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

                           LOAN ACQUISITION AGREEMENT


                                     between


                             ALLEGIANCE CAPITAL, LLC
                                   ("Company")


                                       and


                           ALLEGIANCE FUNDING CORP. I
                                  ("Depositor")



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




                           Dated as of August 1, 1998



<PAGE>



<TABLE>
                                                         

                                TABLE OF CONTENTS
<CAPTION>

                                                                                                               Page
                                                                                                               ----    
<S>                         <C>                                                                                <C>    

ARTICLE ON
DEFINITIONS
         Section 1.01      Defined Terms..........................................................................2
         Section 1.02      Certain Rules of Construction..........................................................5

ARTICLE TWO
ACQUISITION OF LOAN ASSETS
         Section 2.01      Conveyance of Loan Assets.   ..........................................................7
         Section 2.02      Authorization and Issuance of Common Stock by the Depositor. ..........................7
         Section 2.03      Use of Proceeds........................................................................7
         Section 2.04      Delivery of Loans; Filing of Financing Statements......................................8
         Section 2.05      Servicing of Loans.....................................................................8
         Section 2.06      Review of Loans........................................................................8
         Section 2.07      Nature of Transfer.  ..................................................................9

ARTICLE THREERE
PRESENTATIONS AND WARRANTIES
         Section 3.01      Representations and Warranties of the Company.........................................10
         Section 3.02      Representations and Warranties of the Depositor.......................................20
         Section 3.03      Substitution or Repurchase of Loans.  ................................................22
         Section 3.04      Requirements for Purchase or Substitution of Loans....................................22

ARTICLE FOUR
COVENANTS OF THE COMPANY
         Section 4.01      The Company Covenants. ...............................................................24
         Section 4.02      Depositor Covenants. .................................................................27
         Section 4.03      Assignment of Loan Assets. ...........................................................28

ARTICLE FIVE
CONDITIONS
         Section 5.01      Conditions to the Depositor's Obligations. ...........................................29
         Section 5.02      Conditions to the Company's Obligations.  ............................................30

ARTICLE SIX
TERM AND TERMINATION
         Section 6.01      Term. ................................................................................31
         Section 6.02      Default by the Company.  .............................................................31




                                       i
<PAGE>


ARTICLE SEVEN
GENERAL PROVISIONS
         Section 7.01      Amendments............................................................................32
         Section 7.02      Governing Law.  ......................................................................32
         Section 7.03      Notices...............................................................................32
         Section 7.04      Separability Clause.  ................................................................32
         Section 7.05      Assignment.  .........................................................................32
         Section 7.06      Further Assurances....................................................................32
         Section 7.07      No Waivers; Cumulative Remedies.......................................................33
         Section 7.08      Binding Effect; Third Party Beneficiaries.............................................33
         Section 7.09      Set-Off...............................................................................33
<FN>

EXHIBITS
         Exhibit A         Form of Company Certificate
         Exhibit D         Pool Criteria
         
</FN>
</TABLE>

                                       ii
<PAGE>




         This LOAN ACQUISITION AGREEMENT (this "Agreement"),  dated as of August
1, 1998, is entered into between  Allegiance  Capital,  LLC, a Delaware  limited
liability  company (the "Company"),  and Allegiance  Funding Corp. I, a Delaware
corporation (the "Depositor").

                                    RECITALS

         The Depositor has entered into, or is in the process of entering  into,
a Trust  Agreement,  dated as of August 1, 1998 (the  "Trust  Agreement"),  with
Manufacturers  and Traders Trust Company,  a New York banking  corporation  (the
"Trustee"),   Allegiance  Capital,   LLC,  as  special  servicer  (the  "Special
Servicer"),  and Point West Capital  Corporation,  as servicer (the "Servicer"),
pursuant  to which the  Depositor,  on behalf of the  Trust,  has caused or will
cause the  issuance  of various  Series of  Revolving  Certificates  and various
Series of Term Certificates.

         In furtherance thereof, the Company and the Depositor are entering into
this  Agreement to provide  for,  among other  things,  the  acquisition  by the
Depositor of all of the  Company's  right,  title and interest in and to certain
Loan Assets,  which the Depositor will, in accordance with the Trust  Agreement,
subsequently  be conveying to the Trustee from time to time for inclusion in the
Trust Estate.  As a precondition to the  effectiveness  of this  Agreement,  the
Depositor,  the Trustee,  the Servicer,  the Special  Servicer and the Servicing
Advisor will enter into the Servicing  Agreement to provide for the servicing of
the Loan Assets.

         In addition,  the  Depositor  will be  conveying to the Trustee,  among
other things, all of the Depositor's rights derived under this Agreement and the
Servicing   Agreement,   and  the  Company  agrees  that  all   representations,
warranties,  covenants and agreements  made by it in this Agreement with respect
to the Loan  Assets and  otherwise  shall also be for the benefit of the Trustee
and all  Certificateholders.  In consideration of the Company's contribution and
sale and the Company's  representations,  warranties,  covenants and  agreements
under this Agreement,  the Company will be receiving all of the Common Stock and
such other consideration as is required to be paid from time to time hereunder.

         In consideration of the mutual agreements contained herein and of other
good and  valuable  consideration  (the receipt and adequacy of which are hereby
acknowledged), the parties hereto agree as follows:



                                       1


<PAGE>


                                   ARTICLE ONE
                                   -----------

                                   DEFINITIONS
                                   -----------
       
         Section 1.01       Defined Terms.
         ------------       -------------- 

         Each  capitalized  term used herein but not  otherwise  defined has the
meaning assigned to such term in the Trust Agreement or, if not defined therein,
in the  Servicing  Agreement.  For  purposes  of  this  Agreement,  each  of the
following terms has the meaning specified herein:

         "Agreement":  The  meaning  set  forth  in the  introductory  paragraph
hereof.

         "Common  Stock":  All of the  issued and  outstanding  shares of common
stock of the  Depositor,  which consist of one thousand  (1,000) shares having a
par value of $0.01 per share.

         "Company":  The Person described in the  introductory  paragraph hereof
and all successors and permitted assigns of such Person under this Agreement.

         "Company Address":  1700 Montgomery  Street,  Suite 250, San Francisco,
California 94111, or such other address furnished in writing to the Trustee, the
Certificateholders and the Depositor in accordance with the provisions hereof.

         "Company Certificate":  A certificate of the Company,  substantially in
the form of Exhibit A.
            ----------

         "Depositor":  The Person described in the introductory paragraph hereof
and all  successors  and  permitted  assigns  of such  Person  under  the  Trust
Agreement and this Agreement.

         "Depositor Address": 1700 Montgomery Street, Suite 250B, San Francisco,
California 94111, or such other address furnished in writing to the Trustee, the
Certificateholders and the Company in accordance with the provisions hereof.

         "Electronic Records": The electronic master records of all loans of the
Company or the Special Servicer similar to and including the Loans.

         "Eligible Loan": A Loan that satisfies all of the criteria set forth in
Section 3.01(a) and does not cause the Loan Pool to violate the Pool Criteria.

         "Environmental  Laws": All federal,  state, local and foreign statutes,
laws,  regulations,  ordinances,  rules, judgments,  orders,  decrees,  permits,
concessions,  grants,  franchises,  licenses,  agreements or other  governmental
restrictions relating to the environment or to emissions, discharges or releases
of  pollutants,  contaminants,  petroleum  or petroleum  products,  chemicals or
industrial,  toxic or  hazardous  substances  or  wastes  into the  environment,
including  ambient air,  surface  water,  ground  water,  or land,  or otherwise
relating to the manufacture,  processing, distribution, use, treatment, storage,
disposal,  transport  or  handling of  pollutants,  contaminants,  petroleum  or
petroleum products,  chemicals or industrial,  toxic or hazardous  substances or
wastes or the cleanup or other remediation thereof.

         "Existing  Indebtedness":  Any indebtedness of the Company that relates
to pre-existing financings of any Loans that are conveyed hereunder.

                                       2
<PAGE>


         "GAAP":  With  respect  to  any  Loan,  generally  accepted  accounting
principles in the United States  consistently  applied and, to the extent not in
conflict therewith, in the case of any accounting  determination with respect to
the related Obligor(s),  on a basis consistent with the financial  statements of
such Obligor(s).

         "Initial Delivery Date":  The meaning set forth in the Trust Agreement.

         "Lease": A lease for all or any portion of the real property comprising
the Mortgaged Property entered into with a third party, the lessee's interest in
which is held by an Obligor of the related Loan.

         "Lien":  Any  security  interest,   lien,  charge,  pledge,  equity  or
encumbrance of any kind, other than any inchoate liens for taxes not yet due.

          "Loan  Assets":  All of  the  Company's  right,  title  and  interest,
whenever existing or arising and whether now owned or hereafter acquired, in and
to the following:  (a) the Loans and all rights with respect thereto,  including
(i) all payments  made or payable by or on behalf of any Obligor  thereunder  or
with respect  thereto on or after the Cut-Off Date for such Loan,  including all
periodic  payments ( including all Scheduled  Payments but excluding the portion
thereof  representing  interest  accrued prior to the Cut-Off Date), all amounts
paid by any  guarantor  of a Loan,  all  payments  made in respect of  Defaulted
Loans, all Insurance Proceeds,  all prepayments fees, all premiums, and all late
payment or other  incidental  charges or fees (including  late fees,  collection
fees and bounced check charges) and (ii) all guaranties, Insurance Policies, and
other  agreements  or  arrangements  of  whatever  character  from  time to time
supporting or securing payment of any Loan; (b) the Loan Files; (c) the security
interests  and other  Liens of the Company in the Loan  Collateral;  and (d) all
income and proceeds of the foregoing or relating thereto.

         "Loan  Collateral":  The  tangible  and  intangible  assets  (including
accounts,  equipment,  general intangibles,  inventory,  and real property) that
secure, directly or indirectly, all or any portion of a Loan.

         "Loan File":  With respect to any Loan, a file  containing:  (a) all of
the items on the Loan Funding  Checklist  for such Loan,  including the original
manually executed credit  agreement(s),  loan agreement(s),  promissory note(s),
Mortgage(s),  assignment(s),  consent(s), estoppel(s),  guaranty(ies),  security
agreement(s),  and other  agreements,  documents and instruments  (including any
Insurance Policies)  evidencing or otherwise relating to such Loan, the original
credit  application  executed  by  the  Obligor(s)  thereunder,  and  all  other
agreements,  documents,  and instruments  required by the Loan Funding Checklist
(including any share  certificates  and related stock  powers);  (b) the related
loan application;  (c) the related credit memorandum; (d) the related Valuation;
(e) the related ***; and (f) all related filings  (including  Uniform Commercial
Code filings),  notices,  transfers,  assignments  (including assignments of all
related  Mortgages (in recordable  form and duly executed) and Notes),  stock or
other appropriate powers or instruments of transfer (duly executed in blank) and
recordings as required under Section  3.01(a)(ix) hereof, the Trust Agreement or
applicable  law (i) to perfect the sale by the Company to the  Depositor of such
Loan and the related Loan Assets being acquired hereunder, (ii) to assign to the
Trustee all Uniform Commercial Code financing statements perfecting the security
interest  of the  Depositor  (as  assignee of the  Company) in the related  Loan
Collateral, (iii) to perfect the first priority security interest of the Trustee
in the Depositor's rights therein, and (iv) to cause any related Loan Collateral
(including  any  related  Mortgages)  to  name  the  Trustee  as  lienholder  in
accordance with the provisions of the Trust Agreement.

         "Loan Funding Checklist":  The checklist of all required  documentation
relating to any Loan, substantially in the form of Exhibit B.
                                                   ---------

***Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.

                                        3

<PAGE>


         "Mortgage":  The mortgage, deed of trust or other instrument securing a
Loan, which creates a first lien on an unsubordinated  fee,  leasehold or ground
leasehold estate on real property.

         "Mortgaged Property":  Any real property (irrespective of whether a fee
or a leasehold estate) that is encumbered by a Mortgage and secures, directly or
indirectly,  the  repayment  of all or any  portion of any Loan or any  guaranty
thereof or any debt evidenced by a Note.

         "Note":  The note or  other  evidence  of  indebtedness  of an  Obligor
evidencing a Loan.

         "Pending Credit  Schedule":  A schedule,  substantially  in the form of
Exhibit C attached hereto,  setting forth,  with respect to each Loan, a summary
---------
of the financial terms of such Loan, a summary of the relevant documents and the
structure of the Loan and the security therefor.

         "Pension Plans":  The meaning set forth in Section 3.01(c)(xvi).

         "Permitted Loan Collateral  Liens":  Collectively,  with respect to any
Loan and the related Loan Collateral therefor:  (a) Liens that are identified as
existing on the date of the related Loan closing or that are permitted under the
terms of the  related  Loan  documents  to  arise  thereafter,  in each  case as
approved  in writing  by the  Depositor  and the  Certificateholder  Agent;  (b)
statutory Liens of landlords, carriers, warehousemen, mechanics, or materialmen,
and other Liens (other than Liens in connection with any  Environmental  Law and
any Lien imposed under ERISA) imposed by law and incurred in the ordinary course
of business of any related  Obligor for sums either not yet  delinquent or being
contested  in good faith by  appropriate  proceedings  promptly  instituted  and
diligently  conducted and for which adequate  reserves have been  established in
accordance with GAAP (if so required); (c) Liens (other than Liens in connection
with any  Environmental  Law and any  Lien  imposed  under  ERISA)  incurred  or
deposits  made in the  ordinary  course of business  of any  related  Obligor in
connection with workers' compensation,  unemployment insurance,  and other types
of social  security,  or to secure the  performance  of  statutory  obligations,
surety and appeal bonds, leases, or other similar obligations;  (d) non-material
easements,   rights-of-way,   restrictions,   and  other   similar   charges  or
encumbrances not interfering in any material respect with the ordinary course of
business of any Obligor;  (e)  banker's  Liens in the nature of rights of setoff
arising in the ordinary course of business of any related Obligor;  (f) Liens on
property of any related Obligor to another related Obligor  securing debt of the
one party  owing to the other  (but only if such debt is Loan  Collateral);  (g)
Liens  for  taxes,  assessments  or  other  governmental  charges  or  statutory
obligations  that are not  delinquent or remain  payable  without any penalty or
that are being  contested  in good  faith by  appropriate  proceedings  promptly
instituted  and diligently  conducted and for which adequate  reserves have been
established in accordance  with GAAP (if so required);  and (h) Liens created by
the Loan documents in favor of the Company.

         "Pool Criteria":  The criteria set forth on Exhibit D.
                                                     ----------

         "Program Guidelines":  The underwriting  guidelines of the Company with
respect to the  origination  of the  Loans,  which are as set forth on Exhibit E
                                                                       ---------
attached  hereto;  provided  that  "Program  Guidelines"  shall not  include any
                   -------- 
Proposed  Revisions (as that term is defined in Section 4.01(r)) if the same is,
                                                -------            
or  is  deemed,   rejected  by  the   Depositor,   the  Rating   Agency  or  the
Certificateholder Agent in accordance with Section 4.01(r).
                                           -------  

         "Proposed Revisions":  The meaning set forth in the Section 4.01(r).

                                       4
<PAGE>



         "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 in such states to transact  the  applicable  insurance
business and to write the  insurance  provided,  and which is rated as to claims
paying ability as follows:  (a) with respect to pre-need insurance for customers
of  Obligors,  at least  *** or,  in the case of ***; (b)  with  respect to life
insurance  assigned by an Obligor under a Loan, at least *** or, if in excess of
the applicable state guaranty fund limits, at least ***; and (c) with respect to
all other insurance, at least ***.

         "Servicer":  The  Person  described  in the  recitals  hereof  until  a
successor Person shall have (if applicable)  become the Servicer pursuant to the
applicable  provisions of the Servicing  Agreement,  whereupon  "Servicer" shall
mean such successor Person.

         "Servicing  Advisor":  The Person  described in the introduction of the
Servicing  Agreement until a successor Person shall have (if applicable)  become
the Servicing  Advisor  pursuant to the  applicable  provisions of the Servicing
Agreement, whereupon "Servicing Advisor" shall mean such successor Person.

         "Special Servicer": The Person described in the recitals hereof until a
successor Person shall have (if applicable) become the Special Servicer pursuant
to the  applicable  provisions of the Servicing  Agreement,  whereupon  "Special
Servicer" shall mean such successor Person.

          ***

         "Standard Forms": The forms of the documents attached hereto as Exhibit
                                                                         -------
G with such changes  thereto,  if any, as are from time to time approved by both
-
the Certificateholder Agent and the Rating Agency.

         "Substitute Loan":  The meaning set forth in Section 3.04(b).

         "Transfer Taxes":  The meaning set forth in Section 3.01(a)(viii).

         "Trust Agreement":  The meaning set forth in the recitals hereof.

         "Trustee":  The  Person  described  in  the  recitals  hereof  until  a
successor  Person shall have (if applicable)  become the Trustee pursuant to the
applicable  provisions of the Trust  Agreement,  whereupon  "Trustee" shall mean
such successor Person.

         "Valuation": A valuation of an Obligor's business and assets comprising
the Loan  Collateral,  as  prepared by an  experienced  and  competent  business
appraiser acceptable to the Certificateholder Agent and which, initially,  shall
include ***.

         Section 1.02       Certain Rules of Construction.
         -----------       ------------------------------

         Unless the context of this Agreement  clearly requires  otherwise:  (a)
references  to the plural  include the singular and to the singular  include the
plural;  (b)  references to any gender  include any other gender;  (c) the words
"include" and "including" are not limiting;  (d) the word "or" has the inclusive
meaning  represented

***Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.

                                       5
<PAGE>


by the  phrase  "and/or";  (e)  the  words  "hereof,"  "herein,"  "hereby,"  and
"hereunder," and any other similar words, refer to this Agreement as a whole and
not to any particular  provision hereof; and (f) article,  section,  subsection,
clause,  exhibit,  and  schedule  references  are to  this  Agreement.  Article,
section,  and subsection  headings are for convenience of reference only,  shall
not  constitute a part of this  Agreement for any other  purpose,  and shall not
affect the construction of this Agreement.  All exhibits and schedules  attached
hereto are incorporated  herein by this reference.  Any reference herein to this
Agreement or any other agreement, document, or instrument includes all permitted
alterations,  amendments,  changes,  extensions,  modifications,   renewals,  or
supplements thereto or thereof, as applicable.


                                       6
<PAGE>


                                   ARTICLE TWO
                                   -----------
                           ACQUISITION OF LOAN ASSETS
                           --------------------------

         Section 2.01  Conveyance of Loan Assets.
         ------------  --------------------------- 

         (a) In consideration  of the Depositor's  delivery to or upon the order
of the Company of the Common Stock and the net proceeds from the initial sale of
the Certificates,  the Company does hereby sell, transfer,  contribute,  assign,
set over and otherwise  convey to the  Depositor,  without  recourse  (except as
provided in Sections 2.06, 3.03 and 3.04), all of the Company's right, title and
interest now existing or hereafter  arising in and to the Loan Assets related to
the  Loans  listed  on  each  Loan  Schedule.  The  Company,  from  time to time
hereafter,  shall sell and  contribute  to the  Depositor  all of the  Company's
right,  title and  interest  then  existing  or  thereafter  arising in and to a
Funding Group or Substitute  Loans (and, in each case,  the related Loan Assets)
pursuant to a Company Certificate under the circumstances and in accordance with
the procedures set forth herein and in the Trust  Agreement.  The Company agrees
that all Loans sold,  contributed,  transferred  and  conveyed to the  Depositor
hereunder  shall be  Eligible  Loans and that all Loan  Assets  acquired  by the
Depositor shall conform with all of the requirements  hereof. The Company hereby
acknowledges  that each transfer of the Loan Assets to the Depositor is absolute
and irrevocable, without reservation,  retention of any interest, or recourse to
the Company, except as provided in Sections 2.06, 3.03 and 3.04.

         (b) If, for any  reason,  the  Company  retains any portion of the Loan
File pertaining to any Loan sold to the Depositor hereunder,  it shall hold such
documents as the Special  Servicer in trust for the benefit of the Depositor and
the  Trustee.  The  possession  by the  Company of any Loan File (or any portion
thereof)  pertaining  to any Loan is, and shall be, at the will of the Depositor
and the Trustee for the sole  purpose of servicing  such Loan  Assets,  and such
retention  and  possession  by the  Company  is,  and shall  be, in a  custodial
capacity  only. Any Loan File or portion  thereof  relating to any Loan shall be
segregated  from the  books  and  records  of the  Company  and  shall be marked
appropriately  to reflect  clearly  the sale of the  related  Loan Assets to the
Depositor and the conveyance thereof to the Trust.

         Section 2.02       Authorization and Issuance of Common Stock by the
         ------------       --------------------------------------------------
Depositor.
----------

         Subject to all the terms and conditions hereof and in reliance upon the
representations,  warranties  and  covenants  set forth in this  Agreement,  the
Depositor shall issue, as of the Initial  Delivery Date, the Common Stock to the
Company.  In accordance  with all of the terms and  conditions  hereof:  (a) the
Depositor  shall  issue the Common  Stock in the name of, and shall  deliver the
Common  Stock  directly to, the  Company;  and (b) the Company  shall obtain the
Common Stock directly from the Depositor.

         Section 2.03       Use of Proceeds.
         ------------       ----------------

         Subject to all the terms and conditions hereof and in reliance upon the
representations, warranties and covenants set forth herein, the Depositor shall,
on the Initial  Delivery Date and on any  Acquisition  Date,  repay the Existing
Indebtedness,  if  any,  with  the  proceeds  of the  sale  of any  Certificates
simultaneously upon the issuance of such Certificates.

                                       7
<PAGE>


         Section 2.04       Delivery of Loans; Filing of Financing Statements.
         ------------       --------------------------------------------------

         (a) In connection  with each Funding,  the Company shall deliver to the
Depositor,  the  Certificateholder  Agent and the Rating Agency a Pending Credit
Schedule,  ***, a Funding Report and a Company  Certificate  in accordance  with
Sections 4.03 and 4.04 of the Trust Agreement.

         (b) Promptly  upon the transfer by the Company to the  Depositor of the
Loan  Assets,  the  Company  shall  notify all  Obligors  in writing to send all
payments in respect of the Loans directly to the Lockbox Account.

         (c) In connection with the Depositor's  acquisition of any Loan Assets,
the  Company,  on behalf of the  Depositor,  shall  deliver  to the  Trustee  in
accordance  with Section 4.06 of the Trust  Agreement the original  related Loan
Files and shall deliver to the Servicer and the Special  Servicer a copy of such
Loan Files to assist them in their respective servicing obligations (as provided
under  the  Transaction   Documents).   In  addition,  in  connection  with  the
Depositor's  acquisition  of any Loan Assets,  the Company shall make,  file, or
record,  as applicable,  on or prior to the  acquisition of such Loan Assets all
filings  (including  Uniform  Commercial  Code  filings),   notices,  transfers,
assignments  (including assignments of all related Mortgages (in recordable form
duly executed) and Notes),  stock or other appropriate  powers or instruments of
transfer  (duly  executed in blank) and  recordings  as required  under  Section
3.01(a)(ix)  hereof,  the Trust  Agreement or applicable  law (i) to perfect the
sale by the Company to the  Depositor  of the Loans and the related  Loan Assets
being acquired  hereunder,  (ii) to assign to the Trustee all Uniform Commercial
Code financing statements  perfecting the security interest of the Depositor (as
assignee of the  Company) in the related Loan  Collateral,  (iii) to perfect the
first  priority  security  interest  of the  Trustee in the  Depositor's  rights
therein, and (iv) to cause any related Loan Collateral (including any Mortgages)
to name the Trustee as lienholder in accordance with the provisions of the Trust
Agreement.

         (d) In connection with the Depositor's  acquisition of any Loan Assets,
the Company shall promptly, at its own expense, cause all Electronic Records and
other  records  maintained  by it to be marked to show that the Loan Assets have
been acquired by the Depositor in accordance herewith and subsequently  conveyed
by the Depositor to the Trustee in accordance with the Transaction Documents..

         Section 2.05       Servicing of Loans.
         ------------       -------------------

         The Servicer and the Special Servicer shall service all Loan Assets for
the benefit of the Depositor (and its  successors and assigns),  the Trustee and
the  Certificateholders,  in  accordance  with the terms and  conditions  of the
Transaction Documents.  Notwithstanding the foregoing,  the Company acknowledges
and agrees that its obligations  hereunder are independent of any obligations it
may have as the Special  Servicer and that its obligations  under this Agreement
will  continue  in full  force and  effect,  whether  or not it is acting as the
Special Servicer, until termination of this Agreement in accordance with Section
6.01.

         Section 2.06       Review of Loans.
         ------------       ----------------

         If the Company  discovers  or is notified  by the  Depositor  or by the
Trustee on behalf of the  Certificateholders or by the  Certificateholder  Agent
that any material  document in any Loan File  (including  any Note,  Mortgage or
other  document  specified  in  clause  (f) of the  definition  of  "Loan  File"
contained herein) is missing or defective (that is, mutilated, damaged, defaced,
incomplete, improperly dated, clearly forged or otherwise physically altered) in
any material respect, the Company shall correct or cure such omission, defect or
other  irregularity  within  forty-five  (45)  days  from the  date the  Company
discovered,  or 

***Confidential information omitted purusant to a request for confidential 
   treatment filed separately with the Securities and Exchange Commission.

                                       8

<PAGE>


is  notified  by the  Depositor  or the  Trustee  of,  such  omission or defect.
Otherwise,  the Company shall repurchase such Loan from the Depositor or replace
such Loan with a Substitute Loan in accordance with Sections 3.03 and 3.04.

         Section 2.07       Nature of Transfer.
         ------------       -------------------

         (a) The  transfers  of Loan  Assets  by the  Company  to the  Depositor
pursuant to this Agreement are intended to be absolute assignments of all of the
Company's right,  title and interest in, to and under such Loan Assets,  without
recourse (except as provided in Sections 2.06, 3.03 and 3.04), for all purposes.

         (b) If the  transfer  of any or all of the Loan Assets from the Company
to the  Depositor is deemed for any reason to be a secured  financing,  then the
Company  shall be deemed  hereunder  to have granted to the  Depositor,  and the
Company does hereby grant to the Depositor,  a first priority  security interest
in all of the Loan Assets.  For  purposes of such grant,  this  Agreement  shall
constitute a security agreement under applicable law.

         (c) If the transfer  contemplated  by this  Agreement is deemed for any
reason to be less than a transfer  of  complete  legal  title of all of the Loan
Assets,  the parties hereto  nevertheless  intend that this Agreement operate to
transfer all of the Loan Assets to the Depositor.


                                       9
<PAGE>


                                  ARTICLE THREE
                                  -------------

                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

         Section 3.01 Representations and Warranties of the Company.
         ------------ ----------------------------------------------

         (a) Subject to any  exceptions  reflected in a related  Funding  Report
that are approved by the  Certificateholder  Agent, the Company hereby makes the
following  representations  and  warranties as to each Loan to the Depositor and
for  the  benefit  of the  Trustee  and the  Certificateholders,  on  which  the
Depositor  relies in acquiring the Loan and the other  related Loan Assets,  the
Trustee relies in accepting the Trust Estate and authenticating the Certificates
and the  Certificateholders  rely  in  acquiring  the  Certificates  and  making
advances under the Transaction  Documents.  Such  representations and warranties
speak,  unless otherwise  indicated,  as of the Acquisition Date with respect to
such Loan, but such  representations and warranties shall survive any subsequent
transfer, assignment, contribution or conveyance of such Loan.

                  (i) The information set forth with respect to such Loan in the
         Loan  Schedule is true and correct as of the related  Cut-Off  Date and
         Acquisition Date;

                 (ii) Such Loan is a senior secured commercial  loan originated
         in the United  States of America by the Company in the ordinary  course
         of the  Company's  business.  Such Loan is  denominated  and payable in
         United States dollars.  Such Loan is fully and properly executed by the
         parties thereto. The rights with respect to such Loan are assignable by
         the lender  thereunder  and its  assignees  without  the  consent of or
         notice to any Person.

                  (iii) The Company shall hav  delivered to the Depositor either
         (A) the original  manually  executed  Note  relating to such Loan,  all
         other original  documents  evidencing  such Loan (with the exception of
         such  original  documents  as  have  not yet  been  returned  from  the
         appropriate   filing/recordation   office,  which  documents  shall  be
         forwarded  to the Trustee  within one hundred  twenty (120) days of the
         date of the  closing  of such Loan;  provided  that,  if such  original
                                              ---------
         documents are not forwarded to the Trustee on or before such date, then
         the  Company  shall  provide  written  notice  to the  Trustee  and the
         Certificateholder  Agent of such fact,  such written  notice to provide
         the  circumstances of such failure and what steps the Company is taking
         or is able  to  take  in  respect  thereof  (depending  on  information
         supplied by the applicable  filing/recordation  office)), and the other
         items  comprising the Loan File related  thereto or (B) executed Escrow
         Instructions,  or  other  evidence  acceptable  to the  Depositor,  the
         Trustee  and the  Certificateholder  Agent  that such  items  have been
         obtained  from the Obligor and are being held in escrow;  with delivery
         of all  original  documents  evidencing  such Loan and the related Loan
         File to be made  within two (2)  Business  Days  following  the related
         Acquisition Date (with the exception of such original documents as have
         not yet been returned from the appropriate  filing/recordation  office,
         which  documents  shall be forwarded to the Trustee  within one hundred
         twenty  (120) days of the date of the  closing  of such Loan;  provided
                                                                        --------
         that, if such original documents are not forwarded to the Trustee on or
         before such date,  then the Company shall provide written notice to the
         Trustee  and the  Certificateholder  Agent of such fact,  such  written
         notice to provide the  circumstances of such failure and what steps the
         Company is taking or is able to take in respect  thereof  (depending on
         information supplied by the applicable filing/recordation office)).

                                       10

<PAGE>


                  (iv) There is only one original manually executed  counterpart
         of the Note  relating  to such Loan,  which has been  delivered  to the
         Trustee,  and the Company's  Electronic  Records and other records have
         been marked as provided in Section 2.04(d).

                  (v) Such Loan was not  originated in, nor is it subject to the
         laws of, any  jurisdiction,  the laws of which would make  unlawful the
         sale,  transfer  or  assignment  of  such  document  under  any  of the
         Transaction Documents,  including any repurchase in accordance with the
         Transaction Documents.

                  (vi)  Such  Loan  is,  and  on the  related  Cut-Off  Date and
         Acquisition  Date will be, in full force and effect in accordance  with
         its  respective  terms and  neither  the Company nor any Obligor has or
         will have  suspended or reduced any payments or  obligations  due or to
         become due thereunder by reason of a default by the other party to such
         Loan; and, as of the related  Acquisition  Date: (A) such Loan is not a
         Delinquent  Loan or a Defaulted  Loan and (B) there are no  proceedings
         pending,  or to  the  best  of  the  Company's  knowledge,  threatened,
         asserting the  insolvency of an Obligor;  and there are no  proceedings
         pending, or to the best of the Company's knowledge,  threatened wherein
         the Obligor or any  governmental  agency has alleged  that such Loan is
         illegal or  unenforceable or which could reasonably be expected to have
         a material  adverse  effect on the  financial  condition of the related
         Obligor or the enforceability of the Loan; and no advances were made to
         qualify  the Loan  under the  eligibility  criteria  contained  in this
         Section 3.01.

                  (vii) To the best of the Company's knowledge,there has been no
         advance of funds by a party other than the related  Obligor(s)  for the
         payment of any amount required in respect of such Loan.

                  (viii) Such Loan is the valid, binding and legall  enforceable
         obligation of the parties  thereto,  enforceable in accordance with its
         terms,   subject,   as  to  enforcement,   to  applicable   bankruptcy,
         insolvency,   reorganization   and  other   similar   laws  of  general
         applicability  relating to or affecting creditors' rights generally and
         to general  principles of equity  regardless of whether  enforcement is
         sought in a court of law or equity.

                  (ix) All related  filings  (including Uniform  Commercial Code
         filings and further  including  such  Uniform  Commercial  Code filings
         naming the  Trustee as assignee  of secured  party with  respect to the
         Obligors under such Loan), notices,  transfers,  assignments (including
         assignments  of all  related  Mortgages  (in  recordable  form and duly
         executed)),  stock  or  other  appropriate  powers  or  instruments  of
         transfer  (duly  executed in blank),  recordings  and other  actions as
         required  under the Trust  Agreement or  applicable  law to perfect the
         first priority  security interest of the Depositor in such Loan and the
         related Loan Assets being acquired  hereunder,  to assign such security
         interest  to the  Trustee,  to  perfect  the  first  priority  security
         interest of the Trustee in the Depositor's  rights therein and to cause
         any related Loan Collateral  (including any related  Mortgages) to name
         the Trustee as  lienholder  in  accordance  with the  provisions of the
         Trust Agreement have been accomplished and are in full force and effect
         or will  be  accomplished  within  the  time  period  specified  in the
         Transaction  Documents.  Such  Loan  creates  a valid,  subsisting  and
         enforceable  first  priority  lien upon and  security  interest  in the
         related  Loan  Collateral  subject only to  Permitted  Loan  Collateral
         Liens,  securing such Loan in favor of the Company.  Such Loan together
         with the related lien and security  interest in the Loan Collateral has
         been duly assigned by the Company to the Depositor and by the Depositor
         to the Trustee.

                                       11

<PAGE>


                  (X) Each Loan  (except  as  described  below) is secured by a
         related  Mortgage,  which is a valid and enforceable  first lien on the
         fee or leasehold estate (as indicated in the  exhibit/attachment to the
         Mortgage) of the related  Mortgage  Property,  which estate is free and
         clear of all other  encumbrances  and  liens,  except (in the case of a
         mortgage  of a fee  estate)  for (A)  liens for real  estate  taxes and
         special assessments not yet due and payable, (B) covenants,  conditions
         and restrictions,  rights of way, easements and other matters of public
         record as of the date of recording of such  Mortgage,  such  exceptions
         appearing of record being  acceptable  to commercial  mortgage  lending
         institutions  generally or  specifically  (i.e.,  not through a general
         exception  or  exclusion)   reflected  in  the  title  policy  made  in
         connection  with the origination of the related Loan, (C) 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,  or (D) any other
         lien   as   approved   by  the   Company,   the   Depositor   and   the
         Certificateholder Agent.

                  (xi)  Such  Loan is not  cross-collateralized  with any  other
         obligation  other than the  following:  (A) a Loan that is a whole loan
         and not a  participation  interest;  or (B) an obligation not a Loan to
         the  extent  that:  (1) such  obligation  is a loan  originated  by the
         Company;  (2) such obligation has a debt service coverage ratio,  fixed
         charge  coverage  ratio  or  other  similar  measure  analogous  to the
         Coverage  Ratio  applicable  to the Loan of not less than  ***;(3)  the
         proceeds  of  such  other  obligation  are to be  used  solely  for (y)
         acquiring  additional  death care  establishments  or real  property or
         making any improvements  relating thereto or (z) constructive  business
         purposes of the related Obligor,  provided that no proceeds of any such
                                           --------
         obligation  are used by or  distributed to any Affiliate of the related
         Obligor other than such Person's  wholly owned  subsidiaries;  (4) such
         other  obligation  will be  serviced  solely by the  Servicer;  (5) the
         Company shall have entered into an intercreditor  agreement in form and
         substance reasonably  satisfactory to the  Certificateholder  Agent and
         the Rating Agency with the related  creditor (or the assignee  thereof)
         of such other  obligation;  and (6) the Company shall have provided all
         information  with respect to such other  obligation  as shall have been
         reasonably  requested  by the  Certificateholder  Agent and the  Rating
         Agency.

                 (xii) In the case of a Mortgage of a fee or leasehold estate in
         connection with such Loan, the related Mortgaged Property is covered by
         an ALTA or comparable  lender's  title  insurance  policy,  issued by a
         Qualified  Insurer,  insuring the Company,  its  successors and assigns
         that the  related  Mortgage  is a valid  first  lien on such  Mortgaged
         Property,  subject (in the case of a Mortgage on a fee estate)  only to
         the  matters  set  forth  in  Section  3.01(a)(x)  and  Permitted  Loan
         Collateral  Liens.  Such  title  insurance  policy is in full force and
         effect,  is freely assignable to each of the Depositor and the Trustee,
         as  assignee  of the  Loan  using a 104 or  similar  endorsement  which
         endorsement  insures  the  holder  of  record  that  there  is no prior
         assignment  of the  Loan.  Such  title  insurance  policy  insures  the
         Mortgaged  Property in the amount  required by the Program  Guidelines.
         The policy does not contain any special exceptions (other than standard
         exclusions  and  endorsements)  for  zoning  and uses or other  special
         exceptions  (other  than  survey  exceptions)  that  would  render  the
         Mortgaged  Property  unmarketable.  No claim has been made  under  such
         title insurance  policy.  The Company has not done, by act or omission,
         anything,  and has no  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 and all
         premiums for such policy,  including any premiums for  endorsements and
         special endorsements, have been paid.

                (xiii) Any Mortgaged Property related to such Loan is insured by
         a fire and  extended  perils  insurance  policy,  issued by a Qualified
         Insurer,  providing coverage against loss or damage sustained by reason
         of fire, lightning,  windstorm, hail, explosion, riot, riot attending a
         strike,  civil  


***Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.

                                       12

<PAGE>

         commotion, aircraft, vehicles and smoke, and, to the extent required as
         of  the  date  of  origination  by  the  Company  consistent  with  its
         commercial lending practices and the Program Guidelines,  against other
         risks  insured  against by Persons  operating  like  properties  in the
         locality  of the  Mortgaged  Property,  in an amount not less than that
         specified by the Program  Guidelines.  The primary related Obligor also
         maintains  business   interruption  and  rental  continuation  coverage
         sufficient to protect against loss under a policy issued by a Qualified
         Insurer in accordance  with the Program  Guidelines.  If any portion of
         the  Mortgage  Property  is  in  an  area  identified  by  any  federal
         governmental  department,  agency or authority as having  special flood
         hazards,  and flood insurance is available,  a flood  insurance  policy
         meeting the current guidelines of the Federal Insurance  Administration
         is in effect  with a  generally  acceptable  insurance  carrier,  in an
         amount  representing  coverage  not less than the least of the  maximum
         amount of insurance  available under the Flood Disaster  Protection Act
         of 1973, as amended.  All such  insurance  policies  contain a standard
         loss payable endorsement naming the Company, its successors and assigns
         (including subsequent owners of the Loan), as mortgagee, and may not be
         reduced, terminated or cancelled without thirty (30) days prior written
         notice  to the  mortgagee.  No such  notice  has been  received  by the
         insured.  All  premiums  on any such policy have been paid for at least
         six (6) months  following  the related Loan closing  date.  The related
         Mortgage  obligates the related  Obligor to maintain all such insurance
         and, at such  Obligor's  failure to do so,  authorizes the mortgagee to
         maintain such  insurance at the Obligor's  cost and expense and to seek
         reimbursement therefor from such Obligor.

                  (xiv) Such Loan was originated by the Company and each related
         Loan Asset satisfies in all material respects the Program Guidelines.

                  (xv) The proceeds of such Loan have been fully  disbursed  and
         there is no requirement for future advances  thereunder and any and all
         requirements  stated in the  commitment  letter between the Company and
         the related Obligors and the closing  instructions of the Company as to
         the escrow of any funds have been  complied with except as described in
         the related Loan File and approved in writing by the  Depositor and the
         Certificateholder  Agent.  Except  for  any  escrowed  funds  deposited
         pursuant to the related Loan  documents,  no cash deposits,  letters of
         credit,  pledged  account,  surety bonds or other cash equivalent items
         are held to assure  compliance  by any related  Obligor with any of its
         obligations in respect of the Loan.

                  (xvi) The Coverage Ratio relating to such Loan is not less 
         than  ***.

                (xvii) No Obligor with respect to such Loan is the United States
         of America or any state, or agency,  department or  instrumentality  or
         political subdivision of the United States of America or any State.

                  (xviii) All requirements of any  federal,  state  or local law
         (including usury, truth in lending, real estate settlement  procedures,
         consumer  credit  protection,  equal credit  opportunity  or disclosure
         laws) applicable to the  origination,  conveyance and servicing of such
         Loan have been complied with.

                  (xix) Such  Loan is not  and,  to the  best  of the  Company's
         knowledge,  will not be  subject to any right of  rescission,  set-off,
         claim, counterclaim or defense, including the defense of usury, whether
         arising out of  transactions  concerning  such Loan or  otherwise;  the
         operation  of any of the  terms  of such  Loan or the  exercise  by the
         Company or any  related  Obligor of any right  under such Loan will not
         render such Loan  unenforceable in whole or in part, nor subject to any
         claim, counterclaim,  setoff, recision or defense, and no such right of
         rescission,  set-off, claim,  counterclaim

***Confidential information omitted purusant to a request for confidential 
   treatment filed separately with the Securities and Exchange Commission.

                                       13
<PAGE>


         or defense  has been  asserted  with  respect  thereto;  provided  that
                                                                  --------
         certain  rights or  defenses  may exist  under  applicable  law  which,
         individually or in the aggregate, do not make the remedies available to
         the Company and its assignees with respect to such Loan  inadequate for
         the practical realization of the benefits provided thereby.

                  (xx) Proceeds of the Loans may be used for acquisitions,  debt
         refinancing,  stock  purchase,  distribution  and other legal  purposes
         specified  in the  Program  Guidelines  or  otherwise  approved  by the
         Certificateholder  Agent. Except as expressly  previously  disclosed to
         the  Depositor  and the  Certificateholder  Agent,  to the  best of the
         Company's  knowledge,  the proceeds of such Loan have not been and will
         not be used to satisfy,  in whole or in part, any debt owed or owing by
         any Obligor to any of its Affiliates.

                  (xxi) All existing indebtedness of the related primary Obligor
         of such Loan shall be repaid prior to or concurrently  upon the closing
         of  such  Loan;  provided  that,  subject  to  Section  3.01(a)  (xvi),
                          --------
         *** consistent  with the Program  Guidelines and as permitted under the
         related Loan documents is permitted.

                  (xxii)  There is no  default,  breach, violation  or  event of
         acceleration  existing  with respect to such Loan,  and no event (other
         than payments due but not yet  delinquent)  which,  with the passage of
         time or with  notice and the  expiration  of any grace or cure  period,
         would constitute a default, breach, violation or event of acceleration,
         exists with respect to such Loan.

                  (xxiii)  Such Loan is evidenced by document  substantially  in
         the form of the Standard Forms.  The related Note, the related Mortgage
         and the other related Loan documents  contain customary and enforceable
         provisions  such as to render  the rights  and  remedies  of the holder
         thereof  adequate for the  realization  against each related  Obligor's
         interest  in the  related  Loan  Collateral.  Such  Loan  has a  stated
         maturity.  Such Loan has scheduled monthly payments and an amortization
         schedule that comply with the Program Guidelines;  without limiting the
         foregoing,  the grace  period  with  respect to any  scheduled  monthly
         payment due in respect of such Loan is not greater than five (5) days.

                  (xxiv)  To the extent such Loan is secured by a 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 after  default  by the  related
         Obligor,  no  fees  or  expenses  are  payable  by the  Company  or the
         Depositor to such trustee.

                  (xxv)  With  respect to each  Loan  which  is  secured  by the
         interest  of an  Obligor  as  lessee  under a Lease,  unless  otherwise
         approved in writing by the Depositor and the Certificateholder Agent:

                           (1) The  lessor  under  such Lease has agreed in such
                  Lease or in another writing contained in the Loan File, or the
                  related Loan provides for the Obligor's  agreement,  that such
                  Lease may not be amended, modified, surrendered,  cancelled or
                  terminated in any manner that would be  materially  adverse to
                  the Company without the prior written consent of the Company;


***Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.



                                       14

<PAGE>


                           (2) Such Loan  provides that the original term of the
                  related Lease (plus all consecutive renewal terms which may be
                  exercised,   and  which  under  all  circumstances   would  be
                  enforceable, by the Company, the Depositor and the Trustee, as
                  appropriate)  extends beyond the stated maturity date for such
                  Loan,  unless  otherwise  approved in writing by the Depositor
                  and the Certificateholder Agent;

                           (3) Such Lease or related lease estoppel requires the
                  lessor thereunder to give to the Company notice of any default
                  by the lessee,  the opportunity to cure any such default,  and
                  the right to enter into a new lease on substantially  the same
                  terms as the Lease following a rejection  thereof by a trustee
                  or   debtor-in-possession  in  any  bankruptcy  or  insolvency
                  proceeding  or a  termination  of such Lease as a result of an
                  incurable default; and

                           (4) Such  Lease is in full  force and  effect  and no
                  default  has  occurred  under  such  Lease,  nor is there  any
                  existing  condition  which, but for the passage of time or the
                  giving of notice, would result in a default under the terms of
                  such Lease.

                  (xxvi) The  Company has duly fulfilled all  obligations  to be
         fulfilled  on  the  lender's  part  under  or in  connection  with  the
         origination,  acquisition  and assignment of the Loan Assets related to
         such Loan, including giving any notices or consents necessary to effect
         the  acquisition  of such Loan  Assets by the  Depositor,  and has done
         nothing   to  impair   the   rights  of  the  Trust   Estate   and  the
         Certificateholders in such Loan. The Company has obtained all necessary
         licenses,  permits and charters required to be obtained by the Company,
         which  failure to obtain would render any material  portion of the Loan
         documents  unenforceable or would have a material adverse effect on the
         Depositor or the Certificateholders.

                  (xxvii)  Such Loan and the  related  Loan Assets have not been
         sold,  transferred,  assigned  or pledged by the  Company to any Person
         other than the  Depositor  (except for  security  interests in the Loan
         Assets  which shall be  terminated  on or prior to the related  Cut-Off
         Date), and upon execution and delivery of this Agreement by the Company
         and the  contemporaneous  repayment of the Existing  Indebtedness,  the
         Depositor will have all of the right,  title and interest in and to the
         Loan  Assets,  free and  clear of all liens  and  encumbrances  and any
         interest of the Company or its successors,  except for the interests of
         any related  Obligors in  connection  with the Loan and the lien of the
         Trustee  under the Trust  Agreement.  The sale to the  Depositor of the
         such Loan and the  related  Loan  Assets  does not violate the terms or
         provisions of any loan or any other agreement to which the Company is a
         party or by which it is bound.

                  (xxviii) The sale, transfer, assignment and conveyance of such
         Loan and the  related  Loan  Assets  by the  Company  pursuant  to this
         Agreement  is not  subject  to and will not  result in any tax,  fee or
         governmental  charge  payable by the Company to any  federal,  state or
         local government ("Transfer Taxes") other than Transfer Taxes that have
         or will be paid by the Company as due. If the Depositor receives actual
         notice of any Transfer  Taxes arising out of the  transfer,  assignment
         and  conveyance  of such Loan or the related  Loan  Assets,  on written
         demand by the  Depositor,  or upon the  Company  otherwise  being given
         notice thereof, then the Company shall pay, and otherwise indemnify and
         hold the Depositor, the Trustee and the Trust harmless, on an after-tax
         basis,  from 

                                       15

<PAGE>

         and against any and all such Transfer Taxes (it being  understood  that
         the  Certificateholders,  the  Trustee  and  the  Trust  shall  have no
         obligation to pay such Transfer Taxes).

                  (xxix) As of the  related Acquisition Date,  such Loan has not
         been  prepaid in full or in part  (except  for any  partial  prepayment
         reflected in the Loan Balance as shown on the Loan Schedule).

                  (xxx)  Such Loan has been originated  at par (100% of the Note
         amount)  and all  fees  paid to the  Company  in  connection  with  the
         origination of such Loan have been disclosed in the related Loan File.

                  (xxxi) Such Loan has a final  Scheduled  Payment on  or before
         the date that is six  months  prior to the  latest  Series  Termination
         Date.

                  (xxxii) Such Loan has (A) an amortization schedule of not more
         than *** months and (B) a remaining  term  of at least *** months and 
         not more than *** months. 

                  (xxxiii) Except as disclosed in the Funding Report relating to
         such  Loan,  to  the  best  of the  Company's  knowledge,  there  is no
         hazardous  substance,  or proceeding  for  remediation of any hazardous
         substance,  affecting any Mortgaged  Property  related to such Loan and
         there is no material violation of any environmental law,  regulation or
         order affecting any Mortgaged Property relating to such Loan.

                  (xxxiv)  There are no  delinquent  property  taxes or  similar
         charges on or affecting any Mortgaged Property relating to such Loan.

                  (xxxv) Any improvements on any Mortgaged Property  relating to
         such  Loan  are in good  repair,  and,  to the  best  of the  Company's
         knowledge,  since the  origination  of such Loan,  the operator of such
         Mortgaged  Property has maintained all material  licenses,  permits and
         qualifications  necessary for the operation of the Mortgaged  Property,
         and the Company has not received any notice of any proceeding to revoke
         or suspend any such license, permit or qualification.

                  (xxxvi) Such Loan has been serviced  solely by the Company or 
         the Servicer.


         (b)  The  Company  hereby  makes,  as of  each  Acquisition  Date,  the
following  representations and warranties to the Depositor,  and for the benefit
of the  Trustee and the  Certificateholders,  on which the  Depositor  relies in
acquiring the Loan Assets and selling the  Certificates,  the Trustee  relies in
accepting  the  Trust  Estate  and   authenticating  the  Certificates  and  the
Certificateholders  rely in acquiring the Certificates and making advances under
the Transaction Documents.  Such representations and warranties speak as of each
Acquisition Date, as applicable,  unless otherwise indicated,  but shall survive
any subsequent transfer, assignment, contribution or conveyance of the Loans.

                  (i) The Company used no selection  procedures  that identified
         the Loans being acquired as being less desirable or valuable than other
         comparable loans, if any, originated by the Company.

                  (ii) The Loans comply with the Pool Criteria.

                  (iii) As of any Acquisition Date on which any Substitute Loans
         are conveyed to the Depositor and the Trustee: (A) the weighted average
         remaining  term  to  maturity  of  the  Loans   

  
***Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
 

                                       16

<PAGE>

         immediately  after the  substitution of such Substitute  Loans does not
         vary by more  than 1.5  months  shorter  or  longer  from the  weighted
         average   remaining  term  to  maturity   immediately   prior  to  such
         substitution of Substitute  Loans; (B) each Substitute Loan has a final
         Scheduled  Payment on or before  the final  scheduled  maturity  of all
         other Loans; (C) the interest rate and prepayment  premium with respect
         to each  Substitute  Loan are not  less  than  those on the Loan  being
         replaced.

                  (iv) As to any Loans acquired on any Acquisition  Date while a
         Swap  Agreement is then in effect,  the  acquisition of such Loans will
         not cause the weighted  average interest rate on all Loans then held in
         the  Trust  Estate  (computed,  prior  to any  default  under  the Swap
         Agreement,  by taking into account any Swap Payments  anticipated to be
         made in respect  thereof) to be less than the weighted average interest
         rate then accruing on Rated Certificates then Outstanding.

         (c)  The  Company  hereby  makes  the  following   representations  and
warranties  to the  Depositor,  and  for  the  benefit  of the  Trustee  and the
Certificateholders,  on which the Depositor  relies in acquiring the Loan Assets
and selling the  Certificates,  the Trustee relies in accepting the Trust Estate
and authenticating the Certificates and the Certificateholders rely in acquiring
the  Certificates  and making  advances under the  Transaction  Documents.  Such
representations  and warranties speak as of the related Acquisition Date, unless
otherwise  indicated,  but shall survive any  subsequent  transfer,  assignment,
contribution or conveyance of the Loans:

                  (i)  The  Company  has  been  duly  organized  and is  validly
         existing and in good standing as a limited  liability company under the
         laws of its jurisdiction of organization with limited liability company
         power and authority to own its  properties and to transact the business
         in which it is now  engaged,  and the Company is duly  qualified  to do
         business  in and is in good  standing  under the laws of each  State in
         which any Obligor or  Mortgaged  Property is located or is not required
         under applicable law to effect such qualification, except where failure
         to so qualify would not have a material  adverse  effect on the ability
         of the  Company  to  perform  its  obligations  under  the  Transaction
         Documents or under any of the Loans.

                  (ii) The performance  of the  obligations of the Company under
         this Agreement and the other Transaction Documents and the consummation
         of the transactions  herein and therein  contemplated will not conflict
         with or result in any breach of any of the terms or  provisions  of, or
         constitute  with or without  notice,  lapse of time or both,  a default
         under any material  indenture,  agreement,  mortgage,  deed of trust or
         other  instrument  to which  the  Company  is a party or by which it is
         bound,  or result in the creation or imposition of any Lien (except the
         Lien created by the Trust Agreement) upon any of the property or assets
         of the Company pursuant to the terms of such indenture,  mortgage, deed
         of trust,  or other  agreement or  instrument to which the Company is a
         party or by which the Company is bound or to which any of the Company's
         property or assets is subject,  nor will such action  conflict  with or
         result in any violation of the provisions of the Company's  certificate
         of formation or limited liability  company  operating  agreement or any
         statute or any order, rule or regulation of any court or any regulatory
         authority or other governmental agency or body having jurisdiction over
         the  Company  or any  of its  properties;  and  no  consent,  approval,
         authorization, order, registration or qualification of or with or other
         action  of any  court,  or  any  such  regulatory  authority  or  other
         governmental  agency  or  body  is  required  for  consummation  of the
         transactions  contemplated by this Agreement and the other  Transaction
         Documents except such consents,  approvals and authorizations that have
         been obtained or such  registrations or  qualifications  that have been
         made.


                                       17

<PAGE>


                  (iii)  Each  of  the Transaction   Documents   has  been  duly
         authorized,  executed  and  delivered  by the Company by all  necessary
         corporate  action and such agreements are the valid and legally binding
         obligations  of  the  Company,   enforceable  against  the  Company  in
         accordance with their  respective  terms,  subject as to enforcement to
         applicable  bankruptcy,  insolvency,  reorganization  and other similar
         laws of  general  applicability  relating  to or  affecting  creditors'
         rights  generally  and to general  principles  of equity  regardless of
         whether enforcement is sought in a court of law or equity.

                  (iv) The Company  Address  is the chief  executive  office and
         chief place of business of the Company and the office where the Company
         keeps its records concerning the Loans.

                  (v) The  Company  does  not  believe,  nor  does  it have  any
         reasonable  cause to  believe,  that it cannot  perform  each and every
         covenant contained in this Agreement.

                  (vi)  The   transactions   contemplated   by  the  Transaction
         Documents are being  consummated  by the Company in  furtherance of its
         ordinary  business  purposes,  with no  contemplation of insolvency and
         with no intent to hinder, delay or defraud any of its present or future
         creditors.

                  (vii) The consideration received  by the  Company as set forth
         herein is fair consideration  having value reasonably  equivalent to or
         in excess of the value of the Loan  Assets and the  performance  of the
         Company's obligations hereunder.

                  (viii) Neither on the date of the transactions contemplated by
         the  Transaction   Documents  or  immediately   before  or  after  such
         transactions, nor as a result of the transactions, will the Company:
 
                            (1) be  insolvent  such that the sum of its debts is
                  greater  than  all  of  its  respective  property,  at a  fair
                  valuation;

                            (2) be engaged in or about to engage in, business or
                  a  transaction  for which the Company  will have  unreasonably
                  small capital or the  remaining  assets of the Company will be
                  unreasonably  small in relation to its respective  business or
                  the transaction; and

                            (3) have  intended  to incur  or  believed  it would
                  incur,  debts that would be beyond its  respective  ability to
                  pay as such debts mature or become due. The  Company's  assets
                  and cash flow enable it to meet its present obligations in the
                  ordinary course of business as they become due.

                  (ix)  Both immediately   before  and  after  the  transactions
         contemplated by the Transaction Documents: (A) the present fair salable
         value of the  Company's  assets  was or will be in excess of the amount
         that will be  required  to pay its  probable  liabilities  as they then
         exist and as they become  absolute and matured;  and (B) the sum of the
         Company's  assets  was or will be  greater  than the sum of its  debts,
         valuing its assets at a fair salable value.


                                       18
<PAGE>


                  (x) The  acquisition  of the  Loan  Assets  by the  Depositor
         pursuant to this  Agreement is not subject to the bulk  transfer or any
         similar statutory provisions in effect in any applicable jurisdiction.

                  (xi) There are no proceedings or investigations pending, or to
         the  knowledge of the  Company,  threatened,  against or affecting  the
         Company  in or before any court,  governmental  authority  or agency or
         arbitration board or tribunal which,  individually or in the aggregate,
         if determined adversely to the Company,  would materially and adversely
         affect the ability of the Company to perform its obligations  under, or
         the validity or  enforceability  of, any of the Transaction  Documents.
         The Company is not in default  with  respect to any order of any court,
         governmental authority or agency or arbitration board or tribunal.

                  (xii)  All tax  returns or extensions  required to be filed by
         the Company in any jurisdiction have in fact been filed, and all taxes,
         assessments,  fees and other governmental  charges upon the Company, or
         upon any of the  respective  properties,  income or  franchises  of the
         Company, shown to be due and payable on such returns have been, or will
         be, paid when due. To the best of the Company's knowledge, all such tax
         returns are true and correct  and the Company has no  knowledge  of any
         proposed  additional tax assessment  against it in any material  amount
         nor of any basis therefor. The provisions for taxes on the books of the
         Company  are  in  accordance   with   generally   accepted   accounting
         principles.

                  (xiii)  The Company (A)  is  not in  violation  of  any  laws,
         ordinances,  governmental  rules or regulations to which it is subject,
         (B) has not failed to obtain any licenses, permits, franchises or other
         governmental  authorizations necessary to the ownership of its property
         or to the conduct of its  business,  and (C) is not in violation in any
         material  respect  of any term of any  agreement,  charter  instrument,
         bylaw or  instrument to which it is a party or by which it may be bound
         which  violation or failure to obtain would  materially  and  adversely
         affect the ability of the Company to perform its obligations  under, or
         the validity or enforceability of, any of the Transaction Documents.

                  (xiv) It is the intention  of the Company that the Loan Assets
         be acquired by the  Depositor and that the  beneficial  interest in and
         title to the Loan  Assets  not be part of the  Company's  estate in the
         event of the filing of a bankruptcy  petition by or against the Company
         under any bankruptcy law.

                  (xv) As of the Initial  Delivery  Date and after giving effect
         to  the  transactions  contemplated  hereby  to be  consummated  on the
         Initial  Delivery Date, the Company is and will be the registered owner
         of all of the issued and outstanding common stock of the Depositor, all
         of which Common Stock is validly issued, fully paid and nonassessable.

                  (xvi)  The  present  value of all  benefits  vested  under all
         "employee  pension benefit plans," as such term is defined in Section 3
         of ERISA,  maintained  by the  Company,  or in which  employees  of the
         Company  are  entitled to  participate,  as from time to time in effect
         (collectively,  the "Pension Plans"),  does not exceed the value of the
         assets of the Pension Plans allocable to such vested benefits (based on
         the value of such  assets as of  December  31,  1997,  the last  annual
         valuation  date).  No  prohibited  transactions,   accumulated  funding
         deficiencies,  withdrawals  or  reportable  events have  occurred  with
         respect to any Pension Plans that, in the aggregate,  could subject the
         Company to any material tax, penalty or other  liability.  No notice of
         intent to terminate a Pension Plan has been filed,  nor has any Pension
         Plan been  terminated  under  Section  4041(f)  of  ERISA,  nor has the
         

                                       19

<PAGE>

         Pension  Benefit  Guaranty   Corporation   instituted   proceedings  to
         terminate,  or appoint a trustee to  administer,  a Pension Plan and no
         event has occurred or condition exists which might  constitute  grounds
         under Section 4042 of ERISA for the  termination of, or the appointment
         of a trustee to administer, any Pension Plan.

                  (xvii)  There  has  been  no material adverse  change  in  the
         financial  condition  of the  Company  since  April  28,  1998  and all
         information  concerning the Company and its Affiliates furnished by the
         Company   to  the   Depositor,   the   Certificateholder   Agent,   any
         Certificateholder,  the  Trustee  or the  Rating  Agency  prior to such
         Acquisition  Date in connection with the  Transaction  Documents or any
         transaction  contemplated thereby was true and accurate in all material
         respects or based on reasonable  estimates (but, if based on estimates,
         shall  be  identified  as so  based)  on  the  date  as of  which  such
         information  is  stated  or  certified,  as  applicable,  and  no  such
         information  contains any untrue  statement of a material fact or omits
         to state a  material  fact  necessary  in order to make the  statements
         contained herein or therein,  in light of the circumstances under which
         such  statements  were  made  and  taken as a  whole,  not  misleading;
         provided that, to the extent that the representations and warranties of
         --------
         the  Company  contained  in  this  clause  (xvii)  relate  to any  such
         information  that  was  not  prepared  by  the  Company  or  any of its
         Affiliates,  then such  representations  and warranties are made by the
         Company  solely to the best of its  knowledge.  As used in this clause,
         "information"  does not include casual oral  conversations  or informal
         oral statements of opinions on which it would be unreasonable to rely.

Notwithstanding  that any  representation  or warranty set forth in this Section
3.01 is  made to the  best of the  Company's  knowledge  (or to the  best of the
Depositor's  knowledge  as such  representation  or  warranty  is applied to the
Depositor  under  the  terms of the  Trust  Agreement),  in the  event  any such
representation  or warranty is found to be untrue or incorrect,  the  repurchase
and  substitution  provisions  of Sections  3.03 and 3.04 shall apply as if such
representation  or  warranty  was  not  conditioned  on the  Company's  (or  the
Depositor's) knowledge.

         Section 3.02        Representations and Warranties of the Depositor.
         ------------        ------------------------------------------------

         The Depositor hereby makes the following representations and warranties
to the Company,  and for the benefit of the Trustee and the  Certificateholders,
on which the Company  relies in entering into this  Agreement with the Depositor
the  Trustee  relies  in  accepting  the Trust  Estate  and  authenticating  the
Certificates and the  Certificateholders  rely in acquiring the Certificates and
making Fundings. The Company agrees that any breach by the Depositor of any such
representations and warranties shall not limit or excuse the full performance of
the  Company's   obligations   hereunder.   Unless  otherwise  indicated,   such
representations  and warranties  speak as of the Initial  Delivery Date and each
Acquisition  Date, but such  representations  and  warranties  shall survive any
subsequent transfer, assignment, contribution or conveyance of the Loan Assets:

         (a) The  Depositor has been duly  organized and is validly  existing in
good  standing as a  corporation  under the laws of the State of Delaware,  with
corporate  power and authority to own its  properties,  perform its  obligations
under the Transaction  Documents and to transact the business in which it is now
engaged or in which it proposes to engage; the Depositor is duly qualified to do
business  and is in good  standing  in each  State in which  the  nature  of its
business  requires it to be so  qualified,  except  where  failure to so qualify
would not have a material  adverse  effect on the  ability of the  Depositor  to
perform its obligations under the Transaction Documents.


                                       20

<PAGE>


         (b) The  performance  of the  obligations  of the Depositor  under this
Agreement  and the  other  Transaction  Documents  and the  consummation  of the
transactions herein and therein contemplated will not conflict with or result in
any breach of any of the terms or provisions  of, or constitute  with or without
notice,  lapse  of time or both,  a  default  under  any  indenture,  agreement,
mortgage, deed of trust or other instrument to which the Depositor is a party or
by which it is bound,  or  result  in the  creation  or  imposition  of any Lien
(except the Lien  created by the Trust  Agreement)  upon any of the  property or
assets of the Depositor pursuant to the terms of such indenture,  mortgage, deed
of trust,  or other agreement or instrument to which the Depositor is a party or
by which the Depositor is bound or to which any of the  Depositor's  property or
assets is subject, nor will such action conflict with or result in any violation
of the provisions of the Depositor's  certificate of  incorporation or bylaws or
any  statute or any order,  rule or  regulation  of any court or any  regulatory
authority  or other  governmental  agency or body having  jurisdiction  over the
Depositor or any of its  properties;  and no consent,  approval,  authorization,
order, registration or qualification of or with or other action of any court, or
any such regulatory  authority or other governmental  agency or body is required
for  consummation  of the  transactions  contemplated  by this Agreement and the
other Transaction  Documents except such consents,  approvals and authorizations
that have been obtained or such  registrations or qualifications  that have been
made.

         (c) The Transaction  Documents have been duly authorized,  executed and
delivered by the  Depositor by all  necessary  corporate  action and  constitute
valid and legally binding obligations of the Depositor,  enforceable against the
Depositor in accordance  with their terms,  except that such  enforcement may be
subject to  bankruptcy,  insolvency,  reorganization  and other  similar laws of
general  applicability  relating to or affecting creditors' rights generally and
to general principles of equity regardless of whether enforcement is sought in a
court of equity or law.

         (d) There are no proceedings or  investigations  to which the Depositor
is a party pending,  or, to the knowledge of the Depositor,  threatened,  before
any  court,  regulatory  body,   administrative  agency  or  other  tribunal  or
governmental  instrumentality  (i) asserting the  invalidity of any  Transaction
Document,  (ii)  seeking to prevent  the  issuance  of the  Certificates  or the
consummation of any of the  transactions  contemplated by any of the Transaction
Documents,  or (iii) seeking any  determination  or ruling that would materially
and adversely affect the performance by the Depositor of its obligations  under,
or the validity or enforceability of, any of the Transactions Documents.

         (e) All approvals, authorizations, consents, orders or other actions of
any Person or of any court, governmental agency or body or official, required in
connection  with the execution and delivery of this  Agreement have been or will
be taken or obtained on or prior to the Initial Delivery Date.

         (f) The Depositor  Address is the principal place of business and chief
executive office of the Depositor.

         (g) All tax returns or extensions required to be filed by the Depositor
in any jurisdiction  have in fact been filed, and all taxes,  assessments,  fees
and other governmental charges upon the Depositor, or upon any of the respective
properties,  income or franchises of the Depositor,  shown to be due and payable
on such  returns  have  been,  or will be,  paid  when  due.  To the best of the
Depositor's  knowledge,  all such tax  returns  are  true  and  correct  and the
Depositor has no knowledge of any proposed  additional tax assessment against it
in any material  amount nor of any basis  therefor.  The provisions for taxes on
the books of the Depositor are in accordance with generally accepted  accounting
principles.


                                       21
<PAGE>


         (h) The  Depositor  (i) is not in  violation  of any laws,  ordinances,
governmental rules or regulations to which it is subject, (ii) has not failed to
obtain any licenses,  permits,  franchises or other governmental  authorizations
necessary to the  ownership  of its property or to the conduct of its  business,
and  (iii)  is not in  violation  in any  material  respect  of any  term of any
agreement,  charter instrument, bylaw or instrument to which it is a party or by
which it may be bound which violation or failure to obtain would  materially and
adversely affect the ability of the Depositor to perform its obligations  under,
or the validity or enforceability of, any of the Transaction Documents.

         Section 3.03        Substitution or Repurchase of Loans.
         -----------        ------------------------------------

         If (a) the Company,  the  Depositor,  the Trustee,  the Servicer or the
Special   Servicer   discovers  or  are  notified  of  (i)  the  breach  of  any
representations or warranties set forth in Sections 3.01 or 3.02 that materially
and  adversely  affects the value of a Loan,  an interest (of the  Company,  the
Depositor or the Trustee) in the related Loan  Collateral,  or the  interests of
the  Certificateholders,  or (ii) the breach of any of the  representations  and
warranties  set forth in  Sections  3.01(a)(ii),  3.01(a)(v),  3.01(a)(viii)  or
3.01(a)(xxvii),  or (b) the Company or the Depositor discovers or is notified of
the  occurrence  of any missing or  defective  document as  specified in Section
2.06,  then the party  discovering  such breach or  condition  shall give prompt
written  notice to the other parties and to the Trustee,  the  Certificateholder
Agent and each Certificateholder and, in the case of clause (a) of this Section,
the  Company  shall,  within  thirty  (30)  days from the date the  Company  was
notified of or otherwise  discovers  such breach,  cure such breach,  and in the
case of clause (b) of this Section,  the Company shall,  within  forty-five (45)
days from the date the  Company  was  notified of or  otherwise  discovers  such
breach,  cure such  breach.  If in the case of either  clause (a) or (b) of this
Section,  the Company fails to cure such breach in the applicable time period or
the  Company or the  Special  Servicer  is unable to cure such  circumstance  or
condition,  then at the  expiration  of the  applicable  cure period the Company
shall  either (A) purchase  such Loan and the  security  interest in the related
Loan  Collateral  at the  Repurchase  Price or (B)  provide  a  Substitute  Loan
(together with a Company Certificate) and remit the applicable Repurchase Price,
if any, to the Collection  Account.  The Repurchase Price for a repurchased Loan
and, if any, for a Substitute  Loan shall be paid and any Substitute  Loan shall
be  delivered,  by the  Company to the  Collection  Account in  accordance  with
Section 3.04. It is understood  and agreed that the obligation of the Company to
cure or purchase or  substitute  any Loan as to which such a breach has occurred
shall  constitute  the sole  remedy  respecting  such  breach  available  to the
Depositor,   the   Certificateholders   or  the   Trustee   on  behalf  of  such
Certificateholders (except for any indemnities provided under Section 4.01(j) or
under the Trust  Agreement)  for any losses,  claims,  damages  and  liabilities
arising from the  Depositor's  ownership  of such Loan or the  inclusion of such
Loan in the Trust Estate.

         Section 3.04        Requirements for Purchase or Substitution of Loans.
         ------------        ---------------------------------------------------

         (a) If the Company  purchases any Loan under  Sections 2.06 or 3.03, or
if the  Depositor  removes any Loan under  Section 3.04 of the Trust  Agreement,
such Loan shall be  purchased  by the  Company or removed by the  Depositor,  as
applicable,  at the  Repurchase  Price.  All  purchases  and  removals  shall be
accomplished at the times specified in subsection (c) below.

         (b) If the Company substitutes for any Loan under Section 2.06 or 3.03,
or if the  Depositor  substitutes  any  Loan  under  Section  3.04 of the  Trust
Agreement  (a  "Substitute  Loan"),  each such  Substitute  Loan shall (i) be an
Eligible  Loan,  (ii)  be  written  on one  of  the  Standard  Forms,  (iii)  be
accompanied by (A) a Company Certificate  subjecting such Loan to the provisions
hereof and  providing  with  respect to such  Substitute  Loan the related  Loan
Schedule and (B) evidence of all required UCC filings and other actions required
under the  Transaction  Documents to perfect the  interests of the Depositor and
the Trustee in such  

                                       22

<PAGE>


Substitute  Loan and the related  Loan Assets,  and (iv) not have been  selected
using any other  procedures  that identified the Loan as being less desirable or
valuable than other comparable loans owned by the Company. Upon the substitution
of any Substitute Loan pursuant to the provisions of this Section  3.04(b):  (y)
such  Substitute  Loan will be subject to all the terms and  provisions  of this
Agreement,  the  Servicing  Agreement  and the Trust  Agreement  (including  the
applicability  and accuracy of all of the  representations  and  warranties  set
forth in Sections 3.01(a) and 3.01(b) as of the date of substitution) just as if
such  Substitute Loan had been one of the original Loans acquired on the Initial
Delivery  Date; and (z) the Depositor and the Company shall also comply with the
provisions and limitations set forth in the Trust Agreement.  All  substitutions
shall be accomplished at the time specified in subsection (c) below.

         (c) Any purchase or substitution of a Loan by the Company in accordance
with Sections 2.06, 3.03 or this Section 3.04 shall be made by remittance of the
Repurchase  Price directly to the  Collection  Account or by  substitution  of a
Substitute  Loan and  remittance of the  applicable  Repurchase  Price,  if any,
directly to the Collection  Account,  on or prior to the Determination Date next
following the  expiration of the cure period set forth in Sections 2.06 or 3.03,
as  applicable.  In  addition,  the Trustee  shall  release the related  Loan in
accordance with Section 3.05 of the Trust  Agreement,  and the Special  Servicer
shall no longer  hold the copy of the related  Loan File in its  capacity as the
Special Servicer in accordance with the provisions of the Servicing Agreement.

         (d) Any voluntary  purchase or  substitution of a Loan by the Depositor
pursuant  to the terms of the  Trust  Agreement  in the  event of a  prepayment,
default  or  delinquency  with  respect  to such  Loan  shall  satisfy  the same
requirements  for a  purchase  or  substitution,  as the case may be, as are set
forth in this Section 3.04.


                                       23
<PAGE>


                                  ARTICLE FOUR
                                  ------------

                            COVENANTS OF THE COMPANY
                            ------------------------

         Section 4.1        The Company Covenants.
         -----------        ----------------------

         The Company hereby  covenants and agrees with the Depositor and for the
benefit of the Trustee and the Certificateholders as follows:

         (a)  Except as  hereinafter  provided,  the  Company  will keep in full
effect its existence,  rights and franchises as a limited  liability company and
will obtain and preserve its  qualification  to do business as a foreign limited
liability company in each  jurisdiction in which such  qualification is or shall
be  necessary  to protect the validity  and  enforceability  of the  Transaction
Documents or any of the Loans and to perform its duties  hereunder.  The Company
may not  merge or  consolidate  with,  or sell all or  substantially  all of its
assets to, any other Person unless:  (i) immediately after giving effect to such
transaction,  no  representation  or warranty made  pursuant to Section  3.01(c)
shall have been  breached and no Default would occur as a result  thereof,  (ii)
such intended successor executes an agreement or assumption,  in form reasonably
satisfactory  to the  Trustee,  to perform  every  obligation  under each of the
Transaction  Documents  to  which  it is  to be a  party,  (iii)  such  intended
successor has a net worth that is  sufficient to perform in accordance  with the
Transaction  Documents  to which it is to be a party and at least  approximately
equivalent  to the net worth of the Company  immediately  prior to such intended
sale,  merger or  consolidation,  (iv) the Company  shall have  delivered  prior
written notice to the Certificateholder  Agent, the  Certificateholders  and the
Trustee and shall have delivered to the Depositor,  the Certificateholder Agent,
the  Certificateholders  and the Trustee an Officer's Certificate of the Company
and an Opinion of Counsel each stating that such intended consolidation, merger,
or succession and such  agreement of assumption  complies with this Section 4.01
and  that all  conditions  precedent,  if any,  provided  for in this  Agreement
relating to such  transaction have been complied with, and (v) the Company shall
have   delivered   to  the   Depositor,   the   Certificateholder   Agent,   the
Certificateholders  and the  Trustee an Opinion  of Counsel  either (A)  stating
that, in the opinion of such Counsel,  all  financing  statements,  continuation
statements  and  amendments  thereto  have  been  executed  and  filed  and,  if
applicable, all other actions have been taken, to preserve fully the interest of
the  Depositor in the Loans and the Loan Assets and reciting the details of such
filings and, if applicable, such actions, or (B) stating that, in the opinion of
such  counsel,  no such action  shall be  necessary to preserve and protect such
interest;  whereupon such Person,  upon  consummation of such transaction  shall
become the successor of the Company  hereunder,  without the execution or filing
of any paper or any further act on the part of any of the parties hereto.

         (b) Neither the Company nor any of the directors,  officers,  employees
or agents of the Company  shall be under any  liability  to the  Depositor,  the
Trustee or the  Certificateholders  for taking any action,  or for refraining to
take any  action,  in good faith  pursuant  to this  Agreement  or for errors in
judgment  unless such action or inaction  involves  recklessness  or negligence;
provided that this provision shall not protect the Company against any breach of
--------
warranties  or   representations   made  herein,  any  failure  to  perform  its
obligations in strict  compliance  with this  Agreement,  or any liability which
would  otherwise be imposed by reason of any breach of the terms and  conditions
of this Agreement. The Company, and any director,  officer, employee or agent of
the  Company,  may rely in good faith on any  document  of any kind prima  facie
properly  executed and submitted by any Person  respecting  any matters  arising
hereunder.  The  Company  shall  not be  under  any  obligation  to  appear  in,
prosecute,  or defend any legal action that is not incidental to its obligations
as the  contributor  of the Loan  Assets  hereunder  and that in its opinion may
involve it incurring any expense or liability.


                                       24
<PAGE>


         (c) The Company,  from time to time, at its own expense,  shall execute
and  file  such  additional   financing   statements   (including   continuation
statements)  and take such other  actions as may be  necessary  to preserve  the
security  interests  and  liens  described  in  Section  3.01(a)(ix)  as  may be
reasonably  requested  by  the  Depositor  or the  Trustee  and  are  reasonably
satisfactory in form and substance to the Trustee.

         (d) The  Company  will not  change  its  name,  identity  or  corporate
structure in any manner that would, could, or might make any financing statement
or continuation  statement  misleading within the meaning of Section 9-402(7) of
the UCC, unless it shall have given the Depositor,  the Certificateholder  Agent
and the Trustee at least thirty (30) days prior written notice thereof and shall
have provided evidence of appropriate UCC filings.

         (e) The Company will give the Depositor,  the  Certificateholder  Agent
and the Trustee at least thirty (30) days prior written notice of any relocation
of its principal  executive office and, if, as a result of such relocation,  the
applicable  provisions  of the UCC would  require the filing of any amendment of
any previously filed financing or continuation statement or of any new financing
statement and the Company, the Company shall provide evidence of appropriate UCC
filings.

         (f) The Company  will duly  fulfill all  obligations  on its part to be
fulfilled  under or in connection  with each Loan, will not change or modify the
terms of the Loans except as expressly permitted by the terms of the Transaction
Documents  and will do  nothing to impair  the  rights of the  Depositor  or the
Trustee in the Loans or the Loan Collateral.  If, for any reason,  the rights of
the  Company  under  any Loan  (including  under  any  guaranty  of the  related
Obligor's  obligations  under any Loan) are not assignable or have, in fact, not
been assigned to the Depositor or to the Trustee,  then the Company will enforce
such rights on behalf of the Depositor and the Trustee.

         (g) The Company will comply, in all material  respects,  with all acts,
rules, regulations, orders, decrees and directions of any governmental authority
applicable to the Loan Assets or any part thereof; provided that the Company may
                                                   --------
contest any act, regulation, order, decree or direction in any reasonable manner
which shall not materially  and adversely  affect the rights of the Depositor or
the Trustee in the Loan Assets.

         (h) The Company will advise the Depositor,  the  Certificateholders and
the Trustee promptly,  in reasonable  detail, of the occurrence of any breach by
the Company,  following  discovery by the Company of such breach,  of any of its
representations, warranties or covenants contained herein.

         (i) The Company  will execute or endorse,  acknowledge,  and deliver to
the  Depositor,  the  Certificateholders  and the Trustee from time to time such
schedules, confirmatory assignments,  conveyances, powers of attorney, and other
reassurances or instruments  and take such further  similar actions  relating to
the Loans and the rights covered by the Transaction Documents,  as the Depositor
or the Trustee may reasonably request to preserve and maintain title to the Loan
Assets and the rights of the Trustee and the Certificateholders  therein against
the claims of all Persons.

         (j) The Company  agrees to indemnify,  defend and hold the  Depositor,
the  Trustee  and the  Certificateholders  harmless  from and  against any loss,
liability,  damage, judgment,  claim, deficiency or expense (including interest,
penalties,  reasonable  attorney's fees and amounts paid in settlement)  that is
caused  by (i) a  breach  at any  time by the  Company  of its  representations,
warranties and covenants  contained in Section 3.01 or this Section 4.01 or (ii)
any  material  information  furnished  by the  Company  that is set forth in any
schedule  delivered  hereunder,  being  untrue  in any  respect  when  any  such
representation was 

                                       25
<PAGE>


made or  schedule  delivered;  provided  that  the  Company  shall  not have any
                               --------
liability with respect to a  representation  or warranty as to any specific Loan
other than to purchase such Loan or substitute for such Loan in accordance  with
Sections 3.03 and 3.04 unless such breach of  representation  or warranty is the
result  of  the  Company's  fraud,  gross  negligence,   bad  faith  or  willful
misconduct.  The Company shall also indemnify the Depositor, the Trustee and the
Certificateholders for any costs or expenses incurred by them in the enforcement
of this  Agreement  or as a result  of the  Company's  failure  to  perform  its
obligations hereunder. The obligations of the Company under this Section 4.01(j)
shall be considered to have been relied upon by the  Depositor,  the Trustee and
the Certificateholders and shall survive the execution, delivery and performance
of this Agreement,  regardless of any investigation  made by or on behalf of the
Depositor,  the Trustee, the  Certificateholder  Agent or any  Certificateholder
until termination of the Trust Agreement.  If the Company has made any indemnity
payments pursuant to this Section 4.01(j) and thereafter any Person recovers the
amount of the related loss or any portion thereof from others,  such Person will
promptly repay the amount recovered to the Company, without interest.

         (k)  The  Company  will not do  anything  to  disturb  or  impair  the
acquisition of the Loan Assets by the Depositor hereunder.

         (l) The Company (i) will (A) maintain  its books and records  separate
from the books and  records of the  Depositor  and (B)  maintain  bank  accounts
separate  from  those of the  Depositor  and (C)  maintain  one (1)  independent
director  on the  Depositor's  board of  directors,  so long as the Company is a
shareholder  of the  Depositor  and (ii)  will not,  and will not in any  manner
encourage  any  other  Person  to,  (A) take any  action  that  would  cause the
dissolution  or  liquidation  of  the  Depositor,  (B)  guarantee  (directly  or
indirectly),  endorse or  otherwise  become  contingently  liable  (directly  or
indirectly) for the obligations of the Depositor,  or (C) institute  against the
Depositor,  or join any other Person in instituting  against the Depositor,  any
case,  proceeding  or other  action  under any  existing  or future  bankruptcy,
insolvency or similar laws.  This Section  4.01(l) shall survive  termination of
this Agreement.

         (m)  The  Company  shall  notify  the  Depositor,   the  Trustee,  the
Certificateholder Agent and each Certificateholder promptly after becoming aware
of any Lien (other than a Permitted Loan Collateral Lien) on any Loan Asset.

         (n) On each date as of which the Company substitutes a Substitute Loan
or  Substitute  Loans in accordance  with Sections 2.06 or 3.04(b),  the Company
shall  provide  to the  Depositor  (with  a copy  thereof  to the  Trustee,  the
Certificateholder  Agent and each  Certificateholder) a Company Certificate with
respect to such Substitute Loan(s), subjecting such Loan(s) and the related Loan
Assets to the  provisions  hereof and providing with respect to such Loan(s) the
information required in the related amended Loan Schedule.

         (o) The annual  financial  statements  of the Company will reflect the
effects of the transactions  contemplated by the Transaction Documents as a sale
by the Company and a sale by the Depositor in accordance with generally accepted
accounting principles. The financial statements of the Company and the Depositor
will also  reflect  that the assets of the  Depositor  are not  available to pay
creditors of the Company.  The  resolutions,  agreements  and other  instruments
underlying  the  Transaction  Documents will be  continuously  maintained by the
Company as official records.

         (p) The Company, in its capacity as the Special Servicer, will, at its
own cost and expense,  (i) retain on its  Electronic  Records a master record of
the Loans for the benefit of the Depositor,  the Trustee and other  Persons,  if
any, with  interests in the Loans and (ii) mark its  Electronic  Records and all
other  records 

                                       26

<PAGE>


to the effect that the Loan Assets have been  acquired by the Depositor and that
they have been  transferred  and  assigned to the Trustee  pursuant to the Trust
Agreement.

         (q)  Except  as  otherwise  agreed to in  advance  in  writing  by the
Controlling  Holders,  the  Company  will at all times own one  hundred  percent
(100%) of the Common Stock and will not pledge the Common Stock as security.  If
(with such agreement of the Controlling  Holders) the Company elects to transfer
the Common  Stock to an  affiliate  or pledge a security  interest in the Common
Stock, then, as a condition to such sale or pledge, the Company shall, on behalf
of the  Depositor,  obtain an agreement from the transferee or the secured party
that it will take no action that would cause the  Depositor to breach any of its
covenants  under  any  Transaction  Document,  and that for so long as the Trust
Agreement is in effect and for one year and one day thereafter, it will not file
any involuntary petition or otherwise institute any bankruptcy,  reorganization,
insolvency or liquidation  proceeding or other  proceeding  under any federal or
state  bankruptcy  or similar law against the  Depositor and it will comply with
the Depositor's  certificate of incorporation and the covenants of the Depositor
set forth in the Transaction Documents. Subject to the foregoing limitation, the
parties  acknowledge  and agree that the Company may in the future  transfer the
Common  Stock to a direct or indirect  wholly owned  subsidiary  of the Company,
which  subsidiary  may pledge the Common  Stock to or for the  benefit of one or
more lenders or purchasers of its Certificates or other obligations.

         (r) If the Company  desires to amend or  otherwise  revise the Program
Guidelines,  then the Company shall first deliver to the Depositor, the Trustee,
the  Certificateholder  Agent and the  Rating  Agency  the final  version of the
proposed  amendments or other proposed  revisions to the Program  Guidelines (in
each instance and as so proposed,  the "Proposed Revision").  Within thirty (30)
days following its receipt of any Proposed Revision, each of the Depositor,  the
Rating  Agency and the  Certificateholder  Agent  shall  deliver to the  Company
written  notice  indicating  whether the  Depositor,  the Rating  Agency and the
Certificateholder Agent deem the Proposed Revision acceptable or not acceptable;
provided  that  the  failure  of  the  Depositor,   the  Rating  Agency  or  the
--------
Certificateholder  Agent to provide such a written  notice to the Company within
such time  period  shall be  deemed to  constitute  rejection  of such  Proposed
Revision.

         Section 4.02        Depositor Covenants.
         ------------        --------------------

         The Depositor  hereby covenants and agrees with the Company and for the
benefit of the Trustee and the Certificateholders as follows:

         (a) If in any enforcement  suit or legal proceeding it is held that the
Company  may not  enforce a Loan on the  ground  that it is not a real  party in
interest or holder  entitled to enforce the Loan,  the Depositor  shall,  at the
Depositor's expense, take such steps as the Depositor deems necessary to enforce
the Loan, including bringing suit in the Depositor's name.

         (b)  The  Depositor  warrants  that it will  own  and  possess  a first
priority  security  interest in the Loan  Collateral  (subject only to Permitted
Loan Collateral  Liens) upon its acquisition of the Loan Assets and that it will
warrant and defend its  interest  in the Loan  Collateral  against all  Persons,
claims and demands whatsoever.  The Depositor shall not assign, sell, pledge, or
exchange,  or in any way  encumber or  otherwise  dispose of its interest in the
Loan Assets, except as permitted under the Trust Agreement.



                                       27
<PAGE>


         Section 4.03        Assignment of Loan Assets.
         ------------        --------------------------

         The Company  understands  that the Depositor  will convey and assign to
the Trustee all of its right,  title and interest in and to this  Agreement  and
the Loan Assets.  The Company consents to such assignment and grants and further
agrees that all  representations,  warranties,  covenants and  agreements of the
Company  made  herein  shall also be for the benefit of and inure to the Trustee
and all Certificateholders.


                                       28
<PAGE>


                                  ARTICLE FIVE
                                  ------------

                                   CONDITIONS
                                   ----------


         Section 5.01        Conditions to the Depositor's Obligations.
         ------------        ------------------------------------------

         The  obligations  of the  Depositor  to provide  the  Company  with the
consideration  provided  for  herein,  and of  the  Certificateholders  to  make
Fundings  on any  Funding  Date,  shall be  subject to the  satisfaction  of the
following conditions:

         (a)  On or  before  the  Initial  Delivery  Date,  the  Depositor,  the
Servicer, the Special Servicer, the Servicing Advisor and the Trustee shall have
entered into the Trust Agreement and the Servicing Agreement (to the extent they
are parties thereto);

         (b) On the Initial  Delivery Date, the  Certificates to be sold on such
Date shall have been issued and sold and the  Depositor  shall have received the
full consideration due it upon the issuance of such Certificates.

         (c) No Default  (other than a  Servicing  Advisor  Default),  Depositor
Event of Default,  Servicer Event of Default,  Special Servicer Event of Default
or Servicing Advisor Event of Default shall have occurred and be continuing;

         (d) The Company shall have delivered all other  information  previously
required  or  reasonably  requested  by  the  Depositor,   the  Trustee  or  the
Certificateholder Agent to be delivered by the Company hereunder, duly certified
by an officer of the Company,  shall have  complied  with Section 2.04 and shall
have substantially  performed all other obligations  required to be performed by
it pursuant to the terms of the Transaction Documents;

         (e) All  representations  and  warranties  of the Company  contained in
Sections  3.01(a)  and (b) and all  information  provided  in any Loan  Schedule
(including  any  related  Funding  Report  and  Pending  Credit  Schedule),   as
applicable,  shall be true and correct on the  relevant  Acquisition  Date,  all
representations  and warranties in Sections 3.01(c) shall be true and correct as
of each Acquisition  Date, and the Company shall have delivered to the Depositor
and the Trustee an Officer's Certificate to such effect;

         (f)  Within  two  (2)  Business  Days  of  each  Acquisition  Date,  as
applicable,  the Company shall have delivered,  or cause to have been delivered,
to the Trustee, in the manner contemplated by Section 3.01(a)(iii), the original
manually executed Note relating to the Loans being acquired,  all other original
documents  evidencing  such Loans (except as otherwise  contemplated  by Section
3.01(a)(iii)),  and the other items  comprising the Loans Files relating to such
Loans, and there shall have been made all filings,  recordings or registrations,
and there  shall  have been given or taken any  notice or any other  action,  as
applicable,  as may be necessary in the reasonable opinion of the Depositor, the
Trustee and the Certificateholder  Agent, in order to establish and preserve the
right, title and interest of the Depositor and the Trustee in the Loan Assets;

         (g) On or prior to the second  Business Day following  delivery of each
of the documents specified in Section 3.01(a)(iii), the Servicer and the Special
Servicer shall have received a copy of such documents; and


                                       29

<PAGE>


         (h)  On or  before  the  Initial  Delivery  Date,  the  Depositor,  the
Servicer, the Special Servicer, the Servicing Advisor and the Trustee shall have
entered into the Trust Agreement and the Servicing Agreement (to the extent they
are parties thereto).

         Section 5.02        Conditions to the Company's Obligations.
         ------------        ----------------------------------------

         The  obligations  of the  Company to enter into this  Agreement  on the
Initial  Delivery  Date shall be subject to the  satisfaction  of the  following
conditions:

         (a)  On or  before  the  Initial  Delivery  Date,  the  Depositor,  the
Servicer, the Special Servicer, the Servicing Advisor and the Trustee shall have
entered into the Trust Agreement and the Servicing Agreement;

         (b) On the Initial  Delivery  Date,  the  Certificates  shall have been
issued and sold and the Depositor shall have received the full consideration due
it upon the issuance of such Certificates; and

         (c)  The  consideration  set  forth  herein  shall  have  been  paid or
delivered to the Company simultaneously with the execution of this Agreement.


                                       30
<PAGE>


                                   ARTICLE SIX
                                   -----------

                              TERM AND TERMINATION
                              --------------------

         Section 6.01        Term.
         ------------        -----

         This Agreement  shall commence as of the date of execution and delivery
hereof and shall  continue  in full force and effect  until the later of (a) the
final  payment  with respect to the last Loan Asset and (b)  termination  of the
Trust Agreement;  provided that any obligations of the Depositor with respect to
                  --------
the  acquisition  of any Loans from and after the  Initial  Delivery  Date shall
terminate upon the occurrence of a Funding Termination Event.

         Section 6.02        Default by the Company.
         ------------        ----------------------- 

         If the  Company  shall be in  default  under  this  Agreement  and such
default  shall not have been cured for a period of thirty  (30) days,  or if the
Company  shall  become  insolvent or make an  assignment  for the benefit of its
creditors  or have a  receiver  appointed  for all or  substantially  all of its
properties, or if any proceedings are commenced, or consented to, by the Company
or are not stayed or  dismissed  within  sixty (60) days after  being  commenced
against the Company under any bankruptcy, insolvency or other law for the relief
of debtors,  then the  Depositor  shall have the right,  with the prior  written
consent of the  Trustee,  in addition to any other  rights it may have under any
applicable  law, to terminate its  obligations  under this Agreement upon thirty
(30) days prior written notice to the Company;  provided that any termination of
                                                --------
this Agreement  pursuant to this Section 6.02 shall not release the Company from
any obligation under this Agreement.


                                       31

<PAGE>


                                  ARTICLE SEVEN
                                  -------------

                               GENERAL PROVISIONS
                               ------------------

         Section 7.01        Amendments.
         ------------        -----------

         This Agreement and the rights and obligations of the parties  hereunder
may not be changed  orally but only by an  instrument  in writing  signed by the
party against whom enforcement is sought together with the prior written consent
of the Holders of not less than 51% of the Outstanding  Principal Amount of each
affected Class (or, with respect to any affected Class during the Funding Period
applicable to such Class,  of not less than 51% of the Maximum  Series Amount of
such  Class)  of  Rated  Certificates.  Promptly  after  the  execution  of  any
amendment, the Depositor shall send to the Trustee, each Certificateholder,  the
Certificateholder  Agent and each Rating  Agency a  conformed  copy of each such
amendment.

         Section 7.02        Governing Law.
         ------------        --------------

         This Agreement  shall be construed in accordance with the internal laws
of the State of New York.

         Section 7.03        Notices.
         ------------        --------

         All  demands,  notices and  communications  hereunder  shall be made in
accordance with the provisions of the Trust Agreement and shall be addressed, in
the case of the Company,  to the Company Address,  in the case of the Depositor,
to the Depositor Address,  and in the case of any  Certificateholders,  to their
address  set  forth  on the  Certificate  Register.  All  demands,  notices  and
communications  made in accordance with the provisions hereof shall be deemed to
have been received or made (as  applicable) as provided in the Trust  Agreement.
Any Person may change the address for notices hereunder by giving notice of such
change to the other  Person (or in the case of a  Certificateholder,  by causing
the Trustee to change its address as provided on the Certificate Register).

         Section 7.04        Separability Clause.
         ------------        --------------------

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

         Section 7.05        Assignment.
         ------------        -----------

         Except as  provided  in  Section  4.01(a),  this  Agreement  may not be
assigned or delegated by the Company  without the prior  written  consent of the
Depositor  and the Trustee and may not be assigned or delegated by the Depositor
without the prior written consent of the Trustee.

         Section 7.06        Further Assurances.
         ------------        -------------------

         Each of the Company and the  Depositor  agrees to do such  further acts
and  things  and  to  execute  and  deliver  to  the  Trustee  such   additional
assignments,  agreements,  powers and instruments as are required by the Trustee
to carry into effect the  purposes  of this  Agreement  or to better  assure and
confirm  unto the  Trustee or the  Certificateholders  their  rights,  powers or
remedies  hereunder.  If any Obligor  shall be in 

                                       32
<PAGE>


default under any Loan, upon reasonable request from the Special Servicer or the
Trustee,  the Company will take all reasonable steps to assist in enforcing such
Loan and preserving and  maintaining  title to the Loan Assets and the rights of
the Trustee and the Certificateholders therein against the claims of all persons
and parties to the extent the Company is capable of  performing  such  requested
steps and the Special  Servicer or the Trustee  reasonably  determines  that the
assistance of the Company is necessary to effect the intent and purposes hereof.

         Section 7.07        No Waivers; Cumulative Remedies.
         ------------        --------------------------------

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

         Section 7.08        Binding Effect; Third Party Beneficiaries.
         ------------        ------------------------------------------

         This  Agreement  will inure to the  benefit of and be binding  upon the
parties  hereto  and  shall  inure  to  the  benefit  of  the  Trustee  and  the
Certificateholders,  and their respective  successors and permitted assigns,  as
express third party beneficiaries.

         Section 7.09        Set-Off.
         ------------        --------

         (a) The Company hereby irrevocably and unconditionally waives all right
of  set-off  that  it  may  have  under  contract  (including  this  Agreement),
applicable  law  or  otherwise  with  respect  to any  funds  or  monies  of the
Depositor, the Trustee, each Certificateholder, the Certificateholder Agent, the
Servicer,  the Special Servicer or the Servicing  Advisor at any time held by or
in the possession of the Company.

         (b) Each of the Depositor,  the Trustee, the Certificateholders and the
Certificateholder  Agent shall have the right to set-off against the Company any
amounts to which the Company may be  entitled  and to apply such  amounts to any
claims   the   Depositor,    the   Trustee,   any   Certificateholder   or   the
Certificateholder  Agent may have  against the  Company  from time to time under
this Agreement.  Upon any such set-off,  the Person  exercising such right shall
give notice of the amount thereof and the reasons therefor.

                                       33

<PAGE>



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


                                                ALLEGIANCE CAPITAL, LLC,
                                                      Company

                                               By:     /s/ Alan B. Perper      
                                               ------------------------------- 
                                               Name:   Alan B. Perper
                                               Title:  President


                                               ALLEGIANCE FUNDING CORP. I
                                                      Depositor

                                               By:     /s/ Alan B. Perper      
                                               ------------------------------- 
                                               Name:   Alan B. Perper
                                               Title:  President


<PAGE>


                                       
                                                                      EXHIBIT A
                                                                      ---------
                                                   to Loan Acquisition Agreement
                                                   -----------------------------

                               COMPANY CERTIFICATE
                               -------------------

                                                              , 19
                                               ---------------    --

         Pursuant to Section 2.01 of that certain  Loan  Acquisition  Agreement,
dated as of  August  1,  1998  (as  amended  or  modified  from  time to time in
accordance with the terms thereof,  the "Loan Acquisition  Agreement"),  between
Allegiance  Capital,  LLC (the  "Company") and  Allegiance  Funding Corp. I (the
"Depositor"),  attached  hereto as Schedule A is a Loan Schedule  related to the
requested Funding that includes  information  regarding the Loan Assets that are
hereby sold, transferred, contributed, assigned, set over and otherwise conveyed
by the  Company  to the  Depositor  in  accordance  with  the  Loan  Acquisition
Agreement.  Each  capitalized  term used  herein that is not  otherwise  defined
herein has the meaning assigned thereto in the Loan Acquisition Agreement.


                                    
                                                ALLEGIANCE CAPITAL, LLC,
                                                      Company

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

                                               ALLEGIANCE FUNDING CORP. I
                                                      Depositor

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


                                      A-1
<PAGE>


                                                                  Schedule A to
                                                                  ------------- 
                                                            Company Certificate
                                                            -------------------


                                  Loan Schedule




                                      A-2
<PAGE>
                                       
                                                                       EXHIBIT D
                                                                       ---------
                                                  to Loan Acquisition Agreement
                                                  -----------------------------

                                  POOL CRITERIA
                                  -------------
   (Dollar Percentage Limits Based on Greater of Pool Balance and $30,000,000)
   --------------------------------------------------------------------------- 

 ***

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

 ***


***Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.

                                      D-1

<PAGE>



 ***
         


--------
         
 ***

***Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.



                                      D-2