Exhibit 10.157




                           ASSET PURCHASE AGREEMENT

                          Dated as of March 21, 1997

                                      Among

                      LITCHFIELD CAPITAL CORPORATION - 1996

                                  as Seller,

                        LITCHFIELD FINANCIAL CORPORATION

                                 as Servicer,

                        EAGLEFUNDING CAPITAL CORPORATION,

                                 as Purchaser

                                       and

                        THE FIRST NATIONAL BANK OF BOSTON

                                  as Deal Agent






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                                TABLE OF CONTENTS

Section                                                                  Page

ARTICLE I DEFINITIONS.....................................................1
SECTION 1.01.  Certain Defined Terms......................................1
SECTION 1.02.  Other Terms...............................................22
   SECTION 1.03.  Computation of Time Periods............................23

ARTICLE II AMOUNTS AND TERMS OF THE PURCHASE ............................23
    SECTION 2.01.  Facility .............................................23
    SECTION 2.02.  Making Purchases .....................................23
    SECTION 2.03.  Transfers of Interests in Purchased Assets............24
    SECTION 2.04.  Termination or Reduction of the Purchase Limit........24
    SECTION 2.05.  Selection of Purchase Periods.........................24
    SECTION 2.06.  Settlement Procedures.................................25
    SECTION 2.07.  Payments and Computations, Etc........................29
    SECTION 2.08.  Yield Protection .....................................29
    SECTION 2.09.  Increased Capital  ...................................30
    SECTION 2.10.  Grant of Security Interest ...........................31
    SECTION 2.11.  Taxes.................................................31
    SECTION 2.12.  Financing Option......................................32

ARTICLE III CONDITIONS OF PURCHASES......................................33
    SECTION 3.01.  Conditions Precedent to Initial Purchase..............33
    SECTION 3.02.  Conditions Precedent to All Purchases.................35
    SECTION 3.03.  Asset Documents.......................................36

ARTICLE IV REPRESENTATIONS AND WARRANTIES................................39
    SECTION 4.01.  Representations and Warranties of the Seller..........39
    SECTION 4.02.  Representations and Warranties of the Servicer........42
    SECTION 4.03.  Eligible Assets.......................................44

ARTICLE V GENERAL COVENANTS..............................................50
    SECTION 5.01.  Affirmative Covenants of the Seller...................50
    SECTION 5.02.  Reporting Requirements of the Seller..................54
    SECTION 5.03.  Negative Covenants of the Seller......................55
    SECTION 5.04.  Covenants of the Servicer.............................57

ARTICLE VI ADMINISTRATION AND COLLECTION.................................60
    SECTION 6.01.  Designation of Servicer...............................60
    SECTION 6.02.  Duties of the Servicer................................60
    SECTION 6.03.  Rights of the Deal Agent..............................64
    SECTION 6.04.  Responsibilities of the Seller and Initial Servicer...65
    SECTION 6.05.  Further Action Evidencing Purchases...................65
    SECTION 6.06.  Application of Payments...............................65
    SECTION 6.07.  Collateral Custodian..................................66

ARTICLE VII EVENTS OF TERMINATION........................................66
    SECTION 7.01.  Events of Termination.................................66

ARTICLE VIII THE DEAL AGENT..............................................69
    SECTION 8.01.  Authorization and Action..............................69
    SECTION 8.02.  Deal Agent's Reliance, Etc............................69
    SECTION 8.03.  Deal Agent and Affiliates.............................69
    SECTION 8.04.  Resifnation of the Deal Agent.........................70

ARTICLE IX INDEMNIFICATION; REPURCHASES..................................70
    SECTION 9.01.  Indemnities by the Seller.............................70
    SECTION 9.02.  Substitution and Repurchase of Assets.................72

ARTICLE X MISCELLANEOUS..................................................74
    SECTION 10.01.  Amendments, Etc......................................74
    SECTION 10.02.  Notices, Etc.........................................75
    SECTION 10.03.  No Waiver; Remedies..................................75
    SECTION 10.04.  Binding Effect; Assignability........................75
    SECTION 10.05.  GOVERNING LAW; WAIVER OF JURY TRIAL..................76
    SECTION 10.06.  Costs, Expenses and Taxes ...........................77
    SECTION 10.07.  No Proceedings.......................................78
    SECTION 10.08.  Set-Off..............................................78
    SECTION 10.09.  Execution in Counterparts; Serverability.............78

                                LIST OF EXHIBITS

EXHIBIT A         Description of Credit and Collection Policy and Minimum
Underwriting
                    Guidelines
EXHIBIT B         Form of Interest Rate Hedge Assignment(withInterest Rate Hedge
                  Assignment Acknowledgment attached)
EXHIBIT C         Form of Collection Account Agreement
EXHIBIT D         Form of Purchase Request
EXHIBIT E         Form of Asset Report
EXHIBIT F         List of Offices of Seller where Records Are Kept
EXHIBIT G         Deferred Purchase Price Certificate
Appendix A        Description of the Purchased Interests
Schedule I        Asset Schedule
Schedule II       Project Schedule



<PAGE>


                            ASSET PURCHASE AGREEMENT

      This ASSET PURCHASE  AGREEMENT dated as of March 21, 1997 among LITCHFIELD
CAPITAL  CORPORATION-1996,   a  Delaware  corporation,   as  Seller,  LITCHFIELD
FINANCIAL CORPORATION,  a Massachusetts corporation,  as Servicer,  EAGLEFUNDING
CAPITAL  CORPORATION,  as Purchaser,  and THE FIRST NATIONAL BANK OF BOSTON,  as
Deal Agent.

            PRELIMINARY STATEMENTS.

      (1) The Initial  Servicer is in the business of  purchasing  and providing
associated  services  with  respect  to loans and other  obligations  related to
timeshare intervals;

      (2) The Seller is a special  purpose  subsidiary  of the Initial  Servicer
established to purchase and otherwise acquire Assets and related property;

      (3) The Seller  wishes  from time to time to offer to sell,  transfer  and
assign the Assets and related property to the Purchaser;

      (4) The Purchaser will receive  certain  Collections  until its Capital is
reduced to zero and any Yield and other amounts due have been paid; and

      (5) Subject to the terms and  conditions  set forth herein,  the Purchaser
shall accept such offers to purchase  such Assets and related  property from the
Seller.

            NOW, THEREFORE, the parties hereto hereby agree as follows:

                                    ARTICLE I
                                   DEFINITIONS
      SECTION 1.01. Certain Defined Terms. As used in this Agreement (both above
and  elsewhere),  the following  terms shall have the following  meanings  (such
meanings to be equally  applicable  to both the singular and plural forms of the
terms defined):

      "Adjusted  Base Rate"  means,  on any date,  a per annum rate of  interest
equal to the Base Rate on such date.

      "Adjusted  Eurodollar Rate" means, with respect to any Purchase Period for
all Capital  allocated to such Purchase Period, an interest rate per annum equal
to the sum of the Eurodollar Rate with respect to such Purchase Period and 1.15%
for a Purchase  Period  after a CP  Disruption  Event or an event  described  in
clause  (e),  (g) or (j) of the  definition  of  Termination  Date has  occurred
provided that an Event of Termination has not occurred and otherwise 2.00%.

      "Administration  Agreement" means the Amended and Restated  Administration
Agreement  dated as of October 25,  1996  between  the  Purchaser  and The First
National Bank of Boston, as the same may be from time to time amended, restated,
supplemented or otherwise modified.

      "Adverse Claim" means a lien,  security interest,  charge,  encumbrance or
other right or claim of any Person other than Permitted Encumbrances.
      "Affected  Party"  means  the  Purchaser,  FNBB,  individually  and in its
capacity  as  Deal  Agent,  any  Liquidity   Provider  and  any  parent  company
controlling any of the foregoing.

      "Affiliate"  means, with respect to any Person,  any other Person directly
or indirectly  controlling,  controlled by, or under common  control with,  such
specified Person; provided,  however, that none of the Deal Agent, the Purchaser
or any Liquidity  Provider shall be deemed to be an Affiliate of the Seller. For
the  purposes  of this  definition,  "control"  when  used with  respect  to any
specified  Person means the power to direct the  management and policies of such
Person,  directly  or  indirectly,  whether  through  the  ownership  of  voting
securities,   by  contract,  or  otherwise;  and  the  terms  "controlling"  and
"controlled" have meanings correlative to the foregoing.

      "Aggregate  Fee Rate" means the sum of the per annum rates or  percentages
applicable  from time to time to calculate  each of the Servicer Fee  (including
the Collateral Custodian Fee), the Subservicer Fee, the Backup Servicer Fee, the
Program Fee, the Liquidity Fee, and the fees, if any, payable by the Seller with
respect to Interest Rate Hedges.

      "Aggregate   Outstanding  Balance"  means,  at  any  time,  the  aggregate
Outstanding Balance of all Purchased Assets that are Eligible Assets.

      "Aggregate  Purchase Price" means, at any time, the sum of the outstanding
Capital at such time and the Deferred Purchase Price at such time.

      "Agreement" means this Asset Purchase Agreement, as the same may from time
to time be amended, restated, supplemented or otherwise modified.

      "Alternative  Rate" means,  with  respect to any  Purchase  Period for all
Capital  allocated to such Purchase Period,  an interest rate per annum equal to
the  Adjusted  Eurodollar  Rate or the  Adjusted  Base Rate as the Seller  shall
select in accordance with the terms of this Agreement;  provided,  however, that
the "Alternative  Rate" for such Capital allocated to such Purchase Period shall
be the  Adjusted  Base Rate if (i) on or before  the first day of such  Purchase
Period,  the  Purchaser  shall have  notified  the Deal Agent that a  Eurodollar
Disruption  Event has  occurred,  (ii) such Fixed  Period is a period of 1 to 29
days or (iii) such Capital is less than $1,000,000.

      "Asset" means a Loan or an Installment Contract.

      "Asset  Documents  " means  the  documents  with  respect  to  each  Asset
described in Section 3.03.
      "Asset Purchase" means a purchase by the Purchaser of Purchased  Interests
from the Seller pursuant to Sections 2.01 and 2.02.

      "Asset Rate" means,  with  respect to any  Purchased  Asset at any time, a
rate of interest to be paid by the Obligor.

      "Asset  Report" means a report,  in  substantially  the form of Exhibit E,
furnished  by the  Servicer  to the Deal  Agent for the  Purchaser  pursuant  to
Section 2.06(a).
      "Asset Sale  Agreement"  means that  certain  Asset Sale and  Contribution
Agreement of even date herewith between the Initial Servicer and the Seller,  as
such agreement may be amended, supplemented or modified from time to time.
      "Asset Sale Assets" means all right,  title and interest of the Seller in,
to and  under the Asset  Sale  Agreement,  including,  without  limitation,  all
obligations due and to become due to the Seller from the Initial  Servicer under
or in  connection  therewith,  whether  as  Assets  or  fees,  expenses,  costs,
indemnities,  insurance  recoveries,  damages for breach or  otherwise,  and all
rights,  remedies,  powers,  privileges and claims of the Seller against Initial
Servicer under or with respect to the Asset Sale Agreement.

      "Asset  Schedule"  means the list of Purchased  Assets  attached hereto as
Schedule  I, as  modified  from  time to time,  which  list  shall set forth the
following  information  with  respect  to each  such  Purchased  Asset as of the
Cut-off  Date:  (i) loan  number  used by the  Initial  Servicer,  (ii)  name of
Obligor,  (iii) Project number, (iv) current interest rate per annum and, in the
case of an adjustable  rate,  index,  margin and periodic and lifetime floor and
cap, (v) original principal  balance,  (vi) Outstanding  Balance,  (vii) current
monthly  payment amount,  (viii) date of origination to the extent  available in
the servicing data base, (ix) maturity date, (x) original term (in months), (xi)
timeshare  estate  unit(s),  week(s) or number(s),  and (xii) any Exception with
respect to such  Purchased  Asset and the  aggregate  amount of the same type of
Exception with respect to all Purchased Assets.

      "Backup  Servicer"  means  The CIT  Group/Sales  Financing,  Inc.,  in its
capacity as Backup Servicer for the Servicer and the Subservicer pursuant to the
Backup Servicing Agreement and any successors thereto.

      "Backup Servicer Fee" has the meaning in the Backup Servicing Agreement.

      "Backup Servicing Agreement" means the Backup Servicing  Agreement,  dated
as of March 21, 1997 among the Backup  Servicer,  the Initial  Servicer  and the
Purchaser,  as the same may be  amended,  restated,  supplemented  or  otherwise
modified from time to time.

      "Bankruptcy  Code"  means  Title 11 of the United  States  Code (11 U.S.C.
Section 101 et seq.), as amended from time to time, or any successor statute.

      "Base Rate" means,  on any date, a fluctuating  rate of interest per annum
equal to the higher of (i) the per annum rate of interest announced from time to
time by FNBB at its head office in Boston, Massachusetts as its "base rate", and
(ii) one-half of one percent per annum above the Federal Funds Rate.

      "Benefit Plan" means,  with respect to any Person,  a defined benefit plan
as  defined in  Section  3(35) of ERISA  (other  than a  Multiemployer  Plan) in
respect of which such Person or any ERISA Affiliate of such Person is, or at any
time within the immediately preceding six years was, an "employer" as defined in
Section 3(5) of ERISA.

      "Breakage  Indemnity"  means,  for any Purchase Period  (computed  without
regard  to the  maturity  of a  Purchase  Period  occurring  as a result  of the
occurrence of the Termination Date) during which Capital is reduced  (determined
without  regard  to any  Purchases),  the  amount,  if  any,  by  which  (i) the
additional Yield (calculated without taking into account any Breakage Indemnity)
which would have accrued on the  reductions of such Capital during such Purchase
Period (as so computed) if such  reductions had remained as Capital exceeds (ii)
the  income,  if any,  received by the  Purchaser  or the  applicable  Liquidity
Provider from the  investment by such Person of the proceeds of such  reductions
of Capital (which investment the Purchaser and the Liquidity  Providers will use
reasonable   efforts  to  make  under  the  then   applicable   conditions   and
circumstances).

      "Business  Day" means a day of the year other than a Saturday  or a Sunday
on which (i) banks are  authorized  or  required to be open in New York City and
Boston,  Massachusetts and (ii) if the term "Business Day" is used in connection
with the Adjusted Eurodollar Rate, dealings in dollar deposits are carried on in
the London interbank market.

      "Capital" means the sum of the amounts paid to the Seller for each Capital
Purchase  pursuant to Section  2.02,  reduced  from time to time by  Collections
received and  distributed  on account of such  Capital  pursuant to Section 2.06
below. If the Purchaser, any Liquidity Provider or the Deal Agent is required by
law to repay (as a preference or otherwise) to the Seller, the Initial Servicer,
an Obligor,  a trustee for the Seller,  the Initial  Servicer or any Obligor,  a
court or any other  Person any amount  which  previously  caused a reduction  in
Capital,  and does so repay such amount, then Capital shall be reinstated by the
amount of such  repayment and the Seller will  indemnify and hold the Purchaser,
such  Liquidity  Provider  or the Deal  Agent  harmless  for the  amount of such
repayment,  interest thereon required to be paid in connection therewith and all
losses,  liabilities,  costs and expenses  related  thereto  (including  but not
limited to reasonable attorneys' fees and expenses).

      "Capital Purchase" means any increase in the aggregate outstanding Capital
hereunder.

      "Collateral  Custodian"  means the Person  appointed  from time to time as
Collateral Custodian by the Deal Agent pursuant to Section 6.07.

      "Collateral Custodian Fee" means that portion of the Servicer Fee which is
allocated for the account of the Collateral  Custodian as  compensation  for its
duties hereunder, as the Seller, the Servicer, the Deal Agent and the Collateral
Custodian may from time to time agree.

      "Collection  Account"  means  the  account  maintained  at the  Collection
Account Bank into which Collections of Purchased Assets are deposited  following
withdrawal of such Collections from the Lockbox Account.

      "Collection  Account  Agreement"  means an agreement  substantially in the
form of  Exhibit  C among  the  Seller,  the  Servicer,  the Deal  Agent and the
Collection Account Bank which agreement sets forth the rights of the Deal Agent,
the Seller and the Servicer with respect to the  disposition  and  allocation of
the Collections deposited into the Collection Account.

      "Collection Account Bank" means The First National Bank of Boston, and any
successor.

      "Collection  Date" means the date following the Termination  Date on which
the aggregate outstanding Capital has been reduced to zero and the Purchaser and
the Deal Agent have  received  all Yield and other  amounts  payable  under this
Agreement  or any other  document,  instrument  or agreement  executed  pursuant
hereto.
      "Collections"  means,  with  respect  to any  Purchased  Asset,  all  cash
collections  and other cash proceeds  including  Late Charges of such  Purchased
Asset,  all cash  proceeds of Related  Security  with respect to such  Purchased
Asset,  and any amounts in respect of such Purchased Asset received or deemed to
have been received  pursuant to Section 9.02, and shall also include any amounts
earned as a result of the investment of the  Collections  held by the Deal Agent
pursuant to Section 2.06.

      "Contract" means the original agreement, as modified or supplemented, with
respect to any Installment Contract.

      "Coverage  Shortfall"  means  the  occurrence  of the Event of Termination
described in Section 7.01(j).

      "CP Disruption  Event" means the inability of the Purchaser,  at any time,
whether as a result of a  prohibition,  a contractual  restriction  or any other
event or  circumstance  whatsoever,  to raise funds  through the issuance of its
commercial  paper notes  (whether  or not  constituting  commercial  paper notes
issued to fund  Purchases  hereunder)  in the  United  States  commercial  paper
market.

      "CP Rate"  means,  with  respect to any  Purchase  Period for all  Capital
allocated to such Period,  the rate  equivalent to the rate for (or if more than
one rate, the weighted  average or the rates) at which commercial paper notes of
the Purchaser  having a term equal to such  Purchase  Period and to be issued to
fund the applicable Purchase by the Purchaser may be sold by any placement agent
or commercial  paper dealer selected by such  Purchaser,  as agreed between each
such agent or dealer and such  Purchaser  and  notified by the  Purchaser to the
Deal Agent and the Servicer; provided, however, if the rate (or rates) as agreed
between any such agent or dealer and the  Purchaser  with regard to any Purchase
Period for the applicable  Purchase is a discount rate (or rates), the "CP Rate"
for such  Purchase  Period  shall be the rate  (or if more  than one  rate,  the
weighted  average of the rates) resulting from converting such discount rate (or
rates) to an interest bearing equivalent rate per annum.

      "Credit and Collection Policy" means those credit and collection  policies
and  practices  relating  to the Assets  described  in Exhibit A, as modified in
compliance with Section 5.03(c).

      "Cutoff  Date" means the  beginning  of business on February 28, 1997 with
respect to the Initial  Purchase Date and  thereafter on the third  Business Day
prior to the Purchase Date with respect to a Purchased Asset.

      "DCR" means Duff & Phelps Credit Rating Co. and any successor thereto.

      "Deal  Agent"  means  FNBB, in  its  capacity  as  agent hereunder for the
Purchaser.

      "Dealer Fee" means a fee equal to .05% per annum of the  principal  amount
of the commercial paper on each commercial paper maturity date.

      "Default  Ratio"  means,  for any month,  the product of 12 and a fraction
(expressed as a percentage) determined as of the last day of such month equal to
(i) the  aggregate  Outstanding  Balance of all  Purchased  Assets  which became
Defaulted  Assets during such month  divided by (ii) the  aggregate  Outstanding
Balance of all Purchased  Assets which were Eligible  Assets  outstanding on the
last day of the fourth month next preceding such month.

      "Defaulted  Asset" means an Asset at any time: (i) as to which any payment
is  delinquent  for 120 days or more from the original due date for such payment
(regardless of whether such Asset becomes current at some future date),  (ii) as
to which  foreclosure  proceedings  have been initiated and are  continuing,  or
(iii)  which,  consistent  with the Credit and  Collection  Policy,  has been or
should be specifically reserved against,  classified as uncollectible or charged
off;  provided,  that  neither the  Servicer nor the Seller shall be required to
include an Asset which becomes a Defaulted  Asset during a given  calendar month
as a "Defaulted  Asset" for the purposes of this Agreement  until the earlier of
(x) the date on which the Asset  Report in respect of such month is  required to
be  delivered  pursuant to Section  2.06(a) and (y) the date on which such Asset
Report is actually delivered to the Deal Agent.

      "Deferred Purchase Price" means
      (a)  at  any  time  prior  to the  Collection Date, an amount equal to the
      greater of:

             (i)  the Minimum Overcollateralization Amount,

             (ii)  the  product of 20.0%  and  an amount  equal to the Aggregate
      Outstanding Balance at such time; or

            (iii)  the product  of  25.0%  and an amount equal to the Capital at
      such time; and

      (b)  on  and after th  Collection  Date, an  amount equal to the Aggregate
Outstanding Balance.

      "Delinquency Ratio" means, for any month, the product of 12 and a fraction
(expressed as a percentage) determined as of the last day of such month equal to
(i) the  aggregate  Outstanding  Balance of all  Purchased  Assets  which became
Delinquent  Assets during such month  divided by (ii) the aggregate  Outstanding
Balance of all Purchased  Assets which were Eligible  Assets  outstanding on the
last day of the third month next preceding such month.

      "Delinquent  Asset"  means an Asset that is not a Defaulted  Asset and (i)
any payment  remains unpaid for at least 90 days and less than 120 days from the
original due date for such payment or (ii) which, consistent with the Credit and
Collection  Policy,  has been or should be classified as  delinquent;  provided,
that  neither the  Servicer nor the Seller shall be required to include an Asset
which becomes a Delinquent  Asset during a given calendar month as a "Delinquent
Asset" for the purposes of this  Agreement  until the earlier of (x) the date on
which the Asset  Report in  respect of such month is  required  to be  delivered
pursuant  to Section  2.06(a)  and (y) the date on which  such  Asset  Report is
actually delivered to the Deal Agent.

      "Developer"  means  the  developer  of a  Project,  or the  seller  of any
Purchased Assets to the Initial Servicer, or its successors and assigns.

      "Developer  Agreement" means an agreement between the Initial Servicer and
a Developer  pursuant  to which the Initial  Servicer  has  purchased  Purchased
Assets.

      "DOL"  means  the United  States  Departmen  of  Labor  and  any successor
department or agency.

      "Early  Stage  Delinquency   Ratio"  means,  for  any  month,  a  fraction
(expressed as a percentage) determined as of the last day of such month equal to
(i) the aggregate  Outstanding  Balance of all Purchased  Assets which are Early
Stage  Delinquent  Assets  on the last  day of such  month  divided  by (ii) the
aggregate Outstanding Balance of all Purchased Assets which were Eligible Assets
outstanding on the last day of such month.
      "Early  Stage  Delinquent  Asset"  means an Asset that is not a  Defaulted
Asset and any payment  remains unpaid for at least 30 days and less than 60 days
from the original due date for such payment; provided, that neither the Servicer
nor the Seller  shall be  required  to include an Asset  which  becomes an Early
Stage  Delinquent  Asset  during  a given  calendar  month  as an  "Early  Stage
Delinquent  Asset" for the purposes of this  Agreement  until the earlier of (x)
the date on which the Asset  Report in respect of such month is  required  to be
delivered  pursuant  to  Section  2.06(a)  and (y) the date on which  such Asset
Report is actually delivered to the Deal Agent.

      "EFCC" means EagleFunding Capital Corporation, a Delaware corporation.

      "Eligible  Asset"  means,  at any time,  an Asset which  complies with the
provisions of Section 4.03.

      "ERISA" means the U.S. Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.

      "ERISA Affiliate"  means, with respect to any Person,  any (i) corporation
which is a member  of the same  controlled  group of  corporations  (within  the
meaning of Section 414(b) of the IRC) as such Person;  (ii) partnership or other
trade or business (whether or not incorporated) under common control (within the
meaning of Section  414(c) of the IRC) with such  Person or (iii)  member of the
same affiliated  service group (within the meaning of Section 414(m) of the IRC)
as such Person,  (iv) any  corporation  described in clause (i) above or (v) any
partnership or other trade or business described in clause (ii) above.

      "Eurocurrency  Liabilities"  has the  meaning  assigned  to  that  term in
Regulation  D of the Board of  Governors of the Federal  Reserve  System,  as in
effect from time to time.

      "Eurodollar Disruption Event" means, with respect to all Capital allocated
to any Purchase Period, any of the following: (i) a determination by a Purchaser
that it would be contrary  to law or to the  directive  of any  central  bank or
other governmental  authority (whether or not having the force of law) to obtain
United States dollars in the London  interbank  market to make, fund or maintain
any Purchase for such  Purchase  Period,  (ii) the  inability of FNBB to furnish
timely  information  for purposes of determining the Adjusted  Eurodollar  Rate,
(iii) a  determination  by a Purchaser that the rate at which deposits of United
States  dollars  are being  offered  in the  London  interbank  market  does not
accurately reflect the cost to such Purchaser of making,  funding or maintaining
any Purchase for such Purchase  Period or (iv) the inability of the Purchaser to
obtain United States  dollars in the London  interbank  market to make,  fund or
maintain any Purchase for such Purchase Period.

      "Eurodollar  Rate"  means,  with  respect to any  Purchase  Period for all
Capital  allocated to such Purchase Period,  an interest rate per annum equal to
the quotient,  stated as a percentage,  of (i) the per annum rate  determined by
the Deal Agent at which United States dollar  deposits for such Purchase  Period
are offered by FNBB based on  information  presented on Telerate Page 3750 as of
11:00 a.m. London time on the second Business Day prior to the first day of such
Purchase  Period,  divided by (ii) a number  equal to 1.00 minus the  Eurodollar
Reserve Percentage, if applicable.

      "Eurodollar  Reserve  Percentage"  means,  for any day with  respect  to a
Purchase Period to which Capital has been allocated hereunder, means the maximum
rate  (expressed  as a decimal)  at which any lender  subject  thereto  would be
required to maintain  reserves  under  Regulation D of the Board of Governors of
the Federal Reserve System (or any successor or similar regulations  relating to
such reserve requirements) against Eurocurrency Liabilities, if such liabilities
were  outstanding.   The  Eurodollar   Reserve   Percentage  shall  be  adjusted
automatically  on and as of the effective date of any change in the maximum rate
described above.

      "Event   of   Subservicer  Termination"   means  the  termination  of  the
Subservicer under the Subservicing Agreement.

      "Event  of  Termination" has the meaning  assigned to that term in Section
7.01.

      "Exception"  means any  exception to the  criteria  for an Eligible  Asset
permitted by this Agreement provided that the exceptions with respect to all the
Purchased Assets do not exceed a specified percentage of the Pool.

      "Facility  Documents" shall mean collectively,  this Agreement,  the Asset
Sale Agreement,  the Subservicing Agreement, the Backup Servicing Agreement, the
Funds Designation  Agreement,  the Project Title Assignments,  the Interest Rate
Hedges, the Liquidity Agreements,  the Security Agreements, the Fee Letter, each
Liquidity  Fee  Letter  and all  other  agreements,  documents  and  instruments
executed and delivered in connection herewith or therewith, in each case, as the
same may be amended, supplemented or otherwise modified from time to time.

      "Federal Funds Rate" means,  for any day, a fluctuating  interest rate per
annum equal to the  weighted  average of the rates on  overnight  Federal  funds
transactions  with  members of the Federal  Reserve  System  arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next  preceding  Business Day) by the Federal  Reserve Bank of New York,
or, if such rate is not so  published  for any day which is a Business  Day, the
average of the  quotations for such day for such  transactions  received by FNBB
from three Federal funds brokers of recognized standing selected by it.

      "Fee  Interval"  means an  undivided  fractional  fee title  ownership  or
substantially equivalent leasehold interest in a timeshare estate, together with
a periodic right to occupancy of such timeshare estate.

      "Fee Letter"  means the fee letter of even date  herewith,  among the Deal
Agent,  the  Purchaser  and the  Seller,  as the same  may from  time to time be
amended, restated, supplemented or otherwise modified.

      "Financing Asset" means a Purchased Asset with respect to which the Seller
has elected the Financing Option.

      "Financing  Option"  means  the  election  by  the  Seller  to  treat  the
assignment of a Purchased  Asset as a pledge securing a loan by the Purchaser to
the Seller.

      "FNBB"  means  The First  National  Bank of  Boston,  a  national  banking
association, and any successor.

      "FNBB Interest Rate Hedges" means all Interest Rate Hedges entered into by
the Seller with FNBB, as counterparty.

      "Foreclosure Property" means any Property acquired by the Purchaser or its
nominee through foreclosure, deed in lieu of foreclosure or otherwise.

      "Funds Designation Agreement" means the Funds Designation Agreement, dated
as of March 21,  1997,  among the Lockbox  Bank,  Bank One  Arizona,  N.A.,  the
Initial Servicer, the Purchaser, the Seller and the Subservicer, as the same may
be amended, supplemented or otherwise modified from time to time.

      "Guarantor"  means any partial or full  guarantor of any  Purchased  Asset
under any Developer Agreement.

      "Indebtedness"  of any Person  means (i)  indebtedness  of such Person for
borrowed money, (ii) obligations of such Person evidenced by bonds,  debentures,
notes or other similar instruments,  (iii) obligations of such Person to pay the
deferred purchase price of property or services, (iv) obligations of such Person
as lessee under leases  which shall have been or should be, in  accordance  with
generally  accepted  accounting  principles,  recorded  as capital  leases,  (v)
obligations secured by any lien or other charge upon property or Assets owned by
such  Person,  even though such Person has not assumed or become  liable for the
payment of such obligations,  (vi) obligations of such Person in connection with
any letter of credit issued for the account of such Person and (vii) obligations
of  such  Person  under  direct  or  indirect  guaranties  in  respect  of,  and
obligations  (contingent  or  otherwise)  to purchase or otherwise  acquire,  or
otherwise  to assure a creditor  against  loss in respect  of,  indebtedness  or
obligations  of others of the kinds  referred  to in clauses  (i)  through  (vi)
above.

      "Initial Liquidity  Agreement" means the Liquidity  Agreement of even date
herewith,  entered into by the Purchaser,  the Liquidity Providers, and FNBB, in
its capacity as liquidity agent.

      "Initial  Purchase  Date" means the date the first Asset  Purchase is made
pursuant to this Agreement.

      "Initial   Servicer"  means   Litchfield  Financial  Corporation  and  its
successors.


      "Initial  Servicer Default or Change" means (i) the Initial Servicer shall
fail to pay any  principal or premium or interest on any  Indebtedness  having a
principal  amount of $500,000 or greater,  when the same becomes due and payable
(whether by scheduled maturity,  required  prepayment,  acceleration,  demand or
otherwise) and such failure shall continue after the applicable grace period, if
any, specified in the agreement or instrument relating to such Indebtedness;  or
any other  default  under  any  agreement  or  instrument  relating  to any such
Indebtedness of the Initial  Servicer or any other event,  shall occur and shall
continue after the applicable grace period, if any,  specified in such agreement
or  instrument  if the  effect of such  default  or event is to  accelerate  the
maturity of such Indebtedness;  or any such Indebtedness shall be declared to be
due and payable or required to be prepaid  (other than by a regularly  scheduled
required  prepayment) prior to the stated maturity thereof; or (ii) the ratio of
total  Indebtedness  to tangible net worth of the Initial  Servicer shall exceed
4.00:1.00;  or (iii) the Initial  Servicer  shall fail to maintain a minimum net
worth of $35,000,000  as increased by 50% of retained  earnings for each quarter
ending after December 31, 1996, measured  quarterly,  without any adjustment for
losses incurred in any quarter.

      "Installment  Contract" means an installment  sale contract which provides
for  periodic  occupancy  of a  timeshare  estate  and for  conveyance  of a Fee
Interval or other  Property  acceptable  to the  Purchaser  upon  payment of the
installments.

      "Interest Rate Hedges" means all interest rate exchange, collar, cap, swap
or similar  agreements  entered  into by the Seller in  connection  herewith  to
provide  protection  to, or minimize the impact upon,  the Seller of  increasing
Yield Rates .

      "Interest Rate Hedge  Assignment"  means an assignment of an Interest Rate
Hedge in substantially the form of Exhibit B, made by the Seller in favor of the
Deal Agent.

      "Interest Rate Hedge Assignment Acknowledgment" means an acknowledgment in
substantially  the form of Exhibit B executed by a  counterparty  to an Interest
Rate Hedge in favor of the Deal Agent.

      "Interest  Rate Hedge Test" means a test  calculated as of any  Settlement
Date which  requires  that as of at least one day  during the period  commencing
with the last  Business Day of the  preceding  calendar  month and including the
next four  Business  Days (i) the  weighted  average  Asset Rate of the Eligible
Assets  with a fixed  Asset Rate as of the last  Business  Day of the  preceding
calendar  month  exceeds  (ii) the sum of (x) a fixed rate five year bullet swap
meeting the terms of Section  5.01(k)  hereof in a notional  amount  required by
such Section 5.01(k), (y) the Aggregate Fee Rate and (z) three percent per annum
(3%).

      "IRC" means the  Internal  Revenue  Code of 1986,  as amended from time to
time, and any successor statute.

      "IRS" means the Internal  Revenue Service of the United States of America.

      "Late  Charges"  means  amounts  due under an Asset as fees or charges for
late payments.

      "Liquidity  Agreements" means any one or more loan or purchase  agreements
styled as "liquidity loan agreements,"  "liquidity purchase agreements" or other
similar  agreements,  entered into by the  Purchaser  and one or more  financial
institutions at any time from and after the Initial  Purchase Date,  pursuant to
which the Purchaser may from time to time make  borrowings  from such  financial
institutions secured by all or part of the Purchaser's right, title and interest
in, to and under the Purchased  Interests  arising  hereunder,  or sales to such
financial  institutions  of the  Purchaser's  right,  title and interest in, and
under the Purchased  Interests  arising  hereunder,  as such agreements may from
time to time be amended, restated, supplemented or otherwise modified.

      "Liquidity  Fee" means a fee payable  monthly in arrears to the Deal Agent
for the  account of each  Liquidity  Provider,  equal to the  product of (i) the
average daily  aggregate  amount of the liquidity  commitment of such  Liquidity
Provider under the  applicable  Liquidity  Agreement  during the month then most
recently  concluded,  and (ii) the  relevant  per  annum  rate set  forth in the
applicable Liquidity Fee Letter.

      "Liquidity Fee Letter" means, with respect to a Liquidity Agreement, a fee
letter making reference to such Liquidity Agreement and entered into on or about
the date of such Liquidity  Agreement  among the  Purchaser,  the Seller and the
relevant  Liquidity  Provider  (or  an  agent  for a  group  of  such  Liquidity
Providers,  as the case may be),  as the same may from time to time be  amended,
restated, supplemented or otherwise modified.

      "Liquidity Provider" means any of the financial  institutions from time to
time party to any Liquidity Agreement in a capacity as a liquidity lender to the
Purchaser thereunder.

      "Loan" means a loan evidenced by a Note and secured by a Mortgage on a Fee
Interval or secured by other Property acceptable to the Purchaser.

      "Lockbox Account" means account number 0411-8583 (or a replacement account
therefor)  maintained  at the  Lockbox  Bank  pursuant to the terms of the Funds
Designation  Agreement,  for the purpose of receiving  Collections and providing
for (among other things) the  remittance of such  Collections  to the Collection
Account.

      "Lockbox  Bank" means Banc One  Operations  Services  Corporation,  in its
capacity as lockbox bank under the Funds Designation Agreement and any successor
lockbox bank under the Funds Designation Agreement.

      "Manager" means a manager of a Project.

      "Minimum Overcollateralization Amount" means $1,000,000.

      "Minimum   Underwriting   Guidelines"   means  the  Minimum   Underwriting
Guidelines set forth in Exhibit A.

      "Moody's" means Moody's Investors Service, Inc. and its successors.

      "Mortgage" means the original mortgage,  deed of trust or other instrument
creating a first lien on the Property securing a Loan.

      "Multiemployer  Plan" means,  with respect to any Person, a "multiemployer
plan" as  defined  in  Section  4001(a)(3)  of ERISA  which is,  or  within  the
immediately preceding six (6) years was, contributed to by either such Person or
any ERISA Affiliate of such Person.
      "Note" means the original note or other instrument of indebtedness 
evidencing a loan.

      "Obligor" means a person obligated to make payments on a Purchased Asset.

      "Obligor  Filing   Requirement"  means,  with  respect  to  any  Purchased
Interest,  that the Seller has caused all mortgages and assignments of mortgages
to be recorded,  and all UCC financing statements,  continuation  statements and
assignments to be filed, in the appropriate jurisdictions,  against the Obligor,
so that,  the Purchaser  would  reasonably be expected to have a first  priority
perfected security interest in the Purchased Asset.

      "Outstanding Balance"  means,  with respect  to any Asset, the outstanding
principal amount.

      "Permitted Encumbrance" means any of the following:

      (a)  liens, charges or other encumbrances for taxes and assessments  which
 are not yet due and payable;

      (b) liens,  charges or other encumbrances or priority claims incidental to
the conduct of business or the  ownership of  properties  and Assets  (including
mechanics',  carriers',  repairers',  warehousemen's  and  attorneys'  liens and
statutory  landlords' liens) and deposits,  pledges or liens to secure statutory
obligations,  surety  or  appeal  bonds or other  liens of like  general  nature
incurred in the  ordinary  course of  business  and not in  connection  with the
borrowing of money, provided in each case, the obligation secured is not overdue
or, if  overdue,  is being  contested  in good faith by  appropriate  actions or
proceedings; and

      (c) liens, charges or encumbrances in favor of the Purchaser,  or the Deal
Agent or liens,  charges  or  encumbrances  in favor of any  Liquidity  Provider
created by any Liquidity Agreement.

      "Permitted Investments" means:

      (a) securities  issued or directly and fully  guaranteed or insured by the
United  States  government  or any  agency  or  instrumentality  thereof  having
maturities of no more than 90 days from the date of acquisition;

      (b) time deposits and certificates of deposit having maturities of no more
than 90 days  from the date of  acquisition,  maintained  with or  issued by any
commercial bank having capital and surplus in excess of $500,000,000  and having
a short-term rating of not less than P-1 or the equivalent  thereof from Moody's
and D-1 or the  equivalent  thereof  from DCR (if rated by DCR) and a short-term
rating from S&P which is at least as high as the rating of the commercial  paper
notes issued by EFCC (if rated by S&P);

      (c)  repurchase   obligations  for  underlying  securities  of  the  types
described  in clauses (a) or (b) above with a term of not more than ten days and
maturing no later than 90 days after the date of acquisition; and
      (d) commercial paper maturing within 90 days after the date of acquisition
and having a rating of not less than P-1 or the equivalent  thereof from Moody's
and D-1 or the  equivalent  thereof from DCR (if rated by DCR) and a rating from
S&P which is at least as high as the rating of the commercial paper notes issued
by EFCC (if rated by S&P).

      "Person"  means  an  individual,  partnership,  corporation  (including  a
business  trust),  joint  stock  company,   limited  liability  company,  trust,
unincorporated  association,   joint  venture,  government  (or  any  agency  or
political subdivision thereof) or other entity.

      "Plan" means, with respect to any Person, an employee benefit plan defined
in Section 3(3) of ERISA in respect of which such Person or any ERISA  Affiliate
of such  Person  is, or within  the  immediately  preceding  six years  was,  an
"employer" as defined in Section 3(5) of ERISA.

      "Pool" means the pool of Purchased Assets including any Financing Assets.

      "Post Office Box" means, with respect to the Lockbox Account,  29352, or a
replacement  post  office box  agreed to by the Deal  Agent,  to which  Obligors
remitting  payments  relating  to Assets by mail are  instructed  to direct such
payments for deposit into the Lockbox Account.

      "Program  Fee" means a fee,  payable  monthly in arrears to the Deal Agent
for the account of the Purchaser,  equal to the product of (i) the average daily
amount of outstanding Capital during the month then most recently concluded, and
(ii) the relevant per annum rate set forth in the Fee Letter.

      "Project"  means  the  land,  buildings  and  appurtenant  rights  of each
condominium or other project set forth on the Project Schedule,  as created by a
declaration of condominium or similar document recorded in the public records of
the recording office set forth on such schedule.

      "Project  Association" means the condominium  association or other form of
organization with respect to each Project, as set forth on the Project Schedule.

      "Project  Schedule" means the list of Projects attached hereto as Schedule
II, as  modified  from time to time,  which list  shall set forth the  following
information  with respect to each Project:  (i) each  Project,  (ii) whether the
Purchased Assets are Loans or Installment Contracts,  (iii) the Record Owner and
the Project Title Agreement with respect to any Installment  Contract,  (iv) the
Project Association,  (v) the Developer,  (vi) the Manager,  (vi) the Guarantor,
and (vii) the Seller's  good faith  estimate of the  percentage of the timeshare
intervals which have been sold to a person who is not the Developer, the Manager
or the Guarantor or an Affiliate of any of the foregoing.

      "Project Title Agreement" means with respect to an Installment  Contract a
trust,  escrow,  nominee or other agreement with respect to holding title to the
Property for the Project.

      "Project Title  Assignment" means (i) an assignment of the interest of the
Initial  Servicer or any of its Affiliates with respect to the Property  subject
to any Project  Title  Agreement  and (ii) the  acknowledgment  by the  trustee,
escrow  agent,  nominee or other Person as  applicable,  as the same may be from
time to time amended, supplemented or modified.

      "Property" means the timeshare estate at a Project which secures a Loan or
which will be conveyed pursuant to an Installment Contract.

      "Purchase" means an Asset Purchase or a Capital Purchase, as applicable.

      "Purchase Date" means,  with respect to any Asset, the date of the initial
Purchase thereof hereunder.

      "Purchase  Limit"  means at any time  $25,000,000,  as such  amount may be
reduced  pursuant to Section  2.04.  Notwithstanding  anything in the  foregoing
sentence to the contrary,  at all times on and after the  Termination  Date, the
"Purchase Limit" shall mean the aggregate outstanding Capital at such time.

      "Purchase  Period"  for any  outstanding  Capital  means  (i) if  Yield in
respect of all or any part  thereof is computed by  reference  to the CP Rate, a
period  of 1 to and  including  31 days,  (ii) if Yield in  respect  thereof  is
computed by reference to the Adjusted  Eurodollar  Rate, a period of one, two or
three  months and (iii) if Yield in respect  thereof is computed at the Adjusted
Base Rate, a period of 1 to and  including 31 days,  in each case, as determined
pursuant to Section 2.05.

      "Purchase  Request" means a written request,  in substantially the form of
Exhibit D, delivered by the Seller to the Deal Agent for the Purchaser,  and (i)
requesting an Asset Purchase or a Capital Purchase pursuant to Sections 2.01 and
2.02, or (ii)  identifying  Assets for  substitution  in accordance with Section
9.02.

      "Purchased  Asset" means any Asset purchased  pursuant to Section 2.01 and
Section  2.02;  provided,  however,  that  with  respect  to any  Asset  that is
repurchased or substituted for by the Seller pursuant to Section 9.02, following
the Deal Agent's receipt of the repurchase  price or substituted  Asset for such
Asset, the term "Purchased  Asset" shall not include the Asset so repurchased or
substituted for.

      "Purchased  Interests" means, at any time, all then outstanding  Purchased
Assets,  Related Security with respect to such Purchased Assets,  payments owing
to the Seller or the Deal  Agent (as  applicable)  under  Interest  Rate  Hedges
covering  Purchased  Assets and Collections  with respect to, and other proceeds
of, such Purchased Assets, including,  without limitation,  all Collections of a
Purchased Asset relating to payments  received at any time following the Cut-off
Date.

      "Purchaser" means EFCC, and any of its successors or permitted assignees.

      "Purchaser Filing Requirement" means, with respect to any Purchased Asset,
that the Seller  shall  have  filed all  appropriate  UCC  financing  statements
executed by the Initial  Servicer or the Seller (Form  UCC-1) in all  applicable
jurisdictions,  so that,  if a Purchase  is a  financing,  the  Purchaser  would
reasonably be expected to have a first priority  perfected  security interest in
the Purchased Asset.

      "Rating Agency" means each of S&P, Moody's and DCR.

      "Record Owner"  means  the  holder of title to any Property subject to any
Installment Contract.

      "Records" means all Asset Documents and other documents, books and records
(including without limitation,  computer programs, tapes, discs and punch cards)
maintained by Seller with respect to Assets and the related Obligors.

      "Related Security" means with respect to any Asset:

      (a)  all security  interests or  liens and  property  subject thereto from
      time to time purporting to secure payment of the Asset;

      (b) the  blanket  assignment  to the Deal  Agent,  for the  benefit of the
      Purchaser,  of all  Mortgages and UCC  financing  statements  covering any
      collateral securing payment of the Asset;

      (c) all guarantees, indemnities,  warranties, letters of credit, insurance
      policies and proceeds and premium refunds thereof and other  agreements or
      arrangements  of  whatever  character  from  time  to time  supporting  or
      securing payment of the Asset;

      (d)  all Records;

      (e) all  Collections  and  other  proceeds  of the  foregoing,  including,
      without  limitation,  all  insurance  and  condemnation  proceeds  and all
      security deposits related to the Purchased Assets; and

      (f) all rights with respect to the  Purchased  Assets under any  Developer
      Agreement  pursuant to which the Initial  Servicer may seek  reimbursement
      from the Developer for a defaulted Asset.

      "S&P" means Standard & Poor's Ratings Group and its successors.

      "Scheduled Termination Date" means March 21, 2000.

      "Security  Agreements"  means  any  one or  more  agreements  styled  as a
"security agreement" or other similar agreements, made by the Purchaser in favor
of a collateral agent for the benefit of one or more Liquidity  Providers and/or
the holders of the commercial paper notes of EFCC,  evidencing the grant by EFCC
of a security interest in and to its interests in the Purchased Assets and under
this Agreement in order to secure any obligations of EFCC to any such Persons.

      "Seller"   means   Litchfield   Capital   Corporation-1996,   a   Delaware
corporation,  in its capacity as seller hereunder,  together with its successors
and permitted assigns.

      "Servicer"  means at any time the Person(s)  then  authorized  pursuant to
Article VI to service, administer and collect the Purchased Assets.

      "Servicer  Advance" means an advance of any amounts of interest due on the
Purchased Assets by the Servicer for the account of the Seller to the Deal Agent
as  payment  of  any  amounts  owing  by the  Seller  as set  forth  in  Section
2.06(b)(iii).

      "Servicer Default" means any of the following events shall have occurred:

      (a)  The Servicer shall fail to make any payment or deposit  to be made by
 it hereunder when due within one Business Day; or

      (b) The Servicer shall fail to perform or observe any other term, covenant
or agreement contained in this Agreement on its part to be performed or observed
and any such  failure  shall  remain  unremedied  for five  Business  Days after
written notice from the Deal Agent; or

      (c)  Any  representation  or  warranty  made or  deemed  to be made by the
Servicer (or any of its officers)  under or in connection  with this  Agreement,
any Asset  Report,  or any  Purchase  Request  shall prove to have been false or
incorrect in any material respect when made; provided, however, that if any such
representation or  warranty  relates  to an  Asset  which is  repurchased by the
Seller  pursuant to Section 9.02 hereof, then the breach of such  representation
or warranty shall not give rise to a Servicer Default under this subsection (c);
or

      (d) (i) The Servicer shall admit in writing its inability to pay its debts
generally,  or shall make a general assignment for the benefit of creditors;  or
any  proceeding  shall be  instituted  by or  against  the  Servicer  seeking to
adjudicate  it a bankrupt  or  insolvent,  or seeking  liquidation,  winding up,
reorganization,  arrangement,  adjustment, protection, relief, or composition of
it  or  its  debts  under  any  law  relating  to   bankruptcy,   insolvency  or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver,  trustee,  or other similar official for it or
for any  substantial  part of its  property  and,  in the  case of a  proceeding
instituted by a party other than the Servicer,  such  proceeding  shall continue
undismissed, unstayed and in effect for a period of sixty (60) consecutive days;
or (ii) the Servicer's Board of Directors shall vote  affirmatively to authorize
any of the actions set forth in clause (i) above in this subsection (d); or

      (e) If the Initial  Servicer is the Servicer,  any Event of Termination or
Initial Servicer Default or Change shall have occurred.

       "Servicer  Fee" means a fee payable  monthly in arrears to the Deal Agent
for the  account of the  Servicer,  equal to the  product  of (i) the  Aggregate
Outstanding  Balance  at the end of the  preceding  month and (ii) the per annum
rate of 1.25% less any portion allocated as the Subservicer Fee.

      "Servicing  Agreement  Assets" means all right,  title and interest of the
Seller  with  respect to the  Purchased  Assets (by way of  assignment  from the
Initial Servicer or otherwise) in, to and under the  Subservicing  Agreement and
the Backup Servicing Agreement,  including,  without limitation, all obligations
due and to become due to the Initial Servicer or the Seller thereunder.

      "Servicing  Officer"  means any officer of the  Servicer  involved  in, or
responsible for, the  administration and servicing of the Purchased Assets whose
name appears on a list of servicing  officers  furnished to the Collateral Agent
by the Servicer, as such list may be amended or supplemented from time to time.

      "Settlement Date" means the 20th calendar day or next succeeding  Business
Day of each month;  provided,  that (i) the Seller may,  in its  discretion,  by
notice to the Deal Agent,  request that  Settlement  Dates occur more frequently
than  monthly  and (ii) the Deal  Agent may,  in its  discretion  following  the
occurrence  of an Event of  Termination,  by notice to the Seller,  require that
Settlement Dates occur more frequently than monthly.

      "Settlement  Period"  with respect to  Collections  means (i) the calendar
month preceding the month when the Settlement Date occurs or (ii) in the case of
the first  Settlement  Period  for any  Purchased  Asset,  the  portion  of such
calendar month following the Cut-off Date; provided, that if the Settlement Date
is more frequently than monthly,  the Settlement  Period may be a shorter period
than a calendar month.

      "Stop Event" means the  occurrence of an Event of  Termination of the type
described  in  Section  7.01  (i) or (j).  For  purposes  of the  Administration
Agreement, this Stop Event shall be the sole Stop Event under this Agreement.

      "Subordinated  Interest" means the Seller's interest in cash distributions
equal to the Deferred Purchase Price, plus any other distributions to the Seller
pursuant  to  Section  2.06(d)  and  (e),  and  which  shall be  evidenced  by a
certificate in the form set forth in Exhibit G.


      "Subservicer" means, initially,  Concord Servicing Corporation, an Arizona
corporation,  and thereafter any Person which is subservicing one or more of the
Purchased Assets pursuant to the Subservicing Agreement.

      "Subservicer Fee" means the amount payable to the Subservicer  pursuant to
the Subservicing Agreement with respect to the Purchased Assets, as evidenced by
an invoice from the Subservicer or the Servicer,  provided that any such fee may
not exceed the Servicing Fee.

      "Subservicing  Agreement" means an agreement  relating to the servicing of
the Purchased Assets, between the Servicer and the Subservicer,  as the same may
be amended, supplemented or modified from time to time.

      "Subsidiary"  means, as to any Person,  any corporation or other entity of
which  securities or other ownership  interests  having ordinary voting power to
elect a majority of the Board of Directors or other Persons  performing  similar
functions are at the time directly or indirectly owned by such Person.

      "Tape"  means  a  tape  or  other  electronic  media  from  the  Servicer,
Subservicer  or the  Lockbox  Bank of payment  information  with  respect to the
Purchased  Assets  used to  calculate  the  information  contained  in the Asset
Reports.

      "Taxes" has the meaning assigned to that term in Section 2.11(a).

      "Termination Date" means the earliest of

      (a) that Business Day which the Seller  designates as the Termination Date
      by written  notice to the Deal Agent at least  sixty  (60)  Business  Days
      prior to such Business Day,

      (b) that Business Day which the Deal Agent  designates as the  Termination
      Date by written notice to the Seller  following the occurrence of an Event
      of Termination,

      (c) the  date of the  reduction  of the  Purchase  Limit to zero  pursuant
      to Section 2.04,

      (d)   the automatic occurrence of the Termination Date pursuant to
      Section 7.01,

      (e)   the Scheduled Termination Date,

      (f)   an Initial Servicer Default or Change shall have occurred,

      (g) commercial  paper notes of EFCC (i) are not rated at least D-1 by DCR,
      (ii) are not  rated at least  P-1 by  Moody's,  or (iii)  are not rated at
      least A-1 if rated by S&P,

      (h) there shall not exist a liquidity  facility in favor of the  Purchaser
      in form and substance  satisfactory  to each of the Purchaser and the Deal
      Agent (and, in the event that the Purchaser  has issued  commercial  paper
      notes at any such time of  determination  hereunder,  satisfactory in form
      and substance to each of the rating  agencies then rating such  commercial
      paper at the request of the Purchaser) providing liquidity coverage to the
      Purchaser in an amount equal to or  exceeding  102% of the Purchase  Limit
      then  in  effect  hereunder,  (i) any  expiration,  termination  or  other
      cancellation  of the  commitments of any of the Liquidity  Providers under
      any Liquidity  Agreement if the effect of such expiration,  termination or
      other cancellation is to cause the aggregate  outstanding principal amount
      of such  commitments  at such time  (whether or not drawn) to be less than
      102% of the Purchase Limit in effect at any time,

      (j) the  Purchaser  or the Deal Agent shall  determine  in its  reasonable
      discretion  that  its  participation  in  the  transactions   contemplated
      hereunder will impose a material adverse  regulatory,  accounting,  tax or
      other impact on the Purchaser or the Deal Agent,

      (k) there shall  remain  undischarged,  unstayed or unbonded for more than
      sixty (60) days any final  judgment  or  execution  action not  covered by
      insurance   against  the  Initial  Servicer  that,   together  with  other
      outstanding  claims and  execution  actions  against the Initial  Servicer
      exceeds $2,000,000 in the aggregate, and

      (l) the Pension Benefit  Guaranty  Corporation or the IRS shall have filed
      notice of one or more liens against the Initial Servicer,  and such notice
      shall have remained in effect for more than thirty (30) days unless, prior
      to the  expiration of such period,  such liens shall have been  adequately
      bonded  by  the  Initial  Servicer  or do  not  exceed  $2,000,000  in the
      aggregate.

      "UCC" means the Uniform  Commercial Code as from time to time in effect in
the specified jurisdiction.

      "Up-Front Fee" means a fee payable by or on behalf of the Seller, pursuant
to the Fee Letter, on the date of the initial Asset Purchase hereunder.

      "Weighted Average Remaining Term" means, at any time, the weighted average
remaining term of the Purchased Assets  calculated in a manner acceptable to the
Purchaser.

      "Yield" means, during any Purchase Period, the product of:

      YRT x C x   ED
                 ----              
                 360

      where:

      C     =    the applicable Capital outstanding during such Purchase Period.

      YRT = the Yield Rate for such Purchase Period.

      ED = the actual number of days elapsed during such Purchase Period.

      provided,  however that (i) no provision of this  Agreement  shall require
the payment or permit the collection of Yield in excess of the maximum permitted
by  applicable  law  and  (ii)  Yield  shall  not  be  considered  paid  by  any
distribution if at any time such  distribution is rescinded or must otherwise be
returned for any reason.

      "Yield Payment Date" means, with respect to each Purchase Period, the last
day of such Purchase Period.

      "Yield Rate" means,  for any Purchase Period for all Capital  allocated to
such Purchase Period:

      (a) to the extent a Purchaser will be funding the  applicable  Purchase on
the first day of such Purchase Period through the issuance of commercial  paper,
a rate equal to the CP Rate and the Dealer Fee for such Purchase Period;

      (b) to the extent a Purchaser will not be funding the applicable  Purchase
on the first day of such  Purchase  Period  through the  issuance of  commercial
paper,  a rate equal to the  Alternative  Rate for such Purchase  Period or such
other rate as the Deal Agent and the Seller shall agree to in writing;

      provided,  however,  that at all times following the occurrence and during
the  continuation of a Stop Event or an Event of  Termination,  the "Yield Rate"
shall be a rate  equal to the sum of the Base Rate at such time plus a per annum
rate of 2.0%.

      SECTION 1.02. Other Terms.  All accounting terms not specifically  defined
herein shall be construed  in  accordance  with  generally  accepted  accounting
principles. All terms used in Article 9 of the UCC in the State of New York, and
not specifically defined herein, are used herein as defined in such Article 9.

      SECTION 1.03.  Computation  of Time Periods and Pool  Percentages.  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 means "to but  excluding."  In
calculating  the  percentage  of the Pool with  respect  to any  Exception,  the
percentage  shall  express  a  fraction  which  has a  numerator  equal  to  the
Outstanding   Balance  of  the  Purchased  Assets  with  such  Exception  and  a
denominator  equal to the  Aggregate  Outstanding  Balance of all the  Purchased
Assets as of any Purchase Date or the date of any  reassignment to the Seller of
any Financing Assets, as applicable.

                                  ARTICLE II

                      AMOUNTS AND TERMS OF THE PURCHASES

      SECTION 2.01. Facility. On the terms and conditions hereinafter set forth,
the Purchaser  shall make Purchases from the Seller from time to time during the
period from the date the  conditions  precedent in Section 3.01 are satisfied to
the  Termination  Date.  Each Asset Purchase shall  constitute an assignment and
sale  by the  Seller,  and a  purchase  and  acquisition  by the  Purchaser,  of
Purchased Interests, including, without limitation,  designated Eligible Assets,
Related Security and Collections  with respect  thereto.  Under no circumstances
shall the  Purchaser  make a Capital  Purchase,  if, after giving effect to such
Capital Purchase,  the aggregate  outstanding Capital hereunder would exceed the
Purchase  Limit.  Each Asset  Purchase shall consist of the purchase of Eligible
Assets with an aggregate  Outstanding  Balance of not less than $1,000,000,  and
each  Capital  Purchase  shall be in a minimum  amount  of at least  $1,000,000;
provided,  however, that the Purchase made on the Initial Purchase Date shall be
in a minimum amount of $10,000,000.

      SECTION 2.02.  Making Purchases.

      (a) Purchases.  Purchases  shall be made not more  frequently  than once a
week upon  delivery  to the Deal  Agent of a Purchase  Request by 10:00 A.M.  at
least three  Business Days before the effective  date of the requested  Purchase
(other than in the case of the initial Purchase Request hereunder,  which may be
delivered  prior to  10:00  A.M.  (Boston,  Massachusetts  time) on the  Initial
Purchase Date).  Each Purchase  Request for a Capital Purchase shall specify the
increase to outstanding  Capital as a result of such requested Capital Purchase.
Each  Purchase  Request for an Asset  Purchase  shall  specify (i) a list of all
items on the Asset Schedule and Project  Schedule,  and (ii) the items listed in
the form of  Purchase  Request  attached  at  Exhibit  D (i.e.,  the  amount  of
outstanding  Capital,  the Deferred  Purchase Price,  the Aggregate  Outstanding
Balance and the Weighted  Average  Remaining Term) in each case calculated after
giving  effect to such  Asset  Purchase.  Each  Purchase  Request  for a Capital
Purchase shall specify the items listed in the form of Purchase Request attached
at Exhibit D (i.e.,  the amount of outstanding  Capital,  the Deferred  Purchase
Price,  the Aggregate  Outstanding  Balance and the Weighted  Average  Remaining
Term) in each case calculated after giving effect to such Capital  Purchase.  On
the date of each Capital Purchase, the Purchaser shall, upon satisfaction of the
applicable conditions set forth in Article III, make available to the Seller the
amount of the Capital Purchase in same day funds in an account designated by the
Seller from time to time.

      (b) Purchase Price;  Deferred  Purchase Price.  The purchase price for any
Asset Purchase  hereunder  shall be composed of (i) an immediate  payment to the
Seller  consisting of a Capital  Purchase plus (ii) the Deferred  Purchase Price
allocable to such Asset Purchase.  The amount of each Capital Purchase  (whether
in connection with an Asset Purchase or otherwise) shall be the amount requested
by the Seller in the  related  Purchase  Request  but shall not exceed an amount
equal to (i) the  Aggregate  Outstanding  Balance  (after  giving  effect to the
Capital  Purchase)  minus (ii) the sum of (A) the  outstanding  Capital  (before
giving  effect to such Capital  Purchase)  and (B) the Deferred  Purchase  Price
(after  giving  effect to any  changes in the  Deferred  Purchase  Price on such
Purchase Date). After the Collection Date has occurred,  the Purchaser shall, in
full satisfaction of the Deferred Purchase Price,  assign and sell to the holder
of the Subordinated Interest, its respective remaining interest in the Purchased
Interests and any remaining  Collections without any representation or warranty,
express or implied (other than a representation and warranty that such Purchased
Interests  are free and clear of any  Adverse  Claim  created by or through  the
Purchaser or any Liquidity Provider).

      SECTION 2.03. Transfers of Interests in Purchased Assets.  Notwithstanding
anything to the contrary  contained in this  Agreement,  none of the Deal Agent,
the Purchaser,  or any Liquidity Provider shall have any affirmative  obligation
or  liability  with  respect  to any  Purchased  Asset  or any  other  Purchased
Interests (including,  without limitation,  any Interest Rate Hedges), nor shall
any of them be obligated to perform any of the affirmative obligations of any of
the Seller or the Initial Servicer thereunder.

      SECTION 2.04.  Termination or Reduction of the Purchase Limit.  The Seller
may,  upon at least five Business  Days' notice to the Deal Agent,  terminate in
whole or reduce in part the unused  portion  of the  Purchase  Limit;  provided,
however,  that each partial  reduction shall be in an amount equal to $1,000,000
or an integral multiple thereof.

      SECTION 2.05.  Selection of Purchase Periods. At all times hereafter until
the Termination  Date, the Seller shall,  subject to the  limitations  described
below,  select (a) Purchase  Periods and  allocate a portion of the  outstanding
Capital to each selected Purchase Period, so that the outstanding  Capital is at
all times  allocated  to a Purchase  Period and (b) Yield Rates to apply to such
Capital for such  Purchase  Periods.  The initial  Purchase  Period(s) and Yield
Rate(s)  applicable to the Capital  arising as a result of the initial  Purchase
hereunder  or any later  Capital  Purchase  shall be  specified  in the Purchase
Request relating to such Purchase described in Section 2.02(a).  Each subsequent
Purchase  Period  shall  commence on the last day of the  immediately  preceding
Purchase  Period,  and  the  duration  of and  Yield  Rate  applicable  to  such
subsequent Purchase Period shall be such as the Seller shall select after notice
from the Seller  received  by the Deal  Agent  (including  notice by  telephone,
confirmed in writing) not later than 10:00 A.M. (Boston,  Massachusetts time) on
such last day,  except that (a) if the Seller shall not have so selected  before
10:00 A.M. (Boston,  Massachusetts  time) on such last day, such Purchase Period
shall be one day and the  applicable  Yield Rate shall be the Adjusted Base Rate
and (b) if the Seller is requesting that Yield accrue at the Adjusted Eurodollar
Rate for such Purchase Period,  and the Seller shall not have so selected before
10:00 A.M. (Boston, Massachusetts time) on the second Business Day prior to such
last day, such Purchase  Period shall be one day and the  applicable  Yield Rate
shall be the Adjusted Base Rate. Any Purchase  Period which would  otherwise end
on a day which is not a Business  Day shall be extended  to the next  succeeding
Business  Day;  provided,  however,  that if Yield in respect  of such  Purchase
Period is computed by reference to the Adjusted  Eurodollar  Rate, and such next
succeeding Business Day is in the next calendar month, then such Purchase Period
shall end on the next preceding Business Day. In addition, whenever any Purchase
Period as to which Yield accrues at the Adjusted  Eurodollar  Rate  commences on
the last  Business Day in a month or on a day for which there is no  numerically
corresponding  day in the month in which such Purchase Period ends, the last day
of such  Purchase  Period  shall occur on the last  Business Day of the month in
which such Purchase  Period ends.  Furthermore,  if a CP Disruption  Event shall
have occurred and be continuing, the Purchaser, or the Deal Agent on its behalf,
may, upon notice to the Seller,  terminate any Purchase Period then in effect if
the  Purchaser  has funded the  Capital  allocated  to such  Purchase  Period by
issuing its commercial  paper notes.  Any Purchase Period which commences before
the  Termination  Date and would  otherwise  end on a date  occurring  after the
Termination Date shall end on the Termination  Date. On or after the Termination
Date,  the Deal Agent  shall have the right to allocate  outstanding  Capital to
Purchase  Periods of such  duration as shall be selected by the Deal Agent.  The
Purchaser shall, on the first day of each Purchase Period, notify the Deal Agent
of the Yield Rate for the Capital allocated to such Purchase Period.
      SECTION 2.06.  Settlement Procedures.

      (a) Asset  Reports.  On or prior to the 15th calendar day or next Business
Day of each month,  the Servicer shall prepare and forward to the Deal Agent for
the Purchaser, an Asset Report, indicating the status of the Purchased Assets as
of the close of  business  of the  Servicer  on the last day of the  immediately
preceding  month,  together with such attachments as may be required by the Deal
Agent thereunder,  and setting forth,  among other things,  the payments made on
the immediately preceding Yield Payment Date.

      (b)  Allocation of Collections and Other Amounts.

      (i) Collections.  On each day, both before and after the Termination Date,
      the Servicer or, if the Deal Agent has  exercised  its right under Section
      6.03(a) to require the Collection Account Bank to remit all Collections of
      Purchased Assets deposited in the Collection  Account directly to the Deal
      Agent,  the Deal Agent,  shall  allocate  Collections  of Purchased  Asset
      received on such day as  follows:  (1) Set aside and hold in trust for the
      Seller all amounts in respect of
            such Collections pertaining to (A) sales, use, personal property and
            real estate taxes and (B) premiums  for  insurance,  in each case to
            the extent the portion of the  Collections  described in clauses (A)
            and (B) of this paragraph (1) are separately  identified in the loan
            documents  executed by the Obligor  and, if the Deal Agent is making
            the allocation, identified to the Deal Agent to such uses; and

      (2)   Set  aside  and  hold in  trust in the  Collection  Account  for the
            Purchaser all remaining Collections.

      (ii) Payments Under Interest Rate Hedges. Each payment from the applicable
      counterparty  under an  Interest  Rate  Hedge  shall  be set  aside by the
      Servicer (or the Deal Agent,  as the case may be) and held in trust in the
      Collection Account for the Purchaser.

      (iii) Servicer Advances.  To the extent that the amounts set aside for the
      Purchaser and the Seller  pursuant to this Section 2.06(b) are at any time
      insufficient  to pay in full the amounts set forth in Sections  2.06(c) or
      (d)  below,  the  Servicer  may make a Servicer  Advance  to satisfy  such
      deficiency  if, and only if, the  Servicer  determines  in good faith that
      such Servicer  Advance will be  recoverable  from future  Collections  and
      payments under Interest Rate Hedges with respect to the related  Purchased
      Interests (such determination to be conclusive and binding).

      (c) Yield Payment  Dates.  On each Yield Payment Date,  the Servicer shall
pay to the Deal Agent (or the Deal Agent  shall  retain)  from the excess of (x)
the amounts then set aside for the Purchaser and the Seller  pursuant to Section
2.06(b) over (y) the aggregate amount,  for all Interest Rate Hedges, of the net
amount due to each  counterparty  under the relevant  Interest Rate Hedge on the
next  Settlement Date to occur  hereunder,  an amount equal to the Yield due and
payable on such Yield Payment  Date.  On each such Yield Payment Date,  the Deal
Agent shall pay such amount in respect of Yield so paid to (or  retained by) the
Deal Agent for  application  to the amounts of Yield then due and payable to the
Purchaser.

      (d)  Settlement  Dates -  Pre-Termination  Date. On each  Settlement  Date
(which may or may not be a Purchase  Date)  occurring  prior to the  Termination
Date,  out of amounts  set aside for the  Purchaser  and the Seller  pursuant to
Section  2.06(b) during or in respect of the  immediately  preceding  Settlement
Period  (after  giving  effect to any  payments  previously  made under  Section
2.06(c) and including any amounts received pursuant to a Servicer Advance),  the
Servicer or the Deal Agent (as the case may be) shall pay or retain (as the case
may be),  for  application  to the  following  items in the  following  order of
priority:


      (i)  first,  to the  Servicer,  the  amount  of any  outstanding  Servicer
      Advances from  Collections  and payments  under  Interest Rate Hedges with
      respect to the related Purchased Interests;

      (ii) second, (A) to the Deal Agent, for application to accrued Yield which
      is due and payable on such Settlement Date (if any), and (B) to the extent
      of any accrued Yield which is not then due and payable,  to be retained in
      the Collection  Account for the benefit of the  Purchaser,  until the next
      succeeding  Yield  Payment  Date,  and  not  to be  applied  to any of the
      following items;

      (iii) third , to each  counterparty  under an Interest Rate Hedge, the net
      amount, if any, due to such counterparty  thereunder as of such Settlement
      Date;

      (iv)  fourth,  to the  Servicer (if the Servicer is other than the Initial
      Servicer  or an  Affiliate  of the  Initial  Servicer)  in  payment of the
      Servicer Fee;

      (v)  fifth,  on a  pro  rata  basis,  to  the  Collateral  Custodian,  the
      Subservicer and the Backup Servicer in payment of the Collateral Custodian
      Fee , the Subservicer Fee and the Backup Servicer Fee, respectively;

      (vi)  sixth,  to the  Purchaser,  in  payment of the  Program  Fee and the
      Liquidity Fee, on a pro rata basis  calculated in accordance with the then
      outstanding balance of each such fee;

      (vii)  seventh,  to the Deal Agent,  an amount equal to the sum of (A) the
      excess,  if  any,  of (x)  outstanding  Capital  over  (y)  the  Aggregate
      Outstanding  Balance minus the Deferred  Purchase  Price, as of the end of
      the next preceding  month,  as set forth in the  applicable  Asset Report)
      plus (B) any applicable Breakage Indemnity;

      (viii)  eighth,  to the Servicer  (if the Servicer is the Initial  
      Servicer or an Affiliate of the Initial Servicer) in payment of the 
      Servicer Fee; and

      (ix) ninth,  to the Seller,  all remaining  amounts (if any) following the
      payment of the amounts set forth in the clauses above.

      The Deal Agent shall pay to the Purchaser all amounts received or retained
pursuant to clause (vii) above  (including  any amounts  received  pursuant to a
Servicer  Advance) and, at the Seller's option,  such other funds of the Seller,
(x) first, to the payment of any Breakage Indemnity under clause (vii)(B) above,
and (y) second,  in  reduction  of  outstanding  Capital.  With the  Purchaser's
consent,  the  Subservicer  Fee may be paid to the  Servicer  on  behalf  of the
Subservicer.

      (e) Settlement Dates -- Post-Termination  Date. On each Settlement Date on
and after the  Termination  Date, out of amounts set aside for the Purchaser and
the Seller  pursuant to Section  2.06(b) during or in respect of the immediately
preceding Settlement Period (after giving effect to any payments previously made
under  Section  2.06(c)),  the  Servicer  or the Deal Agent (as the case may be)
shall pay or retain (as the case may be), for application to the following items
in the following order of priority:

       (i) first,  (A) to the Deal Agent, for application to accrued Yield which
      is due and payable on such Settlement Date (if any), and (B) to the extent
      of any accrued Yield which is not then due and payable,  to be retained in
      the Collection  Account for the benefit of the  Purchaser,  until the next
      succeeding  Yield  Payment  Date,  and  not  to be  applied  to any of the
      following items;

      (ii) second,  to each  counterparty  under an Interest Rate Hedge, the net
      amount, if any, due to such counterparty  thereunder as of such Settlement
      Date;

      (iii)  third,  to the  Servicer (if the Servicer is other than the Initial
      Servicer  or an  Affiliate  of the  Initial  Servicer)  in  payment of the
      Servicer Fee.

       (iv)  fourth,  on a pro rata  basis,  to the  Collateral  Custodian,  the
      Subservicer and the Backup Servicer in payment of the Collateral Custodian
      Fee, the Subservicer Fee and the Backup Servicer Fee, respectively;

      (v)  fifth, to the Purchaser, in payment of the Program Fee;

      (vi)  sixth, to the Purchaser, in payment of the Liquidity Fee;

      (vii) seventh,  to the Deal Agent, an amount equal to the sum of (A) if an
      Event  of  Termination  has  not  occurred,  the  excess,  if  any  of (x)
      outstanding  Capital over (y) the Aggregate  Outstanding Balance minus the
      Deferred  Purchase Price (as of the end of the next preceding  month),  as
      set forth in the applicable  Asset Report,  and if an Event of Termination
      has occurred,  the amount of  outstanding  Capital plus (B) any applicable
      Breakage Indemnity;

      (viii)  eighth,  to the Servicer  (if the Servicer is the Initial  
      Servicer or an Affiliate of the Initial Servicer) in payment of the 
      Servicer Fee;

      (ix)  ninth,  to the  Servicer,  to  the  extent  that  the  Servicer  has
      previously made Servicer  Advances which have not been repaid in full, the
      amount of such outstanding Services Advances; and

      (x) tenth,  to the Seller,  all remaining  amounts (if any)  following the
      payment of the amounts set forth in the clauses above.

      The Deal Agent  shall pay all amounts  received  or  retained  pursuant to
clause (vii) above to the Purchaser (A) first,  to the payment of any applicable
Breakage Indemnity,  and (B) second, in reduction of outstanding  Capital.  With
the  Purchaser's  consent,  the  Subservicer  Fee may be paid to the Servicer on
behalf of the Subservicer.  Following the Collection Date, all Collections shall
be payable to the holder of the  Subordinated  Interest in  satisfaction  of the
Deferred Purchase Price.

      SECTION 2.07.  Payments and  Computations,  Etc. All amounts to be paid or
deposited by the Seller or the Servicer  hereunder shall be paid or deposited in
accordance with the terms hereof no later than 2:00 P.M. (Boston,  Massachusetts
time) on the day when due in lawful  money of the  United  States of  America in
immediately  available  funds to a special  account  at FNBB (ABA  #011-000-390,
account  #52266445),  in the name of the Deal  Agent  and  maintained  at FNBB's
office located at 100 Federal Street,  Boston,  Massachusetts  02110. The Seller
shall,  to the extent  permitted by law,  pay to the Deal Agent  interest on all
amounts not paid or deposited  when due hereunder  (whether  owing by the Seller
individually  or as Servicer) at 2.0% per annum above the Base Rate,  payable on
demand; provided,  however, that such interest rate shall not at any time exceed
the maximum rate permitted by applicable law. Such interest shall be retained by
the Deal Agent except to the extent that such  failure to make a timely  payment
or deposit has continued  beyond the date for  distribution by the Deal Agent of
such  overdue  amount to the  Purchaser  or any  applicable  Liquidity  Provider
pursuant to Section  2.06 or  otherwise,  in which case such  interest  accruing
after such date shall be for the account of, and  distributed  by the Deal Agent
to the Purchaser or such Liquidity  Provider.  All  computations of interest and
all computations of Yield,  Breakage  Indemnity,  Program Fees,  Liquidity Fees,
Servicer Fees, Collateral Custodian Fees, Subservicer Fees, Backup Servicer Fees
and other  fees  hereunder  shall be made on the basis of a year of 360 days for
the  actual  number of days  (including  the first but  excluding  the last day)
elapsed.

      SECTION 2.08. Yield Protection.  (a) If due to either:  (i) after the date
hereof, the introduction of or any change (including,  without  limitation,  any
change by way of  imposition or increase of reserve  requirements)  in or in the
interpretation by any governmental or regulatory  authority or agency of any law
or regulation  (other than laws or regulations  relating to taxes) or (ii) after
the dated hereof,  the  compliance  by any Affected  Party with any guideline or
request from any central bank or other  governmental  authority  (whether or not
having  the  force of law) or from any  Rating  Agency,  (1)  there  shall be an
increase in the cost to any Affected Party of accepting,  funding or maintaining
any  Purchase  hereunder,  or agreeing to accept,  fund or maintain any Purchase
hereunder,  (2) there shall be a reduction in the amount  receivable with regard
to any  Purchased  Asset or (3) any  Affected  Party shall be required to make a
payment  calculated by reference to the Purchased Asset purchased by it or Yield
received  by it,  then the Seller  shall,  from time to time,  immediately  upon
demand by the Deal Agent,  pay the Deal Agent for the  account of such  Affected
Party,  that portion of such increased costs  incurred,  amounts not received or
required  payment  made or to be  made,  which  the  Deal  Agent  determines  is
attributable to accepting,  funding and maintaining any Purchase  hereunder,  or
agreeing to accept, fund or maintain any Purchase hereunder. In determining such
amount, the Deal Agent may use any reasonable averaging and attribution methods.
The Deal Agent shall  submit to the Seller a  certificate  as to such  increased
costs incurred,  amounts not received or receivable or required  payment made or
to be made,  which  certificate  shall,  in the  absence of manifest  error,  be
conclusive and binding for all purposes.

      (b) If due to either:  (i) after the date hereof,  the  introduction of or
any change (including,  without  limitation,  any change by way of imposition or
increase  of  reserve   requirements)  in  or  in  the   interpretation  by  any
governmental or regulatory  authority or agency of any law or regulation  (other
than laws or  regulations  relating  to taxes)  or (ii)  after the date  hereof,
compliance  with  any  guideline  or  request  from  any  central  bank or other
governmental  authority  (whether  or not  having  the force of law) or from any
Rating Agency, similar in nature to those described in subsection (a) above, any
Affected  Party is required to compensate any other Affected Party in connection
with this Agreement or any Liquidity Agreement, or the funding or maintenance of
a Purchase  hereunder,  then immediately upon demand by any such Affected Party,
the Seller shall pay to such Affected Party,  such additional  amount or amounts
as may be  necessary  to pay such other  Affected  Party the  amounts  due or to
otherwise reimburse such other Affected Party for any amounts paid by it.

      SECTION 2.09.  Increased Capital. (a) If either (i) the introduction of or
any  change  in or in the  interpretation  by  any  governmental  or  regulatory
authority or agency of any law or regulation or (ii)  compliance by any Affected
Party with any guideline or request from any central bank or other  governmental
authority  (whether  or not  having  the force of law),  or any  rating  agency,
affects  or would  affect  the  amount of capital  required  or  expected  to be
maintained by such Affected  Party or such Affected  Party  determines  that the
amount of such  capital  is  increased  by or based  upon the  existence  of the
Purchaser's  agreement to accept, fund or maintain Purchases hereunder and other
similar  agreements or facilities,  then,  upon demand by such Affected Party or
the Deal Agent,  the Seller shall  immediately pay to such Affected Party or the
Deal  Agent  for the  account  of such  Affected  Party  from  time to time,  as
specified  by  such  Affected  Party  or  the  Deal  Agent,  additional  amounts
sufficient to compensate such Affected Party in light of such circumstances,  to
the extent that such Affected Party or the Deal Agent on behalf of such Affected
Party  reasonably  determines  such  increase in capital to be  allocable to the
existence of the  Purchaser's  agreements  hereunder.  A certificate  as to such
amounts submitted to the Seller by such Affected Party or the Deal Agent, shall,
in the absence of manifest error, be conclusive and binding for all purposes.

      (b)  If  either  (i)  the  introduction  of or  any  change  in or in  the
interpretation by any governmental or regulatory  authority or agency of any law
or regulation or (ii)  compliance with any guideline or request from any central
bank or other  governmental  authority (whether or not having the force of law),
or any Rating Agency,  under events or circumstances  similar to those described
in subsection (a) above,  any Affected Party is required to compensate any other
Affected Party in connection with this Agreement or any Liquidity Agreement,  or
the funding or maintenance of a Purchase hereunder, then immediately upon demand
by any such Affected Party,  the Seller shall pay to such Affected  Party,  such
additional  amount or amounts  as may be  necessary  to pay such other  Affected
Party the amounts due or to otherwise  reimburse  such other  Affected Party for
any amounts paid by it.

      SECTION  2.10.  Grant of  Security  Interest  . (a) If at any time a court
characterizes the transactions hereunder as loans by the Purchaser to the Seller
notwithstanding  the intent of the  parties,  or if the Seller  elects to borrow
funds from the  Purchaser  pursuant  to the  Financing  Option,  then the Seller
hereby pledges, grants a security interest in and assigns to the Deal Agent, for
the benefit of the Purchaser,  all of the right and title to and interest in the
Purchased Interests, including the Purchased Assets and the Related Security and
Collections  related thereto, as security for such loans and for the payment and
performance of all obligations of the Seller hereunder.

      (b) At any time, upon the request of the Deal Agent,  the Seller shall, at
its expense, promptly execute and deliver all further instruments and documents,
and take all further action (including,  without  limitation,  the execution and
filing of such financing or continuation  statements,  or amendments  thereto or
assignments thereof), that may be necessary or desirable, or that the Deal Agent
may request,  in order to perfect and protect any security  interest  granted or
purported to be granted to the Deal Agent  hereunder or to enable the Deal Agent
to exercise  and enforce its rights and remedies  hereunder  with respect to any
Purchased Interests.  The Seller hereby authorizes the Deal Agent to file one or
more  financing  or  continuation   statements,   and  amendments   thereto  and
assignments thereof,  relative to all or any part of the Purchased Interests now
existing  or  hereafter  arising  without  the  signature  of the  Seller  where
permitted by law. A carbon, photographic or other reproduction of this Agreement
or any financing  statement covering the Purchased Interests or any part thereof
shall be  sufficient  as a financing  statement.  The Seller will furnish to the
Deal Agent from time to time  statements and schedules  further  identifying and
describing the Purchased Interests and such other reports in connection with the
Purchased Interests as the Deal Agent may request, all in reasonable detail.

      SECTION  2.11.  Taxes.  (a) Any  and all  payments  to an  Affected  Party
hereunder  shall be made, in accordance with Section 2.06, free and clear of and
without  deduction  for any and all present or future  taxes,  levies,  imposts,
deductions,  charges or withholdings,  and all liabilities with respect thereto,
excluding,  in the case of an Affected Party,  net income taxes that are imposed
by the United States and  franchise  taxes and net income taxes that are imposed
on such Affected  Party by the state or foreign  jurisdiction  under the laws of
which  such  Affected  Party is  organized  or in which  it is  otherwise  doing
business or any  political  subdivision  thereof (all such  non-excluded  taxes,
levies,  imposts,  deductions,   charges,  withholdings  and  liabilities  being
hereinafter  referred to as  "Taxes").  If the Seller or the  Servicer  shall be
required  by law to  deduct  any Taxes  from or in  respect  of any sum  payable
hereunder to any Affected Party, (i) the Seller shall make an additional payment
to such  Affected  Party,  in an amount  sufficient  so that,  after  making all
required deductions  (including deductions applicable to additional sums payable
under this Section  2.11),  such Affected  Party receives an amount equal to the
sum it would have received had no such  deductions been made, (ii) the Seller or
the  Servicer,  as the case may be,  shall  make such  deductions  and (iii) the
Seller or the Servicer,  as the case may be, shall pay the full amount  deducted
to the  relevant  taxation  authority  or other  authority  in  accordance  with
applicable law.

      (b) If,  in  connection  with an  agreement  or other  document  providing
liquidity  support,  credit  enhancement or other similar  support in connection
with this Agreement or the funding or  maintenance  of any Purchases  hereunder,
any Affected Party is required to compensate any other Affected Party in respect
of taxes under  circumstances  similar to those  described in this Section 2.11,
then  immediately  upon demand by such Affected  Party,  the Seller shall pay to
such Affected Party such additional amount or amounts as may be necessary to pay
such other Affected  Party the amounts due or to otherwise  reimburse such other
Affected Party for any amounts paid by it.

      SECTION 2.12.  Financing Option. In lieu of any Asset Purchase pursuant to
Sections  2.01 and  2.02,  the  Seller  may elect  the  Financing  Option in the
Purchase Request. The Purchaser shall make a loan to the Seller in the amount of
Capital that would otherwise be attributable to the Financing  Asset. The Seller
promises to repay the loan with  interest  at such times and in such  amounts as
the Seller  would be required to make  payments  with  respect to any  Purchased
Asset.  The Seller  hereby  pledges  and  assigns as  security  for the loan the
Purchased  Assets  including  the  Financing  Asset.  The  Seller  may repay the
Capital,  Yield and any other  amount  allocated  to any  Financing  Loan at the
termination of any Purchase Period upon two Business Days written  notice.  Upon
such payment,  the Purchaser  shall  reassign the Financing  Asset to the Seller
provided that the Seller has represented  that the Purchased Assets shall remain
Eligible Assets, and no Event of Termination shall occur, after giving effect to
such  reassignment.  The Seller  shall be entitled to  terminate  the  Financing
Option with respect to any Financing Asset at any time and thereafter the Seller
shall not be entitled to make a repayment  except as provided in other  Sections
of this  Agreement.  If the  Financing  Option has been elected and has not been
terminated by the Seller, the Seller shall treat the assignment of the Financing
Asset as a financing  for  financial  reporting  purposes.  Except as  otherwise
provided in this Section, any provision of this Agreement and the other Facility
Documents  applicable  to the  Purchased  Assets  shall  apply to the  Financing
Assets.

                                   ARTICLE III

                             CONDITIONS OF PURCHASES
      SECTION  3.01.  Conditions  Precedent  to Initial  Purchase.  The  initial
Capital Purchase and Asset Purchase shall be subject to the condition  precedent
that  the  Deal  Agent  shall  have  received  the  following,  each in form and
substance satisfactory to the Deal Agent:

      (a)  This  Agreement,   the  Asset  Sale  Agreement,  the  Collection 
Account Agreement,  the Funds Designation Agreement,  the Subservicing Agreement
, the Backup Servicing  Agreement  and the Initial  Liquidity  Agreement,  
executed by each party thereto;

      (b) A copy of the  resolutions  of the Board of  Directors  of the  Seller
approving  this  Agreement,  the Asset  Sale  Agreement  and the other  Facility
Documents  to be delivered by it  hereunder  and the  transactions  contemplated
hereby, certified by its Secretary or Assistant Secretary;

      (c)  The  Certificate  of   Incorporation  of  the  Seller  certified  by
the Secretary of State of Delaware;

      (d) Good  Standing  Certificate  for the  Seller  issued by the  Secretary
of State of the State of Delaware;

      (e) A certificate  of the  Secretary or Assistant  Secretary of the Seller
certifying (i) the names and true  signatures of the officers  authorized on its
behalf to sign this  Agreement,  the Asset Sale Agreement and the other Facility
Documents to be delivered by it hereunder (on which  certificate  the Deal Agent
and the Purchaser may conclusively  rely until such time as the Deal Agent shall
receive from the Seller a revised  certificate  meeting the requirements of this
subsection (e)) and (ii) a copy of the Seller's by-laws;

      (f) A copy of the  resolutions  of the Board of  Directors  of the Initial
Servicer  approving the Asset Sale Agreement and the other Facility Documents to
be delivered by it hereunder and the transactions contemplated hereby, certified
by its Secretary or Assistant Secretary;

      (g) The  Certificate of  Incorporation of the Initial  Servicer  certified
by the Secretary of the Commonwealth of Massachusetts;

      (h) Good  Standing  Certificates  for the Initial  Servicer  issued by the
Secretary  of  State  of the  State  of  Vermont,  and by the  Secretary  of the
Commonwealth of Massachusetts.

      (i) A certificate  of the Secretary or Assistant  Secretary of the Initial
Servicer certifying (i) the names and true signatures of the officers authorized
on its behalf to sign the Asset Sale Agreement and the other Facility  Documents
to be  delivered by it hereunder  (on which  certificate  the Deal Agent and the
Purchaser may conclusively  rely until such time as the Deal Agent shall receive
from the Initial Servicer a revised certificate meeting the requirements of this
subsection) and (ii) a copy of the Initial Servicer's bylaws;

      (j) Upon the Purchaser's request,  acknowledgment  copies as duly filed of
proper UCC-1 Financing Statements (executed by the Initial Servicer,  the Seller
or any  intervening  assignee,  as  applicable),  as may be necessary or, in the
opinion  of  the  Deal  Agent,  desirable  under  the  UCC  of  all  appropriate
jurisdictions  or any  comparable  law to perfect  the Initial  Servicer's,  the
Seller's,  the Deal  Agent's and the  Purchaser's  respective  interests  in all
Purchased Interests or under the Asset Sale Agreement;

      (k) Certified  copies of Requests for  Information or Copies (Form UCC-11)
(or a similar search report  certified by a party acceptable to the Deal Agent),
dated a date  reasonably near to the date of the initial  Purchase,  listing all
effective financing statements which name any intervening assignee,  the Initial
Servicer or the Seller (under their  respective  present names, and any previous
names or tradenames) as debtor and which are filed in the jurisdictions in which
filings were made  pursuant to the  preceding  subsection  of this Section 3.01,
together with copies of such financing statements;

      (l) An opinion of Battle Fowler LLP,  counsel for the Initial Servicer and
the  Seller,  as to  enforceability,  no  conflict  with  laws  and  agreements,
perfection, priority, and such corporate and other matters as the Deal Agent may
reasonably request;

      (m) An opinion of Battle Fowler LLP,  counsel for the Initial Servicer and
the Seller,  as to true sale,  non-consolidation  and such other  matters as the
Deal Agent may reasonably request;


      (n) An opinion of Thomas  McHugh,  special  Massachusetts  counsel for the
Initial  Servicer,  and Wilson & White,  special Vermont counsel for the Initial
Servicer, as to seek matters as the Deal Agent may reasonably request;

      (o) An opinion of counsel to the Lockbox  Bank,  the  Subservicer  and the
Backup Servicer as to such matters as the Deal Agent may reasonably request;

      (p) An opinion of local counsel as to the Assets  related to such Projects
as the Deal Agent may reasonably request; and

      (q) If  applicable,  a copy of the Interest Rate Hedge  Agreement  entered
into by the Seller and a  counterparty  satisfying the  requirements  of Section
5.01(k),  in form and  substance  satisfactory  to the Deal Agent and  otherwise
meeting the requirements of Section 5.01(k),  together with an executed Interest
Rate Hedge  Assignment  relating  thereto executed by the Seller and an Interest
Rate Hedge Assignment Agreement, executed by such counterparty.

      SECTION  3.02.  Conditions  Precedent  to  All  Purchases.  Each  Purchase
(including the initial  Capital  Purchase and Asset Purchase) from the Seller by
the Purchaser shall be subject to the further conditions precedent that:
      (a) on or prior to the date thereof, the Servicer shall have delivered (i)
to the Deal Agent,  (1) a completed  Purchase Request in accordance with Section
2.02, (2) a duly completed  Asset Report for the most recently ended month,  (3)
if  applicable,  with  respect to each  Asset  Purchase,  evidence,  in form and
substance reasonably satisfactory to the Deal Agent, that the Seller has entered
into  Interest  Rate  Hedges  satisfying  the terms of this  Agreement  and in a
notional  amount  equal to the  aggregate  Outstanding  Balance of the  Eligible
Assets  subject to such Asset Purchase  (together,  for any Interest Rate Hedges
the  counterparty of which is not FNBB,  with an Interest Rate Hedge  Assignment
Acknowledgment duly executed by such counterparty and concurrently  delivered to
the Deal Agent), and (4) copies of the UCC financing statements and requests for
information  referred to in Section 3.01 with respect to any  additional  Person
reasonably  requested  by the  Purchaser  in light of the  additional  Purchased
Assets or concentration of Purchased Assets, and (ii) with respect to each Asset
Purchase,  to the  Collateral  Custodian,  the  Asset  Documents  to the  extent
provided in Section 3.03;
      (b) all amounts  then due and payable  under the Facility  Documents  have
been paid  (including  the Up-Front  Fee in  connection  with the initial  Asset
Purchase to made  hereunder and any costs and expenses under Section 8.04 of the
Liquidity Agreement);

      (c) all Adverse   Claims with  respect to the  Purchased  Interests  shall
have been released;

      (d) on the date of each  Purchase the following  statements  shall be true
and the Seller by accepting the amount for a Capital Purchase shall be deemed to
have certified that:

      (i) The representations  and warranties  contained in Section 4.01 and, if
      the  Servicer is the  Initial  Servicer,  Section  4.02 are correct in all
      material  respects  on and as of such day as though made on and as of such
      date, and

      (ii) No event has  occurred and is  continuing,  or would result from such
      Purchase which  constitutes an Event of Termination or would constitute an
      Event of Termination but for the requirement  that notice be given or time
      elapse or both; and (e) any commercial paper issued in connection with the
      transaction shall be rated at least D-1 by DCR, P-1 by Moody's  and A-1 if
      rated by S&P.

      SECTION 3.03.  Asset Documents.

      (a) Asset  Documents.  On each Purchase Date, the Seller shall deliver the
documents  described in clauses  (b), (c) and (d) below or such other  documents
set forth on a schedule acceptable to the Purchaser.  If the Asset is related to
a Project  located  outside  the  United  States,  or if the  Assets  related to
Projects in a single state  constitute 10% or more of the Pool, the Seller shall
furnish a legal opinion in form and  substance  acceptable to the Deal Agent and
the Rating Agencies, from counsel which may include the counsel representing the
Initial Servicer and the Seller in acquiring the Assets,  that the documents are
sufficient to create the equivalent of a first perfected  security interest with
respect  to any Loan or any  Installment  Contract,  as  applicable.  If a legal
opinion is not  required  with respect to an Asset,  the Seller shall  furnish a
memorandum  as to such issue from counsel  acceptable  to the Deal Agent and the
Rating Agencies if necessary to update the memorandum delivered by Battle Fowler
LLP at the Initial Purchase Date. The Deal Agent  acknowledges  receipt of legal
opinions and a memorandum  with respect to the  Purchased  Assets on the Initial
Purchase Date.

      (b) Loans  Generally.  On the Purchase Date with respect to any Loan other
than any Loan relating to the Stardust Lodge  Project,  the Seller shall deliver
to the Purchaser the following  documents  except for those  indicated in clause
(iv):

      (i) The Note,  endorsed  without  recourse in blank or to the  Purchaser's
      designee,  showing an unbroken chain of  endorsements  from the originator
      thereof to the Person endorsing it;

      (ii)  The original Mortgage to  the  original mortgagee or a copy thereof,
      with evidence of recording indicated thereon;

      (iii) An original of any  intervening  assignment of the Mortgage from the
      original  mortgagee  to the  Seller  (which may be  included  in a blanket
      assignment),  or a copy  thereof,  with  evidence of  recording  indicated
      thereon;

      (iv)  Assignments  in  the  form   satisfactory  for  recordation  in  the
      appropriate  jurisdiction  (which may be included in a blanket assignment)
      of the Mortgage  from the Seller to the  Purchaser's  designee,  each such
      assignment showing evidence of recording indicated thereon;

      (v) The original lender's title insurance policy if such a policy has been
      obtained; and

      (vi) An original or copy of any guaranty relating to, or any assumption or
      other agreement, if any, modifying, such Note, Mortgage or title insurance
      policy (including, without limitation, any extension agreement).

      (c) Stardust Lodge Project Loan. On each Purchase Date with respect to any
Loan  relating to the Stardust  Lodge  Project,  the Seller shall deliver to the
Purchaser the following  documents  except for those  indicated in clauses (iv),
(v), (vi) and (ix):


      (i) The Note,  endorsed  without  recourse in blank or to the  Purchaser's
      designee,  showing an unbroken chain of  endorsements  from the originator
      thereof to the Person endorsing it;

      (ii) The original mortgage to the original  mortgagee,  creating a lien on
      the right to use, or a copy thereof,  with evidence of recording indicated
      thereon, and the original security agreement (which may be included in the
      mortgage)  creating  a  security  interest  in  the  beneficial  ownership
      interest in the trust containing the Property;

      (iii) An  original  of any  intervening  assignment  of the  mortgage  and
      security agreement from the mortgagee to the Seller (which may be included
      in a blanket  assignment),  or a copy thereof,  with evidence of recording
      indicated thereon;

      (iv)  Assignments  in  the  form   satisfactory  for  recordation  in  the
      appropriate jurisdiction (which may be included in blanket assignments) of
      the  mortgage  from the  Seller  to the  Purchaser's  designee,  each such
      assignment   showing  evidence  of  recording   indicated   thereon,   and
      assignments  of the security  agreement  (which may be included in blanket
      assignments) from the Seller to the Purchaser's designee;

      (v) A UCC financing  statement,  together with an assignment  thereof from
      the  secured  party  to the  Seller,  and  together  with  a  continuation
      statement  within  every five years from the date of filing of the initial
      UCC financing  statement,  with, in each case, evidence of filing thereon;
      (vi)  Assignments  of the UCC financing  statement  from the Seller to the
      Purchaser's designee, with evidence of filing thereon;

      (vii) The original  lender's  title insurance policy  if such a policy has
      been obtained;

      (viii) An original or copy of any guaranty  relating to, or any assumption
      or other  agreement,  if any,  modifying,  such Note,  mortgage,  security
      agreement or title insurance policy (including,  without  limitation,  any
      extension agreement); and

      (ix) A Project Title  Assignment  or other  document  transferring  to the
      Purchaser's  designee  an  interest  in  the  Property  acceptable  to the
      Purchaser.

      (d)  Installment  Contract.  On each  Purchase  Date with  respect  to any
Contract,  the Seller shall deliver to the Purchaser the following  documents or
instruments except for those indicated in clauses (iii), (iv), (v) and (vi):

      (i)   The original Contract;

      (ii) An  unbroken  chain of  endorsements  or  assignments  (which  may be
      included in a blanket  allonge or  assignment)  from the original payee to
      the Contract to the Seller;

      (iii)  Endorsements  or assignments of the Contract (which may be included
      in a blanket allonge or assignment) from the original payee to the Initial
      Servicer  to the  Seller to the  Purchaser's  designee  with  evidence  of
      recording  in  any  jurisdiction  in  which  recording  is  required,   as
      determined by reference to the memoranda and legal  opinions  delivered on
      the Initial  Purchase  Date or  subsequent  memoranda  and legal  opinions
      required  pursuant to Section 3.03(a);  (iv) A Project Title Assignment or
      other document transferring to the Purchaser's designee an interest in the
      Property acceptable to the Purchaser;

      (v) UCC  financing  statement  against  the  Developer,  together  with an
      assignment  thereof from the Initial Servicer to the Seller, and together,
      in each case, with a continuation  statement  within every five years from
      the date of filing of the initial UCC financing  statement,  with, in each
      case, evidence of filing thereon;

      (vi)  Assignments of all UCC financing  statements  from the Seller to the
      Purchaser's designee, with evidence of filing thereon;  and

      (vii)  The  original  or a  copy  of  any  guaranty  relating  to,  or any
      assumption or other agreement, if any, modifying such Contract (including,
      without limitation, any extension agreement).

      (e)  Delivery  Requirements.  With respect to the  documents  described in
Section  3.03(b)(iv),  (c)(iv),  (v), (vi) and (ix) and (d)(iii),  (iv), (v) and
(vi), the Seller shall use its best efforts to have such documents  prepared and
executed and, if applicable,  recorded or filed in the appropriate  jurisdiction
promptly after the Purchase Date.  With respect to any recording or filing,  the
Seller shall  deliver such Asset  Documents to the recording or filing office no
later  than 90 days  after  the  Purchase  Date and  shall  deliver  such  Asset
Documents to the Purchaser with evidence of recording or filing thereon no later
than 180 days from the date of delivery to the recording or filing  office.  The
Purchaser  shall  maintain a copy provided by the Seller until the original or a
copy,  with  recording  or  filing  information  thereon,  is  delivered  to the
Purchaser.  Any Project  Title  Assignment  shall be delivered to the  Purchaser
within 90 days after the Purchase  Date. If any Asset  Document is not delivered
to the  Purchaser  as required by this  Section,  the Seller,  and if the Seller
fails to do so, the  Initial  Servicer  shall  purchase  or  substitute  for the
related Asset pursuant to Section 9.02. At the  Purchaser's  request,  any Asset
Document may be delivered  to and reviewed by the  Collateral  Agent or the Deal
Agent in lieu of the Purchaser.

                                  ARTICLE IV

                        REPRESENTATIONS AND WARRANTIES

      SECTION  4.01.   Representations and Warranties of the Seller. The  Seller
represents and warrants as follows:

      (a) Due Incorporation and Good Standing.  The Seller is a corporation duly
incorporated,  validly existing and in good standing under the laws of the State
of Delaware,  and is duly qualified to do business, and in good standing, in the
State of  Vermont  and in every  other  jurisdiction  in which the nature of its
business  requires it to be so qualified  and the failure to qualify may have an
adverse effect on the Purchaser or any Affected Party.

      (b)  Due  Authorization  and No  Conflict.  The  execution,  delivery  and
performance  by the Seller of this  Agreement,  the Asset Sale Agreement and all
other  Facility  Documents  to  which  it  is  a  party,  and  the  transactions
contemplated hereby and thereby,  are within the Seller's corporate powers, have
been  duly  authorized  by all  necessary  corporate  action  on the part of the
Seller, do not contravene (i) the Seller's charter or bylaws, (ii) any law, rule
or regulation applicable to the Seller, (iii) any contractual restriction in any
material respect contained in any indenture,  loan or credit  agreement,  lease,
mortgage,  security  agreement,  bond,  note,  or other  agreement or instrument
binding on the Seller or its property or (iv) any order, writ, judgment,  award,
injunction or decree binding on the Seller or its property, and do not result in
or require the creation of any Adverse  Claim upon or with respect to any of its
properties pursuant to any material indenture, loan or credit agreement,  lease,
mortgage,  security agreement, bond, note or other material agreement binding on
the Seller or its properties;  and no transaction  contemplated  hereby requires
compliance  with any bulk sales act or similar law. This Agreement and the Asset
Sale Agreement have been duly executed and delivered on behalf of the Seller.

      (c) Governmental Consent. No authorization or approval or other action by,
and no notice to or filing with, any  governmental  authority or regulatory body
is required for the due  execution,  delivery and  performance  by the Seller of
this  Agreement,  the Asset Sale Agreement or any other  agreement,  document or
instrument to be delivered by it hereunder, except for recordings in appropriate
recording offices and filings under the UCC.

      (d)  Enforceability of Facility  Documents.  This Agreement and each other
Facility  Document  to  be  delivered  by  the  Seller  in  connection  herewith
constitute  the legal,  valid and binding  obligation of the Seller  enforceable
against the Seller in accordance with their respective terms subject,  as to the
enforcement of remedies, to bankruptcy, insolvency,  reorganization,  moratorium
and other  similar  laws  affecting  the  enforceability  of  creditors'  rights
generally   applicable   in  the  event  of  the   bankruptcy,   insolvency   or
reorganization of the Seller and to general principles of equity.

      (e) No Litigation.  There are no actions, suits or proceedings pending, or
to the knowledge of the Seller threatened in writing, against the Seller, or the
property of the Seller,  in any court,  or before any arbitrator of any kind, or
before or by any  governmental  body,  which (i)  assert the  invalidity  of any
Facility  Document  or any  action  to be  taken  by the  Seller  in  connection
therewith;  or  (ii)  seek  to  prevent  the  consummation  of the  transactions
contemplated by this Agreement and the other Facility  Documents.  The Seller is
not  in  default  with  respect  to  any  order  of  any  court,  arbitrator  or
governmental body.

      (f) Perfection of Interest in Purchased Asset. Each Purchased Asset shall,
at all times,  be owned by the Seller free and clear of any Adverse Claim except
as provided  herein or arising as a result of any action taken by the  Purchaser
or any assignee  thereof,  and upon each Purchase,  and the recording and filing
specified in Section  3.03,  the  Purchaser  shall acquire a valid and perfected
first  priority  interest in each  Purchased  Asset then  existing or thereafter
arising and in the Related  Security and Collections  with respect  thereto,  in
each case free and  clear of any  Adverse  Claim  except as  provided  herein or
arising  as a result  of any  action  taken  by the  Purchaser  or any  assignee
thereof;  and no effective  financing  statement or other instrument  similar in
effect,  filed or  permitted to be filed by the Seller,  covering any  Purchased
Asset, the Related Security and Collections  shall at any time be on file in any
recording  office  except  such as may be filed  in  favor of the Deal  Agent in
accordance with this Agreement.

      (g)  Accuracy of  Information.  No Asset  Report or  Purchase  Request (if
prepared by the Seller)  furnished  or to be furnished by the Seller to the Deal
Agent, the Purchaser or any Liquidity Provider in connection with this Agreement
is or shall be inaccurate in any material  respect as of the date it is or shall
be dated,  or as of the date so furnished,  and the description of the Purchased
Interests in Appendix A does not contain any untrue statement of a material fact
or omit to state a  material  fact  necessary  in  order to make the  statements
therein,  in the light of the  circumstances  under  which they were  made,  not
misleading.
      (h) Location of Chief  Executive  Office and  Records.  The chief place of
business and chief executive  office of the Seller are located at the address of
the Seller  referred to in Section 10.02 hereof and the locations of the offices
where the Seller keeps all the Records are listed on Exhibit F (or at such other
locations,  notified to the Deal Agent in accordance  with Section  5.01(f),  in
jurisdictions  where all  action  required  by  Section  6.05 has been taken and
completed).

      (i)  Lockbox  Bank  Information.  Except as  otherwise  agreed by the Deal
Agent,  and in the case of occasional  inadvertent  errors on the part of one or
more Obligors  (which errors are immaterial in the aggregate with respect to the
Purchased  Assets  taken as a whole):  (A) the Lockbox  Bank is the only bank to
which Collections of Purchased Assets are remitted by Obligors,  (B) the account
number at such Lockbox Bank is the only Lockbox Account to which  Collections of
Purchased  Assets  are so  remitted,  (C)  the  Post  Office  Box  is  the  only
post-office  box to which  Collections  of  Purchased  Assets  are  remitted  by
Obligors,  and (D) none of the  Servicer,  the Seller or the Lockbox  Bank shall
have given any contrary instructions to any Obligor.

      (j) No Tradenames.The Seller has no tradenames, fictitious names,  assumed
names or "doing business as" names.

      (k) Separate Corporate Existence. The Seller is operated as an entity with
assets and liabilities distinct from those of the Initial Servicer and any other
Affiliates of the Seller, and the Seller hereby acknowledges that the Deal Agent
and the  Purchaser  are  entering  into the  transactions  contemplated  by this
Agreement in reliance upon the Seller's identity as a separate legal entity from
the Initial  Servicer  and each such  Affiliate.  Since its  incorporation,  the
Seller has been  operated in such a manner as to comply with the  covenants  set
forth in Section 5.01(l).

      (l) Investments.  The Seller does not own or hold, directly or indirectly,
any capital stock or equity security of, or any equity interest in, any Person.

      (m) Facility  Documents.  The Facility  Documents are the only  agreements
pursuant to which the Seller  purchases and receives  contributions of Assets or
any other  interests  from the  Initial  Servicer,  and the  Facility  Documents
represent all material  agreements  between the Initial Servicer and the Seller.
Upon the purchase  and/or  contribution of each Asset pursuant to the Asset Sale
Agreement, the Seller shall be the lawful owner of, and have good and marketable
title to,  such Asset and all  assets  relating  thereto,  free and clear of any
Adverse Claims. All such assets are transferred  without recourse to the Initial
Servicer except as described in the Asset Sale Agreement.

      (n)  Business.  Since its  incorporation,  the  Seller  has  conducted  no
business other than the purchase and receipt of Assets and related  assets,  the
sale of Purchased  Interests and such other  activities as are incidental to the
foregoing.

      (o) Taxes.  The Seller has filed or caused to be filed all Federal,  state
and local tax  returns  which are  required  to be filed by it,  and has paid or
caused to be paid all taxes prior to such taxes becoming delinquent,  other than
any taxes or assessments the validity of which are being contested in good faith
by appropriate proceedings.

      (p)  Solvency.  The  Seller is not  "insolvent"  (as such term is  defined
in '101(32)(A) of the Bankruptcy Code.

      (q)  Software.  To the  extent  the  Seller or the  Servicer  develops  or
licenses computer software to administer the Purchased Assets, the Seller or the
Servicer,  respectively,  shall  assign  (by  way  of  sale  or  collateral)  or
sublicense  such  rights to use all of such  software  solely  with  respect  to
administration of the Purchased Assets to the Deal Agent and the Purchaser.

      (r) Investment  Company Act. The Seller is not, and  is not  controlled by
an "investment company" within the meaning of the Investment Company Act of 1940
, as amended.

      (s) Use of  Proceeds.  All proceeds of the  Purchases  will be used by the
Seller to fund its purchase  obligations  under the Asset Sale  Agreement and to
pay  ordinary  operating  expenses  incurred  in  connection  therewith,  and no
proceeds  of any  Purchase  will be used by the Seller  (i) for a purpose  which
violates,  or would be inconsistent with, Regulation G, T, U or X promulgated by
the Board of Governors of the Federal  Reserve  System from time to time or (ii)
to acquire any security in any transaction  which is subject to Section 13 or 14
of the Securities Exchange Act of 1934, as amended.

      SECTION  4.02.    Representations  and  Warranties of  the  Servicer.  The
Servicer represents and warrants as follows:

      (a) Due  Incorporation  and Good  Standing.  The Servicer is a corporation
duly  incorporated,  validly existing and in good standing under the laws of its
jurisdiction of  incorporation  and is duly qualified to do business,  and is in
good  standing,  in every  jurisdiction  in which  the  nature  of its  business
requires  it to be so  qualified  and the failure to qualify may have an adverse
effect on the Purchaser or any Affected Party.

      (b)  Due  Authorization  and No  Conflict.  The  execution,  delivery  and
performance by the Servicer of this Agreement,  the Asset Sale Agreement and all
other agreements, instruments and documents to be delivered by it hereunder, and
the  transactions  contemplated  hereby and thereby,  are within the  Servicer's
corporate powers, have been duly authorized by all necessary corporate action on
the part of the  Servicer,  do not  contravene  (i) the  Servicer's  charter  or
bylaws, (ii) any law, rule or regulation  applicable to the Servicer,  (iii) any
material contractual  restriction  contained in any material indenture,  loan or
credit agreement,  lease,  mortgage,  security  agreement,  bond, note, or other
material agreement or instrument binding on the Servicer or its property or (iv)
any material order, writ, judgment,  award,  injunction or decree binding on the
Servicer or its  property,  and do not result in or require the  creation of any
Adverse  Claim upon or with  respect to any of its  properties  pursuant  to any
material  indenture,  loan  or  credit  agreement,   lease,  mortgage,  security
agreement, bond, note or other material agreement binding on the Servicer or its
properties.  This Agreement and the Asset Sale Agreement have been duly executed
and delivered on behalf of the Servicer.

      (c) Governmental Consent. No authorization or approval or other action by,
and no notice to or filing with, any  governmental  authority or regulatory body
is required for the due execution,  delivery and  performance by the Servicer of
this  Agreement,  the Asset Sale Agreement or any other  agreement,  document or
instrument to be delivered by it hereunder.

      (d)  Enforceability of Facility  Documents.  This Agreement and each other
Facility  Document  to be  delivered  by the  Servicer  in  connection  herewith
constitute the legal, valid and binding  obligation of the Servicer  enforceable
against the Servicer in accordance with their  respective  terms subject,  as to
the  enforcement  of  remedies,  to  bankruptcy,   insolvency,   reorganization,
moratorium  and other similar laws  affecting the  enforceability  of creditors'
rights  generally  applicable  in the  event of the  bankruptcy,  insolvency  or
reorganization of the Servicer and to general principles of equity.

      (e) No Litigation.  There are no actions, suits or proceedings pending, or
to the knowledge of the Servicer threatened in writing, against or affecting the
Servicer,  or the  property  of  the  Servicer,  in any  court,  or  before  any
arbitrator of any kind, or before or by any governmental  body, which (i) assert
the  invalidity  of any  Facility  Document  or any  action  to be  taken by the
Servicer in connection  therewith,  or (ii) seek to prevent the  consummation of
the  transactions   contemplated  by  this  Agreement  and  the  other  Facility
Documents.  The  Servicer  is not in  default  with  respect to any order of any
court, arbitrator or governmental body.

      (f)  Accuracy of  Information.  No Asset  Report or  Purchase  Request (if
prepared by the  Servicer),  furnished or to be furnished by the Servicer to the
Deal Agent,  the  Purchaser or any Liquidity  Provider in  connection  with this
Agreement is or shall be inaccurate in any material respect as of the date it is
or shall be dated,  or as of the date so furnished,  and the  description of the
Purchased  Interests  in Appendix A does not contain any untrue  statement  of a
material  fact or omit to state a material  fact  necessary in order to make the
statements  therein,  in the light of the  circumstances  under  which they were
made, not misleading.

      (g)  Financial  Statements.  The  audited  balance  sheet  of the  Initial
Servicer as at December 31, 1996, and the related  statements of income and cash
flow of the Initial  Servicer  for the year period then ended,  certified by its
chief financial officer,  copies of which have been furnished to the Deal Agent,
present  fairly in all material  respects the financial  position of the Initial
Servicer at such date and the results of the operations of the Initial  Servicer
for the period ended on such date,  all in accordance  with  generally  accepted
accounting  principles  consistently applied, and since December 31, 1996, there
has been no material adverse change in any such condition or operations.

      SECTION 4.03.  Eligible  Asset.  Unless an exception is noted on the Asset
Schedule  and  acceptable  to the  Purchaser,  and each Rating  Agency has given
written  confirmation  that its rating will not be downgraded  or withdrawn,  an
Eligible  Asset at any time will meet the following  criteria.  If any Purchased
Asset or Project  exceeds a specified  portion of the pool of  Purchased  Assets
required  for an Eligible  Asset,  the  Purchased  Asset or Project  within such
portion  will  remain  an  Eligible  Asset  unless  otherwise  provided  in this
Agreement.

      (a) Schedule.  Each item on the Asset Schedule and the Project Schedule is
correct and  complete in all  material  respects as of the Cut-off  Date and the
Purchase Date.

      (b) Ownership.  Upon the assignment from the Seller to the Purchaser,  the
Purchaser  shall own legal and equitable  title to the Asset,  free and clear of
any lien, charge or encumbrance in favor of any other Person.

      (c) Loan.  With  respect to each Loan other than any Loan  relating to the
Stardust Lodge Project,  the Property  consists of a right to use for a fixed or
floating  week in  perpetuity  and an  undivided  interest  in fee  simple  or a
substantially equivalent leasehold in real property consisting of a lodging unit
or  group of  lodging  units  at a  Project.  The  Obligor  is the  owner of the
Property.  The  Mortgage  creates a first  priority  lien on the  Property.  The
Mortgage has been duly recorded in all jurisdictions  where it is required to be
recorded to create a first  priority  lien on the  Property.  The  execution and
delivery of a chain of assignments  of the Mortgage from the original  mortgagee
to  the  Purchaser,   the  recording  of  such  assignments  in  the  applicable
jurisdiction,  the execution and delivery of a chain of endorsements of the Note
from the original  payee to the  Purchaser  and the delivery of the Mortgage and
Note to the Purchaser constitute all actions required to perfect the Purchaser's
ownership interest in the Mortgage and Note.

      (d) Stardust Lodge Project Loan. With respect to each Loan relating to the
Stardust Lodge Project,  the Property  consists of a right to use for a fixed or
floating week in perpetuity and a beneficial  interest in a trust that holds fee
title to the  Project.  The  Obligor  is the owner of the  Property.  A Mortgage
creates a first priority  security interest in such beneficial  interest,  which
was perfected by filing a UCC financing statement with the California  Secretary
of State and filing a UCC continuation every five years. A Mortgage also creates
a first  priority lien on the Obligor's  right to use the Project which right to
use was conveyed to the Obligor by a grant deed and which lien was  perfected by
recording in the  appropriate  jurisdiction.  The  execution and delivery to the
Purchaser of the chain of assignments of the security interest and lien from the
original  mortgagee to the Purchaser and the chain of  endorsements  of the Note
from the original payee to the Purchaser,  the filing of any  assignments of the
UCC  financing  statements  from the original  mortgagee to the  Purchaser,  the
recording  of the  assignments  of the lien,  and the  delivery  of the Note and
Mortgages  constitute all actions required to perfect the Purchaser's  ownership
interest in the Mortgage and Note.

      (e) Installment Contract.  With respect to each Installment Contract,  the
Obligor  has a right  to use for a fixed or  floating  week in  perpetuity.  The
Record  Owner has an  undivided  interest  in a fee  simple  or a  substantially
equivalent leasehold in real property consisting of a lodging unit or a group of
lodging units at a Project. The Installment Contract provides for the conveyance
of such interest to the Obligor upon payment of the installments.  The execution
and delivery of a chain of  assignments  of the  Installment  Contract  from the
original  payee to the Purchaser and the assignment  and  acknowledgment  of the
Project  Title  Assignment  constitute  all  actions  required  to  perfect  the
Purchaser's ownership interest in the Installment Contract and related Property.

      (f) Binding  Obligation.  Each of the Asset  Documents  is genuine and the
legal,  valid,  binding and enforceable  obligation of the parties  thereto.  No
Asset or Asset Document is subject to any dispute,  claim, defense or set-off of
any kind. The Purchaser is not obligated to perform any obligation in respect of
any Loan or Contract,  and all  obligations  of the original  payee or mortgagee
under the Loan or Contract  have been  performed.  The Asset and the Property is
assignable to the Purchaser  without the consent of the Project  Association  or
any other  Person and there are no other  restrictions  on resale  thereof.  The
terms of the Asset have not been modified in any material  respect.  The Obligor
is not an Affiliate of the Initial Servicer or the Seller.

      (g)  Title.  The  Obligor of a Loan or the  Record  Owner of any  Property
subject to an Installment Contract has good and marketable fee simple title or a
substantially  equivalent leasehold to the Property, free and clear of any lien,
charge or  encumbrance,  subject  only to any  Permitted  Encumbrances  to which
properties  of the same type are  commonly  subject and which do not  materially
interfere with the benefits of the security  intended to be provided by the Loan
or Installment Contract.  The owners of the Project have good and marketable fee
simple title, free and clear of any lien, charge or encumbrance, subject only to
any Permitted Encumbrance or ground lease with commercially financeable terms to
which  properties  of the  same  type  are  commonly  subject  and  which do not
materially  interfere with the benefits of the security  intended to be provided
by the Loan or Installment Contract.
      (h) Customary Documents.  Each Asset Document is in a form used by prudent
lenders with respect to similar  assets.  The Mortgage or  Installment  Contract
contains  customary  and  enforceable  provisions so as to render the rights and
remedies of the holder thereof  adequate for the practical  realization  against
the  related  Property of the benefit of the  security  interest  intended to be
provided  thereby.  There is no exemption  available to the Obligor  which would
interfere with the  mortgagee's  right to foreclosure  the Mortgage,  other than
that  which  may be  available  under  applicable  bankruptcy,  debt  relief  or
homestead statutes. The Note is not secured by any collateral except the lien of
the Mortgage as described in this Agreement. The trustee under any deed of trust
is qualified  under  applicable  law to serve as such,  has been  designated  in
accordance with applicable law, and so currently serves.

      (i) Compliance with Law. All federal, state and local laws and regulations
applicable to the  origination  or servicing of the Asset and the sale or use of
the related Property, including those relating to usury, truth-in-lending,  real
estate settlement  procedures,  land sales,  consumer credit  protection,  equal
credit opportunity,  and offer or sale of securities, have been complied with in
all material  respects.  Any originator or servicer of the Asset and the related
Property has been duly  qualified  to do business and properly  licensed in each
applicable  jurisdiction  to the  extent  failure  to do so may have a  material
adverse affect on the he Purchaser.

      (j) Credit. The Asset satisfies all applicable  requirements of the Credit
and Collection Policy and Minimum Underwriting  Guidelines except that 5% of the
Pool need not comply with the Minimum  Underwriting  Guidelines.  The collection
and servicing  practices  with respect to the Asset since its  origination  have
been in all  respect  legal,  proper  and  prudent,  and  consistent  with those
customarily  employed by companies servicing mortgage loans secured by timeshare
estates.  The Asset was originated in accordance with prudent  underwriting  and
origination  criteria of the  originator.  The Asset has not been  rewritten  or
modified.

      (k) Default.  The Asset is not a Defaulted  Asset and on the Purchase Date
thereof is not a Delinquent Asset and has not been specifically reserved against
by the  Initial  Servicer  or its  Affiliates  or  classified  by any of them as
uncollectible  or charged off. No  installment  payable under the Asset has been
deferred  or extended  while the Asset is owned by the  Initial  Servicer or its
Affiliates  except for the grant of an  extension  of payment  provided  (i) the
Obligor is not solicited for an extension and (ii) such extension is a customary
practice and made in accordance with the Credit and Collection Policy. There are
no delinquent taxes,  ground rents,  water charges,  sewer rents, or assessments
outstanding with respect to any of the Property. On the applicable Purchase Date
(except on the Initial  Purchase  Date),  any payments of principal and interest
with  respect to the Asset and  maintenance  fees with  respect  to the  Project
Association  are not  more  than 30 days  past  the  due  date.  All  applicable
intangible taxes and documentary  stamp taxes have been paid with respect to the
Asset.

      (l) Good Repair. The unit related to the timeshare estate for the Asset is
completed in accordance with the  requirements of federal,  state and local law,
is ready for occupancy and is not in need of maintenance  or repair,  except for
ordinary, routine maintenance and repairs which are not substantial in nature or
cost and such unit contains no structural defects materially affecting its value
and is in good  condition.  The Project is contiguous to a dedicated  public (or
private,  if  subject  to an  easement  running  in favor of all  owners  of the
timeshare  estates  constituting  such Project,  and their  invitees,  affording
access to a public  street),  physically-open,  all-weather  street,  allows for
appropriate ingress, egress and parking and is adequately serviced by public (or
private if complying  with all material and applicable  local laws,  regulations
and  ordinances)  water and sewer systems and  utilities.  The Project is not in
need of  maintenance or repair,  except for ordinary,  routine  maintenance  and
repairs which are not substantial in nature of cost and such Project contains no
structural defects  materially  affecting its value. The portions of the Project
which  represent the security gate,  pool,  tennis court and other  recreational
facilities,  if any, are in good repair and  condition,  ordinary  wear and tear
excepted.

      (m) No  Casualty  or  Condemnation.  The  Property  and  the  Project  are
undamaged by waste,  fire,  earthquake  or earth  movement,  wind storm,  flood,
tornado or other casualty,  so as to adversely  affect the value of the Property
as security for the Assets or the use for which the Property was  intended.  The
Property and the Project are  adequately  insured for fire,  earthquake or earth
movement, wind storm, flood, tornado,  vandalism and other casualty. There is no
legal, judicial or administrative proceeding pending or threatened for the total
or partial  condemnation  or taking of the  Property  or the  Project by eminent
domain.

      (n) Title  Policy.  If the Asset is  covered by a form of  lender's  title
insurance policy,  the policy has been issued by a title insurer qualified to do
business in the jurisdiction where the related Property is located, insuring the
original  lender and its successors and assigns as an assignee of the Asset,  as
to the first priority lien of the related Mortgage or Installment Contract in an
amount  equal to the original  principal  balance of such Asset.  Such  lender's
title  insurance  policy is in full force and  effect.  No claims have been made
under such lender's title insurance policy.

      (o)  Insurance  and  Condemnation  Proceeds.  No action  has been taken or
omitted that would  impair or  invalidate  the coverage  provided by any hazard,
title or other insurance policy which has been obtained relating to the Asset or
the Property.  In the event of a casualty or  condemnation,  the Purchaser  will
receive insurance and condemnation proceeds in respect of the Property, if any.

      (p) Amortization. The proceeds of the Asset have been fully disbursed. The
Asset is a fully amortizing debt obligation which provides for level payments of
principal and interest.  The  Outstanding  Balance does not include any interest
added to principal. No Asset has an Outstanding Balance in excess of $25,000. No
Asset has an original term to maturity of more than 180 months. Except for up to
10% of the Pool,  no Asset has an  original  term to  maturity  of more than 120
months.  Upon becoming a Purchased  Asset, the Asset will not cause the Weighted
Average  Remaining  Term to exceed 72  months.  At least one  scheduled  monthly
payment  has been  made on the  Asset on the  Purchase  Date.  If less than four
scheduled monthly payments have been made on the Asset on the Purchase Date, the
Initial  Servicer shall have  guaranteed all scheduled  monthly  payments on the
Asset until the Asset has had four  scheduled  payments made and qualifies as an
Eligible  Asset as if purchased on such date.  The  weighted  average  number of
monthly  payments based on  Outstanding  Balance on the Purchase Date exceeds 12
payments.  The Obligor made a minimum downpayment for the Property of 10% of the
purchase  price.  The index for any adjustable rate loan shall be the prime rate
as  reported  in The Wall  Street  Journal or another  index  acceptable  to the
Purchaser.  No adjustable rate loan shall have a periodic or lifetime cap unless
acceptable to the Purchaser.


     (q) United States. All payments on the Asset are denominated and payable in
U.S.  dollars.  Except for up to 10% of the Pool, each Obligor is a U.S. citizen
with a U.S.  mailing  address.  Any  Obligor  who is not a U.S.  citizen  with a
U.S.mailing  address is from a country which will not impose any  withholding or
other tax liability with respect to payments on the Asset. Any Note and Mortgage
may be enforced without personal jurisdiction over the Obligor, and any Contract
may be enforced in at least one court in the United  States  which has  personal
jurisdiction over the Obligor.

      (r)  Project.   The  Project  is  affiliated   with  Resorts   Condominium
International or Intervals International.  The Assets related to Projects in any
one state will not constitute  more than 35% of the Pool, and the Assets related
to Projects in the top three  states  will not  constitute  more than 75% of the
Pool.  The Assets  related to Projects  located  outside the United  States will
constitute  less than 5% of the  Pool.  Except  for up to 25% of the  Pool,  the
intervals in each  Project,  based upon the good faith  estimates of the Seller,
will be at least 70% sold out to persons other than the  Developer,  the Manager
or the Guarantor or any Affiliates of the  foregoing.  The Assets related to any
single Project (other than up to $3,437,000 in Outstanding  Balance with respect
to Harbor Club and up to  $1,834,000  in  Outstanding  Balance  with  respect to
Thunderbird) will not constitute more than 10% of the Pool.

      (s) Project Organization.  The Project Association for the Project is duly
organized and validly existing to the extent that its organization and existence
may affect the interest of the  Purchaser.  A homeowners or members  association
has been established. The rights of the Obligor are subject to the declarations,
covenants and restrictions of record affecting the Project.

      (t) Project  Developer.  The  Developer of the Project has complied in all
material  respects with all material  obligations  and duties  incumbent upon it
under the  declaration  of condominium  or similar  applicable  document for the
Project, and with respect to any homeowners association or similar organization,
to the extent  such  compliance  may have a material  effect on the  interest of
Purchaser.  No Developer has any continuing or future right or obligation  under
any  Asset  Documents  including  any  obligation  to  provide  services  to any
consumer;  provided that the Developer may have the  obligation to make payments
to a  homeowners  association  for the  Project,  which  homeowners  association
provides or causes to be  provided  services  to  consumers  pursuant to certain
documents  establishing  the  timeshare  plan;  and  further  provided  that any
obligation of the Developer to make payments to a homeowners  association arises
from the Developer's ownership of timeshare interest in the Project and not from
the Developer's role as the developer of the Project.  The Assets related to any
one  Developer  and its  Affiliates  constitute  25% or less of the Pool. If the
Initial Servicer purchased Assets  constituting 10% or more of the Pool from any
one  Developer  in a  transaction  which  provides  for  recourse,  neither  the
Developer  nor any of its  Affiliates  (i) are in any  bankruptcy  or insolvency
proceeding, (ii) have been in any bankruptcy or insolvency proceeding during the
preceding  three  years or (iii) are in  material  default  with  respect to any
Indebtedness  having a principal  amount of $100,000 or greater and such default
has continued  after the  applicable  grace period.  If the event in clause (i),
(ii) or (iii) occurs, no new Assets shall be permitted to be purchased from such
Developer.

      (u)  Project  Management.  The  Project in which a Property  is located is
currently being managed pursuant to a management  agreement  between the related
Project Association and the Manager. The management agreement contains customary
provisions for the prudent management of the Project. None of the parties to any
management agreement is in material default under the management agreement.

      (v) Project  Licenses.  All  licenses,  permits and  approvals  reasonably
necessary  or  required  under  the  laws,  ordinances  and  regulations  of the
appropriate  jurisdiction  for the  operation,  occupancy and use of the Project
have been obtained and are in effect. No zoning law,  ordinance or regulation is
in  violation  by the  maintenance,  operation,  occupancy  or use of any of the
Project such that the violation would adversely affect the operation,  occupancy
or use of the Project.  No building or other  federal,  state or municipal  law,
ordinance,  regulation  or  any  restrictive  covenant  is in  violation  by the
maintenance,  operation,  occupancy or use of any Project in its present  manner
such that the violation would adversely affect the operation, occupancy or other
use of the Project.

      (w) Environmental  Laws. Each Project and the present use thereof does not
violate any  applicable  environmental  laws,  ordinances or  regulations of any
governmental authority, so as to materially adversely affect the value or use of
the  Project  or the  performance  by the  related  Project  Association  of its
obligations  pursuant to and as  contemplated by the terms and provisions of its
management  agreement.  There is no condition  presently existing concerning any
Project  relating  to any  hazardous  or  toxic  materials,  asbestos  or  other
environmental   or  similar  matters  which  might  reasonably  be  expected  to
materially and adversely  affect the present use of the Project or the financial
condition or business operations of the related Project Association.

      (x) No Adverse Proceeding. There is no pending or threatened action, suit,
proceeding or investigation before any court,  administrative agency, arbitrator
or governmental  body against or affecting the Property or the Project which, if
decided  adversely,  would  materially  and  adversely  affect the  transactions
contemplated  hereunder.  With the exception of Club  Donatello,  Willow Valley,
Surfrider,  Smoketree Lodge and Ridge Sierra under Harlesk Management,  Inc., no
Project is involved in a bankruptcy or  insolvency  proceeding  which  concluded
prior to the Purchase Date. No Project is involved in a bankruptcy or insolvency
proceeding which has not concluded prior to the Purchase Date.

                                    ARTICLE V

                                GENERAL COVENANTS

      SECTION  5.01.  Affirmative  Covenants  of the  Seller.  From the  Initial
Purchase Date until the later of the  Termination  Date or the Collection  Date,
the Seller shall, unless the Deal Agent shall otherwise consent in writing:

      (a)  Compliance with Laws, Etc.  Comply  in all  material   respects  with
all applicable laws, rules, regulations and orders with respect to all Assets.

      (b)  Preservation  of  Corporate  Existence.  Preserve  and  maintain  its
corporate  existence,  rights,  franchises and privileges in the jurisdiction of
its  incorporation,  and  qualify  and remain  qualified  in good  standing as a
foreign  corporation  in each  jurisdiction  where the  nature  of its  business
requires it to be so qualified and the failure to qualify may  adversely  affect
the Purchaser or any other Affected Party.

      (c) Audits. From time to time during each calendar quarter, (with expenses
to be allocated as set forth in Section  10.06) upon  reasonable  prior  written
notice to the Seller and during regular  business hours,  permit the Deal Agent,
or its  agents  or  representatives,  (i) to  examine  and  make  copies  of and
abstracts from all Records,  and (ii) to visit the offices and properties of the
Seller for the  purpose  of  examining  such  Records,  and to  discuss  matters
relating to the Assets or the  Seller's  performance  hereunder  with any of the
officers or employees of the Seller having  knowledge of such matters and in the
Seller's presence with the Seller's independent public accountants.

      (d)  Keeping of  Records  and Books of  Account.  Maintain  and  implement
administrative  and operating  procedures  (including,  without  limitation,  an
ability  to  recreate  records  evidencing  the  Assets  in  the  event  of  the
destruction  of the  originals  thereof) and keep and maintain,  all  documents,
books,  records and other information  reasonably necessary or advisable for the
collection of all Assets  (including,  without  limitation,  records adequate to
permit the daily  identification  of all  Collections of and adjustments to each
Purchased  Asset).  The Asset  Documents  shall be delivered  to the  Collateral
Custodian and all other Records  relating to the Purchased  Assets shall be held
by the Servicer.

      (e)  Performance  and  Compliance  with Assets.  At its expense timely and
fully  perform  and  comply,  in  all  material  respects,   with  all  material
provisions, covenants and other promises required to be observed by it under the
Purchased Asset.

      (f)  Location  of  Records.  Keep its chief  place of  business  and chief
executive office, and the offices where it keeps the Records, at the address(es)
of the Seller  referred  to in Section  4.01(h),  or, in any such case,  upon 30
days' prior written notice to the Deal Agent, at such other locations within the
United  States  where all action  required by Section 6.05 shall have been taken
and completed.

      (g)  Credit and Collection Policies.  Comply  in all   material   respects
with its Credit and Collection Policy in regard to each Purchased Asset.

      (h) Obligor Filing  Requirement.Comply with the Obligor Filing Requirement
and the Purchaser Filing Requirement.

      (i) Facility Documents.  Comply in all material respects with the terms of
and employ the procedures outlined in and enforce its rights with respect to the
obligations of the Initial  Servicer  under the Facility  Documents to which the
Seller is a party.

      (j)  Separate  Corporate  Existence.  Take all  reasonable  steps it deems
necessary or advisable  to maintain  the Seller's  identity as a separate  legal
entity from the Initial  Servicer  and any of its other  Affiliates,  and to not
mislead others as to the separate  identity of Seller and the Initial  Servicer.
Without  limiting  the  generality  of  the  foregoing  and in  addition  to and
consistent  with the  covenants set forth in Sections  5.01(b) and 5.01(i),  the
Seller shall:

      (i)   constitute  a  limited  purpose   corporation  whose  activities are
      restricted in its certificate of incorporation;

      (ii) not permit the direct  involvement  by the  Initial  Servicer  or any
      other  Affiliate of the Initial  Servicer in the day-to-day  management of
      the Seller (other than permitting employees, officers and directors of the
      Initial  Servicer to serve as  employees,  officers  and  directors of the
      Seller and to take such acts and do such things in connection therewith as
      such  persons deem  reasonable  or necessary  under the  circumstances  to
      faithfully  fulfill  their duties as officers,  directors and employees of
      Seller,  or as they are required to take or do by any applicable law, rule
      or  regulation,  or by  the  order,  decree  or  judgment  of  any  court,
      arbitrator or governmental body);

      (iii)  other  than  activities  undertaken  pursuant  to  the  Asset  Sale
      Agreement and this Agreement and the other Facility Documents,  not engage
      in  intercorporate  transactions  with the  Initial  Servicer or any other
      Affiliate of the Initial Servicer, other than transactions in the ordinary
      course of business between a parent  corporation and its subsidiary;  (iv)
      maintain separate  corporate records and books of account from the Initial
      Servicer and the other Affiliates of the Initial Servicer,  hold corporate
      meetings and otherwise observe corporate formalities;

      (v) prepare its financial  statements  separately  from those of its other
      Affiliates or prepare consolidated and consolidating  financial statements
      of  the  Initial   Servicer  and  its   Affiliates  and  insure  that  any
      consolidated  financial  statements  and books and  records of the Initial
      Servicer  that include the Seller have notes to the effect that the Seller
      is a separate  corporate  entity and that the  Seller's  creditors  have a
      claim on its  Assets  prior  to those  Assets  becoming  available  to any
      creditors of the Initial Servicer;

      (vi) not commingle its funds (other than those  deposited into the Lockbox
      Account) or other Assets of the Seller with those of any other  Affiliate,
      and not hold its Assets in any manner that would be  reasonably  likely to
      mislead  any  Person  as to the  ownership  of such  Assets,  and will not
      maintain  bank  accounts  or other  depository  accounts  (other  than the
      Lockbox  Account) to which any Affiliate is an account  party,  into which
      any Affiliate  makes deposits or from which any Affiliate has the power to
      make withdrawals;

      (vii)  pay its own  expenses  and  obligations  out of its own  funds  and
      Assets, other than expenses incurred in connection with the closing of the
      transactions  contemplated  by  this  Agreement  and  the  other  Facility
      Documents;

      (viii) not permit the  Initial  Servicer or any  Affiliate  of the Initial
      Servicer  (other  than in  connection  with any  Lockbox  Account)  to (A)
      guaranty  any of the  Seller's  obligations  or (B)  advance  funds to the
      Seller for the payment of expenses or otherwise  (other than in connection
      with Servicer Advances);

      (ix) not pay any expenses,  guaranty any  obligations or advance funds for
      the  payment of  expenses or  obligations  of the Initial  Servicer or any
      other Affiliate of the Initial Servicer;

      (x)   conduct   all    business    correspondence    of  the   Seller  and
      other communications in the Seller's own name on its own stationery;

      (xi) not permit the Initial Servicer or any other Affiliate of the Initial
      Servicer  to act as an agent of the  Seller  in any  capacity  (except  as
      Servicer  hereunder)  and not  itself  act as an  agent  for  the  Initial
      Servicer,  but  instead  present  itself to the  public  as a  corporation
      separate from the Initial Servicer,  independently engaged in the business
      of purchasing and selling Assets;

      (xii) maintain one independent  director at all times who shall at no time
      be a shareholder,  director, officer, employee,  Affiliate or associate of
      any  shareholder  of the Initial  Servicer as provided in its  articles of
      incorporation; and

      (xiii) take such other actions as are necessary on its part to ensure that
      the facts and  assumptions  set forth in the opinion of  Seller's  counsel
      described in Section 3.01(m) remain true and correct at all times.


      (k) Interest Rate Hedges.  (A) Within five Business Days after any failure
to meet the Interest Rate Hedge Test or make another arrangement satisfactory to
the Deal Agent,  concurrently with each Asset Purchase hereunder,  enter into an
Interest Rate Hedge with such  counterparties and on such terms as shall satisfy
the requirements of clause (B) below, and transfer,  assign and otherwise convey
to the Deal Agent all of the Seller's rights in, to and under such Interest Rate
Hedge  pursuant to an Interest Rate Hedge  Assignment  together with an Interest
Rate Hedge  Assignment  Acknowledgment  executed by the relevant  Interest  Rate
Hedge counterparty; and

      (B) Within five  Business Days after any failure to meet the Interest Rate
Hedge Test or make another arrangement satisfactory to the Deal Agent, maintain,
at all times,  with  respect  to each Asset  Purchase  and the  Eligible  Assets
subject  thereto,  Interest  Rate Hedges (i) between the Seller and either FNBB,
and/or such other counterparties as may be acceptable to the Deal Agent and have
a long-term rating of at least AA- from S&P, Aa3 from Moody's,  AA- from DCR (if
rated by DCR) and a short-term rating of at least A-1 from S&P, P-1 from Moody's
and D-1 from DCR (if rated by DCR), (ii) with an aggregate notional amount equal
to the  product  of (A) a factor  of  100%,  and (B) the  aggregate  Outstanding
Balance of such Eligible  Assets with a fixed Asset Rate,  less the  Outstanding
Balance of any such Eligible  Assets which have  interest rate hedge  protection
satisfactory  to the Deal  Agent,  amortizing  in a manner  satisfactory  to the
parties hereto,  (iii) with respect to which the Seller makes periodic  payments
to the applicable counterparty (solely on a net basis from funds available under
Section 2.06(d)(iii) or Section 2.06(e)(ii), as the case may be) by reference to
a fixed  rate  equal  to the  applicable  market  rate on the  notional  balance
specified in clause (ii) above, and the counterparty  makes periodic payments to
the Seller or (to the extent the Deal Agent has required  such  counterparty  to
remit such  payments  directly  to the Deal  Agent) to the Deal Agent (in either
case,  solely on a net basis) by  reference  to a rate equal during any month to
the daily  average  during such month of the money market yields of the rate set
forth in H.15 (519) for 30 day maturities under the caption  "Commercial  Paper"
and (iv) which the Seller at the direction of the Deal Agent may terminate every
three or six months; and

      (C)  Deliver  prior  written  notice to each of the Rating  Agencies  then
rating the  commercial  paper notes of the  Purchaser  (if any), of the Seller's
entry into one or more Interest Rate Hedges with a Person other than FNBB.

      (l) Search  Updates.  Without  limiting any other rights of the Deal Agent
hereunder,  upon the  Purchaser's  request  provided  the  request  is made in a
commercially  reasonable  manner,  with expenses to be allocated as set forth in
Section 10.06,  obtain (or cause the Servicer to obtain),  at the expense of the
Seller,  and  deliver  to the Deal  Agent,  certified  copies  of  Requests  for
Information or Copies (Form UCC-11) (or a similar  search report  certified by a
party acceptable to the Deal Agent),  listing all effective financing statements
which name, the originator,  any intervening  assignee,  the Initial Servicer or
the Seller (under their  respective  present  names,  and any previous  names or
tradenames) as debtor and which are filed in any  jurisdiction  in which filings
would be required  to be made under the UCC of any  applicable  jurisdiction  in
order to perfect (by filing a financing  statement)  a security  interest in any
Purchased  Interests,  together with copies of such financing  statements (which
search reports may be "bringdowns" of any earlier search report executed against
any such Person in the same jurisdiction).

      (m) Fair  Selection.  In connection  with each Asset  Purchase  hereunder,
select,  to the best  knowledge  of the Initial  Servicer  and the Seller on the
Purchase Date,  Eligible  Assets for inclusion in such Asset Purchase on a basis
which is not adverse to any of the Purchaser or the Deal Agent.

      SECTION  5.02.  Reporting  Requirements  of the  Seller.  From the Initial
Purchase Date until the later of the  Termination  Date or the Collection  Date,
the Seller  will,  unless the Deal Agent  shall  otherwise  consent in  writing,
furnish to the Deal Agent:

      (a) as soon as possible and in any event within five  Business  Days after
the Seller or the Servicer obtains  knowledge of the occurrence of each Event of
Termination  or each event which,  with the giving of notice or lapse of time or
both,  would  constitute  an Event of  Termination,  the  statement of the chief
financial  officer,  chief accounting officer or treasurer of the Seller setting
forth  details of such Event of  Termination  or event and the action  which the
Seller proposes to take with respect thereto;

      (b) as soon as available  and in any event within 45 days after the end of
each of the first  three  quarters  of each  fiscal  year of the  Seller and the
Initial Servicer,  balance sheets of the Seller,  consolidated balance sheets of
the Initial  Servicer and its  consolidated  Subsidiaries  as of the end of such
quarter, and the related consolidated statements of income and retained earnings
and consolidated  statements of cash flow of the Seller and the Initial Servicer
and its consolidated Subsidiaries,  each for the period commencing at the end of
the  previous  fiscal  year (as  appropriate)  and  ending  with the end of such
quarter;

      (c) as soon as available  and in any event within 90 days after the end of
each fiscal year of the Seller and the Initial  Servicer,  an unqualified  audit
report,  including the balance sheets of the Seller and the consolidated balance
sheets of the Initial Servicer and its  consolidated  Subsidiaries as of the end
of such year and the  related  consolidated  statements  of income and  retained
earnings and consolidated  statements of cash flow of the Seller and the Initial
Servicer  and its  consolidated  Subsidiaries  for such  year,  together  with a
separate  consolidating balance sheet, statement of income and retained earnings
and  statement  of cash flow for the  Initial  Servicer  and the  Seller for the
equivalent  periods,  all  of  the  foregoing  to  be  certified  by  nationally
recognized  independent public accountants acceptable to the Deal Agent, in each
such case prepared in accordance with generally accepted accounting  principles,
consistently applied; and

      (d) as soon as  reasonably  practicable,  from  time to time,  such  other
information,  documents,  records or reports (including SEC filings)  respecting
the Assets or the  conditions  or  operations,  financial or  otherwise,  of the
Seller and its  Affiliates  as the Deal  Agent may from time to time  reasonably
request in order to protect  the  interests  of the Deal Agent or the  Purchaser
under or as contemplated by this Agreement.

      SECTION 5.03.  Negative Covenants of the Seller. From the Initial Purchase
Date until the later of the Termination  Date or the Collection Date, the Seller
will not, without the written consent of the Deal Agent:

      (a) Sales,  Liens,  Etc.  Against  Assets and  Related  Assets.  Except as
otherwise  provided herein,  (i) sell, assign (by operation of law or otherwise)
or otherwise dispose of, or create or suffer to exist, any Adverse Claim upon or
with respect to, any Purchased Asset,  Related  Security or Collections,  or any
Asset Sale Asset or Servicing  Agreement  Asset (if any), or assign any right to
receive  income in  respect  thereof,  or (ii)  create  or suffer to exist,  any
Adverse Claim upon or with respect to any Purchased Interests.


      (b)  Extension or Amendment  of Assets.  Except as otherwise  permitted in
Section  6.02,  extend,  amend or otherwise  modify,  the terms of any Purchased
Asset.

      (c) Change in Business or Credit and Collection Policy. Make any change in
the  character  of its  business,  which  change  would  materially  impair  the
collectibility  of any  Purchased  Asset,  or make any  change in the Credit and
Collection  Policy,  including any change to the policy  regarding  rewriting or
modifying any Asset.

      (d) Change in Payment Instructions to Obligors. Make any amendment, change
or other modification to the terms of the Funds Designation Agreement, or in any
instructions to Obligors given in accordance with Section 5.01(h).

      (e) Stock, Merger, Consolidation, Etc. Sell any shares of any class of its
capital  stock to any Person  (other than the Initial  Servicer) or  consolidate
with or merge  into or with any other  corporation,  or  purchase  or  otherwise
acquire  all or  substantially  all of the  Assets or  capital  stock,  or other
ownership interest of, any Person or sell, transfer,  lease or otherwise dispose
of all or  substantially  all of its Assets to any Person,  except as  expressly
permitted under the terms of this Agreement.

      (f) Change in Corporate Name. Make any change to its corporate name or use
any  tradenames,  fictitious  names,  assumed names or "doing business as" names
unless the  Seller  shall give the Deal  Agent  thirty  (30) days prior  written
notice thereof and shall take such other steps reasonably  requested by the Deal
Agent (including, without limitation, the filing of amendments to and/or new UCC
financing  statements) in order to maintain a first priority  perfected interest
of the Purchaser in the Purchased Interests.

      (g)  ERISA Matters.  Establish or be party to any Plan, Multiemployer Plan
or Benefit Plan.

      (h)  Indebtedness.   Create,   incur,   assume  or  suffer  to  exist  any
Indebtedness except for (i) Indebtedness to the Deal Agent, the Purchaser or any
Affected Party expressly  contemplated  hereunder,  and (ii) Indebtedness to the
Initial Servicer  pursuant to or as permitted by the Asset Sale Agreement or any
other Facility Document.

      (i) Guarantees.  Guarantee, endorse or otherwise be or become contingently
liable  (including  by agreement to maintain  balance sheet tests) in connection
with the  obligations  of any other Person,  except  endorsements  of negotiable
instruments for collection in the ordinary course of business and  reimbursement
or indemnification  obligations in favor of the Deal Agent, the Purchaser or any
Affected Party as provided for under this Agreement.

      (j)  Limitation on  Transactions  with  Affiliates.  Enter into, or be a 
party to any transaction with any Affiliate of the Seller, except for:

      (i) the  transactions  contemplated  by the Asset Sale Agreement and the
      other Facility Documents;

      (ii)  other  transactions  in  the  nature  of  employment  contracts  and
      directors'  fees,  upon  fair  and  reasonable  terms  materially  no less
      favorable  to the Seller  than would be  obtained  in a  comparable  arm's
      length transaction with a Person not an Affiliate;  and (iii) with respect
      only to  transactions  between  the  Seller and or the  Initial  Servicer,
      transactions  in  the  ordinary  course  of  business   between  a  parent
      corporation and its subsidiary.

      (k) Facility Documents. Except as otherwise permitted under Section 10.01,
(i) terminate,  amend or otherwise modify any Facility Document to which it is a
party or grant any  waiver  or  consent  thereunder,  (ii)  terminate,  amend or
otherwise  modify,  or permit the Initial  Servicer or Subservicer to terminate,
amend or otherwise  modify,  either of the Subservicing  Agreement or the Backup
Servicing  Agreement or any Facility  Document to which it is a party,  or grant
any waiver or consent thereunder,  or (iii) without the prior written consent of
the Deal Agent, which consent shall not be unreasonably withheld, consent to any
amendment or  modification  of the Credit and Collection  Policy,  including any
change to the policy regarding rewriting or modifying any Asset.

      (m) Charter and By-Laws.  Amend or  otherwise  modify its  Certificate  of
Incorporation  or  By-laws  in any  manner  which  requires  the  consent of the
"Independent Director" (as defined in the Seller's Certificate of Incorporation)
without the prior written consent of the Deal Agent or delivery of an opinion of
counsel that such  amendment  shall not alter the  conclusions  set forth in the
legal opinion described in Section 3.01(m).

      (n) Lines of Business.  Conduct any business  other than that described in
Section  4.01(n),  or enter into any  transaction  with any Person  which is not
contemplated by or incidental to the  performance of its  obligations  under the
Facility Documents.

      (o)  Accounting  and Tax  Treatment.  Prepare any financial  statements or
other  statements  (including  any tax filings which are not  consolidated  with
those  of the  Initial  Servicer)  which  shall  account  for  the  transactions
contemplated  by the Asset Sale  Agreement  in any manner other than as the sale
of, or a capital  contribution  of,  the Assets  and the  related  assets by the
Initial Servicer to the Seller for financial  reporting purposes and a financing
for income tax purposes.

      (p)  Limitation  on  Investments.  Make or  suffer  to exist  any loans or
advances  to, or  extend  any  credit  to,  or make any  investments  (by way of
transfer of property,  contributions to capital, purchase of stock or securities
or  evidences  of  indebtedness,  acquisition  of the  business  or  Assets,  or
otherwise)   in,  any  Affiliate  or  any  other  Person  except  for  Permitted
Investments  and the purchase of Assets and related assets pursuant to the terms
of the Asset Sale Agreement.

      SECTION 5.04.  Covenants of the Servicer.

      (a) Affirmative Covenants of the Servicer.  From the Initial Purchase Date
until the later of the  Termination  Date or the  Collection  Date, the Servicer
will, unless the Deal Agent shall otherwise consent in writing:

      (i) Compliance with Laws,  Etc.  Comply in all material  respects with all
      applicable  laws,  rules,  regulations and orders with respect to, and the
      servicing of, all Assets.

      (ii)  Preservation  of  Corporate  Existence.  Preserve  and  maintain its
      corporate existence, rights, franchises and privileges in the jurisdiction
      of its incorporation, and qualify and remain qualified in good standing as
      a  foreign  corporation  in each  jurisdiction  where  the  nature  of its
      business requires it to be so qualified.  (iii) Audits.  From time to time
      upon  reasonable  prior written  notice to the Servicer and during regular
      business hours,  permit the Deal Agent, or its agents or  representatives,
      (1) to examine and make copies of and abstracts from all Records,  and (2)
      to visit the offices and  properties  of the  Servicer  for the purpose of
      examining such Records,  and to discuss matters  relating to the Assets or
      the Servicer's performance hereunder with any of the officers or employees
      of the Servicer having knowledge of such matters,  and with the Servicer's
      independent public accountants in the Servicer's presence.

      (iv)  Keeping of Records  and Books of  Account.  Maintain  and  implement
      administrative and operating procedures (including, without limitation, an
      ability  to  recreate  records  evidencing  the Assets in the event of the
      destruction  of  the  originals  thereof)  and  keep  and  maintain,   all
      documents,  books, records and other information  reasonably necessary for
      the  collection  of all Assets  (including,  without  limitation,  records
      adequate  to permit the daily  identification  of all  Collections  of and
      adjustments  to each  Purchased  Asset).  The  Asset  Documents  shall  be
      delivered  to the  Collateral  Custodian  and all other  Records  relating
      thereto  shall  be  held  by the  Servicer  segregated  from  any  similar
      documents;  and such Records shall be marked with a legend  indicating the
      interests of the Purchaser and the Liquidity Providers therein.

      (v) Performance and Compliance with Assets.  At its expense timely perform
      and  comply,  in all  material  respects,  with all  material  provisions,
      covenants  and other  promises  required  to be  observed by it under each
      Purchased Asset.

      (vi)  Credit and Collection Policies.  Comply  in  all  material  respects
      with its Credit and Collection Policy in regard to each Purchased Asset.

      (vii) Collections.  Instruct all Obligors of Purchased Assets to cause all
      Collections  to be deposited  directly to the Lockbox  Account (and in the
      case of any  payments  made by mail,  to the  related  Post  Office  Box).
      Pursuant to the terms of the Lockbox  Agreement,  the Servicer shall cause
      all  Collections so deposited  into the Lockbox  Account to be remitted to
      the  Collection  Account  within two Business  Days after the date of such
      deposit.

      (viii) Posting of  Collections  and Assets.  Apply all  Collections to the
      applicable  Assets  pursuant  to the  terms of  Section  6.06  within  one
      Business  Day  following  the  Seller's  or  the  Servicer's   receipt  of
      information in respect of such  Collections  but in no event more than two
      Business  Days  after the  earliest  date on which  such  Collections  are
      deposited in the Lockbox Bank or otherwise received by the Servicer or the
      Seller.

      (ix)  Maintenance  of  Insurance.  Maintain  with respect to the Purchased
      Assets or the Project  related thereto any insurance in an amount and of a
      nature  consistent  with industry  practice and the Credit and  Collection
      Policy.  The  Servicer  shall remit,  or shall cause to be  remitted,  the
      proceeds of any such insurance policy to the Collection Account.

      (x)  Facility  Documents. Comply in all material  respects  with the terms
      of and employ the  procedures  outlined in the Asset Sale  Agreement,  and
      all of the other Facility Documents to which it is a party.


      (b) Reporting Requirements of the Servicer. From the Initial Purchase Date
      until  the  later of the  Termination  Date or the  Collection  Date,  the
      Servicer will,  unless the Deal Agent shall otherwise  consent in writing,
      furnish to the Deal Agent:

      (i) As  soon  as  reasonably  practicable  and in any  event  within  five
      Business Days after obtaining  knowledge of the occurrence of any Event of
      Termination or any event which, with the giving of notice or lapse of time
      or both, would constitute an Event of Termination,  a notice setting forth
      details of such Event of Termination or event.

      (ii)  As soon as  reasonably  practicable  and in any  event  within  five
      Business Days after obtaining  knowledge of the occurrence of any Servicer
      Default or any event which,  with the giving of notice or lapse of time or
      both,  would  constitute a Servicer  Default,  the  statement of the chief
      financial  officer,  chief accounting officer or treasurer of the Servicer
      setting  forth  details of such  Servicer  Default or event and the action
      which the Servicer proposes to take with respect thereto.

      (iii) As soon as  reasonably  practicable,  from time to time,  such other
      information,   documents,   records  or  reports   within  its  possession
      respecting  the  Assets or the  conditions  or  operations,  financial  or
      otherwise,  of the  Servicer  as the  Deal  Agent  may  from  time to time
      reasonably  request in order to protect the interests of the Deal Agent or
      the Purchaser under or as contemplated by this Agreement.

      (c) Negative  Covenants of the  Servicer.  From the Initial  Purchase Date
until the later of the  Termination  Date or the  Collection  Date, the Servicer
will not, without the written consent of the Deal Agent and the Seller:

      (i)  Extension or Amendment  of Assets.  Except as otherwise  permitted in
Section  6.02,  extend,  amend or otherwise  modify,  the terms of any Purchased
Asset.

      (ii) Change in Business or Credit and Collection Policy. Make any material
change in the character of its business,  which change would  materially  impair
the  collectibility of any Purchased Asset, or make any change in the Credit and
Collection  Policy  including any changes to the policy  regarding  rewriting or
modifying any Asset.

      (iii)  Change in Payment  Instructions  to Obligors.  Make any  amendment,
change  or other  modification  to the  Funds  Designation  Agreement  or in any
instructions to Obligors given in accordance with Section 5.04(a)(vii).

      (iv)  ERISA.  (1)  Engage or permit any ERISA  Affiliate  to engage in any
prohibited  transaction  for  which an  exemption  is not  available  or has not
previously  been  obtained  from the DOL;  (2)  permit to exist any  accumulated
funding deficiency,  as defined in Section 302(a) of ERISA and Section 412(a) of
the IRC, or funding  deficiency  with  respect to any Benefit  Plan other than a
Multiemployer Plan; (3) fail to make any payments to any Multiemployer Plan that
the Servicer or any ERISA  Affiliate may be required to make under the agreement
relating to such Multiemployer Plan or any law pertaining thereto; (4) terminate
any Benefit  Plan so as to result in any  material  liability;  or (5) permit to
exist any  occurrence  of any  reportable  event  described in Title IV of ERISA
which represents a material risk of a material  liability of the Servicer or any
ERISA Affiliate under ERISA or the IRC.

                                  ARTICLE VI

                          ADMINISTRATION AND COLLECTION

      SECTION 6.01.  Designation of Servicer.  The servicing,  administering and
collection  of the Assets shall be conducted by the Person (the  "Servicer")  so
designated  from time to time in accordance  with this Section  6.01.  Until the
Deal Agent gives notice to the Seller of the designation of a new Servicer,  the
Initial  Servicer  is hereby  designated  as, and hereby  agrees to perform  the
duties and obligations of, the Servicer  pursuant to the terms hereof.  The Deal
Agent may only designate as Servicer the Backup  Servicer to succeed the Initial
Servicer  or any  successor  Servicer to succeed  the Backup  Servicer  upon two
Business  Days' prior  written  notice  following  the  occurrence of a Servicer
Default or, in the case of the Initial Servicer, an Event of Termination, and on
the  condition  in each case that any such Person so  designated  shall agree to
perform the duties and obligations of the Servicer  pursuant to the terms hereof
and of any other Facility Documents. The Servicer may subcontract with any other
Person for  administering,  servicing  or  collection  any  Delinquent  Asset or
Defaulted  Asset and,  with the prior  consent of the Deal Agent,  which consent
shall  not be  unreasonably  withheld,  subcontract  with any other  Person  for
servicing,  administering or collecting the Purchased Assets,  provided that the
Servicer shall remain liable for the  performance of the duties and  obligations
of the Servicer pursuant to the terms hereof. The Servicer shall not resign from
the obligations and duties hereby imposed on it except upon  determination  that
(i) the  performance  of its duties  hereunder  is no longer  permissible  under
applicable  law and (ii) there is no reasonable  action which the Servicer could
take  to  make  the  performance  of  its  duties  hereunder  permissible  under
applicable law.


      SECTION 6.02. Duties of the Servicer.

      (a) Servicing  Standard.  The Servicer  shall service and  administer  the
Purchased  Assets and perform all of its duties hereunder in accordance with (i)
prudent  procedures   employed  by  institutions   servicing  Assets,  (ii)  the
Servicer's  own past policies and practices,  and (iii) any applicable  laws and
regulations.  The Servicer  shall collect all payments made under each Asset and
shall use its best  efforts to cause each Obligor to timely make all payments in
respect of the Asset.

      (b)  Subservicing  Agreement.  Without the consent of the  Purchaser,  the
Servicer  shall not  amend or  supplement  the  Subservicing  Agreement  if such
amendment or supplement may adversely  affect the  Purchaser.  The Servicer may,
and upon the written  request of the Purchaser,  shall terminate the Subservicer
in accordance with the terms of the Subservicing  Agreement.  If the Subservicer
is terminated,  the Servicer may enter into one or more Subservicing  Agreements
reasonably acceptable to the Purchaser with a Subservicer  reasonably acceptable
to the Purchaser. The Servicer shall act directly as Servicer in accordance with
its  duties  hereunder  if  the  Subservicer  has  been  terminated  and  a  new
Subservicer  has not  entered  into a  Subservicing  Agreement.  Servicer  shall
require  the  Subservicer  to deliver to the  Purchaser  its  audited  financial
statements  within 120 days after each fiscal year.  The  Purchaser  may inspect
during  reasonable   business  hours  the  business   operations  and  financial
information of the Subservicer and make reasonable  inquiries to the auditors of
the Subservicer.

      (c) Servicing and Collection Activities.In addition to any other customary
services which the Servicer may perform, the Servicer shall perform the 
following servicing and collection activities:

      (i)  perform  standard   accounting   services  and general record keeping
      services with respect to the Assets;

      (ii) respond to any telephone and written inquiries of Obligors concerning
      the Assets;

      (iii) keep  Obligors  informed  of the proper  place and method for making
      payments  with  respect to the  Assets;  (iv)  contact  Obligors to effect
      collection and to discourage delinquencies in the payment of Assets, doing
      so by any lawful  means,  including,  but not limited  to, the  following:
      mailing of routine  past due  notices;  preparing  and mailing  collection
      letters; contacting delinquent Obligors by telephone to encourage payment;
      mailing of reminder notices to delinquent Assets; and

      (v)  initiating and pursuing  termination  or  foreclosure  actions deemed
      necessary by the Servicer; advance any maintenance fee, assessment, tax or
      similar  amount due with  respect to any  Property if failure to make such
      advance may  adversely  affect the  interest of the  Purchaser  and if the
      Servicer in its reasonable judgment believes that the amount advanced will
      be recovered from proceeds of the related Purchased Interests

      (vi)  report tax information to Obligors as required by law;

      (vii) take such other  action as may be necessary  or  appropriate  in the
      discretion of the Servicer for the purpose of collecting and  transferring
      to the Collection  Account all payments  received in respect of the Assets
      (except as  otherwise  expressly  provided  herein),  and to carry out the
      duties and obligations  imposed upon the Servicer pursuant to the terms of
      this Section, provided, however, that the Servicer may, in its discretion,
      waive any late payment charge in connection with delinquent payments on an
      Assets; and

      (viii)  reviewing the Asset Report for  completeness  prior to the related
      Settlement  Date and  assisting  the Backup  Servicer in  reconciling  any
      amounts on the Tape in connection with a Settlement Date.

      (d)  Liquidations.  The  Servicer  may  not  commence  and  prosecute  any
proceeding  in respect of an Asset in the name of and on behalf of the Purchaser
unless the Servicer  determines that the proceeds of liquidation will exceed any
liability for taxes,  maintenance or other  amounts.  The Servicer shall use its
best efforts to sell any  Foreclosure  Property as soon as practicable and shall
manage,  operate,  conserve and protect the Foreclosure  Property solely for the
purpose of its prompt disposition. The Servicer shall, not later than the second
Business  Day  following  the  liquidation  of an Asset  deposit the related net
liquidation proceeds in the Collection Account. The Servicer shall, concurrently
with such  deposit,  furnish to the  Purchaser a  certificate  setting forth the
basis  for the  Servicer's  determination  of the  amount,  if any,  of such net
liquidation proceeds.

      (e) Environmental  Matters. The Servicer shall not acquire any Foreclosure
Property  unless the  Servicer  has taken  reasonable  steps to assure that such
Property and the related Project are in compliance with applicable environmental
laws and that there are no  circumstances  present at such  Property  or Project
relating  to the  use,  management  or  disposal  of any  hazardous  substances,
hazardous  materials,  hazardous wastes,  or petroleumbased  materials for which
investigation, testing, monitoring, containment, cleanup or remediation could be
required under any federal,  state or local law or regulation or if, as a result
of any such action,  the Purchaser would be considered to hold title to, to be a
"mortgageeinpossession"  of, or to be an "owner" or  "operator" of such Property
or Project within the meaning of the Comprehensive Environmental  Responsibility
Cleanup and  Liability  Act of 1980,  as amended from time to time, or any other
similar state or local environmental statute.

      (f) Modifications.  Without the Purchaser's consent,  neither the Servicer
nor the Seller  shall  modify,  waive or amend the terms of any Asset unless the
Asset is a Defaulted  Asset or unless  such  modification,  amendment  or waiver
shall not (i) alter the interest rate on, the principal amount of, or the timing
of payments of interest and principal in respect of, such Asset, except that the
Servicer in its reasonable  judgment may modify an Asset in accordance  with the
Credit and Collection  Policy,  (ii) materially  impair the Property  related to
such Asset or (iii) reduce  materially the likelihood  that payments of interest
and principal on such Asset shall be made when due.

      (g)  Assumptions.  In  connection  with any  transfer  of  ownership  of a
Property by an Obligor to a Person,  the Servicer may consent to the  assumption
by such Person of the Asset related to such Property,  if any such assumption is
permitted   under  the  applicable   Asset  Documents  and  applicable  law  and
governmental  regulations,  and if any such  assumption  complies  with  prudent
underwriting  standards.  In connection  with any such  assumption,  the rate of
interest borne by, the maturity date of, the principal  amount of, the timing of
payments of principal and interest in respect of, and all other  material  terms
of, the related Asset shall not be changed.

      (h) Records. If the Servicer requires possession of any Asset Documents to
perform its servicing functions,  the Servicer shall execute a release in a form
satisfactory  to the Deal Agent,  and the Collateral  Custodian shall release to
the  Servicer  such  Asset  Documents.  The  Servicer  shall  maintain  all data
(including,  without limitation,  computerized tapes or disks) relating directly
to or maintained in connection  with the servicing of the Assets (which data and
records shall be clearly marked to reflect that the Assets have been sold to and
constitute  property of the  Purchaser) at the address of the Servicer set forth
in this Agreement or the  Subservicer set forth in the  Subservicing  Agreement,
or,  upon 15 days'  notice  to the  Purchaser,  at such  other  place  where any
Servicing  Officer of the  Servicer  is  located.  The  Servicer  shall give the
Purchaser  or its  authorized  agents  access  to all  such  information  at all
reasonable times, upon 72 hours' written notice.

      (i) Payment of Fees and Expenses.  Except as provided in Section 2.06, the
Initial Servicer shall pay the fees and expenses of the Subservicer, the Lockbox
Bank, the Backup Servicer and the Collateral  Agent in accordance with the terms
of the Facility  Documents and any other agreements between such parties and the
Initial Servicer.

      (j) Servicing  Compensation.  As  compensation  for the performance of its
obligations under this Agreement,  the Servicer shall be entitled to receive the
Servicing  Fee  on  each  Settlement  Date  out of  amounts  released  from  the
Collection Account on such Settlement Date. In addition, the Servicer may retain
as additional  servicing  compensation any late fees and other ancillary income.
The  Servicer  shall pay all  expenses  incurred  by it in  connection  with its
servicing activities hereunder.

      (k) Tax Returns and Reports.  The Servicer shall prepare and file, and the
Purchaser shall sign, all federal,  state,  local and, to the extent required by
the  existence  of the Assets with  respect to which the related  Obligor has an
address of record  other  than the United  States of  America,  foreign  tax and
information  returns  and  reports  required to be filed by or in respect of the
Assets.
      (l)  Servicer  Termination.  Upon the  termination  of the  Servicer,  all
authority and power of the Servicer under this  Agreement,  whether with respect
to the Assets or otherwise,  shall pass to and be vested in the Backup Servicer,
if any, and  otherwise  such person as the Deal Agent may select.  The successor
Servicer is hereby authorized and empowered to execute and deliver, on behalf of
the Servicer,  as attorneyinfact  or otherwise,  any and all documents and other
instruments,  and to do or  accomplish  all other  acts or things  necessary  or
appropriate,  to effect the  purposes of the  termination.  The  Servicer  shall
cooperate  with the  successor  Servicer in  effecting  the  termination  of the
responsibilities and rights of the Servicer under this Agreement,  including the
transfer to the successor Servicer, for administration by it of all cash amounts
which at the time are or would be required to be  deposited  by the  Servicer in
the  Collection  Account and the  subsequent  transfer of any other such amounts
thereafter received with respect to an Asset. In addition,  upon the termination
of the Servicer,  the Servicer shall, promptly upon the demand, and in any event
no later than five Business Days after such demand,  of the Deal Agent,  deliver
to the successor Servicer all data (including, without limitation,  computerized
records)  necessary for the  servicing of the Assets.  In addition to delivering
such  monies and data,  the  Servicer  shall use its best  efforts to effect the
orderly and efficient  transfer of the servicing of the Purchased  Assets to the
successor Servicer,  including, without limitation,  directing Obligors to remit
all payments in respect of the Assets to an account or address designated by the
successor  Servicer.   If  the  identity  of  the  Servicer  shall  change,  the
predecessor Servicer shall be entitled to receive reimbursement for unreimbursed
advances  made by it  pursuant  to this  Agreement  less any  sums  owed by such
predecessor Servicer, to the extent, at the times and in the manner provided for
in this Agreement.

      SECTION  6.03.  Rights  of the Deal  Agent.  (a) The Deal  Agent is hereby
authorized at any time (i) to notify the Collection  Account Bank or the Lockbox
Bank to accept  directions  with respect thereto only from the Deal Agent or its
designee and (ii) notify the  counterparties to each Interest Rate Hedge to make
any payments owed by such  counterparties  thereunder directly to the Deal Agent
or its designee.

      (b) At any time following the occurrence of a Servicer Default or an Event
of Termination:

      (i) The Deal Agent may notify  (or may direct the  Servicer  to notify) at
      any  time  the  Obligors  of  Purchased  Assets,  or any of  them,  of the
      Purchaser's  interest in the Purchased Interests and direct such Obligors,
      or any of them,  that payment of all amounts  payable  under any Purchased
      Asset be made directly to the Deal Agent or its designee.

      (ii) The Seller  shall,  at the Deal  Agent's  request and at the Seller's
      expense,  give  notice of the  Purchaser's  and the  Liquidity  Providers'
      interest in Purchased  Asset to each  Obligor and direct that  payments be
      made directly to the Deal Agent or its designee.

      (iii) Each of the  Seller and the  Purchaser  hereby  authorizes  the Deal
      Agent to take any and all steps in the Seller's  name and on behalf of the
      Seller and the Purchaser which are reasonably  necessary or desirable,  in
      the sole determination of the Deal Agent, to collect all amounts due under
      any and all Purchased Assets, including, without limitation, endorsing the
      Seller's name on checks and other instruments representing Collections and
      enforcing such Assets.

      (c) The Deal Agent shall have the sole and exclusive  right to withdraw or
order a transfer of funds in respect of  Collections  from the Lockbox  Account,
and the  Lockbox  Bank shall be  instructed  to remit any  amounts in respect of
Collections  deposited in the Lockbox Account solely  according to the direction
of the Deal Agent or its assigns (or as otherwise  instructed  in writing by the
Deal Agent from time to time).

      SECTION  6.04.  Responsibilities  of  the  Seller  and  Initial  Servicer.
Anything  herein to the  contrary  notwithstanding,  the Seller and the  Initial
Servicer shall (i) perform all of its  obligations  under the Purchased Asset to
the same extent as if Purchased  Interests  had not been sold  hereunder and the
exercise by Deal Agent of its rights  hereunder  shall not  relieve  Seller from
such obligations and (ii) pay when due any taxes,  including without limitation,
sales,  excise  and  personal  property  taxes  payable in  connection  with the
Purchased  Asset,  unless the Seller is contesting  the payment of such taxes in
good faith and by appropriate proceedings.

      SECTION 6.05. Further Action Evidencing Purchases.  The Seller agrees that
from time to time,  at its  expense,  it will  promptly  execute and deliver all
further  instruments  and  documents,  and take all further action that the Deal
Agent may reasonably request in order to perfect, protect or more fully evidence
the Purchased Interests.  Without limiting the generality of the foregoing,  the
Seller  will  (i)  mark its  master  data  processing  records  evidencing  such
Purchased Asset with a legend, acceptable to the Deal Agent, evidencing that the
Deal Agent and the Purchaser  have  acquired an interest  therein as provided in
this  Agreement,  (ii)  comply  with  the  Obligor  Filing  Requirement  and the
Purchaser Filing Requirement and (iii) upon the request of the Deal Agent or the
Purchaser  (subject to the  provisions of Section  2.10),  execute and file such
financing or  continuation  statements,  or  amendments  thereto or  assignments
thereof,  and  such  other  instruments  or  notices,  as  may be  necessary  or
appropriate  or as such  Persons  may  reasonably  request.  The  Seller  hereby
authorizes  the  Deal  Agent  to file  one or  more  financing  or  continuation
statements,  and amendments thereto and assignments thereof,  relative to all or
any of the Purchased Assets,  and the Related Security now existing or hereafter
arising  without the  signature of the Seller where  permitted by law. A carbon,
photographic or other reproduction of this Agreement or any financing  statement
covering all or any part of the Purchased Assets and the Related Security, shall
be  sufficient as a financing  statement.  If the Seller fails to perform any of
its  agreements or  obligations  under this  Agreement,  the Deal Agent may (but
shall  not be  required  to)  itself  perform,  or cause  performance  of,  such
agreement  or  obligation,  and the  expenses  of the  Deal  Agent  incurred  in
connection therewith shall be payable by the Seller upon the Deal Agent's demand
therefor.
      SECTION 6.06. Application of Payments. To the extent the Servicer receives
a payment from an Obligor of a Purchased Asset with respect to which the Obligor
has not  identified the Asset to which such payment should be applied (a payment
in  the   exact   amount  of  an   outstanding   obligation   being   sufficient
identification), the Servicer shall use its best efforts to contact such Obligor
to  confirm  the Asset to which  such  Obligor  intended  that such  payment  be
applied.

      SECTION 6.07. Collateral Custodian.  All Asset Documents in respect of the
Purchased  Assets shall at all times prior to the Collection Date be held by the
Person  (the  "Collateral  Custodian")  so  designated  from  time  to  time  in
accordance  with this  Section  6.07.  Until the Deal Agent gives  notice to the
Seller of the  designation  of a new  Collateral  Custodian,  the Deal  Agent is
hereby  designated  as, and hereby agrees to perform the duties and  obligations
of, the Collateral  Custodian  pursuant to the terms hereof.  In the event, as a
result of an audit or  otherwise,  the Deal Agent  reasonably  believes that the
performance and practices of the Collateral Custodian threaten in any manner the
perfection or priority of the Purchaser's  interest in the Purchased  Interests,
the Deal Agent may, upon two Business Days prior  written  notice,  designate as
Collateral  Custodian,  any  other  Person  to  succeed  the  Deal  Agent or any
successor  Collateral  Custodian,  on the  condition  in each case that any such
Person so designated  shall agree to perform the duties and  obligations  of the
Collateral Custodian pursuant to the terms hereof. Upon taking possession of the
original copy of any Asset Document,  the Collateral Custodian hereby agrees (i)
to maintain  possession of such  original  copies in trust for the Purchaser and
the Deal  Agent,  (ii) to exercise  the same degree of care with  respect to the
possession  of such Asset  Document as it would if such Asset  Document were its
own property,  and (iii) to return the original  copy of such Asset  Document to
the Seller  within five Business  Days of the Seller's  request  therefor to the
extent the Seller requires such original copy to conduct further  business with,
or take enforcement  action against,  the Obligor of such Purchased Asset.  Upon
the appointment of a successor  Collateral  Custodian,  the Collateral Custodian
being  replaced  shall  make all  Asset  Documents  available  to the  successor
Collateral Custodian at a place selected by such successor Collateral Custodian.
If the Seller or the Initial  Servicer takes  possession of any Asset Documents,
it shall execute a bailee  letter  acceptable to the  Collateral  Custodian,  it
shall not hold any Asset Documents more than 10 Business Days and the Seller and
the Initial Servicer  collectively  shall not hold Asset Documents for more than
5% of the Purchased Assets.

                                   ARTICLE VII
                              EVENTS OF TERMINATION

      SECTION  7.01.   Events of Termination. If any of  the  following   events
("Events of Termination") shall occur:

      (a) The Seller  shall fail to make any  payment or deposit  required to be
made by it hereunder  when due and such failure shall remain  unremedied for one
Business Day after written notice to the Deal Agent; or

      (b) The Seller  shall fail to perform or observe any other term,  covenant
or agreement contained in this Agreement on its part to be performed or observed
and any such failure shall remain  unremedied for five days after written notice
from the Deal Agent; or

      (c) Any representation or warranty made or deemed to be made by the Seller
(or any of its officers or agents) under or in connection  with this  Agreement,
any Asset Report,  any Purchase  Request or other written  information or report
delivered pursuant hereto or pursuant to any other Facility Document shall prove
to have been false or  incorrect in any  material  respect when made;  provided,
however,  that if any such  representation or warranty relates to an Asset which
is repurchased by the Seller pursuant to Section 9.02 hereof, then the breach of
such  representation  or warranty shall not give rise to an Event of Termination
under this subsection (c); or

      (d)  Any  Asset  Purchase  shall  for any  reason,  except  to the  extent
permitted  by the terms  hereof,  cease to create a valid  and  perfected  first
priority  interest in each Purchased Asset and the Related Security  (subject to
Section 6.05 hereof) and Collections with respect thereto; provided, however, if
any such failure relates to an Asset which is repurchased by the Seller pursuant
to Section  9.02 hereof,  then such  failure  shall not give rise to an Event of
Termination under this subsection (d); or

      (e) The Guarantors of Purchased  Assets with an Outstanding  Balance equal
to  one-half  of the  Deferred  Purchase  Price  shall be  subject to any action
described in clause (f) of this  Section  7.01 and a  successful  claim shall be
made in connection with such action such that the Guarantor or its creditors are
deemed by the court in such proceeding to be the owner of the Purchased  Assets;
or
      (f) (i) The Seller  shall admit in writing its  inability to pay its debts
generally,  or shall make a general assignment for the benefit of creditors;  or
any  proceeding  shall  be  instituted   against  the  Seller  (an  "Involuntary
Proceeding")  or by the Seller seeking to adjudicate it a bankrupt or insolvent,
or seeking liquidation,  winding up,  reorganization,  arrangement,  adjustment,
protection,  relief, or composition of it or its debts under any law relating to
bankruptcy,  insolvency or reorganization  or relief of debtors,  or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or other
similar  official for it or for any substantial part of its property and, in the
case of an Involuntary  Proceeding,  such proceeding shall continue undismissed,
unstayed and in effect for a period of sixty (60) consecutive  days; or (ii) the
Seller's  Board of Directors  shall vote  affirmatively  to authorize any of the
actions set forth in clause (i) above in this subsection (f); or

      (g) If the Initial Servicer is the Servicer,  a Servicer Default including
an Initial Servicer Default or Change shall have occurred and be continuing; or

      (h) As of any Settlement Date, (i) the average Default Ratio for the three
most recently  concluded  months  exceeds 6% or (ii) beginning in June 1997, the
average  Default Ratio for the twelve most  recently  concluded  months  exceeds
5.50%; or

      (i) As of any Settlement Date, (i) the Early Stage  Delinquency  Ratio for
the most recently concluded month exceeds 9%, (ii) the average Delinquency Ratio
for the three most recently  concluded  months exceeds 9% or (iii)  beginning in
June 1997, the average  Delinquency Ratio for the twelve most recently concluded
months exceeds 8.25%; or

      (j) As of the close of  business on any  Settlement  Date,  the  Aggregate
Outstanding  Balance then in effect minus the  Deferred  Purchase  Price then in
effect shall be less than the then  outstanding  Capital (after giving effect to
any  increases  or  reductions  to  Capital  to be made on such  day),  and such
deficiency  shall  exist  for a period of five  Business  Days  after  such day,
without cure or waiver; or

      (k) There shall have been any  material  adverse  change in the  financial
condition or operations of the Seller since its  formation,  or there shall have
occurred any event which materially  adversely affects the collectibility of the
Assets  generally or there shall have occurred any other event which  materially
adversely  affects the ability of the Seller to collect Assets  generally or the
ability of the Seller to perform  hereunder,  in each case, as determined in the
reasonable judgment of the Deal Agent; or

      (l)  The  Initial  Servicer  shall  cease  to  own  directly  100%  of the
outstanding capital stock of the Seller; or

       (m) The Pension Benefit Guaranty  Corporation or the IRS shall have filed
notice of one or more liens  against the Seller or the  Initial  Servicer if the
Initial Servicer is the Servicer (unless such lien does not purport to cover the
Purchased  Assets),  and such notice shall have remained in effect for more than
thirty (30) days unless,  prior to the  expiration  of such  period,  such liens
shall have been adequately  bonded by the Seller or the Initial  Servicer do not
exceed $250,000 in the aggregate; or

      (n) The Interest Rate Hedge Test shall not be met and the Initial Servicer
      shall not have  purchased  an  Interest  Rate Hedge as required by Section
      5.01(k).


      then,  and in any such event,  the Deal Agent shall,  at the  request,  or
may with the consent, of the

       Purchaser,  by notice to the Seller declare the Termination  Date to have
occurred,  except that, in the case of any event  described in subsection (j) or
clause (i) of subsection (f) above, the Termination Date shall be deemed to have
occurred  automatically  upon the occurrence of such event;  provided,  however,
that if any  Involuntary  Proceeding  (as  defined in  subsection  (f) above) is
dismissed within sixty (60) days after its  commencement,  and if no other Event
of Termination has occurred, then following such dismissal, the program shall be
reinstated  as  if  the  Termination  Date  had  not  occurred.  Upon  any  such
declaration  or automatic  occurrence,  the Deal Agent and the  Purchaser  shall
have,  in addition to all other  rights and  remedies  under this  Agreement  or
otherwise,  all  other  rights  and  remedies  provided  under  the  UCC  of the
applicable  jurisdiction  and  other  applicable  laws,  which  rights  shall be
cumulative.



                                 ARTICLE VIII

                                THE DEAL AGENT

      SECTION 8.01.  Authorization and Action. The Purchaser hereby appoints and
authorizes  the Deal  Agent to take such  action as agent on its  behalf  and to
exercise such powers under this  Agreement as are delegated to the Deal Agent by
the terms  hereof,  together  with  such  powers  as are  reasonably  incidental
thereto,  including,  without limitation, the power and authority to hold and to
perfect any ownership  interest or security  interest created pursuant hereto or
in connection herewith on behalf of the Purchaser.

      SECTION 8.02. Deal Agent's Reliance,  Etc. The Deal Agent: (i) may consult
with legal  counsel  (including  counsel  for the  Seller),  independent  public
accountants  and other  experts  selected  by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in  accordance  with the
advice of such  counsel,  accountants  or  experts;  (ii) makes no  warranty  or
representation  to any Affected  Party other than the Purchaser and shall not be
responsible to any Affected  Party other than the Purchaser for any  statements,
warranties or representations made in or in connection with this Agreement or in
connection with any of the other  agreements  executed  pursuant  hereto;  (iii)
shall not have any duty to  ascertain  or to  inquire as to the  performance  or
observance of any of the terms, covenants or conditions of this Agreement on the
part of the Seller or to inspect the property  (including the books and records)
of the Seller;  (iv) shall not be  responsible  to any Affected Party other than
the  Purchaser  for  the  due  execution,  legality,  validity,  enforceability,
genuineness or  sufficiency  of value of this Agreement or any other  agreement,
instrument  or  document  furnished  pursuant  hereto;  and (v)  shall  incur no
liability under or in respect of this Agreement or any other agreement  executed
pursuant hereto,  by acting upon any notice  (including notice by telephone with
respect to notices under Section 2.02), consent, certificate or other instrument
or writing (which may be by telex or facsimile) believed by it to be genuine and
signed or sent by the proper party or parties.

      SECTION  8.03.  Deal Agent and  Affiliates.  With respect to any interests
which may be assigned by the Purchaser to FNBB pursuant to Section  10.04,  FNBB
shall  have the same  rights  and  powers  under  this  Agreement  as would  the
Purchaser if it were holding such  interests and may exercise the same as though
it were not the Deal Agent.  FNBB and its Affiliates may generally engage in any
kind of business with the Seller,  the Initial  Servicer or any Obligor,  any of
their  respective  Affiliates  and any  Person who may do  business  with or own
securities of the Seller or any Obligor or any of their  respective  Affiliates,
all as if FNBB were not the Deal Agent and without any duty to account  therefor
to the Purchaser or any Liquidity Provider.

      SECTION 8.04.  Resignation of the Deal Agent. The Deal Agent may resign as
Deal Agent hereunder at any time by giving not less than five (5) Business Days'
prior  written  notice to the  Purchaser,  the  Seller  and the  Servicer,  such
resignation to be effective on the earlier of (i) the appointment and acceptance
of a  successor  Deal Agent as  provided  below and (ii) the 30th day  following
delivery of such notice. Upon any such resignation,  the Purchaser shall appoint
a financial institution of its choosing as Deal Agent. Following the appointment
of a successor Deal Agent and such successor  Deal Agent's  acceptance  thereof,
such  successor  Deal Agent  shall  succeed to and  become  vested  with all the
rights, powers,  privileges and duties of the resigning Deal Agent as Deal Agent
hereunder,  and the resigning Deal Agent shall be discharged from its duties and
obligations as Deal Agent  hereunder.  After the Deal Agent's  resignation,  the
provisions  of this  Article  VIII shall  continue  in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Deal Agent.

                                  ARTICLE IX
                         INDEMNIFICATION; REPURCHASES

      SECTION 9.01.  Indemnities by the Seller.  (a) Without  limiting any other
rights which any Affected Party may have hereunder or under  applicable law, the
Seller and the Initial  Servicer jointly and severally hereby agree to indemnify
the  Purchaser  and FNBB,  individually  and in its  capacity as Deal Agent (the
"Indemnified  Parties"),  from and against any and all damages,  losses, claims,
liabilities and related costs and expenses, including reasonable attorneys' fees
and  disbursements  (all of the  foregoing  being  collectively  referred  to as
"Indemnified  Amounts")  awarded against or incurred by such  Indemnified  Party
arising  out of or as a result  of this  Agreement,  any of the  other  Facility
Documents,  or any  interest of any such  Indemnified  Party in, to or under the
Purchased  Interests,  or in  respect  of any  Asset,  excluding,  however,  (i)
Indemnified  Amounts to the extent  resulting  from gross  negligence or willful
misconduct on the part of any  Indemnified  Party,  (ii)  recourse  (except with
respect to payment and performance  obligations  provided for in this Agreement)
for uncollectible Purchased Assets, or (iii) Indemnified Amounts which are cured
upon a repurchase of the Purchased Assets by the Seller or the Initial Servicer.
The  Seller  and,  if the  Seller  fails to do so, the  Initial  Servicer  shall
indemnify  each  Indemnified  Party  for  Indemnified  Amounts  relating  to  or
resulting from:

      (i) reliance on any  representation or warranty made or deemed made by the
      Seller  or the  Initial  Servicer  (or any of its  officers)  under  or in
      connection  with  this  Agreement,  any  Purchase  Request  or  any  other
      information  or report  delivered  by or on  behalf  of the  Seller or the
      Initial Servicer pursuant hereto, which shall have been false or incorrect
      in any material respect when made or deemed made or delivered;

      (ii) the failure by the Seller, the Initial Servicer or the Subservicer to
      comply with any term,  provision or covenant  contained in this Agreement,
      the Asset Sale  Agreement  or any other  Facility  Document to which it is
      party or with any applicable  law, rule or regulation  with respect to any
      Asset,  the  Related  Security,  the  Property  or  the  Project,  or  the
      nonconformity  of any Asset,  the Related  Security,  the  Property or the
      Project with any such  applicable  law, rule or regulation or the criteria
      for an  Eligible  Asset;  (iii) the  assertion  by any Person of any claim
      (including  any claim alleging the violation of any  environmental  law or
      regulation)  relating  to  the  ownership,   operation,   repair,  use  or
      maintenance of any Property or Project or the  noncompliance  of any Asset
      or the sale of any Asset or Property with any applicable law;

      (iv) the  withholding  or offset or  otherwise  as a result,  solely or in
      part, of any Obligor being a citizen or resident of, or making any payment
      from,  any country (or political  subdivision  thereof) or any place other
      than the  "United  States"  (as  defined  in  Section  7701(a)  (9) of the
      Internal Revenue code of 1986), including,  without limitation, the result
      of any applicable exchange control or withholding tax law or regulation;

      (v) any  reduction  of a Purchased  Asset due to a  Permitted  Encumbrance
      (excluding any Permitted  Encumbrance  in favor of an Indemnified  Party),
      whether existing at the time of the Asset Purchase of such Purchased Asset
      or at any time thereafter;

      (vi) any products  liability  claim or personal  injury or property damage
      suit or other  similar or related claim or action of whatever sort arising
      out of or in connection with property,  goods, merchandise and/or services
      which are the subject of any Asset;

      (vii)  the  failure  to  pay  when  due  any  taxes,  including,   without
      limitation, sales, excise or personal property taxes payable by the Seller
      or the Initial Servicer in connection with the Purchased Assets;

      (viii) the  failure of the  Initial  Servicer  to  maintain,  or cause the
      relevant Obligor to maintain in effect, policies of insurance with respect
      to the  Purchased  Assets,  to the  extent  required  pursuant  to Section
      5.04(a)(ix);

      (ix) the payment by such Indemnified  Party of Taxes,  including,  without
      limitation,  any Taxes imposed by any  jurisdiction on amounts payable and
      any  liability  (including  penalties,   interest  and  expenses)  arising
      therefrom  or with  respect  thereto to the extent  caused by the Seller's
      actions or failure to act;  provided that an Indemnified  Party,  making a
      demand for  indemnity  payment  shall  provide the Seller,  at its address
      referred to in Section 10.02,  with a certificate from the relevant taxing
      authority or from a responsible  officer of such Indemnified Party stating
      or otherwise  evidencing that such  Indemnified  Party has made payment of
      such  Taxes  and,  within 30 days  thereafter,  will  provide a copy of or
      extract  from  documentation,  if  available,  furnished  by  such  taxing
      authority evidencing assertion or payment of such Taxes; and

      (x) any payment  made by or on behalf of an  Indemnified  Party (1) to the
      Lockbox  Bank with  respect to the  Lockbox  Account or to the  Collection
      Account  Bank  with  respect  to  the  Collection  Account  ,  whether  in
      connection with reimbursement for a returned item, or for any other reason
      whatsoever,  or (2) to the Liquidity  Agent or the  Collateral  Agent with
      respect to the Liquidity Agreement or any Facility Document.

      Any amounts subject to the indemnification provisions of this Section 9.01
shall be paid by the Seller to the Deal Agent within two Business Days following
Deal Agent's demand therefor.


      (b) Without  limiting any other  rights which any Affected  Party may have
hereunder or under  applicable  law, the Servicer hereby agrees to indemnify the
Indemnified Parties from and against any Indemnified Amounts awarded or incurred
by such  Indemnified  party arising out of or as a result of (i) reliance on any
representation  or warranty  made or deemed made by the  Servicer (or any of its
officers)  under or in  connection  with this  Agreement  or any other  Facility
Documents  or (ii)  the  failure  of the  Servicer  to  comply  with  any  term,
provision,  or  covenant  contained  in this  agreement  or any  other  Facility
Documents or with any  applicable  law, rule or  regulation  with respect to any
Asset, the Related Security, the Property or the Project.

      SECTION 9.02.  Substitution and Repurchase of Assets. The following rights
are in addition to and not in  limitation  of any other rights or remedies  that
the Purchaser or the Deal Agent may have hereunder.

      (a) If, with respect to any Purchased Asset, such Asset did not constitute
an Eligible Asset on the date such Asset became a Purchased  Asset or the Seller
or the Initial Servicer shall have breached any  representation or warranty made
hereunder with respect to such Asset, including,  without limitation, any of the
representations  and warranties  contained in Section 4.01(f) (a Purchased Asset
described above being referred to as an "Ineligible  Purchased Asset"), then the
Seller and if the Seller fails to do so, the Initial Servicer shall, unless such
ineligibility or breach is waived or cured in all material  respects or does not
have a material  adverse effect on the Purchaser or any Affected  Party,  on the
next succeeding  Settlement  Date, upon the Deal Agent's written demand,  either
substitute  for  such  Ineligible  Purchased  Asset a new  Asset  in the  manner
specified in subsection (f) of this Section 9.02 or repurchase  such  Ineligible
Purchased  Asset for the  repurchase  price  specified in subsection (g) of this
Section 9.02; provided, however, that following the Termination Date, the Seller
shall not have the option to substitute for  Ineligible  Purchased  Assets,  but
must  repurchase  such  Ineligible  Purchased  Assets for the  repurchase  price
specified in subsection  (g) of this Section  9.02. If less than four  scheduled
payments  have been made on any Asset on the  Purchase  Date,  the Asset will be
deemed an Ineligible  Purchased Asset unless the Initial  Servicer  fulfills its
guaranty in Section 4.03(p).

      (b)  [Reserved].

      (c) The Seller may at any time and from time to time notify the Deal Agent
of its intent to  substitute  one or more new Assets  for any  Purchased  Assets
(other  than any  Purchased  Asset  (i)  which is a  Defaulted  Asset or (ii) in
respect of which the Obligor  thereunder  has  requested  the  rewriting  and/or
restructuring  of the  Purchased  Asset as an  accommodation  to such  Obligor);
provided, that in such notice the Seller shall certify that the Purchased Assets
to be  repurchased  by the Seller  represent a fair  selection of the  aggregate
Purchased  Assets.  On the Settlement Date next succeeding any such notice,  the
Seller shall  substitute for any such Purchased  Asset a new Asset in the manner
specified in subsection (f) of this Section 9.02.

      (d) Notwithstanding  anything herein to the contrary,  in no event may the
Seller  substitute  for a Purchased  Asset under  subsection (c) of this Section
9.02 if, after giving effect to such  substitution,  the  aggregate  outstanding
principal amount of all Purchased Assets  substituted for by the Seller pursuant
to  subsection  (c) of this Section  9.02 would exceed ten percent  (10%) of the
cumulative initial Outstanding Balance of all Purchased Assets to date.


      (e)  At any  time  following  the  Termination  Date  when  the  Aggregate
Outstanding Balance is less than ten percent (10%) of the Aggregate  Outstanding
Balance as of the Termination  Date, the Seller may notify the Deal Agent of its
intent to repurchase all remaining Purchased Assets. On the Settlement Date next
succeeding  any  such  notice,  the  Seller  shall  repurchase  all  outstanding
Purchased  Assets for the repurchase  price  specified in subsection (g) of this
Section 9.02.

      (f) If the Seller  substitutes a new Asset for a Purchased  Asset pursuant
to this Section 9.02, such new Asset shall (i) on the date of  substitution,  be
an  Eligible  Asset,  (ii) have an  Outstanding  Balance  at least  equal to the
Outstanding  Balance of the Purchased  Asset for which it is being  substituted,
(iii) have a  remaining  term that is no longer than the  remaining  term of the
Purchased Asset for which it is being  substituted,  (iv) in the case of a fixed
rate,  have an interest  rate no less than the  interest  rate of the  Purchased
Asset for which it is being substituted, and in case of an adjustable rate, have
the same index,  margin and periodic and lifetime floor and cap as the Purchased
Asset for which it is being  substituted,  (v) have at least 12 payments made by
the Obligor, (vi) consist of an Asset from the same Project, or with the consent
of the Deal Agent, a substantially  equivalent  Project,  as the Purchased Asset
for which it is being substituted,  (vii) be of equivalent credit quality to the
Purchased Asset for which it is being  substituted,  and (viii) not give rise to
the  occurrence  of  an  Event  of  Termination   after  giving  effect  to  the
substitution  therefor. In no event shall any such substitution take place after
the  occurrence  or  during  the  continuation  of an Event of  Termination,  or
otherwise  after the  occurrence  of the  Termination  Date. On the date of such
substitution,  such new Eligible  Asset shall  become a Purchased  Asset and the
Asset so replaced shall cease to be a Purchased Asset, and the Seller shall list
the Purchased Asset on a new Purchase Request, and a certification by the Seller
as to the satisfaction of the requirements  relating to such Purchased Asset set
forth in clauses (i) through (v) above.

      (g) In the case of a  repurchase  from the  Purchaser  by the  Seller of a
Purchased  Asset  pursuant  to this  Section  9.02,  the  Seller  shall,  on the
Settlement  Date  coinciding  with such  repurchase  pay to the Deal  Agent as a
reduction  of  Capital  an  amount  equal  to the  Outstanding  Balance  of such
Purchased  Asset.  The  proceeds  of any such  repurchase  shall be deemed to be
Collections  of such Asset  received by the Seller,  and the amount of each such
Collection  shall be applied as provided in Section 2.06.  The repurchase of any
Asset shall not relieve the Seller of the obligation to pay Yield on the Capital
outstanding with respect to such Asset through the date of such repurchase.  Any
such repurchase shall be made without  recourse or warranty,  express or implied
(other than a  representation  and warranty that such Asset is free and clear of
any Adverse Claim  created by or through the  Purchaser).  The  Purchaser  shall
return to the Seller at the Seller's  expense any Asset  Documents  related to a
Purchased Asset subject to repurchase or substitution.

                                    ARTICLE X

                                  MISCELLANEOUS

      SECTION 10.01. Amendments, Etc. No amendment to or waiver of any provision
of this Agreement nor consent to any departure by the Seller, shall in any event
be  effective  unless the same shall be in writing and signed by (i) the Seller,
the Deal Agent and the Purchaser (with respect to an amendment) or (ii) the Deal
Agent and the  Purchaser  (with  respect  to a waiver or consent by them) or the
Seller (with respect to a waiver or consent by it), as the case may be, and then
such waiver or consent shall be effective only in the specific  instance and for
the specific purpose for which given; provided,  however, that no such amendment
or  modification  shall  affect the rights or duties of the  Servicer  hereunder
without  the prior  written  consent of the  Servicer;  and  provided,  further,
however,  that, at any time that the commercial paper notes of the Purchaser (if
any) are being  rated by one or more of the Rating  Agencies,  at the request of
the Purchaser,  no material  amendment or  modification of Article II or Article
VII hereof,  or of any other  material  provisions  hereof,  shall be  effective
absent written confirmation by each of Moody's, S&P and DCR (as applicable) that
such amendment or modification will not result in a withdrawal or downgrading of
the then current rating of the commercial paper notes issued by the Purchaser by
such Rating Agency.  The Purchaser shall send, or shall cause to be sent, copies
of all amendments, modifications or supplements to this Agreement to each of the
Rating Agencies then rating the commercial  paper notes issued by the Purchaser,
if any, at the request of the Purchaser,  prior to the execution  thereof by all
parties thereto. This Agreement contains a final and complete integration of all
prior  expressions  by the  parties  hereto with  respect to the subject  matter
hereof and shall  constitute  the entire  agreement  (together with the exhibits
hereto)  among the parties  hereto with  respect to the subject  matter  hereof,
superseding all prior oral or written understandings.


      SECTION 10.02. Notices, Etc. All notices and other communications provided
for hereunder shall,  unless otherwise stated herein,  be in writing  (including
telex communication and communication by facsimile copy) and shall be personally
delivered  or sent by first class  mail,  postage  prepaid,  or by courier or by
facsimile,  to each party hereto, at its address set forth under its name on the
signature  pages hereof or at such other  address as shall be designated by such
party in a written  notice to the other  parties  hereto.  All such  notices and
communications  shall be effective,  upon receipt, or in the case of delivery by
mail,  three days after being deposited in the mails,  or, in the case of notice
by facsimile, when electronic communication of receipt is obtained, in each case
addressed as aforesaid.

      SECTION  10.03.  No Waiver;  Remedies.  No failure on the part of the Deal
Agent,  the  Purchaser or any  Liquidity  Provider to exercise,  and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder  preclude any other or further
exercise  thereof  or the  exercise  of any other  right.  The  remedies  herein
provided are  cumulative  and not  exclusive  of any  remedies  provided by law.
Without  limiting  the  foregoing,  the Deal Agent is hereby  authorized  by the
Seller at any time and from time to time,  to the fullest  extent  permitted  by
law, to instruct  FNBB or any Affiliate of FNBB to set off and apply any and all
deposits (whether general or special,  time or demand,  provisional or final) at
any time held and other indebtedness at any time owing by FNBB or such Affiliate
to or for the credit or the  account of the  Seller  against  any and all of the
obligations of Seller,  now or hereafter  existing under this Agreement or under
any agreement  executed  pursuant  hereto,  to the Deal Agent,  the Purchaser or
their  respective  successors and assigns  irrespective of whether or not demand
therefor  shall  have been made  under  this  Agreement  or under any  agreement
executed  pursuant hereto.  The Seller  acknowledges that the rights of the Deal
Agent,  the  Purchaser and the  Liquidity  Providers or any of their  respective
successors  and assigns  described  in this  paragraph  are in addition to other
rights and remedies  (including,  without  limitation,  other rights of set-off)
such parties may have.

      SECTION 10.04. Binding Effect; Assignability.  (a) This Agreement shall be
binding  upon and inure to the benefit of the  Seller,  the  Servicer,  the Deal
Agent,  the  Purchaser and their  respective  successors  and permitted  assigns
(which  successors  of the Seller shall include a trustee in  bankruptcy).  This
Agreement shall create and constitute the continuing  obligations of the parties
hereto in accordance  with its terms,  and shall remain in full force and effect
until such time, after the Termination Date, as the Collection Date shall occur;
provided,  however,  that the rights and remedies  with respect to any breach of
any  representation  and warranty made by the Seller  pursuant to Article IV and
the  indemnification  and payment  provisions of Sections  2.08,  2.09 and 2.11,
Article IX and Article X shall be continuing  and shall survive any  termination
of this Agreement for one year.

      (b)  Subject to review by counsel  of the  Seller and the  Purchaser,  the
Seller may assign any of its rights with respect to the Deferred  Purchase Price
to any  Affiliate  and pledge  the cash  distributions  related to the  Deferred
Purchase  Price to the  Affiliate's  creditors.  The  assignment of the Deferred
Purchase Price shall represent an interest in solely cash distributions  payable
pursuant to this Agreement and not an interest in any Purchased Interests.

      (c) The Purchaser  may,  without the consent of the Seller,  assign at any
time all of its rights and  obligations  hereunder  and  interest  herein to any
Person,  except that if such Person is not FNBB, or any other Affiliate of FNBB,
the Purchaser shall be required to acquire the prior written consent of the Deal
Agent and the  Seller to any such  assignment.  Any  permitted  assignee  of the
Purchaser as described in the preceding  sentence may further assign at any time
its rights and obligations hereunder or interests herein with the consent of the
Deal Agent and the Seller to the extent required in the preceding sentence. Upon
any such  assignment,  the assignee  shall succeed to and become vested with all
the rights,  powers,  privileges and duties of the Purchaser,  and the resigning
Purchaser  shall be  discharged  from its duties and  obligations  as  Purchaser
hereunder.  The Seller and the  Servicer  agree to execute or obtain  such other
documentation as may be reasonably requested by the assigning Purchaser in order
to effectuate such assignment.

      (d) At any time and from time to time,  the  Purchaser  may,  without  the
consent of the Seller,  assign all or a portion of its  interests  in  Purchased
Interests  hereunder,  and all or a portion of its interests  under the Facility
Documents, to any or all of the Liquidity Providers,  and each of the Seller and
the Servicer hereby  acknowledge and agree that the obligations of the Purchaser
to any  such  Liquidity  Providers  may  from  time  to time  be  secured  by an
assignment by the Purchaser of its interests in Purchased  Interests  hereunder,
and under  the  Facility  Documents.  The  Liquidity  Providers,  or any  agents
therefor,  shall also be entitled to sell their interests (or portions  thereof)
to other  Liquidity  Providers,  or to any other Persons in connection  with the
enforcement  of any of the above  described  security  interests  granted to the
Liquidity  Providers by the Purchaser.  The Purchaser or the Liquidity  Provider
making any such assignment  shall provide notice to the Seller of any assignment
hereunder or thereunder.

      SECTION 10.05.  GOVERNING LAW; WAIVER OF JURY TRIAL.  THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE  WITH,  THE LAWS OF THE STATE OF NEW
YORK,  EXCEPT TO THE EXTENT THAT THE VALIDITY OR  PERFECTION OF THE INTERESTS OF
THE PURCHASER IN THE PURCHASED INTERESTS OR REMEDIES HEREUNDER OR THEREUNDER, IN
RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE
OF NEW YORK. THE SELLER AND THE SERVICER HEREBY AGREE TO THE JURISDICTION OF ANY
FEDERAL COURT LOCATED  WITHIN THE STATE OF NEW YORK. THE SELLER AND THE SERVICER
EACH  HEREBY  WAIVES  ANY  RIGHT TO HAVE A JURY  PARTICIPATE  IN  RESOLVING  ANY
DISPUTE,  WHETHER  SOUNDING IN CONTRACT,  TORT,  OR  OTHERWISE  AMONG ANY OF THE
SELLER, THE SERVICER,  THE PURCHASER OR THE DEAL AGENT ARISING OUT OF, CONNECTED
WITH,  RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP  BETWEEN THEM IN CONNECTION
WITH THIS AGREEMENT.  INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN
A  BENCH  TRIAL  WITHOUT  A JURY.  WITH  RESPECT  TO THE  FOREGOING  CONSENT  TO
JURISDICTION,  EACH OF THE SELLER AND THE SERVICER  HEREBY  WAIVES ANY OBJECTION
BASED  ON FORUM  NON  CONVENIENS,  AND ANY  OBJECTION  TO  VENUE  OF ANY  ACTION
INSTITUTED  HEREUNDER  AND  CONSENTS TO THE  GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED  APPROPRIATE  BY THE COURT.  NOTHING IN THIS  SECTION  10.05
SHALL AFFECT THE RIGHT OF THE PURCHASER OR THE DEAL AGENT TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE PURCHASER OR THE
DEAL AGENT TO BRING ANY ACTION OR PROCEEDING  AGAINST THE SELLER OR ITS PROPERTY
IN THE COURTS OF ANY OTHER JURISDICTION.

      SECTION 10.06. Costs, Expenses and Taxes. (a) In addition to the rights of
indemnification  under Article IX hereof, the Seller agrees to pay on demand all
reasonable costs and expenses in connection with the  administration  (including
(i) periodic  auditing up to once each quarter prior to an Event of  Termination
and at the Purchaser's  request  thereafter,  (ii) filing searches in connection
with any Asset Purchase and annually prior to an Event of Termination and at the
Purchaser's  request  thereafter and (iii) any  amendments,  waivers or consents
requested  by the  Servicer)  of this  Agreement  and the other  documents to be
delivered hereunder or in connection  herewith,  including,  without limitation,
the reasonable fees and out-of-pocket expenses of counsel for the Deal Agent and
the Purchaser  with respect  thereto and with respect to advising the Deal Agent
and the  Purchaser  as to  their  respective  rights  and  remedies  under  this
Agreement,  and the other agreements  executed  pursuant hereto or in connection
herewith and all costs and expenses,  if any (including  reasonable counsel fees
and  expenses),  in connection  with the  enforcement  of this Agreement and the
other  agreements  and  documents  to be delivered  hereunder  or in  connection
herewith,  (provided,  however, that the Seller shall not be obligated to pay or
reimburse the Deal Agent for personnel costs in connection with any audit of the
Servicer's or the Seller's books and/or records hereunder taking place after the
date  hereof,  to the extent  that the amount  charged in  connection  with such
personnel costs exceeds, on an average basis, $1,000 per man/day).

      (b) In addition,  the Seller shall pay on demand any and all stamp, sales,
excise  and  other  taxes  and fees  payable  or  determined  to be  payable  in
connection with the execution,  delivery, filing and recording of this Agreement
or the other agreements and documents to be delivered hereunder or in connection
herewith,  or of any other agreement or document  providing  liquidity  support,
credit  enhancement or other similar support to the Purchaser in connection with
this Agreement or the funding or maintenance of Purchases hereunder,  and agrees
to indemnify the Deal Agent, the Purchaser and the Liquidity  Providers  against
any  liabilities  with  respect  to or  resulting  from any  delay in  paying or
omission to pay such taxes and fees.

      (c) In addition, the Seller shall pay on demand all other reasonable costs
and  expenses  incurred by the  Purchaser  or any general or limited  partner or
shareholder of the Purchaser ("Other Costs"), in connection with (i) the cost of
rating  the  Purchaser's   promissory  notes  by  independent  financial  rating
agencies,  and (ii) the enforcement of this Agreement and the other documents to
be delivered hereunder or in connection herewith; provided, however, that if the
Purchaser  enters into  agreements for the purchase of  receivables  from one or
more other Persons  ("Other  Sellers"),  the Seller and such Other Sellers shall
each be liable for such Other Costs ratably in  accordance  with the usage under
the  respective  facilities  of the Purchaser to purchase  receivables  from the
Seller and each Other Seller;  and provided,  further,  that if such Other Costs
are  attributable to the Seller and not  attributable  to any Other Seller,  the
Seller shall be solely liable for such Other Costs.

      SECTION 10.07.  No Proceedings.  (a) Each of the Seller,  the Servicer and
the  Collateral  Custodian  hereby  agrees,  and  the  Seller  shall  cause  the
counterparty  to any Interest  Rate Hedge to agree,  that it will not  institute
against the  Purchaser  any  proceeding of the type referred to in clause (i) of
Section 7.01(f) so long as any promissory notes issued by the Purchaser shall be
outstanding or there shall not have elapsed one year plus one day since the last
day on which any such promissory notes shall have been outstanding.

      (b) The  Purchaser,  the  Deal  Agent,  the  Servicer  and the  Collateral
Custodian each hereby agree,  and the Seller shall cause the counterparty to any
Interest Rate Hedge to agree,  that it will not institute against the Seller any
proceeding of the type  referred to in clause (i) of Section  7.01(f) so long as
any  obligations  of the Seller  shall be  outstanding  or there  shall not have
elapsed  one year plus one day since the last day on which any such  obligations
shall have been outstanding.

      (c) The   provisions  of this Section  shall  survive the  termination  of
this Agreement.

     SECTION 10.08.  Set-Off.Each  of the Seller and the Servicer  hereby waives
any  rights it may have by way of  set-off  or  deduction  with  respect  to the
Purchaser or any of the Purchaser's rights, claims or properties.

      SECTION 10.09. Execution in Counterparts; Severability. This Agreement may
be executed in any number of  counterparts  and by different  parties  hereto in
separate  counterparts,  each of which when so executed shall be deemed to be an
original and all of which when taken together shall  constitute one and the same
agreement.  In case any provision in or obligation under this Agreement shall be
invalid,  illegal or unenforceable in any jurisdiction,  the validity,  legality
and  enforceability  of the  remaining  provisions  or  obligations,  or of such
provision  or  obligation  in any  other  jurisdiction,  shall not in any way be
affected or impaired thereby.




<PAGE>


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


SELLER:                             LITCHFIELD CAPITAL CORPORATION - 1996



                                    By___________________________
                                    Title



PURCHASER:                    EAGLEFUNDING CAPITAL CORPORATION

                                    By The First National Bank of
                                       Boston, as its Attorney-in-Fact


                                    By__________________________
                                    Title



DEAL AGENT:                   THE FIRST NATIONAL BANK OF BOSTON
                                  as Deal Agent


                                    By__________________________
                                    Title



SERVICER:                           LITCHFIELD FINANCIAL CORPORATION



                                    By______________________________
                                    Title




<PAGE>


                            ADDRESSES OF SIGNATORIES


                      LITCHFIELD CAPITAL CORPORATION--1996
                      c/o Litchfield Financial Corporation
                         789 Main Road
                         Stamford, VT  05352
                         Attn:  Controller
                         Telecopy No. (802) 694-1237

                        EAGLEFUNDING CAPITAL CORPORATION
                          100 Federal Street
                          Boston, MA  02110
                          Attn:  Mitchell B. Feldman
                           Telecopy No. (617) 434-9591

                        THE FIRST NATIONAL BANK OF BOSTON
                          100 Federal Street
                          Boston, MA  02110
                          Attn:  Mitchell B. Feldman
                           Telecopy No. (617) 434-9591

                        LITCHFIELD FINANCIAL CORPORATION
                          789 Main Road
                          Stamford, Vt  05352
                          Attn:  Controller
                           Telecopy No. (802) 694-1237


<PAGE>


                                                                  Exhibit 10.158
                              EMPLOYMENT AGREEMENT

    AGREEMENT  entered  into as of the 17th day of March,  1997,  by and between
Litchfield Financial Corporation,  a Massachusetts  corporation (the "Company"),
and Joseph S. Weingarten, an individual residing in Ridgefield, Connecticut (the
"Executive").

    WHEREAS,  the Board of Directors  determined that it is in the best interest
of the Company to execute and deliver this Employment Agreement;

    NOW,  THEREFORE,  for good and  valuable  consideration  , the  receipt  and
sufficiency of which are hereby acknowledged,  the undersigned hereby enter into
this Employment Agreement as follows:

    1. Nature of Employment;  Term of  Employment.  The Company shall employ the
Executive as its Senior Vice President and the Executive shall serve the Company
in  such  capacity,   upon  the  terms  and  conditions  contained  herein.  The
Executive's  employment  shall commence on March 17, 1997, or such later date on
or  before  April 7,  1997,  on which  the  Executive  shall  be  available  for
employment  hereunder and shall  continue  until March 30, 2000. The term of the
Executive's employment hereunder,  subject to termination as herein provided, is
referred  to herein  as the  "Term."  The  Executive  agrees to devote  his full
working  time and energy and best efforts to the business of the Company and the
performance  of his duties  hereunder  during the Term;  provided  that  nothing
herein shall preclude the Executive from managing his personal  business affairs
as long as the same do not interfere with his services hereunder.

    2. Compensation.  In consideration of the services rendered by the Executive
under this  Agreement,  the Company  shall pay the  Executive a base salary (the
"Base  Salary") of (i) One Hundred Twenty Five Thousand  Dollars  ($125,000) per
year during the period from the date hereof  through  March 30,  1998,  (ii) One
Hundred Thirty Five Thousand Dollars ($135,000) per year during the period March
30, 1998  through  March 30,  1999,  and (iii) One Hundred  Forty-Five  Thousand
Dollars  ($145,000)  per year during the period March 30, 1999 through March 30,
2000. The Executive's Base Salary will be reviewed not less than annually by the
Company's  Board  of  Directors,  but in no  event  reduced.  In  addition,  the
Executive  shall be entitled to receive a bonus (the  "Bonus") upon the terms as
set forth on Schedule 1 hereto.

    3. Fringe Benefits. During the Term and thereafter to the extent provided in
Section 5.6(c),  the Executive shall be entitled to participate in such employee
benefit plans as are made available  generally to key executive employees of the
Company,  including  but not  limited to 401(k)  plans,  pension  plans,  health
benefits, life insurance and four (4) weeks paid vacation per year.

     4.  Expenses.  The Company shall  reimburse  the  Executive for  reasonable
expenses incurred in connection with its business affairs, subject to guidelines
approved  by  the  Board  of  Directors  and  to  the  receipt  of   appropriate
documentation therefor.

    5.  Termination.

    5.1 Death. In the event of the death of the Executive  during his employment
hereunder, his employment by the Company shall be deemed to terminate at the end
of the calendar month in which his death occurs.

    5.2  Disability.  In the event of the physical or mental  disability  of the
Executive for a period in excess of ninety (90)  consecutive  days as determined
by a qualified  physician,  such that the  Executive is unable to discharge  his
responsibilities  hereunder,  then the Board of Directors  may vote to terminate
the Executive's  employment  effective as of the end of the calendar month which
includes the last day of such ninety (90) day period.

    5.3 By the Executive for Cause.  In the event the Company shall fail to make
any payment of salary owed to the  Executive  under Section 2 hereof when due or
pay any expenses  for which the  Executive  is entitled to  reimbursement  under
Section 4 hereof,  or breach any of the other material  covenants of the Company
hereunder, and such non-payment,  non-reimbursement or breach shall continue for
a period of twenty (20) days after the Executive  gives written notice hereof to
the Company,  the Executive shall be entitled to terminate this Agreement on the
expiration of such twenty (20) day period.

    5.4  By the  Executive  Without  Cause.  The  Executive  may  terminate  his
employment  at any  time without cause upon 30 days' prior written notice to the
Company.

    5.5 By the Company for Cause.  The Company  may  terminate  the  Executive's
employment for "reasonable  cause," by which phrase is meant only one or more of
the following:

        (a)   If the Executive  has been  convicted of, or pleads guilty or nolo
              contendere to a felony,  the Company may terminate the Executive's
              employment  immediately  upon the occurrence of such conviction or
              plea.

        (b)   If the Executive shall commit any embezzlement against the Company
              , the  Company may terminate  the Executive's  employment  at  any
              time after the commission of such act.

        (c)   If  the  Executive  has  (i) engaged  in  willful  misconduct with
              respect to the Company other than that covered by subparagraph(b),
              or  (ii) grossly neglected  his  duties to the Company, and  after
              written  notice of the same,  specifying in  reasonable detail the
              alleged misconduct or neglect,  the Executive  fails to cease such
              misconduct  or  neglect  within  a  reasonable  period of time not
              exceeding thirty  (30) days following the date of such notice, the
              Company may terminate the Executive's employment at any time after
              expiration  of  such  thirty (30) day period;  provided  that  the
              Company has complied with the following terms and conditions:


           (A)   the  Executive is provided with written  notice of the proposed
                 termination;

           (B)   the  Executive  is given the  opportunity  to  appear  with his
                 counsel,  and to present  evidence and a defense to the alleged
                 misconduct or neglect, at a duly called and held meeting of the
                 Board of Directors  of the Company,  the purpose of which shall
                 be to determine  whether the Executive  engaged in such willful
                 misconduct  or  grossly  neglected  his  duties  and  should be
                 terminated; and

           (C)   if the Executive avails himself of the opportunity set forth in
                 clause (B),  following such meeting not less than two-thirds of
                 the  members  of the  Board  of  Directors  determine  that the
                 Executive  engaged  in  such  willful   misconduct  or  grossly
                 neglected his duties and should be terminated.

    5.5A By the Company Without Cause. The Company may terminate the Executive's
employment other than for "reasonable  cause" upon 60 days' prior written notice
to the Executive.

    5.6    Rights  and  Obligations  of  the  Executive  and  the   Company upon
termination.

        (a)In the  event  the  Executive's  employment  terminates  pursuant  to
           Section  5.1,  the Company  shall  continue to make,  until March 30,
           2000,  payments  at a rate equal to the Base  Salary in effect on the
           date of death.  The Executive  shall have no liability to the Company
           as a result of a termination  of employment  pursuant to Sections 5.1
           or 5.2 hereof.  In the event of termination  pursuant to Sections 5.1
           or 5.2 the  Executive  shall also be  entitled  to receive a pro rata
           share of any bonus  which  otherwise  would  have been  payable  with
           respect  to the year in which  termination  occurs,  but shall not be
           entitled to any bonus for any subsequent year.

        (b)In  the  event  of  the  Executive's   employment  terminates  or  is
           terminated  pursuant to Sections 5.4 or 5.5,  all of the  Executive's
           rights to  receive  compensation  under  Section  2 (other  than Base
           Salary for services  rendered  prior to the date of  termination  and
           other amounts  earned but unpaid) and other  benefits  (excluding any
           benefits  which by their terms have vested) shall cease upon the date
           of termination.  The Executive shall have no liability to the Company
           as a result of a termination  of employment  pursuant to Sections 5.3
           or 5.4 hereof.

        (c)If the Executive  terminates his  employment  pursuant to Section 5.3
           or if the Company terminates the Executive's  employment  pursuant to
           Section 5.5A,  the Company shall,  until March 30, 2000,  continue to
           pay and provide to the  Executive  the Base Salary,  Bonus and fringe
           benefits  which the Executive  would  otherwise  have received  under
           Sections 2 and 3 during that period. Such payments and benefits shall
           be  liquidated  damages  for  termination  of  employment,   and  the
           Executive  shall not be entitled  to receive  any further  payment or
           benefit.

        (d)If the Company  terminates  the  Executive's  employment  pursuant to
           Section 5.5A,  the Company shall,  until March 30, 2000,  continue to
           pay and provide to the  Executive  the Base Salary,  Bonus and fringe
           benefits  which the Executive  would  otherwise  have received  under
           Sections  2 and 3  during  that  period,  in  addition  to any  other
           remedies available to the Executive pursuant to applicable law.

    6.  Restrictive Covenants. In consideration of his employment hereunder, the
Executive agrees that he will observe the following covenants.  For the purposes
of this Section, the  term  "Company" shall include any of the Company's current
or future direct or indirect subsidiaries.

    6.1  Non-disclosure.   The  Executive   acknowledges  that  the  technology,
research, know-how, trade secrets, marketing techniques, business plan and other
confidential  information  used or to be used by the  Company  in pursuit of its
business  (collectively,  the  "Proprietary  Information")  are of  value to the
Company and provide the Company with  substantial  competitive  advantage in its
business.  By virtue of his  relationship  to the  Company,  the  Executive  has
knowledge of and will be given access to Proprietary Information.  The Executive
agrees that he will not, during the Term or at any time thereafter,  directly or
indirectly  divulge,  transmit or  otherwise  disclose or cause to be  divulged,
other than in the ordinary course of his employment  hereunder,  any Proprietary
Information.  Any  Proprietary  Information  which comes into the public  domain
through no fault of the  Executive's  shall cease to be Proprietary  Information
for purposes of this Agreement.

    6.2 Non-Competition.

        (a)The  Executive  agrees that upon any  termination  of his  employment
           pursuant to any one of Sections 5.3,  5.5, or 5.5A,  he will,  during
           the Non-Competition Period (as defined in Section 6.2(d)) observe the
           non-competition covenant set forth in Section 6.2(c).

        (b)The  Executive  agrees that upon any  termination  of his  employment
           pursuant to any one of Sections  5.2, or 5.4, or upon  expiration  of
           the Term on March  30,  2000,  he will,  during  the  Non-Competition
           Period,  observe the  non-competition  convenant set forth in Section
           6.2 (c) provided that within thirty days after  termination  pursuant
           to Section 5.2 or 5.4, or in the event of termination upon expiration
           of the Term,  at least  thirty  days  prior to such  expiration,  the
           Company  shall  have given  written  notice to the  Executive  of its
           election to require the Executive to be bound by the  non-competition
           covenant set forth in Section  6.2(c) in exchange for the payments to
           be made pursuant to Section 6.2(e).

        (c)If the Executive is required  under Section 6.2 (a) or (b) to observe
           a  non-competition  covenant,  he shall not engage in any business or
           render services to any business in the United States,  as an officer,
           director,  employee,  agent,  stockholder (excluding ownership of not
           more than one (1%)  percent of the  outstanding  shares of a publicly
           held  corporation if such  ownership  does not involve  managerial or
           operational  responsibility),  manager partner or consultant, if such
           business  is  competitive  with any  product  or  service  then being
           developed,  produced or marketed by the  Company.  The parties  agree
           that the current business of the Company consists of the origination,
           purchasing,  servicing, packaging or disposing of loans, obligations,
           receivables,  notes or mortgages or the  acquisition of or investment
           in any company which engages in such services.

        (d)The term  "Non-Competition  Period"  shall mean:  (i) for purposes of
           Section  6.2(a),  the first to occur of (x) the date 12 months  after
           termination  of  employment  and (y)  March  30,  2000;  and (ii) for
           purposes of Section 6.2(b),  the date 18 months after  termination of
           employment or expiration of the Term, as the case may be.

        (e)If the Company  wishes to require that the  Executive be bound by the
           non-competition covenant in Section 6.2(c) following a termination of
           employment  pursuant to Sections 5.2 or 5.4 or upon expiration of the
           Term on March 30, 3000, it shall give the Executive written notice of
           such  effect as set  forth in  Section  6.2(b).  In such  event,  the
           Company shall pay the Executive  (i)  compensation  at a monthly rate
           equal to the  annual  Base  Salary  in  effect  as of the date of the
           termination  of  employment  divided  by 12,  to be paid  monthly  in
           advance,  during the continuation of the Non-Competition  Period, and
           (ii) an amount  equal to one-half of the Bonus paid to the  Executive
           under Section 2 for the year immediately  preceding the year in which
           termination  occurs,  which  payment  shall be made in equal  monthly
           payments  on the first day of each month  during the  Non-Competition
           Period.

    7.  [Intentionally Omitted]

    8.  Payments Upon Change of Control.  In  the event  of a  Change of Control
Transaction (as herein defined), the provisions of this Section 8 shall apply:

        (a)If within  one year  following  consummation  of a Change of  Control
           Transaction,  the Company  shall seek to (x) relocate  the  principal
           office of the Company more than 25 miles from its current location or
           (y)  materially  alter the  Executive's  authority or  responsibility
           within the Company,  and such alteration  continues for 20 days after
           notice  thereof from the Executive to the Company,  the Executive may
           terminate his employment  pursuant to Section 5.3. In such event, the
           Executive  shall  receive the payments and  benefits  provided  under
           Section  5.6(c)  unless he elects,  by written  notice to the Company
           within  30  days of  such  termination,  to  receive,  in a lump  sum
           payment,  an amount  equal to 150% of the Base Salary then in effect.
           If the  Executive  elects  such  lump sum  payment,  it shall be paid
           within 30 days of such election, he shall have no further obligations
           hereunder,  except to observe the covenants set forth in Section 6.1,
           and the Company shall have no further  obligations  hereunder,  other
           than to pay such lump sum payment.

        (b)A "Change of Control Transaction" shall mean (i) a sale,  conveyance,
           lease or other transfer of all or substantially  all of the assets of
           the Company,  (ii) a  consolidation  or merger of the Company with or
           into another corporation in which the Company is not the surviving or
           resulting  corporation or after which more than 50% of the issued and
           outstanding  shares  of  voting  capital  stock of the  surviving  or
           resulting  corporation is thereafter  owned of record or beneficially
           by any single Person or Group of affiliated Persons,  (iii) a sale or
           transfer  in a single  transaction  of shares of the  voting  capital
           stock of the  Company,  which  results in more than 50% of the issued
           and  outstanding  shares of the voting  capital  stock of the Company
           being thereafter owned of record or beneficially by any single Person
           or Group of affiliated Persons,  (iv) any other transaction or series
           of transactions involving the issuance, sale or transfer of shares of
           the capital  stock of the Company,  which  results in more than fifty
           percent  (50%) of the  issued  and  outstanding  shares of the voting
           capital  stock of the  Company  being  thereafter  owned of record or
           beneficially by any single Person or Group of affiliated  Persons, or
           (v) a majority of the Board of  Directors  of the Company  ceasing to
           consist of individuals (A) who are currently  members of the Board or
           (B) for whose  nomination  for such  membership  a  majority  of such
           current members voted in favor.

        (c)"Group of affiliated  Persons"  shall mean a group of tow (2) or more
           persons  (i) in which one (1) or more of such  Persons  controls,  is
           controlled  by, or is under  common  control  with,  another  of such
           Persons,  or (ii) which is associated by agreement for the purpose of
           controlling  the Company or any successor  corporation  thereof.  The
           term "Group of affiliated  Persons"  shall not include any such group
           which  consists  entirely  of Persons  who are  current  stockholders
           and/or  directors  of the Company  which any  currently  be deemed to
           control the Company. "Person" shall mean an individual,  partnership,
           corporation, trust, or other business entity.

    9. Termination of this Agreement.  This Agreement shall remain in full force
and  effect,  notwithstanding  any  termination  of the  Term,  until all of the
parties' obligations hereunder have been fully performed.

    10. Notices. All notices hereunder, to be effective, shall be in writing and
shall be delivered by  hand or by certified mail, postage  and fees prepaid,  as
follows:

           (i)   If to the Company:  Litchfield Financial Corporation
                                  789 Main Road
                               Stamford, VT 05352

              With a Copy to:    James Westra, Esq.
                                 Hutchins, Wheeler & Dittmar
                               101 Federal Street
                                Boston, MA 02110

           (ii)  If to Executive:Joseph S. Weingarten



              With a Copy to:    Craig Griffith, Esq.
                                 Sidley & Austin
                             1 First National Place
                                Chicago, IL 60603

unless  and until  notice of  another  or  different  address  shall be given as
provided herein.

     11. Modification.  This Agreement  constitutes the entire Agreement between
the parties  hereto with regard to the subject matter  hereof,  superseding  all
prior understandings and agreements, whether written or oral. This Agreement may
not be amended or revised except by a writing signed by the parties.

    12.  Successors and Assigns.  This Agreement shall be binding upon and inure
to the benefit of both  parties and their  respective  successors  and  assigns,
including any corporation  with which or into which the Company or its successor
may be merged or which may  succeed  to its  assets or  business,  although  the
obligations of the Executive are personal and may be performed only by him.

    13. Captions.  Captions herein have been inserted  solely for convenience of
reference and in no way define, limit or describe the  scope or substance of any
provision of this Agreement.

    14.  Severability.  The  provisions  of this  Agreement are  severable,  and
invalidity  of any  provision  shall  not  affect  the  validity  of  any  other
provision. In the event that any court of competent jurisdiction shall determine
that any provision of this Agreement or the application thereof is unenforceable
because of the  duration or scope  thereof,  the parties  hereto agree that said
court in making such determinations  shall have the power to reduce the duration
and scope of such provision to the extent necessary to make it enforceable,  and
that the  Agreement  in its reduced form shall be valid and  enforceable  to the
full extent permitted by law.

    15. Governing Law.  This Agreement shall be construed under and  governed by
the laws of the Commonwealth of Massachusetts.


    IN WITNESS WHEREOF,  the parties hereto have duly executed this Agreement as
a sealed instrument as of the day and year first above written.


                    LITCHFIELD FINANCIAL CORPORATION

                    By: /s/ Richard A. Stratton
                       Title:  President

                     /s/ Joseph S. Weingarten
                    Joseph S. Weingarten



<PAGE>



                                   Schedule 1

The  Executive  will be eligible  for total  bonuses of  $120,000,  $135,000 and
$145,000 in 1997, 1998, and 1999, respectively. The bonuses will be comprised of
(i) a  discretionary  portion  granted based upon the employee's  performance as
compared to agreed upon goals and mandatory  payable if the Company's EPS growth
exceeds 10%. The discretionary  bonuses available will be 40,000 in 1997; 45,000
in 1998 and 45,000 in 1999; (ii) a portion of the total bonus will be earned for
each  percentage  increase  in EPS in excess of 10% and (iii) a greater  portion
earned for each  percentage  increase in EPS from 15% to 20%. The dollar amounts
payable under this EPS portion of the plan, for each one percent increase, is as
follows:


                       >10% and        >15% and
                       <or = 15%       <or = 20%
                       ---------       ---------

               1997      7,500           8,500
               1998      8,500           9,500
               1999      9,500          10,500


<PAGE>



                                                                    Exhibit 11.1
                        Litchfield Financial Corporation
                        Computation of Earnings Per Share

<TABLE> 

                                                                Three months ended        Nine months ended
                                                                ------------------        -----------------
                                                                   September 30,            September 30,
                                                                   -------------            -------------
                                                                  1997      1996            1997      1996
                                                                  ----      ----            ----      ----


<S>                                                               <C>       <C>             <C>         <C>

Primary
    Weighted average number of  common
        shares outstanding ................................  5,629,644    5,443,319    5,545,507    5,440,714
    Weighted average number of common
       stock equivalents outstanding:
       Stock options ......................................    350,586      253,808      329,261      240,717
                                                               -------      -------      -------      -------
                                                                                                  

    Fully-diluted weighted average common
        and common equivalent shares
        outstanding (1)....................................  5,980,230    5,697,127    5,874,768     5,681,431
                                                             =========    =========    =========     =========

    Net income ............................................ $2,161,000   $1,946,000   $5,186,000    $4,308,000
                                                            ==========   ==========   ==========    ==========

    Net income per common share ...........................   $    .36   $      .34    $     .88    $      .76
                                                              ========   ==========    =========    ==========



Fully-diluted
    Weighted average number of  common
        shares outstanding ................................  5,629,644    5,443,319    5,545,497      5,440,745
    Weighted average number of common
       stock equivalents outstanding:
       Stock options ......................................    414,884      277,605      440,882        274,646
                                                               -------      -------      -------        -------
                                                                                                  

    Fully-diluted weighted average common
        and common equivalent shares
        outstanding (1)....................................  6,044,528    5,720,924    5,986,379      5,715,391
                                                             =========    =========    =========      =========                     

    Net income.............................................  $2,161,000  $1,946,000   $5,186,000     $4,308,000
                                                             ==========  ==========   ==========     ==========

    Net income per common share ...........................  $      .36  $      .34   $      .87     $      .75
                                                             ==========  ==========   ==========     ==========


</TABLE>