Document:

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                                                          EXHIBIT 10.1

                                   $12,500,000
                                CREDIT AGREEMENT

                                 By and Between

                             PRA AG FUNDING, L.L.C.
                                   as Borrower

                                       and

                          AG PRA 1999 FUNDING CO., LLC
                                    as Lender

                          Dated as of December 30, 1999

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                                CREDIT AGREEMENT

                This Credit Agreement (this "Agreement") is made as of December
30, 1999, by and between PRA AG FUNDING, L.L.C., a Delaware limited liability
company (the "Borrower") and AG PRA 1999 Funding Co., LLC, a Delaware limited
liability company (the "Lender").

                                    Recitals

                WHEREAS, the Borrower may from time to time wish to purchase a
pool or pools of assets, which assets include charged off credit card accounts
and other delinquent or deficiency consumer obligations.

                WHEREAS, the Borrower has requested that the Lender consider
making loans to the Borrower from time to time to finance a portion of the
purchase price to be paid by the Borrower for such pools of accounts.

                WHEREAS, the Lender has agreed to consider making such financing
available to the Borrower pursuant to the terms and subject to the conditions
set forth in this Agreement.

                NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the Lender and the Borrower
hereby agree as follows:

                                    ARTICLE I

                                   Definitions

                Section 1.1     Definitions. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires:

                        (a)     the terms defined in this Article have the
        meanings assigned to them in this Article, and include the plural as
        well as the singular;

                        (b)     all accounting terms not otherwise defined
        herein have the meanings assigned to them in accordance with GAAP; and

                        (c)     all accounting terms, unless otherwise
        specified, shall be deemed to refer to Persons and their Subsidiaries on
        a consolidated basis in accordance with GAAP.

                "Accepted Borrowing Request" shall have the meaning set forth in
Section 2.1(b).

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                "Account" means an account established for a bank or retail
credit card customer or consumer installment loan borrower, as set forth and
described in a Purchase Agreement, and all unpaid balances due from the Obligors
of those accounts, together with all documents evidencing such Obligors'
agreement to make payment of such unpaid balances, including without limitation
each credit card application or agreement, and each promissory note, receivable,
obligation, chattel paper, payment agreement, contract, installment sale
agreement or other obligation or promise to pay of an Obligor, all as described
and referred to in a Purchase Agreement.

                "Affiliated Party" means a Person which is related to,
affiliated with or controlled by, or under common control with, or common
ownership of, the Borrower, the Servicer or any member or equity holder of the
Borrower or the Servicer.

                "Agreement" means this Credit Agreement and all exhibits,
amendments and supplements hereto.

                "Asset" shall mean, with respect to an Asset Pool, each Account
and any property or other right obtained by the Borrower in connection with
collection of any such Account or in substitution therefor, all of which
constitute a part of the Asset Pool into which such Account was initially
delivered.

                "Asset Pool" shall mean all Accounts and other Assets described
in a Borrowing Request or an Accepted Borrowing Request, as the context may
require, which Accounts shall all have been originated by a single creditor,
together with (a) each and every Asset obtained in replacement or satisfaction
of or substitution for, any such Account so purchased, (b) each and every item
of property obtained by the Borrower as a result of its collection activities
with respect to any such Account, (c) each and every item of collateral or
security, including all security interests, liens, guarantees and other
interests securing payout of any Account, and all other rights and interests of
the Borrower with respect to each Account, (d) each judgment rendered against an
Obligor in respect of an Account, together with all lien rights related thereto,
(e) Asset Pool Proceeds derived from or paid or payable with respect thereto,
together with any and all earnings thereon and (f) each and every other right,
claim and interest associated therewith.

                "Asset Pool Equity Contribution" shall mean, with respect to
each Asset Pool, that portion of the Total Cost of an Asset Pool not funded with
proceeds of a Loan.

                "Asset Pool Proceeds" shall mean, with respect to an Asset Pool,
any and all payments, revenues, income, receipts, collections, recoveries and
other proceeds or assets received with respect to such Asset Pool, including
(without limitation) (a) payments of principal, interest, fees, late charges,
insufficient funds charges, guaranty payments and any interest thereon, credit
insurance payments and other cash receipts on account of any Asset in such Asset
Pool, (b) interest on the Collateral Account or any other account created in
connection herewith, (c) legal fees, credit insurance costs, guaranty fees and
other amounts recovered on account of any Asset in such Asset Pool, to the
extent the obligation giving rise thereto has previously been paid or is
otherwise not due and payable with any such receipts and

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(d) settlements, compromises, liquidations, foreclosure proceeds, dispositions,
sales, transfers or other proceeds, whether cash or otherwise, received as a
result of or in any way in connection with collection activities related to any
Asset or in connection with the sale of any Asset constituting a part of such
Asset Pool.

                "Asset Pool Seller" shall mean, with respect to an Asset Pool,
the party described in a Borrowing Request which has agreed to sell a specified
Asset Pool to the Borrower pursuant to the terms and conditions of a Purchase
Agreement.

                "Asset Pool Shortfall Amount" shall have the meaning set forth
in Section 2.9.

                "Borrower" shall have the meaning specified in the preamble.

                "Borrowing Date" shall have the meaning specified in
Section 2.1(c).

                "Borrowing Request" shall have the meaning set forth in
Section 2.1(a).

                "Business Day" shall mean any day other than (a) a Saturday or
Sunday and (b) a day on which banking institutions in the states of Virginia or
New York are authorized or obligated by law, executive order or governmental
decree to be closed.

                "Change of Control" shall mean any event, circumstance or
occurrence that results in the Servicer holding and owning less than one hundred
percent (100%) of the issued and outstanding equity interests in the Borrower.

                "Collateral Account" shall have the meaning set forth in
Section 2.7.

                "Collateral Account Agreement" shall mean the Collateral Account
Agreement by and among the Borrower, the Servicer, the Lender and the Collateral
Agent as to the deposit of Asset Pool Proceeds to one or more Collateral
Accounts.

                "Collateral Agent" shall initially mean Bank of America and if
thereafter replaced, shall mean any replacement or permitted successor or
assignee thereof pursuant to the Collateral Account Agreement.

                "Contingent Interest" shall mean the amounts to be paid to the
Lender in accordance with Sections 2.6 and 2.8(1).

                "Contingent Interest Share" shall mean, in respect of the Junior
Tranche of any Loan, the percentage of the Total Cost of the Asset Pool financed
with such Junior Tranche.

                "Default" shall mean an event that, with giving of notice or
passage of the grace period (if any) or both, would constitute an Event of
Default.

                "Default Rate" shall have the meaning set forth in
Section 2.3(b).

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                "Distribution Date shall mean, with respect to an Asset Pool,
the twelfth (12th) day of each month (or as soon after such day as possible but
not later than the fifteenth (15th) day of each month unless otherwise agreed by
the Lender and the Borrower) commencing on the first such specified day
following a Borrowing Date (or, in the case of the initial Loan hereunder,
February 12, 2000) and continuing thereafter until all Assets constituting a
part of such Asset Pool have been collected, sold, abandoned or otherwise
disposed of to the satisfaction of the Borrower and the Lender.

                "Distribution Report" shall have the meaning set forth in
Section 2.7.

                "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.

                "Event of Default" shall have the meaning specified in
Section 8.1.

                "Facility Amount" shall mean $12,500,000.

                "Facility Termination Date" shall mean December 31, 2000.

                "Fixed Rate" shall mean an annual rate equal to twelve percent
(12.0%).

                "GAAP" shall mean generally accepted accounting principles.

                "Indemnitees" shall have the meaning specified in Section 9.6.

                "Junior Tranche" shall mean, with respect to each Loan, the
portion, if any, thereof in excess of the amount equal to eighty-five percent
(85%) of the Total Cost of the Asset Pool to be financed with such Loan.

                "Junior Tranche Note" shall mean each promissory note of the
Borrower in the form of Exhibit B-2.

                "Lender" shall have the meaning specified in the preamble.

                "Loan" shall mean, with respect to an Asset Pool, the loan made
by the Lender to the Borrower pursuant to Section 2.1.

                "Loan Collateral" shall have the meaning set forth in
Section 3.1.

                "Loan Costs" shall mean those out-of-pocket payments, costs and
expenses paid or incurred by the Lender pursuant to Section 9.5.

                "Loan Documents" shall mean this Agreement, the Security
Agreement, the Collateral Account Agreement, the Servicing Agreement and, as and
when issued, each Note and any other instrument, document or agreement entered
into by the Borrower for the benefit of the

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Lender to evidence or secure any Loan, in each case as amended, supplemented or
modified with the consent of the Lender from time to time.

                "Loan Maturity Date" shall mean, with respect to a Loan, the
final maturity date specified in the Note evidencing the Borrower's obligation
to repay such Loan, which in no event shall be later than thirty six (36) months
after issuance of such Note.

                "Note" shall have the meaning set forth in Section 2.2.

                "Obligor" shall mean the customer, obligor, maker, borrower or
other party primarily obligated to pay an Account.

                "Permitted Release Value" shall have the meaning set
forth in Section 3.4.

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

                "Plan" shall mean an employee benefit plan or other plan
maintained for employees and covered by Title IV of ERISA.

                "Purchase Agreement" shall mean the asset or account purchase
and sale agreement by and between the Borrower and an Asset Pool Seller pursuant
to which such Asset Pool Seller agrees to sell a specified Asset Pool to the
Borrower for a specified purchase price.

                "Purchase Expenses" shall mean, with respect to an Asset Pool,
the lesser of (a) the maximum estimated expenses to be incurred in connection
with the purchase of an Asset Pool, as set forth in the related Borrowing
Request, or (b) the sum of (i) any brokers' fees incurred in connection with
acquisition of an Asset Pool, not to exceed one percent (1%) of the proposed
purchase price for such Asset Pool, and (ii) the out-of-pocket legal costs and
expenses incurred by the Borrower or the Lender in connection with the
negotiation, preparation and consummation of the related Purchase Agreement, the
closing of the purchase by the Borrower of such Asset Pool and the making of the
Loan or Loans secured by such Asset Pool. In no event shall Purchase Expenses
include any expenses incurred in connection with any due diligence review of an
Asset Pool by the Borrower, the Servicer or the Lender.

                "Reportable Event" shall have the meaning assigned to that term
in Title IV of ERISA.

                "Security Agreement" shall mean the Security Agreement from the
Borrower to the Lender pursuant to which the Borrower grants to the Lender a
security interest in, among other things, all Loan Collateral to secure payment
of the Loans and other obligations hereunder.

                "Senior Tranche" shall mean, with respect to each Loan, the
portion thereof not in excess of eighty-five percent (85%) of the Total Cost of
the Asset Pool to be financed with such Loan.

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                "Senior Tranche Note" shall mean each promissory note of the
Borrower in the form of Exhibit B-1.

                "Servicer" shall initially mean Portfolio Recovery Associates,
L.L.C. and, if thereafter replaced, shall mean any replacement or permitted
successor or assign thereof pursuant to the terms and conditions of the
Servicing Agreement.

                "Servicing Agreement" shall have the meaning set forth in
Section 3.3.

                "Servicing Cost Reimbursement" shall mean, with respect to an
Asset Pool, the amount payable to the Servicer (or an approved subservicer) for
services rendered in connection with collection of the Assets constituting a
part of such Asset Pool, computed in accordance with the Servicing Agreement, as
the same may be amended from time to time with the written consent of the
Lender.

                "Total Cost" shall mean, with respect to an Asset Pool, an
amount equal to the sum of (a) the price actually paid by the Borrower to
purchase such Asset Pool pursuant to the related Purchase Agreement (which in no
event shall be greater than the purchase price (and closing adjustments) with
respect thereto approved by the Lender in the Accepted Borrowing Request for
such Asset Pool) and (b) all Purchase Expenses actually incurred by the Borrower
or the Lender in connection with consummation of such purchase by the Borrower,
or making of the Loan to finance such purchase.

                "UCC" means the Uniform Commercial Code as in effect from time
to time in New York or in any state whose laws are held to govern the creation,
perfection or foreclosure of any security interest granted pursuant to the
Security Agreement.

                                   ARTICLE II

                                 LOAN FACILITIES

                Section 2.1     Loans to Purchase Asset Pools.

                        (a)     Requests for Borrowing. From time to time
        during the period from the date hereof to and including the Facility
        Termination Date, the Borrower may present to the Lender written
        information describing a particular Asset Pool (i) with respect to which
        the Borrower intends to submit an offer to purchase, (ii) requesting
        that the Lender make a Loan to the Borrower in a minimum principal
        amount of $250,000 (or such lesser amount as the Lender may approve) and
        a maximum principal amount of $4,000,000 (or such greater amount as the
        Lender may approve) to finance up to 100 percent (100%) of the Total
        Cost of such Asset Pool and (iii) specifying the portion (which shall
        not exceed 85% of the Total Cost of such Asset Pool) of the requested
        Loan which is to be the Senior Tranche and the portion which is to be
        the Junior Tranche. Each such request for a Loan

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hereunder shall be in substantially the form of Exhibit A hereto (each a
"Borrowing Request"), and shall be accompanied by the relevant bid package
(including the proposed Purchase Agreement to be entered into if the Borrower is
the successful bidder for such Asset Pool), all relevant information known to
the Borrower regarding the Accounts comprising such Asset Pool, projections of
the Borrower's anticipated recoveries, cash flows and net returns to be obtained
upon collection of such Accounts and such other information as the Lender may
reasonably request. The Borrower shall make reasonable efforts to submit no more
than one Borrowing Request in each calendar month. The Lender shall accept or
reject a Borrowing Request within five (5) Business Days after receipt thereof
from the Borrower. The Lender's failure to respond to a Borrowing Request within
five (5) Business Days (or within such extended period as may be required in the
event additional information or documentation is requested by the Lender) shall
be deemed a rejection of the Borrowing Request by the Lender. Notwithstanding
anything in the foregoing to the contrary, the Lender's decision to accept or
reject a Borrowing Request shall be in the Lender's sole and absolute
discretion and the Lender may decline any Borrowing Request for any reason (or
no reason), without notification or explanation, and without regard to whether
or not the Lender has given any prior indication of interest or oral approval
with respect to the specified Asset Pool.

                (b)     Acceptance of Borrowing Request. Any acceptance of a
Borrowing Request shall be evidenced by the Lender's execution and return to the
Borrower of such Borrowing Request, and shall be subject to all terms and
conditions of this Agreement and such additional terms and conditions as the
Lender may specify, and the Borrower may accept, in such accepted Borrowing
Request (each an "Accepted Borrowing Request"). An Accepted Borrowing Request
delivered to the Borrower by the Lender shall constitute the Lender's
commitment, subject to satisfaction of all applicable terms and conditions of
this Agreement, to make a Loan to the Borrower to fund a specified percentage of
the Total Cost of the Asset Pool, as set forth in such Accepted Borrowing
Request. An Accepted Borrowing Request shall expire and shall have no further
force or effect if (i) the Borrower is not the successful bidder for the
specified Asset Pool at a purchase price which is not in excess of the
anticipated purchase price described in such Borrowing Request, (ii) the
Borrower does not consummate its purchase of such Asset Pool pursuant to the
terms and conditions of the related Purchase Agreement and as contemplated in
the related Accepted Borrowing Request within thirty (30) calendar days
following issuance of the Accepted Borrowing Request by the Lender (unless (A)
such period of time is extended in writing by the Lender or (B) the Asset Pool
Seller has unilaterally extended the closing date for purchase of an Asset Pool
and the Borrower is unable to contest any such extension), (iii) the Borrowing
Date does not occur within forty-five (45) days of the purchase of such Asset
Pool or (iv) a Default or Event of Default shall occur and shall be continuing
under this Agreement.

                (c)     Funding Procedures. The Borrower shall provide the
Lender with not less than three (3) Business Days prior written notice of the
scheduled closing date for purchase of an Asset Pool described in an Accepted
Borrowing Request and shall request funding of the related Loan on such date
(each a "Borrowing Date"). Upon satisfaction of all applicable conditions set
forth in Article IV, the Lender shall make the Loan to the Borrower as specified
in the related Accepted Borrowing Request by

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transferring the amount thereof to an appropriate account specified by the
Borrower on (or immediately prior to) the closing date for purchase of such
Asset Pool.

                (d)     Limitations. Without prior written consent of the
Lender, the aggregate outstanding principal amount of all Loans shall not at any
time exceed the Facility Amount.

        Section 2.2    Obligation to Repay Loans; Issuance of Notes. The Senior
Tranche and the Junior Tranche of each Loan made by the Lender with respect to
an Asset Pool under Section 2.1 shall each be evidenced by a separate promissory
note of the Borrower payable to the order of the Lender in the amount(s)
determined in accordance with the related Accepted Borrowing Request, dated as
of the Borrowing Date and otherwise in substantially the respective forms of
Exhibit B-1 and Exhibit B-2 (each a "Note"). The unpaid principal amount of each
such Note shall bear interest, be payable and be secured as provided therein and
herein.

        Section 2.3     Interest on Loans. The Borrower hereby agrees to pay
interest on the unpaid principal balance of each Loan with respect to an Asset
Pool for the period commencing on the Borrowing Date for such Loan and
continuing thereafter until the Loan is paid in full, in accordance with the
following:

                (a)     Prior to the occurrence of an Event of Default, the
outstanding principal balance of each Loan shall bear interest at an annual rate
at all times equal to the Fixed Rate; and

                (b)     From and after the occurrence of an Event of Default and
continuing thereafter until such Event of Default shall be remedied to the
written satisfaction of the Lender, the outstanding principal balance of each
Loan shall bear interest at an annual rate at all times equal to the sum of (i)
the rate then in effect with respect to such Loan and (ii) two percent (2%) (the
"Default Rate").

        Section 2.4     Computation of Interest. Interest accruing on each Loan
shall be computed on the basis of the actual number of days elapsed in a year of
three hundred and sixty-five (365) days. Interest shall accrue on the
outstanding principal balance of each Loan on a daily basis and shall be
compounded on each Distribution Date if funds are not available for payment
thereof on such Distribution Date.

        Section 2.5     Payment of Principal and Interest on Loans. Interest
accruing on a Loan shall be payable in arrears on the next occurring
Distribution Date for the related Asset Pool, but only to the extent available
in accordance with Section 2.8. If not paid in full on a Distribution Date, all
accrued and unpaid interest shall be compounded as of such date in accordance
with Section 2.4. Principal of each Loan shall be finally due and payable on the
Loan Maturity Date for such Loan, as specified in the Note evidencing payment of
such Loan. In addition, each Loan shall be subject to mandatory prepayment
(without premium or penalty) on each Distribution Date for the related Asset
Pool in an amount equal to the Asset Pool Proceeds available for such prepayment
on such date, as provided in Section 18. In addition, the Borrower may
optionally prepay any outstanding Loans, in whole but not in part, at any time
on or before December 31, 2000, provided that (i) no Loan may be prepaid until
all Loans made

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after such Loan have been prepaid and (ii) such prepayment includes all accrued
but unpaid interest on the Loans being prepaid through the date of prepayment
plus the greater of (A) an amount that would result in the Lender receiving an
internal rate of return of 15.0% on the Loans being prepaid through such date of
prepayment and (B) an amount equal to 1.5% of the principal amount of all Loans
being prepaid less all interest paid on such Loans through the date of
prepayment.

        Section 2.6     Contingent Interest Shares. The Borrower agrees to pay
to the Lender, with respect to the Junior Tranche of each Loan, a Contingent
interest Share with respect to the Asset Pool financed with such Loan, payable
on each Distribution Date for the related Asset Pool, as provided in Section
2.8(1). Payment in full of any Loan shall in no way affect the obligation of the
Borrower to pay to the Lender the Contingent Interest Share with respect to the
Asset Pool financed with such Loan.

        Section 2.7     Collection and Deposit of Asset Pool Proceeds. Except
as otherwise provided in Section 2.9, each Loan shall be paid out of Asset Pool
Proceeds collected with respect to the related Asset Pool. All Asset Pool
Proceeds received by the Servicer or the Borrower will be transferred on a daily
basis to one or more separate collateral accounts (as specified by the Lender)
opened and maintained by the Servicer with the Collateral Agent solely and
exclusively for the deposit and collection of Asset Pool Proceeds, in the name
of the Lender, pursuant to the Collateral Account Agreement (each, a "collateral
Account"). Each Collateral Account shall to the extent reasonably possible be an
interest bearing account and all interest earned on amounts or deposit therein
shall constitute, and be treated as, Asset Pool Proceeds collected with respect
to the relevant Asset Pool. All Asset Pool Proceeds from each Asset Pool shall
be held in the related Collateral Account until the next occurring Distribution
Date for such Asset Pool. Not later than 3:00 p.m Eastern Standard Time on the
Business Day preceding each Distribution Date, the Borrower or the Servicer
shall deliver to the Lender a report for the preceding collection period setting
forth, by Asset Pool, the Asset Pool Proceeds, Servicing Cost Reimbursement,
outstanding balances of Loans and other relevant information to determine the
use and application of the Asset Pool Proceeds deposited to a Collateral Account
during such collection period (each, a "Distribution Report") and the Lender
will make its determinations as to distributions in accordance with Section 2.8.
In no event shall any Asset Pool Proceeds be withdrawn from any Collateral
Account or distributed to any party (other than the Lender) without the prior
written consent of the Lender as to each such withdrawal or distribution. Any
amount that the Borrower or Servicer proposes that the Collateral Agent
distribute to the Lender may be so distributed on the date proposed therefor
without the written consent of the Lender, it being understood that the
distribution shall be subject to retroactive adjustment once the Lender
completes its review and determination of the proposed distribution amounts as
contemplated herein.

        Section 2.8     Distribution of Asset Pool Proceeds. Upon delivery to
the Collateral Agent of the Lender's written authorization for distributions to
be made from a Collateral Account as contemplated in Section 2.7, Asset Pool
Proceeds on deposit in the Collateral Account with respect to an Asset Pool
shall be distributed on the next succeeding Distribution Date for such Asset
Pool, in accordance with the following:

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                (a)     first, to the Servicer, any funds improperly deposited
to a Collateral Account;

                (b)     second, to the Servicer, an amount equal to the
Servicing Cost Reimbursement, if any, payable to the Servicer (or any approved
subservicer) with respect to such Asset Pool Proceeds;

                (c)     third, to the Lender, an amount equal to all unpaid Loan
Costs paid or incurred by the Lender with respect to the making or collection of
a Loan secured by such Asset Pool;

                (d)     fourth, to the Collateral Agent, an amount equal to all
fees and expenses due and owing to the Collateral Agent with respect to such
Asset Pool;

                (e)     fifth to the Lender, an amount equal to all accrued and
unpaid interest at the Fixed Rate on the Senior Tranche of the related Loan for
such Asset Pool;

                (f)     sixth, to the Lender, an amount equal to the outstanding
principal, (of the Senior Tranche of the related Loan for such Asset Pool, until
the Senior Tranche of such Loan shall have been paid in full;

                (g)     seventh, if there is any outstanding Asset Pool
Shortfall Amount with respect to the Senior Tranche of Loans secured by other
Asset Pools, to the Lender, to be applied to interest and principal with respect
to such Senior Tranches until such Asset Pool Shortfall Amount has been
eliminated;

                (h)     eighth, to the Lender, an amount equal to all accrued
and unpaid interest at the Fixed Rate on the Junior Tranche of the related Loan
for such Asset Pool;

                (i)     ninth, to the Lender, an amount equal to the
outstanding principal of the Junior Tranche of the related Loan for such Asset
Pool, until the Junior Tranche of such Loan shall have been paid in full;

                (j)     tenth, if there is any outstanding Asset Pool Shortfall
Amount with respect to the Junior Tranche of Loans secured by other Asset Pools,
to the Lender, to be applied to interest and principal with respect to such
Junior Tranches until such Asset Pool Shortfall Amount has been eliminated;

                (k)     eleventh, to the Borrower, an amount equal to the Asset
Pool Equity Contribution made by the Borrower with respect to such Asset Pool,
until such Asset Pool Equity Contribution shall have been repaid in full;

                (1)     twelfth, (x) to the Lender, the Contingent Interest
Share of all remaining Asset Pool Proceeds for such Asset Pool and (y) to the
Borrower, the balance of all remaining Asset Pool Proceeds for such Asset Pool.

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Notwithstanding the above specified distribution priorities, in the event that
Asset Pool Proceeds from a particular Asset Pool are used to satisfy an Asset
Pool Shortfall Amount with respect to Loans secured by other Asset Pools and the
amount of Asset Pool Proceeds from such Asset Pool would otherwise have
generated a payment to the Lender in respect of the Lender's Contingent Interest
Share, then any Asset Pool Proceeds from any Asset Pool remaining after the
repayment of all Senior and Junior Loans shall be used to pay the Lender the
amount of Contingent Interest Share that it would otherwise have been entitled
to receive.

        Section 2.9     Asset Pool Shortfalls. If at any time the Lender, in
its reasonable discretion, shall determine that the Asset Pool Proceeds which
can reasonably be collected prior to the Loan Maturity Date for a Loan will be
insufficient to pay in full all principal of and accrued and unpaid interest on
such Loan on or prior to the Loan Maturity Date, or in any event upon the
occurrence of an Event of Default, the amount of any such anticipated deficiency
(herein, each an "Asset Pool Shortfall Amount") shall be paid from Asset Pool
Proceeds collected with respect to other Asset Pools as provided in Section 2.8
(g) and (i). The Lender may designate separate Asset Pool Shortfall Amounts with
respect to the Senior and Junior Tranches of a Loan.

                                   ARTICLE III

             COLLATERAL FOR LOANS; CUSTODY,SERVICING AND COLLECTIONS

        Section 3 .1    Pledge of Asset Pool Collateral. To secure the due and
prompt payment of each Loan, together with all interest thereon (including
Contingent interest) and all other obligations of the Borrower to the Lender
arising hereunder or under any other Loan Document in connection with an Asset
Pool, the Borrower shall grant to the Lender a first and prior security interest
in, lien on and pledge of all assets of the Borrower, including all right,
title, claim and interest of the Borrower in and to all Assets of or related to
each and every Asset Pool, of any kind, nature or description, whether now owned
or hereafter acquired, wherever located, howsoever arising or created and
whether now existing or hereafter arising, including without limitation each and
every Account and any and all liens, claims and property securing payment of the
indebtedness evidenced by such Account (if any), and all property realized,
collected or obtained in connection with or as a result of collections made on
account of any Account, and any and all Asset Pool Proceeds paid or received
with respect to any Asset Pool, whether deposited to or held in a Collateral
Account or otherwise, and all rights of the Borrower under each and every
Purchase Agreement related to an Asset Pool, together with such additional
property of the Borrower as is set forth and described in the Security
Agreement, as the same may be amended and supplemented from time to time by the
Borrower as additional Asset Pools are purchased by the Borrower (herein the
"Loan Collateral").

        Section 3.2     Perfection of Security Interests in Personal Property
Collateral. The Borrower agrees to deliver to the Lender, at any time upon the
Lender's request, each original Account file of or relating to any Account and
shall execute such financing statements, together with any and all other
instruments, assignments or documents and take such other actions as may be
required, to perfect and to continue the perfection of the Lender's security
interest in all Loan Collateral.

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        Section 3.3     Servicing of Asset Pools. The Borrower shall be
obligated to manage, service, administer, make collections and pursue
enforcement proceedings with respect to each Asset in accordance with the
customary and usual procedures of institutions which service assets of the type
included in each Asset Pool and, to the extent more exacting, with the degree of
skill, prudence and attention that the Borrower exercises from time to time with
respect to assets not securing payment of a Loan. In satisfaction of its
servicing obligations under this Agreement, the Borrower shall enter into a
Servicing Agreement by and among the Servicer, the Lender and the Borrower, in
form and content acceptable to the Lender (the "Servicing Agreement").
Immediately upon the occurrence of a Termination Event as defined in the
Servicing Agreement, the Lender may terminate the Servicer then acting in such
capacity under the Servicing Agreement and may appoint a replacement servicer,
and enter into a replacement servicing agreement, reasonably acceptable to the
Borrower and the Lender.

        Section 3.4     Authority to Settle or Sell Loan Collateral. The
Borrower shall not, and the Servicer shall be instructed not to, compromise,
sell or settle any Account or other Asset for an amount less than ten percent of
the outstanding principal balance together with accrued and unpaid interest of
an Account without first obtaining the prior written consent of the Lender
(herein, with respect to each Account, the "Permitted Release Value"). If an
amount proposed for settlement or sale of an Account is in excess of the
Permitted Release Value established for such Account, the Servicer may proceed
without the consent of the Lender to compromise, sell, or settle such Account
for such higher amount. Notwithstanding the foregoing, without first obtaining
the Lender's prior written consent, the Borrower shall not agree to any sale,
assignment or other bulk transfer of Accounts (whether in one or more Asset
Pools) if any such transaction (or a group of related transactions)
constitutes the sale, transfer or assignment of Accounts having a value (based
upon the Permitted Release Value for each such Account) equal to or exceeding
ten percent of the original Total Cost of such Asset Pool or Asset Pools, as the
case may be.

                                   ARTICLE IV

                              CONDITIONS OF LENDING

        Section 4. 1    Conditions Precedent to the Initial Loan. The
obligation of the Lender to make the initial Loan to the Borrower is subject to
satisfaction by the Borrower of the conditions precedent set forth in Sections
4.2 and 4.3 with respect to such Loan and the further condition precedent that
the Lender shall have received each of the following, in form and substance
satisfactory to the Lender:

                (a)     The Security Agreement, properly executed on behalf of
the Borrower.

                (b)     The Collateral Account Agreement, properly executed on
behalf of the Collateral Agent, the Borrower, the Servicer and the Lender.

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<PAGE>

                (c)     The Servicing Agreement, properly executed on behalf of
the Servicer, the Borrower and the Lender.

                (d)     Certified copies of the consent and agreement of all
members of the Borrower and the Servicer, respectively, evidencing approval of
all Loan Documents, the Servicing Agreement and the other matters contemplated
hereby.

                (e)     Copies of the operating agreement of the Borrower,
certified by the managing member of the Borrower as being a true and correct
copy thereof.

                (f)     Acknowledgment copies of effective financing statements
naming the Lender as secured party and the Borrower as debtor, or such other
similar instruments or documents as may be necessary or, in the opinion of the
Lender, desirable under the UCC or any comparable law of all appropriate
jurisdictions.

                (g)     A signed copy of a certificate of the managing member
of the Borrower which shall certify the names of the members of the Borrower
authorized to sign the Loan Documents and the other documents or certificates to
be delivered pursuant to this Agreement by the Borrower or any of its members,
including Borrowing Requests, together with the true signatures of such members.
The Lender may conclusively rely on such certificate until it shall receive a
further certificate of the managing member of the Borrower canceling or amending
the prior certificate and submitting the signatures of the members named in such
further certificate.

                (h)     A signed copy of a certificate of the president of the
Servicer which shall certify the names of the members of the Servicer authorized
to sign the Servicing Agreement and the other documents or certificates to be
delivered pursuant thereto by the Servicer or any of its members, together with
true signatures of such members. The Lender may conclusively rely on such
certificate until it shall receive a further certificate of the president of the
Servicer canceling or amending the prior certificate and submitting the
signatures of the members named in such further certificate.

                (i)     Payment of an origination fee in the amount equal to one
percent of the Facility Amount.

                (j)     Warrants to purchase on or before March 31, 2005 one
unit of limited liability interests in Portfolio Recovery Associates, L.L.C. per
$100 of the Facility Amount with an exercise price of $3.60 per unit.

        Section 4.2     Conditions Precedent to Each Loan. The obligation of the
Lender to make each Loan (including the initial Loan) shall be subject to the
further conditions precedent that the Lender shall have issued an Accepted
Borrowing Request with respect thereto and shall have received, on or before the
date of such Loan, each of the following with respect to such Loan, in form and
substance satisfactory to the Lender:

                (a)     The Purchase Agreement for the related Asset Pool,
properly executed on behalf of the Borrower and the Asset Pool Seller, pursuant
to which the Asset Pool Seller shall have agreed to transfer all Assets
constituting a part of such Asset

                                       13
<PAGE>

        Pool to the Borrower, effective as of the Borrowing Date, free and clear
        of all liens, claims and encumbrances except those disclosed in the
        related Purchase Agreement.

                      (b) A Senior Tranche Note in the principal amount of the
        Senior Tranche of the related Loan and a Junior Tranche Note in the
        principal amount of the Junior Tranche of the related Loan, each
        properly completed and executed on behalf of the Borrower.

                      (c) Such other information as the Lender may request to
        verify the Total Cost of the Asset Pool, payment of the Borrower's Asset
        Pool Equity Contribution with respect to the Asset Pool, the nature or
        amount of the Accounts to constitute a part thereof or any other matter
        related thereto.

               Section 4.3 Representations and Warranties Upon Making a Loan.
The obligation of the Lender to make each Loan to finance the purchase of an
Asset Pool shall be subject to the further condition precedent that on the date
for funding of such Loan the following statements shall be true and accurate in
all material respects and the Borrower, by requesting such Loan, shall be deemed
to have represented and certified that:

                      (a) The representations, warranties and covenants of the
        Borrower set forth in Article V are true and correct on and as of such
        date as though made on such date and shall be deemed to have been made
        on such date, except to the extent that any such representations,
        warranties and covenants relate solely to an earlier date.

                      (b) No event has occurred and is continuing, or would
        result from the making of such Loan, which constitutes a Default or an
        Event of Default.

                      (c) Upon payment of the purchase price specified in the
        related Purchase Agreement to the Asset Pool Seller and consummation of
        the purchase contemplated in such Purchase Agreement, the Borrower will
        have good title to all Accounts being transferred thereunder free and
        clear of all liens, claims and other interests other than the liens
        granted to the Lender as contemplated herein.

                                    ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

               The Borrower represents and warrants to the Lender as of the date
hereof and as of each Borrowing Date as follows:

               Section 5.1 Existence and Power; Name; Chief Executive Office.
The Borrower and the Servicer are each duly organized, validly existing and in
good standing under the laws of its organization and are each duly licensed or
qualified to transact business in all jurisdictions where the character of the
property owned or leased or the nature of the business transacted by it makes
such licensing or qualification necessary and where failure to obtain such

                                       14

<PAGE>

licensing or qualification would have a material adverse effect on the Borrower
or the Servicer, as the case may be. The Borrower and the Servicer each has all
requisite power and authority, to conduct its business, to own its properties
and to execute and deliver, and to perform all of its obligations under, the
Loan Documents. Within the last twelve (12) months, the Borrower has done
business only under its name as specified herein, The chief executive office and
principal place of business of the Borrower is located at the address set forth
in Section 9.4, and all of the Borrower's records relating to its businesses are
kept at that location.

               Section 5.2 Authorization for Borrowings; No Conflict as to Law
or Agreements. The execution, delivery and performance by the Borrower of the
Loan Documents, and Loans from time to time obtained hereunder, have been duly
authorized by all necessary legal action and do not and will not (a) require any
consent or approval which has not been obtained prior to the date hereof, (b)
require any authorization, consent or approval by, or registration, declaration
or filing with, or notice to, any governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, or any third party,
except such authorization, consent, approval, registration, declaration, filing
or notice as has been obtained, accomplished or given prior to the date hereof,
(c) violate any provision of any material law, rule or regulation or of any
order, writ, injunction or decree presently in effect having applicability to
the Borrower or of the Articles of Incorporation or Bylaws of the Borrower, (d)
result in a breach of or constitute a default under any indenture or loan or
credit agreement or any other material agreement, lease or instrument to which
the Borrower is a party or by which it or its properties may be bound or
affected, or (e) result in, or require, the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest or other charge or
encumbrance of any nature upon or with respect to any of the properties now
owned or hereafter acquired by the Borrower.

               Section 5.3 Legal Agreements. The Loan Documents constitute, and
the Notes, when and as executed and delivered, will constitute, the legal, valid
and binding obligations and agreements of the Borrower, enforceable against the
Borrower in accordance with their respective terms, except as enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity or
at law).

               Section 5.4 Subsidiaries. The Borrower has no subsidiaries.

               Section 5.5 Financial Condition: No Adverse Change. The Borrower
has heretofore furnished to the Lender all annual and the most recent quarterly
financial statements of the Borrower and the Servicer. Those statements fairly
present the financial condition of the Borrower and the Servicer on the date
thereof and the results of their respective operations and cash flows for the
periods then ended and were prepared in accordance with GAAP. Since the date of
the most recent financial statements, there has been no material adverse change
in the business, properties or condition (financial or otherwise) of the
Borrower and the Servicer. The parties acknowledge that, as of the date hereof,
no financial statements exist for the Borrower and, accordingly, none has been
provided to the Lender.

                                       15

<PAGE>

               Section 5.6 Litigation. There are no actions, suits or
proceedings pending or, to the knowledge of the Borrower, threatened against or
affecting the Borrower or the Servicer or the properties of the Borrower or the
Servicer before any court or governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, which, if determined adversely
to the Borrower or the Servicer, could have a material adverse effect on the
financial condition, properties or operations of the Borrower or the Servicer,
except as set forth and described in Schedule 5.6.

               Section 5.7 Taxes. The Borrower and the Servicer have each paid
or caused to be paid to the proper authorities when due all federal, state and
local taxes, including taxes required to be withheld by it. The Borrower and the
Servicer have each filed all federal, state and local tax returns which to the
knowledge of the officers of the Borrower, are required to be filed, and the
Borrower and the Servicer have each paid or caused to be paid to the respective
taxing authorities all taxes as shown on said returns or on any assessment
received by it to the extent such taxes have become due.

               Section 5.8 Title and Liens. The Borrower has good and marketable
title to all properties and assets reflected in the latest balance sheet
referred to in Section 5.5 free and clear of all mortgages, security interests,
liens and encumbrances, except for covenants, restrictions, rights, easements
and minor irregularities in title which do not materially interfere with the
business or operations of the Borrower as presently conducted. In addition, no
financing statement naming the Borrower as debtor is on file in any office
except to perfect only security interests permitted by Section 7.1.

               Section 5.9 Plans. Except as disclosed to the Lender in writing
prior to the date hereof, neither the Borrower nor the Servicer maintains or has
in the past maintained any Plan. Neither the Borrower nor the Servicer has
received any notice or has any knowledge to the effect that it is not in full
compliance with any of the requirements of ERISA. No Reportable Event or other
fact or circumstance which may have an adverse effect on the Plan's tax
qualified status exists in connection with any Plan of the Borrower or Servicer.
Neither the Borrower nor the Servicer has:

                      (a)    any accumulated funding deficiency within the
        meaning of ERISA; or

                      (b)    any liability or knows of any fact or circumstances
        which could result in any liability to the Pension Benefit Guaranty
        Corporation, the Internal Revenue Service, the Department of Labor or
        any participant in connection with any Plan of the Borrower or Servicer
        (other than accrued benefits which are or which may become payable to
        participants or beneficiaries of any such Plan).

               Section 5.10 Default. The Borrower and the Servicer are each in
compliance with all provisions of all agreements, instruments, decrees and
orders to which it is a party or by which it or its property is bound or
affected, the breach or default of which could have a material adverse effect on
the financial condition, properties or operations of the Borrower or the
Servicer, respectively.

                                       16

<PAGE>

               Section 5.11 Submissions to Lender. All financial and other
information provided to the Lender by or on behalf of the Borrower or the
Servicer in connection with the Borrower's request for any Loan and the credit
facilities contemplated hereby is true and correct in all material respects and,
as to projections, valuations or personal financial statements, present a good
faith opinion as to such projections, valuations and pro forma condition and
results.

                                   ARTICLE VI

                     AFFIRMATIVE COVENANTS OF THE BORROWER

               So long as any Note or Asset Pool shall remain unpaid or
outstanding, the Borrower will comply with the following requirements, unless
the Lender shall otherwise consent in writing:

               Section 6.1 Reporting Requirements. The Borrower will deliver, or
cause to be delivered, to the Lender each of the following, which shall be in
form and detail acceptable to the Lender:

                      (a)    As soon as available, and in any event within one
        hundred twenty (120) days after the end of each fiscal year of the
        Borrower and the Servicer, respectively, a copy of the annual audit
        report of the Borrower and the Servicer, respectively, with the
        unqualified opinion of their respective certified public accountants
        (which, in the case of the Borrower shall be Pricewaterhouse Coopers
        LLP or another nationally recognized firm of certified public
        accountants), which annual reports shall include the consolidated
        balance sheet of the Borrower and the Servicer, respectively, as at the
        end of such fiscal year and the related statements of earnings,
        shareholders' equity and cash flows for the fiscal year then ended, all
        in reasonable detail and all prepared in accordance with GAAP, applied
        on a consistent basis, together with a certificate of the chief
        financial officer of the Borrower and the Servicer, respectively,
        stating that such financial statements are true and accurate in all
        material respects.

                     (b)     As soon as available and in any event within sixty
        (60) days after the end of each of the first three quarters of each
        fiscal year of the Servicer a copy of the consolidated balance sheet of
        the Servicer, as at the end of such quarter and related statements of
        earnings to-date, in reasonable detail, all prepared in accordance with
        GAAP, applied on a consistent basis, together with a certificate of the
        chief financial officer of the Servicer stating that such financial
        statements, subject to year-end audit adjustments, are true and accurate
        in all material respects.

                     (c)     As soon as available and in any event within twenty
       (20) days after the end of each month, an asset report in electronic form
       which shall include (i) a report by Asset Pool of the number of assets,
       original balance, current balance, payments to date, settlement allowance
       and percentage of payments life to date, (ii) a report by Asset Pool of
       product codes, (iii) a report by Asset Pool of status codes, (iv) a
       report by Asset

                                       17

<PAGE>

        Pool of states, (v) a report of Assets settled in full, (vi) a report by
        Asset Pool of all transactions posted life to date, (vii) a report by
        Asset Pool of demographic data related to Assets in such Asset Pool,
        (viii) a bank reconciliation account for each Collateral Account and
        (ix) such other information as the Lender shall require.

                      (d)    As soon as available and in any event before the
        Distribution Date for each month, a cash receipts report by Asset Pool,
        together with a distribution report outlining cash distributions as well
        as the remaining cost basis for each Asset Pool.

                      (e)    As promptly as practicable (but in any event not
        later than five (5) Business Days) after an officer of the Borrower
        obtains knowledge of the occurrence of any default by the Borrower in
        the performance of any of its obligations under this Agreement or by the
        Servicer under the Servicing Agreement, notice of such occurrence,
        together with a detailed statement by a responsible officer of the
        Borrower of the steps being taken by the Borrower to cure the effect of
        such event.

                      (f)    Such other information respecting each Asset Pool
        or the financial condition of the Borrower or the Servicer as the Lender
        may from time to time reasonably request.

               Section 6.2   Books and Records: Inspection and Examination. The
Borrower will keep, and will cause the Servicer to keep, accurate books of
record and account for itself pertaining to the Asset Pools and the Borrower's
business and financial condition and such other matters as the Lender may from
time to time request in which true and complete entries will be made in
accordance with GAAP consistently applied and, upon request of and reasonable
notice by the Lender, will permit any officer, employee, attorney or accountant
for the Lender to audit, review, make extracts from or copy any and all
corporate and financial books and records of the Borrower or the Servicer at all
reasonable times during ordinary business hours, to discuss the affairs of the
Borrower or the Servicer, including the purchase, servicing, collection or
liquidation of assets, with any of its members, employees or agents and to
conduct a review of the Borrower's and the Servicer's respective books and
records with respect to the purchase, servicing, collection and disposition of
Loan Collateral.

               Section 6.3   Compliance with Laws. The Borrower will, and will
cause the Servicer (and any subservicer) to (a) comply with the requirements of
applicable laws and regulations, the non-compliance with which would materially
and adversely affect its business or its financial condition, (b) comply with
all applicable debt collection laws, regulations, ordinances and requirements
and will obtain any and all licenses, permits and similar approvals required for
the collection or servicing of any Account constituting a part of an Asset Pool
and (c) use and keep its assets, and will require that others use and keep its
assets, only for lawful purposes, without violation of any federal, state or
local law, statute or ordinance.

               Section 6.4   Payment of Taxes and Other Claims. The Borrower
will pay or discharge, when due, (a) all taxes, assessments and governmental
charges levied or imposed upon it or upon its income or profits, upon any
properties belonging to it prior to the date on which forfeiture of any such
property may occur, (b)all federal, state and local taxes required to be
withheld by it, and (c) all lawful claims for labor, materials and supplies
which, if unpaid,

                                       18

<PAGE>

might by law become a lien or charge upon any properties of the Borrower;
provided, that the Borrower shall not be required to pay any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.

               Section 6.5   Maintenance of Properties. The Borrower will keep
and maintain all of its properties necessary or useful in its business in good
condition, repair and working order (normal wear and tear excepted); provided,
however, that nothing in this Section 6.5 shall prevent the Borrower from
discontinuing the operation and maintenance of any of its properties if such
discontinuance is, in the reasonable judgment of the Borrower, desirable in the
conduct of the Borrower's business and not disadvantageous in any material
respect to the Lender.

               Section 6.6   Preservation of Legal Existence. The Borrower will
preserve and maintain its legal existence and all of its rights, privileges and
franchises necessary or desirable in the normal conduct of its business and
shall conduct its business in an orderly, efficient and regular manner.

               Section 6.7   Special Purpose Entity. The Borrower shall (a) own
no assets, and not engage in any business, other than the assets and
transactions specifically contemplated by the Loan Documents, (b) not incur any
indebtedness or obligation, secured or unsecured, direct or indirect, absolute
or contingent, other than as contemplated hereby, (c) not make any loans or
advances to any third party (other than Assets), and shall not acquire
obligations or securities of any Affiliated Party, (d) pay its debts and
liabilities (including, as applicable, shared personnel and overhead expenses)
only from its own assets, (e) do all things necessary under applicable law and
its organizational documents to observe organizational formalities and to
preserve its existence, and will not amend, modify or otherwise change its
certificate of formation or limited liability company agreement, or suffer the
same to be amended, modified or otherwise changed, without the prior written
consent of the Lender, (f) maintain all of its books, records, financial
statements and bank accounts separate from those of any Affiliated Parties, (g)
be, and at all times will hold itself out to the public as, a legal entity
separate and distinct from any other entity (including any Affiliated Party),
correct any known misunderstanding regarding its status as a separate entity,
conduct business in its own name, not identify itself or any Affiliated Party as
a division or part of the other and maintain and utilize separate stationary,
invoices and checks, (h) maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations, (i) not engage in or suffer any
dissolution, winding up, liquidation, consolidation or merger in whole or in
part, (j) not commingle its funds or other assets with those of any Affiliated
Party or any other Person, (k) maintain its assets in such a manner that it will
not be costly or difficult to sergregate, ascertain or identify its individual
assets from those of any Affiliated Party or any other Person, (l) not and will
not hold itself out to be responsible for the debts or obligations of any other
Person and (m) be formed and organized solely for the purpose of holding,
directly or indirectly, the Assets and not hold or own any assets other than the
Assets, Asset Proceeds and assets related thereto.

                                   ARTICLE VII

                                       19

<PAGE>

                               NEGATIVE COVENANTS

               So long as any Note or Asset Pool shall remain unpaid or
outstanding, the Borrower will comply with the following requirements, unless
the Lender shall otherwise consent in writing:

               Section 7.1   Liens. The Borrower will not create, incur or
suffer to exist any pledge, lien, security interest, assignment or transfer upon
or of any Loan Collateral, now owned or hereafter acquired, or assign or
otherwise convey any right to receive collections or other income with respect
thereto except as provided herein and in the other Loan Documents.

               Section 7.2   Sale or Transfer of Assets; Suspension of Business
Operations. Except as otherwise permitted in accordance with Section 3.4, the
Borrower will not sell, lease, assign, transfer or otherwise dispose of all or a
substantial part of its assets (whether in one transaction or in a series of
transactions) to any other Person, and will not liquidate, dissolve or suspend
its business operations.

               Section 7.3   Consolidation and Merger, Asset Acquisitions. The
Borrower will not consolidate with or merge into any Person, or permit any other
Person to merge into it, or acquire (in a transaction analogous in purpose or
effect to a consolidation or merger) all or substantially all the assets of any
other Person.

               Section 7.4   Accounting. The Borrower will not adopt any
material change in accounting principles other than as required by generally
accepted accounting principles. The Borrower will not adopt, permit or consent
to any change in its fiscal year.

               Section 7.5   Modification or Termination of Agreements. The
Borrower will not terminate, amend or modify the Servicing Agreement or the
Collateral Account Agreement, without, in each case, obtaining the prior written
consent of the Lender.

                                  ARTICLE VIII

                     EVENTS OF DEFAULT, RIGHTS AND REMEDIES

               Section 8.1   Events of Default.  "Event of Default",
wherever used herein, means any one of the following events:

                      (a)    default in the payment of any interest (including
        Contingent Interest) on or principal of any Note when it becomes due and
        payable as provided in Section 2.8; or

                      (b)    default in the payment of any fees, costs or
        expenses required to be paid by the Borrower under this Agreement as
        provided in Section 2.8 or any other Loan Document; or

                                       20

<PAGE>

                  (c)      default in the performance, or breach, of any
     covenant or agreement of the Borrower in this Agreement (other than a
     covenant or agreement a default in whose performance or whose breach is
     elsewhere in this Section specifically dealt with), and the continuance
     of such default or breach for a period of ten (10) calendar days after
     there has been given to the Borrower a written notice specifying such
     default or breach and requiring it to be remedied; or

                  (d)      the Borrower or the Servicer shall be or become
     insolvent, or admit in writing its inability to pay its debts as they
     mature, or make an assignment for the benefit of creditors; or the
     Borrower or the Servicer shall apply for or consent to the appointment of
     any receiver, trustee, or similar officer for it or for all or any
     substantial part of its property, or such receiver, trustee or similar
     officer shall be appointed without the application or consent of the
     Borrower or the Servicer; or the Borrower or the Servicer shall institute
     (by petition, application, answer, consent or otherwise) any insolvency,
     reorganization, arrangement, readjustment of debt, dissolution,
     liquidation or similar proceeding relating to it under the laws of any
     jurisdiction; or any such proceeding shall be instituted (by petition,
     application or otherwise) against the Borrower or the Servicer; or any
     judgment, writ, warrant of attachment or execution or similar process
     shall be issued or levied against a substantial part of the property of
     the Borrower or the Servicer; or

                  (e)      a petition naming the Borrower or the Servicer as
     debtor is filed under the United States Bankruptcy Code; or

                  (f)      any representation or warranty made by the Borrower
     in this Agreement or by the Borrower (or any of its officers) in any
     Borrowing Request, or in any other certificate, instrument, or statement
     contemplated by or made or delivered pursuant to or in connection with
     this Agreement, shall prove to have been incorrect in any material
     respect when made; or

                  (g)      the rendering against the Borrower of a final
     judgment, decree or order for the payment of money in excess of $50,000
     (unless the payment of such judgment in excess of $50,000 is fully
     insured) and the continuance of such judgment, decree or order
     unsatisfied and in effect for any period of thirty (30) consecutive days
     without a stay of execution; or

                  (h)      a default under the Security Agreement or a
     Termination Event under the Servicing Agreement, and the expiration of
     the applicable period of grace, if any, specified in such agreement; or

                  (i)      any Reportable Event, which the Lender determines
     in good faith might constitute grounds for the termination of any Plan of
     the Borrower or Servicer or for the appointment by the appropriate United
     States District Court of a trustee to administer any such Plan, shall
     have occurred and be continuing thirty (30) days after written notice to
     such effect shall have been given to the Borrower by the Lender; or any
     Plan of the Borrower or Servicer shall have been terminated, or a trustee
     shall have been appointed by an appropriate United States District Court
     to administer any such Plan, or

                                      21

<PAGE>

     the Pension Benefit Guaranty Corporation shall have instituted
     proceedings to terminate any Plan of the Borrower or Servicer or to
     appoint a trustee to administer any such Plan; or

                  (j)      the Borrower shall liquidate, dissolve, terminate
     or suspend its business operations or otherwise fail to operate its
     business in the ordinary course, or shall sell all or substantially all
     of its assets, without the prior written consent of the Lender; or

                  (k)      the Borrower shall fail to pay, withhold, collect
     or remit any tax or tax deficiency when assessed or due (other than any
     tax deficiency which is being contested in good faith and by proper
     proceedings and for which it shall have set aside on its books adequate
     reserves) or notice of any state or federal tax liens shall be filed or
     issued; or

                  (l)      a Change of Control shall occur.

         Section 8.2       Rights and Remedies Upon the Occurrence of an Event
of Default. Upon the occurrence of an Event of Default or at any time
thereafter until such Event of Default is cured or waived to the written
satisfaction of the Lender, the Lender may exercise any or all of the
following rights and remedies with respect to outstanding Loans:

                  (a)      by notice to the Borrower, declare the entire
     unpaid principal amount of all Notes, or any of them, all interest
     accrued and unpaid thereon (including Contingent Interest), and all other
     amounts payable under this Agreement to be forthwith due and payable
     whereupon such Note or Notes, as the case may be, all such accrued
     interest, and all such amounts shall become and be forthwith due and
     payable, without presentment, demand, protest or further notice of any
     kind, all of which are hereby expressly waived by the Borrower;

                  (b)      terminate the existing Servicing Agreement and
     enter into a new servicing agreement with a replacement servicer to
     service and collect all Loan Collateral, with such replacement servicer
     acting in its own name, but on behalf of the Borrower or the Lender and
     taking direction solely and exclusively from the Lender;

                  (c)      direct the Servicer then in place to take all steps
     necessary to collect or otherwise liquidate the Loan Collateral in
     accordance with such procedures and for such sale prices as the Lender
     shall specify and apply all Asset Pool Proceeds resulting therefrom in
     accordance with Section 2.8, provided that each Asset Pool shall be
     deemed to have an Asset Pool Shortfall Amount in an amount equal to the
     unpaid principal balance of, and all accrued interest on, the related
     Loan therefor; and

                  (d)      exercise and enforce any and all rights and
     remedies available to the Lender under any Loan Document (or otherwise by
     law or agreement) against any or all Loan Collateral securing payment of
     outstanding Loans; provided, however, that (i) no Servicing Cost
     Reimbursement shall be payable with respect to any Asset Pool Proceeds
     received as a result of any actions specified above if the Lender effects
     collection thereof without the assistance of the Servicer and (ii) no
     Asset Pool Proceeds shall be paid to the

                                      22

<PAGE>

     Borrower pursuant to Sections 2.8(k) and (l) with respect to any Asset Pool
     until all outstanding Loans, together with all interest thereon, shall
     have been paid in full, whereupon all remaining Asset Pool Proceeds for
     each Asset Pool shall be distributed in accordance with Section 2.8.

         Notwithstanding the foregoing, upon the occurrence of an Event of
Default described in Section 8.1, the entire unpaid principal amount of all
Notes, all interest accrued and unpaid thereon, and all other amounts payable
under this Agreement shall be immediately due and payable without presentment,
demand, protest or notice of any kind.

                                  ARTICLE IX

                                MISCELLANEOUS

         Section 9.1       No Waiver: Cumulative Remedies. No failure or delay
on the part of the Lender in exercising any right, power or remedy under the
Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
under the Loan Documents. The remedies provided in the Loan Documents are
cumulative and not exclusive of any remedies provided by law.

         Section 9.2       Amendments, Requested Waivers, Etc. No amendment,
modification, termination or waiver of any provision of any Loan Document or
consent to any departure by the Borrower therefrom shall be effective unless
the same shall be in writing and signed by the Lender. Any waiver or consent
given hereunder shall be effective only in the specific instance and for the
specific purpose for which given. No notice to or demand on the Borrower in
any case shall entitle the Borrower to any other or further notice or demand
in similar or other circumstances.

         Section 9.3       Severability Clause. Any part, provision
representation or warranty of this Agreement which is prohibited or which is
held to be void or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof. Any part, provision, representation or warranty of this Agreement
which is prohibited or unenforceable or is held to be void 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. To the extent permitted by applicable law, the parties
hereto waive any provision of law which prohibits or renders void or
unenforceable any provision hereof. If the invalidity of any part, provision,
representation or warranty of this Agreement shall deprive any party of the
economic benefit intended to be conferred by this Agreement, the parties shall
negotiate in good faith to develop a structure the economic effect of which is
as nearly as possible the same as the economic effect of this Agreement
without regard to such invalidity.

                                      23

<PAGE>

         Section 9.4       Notices. Any notices, consents, directions, demands
or other communications given under this Agreement (unless otherwise specified
herein) shall be in writing and shall be deemed to have been duly given when
delivered in person or by overnight delivery at, or telecopied to the
respective addresses or telecopy numbers, as the case may be, set forth below
(or to such other address or telecopy numbers as either party shall give
notice to the other party pursuant to this Section 9.4):

         If to the Borrower:

                  PRA AG FUNDING, L.L.C.
                  120 Corporate Boulevard, Suite 100
                  Norfolk, Virginia 23502
                  Attention: Steve Fredrickson
                  Telephone: 757-519-9300
                  Telecopy: 757-554-0586

         If to the Lender:

                  AG PRA 1999 Funding Co., LLC
                  c/o Angelo, Gordon & Co.
                  245 Park Avenue -- 26th Floor
                  New York, New York 10167
                  Attention: Josh Brain
                  Telephone: (212) 692-2287
                  Telecopy: (212) 867-5436

         Section 9.5       Reimbursement of the Lender's Costs and Expenses.
The Borrower and the Lender agree that (a) all out-of-pocket costs and
expenses incurred by the Lender in connection with the preparation, execution
and delivery of the Loan Documents and documents relating to formation of the
Lender (in each case including, without limitation, legal fees and expenses of
counsel), UCC searches, recording fees, and other similar expenses paid or
incurred by the Lender in connection with obtaining, perfecting or maintaining
its security interest or lien on or priority in any Loan Collateral shall
constitute Purchase Expenses with respect to an Asset Pool and the Lender
shall be reimbursed from Loan proceeds made available for purchase of such
Asset Pool, provided, however, that in the event any such costs and expenses
are incurred by the Lender with respect to an Asset Pool that the Lender has
committed to finance pursuant to an Accepted Borrowing Request, but which is
not financed with proceeds of a Loan, or which is not purchased by the
Borrower, the Borrower will reimburse the Lender for all such costs and
expenses, (b) all out-of-pocket costs and expenses incurred by the Lender in
connection with the administration, amendment, documentation, recording,
filing, insuring, or enforcing any Loan Document or any Loan Collateral, or
perfecting or maintaining the priority of any lien on or security interest in
any Loan Collateral, incurred after funding of the related Loan shall
constitute Loan Costs with respect to the related Asset Pool for which they
were incurred (or pro rata among all Asset Pools if not attributable to one
such Asset Pool) and shall be payable as such in accordance with Section 2.8
and (c) the Borrower shall reimburse the Lender, from Asset Pool Proceeds or
otherwise, for any and all reasonable out-of-pocket costs

                                      24

<PAGE>

and expenses incurred by the Lender in connection with the enforcement by the
Lender of any of the rights or remedies available to the Lender hereunder or
under any of the Loan Documents or under applicable law, whether or not suit
is filed with respect thereto.

         Section 9.6       Indemnity. In addition to the payment of expenses
pursuant to Section 9.5, the Borrower agrees to indemnify, defend and hold
harmless the Lender and each of its respective participants, members, parent
corporations, subsidiary corporations, affiliated corporations, successor
corporations, and all present and future officers, directors, employees and
agents (the "Indemnitees"), from and against (i) any and all transfer taxes,
documentary taxes, assessments or charges made by any governmental authority
by reason of the execution and delivery of this Agreement and the other Loan
Documents or the making of any Loans and (ii) any and all liabilities, losses,
damages, penalties, judgments, suits, claims, costs and expenses of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel) in connection with any investigative, administrative
or judicial proceedings, whether or not such Indemnitee shall be designated a
party thereto, which may be imposed on, incurred by or asserted against such
Indemnitee, in any manner relating to or arising out of or in connection with,
the making of any Loans or entering into this Agreement or any other Loan
Documents or the use or intended use of the proceeds of the Loans or the
collection of Assets, excepting, however, from the foregoing any such
liabilities, losses, damages, penalties, judgments, suits, claims, costs and
expenses resulting from collection actions undertaken by the Lender, or by a
replacement servicer appointed by the Lender, or the willful misconduct or
gross negligence of an Indemnitee. If any investigative, judicial or
administrative proceeding arising from any of the foregoing is brought against
any Indemnitee, upon request of such Indemnitee, the Borrower, or counsel
designated by the Borrower and satisfactory to the Indemnitee, will resist and
defend such action, suit or proceeding to the extent and in the manner
directed by the Indemnitee, at the Borrower's sole cost and expense. Each
Indemnitee will use its best efforts to cooperate in the defense of any such
action, suit or proceeding. If the foregoing undertaking to indemnify, defend
and hold harmless may be held to be unenforceable because it violates any law
or public policy, the Borrower shall nevertheless make the maximum
contribution to the payment and satisfaction of each of the indemnified
liabilities contemplated hereby which is permissible under applicable law. The
obligations of the Borrower under this Section 9.6 shall survive termination
of this Agreement.

         Section 9.7       Execution in Counterparts. This Agreement and other
Loan Documents may be executed in any number of counterparts, each of which
when so executed and delivered shall be deemed to be an original and all of
which counterparts, taken together, shall constitute but one and the same
instrument.

         Section 9.8       Governing Law: Jurisdiction; Waiver of Jury Trial.

                  (a)      Governing Law. Except as otherwise provided in the
     Security Agreement, the Loan Documents shall be governed by, and
     construed in accordance with, the laws of the State of New York.

                  (b)      Jurisdiction. The Borrower hereby irrevocably
     submits to the nonexclusive jurisdiction of any federal court sitting in
     the City of New York, in any action or proceeding arising out of or
     relating to this Agreement or any of the other Loan

                                      25

<PAGE>

     Documents, and the Borrower hereby irrevocably agrees that all claims in
     respect of such action or proceeding may be heard and determined in such
     federal court. The Borrower hereby irrevocably waives, to the fullest
     extent it may effectively do so, the defense of an inconvenient forum to
     the maintenance of such action or proceeding. The Borrower irrevocably
     consents to the service of copies of the summons and complaint and any
     other process which may be served in any such action or proceeding, by
     the mailing of copies of such process, by certified mail, return receipt
     requested, to the Borrower at its address specified in Section 9.4 above.
     The Borrower agrees that a final judgment in any such action or
     proceeding shall be conclusive and may be enforced in other jurisdictions
     by suit on the judgment or in any other manner provided by law. Nothing
     in this Section 9.8(b) shall affect the right of either party to serve
     legal process in any other manner permitted by law or affect the right of
     either party to bring any action or proceeding against the other party or
     its property in the courts of other jurisdictions.

                  (c)      WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER
     HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY N ANY ACTION,
     PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY LOAN
     DOCUMENT OR ANY INSTRUMENT OR DOCUMENT DELIVERED THEREUNDER.

         Section 9.9       Integration. This Agreement comprises the final and
complete integration of all prior expressions by the parties hereto with
respect to the subject matter hereof and shall constitute the entire agreement
among the parties hereto with respect to such subject matter, superseding all
prior oral or written understandings.

         Section 9.10      Agreement Effectiveness. This Agreement shall
become effective upon delivery of fully executed counterparts hereof to each
of the parties hereto.

         Section 9.11      Headings Descriptive. The headings of the sections
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.

         Section 9.12      Assignment. This Agreement shall be binding upon
the Borrower and the Lender and their respective successors and assigns,
except that the Borrower may not transfer or assign any or all of its rights
or obligations hereunder without the prior written consent of the Lender. The
Lender hereby expressly reserves the right to sell, transfer, assign and
convey any Note or any portion thereof and any or all of its rights or
obligations under this Agreement or with respect to any Loan or Note,
including without limitation the right to sell undivided participating
interests in any Loan or Note, without any prior notice to or consent of the
Borrower.

         Section 9.13      Advice from Independent Counsel. The parties hereto
understand that this Agreement is a legally binding agreement that may affect
such party's rights. Each party hereto represents to the other that it has
received legal advice from counsel of its choice regarding the meaning and
legal significance of this Agreement and that it is satisfied with its legal
counsel and the advice received from it.

                                      26

<PAGE>

         Section 9.14      Judicial Interpretation. Should any provision of
tins Agreement require judicial interpretation, it is agreed that a court
interpreting or construing the same shall not apply a presumption that the
terms hereof shall be more strictly construed against any person by reason of
the rule of construction that a document is to be construed more strictly
against the person who itself or through its agent prepared the same, it being
agreed that all parties hereto have participated in the preparation of this
Agreement.

         Section 9.15      Use of Lender's Name. The Borrower hereby agrees
that neither it nor the Servicer shall refer to or use the name "AG PRA 1999
Funding Co.", "Angelo, Gordon", "Angelo, Gordon & Co." or the name of any
shareholder or member of the Lender in any manner in any collection or
enforcement activities with respect to any Asset or in any advertising,
printed material, electronic medium or other medium, without first obtaining
the Lender's prior written consent. The Lender shall have no obligation to
give any such written consent and may withhold the same in its sole and
absolute discretion.

         Section 9.16      Confidentiality of Information. The Lender hereby
acknowledges that it will use all information regarding one or more Asset
Pools in connection with a Borrowing Request (the "Confidential Information")
solely for the purposes of evaluating, administering and enforcing the
transactions contemplated by this Agreement and making any necessary business
judgments with respect thereto and, in particular, determining whether or not
to make a Loan with respect to an Asset Pool. In addition, the Lender will not
disclose any Confidential Information without the prior consent of the
Borrower, other than to the directors, employees, auditors, counsel or
affiliates of the Lender, each of whom shall be informed of the confidential
nature of the Confidential Information; provided, however, that the Lender
may disclose any such Confidential Information (i) to any party contemplated
in this Agreement for purposes contemplated hereunder (including to any
permitted assignee of a Loan), (ii) as may be required by any municipal,
state, federal or other regulatory body having or claiming to have
jurisdiction over such party, (iii) in order to comply with any law, order,
regulation, regulatory request or ruling applicable to such party or (iv) in
the event any such party is legally compelled (by interrogatories, requests
for information or copies, subpoena, civil investigative demand or similar
process) to disclose any such Confidential Information. This Section 9.16
shall be inoperative as to those portions of the Confidential Information
which are or become generally available to the public or to the Lender on a
non-confidential basis from a source other than the Borrower or were known to
the Lender on a non-confidential basis prior to its disclosure by the
Borrower.

                           [Signature Page Follows]

                                      27

<PAGE>

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

PRA AG FUNDING, L.L.C.

By:  Portfolio Recovery Associates, L.L.C., Member

By:  /s/ STEVE FREDRICKSON
     -------------------------------
     Steve Fredrickson, President

AG PRA 1999 FUNDING CO., LLC

By:  Angelo, Gordon & Co., L.P., Managing Member

By:  /s/ FRED BERGER
     -----------------------------------
     Fred Berger
     Chief Financial Officer

[Signature Page to Credit Agreement]

                                      28

<PAGE>

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

PRA AG FUNDING, L.L.C.

By:  Portfolio Recovery Associates, L.L.C., Member

By:  /s/ STEVE FREDRICKSON
     -----------------------
     Steve Fredrickson, President

AG PRA 1999 FUNDING CO., LLC

By:  Angelo, Gordon & Co., L.P., Managing Member

By:  /s/ FRED BERGER
     -----------------------------------
     Fred Berger
     Chief Financial Officer

[Signature Page to Credit Agreement]

                                      29<PAGE>

                                                                    EXHIBIT 10.2

                          [BANK OF AMERICA LETTERHEAD]

July 20, 2000

Mr. Steve Fredrickson
Mr. Kevin Stevenson
PRA Holdings 1, LLC
120 Corporate Blvd., Suite 100
Norfolk, VA 23502

Dear Steve and Kevin:

Thank you for the opportunity to make the following commitment to you. Bank of
America, N.A. (the "Bank") is pleased to have approved for PRA Holding I, LLC
(the "Borrower") a credit facility consisting of a Term Loan in an amount not
to exceed $550,000.00 (the "Loan"). This commitment is to be used by you for
the purpose of purchasing real estate located in Hutchinson, Kansas and making
improvements thereto.

This commitment is subject to the execution and delivery to the Bank of legal
documents yet to be prepared, including, without limitation a promissory note,
guaranty and collateral documents. All such documents must be satisfactory in
form and substance to the Bank.

The making and funding of any loans under this commitment (in addition to any
other conditions which may be required in the documents referred to in the
preceding paragraph) is expressly subject to the terms and conditions set
forth in the attached Terms and Conditions.

If you find the terms and conditions of this commitment to be acceptable to
you, please execute the enclosed copy of this letter and return it to the
undersigned. If not accepted, this commitment shall expire on July 28, 2000.

We appreciate the opportunity to provide you with the financial services of
Bank of America, N.A.

Sincerely,

/s/ BUFFY J. BAREFOOT

Buffy J. Barefoot
Vice President

Accepted and agreed to this 20 day of July, 2000.

PRA Holding I, LLC                Portfolio Recovery Associates, LLC

By: /s/ KEVIN P. STEVENSON        By: /s/ STEVEN D. FREDRICKSON
   ------------------------          ---------------------------

                                      1

<PAGE>
                             TERMS AND CONDITIONS

BORROWER: PRA Holding I, LLC

PURPOSE: Purchase real estate located at 500 West 1st Street, 505 West 2nd
Street, 507 West 2nd Street, and 113 North Monroe Street, all in Hutchinson,
Kansas and make improvement thereto.

AMOUNT OF LOAN: $550,000.00

INTEREST RATE:

30-Day LIBOR changing daily, as determined by Bank of America and adjusted for
reserves, deposit insurance assessments and other regulatory costs, plus
2.25%.

REPAYMENT TERMS:

In sixty consecutive monthly installments of principal in the amount of
$4,583.33 plus interest payable on the first day of each month beginning
September 1, 2000, and one final installment of all unpaid principal and
accrued interest payable on July 21, 2005.

LOAN DOCUMENTS:

The Loan shall be made under and governed by definitive Loan documents to be
executed and delivered by the Borrower to the Bank and containing the terms
set forth in this commitment and such other terms, conditions,
representations, warranties and covenants as are usual and customary in
lending transactions such as the Loan, which documents may include one or more
promissory notes, guaranties, deeds of trust and such other documents executed
and/or delivered by Borrower, any guarantor or third party in connection with
the Loan (collectively, the "Loan Documents").

COLLATERAL:

A first priority deed of trust on real property owned by the Borrower
described as 500 West 1st Street, 505 West 2nd Street, 507 West 2nd Street,
and 113 North Monroe Street, all located in Hutchinson, Kansas 67501 (the
"Real Property").

GUARANTORS:

This Loan shall be unconditionally and fully guaranteed by Portfolio Recovery
Associates, LLC whose obligations to the Bank shall be joint and several with
Borrower and all other guarantors, if any, and shall be on such other written
terms as are acceptable to the Bank.

TITLE INSURANCE, APPRAISAL AND ENVIRONMENTAL QUESTIONNAIRE

The Loan is subject to Bank obtaining title insurance containing no title
exceptions except those satisfactory to the Bank, insuring the Bank's deed of
trust, and an internal review by the Bank of the data, assumptions and
conclusions found in the appraisal. The Loan is further subject to the Bank
receiving a report from the Borrower with respect to an investigation and
audit of the Real Property showing that the Property is environmentally
acceptable to the Bank.

SURVIVAL:

This commitment letter shall constitute one of the Loan Documents and shall
survive the closing of the Loan, the execution and delivery of all Loan
Documents, and the making of any advances or

                                      2

<PAGE>

disbursements thereunder. In the event of a conflict between a provision
contained in this commitment letter and a provision of any other Loan
Document, the terms of the other Loan Document shall control.

EXPIRATION/RENEWAL CLAUSES:

Any commitment to advance funds under the Loan shall expire on July 21, 2005
and the Bank shall have no further obligation to extend credit. Any renewal,
extension of maturity and/or expiration date, or increase in amount of this
Loan by the Bank shall be governed by the terms of this commitment unless
otherwise agreed to by the Bank, in writing.

CONDITIONS TO FIRST ADVANCE:

Prior to the making by the Bank of the first advance to the Borrower, the
following conditions precedent shall have been satisfied.

The Bank shall have received, duly executed, all Loan Documents and any other
documents and instruments necessary or advisable in connection with the Loan,
all of which shall be in form and substance satisfactory to the Bank and its
counsel.

All deeds of trust and other documents and instruments deemed by the Bank and
its counsel to be necessary or advisable in connection with the collateral
described herein shall have been recorded or filed in all necessary places,
and sent to or received by all necessary persons, as the case may be.

With respect to the Real Property collateral herein, the Bank shall have
received (i) evidence satisfactory to the Bank of a casualty insurance and a
flood insurance policy, if in a flood plain, with standard mortgagee clauses
attached in favor of and in form satisfactory to Bank, and (ii) a mortgagee
title insurance policy issued by a title insurance company acceptable to the
Bank insuring the lien created by the Bank's deed of trust on such Real
Property, subject only to prior liens referred to in this commitment and such
other exceptions to title as may be acceptable to the Bank, in its sole
discretion.

REPORTING REQUIREMENTS:

So long as the Borrower is indebted to the Bank, the Guarantor shall submit to
the Bank the following:

1.       Quarterly, within 45 days of the end of each quarter, internally
         prepared financial statements of the Guarantor including a balance
         sheet and income statement; and

2.       Annually, within 120 days following the end of the Guarantor's fiscal
         year, a balance sheet and income statement prepared in accordance
         with generally accepted accounting principles on an audited basis by
         an independent certified public accountant acceptable to the Bank,
         including statements of financial condition, income, cash flows and
         changes in shareholders' equity.

3.       Quarterly, within 45 days of quarter-end a covenant compliance
         certificate.

REPRESENTATIONS AND WARRANTIES:

Good Standing. Borrower and guarantor are limited liability corporations, duly
organized, validly existing and in good standing under the laws of Virginia
and has the power and authority to own its property and to carry on its
business in each jurisdiction in which Borrower does business.

Authority and Compliance. Borrower has full power and authority to execute and
deliver the Loan Documents and to incur and perform the obligations provided
for therein, all of which have been duly authorized by all proper and
necessary action of the appropriate governing body of Borrower. No consent or
approval of any public authority or other third party is required as a
condition to the validity of any

                                      3

<PAGE>

Loan Document, and Borrower is in compliance with all laws and regulatory
requirements to which it is subject.

Binding Agreement. This Agreement and the other Loan Documents executed by
Borrower constitute valid and legally binding obligations of Borrower,
enforceable in accordance with their terms.

Litigation. There is no material proceeding involving Borrower or Guarantor
pending or, to the knowledge of Borrower and Guarantor, threatened before any
court or governmental authority, agency or arbitration authority, except as
disclosed to Bank in writing and acknowledged by Bank prior to the date of
this Agreement.

No Conflicting Agreements. There is no charter, bylaw, stock provision,
partnership agreement or other document pertaining to the organization, power
or authority of Borrower and no provision of any existing agreement, mortgage,
indenture or contract binding on Borrower or affecting its property, which
would conflict with or in any way prevent the execution, delivery or carrying
out of the terms of this Agreement and the other Loan Documents.

Ownership of Assets. Borrower has good title to its assets, and its assets are
free and clear of liens, except those granted to Bank and as disclosed to Bank
in writing prior to the date of this Agreement.

Taxes. All taxes and assessments due and payable by Borrower have been paid or
are being contested in good faith by appropriate proceedings and the Borrower
has filed all tax returns which it is required to file.

Financial Statements. The financial statements of Guarantor heretofore
delivered to Bank have been prepared in accordance with GAAP applied on a
consistent basis throughout the period involved and fairly present Borrower's
financial condition as of the date or dates thereof, and there has been no
material adverse change in Borrower's financial condition or operations since
December 31, 1999. All factual information furnished by Borrower to Bank in
connection with this Agreement and the other Loan Documents is and will be
accurate and complete on the date as of which such information is delivered to
Bank and is not and will not be incomplete by the omission of any material
fact necessary to make such information not misleading.

Place of Business. Borrower's chief executive office is located at
                       Riverside Commerce Center
                       120 Corporate Boulevard, Suite 100
                       Norfolk, VA 23502

Environmental Compliance. The conduct of Borrower's business operations and
the condition of Borrower's property does not and will not violate any federal
laws, rules or ordinances for environmental protection, regulations of the
Environmental Protection Agency and any applicable local or state law, rule,
regulation or rule of common law and any judicial interpretation thereof
relating primarily to the environment or Hazardous Materials.

Continuation of Representation and Warranties. All representations and
warranties made under this Letter of Commitment shall be deemed to be made at
and as of the date hereof and at and as of the date of any advance under any
Loan.

FINANCIAL COVENANTS:

Until full payment and performance of all obligations of Borrower under the
Loan, Guarantor will, unless Bank consents otherwise in writing (and without
limiting any requirement of any other loan document):

                                      4

<PAGE>

Net Worth: Maintain at all times a net worth at no less than $20,000,000.00.

Cash Flow Coverage Ratio: Maintain a minimum ratio of cash flow to debt
service of not less than 1.50 to 1.00. For this purpose cash flow coverage
shall be defined as: (Net Income + Depreciation + Amortization + Interest
Expense - Distributions) divided by (Prior Period's Current Maturity of Long
Term Debt + Interest Expense).

All accounting terms not specifically defined or specified herein shall have
the meanings generally attributed to such terms under generally accepted
accounting principles ("GAAP"), as in effect from time to time, consistently
applied.

AFFIRMATIVE COVENANTS:

Until full payment and performance of all obligations of Borrower under the Loan
Documents, Borrower will, without the prior written consent of Bank (and
without limiting any requirement of any other Loan Documents):

Insurance. Maintain insurance with responsible insurance companies on such of
its properties, in such amounts and against such risks as is customarily
maintained by similar businesses operating in the same vicinity, specifically
to include fire and extended coverage insurance covering all assets, business
interruption insurance, workers compensation insurance and liability
insurance, all to be with such companies and in such amounts as are
satisfactory to Bank and providing for at least 30 days prior notice to Bank
of any cancellation thereof. Satisfactory evidence of such insurance will be
supplied to Bank prior to funding under the Loan(s) and 30 days prior to each
policy renewal.

Existence and Compliance. Maintain its existence, good standing and
qualification to do business, where required and comply with all laws,
regulations and governmental requirements including, without limitation,
environmental laws applicable to it or to any of its property, business
operations and transactions.

Adverse Conditions or Events. Promptly advise Bank in writing of (i) any
condition, event or act which comes to its attention that would or might
materially adversely affect Borrower's financial condition or operations or
Bank's rights under the Loan Documents, (ii) any material litigation filed by
or against Borrower, (iii) any event that has occurred that would constitute
an event of default under any Loan Documents and (iv) any uninsured or
partially uninsured loss through fire, theft, liability or property damage in
excess of an aggregate of $50,000.00.

Taxes and Other Obligations. Pay all of its taxes, assessments and other
obligations, including, but not limited to taxes, costs or other expenses
arising out of this transaction, as the same become due and payable, except to
the extent the same are being contested in good faith by appropriate
proceedings in a diligent manner.

Maintenance. Maintain all of its tangible property in good condition and
repair and make all necessary replacements thereof, and preserve and maintain
all licenses, trademarks, privileges, permits, franchises, certificates and
the like necessary for the operation of its business.

Environmental. Immediately advise Bank in writing of (i) any and all
enforcement, cleanup, remedial, removal, or other governmental or regulatory
actions instituted, completed or threatened pursuant to any applicable
federal, state, or local laws, ordinances or regulations relating to any
Hazardous Materials affecting Borrower's business operations; and (ii) all
claims made or threatened by any third party against

                                      5

<PAGE>

Borrower relating to damages, contribution, cost recovery, compensation, loss or
injury resulting from any Hazardous Materials. Borrower shall immediately notify
Bank of any remedial action taken by Borrower with respect to Borrower's
business operations. Borrower will not use or permit any other party to use any
Hazardous Materials at any of Borrower's places of business or at any other
property owned by Borrower except such materials as are incidental to Borrower's
normal course of business, maintenance and repairs and which are handled in
compliance with all applicable environmental laws. Borrower agrees to permit
Bank, its agents, contractors and employees to enter and inspect any of
Borrower's places of business or any other property of Borrower at any
reasonable times upon three (3) days prior notice for the purposes of conducting
an environmental investigation and audit (including taking physical samples) to
insure that Borrower is complying with this covenant and Borrower shall
reimburse Bank on demand for the costs of any such environmental investigation
and audit. Borrower shall provide Bank, its agents, contractors, employees and
representatives with access to and copies of any and all data and documents
relating to or dealing with any Hazardous Materials used, generated.
manufactured, stored or disposed of by Borrower's business operations within
five (5) days of the request therefore.

NEGATIVE COVENANTS:
Until full payment and performance of all obligations of Borrower under the Loan
Documents, Borrower will not, without the prior written consent of Bank (and
without limiting any requirement of any other Loan Documents):

Transfer of Assets or Control. Sell, lease, assign or otherwise dispose of or
transfer any assets, except in the normal course of its business, or enter into
any merger or consolidation, or transfer control or ownership of the Borrower or
from or acquire any subsidiary.

Liens. Grant, suffer or permit any contractual or noncontractual lien on or
security interest in its assets, except in favor of Bank, or fail to promptly
pay when due all lawful claims, whether for labor, materials or otherwise.

Extensions of Credit. Make any loan or advance to any individual, partnership,
corporation or other entity.

Borrowings. Create, incur, assume or become liable in any manner for any
indebtedness (for borrowed money, deferred payment for the purchase of assets,
lease payments, as surety or guarantor for the debt for another, or otherwise)
other than to Bank, except for normal trade debts incurred in the ordinary
course of Borrowers business, and except for existing indebtedness disclosed to
Bank in writing and acknowledged by Bank prior to the date of this Agreement.

Character of Business. Change the general character of business as conducted at
the date hereof, or engage in any type of business not reasonably related to its
business as presently conducted.

EVENTS OF DEFAULT:
A default shall occur under this Letter of Commitment and under each of the Loan
Documents and under any other promissory note executed by Borrower in favor of
Bank if the Borrower, any endorser or any guarantor of the Loan defaults in the
payment of any amounts due and owing under the Loan or any other indebtedness
owing to Bank or fails to timely and properly observe, keep or perform any term,
covenant, agreement or condition in any of the Loan Documents or in any other
loan agreement, promissory note, security agreement, deed of trust, deed to
secure debt, mortgage, assignment or other contract securing or evidencing
payment of any indebtedness of Borrower, any endorser or any guarantor of any
loan to Bank or to any affiliate or subsidiary of Bank of America Corporation.

                                        6
<PAGE>

REMEDIES UPON DEFAULT:
If an event of default shall occur Bank shall have all rights, powers and
remedies available under each of the loan Documents as well as all rights and
remedies available at law or in equity.

CLOSING COSTS AND EXPENSES:
The Borrower shall pay all costs and expenses incurred by the Bank in connection
with the Bank's review, due diligence and closing of the Loan, including
attorneys' fees incurred by the Bank in connection with the negotiation and
preparation of the Loan Documents, the costs of any environmental investigation
and audit, appraisal, title insurance premiums, survey and inspection fees,
whether or not the Loan actually closes.

MATERIAL ADVERSE CHANGE:
This commitment may be terminated, in the sole discretion of the Bank, upon the
occurrence of a material adverse change in the financial condition of the
Borrower or any other person liable to the Bank for the repayment of this Loan.

NON-ASSIGNABLE
This commitment and the right of Borrower to receive loans hereunder may not be
assigned by Borrower.

RELIANCE:
This commitment constitutes an offer by the Bank to the Borrower to make a Loan
on the terms and conditions set forth herein and should not be relied upon by
any third party for any purpose.

AMENDMENT AND WAIVER:
No alteration, modification, amendment or waiver of any terms and conditions of
this commitment, or of any of the documents required by or delivered to the Bank
under this commitment, shall be effective or enforceable against the Bank unless
set forth in a writing signed by the Bank.

GOVERNING LAW:
This commitment and the Loan shall be governed by and construed in accordance
with the laws of the Commonwealth of Virginia (without regard to choice of law
principles).

INTEGRATION:
The terms set forth above represent the entire understanding between the
Borrower and the Bank with respect to the subject matter of this commitment, and
this commitment supersedes any prior and contemporaneous agreements,
commitments, discussions and understandings, oral or written, with respect to
the subject matter of this commitment.

ARBITRATION:
Any controversy or claim between or among the parties hereto including but not
limited to those arising out of or relating to this agreement or any related
instruments, agreements or documents including any claim based on or arising
from an alleged tort, shall be determined by binding arbitration in accordance
with the Federal Arbitration Act (or if not applicable, the applicable state
law), and the rules of practice and procedure for the arbitration of commercial
disputes of Judicial Arbitration and Mediation Services, Inc. (J.A.M.S.).
Judgment upon any arbitration award may be entered in any court having
jurisdiction. Any party to this instrument, agreement or document may bring an
action, including a summary or expedited proceeding, to compel arbitration of
any controversy or claim to which this agreement applies in any court having
jurisdiction over such action.

                                        7
<PAGE>

EXPIRATION:
This commitment is to be closed within 30 days of the acceptance date. Should
this commitment not be accepted by the expiration date, and not closed within 30
days of the acceptance date, then the Bank shall have no further obligation to
extend credit hereunder.

The terms and conditions set forth above are accepted this 20 day of July, 2000.

BORROWER: PRA Holding I, LLC

By:  /s/ KEVIN P. STEVENSON
    ------------------------------
Title: /s/ Member's Representative
       ---------------------------

GUARANTOR Portfolio Recovery Associates, LLC

By:  /s/ STEVEN D. FREDRICKSON
    ------------------------------
Title:   President
       ---------------------------

                                        8

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