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                          PLEDGE AND SECURITY AGREEMENT


                                     made by


                           CONTIFINANCIAL CORPORATION



                                   in favor of


                  CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH,

                               as Collateral Agent



                           Dated as of August 19, 1999

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                                TABLE OF CONTENTS

                                                                           Page
                                                                           ----

SECTION 1.DEFINED TERMS ...................................................    1

  1.1 Definitions .........................................................    1

  1.2 Other Definitional Provisions .......................................    3

SECTION 2 GRANT OF SECURITY INTEREST .......................................   4

  2.1 Collateral ...........................................................   4

  2.2 Grant of Security Interest in Collateral .............................   4

SECTION 3 REPRESENTATIONS AND WARRANTIES ...................................   5

  3.1 Representations in Credit Agreement ..................................   5

  3.2 Title; No Other Liens ................................................   5

  3.3 Perfection; Priority .................................................   5

  3.4 Chief Executive Office; Books and Records ............................   5

SECTION 4 COVENANTS ........................................................   6

  4.1 Generally ............................................................   6

  4.2 Covenants in Credit Agreement ........................................   6

  4.3 Payment of Obligations ...............................................   6

  4.4 Maintenance of Perfected Security Interest; Further Documentation ....   6

  4.5 Changes in Locations, Name, Etc ......................................   7

  4.6 Notices .............................................................    8

  4.7 Certificates, Instruments and Investment Property ...................    8

SECTION 5 REMEDIAL PROVISIONS ..............................................   9

  5.1 Sale of Collateral ..................................................    9

  5.2 Voting Rights .......................................................   10

  5.3 Proceeds to be Turned Over To Collateral Agent ......................   11

  5.4 Code and Other Remedies .............................................   11

  5.5 Waiver; Deficiency ..................................................   12

SECTION 6 THE COLLATERAL AGENT ............................................   12

  6.1 Collateral Agent's Appointment as Attorney-in-Fact, Etc .............   12

  6.2 Duty of Collateral Agent ............................................   14

  6.3 Execution of Financing Statements ...................................   14

  6.4 Authority of Collateral Agent .......................................   15

SECTION 7 MISCELLANEOUS ...................................................   15


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                                TABLE OF CONTENTS
                                   (continued)

                                                                           Page
                                                                           ----

  7.1 Amendments in Writing ...............................................   15

  7.2 Notices .............................................................   15

  7.3 No Waiver by Course of Conduct; Cumulative Remedies .................   15

  7.4 Enforcement Expenses; Indemnification ...............................   15

  7.5 Successors and Assigns ..............................................   16

  7.6 Set-Off .............................................................   16

  7.7 Counterparts ........................................................   17

  7.8 Severability ........................................................   17

  7.9 Section Headings ....................................................   17

  7.10 Integration ........................................................   17

  7.11 GOVERNING LAW ......................................................   17

  7.12 Submission To Jurisdiction; Waivers ................................   17

  7.13 Acknowledgements ...................................................   18

  7.14 Releases ...........................................................   18

  7.15 WAIVERS OF JURY TRIAL ..............................................   19

Annex 1 to Pledge and Security Agreement ...................................   1

Pledge and Security Agreement ..............................................   1

Annex 3 to Pledge and Security Agreement ...................................   2

Annex 4 to Pledge and Security Agreement ...................................   1

Annex 5 to Pledge and Security Agreement ...................................   1


                                       ii

<PAGE>

                          PLEDGE AND SECURITY AGREEMENT

                  PLEDGE AND SECURITY AGREEMENT, dated as of August 19, 1999,
made by ContiFinancial Corporation, a Delaware corporation (the "Grantor"), in
favor of Credit Suisse First Boston, New York Branch ("CSFB"), as agent for the
banks, financial institutions and other entities from time to time party to
either or both of the Credit Agreement and the Reimbursement Agreement referred
to below (the "Secured Parties" and CSFB, in such capacity, the "Collateral
Agent").

                              W I T N E S S E T H:

                  WHEREAS, the Secured Parties have made extensions of credit to
the Grantor pursuant to (i) the Credit Agreement dated as of January 7, 1997 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Grantor, the lenders party thereto and CSFB, as
Administrative Agent, and (ii) the Amended and Restated Letter of Credit and
Reimbursement Agreement dated as of September 9, 1997, as amended and restated
as of August 21, 1998 (as further amended, amended and restated, supplemented or
otherwise modified from time to time, the "Reimbursement Agreement" and together
with the Credit Agreement, the "Agreements"), among the Grantor, the
participating banks party thereto, CSFB, as Agent, and Dresdner Bank AG, New
York Branch, as Issuing Bank; and

                  WHEREAS, the proceeds of the extensions of credit under the
Agreements have been used in part to enable the Grantor to make valuable
transfers to one or more of its Subsidiaries in connection with the operation of
their respective businesses; and

                  WHEREAS, the Grantor has derived substantial direct and
indirect benefit from the making of the extensions of credit under the
Agreements; and

                  WHEREAS, it is a condition precedent to the obligation of the
Secured Parties to amend the Agreements that the Grantor shall have executed and
delivered this Agreement to the Collateral Agent;

                  NOW, THEREFORE, in consideration of the premises and to induce
the Secured Parties to amend the Agreements, the Grantor hereby agrees with the
Collateral Agent, for the ratable benefit of the Secured Parties, as follows:

                  SECTION 1. DEFINED TERMS

                  1.1 Definitions.

                  (a) Unless  otherwise  defined  herein,  terms  defined in the
Credit  Agreement  and used herein shall have the meanings  given to them in the
Credit Agreement.

                  (b) The following terms shall have the following meanings:

<PAGE>

                  "Agreement" means this Pledge and Security Agreement.

                  "Collateral" has the meaning specified in Section 2.

                  "Control" has the meaning specified in the Uniform Commercial
Code in effect in the State of New York on the date hereof and, to the extent
the category of property or rights is expanded by any subsequent amendment of
such statute, as so expanded from and after the date such amendment becomes
effective.

                  "General Intangibles" means all "general intangibles" as such
term is defined in Section 9-106 of the Uniform Commercial Code in effect in the
State of New York on the date hereof and, to the extent the category of property
or rights is expanded by any subsequent amendment of such statute, as so
expanded from and after the date such amendment becomes effective and, General
Intangibles in any event, includes with respect to the Grantor, all contracts,
agreements, instruments and indentures in any form, and portions thereof, to
which the Grantor is a party or under which the Grantor has any right, title or
interest or to which the Grantor or any property of the Grantor is subject, as
the same may from time to time be amended, supplemented or otherwise modified,
including (i) all rights of the Grantor to receive moneys due and to become due
to it thereunder or in connection therewith, (ii) all rights of the Grantor to
damages arising thereunder and (iii) all rights of the Grantor to perform and to
exercise all remedies thereunder, in each case to the extent the grant by the
Grantor of a security interest pursuant to this Agreement in its right, title
and interest in such contract, agreement, instrument or indenture is not
prohibited by such contract, agreement, instrument or indenture without the
consent of any other party thereto, would not give any other party to such
contract, agreement, instrument or indenture the right to terminate its
obligations thereunder, or is permitted with consent if all necessary consents
to such grant of a security interest have been obtained from the other parties
hereto (it being understood that the foregoing shall not be deemed to obligate
the Grantor to obtain such consents); provided, however, that the foregoing
limitation shall not affect, limit, restrict or impair the grant by the Grantor
of a security interest pursuant to this Agreement in any receivable or any money
or other amounts due or to become due under any such contract, agreement,
instrument or indenture.

                  "Instruments" has the meaning specified in the Uniform
Commercial Code in effect in the State of New York on the date hereof and, to
the extent the category of property or rights is expanded by any subsequent
amendment of such statute, as so expanded from and after the date such amendment
becomes effective.

                  "Investment Property" means all "investment property" as such
term is specified in the Uniform Commercial Code in effect in the State of New
York on the date hereof and, to the extent the category of property or rights is
expanded by any subsequent amendment of such statute, as so expanded from and
after the date such amendment becomes effective.

                  "New York UCC" means the Uniform Commercial Code as from time
to time in effect in the State of New York; provided, however, in the event
that, by reason of


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mandatory provisions of law, any or all of the attachment, perfection or
priority of the Collateral Agent's and the Secured Parties' security interest in
any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term "New York UCC" shall
mean the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of definitions related to such provisions.

                  "Obligations" means the Loans (as defined in the Credit
Agreement or the Reimbursement Agreement), obligations under any Letter of
Credit and all other advances, debts, liabilities, obligations, covenants and
duties owing by the Grantor to the Agent under the Reimbursement Agreement, the
Administrative Agent under the Credit Agreement, the Collateral Agent, any other
Secured Party, the Issuing Bank (as defined in the Reimbursement Agreement), the
Swingline Lender, any Affiliate of any of them or any indemnitee, of every type
and description, present or future, whether or not evidenced by any note,
guaranty or other instrument, arising under this Agreement or under the
Agreements, whether or not for the payment of money, whether arising by reason
of an extension of credit, opening or amendment of a Letter of Credit or payment
of any draft drawn thereunder, loan, guaranty, indemnification, foreign exchange
transaction or in any other manner, whether direct or indirect (including,
without limitation, those acquired by assignment), absolute or contingent, due
or to become due, now existing or hereafter arising and however acquired. The
term "Obligations" includes, without limitation, all interest, charges,
expenses, fees, attorneys' fees and disbursements and any other sum chargeable
to the Grantor under this Agreement or the Agreements and all obligations of the
Grantor to cash collateralize obligations under a Letter of Credit, if any.

                  "Proceeds" means all "proceeds" as such term is defined in
Section 9-306(1) of the Uniform Commercial Code in effect in the State of New
York on the date hereof and, in any event, shall include, without limitation,
(a) all dividends or other income from the Collateral, collections thereon or
distributions or payments with respect thereto, including any Instruments,
General Intangibles and Investment Property received in connection therewith,
and any amounts deposited in any overcollateralization account or reserve
account which is payable with respect to any Collateral (b) any and all proceeds
of any insurance, indemnity, warranty or guaranty payable to the Grantor from
time to time with respect to any of the Collateral, (c) any and all payments (in
any form whatsoever) made or due and payable to the Grantor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of Governmental Authority) and (d) any and all
other amounts from time to time paid or payable under or in connection with any
of the Collateral.

                  "Securities Act" means the Securities Act of 1933, as amended.

                  1.2 Other Definitional Provisions. (a) The words "hereof,"
"herein," "hereto" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
section, subsection or clause


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<PAGE>

in this Agreement, and Section and Schedule references are to this Agreement
unless otherwise specified.

                  (b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.

                  (c) Where the context requires, terms relating to the
Collateral or any part thereof, when used in relation to the Grantor, shall
refer to the Grantor's Collateral or the relevant part thereof.

                  (d) References herein to an Exhibit, Schedule, Article,
Section, subsection or clause refer to the appropriate Exhibit or Schedule to,
or Article, Section, subsection or clause in this Agreement.

                  (e) Any reference in this Agreement to the Agreements shall
include all appendices, exhibits and schedules thereto, and, unless specifically
stated otherwise all amendments, restatements, supplements or other
modifications thereto, and as the same may be in effect at any and all times
such reference becomes operative.

                  (f) The term "including" when used herein means "including
without limitation" unless the context otherwise requires.

                  (g) The terms "Secured Parties" and "Collateral Agent" include
their respective successors.

                  SECTION 2. GRANT OF SECURITY INTEREST

                  2.1 Collateral. For the purposes of this Agreement, all of the
following property now owned or at any time hereafter acquired by the Grantor or
in which the Grantor now has or at any time in the future may acquire any right,
title or interests is collectively referred to as the "Collateral":

                  (a) those certain Excess Spread Receivables listed on Annex 2
hereto and all certificates and documents, if any, representing any such
Collateral or relating thereto;

                  (b) all books and records pertaining to the Collateral; and

                  (c) to the extent not otherwise included, all Proceeds and
products of each of the foregoing and all accessions to, substitutions and
replacements for, and rents, profits and products of, each of the foregoing, all
dividends, cash, interest, all instruments and other property and Proceeds and
products from time to time received, receivable or otherwise distributed in
respect of the Collateral or in exchange therefore.

                  2.2 Grant of Security Interest in Collateral. As collateral
security for the full, prompt and complete payment and performance when due
(whether at stated maturity, by acceleration or otherwise) of the Obligations,
the Grantor hereby collaterally assigns, conveys, mortgages, pledges,
hypothecates and transfers to the Collateral Agent,


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and grants to the Collateral Agent, for the ratable benefit of the Secured
Parties, a security interest in all of its right, title and interest in, to and
under the Collateral.

                  SECTION 3. REPRESENTATIONS AND WARRANTIES

                  To induce the Secured Parties to amend the Agreements, the
Grantor hereby represents and warrants to the Secured Parties that:

                  3.1 Representations in Credit Agreement. The representations
and warranties set forth in Article III of the Credit Agreement and Article III
of the Reimbursement Agreement are hereby incorporated herein by reference, are
true and correct, and the Collateral Agent and each Secured Party shall be
entitled to rely on each of them as if they were fully set forth herein.

                  3.2 Title; No Other Liens. (a) Except for the security
interests granted to the Collateral Agent for the ratable benefit of the Secured
Parties pursuant to this Agreement, the Grantor is the legal and beneficial
owner of and has good and marketable title to the Collateral on Annex 2 and owns
each item of such Collateral free and clear of any and all Liens, or options in
favor of, or claims of any other Person. No financing statement or other public
notice with respect to all or any part of the Collateral is on file or of record
in any public office, except such as have been filed in favor of the Collateral
Agent, for the benefit of the Secured Parties, pursuant to this Agreement or as
are permitted by the Agreements.

                  (b) All Collateral in certificated form has been delivered to
the Collateral Agent.

                  3.3 Perfection; Priority.

                  (a) Upon (i) the completion of the filings and other actions
specified on Annex 1 (which, in the case of all filings and other documents
referred to on said Schedule, have been delivered to the Collateral Agent in
completed and duly executed form), (ii) the delivery to the Collateral Agent of
all certificates representing Collateral that consist of certificated securities
and (iii) the Collateral Agent having obtained Control over such Investment
Property, the security interests granted pursuant to this Agreement will
constitute valid and continuing perfected security interests in the Collateral
in favor of the Collateral Agent, for the benefit of the Secured Parties, having
the priority ascribed to such security interests in Section 3.3(b).

                  (b) Upon the completion of the filings and other actions
specified in Section 3.3(a) and on Annex 1 (which, in the case of all filings
and other documents referred to on said Schedule, have been delivered to the
Collateral Agent in completed and duly executed form), the security interests
granted pursuant to this Agreement are prior to all other Liens on the
Collateral in existence on the date hereof.

                  3.4 Chief Executive Office; Books and Records. On the date
hereof, the Grantor's jurisdiction of organization, the location of the
Grantor's chief executive office


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or sole place of business and the place where its records concerning the
Collateral are kept are specified on Annex 4.

                  SECTION 4. COVENANTS

                  The Grantor covenants and agrees with the Secured Parties
that, from and after the date of this Agreement until the obligations under the
Credit Agreement and the Reimbursement Agreement shall have been paid in full,
no Letter of Credit (as defined in the Reimbursement Agreement) shall be
outstanding and the Commitments shall have terminated:

                  4.1 Generally. The Grantor shall (i) except for the security
interest created by this Agreement, not create or suffer to exist any Lien upon
or with respect to any of the Collateral; (ii) not use or permit any Collateral
to be used unlawfully or in violation of any provision of this Agreement or any
applicable statute, regulation or ordinance or any policy of insurance covering
the Collateral; and (iii) pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Collateral,
except to the extent the validity thereof is being contested in good faith;
provided, however, that the Grantor shall in any event pay such taxes,
assessments, charges, levies or claims not later than five days prior to the
date of any proposed sale under any judgment, writ or warrant of attachment
entered or filed against the Grantor or any of the Collateral as a result of the
failure to make such payment. The Grantor shall not sell, transfer or assign (by
operation of law or otherwise) any Collateral except as contemplated in this
Agreement.

                  4.2 Covenants in Credit Agreement. The Grantor shall take, or
shall refrain from taking, as the case may be, each action that is necessary to
be taken or not taken, as the case may be, so that no Default or Event of
Default under the Agreements is caused by the failure to take such action or to
refrain from taking such action by the Grantor.

                  4.3 Payment of Obligations. The Grantor will pay and discharge
or otherwise satisfy at or before maturity or before they become delinquent, as
the case may be, all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of income or profits therefrom, as
well as all claims of any kind (including claims for labor, materials and
supplies) against or with respect to the Collateral, except that no such charge
need be paid if the amount or validity thereof is currently being contested in
good faith by appropriate proceedings, reserves in conformity with GAAP with
respect thereto have been provided on the books of the Grantor and such
proceedings could not reasonably be expected to result in the sale, forfeiture
or loss of any material portion of the Collateral or any interest therein.

                  4.4 Maintenance of Perfected Security Interest; Further
Documentation.

                  (a) The Grantor shall maintain the security interests created
by this Agreement as perfected security interests having at least the priorities
described in


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Section 3.3 and shall defend such security interests against the claims and
demands of all Persons.

                  (b) The Grantor will furnish to the Collateral Agent from time
to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the
Collateral Agent may reasonably request, all in reasonable detail.

                  (c) At any time and from time to time, upon the written
request of the Collateral Agent, and at the sole expense of the Grantor, the
Grantor will promptly and duly execute and deliver, and have recorded, such
further instruments and documents and take such further actions as the
Collateral Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted, including the filing of any financing or continuation statements
under the Uniform Commercial Code (or other similar laws) in effect in any
jurisdiction with respect to the security interests created hereby.

                  (d) The Grantor hereby authorizes the Collateral Agent to file
one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Collateral without the signature of the
Grantor. The Grantor agrees that a carbon, photographic or other reproduction of
this Agreement or of a financing statement signed by Grantor shall be sufficient
as a financing statement and may be filed as a financing statement in any and
all jurisdictions.

                  4.5 Changes in Locations, Name, Etc.

                  (a) The Grantor will not, except upon 30 days' prior written
notice to the Collateral Agent and delivery to the Collateral Agent of all
additional executed financing statements and other documents reasonably
requested by the Collateral Agent to maintain the validity, perfection and
priority of the security interests provided for herein:

                  (i) change the location of its chief executive office or sole
place of business from that referred to in Section 3.4; or

                  (ii) change its name, identity or corporate structure to such
an extent that any financing statement filed by the Collateral Agent in
connection with this Agreement would become misleading.

                  (b) The Grantor will keep and maintain at its own cost and
expense satisfactory and complete records of the Collateral, including a record
of all payments received and all credits granted with respect to the Collateral
and all other dealings with the Collateral. The Grantor will, if so requested by
the Collateral Agent, furnish to the Collateral Agent, as often as the
Collateral Agent reasonably requests, statements and schedules further
identifying and describing the Collateral and the transaction generating the
Collateral related thereto, such other reports in connection with the Collateral
as the Collateral Agent may reasonably request and any information that the
Collateral Agent may reasonably request in order to perform an evaluation of the
Collateral, all in


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<PAGE>

reasonable detail. The Grantor will mark its books and records pertaining to the
Collateral to evidence this Agreement and the Lien and security interests
granted hereby. For the Secured Parties' further security, the Grantor agrees
that the Secured Parties shall have a special property interest in all of the
Grantor's books and records pertaining to the Collateral. At any time, upon
reasonable notice from the Collateral Agent, the Grantor shall permit any
representative of the Collateral Agent to inspect such books and records and
will provide photocopies thereof to the Collateral Agent.

                  4.6 Notices. The Grantor will advise the Collateral Agent,
promptly and in reasonable detail, of any Lien (other than security interests
created hereby or Liens permitted under the Agreements) on any of the
Collateral.

                  4.7 Certificates, Instruments and Investment Property.

                  (a) The Grantor will deliver all certificates or Instruments
representing or evidencing the Collateral or, subject to Section 5, any amounts
payable under or in connection therewith, whether now arising or hereafter
acquired or arising to the Collateral Agent, and held by or on behalf of the
Collateral Agent pursuant hereto, in suitable form for transfer by delivery or,
as applicable, accompanied by the Grantor's endorsement, where necessary, or
duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent. The Collateral Agent shall have
the right, at any time in its discretion and without notice to the Grantor, to
transfer to or to register in its name or in the name of its nominees any or all
certificates, Instruments or Investment Property constituting Collateral. The
Collateral Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing any Collateral for certificates or
instruments of smaller or larger denominations.

                  (b) Subject to Section 5, the Grantor shall be entitled to
exercise all voting, consent and corporate rights with respect to the
Collateral; provided, however, that no vote shall be cast, no consent shall be
given, no corporate right shall be exercised and no other action shall be taken
by the Grantor which, in the Collateral Agent's reasonable judgment, would
impair the Collateral or which would be inconsistent with or result in any
violation of any provision of the Credit Agreement, the Reimbursement Agreement
or this Agreement.

                  (c) The Grantor hereby agrees that it shall not grant Control
over any Collateral to any Person other than the Collateral Agent.

                  (d) Subject to Section 5, the Grantor shall be entitled to
receive all payments, including any and all dividends, made in respect of the
Collateral paid in the normal course of business of the relevant issuer thereof
and consistent with past practice, to the extent permitted in the Agreements.
Any sums paid or other property distributed upon or in respect of the Collateral
upon the liquidation or dissolution of any issuer thereof shall be paid over to
the Collateral Agent to be held by it hereunder as additional collateral
security for the Obligations, and in case any distribution of capital shall be
made on or in respect of the Collateral or any property shall be distributed
upon or with


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<PAGE>

respect to such Collateral pursuant to the recapitalization or reclassification
of the capital of any issuer thereof or pursuant to the reorganization thereof,
the property so distributed shall be delivered to the Collateral Agent to be
held by it hereunder as additional collateral security for the Obligations. If
any sums of money or property so paid or distributed in respect of the
Collateral shall be received by the Grantor, the Grantor shall, until such money
or property is paid or delivered to the Collateral Agent, hold such money or
property in trust for the Secured Parties, segregated from other funds of the
Grantor, as additional collateral security for the Obligations.

                  (e) Without the prior written consent of the Collateral Agent,
the Grantor will not (i) vote to enable, or take any other action to permit, any
issuer of Investment Property or other Collateral to issue any stock or other
equity securities of any nature or to issue any other securities convertible
into or granting the right to purchase or exchange for any stock or other equity
securities of any nature of any issuer thereof, (ii) sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with respect to, any
Collateral or the Proceeds thereof (except pursuant to a transaction expressly
permitted by the Agreements), (iii) create, incur or permit to exist any Lien or
option in favor of, or any claim of any Person with respect to, any of the
Collateral or the Proceeds thereof, or any interest therein, except for the
security interests created by this Agreement or (iv) enter into any agreement or
undertaking restricting the right or ability of the Grantor or the Collateral
Agent to sell, assign or transfer any of the Collateral or Proceeds thereof.

                  (f) Upon request of the Collateral Agent, the Grantor shall
cause each Person which is an issuer of an uncertificated security included in
the Collateral to execute and deliver all instruments and documents, and take
all further action that the Collateral Agent may reasonably request, in order to
perfect and protect any security interest granted or purported to be granted in
such uncertificated securities, to establish Control by the Collateral Agent
over such Collateral or to enable the Collateral Agent to exercise and enforce
its rights and remedies hereunder with respect to such Collateral, including and
as applicable, (i) register the security interest granted hereby upon the books
of such Person in accordance with Article 8 of the New York UCC and (ii) deliver
to the Collateral Agent an Acknowledgment of Pledge, duly executed by such the
issuer of the applicable uncertificated security, in substantially the form of
Annex 3.

                  SECTION 5. REMEDIAL PROVISIONS

                  5.1 Sale of Collateral. The Grantor recognizes that the
Collateral Agent may be unable to effect a public sale of any or all the
Collateral, by reason of certain prohibitions contained in the Securities Act
and applicable state securities laws or otherwise, and may be compelled to
resort to one or more private sales thereof to a restricted group of purchasers
which will be obliged to agree, among other things, to acquire such securities
for their own account for investment and not with a view to the distribution or
resale thereof. The Grantor acknowledges and agrees that any such private sale
may result in prices and other terms less favorable than if such sale were a
public sale. The Collateral Agent shall be under no obligation to delay a sale
of any of the Collateral for the period of time necessary to permit the issuer
thereof to register such


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<PAGE>

securities for public sale under the Securities Act, or under applicable state
securities laws, even if such issuer would agree to do so.

                  5.2 Voting Rights.

                  (a) If an Event of Default under the Credit Agreement or the
Reimbursement Agreement shall occur and be continuing (other than an Event of
Default arising under clause (f) of Article VII of the Agreements) and the
Collateral Agent shall have provided notice to the Grantor of the acceleration
of the obligations outstanding under the Agreements and shall have commenced
enforcement action in respect thereof, (i) the Collateral Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Collateral and make application thereof to the Obligations in the
order set forth in the Agreements, and (ii) the Collateral Agent or its nominee
may exercise (x) all voting, consent, corporate and other rights pertaining to
such Collateral at any meeting of shareholders of the relevant issuer or issuers
thereof or otherwise and (y) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to such
Collateral as if it were the absolute owner thereof (including the right to
exchange at its discretion any and all of the Collateral upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate structure of any issuer thereof, or upon the exercise by the
Grantor or the Collateral Agent of any right, privilege or option pertaining to
such Collateral, and in connection therewith, the right to deposit and deliver
any and all of the Collateral with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as the
Collateral Agent may determine), all without liability except to account for
property actually received by it, but the Collateral Agent shall have no duty to
the Grantor to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing. IN ORDER TO PERMIT
THE COLLATERAL AGENT TO EXERCISE THE VOTING AND OTHER CONSENSUAL RIGHTS WHICH IT
MAY BE ENTITLED TO EXERCISE PURSUANT HERETO AND TO RECEIVE ALL DIVIDENDS AND
OTHER DISTRIBUTIONS WHICH IT MAY BE ENTITLED TO RECEIVE HEREUNDER, (I) THE
GRANTOR SHALL PROMPTLY EXECUTE AND DELIVER (OR CAUSE TO BE EXECUTED AND
DELIVERED) TO THE COLLATERAL AGENT ALL SUCH PROXIES, DIVIDEND PAYMENT ORDERS AND
OTHER INSTRUMENTS AS THE COLLATERAL AGENT MAY FROM TIME TO TIME REASONABLY
REQUEST AND (II) WITHOUT LIMITING THE EFFECT OF CLAUSE (I) ABOVE, THE GRANTOR
HEREBY GRANTS TO THE COLLATERAL AGENT AN IRREVOCABLE PROXY TO VOTE THE
INVESTMENT PROPERTY OR OTHER COLLATERAL AND TO EXERCISE ALL OTHER RIGHTS,
POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF SUCH COLLATERAL WOULD BE
ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS,
CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH MEETINGS), WHICH
PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION
(INCLUDING ANY TRANSFER OF ANY INVESTMENT PROPERTY


                                       10
<PAGE>

OR OTHER COLLATERAL ON THE RECORD BOOKS OF THE ISSUER THEREOF) BY ANY OTHER
PERSON (INCLUDING THE ISSUER OF SUCH INVESTMENT PROPERTY OR OTHER COLLATERAL OR
ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE AND DURING THE CONTINUATION
OF AN EVENT OF DEFAULT UNDER THE CREDIT AGREEMENT OR THE REIMBURSEMENT
AGREEMENT, AND WHICH PROXY SHALL ONLY TERMINATE UPON THE PAYMENT IN FULL OF THE
OBLIGATIONS.

                  (b) The Grantor hereby authorizes and instructs each issuer of
any Collateral pledged by the Grantor hereunder to (i) comply with any
instruction received by it from the Collateral Agent in writing that (x) states
that an Event of Default under the Credit Agreement or the Reimbursement
Agreement has occurred and is continuing and (y) is otherwise in accordance with
the terms of this Agreement, without any other or further instructions from the
Grantor, and the Grantor agrees that each such issuer shall be fully protected
in so complying and (ii) unless otherwise expressly permitted hereby, pay any
dividends or other payments with respect to such Investment Property directly to
the Collateral Agent.

                  5.3 Proceeds to be Turned Over To Collateral Agent. If an
Event of Default under the Credit Agreement or the Reimbursement Agreement shall
occur and be continuing (other than an Event of Default arising under clause (f)
of Article VII of the Agreements) and the Collateral Agent shall have provided
notice to the Grantor of the acceleration of the obligations outstanding under
the Agreements and shall have commenced enforcement action in respect thereof,
all Proceeds received by the Grantor consisting of cash, checks and other
near-cash items shall be held by the Grantor in trust for the Collateral Agent
and the other Secured Parties, segregated from other funds of the Grantor, and
shall, forthwith upon receipt by the Grantor, be turned over to the Collateral
Agent in the exact form received by the Grantor (duly indorsed by the Grantor to
the Collateral Agent, if required). All Proceeds received by the Collateral
Agent hereunder shall be held by the Collateral Agent in a deposit account
maintained under its sole dominion and control. All Proceeds, while held by the
Collateral Agent in such deposit account (or by the Grantor in trust for the
Collateral Agent and the other Secured Parties), shall continue to be held as
collateral security for all the Obligations and shall not constitute payment
thereof until applied as provided in the Credit Agreement or the Reimbursement
Agreement, as applicable.

                  5.4 Code and Other Remedies. If an Event of Default under the
Credit Agreement or the Reimbursement Agreement shall occur and be continuing,
the Collateral Agent, on behalf of the Secured Parties, may exercise, in
addition to all other rights and remedies granted to them in this Agreement and
in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the New York UCC
or any other applicable law. Without limiting the generality of the foregoing,
the Collateral Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof


                                       11
<PAGE>

(or contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, at any exchange, broker's board or office of the
Collateral Agent or any other Secured Party or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
The Collateral Agent or any other Secured Party shall have the right upon any
such public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption in the Grantor, which right or
equity is hereby waived and released. The Grantor further agrees, at the
Collateral Agent's request, to assemble the Collateral and make it available to
the Collateral Agent at places which the Collateral Agent shall reasonably
select, whether at the Grantor's premises or elsewhere. The Collateral Agent
shall apply the net proceeds of any action taken by it pursuant to this Section
5.4, after deducting all reasonable costs and expenses of every kind incurred in
connection therewith or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the
Collateral Agent and any other Secured Party hereunder, including reasonable
attorneys' fees and disbursements, to the payment in whole or in part of the
Obligations, in such order as the Credit Agreement or the Reimbursement
Agreement, as applicable, shall proscribe, and only after such application and
after the payment by the Collateral Agent of any other amount required by any
provision of law, including Section 9-504(1)(c) of the New York UCC, need the
Collateral Agent account for the surplus, if any, to the Grantor. To the extent
permitted by applicable law, the Grantor waives all claims, damages and demands
it may acquire against the Collateral Agent or any other Secured Party arising
out of the exercise by them of any rights hereunder. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 days before such sale
or other disposition.

                  5.5 Waiver; Deficiency. The Grantor waives and agrees not to
assert any rights or privileges which it may acquire under Section 9-112 of the
New York UCC. The Grantor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Collateral are insufficient to pay its
Obligations and the fees and disbursements of any attorneys employed by the
Collateral Agent or any other Secured Party to collect such deficiency.

                  SECTION 6. THE COLLATERAL AGENT

                  6.1 Collateral Agent's Appointment as Attorney-in-Fact, Etc.

                  (a) The Grantor hereby irrevocably constitutes and appoints
the Collateral Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Grantor and in the name of the
Grantor or in its own name, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Agreement, and, without limiting the generality of the
foregoing, the Grantor hereby gives the Collateral Agent the power and right, on
behalf


                                       12
<PAGE>

of the Grantor, without notice to or assent by the Grantor, to do any or all of
the following:

            (i) in the name of the Grantor or in its own name, or otherwise,
      take possession of and indorse and collect any checks, drafts, notes,
      acceptances or other instruments for the payment of moneys due with
      respect to any Collateral and file any claim or take any other action or
      proceeding in any court of law or equity or otherwise deemed appropriate
      by the Collateral Agent for the purpose of collecting any and all such
      moneys due with respect to any Collateral whenever payable;

            (ii) pay or discharge taxes and Liens levied or placed on or
      threatened against the Collateral, effect any repairs or any insurance
      called for by the terms of this Agreement and pay all or any part of the
      premiums therefor and the costs thereof;

            (iii) execute, in connection with any sale provided for in Section
      5.4, any endorsements, assignments or other instruments of conveyance or
      transfer with respect to the Collateral; and

            (iv) (1) direct any party liable for any payment under any of the
      Collateral to make payment of any and all moneys due or to become due
      thereunder directly to the Collateral Agent or as the Collateral Agent
      shall direct; (2) ask or demand for, collect, and receive payment of and
      receipt for, any and all moneys, claims and other amounts due or to become
      due at any time in respect of or arising out of any Collateral; (3) sign
      and indorse any invoices, freight or express bills, bills of lading,
      storage or warehouse receipts, drafts against debtors, assignments,
      verifications, notices and other documents in connection with any of the
      Collateral; (4) commence and prosecute any suits, actions or proceedings
      at law or in equity in any court of competent jurisdiction to collect the
      Collateral or any portion thereof and to enforce any other right in
      respect of any Collateral; (5) defend any suit, action or proceeding
      brought against the Grantor with respect to any Collateral; (6) settle,
      compromise or adjust any such suit, action or proceeding and, in
      connection therewith, give such discharges or releases as the Collateral
      Agent may deem appropriate; and (7) generally, sell, transfer, pledge and
      make any agreement with respect to or otherwise deal with any of the
      Collateral as fully and completely as though the Collateral Agent were the
      absolute owner thereof for all purposes, and do, at the Collateral Agent's
      option and the Grantor's expense, at any time, or from time to time, all
      acts and things which the Collateral Agent deems necessary to protect,
      preserve or realize upon the Collateral and the Collateral Agent's and the
      other Secured Parties' security interests therein and to effect the intent
      of this Agreement, all as fully and effectively as the Grantor might do.

Anything in this Section 6.1(a) to the contrary notwithstanding, the Collateral
Agent agrees that it will not exercise any rights under the power of attorney
provided for in this


                                       13
<PAGE>

Section 6.1(a) unless an Event of Default under the Credit Agreement or the
Reimbursement Agreement shall be continuing.

                  (b) If the Grantor fails to perform or comply with any of its
agreements contained herein, the Collateral Agent, at its option, but without
any obligation so to do, may perform or comply, or otherwise cause performance
or compliance, with such agreement.

                  (c) The expenses of the Collateral Agent incurred in
connection with actions undertaken as provided in this Section 6.1, together
with interest thereon at a rate per annum equal to the rate per annum at which
interest would then be payable on past due Loans that are ABR Loans under the
Credit Agreement, from the date of payment by the Collateral Agent to the date
reimbursed by the relevant Grantor, shall be payable by the Grantor to the
Collateral Agent on demand.

                  (d) The Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.

                  6.2 Duty of Collateral Agent. The Collateral Agent's sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Collateral Agent
deals with similar property for its own account. Neither the Collateral Agent or
any other Secured Party nor any of their respective officers, directors,
employees or agents shall be liable for failure to demand, collect or realize
upon any of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
the Grantor or any other Person or to take any other action whatsoever with
regard to the Collateral or any part thereof. The powers conferred on the
Collateral Agent and the other Secured Parties hereunder are solely to protect
the Collateral Agent's and the other Secured Parties' interests in the
Collateral and shall not impose any duty upon the Collateral Agent or other
Secured Party to exercise any such powers. The Collateral Agent and the other
Secured Parties shall be accountable only for amounts that they actually receive
as a result of the exercise of such powers, and neither they nor any of their
officers, directors, employees or agents shall be responsible to the Grantor for
any act or failure to act hereunder, except for their own gross negligence or
willful misconduct.

                  6.3 Execution of Financing Statements. Pursuant to Section
9-402 of the New York UCC and any other applicable law, the Grantor authorizes
the Collateral Agent to file or record financing statements and other filing or
recording documents or instruments with respect to the Collateral without the
signature of the Grantor in such form and in such offices as the Collateral
Agent reasonably determines appropriate to perfect the security interests of the
Collateral Agent under this Agreement. A photographic or other reproduction of
this Agreement shall be sufficient as a financing


                                       14
<PAGE>

statement or other filing or recording document or instrument for filing or
recording in any jurisdiction.

                  6.4 Authority of Collateral Agent. The Grantor acknowledges
that the rights and responsibilities of the Collateral Agent under this
Agreement with respect to any action taken by the Collateral Agent or the
exercise or non-exercise by the Collateral Agent of any option, voting right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Agreement shall, as between the Collateral Agent and the
other Secured Parties, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Collateral Agent and the Grantor, the Collateral Agent shall be
conclusively presumed to be acting as agent for the Collateral Agent and the
other Secured Parties with full and valid authority so to act or refrain from
acting, and the Grantor shall not be under any obligation, or entitlement, to
make any inquiry respecting such authority.

                  SECTION 7. MISCELLANEOUS

                  7.1 Amendments in Writing. None of the terms or provisions of
this Agreement may be waived, amended, supplemented or otherwise modified except
in accordance with 9.02 of the Credit Agreement.

                  7.2 Notices. All notices, requests and demands to or upon the
Collateral Agent or the Grantor hereunder shall be effected in the manner
provided for in Section 9.01 of the Credit Agreement or Section 9.01 of the
Reimbursement Agreement; provided, however, that any such notice, request or
demand to or upon the Grantor shall be addressed to the Grantor at its notice
address set forth on Annex 5.

                  7.3 No Waiver by Course of Conduct; Cumulative Remedies.
Neither the Collateral Agent nor any other Secured Party shall by any act
(except by a written instrument pursuant to Section 7.1), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default under the Credit Agreement
or the Reimbursement Agreement, as applicable. No failure to exercise, nor any
delay in exercising, on the part of the Collateral Agent or any other Secured
Party, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Collateral Agent or any
other Secured Party of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy which the Collateral Agent or
such other Secured Party would otherwise have on any future occasion. The rights
and remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies provided by
law.

                  7.4 Enforcement Expenses; Indemnification.

                  (a) The Grantor agrees to pay or reimburse the Collateral
Agent and each other Secured Party for all its costs and expenses incurred in
enforcing or preserving any


                                       15
<PAGE>

rights under this Agreement and the Agreements, including the reasonable fees
and disbursements of counsel (including the allocated reasonable fees and
expenses of in-house counsel) to each Secured Party.

                  (b) The Grantor agrees to pay, and to save the Collateral
Agent and each other Secured Party harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all stamp, excise,
sales or other taxes which may be payable or determined to be payable with
respect to any of the Collateral or in connection with any of the transactions
contemplated by this Agreement.

                  (c) The Grantor agrees to pay, and to save the Collateral
Agent and each other Secured Party and each Affiliate of the Collateral Agent
and any other Secured Party harmless from, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement to the
extent the Grantor would be required to do so pursuant to the Credit Agreement
or the Reimbursement Agreement, as applicable.

                  (d) The agreements in this Section 7.4 shall survive repayment
of the Obligations and all other amounts payable under the Agreements.

                  7.5 Successors and Assigns. This Agreement shall be binding
upon the successors and assigns of the Grantor and shall inure to the benefit of
the Collateral Agent and each other Secured Party and their successors and
assigns; provided, however, that the Grantor may not assign, transfer or
delegate any of its rights or obligations under this Agreement without the prior
written consent of the Collateral Agent.

                  7.6 Set-Off. The Grantor hereby irrevocably authorizes the
Collateral Agent, each other Secured Party and each of their respective
Affiliates at any time and from time to time, without notice to the Grantor ,
any such notice being expressly waived by the Grantor, to set-off and
appropriate and apply any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Collateral
Agent, such other Secured Party or any of their respective Affiliates to or for
the credit or the account of the Grantor, or any part thereof in such amounts as
the Collateral Agent, such other Secured Party or any of their respective
Affiliates, as the case may be, may elect, against and on account of the
obligations and liabilities of the Grantor to the Collateral such Agent such
other Secured Party or any such Affiliate hereunder and claims of every nature
and description of the Collateral Agent, such other Secured Party or any of
their


                                       16
<PAGE>

respective Affiliates, as the case may be, against the Grantor, in any currency,
whether arising hereunder, under the Credit Agreement, the Reimbursement
Agreement or otherwise, as the Collateral Agent, such other Secured Party or any
of their respective Affiliates, as the case may be, may elect, whether or not
the Collateral Agent, such other Secured Party or any of their respective
Affiliates, as the case may be, has made any demand for payment and although
such obligations, liabilities and claims may be contingent or unmatured. The
Collateral Agent, such other Secured Party or any of their respective
Affiliates, as the case may be, shall notify the Grantor promptly of any such
set-off and the application made by the Collateral Agent, such other Secured
Party or any of their respective Affiliates, as the case may be, of the proceeds
thereof, provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the
Collateral Agent, such other Secured Party or any of their respective
Affiliates, as the case may be, under this Section 7.6 are in addition to other
rights and remedies (including other rights of set-off) which the Collateral
Agent, such other Secured Party or any of their respective Affiliates, as the
case may be, may have.

                  7.7 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.

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

                  7.9 Section Headings. The Section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.

                  7.10 Integration. This Agreement and the Agreements represent
the agreement of the Grantor, the Collateral Agent and each other Secured Party
with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Collateral Agent or
other Secured Party relative to subject matter hereof and thereof not expressly
set forth or referred to herein or in the Agreements.

                  7.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

                  7.12 Submission To Jurisdiction; Waivers. The Grantor hereby
irrevocably and unconditionally:

                  (a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the Credit Agreement and the
Reimbursement Agreement to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate courts
from any thereof;

                  (b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter have to the
venue of any


                                       17
<PAGE>

such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same;

                  (c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid; to the
Grantor at its address referred to in Section 7.2 or at such other address of
which the Collateral Agent shall have been notified pursuant thereto;

                  (d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and

                  (e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential damage.

                  7.13 Acknowledgements. The Grantor hereby acknowledges that:

                  (a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the Credit Agreement and the
Reimbursement Agreement;

                  (b) neither the Collateral Agent nor any Secured Party has any
fiduciary relationship with or duty to the Grantor arising out of or in
connection with this Agreement or any of the Credit Agreement and the
Reimbursement Agreement, and the relationship between the Grantor, on the one
hand, and the Collateral Agent and Secured Parties, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and

                  (c) no joint venture is created hereby or by the Credit
Agreement or the Reimbursement Agreement or otherwise exists by virtue of the
transactions contemplated hereby among the Secured Parties or among the Grantor
and the Secured Parties.

                  7.14 Releases.

                  (a) At such time as the Loans and the Obligations shall have
been paid in full, the Commitments have been terminated and no Letters of Credit
(as defined in the Reimbursement Agreement) shall be outstanding which are not
cash collateralized or backstopped to the satisfaction of the Secured Parties,
the Collateral shall be released from the Liens created hereby, and this
Agreement and all obligations (other than those expressly stated to survive such
termination) of the Collateral Agent and the Grantor hereunder shall terminate,
all without delivery of any instrument or performance of any act by any party,
and all rights to the Collateral shall revert to the Grantor. At the request and
sole expense of the Grantor following any such termination, the Collateral Agent
shall deliver to the Grantor any Collateral held by the Collateral Agent
hereunder, and execute and deliver to the Grantor such documents as the Grantor
shall reasonably request to evidence such termination.


                                       18
<PAGE>


                  (b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by the Grantor in a transaction permitted by the
Agreements, then the Collateral Agent, at the request and sole expense of the
Grantor, shall execute and deliver to the Grantor all releases or other
documents reasonably necessary or desirable for the release of the Liens created
hereby on such Collateral.

                  7.15 WAIVERS OF JURY TRIAL. THE SECURED PARTIES AND THE
GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE CREDIT AGREEMENT OR THE
REIMBURSEMENT AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.


                                       19
<PAGE>

                  IN WITNESS WHEREOF, each of the undersigned has caused this
Pledge and Security Agreement to be duly executed and delivered as of the date
first above written.

                                       CONTIFINANCIAL CORPORATION


                                       By:  ________________________________
                                            Name:/s/Alan Fishman
                                            Title: Authorized Signatory


                                       By:  ________________________________
                                            Name:/s/Frank Baier
                                            Title: Authorized Signatory


                                       20
<PAGE>

                                   Annex 1 to
                          Pledge and Security Agreement


                     UCC FILINGS AND OTHER NECESSARY ACTION


UCC-1 Financing Statements to be filed in the following jurisdictions:


New York State


New York County


                                      A1-1

<PAGE>

                                   Annex 2 to
                          Pledge and Security Agreement


                            EXCESS SPREAD RECEIVABLES

--------------------------------------------------------------------------------
CERTIFICATE                                                           PERCENTAGE
                                                                       INTEREST
--------------------------------------------------------------------------------
ContiMortgage Home Equity Loan Trust 1997-4, Home Equity Loan            48.18%
Pass-Through  Certificate, Interest Only Class C Certificate,
issued pursuant to that certain Pooling and Servicing Agreement dated
as of September 1, 1997 among ContiSecurities Asset Funding Corp., as
Depositor, ContiMortgage Corporation, as Seller and Servicer,
ContiWest Corporation, as Seller, and Manufacturers and Traders Trust
Company, as Trustee, as the same may be amended from time to time.
--------------------------------------------------------------------------------
ContiMortgage Home Equity Loan Trust 1997-4, Home Equity Loan          14.6771%
Pass-Through Certificate, Interest Only Class C Certificate,
issued pursuant to that certain Pooling and Servicing Agreement dated
as of September 1, 1997 among ContiSecurities Asset Funding Corp., as
Depositor, ContiMortgage Corporation, as Seller and Servicer,
ContiWest Corporation, as Seller, and Manufacturers and Traders Trust
Company, as Trustee, as the same may be amended from time to time.
--------------------------------------------------------------------------------
ContiMortgage Home Equity Loan Trust 1998-1, Home Equity Loan            48.18%*
Pass-Through Certificate, Interest Only Class C Certificate,
issued pursuant to that certain Pooling and Servicing Agreement dated
as of March 1, 1998 among ContiSecurities Asset Funding Corp., as
Depositor, ContiMortgage Corporation, as Seller and Servicer,
ContiWest Corporation, as Seller, and Manufacturers and Traders Trust
Company, as Trustee, as the same may be amended from time to time.
--------------------------------------------------------------------------------
ContiMortgage Home Equity Loan Trust 1998-1, Home Equity Loan            51.82%*
Pass-Through Certificate, Interest Only Class C  Certificate,
issued pursuant to that certain Pooling and Servicing Agreement dated
as of March 1, 1998 among ContiSecurities Asset Funding Corp., as
Depositor, ContiMortgage Corporation, as Seller and Servicer,
ContiWest Corporation, as Seller, and Manufacturers and Traders Trust
Company, as Trustee, as the same may be amended from time to time.
--------------------------------------------------------------------------------
ContiMortgage Home Equity Loan Trust 1999-1, Home Equity Loan            100%
Pass-Through Certificate, Interest Only Class C Certificate,
issued pursuant to that certain Pooling and Servicing Agreement dated
as of March 1, 1999 among ContiSecurities Asset Funding Corp., as
Depositor, ContiMortgage Corporation, as Seller and Servicer,
ContiWest Corporation, as Seller, and Manufacturers and Traders Trust
Company, as Trustee, as the same may be amended from time to time.
--------------------------------------------------------------------------------
ContiMortgage Home Equity Loan Trust 1999-2, Home Equity Loan            100%
Pass-Through Certificate, Interest Only Class C  Certificate,
issued pursuant to that certain Pooling and Servicing Agreement dated
as of March 1, 1999 among ContiSecurities Asset Funding Corp., as
Depositor, ContiMortgage Corporation, as Seller and Servicer,
ContiWest Corporation, as Seller, and Manufacturers and Traders Trust
Company, as Trustee, as the same may be amended from time to time.
--------------------------------------------------------------------------------
ContiMortgage Home Equity Loan Trust 1999-3, Home Equity Loan             100%
Pass-Through Certificate, Interest Only Class C Certificate, issued
pursuant to that certain Pooling and Servicing Agreement dated as of
June 1, 1999 among ContiSecurities Asset Funding Corp., as Depositor,
ContiMortgage Corporation, as Seller and Servicer, ContiWest
Corporation, as Seller, Norwest Bank Minnesota, National Association,
as Master Servicer, and Manufacturers and Traders Trust Company, as
Trustee, as the same may be amended from time to time.
--------------------------------------------------------------------------------

--------
* The percentage interests of these two certificates represent 100% of the Class
C certificates for the 1998-1 series. The total percentage interest being
pledged to the Secured Parties is 86.602%. The remaining 13.398% shall be
retained by the Grantor.


<PAGE>

                                   Annex 3 to
                          Pledge and Security Agreement

                            Acknowledgment Of Pledge

                  The undersigned hereby acknowledges receipt of a copy of the
Pledge and Security Agreement, dated as of August 19, 1999 (the "Agreement"),
made by the Grantors party thereto in favor of Credit Suisse First Boston, New
York Branch as Collateral Agent. The undersigned agrees for the benefit of the
Secured Parties as follows:

                  1. The undersigned will be bound by the terms of the Agreement
and will comply with such terms insofar as such terms are applicable to the
undersigned.

                  2. The terms of Section 5.2(b) of the Agreement shall apply to
it, mutatis mutandis, with respect to all actions that may be required of it
pursuant to Section 5.2(b) of the Agreement.

                                             [NAME OF ISSUER]


                                             By:
                                             Name:
                                             Title:


Address for Notices

<PAGE>

                                   Annex 4 to
                          Pledge and Security Agreement


                 CHIEF EXECUTIVE OFFICE AND LOCATION OF RECORDS


ContiFinancial Corporation
277 Park Avenue
New York, New York 10172

<PAGE>

                                   Annex 5 to
                          Pledge and Security Agreement
                          -----------------------------

                               ADDRESS FOR NOTICES


ContiFinancial Corporation
277 Park Avenue
New York, New York 10172

Attention:  Allan Fishman
Fax #:  (212) 207-2868


         with a copy to:

Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019-6092

Attention:  Rich Miller
Fax #:  (212) 259-6333