CRIIMI MAE INC
NEWCO MEMBER PLEDGE AGRMT
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>17
<FILENAME>newco_pldg-agmt.txt
<DESCRIPTION>NEWCO MEMBER PLEDGE AGRMT
<TEXT>

                                                                EXHIBIT 10.4


                                                              EXECUTION COPY



                          NEWCO MEMBER PLEDGE AGREEMENT



     This  NEWCO  MEMBER  PLEDGE  AGREEMENT  (this  "Agreement")  is dated as of
January 14, 2003 and entered into by and between  CRIIMI NEWCO  MEMBER,  INC., a
Maryland corporation  ("Pledgor"),  and BRASCAN REAL ESTATE FINANCE FUND I, L.P.
("Initial  Purchaser"),  as collateral agent for and  representative of (in such
capacity   herein  called  "Secured   Party")  Brascan  Real  Estate   Financial
Investments LLC  ("Investor")  and the holders of the Notes  (capitalized  terms
used herein without definition shall have the meanings assigned to such terms in
the Senior Subordinated  Secured Note Agreement dated as of January 14, 2003 (as
amended, supplemented or otherwise modified from time to time, the "Subordinated
Note  Agreement")  between  Initial  Purchaser  and CRIIMI MAE Inc.,  a Maryland
corporation ("Company")).

                             PRELIMINARY STATEMENTS


     A.  Pledgor  (i) is a  wholly-owned  Subsidiary  of Company and (ii) is the
legal and beneficial owner of the limited  liability company interests in CRIIMI
NEWCO, LLC, a Maryland limited  liability  company (the "Issuer"),  described in
Schedule I annexed hereto (the "Pledged Interests").

     B. Company and Investor have entered into the Investment Agreement pursuant
to which (i) Company has agreed to issue and sell,  and  Investor  has agreed to
purchase,  the 15% Subordinated Notes, and (ii) at the option of Company as more
fully  described in the  Investment  Agreement,  Company may issue and sell, and
Investor has agreed to purchase  (and/or to cause one or more of its  Affiliates
to purchase),  up to  $10,000,000  in aggregate  principal  amount of Additional
Subordinated  Notes,  in each case on the terms and  conditions set forth in the
Investment Agreement and the Subordinated Note Agreement.

     C. Initial Purchaser is an Affiliate of Investor, and Investor has selected
Initial  Purchaser to enter into the  Subordinated  Note Agreement and to be the
purchaser of the 15% Subordinated Notes.

     D. It is a condition  precedent  to the  consummation  of the  transactions
contemplated  by the Investment  Agreement and the  Subordinated  Note Agreement
that Pledgor  shall have  granted the  security  interests  and  undertaken  the
obligations contemplated by this Agreement.

     NOW,  THEREFORE,  in  consideration  of the premises and in order to induce
Initial  Purchaser  and/or one or more  Affiliates  of Investor to purchase  the
Notes, and for other good and valuable  consideration,  the receipt and adequacy
of which are hereby  acknowledged,  Pledgor  hereby agrees with Secured Party as
follows:

<PAGE>

     SECTION 1. Pledge of Security. Pledgor hereby pledges to Secured Party, and
hereby grants to Secured Party a security  interest in, all of Pledgor's  right,
title and interest in and to the following (the "Pledged Collateral"):

     (a) the Pledged  Interests and the  certificates or other  instruments,  if
any,  representing  the  Pledged  Interests  and any  interest of Pledgor in the
entries on the books of any securities  intermediary pertaining thereto, and all
dividends,  distributions,  returns of capital, cash, warrants, options, rights,
instruments,  and all other  property  or proceeds  from time to time  received,
receivable or otherwise  distributed in respect of or in exchange for any or all
of the Pledged Interests; and

     (b) to the extent not covered by clause (a) above,  all  proceeds of any or
all of the foregoing  Pledged  Collateral.  For purposes of this Agreement,  the
term  "proceeds"  includes  whatever  is  receivable  or received  when  Pledged
Collateral or proceeds are sold, exchanged,  collected or otherwise disposed of,
whether such  disposition  is voluntary or  involuntary,  and includes,  without
limitation,  proceeds of any indemnity or guaranty payable to Pledgor or Secured
Party from time to time with respect to any of the Pledged Collateral.

     SECTION 2.  Security  for  Obligations.  This  Agreement  secures,  and the
Pledged Collateral is collateral security for, the prompt payment or performance
in  full  when  due,  whether  at  stated  maturity,   by  required  prepayment,
declaration, acceleration, demand or otherwise (including the payment of amounts
that would become due but for the operation of the automatic  stay under Section
362(a) of the Bankruptcy  Code, 11 U.S.C.  ss.362(a)),  of all  obligations  and
liabilities  of every  nature of  Company  now or  hereafter  existing  under or
arising  out  of  or  in  connection  with  the  Investment  Agreement  and  the
Subordinated  Note  Agreement,  in each case  together  with all  extensions  or
renewals thereof, whether for principal,  interest (including without limitation
interest  that,  but for the filing of a petition in bankruptcy  with respect to
Company,  would  accrue on such  obligations,  whether or not a claim is allowed
against Company for such interest in the related bankruptcy  proceeding),  fees,
expenses, indemnities or otherwise, whether voluntary or involuntary,  direct or
indirect,  absolute or contingent,  liquidated or  unliquidated,  whether or not
jointly  owed with  others,  and whether or not from time to time  decreased  or
extinguished and later increased, created or incurred, and all or any portion of
such  obligations or liabilities that are paid, to the extent all or any part of
such payment is avoided or recovered  directly or indirectly  from Secured Party
or any  Holder  as a  preference,  fraudulent  transfer  or  otherwise,  and all
obligations  of every  nature of Pledgor now or  hereafter  existing  under this
Agreement  (all such  obligations  of Company  and  Pledgor  being the  "Secured
Obligations").

     SECTION 3. Delivery of Pledged Collateral.  All certificates or instruments
representing or evidencing the Pledged Collateral shall be delivered to and held
by or on behalf of Secured Party  pursuant  hereto and shall be in suitable form
for transfer by delivery or, as  applicable,  shall be  accompanied by Pledgor's
endorsement in blank, where necessary,  or duly executed instruments of transfer
or assignment in blank, all in form and substance satisfactory to Secured Party.
After the  occurrence and only during the  continuation  of an Event of Default,
Secured Party shall have the right, without notice to Pledgor, to transfer to or
to register in the name of Secured  Party or any of its  nominees  any or all of
the Pledged  Collateral,  subject to the revocable  rights  specified in Section
7(a).  In addition,  Secured  Party

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<PAGE>

shall have the right at any time to exchange  certificates  or  instruments
representing or evidencing Pledged Collateral for certificates or instruments of
smaller or larger denominations.

     SECTION 4. Representations and Warranties.  Pledgor represents and warrants
as follows:

     (a) Due  Authorization,  etc.  of Pledged  Collateral.  All of the  Pledged
Interests  described on Schedule I have been duly  authorized and validly issued
and are fully paid and non-assessable.

     (b) Description of Pledged Collateral. The Pledged Interests constitute all
of the issued and outstanding limited liability company interests of the Issuer,
and there are no outstanding  warrants,  options or other rights to purchase, or
other  agreements  outstanding  with  respect  to,  or  property  that is now or
hereafter  convertible  into,  or that  requires  the  issuance  or sale of, any
Pledged Interests.

     (c)  Ownership  of Pledged  Collateral.  Pledgor  is the legal,  record and
beneficial owner of the Pledged Collateral free and clear of any Lien except for
Permitted Liens.

     (d)  Governmental  Authorizations.  Except as provided in Section  4(e), no
authorization, approval or other action by, and no notice to or filing with, any
governmental  authority or regulatory body is required for either (i) the pledge
by Pledgor of the Pledged Collateral pursuant to this Agreement and the grant by
Pledgor of the security interest granted hereby, (ii) the execution, delivery or
performance of this Agreement by Pledgor, or (iii) the exercise by Secured Party
of the  voting or other  rights,  or the  remedies  in  respect  of the  Pledged
Collateral,  provided  for in  this  Agreement  (except  as may be  required  in
connection with a disposition of Pledged  Collateral by laws affecting the offer
and sale of securities generally).

     (e)  Perfection.  The pledge of the  Pledged  Collateral  pursuant  to this
Agreement,  together  with the  filing  of a UCC  financing  statement  with the
Secretary of State of the State of Maryland  describing the Pledged  Collateral,
creates a valid and perfected  first priority  security  interest in the Pledged
Collateral, securing the payment of the Secured Obligations.

     (f) Office  Locations;  Type and  Jurisdiction of  Organization.  The chief
place of business, the chief executive office and the office where Pledgor keeps
its records  regarding  the Pledged  Collateral  are located at 11200  Rockville
Pike,  Rockville,  Maryland  20852;  Pledgor  is a  Maryland  corporation  whose
organizational number is D07168131.

     (g) Margin  Regulations.  The pledge of the Pledged Collateral  pursuant to
this Agreement  does not violate  Regulation T, U or X of the Board of Governors
of the Federal Reserve System.

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<PAGE>

     (h) Other  Information.  All  information  heretofore,  herein or hereafter
supplied to Secured Party by or on behalf of Pledgor with respect to the Pledged
Collateral is accurate and complete in all respects.

     SECTION 5. Transfers and Other Liens;  Additional Pledged Collateral;  etc.
Pledgor shall:

     (a) not, except as expressly  permitted by the Subordinated Note Agreement,
(i) sell,  assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral,  (ii) create or
suffer to exist any Lien upon or with respect to any of the Pledged  Collateral,
or (iii) permit the Issuer to merge or consolidate with any Person;

     (b) (i) cause the Issuer  not to issue any  membership  interests  or other
securities in addition to or in substitution for the Pledged  Interests,  except
to Pledgor, or (ii) pledge hereunder, immediately upon its acquisition (directly
or indirectly)  thereof,  any and all additional  membership  interests or other
securities of the Issuer;

     (c) promptly  notify  Secured Party of any event of which  Pledgor  becomes
aware causing loss or depreciation in the value of the Pledged Collateral;

     (d) promptly  deliver to Secured Party all written  notices  received by it
with respect to the Pledged Collateral; and

     (e) pay promptly when due all taxes,  assessments and governmental  charges
or levies imposed upon, and all claims against,  the Pledged Collateral,  except
to the extent the validity  thereof is being  contested in good faith;  provided
that Pledgor shall in any event pay such taxes, assessments,  charges, levies or
claims not later than five days prior to the date of any proposed sale under any
judgement, writ or warrant of attachment entered or filed against Pledgor or any
of the Pledged Collateral as a result of the failure to make such payment.

     SECTION 6. Further Assurances; Pledge Amendments.

     (a)  Pledgor  agrees  that from time to time,  at the  expense of  Pledgor,
Pledgor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or reasonably  desirable,  or
that Secured Party may reasonably  request,  in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable Secured
Party to exercise and enforce its rights and remedies  hereunder with respect to
any Pledged  Collateral.  Without  limiting  the  generality  of the  foregoing,
Pledgor will: (i) execute and file such financing or continuation statements, or
amendments  thereto,  and such other instruments or notices, as may be necessary
or reasonably desirable, or as Secured Party may reasonably request, in order to
perfect and preserve the security  interests  granted or purported to be granted
hereby and (ii) at Secured Party's reasonable request,  appear in and defend any
action or  proceeding  that may affect  Pledgor's  title to or  Secured  Party's
security interest in all or any part of the Pledged  Collateral.  Pledgor hereby
authorizes  Secured  Party  to  file  one  or  more  financing  or

                                       4
<PAGE>

continuation  statements,  and amendments  thereto,  relative to all or any
part of the Pledged Collateral.

     (b) Pledgor  further  agrees that it will,  upon  obtaining any  additional
membership  interests or other  securities  required to be pledged  hereunder as
provided in Section 5(b),  promptly (and in any event within five Business Days)
deliver to Secured  Party a Pledge  Amendment,  duly  executed  by  Pledgor,  in
substantially the form of Schedule I annexed hereto (a "Pledge  Amendment"),  in
respect of the  additional  Pledged  Interests  to be pledged  pursuant  to this
Agreement.  Upon each  delivery  of a Pledge  Amendment  to Secured  Party,  the
representations and warranties  contained in Section 4 hereof shall be deemed to
have been made by Pledgor as to the Pledged Collateral  described in such Pledge
Amendment.  Pledgor  hereby  authorizes  Secured  Party to  attach  each  Pledge
Amendment to this Agreement and agrees that all Pledged  Interests listed on any
Pledge Amendment  delivered to Secured Party shall for all purposes hereunder be
considered Pledged Collateral; provided that the failure of Pledgor to execute a
Pledge  Amendment  with  respect to any  additional  Pledged  Interests  pledged
pursuant to this  Agreement  shall not impair the  security  interest of Secured
Party therein or otherwise  adversely  affect the rights and remedies of Secured
Party hereunder with respect thereto.

     SECTION 7. Voting Rights; Dividends; Etc.

     (a) So long as no Event of Default shall have occurred and be continuing:

     (i) Pledgor  shall be  entitled  to  exercise  any and all voting and other
consensual rights  pertaining to the Pledged  Collateral or any part thereof for
any  purpose  not  inconsistent   with  the  terms  of  this  Agreement  or  the
Subordinated Note Agreement;  provided, however, that Pledgor shall not exercise
or refrain from  exercising  any such right if Secured Party shall have notified
Pledgor that,  in Secured  Party's  judgment,  such action would have a material
adverse effect on the value of the Pledged  Collateral or any part thereof;  and
provided,  further,  that Pledgor shall give Secured Party at least two Business
Days' prior written notice of the manner in which it intends to exercise, or the
reasons for refraining  from  exercising,  any such right (it being  understood,
however,  that neither (A) the voting by Pledgor of any Pledged Interests for or
Pledgor's  consent to the election of directors at a regularly  scheduled annual
or other  meeting of members or with respect to  incidental  matters at any such
meeting,  nor (B)  Pledgor's  consent to or  approval  of any  action  otherwise
permitted  under this Agreement and the  Subordinated  Note  Agreement  shall be
deemed  inconsistent  with the terms of this Agreement or the Subordinated  Note
Agreement within the meaning of this Section 7(a)(i),  and no notice of any such
voting or consent need be given to Secured Party);

     (ii) Pledgor  shall be entitled to receive and retain,  and to utilize free
and  clear  of the  lien  of  this  Agreement,  any  and  all  dividends,  other
distributions and interest paid in respect of the Pledged Collateral;  provided,
however, that any and all

     (A) dividends,  other distributions and interest paid or payable other than
in cash in respect of, and instruments and other property  received,

                                       5

<PAGE>

receivable or otherwise  distributed in respect of, or in exchange for, any
Pledged Collateral,

     (B) dividends and other distributions paid or payable in cash in respect of
any Pledged  Collateral in  connection  with a partial or total  liquidation  or
dissolution  or in connection  with a reduction of capital,  capital  surplus or
paid-in-surplus, and

     (C) cash paid, payable or otherwise  distributed in respect of principal or
in redemption of or in exchange for any Pledged Collateral,

     shall be, and shall  forthwith be  delivered  to Secured  Party to hold as,
Pledged  Collateral and shall, if received by Pledgor,  be received in trust for
the benefit of Secured Party,  be segregated from the other property or funds of
Pledgor and be forthwith delivered to Secured Party as Pledged Collateral in the
same form as so received (with all necessary indorsements); and

     (iii)  Secured  Party  shall  promptly  execute and deliver (or cause to be
executed and delivered) to Pledgor all such proxies, dividend payment orders and
other  instruments as Pledgor may from time to time  reasonably  request for the
purpose of enabling Pledgor to exercise the voting and other  consensual  rights
which it is entitled to exercise  pursuant to paragraph (i) above and to receive
the dividends,  other distributions,  principal or interest payments which it is
authorized to receive and retain pursuant to paragraph (ii) above.

     (b) After the  occurrence and only during the  continuation  of an Event of
Default:

     (i) upon  written  notice  from  Secured  Party to  Pledgor,  all rights of
Pledgor  to  exercise  the voting and other  consensual  rights  that they would
otherwise be entitled to exercise  pursuant to Section 7(a)(i) shall cease,  and
all such  rights  shall  thereupon  become  vested  in  Secured  Party who shall
thereupon  have the sole right to  exercise  such  voting  and other  consensual
rights;

     (ii) all rights of Pledgor to receive the  dividends,  other  distributions
and interest  payments  that they would  otherwise be  authorized to receive and
retain  pursuant to Section  7(a)(ii)  shall  cease,  and all such rights  shall
thereupon become vested in Secured Party who shall thereupon have the sole right
to receive and hold as Pledged  Collateral such dividends,  other  distributions
and interest payments; and

     (iii) all dividends,  principal,  interest payments and other distributions
which are received by Pledgor  contrary to the  provisions of paragraph  (ii) of
this Section  7(b) shall be received in trust for the benefit of Secured  Party,
shall be segregated from other funds of Pledgor and shall forthwith be paid over
to Secured Party as Pledged Collateral in the same form as so received (with any
necessary indorsements).

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<PAGE>

     (c) In order to permit  Secured  Party to  exercise  the  voting  and other
consensual  rights  that it may be  entitled  to  exercise  pursuant  to Section
7(b)(i) and to receive all  dividends  and other  distributions  which it may be
entitled to receive  under  Section  7(a)(ii) or Section  7(b)(ii),  (i) Pledgor
shall  promptly  execute and deliver (or cause to be executed and  delivered) to
Secured Party all such proxies, dividend payment orders and other instruments as
Secured Party may from time to time reasonably request and (ii) without limiting
the effect of the  immediately  preceding  clause (i),  Pledgor hereby grants to
Secured Party an irrevocable proxy to vote the Pledged Interests and to exercise
all other  rights,  powers,  privileges  and  remedies  to which a holder of the
Pledged Interests would be entitled  (including,  without limitation,  giving or
withholding written consents of members, calling special meetings of members and
voting at such  meetings),  which proxy shall be  effective,  automatically  and
without  the  necessity  of any action  (including  any  transfer of any Pledged
Interests on the record books of the Issuer) by any other Person  (including the
Issuer or any officer or agent  thereof),  after the  occurrence and only during
the  continuation  of an Event of Default and which  proxy shall only  terminate
upon the payment in full of the Secured Obligations.

     SECTION  8.  Secured  Party  Appointed  Attorney-in-Fact.   Pledgor  hereby
irrevocably  appoints  Secured  Party as Pledgor's  attorney-in-fact,  with full
authority in the place and stead of Pledgor and in the name of Pledgor,  Secured
Party or otherwise,  from time to time in Secured Party's discretion to take any
action and to execute any  instrument  that Secured Party may deem  necessary or
advisable  to  accomplish  the  purposes of this  Agreement,  including  without
limitation:

     (a) to file one or more financing or continuation statements, or amendments
thereto, relative to all or any part of the Pledged Collateral;

     (b) after the  occurrence  and only during the  continuance  of an Event of
Default, to ask, demand, collect, sue for, recover,  compound,  receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Pledged Collateral;

     (c) after the  occurrence  and only during the  continuance  of an Event of
Default, to receive, endorse and collect any instruments made payable to Pledgor
representing  any  dividend  or other  distribution  in respect  of the  Pledged
Collateral or any part thereof and to give full discharge for the same;

     (d) after the  occurrence  and only during the  continuance  of an Event of
Default, to file any claims or take any action or institute any proceedings that
Secured Party may deem  necessary or desirable for the  collection of any of the
Pledged  Collateral  or  otherwise  to enforce the rights of Secured  Party with
respect to any of the Pledged Collateral;

     (e) to pay or discharge  taxes or Liens (other than Liens  permitted  under
this  Agreement or the  Subordinated  Note  Agreement)  levied or placed upon or
threatened against the Pledged Collateral,  the legality or validity thereof and
the amounts necessary to discharge the same to be determined by Secured Party in
its  sole  discretion,  any  such

                                       7

<PAGE>

payments made by Secured Party to become  obligations of Pledgor to Secured
Party, due and payable immediately without demand; and

     (f) after the  occurrence  and only during the  continuance  of an Event of
Default, generally to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of the Pledged  Collateral as fully and completely as
though  Secured Party were the absolute  owner thereof for all purposes,  and to
do, at Secured Party's option and Pledgor's expense, at any time or from time to
time,  all acts and things  that  Secured  Party  deems  necessary  to  protect,
preserve or realize upon the Pledged  Collateral  and Secured  Party's  security
interest  therein in order to effect the intent of this Agreement,  all as fully
and effectively as Pledgor might do.

     SECTION 9.  Secured  Party May  Perform.  If Pledgor  fails to perform  any
agreement  contained  herein,   Secured  Party  may  itself  perform,  or  cause
performance  of, such  agreement,  and the expenses of Secured Party incurred in
connection therewith shall be payable by Pledgor under Section 13(b).

     SECTION  10.  Standard  of Care.  The powers  conferred  on  Secured  Party
hereunder are solely to protect its interest in the Pledged Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable  care in the custody of any Pledged  Collateral in its  possession
and the accounting for moneys actually  received by it hereunder,  Secured Party
shall  have no duty as to any  Pledged  Collateral,  it  being  understood  that
Secured Party shall have no responsibility for (a) ascertaining or taking action
with  respect to calls,  conversions,  exchanges,  maturities,  tenders or other
matters relating to any Pledged Collateral,  whether or not Secured Party has or
is deemed to have  knowledge of such  matters,  (b) taking any  necessary  steps
(other than steps taken in accordance  with the standard of care set forth above
to maintain possession of the Pledged Collateral) to preserve rights against any
prior  parties or any other rights  pertaining  to any Pledged  Collateral,  (c)
taking any necessary steps to collect or realize upon the Secured Obligations or
any guarantee  therefor,  or any part thereof, or any of the Pledged Collateral,
or (d)  initiating  any action to protect  the  Pledged  Collateral  against the
possibility of a decline in market value.  Secured Party shall be deemed to have
exercised  reasonable care in the custody and preservation of Pledged Collateral
in its possession if such Pledged Collateral is accorded treatment substantially
equal to that  which  Secured  Party  accords  its own  property  consisting  of
negotiable securities.

     SECTION 11. Remedies.

     (a) If any Event of Default shall have occurred and be continuing,  Secured
Party may  exercise  in respect of the  Pledged  Collateral,  in addition to all
other rights and remedies provided for herein or otherwise  available to it, all
the rights and remedies of a secured  party on default under the UCC (whether or
not the UCC applies to the affected Pledged  Collateral),  and Secured Party may
also in its sole discretion,  without notice except as specified below, sell the
Pledged  Collateral  or any part  thereof  in one or more  parcels  at public or
private  sale,  at any exchange or broker's  board or at any of Secured  Party's
offices or elsewhere,  for cash, on credit or for future delivery,  at such time
or times and at such price or prices and upon such other terms as Secured  Party
may deem commercially  reasonable,

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<PAGE>

irrespective  of the impact of any such  sales on the  market  price of the
Pledged  Collateral.  Secured Party or any Holder may be the purchaser of any or
all of the Pledged  Collateral at any such sale, and Secured Party, as agent for
and  representative  of Holders (but not any Holder in its  individual  capacity
unless Investor and the Holders of a majority in outstanding principal amount of
the Notes shall otherwise agree in writing),  shall be entitled, for the purpose
of bidding and making settlement or payment of the purchase price for all or any
portion of the Pledged Collateral sold at any such public sale, to use and apply
any of the Secured  Obligations as a credit on account of the purchase price for
any Pledged  Collateral payable by Secured Party at such sale. Each purchaser at
any such sale shall hold the  property  sold  absolutely  free from any claim or
right on the part of Pledgor, and Pledgor hereby waives (to the extent permitted
by applicable law) all rights of redemption,  stay and/or appraisal which it now
has or may at any time in the future  have under any rule of law or statute  now
existing or hereafter enacted. Pledgor agrees that, to the extent notice of sale
shall be required  by law, at least ten days'  notice to Pledgor of the time and
place of any public sale or the time after which any private  sale is to be made
shall constitute reasonable  notification.  Secured Party shall not be obligated
to make any sale of Pledged Collateral  regardless of notice of sale having been
given. Secured Party may adjourn any public or private sale from time to time by
announcement  at the time and place fixed therefor,  and such sale may,  without
further  notice,  be made at the  time and  place to which it was so  adjourned.
Pledgor hereby waives any claims against  Secured Party arising by reason of the
fact that the price at which any Pledged Collateral may have been sold at such a
private sale was less than the price which might have been  obtained at a public
sale,  even if Secured Party accepts the first offer received and does not offer
such Pledged Collateral to more than one offeree.

     (b) Anything  contained in this Agreement to the contrary  notwithstanding,
if the proceeds of any sale or other  disposition of the Pledged  Collateral are
insufficient to pay all the Secured Obligations, Pledgor shall not be liable for
the deficiency.

     (c) Pledgor recognizes that, by reason of certain prohibitions contained in
the Securities Act and applicable state  securities  laws,  Secured Party may be
compelled, with respect to any sale of all or any part of the Pledged Collateral
conducted without prior registration or qualification of such Pledged Collateral
under the Securities Act and/or such state  securities laws, to limit purchasers
to those who will agree,  among other things, to acquire the Pledged  Collateral
for their own account, for investment and not with a view to the distribution or
resale  thereof.  Pledgor  acknowledges  that any such  private  sales may be at
prices and on terms less favorable than those  obtainable  through a public sale
without such restrictions (including, without limitation, a public offering made
pursuant  to  a  registration   statement   under  the   Securities   Act)  and,
notwithstanding  such circumstances,  Pledgor agrees that any such private sale,
if otherwise conducted in a commercially  reasonable manner,  shall be deemed to
have been made in a commercially  reasonable manner and that Secured Party shall
have no obligation to engage in public sales and no obligation to delay the sale
of any Pledged  Collateral for the period of time necessary to permit the Issuer
to  register  it for a form of  public  sale  requiring  registration  under the
Securities Act or under  applicable  state  securities  laws, even if the Issuer
would, or should, agree to so register it.

     (d) If Secured Party determines to exercise its right to sell any or all of
the Pledged Collateral,  upon written request, Pledgor shall and shall cause the
Issuer  from time to

                                       9

<PAGE>

time to furnish to Secured Party all such  information as Secured Party may
request in order to  determine  the  number of  membership  interests  and other
instruments  included  in the  Pledged  Collateral  which may be sold by Secured
Party  in  exempt  transactions  under  the  Securities  Act and the  rules  and
regulations of the Securities and Exchange  Commission  thereunder,  as the same
are from time to time in effect.

     SECTION 12. Application of Proceeds. Except as expressly provided elsewhere
in this Agreement, all proceeds received by Secured Party in respect of any sale
of, collection from, or other realization upon all or any part of the Collateral
shall be applied in the following order of priority:

     FIRST: To the payment of all costs and expenses of such sale, collection or
other realization,  including  reasonable  compensation to Secured Party and its
agents and counsel,  and all other  expenses,  liabilities  and advances made or
incurred by Secured  Party in  connection  therewith,  and all amounts for which
Secured Party is entitled to indemnification  hereunder and all advances made by
Secured Party  hereunder  for the account of Pledgor,  and to the payment of all
costs and  expenses  paid or incurred by Secured  Party in  connection  with the
exercise of any right or remedy hereunder;

     SECOND:  To the payment of all other Secured  Obligations  (for the ratable
benefit of the holders thereof), and

     THIRD: To the payment to or upon the order of Pledgor,  or to whosoever may
be lawfully entitled to receive the same or as a court of competent jurisdiction
may direct, of any surplus then remaining from such proceeds.

     SECTION 13. Indemnity and Expenses.

     (a)  Pledgor  agrees to  indemnify  Secured  Party and each Holder from and
against any and all  claims,  losses and  liabilities  in any way  relating  to,
growing  out  of  or  resulting  from  this   Agreement  and  the   transactions
contemplated  hereby  (including,   without  limitation,   enforcement  of  this
Agreement),  except to the extent  such  claims,  losses or  liabilities  result
solely  from  Secured  Party's  or such  Holder's  gross  negligence  or willful
misconduct as finally determined by a court of competent jurisdiction.

     (b)  Pledgor  agrees to pay to Secured  Party upon demand the amount of any
and all costs and expenses,  including the  reasonable  fees and expenses of its
counsel  and of any  experts  and  agents,  that  Secured  Party  may  incur  in
connection  with (i) the  preservation  or sale of,  collection  from,  or other
realization  upon,  any  of  the  Pledged  Collateral,   (ii)  the  exercise  or
enforcement  of any of the  rights  of  Secured  Party  hereunder,  or (iii) the
failure by Pledgor to perform or observe any of the provisions hereof.

     (c) The  obligations  of  Pledgor  in this  Section  13 shall  survive  the
termination of this Agreement and the discharge of Pledgor's  other  obligations
under  this  Agreement,  the  Investment  Agreement  and the  Subordinated  Note
Agreement.

                                       10

<PAGE>

     SECTION 14. Continuing Security Interest; Transfer of Loans. This Agreement
shall create a continuing  security interest in the Pledged Collateral and shall
(a)  remain in full force and effect  until the  payment in full of all  Secured
Obligations,  (b) be binding upon Pledgor,  its successors and assigns,  and (c)
inure, together with the rights and remedies of Secured Party hereunder,  to the
benefit of Secured Party and its successors,  transferees  and assigns.  Without
limiting  the  generality  of the  foregoing  clause  (c),  but  subject  to the
provisions of Section 2.04 of the  Subordinated  Note Agreement,  any Holder may
assign or otherwise  transfer any Note held by it to any other Person,  and such
other  Person  shall  thereupon  become  vested with all the benefits in respect
thereof granted to Holders herein or otherwise.  Upon the payment in full of all
Secured  Obligations,  the security  interest granted hereby shall terminate and
all rights to the Pledged  Collateral  shall  revert to  Pledgor.  Upon any such
termination  Secured  Party will, at Pledgor's  expense,  execute and deliver to
Pledgor such  documents as Pledgor  shall  reasonably  request to evidence  such
termination.

     SECTION 15. Secured Party as Agent.

     (a) Secured Party has been  appointed to act as Secured Party  hereunder by
Holders.  Secured Party shall be obligated,  and shall have the right hereunder,
to make demands,  to give notices,  to exercise or refrain from  exercising  any
rights,  and to take or  refrain  from  taking  any  action  (including  without
limitation  the  release  or  substitution  of  Pledged  Collateral),  solely in
accordance with this Agreement and the  Subordinated  Note  Agreement;  provided
that Secured  Party shall  exercise,  or refrain from  exercising,  any remedies
provided for in Section 11 in accordance  with the  instructions of the Investor
and the Holders of a majority in outstanding principal amount of the Notes.

     (b) In the event Investor  desires to resign as Secured Party, the Investor
and the Holders of a majority in outstanding principal amount of the Notes shall
appoint a successor  Secured Party.  Upon the  acceptance of any  appointment as
Secured Party by a successor  Secured Party,  that successor Secured Party shall
thereupon succeed to and become vested with all the rights,  powers,  privileges
and duties of the retiring Secured Party under this Agreement,  and the retiring
Secured Party under this Agreement shall promptly (i) transfer to such successor
Secured Party all sums,  securities and other items of Pledged  Collateral  held
hereunder,   together  with  all  records  and  other  documents   necessary  or
appropriate  in connection  with the  performance of the duties of the successor
Secured  Party  under  this  Agreement,  and (ii)  execute  and  deliver to such
successor Secured Party such amendments to financing  statements,  and take such
other  actions,  as may be  necessary  or  appropriate  in  connection  with the
assignment to such  successor  Secured Party of the security  interests  created
hereunder,  whereupon such retiring  Secured Party shall be discharged  from its
duties and obligations under this Agreement.  After any retiring Secured Party's
resignation  hereunder as Secured Party,  the provisions of this Agreement shall
inure to its benefit as to any actions  taken or omitted to be taken by it under
this Agreement while it was Secured Party hereunder.

     SECTION 16.  Amendments;  Etc. No amendment,  modification,  termination or
waiver of any  provision of this  Agreement,  and no consent to any departure by
Pledgor  therefrom,  shall in any event be effective unless the same shall be in
writing and

                                       11

<PAGE>

signed  by  Secured  Party  and,  in the  case  of any  such  amendment  or
modification,  by Pledgor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.

     SECTION 17. Notices.  Any notice or other communication  herein required or
permitted to be given shall be in writing and may be  personally  served or sent
by telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service,  upon receipt of
telefacsimile,  or three Business Days after  depositing it in the United States
mail with  postage  prepaid and  properly  addressed;  provided  that notices to
Secured Party shall not be effective  until received.  For the purposes  hereof,
the address of each party  hereto  shall be as set forth under such party's name
on the signature pages hereof or as such other address as shall be designated by
such party in a written notice delivered to the other party hereto.

     SECTION 18.  Failure or  Indulgence  Not Waiver;  Remedies  Cumulative.  No
failure  or delay on the part of  Secured  Party in the  exercise  of any power,
right or privilege  hereunder shall impair such power,  right or privilege or be
construed to be a waiver of any default or acquiescence  therein,  nor shall any
single or partial  exercise of any such power,  right or privilege  preclude any
other or further exercise thereof or of any other power, right or privilege. All
rights and remedies  existing  under this  Agreement are  cumulative to, and not
exclusive of, any rights or remedies otherwise available.

     SECTION 19. Severability. In case any provision in or obligation under this
Agreement shall be invalid,  illegal or unenforceable in any  jurisdiction,  the
validity,   legality  and   enforceability   of  the  remaining   provisions  or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.

     SECTION 20. Headings. Section and subsection headings in this Agreement are
included  herein for  convenience  of reference  only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.

     SECTION  21.  Governing  Law;  Terms.  THIS  AGREEMENT  AND THE  RIGHTS AND
OBLIGATIONS  OF THE  PARTIES  HEREUNDER  SHALL  BE  GOVERNED  BY,  AND  SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW  YORK),  WITHOUT  REGARD TO  CONFLICTS  OF LAWS  PRINCIPLES,
EXCEPT TO THE EXTENT THAT THE UCC PROVIDES  THAT THE  PERFECTION OF THE SECURITY
INTEREST HEREUNDER,  OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED
COLLATERAL  ARE GOVERNED BY THE LAWS OF A  JURISDICTION  OTHER THAN THE STATE OF
NEW YORK. Unless otherwise defined herein or in the Subordinated Note Agreement,
terms used in  Articles 8 and 9 of the Uniform  Commercial  Code in the State of
New York are used herein as therein defined. The rules of construction set forth
in Section 1.03 of the  Subordinated  Note Agreement shall be applicable to this
Agreement mutatis mutandis.

                                       12

<PAGE>

     SECTION 22. Consent to  Jurisdiction  and Service of Process.  ALL JUDICIAL
PROCEEDINGS  BROUGHT  AGAINST  PLEDGOR  ARISING  OUT  OF  OR  RELATING  TO  THIS
AGREEMENT, OR ANY OBLIGATIONS HEREUNDER,  MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT  JURISDICTION  IN THE STATE , COUNTY AND CITY OF NEW YORK. BY
EXECUTING AND DELIVERING THIS AGREEMENT,  PLEDGOR,  FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES,  IRREVOCABLY (I) ACCEPTS GENERALLY AND  UNCONDITIONALLY THE
NONEXCLUSIVE  JURISDICTION AND VENUE OF SUCH COURTS;  (II) WAIVES ANY DEFENSE OF
FORUM NON  CONVENIENS;  (III)  AGREES  THAT  SERVICE OF ALL  PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO PLEDGOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION
17; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS  SUFFICIENT TO
CONFER  PERSONAL  JURISDICTION  OVER PLEDGOR IN ANY SUCH  PROCEEDING IN ANY SUCH
COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT SECURED  PARTY  RETAINS THE RIGHT TO SERVE  PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST PLEDGOR IN THE COURTS OF
ANY OTHER  JURISDICTION;  AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 22
RELATING  TO  JURISDICTION  AND VENUE SHALL BE BINDING  AND  ENFORCEABLE  TO THE
FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402
OR OTHERWISE.

     SECTION 23. Waiver of Jury Trial. PLEDGOR AND SECURED PARTY HEREBY AGREE TO
WAIVE  THEIR  RESPECTIVE  RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED  UPON OR  ARISING  OUT OF THIS  AGREEMENT.  The  scope of this  waiver  is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that  relate to the  subject  matter  of this  transaction,  including
without limitation contract claims, tort claims,  breach of duty claims, and all
other common law and statutory  claims.  Pledgor and Secured  Party  acknowledge
that this waiver is a material inducement for Pledgor and Secured Party to enter
into a business relationship, that Pledgor and Secured Party have already relied
on this waiver in entering  into this  Agreement  and that each will continue to
rely on this waiver in their related future dealings.  Pledgor and Secured Party
further  warrant and represent that each has reviewed this waiver with its legal
counsel,  and that each knowingly and  voluntarily  waives its jury trial rights
following  consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,  MEANING
THAT IT MAY NOT BE MODIFIED  EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL
WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 23 AND EXECUTED BY EACH OF
THE PARTIES HERETO),  AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT  AMENDMENTS,
RENEWALS,  SUPPLEMENTS  OR  MODIFICATIONS  TO THIS  AGREEMENT.  In the  event of
litigation,  this Agreement may be filed as a written  consent to a trial by the
court.

     SECTION 24.  Counterparts.  This  Agreement  may be executed in one or more
counterparts and by different parties hereto in separate  counterparts,  each of
which when so executed and delivered  shall be deemed an original,  but all such
counterparts

                                       13

<PAGE>

together shall constitute but one and the same instrument;  signature pages
may be detached from  multiple  separate  counterparts  and attached to a single
counterpart  so that all  signature  pages are  physically  attached to the same
document.

     SECTION 25. Suretyship Waivers by Pledgor, etc.

     (a)  Pledgor  agrees  that  its  obligations   hereunder  are  irrevocable,
absolute,  independent  and  unconditional  and  shall  not be  affected  by any
circumstance which constitutes a legal or equitable  discharge of a guarantor or
surety other than payment in full of the Secured Obligations.  In furtherance of
the foregoing and without  limiting the  generality  thereof,  Pledgor agrees as
follows:  (i)  Secured  Party,  Investor  or any  Holder  may from time to time,
without notice or demand and without affecting the validity or enforceability of
this  Agreement  or giving rise to any  limitation,  impairment  or discharge of
Pledgor's liability hereunder, (A) renew, extend, accelerate or otherwise change
the time,  place,  manner or terms of payment of the  Secured  Obligations,  (B)
settle,  compromise,  release  or  discharge,  or accept or refuse  any offer of
performance  with respect to, or substitutions  for, the Secured  Obligations or
any agreement relating thereto and/or subordinate the payment of the same to the
payment of any other  obligations,  (C)  request  and accept  guaranties  of the
Secured  Obligations  and take and hold other  security  for the  payment of the
Secured Obligations, (D) release, exchange,  compromise,  subordinate or modify,
with or without  consideration,  any other  security  for payment of the Secured
Obligations,  any guaranties of the Secured Obligations, or any other obligation
of any Person with respect to the Secured Obligations, (E) enforce and apply any
other  security now or hereafter  held by or for the benefit of Secured Party or
Investor  or any  Holder in respect of the  Secured  Obligations  and direct the
order or manner of sale  thereof,  or  exercise  any other  right or remedy that
Secured  Party,  Investor or Holders,  or any of them, may have against any such
security,  as Secured Party in its discretion may determine  consistent with the
Subordinated  Note Agreement and any applicable  security  agreement,  including
foreclosure on any such security pursuant to one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially  reasonable,
and (F)  exercise  any other  rights  available  to Secured  Party,  Investor or
Holders, or any of them, under the Investment  Agreement,  the Subordinated Note
Agreement  and the  Collateral  Agreements,  at law or in equity;  and (ii) this
Agreement  and  the  obligations  of  Pledgor   hereunder  shall  be  valid  and
enforceable and shall not be subject to any limitation,  impairment or discharge
for  any  reason  (other  than  payment  in full  of the  Secured  Obligations),
including without limitation the occurrence of any of the following,  whether or
not Pledgor  shall have had notice or knowledge of any of them:  (A) any failure
to assert or  enforce  or  agreement  not to assert or  enforce,  or the stay or
enjoining,  by order of court, by operation of law or otherwise, of the exercise
or  enforcement  of,  any  claim or demand or any  right,  power or remedy  with
respect to the Secured  Obligations or any agreement  relating thereto,  or with
respect to any  guaranty  of or other  security  for the  payment of the Secured
Obligations,  (B) any waiver,  amendment or  modification  of, or any consent to
departure  from, any of the terms or provisions  (including  without  limitation
provisions  relating  to events of  default) of the  Investment  agreement,  the
Subordinated Note Agreement,  any of the Collateral  Agreements or any agreement
or instrument  executed pursuant  thereto,  or of any guaranty or other security
for the Secured  Obligations,  (C) the  Secured  Obligations,  or any  agreement
relating  thereto,   at  any  time  being  found  to  be  illegal,   invalid  or
unenforceable in any respect,  (D) the application of payments received from any

                                       14

<PAGE>

source to the payment of indebtedness other than the Secured  Obligations,  even
though Secured Party, Investor or Holders, or any of them, might have elected to
apply  such  payment  to any  part or all of the  Secured  Obligations,  (E) any
failure to perfect or continue  perfection  of a security  interest in any other
collateral  which  secures any of the  Secured  Obligations,  (F) any  defenses,
set-offs or  counterclaims  which Company may allege or assert  against  Secured
Party,  Investor or any Holder in respect of the Secured Obligations,  including
but not  limited to  failure  of  consideration,  breach of  warranty,  payment,
statute of frauds,  statute of limitations,  accord and  satisfaction and usury,
and (G) any  other  act or thing or  omission,  or delay to do any  other act or
thing,  which  may or  might in any  manner  or to any  extent  vary the risk of
Pledgor as an obligor in respect of the Secured Obligations.

     (b) Pledgor hereby waives, for the benefit of Holders, Investor and Secured
Party:  (i) any right to  require  Secured  Party,  Holders  or  Investor,  as a
condition of payment or performance by Pledgor,  to (A) proceed against Company,
any  guarantor  of the  Secured  Obligations  or any other  Person,  (B) proceed
against or exhaust any other  security held from  Company,  any guarantor of the
Secured  Obligations or any other Person,  (C) proceed against or have resort to
any  balance of any  deposit  account  or credit on the books of Secured  Party,
Investor  or any Holder in favor of Company or any other  Person,  or (D) pursue
any  other  remedy  in the  power  of  Secured  Party,  Investor  or any  Holder
whatsoever;  (ii) any  defense  arising  by  reason of the  incapacity,  lack of
authority  or any  disability  or other  defense of Company  including,  without
limitation,  any defense  based on or arising out of the lack of validity or the
unenforceability  of the Secured  Obligations  or any  agreement  or  instrument
relating  thereto or by reason of the cessation of the liability of Company from
any cause  other than  payment  in full of the  Secured  Obligations;  (iii) any
defense based upon any statute or rule of law which provides that the obligation
of a  surety  must be  neither  larger  in  amount  nor in other  respects  more
burdensome  than that of the  principal;  (iv) any  defense  based upon  Secured
Party's, Investor's or any Holder's errors or omissions in the administration of
the Secured Obligations, except behavior which amounts to bad faith; (v) (A) any
principles or provisions of law,  statutory or otherwise,  which are or might be
in  conflict  with  the  terms of this  Agreement  and any  legal  or  equitable
discharge of Pledgor's obligations hereunder,  (B) the benefit of any statute of
limitations  affecting  Pledgor's liability hereunder or the enforcement hereof,
(C) any rights to set-offs,  recoupments and counterclaims,  and (D) promptness,
diligence  and any  requirement  that  Secured  Party,  Investor  or any  Holder
protect,  secure,  perfect or insure any other security  interest or lien or any
property subject thereto; (vi) notices, demands, presentments, protests, notices
of protest,  notices of dishonor and notices of any action or inaction,  notices
of default under the Investment  Agreement or the Subordinated Note Agreement or
any agreement or instrument related thereto,  notices of any renewal,  extension
or modification  of the Secured  Obligations or any agreement  related  thereto,
notices of any  extension of credit to Company and notices of any of the matters
referred to in Section 25(a) and any right to consent to any thereof;  and (vii)
to the fullest  extent  permitted by law,  any defenses or benefits  that may be
derived  from or  afforded  by law which  limit the  liability  of or  exonerate
guarantors or sureties, or which may conflict with the terms of this Agreement.

     (c) Until the  Secured  Obligations  shall have been paid in full,  Pledgor
shall withhold exercise of (i) any claim,  right or remedy,  direct or indirect,
that Pledgor now has or may hereafter have against  Company or any of its assets
in  connection  with  this

                                       15

<PAGE>

Agreement or the  performance by Pledgor of its obligations  hereunder,  in
each case whether such claim, right or remedy arises in equity,  under contract,
by statute,  under common law or otherwise and including without  limitation (A)
any right of subrogation,  reimbursement or indemnification that Pledgor now has
or may  hereafter  have  against  Company,  (B)  any  right  to  enforce,  or to
participate in, any claim,  right or remedy that Secured Party,  Investor or any
Holder now has or may hereafter  have against  Company,  and (C) any benefit of,
and any  right to  participate  in,  any other  collateral  or  security  now or
hereafter held by Secured Party,  Investor or any Holder,  and (ii) any right of
contribution  Pledgor  may have  against  any  guarantor  of any of the  Secured
Obligations. Pledgor further agrees that, to the extent the waiver of its rights
of subrogation,  reimbursement,  indemnification  and  contribution as set forth
herein is found by a court of competent  jurisdiction to be void or voidable for
any reason, any rights of subrogation,  reimbursement or indemnification Pledgor
may have against  Company or against any other  collateral or security,  and any
rights of  contribution  Pledgor may have against any such  guarantor,  shall be
junior and subordinate to any rights Secured Party, Investor or Holders may have
against Company,  to all right,  title and interest  Secured Party,  Investor or
Holders  may have in any such other  collateral  or  security,  and to any right
Secured Party, Investor or Holders may have against any such guarantor.

     (d)  Holders,  Investor  and  Secured  Party  shall have no  obligation  to
disclose or discuss with Pledgor their assessment,  Pledgor's assessment, of the
financial condition of Company. Pledgor has adequate means to obtain information
from Company on a continuing basis concerning the financial condition of Company
and its ability to perform its obligations under the Investment  Agreement,  the
Subordinated Note Agreement and the Collateral  Agreements,  and Pledgor assumes
the responsibility for being and keeping informed of the financial  condition of
Company and of all  circumstances  bearing  upon the risk of  nonpayment  of the
Secured Obligations. Pledgor hereby waives and relinquishes any duty on the part
of Secured Party,  Investor or any Holder to disclose any matter,  fact or thing
relating  to the  business,  operations  or  condition  of Company  now known or
hereafter known by Secured Party, Investor or any Holder.









                                       16

<PAGE>


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

                              CRIIMI NEWCO MEMBER, INC.


                              /s/David B. Iannarone
                              ---------------------------------
                              Name:  David B. Iannarone
                              Title:  Executive Vice President


                              Notice Address for Pledgor:

                              CRIIMI Newco Member, Inc.
                              c/o CRIIMI MAE Inc.
                              11200 Rockville Pike
                              Rockville, Maryland  20852
                              Telecopier No.:  (301) 231-0334
                              Attention:  Chief Financial Officer


                              BRASCAN REAL ESTATE FINANCE
                              FUND I, L.P.


                              /s/William M. Powell
                              --------------------------------
                              Name:  William M. Powell
                              Title:  Secretary and Treasurer


                              Notice Address for Secured Party:

                              Brascan Real Estate Finance Fund I, L.P.
                              c/o Brascan Real Estate Financial Investments LLC
                              One Liberty Plaza
                              New York, New York 10006
                              Telecopier No.:  (212) 417-7292
                              Attention:  Barry Blattman, Managing Partner


                                      S-1

<PAGE>


                                   SCHEDULE I

Attached to and forming a part of the Pledge  Agreement dated as of January
14, 2003 among CRIIMI NEWCO MEMBER,  Inc.,  as Pledgor,  and Brascan Real Estate
Finance Fund I, L.P., as Secured Party.


<TABLE>
<CAPTION>
--------------------------- ----------------------- ------------------ ------------ -------------- -------------------
                                    Class                 Stock            Par        Number of      Percentage of
                              of Stock or Equity    Certificate Nos.      Value        Shares         Outstanding
          Issuer                   Interest                                                          Shares Pledged
=========================== ======================= ================== ============ ============== ===================
<S>                         <C>                     <C>                <C>          <C>            <C>
--------------------------- ----------------------- ------------------ ------------ -------------- -------------------

--------------------------- ----------------------- ------------------ ------------ -------------- -------------------

--------------------------- ----------------------- ------------------ ------------ -------------- -------------------

</TABLE>








                                 SCHEDULE II-1

<PAGE>


                                   SCHEDULE II


                                PLEDGE AMENDMENT


This Pledge Amendment, dated ____________, 200_, is delivered pursuant to
Section 6(b) of the Pledge Agreement referred to below. The undersigned hereby
agrees that this Pledge Amendment may be attached to the Pledge Agreement dated
January 14, 2003, among CRIIMI NEWCO MEMBER, Inc., as Pledgor, and Brascan Real
Estate Finance Fund I, L.P., as Secured Party (the "Pledge Agreement,"
capitalized terms defined therein being used herein as therein defined), and
that the Pledged Interests listed on this Pledge Amendment shall be deemed to be
part of the Pledged Interests and shall become part of the Pledged Collateral
and shall secure all Secured Obligations.

                                   CRIIMI NEWCO MEMBER, INC.



                                   By: ___________________________
                                   Title:



<TABLE>
<CAPTION>

                      Class of Stock or              Stock Certi-        Par                Number of
Issuer                other equity interests         ficate Nos.         Value                Shares
------                ----------------------         ------------        -----              ---------
<S>                   <C>                            <C>                 <C>                <C>

</TABLE>










                                  SCHEDULE V-1

</TEXT>
</DOCUMENT>
