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                           SECOND AMENDED AND RESTATED

                          SALE AND SERVICING AGREEMENT

                           Dated as of January 1, 2000

                                      among

                     FFCA FRANCHISE LOAN OWNER TRUST 1998-1
                                    (Issuer)

                         FFCA LOAN WAREHOUSE CORPORATION

                                   (Depositor)

                          FFCA ACQUISITION CORPORATION

                                (Loan Originator)

                    FRANCHISE FINANCE CORPORATION OF AMERICA

                                   (Servicer)

                                       and

                     LASALLE BANK NATIONAL ASSOCIATION f/k/a

                              LASALLE NATIONAL BANK

                               (Indenture Trustee)

                     FFCA FRANCHISE LOAN OWNER TRUST 1998-1
                 FRANCHISE LOAN BACKED NOTES ISSUABLE IN SERIES

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                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
                                    ARTICLE I

                                   DEFINITIONS

Section 1.01   Definitions..................................................   1
Section 1.02   Other Definitional Provisions................................  35

                                   ARTICLE II

                 CONVEYANCE OF THE TRUST ESTATE; ADDITIONAL NOTE
                               PRINCIPAL BALANCES

Section 2.01   Conveyance of the Trust Estate; Additional Note Principal
                 Balances...................................................  36
Section 2.02   Ownership and Possession of Loan Files.......................  37
Section 2.03   Books and Records; Intention of the Parties..................  38
Section 2.04   Delivery of Loan Documents...................................  38
Section 2.05   Acceptance by the Indenture Trustee of the Loans; Certain
                 Substitutions and Repurchases; Certification by the
                 Custodian..................................................  41
Section 2.06   Conditions Precedent to Transfer Dates and Collateral Value
                 Excess Dates...............................................  43
Section 2.07   Termination of Revolving Period..............................  45

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

Section 3.01   Representations and Warranties of the Depositor..............  45
Section 3.02   Representations and Warranties of the Loan Originator........  47
Section 3.03   Representations, Warranties and Covenants of the Servicer....  50
Section 3.04   Representations and Warranties Regarding Loans...............  52
Section 3.05   Purchase and Substitution....................................  61
Section 3.06   Securitizations..............................................  63
Section 3.07   Loan Originator Put; Servicer Call...........................  64
Section 3.08   Modification of Underwriting Guidelines......................  64
Section 3.09   Environmental Policy and Business Interruption Insurance.....  65
Section 3.10   Whole Loan Sales.............................................  65
<PAGE>
                                   ARTICLE IV

                    ADMINISTRATION AND SERVICING OF THE LOANS

Section 4.01   Duties of the Servicer.......................................  66
Section 4.02   Vacancies and Inspections....................................  68
Section 4.03   Fidelity Bond; Errors and Omissions Insurance................  69
Section 4.04   Filing of Continuation Statements............................  69
Section 4.05   Establishment and Administration of Escrow Account...........  70
Section 4.06   Subservicing.................................................  70
Section 4.07   Successor Servicers..........................................  72
Section 4.08   Maintenance of Insurance.....................................  72
Section 4.09   Periodic Advances............................................  73
Section 4.10   Foreclosure; Repossession and Alternatives...................  74
Section 4.11   Title, Management and Disposition of Foreclosure Property....  75
Section 4.12   Compliance With Request for Information......................  77
Section 4.13   Lockbox Trigger Event; Lockbox Account.......................  77
Section 4.14   Valuation of Loans, Hedge Value and Retained Securities
                 Value; Market Value Agent..................................  78

                                    ARTICLE V

                         ESTABLISHMENT OF TRUST ACCOUNTS

Section 5.01   Collection Account and Distribution Account .................  78
Section 5.02   Payments to Securityholders..................................  82
Section 5.03   Trust Accounts; Trust Account Property.......................  83
Section 5.04   Advance Account..............................................  86
Section 5.05   Transfer Obligation; Transfer Obligation Account.............  86

                                   ARTICLE VI

              STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS

Section 6.01   Statements...................................................  87
Section 6.02   Specification of Certain Tax Matters.........................  91

                                   ARTICLE VII

                           GENERAL SERVICING PROCEDURE

Section 7.01   Due-On-Sale; Due-on-Encumbrance..............................  91
Section 7.02   Release of Loan Files........................................  92
Section 7.03   Servicing Compensation.......................................  93
Section 7.04   Statement as to Compliance and Financial Statements..........  94
Section 7.05   Independent Public Accountants' Servicing Report.............  94

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Section 7.06   Right to Examine Servicer Records............................  95
Section 7.07   Reports to the Indenture Trustee; Collection Account
                 Statements.................................................  95
Section 7.08   Access to Information........................................  95

                                  ARTICLE VIII

                                     HEDGING

Section 8.01   Hedging Instruments..........................................  96

                                   ARTICLE IX

                                  THE SERVICER

Section 9.01   Indemnification; Third Party Claims..........................  97
Section 9.02   Merger or Consolidation of the Servicer......................  99
Section 9.03   Limitation on Liability of the Servicer and Others........... 100
Section 9.04   Servicer Not to Resign; Assignment........................... 100
Section 9.05   Relationship of Servicer to Issuer and the Indenture Trustee. 100
Section 9.06   Servicer May Own Securities.................................. 101

                                    ARTICLE X

                                     DEFAULT

Section 10.01  Events of Default............................................ 101
Section 10.02  Appointment of Successor..................................... 103
Section 10.03  Waiver of Defaults........................................... 104
Section 10.04  Accounting Upon Termination of Servicer...................... 104

                                   ARTICLE XI

                                   TERMINATION

Section 11.01  Termination.................................................. 105
Section 11.02  Optional Termination......................................... 105
Section 11.03  Notice of Termination........................................ 105

                                   ARTICLE XII

                            MISCELLANEOUS PROVISIONS

Section 12.01  Acts of Noteholders.......................................... 106
Section 12.02  Amendment.................................................... 106
Section 12.03  Recordation of Agreement..................................... 107
Section 12.04  Duration of Agreement........................................ 107

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Section 12.05  Governing Law................................................ 107
Section 12.06  Notices...................................................... 107
Section 12.07  Severability of Provisions................................... 108
Section 12.08  No Partnership............................................... 108
Section 12.09  Counterparts................................................. 108
Section 12.10  Successors and Assigns....................................... 108
Section 12.11  Headings..................................................... 108
Section 12.12  Actions of Securityholders................................... 108
Section 12.13  Non-Petition Agreement....................................... 109
Section 12.14  Holders of the Trust Certificates............................ 109
Section 12.15  FFCA to Guarantee Certain Loan Originator Obligations........ 109
Section 12.16  Reports in Electronic Form................................... 110
Section 12.17  Limitation of Owner Trustee Liability........................ 110

EXHIBIT A - Form of Notice of Additional Note Principal Balance

EXHIBIT B - Form of Servicer's Remittance Report to Trustee

EXHIBIT C - Form of S&SA Assignment

EXHIBIT D - Referenced Documents

EXHIBIT E - Form of Bailee Agreement

EXHIBIT F - Form of Escrow Instructions

EXHIBIT G - Form of Loan Originator Put Notice

EXHIBIT H - Form of Servicer Call Notice

                                      -iv-
<PAGE>
          THIS SECOND  AMENDED AND RESTATED  SALE AND SERVICING  AGREEMENT  (the
"SALE AND SERVICING Agreement") is entered into effective as of January 1, 2000,
by and among FFCA Franchise Loan Owner Trust 1998-1,  a Delaware  business trust
(the  "ISSUER" or the  "TRUST"),  FFCA Loan  Warehouse  Corporation,  a Delaware
corporation,  as depositor (the "DEPOSITOR"),  FFCA Acquisition  Corporation,  a
Delaware  corporation,  as loan  originator (the "LOAN  ORIGINATOR"),  Franchise
Finance  Corporation of America, a Delaware  corporation  ("FFCA"),  as servicer
(the "SERVICER"),  and LaSalle Bank National  Association f/k/a LaSalle National
Bank, a national  banking  association,  as  indenture  trustee on behalf of the
Noteholders  (in such  capacity,  the  "INDENTURE  TRUSTEE"),  which  amends and
restates  the Amended and Restated  Sale and  Servicing  Agreement,  dated as of
March 18, 1999 (the "AMENDED AND RESTATED SALE AND SERVICING AGREEMENT"), by and
among the  parties  hereto,  as amended by  Amendment  No. 1 to the  Amended and
Restated Sale and Servicing  Agreement,  dated as of August 27, 1999 ("AMENDMENT
NO. 1 TO THE AMENDED AND RESTATED SALE AND SERVICING  AGREEMENT"),  by and among
the parties hereto,  which amends and restates the Sale and Servicing Agreement,
dated as of August 14, 1998 (the  "ORIGINAL SALE AND SERVICING  AGREEMENT"),  by
and among the parties hereto,  as amended by the Amendment No. 1 to the Sale and
Servicing  Agreement,  dated as of October  30,  1998  ("AMENDMENT  NO. 1 TO THE
ORIGINAL SALE AND SERVICING AGREEMENT"), by and among the parties hereto.

          WHEREAS,  the parties  hereto  desire to amend and restate the Amended
and Restated Sale and Servicing Agreement,  as amended by Amendment No. 1 to the
Amended and Restated Sale and Servicing Agreement, which amends and restates the
Original Sale and Servicing Agreement,  as amended by the Amendment No. 1 to the
Original Sale and Servicing Agreement;

          NOW,  THEREFORE,  in  consideration  of the mutual  agreements  herein
contained, the Issuer, the Depositor, the Loan Originator,  the Servicer and the
Indenture  Trustee  hereby agree for the benefit of each of them and the holders
of the Notes and the Trust  Certificates  issued  hereunder to amend and restate
the Amended and Restated Sale and Servicing  Agreement,  as amended by Amendment
No. 1 to the Amended and Restated Sale and Servicing Agreement, which amends and
restates the Original Sale and Servicing Agreement,  as amended by the Amendment
No. 1 to the Original Sale and Servicing  Agreement,  in its entirety to read as
follows:

                                    ARTICLE I

                                   DEFINITIONS

          SECTION 1.01 DEFINITIONS.

          Whenever  used in this  Agreement,  the  following  words and phrases,
unless the context otherwise requires, shall have the meanings specified in this
Article.  Unless otherwise  specified,  all  calculations of interest  described
herein  shall be made on the basis of a 360-day  year and the  actual  number of
days elapsed in each Accrual Period.
<PAGE>
          ACCRUAL PERIOD:  With respect to the Notes,  the period  commencing on
and including  the preceding  Payment Date (or, in the case of the first Payment
Date, the period commencing on and including the first Transfer Date) and ending
on the day preceding the related Payment Date.

          ACT OR SECURITIES ACT: The Securities Act of 1933, as amended.

          ADDITIONAL NOTE PRINCIPAL BALANCE:

          (a) With respect to each Transfer  Date, the lesser of (i) the product
of (x) an amount equal to the average of the Advance Factors with respect to the
Loans  conveyed  on such date,  weighted  by  Transfer  Cut-off  Date  Principal
Balances  multiplied  by (y)  the sum of the  Transfer  Cut-off  Date  Principal
Balances of the Loans conveyed as of such Transfer Date, and (ii) the product of
(x) the  average  Maximum  Advance  Factors of the Loans  conveyed  on such date
weighted by Transfer Cut-off Date Principal  Balances  multiplied by (y) the sum
of the  Market  Value  of all  Loans  conveyed  on such  date,  in  either  case
subtracting  from the product  any  Overcollateralization  Shortfall  as of such
date.

          (b) With respect to each Collateral Value Excess Date, an amount equal
to the Additional  Note  Principal  Balance that the Issuer sells to the Initial
Noteholder  pursuant to the Note  Purchase  Agreement on such  Collateral  Value
Excess Date.

          ADJUSTABLE RATE LOAN: Any Loan, the Loan Interest Rate with respect to
which is subject to adjustment; provided that under the terms of such Loan, such
adjustments  may not modify the Loan  Interest  Rate to a rate that is more than
six percent above or two percent below the Loan Interest Rate at the origination
of such Loan.

          ADMINISTRATION  AGREEMENT: The Administration  Agreement,  dated as of
August 14, 1998, among the Issuer and FFCA, as Administrator and as Servicer.

          ADVANCE ACCOUNT:  The account  established and maintained  pursuant to
Section 5.04.

          ADVANCE  FACTOR:  With  respect  to each  Loan  (a) as of the  related
Transfer  Date,  the lesser of (x) 85% or, to the extent that the Note Principal
Balance  as of such day  (after  giving  effect  to the sale of such Loan to the
Trust) is  greater  than  $300,000,000,  80% for each Loan (as  selected  by the
Initial Noteholder),  the inclusion of which as an asset of the Trust results in
the Note Principal Balance as of such day exceeding  $300,000,000 (or such other
lesser  percentage as agreed in writing by the Issuer and Initial  Noteholder as
the Advance Factor with respect to such Loan) and (y) the Maximum Advance Factor
with  respect to such Loan and (b)  thereafter,  the  lesser of (x) the  Maximum
Advance  Factor  with  respect to such Loan and (y) to the extent  that the Note
Principal Balance as of such day is greater than $300,000,000, 80% for each Loan
(as selected by the Initial  Noteholder),  the inclusion of which as an asset of
the  Trust  results  in the Note  Principal  Balance  as of such  day  exceeding
$300,000,000.  Notwithstanding  the  foregoing,  with  respect  to any  date  of
determination,  if the Corporate FCCR Percentage is greater than or equal to 25%
as of such date, the Advance Factor for any Loan having a Corporate Fixed Charge
Coverage  Ratio  less than or equal to 1.15 will be  determined  by the  Initial
Noteholder in its sole  discretion,  provided that such Advance Factor shall not
be less than 50%.

                                       -2-
<PAGE>
          AFFILIATE:  With  respect to any  specified  Person,  any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition,  the term "control", when used with respect
to any specified  Person,  means the power to direct the management and policies
of such Person, directly or indirectly,  whether through the ownership of voting
securities,   by  contract  or  otherwise,   and  the  terms  "controlling"  and
"controlled" have corresponding meanings.

          AGREEMENT: This Sale and Servicing Agreement and all amendments hereof
and supplements hereto.

          ALTA:  The  American  Land Title  Association  and its  successors  in
interest.

          APPROVED BRAND CD FACILITY  MORTGAGE LOANS: CD Facility Mortgage Loans
for which the Brand has been approved in writing by the Majority  Noteholders in
their sole discretion.

          ASSIGNMENT: An LPA Assignment or S&SA Assignment.

          ASSIGNMENT  OF LOAN  DOCUMENTS:  With  respect to each Loan, a blanket
assignment of the related Loan File (other than those Loan Documents in the Loan
File specifically assigned by another Loan Document) with the assignee in blank,
assigning all of the Loan Originator's  right, title and interest in the related
Loan File,  including but not limited to, the Promissory  Note, the Mortgage and
Security Agreement.

          ASSIGNMENT  OF  MORTGAGE:  With  respect  to  any  Mortgage  Loan,  an
assignment  in blank of the related  Mortgage,  notice of transfer or equivalent
instrument in recordable  form,  sufficient  under the laws of the  jurisdiction
wherein the related Mortgaged  Property is located to reflect the assignment and
pledge of such Mortgage.

          AUTOMOTIVE SERVICE FACILITY MORTGAGE LOANS:  Mortgage Loans secured by
establishments engaged in the service, repair,  maintenance and sale of products
for motor vehicles after their initial sale to the public.

          BAILEE:  With respect to any Table-Funded Loan, the entity approved by
the Initial Noteholder, in its sole discretion and pursuant to Section 25 of the
Custodial  Agreement,  (i) to act  pursuant  to the  Bailee  Agreement,  (ii) to
receive the documents  comprising the Indenture Trustee's Loan File and (iii) to
issue the Bailee Trust Receipt.

          BAILEE AGREEMENT: A Bailee Agreement,  among the Loan Originator,  the
Initial Noteholder and a Bailee, substantially in the form of Exhibit E attached
hereto as the same may be amended,  supplemented or otherwise modified from time
to time.

          BAILEE TRUST RECEIPT: A trust receipt,  in the form of Attachment B to
Exhibit E hereto, issued by the Bailee pursuant to the Bailee Agreement.

          BASIC DOCUMENTS:  This Agreement,  the Administration  Agreement,  the
Custodial  Agreement,  the  Indenture,  the Loan  Purchase  Agreement,  the Note
Purchase  Agreement,   the  Trust  Agreement,   the  Collection  Account  Letter
Agreement,  each Hedging Instrument and, as and when required to be executed and
delivered, the Assignments and the Lockbox Agreement.

                                       -3-
<PAGE>
          BORROWER:  The obligor or obligors on a Promissory Note; including any
person who has assumed or guaranteed the  obligations of the obligor or obligors
under such  Promissory  Note.  With respect to each  Borrower  that is a special
purpose entity,  "Borrower" shall be deemed to include the lessee (including all
Affiliates  of such lessee and any guarantor of the lessee's  obligations  under
the lease) of the related Loan Collateral.

          BRAND: With respect to each Loan, the franchise concept,  if any, used
by the Borrower in operating the related Loan Collateral.

          BUSINESS  DAY: Any day other than (i) a Saturday or Sunday,  or (ii) a
day on which banking  institutions  in New York City or in the city in which the
corporate trust office of the Indenture  Trustee is located or the city in which
the Servicer's  servicing  operations are located are authorized or obligated by
law or executive order to be closed.

          C&G STORE MORTGAGE  LOANS:  Mortgage Loans secured by convenience  and
gasoline stores.

          CAPITALIZED  LEASE:  Any  lease  of  property  by  FFCA  or any of its
Subsidiaries as lessee that is reflected on FFCA's consolidated balance sheet as
a capitalized lease in accordance with GAAP.

          CD FACILITY MORTGAGE LOANS: Mortgage Loans secured by casual dining or
family dining establishments.

          CERTIFICATEHOLDER: A holder of a Trust Certificate.

          CERTIFICATE REGISTER: The register established pursuant to Section 3.4
of the Trust Agreement.

          CLEAN-UP CALL DATE:  The first Payment Date  occurring on or after the
end of the final Revolving  Period on which the Note Principal  Balance declines
to 10% or less of the  aggregate  Note  Principal  Balance as of the end of such
final Revolving Period.

          CLOSING  DATE:  August 14, 1998,  or with respect to a Series of Notes
subsequent to the Series issued on the date hereof,  as set forth in the related
Indenture Supplement.

          CODE: The Internal Revenue Code of 1986, as amended from time to time,
and the regulations promulgated by the United States Treasury thereunder.

          COLLATERAL  VALUE: With respect to each Loan and each Business Day, an
amount  equal to (i) the product of the lesser of (x) the  Principal  Balance of
such Loan after giving  effect to all payments  received in respect of principal
thereon  prior to such  Business  Day and (y) the  Market  Value  of such  Loan,
multiplied by the Advance Factor applicable to such Loan LESS (ii) the aggregate
unreimbursed Servicing Advances and Periodic Advances attributable to such Loan;
provided,  however, that the Collateral Value shall be zero with respect to each
Loan (v) where the Unit-Level  Fixed Charge Coverage Ratio is less than 1.20 or,

                                       -4-
<PAGE>
with respect to the Sonic franchise  finance  program,  1.15,  unless  otherwise
specified in writing by the Majority  Noteholders in their sole discretion,  (w)
that is 30 or more days Delinquent,  (x) that the Loan Originator is required to
repurchase  pursuant  to Section  2.05 or  Section  3.05  hereof,  (y) that is a
Table-Funded  Loan and for which the Custodian has failed to receive the related
Loan Documents by the third Business Day following the applicable  Transfer Date
or (z) that is a Table-Funded Loan for which the Custodian has failed to receive
a copy of the related Promissory Note and such other documents as are prescribed
in SECTION  2.04(B) on or prior to the related  Transfer  Date.  The  Collateral
Value of a Loan shall be determined  taking into  consideration  any Hedge Value
(or any net negative  value) of each Hedging  Instrument  (as  determined by the
Market Value Agent in accordance with Section 4.14(c)) attributable to such Loan
as of such Business Day. With the written consent of the Majority Noteholders in
their sole  discretion,  as of such Business Day, the Collateral  Value shall be
increased (but in no event to an amount  greater than par) or decreased,  as the
case may be, by all or any portion of the Hedge Value or net  negative  value of
any Hedging  Instrument  attributable  to such Loan, as of such Business Day, as
the Majority Noteholders may, in their sole discretion, designate in writing. If
as of such Business Day, no Rapid Amortization Trigger or Event of Default shall
be in effect,  the aggregate  Collateral  Value of the Loans shall be reduced or
increased,  as the case may be,  by the  aggregate  net  Hedge  Value as of such
Business Day.

          COLLATERAL  VALUE EXCESS:  With respect to any Business Day, an amount
equal  to the  positive  difference,  if any,  between  (a)  (i)  the  aggregate
Collateral  Value of all Loans in the Loan Pool on such Business Day, or (ii) in
the event that a  Performance  Trigger  shall have  occurred and not been Deemed
Cured,  the  aggregate  Collateral  Value of all  Loans in the Loan Pool on such
Business  Day  multiplied  by 0.98 and (b) the Note  Principal  Balance  on such
Business Day.

          COLLATERAL  VALUE EXCESS DATE:  Any Business Day on which a Collateral
Value Excess  exists and on which the Initial  Noteholder  purchases  Additional
Note Principal Balance in respect thereof pursuant to SECTION 2.01 hereof.

          COLLECTION  ACCOUNT:  The account designated as such,  established and
maintained by the Servicer in accordance with SECTION 5.01(A)(1) hereof.

          COLLECTION ACCOUNT LETTER AGREEMENT: the Letter Agreement dated August
14, 1998,  between FFCA and the Issuer and acknowledged and agreed to by Norwest
Bank Arizona, N.A., Norwest Investment Services, Inc. and the Indenture Trustee.

          CONDEMNATION PROCEEDS:  With respect to a Mortgage Loan, all awards or
settlements in respect of the related Mortgaged  Property,  whether permanent or
temporary,  partial or entire,  by  exercise  of the power of eminent  domain or
condemnation.

          CONSOLIDATED  INCOME AVAILABLE FOR DEBT SERVICE:  For any period,  the
Consolidated  Net Income of FFCA and its  Subsidiaries  plus amounts  which have
been deducted, and minus amounts which have been added, for (a) interest on Debt
of  FFCA  and  its  Subsidiaries,  (b)  provision  for  taxes  of  FFCA  and its
Subsidiaries based on income, (c) amortization of debt discount,  (d) provisions
for gains and  losses on  properties,  (e)  depreciation,  (f) the effect of any

                                       -5-
<PAGE>
non-cash charge resulting from a change in accounting  principles in determining
Consolidated  Net  Income  for such  period  and (g)  amortization  of  deferred
charges.

          CONSOLIDATED  NET INCOME:  For any period,  the amount of consolidated
net income (or loss) of FFCA and its Subsidiaries for such period  determined on
a consolidated basis in accordance with GAAP.

          CORPORATE FIXED CHARGE COVERAGE RATIO: The consolidated  operations of
all  entities  related  to  the  Borrower,  calculated  as (x)  earnings  before
depreciation,  amortization,  interest,  rent and taxes,  inclusive of overhead,
divided by (y) rent,  interest and the current  maturity of long-term  debt,  as
computed by the Loan Originator based on the information most recently  provided
by the Borrower prior to the Transfer Date prior to any discretionary "add-back"
adjustments.  In computing the Corporate Fixed Charge  Coverage Ratio,  the Loan
Originator,  with the consent of the Initial Noteholder, in its sole discretion,
may take into  consideration  any  guarantee of the  obligations  of the related
Borrower.  For any given Loan, the Corporate  Charge Coverage Ratio shall remain
constant from the date the Loan is  transferred to the Trust until it is removed
from the Trust.

          CORPORATE FCCR PERCENTAGE:  As of any date of  determination,  (x) the
Principal  Balance of all Loans which have a  Corporate  Fixed  Charge  Coverage
Ratio less than or equal to 1.15,  divided by (y) the  Principal  Balance of all
Loans as of the same date of determination.

          CUSTODIAL  AGREEMENT:  The Amended and Restated  Custodial  Agreement,
dated as of March 18, 1999, among the Issuer, the Loan Originator, the Servicer,
the  Indenture  Trustee and the  Custodian,  providing  for the retention of the
Indenture  Trustee's  Loan  Files by the  Custodian  on behalf of the  Indenture
Trustee and all amendments and supplements thereto.

          CUSTODIAN:  Any custodian  appointed by the Indenture Trustee pursuant
to the Custodial  Agreement,  which  custodian  shall not be affiliated with the
Servicer,  the  Loan  Originator,  any  Subservicer  or the  Depositor.  LaSalle
National  Bank  shall be the  initial  Custodian  pursuant  to the  terms of the
Custodial Agreement.

          CUSTODIAN FEE: If applicable, the annual fee payable to the Custodian,
calculated  and  payable  monthly  on each  Payment  Date  pursuant  to  SECTION
5.01(C)(3)(I)  hereof  equal  to the fee,  if any,  set  forth in the  Custodial
Agreement.

          DAILY  INTEREST  ACCRUAL  AMOUNT:  With respect to each day,  interest
accrued at the Note Interest Rate with respect to such day on the Note Principal
Balance as of the  preceding  Business Day after giving effect to all changes to
the Note Principal Balance on or prior to such preceding day.

          DCR: Duff & Phelps Credit Rating Co.

          DEBT: Any indebtedness of FFCA or any of its Subsidiaries,  whether or
not contingent,  in respect of (a) borrowed money or evidenced by bonds,  notes,
debentures or similar  instruments,  (b)  indebtedness  secured by any mortgage,
pledge, lien, charge,  encumbrance or any security interest existing on property
owned by FFCA or any of its  Subsidiaries,  (c)  letters  of credit  or  amounts
representing  the  balance  deferred  and  unpaid of the  purchase  price of any

                                       -6-
<PAGE>
property  except any such balance that  constitutes an accrued  expense or trade
payable or (d) Capitalized  Leases,  in the case of items of indebtedness  under
(a) through (c) above to the extent that any such items  (other than  letters of
credit)  would appear as  liabilities  on FFCA's  consolidated  balance sheet in
accordance with GAAP, and also includes,  to the extent not otherwise  included,
any obligation by FFCA or any of its  Subsidiaries  to be liable for, or to pay,
as obligor, guarantor or otherwise (other than for purposes of collection in the
ordinary course of business), indebtedness of another person (other than FFCA or
any of its  Subsidiaries)  (it being  understood that Debt shall be deemed to be
incurred by FFCA or any of its  Subsidiaries  whenever  FFCA or such  Subsidiary
shall create, assume, guarantee or otherwise become liable in respect thereof).

          DEEMED CURED:  A  Performance  Trigger or Rapid  Amortization  Trigger
shall be  Deemed  Cured  on the  25th  consecutive  Business  Day on  which  the
condition that originally gave rise to such event has not continued.

          DEFAULT:  Any occurrence  that is, or with notice or the lapse of time
or both would become, an Event of Default.

          DEFAULTED LOAN: With respect to any date of  determination,  any Loan,
including,  without limitation, any Liquidated Loan with respect to which any of
the  following  has  occurred as of the end of the  preceding  Due  Period:  (a)
foreclosure or similar  proceedings  have been  commenced;  (b) any portion of a
Monthly  Payment  becomes 59 days past due by the related  Borrower;  or (c) the
Servicer or any  Subservicer has determined in good faith and in accordance with
the Servicing Standard that such Loan is in default or imminent default.

          DEFECTIVE LOAN: As defined in SECTION 3.05(A) hereof.

          DELETED  LOAN:  A Loan  replaced or to be replaced by one or more than
one Qualified Substitute Loan.

          DELINQUENT:  A Loan is "Delinquent" if any Monthly Payment due thereon
is not made by the close of business on the day such Monthly Payment is required
to be paid. A Loan is "30 days  Delinquent"  if any Monthly  Payment due thereon
has not been received by the close of business on the  corresponding  day of the
month  immediately  succeeding  the  month in which  such  Monthly  Payment  was
required to be paid or, if there is no such  corresponding  day (e.g., as when a
30-day  month  follows a 31-day month in which a payment was required to be paid
on the  31st  day of such  month),  then  on the  last  day of such  immediately
succeeding  month. The  determination of whether a Loan is "60 days Delinquent,"
"90 days Delinquent", etc. shall be done in like manner.

          DELIVERY: When used with respect to Trust Account Property means:

          (a) with respect to bankers' acceptances, commercial paper, negotiable
     certificates of deposit and other obligations that constitute "instruments"
     within the meaning of Section 9-105(1)(i) of the UCC and are susceptible of
     physical delivery (except with respect to Trust Account Property consisting
     of certificated securities (as defined in Section 8-102(a)(4) of the UCC)),
     physical delivery to the Indenture Trustee or its custodian endorsed to the
     Indenture Trustee or its custodian or endorsed in blank;

                                       -7-
<PAGE>
          (b) with  respect to a  certificated  security  (i)  delivery  of such
     certificated  security  endorsed  to,  or  registered  in the name of,  the
     Indenture  Trustee or endorsed in blank to a  securities  intermediary  (as
     defined  in  Section  8-102(a)(14)  of the  UCC)  and  the  making  by such
     securities  intermediary of appropriate  entries in its records identifying
     such  certificated  securities  as credited to the  securities  account (as
     defined in Section 8-501(a) of the UCC) of the Indenture  Trustee,  or (ii)
     by  delivery  thereof to a  "clearing  corporation"  (as defined in Section
     8-102(5)  of the  UCC)  and the  making  by such  clearing  corporation  of
     appropriate  entries in its records  crediting the securities  account of a
     securities intermediary by the amount of such certificated security and the
     making  by such  securities  intermediary  of  appropriate  entries  in its
     records  identifying  such  certificated  securities  as  credited  to  the
     securities  account  of the  Indenture  Trustee  (all of the Trust  Account
     Property described in subsections (a) and (b), "PHYSICAL PROPERTY");

          and, in any event, any such Physical Property in registered form shall
     be  registered  in the name of the  Indenture  Trustee  or its  nominee  or
     custodian;  and such additional or alternative  procedures as may hereafter
     become appropriate to effect the complete transfer of ownership of any such
     Trust Account Property (as defined herein) to the Indenture  Trustee or its
     nominee or custodian, consistent with then applicable law or regulations or
     the interpretation thereof;

          (c) with respect to any security issued by the U.S. Treasury,  FNMA or
     FHLMC that is a book-entry security held through the Federal Reserve System
     pursuant to federal book-entry regulations,  the following procedures,  all
     in accordance with applicable law, including applicable federal regulations
     and Articles 8 and 9 of the UCC: the making by a Federal Reserve Bank of an
     appropriate  entry crediting such Trust Account property to an account of a
     securities intermediary that is also a "participant" pursuant to applicable
     federal  regulations;   the  making  by  such  securities  intermediary  of
     appropriate  entries in its records crediting such book-entry security held
     through  the  Federal  Reserve  System   pursuant  to  federal   book-entry
     regulations  and Articles 8 and 9 of the UCC to the  securities  account of
     the Indenture Trustee; and such additional or alternative procedures as may
     hereafter  become  appropriate to effect complete  transfer of ownership of
     any such Trust Account Property to the Indenture  Trustee or its nominee or
     custodian,  consistent  with  then  applicable  law or  regulations  or the
     interpretation thereof; and

          (d) with  respect  to any item of Trust  Account  Property  that is an
     uncertificated security (as defined in Section 8-102(a)(18) of the UCC) and
     that is not  governed by clause (c) above,  registration  in the records of
     the Issuer  thereof  in the name of the  securities  intermediary,  and the
     making  by such  securities  intermediary  of  appropriate  entries  in its
     records  crediting  such  uncertificated   certificates  to  the  Indenture
     Trustee.

          DENOMINATION:  With  respect  to a  Note,  the  portion  of  the  Note
Principal Balance represented by such Note as specified on the face thereof.

          DEPOSITOR:  FFCA Loan Warehouse  Corporation,  a Delaware corporation,
and any successor thereto.

                                       -8-
<PAGE>
          DETERMINATION  DATE:  With  respect  to any  Payment  Date,  the tenth
calendar  day of the month in which such  Payment  Date occurs or if such day is
not a Business Day, the immediately preceding Business Day.

          DISPOSITION  TRIGGER EVENT:  Either (i) FFCA or any Subsidiary of FFCA
shall incur any Debt such that the ratio of  Consolidated  Income  Available for
Debt Service to Quarterly  Service Charge for the most recent fiscal quarter for
which consolidated  financial  statements of FFCA are available is less than 2.0
to 1.0 on a pro forma basis after giving  effect to the  incurrence of such Debt
and the  application  of the  proceeds  therefrom  or  (ii)  the  rating  of the
long-term,  senior,  unsecured debt  obligations of the Servicer is withdrawn by
Moody's or S&P or is downgraded below Ba2, by Moody's, or BB, by S&P.

          DISTRIBUTION  ACCOUNT: The account established and maintained pursuant
to SECTION 5.01(A)(2) hereof.

          DUE DATE:  The day of the month on which the  Monthly  Payment  is due
from the Borrower with respect to a Loan.

          DUE DILIGENCE  PACKAGE:  With respect to a Loan,  collectively,  (i) a
complete  and  accurate  internal  credit  write-up  with respect to the related
Borrower,  (ii) a site  inspection  and  valuation  report  with  respect to the
Mortgaged  Property  consistent with the Underwriting  Guidelines,  (iii) (x) if
such Loan is a C&G Store  Mortgage  Loan,  a copy of the schedule to the insured
properties   declaration  of  the   Environmental   Policy  or  letter  from  an
Environmental  Insurer  evidencing  that such  Mortgage  Loan is  covered by the
Environmental  Policy and (y) in the case of each other Mortgage Loan, (I) (x) a
copy of a Phase I environmental assessment conducted with respect to the related
Mortgaged Property,  that concluded that no further investigation of the related
Mortgaged  Property  was  necessary  or (y) in those  cases  where  the  Phase I
environmental  assessment concluded that further investigation of such Mortgaged
Property  was  necessary,  copies  of the  Phase  II  environmental  assessments
conducted with respect to the related  Mortgaged  Property,  evidencing  that no
remediation  or other further action was required with respect to such Mortgaged
Property or (II) a copy of the schedule to the insured properties declaration of
the Environmental Policy or letter from an Environmental Insurer evidencing that
such  Mortgage  Loan is covered  by the  Environmental  Policy,  (iv) a complete
description  of any  modifications  made to such Loan  since the  completion  of
funding  contemplated under the applicable Loan Documents,  without  limitation,
any information concerning any prior borrower with respect to any of the related
Loan  Collateral,  (v)  the  Corporate  Fixed  Charge  Coverage  Ratio  and  the
Unit-Level Fixed Charge Coverage Ratio, (vi) information  concerning all pending
or overtly  threatened  lawsuits and legal  actions  related to the Borrower and
actually known by the Loan Originator which are reasonably expected to result in
cumulative  liabilities  of  $100,000 or more net of  expected  recoveries  from
insurance or other third party  sources,  together  with an estimate by the Loan
Originator  as to the  potential  financial  and  operational  magnitude  of the
related lawsuit and (vii) such other information as may be reasonably  requested
by the Majority Noteholders from time to time.

          DUE PERIOD:  With respect to any  Determination  Date or Payment Date,
the calendar  month  immediately  preceding such  Determination  Date or Payment
Date, as the case may be.

                                       -9-
<PAGE>
          ELIGIBLE  ACCOUNT:  At any time, an account  which is: (i)  maintained
with  a  depository   institution  or  trust  company  (A)  the  long-term  debt
obligations  of which are at such  time  rated by each  Rating  Agency in one of
their three  highest  long-term  rating  categories or (B) the  short-term  debt
obligations  of which are then  rated by each  Rating  Agency  in their  highest
short-term rating category; (ii) fully insured by either the Bank Insurance Fund
or the Savings  Association  Insurance  Fund of the FDIC;  (iii) a trust account
(which shall be a  "segregated  trust  account")  maintained  with the corporate
trust department of a federal or state chartered depository institution or trust
company with trust powers and acting in its  fiduciary  capacity for the benefit
of the Indenture Trustee and the Issuer,  which depository  institution or trust
company  shall have  capital and surplus of not less than  $50,000,000;  or (iv)
with the prior written consent of the Majority  Noteholders,  any other account.
(Each  reference in this  definition of "Eligible  Account" to the Rating Agency
shall be construed as a reference to Moody's and DCR).

          ELIGIBLE SERVICER:  A Person that (a) (i) has demonstrated the ability
professionally  and  competently  to service a portfolio of commercial  mortgage
loans  similar to the Loans and (ii) has a net worth  calculated  in  accordance
with GAAP of at least  $5,000,000  or (b) any other Person to which the Majority
Noteholders may consent in writing.

          ENVIRONMENTAL   INSURER:   American   International   Specialty  Lines
Insurance  Company, a member company of American  International  Group, Inc., or
such other  environmental  insurer  as the  Majority  Noteholders  in their sole
discretion may consent to in writing.

          ENVIRONMENTAL  POLICY:  Any  one  of  the  secured  creditor  impaired
property  policies  issued  by  an  Environmental  Insurer,  together  with  any
endorsements thereto, insuring the Loan Originator and the Indenture Trustee, as
their interests appear, for losses with respect to certain Mortgage Loans caused
by the  presence  of  hazardous  substances  on or the  migration  of  hazardous
substances  from the related  Mortgage  Properties,  acceptable  to the Majority
Noteholders  in their  reasonable  discretion,  provided that the  Environmental
Policy issued by American International  Specialty Lines Insurance Company shall
be deemed acceptable to the Majority Noteholders.

          EQUIPMENT:  All  personalty,   furniture,  securities  and  any  other
property or assets of any kind securing an Equipment Loan.

          EQUIPMENT  LOAN:  A Loan secured by a valid and  enforceable  security
interest in Equipment of the related Borrower, evidenced by a Security Agreement
and, if applicable, Loan Agreement with respect to such Equipment.

          ESCROW ACCOUNT: The separate account or accounts,  each of which shall
be an Eligible Account, created and maintained pursuant to SECTION 4.05 hereof.

          ESCROW  INSTRUCTIONS:  Escrow  Instructions  to the Settlement  Agent,
substantially  in the  form of  EXHIBIT  F  attached  hereto  as the same may be
amended, supplemented or otherwise modified from time to time.

          ESCROW  PAYMENTS:  With  respect to any  Mortgage  Loan,  the  amounts
constituting  ground  rents,  taxes,  assessments,  water  rates,  sewer  rents,
municipal  charges,  fire,  hazard,  liability  and  other  insurance  premiums,
condominium  charges,  and any other  payments  required  to be  escrowed by the
related Borrower with the lender pursuant to the Mortgage or any other document.

                                      -10-
<PAGE>
          EVENT OF DEFAULT: As described in SECTION 10.01 hereof.

          EXTENSION  DATE:  Any day on which there  occurs a  Securitization  of
Loans with an  aggregate  Principal  Balance  at least  equal to 66.67% (or such
lesser amount as may be agreed to in writing by the Majority Noteholders) of the
Pool   Principal   Balance  as  of  the  closing   date  with  respect  to  such
Securitization,  and with respect to which Securitization (i) the sum of (x) the
cash  Securitization  Proceeds  and (y) the  Retained  Securities  Value  of any
Retained  Securities  issued in  connection  therewith was at least equal to the
aggregate  Principal Balance of the Loans included in such  Securitization as of
the closing date with respect to such  Securitization and (ii) immediately after
giving effect to the sale of Loans pursuant to such Securitization,  no Borrower
has an Individual Borrower Concentration greater than $30,000,000.

          FDIC:  The Federal  Deposit  Insurance  Corporation  and any successor
thereto.

          FFCA:   Franchise   Finance   Corporation   of  America,   a  Delaware
corporation.

          FFCA  ACQUISITION  CORP.:  FFCA  Acquisition  Corporation,  a Delaware
corporation.

          FHLMC:  The Federal Home Loan Mortgage  Corporation  and any successor
thereto.

          FIDELITY BOND: As described in SECTION 4.03 hereof.

          FNMA:  The Federal  National  Mortgage  Association  and any successor
thereto.

          FORECLOSED  LOAN:  As of any date of  determination,  (a) any Mortgage
Loan that has been  discharged as a result of (i) the  completion of foreclosure
or comparable  proceedings;  (ii) the Owner Trustee's  acceptance of the deed or
other evidence of title to the related Mortgaged Property in lieu of foreclosure
or other comparable proceeding; or (iii) the acquisition by the Owner Trustee of
title  to the  related  Mortgaged  Property  by  operation  of law  and  (b) any
Equipment  Loan  that  has been  discharged  as a result  of a  repossession  or
comparable conversion of the ownership of the related Equipment.

          FORECLOSURE  PROPERTY:  Any real property  securing a Foreclosed  Loan
that has been  acquired by the  Servicer  through  foreclosure,  deed in lieu of
foreclosure  or  similar  proceedings  in respect  of the  related  Loan if such
Foreclosed  Loan is a Mortgage  Loan or  personalty  securing a Foreclosed  Loan
acquired  by  the  Servicer  pursuant  to a  foreclosure  or  other  appropriate
procedure  in  accordance  with  applicable  law if such  Foreclosed  Loan is an
Equipment Loan.

          GAAP:  Generally  accepted  accounting  principles as in effect in the
United States.

                                      -11-
<PAGE>
          GROUND LEASE:  A lease for which the related  Borrower has a leasehold
interest  as a lessee of  either  the  land,  or the land and the  improvements,
located at the related Mortgaged Property.

          HAZARDOUS  MATERIAL:  Each of (a) those substances included within the
definitions  of any  one or  more  of the  terms  "contaminants,"  "pollutants,"
"hazardous  substances," "hazardous materials" and "toxic substances" in CERCLA,
RCRA,  and the Hazardous  Materials  Transportation  Act, as amended,  49 U.S.C.
ss.ss. 1801 et seq., and in the regulations  promulgated  pursuant thereto;  (b)
those substances listed in the United States Department of Transportation  Table
(49 CFR ss. 172. 101 and amendments thereto) or by the Environmental  Protection
Agency (or any  successor  agency)  (40 CFR ss. 302 and  amendments  thereto) as
hazardous substances;  (c) such other substances,  materials and wastes that are
or  become  regulated  under  applicable   local,   state  or  federal  laws  or
regulations,  or that are classified as hazardous or toxic under federal,  state
or local laws or regulations;  and (d) any materials,  wastes or substances that
are (i) petroleum, (ii) polychlorinated biphenyl, (iii) within the definition of
"hazardous  substance"  set forth in Section  311 of the Clean  Water  Act,  (33
U.S.C.  ss. 1321) or designated as "toxic  pollutants"  subject to Chapter 26 of
the Clean  Water Act  pursuant  to SECTION 307 to the Clean Water Act (33 U.S.C.
ss.  1317),  (iv)  flammable  substances  or  explosives,   or  (v)  radioactive
materials.

          HEDGE  FUNDING  REQUIREMENT:  With  respect  to any day,  all  amounts
required to be paid or  delivered  by the Issuer  under any Hedging  Instrument,
whether in respect of payments thereunder or in order to meet margin, collateral
or other requirements thereof.

          HEDGE VALUE:  With respect to any Business Day and a specific  Hedging
Instrument,  the amount,  if any, that is equal to the amount that would be paid
to the Issuer  (expressed as a positive number) or paid by the Issuer (expressed
as a negative number) in consideration of an agreement between the Issuer and an
unaffiliated  third  party,  that would have the  effect of  preserving  for the
Issuer the net economic equivalent,  as of such Business Day, of all payment and
delivery requirements payable to and by the Issuer under such Hedging Instrument
until the  termination  thereof,  as  determined  by the Market  Value  Agent in
accordance with SECTION 4.14 hereof.

          HEDGING  COUNTERPARTY:  A Person (i) (A) the long-term and  commercial
paper or  short-term  deposit  ratings of which are  acceptable  to the Majority
Noteholders  and (B) which shall agree in writing that, in the event that any of
its long-term or commercial  paper or short-term  deposit ratings cease to be at
or above the levels  deemed  acceptable  by the Majority  Noteholders,  it shall
secure its obligations in accordance with the reasonable request of the Majority
Noteholders,  (ii) that has entered into a Hedging  Instrument and (iii) that is
acceptable to the Majority  Noteholders;  provided,  that as of the date hereof,
NationsBank,  N.A., Merrill Lynch,  Pierce,  Fenner & Smith Incorporated and the
Bank of Montreal shall be deemed to be acceptable to the Majority Noteholders.

          HEDGING  INSTRUMENT:  Any interest rate cap  agreement,  interest rate
floor  agreement,  interest rate swap  agreement or other  interest rate hedging
agreement  entered  into by the Issuer  with a Hedging  Counterparty,  and which
requires  the  Hedging  Counterparty  to deposit  all  amounts  payable  thereby
directly to the  Collection  Account.  Each  Hedging  Instrument  shall meet the
requirements set forth in ARTICLE VIII hereof with respect thereto.

                                      -12-
<PAGE>
          IDENTIFICATION  CERTIFICATE:  A  certificate  originated  by the  Loan
Originator,  substantially in the form of Attachment A to the Bailee  Agreement,
attached hereto as Exhibit E.

          INDENTURE:  The Indenture  dated as of August 14, 1998,  together with
the Indenture Supplement, between the Issuer and the Indenture Trustee.

          INDENTURE SUPPLEMENT: With respect to a Series of Notes, the Indenture
Supplement pursuant to which such Series of Notes was issued.

          INDENTURE   TRUSTEE:   LaSalle   National  Bank,  a  national  banking
association,  as Indenture Trustee under the Indenture and this Agreement acting
on behalf of the  Noteholders,  or any  successor  indenture  trustee  under the
Indenture or this Agreement.

          INDENTURE TRUSTEE FEE: As to any Payment Date, $750.

          INDENTURE TRUSTEE'S LOAN FILE: As defined in SECTION 2.04(A) hereof.

          INDEPENDENT:  When used with  respect to any  specified  Person,  such
Person (i) is in fact  independent  of the Loan  Originator,  the Servicer,  the
Depositor or any of their respective  Affiliates,  (ii) does not have any direct
financial  interest in, or any material indirect  financial  interest in, any of
the Loan  Originator,  the Servicer,  the  Depositor or any of their  respective
Affiliates  and  (iii) is not  connected  with any of the Loan  Originator,  the
Servicer,  the Depositor or any of their respective  Affiliates,  as an officer,
employee, promoter, underwriter, trustee, partner, director or Person performing
similar  functions;  provided,  however,  that a  Person  shall  not  fail to be
Independent of the Loan Originator,  the Servicer, the Depositor or any of their
respective  Affiliates  merely because such Person is the beneficial owner of 1%
or less of any class of securities issued by the Loan Originator,  the Servicer,
the Depositor or any of their respective Affiliates, as the case may be.

          INDEPENDENT  ACCOUNTANTS:  A firm of nationally  recognized  certified
public accountants which is Independent.

          INDIVIDUAL BORROWER  CONCENTRATION:  With respect to each Borrower and
as of any date of determination, the aggregate Principal Balance of Loans in the
Loan Pool with respect to which such Borrower (including all Affiliates thereof)
is an obligor or guarantor under the related Promissory Note.

          INITIAL  CERTIFICATION:   The  meaning  set  forth  in  the  Custodial
Agreement.

          INITIAL NOTEHOLDER: MSSFI.

          INSURANCE POLICIES:  With respect to any Loan Collateral,  any related
insurance policy.

          INSURANCE PROCEEDS:  With respect to any Loan Collateral,  all amounts
collected in respect of Insurance  Policies and not required  either pursuant to
applicable law or the related Loan Documents to be applied to the restoration of
the related Loan Collateral or paid to the related Borrower.

                                      -13-
<PAGE>
          INSURED CLOSING LETTER: A letter  addressed to the Initial  Noteholder
and the Indenture  Trustee from the title  insurance  underwriter  for which the
Settlement Agent is serving as an agent for each Table-Funded Loan, which letter
shall be in form and substance reasonably acceptable to the Initial Noteholder.

          INTEREST  CARRY-FORWARD  AMOUNT: With respect to any Payment Date, the
excess,  if any, of (A) the Interest  Payment  Amount for such Payment Date plus
the Interest Carry-Forward Amount for the prior Payment Date over (B) the amount
in respect of interest  that is actually paid from the  Distribution  Account on
such Payment Date in respect of the interest for such Payment Date.

          INTEREST PAYMENT AMOUNT:  With respect to any Payment Date, the sum of
the Daily Interest Accrual Amounts for all days in the related Accrual Period.

          LASALLE NATIONAL BANK: LaSalle Bank National Association f/k/a LaSalle
National Bank, a national banking association.

          LIBOR:  With  respect to each day, the rate for United  States  dollar
deposits for one month that appears on the Telerate Screen Page 3750 as of 11:00
a.m.,  London time, on the related LIBOR  Determination  Date. If such rate does
not  appear on such page (or such other  page as may  replace  that page on that
service,  or if such  service  is no longer  offered,  such  other  service  for
displaying  LIBOR or  comparable  rates  as may be  reasonably  selected  by the
Initial  Noteholder),  LIBOR for the  applicable  day will be the Reference Bank
Rate. If no such  quotations  can be obtained by the Initial  Noteholder  and no
Reference  Bank Rate is available,  LIBOR will be LIBOR  applicable to the first
preceding  day on which  LIBOR  has been  determined  in  accordance  with  this
definition.

          LIBOR  BUSINESS  DAY:  Any day on which  banks are open for dealing in
foreign currency and exchange in London and New York City.

          LIBOR  DETERMINATION  DATE:  With  respect to each day that is a LIBOR
Business Day, such LIBOR Business Day, and with respect to any day that is not a
LIBOR  Business Day, the LIBOR Business Day preceding such day, as determined by
the Initial Noteholder.

          LIBOR MARGIN:  With respect to each day, a percentage equal to the sum
of:

          (a) in the case of Other  Mortgage  Loans:  (I) the sum for all  Other
Mortgage Loans of the product for each Other Mortgage Loan of (A) the applicable
Loan Margin and (B) the applicable  Other Margin Balance as of such day, divided
by (II) the Note Principal Balance as of such day,

          (b) in the case of Mortgage Loans  (exclusive of Other Mortgage Loans)
up to  $300,000,000  of related Note Principal  Balance:  0.70%  multiplied by a
fraction, (I) the numerator of which is the positive difference,  if any, of (A)
the lesser of (i)  $300,000,000  and (ii) the Note Principal  Balance as of such
day minus (B) the sum of all Other  Margin  Balances as of such day and (II) the
denominator of which is the Note Principal Balance as of such day, and

                                      -14-
<PAGE>
          (c) in the case of Mortgage Loans  (exclusive of Other Mortgage Loans)
in excess of $300,000,000 of related Note Principal Balance: 1.00% multiplied by
a fraction,  (I) the numerator of which is the positive  difference,  if any, of
(A) the Note  Principal  Balance as of such day minus (B) the sum of (i) the sum
of all Other Margin Balances as of such day and (ii) the amount stated in clause
(b)(I)  above,  as of such day,  and (II) the  denominator  of which is the Note
Principal Balance as of such day.

          The intent of the foregoing  LIBOR Margin  formula is to calculate the
LIBOR Margin  attributable  to Other  Mortgage Loans solely in clause (a) and to
calculate the LIBOR Margin attributable to Mortgage Loans in clauses (b) and (c)
based on the relative  portion of Note Principal  Balance  attributable  to such
Mortgage Loans under and in excess of $300,000,000,  calculated,  in the case of
(b) and (c), without counting Other Mortgage Loans.

          LIQUIDATED  LOAN:  With  respect  to any  date of  determination,  any
Foreclosure  Property  or any Loan in respect  of which a Monthly  Payment is in
excess of 30 days  past due and as to which  the  Servicer  has  determined,  in
accordance with the Servicing Standard, that all amounts which it reasonably and
in good faith expects to collect have been  recovered from or on account of such
Loan or the related Foreclosure Property;  provided,  however, that in any event
such Loan or the related Foreclosure  Property shall be deemed uncollectible and
therefore  be a  Liquidated  Loan  upon  the  earliest  to  occur  of:  (a)  the
liquidation of the related  Foreclosure  Property,  (b) the determination by the
Servicer, in accordance with the Servicing Standard, that no further amounts are
collectible  from the Loan and any related Loan  Collateral,  or (c) the date on
which any portion of a Monthly  Payment on any Loan is in excess of 59 days past
due (without regard to any applicable grace periods).

          LIQUIDATED LOAN LOSSES: With respect to any date of determination, the
difference  between (i) the aggregate  Principal Balances as of such date of all
Loans that became Liquidated Loans and (ii) all Liquidation  Proceeds  allocable
to principal received prior to such date.

          LIQUIDATION  PROCEEDS:  With  respect to a Liquidated  Loan,  any cash
amounts  received in connection with the  liquidation of such  Liquidated  Loan,
whether through trustee's sale, foreclosure sale or other disposition,  any cash
amounts  received in connection  with the management of the Loan Collateral from
Defaulted Loans and any other amounts required to be deposited in the Collection
Account pursuant to SECTION 5.01(B)(1) hereof, in each case other than Insurance
Proceeds,  Released  Loan  Collateral  Proceeds  and any  proceeds  of  Retained
Interests, provided, however, that no Liquidation Proceeds shall be allocated to
Retained  Interest until all other amounts owing under the Promissory Note shall
have been paid.

          LOAN: Any Equipment Loan or Mortgage Loan.

          LOAN AGREEMENT:  With respect to each Loan, the related loan agreement
between the Borrower and the Loan Originator.

          LOAN  COLLATERAL:  With  respect  to an  Equipment  Loan,  all  of the
Equipment  securing such Equipment Loan, with respect to a Mortgage Loan, all of
the Mortgaged  Property securing such Mortgage Loan and with respect to a Senior
Loan, all of the Equipment and/or Mortgaged Property securing such Senior Loan.

                                      -15-
<PAGE>
          LOAN DOCUMENTS:  With respect to a Loan, the documents  comprising the
Indenture Trustee's Loan File for such Loan.

          LOAN FILE:  With respect to each Loan,  the Indenture  Trustee's  Loan
File and the Servicer's Loan File.

          LOAN  INTEREST  RATE:  With  respect to each Loan,  the annual rate of
interest borne by the related Promissory Note, as shown on the Loan Schedule, as
the same may be modified by the  Servicer in  accordance  with  SECTION  4.01(A)
hereof  and,  in the  case  of an  Adjustable  Rate  Loan,  as the  same  may be
periodically adjusted in accordance with the terms of such Loan.

          LOAN MARGIN:  With respect to each Other Mortgage Loan, the applicable
margin  over LIBOR for the Note  Principal  Balance  relating to each such Other
Mortgage  Loan.  The Loan Margin for each Other  Mortgage  Loan is 0.70%  unless
otherwise agreed in writing between the Servicer and the Majority Noteholders.

          LOAN ORIGINATOR:  FFCA Acquisition Corporation, in its capacity as the
Loan Originator hereunder.

          LOAN ORIGINATOR PUT: The mandatory  repurchase by the Loan Originator,
at the option of the Majority Noteholders, of a Loan pursuant to SECTION 3.07(A)
hereof.

          LOAN  POOL:  As of any date of  determination,  the pool of all  Loans
conveyed to the Issuer  pursuant to this  Agreement on all Transfer  Dates up to
and  including  such date of  determination,  which Loans have not been released
from the Lien of the Indenture pursuant to the terms thereof,  together with the
rights  and  obligations  of a holder  thereof,  and the  payments  thereon  and
proceeds  therefrom  received  after the  applicable  Transfer  Cutoff Date,  as
identified from time to time on the Loan Schedule.

          LOAN PURCHASE AGREEMENT:  The Loan Purchase Agreement between the Loan
Originator  and the  Depositor,  dated as of August 14, 1998, and all amendments
and supplements thereto.

          LOAN  SCHEDULE:  The  schedule  of Loans  conveyed  to the  Issuer and
delivered  to  the  Initial  Noteholder  in  the  form  of  a  computer-readable
transmission  specifying  the  following  information  with respect to each Loan
conveyed  on such date:  (i) the Loan  Originator's  internal  loan  identifying
number;  (ii) the Borrower's name as it appears on the related  Promissory Note;
(iii) the name of the Borrower group (to be input  consistently  for purposes of
computing the Individual Borrower Concentration); (iv) in the case of a Mortgage
Loan, the street address,  city,  state and zip code of the Mortgaged  Property;
(v) the original  Principal  Balance;  (vi) the Transfer  Cutoff Date  Principal
Balance;  (vii)  the  Loan  Interest  Rate at  origination;  (viii)  the date of
origination;  (ix) the  industry  segment  (e.g.,  CD Facility,  C&G Store,  QSR
Store);  (x) the type of Loan  (e.g.,  Mortgage,  Equipment);  (xi) the  Monthly
Payment as of such Transfer Cutoff Date; (xii) the scheduled maturity date under
the Promissory  Note;  (xiii) the Corporate Fixed Charge  Coverage Ratio;  (xiv)
with respect to the Unit-Level  Fixed Charge  Coverage  Ratio, a flag indicating
whether such figure is a calculation  of the  Unit-Level  Fixed Charge  Coverage
Ratio with respect to the single unit or in the aggregate; (xv) the Brand; (xvi)
a Prepayment Code;  (xvii) a Product Code with respect to such Loan;  (xviii) if
such Loan is an Adjustable Rate Loan, the interest rate spread over LIBOR; (xix)

                                      -16-
<PAGE>
in the case of a  Mortgage  Loan,  the loan to  replacement  cost  ratio for the
related  Mortgaged  Property (if obtained);  (xx) the Maximum Advance Factor, to
the extent  changed by written  agreement  between the Servicer and the Majority
Noteholders in their sole discretion;  (xxi) a code indicating  whether the Loan
is a Table-Funded  Loan; and (xxii) such other  information as may be reasonably
requested by the Majority Noteholders.

          LOAN  SCHEDULE  AND  EXCEPTIONS  REPORT:  The meaning set forth in the
Custodial Agreement.

          LOCKBOX ACCOUNT:  A demand deposit account or an Eligible Account held
by the Lockbox Bank acceptable to the Majority Noteholders.

          LOCKBOX  AGREEMENT:  An agreement  acceptable to the Indenture Trustee
and  the  Majority  Noteholders  among  the  Lockbox  Bank,  the  Servicer,  the
Depositor, the Issuer and the Indenture Trustee.

          LOCKBOX  BANK:  A  depository  institution  named by the  Servicer and
agreed to by the Majority Noteholders.

          LOCKBOX  TRIGGER  EVENT:  The  Majority  Noteholders,  in  their  sole
discretion  may declare the  occurrence  of a Lockbox  Trigger Event at any time
after the Closing Date if the long-term  unsecured debt  obligations of FFCA (i)
fail to be rated at least  BBB- by DCR and Baa3 by  Moody's  or are not rated by
either of DCR or Moody's and (ii) such condition continues for 30 days after the
occurrence thereof.

          LONDON  BUSINESS  DAY: A day on which  dealings  in deposits in United
States dollars are transacted in the London interbank market.

          LPA ASSIGNMENT: An Assignment of Loans from the Loan Originator to the
Depositor under the Loan Purchase Agreement.

          MAJORITY NOTEHOLDERS: The holder or holders of in excess of 50% of the
Note Principal Balance. In the event of the release of the Lien of the Indenture
in accordance with the terms thereof,  the Majority  Noteholders  shall mean the
Majority Certificateholders.

          MAJORITY  CERTIFICATEHOLDERS:  The  meaning  set  forth  in the  Trust
Agreement.

          MARKET  VALUE:  With respect to each Loan and each  Business  Day, the
Market Value of such Loan as of such  Business Day as  determined  by the Market
Value Agent in accordance with SECTION 4.14 hereof.

          MARKET  VALUE  AGENT:  Morgan  Stanley  &  Co.  Incorporated  and  its
successors and assigns.

          MATURITY  DATE:  With respect to the Notes of a given  Series,  as set
forth in the related Indenture Supplement or such later date as may be agreed in
writing by the Majority Noteholders.

                                      -17-
<PAGE>
          MAXIMUM  ADVANCE  FACTOR:  With  respect  to each Loan and any date of
determination, a percentage determined as follows:

               (i) with  respect to QSR Store  Mortgage  Loans with the  related
          Borrower's   Individual  Borrower   Concentration  of  (a)  less  than
          $20,000,000,  92.5%, (b) equal to or greater than $20,000,000 and less
          than $40,000,000,  90.0% and (c) equal to or greater than $40,000,000,
          85.0%;

               (ii) with  respect to C&G Store  Mortgage  Loans with the related
          Borrower's   Individual  Borrower   Concentration  of  (a)  less  than
          $20,000,000,  92.5%, (b) equal to or greater than $20,000,000 and less
          than $40,000,000,  90.0% and (c) equal to or greater than $40,000,000,
          85.0%;

               (iii) with respect to Approved  Brand CD Facility  Mortgage Loans
          with the related Borrower's  Individual Borrower  Concentration of (a)
          less than $20,000,000, 85.0%, (b) equal to or greater than $20,000,000
          and less than  $40,000,000,  80.0% and (c)  equal to or  greater  than
          $40,000,000, 75.0%;

               (iv) with  respect to Other CD Facility  Mortgage  Loans with the
          related Borrower's Individual Borrower  Concentration of (a) less than
          $20,000,000,  85.0%, (b) equal to or greater than $20,000,000 and less
          than $40,000,000,  80.0% and (c) equal to or greater than $40,000,000,
          0.0%;

               (v) with respect to Automotive  Service  Facility  Mortgage Loans
          with the related Borrower's  Individual Borrower  Concentration of (a)
          less than $20,000,000, 85.0%, (b) equal to or greater than $20,000,000
          and less than  $40,000,000,  80.0% and (c)  equal to or  greater  than
          $40,000,000, 75.0%;

               (vi) with respect to Other  Mortgage  Loans,  the  percentage  or
          percentages  to which the  Majority  Noteholders  and the Issuer  have
          agreed in writing prior to the Transfer Date relating thereto;

               (vii) with respect to each Equipment  Loan,  the Maximum  Advance
          Factor applicable to the related Mortgage Loan; and

               (viii) in the event the Corporate FCCR Percentage is greater than
          or equal to 25% with  respect to each Loan  having a  Corporate  Fixed
          Charge  Coverage Ratio less than or equal to 1.15, such amount (not to
          be less than 50%) as the Initial  Noteholder may designate in its sole
          discretion;

               provided  that,   with  respect  to  Loans  (a)  having  Retained
          Interests, to the extent the aggregate Principal Balance of such Loans
          equals or  exceeds 5% of the Pool  Principal  Balance as of such date,
          each such Loan in excess  thereof shall have a Maximum  Advance Factor
          of 0.0%,  (b) that have been  included  in the Trust  Estate (i) for a
          period in excess of one year from the  Transfer  Date  thereof or (ii)
          after completion of two Securitizations  since the applicable Transfer
          Date for such Loan, each such Loan shall have a Maximum Advance Factor
          of 0.0% and (c) which are Senior  Loans  (ignoring  the proviso to the

                                      -18-
<PAGE>
          definition  thereof),  to the  extent  that  the  aggregate  Principal
          Balance  of such  Senior  Loans  equals  or  exceeds  20% of the  Pool
          Principal  Balance as of such date,  each such  Senior  Loan in excess
          thereof  shall  have a Maximum  Advance  Factor of 0.0%.  The  Maximum
          Advance  Factor  with  respect  to each  Loan may also be  reduced  as
          provided in SECTION 3.09(C) hereof.

               The definition of Maximum  Advance Factor may be changed upon the
          written  agreement  of  the  Majority   Noteholders,   in  their  sole
          discretion, and the Servicer.

          MAXIMUM NOTE PRINCIPAL BALANCE:  For any Series of Notes, as set forth
in the related Indenture Supplement.

          MONTHLY  PAYMENT:  The scheduled  monthly payment of principal  and/or
interest required to be made by an Borrower on the related Loan, as set forth in
the related Promissory Note.

          MOODY'S: Moody's Investors Service, Inc., or any successor thereto.

          MORTGAGE:  With respect to any Mortgage  Loan,  the mortgage,  deed of
trust or other instrument  securing the related Promissory Note, which creates a
first  lien on the fee in real  property  and/or a first  lien on the  leasehold
estate in real property securing the Promissory Note and the assignment of rents
and leases related thereto.

          MORTGAGE LOAN: Any C&G Store Mortgage Loan, CD Facility Mortgage Loan,
QSR Store  Mortgage Loan,  Automotive  Service  Facility  Mortgage Loan or Other
Mortgage Loan pledged to the Indenture  Trustee  pursuant to the Indenture,  and
which  Mortgage  Loan  includes,  without  limitation,  (i) a Mortgage  Note and
related  Mortgage and (ii) all right,  title and interest of the Loan Originator
in and to the Mortgaged  Property  covered by such  Mortgage.  The term Mortgage
Loan shall be deemed to include the related Mortgage Note,  related Mortgage and
related Foreclosure  Property,  if any. The term Mortgage Loan shall exclude any
Retained Interest.

          MORTGAGED  PROPERTY:  With  respect to a Mortgage  Loan,  the  related
mortgagor's  fee and/or  leasehold  interest  in the real  property  (and/or all
improvements,  buildings,  fixtures,  building  equipment and personal  property
thereon  (to  the  extent   applicable)  and  all  additions,   alterations  and
replacements  made at any time  with  respect  to the  foregoing)  and all other
collateral  securing  repayment of the debt evidenced by the related  Promissory
Note.

          MSSFI: Morgan Stanley Securitization Funding Inc.

          NEGATIVE AMORTIZATION:  With respect to each Adjustable Rate Loan, any
amounts in respect of interest  accrued thereon for any Payment Period in excess
of the amount of the Monthly  Payment  thereon  for the related Due Date,  which
amounts are  capitalized  and added to the Principal  Balance of such Adjustable
Rate Loan.

          NEGATIVE  AMORTIZATION  CAP: With respect to any Adjustable Rate Loan,
the fixed percentage  specified in the related Promissory Note as the percentage
of the  original  principal  balance of such Loan for  purposes  of  determining
whether any  Negative  Amortization  Payment is payable as a part of the Monthly
Payment on such Loan for any Due Date.

                                      -19-
<PAGE>
          NEGATIVE  AMORTIZATION  PAYMENT:  With respect to any Adjustable  Rate
Loan and any Due Date immediately succeeding a Due Date on which the addition of
Negative  Amortization  to the  Principal  Balance  of  such  Loan  caused  such
Principal  Balance to be more than the product of the Negative  Amortization Cap
for such Loan and the original  principal  balance of such Loan, a prepayment of
principal  that is payable  (without  penalty) by the  related  Borrower on such
immediately succeeding Due Date in an amount equal to the difference between the
Principal Balance of such Loan and the original principal balance of such Loan.

          NET   LIQUIDATION   PROCEEDS:   With  respect  to  any  Payment  Date,
Liquidation  Proceeds  received  during the period  commencing  on the preceding
Payment Date and ending on the Business  Day  immediately  prior to such Payment
Date, net of any  reimbursements  to the Servicer made from such amounts for any
unreimbursed  Servicing  Compensation,  Servicing Advances and Periodic Advances
(including   Nonrecoverable   Servicing  Advances  and  Nonrecoverable  Periodic
Advances)  made and any other  fees and  expenses  paid in  connection  with the
foreclosure,  conservation  and liquidation of the related  Liquidated  Loans or
Foreclosure Properties pursuant to SECTION 4.11 hereof.

          NET LOAN INTEREST  RATE:  With respect to each Loan,  the related Loan
Interest Rate, less the rate at which the Servicing Fee is calculated.

          NET LOAN LOSSES: With respect to any Defaulted Loan that is subject to
a  modification  pursuant  to SECTION  4.01(E)  hereof,  an amount  equal to the
portion of the  Principal  Balance,  if any,  released in  connection  with such
modification.

          NONRECOVERABLE  PERIODIC  ADVANCE:  Any portion of a Periodic  Advance
previously  made or  proposed to be made in respect of a Loan which has not been
previously  reimbursed to the Servicer and which,  in the good faith judgment of
the Servicer, will not, or in the case of a proposed Periodic Advance would not,
be  ultimately  recoverable  from  Liquidation  Proceeds or other  recoveries in
respect of the related Loan. The  determination  by the Servicer that (i) it has
made a  Nonrecoverable  Periodic Advance or (ii) that any proposed  advance,  if
made, would constitute a Nonrecoverable  Periodic Advance, shall be evidenced by
a  certificate  of  a  Servicing  Officer  promptly  delivered  to  the  Initial
Noteholder detailing the reasons for such determination.

          NONRECOVERABLE  SERVICING  ADVANCE:  With  respect to any  Foreclosure
Property, (a) any Servicing Advance previously made and not reimbursed from late
collections,  Liquidation Proceeds,  Insurance Proceeds or the Released Property
Proceeds or (b) a Servicing  Advance proposed to be made in respect of a Loan or
Foreclosure Property either of which, in the good faith business judgment of the
Servicer,  as  evidenced by an  Officer's  Certificate  delivered to the Initial
Noteholder, would not be ultimately recoverable.

          NOTE: The meaning assigned thereto in the Indenture.

                                      -20-
<PAGE>
          NOTE INTEREST RATE: Interest will accrue on the Notes on each day at a
per annum interest rate equal to LIBOR for the related LIBOR  Determination Date
plus the LIBOR Margin for such day.

          NOTE PRINCIPAL  BALANCE:  With respect to the Notes, as of any date of
determination (a) the sum of the Additional Note Principal Balances of all Notes
purchased on or prior to such date pursuant to the Note Purchase  Agreement less
(b) all amounts  previously  distributed  in respect of  principal  of the Notes
prior to such day.

          NOTE PURCHASE AGREEMENT:  The Note Purchase Agreement among MSSFI, the
Issuer,  the Depositor and the Loan Originator,  dated as of August 14, 1998 and
all amendments and supplements thereto.

          NOTE REDEMPTION  AMOUNT:  As of any date of  determination,  an amount
without  duplication  equal to the sum of (i) then  outstanding  Note  Principal
Balance  plus all accrued and unpaid  interest  thereon  (ii) any Trust Fees and
Expenses due and unpaid on such date, (iii) any Servicing Advance  Reimbursement
Amount and (iv) any Nonrecoverable Periodic Advances.

          NOTEHOLDER: The meaning assigned thereto in the Indenture.

          OFFICER'S  CERTIFICATE:  A  certificate  delivered  to  the  Indenture
Trustee  or the  Issuer  signed  by the  President  or a  Vice  President  or an
Assistant Vice President of the Depositor,  the Servicer or the Loan Originator,
in each case, as required by this Agreement.

          OPINION OF COUNSEL:  A written  opinion of counsel who may be employed
by the Loan Originator,  the Servicer,  the Depositor or any of their respective
Affiliates.

          OPTIMAL  PRINCIPAL  PAYMENT  AMOUNT:  On each Payment  Date, an amount
equal to the sum of (a) the positive  difference,  if any, between (i) aggregate
Collateral  Value of all Loans in the Loan Pool for the prior  Payment  Date and
(ii)  the  aggregate  Collateral  Value of all  Loans in the Loan  Pool for such
Payment Date, (b) the Overcollateralization Shortfall for such Payment Date, and
(c) on each Payment Date on which a Securitization  shall occur, an amount equal
to the cash Securitization Proceeds, provided, however, that on (A) the Maturity
Date, or (B) the Payment Date on which the Trust is to be terminated pursuant to
SECTION 11.02 hereof, the Optimal Principal Payment Amount shall be equal to the
Note Principal Balance.  Notwithstanding  anything to the contrary herein, in no
event shall the Optimal  Principal  Payment  Amount with  respect to any Payment
Date exceed the Note Principal Balance as of such date.

          OTHER CD FACILITY  MORTGAGE  LOANS:  CD Facility  Mortgage Loans other
than Approved Brand CD Facility Mortgage Loans.

          OTHER  MARGIN  BALANCES:  With  respect  to each  date and each  Other
Mortgage  Loan,  (i) the  product  of (a) the  Principal  Balance  of such Other
Mortgage  Loan as of such date,  (b) the Maximum  Advance  Factor for such Other
Mortgage  Loan as of such  date and (c) the Note  Principal  Balance  as of such
date,  divided by (ii) the sum for all Loans of the product of (a) the Principal
Balance of each such Loan as of such date and (b) the Maximum Advance Factor for
each such Loan as of such date.

                                      -21-
<PAGE>
          OTHER MORTGAGE  LOANS:  Senior Loans and Mortgage Loans other than QSR
Store Mortgage  Loans,  C&G Store Mortgage  Loans,  CD Facility  Mortgage Loans,
Equipment Loans or Automotive  Service  Facility  Mortgage Loans and as to which
the Majority  Noteholders,  in their sole discretion,  have consented in writing
delivered  pursuant  to  the  terms  hereof  and  which  may  include,   without
limitation,  truck stops,  automotive  parts and/or  service  facilities and car
washes.

          OUTSTANDING: As defined in the Indenture.

          OVERCOLLATERALIZATION  SHORTFALL: With respect to any Business Day, an
amount equal to the positive difference,  if any, between (a) the Note Principal
Balance on such Business Day and (b) (i) the aggregate  Collateral  Value of all
Loans  in the  Loan  Pool on such  Business  Day,  or (ii) in the  event  that a
Performance Trigger shall have occurred and not been Deemed Cured, the aggregate
Collateral  Value of all Loans in the Loan Pool on such Business Day  multiplied
by 0.98.

          OWNER TRUSTEE:  Wilmington  Trust Company,  as owner trustee under the
Trust Agreement, and any successor owner trustee under the Trust Agreement.

          OWNER TRUSTEE FEE: The annual fee of $2,500  pursuant to the agreement
mentioned  in  Section  8.1 of the Trust  Agreement,  payable  in equal  monthly
installments  to the  Servicer  which shall in turn pay,  in one lump sum,  such
$2,500 to the Owner  Trustee on the Payment  Date  occurring in August each year
during the term of this Agreement, commencing in August 1999.

          PAYMENT DATE:  The second  Business Day following  each  Determination
Date. From time to time, the Majority Noteholders and the Issuer may agree, upon
written  notice  to the  Indenture  Trustee,  to  additional  Payment  Dates  in
accordance with SECTION 5.01(C)(3).

          PAYMENT PERIOD:  With respect to each Adjustable Rate Loan, the period
commencing  on the first day of each calendar year and ending on the last day of
such calendar year.

          PAYMENT RESET DATE:  With respect to each  Adjustable  Rate Loan,  the
first day of the calendar  year or, if such day is not a Business  Day, the next
succeeding Business Day.

          PAYMENT STATEMENT: As defined in SECTION 6.01(B) hereof.

          PERCENTAGE INTEREST: As defined in the Trust Agreement.

          PERFORMANCE  TRIGGER:  With respect to any Business Day, a Performance
Trigger shall mean the  existence of one or more of the following  conditions as
of such Business Day:

          (i)   (x) the  aggregate  Principal  Balance  of all Loans that are 30
                days or more  Delinquent  as of such Business Day divided by (y)
                the Pool  Principal  Balance as of such  Business Day is greater
                than 1.0%; and

                                      -22-
<PAGE>
          (ii)  the aggregate  Liquidated  Loan Losses from the later of (A) the
                Closing Date or (B) the most recent Securitization, through such
                Business Day are greater than $25,000.

          A Performance Trigger shall continue to exist until Deemed Cured.

          PERIODIC  ADVANCE:  The aggregate of the advances made by the Servicer
on any Payment Date  pursuant to SECTION  4.09,  the amount of any such advances
being equal to the total of all Monthly  Payments (net of the related  Servicing
Fee) on the Loans,  that (x) were  Delinquent as of the close of business on the
Business Day preceding the related Payment Date and (y) have not been determined
by the Servicer to be Nonrecoverable Periodic Advances.

          PERMITTED INVESTMENTS: Each of the following:

          (1) obligations of, or guaranteed as to principal and interest by, the
     United  States or any  agency or  instrumentality  thereof if backed by the
     full faith and credit of the United States;

          (2) direct U.S.  government  obligations  or  obligations of a federal
     agency that are backed by the full faith and credit of the U.S.  government
     or by FNMA or FHLMC,  which are  subject  to a  repurchase  agreement  that
     satisfies  the  following  criteria:  (A) it must be between the  Indenture
     Trustee and either (x) primary  dealers on the  Federal  Reserve  reporting
     dealer  list  which are rated in one of the three  highest  categories  for
     long-term  unsecured debt obligations by each Rating Agency or (y) banks or
     bank holding  companies  rated in one of the three highest  categories  for
     long-term unsecured debt obligations by each Rating Agency; and (B) it must
     be in writing and include the following  terms:  (a) a term no greater than
     60 days for any  repurchase  transaction;  (b)  except as may be  otherwise
     provided in the  Collection  Account  Letter  Agreement with respect to the
     investment of funds on deposit in the  Collection  Account,  the collateral
     must be  delivered  to the  Indenture  Trustee or a third  party  custodian
     acting as agent for the Indenture  Trustee by appropriate  book entries and
     confirmation   statements,   and  must  have  been   delivered   before  or
     simultaneously with payment (i.e., perfection by possession of certificated
     securities);  and (c) the securities sold thereunder must be valued weekly,
     marked-to-market  at current  market  price plus  accrued  interest and the
     value of the  collateral  must be equal to at least  104% of the  amount of
     cash  transferred  by or on  behalf  of the  Indenture  Trustee  under  the
     repurchase agreement and, if the value of the securities held as collateral
     declines to an amount below 104% of the cash transferred by or on behalf of
     the Indenture  Trustee plus accrued  interest  (i.e., a margin call),  then
     additional  cash and/or  acceptable  securities  must be transferred to the
     Indenture  Trustee  (except as may be otherwise  provided in the Collection
     Account Letter Agreement with respect to the investment of funds on deposit
     in the Collection Account) to satisfy such margin call; provided,  however,
     that if the securities used as collateral are obligations of FNMA or FHLMC,
     then the value of the  securities  held as  collateral  must equal at least
     105% of the cash transferred by or on behalf of the Indenture Trustee under
     such repurchase agreement;

                                      -23-
<PAGE>
          (3) certificates of deposit,  time deposits and bankers acceptances of
     any United States  depository  institution  or trust  company  incorporated
     under the laws of the United  States or any state  thereof,  including  the
     Indenture  Trustee;  provided,  however,  that the debt obligations of such
     depository  institution  or trust  company  at the date of the  acquisition
     thereof have been rated by each Rating  Agency in one of its three  highest
     long-term rating categories;

          (4) deposits,  including deposits with the Indenture Trustee, that are
     fully  insured  by the  Bank  Insurance  Fund  or the  Savings  Association
     Insurance Fund of the FDIC;

          (5) commercial paper of any corporation incorporated under the laws of
     the United States or any state thereof,  including corporate  Affiliates of
     the Indenture Trustee, which at the time the investment is made is rated by
     each Rating Agency in its highest  short-term rating category and which has
     an original maturity of not more than 365 days;

          (6) debt  obligations  rated  by each  Rating  Agency  at the time the
     investment is made in one of its three highest  long-term rating categories
     (or those  investments  specified  in paragraph  (3) above with  depository
     institutions which have debt obligations rated by each Rating Agency in one
     of its three highest long-term rating categories);

          (7) money  market  funds that are rated by each  Rating  Agency at the
     time the  investment is made in one of its three highest  long-term  rating
     categories; provided, that money market funds that allow for withdrawals on
     demand shall be deemed to satisfy any maturity  requirements  for Permitted
     Investments set forth in this Agreement; or

          (8) any other investments that the Majority Noteholders may consent to
     in writing prior to the time at which such investment is made;

PROVIDED,  HOWEVER, that no instrument described in foregoing  subparagraphs (1)
through (7) shall  evidence  either the right to receive (a) only  interest with
respect to the obligations  underlying such instrument or (b) both principal and
interest payments derived from obligations  underlying such instrument where the
interest and principal  payments with respect to such instrument provide a yield
to  maturity  at par  greater  than 120% of the yield to  maturity at par of the
underlying obligations;  and provided,  further, that no instrument described in
the foregoing subparagraphs may be purchased at a price greater than par if such
instrument  may be  prepaid or called at a price  less than its  purchase  price
prior to its stated maturity.

          Each reference in this  definition of "Permitted  Investments"  to the
Rating  Agency  shall  be  construed,  in the  case of each  subparagraph  above
referring to each Rating Agency, as a reference to each of DCR and Moody's.

          PERSON:  Any  individual,  corporation,  partnership,  joint  venture,
limited liability company,  association,  joint-stock company,  trust,  national
banking association,  unincorporated organization or government or any agency or
political subdivision thereof.

          PHYSICAL  PROPERTY:  As  defined in clause  (b) of the  definition  of
"Delivery" above.

                                      -24-
<PAGE>
          POOL PRINCIPAL BALANCE: With respect to any date of determination, the
aggregate  Principal  Balances of the Loans as of the end of the preceding  day;
provided,  however,  that the Pool Principal Balance on any Distribution Date on
which the Termination  Price is to be paid to Noteholders will be deemed to have
been equal to zero as of such date.

          POSTSECURITIZATION  UNFUNDED TRANSFER OBLIGATION:  With respect to any
Series of Notes and any date of determination after an Extension Date, an amount
equal to (x) the sum of (A) the Transfer Obligation  Carry-Forward  Amount, plus
(B) 10% of the aggregate Collateral Value of all Loans sold hereunder since such
Extension  Date plus (C) any  amounts  withdrawn  from the  Transfer  Obligation
Account for return to the Loan  Originator  pursuant to SECTION  5.05(J)  hereof
since such Extension  Date less (y) the sum of the aggregate  amount of payments
actually  made by the Loan  Originator  in  respect of the  Transfer  Obligation
pursuant to Section 2.3(b) of the Loan Purchase  Agreement  since such Extension
Date and the aggregate amount of the Purchase Prices paid by Servicer in respect
of any Loan  Originator  Puts since such  Extension  Date.  With  respect to any
Series of Notes subsequent to the first Series of Notes, the  Postsecuritization
Unfunded  Transfer  Obligation  may be  modified  as set forth in the  Indenture
Supplement.

          PREPAYMENT  CODE:  With  respect  to each  Loan,  a code  agreed to in
writing by the Loan  Originator  and the  Initial  Noteholder,  which code shall
identify certain  prepayment terms with respect to such Loan as may be agreed in
writing  from  time  to  time  between  the  Loan  Originator  and  the  Initial
Noteholder.

          PRINCIPAL  BALANCE:  With  respect to any Loan or related  Foreclosure
Property,  (i) at the Transfer  Cutoff Date, the  outstanding  unpaid  principal
balance  of the  Mortgage  Loan as of the  Transfer  Cutoff  Date and (ii)  with
respect to any other date of  determination,  the outstanding  unpaid  principal
balance of the Loan as of the prior  Business  Day (after  giving  effect to all
payments received thereon and the allocation of any Net Loan Losses with respect
thereto for a Defaulted Loan on such Business Day); provided,  however, that any
Liquidated Loan shall be deemed to have a Principal Balance of zero.

          PRINCIPAL  CARRY-FORWARD AMOUNT: With respect to any Payment Date, the
excess,  if any, of (A) the Optimal  Principal  Payment  Amount for such Payment
Date plus the Principal Carry-Forward Amount for the prior Payment Date over (B)
the  amount in  respect  of  principal  that is  actually  distributed  from the
Distribution Account on such Payment Date.

          PRINCIPAL  PREPAYMENT:  With  respect  to any Loan  and any  day,  any
principal  amount  received on a Loan in excess of the  principal of the Monthly
Payment due on such day.

          PRODUCT  CODE:  With respect to each Loan, a code agreed to in writing
by the Loan  Originator  and the Initial  Noteholder,  which code shall identify
whether such Loan is an Adjustable Rate Loan or a fixed rate Loan,  whether such
Loan has a Retained  Interest and such other  attributes  of such Loan as may be
agreed in writing from time to time between the Loan  Originator and the Initial
Noteholder.

          PROMISSORY  NOTE:  With  respect  to a  Loan,  the  original  executed
promissory note or other evidence of the indebtedness of the related Borrower or
Borrowers.

                                      -25-
<PAGE>
          PURCHASE PRICE:  With respect to a Loan, the Principal Balance thereof
as of the date of purchase or repurchase,  plus all accrued and unpaid  interest
on such Loan to and including the date of purchase or repurchase computed at the
applicable  Loan Interest Rate,  plus the amount of any  unreimbursed  Servicing
Advances  and any  unreimbursed  Periodic  Advances  made by the  Servicer  with
respect to such Loan (after deducting  therefrom any amounts received in respect
of such purchased or repurchased  Loan and being held in the Collection  Account
for future  distribution  to the extent such  amounts  represent  recoveries  of
principal  not yet applied to reduce the related  Principal  Balance or interest
(net  of the  Servicing  Fee)  for  the  period  from  and  after  the  date  of
repurchase).  To the extent the Servicer does not reimburse  itself for amounts,
if  any,  in  respect  of  the  Servicing   Advance   Reimbursement   Amount  or
Nonrecoverable  Periodic Advances pursuant to SECTION  5.01(C)(1)  hereof,  with
respect to such Loan, the Purchase Price shall be reduced by such amounts.

          QSR STORE  MORTGAGE  LOANS:  Mortgage  Loans  secured by quick service
restaurants.

          QUALIFIED  INSURER:  An insurance company duly qualified as such under
the laws of the states in which any applicable Loan Collateral is located,  duly
authorized  and licensed or  otherwise  qualified in such states to transact the
applicable  insurance business and to write the insurance provided,  approved as
an insurer in accordance with the Servicing  Standard,  and whose  claims-paying
ability  is rated "A" or  better  (or the  equivalent  in any  successor  rating
system) by Best's Key Rating  Guide or rated "A" or better by  Standard & Poor's
Ratings  Services or the  equivalent  by any Rating  Agency as to  claims-paying
ability with respect to hazard and flood insurance.

          QUALIFIED  SUBSTITUTE LOAN: A Loan or Loans  substituted for a Deleted
Loan  pursuant to SECTION  3.05 hereof,  which (i) has or have been  approved in
writing by the Majority  Noteholders  and (ii) complies or comply as of the date
of substitution with each  representation and warranty set forth in SECTION 3.04
hereof  and is or are  not  more  than  29  days  Delinquent  as of the  date of
substitution for such Deleted Loan or Loans.

          QUARTERLY  SERVICE  CHARGE:  The  interest  expense  of  FFCA  and its
Subsidiaries for the quarter most recently ended, including, without limitation,
commissions,  discounts and other fees and charges incurred in respect of letter
of credit or  bankers'  acceptance  financings,  net costs  pursuant  to hedging
obligations,  the interest component of all payments associated with Capitalized
Leases,  amortization  of debt issuance  costs,  amortization  of original issue
discount,  non-cash interest payments and the interest component of any deferred
payment obligations.

          RAPID AMORTIZATION  TRIGGER: With respect to any Business Day, a Rapid
Amortization  Trigger  shall mean the  existence of one or more of the following
conditions as of such Business Day:

          (i)   the aggregate  Principal  Balance of all Loans that are 30 to 59
                days  Delinquent  as of such  Business  Day  divided by the Pool
                Principal Balance as of such Business Day is greater than 2.0%;

                                      -26-
<PAGE>
          (ii)  the aggregate  Principal  Balance of all Loans that are 60 to 89
                days  Delinquent  as of such  Business  Day  divided by the Pool
                Principal Balance as of such Business Day is greater than 1.0%;

          (iii) the aggregate Principal Balance of all Loans that are 90 days or
                more  Delinquent  as of such  Business  Day  divided by the Pool
                Principal Balance as of such Business Day is greater than 0.50%;

          (iv)  the  aggregate  Liquidated  Loan Losses since the Reset Date are
                greater than $100,000; and

          (v)   (x) the aggregate  Liquidated Loan Losses for the three calendar
                month  period  preceding  such  Business  Day divided by (y) the
                average  Transfer  Cutoff  Date  Principal  Balance of all Loans
                conveyed  to the Issuer  hereunder  during  such three  calendar
                month period is greater than 0.10%.

          A Rapid  Amortization  Trigger  shall  continue  to exist  until it is
Deemed Cured.

          RATING AGENCIES:  DCR and Moody's or such other nationally  recognized
credit rating  agencies as may from time to time be designated in writing by the
Majority Noteholders in their sole discretion.

          RECORD DATE:  With respect to each Payment Date, the close of business
on the prior Business Day.

          REFERENCE  BANK RATE:  With  respect to any day, the  arithmetic  mean
(rounded  upwards,  if necessary,  to the nearest one sixteenth of a percent) of
the  offered  rates for United  States  dollar  deposits  for one month that are
offered by the  Reference  Banks as of 11:00  a.m.,  New York City time,  on the
related LIBOR  Determination  Date to prime banks in the London interbank market
for a period of one month in amounts  approximately  equal to the Note Principal
Balance,  provided that at least two such Reference  Banks provide such rate. If
fewer than two offered rates appear,  the Reference Bank Rate will be arithmetic
mean of the rates  quoted by one or more major banks in New York City,  selected
by the Initial Noteholder, as of 11:00 a.m., New York City time, on such day for
loans in U.S.  Dollars  to leading  European  Banks for a period of one month in
amounts  approximately  equal to the outstanding Note Principal  Balance.  If no
such  quotation can be obtained,  the Reference  Bank Rate will be the Reference
Bank Rate applicable to the preceding day.

          REFERENCE  BANKS:  Three money  center  banks  selected by the Initial
Noteholder.

          RELEASED LOAN COLLATERAL PROCEEDS:  With respect to any Loan, proceeds
received by the Servicer in connection with (i) a taking of an entire  Mortgaged
Property by exercise of the power of eminent domain or  condemnation or (ii) any
release of part of the Loan Collateral from the lien of the related  Mortgage or
Security Agreement, as the case may be, whether by partial condemnation, sale or
otherwise;  which  proceeds in either case are not  released to the  Borrower in
accordance with applicable law, the Servicing Standard or this Agreement.

          RESET  DATE:  The  later of the  latest  Closing  Date and the  latest
Extension Date.

                                      -27-
<PAGE>
          RESPONSIBLE  OFFICER:  When  used  with  respect  to (i)  the  initial
Indenture  Trustee or the initial  Custodian,  any  officer in its Asset  Backed
Securities  Trust  Services  Group  with  particular   responsibility   for  the
transactions  contemplated  by this  Agreement and (ii) any successor  Indenture
Trustee or  Custodian,  any officer  within the  corporate  trust office of such
successor  Indenture  Trustee  or  Custodian,   including  any  Vice  President,
Assistant Vice President, Secretary, Assistant Secretary or any other officer of
such successor Indenture Trustee or Custodian  customarily  performing functions
similar to those  performed  by any of the above  designated  officers and also,
with respect to a particular  matter,  any other  officer to whom such matter is
referred  because  of such  officer's  knowledge  of and  familiarity  with  the
particular  subject.  When used with  respect to the Issuer,  any officer in the
corporate  trust  administration  department  of the Owner  Trustee  with direct
responsibility  for the administration of the Trust Agreement and this Agreement
on behalf of the  Issuer.  When used with  respect  to the  Depositor,  the Loan
Originator or the  Servicer,  the  President or any  Executive  Vice  President,
Senior Vice President or the Treasurer.

          RETAINED  INTEREST:  With respect to any Loan,  any  interest  payable
under the related  Promissory  Note other than default  interest and interest at
the related Loan Interest Rate (and excluding any  prepayment  charges and yield
maintenance  premiums).  Without  limiting  the  generality  of  the  foregoing,
Retained  Interest  shall  include  interest  designated  or  defined as "Shared
Appreciation,"  "Contingent  Interest,"  "Participating  Interest,"  "Additional
Interest," "Fixed Bumps" or "Payment Escalations" under the terms of any Loan.

          RETAINED   SECURITIES:   With   respect  to  a   Securitization,   any
subordinated  securities  issued or expected to be issued,  or excess collateral
value retained or expected to be retained, in connection therewith to the extent
the Loan  Originator or an Affiliate  thereof  decides in its sole discretion to
retain, instead of sell, such securities.

          RETAINED  SECURITIES  VALUE:  With  respect to any  Business Day and a
Retained  Security,  the market value  thereof as determined by the Market Value
Agent in accordance with SECTION 4.14(D) hereof.

          REVOLVING PERIOD: The period commencing on the Closing Date and ending
on the  earlier  of (i) the date on which the  Revolving  Period  is  terminated
pursuant to SECTION 2.07 and (ii) with respect to a Note of a given Series,  the
date set forth in the related Indenture Supplement.

          S&SA ASSIGNMENT:  An Assignment,  in the form of Exhibit C hereto,  of
Loans and other  property  from the  Depositor  to the Issuer  pursuant  to this
Agreement.

          SECURITIES: The Notes or Trust Certificates.

          SECURITIZATION:  A sale or transfer of loans,  including  Loans, to an
Affiliate   of  the   Depositor   in  order  to  effect   one  or  a  series  of
structured-finance   securitization   transactions  involving  the  issuance  of
securities  treated for federal income tax purposes as  indebtedness  of FFCA or
one or more of its wholly-owned subsidiaries.

          SECURITIZATION  PARTICIPANT:  With  respect to a  Securitization,  any
"depositor" with respect to such Securitization,  the Majority Noteholders,  the
Issuer, the Servicer,  the trustee and the custodian thereunder,  any nationally

                                      -28-
<PAGE>
recognized credit rating agency, the related underwriters, the related placement
agent, the related credit enhancer,  the related  purchaser of securities and/or
any other party  necessary or, in the good faith belief of any of the foregoing,
desirable to effect a Securitization.

          SECURITIZATION  PROCEEDS:  With respect to a  Securitization,  (x) the
proceeds  of the  Securitization  remitted to the Issuer in respect of the Loans
transferred  on the date of and with respect to such  Securitization,  including
without   limitation,   any  cash  and  Retained   Securities  created  in  such
Securitization  less all costs,  fees and expenses  incurred in connection  with
such Securitization,  including,  without limitation, all amounts deposited into
any reserve funds upon the closing thereof plus or minus (y) the net positive or
net negative value of all Hedging Instruments terminated in connection with such
Securitization minus (z) all other amounts agreed upon in writing by the Initial
Noteholder, the Issuer and the Servicer.

          SECURITY AGREEMENT: (a) With respect to any Equipment Loan, the pledge
agreement,  security  agreement or similar  instrument  that secures the related
Promissory Note and creates a lien on the related Equipment and (b) with respect
to any Mortgage  Loan,  any security  agreement,  contract,  instrument or other
document  related to  security  for  repayment  thereof  (other than the related
Mortgage  and  Promissory  Note),  executed  by the  Borrower  and/or  others in
connection  with such  Mortgage  Loan,  and in  either  case  including  without
limitation,  any guaranty,  title insurance  policy,  hazard  insurance  policy,
chattel  mortgage,  letter of credit or  certificate  of deposit,  other pledged
accounts,  pledge of stock or other equity interest in the related Borrower, and
any other documents and records relating to any of the foregoing.

          SECURITYHOLDER: Any Noteholder or Certificateholder.

          SENIOR LOAN: A Loan secured by Loan Collateral with respect to which a
Unit-Level  Fixed  Charge  Coverage  Ratio is not  provided on the related  Loan
Schedule,  provided,  however,  that (i) a Senior Loan which is secured  only by
Equipment shall be deemed an Equipment Loan for purposes of this Agreement, (ii)
a Senior Loan which is secured by Mortgaged  Property shall be deemed a Mortgage
Loan for  purposes of this  Agreement,  and (iii) a Senior Loan which is secured
only by both  Equipment and Mortgaged  Property  shall be deemed a Mortgage Loan
for purposes of this Agreement.

          SERIES:  With respect to a Note, the related series of which such Note
is a part, as specified in the Indenture Supplement.

          SERVICER:  FFCA,  in its  capacity as the servicer  hereunder,  or any
successor appointed as herein provided.

          SERVICER  CALL:  The  optional  repurchase  by the  Servicer of a Loan
pursuant to SECTION 3.07(B) hereof.

          SERVICER'S  FISCAL  YEAR:  January 1st through  December  31st of each
year.

          SERVICER'S  LOAN FILE: With respect to each Loan, the file held by the
Servicer,  consisting of originals of all  documents  relating to such Loan that
are not delivered to the Custodian, copies of all of the Loan Documents included
in the  related  Indenture  Trustee's  Loan File and (i) a  closing  instruction

                                      -29-
<PAGE>
letter (if any) with respect to the Loan, (ii) a copy of the Borrower's  opinion
of counsel (if any), (iii) a copy of the franchise agreement with all amendments
thereto (if any),  (iv) a copy of the site  inspection and valuation  report and
(v) if such Loan is a Mortgage Loan, a survey (if any) of the related  Mortgaged
Property and a Title Matters Indemnity Agreement (if any).

          SERVICER'S  REMITTANCE  REPORT:  A report prepared and computed by the
Servicer in substantially the form of Exhibit B attached hereto.

          SERVICER  TERMINATION  EVENT: The termination of the Servicer pursuant
to SECTION 10.01(B) hereof.

          SERVICING ADVANCE  REIMBURSEMENT  AMOUNT:  With respect to any date of
determination,  the  amount  of  any  Servicing  Advances  that  have  not  been
reimbursed as of such date, including Nonrecoverable Servicing Advances.

          SERVICING ADVANCES: Subject to SECTION 4.01(B) hereof, all reasonable,
customary and necessary  "out of pocket" costs and expenses  advanced or paid by
the Servicer with respect to the Loans in accordance with the performance by the
Servicer of its servicing obligations hereunder,  including, but not limited to,
the costs and expenses for (i) the  preservation,  restoration and protection of
Loan  Collateral,  including  without  limitation,  advances  in respect of real
estate  taxes and  assessments,  (ii) any  collection,  enforcement  or judicial
proceedings, including, without limitation,  foreclosures,  collections, reports
and  liquidations  pursuant to SECTION  4.10 hereof and (iii) the  conservation,
management and sale or other  disposition of a Foreclosure  Property pursuant to
SECTION 4.11 hereof.

          SERVICING  COMPENSATION:  The Servicing Fee and other amounts to which
the Servicer is entitled pursuant to SECTION 7.01 and SECTION 7.03 hereof.

          SERVICING  FEE:  As to each  Loan  (including  any Loan  that has been
foreclosed and has become a Foreclosure  Property,  but excluding any Liquidated
Loan),  the fee payable monthly to the Servicer on each Payment Date,  which (i)
in the case of fixed rate Loans shall be the product of 0.25% (25 basis  points)
and the Principal  Balance of such Loan as of the  beginning of the  immediately
preceding  Due  Period,  divided by 12 and (ii) in the case of  Adjustable  Rate
Loans shall be the  product of 0.375%  (37.5  basis  points)  and the  Principal
Balance  of such  Loan as of the  beginning  of the  immediately  preceding  Due
Period,  divided by 12. The Servicing  Fee includes any  servicing  fees owed or
payable to any Subservicer, which fees shall be paid from the Servicing Fee.

          SERVICING OFFICER: Any officer of the Servicer or Subservicer involved
in, or responsible for, the administration and servicing of the Loans whose name
and specimen  signature  appears on a list of servicing  officers  annexed to an
Officer's   Certificate   furnished   by  the   Servicer  or  the   Subservicer,
respectively,  on the Closing Date to the Issuer and the Indenture  Trustee,  on
behalf of the Noteholders, as such list may from time to time be amended.

          SERVICING  STANDARD:  With respect to the servicing of the Loans,  the
servicing and  administration of the Loans with the same care,  skill,  prudence
and  diligence  with which  prudent  institutional  commercial  lenders and loan
servicers  service  comparable  loans which are owned,  for  federal  income tax

                                      -30-
<PAGE>
purposes,  by entities  which  qualify as real estate  investment  trusts  under
Section 856 of the Code (and at least with the same care,  skill,  prudence  and
diligence with which the Servicer  generally services loans owned by it), with a
view to the  timely  collection  of all  scheduled  payments  of  principal  and
interest  under the Loans or, if a Loan comes into and  continues in default and
no  satisfactory  arrangements  can be made for the collection of the delinquent
payments,  the maximization of the recovery on such Loan to the Noteholders on a
present value basis (the relevant  discounting of anticipated  collections to be
performed at the related Loan Interest Rate), but without regard to:

          (i)   any  relationship  that the  Servicer,  any  Subservicer  or any
                Affiliate of the Servicer or any  Subservicer  may have with the
                related Borrower;

          (ii)  the  ownership  of any  Notes or the Trust  Certificates  by the
                Servicer or any Affiliate of the Servicer;

          (iii) the Servicer's obligation to make Servicing Advances or Periodic
                Advances; or

          (iv)  the   Servicer's   or  any   Subservicer's   right  to   receive
                compensation  for its  services  or  reimbursement  of its costs
                hereunder or with respect to any particular transaction.

          SETTLEMENT  AGENT:  With respect to any Table-Funded  Loan, the entity
approved by the  Initial  Noteholder,  in its sole  discretion  and  pursuant to
Section 25 of the  Custodial  Agreement  (which may be a title  company,  escrow
company  or  attorney  in  accordance   with  local  law  and  practice  in  the
jurisdiction where the related  Table-Funded Loan is being  originated),  (i) to
act  pursuant  to the Escrow  Instructions,  (ii) to which the  proceeds of such
Table-Funded  Loan  are to be  wired  by the  Initial  Noteholder  and  (iii) to
disburse  such  proceeds  pursuant to a written  authorization  from the Initial
Noteholder.

          SUBSERVICER:  Any Person with which the  Servicer  has entered  into a
Subservicing  Agreement  and which is an Eligible  Servicer  and  satisfies  any
requirements   set  forth  in   SECTION   4.06(A)   hereof  in  respect  of  the
qualifications of a Subservicer.

          SUBSERVICING ACCOUNT: An account established by a Subservicer pursuant
to a Subservicing Agreement, which account must be an Eligible Account.

          SUBSERVICING  AGREEMENT:  Any  agreement  between the Servicer and any
Subservicer  relating to subservicing and/or  administration of any or all Loans
as provided in SECTION 4.06(A) hereof,  copies of which shall be made available,
along with any modifications thereto, to the Issuer and the Indenture Trustee.

          SUBSIDIARY:  With respect to FFCA, (a) any  corporation,  association,
joint  venture  or other  business  entity  of which  more than 50% of the total
voting power of shares of stock or other ownership interests entitled to vote in
the election of the  directors,  managers,  trustees or other persons having the
power to direct or cause the direction of the management and policies thereof is
at the time owned or controlled,  directly or indirectly, by FFCA or one or more
of the other  Subsidiaries of FFCA, and (b) any partnership or limited liability
company in which FFCA or one or more of the other Subsidiaries of FFCA, directly
or indirectly,  possesses more than a 50% interest in the total capital or total
income of such partnership or limited liability company.

                                      -31-
<PAGE>
          SUBSTITUTION ADJUSTMENT: As to any date on which a substitution occurs
pursuant to SECTION 2.05 or SECTION 3.05  hereof,  the amount,  if any, by which
(a) the sum of the aggregate  principal balance (after  application of principal
payments  received  on or  before  the date of  substitution)  of any  Qualified
Substitute  Loans as of the date of  substitution,  plus any  accrued and unpaid
interest  thereon to the date of  substitution,  is less than (b) the sum of the
aggregate of the Principal  Balances,  together with accrued and unpaid interest
thereon to the date of substitution, of the related Deleted Loans.

          TABLE-FUNDED  LOAN: A Loan which is pledged to the  Indenture  Trustee
simultaneously  with  the  origination  thereof  by the Loan  Originator,  which
origination is funded in part or in whole with proceeds  advanced  directly to a
Settlement Agent. A Loan shall cease to be a Table-Funded Loan upon the later to
occur of (i) the  delivery of the Loan  Schedule  and  Exceptions  Report by the
Custodian to the Initial  Noteholder for such  Table-Funded Loan on the Business
Day of receipt of the related Indenture Trustee's Loan File by the Custodian and
(ii) the disbursement of funds by the Settlement Agent to the Borrower.

          TEN YEAR TREASURY YIELD: As of any date of determination, the yield on
United States treasury securities with maturities of ten years, as most recently
reported  in the Wall  Street  Journal,  or in the  event  that the Wall  Street
Journal ceases publication,  in such source as shall be designated in writing by
the Indenture Trustee.

          TERMINATION PRICE: As of any date of determination,  an amount without
duplication  equal to the greater of (A) the Note Redemption  Amount and (B) the
sum of (i) the  Principal  Balance of each Loan  included in the Trust as of the
Payment Date of the termination of the Trust;  (ii) all unpaid interest  accrued
on the Principal Balance of each such Loan at the related Net Loan Interest Rate
to such  Payment  Date;  and  (iii)  the  aggregate  fair  market  value of each
Foreclosure  Property  included in the Trust on such Payment Date, as determined
by an Independent  appraiser acceptable to the Majority Noteholders as of a date
not more than 30 days prior to such Payment Date.

          TITLE MATTERS INDEMNITY AGREEMENT: With respect to each Mortgage Loan,
an agreement (if any) between the Borrower and the Loan Originator, indemnifying
the Loan Originator for any losses arising from title matters, including without
limitation,   zoning,   use,   covenants,   conditions  and   restrictions   and
encroachments.

          TITLE  POLICY:  With  respect  to  any  Mortgaged  Property,  an  ALTA
(extended  coverage)  loan  title  insurance  policy  or such  other  form as is
customarily  acceptable to prudent lending  institutions in the  jurisdiction in
which the Mortgaged  Property is located (or other  satisfactory title insurance
as  confirmed  in  writing  by the  Majority  Noteholders)  consistent  with the
Underwriting Guidelines.

          TRANSFER  CUTOFF DATE: With respect to each Loan, the first day of the
month in which the Transfer Date with respect to such Loan occurs.

                                      -32-
<PAGE>
          TRANSFER CUTOFF DATE PRINCIPAL BALANCE:  As to each Loan for which its
Transfer Date occurs (i) from and including the first of a calendar month to and
including the Business Day  preceding  the Payment Date in such calendar  month,
its Principal  Balance as of the opening of business on the Transfer Cutoff Date
(after  giving  effect to any payments  received on the Loan before the Transfer
Cutoff Date) and (ii) from and  including  the Payment Date to and including the
last day of a calendar month, its Principal  Balance as of the close of business
on the Transfer Cutoff Date (after giving effect to any payments due on the Loan
on or before the Transfer Cutoff Date).

          TRANSFER DATE: With respect to each Loan, the day such Loan is sold to
the Depositor pursuant to the Loan Purchase Agreement and to the Issuer pursuant
to SECTION 2.01 hereof.

          TRANSFER  OBLIGATION:  The  obligation  of the Loan  Originator  under
Section  2.3(b) of the Loan  Purchase  Agreement  to make  certain  payments  in
connection with Securitizations and other related matters.

          TRANSFER   OBLIGATION   ACCOUNT:   The  account  designated  as  such,
established and maintained pursuant to SECTION 5.05 hereof.

          TRANSFER  OBLIGATION   CARRY-FORWARD   AMOUNT:  With  respect  to  any
Extension  Date, the lesser of (x) the Unfunded  Transfer  Obligation as of such
date (immediately  after giving effect to any  Securitization  occurring on such
date) and (y) 10% of the aggregate  Collateral  Value of all Loans  remaining in
the Loan Pool as of such date.

          TRANSFER  OBLIGATION  TARGET  AMOUNT:  With  respect  to any  date  of
determination,  the  cumulative  total of all  withdrawals  pursuant  to SECTION
5.05(E),  5.05(F),  5.05(G) and  5.05(H)  hereof  from the  Transfer  Obligation
Account  since the Closing  Date,  after  deducting  from such total all amounts
returned to the Loan Originator pursuant to SECTION 5.05(J) hereof.

          TRUST: The Issuer.

          TRUST  ACCOUNT   PROPERTY:   The  Trust  Accounts,   all  amounts  and
investments held from time to time in the Trust Accounts and all proceeds of the
foregoing.

          TRUST ACCOUNTS:  The Distribution Account, the Collection Account, the
Transfer  Obligation  Account,  the  Lockbox  Account,  if any,  and each Escrow
Account, if any.

          TRUST  AGREEMENT:  The Trust  Agreement dated as of March 13, 1998, as
amended, among the Depositor, the Loan Originator and the Owner Trustee.

          TRUST   CERTIFICATE:   The  meaning  assigned  thereto  in  the  Trust
Agreement.

          TRUST  ESTATE:  The  assets  subject  to  this  Agreement,  the  Trust
Agreement and the Indenture and assigned to the Trust,  which assets consist of:
(i) such Loans as from time to time are subject to this  Agreement  as listed in
the Loan Schedule,  as the same may be amended or  supplemented on each Transfer
Date,  by  the  removal  of  Deleted  Loans  and by the  addition  of  Qualified
Substitute  Loans,  together  with the  Servicer's  Loan Files and the Indenture
Trustee's  Loan  Files  relating  thereto  and all  proceeds  thereof,  (ii) the

                                      -33-
<PAGE>
Mortgages,  Security Agreements and security interests in Loan Collateral, (iii)
all  payments in respect of interest  due with  respect to each Loan on or after
the  related  Transfer  Cutoff  Date and all  payments  in respect of  principal
received after such Transfer Cutoff Date net of any Retained  Interest (iv) such
assets as from time to time are  identified as  Foreclosure  Property,  (v) such
assets and funds as are from time to time deposited in the Distribution Account,
Collection Account,  the Transfer  Obligation  Account,  the Lockbox Account, if
any, and each Escrow Account, if any, including, without limitation,  amounts on
deposit in such  accounts  that are  invested  in  Permitted  Investments,  (vi)
lenders'  rights under all  Insurance  Policies and to any  Insurance  Proceeds,
(vii)  lenders'  rights to any  Condemnation  Proceeds,  (viii) Net  Liquidation
Proceeds  and  Released  Loan  Collateral  Proceeds,  (ix) all right,  title and
interest of the Issuer (but none of the  obligations)  in and to the obligations
of Hedging  Counterparties under Hedging  Instruments,  (x) all right, title and
interest of the Depositor in and to the obligations of the Loan Originator under
the Loan Purchase  Agreement  pursuant to which the Depositor acquired the Loans
from the Loan Originator,  and all proceeds of any of the foregoing and (xi) all
of the Loan Originator's right, title and interest in, to and under (but none of
its  obligations)  any  Environmental  Policy to the extent relating to Mortgage
Loans.

          TRUST FEES AND  EXPENSES:  As of each Payment Date, an amount equal to
the Servicing Compensation, the Indenture Trustee Fee, the Owner Trustee Fee and
the Custodian Fee, if any.

          UCC:  The  Uniform  Commercial  Code as in  effect in the State of New
York.

          UCC-1  FINANCING   STATEMENT:   A  financing   statement  meeting  the
requirements of the Uniform Commercial Code of the relevant jurisdiction.

          UCC  ASSIGNMENT:  A form  "UCC-2" or  "UCC-3"  statement  meeting  the
requirements  of the Uniform  Commercial  Code of the relevant  jurisdiction  to
reflect an assignment of a secured party's interest in collateral.

          UNDERWRITING  GUIDELINES:  The underwriting  guidelines (including the
loan origination  guidelines)  provided to the Initial Noteholder on or prior to
the Closing Date by the Loan Originator or an Affiliate thereof.

          UNFUNDED TRANSFER OBLIGATION:  With respect to any Series of Notes and
any date of  determination  on or prior to an Extension Date, an amount equal to
(x) the sum of (A) 10% of the  aggregate  Collateral  Value  of all  Loans  sold
hereunder since the related  Closing Date,  plus (B) any amounts  withdrawn from
the Transfer  Obligation  Account for return to the Loan Originator  pursuant to
SECTION  5.05(J)  hereof since the related  Closing Date less (y) the sum of the
aggregate amount of payments  actually made by the Loan Originator in respect of
the  Transfer  Obligation  pursuant  to  Section  2.3(b)  of the  Loan  Purchase
Agreement  since  the  related  Closing  Date and the  aggregate  amount  of the
Purchase  Prices paid by Servicer in respect of any Loan  Originator  Puts since
the related Closing Date. With respect to any Series of Notes  subsequent to the
first Series of Notes, the Unfunded  Transfer  Obligation may be modified as set
forth in the Indenture Supplement.

                                      -34-
<PAGE>
          UNIT-LEVEL FIXED CHARGE COVERAGE RATIO:  With respect to a Loan, as of
any date of  determination  and for any period,  the  applicable  "Fixed  Charge
Coverage Ratio"  determined in accordance with, and defined in, the Underwriting
Guidelines and any applicable Loan Documents, as computed by the Loan Originator
based on the  information  most recently  provided by the Borrower  prior to any
discretionary "add-back" adjustments.

          WHOLE LOAN SALE: A sale of Loans as whole loans.

          WILMINGTON TRUST COMPANY: Wilmington Trust Company, a Delaware banking
corporation.

          WIRE  INSTRUCTIONS:  Instructions,  originated by the Loan Originator,
substantially in the form of Attachment A to the Escrow  Instructions,  attached
hereto as Exhibit F.

          SECTION 1.02 OTHER DEFINITIONAL PROVISIONS.

          (a)  Capitalized  terms used herein and not otherwise  defined  herein
have the meanings assigned to them in the Indenture and the Trust Agreement.

          (b) All  terms  defined  in this  Agreement  shall  have  the  defined
meanings  when  used in any  certificate  or other  document  made or  delivered
pursuant hereto unless otherwise defined therein.

          (c) As used in this Agreement and in any certificate or other document
made or delivered  pursuant hereto or thereto,  accounting  terms not defined in
this  Agreement or in any such  certificate  or other  document,  and accounting
terms  partly  defined in this  Agreement  or in any such  certificate  or other
document to the extent not defined,  shall have the respective meanings given to
them under GAAP. To the extent that the definitions of accounting  terms in this
Agreement or in any such certificate or other document are inconsistent with the
meanings of such terms under GAAP, the  definitions  contained in this Agreement
or in any such certificate or other document shall control.

          (d) The words  "hereof,"  "herein,"  "hereunder"  and words of similar
import when used in this Agreement  shall refer to this Agreement as a whole and
not to any particular provision of this Agreement;  Article,  Section,  Schedule
and Exhibit  references  contained in this Agreement are references to Articles,
Sections,  Schedules  and  Exhibits  in or to this  Agreement  unless  otherwise
specified; and the term "including" shall mean "including without limitation."

          (e) The definitions  contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the  masculine as well
as to the feminine and neuter genders of such terms.

          (f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate  delivered in connection herewith means such
agreement,  instrument  or statute  as from time to time  amended,  modified  or
supplemented and includes (in the case of agreements or instruments)  references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.

                                      -35-
<PAGE>
                                   ARTICLE II

            CONVEYANCE OF THE TRUST ESTATE; ADDITIONAL NOTE PRINCIPAL
                                    BALANCES

          SECTION 2.01 CONVEYANCE OF THE TRUST ESTATE; ADDITIONAL NOTE PRINCIPAL
BALANCES.

          (a)  (i) On the  terms  and  conditions  of  this  Agreement,  on each
Transfer  Date,  the  Depositor  agrees to offer for sale and to sell  Loans and
deliver  related  Loan  Documents to or at the  direction of the Issuer.  To the
extent  the Issuer has or is able to obtain  sufficient  funds for the  purchase
thereof,  the  Issuer  agrees to  purchase  such Loans  offered  for sale by the
Depositor.

               (ii) In  consideration  of the  payment  of the  Additional  Note
Principal  Balance  pursuant to SECTION 2.06 hereof,  the  Depositor,  as of the
Closing Date and  concurrently  with the  execution  and delivery  hereof,  does
hereby sell,  transfer,  assign,  set over and  otherwise  convey to the Issuer,
without  recourse,  but  subject  to the  other  terms  and  provisions  of this
Agreement,  all of the right,  title and interest of the Depositor in and to the
Trust Estate.

               (iii) During the Revolving Period, on each Transfer Date, subject
to the conditions  precedent set forth in SECTION 2.06(A) and in accordance with
the procedures set forth in SECTION 2.01(C), the Depositor,  pursuant to an S&SA
Assignment,  will assign to the Issuer without recourse all the right, title and
interest of the Depositor in and to the Loans and all proceeds thereof listed on
the Loan Schedule  attached to such S&SA Assignment,  including all interest and
principal  (i) for each Loan having a Transfer Date from and including the first
day of a calendar  month to and  including  the Business Day preceding a Payment
Date,  received on or after the opening of business of the Transfer  Cutoff Date
and (ii) for each Loan having a Transfer  Date from and including a Payment Date
to and  including  the last day of a calendar  month,  due on the Loan after the
Transfer Cutoff Date, in each case whether received by the Loan Originator,  the
Depositor or the Servicer, together with all right, title and interest in and to
the proceeds of any related Insurance Policies and all of the Depositor's right,
title  and  interest  in and to (but  none of its  obligations  under)  the Loan
Purchase Agreement and all proceeds of the foregoing.

               (iv) The foregoing sales, transfers,  assignments,  set overs and
conveyances  do  not,  and are not  intended  to,  result  in a  creation  or an
assumption by the Issuer of any obligation of the Depositor, the Loan Originator
or any other Person in  connection  with the Trust Estate or under any agreement
or instrument relating thereto except as specifically set forth herein.

          (b) As of the Closing Date and as of each  Transfer  Date,  the Issuer
acknowledges  (or  will  acknowledge   pursuant  to  the  S&SA  Assignment)  the
conveyance to it of the Trust Estate, including all right, title and interest of
the  Depositor  in  and  to  the  Trust  Estate,  receipt  of  which  is  hereby
acknowledged by the Issuer.  Concurrently with such delivery,  as of the Closing
Date and as of each Transfer Date,  the Issuer pledges (or will pledge  pursuant
to the S&SA Assignment) the Trust Estate to the Indenture Trustee.  In addition,
concurrently  with such delivery and in exchange  therefor,  the Owner  Trustee,

                                      -36-
<PAGE>
pursuant  to the  instructions  of  the  Depositor,  has  executed  (not  in its
individual  capacity,  but solely as Owner  Trustee on behalf of the Issuer) and
caused  the  Trust  Certificates  to  be  authenticated  and  delivered  to  the
Depositor.

          (c)  (i) Pursuant to and subject to the Note  Purchase  Agreement, the
Issuer  may,  at its sole  option,  from time to time  request  that the Initial
Noteholder advance on any Transfer Date and on any Collateral Value Excess Date,
Additional  Note Principal  Balances and the Initial  Noteholder  shall remit on
such Transfer  Date or Collateral  Value Excess Date, as the case may be, to the
Advance Account an amount equal to the Additional Note Principal Balance.

               (ii) Notwithstanding anything to the contrary herein, in no event
shall the Initial  Noteholder be required to advance  Additional  Note Principal
Balances on a Transfer  Date if the  conditions  precedent  to a transfer of the
Loans under  SECTION  2.06(A) and the  conditions  precedent  to the purchase of
Additional  Note  Principal  Balances  set  forth  in  Section  3.01 of the Note
Purchase Agreement have not been fulfilled.

               (iii)  Notwithstanding  anything to the  contrary  herein,  in no
event  shall the Initial  Noteholder  be  required  to advance  Additional  Note
Principal Balance on a Collateral Value Excess Date if the conditions  precedent
thereto  set  forth in  SECTION  2.06(B)  and the  conditions  precedent  to the
purchase of Additional Note Principal  Balances set forth in Section 3.01 of the
Note Purchase Agreement have not been fulfilled.

               (iv) The Servicer shall  appropriately  note such Additional Note
Principal  Balance  (and  the  increased  Note  Principal  Balance)  in the next
succeeding Payment Statement;  provided,  however, that failure to make any such
notation  in such  Payment  Statement  or any error in such  notation  shall not
adversely  affect any  Noteholder's  rights with  respect to its Note  Principal
Balance and its right to receive  interest and principal  payments in respect of
the Note Principal Balance held by such Noteholder. The Initial Noteholder shall
record on the schedule attached to such  Noteholder's  Note, the date and amount
of any Additional Note Principal Balance advanced by it; provided,  that failure
to make such  recordation  on such schedule or any error in such schedule  shall
not adversely affect any Noteholder's  rights with respect to its Note Principal
Balance  and its right to  receive  interest  payments  in  respect  of the Note
Principal Balance held by such Noteholder.

               (v) Absent  manifest  error,  the Note Principal  Balance of each
Note as set forth in the Initial  Noteholder's records shall be binding upon the
Noteholders and the Issuer, notwithstanding any notation made by the Servicer in
its Payment Statement pursuant to the preceding paragraph.

          SECTION 2.02 OWNERSHIP AND POSSESSION OF LOAN FILES.

          With  respect  to each  Loan,  as of the  related  Transfer  Date  the
ownership  of the related  Promissory  Note,  the  related  Mortgage or Security
Agreement  and the contents of the related  Servicer's  Loan File and  Indenture
Trustee's  Loan File shall be vested in the Issuer and pledged to the  Indenture
Trustee  for the  benefit of the  Securityholders,  although  possession  of the
Servicer's  Loan  File  (other  than  items  required  to be  maintained  in the
Indenture  Trustee's  Loan  Files)  on  behalf  of and  for the  benefit  of the
Securityholders  shall remain with the Servicer,  and the  Custodian  shall take
possession of the Indenture Trustee's Loan Files as contemplated in SECTION 2.05
hereof.

                                      -37-
<PAGE>
          SECTION 2.03 BOOKS AND RECORDS; INTENTION OF THE PARTIES.

          (a) As of each Transfer  Date,  the sale of each of the Loans conveyed
on such  Transfer  Date  shall be  reflected  on the  balance  sheets  and other
financial  statements of the Depositor or the Loan  Originator,  as the case may
be, as a sale of assets by the Depositor or the Loan Originator, as the case may
be, under GAAP.  Each of the Servicer and the Custodian shall be responsible for
maintaining,  and shall  maintain,  a complete set of books and records for each
Loan which shall be clearly  marked to reflect the ownership of each Loan, as of
the related Transfer Date, by the Owner Trustee and pledged, as of such Transfer
Date, to the Indenture Trustee for the benefit of the Securityholders.

          (b) It is the  intention of the parties  hereto  that,  other than for
federal,  state and local income or franchise  tax  purposes,  the transfers and
assignments  of the Trust Estate on the Closing  Date, on each Transfer Date and
as otherwise  contemplated  by the Basic  Documents  and the  Assignments  shall
constitute a sale of the Trust Estate including,  without limitation,  the Loans
and all other property  comprising the Trust Estate specified in SECTION 2.01(A)
hereof, from the Depositor to the Issuer and such property shall not be property
of the Depositor.  The parties hereto shall treat the Notes as indebtedness  for
federal, state and local income and franchise tax purposes.

          (c) If any of the assignments and transfers of the Loans and the other
property of the Trust Estate  specified in SECTION  2.01(A)  hereof to the Owner
Trustee pursuant to this Agreement or the conveyance of the Loans or any of such
other property of the Trust Estate to the Owner Trustee, other than for federal,
state and local income or franchise tax purposes,  is held or deemed not to be a
sale or is held or deemed to be a pledge of security for a loan,  the  Depositor
intends  that the rights and  obligations  of the parties  shall be  established
pursuant to the terms of this Agreement and that, in such event, with respect to
such property, (i) consisting of Loans and related property, the Depositor shall
be deemed to have granted, as of the related Transfer Date, to the Owner Trustee
a first priority  security  interest in the entire right,  title and interest of
the Depositor in and to such Loans and proceeds and all other property  conveyed
to the Owner  Trustee as of such  Transfer  Date,  (ii)  consisting of any other
property  specified in SECTION  2.01(A),  the Depositor  shall be deemed to have
granted,  as of the Closing Date, to the Owner Trustee a first priority security
interest in the entire right, title and interest of the Depositor in and to such
property and the proceeds thereof. In such event, with respect to such property,
this Agreement shall constitute a security agreement under applicable law.

          (d)  Within  ten  (10)  days of the  date  first  above  written,  the
Depositor shall, at Depositor's sole expense,  cause to be filed UCC-1 financing
statements  naming the Owner Trustee as "secured party" and describing the Trust
Estate  being  sold by the  Depositor  to the  Issuer  with  the  office  of the
Secretary of State of the state in which the Depositor is located.

                                      -38-
<PAGE>
          SECTION 2.04 DELIVERY OF LOAN DOCUMENTS.

          (a) With  respect to each Loan that is not a  Table-Funded  Loan,  the
Loan  Originator  and/or the Depositor,  as the case may be, shall, on or before
the related Transfer Date, deliver or cause to be delivered to the Custodian, as
the designated agent of the Indenture Trustee,  each of the following  documents
(collectively, the "INDENTURE TRUSTEE'S LOAN FILE"):

          (i) With respect to each Mortgage Loan:

          (1) The original  Promissory Note,  endorsed by the Loan Originator in
     blank in the following form:  "Pay to the order of  ______________________,
     without recourse",  with all prior and intervening  endorsements  showing a
     complete chain of endorsement  from origination of the Mortgage Loan to the
     Loan Originator;

          (2) The original  Mortgage with evidence of recording  thereon (or, if
     the original  Mortgage has not been  returned  from the  applicable  public
     recording  office or is not  otherwise  available,  a copy of the  original
     Mortgage  submitted  for  recording)  and,  if the  Mortgage  was  executed
     pursuant  to a power of  attorney,  the  original  power of  attorney  with
     evidence of recording  thereon  (or, if the original  power of attorney has
     not been returned from the  applicable  public  recording  office or is not
     otherwise available, a copy of the original power of attorney submitted for
     recording);

          (3) The original executed Assignment of Mortgage,  in recordable form.
     The Assignment of Mortgage may be a blanket assignment,  to the extent such
     assignment  is  effective  under  applicable  law, for  Mortgages  covering
     Mortgaged  Properties situated within the same county. If the Assignment of
     Mortgage is in blanket form, an Assignment of Mortgage need not be included
     in the individual Indenture Trustee's Loan File;

          (4) All original intervening assignments of mortgage, with evidence of
     recording thereon,  showing a complete chain of assignment from origination
     of the Mortgage Loan to the Loan  Originator (or, if any such assignment of
     mortgage has not been returned from the applicable  public recording office
     or is not  otherwise  available,  a copy of  such  assignment  of  mortgage
     submitted for recording);

          (5) The original of the guaranty (if any) executed in connection  with
     the Promissory Note or related lease;

          (6) The originals of all assumption,  modification,  consolidation  or
     extension  agreements  relating to the Mortgage  with evidence of recording
     thereon,  (or, if the originals  have not been returned from the applicable
     public  recording  office or are not  otherwise  available,  a copy of such
     originals submitted for recording);

          (7) The original  attorney's opinion of title and abstract of title or
     the original mortgagee title insurance policy, or if the original mortgagee
     title insurance policy has not been issued,  the irrevocable  commitment to
     issue the same;

          (8) The  original  of any  security  agreement,  chattel  mortgage  or
     equivalent document executed in connection with the Mortgage Loan;

                                      -39-
<PAGE>
          (9) The original  assignment of leases and rents, if separate from the
     related  Mortgage,  with  evidence of recording  thereon,  or a copy of the
     original that has been or will, on or prior to the related Transfer Date be
     submitted for recordation in the appropriate  governmental recording office
     of the jurisdiction where the Mortgaged Property is located;

          (10) The original assignment of assignment of leases and rents, if the
     assignment of leases and rents is separate from the related Mortgage,  from
     the  Loan  Originator  in  blank,  in form  and  substance  acceptable  for
     recording;

          (11) A copy of the UCC-1  Financing  Statements  and all necessary UCC
     continuation statements with evidence of filing and/or recording thereon or
     copies  thereof  that have  been sent for  filing  and/or  recording  on or
     promptly after closing, and UCC Assignments executed by the Loan Originator
     in blank,  which UCC Assignments shall be in form and substance  acceptable
     for filing and/or recording;

          (12) An environmental indemnity agreement (if any);

          (13) An Assignment of Loan Documents; and

          (14) the original Loan Agreement.

          (ii) With respect to each Equipment Loan:

          (1) The original  Promissory Note,  endorsed by the Loan Originator in
     blank in the following form:  "Pay to the order of  ______________________,
     without recourse",  with all prior and intervening  endorsements  showing a
     complete  chain of  endorsement  from  origination  of the Loan to the Loan
     Originator;

          (2) The original Security Agreement and, if the Security Agreement was
     executed pursuant to a power of attorney, the original power of attorney;

          (3) The original Loan Agreement,  to the extent not encompassed in the
     Loan Agreement with respect to the related Mortgage Loan;

          (4) The original of the guaranty (if any) executed in connection  with
     the Promissory Note or related lease;

          (5) The originals of all assumption,  modification,  consolidation  or
     extension  agreements  relating  to the  Security  Agreement,  or true  and
     correct copies thereof;

          (6) A true and correct copy of the UCC-1 Financing  Statements and all
     necessary  UCC  continuation  statements  with  evidence  of filing  and/or
     recording  thereon or true  copies  thereof  that have been sent for filing
     and/or recording on or promptly after closing, and UCC Assignments executed
     by the Loan Originator in blank, which UCC Assignments shall be in form and
     substance acceptable for filing and/or recording; and

          (7) An Assignment of Loan Documents.

                                      -40-
<PAGE>
          (b) With respect to each Table-Funded Loan:

          (i) By no later than 2:00 p.m.,  New York City time,  on the  Transfer
     Date, the Loan Originator shall cause the Bailee to deliver,  by facsimile,
     copies of:

          (1) a fully executed  Bailee  Agreement (to the extent that the Bailee
     Agreement  has not been  previously  delivered to the Custodian and Initial
     Noteholder) and Bailee Trust Receipt issued  thereunder (as required in the
     Bailee Agreement) to the Custodian and Initial Noteholder; and

          (2) the fully executed Promissory Note to the Custodian (to the extent
     that the original Promissory Note has not been previously  delivered to the
     Custodian).

          (ii) Within three  Business Days following the Transfer Date, the Loan
     Originator shall have delivered or caused to be delivered to the Custodian,
     by overnight  courier,  the  Indenture  Trustee's  Loan File  documents not
     previously delivered pursuant hereto.

          (iii) By no later than 2:00 p.m.,  New York City time, on the Transfer
     Date, the Loan Originator shall cause the Settlement  Agent to deliver,  by
     facsimile,  copies of fully executed  Escrow  Instructions  and any Insured
     Closing Letter, if any, to the Custodian and Initial Noteholder;

          (c) With respect to each Loan,  the Loan  Originator and the Depositor
shall,  on the related  Transfer Date,  deliver or caused to be delivered to the
Servicer for the benefit of the Indenture Trustee, as secured party on behalf of
the Noteholders, the related Servicer's Loan File.

          (d) The  Indenture  Trustee  shall  cause  the  Custodian  to take and
maintain continuous physical possession of the Indenture Trustee's Loan Files in
the State of Illinois  and, in connection  therewith,  shall act solely as agent
for the Securityholders in accordance with the terms hereof and not as agent for
the Loan Originator, the Servicer or any other party.

          (e) Upon the delivery by the Loan  Originator  to the Custodian of any
copies of Loan  Documents,  the Loan  Originator  shall be deemed to certify and
hereby certifies that each such copy is a true, correct and complete copy of the
related original.

          SECTION 2.05 ACCEPTANCE BY THE INDENTURE TRUSTEE OF THE LOANS; CERTAIN
SUBSTITUTIONS AND REPURCHASES; CERTIFICATION BY THE CUSTODIAN.

          (a) The Indenture Trustee declares that it will cause the Custodian to
hold  the  Indenture  Trustee's  Loan  Files  and  any  additions,   amendments,
replacements or supplements to the documents  contained therein,  as well as any
other assets  included in the Trust Estate and  delivered to the  Custodian,  in
trust,  upon and  subject to the  conditions  set forth  herein.  The  Indenture
Trustee  further  agrees to cause the  Custodian  to execute  and  deliver  such
certifications  as are required  under the Custodial  Agreement and to otherwise
direct the  Custodian  to perform  all of its  obligations  with  respect to the
Indenture  Trustee's  Loan  Files in  strict  accordance  with the  terms of the
Custodial Agreement.

                                      -41-
<PAGE>
          (b)  (i) With  respect  to any Loans which are set forth as exceptions
in the Initial  Certification  or the Loan Schedule and Exceptions  Report,  the
Loan Originator  shall cure such exception by delivering such missing  documents
to the  Custodian  or  otherwise  curing the defect no later than (A) 5 Business
Days after the receipt of the Initial  Certification  or the first Loan Schedule
and  Exceptions  Report with respect to such  Mortgage Loan (or in the case of a
Table-Funded  Loan, 5 Business Days after the related Transfer Date with respect
thereto)  or (B) in the case of Loan  Documents  which  have been  delivered  to
recording or filing offices and have not been returned to the Loan Originator to
permit their delivery to the Custodian at the time  required,  90 days after the
related Transfer Date.

               (ii) In the  event  that,  with  respect  to any  Loan,  the Loan
Originator  does not comply  with the  document  delivery  requirements  of this
SECTION 2.05, the Loan Originator shall purchase such Loan at the Purchase Price
with respect to such Loan by depositing  such Purchase  Price in the  Collection
Account. The Loan Originator shall provide the Servicer,  the Indenture Trustee,
the Issuer and the Initial  Noteholder  with a  certification  of a  Responsible
Officer prior to such repurchase  indicating that the Loan Originator intends to
repurchase  such Loan.  In lieu of such a  repurchase,  the  Depositor  and Loan
Originator may comply with the substitution provisions of SECTION 3.05 hereof.

               (iii) It is understood and agreed that the obligation of the Loan
Originator  to repurchase  any such Loan pursuant to this SECTION  2.04(B) shall
constitute  the sole remedy  against it with  respect to such  failure to comply
with the foregoing delivery requirements.

          (c) In performing  its reviews of the Indenture  Trustee's  Loan Files
pursuant to the Custodial Agreement,  the Custodian shall have no responsibility
to determine the genuineness of any document contained therein and any signature
thereon. The Custodian shall not have any responsibility for determining whether
any  document  is valid  and  binding,  whether  the text of any  assignment  or
endorsement  is in proper or  recordable  form,  whether any  document  has been
recorded in accordance with the  requirements of any applicable  jurisdiction or
whether a blanket assignment is permitted in any applicable jurisdiction.

          (d) The  Servicer's  Loan  File  shall be held in the  custody  of the
Servicer (i) for the benefit of, and as agent for, the  Noteholders and (ii) for
the  benefit  of the  Indenture  Trustee,  as  secured  party on  behalf  of the
Noteholders,  for so long as the  Indenture  continues in full force and effect;
after the  Indenture is terminated in  accordance  with the terms  thereof,  the
Servicer's  Loan  File  shall be held in the  custody  of the  Servicer  for the
benefit of, and as agent for, the  Certificateholders.  It is intended  that, by
the Servicer's agreement pursuant to this SECTION 2.05(D), the Indenture Trustee
shall be deemed to have  possession of the Servicer's Loan Files for purposes of
Section 9-305 of the UCC of the state in which such documents or instruments are
located. The Servicer shall promptly report to the Indenture Trustee any failure
by it to hold the  Servicer's  Loan File as herein  provided and shall  promptly
take  appropriate  action to remedy any such failure.  In acting as custodian of
such documents and  instruments,  the Servicer agrees not to assert any legal or
beneficial ownership interest in the Loans or such documents or instruments. The
Servicer agrees to indemnify the Securityholders and the Indenture Trustee,  its
officers,  directors,  employees,  agents and "control  persons" as such term is
used under the Act and under the Securities Exchange Act of 1934, as amended for
any and all  liabilities,  obligations,  losses,  damages,  payments,  costs  or

                                      -42-
<PAGE>
expenses of any kind whatsoever which may be imposed on, incurred by or asserted
against the Securityholders or the Indenture Trustee as the result of any act or
omission  by the  Servicer  relating  to the  maintenance  and  custody  of such
documents or instruments  which have been  delivered to the Servicer;  provided,
however, that the Servicer will not be liable for any portion of any such amount
resulting from the negligence or willful  misconduct of any  Securityholders  or
the  Indenture  Trustee;  and provided,  further,  that the Servicer will not be
liable  for any  portion  of any  such  amount  resulting  from  the  Servicer's
compliance with any  instructions  or directions  consistent with this Agreement
issued to the Servicer by the Indenture  Trustee.  The  Indenture  Trustee shall
have no duty to monitor or  otherwise  oversee  the  Servicer's  performance  as
custodian hereunder.

          SECTION 2.06  CONDITIONS  PRECEDENT TO TRANSFER  DATES AND  COLLATERAL
VALUE EXCESS DATES.

          (a) On each Transfer Date,  the Depositor  shall convey to the Issuer,
the Loans and the other  property and rights  related  thereto  described in the
related S&SA Assignment,  the Issuer,  only upon the satisfaction of each of the
conditions set forth below on or prior to such Transfer  Date,  shall deposit or
cause to be  deposited  cash in the  amount  of the  Additional  Note  Principal
Balance in the  Advance  Account in respect  thereof,  and the  Servicer  shall,
promptly  after  such  deposit,  withdraw  the  amount  deposited  in respect of
applicable  Additional  Note  Principal  Balance from the Advance  Account,  and
distribute  such amount to or at the direction of the Depositor.  In the case of
Table-Funded  Loans, the Initial Noteholder (acting pursuant to the instructions
of the Issuer and Depositor,  which are hereby given) shall disburse the related
amount in respect of Additional Note Principal  Balances to the Settlement Agent
for  distribution  in  accordance  with  the  related  Escrow  Instructions,  as
applicable.

               (i)    the Depositor  shall have  delivered to the Issuer and the
                      Initial Noteholder duly executed Assignments,  which shall
                      have attached  thereto a Loan  Schedule  setting forth the
                      appropriate information with respect to all Loans conveyed
                      on such  Transfer  Date and shall  have  delivered  to the
                      Initial  Noteholder a computer  readable  transmission  of
                      such Loan Schedule;

               (ii)   the  Depositor  shall  have  deposited  in the  Collection
                      Account all  collections  received with respect to each of
                      the Loans after but not including the applicable  Transfer
                      Cutoff Date;

               (iii)  as of such date,  neither the Loan Originator,  the Issuer
                      nor the  Depositor  shall  (A) be  insolvent,  (B) be made
                      insolvent  by its  respective  sale of  Loans  or (C) have
                      reason to believe that its insolvency is imminent;

               (iv)   the Revolving Period shall not have terminated;

               (v)    the  Initial   Noteholder  shall  have  received  the  Due
                      Diligence Packages for such Loans as are to be transferred
                      on such Transfer Date at least five Business Days prior to
                      the related  Transfer Date,  shall have such completed its
                      due diligence  investigation  of such Loans and shall have
                      approved, in its sole discretion, each such Loan;

                                      -43-
<PAGE>
               (vi)   the Issuer shall have either (x)  delivered  the Indenture
                      Trustee's  Loan File to the Custodian in  accordance  with
                      the Custodial  Agreement and the Initial  Noteholder shall
                      have received a copy of the Loan  Schedule and  Exceptions
                      Report  reflecting  such delivery and for any Loans having
                      Exceptions   (as  defined  in  the  Custodial   Agreement)
                      thereon, the Initial Noteholder shall have approved in its
                      sole  discretion  each  such  Loan or (y) in the case of a
                      Table-Funded Loan,  delivered the documentation  specified
                      in  SECTION  2.04(B)(I)  to the  Custodian  and shall have
                      received consent from the Initial  Noteholder (in its sole
                      discretion) to the sale of the Table-Funded Loan;

               (vii)  each of the  representations  and  warranties  made by the
                      Depositor  pursuant  to SECTION  3.04 with  respect to the
                      Loans shall be true and correct as of the related Transfer
                      Date  with  the  same  effect  as if  then  made,  and the
                      Depositor  shall  have  performed  all  obligations  to be
                      performed  by it under the Basic  Documents on or prior to
                      such Transfer Date;

               (viii) the Depositor  shall,  at its own expense,  on or prior to
                      the Transfer Date, indicate in its computer files that the
                      Loans identified in the LPA Assignment and S&SA Assignment
                      have been sold to the Issuer  pursuant  to this  Agreement
                      and the S&SA Assignment;

               (ix)   the  Depositor  shall have taken any  action  required  to
                      maintain the ownership interest of the Issuer in the Trust
                      Estate and the first perfected  security  interest therein
                      of the Indenture Trustee;

               (x)    no selection  procedures  believed by the  Depositor to be
                      adverse to the  interests  of the  Noteholders  shall have
                      been  utilized  in  selecting  the Loans to be conveyed on
                      such Transfer Date;

               (xi)   the  Depositor   shall  have  provided  the  Issuer,   the
                      Indenture Trustee and the Initial Noteholder no later than
                      two  Business   Days  prior  to  such  date  a  Notice  of
                      Additional Note Principal Balance in the form of Exhibit A
                      hereto;

               (xii)  after  giving  effect  to the  Additional  Note  Principal
                      Balance associated  therewith,  the Note Principal Balance
                      will not exceed the Maximum Note Principal Balance;

                                      -44-
<PAGE>
               (xiii) all conditions  precedent to the  Depositor's  purchase of
                      Loans pursuant to the Loan Purchase  Agreement  shall have
                      been fulfilled as of such Transfer Date;

               (xiv)  all conditions  precedent to the Noteholders'  purchase of
                      Additional  Note  Principal  Balance  pursuant to the Note
                      Purchase  Agreement  shall have been  fulfilled as of such
                      date; and

               (xv)   if any Loan sold on the  Transfer  Date is a  Table-Funded
                      Loan, the Loan Originator  shall have provided the Initial
                      Noteholder,   Depositor,   Issuer,  Settlement  Agent  and
                      Custodian  with a copy of any  related  Bailee  Agreement,
                      Bailee Trust Receipt and Escrow  Instructions  on or prior
                      to such Transfer Date.

          (b) On each Collateral  Value Excess Date, the Issuer shall deposit or
cause to be deposited  into the Advance  Account cash in the amount equal to the
Additional Note Principal  Balance with respect to such Collateral  Value Excess
Date, only upon the  satisfaction  of conditions set forth in subclauses  (iii),
(iv),  (ix),  (xi),  (xii) and (xiv) of Section 2.06(a) on such Collateral Value
Excess Date.  The  Servicer  shall  withdraw the amount  deposited in respect of
Additional  Note Principal  Balance from the Advance  Account in respect of such
deposit and distribute such amount to or at the direction of the Depositor.

          SECTION 2.07 TERMINATION OF REVOLVING PERIOD.

          Upon the  occurrence  of (i) an Event of Default or Default under this
Agreement or the  Indenture or (ii) a Rapid  Amortization  Trigger,  the Initial
Noteholder (if still a Noteholder)  may, in its sole  discretion,  terminate the
Revolving Period.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

          SECTION 3.01 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.

          The Depositor  hereby  represents and warrants to the Loan Originator,
the Servicer,  the Indenture Trustee, the Owner Trustee and the Noteholders that
as of the Closing Date, as of each Transfer Date and as of each Collateral Value
Excess Date:

          (a) The Depositor is a corporation  duly organized,  validly  existing
and in good standing under the laws of the State of Delaware and has, and had at
all relevant times, full power to own its property,  to carry on its business as
currently conducted,  to enter into and perform its obligations under each Basic
Document to which it is a party;

          (b) The execution and delivery of each Basic Document to which it is a
party by the Depositor and its  performance  of and  compliance  with all of the
terms thereof will not violate the Depositor's  certificate of  incorporation or
by-laws or  constitute  a default  (or an event  which,  with notice or lapse of
time, or both,  would  constitute a default)  under,  or result in the breach or

                                      -45-
<PAGE>
acceleration of, any material  contract,  agreement or other instrument to which
the  Depositor is a party or which may be  applicable to the Depositor or any of
its assets;

          (c) The  Depositor  has the full power and authority to enter into and
consummate the transactions contemplated by each Basic Document to which it is a
party, has duly authorized the execution, delivery and performance of each Basic
Document to which it is a party and has duly executed and  delivered  each Basic
Document  to which it is a party.  Each Basic  Document  to which it is a party,
assuming due authorization, execution and delivery by the other party or parties
thereto,  constitutes a valid,  legal and binding  obligation of the  Depositor,
enforceable  against it in  accordance  with the terms  thereof,  except as such
enforcement   may  be  limited  by   bankruptcy,   insolvency,   reorganization,
receivership,  moratorium  or other  similar laws  relating to or affecting  the
rights of creditors generally,  and by general equity principles  (regardless of
whether such enforcement is considered in a proceeding in equity or at law);

          (d) The  Depositor  is not in  violation  of,  and the  execution  and
delivery of each Basic  Document to which it is a party by the Depositor and its
performance  and compliance with the terms of each Basic Document to which it is
a party will not  constitute a violation with respect to, any order or decree of
any  court or any  order or  regulation  of any  federal,  state,  municipal  or
governmental  agency having  jurisdiction,  which violation would materially and
adversely  affect the  condition  (financial  or otherwise) or operations of the
Depositor or its properties or materially and adversely  affect the  performance
of its duties hereunder;

          (e) There are no actions or proceedings against, or investigations of,
the Depositor  currently pending with regard to which the Depositor has received
service of process and no action or proceeding against, or investigation of, the
Depositor is, to the knowledge of the Depositor, threatened or otherwise pending
before any court, administrative agency or other tribunal that (A) if determined
adversely to the  Depositor,  would  prohibit its entering into any of the Basic
Documents  to which it is a party  or  render  the  Notes  invalid,  (B) seek to
prevent the issuance of the Notes or the consummation of any of the transactions
contemplated  by any of the  Basic  Documents  to  which it is a party or (C) if
determined  adversely  to  the  Depositor,  would  prohibit  or  materially  and
adversely  affect the performance by the Depositor of its obligations  under, or
the validity or  enforceability  of, any of the Basic Documents to which it is a
party or the Notes;

          (f) No  consent,  approval,  authorization  or order  of any  court or
governmental  agency  or  body  is  required  for the  execution,  delivery  and
performance by the Depositor of, or compliance by the Depositor with, any of the
Basic Documents to which it is a party or the Notes, or for the  consummation of
the  transactions  contemplated  by any of the Basic  Documents to which it is a
party, except for such consents,  approvals,  authorizations and orders, if any,
that have been obtained prior to the Closing Date;

          (g) The Depositor is solvent,  is able to pay its debts as they become
due and has capital  sufficient  to carry on its  business  and its  obligations
hereunder;  it will not be rendered  insolvent by the  execution and delivery of
any of the Basic  Documents to which it is a party or the  assumption  of any of
its  obligations  thereunder;  no petition of bankruptcy (or similar  insolvency
proceeding) has been filed by or against the Depositor;

                                      -46-
<PAGE>
          (h) As of the Transfer  Date related  thereto,  the  Depositor did not
sell the  Mortgage  Loans  sold  thereon to the Trust with any intent to hinder,
delay or  defraud  any of its  creditors;  nor will the  Depositor  be  rendered
insolvent as a result of such sale;

          (i) As of the Transfer  Date related  thereto,  the Depositor had good
title to, and was the sole owner of,  each Loan sold  thereon  free and clear of
any  lien  other  than  any  such  lien  released  simultaneously  with the sale
contemplated  herein, and,  immediately upon each transfer and assignment herein
contemplated,  the Depositor will have delivered to the Trust good title to, and
the Trust will be the sole owner of, each Mortgage Loan transferred thereon free
and clear of any lien;

          (j) As of the Transfer Date related  thereto,  the Depositor  acquired
title to each of the Loans sold  thereon in good  faith,  without  notice of any
adverse claim;

          (k) The Basic Documents and other information  identified in Exhibit D
hereto (collectively, the "REFERENCED DOCUMENTS"), when taken as a whole, do not
contain any untrue statement of material fact or omit to state any material fact
necessary  to  make  the  statements   herein  or  therein,   in  light  of  the
circumstances   under  which  they  were  made,  not  misleading.   All  written
information  furnished after the date hereof by or on behalf of the Depositor to
the  Initial  Noteholder  or  any  Affiliate  thereof  in  connection  with  the
Referenced  Documents and the  transactions  contemplated  thereby will be true,
complete and accurate in every material respect, or (in the case of projections)
based on  reasonable  estimates,  on the date as of which  such  information  is
stated or certified.  Except as disclosed in writing to the Initial  Noteholder,
there is no fact  known to a  Responsible  Officer of the  Depositor,  after due
inquiry,  that could reasonably be expected to have a material adverse effect on
(a) the property, business, operations,  financial condition or prospects of the
Depositor, (b) the ability of the Depositor to perform its obligations under any
Basic Document to which it is a party, (c) the validity or enforceability of any
of the Basic  Documents,  (d) the rights and remedies of the Noteholders and the
Indenture  Trustee under any of the Basic  Documents,  (e) the timely payment of
the principal of or interest on the Notes or other amounts payable in connection
therewith or (f) the Loans;

          (l) The Depositor is not required to be  registered as an  "investment
company" under the Investment Company Act of 1940, as amended; and

          (m) As of the Transfer Date related thereto, the transfer,  assignment
and conveyance of the Loans by the Depositor  thereon pursuant to this Agreement
is not subject to the bulk transfer laws or any similar statutory  provisions in
effect in any applicable jurisdiction.

          (n) The  Depositor's  principal  place of business and chief executive
offices are  located at The  Perimeter  Center,  17207  North  Perimeter  Drive,
Scottsdale, Arizona 85255.

          SECTION 3.02 REPRESENTATIONS AND WARRANTIES OF THE LOAN ORIGINATOR.

          The Loan  Originator  hereby  represents and warrants to the Servicer,
the Indenture Trustee, the Owner Trustee, the Noteholders and the Depositor that
as of the Closing Date, as of each Transfer Date and as of each Collateral Value
Excess Date:

                                      -47-
<PAGE>
          (a) The Loan  Originator  is a  corporation  duly  organized,  validly
existing and in good standing under the laws of the State of Delaware and (i) is
duly  qualified,  in good standing and licensed to carry on its business in each
state where any Loan  Collateral is located and (ii) is in  compliance  with the
laws of any such state,  in both cases,  to the extent  necessary  to ensure the
enforceability  of the Loans in accordance with the terms thereof and had at all
relevant  times,  full  corporate  power  to  originate  the  Loans,  to own its
property,  to carry on its business as currently conducted and to enter into and
perform its obligations under each Basic Document to which it is a party;

          (b) The  execution  and delivery by the Loan  Originator of each Basic
Document to which it is a party and its  performance of and compliance  with the
terms thereof will not violate the Loan  Originator's  articles of incorporation
or by-laws or  constitute a default (or an event which,  with notice or lapse of
time, or both,  would  constitute a default)  under,  or result in the breach or
acceleration  of, any contract,  agreement or other instrument to which the Loan
Originator is a party or which may be  applicable to the Loan  Originator or any
of its assets;

          (c) The Loan Originator has the full power and authority to enter into
and  consummate  all  transactions  contemplated  by the Basic  Documents  to be
consummated by it, has duly  authorized the execution,  delivery and performance
of each  Basic  Document  to  which  it is a party  and has  duly  executed  and
delivered  each Basic  Document to which it is a party.  Each Basic  Document to
which it is a party, assuming due authorization,  execution and delivery by each
of the other parties thereto,  constitutes a valid, legal and binding obligation
of the Loan  Originator,  enforceable  against it in  accordance  with the terms
hereof,  except as such  enforcement  may be limited by bankruptcy,  insolvency,
reorganization,  receivership,  moratorium  or other similar laws relating to or
affecting the rights of creditors  generally,  and by general equity  principles
(regardless of whether such  enforcement is considered in a proceeding in equity
or at law);

          (d) The Loan  Originator is not in violation of, and the execution and
delivery of each Basic  Document  to which it is a party by the Loan  Originator
and its  performance  and  compliance  with the terms of each Basic  Document to
which it is a party will not  constitute a violation  with respect to, any order
or  decree  of any  court or any  order or  regulation  of any  federal,  state,
municipal or  governmental  agency having  jurisdiction,  which  violation would
materially  and  adversely  affect the  condition  (financial  or  otherwise) or
operations of the Loan  Originator or its properties or materially and adversely
affect the  performance  of its duties under any Basic Document to which it is a
party;

          (e) There are no actions or proceedings against, or investigations of,
the Loan Originator  currently  pending with regard to which the Loan Originator
has  received  service  of  process  and no action  or  proceeding  against,  or
investigation  of,  the  Loan  Originator  is,  to the  knowledge  of  the  Loan
Originator,  threatened or otherwise  pending  before any court,  administrative
agency  or  other  tribunal  that  (A)  if  determined  adversely  to  the  Loan
Originator, would prohibit its entering into any Basic Document to which it is a
party or render the Notes invalid, (B) seek to prevent the issuance of the Notes
or  the  consummation  of  any of the  transactions  contemplated  by any  Basic
Document  to  which  it is a party or (C) if  determined  adversely  to the Loan
Originator,  would prohibit or materially  and adversely  affect the sale of the

                                      -48-
<PAGE>
Loans  to  the  Depositor,  the  performance  by  the  Loan  Originator  of  its
obligations  under, or the validity or enforceability  of, any Basic Document to
which it is a party or the Notes;

          (f) No  consent,  approval,  authorization  or order  of any  court or
governmental  agency or body is required  for: (1) the  execution,  delivery and
performance  by the Loan  Originator  of, or compliance  by the Loan  Originator
with, any Basic Document to which it is a party,  (2) the issuance of the Notes,
(3)  the  sale  of the  Loans  under  the  Loan  Purchase  Agreement  or (4) the
consummation of the  transactions  required of it by any Basic Document to which
it is a party, except such as shall have been obtained before such date;

          (g) Immediately  prior to the Transfer Date related thereto,  the Loan
Originator had good title to the Loans sold on such Transfer Date without notice
of any adverse claim;

          (h) The information,  reports and schedules furnished in writing by or
on behalf of the Loan  Originator  to the Initial  Noteholder  or any  Affiliate
thereof  with  regard  to the  Loans,  the Due  Diligence  Packages,  the  Basic
Documents and other  information  identified in Exhibit D hereto  (collectively,
the  "REFERENCED  DOCUMENTS"),  when taken as a whole, do not contain any untrue
statement of material fact or omit to state any material fact  necessary to make
the statements herein or therein, in light of the circumstances under which they
were made, not  misleading.  All written  information  furnished  after the date
hereof by or on behalf of the Loan  Originator to the Initial  Noteholder or any
Affiliate   thereof  in  connection  with  the  Referenced   Documents  and  the
transactions  contemplated  thereby will be true, complete and accurate in every
material respect, or (in the case of projections) based on reasonable estimates,
on the date as of which  such  information  is  stated or  certified.  Except as
disclosed  in writing  to the  Initial  Noteholder,  there is no fact known to a
Responsible  Officer  of the Loan  Originator,  after due  inquiry,  that  could
reasonably  be expected to have a material  adverse  effect on (a) the property,
business,  operations,  financial condition or prospects of the Loan Originator,
(b) the  ability of the Loan  Originator  to perform its  obligations  under any
Basic Document to which it is a party, (c) the validity or enforceability of any
of the Basic  Documents,  (d) the rights and remedies of the Noteholders and the
Indenture  Trustee under any of the Basic  Documents,  (e) the timely payment of
the principal of or interest on the Notes or other amounts payable in connection
therewith or (f) the Loans;

          (i) The Loan  Originator is solvent,  is able to pay its debts as they
become  due  and  has  capital  sufficient  to  carry  on its  business  and its
obligations  under each Basic  Document  to which it is a party;  it will not be
rendered  insolvent by the  execution  and delivery of this  Agreement or by the
performance of its obligations under each Basic Document to which it is a party;
no petition of bankruptcy (or similar  insolvency  proceeding) has been filed by
or against the Loan Originator prior to the date hereof;

          (j) As of the Transfer Date related  thereto,  the Loan Originator has
transferred the Loans  transferred on or prior to such Transfer Date without any
intent to hinder, delay or defraud any of its creditors; and

          (k) As of the Transfer Date related  thereto,  the Loan Originator has
received fair consideration and reasonably  equivalent value in exchange for the
Loans sold on such Transfer Date to the Depositor.

                                      -49-
<PAGE>
          It is understood  and agreed that the  representations  and warranties
set  forth  in this  SECTION  3.02  shall  survive  delivery  of the  respective
Indenture  Trustee's  Loan Files to the Custodian (as the agent of the Indenture
Trustee) and shall inure to the benefit of the  Securityholders,  the Depositor,
the Servicer,  the  Indenture  Trustee,  the Owner  Trustee and the Trust.  Upon
discovery  by any of the Loan  Originator,  the  Depositor,  the  Servicer,  the
Indenture  Trustee  or the Owner  Trustee  of a breach  of any of the  foregoing
representations  and warranties that materially and adversely  affects the value
of any  Loan  or  the  interests  of  the  Securityholders  therein,  the  party
discovering  such breach shall give prompt written notice (but in no event later
than two Business  Days  following  such  discovery) to the other  parties.  The
obligations of the Loan Originator set forth in SECTIONS 2.05 and 3.05 hereof to
cure any  breach or to  substitute  for or  repurchase  an  affected  Loan shall
constitute the sole remedies  available  hereunder to the  Securityholders,  the
Depositor, the Servicer, the Indenture Trustee or the Owner Trustee respecting a
breach of the representations and warranties contained in this SECTION 3.02. The
fact that the  Initial  Noteholder  has  conducted  or has failed to conduct any
partial or  complete  due  diligence  investigation  of the Loan Files shall not
affect the Noteholders'  rights to demand repurchase or substitution as provided
under this Agreement.

          SECTION  3.03   REPRESENTATIONS,   WARRANTIES  AND  COVENANTS  OF  THE
SERVICER.

          The Servicer hereby  represents and warrants to and covenants with the
Owner Trustee,  the Indenture  Trustee,  the Noteholders,  the Depositor and the
Loan  Originator that as of the Closing Date, as of each Transfer Date and as of
each Collateral Value Excess Date:

          (a) The Servicer is a corporation duly organized, validly existing and
in good  standing  under  the  laws of the  State  of  Delaware  and (i) is duly
qualified,  in good standing and licensed to carry on its business in each state
where any Loan Collateral is located, and (ii) is in compliance with the laws of
any  such  state,  in  both  cases,  to  the  extent  necessary  to  ensure  the
enforceability  of the Loans in accordance with the terms thereof and to perform
its  duties  under  each  Basic  Document  to which it is a party and had at all
relevant  times,  full  corporate  power  to own its  property,  to carry on its
business  as  currently  conducted,  to service  the Loans and to enter into and
perform its obligations under each Basic Document to which it is a party;

          (b) The execution and delivery by the Servicer of each Basic  Document
to which it is a party  and its  performance  of and  compliance  with the terms
thereof will not violate the Servicer's  articles of incorporation or by-laws or
constitute a default (or an event which,  with notice or lapse of time, or both,
would  constitute a default) under, or result in the breach or acceleration  of,
any material contract,  agreement or other instrument to which the Servicer is a
party or which may be applicable to the Servicer or any of its assets;

          (c) The  Servicer  has the full power and  authority to enter into and
consummate all transactions contemplated by each Basic Document to which it is a
party, has duly authorized the execution, delivery and performance of each Basic
Document to which it is a party and has duly executed and  delivered  each Basic
Document  to which it is a party.  Each Basic  Document  to which it is a party,
assuming due authorization,  execution and delivery by each of the other parties
thereto,  constitutes  a valid,  legal and binding  obligation  of the Servicer,
enforceable  against  it in  accordance  with the terms  hereof,  except as such
enforcement   may  be  limited  by   bankruptcy,   insolvency,   reorganization,
receivership,  moratorium  or other  similar laws  relating to or affecting  the
rights of creditors generally,  and by general equity principles  (regardless of
whether such enforcement is considered in a proceeding in equity or at law);

                                      -50-
<PAGE>
          (d)  The  Servicer  is not in  violation  of,  and the  execution  and
delivery of each Basic  Document to which it is a party by the  Servicer and its
performance  and compliance with the terms of each Basic Document to which it is
a party will not  constitute a violation with respect to, any order or decree of
any  court or any  order or  regulation  of any  federal,  state,  municipal  or
governmental  agency having  jurisdiction,  which violation would materially and
adversely  affect the  condition  (financial  or otherwise) or operations of the
Servicer or materially and adversely  affect the performance of its duties under
any Basic Document to which it is a party;

          (e) There are no actions or proceedings against, or investigations of,
the  Servicer  currently  pending with regard to which the Servicer has received
service of process and no action or proceeding against, or investigation of, the
Servicer is, to the knowledge of the Servicer,  threatened or otherwise  pending
before any court, administrative agency or other tribunal that (A) if determined
adversely to the Servicer,  would  prohibit its entering into any Basic Document
to which  it is a party,  (B) seek to  prevent  the  consummation  of any of the
transactions contemplated by any Basic Document to which it is a party or (C) if
determined adversely to the Servicer, would prohibit or materially and adversely
affect the performance by the Servicer of its obligations under, or the validity
or enforceability of, any Basic Document to which it is a party or the Notes;

          (f) No  consent,  approval,  authorization  or order  of any  court or
governmental  agency  or  body  is  required  for the  execution,  delivery  and
performance  by the Servicer of, or compliance by the Servicer  with,  any Basic
Document  to which it is a party or the Notes,  or for the  consummation  of the
transactions  contemplated by any Basic Document to which it is a party,  except
for such consents, approvals,  authorizations and orders, if any, that have been
obtained prior to such date;

          (g) The Basic Documents and other information  identified in Exhibit D
hereto (collectively, the "REFERENCED DOCUMENTS"), when taken as a whole, do not
contain any untrue statement of material fact or omit to state any material fact
necessary  to  make  the  statements   herein  or  therein,   in  light  of  the
circumstances   under  which  they  were  made,  not  misleading.   All  written
information  furnished  after the date hereof by or on behalf of the Servicer to
the  Initial  Noteholder  or  any  Affiliate  thereof  in  connection  with  the
Referenced  Documents and the  transactions  contemplated  thereby will be true,
complete and accurate in every material respect, or (in the case of projections)
based on  reasonable  estimates,  on the date as of which  such  information  is
stated or certified.  Except as disclosed in writing to the Initial  Noteholder,
there is no fact  known to a  Responsible  Officer  of the  Servicer,  after due
inquiry,  that could reasonably be expected to have a material adverse effect on
(a) the property, business, operations,  financial condition or prospects of the
Servicer,  (b) the ability of the Servicer to perform its obligations  under any
Basic Document to which it is a party, (c) the validity or enforceability of any
of the Basic  Documents,  (d) the rights and remedies of the Noteholders and the
Indenture  Trustee under any of the Basic  Documents,  (e) the timely payment of
the principal of or interest on the Notes or other amounts payable in connection
therewith or (f) the Loans;

                                      -51-
<PAGE>
          (h) The  Servicer is solvent and will not be rendered  insolvent  as a
result  of the  performance  of its  obligations  pursuant  to under  the  Basic
Documents to which it is a party; and

          (i) The Servicer  acknowledges  and  agrees  that  the  Servicing  Fee
represents reasonable compensation for the performance of its services hereunder
and that  the  entire  Servicing  Fee  shall be  treated  by the  Servicer,  for
accounting purposes, as compensation for the servicing and administration of the
Loans pursuant to this Agreement.

          It is understood and agreed that the  representations,  warranties and
covenants  set  forth  in  this  SECTION  3.03  shall  survive  delivery  of the
respective  Indenture  Trustee's  Loan Files to the Indenture  Trustee and shall
inure  to the  benefit  of the  Depositor,  the  Noteholders  and the  Indenture
Trustee.  Upon  discovery  by any of the Loan  Originator,  the  Depositor,  the
Servicer,  the Indenture  Trustee or the Owner Trustee of a breach of any of the
foregoing   representations,   warranties  and  covenants  that  materially  and
adversely  affects the value of any Loans or the  interests  of the  Noteholders
therein, the party discovering such breach shall give prompt written notice (but
in no event later than two Business Days following such  discovery) to the other
parties.  The fact that the Initial  Noteholder  has  conducted or has failed to
conduct any partial or complete due diligence investigation shall not affect the
Noteholders' rights to exercise their remedies as provided under this Agreement.

          SECTION 3.04 REPRESENTATIONS AND WARRANTIES REGARDING LOANS.

          The Loan Originator  hereby  represents and warrants to the Depositor,
the Issuer, the Indenture Trustee and the Noteholders, with respect to each Loan
as of the related Transfer Date (except as otherwise expressly agreed in writing
by the Majority Noteholders):

          (a) Immediately prior to sale to the Depositor, the Loan Originator is
the sole owner and holder of the Loan.

          (b)  Immediately  prior to sale to the Depositor,  the Loan Originator
has full right and authority to sell, assign, transfer and pledge the Loan.

          (c) The Loan Originator is transferring the Loan free and clear of any
and all liens, pledges,  equities,  charges, claims or security interests of any
nature  encumbering the Loan, except those removed  immediately prior to sale to
the Depositor and except any security  interest created pursuant to the terms of
this Agreement.

          (d) With respect to each Mortgage  Loan, the related  Servicer's  Loan
File includes a survey, certified to the Loan Originator and the title insurance
company,  which is prepared in accordance with minimum  standards for surveys as
determined  by ALTA or equivalent  at the time of  origination  of such Mortgage
Loan and  contains  the  signature  and seal of a licensed  engineer or surveyor
affixed thereto.

          (e) With respect to each  Mortgage  Loan,  the related  Assignment  of
Mortgage and  assignment of assignment of leases and rents (if any),  except for
the name of the assignee,  which is left blank, constitutes the legal, valid and
binding  assignment  of the  Mortgage and the related  assignment  of leases and
rents from the Loan Originator.  The endorsement of each Promissory Note, except
for the name of the assignee,  which is left blank, constitutes the legal, valid

                                      -52-
<PAGE>
and binding  assignment of the Promissory Note, and together with the Assignment
of Mortgage and Assignment of Loan  Documents,  legally and validly  conveys all
right, title and interest in the subject Loan to the Indenture Trustee.

          (f) With  respect  to each  Equipment  Loan,  the  endorsement  of the
related  Promissory  Note,  except for the name of the  assignee,  which is left
blank,  constitutes  the legal,  valid and binding  assignment of the Promissory
Note,  and together with the Assignment of Loan  Documents,  legally and validly
conveys  all right,  title and  interest in the  subject  Equipment  Loan to the
Indenture Trustee.

          (g) With  respect  to each  Mortgage  Loan,  the  lien of the  related
Mortgage is insured by an ALTA lender's title  insurance  policy (or a policy on
an equivalent form),  issued (or to be issued pursuant to a binding  irrevocable
commitment therefor) by a Qualified Insurer, insuring (subject to the exceptions
referred to in subsection  (ac) below) the Loan  Originator,  its successors and
assigns,  that the  related  Mortgage  is a valid  first  lien on the  Mortgaged
Property. Such title insurance policy is in full force and effect and will inure
to the benefit of the owner of such Mortgage Loan. Such title  insurance  policy
insures the Mortgaged  Property for not less than the original  principal amount
of the Mortgage Loan after all advances of principal.  The title policy does not
contain any special  exceptions (other than the standard  exclusions) for zoning
or uses to the extent that such exceptions  would, in the aggregate,  materially
and adversely affect the value of the related Mortgaged Property or the intended
use thereof and, where available,  has been marked to delete the standard survey
exception or to replace the standard  survey  exception  with a specific  survey
reading.  No Person  claiming  through the Loan  Originator  has done, by act or
omission,  anything, or has knowledge of any fact, which would materially impair
the  coverage  of any such title  insurance  policy.  The title  policy has been
marked to delete the intervening  lien exception.  All premiums for such policy,
including  any premiums for  endorsements  and special  endorsements,  have been
paid.  With  respect to each  Adjustable  Rate Loan,  the related  title  policy
contains an ALTA 6.02 endorsement, or its equivalent, to the extent available.

          (h) With respect to the Indenture  Trustee's  Loan File for such Loan,
all copies  contained  therein  are true,  correct  and  complete  copies of the
related originals.

          (i) The  Unit-Level  Fixed Charge  Coverage Ratio for such Loan is not
less than 1.20 or, with respect to the Sonic franchise finance program, 1.15.

          (j)  (i) With  respect to each  Mortgage  Loan that is  secured by the
related  Borrower's  fee simple  ownership  interest  in the  related  Mortgaged
Property, such Borrower is the owner and holder of the landlord's interest under
any lease for use and  occupancy of all or any portion of the related  Mortgaged
Property.  Each Mortgage provides for the appointment of a receiver for rents in
the event of default or allows the mortgagee to enter into possession to collect
the rents. Neither the Loan Originator nor the Borrower has made any assignments
of the  landlord's  interest  in any such  lease or any  portion  of the  rents,
additional  rents,  charges,  issues or profits due and payable or to become due
and payable under any such lease,  which  assignments are presently  outstanding
and have priority over the related Mortgage or any related assignment of leases,
rents and  profits  given in  connection  with the  origination  of the  related
Mortgage, other than as may be disclosed in the related lender's title insurance
policy referred to in subsection (g) above. An assignment of leases and/or rents

                                      -53-
<PAGE>
and any security  agreement,  chattel mortgage or equivalent document related to
and delivered in connection  with the Mortgage  Loan  establishes  and creates a
valid and  enforceable  first lien and first priority  security  interest on the
property  described  therein  except as  enforceability  may be  limited  by (A)
bankruptcy,  insolvency,  reorganization  or other  similar laws  affecting  the
enforcement of creditors'  rights  generally,  (B) general  principles of equity
(regardless of whether such  enforcement is considered in a proceeding in equity
or at law) and (C) applicable  state laws,  which state laws will not materially
interfere with the practical  realization of the principal  benefits or security
provided thereby.

               (ii) With respect to each Equipment  Loan, all Equipment  subject
to the  related  Security  Agreement  is  either  subject  to a UCC-1  Financing
Statement filed and/or recorded (or sent for filing and/or recording on or prior
to the Transfer  Cutoff  Date) in all places  necessary to perfect a valid first
priority  lien thereon or, to the extent the related  Equipment is securities or
other  instruments,  the Loan Originator or its agent has a valid first priority
lien thereon perfected by possession.

          (k) In reliance on the Borrower's  counsel's  opinion contained in the
Servicer's  Loan File,  if any, and the Title Policy  contained in the Indenture
Trustee's  Loan File,  with respect to each Mortgage that is a deed of trust,  a
trustee,  duly qualified under  applicable law to serve as such, has either been
properly  designated and currently so serves or may be substituted in accordance
with  applicable law. Except in connection with a trustee's sale or as otherwise
required by applicable  law, after default by the Borrower,  no fees or expenses
are payable to such trustee.

          (l) The Servicer's  Loan File contains a site inspection and valuation
report of the related  Mortgaged  Property  which site  inspection and valuation
report conforms to the requirements contained in the Underwriting Guidelines and
such site  inspection  and  valuation  report was  conducted  by a Person  whose
compensation  was and is not  affected by the  approval or  disapproval  of such
Loan.

          (m) The  information  set forth in the Loan  Schedule for such Loan is
true, correct and complete in all material respects.

          (n) The Loan has been originated in accordance with applicable law and
the Underwriting Guidelines.

          (o) The Borrower  and/or its lessees and/or operator are in possession
of all material licenses,  permits,  and authorizations  required for use and/or
possession of the Loan Collateral.

          (p) The Loan has been serviced in accordance  with  applicable law and
the terms of the related Loan Documents.

          (q) Since the completion of funding  contemplated under the applicable
Loan Documents of the Loan, the terms of the related Promissory Note,  Mortgage,
if applicable,  and Security Agreements, if applicable,  have not been impaired,
waived,  modified,  altered,  satisfied,  canceled or  subordinated  by the Loan
Originator  in any  respect,  except,  in each of the  foregoing  instances,  by
written  instruments  that are a part of the related  Indenture  Trustee's  Loan
File,  recorded  in the  applicable  public  recording  office if  necessary  to

                                      -54-
<PAGE>
maintain the priority of the lien of the related  Mortgage,  if applicable,  and
Security  Agreements,  if applicable,  delivered to the Indenture Trustee or its
designee.

          (r) No fraud, error,  omission,  misrepresentation  or negligence with
respect to the  origination of a Loan has taken place on the part of any Person,
including,  without limitation,  the Borrower,  any appraiser or any other party
involved in the origination of the Loan. The Loan Originator has reviewed all of
the documents  constituting  the Indenture  Trustee's  Loan File, the Servicer's
Loan File and internal  credit  write-up and has made such inquiries as it deems
necessary  to make and confirm the  accuracy  of the  representations  set forth
herein.

          (s) The Loan is not a participation interest in a loan, but is a whole
loan, and the Loan Originator does not own and is not entitled to own any equity
interest in the  Borrower.  Except as  disclosed  in the Due  Diligence  Package
related thereto, such Loan does not provide for any Retained Interest.

          (t) The Loan does not  contain a shared  appreciation  feature  or any
terms providing for a contingent interest.

          (u) No taxes,  ground rents,  water  charges,  sewer rents,  insurance
premiums, governmental assessments (including the current portion of assessments
payable in future  installments)  or other  charges  affecting  the related Loan
Collateral  that, prior to the related Transfer Cutoff Date became due and owing
in respect of such Loan Collateral, are delinquent.

          (v) Any escrow  deposits and  payments  relating to the Loan are under
the control of the Loan  Originator  or Servicer and any amounts  required to be
deposited by the Borrower have been deposited.

          (w)  There  is no  material  default,  breach,  violation  or event of
acceleration  on the part of the  related  Borrower  existing  under the related
Mortgage or Security  Agreement  or the related  Promissory  Note,  and no event
which,  with  notice  and the  expiration  of any  grace or cure  period,  would
constitute a default, breach, violation or event of acceleration occurred during
the preceding  twelve  months.  The Loan  Originator has not waived any material
default,  breach,  violation or event of  acceleration  of any of the foregoing,
and, pursuant to the terms of the related Mortgage or Security  Agreement or the
related  Promissory  Note,  no person  or party  other  than the  holder of such
Promissory  Note may  declare  any event of default or  accelerate  the  related
indebtedness under either of such Mortgage or Promissory Note.

          (x) There is no pending total or partial  condemnation  of the related
Mortgaged  Property,  and the Loan Collateral is free and clear of any damage or
waste that would  materially and adversely  affect its value or marketability as
security for the Loan and the related Loan  Collateral is in good repair and has
not been materially  damaged by fire, wind or other cause,  which damage has not
been fully  repaired or for which  insurance  proceeds have not been received or
are not expected to be received.

          (y) With respect to each Mortgage Loan, none of the improvements  that
are or are intended to be,  security  for the  Mortgage  Loan lie outside of the
boundaries and building  restriction lines of the Mortgaged  Property except for
certain  immaterial  encroachments  therefrom,  and no improvements on adjoining

                                      -55-
<PAGE>
properties  materially  encroach upon the Mortgaged  Property,  except for those
material encroachments insured over by title insurance or the subject of a Title
Matters Indemnity  Agreement  contained in the Servicer's Loan File with respect
to such Mortgage Loan.

          (z) The Loan Collateral is covered by acceptable insurance meeting the
minimum  requirements set forth in the Mortgage or Security Agreement.  The Loan
Collateral  is insured  by a fire and  extended  perils  insurance  policy  that
provides coverage in an amount not less than the lesser of the Principal Balance
of  the  related  Promissory  Note  and  full  replacement  value  of  the  Loan
Collateral.

          (aa) With respect to each Mortgage  Loan,  the related Loan  Documents
require  that the related  Mortgaged  Property be insured by a fire and extended
perils insurance policy,  issued by a Qualified Insurer that has a claims-paying
ability  rated at least  "A:VI"  by A.M.  Best's  Key  Rating  Guide,  providing
coverage  against  loss or  damage  sustained  by  reason  of  fire,  lightning,
windstorm,  hail,  explosion,  riot, riot attending a strike,  civil  commotion,
aircraft,  vehicles  and  smoke,  and,  to the extent  required  under such Loan
Documents,  against  earthquake  and other  risks  insured  against  by  Persons
operating  like  properties in the locality of such  Mortgaged  Property,  in an
amount that is not less than 100% of the full insurable replacement cost of such
Mortgaged  Property  (exclusive  of land,  footings  and  foundations).  If such
Mortgaged  Property is located in a Special Flood Hazard Area (as defined by the
Federal Emergency Management Agency) and flood insurance is available, such Loan
Documents  require that a flood insurance policy be in effect.  The related Loan
Documents  also  require  the  related  Mortgaged  Property  to  be  covered  by
comprehensive  general  liability  insurance  in amounts  generally  required by
institutional lenders for similar properties. The related Loan Documents require
that each such Insurance  Policy (i) contain a standard  mortgagee clause naming
the Loan  Originator,  its  successors and assigns as mortgagee and (ii) provide
for prior notice to the  mortgagee,  as additional  insured,  of  termination or
cancellation  (and no such notice has been  received).  In  addition,  each such
Insurance  Policy will be required to be subject to deductibles not greater than
those  customarily  carried  for similar  Mortgaged  Property,  considering  the
creditworthiness  of the  Borrower.  The Loan  Documents  for such Mortgage Loan
obligate  the  related  Borrower  to maintain  all such  insurance,  and if such
Borrower  fails to do so,  authorize  the  mortgagee to obtain and maintain such
insurance at such Borrower's cost and expense and to seek reimbursement therefor
from such Borrower;

          (ab) The Loan is not thirty (30) or more days delinquent in payment of
principal  or interest and has not been  delinquent  by thirty (30) or more days
more than once during the preceding twelve (12) months.

          (ac) With respect to each  Mortgage  Loan,  the related  Mortgage is a
valid and enforceable  first lien on the fee or leasehold estate of the Borrower
in the related Mortgaged  Property (as applicable),  which Mortgaged Property is
free and clear of all encumbrances and liens having priority over the first lien
of the  Mortgage,  except  (i) for  liens  for real  estate  taxes  and  special
assessments  either  not yet  delinquent  or not yet due and  payable,  (ii) for
covenants,  conditions  and  restrictions,  rights of way,  easements  and other
matters of public  record as of the date of  recording of such  Mortgage,  which
exceptions do not, in the aggregate,  materially and adversely  affect the value
of the related  Mortgaged  Property or the intended  use  thereof,  (iii) to the

                                      -56-
<PAGE>
extent such Loan Collateral  consists of patents,  trademarks or copyrights,  or
property as to which  perfection  of a security  interest  is  effected  through
possession, notation on a document of title or recording or filing under any law
other than the UCC,  such  security  interest is perfected  as a first  priority
security  interest  under  the UCC and  (iv) for  other  matters  to which  like
properties are commonly subject which do not,  individually or in the aggregate,
materially  interfere with the benefits of the security  intended to be provided
by such Mortgage.

          (ad) With respect to each  Mortgage  Loan, no claims have been made by
the Loan  Originator  under the related  Title  Policy.  No prior  holder of the
related  Mortgage has done, by act or omission,  anything which would materially
impair the  coverage of any such Title  Policy and such Title  Policy is in full
force and  effect,  is freely  assignable  and will inure to the  benefit of the
Indenture  Trustee  or its  designee  as  mortgagee  of record.  All  applicable
premiums for the Title Policy,  endorsements  and all special  endorsements,  if
any, have been paid.

          (ae)  The  Loan  Originator  has,  and  all  parties  to  the  related
Promissory Note, Mortgage or Security  Agreement,  and any related agreements or
guaranties had, the power,  authority and legal capacity to enter into,  execute
and deliver the same and such Promissory Note,  Mortgage or Security  Agreement,
related agreements and guaranties,  if any, have been duly and properly executed
and delivered by the Loan Originator and all other parties.

          (af) In  connection  with each  Loan,  the  related  Promissory  Note,
Mortgage or  Security  Agreement  and other  agreements  executed in  connection
therewith:

               (i) have been  completed in compliance  with, or are exempt from,
applicable state,  federal and local laws and rules and regulations  relating to
the  origination  of  and  performance  under  the  Loan,   including,   without
limitation, usury, land sales, the offer and sale of securities and equal credit
opportunity or  disclosure,  the Federal  Truth-in-Lending  Act, the Real Estate
Settlement  Procedure  Act  and  other  consumer  protection  laws  and  neither
origination  of such  Loan nor  consummation  of the  transactions  contemplated
hereby involved or will involve the violation of any such laws; and

               (ii) are genuine and are the legal,  valid and binding obligation
of the Borrower or Borrowers  thereof  (subject to any  non-recourse  provisions
therein),  and enforceable in accordance with their  respective  terms,  without
defense, offset, counterclaim or right of rescission,  except as enforcement may
be limited by (A) bankruptcy,  insolvency,  reorganization or other similar laws
affecting the enforcement of creditors' rights generally, (B) general principles
of equity  (regardless of whether such enforcement is considered in a proceeding
in equity or at law) and (C)  applicable  state laws,  which state laws will not
materially interfere with the practical realization of the principal benefits or
security provided thereby.

          (ag) The related Promissory Note, Mortgage or Security  Agreement,  as
applicable,  and other  agreements  executed  in  connection  therewith  contain
enforceable  provisions  such as to render the rights and remedies of the holder
thereof adequate for the realization against the Loan Collateral of the benefits
of the security provided thereby.

          (ah) The Loan  Documents have not been modified to (i) provide for any
holdbacks,  other than any holdbacks  previously approved by the parties hereto,
(ii) require future advances thereunder,  or (iii) require  disbursements of any

                                      -57-
<PAGE>
escrow funds for completion of any on-site or off-site improvements,  other than
any  requirements  for  disbursement  of  escrow  funds  held  pursuant  to  the
applicable Loan Documents.  All applicable  costs, fees and expenses incurred in
making,  closing  or  recording  such Loan will have been paid on or before  the
related Transfer Cutoff Date.

          (ai) With respect to each Mortgage  Loan,  the Loan  Originator  has a
first lien priority perfected security interest in all Condemnation Proceeds and
casualty proceeds relating to such Mortgaged Property.

          (aj)  The  Loan  Collateral  is not  in  construction  or  substantial
rehabilitation.

          (ak) The Loan is not  cross-collateralized  with any obligation  other
than a Loan. For each Senior Loan, the related Borrower's obligations thereunder
are  cross-defaulted  with such Borrower's  obligations under the Mortgage Loans
and the Equipment Loans (if any) associated with such Senior Loan.

          (al) The  conveyance of the Loan on such Transfer Date shall be deemed
a certification by a Responsible  Officer of the Loan Originator that no default
by a Borrower is threatened or imminent with respect to such Loan.

          (am)  With  respect  to each  Mortgage  Loan,  there is  access to the
Mortgaged  Property and such access is insured by title insurance (to the extent
available), and each Mortgaged Property, in every case, is serviced by public or
private water and sewer systems. The Loan Originator inspected,  or caused to be
inspected,  the related Mortgaged Property in connection with the origination of
such  Mortgage  Loan and the Loan  Originator  has  inspected,  or  caused to be
inspected,   such  Mortgaged   Property  in  accordance  with  the  Underwriting
Guidelines.

          (an) [Reserved.]

          (ao) The Loan  Originator has not,  directly or  indirectly,  advanced
funds  under the  related  Promissory  Note to a party  other  than the  related
Borrower or its designee.  The Loan  Originator  has not received any advance of
funds by a party other than the related Borrower,  for the payment of any amount
required by the  related  Promissory  Note or the  related  Mortgage or Security
Agreement, as the case may be.

          (ap) The  related  Borrower  is not a debtor in any  state or  federal
bankruptcy or insolvency proceeding.

          (aq) The Mortgage or Security Agreement, as the case may be, prohibits
any further pledge or lien on the Loan Collateral,  whether equal or subordinate
to the lien of the Mortgage or Security  Agreement,  as the case may be, without
the prior written consent of the holder.

          (ar) All Loan Collateral is located within one of the 50 United States
or the District of Columbia.

                                      -58-
<PAGE>
          (as) Each Loan  that is a  Mortgage  Loan is  secured  by the  related
Borrower's (x) fee simple estate ("FEE  INTEREST") or (y) leasehold  estate in a
Ground Lease. With respect to each Ground Lease:

               (i)  Such  Ground  Lease,  or  a  memorandum  thereof,  has  been
recorded,  and either any  provisions  of such Ground  Lease that  prohibit  the
related  leasehold  estate to be  mortgaged  have been  waived or the lessor has
consented to the leasehold mortgage;

               (ii) Except as disclosed in the Due Diligence  Package related to
such Loan, such Ground Lease or the related estoppel  certificate  provides that
the  Borrower's  interest in such Ground Lease is assignable  to successors  and
assigns of the  mortgagee  with the  consent  of, the  lessor  thereunder  which
consent shall not be unreasonably withheld;

               (iii) The lessor has  delivered an estoppel  certificate  stating
that at the date of delivery of such estoppel certificate,  such Ground Lease is
in full force and effect and no default has occurred under such Ground Lease nor
is there any existing condition which, but for the passage of time or the giving
of notice, or both, would result in a default thereunder;

               (iv)  The  mortgagee  under  such  Ground  Lease is  permitted  a
reasonable  opportunity  to cure any default  under such  Ground  Lease which is
curable after the receipt of notice of such default before the lessor thereunder
may terminate such Ground Lease;

               (v) Such Ground Lease or applicable estoppel certificate does not
restrict the use of the related Mortgaged Property by the related Borrower,  its
successors or assigns in a manner that would materially and adversely affect the
security  provided  by the  related  Mortgage.  The Ground  Lease or  applicable
estoppel certificate contains a covenant or agreement that the lessor thereunder
is not  permitted,  in  the  absence  of an  uncured  default,  to  disturb  the
possession, interest or quiet enjoyment of any lessee in the relevant portion of
the Mortgaged Property for any reason; and

               (vi) Such Ground Lease has an original  term that,  together with
any term or terms for which such Ground  Lease may be renewed or extended by the
related  Borrower,  extends to not  earlier  than the fifth  anniversary  of the
stated maturity date of the related Mortgage Loan.

          (at) (i) Each  Mortgage  Loan  that is a C&G  Store  Mortgage  Loan is
insured under the Environmental Policy; and

               (ii) With respect to each  Mortgage  Loan that is not a C&G Store
          Mortgage Loan,  either (A) (x) a Phase I environmental  assessment was
          conducted  with  respect  to  the  related  Mortgaged  Property,  that
          concluded  that no  further  investigation  of the  related  Mortgaged
          Property was necessary or (y) if such Phase I environmental assessment
          concluded that further  investigation  of such Mortgaged  Property was
          necessary,  a Phase II  environmental  assessment  was conducted  with
          respect  to  the  related  Mortgaged  Property,   and  such  Phase  II
          environmental  assessment  evidenced  that no  remediation  or further
          action was required with respect to the related Mortgaged  Property or
          (B) such Mortgage Loan is insured under the Environmental Policy.

                                      -59-
<PAGE>
          (au) With respect to each Mortgage Loan, the related Mortgage provides
that the Borrower will defend and hold the Loan  Originator  and its  successors
and/or  assigns  harmless  from  and  against  claims  of  any  kind  whatsoever
(including  attorney's  fees and  costs)  paid,  incurred,  or  suffered  by, or
asserted  against,  any  such  other  party  resulting  from  a  breach  of  any
representation,  warranty or covenant  given by the  Borrower  under the related
Mortgage.

          (av) As of the  related  Transfer  Date,  after  giving  effect to the
transfer of such Loan, the aggregate  Principal Balance of all Other CD Facility
Mortgage  Loans in the Loan Pool will not exceed  the  greater of (i) 10% of the
Pool Principal Balance and (ii) $20,000,000.

          (aw)  With  respect  to each  Equipment  Loan,  the  related  Security
Agreement  creates a valid,  existing and  enforceable  first priority  security
interest in the related  Equipment and such security  interest is perfected as a
first priority security interest under the UCC.

          (ax) The information  contained in the Due Diligence  Package covering
the characteristics of such Loan and the related Borrower and Loan Collateral is
true and correct in all material respects.

          (ay) (i) With  respect  to  each  Loan  that is not  identified  as an
Adjustable  Rate Loan on the Loan Schedule,  the Loan Interest Rate with respect
thereto is fixed throughout the term to maturity of such Loan (without regard to
any Retained Interest). The amount of interest accrued on each such Loan will be
calculated based on a 360-day year consisting of twelve 30-day months.

               (ii) With respect to each Loan that is an  Adjustable  Rate Loan,
the Loan  Interest  Rate is  subject  to  adjustment  on the  first  day of each
calendar  month to equal  the sum of  LIBOR  (as  defined  in the  related  Loan
Documents) for such date and a fixed  percentage,  subject to a maximum rate and
minimum rate in accordance  with the terms  thereof.  The initial  amount of the
Monthly  Payment  related to each  Adjustable  Rate Loan will fully amortize the
original  Principal  Balance of such Loan over its original  term to maturity at
the initial Loan Interest Rate thereon.  The Monthly  Payments on each such Loan
will be equal to such amount until the first  Payment  Reset Date for such Loan,
at which time, and on each succeeding Payment Reset Date thereafter,  the amount
of the Monthly  Payments to be paid by the related Borrower will be adjusted for
the next  succeeding  Payment  Period to an amount that will fully  amortize the
Principal  Balance of such Loan on such Payment  Reset Date at the Loan Interest
Rate for such Loan as determined on each December 15th prior to the next Payment
Period over its remaining  term to maturity.  The amount of interest  accrued on
each of the Adjustable Rate Loans will be calculated based on a 360-day year and
the actual number of days elapsed.  Any Negative  Amortization  will be added to
the Principal Balance of such Loan on such Due Date. If the Principal Balance of
any  Adjustable   Rate  Loan  exceeds  the  product  of  the  related   Negative
Amortization  Cap and the original  Principal  Balance  thereof after adding any
Negative  Amortization  thereto, the related Borrower will be required to prepay
such  Loan on the  immediately  succeeding  Due Date in an  amount  equal to the
difference  between such Principal Balance and such original  principal balance.
All  adjustments to the Loan Interest Rate on any Adjustable Rate Loan have been
made in compliance  with the terms of applicable law and the related  Promissory
Note.

                                      -60-
<PAGE>
          (az) As of the  related  Transfer  Date,  after  giving  effect to the
transfer of such Loan, the aggregate Principal Balance of all Automotive Service
Facility  Mortgage Loans in the Loan Pool will not exceed the greater of (i) 20%
of the Pool Principal Balance and (ii) $50,000,000.

          (ba) As of the  related  Transfer  Date,  after  giving  effect to the
transfer of such Loan, the aggregate  Principal Balance of all Mortgage Loans in
the Loan  Pool for  which  the  related  store,  dining  establishment  or other
business operated on the Mortgaged Property has been in continuous operation for
less than  twelve  months will not exceed such  amounts as may  periodically  be
specified by the Majority Noteholder to the Servicer in writing.

          SECTION 3.05 PURCHASE AND SUBSTITUTION.

          (a)  It  is  understood  and  agreed  that  the   representations  and
warranties  set forth in SECTION 3.04 hereof shall survive the conveyance of the
Loans to the Issuer,  the pledge of the Loans to the  Indenture  Trustee and the
delivery of the Notes to the Noteholders.  Upon discovery by the Depositor,  the
Servicer, the Loan Originator,  the Custodian, the Issuer, the Indenture Trustee
or any Securityholder of a breach of any of such  representations and warranties
or the representations and warranties set forth in SECTION 3.02 which materially
and  adversely  affects  the  value  of  the  Loans  or  the  interests  of  the
Securityholders in the related Loan  (notwithstanding  that such  representation
and  warranty  was made to the Loan  Originator's  best  knowledge),  the  party
discovering such breach shall give prompt written notice to the others. The Loan
Originator  shall within 5 Business  Days of any breach of a  representation  or
warranty,  including  any  breach of the  representation  set  forth in  SECTION
3.04(AW)  hereof as a result of an  attribute of the  aggregate  Loan Pool which
would not  otherwise  cause a breach of any other  representation  or  warranty,
promptly  cure such breach in all material  respects.  If within 5 Business Days
after the earlier of the Loan Originator's  discovery of such breach or the Loan
Originator's  receiving  notice thereof such breach has not been remedied by the
Loan Originator and such breach  materially and adversely  affects the interests
of the  Securityholders  or in the related Loan (the "DEFECTIVE LOAN"), the Loan
Originator shall promptly upon receipt of written instructions from the Majority
Noteholders  either (i) remove such Defective Loan from the Trust (in which case
it shall become a Deleted Loan) and substitute one or more Qualified  Substitute
Loans in the manner and subject to the conditions set forth in this SECTION 3.05
or (ii) purchase such  Defective  Loan at a purchase price equal to the Purchase
Price with respect to such Defective  Loan by depositing  such Purchase Price in
the Collection  Account.  The Loan  Originator  shall provide the Servicer,  the
Indenture Trustee, the Initial Noteholder and the Issuer with a certification of
a Responsible  Officer on the Determination Date next succeeding the end of such
5 Business Days period indicating  whether the Loan Originator is purchasing the
Defective  Loan or  substituting  in lieu of  such  Defective  Loan a  Qualified
Substitute Loan.

          Any  substitution  of Loans pursuant to this SECTION  3.05(A) shall be
accompanied by payment by the Loan Originator of the Substitution Adjustment, if
any, to be deposited in the Collection  Account  pursuant to SECTION  5.01(B)(1)
hereof.

          It is understood and agreed that the obligation of the Loan Originator
to repurchase  or  substitute  any such Loan pursuant to this SECTION 3.05 shall
constitute  the sole  remedy  against  it with  respect  to such  breach  of the
foregoing  representations  or  warranties  or the  existence  of the  foregoing

                                      -61-
<PAGE>
conditions.  With respect to  representations  and  warranties  made by the Loan
Originator   pursuant  to  SECTION  3.04  hereof  that  are  made  to  the  Loan
Originator's  best knowledge,  if it is discovered by any of the Depositor,  the
Loan Originator,  the Indenture  Trustee or the Owner Trustee that the substance
of such representation and warranty is inaccurate and such inaccuracy materially
and adversely  affects the value of the related Loan,  notwithstanding  the Loan
Originator's lack of knowledge,  such inaccuracy shall be deemed a breach of the
applicable representation and warranty.

          (b) As to any Deleted Loan for which the Loan Originator substitutes a
Qualified  Substitute  Loan or Loans,  the Loan  Originator  shall  effect  such
substitution  by  delivering  to the Issuer (i) a  certification  executed  by a
Responsible  Officer of the Loan Originator to the effect that the  Substitution
Adjustment  has been credited to the  Collection  Account and (ii) the documents
constituting  the Indenture  Trustee's Loan File for such  Qualified  Substitute
Loan or Loans.

          The  Servicer  shall  deposit in the  Collection  Account all payments
received in connection  with such Qualified  Substitute  Loan or Loans after the
date of such  substitution.  Monthly Payments received with respect to Qualified
Substitute  Loans on or before the date of substitution  will be retained by the
Loan  Originator.  The Issuer will be entitled to all  payments  received on the
Deleted Loan on or before the date of substitution and the Loan Originator shall
thereafter be entitled to retain all amounts subsequently received in respect of
such Deleted Loan. The Loan Originator  shall give written notice to the Issuer,
the Servicer (if the Loan Originator is not then acting as such),  the Indenture
Trustee  and Owner  Trustee  that  such  substitution  has  taken  place and the
Servicer  shall  amend the Loan  Schedule  to  reflect  (i) the  removal of such
Deleted Loan from the terms of this Agreement and (ii) the  substitution  of the
Qualified  Substitute  Loan. The Loan Originator  shall promptly  deliver to the
Issuer,  the Servicer (if the Loan  Originator is not then acting as such),  the
Indenture Trustee and Owner Trustee,  a copy of the amended Loan Schedule.  Upon
such substitution,  such Qualified  Substitute Loan or Loans shall be subject to
the terms of this Agreement in all respects,  and the Loan  Originator  shall be
deemed to have made with respect to such Qualified  Substitute Loan or Loans, as
of the date of substitution,  the covenants,  representations and warranties set
forth  in  SECTION  3.04  hereof.  On the  date of such  substitution,  the Loan
Originator  will  deposit  into the  Collection  Account an amount  equal to the
related  Substitution  Adjustment,  if any.  In  addition,  on the  date of such
substitution,  the  Servicer  shall cause the  Indenture  Trustee to release the
Deleted Loan from the lien of the  Indenture  and the  Servicer  will cause such
Qualified  Substitute  Loan to be pledged  to the  Indenture  Trustee  under the
Indenture as part of the Trust Estate.

          (c) With respect to all Defective Loans or other Loans  repurchased by
the Loan Originator pursuant to this Agreement, upon the deposit of the Purchase
Price therefor into the Collection  Account,  the Indenture Trustee shall assign
to the Loan Originator,  without recourse,  representation or warranty,  all the
Indenture  Trustee's right, title and interest in and to such Defective Loans or
Loans,  which right,  title and interest were conveyed to the Indenture  Trustee
pursuant to SECTION 2.01 hereof.  The Indenture Trustee shall, at the expense of
the Loan  Originator,  take any actions as shall be reasonably  requested by the
Loan Originator to effect the repurchase of any such Loans.

                                      -62-
<PAGE>
          (d) It is  understood  and  agreed  that the  obligations  of the Loan
Originator set forth in this SECTION 3.05 to cure,  purchase or substitute for a
Defective  Loan (and to  indemnify  the Trust for  certain  losses as  described
herein  in  connection  with a  Defective  Loan)  constitute  the sole  remedies
hereunder of the Depositor, the Issuer, the Indenture Trustee, Owner Trustee and
the  Securityholders  respecting a breach of the  representations and warranties
contained in SECTION 3.02 and SECTION 3.04 hereof.  Any cause of action  against
the Loan  Originator  relating  to or  arising  out of a defect  in a  Indenture
Trustee's Loan File as  contemplated  by SECTION 2.05 hereof or against the Loan
Originator  relating  to or arising out of a breach of any  representations  and
warranties  made in SECTION  3.04  hereof  shall  accrue as to any Loan upon (i)
discovery  of such defect or breach by any party and notice  thereof to the Loan
Originator or notice  thereof by the Loan  Originator to the Indenture  Trustee,
(ii) failure by the Loan Originator to cure such defect or breach or purchase or
substitute  such  Loan as  specified  above,  and  (iii)  demand  upon  the Loan
Originator,  as applicable,  by the Issuer or the Majority  Noteholders  for all
amounts payable in respect of such Loan.

          (e) Neither the Issuer nor the  Indenture  Trustee shall have any duty
to conduct any affirmative investigation other than as specifically set forth in
this Agreement as to the occurrence of any condition requiring the repurchase or
substitution of any Loan pursuant to this Section or the eligibility of any Loan
for purposes of this Agreement.

          SECTION 3.06 SECURITIZATIONS.

          (a) In  accordance  with  the  terms  of  Section  2.3(a)  of the Loan
Purchase  Agreement,  the Loan Originator  shall effect  Securitizations  at the
direction of the  Majority  Noteholders.  In  connection  therewith,  the Issuer
agrees to assist the Loan Originator in such  Securitizations and accordingly it
shall, at the request and direction of the Majority Noteholders:

               (i)    transfer,  deliver and sell all or a portion of the Loans,
                      as of the "cutoff  dates" of the related  Securitizations,
                      to such Securitization Participants as may be necessary to
                      effect the Securitizations;  PROVIDED,  that any such sale
                      shall be for "fair  market  value," as  determined  by the
                      Majority Noteholders in their reasonable discretion;

               (ii)   deposit  the  cash   Securitization   Proceeds   into  the
                      Collection  Account  pursuant  to SECTION  5.01(B)(1)  and
                      retain any Retained  Securities created in Securitizations
                      in accordance with the terms of the Trust Agreement;

               (iii)  to the extent that a  Securitization  creates any Retained
                      Securities,  to accept such Retained  Securities as a part
                      of the Securitization  Proceeds,  PROVIDED,  that any such
                      acceptance of such Retained Securities shall be subject to
                      the Issuer's reasonable approval; and

               (iv)   take such further  actions as may be reasonably  necessary
                      to effect such Securitizations.

                                      -63-
<PAGE>
          (b) The Servicer  hereby  covenants  that it will take such actions as
may  be  reasonably   necessary  to  effect   Securitizations  as  the  Majority
Noteholders may request and direct.

          (c) The right of the  Majority  Noteholders  to require the Issuer and
the Loan Originator to effect  Securitizations  is subject to (i) the conditions
set forth in Section 2.3(a) of the Loan Purchase Agreement and (ii) the Issuer's
right of approval with respect to the Securitization; provided, however, that no
such Issuer right of approval  shall be required if a Disposition  Trigger Event
has occurred.

          (d) The  Issuer  covenants  that  no  Loan  shall  remain  pledged  as
Collateral  for a single  Series of Notes  past the date  ending  on the  second
Securitization which occurs while such Loan was pledged as Collateral.

          (e) The Loan Originator  shall,  in connection with a  Securitization,
cause FFCA to obtain an Opinion  of  Counsel to the effect  that the  securities
issued  shall be  treated  as the  issuance  of debt  instruments  by FFCA or an
Affiliate thereof.

          SECTION 3.07 LOAN ORIGINATOR PUT; SERVICER CALL.

          (a)  LOAN  ORIGINATOR   PUT.  The  Loan   Originator   shall  promptly
repurchase,  upon the written demand of the Majority Noteholders, in the form of
Exhibit  G  attached  hereto,  any (i) Loan  that  has  become  30 or more  days
Delinquent,  (ii)  Defaulted  Loan,  (iii) Loan that has been in  default  for a
period of 30 days or more,  (iv) Loan that has been  determined to be ineligible
for a  Securitization  by mutual  agreement of the Majority  Noteholders and the
Servicer and (v) Mortgage Loan with respect to which the Loan Originator did not
enforce a  due-on-sale  or  due-on-encumbrance  clause  pursuant to SECTION 7.01
hereof (each such Loan, a "Put/Call Loan").

          (b) SERVICER  CALL.  The Servicer may repurchase any Put/Call Loan (as
defined in SECTION 3.07(A)  hereof).  Such Servicer Calls shall be solely at the
option of the Servicer.  Prior to exercising a Servicer Call, the Servicer shall
deliver written notice to the Majority  Noteholders and the Indenture Trustee in
the form of Exhibit H attached hereto,  which notice shall identify each Loan to
be repurchased and the Purchase Price therefor.

          (c) In connection  with each Loan  Originator Put, the Loan Originator
shall  remit to the  Servicer  for  deposit  into the  Collection  Account,  the
Purchase Price for the Loans to be repurchased. In connection with each Servicer
Call, the Servicer shall deposit into the Collection  Account the Purchase Price
for the  Loans to be  repurchased.  The  aggregate  Purchase  Price of all Loans
transferred  pursuant to Section  3.07(a)  shall in no event exceed the Unfunded
Transfer Obligation or the Postsecuritization  Unfunded Transfer Obligation,  as
applicable, at the time of such Loan Originator Put.

          SECTION 3.08 MODIFICATION OF UNDERWRITING GUIDELINES.

          The Loan Originator shall give the Initial  Noteholder  prompt written
notification  of  any  material  modification  or  change  to  the  Underwriting
Guidelines.

                                      -64-
<PAGE>
          SECTION 3.09 ENVIRONMENTAL POLICY AND BUSINESS INTERRUPTION INSURANCE.

          (a) The Loan Originator  shall perform all actions  required under the
Environmental Policy to validly assign such policy to the Indenture Trustee with
respect to each Mortgage Loan insured thereunder.

          (b) The Loan  Originator  shall  remit to the  Collection  Account all
amounts received by it under the Environmental  Policy with respect to each Loan
insured  thereunder;  provided  that  to the  extent  the  Servicer  decides  in
accordance  with the Servicing  Standard to apply such proceeds to remediate the
related Mortgaged Property, the Servicer shall retain such amounts for such use.

          (c) The Loan  Originator  hereby  covenants that in the event that the
Majority  Noteholders  determine  that  it is  generally  required  by  national
statistical rating organizations, in connection with securitization transactions
with  respect to the Loans  (regardless  of  whether  such a  Securitization  is
expected to occur with respect to the Loans),  it shall promptly obtain or cause
to be  obtained  for each  Mortgaged  Property,  business  interruption  or rent
insurance,  in an amount at least equal to six (6) months of  operations of such
Mortgaged  Property,  or if the Loan  Originator  shall not obtain or cause such
insurance to be obtained for any Mortgage  Loan,  the parties  hereto agree that
the Majority  Noteholders may proportionately  reduce the Maximum Advance Factor
for  such  Mortgage  Loan in an  amount  equal  to the  aggregate  reduction  in
anticipated  Securitization Proceeds attributable to such failure to obtain such
insurance.

          SECTION 3.10 WHOLE LOAN SALES.

          (a) Each of the Servicer,  the Originator and the Issuer  covenants to
take  such  action  to effect  Whole  Loan  Sales as it would  with  respect  to
Securitizations, as applicable.

          (b) The Majority Noteholders may only effect Whole Loan Sales:

               (i) if FFCA  ceases to qualify  as a REIT,  as defined in Section
856 of the Code; and

               (ii)   subject   to   the   same   conditions   that   apply   to
Securitizations,  including,  without limitation, the Issuer's right of approval
set  forth  in  SECTION  3.06(C)(II)  unless a  Disposition  Trigger  Event  has
occurred.

          (c) In connection  with Whole Loan Sales,  MSSFI shall, in good faith,
use commercially  reasonable efforts to obtain two bona fide market bids for the
Loans  subject  to any  Whole  Loan  Sale  from two  bidders  with the legal and
financial  capacity to make such bids that are not  Affiliates of MSSFI or FFCA.
FFCA may participate as a concurrent  bidder for the Loans subject to such Whole
Loan  Sale,  provided  that MSSFI  obtains  at least two such bids from  bidders
unaffiliated  with FFCA and that FFCA does not pay a price  higher than the fair
market value of such Loans (as reasonably determined by the Market Value Agent).
In addition, MSSFI may, in its sole discretion, obtain such additional bids from
bidders  with the  legal and  financial  capacity  to make  such bids  which may
include  Affiliates  of MSSFI.  MSSFI  shall take the highest bid among all bids
made pursuant to this SECTION 3.10(C).

                                      -65-
<PAGE>
                                   ARTICLE IV

                    ADMINISTRATION AND SERVICING OF THE LOANS

          SECTION 4.01 DUTIES OF THE SERVICER.

          (a) SERVICING STANDARD.  The Servicer,  as an independent  contractor,
shall remain an Eligible  Servicer and shall service and administer the Loans in
the best interests of and for the benefit of the Noteholders, in accordance with
applicable state and Federal Laws, the terms of this Agreement and the Servicing
Standard.  To the extent  consistent with such terms and in accordance with such
terms,  the  Servicer  shall have full power and  authority,  acting  alone,  to
service and administer the Loans with a view toward the  maximization  of timely
recovery of principal  and  interest  thereon.  Notwithstanding  anything to the
contrary  contained  herein,  the Servicer,  in servicing and  administering the
Loans, shall employ or cause to be employed  procedures  (including  collection,
foreclosure,  liquidation  and Foreclosure  Property  management and liquidation
procedures) and exercise the same care that it customarily employs and exercises
in servicing and  administering  loans of the same type as the Loans for its own
account,  all in  accordance  with the  Servicing  Standard  of prudent  lending
institutions and servicers of commercial loans of the same type as the Loans and
giving due  consideration to the Noteholders'  reliance on the Servicer.  In the
event of a conflict  between this  Agreement  and the Servicing  Standard,  this
Agreement  shall control.  The Servicer has and shall  maintain the  facilities,
procedures  and  experienced  personnel  necessary to comply with the  servicing
standard  set forth in this  subsection  (a) and the duties of the  Servicer set
forth in this  Agreement  relating to the  servicing and  administration  of the
Loans. In performing its  obligations  hereunder the Servicer shall at all times
act in good  faith  in a  commercially  reasonable  manner  in  accordance  with
applicable law and the Promissory Notes and Mortgages or Security Agreements, as
the case may be.

          (b) The  Servicer  shall notify the Initial  Noteholder  in writing in
advance of any action  taken by the  Servicer  to (i)  release,  or agree to the
substitution  or  exchange  of any  collateral  for,  any  portion  of any  Loan
Collateral or related collateral,  (ii) release from liability any Person liable
for any obligation under a Mortgage or Security  Agreement,  as the case may be,
(iii)  consent (to the extent the  Servicer is  entitled  under the  Mortgage or
other  agreement to withhold such consent) to the transfer  (direct or indirect)
or encumbrance of any Loan Collateral,  (iv) with respect to any lease,  consent
(to the extent the Servicer is entitled under the Mortgage or other agreement to
withhold such consent) to the execution, assignment, termination or modification
of such lease if, in the case of the  termination of such lease or the execution
of new lease, such would result in a reduction of the monthly rent most recently
payable in respect of the related portion of the Mortgaged Property,  or, in the
case of an assignment  or  modification  of such lease,  such  assignment  would
reduce  the  term  thereof  or  the  rental   payable   thereunder,   (v)  grant
non-disturbance  to any tenant under any lease, (vi) apply Insurance Proceeds or
proceeds of a partial condemnation in excess of $50,000 received with respect to
a Loan to the  restoration  or  repair of the  related  Loan  Collateral  unless
otherwise  required  pursuant to the related Loan  Documents or applicable  law,
(vii) waive any prepayment  premium or otherwise waive, amend or modify any term
of any Loan, (viii) accelerate the maturity of any Loan, (ix) take possession of
or acquire  title to any Loan  Collateral,  or (x) sell any Loan  Collateral  or
Foreclosure Property.

                                      -66-
<PAGE>
          (c)  SERVICING  ADVANCES.  In accordance  with the  preceding  general
servicing standard,  the Servicer, or any Subservicer on behalf of the Servicer,
shall make all Servicing  Advances in connection with the servicing of each Loan
hereunder.  Notwithstanding  any provision to the contrary  herein,  neither the
Servicer nor any Subservicer on behalf of the Servicer shall have any obligation
to satisfy or keep current the  indebtedness  secured by any on the related Loan
Collateral.  No costs incurred by the Servicer or any  Subservicer in respect of
Servicing Advances shall, for the purposes of distributions to  Securityholders,
be added to the  amount  owing  under  the  related  Loan.  Notwithstanding  any
obligation by the Servicer to make a Servicing Advance hereunder with respect to
a Loan,  before  making any  Servicing  Advance,  the Servicer  shall assess the
reasonable  likelihood of (i) recovering  such  Servicing  Advance and any prior
Servicing Advances for such Loan and (ii) recovering any amounts attributable to
outstanding  interest  and  principal  owing on such Loan for the benefit of the
Securityholders in excess of the costs,  expenses and other deductions to obtain
such recovery, including without limitation any Servicing Advances therefor and,
if applicable, the outstanding indebtedness of all. The Servicer shall only make
a  Servicing  Advance  with  respect to a Loan to the extent  that the  Servicer
determines in its  reasonable,  good faith judgment that such Servicing  Advance
would likely be recovered as  aforesaid;  provided,  however,  that the Servicer
will be entitled to be reimbursed for any  Nonrecoverable  Servicing Advances in
accordance with the terms of this Agreement.

          (d) WAIVERS, MODIFICATIONS AND EXTENSIONS; SUBORDINATION. The Servicer
shall make reasonably  diligent efforts to collect all payments called for under
the terms and provisions of the Loans and shall,  to the extent such  procedures
shall be consistent  with this  Agreement,  follow the Servicing  Standard.  The
Servicer may in its discretion waive or permit to be waived any penalty interest
or any other  fee or  charge  which the  Servicer  would be  entitled  to retain
hereunder as servicing compensation and extend the Due Date on a Promissory Note
for a period (with respect to each payment as to which the Due Date is extended)
not  greater  than 90 days  after  the  initially  scheduled  due  date for such
payment.  Notwithstanding  anything  in  this  Agreement  to the  contrary,  the
Servicer shall not permit any additional  extension or modification with respect
to any Loan other than that  permitted  by the  immediately  preceding  sentence
unless the Loan is a Defaulted Loan. The Servicer may in its discretion enter in
subordination  agreements  with respect to any Loan,  provided that the Servicer
determines,  consistent with this Agreement and the Servicing  Standard that the
entering into of such  subordination  agreement is in the best  interests of the
Trust;  provided  further,  that  the  Servicer  shall  not  enter  into  such a
subordination  agreement  with  respect to any  Mortgage  Loan if,  after giving
effect to such  agreement,  such  Mortgage  Loan would fail to constitute a real
estate  asset,  as  described  in Section 856 of the Code.  The  Servicer  shall
provide  written  notice to the Initial  Noteholder  prior to entering  into any
agreement to modify the terms of any Loan after the  Transfer  Date with respect
thereto,     including,     without    limitation,    any    cross-default    or
cross-collateralization provisions with respect thereto.

          (e)  INSTRUMENTS  OF  SATISFACTION  OR RELEASE.  Without  limiting the
generality of subsection (d) of this Section 4.01, the Servicer, in its own name
or in the name of a Subservicer,  is hereby  authorized and empowered,  when the
Servicer  believes it appropriate in its best judgment,  to execute and deliver,
on behalf of the  Securityholders  and the Trust or any of them, and upon notice
to  the  Indenture   Trustee,   any  and  all  instruments  of  satisfaction  or
cancellation  or of  partial  or  full  release  or  discharge,  and  all  other
comparable  instruments with respect to the Loans and the Loan Collateral and to

                                      -67-
<PAGE>
institute foreclosure  proceedings or obtain a deed in lieu of foreclosure so as
to convert the  ownership  of such  properties,  and to hold or cause to be held
title to such  properties,  on  behalf of the  Trust  and  Securityholders.  The
Servicer shall service and administer  the Loans in accordance  with  applicable
state and federal law and shall provide to the Borrowers any reports required to
be provided to them thereby. The Indenture Trustee shall execute, at the written
direction of the Servicer,  any limited or special  powers of attorney and other
documents reasonably  acceptable to the Indenture Trustee to enable the Servicer
or any  Subservicer  to carry  out their  servicing  and  administrative  duties
hereunder,  including, without limitation, limited or special powers of attorney
with respect to any Foreclosure  Property as well as pursuant to Section 4.10(c)
hereof,  and the Indenture  Trustee shall not be accountable  for the actions of
the  Servicer or any  Subservicers  under such  powers of attorney  and shall be
indemnified by such parties with respect to such actions.

          (f) TERMINATION OF SERVICING.  (i) In the event of a Securitization or
other removal of a Loan from the Trust Estate,  the Servicer shall be terminated
with respect to such Loan.

          (ii)  The  Servicer  agrees  that in the  event  that  any  Notes  are
Outstanding  on the Maturity  Date,  the  Servicer  will resign and the Majority
Noteholders  shall appoint a successor in accordance  with provisions of SECTION
10.02.  The Majority  Noteholders may, by written notice to the Servicer and the
Indenture Trustee, elect to have the Servicer continue its duties hereunder.

          SECTION 4.02 VACANCIES AND INSPECTIONS.

          (a) The  Servicer  shall  promptly  notify the Issuer,  the  Indenture
Trustee and the Initial  Noteholder  of any actual  knowledge on the part of the
Servicer of any material vacancy in any Mortgaged  Property,  of any abandonment
of any Loan Collateral, of any material adverse change in the condition or value
of any Loan Collateral,  of any waste committed  thereon,  of any failure on the
part of a Borrower to keep the related Loan  Collateral  in good  condition  and
repair,  of any permanent or substantial  injury to the Loan Collateral  through
unreasonable use, abuse or neglect or of any other matter which would materially
and  adversely  affect  the value of or the  Noteholders'  interest  in any Loan
Collateral.  The Servicer shall also promptly  notify the Issuer,  the Indenture
Trustee  and the  Majority  Noteholders  upon  learning  thereof of any state or
federal  insolvency or bankruptcy  proceedings  in which any Borrower is seeking
relief or is a defendant  debtor provided,  however,  that Servicer shall not be
deemed to be in default under this  Agreement for failure to give such notice if
Servicer has no knowledge of any such  proceeding  and could not  reasonably  be
expected to have such knowledge in the ordinary course of Servicer's business.

          (b) The  Servicer  shall  inspect  or cause to be  inspected  the Loan
Collateral  with  respect to each Loan at such  times and in such  manner as are
consistent  with the Servicing  Standard;  provided that if any Monthly  Payment
becomes more than 45 days Delinquent, or if the Unit-Level Fixed Charge Coverage
Ratio with respect to any Loan  Collateral  is less than 105%,  the related Loan
Collateral shall be inspected as soon as practicable thereafter.

                                      -68-
<PAGE>
          (c) The  Servicer  shall  make a  written  report  of each  inspection
required pursuant to paragraph (b) above, on a form reasonably acceptable to the
Initial  Noteholder  and shall  submit a copy of each such report to the Initial
Noteholder.

          SECTION 4.03 FIDELITY BOND; ERRORS AND OMISSIONS INSURANCE.

          The Servicer shall maintain with a responsible company, and at its own
expense, a blanket fidelity bond and an errors and omissions insurance policy or
policies,  which  policy or  policies  shall be in such form and amount as would
permit   it  to  be  a   qualified   Federal   National   Mortgage   Association
seller-servicer  of  multi-family  mortgage  loans,  with broad  coverage on all
officers,  employees  or other  persons  acting in any capacity  requiring  such
persons  to handle  funds,  money,  documents  or papers  relating  to the Loans
("Servicer  Employees").  Any  such  fidelity  bond  and  errors  and  omissions
insurance shall protect and insure the Servicer against losses, including losses
resulting from forgery,  theft,  embezzlement,  fraud,  errors and omissions and
negligent  acts  (including  acts relating to the  origination  and servicing of
loans of the same type as the Loans) of such Servicer  Employees.  Such fidelity
bond shall also protect and insure the  Servicer  against  losses in  connection
with the release or satisfaction  of a Loan without having  obtained  payment in
full of the indebtedness  secured thereby. In the event of any loss of principal
or interest on a Loan for which  reimbursement  is received from the  Servicer's
fidelity  bond or errors and  omissions  insurance,  the  process  from any such
insurance  will be deposited  in the  Collection  Account.  No provision of this
SECTION 4.03  requiring  such  fidelity  bond and errors and omission  insurance
shall  diminish or relieve the Servicer from its duties and  obligations  as set
forth in this  Agreement.  Upon  the  request  of the  Issuer  or the  Indenture
Trustee,  the Servicer  shall cause to be delivered  to the  requesting  party a
certified true copy of such fidelity bond and insurance policy.

          SECTION 4.04 FILING OF CONTINUATION STATEMENTS.

          On or before  the fifth  anniversary  of the  filing of any  financing
statements by the Loan Originator and the Depositor,  respectively, with respect
to the assets conveyed to the Trust, the Loan Originator and the Depositor shall
prepare,  have  executed  by the  necessary  parties  and  file  in  the  proper
jurisdictions  all financing and continuation  statements  necessary to maintain
the  liens,  security  interests  and  priorities  of such  liens  and  security
interests  that have been  granted  by the Loan  Originator  and the  Depositor,
respectively,  and the Loan  Originator and the Depositor shall continue to file
on or  before  each  fifth  anniversary  of  the  filing  of any  financing  and
continuation  statements such additional  financing and continuation  statements
until the Trust has terminated  pursuant to Section 9.1 of the Trust  Agreement.
The Indenture  Trustee agrees to reasonably  cooperate with the Loan  Originator
and the Depositor in preparing,  executing  and filing such  statements,  at the
expense  of the Loan  Originator  or the  Depositor,  as  applicable;  provided,
however,  that the Indenture  Trustee shall have no responsibility to prepare or
file such statements.  The Servicer agrees to notify the Loan Originator and the
Depositor on the third Payment Date prior to each such fifth  anniversary of the
requirement  that they file such  financing  and  continuation  statements.  The
filing  of any  such  statement  with  respect  to the Loan  Originator  and the
Depositor  shall not be  construed as any  indication  of an intent of any party
contrary to the expressed  intent set forth in SECTION 2.03 hereof.  If the Loan
Originator  or the  Depositor  has  ceased  to do  business  whenever  any  such
financing and  continuation  statements  must be filed or the Loan Originator or
the  Depositor  fails to file  any such  financing  statements  or  continuation

                                      -69-
<PAGE>
statements at least one month prior to the expiration thereof,  each of the Loan
Originator  and the  Depositor  does  hereby  make,  constitute  and appoint the
Indenture  Trustee  its  attorney-in-fact,  with full  power and  authority,  to
execute and file in the Depositor's  name and on the  Depositor's  behalf and at
the Depositor's expense any such financing statements or continuation statements
required under this SECTION 4.04.

          SECTION 4.05 ESTABLISHMENT AND ADMINISTRATION OF ESCROW ACCOUNT.

          (a) The Servicer shall maintain  accurate  records with respect to all
Loan Collateral  reflecting the status of taxes,  basic carrying costs and other
similar  items that are or may become a lien thereon and the status of insurance
premiums and ground rent, if applicable, payable in respect thereof.

          (b) After the  occurrence  of a Default or Event of Default under this
Agreement  or the  Indenture,  the  Majority  Noteholders  may,  in  their  sole
discretion,  direct the Servicer to, upon the occurrence and  continuation  of a
default under a Mortgage Loan,  direct the Borrower  thereunder to remit amounts
in respect of Escrow  Payments to the Escrow  Account,  for  application  by the
Servicer in accordance with the Servicing Standard.  In such event, the Servicer
shall establish the Escrow Account under an arrangement  consented to in writing
by the Majority Noteholders in their reasonable discretion.

          (c) The  Servicer  may  direct  any  depository  institution  or trust
company in which the Escrow Accounts (to the extent permitted by law and subject
to the related Loan  Documents)  are maintained to invest the funds held therein
in one or more Permitted Investments; provided, however, that such funds must be
either (i) immediately available or (ii) available in accordance with a schedule
which will permit the Servicer to meet its payment  obligations  hereunder.  The
Servicer  shall be entitled to all income and gain realized from the  investment
of funds  deposited in the Escrow  Accounts (to the extent  permitted by law and
subject to the related Loan Documents).  The Servicer shall deposit amounts from
its own funds in such Escrow Accounts to make whole any loss incurred in respect
of any such investment of funds therein immediately upon the realization of such
loss.

          (d)  Notwithstanding  anything to the contrary in this  Section  4.05,
upon the occurrence of a Lockbox  Trigger  Event,  the Servicer shall cause each
Borrower  required  to make Escrow  Payments  to  directly  remit to the Lockbox
Account, such Escrow Payments for deposit into the Escrow Account.

          SECTION 4.06 SUBSERVICING.

          (a) The Servicer may,  with the prior written  consent of the Majority
Noteholders,  which  consent  shall not be  unreasonably  withheld,  enter  into
Subservicing  Agreements for any servicing and  administration of Loans with any
institution that is an Eligible Servicer and in compliance with the laws of each
state necessary to enable it to perform its obligations  under such Subservicing
Agreement.  The Servicer  shall give prior written  notice to the Issuer and the
Indenture  Trustee of the appointment of any Subservicer.  The Servicer shall be
entitled to terminate any  Subservicing  Agreement in accordance  with the terms
and conditions of such Subservicing  Agreement and to either service the related
Loans  directly  or  enter  into  a  Subservicing  Agreement  with  a  successor

                                      -70-
<PAGE>
subservicer  which  qualifies   hereunder.   In  the  event  that  the  Majority
Noteholders  fail to respond to a request by the  Servicer  for consent to enter
into a Subservicing  Agreement  within three Business Days after receipt of such
request, the requested consent shall be deemed to have been granted.

          In the event of termination of any Subservicer, and unless a successor
Subservicer  has otherwise  been  appointed,  all servicing  obligations of such
Subservicer  shall  be  assumed  simultaneously  by  the  Servicer  without  any
additional act or deed on the part of such Subservicer or the Servicer,  and the
Servicer shall service directly the related Loans.

          Each  Subservicing  Agreement  shall include the  provision  that such
agreement may be  immediately  terminated by the Indenture  Trustee in the event
that the Servicer shall, for any reason, no longer be the Servicer.  In no event
shall any Subservicing  Agreement  require the Indenture  Trustee,  as successor
Servicer,  for any reason  whatsoever to pay  compensation  to a Subservicer  in
order to terminate such Subservicer.

          (b) Notwithstanding any Subservicing Agreement,  any of the provisions
of this Agreement  relating to agreements or  arrangements  between the Servicer
and a  Subservicer  or  reference  to actions  taken  through a  Subservicer  or
otherwise,  the Servicer  shall remain  obligated  and  primarily  liable to the
Issuer,  the  Indenture  Trustee and the  Securityholders  for the servicing and
administration  of the Loans in accordance with the provisions of this Agreement
without   diminution  of  such   obligation  or  liability  by  virtue  of  such
Subservicing Agreements or arrangements or by virtue of indemnification from the
Subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and  administering  the Loans. For purposes of
this Agreement,  the Servicer shall be deemed to have received payments on Loans
when the Subservicer has actually received such payments and, unless the context
otherwise requires, references in this Agreement to actions taken or to be taken
by the Servicer in servicing the Loans include actions taken or to be taken by a
Subservicer  on behalf of the Servicer.  The Servicer shall be entitled to enter
into any agreement  with a Subservicer  for  indemnification  of the Servicer by
such  Subservicer,  and nothing  contained in this Agreement  shall be deemed to
limit or modify such indemnification.

          (c) In the event the  Servicer  shall for any  reason no longer be the
Servicer  (including  by  reason  of an Event of  Default  with  respect  to the
Servicer),  the  successor  Servicer,  on behalf of the  Issuer,  the  Indenture
Trustee and the Securityholders pursuant to Section 4.07 hereof, shall thereupon
assume all of the rights and obligations of the Servicer under each Subservicing
Agreement that the Servicer may have entered into, unless the successor Servicer
elects to terminate any Subservicing Agreement in accordance with its terms. The
successor  Servicer  shall  be  deemed  to have  assumed  all of the  Servicer's
interest  therein  and  to  have  replaced  the  Servicer  as a  party  to  each
Subservicing Agreement to the same extent as if the Subservicing  Agreements had
been assigned to the assuming party,  except that the Servicer shall not thereby
be relieved of any liability or obligations  under the  Subservicing  Agreements
which accrued prior to the transfer of servicing to the successor Servicer.  The
Servicer,  at its expense and without right of  reimbursement  therefor,  shall,
upon  request  of the  successor  Servicer,  deliver to the  assuming  party all
documents and records relating to each Subservicing Agreement and the Loans then
being  serviced  and an  accounting  of  amounts  collected  and  held by it and
otherwise use its best efforts to effect the orderly and  efficient  transfer of
the Subservicing Agreements to the assuming party.

                                      -71-
<PAGE>
          (d) As part of its servicing activities hereunder,  the Servicer,  for
the benefit of the Issuer, the Indenture Trustee and the Securityholders,  shall
enforce the  obligations  of each  Subservicer  under the  related  Subservicing
Agreement.   Such  enforcement,   including,   without  limitation,   the  legal
prosecution of claims and the pursuit of other appropriate remedies, shall be in
such form and carried out to such an extent and at such time as the Servicer, in
its good faith business judgment, would require were it the owner of the related
Loans.  The Servicer shall pay the costs of such  enforcement at its own expense
and shall be reimbursed therefor only (i) from a general recovery resulting from
such  enforcement to the extent,  if any, that such recovery exceeds all amounts
due in respect of the  related  Loan or (ii) from a specific  recovery of costs,
expenses or attorneys' fees against the party against which such  enforcement is
directed.

          (e) Any Subservicing  Agreement that may be entered into and any other
transactions or services  relating to the Loans involving a Subservicer shall be
deemed to be between  the  Subservicer  and the  Servicer  alone and none of the
Issuer,  the Indenture  Trustee or the  Securityholders  shall be deemed parties
thereto or shall have any claims,  rights,  obligations,  duties or  liabilities
with respect to the  Subservicer  in its capacity as such except as set forth in
subsection (c) of this SECTION 4.06.

          (f) In those cases where a Subservicer is servicing a Loan pursuant to
a  Subservicing  Agreement,  the  Subservicer  will be required to establish and
maintain one or more accounts (collectively,  the "Subservicing  Account").  The
Subservicing  Account  shall be an Eligible  Account.  The  Subservicer  will be
required  to  deposit  into the  Subservicing  Account,  no later than the first
Business Day after receipt,  all proceeds of Loans  received by the  Subservicer
and remit such  proceeds to the Servicer for deposit in the  Collection  Account
not later than the Business Day following  receipt  thereof by the  Subservicer.
Notwithstanding anything in this subsection (f) to the contrary, the Subservicer
shall only be able to  withdraw  funds  from the  Subservicing  Account  for the
purpose of remitting  such funds to the Servicer for deposit into the Collection
Account.  The Servicer  shall require the  Subservicer  to cause any  collection
agent of the  Subservicer  to send a copy to the  Servicer of each  statement of
monthly  payments  collected  by or on behalf  of the  Subservicer  within  five
Business Days after the end of every month,  and the Servicer  shall compare the
information  provided in such reports with the deposits made by the  Subservicer
into the Collection Account for the same period. The Servicer shall be deemed to
have  received  payments on the Loans on the date on which the  Subservicer  has
received such payments.

          SECTION 4.07 SUCCESSOR SERVICERS.

          In the event that the Servicer is terminated pursuant to SECTION 10.01
hereof,  or resigns pursuant to SECTION 9.04 hereof or otherwise  becomes unable
to perform its obligations under this Agreement,  the Majority  Noteholders will
appoint a successor  servicer in accordance with the provisions of SECTION 10.02
hereof.

                                      -72-
<PAGE>
          SECTION 4.08 MAINTENANCE OF INSURANCE.

          (a) The Servicer  shall cause to be  maintained  for each  Foreclosure
Property  acquired by the Trust such types and amounts of insurance  coverage as
the Servicer shall deem reasonable.

          (b) Any amounts collected by the Servicer under any Insurance Policies
shall be paid over or applied by the Servicer as follows:

          (i) In the case of amounts received in respect of any Loan:

               (A)  for  the   restoration   or  repair  of  the  affected  Loan
                    Collateral, in which event such amounts shall be released to
                    the  Borrower  in  accordance  with the terms of the related
                    Promissory Note or

               (B)  to the extent not so used,  in  reduction  of the  Principal
                    Balance of the related  Loan,  in which  event such  amounts
                    shall be deposited into the Collection Account,

unless the related  instruments require a different  application,  in which case
such amounts shall be applied in the manner provided therein; and

          (ii) Subject to SECTION 4.10 hereof,  in the case of amounts  received
in respect of any  Foreclosure  Property,  for the restoration or repair of such
Foreclosure  Property,  unless  the  Servicer  determines,  consistent  with the
servicing  standard set forth in SECTION 4.01 hereof,  that such  restoration or
repair is not in the best  economic  interest of the Trust,  in which event such
amounts shall be deposited  into the  Collection  Account as a payment  received
from the operation of such Foreclosure Property.

          (c) The Servicer  will cause to be performed any and all acts required
to be performed by the Servicer to preserve the rights and remedies of the Trust
and the  Indenture  Trustee in any  Insurance  Policies  applicable to the Loans
including,  without  limitation,  in each case, any necessary  notifications  of
insurers,  assignments of policies or interests  therein,  and establishments of
co-insured,  joint loss payee and mortgagee rights in favor of the Trust and the
Indenture Trustee.

          SECTION 4.09 PERIODIC ADVANCES.

          (a) If, on any Payment Date, the Servicer  determines that any Monthly
Payments due on the Due Date  immediately  preceding  such Payment Date have not
been  received as of the close of business on the  Business Day  preceding  such
Payment Date,  the Servicer shall  determine the amount of any Periodic  Advance
required  to be made with  respect to the related  Payment  Date.  The  Servicer
shall,  on or prior to such Payment  Date,  furnish a statement to the Indenture
Trustee (the  information  in such statement to be made available to the Initial
Noteholder upon request) setting forth the amount of such Monthly Payments which
were not received as of the close of business on the Business Day  preceding the
related  Payment  Date,  and shall  include in the amount to be deposited in the
Collection Account on such Payment Date an amount equal to the Periodic Advance,
if any, from its own funds.

                                      -73-
<PAGE>
          (b) The Servicer shall designate on its records the specific Loans and
related  installments  (or portions  thereof) as to which such Periodic  Advance
shall  be  deemed  to have  been  made  for  purposes  of  withdrawals  from the
Collection Account pursuant to SECTION 5.01(C)(1).

          SECTION 4.10 FORECLOSURE; REPOSSESSION AND ALTERNATIVES.

          (a) If any  monthly  payment  due  under any Loan is not paid when the
same is due and payable,  or if the Borrower fails to perform any other covenant
or obligation  under such Loan and such failure  continues beyond any applicable
grace period,  the Servicer shall take such action as it shall deem to be in the
best interest of the Trust,  including but not limited to proceeding against the
Loan  Collateral  securing  such  Loan,   pursuing   collection   litigation  or
alternative  court  proceedings to foreclosure or repossession  actions.  In the
event that the Servicer determines not to proceed against the Loan Collateral or
Borrower,  as  applicable,  on or before the  Determination  Date following such
determination, the Servicer shall determine in good faith in accordance with the
Servicing  Standard that all amounts which it expects to receive with respect to
such Loan have been  received.  If the Servicer makes such a  determination,  it
shall give notice to such effect to the Issuer and the Indenture Trustee.

          (b) In accordance  with the criteria for  proceeding  against the Loan
Collateral  set forth in subsection (a) of this SECTION 4.10,  unless  otherwise
prohibited by applicable law or court or administrative  order, the Servicer, on
behalf of the Trust  and the  Indenture  Trustee,  may,  at any time,  institute
repossession or foreclosure proceedings to the extent permitted by law, exercise
any  power  of sale to the  extent  permitted  by law,  obtain a deed in lieu of
foreclosure,  or otherwise  acquire  possession  of or title to the related Loan
Collateral, by operation of law or otherwise.

          In  accordance  with the  criteria  for  proceeding  against  the Loan
Collateral  set forth in subsection (a) of this SECTION 4.10, the Servicer shall
institute foreclosure proceedings,  repossess, exercise any power of sale to the
extent  permitted  by law,  obtain a deed in lieu of  foreclosure  or  otherwise
acquire  possession of or title to any Loan  Collateral,  by operation of law or
otherwise,  only in the event that in the  Servicer's  reasonable  judgment such
action  is  likely to result  in a  positive  economic  benefit  to the Trust by
creating net liquidation  proceeds (after reimbursement of all amounts owed with
respect to such Loan to the Servicer).

          With respect to any Mortgage Loan not covered under the  Environmental
Policy, prior to acquiring any Foreclosure Property, however, the Servicer shall
cause a review to be performed,  in accordance with the Servicing  Standard,  on
the related Mortgaged Property by a company such as Equifax,  Inc. or Toxicheck,
and the scope of such  review  shall be limited to the review of public  records
and documents for indications that such Mortgaged  Property has on it, has under
it, or is near hazardous or toxic material or waste. If such review reveals that
the  Mortgaged  Property  has on it,  under  it or is near  hazardous  or  toxic
material or waste or reveals any other environmental problem, the Servicer shall
provide a copy to the Indenture  Trustee of the related  report with an attached
certification  of a  Responsible  Officer  that  based  on an  analysis  of  all
available information  (including potential clean up costs and liability claims)
at the  time it is the best  judgment  of such  Responsible  Officer  that  such
foreclosure shall increase Net Liquidation Proceeds to the Indenture Trustee and
the Trust shall take title to such  Mortgaged  Property.  The Indenture  Trustee
shall promptly forward such report and certification to the Noteholders.

                                      -74-
<PAGE>
          (c) The Indenture  Trustee  shall furnish the Servicer,  within 5 days
after  request  of the  Servicer  therefor,  any  powers of  attorney  and other
documents necessary and appropriate to carry out its duties hereunder, including
any  documents  or powers of attorney  necessary  to  foreclose  any Mortgage or
Security  Agreement,  as the  case may be.  The  forms  of any  such  powers  or
documents shall be appended to such requests.

          SECTION  4.11  TITLE,   MANAGEMENT  AND   DISPOSITION  OF  FORECLOSURE
PROPERTY.

          In the event that any Loan Collateral becomes a Foreclosure  Property,
the deed or  certificate  of sale  shall  be taken in the name of the  Indenture
Trustee for the  benefit of the  Securityholders.  The  Servicer  shall  manage,
conserve,  protect and  operate  each  Foreclosure  Property  for the  Indenture
Trustee and the Securityholders solely for the purpose of the prudent and prompt
disposition and sale of such Foreclosure  Property.  The Servicer shall,  either
itself or through an agent selected by the Servicer,  manage, conserve,  protect
and  operate  the  Foreclosure  Property  in the same  manner  that it  manages,
conserves, protects and operates other foreclosure property for its own account.

          Subject to SECTION 4.10 hereof,  the Servicer  shall,  consistent with
the  Servicing  Standard,  foreclose  upon or otherwise  comparably  convert the
ownership of Properties  securing such of the Loans as come into and continue in
default and as to which no satisfactory  arrangements can be made for collection
of delinquent payments. In connection with realization upon defaulted Loans, the
Servicer  shall follow such  practices and procedures as it shall deem necessary
or  advisable,  as shall be normal and usual in  accordance  with the  Servicing
Standard  and as shall meet the  requirements  of insurers  under any  insurance
policy required to be maintained hereunder with respect to the related Loan. The
Servicer shall be responsible  for all costs and expenses  incurred by it in any
such  proceedings;  provided,  however,  that such  costs and  expenses  will be
recoverable as Servicing Advances by the Servicer as contemplated herein.

          The Servicer shall not be required to make any Servicing  Advance,  to
foreclose  upon or repossess any Loan  Collateral,  or otherwise  expend its own
funds toward the  restoration  of any Loan  Collateral  that shall have suffered
damage  from any  cause of  damage to Loan  Collateral  such  that the  complete
restoration of such property is not fully  reimbursable by the hazard  insurance
policies  required to be maintained  pursuant to this Agreement  unless it shall
determine  in its  reasonable  judgment,  as  evidenced  by a  certificate  of a
Servicing  Officer,  that such  foreclosure or restoration,  as the case may be,
will   increase  the  proceeds  of   liquidation   of  the  related  Loan  after
reimbursement to itself of Servicing Advances.  Any Servicing Advances made with
respect to a Loan shall be recoverable  by the Servicer only from  recoveries on
such Loan except to the extent such Servicing Advance is deemed a Nonrecoverable
Servicing Advance.

          The Servicer may offer to sell to any Person any Foreclosure Property,
if and when the Servicer  determines,  in a manner consistent with the Servicing
Standard,  that such a sale would be in the best  interests  of the  Trust.  The
Servicer shall,  consistent with the Servicing Standard, use its best efforts to
dispose of any  Foreclosure  Property  acquired under SECTION 4.10 hereof within

                                      -75-
<PAGE>
three years of the date of its acquisition on behalf of the Trust.  The Servicer
shall give the  Indenture  Trustee not less than five days' prior  notice of its
intention  to sell any  Foreclosure  Property  and shall  accept the highest bid
received  from any Person  for any  Foreclosure  Property  in an amount at least
equal to the sum of:

          (1) the Principal Balance of the related foreclosed Loan; and

          (2) all unpaid  interest  accrued thereon at the related Loan Interest
     Rate through the date of sale.

          In the absence of any such bid, the Servicer  shall accept the highest
bid  received  from any Person  that is  determined  to be a fair price for such
Foreclosure  Property by the Servicer,  if the highest  bidder is a Person other
than an  Interested  Person,  or by an  Independent  appraiser  retained  by the
Servicer,  if the highest bidder is an Interested  Person. In the absence of any
bid  determined to be fair as aforesaid,  the Servicer  shall offer the affected
Foreclosure Property for sale to any Person, other than an Interested Person, in
a commercially  reasonable  manner for a period of not less than 10 or more than
30 days,  and shall accept the highest  cash bid received  therefor in excess of
the highest bid previously submitted. If no such bid is received, any Interested
Person may resubmit  its original bid and the Servicer  shall accept the highest
outstanding  cash bid,  regardless of from whom received.  No Interested  Person
shall be  obligated to submit a bid to purchase any  Foreclosure  Property  and,
notwithstanding  anything to the contrary herein, neither the Indenture Trustee,
in its  individual  capacity,  nor any of its Affiliates may bid for or purchase
any Foreclosure Property pursuant hereto.

          In  determining  whether  any bid  constitutes  a fair  price  for any
Foreclosure Property, the Servicer shall take into account, and any appraiser or
other expert in real estate matters shall be instructed to take into account, as
applicable,  among other  factors,  the financial  standing of any tenant of the
Foreclosure Property, the physical condition of the Foreclosure Property and the
state of the local and national economies.

          Subject to the  provisions of SECTION 4.10 hereof,  the Servicer shall
act on behalf of the  Indenture  Trustee  in  negotiating  and  taking any other
action  necessary or appropriate in connection  with the sale of any Foreclosure
Property,  including  the  collection  of  all  amounts  payable  in  connection
therewith.  Any sale of a Foreclosure  Property shall be without recourse to the
Indenture  Trustee,  the Servicer or the Trust and, if consummated in accordance
with the terms of this Agreement, neither the Servicer nor the Indenture Trustee
shall have any  liability  to any  Securityholder  with  respect to the purchase
price therefor accepted by the Servicer or the Indenture Trustee.

          The Servicer  may contract  with any  independent  contractor  for the
operation and management of any Foreclosure Property; provided, however, that:

          (i) the  terms  and  conditions  of any  such  contract  shall  not be
     inconsistent with this Agreement;

          (ii) any such contract  shall  require,  or shall be  administered  to
     require,  that  the  independent  contractor  pay all  costs  and  expenses
     incurred  in  connection   with  the  operation  and   management  of  such
     Foreclosure  Property,  remit all related  revenues  (net of such costs and
     expenses)  to the  Servicer as soon as  practicable,  but in no event later
     than 30 days following the receipt thereof by such independent contractor;

                                      -76-
<PAGE>
          (iii) none of the provisions of this SECTION 4.11 relating to any such
     contract or to actions taken through any such independent  contractor shall
     be deemed to relieve  the  Servicer  of any of its  duties and  obligations
     hereunder  with  respect  to the  operation  and  management  of  any  such
     Foreclosure Property; and

          (iv) the Servicer shall be obligated with respect  thereto to the same
     extent  as if it alone  were  performing  all  duties  and  obligations  in
     connection with the operation and management of such Foreclosure Property.

     The  Servicer  shall be  entitled  to enter  into  any  agreement  with any
     independent contractor performing services for it related to its duties and
     obligations   hereunder  for   indemnification  of  the  Servicer  by  such
     independent  contractor,  and nothing in this Agreement  shall be deemed to
     limit or modify such indemnification.  The Servicer shall not be liable for
     any fees owed by it to any such  independent  contractor and any amounts so
     expended  shall  be  deemed  Servicing  Advances.  Each  liquidation  of  a
     Foreclosure  Property  shall be carried by the  Servicer  at such price and
     upon such terms and  conditions  as the  Servicer  shall deem  necessary or
     advisable  and as shall  be  normal  and  usual  in its  several  servicing
     activities,  and the resulting Net Liquidation  Proceeds shall be deposited
     into the Collection Account pursuant to SECTION 5.01(B)(1) hereof.

          SECTION 4.12 COMPLIANCE WITH REQUEST FOR INFORMATION.

          The Servicer shall provide to the Indenture Trustee, upon its request,
information  regarding the Notes and the Loans and such other information as the
Indenture  Trustee  shall be  required  to  deliver  to any  Noteholder  and any
prospective  transferee  designated  by a  Noteholder  to satisfy a condition of
eligibility set forth under Rule 144A(d)(4) under the Securities Act of 1933, as
amended.

          SECTION 4.13 LOCKBOX TRIGGER EVENT; LOCKBOX ACCOUNT.

          In the event of the occurrence of a Lockbox Trigger Event:

          (a) The Servicer, Depositor and Issuer shall each promptly execute and
deliver the Lockbox Agreement.

          (b) The Servicer shall  promptly cause  Borrowers to make all payments
on the Loans (including,  without limitation, Escrow Payments),  irrespective of
method  of  payment,  directly  to the  Lockbox  Bank  pursuant  to the  Lockbox
Agreement.  Amounts  received  by a  Lockbox  Bank in  respect  of the Loans may
initially be deposited into a demand deposit  account  maintained by the Lockbox
Bank for the benefit of the Indenture Trustee, as secured party on behalf of the
Noteholders. The Lockbox Agreement shall require the Lockbox Bank to deposit all
payments  on the Loans in the  Lockbox  Account no later than the  Business  Day
after  receipt,  and to cause all amounts  credited  to the  Lockbox  Account on
account of such payments to be transferred  to the Collection  Account or Escrow
Account, as the case may be, in accordance with the written  instructions of the
Servicer,  no later than the second Business Day after receipt of such payments.

                                      -77-
<PAGE>
The Servicer shall pay all fees and costs incurred  connection with the entering
into of the Lockbox Agreement,  the establishment of the Lockbox Account and the
administration of the provisions of the Lockbox Agreement.

          SECTION 4.14 VALUATION OF LOANS,  HEDGE VALUE AND RETAINED  SECURITIES
VALUE; MARKET VALUE AGENT.

          (a) The Loan Originator hereby  irrevocably  appoints the Market Value
Agent to  determine  the  Market  Value of each  Loan,  the Hedge  Value of each
Hedging Instrument and the Retained Securities Value of all Retained Securities.

          (b) The Market  Value Agent shall  determine  the Market Value of each
Loan in its reasonable  judgment.  In determining the Market Value of each Loan,
the Market Value Agent may consider any  information  that it may deem  relevant
and may base such determination solely on its estimate of the projected proceeds
from such  Loan's  inclusion  in a  Securitization  and the  projected  Retained
Securities Value of any Retained Securities to be issued in connection with such
Securitization,  net of  such  Loan's  ratable  share  of  all  costs  and  fees
associated with such Securitization,  including, without limitation the costs of
issuance,  underwriting and funding reserve  accounts.  The Market Value Agent's
determination,  in its reasonable judgment,  of Market Value shall be conclusive
and binding upon the parties hereto.

          (c) On each Business Day the Market Value Agent shall determine in its
reasonable  judgment  the  Hedge  Value of each  Hedging  Instrument  as of such
Business  Day.  In making  such  determination  the Market  Value Agent may rely
exclusively  on  quotations  provided  by the Hedging  Counterparty,  by leading
dealers in instruments similar to such Hedging Instrument, which leading dealers
may include the Market Value Agent and its  Affiliates and such other sources of
information as the Market Value Agent may deem appropriate.

          (d) On each  Business  Day, the Market Value Agent shall  determine in
its  reasonable   judgment  the  Retained   Securities  Value  of  the  Retained
Securities,  if any, expected to be issued pursuant to such Securitization as of
the closing date of such Securitization. In making such determination the Market
Value Agent may rely  exclusively on quotations  provided by leading  dealers in
instruments  similar to such  Retained  Securities,  which  leading  dealers may
include the Market  Value  Agent and its  Affiliates  and such other  sources of
information as the Market Value Agent may deem appropriate.

                                    ARTICLE V

                         ESTABLISHMENT OF TRUST ACCOUNTS

          SECTION 5.01 COLLECTION ACCOUNT AND DISTRIBUTION ACCOUNT .

     (a) (1) ESTABLISHMENT OF COLLECTION ACCOUNT. The Servicer,  for the benefit
     of the Securityholders, shall cause to be established and maintained one or
     more Collection Accounts  (collectively,  the "COLLECTION ACCOUNT"),  which
     shall be separate Eligible Accounts entitled "Collection  Account,  LaSalle
     National Bank, as Indenture  Trustee,  in trust for the FFCA Franchise Loan
     Backed Notes, Series 1998-1". The Collection Account may be maintained with

                                      -78-
<PAGE>
     the Indenture  Trustee or any other depository  institution which satisfies
     the  requirements  set forth in the  definition  of Eligible  Account.  The
     creation  of any  Collection  Account  other than one  maintained  with the
     Indenture  Trustee  shall be  evidenced by a letter  agreement  between the
     Servicer  and  the  depository   institution  acceptable  to  the  Majority
     Noteholders.  A copy of such letter  agreement  shall be  furnished  to the
     Majority  Noteholders  and the  Indenture  Trustee and, upon request of any
     Securityholder,  to such  Securityholder.  Funds in the Collection  Account
     shall be invested in accordance with SECTION 5.03 hereof.

          The Collection Account shall be established, as of the date hereof, as
     an Eligible  Account  pursuant to the  definition  thereof.  The Collection
     Account may, upon written  notice to the Issuer and the Indenture  Trustee,
     be  transferred  by the Servicer to a different  depository  institution so
     long as such transfer is to an Eligible Account  acceptable to the Majority
     Noteholders.

          (2)  ESTABLISHMENT  OF  DISTRIBUTION  ACCOUNT.  No later than the date
     hereof, the Servicer, for the benefit of the Noteholders, shall cause to be
     established  and  maintained  with  LaSalle   National  Bank  one  or  more
     Distribution Accounts  (collectively,  the "Distribution  Account"),  which
     shall be separate Eligible  Accounts and may be interest bearing,  entitled
     "Distribution  Account,  LaSalle  National Bank, as Indenture  Trustee,  in
     trust for the FFCA  Franchise Loan Backed Notes,  Series  1998-1." Funds in
     the Distribution Account shall not be invested.

     (b) (1) DEPOSITS TO COLLECTION ACCOUNT. The Servicer shall deposit or cause
     to be deposited (without  duplication),  within two (2) Business Days after
     receipt  thereof,  into the Collection  Account and retain therein in trust
     for the benefit of the Securityholders:

          (i)    all payments on or in respect of each Loan conveyed pursuant to
                 SECTION 2.01(A)(III) hereof;

          (ii)   all Net Liquidation Proceeds pursuant to SECTION 4.11 hereof;

          (iii)  all   Insurance   Proceeds   not  required  to  be  applied  to
                 restoration  or repair of Loan  Collateral  pursuant to SECTION
                 4.05;

          (iv)   all Released Loan Collateral Proceeds;

          (v)    any amounts  payable in connection  with the  repurchase of any
                 Loan and the amount of any Substitution  Adjustment pursuant to
                 SECTIONS 2.05 and 3.05 hereof;

          (vi)   any Purchase  Price payable in connection  with a Servicer Call
                 pursuant to SECTION 3.07 hereof;

          (vii)  the  deposit  of the  Termination  Price  under  SECTION  11.01
                 hereof;

                                      -79-
<PAGE>
          (viii) any Periodic Advances pursuant to SECTION 4.09;

          (ix)   any cash Securitization Proceeds pursuant to SECTION 3.06; and

          (x)    any payments  received under Hedging  Instruments or the return
                 of amounts by the  Hedging  Counterparty  pledged  pursuant  to
                 prior Hedge Funding Requirements;

          (xi)   all  proceeds  paid  under  the  Environmental  Policy  and not
                 retained by the  Servicer in  connection  with  remediation  of
                 Mortgaged Properties pursuant to SECTION 3.09 hereof; and

          (xii)  any Purchase Price payable in connection with a Loan Originator
                 Put  remitted by the Loan  Originator  pursuant to SECTION 3.07
                 hereof.

     (c) WITHDRAWALS FROM COLLECTION ACCOUNT; DEPOSITS TO DISTRIBUTION ACCOUNT.

          (1)  WITHDRAWALS  FROM  COLLECTION  ACCOUNT  --  REIMBURSEMENT  ITEMS.
     Periodically, the Indenture Trustee (except as may be otherwise provided in
     writing by the Collection  Account Letter  Agreement),  at the direction of
     the Servicer,  shall make the  following  withdrawals  from the  Collection
     Account prior to any other withdrawals, in no particular order of priority:

          (i)    to  withdraw  any amount not  required to be  deposited  in the
                 Collection Account or deposited therein in error;

          (ii)   to withdraw the Servicing Advance Reimbursement Amount;

          (iii)  to clear and  terminate  the  Collection  Account in connection
                 with the termination of this Agreement;

          (iv)   to  reimburse  the  Servicer  for any  Nonrecoverable  Periodic
                 Advances;

          (v)    to make the payments set forth in SECTION 9.01(E) hereof;

          (vi)   to  make  any  payments  in  respect  of  Servicer  indemnities
                 pursuant to SECTION 9.01(F) hereof;

          (vii)  to pay to the Loan  Originator any Retained  Interest  actually
                 received with respect to the related Loan; and

          (viii) to reimburse the Servicer for unreimbursed  Periodic  Advances,
                 the  Servicer's  right to  reimburse  itself,  pursuant to this
                 clause (viii) with respect to any Periodic  Advance (other than
                 Nonrecoverable  Advances,  which are  reimbursable  pursuant to
                 clause  (iv) above)  being  limited to amounts  that  represent
                 collections of interest (net of any related Retained  Interest)
                 and principal  received in respect of the particular Loan as to
                 which such Periodic Advance was made;

                                      -80-
<PAGE>
          (2)  INDENTURE  TRUSTEE  DEPOSITS  TO  DISTRIBUTION  ACCOUNT - PAYMENT
     DATES.  (a) On the Business Day prior to each Payment  Date,  the Indenture
     Trustee  shall  deposit into the  Distribution  Account such amounts as are
     required from the Transfer  Obligation Account pursuant to SECTION 5.05(E),
     5.05(F) and 5.05(G).

               (b) After making all withdrawals  specified in SECTION 5.01(C)(1)
     above,  on the  Business  Day prior to each  Payment  Date,  the  Indenture
     Trustee,  except as may be  otherwise  provided in the  Collection  Account
     Letter Agreement,  (based on information  provided by the Servicer for such
     Payment  Date) shall  withdraw from the  Collection  Account not later than
     2:00 p.m. Phoenix,  Arizona time and deposit into the Distribution  Account
     all remaining funds on deposit therein,  provided that on or after any date
     on which the long term senior  unsecured debt of the Servicer is unrated or
     rated at or below "BB" by Standard & Poor's  Ratings  Group,  the Indenture
     Trustee,  except as may be  otherwise  provided in the  Collection  Account
     Letter Agreement,  shall make such withdrawal of remaining amounts from the
     Collection  Account on every other  Business  Day and deposit such funds in
     the Distribution Account.

          (3) WITHDRAWALS  FROM  DISTRIBUTION  ACCOUNT -- PAYMENT DATES. On each
     Payment  Date,  to the  extent  funds  are  available  in the  Distribution
     Account,  the Indenture  Trustee (based on the information  provided by the
     Servicer  contained in the  Servicer's  Remittance  Report for such Payment
     Date) shall make  withdrawals  therefrom by 3:00 p.m. (New York City time),
     for application in the following order of priority:

          (i)    to  distribute  on such  Payment  Date  the  following  amounts
                 pursuant to the  Indenture in the following  order:  (a) to the
                 Indenture Trustee, an amount equal to the Indenture Trustee Fee
                 and all unpaid Indenture Trustee Fees from prior Payment Dates,
                 (b) to the Custodian,  an amount equal to the Custodian Fee, if
                 any, and all unpaid  Custodian  Fees from prior Payment  Dates,
                 (c) to the  Servicer,  (x) only if  Servicer is not FFCA or any
                 Affiliate   thereof,   an   amount   equal  to  the   Servicing
                 Compensation and all unpaid Servicing  Compensation  from prior
                 Payment Dates and (y) all Nonrecoverable Servicing Advances not
                 previously  reimbursed,  (d) to the Servicer,  in trust for the
                 Owner Trustee, an amount equal to the Owner Trustee Fee and all
                 unpaid Owner Trustee Fees from prior Payment Dates, and;

          (ii)   to  distribute   on  such  Payment  Date,   the  Hedge  Funding
                 Requirement   to  the   appropriate   Hedging   Counterparties;
                 provided,  that only cash on or in  respect of fixed rate Loans
                 (including cash  Securitization  Proceeds  received  therefrom)
                 shall be distributed for such purpose and;  provided,  further,
                 that  amounts  distributed  pursuant to clause (i) above to the
                 extent not attributable to a specific Loan shall be deemed paid
                 from Loans bearing a fixed Loan Interest  Rate,  pro rata based
                 on their  aggregate  Principal  Balances  relative  to the Pool
                 Principal Balance on such Payment Date;

                                      -81-
<PAGE>
          (iii)  to the holders of the Notes pro rata,  the sum of the  Interest
                 Payment   Amount  for  such   Payment  Date  and  the  Interest
                 Carry-Forward Amount for the preceding Payment Date;

          (iv)   to the  holders of the Notes pro rata,  the sum of the  Optimal
                 Principal   Payment  Amount  for  such  Payment  Date  and  the
                 Principal  Carry-Forward Amount for the preceding Payment Date;
                 provided,  however,  that if (a) a Rapid  Amortization  Trigger
                 shall have  occurred  and not been Deemed Cured or (b) an Event
                 of Default or Default  under this  Agreement  or the  Indenture
                 shall have occurred, the holders of the Notes shall receive, in
                 respect of principal,  all remaining  amounts on deposit in the
                 Collection Account.

          (v)    to the  Servicer if the Servicer is the Loan  Originator  or an
                 Affiliate   thereof,   an   amount   equal  to  the   Servicing
                 Compensation  for the  related  Payment  Date  and  all  unpaid
                 Servicing Compensation from prior Payment Dates;

          (vi)   to the Transfer Obligation Account, all remaining amounts until
                 the  balance  therein  equals the  Transfer  Obligation  Target
                 Amount;

          (vii)  to each  Indemnified  Party (as defined in the Trust Agreement)
                 until  all  amounts   due  and  owing  under   Issuer/Depositor
                 Indemnities  (as  defined in the Trust  Agreement)  are paid in
                 full; and

          (viii) to the holders of the Trust  Certificates of record on the next
                 preceding Record Date, pro rata, all amounts remaining therein.

          The Majority Noteholders and the Issuer may agree, upon written notice
to the Indenture Trustee, to additional Payment Dates. In addition,  there shall
be an  additional  Payment  Date on (i) any day which  Securitization  Proceeds,
Purchase  Prices or proceeds in respect of Put/Call Loans are deposited into the
Collection  Account  on or before 2 p.m.  Phoenix,  Arizona  time,  and (ii) the
Business Day after any day on which Securitization Proceeds,  Purchase Prices or
proceeds in respect of Put/Call Loans are deposited into the Collection  Account
after 2 p.m.  Phoenix,  Arizona  time.  The Issuer and the Majority  Noteholders
shall give the Indenture  Trustee at least one (1) Business Day's written notice
prior to such additional  Payment Date and such notice shall specify each amount
in SECTION 5.01(C) to be withdrawn from the Collection  Account and Distribution
Account  on such day or shall  otherwise  specify  the  Persons  and  respective
amounts to whom such payments shall be made, with  instructions for wiring funds
or mailing checks to such Persons.

          Notwithstanding  that the Notes have been paid in full,  the Indenture
Trustee and the Servicer  shall  continue to maintain the  Distribution  Account
hereunder until this Agreement has been terminated.

                                      -82-
<PAGE>
          SECTION 5.02 PAYMENTS TO SECURITYHOLDERS.

          (a) All  distributions  made on the Notes on each Payment Date will be
made on a pro rata  basis  among the  Noteholders  of record of the Notes on the
next preceding Record Date based on the Percentage Interest represented by their
respective  Notes,  without  preference or priority of any kind,  and, except as
otherwise  provided  in the  next  succeeding  sentence,  shall  be made by wire
transfer of immediately  available funds to the account of such  Noteholder,  if
such Noteholder shall own of record Notes in original Denominations  aggregating
at least  $250,000  and  shall  have so  notified  the  Indenture  Trustee,  and
otherwise  by check  mailed to the address of such  Noteholder  appearing in the
Notes Register. The final distribution on each Note will be made in like manner,
but only upon  presentment and surrender of such Note at the location  specified
in the notice to Noteholders of such final distribution.

          (b) All distributions  made on the Trust  Certificates on each Payment
Date will be made pro rata among the holders of the Trust Certificates of record
on the next  preceding  Record  Date  based on their  Percentage  Interests  (as
defined in the Trust  Agreement),  without  preference  or priority of any kind,
and, except as otherwise provided in the next succeeding sentence, shall be made
by wire  transfer  of  immediately  available  funds to the account of each such
holder,  if such holder shall own of record a Trust  Certificate  in an original
denomination aggregating at least 50% of the Percentage Interests (as defined in
the Trust  Agreement)  and shall have so notified  the  Indenture  Trustee,  and
otherwise by check mailed to the address of such Certificateholder  appearing in
the Certificate Register.  The final distribution on each Trust Certificate will
be made in like manner,  but only upon  presentment  and surrender of such Trust
Certificate  at the  location  specified  in the  notice to holders of the Trust
Certificates of such final  distribution.  Any amount distributed to the holders
of the Trust  Certificates on any Payment Date shall not be subject to any claim
or  interest  of the  Noteholders.  In the event that at any time there shall be
more than one  Certificateholder,  the  Indenture  Trustee  shall be entitled to
reasonable  additional  compensation  from  the  Servicer  for  its  obligations
hereunder,  including,  without limitation,  its obligations to distribute funds
and produce and deliver statements.

          (c) For  purposes of this SECTION  5.02,  the sole holder of the Trust
Certificates  shall  be  deemed  to be the  Depositor  until  such  time  as the
Depositor  provides written notice to the contrary to the Indenture  Trustee and
the Initial Noteholder.

          SECTION 5.03 TRUST ACCOUNTS; TRUST ACCOUNT PROPERTY.

          (a) CONTROL OF TRUST ACCOUNTS.  Each of the Trust Accounts established
hereunder  has been  pledged by the Issuer to the  Indenture  Trustee  under the
Indenture and shall be subject to the lien of the Indenture.  In addition to the
provisions  hereunder,  each of the Trust Accounts shall also be established and
maintained  pursuant  to the  Indenture.  Amounts  distributed  from each  Trust
Account in accordance  with the Indenture and this  Agreement  shall be released
from the lien of the Indenture upon such  distribution  thereunder or hereunder.
The Indenture Trustee shall possess all right,  title and interest in and to all
funds on deposit  from time to time in the Trust  Accounts  and in all  proceeds
thereof (including all income thereon) and all such funds, investments, proceeds
and income shall be part of the Trust Account Property and the Trust Estate. If,
at any time, any Trust Account ceases to be an Eligible  Account,  the Indenture
Trustee (or the Servicer on its behalf) shall, within ten Business Days (or such
longer period, not to exceed 30 calendar days, with the prior written consent of
the  Majority  Noteholders)  (i)  establish  a new Trust  Account as an Eligible
Account,  (ii)  terminate the ineligible  Trust Account,  and (iii) transfer any
cash and  investments  from  such  ineligible  Trust  Account  to such new Trust
Account.

                                      -83-
<PAGE>
          Except as may be otherwise  provided in the Collection  Account Letter
Agreement,  with respect to the Trust Accounts, the Indenture Trustee agrees, by
its acceptance hereof, that each such Trust Account shall be subject to the sole
and exclusive  custody and control of the  Indenture  Trustee for the benefit of
the  Noteholders,  and,  except as may be otherwise  provided in the  Collection
Account  Letter  Agreement  or as may be consented to in writing by the Majority
Noteholders,  the  Indenture  Trustee shall have sole  signature and  withdrawal
authority with respect thereto.

          The  Servicer  shall  have  the  power,   revocable  by  the  Majority
Noteholder or by the Owner Trustee with the consent of the Indenture Trustee, to
instruct the Indenture Trustee or Owner Trustee to make withdrawals and payments
from the Trust  Accounts for the purpose of permitting the Servicer to carry out
its duties  hereunder or permitting  the  Indenture  Trustee or Owner Trustee to
carry out their  respective  duties  herein or under the  Indenture or the Trust
Agreement, as applicable.

          (b) (1) INVESTMENT OF FUNDS.  Funds held in the Collection Account and
the Transfer  Obligation  Account may be invested (to the extent practicable and
consistent  with any  requirements  of the Code) in  Permitted  Investments,  as
directed by the Servicer prior to the occurrence and continuation of an Event of
Default, and by the Majority Noteholders thereafter,  in writing or by telephone
or  facsimile  transmission  confirmed  in  writing  by the Loan  Originator  or
Majority  Noteholders,  as  applicable.  In any  case,  funds in the  Collection
Account and the Transfer  Obligation  Account must be available  for  withdrawal
without  penalty,  and any  Permitted  Investments  must mature or  otherwise be
available for withdrawal,  not later than the Business Day following the date of
such  investment  and, in any event one  Business  Day prior to the next Payment
Date and shall  not be sold or  disposed  of prior to its  maturity  subject  to
subsection  (b)(2)  of this  Section.  All  interest  and any  other  investment
earnings  on amounts  or  investments  held in the  Collection  Account  and the
Transfer  Obligation  Account shall be deposited into the Collection  Account or
the Transfer Obligation Account, as the case may be, immediately upon receipt by
the  Indenture  Trustee.  All  Permitted  Investments  in  which  funds  in  the
Collection Account or the Transfer  Obligation Account are invested must be held
by or registered in the name of "LaSalle National Bank, as Indenture Trustee, in
trust for the FFCA Franchise Loan Backed Notes, Series 1998-1".

          (2)  INSUFFICIENCY  AND LOSSES IN TRUST  ACCOUNTS.  If any amounts are
needed for disbursement from the Collection  Account or the Transfer  Obligation
Account held by or on behalf of the Indenture Trustee and sufficient  uninvested
funds are not available to make such disbursement, the Indenture Trustee (or the
Servicer, as applicable) shall cause to be sold or otherwise converted to cash a
sufficient  amount of the investments in the Collection  Account or the Transfer
Obligation  Account,  as the case may be.  The  Indenture  Trustee  shall not be
liable for any investment loss or other charge resulting therefrom,  unless such
loss or charge is caused by the failure of the  Indenture  Trustee to perform in
accordance with written directions provided pursuant to this SECTION 5.03.

                                      -84-
<PAGE>
          If any losses are realized in  connection  with any  investment in the
Collection Account or the Transfer Obligation Account pursuant to this Agreement
and the  Indenture,  then the Loan  Originator  shall deposit the amount of such
losses  (to the  extent  not  offset by income  from  other  investments  in the
Collection Account or the Transfer  Obligation Account, as the case may be) into
the Collection Account or the Transfer Obligation Trust Account, as the case may
be,  immediately  upon the  realization of such loss. All interest and any other
investment  earnings on amounts held in the Collection  Account and the Transfer
Obligation Account shall be taxed to the Issuer and for federal and state income
tax  purposes  the  Issuer  shall be deemed  to be the  owner of the  Collection
Account and/or the Transfer Obligation Account, as the case may be.

          (c) Subject to Section 6.01 of the  Indenture,  the Indenture  Trustee
shall not in any way be held liable by reason of any  insufficiency in any Trust
Account held by the Indenture  Trustee resulting from any investment loss on any
Permitted  Investment  included therein (except to the extent that the Indenture
Trustee is an obligor and has defaulted thereon).

          (d) With respect to the Trust Account Property,  the Indenture Trustee
acknowledges and agrees that:

          (1) any Trust Account  Property that is held in deposit accounts shall
be held  solely  in the  Eligible  Accounts,  subject  to the last  sentence  of
subsection (a) of this SECTION 5.03; and, except as may be otherwise provided in
the Collection  Account Letter  Agreement,  each such Eligible  Account shall be
subject to the sole and exclusive dominion, custody and control of the Indenture
Trustee;  and, without  limitation on the foregoing,  except as may be otherwise
provided in the Collection Account Letter Agreement, the Indenture Trustee shall
have sole signature authority with respect thereto;

          (2) any Trust Account  Property  that  constitutes  Physical  Property
shall be delivered to the Indenture  Trustee in accordance with paragraph (a) of
the  definition of "Delivery" in SECTION 1.01 hereof and shall be held,  pending
maturity  or  disposition,  solely  by the  Indenture  Trustee  or a  securities
intermediary (as such term is defined in Section 8-102(a)(14) of the UCC) acting
solely for the Indenture Trustee;

          (3) any Trust  Account  Property  that is a book-entry  security  held
through the Federal  Reserve System pursuant to federal  book-entry  regulations
shall be  delivered  in  accordance  with  paragraph  (b) of the  definition  of
"Delivery"  in SECTION  1.01  hereof and shall be  maintained  by the  Indenture
Trustee,   pending  maturity  or  disposition,   through  continued   book-entry
registration of such Trust Account Property as described in such paragraph; and

          (4) any Trust Account  Property that is an  "uncertificated  security"
under Article 8 of the UCC and that is not governed by clause (3) above shall be
delivered to the  Indenture  Trustee in  accordance  with  paragraph  (c) of the
definition  of  "Delivery" in SECTION 1.01 hereof and shall be maintained by the
Indenture   Trustee,   pending  maturity  or  disposition,   through   continued
registration  of the Indenture  Trustee's (or its  nominee's)  ownership of such
security.

          (e) The  Servicer  shall have the  power,  revocable  by the  Majority
Noteholders  or by the Issuer with the consent of the Majority  Noteholders,  to
instruct the Indenture  Trustee to make  withdrawals and payments from the Trust

                                      -85-
<PAGE>
Accounts for the purpose of  permitting  the Servicer or the Issuer to carry out
their respective  duties hereunder or permitting the Indenture  Trustee to carry
out its duties under the Indenture.

          SECTION 5.04 ADVANCE ACCOUNT.

          (a) The Servicer shall cause to be  established  and maintained in its
name, an Advance Account (the "ADVANCE ACCOUNT"), which need not be a segregated
account. The Advance Account shall be maintained with any financial  institution
the Servicer elects.

          (b)  DEPOSITS AND  WITHDRAWALS.  Amounts in respect of the purchase of
Additional Note Principal Balances and Loans shall be deposited in and withdrawn
from the  Advance  Account as provided  in  SECTIONS  2.01(C)  and 2.06  hereof,
Section 3.01 of the Note Purchase Agreement and Section 2.1 of the Loan Purchase
Agreement.

          SECTION 5.05 TRANSFER OBLIGATION; TRANSFER OBLIGATION ACCOUNT.

          (a) The Servicer,  for the benefit of the Noteholders,  shall cause to
be established  and  maintained in the name of the Indenture  Trustee a Transfer
Obligation  Account  (the  "TRANSFER  OBLIGATION  Account"),  which  shall  be a
separate  Eligible  Account  and  may be  interest-bearing,  entitled  "Transfer
Obligation  Account,  LaSalle National Bank, as Indenture Trustee,  in trust for
the FFCA Franchise Loan Backed Notes,  Series  1998-1." The Transfer  Obligation
Account may be  maintained  with the Indenture  Trustee or any other  depository
institution  which  satisfies the  requirements  set forth in the  definition of
Eligible  Account.  The  establishment of a Transfer  Obligation  Account with a
depositary  institution other than the Indenture Trustee shall be evidenced by a
letter agreement between the Servicer and such depository institution acceptable
to the Indenture  Trustee. A copy of such letter agreement shall be furnished to
the  Indenture  Trustee  and,  upon  request  of  any  Securityholder,  to  such
Securityholder.  Amounts in the Transfer Obligation Account shall be invested in
accordance with SECTION 5.03.

          (b) In accordance with Section 2.3(b) of the Loan Purchase  Agreement,
the Loan  Originator  shall  deposit into the Transfer  Obligation  Account such
amounts as may be required thereby.

          (c) On each Payment Date,  the  Indenture  Trustee will deposit in the
Transfer  Obligation  Account  any  amounts  required  to be  deposited  therein
pursuant to SECTION 5.01(C)(3)(VI).

          (d) On the date of each  Securitization,  the Indenture  Trustee shall
withdraw from the Transfer  Obligation Account such amount on deposit therein as
may be  requested  by  the  Majority  Noteholders  in  writing  to  effect  such
Securitization.

          (e) On each Payment  Date,  the  Indenture  Trustee,  upon the written
direction of the Servicer  shall withdraw from the Transfer  Obligation  Account
and deposit into the Distribution Account on such Payment Date the lesser of (x)
the amount  then on  deposit  in the  Transfer  Obligation  Account  and (y) the
Interest Carry-Forward Amount as of such date.

                                      -86-
<PAGE>
          (f) If with  respect  to any  Payment  Date the  Overcollateralization
Shortfall  exceeds the greater of (x) 1% of the aggregate  Principal  Balance of
all Loans as of the prior Business Day and (y) $250,000,  the Indenture Trustee,
upon the written  direction of the  Servicer  shall  withdraw  from the Transfer
Obligation Account and deposit into the Distribution Account on the Business Day
prior to such  Payment  Date the  lesser of the  amount  then on  deposit in the
Transfer  Obligation  Account  and  the  amount  of  such  Overcollateralization
Shortfall as of such date.

          (g) If with  respect to any  Payment  Date there  shall  exist a Hedge
Funding  Requirement,  the Indenture Trustee,  upon the written direction of the
Servicer  shall withdraw from the Transfer  Obligation  Account and deposit into
the  Distribution  Account on the  Business  Day prior to such  Payment Date the
lesser of (x) the  amount  then on deposit in the  Transfer  Obligation  Account
(after  making all other  required  withdrawals  therefrom  with respect to such
Payment  Date) and (y) the amount of such Hedge Funding  Requirement  as of such
date.

          (h) In the event of the  occurrence  of an Event of Default  under the
Indenture,  the Indenture  Trustee shall  withdraw all remaining  funds from the
Transfer Obligation Account and apply such funds in satisfaction of the Notes as
provided in Section 5.04(b) of the Indenture.

          (i) Upon the date of the  termination  of this  Agreement  pursuant to
Article  XI,  the  Indenture  Trustee,  at the  written  direction  of the  Loan
Originator,  shall withdraw any remaining  amounts from the Transfer  Obligation
Account and remit all such amounts to the Loan Originator.

          (j) The  Indenture  Trustee shall (i) at the direction of the Majority
Noteholders,  return  to the Loan  Originator  in the  manner  specified  to the
Indenture  Trustee by the Majority  Noteholders  in such  direction  all amounts
deposited  in  the  Transfer  Obligation  Account  by  the  Loan  Originator  in
connection  therewith  pursuant  to  Section  2.3(b)(v)  of  the  Loan  Purchase
Agreement,  in the event that an Event of  Default is waived by the  Noteholders
and (ii) return to the Loan Originator at the written direction of the Servicer,
all amounts on deposit in the  Transfer  Obligation  Account  until the Majority
Noteholders  provide written notice to the Indenture Trustee (with a copy to the
Loan  Originator)  of the  occurrence of a default or event of default  (however
defined)  under any Basic  Document  with  respect  to the  Issuer,  FFCA or the
Depositor.

                                   ARTICLE VI

              STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS

          SECTION 6.01 STATEMENTS.

          (a) On each  Determination  Date,  the Servicer  shall  deliver to the
Indenture  Trustee  and the Initial  Noteholder  by  facsimile,  the receipt and
legibility of which shall be confirmed by telephone,  and with hard copy thereof
to be  delivered  no later than one (1)  Business  Day after such  Determination
Date, the Servicer's  Remittance  Report,  setting forth the date of such Report
(day, month and year), the name of the Issuer (i.e.,  "FFCA Franchise Loan Owner
Trust 1998-1"),  the Series designation of the Notes (i.e., "Series 1998-1") and
the date of this Agreement,  all in substantially  the form set out in Exhibit B

                                      -87-
<PAGE>
hereto.  Furthermore,  on each Determination Date, the Servicer shall deliver to
the  Indenture  Trustee and the Initial  Noteholder a magnetic  tape or computer
disk  providing,  with  respect  to  each  Loan  in the  Loan  Pool  as of  such
Determination Date: (i) the Loan Originator's  internal loan identifying number;
(ii) if such Loan is an Adjustable  Rate Loan,  the current Loan Interest  Rate;
(iii) the current  Principal Balance with respect to such Loan; (iv) the date of
the last Monthly  Payment paid in full; (v) the Corporate  Fixed Charge Coverage
Ratio;  (vi) with respect to the Unit-Level  Fixed Charge Coverage Ratio, a flag
indicating  whether such figure is a calculation of the Unit-Level  Fixed Charge
Coverage  Ratio with respect to the single unit or in the  aggregate (if updated
from  information  provided  in the Loan  Schedule);  (vii) the  Corporate  FCCR
Percentage;  and (viii) such other information as may be reasonably requested by
the Majority Noteholders.

          (b)  (i) On  any  Business  Day,  upon  the  request  of  the  Initial
Noteholder, the Servicer shall prepare and provide a statement setting forth the
following information as of the close of business on the prior Business Day:

          (a)  for each  Loan  with  respect  to which a  Servicing  Advance  or
               Periodic  Advance is  outstanding,  (i) the  aggregate  amount of
               Servicing  Advances  outstanding,  (ii) the  aggregate  amount of
               Periodic Advances outstanding and (iii) the outstanding Principal
               Balance of such Loan; and

          (b)  the Pool Principal Balance.

          (ii) On each  Determination  Date,  the  Servicer  shall  prepare  and
provide to the Indenture  Trustee for  distribution  to the Issuer,  the Initial
Noteholder and each  Certificateholder,  a statement (the "PAYMENT  STATEMENT"),
stating each date of a purchase of Additional Note Principal Balance (day, month
and year),  the name of the  Issuer  (i.e.,  "FFCA  Franchise  Loan Owner  Trust
1998-1"),  the Series designation of the Notes (i.e., "Series 1998-1"), the date
of this Agreement and the following information:

          (a)  the aggregate  amount of  collections  in respect of principal of
               the Loans  received  by the  Servicer  during the  preceding  Due
               Period;

          (b)  the aggregate amount of collections in respect of interest on the
               Loans received by the Servicer during the preceding Due Period;

          (c)  all Insurance  Proceeds received by the Servicer and not required
               to be  applied  to  restoration  or  repair of the  related  Loan
               Collateral during the preceding Due Period;

          (d)  all Net Liquidation  Proceeds  deposited by the Servicer into the
               Collection Account during the preceding Due Period;

          (e)  all Released Loan Collateral  Proceeds  deposited by the Servicer
               into the Collection Account during the preceding Due Period;

                                      -88-
<PAGE>
          (f)  the aggregate  amount of all Periodic  Advances and all Servicing
               Advances,  set forth separately,  made by the Servicer during the
               preceding Due Period;

          (g)  the  aggregate  of all  amounts  deposited  into  the  Collection
               Account in respect of the  repurchase of Defective  Loans and the
               repurchase  of Loans  pursuant to SECTION 2.05 hereof  during the
               preceding Due Period;

          (h)  the aggregate Principal Balance of all Loans for which a Servicer
               Call was exercised during the preceding Due Period;

          (i)  the  aggregate  Principal  Balance  of all Loans for which a Loan
               Originator Put was exercised during the preceding Due Period;

          (j)  the  aggregate  amount of all  payments  received  under  Hedging
               Instruments during the preceding Due Period;

          (k)  the  aggregate  amount of  proceeds  received  in  respect of the
               Environmental Policy during the preceding Due Period;

          (l)  when  applicable,  the  aggregate  amount of cash  Securitization
               Proceeds received during the preceding Due Period;

          (m)  withdrawals  from  the  Collection  Account  in  respect  of  the
               Servicing Advance  Reimbursement  Amount during the preceding Due
               Period;

          (n)  withdrawals   from  the   Collection   Account   in   respect  of
               Nonrecoverable Periodic Advances during the preceding Due Period;

          (o)  the number and aggregate  Principal Balance of all Loans that are
               (i) 30-59 days Delinquent,  (ii) 60-89 days Delinquent,  (iii) 90
               or more days Delinquent as of the related Payment Date;

          (p)  the  aggregate  amount of  Liquidated  Loan Losses  incurred  (i)
               during the preceding Due Period,  (ii) during the preceding three
               Due Periods and (iii) since the Reset Date;

          (q)  the aggregate of the Principal  Balances of all Loans in the Loan
               Pool as of the related Payment Date; and

          (r)  the  aggregate  amount  of all  withdrawals  from the  Collection
               Account  pursuant  to  SECTION  5.01(C)(1)(I)  hereof  during the
               preceding Due Period.

          (iii) On the Business Day  following  each Business Day on which money
is  deposited  into the  Collection  Account,  the  Servicer  shall  cause to be
delivered to the Initial Noteholder by facsimile,  the receipt and legibility of
which shall be  confirmed  by  telephone,  a statement  setting  forth the total
deposits into the  Collection  Account on the prior Business Day and the balance
in the Collection Account as of the close of business on the prior Business Day.

                                      -89-
<PAGE>
          (c) On each Determination Date, the Indenture Trustee shall deliver to
the  Initial  Noteholder  a magnetic  tape or computer  disk in a form  mutually
agreed the Initial  Noteholder  and the  Indenture  Trustee,  setting  forth the
following information:

          (a)  the  aggregate  amount  of all  deposits  into  the  Distribution
               Account from the Transfer  Obligation Account pursuant to SECTION
               5.05(e), 5.05(f) and 5.05(g) on the preceding payment Date;

          (c)  if  the  Servicer  is  not  FFCA  or an  Affiliate  thereof,  the
               aggregate   amount  of  distributions  in  respect  of  Servicing
               Compensation to the Servicer,  and unpaid Servicing  Compensation
               from prior Payment Dates for the related Payment Date;

          (d)  the  aggregate  amount of  distributions  in respect of Indenture
               Trustee Fees and unpaid Indenture Trustee Fees from prior Payment
               Dates for the related payment Date;

          (e)  the aggregate amount of distributions in respect of Owner Trustee
               Fees and unpaid Owner Trustee Fees from prior  Payments Dates for
               the related Payment Date;

          (f)  the aggregate amount of distributions in respect of the Custodian
               Fee and unpaid  Custodian  Fees from prior  Payment Dates for the
               related Payment Date;

          (g)  if a Rapid Amortization  Trigger shall have occurred and not been
               Deemed Cured or a Default or Event of Default shall have occurred
               hereunder  or  under  the  Indenture,  the  aggregate  amount  of
               distributions  on the Notes in respect of  principal in excess of
               the  Optimal   Principal   Payment   Amount  and  the   Principal
               Carry-Forward Amount for the related Payment Date;

          (h)  the  aggregate  amount of  distributions  in respect of Servicing
               Compensation and unpaid Servicing Compensation from prior Payment
               Dates,  to the Servicer,  if FFCA or an Affiliate  thereof is the
               Servicer, for the related Payment Date;

          (i)  the aggregate amount of distributions to the Transfer  Obligation
               Account for the related Payment Date;

          (j)  the   aggregate   amount   of   distributions   in   respect   of
               Issuer/Depositor  Indemnities (as defined in the Trust Agreement)
               for the related Payment Date;

          (k)  the aggregate amount of distributions to the holders of the Trust
               Certificates for the related Payment Date; and

                                      -90-
<PAGE>
          (l)  the Note  Principal  Balance of the Notes before and after giving
               effect to distributions  made to the holders of the Notes for the
               related Payment Date.

          All reports prepared by the Indenture  Trustee of the withdrawals from
and deposits into the Collection  Account will be based in whole or in part upon
the  information  provided to the  Indenture  Trustee by the  Servicer,  and the
Indenture  Trustee may fully rely upon and shall have no liability  with respect
to such information provided by the Servicer.

          (d) On each Payment Date,  the Indenture  Trustee shall forward to the
holders of the Trust  Certificates a copy of the Payment Statement in respect of
such Payment Date and a statement setting forth the amounts actually distributed
to such holders of the Trust  Certificates  on such Payment Date,  together with
such other information as the Indenture Trustee deems necessary or appropriate.

          SECTION 6.02 SPECIFICATION OF CERTAIN TAX MATTERS.

          The Indenture  Trustee shall comply with all  requirements of the Code
and  applicable  state and local law with  respect to the  withholding  from any
distributions made to any Noteholder of any applicable withholding taxes imposed
thereon and with respect to any applicable reporting  requirements in connection
therewith,  giving due effect to any applicable exemptions from such withholding
and effective  certifications  or forms provided by the  recipient.  Any amounts
withheld  pursuant to this SECTION 6.02 shall be deemed to have been distributed
to the  Noteholders,  as the case may be, for all purposes of this  Agreement or
the Indenture.

                                   ARTICLE VII

                           GENERAL SERVICING PROCEDURE

          SECTION 7.01 DUE-ON-SALE; DUE-ON-ENCUMBRANCE.

          (a) When any  Borrower  proposes  to convey all or any  portion of its
interests in Loan Collateral, or if such a conveyance has actually occurred, the
Servicer  shall  immediately  give  notice  to the  Initial  Noteholder  of such
conveyance and shall enforce any due-on-sale clause or due-on-encumbrance clause
contained  in any  Promissory  Note or Mortgage or  Security  Agreement,  to the
extent permitted under the terms of the Loan and applicable law and governmental
regulations.  In the event that the Servicer determines,  in accordance with the
Servicing Standard,  that waiver of such clauses would be in accordance with the
Servicing  Standard,  the Servicer  shall  promptly  give written  notice to the
Majority Noteholders of its approval of any such subordinate lien. If a Borrower
applies for approval to place a subordinate  monetary lien on Loan Collateral in
accordance  with the terms of the Loan  Documents,  the Servicer  shall promptly
give written notice to the Majority Noteholders of the requested encumbrance and
obtain  and  deliver  to the  Majority  Noteholders  such  appraisals  and other
supporting  documentation  as are  required  by the terms of the Loan  Documents
together with such  additional  information  as the Majority  Noteholders  shall
request to facilitate review and approval of the requested  encumbrance.  In the
event that the Servicer  determines,  in accordance with the Servicing Standard,

                                      -91-
<PAGE>
that permitting such  subordinate lien would be in accordance with the Servicing
Standard,  the Servicer may consent to such lien and shall promptly give written
notice  to the  Majority  Noteholders  thereof.  Any  processing  fees paid by a
Borrower in connection with an application for a subordinate  monetary lien (net
of any fees and  expenses of the  Majority  Noteholders  including  the Majority
Noteholders'  counsel's fees and expenses)  shall be retained by the Servicer as
Servicing   Compensation.   The  Servicer  shall  not  approve  any  request  to
subordinate the lien of any Mortgage Loan to any other lien.

          (b)  If  any  Loan  Collateral  is to be  conveyed  to a  Person  by a
Borrower, and such Person is to enter into an assumption agreement or supplement
to the  Promissory  Note or Mortgage or Security  Agreement  which  requires the
signature of the Indenture Trustee, or if an instrument of release signed by the
Indenture Trustee is required releasing the Borrower from liability on the Loan,
the Servicer shall deliver or cause to be delivered to the Majority  Noteholders
for review, and upon the written approval thereof,  to the Indenture Trustee for
signature the assumption  agreement with the Person to whom the Loan  Collateral
is to  be  conveyed  and  such  modification  agreement  or  supplement  to  the
Promissory  Note or Mortgage or Security  Agreement or other  instruments as are
reasonable  or  necessary  to  carry  out the  terms of the  Promissory  Note or
Mortgage or Security  Agreement or otherwise to comply with any applicable  laws
regarding assumptions or the transfer of the Loan Collateral to such Person. The
Servicer shall also deliver or cause to be delivered to the Majority Noteholders
with the foregoing  documents a letter  explaining  the nature of such documents
and the reason or reasons why the  Indenture  Trustee's  signature  is required.
With such letter the Servicer shall deliver to the Majority  Noteholders and the
Indenture  Trustee a certificate of a servicing  officer  certifying that: (i) a
Servicing  Officer has  examined  and  approved  such  documents  as to form and
substance,  (ii) the Indenture Trustee's execution and delivery thereof will not
conflict with or violate any terms of this Agreement (iii) any required consents
of insurers  under any insurance  policies  required by this Agreement have been
obtained,  (iv) there are no changes or modifications other than the identity of
the  Borrower  other than those  previously  approved in writing by the Majority
Noteholders  and (v) if the  seller/transferor  of the Loan  Collateral is to be
released  from  liability  on the  Loan,  such  release  will not  (based on the
Servicer's good faith determination)  adversely affect the collectability of the
Loan. Upon the closing of the transactions  contemplated by such documents,  the
Servicer shall cause the originals of the assumption agreement,  the release (if
any) or the  modification  or supplement to the  Promissory  Note or Mortgage or
Security  Agreement to be delivered to the Indenture  Trustee and deposited with
the Indenture Trustee's Loan File for such Loan.

          SECTION 7.02 RELEASE OF LOAN FILES.

          If with respect to any Loan:

          (i)    the  outstanding  Principal  Balance  of  such  Loan  plus  all
                 interest accrued thereon shall have been paid;

          (ii)   the Servicer shall have received, in escrow, payment in full of
                 such Loan in a manner customary for such purposes;

                                      -92-
<PAGE>
          (iii)  such Loan has become a Defective Loan and has been  repurchased
                 or a Qualified  Substitute  Loan has been conveyed to the Trust
                 pursuant to SECTION 3.05 hereof;

          (iv)   such Loan or the related Foreclosure  Property has been sold in
                 connection  with  the  termination  of the  Trust  pursuant  to
                 SECTION 11.01 hereof;

          (v)    such  Loan  has  been  purchased  by  the  Loan  Originator  in
                 accordance with the terms of SECTION 3.07;

          (vi)   the  related  Foreclosure  Property  has been sold  pursuant to
                 SECTION 4.11 hereof; or

          (vii)  such  Loan  has  been   included   in  a   Securitization   and
                 concurrently  with such  release  the  Securitization  Proceeds
                 associated  therewith  will be  deposited  into the  Collection
                 Account.

          In each such case,  the Servicer  shall deliver a  certificate  to the
effect that the  Servicer has complied  with all of its  obligations  under this
Agreement  with respect to such Loan and requesting  that the Indenture  Trustee
release to the  Servicer  the related  Indenture  Trustee's  Loan File,  and the
Indenture Trustee shall, within five Business Days or such shorter period as may
be  required by  applicable  law,  release,  or cause the  Custodian  to release
(unless such Indenture  Trustee's Loan File has previously been  released),  the
related  Indenture  Trustee's  Loan File to the Servicer and execute and deliver
such  instruments of transfer or assignment  prepared and delivered to it by the
Servicer, in each case without recourse,  representation or warranty as shall be
necessary to vest ownership of such Loan in the Servicer or such other Person as
may be specified in such  certificate,  the forms of any such  instrument  to be
appended to such certificate.

          SECTION 7.03 SERVICING COMPENSATION.

          As  compensation  for its services  hereunder,  the Servicer  shall be
entitled to receive from the Collection  Account the Servicing Fee, out of which
the Servicer  shall pay any servicing  fees owed or payable to any  Subservicer.
Additional servicing  compensation in the form of assumption fees,  modification
fees, and other  administrative  fees  (exclusive of any  prepayment  premiums),
insufficient funds charges, amounts remitted pursuant to SECTION 7.01 hereof and
late payment charges shall be part of the Servicing  Compensation payable to the
Servicer  hereunder and shall be paid either by the  Servicer's  retaining  such
additional  servicing  compensation prior to deposit into the Collection Account
pursuant  to SECTION  5.01(B)(1)  hereof or, if  deposited  into the  Collection
Account, as part of the Servicing  Compensation  withdrawn therefrom pursuant to
SECTION 5.01(C)(1) hereof.

          The Servicer  shall be required to pay all expenses  incurred by it in
connection with its servicing  activities hereunder and shall not be entitled to
reimbursement  therefor  except as  specifically  provided for herein.  The Loan
Originator also agrees to pay all reasonable costs and expenses  incurred by any
successor  Servicer or the  Indenture  Trustee in replacing  the Servicer in the
event of a default by the  Servicer in the  performance  of its duties under the
terms and conditions of this Agreement.

                                      -93-
<PAGE>
          SECTION 7.04 STATEMENT AS TO COMPLIANCE AND FINANCIAL STATEMENTS.

          The Servicer will deliver to the Initial Noteholder:

          (a) not later than 90 days  following  the end of each  fiscal year of
the Servicer  (beginning on March 31, 1999),  an Officer's  Certificate  stating
that (i) a review of the  activities of the Servicer  during the preceding  year
and of  performance  under this  Agreement  has been made  under such  officer's
supervision  and (ii) to the  best of such  officer's  knowledge,  based on such
review,  the Servicer has fulfilled all of its obligations  under this Agreement
throughout  such year, or, if there has been a default in the fulfillment of any
such  obligation,  specifying  each such  default  known to such officer and the
nature and status  thereof  and what action the  Servicer  proposes to take with
respect thereto.

          (b) As soon as available  and in no event later than 45 days after the
end of each of the first three  quarterly  fiscal  periods of FFCA,  a Quarterly
Report on "Form 10-Q" filed by FFCA with the Securities and Exchange Commission.

          (c) As soon as available  and in no event later than 90 days after the
end of each fiscal year of FFCA,  an Annual  Report on "Form 10-K" filed by FFCA
with the Securities and Exchange Commission.

          (d) As soon as available and in any event within 90 days after the end
of each  fiscal  year of  FFCA,  the  annual  report  that is  delivered  to its
shareholders.

          (e) Within 10 days after  service of process on any of the  following,
notice of all legal or arbitrable  proceedings  affecting the Servicer or any of
its subsidiaries  that questions or challenges the validity or enforceability of
any of the Basic  Documents or as to which there is a reasonable  likelihood  of
adverse  determination  which  would  result in a material  adverse  effect with
respect to the value of the Loans or the interests of any of the Securityholders
therein.  The Servicer  shall also furnish and certify to the  requesting  party
such other  information  as to (i) its  organization,  activities  and personnel
relating to the performance of the obligations of the Servicer  hereunder,  (ii)
its  financial  condition,  (iii)  the  Loans  and (iv) the  performance  of the
obligations of any Subservicer under the related Subservicing Agreement, in each
case as the Indenture Trustee or the Depositor may reasonably  request from time
to time.

          SECTION 7.05 INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.

          Not later than 90 days  following  the end of each  fiscal year of the
Servicer  (beginning on March 31, 1999), the Servicer at its expense shall cause
a nationally  recognized firm of Independent Certified Public Accountants (which
may also render  other  services to the  Servicer) to furnish a statement to the
Indenture  Trustee,  the Depositor and the Initial Noteholder to the effect that
such firm has examined  certain  documents and records relating to the servicing
of the Loans  under this  Agreement  or of loans  under  pooling  and  servicing
agreements (including the Loans and this Agreement) substantially similar to one
another (such  statement to have attached  thereto a schedule  setting forth the
pooling and servicing agreements covered thereby) and that, on the basis of such
examination  conducted  substantially  in  compliance  with the  Uniform  Single
Attestation  Program for  Mortgage  Bankers or the Audit  Program for  Mortgages
serviced for FHLMC, such firm confirms that such servicing has been conducted in

                                      -94-
<PAGE>
compliance  with  such  pooling  and  servicing   agreements   except  for  such
significant  exceptions  or errors in records that, in the opinion of such firm,
the Uniform Single  Attestation  Program for Mortgage Bankers or the Attestation
Program for Mortgages  serviced for FHLMC  requires it to report,  each of which
errors and omissions  shall be specified in such  statement.  In rendering  such
statement,  such firm may rely,  as to matters  relating to direct  servicing of
loans by Subservicers,  upon comparable  statements for  examinations  conducted
substantially  in compliance  with the Uniform  Single  Attestation  Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for FHLMC (rendered
within one year of such statement) of Independent  certified public  accountants
with respect to the related Subservicer.

          SECTION 7.06 RIGHT TO EXAMINE SERVICER RECORDS.

          Each  Securityholder,  the Indenture  Trustee,  the Issuer and each of
their  respective  agents  shall have the right upon  reasonable  prior  notice,
during normal  business hours and as often as reasonably  required,  to examine,
audit and copy,  at the expense of the Person making such  examination  (but, in
the case of the Indenture Trustee, at the expense of the Servicer),  any and all
of the books,  records or other information of the Servicer  (including  without
limitation any  Subservicer to the extent  provided in the related  Subservicing
Agreement),  whether  held  by the  Servicer  or by  another  on  behalf  of the
Servicer, which may be relevant to the performance or observance by the Servicer
of the terms,  covenants or  conditions  of this  Agreement.  In the case of the
supervisory  agents and  examiners  of the  Issuer,  Indenture  Trustee  and the
Securityholders,  access to the  documentation  regarding the Loans  required by
applicable  state and federal  regulations  shall be afforded without charge but
only upon reasonable  request and during normal business hours at the offices of
the Servicer designated by it.

          The Servicer  also agrees to make  available on a reasonable  basis to
the Securityholders or any prospective  Securityholder a knowledgeable financial
or  accounting  officer  for  the  purpose  of  answering  reasonable  questions
respecting  recent   developments   affecting  the  Servicer  or  the  financial
statements of the Servicer and to permit the Securityholders and any prospective
Securityholder  to inspect the  Servicer's  servicing  facilities  during normal
business  hours for the  purpose  of  satisfying  the  Securityholders  and such
prospective  Securityholder  that the  Servicer  has the  ability to service the
Loans in accordance with this Agreement.

          SECTION  7.07 REPORTS TO THE  INDENTURE  TRUSTEE;  COLLECTION  ACCOUNT
STATEMENTS.

          If  the  Collection  Account  is not  maintained  with  the  Indenture
Trustee,  then not later than 25 days after each Record Date, the Servicer shall
forward to the Indenture Trustee a statement,  certified by a Servicing Officer,
setting forth the status of the  Collection  Account as of the close of business
on the  preceding  Record  Date and  showing,  for the  period  covered  by such
statement,  the  aggregate  of  deposits  into the  Collection  Account for each
category of deposit  specified in SECTION  5.01(B)(1)  hereof,  the aggregate of
withdrawals  from  the  Collection  Account  for  each  category  of  withdrawal
specified  in SECTION  5.01(C)(1)  hereof,  in each case,  for the  related  Due
Period.

                                      -95-
<PAGE>
          SECTION 7.08 ACCESS TO INFORMATION.

          (a) The Servicer  understands that, in connection with the transfer of
the Notes,  Noteholders  may request  that the  Servicer  make  available to the
Noteholders and to prospective  Noteholders annual audited financial  statements
of the Servicer for any or all of the most recently  completed five fiscal years
for which such statements are available, which request shall not be unreasonably
denied.

          (b) So long as any Notes  remain  outstanding,  each of the Issuer and
any Noteholder  shall, at any time and from time to time during regular business
hours,  or at such other times upon  reasonable  notice to the  Servicer and the
Servicer  shall  permit  the  Issuer  and  any  Noteholder,  or  its  agents  or
representatives to:

          (i) examine all books, records and documents (including computer tapes
and disks) in the  possession  or under the control of the Servicer  relating to
the Loans,  the  servicing of the Loans and the  compliance  of the terms of the
Basic Documents, as may be reasonably requested;

          (ii) visit the offices and property of the Servicer for the purpose of
examining such materials described in clause (b)(i) above;

          (iii) consult with such  professionals  as may  reasonably be aware of
the  operations or condition of the  Servicer,  including,  without  limitation,
accountants  and auditors,  and the Servicer shall cause such  professionals  to
cooperate with any  examination  conducted in accordance  with the terms of this
SECTION 7.08 and to provide access to those materials listed in subclause (b)(i)
above in the possession or under the control of such professionals.

                                  ARTICLE VIII

                                     HEDGING

          SECTION 8.01 HEDGING INSTRUMENTS.

          (a) The Issuer,  promptly  upon the request of the Market Value Agent,
on behalf of the Majority Noteholders, shall enter into such Hedging Instruments
as the Market  Value  Agent,  on behalf of the  Majority  Noteholders,  may deem
appropriate  to  hedge  the  interest  rate  risk   associated  with  the  Notes
attributable  to Loans  bearing a fixed Loan  Interest  Rate and relative to the
expected Securitization Proceeds therefrom; provided that payments thereunder to
the Collection Account pursuant to SECTION  5.01(B)(1)(X)  constitute qualifying
income  under  Section  856(c)(5)(G)  of the Code.  The Market Value Agent shall
determine,  in its sole discretion,  whether any Hedging Instrument  conforms to
the requirements of SECTION 8.01(B) AND (C).

          (b) Each Hedging  Instrument shall expressly provide that in the event
of a Securitization,  such portion of the Hedging  Instrument shall terminate as
the Majority Noteholders deem appropriate to facilitate the hedging of the risks
specified in SECTION 8.01(A).

          (c) Any Hedging Instrument that provides for any payment obligation on
the part of the Issuer must (i) be without recourse to the assets of the Issuer,
(ii) contain a  non-petition  covenant  provision in the form of SECTION  12.13,

                                      -96-
<PAGE>
(iii)  limit  payment  dates  thereunder  to  Payment  Dates and (iv)  contain a
provision  limiting  any  cash  payments  due  on any  day  under  such  Hedging
Instrument solely to funds available  therefor in the Collection Account on such
day pursuant to SECTION  5.01(C)(3)(II)  hereof and funds available  therefor in
the Transfer Obligation Account.

          (d) Each Hedging Instrument must (i) provide for the direct payment of
any  amounts   thereunder  to  the  Collection   Account   pursuant  to  SECTION
5.01(B)(1)(X),  (ii) contain an  assignment  of all of the Issuer's  rights (but
none of its obligations)  under such Hedging Instrument to the Indenture Trustee
and shall  include  an  express  consent  of the  Hedging  Counterparty  to such
assignment,  (iii)  provide that in the event of the  occurrence  of an Event of
Default,  such Hedging  Instrument  shall  terminate  upon the  direction of the
Majority Noteholders,  (iv) prohibit the Hedging Counterparty from "setting-off"
or "netting"  other  obligations  of the Issuer or its  Affiliates  against such
Hedging  Counterparty's  payment obligations thereunder and (v) provide that the
appropriate portion of the Hedging Instrument will terminate upon the removal of
the related Loans from the Trust Estate.

          (e) The Issuer shall not pledge or otherwise  transfer or encumber any
of its assets in order to secure its obligations in respect of any Hedge Funding
Requirements.

                                   ARTICLE IX

                                  THE SERVICER

          SECTION 9.01 INDEMNIFICATION; THIRD PARTY CLAIMS.

          (a) The  Servicer  shall  indemnify  the Loan  Originator,  the  Owner
Trustee,  the Trust, the Depositor,  the Indenture  Trustee and the Noteholders,
their respective officers,  directors,  employees, agents and "control persons,"
as such term is used under the Act and under the Securities Exchange Act of 1934
as amended (each an "INDEMNIFIED  PARTY") and hold harmless each of them against
any and all claims, losses, damages, penalties,  fines, forfeitures,  reasonable
legal fees and related costs, judgments,  and other costs and expenses resulting
from any claim,  demand,  defense or  assertion  based on or grounded  upon,  or
resulting from, a breach of any of the Servicer's representations and warranties
and covenants  contained in this Agreement or in any way relating to the failure
of the Servicer to perform its duties and service the Loans in  compliance  with
the terms of this  Agreement;  provided,  however,  that if the  Servicer is not
liable  pursuant to the provisions of SECTION  9.01(D) hereof for its failure to
perform its duties and service  the Loans in  compliance  with the terms of this
Agreement,  then the  provisions  of this  SECTION  9.01 shall have no force and
effect with respect to such failure.

          (b) The Loan Originator,  the Depositor,  the Indenture Trustee or the
Noteholders,  as the case may be, shall promptly  notify the Servicer if a claim
is made by a third  party  with  respect  to a breach  of any of the  Servicer's
representations  and warranties and covenants  contained in this Agreement or in
any way  relating  to the  failure of the  Servicer  to  perform  its duties and
service the Loans in compliance with the terms of this  Agreement.  The Servicer
shall  promptly  notify the Indenture  Trustee and the Depositor of any claim of
which it has been notified  pursuant to this SECTION 9.01 by a Person other than
the Depositor,  and, in any event,  shall  promptly  notify the Depositor of its
intended course of action with respect to any claim.

                                      -97-
<PAGE>
          (c) The Servicer  shall be entitled to participate in and, upon notice
to the  Indemnified  Party,  assume the  defense of any such  action or claim in
reasonable  cooperation  with,  and  with the  reasonable  cooperation  of,  the
Indemnified  Party. The Indemnified  Party will have the right to employ its own
counsel in any such action in addition to the counsel of the  Servicer,  but the
fees and  expenses of such  counsel  will be at the expense of such  Indemnified
Party,  unless (i) the  employment  of counsel by the  Indemnified  Party at its
expense has been  authorized in writing by the  Servicer,  (ii) the Servicer has
not in fact  employed  counsel to assume the  defense  of such  action  within a
reasonable time after  receiving  notice of the  commencement of the action,  or
(iii)  the  named  parties  to any such  action  or  proceeding  (including  any
impleaded  parties)  include  both  the  Servicer  and one or  more  Indemnified
Parties,  and the  Indemnified  Parties  shall have been advised by counsel that
there may be one or more legal  defenses  available to them which are  different
from or additional to those available to the Servicer. The Servicer shall not be
liable for any  settlement of any such claim or action unless the Servicer shall
have  consented  thereto  or be in  default on its  obligations  hereunder.  Any
failure by an  Indemnified  Party to comply with the  provisions of this SECTION
9.01 shall relieve the Servicer of liability  only if such failure is materially
prejudicial to the defense of the Servicer of such claim or action and then only
to the extent of such prejudice.

          (d) None of the Loan Originator,  the Depositor or the Servicer or any
of their respective Affiliates,  directors,  officers, employees or agents shall
be under any liability to the Owner Trustee,  the Issuer,  the Indenture Trustee
or the  Securityholders  for any action taken, or for refraining from the taking
of any  action,  in good  faith  pursuant  to this  Agreement,  or for errors in
judgment;  provided,  however,  that this  provision  shall not protect the Loan
Originator,  the Depositor,  the Servicer or any of their respective Affiliates,
directors,  officers, employees, agents against the remedies provided herein for
the breach of any  warranties,  representations  or covenants  made  herein,  or
against any expense or liability specifically required to be borne by such party
without  right of  reimbursement  pursuant to the terms  hereof,  or against any
expense or liability  which would otherwise be imposed by reason of misfeasance,
bad faith or  negligence  in the  performance  of the  respective  duties of the
Servicer,  the  Depositor or the Loan  Originator,  as the case may be. The Loan
Originator,  the Depositor, the Servicer and any of their respective Affiliates,
directors, officers, employees, agents may rely in good faith on any document of
any kind which,  prima facie,  is properly  executed and submitted by any Person
respecting any matters arising hereunder.

          (e) The Servicer,  the Loan Originator,  the Depositor,  the Indenture
Trustee and any of their  respective  directors,  officers,  employees,  agents,
Affiliates  and  "control  persons,"  as such term is used under the Act and the
Securities  Exchange Act of 1934, as amended,  shall be indemnified by the Trust
and held harmless against any loss,  liability or expense incurred in connection
with any audit,  controversy or judicial  proceeding  relating to a governmental
taxing  authority  or  any  legal  action  relating  to  this  Agreement  or the
Securities,  other than any loss,  liability or expense  related to any specific
Loan or Loans (except as any such loss,  liability or expense shall be otherwise
reimbursable  pursuant to this  Agreement)  and any loss,  liability  or expense
incurred  by reason of  willful  misfeasance,  bad  faith or  negligence  in the
performance  of  duties  hereunder  or  by  reason  of  reckless   disregard  of
obligations and duties hereunder.  Except as otherwise provided herein,  none of

                                      -98-
<PAGE>
the Loan Originator,  the Depositor, the Servicer or the Indenture Trustee shall
be under any obligation to appear in,  prosecute or defend any legal action that
is not  related to its  respective  duties  under this  Agreement  and which may
involved it in any expenses or liability;  provided,  however,  that,  except as
otherwise  provided  herein,  any of the Loan  Originator,  the  Depositor,  the
Servicer or the  Indenture  Trustee may,  with the prior consent of the Majority
Noteholders,  in its  discretion  undertake  any such  action  which it may deem
necessary or desirable  with respect to this Agreement and the rights and duties
of the parties hereto and the interests of the Issuer hereunder.  In such event,
the  legal  expenses  and  costs  of such  action  and any  liability  resulting
therefrom  shall be reimbursed  therefor out of the Collection  Account,  to the
extent that funds are available therein, as provided in SECTION 5.01(C)(1).

          (f) The Servicer and any Affiliate  thereof shall be  indemnified  and
held harmless by the Owner Trust  against any  liability or expense  incurred in
connection  with any third party  claims  brought  against the  Servicer and any
Affiliate thereto, which are related to the servicing of the Loans in accordance
with this Agreement,  including actions taken by the Servicer in accordance with
written  instructions  given to the Servicer by the Noteholders,  other than any
liability or expense: (i) specifically  required to be borne thereby pursuant to
the terms hereof or otherwise  incidental to the  performance of obligations and
duties hereunder, including the prosecution of enforcement actions in respect of
any specific  Loan or Loans  (except as any such  liability or expense  shall be
otherwise reimbursable pursuant to this Agreement);  (ii) incurred in connection
with any breach of a  representation,  warranty or covenant made therein;  (iii)
incurred by reason of  misfeasance,  bad faith or  negligence by the Servicer or
its  Affiliates  in the  performance  of  its or  their  obligations  or  duties
hereunder; (iv) incurred in connection with any violation by the Servicer or its
Affiliates  of any state or  federal  securities  law;  (v) claims for which the
Servicer is required to indemnify  any Person  pursuant to this SECTION 9.01; or
(vi) which result from the failure of the Servicer to service and administer the
Loans in strict compliance with the terms of this Agreement.

          (g) SERVICER TO INDEMNIFY  INDENTURE  TRUSTEE.  The Servicer agrees to
perform all of its obligations set forth in Section 6.07 of the Indenture.

          SECTION 9.02 MERGER OR CONSOLIDATION OF THE SERVICER.

          The  Servicer  shall  keep in full  effect its  existence,  rights and
franchises as a corporation,  and will obtain and preserve its  qualification to
do  business as a foreign  corporation  and  maintain  such other  licenses  and
permits  in  each   jurisdiction   necessary   to  protect  the   validity   and
enforceability  of each  Basic  Document  to which it is a party and each of the
Loans and to perform  its duties  under  each  Basic  Document  to which it is a
party;  provided,  however,  that the Servicer may merge or consolidate with any
other  corporation  upon the  satisfaction  of the  conditions  set forth in the
following paragraph.

          Any Person into which the Servicer may be merged or  consolidated,  or
any corporation resulting from any merger,  conversion or consolidation to which
the Servicer shall be a party,  or any Person  succeeding to the business of the
Servicer,  shall be an  Eligible  Servicer  and  shall be the  successor  of the
Servicer, as applicable hereunder,  without the execution or filing of any paper
or any further act on the part of any of the parties hereto,  anything herein to
the contrary notwithstanding. The Servicer shall send notice of any such merger,
conversion, consolidation or succession to the Indenture Trustee and the Issuer.

                                      -99-
<PAGE>
          SECTION 9.03 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS.

          The  Servicer  and any  director,  officer,  employee  or agent of the
Servicer may rely on any document of any kind which it in good faith  reasonably
believes  to be  genuine  and to have  been  adopted  or  signed  by the  proper
authorities  respecting any matters arising  hereunder.  Subject to the terms of
SECTION  9.01  hereof,  the  Servicer  shall have no  obligation  to appear with
respect to,  prosecute or defend any legal action which is not incidental to the
Servicer's duty to service the Loans in accordance with this Agreement.

          SECTION 9.04 SERVICER NOT TO RESIGN; ASSIGNMENT.

          The Servicer shall not resign from the  obligations  and duties hereby
imposed on it except (a) with the consent of the  Indenture  Trustee or (b) upon
determination  that  its  duties  hereunder  are  no  longer  permissible  under
applicable law. Any such  determination  pursuant to clause (b) of the preceding
sentence  permitting  the  resignation  of the Servicer shall be evidenced by an
independent  opinion of counsel to such effect  delivered (at the expense of the
Servicer) to the Indenture Trustee.  No resignation of the Servicer shall become
effective until a successor  servicer,  appointed  pursuant to the provisions of
SECTION 10.02 hereof and satisfying the requirements of SECTION 4.07 hereof with
respect to the  qualifications of a successor  Servicer,  shall have assumed the
Servicer's  responsibilities,  duties, liabilities (other than those liabilities
arising prior to the appointment of such  successor) and obligations  under this
Agreement.

          Except as expressly  provided herein, the Servicer shall not assign or
transfer  any of its  rights,  benefits  or  privileges  hereunder  to any other
Person,  or delegate to or  subcontract  with, or authorize or appoint any other
Person to perform any of the duties, covenants or obligations to be performed by
the Servicer hereunder and any agreement, instrument or act purporting to effect
any such assignment, transfer, delegation or appointment shall be void.

          The  Servicer  agrees to  cooperate  with any  successor  Servicer  in
effecting the transfer of the Servicer's  servicing  responsibilities and rights
hereunder  pursuant to the first  paragraph  of this  SECTION  9.04,  including,
without  limitation,  the transfer to such successor of all relevant records and
documents  (including  any Loan Files in the possession of the Servicer) and all
amounts  received  with respect to the Loans and not  otherwise  permitted to be
retained by the Servicer pursuant to this Agreement.  In addition, the Servicer,
at its sole cost and  expense,  shall  prepare,  execute and deliver any and all
documents and instruments to the successor  Servicer including all Loan Files in
its  possession  and do or accomplish all other acts necessary or appropriate to
effect such termination and transfer of servicing responsibilities.

          SECTION  9.05  RELATIONSHIP  OF SERVICER  TO ISSUER AND THE  INDENTURE
TRUSTEE.

          The relationship of the Servicer (and of any successor to the Servicer
as servicer under this Agreement) to the Issuer and the Indenture  Trustee under
this  Agreement is intended by the parties  hereto to be that of an  independent
contractor  and not of a joint  venturer,  agent or partner of the Issuer or the
Indenture Trustee.

                                     -100-
<PAGE>
          SECTION 9.06 SERVICER MAY OWN SECURITIES.

          Each of the  Servicer  and any  Affiliate  of the  Servicer may in its
individual or any other capacity  become the owner or pledgee of Securities with
the same  rights as it would have if it were not the  Servicer  or an  Affiliate
thereof except as otherwise specifically provided herein. Securities so owned by
or  pledged  to  the  Servicer  or  such  Affiliate  shall  have  an  equal  and
proportionate   benefit  under  the  provisions  of  this   Agreement,   without
preference,  priority, or distinction as among all of the Securities;  provided,
however,  that any  Securities  owned by the Servicer or any Affiliate  thereof,
during  the time such  Securities  are owned by them,  shall be  without  voting
rights for any purpose set forth in this  Agreement.  The Servicer  shall notify
the Indenture  Trustee  promptly after it or any of its  Affiliates  becomes the
owner or pledgee of a Security.

                                    ARTICLE X

                                     DEFAULT

          SECTION 10.01 EVENTS OF DEFAULT.

          (a) In case one or more of the  following  Events  of  Default  by the
Servicer shall occur and be continuing, that is to say:

          (i) any failure by Servicer to deposit (A) into the Collection Account
     in accordance  with SECTION  5.01(B) any amount required to be deposited by
     it under any Basic Document to which it is a party, which failure continues
     unremedied  for two days following the date on which such deposit was first
     requested  to be  made or (B)  the  full  amount  of any  Periodic  Advance
     required to be made on the day such  Periodic  Advances  are required to be
     made,  which failure  continues  unremedied  until 12:00 p.m. New York City
     time on the Business Day following such day; or

          (ii)  any  failure  on the part of the  Servicer  duly to  observe  or
     perform in any  material  respect any other of the  material  covenants  or
     agreements on the part of the Servicer,  contained in any Basic Document to
     which it is a party,  which  continues  unremedied  for a period of 30 days
     (or, in the case of payment of insurance premiums, for a period of 15 days)
     after the date on which written notice of such failure,  requiring the same
     to be  remedied,  shall have been given to the  Servicer by any other party
     hereto or to the  Servicer  (with  copy to each  other  party  hereto),  by
     Holders of 25% of the Percentage Interests (as defined in the Indenture) of
     the Notes or the Certificates; or

          (iii) any breach on the part of the Servicer of any  representation or
     warranty  contained  in any  Basic  Document  to which  it is a party  that
     materially and adversely affects the interests of any of the parties hereto
     or any  Securityholder  and which  continues  unremedied for a period of 30
     days after the date on which notice of such breach,  requiring  the same to
     be  remedied,  shall have been  given to the  Servicer  by any other  party
     hereto or to the Servicer  (with copy to each other party  hereto),  by the
     Initial  Noteholder  or Holders of 25% of the  Percentage  Interests of the
     Notes or the Certificates; or

                                     -101-
<PAGE>
          (iv)  there  shall  have  been  commenced  before a court or agency or
     supervisory  authority  having  jurisdiction in the premises an involuntary
     proceeding  against the  Servicer  under any  present or future  federal or
     state  bankruptcy,  insolvency  or  similar  law for the  appointment  of a
     conservator,  receiver,  liquidator,  trustee  or similar  official  in any
     bankruptcy,  insolvency,  readjustment  of debt,  marshaling  of assets and
     liabilities or similar proceedings, or for the winding-up or liquidation of
     its affairs,  which action shall not have been dismissed for a period of 60
     days; or

          (v) the Servicer  shall consent to the  appointment  of a conservator,
     receiver,  liquidator,  trustee  or  similar  official  in any  bankruptcy,
     insolvency,  readjustment of debt,  marshaling of assets and liabilities or
     similar  proceedings  of or  relating  to it or of or  relating  to  all or
     substantially all of its property; or

          (vi) the  Servicer  shall  admit in writing its  inability  to pay its
     debts  generally as they become due,  file a petition to take  advantage of
     any applicable  bankruptcy,  insolvency or reorganization  statute, make an
     assignment for the benefit of its creditors, voluntarily suspend payment of
     its  obligations,  or take  any  corporate  action  in  furtherance  of the
     foregoing; or

          (vii) FFCA or any  Subsidiary  of FFCA shall  incur any Debt such that
     the ratio of  Consolidated  Income  Available for Debt Service to Quarterly
     Service  Charge for the most recent fiscal  quarter for which  consolidated
     financial  statements  of FFCA are  available is less than 1.75 to 1.0 on a
     pro forma basis after giving effect to the  incurrence of such Debt and the
     application of the proceeds therefrom; or

          (viii) the rating of the long-term, senior, unsecured debt obligations
     of the Servicer is withdrawn by Moody's or S&P or is downgraded  below Ba2,
     by Moody's, or BB, by S&P.

          (b) Then,  and in each and  every  such  case,  so long as an Event of
Default  shall not have been  remedied,  the  Indenture  Trustee or the Majority
Noteholders,  by notice in writing to the Servicer  may, in addition to whatever
rights such Person may have at law or in equity to damages, including injunctive
relief and specific performance, may terminate all the rights and obligations of
the  Servicer  under  this  Agreement  and in and to the Loans and the  proceeds
thereof, as servicer under this Agreement.  Upon receipt by the Servicer of such
written  notice,  all authority and power of the Servicer under this  Agreement,
whether with respect to the Loans or otherwise,  shall, subject to SECTION 10.02
hereof,  pass to and be  vested  in a  successor  servicer,  and  the  successor
servicer is hereby authorized and empowered to execute and deliver, on behalf of
the Servicer, as attorney-in-fact or otherwise,  any and all documents and other
instruments  and do or cause to be done all other  acts or things  necessary  or
appropriate to effect the purposes of such notice of termination, including, but
not limited to, the  transfer and  endorsement  or  assignment  of the Loans and
related documents.  The Servicer agrees to cooperate with the successor servicer
in effecting  the  termination  of the  Servicer's  responsibilities  and rights
hereunder, including, without limitation, the transfer to the successor servicer
for  administration  by it of all amounts which shall at the time be credited by
the Servicer to each Collection  Account or thereafter  received with respect to
the Loans.

                                     -102-
<PAGE>
          (c) Immediately  upon the occurrence  hereunder or under the Indenture
of an Event of  Default  or a  Default,  the Loan  Originator,  shall,  upon the
request of the Majority  Noteholders  provide to the  Indenture  Trustee and the
Initial  Noteholder  for each (i) Mortgage,  (ii) power of attorney  pursuant to
which a Mortgage was executed, (iii) assumption, modification,  consolidation or
extension  agreement  relating to a Mortgage,  (iv) Assignment of Mortgage,  (v)
assignment  of  leases  or  rents,  (vi)  UCC-1  Financing   Statement  and  UCC
continuation   statement,   (vii)  Security  Agreement  and  (viii)  assumption,
modification,  consolidation  or  extension  agreement  relating  to a  Security
Agreement  with  respect  to which the  Indenture  Trustee's  Loan File does not
contain the original,  a certificate or certificates of (x) in the case of items
(i) and (ii) a Responsible Officer of the Loan Originator,  the closing attorney
or an officer of the title insurer or agent of the title insurer that issued the
related Title Policy and (y) in the case of the remaining  items,  a Responsible
Officer of the Loan Originator, certifying that such copy is a true, correct and
complete copy of the related original, which original has not been returned from
the applicable public recording office.

          SECTION 10.02 APPOINTMENT OF SUCCESSOR.

          On and after the date the  Servicer  receives a notice of  termination
pursuant  to  SECTION  10.01  hereof,  or the  Indenture  Trustee  receives  the
resignation of the Servicer evidenced by an Opinion of Counsel or accompanied by
the  consents  required by SECTION  9.04  hereof,  or the Servicer is removed as
servicer  pursuant to this Article X or SECTION  4.01(F)(II),  then,  subject to
SECTION 4.07 hereof, the Majority Noteholders shall appoint a successor servicer
to be the  successor in all respects to the Servicer in its capacity as Servicer
under this Agreement and the  transactions  set forth or provided for herein and
shall be subject to all the  responsibilities,  duties and liabilities  relating
thereto  placed on the Servicer by the terms and  provisions  hereof;  provided,
however,  that the successor servicer shall not be liable for any actions of any
servicer prior to it.

          The successor  servicer shall be obligated to make Servicing  Advances
hereunder.  As compensation  therefor, the successor servicer appointed pursuant
to the following paragraph, shall be entitled to all funds relating to the Loans
which the  Servicer  would have been  entitled  to receive  from the  Collection
Account  pursuant to SECTION  5.01(C) hereof as if the Servicer had continued to
act as servicer  hereunder,  together with other  Servicing  Compensation in the
form of  assumption  fees,  late  payment  charges or  otherwise  as provided in
SECTION 7.03 hereof.  The Servicer shall not be entitled to any  termination fee
if it is  terminated  pursuant to SECTION  10.01 hereof but shall be entitled to
any accrued and unpaid Servicing Fee to the date of termination.

          Any collections  received by the Servicer after removal or resignation
shall be endorsed by it to the  Indenture  Trustee and remitted  directly to the
successor  servicer.  The compensation of any successor servicer appointed shall
be the Servicing Fee,  together with other Servicing  Compensation  provided for
herein. The Indenture Trustee,  the Issuer, any Custodian,  the Servicer and any
such successor servicer shall take such action,  consistent with this Agreement,
as shall be  reasonably  necessary to effect any such  succession.  Any costs or
expenses incurred by the Indenture Trustee in connection with the termination of
the Servicer and the  succession of a successor  servicer shall be an expense of
the outgoing  Servicer and, to the extent not paid  thereby,  an expense of such
successor servicer.  The Servicer agrees to cooperate with the Indenture Trustee
and any  successor  servicer in  effecting  the  termination  of the  Servicer's

                                     -103-
<PAGE>
servicing  responsibilities  and rights hereunder and shall promptly provide the
successor  servicer  all  documents  and records  reasonably  requested by it to
enable it to assume the Servicer's  functions  hereunder and shall promptly also
transfer to the  successor  servicer all amounts  which then have been or should
have been deposited in any Trust Account maintained by the Servicer or which are
thereafter  received with respect to the Loans.  No successor  servicer shall be
held  liable by reason  of any  failure  to make,  or any delay in  making,  any
distribution  hereunder or any portion  thereof caused by (i) the failure of the
Servicer to deliver, or any delay in delivering,  cash,  documents or records to
it or (ii) restrictions  imposed by any regulatory authority having jurisdiction
over the  Servicer  hereunder.  No  appointment  of a successor  to the Servicer
hereunder shall be effective  until written notice of such proposed  appointment
shall have been provided by the Indenture Trustee to the Initial Noteholder, the
Issuer and the Depositor and the  Depositor,  the Majority  Noteholders  and the
Issuer shall have consented in writing thereto.

          In  connection  with such  appointment  and  assumption,  the Majority
Noteholder may make such  arrangements  for the  compensation  of such successor
servicer out of payments on the Loans as they and such successor  servicer shall
agree.

          SECTION 10.03 WAIVER OF DEFAULTS.

          The Majority  Noteholders may waive any events  permitting  removal of
the Servicer as servicer pursuant to this Article X; provided, however, that the
Majority  Noteholders may not waive a default in making a required  distribution
on a Note or Trust Certificate  without the consent of the related Noteholder or
Certificateholder.  Upon any waiver of a past default,  such default shall cease
to exist and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto except to the
extent expressly so waived.

          SECTION 10.04 ACCOUNTING UPON TERMINATION OF SERVICER.

          Upon  termination  of the Servicer  under this Article X, the Servicer
shall, at its own expense:

          (a)  deliver  to its  successor  or,  if  none  shall  yet  have  been
appointed, to the Indenture Trustee the funds in any Trust Account maintained by
the Servicer;

          (b)  deliver  to its  successor  or,  if  none  shall  yet  have  been
appointed,  to the  Indenture  Trustee all Loan Files and related  documents and
statements held by it hereunder and a Loan portfolio computer tape;

          (c)  deliver  to its  successor  or,  if  none  shall  yet  have  been
appointed,  to the Indenture Trustee and to the Issuer and the Securityholders a
full accounting of all funds, including a statement showing the Monthly Payments
collected  by it and a statement  of monies held in trust by it for  payments or
charges with respect to the Loans; and

          (d)  execute  and  deliver  such  instruments  and  perform  all  acts
reasonably  requested in order to effect the orderly and  efficient  transfer of
servicing of the Loans to its successor and to more fully and definitively  vest
in such successor all rights, powers, duties, responsibilities,  obligations and
liabilities of the Servicer under this Agreement.

                                     -104-
<PAGE>
                                   ARTICLE XI

                                   TERMINATION

          SECTION 11.01 TERMINATION.

          This Agreement shall  terminate upon either:  (a) the later of (i) the
satisfaction  and discharge of the Indenture and the provisions  thereof or (ii)
the disposition of all funds with respect to the last Loan and the remittance of
all  funds  due  hereunder  and the  payment  of all  amounts  due  and  payable
(including, without limitation, indemnification payments payable pursuant to any
Basic Document) to the Indenture Trustee,  the Owner Trustee, the Issuer and the
Custodian, written notice of the occurrence of either of which shall be provided
to the  Indenture  Trustee by the  Servicer;  or (b) the  mutual  consent of the
Servicer, the Depositor,  the Loan Originator and all Securityholders in writing
and delivered to the Indenture Trustee by the Servicer.

          SECTION 11.02 OPTIONAL TERMINATION.

          The Majority  Certificateholders may, at their option, effect an early
termination of the Trust on any Payment Date on or after the Clean-up Call Date.
The Majority Certificateholders shall effect such early termination by providing
notice thereof to the Indenture  Trustee and Owner Trustee and by purchasing all
of the Loans at a purchase price,  payable in cash, equal to or greater than the
Termination Price. The expense of any Independent  appraiser required under this
SECTION   11.02   shall   be  a   nonreimbursable   expense   of  the   Majority
Certificateholders.

          Any such early termination by the Majority Certificateholders shall be
accomplished by depositing into the Collection Account on the third Business Day
prior to the  Payment  Date on which the  purchase is to occur the amount of the
Termination  Price to be paid.  The  Termination  Price and any amounts  then on
deposit in the Collection Account (other than any amounts withdrawable  pursuant
to SECTION  5.01(C)(1)  hereof) shall be  distributed  by the Indenture  Trustee
(except as may be otherwise provided in the Collection Account Letter Agreement)
pursuant to SECTION  5.01(C)(3)  and Section 9.1 of the Trust  Agreement  on the
next succeeding Payment Date; and any amounts received with respect to the Loans
and Foreclosure  Properties subsequent to the final Payment Date shall belong to
the purchaser thereof.

          SECTION 11.03 NOTICE OF TERMINATION.

          Notice of  termination  of this  Agreement or of early  redemption and
termination  of the  Trust  shall be sent (i) by the  Indenture  Trustee  to the
Noteholders  in  accordance  with Section 10.02 of the Indenture and (ii) by the
Owner Trustee to the Certificateholders in accordance with Section 9.1(d) of the
Trust Agreement.

                                     -105-
<PAGE>
                                   ARTICLE XII

                            MISCELLANEOUS PROVISIONS

          SECTION 12.01 ACTS OF NOTEHOLDERS.

          Except as otherwise  specifically  provided  herein,  whenever action,
consent or approval of the  Securityholders  is required  under this  Agreement,
such action,  consent or approval shall be deemed to have been taken or given on
behalf  of, and shall be  binding  upon,  all  Securityholders  if the  Majority
Securityholders agree to take such action or give such consent or approval.

          SECTION 12.02 AMENDMENT.

          (a) This  Agreement may be amended from time to time by the Depositor,
the  Servicer,  the Loan  Originator,  the  Indenture  Trustee and the Issuer by
written  agreement  with  notice  thereof to the  Securityholders,  without  the
consent  of any of the  Securityholders,  to cure  any  error or  ambiguity,  to
correct  or  supplement  any  provisions   hereof  which  may  be  defective  or
inconsistent  with any other  provisions  hereof or to add any other  provisions
with respect to matters or questions  arising  under this  Agreement;  provided,
however,  that such action will not adversely affect in any material respect the
interests of the  Securityholders.  An amendment described above shall be deemed
not  to  adversely   affect  in  any  material  respect  the  interests  of  the
Securityholders if an Opinion of Counsel is obtained to such effect.

          (b)  This  Agreement  may  also be  amended  from  time to time by the
Depositor,  the Servicer,  the Loan  Originator,  the Indenture  Trustee and the
Issuer by written  agreement,  with the prior  written  consent of the  Majority
Noteholders,  for the  purpose of adding any  provisions  to or  changing in any
manner or eliminating any of the provisions of this  Agreement,  or of modifying
in any manner the rights of the Securityholders; provided, however, that no such
amendment  shall (i) reduce in any manner the amount of, or delay the timing of,
collections of payments on Loans or distributions  which are required to be made
on any Security,  without the consent of the holders of 100% of the Notes,  (ii)
adversely  affect in any material respect the interests of any of the holders of
the Notes in any manner  other than as  described  in clause  (i),  without  the
consent of the holders of 100% of the Notes,  or (iii) reduce the  percentage of
the Notes, the consent of which is required for any such amendment,  without the
consent of the holders of 100% of the Notes.

          (c) It shall not be necessary for the consent of Securityholders under
this Section to approve the particular  form of any proposed  amendment,  but it
shall be sufficient if such consent shall approve the substance thereof.

          Prior to the execution of any amendment to this Agreement,  the Issuer
and the Indenture  Trustee shall be entitled to receive and rely upon an Opinion
of Counsel  stating  that the  execution  of such  amendment  is  authorized  or
permitted by this Agreement. The Issuer and the Indenture Trustee may, but shall
not be obligated  to, enter into any such  amendment  which affects the Issuer's
own rights,  duties or immunities of the Issuer or the Indenture Trustee, as the
case may be, under this Agreement.

                                     -106-
<PAGE>
          SECTION 12.03 RECORDATION OF AGREEMENT.

          To the extent  permitted  by  applicable  law,  this  Agreement,  or a
memorandum  thereof if permitted under applicable law, is subject to recordation
in all  appropriate  public  offices  for real  property  records  in all of the
counties  or other  comparable  jurisdictions  in  which  any or all of the Loan
Collateral is situated,  and in any other appropriate public recording office or
elsewhere,  such  recordation to be effected by the Servicer at the Noteholders'
expense on direction of the Majority Noteholders but only when accompanied by an
Opinion  of  Counsel  to  the  effect  that  such  recordation   materially  and
beneficially  affects the interests of the  Noteholders  or is necessary for the
administration or servicing of the Loans.

          SECTION 12.04 DURATION OF AGREEMENT.

          This Agreement shall continue in existence and effect until terminated
as herein provided.

          SECTION 12.05 GOVERNING LAW.

          THIS AGREEMENT  SHALL BE CONSTRUED IN ACCORDANCE  WITH THE LAWS OF THE
STATE  OF NEW YORK AND THE  OBLIGATIONS,  RIGHTS  AND  REMEDIES  OF THE  PARTIES
HEREUNDER  SHALL BE  DETERMINED  IN ACCORDANCE  WITH SUCH LAWS,  WITHOUT  GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.

          SECTION 12.06 NOTICES.

          All demands,  notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if (i) delivered personally,  mailed
by overnight mail,  certified mail or registered mail, postage prepaid,  or (ii)
transmitted by telecopy,  upon telephone confirmation of receipt thereof (with a
copy  delivered  by  overnight  courier),  as  follows:  (I) in the  case of the
Depositor, to FFCA Loan Warehouse Corporation, The Perimeter Center, 17207 North
Perimeter Drive, Scottsdale, Arizona 85255, Attention: Dennis L. Ruben, telecopy
number: (480) 585-2230, telephone number: (480) 585-4500 or such other addresses
or  telecopy  or  telephone  numbers  as  may  hereafter  be  furnished  to  the
Securityholders  and the other parties hereto in writing by the Depositor;  (II)
in the case of the  Issuer,  to FFCA  Franchise  Loan Owner  Trust  1998-1,  c/o
Wilmington  Trust  Company,  Rodney  Square  North,  1100 North  Market  Street,
Wilmington, Delaware 19890, Attention: Corporate Trust Administration,  telecopy
number:  (302) 651-8882,  telephone number: (302) 651-1000 or such other address
or  telecopy  or  telephone  numbers  as  may  hereafter  be  furnished  to  the
Securityholders and the other parties hereto in writing by the Depositor;  (III)
in the  case of the  Loan  Originator,  to  FFCA  Acquisition  Corporation,  The
Perimeter Center, 17207 North Perimeter Drive, Scottsdale, Arizona 85255, Dennis
L. Ruben,  telecopy number: (480) 585-2230,  telephone number: (480) 585-4500 or

                                     -107-
<PAGE>
such other  addresses  or  telecopy or  telephone  numbers as may  hereafter  be
furnished to the  Securityholders and the other parties hereto in writing by the
Loan  Originator,  (IV)  in the  case  of the  Servicer,  to  Franchise  Finance
Corporation  of America,  The Perimeter  Center,  17207 North  Perimeter  Drive,
Scottsdale,  Arizona 85255,  Attention:  Dennis L. Ruben, telecopy number: (480)
585-2230,  telephone number:  (480) 585-4500 or such other addresses or telecopy
or telephone  numbers as may hereafter be furnished to the  Securityholders  and
the other  parties  hereto in  writing by the  Servicer;  (V) in the case of the
Indenture  Trustee,  to LaSalle Bank  National  Association,  135 South  LaSalle
Street, Suite 1625, Chicago, Illinois 60603, Attention:  Asset-Backed Securities
Trust Services Group,  FFCA Franchise Loan Owner Trust 1998-1  telecopy  number:
(312)  904-2084,  telephone  number:  (312) 904-7830 or such other  addresses or
telecopy  or   telephone   numbers  as  may   hereafter   be  furnished  to  the
Securityholders  and the  other  parties  hereto  in  writing  by the  Indenture
Trustee;  (VI)  in the  case  of  the  Initial  Noteholder,  to  Morgan  Stanley
Securitization Funding Inc., 1585 Broadway, New York, New York 10036, Attention:
Peter  Woroniecki,  telecopy number:  (212) 761-0710,  telephone  number:  (212)
761-2063; and (VII) in the case of the Securityholders, as set forth in the Note
Register.  Any such notices shall be deemed to be effective  with respect to any
party hereto upon the receipt of such notice or telephone  confirmation  thereof
by such party, except;  provided,  that notices to the Securityholders  shall be
effective upon mailing or personal delivery.

          SECTION 12.07 SEVERABILITY OF PROVISIONS.

          If any one or more of the covenants,  agreements,  provisions or terms
of this  Agreement  shall be held invalid for any reason  whatsoever,  then such
covenants,  agreements,  provisions or terms shall be deemed  severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no  way  affect  the  validity  or  enforceability  of the  other  covenants,
agreements, provisions or terms of this Agreement.

          SECTION 12.08 NO PARTNERSHIP.

          Nothing  herein  contained  shall be deemed or construed to create any
partnership or joint venture  between the parties hereto and the services of the
Servicer shall be rendered as an independent contractor.

          SECTION 12.09 COUNTERPARTS.

          This Agreement may be executed in one or more  counterparts and by the
different  parties  hereto on  separate  counterparts,  each of  which,  when so
executed, shall be deemed to be an original; such counterparts,  together, shall
constitute one and the same Agreement.

          SECTION 12.10 SUCCESSORS AND ASSIGNS.

          This  Agreement  shall inure to the benefit of and be binding upon the
Servicer, the Loan Originator,  the Depositor, the Indenture Trustee, the Issuer
and the Noteholders and their respective successors and permitted assigns.

          SECTION 12.11 HEADINGS.

          The  headings of the  various  sections  of this  Agreement  have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.

                                     -108-
<PAGE>
          SECTION 12.12 ACTIONS OF SECURITYHOLDERS.

          (a) Any request, demand,  authorization,  direction,  notice, consent,
waiver  or  other  action  provided  by this  Agreement  to be given or taken by
Securityholders  may be embodied in and evidenced by one or more  instruments of
substantially similar tenor signed by such Securityholders in person or by agent
duly appointed in writing;  and except as herein otherwise  expressly  provided,
such action shall become  effective  when such  instrument  or  instruments  are
delivered to the  Depositor,  the Servicer or the Issuer.  Proof of execution of
any  such  instrument  or of a  writing  appointing  any  such  agent  shall  be
sufficient  for any purpose of this  Agreement  and  conclusive  in favor of the
Depositor,  the Servicer  and the Issuer if made in the manner  provided in this
SECTION 12.12.

          (b) The fact and date of the  execution by any  Securityholder  of any
such  instrument  or writing may be proved in any  reasonable  manner  which the
Depositor, the Servicer or the Issuer deems sufficient.

          (c) Any request, demand,  authorization,  direction,  notice, consent,
waiver  or other  act by a  Securityholder  shall  bind  every  holder  of every
Security  issued  upon the  registration  of  transfer  thereof  or in  exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done,
by the Depositor, the Servicer or the Issuer in reliance thereon, whether or not
notation of such action is made upon such Security.

          (d) The Depositor,  the Servicer or the Issuer may require  additional
proof  of any  matter  referred  to in  this  SECTION  12.12  as it  shall  deem
necessary.

          SECTION 12.13 NON-PETITION AGREEMENT.

          Notwithstanding any prior termination of any Basic Document,  the Loan
Originator, the Servicer, the Depositor and the Indenture Trustee each severally
and not jointly covenants that it shall not, prior to the date which is one year
and one day  after  the  payment  in  full of the all of the  Notes,  acquiesce,
petition or otherwise,  directly or indirectly, invoke or cause the Trust or the
Depositor to invoke the process of any governmental authority for the purpose of
commencing or sustaining a case against the Trust or Depositor under any Federal
or state  bankruptcy,  insolvency  or  similar  law or  appointing  a  receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Trust or Depositor or any substantial part of their  respective  property
or  ordering  the winding up or  liquidation  of the affairs of the Trust or the
Depositor.

          SECTION 12.14 HOLDERS OF THE TRUST CERTIFICATES.

          (a) Any sums to be  distributed  or otherwise  paid hereunder or under
the Trust  Agreement to the holders of the Trust  Certificates  shall be paid to
such  holders pro rata based on their  Percentage  Interests  (as defined in the
Trust Agreement);

          (b) Where any act or event hereunder is expressed to be subject to the
consent or approval of the holders of the Trust  Certificates,  such  consent or
approval shall be capable of being given by the holder or holders  evidencing in
the aggregate not less than 51% of the  Percentage  Interests (as defined in the
Trust Agreement).

                                     -109-
<PAGE>
          SECTION 12.15 FFCA TO GUARANTEE CERTAIN LOAN ORIGINATOR OBLIGATIONS.

          (a) FFCA hereby  unconditionally  guarantees to the Indenture  Trustee
and the Noteholders  the due and punctual  payment of all amounts payable by the
Loan  Originator  under Sections 2.3 and 3.1 of the Loan Purchase  Agreement and
SECTIONS  2.05,   3.05  AND  3.07(A)  hereof   (collectively,   the  "GUARANTEED
OBLIGATIONS")  when and as such  obligations  thereunder  shall  become  due and
payable.  In case of the inability of the Loan  Originator to pay punctually any
such amounts,  FFCA hereby agrees,  upon written demand by the Indenture Trustee
or the  Majority  Noteholders,  to pay or  cause  to be paid  any  such  amounts
punctually  when and as the same shall become due and payable  (exclusive of any
grace period).

          (b) FFCA hereby agrees that its  obligations  under this SECTION 12.15
constitute a guaranty of payment when due and not of collection.

          (c) FFCA hereby agrees that its  obligations  under this SECTION 12.15
shall  be   unconditional,   irrespective   of  the   validity,   regularity  or
enforceability  of any Basic  Document to which the Loan  Originator  is a party
against  the Loan  Originator,  the  absence of any  action to enforce  the Loan
Originator's  obligations  under any Basic Document to which it is a party,  any
waiver or consent by the  Indenture  Trustee or the  Majority  Noteholders  with
respect to any of the  Guaranteed  Obligations or any other  circumstance  which
might otherwise  constitute a legal or equitable  discharge or defense of a FFCA
(other than the defenses of statute of  limitations or payment (as such defenses
may apply to FFCA), which are not waived); PROVIDED, HOWEVER, that FFCA shall be
entitled to exercise  any right that the Loan  Originator  could have  exercised
under each Basic  Document to which the Loan  Originator  is a party to cure any
default in respect of the Guaranteed Obligations.

          (d) FFCA hereby waives (i) promptness,  diligence, presentment, demand
of payment,  protest,  order and,  except as set forth in paragraph  (a) hereof,
notice of any kind in  connection  with each  Basic  Document  to which the Loan
Originator is a party, or (ii) any requirement that the Indenture Trustee or the
Noteholders  exhaust any right to take any action against the Loan Originator or
any other person prior to or  contemporaneously  with proceeding to exercise any
right against FFCA under this SECTION 12.15.

          SECTION 12.16 REPORTS IN ELECTRONIC FORM.

          Notwithstanding anything to the contrary in this Agreement, any report
required to be furnished by a party to this Agreement to the Initial  Noteholder
may be furnished by magnetic tape or computer disk in a form mutually  agreed to
by the Initial  Noteholder and the party  providing such  information,  provided
that such report is delivered timely in accordance with the terms herein.

          SECTION 12.17 LIMITATION OF OWNER TRUSTEE LIABILITY.

          It is expressly  understood  and agreed by the parties hereto that (a)
this  Agreement  is executed and  delivered by  Wilmington  Trust  Company,  not
individually  or personally  but solely as Trustee of FFCA  Franchise Loan Owner
Trust 1998-1,  in the exercise of the powers and authority  conferred and vested
in it, (b) each of the representations,  undertakings and agreements herein made
on the part of the Trust is made and intended  not as personal  representations,
undertakings and agreements by Wilmington Trust Company but is made and intended

                                     -110-
<PAGE>
for the purpose for binding only the Trust,  (c) nothing herein  contained shall
be construed as creating any liability on Wilmington Trust Company, individually
or personally,  to perform any covenant  either  expressed or implied  contained
herein, all such liability, if any, being expressly waived by the parties hereto
and by any Person claiming by, through or under the parties hereto and (d) under
no circumstances  shall  Wilmington  Trust Company be personally  liable for the
payment of any indebtedness or expenses of the Trust or be liable for the breach
or failure of any  obligation,  representation,  warranty  or  covenant  made or
undertaken by the Trust under this Agreement or any other related documents.

                            [SIGNATURE PAGE FOLLOWS]

                                     -111-
<PAGE>
          IN WITNESS WHEREOF, the Issuer, the Depositor,  the Servicer, the Loan
Originator  and the  Indenture  Trustee  have caused their names to be signed by
their  respective  officers  thereunto duly  authorized,  as of the day and year
first above written, to this Sale and Servicing Agreement.

                                         FFCA FRANCHISE LOAN OWNER TRUST 1998-1,
                                           as Issuer

                                         By: Wilmington Trust Company, not in
                                             its individual capacity but solely
                                             as Owner Trustee

                                         By: /s/ Rosemary Pantano
                                             -----------------------------------
                                             Name: Rosemary Pantano
                                             Title: Financial Services Officer

                                         FFCA LOAN WAREHOUSE CORPORATION,
                                           as Depositor

                                         By: /s/ Dennis L. Ruben
                                             -----------------------------------
                                             Name: Dennis L. Ruben
                                             Title: Executive Vice President

                                         FFCA ACQUISITION CORPORATION
                                           as Loan Originator

                                         By: /s/ Dennis L. Ruben
                                             -----------------------------------
                                             Name: Dennis L. Ruben
                                             Title: Executive Vice President

                                         FRANCHISE FINANCE CORPORATION OF
                                         AMERICA,
                                           as Servicer

                                         By: /s/ Dennis L. Ruben
                                             -----------------------------------
                                             Name:  Dennis L. Ruben
                                             Title: Executive Vice President

                                         LASALLE BANK NATIONAL ASSOCIATION f/k/a
                                         LASALLE NATIONAL BANK
                                           as Indenture Trustee

                                         By: /s/ Michael Evans
                                             -----------------------------------
                                             Name: Michael Evans
                                             Title: First Vice President
<PAGE>
THE STATE OF ____________   )
                            )
COUNTY OF _______________   )

          BEFORE ME, the undersigned  authority,  a Notary Public, on this _____
day of ____________,  _____ personally appeared _______________,  known to me to
be a person and officer whose name is subscribed to the foregoing instrument and
acknowledged  to me that  the  same  was the act of the  said  WILMINGTON  TRUST
COMPANY, a Delaware banking  corporation,  not in its individual capacity but in
its  capacity as Owner  Trustee of FFCA  FRANCHISE  LOAN OWNER TRUST  1998-1,  a
Delaware  business trust,  as Issuer,  and that such person executed the same as
the  act of said  business  trust  for the  purpose  and  consideration  therein
expressed, and in the capacity therein stated.

          GIVEN  UNDER MY HAND AND SEAL OF      , this the ____ day of  _______,
_____.


                                         _______________________________________
                                         Notary Public, State of _______________


My commission expires:

_________________________
<PAGE>
THE STATE OF ____________   )
                            )
COUNTY OF _______________   )

          BEFORE ME, the undersigned  authority,  a Notary Public, on this _____
day of ____________,  _____ personally  appeared Dennis L. Ruben, known to me to
be a person and officer whose name is subscribed to the foregoing instrument and
acknowledged  to me that the same was the act of the said  FFCA  LOAN  WAREHOUSE
CORPORATION,  as the Depositor, and that he executed the same as the act of such
corporation  for the purpose and  consideration  therein  expressed,  and in the
capacity therein stated.

          GIVEN  UNDER MY HAND AND SEAL OF      , this the ____ day of  _______,
_____.


                                         _______________________________________
                                         Notary Public, State of _______________


My commission expires:

_________________________
<PAGE>
THE STATE OF ____________   )
                            )
COUNTY OF _______________   )

          BEFORE ME, the undersigned  authority, a Notary Public, on this day of
____________,  _____ personally  appeared Dennis L. Ruben, known to me to be the
person and officer  whose name is subscribed  to the  foregoing  instrument  and
acknowledged  to me that  the  same  was the act of the  said  FFCA  ACQUISITION
CORPORATION, as the Loan Originator, and that he executed the same as the act of
such corporation for the purposes and consideration  therein  expressed,  and in
the capacity therein stated.

          GIVEN UNDER MY HAND AND SEAL OF FFCA  ACQUISITION  CORPORTATION,  this
the ____ day of _______, _____.


                                         _______________________________________
                                         Notary Public, State of _______________


My commission expires:

_________________________
<PAGE>
THE STATE OF ____________   )
                            )
COUNTY OF _______________   )

          BEFORE ME, the undersigned  authority, a Notary Public, on this day of
____________,  _____ personally  appeared Dennis L. Ruben, known to me to be the
person and officer  whose name is subscribed  to the  foregoing  instrument  and
acknowledged  to me that  the same  was the act of the  said  FRANCHISE  FINANCE
CORPORATION  OF AMERICA,  as the Servicer,  and that he executed the same as the
act of such corporation for the purposes and  consideration  therein  expressed,
and in the capacity therein stated.

          GIVEN  UNDER MY HAND  AND SEAL OF  FRANCHISE  FINANCE  CORPORATION  OF
AMERICA, this the ____ day of _______, _____.


                                         _______________________________________
                                         Notary Public, State of _______________


My commission expires:

_________________________
<PAGE>
THE STATE OF ____________   )
                            )
COUNTY OF _______________   )

          BEFORE ME, the undersigned  authority, a Notary Public, on this day of
____________,  _____ personally  appeared  Michael Evans,  known to me to be the
person and officer  whose name is subscribed  to the  foregoing  instrument  and
acknowledged  to me that the same was the act of the said LASALLE BANK  NATIONAL
ASSOCIATION f/k/a LASALLE NATIONAL BANK, as the Indenture Trustee,  and that she
executed the same as the act of such entity for the  purposes and  consideration
therein expressed, and in the capacity therein stated.

          GIVEN  UNDER MY HAND AND SEAL OF LASALLE  BANK  NATIONAL  ASSOCIATION,
this the ____ day of _______, _____.


                                         _______________________________________
                                         Notary Public, State of _______________


My commission expires:

_________________________
<PAGE>
                                    EXHIBIT A

               FORM OF NOTICE OF ADDITIONAL NOTE PRINCIPAL BALANCE

                 [Letterhead of FFCA Loan Warehouse Corporation]

                                     [Date]

FFCA Franchise Loan Owner Trust 1998-1
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration

LaSalle Bank National Association
135 South LaSalle Street
Suite 1625
Chicago, Illinois 60603
Attention:  Asset-Backed Securities Trust
Services Group, FFCA Franchise Loan
Owner Trust 1998-1

          Re: FFCA FRANCHISE LOAN BACKED NOTES SERIES 1998-1

Ladies and Gentlemen:

          Reference  is  made  to the  Second  Amended  and  Restated  Sale  and
Servicing  Agreement,  dated as of  January  1,  2000 (the  "SALE AND  SERVICING
AGREEMENT"),  among FFCA Franchise Loan Owner Trust 1998-1,  FFCA Loan Warehouse
Corporation,  as Depositor,  FFCA Acquisition  Corporation,  as Loan Originator,
Franchise Finance  Corporation of America, as Servicer and LaSalle Bank National
Association, as Indenture Trustee,  hereinafter as such agreement may have been,
or may from  time to time  be,  amended,  supplemented  or  otherwise  modified.
Capitalized  terms not defined  herein shall have the meanings  assigned to such
terms in the Sale and Servicing Agreement.

          The   undersigned   ________________,   a  duly   appointed   [Senior]
[Executive]  [Vice  President]  [President] of FFCA Loan Warehouse  Corporation,
acting  in such  capacity,  hereby  requests  and  advance  of  Additional  Note
Principal Balance in an amount of $_____________,  such amount to be advanced on
__________________,  a  Business  Day at least two  Business  Days from the date
hereof for a [Loan] [Table-Funded Loan].
<PAGE>
                                        Very truly yours,

                                        FFCA LOAN WAREHOUSE CORPORATION


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

                                       -2-
<PAGE>
                                    EXHIBIT B

                          SERVICER'S REMITTANCE REPORT

1.    FFCA Loan Number
2.    Beginning Scheduled Principal Balance
3.    Scheduled Principal Amount
4.    Prepayment Penalty
5.    Partial Prepayment Amount
6.    Full Prepayment Amount
7.    Prepayment Date
8.    Prepayment Interest Shortfall Amount
9.    Ending Scheduled Principal Balance
10.   Current Index Rate
11.   Current Gross Rate
12.   Scheduled Interest Amount
13.   Scheduled P&I Amount
14.   Next Index Rate
15.   Next Note Rate
16.   Paid Thru Date
17.   Recovered Delinquency Amount
18.   Current P&I Advance Amount
19.   Outstanding P&I Advance Amount
20.   Property Protection Advance Amount
21.   Amount
22.   Foreclosure Date
23.   Real Estate Owned Date
24.   Real Estate Owned Book Value
25.   Bankruptcy Date
26.   Modification Date
27.   Liquidation Proceeds
28.   liquidation Expenses
29.   Liquidation Date
30.   Special Servicing Transfer Date
31.   Net Operating Income
32.   Net Operating Income Date
33.   Unit-Level Fixed Charge Coverage
34.   Unit-Level Fixed Charge Coverage Date
<PAGE>
                                    EXHIBIT C

                             FORM OF S&SA ASSIGNMENT

          ASSIGNMENT    NO.____   OF   LOANS    ("S&SA    ASSIGNMENT"),    dated
____________________  (the "TRANSFER Date"), by FFCA LOAN WAREHOUSE  CORPORATION
(the  "DEPOSITOR")  to FFCA  FRANCHISE  LOAN OWNER TRUST  1998-1 (the  "Issuer")
pursuant to the Sale and Servicing Agreement referred to below.

                                   WITNESSETH:

          WHEREAS,  the  Depositor  and the  Issuer  are  parties  to the Second
Amended and Restated Sale and Servicing  Agreement,  dated as of January 1, 2000
(the "SALE AND SERVICING  AGREEMENT"),  among the Issuer,  the  Depositor,  FFCA
Acquisition  Corporation,  as Loan Originator,  Franchise Finance Corporation of
America,  as Servicer  and  LaSalle  Bank  National  Association,  as  Indenture
Trustee,  hereinafter  as such agreement may have been, or may from time to time
be, amended, supplemented or otherwise modified;

          WHEREAS,  pursuant to the Sale and Servicing Agreement,  the Depositor
wishes to sell, convey,  transfer and assign Loans to the Issuer in exchange for
consideration  consisting  of cash,  the Trust  Certificates  and other good and
valid consideration the receipt and sufficiency of which is hereby acknowledged;
and

          WHEREAS,  the Issuer is willing to acquire  such Loans  subject to the
terms and conditions hereof and of the Sale and Servicing Agreement;

          NOW THEREFORE, the Depositor and the Issuer hereby agree as follows:

          1.  DEFINED  TERMS.  All  capitalized  terms  defined  in the Sale and
Servicing  Agreement and used herein shall have such defined  meanings when used
herein, unless otherwise defined herein.

          2.  DESIGNATION OF LOANS. The Depositor does hereby deliver herewith a
Loan Schedule containing a true and complete list of each Loan to be conveyed on
the Transfer Date. Such list is marked as Schedule A to this S&SA Assignment and
is hereby incorporated into and made a part of this S&SA Assignment.

          3. CONVEYANCE OF LOANS.  (a) The Depositor hereby  transfers,  assigns
and  conveys  to the  Issuer,  without  recourse,  all of the  right,  title and
interest of the Depositor in and to the Loans and all proceeds thereof listed on
the Loan Schedule attached hereto,  including all interest and principal (i) for
each Loan having a Transfer  Date from and including the first day of a calendar
month to and including the Business Day preceding a Payment Date, received on or
after the opening of business of the Transfer Cutoff Date and (ii) for each Loan
having a Transfer  Date from and  including a Payment Date to and  including the
last day of a calendar month, due on the Loan after the close of business on the
Transfer Cutoff Date), in each case whether received by the Loan Originator, the
Depositor or the Servicer, together with all right, title and interest in and to
the proceeds of any related Insurance Policies and all of the Depositor's right,
title  and  interest  in and to (but  none of its  obligations  under)  the Loan
Purchase Agreement and all proceeds of the foregoing.
<PAGE>
          4. ISSUER ACKNOWLEDGES  ASSIGNMENT.  As of the Transfer Date, pursuant
to this S&SA Assignment and Section 2.01(a) of the Sale and Servicing Agreement,
the Issuer  acknowledges  its receipt of the Loans listed on the  attached  Loan
Schedule and all other related property.

          5.  ACCEPTANCE  OF RIGHTS BUT NOT  OBLIGATIONS.  The  foregoing  sale,
transfer,  assignment, set over and conveyance does not, and is not intended to,
result in a creation or an  assumption  by the Issuer of any  obligation  of the
Depositor,  the Loan Originator or any other Person in connection with this S&SA
Assignment  or under any  agreement or  instrument  relating  thereto  except as
specifically set forth herein.

          6.  DEPOSITOR  ACKNOWLEDGES  RECEIPT OF  CONSIDERATION.  The Depositor
hereby acknowledges receipt of payment for the Loans and related property hereby
conveyed from funds deposited into the Advance Account.

          [TO BE  INSERTED  WHEN  APPLICABLE]  [7.  ASSIGNMENT  OF CERTAIN  SWAP
AGREEMENTS.  The Depositor hereby sells,  transfers and assigns all of its right
title and interest in to and under,  its rights and  obligations  and the Issuer
does  hereby  accept and assume all of the  Depositor's  rights and  obligations
under the following  confirmation(s)  issued under that certain master agreement
between the Depositor and Morgan Stanley Capital Services, Inc. [___] (the "SWAP
AGREEMENT").]

          [7./8.]  CONDITIONS  PRECEDENT.  The  conditions  precedent in Section
2.06(a) of the Sale and Servicing Agreement have been satisfied.

          [8./9.]  AMENDMENT OF THE SALE AND SERVICING  AGREEMENT.  The Sale and
Servicing  Agreement is hereby  amended by providing  that all references to the
"Sale and Servicing  Agreement",  "this  Agreement" and "herein" shall be deemed
from  and  after  the  Transfer  Date to be a dual  reference  to the  Sale  and
Servicing Agreement as supplemented by this S&SA Assignment. Except as expressly
amended hereby, all of the  representations,  warranties,  terms,  covenants and
conditions of the Sale and Servicing  Agreement  shall remain  unamended and the
Sale and Servicing  Agreement  shall  continue to be, and shall remain,  in full
force and effect in accordance  with its terms and except as expressly  provided
herein,  this S&SA Assignment  shall not constitute or be deemed to constitute a
waiver of compliance with or consent to noncompliance with any term or provision
of the Sale and Servicing Agreement.

          [9./10.]  COUNTERPARTS.  This S&SA  Assignment  may be executed in any
number of counterparts  all of which taken together shall constitute one and the
same instrument.

                                       -2-
<PAGE>
          IN WITNESS  WHEREOF,  the undersigned have caused this S&SA Assignment
to be duly executed and delivered by their  respective duly authorized  officers
on the day and year first above written.

                                        FFCA LOAN WAREHOUSE CORPORATION,
                                          as Depositor

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


                                        FFCA FRANCHISE LOAN OWNER TRUST 1998-1,
                                          as Issuer

                                        By: Wilmington Trust Company, not in its
                                            individual capacity but solely as
                                            Owner Trustee

                                        By:
                                            ------------------------------------
                                            Name
                                            Title:
<PAGE>
                                   SCHEDULE A

                                 [LOAN SCHEDULE]
<PAGE>
                                    EXHIBIT D

                          LIST OF REFERENCED DOCUMENTS

1.   Financial Statements of FFCA.

2.   Loan delinquency history reports.

3.   Default/Loss history reports.

4.   Underwriting Guidelines.

5.   Index of Form Documents:

     (a)  Loan Agreement;

     (b)  Promissory Note;

     (c)  Deed of Trust;

     (d)  Mortgage;

     (e)  Guaranty - Multi Guarantors;

     (f)  Guaranty - Single Guarantors;

     (g)  Environmental Indemnity Agreement;

     (h)  Underlying Borrower's Legal Opinion; and

     (i)  Form of Estoppel.

6.   Environmental Policy entitled "Secured Creditor - Secured Creditor Impaired
     Property Policy."

7.   Servicing Procedures & Policy Manual.

8.   Hedging Procedures & Policy Manual.

9.   Geographic Information Systems Procedures & Policy Booklet.

10.  Asset Management Presentation dated January 27, 1998.

11.  List of FFCA Approved Concepts/Brands.

12.  FFCA written research reports on Approved Concepts/Brands.

13.  Example of FFCA regression model entitled; "Burger King Regression Model."

All of such Referenced Documents are attached hereto.
<PAGE>
                                    EXHIBIT E

                                BAILEE AGREEMENT

                                    [ DATE ]

[NAME OF BAILEE]
[ADDRESS OF BAILEE]
Attention: ______________________

     Re:  Bailee Agreement (the "BAILEE AGREEMENT") in connection with
          the sale of certain Loans by FFCA  Acquisition  Corporation (the "LOAN
          ORIGINATOR") to FFCA Loan Warehouse  Corporation (the "DEPOSITOR") and
          by the  Depositor  to FFCA  Franchise  Loan Owner  Trust  1998-1  (the
          "ISSUER")  and the  pledge  by Issuer of such  Loans to  LaSalle  Bank
          National Association, as indenture trustee (the "INDENTURE TRUSTEE").

Gentlemen and Mesdames:

          In  consideration  of the mutual  promises  set forth herein and other
good and valuable consideration,  the receipt and sufficiency of which is hereby
acknowledged,  the Loan Originator,  Morgan Stanley  Securitization Funding Inc.
(the "INITIAL  NOTEHOLDER") and  ________________________  (the "BAILEE") hereby
agree as follows:

          1. The Loan  Originator  shall  deliver to the  Bailee and  Settlement
Agent in connection  with any loans delivered to the Bailee  hereunder  (each, a
"LOAN")  an  Identification  Certificate  in the form of  ATTACHMENT  A attached
hereto  to  which  shall  be  attached  a Loan  Schedule  and  Exception  Report
identifying which Loans are being delivered to the Bailee  hereunder.  Such Loan
Schedule  shall  contain  the  following  fields  of  information:  (i) the Loan
Originator's  internal loan identifying  number;  (ii) the Borrower's name as it
appears on the related Promissory Note; (iii) the name of the Borrower group (to
be  input  consistently  for  purposes  of  computing  the  Individual  Borrower
Concentration);  (iv) in the case of a Mortgage Loan, the street address,  city,
state  and zip  code of the  Mortgaged  Property;  (v)  the  original  Principal
Balance;  (vi) the  Transfer  Cutoff  Date  Principal  Balance;  (vii)  the Loan
Interest Rate at origination;  (viii) the date of origination; (ix) the industry
segment (e.g., CD Facility,  C&G Store, QSR Store);  (x) the type of Loan (e.g.,
Mortgage,  Equipment); (xi) the Monthly Payment as of such Transfer Cutoff Date;
(xii)  the  scheduled  maturity  date  under the  Promissory  Note;  (xiii)  the
Corporate  Fixed Charge  Coverage  Ratio;  (xiv) with respect to the  Unit-Level
Fixed  Charge  Coverage  Ratio,  a flag  indicating  whether  such  figure  is a
calculation  of the Unit-Level  Fixed Charge  Coverage Ratio with respect to the
single unit or in the aggregate; (xv) the Brand; (xvi) a Prepayment Code; (xvii)
a Product Code with respect to such Loan;  (xviii) if such Loan is an Adjustable
Rate Loan, the interest rate spread over LIBOR;  (xix) in the case of a Mortgage
Loan, the loan to replacement cost ratio for the related Mortgaged  Property (if
obtained);  (xx) the Maximum  Advance  Factor,  to the extent changed by written
agreement  between  the  Servicer  and the  Majority  Noteholders  in their sole
discretion; (xxi) a code indicating whether the Loan is a Table-Funded Loan; and
(xxii) such other  information  as may be  reasonably  requested by the Majority
Noteholders.
<PAGE>
          2. On or prior to the "TRANSFER DATE" indicated on the  Identification
Certificate  delivered by the Loan  Originator,  the Loan Originator  shall have
caused to be delivered to the Bailee, as bailee for hire, the following original
documents  (collectively,  the  "INDENTURE  TRUSTEE'S  LOAN FILE") for each Loan
listed in EXHIBIT 1 to such Identification Certificate:

     (i) With respect to each Mortgage Loan:

          (a) The original  Promissory Note,  endorsed by the Loan Originator in
     blank in the following form:  "Pay to the order of  ______________________,
     without recourse",  with all prior and intervening  endorsements  showing a
     complete chain of endorsement  from origination of the Mortgage Loan to the
     Loan Originator;

          (b) The original  Mortgage with evidence of recording  thereon (or, if
     the original  Mortgage has not been  returned  from the  applicable  public
     recording  office or is not  otherwise  available,  a copy of the  original
     Mortgage  submitted  for  recording)  and,  if the  Mortgage  was  executed
     pursuant  to a power of  attorney,  the  original  power of  attorney  with
     evidence of recording  thereon  (or, if the original  power of attorney has
     not been returned from the  applicable  public  recording  office or is not
     otherwise available, a copy of the original power of attorney submitted for
     recording);

          (c) The original executed Assignment of Mortgage,  in recordable form.
     The Assignment of Mortgage may be a blanket assignment,  to the extent such
     assignment  is  effective  under  applicable  law, for  Mortgages  covering
     Mortgaged  Properties situated within the same county. If the Assignment of
     Mortgage is in blanket form, an Assignment of Mortgage need not be included
     in the individual Indenture Trustee's Loan File;

          (d) All original intervening assignments of mortgage, with evidence of
     recording thereon,  showing a complete chain of assignment from origination
     of the Mortgage Loan to the Loan  Originator (or, if any such assignment of
     mortgage has not been returned from the applicable  public recording office
     or is not  otherwise  available,  a copy of  such  assignment  of  mortgage
     submitted for recording);

          (e) The original of the guaranty (if any) executed in connection  with
     the Promissory Note or related lease;

          (f) The originals of all assumption,  modification,  consolidation  or
     extension  agreements  relating to the Mortgage  with evidence of recording
     thereon,  (or, if the originals  have not been returned from the applicable
     public  recording  office or are not  otherwise  available,  a copy of such
     originals submitted for recording);

          (g) The original  attorney's opinion of title and abstract of title or
     the original mortgagee title insurance policy, or if the original mortgagee
     title insurance policy has not been issued,  the irrevocable  commitment to
     issue the same;

                                       -2-
<PAGE>
          (h) The  original  of any  security  agreement,  chattel  mortgage  or
     equivalent document executed in connection with the Mortgage Loan;

          (i) The original  assignment of leases and rents, if separate from the
     related  Mortgage,  with  evidence of recording  thereon,  or a copy of the
     original that has been or will, on or prior to the related Transfer Date be
     submitted for recordation in the appropriate  governmental recording office
     of the jurisdiction where the Mortgaged Property is located;

          (j) The original  assignment of assignment of leases and rents, if the
     assignment of leases and rents is separate from the related Mortgage,  from
     the  Loan  Originator  in  blank,  in form  and  substance  acceptable  for
     recording;

          (k) A copy of the UCC-1  Financing  Statements  and all  necessary UCC
     continuation statements with evidence of filing and/or recording thereon or
     copies  thereof  that have  been sent for  filing  and/or  recording  on or
     promptly after closing, and UCC Assignments executed by the Loan Originator
     in blank,  which UCC Assignments shall be in form and substance  acceptable
     for filing and/or recording;

          (l) An environmental indemnity agreement (if any);

          (m) An Assignment of Loan Documents; and

          (n) the original Loan Agreement.

     (ii) With respect to each Equipment Loan:

          (a) The original  Promissory Note,  endorsed by the Loan Originator in
     blank in the following form:  "Pay to the order of  ______________________,
     without recourse",  with all prior and intervening  endorsements  showing a
     complete  chain of  endorsement  from  origination  of the Loan to the Loan
     Originator;

          (b) The original Security Agreement and, if the Security Agreement was
     executed pursuant to a power of attorney, the original power of attorney;

          (c) The original Loan Agreement,  to the extent not encompassed in the
     Loan Agreement with respect to the related Mortgage Loan;

          (d) The original of the guaranty (if any) executed in connection  with
     the Promissory Note or related lease;

          (e) The originals of all assumption,  modification,  consolidation  or
     extension  agreements  relating  to the  Security  Agreement,  or true  and
     correct copies thereof;

          (f) A true and correct copy of the UCC-1 Financing  Statements and all
     necessary  UCC  continuation  statements  with  evidence  of filing  and/or
     recording  thereon or true  copies  thereof  that have been sent for filing
     and/or recording on or promptly after closing, and UCC Assignments executed
     by the Loan Originator in blank, which UCC Assignments shall be in form and
     substance acceptable for filing and/or recording; and

                                       -3-
<PAGE>
          (g) An Assignment of Loan Documents.

          3. The Bailee shall issue and deliver to the Indenture Trustee and the
Custodian,  prior  to 2:00  p.m.  New York  City  time on the  Transfer  Date by
facsimile,  (i) a Bailee  Trust  Receipt  in the form of  ATTACHMENT  B attached
hereto (the "TRUST RECEIPT") which Trust Receipt shall state that the Bailee has
received the documents  comprising  each Indenture  Trustee's Loan File for each
Loan listed on the related Loan Schedule,  except for such  documents  listed on
the Loan  Schedule and  Exception  Report  attached  thereto (with a copy to the
Initial  Noteholder  via  facsimile)  and (ii) a copy of the executed  documents
listed in Paragraph 2(i)(a) or Paragraph 2(ii)(a).

          For purposes of this Bailee Agreement:

          (a) the  "LOAN  SCHEDULE  AND  EXCEPTION  REPORT"  shall  mean a list,
     reflecting  the Loans held by the Bailee for the  benefit of the  Indenture
     Trustee,  which  includes codes  indicating any Exceptions  with respect to
     each Loan  listed  thereon,  to be  delivered  by the Bailee to the Initial
     Noteholder  and the  Indenture  Trustee  on the  Transfer  Date.  Each Loan
     Schedule and  Exception  Report shall set forth (a) the Loans being pledged
     to the Indenture  Trustee on the related Transfer Date as well as the Loans
     previously pledged to the Indenture Trustee (if any) and held by the Bailee
     under this Bailee  Agreement,  and (b) all Exceptions with respect thereto,
     with any updates  thereto from the time such Loan  Schedule  and  Exception
     Report was last delivered; and

          (b) an  "EXCEPTION"  shall mean,  with respect to any Loan, any of the
     following: (i) the variances from the requirements of Section 2 hereof with
     respect to the Indenture  Trustee's  Loan Files (giving  effect to the Loan
     Originator's  right  to  deliver  certified  copies  in  lieu  of  original
     documents  in  certain  circumstances),  and (ii) any Loan with  respect to
     which the Bailee receives  written notice or has actual knowledge of a lien
     or security  interest in favor of a person other than the Indenture Trustee
     with respect to such Loan.

          4. On the  applicable  Transfer  Date,  in the event that the  Initial
Noteholder  fails to  purchase  Notes  secured  by the Loans  identified  in the
related  Identification  Certificate,  the Loan Originator shall deliver by 5:30
p.m.,  New York time,  by facsimile  to the Bailee,  at ( )  ____-______  to the
attention of ______________,  an authorization  (the "FACSIMILE  AUTHORIZATION")
acknowledged by the Initial  Noteholder to release the Indenture  Trustee's Loan
Files with respect to the Loans identified therein to the Loan Originator.  Upon
receipt of such Facsimile Authorization,  the Bailee shall release the Indenture
Trustee's  Loan  Files  to the  Loan  Originator  in  accordance  with  the Loan
Originator's instructions.

          5. On or after  the  Transfer  Date,  the  Bailee  shall  forward  the
Indenture  Trustee's  Loan Files to (i) LaSalle Bank National  Association,  135
South  LaSalle  Street,  Chicago,   Illinois  60603,   Attention:   Asset-Backed
Securities  Trust  Services  Group,  FFCA Franchise Loan Owner Trust 1998-1 (the
"CUSTODIAN") by overnight  courier for receipt by the Custodian or (ii) the Loan

                                       -4-
<PAGE>
Originator  with  respect  to Loans for which the Bailee  received  a  Facsimile
Authorization,  in each case for receipt no later than three (3)  Business  Days
following the applicable Transfer Date (the "DELIVERY DATE").

          6. From and  after  the  applicable  Transfer  Date  until the time of
receipt of the Facsimile Authorization by the Bailee or receipt of the Indenture
Trustee's Loan File by the Custodian,  the Bailee (a) shall maintain  continuous
custody and control of the related Indenture  Trustee's Loan Files as bailee for
the Indenture Trustee and (b) is holding the related Loans as sole and exclusive
bailee for the  Indenture  Trustee  unless  and until  otherwise  instructed  in
writing by the Indenture Trustee.

          7. The Loan Originator agrees to indemnify and hold the Bailee and its
directors,   officers,  agents  and  employees  harmless  against  any  and  all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses or  disbursements of any kind or nature  whatsoever,  including
reasonable  attorney's  fees,  that may be imposed on,  incurred by, or asserted
against  it or  them in any  way  relating  to or  arising  out of  this  Bailee
Agreement  or any  action  taken  or not  taken  by it or  them  hereunder.  The
foregoing indemnification shall survive any resignation or removal of the Bailee
or the termination or assignment of this Bailee Agreement.

          8.   (a) In the event that the  Bailee  fails to deliver a  Promissory
Note, Assignment of Mortgage or any other document related to a Loan that was in
its possession (a "CUSTODIAL  DELIVERY  FAILURE"),  and PROVIDED that the Bailee
previously delivered to the Indenture Trustee a Trust Receipt which did not list
such document as an Exception on the Transfer Date,  the Bailee shall  indemnify
the  Indenture  Trustee or Loan  Originator in  accordance  with the  succeeding
paragraph of this Section 8.

               (b) The Bailee agrees to indemnify and hold the Loan  Originator,
and  its  respective  affiliates  and  designees,  the  Indenture  Trustee,  its
affiliates  and the directors,  officers,  employees and agents of the Indenture
Trustee  and  its  affiliates,   harmless   against  any  and  all  liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses or disbursements of any kind or nature whatsoever, including reasonable
attorney's  fees, that may be imposed on, incurred by, or asserted against it or
them in any way relating to or arising out of the Bailee's  negligence,  lack of
good  faith or willful  misconduct  which  results  in a failure to perform  its
obligations under this Agreement or Bailee's  Custodial  Delivery  Failure.  The
foregoing  indemnification  shall survive any  termination or assignment of this
Bailee Agreement.

          9. The Bailee  hereby  represents,  warrants  and  covenants  that the
Bailee is not an affiliate of or otherwise  controlled by the Loan Originator or
its Affiliates.

          10. The agreement set forth in this Bailee Agreement letter may not be
modified,  amended or altered, except by written instrument,  executed by all of
the parties hereto.

          11. This Bailee  Agreement may not be assigned by the Loan  Originator
or the Bailee without the prior written consent of the Initial Noteholder.

                                       -5-
<PAGE>
          12. For the  purpose of  facilitating  the  execution  of this  Bailee
Agreement  letter  as  herein  provided  and for  other  purposes,  this  Bailee
Agreement  letter may be executed in any number of  counterparts,  each of which
counterparts  shall be deemed to be an  original,  and such  counterparts  shall
constitute and be one and the same instrument.

          13.  Capitalized  words used and not otherwise defined herein have the
meanings assigned to them in the Sale and Servicing Agreement.

          14. THIS BAILEE  AGREEMENT  SHALL BE CONSTRUED IN ACCORDANCE  WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CHOICE OF LAWS PROVISIONS
THEREOF, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL
BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

                                        Very truly yours,


                                        FFCA ACQUISITION CORPORATION,
                                        as Loan Originator

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


                                        MORGAN STANLEY SECURITIZATION
                                        FUNDING INC.,
                                        as Initial Noteholder

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


                                        [NAME OF BAILEE]
                                        Bailee

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

                                       -6-
<PAGE>
                                  ATTACHMENT A

                           IDENTIFICATION CERTIFICATE

          On this  _____  day of ____  __,  20__  (the  "TRANSFER  DATE"),  FFCA
Acquisition  Corporation  (the "LOAN  ORIGINATOR"),  under that  certain  Bailee
Agreement,  dated as of ____ __, 20__ (the "BAILEE  AGREEMENT"),  among the Loan
Originator,  ________________  (the "BAILEE") and Morgan Stanley  Securitization
Funding Inc.  (the  "INITIAL  NOTEHOLDER"),  does hereby  instruct the Bailee to
hold, in its capacity as Bailee, the Indenture Trustee's Loan Files with respect
to the Loans  listed on EXHIBIT 1 hereto,  which  Loans  shall be subject to the
terms of the Bailee Agreement as of the date hereof.

          Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Bailee Agreement.

          IN WITNESS WHEREOF, the Loan Originator has caused this Identification
Certificate  to be executed and delivered by its duly  authorized  officer as of
the day and year first above written.

                                        FFCA ACQUISITION CORPORATION,


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:
<PAGE>
                                                       EXHIBIT 1 TO ATTACHMENT A

                                  LOAN SCHEDULE
<PAGE>
                                  ATTACHMENT B

                     BAILEE TRUST RECEIPT AND CERTIFICATION

                                                                   ____ __, 20__

LaSalle Bank National Association, as Custodian
135 South LaSalle Street

Chicago, Illinois 60603
Attention: Asset-Backed Securities Trust Services Group
           FFCA Franchise Loan Owner Trust 1998-1

     Re:   Bailee Letter, dated as of _____, 20__ (the "BAILEE AGREEMENT") among
           FFCA Acquisition Corporation,  Morgan Stanley  Securitization Funding
           Inc. and _______________ (the "BAILEE")

Gentlemen and Mesdames:

          In   accordance   with  the   provisions   of   Paragraph   3  of  the
above-referenced  Bailee  Agreement,  the  undersigned,  as the  Bailee,  hereby
certifies that as to each loan described in the "LOAN  SCHEDULE"  (Exhibit 1), a
copy of which is attached hereto,  it has reviewed the Indenture  Trustee's Loan
File and has  determined  that  (subject  to the  exceptions  listed in the Loan
Schedule and  Exception  Report  attached  hereto) (i) all  documents are in its
possession  and (ii) such  documents have been reviewed by it and appear regular
on their face and relate to such loan,  and based on such review,  the foregoing
documents on their face satisfy the requirements set forth in Paragraph 2 of the
Bailee Agreement.

          Subject to the Bailee Agreement, the Bailee hereby confirms that it is
holding  each such  Indenture  Trustee's  Loan File as agent and  bailee for the
exclusive use and benefit of the Indenture  Trustee pursuant to the terms of the
Bailee Agreement.

          All  initially  capitalized  terms used herein shall have the meanings
ascribed to them in the above-referenced Bailee Agreement.


                                        ----------------------------------------
                                        BAILEE


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:
<PAGE>
                                                       EXHIBIT 1 TO ATTACHMENT B

                                  LOAN SCHEDULE
<PAGE>
                                    EXHIBIT F

                           FORM OF ESCROW INSTRUCTIONS

[SETTLEMENT AGENT]

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

     Re:  Escrow Instructions for funds held for origination of Table-Funded
          Loans

Ladies and Gentlemen:

          In connection with the administration of the funds held by you for the
origination  of  Table-Funded  Loans [NAME OF SETTLEMENT  AGENT],  as Settlement
Agent,  is hereby  notified and instructed to act in accordance  with the escrow
instructions provided below.

          Capitalized  terms not  otherwise  defined  herein are defined in that
certain  Second Amended and Restated Sale and Servicing  Agreement,  dated as of
January 1, 2000 by and among FFCA FRANCHISE  LOAN OWNER TRUST 1998-1,  FFCA LOAN
WAREHOUSE  CORPORATION,   as  depositor  (the  "DEPOSITOR"),   FFCA  ACQUISITION
CORPORATION,  as loan  originator  (the "LOAN  ORIGINATOR"),  FRANCHISE  FINANCE
CORPORATION OF AMERICA, as servicer (the "SERVICER"),  and LASALLE BANK NATIONAL
ASSOCIATION,  as indenture  trustee on behalf of the Noteholders (the "INDENTURE
TRUSTEE"), hereinafter as such agreement may have been, or may from time to time
be, amended, supplemented or otherwise modified.

          ESCROW INSTRUCTIONS:

          1. The funds to be used for closing this transaction,  as described in
the Wire Instructions on Attachment A hereto,  may be provided via wire transfer
from Morgan Stanley Securitization Funding Inc. (the "INITIAL NOTEHOLDER").  You
are to hold the closing  funds  provided by the Initial  Noteholder in trust for
the benefit of the Initial Noteholder until such time as the funds are disbursed
in  accordance   with  these  escrow   instructions,   upon   receiving  (i)  an
Identification Certificate from the Loan Originator (in the form of Attachment B
hereto)  and (ii) a  written  authorization  from  the  Initial  Noteholder  via
facsimile, in the form of Attachment A hereto, authorizing such disbursement.

          2. If the mortgage  loan is not funded by the close of business on the
originally  scheduled  Transfer Date on which you receive the closing funds, you
are to return the closing funds  provided by the Initial  Noteholder via federal
funds wire transfer to the Initial  Noteholder as follows  [INSERT WIRE TRANSFER
INSTRUCTIONS],  no later than 5:30 p.m.,  New York City time, on the  originally
scheduled Transfer Date.

          3. The Settlement  Agent shall not be liable  hereunder except for its
own negligence or willful misconduct and the Loan Originator agrees to indemnify
the  Settlement  Agent for and hold it  harmless as to any loss,  liability,  or
expense,  including  attorney  fees,  incurred  without  negligence  or  willful
misconduct  on the  part  of  the  Settlement  Agent  and  arising  out of or in
connection with the Settlement Agent's duties under this Agreement.
<PAGE>
          These  instructions shall be irrevocable and can only be modified with
the  approval in writing of the Initial  Noteholder,  as directed by the Initial
Noteholder.

          NOTE: BY ACCEPTING  THE FUNDS  DELIVERED TO YOU, YOU CONSENT TO BE THE
SETTLEMENT AGENT AND BAILEE FOR THE INITIAL NOTEHOLDER ON THE TERMS DESCRIBED IN
THIS  LETTER  AND  THAT  THE  INITIAL  NOTEHOLDER  IS AN  INTENDED  THIRD  PARTY
BENEFICIARY HEREOF. THE INITIAL NOTEHOLDER REQUESTS THAT YOU ACKNOWLEDGE RECEIPT
OF THE FUNDS AND THIS LETTER BY SIGNING AND  RETURNING THE ENCLOSED COPY OF THIS
LETTER  TO THE  INITIAL  NOTEHOLDER;  HOWEVER,  YOUR  FAILURE  TO DO SO DOES NOT
NULLIFY SUCH CONSENT.

                                        Very truly yours,


                                        FFCA ACQUISITION CORPORATION

                                        as Loan Originator

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


                                        Address for notices:
                                        Address:____________________________
                                        City, state, zip____________________


                                        Attention:__________________________
                                        Facsimile No. ______________________
                                        Telephone No. ______________________

                                       -2-
<PAGE>
ACKNOWLEDGED AND AGREED

[NAME OF SETTLEMENT AGENT]


By:_____________________________
Print Name:_____________________
Title:__________________________
Date:___________________________


Address for notices:

Address:________________________

City, state, zip________________


Attention:______________________

Facsimile No. __________________

Telephone No. __________________


<PAGE>
                     ATTACHMENT A TO THE ESCROW INSTRUCTIONS

                                WIRE INSTRUCTIONS

FUNDS TO BE RECEIVED BY SETTLEMENT AGENT

Funds provided by Initial Noteholder:                         ________________

Funds provided by Loan Originator:                            ________________

Funds provided by ____________:                               ________________

Total funds received by Settlement Agent                      ________________

FUNDS TO BE DISBURSED BY SETTLEMENT AGENT

Amount:                     ________________________

Receiving Bank:             ________________________

Bank ABA Number:            ________________________

Beneficiary:                ________________________

Account Number:             ________________________

Reference:                  ________________________

Escrow Officer:             ________________________

Escrow Number:              ________________________



ACKNOWLEDGED AND AGREED

INITIAL NOTEHOLDER

By:_____________________________

Print Name:_____________________

Title:__________________________

Date:___________________________

Facsimile No. __________________

Telephone No. __________________
<PAGE>
                     ATTACHMENT B TO THE ESCROW INSTRUCTIONS

                           IDENTIFICATION CERTIFICATE

          On this  _____  day of ____  __,  20__  (the  "TRANSFER  DATE"),  FFCA
Acquisition  Corporation  (the "LOAN  ORIGINATOR"),  under that  certain  Bailee
Agreement,  dated as of ____ __, 20__ (the "BAILEE  AGREEMENT"),  among the Loan
Originator,  ________________  (the "BAILEE") and Morgan Stanley  Securitization
Funding Inc.  (the  "INITIAL  NOTEHOLDER"),  does hereby  instruct the Bailee to
hold, in its capacity as Bailee, the Indenture Trustee's Loan Files with respect
to the Loans  listed on EXHIBIT 1 hereto,  which  Loans  shall be subject to the
terms of the Bailee Agreement as of the date hereof.

          Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Bailee Agreement.

          IN WITNESS WHEREOF, the Loan Originator has caused this Identification
Certificate  to be executed and delivered by its duly  authorized  officer as of
the day and year first above written.

                                        FFCA ACQUISITION CORPORATION,


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:
<PAGE>
                                                       EXHIBIT 1 TO ATTACHMENT B

                                  LOAN SCHEDULE
<PAGE>
                                    EXHIBIT G

                       FORM OF LOAN ORIGINATOR PUT NOTICE

                                     [Date]

FFCA Acquisition Corporation
The Perimeter Center
17207 North Perimeter Drive
Scottsdale, Arizona 85255
Attention: Dennis L. Ruben

     Re:  FFCA FRANCHISE LOAN BACKED NOTES SERIES 1998-1

Ladies and Gentlemen:

          Reference  is  made  to the  Second  Amended  and  Restated  Sale  and
Servicing  Agreement,  dated as of  January  1,  2000 (the  "SALE AND  SERVICING
AGREEMENT"),  by and among FFCA  Franchise  Loan Owner Trust  1998-1,  FFCA Loan
Warehouse  Corporation,  as Depositor,  FFCA  Acquisition  Corporation,  as Loan
Originator,  Franchise Finance  Corporation of America,  as Servicer and LaSalle
Bank National Association,  as Indenture Trustee,  hereinafter as such agreement
may have been, or may from time to time be,  amended,  supplemented or otherwise
modified.  Capitalized terms not defined herein shall have the meanings assigned
to such terms in the Sale and Servicing Agreement.

          Pursuant to Section  3.07(a) of the Sale and Servicing  Agreement,  we
demand that you repurchase the following Loan listed below on [specify date] for
the following reason:

     ______ The Loan has become 30 or more days Delinquent

     ______ The Loan is a Defaulted Loan

     ______ The Loan has been in default for a period of 30 days or more

     ______ The Loan has been determined to be ineligible for a Securitization
            by mutual agreement of the Majority Noteholders and the Servicer.

     ______ The Loan is a Mortgage Loan with respect to which the Loan
            Originator did not enforce a due-on-sale or due-on-encumbrance
            clause pursuant to Section 7.01 of the Sale and Servicing Agreement.


     _________________________________        $_________________________________
                 LOAN NAME                             PURCHASE PRICE
<PAGE>
                                        Very truly yours,


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

                                        On behalf of the Majority Noteholders

WITH A COPY TO:

LaSalle Bank National Association
135 South LaSalle Street
Suite 1625
Chicago, Illinois 60603
Attention: Asset-Backed Securities Trust Services Group
           FFCA Franchise Loan Owner Trust 1998-1

                                       -2-
<PAGE>
                                    EXHIBIT H

                          FORM OF SERVICER CALL NOTICE

                                     [Date]

LaSalle Bank National Association
135 South LaSalle Street
Suite 1625
Chicago, Illinois 60603
Attention: Asset-Backed Securities Trust Services Group
           FFCA Franchise Loan Owner Trust 1998-1

     Re:  FFCA Franchise Loan Backed Notes Series 1998-1

Ladies and Gentlemen:

          Reference  is  made  to the  Second  Amended  and  Restated  Sale  and
Servicing  Agreement,  dated as of  January  1,  2000 (the  "SALE AND  SERVICING
AGREEMENT"),  by and among FFCA  Franchise  Loan Owner Trust  1998-1,  FFCA Loan
Warehouse  Corporation,  as Depositor,  FFCA  Acquisition  Corporation,  as Loan
Originator,  Franchise Finance  Corporation of America,  as Servicer and LaSalle
Bank National Association,  as Indenture Trustee,  hereinafter as such agreement
may have been, or may from time to time be,  amended,  supplemented or otherwise
modified.  Capitalized terms not defined herein shall have the meanings assigned
to such terms in the Sale and Servicing Agreement.

          Pursuant to Section  3.07(b) of the Sale and Servicing  Agreement,  we
are notifying  you that we will  repurchase  the following  Loan listed below on
[specify date] for the following reason:

     ______ The Loan has become 30 or more days Delinquent

     ______ The Loan is a Defaulted Loan

     ______ The Loan has been in default for a period of 30 days or more

     ______ The Loan has been determined to be ineligible for a Securitization
            by mutual agreement of the Majority Noteholders and the Servicer.

     ______ The Loan is a Mortgage Loan with respect to which the Loan
            Originator did not enforce a due-on-sale or due-on-encumbrance
            clause pursuant to Section 7.01 of the Sale and Servicing Agreement.


     _________________________________        $_________________________________
                 LOAN NAME                             PURCHASE PRICE
<PAGE>
                                        Very truly yours,


                                        FRANCHISE FINANCE CORPORATION OF AMERICA


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

With a copy to the Majority Noteholders
to the Attention of:

MSSFI
1585 Broadway
New York, New York 10036
Attention: Peter Woroniecki