Document:

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                         UNAFFILIATED SELLER'S AGREEMENT

                          dated as of December 1, 2000

                                  by and among

                   BEAR STEARNS ASSET BACKED SECURITIES, INC.,
                                  as Depositor,

                               ABFS 2000-4, INC.,
                             as Unaffiliated Seller

                                       and

                         AMERICAN BUSINESS CREDIT, INC.,
              HOMEAMERICAN CREDIT, INC., D/B/A UPLAND MORTGAGE, and
                    NEW JERSEY MORTGAGE AND INVESTMENT CORP.,
                                 as Originators

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                                                 TABLE OF CONTENTS

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Article I  DEFINITIONS............................................................................................1

   Section 1.01     Definitions...................................................................................1

Article II  PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS.......................................................3

   Section 2.01     Agreement to Purchase the Mortgage Loans......................................................3
   Section 2.02     [Reserved]....................................................................................3
   Section 2.03     Purchase Price................................................................................3
   Section 2.04     Conveyance of Mortgage Loans; Possession of Mortgage Files....................................3
   Section 2.05     Delivery of Mortgage Loan Documents...........................................................4
   Section 2.06     Acceptance of Mortgage Loans..................................................................5
   Section 2.07     Transfer of Mortgage Loans; Assignment of Agreement...........................................6
   Section 2.08     Examination of Mortgage Files.................................................................7
   Section 2.09     Books and Records.............................................................................7
   Section 2.10     Cost of Delivery and Recordation of Documents.................................................7

Article III  REPRESENTATIONS AND WARRANTIES.......................................................................7

   Section 3.01     Representations and Warranties as to the Originators..........................................7
   Section 3.02     Representations and Warranties as to the Unaffiliated Seller.................................10
   Section 3.03     Representations and Warranties Relating to the Mortgage Loans................................12
   Section 3.04     Representations and Warranties of the Depositor..............................................22
   Section 3.05     Repurchase Obligation for Defective Documentation and for Breach of a
                    Representation or Warranty...................................................................23

Article IV  THE UNAFFILIATED SELLER..............................................................................25

   Section 4.01     Covenants of the Originators and the Unaffiliated Seller.....................................25
   Section 4.02     Merger or Consolidation......................................................................26
   Section 4.03     Costs........................................................................................26
   Section 4.04     Indemnification..............................................................................27

Article V  CONDITIONS OF CLOSING.................................................................................29

   Section 5.01     Conditions of Depositor's Obligations........................................................29
   Section 5.02     Conditions of Unaffiliated Seller's Obligations..............................................31
   Section 5.03     Termination of Depositor's Obligations.......................................................32

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Article VI  MISCELLANEOUS........................................................................................32

   Section 6.01     Notices......................................................................................32
   Section 6.02     Severability of Provisions...................................................................33
   Section 6.03     Agreement of Unaffiliated Seller.............................................................33
   Section 6.04     Survival.....................................................................................33
   Section 6.05     Effect of Headings and Table of Contents.....................................................33
   Section 6.06     Successors and Assigns.......................................................................33
   Section 6.07     Confirmation of Intent; Grant of Security Interest...........................................33
   Section 6.08     Miscellaneous................................................................................34
   Section 6.09     Amendments...................................................................................34
   Section 6.10     Third-Party Beneficiaries....................................................................35
   Section 6.11     GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.................................35
   Section 6.12     Execution in Counterparts....................................................................36

                                                     EXHIBITS

Exhibit A - [Reserved]

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                  This UNAFFILIATED SELLER'S AGREEMENT, dated as of December 1,
2000 (this "Agreement"), by and among BEAR STEARNS ASSET BACKED SECURITIES,
INC., a Delaware corporation, (the "Depositor"), ABFS 2000-4, INC., a Delaware
corporation (the "Unaffiliated Seller"), AMERICAN BUSINESS CREDIT, INC., a
Pennsylvania corporation ("ABC"), HOMEAMERICAN CREDIT, INC. D/B/A UPLAND
MORTGAGE, a Pennsylvania corporation ("Upland") and NEW JERSEY MORTGAGE AND
INVESTMENT CORP., a New Jersey corporation ("NJMIC", and together with ABC and
Upland, the "Originators").

                              W I T N E S S E T H:
                              - - - - - - - - - --

                  WHEREAS, Schedule I attached hereto and made a part hereof
lists certain fixed rate business purpose loans and consumer purpose first and
second lien mortgage loans (the "Mortgage Loans") owned by the Originators that
the Originators desire to sell to the Unaffiliated Seller, the Unaffiliated
Seller desires to sell to the Depositor and that the Depositor desires to
purchase; and

                  WHEREAS, it is the intention of the Originators, the
Unaffiliated Seller and the Depositor that simultaneously with the Originators'
conveyance of the Mortgage Loans to the Unaffiliated Seller and the Unaffiliated
Seller's conveyance of the Mortgage Loans to the Depositor on the Closing Date,
(a) the Depositor shall sell the Mortgage Loans to the ABFS Mortgage Loan Trust
2000-4, a Delaware statutory business trust (the "Trust") pursuant to a Sale and
Servicing Agreement to be dated as of December 1, 2000 (the "Sale and Servicing
Agreement"), to be entered into by and among the Depositor, as depositor, the
Trust, as issuer, ABC, as servicer (in such capacity, the "Servicer"), and The
Chase Manhattan Bank, a New York banking corporation, as indenture trustee and
collateral agent (respectively, the "Indenture Trustee" and the "Collateral
Agent"), and (b) the Trust shall issue its Mortgage Backed Notes (the "Notes"),
pursuant to an Indenture, to be dated as of December 1, 2000 (the "Indenture"),
by and between the Trust and the Indenture Trustee, which Notes will be secured
by a pledge of the assets of the Trust.

                  NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth, the parties hereto agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  Section 1.01 Definitions. (a) Whenever used herein, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article I:

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                  "Prospectus" means the Prospectus dated December 6, 2000
relating to the offering by the Depositor from time to time of its Mortgage
Backed Notes (Issuable in Series) in the form in which it was or will be filed
with the Commission pursuant to Rule 424(b) under the Securities Act with
respect to the offer and sale of the Notes.

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                  "Prospectus Supplement" means the Prospectus Supplement dated
December 6, 2000, relating to the offering of the Notes in the form in which it
was or will be filed with the Commission pursuant to Rule 424(b) under the
Securities Act with respect to the offer and sale of the Notes.

                  "Registration Statement" means that certain registration
statement on Form S-3, as amended (Registration No. 333-43278) relating to the
offering by the Depositor from time to time of its Mortgage Backed Notes
(Issuable in Series) as heretofore declared effective by the Commission.

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

                  "Termination Event" means the existence of any one or more of
the following conditions:

                  (a) a stop order suspending the effectiveness of the
         Registration Statement shall have been issued or a proceeding for that
         purpose shall have been initiated or threatened by the Commission; or

                  (b) subsequent to the execution and delivery of this
         Agreement, a downgrading, or public notification of a possible change,
         without indication of direction, shall have occurred in the rating
         afforded any of the debt securities or claims paying ability of any
         person providing any form of credit enhancement for any of the Notes,
         by any "nationally recognized statistical rating organization," as that
         term is defined by the Commission for purposes of Rule 436(g)(2) under
         the Securities Act; or

                  (c) subsequent to the execution and delivery of this
         Agreement, there shall have occurred an adverse change in the
         condition, financial or otherwise, earnings, affairs, regulatory
         situation or business prospects of the Note Insurer or the Unaffiliated
         Seller reasonably determined by the Depositor to be material; or

                  (d) subsequent to the date of this Agreement there shall have
         occurred any of the following: (i) a suspension or material limitation
         in trading in securities substantially similar to the Notes; (ii) a
         general moratorium on commercial banking activities in the State of New
         York declared by either Federal or New York State authorities; or (iii)
         the engagement by the United States in hostilities, or the escalation
         of such hostilities, or any calamity or crisis, if the effect of any
         such event specified in this clause (iii) in the reasonable judgment of
         the Depositor makes it impracticable or inadvisable to proceed with the
         public offering or the delivery of the Notes on the terms and in the
         manner contemplated in the Prospectus Supplement.

                  (b) Capitalized terms used herein that are not otherwise
defined shall have the respective meanings ascribed thereto in Appendix I to the
Indenture.

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                                   ARTICLE II

                 PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS

                  Section 2.01 Agreement to Purchase the Mortgage Loans. (a)
Subject to the terms and conditions of this Agreement, the Originators agree to
sell, and the Unaffiliated Seller agrees to purchase on the Closing Date and
immediately subsequent thereto, the Unaffiliated Seller agrees to sell, and the
Depositor agrees to purchase, the Mortgage Loans having the Cut-Off Date
Aggregate Principal Balance or, in accordance with Section 2.08 hereof, such
other balance as is evidenced by the actual Cut-Off Date Aggregate Principal
Balance of the Mortgage Loans accepted by the Depositor on the Closing Date and
listed in the Mortgage Loan Schedule.

                  (b) Subject to Section 2.08 hereof, the Depositor and the
Unaffiliated Seller have agreed upon which of the Unaffiliated Seller's Mortgage
Loans are to be purchased by the Depositor on the Closing Date pursuant to this
Agreement, and the Unaffiliated Seller has prepared a schedule describing the
Mortgage Loans (the "Mortgage Loan Schedule") setting forth all of the Mortgage
Loans to be purchased under this Agreement, which Mortgage Loan Schedule is
attached hereto as Schedule I. The Mortgage Loan Schedule shall conform to the
requirements of the Depositor and to the definition of "Mortgage Loan Schedule"
in Appendix I to the Indenture.

                  (c) The closing for the purchase and sale of the Mortgage
Loans shall take place at the offices of Dewey Ballantine LLP, New York, New
York, at 10:00 a.m., New York, New York time, on the Closing Date, or such other
place and time as the parties shall agree.

                  Section 2.02      [Reserved].

                  Section 2.03 Purchase Price. On the Closing Date, as
consideration for the Originators' sale of the Mortgage Loans to the
Unaffiliated Seller, the Unaffiliated Seller will deliver to the Originators an
amount in cash equal to the sum of (A) 99.75% of the Original Note Principal
Balance as of the Closing Date of the Class A Notes plus (B) accrued interest on
the Original Note Principal Balance of the Class A Notes at the rate of 7.05%
per annum, from (and including) December 1, 2000 to (but not including) the
Closing Date, payable by wire transfer of same day funds.

                  On the Closing Date, as full consideration for the
Unaffiliated Seller's sale of the Mortgage Loans to the Depositor, the Depositor
will deliver to, or at the direction of, the Unaffiliated Seller (i) an amount
in cash equal to the sum of (A) 99.75% of the Original Note Principal Balance as
of the Closing Date of the Class A Notes plus (B) accrued interest on the
Original Note Principal Balance of the Class A Notes at the rate of 7.05% per
annum, from (and including) December 1, 2000 to (but not including) the Closing
Date, payable by wire transfer of same day funds, and (ii) the Trust
Certificates to be issued pursuant to the Trust Agreement.

                  Section 2.04 Conveyance of Mortgage Loans; Possession of
Mortgage Files. (a) On the Closing Date, the Originators shall sell, transfer,
assign, set over and convey to the Unaffiliated Seller, without recourse, but
subject to the terms of this Agreement, all right, title and interest in and to
the applicable Mortgage Loans, including all principal outstanding as of, and
all interest due after, the related Cut-Off Date, the Insurance Policies

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relating to each such Mortgage Loan and all right, title and interest in and to
the proceeds of such Insurance Policies and all of its rights under this
Agreement with respect to the Mortgage Loans from and after the related Cut-Off
Date and the Unaffiliated Seller shall sell, transfer, assign, set over and
convey to the Depositor, without recourse, but subject to the terms of this
Agreement, all right, title and interest in and to the applicable Mortgage
Loans, including all principal outstanding as of, and all interest due after,
the related Cut-Off Date, the Insurance Policies relating to each such Mortgage
Loan, all right, title and interest in and to the proceeds of such Insurance
Policies and all of its rights under this Agreement with respect to the Mortgage
Loans from and after the related Cut-Off Date. Upon payment of the purchase
price for such Mortgage Loans as provided in Section 2.03 of this Agreement, the
Originators and the Unaffiliated Seller shall have hereby, and shall be deemed
to have, sold, transferred, assigned, set over and conveyed to the Depositor
such Mortgage Loans, the Insurance Policies relating to each such Mortgage Loan,
all right, title and interest in and to the proceeds of such Insurance Policies
and all of its rights under this Agreement with respect to the Mortgage Loans
from and after the related Cut-Off Date.

                  (b) Upon the sale of such Mortgage Loans, the ownership of
each related Mortgage Note, each related Mortgage and the contents of the
related Mortgage File shall immediately vest in the Depositor and the ownership
of all related records and documents with respect to each Mortgage Loan prepared
by or which come into the possession of the Originators or the Unaffiliated
Seller shall immediately vest in the Depositor. The contents of any Indenture
Trustee's Mortgage File in the possession of the Originators or the Unaffiliated
Seller at any time after such sale, and any principal collected and interest due
on the Mortgage Loans after the related Cut-Off Date and received by the
Originators or the Unaffiliated Seller, shall be held in trust by the
Originators or the Unaffiliated Seller for the benefit of the Depositor as the
owner thereof, and shall be promptly delivered by the Originators or the
Unaffiliated Seller to or upon the order of the Depositor.

                  (c) Pursuant to the Sale and Servicing Agreement, the
Depositor shall, on the Closing Date, assign all of its right, title and
interest in and to the Mortgage Loans to the Trust. Pursuant to the Indenture,
the Trust shall, on the Closing Date, pledge all of its right, title and
interest in and to the Mortgage Loans to the Indenture Trustee, for the benefit
of the Noteholders and the Note Insurer.

                  Section 2.05 Delivery of Mortgage Loan Documents. (a) On or
prior to the Closing Date, the related Originator shall deliver to the
Unaffiliated Seller, and the Unaffiliated Seller shall deliver to the Collateral
Agent, on behalf of the Indenture Trustee (as pledgee of the Trust pursuant to
the Indenture, the Trust being the assignee of the Depositor pursuant to the
Sale and Servicing Agreement), each of the documents for each applicable
Mortgage Loan in accordance with the provisions of Section 2.05 of the Sale and
Servicing Agreement.

                  (b) As promptly as practicable, but in any event within thirty
(30) days from the Closing Date, the Unaffiliated Seller shall promptly submit,
or cause to be submitted by the related Originator, for recording in the
appropriate public office for real property records, each assignment referred to
in Section 2.05(a)(iv) of the Sale and Servicing Agreement. The Collateral
Agent, on behalf of the Indenture Trustee, shall be required to retain a copy of
each assignment submitted for recording. In the event that any such assignment
is lost or returned unrecorded because of a defect therein, the Unaffiliated
Seller or such Originator shall promptly prepare a substitute assignment or cure
such defect, as the case may be, and thereafter the Unaffiliated Seller or such
Originator shall submit each such assignment for recording.

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                  (c) The Unaffiliated Seller or the related Originator shall,
within five (5) Business Days after the receipt thereof, deliver or cause to be
delivered to the Collateral Agent, on behalf of the Indenture Trustee (as
pledgee of the Trust pursuant to the Indenture, the Trust being the assignee of
the Depositor pursuant to the Sale and Servicing Agreement): (i) the original
recorded Mortgage and related power of attorney, if any, in those instances
where a copy thereof certified by the related Originator was delivered to the
Collateral Agent, on behalf of the Indenture Trustee, pursuant to Section 2.05
of the Sale and Servicing Agreement; (ii) the original recorded assignment of
Mortgage from the related Originator to the Indenture Trustee, which, together
with any intervening assignments of Mortgage, evidences a complete chain of
assignment from the originator of the Mortgage Loan to the Indenture Trustee in
those instances where copies of such assignments certified by the related
Originator were delivered to the Collateral Agent, on behalf of the Indenture
Trustee, pursuant to Section 2.05 of the Sale and Servicing Agreement; and (iii)
the title insurance policy or title opinion required in Section 2.05(a)(vi) of
the Sale and Servicing Agreement.

                  Notwithstanding anything to the contrary contained in this
Section 2.05, in those instances where the public recording office retains the
original Mortgage, power of attorney, if any, assignment or assignment of
Mortgage after it has been recorded or such original has been lost, the
Unaffiliated Seller or the related Originator shall be deemed to have satisfied
its obligations hereunder upon delivery to the Collateral Agent, on behalf of
the Indenture Trustee, of a copy of such Mortgage, power of attorney, if any,
assignment or assignment of Mortgage certified by the public recording office to
be a true copy of the recorded original thereof.

                  From time to time the Unaffiliated Seller or the related
Originator may forward or cause to be forwarded to the Collateral Agent, on
behalf of the Indenture Trustee, additional original documents evidencing an
assumption or modification of a Mortgage Loan.

                  (d) All original documents relating to the Mortgage Loans that
are not delivered to the Collateral Agent, on behalf of the Indenture Trustee,
as permitted by Section 2.05(a) hereof are and shall be held by the Servicer,
the Unaffiliated Seller or the related Originator in trust for the benefit of
the Indenture Trustee, on behalf of the Noteholders and the Note Insurer. In the
event that any such original document is required pursuant to the terms of this
Section 2.05 to be a part of an Indenture Trustee's Mortgage File, such document
shall be delivered promptly to the Collateral Agent, on behalf of the Indenture
Trustee. From and after the sale of the Mortgage Loans to the Depositor pursuant
hereto, to the extent that the Unaffiliated Seller or the related Originator
retains legal title of record to any Mortgage Loans prior to the vesting of
legal title in the Indenture Trustee, such title shall be retained in trust for
the Trust as the owner of the Mortgage Loans, as the Depositor's assignee, and
the Indenture Trustee, as the Trust's pledgee.

                  Section 2.06 Acceptance of Mortgage Loans. (a) To evidence the
transfer of the Mortgage Loans and related Mortgage Files to the Collateral
Agent, on behalf of the Indenture Trustee, the Collateral Agent shall deliver
the acknowledgement of receipt, the Initial Certification and the Final
Certification required to be delivered pursuant to Section 2.06(b) of the Sale
and Servicing Agreement.

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                  (b) The Sale and Servicing Agreement provides that, if the
Collateral Agent during the process of reviewing the Indenture Trustee's
Mortgage Files, finds any document constituting a part of an Indenture Trustee's
Mortgage File which is not executed, has not been received, is unrelated to the
Mortgage Loan identified in the Mortgage Loan Schedule, or does not conform to
the requirements of Section 2.05 of the Sale and Servicing Agreement or the
description thereof as set forth in the Mortgage Loan Schedule, the Collateral
Agent shall promptly so notify the Servicer, the Unaffiliated Seller, the
Indenture Trustee, the related Originator and the Note Insurer. The Unaffiliated
Seller and the Originators agree that in performing any such review, the
Collateral Agent may conclusively rely on the Unaffiliated Seller and the
Originators as to the purported genuineness of any such document and any
signature thereon. Each of the Originators and the Unaffiliated Seller agrees to
use reasonable efforts to remedy a material defect in a document constituting
part of an Indenture Trustee's Mortgage File of which it is notified. If,
however, within sixty (60) days after such notice neither the Unaffiliated
Seller nor any Originator has remedied the defect and the defect materially and
adversely affects the interest of the Noteholders in the related Mortgage Loan
or the interests of the Note Insurer, then the Unaffiliated Seller and the
Originators shall be obligated to either substitute in lieu of such Mortgage
Loan a Qualified Substitute Mortgage Loan or purchase such Mortgage Loan in the
manner and subject to the conditions set forth in Section 3.05 hereof.

                  (c) The failure of the Collateral Agent, the Indenture Trustee
or the Note Insurer to give any notice contemplated herein within the time
periods specified above shall not affect or relieve the Unaffiliated Seller's or
the Originators' obligation to repurchase for any Mortgage Loan pursuant to this
Section 2.06 or Section 3.05 of this Agreement.

                  Section 2.07 Transfer of Mortgage Loans; Assignment of
Agreement. The Originators and the Unaffiliated Seller each hereby acknowledges
and agrees that the Depositor or the Trust may assign its interest under this
Agreement to the Indenture Trustee as may be required to effect the purposes of
the Indenture and the Sale and Servicing Agreement, without further notice to,
or consent of, the Unaffiliated Seller or the Originators, and the Indenture
Trustee shall succeed to such of the rights and obligations of the Depositor and
the Trust hereunder as shall be so assigned. The Depositor shall, pursuant to
the Sale and Servicing Agreement, assign all of its right, title and interest in
and to the Mortgage Loans and its right to exercise the remedies created by
Sections 2.06 and 3.05 hereof for breaches of the representations, warranties,
agreements and covenants of the Unaffiliated Seller or the Originators contained
in Sections 2.05, 2.06, 3.02 and 3.03 hereof to the Trust, and the Trust shall,
pursuant to the Indenture, pledge such right, title and interest to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer. Each
of the Originators and the Unaffiliated Seller agrees that, upon such assignment
to the Trust and pledge to the Indenture Trustee, such representations,
warranties, agreements and covenants will run to and be for the benefit of the
Indenture Trustee and the Indenture Trustee may enforce, without joinder of the
Depositor or the Trust, the repurchase obligations of the Unaffiliated Seller
and the Originators set forth herein with respect to breaches of such
representations, warranties, agreements and covenants.

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                  Section 2.08 Examination of Mortgage Files. Prior to the
Closing Date, the Unaffiliated Seller shall make the Mortgage Files available to
the Depositor or its designee for examination at the Unaffiliated Seller's
offices or at such other place as the Unaffiliated Seller shall reasonably
specify. Such examination may be made by the Depositor or its designee at any
time on or before the Closing Date. If the Depositor or its designee makes such
examination prior to the Closing Date, and identifies any Mortgage Loans that do
not conform to the requirements of the Depositor as described in this Agreement,
such Mortgage Loans shall be deleted from the Mortgage Loan Schedule and may be
replaced, prior to the Closing Date, by substitute Mortgage Loans acceptable to
the Depositor. The Depositor may, at its option and without notice to the
Unaffiliated Seller, purchase all or part of the Mortgage Loans without
conducting any partial or complete examination. The fact that the Depositor, the
Collateral Agent or the Indenture Trustee has conducted or has failed to conduct
any partial or complete examination of the Mortgage Files shall not affect the
rights of the Depositor or the Indenture Trustee to demand repurchase or other
relief as provided in this Agreement.

                  Section 2.09 Books and Records. The transfer of each Mortgage
Loan shall be reflected on each of the Originators' and the Unaffiliated
Seller's accounting and other records, balance sheet and other financial
statements as a sale of assets by the Originators to the Unaffiliated Seller, by
the Unaffiliated Seller to the Depositor and by the Depositor to the Trust;
provided, that the Unaffiliated Seller's tax returns shall not reflect the
transfer from the Unaffiliated Seller to the Depositor and from the Depositor to
the Trust as a sale of the Mortgage Loans. Each of the Originators and the
Unaffiliated Seller shall be responsible for maintaining, and shall maintain, a
complete set of books and records for each Mortgage Loan which shall be clearly
marked to reflect the ownership of each Mortgage Loan by the Trust, and the
pledge of each Mortgage Loan by the Trust to the Indenture Trustee, for the
benefit of the Noteholders and the Note Insurer.

                  Section 2.10 Cost of Delivery and Recordation of Documents.
The costs relating to the delivery and recordation of the documents in
connection with the Mortgage Loans as specified in this Article II and in
Article II of the Sale and Servicing Agreement shall be borne by the
Unaffiliated Seller or the Originators.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

                  Section 3.01 Representations and Warranties as to the
Originators. Each of the Originators hereby represents and warrants to the
Unaffiliated Seller and the Depositor, as of the Closing Date, that:

                  (a) The Originator is a corporation duly organized, validly
         existing and in good standing under the laws of (i) with respect to ABC
         and Upland, the State of Pennsylvania, or (ii) with respect to NJMIC,
         the State of New Jersey, and has all licenses necessary to carry on its
         business as now being conducted and is licensed, qualified and in good
         standing in each state where a Mortgaged Property is located if the
         laws of such state require licensing or qualification in order to
         conduct business of the type conducted by the Originator and to perform
         its obligations as the Originator hereunder, and in any event the
         Originator is in compliance with the laws of any such state to the
         extent necessary to ensure the enforceability of the related Mortgage
         Loan; the Originator has the full power and authority, corporate and
         otherwise, to execute and deliver this Agreement and to perform in
         accordance herewith; the execution, delivery and performance of this
         Agreement (including all instruments of transfer to be delivered
         pursuant to this Agreement) by the Originator and the consummation of
         the transactions contemplated hereby have been duly and validly
         authorized; this Agreement evidences the valid, binding and enforceable
         obligation of the Originator; and all requisite corporate action has
         been taken by the Originator to make this Agreement valid and binding
         upon the Originator in accordance with its terms;

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                  (b) No consent, approval, authorization or order of any court
         or governmental agency or body is required for the execution, delivery
         and performance by the Originator of, or compliance by the Originator
         with, this Agreement or the sale of the Mortgage Loans pursuant to the
         terms of this Agreement or the consummation of the transactions
         contemplated by this Agreement, or if required, such approval has been
         obtained prior to the Closing Date;

                  (c) Neither the execution and delivery of this Agreement, the
         acquisition nor origination of the Mortgage Loans by the Originator or
         the transactions contemplated hereby, nor the fulfillment of or
         compliance with the terms and conditions of this Agreement, has or will
         conflict with or result in a breach of any of the terms, conditions or
         provisions of the Originator's charter or by-laws or any legal
         restriction or any agreement or instrument to which the Originator is
         now a party or by which it is bound or to which its property is
         subject, or constitute a default or result in an acceleration under any
         of the foregoing, or result in the violation of any law, rule,
         regulation, order, judgment or decree to which the Originator or its
         property is subject, or impair the ability of the Indenture Trustee (or
         the Servicer as the agent of the Indenture Trustee) to realize on the
         Mortgage Loans, or impair the value of the Mortgage Loans;

                  (d) Neither this Agreement nor the information contained in
         the Prospectus Supplement (other than the information under the caption
         "Plan of Distribution") nor any statement, report or other document
         prepared by the Originator and furnished or to be furnished pursuant to
         this Agreement or in connection with the transactions contemplated
         hereby contains any untrue statement or alleged untrue statement of any
         material fact or omits to state a material fact necessary to make the
         statements contained herein or therein, in light of the circumstances
         under which they were made, not misleading;

                  (e) There is no action, suit, proceeding or investigation
         pending or, to the knowledge of the Originator, threatened before a
         court, administrative agency or government tribunal against the
         Originator which, either in any one instance or in the aggregate, may
         result in any material adverse change in the business, operations,
         financial condition, properties or assets of the Originator, or in any
         material impairment of the right or ability of the Originator to carry
         on its business substantially as now conducted, or in any material
         liability on the part of the Originator, or which would draw into
         question the validity of this Agreement, the Mortgage Loans, or of any
         action taken or to be taken in connection with the obligations of the
         Originator contemplated herein, or which would impair materially the
         ability of the Originator to perform under the terms of this Agreement
         or that will prohibit its entering into this Agreement or the
         consummation of any of the transactions contemplated hereby;

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<PAGE>

                  (f) The Originator is not in violation of or in default with
         respect to, and the execution and delivery of this Agreement by the
         Originator and its performance of and compliance with the terms hereof
         will not constitute a violation or 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 violation or
         default might have consequences that would materially and adversely
         affect the condition (financial or other) or operations of the
         Originator or its properties or might have consequences that would
         materially and adversely affect its performance hereunder or under any
         subservicing agreement;

                  (g) Upon the receipt of each Mortgage File by the Depositor
         (or its assignee) under this Agreement, the Depositor (or its assignee)
         will have good title to each related Mortgage Loan and such other items
         comprising the corpus of the Trust Estate free and clear of any lien
         created by the Originator (other than liens which will be
         simultaneously released);

                  (h) The consummation of the transactions contemplated by this
         Agreement are in the ordinary course of business of the Originator, and
         the transfer, assignment and conveyance of the Mortgage Notes and the
         Mortgages by the Originator pursuant to this Agreement are not subject
         to the bulk transfer or any similar statutory provisions in effect in
         any applicable jurisdiction;

                  (i) With respect to any Mortgage Loan purchased by the
         Originator, the Originator acquired title to the Mortgage Loan in good
         faith, without notice of any adverse claim;

                  (j) The Originator does not believe, nor does it have any
         reason or cause to believe, that it cannot perform each and every
         covenant contained in this Agreement. The Originator is solvent and the
         sale of the Mortgage Loans by the Originator pursuant to the terms of
         this Agreement will not cause the Originator to become insolvent. The
         sale of the Mortgage Loans by the Originator pursuant to the terms of
         this Agreement was not undertaken with the intent to hinder, delay or
         defraud any of the Originator's creditors;

                  (k) The Mortgage Loans are not intentionally selected in a
         manner so as to affect adversely the interests of the Depositor or of
         any transferee of the Depositor (including the Trust and the Indenture
         Trustee);

                  (l) The Originator has determined that it will treat the
         disposition of the Mortgage Loans pursuant to this Agreement as a sale
         for accounting and tax purposes;

                  (m) The Originator has not dealt with any broker or agent or
         anyone else that may be entitled to any commission or compensation in
         connection with the sale of the Mortgage Loans to the Depositor other
         than to the Depositor or an affiliate thereof; and

                                       9

<PAGE>

                  (n) The consideration received by the Originator upon the sale
         of the Mortgage Loans under this Agreement constitutes fair
         consideration and reasonably equivalent value for the Mortgage Loans.

                  Section 3.02 Representations and Warranties as to the
Unaffiliated Seller. The Unaffiliated Seller hereby represents and warrants to
the Depositor, as of the Closing Date, that:

                  (a) The Unaffiliated Seller is a corporation duly organized,
         validly existing and in good standing under the laws of the State of
         Delaware and has all licenses necessary to carry on its business as now
         being conducted and is licensed, qualified and in good standing in each
         state where a Mortgaged Property is located if the laws of such state
         require licensing or qualification in order to conduct business of the
         type conducted by the Unaffiliated Seller and to perform its
         obligations as the Unaffiliated Seller hereunder, and in any event the
         Unaffiliated Seller is in compliance with the laws of any such state to
         the extent necessary to ensure the enforceability of the related
         Mortgage Loan; the Unaffiliated Seller has the full power and
         authority, corporate and otherwise, to execute and deliver this
         Agreement and to perform in accordance herewith; the execution,
         delivery and performance of this Agreement (including all instruments
         of transfer to be delivered pursuant to this Agreement) by the
         Unaffiliated Seller and the consummation of the transactions
         contemplated hereby have been duly and validly authorized; this
         Agreement evidences the valid, binding and enforceable obligation of
         the Unaffiliated Seller; and all requisite corporate action has been
         taken by the Unaffiliated Seller to make this Agreement valid and
         binding upon the Unaffiliated Seller in accordance with its terms;

                  (b) No consent, approval, authorization or order of any court
         or governmental agency or body is required for the execution, delivery
         and performance by the Unaffiliated Seller of or compliance by the
         Unaffiliated Seller with this Agreement or the sale of the Mortgage
         Loans pursuant to the terms of this Agreement or the consummation of
         the transactions contemplated by this Agreement, or if required, such
         approval has been obtained prior to the Closing Date;

                  (c) Neither the execution and delivery of this Agreement, the
         acquisition nor origination of the Mortgage Loans by the Unaffiliated
         Seller nor the transactions contemplated hereby, nor the fulfillment of
         or compliance with the terms and conditions of this Agreement, has or
         will conflict with or result in a breach of any of the terms,
         conditions or provisions of the Unaffiliated Seller's charter or
         by-laws or any legal restriction or any agreement or instrument to
         which the Unaffiliated Seller is now a party or by which it is bound or
         to which its property is subject, or constitute a default or result in
         an acceleration under any of the foregoing, or result in the violation
         of any law, rule, regulation, order, judgment or decree to which the
         Unaffiliated Seller or its property is subject, or impair the ability
         of the Indenture Trustee (or the Servicer as the agent of the Indenture
         Trustee) to realize on the Mortgage Loans, or impair the value of the
         Mortgage Loans;

                                       10
<PAGE>

                  (d) Neither this Agreement nor the information contained in
         the Prospectus Supplement (other than the information under the caption
         "Plan of Distribution") nor any statement, report or other document
         prepared by the Unaffiliated Seller and furnished or to be furnished
         pursuant to this Agreement or in connection with the transactions
         contemplated hereby contains any untrue statement or alleged untrue
         statement of any material fact or omits to state a material fact
         necessary to make the statements contained herein or therein, in light
         of the circumstances under which they were made, not misleading;

                  (e) There is no action, suit, proceeding or investigation
         pending nor, to the knowledge of the Unaffiliated Seller, threatened
         before a court, administrative agency or government tribunal against
         the Unaffiliated Seller which, either in any one instance or in the
         aggregate, may result in any material adverse change in the business,
         operations, financial condition, properties or assets of the
         Unaffiliated Seller, or in any material impairment of the right or
         ability of the Unaffiliated Seller to carry on its business
         substantially as now conducted, or in any material liability on the
         part of the Unaffiliated Seller, or which would draw into question the
         validity of this Agreement, the Mortgage Loans, or of any action taken
         or to be taken in connection with the obligations of the Unaffiliated
         Seller contemplated herein, or which would impair materially the
         ability of the Unaffiliated Seller to perform under the terms of this
         Agreement or that will prohibit its entering into this Agreement or the
         consummation of any of the transactions contemplated hereby;

                  (f) The Unaffiliated Seller is not in violation of or in
         default with respect to, and the execution and delivery of this
         Agreement by the Unaffiliated Seller and its performance of and
         compliance with the terms hereof will not constitute a violation or
         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 violation or default might have consequences that would
         materially and adversely affect the condition (financial or other) or
         operations of the Unaffiliated Seller or its properties or might have
         consequences that would materially and adversely affect its performance
         hereunder or under any subservicing agreement;

                  (g) Upon the receipt of each Mortgage File by the Depositor
         (or its assignee) under this Agreement, the Depositor (or its assignee)
         will have good title to each related Mortgage Loan and such other items
         comprising the corpus of the Trust Estate free and clear of any lien
         created by the Unaffiliated Seller (other than liens which will be
         simultaneously released);

                  (h) The consummation of the transactions contemplated by this
         Agreement are in the ordinary course of business of the Unaffiliated
         Seller, and the transfer, assignment and conveyance of the Mortgage
         Notes and the Mortgages by the Unaffiliated Seller pursuant to this
         Agreement are not subject to the bulk transfer or any similar statutory
         provisions in effect in any applicable jurisdiction;

                  (i) With respect to any Mortgage Loan purchased by the
         Unaffiliated Seller, the Unaffiliated Seller acquired title to the
         Mortgage Loan in good faith, without notice of any adverse claim;

                                       11

<PAGE>

                  (j) The Unaffiliated Seller does not believe, nor does it have
         any reason or cause to believe, that it cannot perform each and every
         covenant contained in this Agreement. The Unaffiliated Seller is
         solvent and the sale of the Mortgage Loans by the Unaffiliated Seller
         pursuant to the terms of this Agreement will not cause the Unaffiliated
         Seller to become insolvent. The sale of the Mortgage Loans by the
         Unaffiliated Seller pursuant to the terms of this Agreement was not
         undertaken with the intent to hinder, delay or defraud any of the
         Unaffiliated Seller's creditors;

                  (k) The Mortgage Loans are not intentionally selected in a
         manner so as to affect adversely the interests of the Depositor or of
         any transferee of the Depositor (including the Trust and the Indenture
         Trustee);

                  (l) The Unaffiliated Seller has determined that it will treat
         the disposition of the Mortgage Loans pursuant to this Agreement as a
         sale for accounting purposes;

                  (m) The Unaffiliated Seller has not dealt with any broker or
         agent or anyone else that may be entitled to any commission or
         compensation in connection with the sale of the Mortgage Loans to the
         Depositor other than to the Depositor or an affiliate thereof; and

                  (n) The consideration received by the Unaffiliated Seller upon
         the sale of the Mortgage Loans under this Agreement constitutes fair
         consideration and reasonably equivalent value for the Mortgage Loans.

                  Section 3.03 Representations and Warranties Relating to the
Mortgage Loans. The Originators represent and warrant to the Unaffiliated Seller
and the Unaffiliated Seller represents to the Depositor that, as of the Closing
Date, as to each Mortgage Loan, immediately prior to the sale and transfer of
such Mortgage Loan by the Unaffiliated Seller to the Depositor:

                  (a) The information set forth in each Mortgage Loan Schedule
         is complete, true and correct;

                  (b) [Reserved];

                  (c) Each Mortgage is a valid first or second lien on a fee
         simple (or its equivalent under applicable state law) estate in the
         real property securing the amount owed by the Mortgagor under the
         Mortgage Note subject only to (i) the lien of current real property
         taxes and assessments which are not delinquent, (ii) with respect to
         any Mortgage Loan identified on the Mortgage Loan Schedule as secured
         by a second lien, the related first mortgage loan, (iii) covenants,
         conditions and restrictions, rights of way, easements and other matters
         of public record as of the date of recording of such Mortgage, such
         exceptions appearing of record being acceptable to mortgage lending
         institutions generally in the area wherein the property subject to the
         Mortgage is located or specifically reflected in the appraisal obtained
         in connection with the origination of the related Mortgage Loan
         obtained by the Unaffiliated Seller and (iv) other matters to which
         like properties are commonly subject which do not materially interfere
         with the benefits of the security intended to be provided by such
         Mortgage;

                                       12
<PAGE>

                  (d) Immediately prior to the transfer and assignment by the
         related Originator to the Unaffiliated Seller and by the Unaffiliated
         Seller to the Depositor, the Unaffiliated Seller or such Originator, as
         applicable, had good title to, and was the sole owner of each Mortgage
         Loan, free of any interest of any other Person, and the Unaffiliated
         Seller or such Originator has transferred all right, title and interest
         in each Mortgage Loan to the Depositor or the Unaffiliated Seller, as
         applicable;

                  (e) As of the applicable Cut-Off Date, no payment of principal
         or interest on or in respect of any Mortgage Loan remains unpaid for
         thirty (30) or more days past the date the same was due in accordance
         with the related Mortgage Note without regard to applicable grace
         periods;

                  (f) As of the Cut-Off Date, no Mortgage Loan has a Mortgage
         Interest Rate less than 9.650% per annum and the weighted average
         Mortgage Interest Rate of the Mortgage Loans is 12.046%;

                  (g) At origination, no Mortgage Loan had an original term to
         maturity of greater than 360 months;

                  (h) As of the Cut-Off Date, the weighted average remaining
         term to maturity of the Mortgage Loans is 243 months for the Mortgage
         Loans;

                  (i) To the best knowledge of the Unaffiliated Seller and each
         of the Originators, there is no mechanics' lien or claim for work,
         labor or material (and no rights are outstanding that under law could
         give rise to such lien) affecting the premises subject to any Mortgage
         which is or may be a lien prior to, or equal or coordinate with, the
         lien of such Mortgage, except those which are insured against by the
         title insurance policy referred to in (ff) below;

                  (j) To the best knowledge of the Unaffiliated Seller and each
         of the Originators, there is no delinquent tax or assessment lien
         against any Mortgaged Property;

                  (k) Such Mortgage Loan, the Mortgage, and the Mortgage Note,
         including, without limitation, the obligation of the Mortgagor to pay
         the unpaid principal of and interest on the Mortgage Note, are each not
         subject to any right of rescission (or any such rescission right has
         expired in accordance with applicable law), set-off, counterclaim, or
         defense, including the defense of usury, nor will the operation of any
         of the terms of the Mortgage Note or the Mortgage, or the exercise of
         any right thereunder, render either the Mortgage Note or the Mortgage
         unenforceable, in whole or in part, or subject to any right of
         rescission, set-off, counterclaim, or defense, including the defense of
         usury, and no such right of rescission, set-off, counterclaim, or
         defense has been asserted with respect thereto;

                  (l) To the best knowledge of the Unaffiliated Seller and each
         of the Originators, the Mortgaged Property is free of material damage
         and is in good repair, and there is no pending or threatened proceeding
         for the total or partial condemnation of the Mortgaged Property;

                                       13
<PAGE>

                  (m) Neither the Originators nor the Unaffiliated Seller has
         received a notice of default of any first mortgage loan secured by the
         Mortgaged Property which has not been cured by a party other than the
         Unaffiliated Seller;

                  (n) Each Mortgage Note and Mortgage are in substantially the
         forms previously provided to the Depositor and the Indenture Trustee on
         behalf of the Unaffiliated Seller;

                  (o) No Mortgage Loan had, at the date of origination, a CLTV
         in excess of 100%, and the weighted average CLTV of all Mortgage Loans
         as of the Cut-Off Date is approximately 76.07%;

                  (p) The Mortgage Loan was not originated in a program in which
         the amount of documentation in the underwriting process was limited in
         comparison to the originator's normal documentation requirements;

                  (q) No more than the following percentages of the Mortgage
         Loans by Cut-Off Date Aggregate Principal Balance are secured by
         Mortgaged Properties located in the following states:

                                       14

<PAGE>

                     Mortgage Loan Pool
--------------------------------------------------------------
                                      Percentage of Cut-Off
                                          Date Aggregate
State                                   Principal Balance
------------------------------       -------------------------
Arizona                                         0.04%
Colorado                                        0.22%
Connecticut                                     1.93%
Delaware                                        0.55%
District of Columbia                            0.13%
Florida                                         7.45%
Georgia                                         3.40%
Illinois                                        4.57%
Indiana                                         1.12%
Iowa                                            0.39%
Kansas                                          0.46%
Kentucky                                        1.26%
Louisiana                                       0.02%
Maryland                                        2.75%
Massachusetts                                   4.98%
Michigan                                        2.91%
Minnesota                                       0.66%
Mississippi                                     0.48%
Missouri                                        1.79%
Nebraska                                        0.25%
New Hampshire                                   0.40%
New Jersey                                     13.47%
New York                                       25.61%
North Carolina                                  3.47%
Ohio                                            5.18%
Pennsylvania                                    8.26%
Rhode Island                                    0.80%
South Carolina                                  1.03%
Tennessee                                       1.88%
Texas                                           0.01%
Vermont                                         0.07%
Virginia                                        3.53%
Washington                                      0.15%
West Virginia                                   0.15%
Wisconsin                                       0.68%
                                     ------------------------
                                              100.00%
                                     ========================

                                       15

<PAGE>

                  (r) The Mortgage Loans were not selected by the Unaffiliated
         Seller or the Originators for sale hereunder or inclusion in the Trust
         Estate on any basis adverse to the Trust Estate relative to the
         portfolio of similar mortgage loans of the Unaffiliated Seller or the
         Originators;

                  (s) No more than 10% by aggregate Principal Balance of the
         Mortgage Loans as of the Cut-Off Date constitutes a lien on leasehold
         interests;

                  (t) Each Mortgage contains customary and enforceable
         provisions which render the rights and remedies of the holder thereof
         adequate for the realization against the related Mortgaged Property of
         the benefits of the security including (A) in the case of a Mortgage
         designated as a deed of trust, by trustee's sale and (B) otherwise by
         judicial foreclosure. To the best of the Unaffiliated Seller's and the
         Originators' knowledge, there is no homestead or other exemption
         available to the related Mortgagor which would materially interfere
         with the right to sell the related Mortgaged Property at a trustee's
         sale or the right to foreclose the related Mortgage. The Mortgage
         contains customary and enforceable provisions for the acceleration of
         the payment of the Principal Balance of such Mortgage Loan in the event
         all or any part of the related Mortgaged Property is sold or otherwise
         transferred without the prior written consent of the holder thereof;

                  (u) The proceeds of such Mortgage Loan have been fully
         disbursed, including reserves set aside by the Unaffiliated Seller or
         the Originators, there is no requirement for, and neither the
         Unaffiliated Seller nor the Originators shall make any, future advances
         thereunder. Any future advances made prior to the applicable Cut-Off
         Date have been consolidated with the principal balance secured by the
         Mortgage, and such principal balance, as consolidated, bears a single
         interest rate and single repayment term reflected on the applicable
         Mortgage Loan Schedule. The Principal Balance as of the applicable
         Cut-Off Date does not exceed the original principal amount of such
         Mortgage Loan. Except with respect to no more than $150,000 of escrow
         funds, any and all requirements as to completion of any on-site or
         off-site improvements and as to disbursements of any escrow funds
         therefor have been complied with. All costs, fees, and expenses
         incurred in making, or recording such Mortgage Loan have been paid;

                  (v) All Mortgage Loans were originated in compliance with the
         Originators' Underwriting Guidelines;

                  (w) The terms of the Mortgage and the Mortgage Note have not
         been impaired, waived, altered, or modified in any respect, except by a
         written instrument which has been recorded, if necessary, to protect
         the interest of the Indenture Trustee and which has been delivered to
         the Collateral Agent, on behalf of the Indenture Trustee. The substance
         of any such alteration or modification will be reflected on the
         Mortgage Loan Schedule and, to the extent necessary, has been or will
         be approved by (i) the insurer under the applicable mortgage title
         insurance policy, and (ii) the insurer under any other insurance policy
         required hereunder for such Mortgage Loan where such insurance policy
         requires approval and the failure to procure approval would impair
         coverage under such policy;

                                       16
<PAGE>

                  (x) No instrument of release, waiver, alteration, or
         modification has been executed in connection with such Mortgage Loan,
         and no Mortgagor has been released, in whole or in part, except in
         connection with an assumption agreement which has been approved by the
         insurer under any insurance policy required hereunder for such Mortgage
         Loan where such policy requires approval and the failure to procure
         approval would impair coverage under such policy, and which is part of
         the Mortgage File and has been delivered to the Collateral Agent, on
         behalf of the Indenture Trustee, and the terms of which are reflected
         in the Mortgage Loan Schedule;

                  (y) Other than delinquencies described in clause (e) above,
         there is no default, breach, violation, or event of acceleration
         existing under the Mortgage or the Mortgage Note and no event which,
         with the passage of time or with notice and the expiration of any grace
         or cure period, would constitute such a default, breach, violation or
         event of acceleration, and neither the Originators nor the Unaffiliated
         Seller has waived any such default, breach, violation or event of
         acceleration. All taxes, governmental assessments (including
         assessments payable in future installments), insurance premiums, water,
         sewer, and municipal charges, leaseholder payments, or ground rents
         which previously became due and owing in respect of or affecting the
         related Mortgaged Property have been paid. Neither the Originators nor
         the Unaffiliated Seller has advanced funds, or induced, solicited, or
         knowingly received any advance of funds by a party other than the
         Mortgagor, directly or indirectly, for the payment of any amount
         required by the Mortgage or the Mortgage Note;

                  (z) All of the improvements which were included for the
         purposes of determining the Appraised Value of the Mortgaged Property
         were completed at the time that such Mortgage Loan was originated and
         lie wholly within the boundaries and building restriction lines of such
         Mortgaged Property. Except for de minimis encroachments, no
         improvements on adjoining properties encroach upon the Mortgaged
         Property. To the best of the Unaffiliated Seller's and the Originators'
         knowledge, no improvement located on or being part of the Mortgaged
         Property is in violation of any applicable zoning law or regulation.
         All inspections, licenses, and certificates required to be made or
         issued with respect to all occupied portions of the Mortgaged Property
         (including all such improvements which were included for the purpose of
         determining such Appraised Value) and, with respect to the use and
         occupancy of the same, including but not limited to certificates of
         occupancy and fire underwriters certificates, have been made or
         obtained from the appropriate authorities and the Mortgaged Property is
         lawfully occupied under applicable law;

                  (aa) To the best of the Unaffiliated Seller's and the
         Originators' knowledge, there do not exist any circumstances or
         conditions with respect to the Mortgage, the Mortgaged Property, the
         Mortgagor, or the Mortgagor's credit standing that can be reasonably
         expected to cause such Mortgage Loan to become delinquent or adversely
         affect the value or marketability of such Mortgage Loan, other than any
         such circumstances or conditions permitted under the Originator's
         Underwriting Guidelines;

                  (bb) All parties which have had any interest in the Mortgage,
         whether as mortgagee, assignee, pledgee or otherwise, are (or, during
         the period in which they held and disposed of such interest, were) (i)
         in compliance with any and all applicable licensing requirements of the
         laws of the state wherein the Mortgaged Property is located and (ii)
         (A) organized under the laws of such state, (B) qualified to do
         business in such state, (C) federal savings and loan associations or
         national banks having principal offices in such state, (D) not doing
         business in such state, or (E) not required to qualify to do business
         in such state;

                                       17
<PAGE>

                  (cc) The Mortgage Note and the Mortgage are genuine, and each
         is the legal, valid and binding obligation of the maker thereof,
         enforceable in accordance with its terms, except as such enforcement
         may be limited by bankruptcy, insolvency, reorganization, moratorium,
         or other similar laws affecting the enforcement of creditors' rights
         generally and except that the equitable remedy of specific performance
         and other equitable remedies are subject to the discretion of the
         courts. All parties to the Mortgage Note and the Mortgage had legal
         capacity to execute the Mortgage Note and the Mortgage and convey the
         estate therein purported to be conveyed, and the Mortgage Note and the
         Mortgage have been duly and properly executed by such parties or
         pursuant to a valid power-of-attorney that has been recorded with the
         Mortgage;

                  (dd) The transfer of the Mortgage Note and the Mortgage as and
         in the manner contemplated by this Agreement is sufficient either (i)
         fully to transfer to the Depositor all right, title, and interest of
         the Unaffiliated Seller and the Originators thereto as note holder and
         mortgagee or (ii) to grant to the Depositor the security interest
         referred to in Section 6.07 hereof. The Mortgage has been duly assigned
         and the Mortgage Note has been duly endorsed. The Assignment of
         Mortgage delivered to the Collateral Agent, on behalf of the Indenture
         Trustee, pursuant to Section 2.05(a)(iv) of the Sale and Servicing
         Agreement is in recordable form and is acceptable for recording under
         the laws of the applicable jurisdiction. The endorsement of the
         Mortgage Note, the delivery to the Collateral Agent, on behalf of the
         Indenture Trustee, of the endorsed Mortgage Note, and such Assignment
         of Mortgage, and the delivery of such Assignment of Mortgage for
         recording to, and the due recording of such Assignment of Mortgage in,
         the appropriate public recording office in the jurisdiction in which
         the Mortgaged Property is located are sufficient to permit the
         Indenture Trustee to avail itself of all protection available under
         applicable law against the claims of any present or future creditors of
         the Unaffiliated Seller and the Originators, and are sufficient to
         prevent any other sale, transfer, assignment, pledge, or hypothecation
         of the Mortgage Note and Mortgage by the Unaffiliated Seller or the
         Originators from being enforceable;

                  (ee) Any and all requirements of any federal, state, or local
         law including, without limitation, usury, truth-in-lending, real estate
         settlement procedures, consumer credit protection, equal credit
         opportunity, or disclosure laws applicable to such Mortgage Loan have
         been complied with, and the Servicer shall maintain in its possession,
         available for the Indenture Trustee's inspection, and shall deliver to
         the Indenture Trustee or its designee upon demand, evidence of
         compliance with all such requirements. The consummation of the
         transactions contemplated by this Agreement will not cause the
         violation of any such laws;

                                       18

<PAGE>

                  (ff) Such Mortgage Loan is covered by an ALTA mortgage title
         insurance policy or such other generally used and acceptable form of
         policy, issued by and the valid and binding obligation of a title
         insurer qualified to do business in the jurisdiction where the
         Mortgaged Property is located, insuring the Unaffiliated Seller, and
         its successors and assigns, as to the first or second priority lien, as
         applicable, of the Mortgage in the original principal amount of such
         Mortgage Loan. The assignment to the Indenture Trustee of the
         Unaffiliated Seller's interest in such mortgage title insurance policy
         does not require the consent of or notification to the insurer. Such
         mortgage title insurance policy is in full force and effect and will be
         in full force and effect and inure to the benefit of the Indenture
         Trustee upon the consummation of the transactions contemplated by this
         Agreement. No claims have been made under such mortgage title insurance
         policy and none of the Unaffiliated Seller, the Originators nor any
         prior holder of the Mortgage has done, by act or omission, anything
         which would impair the coverage of such mortgage title insurance
         policy;

                  (gg) All improvements upon the Mortgaged Property are insured
         against loss by fire, hazards of extended coverage, and such other
         hazards as are customary in the area where the Mortgaged Property is
         located pursuant to insurance policies conforming to the requirements
         of Section 3.05 hereof. If the Mortgaged Property at origination was
         located in an area identified on a flood hazard boundary map or flood
         insurance rate map issued by the Federal Emergency Management Agency as
         having special flood hazards (and such flood insurance has been made
         available), such Mortgaged Property was covered by flood insurance at
         origination. Each individual insurance policy is the valid and binding
         obligation of the insurer, is in full force and effect, and will be in
         full force and effect and inure to the benefit of the Indenture Trustee
         upon the consummation of the transactions contemplated by this
         Agreement, and contain a standard mortgage clause naming the originator
         of such Mortgage Loan, and its successors and assigns, as mortgagee and
         loss payee. All premiums thereon have been paid. The Mortgage obligates
         the Mortgagor to maintain all such insurance at the Mortgagor's cost
         and expense, and upon the Mortgagor's failure to do so, authorizes the
         holder of the Mortgage to obtain and maintain such insurance at the
         Mortgagor's cost and expense and to seek reimbursement therefor from
         the Mortgagor, and none of the Unaffiliated Seller, the related
         Originator or any prior holder of the Mortgage has acted or failed to
         act so as to impair the coverage of any such insurance policy or the
         validity, binding effect, and enforceability thereof;

                  (hh) If the Mortgage constitutes 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, as no
         fees or expenses are or will become payable by the trustee or the
         Noteholders to the Indenture Trustee under the deed of trust, except in
         connection with a trustee's sale after default by the Mortgagor;

                  (ii) The Mortgaged Property consists of one or more parcels of
         real property separately assessed for tax purposes. To the extent there
         is erected thereon a detached or an attached one-family residence or a
         detached two-to-six-family dwelling, or an individual condominium unit
         in a low-rise condominium, or an individual unit in a planned unit
         development, or a commercial property, a manufactured dwelling, or a
         mixed use or multiple purpose property, such residence, dwelling or
         unit is not (i) a unit in a cooperative apartment, (ii) a property
         constituting part of a syndication, (iii) a time share unit, (iv) a
         property held in trust, (v) a mobile home, (vi) a log-constructed home,
         or (vii) a recreational vehicle;

                                       19
<PAGE>

                  (jj) There exist no material deficiencies with respect to
         escrow deposits and payments, if such are required, for which customary
         arrangements for repayment thereof have not been made or which the
         Unaffiliated Seller or the related Originator expects not to be cured,
         and no escrow deposits or payments of other charges or payments due the
         Unaffiliated Seller have been capitalized under the Mortgage or the
         Mortgage Note;

                  (kk) Such Mortgage Loan was not originated at a below market
         interest rate. Such Mortgage Loan does not have a shared appreciation
         feature, or other contingent interest feature;

                  (ll) The origination and collection practices used by the
         Unaffiliated Seller, the Originators or the Servicer with respect to
         such Mortgage Loan have been in all respects legal, proper, prudent,
         and customary in the mortgage origination and servicing business;

                  (mm) The Mortgagor has, to the extent required by applicable
         law, executed a statement to the effect that the Mortgagor has received
         all disclosure materials, if any, required by applicable law with
         respect to the making of fixed-rate mortgage loans. The Servicer shall
         maintain or cause to be maintained such statement in the Mortgage File;

                  (nn) All amounts received by the Unaffiliated Seller or the
         Originators with respect to such Mortgage Loan after the Cut-Off Date
         and required to be deposited in the Collection Account have been so
         deposited in the Collection Account and are, as of the Closing Date, in
         the Collection Account;

                  (oo) The appraisal report with respect to the Mortgaged
         Property contained in the Mortgage File was signed prior to the
         approval of the application for such Mortgage Loan by a qualified
         appraiser, duly appointed by the originator of such Mortgage Loan, who
         had no interest, direct or indirect, in the Mortgaged Property or in
         any loan made on the security thereof and whose compensation is not
         affected by the approval or disapproval of such application;

                  (pp) When measured by the Cut-Off Date Aggregate Principal
         Balance, the Mortgagors with respect to at least 89.76% of the Mortgage
         Loans represented at the time of origination that the Mortgagor would
         occupy the Mortgaged Property as the Mortgagor's primary residence;

                  (qq) Each of the Originators and the Unaffiliated Seller has
         no knowledge with respect to the Mortgaged Property of any governmental
         or regulatory action or third party claim made, instituted or
         threatened in writing relating to a violation of any applicable
         federal, state or local environmental law, statute, ordinance,
         regulation, order, decree or standard;

                                       20
<PAGE>

                  (rr) [Reserved];

                  (ss) With respect to second lien Mortgage Loans:

                               (i) the Unaffiliated Seller and the Originators
                  have no knowledge that the Mortgagor has received notice from
                  the holder of the prior mortgage that such prior mortgage is
                  in default,

                               (ii) no consent from the holder of the prior
                  mortgage is needed for the creation of the second lien
                  Mortgage or, if required, has been obtained and is in the
                  related Mortgage File,

                               (iii) if the prior mortgage has a negative
                  amortization, the CLTV was determined using the maximum loan
                  amount of such prior mortgage,

                               (iv) the related first mortgage loan encumbering
                  the related Mortgaged Property does not have a mandatory
                  future advance provision, and

                               (v)  the Mortgage Loans conform in all material
                  respects to the description  thereof in the Prospectus
                  Supplement.

                  (tt) [Reserved];

                  (uu) To the best of the Unaffiliated Seller's and the
         Originators' knowledge, no error, omission, misrepresentation,
         negligence, fraud or similar occurrence with respect to a Mortgage Loan
         has taken place on the part of any person, including without limitation
         the Mortgagor, any appraiser, any builder or developer, or any other
         party involved in the origination of the Mortgage Loan or in the
         application of any insurance in relation to such Mortgage Loan;

                  (vv) Each Mortgaged Property is in compliance with all
         environmental laws, ordinances, rules, regulations and orders of
         federal, state or governmental authorities relating thereto. No
         hazardous material has been or is incorporated in, stored on or under
         (other than properly stored materials used for reasonable residential
         purposes), released from, treated on, transported to or from, or
         disposed of on or from, any Mortgaged Property such that, under
         applicable law (A) any such hazardous material would be required to be
         eliminated before the Mortgaged Property could be altered, renovated,
         demolished or transferred, or (B) the owner of the Mortgaged Property,
         or the holder of a security interest therein, could be subjected to
         liability for the removal of such hazardous material or the elimination
         of the hazard created thereby. Neither the Unaffiliated Seller nor any
         Mortgagor has received notification from any federal, state or other
         governmental authority relating to any hazardous materials on or
         affecting the Mortgaged Property or to any potential or known liability
         under any environmental law arising from the ownership or operation of
         the Mortgaged Property. For the purposes of this subsection, the term
         "hazardous materials" shall include, without limitation, gasoline,
         petroleum products, explosives, radioactive materials, polychlorinated
         biphenyls or related or similar materials, asbestos or any material
         containing asbestos, lead, lead-based paint and any other substance or
         material as may be defined as a hazardous or toxic substance by any
         federal, state or local environmental law, ordinance, rule, regulation
         or order, including, without limitation, CERCLA, the Clean Air Act, the
         Clean Water Act, the Resource Conservation and Recovery Act, the Toxic
         Substances Control Act and any regulations promulgated pursuant
         thereto;

                                       21
<PAGE>

                  (ww) With respect to any business purpose loan, the related
         Mortgage Note contains an acceleration clause, accelerating the
         maturity date under the Mortgage Note to the date the individual
         guarantying such loan, if any, becomes subject to any bankruptcy,
         insolvency, reorganization, moratorium, or other similar laws affecting
         the enforcement of creditors' rights generally; and

                  (xx) To the best of the Unaffiliated Seller's knowledge, none
         of the Mortgage Loans are Section 32 loans subject to the Home
         Ownership and Equity Protection Act.

                  Section 3.04 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Unaffiliated
Seller, as of the date of execution of this Agreement and the Closing Date,
that:

                  (a) The Depositor is a corporation duly organized, validly
         existing and in good standing under the laws of the State of Delaware;

                  (b) The Depositor has the corporate power and authority to
         purchase each Mortgage Loan and to execute, deliver and perform, and to
         enter into and consummate all the transactions contemplated by this
         Agreement;

                  (c) This Agreement has been duly and validly authorized,
         executed and delivered by the Depositor, and, assuming the due
         authorization, execution and delivery hereof by the Unaffiliated Seller
         and the Originators, constitutes the legal, valid and binding agreement
         of the Depositor, enforceable against the Depositor in accordance with
         its terms, except as such enforcement may be limited by bankruptcy,
         insolvency, reorganization, moratorium or other similar laws relating
         to or affecting the rights of creditors generally, and by general
         equity principles (regardless of whether such enforcement is considered
         in a proceeding in equity or at law);

                  (d) No consent, approval, authorization or order of or
         registration or filing with, or notice to, any governmental authority
         or court is required for the execution, delivery and performance of or
         compliance by the Depositor with this Agreement or the consummation by
         the Depositor of any of the transactions contemplated hereby, except
         such as have been made on or prior to the Closing Date;

                  (e) The Depositor has filed or will file the Prospectus and
         Prospectus Supplement with the Commission in accordance with Rule
         424(b) under the Securities Act; and

                  (f) None of the execution and delivery of this Agreement, the
         purchase of the Mortgage Loans from the Unaffiliated Seller, the
         consummation of the other transactions contemplated hereby, or the
         fulfillment of or compliance with the terms and conditions of this
         Agreement, (i) conflicts or will conflict with the charter or bylaws of
         the Depositor or conflicts or will conflict with or results or will
         result in a breach of, or constitutes or will constitute a default or
         results or will result in an acceleration under, any term, condition or
         provision of any indenture, deed of trust, contract or other agreement
         or other instrument to which the Depositor is a party or by which it is
         bound and which is material to the Depositor, or (ii) results or will
         result in a violation of any law, rule, regulation, order, judgment or
         decree of any court or governmental authority having jurisdiction over
         the Depositor.

                                       22
<PAGE>

                  Section 3.05 Repurchase Obligation for Defective Documentation
and for Breach of a Representation or Warranty. (a) Each of the representations
and warranties contained in Sections 3.01, 3.02 and 3.03 shall survive the
purchase by the Depositor of the Mortgage Loans, the subsequent transfer thereof
by the Depositor to the Trust and the subsequent pledge thereof by the Trust to
the Indenture Trustee, for the benefit of the Noteholders and the Note Insurer,
and shall continue in full force and effect, notwithstanding any restrictive or
qualified endorsement on the Mortgage Notes and notwithstanding subsequent
termination of this Agreement, the Sale and Servicing Agreement or the
Indenture.

                  (b) With respect to any representation or warranty contained
in Sections 3.01 or 3.03 hereof that is made to the best of the Originators'
knowledge or contained in Sections 3.02 or 3.03 hereof that is made to the best
of the Unaffiliated Seller's knowledge, if it is discovered by the Servicer, any
Subservicer, the Indenture Trustee, the Collateral Agent, the Depositor, the
Note Insurer or any Noteholder that the substance of such representation and
warranty was inaccurate as of the Closing Date, and such inaccuracy materially
and adversely affects the value of the related Mortgage Loan, then
notwithstanding the Originators' or the Unaffiliated Seller's lack of knowledge
with respect to the inaccuracy at the time the representation or warranty was
made, such inaccuracy shall be deemed a breach of the applicable representation
or warranty. Upon discovery by the Originators, the Unaffiliated Seller, the
Servicer, any Subservicer, the Indenture Trustee, the Collateral Agent, the Note
Insurer, the Depositor or any Noteholder of a breach of any of such
representations and warranties which materially and adversely affects the value
of Mortgage Loans or the interest of the Noteholders, or which materially and
adversely affects the interests of the Note Insurer or the Noteholders in the
related Mortgage Loan in the case of a representation and warranty relating to a
particular Mortgage Loan (notwithstanding that such representation and warranty
was made to the Originators' or the Unaffiliated Seller's best knowledge), the
party discovering such breach shall give, pursuant to this Section 3.05(b) and
pursuant to Section 4.02 of the Sale and Servicing Agreement, prompt written
notice to the others. Subject to the last paragraph of this Section 3.05(b),
within sixty (60) days of the earlier of its discovery or its receipt of notice
of any breach of a representation or warranty, the Unaffiliated Seller and the
Originators shall (a) promptly cure such breach in all material respects, or (b)
purchase such Mortgage Loan at a purchase price equal to the Loan Repurchase
Price, or (c) remove such Mortgage Loan from the Trust Estate (in which case it
shall become a Deleted Mortgage Loan) and substitute one or more Qualified
Substitute Mortgage Loans. Any such substitution shall be accompanied by payment
by the Unaffiliated Seller of the Substitution Adjustment, if any, to be
deposited in the Payment Account pursuant to the Sale and Servicing Agreement.

                  The Originators shall cooperate with the Unaffiliated Seller
to cure any breach and shall reimburse the Unaffiliated Seller for the costs and
expenses related to any cure, substitution (including any Substitution
Adjustment) or repurchase incurred by the Unaffiliated Seller pursuant to this
Section 3.05.

                                       23
<PAGE>

                  (c) As to any Deleted Mortgage Loan for which the Unaffiliated
Seller or an Originator substitutes a Qualified Substitute Mortgage Loan or
Loans, the Unaffiliated Seller or such Originator shall effect such substitution
by delivering to the Indenture Trustee and the Collateral Agent, a certification
in the form attached to the Sale and Servicing Agreement as Exhibit F, executed
by a Servicing Officer and the documents described in Section 2.06(c) of the
Sale and Servicing Agreement for such Qualified Substitute Mortgage Loan or
Loans. Pursuant to the Sale and Servicing Agreement, upon receipt by the
Indenture Trustee and the Collateral Agent of a certification of a Servicing
Officer of such substitution or purchase and, in the case of a substitution,
upon receipt by the Collateral Agent, on behalf of the Indenture Trustee of the
related Mortgage File, and the deposit of certain amounts in the Payment Account
pursuant to Section 2.06(c) of the Sale and Servicing Agreement (which
certification shall be in the form of Exhibit G to the Sale and Servicing
Agreement), the Collateral Agent, on behalf of the Indenture Trustee, shall be
required to release to the Servicer for release to the Unaffiliated Seller the
related Indenture Trustee's Mortgage File and shall be required to execute,
without recourse, and deliver such instruments of transfer furnished by the
Unaffiliated Seller as may be necessary to transfer such Mortgage Loan to the
Unaffiliated Seller or such Originator.

                  (d) Pursuant to the Sale and Servicing Agreement, the Servicer
shall deposit in the Payment Account all payments received in connection with
such Qualified Substitute Mortgage Loan or Loans after the date of such
substitution. Monthly Payments received with respect to Qualified Substitute
Mortgage Loans on or before the date of substitution will be retained by the
Unaffiliated Seller. The Trust will own all payments received on the Deleted
Mortgage Loan on or before the date of substitution, and the Unaffiliated Seller
shall thereafter be entitled to retain all amounts subsequently received in
respect of such Deleted Mortgage Loan. Pursuant to the Sale and Servicing
Agreement, the Servicer shall be required to give written notice to the
Indenture Trustee, the Collateral Agent and the Note Insurer that such
substitution has taken place and shall amend the Mortgage Loan Schedule to
reflect the removal of such Deleted Mortgage Loan from the terms of the Sale and
Servicing Agreement and the substitution of the Qualified Substitute Mortgage
Loan. The parties hereto agree to amend the Mortgage Loan Schedule accordingly.
Upon such substitution, such Qualified Substitute Mortgage Loan or Loans shall
be subject to the terms of the Indenture, the Sale and Servicing Agreement and
this Agreement in all respects, and the Unaffiliated Seller shall be deemed to
have made with respect to such Qualified Substitute Mortgage Loan or Loans, as
of the date of substitution, the representations and warranties set forth in
Sections 3.02 and 3.03 herein. On the date of such substitution, the
Unaffiliated Seller will remit to the Servicer and, pursuant to the Sale and
Servicing Agreement, the Servicer will deposit into the Payment Account, an
amount equal to the Substitution Adjustment, if any.

                  (e) With respect to any Mortgage Loan that has been converted
to an REO Mortgage Loan, all references in this Section 3.05 or Section 2.06 to
"Mortgage Loan" shall be deemed to refer to such REO Mortgage Loan. With respect
to any Mortgage Loan that the Originator or Unaffiliated Seller is required to
repurchase that is or becomes a Liquidated Mortgage Loan, in lieu of
repurchasing such Mortgage Loan, the Originator or Unaffiliated Seller shall
deposit into the related Payment Account, pursuant to Section 8.01 of the
Indenture an amount equal to the amount of the Liquidated Loan Loss, if any,
incurred in connection with the liquidation of such Mortgage Loan within the
same time period in which the Originator or Unaffiliated Seller would have
otherwise been required to repurchase such Mortgage Loan.

                                       24
<PAGE>

                  (f) It is understood and agreed that the obligations of the
Unaffiliated Seller and the Originator set forth in Section 2.06 and this
Section 3.05 to cure, purchase or substitute for a defective Mortgage Loan as
provided in Section 2.06 and this Section 3.05 constitute the sole remedies of
the Depositor, the Indenture Trustee, the Note Insurer and the Noteholders
respecting a breach of the foregoing representations and warranties.

                  (g) The Unaffiliated Seller and the Originator shall be
obligated to indemnify the Indenture Trustee, the Trust, the Depositor, the
Owner Trustee, the Collateral Agent, the Noteholders and the Note Insurer (in
their individual and trust capacities) and their successors, assigns, agents and
servants (collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits, and
any and all reasonable costs, expenses and disbursements (including reasonable
legal fees and expenses) of any kind and nature whatsoever (collectively,
"Expenses") which may at any time be imposed on, incurred by, or asserted
against any Indemnified Party in any way relating to or arising out of a breach
by the Unaffiliated Seller or the related Originator of the representations or
warranties in Article III hereof. The indemnities contained in this Section 3.05
shall survive the resignation or termination of the Owner Trustee or the
termination of this Agreement.

                  (h) Each of the Originators and the Unaffiliated Seller shall
be jointly and severally responsible for any repurchase, cure or substitution
obligation of any of the Originators or the Unaffiliated Seller under this
Agreement, the Indenture and the Sale and Servicing Agreement.

                  (i) Any cause of action against the Unaffiliated Seller or an
Originator relating to or arising out of the breach of any representations and
warranties or covenants made in Sections 2.06, 3.02 or 3.03 shall accrue as to
any Mortgage Loan upon (i) discovery of such breach by any party and notice
thereof to the Unaffiliated Seller or such Originator, (ii) failure by the
Unaffiliated Seller or such Originator to cure such breach or purchase or
substitute such Mortgage Loan as specified above, and (iii) demand upon the
Unaffiliated Seller or such Originator by the Indenture Trustee for all amounts
payable in respect of such Mortgage Loan.

                                   ARTICLE IV

                             THE UNAFFILIATED SELLER

                  Section 4.01 Covenants of the Originators and the Unaffiliated
Seller. Each of the Originators and the Unaffiliated Seller covenants to the
Depositor as follows:

                  (a) The Originators and the Unaffiliated Seller shall
         cooperate with the Depositor and the firm of independent certified
         public accountants retained with respect to the issuance of the Notes
         in making available all information and taking all steps reasonably
         necessary to permit the accountants' letters required hereunder to be
         delivered within the times set for delivery herein.

                                       25
<PAGE>

                  (b) The Unaffiliated Seller agrees to satisfy or cause to be
         satisfied on or prior to the Closing Date, all of the conditions to the
         Depositor's obligations set forth in Section 5.01 hereof that are
         within the Unaffiliated Seller's (or its agents') control.

                  (c) The Originators and the Unaffiliated Seller hereby agree
         to do all acts, transactions, and things and to execute and deliver all
         agreements, documents, instruments, and papers by and on behalf of the
         Originators or the Unaffiliated Seller as the Depositor or its counsel
         may reasonably request in order to consummate the transfer of the
         Mortgage Loans to the Depositor and the subsequent transfer thereof to
         the Indenture Trustee, and the rating, issuance and sale of the Notes.

                  Section 4.02 Merger or Consolidation. Each of the Originators
and the Unaffiliated Seller will keep in full effect its existence, rights and
franchises as a corporation and will obtain and preserve its qualification to do
business as a foreign corporation, in each jurisdiction necessary to protect the
validity and enforceability of this Agreement or any of the Mortgage Loans and
to perform its duties under this Agreement. Any Person into which any of the
Originators or the Unaffiliated Seller may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Originators or the Unaffiliated Seller shall be a party, or any Person
succeeding to the business of the Originators or the Unaffiliated Seller, shall
be approved by the Note Insurer which approval shall not be unreasonably
withheld. If the approval of the Note Insurer is not required, the successor
shall be an established mortgage loan servicing institution that is a Permitted
Transferee and in all events shall be the successor of the Originators or the
Unaffiliated Seller without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. The Originators and the Unaffiliated Seller shall send notice
of any such merger or consolidation to the Indenture Trustee and the Note
Insurer.

                  Section 4.03 Costs. In connection with the transactions
contemplated under this Agreement, the Trust Agreement, the Indenture and the
Sale and Servicing Agreement, the Unaffiliated Seller shall promptly pay (or
shall promptly reimburse the Depositor to the extent that the Depositor shall
have paid or otherwise incurred): (a) the fees and disbursements of the
Depositor's (100% of fees in excess of $25,000), the Unaffiliated Seller's and
the Originators' counsel; (b) the fees of S&P and Moody's; (c) any of the fees
of the Indenture Trustee and the fees and disbursements of the Indenture
Trustee's counsel; (d) any of the fees of the Owner Trustee and the fees and
disbursements of the Owner Trustee's counsel; (e) expenses incurred in
connection with printing the Prospectus, the Prospectus Supplement, any
amendment or supplement thereto, any preliminary prospectus and the Notes; (f)
fees and expenses relating to the filing of documents with the Commission
(including without limitation periodic reports under the Exchange Act); (g) the
shelf registration amortization fee of 0.04% of the Note Principal Balance of
the Notes on the Closing Date, paid in connection with the issuance of Notes;
(h) the fees and disbursements for Deloitte & Touche LLP, accountants for the
Originators; and (i) all of the initial expenses (not to exceed $65,000) of the
Note Insurer including, without limitation, legal fees and expenses, accountant
fees and expenses and expenses in connection with due diligence conducted on the
Mortgage Files but not including the initial premium paid to the Note Insurer.
For the avoidance of doubt, the parties hereto acknowledge that it is the
intention of the parties that the Depositor shall not pay any of the Indenture
Trustee's or Owner Trustee's fees and expenses in connection with the
transactions contemplated by this Agreement, the Trust Agreement, the Indenture
and the Sale and Servicing Agreement. All other costs and expenses in connection
with the transactions contemplated hereunder shall be borne by the party
incurring such expenses.

                                       26
<PAGE>

                  Section 4.04  Indemnification.  (a) The Originators, the
Servicer and the Unaffiliated Seller, jointly and severally, agree

                      (i) to indemnify and hold harmless the Depositor, each of
         its directors, each of its officers who have signed the Registration
         Statement, and each of its directors and each person or entity who
         controls the Depositor or any such person, within the meaning of
         Section 15 of the Securities Act, against any and all losses, claims,
         damages or liabilities, joint and several, to which the Depositor or
         any such person or entity may become subject, under the Securities Act
         or otherwise, and will reimburse the Depositor and each such
         controlling person for any legal or other expenses incurred by the
         Depositor or such controlling person in connection with investigating
         or defending any such loss, claim, damage, liability or action, insofar
         as such losses, claims, damages or liabilities (or actions in respect
         thereof) arise out of or are based upon any untrue statement or alleged
         untrue statement of any material fact contained in the Prospectus
         Supplement or any amendment or supplement to the Prospectus Supplement
         or the omission or the alleged omission to state therein a material
         fact required to be stated therein or necessary to make the statements
         in the Prospectus Supplement or any amendment or supplement to the
         Prospectus Supplement approved in writing by the Originators or the
         Unaffiliated Seller, in light of the circumstances under which they
         were made, not misleading, but only to the extent that such untrue
         statement or alleged untrue statement or omission or alleged omission
         relates to the information contained in the Prospectus Supplement
         referred to in Section 3.01(d). This indemnity agreement will be in
         addition to any liability which the Originators and the Unaffiliated
         Seller may otherwise have; and

                      (ii) to indemnify and to hold the Depositor harmless
         against any and all claims, losses, penalties, fines, forfeitures,
         legal fees and related costs, judgments, and any other costs, fees and
         expenses that the Depositor may sustain in any way related to the
         failure of any of the Originators or the Unaffiliated Seller to perform
         its duties in compliance with the terms of this Agreement. The
         Originators or the Unaffiliated Seller shall immediately notify the
         Depositor if a claim is made by a third party with respect to this
         Agreement, and the Originators or the Unaffiliated Seller shall assume
         the defense 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 Depositor in respect of such claim. Pursuant to the
         Indenture, the Indenture Trustee shall reimburse the Unaffiliated
         Seller in accordance with the Indenture for all amounts advanced by the
         Unaffiliated Seller pursuant to the preceding sentence except when the
         claim relates directly to the failure of the Unaffiliated Seller to
         perform its duties in compliance with the terms of this Agreement.

                  (b) The Depositor agrees to indemnify and hold harmless each
of the Originators and the Unaffiliated Seller, each of their respective
directors and each person or entity who controls the Originators or the
Unaffiliated Seller or any such person, within the meaning of Section 15 of the
Securities Act, against any and all losses, claims, damages or liabilities,
joint and several, to which the Originators or the Unaffiliated Seller or any
such person or entity may become subject, under the Securities Act or otherwise,
and will reimburse the Originators and the Unaffiliated Seller and any such
director or controlling person for any legal or other expenses incurred by such
party or any such director or controlling person in connection with

                                       27

<PAGE>

investigating or defending any such loss, claim, damage, liability or action,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, the
Prospectus, the Prospectus Supplement, any amendment or supplement to the
Prospectus or the Prospectus Supplement or the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, but only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission is other than a
statement or omission relating to the information set forth in subsection (a)(i)
of this Section 4.04; provided, however, that in no event shall the Depositor be
liable to the Unaffiliated Seller under this paragraph (b) in an amount in
excess of the Depositor's resale profit or the underwriting fee on the sale of
the Notes. This indemnity agreement will be in addition to any liability which
the Depositor may otherwise have.

                  (c) Promptly after receipt by an indemnified party under this
Section 4.04 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 4.04, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying
party may have to any indemnified party hereunder except to the extent such
indemnifying party has been prejudiced thereby. In case any such action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. After notice from the indemnifying party
to such indemnified party of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 4.04 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, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. The indemnifying party shall not be liable for the
expenses of more than one separate counsel.

                  (d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the preceding
parts of this Section 4.04 is for any reason held to be unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or
subsection (b) of this Section 4.04 in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) subject to the limits set forth in subsection (a)
and subsection (b) of this Section 4.04; provided, however, that no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to a contribution from any person who was
not guilty of such fraudulent misrepresentation. In determining the amount of
contribution to which the respective parties are entitled, there shall be

                                       28

<PAGE>

considered the relative benefits received by the Originators and the
Unaffiliated Seller on the one hand, and the Depositor on the other, the
Originators', the Unaffiliated Seller's and the Depositor's relative knowledge
and access to information concerning the matter with respect to which the claim
was asserted, the opportunity to correct and prevent any statement or omission,
and any other equitable considerations appropriate in the circumstances. The
Originators, the Unaffiliated Seller and the Depositor agree that it would not
be equitable if the amount of such contribution were determined by pro rata or
per capita allocation. For purposes of this Section 4.04, each director of the
Depositor, each officer of the Depositor who signed the Registration Statement,
and each person, if any who controls the Depositor within the meaning of Section
15 of the Securities Act, shall have the same rights to contribution as the
Depositor, and each director of the Originators or the Unaffiliated Seller, and
each person, if any who controls the Originators or the Unaffiliated Seller
within the meaning of Section 15 of the Securities Act, shall have the same
rights to contribution as the Originators and the Unaffiliated Seller.

                                    ARTICLE V

                              CONDITIONS OF CLOSING

                  Section 5.01 Conditions of Depositor's Obligations. The
obligations of the Depositor to purchase the Mortgage Loans will be subject to
the satisfaction on the Closing Date of the following conditions. Upon payment
of the purchase price for the Mortgage Loans, such conditions shall be deemed
satisfied or waived.

                  (a) Each of the obligations of the Unaffiliated Seller
required to be performed by it on or prior to the Closing Date pursuant to the
terms of this Agreement shall have been duly performed and complied with and all
of the representations and warranties of the Unaffiliated Seller and the
Originators under this Agreement shall be true and correct as of the Closing
Date and no event shall have occurred which, with notice or the passage of time,
would constitute a default under this Agreement, and the Depositor shall have
received a certificate to the effect of the foregoing signed by an authorized
officer of the Unaffiliated Seller and the Originators.

                  (b) The Depositor shall have received a letter dated the date
of this Agreement, in form and substance acceptable to the Depositor and its
counsel, prepared by Deloitte & Touche LLP, independent certified public
accountants, regarding the numerical information contained in the Prospectus
Supplement including, but not limited to the information under the captions
"Prepayment and Yield Considerations" and "The Mortgage Loan Pool" regarding any
numerical information in any marketing materials relating to the Notes and
regarding any other information as reasonably requested by the Depositor.

                                       29
<PAGE>

                  (c) The Mortgage Loans will be acceptable to the Depositor, in
its sole reasonable discretion.

                  (d) The Depositor shall have received the following additional
closing documents, in form and substance reasonably satisfactory to the
Depositor and its counsel:

                      (i)  the Mortgage Loan Schedule;

                      (ii) this Agreement, the Sale and Servicing Agreement, the
         Indenture, the Trust Agreement, and the Underwriting Agreement dated as
         of December 6, 2000 between the Depositor and Bear, Stearns & Co. Inc.,
         as representative of the underwriters named on Schedule A thereto and
         all documents required thereunder, duly executed and delivered by each
         of the parties thereto other than the Depositor;

                      (iii) officer's certificates of an officer of each of the
         Originators and the Unaffiliated Seller, dated as of the Closing Date,
         and attached thereto resolutions of the board of directors and a copy
         of the charter and by-laws;

                      (iv) copy of each of the Originators and the Unaffiliated
         Seller's charter and all amendments, revisions, and supplements
         thereof, certified by a secretary of each entity;

                      (v) an opinion of the counsel for the Originators and the
         Unaffiliated Seller as to various corporate matters in a form
         acceptable to the Depositor, its counsel, the Note Insurer, S&P and
         Moody's (it being agreed that the opinion shall expressly provide that
         the Indenture Trustee shall be entitled to rely on the opinion);

                      (vi) opinions of counsel for the Unaffiliated Seller, in
         forms acceptable to the Depositor, its counsel, the Note Insurer, S&P
         and Moody's as to such matters as shall be required for the assignment
         of a rating to the Notes of "AAA" by S&P and "Aaa" by Moody's (it being
         agreed that such opinions shall expressly provide that the Indenture
         Trustee shall be entitled to rely on such opinions);

                      (vii) a letter from Moody's to the effect that it has
         assigned a rating of "Aaa" to the Notes;

                      (viii) a letter from S&P to the effect that it has
         assigned a rating of "AAA" to the Notes;

                      (ix) an opinion of counsel for the Indenture Trustee in
         form and substance acceptable to the Depositor, its counsel, the Note
         Insurer, Moody's and S&P (it being agreed that the opinion shall
         expressly provide that the Unaffiliated Seller shall be entitled to
         rely on the opinion);

                      (x) an opinion of counsel for the Owner Trustee in form
         and substance acceptable to the Depositor, its counsel, the Note
         Insurer, Moody's and S&P (it being agreed that the opinion shall
         expressly provide that the Unaffiliated Seller shall be entitled to
         rely on the opinion);

                                       30
<PAGE>

                      (xi) an opinion or opinions of counsel for the Servicer,
         in form and substance acceptable to the Depositor, its counsel, the
         Note Insurer, Moody's and S&P (it being agreed that the opinion shall
         expressly provide that the Unaffiliated Seller shall be entitled to
         rely on the opinion); and

                      (xii) an opinion or opinions of counsel for the Note
         Insurer, in each case in form and substance acceptable to the
         Depositor, its counsel, Moody's and S&P (it being agreed that the
         opinion shall expressly provide that the Unaffiliated Seller shall be
         entitled to rely on the opinion).

                  (e) The Policy shall have been duly executed, delivered and
issued with respect to the Notes.

                  (f) All proceedings in connection with the transactions
contemplated by this Agreement and all documents incident hereto shall be
satisfactory in form and substance to the Depositor and its counsel.

                  (g) The Unaffiliated Seller shall have furnished the Depositor
with such other certificates of its officers or others and such other documents
or opinions as the Depositor or its counsel may reasonably request.

                  Section 5.02 Conditions of Unaffiliated Seller's Obligations.
The obligations of the Unaffiliated Seller under this Agreement shall be subject
to the satisfaction, on the Closing Date, of the following conditions:

                  (a) Each of the obligations of the Depositor required to be
performed by it at or prior to the Closing Date pursuant to the terms of this
Agreement shall have been duly performed and complied with and all of the
representations and warranties of the Depositor contained in this Agreement
shall be true and correct as of the Closing Date and the Unaffiliated Seller
shall have received a certificate to that effect signed by an authorized officer
of the Depositor.

                  (b) The Unaffiliated Seller shall have received the following
additional documents:

                      (i) this Agreement and the Sale and Servicing Agreement,
         and all documents required thereunder, in each case executed by the
         Depositor as applicable; and

                      (ii) a copy of a letter from Moody's to the Depositor to
         the effect that it has assigned a rating of "Aaa" to the Notes and a
         copy of a letter from S&P to the Depositor to the effect that it has
         assigned a rating of "AAA" to the Notes.

                      (iii) an opinion of counsel for the Indenture Trustee in
         form and substance acceptable to the Unaffiliated Seller and its
         counsel;

                      (iv) an opinion of counsel for the Owner Trustee in form
         and substance acceptable to the Unaffiliated Seller and its counsel;

                                       31
<PAGE>

                      (v) an opinion of counsel for the Note Insurer in form and
         substance acceptable to the Unaffiliated Seller and its counsel;

                      (vi) an opinion of the counsel for the Depositor as to
         securities and tax matters; and

                      (vii) an opinion of the counsel for the Depositor as to
         true sale matters.

                  (c) The Depositor shall have furnished the Unaffiliated Seller
with such other certificates of its officers or others and such other documents
to evidence fulfillment of the conditions set forth in this Agreement as the
Unaffiliated Seller may reasonably request.

                  Section 5.03 Termination of Depositor's Obligations. The
Depositor may terminate its obligations hereunder by notice to the Unaffiliated
Seller at any time before delivery of and payment of the purchase price for the
Mortgage Loans if: (a) any of the conditions set forth in Section 5.01 are not
satisfied when and as provided therein; (b) there shall have been the entry of a
decree or order by a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator, receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Unaffiliated Seller, or
for the winding up or liquidation of the affairs of the Unaffiliated Seller; (c)
there shall have been the consent by the Unaffiliated Seller to the appointment
of a conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of or
relating to the Unaffiliated Seller or of or relating to substantially all of
the property of the Unaffiliated Seller; (d) any purchase and assumption
agreement with respect to the Unaffiliated Seller or the assets and properties
of the Unaffiliated Seller shall have been entered into; or (e) a Termination
Event shall have occurred. The termination of the Depositor's obligations
hereunder shall not terminate the Depositor's rights hereunder or its right to
exercise any remedy available to it at law or in equity.

                                   ARTICLE VI

                                  MISCELLANEOUS

                  Section 6.01 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by registered mail, postage prepaid, or
transmitted by telex or telegraph and confirmed by a similar mailed writing, if
to the Depositor, addressed to the Depositor at Bear Stearns Asset Backed
Securities, Inc., 245 Park Avenue, 4th Floor, New York, New York 10167,
Attention: Chief Counsel, or to such other address as the Depositor may
designate in writing to the Unaffiliated Seller and the Originators and if to
the Unaffiliated Seller or an Originator, addressed to the Unaffiliated Seller,
2530 Shannon Drive, Wilmington, Delaware 19810, Attention: Jeffrey Ruben, or to
such Originator at Balapointe Office Centre, 111 Presidential Boulevard, Suite
127, Bala Cynwyd, Pennsylvania 19004, Attention: Mr. Anthony Santilli, Jr., or
to such other address as the Unaffiliated Seller or such Originator may
designate in writing to the Depositor.

                                       32

<PAGE>

                  Section 6.02 Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement which is prohibited or
which is held to be void or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation, warranty or covenant of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.

                  Section 6.03 Agreement of Unaffiliated Seller. The
Unaffiliated Seller agrees to execute and deliver such instruments and take such
actions as the Depositor may, from time to time, reasonably request in order to
effectuate the purpose and to carry out the terms of this Agreement.

                  Section 6.04 Survival. The parties to this Agreement agree
that the representations, warranties and agreements made by each of them herein
and in any Note or other instrument delivered pursuant hereto shall be deemed to
be relied upon by the other party hereto, notwithstanding any investigation
heretofore or hereafter made by such other party or on such other party's
behalf, and that the representations, warranties and agreements made by the
parties hereto in this Agreement or in any such certificate or other instrument
shall survive the delivery of and payment for the Mortgage Loans.

                  Section 6.05 Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.

                  Section 6.06 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. Except as expressly permitted by
the terms hereof, this Agreement may not be assigned, pledged or hypothecated by
any party hereto to a third party without the written consent of the other party
to this Agreement and the Note Insurer; provided, however, that the Depositor
may assign its rights hereunder without the consent of the Unaffiliated Seller.

                  Section 6.07 Confirmation of Intent; Grant of Security
Interest. It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans by the Originators to the Unaffiliated Seller as contemplated
by this Unaffiliated Seller's Agreement be, and be treated for all purposes as,
a sale of the Mortgage Loans and that the conveyance of the Mortgage Loans by
the Unaffiliated Seller to the Depositor as contemplated by this Unaffiliated
Seller's Agreement be, and be treated for accounting purposes as, a sale of the
Mortgage Loans. It is, further, not the intention of the parties that any such
conveyance be deemed a pledge of the Mortgage Loans by the Originators to the
Unaffiliated Seller or by the Unaffiliated Seller to the Depositor to secure a
debt or other obligation of the Originators or the Unaffiliated Seller, as the
case may be. However, in the event that, notwithstanding the intent of the
parties, the Mortgage Loans are held to continue to be property of the
Originators or the Unaffiliated Seller then (a) this Unaffiliated Seller's

                                       33

<PAGE>

Agreement shall also be deemed to be a security agreement within the meaning of
Articles 8 and 9 of the Uniform Commercial Code; (b) the transfer of the
Mortgage Loans provided for herein shall be deemed to be a grant by the
Originators to the Unaffiliated Seller and by the Unaffiliated Seller to the
Depositor of a security interest in all of such parties' right, title and
interest in and to the Mortgage Loans and all amounts payable on the Mortgage
Loans in accordance with the terms thereof and all proceeds of the conversion,
voluntary or involuntary, of the foregoing into cash, instruments, securities or
other property; (c) the possession by the Depositor (or its assignee) of
Mortgage Notes and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be "possession
by the secured party" for purposes of perfecting the security interest pursuant
to Section 9-305 of the Uniform Commercial Code; and (d) notifications to
persons holding such property, and acknowledgments, receipts or confirmations
from persons holding such property, shall be deemed notifications to, or
acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of the Depositor (or its assignee) for the
purpose of perfecting such security interest under applicable law. Any
assignment of the interest of the Depositor pursuant to any provision hereof
shall also be deemed to be an assignment of any security interest created
hereby. The Originators, the Unaffiliated Seller and the Depositor shall, to the
extent consistent with this Unaffiliated Seller's Agreement, take such actions
as may be necessary to ensure that, if this Unaffiliated Seller's Agreement were
deemed to create a security interest in the Mortgage Loans, such security
interest would be deemed to be a perfected security interest of first priority
under applicable law and will be maintained as such throughout the term of this
Agreement.

                  Section 6.08  Miscellaneous. This Agreement supersedes all
prior agreements and understandings relating to the subject matter hereof.

                  Section 6.09 Amendments. (a) This Agreement may be amended
from time to time by the Originators, the Unaffiliated Seller and the Depositor
by written agreement, upon the prior written consent of the Note Insurer,
without notice to or consent of the Noteholders, and with prior written notice
to the Owner Trustee 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 (i) an Opinion of Counsel,
at the expense of the party requesting the change, delivered to the Indenture
Trustee or (ii) a letter from each Rating Agency confirming that such amendment
will not result in the reduction, qualification or withdrawal of the then
current rating of the Notes, adversely affect in any material respect the
interests of any Noteholder; and provided, further, that no such amendment shall
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Note without the
consent of the Holder of such Note, 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
Originators, the Unaffiliated Seller and the Depositor with the consent of the
Note Insurer, the Majority Noteholders and the Holders of the majority of the
Percentage Interest in the Trust Certificates and with prior written notice to
the Owner Trustee 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; provided, however, that no such amendment
shall reduce in any manner the amount of, or delay the timing of, payments
received on Mortgage Loans which are required to be distributed on any Note
without the consent of the Holder of such Note or reduce the percentage for each
Class the Holders of which are required to consent to any such amendment without
the consent of the Holders of 100% of each Class of Notes affected thereby.

                                       34
<PAGE>

                  (c) It shall not be necessary for the consent of Holders under
this Section 6.09 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof.

                  Section 6.10 Third-Party Beneficiaries. The parties agree that
each of the Trust, the Owner Trustee, the Note Insurer, Collateral Agent and the
Indenture Trustee is an intended third-party beneficiary of this Agreement to
the extent necessary to enforce the rights and to obtain the benefit of the
remedies of the Depositor under this Agreement which are assigned to the Trust
and then to the Indenture Trustee, for the benefit of the Noteholders and the
Note Insurer, pursuant to the Sale and Servicing Agreement and the Indenture,
respectively, and to the extent necessary to obtain the benefit of the
enforcement of the obligations and covenants of the Unaffiliated Seller under
Section 4.01 and 4.04(a)(ii) of this Agreement. The parties further agree that
the Underwriters and each of their directors and each person or entity who
controls the Underwriters or any such person, within the meaning of Section 15
of the Securities Act (each, an "Underwriter Entity") is an intended third-party
beneficiary of this Agreement to the extent necessary to obtain the benefit of
the enforcement of the obligations and covenants of the Unaffiliated Seller with
respect to each Underwriter Entity under Section 4.04(a)(i) of this Agreement.

                  Section 6.11 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE
OF NEW YORK.

                  (b) THE ORIGINATORS, THE DEPOSITOR AND THE UNAFFILIATED SELLER
EACH HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF
MANHATTAN IN NEW YORK CITY, AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH IN SECTION 6.01 OF THIS
AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER
THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAIL, POSTAGE PREPAID. THE
ORIGINATORS, THE DEPOSITOR AND THE UNAFFILIATED SELLER EACH HEREBY WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION
SHALL AFFECT THE RIGHT OF THE ORIGINATORS, THE DEPOSITOR AND THE UNAFFILIATED
SELLER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT
EITHERS' RIGHT TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER
JURISDICTION.

                                       35
<PAGE>

                  (c) THE ORIGINATORS, THE DEPOSITOR AND THE UNAFFILIATED SELLER
EACH HEREBY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED
IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

                  Section 6.12 Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.

                  [Remainder of Page Intentionally Left Blank]

                                       36
<PAGE>

                  IN WITNESS WHEREOF, the parties to this Unaffiliated Seller's
Agreement have caused their names to be signed by their respective officers
thereunto duly authorized as of the date first above written.

                                 BEAR STEARNS ASSET BACKED
                                   SECURITIES, INC.

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

                                 ABFS 2000-4, INC.

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

                                 AMERICAN BUSINESS CREDIT, INC.

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

                                 HOMEAMERICAN CREDIT, INC., D/B/A
                                   UPLAND MORTGAGE

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

                                 NEW JERSEY MORTGAGE AND
                                   INVESTMENT CORP.

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

<PAGE>

                                                                      EXHIBIT A

                                   [RESERVED]<PAGE>

                           RECEIVABLES SALE AGREEMENT

                                  by and among

                        AMERICAN BUSINESS LEASING, INC.,
                                 as Originator,

                            ABFS FINANCE LLC 1999-A,
                                  as Transferor

                                       and

                            ABFS RESIDUAL LLC 1999-A,
                                  as Transferor

                            Dated as of June 1, 1999

<PAGE>

                  This RECEIVABLES SALE AGREEMENT, dated as of June 1, 1999
(this "Agreement"), by and among AMERICAN BUSINESS LEASING, INC., a Pennsylvania
corporation (the "Originator"), ABFS FINANCE LLC 1999-A, a Delaware limited
liability company ("Transferor I"), and ABFS RESIDUAL LLC 1999-A, a Delaware
limited liability company ("Transferor II" and, together with Transferor I, the
"Transferors").

                                   WITNESSETH:

                  WHEREAS, the Originator, in the ordinary course of its
business, acquires and originates equipment contracts in the United States; and

                  WHEREAS, the Originator desires to convey, transfer,
contribute and assign all of its right title and interest in and to (x)
Contracts to Transferor I, and (y) the ownership interest or security interest
of the Originator in each item of Equipment and any Residual Receipts to
Transferor II, each upon the terms and conditions hereinafter set forth; and

                  WHEREAS, the Originator and the Transferors agree that all
representations, warranties, covenants and agreements made by it herein shall be
for the benefit of the Depositor, the Collateral Agent, the Noteholders, the
Residual Holders, the Note Insurer, the Owner Trustee and the Indenture Trustee.

                  NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  SECTION 1.01 Definitions. Whenever used in this Agreement,
capitalized terms used herein but not defined herein shall have the meanings set
forth in Annex A to the Indenture, dated as of June 1, 1999 (the "Indenture"),
by and among ABFS Equipment Contract Trust 1999-A, as issuer (the "Issuer"), the
Originator, as servicer (in such capacity, the "Servicer"), and The Chase
Manhattan Bank, as indenture trustee (the "Indenture Trustee") and as back-up
servicer (the "Back-up Servicer").

                  SECTION 1.02 Other Definitional Provisions.

                      (a) Terms used in Related Documents. Each term defined in
this Agreement will have the meaning assigned to such term in this Agreement
when used in any certificate or other document made or delivered pursuant to
this Agreement, unless such term is otherwise defined therein.

                                       1

<PAGE>

                      (b) Accounting Terms. As used in this Agreement,
accounting terms which are not defined pursuant to Section 1.01 have the
respective meanings given to them under GAAP, as in effect on the date of this
Agreement. To the extent that the definitions of accounting terms in this
Agreement are inconsistent with the meanings of such terms under GAAP, the
definitions contained in this Agreement will control.

                      (c) "Hereof," etc. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement will refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and Article, Section, Schedule and Exhibit references contained in
this Agreement are references to Articles, Sections, Schedules and Exhibits in
or to this Agreement, unless otherwise specified.

                      (d) Number and Gender. Each defined term used in this
Agreement has a comparable meaning when used in its plural or singular form.
Each gender-specific term used in this Agreement has a comparable meaning
whether used in a masculine, feminine or gender-neutral form.

                      (e) Including. Whenever the term "including" (whether or
not that term is followed by the phrase "but not limited to" or "without
limitation" or words of similar effect) is used in this Agreement in connection
with a listing of items within a particular classification, that listing will be
interpreted to be illustrative only and will not be interpreted as a limitation
on, or exclusive listing of, the items within that classification.

                                   ARTICLE II

                           TRANSFER OF CONVEYED ASSETS

                  SECTION 2.01 Direction; Acquisition; Capital Contribution. (a)
Subject to the terms and condition of this Agreement, the Originator hereby
agrees to sell, convey and contribute, on the Closing Date, all of its right,
title and interest in and to the Initial Conveyed Assets to the Transferors, as
set forth in subsection (c) below. Upon receipt of the consideration specified
in subsection (d) below, the Originator hereby releases all of its right, title
and interest in, to and under the related Initial Conveyed Assets, such receipt
being hereby acknowledged by the execution of this Agreement by the Originator.

                      (b) Each sale, conveyance and contribution of Subsequent
Conveyed Assets shall be evidenced by the execution and delivery by the
Originator and Transferors of a Subsequent Receivables Sale Agreement in the
form of Exhibit A hereto. Each such sale, conveyance and contribution shall be
effective as of the related Subsequent Funding Date.

                      (c) The transfers occurring on each Conveyance Date shall
be consummated such that those Conveyed Assets which are considered "financial
assets" within the meaning of the Statement of Financial Accountings Standards
No. 125 ("FAS 125") (such Conveyed Assets include, without limitation, the
Contracts) (other than any Contract which is an "operating" or "true" lease))
are acquired by Transferor I, and such that those Conveyed Assets which are not
considered "financial assets" within the meaning of FAS 125 (such Conveyed
Assets include, without limitation, any Contract which is an "operating" or
"true" lease, the ownership interest or security interest of the Originator in
each item of Equipment and any Residual Receipts) are acquired by Transferor II.

                                       2

<PAGE>

                      (d) In consideration of (x) the receipt by the Originator
of a 99% membership interest in each of the Transferors, (y) the receipt by the
Originator of $_____________ from the Transferors and (z) other good and
valuable consideration, the Originator hereby conveys to the applicable
Transferor all of its right, title and interest in, to and under the Initial
Conveyed Assets, whether now existing or hereinafter arising, without recourse,
except as may be set forth herein. The purchase price for any Subsequent
Conveyed Assets will be paid by the applicable Transferor to the Originator in
immediately available funds on the related Subsequent Funding Date in accordance
with the terms of the related Subsequent Receivables Sale Agreement. In
connection with the transfers on each Conveyance Date, the Originator hereby
makes a capital contribution to the related Transferor in the amount by which
the fair market value of the related Conveyed Assets exceeds the cash
consideration received by the Originator in connection therewith.

                      (e) In connection with each sale, contribution and
conveyance of Conveyed Assets, the Originator agrees to record and file, at its
own expense, financing statements (and thereafter will file continuation
statements with respect to such financing statements) with respect to such
Conveyed Assets, meeting the requirements of applicable state law in such manner
and in such jurisdictions as are necessary to perfect and to maintain the
perfection of, (x) the transfer, conveyance and contribution of such Conveyed
Assets (subject to the Filing Requirements with respect to the Equipment) from
the Originator to the related Transferors, (y) the pledge of such Conveyed
Assets (subject to the Filing Requirements with respect to the Equipment) from
the Transferors to the Trust as security for the Pledged Notes, and (z) the
pledge of the related Pledged Property from the Trust to the Indenture Trustee,
on behalf of the Noteholders and the Note Insurer, and to deliver a file-stamped
copy of such financing statements or other evidence of such filings to the
related Transferor (and copies to the Indenture Trustee and the Note Insurer) on
or prior to each Conveyance Date; provided, however, that the Contract Files
(including each original executed Contract) will not be physically delivered to
either of the Transferors, but instead will be held by the Collateral Agent, on
behalf of the Indenture Trustee, as bailee for the Noteholders and the Note
Insurer. In addition, the Originator will assign to the Transferors any UCC-1
financing statement filed by the Originator against the Source with respect to
any Contract originated by a Source.

                      (f) In connection with each sale, contribution and
conveyance of Conveyed Assets, the Originator shall, at its own expense, on or
prior to the related Conveyance Date, and with respect to Substitute Contracts,
as soon as possible, but in no event later than two (2) Business Days after the
related Conveyance Date (i) cause the Contract Management System to be marked
with a specified code (the "Contract Management Code") to show that such
Conveyed Assets have been assigned and transferred to the Transferors in
accordance with this Agreement or a Subsequent Receivables Transfer Agreement,
as applicable, subsequently pledged by the Transferors to the Trust in
accordance with the Receivables Pledge Agreement or a Subsequent Receivables
Pledge Agreement, as applicable, and such security interest was assigned by the
Trust to the Indenture Trustee, on behalf of the Noteholders and the Note
Insurer, pursuant to the Indenture or an Assignment, as applicable, and (ii)
cause the Servicer to prepare and hold on behalf of the Transferors and the
Indenture Trustee, (x) the List of Contracts on or prior to the Closing Date and
(y) the List of Contracts as supplemented by the List of Subsequent Contracts on
or prior to each Subsequent Funding Date. Pursuant to Section 3.04, the
Originator from time to time may make capital contributions of (A) Substitute
Contracts to Transferor I and (B) the ownership interest or security interest of
the Originator in each item of Substitute Equipment and any Residual Receipts to
Transferor II, at any time pursuant to Section 3.04. Upon delivery of any such
List of Subsequent Contracts or List of Substitute Contracts, the List of
Contracts shall be deemed amended to incorporate therein the information
contained in such List of Subsequent Contracts or List of Substitute Contracts,
as applicable.

                                       3

<PAGE>

                      (g) Except for the obligations of the Originator pursuant
to Section 3.03 and Article IV of the Indenture with respect to any breach of a
representation, warranty or covenant made herein, the sale, contribution and
conveyance of the Contracts will be without recourse to the Originator.

                  SECTION 2.02 Custody of Contract Files. In connection with the
sale, contribution, assignment, transfer and conveyance of the Conveyed Assets
to the Transferors pursuant to this Agreement, the pledge of the Conveyed Assets
to the Trust, and the pledge of the Pledged Assets to the Indenture Trustee, for
the benefit of the Noteholders and the Note Issuer, the Collateral Agent, on
behalf of the Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer, will retain the Contract Files, any related evidence of insurance and
payments and original executed counterparts of each Contract in accordance with
the terms of the Indenture.

                  SECTION 2.03 Intention of the Parties; Grant of Security
Interest. It is the intention of the parties hereto that each transfer of
Conveyed Assets to be made pursuant to the terms hereof shall constitute a sale
or capital contribution of (x) the Contracts by the Originator to Transferor I,
and (y) the ownership interest or security interest of the Originator in each
item of Equipment and any Residual Receipts by the Originator to Transferor II,
and, in either case, not a loan. In the event, however, that a court of
competent jurisdiction were to hold that any such transfer constitutes a loan
and not a sale or capital contribution, it is the intention of the parties
hereto that this Agreement is deemed to be a security agreement and that the
Originator shall be deemed to have granted to the related Transferor as of the
date hereof a first priority perfected security interest in all of the
Originator's right, title and interest in, to and under the related Conveyed
Asset, and all income and proceeds thereof.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

                  SECTION 3.01 Representations and Warranties of the Originator.
The Originator hereby makes the following representations and warranties for the
benefit of the Indenture Trustee, the Depositor, the Collateral Agent, the
Noteholders, the Note Insurer and the Transferors. Such representations and
warranties are made as of the Closing Date (with respect to Initial Conveyed
Assets), any Subsequent Funding Date (with respect to Subsequent Conveyed Assets
transferred to the Transferors on such date) or any Transfer Date (with respect
to Substitute Conveyed Assets transferred to the Transferors on such date) and
shall survive each sale, contribution, assignment, transfer and conveyance by
the Originator of the Conveyed Assets to the Transferors and their respective
successors and assigns.

                                       4

<PAGE>

                      (a) Organization and Good Standing. The Originator is a
         corporation duly organized, validly existing and in good standing,
         under the laws of the state of its incorporation, with corporate power
         and authority to own its properties and to conduct its business as such
         properties are currently owned and such business is currently
         conducted, and had at all relevant times, and now has, power,
         authority, and legal right to acquire and own the Conveyed Assets;

                      (b) Due Qualification. The Originator is qualified as a
         foreign corporation in any state where it is required to be so
         qualified to conduct its business and enforce the Source Agreements to
         which it is a party, and has obtained all necessary licenses, consents,
         approvals, authorizations, registrations or declarations as required by
         any Person or any Governmental Authority under federal and state law,
         in each case, where the failure to be so qualified, licensed, consented
         to, authorized, registered, declared or approved could reasonably be
         expected to materially and adversely affect the ability of the
         Originator to execute and deliver, or comply with the terms of, this
         Agreement or any other Transaction Document to which it is a party;

                      (c) Power and Authority. The Originator has the corporate
         power and authority to execute and deliver this Agreement, the Source
         Agreements to which it is a party, the Contracts and any other
         Transaction Document to which it is a party, and to carry out their
         respective terms; the Originator has duly authorized the sale,
         contribution, assignment, transfer and conveyance to the Transferors of
         the Conveyed Assets by all necessary corporate action; and the
         execution, delivery, and performance of this Agreement, the Source
         Agreements, the Contracts and any other Transaction Document to which
         it is a party, has been duly authorized by the Originator by all
         necessary corporate action;

                      (d) Due Execution and Delivery. Each of this Agreement,
         the Source Agreements, the Contracts and any other Transaction Document
         to which it is a party has been duly executed and delivered on behalf
         of the Originator;

                      (e) Valid Assignment; Binding Obligations. This Agreement
         constitutes a valid sale, contribution, assignment, transfer and
         conveyance to the Transferors of all right, title, and interest of the
         Originator in, to and under the Conveyed Assets and the Conveyed Assets
         will be held by the Transferors free and clear of any Lien of any
         Person claiming, through or under the Originator, except for Liens
         permitted under, or to be created by the Indenture; and this Agreement,
         and the other Transaction Documents to which it is a party, when duly
         executed and delivered, will constitute legal, valid, and binding
         obligations of the Originator enforceable against the Originator in
         accordance with their respective terms subject as to enforceability to
         applicable bankruptcy, reorganization, insolvency, moratorium or other
         laws affecting creditors' rights generally and to general principles of
         equity (regardless of whether enforcement is sought in a proceeding in
         equity or at law);

                                       5
<PAGE>

                      (f) No Violation. The consummation of the transactions
         contemplated by, and the fulfillment of the terms of, this Agreement,
         the Source Agreements, the Contracts and the other Transaction
         Documents to which it is a party will not conflict with, result in any
         breach of any of the terms and provisions of, or constitute (with or
         without notice or lapse of time) a default under, the articles of
         incorporation or bylaws of the Originator, or any material term of any
         indenture, agreement, mortgage, deed of trust, or other instrument to
         which the Originator is a party or by which it is bound, or result in
         the creation or imposition of any Lien upon any of its properties
         pursuant to the terms of any such indenture, agreement, mortgage, deed
         of trust, or other instrument, other than this Agreement, or violate
         any law or any order, injunction, writ, rule, or regulation applicable
         to the Originator of any court or of any federal or state regulatory
         body, administrative agency, or other Governmental Authority having
         jurisdiction over the Originator or any of its properties which would
         have a material adverse effect on the Conveyed Assets;

                      (g) No Proceedings. There are no proceedings or
         investigations pending, or, to the knowledge of the Originator,
         threatened, before any court, regulatory body, administrative agency,
         or other tribunal or Governmental Authority (A) asserting the
         invalidity of this Agreement, (B) seeking to prevent the consummation
         of any of the transactions contemplated by this Agreement, or (C)
         seeking any determination or ruling that might (in the reasonable
         judgment of the Originator ) materially and adversely affect the
         performance by the Originator of its obligations under, or the validity
         or enforceability of, this Agreement;

                      (h) Tax Returns. The Originator has filed on a timely
         basis all tax returns (federal, state and local) required to be filed
         and has paid or made adequate provisions for the payment of all taxes,
         assessments and other governmental charges due from the Originator;

                      (i) Pensions. Each pension plan or profit sharing plan to
         which the Originator is a party has been fully funded in accordance
         with the obligations of the Originator set forth in such plan;

                      (j) Valid Business Reasons. The Originator has valid
         business reasons for selling its interests in the Conveyed Assets
         rather than obtaining a loan with the Conveyed Assets as collateral;

                      (k) Insolvency. The Originator is not insolvent nor will
         it be rendered insolvent by the transactions contemplated by this
         Agreement and the Originator has an adequate amount of capital to
         conduct its business in the ordinary course and to carry out its
         obligations hereunder and under each Transaction Document to which it
         is a party;

                                       6
<PAGE>

                      (l) Principal Place of Business. The principal place of
         business and chief executive office of the Originator is located at the
         respective addresses set forth herein and, there are now no, and during
         the past four months there have not been, any other locations where the
         Originator is located (as that term is used in the UCC in the state of
         such location) except that, with respect to such changes occurring
         after the date of this Agreement, as shall have been specifically
         disclosed to the Servicer, the Depositor, the Collateral Agent, the
         Note Insurer and the Indenture Trustee in writing;

                      (m) Accounting and Tax Treatment. The Originator will
         treat the assignment of the related Conveyed Assets to the Transferors
         pursuant to Article II as a sale and contribution of the Conveyed
         Assets to the capital of the related Transferor for Federal income tax
         purposes, and as a contribution for financial reporting and accounting
         purposes; the Originator will respond to any inquiries from third
         parties by indicating that the Conveyed Assets are owned by the
         Transferors;

                      (n) Legal Name. The legal name of the Originator is as set
         forth in the signature line of this Agreement and the Originator has
         not changed its name since its incorporation and since its
         incorporation, the Originator has not used, nor does the Originator now
         use, any trade names, fictitious names, assumed names or "doing
         business as" names;

                      (o) Material Adverse Change. Since March 31, 1999, no
         event has occurred and is continuing which materially and adversely
         affects the Originator's operations, including, without limitation, the
         ability of the Originator to perform the transactions contemplated
         hereunder; and

                      (p) Fair Consideration. The consideration received by the
         Originator as set forth herein is fair consideration having value
         reasonably equivalent to or in excess of the value of the related
         Conveyed Assets conveyed by it and the performance of the Originator's
         obligations hereunder.; and

                  SECTION 3.02 Representations and Warranties of the
Transferors. Each of the Transferors hereby makes the following representations
and warranties for the benefit of the Originator, the Note Insurer, the
Depositor, the Collateral Agent, the Indenture Trustee and the Noteholders. Such
representations and warranties speak as of the Closing Date, each Subsequent
Funding Date and each Transfer Date.

                      (a) Organization and Good Standing. Each of the
         Transferors is a limited liability company duly organized and validly
         existing in good standing under the laws of the State of Delaware, with
         full power and authority to own its properties and to conduct its
         business as presently conducted and has the power, authority and legal
         right to acquire and own the related Conveyed Assets;

                                       7
<PAGE>

                      (b) Due Qualification. Each of the Transferors is duly
         qualified to do business as a foreign limited liability company in good
         standing, and has obtained all necessary licenses and approvals in all
         jurisdictions in which the ownership or lease of property or the
         conduct of its business requires such qualification, except to the
         extent that the failure to be so qualified, licensed or approved would
         not, in the aggregate, materially and adversely affect the ability of
         such Transferor to comply with the terms of this Agreement and the
         other Transaction Documents to which it is a party;

                      (c) Power and Authority. Each of the Transferors has the
         power and authority to execute and deliver this Agreement and the other
         Transaction Documents to which it is a party and to carry out their
         respective terms; and the execution, delivery, and performance of this
         Agreement and other Transaction Documents to which it is a party have
         been duly authorized by such Transferor by all necessary action;

                      (d) Due Execution and Delivery. This Agreement and the
         other Transaction Documents to which it is a party have been duly
         executed and delivered on behalf of each Transferor;

                      (e) Binding Obligations. This Agreement and the other
         Transaction Documents to which it is a party constitute legal, valid,
         and binding obligations of each Transferor and are enforceable in
         accordance with their respective terms subject as to enforceability to
         applicable bankruptcy, reorganization, insolvency, moratorium or other
         laws affecting creditors' rights generally and to general principles of
         equity (regardless of whether enforcement is sought in a proceeding in
         equity or at law);

                      (f) No Violation. The consummation of the transactions
         contemplated by and the fulfillment of the terms of this Agreement and
         other Transaction Documents to which it is a party will not conflict
         with, result in any breach of any of the terms and provisions of, or
         constitute (with or without notice of lapse of time) a default under,
         the Certificate of Formation or Limited Liability Company Agreement of
         either Transferor, or any material term to any indenture to which
         either Transferor is a party or violate any law or any order,
         injunction, writ, rule or regulation applicable to either Transferor of
         any court or of any federal or state regulatory body, administrative
         agency or other Governmental Authority having jurisdiction over either
         Transferor or any of its properties which would have a material adverse
         effect on the Conveyed Assets;

                      (g) Membership Interests. The Originator is the registered
         owner of 99% of the membership interests of each of the Transferors,
         each of which are owned of record, free and clear of all mortgages,
         assignments and pledges, and security interests;

                      (h) No Proceedings. There are no proceedings or
         investigations pending or, to the knowledge of each of the Transferors,
         threatened, before any court, regulatory body, administrative agency or
         other tribunal or governmental instrumentality (A) asserting the
         invalidity of or any of the Transaction Documents, (B) seeking to
         prevent the consummation of any of the transactions contemplated by any
         of the Transaction Documents or (C) seeking any determination or ruling
         that would materially and adversely affect the performance by either
         Transferor of its obligations under, or the validity or enforceability
         of, any of the Transaction Documents;

                                       8
<PAGE>

                      (i) Approvals and Compliance. All approvals,
         authorizations, consents, orders or other actions of any person,
         corporation or other organization, or of any court, governmental agency
         or body or official, required in connection with the execution and
         delivery of the Transaction Documents, have been or will be taken or
         obtained on or prior to the Closing Date and each Transferor is in
         compliance with all applicable laws, rules, regulations and orders with
         respect to such Transferor, its business and properties and all
         Conveyed Assets, except to the extent that non-compliance, or failure
         to be so approved, authorized or consented to, would not, in the
         aggregate, materially and adversely affect the ability of such
         Transferor to comply with the terms of this Agreement and the other
         Transaction Documents to which it is a party;

                      (j) Solvency. Each Transferor is solvent and will not be
         rendered insolvent by the transactions contemplated by this Agreement
         and the other Transaction Documents and each Transferor has an adequate
         amount of capital to conduct its business in the ordinary course and to
         carry out its obligations under this Agreement and the other
         Transaction Documents;

                      (k) Subsidiaries. Neither of the Transferor has any
         subsidiaries other than the Trust;

                      (l) Tax Returns. Each Transferor has filed on a timely
         basis all tax returns (federal, state and local) required to be filed
         and has paid or made adequate provisions for the payment of all taxes,
         assessments and other governmental charges due from such Transferor;

                      (m) Principal Place of Business. The principal place of
         business and chief executive office of each Transferor are located at
         the address of such Transferor set forth herein and, there are now no,
         and during the past four months there have not been, any other
         locations where such Transferor is located (as that term is used in the
         UCC in the state of such location) except that, with respect to such
         changes occurring after the date of this Agreement, as shall have been
         specifically disclosed to the Servicer, the Note Insurer and the
         Indenture Trustee in writing;

                      (n) Accounting and Tax Treatment. Each Transferor will
         treat the assignment of the related Conveyed Assets from the Originator
         to the Transferors pursuant to this Agreement as a contribution of such
         Conveyed Assets for Federal income tax purposes, and as a sale and
         contribution for financial reporting and accounting purposes; each
         Transferor will respond to any inquiries by third parties by indicating
         that the Conveyed Assets are owned by the Transferors; and

                      (o) Legal Name. The legal name of each Transferor is as
         set forth in the related signature line of this Agreement and neither
         Transferor has changed its name since its incorporation and since its
         incorporation, such Transferor did not use, nor does such Transferor
         now use, any trade names, fictitious names, assumed names or "doing
         business as" names.

                                       9
<PAGE>

                  SECTION 3.03 Representations and Warranties of the Originator
with respect to the Conveyed Assets. (a) With respect to each Contract, the
Originator hereby remakes to the Transferors the representations, warranties and
covenants set forth in Section 2.02 of the Servicing Agreement. Such
representations, warranties and covenants are made or deemed to be made, (x)
with respect to the Initial Conveyed Assets, as of the Cut-Off Date, (y) with
respect to the Subsequent Conveyed Assets, as of the Subsequent Cut-Off Date,
and (z) with respect to the Substitute Conveyed Assets, as of the related
Transfer Date.

                      (b) Upon the discovery by the Originator, either
Transferor, the Collateral Agent, the Depositor, the Indenture Trustee or the
Note Insurer of a breach of any of the representations or warranties set forth
in Section 2.02 of the Servicing Agreement that materially and adversely affects
any Contract, the related Equipment or the related Contract File, as the case
may be, or if the Servicer fails to cause delivery of evidence of filing or
copies of any UCC financing statement in accordance with the Servicing Agreement
(any such event, a "Warranty Event"), the party discovering such breach shall
give prompt written notice to the other parties hereto, the Indenture Trustee,
the Trust and the Note Insurer, and the Originator shall be required to
reacquire or replace such Contract in accordance with Article IV of the
Indenture.

                  SECTION 3.04 Substitution of Contracts and Equipment by the
Originator. (a) With respect to a substitution of Contracts in accordance with
the provisions of this Section 3.04, each proposed Substitute Contract must (i)
be an Eligible Contract, (ii) satisfy all of the representations and warranties
set forth in Section 2.02 of the Servicing Agreement, (iii) have a Discounted
Contract Principal Balance of not less than the Discounted Contract Principal
Balance of the Contract being, (iv) have a Purchase Option Payment of not less
than the Purchase Option Payment of the Contract being replaced, and (v) satisfy
the requirements of Section 4.02(d) of the Indenture. For purposes of
determining compliance with clauses (iii) and (iv) of the preceding sentence, if
more than one Substitute Contract is being provided on any date, the Discounted
Contract Principal Balance of the Substitute Contracts and the Contracts being
replaced shall be determined on an aggregate basis.

                      (b) Any substitution of a Contract pursuant to this
Agreement will be effected by (i) delivery to the Collateral Agent, on behalf of
the Indenture Trustee, of the Contract File for each such Substitute Contracts,
(ii) filing of any UCC financing statements necessary to comply with the Filing
Requirements and to perfect the interest of the Indenture Trustee in the
Substitute Contracts, (iii) delivery to the Indenture Trustee and the Collateral
Agent of a supplement to the List of Contracts reflecting such substitution and
(iv) delivery to the Collateral Agent, on behalf of the Indenture Trustee, of a
release request for the replaced Contract and the originally executed trust
receipt relating thereto.

                                       10
<PAGE>

                      (c) The parties hereto agree that in addition to the
obligation of the Originator to reacquire or to substitute any Contract and the
related Equipment as to which a breach of the representations set forth in the
Servicing Agreement has occurred and is continuing, the Originator will enforce
its remedies, if any, against any Source under any Source Agreement. In
consideration of the reacquisition of the Equipment and the Contract, the
Originator shall remit the Reacquisition Amount to the Servicer for allocation
of such Reacquisition Amount pursuant to the terms of the Indenture. Except as
may be set forth in the Transaction Documents, it is understood and agreed that
the obligations of the Originator with respect to a breach as provided in this
Section 3.04 and Section 4.01 of the Indenture constitute the sole remedy
against the Originator for such breach available to the Transferor, the Note
Insurer, the Depositor, the Collateral Agent, the Indenture Trustee and
Noteholders, except to the extent that such breach is proven by final judgment
of a court of law having due jurisdiction to be the result of any fraud or
wilfull misconduct on the part of such Obligor. The representations and
warranties set forth in Sections 3.01, 3.02 and 3.03 shall survive the
assignment of the Conveyed Assets to the Transferors, the pledge of the Conveyed
Assets to the Trust and the pledge of the Pledged Property to the Indenture
Trustee.

                                   ARTICLE IV

                                    COVENANTS

                  SECTION 4.01 Originator Covenants. The Originator hereby
covenants and agrees with the Transferor, the Note Insurer, the Depositor, the
Collateral Agent, the Noteholders and the Indenture Trustee with respect to
itself as follows:

                      (a) Preservation of Security Interest. The Originator
         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 respective right, title and interest of the
         Transferors, the Trust and the Indenture Trustee in the Conveyed
         Assets. The Originator shall deliver (or cause to be delivered) to the
         Transferors file-stamped copies of, or filing receipts for, any
         document filed as provided above, as soon as available following such
         filing.

                      (b) Preservation of Name, etc. The Originator will not
         change its name, identity or corporate structure in any manner that
         would, could, or might make any financing statement or continuation
         statement filed by the Originator in accordance with paragraph (a)
         above or under any Transaction Document seriously misleading within the
         meaning of ss. 9-402(7) of the UCC, unless it shall have given the
         Transferors, the Note Insurer, the Depositor, the Collateral Agent and
         the Indenture Trustee at least 60 days' prior written notice thereof.

                      (c) Preservation of Office. The Originator will give the
         Transferors, the Depositor, the Collateral Agent, the Note Insurer and
         the Indenture Trustee at least 60 days' prior written notice of any
         relocation of its principal executive office if, as a result of such
         relocation, the applicable provisions of the UCC would require the
         filing of any amendment of any previously filed financing or
         continuation statement or of any new financing statement.

                                       11
<PAGE>

                      (d) Obligations with Respect to Conveyed Assets. The
         Originator will duly fulfill all obligations on its part to be
         fulfilled under or in connection with each Contract and each Source
         Agreement, and will do nothing to impair the rights of the Transferors,
         the Trust, the Note Insurer or the Indenture Trustee in any of the
         Conveyed Assets.

                      (e) Compliance with Law. The Originator will comply, in
         all material respects, with all acts, rules, requisitions, orders,
         decrees and directions of any Governmental Authority applicable to its
         business and to the Conveyed Assets or any part thereof; provided,
         however, that the Originator may contest any act, regulation, order,
         decree or direction in any reasonable manner which shall not materially
         and adversely affect the rights of the Transferors, the Indenture
         Trustee, the Note Insurer or the Trust in any of the Conveyed Assets.

                      (f) Conveyance of Conveyed Assets; Security Interests.
         Except for the transfers and conveyances hereunder, or under any
         Transaction Document, the Originator will not sell, pledge, assign or
         transfer to any other Person, or grant, create, incur, assume or suffer
         to exist any Lien, on any Conveyed Asset, or any interest therein and
         the Originator shall defend the right, title, and interest of the
         Transferors, the Trust, the Indenture Trustee, the Note Insurer and
         their respective successors and assigns in, to, and under the Conveyed
         Assets, against all claims of third parties claiming, through or under
         the Originator; provided, however, that nothing in this Section 4.01(f)
         shall prevent or be deemed to prohibit the Originator from suffering to
         exist upon any of the Conveyed Assets any Liens for municipal or other
         local taxes if such taxes shall not at the time be due and payable or
         if the Originator shall concurrently be contesting the validity thereof
         in good faith by appropriate proceedings and shall have set aside on
         its books adequate reserves with respect thereto and such contests pose
         no risk of forfeiture.

                      (g) Notification of Breach. The Originator will advise the
         Transferors, the Indenture Trustee, the Collateral Agent, the
         Depositor, and the Note Insurer promptly, in reasonable detail, upon
         discovery of the occurrence of any breach by the Originator of any of
         its representations, warranties and covenants contained herein.

                      (h) Further Assurances. The Originator will make, execute
         or endorse, acknowledge and file or deliver to the Transferors, the
         Trust, the Collateral Agent, the Depositor, the Note Insurer and the
         Indenture Trustee from time to time such schedules, confirmatory
         assignments, conveyances, transfer endorsements, powers of attorney,
         certificates, reports and other assurances or instruments and take such
         further steps relating to the Conveyed Assets and other rights covered
         by this Agreement, as the Transferors, the Trust, the Indenture
         Trustee, the Collateral Agent, the Depositor and the Note Insurer may
         request and reasonably require; provided, that no UCC filing will be
         required with respect to the Equipment, except as required by the
         Filing Requirements.

                                       12
<PAGE>

                      (i) Indemnification. The Originator agrees to indemnify,
         defend and hold the Transferors, the Indenture Trustee, the Collateral
         Agent, the Depositor and the Note Insurer harmless from and against any
         and all loss, liability, damage, judgment, claim, deficiency, or
         expense (including interest, penalties, reasonable attorneys' fees and
         amounts paid in settlement) to which any of them may become subject
         insofar as such loss, liability, damage, judgment, claim, deficiency,
         or expense arises out of or is based upon a breach by the Originator of
         its representations and warranties contained in Article III, its
         covenants contained in Section 4.01, or in any certificate or in any
         schedule delivered by the Originator hereunder, being untrue in any
         material respect at any time; provided, that the obligations of the
         Originator with respect to the representations and warranties set forth
         in Section 3.03(a) shall be limited as set forth in Section 3.04(c).
         The obligations of the Originator under this Section 4.01(i) shall be
         considered to have been relied upon by the Transferors, the Indenture
         Trustee, the Collateral Agent, the Depositor and the Note Insurer and
         shall survive the execution, delivery, and performance of this
         Agreement regardless of any investigation made by the Transferors, the
         Indenture Trustee, the Collateral Agent, the Depositor and the Note
         Insurer or on their respective behalf. THE INDEMNIFICATION OBLIGATIONS
         OF THE ORIGINATOR PURSUANT TO THE PRECEDING PROVISIONS OF THIS
         PARAGRAPH SHALL APPLY REGARDLESS OF ANY NEGLIGENCE OR OTHER FAULT ON
         THE PART OF THE TRANSFERORS, THE INDENTURE TRUSTEE, THE DEPOSITOR, THE
         COLLATERAL AGENT, THE NOTE INSURER OR ANY OF THEIR RESPECTIVE OFFICERS,
         EMPLOYEES OR AGENTS.

                      (j) Notice of Liens. The Originator shall notify the
         Transferors, the Depositor, the Collateral Agent (other than any
         Permitted Liens), the Indenture Trustee and the Note Insurer promptly
         after becoming aware of any Lien on any Conveyed Asset.

                      (k) Taxes. The Originator shall promptly pay all
         applicable taxes required to be paid in connection with the assignment
         of the Conveyed Assets and acknowledges that the Transferors shall have
         no responsibility with respect thereto. The Originator shall promptly
         pay and discharge, or cause the payment and discharge of, all federal
         income taxes (and all other material taxes) when due and payable by the
         Originator, except (i) such as may be paid thereafter without penalty
         or (ii) such as may be contested in good faith by appropriate
         proceedings and for which an adequate reserve has been established and
         is maintained in accordance with GAAP. The Originator shall promptly
         notify the Transferors, the Depositor, the Collateral Agent, the
         Indenture Trustee, the Noteholders and the Note Insurer of any material
         challenge, contest or proceeding pending by or against the Originator
         before any taxing authority.

                      (l) Taxes and Other Liabilities. The Originator shall
         promptly pay and discharge all material taxes, assessments, fees,
         claims and other governmental charges when due and payable by the
         Originator, except (i) such as may be paid thereafter without penalty
         or (ii) such as may be contested in good faith by appropriate
         proceedings and for which an adequate reserve has been established and
         is maintained in accordance with GAAP. The Originator shall promptly
         notify the Transferors, the Depositor, the Collateral Agent, the Note
         Insurer, the Rating Agencies and the Indenture Trustee of any material
         challenge, contest or proceeding pending by or against the Originator
         before any taxing authority.

                                       13

<PAGE>

                      (m) Non-Consolidation. The Originator shall take all
         action necessary to ensure that neither of the Transferors nor the
         Manager would be substantially consolidated with the Originator, such
         that the separate corporate existence of the Originator and either
         Transferor or the Manager would be ignored in the event of a bankruptcy
         of the Originator.

                  SECTION 4.02 Transferor Covenants. Each of the Transferors
hereby covenants and agrees with the Originator, the Depositor, the Collateral
Agent, the Note Insurer and the Indenture Trustee as follows:

                      (a) Transferor Certificate. Prior to each date as of which
         Contracts and the Equipment subject to such Contracts are to be
         reacquired by the Originator pursuant to the Indenture, the Transferors
         shall submit to the Originator a certificate signed by the president,
         executive vice president, any vice president or the treasurer of the
         Manager of each of the Transferors (a "Transferors Certificate") and
         completed as to its date and the date of this Agreement. Each
         Transferors Certificate shall operate as an assignment, without
         recourse, representation, or warranty, to the Originator of all of the
         Transferors' respective right, title and interests in and to such
         Contracts and Equipment, and all security and documents relating
         thereto, such assignment being an assignment outright and not for
         security; and upon payment of the Reacquisition Amount, the Originator
         will thereupon own such Contract, such interest in the related
         Equipment and all such security and documents, free of any further
         obligation to the Transferors with respect thereto. If in any
         enforcement suit or legal proceeding it is held that the Servicer may
         not enforce a Contract on the ground that it is not a real
         party-in-interest or holder entitled to enforce the Contract, the
         Transferors shall, at the Servicer's expense, take such steps as the
         Servicer deems necessary to enforce the Contract, including bringing
         suit in a Transferor's name.

                      (b) Obligor's Quiet Enjoyment. Transferor II hereby
         acknowledges and agrees that its rights in the Equipment are expressly
         subject to the rights of the related Obligors in such Equipment
         pursuant to the applicable Contracts. Transferor II covenants and
         agrees that, so long as an Obligor shall not be in default of any of
         the provisions of the applicable Contract, neither Transferor II nor
         any assignee of Transferor II will disturb the Obligor's quiet and
         peaceful possession of such Equipment and the Obligor's use thereof for
         its intended purpose.

                      (c) Operation of Transferor. Each of the Transferors shall
         be operated in such a manner that it should not be substantively
         consolidated in the trust estate of another Person (that is, such that
         the separate legal existence of such Transferor and such Person should
         be disregarded) and in that regard, each Transferor shall:

                               (i) not engage in any action that would cause the
                  separate legal identity of such Transferor not to be
                  respected, including, without limitation, (x) holding itself
                  out as being liable for the debts of any other party or (y)
                  acting other than through its duly authorized agents;

                                       14
<PAGE>

                               (ii) not incur, assume or guarantee any
                  indebtedness except for such indebtedness as may be incurred
                  by such Transferor in connection with the issuance of the
                  Pledged Notes or as otherwise permitted by the Note Insurer;

                               (iii) not commingle its funds with those of any
                  other entity;

                               (iv) act solely in its name in the conduct of its
                  business and shall conduct its business so as not to mislead
                  others as to the identity of the entity with which they are
                  concerned;

                               (v) maintain company records and books of account
                  and shall not commingle its company records and books of
                  account with the records and books of account of any entity;

                               (vi) not engage in any business or activity other
                  than in connection with or relating to the activities allowed
                  by its Certificate of Formation and/or Limited Liability
                  Company Agreement;

                               (vii) not form, or cause to be formed, any
                  subsidiaries;

                               (viii) comply with all restrictions and covenants
                  in, and shall not fail to comply with the corporate
                  formalities established in, the Certificate of Formation
                  and/or Limited Liability Company Agreement;

                               (ix) maintain separate bank accounts, if any;

                               (x)  not act as an agent of the Originator; and

                               (xi) have as its managing member a limited
                  purpose corporation who maintains at all times one independent
                  director as required by the Certificate of Incorporation
                  and/or Bylaws.

                  SECTION 4.03 Transfer of Conveyed Assets. The Originator
understands that the Transferors intend to pledge the Conveyed Assets and their
respective rights under this Agreement to the Indenture Trustee, on behalf of
the Trust, as collateral security for its obligations on the Pledged Notes, and
that the Trust intends to pledge the Pledged Property to the Indenture Trustee,
on behalf of the Note Insurer and the Noteholders, pursuant to the Indenture.
The Originator agrees that any such assignee of the Transferors may exercise the
rights of the Transferors hereunder, without any consent or action by either
Transferor, and shall be entitled to all of the benefits of the Transferors
hereunder to the extent provided for in such assignment.

                                       15

<PAGE>

                                    ARTICLE V

                              CONDITIONS PRECEDENT

                  SECTION 5.01 Conditions to Transferors Obligations. The
obligations of the Transferors to accept the transfer of the Initial Conveyed
Assets on the Closing Date shall be subject to the satisfaction of the following
conditions:

                      (a) All representations and warranties of the Originator
         contained in this Agreement shall be true and correct on the Closing
         Date with the same effect as though such representations and warranties
         had been made on such date;

                      (b) All information concerning the Initial Conveyed Assets
         provided to the Transferors shall be true and correct as of the Cut-Off
         Date in all material respects;

                      (c) The Originator shall have delivered to the Transferors
         a List of Contracts with respect to its respective Contracts as of the
         Cut-Off Date and shall have substantially performed all other
         obligations required to be performed by the provisions of this
         Agreement;

                      (d) The Originator shall have recorded and filed, at its
         expense, any financing statement with respect to the Initial Conveyed
         Assets to be transferred from time to time to the related Transferor
         from the Originator pursuant to this Agreement meeting the requirements
         of applicable state law in such manner in such jurisdictions as are
         necessary to perfect the transfer of the Initial Conveyed Assets from
         the Originator to the related Transferor, and shall deliver a
         file-stamped copy of such financing statements or other evidence of
         such filings to the related Transferor;

                      (e) All corporate and legal proceedings and all
         instruments in connection with the transactions contemplated by this
         Agreement shall be satisfactory in form and substance to the
         Transferors, and the Transferors shall have received from the
         Originator copies of all documents (including, without limitation,
         records of corporate proceedings) relevant to the transactions herein
         contemplated as the Transferors may reasonably have requested; and

                      (f) All respective conditions necessary to vest in the
         Originator good title, free and clear of all Liens (other than Liens
         permitted in the proviso contained in Section 4.01(f) hereof), to its
         respective Contracts and interests in Equipment shall have been
         satisfied.

                  SECTION 5.02 Conditions to the Originator's Obligations. The
obligations of the Originator to convey and contribute the Initial Conveyed
Assets to the Transferors on the Closing Date shall be subject to the
satisfaction of the following conditions:

                                       16

<PAGE>

                      (a) All representations and warranties of the Transferors
         contained in this Agreement shall be true and correct with the same
         effect as though such representations and warranties had been made on
         such date; and

                      (b) All corporate and legal proceedings and all
         instruments in connection with the transactions contemplated by this
         Agreement shall be satisfactory in form and substance to the
         Originator, and the Originator shall have received from the Transferors
         copies of all documents (including, without limitation, records of
         corporate proceedings) relevant to the transactions herein contemplated
         as the Originator may reasonably have requested.

                                   ARTICLE VI

                            TERMINATION; LIABILITIES

                  SECTION 6.01 Termination. The respective obligations and
responsibilities of the Originator and the Transferors created by this Agreement
shall terminate upon the latest of (i) the maturity or other liquidation of the
last Contract and the disposition of any amounts received upon disposition of
any Defaulted Contracts and any Equipment leased thereunder; (ii) the
distribution to the Transferors of all amounts required to be paid thereto
pursuant to this Agreement; (iii) the termination of the Indenture in accordance
with the terms thereof and (iv) the payment in full of all amounts owed to the
Note Insurer; provided, however, that (A) the indemnifications contained in
Section 4.01(i) herein and (B) the covenant contained in Section 7.13 hereof,
shall survive the termination of this Agreement.

                  SECTION 6.02 Effect of Termination. No termination or
rejection or failure to assume the executory obligations of this Agreement in
the bankruptcy of the Originator or the Transferors shall be deemed to impair or
affect the obligations pertaining to any executed contribution or executed
obligations, including, without limitation, pre-termination breaches of
representations and warranties by the Originator or the Transferors. Without
limiting the foregoing, prior to termination, neither the failure of the
Transferors to deliver a Transferors Certificate pursuant to Section 4.02, nor
the failure of the Originator to pay a Reacquisition Amount shall render such
transfer or obligation executory, nor shall the continued duties of the parties
pursuant to Article IV or Section 7.06 of this Agreement render an executed
contribution executory.

                  SECTION 6.03 Liabilities. By entering into this Agreement, the
Transferors agree to be liable, directly to each of the Issuer, the Indenture
Trustee, the Owner Trustee, the Note Insurer, the Collateral Agent, the
Depositor and each Noteholder, for the entire amount of any losses, claims,
damages or liabilities (other than those incurred by a Noteholder in the
capacity of an investor in the Notes or those which arise from any action or
omission by any Noteholder) of the Trust (to the extent Trust Assets remaining
after the Noteholders have been paid in full are insufficient to pay such
losses, claims, damages or liabilities).

                                       17

<PAGE>

                                   ARTICLE VII

                            MISCELLANEOUS PROVISIONS

                  SECTION 7.01 Amendment. This Agreement may be amended from
time to time by the parties hereto only with (x) the prior written consent of
the Servicer, the Indenture Trustee and the Note Insurer (or, in the event of a
Note Insurer Default, the Majority Holders) and (y) satisfaction of the Rating
Agency Condition.

                  SECTION 7.02 GOVERNING LAW. THIS AGREEMENT AND ANY AMENDMENT
HEREOF PURSUANT TO SECTION 7.01 SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO
CHOICE OF LAW PRINCIPLES) APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
THEREIN AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES UNDER THIS
AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

                  SECTION 7.03 Notices. All demands, notices, and communications
under this Agreement shall be in writing and shall be deemed to have been duly
given, made and received (i) when delivered against receipt of registered or
certified mail or upon actual receipt of registered or certified mail, postage
prepaid, return receipt requested; (ii) when delivered by courier with
appropriate evidence of receipt; or (iii) upon transmission via facsimile or
telex with appropriate evidence of receipt (a) in the case of the Originator, at
the following address: Balapointe Office Centre, 111 Presidential Boulevard,
Suite 127, Bala Cynwyd, Pennsylvania 19004, Attention: General Counsel, telecopy
(610) 668-1468, (b) in the case of the Indenture Trustee, 450 West 33rd Street,
New York, New York 10001, Attention: Global Trust Services, telecopy (212)
946-8191; (c) in the case of Transferor I, c/o American Business Financial
Services, Inc., Balapointe Office Centre, 111 Presidential Boulevard, Suite 127,
Bala Cynwyd, Pennsylvania 19004, Attention: General Counsel, telecopy (610)
668-1468, (d) in the case of Transferor II, c/o American Business Financial
Services, Inc., Balapointe Office Centre, 111 Presidential Boulevard, Suite 127,
Bala Cynwyd, Pennsylvania 19004, Attention: General Counsel, telecopy (610)
668-1468, (e) in the case of the Collateral Agent, at the address set forth in
the Servicing Agreement, (f) in the case of the Depositor, as the address set
forth in the Receivables Pledge Agreement, and (g) in the case of the Note
Insurer, the Rating Agencies or the Owner Trustee at their respective addresses
set forth in Section 11.06 of the Indenture. Either party may alter the address
to which communications are to be sent by giving notice of such change of
address in conformity with the provisions of this Section 7.03 for giving notice
and by otherwise complying with any applicable terms of this Agreement,
including, but not limited to, subsections 4.01(b) and (c).

                  SECTION 7.04 Severability of Provisions. If any 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.

                                       18

<PAGE>

                  SECTION 7.05 Assignment. Notwithstanding anything to the
contrary contained in this Agreement, this Agreement may not be assigned by the
Originator, without the prior written consent of the Transferors, the Note
Insurer (or, in the event of a Note Insurer Default, the Majority Holders) and
the Indenture Trustee (acting upon the written direction of the Controlling
Party) and, except as provided in Section 4.03, this Agreement may not be
assigned by the Transferors without the prior written consent of the Originator,
the Note Insurer (or, in the event of a Note Insurer Default, the Majority
Holders) and the Indenture Trustee. Whether or not expressly stated, all
representations, warranties, covenants and agreements of the Originator and the
Transferors in this Agreement, or in any document delivered by any of them in
connection with this Agreement, shall be for the benefit of, and shall be
exercisable by, the Indenture Trustee for the benefit of the Noteholders and the
Note Insurer.

                  SECTION 7.06 Further Assurances. Each of the parties hereto
agrees to do such further acts and things and to execute and deliver to the
Indenture Trustee such additional assignments, agreements, powers and
instruments as are required by the Indenture Trustee or the Note Insurer to
carry into effect the purposes of this Agreement or to better assure and confirm
unto the Indenture Trustee or the Note Insurer its rights, powers and remedies
hereunder.

                  SECTION 7.07 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of either Transferor or the
Originator, any right, remedy, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise hereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exhaustive of any rights, remedies, powers and privilege provided by law.

                  SECTION 7.08 Counterparts. This Agreement may be executed in
two or more counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which shall constitute one and
the same instrument.

                  SECTION 7.09 Binding Effect: Third-Party Beneficiaries. This
Agreement will inure to the benefit of and be binding upon the parties hereto.
The Indenture Trustee, the Owner Trustee, the Trust, the Note Insurer, the
Collateral Agent, the Depositor and the Noteholders are intended third party
beneficiaries of this Agreement.

                  SECTION 7.10 Merger and Integration. Except as specifically
stated otherwise herein, this Agreement sets forth the entire understanding of
the parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.

                  SECTION 7.11 Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.

                                       19

<PAGE>

                  SECTION 7.12 Schedules and Exhibits. The schedules and
exhibits attached hereto and referred to herein shall constitute a part of this
Agreement and are incorporated into this Agreement for all purposes.

                  SECTION 7.13 No Bankruptcy Petition Against the Transferors,
the Manager or the Trust. Each of the parties hereto agrees that, prior to the
date that is one year and one day after the payment in full of (a) the of the
latest maturing Notes issued by the Trust and (b) all amounts owed to the Note
Insurer under the Transaction Documents, it will not institute against any of
the Transferors, the Manager or the Trust, or join any other Person in
instituting against any of the Transferors, the Manager or the Trust, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other proceedings under the laws of the United States or any state of the
United States. This Section 7.13 shall survive the termination of this
Agreement.

                  [Remainder of Page Intentionally Left Blank]

                                       20
<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.

                             AMERICAN BUSINESS LEASING, INC.,
                                  as Originator

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

                             ABFS FINANCE LLC 1999-A, as Transferor I

                             By:      ABFS Special Purpose Management, Inc.,
                                      as Managing Member

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

                             ABFS RESIDUAL LLC 1999-A, as Transferor II

                             By:      ABFS Special Purpose Management, Inc.,
                                      as Managing Member

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

                 [Signature Page for Receivables Sale Agreement]

<PAGE>

                                                                      EXHIBIT A

                               FORM OF SUBSEQUENT
                           RECEIVABLES SALE AGREEMENT

                  This SUBSEQUENT RECEIVABLES SALE AGREEMENT, dated as of
____________ (the "Subsequent Funding Date"), by and among AMERICAN BUSINESS
LEASING, INC., a Pennsylvania corporation (the "Originator"), ABFS FINANCE LLC
1999-A, a Delaware limited liability company ("Transferor I"), and ABFS RESIDUAL
LLC 1999-A, a Delaware limited liability company ("Transferor II", and, together
with Transferor I, the "Transferors").

                                   WITNESSETH:

                  Reference is hereby made to that certain Receivables Sale
Agreement, dated as of June 1, 1999 (the "Receivables Sale Agreement"), by and
among the Originator and the Transferors. Pursuant to the Receivables Sale
Agreement, the Originator agreed to sell, convey and contribute, and the
Transferors agreed to accept, from time to time, Subsequent Conveyed Assets. The
Receivables Sale Agreement provides that each such sale, conveyance and
contribution of Subsequent Conveyed Assets be evidenced by the execution and
delivery of a Subsequent Receivables Sale Agreement such as this Subsequent
Receivables Sale Agreement (this "Agreement").

                  The "Subsequent Contracts" are those listed on the List of
Subsequent Contracts attached hereto.

                  NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:

                  Section 1. Definitions. For the purposes of this Agreement,
capitalized terms used herein but not otherwise defined shall have the
respective meanings assigned to such terms in the Receivables Sale Agreement or
in Annex A to the Indenture.

                  Section 2. Direction; Acquisition; Capital Contribution. (a)
Subject to the terms and conditions of this Agreement, the Originator hereby
agrees to sell, convey and contribute, on the Subsequent Funding Date, all of
the Subsequent Conveyed Assets to the Transferors, as set forth in subsection
(b) below. Upon receipt of the consideration specified in subsection (c) below,
the Originator hereby releases all of its right, title and interest in, to and
under the Subsequent Conveyed Assets, such receipt being hereby acknowledged by
the execution of this Agreement by the Originator.

                      (b) The transfers occurring on the Subsequent Funding Date
shall be consummated such that those Conveyed Assets which are considered
"financial assets" within the meaning of the Statement of Financial Accounting
Standards No. 125 ("FAS 125") (such Conveyed Assets include, without limitation,
the Contracts) are acquired by Transferor I, and such that those Conveyed Assets
which are not considered "financial assets" within the meaning of FAS 125 (such
Conveyed Assets include, without limitation, the ownership or security interest
of the Originator in each item of Equipment and any Residual Receipts) are
acquired by Transferor II.

                                      A-1
<PAGE>

                      (c) In consideration for (x) the receipt by the Originator
of $__________ from the Transferors and (y) other good and valuable
consideration, the Originator hereby conveys to the applicable Transferor all of
its right, title and interest in, to and under the Subsequent Conveyed Assets,
whether now existing or hereinafter arising, without recourse, except as may be
set forth herein. In connection with the transfers on Subsequent Funding Date,
the Originator hereby makes a capital contribution to the related Transferor in
the amount by which the fair market value of the Subsequent Conveyed Assets
exceeds the cash consideration received by the Originator in connection
therewith.

                      (d) In connection with the sale, contribution and
conveyance of the Subsequent Conveyed Assets, the Originator shall, at its own
expense, on or prior to the Subsequent Funding Date (i) cause the Contract
Management System to be marked with a specified code (the "Contract Management
Code") to show that such Subsequent Conveyed Assets have been transferred and
contributed to the Transferors in accordance with this Agreement, subsequently
pledged to the Trust, as collateral security for the Pledged Notes in accordance
with the related Subsequent Receivables Pledge Agreement, and such security
interest was assigned to the Indenture Trustee, on behalf of the Noteholders and
the Note Insurer, pursuant to the related Assignment, and (ii) cause the
Servicer to prepare and hold on behalf of the Transferors and the Indenture
Trustee the List of Contracts as supplemented by the List of Subsequent
Contracts on or prior to the Subsequent Funding Date.

                      (e) Except for the obligations of the Originator pursuant
to Section 3 hereof, Section 3.03 of the Receivables Sale Agreement and Article
IV of the Indenture with respect to any breach of a representation, warranty or
covenant made herein, the sale and contribution of the Subsequent Contracts will
be without recourse to the Originator.

                  Section 3. Representations and Warranties of the Originator.
(a) With respect to each Subsequent Contract, the Originator hereby remakes to
the Transferors the representations, warranties and covenants set forth in
Section 2.02 of the Servicing Agreement.

                      (b) Upon the discovery by the Originator, either
Transferor, the Depositor, the Collateral Agent, the Indenture Trustee or the
Note Insurer of a breach of any of the representations or warranties set forth
in Section 2.02 of the Servicing Agreement that materially and adversely affects
any Contract, the related Equipment or the related Contract File, as the case
may be, or if the Servicer fails to cause delivery of evidence of filing or
copies of any UCC financing statement in accordance with the Servicing Agreement
(any such event, a "Warranty Event"), the party discovering such breach shall
give prompt written notice to the other parties hereto, the Indenture Trustee,
the Trust and the Note Insurer, the Depositor, the Collateral Agent and the
Originator shall be required to reacquire or replace such Contract in accordance
with Article IV of the Indenture.

                                      A-2
<PAGE>

                      (c) The Originator understands that the Transferors intend
to pledge the Subsequent Conveyed Assets and their respective rights under this
Agreement to the Trust, as collateral security for its obligations on the
Pledged Notes, and that the Trust intends to pledge the Pledged Property to the
Indenture Trustee, on behalf of the Note Insurer and the Noteholders, pursuant
to the Indenture. The Originator agrees that any such assignee of the
Transferors may exercise the rights of the Transferors hereunder, without any
consent or action by either Transferor, and shall be entitled to all of the
benefits of the Transferors hereunder to the extent provided for in such
assignment.

                  Section 4. Amendment. This Agreement may be amended from time
to time by the parties hereto only with (x) the prior written consent of the
Servicer, the Indenture Trustee and the Note Insurer (or, in the event of a Note
Insurer Default, the Majority Holders) and (y) satisfaction of the Rating Agency
Condition.

                  Section 5. GOVERNING LAW. THIS AGREEMENT AND ANY AMENDMENT
HEREOF PURSUANT TO SECTION 4 SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CHOICE OF
LAW PRINCIPLES) APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN AND
THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL
BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

                  Section 6. Counterparts. This Agreement may be executed in two
or more counterparts (and by different parties on separate counterparts), each
of which shall be an original, but all of which shall constitute one and the
same instrument.

                  Section 7. Binding Effect; Third-Party Beneficiaries. This
Agreement will inure to the benefit of and be binding upon the parties hereto.
The Indenture Trustee, the Owner Trustee, the Trust, the Depositor, the
Collateral Agent, the Note Insurer and the Noteholders are intended third party
beneficiaries of this Agreement.

                  Section 8. Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.

                  Section 9. Exhibits. The schedules and exhibits attached
hereto and referred to herein shall constitute a part of this Agreement and are
incorporated into this Agreement for all purposes.

                                       A-3
<PAGE>

                  Section 10. Intent of Parties; Security Agreement. It is the
intention of the parties hereto that the transfer of the Subsequent Conveyed
Assets to be made pursuant to the terms hereof shall constitute a sale or
capital contribution of (x) the Contracts by the Originator to Transferor I, and
(y) the ownership interest or security interest of the Originator in each item
of Equipment and any Residual Receipts by the Originator to Transferor II, and,
in either case, not a loan. In the event, however, that a court of competent
jurisdiction were to hold that any such transfer constitutes a loan and not a
sale or capital contribution, it is the intention of the parties hereto that
this Agreement is deemed to be a security agreement and that the Originator
shall be deemed to have granted to the related Transferor as of the date hereof
a first priority perfected security interest in all of the Originator's right,
title and interest in, to and under the related Subsequent Conveyed Asset, and
all income and proceeds thereof.

                  [Remainder of Page Intentionally Left Blank]

                                       A-4
<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.

                            AMERICAN BUSINESS LEASING, INC.,
                                 as Originator

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

                            ABFS FINANCE LLC 1999-A, as Transferor I

                            By:      ABFS Special Purpose Management, Inc.,
                                     as Managing Member

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

                            ABFS RESIDUAL LLC 1999-A, as Transferor II

                            By:      ABFS Special Purpose Management, Inc.,
                                     as Managing Member

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

                                      A-5
<PAGE>

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<S>                        <C>                                                                         <C>
ARTICLE I  DEFINITIONS...................................................................................1

   SECTION 1.01            Definitions...................................................................1
   SECTION 1.02            Other Definitional Provisions.................................................1

ARTICLE II  TRANSFER OF CONVEYED ASSETS..................................................................2

   SECTION 2.01            Direction; Acquisition; Capital Contribution..................................2
   SECTION 2.02            Custody of Contract Files.....................................................4
   SECTION 2.03            Intention of the Parties; Grant of Security Interest..........................4

ARTICLE III  REPRESENTATIONS AND WARRANTIES..............................................................4

   SECTION 3.01            Representations and Warranties of the Originator..............................4
   SECTION 3.02            Representations and Warranties of the Transferors.............................7
   SECTION 3.03            Representations and Warranties of the Originator with respect to the
                              Conveyed Assets...........................................................10
   SECTION 3.04            Substitution of Contracts and Equipment by the Originator....................10

ARTICLE IV  COVENANTS...................................................................................11

   SECTION 4.01            Originator Covenants.........................................................11
   SECTION 4.02            Transferor Covenants.........................................................14
   SECTION 4.03            Transfer of Conveyed Assets..................................................15

ARTICLE V  CONDITIONS PRECEDENT.........................................................................15

   SECTION 5.01            Conditions to Transferors Obligations........................................15
   SECTION 5.02            Conditions to the Originator's Obligations...................................16

ARTICLE VI  TERMINATION; LIABILITIES....................................................................17

   SECTION 6.01            Termination..................................................................17
   SECTION 6.02            Effect of Termination........................................................17
   SECTION 6.03            Liabilities..................................................................17

</TABLE>

                                       i

<PAGE>

<TABLE>
<CAPTION>

<S>                                                                                                    <C>
ARTICLE VII  MISCELLANEOUS PROVISIONS...................................................................17

   SECTION 7.01            Amendment....................................................................17
   SECTION 7.02            GOVERNING LAW................................................................17
   SECTION 7.03            Notices......................................................................18
   SECTION 7.04            Severability of Provisions...................................................18
   SECTION 7.05            Assignment...................................................................18
   SECTION 7.06            Further Assurances...........................................................19
   SECTION 7.07            No Waiver; Cumulative Remedies...............................................19
   SECTION 7.08            Counterparts.................................................................19
   SECTION 7.09            Binding Effect:  Third-Party Beneficiaries...................................19
   SECTION 7.10            Merger and Integration.......................................................19
   SECTION 7.11            Headings.....................................................................19
   SECTION 7.12            Schedules and Exhibits.......................................................19
   SECTION 7.13            No Bankruptcy Petition Against the Transferors, the Manager or the
                              Trust.....................................................................19

Exhibit A  -               Form of Subsequent Receivables Sale Agreement

</TABLE>

                                       ii

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