Document:

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                                                                    Exhibit 10.1

                           THIRD AMENDED AND RESTATED

                          REGISTRATION RIGHTS AGREEMENT

                                  by and among

                             MCG CAPITAL CORPORATION

                                       and

                              CERTAIN STOCKHOLDERS

                         Dated as of November 28, 2001

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                                TABLE OF CONTENTS
                                -----------------
                                                                            Page
                                                                            ----

1.   CERTAIN DEFINITIONS.....................................................2

2.   REGISTRATION RIGHTS.....................................................5

   2.1.  DEMAND REGISTRATIONS................................................5
   2.2.  PIGGYBACK REGISTRATIONS.............................................9
   2.3.  ALLOCATION OF SECURITIES INCLUDED IN REGISTRATION STATEMENT........10
   2.4.  REGISTRATION PROCEDURES............................................12
   2.5.  REGISTRATION EXPENSES..............................................17
   2.6.  CERTAIN LIMITATIONS ON REGISTRATION RIGHTS.........................18
   2.7.  LIMITATIONS ON SALE OR DISTRIBUTION OF OTHER SECURITIES............19
   2.8.  NO REQUIRED SALE...................................................20
   2.9.  INDEMNIFICATION....................................................21

3.   UNDERWRITTEN OFFERINGS.................................................25

   3.1.  REQUESTED UNDERWRITTEN OFFERINGS...................................25
   3.2.  PIGGYBACK UNDERWRITTEN OFFERINGS...................................25
   3.3.  INVESTMENT BANKING SERVICES........................................26

4.   GENERAL................................................................26

   4.1.  ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES.......................26
   4.2.  RULE 144...........................................................26
   4.3.  NOMINEES FOR BENEFICIAL OWNERS.....................................27
   4.4.  MISCELLANEOUS......................................................27
   4.5.  AMENDMENT..........................................................32
   4.6.  ADDITIONAL RIGHTS..................................................32
   4.7.  COMPLIANCE WITH APPLICABLE LAW.....................................32
   4.8.  RESCISSION OF AGREEMENT; RESTORATION...............................32

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                           THIRD AMENDED AND RESTATED
                           --------------------------
                          REGISTRATION RIGHTS AGREEMENT
                          -----------------------------

      This THIRD AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this
"Agreement"), is dated as of November ___, 2001 and shall be effective as of the
time specified in Section 4.8(b) below, by and among MCG CAPITAL CORPORATION, a
Delaware corporation (the "Company") (formerly known as named MCG Credit
                          --------
Corporation), each of the Persons listed on the signature pages hereto under the
heading "GOLDMAN STOCKHOLDERS" (the "Goldman Stockholders"), each of the Persons
                                     ---------------------
listed on the signature pages hereto under the heading "SOROS STOCKHOLDERS" (the
"Soros Stockholders"), each of the Persons listed on the signature pages hereto
 ------------------
under the heading "VESTAR STOCKHOLDERS" (the "Vestar Stockholders"), FBR Asset
                                              -------------------
Investment Corporation, a Virginia corporation (the "FBR Stockholder"), each of
                                                     ---------------
the Persons listed on the signature pages attached hereto under the heading
"Management Stockholders", including those listed under the subheading
"ADDITIONAL MANAGEMENT STOCKHOLDERS" (the "Management Stockholders"), and each
                                           -----------------------
of the Persons listed on the signature pages attached hereto under the heading
"ADDITIONAL INVESTORS" (the "Additional Stockholders" and collectively with the
                             -----------------------
Goldman Stockholders, the Soros Stockholders, the Vestar Stockholders, the FBR
Stockholder and the Management Stockholders, the "Stockholders").
                                                  ------------

         WHEREAS, the Company and certain of its stockholders entered into a
Registration Rights Agreement, dated as of June 24, 1998 (the "Original
                                                               -------
Registration Rights Agreement");
------------------------------

      WHEREAS, in connection with the Stock Purchase Agreement (the "Stock
                                                                     -----
Purchase Agreement") dated as of June 22, 2000, pursuant to which, among other
------------------
things, the Soros Stockholders and the Vestar Stockholders purchased shares of
the Company's Class E Common Stock, par value $.01 per share, the parties to the
Original Registration Rights Agreement and the Soros Stockholders and Vestar
Stockholders entered into an Amended and Restated Registration Rights Agreement
(the "First Amended and Restated Registration Rights Agreement"), dated as of
      --------------------------------------------------------
July 11, 2000, which amended and restated the Original Registration Rights
Agreement in its entirety; and

      WHEREAS, in contemplation of the Company's proposed initial public
offering of its common stock (heretofore named Class C Common Stock), par value
$0.01 per share (the "Common Stock"), the Company and certain Stockholders
entered into a Second Amended and Restated Registration Rights Agreement (the
"Second Amended and Restated Registration Rights Agreement"), dated as of the
-----------------------------------------------------------
date hereof, which amended and restated the First Amended and Restated
Registration Rights Agreement in its entirety;

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      WHEREAS, concurrently with the execution of this Agreement, the FBR
Stockholder and the Company are entering into a Stock Purchase Agreement, dated
as of November ___, 2001 (the "FBR Stock Purchase Agreement"), pursuant to which
                              ------------------------------
the FBR Stockholder will agree to purchase 625,000 shares of Common Stock from
the Company on the terms set forth therein; and

      WHEREAS, in connection with the FBR Stock Purchase Agreement, the parties
to the Second Amended and Restated Registration Rights Agreement and the FBR
Stockholder desire to amend and restate the Second Amended and Restated
Registration Rights Agreement on the terms set forth herein effective as of the
time of the closing of (i) the Initial Public Offering (as defined below) and
(ii) the closing of the sale of shares of Common Stock contemplated by the FBR
Stock Purchase Agreement.

      NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged.

      The parties hereto agree as follows:

      1. Certain Definitions. As used in this Agreement, the following terms
         -------------------
shall have the meanings ascribed to them below:

      "Affiliate" means with respect to any Person, any other Person that,
       ---------
directly or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, such Person. Any Relative of an
individual shall be deemed to be an Affiliate of such individual for purposes
hereof. Without limiting the foregoing, any pooled investment vehicle organized
by Goldman, the FBR Stockholder, Vestar Capital Partners IV, L.P., or Soros
Private Equity Partners LLC or any other Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with each of them (each a "Fund") or an Affiliate of a Fund or
the investments of which are directed by a Fund or any Affiliate thereof or any
partner, officer or employee of a Fund or any Affiliate thereof, and any
investment fund organized by a Fund or any Affiliate thereof for the benefit of
the current or former partners, officers or employees of a Fund or their
dependents or any Affiliate thereof, shall be deemed an Affiliate of the Goldman
Stockholders, the FBR Stockholder, the Vestar Stockholders or the Soros
Stockholders, respectively, for purposes of this Agreement. Neither the Company
nor any Person controlled by the Company shall be deemed to be an Affiliate of
any Stockholder.

      "Applicable Law" means any federal, state, local or foreign law, rule,
       --------------
requirement, regulation, statute, ordinance, judgment, decree or bodies of law
applicable to the Company or the Stockholders, including the Investment Company
Act, the Securities Act or the securities laws of any state.

                                     - 2 -

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      "Certificate of Incorporation" means the Amended and Restated Certificate
       ----------------------------
of Incorporation of the Company, as the same may be amended and restated from
time to time.

      "Class A Stock" means the Class A Common Stock, par value $.01 per share,
       -------------
of the Company.

      "Class B Stock" means the Class B Common Stock, par value $.01 per share,
       -------------
of the Company.

      "Class C Stock" means the Class C Common Stock, par value $.01 per share,
       -------------
of the Company, which shall be renamed Common Stock, par value $.01 per share in
connection with the Initial Public Offering.

      "Class D Stock" means the Class D Common Stock, par value $.01 per share,
       -------------
of the Company.

      "Class E Stock" means the Class E Common Stock, par value $.01 per share,
       -------------
of the Company.

      "Common Stock" shall have the meaning set forth in the recitals to this
       ------------
Agreement.

      "Common Stock Equivalents" means any securities convertible into, or
       ------------------------
exercisable or exchangeable for, shares of Common Stock.

      "First Union" means First Union Corporation, a North Carolina corporation.
       -----------

      "Goldman" means The Goldman Sachs Group, Inc.
       -------

      "Initial Public Offering" means the consummation of the first public
       -----------------------
offering of Common Stock pursuant to a registration statement (other than on
Form S-8, a Form N-14 or a successor form) filed with, and declared effective
by, the Securities and Exchange Commission.

      "Investment Company Act" means the Investment Company Act of 1940, as
       ----------------------
amended.

      "Long-Form" has the meaning given it in Section 2.1(a)(i).
       ---------

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      "Major Stockholder" means with respect to any registration, the
       -----------------
Stockholder that, together with its Affiliates, includes the largest number of
Registrable Securities in such registration.

      "Person" means any individual, corporation, limited liability company,
       ------
limited or general partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivisions thereof.

      "Qualified IPO" means any issuance and sale of shares of Common Stock in
       -------------
an underwritten public offering registered under the Securities Act based on an
implied total equity value of the Company without giving effect to such issuance
of shares in such offering of not less than $15.00 per share of Common Stock (as
adjusted to reflect any stock split, combination, recapitalization or other
reorganization) assuming all outstanding shares of Common Stock had been
converted into Common Stock and all outstanding securities convertible into,
exercisable for, or exchangeable for Common Stock that have an exercise price
less than or equal to $15.00 per share (as adjusted to reflect any stock split,
combination, recapitalization or other reorganization) had been so converted
into, exercised for, or exchanged for Common Stock.

      "Registrable Securities" means any (i) shares of Common Stock held as of
       ----------------------
the date hereof by any Stockholder, (ii) shares of Class A Common Stock issued
pursuant to the exercise of Warrants issued to First Union prior to the date
hereof or any shares of Common Stock issued in exchange for such Warrants or
Class A Common Stock, (iii) shares of Class A Common Stock and/or Class E Common
Stock issued pursuant to the exercise of options issued to employees,
consultants or directors of the Company prior to a Qualified IPO or any shares
of Common Stock issued in exchange for such options, (iv) the shares of Common
Stock purchased by the FBR Stockholder pursuant to the terms of the FBR Stock
Purchase Agreement, (v) any shares of Common Stock issued upon a conversion or
exchange of shares of Common Stock referenced in clauses (i), (ii), (iii) or
(iv) above or (vi) any shares of Common Stock issued or issuable, directly or
indirectly, with respect to the Common Stock referenced in clauses (i), (ii),
(iii), (iv) and (v) above by way of stock dividend, stock split or combination
of shares. As to any particular Registrable Securities, such securities shall
cease to be Registrable Securities when (A) a registration statement with
respect to the sale of such securities shall have been declared effective under
the Securities Act and such securities shall have been disposed of in accordance
with such registration statement, or (B) such securities may be sold (other than
in a privately negotiated sale) pursuant to Rule 144 (or any successor
provision) under the Securities Act and in compliance with the requirements of
paragraphs (f) and (g) of Rule 144 (notwithstanding the provisions of paragraph
(k) of such Rule).

                                     - 4 -

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      "Relative" means with respect to each Stockholder, such Stockholder's
       --------
spouse, former spouse, child, parent, parent of spouse, sibling or grandchild.

      "S-3 Eligible Issuer" means an issuer that is qualified under the
       -------------------
Securities Act and the rules and regulations promulgated thereunder, including
without limitation, the General Instructions to Form S-3, to offer securities on
a Form S-3 registration statement (or other applicable equivalent short-form
registration statement, if any) or its successor form.

      "SEC" means the Securities and Exchange Commission.
       ---

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

      "Short-Form" has the meaning given it in Section 2.1(a)(i).
       ----------

      "Stockholder" or "Stockholders" means any party which is entitled to the
       -----------      ------------
benefits of this Agreement and any party which shall hereafter acquire and hold
Registrable Securities.

      2. Registration Rights.
         -------------------

            2.1 Demand Registrations.
                --------------------

                  (a) (i) Subject to Sections 2.1(b) and 2.3 below, at any time
and from time to time after the consummation of an Initial Public Offering, (A)
the Goldman Stockholders, (B) the Vestar Stockholders (C) the Soros Stockholders
and (D) the FBR Stockholder shall each have the right to require the Company to
file either a Form S-1 or Form N-2 registration statement, as applicable, or any
applicable equivalent long-form registration statement ("Long-Forms") or, if
                                                         ----------
available, a Form S-3 or any applicable equivalent short-form registration
statement ("Short-Forms") under the Securities Act covering all or any part of
            -----------
their respective Registrable Securities, by delivering a written request
therefor to the Company specifying the number of Registrable Securities to be
included in such registration by such Stockholder(s) and the intended method of
distribution thereof. All such requests by any Stockholder pursuant to this
Section 2.1(a)(i) are referred to herein as "Demand Registration Requests," and
                                             ----------------------------
the registrations so requested are referred to herein as "Demand Registrations"
                                                          --------------------
(with respect to any Demand Registration, the Stockholder(s) making such demand
for registration being referred to as the "Initiating Stockholder(s)"). As
                                           -------------------------
promptly as practicable, but no later than ten business days after receipt of a
Demand Registration Request, the Company shall give written notice (the "Demand
                                                                         ------
Exercise Notice") of such Demand Registration Request to all Stockholders of
---------------
record of Registrable Securities.

                                     - 5 -

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                        (ii) The Company, subject to Sections 2.3 and 2.6, shall
include in a Demand Registration (x) the Registrable Securities of the
Initiating Stockholder(s) and (y) the Registrable Securities of any other
Stockholder which shall have made a written request to the Company for inclusion
in such registration (which request shall specify the maximum number of
Registrable Securities intended to be disposed of by such Stockholder) within 30
days after the receipt of the Demand Exercise Notice (or within 15 days if, at
the request of the Initiating Stockholder(s) or the Major Stockholder
participating in such registration, the Company states in such written notice or
gives telephonic notice to all Stockholders, with written confirmation to follow
promptly thereafter, that such registration will be on a Form S-3).

                        (iii) The Company shall, as expeditiously as possible,
use all commercially reasonable efforts to (x) effect such registration under
the Securities Act (including, without limitation, by means of a shelf
registration pursuant to Rule 415 under the Securities Act if so requested and
if the Company is then eligible to use such a registration) of the Registrable
Securities which the Company has been so requested to register, for distribution
in accordance with such intended method of distribution, and (y) if requested by
the Initiating Stockholder(s) or the Major Stockholder participating in such
registration, obtain acceleration of the effective date of the registration
statement relating to such registration.

                  (b) The Demand Registration rights granted in Section 2.1(a)
to the Stockholders are subject to the following limitations: (i) each
registration in respect of a Demand Registration Request must include, in the
aggregate (based on Registrable Securities included in such registration by all
Stockholders participating in such registration) either (A) Registrable
Securities having an aggregate market value of at least $10,000,000 based on the
then-current market price or (B) at least 625,000 shares of Common Stock (as
adjusted to reflect any stock split, combination, recapitalization or other
reorganization) so long as the Demand Registration Request relating to such
registration included all Registrable Securities held by the Initiating
Stockholder(s); (ii) the Demand Registration must be initiated by either (A)
Initiating Stockholder(s) beneficially owning Registrable Securities
representing, in the aggregate, in excess of five percent (5%) of the amount of
shares of Common Stock outstanding immediately prior to such registration or (B)
the FBR Stockholder so long as it requests that all Registrable Securities
beneficially owned by it and its Affiliates be included in such Demand
Registration; (iii) the Company shall not be required to cause a registration
pursuant to Section 2.1(a)(i) to be declared effective within a period of 90
days after the date any registration statement of the Company is declared
effective; (iv) if the Board of Directors of the Company, in its good faith
judgment, determines that any registration of Registrable Securities should not
be made or continued because it would materially interfere with any material
financing, acquisition, corporate reorganization or merger or other transaction
involving the Company or any of its subsidiaries (a "Valid Business
                                                     --------------

                                     - 6 -

<PAGE>

Reason"), (x) the Company may postpone filing a registration statement relating
------
to a Demand Registration Request until such Valid Business Reason no longer
exists, but in no event for more than six months, and (y) in case a registration
statement has been filed relating to a Demand Registration Request, if the Valid
Business Reason has not resulted from actions taken by the Company, the Company
may cause such registration statement to be withdrawn and its effectiveness
terminated or may postpone amending or supplementing such registration
statement; and the Company shall give written notice of its determination to
postpone or withdraw a registration statement and of the fact that the Valid
Business Reason for such postponement or withdrawal no longer exists, in each
case, promptly after the occurrence thereof; (v) the offering of Registrable
Securities requested to be registered pursuant to Section 2.1(a)(i) shall be
pursuant to an underwritten offering unless the Company or any of its
Stockholders has previously sold Registrable Securities pursuant to a
registration statement under the Securities Act; and (vi) the Goldman
Stockholders shall be entitled to request up to four Demand Registrations, up to
two of which may be on a Long-Form, the Vestar Stockholders and the Soros
Stockholders shall each be entitled to request up to two Demand Registrations,
up to one of which may be made by each stockholder group on a Long-Form and the
FBR Stockholder shall be entitled to request one Demand Registration, which may
be on a Long-Form (provided that Demand Registrations shall be registered on a
Short Form (or its successor or equivalent) whenever the Company is S-3
Eligible); provided, however, that if, as a result of the allocations made
pursuant to Section 2.3, the Initiating Stockholder is not able to include at
least 75% of the Registrable Securities it requested to be registered pursuant
to a Demand Registration in the applicable Demand Exercise Notice, then such
Stockholder may elect not to be deemed the Initiating Stockholder for such
Demand Registration and that Demand Registration shall not count towards the
applicable limits in this clause (vi); and provided, further, that in no event
and notwithstanding any other provision in this Agreement, shall the Company be
required or obligated to effect more than nine (9) Demand Registrations, up to
five of which may be on a Long-Form.

      If the Company shall give any notice of postponement or withdrawal of any
registration statement, the Company shall not, during the period of postponement
or withdrawal, register any Common Stock, other than an offering by the Company
for its own account or pursuant to a registration statement on Form S-4 or Form
N-14, as applicable, or Form S-8. Each Stockholder of Registrable Securities
agrees that, upon receipt of any notice from the Company that the Company has
determined to withdraw any registration statement pursuant to clause (iv) above,
such Stockholder will discontinue its disposition of Registrable Securities
pursuant to such registration statement and, if so directed by the Company, will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such Stockholder's possession of the prospectus
covering such Registrable Securities that was in effect at the time of receipt
of such notice. If the Company shall have withdrawn or

                                     - 7 -

<PAGE>

prematurely terminated a registration statement filed under Section 2.1(a)(i)
(whether pursuant to clause (iv) above or as a result of any stop order,
injunction or other order or requirement of the SEC or any other governmental
agency or court), the Company shall not be considered to have effected an
effective registration for the purposes of this Agreement until the Company
shall have filed a new registration statement covering the Registrable
Securities covered by the withdrawn registration statement and such registration
statement shall have been declared effective and shall not have been withdrawn.
If the Company shall give any notice of withdrawal or postponement of a
registration statement, the Company shall, at such time as the Valid Business
Reason that caused such withdrawal or postponement no longer exists (but in no
event later than six months after the date of the postponement or withdrawal),
use all commercially reasonable efforts to effect the registration under the
Securities Act of the Registrable Securities covered by the withdrawn or
postponed registration statement in accordance with this Section 2.1 (unless the
Initiating Stockholder shall have withdrawn such request, in which case the
Company shall not be considered to have effected an effective registration for
the purposes of this Agreement), and such registration shall not be withdrawn or
postponed pursuant to clause (iv) above.

                  (c) The Company, subject to Sections 2.3 and 2.6, may elect to
include in any registration statement and offering made pursuant to Section
2.1(a)(i), (i) authorized but unissued shares of Common Stock or shares of
Common Stock held by the Company as treasury shares and (ii) any other shares of
Common Stock which are requested to be included in such registration pursuant to
the exercise of piggyback registration rights granted by the Company after the
date hereof ("Additional Piggyback Rights"); provided, however, that such
              ---------------------------
inclusion shall be permitted only to the extent that it is pursuant to and
subject to the terms of the underwriting agreement or arrangements, if any,
entered into by the Major Stockholder; and, provided, further, that until such
time as the Goldman Stockholders and their Affiliates collectively own 25% or
less of the shares of the Company's outstanding Common Stock, the Company shall
not include, without prejudice to and subject to its rights under this Agreement
otherwise, any authorized shares of Common Stock (treasury or newly issued) in
any registration statement that becomes effective under the Securities Act
pursuant to Section 2.1(a)(i) if any of the Goldman Stockholders notifies the
Company that it proposes to sell shares of Common Stock in such offering in
accordance with Section 2.1.

                  (d) In connection with any Demand Registration, holders of a
majority of the Registrable Securities requested to be included in such
registration shall have the right to designate the lead managing underwriter for
such registration, provided that such managing underwriter is reasonably
satisfactory to the Company.

                                     - 8 -

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            2.2. Piggyback Registrations.
                 -----------------------

                  (a) If, at any time, the Company proposes or is required to
register any of its equity securities under the Securities Act (other than
pursuant to (i) registrations on such form or applicable equivalent form(s)
solely for registration of securities in connection with an employee benefit
plan or dividend reinvestment plan or a merger or consolidation, (ii) a Demand
Registration under Section 2.1 or (iii) in connection with an Initial Public
Offering) on a registration statement on Form N-2, S-1, Form S-2 or Form S-3 (or
an equivalent general registration form then in effect), whether or not for its
own account, the Company shall give prompt written notice of its intention to do
so to each of the Stockholders of record of Registrable Securities. Upon the
written request of any Stockholder, made within 20 days following the receipt of
any such written notice (which request shall specify the maximum number of
Registrable Securities intended to be disposed of by such Stockholder and the
intended method of distribution thereof), the Company shall, subject to Sections
2.2(b), 2.3 and 2.6 hereof, use all commercially reasonable efforts to cause all
such Registrable Securities, the Stockholders of which have so requested the
registration thereof, to be registered under the Securities Act (with the
securities which the Company at the time proposes to register) to permit the
sale or other disposition by the Stockholders (in accordance with the intended
method of distribution thereof) of the Registrable Securities to be so
registered. There is no limitation on the number of such piggyback registrations
pursuant to the preceding sentence which the Company is obligated to effect. No
registration effected under this Section 2.2(a) shall relieve the Company of its
obligations to effect Demand Registrations.

                  (b) If, at any time after giving written notice of its
intention to register any equity securities and prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason not to register or to delay registration
of such equity securities, the Company may, at its election, give written notice
of such determination to all Stockholders of record of Registrable Securities
and (i) in the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with such
abandoned registration, without prejudice, however, to the rights of
Stockholders under Section 2.1, and (ii) in the case of a determination to delay
such registration of its equity securities, shall be permitted to delay the
registration of such Registrable Securities for the same period as the delay in
registering such other equity securities.

                  (c) Any Stockholder shall have the right to withdraw its
request for inclusion of its Registrable Securities in any registration
statement pursuant to this Section 2.2 by giving written notice to the Company
of its request to withdraw; provided, however, that (i) such request must be
made in writing prior to the earlier of the execution of the underwriting
agreement or the execution of the custody agreement with respect to

                                     - 9 -

<PAGE>

such registration and (ii) such withdrawal shall be irrevocable and, after
making such withdrawal, a Stockholder shall no longer have any right to include
Registrable Securities in the registration as to which such withdrawal was made.

            2.3. Allocation of Securities Included in Registration Statement.
                 -----------------------------------------------------------

                  (a) If any requested registration pursuant to Section 2.1
involves an underwritten offering and the lead managing underwriter of such
offering (or a co-managing underwriter of such offering, if Goldman, the FBR
Stockholder or any of their Affiliates is the lead managing underwriter of such
offering) (the "Manager") shall advise the Company that, in its view, the number
                -------
of securities requested to be included in such registration by the Stockholders
or any other persons (including those shares of Common Stock requested by the
Company or by other stockholders exercising Additional Piggyback Rights with the
Company's consent but excluding shares of Common Stock of any Management
Stockholder who is prohibited from participating pursuant to Section 2.6(b)
hereof) exceeds the largest number (the "Section 2.1 Sale Number") that can be
                                         -----------------------
sold in an orderly manner in such offering within a price range acceptable to
the Major Stockholder, or in the case of a Demand Registration, the Initiating
Stockholder, the Company shall include in such registration:

                        (i) all Registrable Securities requested to be included
in such registration by Stockholders of Registrable Securities (excluding shares
of Common Stock of any Management Stockholder who is prohibited from
participating pursuant to Section 2.6(b) hereof) and all other shares of Common
Stock that holders of Additional Piggyback Rights propose to register
("Additional Registrable Securities"); provided, however, that, if the number of
such Registrable Securities and Additional Registrable Securities exceeds the
Section 2.1 Sale Number, the number of such Registrable Securities and
Additional Registrable Securities (not to exceed the Section 2.1 Sale Number) to
be included in such registration shall be allocated on a pro rata basis among
all Stockholders requesting that Registrable Securities be included in such
registration and all holders of Additional Registrable Securities requesting
that Additional Registrable Securities be included in such registration, based
on the number of Registrable Securities or Additional Registrable Securities, as
the case may be, then owned by each such Stockholder or holder of Additional
Registrable Securities requesting inclusion in relation to the number of
Registrable Securities then owned by all Stockholders requesting inclusion plus
the number of Additional Registrable Securities then owned by all holders of
Additional Registrable Securities; and

                        (ii) to the extent that the number of Registrable
Securities to be included by all Stockholders and holders of Additional
Registrable Securities is less than the Section 2.1 Sale Number, shares of
Common Stock that the Company proposes to register.

                                     - 10 -

<PAGE>

      If, as a result of the proration provisions of this Section 2.3(a), any
Stockholder or holders of Additional Registrable Securities shall not be
entitled to include all Registrable Securities or Additional Registrable
Securities in a registration that such Stockholder or holder of Additional
Registrable Securities has requested be included, such Stockholder or holder of
Additional Registrable Securities, as the case may be, may elect to withdraw his
request to include Registrable Securities or Additional Registrable Securities
in such registration or may reduce the number requested to be included;
provided, however, that (i) such request must be made in writing prior to the
earlier of the execution of the underwriting agreement or the execution of the
custody agreement with respect to such registration and (ii) such withdrawal
shall be irrevocable and, after making such withdrawal, a Stockholder or holder
of Additional Registrable Securities shall no longer have any right to include
Registrable Securities or Additional Registrable Securities in the registration
as to which such withdrawal was made.

                  (b) If any registration pursuant to Section 2.2 involves an
underwritten offering and the Manager shall advise the Company that, in its
view, the number of securities requested to be included in such registration
(excluding shares of Common Stock of any Management Stockholder who is
prohibited from participating pursuant to Section 2.6(b) hereof) exceeds the
number (the "Section 2.2 Sale Number") that can be sold in an orderly manner in
             -----------------------
such registration within a price range acceptable to the Company, the Company
shall include in such registration:

                        (i) all Common Stock or Common Stock Equivalents that
the Company proposes to register for its own account (the "Company Securities");
                                                           ------------------
and

                        (ii) to the extent that the number of Company Securities
is less than the Section 2.2 Sale Number, all Registrable Securities requested
to be included in such registration by Stockholders of Registrable Securities
and holders of Additional Registrable Securities (excluding shares of Common
Stock of any Management Stockholder who is prohibited from participating
pursuant to Section 2.6(b) hereof); provided, however, that, if the number of
such Registrable Securities and Additional Registrable Securities exceeds the
Section 2.2 Sale Number less the number of Company Securities, then the number
of such Registrable Securities and Additional Registrable Securities (not to
exceed the Section 2.2 Sale Number less the number of Company Securities) to be
included in such registration shall be allocated on a pro rata basis among all
Stockholders requesting that Registrable Securities be included in such
registration and all holders of Additional Registrable Securities requesting
that Additional Registrable Securities be included in such registration, based
on the number of Registrable Securities or Additional Registrable Securities, as
the case may be, then owned by each such Stockholder or holder of Additional
Registrable Securities requesting inclusion in relation to the number of
Registrable Securities then owned by all Stockholders requesting

                                     - 11 -

<PAGE>

inclusion plus the number of Additional Registrable Securities then owned by all
holders exercising Additional Registrable Securities.

            2.4. Registration Procedures. If and whenever the Company is
                 -----------------------
required by the provisions of this Agreement to use all commercially reasonable
efforts to effect or cause the registration of any Registrable Securities under
the Securities Act as provided in this Agreement, the Company shall, as
expeditiously as possible:

                  (a) prepare and file with the SEC a registration statement on
an appropriate registration form of the SEC for the disposition of such
Registrable Securities in accordance with the intended method of disposition
thereof, which form (i) shall be selected by the Company and (ii) shall, in the
case of a shelf registration, be available for the sale of the Registrable
Securities by the selling Stockholders thereof and such registration statement
shall comply as to form in all material respects with the requirements of the
applicable form and include all financial statements required by the SEC to be
filed therewith, and the Company shall use all commercially reasonable efforts
to cause such registration statement to become and remain effective; provided,
however, that before filing a registration statement or prospectus or any
amendments or supplements thereto, or comparable statements under securities or
"blue sky" laws of any jurisdiction, the Company will furnish, if requested, to
one counsel for the Stockholders participating in the planned offering (selected
by the Major Stockholder) and the underwriters, if any, copies of all such
documents proposed to be filed (including all exhibits thereto), which documents
will be subject to the reasonable review and reasonable comment of such counsel,
and the Company shall not file any registration statement or amendment thereto
or any prospectus or supplement thereto to which the Stockholders of a majority
of the Registrable Securities covered by such registration statement or the
underwriters, if any, shall reasonably object in writing;

                  (b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
such period (which shall not be required to exceed 150 days in the case of a
registration pursuant to Section 2.1 or 120 days in the case of a registration
pursuant to Section 2.2) as any seller of Registrable Securities pursuant to
such registration statement shall request and to comply with the provisions of
the Securities Act with respect to the sale or other disposition of all
Registrable Securities covered by such registration statement in accordance with
the intended methods of disposition by the seller or sellers thereof set forth
in such registration statement;

                  (c) furnish, without charge, to each seller of such
Registrable Securities and each underwriter, if any, of the securities covered
by such registration statement such number of copies of such registration
statement, each amendment and

                                     - 12 -

<PAGE>

supplement thereto (in each case including all exhibits), and the prospectus
included in such registration statement (including each preliminary prospectus)
in conformity with the requirements of the Securities Act, and other documents,
as such seller and underwriter may reasonably request in order to facilitate the
public sale or other disposition of the Registrable Securities owned by such
seller (the Company hereby consenting to the use in accordance with all
applicable law of each such registration statement (or amendment or
post-effective amendment thereto) and each such prospectus (or preliminary
prospectus or supplement thereto) by each such seller of Registrable Securities
and the underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by such registration statement or prospectus);

                  (d) use all commercially reasonable efforts to register or
qualify the Registrable Securities covered by such registration statement under
such other securities or "blue sky" laws of such jurisdictions as any sellers of
Registrable Securities or any managing underwriter, if any, shall reasonably
request, and do any and all other acts and things which may be reasonably
necessary or advisable to enable such sellers or underwriter, if any, to
consummate the disposition of the Registrable Securities in such jurisdictions,
except that in no event shall the Company be required to qualify to do business
as a foreign corporation in any jurisdiction where it would not, but for the
requirements of this paragraph (d), be required to be so qualified, to subject
itself to taxation in any such jurisdiction or to consent to general service of
process in any such jurisdiction;

                  (e) promptly notify each Stockholder selling Registrable
Securities covered by such registration statement and each managing underwriter,
if any, (i) when the registration statement, any pre-effective amendment, the
prospectus or any prospectus supplement related thereto or post-effective
amendment to the registration statement has been filed and, with respect to the
registration statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the SEC or state securities authority for
amendments or supplements to the registration statement or the prospectus
related thereto or for additional information; (iii) of the issuance by the SEC
of any stop order suspending the effectiveness of the registration statement or
the initiation of any proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of any Registrable Securities for sale under the securities or "blue sky" laws
of any jurisdiction or the initiation of any proceeding for such purpose; (v) of
the existence of any fact of which the Company becomes aware which results in
the registration statement, the prospectus related thereto or any document
incorporated therein by reference containing an untrue statement of a material
fact or omitting to state a material fact required to be stated therein or
necessary to make any statement therein not misleading; and (vi) if at any time
the representations and warranties contemplated by any underwriting agreement,
securities sale agreement, or other similar agreement, relating to the offering
shall cease to be true

                                     - 13 -

<PAGE>

and correct in all material respects, and if the notification relates to an
event described in clause (v), the Company shall promptly prepare and furnish to
each such seller and each underwriter, if any, a reasonable number of copies of
a prospectus supplemented or amended so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein in the light of
the circumstances under which they were made not misleading;

                  (f) comply with all applicable rules and regulations of the
SEC, and make generally available to its security holders, as soon as reasonably
practicable after the effective date of the registration statement (and in any
event within 16 months thereafter), an earnings statement (which need not be
audited) covering the period of at least twelve consecutive months beginning
with the first day of the Company's first calendar quarter after the effective
date of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

                  (g) (i) use all commercially reasonable efforts to cause all
such Registrable Securities covered by such registration statement to be listed
on the principal securities exchange on which similar securities issued by the
Company are then listed (if any), if the listing of such Registrable Securities
is then permitted under the rules of such exchange, or (ii) if no similar
securities are then so listed, use all commercially reasonable efforts to either
cause all such Registrable Securities to be listed on a national securities
exchange or to secure designation of all such Registrable Securities as a Nasdaq
National Market, Inc. ("Nasdaq") "national market system security" within the
                        ------
meaning of Rule 11Aa2-1 of the Exchange Act or, failing that, secure Nasdaq
authorization for such shares and, without limiting the generality of the
foregoing, take all actions that may be required by the Company as the issuer of
such Registrable Securities in order to facilitate the managing underwriter's
arranging for the registration of at least two market makers as such with
respect to such shares with the National Association of Securities Dealers, Inc.
(the "NASD");
      ----

                  (h) provide and cause to be maintained a transfer agent and
registrar for all such Registrable Securities covered by such registration
statement not later than the effective date of such registration statement;

                  (i) enter into such customary agreements (including, if
applicable, an underwriting agreement) and take such other actions as the
Stockholders of a majority of the Registrable Securities or the Major
Stockholder participating in such offering shall reasonably request in order to
expedite or facilitate the disposition of such Registrable Securities, provided
that the underwriting agreement, if any, shall be reasonably satisfactory in
form and substance to the Company. The Stockholders of the

                                     - 14 -

<PAGE>

Registrable Securities which are to be distributed by such underwriters shall be
parties to such underwriting agreement and may, at their option, require that
the Company make to and for the benefit of such Stockholders the
representations, warranties and covenants of the Company which are being made to
and for the benefit of such underwriters and which are of the type customarily
provided to institutional investors in secondary offerings; provided, however,
that the Company shall not be required to make any representations or warranties
with respect to written information specifically provided by a Selling
Stockholder for inclusion in the registration documents;

                  (j) use all commercially reasonable efforts to obtain an
opinion from the Company's counsel and a "cold comfort" letter from the
Company's independent public accountants in customary form and covering such
matters as are customarily covered by such opinions and "cold comfort" letters
delivered to underwriters in underwritten public offerings, which opinion and
letter shall be reasonably satisfactory to the underwriter, if any, any
Initiating Stockholder in the case of a Demand Registration, or to the Major
Stockholder participating in any other offering, and furnish to each Stockholder
participating in the offering and to each underwriter, if any, a copy of such
opinion and letter addressed to such Stockholder or underwriter;

                  (k) deliver promptly to counsel for the selling Stockholders
participating in the offering and each underwriter, if any, copies of all
correspondence between the SEC and the Company, its counsel or auditors and all
memoranda relating to discussions with the SEC or its staff with respect to the
registration statement, other than those portions of any such correspondence or
memoranda which contain information subject to attorney-client privilege with
respect to the Company, and, upon receipt of such confidentiality agreements as
the Company may reasonably request, make reasonably available for inspection by
any seller of such Registrable Securities covered by such registration
statement, by any underwriter, if any, participating in any disposition to be
effected pursuant to such registration statement and by any attorney, accountant
or other agent retained by any such seller or any such underwriter, all
pertinent financial and other records, pertinent corporate documents and
properties of the Company, and cause all of the Company's officers, directors
and employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement;

                  (l) use all commercially reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of the registration
statement;

                  (m) provide a CUSIP number for all Registrable Securities, not
later than the effective date of the registration statement;

                                     - 15 -

<PAGE>

                  (n) make reasonably available its employees and personnel and
otherwise provide reasonable assistance to the underwriters (taking into account
the needs of the Company's businesses and the requirements of the marketing
process) in the marketing of Registrable Securities in any underwritten
offering;

                  (o) promptly prior to the filing of any document which is to
be incorporated by reference into the registration statement or the prospectus
(after the initial filing of such registration statement) provide copies of such
document to counsel for the selling Stockholders of Registrable Securities and
to each managing underwriter, if any, and make the Company's representatives
reasonably available for discussion of such document and make such changes in
such document concerning the selling Stockholders prior to the filing thereof as
counsel for such selling Stockholders or underwriters may reasonably request;

                  (p) furnish to counsel for the selling Stockholders
participating in the offering and the managing underwriter, without charge, at
least one signed copy of the registration statement and any post-effective
amendments thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those incorporated
by reference);

                  (q) cooperate with the selling Stockholders of Registrable
Securities and the managing underwriter, if any, to facilitate the timely
preparation and delivery of certificates not bearing any restrictive legends
representing the Registrable Securities to be sold, and cause such Registrable
Securities to be issued in such denominations and registered in such names in
accordance with the underwriting agreement prior to any sale of Registrable
Securities to the underwriters or, if not an underwritten offering, in
accordance with the instructions of the selling Stockholders of Registrable
Securities at least three business days prior to any sale of Registrable
Securities and instruct any transfer agent and registrar of Registrable
Securities to release any stop transfer orders in respect thereof; and

                  (r) take all such other commercially reasonable actions as are
necessary or advisable in order to expedite or facilitate the disposition of
such Registrable Securities.

      The Company may require as a condition precedent to the Company's
obligations under this Section 2.4 that each seller of Registrable Securities as
to which any registration is being effected furnish the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request, provided that such information shall be
used only in connection with such registration.

                                     - 16 -

<PAGE>

      Each Stockholder of Registrable Securities agrees that upon receipt of any
notice from the Company of the happening of any event of the kind described in
clause (v) of paragraph (e) of this Section 2.4, such Stockholder will
discontinue such Stockholder's disposition of Registrable Securities pursuant to
the registration statement covering such Registrable Securities until such
Stockholder's receipt of the copies of the supplemented or amended prospectus
contemplated by paragraph (e) of this Section 2.4 and, if so directed by the
Company, will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies, then in such Stockholder's possession of the
prospectus covering such Registrable Securities that was in effect at the time
of receipt of such notice. In the event the Company shall give any such notice,
the applicable period mentioned in paragraph (b) of this Section 2.4 shall be
extended by the number of days during such period from and including the date of
the giving of such notice to and including the date when each seller of any
Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
paragraph (e) of this Section 2.4.

      If any such registration statement or comparable statement under "blue
sky" laws refers to any Stockholder by name or otherwise as the Stockholder of
any securities of the Company, then such Stockholder shall have the right to
require (i) the insertion therein of language, in form and substance
satisfactory to such Stockholder and the Company, to the effect that the holding
by such Stockholder of such securities is not to be construed as a
recommendation by such Stockholder of the investment quality of the Company's
securities covered thereby and that such holding does not imply that such
Stockholder will assist in meeting any future financial requirements of the
Company, or (ii) in the event that such reference to such Stockholder by name or
otherwise is not in the judgment of the Company, as advised by counsel, required
by the Securities Act or any similar federal statute or any state "blue sky" or
securities law then in force, the deletion of the reference to such Stockholder.

            2.5. Registration Expenses.
                 ---------------------

                  (a) "Expenses" shall mean any and all reasonable fees and
                       --------
expenses incident to the Company's performance of or compliance with this
Article 2, including, without limitation, (i) SEC, stock exchange or NASD
registration and filing fees and all listing fees and fees with respect to the
inclusion of securities in Nasdaq, (ii) fees and expenses of compliance with
state securities or "blue sky" laws and in connection with the preparation of a
"blue sky" survey, including without limitation, reasonable fees and expenses of
"blue sky" counsel, (iii) printing and copying expenses, (iv) messenger and
delivery expenses, (v) fees and disbursements of counsel for the Company, (vi)
with respect to each registration, the fees and disbursements of one counsel for
the selling Stockholder(s) (selected by the Initiating Stockholder, in the case
of any Demand Registration, or the Major Stockholder in any other case), (vii)
fees and

                                     - 17 -

<PAGE>

disbursements of all independent public accountants (including the expenses of
any audit and/or "cold comfort" letter) and fees and expenses of other persons,
including special experts, retained by the Company, (viii) fees and expenses
payable to a Qualified Independent Underwriter (as such term is defined in Rule
2720(b)(15) of the National Association of Securities Dealers, Inc.'s Conduct
Rules), (ix) all expenses in connection with any road show, and (x) any other
fees and disbursements of underwriters, if any, customarily paid by issuers or
sellers of securities (collectively, "Expenses").
                                      --------

                  (b) The Company shall pay all Expenses with respect to any
Demand Registration and any Registration effected under Section 2.2.

                  (c) Notwithstanding the foregoing, (i) the provisions of this
Section 2.5 shall be deemed amended to the extent necessary to cause these
expense provisions to comply with "blue sky" laws of each state in which the
offering is made, (ii) in connection with any registration hereunder, each
Stockholder of Registrable Securities being registered shall pay all
underwriting discounts and commissions and any transfer taxes, if any,
attributable to the sale of such Registrable Securities, pro rata with respect
to payments of discounts and commissions in accordance with the number of shares
sold in the offering by such Stockholder, and (iii) the Company shall, in the
case of all registrations under this Article 2, be responsible for all its
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties).

            2.6. Certain Limitations on Registration Rights.
                 ------------------------------------------

                  (a) In the case of any registration under Section 2.1 pursuant
to an underwritten offering, or in the case of a registration under Section 2.2
if the Company has determined to enter into an underwriting agreement in
connection therewith, all securities to be included in such registration shall
be subject to an underwriting agreement and no person may participate in such
registration unless such person agrees to sell such person's securities on the
basis provided therein and completes and executes all reasonable questionnaires,
and other documents (including custody agreements and powers of attorney) which
must be executed in connection therewith, and provides such other information to
the Company or the underwriter as may be necessary to register such Person's
securities.

                  (b) Notwithstanding anything to the contrary in the Agreement,
no Management Stockholder shall be entitled to include securities in any
registration pursuant to Section 2.1 or Section 2.2 if the Company believes that
such inclusion could result in a violation of Section 57 or any other provision
of the Investment Company Act.

                                     - 18 -

<PAGE>

            2.7. Limitations on Sale or Distribution of Other Securities.
                 -------------------------------------------------------

                  (a) To the extent requested in writing by the Company or the
managing underwriter, if any, of any registration effected pursuant to Sections
2.1 or 2.2, or in connection with any Rule 144A offering or in connection with
any subsequent exchange offer or conversion relating thereto or in connection
with an Initial Public Offering, each Stockholder of Registrable Securities
agrees not to sell, transfer or otherwise dispose of, including any sale
pursuant to Rule 144 under the Securities Act, any Common Stock, or any other
equity security of the Company or any security convertible into or exchangeable
or exercisable for any equity security of the Company during the time period
reasonably requested by the managing underwriter not to exceed 90 days (or 180
days with respect to the Initial Public Offering) beginning with the date of the
closing of such Rule 144A offering, exchange offer, conversion or Initial Public
Offering (such period, the "Stockholder Lockup") other than:

                        (i) sales of shares of Common Stock or other equity
securities of the Company as part of such underwritten public offering;

                        (ii) sales of shares Common Stock or other equity
securities of the Company purchased by the Stockholder in the secondary market
following the Initial Public Offering;

                        (iii) sales of shares of Common Stock or other equity
securities of the Company purchased by the Stockholder in connection with the
Company's dividend reinvestment plan;

                        (iv) sales of shares of Common Stock or other equity
securities purchased from the underwriters in connection with the directed share
program of any underwritten public offering;

                        (v) sales by a Management Stockholder of the number of
shares of Common Stock necessary to derive sufficient proceeds to (A) repay in a
timely fashion all amounts due under borrowings by such Management Stockholder
from the Company and (B) make all tax payments associated with the lapsing of
forfeiture restrictions on shares of restricted Common Stock held by such
Management Stockholder and the sale of any shares pursuant to this clause (v);

                        (vi) the transfer of shares of Common Stock or other
equity securities by any Stockholder to any Affiliate of such Stockholder;
provided, however, that the Stockholder Lockups entered into in connection with
the Initial Public Offering will not include this exception;

                                     - 19 -

<PAGE>

                        (vii) without limiting clause (vi) above, the transfer
of shares of Common Stock or other equity securities by Heller Financial, Inc.
to any successor entity pursuant to a merger or other acquisition of Heller
Financial, Inc., including, without limitation, by General Electric Company, GE
Capital Corporation or any of their Affiliates; or

                        (viii) other transfers customarily excluded from such
transfer restrictions, including, without limitation, bona fide gifts by the
Stockholder or other transfers by a Stockholder to a trust for the benefit of
the Stockholder and/or his or her family members;

provided, however, that in the case of clauses (vi) and (vii) and, to the extent
appropriate, clause (viii), transfers will be permitted only if the transferee
executes an agreement stating that the shares of Common Stock or equity
securities so transferred to the transferee will remain subject to the
Stockholder Lockup. The Company hereby also agrees to use all commercially
reasonable efforts to cause each Stockholder of any equity security or any
security convertible into or exchangeable or exercisable for any equity security
of the Company purchased from the Company at any time other than in a public
offering so to agree.

                  (b) The Company hereby agrees that, if it shall previously
have received a request for registration pursuant to Section 2.1 or 2.2, and if
such previous registration shall not have been withdrawn or abandoned, the
Company shall not, without the prior written consent of the Initiating
Stockholders, sell, transfer, or otherwise dispose of, any Common Stock, or any
other equity security of the Company or any security convertible into or
exchangeable or exercisable for any equity security of the Company (other than
as part of such underwritten public offering, a registration on Form S-4 or Form
N-14, as applicable, or Form S-8 or any successor or applicable equivalent form
which is then in effect or upon the conversion, exchange or exercise of any then
outstanding Common Stock Equivalent), until a period of 90 days (or such shorter
period of time as requested in writing by any managing underwriter of such
registration pursuant to Section 2.1 or 2.2), shall have elapsed from the
effective date of such previous registration; and the Company shall so provide
in any registration rights agreement hereafter entered into with respect to any
of its securities.

            2.8. No Required Sale. Nothing in this Agreement shall be deemed to
                 ----------------
create an independent obligation on the part of any Stockholder to sell any
Registrable Securities pursuant to any effective registration statement.

                                     - 20 -

<PAGE>

            2.9. Indemnification.
                 ---------------

                  (a) In the event of any registration of any securities of the
Company under the Securities Act pursuant to this Article 2, the Company will,
and hereby does, indemnify and hold harmless, to the fullest extent permitted by
law, each Stockholder of Registrable Securities, its directors, officers,
fiduciaries, employees and stockholders or general and limited partners (and the
directors, officers, employees and stockholders thereof), each other Person who
participates as an underwriter or a Qualified Independent Underwriter, if any,
in the offering or sale of such securities, each officer, director, employee,
stockholder or partner of such underwriter or Qualified Independent Underwriter,
and each other Person, if any, who controls such seller or any such underwriter
within the meaning of the Securities Act, against any and all losses, claims,
damages or liabilities, joint or several, actions or proceedings (whether
commenced or threatened) (collectively, "Claims"), and expenses (including
                                         ------
reasonable fees of counsel and any amounts paid in any settlement effected with
the Company's consent, which consent shall not be unreasonably withheld or
delayed) to which each such indemnified party may become subject under the
Securities Act or otherwise, insofar as such Claims or expenses arise out of or
are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement under which such
securities were registered under the Securities Act or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary, final or summary prospectus or any amendment or supplement thereto,
together with the documents incorporated by reference therein, or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or (iii) any
violation by the Company of any federal, state or common law rule or regulation
applicable to the Company and relating to action required of or inaction by the
Company in connection with any such registration, and the Company will reimburse
any such indemnified party for any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
Claim as such expenses are incurred; provided, however, that the Company shall
not be liable to any such indemnified party in any such case to the extent such
Claim or expense arises out of or is based upon any untrue statement or alleged
untrue statement of a material fact or omission or alleged omission of a
material fact made in such registration statement or amendment thereof or
supplement thereto or in any such prospectus or any preliminary, final or
summary prospectus or amendment thereof or supplement thereto in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of such indemnified party specifically for use therein. Such indemnity
and reimbursement of expenses shall remain in full force and effect regardless
of any investigation made by or

                                     - 21 -

<PAGE>

on behalf of such indemnified party and shall survive the transfer of such
securities by such seller.

                  (b) Each Stockholder of Registrable Securities that are
included in the securities as to which any registration under Section 2.1 or 2.2
is being effected (and, if the Company requires as a condition to including any
Registrable Securities in any registration statement filed in accordance with
Section 2.1 or 2.2, any underwriter and Qualified Independent Underwriter, if
any) shall, severally and not jointly, indemnify and hold harmless (in the same
manner and to the same extent as set forth in paragraph (a) of this Section 2.9)
to the extent permitted by law the Company, its officers and directors, each
Person controlling the Company within the meaning of the Securities Act and all
other prospective sellers and their directors, officers, general and limited
partners and respective controlling Persons with respect to any untrue statement
or alleged untrue statement of any material fact in, or omission or alleged
omission of any material fact from, such registration statement, any
preliminary, final or summary prospectus contained therein, or any amendment or
supplement thereto, if such statement or alleged statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company or its representatives by or on behalf of
such Stockholder specifically for use therein and reimburse such indemnified
party for any legal or other expenses reasonably incurred in connection with
investigating or defending any such Claim as such expenses are incurred;
provided, however, that the aggregate amount which any such Stockholder shall be
required to pay pursuant to this Section 2.9(b) and Sections 2.9(c) and (e)
shall in no case be greater than the amount of the net proceeds received by such
person upon the sale of the Registrable Securities pursuant to the registration
statement giving rise to such claim. Such indemnity and reimbursement of
expenses shall remain in full force and effect regardless of any investigation
made by or on behalf of such indemnified party and shall survive the transfer of
such securities by such Stockholder.

                  (c) Indemnification similar to that specified in the preceding
paragraphs (a) and (b) of this Section 2.9 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration or other qualification of securities under
any state securities and "blue sky" laws.

                  (d) Any person entitled to indemnification under this
Agreement shall notify promptly the indemnifying party in writing of the
commencement of any action or proceeding with respect to which a claim for
indemnification may be made pursuant to this Section 2.9, but the failure of any
indemnified party to provide such notice shall not relieve the indemnifying
party of its obligations under the preceding paragraphs of this Section 2.9,
except to the extent the indemnifying party is materially prejudiced thereby and
shall not relieve the indemnifying party from any liability which it

                                     - 22 -

<PAGE>

may have to any indemnified party otherwise than under this Article 2. In case
any action or proceeding is brought against an indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, unless in the reasonable
opinion of outside counsel to the indemnified party a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim, to assume the defense thereof jointly with any other indemnifying party
similarly notified, to the extent that it chooses, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party that it so chooses,
the indemnifying party shall not be liable to such indemnified party for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that (i) if the indemnifying party fails to
take reasonable steps necessary to defend diligently the action or proceeding
within 20 days after receiving notice from such indemnified party that the
indemnified party believes it has failed to do so; or (ii) if such indemnified
party who is a defendant in any action or proceeding which is also brought
against the indemnifying party reasonably shall have concluded that there may be
one or more legal defenses available to such indemnified party which are not
available to the indemnifying party; or (iii) if representation of both parties
by the same counsel is otherwise inappropriate under applicable standards of
professional conduct, then, in any such case, the indemnified party shall have
the right to assume or continue its own defense as set forth above (but with no
more than one firm of counsel for all indemnified parties in each jurisdiction,
except to the extent any indemnified party or parties reasonably shall have
concluded that there may be legal defenses available to such party or parties
which are not available to the other indemnified parties or to the extent
representation of all indemnified parties by the same counsel is otherwise
inappropriate under applicable standards of professional conduct) and the
indemnifying party shall be liable for any expenses therefor. No indemnifying
party shall, without the written consent of the indemnified party, effect the
settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (A) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (B) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.

                  (e) If for any reason the foregoing indemnity is unavailable
or is insufficient to hold harmless an indemnified party under Sections 2.9(a),
(b) or (c), then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of any Claim in such proportion as
is appropriate to reflect the relative fault of the indemnifying party, on the
one hand, and the indemnified party,

                                     - 23 -

<PAGE>

on the other hand, with respect to such offering of securities. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. If, however, the allocation provided in the second
preceding sentence is not permitted by applicable law, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative faults
but also the relative benefits of the indemnifying party and the indemnified
party as well as any other relevant equitable considerations. The parties hereto
agree that it would not be just and equitable if contributions pursuant to this
Section 2.9(e) were to be determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to in the preceding sentences of this Section 2.9(e). The amount paid
or payable in respect of any Claim shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such Claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Notwithstanding anything in this Section 2.9(e) to
the contrary, no indemnifying party (other than the Company) shall be required
pursuant to this Section 2.9(e) to contribute any amount in excess of the net
proceeds received by such indemnifying party from the sale of Registrable
Securities in the offering to which the losses, claims, damages or liabilities
of the indemnified parties relate, less the amount of any indemnification
payment made by such indemnifying party pursuant to Sections 2.9(b) and (c).

                  (f) The indemnity agreements contained herein shall be in
addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made or
omitted by or on behalf of any indemnified party and shall survive the transfer
of the Registrable Securities by any such party.

                  (g) The indemnification and contribution required by this
Section 2.9 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.

                  (h) Notwithstanding the foregoing, so long as the Company is
registered under the Investment Company Act or elects to be regulated as a
business development company under the Investment Company Act, nothing contained
in this

                                     - 24 -

<PAGE>

Section 2.9 shall limit the liability of, or permit the indemnification of, any
director or officer of the Corporation for actions or matters for which such
limitation or indemnification would be prohibited by the Investment Company Act.

      3. Underwritten Offerings.
         ----------------------

            3.1. Requested Underwritten Offerings. If requested by the
                 --------------------------------
underwriters for any underwritten offering by the Stockholders pursuant to a
registration requested under Section 2.1, the Company shall enter into a
customary underwriting agreement with the underwriters. Such underwriting
agreement shall be satisfactory in form and substance to the Initiating
Stockholder in the case of a Demand Registration or to the Major Stockholder if
there is no Initiating Stockholder and shall contain such representations and
warranties by, and such other agreements on the part of, the Company and such
other terms as are generally prevailing in agreements of that type, including,
without limitation, indemnities and contribution agreements. Any Stockholder
participating in the offering shall be a party to such underwriting agreement
and may, at its option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of
such Stockholder and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such Stockholder; provided, however, that the
Company shall not be required to make any representations or warranties with
respect to written information specifically provided by a selling Stockholder
for inclusion in the registration statement. Such underwriting agreement shall
also contain such representations and warranties by the participating
Stockholders as are customary in agreements of that type.

            3.2. Piggyback Underwritten Offerings. In the case of a registration
                 --------------------------------
pursuant to Section 2.2 hereof, if the Company shall have determined to enter
into an underwriting agreement in connection therewith, all of the Stockholders'
Registrable Securities to be included in such registration shall be subject to
such underwriting agreement. Any Stockholder participating in such registration
may, at its option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of
such Stockholder and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such Stockholder. Such underwriting agreement
shall also contain such representations and warranties by the participating
Stockholders as are customary in agreements of that type.

            3.3. Investment Banking Services. Unless and until the Goldman
                 ---------------------------
Stockholders dispose of more than 50% of the Common Stock beneficially owned by

                                     - 25 -

<PAGE>

them on the date hereof (such percentage to be measured after taking into
account any stock split, reclassification, combination, stock dividend or
similar transaction), Goldman or any of its Affiliates shall have the right to
perform all investment banking services (excluding any underwriting of
securities, commercial banking services, any determination of fair market value
pursuant to any employment, consulting or severance agreement and services
relating to any asset securitization or other debt issuances) for the Company
for which an investment banking firm is retained (including, without limitation,
with respect to the sale of the Company), in each case, upon commercially
reasonable terms that are mutually satisfactory to Goldman and the Company;
provided, however, that the Company shall have the right, in its discretion, to
engage one or more other firms to serve as additional providers of investment
banking services performed by Goldman or any of its Affiliates for the Company,
so long as Goldman or an Affiliate is designated as the lead provider of such
services to the Company and such other engagement does not affect the
compensation that Goldman or its Affiliate will receive for providing such
services. If the Company and Goldman, after good faith discussions, cannot agree
on the terms of any such engagement, the Company may hire such other investment
banking firms as it desires.

      4. General.
         -------

            4.1. Adjustments Affecting Registrable Securities. The Company
                 --------------------------------------------
agrees that it shall not effect or permit to occur any combination or
subdivision of shares which would adversely affect the ability of the
Stockholder of any Registrable Securities to include such Registrable Securities
in any registration contemplated by this Agreement or the marketability of such
Registrable Securities in any such registration. The Company agrees that it will
take all reasonable steps necessary to effect a subdivision of shares if in the
reasonable judgment of (a) the Initiating Stockholder of a Demand Registration
Request or (b) the managing underwriter for the offering in respect of such
Demand Registration Request, such subdivision would enhance the marketability of
the Registrable Securities.

            4.2. Rule 144. If the Company shall have filed a registration
                 --------
statement pursuant to the requirements of Section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Securities Act in
respect of the Common Stock or securities of the Company convertible into or
exchangeable or exercisable for Common Stock, the Company covenants that (i) so
long as it remains subject to the reporting provisions of the Exchange Act, it
will timely file the reports required to be filed by it under the Securities Act
or the Exchange Act (including, but not limited to, the reports under Sections
13 and 15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144
under the Securities Act), and (ii) will take such further action as any
Stockholder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such Stockholder to sell Registrable
Securities without

                                     - 26 -

<PAGE>

registration under the Securities Act within the limitation of the exemptions
provided by (A) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (B) any similar rule or regulation hereafter adopted by
the SEC. Upon the request of any Stockholder of Registrable Securities, the
Company will deliver to such Stockholder a written statement as to whether it
has complied with such requirements.

            4.3. Nominees for Beneficial Owners. If Registrable Securities are
                 ------------------------------
held by a nominee for the beneficial owner thereof, the beneficial owner thereof
may, at its option, be treated as the Stockholder of such Registrable Securities
for purposes of any request or other action by any Stockholder or Stockholders
of Registrable Securities pursuant to this Agreement (or any determination of
any number or percentage of shares constituting Registrable Securities held by
any Stockholder or Stockholders of Registrable Securities contemplated by this
Agreement), provided that the Company shall have received assurances reasonably
satisfactory to it of such beneficial ownership.

            4.4. Miscellaneous.
                 --------------

                  (a) No waiver of any of the provisions of this Agreement shall
be deemed to or shall constitute a waiver of any other provision hereof (whether
or not similar). No delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof.

                  (b) Any notice, request, instruction or other document to be
given hereunder by any party hereto to any other party shall be in writing and
delivered (i) personally, (ii) by telecopy (provided that a copy of any notice
delivered pursuant to this clause (ii) shall also be sent pursuant to clause
(iv) below), (iii) by a generally recognized overnight courier service which
guarantees overnight delivery and provides written acknowledgment by the
addressee of receipt, or (iv) by registered or certified mail (or by air mail if
addressed to an address outside of the United States), postage prepaid, return
receipt requested,

          if to the Company to:

               MCG Capital Corporation
               1100 Wilson Boulevard
               Suite 800
               Arlington, Virginia  22209
               Fax:  (703) 247-7505
               Attention: Bryan J. Mitchell
                          Steven F. Tunney
                          Samuel G. Rubenstein

                                     - 27 -

<PAGE>

          with a copy to:

               Fried, Frank, Harris, Shriver & Jacobson
               1001 Pennsylvania Avenue, N.W.
               Suite 800
               Washington, D.C.  20004-2505
               Fax:  (202) 639-7003
               Attention:  Richard A. Steinwurtzel
                           Vasiliki B. Tsaganos

          if to the Goldman Stockholders,

               GS Capital Partners II, L.P.
               85 Broad Street
               New York, New York  10004
               Fax:  (212) 357-5505
               Attention:  Joseph H. Gleberman

          with a copy to:

               GS Capital Partners II, L.P.
               85 Broad Street
               New York, New York  10004
               Fax:  (212) 357-5505
               Attention:  Ben Adler

          if to any Vestar Stockholder, to:

          Vestar Capital Partners
          245 Park Avenue
          41st Floor
          New York, NY  10167
          Fax:  (212) 808-4922
          Attention: Todd N. Khoury
                     Jack M. Feder

          with a copy to:

          Kirkland & Ellis
          Citigroup Center
          153 East 53rd Street
          New York, NY  10022
          Fax:  (212) 446-4900

                                     - 28 -

<PAGE>

          Attention: Michael Movsovich

          if to any Soros Stockholder, to:

          Soros Private Equity Partners LLC
          888 7th Ave., 33rd Floor
          New York, NY  10106
          Fax:  (212) 315-1221
          Attn: Michael A. Pruzan
                Richard Holahan

          If to the FBR Stockholder, to:

          FBR Asset Investment Corporation
          Potomac Tower, 1001 Nineteenth Street North
          Arlington, Virginia  22209
          Fax:  (703) 312-9501
          Attn:  William Ginivan

          if to a Stockholder,

            at the address or facsimile number shown on the record books of the
            Company

or at such other address for a party as shall be specified by like notice. Any
notice which is delivered in the manner provided herein shall be deemed to have
been duly given to the party to whom it is directed upon actual receipt by such
party (evidenced, in the case of a telecopy, by the receipt of telephone
confirmation thereof).

                  (c) The terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the respective successors and assigns of the
parties hereto. If any Person shall acquire Registrable Securities from any
Stockholder, in any manner, whether by operation of law or otherwise, such
transferee shall promptly notify the Company and such Registrable Securities
acquired from such Stockholder shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities such Person
shall be entitled to receive the benefits of and be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement. If the Company shall so request, any such successor or assign shall
agree in writing to acquire and hold the Registrable Securities acquired from
such Stockholder subject to all of the terms hereof. If any Stockholder shall
acquire additional Registrable Securities, such Registrable Securities shall be
subject to all of the terms, and entitled to all the benefits, of this
Agreement.

                                     - 29 -

<PAGE>

                  (d) This Agreement (including the exhibits, any other
schedules and other documents referred to herein) constitutes the entire
agreement between the parties hereto and supersedes all prior agreements and
understandings, oral and written, between the parties hereto, with respect to
the subject matter hereof.

                  (E) THE VALIDITY, PERFORMANCE AND ENFORCEMENT OF THIS
AGREEMENT, UNLESS EXPRESSLY PROVIDED TO THE CONTRARY, SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICTS OF LAW THEREOF. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS
OF THE STATE OF DELAWARE FOR ANY ACTION, PROCEEDINGS OR INVESTIGATIONS IN ANY
COURT OR BEFORE ANY GOVERNMENTAL AUTHORITY ("LITIGATION") ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY (AND AGREES
NOT TO COMMENCE ANY LITIGATION RELATING THERETO EXCEPT IN SUCH COURTS), AND
FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S.
REGISTERED MAIL TO ITS RESPECTIVE ADDRESS SET FORTH IN THIS AGREEMENT SHALL BE
EFFECTIVE SERVICE OF PROCESS FOR ANY LITIGATION BROUGHT AGAINST IT IN ANY SUCH
COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY OBJECTION TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR
RELATING TO THE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN THE COURTS
OF THE STATE OF DELAWARE, AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY
WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO A TRIAL BY
JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF OR RELATING TO THE
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF GS CAPITAL PARTNERS
II OFFSHORE, L.P., GOLDMAN, SACHS & CO. VERWALTUNGS GMBH AND QUANTUM INDUSTRIAL
PARTNERS, LDC HAS APPOINTED AN AGENT FOR SERVICE OF PROCESS IN DELAWARE AND HAS
PROVIDED THE COMPANY WITH DOCUMENTATION OF SUCH APPOINTMENT. EACH OF THE
FOREGOING PARTIES REPRESENTS AND WARRANTS THAT IT WILL NOT PERMIT SUCH
APPOINTMENT TO LAPSE AT ANY time THAT IT OWNS ANy SECURITIES OF THE COMPANY.

                  (f) The headings of the sections and paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof. Terms
stated in either the singular or the plural shall include the singular and the
plural, and pronouns stated in either the masculine or the neuter gender shall
include the masculine, the feminine and the neuter. References to any statute or
any provision thereof shall be deemed to include a reference

                                     - 30 -

<PAGE>

to any statute or provision that amends, extends, consolidates or replaces the
same and shall include any orders, regulations, instruments, official government
interpretations or other subordinate legislation made under the relevant
statute.

                  (g) If any term or provision of this Agreement or any
application thereof shall be declared or held invalid, illegal or unenforceable,
in whole or in part, whether generally or in any particular jurisdiction, such
provision shall be deemed amended to the extent, but only to the extent,
necessary to cure such invalidity, illegality or unenforceability, and the
validity, legality and enforceability of the remaining provisions, both
generally and in every other jurisdiction, shall not in any way be affected or
impaired thereby.

                  (h) The parties hereto hereby acknowledge that each party
hereto would suffer irreparable injury and would not have an adequate remedy at
law for money damages if the provisions of this Agreement were not performed in
accordance with their terms. Each party hereto agrees that the other parties
hereto shall be entitled to specific enforcement of the terms of this Agreement
in addition to any other remedy to which they are entitled, at law or in equity.
Furthermore, if any action or proceeding shall be instituted to enforce the
provisions hereof, any party against whom such action or proceeding is brought
hereby waives the claim or defense therein that there is an adequate remedy at
law, and agrees not to argue in any such action or proceeding the claim or
defense that such remedy at law exists.

                  (i) This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which together shall constitute one and the same instrument.

                  (j) At any time or from time to time the parties hereto agree
to cooperate with each other, and at the request of another party, to execute
and deliver or cause to be executed or delivered any further instruments or
documents and to take all such further action as the other party may reasonably
request in order to evidence or effectuate the consummation of the transactions
contemplated hereby and to otherwise carry out the intent of the parties
hereunder.

            4.5. Amendment. This Agreement may be amended, modified,
                 ---------
supplemented or waived only upon the written consent of the Company, the Goldman
Stockholders holding a majority of all Common Stock held by the Goldman
Stockholders, the Vestar Stockholders holding a majority of all Common Stock
held by the Vestar Stockholders, the Soros Stockholders holding a majority of
all Common Stock held by the Soros Stockholders, the Management Stockholders
holding a majority of all Common Stock held by the Management Stockholders and
the FBR Stockholder.

                                     - 31 -

<PAGE>

            4.6. Additional Rights. The parties hereto acknowledge that the
                 -----------------
Company may from time to time grant holders of the Company's capital stock
demand and piggyback registration rights that are in addition to those set forth
herein.

            4.7. Compliance with Applicable Law. Notwithstanding anything to the
                 ------------------------------
contrary in this Agreement, (i) no right granted by or derived from this
Agreement may be exercised in a manner that would violate any Applicable Law and
(ii) the Company shall have no obligation to take any action or omit to take any
action that would otherwise be required hereunder if such action or omission
would violate any Applicable Law or result in any violation of any Applicable
Law.

            4.8. Rescission of Agreement; Restoration; Effective Date.
                 ------------------------------------

                  (a) If the Initial Public Offering is not consummated on or
prior to the earlier of (i) the 20th day following the effective date of the
contemplated filing by the Company of a Form N-8A with the SEC pursuant to which
the Company will register under the Investment Company Act as a closed-end
investment company or (ii) December 31, 2001, then the parties hereto agree that
(x) the Second Amended and Restated Registration Rights Agreement and this Third
Amended and Restated Registration Rights Agreement shall both be automatically
rescinded and shall be null and void and (y) the First Amended and Restated
Registration Rights Agreement shall be automatically restored and shall be in
full force and effect on the terms set forth therein. In such event, each of the
parties to this Agreement agrees to execute any documents or instruments and
take all other actions required to restore the parties' rights and preferences
prior to the execution of the Second Amended and Restated Registration Rights
Agreement.

                  (b) Subject to Section 4.8(a), this Third Amended and Restated
Registration Rights Agreement shall become effective upon the closing of (i) the
Initial Public Offering and (ii) the closing of the sale of shares of Common
Stock contemplated by the FBR Stock Purchase Agreement.

                                     - 32 -

<PAGE>

      IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date set forth above.

                         MCG CAPITAL CORPORATION

                         By:  /s/ Bryan J. Mitchell
                            ---------------------------------------
                              Name: Bryan J. Mitchell
                              Title: CEO

                         GOLDMAN STOCKHOLDERS

                         GS CAPITAL PARTNERS II, L.P.

                         By:  GS Advisors, L.L.C., Its General Partner

                         By:  /s/ John E. Bowman
                           ----------------------------------------
                              Name: John E. Bowman
                              Title: Vice President

                                     - 33 -

<PAGE>

                         GS CAPITAL PARTNERS II OFFSHORE, L.P.

                         By:  GS Advisors II L.L.C., Its General
                              Partner

                         By:  /s/ John E. Bowman
                            ----------------------------------------
                              Name: John E. Bowman
                              Title: Vice President

                         GOLDMAN, SACHS & CO. VERWALTUNGS
                           GmbH

                         By:  /s/ John E. Bowman
                            ----------------------------------------
                              Name: John E. Bowman
                              Title: Vice President

                         STONE STREET FUND 1998, L.P.

                         By:  Stone Street 1998, L.L.C.,
                              Its General Partner

                         By:  /s/ John E. Bowman
                            ----------------------------------------
                              Name: John E. Bowman
                              Title: Vice President

                         BRIDGE STREET FUND 1998, L.P.

                         By:  Stone Street 1998, L.L.C.,
                              Its General Partner

                         By:  /s/ John E. Bowman
                            ----------------------------------------
                              Name: John E. Bowman
                              Title: Vice President

                                     - 34 -

<PAGE>

                         SOROS STOCKHOLDERS

                         QUANTUM INDUSTRIAL PARTNERS LDC

                         By:  /s/ Richard Holahan, Jr.
                            ---------------------------------------
                              Name: Richard Holahan, Jr.
                              Title: Attorney-In-Fact

                         SFM DOMESTIC INVESTMENTS LLC

                         By:  /s/ Richard Holahan, Jr.
                            ---------------------------------------
                              Name: Richard Holahan, Jr.
                              Title: Attorney-In-Fact

                         VESTAR STOCKHOLDERS

                         VESTAR CAPITAL PARTNERS IV, L.P.

                         By:     Vestar Associates IV, L.P.
                                 Its General Partner

                         By:     Vestar Associates Corporation IV
                                 Its General Partner

                         By:  /s/ Norman W. Alpert
                            ---------------------------------------
                              Name: Norman W. Alpert
                              Title: Managing Director

                         VESTAR /MCG LLC

                          By:     Vestar Associates Corporation IV
                                  Its Managing Member

                         By: /s/ Norman W. Alpert
                            ---------------------------------------
                              Name: Norman W. Alpert
                              Title: Managing Director

                                     - 35 -

<PAGE>

                         FBR STOCKHOLDER

                         FBR ASSET INVESTMENT CORPORATION

                         By:  /s/ Eric Billings
                            ---------------------------------------
                              Name: Eric Billings
                              Title: Chairman and CEO

                         MANAGEMENT STOCKHOLDERS

                         /s/ Bryan J. Mitchell
                         ------------------------------------------
                         Bryan J. Mitchell

                         /s/ B. Hagen Saville
                         ------------------------------------------
                         B. Hagen Saville

                         /s/ Steven F. Tunney
                         ------------------------------------------
                         Steven F. Tunney

                         OTHER MANAGEMENT STOCKHOLDERS

                         Wallace B. Millner
                         Robert Merrick
                         Jon A. Slabaugh
                         Vincent P. Griffin
                         Joseph Bowden
                         Andrew Jacobson
                         Robert Merrick Custodian For Laurin K. Merrick
                           ###-##-#### Under UGMA
                         Robert Merrick Custodian John A. Merrick
                           ###-##-#### Under UGMA
                         Samuel G. Rubenstein
                         Janet Perlowski

                                     - 36 -

<PAGE>

                              ADDITIONAL INVESTORS

                         First Union Corporation
                         Heller Financial, Inc.
                         John E. Oxendine
                         Larry J. Perrotto Revocable Trust
                         Robert N. Snyder
                         John S. Patton, Sr.
                         John S. Patton, Jr.
                         Jill P. Hunter
                         John H. Satterwhite
                         Mary Ann Satterwhite 85 Trust
                         Jackson & Sons, LP
                         United Communications Group
                         James McGinty
                         Rube Enterprises, L.P.

                                     - 37 -<PAGE>

                                                                   Exhibit 10.13

                                                                  --------------
                                                                  EXECUTION COPY
                                                                  --------------

================================================================================

                          SALE AND SERVICING AGREEMENT

                                  by and among

                        MCG COMMERCIAL LOAN TRUST 2001-1,
                                  as the Trust,
                                  -------------

                              MCG FINANCE III, LLC,
                             as the Trust Depositor,
                             -----------------------

                            MCG CAPITAL CORPORATION,
                     as the Originator and as the Servicer,
                     --------------------------------------

                                       and

                WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
              as the Indenture Trustee and as the Backup Servicer.
              ----------------------------------------------------

                          Dated as of December 1, 2001

================================================================================

                 MCG Commercial Loan Trust Notes, Series 2001-1
                       Class A, Class B and Class C Notes

<PAGE>

                                TABLE OF CONTENTS
                                -----------------

<TABLE>
<CAPTION>
                                                                                                                 Page
<S>                                                                                                              <C>
ARTICLE I  DEFINITIONS .......................................................................................... 2
         Section 1.01      Definitions........................................................................... 2
                           -----------
         Section 1.02      Usage of Terms........................................................................29
                           --------------
         Section 1.03      Section References....................................................................30
                           ------------------
         Section 1.04      Calculations..........................................................................30
                           ------------
         Section 1.05      Accounting Terms......................................................................30
                           ----------------

ARTICLE II  ESTABLISHMENT OF TRUST; TRANSFER OF LOAN ASSETS......................................................30
         Section 2.01      Creation and Funding of Trust; Transfer of Loan Assets................................30
                           ------------------------------------------------------
         Section 2.02      Conditions to Transfer of Loan Assets to Trust........................................32
                           ----------------------------------------------
         Section 2.03      Acceptance by Owner Trustee...........................................................33
                           ---------------------------
         Section 2.04      Conveyance of Substitute Loans........................................................34
                           ------------------------------
         Section 2.05      Release of Released Amounts...........................................................36
                           ---------------------------
         Section 2.06      Delivery of Documents in the Loan File; Recording of Assignments of Mortgage..........36
                           ----------------------------------------------------------------------------
         Section 2.07      Optional Purchase or Substitution by the Servicer for Prepaid or Charged-Off
                           -----------------------------------------------------------------------------
                           Loans.................................................................................37
                           -----
         Section 2.08      Certification by Indenture Trustee; Possession of Loan Files..........................38
                           ------------------------------------------------------------

ARTICLE III  REPRESENTATIONS AND WARRANTIES......................................................................39
         Section 3.01      Representations and Warranties Regarding the Trust Depositor..........................40
                           ------------------------------------------------------------
         Section 3.02      Representations and Warranties Regarding Each Loan and as to Certain Loans in the
                           ----------------------------------------------------------------------------------
                           Aggregate.............................................................................43
                           ---------
         Section 3.03      Representations and Warranties Regarding the Initial Loans in the Aggregate...........44
                           ---------------------------------------------------------------------------
         Section 3.04      Representations and Warranties Regarding the Loan Files...............................44
                           -------------------------------------------------------
         Section 3.05      Representations and Warranties Regarding Concentrations of Initial Loans..............44
                           ------------------------------------------------------------------------
         Section 3.06      [Reserved]............................................................................45
                            --------
         Section 3.07      Representations and Warranties Regarding the Servicer.................................45
                           -----------------------------------------------------
         Section 3.08      Representations and Warranties of the Backup Servicer.................................46
                           -----------------------------------------------------

ARTICLE IV  PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS..........................................47
         Section 4.01      Custody of Loans......................................................................47
                           ----------------
         Section 4.02      Filing................................................................................47
                           ------
         Section 4.03      Changes in Name, Corporate Structure or Location......................................48
                           ------------------------------------------------
         Section 4.04      [Reserved]............................................................................48
                            --------
         Section 4.05      Costs and Expenses....................................................................48
                           ------------------
         Section 4.06      Sale Treatment........................................................................48
                           --------------
         Section 4.07      Separateness from Trust Depositor.....................................................49
                           ---------------------------------
</TABLE>

                                       i

<PAGE>

<TABLE>
<S>                                                                                                             <C>
ARTICLE V  SERVICING OF LOANS....................................................................................49
         Section 5.01      Appointment and Acceptance............................................................49
                           --------------------------
         Section 5.02      Duties of the Servicer................................................................49
                           ----------------------
         Section 5.03      Liquidation of Loans..................................................................52
                           --------------------
         Section 5.04      Fidelity Bond; Insurance..............................................................53
                           ------------------------
         Section 5.05      Maintenance of Hazard Insurance.......................................................54
                           -------------------------------
         Section 5.06      Collection of Certain Loan Payments...................................................54
                           -----------------------------------
         Section 5.07      Access to Certain Documentation and Information Regarding the Loans...................55
                           -------------------------------------------------------------------
         Section 5.08      Satisfaction of Mortgages and Collateral and Release of Loan Files....................55
                           ------------------------------------------------------------------
         Section 5.09      Scheduled Payment Advances............................................................56
                           --------------------------
         Section 5.10      Title, Management and Disposition of Foreclosed Property..............................57
                           --------------------------------------------------------
         Section 5.11      Servicing Compensation................................................................57
                           ----------------------
         Section 5.12      Assignment; Resignation...............................................................58
                           -----------------------
         Section 5.13      Merger or Consolidation of Servicer...................................................58
                           -----------------------------------
         Section 5.14      Limitation on Liability of the Servicer and Others....................................58
                           --------------------------------------------------
         Section 5.15      The Backup Servicer...................................................................58
                           -------------------
         Section 5.16      Covenants of the Backup Servicer......................................................61
                           --------------------------------

ARTICLE VI  COVENANTS OF THE TRUST DEPOSITOR.....................................................................62
         Section 6.01      Legal Existence.......................................................................62
                           ---------------
         Section 6.02      Loans Not to Be Evidenced by Promissory Notes.........................................62
                           ---------------------------------------------
         Section 6.03      Security Interests....................................................................62
                           ------------------
         Section 6.04      Delivery of Principal Collections and Interest Collections............................62
                           ----------------------------------------------------------
         Section 6.05      Regulatory Filings....................................................................62
                           ------------------
         Section 6.06      Compliance with Law...................................................................63
                           -------------------
         Section 6.07      Activities............................................................................63
                           ----------
         Section 6.08      Indebtedness..........................................................................63
                           ------------
         Section 6.09      Guarantees............................................................................63
                           ----------
         Section 6.10      Investments...........................................................................63
                           -----------
         Section 6.11      Merger; Sales.........................................................................64
                           -------------
         Section 6.12      Distributions.........................................................................64
                           -------------
         Section 6.13      Other Agreements......................................................................64
                           ----------------
         Section 6.14      Separate Legal Existence..............................................................64
                           ------------------------
         Section 6.15      Location; Records.....................................................................65
                           -----------------
         Section 6.16      Liability of Trust Depositor..........................................................65
                           ----------------------------
         Section 6.17      Bankruptcy Limitations................................................................66
                           ----------------------
         Section 6.18      Limitation on Liability of Trust Depositor and Others.................................66
                           -----------------------------------------------------
         Section 6.19      Insurance Policies....................................................................66
                           ------------------

ARTICLE VII  ESTABLISHMENT OF ACCOUNTS; DISTRIBUTIONS; RESERVE FUND..............................................67
         Section 7.01      Note Distribution Account and Reserve Fund............................................67
                           ------------------------------------------
         Section 7.02      Reserve Fund Deposit..................................................................68
                           --------------------
         Section 7.03      Principal and Interest Account........................................................68
                           ------------------------------
         Section 7.04      Securityholder Distributions..........................................................71
                           ----------------------------
         Section 7.05      Allocations and Distributions.........................................................71
                           -----------------------------
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                              <C>
         Section 7.06      Determination of LIBOR................................................................73
                           ----------------------

ARTICLE VIII  SERVICER DEFAULT; SERVICE TRANSFER.................................................................74
         Section 8.01      Servicer Default......................................................................74
                           ----------------
         Section 8.02      Servicer Transfer.....................................................................75
                           -----------------
         Section 8.03      Appointment of Successor Servicer; Reconveyance; Successor Servicer to Act............76
                           --------------------------------------------------------------------------
         Section 8.04      Notification to Securityholders.......................................................77
                           -------------------------------
         Section 8.05      Effect of Transfer....................................................................78
                           ------------------
         Section 8.06      Database File.........................................................................78
                           -------------
         Section 8.07      Waiver of Defaults....................................................................78
                           ------------------
         Section 8.08      Responsibilities of the Successor Servicer............................................78
                           ------------------------------------------
         Section 8.09      Rating Agency Condition for Servicer Transfer.........................................79
                           ---------------------------------------------
         Section 8.10      Appointment of Successor Backup Servicer; Successor Backup Servicer to Act............79
                           --------------------------------------------------------------------------

ARTICLE IX  REPORTS .............................................................................................80
         Section 9.01      Quarterly Reports.....................................................................80
                           -----------------
         Section 9.02      Officer's Certificate.................................................................80
                           ---------------------
         Section 9.03      Other Data............................................................................81
                           ----------
         Section 9.04      Annual Report of Accountants..........................................................81
                           ----------------------------
         Section 9.05      Annual Statement of Compliance from Servicer..........................................81
                           --------------------------------------------
         Section 9.06      [Reserved]............................................................................81
                            --------
         Section 9.07      Reports of Foreclosure and Abandonment of Mortgaged Property..........................82
                           ------------------------------------------------------------
         Section 9.08      Notices...............................................................................82
                           -------
         Section 9.09      Indenture Trustee's Right to Examine Servicer Records and Audit Operations............82
                           --------------------------------------------------------------------------
         Section 9.10      Reports to the Indenture Trustee; Principal and Interest Account Statements...........82
                           ---------------------------------------------------------------------------

ARTICLE X  TERMINATION ..........................................................................................83
         Section 10.01     Sale of Loan Assets...................................................................83
                           -------------------
         Section 10.02     Termination...........................................................................83
                           -----------

ARTICLE XI  REMEDIES UPON MISREPRESENTATION; REPURCHASE OPTION...................................................84
         Section 11.01     Repurchases of, or Substitution for, Loans for Breach of Representations and
                           -----------------------------------------------------------------------------
                           Warranties............................................................................84
                           ----------
         Section 11.02     Reassignment of Repurchased or Substituted Loans......................................84
                           ------------------------------------------------

ARTICLE XII  INDEMNITIES ........................................................................................85
         Section 12.01     Indemnification by Servicer...........................................................85
                           ---------------------------
         Section 12.02     Indemnification by Trust Depositor....................................................85
                           ----------------------------------

ARTICLE XIII  MISCELLANEOUS......................................................................................86
         Section 13.01     Amendment.............................................................................86
                           ---------
         Section 13.02     Protection of Title to Trust..........................................................87
                           ----------------------------
         Section 13.03     Governing Law.........................................................................87
                           -------------
</TABLE>

                                      iii

<PAGE>

<TABLE>
<S>                                                                                                              <C>
         Section 13.04     Notices...............................................................................87
                           -------
         Section 13.05     Severability of Provisions............................................................90
                           --------------------------
         Section 13.06     Third Party Beneficiaries.............................................................90
                           -------------------------
         Section 13.07     Counterparts..........................................................................90
                           ------------
         Section 13.08     Headings..............................................................................91
                           --------
         Section 13.09     No Bankruptcy Petition; Disclaimer....................................................91
                           ----------------------------------
         Section 13.10     Jurisdiction..........................................................................92
                           ------------
         Section 13.11     Tax Characterization..................................................................92
                           --------------------
         Section 13.12     Prohibited Transactions with Respect to the Trust.....................................92
                           -------------------------------------------------
         Section 13.13     [Reserved]............................................................................92
                            --------
         Section 13.14     Limitation of Liability of Owner Trustee..............................................92
                           ----------------------------------------
         Section 13.15     Payments with respect to Partially Funded Term Loans, Traditional Revolving Loans
                           ----------------------------------------------------------------------------------
                           and Reducing Revolving Loans..........................................................93
                           ----------------------------
         Section 13.16     No Partnership........................................................................93
                           --------------
         Section 13.17     Successors and Assigns................................................................94
                           ----------------------
         Section 13.18     Acts of Holders.......................................................................94
                           ---------------
         Section 13.19     Duration of Agreement.................................................................94
                           ---------------------
         Section 13.20     Limited Recourse......................................................................94
                           ----------------
         Section 13.21     Confidentiality.......................................................................94
                           ---------------
</TABLE>

                              EXHIBITS AND APPENDIX
                              ---------------------

<TABLE>
<S>               <C>                                                            <C>
Exhibit A         Form of Assignment                                               A-1
Exhibit B         Form of Closing Certificate of Trust Depositor                   B-1
Exhibit C         Form of Closing Certificate of Servicer/Originator               C-1
Exhibit D         Form of Liquidation Report                                       D-1
Exhibit E         Form of Principal and Interest Account Letter Agreement          E-1
Exhibit F         Form of Certificate Regarding Repurchased Loans                  F-1
Exhibit G         List of Loans                                                    G-1
Exhibit H         Form of Quarterly Servicer Report                                H-1
Exhibit I         Form of Subsequent Transfer Agreement                            I-1
Exhibit J         Form of Subsequent Purchase Agreement                            J-1
Exhibit K         Credit and Collection Policy                                     K-1
Exhibit L-1       Form of Initial Certification                                    L-1
Exhibit L-2       Form of Final Certification                                      L-2
Exhibit M         Form of Request For Release Of Documents                         M-1

Appendix A        Material Mortgage Loan Criteria                                App-1
</TABLE>

                                       iv

<PAGE>

                          SALE AND SERVICING AGREEMENT
                          ----------------------------

     THIS SALE AND SERVICING AGREEMENT, dated as of December 1, 2001, is by and
among:

     (1)  MCG COMMERCIAL LOAN TRUST 2001-1, a business trust created and
          existing under the laws of the State of Delaware (together with its
          successors and assigns, the "Trust");
                                       -----

     (2)  MCG FINANCE III, LLC, a Delaware limited liability company, as the
          trust depositor (together with its successor and assigns, in such
          capacity, the "Trust Depositor");
                         ----- ---------

     (3)  MCG CAPITAL CORPORATION, a Delaware corporation (together with its
          successors and assigns, "MCG"), as the servicer (together with its
                                   ---
          successor and assigns, in such capacity, the "Servicer"), and as the
                                                        --------
          originator (together with its wholly-owned subsidiary, successor and
          assigns, in such capacity, the "Originator"); and
                                          ----------

     (4)  WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION (together with its
          successors and assigns, "Wells Fargo"), not in its individual capacity
                                   -----------
          but as the indenture trustee (together with its successors and
          assigns, in such capacity, the "Indenture Trustee"), and not in its
                                          -----------------
          individual capacity but as the backup servicer (together with its
          successors and assigns, in such capacity, the "Backup Servicer").
                                                         ---------------

                                 R E C I T A L S
                                 ---------------

     WHEREAS, in the regular course of its business, the Originator originates
and/or otherwise acquires Loans (as defined herein);

     WHEREAS, the Trust Depositor acquired the Initial Loans from the Originator
and may acquire from time to time thereafter certain Substitute Loans (such
Initial Loans and Substitute Loans, together with certain related property as
more fully described herein, being the Loan Assets as defined herein);

     WHEREAS, it was a condition to the Trust Depositor's acquisition of the
Initial Loans from the Originator that the Originator make certain
representations and warranties regarding the Loan Assets for the benefit of the
Trust Depositor as well as the Trust;

     WHEREAS, on the Closing Date (as defined herein), the Trust Depositor will
fund the Trust by selling, conveying and assigning all its right, title and
interest in such Loan Assets and certain other assets to the Trust;

                                       1

<PAGE>

     WHEREAS, the Trust is willing to purchase and accept assignment of the Loan
Assets (as defined herein) from the Trust Depositor pursuant to the terms
hereof; and

     WHEREAS, the Servicer is willing to service the Loan Assets for the benefit
and account of the Trust pursuant to the terms hereof.

     NOW, THEREFORE, based upon the above recitals, the mutual premises and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

     Section 1.01 Definitions.
                  -----------

     Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:

"Addition Notice" means, with respect to any transfer of Substitute Loans to the
 ---------------
Trust in accordance with Section 2.04 (and the Trust Depositor's corresponding
                         ------------
prior purchase of such Loans from the Originator), a notice, which shall be
given at least ten (10) Business Days prior to the related Subsequent Transfer
Date, identifying the Substitute Loans to be transferred, the Outstanding Loan
Balance of such Substitute Loans and the related Substitution Event (with
respect to an identified Loan or Loans then in the Loan Pool) to which such
Substitute Loan relates, with such notice to be signed both by the Trust
Depositor and the Originator.

"Additional Principal Amount" means, with respect to any Remittance Date, an
 ---------------------------
amount equal to, but in no event less than zero, the excess of the Aggregate
Outstanding Principal Balance prior to any distribution on such day over the sum
of (i) the Aggregate Outstanding Loan Balance as of the last Business Day of the
immediately preceding Due Period and (ii) all Principal Collections on deposit
in the Note Distribution Account as of the last day of the immediately preceding
Due Period.

"Additional Servicing Fee" means an amount, in addition to the Servicing Fee,
  -----------------------
necessary to induce a Successor Servicer to serve as Servicer hereunder.

"Affiliate" of any specified Person means any other Person controlling or
  --------
controlled by, or under common control with, such specified Person. For the
purposes of this definition, "control" (including the terms "controlling",
"controlled by" and "under common control with") when used with respect to any
specified Person means the possession, direct or indirect, of the power to vote
10% or more of the voting securities of such Person or to direct or cause the
direction of the management and policies of such Person whether through the
ownership of voting securities, by contract or otherwise. Each of the Indenture
Trustee and the Owner Trustee may conclusively

                                       2

<PAGE>

presume that a Person is not an Affiliate of another Person unless a Responsible
Officer of such trustee has actual knowledge to the contrary.

"Aggregate Outstanding Loan Balance" means, as of any date, the sum of the
 ----------------------------------
Outstanding Loan Balance for each Loan owned by the Trust.

"Aggregate Outstanding Principal Balance" means, as of any date of
 ---------------------------------------
determination, the sum of the Outstanding Principal Balances of each Class
outstanding on such date.

"Agreement" means this Sale and Servicing Agreement, as amended, modified,
  --------
waived, supplemented or restated from time to time in accordance with the terms
hereof.

"Assignment" means each Assignment, substantially in the form of Exhibit A,
 ----------                                                       --------
relating to an assignment, transfer and conveyance of Loans and related property
by the Trust Depositor to the Trust.

"Assignment of Mortgage" means, with respect to each Loan that is a Material
  ---------------------
Mortgage Loan, an assignment of the related Mortgage, notice of transfer or
equivalent instrument sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect of record the transfer of the
Mortgage of the related Loan to the Indenture Trustee.

"Backup Servicer" means the Person acting as Backup Servicer hereunder, its
  --------------
successors in interest and any Successor Backup Servicer hereunder.

"Backup Servicer Termination Notice" has the meaning given to such term in
  ---------------------------------
Section 8.10.
------------

"Backup Servicer Transfer" has the meaning given to such term in Section 8.10.
 ------------------------                                        ------------

"Backup Servicing Fee" has the meaning given to such term in the fee letter,
  -------------------
dated as of the date hereof, among the Originator, the Trust Depositor, the
Trust and the Backup Servicer.

"BIF" means the Bank Insurance Fund, or any successor thereto.
 ---

"Business Day" means any day other than (i) a Saturday or a Sunday, or (ii) a
 ------------
day on which banking institutions in the States of Virginia, New York or
Minnesota are authorized or obligated, by law or executive order, to be closed.

"Business Trust Statute" means Chapter 38 of Title 12 of the Delaware Code, 12
 ----------------------
Del. C.Sections.3801 et seq., as the same maybe amended from time to time.
------

"Certificate" means the MCG Commercial Loan Trust 2001-1 Certificates
 -----------
representing a beneficial equity interest in the Trust and issued pursuant to
the Trust Agreement.

"Certificate Register" has the meaning given to such term in the Trust
 --------------------
Agreement.

"Certificateholder" means the registered holder of the Certificate.
 -----------------

                                       3

<PAGE>

"Charged-Off Loan" means a Loan in the Loan Pool with respect to which there has
 ----------------
occurred one or more of the following: (i) the occurrence of both (a) any
portion of a payment of interest on or principal of such Loan is not paid when
due (without giving effect to any grace period) and (b) within one hundred
eighty (180) days of when such delinquent payment was first due, all
delinquencies have not been cured, (ii) an Insolvency Event has occurred with
respect to the related Obligor, (iii) the related Obligor has suffered any
material adverse change that materially affects its viability as a going
concern, or (iv) the Servicer has determined, in its sole discretion, in
accordance with the Credit and Collection Policy, that such Loan is not
collectible.

"Class" means any of the group of Notes identified herein as, as applicable, the
 -----
Class A Notes, the Class B Notes and the Class C Notes.

"Class A Interest Amount" means, for each Interest Accrual Period, an amount
 -----------------------
equal the product of (i) the Class A Note Interest Rate as of the first (1st)
day of such Interest Accrual Period, (ii) the Outstanding Principal Balance of
the Class A Notes as of the first (1st) day of such Interest Accrual Period
(after giving effect to all distributions made on such day), and (iii) a
fraction, the numerator of which is the number of days in such Interest Accrual
Period and the denominator of which is 360.

"Class A Note Interest Rate" means the annual rate of interest payable with
 --------------------------
respect to the Class A Notes, which shall be equal to 2.50375% for the first
Remittance Date and thereafter shall be equal to LIBOR plus .60%.

"Class A Noteholder" means each Person in whose name a Class A Note is
 ------------------
registered in the Note Register.

"Class A Notes" means MCG Commercial Loan Trust Notes, Series 2001-1, Class A
 -------------
Notes, issued pursuant to the Indenture.

"Class A Trigger" means any Remittance Date on or after April 20, 2007, on which
 ---------------
any of the Class A Notes shall be outstanding.

"Class B Accrued Payable" means, for any Remittance Date with respect to which
 -----------------------
the Class B Interest Amount is calculated using clause (ii)(b) of the definition
                                                 -------------
thereof, an amount equal to the excess, if any, of (i) the amount that would
have been calculated as the Class B Interest Amount on such Remittance Date if
the calculation was made using clause (ii)(a) of the definition of Class B
                                -------------
Interest Amount and not clause (ii)(b) of such definition over (ii) the amount
                         -------------
calculated as the Class B Interest Amount on such Remittance Date, together with
the unpaid portion of any such excess from prior Remittance Dates (and interest
accrued thereon at the then applicable Class B Note Interest Rate).

"Class B Interest Amount" means, for each Interest Accrual Period, an amount
 ----------------------
equal to the product of (i) the Class B Note Interest Rate as of the first (1st)
day of such Interest Accrual Period, (ii) the lesser of (a) the Outstanding
Principal Balance of the Class B Notes as of the first (1st) day of such
Interest Accrual Period (after giving effect to all distributions made on such

                                       4

<PAGE>

day) and (b) greater of (1) the excess, if any, of the Aggregate Outstanding
Loan Balance as of the last day of the Due Period immediately preceding the
start of such Interest Accrual Period over the Outstanding Principal Balance of
the Class A Notes as of the first (1st) day of such Interest Accrual Period
(after giving effect to all distributions made on such day) or (2) zero, and
(iii) a fraction, the numerator of which is the number of days in such Interest
Accrual Period and the denominator of which is 360.

"Class B Note Interest Rate" means the annual rate of interest payable with
 --------------------------
respect to the Class B Notes, which shall be equal to 3.65375% for the first
Remittance Date and thereafter shall be equal to LIBOR plus 1.75% per annum.

"Class B Noteholder" means each Person in whose name a Class B Note is
 ------------------
registered in the Note Register.

"Class B Notes" means MCG Commercial Loan Trust Notes, Series 2001-1, Class B
 -------------
Notes, issued pursuant to the Indenture.

"Class B Trigger" means any Remittance Date on or after October 20, 2007, on
 ---------------
which any of the Class B Notes shall be outstanding.

"Class C Noteholder" means each Person in whose name a Class C Note is
 ------------------
registered in the Note Register.

"Class C Notes" means MCG Commercial Loan Trust Notes, Series 2001-1, Class C
 -------------
Notes, issued pursuant to the Indenture.

"Closing Date" means December 27, 2001.
 ------------

"Code" means the Internal Revenue Code of 1986, as amended, or any successor
 ----
legislation thereto.

"Collateral" means the assets of each Obligor or others that have been pledged
 ----------
as security for each Loan, including, but not limited to, real or personal
property, accounts receivable, general intangibles, intellectual property
rights, equipment, inventory, and a pledge of equity.

"Commission" means the United States Securities and Exchange Commission.
 ----------

"Computer Records" means the computer records generated by the Servicer that
 ----------------
provide information relating to the Loans and that were used by the Originator
in selecting the Loans conveyed to the Trust Depositor pursuant to Section 2.01
                                                                    -----------
(and any Substitute Loans conveyed to the Trust Depositor pursuant to Section
                                                                      -------
2.04).
-----

"Contractual Obligation" means, with respect to any Person, any provision of any
 ----------------------
securities issued by such Person or any indenture, mortgage, deed of trust,
contract, undertaking, agreement, instrument or other document to which such
Person is a party or by which it or any of its property is bound or is subject.

                                       5

<PAGE>

"Corporate Trust Office" means, with respect to the Indenture Trustee or Owner
 ----------------------
Trustee, as applicable, the office of the Indenture Trustee or Owner Trustee at
which at any particular time its corporate trust business shall be principally
administered, which offices at the date of the execution of this Agreement are
located at the addresses set forth in Section 13.04.
                                      -------------

"CP Transaction" means the transactions contemplated by the Note Purchase
 --------------
Agreement, dated as of June 1, 2000, as amended, among MCG Master Trust, the
Servicer, Variable Funding Capital Corporation, and FUSI, and documents executed
in connection therewith, as such "Note Purchase Agreement" and documents may be
amended, modified, waived, supplemented or restated from time to time.

"Credit and Collection Policy" means the written credit and collection policy of
 ----------------------------
the Originator and the Servicer in effect on the Closing Date and attached
hereto as Exhibit K, as amended or supplemented from time to time in accordance
          ---------
with subsection 5.02(m) of this Agreement; and with respect to any Successor
      -----------------
Servicer, the collection policies and procedures of such Person at the time such
Person becomes Successor Servicer.

"Curtailment" means, with respect to a Loan, any payment of principal received
 -----------
by the Trust during a Due Period as part of a payment allocable to a Loan that
is in excess of the principal portion of the Scheduled Payment due for such Due
Period and which is not intended to satisfy the Loan in full, nor is intended to
cure a delinquency.

"Cutoff Date" means either or both (as the context may require) of the Initial
 -----------
Cutoff Date and any Subsequent Cutoff Date as applicable to the Loan or Loans in
question.

"Definitive Notes" shall have the meaning specified in the Indenture.
 ----------------

"Determination Date" means that day of each month that is the third (3rd)
 ------------------
Business Day prior to a Remittance Date.

"Dollar" and "$" means lawful currency of the United States.
 ------       -

"Due Period" means, with respect to each Remittance Date, the three (3) calendar
 ----------
months preceding the month in which such Remittance Date occurs (or, for the
first Remittance Date, the number of months in the period beginning on the
Initial Cutoff Date and ending on the last day of the month immediately
preceding the first Remittance Date).

"Eligible Deposit Account" means either (a) a segregated account with a
 ------------------------
Qualified Institution, or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States or any one of the states thereof, including the District of
Columbia (or any domestic branch of a foreign bank), and acting as a trustee for
funds deposited in such account, so long as any of the securities of such
depository institution shall have a credit rating from in the case of Fitch of
at least "F-1+", in the case of Moody's in one of its short-term credit rating
categories that signifies investment grade, and in the case of S&P a

                                       6

<PAGE>

commercial paper short-term debt rating of "A-1+" and a long-term unsecured debt
rating of "AA- ".

"Eligible Loan" means, on and as of the related Transfer Date, a Loan as to
 -------------
which each of the following is true:

          (i) the information with respect to such Loan set forth in the List of
     Loans delivered to the Indenture Trustee is true and correct;

          (ii) all of the original or certified documentation required to be
     delivered to the Indenture Trustee (including all material documents
     related thereto) with respect to such Loan has been or will be delivered to
     the Indenture Trustee on the related Transfer Date or as otherwise provided
     in the Section 2.06 of this Agreement;
            ------------

          (iii) such Loan was originated and underwritten, or purchased and
     re-underwritten, by the Originator and such Loan is being serviced by the
     Servicer, in each case in accordance with the Credit and Collection Policy;

          (iv) such Loan is denominated in Dollars and the related primary
     Obligor is located in the United States (including Puerto Rico or the U.S.
     Virgin Islands);

          (v) the Loan Rate for such Loan is either a fixed rate or adjusts
     periodically to equal the then applicable index plus the margin set forth
     in the related Underlying Note or the related credit agreement;

          (vi) with respect to each such Loan that is a Material Mortgage Loan,
     such Loan satisfies each of the criteria set forth in Appendix A;
                                                           ----------

          (vii) immediately prior to the transfer and assignment contemplated by
     the Loan Sale Agreement, the Originator held, and immediately prior to the
     transfer and assignment contemplated by this Agreement the Trust Depositor
     held, good and indefeasible title to, and was the sole owner of, the Loans
     being transferred to the Trust Depositor and Trust, respectively, subject
     to no Liens or rights of others except for Permitted Liens and Liens which
     will be released simultaneously with such transfer and assignment and Liens
     provided by the Transfer and Servicing Agreements; and immediately upon the
     transfer and assignment contemplated by this Agreement, the Trust will hold
     good and indefeasible title to, and be the sole owner of, such Loan subject
     to no Liens or rights of others, except for Permitted Liens;

          (viii) as of its Transfer Date, such Loan is not delinquent in payment
     and, since its origination, except for two (2) Loans with an Outstanding
     Loan Balance as of the Initial Cutoff Date of no more than 5.6% of the
     Aggregate Outstanding Loan Balance, such Loan has never been more than
     sixty (60) days delinquent in payment, in each case after giving effect to
     any grace period pursuant to the Credit and Collection Policy;

                                       7

<PAGE>

          (ix) (a) such Loan is not subject to any right of rescission, set-off,
     counterclaim or defense, including the defense of usury, nor will the
     operation of any of the terms of the Underlying Note or any related
     security agreement, or the exercise of any right thereunder, render either
     the Underlying Note or any related security agreement unenforceable in
     whole or in part (except for provisions in the security agreement that if
     held to be unenforceable would not have a material adverse effect on the
     ability of the Servicer to realize the value of the Collateral securing the
     related Loan and except for provisions of the other Loan documentation that
     if held to be unenforceable would not have a material adverse effect on the
     ability of the Servicer to collect the entire principal and interest
     thereunder), or subject to any right of rescission, set-off, counterclaim
     or defense, including the defense of usury, (b) such Loan contains an
     effective provision substantially to the effect that the related Obligor
     agrees to make its payments without any deduction, offset, netting,
     recoupment, defenses, reservation of rights or counterclaim, and (c) no
     right of rescission, set-off, counterclaim or defense has been asserted
     with respect to such Loan;

          (x) such Loan at the time it was made complied, and as of its Transfer
     Date complies, in all material respects with Requirements of Law,
     including, without limitation, usury, equal credit opportunity, disclosure
     and recording laws;

          (xi) there is one or more originally signed Underlying Notes in effect
     for each Loan, which in the aggregate evidence the portion of the Loan
     being assigned to the Trust and which Underlying Notes have been delivered
     to the Indenture Trustee; provided, however, if the Originator funds a Loan
                               --------  -------
     in multiple installments, there may be one originally signed Underlying
     Note for each installment;

          (xii) the Underlying Note with respect to such Loan and any agreement
     pursuant to which Collateral is pledged is the legal, valid and binding
     obligation of the maker thereof and is enforceable in accordance with its
     terms, except only as such enforcement may be limited by bankruptcy,
     insolvency, reorganization, moratorium or other similar laws affecting the
     enforcement of creditors' rights generally and by general principles of
     equity (whether considered in a proceeding or action in equity or at law)
     (except for provisions in the security agreement that if held to be
     unenforceable would not have a material adverse effect on the ability of
     the Servicer to realize the value of the Collateral securing the related
     Loan and except for provisions of the other Loan documentation that if held
     to be unenforceable would not have a material adverse effect on the ability
     of the Servicer to collect the entire principal and interest thereunder),
     none of which will prevent the ultimate realization of the security
     provided by the Collateral or other agreement, and the Obligors to each
     Loan had full legal capacity to execute all Loan Documents and convey the
     estate therein purported to be conveyed;

          (xiii) the terms of the Underlying Note with respect to such Loan and
     the security agreement pursuant to which Collateral was pledged have not
     been impaired, altered or modified in any material respect, except by a
     written instrument which has been recorded, if necessary, to protect the
     interest of the Noteholders and the Certificateholders and which has been
     delivered to the Indenture Trustee;

                                       8

<PAGE>

          (xiv) there is no obligation on the part of the Trust Depositor or any
     other party (except for any guarantor of a Loan) to make Scheduled Payments
     in addition to those made by the Obligor;

          (xv) to the best knowledge of the Trust Depositor, the documents
     signed by a responsible officer of the Originator constituting a part of
     the Loan File as of the date hereof do not (taken as a whole together with
     the other components of the Loan File) contain any untrue statement of a
     material fact or omit to state a material fact necessary to make the
     factual statements contained therein not misleading in light of the
     circumstances under which they were made;

          (xvi) such Loan was originated to a business located in the state
     identified in the List of Loans and the primary Collateral securing each
     Loan is located in the United States;

          (xvii) all parties which have had any interest in such Loan, whether
     as mortgagee, assignee, pledgee or otherwise, are (or, during the period in
     which they held and disposed of such interest, were) (1) in compliance with
     any and all applicable licensing requirements of the laws of the state
     wherein any Collateral is located, and (2)(A) organized under the laws of
     such state, or (B) qualified to do business in such state, or (C) federal
     savings and loan associations or national banks having principal offices in
     such state, or (D) not doing business in such state, except when the
     failure to be in compliance or to be so qualified would not materially and
     adversely effect the value of such Loan or the enforceability of such Loan;

          (xviii) as of the related Transfer Date, there is no default, breach,
     violation or event of acceleration existing under the Underlying Note and
     no event which, with the passage of time or with notice and the expiration
     of any grace or cure period, would constitute a default, breach, violation
     or event of acceleration (except for such defaults, breaches and violations
     that would not have a material adverse effect on the ability of the
     Servicer to collect the entire principal and interest thereunder and would
     not have a material adverse effect on the ability of the Servicer to
     realize the value of the Collateral securing the related Loan);

          (xix) all parties to the Underlying Note and any related Mortgage or
     other document pursuant to which Collateral was pledged had legal capacity
     to execute the Underlying Note and any such Mortgage or other document and
     each Underlying Note and Mortgage or other document have been duly and
     properly executed by such parties;

          (xx) such Loan was not originated to a natural person;

          (xxi) the related Underlying Note, credit agreement, security
     agreements, and mortgages, if any, and UCC-1 financing statement and/or
     intellectual property security agreement filed or to be filed with respect
     to such Collateral collectively create a valid and subsisting first
     priority lien of record on such Collateral subject in all cases to such

                                       9

<PAGE>

     exceptions that are generally acceptable to lending institutions in
     connection with their regular commercial lending activities, and such other
     exceptions to which similar Collateral is commonly subject and which do not
     individually, or in the aggregate, materially and adversely affect the
     benefits of the security intended to be provided by such Underlying Note,
     security agreement and UCC-1 financing statement;

          (xxii) except with respect to subordinated loans and senior loans to
     the same Obligor, multiple Loans originated to the same Obligor contain
     standard cross-collateralization and cross-default provisions;

          (xxiii) such Loan, along with the related Loan File, constitutes
     either a "general intangible," an "instrument," an "account," "investment
     property" or "chattel paper" within the meaning of the UCC;

          (xxiv) at the time such Loan was originated, and on its Transfer Date,
     the related Obligor was not subject to a bankruptcy proceeding and was not
     in financial distress;

          (xxv) such Loan contains an effective provision substantially to the
     effect that the related Obligor agrees to make its payments without any
     deduction, offset, netting, recoupment, defenses, reservation of rights or
     counterclaim;

          (xxvi) either no consent or waiver is required from the Obligor or any
     other party in connection with the transfer of such Loan pursuant to the
     terms of this Agreement or each such consent or waiver has been obtained;
     and

          (xxvii) such Loan has an Investment Rating of 3.0 or better except for
     one Initial Loan representing less than 1% of the Aggregate Outstanding
     Loan Balance.

"Eligible Repurchase Obligations" means repurchase obligations with respect to
 -------------------------------
any security that is a direct obligation of, or fully guaranteed by, the United
States or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States, in either case entered
into with a depository institution or trust company (acting as principal)
described in clauses (c)(ii) and (c)(iv) of the definition of Permitted
             ---------------     -------
Investments.

"Event of Default" shall have the meaning specified in Section 5.01 of the
 ----------------                                       -----------
Indenture.

"Exchange Act" means the Securities Exchange Act of 1934, as amended or
 ------------
supplemented from time to time.

"FDIC" shall mean the Federal Deposit Insurance Corporation and any successor
 ----
thereto.

"Fitch" means Fitch, Inc. or any successor thereto.
 -----

"Foreclosed Property" means Collateral acquired by the Trust for the benefit of
 -------------------
the Noteholders and Certificateholders in foreclosure or by deed in lieu of
foreclosure or by other legal process.

                                       10

<PAGE>

"Foreclosed Property Disposition" means the final sale of a Foreclosed Property
 -------------------------------
or of Repossessed Collateral. The proceeds of any "Foreclosed Property
Disposition" constitute part of the definition of Liquidation Proceeds.

"Fully Funded Term Loan" means a Loan that is a closed-end, fully funded Loan a
 ----------------------
of the Cutoff Date.

"FUSI" means First Union Securities, Inc. and its successors and assigns.
 ----

"Governmental Authority" means, with respect to any Person, any nation or
 ----------------------
government, any state or other political subdivision thereof, any central bank
(or similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any court or arbitrator having jurisdiction over
such Person.

"Heller Transaction" means that certain $400,000,000 senior secured multi-bank
 ------------------
credit facility with Heller Financial Inc., as agent, and secured by all of the
assets of MCG Finance Corporation.

"Highest Required Investment Category" means (i) with respect to ratings
 ------------------------------------
assigned by Fitch (if such investment is rated by Fitch), F1+ for short-term
instruments and AAA for long-term instruments, (ii) with respect to ratings
assigned by Moody's, A2 or P-1 for one (1) month instruments, A1 and P-1 for
three (3) month instruments, Aa3 and P-1 for six (6) month instruments and Aaa
and P-1 for instruments with a term in excess of six (6) months, and (iii) with
respect to rating assigned by S&P, A-1+ for short-term instruments and AAA for
long-term instruments.

"Holder" means (i) with respect to a Certificate, the Person in whose name such
-------
Certificate is registered in the Certificate Register, and (ii) with respect to
a Note, the Person in whose name such Note is registered in the Note Register.

"Indebtedness" means, with respect to any Person at any date, (a) all
 ------------
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current liabilities incurred in the
ordinary course of business and payable in accordance with customary trade
practices) or which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under capital leases, (c) all
obligations of such Person in respect of acceptances issued or created for the
account of such Person, and (d) all liabilities secured by any Lien on any
property owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof.

"Indenture" means the Indenture, dated as of December 1, 2001, between the Trust
 ---------
and the Indenture Trustee.

"Indenture Collateral" has the meaning given to such term in the "granting
 --------------------
clause" of the Indenture.

                                       11

<PAGE>

"Indenture Trustee" means the Person acting as Indenture Trustee under the
 -----------------
Indenture, its successors in interest and any successor trustee under the
Indenture.

"Indenture Trustee Fee" has the meaning given to such term in the fee letter,
 ---------------------
dated as of the date hereof, among the Originator, the Trust Depositor, the
Trust and the Indenture Trustee.

"Independent" means, when used with respect to any specified Person, the Person
 -----------
(i) is in fact independent of the Trust, any other obligor on the Notes, the
Trust Depositor and any Affiliate of any of the foregoing Persons, (ii) does not
have any direct financial interest or any material indirect financial interest
in the Trust, any such other obligor, the Trust Depositor or any Affiliate of
any of the foregoing Persons and (iii) is not connected with the Trust, any such
other obligor, the Trust Depositor or any Affiliate of any of the foregoing
Persons as an officer, employee, trustee, partner, director or person performing
similar functions.

"Ineligible Loan" has the meaning given to such term in Section 11.01.
 ---------------                                        -------------

"Initial Aggregate Outstanding Loan Balance" means the Aggregate Outstanding
 ------------------------------------------
Loan Balance owned by the Trust as of the Initial Cutoff Date.

"Initial Aggregate Outstanding Principal Balance" means, collectively, the sum
 -----------------------------------------------
of the Initial Class A Principal Balance, the Initial Class B Principal Balance
and the Initial Class C Principal Balance, i.e., $353,631,391.

"Initial Class A Principal Balance" means $229,860,000.
 ---------------------------------

"Initial Class B Principal Balance" means $35,363,000.
 ---------------------------------

"Initial Class C Principal Balance" means $88,408,391.
 ---------------------------------

"Initial Cutoff Date" means the beginning of business on November 1, 2001 (or in
 -------------------
the case of payments of interest on the Loans, the first (1st) day of the month
in which the Closing Date occurs).

"Initial Loans" means those Loans conveyed to the Trust on the Closing Date and
 -------------
identified on the initial List of Loans required to be delivered pursuant to
subsection 2.02(iv).
 ------------------

"Insolvency Event" means, with respect to a specified Person, (a) the filing of
 ----------------
a decree or order for relief by a court having jurisdiction in the premises in
respect of such Person or any substantial part of its property in an involuntary
case under any applicable Insolvency Law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and such decree
or order shall remain unstayed or undismissed and in effect for a period of
sixty (60) consecutive days; or (b) the commencement by such Person of a
voluntary case under any applicable Insolvency Law now or hereafter in effect,
or the consent by such Person to the entry of an order for relief in an
involuntary case under such law, taking possession by a receiver, liquidator,
assignee, custodian,

                                       12

<PAGE>

trustee, sequestrator or similar official for such Person or for any substantial
part of this property, or the making by such Person of any general assignment
for the benefit of creditors, or the failure by such Person generally to pay its
debts as such debts become due, or the taking of action by such Person in
furtherance of any of the foregoing.

"Insolvency Laws" means the Bankruptcy Code of the United States and all other
 ---------------
applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments, or similar
debtor relief laws from time to time in effect affecting the rights of creditors
generally.

"Insolvency Proceeds" has the meaning given to such term in Section 10.01.
 -------------------                                        -------------

"Insurance Policy" means, with respect to any Loan, an insurance policy covering
 ----------------
physical damage to or loss of the related Collateral, including, but not limited
to, title, hazard, life and/or accident insurance policies.

"Insurance Proceeds" means, depending on the context, any amounts payable or any
 ------------------
payments made under any Insurance Policy covering a Loan, Collateral,
Repossessed Collateral or Foreclosed Property.

"Interest Accrual Period" means the period commencing on a Remittance Date (or
 -----------------------
the Closing Date with respect to the first Interest Accrual Period) and ending
on the day immediately preceding the next Remittance Date.

"Interest Collection Account" means a sub-account of the Principal and Interest
 ---------------------------
Account established pursuant to subsection 7.03(a).
                                ------------------

"Interest Collections" means, with respect to amounts deposited into the
 --------------------
Principal and Interest Account during any Due Period, (i) all payments received
on or after the first day of the month of the Closing Date on account of
interest on the Loans (including the deferred interest component of any
Payment-in-Kind Loan) and all late payment, default and waiver charges, (ii) (a)
Net Liquidation Proceeds, (b) Insurance Proceeds (other than amounts to be
applied to the restoration or repair of the related Collateral, or to be
released to the Obligor) and (c) Released Mortgaged Property Proceeds and any
other proceeds from any other Collateral securing the Loans (other than amounts
released to the Obligor), (iii) the interest portion of any amounts paid in
connection with the purchase or repurchase of any Loan and the interest portion
of the amount of any Substitute Loans, (iv) the interest portion of any
Scheduled Payment Advances that the Servicer determines to make, (v) the amount
of any losses incurred in connection with investments in Permitted Investments,
and (vi) investment earnings on funds held in the Principal and Interest
Account; provided, however, any amounts received by the Originator in connection
          -------  -------
with the purchase by Media Central LLC of the Loan to Brill Media Holdings will
not be deemed to be "Interest Collections."

"Interest Shortfall" means, with respect to the Class A Notes or the Class B
 ------------------
Notes, as applicable, the amount by which the interest paid to such Class on a
Remittance Date is less than the amount

                                       13

<PAGE>

due to such Class, together with accrued interest on such amount at the then
applicable Note Interest Rate for such Class.

"Investment Earnings" means the investment earnings (net of losses and
 -------------------
investment expenses) on amounts on deposit in the Principal and Interest
Account, the Note Distribution Account and the Reserve Fund, to be credited to
the Principal and Interest Account on applicable Remittance Date pursuant to
Section 7.03.
------------

"Investment Rating" means the rating (ranging from "Rating 1" to "Rating 5")
 -----------------
assigned to each Loan by the Servicer under and in accordance with the Credit
and Collection Policy.

"Legal Final Maturity Date" means February 20, 2013.
 -------------------------

"LIBOR" has the meaning given to such term in Section 7.06.
-----                                         ------------

"LIBOR Determination Date" means the date that is a London Banking Day
 ------------------------
immediately prior to the commencement of each related Interest Accrual Period.

"Lien" means any mortgage, deed of trust, pledge, hypothecation, assignment,
-----
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever, including, without limitation, any conditional sale or other
title retention agreement, and any financing lease having substantially the same
economic effect as any of the foregoing.

"Liquidation Proceeds" means, cash, including Insurance Proceeds, proceeds of
 --------------------
any Foreclosed Property Disposition, revenues received by the Servicer or the
Trust with respect to the conservation and disposition of a Foreclosed Property,
and any other amounts received by the Servicer or Trust in connection with the
liquidation of Charged-Off Loans, whether through trustee's sale, foreclosure
sale or otherwise.

"Liquidation Report" shall have the meaning given to such term in subsection
 ------------------                                               ----------
5.03(b).
-------

"List of Loans" means the list identifying each Loan constituting part of the
 -------------
Loan Assets, which list shall consist of the initial List of Loans reflecting
the Initial Loans transferred to the Trust on the Closing Date, together with
any Subsequent List of Loans amending the most current List of Loans reflecting
the Substitute Loans transferred to the Trust on the related Subsequent Transfer
Date (together with a deletion from such list of the related Loan or Loans
identified on the corresponding Addition Notice with respect to which a
Substitution Event has occurred), and which list in each case (a) identifies by
account number and Obligor name each Loan included in the Loan Pool, and (b)
sets forth as to each such Loan (i) the Outstanding Loan Balance as of the
Cutoff Date, and (ii) the maturity date, and which list (as in effect on the
Closing Date) is attached to this Agreement as Exhibit G.
                                               ---------

"Loan" means, to the extent transferred by the Trust Depositor to the Trust, an
 ----
individual loan or portion thereof made or purchased by the Originator to a
holding or operating company including, as applicable, Loan Assignments.

                                       14

<PAGE>

"Loan Assets" has the meaning given to such term in Section 2.01 (and 2.04, as
 -----------                                        ------------      ----
applicable in the case of Substitute Loans).

"Loan Assignment" means an assignment of a fractional undivided interest in an
 ---------------
Eligible Loan originated by third parties unaffiliated with the Originator.

"Loan Checklist" means the list delivered by the Trust Depositor to the
 --------------
Indenture Trustee pursuant to Section 2.06 of this Agreement that identifies the
                              ------------
items contained in the related Loan File.

"Loan Document" means, with respect to any Loan, the Underlying Note and any
 -------------
related credit agreement, security agreement, Mortgage, assignment of Loans,
guarantees and UCC financing statements and continuation statements (including
amendments or modifications thereof) executed by the Obligor thereof or by
another Person on the Obligor's behalf in respect of such Loan and Underlying
Note and, for each Loan that is a Material Mortgage Loan, an Assignment of
Mortgage, and, for all Loans with an Underlying Note, an assignment (which may
be by allonge); provided, however, "Loan Document" shall not include any
                --------  -------
warrants, options or other equity instruments issued in the name of MCG or its
Affiliates in connection with such Loan and included in the Retained Interest.

"Loan File" means, with respect to:
 ---------

     (i) all Loans in the aggregate:

          (a) a blanket assignment of all of the Trust Depositor's right, title
     and interest in and to all Collateral securing the Loans at any time
     transferred to the Trust including without limitation, all rights under
     applicable guarantees and Insurance Policies, such assignment shall be in
     the name of "Wells Fargo Bank Minnesota, National Association, its
     successors and assigns, as Indenture Trustee under the Indenture, dated as
     of December 1, 2001, relating to MCG Commercial Loan Trust 2001-1";

          (b) irrevocable powers of attorney of the Originator, the Trust
     Depositor and the Trust to the Indenture Trustee to execute, deliver, file
     or record and otherwise deal with the Collateral for the Loans at any time
     transferred to the Trust. The powers of attorney will be delegable by the
     Indenture Trustee to the Servicer and any Successor Servicer and will
     permit the Indenture Trustee or its delegate to prepare, execute and file
     or record UCC financing statements and notices to insurers;

          (c) blanket UCC-1 financing statements identifying by type all
     Collateral for the Loans to be transferred to the Trust as Collateral under
     the Indenture and naming the Trust and the Indenture Trustee, as assignee
     of the Trust, as "Secured Party" and the Trust Depositor as the "Debtor";

                                       15

<PAGE>

     (ii) for each Loan:

          (a) the original Underlying Note, endorsed by means of an allonge as
     follows: "Pay to the order of Wells Fargo Bank Minnesota, National
     Association, and its successors and assigns, not in its individual capacity
     but solely as Indenture Trustee under that certain Indenture, dated as of
     December 1, 2001, relating to MCG Commercial Loan Trust 2001-1, without
     recourse" and signed, by facsimile or manual signature, in the name of the
     Trust Depositor by a Responsible Officer, with all prior and intervening
     endorsements showing a complete chain of endorsement from the Originator to
     the Trust Depositor and from the Trust Depositor to the Trust;

          (b) a copy of the related loan agreement (which may be included in the
     Underlying Note if so indicated in the Loan Checklist), together with all
     amendments and modifications thereto;

          (c) a copy of the related security agreement signed by the primary
     Obligor;

          (d) a copy of the Loan Checklist;

          (e) a copy of any related guarantees then executed in connection with
     such Loan;

          (f) a copy of all material UCC financing statements filed securing the
     related Collateral naming the Originator or a Subservicer that agrees to
     act as collateral agent pursuant to a Subservicing Agreement as "Secured
     Party";

          (g) for Loan Assignments relating to a loan for which the Originator
     is not the lead lender, a copy of an assignment agreement between the
     selling lender and the Originator;

          (h) if the Originator is the only lender under the credit facility, if
     the Originator is the collateral agent for a syndicate of lenders under the
     credit facility, or if the Originator has not previously delivered such
     stock certificate to Wells Fargo in connection with the CP Transaction, and
     the Loan Checklist indicates that the Collateral includes a pledge of
     stock, the original stock certificate serving as Collateral for such Loan,
     along with an executed stock power executed in blank;

          (i) if the Originator is the only lender under the credit facility, if
     the Originator is the collateral agent for a syndicate of lenders under the
     credit facility, or if the Originator has not previously delivered such
     items to Wells Fargo in connection with the CP transaction, all other items
     listed in the related Loan Checklist that have not previously been
     delivered, or a certificate from a Responsible Officer of the Trust
     Depositor that such delivery has been waived consistent with the prudent
     lending practices and the Credit and Collection Policy of the Originator
     and such waiver shall not have a material adverse effect on the
     Noteholders; and

                                       16

<PAGE>

     (iii) for each Loan identified by the Trust Depositor as a Material
Mortgage Loan, each of the following documents (except for Material Mortgaged
Loans where the Originator or one of its Affiliates is a co-lender but not the
agent):

          (a) either: (i) the original Mortgage, with evidence of recording
     thereon, (ii) a copy of the Mortgage certified as a true copy by a
     Responsible Officer of the Originator where the original has been
     transmitted for recording until such time as the original is returned by
     the public recording office or duly licensed title or escrow officer or
     (iii) a copy of the Mortgage certified by the public recording office in
     those instances where the original recorded Mortgage has been lost;

          (b) the original Assignment of Mortgage from the Originator endorsed
     as follows: "Wells Fargo Bank Minnesota, National Association, its
     successors and assigns, as Indenture Trustee under the Indenture, dated as
     of December 1, 2001, relating to MCG Commercial Loan Trust 2001-1";

          (c) either: (i) originals of all intervening assignments, if any,
     showing a complete chain of title from the originator of the Loan (where
     such originator was not the Originator or one of its Affiliates) to the
     Originator or one of its Affiliates, including warehousing assignments,
     with evidence of recording thereon if such assignments were recorded, (ii)
     copies of any assignments certified as true copies by a Responsible Officer
     of the Originator where the originals have been submitted for recording
     until such time as the originals are returned by the public recording
     officer, or (iii) copies of any assignments certified by the public
     recording office in any instances where the original recorded assignments
     have been lost; and

          (d) either: (i) a copy of all title insurance policies or a marked
     title commitment relating to the title insurance policies for to the
     Mortgaged Property to the extent the Originator obtained such policies or
     (ii) copies of any title insurance policies or other evidence of lien
     position, including but not limited to policy insurance record of title
     policies, limited liability reports and lot book reports, to the extent the
     Originator obtains such policies or other evidence of lien position,
     certified as true by the Originator.

"Loan Pool" means, as of any date, the Initial Loans and the Substitute Loans
 ---------
(if any), other than any such Loans that (i) have been reconveyed by the Trust
to the Trust Depositor, and concurrently by the Trust Depositor to the
Originator, pursuant to Section 11.02 hereof or (ii) have been paid (or prepaid)
                        -------------
in full.

"Loan Rate" means, for each Loan in a Due Period, the current cash pay interest
 ---------
rate for such Loan in such period, as specified in the related Loan Documents.

"Loan Sale Agreement" means the Commercial Loan Sale Agreement, dated as of the
 -------------------
date hereof, between the Originator and the Trust Depositor, as such agreement
may be amended, modified, waived, supplemented or restated from time to time.

                                       17

<PAGE>

"London Banking Day" means any day on which dealings in deposits in Dollars are
 ------------------
transacted in the London interbank market.

"Majority Noteholders" means (i) prior to the payment in full of the Class A
 --------------------
Notes and the Class B Notes, the Class A Noteholders evidencing more than 50% of
the aggregate Outstanding Principal Balance of all Class A Notes and the Class B
Noteholders evidencing more than 50% of the aggregate Outstanding Principal
Balance of all Class B Notes and (ii) from and after the payment in full of the
Class A Notes and the Class B Notes, Class C Noteholders evidencing more than
50% of the aggregate Outstanding Principal Balance of all Class C Notes.

"Material Modification" means a termination or release (including pursuant to
 ---------------------
prepayment), or an amendment, modification or waiver, or equivalent similar
undertaking or agreement, by the Servicer with respect to a Loan which would not
otherwise be permitted under the standards and criteria set forth in subsection
                                                                     ----------
5.02(e) hereof, as applicable.
-------

"Material Mortgage Loan" means any Loan for which the underlying Collateral
 ----------------------
consisting of real property owned by the Obligor either (i) is material to the
operations of the related business or (ii) represents 25% or more (measured by
the book value of the three most valuable parcels of real property as of the
date of such Loan) of (a) the original commitment for such Loan and (b) the fair
value of the underlying Obligor and Collateral as a whole; provided, however,
                                                           --------  -------
that a Material Mortgage Loan shall not include certain parcels of real property
that the Obligor is in the process of disposing.

"MCG" has the meaning given to such term in the Preamble.
----                                            --------

"Monthly Period" means each calendar month.
 --------------

"Moody's" means Moody's Investors Service, Inc. or any successor thereto.
 -------

"Mortgage" means the mortgage, deed of trust or other instrument creating a lien
---------
on a Mortgaged Property.

"Mortgaged Property" means the underlying real property, if any, secured under a
 ------------------
Material Mortgage Loan, and any improvements thereon, which property satisfies
either test in the definition of Material Mortgage Loan.

"Net Liquidation Proceeds" means Liquidation Proceeds net of (i) any
 ------------------------
reimbursements to the Servicer made therefrom pursuant to terms of this
Agreement and (ii) amounts required to be released to other creditors, including
any other costs, expenses and taxes, or the related Obligor or grantor pursuant
to applicable law or the governing Loan Documents.

"Note" means any one of the notes of the Trust of any Class executed and
-----
authenticated in accordance with the Indenture.

"Note Distribution Account" means the interest bearing trust account established
 -------------------------
and maintained pursuant to Section 7.01.
                           ------------

                                       18

<PAGE>

"Note Register" has the meaning given to such term in Section 2.04 of the
 -------------                                        ------------
Indenture.

"Noteholders" means each Person in whose name a Note is registered in the Note
 -----------
Register.

"Obligor" means, with respect to any Loan, the borrower(s) obligated to make
 -------
payments with respect to such Loan.

"OCC" means the Office of the Comptroller of the Currency.
 ---

"Officer's Certificate" means a certificate delivered to the Indenture Trustee
 ---------------------
signed by the Chief Executive Officer, the President, an Executive Vice
President, a Senior Vice President, a Vice President, Assistant Vice President,
the Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant
Secretaries of the Trust Depositor, the Servicer, or the Owner Trustee (or
another Person) on behalf of the Trust, as required by this Agreement or any
other Transaction Document.

"Opinion of Counsel" means a written opinion of counsel, who may be outside
 ------------------
counsel, or internal counsel (except with respect to federal securities law or
tax law matters), for the Trust Depositor or the Servicer and who shall be
reasonably acceptable to the Owner Trustee or the Indenture Trustee, as the case
may be.

"Originator" has the meaning given to such term in the Preamble.
 ----------                                            --------

"Outstanding" has the meaning given to such term in the Indenture.
 -----------

"Outstanding Loan Balance" means, as of any date of determination and with
 ------------------------
respect to any Loan, an amount equal to the excess of (a) the principal amount
of such Loan, or portion thereof transferred to the Trust, outstanding as of the
Cutoff Date over (b) all Principal Collections received on such Loan, or portion
thereof transferred to the Trust, since the Cutoff Date. Charged-Off Loans will
be deemed to have an Outstanding Loan Balance equal to zero.

"Outstanding Principal Balance" means, as of any date of determination and with
 -----------------------------
respect to any Class, the original principal amount of such Class on the Closing
Date as reduced by all amounts paid by the Trust with respect to such principal
amount up to such date.

"Owner Trustee" means the Person acting, not in its individual capacity, but
 -------------
solely as Owner Trustee, under the Trust Agreement, its successors in interest
and any successor owner trustee under the Trust Agreement.

"Partially Funded Term Loan" means a Loan that is a closed-end multiple advance
 --------------------------
Loan that has not been fully funded as of the Cutoff Date.

"Paying Agent" means as described in Section 3.03 of the Indenture and Section
 ------------                        ------------                      -------
3.09 of the Trust Agreement.
----

                                       19

<PAGE>

"Payment-in-Kind Loan" means a Loan that requires the related Obligor to pay
 --------------------
only a portion of the accrued and unpaid interest on a current basis, with the
remaining interest being deferred and paid later, together with any unpaid
interest thereon, in a lump sum.

"Permitted Investments" with respect to any Remittance Date means negotiable
 ---------------------
instruments or securities or other investments maturing on or before such
Remittance Date (a) which, except in the case of demand or time deposits,
investments in money market funds and Eligible Repurchase Obligations, are
represented by instruments in bearer or registered form or ownership of which is
represented by book entries by a Clearing Agency or by a Federal Reserve Bank in
favor of depository institutions eligible to have an account with such Federal
Reserve Bank who hold such investments on behalf of their customers, (b) that,
as of any date of determination, mature by their terms on or prior to the
Remittance Date immediately following such date of determination, and (c) that
evidence:

          (i) direct obligations of, and obligations fully guaranteed as to full
     and timely payment by, the United States (or by any agency thereof to the
     extent such obligations are backed by the full faith and credit of the
     United States);

          (ii) demand deposits, time deposits or certificates of deposit of
     depository institutions or trust companies incorporated under the laws of
     the United States or any state thereof and subject to supervision and
     examination by federal or state banking or depository institution
     authorities; provided, however, that at the time of the Trust's investment
                  --------  -------
     or contractual commitment to invest therein, the commercial paper, if any,
     and short-term unsecured debt obligations (other than such obligation whose
     rating is based on the credit of a Person other than such institution or
     trust company) of such depository institution or trust company shall have a
     credit rating from each Rating Agency in the Highest Required Investment
     Category granted by such Rating Agency, which, in the case of Fitch, shall
     be "F1+";

          (iii) commercial paper, or other short term obligations, having, at
     the time of the Trust's investment or contractual commitment to invest
     therein, a rating in the Highest Required Investment Category granted by
     each Rating Agency, which, in the case of Fitch, shall be "AAA";

          (iv) demand deposits, time deposits or certificates of deposit that
     are fully insured by the FDIC and either have a rating on their
     certificates of deposit or short-term deposits from Moody's and S&P of
     "P-1" and "A-1+", respectively, and, if rated by Fitch, from Fitch of
     "F1+/AAA";

          (v) notes that are payable on demand or bankers' acceptances issued by
     any depository institution or trust company referred to in clause (ii)
                                                                -----------
     above;

          (vi) investments in taxable money market funds or other regulated
     investment companies having, at the time of the Trust's investment or
     contractual commitment to invest therein, a rating of the Highest Required
     Investment Category from Moody's,

                                       20

<PAGE>

     S&P and Fitch (if rated by Fitch) or otherwise subject to satisfaction of
     the Rating Agency Condition;

          (vii) time deposits (having maturities of not more than ninety (90)
     days) by an entity the commercial paper of which has, at the time of the
     Trust's investment or contractual commitment to invest therein, a rating of
     the Highest Required Investment Category granted by each Rating Agency;

          (viii) Eligible Repurchase Obligations with a rating acceptable to the
     Rating Agencies, which, in the case of Fitch, shall be "F1+" and in the
     case of S&P shall be "A-1+"; or

          (ix) any negotiable instruments or securities or other investments
     subject to satisfaction of the Rating Agency Condition.

The Indenture Trustee may purchase or sell to itself or an Affiliate, as
principal or agent, the Permitted Investments described above.

"Permitted Liens" means
 ---------------

     (a) with respect to Loans in the Loan Pool:

          (i) Liens in favor of the Trust Depositor created pursuant to the Loan
     Sale Agreement and transferred to the Trust pursuant hereto, (ii) Liens in
     favor of the Trust created pursuant to this Agreement, and (iii) Liens in
     favor of the Indenture Trustee created pursuant to the Indenture and/or
     this Agreement; and

     (b) with respect to the interest of the Originator, the Trust Depositor and
the Trust in the related Collateral:

          (i) materialmen's, warehousemen's, mechanics' and other liens arising
     by operation of law in the ordinary course of business for sums not due or
     sums that are being contested in good faith, (ii) Liens for state,
     municipal and other local taxes if such taxes shall not at the time be due
     and payable or if the Trust Depositor shall currently be contesting the
     validity thereof in good faith by appropriate proceedings, (iii) Liens in
     favor of the Trust Depositor created by the Originator and transferred by
     the Trust Depositor to the Trust pursuant to this Agreement, (iv) Liens in
     favor of the Trust created pursuant to this Agreement, (v) Liens in favor
     of the Indenture Trustee created pursuant to the Indenture and/or this
     Agreement, and (vi) Liens held by senior lenders with respect to any
     subordinated Loans.

"Person" means any individual, corporation, estate, partnership, business trust,
 ------
limited liability company, sole proprietorship, joint venture, association,
joint stock company, trust (including any beneficiary thereof), unincorporated
organization or government or any agency or political subdivision thereof or
other entity.

                                       21

<PAGE>

"Placement Agent" means FUSI.
 ---------------

"Prepaid Loan" means any Loan that has terminated or been prepaid in full prior
 ------------
to its scheduled expiration date, other than a Charged-Off Loan.

"Prepaid Loan Amount" means, with respect to each Substitute Loan being
 -------------------
transferred in place of a Prepaid Loan, an amount equal to the lesser of (i) the
amount deposited into the Principal Collection Account with respect to such
Prepaid Loan and (ii) the Outstanding Loan Balance of the Prepaid Loan
immediately prior to the date it was prepaid.

"Prepayment" means any full prepayments, including any prepayment premiums, on a
 ----------
Loan.

"Principal and Interest Account" means the Trust Account so designated
 ------------------------------
established pursuant to Section 7.03.
                        ------------

"Principal Collection Account" means a sub-account of the Principal and Interest
 ----------------------------
Account established pursuant to subsection 7.03(a).
                                ------------------

"Principal Collections" means, with respect to amounts deposited into the
 ---------------------
Principal and Interest Account during any Due Period, (i) all payments received
on or after the Cutoff Date on account of principal on the Loans, including (a)
the principal portion of any Schedule Payments and Prepayments and (b)
Curtailments, (ii) the principal portion of any amounts paid in connection with
the purchase or repurchase of any Loan and the amount of any Transfer Deposit
Amounts, (iii) the principal portion of any Scheduled Payment Advances that the
Servicer determines to make and (iv) on and after an Event of Default or the
occurrence and continuance of a Class A Trigger or Class B Trigger, all amounts
remaining after clause FIFTH of subsection 7.05(a); provided, however, any
                                ------------------  --------  -------
amounts received by the Originator in connection with the purchase by Media
Central LLC of the Loan to Brill Media Holdings will not be deemed to be
"Principal Collections."

"Prior Transactions" collectively, the CP Transaction and the Heller
 ------------------
Transaction.

"Private Placement Memorandum" has the meaning given to such term in the
 ----------------------------
Purchase Agreement.

"Public Securities" means the securities issued by MCG in connection with its
 -----------------
initial public offering, and any subsequent securities issued by MCG in a
transaction registered under the Securities Act of 1933.

"Purchase Agreement" means the Purchase Agreement, dated December 1, 2001, among
 ------------------
the Placement Agent, the Trust and MCG, as such agreement may be amended,
modified, waived, supplemented or restated from time to time.

"Qualified Institution" means (a) the corporate trust department of the
 ---------------------
Indenture Trustee or the corporate trust department of First Union National
Bank, or (b) a depository institution organized under the laws of the United
States or any one of the states thereof or the District of Columbia

                                       22

<PAGE>

(or any domestic branch of a foreign bank), (i) (A) that has either (1) a
long-term unsecured debt rating acceptable to the Rating Agencies, or (2) a
short-term unsecured debt rating or certificate of deposit rating acceptable to
the Rating Agencies, (B) the parent corporation, if such parent corporation
guarantees the obligations of the depository institution, of which has either
(1) a long-term unsecured debt rating acceptable to the Rating Agencies, or (2)
a short-term unsecured debt rating or certificate of deposit rating acceptable
to the Rating Agencies, or (C) otherwise satisfies the Rating Agency Condition,
and (ii) whose deposits are insured by the FDIC and satisfies the Rating Agency
Condition.

"Quarterly Report" has the meaning given to such term in Section 9.01.
 ----------------                                        ------------

"Rating Agency" means each of S&P, Moody's and Fitch, so long as such Persons
 -------------
maintain a rating on the Class A Notes and the Class B Notes; and if any of S&P,
Moody's or Fitch no longer maintains a rating on the Class A Notes and the Class
B Notes, such other nationally recognized statistical rating organization
selected by the Trust Depositor.

"Rating Agency Condition" means, with respect to any action or series of related
 -----------------------
actions or proposed transaction or series of related proposed transactions, that
each Rating Agency shall have notified the Trust Depositor, the Owner Trustee
and the Indenture Trustee in writing that such action or series of related
actions or the consummation of such proposed transaction or series of related
transactions will not result in a Ratings Effect.

"Ratings Effect" means, with respect to any action or series of related actions
 --------------
or proposed transaction or series of related proposed transactions, a reduction
or withdrawal of the rating of any outstanding Class with respect to which a
Rating Agency has previously issued a rating as a result of such action or
series of related actions or the consummation of such proposed transaction or
series of related transactions.

"Record Date" means the last Business Day of the month immediately preceding a
 -----------
Remittance Date.

"Reducing Revolving Loans" means a Loan that is a revolving line of credit with
 ------------------------
a commitment that reduces over the life of the Loan.

"Reference Banks" means leading banks selected by the Indenture Trustee and
 ---------------
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market.

"Released Amounts" means, with respect to any payment or collection received
 ----------------
with respect to any Loan on any Business Day (whether such payment or collection
is received by the Servicer, the Owner Trustee or the Trust Depositor), an
amount equal to that portion of such payment or collection on any Retained
Interest released from the Loan Assets pursuant to Section 2.05.
                                                   ------------

"Released Mortgage Property Proceeds" means, as to any Loan secured by a
 -----------------------------------
Mortgaged Property, the proceeds received by the Servicer in connection with (a)
a taking of an entire Mortgaged Property by exercise of the power of eminent
domain or condemnation or (b) any release of part of the Mortgaged Property from
the Lien of the related Mortgage, whether by

                                       23

<PAGE>

partial condemnation, sale or otherwise, which is not released to the Obligor,
the grantor or another creditor in accordance with the Requirements of Law, the
governing documents, the Credit and Collection Policy and this Agreement.

"Remittance Date" means the 20th day of each January, April, July and October,
 ---------------
commencing January, 2002 or, if such 20th day is not a Business Day, on the next
succeeding Business Day.

"Repossessed Collateral" means items of Collateral taken in the name of the
 ----------------------
Trust as a result of legal action enforcing the Lien on the Collateral resulting
from a default on the related Loan.

"Required Reserve Amount" means, with respect to each Remittance Date, an amount
 -----------------------
equal to the sum of (i) the sum of the then current Class A Interest Amount and
Class B Interest Amount and (ii) the Outstanding Loan Balance of each Loan that
is more than sixty (60) days delinquent in any payment of interest on or
principal of such Loan (without giving effect to any grace period), or would be
so delinquent but for any amendment or modification made to such Loan resulting
from the Obligor's inability to pay such Loan in accordance with its terms.

"Requirements of Law" for any Person means the certificate of incorporation or
 -------------------
articles of association and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation, or order or
determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person or to which such Person is subject,
whether Federal, state or local (including, without limitation, usury laws, the
Federal Truth in Lending Act and Regulation Z and Regulation B of the Board of
Governors of the Federal Reserve System).

"Reserve Fund" means the Reserve Fund established and maintained pursuant to
 ------------
Section 7.01.
------------

"Reserve Fund Initial Balance" means an amount equal to $     (i.e., the product
 ----------------------------                            -----
of (a) the sum of the Outstanding Principal Balance of the Class A Notes and
Class B Notes as of the Closing Date, (b) the weighted average Note Interest
Rate applicable to the Class A Notes and Class B Notes as of the first (1st) day
of the initial Interest Accrual Period (weighted by the Outstanding Principal
Balance of each of the Class A Notes and Class B Notes) and (c) the quotient of
90 divided by 360).

"Responsible Officer" means, when used with respect to the Owner Trustee or the
Indenture Trustee, any officer assigned to the Corporate Trust Office, including
any Chief Executive Officer, President, Executive Vice President, Vice
President, Assistant Vice President, Secretary, any Assistant Secretary, any
trust officer or any other officer of the Owner Trustee or the Indenture Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject. When used with respect to the Trust
Depositor, the Trust, the Originator or the Servicer, any Chief Executive
Officer, the President, Executive Vice President, Vice President, Assistant Vice
President, or Secretary or Assistant Secretary; provided, however, where any
                                                --------  -------
provision of the Transaction Documents requires a Responsible Officer to receive
notice or have certain knowledge, such provision will be effective with respect
to the Trust Depositor, the Trust, the

                                       24

<PAGE>

Originator or the Servicer only if its respective Chief Executive Officer,
President, Chief Financial Officer, Executive Vice President or General Counsel
receives such notice or has such knowledge.

"Retained Interest" means, for each Loan, the following interests, rights and
------------------
obligations in such Loan and under the associated Loan Documents, which are
being retained by the Originator: (i) all of the obligations, if any, to provide
additional funding with respect to such Loan, (ii) all of the rights and
obligations, if any, of the agent(s) under the documentation evidencing such
Loan, (iii) the applicable portion of the interests, rights and obligations
under the documentation evidencing such Loan that relate to such portion(s) of
the indebtedness that is owned by another lender or is being retained by the
Originator, (iv) any unused, commitment or similar fees associated with the
additional funding obligations that are not being transferred in accordance with
clause (i) of this definition, (v) any agency or similar fees associated with
----------
the rights and obligations of the agent that are not being transferred in
accordance with clause (ii) of this definition, (vi) any advisory, consulting or
                ----------
similar fees due from the Obligor associated with services provided by the agent
that are not being transferred in accordance with clause (ii) of this
                                                  ----------
definition, (vii) the right to collect from such Obligor(s) the fees and expense
reimbursements associated with the preparation, negotiation, execution,
perfection and documentation of such Loan, the associated Collateral therefor,
and any subsequent amendments, waivers, consents and restructuring thereof
(which fees, for avoidance of doubt, shall not include any underwriting fees or
fees serving as consideration for amendments and waivers) and (viii) any and all
warrants, options, and other equity instruments issued in the name of MCG or its
Affiliates in connection with or relating to any Loan.

"S&P" means Standard and Poor's Rating Services, a division of The McGraw Hill
 ---
Companies or any successor thereto.

"SAIF" means the Savings Association Insurance Fund, or any successor thereto.
 ---

"Scheduled Payment" means, with respect to any Loan, the payment of principal
 -----------------
and/or interest scheduled to be made by the related Obligor under the terms of
such Loan after the related Cutoff Date, as adjusted pursuant to the terms of
the related Underlying Note and Loan Documents, and any such payment received
after the related Cutoff Date.

"Scheduled Payment Advance" means, with respect to any Remittance Date, the
 -------------------------
amounts, if any, deposited by the Servicer in the Principal and Interest Account
for such Remittance Date in respect of Scheduled Payments (or portions thereof)
pursuant to Section 5.09.
            ------------

"Securities" means the Notes and the Certificate, or any of them.
 ----------

"Securities Act" means the Securities Act of 1933, as amended from time to time.
 --------------

"Securityholders" means the Holders of the Notes or the Certificate.
 ---------------

"Servicer" means initially MCG, or its successor, until any Servicer Transfer
 --------
hereunder or the resignation or permitted assignment by the Servicer and
thereafter means the Successor Servicer

                                       25

<PAGE>

appointed pursuant to Article VIII with respect to the duties and obligations
                      ------------
required of the Servicer under this Agreement.

"Servicer Default" shall have the meaning specified in Section 8.01.
 ----------------                                      ------------

"Servicer Employees" shall have the meaning specified in Section 5.04.
 ------------------                                      ------------

"Servicer Transfer" has the meaning given to such term in subsection 8.02(b).
 -----------------                                        ------------------

"Servicing Advances" means, all reasonable and customary "out-of-pocket" costs
 ------------------
and expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Collateral, (ii) any enforcement or judicial
proceedings, including foreclosures, (iii) the management and liquidation of the
Foreclosed Property or Repossessed Collateral, (iv) compliance with the
obligations under this Agreement, which "Servicing Advances" are reimbursable to
the Servicer to the extent provided in subsection 5.10(d) of this Agreement, and
                                       ------------------
(v) in connection with the liquidation of a Loan, for all of which costs and
expenses the Servicer is entitled to reimbursement thereon up to a maximum rate
per annum equal to the related Loan Rate.

"Servicing Fee" has the meaning given to such term in Section 5.11.
 -------------                                        ------------

"Servicing Fee Percentage" means 1.00%.
 ------------------------

"Servicing Officer" means any officer of the Servicer involved in, or
 -----------------
responsible for, the administration and servicing of Loans whose name appears on
a list of servicing officers appearing in an Officer's Certificate furnished to
the Indenture Trustee by the Servicer, as the same may be amended from time to
time.

"Solvent" means, as to any Person at any time, that (a) the fair value of the
 -------
property of such Person is greater than the amount of such Person's liabilities
(including disputed, contingent and unliquidated liabilities) as such value is
established and liabilities evaluated for purposes of Section 101(32) of the
Bankruptcy Code; (b) such Person is able to realize upon its property and pay
its debts and other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business; (c) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (d) such Person is not engaged in business or a transaction, and is
not about to engage in a business or a transaction, for which such Person's
property would constitute unreasonably small capital.

"Subsequent Cutoff Date" means the date specified as such for Substitute Loans
 ----------------------
in the related Subsequent Transfer Agreement.

"Subsequent List of Loans" means a list, in the form of the initial List of
 ------------------------
Loans delivered on the Closing Date, but listing each Substitute Loan
transferred to the Trust pursuant to the related Subsequent Transfer Agreement.

                                       26

<PAGE>

"Subsequent Purchase Agreement" means, with respect to any Substitute Loans, the
 -----------------------------
agreement between the Originator and the Trust Depositor pursuant to which the
Originator will transfer the Substitute Loans to the Trust Depositor, the form
of which is attached to hereto as Exhibit J.
                                  ---------

"Subsequent Transfer Agreement" means the agreement described in Section
 -----------------------------                                   -------
2.04(b)(5) hereof, the form of which is attached hereto as Exhibit I.
----------                                                 ---------

"Subsequent Transfer Date" means any date on which Substitute Loans are
 ------------------------
transferred to the Trust.

"Subservicer" means any direct or indirect wholly-owned subsidiary of MCG that
 -----------
MCG has identified as a subservicer or additional collateral agent or any other
Person with whom the Servicer has entered into a Subservicing Agreement and who
satisfies the requirements set forth in subsection 5.02(a) of the Sale and
                                        ------------------
Servicing Agreement in respect of the qualification of a Subservicer.

"Subservicing Agreement" means any agreement between the Servicer and any
 ----------------------
Subservicer relating to subservicing and/or administration of certain Loans as
provided in this Agreement, a copy of which shall be delivered, along with any
modifications thereto, to the Indenture Trustee.

"Substitute Loan" means a Loan that (a) is transferred to the Trust under and in
 ---------------
accordance with Section 2.04 and/or Section 2.07 and identified in the related
                ------------        ------------
Addition Notice, and (b) becomes part of the Loan Pool; provided, however, the
                                                        --------  -------
Loan to Media Central LLC will not be deemed to be a "Substitute Loan."

"Substitute Loan Qualification Conditions" means, with respect to any Substitute
 ----------------------------------------
Loan being transferred to the Trust pursuant to Section 2.04 and/or Section
                                                ------------        -------
2.07, the accuracy of each of the following statements as of the related Cutoff
----
Date for such Loan:

     (a) the current weighted average Loan Rate on such Substitute Loan is equal
to or greater than the current weighted average Loan Rate on the Loan identified
on the related Addition Notice as the Loan to be released by the Trust to the
Trust Depositor and reconveyed to the Originator in exchange for such Substitute
Loan;

     (b) the then current weighted average gross interest rate (i.e., the sum of
Loan Rate and any paid in kind interest that will be deferred) of the Substitute
Loan must be within ten (10) percent of the then current weighted average gross
interest rate on the Loan identified on the related Addition Notice as the Loan
to be released by the Trust to the Trust Depositor and reconveyed to the
Originator in exchange for such Substitute Loan;

     (c) the Outstanding Loan Balance of such Substitute Loan is equal to or
greater than that of the Loan identified on the related Addition Notice as the
Loan to be released by the Trust to the Trust Depositor and reconveyed to the
Originator in exchange for such Substitute Loan; and

                                       27

<PAGE>

     (d) after giving effect to such substitution, no Class will have its Legal
Final Maturity Date extended.

"Substitution Event" shall have occurred if a Loan then held in the Trust and
 ------------------
identified in the related Addition Notice is either (a) a Prepaid Loan, (b) a
Loan that becomes subject to a Material Modification, (c) a Charged-Off Loan or
past due in payment or has a covenant default or (d) the subject of a breach of
a representation or warranty under this Agreement or other provision, which
breach or other provision, in the absence of a substitution of a Substitute Loan
for such Loan pursuant to Section 2.04, would require the payment of a Transfer
                          ------------
Deposit Amount to the Trust in respect of such Loan pursuant to Section 11.01;
                                                                -------------
provided, that, no Substitution Event shall be deemed to occur under clauses (a)
--------  ----                                                       -----------
or (c) to the extent Loans having an initial aggregate Outstanding Loan Balance
    -
of 20% or greater of the Initial Aggregate Outstanding Loan Balance have
previously been substituted under such clauses pursuant to Section 2.04 or
                                                           ------------
substituted or repurchased under such clauses pursuant to Section 2.07.
                                                          ------------

"Successor Backup Servicer" has the meaning given to such term in Section 8.10.
 -------------------------                                        -------------

"Successor Servicer" has the meaning given to such term in subsection 8.02(b).
 ------------------                                        ------------------

"Tape" has the meaning given to such term in subsection 5.15(b).
 ----                                        ------------------

"Telerate Page 3750" means the display page currently so designated on the Dow
 ------------------
Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).

"Three-Month Index Maturity" has the meaning given to such term in Section 7.06.
 --------------------------                                        ------------

"Traditional Revolving Loans" means a Loan that is a revolving line of credit
 ---------------------------
with a commitment that does not vary over the life of the Loan.

"Transaction Documents" means this Agreement, the Indenture, the Trust
 ---------------------
Agreement, the Loan Sale Agreement, the Purchase Agreement, any Subsequent
Transfer Agreement, and any Subsequent Purchase Agreement, as such agreements
are amended, modified, restated, replaced, substituted, waived, supplemented or
extended from time to time.

"Transfer and Servicing Agreements" means collectively this Agreement and the
 ---------------------------------
Loan Sale Agreement.

"Transfer Date" means each date on which the Trust Depositor transfers Loans, or
 -------------
portions thereof, to the Trust.

"Transfer Deposit Amount" means, with respect to each Ineligible Loan or
 -----------------------
Substitute Loan, on any date of determination, the sum of the Outstanding Loan
Balance of such Loan, together with accrued interest thereon through such date
of determination at the Loan Rate provided for thereunder, and any outstanding
Scheduled Payment Advances thereon that have not been waived by the Servicer
entitled thereto.

                                       28

<PAGE>

"Trust" means the trust created by the Trust Agreement and funded pursuant to
 -----
this Agreement, consisting of the Loan Assets.

"Trust Account Property" means the Trust Accounts, all amounts and investments
 ----------------------
held from time to time in any Trust Account (whether in the form of deposit
accounts, physical property, book-entry securities, uncertificated securities or
otherwise) including, without limitation, the Reserve Fund Initial Balance, and
all proceeds of the foregoing.

"Trust Accounts" means, collectively, the Principal and Interest Account
 --------------
(including the Principal Collection Account and Interest Collection Account),
the Reserve Fund and the Note Distribution Account, or any of them.

"Trust Agreement" means the Trust Agreement, dated as of the date hereof,
 ---------------
between the Trust Depositor and the Owner Trustee.

"Trust Depositor" has the meaning given to such term in the Preamble.
 ---------------                                            --------

"Trust Estate" shall have the meaning given to such term in the Trust Agreement.
 ------------

"Trustees" means the Owner Trustee and the Indenture Trustee, or any of them
 --------
individually as the context may require.

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

"Underlying Note" means the one or more promissory notes executed by an Obligor
 ---------------
evidencing a Loan.

"United States" means the United States of America.
 -------------

"Unreimbursed Scheduled Payment Advances" means, at any time, the amount of all
 ---------------------------------------
previous Scheduled Payment Advances (or portions thereof) as to which the
Servicer has not been reimbursed as of such time pursuant to Sections 7.03 or
                                                             -------------
7.05 and which the Servicer has determined in its sole discretion are
----
Uncollectible Scheduled Payment Advances, and with respect to which the Servicer
has given a written certification to such effect to each Trustee.

     Section 1.02 Usage of Terms.
                  --------------

     With respect to all terms in this Agreement, the singular includes the
plural and the plural the singular; words importing any gender include the other
genders; references to "writing" include printing, typing, lithography and other
means of reproducing words in a visible form; references to agreements and other
contractual instruments include all amendments, modifications and supplements
thereto or any changes therein entered into in accordance with their respective
terms and not prohibited by this Agreement; references to Persons include their
permitted successors and assigns; and the term "including" means "including
without limitation."

                                       29

<PAGE>

     Section 1.03 Section References.
                  ------------------

     All Section references (including references to the Preamble), unless
                                                         --------
otherwise indicated, shall be to Sections (and the Preamble) in this Agreement.
                                                   --------

     Section 1.04 Calculations.
                  ------------

     Except as otherwise provided herein, all interest rate and basis point
calculations hereunder will be made on the basis of a 360 day year and the
actual days elapsed in the relevant period and will be carried out to at least
three decimal places.

     Section 1.05 Accounting Terms.
                  ----------------

     All accounting terms used but not specifically defined herein shall be
construed in accordance with generally accepted accounting principles in the
United States.

                                   ARTICLE II

                 ESTABLISHMENT OF TRUST; TRANSFER OF LOAN ASSETS

     Section 2.01 Creation and Funding of Trust; Transfer of Loan Assets.
                  ------------------------------------------------------
     (a) The Trust shall be created pursuant to the terms and conditions of the
Trust Agreement, upon the execution and delivery of the Trust Agreement and the
filing by the Owner Trustee of an appropriately completed Certificate of Trust
(as defined in the Trust Agreement) under the Business Trust Statute. The Trust
Depositor, as settlor of the Trust, shall fund and convey assets to the Trust
pursuant to the terms and provisions hereof. The Trust shall be administered
pursuant to the provisions of this Agreement and the Trust Agreement for the
benefit of the Noteholders and Certificateholder. The Owner Trustee is hereby
specifically recognized by the parties hereto as empowered to conduct business
dealings on behalf of the Trust in accordance with the terms hereof and of the
Trust Agreement. The Servicer is hereby specifically recognized by the parties
hereto as empowered to act on behalf of the Trust and the Owner Trustee in
accordance with subsections 5.02(e) and (h) hereof.
                -------------------     ---

     (b) Subject to and upon the terms and conditions set forth herein, the
Trust Depositor hereby sells, transfers, assigns, sets over and otherwise
conveys to the Trust, for a purchase price consisting of $262,637,072.84 in cash
(less placement expenses and certain other expenses associated with the initial
offer and sale of the Notes the proceeds of which represent the consideration
paid by the Trust herein) the Class C Notes and the Certificate, all the right,
title and interest of the Trust Depositor in and to the following (the Trust
Depositor's interest in items (i)-(vi) below, being collectively referred to
herein as the "Loan Assets"):
               -----------

          (i) the Initial Loans, all payments paid in respect thereof and all
     monies due, to become due or paid in respect thereof accruing on and after
     the Initial Cutoff Date and

                                       30

<PAGE>

     all Liquidation Proceeds and recoveries thereon, in each case as they arise
     after the Initial Cutoff Date, but not including the Retained Interest or
     Interest Collections received prior to December 1, 2001;

          (ii) all security interests and liens and Collateral subject thereto
     from time to time purporting to secure payment by Obligors under such
     Loans;

          (iii) all guaranties, indemnities and warranties, and other agreements
     or arrangements of whatever character from time to time supporting or
     securing payment of such Loans;

          (iv) all collections and records (including computer records) with
     respect to the foregoing;

          (v) all documents relating to the Loan Files; and

          (vi) all income, payments, proceeds and other benefits of any and all
     of the foregoing.

     (c) The Originator and the Trust Depositor acknowledge that the
representations and warranties of the Trust Depositor in Sections 3.01, 3.02,
                                                         -------------  ----
3.03, 3.04 and 3.05 will run to and be for the benefit of the Trust and the
----  ----     ----
Trustees and the Trust and the Trustees may enforce, directly without joinder of
Trust Depositor, the repurchase obligations of the Originator with respect to
breaches of such representations and warranties as set forth herein and in
Section 11.01.
-------------

     (d) The sale, transfer, assignment, set-over and conveyance of the Loan
Assets by the Trust Depositor to the Trust pursuant to this Agreement does not
constitute and is not intended to result in a creation or an assumption by the
Trust Depositor or the Trust of any obligation of the Originator in connection
with the Loan Assets, or any agreement or instrument relating thereto,
including, without limitation, any obligation to any Obligor, if any, not
financed by the Originator, or (1) any taxes, fees, or other charges imposed by
any Governmental Authority and (2) any insurance premiums that remain owing with
respect to any Loan at the time such Loan is sold hereunder. The Trust Depositor
also hereby assigns to the Trust all of the Trust Depositor's right, title and
interest (but none of its obligations) under the Loan Sale Agreement, including
but not limited to the Trust Depositor's right to exercise the remedies created
by the Loan Sale Agreement.

     (e) The Originator, Trust Depositor and Trust intend and agree that (i) the
transfer of the Loan Assets to the Trust Depositor and the transfer of the Loan
Assets to the Trust are intended to be a sale, conveyance and transfer of
ownership of the Loan Assets, as the case may be, rather than the mere granting
of a security interest to secure a borrowing and (ii) such Loan Assets shall not
be part of the Originator's or the Trust Depositor's estate in the event of a
filing of a bankruptcy petition or other action by or against such Person under
any Insolvency Law. In the event, however, that notwithstanding such intent and
agreement, such transfers are deemed to be of a mere security interest to secure
indebtedness, the Originator shall be deemed to have granted the Trust Depositor
and the Trust Depositor shall be deemed to have granted the Trust,

                                       31

<PAGE>

as the case may be, a perfected first priority security interest in such Loan
Assets respectively and this Agreement shall constitute a security agreement
under Requirements of Law, securing the repayment of the purchase price paid
hereunder and the obligations and/or interests represented by the Securities, in
the order and priorities, and subject to the other terms and conditions of, this
Agreement, the Indenture and the Trust Agreement, together with such other
obligations or interests as may arise hereunder and thereunder in favor of the
parties hereto and thereto.

     If any such transfer of the Loan Assets is deemed to be the mere granting
of a security interest to secure a borrowing, the Trust Depositor may, to secure
the Trust Depositor's own borrowing under this Agreement (to the extent that the
transfer of the Loan Assets thereunder is deemed to be a mere granting of a
security interest to secure a borrowing) repledge and reassign (1) all or a
portion of the Loan Assets pledged to Trust Depositor by the Originator and with
respect to which the Trust Depositor has not released its security interest at
the time of such pledge and assignment, and (2) all proceeds thereof. Such
repledge and reassignment may be made by Trust Depositor with or without a
repledge and reassignment by Trust Depositor of its rights under any agreement
with the Originator, and without further notice to or acknowledgment from the
Originator. The Originator waives, to the extent permitted by applicable law,
all claims, causes of action and remedies, whether legal or equitable (including
any right of setoff), against Trust Depositor or any assignee of Trust Depositor
relating to such action by Trust Depositor in connection with the transactions
contemplated by this Agreement.

     Section 2.02 Conditions to Transfer of Loan Assets to Trust.
                  ----------------------------------------------

     On or before the Closing Date, the Originator or the Trust Depositor, as
applicable, shall deliver or cause to be delivered to the Owner Trustee and
Indenture Trustee each of the documents, certificates and other items as
follows:

          (i) a certificate of an officer of the Originator substantially in the
     form of Exhibit C hereto;
             ---------

          (ii) copies of resolutions of the Board of Directors of the
     Originator, the Servicer and the member of the Trust Depositor or of the
     Executive Committee of the Board of Directors of the Originator, the
     Servicer and the member of the Trust Depositor approving the execution,
     delivery and performance of this Agreement and the transactions
     contemplated hereunder, certified in each case by the Secretary or an
     Assistant Secretary of the Originator, the Servicer and member of the Trust
     Depositor;

          (iii) officially certified recent evidence of due incorporation and
     good standing of the Originator under the laws of the State of Delaware;

          (iv) the initial List of Loans, certified by an officer of the Trust
     Depositor, together with an Assignment substantially in the form of Exhibit
                                                                         -------
     A (along with the delivery of any instruments and Loan Documents as
     -
     required under Section 2.06);
                    ------------

                                       32

<PAGE>

          (v) a certificate of an officer of the Trust Depositor substantially
     in the form of Exhibit B hereto;
                    ---------

          (vi) a letter from Ernst & Young LLP or another nationally recognized
     accounting firm, addressed to the Originator and the Trust Depositor,
     stating that such firm has reviewed a sample of the Initial Loans and
     performed specific procedures for such sample with respect to certain loan
     terms and that identifies those Initial Loans that do not conform;

          (vii) [Reserved];
                 --------

          (viii) officially certified, recent evidence of due organization and
     good standing of the Trust Depositor under the laws of the State of
     Delaware;

          (ix) evidence of proper filing with appropriate offices in the State
     of Delaware of UCC financing statements executed by the Originator, as
     debtor, naming the Trust Depositor as secured party (and the Owner Trustee
     as assignee) and identifying the Loan Assets as collateral; and evidence of
     proper filing with appropriate officer in the State of Delaware of UCC
     financing statements executed by the Trust Depositor, as debtor, naming the
     Owner Trustee as secured party (and the Indenture Trustee as assignee) and
     identifying the Loan Assets as collateral; and evidence of proper filing
     with appropriate officers in the State of Delaware of UCC financing
     statements executed by the Trust and naming the Indenture Trustee as
     secured party and identifying the Indenture Collateral, as collateral;

          (x) an Officer's Certificate listing the Servicer's Servicing
     Officers;

          (xi) evidence of deposit in the Principal and Interest Account of all
     funds received with respect to the Initial Loans on and after the Initial
     Cutoff Date to the date two (2) days preceding the Closing Date, together
     with an Officer's Certificate from the Servicer to the effect that such
     amount is correct;

          (xii) evidence of deposit in the Reserve Fund of the Reserve Fund
     Initial Balance by the Trust; and

          (xiii) a fully executed copy of the Transaction Documents.

     Section 2.03 Acceptance by Owner Trustee.
                  ---------------------------

         On the Closing Date, if the conditions set forth in Section 2.02 have
                                                             ------------
been satisfied, the Trust shall issue to, or upon the order of, the Trust
Depositor the Certificate representing ownership of a beneficial interest in
100% of the Trust and the Trust shall issue, and the Indenture Trustee shall
authenticate, to, or upon the order of, the Trust Depositor the Notes secured by
the Indenture Collateral. The Owner Trustee hereby acknowledges its acceptance,
on behalf of the Trust, of the Loan Assets, and declares that it shall maintain
such right, title and

                                       33

<PAGE>

interest in accordance with the terms of this Agreement and the Trust Agreement
upon the trust herein and therein set forth.

     Section 2.04 Conveyance of Substitute Loans.
                  ------------------------------

     (a) Subject to subsections 2.01(d) and (e) and the satisfaction of the
                    -------------------      -
conditions set forth in subsection 2.04(c), at the option of the Trust
                        ------------------
Depositor, the Originator may at its option (but shall not be obligated to)
sell, transfer, assign, set over and otherwise convey to the Trust Depositor (by
delivery of an executed Subsequent Purchase Agreement substantially in the form
attached as Exhibit J hereto), without recourse other than as expressly provided
            ---------
herein and therein (and the Trust Depositor shall be required to purchase
through cash payment or by exchange of one or more related Loans released by the
Trust to the Trust Depositor on the Subsequent Transfer Date), all the right,
title and interest of the Trust Depositor in and to the following (the Trust
Depositor's interest in property in clauses (i)-(vi) below, upon such transfer,
                                    ----------------
becoming part of the "Loan Assets"):
                      -----------

          (i) the Substitute Loans listed in the related Addition Notice, all
     payments paid in respect thereof and all monies due, to become due or paid
     in respect thereof accruing on and after the related Subsequent Cutoff
     Dates and all Liquidation Proceeds and recoveries thereon, in each case as
     they arise after the related Subsequent Cutoff Dates, but not including the
     Retained Interest or Interest Collections received prior to December 1,
     2001;

          (ii) all security interests and liens and Collateral subject thereto
     from time to time purporting to secure payment by Obligors under such
     Loans;

          (iii) all guaranties, indemnities and warranties, and other agreements
     or arrangements of whatever character from time to time supporting or
     securing payment of such Loans;

          (iv) all collections and records (including computer records) with
     respect to the foregoing;

          (v) all documents relating to the Loan Files; and

          (vi) all income, payments, proceeds and other benefits of any and all
     of the foregoing.

     (b) Subject to subsections 2.01(d) and (e) and the conditions set forth in
                    -------------------     ---
subsection 2.04(c), the Trust Depositor shall sell, transfer, assign, set over
------------------
and otherwise convey to the Trust, without recourse other than as expressly
provided herein and therein, (i) all the right, title and interest of the Trust
Depositor in and to the Substitute Loans purchased pursuant to subsection
                                                               ----------
2.04(a), and (ii) all other rights and property interests consisting of Loan
-------
Assets related to such Substitute Loans (the property in clauses (i) - (ii)
                                                         ------------------
above, upon such transfer, becoming part of the "Loan Assets").
                                                 -----------

                                       34

<PAGE>

     (c) The Originator shall transfer to the Trust Depositor and the Trust
Depositor shall transfer to the Trust the Substitute Loans and the other
property and rights related thereto described in subsection 2.04(a) only upon
                                                 ------------------
the satisfaction of each of the following conditions on or prior to the related
Subsequent Transfer Date (and the delivery of a related Addition Notice by the
Trust Depositor shall be deemed a representation and warranty by the Trust
Depositor and of the Originator, that such conditions have been or will be, as
of the related Subsequent Transfer Date, satisfied):

          (i) the Trust Depositor shall have provided the Owner Trustee and the
     Indenture Trustee with a timely Addition Notice complying with the
     definition thereof contained herein, which Notice shall in any event be no
     later than ten (10) Business Days prior to the date of addition;

          (ii) there shall have occurred, with respect to each such Substitute
     Loan, a corresponding Substitution Event with respect to one or more Loans
     then in the Loan Pool;

          (iii) the Substitute Loan(s) being conveyed to the Trust satisfy the
     Substitute Loan Qualification Conditions;

          (iv) the Originator shall have delivered to the Trust Depositor a duly
     executed written assignment in substantially the form of Exhibit J hereto
                                                              ---------
     (the "Subsequent Purchase Agreement"), which shall include a Subsequent
           -----------------------------
     List of Loans listing the Substitute Loans;

          (v) the Trust Depositor shall have delivered to the Trust a duly
     executed written assignment (including an acceptance by the Owner Trustee)
     in substantially the form of Exhibit I hereto (the "Subsequent Transfer
                                  ---------              -------------------
     Agreement"), which shall include a Subsequent List of Loans listing the
     ---------
     Substitute Loans;

          (vi) the Trust Depositor shall have deposited or caused to be
     deposited in the Principal and Interest Account all Principal Collections
     and Interest Collections received with respect to the Substitute Loans on
     and after the related Subsequent Cutoff Date;

          (vii) each of the representations and warranties made by the Trust
     Depositor pursuant to Sections 3.02, 3.03(i), (ii) and (iv), 3.04, and 3.05
                           -------------  -------   --       --   ----      ----
     applicable to the Substitute Loans shall be true and correct as of the
     related Subsequent Transfer Date; provided, however, that, (a) with respect
                                       --------- -------  ----
     to the representation and warranty made by the Trust Depositor in
     subsection 3.05(a), such representation and warranty shall only apply to a
     ------------------
     Loan that is being substituted for a Loan that is not an Eligible Loan and
     (b) with respect to the representations and warranties made by the Trust
     Depositor in subsections 3.03(iv) and 3.05, such representations and
                  --------------------     ----
     warranties shall be determined based upon the Outstanding Loan Balances of
     the Substitute Loans as of the applicable Subsequent Transfer Date over the
     Initial Aggregate Outstanding Loan Balance;

                                       35

<PAGE>

          (viii) the Originator shall, at its own expense, on or prior to the
     Subsequent Transfer Date, indicate in its Computer Records that ownership
     of the Substitute Loans identified on the Subsequent List of Loans in the
     Subsequent Transfer Agreement has been sold to the Trust through the Trust
     Depositor pursuant to this Agreement; and

          (ix) prior to such substitution the Originator has received written
     confirmation from the Rating Agencies (which shall respond to the
     Originator within ten (10) Business Days after receiving written notice
     from the Originator of its intention to substitute a Loan) that the
     proposed substitution will not result in a reduction or withdrawal of the
     rating on the Class A Notes or Class B Notes; provided, however, that any
                                                   --------  -------
     failure by each of the Rating Agencies to respond to the Originator shall
     be deemed a non-approval by the Rating Agencies.

     Section 2.05 Release of Released Amounts.
                  ----------------------------

     (a) The parties hereto acknowledge and agree that the Trust has no interest
in the Retained Interest and Released Amounts. The Indenture Trustee hereby
agrees to release to the Trust from the Loan Assets, and the Trust hereby agrees
to release to the Trust Depositor, an amount equal to the Released Amounts
immediately upon identification thereof and upon receipt of an Officer's
Certificate of the Servicer, which release shall be automatic and shall require
no further act by the Indenture Trustee or the Trust; provided, that, the
                                                      --------  ----
Indenture Trustee and Owner Trustee shall execute and deliver such instruments
of release and assignment or other documents, or otherwise confirm the foregoing
release, as may reasonably be requested by the Trust Depositor in writing. Such
Released Amounts shall not constitute and shall not be included in the Loan
Assets.

     (b) Immediately upon the release to the Trust Depositor by the Indenture
Trustee of the Released Amounts, the Trust Depositor hereby irrevocably agrees
to release to the Originator such Released Amounts, which release shall be
automatic and shall require no further act by the Trust Depositor; provided,
                                                                   --------
that, the Trust Depositor shall execute and deliver such instruments of release
----
and assignment, or otherwise confirming the foregoing release of any Released
Amounts, as may be reasonably requested by the Originator.

     Section 2.06 Delivery of Documents in the Loan File; Recording of
                  ----------------------------------------------------
                  Assignments of Mortgage.
                  ------------------------

     (a) Subject to the delivery requirements set forth in subsection 2.06(b),
                                                           -----------------
the Trust hereby authorizes and directs the Originator and the Trust Depositor
to deliver possession of all the Loan Files to the Indenture Trustee on behalf
of and for the account of the Noteholders. The Originator and the Trust
Depositor shall also identify on the List of Loans (including any deemed
amendment thereof associated with any Substitute Loans), whether by attached
schedule or marking or other effective identifying designation, all Loans that
are or are evidenced by such instruments.

     (b) With respect to each Loan in the Loan Pool on or before the related
Transfer Date, the Trust Depositor will deliver or cause to be delivered to the
Indenture Trustee, to the extent

                                       36

<PAGE>

not previously delivered, each of the documents in the Loan File with respect to
such Loan, except that (i) the original recorded Mortgage in those instances
where a copy thereof certified by the Originator was delivered to the Indenture
Trustee will be delivered or caused to be delivered within ten (10) Business
Days after receipt thereof, and in any event within one (1) year after the
related Transfer Date, (ii) any intervening Assignments of Mortgage in those
instances where copies thereof certified by the Originator were delivered to the
Indenture Trustee, will be delivered or caused to be delivered within ten (10)
Business Days after the receipt thereof, and in any event, within one (1) year
of the related Transfer Date and (iii) the items described in clause (ii)(i) of
                                                              --------------
the Loan File definition will be delivered or caused to be delivered within one
hundred twenty (120) days after the related Transfer Date. Notwithstanding the
foregoing in clauses (i) and (ii) of this subsection 2.06(b), in those instances
             -----------      --          ------------------
where the public recording office retains the original Mortgage or the
intervening assignments of the Mortgage after it has been recorded, the Trust
Depositor shall be deemed to have satisfied its obligations hereunder upon
delivery to the Indenture Trustee of a copy of such Mortgage or assignments of
Mortgage certified by the public recording office to be a true copy of the
recorded original thereof.

     (c) Prior to the occurrence of an Event of Default or a Servicer Default,
the Indenture Trustee shall not record the Assignments of Mortgage delivered
pursuant to subsection 2.06(b). Upon the occurrence of an Event of Default or a
            ------------------
Servicer Default, the Indenture Trustee shall cause to be recorded in the
appropriate offices each Assignment of Mortgage delivered to it. Each such
recording shall be at the expense of the Servicer; provided, however, to the
                                                   --------  -------
extent the Servicer does not pay such expense then the Indenture Trustee shall
be reimbursed pursuant to the provisions of Section 7.05.
                                            -------------

     Section 2.07 Optional Purchase or Substitution by the Servicer for Prepaid
                  -------------------------------------------------------------
                  or Charged-Off Loans.
                  --------------------

     The Servicer shall have the right, but not the obligation, to purchase, or
substitute for, any Prepaid Loan or Charged-Off Loan or a Loan that is past due
in payment or has a covenant default, or any portion thereof, subject to the
limitations set forth in this Section 2.07. In the case of a purchase, the
                              ------------
Servicer shall deposit in the Principal and Interest Account, on the next
succeeding Determination Date, an amount equal to the Transfer Deposit Amount
for such Loan (or applicable portion thereof) as of the date of such purchase.
In the case of a substitution, the Servicer shall deliver to the Trust one or
more Substitute Loans satisfying the Substitute Loan Qualification Conditions.
Any such substitution shall be made in accordance with the provisions of Section
                                                                         -------
2.04. On the date of such substitution, the Servicer shall deliver to the
----
Indenture Trustee a certificate stating that such Loan satisfies each of the
Substitute Loan Qualification Conditions. The Servicer, the Trust and the
Indenture Trustee shall execute and deliver such instruments, consents or other
documents and perform all acts reasonably requested by the Servicer in order to
effect the transfer and release of any of the Trust's interests in the Loans
that is being purchased or substituted. In no event, however, may the initial
aggregate Outstanding Loan Balance of (i) Prepaid Loans, Charged-Off Loans and
Loans that are past due in payment or have a covenant default purchased or
substituted for pursuant to this Section 2.07, and (ii) Prepaid Loans,
                                 ------------
Charged-Off Loans and Loans that are past due in payment or have a

                                       37

<PAGE>

covenant default substituted pursuant to Section 2.04 exceed 20% of the Initial
                                         ------------
Aggregate Outstanding Loan Balance.

     Section 2.08 Certification by Indenture Trustee; Possession of Loan Files.
                  ------------------------------------------------------------

     (a) On or prior to the applicable Transfer Date, the Indenture Trustee
shall review the portion of the Loan File required to be delivered pursuant to
subsection 2.06(b) on the applicable Transfer Date and shall deliver to the
------------------
Originator, the Trust Depositor and the Servicer a certification in the form
attached hereto as Exhibit L-1 on or prior to such Transfer Date. Within two (2)
                   -----------
Business Days after the Indenture Trustee receives the portion of the Loan File
permitted to be delivered after the applicable Transfer Date pursuant to
subsection 2.06(b), the Indenture Trustee shall deliver to the Originator, the
------------------
Trust Depositor and the Servicer a certification in the form attached hereto as
Exhibit L-1. Within 360 days after each Transfer Date (or, with respect to any
-----------
Substitute Loan, within 360 days after the assignment thereof), the Indenture
Trustee shall deliver to the Originator, the Servicer, the Trust Depositor and
any Noteholder who requests a copy from the Indenture Trustee a final
certification in the form attached hereto as Exhibit L-2 evidencing the
                                             -----------
completeness of the Loan Files with respect to the Loans being transferred on
such Transfer Date.

     (b) If the Indenture Trustee during the process of reviewing the Loan Files
finds any document constituting a part of a Loan File which is not properly
executed, has not been received, is unrelated to a Loan identified in the List
of Loans, or does not conform in a material respect to the requirements of the
definition of Loan File, or the description thereof as set forth in the List of
Loans, the Indenture Trustee shall promptly so notify the Originator, the Trust
Depositor and the Servicer. In performing any such review, the Indenture Trustee
may conclusively rely on the Originator as to the purported genuineness of any
such document and any signature thereon. It is understood that the scope of the
Indenture Trustee's review of the Loan Files is limited solely to confirming
that the documents listed in the definition of Loan File have been executed and
received and relate to the Loans identified in the List of Loans; provided,
however, with respect to the UCC financing statements referenced in clause (i)
of the definition of Loan File, the Indenture Trustee's sole responsibility will
be to confirm that the Loan File contains UCC financing statements and not to
make determinations about the materiality of such UCC financing statements. The
Originator agrees to use reasonable efforts to remedy a material defect in a
document constituting part of a Loan File of which it is so notified by the
Indenture Trustee. If, however, within thirty (30) days after the Indenture
Trustee's notice to it respecting such material defect the Originator has not
remedied the defect and such defect materially and adversely affects the value
of the related Loan, such Loan will be treated as an "Ineligible Loan" and the
Originator will (i) substitute in lieu of such Loan a Substitute Loan in the
manner and subject to the conditions set forth in Section 11.01 or (ii)
                                                  -------------
repurchase such Loan at a purchase price equal to the Transfer Deposit Amount,
which purchase price shall be deposited in the Principal and Interest Account
within such thirty (30) day period.

     (c) Release of Entire Loan File Upon Substitution. Subject to subsection
         ---------------------------------------------             ----------
5.08(a), upon receipt by the Indenture Trustee of a certification of a Servicing
------
Officer of the Servicer of such substitution or of such purchase and the deposit
of the amounts described in subsection 2.08(b) in the Principal and Interest
                            ------------------
Account (which certification shall be in the form of Exhibit M hereto), the
                                                     ---------
Indenture Trustee shall release to the Servicer for release to the Originator
the related Loan File and

                                       38

<PAGE>

the Indenture Trustee and the Trust shall execute, without recourse, and deliver
such instruments of transfer necessary to transfer all right, title and interest
in such Loan to the Originator free and clear of any Liens created by the
Transaction Documents. All costs of any such transfer shall be borne by the
Servicer.

     (d) Partial Release of Loan File and/or Collateral. Subject to subsection
         ----------------------------------------------             ----------
5.08(b), if in connection with taking any action in connection with a Loan
-------
(including, without limitation, the amendment to documents in the Loan File
and/or a revision to Collateral) the Servicer requires any item constituting
part of the Loan File, or the release from the lien of the related Loan of all
or part of any Collateral, the Servicer shall deliver to the Indenture Trustee a
certificate to such effect in the form attached as Exhibit M hereto. Upon
                                                   ---------
receipt of such certification, the Indenture Trustee shall deliver to the
Servicer within two (2) Business Days of such request (if such request was
received by 2:00 p.m., central time), the requested documentation, and the
Indenture Trustee shall execute, without recourse, and deliver such instruments
of transfer necessary to release all or the requested part of the Collateral
from the lien of the related Loan and/or the Lien under the Transaction
Documents.

     (e) On the Remittance Date in March of each year, commencing March 2003,
the Indenture Trustee shall deliver to the Originator, the Trust Depositor and
the Servicer a certification detailing all transactions with respect to the
Loans for which the Indenture Trustee holds the Loan Files pursuant to this
Agreement during the prior calendar year. Such certification shall list all Loan
Files which were released by or returned to the Indenture Trustee during the
prior calendar year, the date of such release or return and the reason for such
release or return.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

     The Trust Depositor makes, and upon execution of each Subsequent Purchase
Agreement is deemed to make, the following representations and warranties in
Sections 3.01, 3.02, 3.03, 3.04 and 3.05, on which the Trust will rely in
-------------  ----  ----  ----     ----
purchasing the Loan Assets on the Closing Date (and on any Subsequent Transfer
Date), and on which the Noteholders and Certificateholders will rely.

     Such representations and warranties are given as of the execution and
delivery of this Agreement and as of the Closing Date (or Subsequent Transfer
Date, as applicable), but shall survive the sale, transfer and assignment of the
Loan Assets to the Trust. The repurchase obligation or substitution obligation
of the Trust Depositor set forth in Section 11.01 constitutes the sole remedy
                                    -------------
available for a breach of a representation or warranty of the Trust Depositor
set forth in Sections 3.01, 3.02, 3.03, 3.04 or 3.05 of this Agreement. Except
             -------------  ----  ----  ----    ----
as otherwise provided in Section 2.04(c)(vii), the Trust Depositor shall not be
                         --------------------
deemed to be remaking any of the representations set forth in Section 3.03 on a
                                                              ------------
Subsequent Transfer Date with respect to the Substitute Loans, as such
representations relate solely to the composition of the Initial Loans conveyed
on the Closing Date.

                                       39

<PAGE>

     Section 3.01 Representations and Warranties Regarding the Trust Depositor.
                  -------------------------------------------------------------

     By its execution of this Agreement and each Subsequent Transfer Agreement,
the Trust Depositor represents and warrants to the Trust, the Indenture Trustee,
the Noteholders and the Certificateholder that:

     (a) Organization and Good Standing. The Trust Depositor is a limited
         ------------------------------
liability company duly organized, validly existing and in good standing under
the laws of Delaware and has the power to own its assets and to transact the
business in which it is currently engaged. The Trust Depositor is duly qualified
to do business as a foreign entity and is in good standing in each jurisdiction
in which the character of the business transacted by it or properties owned or
leased by it requires such qualification and in which the failure so to qualify
would have a material adverse effect on the business, properties, assets, or
condition (financial or otherwise) of the Trust Depositor or the Trust.

     (b) Authorization; Valid Sale; Binding Obligations. The Trust Depositor has
         ----------------------------------------------
the power and authority to make, execute, deliver and perform this Agreement and
the other Transaction Documents to which it is a party and all of the
transactions contemplated under this Agreement and the other Transaction
Documents to which it is a party, and to create the Trust and cause it to make,
execute, deliver and perform its obligations under this Agreement and the other
Transaction Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party and to
cause the Trust to be created. This Agreement and each Subsequent Transfer
Agreement, if any, shall effect a valid sale, transfer and assignment of or
grant a security interest in the Loan Assets from the Trust Depositor to the
Trust, enforceable against the Trust Depositor and creditors of and purchasers
from the Trust Depositor. This Agreement and the other Transaction Documents to
which the Trust Depositor is a party constitute the legal, valid and binding
obligation of the Trust Depositor enforceable in accordance with their terms,
except as enforcement of such terms may be limited by applicable Insolvency Laws
and general principles of equity, whether considered in a suit at law or in
equity.

     (c) No Consent Required. The Trust Depositor is not required to obtain the
         -------------------
consent of any other party (other than those that it has already obtained) or
any consent, license, approval or authorization from, or registration or
declaration with, any Governmental Authority (other than those that it has
already obtained) in connection with the execution, delivery, performance,
validity or enforceability of this Agreement or the other Transaction Documents
to which it is a party.

     (d) No Violations. The execution, delivery and performance of this
         -------------
Agreement and the other Transaction Documents to which it is a party by the
Trust Depositor, and the consummation of the transactions contemplated hereby
and thereby, will not violate any material Requirement of Law applicable to the
Trust Depositor, or constitute a material breach of any mortgage, indenture,
contract or other agreement to which the Trust Depositor is a party or by which
the Trust Depositor or any of the Trust Depositor's properties may be bound, or
result in

                                       40

<PAGE>

the creation or imposition of any security interest, lien, charge, pledge,
preference, equity or encumbrance of any kind upon any of its properties
pursuant to the terms of any such mortgage, indenture, contract or other
agreement, other than as contemplated by the Transaction Documents.

     (e) Litigation. No litigation or administrative proceeding of or before any
         ----------
court, tribunal or governmental body is currently pending, or to the knowledge
of the Trust Depositor threatened, against the Trust Depositor or any of its
properties or with respect to this Agreement, the other Transaction Documents to
which it is a party or the Securities (1) that, if adversely determined, would
in the reasonable judgment of the Trust Depositor be expected to have a material
adverse effect on the business, properties, assets or condition (financial or
otherwise) of the Trust Depositor or the Trust or the transactions contemplated
by this Agreement or the other Transaction Documents to which the Trust
Depositor is a party or (2) seeking to adversely affect the federal income tax
or other federal, state or local tax attributes of the Certificate or Notes.

     (f) Solvency. The Trust Depositor, at the time of and after giving effect
         --------
to each conveyance of  Loan Assets hereunder, is Solvent on and as of the date
 thereof.

     (g) Taxes. The Trust Depositor has filed or caused to be filed all tax
         -----
returns which, to its knowledge, are required to be filed and has put all taxes
shown to be due and payable on such returns or on any assessments made against
it or any of its property and all other taxes, fees or other charges imposed on
it or any of its property by any Governmental Authority (other than any amount
of tax due, the validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in accordance with
generally accepted accounting principles have been provided on the books of the
Trust Depositor); no tax lien has been filed and, to the Trust Depositor's
knowledge, no claim is being asserted, with respect to any such tax, fee or
other charge.

     (h) Place of Business; No Changes. The Trust Depositor's location (within
         -----------------------------
the meaning of Article 9 of the UCC) is as set forth in Section 13.04. The Trust
                                                        -------------
Depositor has not changed its name, whether by amendment of its certificate of
formation, by reorganization or otherwise, and has not changed its location
within the four (4) months preceding the Closing Date.

     (i) Not an Investment Company. The Trust Depositor is not required to
         -------------------------
register as an "investment company" under the Investment Company Act of 1940, as
amended.

     (j) Sale Treatment. Other than for tax and accounting purposes, the Trust
         --------------
Depositor has treated the transfer of Loan Assets to the Trust Depositor for all
purposes as a sale and purchase on all of its relevant books and records and
other applicable documents.

     (k) Security Interest.
         -----------------

          (i) This Agreement creates a valid and continuing security interest
     (as defined in the applicable UCC) in the Loan Assets in favor of the
     Trust, which security interest is

                                       41

<PAGE>

     prior to all other Liens (except for Permitted Liens), and is enforceable
     as such against creditors of and purchasers from the Trust Depositor;

          (ii) such Loans, along with the related Loan Files, constitute either
     a "general intangible," an "instrument," an "account," "investment
     property," or "chattel paper," within the meaning of the applicable UCC;

          (iii) the Trust owns and has good and marketable title to such Loan
     Assets free and clear of any Lien (other than Permitted Liens), claim or
     encumbrance of any Person;

          (iv) the Trust Depositor has received all consents and approvals
     required by the terms of the Loan Assets to the sale of the Loan Assets
     hereunder to the Trust;

          (v) the Trust Depositor has caused the filing of all appropriate
     financing statements in the proper filing office in the appropriate
     jurisdictions under applicable law in order to perfect the security
     interest in such Loan Assets granted to the Trust under this Agreement;

          (vi) other than the security interest granted to the Trust pursuant to
     this Agreement, the Trust Depositor has not pledged, assigned, sold,
     granted a security interest in or otherwise conveyed any of such Loan
     Assets. The Trust Depositor has not authorized the filing of and is not
     aware of any financing statements against the Trust Depositor that include
     a description of collateral covering such Loan Assets other than any
     financing statement (A) relating to the security interest granted to the
     Trust Depositor under the Loan Sale Agreement, or (B) that has been
     terminated. The Trust Depositor is not aware of the filing of any judgment
     or tax lien filings against the Trust Depositor;

          (vii) all original executed copies of each Underlying Note that
     constitute or evidence the Loan Assets have been delivered to the Indenture
     Trustee;

          (viii) the Trust Depositor has received a written acknowledgment from
     the Indenture Trustee that the Indenture Trustee or its bailee is holding
     the Underlying Notes that constitute or evidence the Loan Assets solely on
     behalf of and for the benefit of the Trust; and

          (ix) none of the Underlying Notes that constitute or evidence the Loan
     Assets has any marks or notations indicating that they have been pledged,
     assigned or otherwise conveyed to any Person other than the Trust.

     (l) Value Given. The cash payments received by the Trust Depositor in
         -----------
respect of the purchase price of each Loan sold hereunder constitutes reasonably
equivalent value in consideration for the transfer to the Trust of such Loan
under this Agreement, such transfer was not made for or on account of an
antecedent debt owed by the Originator to the Trust Depositor, and such transfer
was not and is not voidable or subject to avoidance under any Insolvency Law.

                                       42

<PAGE>

     (m) Investment Company. The Trust is not required to be registered as an
         ------------------
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.

     (n) No Defaults. The Trust Depositor is in not default with respect to any
         -----------
order or decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which default might have consequences
that would materially and adversely affect the condition (financial or
otherwise) or operations of the Trust Depositor or its respective properties or
might have consequences that would materially and adversely affect its
performance hereunder.

     (o) Bulk Transfer Laws. The transfer, assignment and conveyance of the
         ------------------
Loans by the Trust Depositor pursuant to this Agreement are not subject to the
bulk transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction.

     (p) Origination and Collection Practices. The origination and collection
         ------------------------------------
practices used with respect to each Loan have been in all material respects
legal, proper, prudent and customary in the Loan origination and servicing
business and comply with the Credit and Collection Policy.

     (q) Adequacy of Consideration. The Trust Depositor will receive fair
         -------------------------
consideration and reasonably equivalent value in exchange for the sale of the
Loans.

     (r) Lack of Intent to Hinder, Delay or Defraud. Neither the Trust Depositor
         ------------------------------------------
nor any of its Affiliates sold, or will sell, any interest in any Loan with any
intent to hinder, delay or defraud any of their respective creditors.

     (s) Nonconsolidation. The Trust Depositor conducts its affairs such that
         ----------------
the Trust would not be substantively consolidated in the estate of the Trust
Depositor and their respective separate existences would not be disregarded in
the event of the Trust Depositor's bankruptcy.

     (t) Accuracy of Information. All written factual information heretofore
         -----------------------
furnished by the Trust Depositor for purposes of or in connection with this
Agreement or the other Transaction Documents to which Trust Depositor is a
party, or any transaction contemplated hereby or thereby is, and all such
written factual information hereafter furnished by the Trust Depositor to any
such party will be, true and accurate in every material respect, on the date
such information is stated or certified.

The representations and warranties set forth in subsection 3.01(k) may not be
                                                ------------------
waived by any Person and shall survive the termination of this Agreement.

     Section 3.02 Representations and Warranties Regarding Each Loan and as to
                  ------------------------------------------------------------
                  Certain Loans in the Aggregate.
                  -------------------------------

     The Trust Depositor represents and warrants (x) with respect to subsections
                                                                     -----------
(a)-(b), as to each Loan as of the execution and delivery of this Agreement and
-------
on the Closing Date, and as of

                                       43

<PAGE>

each Subsequent Transfer Date with respect to each Substitute Loan, and (y) with
respect to subsection (c), as to the Loan Pool in the aggregate as of the
           --------------
Closing Date, and as of each Subsequent Transfer Date with respect to Substitute
Loans (after giving effect to the addition of such Substitute Loans to the Loan
Pool), that:

     (a) List of Loans. The information set forth in the List of Loans attached
         -------------
hereto as Exhibit G (as the same may be amended or deemed amended in respect of
          ---------
a conveyance of Substitute Loans on a Subsequent Transfer Date) is true,
complete and correct as of the applicable Cutoff Date.

     (b) Eligible Loan. Such Loan satisfies the criteria for the definition of
         -------------
Eligible Loan set forth in this Agreement as of the date of its conveyance
hereunder.

     (c) Loans Secured by Real Property. Less than 2% of the Aggregate
         ------------------------------
Outstanding Loan Balance of the Loan Pool as of the Closing Date consists of
Loans principally secured by real property, and less than 50% of the Aggregate
Outstanding Loan Balance of the Loan Pool as of each Subsequent Transfer Date
shall consist of Loans principally secured by real property.

     Section 3.03 Representations and Warranties Regarding the Initial Loans in
                  -------------------------------------------------------------
                  the Aggregate.
                  --------------

     The Trust Depositor represents and warrants, on the Closing Date, that:

     Characteristics. As of the Initial Cutoff Date, the Initial Loans have the
     ---------------
following additional characteristics: (i) no Loan has a remaining maturity of
more than 122 months; (ii) the date of the final Scheduled Payment on the Loan
with the latest maturity is not later than January 20, 2012; (iii) other than
the Loan to Media Central LLC, no Loan was originated after the Initial Cutoff
Date; and (iv) none of the Initial Loans provide for Scheduled Payments due on a
basis other than monthly or quarterly.

     Section 3.04 Representations and Warranties Regarding the Loan Files.
                  --------------------------------------------------------

     The Trust Depositor represents and warrants on the Closing Date with
respect to the Initial Loans (or as of the Subsequent Transfer Date, with
respect to Substitute Loans), that (i) immediately prior to such date (as
applicable), the Originator and/or a collateral custodian under the Prior
Transactions had possession of each original Underlying Note and the related
complete Loan File, and there were no other custodial agreements relating to the
same in effect and (ii) except as otherwise provided in Section 2.06, the
                                                        ------------
complete Loan File for each Loan is in the possession of the Indenture Trustee.

     Section 3.05 Representations and Warranties Regarding Concentrations of
                  ----------------------------------------------------------
                  Initial Loans.
                  -------------

     The Trust Depositor represents and warrants on the Closing Date, as to the
composition of the Initial Loans in the Loan Pool as of the Initial Cutoff Date,
that:

                                       44

<PAGE>

     (a) the sum of the Outstanding Loan Balances of Obligors that are in the
same industry (by SIC code) shall not exceed 35%;

     (b) the sum of the Outstanding Loan Balances of the ten largest Obligors
shall not exceed 38%; and

     (c) the sum of the Outstanding Loan Balances of Obligors that have their
principal executive offices in the same State of the United States shall not
exceed 16%.

     Section 3.06 [Reserved].
                   --------

     Section 3.07 Representations and Warranties Regarding the Servicer.
                  -----------------------------------------------------

     The Servicer represents and warrants to the Owner Trustee, the Indenture
Trustee, the Noteholders and the Certificateholder that:

     (a) Organization and Good Standing. The Servicer is a corporation duly
         ------------------------------
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power to own its assets
and to transact the business in which it is currently engaged. The Servicer is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the business,
properties, assets, or condition (financial or otherwise) of the Servicer or the
Trust. The Servicer is properly licensed in each jurisdiction to the extent
required by the laws of such jurisdiction to service the Loans in accordance
with the terms hereof and in which the failure to so qualify would have a
material adverse effect on the business, properties, assets, or condition
(financial or otherwise) of the Servicer or Trust.

     (b) Authorization; Binding Obligations. The Servicer has the power and
         ----------------------------------
authority to make, execute, deliver and perform this Agreement and the other
Transaction Documents to which the Servicer is a party and all of the
transactions contemplated under this Agreement and the other Transaction
Documents to which the Servicer is a party, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which the Servicer is a party.
This Agreement and the other Transaction Documents to which the Servicer is a
party constitute the legal, valid and binding obligation of the Servicer
enforceable in accordance with their terms, except as enforcement of such terms
may be limited by Insolvency Laws and general principles of equity, whether
considered in a suit at law or in equity.

     (c) No Consent Required. The Servicer is not required to obtain the consent
         -------------------
of any other party (other than those that it has already obtained) or any
consent, license, approval or authorization from, or registration or declaration
with, any Governmental Authority (other than those that it has already obtained)
in connection with the execution, delivery, performance, validity or
enforceability of this Agreement and the other Transaction Documents to which
the Servicer is a party.

                                       45

<PAGE>

     (d) No Violations. The execution, delivery and performance of this
         -------------
Agreement and the other Transaction Documents to which the Servicer is a party
by the Servicer will not violate any material Requirements of Law applicable to
the Servicer, or constitute a material breach of any mortgage, indenture,
contract or other agreement to which the Servicer is a party or by which the
Servicer or any of the Servicer's properties may be bound, or result in the
creation of or imposition of any security interest, lien, pledge, preference,
equity or encumbrance of any kind upon any of its properties pursuant to the
terms of any such mortgage, indenture, contract or other agreement, other than
as contemplated by the Transaction Documents.

     (e) Litigation. No litigation or administrative proceeding of or before any
         ----------
court, tribunal or governmental body is currently pending, or to the knowledge
of the Servicer threatened, against the Servicer or any of its properties or
with respect to this Agreement, or any other Transaction Document to which the
Servicer is a party that, if adversely determined, would in the reasonable
judgment of the Servicer be expected to have a material adverse effect on the
business, properties, assets or condition (financial or otherwise) of the
Servicer or the Trust or the transactions contemplated by this Agreement or any
other Transaction Document to which the Servicer is a party.

     (f) Reports. All reports, certificates and other written information
         -------
furnished by the Servicer with respect to the Loans are correct in all material
respects.

     Section 3.08 Representations and Warranties of the Backup Servicer.
                  -----------------------------------------------------

     The Backup Servicer hereby represents and warrants to the Owner Trustee,
the Indenture Trustee, the Noteholders and the Certificateholders, as follows:

     (a) Organization. It is a national banking association duly organized,
         ------------
validly existing and in good standing under the federal laws of the United
States with all requisite power and authority to own its properties and to
conduct its business as presently conducted and to enter into and perform its
obligations pursuant to this Agreement.

     (b) Good Standing. The Backup Servicer is duly qualified to do business as
         -------------
a national banking association and is in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the ownership or
lease of its property and the conduct of its business requires such
qualification, licenses or approvals, except where the failure to so qualify or
have such licenses or approvals has not had, and would not be reasonably
expected to have, a material adverse effect on the interests of the Holders.

     (c) Authorization. It has the power and authority to execute and deliver
         -------------
this Agreement and to carry out its terms. It has duly authorized the execution,
delivery and performance of this Agreement by all requisite action.

     (d) No Violations. The consummation of the transactions contemplated by,
         -------------
and the fulfillment of the terms of, this Agreement by it will not (i) conflict
with, result in any breach of any of the terms or provisions of, or constitute a
default under, its articles of association or any Contractual Obligation by
which it or any of its property is bound, (ii) result in the creation or

                                       46

<PAGE>

imposition of any Lien upon any of its properties pursuant to the terms of any
Contractual Obligation (other than the Agreement), or (iii) violate any
Requirements of Law.

     (e) No Consent Required. No consent, approval, authorization, order,
         -------------------
registration, filing, qualification, license or permit (collectively, the
"Consents") of or with any Governmental Authority having jurisdiction over it or
 --------
any of its respective properties is required to be obtained in order for it to
enter into this Agreement or perform its obligations hereunder.

     (f) Binding Obligation. This Agreement constitutes its legal, valid and
         ------------------
binding obligation, enforceable in accordance with its terms, except as such
enforceability may be limited by (i) applicable Insolvency Laws and (ii) general
principles of equity (whether considered in a suit at law or in equity).

     (g) Litigation. There are no proceedings or investigations pending or, to
         ----------
the best of its knowledge, threatened, against it before any Governmental
Authority (i) asserting the invalidity of this Agreement, (ii) seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement or (iii) seeking any determination or ruling that might (in its
reasonable judgment) have a material adverse effect on the interests of the
Holders.

                                   ARTICLE IV

                           PERFECTION OF TRANSFER AND
                        PROTECTION OF SECURITY INTERESTS

     Section 4.01 Custody of Loans.
                  ----------------

     The contents of each Loan File shall be held in the custody of the
Indenture Trustee under the Indenture for the benefit of, and as agent for, the
Holders.

     Section 4.02 Filing.
                  ------

     On or prior to the Closing Date, the Originator, Trust Depositor and
Servicer shall cause the UCC financing statement(s) referred to in subsection
                                                                   ----------
2.02(ix) hereof to be filed, and from time to time the Servicer shall take and
--------
cause to be taken such actions and execute such documents as are necessary or
desirable or as the Owner Trustee or Indenture Trustee (acting at the direction
of the Majority Noteholders) may reasonably request to perfect and protect the
Trust's first priority perfected security interest in the Loan Assets against
all other Persons, including, without limitation, the filing of financing
statements, amendments thereto and continuation statements, the execution of
transfer instruments and the making of notations on or taking possession of all
records or documents of title. Notwithstanding the obligations of the
Originator, Trust Depositor and Servicer set forth in the preceding sentence,
the Originator, Trust Depositor and Servicer hereby authorize the Owner Trustee
and Indenture Trustee to prepare and file, at the expense of the Servicer, UCC
financing statements (including but not limited to renewal, continuation or in
lieu statements) and amendments or supplements thereto or other instruments as
the Owner Trustee or Indenture Trustee may from time to time deem necessary or

                                       47

<PAGE>

appropriate in order to perfect and maintain the security interest granted
hereunder in accordance with the UCC.

     Section 4.03 Changes in Name, Corporate Structure or Location.
                  ------------------------------------------------

     (a) During the term of this Agreement, none of the Originator, the
Servicer, the Trust Depositor or the Trust shall change its name, identity,
structure, existence, state of formation or location without first giving at
least thirty (30) days' prior written notice to the Owner Trustee and the
Indenture Trustee.

     (b) If any change in either the Servicer's, the Originator's or the Trust
Depositor's name, identity, structure, existence, state of formation, location
or other action would make any financing or continuation statement or notice of
ownership interest or lien relating to any Loan Asset seriously misleading
within the meaning of applicable provisions of the UCC or any title statute, the
Servicer, no later than five (5) Business Days after the effective date of such
change, shall file such amendments as may be required to preserve and protect
the Trust's interests in the Loan Assets and the proceeds thereof. In addition,
neither the Originator, the Servicer nor the Trust Depositor shall change the
place of its chief executive office (within the meaning of Article 9 of the UCC)
unless it has first taken such action as is advisable or necessary to preserve
and protect the Trust's interest in the Loan Assets. Promptly after taking any
of the foregoing actions, the Servicer shall deliver to the Owner Trustee and
the Indenture Trustee an Opinion of Counsel reasonably acceptable to the Owner
Trustee and the Indenture Trustee stating that, in the opinion of such counsel,
all financing statements or amendments necessary to preserve and protect the
interests of the Owner Trustee in the Loan Assets have been filed, and reciting
the details of such filing.

     Section 4.04 [Reserved].
                   --------

     Section 4.05 Costs and Expenses.
                  ------------------

     The Servicer agrees to pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Trustees' and Trust's right, title and interest in and to
the Loan Assets (including, without limitation, the security interest in the
Collateral related thereto and the security interests provided for in the
Indenture); provided, however, to the extent permitted by the Loan Documents,
            --------  -------
the Servicer may seek reimbursement for such costs and disbursements from the
related Obligors.

     Section 4.06 Sale Treatment.
                  --------------

     Other than for tax and accounting purposes, the Trust Depositor shall treat
the transfer of Loan Assets made hereunder for all purposes as a sale and
purchase on all of its relevant books and records.

                                       48

<PAGE>

     Section 4.07 Separateness from Trust Depositor.
                  ---------------------------------

     The Originator agrees to take or refrain from taking or engaging in with
respect to the Trust Depositor each of the actions or activities specified in
the "substantive consolidation" opinion of Moore & Van Allen PLLC (including any
certificates of the Originator attached thereto) delivered on the Closing Date,
upon which the conclusions therein are based.

                                    ARTICLE V

                               SERVICING OF LOANS

     Section 5.01 Appointment and Acceptance.
                  --------------------------

     MCG is hereby appointed as Servicer pursuant to this Agreement. MCG accepts
the appointment and agrees to act as the Servicer pursuant to this Agreement.

     Section 5.02 Duties of the Servicer.
                  ----------------------

     (a) The Servicer, as an independent contract servicer, shall service and
administer the Loans and shall have full power and authority, acting alone, to
do any and all things in connection with such servicing and administration which
the Servicer may deem necessary or desirable and consistent with the terms of
this Agreement and the Credit and Collection Policy. The Servicer may enter into
Subservicing Agreements for any servicing and administration of Loans with any
entity provided the Rating Agency Condition is satisfied; provided, however, so
                                                          -----------------
long as MCG is the Servicer and is a publicly owned investment company that has
elected to be regulated as a business development company under the Investment
Company Act of 1940, as amended, the Servicer shall only be required to provide
written notice to the Rating Agencies in the event that it enters into a
Subservicing Agreement with a direct or indirect wholly-owned subsidiary. The
Servicer shall be entitled to terminate any Subservicing Agreement in accordance
with the terms and conditions of such Subservicing Agreement and to either
itself directly service the related Loans or enter into a Subservicing Agreement
with a successor Subservicer which qualifies hereunder.

     (b) Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Servicer and a
Subservicer or reference to actions taken through a Subservicer or otherwise, so
long as this Agreement shall remain effective, the Servicer shall remain
obligated and primarily liable to the Indenture Trustee, for itself and on
behalf of the Noteholders and the Certificateholders, for the servicing and
administering of the Loans in accordance with the provisions of this Agreement
and the Credit and Collection Policy, without diminution of such obligation or
liability by virtue of such Subservicing Agreements or arrangements or by virtue
of indemnification from the Subservicer and to the same extent and under the
same terms and conditions as if the Servicer alone were servicing and
administering the Loans. For purposes of this Agreement, the Servicer shall be
deemed to have received payments on Loans when any Subservicer has received such
payments. The Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification

                                       49

<PAGE>

of the Servicer by such Subservicer, and nothing contained in this Agreement
shall be deemed to limit or modify such indemnification.

     (c) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Loans involving a Subservicer in its
capacity as such and not as an originator shall be deemed to be between the
Subservicer and the Servicer alone, and the Indenture Trustee, the Noteholders
and the Certificateholders shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to the
Subservicer except as set forth in subsection 5.02(d). Notwithstanding the
                                   ------------------
foregoing, the Servicer shall (i) at its expense and without reimbursement,
deliver to the Indenture Trustee a copy of each Subservicing Agreement and (ii)
provide notice of the termination of any Subservicer within a reasonable time
after such Subservicer's termination to the Indenture Trustee.

     (d) In the event the Servicer shall for any reason no longer be the
Servicer, the Servicer at its expense and without right of reimbursement
therefor, shall, upon request of the Indenture Trustee, deliver to the successor
servicer all documents and records (including computer tapes and diskettes)
relating to each Subservicing Agreement and the Loans then being serviced
hereunder and an accounting of amounts collected and held by it hereunder and
otherwise use its best efforts to effect the orderly and efficient transfer of
the Subservicing Agreements to the assuming party.

     (e) Modifications and Waivers Relating to Loans. So long as it is
         -------------------------------------------
consistent with the terms of this Agreement and the Credit and Collection
Policy, the Servicer may waive, modify or vary any term of any Loan or consent
to the postponement of strict compliance with any such term or in any manner
grant indulgence to any Obligor or other parties to the Loan Documents if in the
Servicer's determination such waiver, modification, postponement or indulgence
will not be materially adverse to the interests of the Noteholders; provided,
                                                                    --------
however, the Servicer may not modify any Loan in any manner that would extend
-------
the amortization of such Loan beyond the Legal Final Maturity Date. The Servicer
may execute any waivers, modifications, postponements or indulgences on behalf
of the Trust. No costs incurred by the Servicer or any Subservicer in respect of
Servicing Advances shall for the purposes of distributions to Noteholders be
added to the amount owing under the related Loan. Any fees and costs imposed in
connection therewith may be retained by the Servicer. Without limiting the
generality of the foregoing, so long as it is consistent with the Credit and
Collection Policy, the Servicer shall continue, and is hereby authorized and
empowered to execute and deliver on behalf of the Indenture Trustee, the Owner
Trustee, each Noteholder and each Certificateholder, all instruments of
amendment, waiver, satisfaction or cancellation, or of partial or full release,
discharge and all other comparable instruments, with respect to the Loans and
with respect to any Collateral. Such authority shall include, but not be limited
to, the authority to substitute or release items of Collateral consistent with
the Credit and Collection Policy and sell participations or assignments in Loans
previously transferred to the Trust. In connection with any such sale, the
Servicer shall deposit in the Principal and Interest Account, pursuant to
subsection 7.03(b), all proceeds received upon such sale. If reasonably required
------------------
by the Servicer, the Indenture Trustee, on behalf of the Trust, shall furnish
the Servicer, within five (5) Business Days of receipt of the Servicer's
request, with any powers of attorney and other documents necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties under this Agreement. Any such request to the Indenture Trustee, on

                                       50

<PAGE>

behalf of the Trust, shall be accompanied by a certification in the form of
Exhibit L attached hereto signed by a Servicing Officer. In connection with any
---------
substitution of Collateral, the Servicer shall deliver to the Indenture Trustee
the items, and within the time frame, set forth in Section 2.06, assuming that
                                                   ------------
the date of substitution is the relevant "Transfer Date."

     (f) The Servicer, in servicing and administering the Loans, shall employ or
cause to be employed procedures (including collection, foreclosure and
Foreclosed Property and Repossessed Collateral management procedures) and
exercise the same care that it customarily employs and exercises in servicing
and administering Loans for its own account and prudent lending standards, and
in accordance with the Credit and Collection Policy, giving due consideration to
the Noteholders' reliance on the Servicer.

     (g) [Reserved].
          --------

     (h) In accordance with the power set forth in subsection 2.01(a), the
                                                   ------------------
Servicer shall perform the duties of the Issuer and the Owner Trustee under the
Transaction Documents. In furtherance of the foregoing, the Servicer shall
consult with the Owner Trustee as the Servicer deems appropriate regarding the
duties of the Issuer and the Owner Trustee under the Transaction Documents. The
Servicer shall monitor the performance of the Issuer and the Owner Trustee and
shall advise the Owner Trustee when action is necessary to comply with the
Issuer's or the Owner Trustee's duties under the Transaction Documents. The
Servicer shall prepare for execution by the Owner Trustee or shall cause the
preparation by other appropriate Persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of the
Issuer or the Owner Trustee to prepare, file or deliver pursuant to the
Transaction Documents.

     (i) In addition to the duties of the Servicer set forth in this Agreement
or any of the Transaction Documents, the Servicer shall perform such
calculations and shall prepare for execution by the Issuer or the Owner Trustee
or shall cause the preparation by other appropriate Persons of all such
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Issuer to prepare, file or deliver pursuant to state and
federal tax and securities laws. In accordance with the directions of the Issuer
or the Owner Trustee, the Servicer shall administer, perform or supervise the
performance of such other activities in connection with the Issuer as are not
covered by any of the foregoing provisions and as are expressly requested by the
Issuer or the Owner Trustee and are reasonably within the capability of the
Servicer.

     (j) Notwithstanding anything in this Agreement or any of the Transaction
Documents to the contrary, the Servicer shall be responsible for promptly (upon
knowledge thereof) notifying the Owner Trustee and the Paying Agent in the event
that any withholding tax is imposed on the Issuer's payments (or allocations of
income) to a Noteholder or a Certificateholder. Any such notice shall be in
writing and specify the amount of any withholding tax required to be withheld by
the Owner Trustee or the Paying Agent pursuant to such provision.

     (k) All tax returns will be signed by the Servicer on behalf of the Issuer.

                                       51

<PAGE>

     (l) The Servicer shall maintain appropriate books of account and records
relating to services performed under this Agreement, which books of account and
records shall be reasonably accessible for inspection by the Owner Trustee at
any time during normal business hours.

     (m) Revisions to Credit and Collection Policy. Without the prior written
         -----------------------------------------
consent of the Majority Noteholders, the Servicer shall not agree or consent to,
or otherwise permit to occur, any amendment, modification, change, supplement or
rescission of or to the Credit and Collection Policy, in whole or in part, in
any manner that could have a material adverse effect on the Loans.

     (n) For so long as any of the Notes are outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) of the Securities Act, (1) the
Servicer will provide or cause to be provided to any holder of such Notes and
any prospective purchaser thereof designated by such holder, upon the request of
such a holder or prospective purchaser, the information required to be provided
to such holder or prospective purchaser by Rule 144A(d)(4) under the Securities
Act; and (2) the Servicer shall update such information from time to time in
order to prevent such information from becoming false and misleading and will
take such other actions as are necessary to ensure that the safe harbor
exemption from the registration requirements of the Securities Act under Rule
144A is and will be available for resales of such Notes conducted in accordance
with Rule 144A.

     (o) The Servicer will keep in full force and effect its existence, rights
and franchise as a Delaware corporation, and the Servicer shall obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement and of any of the Loans and to
perform its duties under this Agreement.

     (p) The Servicer shall be obligated to make the Servicing Advances (but not
Scheduled Payment Advances) incurred in the performance of its servicing duties
hereunder. The Servicer shall be entitled to reimbursement for such Servicing
Advances pursuant to subsections 5.10(d) and 7.03(h).
                     -------------------     -------

     (q) The Servicer is not responsible for any taxes on the Trust or any
Servicing Fees to any Successor Servicer.

     (r) All payments (other than Prepayments) received on Loans will be applied
by the Servicer to amounts due by the Obligor starting with the most recent
Scheduled Payment.

     Section 5.03 Liquidation of Loans.
                  --------------------

     (a) In the event that any payment due under any Loan and not postponed
pursuant to Section 5.02 is not paid when the same becomes due and payable, or
            ------------
in the event the Obligor fails to perform any other covenant or obligation under
the Loan, the Servicer in accordance with the Credit and Collection Policy shall
take such action as it shall deem to be in the best interests of the
Noteholders. The Servicer consistent with its Credit and Collection Policy shall
foreclose

                                       52

<PAGE>

upon or otherwise comparably effect the ownership of Collateral relating to
defaulted Loans for which the related Loan is still outstanding, and as to which
no satisfactory arrangements can be made for collection of delinquent payments
in accordance with the provisions of Section 5.10. In connection with such
                                     ------------
foreclosure or other conversion and any other liquidation action or
enforcement of remedies, the Servicer shall exercise collection and foreclosure
procedures with the same degree of care and skill in its exercise or use as it
would exercise with respect to its own affairs, in accordance with prudent
servicing standards, and in accordance with the Credit and Collection Policy.
Prior to undertaking foreclosure of any material Property of a Material Mortgage
Loan, the Servicer must investigate environmental conditions, including, in
accordance with the Credit and Collection Policy, the performance of a Phase I
and/or Phase II environmental site assessment, to ascertain the actual or
potential presence of any hazardous material on or under such property. For
purposes of this Agreement, the term hazardous material includes (1) any
hazardous substance, as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C. 9601-9675, and (2) petroleum (as that
term is defined at 42 U.S.C. ss.6991) including any derivative, fraction,
by-product, constituent or breakdown product thereof, or additive thereto. In
the event that the environmental investigation determines the existence of any
hazardous material on or under the Mortgaged Property in excess of minimum
action levels established by relevant regulatory agencies, title to such
property shall not be taken without satisfaction of the Rating Agency Condition.

     (b) After a Loan has been liquidated, the Servicer shall promptly prepare
and forward to the Indenture Trustee and upon request, any Noteholder or
Certificateholder, a report (the "Liquidation Report"), in the form attached
                                  ------------------
hereto as Exhibit D, detailing the Liquidation Proceeds received from such Loan,
          ---------
expenses incurred with respect thereto, and any loss incurred in connection
therewith.

     (c) Upon classification of a Loan as a Charged-Off Loan, the Servicer may
accelerate all payments due thereunder to the extent permitted under the Loan
Documents or take any other action as the Servicer reasonably believes will
maximize the amount of recovery thereon and shall otherwise follow the Credit
and Collection Policy, which other actions may include the foreclosure and
transfer of any related Collateral or other security on behalf of the
Noteholders.

     Section 5.04 Fidelity Bond; Insurance.
                  ------------------------

     The Servicer shall maintain with a responsible company, and at its own
expense, a blanket fidelity bond and an errors and omissions insurance policy
(which, for avoidance of doubt, may be used by the Servicer to satisfy
requirements under different agreements, including, but not limited to, the CP
Transaction), in a minimum aggregate amount equal to $1,500,000, and a maximum
deductible of $250,000 (with respect to the fidelity bond) and $100,000 (with
respect to the errors and omissions insurance policy), if commercially
available, with coverage on all employees acting in any capacity requiring such
persons to handle funds, money, documents or papers relating to the Loans
("Servicer Employees"). The fidelity bond shall provide coverage to the
  ------------------
Indenture Trustee and the Owner Trustee, their respective officers and
employees, against losses resulting from forgery, theft, embezzlement or fraud
by such Servicer Employees. The errors and omissions policy shall insure against
losses resulting from the errors,

                                       53

<PAGE>

omissions and negligent acts of such Servicer Employees. No provision of this
Section 5.04 requiring such fidelity bond and errors and omissions insurance
------------
shall relieve the Servicer from its duties as set forth in this Agreement. Upon
the request of the Indenture Trustee, the Owner Trustee, any Noteholder or any
Certificateholder, the Servicer shall cause to be delivered to the Indenture
Trustee, the Owner Trustee, such Noteholder or such Certificateholder a
certified true copy of such fidelity bond and insurance policy. Notwithstanding
the foregoing, the Servicer shall not be required to obtain an errors and
omissions insurance policy satisfying the standard described above until the
first advance is made on the Series of Notes.

     Section 5.05 Maintenance of Hazard Insurance.
                  -------------------------------

     In the case of each Material Mortgage Loan, the Servicer shall comply with
the Credit and Collection Policy concerning the issuance and maintenance of fire
and hazard insurance with extended coverage customary in the area where the
Mortgaged Property is located. If at origination of a Loan, to the best of the
Servicer's knowledge after reasonable investigation, the related Mortgaged
Property is in an area identified in the Federal Register by the Flood Emergency
Management Agency as having special flood hazards (and such flood insurance has
been made available) consistent with the Credit and Collection Policy, the
Servicer will require the related Obligor or other creditors to purchase a flood
insurance policy covering each piece of property that is material with a
generally acceptable insurance carrier, in an amount representing coverage not
less than the least of (i) the full insurable value of the Mortgaged Property
that is material, or (ii) the maximum amount of insurance available under the
National Flood Insurance Act of 1968, as amended. The Servicer shall also
maintain, to the extent such insurance is available, and required by the Credit
and Collection Policy, on Foreclosed Property constituting real property that is
material, fire and hazard insurance in the amounts described above and liability
insurance. Any amounts collected by the Servicer under any such policies (other
than amounts to be applied to the restoration or repair of the Mortgaged
Property, or to be released to the Obligor or other creditors in accordance with
Requirements of Law or the governing documents) shall be deposited in the
Principal and Interest Account, subject to withdrawal pursuant to subsection
                                                                  ----------
7.03(h). It is understood and agreed that no earthquake or other additional
-------
insurance need be required by the Servicer of any Obligor or other creditors or
maintained on Foreclosed Property, other than pursuant to such Requirements of
Law and regulations as shall at any time be in force and as shall require such
additional insurance. All policies required hereunder (unless the Seller is a
non-agent co-lender with respect to such Loan) shall be endorsed with standard
mortgagee clauses with losses payable to the Servicer or its affiliates.

     Section 5.06 Collection of Certain Loan Payments.
                  -----------------------------------

     The Servicer shall make reasonable efforts, consistent with the Credit and
Collection Policy, to collect all payments required under the terms and
provisions of the Loans. Consistent with the foregoing and the Credit and
Collection Policy, the Servicer may in its discretion waive or permit to be
waived any fee or charge which the Servicer would be entitled to retain
hereunder as servicing compensation and extend the due date for payments due on
an Underlying Note as provided in subsection 5.02(e).
                                  ------------------

                                       54

<PAGE>

     Section 5.07 Access to Certain Documentation and Information Regarding the
                  -------------------------------------------------------------
                  Loans.
                  -----

     The Servicer shall provide to the Owner Trustee, the Indenture Trustee, the
FDIC, the OCC, the Federal Reserve, the Office of Thrift Supervision and the
supervisory agents and examiners of the foregoing, access to the documentation
regarding the Loans required by applicable local, state and federal regulations,
such access being afforded without charge but only upon reasonable request and
during normal business hours at the offices of the Servicer designated by it and
in a manner that does not unreasonably interfere with the Servicer's normal
operations or customer or employee relations. The Indenture Trustee and the
Owner Trustee shall and shall cause their representatives to hold in confidence
all such information except to the extent disclosure may be required by law (and
all reasonable applications for confidential treatment are unavailing) and
except to the extent that the Indenture Trustee and the Owner Trustee may
reasonably determine that such disclosure is consistent with their obligations
hereunder.

     Section 5.08 Satisfaction of Mortgages and Collateral and Release of Loan
                  ------------------------------------------------------------
                  Files.
                  -----

     (a) Upon the payment in full of any Loan, the receipt by the Servicer of a
notification that payment in full will be escrowed in a manner customary for
such purposes or the deposit into the Principal and Interest Account of the
purchase price of any Loan acquired by the Trust Depositor, the Servicer or
another Person pursuant to this Agreement, or any other Transaction Document,
the Servicer will immediately notify the Indenture Trustee by a certification in
the form of Exhibit M attached hereto (which certification shall include a
            ---------
statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the Principal
and Interest Account pursuant to subsection 7.03(b) have been or will be so
                                 ------------------
deposited) of a Servicing Officer and shall request delivery to it of the Loan
File. Upon receipt of such certification and request, the Indenture Trustee
shall in accordance with subsection 2.08(c) release, within two (2) Business
                         ------------------
Days (if such request was received by 2:00 p.m. central time), the related Loan
File to the Servicer. Expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be payable by the Servicer and shall
not be chargeable to the Principal and Interest Account or the Note Distribution
Account.

     (b) From time to time and as appropriate for the servicing or foreclosure
of any Loan, the Indenture Trustee shall, upon request of the Servicer and
delivery to the Indenture Trustee of a certification in the form of Exhibit M
                                                                    ---------
attached hereto signed by a Servicing Officer, release the related Loan File to
the Servicer within two (2) Business Days (if such request was received by 2:00
p.m. central time), and the Indenture Trustee shall execute such documents as
shall be necessary to the prosecution of any such proceedings. The Servicer
shall return the Loan File to the Indenture Trustee when the need therefor by
the Servicer no longer exists, unless the Loan has been liquidated and the
Liquidation Proceeds relating to the Loan have been deposited in the Principal
and Interest Account and remitted to the Indenture Trustee for deposit in the
Note Distribution Account or the Loan File or such document has been delivered
to an attorney, or to a public trustee or other public official as required by
law, for purposes of initiating or pursuing legal action or other proceedings
for the foreclosure or repossession of Collateral either judicially or
non-judicially, and the Servicer has delivered to the Indenture Trustee a
certificate of a

                                       55

<PAGE>

Servicing Officer certifying as to the name and address of the Person to whom
such Loan File or such document was delivered and the purpose or purposes of
such delivery. Upon receipt of a certificate of a Servicing Officer stating that
such Loan was liquidated, the servicing receipt relating to such Loan shall be
released by the Indenture Trustee to the Servicer.

     (c) The Indenture Trustee shall execute and deliver to the Servicer any
court pleadings, requests for trustee's sale or other documents provided to it
necessary to the foreclosure or trustee's sale in respect of Collateral or to
any legal action brought to obtain judgment against any Obligor on the
Underlying Note or other agreement securing Collateral or to obtain a deficiency
judgment, or to enforce any other remedies or rights provided by the Underlying
Note or other agreement securing Collateral or otherwise available at law or in
equity. Together with such documents or pleadings, the Servicer shall deliver to
the Indenture Trustee a certificate of a Servicing Officer requesting that such
pleadings or documents be executed by the Indenture Trustee and certifying as to
the reason such documents or pleadings are required and that the execution and
delivery thereof by the Indenture Trustee will not invalidate or otherwise
adversely affect the lien of the agreement securing Collateral, except for the
termination of such a lien upon completion of the foreclosure or trustee's sale.
The Indenture Trustee shall, upon receipt of a written request from a Servicing
Officer, execute any document provided to the Indenture Trustee by the Servicer
or take any other action requested in such request, that is, in the opinion of
the Servicer as evidenced by such request, required or appropriate by any state
or other jurisdiction to discharge the lien securing Collateral upon the
satisfaction thereof and the Indenture Trustee will sign and post, but will not
guarantee receipt of, any such documents to the Servicer, or such other party as
the Servicer may direct, within five (5) Business Days of the Indenture
Trustee's receipt of such certificate or documents. Such certificate or
documents shall establish to the Indenture Trustee's satisfaction that the
related Loan has been paid in full by or on behalf of the Obligor (or subject to
a deficiency claim against such Obligor) and that such payment has been
deposited in the Principal and Interest Account.

     (d) Notwithstanding anything contained in this Section 5.08 to the
                                                    ------------
contrary, in no event may the Servicer possess in excess of fifteen (15) Loan
Files (excluding Loan Files for Loans which have been paid in full or
repurchased) at any given time without the consent of the Indenture Trustee.

     Section 5.09 Scheduled Payment Advances.
                  --------------------------

     For each Due Period, if the Servicer determines that any Scheduled Payment
(or portion thereof) that was due and payable pursuant to a Loan in the Loan
Pool during such Due Period was not received prior to the end of such Due
Period, the Servicer has the right to elect, but is not obligated, to make a
Scheduled Payment Advance in an amount up to the amount of such delinquent
Scheduled Payment (or portion thereof) if the Servicer reasonably believes that
the advance will be reimbursed or subsequently paid by the related Obligor. The
Servicer will deposit any Scheduled Payment Advances into the Principal and
Interest Account on or prior to 11:00 a.m. (New York City time) on the related
Determination Date, in immediately available funds. The Servicer will be
entitled to be reimbursed for Scheduled Payment Advances pursuant to subsections
                                                                     -----------
7.05(a) and 7.05(b).
-------     -------

                                       57

<PAGE>

     Section 5.10 Title, Management and Disposition of Foreclosed Property.
                  --------------------------------------------------------

     (a) In the event that title to Collateral is acquired in foreclosure or by
deed in lieu of foreclosure or by other legal process, the deed or certificate
of sale, or the Repossessed Collateral, shall be taken in the name of the Trust
for the benefit of the Holders.

     (b) The Servicer, subject to the provisions of this Article V, shall
                                                         ---------
manage, conserve, protect and operate each Foreclosed Property or other
Repossessed Collateral for the Holders solely for the purpose of its prudent and
prompt disposition and sale. The Servicer shall, either itself or through an
agent selected by the Servicer, manage, conserve, protect and operate the
Foreclosed Property or other Repossessed Collateral in the same manner that it
manages, conserves, protects and operates other foreclosed or repossessed
property for its own account, and in a similar manner to that of similar
property in the same locality as the Foreclosed Property or other Repossessed
Collateral is managed. The Servicer shall attempt to sell the same (and may
temporarily rent the same) on such terms and conditions as the Servicer deems to
be in the best interest of the Holders.

     (c) The Servicer shall cause to be deposited in the Principal and Interest
Account, no later than two (2) Business Days after the receipt thereof, all
revenues received with respect to the conservation and disposition of the
related Foreclosed Property or other Repossessed Collateral net of Servicing
Advances.

     (d) The Servicer shall, subject to Section 7.03, reimburse itself for any
                                        ------------
related unreimbursed Servicing Advances and unpaid Servicing Fees, and the
Servicer shall deposit in the Principal and Interest Account the net cash
proceeds of the sale of any Foreclosed Property or other Repossessed Collateral
to be distributed to the Holders in accordance with Section 7.05 hereof.

     Section 5.11 Servicing Compensation.
                  ----------------------

     (a) As compensation for its servicing activities hereunder and
reimbursement for its expenses, the Servicer shall be entitled to receive a
servicing fee for each month (or portion thereof), calculated monthly but
payable quarterly in arrears on each Remittance Date prior to the termination of
the Trust (with respect to each Due Period, the "Servicing Fee") equal to the
                                                 -------------
sum of the products for each of the three (3) Monthly Periods included in the
related Due Period of: (A) the Servicing Fee Percentage, (B) the Aggregate
Outstanding Loan Balance of the Loans as of the first (1st) day of the
applicable Monthly Period and (c) a fraction, the numerator of which is equal to
the number of days in the applicable Monthly Period and the denominator of which
is 360. The Servicing Fee is payable out of Interest Collections pursuant to
subsections 7.05(a), (b) and (c).
-------------------  ---     ---

     (b) In addition to the Servicing Fee, the Servicer shall be entitled to
retain for itself as additional servicing compensation assumption and other
administrative fees paid or payable in connection with any Loan.

                                       57

<PAGE>

     Section 5.12 Assignment; Resignation.
                  -----------------------

     The Servicer shall not assign its rights and duties under this Agreement
(other than in connection with a subservicing arrangement) nor resign from the
obligations and duties hereby imposed on it as Servicer except (i) by mutual
consent of the Servicer, the Indenture Trustee and the Majority Noteholders,
(ii) in connection with a merger, conversion or consolidation permitted pursuant
to Section 5.13 (in which case the Person resulting from the merger, conversion
   ------------
or consolidation shall be the successor of the Servicer), (iii) in connection
with an assignment permitted pursuant to Section 5.13 (in which case the
                                         ------------
Assignee shall be the successor of the Servicer), or (iv) upon the Servicer's
determination that its duties hereunder are no longer permissible under
Requirements of Law or administrative determination and such incapacity cannot
be cured by the Servicer. Any such determination permitting the resignation of
the Servicer shall be evidenced by a written Opinion of Counsel (who may be
counsel for the Servicer) to such effect delivered to the Indenture Trustee,
which Opinion of Counsel shall be in form and substance reasonably acceptable to
the Indenture Trustee. No such resignation shall become effective until a
successor has assumed the Servicer's responsibilities and obligations hereunder
in accordance with Section 8.03.
                   ------------

     Section 5.13 Merger or Consolidation of Servicer.
                  -----------------------------------

     Any Person into which the Servicer may be merged or consolidated, or any
Person resulting from such merger, conversion or consolidation to which the
Servicer is a party, or any Person succeeding to substantially all of the
business of the Servicer, and who shall be an established commercial loan
servicing institution that on a consolidated basis has a net worth of at least
$50,000,000, shall be the Successor Servicer hereunder without execution or
filing of any paper or any further act on the part of any of the parties hereto,
notwithstanding anything herein to the contrary; provided, however, no such
                                                 --------  -------
merger, conversion or consolidation of the Servicer or transfer of all or
substantially all or the Servicer assets or business shall be permitted
hereunder unless the Rating Agency Condition is satisfied with respect thereto.

     Section 5.14 Limitation on Liability of the Servicer and Others.
                  --------------------------------------------------

     The Servicer and any director, officer, employee or agent of the Servicer
may rely on any document of any kind which it in good faith reasonably believes
to be genuine and to have been adopted or signed by the proper authorities or
persons respecting any matters arising hereunder. Subject to the terms of
Section 12.01 herein, the Servicer shall have no obligation to appear with
-------------
respect to, prosecute or defend any legal action which is not incidental to the
Servicer's duty to service the Loans in accordance with this Agreement. The
Servicer shall not be responsible for the payment of any taxes imposed on or
with respect to the Trust or for the fees of any Successor Servicer

     Section 5.15 The Backup Servicer.
                  -------------------

     (a) The Trust, the Indenture Trustee and the Trust Depositor hereby appoint
Wells Fargo Bank Minnesota, National Association to act as Backup Servicer in
accordance with the terms of this Agreement. Wells Fargo Bank Minnesota,
National Association hereby accepts

                                       58

<PAGE>

such appointment and agrees to perform the duties and responsibilities with
respect thereto set forth herein.

     (b) The Backup Servicer shall perform the following duties and obligations:

          (i) On or before the Closing Date, the Backup Servicer shall accept
     from the Servicer delivery of the information required to be set forth in
     the Quarterly Reports in hard copy and in an agreed upon electronic format.

          (ii) Not later than 12:00 noon New York time ten (10) Business Days
     after the end of the related Monthly Period, the Servicer shall provide to
     the Backup Servicer and the Backup Servicer shall accept delivery of tape
     in an agreed upon electronic format (the "Tape") from the Servicer, which
                                               ----
     shall include but not be limited to the following information: (x) for each
     Loan, (1) Loan number, (2) legal name of the related Obligor, (3) scope
     (i.e., whether revenues are local, regional or national), (4) state of
     Obligor's Chief executive office, (5) SIC Code, (6) outstandings at cost,
     (7) type of Loan (i.e., Partially Funded Term Loan, Fully Funded Term Loan,
     Reducing Revolving Loan or Traditional Revolving Loan), (8) type of
     security interest (i.e., senior or subordinated), (9) term payment type
     (i.e., amortizing, balloon or bullet), (10) origination date, (11) maturity
     date, (12) benchmark for Loan Rate, (13) margin, (14) frequency of
     Scheduled Payments, (15) controlling interest,(16) the collection status,
     (17) the Loan status, and (18) the Outstanding Loan Balance and (y) the
     Aggregate Outstanding Loan Balance. With respect to its duties pursuant to
     this subsection 5.15(b)(ii), the Backup Servicer shall have no duty to
          ----------------------
     confirm that the Tape contains the foregoing information.

          (iii) Prior to the Remittance Date, the Backup Servicer shall review
     the Quarterly Report to ensure that it is complete on its face and that the
     following items in such Quarterly Report have been accurately calculated,
     if applicable, and reported: (A) the Aggregate Outstanding Loan Balance,
     (B) the Backup Servicing Fee, (C) the Loans that are more than sixty (60)
     days delinquent (other than Charged-Off Loans), (D) the Charged-Off Loans,
     (E) principal and interest payments due to the Noteholders. The Backup
     Servicer shall notify the Indenture Trustee, the Placement Agent and the
     Servicer of any discrepancies with the Quarterly Report based on such
     review not later than the Business Day preceding such Remittance Date.

          (iv) If the Servicer disagrees with the report provided under
     paragraph (iii) above by the Backup Servicer or if the Servicer or any
     ---------------
     subservicer has not reconciled such discrepancy, the Backup Servicer agrees
     to confer with the Servicer to resolve such disagreement on or prior to the
     next succeeding Determination Date and shall settle such discrepancy with
     the Servicer if possible, and notify the Indenture Trustee, the Placement
     Agent and the Rating Agencies of the resolution thereof. The Servicer
     hereby agrees to cooperate at its own expense with the Backup Servicer in
     reconciling any discrepancies herein. If within twenty (20) days after the
     delivery of the report provided under paragraph (iii) above by the Backup
                                           ---------------
     Servicer, such discrepancy is not resolved, the Backup Servicer shall
     promptly notify the Servicer, Indenture Trustee, the Placement Agent and
     the Rating Agencies of the continued existence of such discrepancy.

                                       59

<PAGE>

     Following receipt of such notice by the Indenture Trustee, the Placement
     Agent and the Rating Agencies, the Servicer shall deliver to the Indenture
     Trustee, the Placement Agent, the Backup Servicer and the Rating Agencies
     no later than the related Remittance Date a certificate describing the
     nature and amount of such discrepancies and the actions the Servicer
     proposes to take with respect thereto.

     With respect to the foregoing, the Backup Servicer, in the performance of
its duties and obligations hereunder, is entitled to rely conclusively, and
shall be fully protected in so relying, on the contents of each Tape, including,
but not limited to, the completeness and accuracy thereof, provided by the
Servicer.

     (c) After the termination or resignation by the Servicer in accordance with
this Agreement, all authority, power, rights and responsibilities of the
Servicer, under this Agreement, whether with respect to the Loans or otherwise,
shall pass to and be vested in the Backup Servicer and the Backup Servicer shall
be deemed the Successor Servicer, subject to and in accordance with the
provisions of Section 8.03, as long as the Backup Servicer is not prohibited by
              ------------
an applicable provision of law from fulfilling the same, as evidenced by an
Opinion of Counsel; provided, however, if Wells Fargo as Backup Servicer becomes
                    --------  -------
the Successor Servicer, it will not make any Scheduled Payment Advances.

     (d) Any Person (i) into which the Backup Servicer may be merged or
consolidated, (ii) that may result from any merger or consolidation to which the
Backup Servicer shall be a party, or (iii) that may succeed to the properties
and assets of the Backup Servicer substantially as a whole, which Person in any
of the foregoing cases executes an agreement of assumption to perform every
obligation of the Backup Servicer hereunder, shall be the successor to the
Backup Servicer under this Agreement without further act on the part of any of
the parties to this Agreement.

     (e) As compensation for its backup servicing activities hereunder, the
Backup Servicer shall be entitled to receive the Backup Servicing Fee from the
Servicer. The Backup Servicing Fee shall be calculated monthly but payable
quarterly on each Remittance Date. The Backup Servicer's entitlement to receive
the Backup Servicing Fee (other than due and unpaid Backup Servicer Fees owed
through such date) shall cease on the earliest to occur of: (i) it becoming the
Successor Servicer, (ii) its removal as Backup Servicer, or (iii) the
termination of this Agreement.

     (f) The Backup Servicer may be removed with or without cause by the
Majority Noteholders by notice given in writing to the Backup Servicer. In the
event of any such removal, a replacement Backup Servicer may be appointed by
Majority Noteholders.

     (g) The Backup Servicer undertakes to perform only such duties and
obligations as are specifically set forth in this Agreement, it being expressly
understood by all parties hereto that there are no implied duties or obligations
of the Backup Servicer hereunder. Without limiting the generality of the
foregoing, the Backup Servicer, except as expressly set forth herein, shall have
no obligation to supervise, verify, monitor or administer the performance of the
Servicer. The Backup Servicer may act through its agents, attorneys and
custodians in

                                       60

<PAGE>

performing any of its duties and obligations under this Agreement, it being
understood by the parties hereto that the Backup Servicer will be responsible
for any misconduct or negligence on the part of such agents, attorneys or
custodians acting for and on behalf of the Backup Servicer. Neither the Backup
Servicer nor any of its officers, directors, employees or agents shall be
liable, directly or indirectly, for any damages or expenses arising out of the
services performed under this Agreement other than damages or expenses that
result from the gross negligence or willful misconduct of it or them or the
failure to perform materially in accordance with this Agreement.

     (h) Limitation on Liability. The Backup Servicer shall not be liable for
         -----------------------
any obligation of the Servicer contained in this Agreement or for any errors of
the Servicer contained in any Tape, certificate or other data or document
delivered to the Backup Servicer hereunder or on which the Backup Servicer must
rely in order to perform its obligations hereunder, and the parties hereto each
agree to look only to the Servicer to perform such obligations. The Backup
Servicer shall have no responsibility and shall not be in default hereunder or
incur any liability for any failure, error, malfunction or any delay in carrying
out any of its respective duties under this Agreement if such failure or delay
results from the Backup Servicer acting in accordance with information prepared
or supplied by a Person other than the Backup Servicer or the failure of any
such other Person to prepare or provide such information. The Backup Servicer
shall have no responsibility, shall not be in default and shall incur no
liability for (i) any act or failure to act of any third party, including the
Servicer (ii) any inaccuracy or omission in a notice or communication received
by the Backup Servicer from any third party, (iii) the invalidity or
unenforceability of any Loan under Requirements of Law, (iv) the breach or
inaccuracy of any representation or warranty made with respect to any Loan, or
(v) the acts or omissions of any Successor Backup Servicer.

     Section 5.16 Covenants of the Backup Servicer.
                  --------------------------------

     The Backup Servicer hereby covenants that:

     (a) The Backup Servicer will comply in all material respects with all
Requirements of Law.

     (b) The Backup Servicer will preserve and maintain its existence, rights,
franchises and privileges as a national banking association in good standing
under the federal laws of the United States.

     (c) The Backup Servicer shall perform in all material respects all of its
obligations and duties under this Agreement.

                                       61

<PAGE>

                                   ARTICLE VI

                        COVENANTS OF THE TRUST DEPOSITOR

     Section 6.01 Legal Existence.
                  ---------------

     During the term of this Agreement, the Trust Depositor will keep in full
force and effect its existence, rights and franchises as a limited liability
company under the laws of the jurisdiction of its organization and will obtain
and preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the other Transaction Documents and each other
instrument or agreement necessary or appropriate to the proper administration of
this Agreement and the transactions contemplated hereby. In addition, all
transactions and dealings between the Trust Depositor and its Affiliates will be
conducted on an arm's-length basis.

     Section 6.02 Loans Not to Be Evidenced by Promissory Notes.
                  ---------------------------------------------

     The Trust Depositor will take no action to cause any Loan not originally
evidenced by an Underlying Note to be evidenced by an instrument (as defined in
the UCC), except in connection with the enforcement or collection of such Loan.

     Section 6.03 Security Interests.
                  ------------------

     The Trust Depositor will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on any Loan
in the Loan Pool or its interest in any related Collateral, whether now existing
or hereafter transferred to the Trust, or any interest therein. The Trust
Depositor will immediately notify the Owner Trustee and the Indenture Trustee of
the existence of any Lien on any Loan in the Loan Pool or its interest in any
related Collateral; and the Trust Depositor shall defend the right, title and
interest of the Trust in, to and under the Loans in the Loan Pool and its
interest in any related Collateral, against all claims of third parties;
provided, however, that nothing in this Section 6.03 shall prevent or be deemed
--------  -------                       ------------
to prohibit the Trust Depositor from suffering to exist Permitted Liens upon any
of the Loans in the Loan Pool or its interest in any related Collateral.

     Section 6.04 Delivery of Principal Collections and Interest Collections.
                  ----------------------------------------------------------

     The Trust Depositor agrees to pay to the Servicer promptly (but in no event
later than two (2) Business Days after receipt) all Principal Collections and
Interest Collections received by the Trust Depositor in respect of the Loans,
for application in accordance with Section 7.05 hereof.
                                   ------------

     Section 6.05 Regulatory Filings.
                  ------------------

     The Trust Depositor shall make any filings, reports, notices, applications
and registrations with, and seek any consents or authorizations from, the
Commission and any state securities authority on behalf of the Trust as may be
necessary or that the Trust Depositor deems advisable to comply with any federal
or state securities or reporting requirements laws.

                                       62

<PAGE>

     Section 6.06 Compliance with Law.
                  -------------------

     The Trust Depositor hereby agrees to comply in all material respects with
all Requirements of Law applicable to the Trust Depositor except where the
failure to do so would not have a material adverse effect on the Holders.

     Section 6.07 Activities.
                  ----------

     Except as contemplated by this Agreement or the other Transaction
Documents, the Trust Depositor shall not engage in any business or activity of
any kind, or enter into any transaction or indenture, mortgage, instrument,
agreement, contract, lease or other undertaking, which is not directly related
to the transactions contemplated and authorized by this Agreement or the other
Transaction Documents; provided, however, that the Trust Depositor may purchase
                       --------  -------
and sell (or grant Liens in respect of) assets similar to the Loan Assets to
other Persons in securitization or other non-recourse financing transactions
involving the Originator or any of its Affiliates on terms and conditions (with
respect to liabilities and restrictions on its activities, as well as
restrictions on its interactions with the Originator or its Affiliates, relevant
to the "bankruptcy remoteness" or "substantive consolidation" analysis relating
to the Trust Depositor) substantially similar to the terms and conditions
applicable to the Trust Depositor under the Transaction Documents so long as the
Securityholders are not materially adversely affected thereby and the Rating
Agency Condition is satisfied.

     Section 6.08 Indebtedness.
                  ------------

     The Trust Depositor shall not create, incur, assume or suffer to exist any
Indebtedness or other liability whatsoever, except (i) obligations incurred
under this Agreement or to the Originator, (ii) liabilities incident to the
maintenance of its corporate existence in good standing or (iii) liabilities
necessarily incurred to facilitate securitizations referred to in the proviso in
Section 6.07.
------------

     Section 6.09 Guarantees.
                  ----------

     The Trust Depositor shall not become or remain liable, directly or
contingently, in connection with any Indebtedness or other liability of any
other Person, whether by guarantee, endorsement (other than endorsements of
negotiable instruments for deposit or collection in the ordinary course of
business), agreement to purchase or repurchase, agreement to supply or advance
funds, or otherwise except in connection with the transactions described in
Section 6.07.
------------

     Section 6.10 Investments.
                  -----------

     The Trust Depositor shall not 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
Person except (i) for purchases of Loans from the Originator, (ii) for
investments in Permitted Investments in accordance with the terms of this
Agreement, (iii) as

                                       63

<PAGE>

may be necessary to facilitate securitizations referred to in the proviso in
Section 6.07 or (iv) the receipt of the Class C Notes and the Certificate as
consideration for the transfer of the Loan Assets to the Trust. Without limiting
the generality of the foregoing, the Trust Depositor shall not: (i) provide
credit to any Securityholder for the purpose of enabling such Securityholder to
purchase any Securities or (ii) lend any money to the Trust.

     Section 6.11 Merger; Sales.
                  -------------

     The Trust Depositor shall not enter into any transaction of merger or
consolidation, or liquidate or dissolve itself (or suffer any liquidation or
dissolution) or acquire or be acquired by any Person, or convey, sell, lease or
otherwise dispose of all or substantially all of its property or business,
except as provided for in this Agreement.

     Section 6.12 Distributions.
                  -------------

     The Trust Depositor shall not declare or pay, directly or indirectly, any
dividend or make any other distribution (whether in cash or other property) with
respect to the profits, assets or capital of the Trust Depositor or any Person's
interest therein, or purchase, redeem or otherwise acquire for value any of its
shareholders interests now or hereafter outstanding, except that, so long as no
Event of Default has occurred and is continuing and no Event of Default would
occur as a result thereof or after giving effect thereto and the Trust Depositor
would continue to be Solvent as a result thereof and after giving effect
thereto, the Trust Depositor may declare and pay distributions to its
shareholders.

     Section 6.13 Other Agreements.
                  ----------------

     Except as provided in this Agreement or the other Transaction Documents,
the Trust Depositor shall not become a party to, or permit any of its properties
to be bound by, any indenture, mortgage, instrument, contract, agreement, lease
or other undertaking, except this Agreement and the other Transaction Documents
to which it is a party and any agreement relating to another securitization
transaction permitted by Section 6.07; nor shall it amend or modify the
                         ------------
provisions of its Certificate of Formation or issue any power of attorney except
to the Owner Trustee, the Indenture Trustee or the Servicer in accordance with
the Transaction Documents or in connection with another securitization
transaction permitted by Section 6.07.
                         ------------

     Section 6.14 Separate Legal Existence.
                  ------------------------

     The Trust Depositor shall:

     (a) Maintain its own deposit account or accounts, separate from those of
any Affiliate, with commercial banking institutions. The funds of the Trust
Depositor will not be diverted to any other Person or for other than authorized
uses of the Trust Depositor.

     (b) Ensure that, to the extent that it shares the same officers or other
employees as any of its members or Affiliates, the salaries of and the expenses
related to providing benefits to such officers and other employees shall be
fairly allocated among such entities, and each such

                                       64

<PAGE>

entity shall bear its fair share of the salary and benefit costs associated with
all such common officers and employees.

     (c) Ensure that, to the extent that it jointly contracts with any of its
members or Affiliates to do business with vendors or service providers or to
share overhead expenses, the costs incurred in so doing shall be allocated
fairly among such entities, and each such entity shall bear its fair share of
such costs. To the extent that the Trust Depositor contracts or does business
with vendors or service providers when the goods and services provided are
partially for the benefit of any other Person, the costs incurred in so doing
shall be fairly allocated to or among such entities for whose benefit the goods
and services are provided, and each such entity shall bear its fair share of
such costs. All material transactions between Trust Depositor and any of its
Affiliates shall be only on an arm's length basis.

     (d) To the extent that the Trust Depositor and any of its members or
Affiliates have offices in the same location, there shall be a fair and
appropriate allocation of overhead costs among them, and each such entity shall
bear its fair share of such expenses.

     (e) Conduct its affairs strictly in accordance with its Certificate of
Formation and observe all necessary, appropriate and customary limited liability
company formalities, including, but not limited to, holding all regular and
special board of director meetings appropriate to authorize all limited
liability company action, keeping separate and accurate minutes of its meetings,
passing all resolutions or consents necessary to authorize actions taken or to
be taken, and maintaining accurate and separate books, records and accounts,
including, but not limited to, payroll and intercompany transaction accounts.

     (f) Take or refrain from taking, as applicable, each of the activities
specified in the "substantive consolidation" opinion of Moore & Van Allen PLLC,
delivered on the Closing Date, upon which the conclusions expressed therein are
based.

     Section 6.15 Location; Records.
                  ------------------

     The Trust Depositor (y) shall not move its location outside the
Commonwealth of Virginia or its jurisdiction of formation outside of the State
of Delaware without thirty (30) days' prior written notice to the Owner Trustee
and the Indenture Trustee and (z) will promptly take all actions (if any)
required (including, but not limited to, all filings and other acts necessary or
advisable under the UCC of each relevant jurisdiction) in order to continue the
first priority perfected security interest of the Indenture Trustee in all
Loans. The Trust Depositor will give the Owner Trustee and the Indenture Trustee
prompt notice of a change within the Commonwealth of Virginia of the location of
its chief executive office.

     Section 6.16 Liability of Trust Depositor.
                  -----------------------------

     The Trust Depositor shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Trust Depositor under
this Agreement.

                                       65

<PAGE>

     Section 6.17 Bankruptcy Limitations.
                  -----------------------

     The Trust Depositor shall not, without the affirmative vote of a majority
of the managers of the Trust Depositor (which must include the affirmative vote
of at least two (2) duly appointed Independent managers) (A) dissolve or
liquidate, in whole or in part, or institute proceedings to be adjudicated
bankrupt or insolvent, (B) consent to the institution of bankruptcy or
insolvency proceedings against it, (C) file a petition seeking or consent to
reorganization or relief under any applicable federal or state law relating to
bankruptcy, (D) consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the limited liability
company or a substantial part of its property, (E) make a general assignment for
the benefit of creditors, (F) admit in writing its inability to pay its debts
generally as they become due, or (G) take any limited liability company action
in furtherance of the actions set forth in clauses (A) through (F) above;
                                           -----------         ---
provided, however, that no manager may be required by any member of the Trust
-----------------
Depositor to consent to the institution of bankruptcy or insolvency proceedings
against the Trust Depositor so long as it is Solvent.

     Section 6.18 Limitation on Liability of Trust Depositor and Others.
                  -----------------------------------------------------

     The Trust Depositor and any director or officer or employee or agent of the
Trust Depositor may rely in good faith on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Trust Depositor and any director or officer or employee or agent
of the Trust Depositor shall be reimbursed by the Indenture Trustee for any
liability or expense incurred by reason of the Indenture Trustee's willful
misfeasance, bad faith or gross negligence (except errors in judgment) in the
performance of its duties hereunder, or by reason of the Indenture Trustee's
material breach of the obligations and duties under this Agreement or the
Transaction Documents. The Trust Depositor shall not be under any obligation to
appear in, prosecute or defend any legal action that shall not be incidental to
its obligations under this Agreement, and that in its opinion may involve it in
any expense or liability.

     Section 6.19 Insurance Policies.
                  -------------------

     Upon and after an Event of Default or Servicer Default, at the request of
the Indenture Trustee, the Trust Depositor will cause to be performed any and
all acts reasonably required to be performed to preserve the rights and remedies
of the Indenture Trustee and the Owner Trustee in any insurance policies
applicable to the Loans including, without limitation, in each case, any
necessary notifications of insurers, assignments of policies or interests
therein, and establishments of co-insured, joint loss payee and mortgagee rights
in favor of the Indenture Trustee or the Trust Depositor, respectively.

                                       66

<PAGE>

                                   ARTICLE VII

             ESTABLISHMENT OF ACCOUNTS; DISTRIBUTIONS; RESERVE FUND

     Section 7.01 Note Distribution Account and Reserve Fund.
                  -------------------------------------------

     (a) On or before the Closing Date, the Servicer shall establish the Note
Distribution Account and the Reserve Fund with and in the name of the Indenture
Trustee for the benefit of the Holders. The Servicer and Indenture Trustee are
hereby required to ensure that each of the Note Distribution Account and Reserve
Fund is established and maintained as an Eligible Deposit Account with a
Qualified Institution. If any institution with which any of the accounts
established pursuant to this subsection 7.01(a) are established ceases to be a
                             ------------------
Qualified Institution, the Servicer, or if the Servicer fails to do so, the
Indenture Trustee (as the case may be) shall within ten (10) Business Days
establish a replacement account at a Qualified Institution after notice of such
event. In no event shall the Indenture Trustee be responsible for monitoring
whether such Eligible Institution shall remain a Qualified Institution. Each
Qualified Institution maintaining an Eligible Deposit Account shall agree in
writing to comply with all instructions originated by the Indenture Trustee or,
with respect to the Principal and Interest Account only, the Servicer directing
disposition of the funds in the Eligible Deposit Account without the further
consent of the Trust Depositor.

     (b) If the Servicer so directs, in writing, the Indenture Trustee shall
accept such directions as directions of the Trust and shall invest the amounts
in the Note Distribution Account and the Reserve Fund in Permitted Investments
of the type specified in such written direction that mature or are withdrawable
not later than the next succeeding Determination Date, except for investments in
section (vi) of the definition of Permitted Investments. Once such funds are
------------
invested, the Indenture Trustee shall not change the investment of such funds
other than in connection with the withdrawal or liquidation of such investments
and the transfer of such funds as provided herein on or prior to the next
succeeding Determination Date. Funds in the Note Distribution Account and
Reserve Fund not so invested must be insured to the extent and the amount
permitted by law by BIF or SAIF of the FDIC. Subject to the restrictions herein,
the Servicer or Indenture Trustee may purchase a Permitted Investment from
itself or an Affiliate with respect to investment of funds in the Trust
Accounts. Subject to the other provisions hereof, the Servicer in the case of
the Principal and Interest Account and the Indenture Trustee in the case of all
other Trust Accounts shall have sole control over each such investment and the
income thereon, and any certificate or other instrument evidencing any such
investment, if any, shall be delivered directly to the Servicer or its agent or
the Indenture Trustee or its agent, as applicable, together with each document
of transfer, if any, necessary to transfer title to such investment to the
Servicer or Indenture Trustee, as applicable, in a manner which complies with
this Section 7.01. All Investment Earnings on investments of funds in the Trust
     ------------
Accounts shall be deposited in the Interest Collection Account pursuant to
Section 7.01 and distributed on the next Remittance Date pursuant to Section
------------                                                         -------
7.05. The Trust Depositor and the Trust agree and acknowledge that the Servicer
----
and Indenture Trustee are to have "control" (within the meaning of the UCC) of
collateral comprised of "Investment Property" (within the meaning of the UCC)
for all purposes of this Agreement. In the absence of timely written direction
from the Servicer, the Indenture Trustee shall invest amounts in the Note
Distribution Account and Reserve Fund

                                       67

<PAGE>

Account in Permitted Investments of the type specified in clause (vi) of the
definition of Permitted Investments herein.

     Section 7.02 Reserve Fund Deposit.
                  ---------------------

     On the Closing Date, the Owner Trustee, on behalf of the Trust, shall
deposit the Reserve Fund Initial Balance into the Reserve Fund from the net
proceeds of the sale of the Securities.

     Section 7.03 Principal and Interest Account.
                  -------------------------------

     (a) The Servicer shall cause to be established and maintained one or more
Principal and Interest Accounts (including for each such account two (2)
subaccounts, one designated as the Interest Collection Account and the other
designated as the Principal Collection Account), in one or more Eligible Deposit
Accounts, in the form of time deposit or demand accounts, which may be
interest-bearing or such accounts may be trust accounts wherein the moneys
therein are invested in Permitted Investments, titled "MCG Capital Corporation,
as Servicer, in trust for the registered holders of MCG Commercial Loan Trust
Notes, Series 2001-1 Class A, Class B and Class C Notes." All funds in such
Principal and Interest Accounts not so invested shall be insured to the extent
and the amount permitted by the BIF or SAIF of the FDIC to the maximum extent
provided by law. The creation of any Principal and Interest Account shall be
evidenced by a letter agreement in the form of Exhibit E hereto. A copy of such
                                               ---------
letter agreement shall be furnished to the Indenture Trustee, the Owner Trustee
and, upon request, any Noteholder or Certificateholder. The Servicer may, upon
written notice to the Indenture Trustee, transfer any Principal and Interest
Account to a different Eligible Deposit Account.

     (b) The Servicer and each Subservicer shall deposit without duplication
(within two (2) Business Days of receipt thereof) in the applicable Principal
and Interest Account and retain therein the following amounts received by the
Servicer (and shall segregate and deposit Interest Collections into the Interest
Collections Account and Principal Collections into the Principal Collection
Account):

          (i) all Principal Collections accruing and received on or after the
     applicable Cut-Off Date;

          (ii) all Interest Collections accruing and received on or after the
     first day of the month of the Closing Date (net of the Servicing Fee with
     respect to each Loan and other servicing compensation payable to the
     Servicer as permitted herein) and all origination and commitment fees;

          (iii) all Net Liquidation Proceeds (other than Insurance Proceeds
     covered under clause (iv) below);
                   -----------

          (iv) all Insurance Proceeds (other than amounts to be applied to
     restoration or repair of any related Collateral, or to be released to the
     Obligor in accordance with the Credit and Collection Policy);

                                       68

<PAGE>

          (v) all Released Mortgaged Property Proceeds and any other proceeds
     from any other Collateral securing the Loans (other than amounts released
     to the Obligor in accordance with the Credit and Collection Policy);

          (vi) any amounts paid in connection with the purchase or repurchase of
     any Loan;

          (vii) any amount required to be deposited in the Principal and
     Interest Account pursuant to Sections 5.10 or 7.03; and
                                  -------------    ----

          (viii) the amount of any gains and interest incurred in connection
     with investments in Permitted Investments.

     (c) The Servicer shall have no obligation to deposit into the Principal and
Interest Account any Retained Interest or Released Amounts.

     (d) Not later than the close of business on each Determination Date
immediately preceding a Remittance Date, the Servicer will remit to the
Principal and Interest Account any Scheduled Payment Advance that the Servicer
determines to make.

     (e) Notwithstanding subsection 7.03(b), if (i) the Servicer makes a deposit
                         -----------------
into the Principal and Interest Account in respect of a Collection of a Loan in
the Loan Pool and such Collection was received by the Servicer in the form of a
check that is not honored for any reason, or (ii) the Servicer makes a mistake
with respect to the amount of any Collection and deposits an amount that is less
than or more than the actual amount of such Collection, the Servicer shall
appropriately adjust the amount subsequently deposited into the Principal and
Interest Account to reflect such dishonored check or mistake. Any Scheduled
Payment in respect of which a dishonored check is received shall be deemed not
to have been paid.

     (f) The foregoing requirements for deposit in the Principal and Interest
Accounts shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments with respect to the Servicing
Fee, together with the difference between any Liquidation Proceeds and the
related Net Liquidation Proceeds, may not be deposited by the Servicer in the
Principal and Interest Account.

     (g) So long as no Servicer Default shall have occurred and be continuing,
and consistent with any requirements of the Code, the Principal and Interest
Accounts shall either be maintained with an Eligible Deposit Account as an
interest-bearing account meeting the requirements set forth in subsection
                                                               ----------
7.03(a), or the funds held therein may be invested by the Servicer (to the
-------
extent practicable) in Permitted Investments, as directed in writing by the
Servicer. In either case, funds in the Principal and Interest Accounts must be
available for withdrawal without penalty, and any Permitted Investments must
mature not later than the Business Day immediately preceding the Determination
Date next following the date of such investment (except that if such Permitted
Investments is an obligation of the institution that maintains such account,
then such Permitted Investments shall mature not later than such Determination
Date) and shall not be sold or disposed of prior to its maturity. All Permitted

                                       69

<PAGE>

Investments must be held by or registered in the name of "MCG Capital
Corporation, as Servicer, in trust for the registered holders of MCG Commercial
Loan Trust Notes, Series 2001-1." Any Investment Interest Earnings on funds held
in the Principal and Interest Account Class A, Class B and Class C Notes shall
be deemed part of the Interest Collection Account and shall be deposited therein
pursuant to Section 7.03 and distributed on the next Remittance Date pursuant to
            ------------
Section 7.05. The amount of any losses incurred in connection with the
------------
investment of funds in the Principal and Interest Account in Permitted
Investments shall be deposited in the Principal and Interest Account by the
Servicer from its own funds immediately as realized without reimbursement
therefor.

     (h) The Servicer may (and, for the purposes of clause (ii), shall) make
                                                    -----------
withdrawals from the Principal and Interest Account for the following purposes:

          (i) to remit to the Trust Depositor, in connection with the transfer
     of a Substitute Loan to the Trust in place of a Prepaid Loan, an amount
     equal to the Prepaid Loan Amount;

          (ii) to remit to the Indenture Trustee on each Determination Date
     immediately preceding a Remittance Date, for deposit in the Note
     Distribution Account, the Interest Collections and Principal Collections
     received during the immediately preceding Due Period less any amounts
     remitted to the Trust Depositor pursuant to clause (i) above prior to such
                                                 ----------
     Determination Date;

          (iii) to reimburse itself for any unreimbursed Servicing Advances to
     the extent deposited in the Principal and Interest Account (and not netted
     from Scheduled Payments received);

          (iv) to withdraw any amount received from an Obligor that is
     recoverable and sought to be recovered as a voidable preference by a
     trustee in bankruptcy pursuant to the United States Bankruptcy Code in
     accordance with a final, nonappealable order of a court having competent
     jurisdiction;

          (v) to make investments in Permitted Investments;

          (vi) to withdraw any funds deposited in the Principal and Interest
     Account that were not required or permitted to be deposited therein or were
     deposited therein in error;

          (vii) to pay itself certain additional servicing compensation as
     permitted under subsection 5.11(b) of the Agreement; and
                     ------------------

          (viii) to clear and terminate the Principal and Interest Account upon
     the termination of the Agreement.

                                       70

<PAGE>

     Section 7.04 Securityholder Distributions.
                  -----------------------------

     (a) Each Holder as of the related Record Date shall be paid on the next
succeeding Remittance Date by check mailed to such Holder at the address for
such Holder appearing on the Note Register or Certificate Register or by wire
transfer if such Holder provides written instructions to the Indenture Trustee,
or Owner Trustee, respectively, at least (10) ten days prior to such Remittance
Date, which instructions may be in the form of a standing order.

     (b) The Indenture Trustee shall serve as the Paying Agent hereunder and
shall make the payments to the Holder required hereunder. The Indenture Trustee
hereby agrees that all amounts held by it for payment hereunder will be held in
trust for the benefit of the Holder.

     Section 7.05 Allocations and Distributions.
                  ------------------------------

     (a) On each Determination Date prior to the occurrence of an Event of
Default, (i) the Indenture Trustee shall deposit into the Note Distribution
Account all funds on deposit in the Reserve Account and (ii) the Servicer shall
instruct the Indenture Trustee in writing to withdraw, and on the related
Remittance Date the Indenture Trustee shall withdraw from the Note Distribution
Account (A) the Interest Collections, (B) the Investment Earnings on funds in
the Note Distribution Account and (C) all amounts deposited therein from the
Reserve Account to make the following payments. The payments listed below will
be made only to the extent there are sufficient amounts available on the
Remittance Date. Payments will be made, in the following order of priority:

     FIRST, to the Indenture Trustee, the Backup Servicer and the Owner Trustee,
any amounts owed to such parties under the Transaction Documents for fees and
expenses, other than for fees, expenses and other amounts related to
indemnification; provided, however, that in no event shall the amounts payable
                 --------  -------
pursuant to this clause FIRST (i) to the Indenture Trustee, the Backup Servicer,
in the aggregate, exceed $5,000 for any twelve (12) month period (excluding
amounts paid as part of the Indenture Trustee Fee and the Backup Servicer Fee),
(ii) to the Owner Trustee, exceed $5,000 for any twelve (12) month period
(excluding amounts paid as part of the Owner Trustee Fee) and (iii) if a
successor servicer is being appointed, to the Indenture Trustee for costs and
expenses associated with that appointment, exceed $100,000 in the aggregate;

     SECOND, to the Servicer, from Interest Collections received from the
specific Loan for which Scheduled Payment Advances were made, reimbursement for
the amount of any such Scheduled Payment Advances, relating to interest on such
Loans;

     THIRD, to the Servicer, its Servicing Fee for the preceding Due Period,
together with any amounts in respect of the Servicing Fee that were due in
respect of prior Due Periods that remain unpaid;

     FOURTH, to the holders of the Class A Notes, the Class A Interest Amount
for the related Interest Accrual Period and any related unpaid Class A Interest
Shortfall with respect to

                                       71

<PAGE>

prior Remittance Dates together with interest on the unpaid Class A Interest
Shortfall at the then applicable Class A Note Interest Rate;

     FIFTH, to the holders of the Class B Notes, the Class B Interest Amount for
the related Interest Accrual Period and any related unpaid Class B Interest
Shortfall with respect to prior Remittance Dates together with interest on the
unpaid Class B Interest Shortfall at the then applicable Class B Note Interest
Rate;

     SIXTH, to the holders of the Class A Notes and Class B Notes, sequentially
and in reduction of their respective Outstanding Principal Balance, until
reduced to zero, an amount equal to the Additional Principal Amount;

     SEVENTH, to the Reserve Fund an amount, if any, which when so deposited,
causes the balance of the Reserve Fund to equal the Required Reserve Amount;

     EIGHTH, to the holders of the Class B Notes, the Class B Accrued Payable,
if any;

     NINTH, to the Servicer to the extent not reimbursed pursuant to clause
SECOND above, reimbursement for the amount of any Scheduled Payment Advance,
relating to interest on Loans;

     TENTH, pro rata based on the amount owed to such Person under this clause
TENTH, to the Indenture Trustee, the Backup Servicer and the Owner Trustee, to
the extent not paid pursuant to clause FIRST due to the limitations set forth
therein, amounts owed to such parties for fees and expenses and other amounts,
including such amounts related to indemnification and, to a Successor Servicer,
any Additional Servicing Fee; and

     ELEVENTH, to the Owner Trustee for payment to the Holders of the
Certificates, any remaining Interest Collections.

     (b) On each Remittance Date on and after the occurrence of an Event of
Default or the occurrence and continuance of a Class A Trigger or a Class B
Trigger, all amounts remaining after clause FIFTH of subsection 7.05(a) shall be
                                                     ------------------
treated as Principal Collections and distributed in accordance with subsection
                                                                    ----------
7.05(c);
-------

     (c) On each Determination Date, the Servicer shall instruct the Indenture
Trustee in writing to withdraw, and on the Remittance Date the Indenture Trustee
will follow the instructions to withdraw, from the Principal Collections on
deposit in the Note Distribution Account the amounts needed to make the
following payments. The payments listed below will be made in the following
order of priority;

     FIRST, to the Servicer, from Principal Collections received from the
specific Loan for which Scheduled Payment Advances were made, reimbursement for
the amount of any such Scheduled Payment Advances, relating to principal on such
Loans;

     SECOND, to the holders of the Class A Notes until the Outstanding Principal
Balance of the Class A Notes equals zero;

                                       72

<PAGE>

     THIRD, to the holders of the Class B Notes, the Class B Accrued Payable, if
any;

     FOURTH, to the holders of the Class B Notes, until the Outstanding
Principal Balance of the Class B Notes equals zero;

     FIFTH, to the Servicer, to the extent not reimbursed pursuant to clause
FIRST above, reimbursement for the amount of any Scheduled Payment Advance,
relating to the principal on the Loans;

     SIXTH, pro rata based upon the amount owed to such Person under this clause
SIXTH, to the Indenture Trustee, the Backup Servicer and the Owner Trustee, to
the extent not previously paid, amounts owed to such parties for fees and
expenses and other amounts, including such amounts related to indemnification
and, to a Successor Servicer, any Additional Servicing Fee;

     SEVENTH, to the holders of the Class C Notes until the Outstanding
Principal Balance of the Class C Notes is reduced to zero; and

     EIGHTH, to the Owner Trustee for payment to the Holders of the
Certificates, any remaining Principal Collections.

     Section 7.06 Determination of LIBOR.
                  -----------------------

     (a) The Indenture Trustee will determine the London interbank offered rate
for deposits in U.S. dollars having a maturity of three (3) months ("LIBOR") for
                                                                     -----
each Interest Accrual Period as of the second LIBOR Determination Date preceding
the first (1/st/) day of such Interest Accrual Period (the "Three-Month Index
                                                          -----------------
Maturity") which appears on Telerate Page 3750 as of 11:00 a.m., London time, on
--------
such LIBOR Determination Date. If such rate does not appear on Telerate Page
3750, the rate for that day will be determined on the basis of the rates at
which deposits in U.S. dollars, having the Three-Month Index Maturity and in a
principal amount of not less than U.S. $1,000,000, are offered at approximately
11:00 a.m., London time, on such LIBOR Determination Date to prime banks in the
London interbank market by the Reference Banks. The Indenture Trustee will
request the principal London office of each of such Reference Banks to provide a
quotation of its rate. If at least two (2) such quotations are provided, the
rate for that day will be the arithmetic mean of the quotations. If fewer than
two (2) quotations are provided, the rate for that day will be the arithmetic
mean of the rates quoted by major banks in New York City, selected by the
Indenture Trustee, at approximately 11:00 a.m., New York City time, on such
LIBOR Determination Date for loans in U.S. dollars to leading European banks
having the Three-Month Index Maturity and in a principal amount equal to an
amount not less than U.S. $1,000,000; provided, that, if the banks selected as
                                      --------  ----
aforesaid are not quoting as mentioned in this sentence, LIBOR in effect for the
applicable Interest Accrual Period will be LIBOR in effect for the previous
Interest Accrual Period.

     (b) The establishment of LIBOR on each LIBOR Determination Date by the
Indenture Trustee and the Indenture Trustee's subsequent calculation of the
rates of interest

                                       73

<PAGE>

applicable to the Notes for the related Remittance Date shall, in the absence of
manifest error, be final and binding. Each such rate of interest may be obtained
by telephoning the Indenture Trustee at (612) 667-8058.

                                  ARTICLE VIII

                       SERVICER DEFAULT; SERVICE TRANSFER

     Section 8.01 Servicer Default.
                  -----------------

     "Servicer Default" means the occurrence of any of the following:
      ----------------

     (a) any failure by the Servicer to remit when due to the Noteholders, or to
the Indenture Trustee for the benefit of the Noteholders, or to the Owner
Trustee for the benefit of the Certificateholders, any payment required to be
made under the terms of this Agreement or the other Transaction Documents, it
being understood that the Servicer shall not be responsible for the failure of
either the Owner Trustee or the Indenture Trustee to remit funds that were
received by the Owner Trustee or the Indenture Trustee from the Servicer in
accordance with this Agreement or the other Transaction Documents; or

     (b) failure by the Servicer duly to observe or perform, in any material
respect, any other covenants, obligations or agreements of the Servicer set
forth in this Agreement or the other Transaction Documents, or any
representation or warranty of the Servicer made in this Agreement or the other
Transaction Documents or in any certificate or other writing delivered thereto
or in connection therewith proves to have been incorrect when made, which
failure or breach has a material adverse effect on the rights of the Noteholders
and continues unremedied for a period of thirty (30) days (if such failure or
breach can be cured) after the first to occur of (i) the date on which written
notice of such failure requiring the same to be remedied shall have been given
to a Responsible Officer of the Servicer by the Indenture Trustee, or a
Responsible Officer of the Servicer and the Indenture Trustee by any Noteholder
or Certificateholder, and (ii) the date on which a Responsible Officer of the
Servicer receives actual knowledge of such failure or breach; or

     (c) a decree or order of a court or agency or supervisory authority having
jurisdiction for the appointment of a conservator or receiver or liquidator in
any insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer and such decree or order shall have
remained in force, undischarged or unstayed for a period of thirty (30) days; or

     (d) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings of or relating to the Servicer or
of or relating to all or substantially all of the Servicer's property; or

                                       74

<PAGE>

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

     (f) without the consent of the Majority Noteholders, the Servicer agrees or
consents to, or otherwise permits to occur, any amendment, modification, change,
supplement or recision of or to the Servicer or the Credit and Collection
Policy, in whole or in part, in any manner that would have a material adverse
effect on the Loans; or

     (g) failure by the Servicer to observe or perform the Credit and Collection
Policy regarding the servicing of the Loans in any manner that would have a
material adverse effect on the Loans.

     Section 8.02 Servicer Transfer.
                  ------------------

     (a) If a Servicer Default has occurred and is continuing, the Majority
Noteholders may, by written notice (a "Termination Notice") delivered to the
                                       ------------------
parties hereto, terminate all (but not less than all) of the Servicer's
management, administrative, servicing, custodial and collection functions;
provided, however, no Termination Notice shall be required with respect to any
--------  -------
Servicer Default described under subsections 8.01(c), (d), or (e).
                                 -------------------  ---     ---

     (b) Upon delivery of the notice required by subsection 8.02(a) (or, if
                                                 ------------------
later, on a date designated therein), and on the date that a successor Servicer
shall have been appointed pursuant to Section 8.03 (such appointment being
                                      ------------
herein called a "Servicer Transfer"), all rights, benefits, fees, indemnities,
                 -----------------
authority and power of the Servicer under this Agreement, whether with respect
to the Loans, the Loan Files or otherwise, shall pass to and be vested in such
successor (the "Successor Servicer") pursuant to and under this Section 8.02;
                ------------------                              ------------
and, without limitation, the Successor Servicer is authorized and empowered to
execute and deliver on behalf of the Servicer, as attorney-in-fact or otherwise,
any and all documents and other instruments, and to do any and all acts or
things necessary or appropriate to effect the purposes of such notice of
termination. The Servicer agrees to cooperate with the Successor Servicer in
effecting the termination of the responsibilities and rights of the Servicer
hereunder, including, without limitation, the transfer to the Successor Servicer
for administration by it of all cash amounts which shall at the time be held by
the Servicer for deposit, or have been deposited by the Servicer, in the
Principal and Interest Account, or for its own account in connection with its
services hereafter or thereafter received with respect to the Loans. The
Servicer shall transfer to the Successor Servicer (i) all records held by the
Servicer relating to the Loans in such electronic form as the Successor Servicer
may reasonably request and (ii) any Loan Files in the Servicer's possession. In
addition, the Servicer shall permit access to its premises (including all
computer records and programs) to the Successor Servicer or its designee, and
shall pay the reasonable transition expenses of the Successor Servicer. Upon a
Servicer Transfer, the Successor Servicer shall also be entitled to receive the
Servicing Fee for performing the obligations of the Servicer. Any indemnities
provided in this Agreement or the other Transaction Documents in favor of the
Servicer and any fees, costs, expenses, Servicing Advances or Scheduled Payment
Advances

                                       75

<PAGE>

which have accrued and/or are unpaid to the Servicer shall survive the
resignation or termination of the Servicer.

     Section 8.03 Appointment of Successor Servicer; Reconveyance; Successor
                  ----------------------------------------------------------
                  Servicer to Act.
                  ----------------

     (a) Upon delivery of the notice required by subsection 8.02(a) (or, if
                                                 ------------------
later, on a date designated therein), the Servicer shall continue to perform all
servicing functions under this Agreement until the date specified in the
Termination Notice or, if no such date is specified, until a date mutually
agreed by the Servicer and the Indenture Trustee. The Indenture Trustee shall as
promptly as possible after the giving of or receipt of a Termination Notice,
appoint a Successor Servicer, which shall be the Backup Servicer, in accordance
with subsection 5.16(c) (the "Successor Servicer"), and such Successor Servicer
     ------------------       ------------------
shall accept its appointment by a written assumption in a form acceptable to the
Indenture Trustee and Owner Trustee. If within sixty (60) days of delivery of a
Termination Notice a Successor Servicer is not appointed and the Servicer shall
have yet to cure the Servicer Default, then the Indenture Trustee shall offer
the Trust Depositor, and the Trust Depositor shall offer the Originator, the
right to accept retransfer of all the Loan Assets, and such parties may accept
retransfer of such Loan Assets in consideration of the Trust Depositor's
delivery to the Principal and Interest Account on or prior to the next upcoming
Remittance Date of a sum equal to the Aggregate Outstanding Principal Balance of
all Securities (other than the Certificates) then outstanding, together with
accrued and unpaid interest thereon through such date of deposit; provided,
                                                                  --------
that, the Indenture Trustee, if so directed by the Majority Noteholders in
----
writing, need not accept and effect such reconveyance in the absence of evidence
(which may include valuations of an investment bank or similar entity)
reasonably acceptable to such Indenture Trustee or Majority Noteholders that
such retransfer would not constitute a fraudulent conveyance of the Trust
Depositor or the Originator.

     (b) The Backup Servicer may, in its discretion, or shall, if it is unable
to so act or if the Majority Noteholders request in writing to the Backup
Servicer, appoint, or petition a court of competent jurisdiction to appoint, any
established servicing institution having a net worth of not less than
$25,000,000 as the Successor Servicer in the assumption of all or any part of
the responsibilities, duties or liabilities of the Servicer.

     (c) As compensation, any Successor Servicer (including, without limitation,
the Backup Servicer) so appointed shall be entitled to receive the Servicing
Fee, together with any other servicing compensation in the form of assumption
fees, late payment charges or otherwise as provided herein that accrued prior
thereto; including, without limitation, all reasonable costs (including
reasonable attorneys' fees) incurred in connection with transferring the
servicing obligations under the Agreement and amending the Agreement to reflect
such transfer.

     (d) In the event the Backup Servicer is required to solicit bids, the
Backup Servicer shall solicit, by public announcement, bids from banks and
mortgage servicing institutions meeting the qualifications set forth above. Such
public announcement shall specify that the Successor Servicer shall be entitled
to the full amount of the Servicing Fee as servicing compensation, together with
the other servicing compensation in the form of assumption fees, late payment
charges or otherwise that accrued prior thereto. Within thirty (30) days after
any

                                       76

<PAGE>

such public announcement, the Backup Servicer shall negotiate and effect the
sale, transfer and assignment of the servicing rights and responsibilities
hereunder to the qualified party submitting the highest qualifying bid. The
Backup Servicer shall deduct from any sum received by the Backup Servicer from
the successor to the Servicer in respect of such sale, transfer and assignment
all costs and expenses of any public announcement and of any sale, transfer and
assignment of the servicing rights and responsibilities hereunder and the amount
of any unreimbursed Servicing Advances. After such deductions, the remainder of
such sum shall be paid by the Backup Servicer to the Servicer at the time of
such sale, transfer and assignment to the Servicer's successor. The Backup
Servicer and such successor shall take such action, consistent with the
Agreement, as shall be necessary to effectuate any such succession. Neither the
Backup Servicer nor any other Successor Servicer shall be held liable by reason
of any failure to make, or any delay in making, any distribution hereunder or
any portion thereof caused by (i) the failure of the Servicer to deliver, or any
delay in delivering, cash, documents or records to it, or (ii) restrictions
imposed by any regulatory authority having jurisdiction over the Servicer
hereunder. No appointment of a successor to the Servicer shall be effective
until written notice of such proposed appointment shall have been provided by
the Indenture Trustee to each Noteholder and Certificateholder and the Backup
Servicer shall have consented thereto. The Backup Servicer shall not resign as
Servicer until a Successor Servicer has been appointed and accepted such
appointment.

     (e) On or after a Servicer Transfer, the Successor Servicer shall be the
successor in all respects to the Servicer in its capacity as servicer under this
Agreement and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof, and the terminated
Servicer shall be relieved of such responsibilities, duties and liabilities
arising after such Servicer Transfer; provided, however, that (i) the Successor
                                      --------  -------
Servicer will not assume any obligations of the Servicer described in Section
                                                                      -------
8.02 and (ii) the Successor Servicer shall not be liable for any acts or
----
omissions of the Servicer occurring prior to such Servicer Transfer or for any
breach by the Servicer of any of its representations and warranties contained
herein or in any related document or agreement. Notwithstanding anything else
herein to the contrary, in no event shall the Indenture Trustee or the Backup
Servicer be liable for any Servicing Fee or for any differential in the amount
of the servicing fee paid hereunder and the amount necessary to induce any
Successor Servicer to act as Successor Servicer under this Agreement and the
transactions set forth or provided for herein, including any Additional
Servicing Fee. The Owner Trustee, Securityholders and the Indenture Trustee and
such successor shall take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession. To the extent the terminated
Servicer has made Servicer Advances, it shall be entitled to reimbursement of
the same notwithstanding its termination hereunder, to the same extent as if it
had continued to service the Loans hereunder.

     Section 8.04 Notification to Securityholders.
                  --------------------------------

     (a) Promptly following the occurrence of any Servicer Default, the Servicer
shall give written notice thereof to the Trustees, the Trust Depositor and each
Rating Agency at the addresses described in Section 13.04 hereof and to the
                                            -------------
Noteholders and Certificateholder at their respective addresses appearing on the
Note Register and the Certificate Register, respectively.

                                       77

<PAGE>

     (b) Within ten (10) days following any termination or appointment of a
Successor Servicer pursuant to this Article VIII, the Indenture Trustee shall
                                    ------------
give written notice thereof to each Rating Agency and the Trust Depositor at the
addresses described in Section 13.04 hereof, and to the Noteholders and
                       -------------
Certificateholder at their respective addresses appearing on the Note Register
and the Certificate Register, respectively.

     Section 8.05 Effect of Transfer.
                  -------------------

     (a) After a Servicer Transfer, the terminated Servicer shall have no
further obligations with respect to the management, administration, servicing,
custody or collection of the Loans and the Successor Servicer appointed pursuant
to Section 8.03 shall have all of such obligations, except that the terminated
   ------------
Servicer will transmit or cause to be transmitted directly to the Successor
Servicer for its own account, promptly on receipt and in the same form in which
received, any amounts (properly endorsed where required for the Successor
Servicer to collect them) received as payments upon or otherwise in connection
with the Loans.

     (b) A Servicer Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer)
other than those relating to the management, administration, servicing, custody
or collection of the Loans.

     Section 8.06 Database File.
                  --------------

     Upon reasonable request by the Indenture Trustee or the Backup Servicer,
the Servicer will provide the Successor Servicer with a magnetic tape containing
the database file for each Loan (i) as of the Cutoff Date, (ii) the Subsequent
Cutoff Dates, (iii) thereafter, as of the last day of the preceding Due Period
on the Determination Date prior to a Servicer Default and (iv) on and as of the
Business Day before the actual commencement of servicing functions by the
Successor Servicer following the occurrence of a Servicer Default.

     Section 8.07 Waiver of Defaults.
                  -------------------

     The Majority Noteholders may, on behalf of all the Noteholders and
Certificateholders, and subject satisfying the Rating Agency Condition, waive
any events permitting removal of the Servicer pursuant to this Article VIII;
                                                               ------------
provided, however, that the Majority Noteholders may not waive a default in
--------  -------
making a required distribution on a Note without the consent of each holder of
such Note. Upon any waiver or cure of a past default, such default shall cease
to exist, and any Servicer Default or Event of Default arising therefrom shall
be deemed to have been remedied for every purpose of this Agreement. No such
waiver or cure shall extend to any subsequent or other default or impair any
right consequent thereto except to the extent expressly so waived.

     Section 8.08 Responsibilities of the Successor Servicer.
                  -------------------------------------------

     (a) The Successor Servicer will not be responsible for delays attributable
to the Servicer's failure to deliver information, defects in the information
supplied by the Servicer or other circumstances beyond the control of the
Successor Servicer.

                                       78

<PAGE>

     (b) The Successor Servicer will make arrangements with the Servicer for the
prompt and safe transfer of, and the Servicer shall provide to the Successor
Servicer, all necessary servicing files and records, including (as deemed
necessary by the Successor Servicer at such time): (i) microfiche loan
documentation, (ii) servicing system tapes, (iii) Loan payment history, (iv)
collections history and (v) the trial balances, as of the close of business on
the day immediately preceding conversion to the Successor Servicer, reflecting
all applicable Loan information. The current Servicer shall be obligated to pay
the costs associated with the transfer of the servicing files and records to the
Successor Servicer.

     (c) The Successor Servicer shall have no responsibility and shall not be in
default hereunder nor incur any liability for any failure, error, malfunction or
any delay in carrying out any of its duties under this Agreement if any such
failure or delay results from the Successor Servicer acting in accordance with
information prepared or supplied by a Person other than the Successor Servicer
or the failure of any such Person to prepare or provide such information. The
Successor Servicer shall have no responsibility, shall not be in default and
shall incur no liability (i) for any act or failure to act by any third party,
including the Servicer, the Trust Depositor or the Trustees or for any
inaccuracy or omission in a notice or communication received by the Successor
Servicer from any third party or (ii) which is due to or results from the
invalidity, unenforceability of any Loan with applicable law or the breach or
the inaccuracy of any representation or warranty made with respect to any Loan.

     (d) If the Indenture Trustee or any other Successor Servicer assumes the
role of Successor Servicer hereunder, such Successor Servicer shall be entitled
to the benefits of (and subject to the provisions of) Section 5.02 concerning
                                                      ------------
delegation of duties to subservicers.

     Section 8.09 Rating Agency Condition for Servicer Transfer.
                  ----------------------------------------------

     Notwithstanding the foregoing provisions relating to a Servicer Transfer,
no Servicer Transfer shall be effective hereunder unless prior written notice
thereof shall have been given to the Rating Agencies, and the Rating Agency
Condition shall have been satisfied with respect thereto.

     Section 8.10 Appointment of Successor Backup Servicer; Successor Backup
                  ----------------------------------------------------------
                  Servicer to Act.
                  ---------------

     (a) The Backup Servicer may be removed, with or without cause, by the
Majority Noteholders or the Indenture Trustee, by notice given in writing to the
Backup Servicer (the "Backup Servicer Termination Notice"). The Backup Servicer
                      ----------------------------------
shall continue to perform all backup servicing functions under this Agreement
until the date specified in the Backup Servicer Termination Notice or, if no
such date is specified, until a date mutually agreed by the Backup Servicer and
the Indenture Trustee. The Indenture Trustee shall as promptly as possible after
the giving of a Backup Servicer Termination Notice, to appoint a Successor
Backup Servicer (the "Successor Backup Servicer") and such Successor Backup
                      -------------------------
Servicer shall accept its appointment by a written assumption in a form
acceptable to the Indenture Trustee and Owner Trustee.

                                       79

<PAGE>

     (b) In the event that a Successor Backup Servicer has not been appointed
and has not accepted its appointment at the time when the then Backup Servicer
has ceased to act as Backup Servicer, the Indenture Trustee shall petition a
court of competent jurisdiction to appoint any established financial institution
having a net worth of at least $50,000,000 and whose regular business includes
the backup servicing of loans similar to the Loans as the Successor Backup
Servicer hereunder and the Successor Backup Servicer shall be the successor in
all respects to the Backup Servicer in its capacity as Backup Servicer under
this Agreement and the transactions set forth or provided for herein and shall
be subject to all the responsibilities, duties and liabilities relating thereto
placed on the Backup Servicer by the terms and provisions hereof, and the
terminated Backup Servicer shall be relieved of such responsibilities, duties
and liabilities arising after such backup servicer transfer (the "Backup
                                                                  ------
Servicer Transfer"); provided, however, that the Successor Backup Servicer shall
-----------------    --------  -------
not be liable for any acts or omissions of the Backup Servicer occurring prior
to such Backup Servicer Transfer or for any breach by the Backup Servicer of any
of its representations and warranties contained herein or in any related
document or agreement. As compensation therefor, the Successor Backup Servicer
shall be entitled to receive reasonable compensation equal to the monthly Backup
Servicing Fee. Notwithstanding anything else herein to the contrary, in no event
shall the Indenture Trustee or the Servicer be liable for any Backup Servicing
Fee or for any differential in the amount of the backup servicing fee paid
hereunder and the amount necessary to induce any Successor Backup Servicer to
act as Backup Servicer under this Agreement and the transactions set forth or
provided for herein. The Owner Trustee, Securityholders and the Indenture
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.

                                   ARTICLE IX

                                     REPORTS

     Section 9.01 Quarterly Reports.
                  ------------------

     With respect to each Remittance Date and the related Due Period, the
Servicer will provide to each Trustee, the Backup Servicer, each Rating Agency
and FUSI, on the related Determination Date, a quarterly statement (a "Quarterly
                                                                       ---------
Report") substantially in the form of Exhibit H hereto with respect to the
------                                ---------
preceding Due Period.

     Section 9.02 Officer's Certificate.
                  ----------------------

     Each Quarterly Report delivered pursuant to Section 9.01 shall be
                                                 ------------
accompanied by a certificate of a Responsible Officer of the Servicer certifying
the accuracy of the Quarterly Report and that no Servicer Default or event that
with notice or lapse of time or both would become a Servicer Default has
occurred, or if such event has occurred and is continuing, specifying the event
and its status.

                                       80

<PAGE>

     Section 9.03 Other Data.
                  -----------

     In addition, the Servicer shall, upon the request of any Trustees, the
Backup Servicer, or any Rating Agency, furnish such Trustee, Rating Agency or
the Backup Servicer, as the case may be, such underlying data used to generate a
Quarterly Report as may be reasonably requested. The Servicer will also forward
to the Indenture Trustee, the Owner Trustee, each Rating Agency and FUSI (a)
within sixty (60) days after each calendar quarter (except the fourth calendar
quarter), commencing with the quarter ending March 31, 2002, the audited
quarterly financial statement of the Servicer and (b) within ninety (90) days
after each fiscal year of the Servicer, commencing with the fiscal year ending
December 31, 2001, the unaudited annual financial statement of the Servicer,
together with the related report of the independent accountants to the Servicer.
On the Remittance Date following the receipt of each such financial statements
and report, the Indenture Trustee will forward to each Noteholder of record a
copy of such financial statements and report.

     Section 9.04 Annual Report of Accountants.
                  -----------------------------

     On or before May 31 of each year beginning May 31, 2003, the Servicer, at
its expense, shall cause a firm of nationally recognized independent certified
public accountants to furnish a letter or letters to the Indenture Trustee to
the effect that such firm has with respect to the Servicer's overall servicing
operations examined such operations in accordance with the requirements of the
Uniform Single Audit Program for Mortgage Bankers, and stating such firm's
conclusions relating thereto.

     Section 9.05 Annual Statement of Compliance from Servicer.
                  ---------------------------------------------

     The Servicer will deliver to the Trustees within ninety (90) days of the
end of each fiscal year commencing with the year ending December 31, 2002, an
Officer's Certificate stating that (a) the Servicer has fully complied in all
material respects with certain provisions of the Agreement relating to servicing
of the Loans and payments on the Notes, (b) a review of the activities of the
Servicer during the prior calendar year and of its performance under this
Agreement was made under the supervision of the officer signing such certificate
and (c) to the best of such officer's knowledge, based on such review, the
Servicer has fully performed or cause to be performed in all material respects
all its obligations under this Agreement for such year, or, if there has been a
default in the fulfillment in all material respects any of its obligations,
specifying each such default known to such officer and the nature and status
thereof and the steps being taken or necessary to be taken to remedy such event.
A copy of such certificate may be obtained by any Securityholder by a request in
writing to the Indenture Trustee, with respect to any Noteholder, or the Owner
Trustee, with respect to any Certificateholder.

     Section 9.06 [Reserved].
                   --------

                                       81

<PAGE>

     Section 9.07 Reports of Foreclosure and Abandonment of Mortgaged Property.
                  -------------------------------------------------------------

     Each year the Servicer shall make the reports of foreclosures and
abandonment of any Mortgaged Property as and to the extent required by Section
6050J of the Code. Promptly after filing any such report with the Code, the
Servicer shall provide the Indenture Trustee with an Officer's Certificate
certifying that such report has been filed.

     Section 9.08 Notices.
                  --------

     (a) The Servicer shall furnish to the Indenture Trustee (i) promptly,
copies of any material and adverse notices (including, without limitation,
notices of defaults, breaches, potential defaults or potential breaches) given
to or received from its other lenders and (ii) immediately, notice of the
occurrence of any Event of Default or Servicer Default or of any situation which
the Servicer reasonably expects to develop into an Event of Default or Servicer
Default.

     (b) The Servicer also agrees to make available on a reasonable basis to any
Noteholder a knowledgeable financial or accounting officer for the purpose of
answering reasonable questions respecting recent developments affecting the
Servicer or the financial statements of the Servicer and to permit any
Noteholder upon reasonable advance notice and subject to reasonable
confidentiality restrictions to inspect the Servicer's servicing facilities
during normal business hours and in a manner that does not unreasonably
interfere with the Servicer's normal operations or customer or employee
relations for the purpose of satisfying such Noteholder that the Servicer has
the ability to service the Loans in accordance with this Agreement.

     Section 9.09 Indenture Trustee's Right to Examine Servicer Records and
                  ---------------------------------------------------------
                  Audit Operations.
                  -----------------

     The Indenture Trustee shall have the right upon reasonable prior notice,
during normal business hours, in a manner that does not unreasonably interfere
with the Servicer's normal operations or customer or employee relations, and as
often as reasonably required, to examine and audit any and all of the books,
records or other information of the Servicer, whether held by the Servicer or by
another on behalf of the Servicer, which may be relevant to the performance or
observance by the Servicer of the terms, covenants or conditions of this
Agreement. No amounts payable in respect of the foregoing shall be paid from the
Loan Assets.

     Section 9.10 Reports to the Indenture Trustee; Principal and Interest
                  --------------------------------------------------------
                  Account Statements.
                  -------------------

     Not later than twenty (20) days after each Record Date, the Servicer shall
forward to the Indenture Trustee a statement, certified by a Servicing Officer,
setting forth the status of the Principal and Interest Account as of the close
of business on the preceding Record Date and showing, for the period covered by
such statement, the aggregate of deposits into the Principal and Interest
Account for each category of deposit specified in Section 7.03, the aggregate of
                                                  ------------
withdrawals from the Principal and Interest Account for each category of
withdrawal specified in

                                       82

<PAGE>

Section 7.03 and the aggregate amount of permitted withdrawals not made in the
------------
related Due Period.

                                    ARTICLE X

                                   TERMINATION

     Section 10.01 Sale of Loan Assets.
                   --------------------

     (a) Upon any sale of the assets of the Trust pursuant to Section 9.02 of
                                                              ------------
the Trust Agreement, the Servicer shall instruct the Indenture Trustee in
writing to deposit the proceeds from such sale after all payments and reserves
therefrom have been made (the "Insolvency Proceeds") in the Principal and
                               -------------------
Interest Account. On the Remittance Date on which the Insolvency Proceeds are
deposited in the Principal and Interest Account (or, if such proceeds are not so
deposited on a Remittance Date, on the Remittance Date immediately following
such deposit), the Servicer shall instruct the Indenture Trustee in writing to
allocate and apply (after the application on such Remittance Date of Principal
Collections and Interest Collections pursuant to Section 7.05) the Insolvency
                                                 ------------
Proceeds as if (and in the same order of priority as) the Insolvency Proceeds
were Principal Collections and Interest Collections being allocated and
distributed on such date pursuant to subsection 7.05(c).
                                     ------------------

     (b) As described in Article IX of the Trust Agreement, notice of any
                         ----------
termination of the Trust shall be given by the Servicer to the Owner Trustee and
the Indenture Trustee as soon as practicable after the Servicer has received
notice thereof.

     (c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholder will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of the Indenture Trustee pursuant
to this Agreement.

     Section 10.02 Termination.
                   ------------

     (a) This Agreement shall terminate upon notice to the Indenture Trustee of
the earlier of the following events: (i) the final payment on or the disposition
or other liquidation by the Trust of the last Loan or the disposition of all
property acquired upon foreclosure or deed in lieu of foreclosure of any Loan
and the remittance of all funds due thereunder, or (ii) mutual written consent
of the Servicer, the Trust Depositor, Indenture Trustee, the Originator and all
Noteholders and Certificateholders.

     (b) Notice of any termination, specifying the Remittance Date upon which
the Trust will terminate and that the Noteholders shall surrender their Notes to
the Indenture Trustee for payment of the final distribution and cancellation
shall be given promptly by the Servicer by letter to all Noteholders mailed
during the month of such final distribution before the Determination Date in
such month, specifying (i) the Remittance Date upon which final payment of the
Notes will be made upon presentation and surrender of Notes at the office of the
Indenture

                                       83

<PAGE>

Trustee therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such Remittance Date is not
applicable, payments being made only upon presentation and surrender of the
Notes at the office of the Indenture Trustee therein specified. The Servicer
shall give such notice to the Indenture Trustee at the time such notice is given
to Noteholders.

                                   ARTICLE XI

               REMEDIES UPON MISREPRESENTATION; REPURCHASE OPTION

     Section 11.01 Repurchases of, or Substitution for, Loans for Breach of
                   --------------------------------------------------------
                   Representations and Warranties.
                   -------------------------------

     Upon a discovery by a Responsible Officer of the Servicer or any
subservicer, a Responsible Officer of the Owner Trustee or the Indenture Trustee
of a breach of subsection 2.08(b) or a breach of a representation or warranty as
               ------------------
set forth in Section 3.01, Section 3.02, Section 3.03, Section 3.04 or Section
             ------------  ------------  ------------  ------------    -------
3.05 or as made or deemed made in any Addition Notice or any Subsequent Purchase
----
Agreement relating to Substitute Loans that materially and adversely affects the
value of the Loans or the interests of the Noteholders or the Certificateholders
therein or which materially and adversely affects the interests of the
Noteholders or the Certificateholders in the related Loan in the case of a
representation or warranty relating to a particular Loan (notwithstanding that
such representation or warranty was made to the Originator's or the Trust
Depositor's best knowledge) (an "Ineligible Loan"), the party discovering the
                                 ---------------
breach shall give prompt written notice to the other parties; provided, that,
                                                              --------  ----
the Indenture Trustee shall have no duty or obligation to inquire or to
investigate the breach of any of such representations or warranties. Within
thirty (30) days of the earlier of its discovery or its receipt of notice of any
breach of a representation or warranty, the Originator or Trust Depositor shall
(a) promptly cure such breach in all material respects, (b) repurchase each such
Ineligible Loan by depositing in the Principal and Interest Account, within such
thirty (30) day period, an amount equal to the Transfer Deposit Amount, or (c)
remove such Loan from the Trust and effect a substitution for such affected Loan
with a Substitute Loan in accordance with the substitution requirements set
forth in Section 2.04 not later than the date a repurchase of such affected Loan
         ------------
would be required hereunder; provided, however, that with respect to a breach of
                             --------  -------
a representation or warranty relating to the Loans in the aggregate and not to
any particular Loan, the Originator may select Loans (without adverse selection)
to repurchase (or substitute for) such that had such Loans not been included as
part of the Trust (and, in the case of a substitution, had such Substitute Loan
been included as part of the Loan Assets instead of the selected Loan) there
would have been no breach of such representation or warranty.

     Section 11.02 Reassignment of Repurchased or Substituted Loans.
                   -------------------------------------------------

     Upon receipt by the Indenture Trustee for deposit in the Principal and
Interest Account of the amounts described in Section 11.01 (or upon the
                                             -------------
Subsequent Transfer Date related to a Substitute Loan described in Section
                                                                   -------
11.01), and upon receipt of an Officer's Certificate of the Servicer in the form
-----
attached hereto as Exhibit F, the Indenture Trustee shall assign to the Trust
                   ---------
Depositor and the Trust

                                       84

<PAGE>

Depositor shall assign to the Originator all of the Trust's (or Trust
Depositor's, as applicable) right, title and interest in the repurchased or
substituted Loan and related Loan Assets without recourse, representation or
warranty. Such reassigned Loan shall no longer thereafter be included in any
calculations of Outstanding Loan Balances required to be made hereunder or
otherwise be deemed a part of the Trust.

                                   ARTICLE XII

                                   INDEMNITIES

     Section 12.01 Indemnification by Servicer.
                   ----------------------------

     The Servicer agrees to indemnify, defend and hold the Indenture Trustee (as
such and in its individual capacity), the Owner Trustee (as such and in its
individual capacity), the Backup Servicer and each Noteholder and
Certificateholder harmless from and against any and all claims, losses,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments, and any other reasonable costs, fees and expenses that such Person
may sustain as a result of the material failure of the Servicer to perform its
duties and service the Loans in compliance with the terms of this Agreement,
except to the extent arising from (a) the gross negligence, willful misconduct
or fraud by the Person claiming indemnification or (b) an Obligor's financial
difficulty. The Servicer shall immediately notify the Indenture Trustee and the
Owner Trustee if a claim is made by any party with respect to this Agreement,
and the Servicer shall assume (with the consent of the indemnified party) the
defense and any settlement of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the indemnified
party in respect of such claim.

     Section 12.02 Indemnification by Trust Depositor.
                   -----------------------------------

     The Trust Depositor agrees to indemnify, defend, and hold the Indenture
Trustee (as such and in its individual capacity), the Owner Trustee (as such and
in its individual capacity) and each Noteholder and Certificateholder harmless
from and against any and all claims, losses, penalties, fines, forfeitures,
reasonable legal fees and related costs, judgments, and any other reasonable
costs, fees and expenses that such Person may sustain as a result of the
material failure of the Trust Depositor to perform its duties in compliance with
the terms of this Agreement and in the best interests of the Noteholders and the
Certificateholders, except to the extent arising from (a) the gross negligence,
willful misconduct or fraud by the Person claiming indemnification or (b) an
Obligor's financial difficulty. The Trust Depositor shall immediately notify the
Indenture Trustee and the Owner Trustee if a claim is made by a third party with
respect to this Agreement, and the Trust Depositor shall assume (with the
consent of the indemnified party) the defense and any settlement of any such
claim and pay all expenses in connection therewith, including reasonable counsel
fees, and promptly pay, discharge and satisfy any judgment or decree which may
be entered against the indemnified party in respect of such claim.

                                       85

<PAGE>

                                  ARTICLE XIII

                                  MISCELLANEOUS

     Section 13.01 Amendment.
                   ----------

     (a) This Agreement may be amended from time to time by the parties hereto
by written agreement, with the prior written consent of the Indenture Trustee
but without notice to or consent of the Noteholders or Certificateholder, to
cure any ambiguity, to correct or supplement any provisions herein, to comply
with any changes in the Code, or to make any other provisions with respect to
matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement; provided, however, that such
                                                    --------  -------
action shall not, as evidenced by an Opinion of Counsel delivered to the
Indenture Trustee, adversely affect the interests of any Noteholder or
Certificateholder; and further, provided, that no such amendment shall reduce in
                       -------  --------
any manner the amount of, or delay the timing of, any amounts received on Loans
which are required to be distributed on any Note or Certificate without the
consent of the Holder of such Note or Certificate, or change the rights or
obligations of any other party hereto without the consent of such party.

     (b) This Agreement may be amended from time to time by the parties hereto
by written agreement, with the prior written consent of the Indenture Trustee
and with the consent of the Majority Noteholders, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders of the
Notes or Certificates; provided, however, that no such amendment shall reduce in
                       --------  -------
any manner the amount of, or delay the timing of, any amounts which are required
to be distributed on any Note or Certificate without the consent of the Holder
of such Note or Certificate or reduce the percentage of Holders of any Note or
Certificate which are required to consent to any such amendment without the
consent of the Holders of 100% of the Notes affected thereby; and provided,
                                                                  --------
further, that no amendment affecting only one (1) Class shall require the
-------
approval of the Holders of any other Class.

     (c) Prior to the execution of any such amendment or consent, the Indenture
Trustee shall furnish written notification of the substance of such amendment or
consent, together with a copy thereof, to each Rating Agency.

     (d) Promptly after the execution of any such amendment or consent, the
Owner Trustee and the Indenture Trustee, as the case may be, shall furnish
written notification of the substance of such amendment or consent to each
Certificateholder and Noteholder, respectively. It shall not be necessary for
the consent of Noteholders and Certificateholder pursuant to subsection 13.01(b)
                                                             -------------------
to approve the particular form of any proposed amendment or consent, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization by
Noteholders and Certificateholder of the execution thereof shall be subject to
such reasonable requirements as the Owner Trustee or the Indenture Trustee may
prescribe.

                                       86

<PAGE>

     (e) Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Indenture Trustee shall be entitled to receive and conclusively
rely upon an Opinion of Counsel stating that the execution of such amendment is
authorized and permitted by this Agreement. Such Trustee may, but shall not be
obligated to, enter into any such amendment that affects such Trustee's own
rights, duties, indemnities or immunities under this Agreement or otherwise.

     Section 13.02 Protection of Title to Trust.
                   -----------------------------

     The Servicer shall execute and file such financing statements and cause to
be executed and filed such continuation statements, all in such manner and in
such places as may be required by law fully to preserve, maintain and protect
the interest of the Trust, the Securityholders, the Indenture Trustee and the
Owner Trustee in the Loans and in the proceeds thereof. The Servicer shall
deliver (or cause to be delivered) to the Owner Trustee and the Indenture
Trustee file-stamped copies of, or filing receipts for, any document filed as
provided above, as soon as available following such filing.

     Section 13.03 Governing Law.
                   --------------

     (a) This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights, and remedies of the parties under
the Agreement shall be determined in accordance with such laws.

     (b) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT. Each party hereto (i) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the foregoing
waiver and (ii) acknowledges that it and the other parties hereto have been
induced to enter into this Agreement by, among other things, the mutual waivers
and certifications in this subsection 13.03(b).
                           --------------------

     Section 13.04 Notices.
                   --------

     All notices, demands, certificates, requests and communications hereunder
("notices") shall be in writing and shall be effective (a) upon receipt when
sent through the U.S. mails, registered or certified mail, return receipt
requested, postage prepaid, with such receipt to be effective the date of
delivery indicated on the return receipt, or (b) one (1) Business Day after
delivery to an overnight courier, or (c) on the date personally delivered to an
Responsible Officer of the party to which sent, or (d) on the date transmitted
by legible telecopier transmission with a confirmation of receipt, in all cases
addressed to the recipient as follows:

                                       87

<PAGE>

           (i)      if to the Servicer or the Originator:

                    MCG Capital Corporation
                    300 Arboretum Place, Suite 300
                    Richmond, Virginia  23236
                    Attention:       Chief Financial Officer
                    Facsimile No.:   (804) 272-3694

                    and

                    MCG Capital Corporation
                    1100 Wilson Boulevard, Suite 800
                    Arlington, Virginia  22209
                    Attention:       General Counsel
                    Facsimile No.:   (703) 247-7545

           (ii)     if to the Trust Depositor:

                    MCG Finance III, LLC
                    1100 Wilson Boulevard, Suite 800
                    Arlington, Virginia  22209
                    Attention:       General Counsel
                    Facsimile No.:   (703) 247-7545

                    and

                    MCG Finance III, LLC 300 Arboretum Place, Suite 300
                    Richmond, Virginia 23236
                    Attention:       Chief Financial Officer
                    Facsimile No.:   (804) 272-3694

           (iii)    if to the Indenture Trustee:

                    Wells Fargo Bank Minnesota, National Association
                    Sixth Street and Marquette Avenue
                    MAC N9311-161
                    Minneapolis, Minnesota  55479
                    Attention:       Corporate Trust Services/Asset Backed
                                     Administration
                    Facsimile No.:   (612) 667-3464

                                       88

<PAGE>

           (iv)     if to the Owner Trustee:

                    Wilmington Trust Company
                    One Rodney Square North
                    Wilmington, Delaware  19890
                    Attention:       Corporate Trust Administration
                    Facsimile No.:   (302) 427-4749

                    with a copy to:

                    the Originator and the Servicer as provided in clause (i)
                                                                   ----------
                    above

           (v)      if to the Trust:

                    MCG Commercial Loan Trust 2001-1
                    c/o Wilmington Trust Company
                    One Rodney Square North
                    Wilmington, Delaware  19890
                    Attention:       Corporate Trust Administration
                    Facsimile No.:   (302) 427-4749

                    with a copy to:

                    the Originator and the Servicer as provided in clause (i)
                                                                   ----------
                    above

           (vi)     if to S&P:

                    Standard and Poor's Rating Service
                    55 Water Street
                    41st Floor
                    New York, New York  10041
                    Attention:       Surveillance:  Asset-Backed Services
                    Facsimile No.:   (212) 438-2662

           (vii)    if to Moody's:

                    Moody's Investors Service, Inc.
                    99 Church Street
                    4th Floor
                    New York, New York  10007
                    Attention:       ABS Monitoring Department
                    Facsimile No.:   (212) 553-0344

                                       89

<PAGE>

           (viii)   if to Fitch:

                    Fitch, Inc.
                    One State Street Plaza
                    New York, New York  10004
                    Attention:       CDO Surveillance
                    Facsimile No.:   (212) 514-6501

           (ix)     if to the Placement Agent:

                    First Union Securities, Inc.
                    One First Union Center, Mail Code: NC0610
                    301 South College Street
                    Charlotte, North Carolina  28288-0610
                    Attention:       Asset Securitization Division
                    Facsimile No.:   (704) 383-4012

     Each party hereto may, by notice given in accordance herewith to each of
the other parties hereto, designate any further or different address to which
subsequent notices shall be sent.

     Section 13.05 Severability of Provisions.
                   ---------------------------

     If one or more of the covenants, agreements, provisions or terms of this
Agreement shall be for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Agreement
or of the Notes or Certificates or the rights of the Holders thereof, and any
such prohibition, invalidity or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such covenants, agreements, provisions or
terms in any other jurisdiction.

     Section 13.06 Third Party Beneficiaries.
                   --------------------------

     Except as otherwise specifically provided herein, the parties hereto hereby
manifest their intent that no third party shall be deemed a third party
beneficiary of this Agreement, and specifically that the Obligors are not third
party beneficiaries of this Agreement.

     Section 13.07 Counterparts.
                   -------------

     This Agreement may be executed by facsimile signature and in several
counterparts, each of which shall be an original and all of which shall together
constitute but one and the same instrument.

                                       90

<PAGE>

     Section 13.08 Headings.
                   ---------

     The headings of the various Articles and Sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.

     Section 13.09 No Bankruptcy Petition; Disclaimer.
                   -----------------------------------

     (a) Each of the Originator, the Indenture Trustee, the Servicer, the Trust
acting through the Owner Trustee and each Holder (by acceptance of the
applicable Securities) covenants and agrees that, prior to the date that is one
(1) year and one (1) day after the payment in full of all amounts owing in
respect of all outstanding Securities, it will not institute against the Trust
Depositor or the Trust, or join any other Person in instituting against the
Trust Depositor or the Trust, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other similar proceedings under the
laws of the United States or any state of the United States; provided, however,
                                                             --------  -------
that nothing herein shall prohibit the Indenture Trustee from filing proofs of
claim or otherwise participating in any such proceedings instituted by any other
Person. This Section 13.09 will survive the termination of this Agreement.
             -------------

     (b) The Trust acknowledges and agrees that the Certificates represent a
beneficial interest in the Trust and Loan Assets only and the Securities do not
represent an interest in any assets (other than the Loan Assets) of the Trust
Depositor (including by virtue of any deficiency claim in respect of obligations
not paid or otherwise satisfied from the Loan Assets and proceeds thereof). In
furtherance of and not in derogation of the foregoing, to the extent that the
Trust Depositor enters into other securitization transactions as contemplated in
Section 6.07, the Trust acknowledges and agrees that it shall have no right,
------------
title or interest in or to any assets (or interests therein), other than the
Loan Assets, conveyed or purported to be conveyed (whether by way of a sale,
capital contribution or by the granting of a Lien) by the Trust Depositor to any
Person other than the Trust (the "Other Assets").
                                  ------------

     (c) To the extent that notwithstanding the agreements contained in this
Section, the Trust or any Securityholder, either (i) asserts an interest in or
claim to, or benefit from any Other Assets, whether asserted against or through
the Trust Depositor or any other Person owned by the Trust Depositor, or (ii) is
deemed to have any interest, claim or benefit in or from any Other Assets,
whether by operation of law, legal process, pursuant to applicable provisions of
Insolvency Laws or otherwise (including without limitation pursuant to Section
1111(b) of the federal Bankruptcy Code, as amended) and whether deemed asserted
against or through the Trust Depositor or any other Person owned by the Trust
Depositor, then the Trust and each Securityholder by accepting a Note or
Certificate further acknowledges and agrees that any such interest, claim or
benefit in or from the Other Assets is and shall be expressly subordinated to
the indefeasible payment in full of all obligations and liabilities of the Trust
Depositor that, under the terms of the documents relating to the securitization
of the Other Assets, are entitled to be paid from, entitled to the benefits of,
or otherwise secured by such Other Assets (whether or not any such entitlement
or security interest is legally perfected or otherwise entitled to a priority of
distribution under applicable law, including Insolvency Laws, and whether
asserted against the Trust Depositor or any other Person owned by the Trust
Depositor) including, without limitation, the payment of post-petition interest
on such other obligations and liabilities. This subordination

                                       91

<PAGE>

agreement shall be deemed a subordination agreement within the meaning of
Section 510(a) of the Bankruptcy Code. Each Securityholder is deemed to have
acknowledged and agreed that no adequate remedy at law exists for a breach of
this Section 13.09 and that the terms and provisions of this Section 13.09 may
     -------------                                           -------------
be enforced by an action for specific performance.

     (d) The provisions of this Section 13.09 shall be for the third party
                                -------------
benefit of those entitled to rely thereon and shall survive the termination of
this Agreement.

     Section 13.10 Jurisdiction.
                   -------------

     Any legal action or proceeding with respect to this Agreement may be
brought in the courts of the United States for the Southern District of New
York, and by execution and delivery of this Agreement, each party hereto
consents, for itself and in respect of its property, to the non-exclusive
jurisdiction of those courts. Each such party irrevocably waives any objection,
including any objection to the laying of venue or based on the grounds of forum
non conveniens, which it may now or hereafter have to the bringing of any action
or proceeding in such jurisdiction in respect of this Agreement or any document
related hereto.

     Section 13.11 Tax Characterization.
                   ---------------------

     Notwithstanding the provisions of Section 2.01 and Section 2.04 hereof, the
                                       ------------     ------------
Trust Depositor and Owner Trustee agree that pursuant to Treasury Regulations
Section 301.7701-3(b)(1)(ii), in the event that the Certificates and the Class C
Notes are owned by more than one Holder the Trust will be treated as a
partnership, the partners of which are the Certificateholders and the Holders of
the Class C Notes and, in the event that the Certificates and the Class C Notes
are owned by a single Holder, the Trust will be treated as a division of such
Holder.

     Section 13.12 Prohibited Transactions with Respect to the Trust.
                   --------------------------------------------------

     The Originator shall not:

     (a) Provide credit to any Noteholder or Certificateholder for the purpose
of enabling such Noteholder or Certificateholder to purchase Notes or
Certificates, respectively;

     (b) Purchase any Notes or Certificates in an agency or trustee capacity; or

     (c) Except in its capacity as Servicer as provided in this Agreement, lend
any money to the Trust.

     Section 13.13 [Reserved].
                    --------

     Section 13.14 Limitation of Liability of Owner Trustee.
                   -----------------------------------------

     Wilmington Trust Company acts on behalf of the Trust solely as Owner
Trustee hereunder and not in its individual capacity, and all Persons having any
claim against the Trust by reason of the transactions contemplated by this
Agreement or any other Transaction

                                       92

<PAGE>

Document shall look only to the Trust Estate under the Trust Agreement for
payment or satisfaction thereof. The Owner Trustee makes no representations as
to the validity or sufficiency of this Agreement, any other Transaction Document
or the Notes, or of any Loan or related documents. The Owner Trustee shall at no
time have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Loan, or the perfection and priority of any
security interest created by any Loan in any Collateral or the maintenance of
any such perfection and priority, or for or with respect to the sufficiency of
the Trust Estate under the Trust Agreement or its ability to generate the
payments to be distributed to the Certificateholder under the Trust Agreement or
the Noteholders under the Indenture, including, without limitation, the
existence, condition and ownership of any Collateral; the existence and
enforceability of any insurance thereon; the existence and contents of any Loan
on any computer or other record thereof; the validity of the assignment of any
Loan to the Trust or of any intervening assignment; the completeness of any
Loan; the performance or enforcement of any Loan; the compliance by the Trust,
the Trust Depositor or the Servicer with any covenant, agreement or other
obligation or any warranty or representation made under any Transaction Document
or in any related document or the accuracy of any such warranty or
representation; or any action of the Indenture Trustee or the Servicer or any
subservicer taken in the name of the Owner Trustee or the Trust.

     Section 13.15 Payments with respect to Partially Funded Term Loans,
                   ----------------------------------------------------------
                   Traditional Revolving Loans and Reducing Revolving Loans.
                   ---------------------------------------------------------

     (a) With respect to any Partially Funded Term Loans, any Traditional
Revolving Loans and any Reducing Revolving Loans, the Trust will own only the
principal portion of such Loans outstanding as of the applicable Cutoff Date.
Principal Collections received by the Servicer on any Traditional Revolving
Loans and any Reducing Revolving Loans will be allocated first to the portion of
such Loan not owned by the Trust, until the principal amount of such portion is
reduced to zero, and then to the portion owned by the Trust; provided, however,
                                                             --------  -------
(i) if a payment default occurs with respect to any Traditional Revolving Loan
or any Reducing Revolving Loans, (ii) an Event of Default occurs or (iii) a
Servicer Default occurs, then Principal Collections received on (x) the
applicable Loan (in the case of clause (i) above) or (y) all the Traditional
                                ----------
Revolving Loans and Reducing Revolving Loans (in the case of clauses (ii) or
                                                             ------------
(iii) above) will be allocated between the portion not owned by the Trust and
-----
the portion owned by the Trust, pro rata based upon the outstanding principal
amount of each such portion.

     (b) With respect to any Partially Funded Term Loan, any Traditional
Revolving Loan and any Reducing Revolving Loan, Interest Collections received by
the Servicer on those Loans will be allocated between the portion not owned by
the Trust and the portion owned by the Trust on a pro rata basis according to
the outstanding principal amount of each such portion.

     Section 13.16 No Partnership.
                   ---------------

     Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto, and the services of
the Servicer shall be rendered as an independent contractor and not as agent for
the Holders.

                                       93

<PAGE>

     Section 13.17 Successors and Assigns.
                   -----------------------

     This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.

     Section 13.18 Acts of Holders.
                   ----------------

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

     Section 13.19 Duration of Agreement.
                   ----------------------

     This Agreement shall continue in existence and effect until terminated as
herein provided.

     Section 13.20 Limited Recourse.
                   -----------------

     The obligations of the Trust Depositor, the Originator and the Servicer
under this Agreement are solely the obligations of the Trust Depositor, the
Originator and the Servicer. No recourse shall be had for the payment of any
amount owing by the Trust Depositor, the Originator, and the Servicer under this
Agreement or for the payment by the Trust Depositor, the Originator and the
Servicer of any fee in respect hereof or any other obligation or claim of or
against the Trust Depositor, the Originator and the Servicer arising out of or
based upon this Agreement, against any employee, officer, director, Affiliate,
shareholder, partner or member of the Trust Depositor, the Originator and the
Servicer or against the employee, officer, director, shareholder, partner or
member or any Affiliate of such Person. The provisions of this Section 13.20
                                                                       -----
shall survive termination of this Agreement.

     Section 13.21 Confidentiality.
                   ----------------

     Each of the Trust, the Trust Depositor, the Servicer (if other than MCG),
the Indenture Trustee and the Backup Servicer shall maintain and shall cause
each of its employees, officers, agents and Affiliates to maintain the
confidentiality of material non-public information concerning MCG and its Public
Securities or about the Obligors (to the extent MCG has advised such Person or
such Person has actual knowledge that the Loan Documents prohibit disclosure of
such information with respect to the Obligors) obtained by it or them in
connection with the structuring, negotiating, execution and performance of the
transactions contemplated herein, except that each such party and its employees,
officers, agents and Affiliates may disclose such information to other parties
to the Transaction Documents and to its external accountants, attorneys, any
potential subservicers and the agents of such Persons provided such Persons
expressly agree to maintain the confidentiality of such information ("Excepted
                                                                      --------
Persons"), and as required by an applicable law or order of any judicial or
-------
administrative proceeding.

                                       94

<PAGE>

                  [Remainder of Page Intentionally Left Blank]

                                       95

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.

                   MCG COMMERCIAL LOAN TRUST 2001-1

                            By:      WILMINGTON TRUST COMPANY, not
                                     in its individual capacity, but solely as
                                     Owner Trustee on behalf of the Trust

                            By:    /s/ Donald G. MacKelcan
                               -------------------------------------------------
                            Name:  Donald G. MacKelcan
                                 -----------------------------------------------
                            Title: Vice President
                                  ----------------------------------------------

                            MCG FINANCE III, LLC, as the Trust Depositor

                            By:    /s/ Samuel G. Rubenstein
                               -------------------------------------------------
                            Name:  Samuel G. Rubenstein
                                 -----------------------------------------------
                            Title: General Counsel and Executive Vice President
                                  ----------------------------------------------

                            MCG CAPITAL CORPORATION, as the
                            Originator and as the Servicer

                            By:    /s/ Samuel G. Rubenstein
                               -------------------------------------------------
                            Name:  Samuel G. Rubenstein
                                 -----------------------------------------------
                            Title: General Counsel and Executive Vice President
                                  ----------------------------------------------

                  [Signatures Continued on the Following Page]

                                      S-1

<PAGE>

                              WELLS FARGO BANK MINNESOTA,
                              NATIONAL ASSOCIATION, not in its individual
                              capacity but as the Indenture Trustee and as the
                              Backup Servicer

                              By: /s/ Sue Dignan
                                 -----------------------------------------------
                              Name: Sue Dignan
                                   ---------------------------------------------
                              Title: Assistant Vice President
                                    --------------------------------------------

                                       S-2

<PAGE>

                                                                      Appendix A
                                                                      ----------
                                                                     to Sale and
                                                                     -----------
                                                             Servicing Agreement
                                                             -------------------

                         MATERIAL MORTGAGE LOAN CRITERIA
                         -------------------------------

     With respect to each Loan that is a Material Mortgage Loan, on and as of
the related Transfer Date, a Loan as to which each of the following is true:

          (i) with respect to each such Loan that is a Material Mortgage Loan,
     the related Mortgage is a valid and subsisting first priority lien of
     record on the Mortgaged Property subject in all cases to such exceptions
     that are generally acceptable to lending institutions in connection with
     their regular commercial lending activities, and such other exceptions to
     which similar properties are commonly subject and which do not
     individually, or in the aggregate, materially and adversely affect the
     benefits of the security intended to be provided by such Mortgage;

          (ii) with respect to each such Loan that is a Material Mortgage Loan,
     there is no delinquent tax or assessment lien on any Mortgaged Property
     which is the primary Collateral for such Material Mortgage Loan, and each
     such Mortgaged Property is free of material damage and is in good repair;

          (iii) the improvements upon each Mortgaged Property related to a
     Material Mortgage Loan are covered by a valid and existing hazard insurance
     policy with a generally acceptable carrier that provides for fire and
     extended coverage representing coverage described in this Agreement;

          (iv) if a Mortgaged Property related to a Material Mortgage Loan is in
     an area identified in the Federal Register by the Federal Emergency
     Management Agency as having special flood hazards, a flood insurance policy
     is in effect with respect to such Mortgaged Property with a generally
     acceptable carrier in an amount representing coverage described in this
     Agreement;

          (v) each original Mortgage related to a Material Mortgage Loan was
     recorded, and all subsequent assignments of such original Mortgage have
     been recorded in the appropriate jurisdictions wherein such recordation is
     necessary to perfect the Lien thereof as against creditors of the related
     Obligor (or are in the process of being recorded);

          (vi) there are no material defaults in complying with the terms of any
     applicable Mortgage related to a Material Mortgage Loan, and all taxes,
     governmental assessments, insurance premiums, water, sewer and municipal
     charges, leasehold payments or ground rents which previously became due and
     owing have been paid, or an escrow of funds has been established in an
     amount sufficient to pay for every such item which remains unpaid and which
     has been assessed but is not yet due and payable;

                                       1

<PAGE>

          (vii) there is no proceeding pending or threatened for the total or
     partial condemnation of any Mortgaged Property related to a Material
     Mortgage Loan, nor is such a proceeding currently occurring, and such
     property is undamaged by waste, fire, earthquake or earth movement,
     windstorm, flood, tornado or other casualty, so as to materially adversely
     affect the value of such Mortgaged Property as security for the Material
     Mortgage Loan or the use for which the premises were intended;

          (viii) at the time of origination of a Material Mortgage Loan, the
     related Mortgaged Property was free of contamination from toxic substances
     or hazardous wastes requiring action under applicable laws or is subject to
     ongoing environmental rehabilitation approved by the Servicer, and, as of
     the related Transfer Date, the Trust Depositor has no knowledge of any such
     contamination from toxic substances or hazardous waste material on any such
     Mortgaged Property unless such items are below action levels;

          (ix) with respect to each Material Mortgage Loan, for each related
     Mortgage constituting a deed of trust, a trustee, duly qualified under
     applicable law to serve as such, has been properly designated and currently
     so serves and is named in such Mortgage, and no fees or expenses are or
     will become payable by the Noteholders and/or the Certificateholders to the
     trustee under the deed of trust, except in connection with a trustee's sale
     after default by the Obligor; and

          (x) with respect to each Material Mortgage Loan, any related Mortgage
     contains customary and enforceable provisions, which render the rights and
     remedies of the holder thereof adequate for the realization against the
     Mortgaged Property of the benefits of the security, including, (i) in the
     case of a Mortgage designated as a deed of trust, by trustee's sale, and
     (ii) otherwise by judicial foreclosure. There is no homestead or other
     exemption available to the Obligor which would materially interfere with
     the right to sell the Mortgaged Property related to a Material Mortgage
     Loan at a trustee's sale or the right to foreclose the Mortgage.

                                       2

<PAGE>

                                                                  --------------
                                                                  EXECUTION COPY
                                                                  --------------

                            EXHIBITS AND APPENDIX TO
                            ------------------------
                          SALE AND SERVICING AGREEMENT
                          ----------------------------

EXHIBIT A       Form of Assignment

EXHIBIT B       Form of Closing Certificate of Trust Depositor

EXHIBIT C       Form of Closing Certificate of Servicer/Originator

EXHIBIT D       Form of Liquidation Report

EXHIBIT E       Principal and Interest Account Letter Agreement

EXHIBIT F       Form of Certificate Regarding Repurchased Loans

EXHIBIT G       List of Loans

EXHIBIT H       Form of Quarterly Servicer Report

EXHIBIT I       Form of Subsequent Transfer Agreement

EXHIBIT J       Form of Subsequent Purchase Agreement

EXHIBIT K       Credit and Collection Policy

EXHIBIT L-1     Form of Initial Certification

EXHIBIT L-2     Form of Final Certification

EXHIBIT M       Request for Release of Documents

APPENDIX A      Material Mortgage Loan Criteria

<PAGE>

                                                                       Exhibit A
                                                                       ---------
                                                                     to Sale and
                                                                     -----------
                                                             Servicing Agreement
                                                             -------------------

                               FORM OF ASSIGNMENT

     Pursuant to and in accordance with the Sale and Servicing Agreement (such
agreement as amended, modified, waived, supplemented or restated from time to
time, the "Agreement"), dated as of December 1, 2001, made by and among the
           ---------
undersigned, as the Trust Depositor, MCG Capital Corporation, as the Originator
and as the Servicer, Wells Fargo Bank Minnesota, National Association, as the
Indenture Trustee and as the Backup Servicer and the MCG Commercial Loan Trust
2001-1, as the Trust, the undersigned does hereby sell, transfer, convey,
assign, set over and otherwise convey to the Trust (i) the Initial Loans, all
payments paid in respect thereof and all monies due, to become due or paid in
respect thereof accruing after the Initial Cutoff Date and all Liquidation
Proceeds and recoveries thereon, in each case as they arise after the Initial
Cutoff Date, but not including the Retained Interest or Interest Collections
received prior to December 1, 2001; (ii) all security interests and liens and
Collateral subject thereto from time to time purporting to secure payment by
Obligors under such Loans; (iii) all guaranties, indemnities, warranties and
other agreements or arrangements of whatever character from time to time
supporting or securing payment of such Loans; (iv) all collections and records
(including computer records) with respect to the foregoing; (v) all documents
relating to the Loan Files; and (vi) all income, payments, proceeds and other
benefits of any and all of the foregoing.

     Capitalized terms used herein have the meaning given such terms in the
Agreement.

     IN WITNESS WHEREOF, the undersigned has caused this assignment to be duly
executed this       day of December, 2001.
             ------

                                     MCG FINANCE III, LLC

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

                                      A-1

<PAGE>

                                                                       Exhibit B
                                                                       ---------
                                                                     to Sale and
                                                                     ----------
                                                             Servicing Agreement
                                                             -------------------

                 FORM OF CLOSING CERTIFICATE OF TRUST DEPOSITOR

     The undersigned certifies that he/she is the Secretary of MCG Finance III,
LLC, a Delaware limited liability company, as the Trust Depositor, and that, in
the capacity as such officer, is duly authorized to execute and deliver this
certificate on behalf of the Trust Depositor in connection with the Sale and
Servicing Agreement (such agreement as amended, modified, waived, supplemented
or restated from time to time, the "Agreement"), dated as of December 1, 2001,
                                    ---------
by and among MCG Commercial Loan Trust 2001-1, as the Trust, the Trust
Depositor, Wells Fargo Bank Minnesota, National Association, as the Indenture
Trustee and as the Backup Servicer, and MCG Capital Corporation, as the
Originator and as the Servicer (all capitalized terms used herein without
definition have the respective meanings set forth in the Agreement), and further
certifies in his/her capacity as such officer as follows (it being understood
that these certifications are being relied upon by, among others, Moore & Van
Allen PLLC in connection with its delivery of a legal opinion (the "Opinion")
                                                                    -------
required in connection with the subject transactions addressing, among other
things, enforceability and UCC perfection issues, and by the Placement Agent in
connection with its undertakings in connection with the subject transactions):

     1. Attached hereto as Exhibit I is a true and correct copy of the
                           ---------
Certificate of Formation of the Trust Depositor, together with all amendments
thereto as in effect on the date hereof.

     2. There has been no other amendment or other document filed affecting the
Certificate of Formation of the Trust Depositor since December 18, 2001, and no
such amendment has been authorized by the members or managers of the Trust
Depositor.

     3. Attached hereto as Exhibit II is a Certificate of the Secretary of State
                           ----------
of the State of Delaware, dated December 18, 2001, stating that the Trust
Depositor is duly formed under the laws of the State of Delaware and is in good
standing.

     4. Attached hereto as Exhibit III is a true and correct copy of the Limited
                           -----------
Liability Company Operating Agreement of the Trust Depositor, together with all
amendments thereto in effect on the date hereof, which were in full force and
effect on December 18, 2001, and at all times subsequent thereto.

     5. Attached hereto as Exhibit IV is a true and correct copy of resolutions
                           ----------
adopted pursuant to the unanimous written consent of the Board of Managers of
the Trust Depositor relating to the authorization, execution, delivery and
performance of (among other things) the Agreement and the other Transaction
Documents. Said resolutions have not been amended,

                                      B-1

<PAGE>

modified, annulled or revoked, and are on the date hereof in full force and
effect and are the only resolutions relating to these matters which have been
adopted by the Managers.

     6. No event with respect to the Trust Depositor has occurred and is
continuing that would constitute an Event of Default or an event that, with
notice or the passage of time or both, would become an Event of Default as
defined in the Agreement. To the best of my knowledge after reasonable
investigation, there has been no material adverse change in the condition,
financial or otherwise, or the earnings, business affairs or business prospects
of the Trust Depositor, whether or not arising in the ordinary course of
business, since the respective dates as of which information is given in the
Private Placement Memorandum and except as set forth therein.

     7. All federal, state and local taxes of the Trust Depositor due and owing
as of the date hereof have been paid or adequate provisions for the payment
thereof have been made.

     8. All representations and warranties of the Trust Depositor contained in
the Transaction Documents or any other related documents, or in any document,
certificate or financial or other statement delivered in connection therewith,
are true and correct in all material respects as of the date hereof.

     9. There is no action, investigation or proceeding pending or, to our
knowledge, threatened against the Trust Depositor before any court,
administrative agency or other tribunal (a) asserting the invalidity of the
Transaction Documents; (b) seeking to prevent the consummation of any of the
transactions contemplated by the Transaction Documents; or (c) which is likely
to materially and adversely affect the Trust Depositor's performance of its
obligations under, or the validity or enforceability of, the Transaction
Documents.

     10. No consent, approval, authorization or order of, and no notice to or
filing with, any governmental agency or body or state or federal court is
required to be obtained by the Trust Depositor for the Trust Depositor's
consummation of the transactions contemplated by the Transaction Documents,
except such as have been obtained or made and such as may be required under the
blue sky laws of any jurisdiction in connection with the issuance and sale of
the Securities.

     11. The Trust Depositor is not a party to any agreements or instruments
evidencing or governing indebtedness for money borrowed or by which the Trust
Depositor or its property is bound (other than the Transaction Documents).

     12. Neither (a) the Originator's transfer and assignment of the Loan Assets
to the Trust Depositor, (b) the Trust Depositor's concurrent transfer and
assignment of the Loan Assets to the Trust, (c) the Trust Depositor's execution
and delivery of the Transaction Documents, nor (d) the Trust Depositor's
consummation of any of the transactions contemplated in the Transaction
Documents, will violate or conflict with any agreement or instrument to which
the Trust Depositor is a party or by which it is otherwise bound.

                                      B-2

<PAGE>

     13. In connection with the transfer of Loans and related Collateral
contemplated in the Agreement, the Trust Depositor (a) has not made such
transfer with the actual intent to hinder, delay or defraud any creditor of the
Trust Depositor, (b) has not received less than a reasonably equivalent value in
exchange for such transfer, (c) is not on the date thereof insolvent (nor will
it become insolvent as a result thereof), (d) is not engaged (or about to
engage) in a business or transaction for which it has unreasonably small
capital, and (e) does not intend to incur or believe it will incur debts beyond
its ability to pay when matured.

     14. Each of the agreements and conditions of the Trust Depositor to be
performed on or before the Closing Date pursuant to the Transaction Documents
have been performed in all material respects.

     15. MCG Capital Corporation has not executed for filing any UCC financing
statements listing the Loan Assets as collateral other than financing statements
(a) relating to the transactions contemplated in the Agreement, (b) that will be
terminated in connection with the Heller Transaction or (c) that will be amended
to exclude the Loan Assets as collateral in connection with the CP Transaction.

     16. Since the respective dates as of which information is given in the
Private Placement Memorandum, dated December 19, 2001 (the "PPM"), there has
                                                            ---
been no material adverse change in the condition, financial or otherwise, or in
the earnings, results of operations, business affairs or business prospects of
the Company, whether or not arising in the ordinary course of business, or in
the ability of the Company to perform its obligations under the Purchase
Agreement or under the Transaction Documents or in the characteristics of the
Loans.

     17. Nothing has come to the attention of the Trust Depositor that would
lead it to believe that the PPM, and any amendment thereof or supplement
thereto, as of its date and as of the Closing Date, or any Additional Offering
Documents (as defined in the Purchase Agreement), contained an untrue statement
of a material fact or omitted to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
are made, not misleading.

                                     * * * *

     IN WITNESS WHEREOF, I have affixed my signature hereto this      day of
                                                                ------
December, 2001.

                                     By:
                                        ----------------------------------------
                                     Name:  Samuel G. Rubenstein
                                     Title: Secretary

                                      B-3

<PAGE>

                                                                       Exhibit C
                                                                       ---------
                                                                     to Sale and
                                                                     -----------
                                                             Servicing Agreement
                                                             -------------------

               FORM OF CLOSING CERTIFICATE OF SERVICER/ORIGINATOR

     The undersigned certifies that he/she is the Secretary of MCG Capital
Corporation, and that, in the capacity as such officer, he/she is duly
authorized to execute and deliver this certificate on behalf of MCG Capital
Corporation, as the Originator and as the Servicer, in connection with the Sale
and Servicing Agreement (such agreement as amended, modified, waived,
supplemented or restated from time to time, the "Agreement"), dated as of
                                                 ---------
December 1, 2001, by and among the Originator, the Servicer, MCG Finance III,
LLC, as the Trust Depositor, Wells Fargo Bank Minnesota, National Association,
as the Indenture Trustee and as the Backup Servicer, and MCG Commercial Loan
Trust 2001-1, as the Trust (all capitalized terms used herein without definition
having the respective meanings set forth in the Agreement) and further certifies
in his/her capacity as such officer as follows (it being understood that these
certifications are being relied upon by, among others, Moore & Van Allen PLLC in
connection with its delivery of a legal opinion (the "Opinion") required in
                                                      -------
connection with the subject transactions addressing, among other things,
enforceability and UCC perfection issues, and by the Placement Agent in
connection with its undertakings in connection with the subject transactions):

     1. Attached hereto as Exhibit I is a true and correct copy of the Restated
                           ---------
Certificate of Incorporation of MCG Capital Corporation, together with all
amendments thereto as in effect on the date hereof.

     2. There has been no other amendment or other document filed affecting the
Restated Certificate of Incorporation of MCG Capital Corporation since December
4, 2001, and no such amendment has been authorized by the Board of Directors or
shareholders of MCG Capital Corporation.

     3. Attached hereto as Exhibit II is a Certificate of the Secretary of State
                           ----------
of the State of Delaware, dated December 17, 2001, stating that MCG Capital
Corporation is duly incorporated under the laws of the State of Delaware and is
in good standing.

     4. Attached hereto as Exhibit III is a true and correct copy of the Amended
                           -----------
and Restated Bylaws of MCG Capital Corporation, together with all amendments
thereto, which were in full force and effect on December 4, 2001, and at all
times subsequent thereto.

     5. Attached hereto as Exhibit IV is a true and correct copy of resolutions
                           ----------
adopted pursuant to the unanimous written consent of the Board of Directors of
MCG Capital Corporation relating to the authorization, execution, delivery and
performance of (among other things) the Agreement and the other Transaction
Documents. Said resolutions have not been amended, modified, annulled or
revoked, and are on the date hereof in full force and effect and

                                      C-1

<PAGE>

are the only resolutions relating to these matters which have been adopted by
the Board of Directors.

     6. No event with respect to MCG Capital Corporation has occurred and is
continuing that would constitute an Event of Default or Servicer Default or an
event that, with notice or the passage of time, would constitute an Event of
Default or Servicer Default as defined in the Agreement. To the best of my
knowledge after reasonable investigation, there has been no material adverse
change in the condition, financial or otherwise, or the earnings, business
affairs or business prospects of MCG Capital Corporation, whether or not arising
in the ordinary course of business, since the respective dates as of which
information is given in the Private Placement Memorandum and except as set forth
therein.

     7. All federal, state and local taxes of MCG Capital Corporation due and
owing as of the date hereof have been paid or adequate provisions for the
payment thereof have been made.

     8. All representations and warranties of MCG Capital Corporation contained
in the Transaction Documents or in any document, certificate or financial or
other statement delivered in connection therewith are true and correct in all
material respects as of the date hereof.

     9. There is no action, investigation or proceeding pending or, to my
knowledge, threatened against MCG Capital Corporation before any court,
administrative agency or other tribunal (a) asserting the invalidity of any
Transaction Document to which MCG Capital Corporation is a party; (b) seeking to
prevent the consummation of any of the transactions contemplated by the
Transaction Documents; or (c) that is likely to materially and adversely affect
MCG Capital Corporation's performance of its obligations under, or the validity
or enforceability of, the Transaction Documents.

     10. No consent, approval, authorization or order of, and no notice to or
filing with, any governmental agency or body or state or federal court is
required to be obtained by MCG Capital Corporation for its consummation of the
transactions contemplated by the Transaction Documents, except such as have been
obtained or made and such as may be required under the blue sky laws of any
jurisdiction in connection with the issuance and sale of the Securities.

     11. Neither (a) MCG Capital Corporation's transfer and assignment of the
Loan Assets to the Trust Depositor, (b) MCG Capital Corporation's entering into
of the Transaction Documents, nor (c) MCG Capital Corporation's consummation of
any of the transactions contemplated in the Transaction Documents, will violate
or conflict with any agreement or instrument to which MCG Capital Corporation is
a party or by which it is otherwise bound.

     12. In connection with the transfers of Loans and related Collateral
contemplated in the Agreement, MCG Capital Corporation (a) has not made such
transfer with actual intent to hinder, delay or defraud any creditor of MCG
Capital Corporation, (b) has not received less than a reasonably equivalent
value in exchange for such transfer, (c) is not on the date hereof insolvent
(nor will MCG Capital Corporation become insolvent as a result thereof), (d) is
not engaged (or about to engage) in a business or transaction for which it has
unreasonably small

                                      C-2

<PAGE>

capital, and (e) does not intend to incur or believe it will incur debts beyond
its ability to pay when matured.

     13. Each of the agreements and conditions of MCG Capital Corporation to be
performed or satisfied on or before the Closing Date under the Transaction
Documents has been performed or satisfied in all material respects.

     14. MCG Capital Corporation has not executed for filing any UCC financing
statements listing the Loan Assets as collateral other than financing statements
(a) relating to the transactions contemplated in the Agreement, (b) that will be
terminated in connection with the Heller Transaction or (c) that will be amended
to exclude the Loan Assets as collateral in connection with the CP Transaction.

     15. Since the respective dates as of which information is given in the
Private Placement Memorandum, dated December 19, 2001 (the "PPM"), there has
                                                            ---
been no material adverse change in the condition, financial or otherwise, or in
the earnings, results of operations, business affairs or business prospects of
the Company, whether or not arising in the ordinary course of business, or in
the ability of the Company to perform its obligations under the Purchase
Agreement or under the Transaction Documents or in the characteristics of the
Loans.

     16. Nothing has come to the attention of MCG Capital Corporation that would
lead it to believe that the PPM, and any amendment thereof or supplement
thereto, as of its date and as of the Closing Date, or any Additional Offering
Documents (as defined in the Purchase Agreement), contained an untrue statement
of a material fact or omitted to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
are made, not misleading.

                                   * * * * * *

     IN WITNESS WHEREOF, I have affixed my signature hereto this      day of
                                                                ------
December, 2001.

                                     By:
                                        ----------------------------------------
                                     Name:  Samuel G. Rubenstein
                                     Title: Secretary

                                      C-3

<PAGE>

                                                                       Exhibit D
                                                                       ---------
                                                                     to Sale and
                                                                     -----------
                                                             Servicing Agreement
                                                             -------------------

                           FORM OF LIQUIDATION REPORT

Obligor Name:
Account number:
Original Outstanding Loan Balance:

1.   Liquidation Proceeds

              Principal Prepayment                       $
                                                           ------------
              Property Sale Proceeds
                                                           ------------
              Insurance Proceeds
                                                           ------------
              Other (Itemize)
                                                           ------------

2.   Servicing Advances                                  $
                                                           ------------

3.   Net Liquidation Proceeds                            $
     (Line 1 minus Line 2)                                 ------------

4.   Outstanding Loan Balance of the
     Loan on date of liquidation                         $
                                                           ------------

5.   Realized (Loss) or Gain                             $
     (Line 3 minus Line 4)                                 ------------

                                      D-1

<PAGE>

                                                                       Exhibit E
                                                                       ---------
                                                                     to Sale and
                                                                     -----------
                                                             Servicing Agreement
                                                             -------------------

                 PRINCIPAL AND INTEREST ACCOUNT LETTER AGREEMENT

                                     (date)

         To:

         (the "Depository")
               ----------

     As "Servicer" under the Sale and Servicing Agreement, dated as of December
1, 2001, relating to the MCG Commercial Loan Trust 2001-1 (such agreement as
amended, modified, waived, supplemented or restated from time to time, the
"Agreement"), we hereby authorize and request you to establish an
 ---------
account, as a Principal and Interest Account pursuant to Section 7.03 of the
                                                         ------------
Agreement, to be designated as "MCG Capital Corporation, as the
Servicer, in trust for the registered holders of MCG Commercial Loan Trust,
Series 2001-1 Class A, Class B and Class C Notes." Such account shall have two
(2) subaccounts, one designated the Interest Collection Account and the other
designated the Principal Collection Account. All deposits in the account shall
be subject to withdrawal therefrom by order signed by the Servicer. You may
refuse any deposit which would result in violation of the requirement that the
account be fully insured as described below. This letter is submitted to you in
duplicate. Please execute and return one original to us.

                                     MCG CAPITAL CORPORATION

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

                                      E-1

<PAGE>

     The undersigned, as Depository, hereby (i) certifies that the above
described account has been established under Account Number
                                                           --------------------,
at the office of the depository indicated above, (ii) agrees to honor
withdrawals on such account as provided above and (iii) agrees that it will
comply with the instructions of the Servicer directing disposition of the funds
in the above-described account without the consent of MCG Finance III, LLC or
MCG Commercial Loan Trust 2001-1. The amounts deposited at any time in the
account will be insured to the maximum amount provided by applicable law by the
Federal Deposit Insurance Corporation.

                                     -------------------------------------------
                                     (Name of Depository)

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

                                      E-2

<PAGE>

                                                                       Exhibit F
                                                                       ---------
                                                                     to Sale and
                                                                     -----------
                                                             Servicing Agreement
                                                             -------------------

                 FORM OF CERTIFICATE REGARDING REPURCHASED LOANS

     The undersigned certifies that he/she is the [           ] of MCG Capital
                                                   -----------
Corporation, a Delaware corporation, as the Servicer, and that, in the capacity
as such officer, he/she is duly authorized to execute and deliver this
certificate on behalf of the Servicer pursuant to Section 11.02 of the Sale and
                                                  -------------
Servicing Agreement (such agreement as amended, modified, waived, supplemented
or restated from time to time, the "Agreement"), dated as of December 1, 2001,
                                    ---------
by and among MCG Finance III, LLC, as the Trust Depositor, MCG Capital
Corporation, as the Originator and as the Servicer, Wells Fargo Bank Minnesota,
National Association, as the Indenture Trustee and as the Backup Servicer, and
MCG Commercial Loan Trust 2001-1, as the Trust (all capitalized terms used
herein without definition have the respective meanings specified in the
Agreement), and further certifies in her/her capacity as such officer that:

     1. The Loans on the attached schedule are to be repurchased by the
Originator on the date hereof, or substituted for by the Originator, pursuant to
and in accordance with Section 11.01 of the Agreement.
                       -------------

     2. Upon deposit of the Transfer Deposit Amount for such Loans (or the
effective conveyance of one or more Substitute Loans therefor), such Loans may,
pursuant to Section 11.02 of the Agreement, be assigned by the Owner Trustee to
            -------------
the Originator.

     IN WITNESS WHEREOF, I have affixed hereunto my signature this      day of
                                                                   ----
[           ], 200[ ].
 -----------

                                     MCG CAPITAL CORPORATION

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

                                       F-1

<PAGE>

                                                                       Exhibit G
                                                                       ---------
                                                                     to Sale and
                                                                     -----------
                                                             Servicing Agreement
                                                             -------------------

                                  LIST OF LOANS

                                [TO BE PROVIDED]

                                      G-1

<PAGE>

                                                                       Exhibit H
                                                                       ---------
                                                                     to Sale and
                                                                     -----------
                                                             Servicing Agreement
                                                             -------------------

                        FORM OF QUARTERLY SERVICER REPORT
<TABLE>
<S>                                                                                     <C>     <C>
MCG COMMERCIAL LOAN TRUST NOTES
SERIES 2001-1, CLASS A, CLASS B and CLASS C

Due Period ending on:
Determination Date:       3rd Business Days prior to Remittance Date
Remittance Date:
Days during Interest Accrual Period:
Year Basis                                 360

AGGREGATE OUTSTANDING LOAN BALANCE
Aggregate Outstanding Loan Balance, beginning of Due Period                                      --
         Less: Scheduled Principal Payments                                                      --
         Less: Curtailments                                                                      --
         Less: Payoffs                                                                           --
         Less: Aggregate Outstanding Loan Balance of Loans that
         became Charged-Off Loans during the current Due Period                                  --
         Less: Repurchased Loans                                                                 --
         Add: Aggregate Outstanding Loan Balance of Substitute Loans                             --
Aggregate Outstanding Loan Balance, end of Due Period                                            --

AGGREGATE PRINCIPAL BALANCE OF NOTES (post distribution)

Class A Principal Amount, end of Interest Accrual Period                                         --
Class B Principal Amount, end of Interest Accrual Period                                         --
Class C Principal Amount, end of Interest Accrual Period                                         --
Aggregate Outstanding Principal Balance                                                          --

ADDITIONAL PRINCIPAL AMOUNT                                                                      --

DELINQUENT LOANS                                                                                 --
1-29 DPD                                                                                --
30-59 DPD                                                                               --
60-89 DPD                                                                               --
90-119 DPD                                                                              --
120-149 DPD                                                                             --
150+ DPD                                                                                --

CHARGED-OFF LOANS
Cumulative Aggregate Outstanding Loan Balance of Charged-Off Loans,
         beginning of Due Period                                                                 --
Aggregate Outstanding Loan Balance of Charged-Off Loans that became
         Charged-Off Loans during the current Due Period                                         --
Cumulative Aggregate Outstanding Loan Balance of Charged-Off Loans,
         end of Due Period                                                                       --
</TABLE>

                                      H-1

<PAGE>

<TABLE>
<S>                                                                                            <C>
RESERVE FUND
Reserve Fund balance, beginning of Due Period                                                    --
         Required Reserve Amount
                  The sum of (i) the then current Class A and B Interest Amounts,
                  and (ii) of the Outstanding Loan Balance of Loans that are
                  more than 60 days delinquent in any payment of interest on or
                  principal of such Loan (without giving effect to any grace period)
                  or would be so delinquent but for any amendment or modification
                  made to such Loan resulting from the Obligor's inability to pay
                  such Loan in accordance with its terms.  (Note:  on the Closing
                  Date only the amount in clause (l) on the first Remittance Date).              --
                                          ----------
         Total                                                                                   --
         Deposit from (release to) waterfall                                                     --
Reserve Fund balance, end of Due Period                                                          --

Servicing Fee                                                                                    --
unpaid Servicing Fee from prior Collection Periods                                               --
Total Servicing Fee due                                                                          --

Total Principal Collections                                                                      --

Total Interest Collections                                                                       --

Prepayments                                                                                      --

Class A Outstanding Principal Balance, beginning of Interest Accrual Period                      --
Class B Outstanding Principal Balance, beginning of Interest Accrual Period                      --
Class C Outstanding Principal Balance, beginning of Interest Accrual Period                      --
Aggregate Outstanding Principal Balance, beginning of Interest Accrual Period                    --

Class A Note Interest Rate                                                                     0.00%
Class B Note Interest Rate                                                                     0.00%

Class A Interest Shortfall from previous Interest Accrual Period                                 --
Class B Interest Shortfall from previous Interest Accrual Period                                 --

Class A Outstanding Principal Balance as a percent of Aggregate Outstanding
Principal Balance
Class B Outstanding Principal Balance as a percent of Aggregate Outstanding
Principal Balance Class C Outstanding Principal Balance as a percent of
Aggregate Outstanding Principal Balance
</TABLE>

                                       H-2

<PAGE>

<TABLE>
<S>                                                                             <C>     <C>    <C>
INTEREST ALLOCATIONS
         Prior to an Event of Default or the occurrence and continuation of a
         Class A Trigger or Class B Trigger
         Interest Collections on deposit in the Note Distribution Account,
         balance as of end of Due Period                                        --
         All investment earnings on funds held in the Note Distribution
         Account                                                                --
         Reserve Fund balance                                                   --
         Total available for distribution                                       --
                                                                                Due     Paid   Shortfall
                                                                                ---     ----   ---------
         1.       Any amounts to Indenture Trustee, Backup Servicer
                  and Owner Trustee (excluded amounts related to
                  indemnification)                                              --       --        --
         2.       From the Interest Collections received on the specific Loans
                  for which Scheduled Payment Advances were made,
                  reimbursement for the amount of any Scheduled Payment
                  Advances relating to interest on such Loans                   --       --        --
         3.       Servicing Fee                                                 --       --        --
         4.       Class A Interest Amount plus any Class A Interest
                  Shortfall                                                     --       --        --
         5.       Class B Interest Amount plus any Class B Interest Shortfall   --       --        --
         6.       Any Additional Principal Amount to the holders of the
                  Class A and Class B sequentially until the Additional
                  Principal Amount equals zero                                  --        --       --
         7.       Any amount to the Reserve Fund which will equal the
                  Required Reserve Amount                                       --        --       --
         8.       Class B Accrued Payable                                       --        --       --
         9.       To the extent not reimbursed under paragraph 2 above,
                  reimbursement for the amount of any Scheduled Payment
                  Advances relating to interest on such Loans                   --        --       --
         10.      Other amounts to the Indenture Trustee, Backup Servicer
                  and Owner Trustee plus Additional Servicing Fee               --        --       --
         11.      To the Owner Trustee for payment to the holders of
                  the Certificates, any remaining Interest Collections          --        --

         Following an Event of Default or the occurrence and continuation
         of a Class A Trigger or Class B Trigger
         Interest Collections on deposit in the Note Distribution Account,
         balance as of end of Due Period                                        --
         All investment earnings on funds held in the Note Distribution
         Account                                                                --
         Reserve Fund                                                           --
         Total available for distribution                                       --
                                                                                Due     Paid   Shortfall
                                                                                ---     ----   ---------
         1.       Any amounts to Indenture Trustee, Backup Servicer
                  and Owner Trustee (excluded amounts related to
                  indemnification)                                              --       --        --
         2.       From the Interest Collections received on the specific Loans
                  for which Scheduled Payment Advances were made,
                  reimbursement for the amount of any Scheduled Payment
                  Advances relating to interest on such Loans                   --       --        --
         3.       Servicing Fee                                                 --       --        --
         4.       Class A Interest Amount plus any Class A Interest Shortfall   --       --        --
         5.       Class B Interest Amount plus any Class B Interest Shortfall   --       --        --
         6.       All remaining amounts to be treated as Principal
                  Collections and distributed as described below                --       --
</TABLE>

                                      H-3

<PAGE>
<TABLE>
<S>                                                                             <C>     <C>    <C>
PRINCIPAL ALLOCATIONS
         Principal Collections on deposit in the Note Distribution Account,
         balance as of end of Due Period                                        --
         Interest Collections treated as Principal Collections                  --
         Total Available for distribution                                       --

         1.       From the Principal Collections received on the specific       Due     Paid   Shortfall
                                                                                ---     ----   ---------
                  Loans for which Scheduled Payment Advances were made,
                  reimbursement for the amount of any Scheduled Payment
                  Advances relating to principal on such Loans                  --        --       --
         2.       Amounts to the Class A Notes until the Outstanding Principal
                  Balance is reduced to zero                                    --        --       --
         3.       Amounts to the Class B Notes for Class B Accrued Payable to
                  the extent not previously paid                                --        --       --
         4.       Amounts to the Class B Notes until the Outstanding Principal
                  Balance is reduced to zero                                    --        --       --
         5.       To the extent not reimbursed under paragraph 1 above,
                  reimbursement for the amount of any Scheduled Payment
                  Advances relating to principal on such Loans                  --        --
         6.       Other amounts to the Indenture Trustee, Backup Servicer
                  and Owner Trustee plus Additional Servicing
                  Fee to the extent not previously paid                         --        --       --
         7.       Amounts to the Class C Notes until the Outstanding Principal
                  Balance is reduced to zero                                    --        --
         8.       To the Owner Trustee for payment to the holders of
                  the Certificates, any remaining Principal Collections         --        --
</TABLE>

                                      H-4

<PAGE>

                     SERVICER'S MONTHLY COMPUTER TAPE FORMAT

The computer tape to be delivered in electronic format shall contain the
following information for each Loan transferred to the Trust as of the related
Transfer Date:

1.   Obligor Name and account number

2.   Business Scope (National, Regional or Local)

3.   State

4.   Industry

5.   Total Commitment

6.   Principal Balance

7.   Lending Type

8.   Loan Type

9.   Source (New, refinancing, etc...)

10.  Origination Date

11.  Maturity Date

12.  Pricing Index

13.  Margin

14.  Interest Rate

15.  Any additional information reasonable requested by the Indenture Trustee

                                      H-5

<PAGE>

                                                                       Exhibit I
                                                                       ---------
                                                                     to Sale and
                                                                     -----------
                                                             Servicing Agreement
                                                             -------------------

                      FORM OF SUBSEQUENT TRANSFER AGREEMENT

     SUBSEQUENT TRANSFER AGREEMENT (the "Agreement"), dated as of
                                         ---------
     [                   ], by and among MCG COMMERCIAL LOAN TRUST 2001-1, as
      ------------------
the Trust (the "Trust"), MCG FINANCE III, LLC, a Delaware limited liability
                -----
company, as the Trust Depositor (the "Trust Depositor"), WELLS FARGO BANK
                                      ---------------
MINNESOTA, NATIONAL ASSOCIATION, as the Indenture Trustee (the "Indenture
                                                                ---------

Trustee") and as the Backup Servicer (the "Backup Servicer"), and MCG CAPITAL
-------                                    ---------------
CORPORATION, a Delaware corporation, as the Servicer (the "Servicer") and as the
                                                           --------
Originator (the "Originator"), pursuant to the Sale and Servicing Agreement
                 ----------
referred to below.

                                   WITNESSETH:

     WHEREAS, the Trust, the Trust Depositor, the Servicer, the Originator, the
Indenture Trustee, and the Backup Servicer are parties to the Sale and Servicing
Agreement, dated as December 1, 2001 (such agreement as amended, modified,
waived, supplemented or restated from time to time, the "Sale and Servicing
                                                         ------------------
Agreement");
---------
     WHEREAS, pursuant to the Sale and Servicing Agreement, the Trust Depositor
wishes to sell the Substitute Loans to the Trust, and the Trust wishes to
purchase the same, for the consideration described in the Sale and Servicing
Agreement; and

     WHEREAS, the Servicer has timely delivered an Addition Notice related to
such conveyance as required in the Sale and Servicing Agreement.

     NOW, THEREFORE, the parties hereto agree as follows:

     Section 1. Defined Terms.
                -------------

     Capitalized terms used herein shall have the meanings ascribed to them in
the Sale and Servicing Agreement unless otherwise defined herein.
"Subsequent Cutoff Date" shall mean, with respect to the Substitute Loans
----------------------
transferred hereby,[                 ].
                    ----------------
"Substitute Loans" shall mean, for purposes of this Agreement, the Substitute
-----------------
Loans listed in the Subsequent List of Loans attached hereto as Exhibit A.
                                                                ----------
"Subsequent Transfer Date" shall mean, with respect to the Substitute Loans
------------------------
transferred hereby,[                   ].
                    ------------------

                                       I-1

<PAGE>

     Section 2. Subsequent List of Loans.
                ------------------------

     The Subsequent List of Loans attached hereto as Exhibit A is an amendment
                                                     ---------
to the initial List of Loans attached as Exhibit G to the Sale and Servicing
                                         ---------
Agreement, as contemplated in the definition of List of Loans set forth
therein. The Subsequent List of Loans separately identifies the Substitute Loans
to be transferred pursuant to this Agreement on the Subsequent Transfer Date,
and also further separately identifies the related Loan or Loans with respect to
which a Substitution Event has occurred and which Loans are being deleted from
the List of Loans by virtue of the delivery of the Subsequent List of Loans.

     Section 3. Transfer of Substitute Loans.
                ----------------------------

     Subject to and upon the terms and conditions set forth in Section 2.04 of
                                                               ------------
the Sale and Servicing Agreement and this Agreement, the Trust Depositor hereby
sells, transfers, assigns, sets over and otherwise conveys to the Trust all of
the Trust Depositor's rights, title and interest in:

          (i) the Substitute Loans listed in the related Addition Notice, all
     payments paid in respect thereof and all monies due, to become due or paid
     in respect thereof accruing after the related Subsequent Cutoff Dates and
     all Liquidation Proceeds and recoveries thereon, in each case as they arise
     after the related Subsequent Cutoff Dates, but not including the Retained
     Interest or Interest Collections received prior to December 1, 2001;

          (ii) all security interests and liens and Collateral subject thereto
     from time to time purporting to secure payment by Obligors under such
     Loans;

          (iii) all guaranties, indemnities and warranties, and other agreements
     or arrangements of whatever character from time to time supporting or
     securing payment of such Loans;

          (iv) all collections and records (including computer records) with
     respect to the foregoing;

          (v) all documents relating to the Loan Files; and

          (vi) all income, payments, proceeds and other benefits of any and all
     of the foregoing.

     It is the intention of the Trust Depositor and Owner Trustee that the
transfer contemplated by this Agreement shall constitute an absolute assignment
and sale of the Substitute Loans from the Trust Depositor to the Trust,
conveying good title thereto free and clear of any Liens (other than Permitted
Liens).

                                      I-2

<PAGE>

     Section 4. Representations and Warranties of the Trust Depositor.
                ------------------------------------------------------

     (a) The Trust Depositor hereby represents and warrants to the Trust that
the representations and warranties of the Trust Depositor required by Section
                                                                      -------
2.04 of the Sale and Servicing Agreement are true and correct as of the date
----
such representations and warranties are required to be made.

     (b) The Trust Depositor hereby represents and warrants that (a) the
Outstanding Loan Balance of the Substitute Loans listed on the Subsequent List
of Loans and conveyed to the Trust Depositor pursuant to this Agreement is
$           as of the Subsequent Cutoff Date, and (b) the conditions set forth
 ----------
in Section 2.04 of the Sale and Servicing Agreement have been satisfied as of
   ------------
the Subsequent Transfer Date.

     Section 5. Ratification of Agreement.
                -------------------------

     As supplemented by this Agreement, the Sale and Servicing Agreement is in
all respects ratified and confirmed and, as so supplemented by this Agreement,
shall be read, taken and construed as one and the same instrument.

     Section 6. Counterparts.
                ------------

     This Agreement may be executed by facsimile signatures and in one or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.

     Section 7. Governing Law.
                -------------

     This Agreement shall be construed in accordance with the laws of the State
of New York, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.

     Section 8. Authorization of Servicer.
                -------------------------

     Pursuant to the terms of the Sale and Servicing Agreement, the Servicer has
the power and authority to execute and deliver this Agreement on behalf of the
Trust.

                                   * * * * * *

                                       I-3

<PAGE>

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

                                   MCG FINANCE III, LLC, as the Trust Depositor

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

                                   MCG CAPITAL CORPORATION, as the
                                   Originator and as the Servicer

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

                                   MCG COMMERCIAL LOAN TRUST 2001-1

                                   By:      MCG Capital Corporation, as Servicer

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

                                   WELLS FARGO BANK MINNESOTA,
                                   NATIONAL ASSOCIATION, not in its individual
                                   capacity but solely as the Indenture Trustee

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

                                   WELLS FARGO BANK MINNESOTA,
                                   NATIONAL ASSOCIATION, not in its individual
                                   capacity but solely as the Backup Servicer

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

                                       I-4

<PAGE>

                                                                       Exhibit J
                                                                       ---------
                                                                     to Sale and
                                                                     -----------
                                                             Servicing Agreement
                                                             -------------------

                     [FORM OF SUBSEQUENT PURCHASE AGREEMENT]

     SUBSEQUENT PURCHASE AGREEMENT (the "Agreement"), dated as of
                                         ---------
[              ], [       ], by and between MCG FINANCE III, LLC, a Delaware
 --------------    -------
limited liability company (the "Trust Depositor"), and MCG CAPITAL CORPORATION,
                                ---------------
a Delaware corporation ("MCG" or the "Originator"), pursuant to the Loan Sale
                         ---          ----------
Agreement referred to below.

                                   WITNESSETH:

     WHEREAS, the Trust Depositor and the Originator are parties to the
Commercial Loan Sale Agreement, dated as of December 1, 2001 (such agreement as
amended, modified, waived, supplemented or restated from time to time, the "Loan
                                                                            ----
Sale Agreement");
--------------

     WHEREAS, pursuant to the Loan Sale Agreement, the Originator wishes to sell
the Substitute Loans to the Trust Depositor, and the Trust Depositor wishes to
purchase the same, for the purchase price set forth in Section 3 below; and
                                                       ---------

     WHEREAS, the Originator has timely delivered an Addition Notice related to
such conveyance as required in the Loan Sale Agreement.

     NOW, THEREFORE, the Originator and the Trust Depositor hereby agree as
follows:

     Section 1. Defined Terms.
                -------------

     Capitalized terms used herein shall have the meanings ascribed to them in
the Sale and Servicing Agreement unless otherwise defined herein.

"Subsequent Cutoff Date" shall mean, with respect to the Substitute Loans
----------------------
transferred hereby,[                ].
                    ---------------

"Substitute Loans" shall mean, for purposes of this Agreement, the Substitute
 ----------------
Loans listed in the Subsequent List of Loans attached hereto as Exhibit A.
                                                                ---------

"Subsequent Transfer Date" shall mean, with respect to the Substitute Loans
-------------------------
transferred hereby,[                ].
                    ---------------

                                       J-1

<PAGE>

     Section 2. Subsequent List of Loans.
                ------------------------

     The Subsequent List of Loans attached hereto as Exhibit A is an amendment
                                                     ---------
to the initial List of Loans attached as Exhibit G to the Sale and Servicing
                                         ---------
Agreement, as contemplated in the definition of List of Loans set forth therein.
The Subsequent List of Loans separately identifies (by attached schedule, or
marking or other effective identifying designation) the Substitute Loans to be
transferred pursuant to this Agreement on the Subsequent Transfer Date, and also
further separately identifies (by attached schedule, or marking or other
effective identifying designation) the related Loan or Loans with respect to
which a Substitution Event has occurred and which Loans are being deleted from
the List of Loans by virtue of the delivery of the Subsequent List of Loans.

     Section 3. Transfer of Substitute Loans.
                ----------------------------

     Subject to and upon the terms and conditions set forth in Section 2.04 of
                                                               ------------
the Loan Sale Agreement and this Agreement, the Originator hereby sells,
transfers, assigns, sets over and otherwise conveys to the Trust Depositor, in
consideration of the Trust Depositor's (x) payment of $              as the
                                                       -------------
purchase price therefor, representing the prepayment proceeds received with
respect to the related Substitution Event (if applicable) or (y) release and
redelivery to the Originator of the related Loan Assets with respect to which a
Substitution Event has occurred (if applicable), all of the Originator's rights,
title and interests in:

          (i) the Substitute Loans listed in the related Addition Notice, all
     payments paid in respect thereof and all monies due, to become due or paid
     in respect thereof accruing after the related Subsequent Cutoff Dates and
     all Liquidation Proceeds and recoveries thereon, in each case as they arise
     after the related Subsequent Cutoff Dates, but not including the Retained
     Interest or Interest Collections received prior to December 1, 2001;

          (ii) all security interests and liens and Collateral subject thereto
     from time to time purporting to secure payment by Obligors under such
     Loans;

          (iii) all guaranties, indemnities and warranties, and other agreements
     or arrangements of whatever character from time to time supporting or
     securing payment of such Loans;

          (iv) all collections and records (including computer records) with
     respect to the foregoing;

          (v) all documents relating to the Loan Files; and

          (vi) all income, payments, proceeds and other benefits of any and all
     of the foregoing.

     It is the intention of the Originator and the Trust Depositor that the
transfer contemplated by this Agreement shall constitute a sale of the
Substitute Loans from the Originator to the Trust

                                       J-2

<PAGE>

Depositor, conveying good title thereto free and clear of any Liens (other than
Permitted Liens), and that the Substitute Loans shall not be part of the
Originator's estate in the event of the filing of a bankruptcy petition by or
against the Originator under any bankruptcy or similar law.

     Section 4. Representations and Warranties of the Originator.
                ------------------------------------------------

         (a) The Originator hereby represents and warrants to the Trust
Depositor that the representations and warranties of the Originator required by
subsection 2.04 of the Loan Sale Agreement are true and correct as of the date
---------------
such representations and warranties are required to be made.

         (b) The Originator hereby represents and warrants that (i) the
Outstanding Loan Balance of the Substitute Loans listed on the Subsequent List
of Loans and conveyed to the Trust Depositor pursuant to this Agreement is
$              as of the Subsequent Cutoff Date, and (ii) the conditions set
 -------------
forth in Section 2.04 of the Loan Sale Agreement have been satisfied as of the
         ------------
Subsequent Transfer Date.

     Section 5. Ratification of Agreement.
                -------------------------

     As supplemented by this Agreement, the Loan Sale Agreement is in all
respects ratified and confirmed and, as so supplemented by this Agreement, shall
be read, taken and construed as one and the same instrument.

     Section 6. Counterparts.
                ------------

     This Agreement may be executed by facsimile signatures and in one or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.

     Section 7. Governing Law.
                --------------

     This Agreement shall be construed in accordance with the laws of the State
of New York, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.

                                   * * * * * *

                                       J-3

<PAGE>

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

                                   MCG FINANCE III, LLC

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

                                   MCG CAPITAL CORPORATION

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

                                       J-4

<PAGE>

                                                                       Exhibit K
                                                                       ---------
                                                                     to Sale and
                                                                     -----------
                                                             Servicing Agreement
                                                             -------------------

                          CREDIT AND COLLECTION POLICY

                                 (SEE ATTACHED)

                                       K-1

<PAGE>

                                                                     Exhibit L-1
                                                                     -----------
                                                                     to Sale and
                                                                     -----------
                                                             Servicing Agreement
                                                             -------------------

                          FORM OF INITIAL CERTIFICATION

                                                                          [date]

[Seller]

[Servicer]

Re:   Sale and Servicing Agreement - MCG Commercial Loan Trust 2001-1
      ---------------------------------------------------------------

Ladies and Gentlemen:

     In accordance with Section 2.08 of the above-captioned Sale and Servicing
                        ------------
Agreement (such agreement as amended, modified, waived, supplemented or restated
from time to time, the "Agreement"), the undersigned, as the Indenture Trustee,
                        ---------
hereby certifies that, except as noted on the attachment hereto, if any (the
"Loan Exception Report"), it has received each of the documents required to be
 ---------------------
delivered to it pursuant to Section 2.08 of the Agreement with respect to each
                            ------------
Loan listed in the List of Loans and the documents contained therein appear to
bear original signatures. Capitalized but undefined terms have the meanings set
forth in the Agreement.

     The Indenture Trustee has made no independent examination of any such
documents beyond the review specifically required in the above-referenced
Agreement.

     The Indenture Trustee makes no representations as to: (i) the validity,
legality, sufficiency, enforceability or genuineness of any such documents or
any of the Loans identified on the List of Loans, or (ii) the collectibility,
insurability, effectiveness or suitability of any such Loan.

                                          WELLS FARGO BANK MINNESOTA,
                                          NATIONAL ASSOCIATION, as the Indenture
                                          Trustee

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

                                     L-I-1

<PAGE>

                                                                     Exhibit L-2
                                                                     -----------
                                                                     to Sale and
                                                                     -----------
                                                             Servicing Agreement
                                                             -------------------

                           FORM OF FINAL CERTIFICATION

                                                                          [date]

[Seller]

[Servicer]

Re:   Sale and Servicing Agreement - MCG Commercial Loan Trust 2001-1
      ---------------------------------------------------------------

Ladies Gentlemen:

     In accordance with Section 2.08 of the above-captioned Sale and Servicing
                        ------------
Agreement (such agreement as amended, modified, waived, supplemented or restated
from time to time, the "Agreement"), the undersigned, as the Indenture Trustee,
                        ---------
hereby certifies that, except as noted on the attachment hereto, as to each Loan
listed in the List of Loans (other than any Loan paid in full or listed on the
attachment hereto) it has reviewed the documents delivered to it pursuant to
Section 2.08 of the Agreement and has determined that (i) all such documents are
------------
in its possession, (ii) such documents have been reviewed by it and have not
been mutilated, damaged, torn or otherwise physically altered and relate to such
Loan and (iii) based on its examination, and only as to the foregoing documents,
the information set forth in the List of Loans respecting such Loan is correct.
The Indenture Trustee has made no independent examination or inquiry of such
documents beyond the review specifically required in the Agreement.

     The Indenture Trustee makes no representations as to: (i) the validity,
legality, enforceability or genuineness of any such documents contained in each
or any of the Loans identified on the List of Loans, (ii) the collectibility,
insurability, effectiveness or suitability of any such Loan, or (iii) the
compliance by such documents with statutory or regulatory guidelines.

                                          WELLS FARGO BANK MINNESOTA,
                                          NATIONAL ASSOCIATION, as the Indenture
                                          Trustee

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

                                      L-2-1

<PAGE>

                                                                       Exhibit M
                                                                       ---------
                                                                     to Sale and
                                                                     -----------
                                                             Servicing Agreement
                                                             -------------------

                        REQUEST FOR RELEASE OF DOCUMENTS

To:   Wells Fargo Bank Minnesota, National Association, as the Indenture Trustee

Re:   Sale and Servicing Agreement - MCG Commercial Loan Trust 2001-1
      ---------------------------------------------------------------

     In connection with the administration of the pool of Loans held by you, we
request the release, and acknowledge receipt, of the (Indenture Trustee's
Document File/[specify document]) for the Loan described below, for the reason
indicated.

Obligor's Name, Address & Zip Code:
----------------------------------

Loan Number:
-----------

Reason for Requesting Documents (check one)
-------------------------------

          1.   Loan paid in full
---------      (Servicer hereby certifies that all amounts received in
               connection therewith have been credited to the Principal and
               Interest Account.)

          2.   Loan liquidated
---------      (Servicer hereby certifies that all proceeds of foreclosure,
               insurance or other liquidation have been finally received and
               credited to the Principal and Interest Account.)

          3.   Loan in foreclosure
---------
          4.   Loan repurchased pursuant to Section 11.01 of the Sale and
---------                                   -------------
               Servicing Agreement.

          5.   Loan repurchased or substituted pursuant to Article II or III of
---------                                                  ----------    ---
               the Sale and Servicing Agreement (Servicer hereby certifies that
               the repurchase price to the extent required has been credited to
               the Principal and Interest Account and/or remitted to the
               Indenture Trustee for deposit into the Note Distribution Account
               pursuant to the Sale and Servicing Agreement.)

                                      M-1

<PAGE>

          6.   Collateral being released pursuant to subsection 5.02(e) of the
---------                                            -----------------
               Sale and Servicing Agreement.

          7.   Loan Collateral or associated loan document being substituted,
---------      released, revised or subordinated.

     If box 1, 2 or 4 above is checked, and if all or part of the Indenture
Trustee's document file was previously released to us, please release to us our
previous receipt on file with you, as well as any additional documents in your
possession relating to the above specified Loan.

     If box 3, 5, 6 or 7 above is checked, upon our return of all of the above
documents (or the appropriate substitutes therefor, if applicable) to you,
please acknowledge your receipt by signing in the space indicated below, and
returning this form.

                                        MCG CAPITAL CORPORATION, as the Servicer

                                        By:
                                           -------------------------------------
                                        Name:
                                             -----------------------------------
                                        Date:
                                             -----------------------------------

Documents returned to Indenture Trustee:

         Wells Fargo Bank Minnesota, National Association
         ------------------------------------------------
         Indenture Trustee

By:
     -----------------------------------------
Date:
     ---------------------------------------

cc:   Janet C. Perlowski (via facsimile) (804) 272-3694

      Scott Williams (via facsimile) (704) 383-4012

                                      M-2

<PAGE>

                                                                      Appendix A
                                                                      ----------
                                                                     to Sale and
                                                                     -----------
                                                             Servicing Agreement
                                                             -------------------

                         MATERIAL MORTGAGE LOAN CRITERIA
                         -------------------------------

     With respect to each Loan that is a Material Mortgage Loan, on and as of
the related Transfer Date, a Loan as to which each of the following is true:

          (i) with respect to each such Loan that is a Material Mortgage Loan,
     the related Mortgage is a valid and subsisting first priority lien of
     record on the Mortgaged Property subject in all cases to such exceptions
     that are generally acceptable to lending institutions in connection with
     their regular commercial lending activities, and such other exceptions to
     which similar properties are commonly subject and which do not
     individually, or in the aggregate, materially and adversely affect the
     benefits of the security intended to be provided by such Mortgage;

          (ii) with respect to each such Loan that is a Material Mortgage Loan,
     there is no delinquent tax or assessment lien on any Mortgaged Property
     which is the primary Collateral for such Material Mortgage Loan, and each
     such Mortgaged Property is free of material damage and is in good repair;

          (iii) the improvements upon each Mortgaged Property related to a
     Material Mortgage Loan are covered by a valid and existing hazard insurance
     policy with a generally acceptable carrier that provides for fire and
     extended coverage representing coverage described in this Agreement;

          (iv) if a Mortgaged Property related to a Material Mortgage Loan is in
     an area identified in the Federal Register by the Federal Emergency
     Management Agency as having special flood hazards, a flood insurance policy
     is in effect with respect to such Mortgaged Property with a generally
     acceptable carrier in an amount representing coverage described in this
     Agreement;

          (v) each original Mortgage related to a Material Mortgage Loan was
     recorded, and all subsequent assignments of such original Mortgage have
     been recorded in the appropriate jurisdictions wherein such recordation is
     necessary to perfect the Lien thereof as against creditors of the related
     Obligor (or are in the process of being recorded);

          (vi) there are no material defaults in complying with the terms of any
     applicable Mortgage related to a Material Mortgage Loan, and all taxes,
     governmental assessments, insurance premiums, water, sewer and municipal
     charges, leasehold payments or ground rents which previously became due and
     owing have been paid, or an

                                  Appendix A-1

<PAGE>

     escrow of funds has been established in an amount sufficient to pay for
     every such item which remains unpaid and which has been assessed but is not
     yet due and payable;

          (vii) there is no proceeding pending or threatened for the total or
     partial condemnation of any Mortgaged Property related to a Material
     Mortgage Loan, nor is such a proceeding currently occurring, and such
     property is undamaged by waste, fire, earthquake or earth movement,
     windstorm, flood, tornado or other casualty, so as to materially adversely
     affect the value of such Mortgaged Property as security for the Material
     Mortgage Loan or the use for which the premises were intended;

          (viii) at the time of origination of a Material Mortgage Loan, the
     related Mortgaged Property was free of contamination from toxic substances
     or hazardous wastes requiring action under applicable laws or is subject to
     ongoing environmental rehabilitation approved by the Servicer, and, as of
     the related Transfer Date, the Trust Depositor has no knowledge of any such
     contamination from toxic substances or hazardous waste material on any such
     Mortgaged Property unless such items are below action levels;

          (ix) with respect to each Material Mortgage Loan, for each related
     Mortgage constituting a deed of trust, a trustee, duly qualified under
     applicable law to serve as such, has been properly designated and currently
     so serves and is named in such Mortgage, and no fees or expenses are or
     will become payable by the Noteholders and/or the Certificateholders to the
     trustee under the deed of trust, except in connection with a trustee's sale
     after default by the Obligor; and

          (x) with respect to each Material Mortgage Loan, any related Mortgage
     contains customary and enforceable provisions, which render the rights and
     remedies of the holder thereof adequate for the realization against the
     Mortgaged Property of the benefits of the security, including, (i) in the
     case of a Mortgage designated as a deed of trust, by trustee's sale, and
     (ii) otherwise by judicial foreclosure. There is no homestead or other
     exemption available to the Obligor which would materially interfere with
     the right to sell the Mortgaged Property related to a Material Mortgage
     Loan at a trustee's sale or the right to foreclose the Mortgage.

                                  Appendix A-2

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