PURCHASE AND SALE AGREEMENT

                                     between

                            CONTINENTAL GRAIN COMPANY

                                       and

                    CONTI SECURITIES ASSET FUNDING CORP. III

                            Dated as of May 26, 1999

<PAGE>

                                                                         Page
                                                                         ----

ARTICLE I DEFINITIONS ...................................................  1

      Section 1.1.   Definitions ........................................  1
      Section 1.2.   Usage of Terms .....................................  8

ARTICLE II PROCEDURES FOR PURCHASES OF ELIGIBLE ASSETS ..................  8

      Section 2.1.   Obligation to Purchase .............................  8
      Section 2.2.   Delivery of Documents; Initial Purchase of Assets ..  8
      Section 2.3.   Delivery of Documents; Subsequent Purchases of
                     Eligible Assets .................................... 10
      Section 2.4.   Wet Funded Purchases ............................... 10
      Section 2.5.   Purchase Requests .................................. 10
      Section 2.6.   Tranche Term Selection ............................. 11
      Section 2.7.   Survival of Representations ........................ 11
      Section 2.8.   Proceeds of Eligible Assets ........................ 12

ARTICLE III DISTRIBUTIONS ............................................... 12

      Section 3.1.   Distributions on Eligible Assets ................... 12

ARTICLE IV TRANSFERS OF ELIGIBLE ASSETS BY PURCHASER .................... 13

      Section 4.1.   Purchaser Sale ..................................... 13
      Section 4.2.   Required Sale Events ............................... 14
      Section 4.3.   Effect of Required Sale Event ...................... 14
      Section 4.4.   Bankruptcy Event ................................... 15
      Section 4.5.   Mandatory Repurchase ............................... 15
      Section 4.6.   Seller's Right of Repurchase ....................... 15

ARTICLE V INTENT OF PARTIES ............................................. 16

      Section 5.1.   Intent of Parties; Protective Security Interest .... 16

ARTICLE VI REPRESENTATIONS AND WARRANTIES ............................... 17

      Section 6.1.   Seller's Representations and Warranties ............ 17

ARTICLE VII COVENANTS OF SELLER ......................................... 21

      Section 7.1.   Seller's Covenants ................................. 21

ARTICLE VIII FEES AND OTHER COSTS ....................................... 23

      Section 8.1.   Net Securities Amount .............................. 23
      Section 8.2.   Hold Harmless ...................................... 23
      Section 8.3.   Definition of Taxes ................................ 23
      Section 8.4.   After-Tax Calculation .............................. 23
      Section 8.5.   Contest, Payment, Interest ......................... 23
      Section 8.6.   Definition of "After-Tax Basis"; Tax Savings ....... 24


                                        i
<PAGE>

                                                                         Page
                                                                         ----

ARTICLE IX TERMINATION .................................................. 24

      Section 9.1.   Events of Termination .............................. 24
      Section 9.2.   Term ............................................... 26

ARTICLE X MISCELLANEOUS PROVISIONS ...................................... 26

      Section 10.1.  Payment ............................................ 26
      Section 10.2.  Remedies ........................................... 26
      Section 10.3.  Exceeding Available Amount ......................... 26
      Section 10.4.  Exclusive Benefit of Parties; Assignment ........... 26
      Section 10.5.  Amendment; Waivers ................................. 27
      Section 10.6.  Effect of Invalidity of Provisions ................. 27
      Section 10.7.  Governing Law ...................................... 27
      Section 10.8.  Submission to Jurisdiction; Waiver of Trial by
                     Jury ............................................... 27
      Section 10.9.  Jurisdiction Not Exclusive ......................... 27
      Section 10.10. Notices ............................................ 27
      Section 10.11. Entire Agreement ................................... 28
      Section 10.12. Purchaser's Investment Representation .............. 28
      Section 10.13. Indemnification .................................... 28
      Section 10.14. Headings ........................................... 29
      Section 10.15. Execution in Counterparts .......................... 29

                             SCHEDULES AND EXHIBITS

Schedule I    Residential Mortgage Product Underwriting Guidelines
              For "C" Risk Mortgage Products                             S-l

Exhibit A     Form of Guarantee                                          A-l

Exhibit B     Form of Receipt, Grant and Assignment                      B-l

Exhibit C     Form of Securities Purchase Request                        C-1

Exhibit D     Form of Legal Opinion of Seller                            D-1

Exhibit E     Form of Legal Opinion of Guarantor                         E-1

Exhibit F     Form of Repurchase Notification                            F-l


                                       ii
<PAGE>

                         PURCHASE AND SALE AGREEMENT

            PURCHASE AND SALE AGREEMENT (this "Agreement"), dated as of May 26,
1999, between CONTINENTAL GRAIN COMPANY, a Delaware corporation ("Purchaser"),
and CONTISECURITIES ASSET FUNDING CORP. III, a Delaware corporation ("Seller").

            WHEREAS, Seller desires to sell from time to time to Purchaser
certain Eligible Assets (as hereinafter defined), and Purchaser desires to
purchase such Eligible Assets, each in accordance with the terms and conditions
set forth in this Agreement;

            NOW, THEREFORE, the parties, in consideration of the premises and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound, hereby agree as follows:

                                   ARTICLE I

                                  DEFINITIONS

            Section 1.1. Definitions. As used in this Agreement, the following
terms shall have the following meanings:

            "Adjusted Net Securities Amount": As of any date of determination
(including the date of any sale or deemed sale hereunder), with respect to the
Eligible Assets forming part of any Tranche or portion thereof (as applicable),
the related Net Securities Amount less the related Retained Securities Amount,
if any.

            "Adjusted Tranche Amount": As of any date of determination in
respect of any Eligible Assets subject to a Purchase hereunder, the related
Initial Tranche Amount less the sum of (x) all payments of principal received by
Purchaser in respect of such Eligible Assets on or prior to such date and (y)
all payments of interest received by Purchaser allocable to the related
Purchased Accrued Interest, if any, included in the Initial Tranche Amount for
such Eligible Assets.

            "After-Tax Basis": As defined in Section 8.6 hereof.

            "Aggregate Adjusted Tranche Amount": At any date, the aggregate sum
of the Adjusted Tranche Amounts as of such date in respect of all Eligible
Assets that are subject to a Purchase hereunder.

            "Alternative Financing": As defined in Section 2.6 hereof.

            "Asset File": As defined in the Custodial Agreement.

            "Available Amount": As of any date of determination, the lesser of
the following amounts: (x) $85,000,000 less the sum of (i) the then-outstanding
Aggregate

<PAGE>

Adjusted Tranche Amount and (ii) the then-outstanding Subservicer Advances; and
(y) $60,000,000 less the then-outstanding Aggregate Adjusted Tranche Amount.

            "Borrower": The person who has executed the promissory note
evidencing the person's obligations under a Franchise Loan.

            "Business Day": A day on which banks and the New York Stock Exchange
are open for business in New York, New York and on which dealings in United
States dollars are carried on in the London interbank market.

            "Change of Control": The acquisition by any person, entity or
"group" within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act
(excluding, for this purpose, Purchaser or any of its subsidiaries, or any
employee benefit plan of Purchaser or any of its subsidiaries) of "beneficial
ownership" within the meaning of Rule 13d-3 promulgated under the Exchange Act
of more than 50% of either the then-outstanding shares of the common stock of
Seller or Guarantor or the combined voting power of Seller's or Guarantor's
then-outstanding voting securities entitled to vote generally in the election of
directors.

            "Collateral": As defined in Section 5.1 hereof.

            "Collateralized Note": A promissory note made in favor of Seller and
secured by pools of any of the Eligible Assets described in clauses (i), (ii)
and (iii) of the definition of the term "Eligible Assets" in this Section 1.1;
provided, however, that the obligor under such Note has pledged and hypothecated
to Seller, and has granted to Seller a continuing lien upon and first priority
security interest in, collateral comprised of such Eligible Assets; and provided
further, however, that Seller assigns to Purchaser all of Sellers interest in
such lien and security interest as of the related Purchase Date.

            "Custodial Agreement": With respect to Eligible Assets consisting of
Mortgage Products, the Custodial Agreement dated as of March 31, 1999 among
Seller, Purchaser and the Custodian. With respect to any other type of Eligible
Assets, such other applicable agreement as Seller, Purchaser and the related
Custodian may enter into from time to time.

            "Custodian": With respect to Eligible Assets consisting of Mortgage
Products, Manufacturers and Traders Trust Company, a New York banking
corporation. With respect to any other type of Eligible Assets, such custodian
as the parties shall mutually approve from time to time.

            "Default Rate": As defined in Section 10.1 hereof.

            "Eligible Assets": Any of the following types of assets:

            (i)   Mortgage Products;

            (ii)  Motor Vehicle Loans;


                                       2
<PAGE>

            (iii) Franchise Loans; and

            (iv)  Collateralized Notes.

            "Eligible Asset Schedule": As defined in Section 2.5 hereof.

            "Event of Termination": As defined in Section 9.1 hereof.

            "Exchange Act": The Securities Exchange Act of 1934, as amended.

            "Franchise Loan": All of Seller's right, title and interest in and
to a loan evidenced by a promissory note and secured by Franchise Loan
Collateral.

            "Franchise Loan Collateral": All of the following which has been
pledged to Seller to secure a Franchise Loan: all of a Borrower's right, title
and interest in and to all receivables, goods, documents, instruments, chattel
paper, inventory, equipment, general intangibles, contracts (other than the
franchise agreement and the license thereunder), certificates of title,
fixtures, money, securities, deposits, credits, claims, demands, assets, other
personal property and real property, owned, leased, acquired, held, used, sold
or consumed in connection with a nationally recognized franchise involved in the
restaurant or quick-lube business and any other property, rights and interests
of the Borrower which at any time relate to, arise out of or exist in connection
with the foregoing; any and all additions and accessions to any of the
foregoing, all improvements thereto and all substitutions and replacements
therefor; and all products and proceeds thereof.

            "Gain Amount": With respect to any sale or deemed sale of any
Eligible Assets by Purchaser hereunder, that portion of the realized net
proceeds (inclusive of accrued interest) in excess of the sum of (i) the related
Adjusted Tranche Amount and (ii) the related Adjusted Net Securities Amount, in
each case computed as of the date of such sale or deemed sale, which portion
Purchaser shall remit to Seller pursuant to Section 4.3. The Gain Amount shall
be calculated separately for each Eligible Asset sold or deemed sold by
Purchaser.

            "Guarantee": A guarantee in substantially the form of Exhibit A
hereto, executed by Guarantor in favor of Purchaser.

            "Guarantor": ContiFinancial Corporation, a Delaware corporation, and
the indirect owner of Seller.

            "Indemnified Party": As defined in Section 10.15(a) hereof.

            "Indenture": As defined in Section 7.1(c) hereof.

            "Initial Tranche Amount": With respect to any Eligible Asset or
groups of Eligible Assets subject to a Purchase hereunder, the purchase amount
paid for the related Eligible Assets by Purchaser on the related Purchase Date,
such purchase amount being equal to the sum of (i) the product of (x) the
Principal of the related Eligible Assets as of


                                       3
<PAGE>

such Purchase Date and (y) the related Purchase Price Percentage plus (ii) the
Purchased Accrued Interest, if any, with respect to such Eligible Assets as of
such Purchase Date.

            "LIBOR": As of any date of determination, the rate for deposits in
U.S. Dollars for a period most closely approximating the Tranche Term that
appears on the Telerate Page 3750 as of 11:00 a.m. London time, on such date. If
such rate does not appear on Telerate Page 3750 by 9:00 a.m. New York City time,
on such date, the rate for such date will be determined on the basis of the
rates at which deposits in U.S. dollars are offered by four major banks (chosen
by Purchaser) in the London interbank market as of approximately 11:00 a.m.,
London time, on such date to prime banks in the London interbank market for a
period of the relevant Tranche Term commencing on the applicable Date. Purchaser
will request the principal London office of each such bank to provide a
quotation of its rate. If at least two quotations are provided, the rate for
such date will be the arithmetic mean of the quotations. If fewer than two
quotations are provided as requested, the rate for such date will be the
arithmetic mean of the rates quoted by major banks in New York City as of 11:00
a.m., local time in New York City, on such date for loans in U.S. dollars to
leading European banks for a period of the Tranche Term commencing on such date.

            "Losses": Any and all out-of-pocket losses, claims, damages,
liabilities or expenses (including reasonable attorneys' fees and disbursements)
directly incurred by any person specified in this Agreement, resulting from
transactions entered into under this Agreement (other than liability for Taxes).
Losses must be accounted for and presented for reimbursement documented in
reasonable detail. For the avoidance of doubt, if in any sale or deemed sale of
Eligible Assets by Purchaser hereunder, the realized net sale proceeds
(inclusive of accrued interest) are less than the sum of the related Adjusted
Tranche Amount and the related Adjusted Net Securities Amount (in each case
computed as of the date of such sale or deemed sale), the amount of such
shortfall shall be deemed a Loss hereunder.

            "Market Movement Allowance": For each Purchase, the amount of
diminution in the Market Value of the related Eligible Assets (expressed as a
percentage) that may occur before the occurrence of a Required Sale Event with
respect to such Eligible Assets, as described in Section 4.2 hereof.

            "Market Value": For each day of determination in respect of a
Purchase, the market value (expressed as a percentage of par) of the related
Eligible Asset as determined by Seller (subject to the provisions of Section 4.2
hereof) and taking into account (i) credit rating; (ii) credit worthiness of the
account debtor, lessee or other obligors (including third party credit
enhancements); (iii) realizable distress sale liquidation value; (iv)
impediments (legal or otherwise) to prompt and effective enforcement; (v)
general industry and overall economic conditions; (vi) current interest rates;
(vii) availability of purchasers; and (viii) such other considerations as
reasonably appropriate in the circumstances.

            "Monoline Insurance Company": Ambac Assurance Corporation, MBIA
Insurance Corporation, Financial Guaranty Insurance Company, Capital Markets


                                       4
<PAGE>

Assurance Corporation, Financial Security Assurance Inc. or GE Mortgage
Insurance Company.

            "Mortgage Products": All of Seller's right, title and interest in
and to one or more commercial, residential, mixed use or multifamily first
mortgage loans, second mortgage loans or home equity lines of credit, any of
which can bear either fixed or variable rates of interest. Mortgage Products may
include, without limitation, interests in warehouse facilities, urban or
suburban office buildings, mobile homes, manufactured housing, congregate care
and assisted living facilities, nursing homes, retail shopping centers, Title I
products, SBA products and timeshare estates.

            "Mortgaged Property": Property underlying a Mortgage Product, or in
the case of a Mortgage Product which is an equity line of credit, the property
securing such line of credit.

            "Motor Vehicle Loans": All of Seller's right, title and interest in
and to one or more non-cancelable, conditional sale contracts (including
security agreements, operating leases, and direct financing equipment leases),
or motor vehicle finance loans, including, as applicable, schedules, supplements
and amendments, under which the purchase or lease of specified motor vehicles is
financed at a specified monthly rate.

            "Net Securities Amount": With respect to any Tranche Period which
has terminated, the amount produced for the related Tranche or portion thereof
(as applicable) corresponding to such Tranche Period by application of the
following formula:

                                 TR x TA x AD
                                 ------------
                                     360

For purposes of this formula, "TR" represents the Tranche Rate applicable to
such Tranche or portion thereof (as applicable), "TA" represents the Adjusted
Tranche Amount with respect to such Tranche or portion thereof (as applicable),
and "AD" represents the actual number of days elapsed during such Tranche
Period. Notwithstanding the foregoing, no provision of this Agreement shall
require the payment or permit the collection of any Net Securities Amount in
excess of the maximum permitted by applicable law, and no Net Securities Amount
shall be considered paid if at any time payment is rescinded or must be returned
for any reason.

            "Principal": With respect to any Eligible Asset, as of any date of
determination, the unamortized principal balance of such Eligible Asset as of
such date.

            "Purchase": Any purchase of Eligible Assets by Purchaser from Seller
pursuant to the terms hereof and of the applicable Purchase Request. For
purposes of this Agreement, an Eligible Asset shall be deemed "subject to a
Purchase" commencing on the related Purchase Date and continuing until such date
as such Eligible Asset is sold or deemed sold by Purchaser pursuant to the
provisions hereof (including any sale of such Eligible Asset to Seller as
provided herein).


                                       5
<PAGE>

            "Purchase Date": With respect to any Purchase, the date on which
Purchaser purchases the related Eligible Assets from Seller.

            "Purchase Price Percentage": With respect to any Purchase, the
Market Value percentage of the Principal paid by Purchaser for the Principal
portion of the related Eligible Assets (expressed as a percentage of par) as set
forth in the related Purchase Request, which percentage shall be reasonably
satisfactory to Purchaser. In connection with the initial Purchase involving
Mortgage Products, any percentage not in excess of 95% in the case of
residential Mortgage Products or 87% in the case of non-residential Mortgage
Products shall be deemed satisfactory to Purchaser.

            "Purchase Request": A request for the purchase of Eligible Assets in
the form of Exhibit C hereto.

            "Purchased Accrued Interest": With respect to any Eligible Assets
that are part of any Purchase hereunder, the interest accrued thereon as of the
related Purchase Date pursuant to the terms of such Eligible Assets (and
assuming that, pursuant to any "record date" provision relating to such Eligible
Assets, upon Purchaser's purchase thereof, Purchaser will be entitled to receive
such accrued interest on the next scheduled interest payment date for such
Eligible Assets).

            "Recourse Amount": As of any date of determination, (i) with respect
to Eligible Assets which consist of residential Mortgage Products, five percent
of the related Adjusted Tranche Amount as of such date; and (ii) with respect to
all other Eligible Assets, ten percent of the related Adjusted Tranche Amount as
of such date; provided, however, in each case, that the Recourse Amount shall be
fixed upon the earlier of (i) a Required Sale Event or (ii) an Event of
Termination.

            "Repurchase Assets": The Eligible Assets identified on a Repurchase
Notification.

            "Repurchase Notification": A Repurchase Notification in the form
attached hereto as Exhibit F.

            "Required Sale Event": An event described in Section 4.2 hereof,
which triggers a sale of Eligible Assets pursuant to Section 4.3 hereof.

            "Retained Securities Amount": With respect to the Eligible Assets
forming part of any Tranche or portion thereof, the related Net Securities
Amount actually received and retained by Purchaser.

            "Seller's Account": Seller's account at a designated bank in New
York, New York, as specified in the applicable Purchase Request.

            "Subsequent Conditions": As defined in Section 2.4 hereof.

            "Subservicer Advance": As defined in the Subservicing Agreement.


                                       6
<PAGE>

            "Subservicing Agreement": The Subservicing Agreement dated as of
November 1, 1998 by and among ContiMortgage Corporation, ContiWest Corporation,
ContiSecurities Asset Funding Corp., Manufacturers and Traders Trust Company and
Purchaser.

            "Taxes": As defined in Section 8.3 hereof.

            "Term": As defined in Section 9.2 hereof.

            "Tranche": The Eligible Assets specified on any particular Purchase
Request; provided, however, that any Eligible Assets which are sold or deemed
sold by Purchaser pursuant to the provisions hereof shall no longer be regarded
as part of a Tranche hereunder. For purposes of the foregoing, if Seller elects
to replace one or more non-conforming Eligible Assets with one or more
conforming Eligible Assets as provided in Section 7.1(h) hereof, then upon such
replacement, (i) the non-conforming Eligible Assets shall be treated as if they
had been sold by Purchaser to Seller on the replacement date at a price equal to
the related Adjusted Tranche Amount plus the related Adjusted Net Securities
Amount and shall no longer be regarded as included in any Tranche, and (ii) the
conforming Eligible Assets shall be treated as if they had been purchased by
Purchaser from Seller on the replacement date at a price equal to the Adjusted
Tranche Amount plus the Adjusted Net Securities Amount of the non-conforming
Eligible Assets and shall thereafter be regarded as included in the same Tranche
in which the non-conforming Eligible Assets had formerly been included.

            "Tranche Period": With respect to any Tranche or portion thereof (as
applicable), the period commencing on the day Purchaser receives a payment of
principal or interest with respect to the related Eligible Assets and ending on
(and including) the day preceding the earliest of the following: (i) the day on
which the next such payment is received; (ii) the day upon which Purchaser sells
or is deemed to have sold one or more of the Eligible Assets included in the
Tranche or portion thereof (as applicable) pursuant to the provisions hereof,
including any sale to Seller as provided herein; and (iii) the end of the
related Tranche Term. For purposes of the initial Tranche Period, Purchaser
shall be deemed to have received such a payment with respect to the Eligible
Assets in the related Tranche on the related Purchase Date.

            "Tranche Rate": With respect to any Tranche, LIBOR plus 1.37% per
annum. The Tranche Rate shall reset at the beginning of each Tranche Period
based on LIBOR determined as of two Business Days prior to the beginning of such
Tranche Period.

            "Tranche Selection Notice": As defined in Section 2.05 hereof.

            "Tranche Term": With respect to a Tranche or portion thereof (as
applicable), a period of one, two or three months, or such other period as may
be mutually agreeable to the parties hereto, commencing on a Business Day
selected by Seller and Purchaser pursuant to this Agreement. If the parties
cannot agree, the Tranche Term shall be one month.


                                       7
<PAGE>

            "Wet Funded Eligible Asset": As defined in Section 2.4 hereof.

            "Wet Funded Purchase": As defined in Section 2.4 hereof.

            Section 1.2. Usage of Terms. With respect to all terms used in this
Agreement: (i) the singular includes the plural and the plural includes the
singular; (ii) words importing any gender include the other gender; (iii) the
words "and" and "or" are used in the conjunctive or disjunctive as the sense and
circumstances may require; (iv) references to "writing" include printing,
typing, lithography and other means of reproducing words in a visible form; (v)
references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; (vi) references to
any person shall include its permitted successors and assigns; (vii) any form of
the word "include" shall be deemed to be followed by the words "without
limitation"; (viii) the phrase "in and to" shall be deemed to include "under"
and "with respect to" whenever appropriate; (ix) the words "herein," "hereof"
and "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section or other subdivision of this
Agreement; and (x) Article, Section, Schedule and Exhibit references, unless
otherwise specified, refer to Articles and Sections of and Schedules and
Exhibits to this Agreement. Unless otherwise stated in this Agreement, in the
computation of a period of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding."

                                   ARTICLE II

                  PROCEDURES FOR PURCHASES OF ELIGIBLE ASSETS

            Section 2.1. Obligation to Purchase. Subject to Sections 2.2 and 2.3
hereof and the other terms and conditions of this Agreement, at the request of
Seller from time to time during the Term, Purchaser shall purchase Eligible
Assets from Seller at the related Initial Tranche Amount for any such Eligible
Assets; provided, however, that each Initial Tranche Amount shall be at least
$5,000,000; and provided further, however, that no purchase of Eligible Assets
shall be requested by Seller if, immediately following such purchase, the
Available Amount would be less than zero.

            Section 2.2. Delivery of Documents; Initial Purchase of Assets.
Prior to the initial Purchase of Eligible Assets:

            (a) Purchaser shall have received a certificate of the Secretary of
Seller certifying (i) a copy of Seller's articles of incorporation; (ii) a copy
of Seller's bylaws; (iii) the names and signatures of the officers authorized on
its behalf to execute this Agreement and any other documents to be delivered by
it hereunder (on which Purchaser may conclusively rely until such time as
Purchaser shall receive from Seller a revised certificate); and (iv) a copy of
the resolutions of Seller's Board of Directors approving this Agreement.


                                       8
<PAGE>

            (b) Purchaser shall have received a certificate of the Assistant
Secretary of Guarantor certifying (i) a copy of Guarantor's articles of
incorporation; (ii) a copy of Guarantor's bylaws; (iii) the names and signatures
of the officers authorized on its behalf to execute the Guarantee, and any other
documents to be delivered by it thereunder (on which Purchaser may conclusively
rely until such time as Purchaser shall receive from Guarantor a revised
certificate); and (iv) a copy of the resolutions of the Board of Directors of
Guarantor approving the Guarantee.

            (c) There shall be in full force and effect from Guarantor a duly
executed Guarantee.

            (d) Purchaser shall have received an opinion of the Counsel to
Seller in substantially the form of Exhibit D hereto.

            (e) Purchaser shall have received an opinion of the Chief Counsel to
Guarantor in substantially the form of Exhibit E hereto.

            (f) Seller shall have (i) delivered to Purchaser or its designee
evidence, satisfactory to Purchaser, of the transfer of the ownership of the
related Eligible Assets from Seller to Purchaser, (ii) delivered to Purchaser or
its designee the related Asset Files and (iii) filed with the Secretary of the
State of New York and the City Register of New York County UCC-l financing
statements, in each case naming Seller as "debtor" and Purchaser as "secured
party" and describing the Collateral.

            (g) Seller shall have instructed the applicable debtor, trustee,
paying agent, authenticating agent, transfer agent, registrar, predecessor in
interest, owner (if the Eligible Assets are in the form of a security
agreement), or servicer, if any, in respect of the related Eligible Assets to
reflect on their books and records the transfer of such Eligible Assets to
Purchaser, as owner or secured party (if the Eligible Assets are in the form of
a security agreement).

            (h) Purchaser shall have received the most recent available
servicing or like reports, if any, with respect to the Eligible Assets.

            (i) Purchaser and/or any independent contractor appointed by
Purchaser shall have completed such investigation as Purchaser may reasonably
require with respect to each Eligible Asset which is the subject of such
Purchase and the results of such investigation (and all other legal and
documentary matters with respect to such Eligible Asset) shall be satisfactory
to Purchaser.

            (j) The bond power or transfer instrument for the related Eligible
Asset shall be executed by appropriate officers of Seller.

            (k) Seller shall have obtained (i) all necessary approvals, consents
or authorizations, if any, pursuant to any agreements, indentures, loan or
credit agreements or other instruments to which Seller is a party or by which
its assets are bound, and (ii) all necessary approvals, consents or
authorizations, if any, from any federal, state or local regulatory authority
having jurisdiction over Seller or its assets.


                                       9
<PAGE>

            Section 2.3. Delivery of Documents; Subsequent Purchases of Eligible
Assets. Prior to any Purchase of Eligible Assets after the initial Purchase of
Eligible Assets, the actions, conditions and deliveries specified in subsections
(c), (f), (g), (h), (i), (j) and (k) of Section 2.2 hereof shall have been
taken, satisfied or made, as the case may be on or before the related Purchase
Date.

            Section 2.4. Wet Funded Purchases. Notwithstanding Sections 2.2 and
2.3 hereof (but subject to the other provisions hereof), Purchaser hereby agrees
to purchase Eligible Assets from Seller without the actions, conditions and
deliveries specified in subsections (f), (g), (h), (i) and (j) of Section 2.2
hereof being taken, satisfied or made on (as the case may be) or before the
related Purchase Date; provided, however, that (i) Seller shall have delivered
to Purchaser and the Custodian at least one Business Day prior to the related
Purchase Date an Eligible Asset Schedule with respect to the Eligible Assets
being sold to Purchaser in connection with the Purchase being entered into on
such Purchase Date (each such Purchase, a "Wet Funded Purchase"), and (ii)
Seller shall have delivered to Purchaser an officer's certificate certifying
that, with respect to each such Eligible Asset purchased pursuant to a Wet
Funded Purchase (each such Eligible Asset, a "Wet Funded Eligible Asset"), (x)
such Wet Funded Eligible Asset is a closed loan and (y) Seller or its authorized
agent is in possession of the original executed promissory note that evidences
the indebtedness of the related Borrower with respect to such Wet Funded
Eligible Asset. In connection with any Wet Funded Purchase, Seller agrees to
deliver or cause to be delivered to the Custodian, within three Business Days
after the related Purchase Date, the Asset Files with respect to all of the Wet
Funded Eligible Assets purchased on such Purchase Date. Seller further agrees to
take, satisfy or make (as applicable) the actions, conditions and deliveries
specified in subsections (f), (g), (h), (i) and (j) of Section 2.2 hereof
(collectively, the "Subsequent Conditions") with respect to such Wet Funded
Eligible Assets within five Business Days after the related Purchase Date. In
the event that Seller fails to deliver the Asset File relating to any Wet Funded
Eligible Asset or to satisfy the Subsequent Conditions with respect to such Wet
Funded Eligible Asset (in each case within the three-Business Day period
described above), then at Purchaser's election, such Wet Funded Eligible Asset
shall be treated as a non-conforming Eligible Asset within the meaning of
Section 7.1(h) hereof.

            Section 2.5. Purchase Requests. Seller shall deliver to Purchaser a
Purchase Request at least five Business Days prior to the proposed Purchase Date
for any Purchase (unless otherwise agreed by the parties). Purchaser shall
indicate its acceptance or declination of each Purchase Request by completing
the appropriate section of the Purchase Request and returning the copy thereof
to Seller; provided, however, that Purchaser hereby agrees to accept such
Purchase Request if the Initial Tranche Amount relating to such Purchase Request
(together with the aggregate Initial Tranche Amount relating to any Purchase
Requests then outstanding) would not exceed the Available Amount and if all of
the conditions to such Purchase provided for in this Agreement (including,
without limitation, Section 2.2 hereof) have been satisfied.

            Each Purchase Request accepted by Purchaser shall be irrevocable and
binding on Purchaser and Seller. Seller shall indemnify Purchaser and hold it
harmless


                                       10
<PAGE>

against any Losses incurred by Purchaser as a result of any failure by Seller to
timely deliver the Eligible Assets subject to such Purchase, which losses shall
be limited to costs incurred by Purchaser by reason of the liquidation or
reemployment of funds acquired by Purchaser to fund such Purchase. In addition,
Purchaser shall undertake to take all commercially reasonable steps to mitigate
Seller's indemnity hereunder. Purchaser shall indemnify Seller and hold it
harmless against any Losses incurred by Seller as a result of any failure by
Purchaser to purchase (to the extent that Purchaser is obligated to do so) the
Eligible Assets subject to any Purchase Request accepted by Purchaser, which
losses shall be limited to excess interest costs or net repurchase obligations
incurred by Seller in making alternative arrangements for disposition or
financing of the Eligible Assets for up to 90 days ("Alternative Financing")
which shall be calculated as the sum of (A) the difference between (i) the total
interest cost or the repurchase price of such Eligible Assets (net of the
purchase price received by Seller related thereto), in each case paid by Seller
in connection with the Alternative Financing at the end of the relevant Tranche
Period for the related Eligible Assets, and (ii) the Net Securities Amount which
would have been received by Purchaser if Purchaser held the Eligible Assets for
the balance of the then existing Tranche Period for such Eligible Assets and
such Eligible Assets had amortized in accordance with their terms; and (B)
reasonable transaction costs, if any, incurred by Seller in connection with the
Alternative Financing. In any event, Seller shall undertake to take all
commercially reasonable steps to mitigate Purchaser's indemnity hereunder. Each
Purchase shall cover the Eligible Assets identified in a schedule (the "Eligible
Asset Schedule") attached to the related Purchase Request. Each Purchase Request
shall specify the type of Eligible Asset, the Purchase Price Percentage and date
of such requested Purchase, the Initial Tranche Amount together with the Tranche
Term and Tranche Rate requested by Seller with respect thereto in accordance
with Section 2.6 hereof, the Market Movement Allowance, Recourse Amount, Gain
Amount and such other matters as may be specified on the form of the Purchase
Request attached hereto as Exhibit C. On the applicable Purchase Date, Purchaser
shall pay to Seller the Initial Tranche Amount for the related Eligible Assets
against receipt of the documents required to be delivered by Seller pursuant to
Section 2.2, 2.3 or 2.4 hereof, as the case may be.

            Section 2.6. Tranche Term Selection. Seller shall, at least three
Business Days prior to the expiration of any Tranche Term, provide Purchaser
with a notice requesting a new Tranche Term for application to the related
Tranche (a "Tranche Selection Notice"). The Tranche Selection Notice may be
oral, promptly confirmed by Seller in writing, and shall be deemed to be an
irrevocable offer by Seller to Purchaser to apply the requested Tranche Term to
the related Tranche. Failure to provide written confirmation of an oral Tranche
Selection Notice shall not affect the irrevocability of any such Notice.
Notwithstanding the foregoing provisions of this Section, Purchaser, in its
reasonable discretion, may select a new Tranche Term if (i) Seller fails to
provide a Tranche Selection Notice on a timely basis or (ii) Purchaser
determines, in its reasonable discretion, that any Tranche Term requested by
Seller is unavailable.

            Section 2.7. Survival of Representations. The terms and conditions
of the purchase of each Eligible Asset shall be as set forth in this Agreement.
Seller will be deemed on each Purchase Date to have made to Purchaser the
representations and warranties set forth in Section 6.1 hereof in respect of the
Eligible Assets comprising the


                                       11
<PAGE>

related Purchase and such representations and warranties of Seller shall be true
and correct on and as of such Purchase Date and throughout the Term for as long
as such Eligible Assets are held by Purchaser.

            Section 2.8. Proceeds of Eligible Assets. The transfer and sale
hereby of all of Seller's right, title and interest in and to each Eligible
Asset shall include all proceeds, products and profits derived therefrom,
including, without limitation, all scheduled payments of principal of and
interest on such Eligible Assets and other amounts due or payable or to become
due or payable in respect thereof and proceeds thereof including, without
limitation, all moneys, goods and other tangible or intangible property received
upon the liquidation or sale thereof.

                                  ARTICLE III

                                 DISTRIBUTIONS

            Section 3.1. Distributions on Eligible Assets.

            (a) Seller shall instruct the applicable paying agent, servicer or
other appropriate party with respect to each Eligible Asset subject to a
Purchase hereunder, to remit to Purchaser, at the times required by the terms of
such Eligible Asset, by wire transfer in immediately available funds (to the
extent that Seller may require the same under the terms of the related Eligible
Assets), all distributions thereon or with respect thereto in accordance with
Purchaser's payment instructions.

            (b) Upon receipt of any payment of principal with respect to any
Eligible Asset, Purchaser shall apply such principal payment so received to
reduce the Adjusted Tranche Amount of the applicable Tranche.

            (c) Upon receipt of any payment of principal or interest with
respect to any Eligible Assets subject to a Purchase hereunder, the prior
Tranche Period of the related Tranche shall terminate and a new Tranche Period
shall begin, and Purchaser shall compute and either remit to Seller or, at
Seller's option, deposit in an account maintained by Purchaser on behalf of
Seller, the amount (if any) by which the aggregate amount of any interest
payments received by Purchaser in respect of such Tranche (less, in the case of
the first interest payment received by Purchaser, the amount, if any, of the
Purchased Accrued Interest paid by Purchaser with respect to the related
Tranche) exceeds the related Net Securities Amount with respect to the Tranche
Period then ending. For the avoidance of doubt, that portion of the interest
payments received by Purchaser (exclusive of the amount of any Purchased Accrued
Interest) in respect of any Tranche and not remitted to Seller (or deposited in
an account maintained by Purchaser on Seller's behalf) may be retained by
Purchaser.


                                       12
<PAGE>

                                  ARTICLE IV

                  TRANSFERS OF ELIGIBLE ASSETS BY PURCHASER

            Section 4.1. Purchaser Sale. Subject to the provisions of Section
10.12 hereof, Purchaser may, at its election, and without the consent of Seller,
at any time during this Agreement sell, transfer, convey, pledge or assign any
or all of its right, title and interest in, to or under, or grant a security
interest in, any Eligible Assets purchased by Purchaser hereunder, including the
servicing fees and rights relating to such Eligible Assets. Prior to effecting
any sale or other disposition of its right, title and interest in any Eligible
Asset, Purchaser shall offer to Seller between the hours of 8:00 a.m. and 6:00
p.m. on any Business Day (by oral notice to such effect, promptly confirmed in
writing) the right to purchase the offered Eligible Assets in whole from it.
Within the time periods specified below, Seller shall notify Purchaser of its
intent to so purchase the offered Eligible Assets:

<TABLE>
<CAPTION>
         If Purchaser makes                          Seller shall notify
       offer to sell to Seller                  Purchaser of intent to purchase
       -----------------------                  -------------------------------
<S>                                             <C>
    Between 8:00 a.m. and 10:00 a.m. on any     Before noon on the next
    Business Day                                succeeding Business Day
    Between 10:00 a.m. and 6:00 p.m. on any     Before noon on the second
    Business Day                                succeeding Business Day
</TABLE>

If Seller fails to notify Purchaser of its intention to purchase the related
Eligible Assets within the time periods set forth above, then Seller shall be
deemed to have declined Purchaser's offer to purchase the related Eligible
Assets. If Seller determines to effect such a purchase, Seller shall, on the
fifth Business Day next succeeding the Business Day on which Seller accepted the
offer to purchase the related Eligible Assets from Purchaser pursuant to this
Section, pay to Purchaser the related Adjusted Tranche Amount and the related
Adjusted Net Securities Amount (in each case computed as of such fifth Business
Day). In connection with any such sale of Eligible Assets to Seller, Purchaser
shall comply with the provisions of Section 4.6(c) hereof (with all of the
Eligible Assets then being sold to Seller being deemed Repurchase Assets for
this purpose). For purposes of this Section 4.1, a "sale or other disposition"
of Eligible Assets shall be deemed not to include a grant of a lien upon or
security interest in, or a sale or assignment pursuant to a master repurchase or
similar agreement of, any of Purchaser's right, title or interest in or to such
Eligible Assets so long as the terms of the agreement or other instrument
effecting any such grant, sale or assignment permit Purchaser to reacquire the
property subject to the grant, sale or assignment free and clear of any liens,
claims or encumbrances and do not otherwise prevent or hinder Purchaser from
performing its obligations hereunder (including its obligations under Section
4.6 hereof).


                                       13
<PAGE>

            Section 4.2. Required Sale Events. For purposes of this Agreement, a
"Required Sale Event" shall be deemed to have occurred under any of the
following circumstances:

            (a) On a weekly basis, Seller, in respect of each Purchase, shall
determine the Market Value of each Eligible Asset which has been purchased by
Purchaser and not disposed of, and shall notify Purchaser thereof. If Purchaser
shall in good faith disagree with the Market Value of any such Eligible Asset as
so determined by Seller, Purchaser shall notify Seller and Purchaser and Seller
shall endeavor in good faith to reach an agreement on the Market Value of such
Eligible Assets. If Purchaser and Seller cannot agree on the Market Value, a
"Required Sale Event" will be deemed to have occurred.

            (b) If, in respect of any Purchase, the Market Value of the Eligible
Assets at any time has declined from the Market Value of the Eligible Assets as
of the relevant Purchase Date by an amount exceeding the applicable Market
Movement Allowance, a "Required Sale Event" shall be deemed to have occurred.

            (c) A "Required Sale Event" shall also be deemed to have occurred on
any day if the sum of (x) the Aggregate Adjusted Tranche Amount with respect to
all Eligible Assets then subject to a Purchase hereunder and (y) the amount of
Subservicer Advances outstanding on such day exceeds $85,000,000. In such event,
a Required Sale Event shall be deemed to have occurred only with respect to that
portion of such Eligible Assets necessary to reduce the sum described above to
$85,000,000 or less.

            Section 4.3. Effect of Required Sale Event. Upon the occurrence of a
Required Sale Event, Purchaser shall in a commercially reasonable manner sell
the affected Eligible Assets, subject to Seller's obligation to indemnify
Purchaser against any resulting Losses from such sale up to the applicable
Recourse Amount for such Eligible Assets. Prior to effecting any such sale,
Purchaser shall offer to Seller the right to purchase such Eligible Assets from
it at a price equal to the related Adjusted Tranche Amount, plus the related
Adjusted Net Securities Amount. If Seller fails to exercise its right of
purchase within the time set forth in Section 4.1 and Purchaser sells the
Eligible Assets (through private or public sale) to a third party, Purchaser
shall promptly provide a notification to Seller of such event, setting forth the
net sales proceeds inclusive of accrued interest received (after giving effect
to all selling and related expenses, including the fees and expenses of any
consultants, brokers or attorneys) and shall notify Seller of all Losses
incurred and invoice Seller (with supporting detail) for the amount due to
Purchaser, up to the amount of the Recourse Amount. Upon receipt of such
invoice, Seller shall pay to Purchaser the Recourse Amount to the extent
necessary to indemnify Purchaser against the Losses sustained. If, as a result
of the sale of the Eligible Assets, the realized net sales proceeds (inclusive
of accrued interest, if any) on the related Eligible Assets exceed the related
Adjusted Tranche Amount plus the related Adjusted Net Securities Amount, then
Purchaser shall pay any such excess up to the Gain Amount to Seller and retain
the balance of such proceeds.


                                       14
<PAGE>

            Notwithstanding the foregoing, Purchaser shall be entitled, at its
option, upon the occurrence of a Required Sale Event, to retain any such
Eligible Assets; provided, however, that Purchaser shall have obtained bona fide
bids to purchase such Eligible Assets from at least two independent third
parties and Purchaser matches the higher bid for such Eligible Assets; and
provided further, however, that in the event Purchaser is unable reasonably to
obtain at least two bids to purchase such Eligible Assets as described in the
preceding sentence, Purchaser may nevertheless retain such Eligible Assets at
such price as reasonably determined by Purchaser in a commercially reasonable
manner. In the event Purchaser opts to match such bid or retain such Eligible
Assets at a commercially reasonable price, then such retention by Purchaser
shall be treated in all respects as a sale by Purchaser to a third party
pursuant to this Section 4.3 (with the realized net sales proceeds being deemed
to be equal to the amount of the bid being matched or the commercially
reasonable price, as applicable), and Purchaser shall fulfill all of its
obligations to Seller as provided for in this Section 4.3 in the same manner as
if such Eligible Assets were sold to a third party hereunder.

            Section 4.4. Bankruptcy Event. With respect to Seller's right of
purchase set forth in Section 4.1, Section 4.3 and Section 4.6, if, a bankruptcy
event occurs, as described in Section 9.1(d) below, involving either Seller or
Guarantor, during the period after which Seller has notified Purchaser of its
intention to purchase the offered Eligible Assets but before the expiration of
the five Business Day period in which Seller has to effect such purchase,
Purchaser shall be released from its obligation to sell such Eligible Assets to
Seller and may sell such Eligible Assets (through private or public sale) to any
third party.

            Section 4.5. Mandatory Repurchase. On the date which is two Business
Days prior to any funding date under the Subservicing Agreement, Seller shall
purchase from Purchaser, and Purchaser shall sell to Seller, Eligible Assets to
the extent necessary so that the Aggregate Adjusted Tranche Amount does not
exceed $0. Seller shall effect such mandatory repurchase of Eligible Assets by
delivering a Repurchase Notification covering such Eligible Assets in accordance
with Section 4.6 hereof.

            Section 4.6. Seller's Right of Repurchase.

            (a) At the request of Seller pursuant to a Repurchase Notification
in the form attached hereto as Exhibit F, Seller shall have the right to
purchase, and Purchaser shall be obligated to sell, Repurchase Assets from
Purchaser at a price equal to the sum of the Adjusted Tranche Amount of the
Repurchase Assets plus the Adjusted Net Securities Amount of the Repurchase
Assets.

            Seller shall deliver a Repurchase Notification by 10:00 a.m., New
York time, on the second Business Day prior to the proposed repurchase date
(unless otherwise agreed by the parties).

            (b) Upon receipt of the payment referred to in Section 4.6(a)
hereof, Purchaser shall sell, assign, transfer and otherwise convey to Seller
all of Purchaser's right, title and interest in and to the Repurchase Assets,
shall release any lien it may have


                                       15
<PAGE>

on the Repurchase Assets (including any lien granted pursuant to Section 5.1
hereof), shall return any related trust receipt or participation certificate and
shall reduce both the related Adjusted Tranche Amount and the Aggregate Adjusted
Tranche Amount accordingly.

            (c) In connection with any sale pursuant to a Repurchase
Notification (including a Repurchase Notification delivered pursuant to Section
4.5 hereof), Purchaser hereby agrees and covenants as follows:

                  (i) To deliver to Seller or its designee evidence, reasonably
      satisfactory to Seller, of the transfer of the ownership of, and the
      release of any lien on, the related Repurchase Assets from Purchaser to
      Seller (it being understood and agreed that Purchaser's transfer of
      ownership shall be without any representation or warranty except that the
      Repurchase Assets are not subject to any liens, claims or encumbrances
      created by Purchaser or any third party deriving rights from Purchaser);

                  (ii) To instruct the applicable debtor, trustee, paying agent,
      authenticating agent, transfer agent, registrar, predecessor in interest,
      owner (if the Repurchase Assets are in the form of a security agreement),
      or servicer, if any, in respect of the related Repurchase Assets to
      reflect on their books and records the transfer of such Repurchase Assets
      to Seller, as owner or secured party (if the Repurchase Assets are in the
      form of a security agreement);

                  (iii) If requested by Seller, to deliver the most recent
      servicing or like reports received by Purchaser, if any, with respect to
      the Repurchase Assets; and

                  (iv) To promptly turn over to Seller any principal, interest
      or other payments in respect of the Repurchase Assets that Purchaser may
      thereafter receive (whether due to the "record date" provisions relating
      to the Repurchase Assets or otherwise).

                                    ARTICLE V

                                INTENT OF PARTIES

            Section 5.1. Intent of Parties; Protective Security Interest.
Purchaser and Seller confirm that the transactions contemplated herein are
intended as purchases and sales rather than as loan transactions. In the event,
for any reason, and solely in such event, that any transaction hereunder is
construed by any court or regulatory authority as a loan or other than a
purchase and sale of all Eligible Assets, Seller shall be deemed to have hereby
pledged to Purchaser as security for the performance by Seller of all of its
obligations from time to time arising hereunder and under any and all Purchases
effected pursuant hereto, and shall be deemed to have granted to Purchaser a
perfected security interest in, all of Seller's right, title and interest in and
to all of the Eligible Assets sold to Purchaser hereunder and all distributions
in respect thereof, and the proceeds of any and


                                       16
<PAGE>

all of the foregoing, and the servicing fees and rights in the foregoing
(including the right to contract for servicing) (collectively, whether now
existing or hereafter acquired, the "Collateral"). Seller represents that, with
respect to all Eligible Assets in the form of a participation certificate or
other instrument evidencing ownership of an underlying pool of assets, there is
and will continuously be an effective UCC filing evidencing the security
interest of the issuer or indenture trustee (as the case may be), for the
benefit of the holders of such certificate or instrument, in such pool of
assets, including any chattel paper related to such assets. Seller also
represents that, with respect to all Collateralized Notes, there is and will
continuously be an effective UCC filing naming Seller the secured party (or an
assignee thereof) with respect to the Eligible Assets, including any related
chattel paper, underlying such Notes. Seller shall, with respect to each
Purchase, execute a Receipt and Assignment substantially in the form of Exhibit
B hereto, as applicable, pursuant to which Seller shall reconfirm its grant to
Purchaser of a first priority security interest in, and lien upon, the
Collateral. In furtherance of the foregoing, (i) this Agreement shall constitute
a security agreement, (ii) Purchaser shall have all of the rights of a secured
party with respect to the Collateral pursuant to applicable law and (iii) Seller
shall execute all documents, including but not limited to financing statements
under the Uniform Commercial Code as in effect in any applicable jurisdictions,
as Purchaser may reasonably require to effectively perfect and evidence
Purchaser's first priority security interest in the Collateral. Seller also
covenants not to pledge, assign or grant any security interest to any other
party in any Eligible Asset subject to a Purchase hereunder.

                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES

            Section 6.1. Seller's Representations and Warranties. Seller hereby
represents and warrants to Purchaser, as of the date hereof and as of each
Purchase Date, as follows:

            (a) All Documents True and Correct. All representations and
warranties made and all information and documents or copies of documents
furnished to Purchaser pursuant to or in connection with this Agreement are and
will be true and correct at the time when made and at all times thereafter under
this Agreement or, if limited to a specific date, as of the date to which they
refer.

            (b) Due Organization. Seller is duly organized and validly existing
under the laws of the state of Delaware, and is qualified to do business in each
jurisdiction in which the failure to so qualify would have a material adverse
effect upon its business; has the authority under its charter and bylaws and
applicable law to enter into this Agreement and to perform all acts contemplated
hereby or in connection herewith; and has taken all corporate action necessary
to authorize the execution and delivery of this Agreement and the performance of
its terms.

            (c) Binding Obligations. This Agreement and every other document to
be executed by Seller pursuant to this Agreement is and will be a legal, valid,
binding and


                                       17
<PAGE>

subsisting obligation of Seller, enforceable in accordance with its respective
terms, except that (a) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws (whether statutory,
regulatory or decisional) now or hereafter in effect relating to creditors'
rights generally and (b) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to certain equitable defenses and
to the discretion of the court before which any proceeding therefor may be
brought, whether a proceeding at law or in equity.

            (d) No Violation. The consummation of the transactions contemplated
by this Agreement do not and will not result in the breach of any provision of
the charter or bylaws of Seller or result in the breach of any provision of, or
conflict with or constitute a default under or result in the acceleration of any
obligation under, any agreement, indenture, loan or credit agreement or other
instrument to which Seller, the Eligible Assets or any of Seller's property is
subject, or result in the violation of any law, rule, regulation, order,
judgment or decree to which Seller, the Eligible Assets or Seller's property is
subject.

            (e) No Litigation. There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, or before, or by any court, public board or
body pending or, in each case, as to which Seller has received service of
process, or, to Seller's knowledge, threatened against or affecting Seller,
which will adversely affect the validity or enforceability of this Agreement or
Seller's ability to carry out its obligations hereunder.

            (f) Financial Statements. The audited financial statements of
Guarantor and its consolidated subsidiaries as of March 31, 1998 and the
unaudited financial statements of Guarantor and its consolidated subsidiaries as
of December 31, 1998, heretofore furnished to Purchaser, fairly present the
financial position of Guarantor and its consolidated subsidiaries on a
consolidated basis as of such date and the period then ended, and subsequent to
the date of said financial statements there has been no material adverse change
in the financial condition of Guarantor and its consolidated subsidiaries on a
consolidated basis.

            (g) No Consent. No consent, approval, authorization or order of any
court or governmental agency or body is required for the sale of any Eligible
Assets hereunder or the execution, delivery and performance by Seller of or
compliance by Seller with this Agreement or the consummation of the transactions
contemplated hereby or thereby.

            (h) Truth of Schedules. The information pertaining to the Eligible
Assets set forth in the relevant schedules and reports furnished to Purchaser by
Seller in respect of the Eligible Assets is true and correct in all material
respects.

            (i) Transfer of Eligible Assets. All actions necessary to transfer
to Purchaser the interests in the Eligible Assets subject to Purchase hereunder
have been or are currently being taken and Seller has not offered or sold, and
will not offer or sell, any Eligible Assets in any manner that would render the
issuance and sale of the Eligible


                                       18
<PAGE>

Assets a violation of Section 5 of the Securities Act of 1933, as amended, or
any state securities or "Blue Sky" laws or require registration pursuant
thereto, nor has it authorized, nor will it authorize, any person to act in such
manner.

            (j) Representations with Respect to Eligible Assets. With respect to
the Eligible Assets subject to any Purchase Request, Seller represents and
warrants to Purchaser with respect to each such Eligible Asset as follows:

                  (i) such Eligible Asset is owned by Seller free from all liens
      and encumbrances and will be transferred to Purchaser free from all liens
      and encumbrances;

                  (ii) the documentation evidencing such Eligible Asset,
      including any leases, notes, guarantees, mortgages, security agreements,
      waivers and/or other instruments are true, valid and genuine and represent
      existing valid and enforceable obligations in accordance with their terms,
      except only as such enforcement may be limited by bankruptcy, insolvency,
      reorganization, moratorium or other similar laws affecting the enforcement
      of creditors' rights generally and by general principles of equity
      (whether considered in a proceeding or action in equity or at law), and
      all parties to each Eligible Asset had full legal capacity to execute all
      documents relating to such Eligible Asset and convey the estate therein
      purported to be conveyed;

                  (iii) all signatures, names, addresses, amounts and other
      statements entered in the documentation referred to in clause (ii) are, to
      the best knowledge of Seller, true and correct;

                  (iv) the transaction yielding or underlying such Eligible
      Asset conforms to all applicable laws, rules, regulations, ordinances and
      orders;

                  (v) the obligations of the obligor under any Eligible Asset is
      not subject to any defense, claim, counterclaim or set off of which Seller
      has knowledge;

                  (vi) all mortgages, security interests and other liens in
      favor of Seller in any collateral underlying such Eligible Asset are
      valid, perfected and enforceable and (except as specifically identified by
      Seller) rank prior to all other mortgages, liens and security interests;
      and

                  (vii) any Eligible Asset consisting of a participation
      certificate or other ownership instrument evidencing an interest in an
      underlying pool of assets represents 100% of the senior interest in such
      pool.

            (k) Residential Mortgage Products. Seller represents and warrants to
Purchaser with respect to each Mortgage Product consisting of an interest in a
residential property in a pool of Eligible Assets that each such Mortgage
Product (i) shall be an "`A' Risk Mortgage Product" as determined in accordance
with customary standards for the mortgage lending industry, (ii) shall be a "`B'
Risk Mortgage Product" as determined in


                                       19
<PAGE>

accordance with customary standards or the mortgage lending industry, or (iii)
shall be a "`C' Risk Mortgage Product" which shall have been originated in
conformity with and shall meet, as of the Date of Purchase, underwriting
guidelines no less stringent than those specified in Schedule I attached hereto.

            (1) Multi-Family Mortgage Products. Seller represents and warrants
to Purchaser with respect to each Mortgage Product consisting of an interest in
a multi-family property that such Mortgage Product shall be of a type and
quality eligible for inclusion in a securitized pool which would be expected to
issue a security which would be rated in one of the investment grade generic
rating categories by any nationally recognized statistical rating agency;
provided, that either (i) the aggregate principal balance of such pool exceeded
$70,000,000 and, in order to be eligible for such rating, the structure of such
pool would not require more than 10% of the securities issued by such pool to be
subordinated to the class of securities eligible for such rating, or (ii) such
pool would be eligible for credit enhancement by a Monoline Insurance Company.

            (m) Other Mortgage Products. Seller represents and warrants to
Purchaser with respect to each Mortgage Product, excepting residential mortgage
products which are addressed in subsection (k) or (1) above, that such Mortgage
Product shall be of a type and quality eligible for inclusion in a securitized
pool which would be expected to issue a security which would be rated in one of
the investment grade generic rating categories by any nationally recognized
statistical rating agency; provided, that either (i) the aggregate principal
balance of such pool exceeded $25,000,000 and, in order to be eligible for such
rating, the structure of such pool would not require more than 25% of the
securities issued by such pool to be subordinated to the class of securities
eligible for such rating, or (ii) such pool would be eligible for credit
enhancement by a Monoline Insurance Company.

            (n) Motor Vehicle Loans. Seller represents and warrants to Purchaser
with respect to each motor vehicle loan constituting an Eligible Asset hereunder
that such motor vehicle loan shall be of a type and quality usually eligible for
inclusion in a securitized pool which would be expected to issue a security
which would be rated in one of the investment grade generic rating categories by
any nationally recognized statistical rating agency; provided, that either (i)
the aggregate principal balance of such pool exceeded $40,000,000 and, in order
to be eligible for such rating, the structure of such pool would not require
more than 10% of the securities issued by such pool to be subordinated to the
class of securities eligible for such rating, or (ii) such pool would be
eligible for credit enhancement by a Monoline Insurance Company.

            (o) Franchise Loans. Seller represents and warrants to Purchaser
with respect to each Franchise Loan constituting an Eligible Asset hereunder
that such Franchise Loan shall be of a type and quality eligible for inclusion
in a securitized pool which would be expected to issue a security which would be
rated in one of the investment grade generic rating categories by any nationally
recognized statistical rating agency; provided, that either (i) the aggregate
principal balance of such pool exceeded $25,000,000 and, in order to be eligible
for such rating, the structure of such pool would not require more than 25% of
the securities issued by such pool to be subordinated to the


                                       20
<PAGE>

class of securities eligible for such rating, or (ii) such pool would be
eligible for credit enhancement by a Monoline Insurance Company.

            (p) Collateralized Notes. Seller represents and warrants to
Purchaser with respect to each Collateralized Note purchased hereunder that such
Collateralized Note is secured by Eligible Assets which conform to the
appropriate representations and warranties set forth in subsections (j) through
(o) above.

                                  ARTICLE VII

                              COVENANTS OF SELLER

            Section 7.1. Seller's Covenants. So long as the Agreement remains in
effect or Seller shall have any obligations hereunder, Seller hereby covenants
and agrees with Purchaser as follows:

            (a) Financial Statements. Promptly upon preparation, but in no event
later than 90 days following the end of each fiscal quarter, Seller shall
deliver to Purchaser the Financial Statements of Guarantor and its consolidated
subsidiaries as of the end of each fiscal quarter. In the event the parties
hereto agree to extend the term of this Agreement, promptly upon preparation,
Seller shall deliver to Purchaser financial statements of Guarantor, and its
consolidated subsidiaries as of the end of each fiscal year, as described in
Section 6.1(f) hereof.

            (b) Reports. Seller shall with respect to any Eligible Assets
serviced by Seller or any of its affiliates or otherwise use its best efforts to
cause to be delivered to Purchaser periodically the report, if any, prepared by
the relevant trustee or servicer setting forth payment activity, defaults and
delinquencies with respect to the underlying loans or receivables in respect of
each Eligible Asset acquired by Purchaser and shall prepare and deliver reports
each month, detailing, with respect to all Purchases, all of the information
necessary for Purchaser to determine the Market Value of such Eligible Assets,
including such information as Purchaser may from time to time reasonably request
including, but not limited to, purchase activity and valuation of Eligible
Assets, which reports shall be rendered within 15 days of the information as to
which they pertain becoming available.

            (c) Compliance with Laws. Seller will comply in all material
respects with all laws, rules and regulations to which it is or may become
subject.

            (d) Conduct of Business. Seller will, and will cause each of its
subsidiaries to do all things necessary to remain duly organized or
incorporated, validly existing and in good standing as a domestic corporation or
limited liability company, as the case may be, in its jurisdiction of
organization or incorporation, as the case may be, and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted as presently conducted.


                                       21
<PAGE>

            (e) Parent. Guarantor shall, at all times, directly or indirectly,
own at least 50% of the common stock of Seller, and no "Event of Default" as
such term is defined in the Indenture dated as of August 15, 1996 between
Guarantor and the Chase Manhattan Bank as Trustee (the "Indenture") with respect
to the senior notes, due 2003, shall have occurred, nor an event which would
constitute an "Event of Default" under the Indenture, has occurred during the
term of this Agreement.

            (f) Maintenance of Capital. At all times during this Agreement,
Seller shall possess sufficient net capital and liquid assets (or ability to
access the same) to satisfy its obligations as they become due in the normal
course of business.

            (g) Notifications. Seller will notify Purchaser in writing of any of
the following promptly upon learning of the occurrence thereof, describing the
same and, if applicable, any remedial steps being taken with respect thereto:

                  (i) The occurrence or likelihood of occurrence of an Event of
      Termination hereunder;

                  (ii) The institution of any litigation, arbitration proceeding
      or governmental proceeding which, in the opinion of counsel to Seller,
      could have a material adverse effect on Seller, any of its subsidiaries,
      the Eligible Assets or Guarantor;

                  (iii) The entry of any judgment or decree against Seller or
      any of its subsidiaries or Guarantor if the aggregate amount of all
      judgments and decrees then outstanding against Seller or any of its
      subsidiaries or Guarantor exceeds $10,000,000 after deducting (i) the
      amount with respect to which Seller or any of its subsidiaries or
      Guarantor is insured and with respect to which the insurer has assumed
      responsibility in writing, and (ii) the amount for which Seller or said
      subsidiary or Guarantor is otherwise indemnified if the terms of such
      indemnification are reasonably satisfactory to Purchaser; or

                  (iv) The occurrence or likelihood of any event which would
      allow the obligee under any material loan agreement to which Seller or any
      of its subsidiaries or Guarantor is bound to declare an event of default
      or accelerate the obligations of Seller or any of its subsidiaries or
      Guarantor thereunder.

            (h) Replacement or Repurchase. Upon notice or discovery of an
Eligible Asset not conforming in any material respect with the representations
made in this Agreement, Seller shall immediately do one or the following: (i)
replace the non-conforming Eligible Asset with one or more conforming Eligible
Assets of substantially the same type and general risk profile as the
non-conforming Eligible Asset (including, in the case of residential Mortgage
Products, the same generic risk category) and of an aggregate fair market value
at least equal to that of the non-conforming Eligible Asset; or (ii) repurchase
such Eligible Asset at the related Adjusted Tranche Amount plus the related
Adjusted Net Securities Amount. If Seller elects to replace a non-conforming
Eligible Asset with one or more conforming Eligible Assets rather than to
repurchase the


                                       22
<PAGE>

non-conforming Eligible Asset as described above, Seller hereby agrees to
satisfy the Subsequent Conditions (other than that described in Section 2.2(i)
hereof) with respect to the conforming Eligible Assets and Purchaser hereby
agrees to comply with the provisions of Section 4.6(c) hereof with respect to
the non-conforming Eligible Asset (with the non-conforming Eligible Asset being
treated as if it were a Repurchase Asset being sold to Seller for this purpose).

                                  ARTICLE VIII

                              FEES AND OTHER COSTS

            Section 8.1. Net Securities Amount. In connection with each Tranche
hereunder, Seller agrees to pay to Purchaser during the Term, on the last day of
any Tranche Term, the Net Securities Amount then owed to Purchaser (less the
related Retained Securities Amount, if any), with respect to the applicable
Tranche. In addition, in connection with each Tranche hereunder, if the interest
received by Purchaser at the end of any Tranche Period is less than the Net
Securities Amount (less the related Retained Securities Amount, if any) owed by
Seller to Purchaser in respect of such Tranche Period, Seller shall immediately
reimburse Purchaser for any such deficiency.

            Section 8.2. Hold Harmless. Seller hereby agrees to pay, and to
indemnify, protect, save and hold harmless, on an After-Tax Basis, Purchaser
from and against any and all Taxes (as defined in Section 8.3 hereof) other than
(i) income taxes of Purchaser, (ii) Taxes that result from the misconduct or
negligence of Purchaser or from the failure of Purchaser to file tax returns or
certificates of exemption from withholding or other reports, properly and on a
timely basis or to claim a deduction or credit and (iii) Taxes that are based on
or measured by fees or compensation received by Purchaser, which may at any time
be imposed or asserted by reason of, in connection with or in respect of the
Eligible Assets or any transactions contemplated hereby, whether imposed on
Purchaser, Seller or the Eligible Assets or otherwise, and whether arising by
reason of the acts to be performed by Seller hereunder or otherwise.

            Section 8.3. Definition of Taxes. For purposes of this Article VIII,
the term "Taxes" shall mean all taxes, charges, fees, levies or other
assessments including, without limitation, withholding, excise, property, sale
and franchise taxes (including, in each such case, any interest, penalties or
additions attributable to or imposed on or with respect to any such assessment)
imposed by the United States, any state or political subdivision thereof, any
foreign government or any other jurisdiction or taxing authority.

            Section 8.4. After-Tax Calculation. For purposes of this Section 8,
in determining the additional amount necessary so that any payment hereunder is
paid on an After-Tax Basis, such calculation shall be based on Purchaser's
effective tax rate in effect from time to time under applicable law.

            Section 8.5. Contest, Payment, Interest. In the event a taxing
jurisdiction makes a claim with respect to any Tax for which Seller may be
liable under this Article VIII, Purchaser shall promptly notify Seller thereof.
If reasonably requested


                                       23
<PAGE>

by Seller within 30 days of receipt of such notice, Seller shall, at its own
expense, be entitled to contest the imposition of such Tax. All payments due
pursuant to this Section 8 shall be paid no later than the later of (i) five (5)
Business Days after the date of such demand or (ii) five (5) Business Days
before the date the Tax to which such amount payable hereunder relates is due or
is to be paid (ignoring extension of time) accompanied by a written statement
(which written statement shall, at Seller's request, be verified by a nationally
recognized independent accounting firm mutually acceptable to Seller and
Purchaser, such verification to be at Seller's expense unless such accountants
determine that the amount payable by Seller is less than ninety-five percent
(95%) of the amount shown on such written statement) describing in reasonable
detail the Tax and the computation of the amount payable; provided, however,
that Seller shall not be entitled to any payment in respect of accountants' fees
and expenses incurred in connection with the contest of a taxing authority
assessment. Without in any way limiting Purchaser's remedies, any such amount
not paid when due, shall bear interest at a rate equal to the Default Rate.

            Section 8.6. Definition of "After-Tax Basis"; Tax Savings. For
purposes of this Article VIII, the term "After-Tax Basis" shall mean an amount
which after deduction of the net increase in federal, state and foreign income
taxes required to be paid by Purchaser in with respect to the receipt of such
amount is equal to the payment required under the provision of this Article VIII
which requires payment to be made on an After-Tax Basis. If Purchaser
subsequently realizes a tax deduction or credit (including foreign tax credit
and any reduction in Taxes) not previously taken into account in computing such
payment, Purchaser shall promptly pay to Seller an amount equal to the sum of
(i) the actual reduction in Taxes, if any, realized by Purchaser which is
attributable to such deduction or credit and (ii) the actual reduction in Taxes
realized by Purchaser as a result of any payment made by Purchaser pursuant to
this sentence.

                                   ARTICLE IX

                                  TERMINATION

            Section 9.1. Events of Termination. Each of the following events
shall constitute an "Event of Termination" hereunder (whatever the reason for
such Event of Termination and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):

            (a) Failure to Perform. Failure of Seller to deliver to Purchaser or
its designee the relevant Eligible Assets on the relevant Purchase Date; or
failure of Seller to pay when due any sums or amount equal to or greater than
$20,000 payable hereunder or under any Purchase or to pay within one Business
Day of the due date any sums or amount less than $20,000 payable hereunder or
under any Purchase.

            (b) Failure of Representation or Warranty. Any of the
representations and warranties (except for those set forth in subsections (j)
through (p) of Section 6.1 hereof) made by Seller herein, or in any certificate
or other document delivered pursuant


                                       24
<PAGE>

to or in connection with this Agreement or any transaction contemplated hereby,
or any of the representations and warranties made by Guarantor in the Guarantee,
shall prove to be untrue in any material respect when made or deemed made.

            (c) Failure of Covenant. Failure of Seller to observe and perform
any material covenant, condition or other agreement on its part to be observed
or performed hereunder and such default shall continue unremedied for five
Business Days, or failure of Guarantor to observe and perform any covenant,
condition or agreement on its part to be observed or performed under the
Guarantee.

            (d) Bankruptcy Event.

                  (i) Appointment of a receiver, conservator, liquidator,
      assignee, custodian, trustee, sequestrator (or other similar official) of
      Seller or of Guarantor, or of any substantial part of its or their
      property, the ordering of the winding-up or liquidation of its or their
      affairs, or the entry of a decree or order for relief by a court having
      jurisdiction in the premises in respect of Seller or Guarantor in any
      involuntary case under any applicable bankruptcy, insolvency or other
      similar law now or hereinafter in effect;

                  (ii) Commencement by Seller or Guarantor of a voluntary case
      under any applicable bankruptcy, insolvency or other similar law now or
      hereafter in effect, or the consent by Seller or Guarantor to the entry of
      an order for relief in an involuntary case under any such law or to the
      appointment of or taking possession by a receiver, liquidator, assignee,
      trustee, custodian, sequestrator (or other similar official) of Seller or
      of Guarantor, or of any substantial part of its property, or the making by
      Seller or Guarantor of any general assignment for the benefit of
      creditors, or the failure of Seller or of Guarantor generally to pay its
      debts as such debts become due, or the taking of corporate action by
      Seller or Guarantor in furtherance of any of the foregoing.

            (e) Seller Default. Default by Seller or Guarantor, whether as
principal, guarantor or surety, in the payment of any principal or interest on
any indebtedness of Seller or Guarantor in the amount of $10,000,000 or more.

            (f) Material Adverse Change. A material adverse change in the
financial condition of Seller or Guarantor shall have occurred which, in the
reasonable opinion of Purchaser, will impair the ability of either to perform
its obligations hereunder or under the Guarantee, as the case may be.

            (g) Cross-Default. The occurrence and continuance of an "event of
default" or of an "event of termination" on the part of either Seller or
Guarantor under any other agreement between either Seller or Guarantor, on the
one hand, and Purchaser or any of its affiliates on the other hand, which has
not been waived by Purchaser, or the occurrence and continuance of an "Event of
Default" on the part of the Guarantor under the Indenture with respect to the
senior notes, due 2003; or the occurrence of an event


                                       25
<PAGE>

which would constitute an "Event of Default" under the Indenture during the term
of this Agreement.

            Section 9.2. Term. This Agreement shall terminate upon the earlier
to occur of an Event of Termination or the expiration of the Term. As used
herein, the "Term" shall mean that period commencing on the date hereof and
continuing until the earlier of (i) the date that the Subservicing Agreement
shall terminate and (ii) the date that a Change of Control with respect to
Seller or Guarantor shall occur. In the event this Agreement expires at the end
of the Term and at that time there exists no Event of Termination, then
immediately prior to the date of such expiration, as to all Eligible Assets then
owned by Purchaser, a Required Sale Event shall be deemed to occur unless this
Agreement is extended.

                                    ARTICLE X

                            MISCELLANEOUS PROVISIONS

            Section 10.1. Payment. Any payment due under this Agreement shall be
made promptly and by wire transfer. Any late payments shall bear interest at a
rate of "Prime" (as then set forth in The Wall Street Journal) plus 2% (the
"Default Rate"), except that payments made one Business Day late shall bear
interest at the then "federal funds" rate plus any customary margin.

            Section 10.2. Remedies. If an Event of Termination occurs and is
continuing, Purchaser may, to the extent provided or permitted by applicable law
and this Agreement, pursue any available legal remedy including the sale or
other disposition of some or all of the Eligible Assets and related Collateral
in accordance with the provisions of Section 4.1; provided, however, Purchaser
shall not be obligated to offer the relevant Eligible Asset to Seller for
purchase pursuant to the right of first refusal contained in Section 4.1 if any
of the events described in subsections (d), (e), (f) and (g) of Section 9.1
hereof have occurred and are continuing. Following an Event of Termination, in
addition to the rights granted to Purchaser pursuant to Section 4.4 hereof, no
further Purchase hereunder shall occur, unless such Event of Termination shall
have been waived by Purchaser.

            Section 10.3. Exceeding Available Amount. If Purchaser shall accept
a Purchase Request and the Aggregate Adjusted Tranche Amount shall exceed the
Available Amount, then such Purchase shall be governed in all respects by the
terms of this Agreement. Purchaser shall have the option, but not the
obligation, to accept any Purchase Request which causes the Aggregate Adjusted
Tranche Amount to exceed the Available Amount.

            Section 10.4. Exclusive Benefit of Parties; Assignment. This
Agreement is for the exclusive benefit of the parties hereto and their
respective successors and assigns and shall not be deemed to give any legal or
equitable right to any other person. This Agreement may not be assigned by
either party hereto without the prior written consent of the other party.


                                       26
<PAGE>

            Section 10.5. Amendment; Waivers. This Agreement may be amended from
time to time only by written agreement of Seller and Purchaser. Any forbearance,
failure, or delay by a party in exercising any right, power, or remedy hereunder
shall not be deemed to be a waiver thereof, and any single or partial exercise
by a party of any right, power or remedy hereunder shall not preclude the
further exercise thereof. Every right, power and remedy of a party shall
continue in full force and effect until specifically waived by it in writing. No
right, power or remedy shall be exclusive, and each such right, power or remedy
shall be cumulative and in addition to any other right, power or remedy, whether
conferred hereby or hereafter available at law or in equity or by statute or
otherwise.

            Section 10.6. Effect of Invalidity of Provisions. In case any one or
more of the provisions contained in this Agreement should be or become invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall in no way be
affected, prejudiced or disturbed thereby.

            Section 10.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to its rules regarding conflict of laws.

            Section 10.8. Submission to Jurisdiction; Waiver of Trial by Jury.
With respect to any claim arising out of this Agreement each party irrevocably
submits to the nonexclusive jurisdiction of the courts of the State of New York
and the United States District Court located in the Borough of Manhattan, City
of New York, and each party irrevocably waives any objection which it may have
at any time to the laying of venue of any suit, action or proceeding arising out
of or relating hereto brought in any such court, irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in any inconvenient forum and further irrevocably waives the right to
object, with respect to such claim, suit, action or proceeding brought in any
such court, that such court does not have jurisdiction over such party. Each
party irrevocably consents to the service of process by registered or certified
mail, postage prepaid, to it at its address given pursuant to Section 10.11
hereof. To the extent permitted by applicable law, Purchaser and Seller each
irrevocably waive all right of trial by jury in any action, proceeding or
counterclaim arising out of or in connection with this Agreement or any matter
arising hereunder.

            Section 10.9. Jurisdiction Not Exclusive. Nothing herein will be
deemed to preclude either party hereto from bringing an action or proceeding in
respect of this Agreement in any jurisdiction other than as set forth in Section
10.8 hereof.

            Section 10.10. Notices. Any notices, consents, directions, demands
and other communications given under this Agreement (unless otherwise specified
herein) shall be in writing and shall be deemed to have been duly given when
personally delivered at or telefaxed to the respective addresses or facsimile
numbers, as the case may be, set forth on the signature page hereof for Seller
and Purchaser, or to such other address or facsimile number as either party
shall give notice to the other party pursuant to this Section. Notices,
consents, etc. may be also effected by first class mail, postage


                                       27
<PAGE>

prepaid sent to the foregoing addresses and will be effective upon receipt by
the intended recipient.

            Section 10.11. Entire Agreement. This Agreement, including the
Schedules and Exhibits hereto, contains the entire agreement of the parties
hereto with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements between them, whether oral or written, of any nature
whatsoever with respect to the subject matter hereof.

            Section 10.12. Purchaser's Investment Representation. Each purchase
of Eligible Assets hereunder shall constitute a representation by Purchaser to
Seller that Purchaser understands, and that Purchaser has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of, its investment in the relevant Eligible Assets; that
Purchaser has reviewed such materials and information with respect to the
relevant Eligible Assets as it has deemed necessary and it has been afforded the
opportunity to make inquiry of Seller; that Purchaser is acquiring the relevant
Eligible Assets for the purpose of investment and not with a view to the resale
or distribution thereof; and that it has no present intention of selling,
negotiating, or otherwise disposing of the relevant Eligible Assets; provided,
however, that the disposition of Purchaser's property shall at all times be and
remain within Purchaser's control.

            Section 10.13. Indemnification.

            (a) Without limiting any other rights which Purchaser or Seller may
have hereunder or under applicable law, and in addition to any other indemnity
provided hereunder, Seller hereby agrees to indemnify Purchaser and its
respective officers, directors, agents and employees (each, an "Indemnified
Party") from and against any and all Losses incurred by any of them directly
arising out of or as a result of this Agreement or any Purchase of Eligible
Assets excluding, however, Losses to the extent arising from gross negligence or
willful misconduct on the part of Purchaser. Without limiting the generality of
the foregoing, Seller shall indemnify Purchaser for Losses relating to or
resulting from:

                  (i) any representation or warranty made by Seller (or any
      officers, employees or agents of Seller) under or in connection with this
      Agreement, any periodic report required to be furnished hereunder or any
      other information or document delivered by Seller pursuant hereto, which
      shall have been false or incorrect in any material respect when made or
      deemed made;

                  (ii) the failure by Seller to comply with any applicable law,
      rule or regulation with respect to any Purchase; or

                  (iii) the failure by Seller (if so requested by Purchaser) to
      execute and properly file, or any delay in executing and properly filing,
      financing statements or other similar instruments or documents under the
      Uniform


                                       28
<PAGE>

      Commercial Code of any applicable jurisdiction or other applicable laws
      with respect to the Eligible Assets.

            (b) The sole indemnification with respect to Taxes, as defined in
Section 8.3 hereof, is that set forth in Article VIII hereof. All indemnities
and undertakings of Seller and Purchaser hereunder shall survive the termination
of this Agreement.

            Section 10.14. Headings. The headings in this Agreement are for
convenience only and are not intended to influence its construction.

            Section 10.15. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, and all of which shall constitute one and the same instrument.


                                       29
<PAGE>

            IN WITNESS WHEREOF, Purchaser and Seller have duly executed this
Agreement as of the date and year first above written.

                                   CONTINENTAL GRAIN COMPANY

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

                                   Address:   277 Park Avenue
                                              New York, New York 10172
                                              Attention: Senior Vice President
                                              and Chief Legal Officer

                                   Telephone: (212) 207-5100
                                   Facsimile: (212) 207-5799


                                   CONTISECURITIES ASSET FUNDING CORP. III


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


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

                                   Address:   277 Park Avenue
                                              New York, New York 10172
                                              Attention: Chief Counsel

                                   Telephone: (212) 207--2822
                                   Facsimile: (212) 207--2935

                 [Signature Page to Purchase and Sale Agreement]


                                       30
<PAGE>

                                                                      SCHEDULE I

                   RESIDENTIAL MORTGAGE PRODUCT UNDERWRITING
                   GUIDELINES FOR "C" RISK MORTGAGE PRODUCTS
                   -----------------------------------------

            For purposes of representations of individual mortgage loans and for
purposes of the classification of "C" Risk Mortgage Product, the "C" Risk
Mortgage Product underwriting guidelines are as follows:

                  (i) The obligor under each Mortgage Product has made no more
      than (a) six payments more than 30 days past due, (b) two payments more
      than 60 days past due, and (c) two payments more than 90 days past due,
      within the last twelve month period.

                  (ii) There are no more than $2,500 in open charge-offs or
      collection accounts remaining open on any Purchase Date.

                  (iii) No bankruptcy or notice of default filings by the
      obligor under each Mortgage Product may have occurred during the preceding
      eighteen months, but discharged bankruptcies are acceptable if there is a
      two-year history of re-established credit with major creditors (i.e.,
      installment loans, major credit cards) and a written explanation of
      delinquency is provided.

                  (iv) The Mortgaged Property must be in at least acceptable
      condition.

                  (v) The Mortgage Product must have a maximum Loan-to-Value
      Ratio of 75%.

                  (vi) The Mortgage Product must have a maximum debt-to-income
      ratio of 60%.

                  (vii) The minimum mortgage loan size is $10,000 and the
      maximum mortgage loan size is $325,000 (over $325,000 determined on an
      exception basis).

                  (viii) Two automated credit bureau reports are required for
      each borrower.

                  (ix) The foregoing Guidelines are subject to commercially
      reasonable variations on a loan-by-loan basis. For example, a borrower
      unable to meet Guideline (i) may be approved for a loan with a
      Loan-to-Value ratio of less than 75% or for a loan with an above-market
      interest rate. Such determinations are made by the originators on a
      case-by-case basis.


                                      S-1
<PAGE>

                                                                       EXHIBIT A

                               FORM OF GUARANTEE

            THIS GUARANTEE is made as of May 26, 1999 by CONTIFINANCIAL
CORPORATION (the "Guarantor"), a corporation organized and existing under the
laws of the State of Delaware and having its principal office at 277 Park
Avenue, New York, New York 10172.

            WHEREAS, CONTINENTAL GRAIN COMPANY (the "Purchaser") has entered
into a Purchase and Sale Agreement (the "Agreement," with terms defined therein
being used herein as therein defined) dated as of May 26, 1999 with
CONTISECURITIES ASSET FUNDING CORP. III (the "Seller") providing for the
purchase of certain Eligible Assets by the Purchaser from the Seller, from time
to time; and

            WHEREAS, the Guarantor represents that it owns directly or
indirectly a substantial amount of the stock of the Seller and/or is financially
interested in its affairs and expects to derive advantage from each and every
such Purchase;

            NOW, THEREFORE, to induce Purchaser to enter into Purchases with the
Seller from time to time, and for other good and valuable consideration receipt
of which is hereby acknowledged, the Guarantor hereby agrees as follows:

            (1) The Guarantor hereby unconditionally and irrevocably guarantees
to the Purchaser the full and complete payment when due (whether at stated
maturity, by acceleration or otherwise), and performance, of the Seller's
obligations under the Agreement and every Purchase evidenced by a Purchase
Request entered into pursuant thereto. In addition, the Guarantor agrees that in
the event that the Seller defaults in the performance of or payment when due of
any or all obligations or sums hereby guaranteed, the Guarantor shall forthwith
pay such sums or perform such obligations without need to resort to the Seller
first. All amounts payable by the Guarantor to the Purchaser hereunder shall be
paid in immediately available funds in U.S. Dollars and at the place and
otherwise in the manner and on the terms required by the Agreement. This
Guarantee shall be a continuing Guarantee and shall remain in full force and
effect until all the obligations of the Seller hereby guaranteed are paid in
cash or other immediately available funds or performed in full. The Guarantor's
obligations under this Guarantee shall be reinstated and be continued in full
force and effect if at any time any payment received by the Purchaser under the
Agreement is invalidated, declared to be fraudulent or preferentially set aside
and/or required to be repaid by the Purchaser.

            (2) The Guarantor hereby expressly waives all setoffs and
counterclaims and all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, notices of
acceptance of this Guarantee, notices of sale, surrender or other handling or
disposition of assets subject


                                      A-1
<PAGE>

to the Agreement, any requirement that the Purchaser exhaust any right, power or
remedy or take any action against the Seller or against any assets subject to
the Agreement, and other formalities of any kind. The obligation of the
Guarantor hereunder is absolute and unconditional irrespective of the
genuineness, legality, validity, regularity or enforceability of the Agreement,
any Purchase Request, or any other agreement, instrument or document
contemplated therein or thereby. The Guarantor hereby waives, to the fullest
extent permitted by applicable law, all defenses of a surety to which it may be
entitled by statute or otherwise. The Purchaser may neglect or forbear to
enforce payment or performance hereunder, under the Agreement, any Purchase
Request, or under any other agreement, instrument or document contemplated
therein or thereby, or waive, amend or otherwise alter the terms of the
Agreement or any Purchase Request in any manner, or release or cause the release
of any assets subject to the Agreement, in each case without in any way
affecting or impairing the liability of the Guarantor hereunder.

            (3) The Guarantor hereby waives all rights of subrogation,
exoneration, reimbursement (except reimbursements by third parties) or
contribution, whether arising by contract or operation of law (including,
without limitation, any such right arising under the Federal Bankruptcy Code) or
otherwise by reason of any payment by it hereunder and further agrees with the
Seller for the benefit of its creditors that any such payment by it shall
constitute a contribution of capital by the Guarantor to the Seller.

            (4) If an Event of Termination shall have occurred and be
continuing, the Guarantor agrees that, as between the Guarantor and the
Purchaser, the obligations of the Seller guaranteed hereunder may be declared to
be due for purposes of this guarantee notwithstanding any stay, injunction or
other prohibition which may prevent, delay or vitiate any such declaration as
against the Seller and that, in the event of any such declaration (or attempted
declaration), such obligations shall forthwith become due by the Guarantor for
purposes of this Guarantee.

            (5) All notices, demands and other communications hereunder shall be
given in writing and delivered or telefaxed (i) to the Guarantor at 277 Park
Avenue, New York, New York 10172, Attention: General Counsel, Facsimile: (212)
207-2937, and (ii) to the Purchaser at 277 Park Avenue, New York, New York
10172, Attention: Senior Vice President and Chief Legal Officer, Facsimile:
(212) 207-5799, and shall be effective upon actual receipt.

            (6) THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS
RULES THEREOF. This guarantee may not be modified, altered or amended except by
a writing signed by both the Guarantor and the Purchaser.

            (7) THE GUARANTOR IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN
THE BOROUGH OF


                                      A-2
<PAGE>

MANHATTAN, CITY OF NEW YORK, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST
IT WHICH IS RELATED TO ANY MATTER CONTAINED IN THIS GUARANTEE, AND THE GUARANTOR
HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, DEFENSE OR OTHERWISE,
IN ANY SUCH ACTION, SUIT OR PROCEEDING, THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT, THAT ANY SUCH COURT IS AN INCONVENIENT FORUM OR
THAT VENUE IN ANY SUCH COURT IS IMPROPER. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE GUARANTOR IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTEE
OR ANY MATTER ARISING HEREUNDER.

            IN WITNESS WHEREOF, the Guarantor has executed this Guarantee as of
the day and year first above written.

                                   CONTIFINANCIAL CORPORATION

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

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


                                      A-3
<PAGE>

                                                                       EXHIBIT B

                         RECEIPT, GRANT AND ASSIGNMENT

            Reference is made to the Purchase and Sale Agreement (the "Purchase
Agreement"), dated as of May 26, 1999, between CONTINENTAL GRAIN COMPANY
("Purchaser") and CONTISECURITIES ASSET FUNDING CORP. III ("Seller") and the
Purchase Request dated May 26, 1999 (a copy of which is annexed hereto).
Capitalized terms used herein but not defined herein have the meanings assigned
such terms in the Purchase Agreement.

            Seller hereby acknowledges receipt of $____________ in immediately
available funds representing the Purchase Amount for Eligible Assets which are
the subject matter of the annexed Purchase Request. Seller hereby confirms and
restates with respect to each such Assets the representations and warranties
contained in Section 6.1 of the Purchase Agreement.

            Seller hereby assigns to Purchaser as security for Seller's
obligations under the Purchase Agreement all of Seller's right, title and
interest in, to and under (a) such Eligible Assets, (b) all distributions of
principal and interest with respect thereto and (c) all proceeds of the
foregoing. The foregoing grant of a security interest is given in furtherance of
Section 5.1 of the Purchase Agreement.

                                   CONTISECURITIES ASSET FUNDING CORP. III

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

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


                                      B-1
<PAGE>

                                                                       EXHIBIT C

                                PURCHASE REQUEST

                                     [Date]

Continental Grain Company
277 Park Avenue
New York, New York 10172

Ladies and Gentlemen:

            Pursuant to Section 25 of the Purchase and Sale Agreement (the
"Purchase Agreement") dated as of May 26, 1999 between you ("Purchaser") and us
("Seller"), Seller hereby irrevocably requests that the Purchaser purchase the
following Eligible Assets:

Type of Eligible Assets:                                    _____________

Purchase Date:                                              _____________

Principal:                             $___________
(multiplied by)
       Purchase Price
       Percentage:                     ___%
(equals)
Principal Purchase Amount:                                  $____________
(plus)
       Purchased Accrued
       Interest:                       $___________
(equals)
Initial Tranche Amount:                                     $

Tranche Period:                                             _____________

Tranche Rate:                                               _____________.

Market Movement Allowance:                                  _____________%

Gain Amount:                                                $____________

Seller's Account:                      (#________)          $____________


                                      C-1
<PAGE>

Other terms:

                                   CONTISECURITIES ASSET FUNDING CORP. III


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

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

SELECT ONE ONLY:

/ /   Purchaser hereby acknowledges receipt of the foregoing Purchase Request
      and by its signature below agrees to purchase the above-described Assets
      subject to the terms and provisions hereof and of the Purchase Agreement.
      This document shall operate as a confirmation of the purchase transaction
      which is the subject of such request.

/ /   Purchaser hereby acknowledges receipt of the foregoing Purchase Request
      and declines to purchase the above-described Assets.

                                   CONTINENTAL GRAIN COMPANY


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


                                      C-2
<PAGE>

                                                                       EXHIBIT D

                   FORM OF LEGAL OPINION OF COUNSEL TO SELLER

                               ____________, 1999


Continental Grain Company
277 Park Avenue
New York, New York 10172

            Re: Purchase and Sale Agreement and Custodial Agreement

Ladies and Gentlemen:

            I have acted as Counsel to ContiSecurities Asset Funding Corp. III
("Seller") in connection with (i) the Purchase and Sale Agreement dated as of
May 26, 1999 (the "Purchase and Sale Agreement") between Continental Grain
Company ("Purchaser") and Seller and (ii) the Custodial Agreement dated as of
March 31, 1999 (the "Custodial Agreement") among Seller, Purchaser and
Manufacturers and Traders Trust Company. The Purchase and Sale Agreement and the
Custodial Agreement are individually referred to herein as an "Agreement" and
collectively referred to herein as the "Agreements." In rendering the opinion
set forth below, I have reviewed the original or a certified or conformed copy
of the Agreements and originals or copies satisfactory to me of all such
corporate records, agreements, certificates, governmental orders, permits and
other documents as I have deemed relevant and necessary. Capitalized terms not
defined herein have the respective meanings assigned to them in the Purchase and
Sale Agreement or, if not defined therein, the Custodial Agreement.

            In rendering the opinion expressed below, I have, with your
permission and without any further investigation or verification, assumed (a)
the genuineness of all signatures (other than those executed by officer of
Seller), (b) the authenticity of all documents submitted to me as originals, (c)
the conformity to originals of all documents submitted to me as copies and the
authenticity of the originals of such documents, (d) the legal capacity of
natural persons, (e) that the parties to each Agreement (other than Seller) have
the full power and authority to execute and deliver such Agreement and each
Agreement is the legal, valid and binding obligation of each such party, (f)
that to the extent that certain standards of conduct may be imposed as a matter
of law on either or both of Purchaser and the Custodian as a condition to, or as
a requirement for enforceability of, any of the Agreements (including, without
limitation, any requirement that such parties act reasonably, in good faith, in
a commercially reasonable manner or otherwise in compliance with applicable
law), such parties will comply with such standards of conduct, whether or not
any other conduct is permitted by the Agreements, and (g) the adequacy and
accuracy of the public records reviewed by me.


                                      D-1
<PAGE>

            Based upon and subject to the foregoing, I am of the opinion that:

            1. Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.

            2. Seller (i) has full power and authority to hold all of its right,
title and interest in and to each Eligible Asset, to assign all of its right,
title and interest in and to each Eligible Asset and to execute, deliver and
perform, and to enter into and consummate, all transactions contemplated by the
Agreements, and (ii) has duly authorized the execution, delivery and performance
of the Agreements.

            3. The execution, delivery and performance of the Agreements do not,
and will not, conflict with, or constitute a breach of or default under, any
applicable law, rule, order, decree of any court or regulation, the certificate
of incorporation or the bylaws of Seller, or any material instrument or
agreement to which Seller is a party or by which Seller, or any substantial
portion of its assets, is bound.

            4. No consent, approval, authorization or order of, or filing with,
any court or governmental agency, authority or body is required in connection
with the execution and delivery of the Agreements or the consummation of the
transactions contemplated by the Agreements.

            5. Seller is not an "investment company" or a company "controlled by
an investment company" within the meaning of the Investment Company Act of 1940,
as amended.

            The opinions set forth above are subject to the assumptions,
examinations, qualifications and limitations set forth above and the following
additional qualifications and limitations:

            A. This opinion is limited to the matters expressly stated herein
            and no opinion is implied or may be inferred beyond the matters
            expressly stated herein.

            B. This opinion does not cover compliance or noncompliance by Seller
            or by any other person or entity with federal or state tax,
            intellectual property, employee benefit, antitrust or securities
            laws (except for the opinion expressed in paragraph 5 relating to
            certain federal securities laws).

            C. This opinion is rendered as of the date hereof. I assume no
            responsibility to supplement or update the opinions herein expressed
            and disclaim any obligation to supplement or update this opinion if,
            after the date hereof, something comes to my attention or there are
            changes in the law or court decrees which could affect this opinion.


                                      D-2
<PAGE>

            D. If any document, instrument, record or paper referred to in the
            opinion set forth above is governed by the law of a jurisdiction
            other than the State of New York, I have for purposes of this
            opinion assumed that the law of such other jurisdiction was
            identical to the law of the State of New York.

            I am a member of the Bar of the State of New York, and the foregoing
opinions are limited to matters arising under the law of the State of New York,
the federal law of the United States of America and the General Corporation Law
of the State of Delaware.

            This letter is furnished by me solely for your benefit in connection
with the transactions referred to in the Agreements, and may not be relied upon
by any other party.


                                                  Very truly yours,


                                      D-3
<PAGE>

                                                                       EXHIBIT E


                  FORM OF LEGAL OPINION OF COUNSEL TO GUARANTOR

                               ____________, 1999


Continental Grain Company
277 Park Avenue
New York, New York 10172

            Re: Purchase and Sale Agreement

Ladies and Gentlemen:

            This opinion is being furnished to you in my capacity as Chief
Counsel of ContiFinancial Corporation ("Guarantor") in connection with the
Purchase and Sale Agreement dated as of May 26, 1999 (the "Purchase and Sale
Agreement") between Continental Grain Company ("Purchaser") and ContiSecurities
Asset Funding Corp. III ("Seller") and the Guarantee issued by Guarantor
pursuant thereto (the "Guarantee"). In rendering the opinion set forth below, I
have reviewed the originals or certified or conformed copies of the Purchase and
Sale Agreement and the Guarantee and originals or copies satisfactory to me of
all such corporate records, agreements, certificates, governmental orders,
permits and other documents as I have deemed relevant and necessary. Capitalized
terms used and not otherwise defined herein have the respective meanings
assigned to them in the Purchase and Sale Agreement.

            In rendering the opinion expressed below, I have, with your
permission and without any further investigation or verification, assumed (a)
the genuineness of all signatures (other than that of Guarantor), (b) the
authenticity of all documents submitted to me as originals, (c) the conformity
to originals of all documents submitted to me as copies and the authenticity of
the originals of such documents, (d) the legal capacity of natural persons, (e)
that the parties to the Purchase and Sale Agreement have the full power and
authority to execute and deliver the Purchase and Sale Agreement and the
Purchase and Sale Agreement is the legal, valid and binding obligation of each
such party, (f) that to the extent that certain standards of conduct may be
imposed as a matter of law on Purchaser as a condition to, or as a requirement
for enforceability of, the Purchase and Sale Agreement and the Guarantee
(including, without limitation, any requirement that such parties act
reasonably, in good faith, in a commercially reasonable manner or otherwise in
compliance with applicable law), such parties will comply with such standards of
conduct, whether or not any other conduct is permitted by the Purchase and Sale
Agreement or the Guarantee, and (g) the adequacy and accuracy of the public
records reviewed by me.


                                      E-1
<PAGE>

            Based upon and subject to the foregoing, I am of the opinion that:

            1. Guarantor is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.

            2. Guarantor has duly authorized the execution, delivery and
performance of the Guarantee and has full power and authority, corporate and
other, to enter into and perform its obligations under the Guarantee.

            3. The execution, delivery and performance of the Guarantee do not,
and will not, conflict with, or constitute a breach of or default under, any
applicable law, rule, order, decree of any court or any regulation, the
certificate of incorporation or the bylaws of Guarantor, or any material
instrument or agreement to which Guarantor is a party or by which Guarantor, or
any substantial portion of its assets, is bound.

            4. No consent, approval, authorization or order of, or filing with,
any court or governmental agency, authority or body is required in connection
with the execution and delivery of the Guarantee.

            The opinions set forth above are subject to the assumptions,
examinations, qualifications and limitations set forth above and the following
additional qualifications and limitations:

            A. This opinion is limited to the matters expressly stated herein
            and no opinion is implied or may be inferred beyond the matters
            expressly stated herein.

            B. This opinion does not cover compliance or noncompliance by
            Guarantor or by any other person or entity with federal or state
            tax, intellectual property, employee benefit, antitrust or
            securities laws.

            C. This opinion is rendered as of the date hereof. I assume no
            responsibility to supplement or update the opinions herein expressed
            and disclaim any obligation to supplement or update this opinion if,
            after the date hereof, something comes to my attention or there are
            changes in the law or court decrees which could affect this opinion.

            D. If any document, instrument, record or paper referred to in the
            opinion set forth above is governed by the law of a jurisdiction
            other than the State of New York, I have for purposes of this
            opinion assumed that the law of such other jurisdiction was
            identical to the law of the State of New York.

            I am a member of the Bar of the State of New York and the foregoing
opinions are limited to matters arising under the law of the State of New York,
the federal


                                      E-2
<PAGE>

law of the United States of America and the General Corporation Law of the
State of Delaware.

            This letter if furnished by me solely for your benefit in connection
with the transactions referred to in the Purchase and Sale Agreement, and may
not be relied upon by any other party.

                                               Very truly yours,


                                      E-3
<PAGE>

                                                                       EXHIBIT F

                        FORM OF REPURCHASE NOTIFICATION

Continental Grain Company
277 Park Avenue
New York, New York 10172

Ladies and Gentlemen:

            Pursuant to Section 4.6 of the Purchase and Sale Agreement (the
"Purchase Agreement"), dated as of May 26, 1999, between you ("Purchaser") and
ContiSecurities Asset Funding Corp. III ("Seller"), Seller hereby irrevocably
requests that Purchaser sell to Seller on _________, ____ [insert date]
Repurchase Assets with the following characteristics which Repurchase Assets
correspond to the corresponding Eligible Assets listed on the schedule attached
hereto:


Type of Eligible Assets:

Aggregate Principal Balance:

Average Principal Balance:

Minimum/Maximum Principal Balance:

Number of Loans (range):

Weighted Average Remaining Maturity:

Weighted Average CLTV:

Minimum/Maximum CLTV:

Weighted Average Coupon Rate:


                                      F-1
<PAGE>

Minimum/Maximum Coupon Rate:

Other characteristics (specify)

                                   CONTISECURITIES ASSET FUNDING CORP. III,
                                     as Seller


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


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


                                      F-2