunder, the Lender shall apply all Free Cash Flow received by it, if any, to
pay the following amounts in the following priority:

         (1)      to the Lender, any Interest Arrearage for such Payment Date;

         (2)      to the Lender, the Term Loan Monthly Principal;

         (3)      to the Lender, the Accrued Interest for such Payment Date;

         (4)      to the Lender, Term Loan Monthly Principal Arrearage;

         (5)      Reserved;

         (6)      to the Lender, any Unscheduled Principal Payments;

         (7)      to the Lender, any amount remaining until all of the
                  then-outstanding Obligations are paid in full; and

         (8)      any amounts remaining to the Borrower.

         (c) In the event that an Event of Default has occurred, amounts
received by the Lender pursuant to this Section will instead be applied in
accordance with the priorities set forth in Section 14.3(b).

         (d) Nothing herein (except Section 14.5 hereof and the Intercreditor
Agreement) shall in any way limit Lender's rights with respect to any Collateral
upon an Event of Default.

<PAGE>   31
                                      -25-


         6.2 TAXES

         (a) Subject to the Intercreditor Agreement and Section 14.5, any and
all payments by Borrower or, if applicable, NAFI, to Lender under this Agreement
shall be made free and clear of, and without deduction or withholding for, any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of Lender, Income Taxes.

         (b) Subject to the Intercreditor Agreement and Section 14.5, in
addition, the Borrower or NAFI shall pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery of, or otherwise with respect to, this Agreement or any other
Transaction Documents (hereinafter referred to as "Other Taxes").

         (c) Subject to the Intercreditor Agreement and Section 14.5, the
Borrower or NAFI shall indemnify and hold harmless Lender for the full amount of
Other Taxes (including any such Other Taxes imposed by any jurisdiction on
amounts payable under this Section 6.2) paid by Lender and any liability
(including penalties, interest, additions to tax and expenses) arising therefrom
or with respect thereto, whether or not such Other Taxes were correctly or
legally asserted. Payment under this indemnification shall be made within thirty
(30) days from the date Lender makes written demand therefor and provides
written evidence of payment thereof or a copy of any invoice therefor, except
for any such Other Taxes that may be paid thereafter without penalty and are
being contested in good faith by appropriate proceedings and for which an
adequate reserve has been established and is maintained in accordance with GAAP.

         (d) Subject to the Intercreditor Agreement and Section 14.5, if either
the Borrower or NAFI shall be required by law to deduct or withhold any Other
Taxes from or in respect of any sum payable hereunder to the Lender then:

                  (i)      the sum payable shall be increased as necessary so
                           that after making all required deductions (including
                           deductions applicable to additional sums payable
                           under this Section 6.2) the Lender, shall receive an
                           amount equal to the sum it would have received had no
                           such deductions been made;

                  (ii)     the Borrower shall make such deductions, and

                  (iii)    the Borrower shall pay the full amount deducted to
                           the relevant taxation authority or other authority in
                           accordance with applicable law.

         (e) The obligations in this Section 6.2 shall survive the termination
of the Transaction Documents and payment of all other Obligations.

<PAGE>   32
                                      -26-


SECTION 7. BORROWER'S AND NAFI'S REPRESENTATIONS AND WARRANTIES.

         Each of the Borrower and NAFI hereby makes the following
representations and warranties to Lender, as of the Closing Date and each date
upon which the Borrower requests, and each date upon which the Borrower
receives, a Revolving Loan hereunder:

         7.1 EXISTENCE AND POWER. Borrower is a trust, duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified and licensed as a foreign business trust and authorized to do
business in each jurisdiction within the United States where its ownership of
Property and assets or conduct of business requires such qualification, except
where failure to be so qualified and licensed would not have a Material Adverse
Effect. Borrower has all of the trust power and authority, rights and franchises
to own its Property and to carry on its business as now conducted. Borrower has
all of the trust power and authority to execute, deliver and perform the terms
of the Transaction Documents (to the extent it is a party thereto) and all other
instruments and documents contemplated hereby or thereby.

         7.2 TRANSACTION DOCUMENTS AUTHORIZED; BINDING OBLIGATIONS. The
execution, delivery and performance of this Agreement and each of the other
Transaction Documents to which Borrower is a party have been duly authorized by
all necessary trust action on the part of Borrower, its owner trustee, its
co-trustees and NAFI. The Transaction Documents constitute the legally valid and
binding obligations of Borrower, enforceable against Borrower, to the extent
Borrower is a party thereto, in accordance with their respective terms, except
as enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforcement of creditors' rights
generally and by general principles of equity, regardless of whether
enforceability is at law or in equity.

         7.3 NO CONFLICT; LEGAL COMPLIANCE. The execution, delivery and
performance of this Agreement, and each of the other Transaction Documents to
which the Borrower is a party will not: (a) contravene any provision of
Borrower's trust agreement; (b) contravene, conflict with or violate any
applicable law or regulation, or any order, writ, judgment, injunction, decree,
determination or award of any Governmental Authority, which contravention,
conflict or violation, in the aggregate, would have a Material Adverse Effect;
or (c) violate or result in the breach of, or constitute a default under any
indenture or other loan or credit agreement, or other agreement or instrument to
which Borrower is a party (including, without limitation, each of the Underlying
Transaction Documents) or by which Borrower, or its Property is bound or
affected. Borrower is not in violation or breach of or default under any law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award or any contract, agreement, lease, license, indenture or other instrument
to which it is a party, the non-compliance with, the violation or breach of or
the default under which would have a Material Adverse Effect.

         7.4 EXECUTIVE OFFICES. The Borrower's chief executive office is c/o
Chase Manhattan Bank Delaware, 1201 Market Street, 9th Floor, Wilmington,
Delaware 19801. The Borrower's principal place of business is 10302 Deerwood
Park Blvd., Suite 100, Jacksonville, Florida 32256.

<PAGE>   33
                                      -27-


         7.5 LITIGATION. Except as set forth in Exhibit H hereto, there are no
claims, actions, suits, proceedings or other litigation pending or, to the best
of Borrower's knowledge, threatened against Borrower, at law or in equity before
any Governmental Authority or, to the best of Borrower's knowledge, any
investigation by any Governmental Authority of Borrower's Properties that (a)
asserts the invalidity of any Transaction Document or Underlying Transaction
Document, (b) seeks to prevent the consummation of any of the transactions
contemplated by any Transaction Document or Underlying Transaction Document, (c)
seeks any determination or ruling that would materially and adversely affect the
performance by the Borrower of its obligations under any Transaction Document
or Underlying Transaction Document, (d) individually or in the aggregate, would
reasonably be expected to have a material adverse effect on the Borrower's
ability to perform its obligations under any Transaction Document or Underlying
Transaction Document or (e) would reasonably be expected to have a material
adverse effect on the value of, or the Lender's security interest in, the
Collateral in the aggregate.

         7.6 CONSENTS AND APPROVALS. No approval, authorization or consent of
any trustee or holder of any indebtedness or obligation of Borrower or of any
other Person (including, without limitation, FSA) under any material agreement,
contract, lease or license or similar document or instrument to which Borrower
is a party or by which Borrower is bound, that has not been obtained by the
Closing Date, is required to be obtained by Borrower in order to make or
consummate the transactions contemplated under the Transaction Documents. All
consents and approvals of, filings and registrations with, and other actions in
respect of, all Governmental Authorities required to be obtained by Borrower in
order to make or consummate the transactions contemplated under the Transaction
Documents have been, or prior to the time when required will have been,
obtained, given, filed or taken.

         7.7 OTHER AGREEMENTS. Borrower is not a party to any material
agreements other than this Agreement, the other Transaction Documents and:

         (1)      the Note;

         (2)      the Irrevocable Instruction Letter;

         (3)      the Intercreditor Agreement;

         (4)      the 1995-1 Pooling and Servicing Agreement;

         (5)      the Assignment Agreement; dated as of October 1, 1995, between
                  Bankers Trust Company, not in its individual capacity but
                  solely as trustee for the National Financial Auto Receivables
                  Master Trust, and the Borrower;

         (6)      the Transfer Agreement, dated as of October 1, 1995, between
                  the Borrower and Harris;


<PAGE>   34
                                      -28-


         (7)      the 1995-1 Insurance and Indemnity Agreement as amended as of
                  March 31, 1998;

         (8)      the Indemnification Agreement dated as of November 21, 1995,
                  among FSA, the Borrower and First Union Capital Markets Corp.;

         (9)      the First Amended and Restated Master Spread Account
                  Agreement, dated as of March 31, 1998 among the Borrower,
                  FSA and Harris (as Trustee and Collateral Agent), and the
                  Series 1996-1, 1997-1 and 1998-1 Supplements thereto;

         (10)     the Placement Agent Agreement, dated as of November 21, 1995,
                  between First Union Capital Markets Corp. and the Borrower;

         (11)     the 1996-1 Pooling and Servicing Agreement as amended as of
                  March 31, 1998;

         (12)     the Purchase and Contribution Agreement, dated as of October
                  21, 1996, between NAFI and the Borrower;

         (13)     the Sale Agreement, dated as of October 21, 1996, between the
                  Borrower and National Financial Auto Funding Trust II;

         (14)     the Transfer Agreement, dated as of November 13, 1996, between
                  the Borrower and Harris;

         (15)     the 1996-1 Insurance and Indemnity Agreement;

         (16)     the Indemnification Agreement, dated as of November 13, 1996,
                  among FSA, the Borrower and First Union Capital Markets Corp.;

         (17)     the Underwriting Agreement, dated as of November 13, 1996,
                  between First Union Capital Markets Corp. and the Borrower;

         (18)     the 1997-1 Sale and Servicing Agreement;

         (19)     the Purchase and Contribution Agreement, dated as of July 29,
                  1997, between NAFI and the Borrower;

         (20)     the Sale Agreement, dated as of June 29, 1997, between
                  National Financial Auto Funding Trust II and the Borrower;

         (21)     the Indemnification Agreement, dated as of July 23, 1997,
                  among FSA, the Borrower and First Union Capital Markets Corp.;

<PAGE>   35
                                      -29-


         (22)     the 1997-1 Insurance and Indemnity Agreement as amended as of
                  March 31, 1998;

         (23)     the Trust Agreement, dated as of July 21, 1997, between the
                  Borrower, as Depositor, and Wilmington, as Owner Trustee;

         (24)     the 1998-1 Sale and Servicing Agreement;

         (25)     the Trust Agreement, dated as of December 15, 1997, between
                  the Borrower and Wilmington;

         (26)     the Purchase and Contribution Agreement, dated as of December
                  15, 1997, between NAFI, and the Borrower;

         (27)     the Sale Agreement, dated as of December 15, 1997, between
                  National Financial Auto Funding Trust II and the Borrower;

         (28)     the 1998-1 Insurance and Indemnity Agreement as amended as of
                  March 31, 1998;

         (29)     the Indemnification Agreement, dated as of January 20, 1998,
                  among FSA, the Borrower and First Union Capital Markets Corp.;

and the Lender has received all of the foregoing documents, together with any
amendments or modifications thereto, prior to the Closing Date and a
certification of a Responsible Officer of NAFI that such documents and
amendments have been delivered and are the true and correct copies thereof.

         7.8 MARGIN REGULATIONS. Borrower does not own any "margin security", as
that term is defined in Regulation U of the Federal Reserve Board. None of the
proceeds of the Loan will be used, directly or indirectly, for the purpose of
purchasing or carrying any such "margin security," for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or carry
any such "margin security" or for any other purpose which would cause the Loan
to be considered a "purpose credit" within the meaning of Regulations T, U and
X.

         7.9 TAXES. All federal, state, local and foreign tax returns, reports
and statements required to be filed by Borrower have been filed with the
appropriate Governmental Authorities where failure to file may have a Material
Adverse Effect, and all Charges and other impositions shown thereon to be due
and payable by Borrower have been paid prior to the date on which any fine,
penalty, interest or late charge may be added thereto for nonpayment thereof, or
any such fine, penalty, interest, late charge or loss has been paid. Borrower
has paid when due and payable all Charges upon the books of Borrower and no
Government Authority has asserted any Lien against the Borrower with respect to
unpaid Charges. All material amounts have been withheld by Borrower from its
employees for all periods in compliance with the tax, social security and
unemployment

<PAGE>   36
                                      -30-


withholding provisions of applicable federal, state, local and foreign law and
such withholdings have been timely paid to the respective Governmental
Authorities (other than for taxes that are being contested in good faith by the
Borrower and for which the Borrower has established adequate reserves).

         7.10 SOLVENCY. Borrower is Solvent.

         7.11 MATERIAL ADVERSE CHANGE. Other than has been disclosed in writing
to Lender, there has been no material adverse change in the financial or other
condition of either the Borrower or NAFI since December 31, 1998.

         7.12 GOOD TITLE TO THE COLLATERAL; FIRST PRIORITY SECURITY INTEREST.
The Borrower owns the Collateral free and clear of any Lien, except for
Permitted Liens. Any lender that held heretofore a security interest or other
Lien (other than a Permitted Lien) on any of the Collateral has effectively
released such Lien. This Agreement creates in favor of the Lender a valid
security interest in the Borrower's interest in the Collateral. Upon the filing
of the financing statements described in Section 13.2 hereof, and Delivery of
the Pledged Certificates, such security interest will be a perfected security
interest in the Collateral and a first priority perfected security interest in
the First Priority Collateral. Such filing statement has been properly filed by
the Borrower and does thus create, as of the date hereof, a perfected security
interest in favor of the Lender in the Collateral and a first priority perfected
security interest in the First Priority Collateral.

         7.13 INVESTMENT COMPANY ACT. The Borrower is not required to be
registered as an investment company under the Investment Company Act.

         7.14 EARLY AMORTIZATION EVENTS. There have not been any early
amortization events, amortization events, credit triggers, defaults, or other
event, that with either notice or the passage of time would constitute an event
of default or events of default that have occurred with respect to the
Underlying Transactions other than those that have been cured, duly waived or
previously disclosed in writing by either the Borrower or NAFI to the Lender and
FSA.

         7.15 FSA INDEBTEDNESS. As of the Closing Date, the Borrower has no
Indebtedness, obligation or liability for the payment of money of any kind or
nature (whether or unmatured or contingent or non-contingent) to FSA or any
Affiliate of FSA pursuant to any agreement to which FSA is a party other than
Indebtedness, obligations and liabilities (whether matured or umnatured or
contingent or non-contingent) in connection with policies issued by FSA or
otherwise, with regard the Underlying Transaction Documents. During the term of
this Agreement, the Borrower will not have at any time any Indebtedness or
obligation or liability for the payment of money of any kind or nature (whether
matured or unmatured or contingent or non-contingent) to FSA or any Affiliate
of FSA pursuant to any agreement to which FSA is a party other than
Indebtedness, obligations or liabilities (whether matured or unmatured or
contingent or non-contingent) in connection with securitization transactions,
including, without limitation, the Underlying Transactions.

<PAGE>   37
                                      -31-


         7.16 REPRESENTATIONS WITH RESPECT TO NAFI.

         (a) Existence and Power. NAFI is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified and licensed as a foreign corporation and authorized to do
business in each jurisdiction within the United States where its ownership of
Property and assets or conduct of business requires such qualification, except
where failure to be so qualified and licensed would not have a Material Adverse
Effect. NAFI has all of the corporate power and authority, rights and franchises
to own its Property and to carry, on its business as now conducted. NAFI has all
of the corporate power and authority to execute, deliver and perform the terms
of the Transaction Documents (to the extent it is a party thereto) and all other
instruments and documents contemplated hereby or thereby.

         (b) Transaction Documents and Note Authorized; Binding Obligations. The
execution, delivery and performance of this Agreement and each of the other
Transaction Documents to which NAFI is a party have been duly authorized by all
necessary corporate action on the part of NAFI, its shareholders or its Board of
Directors, as needed. The Transaction Documents constitute the legally valid and
binding obligations of NAFI, enforceable against NAFI, to the extent NAFI is a
party thereto, in accordance with their respective terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors' rights generally and by
general principles of equity, regardless of whether enforceability is at law or
in equity.

         (c) No Conflict; Legal Compliance. The execution, delivery and
performance of this Agreement, and each of the other Transaction Documents to
which NAFI is a party will not: (a) contravene any provision of NAFI's
certificate of incorporation; (b) contravene, conflict with or violate any
applicable law or regulation, or any order, writ, judgment, injunction, decree,
determination or award of any Governmental Authority, which contravention,
conflict or violation, in the aggregate, would have a Material Adverse Effect;
or (c) violate or result in the breach of, or constitute a default under any
indenture or other loan or credit agreement, or other agreement or instrument to
which NAFI is a party (including, without limitation, each of the Underlying
Transaction Documents) or by which NAFI, or its Property is bound or affected.
NAFI is not in violation or breach of or default under any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award or
any contract, agreement, lease, license, indenture or other instrument to which
it is a party, the non-compliance with, the violation or breach of or the
default under which would have a Material Adverse Effect.

         (d) Executive Offices. NAFI's chief executive office and principal
place of business is 10302 Deerwood Park Blvd., Suite 100, Jacksonville, FL
32256.

         (e) Litigation. Except as set forth in Exhibit H hereto, there are no
claims, actions, suits, proceedings or other litigation pending or, to the best
of NAFI's knowledge, threatened against NAFI, at law or in equity, before any
Governmental Authority or, to the best of NAFI's knowledge, any investigation by
any Governmental Authority of NAFI's Properties that (a) asserts the invalidity
of any Transaction Document or Underlying Transaction Document, (b) seeks to
prevent the

<PAGE>   38
                                      -32-


consummation of any of the transactions contemplated by any Transaction Document
or Underlying Transaction Document, (c) seeks any determination or ruling that
would materially and adversely affect the performance by NAFI, either in its
individual capacity or as initial Servicer of those respective obligations under
any Transaction Document or Underlying Transaction Document, (d) individually or
in the aggregate, would reasonably be expected to have a material adverse
effect on its ability to perform its respective obligations under any
Transaction Document or Underlying Transaction Document, or (e) would reasonably
be expected to have a material adverse effect on the value of, or the Lender's
security interest in, the Collateral in the aggregate.

         (f) Consents and Approvals. No approval, authorization or consent of
any trustee or holder of any indebtedness or obligation of NAFI or of any other
Person (including, without limitation, FSA) under any material agreement,
contract, lease or license or similar document or instrument to which NAFI is a
party or by which NAFI is bound, that has not been obtained by the Closing Date,
is required to be obtained by NAFI in order to make or consummate the
transactions contemplated under the Transaction Documents. All consents and
approvals of, filings and registrations with, and other actions in respect of,
all Governmental Authorities required to be obtained by NAFI in order to make or
consummate the transactions contemplated under the Transaction Documents have
been, or prior to the time when required will have been, obtained, given, filed
or taken.

         (g) Margin Regulations. NAFI does not own any "margin security", as
that term is defined in Regulation U of the Federal Reserve Board. None of the
proceeds of the Loan will be used, directly or indirectly, for the purpose of
purchasing or carrying any such "margin security," for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or carry
any such "margin security" or for any other purpose which would cause the Loan
to be considered a "purpose credit" within the meaning of Regulations T, U and
X.

         (h) Taxes. All federal, state, local and foreign tax returns, reports
and statements required to be filed by NAFI have been filed with the appropriate
Governmental Authorities where failure to file may have a Material Adverse
Effect, and all Charges and other impositions shown thereon to be due and
payable by NAFI have been paid prior to the date on which any fine, penalty,
interest or late charge may be added thereto for nonpayment thereof, or any such
fine, penalty, interest, late charge or loss has been paid. NAFI has paid when
due and payable all Charges upon the books of NAFI and no Government Authority
has asserted any Lien against NAFI with respect to unpaid Charges. All material
amounts have been withheld by NAFI from its employees for all periods in
compliance with the tax, social security and unemployment withholding provisions
of applicable federal, state, local and foreign law and such withholdings have
been timely paid to the respective Governmental Authorities (other than for
taxes that are being contested in good faith by the borrower and for which NAFI
has established adequate reserves).

         (j) Investment Company Act. NAFI is not required to be registered as an
investment company under the Investment Company Act.

<PAGE>   39
                                      -33-


         7.17 DELIVERY OF PHYSICAL CERTIFICATES. The Borrower has caused
Wilmington Trust Company, as Underlying Trustee of the 1997-1 Transaction and
1998-1 Transaction, to Deliver the Pledged Certificates.

         7.18 OWNERSHIP. The Borrower is 100% owned by NAFI, and each of the
1997-1 Trust and 1998-1 Trust are 100% owned by the Borrower, and (a) each
Underlying Trustee has so registered the Borrower as the sole owner of the
Underlying Trust related to it upon such Underlying Trustee's books and records
and (b) the owner trustee of the Borrower has registered NAFI as the sole owner
of the Borrower on such owner trustee's books and records.

         7.19 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Until payment and
performance in full of the Obligations, the representations and warranties
contained herein shall have a continuing effect as having been true when made.

SECTION 8. AFFIRMATIVE COVENANTS OF THE BORROWER AND NAFI.

         Either the Borrower or NAFI, as provided below, covenants and agrees
that, until full complete and indefeasible payment and performance of the
Obligations, unless Lender shall otherwise consent in writing, Borrower or NAFI,
as the case may be, covenants and agrees as follows:

         8.1 BORROWING BASE CERTIFICATES; ADDITIONAL ACCESS AND INFORMATION.

         (a) On each Calculation Date, Borrower shall deliver to Lender a
Borrowing Base Certificate dated as of such Calculation Date duly executed by
either the Borrower or NAFI, signed by a Responsible Officer of either the
Borrower or NAFI and properly completed.

         (b) Promptly upon reasonable request therefore by Lender, either the
Borrower or NAFI will furnish to the Lender any information which is in the
Borrower's or NAFI's possession relating to the Collateral, including
information which is necessary in order for the Lender to enforce its rights
under this Agreement. In addition both the Borrower and NAFI will either provide
or, to the extent of their control thereof, instruct the Custodian to provide
the Lender with access to the Contract Files and any documentation regarding the
Collateral which is in the Borrower's (or NAFI's) possession in order to permit
the Lender to obtain any such information. Such access will be afforded without
charge, but only (i) upon reasonable request and with reasonable notice to
Borrower or NAFI, as the case may be, (ii) during normal business hours, (iii)
subject to Borrower's or NAFI's, as appropriate, or normal security and
confidentiality procedures and (iv) at offices designated by the Borrower or
NAFI, as appropriate.

         (c) Promptly upon any officer of either the Borrower or NAFI obtaining
knowledge (i) of any condition or event which constitutes an Early Amortization
Event, Event of Default or Potential Event of Default under this Agreement, (ii)
that any Person has given any notice to either the Borrower or NAFI or taken any
other action with respect to a claimed default or event or condition of the type
referred to in Section 14.1(b) or (c), (iii) of the institution of any
litigation

<PAGE>   40
                                      -34-

or of the receipt of written notice from any Governmental Authority as to the
commencement of any formal investigation involving an alleged or asserted
liability of either the Borrower or NAFI of any material amount or any adverse
judgment in any litigation involving a potential material liability of either
the Borrower or NAFI, either the Borrower or NAFI shall deliver to Lender a
certificate of either the Borrower or NAFI signed by a Responsible Officer of
either the Borrower or NAFI, specifying the notice given or action taken by such
Person and the nature of such claimed default. Early Amortization Event, Event
of Default, Potential Event of Default, event or condition and what action
either the Borrower or NAFI has taken, is taking and proposes to take with
respect thereto.

         (d) Promptly after its receipt thereof, the Borrower shall deliver to
the Lender a copy of each monthly and any other servicing report delivered to it
with regard to each Underlying Transaction.

         8.2 EXISTENCE; COMPLIANCE WITH LAW, BOOKS AND RECORDS, COMMINGLING OF
FUNDS. Borrower shall (a) keep in full effect its existence, rights and
franchises as a business trust under the laws of the State of Delaware and all
of its licenses, permits, governmental approvals, rights, privileges and
franchises necessary in the normal conduct of its business as now conducted or
presently proposed to be conducted; (b) obtain and preserve its qualification to
do business as a foreign business trust in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of the rights of Lender under this Agreement; (c) comply with (i)
the provisions of its trust agreement and (ii) the requirements of all
applicable laws, rules, regulations or orders of any Governmental Authority to
the extent that the failure to comply therewith would not, in the aggregate,
have a Material Adverse Effect, (d) maintain its books and records separate from
the books and records of any other entity and (e) maintain separate bank
accounts and, except as contemplated by this Agreement, not permit funds of
Borrower to be commingled with funds of any other entity.

         8.3 RESERVED.

         8.4 NOTICE OF LIENS. Either the Borrower or NAFI will notify Lender of
the existence of any Lien (except Permitted Liens) on any of its Property
immediately upon discovery thereof and Borrower and NAFI shall defend the
priority of the security interest of Lender in the Collateral now existing or
hereafter created, including the first-priority perfected security interest of
the Lender in the Free Cash Flow, the Pledged Certificates, the Interest Reserve
Account, the Swap Agreement and all income or proceeds of the foregoing or
relating thereto (all of the foregoing, cumulatively, the "First Priority
Collateral") against all claims of third parties claiming through or under
either the Borrower or NAFI.

         8.5 OBLIGATIONS WITH RESPECT TO CONTRACTS. Both the Borrower and NAFI
will duly fulfill all obligations on each of their parts to be fulfilled under
or in connection with each Contract, if any, and will do nothing to impair the
continued, valid existence of, or the rights of the Lender in, the Collateral.

<PAGE>   41


                                      -35-



         8.6 PRESERVATION OF SECURITY INTEREST. Each of the Borrower and NAFI
shall execute and file such continuation statements and any other documents and
take such other actions which may be required by law to fully preserve and
protect the perfected security interest of Lender in the Collateral and the
first-priority security interest of the Lender in the First Priority Collateral.

         8.7 RESERVED.

         8.8 SEPARATELY TAXABLE ENTITY. Borrower and NAFI have filed, and will
continue to file, returns for federal income tax purposes at all times until the
termination of this Agreement and satisfaction in full of all Obligations of
Borrower hereunder, Borrower or NAFI files, and will continue to file, returns
for federal income tax purposes. Either the Borrower or NAFI shall deliver to
the Lender copies of each such returns filed from the Closing Date until the
termination of this Agreement. The Borrower is taxable neither as a corporation
nor as a publically traded partnership.

         8.9 TAXABLE INCOME FROM THE CONTRACTS. Borrower shall report and
include in gross income for Income Tax purposes in its consolidated, combined or
unitary return the income from all of the Underlying Transactions and shall
deduct the interest paid or accrued, in accordance with its applicable method of
accounting for federal income tax purposes.

         8.10 MAINTENANCE OF SWAP AGREEMENT. Subject to Section 3.2(c), any Swap
Agreement entered into by Borrower shall be maintained with a notional amount in
an amount equal to the outstanding principal balance of the Loan(s). Subject to
Section 3.2(c) hereof, if at any time the notional amount of the Swap Agreement
exceeds the outstanding principal balance of the Loan by more than $500,000,
Borrower shall, within five (5) Business Days of such time, enter into a revised
Swap Agreement or an offsetting Swap Agreement, and shall pay subject to the
Intercreditor Agreement and Section 14.5 hereof all Swap Breakage Costs
associated therewith.

         8.11 ENFORCEMENT OF UNDERLYING DOCUMENTS. Subject to the Intercreditor
Agreement and Section 14.5 hereof, each of the Borrower and NAFI shall, at the
expense of NAFI, and on behalf of the Lender and themselves, enforce all of
their rights under the Contracts and the Underlying Transaction Documents as
needed to protect the Lender's interests in the Collateral. Neither the Borrower
nor NAFI shall either cause or seek to cause Harris, Wilmington, Chase, any
related Custodian or Back-up Servicer to make any distribution or pay any
dividends or other amounts of any kind or nature to any party in contravention
of the Irrevocable Instruction Letter.

         8.12 BORROWER'S IDENTITY. Borrower shall avoid the appearance of
conducting business on behalf of NAFI or any Affiliate of NAFI (other than the
Borrower itself). Borrower shall conduct its business solely in its own name so
as not to mislead others as to the identity of the Person with which such others
are concerned.

         8.13 AUDIT REPORTS. Either the Borrower or NAFI shall deliver copies of
any audited reports performed with respect to, or encompassing, either the
Borrower or the Collateral, within ten (10) Business Days of their receipt of
the same.


<PAGE>   42


                                      -36-


         8.14 FINANCIAL STATEMENTS. As soon as available and in any event within
90 days after the close of each quarterly accounting period in each fiscal year
of the Borrower (other than the fourth quarterly accounting period of each such
fiscal year), either the Borrower or NAFI shall deliver to the Lender the
consolidated and the consolidating balance sheet of the Borrower and NAFI as at
the end of such quarterly period and the related consolidated and the
consolidating statements of income and cash flow of the Borrower and NAFI for
such quarterly period and for the elapsed portion of the fiscal year ended with
the last day of such quarterly period.

         8.15 INSPECTION. At any time and from time to time during regular
business hours the Lender or any agent, delegee, successor or assign to it may
visit and inspect the premises, offices, properties, books and records of the
Borrower, NAFI and the Servicer (if a Person other than NAFI), and interview any
of their employees or independent accountants for the purpose of discussing the
performance of this transaction or any of the Underlying Transactions or the
Contracts. Unless either an Early Amortization Event, Event of Default or
Potential Event of Default is occurring, in which case, the costs of such
inspection will be borne by the Borrower or any Affiliate thereof, such costs
will be borne by the Lender. In addition, if an Early Amortization Event,
Potential Event of Default or an Event of Default shall occur at any time and
from time to time during regular business hours, upon prior written notice to
the Borrower, the Borrower agrees to permit each of the Lender or any such
Person's agents or representatives or other Persons designated by it, including,
without limitation, attorneys or auditors to visit at the expense of the
Borrower the offices and properties of the Borrower for the purpose of (i)
examining the systems used in the processing, administration and servicing of
the Contracts, including, without limitation, the Borrower's record-keeping,
accounting, auditing and other internal control systems related thereto, (ii)
examining and making copies of and abstracts from all books, records, files and
documents (including, without limitation, computer tapes and disks) in the
possession or under the control of the Borrower relating to the generation,
invoicing, servicing and collection of the Contracts and (iii) reviewing the
continuing performance by the Borrower of its obligations and duties under the
Transaction Documents; provided that Borrower and NAFI shall have the right to
be present at any such visit and shall be notified by Lender of any such
scheduled visit not less than two (2) Business Days in advance of such visit.

         8.16 COVENANTS WITH RESPECT TO NAFI.

         (a) Payment of Taxes. NAFI shall promptly pay and discharge all Charges
when due and payable, except (i) such as may be paid thereafter without penalty
or (ii) such as are being contested in good faith by appropriate proceedings and
for which an adequate reserve has been established and is maintained in
accordance with GAAP. NAFI shall promptly notify Lender of any material
challenge, contest or proceeding pending by or against NAFI before any taxing
authority.

         In addition to the financial information described above, the Borrower
will also furnish or cause to be furnished or made available to the Lender, (i)
the Borrowing Base Certificate at the times required under Section 3.2, (ii)
upon request of the Lender, the electronic records and computer tapes maintained
by the Borrower summarizing the characteristics and distribution of the
Contracts in all of the Underlying Transactions and (iii) such other information
regarding the business, affairs and condition of the Borrower and its
Affiliates, the Collateral, cash payments made


<PAGE>   43


                                      -37-

by the Borrower's Affiliates in respect of taxes and the scheduled amortization
of the Free Cash Flow, as such Lender may from time to time reasonably request.
The Borrower will permit the Lender to inspect and audit the books and records
and any of the properties or assets of the Borrower and its Affiliates not more
than once per year prior to the occurrence of an Early Amortization Event, a
Potential Event of Default or Event of Default, at the Lender's expense, and
after any such occurrence, at such times as the Lender may from time to time
request, each such inspection to be at the Borrower's expense.

         8.17 COOPERATION IN CONNECTION WITH PARTICIPATIONS. Subject to the
Intercreditor Agreement, if the Lender chooses to exercise its rights granted to
it pursuant to Section 11.1 hereof, the Borrower and NAFI each hereby covenants
and agrees to re-execute new notes, documents, agreements, supplements,
amendments, instruments and certificates as necessary and to cooperate with any
and all other commercially reasonable requests of the Lender to facilitate the
closing of such transaction.

         8.18 AGREEMENT TO HOLD IN TRUST. As of the Closing Date, either the
Borrower or NAFI will have caused to be executed by all necessary parties the
Irrevocable Instruction Letter and this Agreement, which are referred to herein
collectively as the "Transaction Payment Documents". To the extent that,
notwithstanding the Transaction Payment Documents, the Borrower or NAFI receives
any amounts which should, in accordance with the Transaction Payment Documents,
have been sent to either the Lender or its designee, the Borrower or NAFI will
hold the same in trust for the Lender immediately upon receipt thereof, and
forthwith deliver the same to the Lender in the form received, together with the
Borrower's or NAFI's (as the case may be) endorsement thereon where necessary to
permit collection thereof.

         8.19 COMMUNICATION WITH ACCOUNTANTS. Each of the Borrower and NAFI
authorizes the Lender to communicate directly with the Borrower's and NAFI's,
respectively, independent certified public accountants and has authorized those
accountants to disclose to the Lender any and all financial statements and other
supporting financial documents and schedules and the Borrower and NAFI will
continue to keep such authorization in effect; provided that Borrower and NAFI
shall have the right to be present at all times.

         8.20 PERFORMANCE OF SERVICING DUTIES. The Borrower and NAFI shall
comply in all material respects with the provisions of each of their charter
agreements and other Underlying Transaction Documents relating to any
Transaction Document, and perform the duties of servicer in compliance with the
terms thereof.

         8.21 JOINT AND SEVERAL LIABILITY. The representations, warranties and
covenants of the Borrower and NAFI hereunder shall be the joint and several
obligations of the Borrower and NAFI. Notwithstanding the foregoing sentence,
neither the Borrower nor NAFI shall be jointly and severally liable for any
other obligations other than as expressly provided for herein. Specifically,
NAFI shall not be the guarantor of, or liable in any respect for, the obligation
to pay either any principal or interest on the Note.


<PAGE>   44

                                      -38-


         8.22 MAINTENANCE OF LOCKBOX. Subject to the rights of any other parties
to the Underlying Transaction Documents, NAFI and the Borrower shall cause the
lockbox account to which payments from the Obligors pursuant to the Underlying
Transaction Documents are sent to be maintained at all times prior to the
termination of this Agreement.

SECTION 9. NEGATIVE COVENANTS OF THE BORROWER AND NAFI.

         Until full, complete and indefeasible payment and performance of the
Obligations, unless Lender shall otherwise consent in writing, either Borrower
or NAFI, as the case may be, covenants and agrees as follows:

         9.1 LIENS; NEGATIVE PLEDGES; AND ENCUMBRANCES. Neither Borrower nor
NAFI shall create, incur, assume or suffer to exist any Lien of any nature upon
or with respect to any of Property of the Borrower or any of the Collateral,
whether now or hereafter owned, leased or acquired, except for Permitted Liens.

         9.2 EXPENDITURES AND ACQUISITIONS. Borrower shall not make any capital
expenditures, acquire any assets of any kind, except as required or permitted by
the Underlying Transaction Documents.

         9.3 DISPOSITION OF ASSETS. Borrower shall not sell, assign or otherwise
dispose of, any of its assets, except for such sales, assignments or other
dispositions that it is required to make pursuant to the Underlying Transaction
Documents or to facilitate a future securitization transaction.

         9.4 INDEBTEDNESS AND GUARANTEES. Borrower shall not create, incur,
assume or suffer to exist, any Indebtedness other than (a) trade payables and
expense accruals less than $50,000 in connection with its operations in the
normal course of business, (b) Obligations to Lender arising under this
Agreement and the other Transaction Documents, (c) the Swap Agreement, (d)
amounts that the Borrower is required as of the date hereof to pay FSA or any
other party pursuant to the Underlying Transaction Documents, (e) as required by
Section 2.4 and (f) other amounts previously approved in writing by the Lender
and FSA. Nothing in this Section 9.4 is intended to permit the Borrower to take
any action that would be prohibited or restricted by the Underlying Transaction
Documents.

         9.5 NO SUBSIDIARIES. Borrower shall have no Affiliate that is
controlled by it other than the Issuing Trusts pursuant to the Underlying
Transaction Documents.

         9.6 AMENDMENTS OF CHARTER DOCUMENTS; TRANSACTION DOCUMENTS. Neither the
Borrower nor NAFI shall amend the Borrower's trust agreement after the Closing
Date without the prior written consent of the Lender and shall conduct the
Borrower's business within the limitations set forth therein. Neither the
Borrower nor NAFI shall amend any Underlying Transaction Document or Transaction
Document in any respect that (i) could be adverse to the rights and interest of
the Lender, without the prior written consent of the Lender or (ii) could
adversely alter


<PAGE>   45

                                      -39-

the timing or amount of any payment of Free Cash Flow or the interest of the
Borrower in either any of the Collateral or any Underlying Transaction
Document.

         9.7 NO USE OF LENDER'S NAME. Except as required by law, neither the
Borrower nor NAFI shall use or authorize others to use Lender's name or marks in
any publication or medium, including, without limitation, any prospectus,
without Lender's advance written authorization.

         9.8 LIMITATION ON ACTIVITIES OF BORROWER. Borrower shall not (i) engage
in any activity other than the acquisition, ownership, leasing, selling and
pledging of the property contributed to Borrower, and performing its obligations
under this Agreement, the other Transaction Documents, any Underlying
Transaction Document, or in connection with any future securitization
transaction that the Borrower enters into, and (ii) enter into any material
agreement other than this Agreement, the other Transaction Documents, any
Underlying Transaction Document or in connection with any future securitization
transaction that the Borrower enters into.

         9.9 INSOLVENCY PROCEEDINGS. Neither the Borrower nor NAFI shall (a)
commence any case, proceeding or other action under any existing or future
bankruptcy, insolvency or similar law seeking to have an order for relief
entered with respect to it, or seeking reorganization, arrangement, adjustment,
windup, liquidation, dissolution, composition or other relief with respect to it
or its debts, (b) seek appointment of a receiver, trustee, custodian or other
similar official for it or any part of its assets, (c) make a general assignment
for the benefit of creditors, or (d) take any action in furtherance of, or
consenting or acquiescing in, any of the foregoing.

         9.10 NO REDEMPTION. Borrower shall not transact an early redemption of
any of its outstanding indebtedness in a financing transaction other than as
permitted hereunder with respect to the Obligations or as required pursuant to
the Underlying Transaction Documents.

         9.11 NO ADVANCES. Neither the Borrower nor NAFI shall make any advances
to any record or beneficial owner of the Borrower or the shareholders, partners,
members or other similar Person other than the advance of proceeds of the Loans
from the Borrower to NAFI expressly permitted by Section 2.4 and only for the
uses expressly permitted thereunder, other than advance as Servicer or otherwise
required under the Underlying Transaction Documents.

         9.12 GUARANTEES. The Borrower shall not guarantee (directly or
indirectly), endorse or otherwise become contingently liable (directly or
indirectly) for the obligations of, or own or purchase any stock, obligations or
securities of or any other interest in, or make any capital contribution to, any
other Person, engage in any other action that bears on whether the separate
legal identity of Borrower shall be respected, including, without limitation (i)
holding itself out as being liable for the debts of any other party or (ii)
acting other than in its corporate name and through its duly authorized officers
or agents.

         9.13 ERISA. The Borrower shall not incur or assume any obligation to
make contributions or payments of any kind to or with respect to any Plan, take
actions or refrain from taking actions which could result in liabilities with
respect to any Plan, and permit any condition to


<PAGE>   46


                                      -40-


occur which could result in a Lien on assets of the Borrower with respect to any
Plan, or become a Plan or permit its assets to become assets of an employee
benefit plan within the meaning of the Plan asset regulations.

SECTION 10. GRANTS OF SECURITY INTEREST; THE COLLATERAL.

         10.1 SECURITY INTEREST. Subject to the Intercreditor Agreement, as
collateral security for the prompt, complete and indefeasible payment and
performance of (a) the entire principal amount of and all interest accrued on
the Loan, (b) all fees payable to the Lender hereunder, including, without
limitation, any and all commitment fees, agent fees and attorneys' fees and any
and all other fees, expenses, costs or other sums chargeable to Borrower under
any of the Transaction Documents, (c) all other amounts and other obligations of
the Borrower to the Lender arising under this Agreement or any other Transaction
Documents and (d) all covenants and duties regarding such amounts, of any kind
or nature, arising under any of the Transaction Documents (collectively, the
"Obligations"), Borrower hereby assigns, pledges and grants, as appropriate, to
the Lender a lien on and security interest in all of the Borrower's right, title
and interest in and to (but none of its obligations under) the following
property, whether now existing or owned or hereafter arising or acquired by the
Borrower (collectively, the "Collateral"):

         (1)      the Trust Property of the 1995-1 Transaction and the 1996-1
                  Transaction (as defined in the 1995-1 Pooling and Servicing
                  Agreement and the 1996-1 Pooling and Servicing Agreement,
                  respectively) and Trust Estates of the 1997-1 Transaction and
                  1998-1 Transaction (as defined in the 1997-1 Sale and
                  Servicing Agreement and the 1998-1 Sale and Servicing
                  Agreement, respectively), subject, in each case, to the prior
                  claims of (i) in the case of the Trust Property of the 1995-1
                  Transaction, the parties referenced in subsections (i) through
                  (x) of Section 4.01 of the 1995-1 Pooling and Servicing
                  Agreement; (ii) in the case of the Trust Property of the
                  1996-1 Transaction, the parties referenced in subsections (i)
                  through (x) of Section 4.01 of the 1996-1 Pooling and
                  Servicing Agreement; (iii) in the case of the Trust Estate of
                  the 1997-1 Transaction, the parties referenced in subsections
                  (b)(i) through (x) of Section 5.7 of the 1997-1 Sale and
                  Servicing Agreement; and (iv) in the case of the Trust Estate
                  of the 1998-1 Transaction, the parties referenced in
                  subsections (b)(i) through (x) of Section 5.7 of the 1998-1
                  Sale and Servicing Agreement; and, further subject to the
                  claims of any parties entitled, under the terms of the
                  aforementioned Underlying Transaction Documents, to amounts
                  deposited to the Collection Account (as such term is defined
                  in each of the aforementioned Underlying Transaction
                  Documents) that do not constitute Available Amounts (as such
                  term is defined in each of the aforementioned Underlying
                  Transaction Documents as in effect on the date hereof, which
                  definition is set forth in Exhibit F hereto, but with any such
                  changes thereto as shall have been consented to by FUNB);

         (2)      the Pledged Certificates;


<PAGE>   47


                                      -41-


         (3)      the Interest Reserve Account, all amounts on deposit therein
                  from time to time, and any investments thereof and earnings
                  thereon;

         (4)      all of the Borrower's rights (other than rights to payments
                  excluded from the definition of Collateral pursuant to
                  paragraph 1 above), but none of the obligations of either,
                  under the Underlying Transaction Documents (other than any
                  such rights granted, assigned, or subject to a security
                  interest for the benefit of the Underlying Trustees for the
                  Underlying Transactions as of the related closing date), and
                  the Transaction Documents;

         (5)      the Swap Agreement, and all payments thereunder;

         (6)      all of the Borrower's rights, interests and title to all of
                  the Insurance Policies and any Insurance Proceeds related to
                  the Contracts other than such as are subject to the security
                  interest of the Underlying Trustees for the Underlying
                  Transactions as of the related closing date;

         (7)      all of the Borrower's rights in, to and under any
                  "collateral", "trust property" or similar term evidencing a
                  valid, perfected security interest of a related
                  securityholder, which may be a first priority security
                  interest, or stream of payments therefrom as defined in the
                  agreements, indentures or other documents entered into by the
                  Borrower or such subsidiary after the Closing Date which
                  definition incorporates, directly or indirectly, any
                  Contracts, Spread Account, other Collateral or any other
                  collateral of any Underlying Transaction (but subordinate to
                  any rights or claims prior to those of the Borrower of the
                  Underlying Trustee, the securityholders and FSA or anyone
                  other than the Borrower pursuant to the Underlying Transaction
                  Documents);

         (8)      all income or proceeds of the foregoing or relating thereto.

         The assignment under this Section 10.1 does not constitute and is not
intended to result in a creation or an assumption by the Lender of any
obligation of the Borrower or NAFI, or any other Person in connection with the
Collateral or under any agreement or instrument relating thereto. Anything
herein to the contrary notwithstanding, but subject to the Intercreditor
Agreement and Section 14.5 hereof, (a) either Borrower or NAFI, as the case may
be, shall remain liable under the Contracts and the Underlying Transaction
Documents to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by Lender of any of its rights in the Collateral
shall not release either Borrower or NAFI, as the case may be, from any of its
duties or obligations under the Contracts or the Underlying Transaction
Documents and (c) Lender shall not have any obligations or liability under the
Contracts by reason of this Agreement, nor shall Lender be obligated to perform
any of the obligations or duties of Borrower thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.


<PAGE>   48


                                      -42-


         10.2 CREATION OF ACCOUNTS; INVESTMENTS.

         (a) Prior to the Closing Date, either the Borrower or NAFI shall, or
shall cause the Servicer to establish with the Lender the following segregated
trust account with the designations indicated: the Interest Reserve Account
designated "First Union National Bank of North Carolina - National Financial
Auto Funding Trust Interest Reserve Account."

         (b) Subject to the Intercreditor Agreement and Section 14.5, Prior to
each advance made hereunder, the Borrower shall deposit in the Interest Reserve
Account the amount necessary to maintain the Interest Reserve Account Deposit
Amount as of the related advance date. Subject to the Intercreditor Agreement
and Section 14.5, borrower hereby covenants and agrees that until all of the
Obligations have been paid in full to the Lender, the funds on deposit in the
Interest Reserve Account shall always be not less than the Interest Reserve
Account Deposit Amount.

         (c) All amounts on deposit in the Interest Reserve Account shall upon
the direction of the Lender be invested in Eligible Investments held by and in
the name of the Lender maturing no later than the close of business on the
Business Day immediately preceding the next Payment Date.

         (d) The Interest Reserve Account shall be the property of the Borrower,
subject to the grant of a security interest therein to the Lender as set forth
above, and shall be so treated for Income Tax informational reporting purposes.
All earnings on amounts on deposit in the Interest Reserve Account shall be for
the account of the Borrower and the Borrower agrees that it shall include such
earnings in its income for Income Tax informational reporting purposes and the
Lender shall not be liable for any taxes thereon.

         (e) Promptly upon the release of the Lien of this Agreement and the
payment in full of all of the Obligations, the Lender shall release to the
Borrower or its designee all amounts on deposit in the Interest Reserve Account,
including all investments and interest thereon.

SECTION 11. RELATIONSHIP AMONG THE BANKS.

         11.1 APPOINTMENT AND AUTHORIZATION. Subject to the Intercreditor
Agreement and Section 16.10 hereof, the Lender may elect to transfer (pursuant
to a sale or participation) all or any portion of the Loan to one or more Banks,
in which event, the Lender may act as the agent, on behalf of itself and such
Banks under this Agreement (the "Agent") and under each of the other Transaction
Documents and the Agent is authorized to take such action on behalf of itself
and such Banks under the provisions of this Agreement and each other Transaction
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Transaction
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Transaction Document, the Agent shall not have any
duties or responsibilities, except those expressly set forth herein, nor shall
the Agent have or be deemed to have any fiduciary relationship with any


<PAGE>   49


                                      -43-


Bank, and no implied covenants, functions, responsibilities, duties, obligations
or liabilities shall be read into this Agreement or any other Transaction
Document or otherwise exist against the Agent.

         11.2 DELEGATION OF DUTIES. The Agent may execute any of its duties
under this Agreement or any other Transaction Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.

         11.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Transaction Document (except for its
own gross negligence or willful misconduct), or (b) be responsible in any manner
to any Bank for any recital, statement, representation or warranty made by
Borrower, or any officer thereof, contained in this Agreement or in any other
Transaction Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or any other Transaction Document, or for the value of any
Collateral or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Transaction Document, or for any
failure of the Borrower or any other party to any Transaction Document to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Bank to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Transaction Document, or to inspect the
properties, books or records of Borrower or its Subsidiaries or its
Subsidiaries.

         11.4 RELIANCE BY THE AGENT.

         (a) The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telegram, facsimile, telex or telephone message, statement or
other 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 counsel to Borrower), independent
accountants and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Transaction Document unless it shall first receive such advice or
concurrence of the majority of Banks as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Banks against
any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Transaction Document in accordance with a request or consent of the
majority of Banks and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Banks.

         (b) For purposes of determining compliance with the conditions
precedent specified in Section 12, each Bank shall be deemed to have consented
to, approved or accepted or to be satisfied with each document or other matter
either sent by the Agent to such Bank for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved by or



<PAGE>   50


                                      -44-


acceptable or satisfactory to the Bank, unless an officer of the Agent
responsible for the transactions contemplated by the Transaction Documents shall
have received notice from the Bank prior to the initial borrowing specifying its
objection thereto and either such objection shall not have been withdrawn by
notice to the Agent to that effect or the Bank shall not have made available to
the Agent the Bank's ratable portion of such borrowing.

         11.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Early Amortization Event, Event of Default or
Potential Event of Default, except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Agent on behalf and for
the benefit of the Banks, unless the Agent shall have received written notice
from a Bank or the Borrower referring to this Agreement, describing such Event
of Default or Potential Event of Default and stating that such notice is a
"notice of default". In the event that the Agent receives such a notice, the
Agent shall give notice thereof to the Banks. The Agent shall take such action
with respect to such Early Amortization Event, Event of Default or Potential
Event of Default as shall be requested by the majority of Banks in accordance
with this Agreement; provided, however, that unless and until the Agent shall
have received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such Early
Amortization Event, Event of Default or Potential Event of Default as it shall
deem advisable or in the best interest of the Banks.

         11.6 CREDIT DECISION. Each Bank expressly acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it and that no
act by the Agent hereinafter taken, including any review of the affairs of
Borrower, shall be deemed to constitute any representation or warranty by the
Agent to any Bank. Each Bank represents to the Agent that it has, independently
and without reliance upon the Agent and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower, and all applicable bank regulatory laws relating
to the transactions contemplated thereby, and made its own decision to enter
into this Agreement and extend credit to Borrower under and pursuant to this
Agreement. Each Bank also represents that it will, independently and without
reliance upon the Agent and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Transaction Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of Borrower. Except for
notices, reports and other documents expressly herein required to be furnished
to the Banks by the Agent, the Agent shall not have any duty or responsibility
to provide any Bank with any credit or other information concerning the
business, prospects, operations, property, financial and other condition or
creditworthiness of Borrower, which may come into the possession of any of the
Agent-Related Persons.

         11.7 INDEMNIFICATION BY BANKS. Whether or not the transactions
contemplated hereby shall be consummated, the Banks shall indemnify upon demand
the Agent-Related Persons (to the extent not reimbursed by or on behalf of
Borrower and without limiting the obligation of Borrower to do so), ratably from
and against any and all liabilities, obligations, losses, damages,



<PAGE>   51


                                      -45-

penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind whatsoever which may at any time (including at any time following the
repayment of the Loans and the termination or resignation of the related Agent)
be imposed on, incurred by or asserted against any such Person in any way
relating to or arising out of this Agreement or any document contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by any such Person under or in connection with
any of the foregoing; provided, however, that no Bank shall be liable for the
payment to the Agent-Related Persons of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from such Person's gross negligence
or willful misconduct. Without limitation of the foregoing, each Bank shall
reimburse the Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including reasonable attorney fees) incurred by the
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Transaction Document, or any
document contemplated by or referred to herein to the extent that the Agent is
not reimbursed for such expenses by or on behalf of the Borrower. Without
limiting the generality of the foregoing, if the United States Internal Revenue
Service or any other Governmental Authority of the United States or other
jurisdiction asserts a claim that the Agent did not properly withhold tax from
amounts paid to or for the account of any Bank (because the appropriate form was
not delivered, was not properly executed, or because such Bank failed to notify
the Agent of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason), such Bank
shall indemnify the Agent fully for all amounts paid, directly or indirectly, by
the Agent as tax or otherwise, including penalties and interest, and including
any taxes imposed by any jurisdiction on the amounts payable to the Agent under
this Section 11.7, together with all costs and expenses (including reasonable
attorney fees). The obligation of the Banks in this Section 11.7 shall survive
the payment of all Obligations.

         11.8 RESERVED.

         11.9 SUCCESSOR AGENT. Subject to the Intercreditor Agreement, the Agent
may resign as Agent upon thirty (30) days' notice to the Banks. If the Agent
shall resign as Agent under this Agreement, the majority of Banks shall appoint
from among the Banks a successor agent for the Banks. If no successor agent is
appointed prior to the effective date of the resignation of the Agent, the Agent
may appoint, after consulting with the Banks and the Borrower, a successor agent
from among the Banks. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 11.9 and Sections 11.13 and 11.14 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement. If no successor agent has accepted appointment as
Agent by the date which is thirty (30) days following a retiring Agent's notice
of resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Banks shall perform all of the duties of the Agent
hereunder until such time, if any, as the majority of Banks appoint a successor
agent as provided for above.


<PAGE>   52


                                      -46-


         11.10 COLLATERAL MATTERS.

         (a) The Agent is authorized on behalf of all the Banks, without the
necessity of any notice to or further consent from the Banks, from time to time
to take any action with respect to any Collateral or the Transaction Documents
which may be necessary to perfect and maintain perfected the security interest
in and liens upon the Collateral granted pursuant thereto.

         (b) The Banks irrevocably authorize the Agent, at its option and in its
discretion, to release any lien granted to or held by the Agent upon any
Collateral (i) upon termination of this Agreement and payment in full of all
Loans and all other Obligations payable under this Agreement and under any other
Transaction Document; (ii) constituting property sold or to be sold or disposed
of as part of or in connection with any disposition permitted hereunder; (iii)
constituting property in which the Borrower owned no interest at the time the
lien was granted or at any time thereafter; (iv) constituting property leased to
the Borrower under a lease which has expired or been terminated in a transaction
permitted under this Agreement or is about to expire and which has not been, and
is not intended by the Borrower to be, renewed or extended; (v) consisting of an
instrument evidencing Indebtedness or other debt instrument, if the indebtedness
evidenced thereby has been paid in full; (vi) if approved, authorized or
ratified in writing by the majority of Banks or all the Banks, as the case may
be, or (vii) liens securing Indebtedness permitted under Section 6.13(c). Upon
request by the Agent at any time, the Banks will confirm in writing the Agent's
authority to release particular types or items of Collateral pursuant to this
Section 11.10(b).

         11.11 NO PETITION COVENANT. Prior to the date that is one year and one
day after the payment in full by the Borrower of all Indebtedness under this
Agreement, each Bank agrees that it will not institute against Borrower or any
Underlying Trust, or join any other Person in instituting against Borrower or
any Underlying Trust, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other proceedings under the laws of the United
States, any state of the United States, or any other jurisdiction.

         11.12 DOCUMENTS. The Agent shall deliver to each Bank a copy of any
document which is delivered to the Agent pursuant to this Agreement.

         11.13 INDEMNIFICATION BY BORROWER. Subject to the Intercreditor
Agreement and Section 14.5, to the fullest extent permitted by law, the Borrower
agrees to protect, indemnify, defend and hold harmless the Agent (solely in its
capacity as Agent hereunder), each Bank (other than, for the purposes of this
Section 11.13, the Lender with respect to its role as Lender hereunder) and
each of their respective directors, officers, employees and agents and any
Person who controls any of them within the meaning of the federal, state and
foreign securities laws (each an "Indemnitee") from and against any liabilities,
losses, obligations, damages, penalties, expenses or costs of any kind or nature
and from any suits, judgments, claims or demands (including in respect of or for
attorney costs and other reasonable fees and other disbursements of counsel for
and consultants of such Indemnities in connection with any investigative,
administrative or judicial proceeding, whether or not such Indemnities shall be
designated a party thereto) based on any Federal, state, local or foreign law or
other statutory regulation, including securities, environmental


<PAGE>   53


                                      -47-


and commercial law or other statutory regulation, which arises under common law
or at equitable cause or on contract or otherwise on account of or in connection
with any matter or thing or any action or failure to act by Indemnities, or any
of them, arising out of or relating to the Transaction Documents or any
agreement or instrument contemplated by the Transaction Documents, except to the
extent such liability arises from the willful misconduct or negligence of any of
the Indemnitees (collectively, the "Indemnified Matter"). Upon receiving
knowledge of any suit, claim or demand asserted by any Person that the Agent or
any Bank believes is covered by this indemnity, the Agent or such Bank shall
give the Borrower notice of the matter and an opportunity to defend it, at the
Borrower's sole cost and expense, with legal counsel reasonably satisfactory to
the Agent and the Banks. The Agent or the Banks may also require the Borrower to
defend the matter. The obligations of the Borrower under this Section 11.13
shall survive the payment and performance of the Obligations and the termination
of this Agreement. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section 11.13 may be unenforceable because it is
violative of any law or public policy, the Borrower shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all Indemnified Matters incurred by the Indemnities.

         11.14 COSTS AND EXPENSES. Subject to the Intercreditor Agreement and
Section 14.5, Borrower shall, whether or not the transactions contemplated
hereby shall be consummated:

         (a) pay or reimburse the Agent (other than in its capacity as the
Lender) within five (5) Business Days after demand for all costs and expenses
incurred by the Agent (other than in its capacity as the Lender) in connection
with the development, preparation, delivery, administration and execution of,
and any amendment, supplement, waiver or modification to (in each case, whether
or not consummated), this Agreement, any other Transaction Document and any
other documents prepared in connection herewith (including any commitment letter
and related documents preceding this Agreement) or therewith, and the
consummation of the transactions contemplated hereby and thereby, including the
reasonable attorney costs incurred by the Agent (other than in its capacity as
the Lender) with respect hereto and thereto;

         (b) pay or reimburse the Agent (other than in its capacity as Lender)
and each Bank within five (5) Business Days after demand for all reasonable
costs and expenses incurred by them in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies (including in
connection with any "workout" or restructuring regarding the Loans, and
including in any insolvency proceedings or appellate proceeding) under this
Agreement, any other Transaction Document, and any such other documents,
including reasonable attorney costs incurred by the Agent (other than in its
capacity as Lender) and any Bank; and

         (c) pay or reimburse the Agent (other than in its capacity as the
Lender) within five (5) Business Days after demand for all reasonable audit,
environmental inspection and review. search and filing, registration and
recording costs, fees and expenses, incurred or sustained by the Agent (other
than in its capacity as Lender) in connection with the matters referred to under
clauses (a) and (b) of this Section 11.14.


<PAGE>   54


                                      -48-


         11.15 RELIANCE BY THE BANKS. All covenants, agreements, representations
and warranties made herein by Borrower shall, notwithstanding any investigation
by the Banks or the Agent be deemed to be material to and to have been relied
upon by the Banks.

SECTION 12. CONDITIONS PRECEDENT TO ALL REVOLVING LOANS.

         The obligation of 1he Lender to make any Revolving Loan is subject to
the satisfaction of each of the following conditions precedent:

         12.1 NOTICE. The Lender shall have received timely notice of such
Revoking Loan and such other documents required by Section 3.1 hereof.

         12.2 DEFAULT. Before and after giving effect to such Revolving Loan, no
Early Amortization Event, Potential Event of Default or Event of Default shall
have occurred and be continuing.

         12.3 WARRANTIES. Before and after giving effect to such Revolving Loan.
the representations and warranties in Section 7 shall be true and correct in all
respects as though made on the date of such Revolving Loan, and the Borrowing
Base Certificate delivered together with the request for such Revolving Loan
shall be properly prepared and accurate.

         12.4 ADDITIONAL DOCUMENTS; FINANCING STATEMENTS. Lender shall have
received (a) acknowledgment copies (or other evidence of filing satisfactory to
Lender) of financing statements (i) filed with the Secretary of the States in
the Filing Locations naming Borrower as debtor, Lender as secured party, and the
Collateral as collateral thereunder and (b) any release of lien by any third
party with a security interest or other encumbrance on any of the Collateral
other than Permitted Liens.

         12.5 NO MATERIAL ADVERSE CHANGE. Other than has been disclosed in
writing to Lender, there shall have been no material adverse change in the
financial condition, operation or assets of the Borrower or NAFI since December
31, 1998.

SECTION 13. CONDITIONS PRECEDENT TO INITIAL REVOLVING LOAN.

         The obligation of the Lender to make its initial Revolving Loan
hereunder is subject to the satisfaction of the condition precedent, in addition
to the applicable conditions precedent set forth in Section 12 above, that the
Borrower shall have either delivered to the Lender all of the following, each
duly executed and dated the date of the initial Revolving Loan, in form and
substance satisfactory to the Lender or otherwise satisfied the Lender with
regard to those conditions incapable of being delivered:

13.1 NOTE. The Note.

13.2 OTHER AGREEMENTS AND FINANCING STATEMENTS.




<PAGE>   55


                                      -49-


         (a) The fully-executed Irrevocable Instruction Letter, including the
acknowledgments of Chase, Harris and Wilmington.

         (b) Letter Agreement executed by Harris, as custodian of each
Underlying Transaction, in which Harris agrees to hold the Collateral for the
benefit of the Lender, as Lender under this Agreement (but subordinate to the
rights of FSA and the certificateholders and noteholders of the Underlying
Transactions) until such day as this Agreement terminates (such day, the "FUNB
Termination Date").

         (c) The written consent. agreement or covenant. as the case may be, of
FSA, dated at or prior to the Closing Date, to:

         (i)      the agreements described in subparagraphs (a) and (b) of this
                  Section 13.2;

         (ii)     the revised FSA Spread Account requirement;

         (iii)    release of Free Cash Flow directly from each Spread Account to
                  the Lender after the revised FSA Spread Account requirement is
                  reached and the instruction of FSA to each underlying
                  Collateral Agent to do so;

         (iv)     execution, delivery and performance of this Agreement;

         (v)      waiver of the requirement that NFAFT be the agent of any party
                  financing cash flows;

         (vi)     amendment of the other Underlying Transaction Documents,
                  including the following amendments; (1) Section 203(m) of the
                  1995-1 Insurance and Indemnity Agreement and the 1996-1
                  Insurance and Indemnity Agreement; and (2) Section 206(l) of
                  the 1997-1 Insurance and Indemnity Agreement and 1998-1
                  Insurance and Indemnity Agreement;

         (vii)    that FSA will not amend any Underlying Transaction Document
                  and will make reasonable commercial efforts not to consent or
                  agree to the amendment of any Underlying Transaction Document
                  that may adversely affect the interests of the Lender
                  hereunder without the prior written consent of the Lender,

         (viii)   covenant of FSA that it will, at such time as the interests of
                  FSA in any Underlying Transaction is satisfied, promptly and
                  irrevocably instruct each collateral agent of each Underlying
                  Transaction to accept instructions only from the Lender from
                  the time the interests of FSA in the Underlying Transactions
                  are paid in full until the Lender informs FSA that the
                  obligations have been paid in full;


<PAGE>   56


                                      -50-

         (ix)     covenant of FSA that it will neither terminate nor consent or
                  agree to the termination of any Underlying Transaction
                  document until such time as it is notified in writing by the
                  Lender that the Obligations have been paid in full; and

         (x)      covenant that FSA will promptly instruct each Custodian, to
                  (A) acknowledge the Lien, subordinated to the Lien of FSA, of
                  the Lender on the related Contracts, (B)(i) immediately after
                  the time that FSA's interests in such contracts are
                  extinguished covenant that such Custodian will not act to
                  affect adversely the interests of the Lender in the Contracts
                  related to such Underlying Transaction and any other related
                  Collateral that the Custodian holds, (C) to establish a
                  bailment of such Contracts on behalf of the Lender that arises
                  immediately upon the extinguishment of FSA's interests thereon
                  and is maintained for a long as any of the Obligations
                  hereunder are paid in full and (D) only accept the
                  instructions of the Lender with respect thereto until such
                  time as the Obligations paid in full.

         (d) An agreement by which the collateral agent for each Underlying
Transaction acknowledges receipt of FSA's instruction to remit Free Cash Flow
directly from each Underlying Spread Account to the Lender and the covenant of
such collateral agent only to take instructions from the Lender with regard to
any Collateral from the time that FSA so instructs it until such time as the
Lender informs the collateral agent that the Obligations have been repaid in
full;

         (e) UCCs filed with respect to the Free Cash Flow and other Collateral
in the jurisdiction of the chief executive office of NFAFT;

         (e) UCC searches against NFAFT in the States of Delaware and Florida;

         (f) any and all other documentation, certifications and representations
reasonably requested by the Lender.

         13.3 RESOLUTIONS.

         (a) A copy, duly certified by a Responsible Officer of either the
Borrower or NAFI, of (i) the Trust Agreement of the Borrower or its
certificateholder(s) of beneficial interest, as appropriate, authorizing or
ratifying the execution and delivery of this Agreement, the Note and the other
Transaction Documents and authorizing the borrowings hereunder, (ii) all
documents evidencing other necessary corporate action and (iii) all approvals or
consents, if any, with respect to this Agreement, the Note and the other
Transaction Documents.

         (b) A copy, duly certified by the secretary or an assistant secretary
of NAFI, of (i) the resolutions of NAFI's Board of Directors authorizing or
ratifying the execution and delivery of this Agreement, the Note and the other
Transaction Documents and authorizing the borrowings hereunder, (ii) all
documents evidencing other necessary corporate action and (iii) all approvals or
consents, if any, with respect to this Agreement, the Note and the other
Transaction Documents.


<PAGE>   57




                                      -51-

13.4 INCUMBENCY CERTIFICATE.

         (a) A certificate of a trust officer of the Borrower or the secretary
or an assistant secretary of the Borrower's certificateholders certifying the
names of the Borrower's officers authorized to sign this Agreement, the Note and
the other Transaction Documents to which it is a party, together with the true
signatures of such officers.

         (b) A certificate of the secretary or an assistant secretary of NAFI
certifying the names of NAFI's officers authorized to sign the Transaction
Documents to which it is a party, together with the true signatures of such
officers.

         13.5 BY-LAWS.

         (a) A copy, certified as true and correct by a trust officer of its
trust agreement as amended.

         (b) A copy, certified as true and correct by the secretary or an
assistant secretary of NAFI, of NAFI's By-laws.

         13.6 CERTIFICATE OF INCORPORATION.

         (a) A copy, certified by the Secretary of State of Delaware, of the
Borrower's Certificate of Trust, together with all amendments thereto.

         (b) A copy, certified by the Secretary of State of Delaware, of NAFI's
Certificate of Incorporation, together with all amendments thereto.

         13.7 GOOD STANDING.

         (a) A current Good Standing Certificate issued by the Secretary of
State of Delaware where the Borrower is qualified to do business.

         (b) A current Good Standing Certificate issued by the Secretary of
State of Delaware where NAFI is qualified to do business.

         13.8 UCC SEARCHES. Delivery to the Lender of UCC Search Reports
bringing down to a date within the week of the initial advance those UCC
Searches delivered to the Lender with respect to the Borrower and NAFI on or
prior to the Closing Date.

         13.9 FEES AND COSTS. Evidence to the Lender's reasonable satisfaction
that the Borrower shall have paid in immediately available funds all costs and
expenses of Lender incurred in connection with negotiation and documentation of
the Transaction Documents including, but not limited to, the fees and
disbursements of its counsel.



<PAGE>   58

                                      -52-


         13.10 OTHER TRANSACTION DOCUMENT CONDITIONS. Evidence to the Lender's
reasonable satisfaction that all conditions set forth in all other Transaction
Documents have been fulfilled.

         13.11 DUE DILIGENCE. Completion, satisfactory to the Lender in its
reasonable discretion, of its due diligence investigation of the Contracts by
Baker and Associates or by Lender itself and other Lender agents as reasonably
requested by Lender.

         13.12 RELIANCE LETTERS. Receipt by the Lender of reliance letters
satisfactory to the Lender and its counsel from the Borrower's counsel as to
those opinions given by the Borrower's counsel at the closing of each of the
Underlying Transactions, including and not limited to, previously issued tax,
true sale, perfection and nonconsolidation opinions.

         13.13 RESERVED.

         13.14 NO MATERIAL ADVERSE CHANGE. A certificate of the Co-Trustee of
Borrower or a Responsible Officer of NAFI stating that there has been no
material adverse change in the financial condition, operations or assets since
the December 31, 1998 of either the Borrower or NAFI.

         13.15 RESERVED.

         13.16 OPINIONS. (A) Originally executed copies of the opinions of
NFAFT's counsel agreed to on the Closing Date, to the effect that: (i) on or
prior to the Closing Date, the Lender has a first-priority perfected security
interest in the First Priority Collateral and a perfected security interest in
all other Collateral subordinate only to that of the Underlying Trustee for each
Underlying Transactions, (ii) upon the filing of a bankruptcy petition with
respect to NAFI, (a) NFAFT would not be consolidated with NAFI, (b) the
automatic stay provisions of the Bankruptcy Code would not apply with respect to
any payment in respect of the Collateral to the Lender, (c) none of the
Collateral would become property of NAFI's estate; and (B) opinion of counsel
for each of Chase, Harris and Wilmington, to the effect that each of their
signatures as trustees under the Underlying Transaction Documents and all
documents, certificates, instruments and filings related thereto are legal,
valid binding, duly authorized, etc., and that there are no conflicts, etc., and
that such Underlying Trustee is duly organized.

         13.17 CERTIFIED COPIES OF UNDERLYING TRANSACTION DOCUMENTS. (i) Copies
of the Underlying Transaction Documents requested by the Lender (including, but
not limited to, those documents set forth in Section 7.7) and certified by the
Borrower or NAFI, including but not limited to the 1995-1 Pooling and Servicing
Agreement, the 1996-1 Pooling and Servicing Agreement, the 1997-1 Sale and
Servicing Agreement, the 1998-1 Sale and Servicing Agreement, the 1997-1
Indenture, the 1998-1 Indenture and the trust agreement of the Borrower and of
each issuer in each of the Underlying Transactions; and (ii) copies, certified
by the Borrower or NAFI, of the Servicing, Custodial and Back-up Servicing
Agreements in effect for the Underlying Transactions.


<PAGE>   59


                                      -53-


         13.18 OTHER AGREEMENTS. Any other agreements or documents reasonably
requested by Lender as the Lender deems necessary.

SECTION 14. EVENTS OF DEFAULT AND REMEDIES.

         14.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall constitute an Event of Default:

         (a) Failure to Pay. Borrower fails to pay any sum when due pursuant to
the terms hereof and such failure to pay continues for more than two (2)
Business Days; provided, however, that a failure to pay interest or any Term
Loan Monthly Principal on the Loan on any Payment Date other than the Maturity
Date shall not be an Event of Default hereunder, but shall constitute an
Interest Arrearage or Term Loan Monthly Principal Arrearage, respectively,
payable on the earlier of the Maturity Date or the immediately succeeding
Payment Date;

         (b) Failure to Perform. Either the Borrower or NAFI fails or neglects
to perform, keep or observe in any material respect any of the affirmative
covenants contained in this Agreement or in any other Transaction Document
within thirty (30) calendar days after Borrower shall become aware thereof,
whether by written notice from Lender or otherwise;

         (c) Warranty. Any representation, warranty or negative covenant made by
the Borrower or NAFI herein shall be untrue in any material respect when made or
deemed made; or any schedule, statement, report, notice or certificate
specifically required herein to be furnished by the Borrower or NAFI to the
Lender shall be untrue in any material respect on the date as of which the facts
set forth therein are stated or certified; or any certification made or deemed
made by the Borrower or NAFI to the Lender herein shall be untrue or misleading
in any material respect on or as of the date made or deemed made;

         (d) Insolvency. The Borrower becomes insolvent, or generally fails to
pay, or admits in writing its inability to pay, its debts as they mature, or
applies for, consents to, or acquiesces in, the appointment of a trustee,
receiver or other custodian for the Borrower or for a substantial part of the
property of the Borrower, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or acquiescence, a
trustee, receiver or other custodian is appointed for the Borrower or for a
substantial part of the property of the Borrower and is not discharged within 30
days; or any bankruptcy, reorganization, debt arrangement or other proceeding
under any bankruptcy or insolvency law, or any dissolution or liquidation
proceeding, is instituted by or against the Borrower and, if instituted against
the Borrower, is consented to or acquiesced in by the Borrower or remains for 30
days undismissed; or any warrant of attachment or similar legal process is
issued against any substantial part of the property of the Borrower which is not
released within 30 days of service;

         (e) Cross-Defaults. The occurrence of any "Default", "Event of Default"
or other event that, upon the occurrence thereof, permits the trustee or
securityholders related thereto to foreclose upon or liquidate the related
collateral or terminate the servicer thereof by NAFI, the



<PAGE>   60


                                      -54-

Borrower or any other member of the NAFI Group under any credit agreement,
security agreement, indenture, pooling and servicing agreement, sale and
servicing agreement, servicing contract, sale agreement, transfer agreement, or
other similar agreement, document or contract (after giving effect to any grace
period set forth in the related transaction document applicable thereto) to
which NAFI or the Borrower or any Affiliate of either is a party and such
Default, Event of Default or other event is neither cured nor waived;

         14.2 WAIVER OF DEFAULT. An Event of Default may be waived only with the
written consent of Lender. Any Event of Default so waived shall be deemed to
have been cured and not to be continuing; but no such waiver shall be deemed a
continuing waiver or shall extend to or affect any subsequent like default or
impair any rights arising from any such subsequent like default.

         14.3 REMEDIES. (a) Upon the occurrence and continuance of any Event of
Default, Lender shall have no further obligation to advance money, extend credit
to or for the benefit of Borrower or undertake any other liability or
obligation.

         Subject to the Intercreditor Agreement and Section 14.5 hereof, if an
Event of Default has occurred and is continuing, Lender may, at its option, do
any one or more of the following:

         (i) after the Final Insurance Termination Date and the termination of
the Intercreditor Agreement, declare all or any of the Obligations of the
Borrower to be immediately due and payable, and upon such declaration such
obligations so declared due and payable shall immediately become due and
payable;

         (ii) terminate this Agreement; or

         (iii) after the Final Insurance Termination Date and the termination of
the Intercreditor Agreement in lieu of or in addition to exercising any other
power hereby granted, may upon notice to Borrower, proceed by an action or
actions in equity or at law for the seizure and/or sale of the Collateral or any
part thereof, for the specific performance of any covenant or agreement herein
contained or in aid of the execution of any power herein granted, for the
foreclosure or sale of the Collateral or any part thereof under the judgment or
decree of any court of competent jurisdiction, for the appointment of a receiver
pending any foreclosure hereunder or the sale of the Collateral or any part
thereof or for the enforcement of any other appropriate equitable or legal
remedy; and upon the commencement of judicial proceedings by Lender to enforce
any right under this Agreement, or contained in the Collateral and Lender shall
be entitled as a matter of right against Borrower to such appointment of a
receiver, without regard to the adequacy of the security by virtue of this
Agreement or any other collateral or to the solvency of Borrower.

         (b) Subject to the Intercreditor Agreement, all cash proceeds received
by Lender in respect of any possession, seizen or sale of, collection from or
other realization upon all or any part of the Collateral pursuant to this
Section 14.3 shall be applied as follows:


<PAGE>   61


                                      -55-


         (i)      first, to the payment of all costs and expenses incident to
                  the enforcement of this Agreement or the protection of the
                  Collateral, including but not limited to reasonable
                  compensation to the agents, contractors and attorneys of
                  Lender;

         (ii)     second, to the payment of all other Obligations, initially to
                  any Interest Arrearage, then to any other interest due and
                  owing, thereafter to reduce all principal on the Note until
                  the outstanding balance on the Note shall equal zero and
                  finally, to any other Obligations not previously paid;

         (iii)    third, to the payment in full of other amounts owed by the
                  Borrower or NAFI to the Lender pursuant to any other
                  agreement, indenture, contract, instruments or document; and

         (iv)     fourth, the remainder, if any, to Borrower or to whomever may
                  be lawfully entitled to receive such remainder.

         (c) Subject to the Intercreditor Agreement, the Lender shall have the
right to become the purchaser at any public or private sale made pursuant to the
provisions of this Section 14.3 and shall have the right to credit against the
amount of the bid made therefor the amount payable to the purchasing Lender out
of the net proceeds of such sale. Absent manifest error, recitals contained in
any conveyance to any purchaser at any sale made hereunder shall conclusively
establish the truth and accuracy of the matters therein stated, including,
without limitation, nonpayment of the Obligations and advertisement and conduct
of such sale in the manner provided herein. Borrower does hereby ratify and
confirm all legal acts that Lender may do in carrying out the provisions of this
Section 14.3.

         (d) Subject to the Intercreditor Agreement, any sale, seizure, taking
or ownership of the Collateral or any part thereof pursuant to the provisions of
this Section 14.3 shall operate to divest all right, title, interest, claim and
demand of Borrower or NAFI, as the case may be, in and to the Property sold and
shall be a perpetual bar against Borrower and NAFI. Nevertheless, if requested
by Lender so to do, either the Borrower or NAFI shall join in the execution,
acknowledgment and delivery of all proper conveyances, assignments and
transfers of the Property so sold. It shall not be necessary for Lender to have
physically present or constructively in its possession any of the Collateral at
any such sale, and either the Borrower or NAFI shall deliver all of the
Collateral to the purchaser at such sale on the date of sale and, if it should
be impossible or impracticable then to take actual delivery of the Collateral,
the title and right of possession to the Collateral shall pass to the purchaser
at such sale as completely as if the same had been actually present and
delivered.

         (e) Subject to any requirements of applicable law, neither the
Borrower, NAFI nor any of their Affiliates shall at any time have or assert any
right, under any law pertaining to the marshaling of assets, the sale of
Property in the inverse order of alienation, the administration of estates of
decedents, appraisement, valuation, stay, extension or redemption now or
hereafter in force in order to prevent or hinder the rights of Lender or any
purchaser of the Collateral or any part

<PAGE>   62


                                      -56-


thereof under this Agreement, and Borrower or NAFI, to the extent permitted by
applicable law, hereby waives the benefit of all such laws.

         (f) Subject to the Intercreditor Agreement, upon any sale made under
the powers of sale herein granted and conferred, the receipt of Lender shall be
sufficient discharge to the purchaser or purchasers at any sale for the purchase
money, and such purchaser or purchasers and the heirs, devisees, personal
representatives, successors and assigns thereof shall not, after paying such
purchase money and receiving such receipt of Lender, be obliged to see to the
application thereof or be in otherwise answerable for any loss, misapplication
or nonapplication thereof.

         (g) Subject to the Intercreditor Agreement, if Borrower of NAFI fails
to perform any agreement contained herein, then the Lender may perform, or cause
performance of, such agreement, and the expenses of the Lender incurred in
connection therewith shall constitute additional Obligations and shall be
payable by NAFI under Section 15 hereof.

         (h) Subject to the Intercreditor Agreement, if an Event of Default
hereunder has occurred and is continuing, the Borrower and NAFI hereby appoint
the Lender as attorney-in-fact to exercise all rights of the Borrower and NAFI
under the Underlying Transaction Documents, including the right to direct the
Underlying Trustees to the extent that the Borrower is entitled to so under the
Underlying Transaction Documents.

         14.4 RIGHTS AND REMEDIES CUMULATIVE. The enumeration of the rights and
remedies of Lender set forth in this Agreement is not intended to be exhaustive
and the exercise by Lender of any right or remedy shall not preclude the
exercise of any other rights or remedies, all of which shall be cumulative, and
shall be in addition to any other right or remedy given hereunder or under the
other Transaction Documents and the Underlying Transaction Documents or that may
now or hereafter exist in law or in equity or by suit or otherwise. No delay or
failure to take action on the part of Lender in exercising any right, power or
privilege shall operate as a waiver hereof, nor shall any single or partial
exercise of any such right, power or privilege preclude other or further
exercise thereof or the exercise of any other right, power or privilege or shall
be construed to be a waiver of any Early Amortization Event, Event of Default or
Potential Event of Default. No course of dealing between NAFI, Borrower and
Lender or their respective agents or employees shall be effective to change,
modify or discharge any provision of this Agreement or any of the Transaction
Documents or to constitute a waiver of any Event of Default or Potential Event
of Default.

         14.5 INTERCREDITOR AGREEMENT; LIMITATION ON AMOUNTS DUE. (a)
Notwithstanding anything in this Agreement or any other Transaction Document to
the contrary, the rights of the Lender to exercise any remedies hereunder or
otherwise under law or in equity are subject to the terms of the Intercreditor
Agreement. Notwithstanding anything in this Agreement, in any other Transaction
Document or otherwise, until the Final Insurance Termination Date, all rights
and remedies of the Lender under this Agreement, in any other Transaction
Document or otherwise, whether at law or in equity, are subject to and limited
by the Intercreditor agreement. In the event of any contradiction or ambiguity
between any Transaction Document and the Intercreditor Agreement, the terms of
the Intercreditor Agreement shall govern. All disputes with respect to



<PAGE>   63


                                      -57-


matters addressed in the Intercreditor Agreement shall be determinated by
reference to the Intercreditor Agreement exclusively and no provision of this
Agreement or any other Transaction Document should be interpreted as altering,
amending explaining or clarifying any provision of the Intercreditor Agreement.

         (b) Notwithstanding anything in this Agreement or any other Transaction
Document to the contrary, no obligation or liability shall become due and
payable hereunder at any time before the Final Insurance Termination Date if the
effect of such obligation or liability becoming due would be to cause the
Borrower to not be Solvent. Subject to the terms of the Intercreditor Agreement,
any amount that is prevented by operation of this restriction from becoming due
and payable may, at the option of the Lender, become an arrearage that becomes
due and payable no earlier than the first to occur of the date upon which
Borrower can satisfy such obligation or liability in full and remain Solvent and
the day following the Final Insurance Termination Date.

         (c) Notwithstanding anything in this Agreement or any other Transaction
Document to the contrary, the total amount of principal due under this Agreement
and any other Transaction Document, excluding interest and any arrearages of
interest but including any arrearages of principal, shall not at any time
exceed $8,000,000 (eight million dollars).

SECTION 15. EXPENSES AND INDEMNITIES.

         15.1 EXPENSES. Subject to the Intercreditor Agreement and Section 14.5,
Borrower and NAFI agree to pay promptly on demand, and in any event within
thirty (30) days of the invoice date therefor, (a) costs, expenses, charges and
other disbursements of the Lender incurred in connection with the negotiation,
preparation, execution, administration, continuation (including without
limitation all costs, expenses, charges and other disbursements incurred by or
on behalf of Lender in connection with the preparation and execution of the
Transaction Documents; (b) reasonable attorneys' fees and allocated expenses of
outside counsel incurred by or on behalf of Lender in connection with the
preparation of the Transaction Documents, amendments and consents thereto of the
Underlying Transaction Documents and all amendments and modifications thereof,
extensions thereto or substitutions therefor, and all reasonable attorney's fees
and allocated expenses of outside counsel in connection with the furnishing of
opinions of counsel (including, without limitation, any opinions reasonably
requested by Lender as to any legal matters arising hereunder) and of Borrower's
and NAFI's performance of and compliance with all agreements and conditions
contained herein or in any of the other Transaction Documents on its part to be
performed or complied with; and (c) regardless of the existence of an Early
Amortization Event, Event of Default or Potential Event of Default, all legal,
appraisal, audit, accounting, consulting or other fees, costs, expenses, charges
or other disbursements incurred by or on behalf of Lender in connection with any
litigation, contest, dispute, suit, proceeding or action (whether instituted by
Lender or any other Person and which Lender or such other Person is the
prevailing party) seeking to enforce any Obligations of, or collecting any
payments due from either the Borrower or NAFI under this Agreement and the Note,
all of which amounts shall be deemed to be part of the Obligations.



<PAGE>   64


                                      -58-


         15.2 INDEMNIFICATION. (a) GENERAL INDEMNITY. Subject to the
Intercreditor Agreement and Section 14.5.

         (i) to the fullest extent permitted under applicable law, either the
Borrower or NAFI shall pay, indemnify, and hold Lender and its employees (each,
an "Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, penalties, actions, judgements, suits, costs, expenses and
damages (including reasonable attorney's fees) arising directly from any
investigation, litigation or proceeding (including any case, action or
proceeding before any court or other Governmental Authority relating to
bankruptcy, reorganization, insolvency, liquidation, dissolution or relief of
debtors or any appellate proceeding), (i) the negligence, bad faith, willful
misconduct, misfeasance, malfeasance or theft committed by any director,
officer, employee or agent of the Borrower or NAFI, as the case may be; (ii) the
breach by the Borrower or NAFI, as the case may be, of any representation,
warranty or covenant under this Agreement; or (iii) the violation by the
Borrower or NAFI of any federal, state or foreign law, rule or regulation, or
any judgment, order or decree applicable to it; whether or not any Indemnified
Person is a party hereto (all the foregoing, collectively, the "Indemnified
Liabilities"); provided that neither the Borrower nor NAFI shall have any
obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities arising from the gross negligence, willful misconduct or violation
of the Transaction Documents by any Indemnified Person;

         (ii) to the fullest extent permitted under applicable law, each of the
Borrower and NAFI hereby acknowledges and agrees that it shall upon demand,
indemnify, protect, save, defend and hold harmless the Lender, from and against
any and all obligations, fees, liabilities, losses, damages, penalties claims,
demands, actions, suits, judgments, costs and expenses, including reasonable
legal expenses and attorneys fees, of every kind and nature whatsoever
(collectively, "INDEMNIFIABLE EXPENSES"), imposed on, incurred by, or asserted
against the Lender by any Person in connection with any (i) Revived Claim (as
defined in the Intercreditor Agreement) and (ii) payments made by the Lender in
connection with preference payments made to Noteholders and Certificateholders
(each as defined in the Intercreditor Agreement), pursuant to certain provisions
of the relevant Underlying Transaction Documents, including, but not limited to
Section 4.05 of the 1995-1 and 1996-1 Pooling and Servicing Agreements, Section
5.19 of the 1997-1 and 1998-1 Indentures and Section 6.2 of the 1997-1 and
1998-1 Sale and Servicing Agreement; and

         (iii) to the fullest extent permitted under applicable law, each of the
Borrower and NAFI hereby acknowledges and agrees that it shall upon demand,
indemnify, protect, save, defend and hold harmless the Lender from Indemnifiable
Expenses resulting in an out-of-pocket expenditure or payment by the Lender to
the extent such Indemnifiable Expenses resulted from the existence of the
Transaction Documents or any of the accommodations, consents or waivers made by
the Lender with respect to either FSA's or the Senior Lien Holder's (each as
defined in the Intercreditor Agreement) rights or remedies thereunder.

         (b) PROCEDURES FOR SUITS. If a claim is made for which a party seeks
indemnification hereunder, the indemnified party and any counsel retained by it
shall consult with the indemnifying party on all material issues and matters
with respect thereto and the indemnifying



<PAGE>   65


                                      -59-


party will have no liability hereunder with respect to any claim if the
indemnifying party has not consented (which consent shall not be unreasonably
withheld) to the resolution or handling of any such matter or issue, including,
without limitation, any settlement made without the indemnifying party's prior
written consent.

         (c) SURVIVAL; DEFENSE. The obligations in this Section 15.2 shall
survive the termination of the Transaction Documents and payment of all other
Obligations. Subject to the Intercreditor Agreement and Section 14.5, at the
election of either the Borrower or NAFI, either the Borrower or NAFI shall
defend such Indemnified Person using legal counsel satisfactory to such
Indemnified Person in such Person's sole discretion, at the cost and expense of
either the Borrower or NAFI. Subject to the Intercreditor Agreement and Section
14.5, all amounts owing under this Section 15.2 shall be paid within thirty (30)
days after written demand.

SECTION 16. MISCELLANEOUS.

         16.1 SURVIVAL. All covenants, agreements, representations and
warranties made herein shall survive the execution and delivery of the
Transaction Documents and the making of the Loan hereunder.

         16.2 NO WAIVER BY LENDER. No failure or delay on the part of Lender in
the exercise of any power, right or privilege under this Agreement, the Note or
any of the other Transaction Document shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege.

         16.3 NOTICES. Except as otherwise provided in this Agreement, any
notice or other communication herein required or permitted to be given shall be
in writing and may be delivered in person, with receipt acknowledged, or sent by
telex, facsimile, telecopy, computer transmission or by United States mail,
registered or certified, return receipt requested, or by Federal Express or
other nationally recognized overnight courier service, postage prepaid and
confirmation of receipt requested, and addressed as set forth on the signature
pages to this Agreement or at such other address as may be substituted by notice
given as herein provided. The giving of any notice required hereunder may be
waived in writing by the party entitled to receive such notice. Every notice,
demand, request, consent, approval, declaration or other communication hereunder
shall be deemed to have been duly given or served on the date on which the same
shall have been personally delivered, with receipt acknowledged, or sent by
telex, facsimile, telecopy; or computer transmission (with appropriate
confirmation), three (3) Business Days after the same shall have been deposited
in the United States mail or on the next succeeding Business Day if the same has
been sent by Federal Express or other nationally recognized overnight courier
service. Failure or delay in delivering copies of any notice, demand, request,
consent, approval, declaration or other communication to the persons designated
above to receive copies shall in no way adversely affect the effectiveness of
such notice, demand, request, consent, approval, declaration or other
communication. Copies of all such notices, demands, requests, consents,
approvals, declarations or



<PAGE>   66


                                      -60-

other communications sent by Lender or Borrower under the Transaction
Documents must be simultaneously transmitted to the applicable Underlying
Trustee and FSA.

         16.4 HEADINGS. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.

         16.5 SEVERABILITY. Whenever possible, each provision of this Agreement,
the Note and each of the other Transaction Documents shall be interpreted in
such a manner as to be valid, legal and enforceable under the applicable law of
any jurisdiction. Without limiting the generality of the foregoing sentence, in
case any provision of this Agreement, the Note or any of the other Transaction
Documents shall be invalid, illegal or unenforceable under the applicable law of
any jurisdiction, the validity, legality and enforceability of the remaining
provisions, or of such provision in any other jurisdiction, shall not in any way
be affected or impaired thereby.

         16.6 ENTIRE AGREEMENT; CONSTRUCTION; AMENDMENTS AND WAIVERS.

         (a) This Agreement, the Note, the Intercreditor Agreement and each of
the other Transaction Documents dated as of the date hereof. taken together,
constitute and contain the entire agreement among NAFI, Borrower and Lender and
supersede any and all prior agreements, negotiations, correspondence,
understandings and communications between the parties, whether written or oral,
respecting the subject matter hereof.

         (b) This Agreement is the result of negotiations between and has been
reviewed by each of Borrower, NAFI, the Lender and their respective counsel;
accordingly, this Agreement shall be deemed to be the product of the parties
hereto, and no ambiguity shall be construed in favor of or against Borrower,
NAFI or Lender. Borrower, NAFI and Lender agree that they intend the literal
words of this Agreement and the other Transaction Documents and that no parol
evidence shall be necessary or appropriate to establish Borrower's or Lender's
actual intentions.

         (c) Any and all amendments, modifications, discharges or waivers of, or
consents to any departures from any provision of this Agreement or of any of the
other Transaction Documents shall not be effective unless set forth in a writing
signed by Borrower and Lender. Any waiver or consent with respect to any
provision of the Transaction Documents shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on Borrower or NAFI in any case shall entitle Borrower or NAFI to any
other or further notice or demand in similar or other circumstances.

         16.7 RELIANCE BY LENDER. All covenants, agreements, representations and
warranties made herein by Borrower shall, notwithstanding any investigation by
Lender be deemed to have been relied upon by Lender.

         16.8 MARSHALING; PAYMENTS SET ASIDE. Lender shall be under no
obligation to marshall any assets in favor of Borrower or NAFI or any other
person or against or in payment of


<PAGE>   67


                                      -61-


any or all of the Obligations. To the extent that Borrower or NAFI makes a
payment or payments to Lender, or Lender enforces its rights in the Collateral
and such payment or payments or the proceeds of such enforcement or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid to a trustee, receiver or any other party
under Title 11 of the United States Code or under any other similar federal or
state law, common law or equitable cause, then to the extent of such recovery
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or set-off had not occurred.

         16.9 NO SET-OFFS BY BORROWER OR NAFI. All sums payable by Borrower or
NAFI pursuant to this Agreement, the Note or any of the other Transaction
Documents shall be payable without notice or demand and shall be payable in
United States dollars without set-off or reduction of any manner whatsoever.

         16.10 BINDING EFFECT, ASSIGNMENT AND TRANSFER. This Agreement, the Note
and the other Transaction Documents shall be binding upon and shall inure to the
benefit of the parties hereto and thereto and their respective successors and
assigns, except that Borrower or NAFI may not assign its rights hereunder or
thereunder or any interest herein or therein without the prior written consent
of Lender. So long as the Intercreditor Agreement is in effect, all legal and
beneficial interest in the Obligations and any Lien securing the Obligations
shall be held solely by and solely for the benefit of First Union National Bank
unless and until FSA consents in writing to any proposed assignment,
participation, pledge, or other transfer or disposition, which consent of FSA
can be withheld arbitrarily, for any reason or for no reason. Any purported,
transfer or disposition, of any interest in the Obligations or of any Lien
securing the Obligations without such consent of FSA shall be null and void and
the Obligations shall be non-payable and uncollectible and such Lien
unenforceable so long as they are held by any such transferee not so consented
to, without affecting such obligations or liens held by the Lender. After the
Intercreditor Agreement has expired in accordance with its terms, Lender shall
(i) have the right to sell and assign to any Person all or any portion of its
interest under this Agreement, the Note and the other Transaction Documents and
(ii) to grant any participation or other interest herein or therein provided,
however, that after any such sale, assignment or participation, Lender shall
have the right, without the consent of any purchaser, assignee or participant,
to grant any consent or waiver or take any other action hereunder, or agree to
any amendment hereof. No sale, assignment or participation grant shall result in
requiring registration under the Securities Act of 1933, as amended, or
qualification under any state securities law.

         16.11 COUNTERPARTS. This Agreement and any amendments, waivers,
consents or supplements hereto may be executed in any number of counterparts,
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.

         16.12 EQUITABLE RELIEF. Borrower and NAFI recognize that, in the event
Borrower or NAFI fail to perform, observe or discharge any of its obligations or
liabilities under this


<PAGE>   68


                                      -62-


Agreement, the Note or any of the other Transaction Documents, any remedy at law
may prove to be inadequate relief to Lender.

         16.13 GOVERNING LAW. Except as otherwise expressly provided in any of
the Transaction Documents, in all respects, including all matters of
construction, validity and performance, this Agreement and the Obligations
arising hereunder shall be governed by, and construed and enforced in accordance
with, the laws of the State of New York applicable to contracts made and
performed in such state, without regard to the principles thereof regarding
conflict of laws which would result in the application of the laws of another
jurisdiction, and any applicable laws of the United States of America.

         16.14 CONSENT TO JURISDICTION. Borrower and NAFI hereby irrevocably
consent to the personal jurisdiction of the state and federal courts located in
Mecklenberg County, North Carolina, in any action, claim or other proceeding
arising out of any dispute in connection with this Agreement, the Note and the
other Transaction Documents, any rights or obligations hereunder or thereunder,
or the performance of such rights and obligations. Borrower and NAFI hereby
irrevocably consent to the service of a summons and complaint and other process
in any action, claim or proceeding brought by Lender in connection with this
Agreement or the other Transaction Documents, any rights or obligations
hereunder or thereunder, or the performance of such rights and obligations, on
behalf of itself or its Property. Nothing in this Section 16.14 shall affect the
right of the Lender to serve legal process in any other manner permitted by
applicable law or affect the right of Lender to bring any action or proceeding
against Borrower or its properties in the courts of any other jurisdictions.
Nothing in this section shall be deemed to restrict the rights that either the
Borrower or NAFI may otherwise have to file suit in the courts of any other
jurisdiction. Notwithstanding the other provisions of this Section, any dispute
arising between FSA and the Lender with respect to either the Intercreditor
Agreement or other disputes referenced in Section 3.11 thereof shall be
adjudicated pursuant to Section 3.11 of the Intercreditor Agreement.

         16.15 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED UNDER
APPLICABLE LAW, LENDER, NAFI AND BORROWER HEREBY IRREVOCABLY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER
PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE
NOTE OR THE OTHER TRANSACTION DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.

         16.16 NO PETITION BY LENDER OR AGENT. Notwithstanding the provisions of
Section 14(a)(iii), each of the Lender and Agent agree and covenant that prior
to the date which is one year and one day after the payment in full of all Loans
made by the Lender, it will not institute against, or join any other Person in
instituting against, the Borrower or any Underlying Trust, any bankruptcy,
reorganization, receivership, arrangement, insolvency or liquidation
proceedings, or other similar proceedings under any federal or state bankruptcy
or similar law. This Section 16.16 shall survive the termination of this
Agreement.


<PAGE>   69


                                      -63-

         16.17 LIMITATION OF LIABILITY. It is expressly understood and agreed by
the parties hereto that (a) this Agreement is executed and delivered by Chase
Manhattan Bank Delaware (as successor to Chase Manhattan Bank USA, N.A.), not
individually or personally but solely as Owner Trustee of the Borrower, in the
exercise of the powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Borrower is made and intended not as personal representations, undertakings and
agreements by Chase Manhattan Bank Delaware (as successor to Chase Manhattan
Bank USA, N.A.) but is made and intended for the purpose of binding only the
Borrower and (c) under no circumstances shall Chase Manhattan Bank Delaware (as
successor to Chase Manhattan Bank USA, N.A.) be personally liable for the
payment of any indebtedness or expenses of the Borrower or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Borrower under this Agreement or the other Transaction
Documents.

         16.18 GENERAL INTERPRETIVE PRINCIPLES. For purposes of this Agreement
except as otherwise expressly provided or unless the context otherwise requires:

         (a) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;

         (b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP as in effect on the date hereof;

         (c) references herein to "Articles", "Sections", "Subsections",
"paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, paragraphs and other subdivisions
of this Agreement;

         (d) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to paragraphs and other
subdivisions;

         (e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and

         (f) the term "include" or "including" shall mean without limitation by
reason of enumeration.

         (g) the term "Lender", upon the exercise of the Lender's right to
become the Agent pursuant to Section 11 when used in conjunction with the
exercise of rights granted hereunder, shall be deemed to be Agent.


<PAGE>   70


WITNESS the due execution hereof by the respective duly authorized officers of
the undersigned as of the date first written above.
NATIONAL FINANCIAL AUTO FUNDING TRUST,
as Borrower

By: CHASE MANHATTAN BANK DELAWARE (as successor to Chase Manhattan Bank USA,
N.A.), not in its individual capacity, but solely as Owner Trustee for National
Financial Auto Funding Trust

By: /s/ DENIS KELLY
   ----------------------------------

Printed Name: Denis Kelly

Title: Trust Officer

Notice to be sent to:

National Financial Auto Funding Trust
10302 Deerwood Park Blvd., Suite 100
Jacksonville, FL 32256
Attention:
          ---------------------

Telephone: (904) 996-2500
Facsimile: (904) 996-2557

FIRST UNION NATIONAL BANK,
as Lender

By /s/ TERENCE P. BEGLEY
   ----------------------------
Printed Name: Terence P. Begley

Title: Senior Vice President

Notice to be sent to:

First Union National Bank
One First Union Center
301 South College Street, TW-10
Charlotte, NC 28288-0610
Attention: Reggie Imamura
Telephone: 704/374-6501
Facsimile: 704/374-3254

<PAGE>   71


                                NATIONAL AUTO FINANCE COMPANY, INC.

                                By /s/ KEITH B. STEIN
                                  ----------------------------------------------

                                Printed Name: Keith B. Stein
                                             -----------------------------------

                                Title: Vice Chairman and Chief Executive Officer
                                      ------------------------------------------
                                Notices to be sent to:

                                10302 Deerwood Park Blvd.
                                Suite 100
                                Jacksonville, FL 32256
                                Attention: Keith B. Stein

                                Telephone: (904) 996-2548
                                Facsimile: (904) 996-2557



<PAGE>   72


                                      -67-


                                   EXHIBIT A

            THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
            SECURITIES ACT OF 1933, AS AMENDED, AND NO TRANSFER
            HEREOF MAY BE EFFECTED UNLESS THE TRANSACTION
            RELATING THERETO SHALL BE EXEMPT WITHIN THE MEANING
            OF SUCH ACT AND THE RULES AND REGULATIONS OF THE
            SECURITIES AND EXCHANGE COMMISSION ADOPTED THEREUNDER

                                      NOTE

Up to $8.000,000.00                                         Dated: April 7, 1999
                                                             Due: March 31, 2005

         FOR VALUE RECEIVED, National Financial Auto Funding Trust ("Borrower ")
hereby promises to pay to First Union National Bank ("Lender "), at its office
located at One First Union Center, 301 South College Street, Charlotte, North
Carolina 28288, the principal sum of EIGHT MILLION Dollars ($8,000,000.00) or
such lesser portion thereof as has been advanced by Lender, together with
interest thereon, pursuant to the Revolving Credit, Term Loan and Security
Agreement dated as of March 31, 1999 between Borrower and Lender (the
"Agreement"). Any capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Agreement. Principal and interest shall be
due and payable on this Note in accordance with the Agreement.

         All payments under this Note shall be made by Borrower in lawful money
of the United States of America in immediately available funds delivered to
Lender, not later than 11:00 a.m., North Carolina time, on the date due at First
Union National Bank, One First Union Center, 301 South College Street,
Charlotte, North Carolina 28288, Attention: Hannah Carmody, or such other place
within the United States as shall have been designated in writing by Lender,
unless Lender shall have withdrawn the amount of such payment from the
Collection Account or the Security Deposit Account pursuant to the Agreement.

         This Note is the Note referred to in, and secured by, the Agreement, to
which reference is made as to the nature and extent of the security
("Collateral") for this Note, the rights of Lender, Borrower and any holder of
this Note with respect to the Collateral and the acceleration of the maturity of
this Note. The Borrower may prepay this Note, in whole or in part, in the
manner, to the extent, under the circumstances, and subject to any additional
payments provided for in the Agreement, and not otherwise.

         Borrower promises to pay interest on the aggregate unpaid principal
amount hereof from time to time outstanding at the rate and on the dates set
forth in the Agreement. All payments of principal and, to the extent permitted
by law, interest, shall be paid on the dates set forth in the Agreement.


<PAGE>   73


                                      -68-


         The Borrower hereby authorizes the Lender to endorse on the schedule of
advances, loans, payments and reductions due under the Note annexed hereto as
Schedule I all advances, payments, loans and all reductions on the balance due
under the Note, which endorsements shall, in the absence of manifest error, be
conclusive as to such balance: provided, however, that the failure to make such
notation with respect to the original principal sum, advance, reduction or
payment on the balance due under the Note shall not limit or otherwise affect
the obligations of the Borrower under the Agreement or this Note.

         This Note is the Note referred to in the Agreement, which, among other
things, contains provisions for the acceleration of the maturity hereof upon the
happening of certain events and for optional prepayment of the principal hereof
prior to the maturity thereof, all upon the terms and conditions therein
specified. This Note shall be construed in accordance with and governed by the
laws of the State of New York and applicable federal law.

         Except as expressly provided in the Agreement, the Borrower hereby
waives diligence, presentment, demand, protest and notice of any kind
whatsoever. The nonexercise by the holder of any of its rights hereunder in any
particular instance shall not constitute a waiver thereof in that or any
subsequent instance.

         It is expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by Chase Manhattan Bank Delaware (as
successor to Chase Manhattan Bank USA, N.A.), not individually or personally but
solely as Owner Trustee of the Borrower, in the exercise of the powers and
authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Borrower is made and
intended not as personal representations, undertakings and agreements by Chase
Manhattan Bank Delaware (as successor to Chase Manhattan Bank USA, N.A.) but is
made and intended for the purpose of binding only the Borrower and (c) under no
circumstances shall Chase Manhattan Bank Delaware (as successor to Chase
Manhattan Ban USA, N.A.) be personally liable for the payment of any
indebtedness or expenses of the Borrower or be liable for the breach or failure
of any obligation, representation, warranty or covenant made or undertaken by
the Borrower under the Agreement or the other Transaction Documents.

         This Note is subject to (a) the restrictions contained in Section 14.5
of the Agreement and (b) the terms and conditions of the Intercreditor
Agreement. Any transfer or pledge of any interest in this Note is subject to the
transfer restrictions in Section 16.10 of the Agreement and in the
Intercreditor Agreement.


<PAGE>   74


                                      -69-


         This Note shall be construed in accordance with and governed by the
laws of the State of New York.

                              NATIONAL FINANCIAL AUTO FUNDING TRUST

                              By: CHASE MANHATTAN BANK DELAWARE, not in its
                                  individual capacity but solely as Owner
                                  Trustee for National Financial Auto Funding
                                  Trust

                              By: /s/ EXECUTED BY AUTHORIZED OFFICER
                                 -----------------------------------------------

                              Title:
                                    --------------------------------------------

<PAGE>   75


                                      -70-


                                   SCHEDULE I

              SCHEDULE OF ADVANCES, NOTE PAYMENTS AND NOTE BALANCE

<TABLE>
<CAPTION>

              Amount of     Payment of     Payment of
     Date      Advance       Principal      Interest      Balance of Note
  --------- ------------- -------------- -------------- -------------------
<S>         <C>           <C>            <C>            <C>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  --------- ------------- -------------- -------------- -------------------
</TABLE>


<PAGE>   76


                                      -71-

                                  EXHIBIT B-1

                         FORM OF REQUEST FOR BORROWING

                                                         ,
                                   ----------------------  ------

First Union National Bank
One First Union Center TW-10
301 South College Street
Charlotte, North Carolina 28288-0610

Attention:
          ----------------------------

Ladies/Gentlemen:

Reference is made to the Revolving Credit, Term Loan and Security Agreement
dated as of March 31, 1999 (as the same may be amended, supplemented or
otherwise modified, the "Agreement") between National Financial Auto Funding
Trust and First Union National Bank. All terms used herein which are defined in
the Agreement shall have the same meaning herein as therein.

Pursuant to Section 3.1 [(b)]/[(c)] of the Agreement, this Notice of Borrowing
in respect of the Revolving Loans represents the request of the undersigned to
borrow on ____________, _____ (the "Borrowing Date") a Revolving Loan in an
aggregate principal amount of $___________ . The proceeds of such Revolving Loan
are to be deposited on the Borrowing Date in the Borrower's Account in
immediately available funds.

[FOR DRAWS UNDER 3.1(b) USE THE FOLLOWING PARAGRAPH]
Attached hereto is an Addition Certificate indicating that Additional Free Cash
Flows with an aggregate Contract Balance of $_______ were added to the
Collateral on _____________, _____ in accordance with Section [10.3] [10.4] of
the Agreement. The undersigned hereby certifies that all of the requirements of
Section [10.3] [10.4] of the Agreement and all of the conditions precedent set
forth in Section 12 of the Agreement have been satisfied.

[FOR DRAWS UNDER 3.1(c) USE THE FOLLOWING PARAGRAPH]
The undersigned hereby certifies that as of the Borrowing Date (i) all of the
conditions precedent contained in Section 12 of the Agreement have been
satisfied and (ii) the aggregate amount of the outstanding Revolving Loans
(after giving effect to the Revolving Loan requested hereunder) does not exceed
the Borrowing Base as set forth in the attached Borrowing Base Certificate dated
as of ____________, _____.



<PAGE>   77


                                      -72-


IN WITNESS WHEREOF, the undersigned has executed and delivered this Notice of
Borrowing as of this ____ day of ____________, ____.

                                       NATIONAL FINANCIAL AUTO FUNDING TRUST

                                       By: CHASE MANHATTAN BANK DELAWARE, not in
                                           its individual capacity but solely as
                                           Owner Trustee for National Financial
                                           Auto Funding Trust

                                       By: /s/ Executed By Authorized Officer
                                          --------------------------------------
                                       Name:   Executed By Authorized Officer
                                            ------------------------------------
                                       Title:
                                             -----------------------------------




<PAGE>   78


                                      -73-


                                   EXHIBIT C

                       FORM OF BORROWING BASE CERTIFICATE


                                                        ,
                                   ---------------------  ------


First Union National Bank
One First Union Center TW-10
301 South College Street
Charlotte, North Carolina 28288-0610

Attention:
           ------------------------------

Ladies/Gentlemen:

Reference is made to the Revolving Credit, Term Loan and Security Agreement
dated as of March 31, 1999 (as the same may be amended, supplemented or
otherwise modified, the "Agreement") between National Financial Auto Funding
Trust and First Union National Bank. All terms used herein which are defined in
the Agreement shall have the same meaning herein as therein.

Pursuant to Section 3 and Section 8.1(a) of the Agreement, the undersigned
hereby certifies (i) that the aggregate outstanding principal balance of the
Revolving Loans on _________, _____ (the "Calculation Date") was (a)
$_____________, and (b) did not exceed the Facility Amount, (ii) that the
Borrowing Base on such date was $_______________ and (iii) the representations
contained in Section 7 of the Agreement are true and correct on the Addition
Date related hereto. The related calculations are set forth in Schedule I
hereto.

IN WITNESS WHEREOF, the undersigned has executed and delivered this Borrowing
Base Certificate as of this ___ day of ___________, _____.

                                    NATIONAL FINANCIAL AUTO FUNDING TRUST

                                    By: CHASE MANHATTAN BANK DELAWARE, not in
                                        its individual capacity but solely as
                                        Owner Trustee for National Financial
                                        Auto Funding Trust

                                    By: /s/ Executed By Authorized Officer
                                       -----------------------------------------
                                    Name:   Executed By Authorized Officer
                                         ---------------------------------------
                                    Title:
                                          --------------------------------------


<PAGE>   79


                                      -74-


                               EXHIBIT C (CONT.)

                FORM OF SCHEDULE 1 TO BORROWING BASE CERTIFICATE

                                   SCHEDULE 1
                                       TO
                           BORROWING BASE CERTIFICATE
                             DATED ___________, ____

                              [(FUNB TO PROVIDE)]




<PAGE>   80


                                      -75-


                                    EXHIBIT D

                          FORM OF SWAP PAYMENT SCHEDULE

<TABLE>
<CAPTION>
  Payment Date      Scheduled Payments       Servicing Fee       Payment due to Swap Counterparty     Scheduled Principal Payment
  ------------      ------------------       -------------       --------------------------------     ---------------------------
<S>                 <C>                      <C>                 <C>                                  <C>
</TABLE>






<PAGE>   81


                                      -76-


                                    EXHIBIT E
                         BORROWER'S ACCOUNT INFORMATION


<PAGE>   82


                                      -77-





                                    EXHIBIT F
                       DEFINITIONS OF "AVAILABLE AMOUNTS"

     The following are the definitions of Available Amounts set forth with
respect to each of the Original Underlying Transactions as of the closing date
related thereto and the Closing Date.

     For the 1995-1 Transaction and the 1996-1 Transaction, the definition of
"Available Amounts" is as follows:

         Available Amount: With respect to any Distribution Date, an amount
         equal to (i) the amount on deposit in the Certificate Account on the
         preceding Distribution Date after giving effect to all withdrawals
         therefrom on such preceding Distribution Date, plus (ii) the amount, if
         any, to be transferred by the Trustee to the Certificate Account from
         the Pre-Funding Period Reserve Account, the Revolving Account and/or
         the Pre-Funding Account on such Distribution Date pursuant to Section
         3.12(b), Section 3.13(b) or Section 3.14(b), as applicable, plus (iii)
         the amount to be transferred by the Trustee to the Certificate Account
         from the Collection Account on such Distribution Date pursuant to
         Section 3. 1 0 (b), plus (iv) any amounts paid by the Certificate
         Insurer to the Trustee pursuant to Section 4.04(e) hereof for
         distribution to the Certificateholders on such Distribution Date.

and, with respect to 1997-1 Transaction and the 1998-1 Transaction, the
definition of "Available Amounts" is:

         "Available Amount" means, with respect to any Distribution Date, an
         amount equal to the sum of (i) the amount on deposit in the
         Distribution Account on the preceding Distribution Date after giving
         effect to all withdrawals therefrom on such preceding Distribution
         Date, (ii) the amount, if any, to be transferred by the Trust
         Collateral Agent to the Distribution Account from the Pre-Funding
         Period Reserve Account and/or the Pre-Funding Account, if any, as
         provided herein, (iii) the amount to be transferred by the Trust
         Collateral Agent to the Distribution Account from the Collection
         Account on such Distribution Date pursuant to Section 5.1(c), and (iv)
         any amounts paid by the Insurer to the Trust Collateral Agent pursuant
         to Section 5.11 hereof for distribution on such Distribution Date.

Capitalized terms used in either of the foregoing definitions shall be deemed to
have the meaning set forth in the related Pooling and Servicing Agreement or
Sale and Servicing Agreement, as the case may be, as of the closing date related
thereto.