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                           WAREHOUSE CREDIT AGREEMENT

                           DATED AS OF APRIL 30, 1998


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                                      AMONG

                           CONTITRADE SERVICES L.L.C.,

                     FIRSTCITY CONSUMER LENDING CORPORATION,

                       FIRSTCITY AUTO RECEIVABLES L.L.C.,

                                       AND

                         FIRSTCITY FINANCIAL CORPORATION




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<PAGE>
                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                                PAGE
<S>              <C>                                                                                           <C>
SECTION 1.        DEFINITIONS.....................................................................................1

         1.1.     DEFINED TERMS...................................................................................1

SECTION 2.        AMOUNT AND TERMS OF LENDER FUNDING COMMITMENT...................................................2

         2.1.     LENDER FUNDING COMMITMENT.......................................................................2

         2.2.     PROMISSORY NOTE.................................................................................2

         2.3.     AVAILABILITY OF BORROWINGS......................................................................2

         2.4.     INTEREST........................................................................................3

         2.5.     PRINCIPAL PAYMENTS ON THE LOAN..................................................................3

         2.6.     SECURITY AND COLLATERAL AGENT AGREEMENT.........................................................3

         2.7.     DEPOSITS TO COLLECTION ACCOUNT..................................................................4

         2.8.     PROCEEDS........................................................................................4

         2.9.     TAXES...........................................................................................4

SECTION 3.        REPRESENTATIONS AND WARRANTIES..................................................................5

         3.1.     REPRESENTATIONS AND WARRANTIES OF BORROWER......................................................5

         3.2.     REPRESENTATIONS AND WARRANTIES OF FIRSTCITY CONSUMER............................................8

         3.3.     REPRESENTATIONS AND WARRANTIES OF FIRSTCITY FINANCIAL..........................................11

SECTION 4.        CONDITIONS PRECEDENT...........................................................................13

         4.1.     CONDITIONS TO INITIAL ADVANCE..................................................................13

         4.2.     CONDITIONS TO EACH ADVANCE.....................................................................15

SECTION 5.        RELEASE OF LIENS...............................................................................16

SECTION 6.        AFFIRMATIVE COVENANTS..........................................................................16

         6.1.     FINANCIAL STATEMENTS...........................................................................16

         6.2.     CERTIFICATES; OTHER INFORMATION................................................................17

         6.3.     PAYMENT OF OBLIGATIONS.........................................................................17


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         6.4.     CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE...............................................17

         6.5.     MAINTENANCE OF PROPERTY; INSURANCE.............................................................17

         6.6.     INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS; AUDIT REPORTS..........................18

         6.7.     NOTICES........................................................................................18

         6.8.     DELIVERY OF OTHER REPORTS......................................................................19

         6.9.     APPROVAL OF NEW ORIGINATORS....................................................................19

         6.10.    FURTHER ASSURANCES.............................................................................19

         6.11.    COOPERATION IN MAKING CALCULATIONS.............................................................19

         6.12.    SECURITIZATION.................................................................................20

         6.13.    ADDITIONAL CREDIT SUPPORT......................................................................20

         6.14.    MINIMUM NET WORTH..............................................................................20

         6.15.    UNDERWRITING AND REVIEW........................................................................20

         6.16.    CERTAIN INFORMATION............................................................................20

         6.17.    CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE...............................................20

         6.18.    NOTICES........................................................................................20

         6.19.    MAINTENANCE OF CONTROL.........................................................................21

         6.20.    FURTHER ASSURANCES.............................................................................21

         6.21.    MAINTENANCE OF CONTROL-BORROWER................................................................21

SECTION 7.        NEGATIVE COVENANTS.............................................................................21

         7.1.     LIMITATION ON DEBT.............................................................................21

         7.2.     LIMITATION ON LIENS............................................................................21

         7.3.     LIMITATION ON FUNDAMENTAL CHANGES..............................................................22

         7.4.     SALE, TRANSFER OR ENCUMBRANCE OF ASSETS........................................................22

         7.5.     CONTRACTS......................................................................................22

         7.6.     LIMITATION ON DIVIDENDS........................................................................22


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         7.7.     LIMITATIONS ON BORROWER'S BUSINESS AND ACTIVITIES..............................................22

         7.8.     LIMITATION ON INVESTMENTS, LOANS AND ADVANCES..................................................23

         7.9.     TRANSACTIONS WITH AFFILIATES...................................................................23

         7.10.    SALE AND LEASEBACK.............................................................................23

         7.11.    CERTIFICATE OF FORMATION.......................................................................23

         7.12.    FISCAL YEAR....................................................................................23

         7.13.    LIMITATION ON NEGATIVE PLEDGE CLAUSES..........................................................23

         7.14.    ACTIVITIES OF BORROWER.........................................................................23

         7.15.    AGREEMENTS.....................................................................................24

         7.16.    BANK ACCOUNTS..................................................................................24

         7.17.    LOCKBOX PROVIDERS..............................................................................24

         7.18.    SUBORDINATED DEBT..............................................................................24

         7.19.    MARGIN SECURITIES..............................................................................24

         7.20.    NO COMMINGLING.................................................................................24

         7.21.    GUARANTEES.....................................................................................24

         7.22.    AMENDMENT OF FACILITY AGREEMENTS...............................................................24

         7.23.    POLICIES.......................................................................................25

         7.24.    MISCELLANEOUS..................................................................................25

SECTION 8.        REMEDIES UPON DEFAULT..........................................................................25

         8.1.     ACCELERATION...................................................................................25

         8.2.     FILES..........................................................................................25

         8.3.     COLLECTIONS....................................................................................25

         8.4.     POWER OF ATTORNEY..............................................................................26

SECTION 9.        FUNDING COMMITMENT OF FIRSTCITY................................................................26

         9.1.     FUNDING COMMITMENT.............................................................................26

         9.2.     FIRSTCITY FINANCIAL TO PROVIDE SUBORDINATE FINANCING...........................................27


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         9.3.     INDEMNIFICATION................................................................................27

SECTION 10.       MISCELLANEOUS..................................................................................27

         10.1.    AMENDMENTS AND WAIVERS.........................................................................27

         10.2.    NOTICES........................................................................................28

         10.3.    NO WAIVER; CUMULATIVE REMEDIES.................................................................29

         10.4.    SURVIVAL OF REPRESENTATIONS AND WARRANTIES.....................................................29

         10.5.    PAYMENT OF EXPENSES AND TAXES..................................................................29

         10.6.    SUCCESSORS AND ASSIGNS; PARTICIPATIONS.........................................................30

         10.7.    TERMINATION....................................................................................31

         10.8.    COUNTERPARTS...................................................................................31

         10.9.    SEVERABILITY...................................................................................31

         10.10.   INTEGRATION; CONSTRUCTION......................................................................31

         10.11.   LIMITED LIABILITY..............................................................................31

         10.12.   GOVERNING LAW..................................................................................32

         10.13.   SUBMISSION TO JURISDICTION; WAIVERS............................................................32

         10.14.   ACKNOWLEDGEMENTS...............................................................................33

         10.15.   WAIVER OF JURY TRIAL...........................................................................33

</TABLE>


EXHIBITS
Exhibit A    -        Definition List
Exhibit B    -        Form of Promissory Note
Exhibit C    -        Notice of Borrowing
Exhibit D    -        Reserved
Exhibit E    -        Reserved
Exhibit F    -        Underwriting Guidelines
Exhibit G    -        Charge Off Policy
Exhibit H    -        Lockbox Agreement
         

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<PAGE>
                           WAREHOUSE CREDIT AGREEMENT

                  WAREHOUSE CREDIT AGREEMENT, dated as of April 30, 1998 (this
"Credit Agreement"), by and among CONTITRADE SERVICES L.L.C., a Delaware limited
liability company ("Lender"), FIRSTCITY AUTO RECEIVABLES L.L.C., a Texas limited
liability company ("Borrower"), FIRSTCITY CONSUMER LENDING CORPORATION, a Texas
corporation ("FirstCity Consumer"), and FIRSTCITY FINANCIAL CORPORATION, a
Delaware corporation (together with the Borrower and FirstCity Consumer, the
"FirstCity Entities").

                              W I T N E S S E T H:

                  WHEREAS, Borrower desires to purchase certain Contracts from
time to time; and

                  WHEREAS, Borrower has requested that Lender make the Loan to
Borrower, the proceeds of which shall be used to purchase Contracts; and

                  WHEREAS, as security for its obligations under this Credit
Agreement, Borrower shall pledge the Collateral; and

                  WHEREAS, subject to the terms and conditions set forth herein,
Lender is willing to make the Loan to Borrower.

                  NOW, THEREFORE, the parties hereto agree as follows:


                             SECTION 1. DEFINITIONS

1.1.     Defined Terms.

                  (a) As used in this Credit Agreement, the Promissory Note, the
Servicing Agreement, the Security and Collateral Agent Agreement, the Paying
Agent Agreement, the IBSA, or any certificate or other document made or
delivered pursuant hereto or thereto (collectively, the "Facility Agreements"),
the capitalized terms used herein and therein shall, unless otherwise defined
herein or therein, have the meanings assigned to them in the Definitions List
dated as of the date hereof that refers to this Credit Agreement, which is
incorporated herein by reference and attached as Exhibit A hereto (the
"Definitions List").

                  (b) As used herein or in any other Facility Agreement,
accounting terms not defined in the Definitions List and accounting terms partly
defined in the Definitions List to the extent not defined shall have the
respective meanings given to them under GAAP.

                  (c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Credit Agreement shall refer to this Credit
Agreement as a whole and not to any particular provision of this Credit
Agreement, and Section, subsection and Exhibit references are to this Credit
Agreement unless otherwise specified. 

                  (d) Capitalized terms used herein or in any other Facility
Agreement shall be equally applicable to both the singular and plural forms of
such terms.

<PAGE>
            SECTION 2. AMOUNT AND TERMS OF LENDER FUNDING COMMITMENT

2.1.     Lender Funding Commitment.

                    (a) Subject to the terms and conditions hereof, Lender
agrees to make revolving credit loans (collectively, "Advances" or the "Loan",
and, individually, an "Advance") to Borrower from time to time during the
Commitment Period, as requested by the Borrower; provided, however, that in no
event shall Lender make any Advance, if (x) after giving effect to such Advance
the Outstanding Facility Balance would exceed either (i) the Maximum Loan Amount
or (ii) the Borrowing Base or (y) an Event of Default or an Unmatured Event of
Default shall have occurred and be continuing and not waived by Lender. Funds
may be borrowed, repaid and reborrowed on a revolving basis subject to the terms
and conditions set forth herein. The lending arrangement described herein is
referred to herein as the "Facility".

                  (b) The Facility will cancel automatically on the Commitment
Termination Date; provided, however, that the Borrower may request a renewal, in
writing (a "Renewal Request"), not more than 120 days prior to the Commitment
Termination Date; and provided, further, that the Lender must notify the
Borrower, in writing, by the later of (x) 30 days from receipt by the Lender of
the Renewal Request or (y) at least 60 days prior to the Commitment Termination
Date that it has elected to renew the Facility.

                  (c) If the Facility is not renewed pursuant to Section 2.1(b),
Lender shall extend the Facility 60 days if no Event of Default or Unmatured
Event of Default shall have occurred and be continuing and if the Borrower
delivers to the Lender (i) a commitment letter, acceptable to the Lender, for a
replacement warehouse loan facility from a financial institution acceptable to
the Lender or (ii) a guarantee, from a party acceptable to the Lender, of all
amounts payable under the Facility. 


2.2. Promissory Note.

                    The Borrower shall, in connection with the Facility, execute
and deliver a promissory note, substantially in the form of Exhibit B hereto
(the "Promissory Note"), payable to the order of Lender. Borrower is obligated
to make payments to Lender as provided in this Agreement whether or not Borrower
has executed the Promissory Note. The actual amount Borrower is obligated to pay
the Lender shall be determined by this Agreement and the records of the Lender,
regardless of the terms of the Promissory Note. Any Promissory Note executed in
connection with the Facility need not be amended to reflect changes made to this
Agreement. The records of the Lender shall, absent demonstrable error, be
conclusive evidence at any time as to the amount of the Loan, the interest due
thereon, and all other amounts owed in connection with this Agreement with
respect to the Borrower. The Promissory Note shall (a) be dated the Closing
Date, (b) be stated to mature on the Commitment Termination Date and (c) provide
for the payment of interest in accordance with Section 2.4.

2.3.     Availability of Borrowings.

                    Borrower may request an Advance on any Business Day during
the Commitment Period, subject to the provisions contained in Section 2.1, by
giving Lender, with a copy to the Collateral Agent, prior irrevocable notice of
each borrowing in the form of Exhibit C hereto ("Notice of Borrowing") by 11:00
A.M. (New York City time) on the second Business Day prior to a Borrowing Date
which shall specify (a) the Borrowing Date for such borrowing, (b) the
Outstanding Facility Balance on such date (prior to the making of the requested


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Advance), (c) the Borrowing Base applicable to such Advance, and (d) the
Available Facility Amount; provided, however, that Lender shall not be obligated
to make more than one Loan in any single calendar week. Subject to satisfaction
of the conditions precedent set forth in Section 4 hereof, the proceeds of such
Advance will be made available to Borrower by Lender by wire transfer of
immediately available funds to the Collection Account. The amount of such
Advance shall be paid out from the Collection Account as set forth in Section
2.03(a) of the Paying Agent Agreement.

2.4.     Interest.

                    Interest shall accrue on the Outstanding Facility Balance at
a fluctuating rate per annum equal to (i) in the case of the Contracts
originated by FirstCity Funding or the N.A.F. Entities, LIBOR plus three percent
(3.00%) and (ii) in the case of Contracts originated by FirstCity Consumer
Finance, LIBOR plus one and one-half percent (1.50%). Interest accrued on the
Loans shall be paid monthly in arrears on the third day of each calendar month,
or if such day is not a Business Day the next succeeding Business Day,
commencing in the first calendar month following the Closing Date (each such
date, a "Payment Date"). Upon the occurrence, and during the continuance of, an
Event of Default, the Outstanding Facility Balance shall bear interest at the
rate per annum equal to LIBOR plus seven percent (7.00%); provided, however,
that no provision of this Agreement shall require the payment or permit the
collection of interest in excess of the maximum permitted by applicable law; and
provided, further, that interest shall not be considered paid by any
distribution if at any time such distribution is rescinded or must be returned
for any reason. Interest shall accrue on the basis of a 360-day year and the
actual number of days elapsed.

2.5.     Principal Payments on the Loan.

                  (a) Other than as set forth in Section 2.03(a)(i), (ii) and
(iii) of the Paying Agent Agreement, the Borrower shall prepay the Loan with the
proceeds of a Securitization to at least an extent such that the Outstanding
Facility Balance (after such prepayment) does not exceed the Borrowing Base
(after taking into account the Contracts transferred from the Facility to the
Securitization). Any such prepayment shall be accompanied by payment of all
accrued and unpaid interest thereon and all fees and other amounts due to the
Lender hereunder through the date of such prepayment.

                  (b) Borrower shall pay the Outstanding Facility Balance,
together with any accrued and unpaid interest thereon, and any other sums due
pursuant to the terms hereof as set forth in Section 2.0(3)(a)(iv) and (v) of
the Paying Agent Agreement and otherwise on or before the Commitment Termination
Date.

2.6.     Security and Collateral Agent Agreement.

                    The Facility is secured pursuant to a Security and
Collateral Agent Agreement, dated as of the date hereof (the "Security and
Collateral Agent Agreement"), among the Borrower, the Lender and Chase Bank of
Texas, National Association, as Collateral Agent (together with any successors
thereto, the "Collateral Agent").

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<PAGE>
2.7.     Deposits to Collection Account.

                  (a) Borrower shall cause the Paying Agent to establish on or
prior to the Closing Date, a bank account in the name of the Borrower (the
"Collection Account"), as set forth in Section 2.01 of the Paying Agent
Agreement. The Collection Account shall at all times be an Eligible Deposit
Account. All amounts held in such account shall, to the extent permitted by
applicable laws, rules and regulations, be invested by the Collateral Agent at
the written direction of the Borrower, in Permitted Investments which mature
prior to the following Payment Date, or such earlier date as may be specified by
the Borrower. Investments in Permitted Investments shall not be sold or
otherwise disposed of prior to their maturity unless (x) a Securitization or an
Event of Default shall have occurred and be continuing, (y) the Lender shall
have instructed the Borrower to sell or otherwise dispose of such investments
prior to their maturity or (z) as needed to fund the disbursements listed in
Section 2.03(a) of the Paying Agent Agreement. Should the Collection Account no
longer be an Eligible Deposit Account, then the Borrower shall within 10
Business Days (or such longer period, not to exceed 30 calendar days, as to
which the Lender shall consent), with such bank's or trust company's assistance
as necessary, cause the Collection Account to be moved to a bank or trust
company such that the Collection Account will be an Eligible Deposit Account.
Investment earnings on funds deposited in the Collection Account shall be
deposited in the Collection Account.

                  (b) The Servicer shall cause each Lockbox Provider to deposit,
within 1 Business Day of Receipt, all available Collections received by each
such Lockbox Provider into Wells Fargo Account #0221688385 (the "Lockbox
Account"). Within 2 Business Days of Receipt, the Servicer shall cause each
Lockbox Provider to transfer such payments into the Collection Account.

                  (c) All Collections received directly by the Borrower or the
Servicer shall be held by the Borrower or the Servicer, as applicable, in trust
for the benefit of the Lender. Borrower shall remit for deposit, and shall cause
the Servicer to remit for deposit, no later than the close of business on the
day received, such Collections in the Collection Account.

                  (d) Borrower may, from time to time, deposit cash and/or
deliver to the Paying Agent Permitted Investments to be credited to the
Collection Account.

2.8. Proceeds.

                    The proceeds of the Loan shall be used by Borrower solely to
finance the purchase or holding of Eligible Contracts, and to pay other amounts
expressly permitted under the terms and conditions of the Facility Agreements,
provided, however, if the Loan is prepaid, proceeds can be re-borrowed up to the
Available Facility Amount.

2.9.     Taxes.

                    All payments made by Borrower under this Credit Agreement
and the Promissory Note shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority having taxing authority, excluding income taxes and
franchise taxes (imposed in lieu of income taxes) imposed on Lender, as a result
of any present or former connection between the jurisdiction of the government
or taxing authority imposing such tax or any political subdivision or taxing
authority thereof or therein and Lender (excluding a connection arising solely

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<PAGE>
from Lender having executed, delivered or performed its obligations or received
a payment under, or enforced, this Credit Agreement or the Promissory Note) (all
such non-excluded taxes, levies, imposts, duties, charges, fees, deductions and
withholdings being hereinafter called "Taxes"). If any Taxes are required to be
withheld from any amounts payable to or under the Promissory Note, the amounts
so payable to Lender shall be increased to the extent necessary to yield to
Lender (after payment of all Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Credit Agreement and
the Promissory Note. Whenever any Taxes are payable by Borrower, as promptly as
possible thereafter Borrower shall send to Lender a certified copy of an
original official receipt received by Borrower showing payment thereof. If
Borrower fails to pay any Taxes when due to the appropriate taxing authority or
fails to remit to Lender the required receipts or other required documentary
evidence, Borrower shall indemnify Lender for any incremental Taxes, interest or
penalties that Lender is legally required to pay as a result of any such
failure. The agreements in this subsection shall survive the termination of this
Credit Agreement and the payment of the Promissory Note.

                   SECTION 3. REPRESENTATIONS AND WARRANTIES

3.1.     Representations and Warranties of Borrower.

                    To induce Lender to enter into this Credit Agreement and to
make the Advances, Borrower hereby represents and warrants to Lender that:

                  (a) Existence; Compliance with Law. Borrower (i) is duly
organized, validly existing and in good standing under the laws of Texas, (ii)
has the power and authority, and the legal right, as a Texas limited liability
company, to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently engaged, (iii) is
duly qualified as a foreign limited liability company, is in good standing and
has all licenses (in full force and effect) under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification and/or licensing and (iv) is in compliance
with all Requirements of Law.

                  (b) Power; Authorization; Enforceable Obligations. Borrower
has the power and authority, and the legal right, as a Texas limited liability
company, to make, deliver and perform this Credit Agreement and the other
Facility Agreements to which it is a party and to borrow hereunder and has taken
all necessary action to authorize the borrowings on the terms and conditions of
this Credit Agreement and the other Facility Agreements to which it is a party
and to authorize the execution, delivery and performance of this Credit
Agreement and the other Facility Agreements to which it is a party. All consents
or authorizations of, filing with or other act by or in respect of, any
Governmental Authority or any other Person required to be obtained, made or
given by it in connection with the borrowings hereunder or with the execution,
delivery, performance, validity or enforceability of this Credit Agreement or
the other Facility Agreements to which it is a party have been so obtained, made
or received. This Credit Agreement and each other Facility Agreement to which it
is a party has been duly executed and delivered on behalf of Borrower. This
Credit Agreement and each other Facility Agreement to which it is a party
constitutes a legal, valid and binding obligation of Borrower enforceable
against Borrower in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by

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<PAGE>
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).

                  (c) No Legal Bar. The execution, delivery and performance of
this Credit Agreement and the other Facility Agreements, the borrowings
hereunder and the use of the proceeds thereof will not violate any Requirement
of Law or Contractual Obligation of Borrower and will not result in, or require,
the creation or imposition of any Lien on any of its properties or revenues
pursuant to any such Requirement of Law or Contractual Obligation other than the
Lien set forth herein.

                  (d) No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator, court or Governmental Authority is
pending or threatened, by or against Borrower or against any of its properties
or revenues (i) with respect to this Credit Agreement or the other Facility
Agreements or any of the transactions contemplated hereby or thereby, or (ii)
which could have a material adverse effect on the business, prospects,
properties, assets, operations or condition, financial or otherwise, of
Borrower, or the ability of Borrower to perform its obligations hereunder or
under the other Facility Agreements.

                  (e) No Default; No Event of Default. Borrower is not in
default under or with respect to any of its Contractual Obligations in any
respect which could have a material adverse effect on the business, operations,
properties, assets, condition or prospects, financial or otherwise, of Borrower,
or on the ability of Borrower to perform its obligations hereunder or under the
other Facility Agreements. No Event of Default or Unmatured Event of Default has
occurred or is continuing.

                  (f) No Burdensome Restrictions. Borrower is not a party to or
subject to any Contractual Obligation (other than the Facility Agreements) which
could have a material adverse effect on the business, properties, assets,
operations, condition or prospects, financial or otherwise, of Borrower, or on
the ability of Borrower to carry out its obligations hereunder or under the
other Facility Agreements.

                  (g) Taxes. Borrower has filed or caused to be filed all
federal, state and other tax returns which are required to be filed by it, or
has filed extensions with respect thereto (which extensions have not expired)
and has paid all taxes shown to be due and payable on said returns or on any
federal, state and other tax assessments made against it or any of its property
and all other taxes, fees or other charges imposed on it or any of its property
by any Governmental Authority having taxing power; no tax Lien has been filed
against it, and no claim is being asserted by any Governmental Authority with
respect to any such tax, fee or other charge.

                  (h) ERISA. Borrower has not participated in any Multiemployer
Plan. Borrower has not maintained any Single-Employer Plan.

                  (i) Investment Company Act; Other Regulations. Borrower is not
an "investment company," or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended. Borrower
is not subject to regulation under any federal or state statute or regulation
which limits its ability to incur Debt.


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<PAGE>
                  (j) Subsidiaries. Borrower has no Subsidiaries, other than
Subsidiaries formed in connection with any Securitization.

                  (k) Purpose of Advances. The proceeds of the Advances shall be
used by Borrower to purchase Eligible Contracts and for other purposes expressly
permitted by the Facility Agreements.

                  (l) No Deduction. Borrower is not required to make any
deduction or withholding from payments to be made by it to Lender under this
Credit Agreement, and the execution and performance of this Credit Agreement and
any of the other Facility Agreements does not make Borrower liable for any
registration tax, stamp duty or similar tax or duty imposed by any authority of
or within its jurisdiction of creation, which tax or duty has not been, or will
not be, paid when due.

                  (m) No Other Debt. Borrower has no liability in respect of any
Debt or in respect of any guarantee by Borrower of the obligations of another
under which the lender, creditor or lessor or the Person in whose favor such
guarantee is given has any right, by operation of law or otherwise, to have any
claim in respect of such obligation or guarantee satisfied out of any assets of
Borrower, other than Subordinated Debt consented to by Lender in writing.

                  (n) Title; Liens. Except for the Liens granted to the Lender
pursuant to the Facility Agreements and any Subordinate Liens consented to by
the Lender in writing, Borrower owns each item of the Collateral free and clear
of any and all Liens or claims of others. No security agreement, financing
statement or other public notice with respect to all or any part of the
Collateral is on file or of record in any public office, except such as may have
been filed in favor of the Lender pursuant to the Facility Agreements.

                  (o) Ownership of Contracts. Each purchase by Borrower of
Contracts constitutes a valid sale of the Contracts to Borrower and creates in
favor of Borrower a perfected ownership interest in and valid, legal and
equitable title to such Contracts, which ownership interest is not subject to
any Lien.

                  (p) No Petition. There is no intent to file a voluntary
petition under the federal bankruptcy laws with respect to Borrower and Borrower
is not insolvent or generally unable to pay its debts as they become due.

                  (q) Eligible Contracts. Each Contract is an Eligible Contract.
With respect to each such Contract, (i) no effective financing statement, lien
notation on any certificate of title or other instrument similar in effect
covering all or any part of such Contract or the security therefor, which would
give the Person filing, named on or entitled to the benefit of such statement or
instrument priority senior to or pari passu with the Borrower, is on file in any
recording office or is otherwise effective except such as may be filed in favor
of the Dealer, the related Originator or the Borrower and collaterally assigned
to Lender in accordance with the Facility Agreements; and (ii) the Vehicle,
including any equipment sold and financed in connection with such Contract, is
the subject of an application for a certificate of title to be issued in the
name of the Obligor which will indicate a security interest therein held by the


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<PAGE>
Originators, and to be held in the possession of the Servicer, in the
appropriate form and in compliance with all appropriate procedures as may be
necessary under applicable law to cause a perfected and first priority security
interest to exist in favor of, or for the benefit of, the Borrower, to secure
the obligations of such Obligor under such Contract; and (iii) it is in
compliance with the Underwriting Criteria. 

                  (r) Representations and Warranties in Facility Agreements. The
representations and warranties of the Borrower contained in each of the Facility
Agreements to which it is a party and in any document, certificate or instrument
delivered pursuant to any such Facility Agreement are true and correct and the
Lender may rely on such representations and warranties, if not made directly to
the Lender, as if such representations and warranties were made directly to the
Lender.

                  (s) Principal Place of Business. The Borrower's principal
place of business is located at 6400 Imperial Drive, Waco, Texas 76712. 

3.2.  Representations and Warranties of FirstCity Consumer. 

                  To induce Lender to enter into this Credit Agreement and to
make the Loans, FirstCity Consumer hereby represents and warrants to Lender
that:

                  (a) Financial Condition. (i) The consolidated balance sheet of
FirstCity Consumer as of February 28, 1998 and reflecting all Closing Date
transactions is complete and correct and presents fairly the financial condition
of FirstCity Consumer as at such date. As of the Closing Date, FirstCity
Consumer does not have any Debt, contingent liability or liability for taxes, or
any long-term lease or unusual forward or long-term commitments, including,
without limitation, any interest rate or foreign currency swap or exchange
transaction except to the extent reflected as a liability on the balance sheet
referred to above. Such balance sheet has been prepared in accordance with GAAP.

                  (ii) The consolidated balance sheet of FirstCity Funding as of
         February 28, 1998 and reflecting all Closing Date transactions is
         complete and correct and presents fairly the financial condition of
         FirstCity Funding as at such date. As of the Closing Date, FirstCity
         Funding does not have any Debt, contingent liability or liability for
         taxes, or any long-term lease or unusual forward or long-term
         commitments, including, without limitation, any interest rate or
         foreign currency swap or exchange transaction except to the extent
         reflected as a liability on the balance sheet referred to above. Such
         balance sheet has been prepared in accordance with GAAP.

                  (b) Corporate Existence; Compliance with Law. FirstCity
Consumer (i) is duly organized, validly existing and in good standing under the
laws of Texas, (ii) has the power and authority, and the legal right, as a Texas
corporation, to own and operate its property, to lease the property it operates
as lessee and to conduct the business in which it is currently engaged, (iii) is
duly qualified as a foreign corporation, is in good standing and has all
licenses (in full force and effect) under the laws of each jurisdiction where
its ownership, lease or operation of property or the conduct of its business
requires such qualification and/or licensing and (iv) is in compliance with all
Requirements of Law.

                                       8
<PAGE>
                  (c) Corporate Power; Authorization; Enforceable Obligations.
FirstCity Consumer has the power and authority, and the legal right, as a Texas
corporation, to make, deliver and perform this Credit Agreement and the other
Facility Agreements to which it is a party and to borrow hereunder and has taken
all necessary action to authorize the borrowings on the terms and conditions of
this Credit Agreement and the other Facility Agreements to which it is a party
and to authorize the execution, delivery and performance of this Credit
Agreement and the other Facility Agreements to which it is a party. All consents
or authorizations of, filing with or other act by or in respect of, any
Governmental Authority or any other Person required to be obtained, made or
given by it in connection with the borrowings hereunder or with the execution,
delivery, performance, validity or enforceability of this Credit Agreement or
the other Facility Agreements to which it is a party have been so obtained, made
or received. This Credit Agreement and each other Facility Agreement to which it
is a party has been duly executed and delivered on behalf of FirstCity Consumer.
This Credit Agreement and each other Facility Agreement to which it is a party
constitutes a legal, valid and binding obligation of FirstCity Consumer
enforceable against FirstCity Consumer in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

                  (d) No Legal Bar. The execution, delivery and performance of
this Credit Agreement and the other Facility Agreements, the borrowings
hereunder and the use of the proceeds thereof will not violate any Requirement
of Law or Contractual Obligation of FirstCity Consumer and will not result in,
or require, the creation or imposition of any Lien on any of its properties or
revenues pursuant to any such Requirement of Law or Contractual Obligation other
than the Lien set forth herein.

                  (e) No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator, court or Governmental Authority is
pending or threatened, by or against FirstCity Consumer or against any of its
properties or revenues.

                  (f) No Default; No Event of Default. FirstCity Consumer is not
in default under or with respect to any of its Contractual Obligations in any
respect which could have a material adverse effect on the business, operations,
properties, assets, condition or prospects, financial or otherwise, of FirstCity
Consumer, or on the ability of FirstCity Consumer to perform its obligations
hereunder or under the other Facility Agreements. No Event of Default or
Unmatured Event of Default has occurred or is continuing.

                  (g) No Burdensome Restrictions. FirstCity Consumer is not a
party to or subject to any Contractual Obligation (other than the Facility
Agreements) which could have a material adverse effect on the business,
properties, assets, operations, condition or prospects, financial or otherwise,
of FirstCity Consumer, or on the ability of FirstCity Consumer to carry out its
obligations hereunder or under the other Facility Agreements.

                  (h) Taxes. FirstCity Consumer has filed or caused to be filed
all federal, state and other tax returns which are required to be filed by it,
or has filed extensions with respect thereto (which extensions have not expired)
and has paid all taxes shown to be due and payable on said returns or on any
federal, state and other tax assessments made against it or any of its property

                                       9
<PAGE>
and all other taxes, fees or other charges imposed on it or any of its property
by any Governmental Authority having taxing power; no tax Lien has been filed
against it, and no claim is being asserted by any Governmental Authority with
respect to any such tax, fee or other charge.


                  (i) Investment Company Act; Other Regulations. FirstCity
Consumer is not an "investment company," or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended. FirstCity Consumer is not subject to regulation under any federal or
state statute or regulation which limits its ability to incur Debt.

                  (j) No Deduction. FirstCity Consumer is not required to make
any deduction or withholding from payments to be made by it to Lender under this
Credit Agreement, and the execution and performance of this Credit Agreement and
any of the other Facility Agreements does not make FirstCity Consumer liable for
any registration tax, stamp duty or similar tax or duty imposed by any authority
of or within its jurisdiction of creation, which tax or duty has not been, or
will not be, paid when due.

                  (k) No Petition. There is no intent to file a voluntary
petition under the federal bankruptcy laws with respect to FirstCity Consumer
and FirstCity Consumer is not insolvent or generally unable to pay its debts as
they become due.

                  (l) Eligible Contracts. Each Contract is an Eligible Contract.
With respect to each such Contract, (i) no effective financing statement, lien
notation on any certificate of title or other instrument similar in effect
covering all or any part of such Contract or the security therefor, which would
give the Person filing, named on or entitled to the benefit of such statement or
instrument priority senior to or pari passu with the Borrower, is on file in any
recording office or is otherwise effective except such as may be filed in favor
of the Dealer, the related Originator or the Borrower and collaterally assigned
to Lender in accordance with the Facility Agreements; and (ii) the Vehicle,
including any equipment sold and financed in connection with such Contract is
the subject of an application for a certificate of title to be issued in the
name of the Obligor which will indicate a security interest therein held by the
Originator and to be held in the possession of the Servicer, in the appropriate
form and in compliance with all appropriate procedures as may be necessary under
applicable law to cause a perfected and first priority security interest to
exist in favor of, or for the benefit of, to secure the obligations of such
Obligor under such Contract; and (iii) it is in compliance with each
Originator's Underwriting Criteria.

                  (m) Representations and Warranties in Facility Agreements. The
representations and warranties of FirstCity Consumer contained in each of the
Facility Agreements to which it is a party and in any document, certificate or
instrument delivered pursuant to any such Facility Agreement are true and
correct and the Lender may rely on such representations and warranties, if not
made directly to the Lender, as if such representations and warranties were made
directly to the Lender.

                  (n) Principal Place of Business. FirstCity Consumer's
principal place of business is located at 6400 Imperial Drive, Waco, Texas

                                       10
<PAGE>
3.3.   Representations and Warranties of FirstCity Financial.

                    To induce Lender to enter into the Credit Agreement and to
make the Advances, FirstCity Financial hereby represents and warrants to Lender
that:

                  (a) Corporate Existence; Compliance with Law. FirstCity
Financial (i) is duly organized, validly existing and in good standing under the
laws of Delaware, (ii) has the power and authority, and the legal right, as a
Delaware corporation, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged,
(iii) is duly qualified as a foreign corporation and is in good standing and has
all licenses (in full force and effect) under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification and/or licensing and (iv) is in compliance
with all Requirements of Law.

                  (b) Corporate Power; Authorization; Enforceable Obligations.
FirstCity Financial has the power and authority, and the legal right, as a
Delaware corporation, to make, deliver and perform all obligations under this
Credit Agreement and has taken all necessary action to authorize its obligations
hereunder on the terms and conditions hereof to authorize the execution,
delivery and performance of this Credit Agreement. All consents or
authorizations of, filing with or other act by or in respect of, any
Governmental Authority or any other Person required to be obtained, made or
given by it in connection with its obligations hereunder or with the execution,
delivery, performance, validity or enforceability of this Credit Agreement have
been so obtained, made or received. This Credit Agreement has been duly executed
and delivered on behalf of FirstCity Financial. This Credit Agreement
constitutes a legal, valid and binding obligation of FirstCity Financial
enforceable against FirstCity Financial in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

                  (c) No Legal Bar. The execution, delivery and performance by
FirstCity Financial of this Credit Agreement and its obligations hereunder will
not violate any Requirement of Law or Contractual Obligation of FirstCity
Financial and will not result in, or require, the creation or imposition of any
Lien on any of its properties or revenues pursuant to any such Requirement of
Law or Contractual Obligation.

                  (d) No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator, court or Governmental Authority is
pending or threatened, by or against FirstCity Financial or against any of its
properties or revenues (i) with respect to this Credit Agreement or any of the
transactions contemplated hereby, or (ii) which could have a material adverse
effect on the business, prospects, properties, assets, operations or condition,
financial or otherwise, of FirstCity Financial or the ability of FirstCity
Financial to perform its obligations hereunder.

                  (e) No Default; No Event of Default. FirstCity Financial is
not in default under or with respect to any of its Contractual Obligations in
any respect which could have a material adverse effect on the business,
operations, properties, assets, condition or prospects, financial or otherwise,

                                       11
<PAGE>
of FirstCity Financial or on the ability of FirstCity Financial to perform its
obligations hereunder.

                  (f) No Burdensome Restrictions. FirstCity Financial is not a
party to or subject to any Contractual Obligation which could have a material
adverse effect on the business, properties, assets, operations, condition or
prospects, financial or otherwise, of FirstCity Financial, or on the ability of
FirstCity Financial to carry out its obligations hereunder or under the other
Facility Agreements.

                  (g) Taxes. FirstCity Financial has filed or caused to be filed
all federal, state and other tax returns which are required to be filed by it,
or has filed extensions with respect thereto (which extensions have not expired)
and has paid all taxes shown to be due and payable on said returns or on any
federal, state and other tax assessments made against it or any of its property
and all other taxes, fees or other charges imposed on it or any of its property
by any Governmental Authority having taxing power; no tax Lien has been filed
against it, and no claim is being asserted by any Governmental Authority with
respect to any such tax, fee or other charge except, in each case, for filings
which, if not made, taxes which, if not paid, and tax Liens which, if imposed,
would not, in the aggregate, have a material adverse effect on the business,
properties, assets, operations, condition or prospects, financial or otherwise,
of FirstCity Financial, or on the ability of FirstCity Financial to carry out
its obligations hereunder or under the other Facility Agreements.

                  (h) ERISA. Neither FirstCity Financial, nor any other person,
including any fiduciary, has engaged in any prohibited transaction (as defined
in section 4975 of the Code or section 406 of ERISA) which could subject
FirstCity Financial or any entity which they have an obligation to indemnify to
any material tax or penalty imposed under section 4975 of the Code or section
502(I) of ERISA. Each Employee Benefit Plan and Single-Employer Plan is
administered in accordance with its terms and compliance with all applicable
law. The projected benefit obligations of each Single-Employer Plan does not
exceed the fair market value of assets allocated to each such Single-Employer
Plan as of the end of the most recent plan year. There is no lien outstanding or
security interest given in connection with a Single-Employer Plan. Each member
of the ERISA Group has fulfilled its obligations under the minimum funding
standards of ERISA and the Code with respect to each Single-Employer Plan. No
member of the ERISA Group has incurred or expects to incur any liability under
Title IV of ERISA (other than the payment of premiums), or withdrawal liability
(contingent or otherwise) under a Multiemployer Plan. No Multiemployer Plan is
terminating, in Reorganization or insolvent within the meaning of section 4245
of ERISA. FirstCity Financial has no material liability for retiree medical and
life benefits (contingent or otherwise).

                  (i) Investment Company Act; Other Regulations. FirstCity
Financial is not an "investment company," or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended. Borrower is not subject to regulation under any federal or state
statute or regulation which limits its ability to incur Debt.

                  (j) No Deduction. FirstCity Financial is not required to make
any deduction or withholding from payments to be made by it to Lender under this
Credit Agreement and the execution and performance of this Credit Agreement and
any of the other Facility Agreements does not make FirstCity Financial liable

                                       12
<PAGE>
for any registration tax, stamp duty or similar tax or duty imposed by any
authority of or within its jurisdiction of creation, which tax or duty has not
been, or will not be, paid when due.


                  (k) No Petition. There is no intent to file a voluntary
petition under the federal bankruptcy laws with respect to FirstCity Financial
and FirstCity Financial is not insolvent or generally unable to pay its debts as
they become due.

                  (l) Principal Place of Business. FirstCity Financial's
principal place of business is located at 6400 Imperial Drive, Waco, Texas
76712.

                  (m) Financial Condition. The audited, consolidated balance
sheet of FirstCity Financial as of December 31, 1997 and the related,
consolidated statements of income and of cash flows for the periods ended on
such date, are complete and correct and present fairly the financial condition
of FirstCity Financial as at such date, and the results of its operations and
its consolidated cash flows for the period then ended. Such financial statements
have been audited by KPMG Peat Marwick, FirstCity Financial's independent
certified public accountants. FirstCity Financial does not have, and at the date
of the December 31, 1997 balance sheet referred to above, did not have any
material Debt, material contingent liability or material liability for taxes, or
any long-term lease or unusual forward or long-term commitments, including,
without limitation, any interest rate or foreign currency swap or exchange
transaction except (i) to the extent reflected as a liability on the balance
sheet referred to above or (ii) liabilities incurred in the ordinary course of
business since the date of such balance sheet and fully reflected on FirstCity
Financial's books of account. Since the date of the December 31, 1997 balance
sheet referred to above, there has been no material change in the condition or
prospects, financial or otherwise, of FirstCity Financial except changes in the
ordinary course of business, none of which individually or in the aggregate has
been materially adverse. All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the period covered thereby.


                  (n) Tangible Net Worth Requirement. The Tangible Net Worth
Requirement is met.


                        SECTION 4. CONDITIONS PRECEDENT

4.1.     Conditions to Initial Advance.

                    The agreement of Lender to fund the initial Advance is
subject to the satisfaction, immediately prior to or concurrently with the
making of such Loan on the Closing Date, of the following conditions precedent:

                  (a) Facility Agreements. Each of the Facility Agreements shall
have been duly executed and delivered by the parties thereto and Lender shall
have received executed copies thereof, and of such other documents or
instruments as may be reasonably requested by Lender.

                  (b) Organization; Incumbency. (i) Lender shall have received
copies of the certificate of formation of Borrower certified by the Secretary of
State or other appropriate official of the State of Delaware and the operating
agreement of Borrower certified as of the Closing Date as complete and correct
copies thereof by a Responsible Officer, (ii) good standing certificates for


                                       13
<PAGE>
Borrower issued by the Secretary of State or other appropriate official of the
State of Delaware and each jurisdiction where the conduct of Borrower's business
activities or its ownership of properties makes qualification necessary and
(iii) a certificate of a Responsible Officer of Borrower, certifying the names
and true signatures of the officers of Borrower authorized to sign the Facility
Agreements to which it is a party.

                  (c) Credit Committee Approval. Lender shall have received the
approval of its credit committee with respect to the transactions contemplated
by the Facility Agreements.

                  (d) No Violation. The consummation of the transactions
contemplated hereby and by the other Facility Agreements shall not contravene,
violate or conflict with, nor involve Borrower in any violation of, any
Requirement of Law except to the extent that any such contravention, violation,
conflict or involvement would not adversely affect the transactions contemplated
hereby and by the other Facility Agreements.

                  (e) Legal Opinions. Lender shall have received the executed
legal opinion of counsel to Borrower, FirstCity Financial and FirstCity
Consumer, which shall be reasonably satisfactory to Lender and its counsel and
which shall address the security interest in the vehicles described in Section
3.1 (q)(ii) hereof.

                  (f) Collection Account. Borrower shall have caused the
Collection Account to be established.


                  (g) Lien Certificate. Lender shall have received a certificate
of a Responsible Officer of Borrower to the effect that the Collateral is not
subject to any Lien, except Liens created by the Facility Agreements.

                  (h) UCC Searches. Lender shall have received lien searches and
other evidence as to the absence of any Lien on or security interest in the
Collateral in form and substance satisfactory to Lender. Any termination
statements or releases requested by Lender to be filed with respect to the
Contracts shall have been filed.

                  (i) Filings. Lender shall have received acknowledgment copies
of proper financing statements, duly filed under the UCC of all jurisdictions
that Lender may deem necessary or desirable in order to perfect the security
interests created by this Credit Agreement and the other Facility Agreements and
all other filings, notifications, consents and recordings necessary to
consummate the transactions contemplated hereunder and under the other Facility
Agreements shall be accomplished and Lender shall have received evidence of such
filings, notifications, consents and recordings satisfactory in form and
substance to Lender.

                  (j) Lockbox Accounts. Borrower shall have established or
caused to have been established Lockbox Accounts in its name and the name of the
Lender and shall have received an executed Lockbox Agreement (a "Lockbox
Agreement") for each Lockbox Account from each Lockbox Provider. All Obligors
shall have been instructed to remit Collections to a Lockbox Account.

                  (k) Consents. Lender shall have received copies of all
consents, licenses and approvals, if any, required in connection with the
execution, delivery and performance by Borrower and the validity and


                                       14
<PAGE>
enforceability against it of the Facility Agreements to which it is a party and
such consents, licenses and approvals shall be in full force and effect.

                  (l) Insurance. Lender shall have received evidence that the
Blanket Policy is in full force and effect.

                  (m) Servicer's Certificates. Lender shall have received a
certificate from the Servicer confirming the loss and delinquency status of the
portfolio immediately prior to Closing.

                  (n) No Default. Neither FirstCity Consumer nor the Borrower is
in default under any agreement to which either is a party.

                  (o) Due Diligence. Lender shall have had the opportunity to
conduct legal, financial, operational and key man due diligence on the FirstCity
Entities and FirstCity Financial.

                  (p) Servicing Agreement. Borrower, the Servicer, the Lender
and the Collateral Agent shall have entered into the Servicing Agreement.

4.2.     Conditions to Each Advance.

                    The agreement of Lender to fund any Advance requested to be
made by it on any date (including, without limitation, the initial Advance) is
subject to the satisfaction of the following conditions precedent:

                  (a) Representations and Warranties. Each of the
representations and warranties made by Borrower and FirstCity Consumer in or
pursuant to any of the Facility Agreements, shall be true and correct on and as
of such date as if made on and as of such date.

                  (b) Notice of Borrowing. Borrower shall have delivered to
Lender a Notice of Borrowing within the time period specified in Section 2.3.

                  (c) Section 2.1 Requirements. After giving effect to the
Advance to be made on such day, the Outstanding Facility Balance does not exceed
either (x) the Maximum Loan Amount or (y) the Borrowing Base.

                  (d) Evidence of Pledge. Prior to the release of the proceeds
of such Advance in consideration of the Borrower's acquisition of any Contracts,
Lender shall have received a Borrowing Base confirmation from the Collateral
Agent not later than 12 noon, New York time, on the day on which such amounts
are to be released.

                  (e) Additional Documents. The Lender shall have received each
additional document, instrument, legal opinion or item of information reasonably
requested by Lender with respect of any aspect or consequence of the
transactions contemplated hereby or by any other Facility Agreement.

                  (f) Additional Matters. All proceedings, documents,
instruments and legal matters specified in subsection 4.1 hereof, or required
after the Closing Date, shall be satisfactory in form and substance to Lender.


                                       15
<PAGE>
                  (g) Event of Default. No Event of Default or Unmatured Event
of Default shall have occurred and be continuing to occur.

Each borrowing by Borrower hereunder shall constitute a representation and
warranty by Borrower as of the date of such Loan that the conditions contained
in this subsection 4.2 have been satisfied.


                          SECTION 5. RELEASE OF LIENS

                  In connection with any payment of principal on the Facility,
upon receipt of a written request from the Borrower to the Lender, the Lender
shall take such actions as are necessary to release or cause the lien of the
Lender on the related Contract to be released and to cause the related Contract
Files to be returned to the Borrower; as used in this Section 5, the "related
Contracts" shall be those Contracts, specified by Borrower to be released from
this Facility; provided that, following such release and the related payment of
principal on the Facility, the Outstanding Facility Balance does not exceed the
Borrowing Base. Upon payment in full of all Obligations, termination of all
obligations of Lender to make Advances hereunder and expiration or termination
of this Credit Agreement, the Lender shall take such actions as are necessary to
release or cause the Lien of the Lender on the Collateral to be released and to
cause the Contract Files then held by the Collateral Agent to be returned to the
Borrower. To the extent the Borrower consummates a Securitization and so long as
the proceeds thereof are applied to repay Loans hereunder, the Lender shall take
such actions as are necessary to release the Lien of the Lender on the related
Collateral and shall instruct the Collateral Agent to deliver possession of the
related Contracts and Contract Files in the Collateral Agent's possession which
will be used as collateral for such securities.

                        SECTION 6. AFFIRMATIVE COVENANTS

                  FirstCity Consumer, FirstCity Financial and/or the Borrower
hereby agree that, so long as this Credit Agreement remains in effect, FirstCity
Consumer, FirstCity Financial and/or the Borrower shall:

6.1.     Financial Statements.

                  FirstCity Financial shall furnish to Lender, commencing with
the year ending December 31, 1997:

          (i)  as soon as available, but in any event within 120 days after the
               end of each fiscal year of FirstCity Financial a copy of the
               audited consolidated balance sheet as at the end of such year and
               the related audited consolidated statements of income and of cash
               flows for such year, setting forth in each case in comparative
               form the figures for the previous year and including all
               footnotes thereto and management discussions and analysis
               contained therein, audited by KPMG Peat Marwick or another
               nationally recognized accounting firm acceptable to Lender (the
               "Accountants").

          (ii) as soon as available, but in any event not later than 60 days
               after the end of each fiscal quarter of FirstCity Financial, the
               unaudited consolidated balance sheet of FirstCity Financial and
               the related audited consolidated statements of income and cash
               flows of FirstCity Financial for such period and the portion of
               the fiscal year through the end of such quarter, setting forth in
               each case in comparative form the figures for the previous year.


                                       16
<PAGE>
         (iii) as soon as available, but in any event not later than 20 days
               after the end of each month, the unaudited consolidated balance
               sheet of FirstCity Funding and FirstCity Consumer Finance as at
               the end of such month and the related unaudited consolidated
               statements of income for such period, setting forth in each case
               in comparative form the figures for the previous year.


6.2. Certificates; Other Information.

                    FirstCity Consumer shall furnish to Lender:

                  (a) concurrently with the delivery of the financial statements
referred to in subsection 6.1(a), a certificate of the Accountants reporting on
such financial statements stating that (i) such audit was made in accordance
with GAAP and (ii) no knowledge was obtained of any Event of Default or
Unmatured Event of Default, except as specified in such certificate;

                  (b) concurrently with the delivery of the financial statements
referred to in subsection 6.1, a certificate of a Responsible Officer stating
that each of FirstCity Consumer and the Borrower during such period has observed
or performed all of its covenants and other agreements, and satisfied every
condition contained in this Credit Agreement and the other Facility Agreements
to be observed, performed or satisfied by it, and that such Responsible Officer
has obtained no knowledge of any Unmatured Event of Default or Event of Default,
except as specified in such certificate;

                  (c) copies of all financial statements, reports and other
communications that FirstCity Consumer or the Borrower may make to, or file or
have with, the SEC or any state securities commission contemporaneously with the
filing thereof;

                  (d) at the time of each securitization or whole-loan sale, a
comfort letter from the Accountants covering the loss and delinquency statistics
on the Servicer's servicing portfolio of the Borrower's contracts; and

                  (e) promptly, such additional financial and other information
as Lender may from time to time reasonably request.

6.3. Payment of Obligations.

                    The FirstCity Entities shall pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, each of their obligations (with a balance of $50,000 or more) of whatever
nature.

6.4.     Conduct of Business and Maintenance of Existence.

                    The FirstCity Entities shall continue to engage in business
of the same type as now conducted by them and preserve, renew and keep in full
force and effect their existence and take all action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of their
business; and comply in all material respects with all Contractual Obligations
and Requirements of Law.

6.5.     Maintenance of Property; Insurance.

                    The FirstCity Entities shall keep all property useful and
necessary in their business in good working order and condition; maintain, or


                                       17
<PAGE>
cause to be maintained on their behalf, with financially sound and reputable
insurance companies, the Blanket Policy and insurance on all their property in
at least such amounts and against at least such risks as are usually insured
against in the same general area by companies engaged in the same or a similar
business; and furnish to Lender, at least annually, and otherwise upon written
request, full information as to the insurance carried.

6.6.     Inspection of Property; Books and Records; Discussions; Audit Reports.

                    FirstCity Consumer and the Borrower shall each

                  (a) keep proper books of records and account in which full,
true and correct entries in conformity with GAAP and all Requirements of Law
shall be made of all dealings and transactions in relation to its business and
activities; and permit representatives of Lender to visit and inspect any of its
properties and examine and make abstracts from any of its books and records on
prior notice during normal business hours and to discuss the business,
prospects, operations, properties and financial and other condition of FirstCity
Financial with officers and employees of FirstCity Consumer and the Borrower and
with its independent certified public accountants.

                  (b) permit all accountants and auditors employed by FirstCity
Consumer and the Borrower at any time to exhibit and deliver to the Lender
copies of any and all of FirstCity Consumer's and the Borrower's financial
statements, trial balances or other accounting records of any sort in the
accountant's or auditor's possession and to disclose to the Lender any
information they may have concerning the Borrower's financial status and
business operations which the Lender may reasonably request. FirstCity Consumer
and the Borrower shall authorize all federal, state and municipal authorities to
furnish to the Lender copies of reports or examinations relating to FirstCity
Consumer or the Borrower, whether made by FirstCity Consumer, the Borrower or
otherwise.

                  (c) permit the Lender to conduct at any time and from time to
time, and fully cooperate with, field examinations and audits of the business
affairs of FirstCity Consumer and/or the Borrower. FirstCity Consumer shall
reimburse the Lender for all reasonable costs and expenses in connection with
such examinations.

                  (d) permit the Lender to inspect the Collateral, during normal
business hours and upon reasonable notice; the Borrower shall reimburse the
Lender for the reasonable expenses of the Lender in conducting any such
inspection.

                  (e) deliver promptly upon receipt thereof, one copy of each
other report submitted to the Borrower by its independent accountants, including
management letters and "comment" letters, in connection with any annual, interim
or special audit report made by them of the books of the Borrower. 

6.7. Notices.

                    The Borrower or FirstCity Consumer shall promptly give
notice to Lender, the Collateral Agent and the Paying Agent of:

                  (a) the occurrence of any Event of Default or Unmatured Event
of Default;

                                       18
<PAGE>
                  (b) any (i) default or event of default by Borrower or
FirstCity Consumer under any Contractual Obligation of Borrower or FirstCity
Consumer or (ii) litigation, investigation or proceeding which may exist at any
time affecting the Borrower or FirstCity Consumer and which is likely to result
in a material adverse change in the financial condition or business prospects of
the Borrower or of FirstCity Consumer;

                  (c) a material adverse change in the business, properties,
assets, operations, prospects or condition (financial or otherwise) of the
Borrower, FirstCity Consumer or FirstCity Financial; and

                  (d) any change in its principal place of business or chief
executive office from the address set forth in paragraph (v) of subsection 3.1.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the FirstCity Entities propose to take with respect
thereto.

6.8.     Delivery of Other Reports.

                    The FirstCity Entities shall furnish any reports required to
be delivered by the FirstCity Entities pursuant to any Facility Agreement to
which any FirstCity Entity is a party or which any FirstCity Entity has signed.

6.9.     Approval of New Originators.

                   The Originators are FirstCity Funding, FirstCity Consumer
Finance and the N.A.F. Entities. The FirstCity Entities shall not execute an
agreement with a new Originator unless they have received approval of the new
Originator and the new agreement from the Lender, which approval shall not be
unreasonably withheld. The Borrower shall inform the Collateral Agent in writing
of the approval by Lender of any new Originator.

6.10.             Further Assurances.

                    The FirstCity Entities shall do such further acts and things
and execute and deliver to Lender such assignments, agreements, financing
statements, powers and instruments as are required by Lender to carry into
effect the purposes of this Credit Agreement and the other Facility Agreements
or to better assure and confirm unto Lender its rights, powers and remedies
hereunder and under the other Facility Agreements, including, without
limitation, to obtain such consents and give such notices, and to file and
record all such documents, financing statements and instruments, and renew each
such consent, notice, filing and recordation, at such time or times, in such
manner and at such places, as may be necessary or desirable to preserve and
protect the position of Lender hereunder and under the other Facility
Agreements. This covenant shall survive the termination of this Credit
Agreement.

6.11.    Cooperation in Making Calculations.

                    The FirstCity Entities shall cooperate with Lender at all
times in the calculation of all formulas used in any Facility Agreement,
including, without limitation, delivering in written or electronic form any and
all data and other information as may be so required. The FirstCity Entities
hereby agree to provide all such information or data on or before each date,
without prior request by Lender, as required to make any such calculation, and
to provide such information and data in such form as may be immediately used by
Lender without further interpretation or purchase or license of any software.
The FirstCity Entities do hereby further agree that if they fail to provide any


                                       19
<PAGE>
such information or data as required in this subsection 6.11, Lender may use any
estimate of any amount or calculation that it, in its sole discretion,
determines.

6.12.    Securitization.

                    The Borrower shall use its best efforts to effect a
refinancing of the Loans through the issuance by Borrower or an Affiliate of
asset backed securities secured by Contracts (each such refinancing a
"Securitization") on a semi-annual basis.

6.13.    Additional Credit Support.

  The FirstCity Entities will deliver or cause to be delivered to the Lender any
and all subordinate securities (together with appropriate, fully-executed bond
powers and assignments) received by them or by any Affiliate of the FirstCity
Entities pursuant to any Securitization in order to create a first-priority,
perfected security interest therein in favor of the Lender.

6.14.    Minimum Net Worth.

                    For so long as there are any Obligations to Lender, the
Borrower shall maintain at all times the Tangible Net Worth Requirement.

6.15.    Underwriting and Review.

                    (a) FirstCity Consumer shall review each Contract for
compliance with each Originator's Underwriting Criteria.

                  The Borrower agrees to pay up to $20,000 per year in
additional fees and expenses of a third-party contract reviewer (such as Baker
and Associates); provided, that if any such review reveals material
inconsistencies in the application of each Originator's Underwriting Criteria,
the Lender may require additional reviews to be performed, all at the Borrower's
expense.

6.16.    Certain Information.

  FirstCity Financial shall furnish to Lender copies of all financial
statements, reports and other communications that FirstCity Financial may make
to, or file or have with, the SEC (contemporaneously with the filing thereof
with the SEC) pursuant to the Securities Exchange Act of 1934, as amended,
together with, promptly, such additional financial and other information as
Lender may from time to time reasonably request.

6.17.    Conduct of Business and Maintenance of Existence.

  FirstCity Financial shall continue to engage in business of the same type as
now conducted by it and preserve, renew and keep in full force and effect its
existence and take all action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business; and comply in all
material respects with all Contractual Obligations and Requirements of Law.

6.18.    Notices.

  FirstCity Financial shall promptly give notice to Lender of:

                  (a) the occurrence of any Event of Default or Unmatured Event
of Default, in either case, under this Credit Agreement;

                  (b) any (i) default or event of default by FirstCity under any
Contractual Obligation of FirstCity Financial or (ii) litigation, investigation
or proceeding which may exist at any time affecting FirstCity Financial, which,
in either case, is likely to have a material adverse effect on the financial
condition or prospects of FirstCity Financial or the ability of FirstCity
Financial to perform its obligations hereunder;

                                       20
<PAGE>
                  (c) a material adverse change in the business, properties,
assets, operations, prospects or condition (financial or otherwise) of FirstCity
Financial.

                  (d) any change in its principal place of business or chief
executive office from the address set forth in Section 3.3(k) hereof. Each
notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action FirstCity proposes to take with respect thereto.

6.19.    Maintenance of Control.

  FirstCity Financial hereby covenants and agrees to maintain direct or indirect
ownership of (i) at least 100% of the issued and outstanding shares of capital
stock of FirstCity Consumer, (ii) 100% of the issued and outstanding shares of
capital stock of FirstCity Servicing Corporation of California, (iii) 100% of
the issued and outstanding shares of capital stock of FirstCity Consumer Finance
and (iv) at least 80% of the issued and outstanding shares of capital stock of
FirstCity Funding.

6.20.    Further Assurances.

  FirstCity Financial shall do such further acts and things and execute and
deliver to Lender such assignments, agreements, financing statements, powers and
instruments as are required by Conti to carry into effect the purposes of this
Commitment or to better assure and confirm unto Conti its rights, powers and
remedies hereunder, including, without limitation, to obtain such consents and
give such notices, and to file and record all such documents, financing
statements and instruments, and renew each such consent, notice, filing and
recordation, at such time or times, in such manner and at such places, as may be
necessary or desirable to preserve and protect the position of Conti hereunder.
This covenant shall survive the termination of Section 9 hereunder.

6.21.             Maintenance of Control-Borrower.

  FirstCity Financial hereby covenants and agrees that it or an Affiliate will
maintain direct or indirect ownership of 100% of membership interests in the
Borrower at all times.

                          SECTION 7. NEGATIVE COVENANTS

                  Each FirstCity Entity hereby agrees that, so long as this
Credit Agreement remains in effect, it shall directly or indirectly ensure that
the negative covenants set forth in this Section 7 are fully complied with,
except with the prior written consent of the Lender, in its sole discretion.

7.1.     Limitation on Debt.

                    The Borrower shall not create, incur, assume or suffer to
exist any Debt, except (i) indebtedness in respect of the Loans, the Promissory
Note, and other obligations of the FirstCity Entities under the Facility
Agreements and, (ii) Subordinated Debt which is subordinated to the Obligations
on terms reasonably satisfactory to Lender.

7.2.     Limitation on Liens.

                    The Borrower shall not create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, including, without
limitation, the Collateral, whether now owned or hereafter acquired, except
Subordinate Liens.

                                       21
<PAGE>
7.3.     Limitation on Fundamental Changes.

                    Neither the Borrower nor FirstCity Consumer, except as
expressly permitted by the Facility Agreements, enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business.

7.4.     Sale, Transfer or Encumbrance of Assets.

                    The Borrower shall not sell, lease, or otherwise dispose of,
move, relocate, or transfer, whether by sale or otherwise, any of its property,
business or assets, including, without limitation, the Collateral, (whether now
owned or hereafter acquired) except for (i) the movement of assets in the
ordinary course of business to locations disclosed in advance to Lender and
where Borrower has executed and tendered to Lender appropriate UCC-1 financing
statements for filing or taken other steps required to enable Lender to perfect
its lien and (ii) Securitizations.

7.5.     Contracts.

                  (a) The Borrower shall not sell, assign or otherwise encumber
any Contract except as expressly permitted by the Facility Agreements; or

                  (b) The Borrower shall not cancel, terminate, amend, modify or
waive any term or condition of any Contract (including the granting of rebates
or adjustments with respect thereto), or the related certificates of title
except in accordance with the Credit and Collection Policy. 7.6. Limitation on
Dividends.

                    The Borrower shall not declare or pay any dividend on, or
make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of Capital Stock of the Borrower or any
warrants or options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of Borrower.

7.7.     Limitations on Borrower's Business and Activities.

                  (a) The business to be conducted by the Borrower shall be
limited to the following: (i) acquiring, owning, purchasing, holding,
transferring, pledging and otherwise dealing with the Contracts; (ii) issuing,
transferring, assigning and financing the Promissory Note; (iii) transferring
the Borrower's right to any cash flow to the Lender; and (iv) engaging in any
other acts or activities to accomplish the foregoing.

                  (b) The Borrower shall not: (i) consolidate or merge with or
into any other entity or person or dissolve or liquidate or transfer its
properties and assets to any entity; (ii) hold itself out as being liable for
the debts of any other party, form any subsidiaries or act in any name other
than its own; (iii) except as provided in Section 7.20 hereof, commingle its
funds and assets with those of any other company; or (iv) file or otherwise
initiate (w) a voluntary petition for relief under any chapter of the Bankruptcy
Code, (x) a receivership, conservatorship or custodianship, (y) assignment for
the benefit of creditors or (z) any other bankruptcy or insolvency proceeding.


                                       22
<PAGE>
7.8.    Limitation on Investments, Loans and Advances.

                    Neither the Borrower nor FirstCity Consumer shall make any
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in, any Person,
except:

                  (a) purchases of Contracts;

                  (b) investments in Permitted Investments of funds, if any, on
deposit in the Collection Account; and

                  (c) capitalization of any special purpose entity formed for
the purpose of a Securitization.

7.9.     Transactions with Affiliates.

                    The Borrower shall not enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate, except for transactions
expressly permitted by the Facility Agreements, and transactions in the ordinary
course of Borrower's business and which are upon fair and reasonable terms not
less favorable to Borrower than it would obtain in a comparable arm's length
transaction with a person that is not an Affiliate.

7.10.    Sale and Leaseback.

                    The Borrower shall not enter into any arrangement with any
Person providing for the leasing by the Borrower of real or personal property
which has been or is to be sold or transferred by the Borrower to such Person or
to any other Person to whom funds have been or are to be advanced by such Person
on the security of such property or rental obligations of Borrower.

7.11.    Certificate of Formation.

                  The Borrower shall not amend its Certificate of Formation.

7.12.    Fiscal Year.

                  The Borrower shall not permit the fiscal year of Borrower to
end on a day other than December 31.

7.13.    Limitation on Negative Pledge Clauses.

                  The Borrower shall not enter into any agreement with any
Person other than Lender which prohibits or limits the ability of Borrower to
create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired.

7.14.    Activities of Borrower.

                    The Borrower shall not engage in any business or activity of
any kind, or enter into any transaction or indenture, mortgage, instrument,
agreement, contract, lease or other undertaking or expend any funds (other than
incidental expenses incurred in the ordinary course of business), which are not
directly related to the transactions contemplated and authorized hereby or by
the other Facility Agreements other than an agreement or other arrangement
approved in writing by Lender to share taxes of any affiliated, consolidated,
unitary, combined or similar group including Borrower, such approval not to be
unreasonably withheld.
                                       23
<PAGE>
7.15.    Agreements.

                    The Borrower shall not, except for the Facility Agreements,
and as expressly permitted by the Facility Agreements, become a party to, or
permit any of its properties to be bound by, any indenture, mortgage,
instrument, contract, agreement, lease or other undertaking, or issue any power
of attorney except to Lender except for instruments, contracts, agreements or
leases entered into in the ordinary course of the Borrower's business which are
necessary or desirable in furtherance of the transactions contemplated by the
Facility Agreements.

7.16.    Bank Accounts.

                    The FirstCity Entities shall not, except as otherwise
permitted by this Credit Agreement, move the Bank Accounts from the institution
at which they are maintained on the Closing Date.

7.17.    Lockbox Providers.

                    The FirstCity Entities shall not terminate any Lockbox
Provider or Lockbox Agreement pursuant to Section 4.1(j) hereof, or make any
change in its instructions to Obligors regarding payments to be made to the
Lockbox Provider, and shall not add any Lockbox Provider with respect to the
Contracts unless the Lender shall have received notice of such addition of any
Lockbox Provider and a Lockbox Agreement executed by Borrower, the Lender and
such Lockbox Provider shall have been delivered to the Lender; or deposit or
otherwise credit, or cause or permit to be so deposited or credited, Collections
to any Lockbox Account except the Lockbox Accounts and the Collection Account.

7.18.    Subordinated Debt.

                    The Borrower shall not make or take any action to authorize
or effect any payment of principal on or in respect of any part or all of any
Debt that is by its terms subordinated to the Obligations or voluntarily prepay
any such Debt or otherwise repurchase, redeem or retire any instrument
evidencing any such Debt.

7.19.    Margin Securities.

                    The Borrower shall not own, purchase or acquire (or enter
into any contract to purchase or acquire) any "margin security" as defined by
any regulation of the Federal Reserve Board as now in effect or as the same may
hereinafter be in effect.

7.20.    No Commingling.

                    The Borrower shall maintain separate bank accounts and no
funds of the Borrower shall be commingled with funds of any other entity,
provided, however, that Lockbox funds from the FirstCity securitization dated as
of February 11, 1998, or any other FirstCity auto loan securitization, may be
commingled with funds deposited in the Lockbox hereunder. The Borrower shall not
maintain bank accounts other than those which have been identified in writing to
the Lender.

7.21.    Guarantees.

                    None of the Borrower, FirstCity Consumer Finance or
FirstCity Funding will 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.

7.22.    Amendment of Facility Agreements.

                    The FirstCity Entities will not amend the Facility
Agreements without the prior written approval of the Lender, such approval not
to be unreasonably withheld.

                                       24
<PAGE>
7.23.    Policies.

                    The FirstCity Entities shall not amend the Credit and
Collection Policy or each Originator's Underwriting Criteria without the prior
written approval of Lender, such approval not to be unreasonably withheld.

7.24.    Miscellaneous.

          (i)  The Borrower will at all times hold itself out to the public
               under the Borrower's own name and as a separate and distinct
               entity from FirstCity Financial, FirstCity Funding, FirstCity
               Consumer, FirstCity Consumer Finance, the N.A.F. Entities, and
               FirstCity Servicing.

          (ii) The Borrower will at all times be responsible for the payment of
               all its obligations and indebtedness, will at all times maintain
               a business office, records, books of account, and funds separate
               from any other entity and will observe all customary formalities
               of independent existence.

                        SECTION 8. REMEDIES UPON DEFAULT

8.1.     Acceleration.

                    Upon the occurrence of one or more Events of Default (other
than pursuant to clause (e) of the definition of Event of Default), the Lender
may cease making Advances, and may immediately declare all or any portion of the
Obligations to be immediately due and payable. Upon such declaration, the
Obligations shall become immediately due and payable without presentation,
demand or further notice of any kind to the Borrower. Upon the occurrence of an
Event of Default specified in clause (e) of the definition of Event of Default,
the Lender shall immediately cease making Advances and the Obligations shall
automatically accelerate and become due and payable, without any further action
of the Lender. Upon acceleration of the Obligations for any reason, Borrower
shall thereupon be obligated to pay to Lender the Obligations then outstanding,
and Lender shall not be obligated to make any further Advance under this Credit
Agreement.

8.2.     Files.

                    Upon the occurrence of one or more Events of Default, the
Lender shall have the right to obtain physical possession of the Collateral, on
a servicing-retained or servicing-released basis, as Lender may elect, together
with all files of Borrower relating to the Collateral and all documents relating
to the Collateral which are then or may thereafter come into the possession of
Borrower or any third party acting for Borrower, including the Collateral Agent
and the Servicer.

8.3.     Collections.

                    Upon the occurrence of one or more Events of Default, Lender
may exercise all rights and remedies under each Contract, lease, security
agreement and other contract included among the Collateral as are afforded to
the secured party thereunder or which are otherwise afforded to Borrower
thereunder; Lender may, subject to the rights of Obligors, recover possession of
any tangible personal property under any Contract, and require that the same be
assembled and delivered to a specific location. Without limiting the foregoing,
the Lender shall have the right to give direction to the Servicer, replace or
remove the Servicer, collect and receive all further payments made on the
Collateral, to instruct the Obligors to make payments to a Lockbox Account or
other location designated by the Lender, to control deposits to and
disbursements from the Collection Account, to notify Lockbox Providers to follow


                                       25
<PAGE>
the instructions of the Lender, and if any payments are received by Borrower,
the Borrower shall not commingle the amounts received with other funds of the
Borrower and shall promptly pay them over to the Lender. In addition, the Lender
shall have the right to dispose of all or any part of the Collateral as provided
in the other documents executed in connection herewith, or in any commercially
reasonable manner, or as provided by law. The Lender shall be entitled to place
the Contracts which it recovers after any default in a pool for issuance of
automobile loan receivable pass-through securities and to sell such securities
at the then prevailing price for such securities in the open market as a
commercially reasonable disposition of collateral subject to the applicable
requirements of the UCC. The Lender shall also be entitled to sell (on a
servicing-retained or servicing-released basis, as Lender may elect) any or all
of such Contracts individually for the prevailing price as a commercially
reasonable disposition of collateral subject to the applicable requirements of
the UCC and to retitle in Lender's or Lender's nominee's name, the subordinate
certificates referenced in Section 6.13 hereof. Any surplus which exists after
payment and performance in full of the Loans and any other Obligations which
arise hereunder shall be promptly paid over to Borrower or otherwise disposed of
in accordance with the UCC or other applicable law. The specification in this
subsection 8.3 of manners of disposition of collateral as being commercially
reasonable shall not preclude the use of other commercially reasonable methods
(as contemplated by the UCC) at the option of the Lender.

8.4.     Power of Attorney.

                    Borrower hereby authorizes the Lender, at Borrower's
expense, to file such financing statement or statements relating to the
Collateral without Borrower's signature thereon as Lender at its option may deem
appropriate, and appoints the Lender as the Borrower's attorney-in-fact (but
without requiring the Lender to act) to execute any such financing statement or
statements in Borrower's name and to perform all other acts which the Lender
deems appropriate to perfect and continue the security interest granted hereby
and to protect, preserve and realize upon the Collateral, including, but not
limited to, the right to endorse notes and instruments, complete blanks in
documents and sign assignments on behalf of Borrower as its attorney-in-fact and
to prove and adjust any losses and to endorse any loss drafts under applicable
insurance policies. This power of attorney is coupled with an interest and is
irrevocable without the Lender's consent. Notwithstanding the foregoing, the
power of attorney hereby granted shall only be effective during the occurrence
and continuance of any Event of Default hereunder.

                   SECTION 9. FUNDING COMMITMENT OF FIRSTCITY

9.1.     Funding Commitment.

                  (a) If, on any Payment Date, or any other date on which
amounts are due to the Lender hereunder (including, without limitation, in
connection with an acceleration of the Loan), the full amount then due to the
Lender is not received by the Lender on such date, FirstCity Financial shall,
within two Business Days of receipt by FirstCity Financial of written demand
from Lender, pay to Lender, in immediately available funds, the lesser of (i)
the amount of such shortfall and (ii) 25% of the aggregate Outstanding Contract
Balance of the Contracts which were subject to advances made by the Lender less
the Outstanding Contract Balance of any Contracts released by the Lender as of
the related Determination Date.


                                       26
<PAGE>
                  (b) In furtherance of the foregoing, FirstCity Financial
hereby covenants and agrees with the Lender that FirstCity Financial shall (i)
monitor the Borrower's loan acquisition and securitization program (the
"Program") and each of the Facility Agreements, (ii) report to the Lender the
progress of such Program and compliance with the Facility Agreements, including,
without limitation, the Borrower's and FirstCity Financial's respective
reporting requirements under each of the Facility Agreements, as applicable, and
(iii) use its best efforts to take all other steps necessary to insure the
success of the Borrower's Program and each of the Borrower's and FirstCity
Financial's respective performances under each of the Facility Agreements, as
applicable, including, without limitation, compliance with the Borrower's and
FirstCity Financial's respective reporting obligations thereunder, including,
without limitation, the reporting of delinquency, default and loss information
with regard to the Contracts as well as the reporting of any default or
prospective default under any of the Facility Agreements. 

9.2.    FirstCity Financial to Provide Subordinate Financing.

                    FirstCity Financial hereby agrees and covenants with Lender
that FirstCity Financial shall provide sufficient Subordinate Financing in
connection with each securitization transaction with respect to the Contracts as
may be required by independent third parties (such as the Rating Agencies and/or
Credit Enhancer(s)), it being acknowledged that such level of Subordinate
Financing so determined by such independent third parties shall constitute a
"market" level.

9.3.     Indemnification.

                    FirstCity Financial will indemnify Conti against any losses,
claims, damages or liabilities to which Conti may become subject in connection
with any matter related to or arising out of a default by FirstCity Financial
under this Commitment; provided, however, there shall be excluded from such
indemnification any such loss, claim, damage or liability which results from the
gross negligence or willful misconduct of Conti in performing the services which
it is to render pursuant to this Credit Agreement or the other Facility
Agreements.

                           SECTION 10. MISCELLANEOUS

10.1.    Amendments and Waivers.

                    None of this Credit Agreement, the Promissory Note, any
other Facility Agreement to which Lender or Borrower is a party, nor any terms
hereof or thereof may be amended, supplemented or modified except in accordance
with the provisions of this subsection. Lender, the Collateral Agent and
Borrower may, from time to time, enter into written amendments, supplements or
modifications hereto and to the Promissory Note and the other Facility
Agreements to which they are parties for the purpose of adding any provisions to
this Credit Agreement or the Promissory Note or such other Facility Agreements
or changing in any manner the rights of Lender, the Collateral Agent or Borrower
hereunder or thereunder and, in addition, waiving, on such terms and conditions
as Lender may specify in such instrument, any of the requirements of this Credit
Agreement or the Promissory Note or such other Facility Agreements or any
Unmatured Event of Default or Event of Default and its consequences. Any such
waiver and any such amendment, supplement or modification shall be binding upon
Lender and all future holders of the Promissory Note. In the case of any waiver,
Lender and Borrower shall be restored to their former position and rights
hereunder and under the Promissory Note and any other Facility Agreements to
which they are parties, and any Unmatured Event of Default or Event of Default
waived shall be deemed to be cured and not continuing; but no such waiver shall
extend to any subsequent or other Unmatured Event of Default or Event of
Default, or impair any right consequent thereon.


                                       27
<PAGE>
10.2.    Notices.

                    Except where telephonic instructions or notices are
authorized herein to be given, all notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto shall be in writing and shall be personally delivered or sent by
overnight courier service, or by registered, certified or express mail, postage
prepaid, return receipt requested, or by facsimile copy (accompanied by a
telephonic confirmation or receipt thereof), or telegram (with messenger
delivery specified in the case of a telegram) and shall be deemed to be
delivered for purposes of this Credit Agreement on: (a) the second Business Day
following the day on which such notice was placed in the custody of the U.S.
Postal Service, (b) the next Business Day following the day on which such notice
was placed in the custody of any overnight courier service, including express
mail service or (c) the same Business Day on which such notice is sent by
telegram, messenger or facsimile. Unless otherwise specified in a notice sent or
delivered in accordance with the foregoing provisions of this subsection,
notices, demands, instructions and other communications in writing shall be
given to or made upon the respective parties hereto at their respective
addresses (or to their respective facsimile numbers) indicated below, and, in
the case of telephonic instructions or notices, by calling the telephone number
or numbers indicated for such party below:

                  If to Borrower:

                  FirstCity Auto Receivables L.L.C.
                  Box 8216
                  6400 Imperial Drive
                  Waco, Texas  76714-8216
                  Facsimile Number:  (817) 751-1757
                  Telephone Number:  (817) 751-1750
                  Attention:  Jim Moore

                  If to FirstCity Consumer:

                  Box 8216
                  6400 Imperial Drive
                  Waco, Texas  76714-8216
                  Facsimile Number:  (817) 751-1757
                  Telephone Number:  (817) 751-1750
                  Attention:  Jim Moore

                  If to Lender:

                  ContiTrade Services L.L.C.
                  277 Park Avenue, 38th Floor
                  New York, New York  10172
                  Tel. No.: 212-207-2822
                  Telecopier No.: 212-207-2935
                  Attention: Chief Counsel


                                       28
<PAGE>
10.3.    No Waiver; Cumulative Remedies.

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

10.4.    Survival of Representations and Warranties.

                    All representations and warranties made hereunder and in any
document, certificate or statement delivered pursuant hereto or in connection
herewith shall survive the execution and delivery of this Credit Agreement and
the Promissory Note.

10.5.    Payment of Expenses and Taxes.

                    Borrower agrees, on demand, and except as otherwise
specifically set forth herein, to (a) pay or reimburse Lender and the Collateral
Agent for all out-of-pocket costs and expenses incurred in connection with the
preparation and execution of this Credit Agreement, the Promissory Note and the
other Facility Agreements and any other documents prepared in connection
herewith or therewith, and the consummation of the transactions contemplated
hereby and thereby, including, without limitation, subject to the limitations in
Section 5.2 hereof, any and all collateral audit fees and the reasonable fees
and disbursements of counsel to Lender, (b) pay or reimburse Lender for all of
its costs incurred in connection with its due diligence review of Borrower and
all of its out-of-pocket expenses incurred in connection with the preparation,
negotiation and execution of the Facility Agreements, (c) pay or reimburse
Lender and the Collateral Agent for all out-of-pocket costs and expenses
incurred in connection with the preparation and execution of any amendment,
modification or supplement to this Credit Agreement, the Promissory Note and the
other Facility Agreements and any other documents prepared in connection
herewith or therewith, and the consummation of the transactions contemplated
hereby and thereby, including, without limitation, any and all collateral audit
fees and the reasonable fees and disbursements of counsel to Lender, (d) pay or
reimburse Lender for all its costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Credit Agreement, the
Promissory Note, the other Facility Agreements and any such other documents,
including, without limitation, reasonable fees and disbursements of counsel to
Lender, (e) pay, indemnify, and hold Lender, its directors, members, officers,
employees, agents and Affiliates, harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, any registration tax, stamp, duty and other similar taxes or
duties, if any, which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Credit Agreement, the Promissory Note,
the other Facility Agreements and any such other documents (other than income
taxes and franchise taxes), and (f) pay, indemnify, and hold Lender, its
directors, members, officers, employees, agents and Affiliates, harmless from
and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Credit Agreement, the Promissory Note and
the other Facility Agreements (all the foregoing, collectively, the "indemnified
liabilities"), provided that Borrower has no obligation hereunder to the Lender
with respect to indemnified liabilities arising from the gross negligence or
willful misconduct of the Lender.

                                       29
<PAGE>
10.6.    Successors and Assigns; Participations.

                    (a) This Credit Agreement shall be binding upon and inure to
the benefit of Borrower and Lender, and all future holders of the Promissory
Note and their respective successors and assigns, except that Borrower may not
assign or transfer any of its rights or obligations under this Credit Agreement
and Lender, except as set forth in paragraph (b) below, may not assign or
transfer any of its rights or obligations under this Credit Agreement without
(except following the occurrence of, and during the continuance of, an Event of
Default) the prior consent of Borrower, which consent shall not unreasonably be
withheld; provided, however, that if Lender desires to assign, transfer, sell or
otherwise dispose of all of its right, title and interest in the Collateral or
the Obligations owed to it under the Facility Agreements to any institutional
investor pursuant to any repurchase agreement or similar arrangement, or to a
Subsidiary or Affiliate of Continental Grain Company, the consent of Borrower
shall not be required.

                  (b) Lender may, in accordance with applicable law, at any time
sell to one or more banks or other entities ("Participants") participating
interests in any Loan owing to it, the Promissory Note, the Facility or any
other interest of Lender hereunder and under the other Facility Agreements. In
the event of any such sale by Lender of participating interests to a
Participant, Lender's obligations under this Credit Agreement to the other
parties hereto shall remain unchanged, Lender shall remain solely responsible
for the performance thereof, Lender shall remain the holder of the Promissory
Note for all purposes under this Credit Agreement and the other Facility
Agreements, and Borrower shall continue to deal solely and directly with Lender
in connection with Lender rights and obligations under this Credit Agreement and
the other Facility Agreements. Borrower agrees that if amounts outstanding under
this Credit Agreement and the Promissory Note are due and unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of the
Commitment Termination Date, each Participant shall be deemed to have the right
of setoff in respect of its participating interest in amounts owing under this
Credit Agreement and the Promissory Note to the same extent as if the amount of
its participating interest were owing directly to it under this Credit Agreement
or the Promissory Note. Borrower also agrees that each Participant shall be
entitled to the benefits of Subsections 2.9 and 9.5 with respect to its
participation in the Facility and the Loans outstanding from time to time;
provided, that no Participant shall be entitled to receive any greater amount
pursuant to such subsections than Lender would have been entitled to receive in
respect of the amount of the participation transferred by Lender to such
Participant had no such transfer occurred.

                  (c) Borrower authorizes Lender to disclose to any Participant
and any prospective Participant any and all financial information in its
possession concerning the Borrower and its Affiliates which has been delivered
to it by or on behalf of such Person pursuant to this Credit Agreement or which
has been delivered to it by or on behalf of such Person in connection with its
credit evaluation of Borrower and its Affiliates prior to becoming a party to
this Credit Agreement; provided such Participant agrees to keep such financial
information confidential unless required to be disclosed by applicable
Requirements of Law.

                                       30
<PAGE>
                  (d) If, pursuant to this Subsection 10.6, any interest in this
Credit Agreement or the Promissory Note is transferred or assigned to any
Participant or assignee which is organized under the laws of any jurisdiction
other than the United States or any state thereof, Lender shall cause such
Participant or assignee, as a condition to the effectiveness of such transfer,
(i) to represent to Lender and Borrower that under applicable law and treaties
then in effect no taxes will be required to be withheld by Borrower or Lender
with respect to any payments to be made to such Participant or assignee, in
respect of the Loans, (ii) to furnish to Borrower either U.S. Internal Revenue
Service Form 4224 (or any successor form) or U.S. Internal Revenue Service Form
1001 (or any successor form) (wherein such Participant or assignee claims
entitlement to complete exemption from U.S. federal withholding tax on all
interest payments hereunder) and (iii) to agree (for the benefit of Lender and
Borrower) timely to provide Lender and Borrower a new Form 4224 (or any
successor form) or Form 1001 (or any successor form) upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with and if permitted under applicable U.S. laws and regulations and
amendments then in effect duly executed and completed by such Participant or
assignee, and to comply from time to time with all applicable U.S. laws and
regulations with regard to such withholding tax exemption.

                  (e) Lender shall not grant to any Participant the right to
consent to any amendment or waiver entered into in accordance with subsection
10.1 except for any such amendment or waiver which would increase the Lender
Funding Commitment, or reduce the amount or extend the due date of any principal
of or interest on the Promissory Note.

10.7. Termination.

                    This Credit Agreement (except for Sections 10.4 and 10.5)
shall terminate following the Commitment Termination Date upon payment in full
of all outstanding principal, interest and other amounts due hereunder to
Lender.

10.8.    Counterparts.

                    This Credit Agreement may be executed by one or more of the
parties to this Credit Agreement on any number of separate counterparts, and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument.

10.9.    Severability.

                    Any provision of this Credit Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

10.10.   Integration; Construction.

                    This Credit Agreement represents the agreement of Borrower
and Lender with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by Lender relative to the subject
matter hereof not expressly set forth or referred to herein or in the other
Facility Agreements.

10.11.   Limited Liability.

                    No recourse under any Facility Agreement shall be had
against, and no personal liability shall attach to, any officer, employee,
director, member, affiliate, beneficial owner, trustee or shareholder of any
party hereto, as such, by the enforcement of any assessment or by any legal or
equitable proceeding, by virtue of any statute or otherwise in respect of any of
the Facility Agreements, it being expressly agreed and understood that each


                                       31
<PAGE>
Facility Agreement is solely a corporate or trust obligation of each party
hereto, and that any and all personal liability, either at common law or in
equity, or by statute or constitution, of every such officer, employee,
director, member, affiliate, beneficial owner, trustee or shareholder for
breaches by any party hereto of any obligations under any Facility Agreement is
hereby expressly waived as a condition of and in consideration for the execution
and delivery of this Agreement.

10.12.   GOVERNING LAW.

                    THIS CREDIT AGREEMENT AND THE PROMISSORY NOTE AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES UNDER THIS CREDIT AGREEMENT AND THE PROMISSORY
NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE
LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES
THEREOF.

10.13.   SUBMISSION TO JURISDICTION; WAIVERS.

                    EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY:

                  (a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS CREDIT AGREEMENT AND THE OTHER FACILITY AGREEMENTS
TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT OF
THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;

                  (b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT
IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM
THE SAME;

                  (c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS
ADDRESS SET FORTH IN SUBSECTION 10.2 OR AT SUCH OTHER ADDRESS OF WHICH ALL OF
THE OTHER PARTIES HERETO SHALL HAVE BEEN NOTIFIED PURSUANT THERETO;

                  (d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND


                  (e) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED
TO IN THIS SUBSECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.

                                       32
<PAGE>
10.14. Acknowledgements.

                    Borrower and FirstCity Consumer each hereby acknowledge
that:

                  (a) it has been advised by counsel in the negotiation,
execution and delivery of this Credit Agreement, the Promissory Note and the
other Facility Agreements;

                  (b) the Lender has no fiduciary relationship to Borrower or
FirstCity Consumer, and the relationship between Lender and Borrower is solely
that of debtor and creditor; and

                  (c) no joint venture exists between Borrower, FirstCity
Consumer and Lender.

10.15.   WAIVER OF JURY TRIAL.

                    EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS CREDIT
AGREEMENT OR THE PROMISSORY NOTE OR ANY OTHER FACILITY AGREEMENT AND FOR ANY
COUNTERCLAIM THEREIN.




                                       33
<PAGE>
                  IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed and delivered in New York, New York by their
proper and duly authorized officers, members or trustees as of the day and year
first above written.

                          FIRSTCITY AUTO RECEIVABLES L.L.C.


                          -----------------------------------------
                          By:
                          Name:
                          Title:


                          FIRSTCITY CONSUMER LENDING CORPORATION


                          -----------------------------------------
                          By:
                          Name:
                          Title:


                          FIRSTCITY FINANCIAL CORPORATION


                          -----------------------------------------
                          By:
                          Name:
                          Title:


                          CONTITRADE SERVICES L.L.C.


                          ------------------------------------------
                          By:
                          Name:
                          Authorized Signatory



                          -------------------------------------------
                          Name:
                          Authorized Signatory




                                       34
<PAGE>
                                                                     EXHIBIT A

                                DEFINITIONS LIST

                  Adjusted Eligible Contract Balance: On any date, the amount
described in clause (y) of the definition of "Borrowing Base."

                  Advance: As defined in Subsection 2.1 of the Credit Agreement.

                  Advance Rate: For each Contract which is designated "tier 1,"
"tier 2," "tier 3" or "tier 4" under the Underwriting Criteria, 85%. For each
Contract originated by FirstCity Consumer, 95%.

                  Affiliate: As to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" or
"controlled" have meanings correlative to the foregoing. Notwithstanding the
foregoing, no "acquisition vehicle" (such as WAMCO XXIII, Ltd.) shall be
considered an "Affiliate" of FirstCity Financial or any FirstCity Entity.

                  Annual Percentage Rate: The annual rate of interest applicable
to each Contract, as disclosed therein.

                  Available Amount:  As defined in Subsection 9.1(c).

                  Available Facility Amount: On any date, the excess, if any, of
(a) the Borrowing Base, as of such date, minus (b) the Outstanding Facility
Balance (not to exceed the Maximum Loan Amount).

                  Bank Accounts: Collectively, the Lockbox Account and the
Collection Account.

                  Bankruptcy Event: With respect to a Person, (a) such Person or
any of its Affiliates (if any) shall commence any case, proceeding or other
action (i) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (ii) seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or any
substantial part of its assets, or such Person or any of its Affiliates shall
make a general assignment for the benefit of its creditors; or (b) there shall
be commenced against such Person or any of its Affiliates any case, proceeding
or other action of a nature referred to in clause (a) above which (i) results in
the entry of an order for relief or any such adjudication or appointment or (ii)
remains undismissed, undischarged or unbonded for a period of 60 days; or (c)
there shall be commenced against such Person or any of its Affiliates any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its assets which results in the entry of an order for any such relief which

                                      A-1
<PAGE>
shall not have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (d) such Person or any of its
Affiliates shall take any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the acts set forth in clause (a),
(b), or (c) above; or (e) such Person or any of its Affiliates shall generally
not, or shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due.

                  Blanket Policy: An Insurance Policy maintained by the Borrower
and its assignees for "vendor's single interest" coverage with respect to each
Vehicle.

                  Borrower: FirstCity Auto Receivables L.L.C., a Texas limited
liability company.

                  Borrowing Base: As determined by the Collateral Agent pursuant
to Section 7.08(a)(v) of the Security and Collateral Agent Agreement, on any
day, an amount equal to the product of (x) the applicable Advance Rate and (y)
the Outstanding Contract Balance of all Contracts which are not Defaulted or
Liquidated, less the Outstanding Contract Balance of Contracts (a) as to which
the Collateral Agent has not confirmed that it has possession thereof and (b)
Contracts that do not have a certificate of title by the 121st day of its
origination.

                  Borrowing Date: Any Business Day specified in a notice
pursuant to subsection 2.3 of the Credit Agreement as a date on which Borrower
requests Lender to make Loans thereunder.

                  Business Day: A day of the year on which banks are not
required or authorized to close in New York City, New York, Wilmington,
Delaware, Dallas, Texas and Los Angeles, California.

                  Capital Stock: With respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of capital
stock of a corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants or options to purchase any
of the foregoing.

                  Change of Control:

                  (i) Except with respect to a securitization contemplated by
the Facility Agreements, all or substantially all of any of the Borrowers',
FirstCity Funding's, FirstCity Consumer's or FirstCity Servicing's assets are
sold, leased, transferred or otherwise disposed of as an entirety or
substantially as an entirety (in one transaction or in a series of transactions)
to any Person or Persons which are not at least 80% owned, directly or
indirectly, by FirstCity Financial; or

                  (ii) the beneficial owners or trustees of either of the
FirstCity Entities consummate, or approve a definitive agreement or plan for:

                  (A) any merger, consolidation, exchange of certificates,
recapitalization, restructuring or other business combination with or into
another corporation or any sale of beneficial ownership of any of the Borrower,
FirstCity Funding, FirstCity Consumer or FirstCity Servicing (for purposes of
this definition, a "Transaction") pursuant to which (x) any of the Borrower,
FirstCity Funding, FirstCity Consumer or FirstCity Servicing will not survive,


                                      A-2
<PAGE>
or (y) FirstCity Financial, directly or indirectly, will not hold at least 80%
of the beneficial interest in any of the Borrower, FirstCity Funding, FirstCity
Consumer or FirstCity Servicing after such Transaction, or (z) FirstCity
Financial, directly or indirectly, is entitled to receive any cash, securities
or other property, except any such Transaction as a result of which at least 80%
of the beneficial ownership of the surviving Person is owned, directly or
indirectly, by FirstCity Financial, or

                  (B) the liquidation or dissolution of any of the Borrower,
FirstCity Funding, FirstCity Consumer or FirstCity Servicing.

                  Closing Date:  April 30, 1998.

                  Code: The United States Internal Revenue Code of 1986,
amended.

                  Collateral: As defined in Section 2 of the Security and
Collateral Agent Agreement.

                  Collateral Agent: Chase Bank of Texas, National Association,
acting in its capacity as Collateral Agent under the Security and Collateral
Agent Agreement and any successor Collateral Agent appointed pursuant to the
Security and Collateral Agent Agreement.

                  Collateral Agent Certification: As defined in Section
7.08(a)(i) of the Security and Collateral Agent Agreement.

                  Collection Account: The Collection Account maintained by the
Collateral Agent pursuant to the Paying Agent Agreement.

                  Collection Period: With respect to any Payment Date, the
calendar month (or portion of such calendar month, in the case of the first
Payment Date) immediately preceding such Payment Date.

                  Collections: All amounts (including, without limitation,
Recoveries) due and owing on, or otherwise received by Borrower in respect of
the Contracts and the Vehicles.

                  Commitment Period: The period from and including the date
hereof to but not including the Commitment Termination Date.

                  Commitment Termination Date: May 30, 1998; or such later date
to which the Commitment Termination Date may be extended pursuant to Section
2.1(b) of this Credit Agreement.

                  Computer Tape: A computer tape generated by the Borrower
containing, without limitation, the information set forth on the Contract List.

                  Conti: The Lender and its Affiliates.

                  ContiFinancial: ContiFinancial Services Corporation, a
Delaware Corporation.

                                      A-3
<PAGE>
                  Contract: Each retail installment sale contract for a Vehicle
that was originated by an Originator, and all rights and obligations thereunder.

                  Contract File: Each original Contract, a record of the
information supplied by the Obligor in the original credit application, together
with any other documents relating thereto each of which are delivered to and
held by the Collateral Agent (including, but not limited to, the application for
title registration).

                  Contract List: Each schedule of Contracts delivered by
Borrower to Lender and the Collateral Agent with respect to each Borrowing Date
identifying, in such detail as such parties may require, each Contract being
purchased by Borrower, delivered to the Lender and, for so long as the Security
and Collateral Agent Agreement is in effect, the Collateral Agent, pledged by
Borrower to the Lender, organized by the name of the Obligor and the state in
which the Obligor's billing address is located and setting forth for each such
Contract: (i) a number identifying the Contract, (ii) the original amount
financed of such Contract, (iii) Annual Percentage Rate, (iv) the original
maturity of the Contract, (v) the remaining maturity of the Contract, (vi) the
amount of the Obligor's monthly payment, (vii) the purchase price of such
Contract, (viii) the name of the Obligor on such Contract, (ix) the address of
the Obligor on such Contract, (x) the Outstanding Balance of such Contract and
(xi) the name of the holder of the Lien on such Contract.

                  Contractual Obligation: As to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.

                  Credit Agreement: This Warehouse Credit Agreement dated as of
April 30, 1998 among Borrower, Lender, FirstCity Consumer and FirstCity
Financial.

                  Credit and Collection Policy: The credit and collection policy
in effect as of the Closing Date.

                  Credit Enhancer: A monoline insurer, letter of credit bank or
other third- party supplier of credit enhancement, if any.

                  Dealer Assignment: Any agreement pursuant to which a Contract
or security interest in a Vehicle has been transferred, sold or assigned by a
Vehicle Dealer to Borrower (to an Originator and then assigned to Borrower).

                  Debt: Of a Person on any day, the sum on such day of (a)
indebtedness for borrowed money or for the deferred purchase price of property
or services, or evidenced by bonds, notes or other similar instruments, (b)
obligations as lessee under any operating leases and any leases which shall have
been or should be, in accordance with GAAP, recorded as capital leases, and (c)
obligations under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred to in clause (a) or (b) above.

                                       A-4
<PAGE>
                  Defaulted Contract: As of any Determination Date, any Contract
that as of the end of the preceding Collection Period (a) is classified by the
Borrower, on a contractual basis, as 61 or more days past due, or (b) with
respect to which the related Vehicle has been repossessed by Borrower and the
notice of intent to sell has expired, or (c) with respect to which the related
Vehicle has been voluntarily repossessed.

                  Delinquency Ratio: With respect to a Determination Date, the
aggregate Outstanding Contract Balances of all contracts in the Servicer's
entire servicing portfolio which are thirty-one (31) or more days past due as of
the end of the preceding Collection Period divided by the aggregate Outstanding
Contract Balances of all contracts in the Servicer's entire servicing portfolio
as of the end of such preceding Collection Period.

                  Delinquent Contract: Any Contract (a) that is classified by
the Borrower, on a contractual basis, as 31 or more days past due and (b) that
is not a Liquidated Contract.

                  Deposit Amount: means all funds deposited in the Collection
Account (i) by the Borrower, pursuant to Section 2.01(a)(iii) of the Paying
Agent Agreement or (ii) by the Lender, pursuant to Section 2.01(a)(i) of the
Paying Agent Agreement in each case (a) since the end of the immediately
preceding Collection Period and (b) which remain on deposit in the Collection
Account at the time of the Borrowing Base calculation is being made and, thus
have not been applied to the acquisition of Contracts.

                  Deposited Funds: On any day, all Principal Collections on
deposit in or otherwise to the credit of the Collection Account at the close of
business on the previous Business Day.

                  Determination Date: With respect to a Collection Period, the
tenth day following the end of such Collection Period.

                  Dollars and $:  Lawful money of the United States of America.

                  Eligible Contract: On any day, a Contract (a) that arises from
the completed delivery of a Vehicle and which has been fully performed by
Borrower and the Dealer party thereto, (b) that arises from the normal course of
the Dealer's business, (c) that is not a Defaulted Contract, (d) that is not a
Delinquent Contract; (e) the Obligor of which is a natural person residing in
any state of the United States or the District of Columbia, (f) the Obligor of
which is not a government or governmental subdivision or agency, (g) the Obligor
of which has full power and capacity to enter into such Contract and perform his
or her obligations thereunder, (h) as to which the Obligor has executed and
delivered an original note that is in full force and effect and constitutes the
legal, valid and binding obligation of the Obligor in accordance with its terms,
(i) that is denominated and payable in Dollars in the United States, (j) that is
not subject to any dispute, litigation, counterclaim or defense, or any offset
or right of offset at the time of purchase by Borrower, (k) that has an original
term to maturity of not less than 24 nor more than 72 months, provided that no
more than 1% shall have original terms to maturity greater than 60 months, (l)
that provides for equal monthly payments which will cause the Contract to fully
amortize during its term, (m) that has an Annual Percentage Rate of not less
than the lesser of (A) 500 basis points over the two-year Treasury rate in
effect on the date of origination of such Contract and (B) the maximum interest
rate permissible by law with respect to such Contract, (n) that, together with

                                       A-5
<PAGE>
the note applicable thereto, does not contravene any Requirements of Law
applicable thereto, (o) with respect to which all required consents, approvals
and authorizations have been obtained, (p) as to which the security interest in
the Vehicle securing such Contract has been recorded in the name of Originator
and which security interest is in full force and effect and subject to no prior
or equal liens, claims or encumbrances, (q) which was originated using each
Originator's Underwriting Criteria, (r) that requires the Borrower to be named
as loss payee or beneficiary (as applicable) under an insurance policy with
respect to the Vehicle financed by such Contract and entitles the Borrower to
the benefits of such insurance policy (s) that, if such Contract is a Modified
Contract, the Lender has not given the Borrower notice that such Contract is to
be excluded as not being an Eligible Contract and (t) as to which the Collateral
Agent has issued a Collateral Agent's Certification listing no exceptions.

                  Eligible Deposit Account: Either (i) a segregated account with
an Eligible Institution or (ii) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States of America or any one of the States thereof or the District of
Columbia (or any domestic branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so long as any
of the securities of such depository institution have a credit rating acceptable
to the Lender.

                  Eligible Institution: A depository institution organized under
the laws of the United States of America or any one of the States thereof or the
District of Columbia (or any domestic branch of a foreign bank), (A) which has
either (1) a long-term unsecured debt rating of at least AA by S&P and Aa by
Moody's or otherwise acceptable to the Lender or (2) a short-term unsecured debt
rating or certificate of deposit rating of at least A-1 by S&P and P-1 by
Moody's or otherwise acceptable to the Lender and (B) whose deposits are insured
by the FDIC.

                  Employee Benefit Plan: Any plan, agreement, arrangement or
commitment which is an employee benefit plan, as defined in section 3(3) of
ERISA, maintained by FirstCity Consumer or with respect to which FirstCity
Consumer has any liability or obligation to contribute.

                  ERISA: The Employee Retirement Income Security Act of 1974, as
amended.

                  ERISA Group: FirstCity Financial and any entity required to be
aggregated with the FirstCity Consumer under Section 414(b), (c), (m) or (o) of
the Code.

                  Event of Default: The occurrence of any of the following
events:

                  (a) Borrower fails to pay when due any amount payable under
         the Credit Agreement.

                  (b) Any representation or warranty made or deemed made by
         Borrower or FirstCity Consumer, in any capacity which is contained in
         the Facility Agreements or in any agreement, written report or written
         information furnished at any time under or required by the Facility
         Agreements shall prove to have been false or incorrect on or as of the
         date made or deemed made, which remains uncured for five Business Days
         following FirstCity Consumer's receipt of notice thereof, and which is
         likely to have a material, adverse effect on the financial condition or
         business prospects of the Borrower or of FirstCity Consumer.

                                      A-6
<PAGE>
                  (c) (i) Borrower (x) defaults in any payment of principal of
         or interest on any Debt, beyond the period of grace, if any, provided
         in the instrument or agreement under which such Debt was created or (y)
         defaults in the observance or performance of any agreement or condition
         contained in any instrument or agreement to which it is a party or by
         which its property or assets are bound, which remains uncured for five
         Business Days following the Borrower's and FirstCity Consumer's receipt
         of notice thereof.

                           (ii) FirstCity Consumer (x) defaults in any payment
         of principal of or interest on any Debt, beyond the period of grace, if
         any, provided in the instrument or agreement under which such Debt was
         created and which has an outstanding principal balance of $50,000 or
         more or (y) defaults in the observance or performance of any agreement
         or condition contained in any instrument or agreement to which it is a
         party or by which its property or assets are bound, which remains
         uncured for five Business Days following FirstCity Consumer's receipt
         of notice thereof, and which is likely to have a material adverse
         effect on the financial condition or business prospects of FirstCity
         Consumer.

                           (iii) FirstCity Financial (x) defaults in any payment
         of principal of or interest on any Debt, beyond the period of grace, if
         any, provided in the instrument or agreement under which such Debt was
         created and which has an outstanding principal balance of $50,000 or
         more or (y) defaults in the observance or performance of any agreement
         or condition contained in any instrument or agreement to which it is a
         party or by which its property or assets are bound, which remains
         uncured for five Business Days following FirstCity Financial's receipt
         of notice thereof, and which is likely to have a material adverse
         effect on the financial condition or business prospects of FirstCity
         Financial; provided, however, that only payments due from FirstCity
         Financial, if any, with respect to any acquisition partnership shall
         apply with respect to this provision.

                  (d) For any reason, Borrower shall cease to have a valid and
         perfected first priority ownership interest in the Contracts or Lender
         shall cease to have a valid and perfected first priority security
         interest in the Collateral or any other collateral pledged under the
         Facility Agreements or any other Operative Document shall cease to be
         in full force and effect or cease to be the legal, valid, binding and
         enforceable obligation of any party thereto.

                  (e) A Bankruptcy Event shall occur with respect to any of the
         FirstCity Entities.

                  (f) One or more judgments or decrees (in the case of FirstCity
         Consumer, in an aggregate amount in excess of $50,000) shall have been
         entered against any FirstCity Entity which is not paid, bonded, stayed
         or covered by insurance, provided, that this clause shall not apply to
         actions relating to individual Contracts, unless a material portion of
         the Contracts is affected.

                                      A-7
<PAGE>
                  (g) Borrower or FirstCity Consumer becomes liable for
         environmental remediation or compliance expenses or fines, penalties or
         other charges related to environmental matters in excess of $50,000.

                  (h) (i) FirstCity Consumer or any other person engages in a
         transaction in connection with which FirstCity Consumer or any entity
         which it has an obligation to indemnify could be subject to liability
         for either a civil penalty assessed pursuant to section 502(I) of ERISA
         or a tax imposed by section 4975 of the Code; (ii) any "accumulated
         funding deficiency" (as defined in Section 302 of ERISA or Section 412
         of the Code), whether or not waived, shall exist with respect to any
         Single Employer Plan, (iii) a Reportable Event shall occur with respect
         to, or proceedings shall commence to have a trustee appointed, or a
         trustee shall be appointed, to administer or to terminate, any Single
         Employer Plan, which Reportable Event or commencement of proceedings or
         appointment of a trustee is, in the reasonable opinion of the Lender,
         likely to result in the termination of such Plan for purposes of Title
         IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes
         of Title IV of ERISA, (v) any member of the ERISA Group shall, or in
         the reasonable opinion of Lender is likely to, incur any liability in
         connection with a withdrawal from, or the Insolvency or Reorganization
         of, a Multiemployer Plan or (vi) any other event or condition shall
         occur or exist, with respect to a Plan; and in each case in clauses (i)
         through (vi) above, such event or condition, together with all other
         such events or conditions, if any, could subject Borrower or any ERISA
         Affiliate to any tax, penalty or other liabilities which are materially
         adverse to the business, operations, prospects, property or financial
         or other condition of FirstCity Consumer.

                  (i) Any financial statement delivered pursuant to the Facility
         Agreements and reported on by any independent certified public
         accountants shall contain any qualification or exception, or
         qualification arising out of the scope of the audit.

                  (j) A material adverse change from the date hereof in the
         business, properties, operations, prospects or financial or other
         condition of Borrower, FirstCity Consumer, or FirstCity Financial as
         determined by Lender in its reasonable, good faith business judgment.

                  (k) A material adverse change from the date hereof in the
         collectibility of the Contracts taken as a whole.

                  (l) Borrower or FirstCity Consumer becomes an "investment
         company" or a company "controlled" by an "investment company" within
         the meaning of the Investment Company Act of 1940, as amended.

                  (m) Borrower shall fail to provide any information required to
         be provided by Sections 6.1 and 6.2 of this Credit Agreement by the
         time required thereby.

                  (n) Borrower or FirstCity Consumer shall default in the
         observance or performance of any other term, condition or covenant
         under the Facility Agreements and such failure to observe or perform
         continues for five Business Days.

                                      A-8
<PAGE>
                  (o) As of any Determination Date, the Rolling Delinquency
         Ratio is greater than or equal to 15%.

                  (p) As of any Determination Date, the Delinquency Ratio is
         greater than or equal to 20%.

                  (q) The Net Loss Ratio is greater than or equal to, on an
         annualized basis, 19% during April, May or June 1998, 16% during July,
         August or September 1998, and 13% thereafter.

                  (r) As of any Determination Date, the average of the Recovery
         Percentages for the three preceding Collection Periods is less than
         40%.

                  (s) As of any date, the Outstanding Facility Balance exceeds
         the Borrowing Base.

                  (t) A Change of Control shall occur.

                  (u) The aggregate principal amount of Contracts originated by
         FirstCity Consumer is less than $20,000,000 for the first six months
         following the Closing Date.

                  (v) Borrower fails to observe the financial covenant set forth
         in Section 6.14 of the Credit Agreement.

                  (w) FirstCity Financial fails to observe the covenant set
         forth in Section 6.17 of the Credit Agreement.

                  (x) Any default occurs under the Servicing Agreement.

                  (y) Any FirstCity Entity shall default in the observance or
         performance of any term, condition or covenant in any other Facility
         Agreement and such failure to observe or perform continues for five
         Business Days.

                  (z) Any default by FirstCity Consumer under the IBSA.

                  Facility: As defined in Section 2.1(a) of this Credit
Agreement.

                  Facility Agreements: The collective reference to the Credit
Agreement, the Promissory Note, the Security and Collateral Agent Agreement, the
Servicing Agreement, the IBSA, and any other agreement or instrument related or
delivered to any party to any of the foregoing pursuant to or in connection with
any of the foregoing.

                  FDIC: The Federal Deposit Insurance Corporation or any
successor thereof.

                  File: With respect to each Contract to be purchased by
Borrower:

                  (a)      the original Dealer Assignment;

                  (b)      the fully executed original of the Contract;


                                      A-9
<PAGE>
                  (c) documents evidencing or related to any Insurance 
         Policy with respect to a Vehicle;

                  (d) the original or a copy of the credit application of the
         Obligor, fully executed by such Obligor, such application to be in a
         form substantially similar to that included in the Credit and
         Collection Policy;

                  (e) where permitted by law, the original certificate of title
         and otherwise such documents, if any, that the Servicer keeps on file
         in accordance with its customary procedures and the Credit and
         Collection Policy indicating that the Vehicle is owned by the Obligor
         and subject to the interest of Borrower as first lienholder or secured
         party; and

                  (f) any and all other documents that Borrower, Collateral
         Agent or Servicer keeps on file in accordance with its procedures
         relating to the Contract, Obligor or Vehicle.

                  Finance Charges: Interest charges, late charges, and other
fees, charges and similar items with respect to Contracts.

                  FirstCity Consumer: FirstCity Consumer Lending Corporation, a
Texas corporation.

                  FirstCity Consumer Finance: FirstCity Consumer Finance
Corporation, a Texas corporation.

                  FirstCity Entities: The Borrower, FirstCity Consumer,
FirstCity Financial and all subsidiaries (including trusts) of FirstCity
Consumer.

                  FirstCity Financial: FirstCity Financial Corporation, a
Delaware corporation.

                  FirstCity Funding: FirstCity Funding Corporation, a Texas
corporation.

                  GAAP: Generally accepted accounting principles in effect from
time to time in the United States of America.

                  Governmental Authority: Any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

                  IBSA: The Investment Banking Services Agreement dated as of
May 17, 1996 between National Auto Funding Corporation and ContiFinancial, as
amended.

                  Insolvency: With respect to any Multiemployer Plan, the
condition that such plan is insolvent within the meaning of Section 4245 of
ERISA.

                  Interest Period: With respect to any Payment Date, the prior
calendar month.

                                      A-10
<PAGE>
                  Lender: ContiTrade Services L.L.C.

                  Lender Commitment: $50,000,000, or such other amount agreed
upon in writing by Borrower and Lender.

                  LIBOR: With respect to any Advance, (x) through the end of the
Interest Period in which such Advance is made, one-month LIBOR on the related
Borrowing Date, and (y) for subsequent Interest Periods, one-month LIBOR on the
first day of such Interest Period, in either case as published on such date in
the Wall Street Journal.

                  Lien: Any lien, mortgage, security interest, pledge,
hypothecation, charge, equity, encumbrance or right of any kind whatsoever
(except any lien, mortgage, security interest, pledge, hypothecation, charge,
equity, encumbrance or right of any kind granted under the Credit Agreement with
respect to the Contracts).

                  Liquidated Contract: A Contract which is a charged off
Contract, according to the charge-off policy attached hereto as Exhibit G.

                  Loan:  As defined in subsection 2.1 of the Credit Agreement.

                  Lockbox Account: The Wells Fargo Account #022168835 into which
each Lockbox Provider deposits all available Collections.

                  Lockbox Agreement: The Lockbox Agreement attached hereto as
Exhibit H.

                  Lockbox Provider: Fiserv Corporation.

                  Maximum Loan Amount: At any time, the lesser of (a)
$50,000,000 and (b) the Borrowing Base.

                  Modified Contract: As defined in Section 2.2(b) of the
Servicing Agreement.

                  Moody's: Moody's Investors Service, Inc.

                  Multiemployer Plan: A "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which any member of the ERISA Group is making or
accruing an obligation to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make contributions.

                  N.A.F. Entities: N.A.F. Auto Loan Trust, a Delaware business
trust and National Auto Funding Corporation, a Texas corporation.

                  Net Loss. For a Collection Period, the remaining Contract
Balance of any Contracts liquidated during such period, less any Recoveries
received during such period on Contracts liquidated during prior Collection
Periods.

                  Net Loss Ratio: As of any Determination Date, the average,
over the three most recent Collection Periods, of the product of (a)(i) the Net
Loss for such Collection Period, divided by (ii) the principal balance of all
contracts in the Servicer's entire servicing portfolio outstanding at the end of
such Collection Period and (b) 12.

                                      A-11
<PAGE>
                  Notice of Borrowing: As defined in Section 2.3 of the Credit
Agreement.

                  Obligations: All the unpaid principal amount of, and interest
on (including interest accruing on or after any Bankruptcy Event, whether or not
a claim for post-filing or post-petition interest is allowed in a proceeding
relating thereto, and interest on overdue interest), the Promissory Note and all
other obligations and liabilities of Borrower or any Affiliate of the FirstCity
Entities to Lender or any Affiliate of Lender, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the Credit
Agreement, the Promissory Note, the Facility Agreement and any other document
executed and delivered in connection therewith whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all fees and disbursements of counsel to Lender)
or otherwise.

                  Obligor:  Each Person who is indebted on a Contract.

                  Originators: The N.A.F. Entities, FirstCity Consumer Finance,
FirstCity Funding, and any originator approved by the Lender subject to Section
6.9 hereof.

                  Outstanding Contract Balance: On any day, with respect to any
Contract, the principal amount due and owing on such Contract on such day.

                  Outstanding Facility Balance: On any day, with respect to the
Loan, the outstanding principal amount of the Loan on such day.

                  Paying Agent: The Collateral Agent, acting in its capacity as
paying agent under the Paying Agent Agreement.

                  Paying Agent Agreement: The Paying Agent Agreement dated as of
April 30, 1998 among Borrower, Lender and the Paying Agent.

                  Payment Date: As defined in Section 2.4 of the Credit
Agreement.

                  PBGC: The Pension Benefit Guaranty Corporation established
under ERISA.

                  Permitted Investments: Book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:

                  (i) direct obligations of, and obligations fully guaranteed as
         to timely payment by, the United States of America;

                  (ii) demand deposits, time deposits or certificates of deposit
         of any depository institution or trust company incorporated under the
         laws of the United States of America or any state thereof (or any
         domestic branch of a foreign bank) and subject to supervision and
         examination by Federal or State banking or depository institution
         authorities; provided, however, that at the time of the investment or
         contractual commitment to invest therein, the commercial paper or other


                                      A-12
<PAGE>
         short-term unsecured debt obligations (other than such obligations the
         rating of which is based on the credit of a person other than such
         depository institution or trust company) thereof shall have a credit
         rating from each of S&P and Moody's in the highest investment category
         granted thereby;

                  (iii) commercial paper having, at the time of the investment
         or contractual commitment to invest therein, a rating from each of S&P
         and Moody's in the highest investment category granted thereby;

                  (iv) investments in money market funds, including, without
         limitation, the VISTA money market funds so long as such funds are
         rated Aaa by Moody's or AAAm by S&P, and any other funds for which the
         Paying Agent or an affiliate thereof serves as an investment advisor,
         administrator, shareholder, servicing agent and/or custodian or
         sub-custodian;

                  (v) demand deposits, time deposits and certificates of deposit
         which are fully insured by the FDIC;

                  (vi) bankers' acceptances issued by any depository institution
         or trust company referred to in clause (ii) above; and

                  (vii) repurchase obligations with respect to any security that
         is a direct obligation of, or fully guaranteed by, the United States of
         America or any agency or instrumentality thereof, the obligations of
         which are backed by the full faith and credit of the United States of
         America, in either case entered into with a depository institution or
         trust company (acting as principal) the deposits of which are insured
         by the FDIC.

                  Person: An individual, a partnership, a corporation, a limited
liability company, a limited liability partnership, a business trust, a joint
stock company, a trust, an unincorporated association, a joint venture, a
Governmental Authority or other entity of whatever nature.

                  Plan: Any employee benefit plan defined in Section 3(3) of
ERISA in respect of which any member of the ERISA Group is or at any time within
the immediately preceding five years was an "employer" as defined in Section
3(5) of ERISA or may have liability, including liability as a substantial
employer, within the meaning of Section 4063 of ERISA and as a contributing
sponsor under Section 4069 of ERISA.

                  Principal Collections: Collections other than Finance Charges.

                  Program: As defined in Subsection 9.1(c).

                  Promissory Note: The note issued pursuant to Section 2.2 of
the Credit Agreement.

                  Rating Agencies: Moody's Investors Service, Standard & Poor's
Corporation, Duff & Phelps Credit Rating Service and Fitch Investors Service.

                                      A-13
<PAGE>
                  Recoveries: With respect to any Collection Period, the
aggregate amount of all cash received by Borrower net of expenses during such
Collection Period in respect of any Contract which is a liquidated Contract.

                  Recovery Percentage: With respect to any Collection Period,
the percentage equivalent of a fraction, the numerator of which is the aggregate
amount of Recoveries deposited in the Collection Account during such Collection
Period in respect of Contracts which became Liquidated Contracts during such
Collection Period and the denominator of which is the aggregate Outstanding
Balance of such Liquidated Contracts.

                  Reorganization: With respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.

                  Reportable Event: Any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder other than those events as to
which the thirty day notice period is waived under subsections .13, .14, .18,
 .19 or .20 of PBGC regulation Section 2615.

                  Requirements of Law: As to any Person, the Certificate of
Incorporation and By-laws or other organizational or governing documents of such
Person and any law, treaty, rule or regulation or determination of any
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

                  Responsible Officer: As to any Person, the chief executive
officer, president, vice president-operations, chief financial officer,
controller, secretary or treasurer of a corporation, provided, that (a) with
respect to any certificate to be delivered by a Responsible Officer, such
Responsible Officer shall have personal knowledge of the subject matter of such
certificate, and (b) with respect to any other matter to be undertaken by a
Responsible Officer, such Responsible Officer shall be duly authorized by all
necessary corporate or other action with respect to such matter.

                  Rolling Delinquency Ratio: With respect to any Determination
Date, the average, as of the last day of each of the three preceding Collection
Periods, of the aggregate Outstanding Contract Balances of all Contracts which
are 31 or more days past due as of the end of the preceding Collection Period
divided by the aggregate Outstanding Contract Balances of all Contracts as of
the end of such preceding Collection Period.

                  S&P: Standard & Poor's Ratings Services, a Division of The
McGraw Hill Companies, Inc.

                  SEC: The Securities and Exchange Commission.

                  Securitization: As defined in Section 6.12 of this Credit
Agreement.

                  Security and Collateral Agent Agreement: The Security and
Collateral Agent Agreement dated as of April 30, 1998 among Borrower, Lender and
the Collateral Agent.

                  Servicer: FirstCity Servicing Corporation of California.

                                      A-14
<PAGE>
                  Servicing Agreement: The Servicing Agreement dated as of April
30, 1998 among Borrower, the Servicer and the Collateral Agent.

                  Servicing Report: The report to be delivered by Borrower
pursuant to Section 6.2 of the Credit Agreement, substantially in the form of
Exhibit I thereto.

                  Single-Employer Plan: A single employer plan, as defined in
Section 4001(a)(15) of ERISA, which (a) is maintained for employees of Borrower
or an ERISA Affiliate thereof and no Person other than the Borrower and their
ERISA Affiliates or (b) was so maintained and in respect of which the Borrower
or any ERISA Affiliate thereof could have liability under Title IV of ERISA in
the event such plan has been or were to be terminated.

                  Subordinated Debt: Any Debt which (x) is by its terms
subordinated to the Obligations, and (y) provides for a non-petition covenant
against Borrower.

                  Subordinated Lien: A Lien approved in writing by the Lender,
and which secures any Subordinated Debt.

                  Subordinate Financing: Any combination of the following: cash,
purchase of a "B piece" or "residual" certificate, funding of an initial reserve
account deposit, issuance of a guaranty, serving as account party on a letter of
credit, or other form of subordinate financing in the related securitization.
Such subordinate financing shall be acceptable to the Rating Agencies and the
Credit Enhancer.

                  Subsidiary: As to any Person, any Person of which a Person
owns, directly or indirectly through one or more intermediaries, more than 50%
of the Capital Stock or beneficial interest thereof.

                  Tangible Assets: All assets of Borrower except: (i) deferred
assets, other than prepaid insurance and prepaid taxes, (ii) patents,
copyrights, trademarks, trade names, non-compete agreements, franchises and
similar intangibles, (iii) good will, including any amounts, however designated
on the balance sheet of Borrower, representing the excess of the purchase price
paid for assets or stock over the value assigned thereto on the books of
Borrower, (iv) unamortized debt discount and expense, and (v) accounts, notes
and other receivables due from Affiliates or employees.

                  Tangible Net Worth: At any date means a sum equal to (i) the
net book value (after deducting related depreciation, amortization and other
proper reserves) at which the Tangible Assets of Borrower would be shown on a
balance sheet at such date in accordance with GAAP applied on a consistent
basis, minus (ii) the amount at which the liabilities of Borrower (excluding
Subordinated Debt) would be shown on such balance sheet in accordance with GAAP,
and including as liabilities all reserves, required in accordance with GAAP, for
contingencies and other potential liabilities.

                  Tangible Net Worth Requirement: The total Tangible Net Worth
of FirstCity Financial is equal to at least $95 million.

                  Taxes: As defined in Section 2.10 of the Credit Agreement.

                                      A-15
<PAGE>
                  UCC: The Uniform Commercial Code as in effect in the specified
jurisdiction or, if no jurisdiction is specified, as in effect in the state
whose law, by agreement of the parties, governs the document or agreement in
which the term "UCC" appears.

                  Underwriting Criteria: The criteria agreed upon for
underwriting Contracts between Borrower and Lender and attached to the Credit
Agreement as Exhibit K.

                  Unmatured Event of Default: Any of the events specified in the
definition of Event of Default, whether or not any requirement for the giving of
notice, the lapse of time, or both, or any other condition, has been satisfied.

                  Vehicle: Any new or used automobile or light truck that
secures a Contract.

                  Vehicle Dealer: Any seller of automobile or light trucks that
originated one or more of the Contracts and transferred, sold or assigned the
respective Contract, directly or indirectly, to Borrower under a Dealer
Assignment.




                                      A-16
<PAGE>
                                                                     EXHIBIT B

                                 PROMISSORY NOTE

                                                             New York, New York
                                                             April 30, 1998

                  FOR VALUE RECEIVED, the undersigned, FirstCity Auto
Receivables L.L.C., a Delaware limited liability company (the "Borrower"),
promises to pay to the order of ContiTrade Services L.L.C. ("Lender"), on the
date specified in Section 2.5 of the Credit Agreement hereinafter referred to,
at the office of Lender at 277 Park Avenue, New York, New York, in lawful money
of the United States of America and in immediately available funds, the
principal amount of FIFTY MILLION DOLLARS AND NO CENTS ($50,000,000), or if
less, the aggregate unpaid principal amount of all Advances made by Lender to
Borrower pursuant to the Credit Agreement, and to pay interest at such office,
in like money, from the date hereof on the unpaid principal amount of such Loans
from time to time outstanding at the rate and on the dates specified in Section
2.4 of the Credit Agreement.

                  Lender is authorized to record, on the schedule annexed
thereto and made a part hereof or on other appropriate records of Lender, the
date and amount of each Loan made by Lender, each continuation thereof, the
interest rate from time to time on each Loan and the date and amount of each
payment or repayment of principal thereof. Any such recordation shall constitute
prima facie evidence of the accuracy of the information so recorded, provided
that the failure of Lender to make any such recordation (or any error in such
recordation) shall not affect the obligations of Borrower hereunder or under the
Credit Agreement in respect of the Loan.

                  This Promissory Note is the Promissory Note referred to in the
Warehouse Credit Agreement dated as of April 30, 1998 (as amended, supplemented
or otherwise modified and in effect from time to time, the "Credit Agreement")
among Borrower, Lender, FirstCity Consumer Lending Corporation and FirstCity
Financial Corporation, and is entitled to the benefits thereof. Capitalized
terms used herein without definition have the meanings assigned to them in the
Credit Agreement.

                  This Promissory Note is subject to original and mandatory
prepayment as provided in the Credit Agreement.

                  Upon the occurrence of an Event of Default, the Lender shall
have all of the remedies specified in the Credit Agreement, and Borrower hereby
waives presentment, demand, protest and all notices of any kind.


                                      B-1
<PAGE>
                  THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.


                                     FIRSTCITY AUTO RECEIVALBES CORP.

                                     By:
                                        -----------------------------------
                                        Name:
                                        Title:





                                      B-2
<PAGE>
                                  Schedule 1 to
                                 PROMISSORY NOTE
                                 ---------------

<TABLE>
<CAPTION>
                                                       Interest               Prepayment                Notation
       Date                  Principal                 on Loans                of Loans                    By
------------------        ----------------        ------------------       -----------------       -------------------
<S>                      <C>                      <C>                      <C>                     <C>
------------------        ----------------        ------------------       -----------------       -------------------
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------------------        ----------------        ------------------       -----------------       -------------------
------------------        ----------------        ------------------       -----------------       -------------------
------------------        ----------------        ------------------       -----------------       -------------------
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------------------        ----------------        ------------------       -----------------       -------------------
------------------        ----------------        ------------------       -----------------       -------------------

</TABLE>

                                      B-3
<PAGE>
                                                                    EXHIBIT C



                               NOTICE OF BORROWING


                  FirstCity Auto Receivables L.L.C. ("Borrower") hereby requests
that ContiTrade Services L.L.C. make a Loan to it on [insert Borrowing Date] in
the amount of [amount of Loan requested] by crediting the Collection Account by
4:00 p.m. (New York City time) on [insert Borrowing Date] (capitalized terms
used herein have the meaning assigned to them in the Warehouse Credit Agreement
dated as of April 30, 1998 as amended, modified or supplemented from time to
time). Borrower hereby certifies to Lender that:

                  1. The representations and warranties of Borrower contained in
the Credit Agreement are true and correct in all material respects on and as of
this day.

                  2. Borrower is in compliance with all of the terms and
provisions set forth in the Credit Agreement required to be complied with or
performed by Borrower on or before the date hereof.

                  3. No Event of Default or Default (as defined in the Credit
Agreement) has occurred and is continuing as of today's date.

                  4. The Collateral is not subject to any Lien, except Liens
created by the Operative Documents. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings assigned to them in
the Credit Agreement.

                  5. The Outstanding Facility Balance (prior to the making of
the requested Advance) on the date hereof is $__________.

                  6. The Borrowing Base applicable to the requested Advance is
$_________.

                  7. The Available Facility Amount is $____________.


                  IN WITNESS WHEREOF, the undersigned has executed and delivered
this Certificate this _______ day of ________________, _____.



                                     FIRSTCITY AUTO RECEIVABLES L.L.C.

                                     By:
                                        -----------------------------------
                                        Name:
                                        Title: