Document:

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                                                                    Exhibit 10.4

                                                                   Amended as of
                                                                   July 15, 1999

                                 PRINTPACK INC.
                           INCENTIVE COMPENSATION PLAN
                   (CASH ECONOMIC VALUE ADDED [CASH EVA] PLAN)

<TABLE>
<CAPTION>
Section
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<S>          <C>
    1        Cash EVA Plan Statement of Purpose
    2        Definition of Cash EVA and its Components
    3        Definition and Computation of Unit Award Pool
    4        Definition of Award Allocation
    5        Description of Bonus Banks
    6        Cash EVA Plan Transfers and Termination
    7        Performance Share Plan Statement of Purpose and Administration
    8        Certain Definitions Related to Performance Shares
    9        Limitation on Outstanding Performance Shares and Call Provision
   10        Redemption of Performance Shares
   11        Termination of Employment, Disability and Death
   12        Limitations
   13        General Provisions

<CAPTION>
Exhibit
-------

<S>          <C>
   A         Calculation of the Cost of Capital
   B         Calculation of CIP, Severance and Restructuring Charge
   C         Calculation of the Cash EVA Award
   D         Bonus Bank
   E         Purchase of Performance Shares
   F         Calculation of Performance Share Value
</TABLE>

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                                 PRINTPACK INC.
                           INCENTIVE COMPENSATION PLAN
                   (CASH ECONOMIC VALUE ADDED [CASH EVA] PLAN)

1.       CASH EVA PLAN STATEMENT OF PURPOSE

1.1      The purpose of the Plan is to provide a system of incentive
         compensation that will promote the maximization of the Company's market
         value over the long term. In order to align management incentives with
         ownership interests, incentive compensation will reward the creation of
         value. This Plan will tie incentive compensation to Cash Economic Value
         Added ("Cash EVA") and, thereby, reward management for creating value
         and penalize management for destroying value.

1.2      Cash EVA is the performance measure of value creation. Cash EVA
         reflects the benefits and costs of capital employment. Managers create
         value when they employ capital in an endeavor that generates an
         operating profit exceeding the cost of the capital employed. Managers
         destroy value when they employ capital in an endeavor that generates an
         operating profit less than the cost of capital employed. By comparing
         the cost of capital to the operating profits generated by a business
         unit, Cash EVA measures the total value created (or destroyed) by
         management.

                  Cash EVA = Operating Earnings Before Interest, Taxes,
                  Depreciation and Amortization (EBITDA) less the Capital Charge

1.3      For each business unit, a percentage of total management salary and a
         percentage of the change in Cash EVA are summed to create an Award Pool
         for the managers of that unit. That Award Pool is then allocated among
         the individual managers and is deposited in each manager's Bonus Bank.
         A portion of the balance in the Bonus Banks (if it is positive) is then
         paid out in cash as an annual bonus.

2.       DEFINITION OF CASH EVA AND THE COMPONENTS OF CASH EVA

         Unless the context provides a different meaning, the following terms
         shall have the following meanings.

2.1      "Participating Unit" or "Unit" means a business unit or group of
         business units that is uniquely identified for the purpose of
         calculating Cash EVA and Cash EVA based bonus awards.

         The Participating Units for 2000 are defined as follows:

<TABLE>
                  <S>                                <C>
                  Total Company (Worldwide)          U.S. Flexibles
                  Total Company (U.S.)               Labels
                  Confectionery                      Rampart Packaging
</TABLE>

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<TABLE>
                  <S>                                <C>
                  National Account                   Europe
                  Snacks                             Mexico
</TABLE>

         These units may change as the divisional structure of the Company
         changes.

2.2      "Capital" means the total gross investment utilized in the operation of
         each Participating Unit. The components of Capital are as follows:

                        Cash
                  Plus: Net receivables
                  Plus: Inventory
                  Plus: Other current assets (i.e., deposits, prepaids, etc.)
                  Less: Accounts payable
                  Less: Taxes and dividends payable
                  Less: Accrued salaries, wages, benefits and bonuses
                  Plus: Gross fixed assets
                  Plus: Other operating assets
                  Less: Construction-in-progress
                  Plus: Adjustments (if any):
                                 LIFO reserve
                                 Cumulative amortization of goodwill
                                 Cumulative write-offs (before tax)
         NOTES:

                  Non-Interest Bearing Current Liabilities (NIBCL's) do not
                  include the contingent liability associated with Bonus Banks,
                  accrued interest payable, or the current portion of deferred
                  taxes.

2.3      Each component of Capital will be measured by computing an average
         balance based on the ending monthly balance for the twelve months of
         the fiscal year.

2.4      "Cost of Capital" means the weighted average of the before tax cost of
         debt and equity.

         The Cost of Capital will be reviewed annually and revised if it has
         changed significantly. Calculations will be rounded up to one decimal
         point.

         The methodology for the calculation of the Cost of Capital is:

<TABLE>
                        <S>         <C>
                                    Weighted cost of debt
                          Plus:     Weighted cost of equity
                        Equals:     Weighted average Cost of Capital
</TABLE>

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         The cost of equity equals the risk free investment rate plus the
         historical equity market risk premium times our industry's risk index.
         The historical equity market risk premium will be held constant at 6%
         and our industry's unlevered risk index will be held constant at .99.
         This industry risk was determined by a comparison of our publicly
         traded peers and is equivalent to their betas during the period from
         1993 to 1995. The risk free investment rate will be measured using the
         daily average of the yield on twenty year U.S. Treasury Bonds for the
         two months prior to the beginning of each fiscal year. The weighting
         factor for equity will be our target equity percentage of our total
         capitalization.

         The cost of debt equals our marginal long-term borrowing cost. The
         weighting factor for debt will be the target debt percentage of our
         total market capitalization. Our marginal long-term borrowing cost will
         be measured using the daily average of the yield on ten year U.S.
         Treasury Bonds for the two months prior to the beginning of each fiscal
         year plus our market spread over Treasury Bonds in effect for our last
         borrowing prior to the computation.

         See Exhibit A for sample calculation.

2.5      "Capital Charge" means the deemed opportunity cost of employing the
         Capital in the business of each Participating Unit.

         The Capital Charge shall be equal to the Cost of Capital multiplied by
         Capital.

2.6      "Earnings before Interest, Taxes, Depreciation and Amortization" or
         "EBITDA"

         "EBITDA" means the adjusted cash operating earnings attributable to the
         capital employed in the Participating Unit for the year in question.
         The components of EBITDA are as follows:

<TABLE>
                <S>     <C>
                        Net Sales
                  Less: Operating expenses
                  Less: Other expense/(income)
                  Less: Profit sharing and other benefit expenses
                  Less: Bonuses

                Equals: EBIT
                  Less: Amortization of CIP, severance and restructuring charges
                  Plus: Depreciation
                  Plus: Amortization of intangibles

                  Plus: Increases/(decreases) in the LIFO reserve
                  Plus: Write-offs (before tax)
                Equals: EBITDA
</TABLE>

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         Note:    "Amortization of CIP, Severance and Restructuring Charges"
                  means the amortization of the capital charge on
                  construction-in-progress (CIP) and the amortization of the
                  expenses for severance pay or for restructuring charges.

                  For each year, there is a capital charge computed on the
                  average balance of CIP, severance and restructuring. This
                  charge equals the average CIP, and the severance accrual and
                  the restructuring charge times the cost of capital.

                  This capital charge is not subtracted from EBITDA in the year
                  in which it is measured, but amortized against EBITDA over the
                  following five years.

                  The amount of this amortization is determined in the manner of
                  a mortgage payment, with the capital charge as the principal,
                  the cost of capital as the interest rate, and five as the
                  number of years over which the principal is amortized.

                  Using this method, the Amortization of CIP, Severance and
                  Restructuring Charge will be the sum of the five overlapping
                  amortization payments. That is, for a given year the
                  Amortization of CIP. Severance and Restructuring Charge will
                  be the sum of amortization amounts that were calculated one,
                  two, three, four and five years prior.

                  See Exhibit B for sample calculation.

2.7      "Cash Economic Value Added" or "Cash EVA" means the EBITDA that remains
         after subtracting the Capital Charge, expressed as follows:

                  Cash EVA = EBITDA minus Capital Charge

         Cash EVA may be positive or negative.

3.       DEFINITION AND COMPUTATION OF UNIT AWARD POOL

3.1      "Actual Cash EVA" means the Cash EVA as calculated for each
         Participating Unit for the year in question.

3.2      "Target Cash EVA" means the measure of the Cash EVA for the year prior
         to the year in question. The Target Cash EVA is calculated as follows:

                    EBITDA of year prior to year in question

                  Less the following quantity:

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                           Capital of year prior to year in question
                  Times:   Cost of Capital for year in question

         In the first year of the Plan, the Target Cash EVA is derived such that
         achieving a performance specified by the Committee will result in
         Target Awards.

3.3      "Unit Award Pool" means the total award that is calculated for each
         Participating Unit. It is equal to the sum of the Base Award and the
         Improvement Award for the year in question.

         The Unit Award Pool can be positive or negative.

3.4      "Base Award" means the dollar award for each Participating Unit, which
         is a fixed percentage of the total Participant salaries for that unit.
         Each unit will be allocated a portion of Participant salaries for
         Participants at the corporate level and such allocation will be based
         on the expected average capital employed by each unit during of the
         year.

         The computation for the Base Award is as follows:

                         Average Responsibility Percentage
                  Times: Total participant salaries
                  Times: Performance Indicator (75% for Participating Units with
                         negative Cash EVA for three years running and 100% for
                         those with positive Cash EVA)

3.5      "Average Responsibility Percentage" means the weighted average award,
         as a percent of salary, for the participant group based on each
         Participant's "Responsibility Percentage."

3.6      "Responsibility Percentage" means the typical award that a Participant
         would expect to earn, as a percent of salary, given that Participant's
         base salary and level of responsibility.

3.7      "Improvement Award" means the dollar award for each Participating Unit,
         which results from the difference between the Target Cash EVA and the
         Actual Cash EVA of that Participating Unit.

         The Improvement Award can be positive or negative.

         The computation for the Improvement Award for each Participating Unit
         is as follows:

                          Improvement Award Percentage

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                  Times the following quantity,

                                    Actual Cash EVA
                           Less:    Target Cash EVA

         The "Improvement Award Percentage" for each of the Participating Units
         is 20%.

         See Exhibit C for sample calculation of both Base and Improvement
         Awards.

         The Committee will review Improvement Award Percentages annually and
         revise them when appropriate.

4.       DEFINITION OF AWARD ALLOCATION

4.1      "Individual Allocation Percentage" means the percentage of a Unit's
         Award Pool that is allocated to an individual Participant.

                  The Individual Allocation Percentage for each Participant is
                  calculated as follows:

                           The Participant's Target Award

         Divided By:

                           The sum of all Target Awards for the Participant
                           group

4.2      "Target Award" means the dollar award that is determined by multiplying
         the Responsibility Percentage times the Participant's base salary.

4.3      "Individual Award" means the amount of the Unit Award Pool that is
         allocated to each individual. The Individual Award is calculated as
         follows:

                                    Individual Allocation Percentage
                  Times:
                                    Unit Award Pool

5.       DESCRIPTION OF BONUS BANKS

5.1      Establishment of a Bonus Bank. To encourage a long-term commitment by
         Participants to the Company, awards under the Plan shall be credited to
         "at risk" deferred accounts ("Bonus Banks"), with the level of payout
         contingent on sustained high performance and improvements and continued
         employment as provided herein.

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5.2      Annual Allocation. Each Participant's Individual Award is credited to
         the Bonus Bank maintained for that Participant. Such crediting will
         occur as soon as possible after the conclusion of each Plan Year.
         Although a Bonus Bank may, as a result of negative Cash EVA, have a
         deficit, no Plan Participant shall be required, at any time, to
         reimburse his Bonus Bank.

5.3      "Bonus Bank" means, with respect to each Participant, a bookkeeping
         record of an account to which Individual Awards for such Participant
         are added or subtracted, as the case may be, from time to time under
         the Plan and from which bonus payments to such Participant are
         subtracted.

5.4      "Bank Balance" means, with respect to each Participant, a bookkeeping
         record of the net balance of the amounts added to and subtracted from
         such Participant's Bonus Bank. A Participant's Bank Balance shall
         initially be equal to zero.

5.5      "Available Balance" means the Bank Balance at the point in time
         immediately after the Individual Award has been added to the Bonus
         Bank.

5.6      "Current Bonus" means amount of the Available Balance that may be paid
         out in cash to the Participant. The Current Bonus is calculated as
         follows:

                  If the Available Balance is zero or less,

                           Current Bonus equals zero.

                  If the Available Balance is greater than zero, but less than
                  the Target Award,

                           Current Bonus equals the Available Balance.

                  If the Available Balance is greater than the Target Award,

                           Current Bonus equals the Target Award plus one-third
                           of the amount by which the Available Balance exceeds
                           the Target Award.

         The Current Bonus is subtracted from the Bank Balance.

         See Exhibit D for sample calculation.

6.       CASH EVA PLAN TRANSFERS AND TERMINATION

6.1      Transfers. A Participant who transfers his employment from one
         Participating Unit of the Company to another shall have his Bonus Bank
         transferred to such new unit on an equitable basis. At the time of
         transfer, the Participant and the Company shall agree on the manner of
         prorating any award with respect to the year in which the transfer
         occurs. If the new entity does not offer Bonus Banking or a similar
         deferred compensation plan, the Participant's Bank Balance (giving
         effect to any prorated award for the year of transfer) shall vest and
         be distributed over a two-

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         year period.

6.2      Death. A Participant who dies shall receive full payment of his Bank
         Balance and a pro rata bonus for the year in which he dies. Such
         payment shall be made at the regular time for making bonus payments
         attributable to the year of such death.

6.3      Retirement or Disability. A Participant who retires from the Company or
         suffers a "permanent incapacitating disability" while in the employ of
         the Company shall receive a pro rata bonus for the year in which he
         retires. Payment shall be equal to the Current Bonus for the year of
         retirement. Any remaining Bank Balance will be paid over two years in
         two equal installments at the regular time for making bonus payments as
         long as the former Participant is not employed by or under contract
         with a competitor of the Company.

         A Participant shall be deemed to suffer a "permanent incapacitating
         disability" if, because of physical or mental condition, the
         Participant is unable for a period of at least one year to perform the
         principal duties of his occupation as determined by a physician
         selected by the Committee.

6.4      Voluntary Termination or Involuntary Termination for Cause. Voluntary
         termination of employment with the Company shall result in forfeiture
         of the Balance in a Participant's Bonus Bank. In addition, a
         Participant's Bank Balance shall be forfeited in the event of
         termination of employment for cause.

                  "Cause" shall mean:

         I.       any act or acts of the Participant constituting a felony under
                  the laws of the United States, any state thereof or any
                  foreign jurisdiction;

         II.      any material breach by the Participant of any employment
                  agreement with the Company or the policies of the Company or
                  the willful and persistent (after written notice to the
                  Participant) failure or refusal of the Participant to comply
                  with any lawful directives of the Board;

         III.     a course of conduct amounting to gross neglect, willful
                  misconduct or dishonesty;

         IV.      any misappropriation of material property of the Company by
                  the Participant or any misappropriation of a corporate or
                  business opportunity of the Company by the Participant; or

         V.       the Participant not meeting the performance standards
                  specified for his job.

6.5      Involuntary Termination Without Cause. A Participant who is terminated
         without cause and has a positive Bank Balance in his Bonus Bank shall
         become vested

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         with respect to such Bank Balance and shall be paid in full at the
         regular time for making bonus payments in respect of the year of such
         termination.

6.6      Breach of Agreement. Notwithstanding any other provision of the Plan or
         any other agreement, in the event that a Participant shall breach any
         non-competition agreement with the Company or breach any agreement with
         respect to the post-employment conduct of such Participant, the Bank
         Balance in such Participant's Bonus Bank shall be forfeited.

6.7      No Guarantee. Participation in the Plan provides no guarantee that a
         bonus under the Plan will be paid. Similarly, the payment of a bonus
         under the Plan in one year or selection as a Participant is no
         guarantee that a bonus under the Plan will be paid in the subsequent
         year. The success of the Company as measured by the achievement of Cash
         EVA shall determine the extent to which Participants shall be entitled
         to receive bonuses hereunder.

7.       PERFORMANCE SHARE PLAN STATEMENT OF PURPOSE AND ADMINISTRATION

7.1      The purpose of the Printpack, Inc. Performance Share Plan (the "Plan")
         is to promote the success and enhance the value of Printpack, Inc. (the
         "Company"), by aligning the interests of its associates with the
         worldwide consolidated results of the Printpack companies and to allow
         its associates to participate in the long term appreciation in the
         equity value of Printpack Holdings, Inc. ("Printpack Holdings").

7.2      The Plan shall be administered by a Committee (the "Committee")
         consisting of the President and the Vice Presidents of Finance and of
         Human Resources of the Company or, at the discretion of the Board of
         Directors of the Company (the "Board") from time to time, by the Board.
         The Committee may from time to time make such decisions and adopt such
         rules and regulations for implementing the Plan as it deems appropriate
         for any Participant under the Plan. Any decision taken by the Committee
         arising out of or in connection with the construction, administration,
         interpretation and effect of the Plan shall be final, conclusive and
         binding upon all Participants and any person claiming under or through
         them. The Committee will have sole discretion in determining which
         associates are eligible to participate in the Plan. Whereas the annual
         incentive bonus plans provide for near-and intermediate-term rewards,
         the Performance Share Plan provides a longer-term focus by allowing
         associates to participate in the long-term appreciation in the equity
         value of Printpack Holdings Inc.

7.3      For purposes of administering the Plan, the following rules of
         procedure shall govern the Committee. A majority of the Committee shall
         constitute a quorum. The acts of a majority of the members present at
         any meeting at which a quorum is present, and acts approved unanimously
         in writing by the members of the Committee in lieu of a meeting, shall
         be deemed the acts of the Committee. Each

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         member of the Committee is entitled to, in good faith, rely or act upon
         any report or other information furnished to that member by any officer
         or other associate of the company or any parent or subsidiary of the
         Company, the Company's independent certified public accountants, or any
         executive compensation consultant or other professional retained by the
         Company to assist in the administration of the Plan.

8.       CERTAIN DEFINITIONS RELATED TO PERFORMANCE SHARES

8.1      "Cash Bonus" means the Current Employment Bonus less the Investment
         Amount. The Cash Bonus is the cash payment that Participants receive
         from the Current Employment Bonus.

8.2      "Current Employment Bonus" means the annual employment bonus awarded to
         a Participant under any of the various associate award programs and
         incentive arrangements established by the Company from time to time.

8.3      "Incentive Compensation Plan (Performance Share Plan)" means that
         certain Printpack, Inc. Incentive Compensation Plan adopted by the
         Board and effective as of July 15, 1999 pursuant to which participants
         in that plan may elect to purchase performance shares as defined
         therein.

8.4      "Salaried Associate Performance Shares" means performance shares as
         defined in and issued under the Incentive Compensation Plan
         (Performance Share Plan), including without limitation, all performance
         shares issued prior to 1993 under the "old" performance share program,
         which shares are referred to as the "Pre-1993 Series under the EVA
         Performance Share Plan" and all performance shares issued in the series
         under the EVA Performance Share Plan.

8.5      "Equity Change" means any material change in the book value of the
         Company or in the outstanding common shares of the Company that would
         dilute the value of the performance shares outstanding. In the case of
         such a change, the number of outstanding performance shares outstanding
         shall be adjusted so that the total value of such performance shares
         after the "Equity Change" shall be the same as the total value before
         the "Equity Change."

8.6      "Investment Amount" means a Participant's Investment Percentage times
         his or her Current Employment Bonus.

8.7      "Investment Percentage" means the percentage of each Participant's
         Current Employment Bonus that the Participant elects to invest in
         Performance Shares. Each Participant shall elect an "Investment
         Percentage" equal to 25%.

8.8      Number of Performance Shares" means the number of Performance Shares
         that each Participant purchases in a given year. The Number of
         Performance Shares

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         equals the Investment Amount divided by the Performance Share Value.

         See Exhibit E for an example of Number of Performance Shares
         calculation.

8.9      "Participant" means an associate of the Company who has been determined
         by the committee to be eligible to participate in the Plan and who has
         elected to invest a portion of his or her Current Employment Bonus in
         Performance Shares.

8.10     "Performance Share" means a right to receive a payment from the Company
         on the terms and conditions of the Plan, which right is based upon a
         fraction of the Phantom Equity Value and is issued to a Participant
         under the Plan. A Performance Share is not an EVA Performance Share,
         but references to "Performance Shares" in the EVA Performance Share
         Plan include Performance Shares as defined hereby.

8.11     "Performance Share Series" means all of the Performance Shares issued
         in a given year. For example, all Performance Shares issued for 2000
         would be referred to as the "2000 Series."

8.12     "Performance Share Value" means the Phantom Equity Value divided by the
         sum of (a) the number of Printpack Holdings, Inc.'s outstanding common
         shares at the end of the year, (b) the number of outstanding
         Performance Shares at the end of the year, including the current year's
         purchase of Performance Shares, and (c) the number of outstanding EVA
         Performance Shares at the end of the year, including the current year's
         purchase of EVA Performance Shares.

         See Exhibit F for an example of Performance Share Value Calculation.

8.13     "Phantom Equity Value" means the estimated value of Printpack Holdings'
         worldwide equity. It is determined as follows:

                  Seven times the average two years' EBITDA less total debt,
                  both short and long-term equals Phantom Equity Value.

                  The minimum "Phantom Equity Value" under this Plan will be
                  $100,000,000.

8.14     "Redemption Proceeds" equals the Performance Share Value times the
         number of Performance Shares redeemed. Redemption Proceeds, which are
         to be paid in cash, will be distributed in March subsequent to the end
         of the fiscal year.

8.15     "Vested Performance Shares" means Performance Shares that are eligible
         for redemption. Each Performance Share Series becomes eligible for
         redemption four years after issuance.

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9.       LIMITATION ON OUTSTANDING PERFORMANCE SHARES AND CALL PROVISION

9.1      The aggregate Performance Share Value of all issued and outstanding
         Performance Shares and all issued and outstanding EVA Performance
         Shares may not exceed 15% of the Phantom Equity Value. If the 15%
         limitation is reached, no discretionary investment in Performance
         Shares may be made.

10.      REDEMPTION OF PERFORMANCE SHARES

10.1     A Participant may, but is not required to, exercise 100% of his or her
         Vested Performance Shares.

10.2     After the end of each fiscal year, each Participant who holds Vested
         Performance Shares will receive a form upon which the Participant may
         indicate the number of Performance Shares that the Participant wishes
         to redeem. Such redemption will take place in March.

10.3     Subject to the provisions of Section 5 below and subject to the call
         provisions Of Section 3 above, a Participant may hold their Performance
         Shares for as long as they wish until they leave the Company.

11.      TERMINATION OF EMPLOYMENT, DISABILITY AND DEATH

11.1     Involuntary Termination Without Cause or Death. A participant whose
         employment is terminated without cause or who dies shall receive the
         Performance Share Value of all Performance Shares held by such
         Participant In redemption of such Performance Shares, whether those
         Performance Shares were vested or not. Such payments will be made as
         soon as is practical.

11.2     Retirement or Disability. A participant who retires from the Company or
         suffers a "permanent incapacitating disability" while in the employ of
         the Company shall receive the Performance Share Value of all
         Performance Shares held by such Participant in redemption of such
         Performance Shares, whether those Performance Shares were vested or
         not. Such payments will be made as soon as is practical. A Participant
         shall be deemed to suffer a "permanent incapacitating disability" if,
         because of physical or mental condition, the Participant is unable for
         a period of at least one year to perform the principal duties of his or
         her occupation as determined by a physician selected by the Committee.

11.3     Voluntary Termination. In the event that a Participant voluntarily
         terminates employment with the Company, the Participant will receive
         the lesser of either the Performance Share Value times the Number of
         Performance Shares held by the Participant as of the date of such
         termination, or the Investment Amount related to those Performance
         Shares, in either case, in redemption of the Performance Shares.

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11.4     Involuntary Termination for Cause. In the event of termination of
         employment for cause, the right of the Participant to exercise his of
         her Performance Shares shall be determined by the Committee.

                  "Cause" shall mean:

         (i)      any act or acts of the Participant constituting a felony under
                  the laws of the United States, any state thereof or any
                  foreign jurisdiction;

         (ii)     any material breach by the Participant of any employment
                  agreement with the Company or the policies of the Company or
                  the willful and persistent (after written notice to the
                  Participant) failure or refusal of the Participant to comply
                  with any lawful directives of the Board of Directors of the
                  Company (the "Board") or the Participant's supervisor;

         (iii)    a course of conduct amounting to gross neglect, willful
                  misconduct or dishonesty;

         (iv)     any misappropriation of material property of the Company by
                  the Participant or any misappropriation of a corporate or
                  business opportunity of the Company by the Participant; or

         (v)      the Participant not meeting the performance standards
                  specified for his or her job.

11.5     Breach of Agreement. Notwithstanding any other provision of the Plan or
         any other agreement, in the event that a Participant shall breach any
         non-competition agreement with the Company or breach any agreement with
         respect to the post-employment conduct of such Participant, the
         Performance Shares held by such Participant shall be forfeited.

11.6     No Guarantee. Participation in the Plan provides no guarantee that a
         payment under the plan will be paid. Similarly, the redemption of
         Performance Shares under the Plan in one year or selection as A
         Participant is no guarantee that payments under the Plan will be paid
         in any subsequent year or that a Participant may participate in the
         Plan in any subsequent year.

12.      LIMITATIONS

12.1     No Continued Employment. Nothing contained herein shall be deemed to
         constitute an express or implied contract of employment for any period
         of time nor provide any employee with any right to continued employment
         or in any way abridge the rights of the Company to determine the terms
         and conditions of employment or whether to terminate employment of any
         employee with or without cause at any time.

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12.2     No Vested Rights. Except as otherwise provided herein, no employee or
         other person shall have any claim of right (legal, equitable, or
         otherwise) to any award, allocation, or distribution and no officer or
         employee of the Company or any other person shall have any authority to
         make representations or agreements to the contrary.

12.3     Rights Personal; No Assignment. Any rights provided to an employee
         under Plan shall be personal to such employee, shall not be
         transferable (except by will or pursuant to the laws of descent or
         distribution), and shall be exercisable, during his or her lifetime,
         only by such employee. No interest conferred herein to a Participant
         shall be assignable or subject to claim by a Participant's creditors.

12.4     Not Part of Other Benefits. The benefits provided in this Plan shall
         not be deemed a part of any other benefit provided by the Company to
         its employees except to the extent that all or a portion of a
         Participant's Current Employment Bonus is taken in the form of
         Performance Shares. The Company assumes no obligation to Plan
         Participants except as specified herein. This is a complete statement,
         along with the Schedules and Appendices attached hereto, of the terms
         and conditions of the Plan.

12.5     Other Plans. Nothing contained herein shall limit the Company or the
         Committee's power to grant bonuses to employees of the Company, whether
         or not they are Participants in this Plan.

13.      GENERAL PROVISIONS

13.1     Withholding of Taxes. The Company shall have the right to withhold the
         amount of taxes, which in the determination of the Company, are
         required to be withheld under law with respect to any amount due or
         paid under the Plan.

13.2     Expenses. All expenses and costs in connection with the adoption and
         administration of the Plan shall be borne by the Company.

13.3     No Prior Right or Offer. Except and until expressly granted pursuant to
         the Plan, nothing in the Plan shall be deemed to give any employee any
         contractual or other right to participate in the benefits of the Plan.

13.4     Claims for Benefits. In the event a Participant (a "claimant") desires
         to make a claim with respect to any of the benefits provided hereunder,
         the claimant shall submit evidence satisfactory to the Committee of
         facts establishing his or her entitlement to a payment under the Plan.
         Any claim with respect to any of the benefits provided under the Plan
         shall be made in writing within ninety (90) days of the event which the
         claimant asserts entitles him to benefits. Failure by the claimant to
         submit his or her claim within such ninety (90) day period shall bar
         the claimant from any claim for Benefits under the Plan.

                                       15
<PAGE>   16

13.5     Denied Claims. In the event that a claim made by a claimant is wholly
         or partially denied, the claimant will receive from the Committee a
         written explanation of the reason for denial and the claimant or his or
         her duly authorized representative may appeal the denial of the claim
         to the Committee at any time within ninety (90) days after the receipt
         by the claimant of written notice from the Committee of the denial of
         the claim. In connection therewith, the claimant or his or her duly
         authorized representative may request a review of the denied claim, may
         review pertinent documents, and may submit issues and comments in
         writing. Upon receipt of an appeal, the Committee shall make a decision
         with respect to the appeal and, not later than sixty (60) days after
         receipt of a request for review, shall furnish the claimant with a
         decision on review in writing, including the specific reasons for the
         decision written in a manner calculated to be understood by the
         claimant, as well as specific reference to the pertinent provisions of
         the Plan upon which the decision is based. In reaching its decision,
         the Committee shall have complete discretionary authority to determine
         all questions arising in the interpretation and administration of the
         Plan, and to construe the terms of the Plan, including any doubtful or
         disputed terms and the eligibility of a Participant for benefits.

13.6     Action Taken in Good Faith; Indemnification. The Committee may employ
         attorneys, consultants, accountants or other persons and the Company's
         directors and officers shall be entitled to rely upon the advice,
         opinions or valuations of any such persons. All actions taken and all
         interpretations and determinations made by the Committee in good faith
         shall be final and binding upon all employees who have received awards,
         the Company and all other interested parties. No member of the
         Committee, nor any officer, director, employee or representative of the
         Company, or any of its affiliates acting on behalf of or in conjunction
         with the Committee, shall be personally liable for any action,
         determination, or interpretation, whether of commission or omission,
         taken or made with respect to the Plan, except in circumstances
         involving actual bad faith or willful misconduct. In addition to such
         other rights of indemnification as they may have as members of the
         Board, as members of the Committee or as officers or employees of the
         Company, all members of the Committee and any officer, employee or
         representative of the Company or any of its subsidiaries acting on
         their behalf shall be fully indemnified and protected by the Company
         with respect to any such action, determination or interpretation
         against the reasonable expenses, including attorneys' fees actually and
         necessarily incurred, in connection with the defense of any civil or
         criminal action, suit or proceeding, or in connection with any appeal
         therein, to which they or any of them may be a party by reason of any
         action taken or failure to act under or in connection with the Plan or
         an award granted thereunder, and against all amounts paid by them in
         settlement thereof (provided such settlement is approved by independent
         legal counsel selected by Company) or paid by them in satisfaction of a
         judgement in any action, suit or proceeding, except in relation to
         matters as to which it shall be adjudged in such action, suit or
         proceeding that such person claiming indemnification shall in writing
         offer the Company the opportunity, at its

                                       16
<PAGE>   17

         own expense, to handle and defend the same. Expenses (including
         attorneys' fees) incurred in defending a civil or criminal action, suit
         or proceeding shall be paid by the Company in advance of the final
         disposition of such action, suit or proceeding if such person claiming
         indemnification is entitled to be indemnified as provided in this
         Section.

13.7     Amendment of Plan. This Plan may be amended, suspended or terminated at
         any time at the sole discretion of the Board upon the recommendation of
         the Committee. Provided, however, that no such change in the Plan shall
         be effective to eliminate or diminish the Performance Share Value of
         Performance Shares issued to Participants prior to the date of such
         amendment, suspension or termination. Notice of any such amendment,
         suspension or termination shall be given promptly to each Participant.

13.8     Termination of Plan. Upon termination of the Plan or suspension for a
         period of more than 90 days, the Performance Share Value of all Vested
         Performance shares shall be distributed to each Participant, in
         redemption of all such Performance Shares, in two equal annual
         installments in each of the two Septembers following the termination.

13.9     Written Notice. Any notice to be given pursuant to the provisions of
         the Plan shall be in writing and directed to the appropriate recipient
         thereof at his or her business address or office location.

13.10    Captions. Paragraph titles or captions and the index contained in this
         Plan are inserted only as a matter of convenience and for reference.
         Such titles and captions in no way define, limit, extend, or describe
         the scope of this Plan or the intent of any provisions.

13.11    Pronouns. Any pronoun shall be deemed to be of the number and gender
         necessary to refer to the person or persons designated in the context
         of the reference.

13.12    Severability. If any portion of this Plan is declared by a court of
         competent jurisdiction to be void or unenforceable, such portion shall
         be deemed severed from the Plan and the balance of the Plan shall
         remain in effect.

13.13    Construction. This Plan shall be interpreted, construed and enforced in
         accordance with the laws of the State of Georgia.

                                       17
<PAGE>   18

                                    EXHIBIT A

                       CALCULATION OF THE COST OF CAPITAL

<TABLE>
               <S>                                             <C>
               Risk free investment rate                        6.67%

               Historical equity market risk premium            6.00%
                                                               -----

                  Total expected equity rate                   12.67%

               X Target beta                                    1.58
                                                               -----

               = Cost of equity                                20.02%
                                                               =====

               = Marginal cost of debt                          10.5%
                                                               =====

<CAPTION>
                                                     Target
                                     Before-Tax     Capital      Weighted
                                        Cost         Weight        Cost
                                     ----------     -------      --------

         <S>                         <C>            <C>          <C>
                 Debt                  10.50%          50%         5.25%

                 Equity                20.02%          50         10.01
                                                      ---         -----

         Weighted Cost of Capital                     100%        15.26%
                                                      ===         =====
</TABLE>

<PAGE>   19

                                    EXHIBIT B

             CALCULATION OF CIP, SEVERANCE AND RESTRUCTURING CHARGE

<TABLE>
<CAPTION>
                              1989      1990       1991       1992       1993       1994       1995       1996
                             ------    ------     ------     ------     ------     ------     ------     ------

<S>                          <C>       <C>        <C>        <C>        <C>        <C>        <C>        <C>
Year End CIP                  3,132     1,953      5,174     13,788      6,906     11,582     19,940     10,000

Average CIP                             2,543      3,564      9,481     10,347      9,244     15,761     14,970

X Cost of Capital                        15.0%      15.0%      15.0%      15.0%      15.0%      15.0%      15.0%

= Capital Charge                          381        535      1,422      1,552      1,387      2,364      2,245

Amortization Payment(1)                   109        153        406        443        396        675        641

Amortization of Capital Charge

1990                                                 109        109        109        109        109

1991                                                            153        153        153        153        153

1992                                                                       406        406        406        406

1993                                                                                  443        443        443

1994                                                                                             396        396

1995                                                                                                        675
------------------                                  ----     ------     ------     ------     ------     ------
Total Amortization                                   109        262        668      1,111      1,507      2,073
</TABLE>

         (1)      The Amortization Payment is calculated by taking the Capital
                  Charge as the principal and then determining the payment
                  necessary to amortize it in five years using an interest rate
                  equal to the Cost of Capital.

<PAGE>   20

                                    EXHIBIT C

                        CALCULATION OF THE CASH EVA AWARD

<TABLE>
         <S>      <C>                                 <C>           <C>
                  Average Target Award Percentage                         27.5%

         X        Total Participant Salaries                        $  600,000
                                                                    ----------

         =        Base Award                                           165,000

                  Improvement Award Percentage                              20%

                  Actual Cash EVA                     2,415,000

         -        Target Cash EVA                       833,000
                                                      ---------

         =        Improvement in EVA                                 1,582,000

         =        Improvement Award                                    316,400
                                                                    ----------

                  UNIT AWARD POOL                                   $  481,400
</TABLE>

<PAGE>   21

                                    EXHIBIT D

                                   BONUS BANK

<TABLE>
         <S>      <C>                               <C>
                  Calculated bonus                  $30,000

         +        Beginning balance                       0
                                                    -------

         =        Available balance                  30,000
                                                    -------

                  Less distribution:

                           Target award              20,000

                           1/3 of excess              3,333
                                                    -------

                  Total current bonus                23,333
                                                    -------

                  Ending balance                    $ 6,667
                                                    =======
</TABLE>

<PAGE>   22

                                    EXHIBIT E

                         PURCHASE OF PERFORMANCE SHARES

<TABLE>
         <S>                                        <C>
         Cash Employment Bonus                      $ 8,000

         Investment Percentage                           25%
                                                    -------

         Investment Amount                          $ 1,200
                                                    =======

         Performance Share Value                    $ 52.22
                                                    =======

         Number of Performance Shares Purchased       22.98
                                                    =======
</TABLE>

<PAGE>   23

                                    EXHIBIT F

                     CALCULATION OF PERFORMANCE SHARE VALUE

<TABLE>
<S>                        <C>
AVERAGE EBITDA             (Current EBITDA + Prior EBITDA)/2

7 X AVERAGE EBITDA                  Average EBITDA times 7

PHANTOM EQUITY VALUE       7 X Average EBITDA less Short-term and Long-term Debt
</TABLE>

                                     EXAMPLE

<TABLE>
<S>                        <C>
AVERAGE EBITDA             = (100,000,000 + 110,000,000)/2 = 105,000,000

7 X AVERAGE EBITDA         = 105,000,000  X  7 = 735,000,000

PHANTOM EQUITY VALUE       = 735,000,000 - 500,000,000 = 235,000,000

ACTUAL COMMON SHARES
OUTSTANDING AT END OF
YEAR PLUS PERFORMANCE
SHARES OUTSTANDING
AT END OF YEAR
(INCLUDING CURRENT
YEAR'S INVESTMENT)         = 4,500,000

PERFORMANCE SHARE VALUE    = 235,000,000/4,500,000 = $ 52.22
</TABLE><PAGE>   1

                                                                     EXHIBIT 4.1

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

                                 STANDARD TERMS

                                       TO

                         POOLING AND SERVICING AGREEMENT

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

                        UNION PLANTERS HOME EQUITY CORP.

                            PASS-THROUGH CERTIFICATES

                             SEPTEMBER 2000 EDITION

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

<PAGE>   2

<TABLE>
<CAPTION>

                               TABLE OF CONTENTS

                                                                                                                 PAGE
                                                                                                                 ----
<S>                                                                                                              <C>
ARTICLE I DEFINITIONS............................................................................................   1
         Section 1.01.  Definitions..............................................................................   1
         Section 1.02.  Interest Calculations....................................................................  19

ARTICLE II THE ASSETS............................................................................................  19
         Section 2.01.  Assignment of Assets.....................................................................  19
         Section 2.02.  The Mortgage Loans.......................................................................  20
         Section 2.03.  Representations and Warranties of the Trustee............................................  22
         Section 2.04.  Representations and Warranties as to Assets..............................................  22
         Section 2.05.  Purchase or Substitution of Certain Assets...............................................  22

ARTICLE III ADMINISTRATION OF TRUSTS AND SERVICING OF THE ASSETS.................................................  26
         Section 3.01.  The Master Servicer......................................................................  26
         Section 3.02.  Maintenance of Records; Inspection of Asset Files........................................  27
         Section 3.03.  Collection of Payments on Assets; Servicing Delinquent Accounts..........................  27
         Section 3.04.  Advances and Compensating Interest.......................................................  28
         Section 3.05.  Collection Account.......................................................................  29
         Section 3.06.  Certificate Account......................................................................  29
         Section 3.07.  Withdrawals From Certificate Account; Remittance Amounts.................................  30
         Section 3.08.  Realization upon Defaulted Assets........................................................  31
         Section 3.09.  Title, Conservation, and Disposition of REO Property.....................................  31
         Section 3.10.  Full Prepayments and Liquidations; Trustee to Cooperate; Release of Mortgage Files.......  34
         Section 3.11.  Due-on-Sale Clauses and Assumption Agreements............................................  34
         Section 3.12.  Annual Accountants' Certificate; Annual Statement as to Compliance.......................  35
         Section 3.13.  Servicing Fees...........................................................................  35
         Section 3.14.  Late Charges; Prepayment Fees or Other Charges...........................................  36
         Section 3.15.  Maintenance of Standard Hazard Insurance, Primary Mortgage Insurance, and Errors and
                  Omissions Coverage.............................................................................  36

ARTICLE IV REMITTANCE AND REPORTING TO CERTIFICATEHOLDERS........................................................  38
         Section 4.01.  Remittance Reports.......................................................................  38
         Section 4.02.  Distribution Account.....................................................................  39
         Section 4.03.  Allocation of Funds......................................................................  40
         Section 4.04.  Compliance with Withholding Requirements.................................................  40
         Section 4.05.  Reports of Security Principal Balances to the Clearing Agency............................  40
         Section 4.06.  Preparation of Regulatory Reports........................................................  41

ARTICLE V THE POOLING INTERESTS AND THE CERTIFICATES.............................................................  41
         Section 5.01.  Pooling REMIC Interests..................................................................  41
         Section 5.02.  The Certificates.........................................................................  41
         Section 5.03.  Book-Entry Certificates..................................................................  42
         Section 5.04.  Registration of Transfer and Exchange of Certificates....................................  43
         Section 5.05.  Restrictions on Transfer.................................................................  43
         Section 5.06.  Accrual of Interest on the Certificates..................................................  45
         Section 5.07.  Mutilated, Destroyed, Lost or Stolen Certificates........................................  45
         Section 5.08.  Persons Deemed Owners....................................................................  45
         Section 5.09.  Appointment of Paying Agent..............................................................  45
</TABLE>

                                      (i)

<PAGE>   3

<TABLE>
<CAPTION>
                                                                                                                 PAGE
                                                                                                                 ----
<S>                                                                                                              <C>
ARTICLE VI THE DEPOSITOR AND THE MASTER SERVICER.................................................................  46
         Section 6.01.  Liability of the Depositor and the Master Servicer.......................................  46
         Section 6.02.  The Depositor's Representations and Warranties...........................................  46
         Section 6.03.  Representations, Warranties and Covenants of the Master Servicer.........................  47
         Section 6.04.  Corporate Existence......................................................................  48
         Section 6.05.  Limitation on Liability of the Depositor, the Master Servicer and Others.................  49
         Section 6.06.  Master Servicer Resignation..............................................................  49
         Section 6.07.  Assignment or Delegation of Duties by the Master Servicer and the Depositor..............  49
         Section 6.08.  The Depositor and Master Servicer May Own Certificates...................................  49
         Section 6.09.  Protection of Trust Estate...............................................................  50
         Section 6.10.  Performance of Obligations...............................................................  50

ARTICLE VII EVENT OF DEFAULT; TERMINATION OF SERVICING ARRANGEMENTS..............................................  50
         Section 7.01.  Events of Default........................................................................  50
         Section 7.02.  Trustee to Act; Appointment of Successor.................................................  52
         Section 7.03.  Notifications to Master Servicer and to Certificateholders...............................  53

ARTICLE VIII CONCERNING THE TRUSTEE..............................................................................  53
         Section 8.01.  Duties of Trustee........................................................................  53
         Section 8.02.  Certain Matters Affecting the Trustee....................................................  55
         Section 8.03.  Trustee Not Liable for Certificates or Assets............................................  56
         Section 8.04.  Trustee May Own Certificates.............................................................  56
         Section 8.05.  Trustee's Fees and Expenses..............................................................  56
         Section 8.06.  Eligibility Requirements for Trustee.....................................................  57
         Section 8.07.  Resignation and Removal of the Trustee...................................................  57
         Section 8.08.  Successor Trustee........................................................................  58
         Section 8.09.  Merger or Consolidation of Trustee.......................................................  58
         Section 8.10.  Appointment of Co-Trustee or Separate Trustee............................................  58
         Section 8.11.  Appointment of Custodians................................................................  59
         Section 8.12.  Trustee May Enforce Claims Without Possession of Certificates............................  59

ARTICLE IX TERMINATION...........................................................................................  59
         Section 9.01.  Termination Upon Repurchase or Liquidation of All Assets.................................  59
         Section 9.02.  Additional Termination Requirements......................................................  61

ARTICLE X REMIC TAX PROVISIONS...................................................................................  61
         Section 10.01.  REMIC Administration....................................................................  61
         Section 10.02.  Prohibited Activities...................................................................  63

ARTICLE XI MISCELLANEOUS PROVISIONS..............................................................................  64
         Section 11.01.  Amendments..............................................................................  64
         Section 11.02.  Recordation of Agreement; Counterparts..................................................  64
         Section 11.03.  Limitation on Rights of Certificateholders..............................................  65
         Section 11.04.  Notices.................................................................................  65
         Section 11.05.  Severability of Provisions..............................................................  66
         Section 11.06.  Sale of Assets..........................................................................  66
         Section 11.07.  Notice to Rating Agency.................................................................  66

ARTICLE XII CONCERNING THE CONTRACT OF INSURANCE HOLDER..........................................................  67
         Section 12.01.  Compliance with FHA Regulations and Filing of FHA Claims................................  67
         Section 12.02.  Regarding the Contract of Insurance Holder..............................................  68
</TABLE>

                                      (ii)

<PAGE>   4

                                TABLE OF EXHIBITS
<TABLE>
<S>                        <C>
Exhibit 1-A                Form of Initial Certification
Exhibit 1-B                Form of Final Certification
Exhibit 2                  Form of Recordation Report
Exhibit 3                  Form of Request for Release
Exhibit 4                  Form of Rule 144A Agreement
Exhibit 5                  Form of Transferee Agreement
Exhibit 6                  Form of Benefit Plan Affidavit
Exhibit 7                  Form of Residual Transferee Agreement
Exhibit 8                  Form of Supplemental Pooling and Servicing Agreement
Exhibit 9                  Union Planters Mortgage Loan Collection and Loss Mitigation Procedures
</TABLE>

                                     (iii)
<PAGE>   5

                                    RECITALS

         UNION PLANTERS HOME EQUITY CORP., a Delaware corporation (the
"Depositor"), UNION PLANTERS BANK, N.A., a national banking association (the
"Master Servicer") and THE BANK OF NEW YORK, a New York banking corporation, as
trustee (the "Trustee") have entered into a Pooling and Servicing Agreement that
provides for the issuance of mortgage pass-through securities (the
"Certificates") that in the aggregate evidence the entire interest in a pool
consisting of mortgage loans secured by first liens on one- to four-family
residential real properties (the "Mortgage Loans," and, together with certain
other assets, the "Assets") and other property owned by the Trust (the "Trust")
created by such Pooling and Servicing Agreement. These Standard Terms are a part
of, and are incorporated by reference into, such Pooling and Servicing
Agreement.

                               STANDARD PROVISIONS

         NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties made in the Pooling and Servicing Agreement and
as hereinafter set forth, the Depositor, the Master Servicer and the Trustee
agree as follows:

                                    ARTICLE I

                                   DEFINITIONS
SECTION 1.01.    DEFINITIONS.

         Except as otherwise specified herein or in a Pooling and Servicing
Agreement or as the context may otherwise require, whenever used in these
Standard Terms, the following words and phrases shall have the meanings assigned
to them in this Article. Unless otherwise specified, all calculations described
herein shall be made on the basis of a 360-day year consisting of twelve 30-day
months.

         "Accrual Date": With respect to any Series or Class of Certificates,
the date upon which interest begins accruing on the Certificates of such Series
or Class, which shall be specified in the related Pooling and Servicing
Agreement.

         "Adjustable Rate Asset": An "adjustable rate" Mortgage Loan, the Asset
Rate of which is subject to periodic adjustment in accordance with the terms of
the related Mortgage Note.

         "Advance":  Any Servicing Advance, Foreclosure Advance or P&I Advance.

         "Affiliate": As to any specified Person, any other Person controlling
or controlled by or under common control with such specified Person. For the
purposes of this definition, "control," when used with respect to any specified
Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.

         "Application for Relief":  As defined in Section 4.06 hereof.

         "Asset": A Mortgage Loan, or other asset if specified in the related
Pooling and Servicing Agreement.

         "Asset Documents": Mortgage Loan Documents, and other asset documents
if specified in the related Pooling and Servicing Agreement.

         "Asset File": With respect to any Asset, the related Trustee Mortgage
Loan File.

         "Asset Rate":  As to any Asset, the Mortgage Rate.

                                      -1-
<PAGE>   6

         "Asset Schedule": For any Series, the list or lists attached to the
related Pooling and Servicing Agreement consisting of the related Mortgage Loan
Schedule.

         "Assignment": A document effecting the transfer of all the rights of a
secured party under a Mortgage to a transferee, in recordable form for the
jurisdiction in which the related Mortgaged Property is located.

         "Assignment Event": The 30th day following either (i) the Seller's
long-term unsecured debt rating being reduced to below "A2" by Moody's Investors
Service, Inc. or (ii) the suspension, termination or withdrawal of the Seller's
long-term unsecured debt rating by Moody's Investors Service, Inc. (provided,
however, that if such suspension, termination or withdrawal is for reasons other
than credit reasons, the Seller shall have 90 days to provide a substitute
rating agency acceptable to the Trustee).

         "Available Distribution Amount": For each Distribution Date for a
Series of Certificates, the amount on deposit in the related Distribution
Account at the commencement of business on such Distribution Date, less income
earned thereon.

         "Basis Limit Amount": With respect to any Converted Loan purchased from
a REMIC, an amount equal to the REMIC's adjusted federal income tax basis in
such Converted Loan as of the date on which the purchase occurs as set forth in
a certificate of an Officer of the Master Servicer, which certificate shall be
delivered to the Trustee in connection with any purchase of a Converted Loan
from a REMIC.

         "Beneficial Owner": With respect to a Book-Entry Certificate, the
Person who is registered as owner of that Certificate in the books of the
Clearing Agency for that Certificate or in the books of a Person maintaining an
account with such Clearing Agency.

         "Benefit Plan Affidavit": An affidavit substantially in the form of
Exhibit 6 hereto.

         "Benefit Plan Opinion": An Opinion of Counsel to the effect that a
proposed transfer of a Certificate will not (a) cause any of the assets of the
Trust to be regarded as "plan assets" for purposes of the Plan Asset
Regulations, (b) give rise to any fiduciary duty under ERISA on the part of the
Depositor, the Master Servicer, the Trustee or the Trust's Tax Matters Person,
if any, or (c) be treated as, or result in, a "prohibited transaction" under
section 406 or section 407 of ERISA or under section 4975 of the Code. The cost
of obtaining a Benefit Plan Opinion shall not be borne by the Depositor, the
Master Servicer or the Trustee.

         "Board of Directors": The Board of Directors of the Master Servicer or
any committee of that Board duly authorized to act on behalf of that Board with
respect to any matters arising hereunder.

         "Book-Entry Certificates": The Classes of Certificates of a Series, if
any, classified as such in the related Pooling and Servicing Agreement.

         "Business Day": Any day that is not a Saturday, Sunday, holiday or
other day on which commercial banking institutions in the city and state in
which the Trustee's Corporate Trust Office is located are authorized or
obligated by law or executive order to be closed.

         "Certificate Account": An account established pursuant to and described
in Section 3.06 hereof. The Certificate Account will be an asset of the Trust.
Solely for federal income tax purposes, the Master Servicer will be the owner of
the Certificate Account and, thus, any income earned by the Certificate Account,
or any amounts transferred by any related REMIC to the Certificate Account,
shall be treated as income earned by, or amounts distributed to, the Master
Servicer.

         "Certificate Principal Balance": With respect to each Certificate or
Class of Certificates, on any date of determination, the outstanding principal
amount, if any, of such Certificate(s) immediately prior to the most recently
preceding Distribution Date (or in the case of a date of determination on or
before the first Distribution Date, an amount equal to the initial principal
amount of such Certificate(s) as of the Closing Date) net of the amounts, if
any,

                                      -2-
<PAGE>   7

applied on such preceding Distribution Date to reduce the principal amount of
such Certificate(s) in accordance with Section 3.07(c) hereof, less the amount,
if any, of Realized Losses allocated during such period, to the extent specified
in the Pooling and Servicing Agreement.

         "Certificate Register" and "Certificate Registrar": The respective
meanings specified for such terms in Section 5.04 hereof.

         "Certificateholder" or "Holder": With respect to any Certificate, the
Person in whose name such Certificate is registered in the Certificate Register.

         "Certificates": The certificates authorized by, executed and delivered
under, and issued pursuant to any Pooling and Servicing Agreement.

         "Claims Administrator": The entity identified as such in any related
Pooling and Servicing Agreement, or any successor thereof.

         "Class": With respect to any Series, the classification of different
types of the Certificates within such Series as set forth in the related Pooling
and Servicing Agreement.

         "Clearing Agency": The Depository Trust Company, or any successor
organization or any other organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended, and
the regulations of the Securities and Exchange Commission thereunder.

         "Clearing Agency Participant": A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.

         "Closing Date": With respect to any Series, the date specified as the
"Closing Date" in the related Pooling and Servicing Agreement.

         "Code":  The Internal Revenue Code of 1986, as amended.

         "Collection Account":  As defined in Section 3.05 hereof.

         "Collection Period": With respect to each Distribution Date for a
Series, the period commencing on the second day of the calendar month preceding
the month in which such Distribution Date occurs and ending at the close of
business on the first day of the calendar month in which such Distribution Date
occurs.

         "Commission": The Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, as amended.

         "Compensating Interest": For any Remittance Date, the amount of all Due
Date Interest Shortfalls for the preceding Collection Period to the extent such
shortfalls do not exceed the Master Servicer's aggregate servicing compensation
in respect of such Collection Period.

         "Contract of Insurance Holder": The approved mortgagee identified as
the "Contract of Insurance Holder" under any Pooling and Servicing Agreement.

         "Converted Loan": An Adjustable Rate Asset with respect to which the
Obligor has complied with the applicable requirements of the related Mortgage
Note to convert the related Asset Rate to a fixed rate of interest, and as to
which the Master Servicer has processed such conversion.

           "Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business under a
Pooling and Servicing Agreement shall be administered.

                                      -3-
<PAGE>   8

         "Credit Insurer": An insurer under any Primary Mortgage Insurance
Policy or pool insurance policy for a Series.

         "Custodian": For any Series, the Trustee or an agent of the trustee
identified in the related Pooling and Servicing Agreement, which agent shall
hold all or part of the Trustee Mortgage Loan Files for some or all of the
related Mortgage Loans.

         "Cut-off Date": With respect to any Series, the date or dates (a) after
which all Monthly Payments due in respect of the Assets sold to the Trust and
(b) on and after which all Principal Prepayments, Net Liquidation Proceeds and
Repurchase Prices received in respect of such Assets, are to be transmitted to
the Certificate Account for the benefit of the Holders of the Certificates. The
Cut-off Date for a Series shall be specified in the related Pooling and
Servicing Agreement.

         "Cut-off Date Principal Balance": As to any Asset, the original
principal amount of such Asset, minus the principal portion of all Monthly
Payments due on such Asset on or before the Cut-off Date and minus all other
payments applied to reduce such original principal amount before the Cut-off
Date.

         "Default": Any occurrence that is, or that with notice or the lapse of
time or both would become, an Event of Default.

         "Defect Discovery Date": With respect to an Asset, the date on which
either the Trustee or the Master Servicer first discovers a Qualification Defect
affecting the Asset.

         "Depositor": Union Planters Home Equity Corp., a Delaware corporation,
and its permitted successors and assigns.

         "Directly Operate": With respect to any REO Property, the furnishing or
rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a trade or business conducted by the Trust, in each case other
than through an Independent Contractor; provided, however, that the Master
Servicer on behalf of the Trustee shall not be considered to Directly Operate an
REO Property solely because the Master Servicer on behalf of the Trustee
establishes rental terms, chooses tenants, enters into or renews leases, deals
with taxes and insurance, or makes decisions as to repairs or capital
expenditures with respect to such REO Property.

         "Disqualified Organization": Either (a) the United States, (b) any
state or political subdivision thereof, (c) any foreign government, (d) any
international organization, (e) any agency or instrumentality of any of the
foregoing, (f) any organization (other than a cooperative described in section
521 of the Code) that is exempt from federal income taxation (including taxation
under the unrelated business taxable income provisions of the Code), (g) any
rural telephone or electrical service cooperative described in section
1381(a)(2)(C) of the Code, or (h) any other entity identified as a disqualified
organization by legislation enacted or administrative pronouncement in effect as
of the date of the most recent transfer of the related Residual Certificate. A
corporation will not be treated as an instrumentality of the United States or
any state or political subdivision thereof if all of its activities are subject
to tax and, with the exception of the Federal Home Loan Mortgage Corporation, a
majority of its board of directors is not selected by such governmental unit.

         "Distribution Account":  As defined in Section 4.02 hereof.

         "Distribution Date": Unless otherwise specified in the Pooling and
Servicing Agreement, the 25th day of any month, or the next Business Day after
such 25th day if such 25th day is not a Business Day, commencing in the month
following the Closing Date and ending on the date on which the Trust is
terminated.

         "Due Date": With respect to any Asset, the date on which a Monthly
Payment is due on such Asset from the Obligor thereunder (without regard to any
grace period).

                                      -4-
<PAGE>   9

         "Due Date Interest Shortfall": For any Asset that is prepaid in full or
liquidated on other than a Due Date for such Asset, the difference between (a)
the amount of interest that would have accrued on such Asset through the day
preceding the Due Date next following the date of such prepayment or liquidation
had the Asset not been prepaid in full or liquidated (net of any Servicing Fees
and Trustee Fees) and (b) the amount of interest that actually accrued on such
Asset prior to the prepayment in full or liquidation thereof (net of an
allocable portion of any Servicing Fees and Trustee Fees).

         "Early Payment": As to any Asset and any Due Date on which the
principal and interest payments on such Asset made with respect to such Due Date
(not including any late fees) exceed the sum of the scheduled Monthly Payment
for such Asset and Due Date plus any unpaid Monthly Payments for previous Due
Dates, if the related Obligor has not sent written notice to the Master Servicer
with such payment asking that the amount by which such payment exceeds the
Monthly Payment then due be treated as a Principal Prepayment and the Master
Servicer is unable to determine the Obligor's intended treatment of such excess
payment, the Early Payment shall be the amount by which (1) payments of
principal and interest on such Asset made with respect to such Due Date exceed
(2) the scheduled Monthly Payment for such Asset on such Due Date plus any
unpaid Monthly Payments for previous Due Dates, but only to the extent that the
amount of such excess is an integral multiple of the amount of the scheduled
Monthly Payment for such Due Date. To the extent that the amount of such excess
exceeds an integral multiple of such scheduled Monthly Payment, the excess shall
be deemed to be a Principal Prepayment of such Asset.

         "Eligible Account": (1) An account or accounts maintained with a
Qualified Bank, (2) any trust account maintained in the corporate trust
department of a financial institution subject to governmental regulatory
authorities or (3) a non-trust account maintained with the Trustee, so long as
the Trustee's commercial paper or short-term unsecured debt obligations are
rated by each Rating Agency in its highest applicable rating category (without
regard to "plus" or "minus" modifiers of such rating category); provided that
the Master Servicer shall move any funds in such account to another account
which is an Eligible Account pursuant to clause (1) or (2) of this definition
within five days after any downgrading of the Trustee's commercial paper or
short-term unsecured debt obligations below each Rating Agency's highest
applicable rating category (without regard to "plus" or "minus" modifiers of
such rating category) and shall not deposit funds into any account that is an
Eligible Account pursuant to this clause (3) if such deposit would cause the
amount on deposit in such account to exceed 20% of the aggregate unpaid
principal balance of the Certificates. Eligible Accounts may bear interest.

         "Eligible Investments": Any one or more of the following obligations or
securities:

         (a) direct obligations of, and obligations fully guaranteed by, the
United States of America;

         (b) demand and time deposits in, negotiable certificates of deposit of,
bankers' acceptances issued by, or federal funds sold by, any Qualified Bank;

         (c) commercial paper of any Person other than the Depositor, the Seller
or any Affiliate of the Depositor or the Seller rated in the Rating Agency's
highest applicable rating category;

         (d) repurchase agreements fully collateralized by possession of
obligations of the type specified in clause (a) above; provided, however, that
investments in such repurchase agreements shall mature within three days of the
acquisition thereof and; provided further, that such agreements shall be entered
into with a Qualified Bank;

         (e) money market accounts or money market funds rated in one of the
three highest rating categories of the Rating Agency for money market funds; or

         (f) money market accounts or money market mutual funds investing
primarily in obligations of the United States government, and further investing
exclusively in debt obligations, provided, however, that such money market
accounts or money market mutual funds shall be rated in a rating category
sufficient to support the initial ratings assigned to a related Series of
Certificates.

                                      -5-
<PAGE>   10

         The foregoing notwithstanding, Eligible Investments that are acquired
with funds in the Certificate Account, the Distribution Account or any Reserve
Fund shall include only such obligations or securities that mature on or before
the Business Day immediately preceding the next Distribution Date. The Trustee
may not sell or convert an Eligible Investment if such sale or conversion would
result in a loss on the investment. In no event shall an instrument be an
Eligible Investment if such instrument evidences (1) a right to receive only
interest payments with respect to the obligations underlying such instrument or
(2) both principal and interest payments derived from obligations underlying
such instrument, if the interest and principal payments with respect to such
instrument provide a yield to maturity at the date of investment of greater than
120% of the yield to maturity at par of such underlying obligations.

         "ERISA": The Employee Retirement Income Security Act of 1974, as
amended.

         "ERISA Restricted Certificates": With respect to any Series, any
Certificates of a Class that are subordinated to the Certificates of any other
Class of such Series, and are designated as "ERISA Restricted Certificates" in
the related Series Agreement.

         "Event of Default":  As defined in Section 7.01 hereof.

         "Fannie Mae": Fannie Mae (formerly the Federal National Mortgage
Association), or any successor in interest.

         "FHA":  The Federal Housing Administration or any successor thereof.

         "FHA Asset":  An Asset that is insured by the FHA.

         "FHA Insurance": As to any FHA Asset, FHA's agreement to reimburse the
owner of such Asset for the amount of any losses incurred upon the liquidation
of such Asset.

          "Final Certification": A certification as to the completeness of each
Trustee Mortgage Loan File substantially in the form of Exhibit 1-B hereto
provided by the Trustee (or the Custodian) on or before the first anniversary of
the Closing Date pursuant to Section 2.02(c)(2) hereof.

         "Final Scheduled Distribution Date": With respect to any Class of any
Series, the date specified as such in the related Pooling and Servicing
Agreement.

         "Foreclosure Advance".  As defined in Section 3.04(c) hereof.

         "Fraud Loss": A loss incurred on a Mortgage Loan resulting from a
Credit Insurer's failure to pay a claim with respect to such Mortgage Loan on
the grounds of fraud in connection with the origination of the Mortgage Loan or
on the grounds of fraud, dishonesty or misrepresentation in connection with the
application for any insurance obtained with respect to such Mortgage Loan.

         "Freddie Mac": Freddie Mac (formerly the Federal Home Loan Mortgage
Corporation), or any successor in interest.

         "Government Insured Mortgage Loan": Any Mortgage Loan guaranteed by the
VA or insured by FHA, which are backed by the full faith and credit of the
United States government.

         "Independent": When used with respect to any specified Person, another
Person who (a) is in fact independent of the Depositor, the Seller, the Master
Servicer, any obligor upon the Certificates or any Affiliate of the Depositor,
the Seller or the Master Servicer or such obligor, (b) does not have any direct
financial interest or any material indirect financial interest in the Depositor,
the Seller or the Master Servicer or in any such obligor or in an Affiliate of
the Depositor, the Seller or the Master Servicer or such obligor, and (c) is not
connected with the Depositor, the Seller or the Master Servicer or any such
obligor as an officer, employee, promoter, underwriter,

                                      -6-
<PAGE>   11

trustee, partner, director or person performing similar functions. Whenever it
is provided herein that any Independent Person's opinion or certificate shall be
furnished to the Trustee, such Person shall be appointed by the Depositor, the
Seller or the Master Servicer in the exercise of reasonable care by the
Depositor, the Seller or the Master Servicer, as the case may be, and approved
by the Trustee, and such opinion or certificate shall state that the Person
executing the same has read this definition and that such Person is independent
within the meaning thereof.

         "Independent Contractor": Either (a) any Person (other than the Master
Servicer) that would be an "independent contractor" with respect to the Trust
within the meaning of Section 856(d)(3) of the Code if the Trust were a real
estate investment trust (except that, in applying that Section, more than 35% of
the outstanding principal balance of any Class shall be deemed to be more than
35% of the certificates of beneficial interest of the Trust), so long as the
Trust does not receive or derive any income from such Person, the relationship
between such Person and the Trust is at arm's length and such Person is not an
employee of the REMIC, the Trustee or the Master Servicer, all within the
meaning of Treasury Regulation Section 1.856-4(b)(5), or (b) any other Person
(including the Master Servicer) upon receipt by the Trustee of an Opinion of
Counsel, the expense of which shall constitute a Servicing Advance if borne by
the Master Servicer, to the effect that the taking of any action in respect of
any REO Property by such Person, subject to any conditions therein specified,
that is otherwise herein contemplated to be taken by an Independent Contractor
will not cause such REO Property to cease to qualify as "foreclosure property"
within the meaning of Section 860G(a)(8) of the Code (determined without regard
to the exception applicable for purposes of Section 860D(a) of the Code), or
cause any income realized in respect of such REO Property to fail to qualify as
Rents from Real Property.

         "Initial Certification": A certification as to the completeness of each
Trustee Mortgage Loan File substantially in the form of Exhibit 1-A hereto
provided by the Trustee (or the Custodian) on the Closing Date pursuant to
Section 2.02(c)(1) hereof.

         "Initial Value":  As defined in Section 3.15(b) hereof.

         "Insurance Policy": Any insurance policy covering any Asset (and the
related Mortgaged Property), including, without limitation, any Standard Hazard
Insurance Policy or Primary Mortgage Insurance Policy or FHA Insurance or VA
Guaranty.

         "Insurance Proceeds": Amounts paid or payable (as the context requires)
under any Insurance Policy, to the extent such amounts are not applied to the
restoration or repair of the Mortgaged Property in respect of which such amounts
were paid.

         "Insured Expenses": Expenses incurred by the Master Servicer in
connection with a Mortgage Loan under which the Obligor is in default, which
expenses are covered by a Standard Hazard Insurance Policy and are paid by an
insurer under any such policy.

         "Interest Accrual Period": With respect to each Distribution Date (i)
for any Class of Certificates paying interest at a variable rate, the period
commencing on the 15th day of the preceding month through the 14th day of the
month in which such Distribution Date occurs (except that the first Interest
Accrual Period for such Class of Certificates will be the period from the
related Closing Date through the 14th day of the month in which such
Distribution Date occurs) and (ii) for all other Classes of Certificate, the
calendar month preceding the month in which the Distribution Date occurs.
Interest on any Class of Certificates paying interest at a variable rate will be
calculated on the basis of a 360-day year and the actual number of days elapsed
in the applicable Interest Accrual Period. Interest on all other Classes of
Certificates will be computed on the basis of a 360-day year consisting of
twelve 30-day months.

         "Issuing REMIC": If provided for in a Pooling and Servicing Agreement,
the REMIC composed primarily of Regular Interests in the Pooling REMIC, together
with the Distribution Account.

         "Liquidated Loan": A defaulted Mortgage Loan as to which all amounts
that the Master Servicer expects to recover have been received.

                                      -7-
<PAGE>   12

         "Liquidation Expenses": All reasonable, out-of-pocket costs and
expenses (exclusive of the Master Servicer's overhead costs) incurred by the
Master Servicer in connection with liquidation of any Asset or disposition of
any related REO Property, including, but not limited to, the cost of all notices
sent in connection with such liquidation, costs and expenses incurred in
connection with preparation and recordation of assignments of Mortgages,
expenses, including reasonable attorney's fees, incurred in connection with the
commencement and pursuit of Proceedings against Obligors or guarantors or
sureties of Obligors or in the pursuit of foreclosure or other similar remedies,
expenses incurred in repossessing and refurbishing the related REO Property for
sale and sales commissions paid in connection with the resale of the related REO
Property.

         "Liquidation Proceeds": Amounts received and retained in connection
with the liquidation of Liquidated Loans, whether through foreclosure on the
related Mortgaged Property or otherwise (including Insurance Proceeds collected
in connection with such liquidation and proceeds of FHA Insurance and VA
Guaranty payments related to Government Insured Mortgage Loans).

         "Master Servicer": Union Planters Bank, N.A., as master servicer of any
of the Assets under any Pooling and Servicing Agreement, and its permitted
successors and assigns.

         "Master Servicer Mortgage Loan File": As to each Mortgage Loan, a file
maintained by the Master Servicer that contains or will contain at such time
that appropriate documentation of the servicing of the Mortgage Loans, and
generally may include for this purpose (1) an original, microfiche or electronic
record of Standard Hazard Insurance Policy (and flood insurance policy, if
required pursuant to Section 3.15 hereof) relating to the underlying Mortgaged
Property or a certificate of insurance issued by the insurer or its agent
indicating that a Standard Hazard Insurance Policy (and a flood insurance
policy, if required pursuant to Section 3.15 hereof) is in effect with respect
to such Mortgaged Property, (2) originals or copies of all documents submitted
to a Mortgage Insurer for credit and property underwriting approval, (3) the
originals or copies of all RESPA and Regulation Z disclosure statements executed
by the related Mortgagors, (4) the original or a copy of the appraisal report
made in connection with the origination of the Mortgage Loan, (5) the original
or a copy of the settlement statement for the purchase and/or refinancing of the
underlying Mortgaged Property by the related Mortgagor under the related
Mortgage Note and Mortgage, (6) evidence of any tax service contracts, which may
be copies or in electronic format, (7) documentation relating to any approvals
by the Master Servicer of any modifications of the original related Mortgage
Loan Documents and any releases of collateral supporting the related Mortgage
Loan, together with copies of the documentation effecting any such modifications
or releases, (8) collection notices or form notices sent to the related
Mortgagor, which may be copies or in electronic format, (9) foreclosure
correspondence and legal notifications, if applicable which may be copies or in
electronic format, (10) water and irrigation company stock certificates, if
applicable, and (11) all other documents relating to such Mortgage Loan which
would customarily be maintained in a mortgage loan file by the Master Servicer
in order to service the mortgage loan properly, as well as any other documents
relating to such Mortgage Loan (other than Mortgage Loan Documents) that come
into the Master Servicer's possession.

         "Monthly Payment": With respect to any Asset, the scheduled monthly
payment of principal and interest thereon due in any month under the terms
thereof.

         "Mortgage": A written instrument creating a valid first lien on
Mortgaged Property, in the form of a mortgage, deed of trust, deed to secure
debt or security deed, including any riders or addenda thereto.

         "Mortgage Insurer": The insurance company or companies which issue any
Primary Mortgage Insurance Policies with respect to any Mortgage Loans.

         "Mortgage Loan": A mortgage loan secured by a first lien on a one- to
four-family residential real property (which may be the real estate to which a
manufactured home is deemed by the Seller to have become permanently affixed as
of the Cut-off Date for the related Series).

         "Mortgage Loan Documents": With respect to each Mortgage Loan, the
following documents:

                                      -8-
<PAGE>   13

         (a) the original Mortgage Note bearing a complete chain of
endorsements, if necessary, from the initial payee thereunder to the Seller,
with a further endorsement without recourse from the Seller in blank or to the
Trustee or its Custodian, in a form specified in the related Sales Agreement,
(or a copy or a duplicate original Mortgage Note, together with an affidavit
certifying that the original thereof has been lost or destroyed) together with
all related riders and addenda and any related surety or guaranty agreement,
power of attorney and buydown agreement;

         (b) the original recorded Mortgage (or a copy thereof certified to be a
true and correct reproduction of the original thereof by the appropriate public
recording office) with evidence of recordation noted thereon or attached
thereto, or, if the Mortgage is in the process of being recorded, a photocopy of
the Mortgage, certified by an officer of the related Seller or the originator,
the related title insurance company, the related closing/settlement/escrow agent
or the related closing attorney to be a true and correct copy of the Mortgage
submitted for recordation;

          (c) each original recorded intervening assignment of the Mortgage as
is necessary to show a complete chain of title from the initial mortgagee (or
beneficiary, in the case of a deed of trust) to the related Seller (or a copy of
each such assignment certified to be a true and correct reproduction of the
original thereof by the appropriate public recording office) with evidence of
recordation noted thereon or attached thereto, or, if an assignment is in the
process of being recorded, a photocopy of the assignment, certified by an
officer of the Seller to be a true and correct copy of the assignment submitted
for recordation; and the original assignment of the Mortgage from the related
Seller either in blank or to the Trustee or its Custodian, in the form specified
in the related Sales Agreement (or a copy thereof certified to be a true and
correct reproduction of the original thereof);

         (d) an original Title Insurance Policy or, if such policy has not yet
been issued or is otherwise not available, (1) a written commitment to issue
such policy issued by the applicable title insurance company and an officer's
certificate of the related Seller certifying that all of the requirements
specified in such commitment have been satisfied, (2) a preliminary title report
if the related Mortgaged Property is located in a state in which preliminary
title reports are acceptable evidence of title insurance or (3) a certificate of
an officer of the Seller certifying that a Title Insurance Policy is in full
force and effect as to the related Mortgage and that such Title Insurance Policy
is freely assignable to and will inure to the benefit of the Trustee (subject to
recordation of the related Assignment of Mortgage);

         (e) (1) for each Mortgage Loan identified in the related Pooling
and Servicing Agreement as having in place a Primary Mortgage Insurance Policy,
a Primary Mortgage Insurance Policy or a certificate of primary mortgage
insurance issued by the related Mortgage Insurer or its agent indicating that
such a policy is in effect as to such Mortgage Loan or, if neither a policy nor
a certificate of insurance from the related Mortgage Insurer is available, a
certificate of an officer of the related Seller certifying that a Primary
Mortgage Insurance Policy is in effect as to such Mortgage Loan, or (2) for each
Mortgage Loan identified in the related Pooling and Servicing Agreement as
having in place FHA Insurance or a VA Guaranty, the related certificate issued
by FHA or VA, as applicable, evidencing that such policy is in effect as to such
Mortgage Loan or, if such certificate is not available, a certificate from an
officer of the related Seller certifying that FHA Insurance or VA Guaranty, as
applicable, is in effect as to such Mortgage Loan;

         (f) each related assumption agreement, modification, written assurance
or substitution agreement, if any; and

         (g) proof of the maintenance of a Standard Hazard Insurance Policy (and
a flood insurance policy, if applicable) as to the related Mortgaged Property.

         "Mortgage Loan-to-Value Ratio": As to a Mortgage Loan, the ratio,
expressed as a percentage, borne by the principal amount of such Mortgage Loan
at the time of determination, to (a) the lesser of (1) the sales price of the
related Mortgaged Property (in the case of a purchase money mortgage loan where
the Mortgage Loan-to-Value Ratio is being determined as of origination), or (2)
the appraised value of the related Mortgaged Property, as shown in the appraisal
prepared in connection with the origination of such Mortgage Loan or (b) the
appraised value of the

                                      -9-
<PAGE>   14

related Mortgaged Property, as shown in an appraisal made within six months of
the date of determination of the Mortgage Loan-to-Value Ratio, where the
Mortgage Loan-to-Value Ratio is being determined later than origination.

         "Mortgage Loan Schedule": For any Series, the list attached to the
related Pooling and Servicing Agreement identifying each Mortgage Loan assigned
thereunder, which list shall (a) identify each Mortgage Loan and (b) set forth
(or describe the method of determining) as to each such Mortgage loan (1) the
Cut-off Date Principal Balance thereof, (2) the amount of each Monthly Payment,
(3) the Mortgage Rate thereof, (4) the original term to maturity thereof, (5)
the date of origination thereof, (6) the original Mortgage Loan-to-Value Ratio
thereof, (7) the state in which the related Mortgaged Property is located, and
(8) any other information specified in the Pooling and Servicing Agreement.

         "Mortgage Note": A manually executed written instrument evidencing a
Mortgagor's promise to repay a stated sum of money, plus interest, to the holder
of such instrument on or before a specific date according to a schedule of
principal and interest payments.

         "Mortgage Rate": With respect to each Mortgage Loan, the interest rate
specified in the related Mortgage Note.

         "Mortgaged Property":  The mortgaged property securing a Mortgage Loan.

         "Mortgagor":  The obligor on a Mortgage Note.

         "Net Insurance Proceeds": With respect to any Asset, Insurance Proceeds
received with respect thereto net of (a) any Insured Expenses incurred in
connection therewith, (b) all other reasonable out-of-pocket expenses incurred
by the Master Servicer in connection with the collection of such Insurance
Proceeds and (c) the amount of any Advances made by the Master Servicer or any
other entity with respect to such Asset and not previously reimbursed to the
Master Servicer or such other entity as of the time of the Master Servicer's
receipt of such Insurance Proceeds. Amounts received by the Master Servicer as
Net Insurance Proceeds will be treated for accounting purposes as payments
received on Assets.

         "Net Liquidation Proceeds": With respect to any Asset, the amount of
Liquidation Proceeds received with respect thereto (including any Net Insurance
Proceeds recovered in connection with the liquidation of the related Mortgaged
Property) net of the amount of any related Liquidation Expenses incurred and not
previously reimbursed to the Master Servicer or such other entity as of the time
of the liquidation of such Asset. Amounts received by the Master Servicer as Net
Liquidation Proceeds will be treated for accounting purposes as payments
received on Assets.

         "Net Rate": As to any Asset, the applicable Asset Rate minus the
Servicing Fee Rate and the Trustee Fee Rate.

         "New Lease": Any lease of REO Property entered into on behalf of the
Trust, including any lease renewed, modified or extended on behalf of the Trust
(if the Trustee, or the Master Servicer or its agent, has the right to
renegotiate the terms of such lease).

         "Non-Recoverable Advance": As to any Advance that has not yet been
made, any portion of the amount of such prospective Advance which the Master
Servicer reasonably determines would not ultimately be recoverable from Related
Proceeds. As to any Advance that has been made by the Master Servicer, any
portion of the amount of such Advance that has subsequently been determined by
the Master Servicer to be not ultimately recoverable from Related Proceeds. In
determining whether an Advance is or would be a Non-Recoverable Advance, the
Master Servicer need not take into account the possibility that it might recover
any amounts as the result of a deficiency judgment against the related Obligor.

         "Non-U.S. Person":  Any Person other than a U.S. Person.

         "Obligor":  The obligor under an Asset.

                                      -10-
<PAGE>   15

         "Obligor Bankruptcy Loss": With respect to any Distribution Date as to
any Asset that was the subject of a Principal Cramdown during the preceding
Prepayment Period, the related Principal Cramdown Amount.

         "Officer": With respect to any corporation, the Chairman of the Board
of Directors, the President, any Vice President or Assistant Vice President, the
Secretary, the Treasurer, or any Assistant Secretary or Assistant Treasurer of
such corporation (or, in the case of the Trustee, any trust officer thereof);
with respect to the Depositor, any Officer of the Depositor; with respect to any
partnership, the designated managing partner, if any, who has been granted
authority by the partnership agreement of such partnership to bind the
partnership by his or her signature, or, in any other case, any general partner
of the partnership; with respect to any bank or trust company acting as trustee
of an express trust or as custodian, any trust officer or authorized officer
thereof.

         "Officer's Certificate": For any Person, a certificate that has been
signed on behalf of that Person by an Officer of that Person.

         "Opinion of Counsel": A written opinion of counsel, which counsel is
satisfactory to the Master Servicer and the Trustee. Whenever an Opinion of
Counsel is required hereunder, the renderer of such Opinion may rely on other
Opinions of Counsel. Any Opinion of Counsel relating to tax matters must be an
opinion of Independent counsel.

         "Outstanding": (a) With respect to the Certificates, as of any date of
determination, "Outstanding" refers to all Certificates theretofore executed and
delivered under the Pooling and Servicing Agreement except:

                  (1)      Certificates theretofore canceled by the Certificate
Registrar  or  delivered to the Certificate Registrar for cancellation;

                  (2)      Certificates or portions thereof for which money in
the amount necessary for the making of a final distribution on such Certificates
has been theretofore deposited with the Trustee or any Paying Agent in trust for
the Holders of such Certificates; provided, that if such Certificates are to be
retired because of termination of the Trust at the option of the Master
Servicer, notice of such optional termination has been duly given pursuant to
the Pooling and Servicing Agreement;

                  (3)      Certificates in exchange for which other Certificates
have been executed and delivered pursuant to Section 5.04 hereof; and

                  (4)      Certificates alleged to have been destroyed, lost or
stolen for which replacement Certificates have been issued pursuant to Section
5.07 hereof unless proof satisfactory to the Trustee has been presented at or
before the time that the determination of those Certificates that are
Outstanding is made that any such Certificates are held by a holder in due
course.

         (b) With respect to the Assets as of any date, "Outstanding" refers to
Assets with unpaid principal balances greater than zero and that have not
previously been purchased or repurchased pursuant to Section 2.05 hereof or
become Liquidated Loans.

         "P&I Advance":  As defined in Section 3.04(a) hereof.

         "Pass-Through Rate": With respect to any Class of Certificates, the
annual rate at which interest accrues on the Certificates of such Class, which
rate is specified or described for each Class in the related Pooling and
Servicing Agreement.

         "Paying Agent": Any Person authorized by the Depositor and the Trustee
to distribute principal or interest on any Certificates on behalf of the Trustee
and appointed pursuant to Section 5.09 hereof.

         "Percentage Interest": With respect to a Certificate to which an
initial principal amount is assigned as of the Closing Date, the portion of the
Class of which such Certificate is a part evidenced by such Certificate,
expressed as

                                      -11-
<PAGE>   16

a percentage, the numerator of which is the denomination represented by such
Certificate and the denominator of which is the initial Certificate Principal
Balance of such Class. With respect to a Certificate to which an initial
principal balance is not assigned as of the Closing Date, the portion of the
Class of which such Certificate is a part evidenced by such Certificate,
expressed as a percentage stated on the face of such Certificate.

         "Permitted Encumbrances":  In respect of any Mortgaged Property:

         (a)      the lien of current real property taxes and assessments not
yet due and payable;

         (b) covenants, conditions and restrictions, rights of way, easements
and other matters of public record as of the date of recording acceptable to
prudent mortgage lending institutions generally and specifically referred to in
the lender's title insurance policy delivered to the related originator and
referred to or otherwise considered in the appraisal made for the originator;
and

         (c) 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 the Mortgage or the use, enjoyment, value or marketability of the
related Mortgaged Property.

         "Person": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.

         "Plan": Any employee benefit plan or retirement arrangement, including
individual retirement accounts and annuities, Keogh plans and collective
investment funds in which such plans, accounts, annuities or arrangements are
invested, that are described in or subject to the Plan Asset Regulations, ERISA
or corresponding provisions of the Code.

         "Plan Asset Regulations": The Department of Labor regulations set forth
in 29 C.F.R. ss. 2510.3-101.

         "Plan Investor": A Plan, a Person acting on behalf of a Plan or a
Person using the assets of a Plan.

         "Pool Scheduled Principal Balance": For any Series, on any Distribution
Date, the aggregate of the Scheduled Principal Balances on the last day of the
related Collection Period.

         "Pooling and Servicing Agreement": A Pooling and Servicing Agreement
among the Depositor, the Master Servicer and a Trustee, relating to the issuance
of Certificates of a Series, which shall incorporate these Standard Terms by
reference.

         "Pooling REMIC": If provided for in a Pooling and Servicing Agreement,
the REMIC consisting primarily of the related Assets.

         "Pooling REMIC Regular Interest": A Regular Interest in a Pooling
REMIC.

         "Prepayment Period": With respect to each Distribution Date, the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs.

         "Primary Mortgage Insurance": The insurance provided under any Primary
Mortgage Insurance Policy.

         "Primary Mortgage Insurance Policy": A primary mortgage insurance
policy, if applicable, covering certain conventional Mortgage Loans for which
the initial Mortgage Loan-to-Value Ratios exceeded 80%.

         "Principal Cramdown" means, as to any Asset, either (a) a decree by a
bankruptcy court to the effect that the portion of such Asset that is secured by
the underlying Mortgaged Property is less than its Unpaid Principal Balance due
to the fact that the value of such Mortgaged Property is less than such Unpaid
Principal Balance or (b)

                                      -12-
<PAGE>   17

the permanent forgiveness by a bankruptcy court of some or all of the Unpaid
Principal Balance owed by the related Obligor.

         "Principal Cramdown Amount" means, with respect to any Prepayment
Period as to any Asset that has been the subject of a Principal Cramdown, the
amount by which (a) the Unpaid Principal Balance of such Asset exceeds (b) as
applicable, depending upon the type of Principal Cramdown that was applied to
such Asset, either (1) the portion of such Unpaid Principal Balance that remains
secured by the related Mortgaged Property after taking the related Principal
Cramdown into account or (2) the Unpaid Principal Balance after taking into
account the permanent forgiveness of debt ordered by the bankruptcy court in
connection with the related Principal Cramdown.

         "Principal Distribution Amount": For any Series, as defined in the
related Pooling and Servicing Agreement.

         "Principal Prepayment": With respect to any Asset, a payment
attributable to principal of such Asset, other than a scheduled principal
payment on such Asset, which may be received (a) from the related Obligor
together with a regular Monthly Payment, (b) from the related Obligor together
with an Early Payment, or (c) in the form of Net Insurance Proceeds received by
the Master Servicer otherwise than as a component of Liquidation Proceeds.

         "Private Certificate": Any Class of Certificates of a Series designated
as such in the related Pooling and Servicing Agreement.

         "Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.

         "Qualification Defect": With respect to an Asset, (a) a defective
document in the related Asset File, (b) the absence of a document in such Asset
File, or (c) the breach of any representation, warranty, or covenant with
respect to the Asset made by the Depositor, the Seller or the Master Servicer,
but only if, as a result of any of the foregoing, the affected Asset would cease
to qualify as a "qualified mortgage" for purposes of the REMIC Provisions. With
respect to a REMIC Regular Interest or a participation certificate described in
Code section 860G(a)(3), the failure to qualify as a "qualified mortgage" for
purposes of the REMIC Provisions.

         "Qualified Bank": Any domestic bank not affiliated with the Seller or
the Depositor (1) having long-term unsecured debt obligations rated in one of
the two highest rating categories (without modifiers) of at least one Rating
Agency (and of any other Rating Agency, if such bank's long-term unsecured debt
obligations are rated by such additional Rating Agency) or short-term unsecured
debt obligations rated in at least one Rating Agency's highest applicable rating
category (and of any other Rating Agency's highest applicable rating category if
such bank's short-term unsecured debt obligations are rated by such additional
Rating Agency), (2) having commercial paper or short-term unsecured debt
obligations rated in at least one Rating Agency's highest applicable rating
category (and in any other Rating Agency's highest applicable rating category if
such bank's commercial paper or short-term unsecured debt obligations are rated
by such additional Rating Agency), or (3) that is otherwise acceptable to each
applicable Rating Agency.

         "Qualified Institutional Buyer": Any "qualified institutional buyer" as
defined in clause (a)(1) of Rule 144A.

         "Qualified Insurer": Any insurance company or surety or bonding company
licensed to do business and issue insurance in all relevant jurisdictions
(including, in the case of an insurer under a Standard Hazard Insurance Policy,
the jurisdiction in which each Mortgaged Property covered by such policy is
located).

         "Qualified Substitute Asset": An Asset substituted by the Depositor or
the Seller for a Replaced Asset which must, on the date of such substitution,
(a) have an Unpaid Principal Balance not greater than (and not more than $10,000
less than) the Unpaid Principal Balance of the Replaced Asset, (b) have an Asset
Rate not less than (and not more than one percentage point in excess of) the
Asset Rate of the Replaced Asset, (c) have a Net Rate equal to the Net Rate of
the Replaced Asset, (d) have a remaining term to maturity not greater than (and
not more than one year less than) that of the Replaced Asset, (e) have a
Mortgage Loan-to-Value Ratio as of the first day of

                                      -13-
<PAGE>   18

the month in which the substitution occurs equal to or less than the Mortgage
Loan-to-Value Ratio of the Replaced Asset as of such date (in each case, using
the appraised value at origination, and after taking into account the Monthly
Payment due on such date), and (f) comply with each representation and warranty
set forth in Section 2.04 hereof and in the related Sales Agreement. In the
event that more than one Asset is substituted for a Replaced Asset, the amount
described in clause (a) hereof shall be determined on the basis of aggregate
Unpaid Principal Balances, the rates described in clauses (c) (i), (ii), and
(iii) hereof shall be determined on the basis of weighted average Asset Rates
and Net Rates, as the case may be, and the term described in clause (d) hereof
shall be determined on the basis of weighted average remaining terms to
maturity, provided that no Qualified Substitute Asset may have an original term
to maturity beyond the latest original term to maturity of any Asset assigned to
the Trust on the Closing Date. In the case of a Trust for which a REMIC election
has been or will be made, a Qualified Substitute Asset also shall satisfy the
following criteria as of the date of its substitution for a Replaced Asset: (A)
the Obligor shall not be 90 or more days delinquent in payment on the Qualified
Substitute Asset, (B) the Asset File for such Asset shall not contain any
material deficiencies in documentation, and shall include an executed Mortgage
Note, as applicable, and, if it is a Mortgage Loan, a recorded Mortgage; (C) the
Mortgage Loan-to-Value Ratio of the Asset must be 125% or less either (1) on the
date of origination of the Asset, or, if any of the terms of such Asset were
modified other than in connection with a default or imminent default on such
Asset, on the date of such modification, or (2) on the date of the substitution,
based on an appraisal conducted within the 60 day period prior to the date of
the substitution; (D) no property securing such Asset may be subject to
foreclosure, bankruptcy, or insolvency proceedings; and (E) such Asset, if a
Mortgage Loan, must be secured by a valid first lien on the related Mortgaged
Property.

         "Rating Agency": As to any Series, any nationally recognized
statistical rating agency, or its successor, that on the Closing Date rated one
or more Classes of the Certificates of such Series at the request of the
Depositor. If such agency or a successor is no longer in existence, "Rating
Agency" shall be such nationally recognized statistical rating agency, or other
comparable Person, designated by the Depositor, notice of which designation
shall be given to the Trustee and the Master Servicer. References herein to any
rating category of a Rating Agency shall mean such rating category without
regard to any plus or minus or numerical designation.

         "Realized Loss": For any Series, as defined in the Pooling and
Servicing Agreement.

         "Record Date": With respect to each Distribution Date, the last
Business Day of the month immediately preceding the month in which such
Distribution Date occurs.

          "Regular Certificate": A Certificate other than a Residual Certificate
and that is a Regular Interest in a REMIC or a combination of Regular Interests
in a REMIC.

         "Regular Interests": Interests in a REMIC that are designated as
"regular interests" under the REMIC Provisions.

         "Regulations": The regulations promulgated under the Code by the
Treasury.

         "Related Proceeds':  As defined in Section 3.04(c) hereof.

         "REMIC": A "real estate mortgage investment conduit," within the
meaning of the REMIC Provisions. As to a particular Trust, those assets of the
Trust as to which an election is to be made to be treated as a "real estate
mortgage investment conduit," within the meaning of section 860D of the Code. A
REMIC generally is an elective entity for federal income tax purposes that
consists of a fixed pool of qualifying assets in which investors hold multiple
classes of interests. In order to be treated as a REMIC, such pool will be
required to meet ongoing qualification requirements provided by the Code,
Regulations, and binding pronouncements of the Internal Revenue Service, as in
effect from time to time.

         "REMIC Loan-to-Value Ratio": The quotient, expressed as a percentage,
obtained by dividing (a) the original unpaid principal balance of an Asset, plus
the full amount of any other indebtedness secured by the related Mortgaged
Property which is senior to, or pari passu with, such Asset by (b) the sale
price of the Mortgaged Property that secures such Asset. Alternatively, the
REMIC Loan-to-Value Ratio may be determined by dividing (a)

                                      -14-
<PAGE>   19

the unpaid principal balance of an Asset as of the Startup Day plus the full
amount of any other indebtedness secured by the related Mortgaged Property which
is senior to, or pari passu with, such Asset by (b) the fair market value of the
Mortgaged Property that secures such Asset on the Startup Day.

         "REMIC Provisions": Provisions of the Code relating to real estate
mortgage investment conduits, which appear at sections 860A through 860G of the
Code, related Code provisions, and Regulations (whether in proposed, temporary
or final form), announcements and rulings thereunder, as the foregoing may be in
effect from time to time.

         "Remittance Amount": With respect to any Remittance Date and related
Distribution Date, the amount equal to (i)i sum of the following amounts:

         (a) the Monthly Payment that was due on each Outstanding Asset on the
Due Date occurring in the related Collection Period and that was received by the
Master Servicer from the related Obligor;

         (b) all amounts received during the related Collection Period in
respect of any Asset that was Outstanding at the beginning of the related
Collection Period representing late payments of principal and interest due on
such Asset prior to the Due Date occurring in the related Collection Period, to
the extent such amounts exceed outstanding unreimbursed P&I Advances made by the
Master Servicer with respect to such Asset;

         (c) each Principal Prepayment (whether full or partial) of any Asset
that was Outstanding at the beginning of the related Prepayment Period received
by the Master Servicer during the related Prepayment Period;

         (d) any amounts received by the Master Servicer during the related
Prepayment Period as Net Liquidation Proceeds with respect to any Asset that was
Outstanding at the beginning of the related Prepayment Period (net of
outstanding unreimbursed P&I Advances made by the Master Servicer with respect
to such Asset);

         (e) all amounts deposited into the Certificate Account during the
related Prepayment Period as a result of any purchase or repurchase of any Asset
pursuant to Section 2.05 hereof (net of outstanding unreimbursed P&I Advances
made by the Master Servicer with respect to such Asset); and

         (f)      all Foreclosure Advances made by the Master Servicer

less (ii) amounts permitted to be withdrawn by the Master Servicer pursuant to
Section 3.07(a) during the related Collection Period.

         "Remittance Date": The Business Day preceding each Distribution Date,
which is the date by which funds must be remitted by the Master Servicer from
the Certificate Account to the Distribution Account or, if the Certificate
Account is maintained by the Trustee, the date on which the Master Servicer is
to notify the Trustee of the related Remittance Amount, in either case pursuant
to Section 3.07(b) hereof.

         "Remittance Report":  As defined in Section 4.01 hereof.

         "Rents From Real Property": With respect to any REO Property, gross
income of the character described in Code section 856(d) and Treasury
regulations thereunder.

         "REO Property": A Mortgaged Property acquired by the Master Servicer on
behalf of the Certificateholders through foreclosure or deed-in-lieu of
foreclosure, as further described in Section 3.09 hereof.

         "REO Property Disposition": The receipt by the Master Servicer of
Insurance Proceeds and other payments and recoveries (including Liquidation
Proceeds) which the Master Servicer recovers from the sale or other disposition
of an REO Property.

         "Replaced Asset": An Asset replaced or to be replaced by a Qualified
Substitute Asset.

                                      -15-
<PAGE>   20

         "Repurchase Price": With respect to any Asset to be purchased or
repurchased pursuant to Section 2.05 hereof, an amount equal to the Unpaid
Principal Balance of such Asset as of the close of business on the date of such
purchase or repurchase, together with all accrued and unpaid interest thereon to
the end of the Collection Period in which such purchase or repurchase occurs.

         "Repurchaser": Any Person that repurchases or purchases an Asset from
the Trust pursuant to Section 2.05 hereof.

         "Request for Release": A release signed by an Officer of the Master
Servicer in the form attached hereto as Exhibit 3.

         "Reserve Fund": Any fund designated as a "Reserve Fund" in a Pooling
and Servicing Agreement.

         "Residual Certificate": Any one of the Classes of Certificates of a
Series designated as such in the related Pooling and Servicing Agreement.

         "Residual Interest": An interest in a REMIC that is designated as a
"residual interest" under the REMIC Provisions.

         "Residual Majority": At any time, the Holders of a majority (by
Percentage Interests) of the Residual Certificates.

         "Residual Transferee Agreement": A certification and agreement required
to be executed and delivered by the prospective transferee of a Residual
Certificate pursuant to Section 5.05(c) hereof, which must be substantially in
the form of Exhibit 7 hereto.

         "RESPA": The Real Estate Settlement Procedures Act of 1974, as amended.

         "Rule 144A": Rule 144A promulgated by the Securities and Exchange
Commission, as the same may be amended from time to time.

         "Rule 144A Agreement": An agreement substantially in the form of
Exhibit 4 hereto.

         "Rule 144A Certificates": Any Class of Certificates of a Series
designated as such in the related Pooling and Servicing Agreement.

         "Sales Agreement": A Sales Agreement pursuant to which the Seller sells
Mortgage Loans to the Depositor for inclusion in a Trust.

         "Scheduled Principal Balance": For any Series, as defined in the
Pooling and Servicing Agreement.

         "Securities Act":  The Securities Act of 1933, as amended.

         "Seller": As to any Asset included in the Trust Estate for a Series,
the entity that sold such Asset to the Depositor under a Sales Agreement, which
will be Union Planters Bank, N.A. unless otherwise specified in the related
Pooling and Servicing Agreement. For purposes of the definitions of "Mortgage
Loan Documents" herein, documents (including, without limitation, assignments
and endorsements) indicating assignment or endorsement to, or the existence of a
security interest in, a name that is a registered trade name of the Seller in
the relevant jurisdiction shall satisfy any requirement of these Standard Terms
that such documents reflect the name of the "Seller."

         "Series": A separate Series of Certificates issued pursuant to a
Pooling and Servicing Agreement, which Series may, as provided therein, be
divided into two or more Classes.

                                      -16-
<PAGE>   21

          "Servicing Advances": Advances required to be made by the Master
Servicer as described in Section 3.04(b) hereof, including, but not limited to,
advances for the payment of personal property taxes, real estate taxes and
premiums for Standard Hazard Insurance Policies and other insurance and guaranty
premiums, if any.

         "Servicing Fee": On each Distribution Date for each Asset, the product
obtained by multiplying (a) the Servicing Fee Rate by (b) the Scheduled
Principal Balance of such Asset as of the first day of the related Collection
Period.

         "Servicing Fee Rate": A per annum rate, to be specified in each Pooling
and Servicing Agreement.

         "Shortfall": Due Date Interest Shortfall and Soldiers' and Sailors'
Shortfall.

         "Soldiers' and Sailors' Shortfall": Interest losses on a Mortgage Loan
resulting from application of the Soldiers' and Sailors' Civil Relief Act of
1940.

         "Special Hazard Insurance Policy": An insurance policy covering a
Mortgage Loan against loss by reason of fire, lightning, explosion, smoke,
windstorm, hail, riot, strike and civil commotion.

         "Special Hazard Loss": A loss incurred on a Mortgage Loan attributable
to physical damage to the related Mortgaged Property of a type which is not
covered by standard hazard insurance policies, excluding losses caused by war,
nuclear reaction, nuclear or atomic weapons, insurrection or normal wear and
tear.

         "Special Tax Consent": The written consent of the Holder of a Residual
Certificate to any tax (or risk thereof) arising out of a proposed transaction
or activity that may be imposed upon such Holder or that may affect adversely
the value of such Holder's Residual Certificate.

         "Special Tax Opinion": An Opinion of Counsel that a proposed
transaction or activity will not (a) affect adversely the status of the REMIC as
a REMIC or the related Regular Certificates as the regular interests therein,
(b) affect the timing or amount of distributions of interest or principal on
such Regular Certificates, or (c) result in the encumbrance of the Assets by a
tax lien.

         "Standard Hazard Insurance Policy": With respect to each Asset, the
policy of fire and extended coverage insurance (and any federal flood insurance,
if applicable) required to be maintained for the related Mortgaged Property, as
provided herein, which may be a blanket mortgage impairment policy maintained by
the Servicer in accordance with the terms and conditions of the Pooling and
Servicing Agreement.

         "Standard Terms": These Standard Terms to Pooling and Servicing
Agreement and all exhibits, schedules and appendices hereto, as amended and
supplemented from time to time.

         "Startup Day": The Startup Day (within the meaning of Code section
860G(a)(9)) is the Closing Date.

         "Tax Matters Person": The Person or Persons designated from time to
time hereunder to act as tax matters person (within the meaning of the REMIC
Provisions) of the REMIC.

         "Terminating Purchase": The purchase of all Mortgage Loans and each REO
Property owned by a Trust pursuant to Section 9.01 hereof.

         "Termination Account": An escrow account maintained by the Trustee into
which any Trust funds not distributed on the Distribution Date on which the
earlier of (a) a Terminating Purchase or (b) the final payment or other
liquidation of the last Asset remaining in the Trust or the disposition of the
last REO Property remaining in the Trust is made are deposited. The Termination
Account shall be an Eligible Account.

         "Termination Date": Any Distribution Date fixed for termination of the
Trust pursuant to the provisions of Sections 9.01 and 9.02 hereof.

                                      -17-
<PAGE>   22

         "Termination Price": With respect to any Terminating Purchase, the
greater of (1) the sum of (a) any Liquidation Expenses incurred by the Master
Servicer in respect of any Asset that has not yet been liquidated, (b) all
amounts required to be reimbursed or paid to the Master Servicer in respect of
previously unreimbursed Servicing Advances, plus (c) the sum of (i) 100% of the
aggregate of the Unpaid Principal Balance of each Asset remaining in the Trust
on the day of such purchase, plus accrued interest thereon at the related Asset
Rate through the end of the Interest Accrual Period relating to the Termination
Date, plus (ii) the lesser of (A) the aggregate of the Unpaid Principal Balances
of each Asset relating to any REO Property remaining in the Trust, plus accrued
interest thereon at the related Asset Rate through the end of the Interest
Accrual Period related to the Termination Date and (B) the current appraised
value of any such REO Property (net of Liquidation Expenses to be incurred in
connection with the disposition of such REO Property, estimated in good faith by
the Master Servicer), such appraisal to be conducted by an appraiser mutually
agreed upon by the Master Servicer and the Trustee, plus all previously
unreimbursed P&I Advances made in respect of such REO Property and (2) the
aggregate fair market value of all of the assets of the Trust (as determined by
the Master Servicer as of the close of business on the third Business Day
preceding the date upon which notice of any such purchase is furnished to
Certificateholders pursuant to Section 9.01(c) hereof), plus all previously
unreimbursed P&I Advances made with respect to the Assets. The fair market value
of the assets of the Trust shall be deemed to include accrued interest through
the end of the Interest Accrual Period related to the Termination Date at the
applicable Asset Rate on the unpaid principal balance of each Asset (including
any Asset that became a REO Property, which REO Property has not yet been
disposed of by the Master Servicer). The basis for any such valuation shall be
furnished by the Master Servicer to the Certificateholders upon request.

         "Terminator": The Person making a Terminating Purchase or causing such
Terminating Purchase to be made.

         "TIN":  Taxpayer identification number.

         "Title Insurance Policy": For any Mortgage Loan, an American Land Title
Association mortgagee's mortgage loan title policy form 1970, or other form of
mortgagee's title insurance acceptable to Fannie Mae or Freddie Mac for the
jurisdiction in which the subject property is located, including all riders and
endorsements thereto, insuring that the related Mortgage creates a valid first
lien on the underlying Mortgaged Property subject only to Permitted
Encumbrances.

         "Transferee Agreement": An agreement substantially in the form of
Exhibit 5 hereto.

         "Treasury":  The United States Department of the Treasury.

         "Trust": The trust created pursuant to the terms of a Pooling and
Servicing Agreement.

         "Trust Estate": The segregated pool of assets sold and assigned to a
Trustee by the Depositor pursuant to the conveyance clause of any Pooling and
Servicing Agreement.

         "Trustee": The bank or trust company identified as the trustee under
any Pooling and Servicing Agreement.

         "Trustee Fee": On each Distribution Date for each Asset, the product
obtained by multiplying (a) the Trustee Fee Rate by (b) the Scheduled Principal
Balance of such Asset as of the first day of the related Collection Period.

         "Trustee Fee Rate": A per annum rate, to be specified in the related
Pooling and Servicing Agreement.

         "Trustee Mortgage Loan File": As to each Mortgage Loan, a file
containing all of the related Mortgage Loan Documents.

         "UCC": The Uniform Commercial Code as in effect in any relevant
jurisdiction.

                                      -18-
<PAGE>   23

         "Unpaid Principal Balance": With respect to any Asset, the outstanding
principal balance payable by the related Obligor pursuant to the terms of such
Asset.

         "U.S. Person": (i) A citizen or resident of the United States, (ii) a
corporation created or organized in or under the laws of the United States, any
state thereof or the District of Columbia, including an entity treated as a
corporation for federal income tax purposes, (iii) a partnership (unless
Treasury regulations are adopted that provide otherwise) created or organized in
or under the laws of the United States, any state thereof or the District of
Columbia, including an entity treated as a partnership for federal income tax
purposes, none of the interests in which are owned, directly or indirectly
through one or more intermediate entities, by a Non-U.S. Person, (iv) an estate
the income of which is includible in gross income for United States federal
income tax purposes, regardless of its source, (v) a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States fiduciaries have the authority to
control all substantial decisions of the trust (or to the extent provided in
applicable Treasury regulations, certain trusts in existence on August 20, 1996
that are eligible to be treated as United States persons), or (vi) a foreign
person who would be subject to United States taxation on a net basis on income
derived from a Certificate.

         "USAP":  As defined in Section 3.12 hereof.

         "VA":  The United States Department of Veterans Affairs.

         "VA Asset":  An Asset guaranteed in whole or in part by the VA.

         "VA Guaranty": As to any VA Asset, VA's full or partial guaranty of
payment of amounts due thereunder.

         "Voting Rights": With respect to any Certificate, the portion of the
voting rights of all of the Certificates of the related Series that is allocated
to such Certificate, as specified in the related Pooling and Servicing
Agreement. Voting Rights allocated to each Class of Certificates shall be
allocated among the Certificates of such Class in proportion to the respective
Percentage Interests of the Holders thereof.

         "Withholding Agent": The Trustee or its designated Paying Agent or
other Person who is liable to withhold federal income tax from a distribution on
a Residual Certificate under sections 1441 or 1442 of the Code and the
Regulations promulgated thereunder.

SECTION 1.02.    INTEREST CALCULATIONS.

         Unless otherwise specified, all calculations described herein shall be
made on the basis of a 360-day year consisting of twelve 30-day months.

                                   ARTICLE II

                                   THE ASSETS

SECTION 2.01.    ASSIGNMENT OF ASSETS.

         Pursuant to a Pooling and Servicing Agreement, the Depositor has sold
to the Trust without recourse all the right, title and interest of the Depositor
in and to the Assets identified in such Pooling and Servicing Agreement, any and
all rights, privileges and benefits accruing to the Depositor under the Sales
Agreement(s) with respect to such Assets (except any rights of the Depositor to
fees payable by the Seller under such Sales Agreement and provided that the
Depositor shall retain its rights to indemnification from the Seller under such
Sales Agreement, but shall also convey rights to such indemnification to the
Trust as its assignee), including the rights and remedies with respect to the
enforcement of any and all representations, warranties and covenants under such
Sales Agreements and assets included or to be included in the related Trust for
the benefit of the related Certificateholders as set forth in the conveyance
clause of the related Pooling and Servicing Agreement. Such assignment includes
all of the Depositor's rights to payments due with respect to the Assets after
the Cut-off Date.

                                      -19-
<PAGE>   24

SECTION 2.02.    THE MORTGAGE LOANS.

         (a) Custody of Trustee Mortgage Loan Files. In connection with the
transfer and assignment of the Mortgage Loans from the Depositor to the Trustee,
the Depositor shall deliver, or cause to be delivered, to the Trustee or its
Custodian on or before the Closing Date, a Trustee Mortgage Loan File containing
each of the documents listed in the definition thereof. If any Mortgage or any
prior Assignment is in the process of being recorded on the Closing Date, the
Depositor shall cause each such original recorded document or certified copy
thereof, to be delivered to the Trustee or its Custodian promptly following its
recordation. The Depositor shall also cause to be delivered to the Trustee any
other original Mortgage Loan Document to be included in the Trustee Mortgage
Loan File if a copy thereof initially was delivered.

         In lieu of recording an Assignment of any Mortgage for any Mortgage
Loan, the Depositor may deliver or cause to be delivered to the Trustee or its
Custodian the Assignment of the Mortgage from the Seller to the Trustee in a
form suitable for recordation; provided, however, that the Depositor shall use
its best efforts within 30 days of the occurrence of an Assignment Event, and in
any event within 60 days of the occurrence of an Assignment Event, to either (i)
arrange for the Master Servicer to record the Assignment of each Mortgage in
favor of the Trustee in the appropriate real property office or other records
office or (ii) deliver to the Trustee an Opinion of Counsel to the effect that
recording is not required to protect the Trustee's right, title and interest in
and to the related Mortgage Loans or, in the event a court should recharacterize
the conveyance of the Mortgage Loans as a loan or a security for a loan, to
perfect a first priority security interest in favor of the Trustee in the
related Mortgage Loan. With respect to any Assignment of Mortgage as to which
the related recording information is unavailable within the applicable time
period set forth above, such Assignment of Mortgage shall be submitted for
recording within 30 days after receipt of such information but in no event later
than one year after the date such Assignment of Mortgage is otherwise required
to be recorded pursuant to this Section. The Trustee shall be required to retain
a copy of each Assignment of Mortgage submitted for recording. In the event that
any such Assignment of Mortgage is lost or returned unrecorded because of a
defect therein, the Seller shall promptly prepare a substitute Assignment or
cure such defect, as the case may be, and thereafter the Seller shall be
required to submit each such Assignment for recording. Any failure of the Seller
to comply with this Section 2.02(a) shall result in the obligation of the Seller
to purchase or substitute for the related Mortgage Loans pursuant to the
provisions of Section 2.05(a)(1).

         By its execution of the Pooling and Servicing Agreement for a Series,
the Trustee acknowledges and declares that it or the Custodian holds and will
hold or has agreed to hold all documents delivered to it from time to time with
respect to a Mortgage Loan underlying such Series and all other assets delivered
to it or its Custodian and that are included in the definition of "Trust Estate"
in the related Pooling and Servicing Agreement in trust for the exclusive use
and benefit of all present and future Certificateholders of the related Series.

         (b)      Custody of Master Servicer Mortgage Loan Files. The Master
Servicer has in its possession a Master Servicer Mortgage Loan File for each
Mortgage Loan containing each of the documents listed in the definition thereof.
All such documents shall be held by the Master Servicer in trust for the benefit
of the Trustee on behalf of the Certificateholders of the related Series.

         (c)      Review of Trustee Mortgage Loan Files.

                  (i)      Initial Certification. The Trustee shall, for the
         benefit of the Certificateholders for any Series, review each related
         Trustee Mortgage Loan File prior to the related Closing Date to
         ascertain that all documents required to be included in the Trustee
         Mortgage Loan File (other than documents noted in (G) below and any
         flood insurance policy) are included therein, and shall deliver to the
         Depositor and the Master Servicer on such Closing Date an Initial
         Certification with respect to each underlying Mortgage Loan (except any
         Mortgage Loan that has been liquidated or purchased from the related
         Trust prior to such Closing Date) to the effect that, except as
         specifically noted on a schedule of exceptions thereto, (A) all
         documents required to be contained in the Trustee Mortgage Loan File
         (other than documents noted in (G) below and any flood insurance
         policy) are in its possession, (B) such documents have been reviewed by
         it and appear regular on their face and relate by loan number to such
         Mortgage Loan, and (C) based on its

                                      -20-
<PAGE>   25

         examination and only as to the foregoing documents, the information set
         forth on the related Mortgage Loan Schedule accurately reflects
         information set forth in the Trustee Mortgage Loan File.

                  It is understood that before making the Initial Certification
         for any Series, the Trustee shall examine the related Mortgage Loan
         Documents to confirm that:

                           (A) each Mortgage Note and Mortgage bears an original
                  or reproduction signature or signatures purporting to be that
                  of the Person or Persons named as the maker and
                  mortgagor/trustor;

                           (B) except for the endorsement to the Trustee, if
                  any, neither the Mortgage Note, the Mortgage nor any
                  Assignment, on the face or the reverse side(s) thereof,
                  contain evidence of any unsatisfied claims, liens, security
                  interests, encumbrances or restrictions on transfer;

                           (C) the principal amount of the indebtedness secured
                  by the related Mortgage is identical to the original principal
                  amount of the related Mortgage Note;

                           (D) the Assignment of the related Mortgage from the
                  Seller to the Trustee is in the form required pursuant to
                  clause (c) of the definition of Trustee Mortgage Loan File,
                  and bears an original or reproduction signature of the Seller
                  and any other necessary party (or signatures purporting to be
                  that of the Seller and any such other party);

                           (E) if intervening Assignments are included in the
                  Trustee Mortgage Loan File, each such intervening Assignment
                  bears an original or reproduction signature of the related
                  mortgagee and/or the assignee (and any other necessary party)
                  (or signatures purporting to be that of the Seller and any
                  such other party);

                           (F) if either a Title Insurance Policy, a preliminary
                  title report or a written commitment to issue a Title
                  Insurance Policy is delivered, the address of the real
                  property set forth in such policy, report or written
                  commitment is identical to the real property address contained
                  in the related Mortgage; and

                           (G) if any of a Title Insurance Policy, certificate
                  of title insurance or a written commitment to issue a Title
                  Insurance Policy is delivered, such policy, certificate or
                  written commitment is for an amount not less than the original
                  principal amount of the related Mortgage Note and such Title
                  Insurance Policy insures that the related Mortgage creates a
                  first lien, senior in priority to all other deeds of trust,
                  mortgages, deeds to secure debt, financing statements and
                  security agreements and to any mechanics' liens, judgment
                  liens or writs of attachment (or if the Title Insurance Policy
                  or certificate of title insurance has not been issued, the
                  written commitment for such insurance obligates the insurer to
                  issue such policy for an amount not less than the original
                  principal amount of the related Mortgage Note).

                  (ii)     Final Certification. Prior to the first anniversary
         date of the Closing Date for a Series, the Trustee shall deliver to the
         Depositor and the Master Servicer a Final Certification evidencing the
         completeness of the Trustee Mortgage Loan File for each Mortgage Loan,
         with any applicable exceptions noted on such Final Certification.

                  (iii)    Certifications Generally. In giving each of the
         Initial Certification and the Final Certification with respect to a
         Series, the Trustee shall be under no duty or obligation (A) to
         inspect, review or examine any such documents, instruments, securities
         or other papers to determine that they or the signatures thereon are
         genuine, enforceable, or appropriate for the represented purpose or
         that they have actually been recorded or that they are other than what
         they purport to be on their face or (B) to determine whether any
         Trustee Mortgage Loan File should include any assumption agreement,
         modification agreement, written assurance or substitution agreement or
         flood insurance.

                                      -21-
<PAGE>   26

                  (iv)     Custodians. In lieu of taking possession of the
         Trustee Mortgage Loan Files and reviewing such files itself, the
         Trustee may, in accordance with Section 8.11 hereof, appoint one or
         more Custodians to hold the Trustee Mortgage Loan Files for a Series on
         its behalf and to review them as provided in this Section 2.02. The
         Depositor shall, upon notice of the appointment of a Custodian, deliver
         or cause to be delivered all documents to the Custodian that would
         otherwise be deliverable to the Trustee. In such event, the Trustee
         shall obtain from each such Custodian, within the specified times, the
         Initial and Final Certifications with respect to those Mortgage Loans
         held and reviewed by such Custodian and may deliver such Certifications
         to the Depositor and the Master Servicer in satisfaction of the
         Trustee's obligation to prepare such Certification. The Trustee shall
         notify the Custodian of any notices delivered to the Trustee with
         respect to those Trustee Mortgage Loan Files.

SECTION 2.03.    REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE.

         The Trustee acknowledges receipt of the Trustee Mortgage Loan Files and
declares that it, or its agent, holds and will hold such documents and papers
delivered to it in trust for the use and benefit of all present and future
Certificateholders of the related Series.

SECTION 2.04.    REPRESENTATIONS AND WARRANTIES AS TO ASSETS.

         The Depositor represents and warrants to the Trustee, effective as of
the Closing Date, that the following information is true and correct in all
material respects:

         (a) The information pertaining to each Asset set forth in the Asset
Schedule was true and correct at the date or dates respecting which such
information was furnished.

         (b) The Depositor is the owner of, or holder of a perfected first
priority security interest in, each Asset.

         (c) The Depositor acquired its ownership of, or security interest in,
each such Asset in good faith without notice of any adverse claim.

         (d) Except for the sale to the Trustee, the Depositor has not assigned
any interest or participation in each such Asset (or, if any such interest or
participation has been assigned, it has been released).

         (e) The Depositor has full right to sell the Trust Estate to the
Trustee.

         It is understood and agreed that the representations and warranties set
forth in this Section 2.04 shall survive delivery of the respective Trustee
Mortgage Loan Files to the Trustee or its Custodian and shall inure to the
benefit of the Trust notwithstanding any restrictive or qualified endorsement or
assignment. Upon the discovery by the Depositor, the Master Servicer or the
Trustee of a breach of any of the foregoing representations and warranties, the
party discovering such breach shall give prompt written notice to the other
parties to the Pooling and Servicing Agreement. It is understood and agreed that
the obligations of the Depositor set forth in Section 2.05 to cure, substitute
for or repurchase an Asset constitute the sole remedies against the Depositor
available to the Certificateholders or to the Trustee on their behalf respecting
a breach of the representations and warranties contained in this Section 2.04.
It is further understood and agreed that the Depositor shall be deemed not to
have made the representations and warranties in this Section 2.04 with respect
to, and to the extent of, representations and warranties made, as to the matters
covered in this Section 2.04, by the Seller in the related Sales Agreement
assigned to the Trust.

SECTION 2.05.    PURCHASE OR SUBSTITUTION OF CERTAIN ASSETS.

         (a)      Breaches of Representations and Warranties and Incomplete or
Defective Asset Files.

                  (i)      Seller Breach. Upon discovery or receipt of notice of
         any missing or defective document in an Asset File, or of any breach by
         the Seller of any representation, warranty or covenant hereunder or

                                      -22-
<PAGE>   27

         under the Sales Agreement, which defect or breach materially and
         adversely affects the value of any Asset or the interest of the Trust
         therein (it being understood that any such defect or breach shall be
         deemed to have materially and adversely affected the value of the
         related Asset or the interest of the Trust therein if the Trust incurs
         a loss as a result of such defect or breach), the Trustee upon actual
         knowledge thereof shall promptly notify the Master Servicer of such
         absence or defect or breach and direct the Master Servicer to request
         the Seller of such Asset to cure such defect or breach. For purposes of
         this subsection, a document in any Asset File shall not be considered
         missing until the Trustee delivers its Final Certification, unless such
         missing document creates a materially adverse consequence to any
         Certificateholder. The Seller must cure such defect or breach, or
         purchase such Asset from the Trust, within 90 days after the date on
         which the Seller was notified of such defect or breach. In lieu of
         purchasing any such Asset as provided above, if so provided in the
         related Sales Agreement, the Seller may cause such Asset to be removed
         from the Trust (in which case it shall become a Replaced Asset) and
         substitute one or more Qualified Substitute Assets in the manner and
         subject to the limitations set forth in Section 2.05(d) below.
         Notwithstanding the foregoing, however, if such breach is a
         Qualification Defect and one or more REMIC elections have been made
         with respect to the related Trust, such cure, purchase or substitution
         must take place within 75 days of the Defect Discovery Date. It is
         understood and agreed that enforcement of the obligation of the Seller
         to cure or to purchase (or to substitute for) any Asset as to which a
         material defect in a constituent document exists or as to which such a
         breach has occurred and is continuing, in addition to the obligation of
         the Seller to indemnify the Depositor and its assignees (including the
         Trust) for any losses and damages incurred in respect of any such
         breach or defect, shall constitute the sole remedy against the Seller
         respecting such defect or breach available to the Trustee on behalf of
         the Certificateholders. The Master Servicer shall use its best efforts
         to enforce the Seller's obligations under its Sales Agreement to
         repurchase or substitute for Assets affected by breaches of the
         Seller's representations and warranties contained in its Sales
         Agreement, and to enforce the Seller's obligations to indemnify the
         Trust (as the assignee of the Depositor under the Sales Agreement) for
         any losses or damages it incurs as a result of breaches of the Seller's
         representations and warranties contained in its Sales Agreement.

                  (ii)     Master Servicer Breach. In addition to taking any
         action required pursuant to Section 7.01 hereof, upon discovery or
         notice of any breach by the Master Servicer of any representation,
         warranty or covenant hereunder not covered by Section 2.05(a)(i) above
         that materially and adversely affects the value of any Asset or the
         interest of the Trust therein (it being understood that any such defect
         or breach shall be deemed to have materially and adversely affected the
         value of the related Asset or the interest of the Trust therein if the
         Trust incurs a loss as a result of such defect or breach), the Trustee
         upon actual knowledge thereof promptly shall notify the Master Servicer
         of such breach. Upon receipt of such notification, the Master Servicer
         shall cure such breach or shall purchase such Asset from the Trust
         within 90 days after the date on which the Master Servicer was notified
         of such breach. Notwithstanding the foregoing, however, if such breach
         is a Qualification Defect and one or more REMIC elections have been
         made with respect to the related Trust, such cure or purchase must take
         place within 75 days of the Defect Discovery Date.

                  In the event the Seller has breached a representation or
         warranty under its Sales Agreement that is substantially identical to a
         representation or warranty breached by the Master Servicer, the Master
         Servicer shall first proceed against the Seller. If the Seller does not
         within 60 days after notification of the breach, take steps to cure
         such breach or purchase or substitute for the Mortgage Loan, the Master
         Servicer shall cure such breach or purchase the Mortgage Loan from the
         Trust as provided in this Section 2.05(a)(2).

                  (iii)    Depositor Breach. Within 90 days after the earlier of
         discovery or receipt of notice by the Depositor of the breach of any of
         its representations or warranties set forth in Section 2.04 above with
         respect to any Asset, which breach materially and adversely affects the
         value of the Asset or the interest of the Trust therein (it being
         understood that any such breach shall be deemed to have materially and
         adversely affected the value of the related Asset or the interest of
         the Trust therein if the Trust incurs a loss as a result of such defect
         or breach), the Depositor shall (i) cure such breach in all material
         respects, (ii) purchase the Asset from the Trustee, or (iii) remove
         such Asset from the Trust (in which case it shall become a Replaced
         Asset) and substitute one or more Qualified Substitute Assets in the
         manner and subject to the limitations set forth in Section 2.05(g)
         below. Notwithstanding the foregoing, however, if such breach is a

                                      -23-
<PAGE>   28

         Qualification Defect and one or more REMIC elections have been made
         with respect to the related Trust, such cure, purchase or substitution
         must take place within 75 days of the Defect Discovery Date

         (b) Converted Loans. Upon receipt of written notice from the Master
Servicer of the conversion of any Adjustable Rate Asset to a Converted Loan, the
Trustee shall direct the Master Servicer to enforce the related Seller's
obligation set forth in its Sales Agreement to purchase such Converted Loan from
the Trust, or the Master Servicer shall repurchase such Converted Loan from the
Trust. In the event the Master Servicer or Seller defaults upon its obligation
to purchase any Converted Loan, and, in the case of a Seller default, such
default remains unremedied for a period of five Business Days after written
notice of such default shall have been given by the Master Servicer to the
Seller, then the Master Servicer shall use its best efforts to cause such
Converted Loan to be sold for settlement on the last day of any month to any
entity which the Master Servicer may in its sole discretion select. The Master
Servicer shall not cause a Converted Loan to be sold or otherwise transferred to
a Person other than the Master Servicer or Seller (or other Person who has a
pre-existing obligation to purchase such loan) unless (i) upon such sale the
Trust would receive a net amount at least equal to the Repurchase Price of the
Converted Loan and (ii) if the Repurchase Price of the Converted Loan exceeds
the related Basis Limit Amount, the Master Servicer receives an Opinion of
Counsel that such disposition of a Converted Loan will not result in the
imposition of a "prohibited transaction" tax (as such term is defined in the
Code) on any related REMIC or jeopardize its status as a REMIC. Any such
Converted Loan which is not purchased by the Master Servicer or the Seller and
which the Master Servicer is unable to sell as described in the second preceding
sentence shall remain in the Trust.

         (c) Manner of Repurchase. Any Asset purchased pursuant to Section
2.04(a), (b), (c), (d) or (e) hereof shall be purchased at the Repurchase Price
for such Asset. The Seller, the Depositor or the Master Servicer, as appropriate
(any of the foregoing, a "Repurchaser"), shall deposit into the Certificate
Account, on the date of purchase, the Repurchase Price for each Asset to be
purchased. Upon such deposit and upon being provided by the Repurchaser with
notice thereof and the appropriate instruments of transfer or assignment, the
Trustee shall execute and deliver such instruments of transfer or assignment, in
each case without recourse, as shall be necessary to vest in the Repurchaser any
Asset purchased hereunder, and the Trustee shall deliver to the Repurchaser any
Asset Documents relating to the repurchased Asset that are in the Trustee's
possession, whereupon the Trustee shall have no further responsibility with
regard to such Asset. Except as provided in this Section 2.05(f), if a
Repurchaser shall, in accordance with the foregoing, purchase any Asset required
by it to be purchased, neither the Trustee nor any Certificateholder shall have
any other remedy against such Repurchaser based on any misrepresentation or
breach of covenant or warranty of such Repurchaser with respect to or resulting
from any such Asset.

         The Master Servicer will be responsible for determining the Repurchase
Price for any Asset (and the related Basis Limit Amount for any Converted Loan)
to be repurchased pursuant to this Section 2.05 and shall certify in writing
such amounts to the Trustee at the time of any such purchase. If, for whatever
reason, the Master Servicer shall certify to the Trustee that there is a
miscalculation of the amount to be paid to the Trust, the Master Servicer may
withdraw from monies in the Certificate Account any overpayment that the Trust
received as a result of such miscalculation to the applicable Repurchaser upon
the discovery of such overpayment, and the Master Servicer shall collect from
the applicable Repurchaser for payment to the Trustee any underpayment that
resulted from such miscalculation upon the discovery of such underpayment and
deposit such amount into the Certificate Account. Recovery may be made either
directly or by set-off of all or any part of such underpayment against amounts
owed by the Trust to such Repurchaser.

         Any Repurchaser shall indemnify and hold harmless the Trustee from and
against any and all losses or liabilities incurred by the Trustee (including any
such losses or liabilities arising from third-party claims) with respect to or
resulting from any repurchase hereunder.

         (d) Manner of Substitution. Unless otherwise provided in the Pooling
and Servicing Agreement, the right to substitute a Qualified Substitute Asset
for any Replaced Asset that is an asset of the Trust shall be limited to (1) in
the case of substitutions pursuant to Section 2.05(a) or 2.05(c), the two-year
period beginning on the Closing Date and (2) in the case of any other
substitution, the three-month period beginning on the Closing Date.

                                      -24-
<PAGE>   29

         As to any Replaced Asset for which the Depositor or the Seller
substitutes a Qualified Substitute Asset or Assets, the Depositor or the Seller,
as the case may be, shall effect such substitution by delivering to the Trustee
for such Qualified Substitute Asset or Assets a complete Trustee Mortgage Loan
File, together with an Officer's Certificate of the Depositor or the Seller, as
the case may be, to the effect that each such Qualified Substitute Asset
complies with the terms of the Pooling and Servicing Agreement. Monthly Payments
due with respect to Qualified Substitute Assets in the month of substitution are
not part of the Trust and will be retained by the Depositor or the Seller, as
the case may be. For the month of substitution, distributions to
Certificateholders will reflect the Monthly Payment due on such Replaced Asset
during the month in which the substitution occurs, and the Depositor or the
Seller, as the case may be, shall thereafter be entitled to retain all amounts
subsequently received in respect of such Replaced Asset. The Master Servicer
shall amend the Asset Schedule to reflect the removal of such Replaced Asset
from the terms of the Pooling and Servicing Agreement and the substitution of
the Qualified Substitute Asset or Assets. Upon such substitution, such Qualified
Substitute Asset or Assets shall be subject to the terms of the Pooling and
Servicing Agreement in all respects, including, in the case of a substitution
effected by the Seller, the representations and warranties included in the
related Sales Agreement, and in the case of a substitution effected by the
Depositor, the representations and warranties set forth in Section 2.04 above,
in each case as of the date of substitution. The Trustee shall, within five
Business Days of its receipt of the documents referred to above, effect the
reconveyance of such Replaced Asset to the Depositor or the Seller, as the case
may be, in accordance with the procedures specified above.

         For any month in which the Depositor or the Seller substitutes one or
more Qualified Substitute Assets for one or more Replaced Assets, the Master
Servicer will determine and notify the Trustee with respect to the amount (if
any) by which the aggregate Unpaid Principal Balance of all such Qualified
Substitute Assets as of the date of substitution is less than the aggregate
Unpaid Principal Balance of all such Replaced Assets (after application of
Monthly Payments due in the month of substitution) (the "Substitution
Shortfall"). On the date of such substitution, the Depositor or the Seller, as
the case may be, will deliver or cause to be delivered to the Trustee for
deposit from its own funds into the Distribution Account an amount equal to the
Substitution Shortfall.

         (e) Qualification Defect. If any Person required to cure, purchase, or
substitute under Section 2.05(a) above for an Asset affected by a Qualification
Defect fails to perform within the time limit set forth in those subsections,
the Master Servicer shall dispose of such an Asset in such manner and for such
price as the Master Servicer determines are appropriate, provided that the
removal of such Asset occurs no later than the 90th day from the Defect
Discovery Date. It is the express intent of the parties that an Asset affected
by a Qualification Defect be removed from the Trust before the 90th day from the
Defect Discovery Date so that the related REMIC or Pooling REMIC will continue
to qualify as a REMIC. Accordingly, the Master Servicer is not required to sell
an affected Asset for its fair market value nor shall the Master Servicer be
required to make up any shortfall resulting from the sale of such Asset. The
person failing to perform under Section 2.05(a) above shall be liable to the
Trust for (1) any difference between (A) the Unpaid Principal Balance plus
accrued and unpaid interest thereon at the applicable Asset Rate to the date of
disposition and (B) the net amount received by the Master Servicer from the
disposition (after the payment of related expenses), (2) interest on such
difference at the Asset Rate from the date of disposition to the date of payment
and (3) any legal and other expenses incurred by or on behalf of the Trust in
seeking such payments. Except where the Master Servicer is the person failing to
perform, the Master Servicer shall pursue the legal remedies of the Trust on the
Trust's behalf and the Trust shall reimburse the Master Servicer for any legal
or other expenses of the Master Servicer related to such pursuit not recovered
from such person. If the Master Servicer is the person failing to perform, the
Trustee shall pursue the Trust's legal remedies against the Master Servicer and
the Trust shall reimburse the Trustee for its related legal or other expenses.

         (f) Notices. Any person required under this Section 2.05 to give notice
or to make a request of another person to give notice shall give such notice or
make such request promptly.

                                      -25-
<PAGE>   30
                                   ARTICLE III

              ADMINISTRATION OF TRUSTS AND SERVICING OF THE ASSETS

SECTION 3.01.  THE MASTER SERVICER.

         The Master Servicer agrees to service the Assets for and on behalf of
the Trustee and its successors and assigns, and otherwise to perform and carry
out the duties, responsibilities and obligations that are to be performed and
carried out by the Master Servicer under the Pooling and Servicing Agreement.
The Master Servicer shall service the Mortgage Loans (a) generally in compliance
with Fannie Mae standards (and, in the case of FHA Loans or VA Loans, FHA and VA
standards, respectively) and (b) in a manner that is consistent with prudent
residential mortgage loan servicing standards generally accepted within the
residential mortgage loan servicing industry. A summary of the Master Servicer's
collections and loss mitigation procedures is annexed hereto as Exhibit 9. The
manner in which the Master Servicer services the Assets shall be consistent with
the manner in which the Master Servicer services all similar residential
mortgage loans in its servicing portfolio, except for any differences
specifically required by the Pooling and Servicing Agreement. The Master
Servicer shall have full power and authority consistent with the aforementioned
standards, acting alone and/or through agents and designees as permitted by
Section 6.07 hereof, to do any and all things it may deem necessary or desirable
in connection with such servicing and administration; provided, however, that to
the extent the Master Servicer is prohibited by any applicable rule, regulation,
judicial or administrative determination or other order applicable to it from
carrying out any of its obligations or duties provided for herein or in any
document contemplated herein, such failure shall not constitute a breach of this
Agreement.

         The Master Servicer may agree to modify, waive or amend any term of any
Mortgage Loan in a manner consistent with the servicing standard described
herein so long as the modification, waiver or amendment will not (i) affect the
timing of any scheduled payments of principal or interest on the Mortgage Loan
other than in a manner consistent with the provisions of Section 3.02(b) hereof,
(ii) in its judgment, materially impair the security for the Mortgage Loan or
reduce the likelihood of timely payment of amounts due thereon or (iii) cause
the Trust to fail to qualify as a REMIC under the Code or the imposition of any
tax on "prohibited transactions" or "contributions after the startup date" under
the REMIC Provisions. The Master Servicer also may agree to any modification,
waiver or amendment that would so affect or impair the payments on, or the
security for, a Mortgage Loan if, (i) in its judgment, a material default on the
Mortgage Loan has occurred or a payment default is imminent and (ii) in its
judgment, such modification, waiver or amendment is reasonably likely to produce
a greater recovery on a present value basis than would liquidation. The Master
Servicer promptly shall notify the Trustee in the event of any modification,
waiver or amendment of any Mortgage Loan.

         With the consent of the Trustee, the Master Servicer may hire a
sub-servicer pursuant to a sub-servicing agreement, the terms of which must be
consistent with the terms of the Pooling and Servicing Agreement. Each
sub-servicing agreement must meet standards applicable to sub-servicing for FHA
Assets and VA Assets and must provide that the Trustee will not be obligated to
assume the duties of the Master Servicer thereunder. Each sub-servicer (i) must
be a FNMA, FHLMC, VA and FHA approved servicer, (ii) must not be excluded from
participation in federal non-procurement programs pursuant to a determination of
ineligibility under statutory or regulatory authority or executive order, (iii)
must have a current mortgage loan servicing portfolio aggregating at least
$50,000,000 (exclusive of the Mortgage Loans), (iv) must be a HUD approved
mortgagee and (v) in the best judgment of the Master Servicer, must be capable
of servicing the Mortgage Loans and be experienced in servicing loans of a
similar nature and quality. References in this Pooling and Servicing Agreement
to actions taken or to be taken by the Master Servicer in servicing the Mortgage
Loans include actions taken or to be taken by a sub-servicer on behalf of the
Master Servicer. With the approval of the Master Servicer and the Trustee, a
sub-servicer may delegate its servicing duties to third-party servicers, but a
sub-servicer must remain obligated under its sub-servicing agreement with the
Master Servicer notwithstanding any such delegation. In the event of any such
delegation, references in this Pooling and Servicing Agreement to actions taken
or to be taken by sub-servicers in servicing the Mortgage Loans shall include
actions taken or to be taken by such third parties. The Master Servicer shall
deliver to the Trustee and to the Depositor copies of each sub-servicing
agreement and each amendment thereto proposed by the Master Servicer or any
sub-servicer at least ten days prior to adoption or execution thereof, and shall
provide execution copies thereof to the Trustee and to the Depositor promptly
after execution thereof.

                                      -26-
<PAGE>   31

         With respect to any such sub-servicing arrangement between the Master
Servicer and any sub-servicer, the Master Servicer shall remain liable for the
performance of its duties hereunder, and any collections received by a
sub-servicer shall be deemed to have been received by the Master Servicer.

         Each of the Master Servicer and the Depositor shall be entitled to
terminate any sub-servicing agreement in accordance with the terms and
conditions thereof; provided, however, that in the event of termination of any
sub-servicing agreement, the Master Servicer shall either act as servicer of the
related Mortgage Loans or enter into a sub-servicing agreement with a successor
sub-servicer. Nothing contained herein shall prohibit the Master Servicer from
increasing or decreasing the number of sub-servicers servicing the Mortgage
Loans.

SECTION 3.02.    MAINTENANCE OF RECORDS; INSPECTION OF ASSET FILES.

         (a) The Master Servicer shall retain all data relating directly to or
maintained in connection with the servicing of the Assets for any Series at the
address of the Master Servicer set forth in Section 11.04 hereof or at such
other place where the servicing offices of the Master Servicer are located.

         The Master Servicer shall permit the Trustee or any authorized agent of
the Trustee reasonable access, upon prior written notice to the Master Servicer,
during the Master Servicer's normal business hours, to the Asset Files, the
Master Servicer Mortgage Loan Files, and the Master Servicer's other records, if
any, relating to the Assets for any related Series. Any such examination of such
files or records will be conducted in a manner that does not unreasonably
interfere with the Master Servicer's normal operations or customer or employee
relations. Without otherwise limiting the scope of the examination the Trustee
may make, the Trustee or its authorized agents, using generally accepted audit
procedures, may in their discretion verify the status of each Asset and review
the records relating thereto for conformity to Remittance Reports prepared
pursuant to Article IV hereof and compliance with the standards represented to
exist as to each Asset in the Pooling and Servicing Agreement.

         (b) At all times during the term hereof, the Master Servicer shall keep
available a copy of the Asset Schedule at its principal executive office for
inspection by Certificateholders.

         (c) On or before the date of the Master Servicer's delivery of the
Remittance Report to the Trustee in any month, the Master Servicer will, upon
the written request of the Trustee, provide to the Trustee a list of outstanding
Assets, setting forth the Scheduled Principal Balance of each such Asset as of
the end of the Collection Period relating to the preceding Distribution Date.

         (d) Notwithstanding the provisions of this Section 3.02, the Trustee
shall at no time have any duty or obligation to examine any records of the
Master Servicer or to recalculate or otherwise verify the accuracy of any
certificate or report prepared by the Master Servicer, and no implied duty to do
so shall be asserted against the Trustee.

         (e) On or before the Closing Date for a Series, the Master Servicer
shall deliver to the Trustee a list of Officers of the Master Servicer (each a
"Servicing Officer") involved in, or responsible for, the administration and
servicing of the Assets underlying such Series, which list shall be amended from
time to time as necessary by the Master Servicer by delivery of an amended list
of Servicing Officers to the Trustee.

SECTION 3.03.    COLLECTION OF PAYMENTS ON ASSETS; SERVICING DELINQUENT
                 ACCOUNTS.

         (a) Continuously from the Cut-off Date until the earliest to occur of
the following with respect to each Asset sold to the Trust in connection with
the issuance of the Certificates: (i) the principal and interest on such Asset
is paid in full, (ii) such Asset is foreclosed and the related Mortgaged
Property is liquidated pursuant to Section 3.08 hereof, (iii) all of the
proceeds of a liquidating claim under the Standard Hazard Insurance Policy
relating to such Asset have been deposited to the Certificate Account, or (iv)
the Liquidation Proceeds relating to such Asset have been deposited to the
Certificate Account, the Master Servicer will proceed diligently and in a manner
consistent with its standards for servicing Assets described in Section 3.01
above, to collect all payments due under each Asset

                                      -27-
<PAGE>   32

when such payments become due and payable and to apply such payments in
accordance with Sections 3.05, 3.06 and 3.07 hereof.

         (b) The Master Servicer shall have reasonable discretion to extend
appropriate relief to Obligors who encounter hardship and who are cooperative
and demonstrate proper regard for their obligations. The Master Servicer may
arrange with such an Obligor to extend the payment schedule for the related
Asset; provided, however, that any such extension must be made in accordance
with the Master Servicer's standards for servicing Assets described in Section
3.01 above; and provided further, that no such extensions may be made except to
the extent (1) that the Master Servicer has determined, in its reasonable
judgment, that the Obligor is in default or that default is reasonably
foreseeable with respect to such Asset in the absence of such relief, (2) that
the Due Date for the final Monthly Payment on such Asset is not extended beyond
the latest Final Scheduled Distribution Date for the related Series and (3) that
the grant of such extension is otherwise permissible under Section 10.02 hereof
and, if a REMIC election has been made in connection with the Asset, the REMIC
Provisions as in effect at the time of such extension, as evidenced by an
Opinion of Counsel delivered by the Master Servicer to the Trustee. Where the
Obligor is in default on an Asset notwithstanding such relief and the Master
Servicer has exhausted all reasonable means of inducing the Obligor to pay on a
timely basis, the Master Servicer shall begin acceleration of the Assets in
accordance with its terms and applicable laws.

SECTION 3.04.  ADVANCES AND COMPENSATING INTEREST.

         (a) P&I Advances. If any Obligor fails to make its Monthly Payment by
the Remittance Date, the Master Servicer shall deposit such amount in the
Distribution Account on or before such Remittance Date, as a "P&I Advance,"
unless the Master Servicer, in its reasonable judgment, determines that any such
P&I Advance would be a Non-Recoverable Advance, or such Monthly Payment can be
offset by Early Payments, as provided in Section 3.07(c) hereof. In addition, if
the Certificate Account is maintained with the Trustee, the Master Servicer may
instruct the Trustee to use any investment earnings otherwise to be paid to the
Master Servicer on such account to defray its P&I Advance obligation, and the
Trustee shall honor any such instructions (including standing instructions).

         (b) Servicing Advances. If any Obligor is in default in the payment of
premiums on its Standard Hazard Insurance Policy or Policies, insurance
premiums, or in the payment of real estate taxes, the Master Servicer may pay
such premiums or taxes out of its own funds. If any Obligor is in default in the
payment of premiums on its Standard Hazard Insurance Policy or Policies and
coverage is not provided in respect of the related Asset under a blanket policy
maintained by the Master Servicer pursuant to Section 3.15(a) below, or if any
Obligor is in default in the payment of personal property taxes or real estate
taxes due in respect of its Mortgaged Property, the Master Servicer shall pay
such premiums or taxes out of its own funds in a timely manner, as Servicing
Advances, unless the Master Servicer, in its reasonable judgment, determines
that any such Servicing Advance would be a Non-Recoverable Advance. In addition,
the Master Servicer shall pay in a timely manner, as Servicing Advances, any and
all personal property taxes and real estate taxes due in respect of any REO
Property it holds on behalf of the Trust and all premiums for any Standard
Hazard Insurance Policy maintained for such REO Property (except as similar
coverage may be provided under a blanket policy maintained by the Master
Servicer pursuant to Section 3.15 below) unless the Master Servicer, in its
reasonable judgment, determines that any such Servicing Advance would be a
Non-Recoverable Advance.

         (c) Foreclosure Advances. If a foreclosure sale has been completed with
respect to any Government Insured Mortgage Loan, the Master Servicer shall
deposit the remaining Scheduled Principal Balance thereof, plus accrued interest
thereon (a "Foreclosure Advance"), in the Distribution Account on or before the
next succeeding Remittance Date. The Master Servicer thereafter shall be
entitled to reimbursement for any Foreclosure Advance out of claims proceeds
received in respect of the related Mortgage Loans.

         (d) Recovery of Advances. The Master Servicer shall be entitled to
reimbursement for any Advances made by it in respect of any Asset out of late
collections from the related Obligor or from Insurance Proceeds, Liquidation
Proceeds or a Repurchase Price paid in respect of such Asset ("Related
Proceeds") and shall be entitled

                                      -28-
<PAGE>   33

to reimburse itself for unreimbursed Advances made that have become
Non-Recoverable Advances in accordance with Section 3.07(a)(1) below.

         (e) Non-Recoverable Advances. If the Master Servicer does not make an
Advance on the grounds that it is a Non-Recoverable Advance, or if an Advance
previously made by the Master Servicer is determined by the Master Servicer to
have become a Non-Recoverable Advance, then the Master Servicer shall provide
the Trustee with an Officer's Certificate stating this fact and stating the
basis upon which the Master Servicer determined that such Advance would be or
was a Non-Recoverable Advance. The Trustee shall not be responsible for
determining whether any such determination was reasonable.

         (f) Compensating Interest. So long as Union Planters Bank, N.A., is the
Master Servicer of any Assets, then the Master Servicer shall deposit into the
Distribution Account for the related Series on or before each Remittance Date an
amount equal to Compensating Interest for such month. Compensating Interest
shall not be considered a Non-Recoverable Advance, and the Master Servicer shall
not be entitled to any recovery or reimbursement from the Trustee or the
Certificateholders for any Compensating Interest.

SECTION 3.05.  COLLECTION ACCOUNT.

         Within one Business Day after the Master Servicer's receipt of any
amounts collected on any Asset in its lock box maintained for the collection of
amounts payable under contracts serviced by it (including Net Liquidation
Proceeds, Insurance Proceeds and Repurchase Prices in respect thereof), the
Master Servicer shall deposit such collections, or cause such collections to be
deposited, into a clearing account established by the Master Servicer (the
"Collection Account"), which shall be an Eligible Account. If the Master
Servicer receives Insurance Proceeds from FHA in the form of FHA debentures, the
Master Servicer shall purchase such FHA debentures from the Trust within two
Business Days of receipt for their par value and deposit the proceeds of such
sale into the Collection Account. The Master Servicer may use the Collection
Account for collection of payments on Assets underlying more than one Series and
for assets that are not the subject of any transaction covered by a Pooling and
Servicing Agreement; provided, that in any such event, the Master Servicer shall
cause separate accounting and records to be maintained within the Collection
Account with respect to the Assets underlying each separate Series. Furthermore,
the parties hereto agree that all amounts deposited into the Collection Account
in respect of the Assets, other than amounts payable to the Master Servicer as
servicing compensation under the Pooling and Servicing Agreement, are to be held
in trust for the exclusive use and benefit of the related Trust.

SECTION 3.06.    CERTIFICATE ACCOUNT.

         (a) On or before the Closing Date, the Trustee shall establish and
maintain a collection account or accounts (the "Certificate Account"), which
must be an Eligible Account. The Certificate Account is to be held by or for the
benefit of the Trustee on behalf of the Certificateholders, and shall be either
in the Trustee's name or designated in a manner that reflects the custodial
nature of the account and that all funds in such account are held for the
benefit of the Trustee. The Trustee may elect to use a single Certificate
Account for more than one Series of Certificates provided, that in any such
event, the Master Servicer shall cause separate accounting and records to be
maintained within the Certificate Account with respect to each separate Series.

         (b) The Master Servicer shall deposit into the appropriate Certificate
Account no later than two Business Days following deposit thereof to the
Collection Account after the Master Servicer's collection thereof, all payments
and collections received by it on each Outstanding Asset on or after the
effective date of the related Pooling and Servicing Agreement (including Net
Liquidation Proceeds, Insurance Proceeds and Repurchase Prices in respect
thereof), except amounts collected in respect of Monthly Payments due on or
prior to the Cut-off Date. On or prior to the Closing Date, the Master Servicer
shall deposit into the Certificate Account all installments of principal and
interest due on the Assets after the Cut-off Date and received by the Master
Servicer prior to the Closing Date, plus each Principal Prepayment of any Asset
(including any related payment of interest) received by the Master Servicer on
or after the Cut-off Date but prior to the Closing Date.

                                      -29-
<PAGE>   34

         (c) Amounts on deposit in the Certificate Account may be invested at
the direction of the Master Servicer in Eligible Investments, and earnings on
amounts deposited in such account shall be credited to the account of the Master
Servicer as servicing compensation in addition to the Servicing Fee and shall
offset P&I Advances due from the Master Servicer in respect of the Distribution
Date next succeeding the date on which such earnings were made or, in the
alternative at the Master Servicer's option, may be released to the Master
Servicer on such Distribution Date. The amount of any net losses incurred in
respect of any such investments shall be deposited in the Certificate Account by
the Master Servicer out of its own funds immediately upon realization of any
such losses.

SECTION 3.07.  WITHDRAWALS FROM CERTIFICATE ACCOUNT; REMITTANCE AMOUNTS.

         (a) Withdrawals from Certificate Account. The Master Servicer may
withdraw funds on deposit in the Certificate Account for the following purposes:

             (i)   to reimburse itself for any Advances previously made by
         the Master Servicer, which Advances remain unreimbursed to the Master
         Servicer, out of Related Proceeds or, if such Advances have been
         determined by the Master Servicer to have become Non-Recoverable
         Advances, out of any funds on deposit in the Certificate Account;

             (ii)  to pay any Servicing Fees and other servicing compensation
         provided for herein due to the Master Servicer;

             (iii) to enable the Master Servicer to remit the Remittance
         Amount to the Trustee on each Remittance Date, as described in Section
         3.07(b) below;

             (iv)  to reimburse the Master Servicer from any amounts on
         deposit in the Certificate Account for any Advance previously made
         which has become a Non-Recoverable Advance, or to reimburse the Master
         Servicer for any other Advance out of Related Proceeds on deposit in
         the Certificate Account;

             (v)   to reimburse the Depositor or the Master Servicer for
         expenses incurred by or reimbursable to them pursuant to Section 6.05
         hereof; and

             (vi)  to refund any overpayment of a Repurchase Price for
         an Asset pursuant to Section 2.05(c) hereof.

         (b) Remittance Dates. On or prior to the Remittance Date for any
Distribution Date, the Master Servicer shall remit the Remittance Amount for
such Distribution Date to the Trustee, from and to the extent of the funds in
the Certificate Account, plus all required P&I Advances, Compensating Interest
and Foreclosure Advances, by wire transfer or otherwise, in immediately
available funds, for deposit into the Distribution Account. If the Certificate
Account is maintained by the Trustee, on each Remittance Date, the Master
Servicer shall notify the Trustee as to the amount of the related Remittance
Amount and the amount of all required P&I Advances to be covered by investment
earnings on the Certificate Account, and the Trustee shall transfer such amount
from the Certificate Account to the Distribution Account on the related
Distribution Date. In such event, the Master Servicer shall still remit any P&I
Advances not covered by investment earnings on the Certificate Account to the
Trustee for deposit into the Distribution Account on the Remittance Date.

         Notwithstanding the foregoing, if a Terminating Purchase is to be made
on such Distribution Date, and the Master Servicer shall have received the
Termination Price or shall be the Terminator, the Master Servicer shall remit
the Termination Price rather than the Remittance Amount to the Trustee for
deposit into the Distribution Account.

         (c) Treatment of Early Payments. Early Payments received by the Master
Servicer shall be retained in the Certificate Account and transferred to the
Distribution Account when and as if such Early Payments had otherwise been
received by the Master Servicer as scheduled payments under the Assets. However,
Early Payments on any Assets for a Series on deposit in the Certificate Account
that are not yet due to be passed through to Certificateholders on any
Distribution Date may be remitted to the Distribution Account to offset
delinquencies on other Assets for the same Series. If Early Payments on any
Asset are used to offset delinquencies on

                                      -30-
<PAGE>   35

other Assets, subsequent late recoveries of such delinquent amounts on such
other Assets shall be treated by the Master Servicer as a restoration of the
Early Payments used to offset such delinquent amounts and shall be deposited
into the Certificate Account in accordance with Section 3.06(a) hereof. To the
extent that subsequent late recoveries in respect of such delinquent amounts on
other Assets are insufficient to offset the amount of Early Payment used, then
the Master Servicer shall deposit the amount of such insufficiency into the
Certificate Amount. The Master Servicer shall maintain records with respect to
its application of Early Payments.

SECTION 3.08.  REALIZATION UPON DEFAULTED ASSETS.

         (a) The Master Servicer shall repossess, foreclose upon or otherwise
comparably convert the ownership of any Mortgaged Property securing an Asset
that comes into and continues in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant to
Section 3.03 hereof. In connection with such repossession, foreclosure or other
conversion, the Master Servicer shall follow such practices and procedures as it
shall deem necessary or advisable and as shall be normal and usual for
responsible holders of residential, one- to four-family mortgage loans and as
shall be in compliance with all applicable laws, including, with respect to
Government Insured Mortgage Loans, all applicable FHA, HUD and VA guidelines and
regulations; provided, that such practices and procedures shall be, in all
circumstances, undertaken with a view toward maximizing the amount of principal
and interest recovered by the Trust on the Assets. The Master Servicer shall
purchase from the Trust Government Insured Mortgage Loans with respect to which
Assets a Foreclosure Advance has occurred in accordance with the procedures
stated above at a price equal to its then current Scheduled Principal Balance.

         (b) The Master Servicer will commence and prosecute any Proceedings in
respect of any Asset in default in its own name on behalf of the Trustee and for
the benefit of the Certificateholders.

         (c) In seeking to enforce the Assets, the Master Servicer may exercise
any rights of recourse against guarantors or sureties of any Obligor's
obligations (or against any other third parties against whom any rights of
recourse exist in connection with any Asset).

         (d) The Master Servicer's obligations under this Section are subject to
the proviso that, in the case of damage to a Mortgaged Property, the Master
Servicer shall not be required to expend its own funds in incurring Liquidation
Expenses to restore such property unless it shall determine, in its reasonable
judgment, (1) that such restoration will increase the proceeds of liquidation of
the related Asset, after reimbursement to the Master Servicer for such expenses,
and (2) that such Liquidation Expenses, if made, will be recoverable out of
Liquidation Proceeds of such Asset. If the Master Servicer recovers any
Insurance Proceeds or Liquidation Proceeds in respect of any Asset, the Master
Servicer may deduct the amount of any Insured Expenses and unreimbursed
Liquidation Expenses incurred by it in respect of such Asset from such gross
Insurance Proceeds and Liquidation Proceeds, respectively, prior to deposit of
such proceeds into the Certificate Account.

         (e) Notwithstanding any of the foregoing, the Master Servicer shall not
repossess, foreclose upon or otherwise comparably convert the ownership of any
Mortgaged Property securing an Asset in cases where the Master Servicer has
actual knowledge that the Mortgaged Property is situated on a toxic waste site
as determined by the United States Environmental Protection Agency or other
comparable federal or state agency and where, in the good faith judgment of the
Master Servicer, the liabilities that would be imposed upon the Trust with
respect to such toxic waste site would exceed the Net Liquidation Proceeds that
could be realized upon liquidation of the related Asset. The Master Servicer
shall have no affirmative duty or obligation to determine whether any Mortgaged
Property is situated on a toxic waste site.

SECTION 3.09.  TITLE, CONSERVATION, AND DISPOSITION OF REO PROPERTY.

         (a) The Master Servicer shall maintain, protect, and insure any REO
Property acquired pursuant to Section 3.08 hereof, on behalf of the Trust, in
accordance with standard industry practice solely for the purpose of its prompt
disposition and sale and with a view toward maximizing the amount of principal
and interest recovered on

                                      -31-
<PAGE>   36
the Assets. The Master Servicer will have the authority to execute documents in
connection with the disposition of REO Property. During any period in which the
Trust holds a REO Property, the Master Servicer shall not (1) lease the REO
Property, (2) authorize or permit any construction on the REO Property, other
than the completion of a building or improvement thereon, and then only if more
than 10% of the construction of such building or other improvement was completed
before default on the related Asset became imminent, all within the meaning of
section 856(e)(4)(B) of the Code, or (3) allow the REO Property to be used in
any trade or business conducted by the Trust. If one or more REMIC elections are
made with respect to the assets of the Trust, the Master Servicer shall use its
best efforts to dispose of such REO Property for its fair market value by the
end of the tenth month of the third calendar year following the end of the
calendar year in which the related REO Property was acquired, (the "REO Holding
Period") after its acquisition by the Trust pursuant to the Master Servicer's
ordinary commercial practices. If the Master Servicer is unable to sell such REO
Property in the course of its ordinary commercial practices within REO Holding
Period, the Master Servicer shall (a) purchase such REO Property at a price
equal to such REO Property's fair market value or (b) auction such REO Property
to the highest bidder in an auction reasonably designed to produce a fair price
(an "Auction") that takes place within one month after the end of REO Holding
Period. If the Master Servicer and the Trustee either (1) receive an Opinion of
Counsel indicating that, under then-current law, the REMIC may hold REO Property
associated with a REMIC Asset for a longer period without threatening the REMIC
status of any related REMIC or causing the imposition of a tax upon any such
REMIC or (2) the Master Servicer applies for and is granted an extension of the
REO Holding Period noted in this Section 3.09(a) pursuant to Code sections
860G(a)(8) and 856(e)(3) (the applicable period provided pursuant to such
Opinion of Counsel or such Code section being referred to herein as an "Extended
Holding Period"), upon the direction of the Depositor or the Trustee, the Master
Servicer shall continue to attempt to sell such REO Property pursuant to its
ordinary commercial practices until the date two months prior to the expiration
of the Extended Holding Period. If no REMIC election has been made or is to be
made with respect to the assets of the Trust, the 3 year period noted in this
Section 3.09(a) for disposing of any REO Property as described in the preceding
two sentences shall be an eleven-month period. The Master Servicer shall either
sell any REO Property remaining after such date in an Auction or purchase such
REO Property (at the price set forth in this paragraph) before the end of the
Extended Holding Period. In the event of any such sale of a REO Property, the
Trustee shall, at the written request of the Master Servicer and upon being
supplied with appropriate forms therefor, within five Business Days after its
receipt of the proceeds of such sale or auction, instruct the Master Servicer to
release to the purchaser the related Master Servicer Mortgage Loan File, and in
any event the Trustee shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as shall be necessary to vest in the
auction purchaser title to the REO Property, and shall deliver to such purchaser
any Asset Documents relating to such Asset that are in the Trustee's possession,
whereupon the Trustee shall have no further responsibility with regard to any
related Master Servicer Mortgage Loan File. Neither the Trustee nor the Master
Servicer, acting on behalf of the Trust, shall provide financing from such Trust
to any purchaser of a REO Property.

         (b) In the event that title to any REO Property is acquired, the deed
or certificate of sale shall be issued to the Trustee for the benefit of the
Certificateholders. The Master Servicer shall, in accordance with Section
3.09(a), use its reasonable efforts to sell any REO Property as expeditiously as
possible, but in all events within the time period, and subject to the
conditions set forth in Section 3.09(a) hereof. Pursuant to its efforts to sell
such REO Property, the Master Servicer shall either itself or through an agent
selected by the Master Servicer protect and conserve such REO Property in the
same manner and to such extent as it customarily does in connection with its own
repossessed mortgaged properties (as applicable), incident to its conservation
and protection of the interests of the Certificateholders.

         (c) The Master Servicer shall deposit all net funds collected and
received in connection with the operation of any REO Property in the applicable
Certificate Account no later than the second Business Day following receipt of
such funds.

         (d) The Master Servicer, upon the final disposition of any REO
Property, shall be entitled to reimbursement of any related unreimbursed
Advances related to the Asset for such REO Property as well as any unpaid
Servicing Fees from Liquidation Proceeds received in connection with the final
disposition of such REO Property.

                                      -32-
<PAGE>   37

         (e) The final disposition of any REO Property shall be carried out by
the Master Servicer at the REO Property's fair market value under the
circumstances existing at the time of disposition and upon such terms and
conditions as the Master Servicer shall deem necessary or advisable, and as are
in accordance with accepted servicing practices and in accordance with Section
3.09(a) above.

         (f) The Liquidation Proceeds from the final disposition of any REO
Property shall be deposited into the Certificate Account promptly following
receipt of such Liquidation Proceeds and, subject to such withdrawals as may be
permitted by Section 3.07(a) above, shall be transferred to the Distribution
Account pursuant to Section 3.07(b) above.

         (g) The Master Servicer shall prepare and file reports of foreclosure
and abandonment in accordance with section 6050J of the Code.

         (h) Notwithstanding any other provision of this Agreement, the Master
Servicer, acting on behalf of the Trustee hereunder, shall not rent, lease, or
otherwise earn income or take any action on behalf of the Trust with respect to
any REO Property that might (i) cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of section 860G(a)(8) of the Code or
(ii) result in the receipt by any related REMIC of any "income from
non-permitted assets" within the meaning of section 860F(a)(2) of the Code or
any "net income from foreclosure property" within the meaning of section
860G(c)(2) of the Code, both of which types of income are subject to tax under
the REMIC Provisions, unless the Trustee has received an Opinion of Counsel at
the Trust's expense (the costs of which shall be recoverable out of the
applicable Certificate Account), to the effect that, under the REMIC Provisions
and any relevant proposed legislation, any income generated for any related
REMIC by the REO Property would not result in the imposition of a tax upon such
REMIC.

         Without limiting the generality of the foregoing, the Master Servicer
shall not:

             (i)   enter into, renew or extend any New Lease with respect to
         any REO Property, if the New Lease by its terms will give rise to any
         income that does not constitute Rents from Real Property;

             (ii)  permit any amount to be received or accrued under any New
         Lease other than amounts that will constitute Rents from Real Property;

             (iii) authorize or permit any construction on any REO
         Property, other than the completion of a building or other improvement
         thereon, and then only if more than ten percent of the construction of
         such building or other improvement was completed before default on the
         related Mortgage Loan became imminent, all within the meaning of
         section 856(e)(4)(B) of the Code; or

             (iv)  Directly Operate, or allow any other Person (other than
         an Independent Contractor) to Directly Operate, any REO Property on any
         date more than 90 days after its acquisition date;

unless, in any such case, the Master Servicer has requested and received the
Opinion of Counsel described in the preceding sentence, in which case the Master
Servicer may take such actions as are specified in such Opinion of Counsel.

         (i) The Master Servicer shall not acquire any personal property
relating to any Asset pursuant to this Section 3.09 unless either:

             (i)   such personal property is incident to real property (within
         the meaning of section 856(e)(1) of the Code) so acquired by the
         Master Servicer; or

             (ii)  the Master Servicer shall have requested and received an
         Opinion of Counsel, at the expense of the Trust (recoverable out of the
         Certificate Account), to the effect that the holding of such personal
         property by the related REMIC will not cause the imposition of a tax
         under the REMIC Provisions

                                      -33-
<PAGE>   38

         on any REMIC related to the Trust or cause any such REMIC to fail to
         qualify as a REMIC at any time that any Certificate is outstanding.

SECTION 3.10.    FULL PREPAYMENTS AND LIQUIDATIONS; TRUSTEE TO COOPERATE;
                 RELEASE OF MORTGAGE FILES.

         (a) Mortgage Loans. Upon the liquidation of any Mortgage Loan, the
Master Servicer shall remit the proceeds thereof to the related Certificate
Account in accordance with Sections 3.05 and 3.06 above and shall deliver to the
Trustee a Request for Release requesting that the Trustee execute such
instrument of release or satisfaction as is necessary to release the related
Mortgaged Property from the lien of the related Mortgage. The Trustee shall,
within five Business Days of its receipt of such a Request for Release, release,
or cause the Custodian to release, the related Trustee Mortgage Loan File to the
Master Servicer. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to a Certificate
Account or Distribution Account.

         From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan, including but not limited to, collection under any Title
Insurance Policy, Primary Mortgage Insurance Policy, flood insurance policy or
Standard Hazard Insurance Policy or to effect a partial release of any Mortgaged
Property from the lien of the related Mortgage, the Master Servicer shall
deliver to the Trustee a Request for Release. The Trustee shall, within three
Business Days after its receipt of such Request for Release, release, or cause
the Custodian to release, the related Trustee Mortgage Loan File to the Master
Servicer. Any such Request for Release shall obligate the Master Servicer to
return each and every document previously requested from the Trustee Mortgage
Loan File to the Trustee by the sixty-first day following the release thereof,
unless (a) the Mortgage Loan has been liquidated and the Liquidation Proceeds
relating to the Mortgage Loan have been deposited in the related Certificate
Account or Distribution Account or the Trustee Mortgage Loan File or such
document has been delivered to an attorney, or to a public trustee or other
public official as required by law, for purposes of initiating or pursuing legal
action or other proceedings for the foreclosure of the Mortgaged Property either
judicially or non-judicially, and the Master Servicer has delivered to the
Trustee a certificate of the Master Servicer certifying as to the name and
address of the Person to which such Trustee Mortgage Loan File or such document
was delivered and the purpose or purposes of such delivery. Upon receipt of an
Officer's certificate of the Master Servicer stating that such Mortgage Loan was
liquidated and that all amounts received or to be received in connection with
such liquidation which are required to be deposited into the applicable
Certificate Account or the Distribution Account have been so deposited, or that
such Mortgage Loan has become an REO Property, the Request for Release shall be
released by the Trustee to the Master Servicer.

         (b) Trustee's Execution of Documents in connection with
Foreclosures/REO. The Master Servicer will have the authority to execute
documents in connection with the disposition of REO Property so long as the
execution of such documents will not invalidate or otherwise adversely affect
the lien of the related mortgage, except for the termination of such a lien upon
completion of the foreclosure proceeding or trustee's sale.

SECTION 3.11.    DUE-ON-SALE CLAUSES AND ASSUMPTION AGREEMENTS.

         Upon learning of any conveyance or prospective conveyance of a
Mortgaged Property securing any Mortgage Loan, the Master Servicer may exercise
its rights, subject to state law, under any "due-on-sale" clause of the Mortgage
Note or Mortgage relating to such Mortgaged Property to demand immediate payment
in full of all amounts due under such Mortgage Loan. With respect to Mortgage
Loans, the Master Servicer will exercise such rights to the extent, under the
circumstances, and in the manner in which the Master Servicer enforces such
clauses with respect to other Mortgage Loans held in its portfolio, but will not
exercise such rights if prohibited by law from doing so.

         If the Master Servicer determines not to enforce a "due-on-sale" clause
with respect to an Asset, the Master Servicer will enter into an assumption
and/or modification agreement with the person to whom the Mortgaged Property has
been conveyed in a form that is customary or appropriate in the Master
Servicer's reasonable business judgment pursuant to which such person becomes
liable under the Asset and pursuant to which, to the extent permitted by
applicable law and deemed appropriate by the Master Servicer in its reasonable
judgment, the original Obligor remains liable on such Asset; provided, that (a)
the Master Servicer reasonably determines that permitting

                                      -34-
<PAGE>   39
such assumption by such person will not increase materially the risk of
nonpayment of amounts due under the related Asset, (b) such action is not
prohibited by law and will not affect adversely or jeopardize any coverage under
any Insurance Policy required to be maintained with respect to such Asset
pursuant to the Pooling and Servicing Agreement, (c) neither the Unpaid
Principal Balance nor the Asset Rate of the related Asset may be reduced, (d) if
one or more REMIC elections have been made with respect to the assets of the
Trust, no other material term of the related Asset (including, without
limitation, the amortization schedule or any other term affecting the amount or
timing of payments on such Asset) may be modified without an Opinion of Counsel
to the effect that such modification will not be treated, under the REMIC
Provisions, as an acquisition of the modified Asset by the REMIC in exchange for
the unmodified Asset on the date the modification occurs and (e) if such Asset
is a Government Insured Mortgage Loan, then such assumption and/or modification
shall be done in accordance with FHA or VA guidelines, as applicable. The Master
Servicer shall follow its customary underwriting procedures prior to entering
into any such assumption agreement, including, without limitation, a
satisfactory credit review of any Person assuming such Asset.

SECTION 3.12.    ANNUAL ACCOUNTANTS' CERTIFICATE; ANNUAL STATEMENT AS TO
                 COMPLIANCE.

         (a) The Master Servicer shall deliver to the Trustee, on or before
March 31 of each year, with respect to each Pooling and Servicing Agreement that
the Master Servicer entered into on or before the preceding December 31, an
Officer's Certificate signed by the President or any Vice President of the
Master Servicer, dated as of December 31 of the preceding year, stating that (1)
a review of the activities of the Master Servicer during the preceding 12-month
period (or since the Cut-off Date in the case of the first such Officer's
Certificate relating to any Trust) and of its performance under the Pooling and
Servicing Agreement has been made under such Officer's supervision and (2) to
the best of such Officer's knowledge, based on such review, the Master Servicer
has fulfilled all its obligations under the Pooling and Servicing Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such Officer and the
nature and status thereof. A copy of such certificate may be obtained by any
other Holder who makes a request in writing to the Trustee addressed to the
Corporate Trust Office.

         (b) In addition, on or before March 31 of each year, the Master
Servicer, at its expense, shall cause a firm of Independent public accountants
that is a member of the American Institute of Certified Public Accountants to
furnish the following statements to the Trustee and each applicable Rating
Agency: (1) a statement to the effect that such firm has audited the financial
statements of the Master Servicer (or the consolidated group that includes the
Master Servicer) for the Master Servicer's (or the consolidated group's) most
recently ended fiscal year and issued its report thereon and (2) a statement
relating to the servicing of mortgage loans serviced by the Master Servicer and
its Affiliates for others in accordance with the requirements of the Uniform
Single Attestation Program for Mortgage Bankers, or any successor program
promulgated by the accounting profession ("USAP") and such other statements as
are contemplated under USAP, including, if called for under USAP, a statement as
to whether the Master Servicer and its Affiliates' management's written
assertion to such firm (which shall be attached to the statement of such firm)
that its servicing during the applicable fiscal year complied with USAP's
minimum servicing standards in all material respects is fairly stated in all
material respects. The audit tests referred to in clause (2) of the preceding
sentence shall be applied to mortgage loans serviced under the Pooling and
Servicing Agreement and/or, in the sole discretion of such firm, mortgage loans
serviced under pooling and servicing agreements, trust agreements or indentures
substantially similar to the Pooling and Servicing Agreement (hereinafter
referred to as "Pooling Agreements"). For purposes of such statement, such firm
may assume conclusively that all Pooling Agreements under which the Master
Servicer is the servicer of mortgage loans for a trustee relating to
certificates evidencing an interest in mortgage loans are substantially similar
to one another except for any such Pooling Agreement which by its terms
specifically states otherwise.

SECTION 3.13.    SERVICING FEES.

         As compensation for the services provided for a Series (including
servicing of the related Assets and administration of the related Trust) and
ordinary expenses incurred by the Master Servicer under the Pooling and
Servicing Agreement, on each Distribution Date the Master Servicer shall be
entitled to receive the Servicing Fee on each Asset from amounts collected on
such Asset. Except as otherwise expressly provided in the Pooling and Servicing
Agreement, the Master Servicer shall perform all of the obligations to be
performed by it under the

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<PAGE>   40
Pooling and Servicing Agreement at its expense and without cost or charge to the
Trustee. The Servicing Fee relating to any Asset shall be payable solely from
the interest portion of each Monthly Payment or other payment of or in respect
of interest collected by the Master Servicer in respect of such Asset, whether
from the proceeds of any judgment, writ of attachment or levy against the
related Obligor or its assets, or from funds received by the Master Servicer in
connection with any Principal Prepayment in full, from Insurance Proceeds or
Liquidation Proceeds or in connection with any purchase or repurchase of an
Asset; provided, however, that the Servicing Fee with respect to an Asset in any
month shall be payable to the Master Servicer out of amounts paid by the related
Obligor toward the Monthly Payment due on such Asset during such month only if
the related Obligor has remitted the entire amount of such Monthly Payment. The
Master Servicer also shall be entitled to additional servicing compensation as
specified in Sections 3.06(c) and 3.14 hereof. Unless otherwise provided in the
Pooling and Servicing Agreement for a Series, the Master Servicer may retain its
Servicing Fee and any other servicing compensation provided for in such Pooling
and Servicing Agreement from gross interest collections on the related Assets
prior to depositing such collections into the related Certificate Account.

SECTION 3.14.    LATE CHARGES; PREPAYMENT FEES OR OTHER CHARGES.

         To the extent permitted by law, the Pooling and Servicing Agreement and
the terms of any Asset, the Master Servicer may collect and retain as additional
compensation any late charges, electronic payment fees, loss mitigation
incentive payments, extension fees or similar fees provided for in the Asset.

         To the extent reasonable and permitted by the terms of any Asset and by
law, the Master Servicer may collect from the Obligors, and retain as additional
compensation, prepayment fees, assumption fees or any fees imposed in connection
with the replacement by such Obligor of the related Standard Hazard Insurance
Policy.

         Notwithstanding any other provisions of the Pooling and Servicing
Agreement, the Master Servicer shall not charge or impose upon any Obligor, nor
seek to charge or impose upon any Obligor, or assert a right to receive from any
Obligor, any fee, charge, premium or penalty that, if charged or collected,
would violate or contravene any law, including usury laws, or the terms of the
related Asset.

SECTION 3.15.    MAINTENANCE OF STANDARD HAZARD INSURANCE, PRIMARY
                 MORTGAGE INSURANCE, AND ERRORS AND OMISSIONS COVERAGE.

         (a) Standard Hazard Insurance. Except as otherwise provided in this
Section 3.15(a), the Master Servicer shall cause to be maintained with respect
to each Mortgage Loan and each REO Property one or more Standard Hazard
Insurance Policies that provide, at a minimum, the same coverage as that
provided by a standard form fire and extended coverage insurance policy that is
customary for residential real property and which shall include flood insurance
coverage issued by a Qualified Insurer, providing coverage in an amount at least
equal to the lesser of (1) the maximum insurable value of the related Mortgaged
Property or (2) the principal balance due from the Obligor under such Mortgage
Loan; provided, however, that in any event the amount of coverage provided by
each Standard Hazard Insurance Policy must be sufficient to avoid the
application of any co-insurance clause contained therein; provided, further,
that notwithstanding the above, Standard Hazard Insurance Policies for FHA
Assets will be in an amount acceptable under FHA guidelines. As part of its
collection responsibilities, the Master Servicer shall proceed to collect the
premiums due on the Standard Hazard Insurance Policies from the Obligors in
accordance with the degree of skill and care that is customarily used for such
purpose in the residential mortgage loan servicing industry. Each Standard
Hazard Insurance Policy caused to be maintained by the Master Servicer shall
contain a standard loss payee clause in favor of the Master Servicer and its
successors and assigns. Any amounts received under any such policies shall be
deposited initially into the related Collection Account or Certificate Account
and then deposited into the related Distribution Account pursuant to Sections
3.06 and 3.07 hereof, within the respective time frames specified in such
Sections.

         In lieu of causing individual Standard Hazard Insurance Policies to be
maintained with respect to each Mortgaged Property pursuant to subsection (a) of
this Section 3.15, the Master Servicer may maintain one or more blanket
insurance policies, each issued by a Qualified Insurer, covering losses on the
Obligors' interests in the Assets relating to such Mortgaged Properties
resulting from the absence or insufficiency of such individual Standard Hazard

                                      -36-
<PAGE>   41
Insurance Policies. The Master Servicer shall pay the premium for any such
policy on the basis described therein and shall pay any deductible amount with
respect to claims under such policy relating to the Assets covered thereby. All
amounts collected by the Master Servicer under any such blanket policy and any
payments by the Master Servicer of deductible amounts thereunder, in each case
relating to an Asset covered thereby, shall be deposited initially into the
Certificate Account pursuant to Sections 3.05 and 3.06 hereof (within the
respective time frames specified in such Sections), after payment to (or
retention by) the Master Servicer of all Insured Expenses and Liquidation
Expenses incurred by it with respect to the Mortgaged Property to which such
recovery relates, as well as the amount of any Advances made by the Master
Servicer with respect to the related Asset that have not been reimbursed to the
Master Servicer.

         (b) Primary Mortgage Insurance. The Master Servicer must maintain a
Primary Mortgage Insurance Policy in full force and effect on each Mortgage
Loan, if any, which is identified in the related Sales Agreement as being
covered by a Primary Mortgage Insurance Policy. Any such Primary Mortgage
Insurance Policy must insure the portion of the Unpaid Principal Balance of the
related Mortgage Loan that exceeds 75% of the value of the related Mortgaged
Property (as set forth in the appraisal obtained in connection with origination
of the Mortgage Loan) (the Mortgaged Property's "Initial Value") unless such
Primary Mortgage Insurance coverage has been waived in writing by the Depositor
at the time it purchases the Mortgage Loan or such Primary Mortgage Insurance is
canceled under the circumstances described below. If a covered Mortgage Loan
provides for negative amortization or the potential for negative amortization,
the Primary Mortgage Insurance Policy must also insure any increase in the
Unpaid Principal Balance of the Mortgage Loan from the original principal
balance of the related Mortgage Note. In the event that the rating assigned by
any Rating Agency for any of the related Certificates to the claims-paying
ability of any related Mortgage Insurer is reduced subsequent to the issuance of
the related Certificates, the Master Servicer will use its best efforts to
replace each Primary Mortgage Insurance Policy issued by the downgraded Mortgage
Insurer with a new Primary Mortgage Insurance Policy issued by an insurer whose
claims-paying ability is acceptable to the Depositor. The premium for any
replacement policy shall not exceed the premium for any replaced policy.

         The Master Servicer may cancel the Primary Mortgage Insurance Policy
maintained with respect to any Mortgage Loan at the related Mortgagor's request
if the following conditions are met:

             (i)   The current Mortgage Loan-to-Value Ratio of the mortgage
         Loan must be 80% or less. The current Mortgage Loan-to-Value Ratio must
         be calculated by dividing the Unpaid Principal Balance of the Mortgage
         Loan by the Initial Value of the related Mortgaged Property;

             (ii)  The Mortgage Loan may not have been 30 days or more
         delinquent at any time within the preceding twelve months; and

             (iii) There nay not have been any other default under the
         terms of the Mortgage Loan at any time during the preceding twelve
         months.

         The Master Servicer must take all steps necessary to ensure the payment
by each Mortgage Insurer of the maximum benefits available under the terms of
the related Primary Mortgage Insurance Policy. The Master Servicer must work
diligently with the Mortgage Insurer to determine whether such insurer will
settle a claim under a Primary Mortgage Insurance Policy by taking title to the
related Mortgaged Property or in some other manner. Upon receipt of any proceeds
of a Primary Mortgage Insurance Policy, the Master Servicer must deposit such
proceeds into the applicable Certificate Account in accordance with Sections
3.05 and 3.06 above.

         (c) Errors and Omissions Coverage; Fidelity Bond. The Master Servicer
shall keep in force throughout the term of the Pooling and Servicing Agreement a
policy or policies of insurance issued by a Qualified Insurer covering errors
and omissions in the performance of its obligations as Master Servicer
hereunder, including failure to maintain insurance as required by the Pooling
and Servicing Agreement, and a fidelity bond covering the Master Servicer's
performance under the Pooling and Servicing Agreement. Such policy or policies
and bond shall be in such form and amount as is generally customary among
Persons that service a portfolio of mortgage loans

                                      -37-
<PAGE>   42
having an aggregate principal amount of $100 million or more and which Persons
are generally regarded as servicers acceptable to institutional investors.

         (d) FHA Insurance and VA Guaranty. The Master Servicer must maintain
the FHA Insurance and VA Guaranty in full force and effect on each FHA Asset and
VA Asset, as applicable, which is identified in the related Sales Agreement. The
Master Servicer must take all steps necessary to ensure payment by FHA and VA of
the maximum benefits available under the terms of the related FHA Insurance or
VA Guaranty, as applicable. The Master Servicer must work diligently with the
FHA and VA to settle all claims. Upon receipt of any proceeds of FHA Insurance
or VA Guaranty, the Master Servicer must deposit such proceeds into the
applicable Certificate Account in accordance with Sections 3.05 and 3.06 above.

                                   ARTICLE IV

                 REMITTANCE AND REPORTING TO CERTIFICATEHOLDERS

SECTION 4.01.   REMITTANCE REPORTS.

         On or before the tenth Business Day of each month the Master Servicer
shall deliver to the Trustee Mortgage Loan information, which shall be in a form
mutually agreed upon by the Trustee and the Master Servicer and which shall
include, but shall not be limited to, the items listed in (i), (iii), (iv) and
(v) of this Section 4.01, to facilitate the Trustee's preparation of Remittance
Reports. On or before the third Business Day prior to each Distribution Date,
the Trustee shall prepare a statement containing the information specified below
as to such Distribution Date (a "Remittance Report"). The information contained
in any Remittance Report with respect to any Government Insured Mortgage Loan
that became a Liquidated Loan will be reported immediately following the
Collection Period in which the Master Servicer has determined that all
Liquidation Proceeds that it reasonably expects to recover on account of such
Government Insured Mortgage Loans have been recovered. The Trustee shall forward
each Remittance Report to the Certificateholders on the related Distribution
Date, by mail to the addresses of such Certificateholders as listed in the
Certificate Register on the preceding Record Date. A Remittance Report for a
Distribution Date for a Series shall identify the following items:

                 (i)  the aggregate amount of each of the following, stated
         separately, with respect to the related Assets: (A) the amount of all
         scheduled principal payments on the Assets due during the related
         Collection Period, (B) the principal components and interest components
         of all Monthly Payments made by the Obligors on the Assets during the
         related Collection Period, (C) Principal Prepayments received by the
         Master Servicer during the related Prepayment Period, (D) Liquidation
         Proceeds (including related Insurance Proceeds) and Net Liquidation
         Proceeds (including related Net Insurance Proceeds) received during the
         related Prepayment Period and number of Liquidated Assets (stated
         separately with respect to FHA Assets and VA Assets), (E) the amount of
         any Repurchase Price paid by the Depositor, the Seller or the Master
         Servicer with respect to any of the Assets purchased by the Depositor,
         the Seller or the Master Servicer pursuant to Section 2.05 hereof
         during the related Prepayment Period and the number of Assets affected,
         (F) the aggregate number of REO Properties in the Trust as of the end
         of the related Prepayment Period and the aggregate of the unpaid
         principal balances of the related Mortgage Loans, (G) the aggregate
         number and the aggregate Unpaid Principal Balance of Outstanding
         Mortgage Loans (stated separately with respect to FHA Assets and VA
         Assets) that are (i) delinquent one month (i.e., 30 to 59 days) as of
         the end of the related Prepayment Period, (ii) delinquent two months
         (i.e., 60 to 89 days) as of the end of the related Prepayment Period,
         (iii) delinquent three months (i.e., 90 days or longer) as of the end
         of the related Prepayment Period and (iv) as to which foreclosure or
         other comparable proceedings have been commenced as of the end of the
         related Prepayment Period, (H) the amount of Realized Losses incurred
         on the Assets and the number of Assets affected (stated separately with
         respect to FHA Assets and VA Assets) during the related Prepayment
         Period and on a cumulative basis since the Cut-off Date (the latter
         expressed as a dollar amount and as a percentage of the aggregate
         Cut-off Date Principal Balance) (separately identifying any Obligor
         Bankruptcy Losses, Special Hazard Losses and Fraud Losses, if they are
         separately allocated to the related Certificates), (I) the aggregate
         Scheduled Principal Balance of the Mortgage Loans and the number of
         Outstanding Mortgage Loans at the end of the related Collection Period,
         (J) Net Insurance Proceeds

                                      -38-
<PAGE>   43

         (stated separately with respect to FHA Assets and VA Assets) received
         by the Master Servicer during the related Prepayment Period, (K) the
         aggregate Scheduled Principal Balance and number of Assets in respect
         of which a Default has occurred during the related Collection Period,
         (L) the aggregate amount of claims filed with FHA and VA and number of
         Assets affected, if any, stated separately, during the related
         Collection Period, and (M) the aggregate Scheduled Principal Balance
         and number of VA Assets that VA, at its option and without regard to
         the related VA Guaranty, makes full payment to the Mortgagee of the
         unsatisfied indebtedness on such VA Asset during the related Collection
         Period, commonly referred to as a "No-bid";

             (ii)  the amount of the Available Distribution Amount for such
         Distribution Date;

             (iii) the amount of funds in the Certificate Account, if any,
         to be allocated to pay Servicing Fees, to reimburse the Master Servicer
         for Advances made, to reimburse the Depositor or the Master Servicer
         for expenses pursuant to Section 6.05 hereof, and to refund any
         overpayment of a Repurchase Price for an Asset pursuant to Section
         2.05(c) hereof;

             (iv)  the amount of the Servicing Fee for the related Collection
         Period;

             (v)   the aggregate deposits into the Certificate Account
         relating to such Distribution Date and the aggregate withdrawals from
         the Certificate Account for each category of withdrawal specified in
         Section 3.07(a) hereof relating to such Distribution Date;

             (vi)  in the case of a Trust (or designated assets thereof) for
         which a REMIC election has been or will be made, any other information
         required to be provided to Certificateholders by the REMIC Provisions;
         and

             (vii) any items relating to a specific Series of Certificates
         specified in the related Pooling and Servicing Agreement.

         Within a reasonable period of time after the end of each calendar year,
the Trustee shall prepare and furnish a statement, from information provided by
the Master Servicer, containing the information concerning the amount of
distributions of interest and principal on the Regular Certificates and the
amount of distributions on the Residual Certificates, as well as any other
information as may be required by the Code or Regulations and that customarily
would be provided by a Trustee to Certificateholders in order to enable such
Certificateholders to prepare their federal income tax returns, to each Person
who at any time during the calendar year was a Certificateholder that
constituted a retail investor or other Certificateholder that requests such
statement, aggregated for such calendar year or portion thereof during which
such Person was a Certificateholder. Such obligation of the Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of the
Code as from time to time are in force.

SECTION 4.02.  DISTRIBUTION ACCOUNT.

         (a) The Trustee shall establish and maintain with itself a Distribution
Account for the benefit of the Certificateholders and shall deposit therein
funds received with respect to the Remittance Amount, P&I Advances, Compensating
Interest and Foreclosure Advances for each Distribution Date immediately upon
receipt thereof from the Master Servicer in accordance with Section 3.04 and
Section 3.07(b) hereof. The Distribution Account shall be an Eligible Account
and shall be either held in the Trustee's name or designated in a manner that
reflects the custodial nature of the account and that all funds in such account
are held in trust for the benefit of the Trustee.

         The Master Servicer shall keep and maintain separate accounting, on an
Asset-by-Asset basis, for the purpose of justifying any payment to and from the
Distribution Account.

         (b) Amounts on deposit in the Distribution Account may be invested at
the direction of the Trustee in Eligible Investments, and earnings on amounts
deposited in such account shall be credited to the account of the

                                      -39-
<PAGE>   44
Trustee as additional compensation in addition to the Trustee. The amount of any
net losses incurred in respect of any such investments shall be deposited in the
Distribution Account by the Trustee out of its own funds immediately upon
realization of any such losses.

SECTION 4.03.    ALLOCATION OF FUNDS.

         On or prior to the Distribution Date for a Series, the Trustee shall
withdraw the Available Distribution Amount on deposit in the related
Distribution Account in accordance with the related Remittance Report and shall
distribute such amounts in the following order of priority:

                 (i)  to pay the Trustee the monthly Trustee Fee, to the extent
         not previously retained or withdrawn from the Distribution Account; and

                 (ii) to distribute to the Certificateholders (or, if more than
         one REMIC election has been made with respect to the Trust, to
         distribute to the holders of the Regular Interests and the Residual
         Interests in the Pooling REMIC), the balance of the amount of the
         Available Distribution Amount in accordance with the related Pooling
         and Servicing Agreement.

SECTION 4.04.  COMPLIANCE WITH WITHHOLDING REQUIREMENTS.

         Notwithstanding any other provisions of the Pooling and Servicing
Agreement, the Trustee shall comply with all federal withholding requirements
respecting payments of interest or principal to the extent of accrued original
issue discount on Certificates to each Holder of such Certificates who (a) is
not a "United States person," within the meaning of Code section 7701(a)(30),
(b) fails to furnish its TIN to the Trustee, (c) furnishes the Trustee an
incorrect TIN, (d) fails to report properly interest and dividends, or (e) under
certain circumstances, fails to provide the Trustee or the Certificateholder's
securities broker with a certified statement, signed under penalties of perjury,
that the TIN provided by such Certificateholder to the Trustee or such broker is
correct and that the Certificateholder is not subject to backup withholding. The
consent of such a Certificateholder shall not be required for such withholding.
In the event the Trustee does withhold the amount of any otherwise required
distribution from interest payments on the Assets (including principal payments
to the extent of accrued original issue discount) or P&I Advances thereof to any
Certificateholder pursuant to federal withholding requirements, the Trustee
shall indicate with any payment to such Certificateholders the amount withheld.
In addition, if any United States federal income tax is due at the time a
Non-U.S. Person transfers a Residual Certificate, the Trustee or other
Withholding Agent may (1) withhold an amount equal to the taxes due upon
disposition of such Residual Certificate from future distributions made with
respect to such Residual Certificate to the transferee thereof (after giving
effect to the withholding of taxes imposed on such transferee), and (2) pay the
withheld amount to the Internal Revenue Service unless satisfactory written
evidence of payment by the transferor of the taxes due has been provided to the
Trustee or such Withholding Agent. Moreover, the Trustee or other Withholding
Agent may (1) hold distributions on a Residual Certificate, without interest,
pending determination of amounts to be withheld, (2) withhold other amounts, if
any, required to be withheld pursuant to United States federal income tax law
from distributions that otherwise would be made to such transferee on each
Residual Certificate that it holds, and (3) pay to the Internal Revenue Service
all such amounts withheld.

SECTION 4.05.    REPORTS OF SECURITY PRINCIPAL BALANCES TO THE CLEARING AGENCY.

         If and for so long as any Certificate is held by the Clearing Agency,
on the second Business Day before each Distribution Date, the Trustee shall give
oral notice to the Clearing Agency (and shall promptly thereafter confirm in
writing) the following: (a) the amount of interest and principal to be
distributed on the Certificates of such Class on the upcoming Distribution Date,
as reported in the related Remittance Report, (b) the Record Date for such
distribution, (c) the Distribution Date for such distribution and (d) the
aggregate Certificate Principal Balance of each Class of Certificates reported
pursuant to clause (10) of Section 4.01 hereof in such month.

                                      -40-
<PAGE>   45

SECTION 4.06.    PREPARATION OF REGULATORY REPORTS.

         (a) Subject to the provisions of subsections (b) and (c) of this
Section 4.06, the Trustee shall prepare or cause to be prepared, on behalf of
the Trust, and at the expense of the Master Servicer such supplementary and
periodic information, documents and reports (such information, documents or
reports are referred to hereinafter as "Periodic Reports") as may be required
pursuant to Section 12(g) or Section 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), by the rules and regulations of the
Commission thereunder or as a condition to approval of any application for
relief ("Application for Relief") hereinafter referred to and, in connection
therewith, shall prepare such applications and requests for exemption and other
relief from such provisions as it may deem appropriate. The Trustee shall be
deemed to certify as to each Periodic Report that it conforms in all material
respects to applicable reporting requirements imposed by the Exchange Act or is
otherwise in form and content appropriate for filing with the Commission. The
Trustee is hereby authorized to and shall execute all such Periodic Reports or
Applications for Relief on the Trust's behalf and file the same with the
Commission and other required filing offices, if any, on behalf of the Trust.

         (b) Within 30 days after the beginning of the first fiscal year of any
Trust during which its obligation to file Periodic Reports pursuant to the
Exchange Act shall have been suspended, the Trustee shall prepare, or cause to
be prepared, a notice on Commission Form 15 ("Form 15") and is hereby authorized
to and shall execute such Form 15 on the related Trust's behalf and at the
expense of the Master Servicer; provided, however, that the Trustee shall be
under no obligation to prepare such notice if the number of Certificateholders
exceeds 300. The Trustee shall file any notice on Form 15 with the Commission in
accordance with the provisions of Rule 15d-6 under the Exchange Act.

         (c) Notwithstanding any other provision of the Pooling and Servicing
Agreement, the Trustee has not assumed, and shall not by its performance
hereunder be deemed to have assumed, any of the duties or obligations of the
Depositor or any other Person with respect to (1) the registration of the
Certificates pursuant to the Securities Act, (2) the issuance or sale of the
Certificates, or (3) other than as expressly set forth in this Section 4.06,
compliance with the provisions of the Securities Act, the Exchange Act, or any
applicable federal or state securities or other laws including, without
limitation, any requirement to update the registration statement or prospectus
relating to the Certificates in order to render the same not materially
misleading to investors.

         (d) In connection with the Trustee's preparation of any Form 15 or of
any Periodic Report, the Master Servicer and the Depositor shall provide it with
information which it may reasonably request.

                                    ARTICLE V

                   THE POOLING INTERESTS AND THE CERTIFICATES

SECTION 5.01.  POOLING REMIC INTERESTS.

         If an election has been made to treat certain assets of the Trust as a
Pooling REMIC, the Pooling and Servicing Agreement will set forth the terms of
the Regular Interests and Residual Interest of the Pooling REMIC. Unless
otherwise specified in the Pooling and Servicing Agreement, (a) the Pooling
REMIC Regular Interests will be "regular interests" for purposes of the REMIC
Provisions but will not constitute securities or certificates of interest in the
Trust; and (b) the Trustee will be the owner of any such Regular Interests,
which may not be transferred to any person other than a successor trustee
appointed pursuant to Section 8.08 hereof unless the party desiring the transfer
obtains a Special Tax Opinion.

SECTION 5.02.    THE CERTIFICATES.

         The Certificates shall be designated in the Pooling and Servicing
Agreement. The Certificates in the aggregate will represent the entire
beneficial ownership interest in the Trust Estate (or in the Issuing REMIC, if
any). On the Closing Date, unless otherwise specified in the related Pooling and
Servicing Agreement, the aggregate Certificate Principal Balance of the
Certificates will not be less than the aggregate Unpaid Principal Balance of the

                                      -41-
<PAGE>   46

underlying Assets as of the Cut-off Date, after application of principal
payments due on or before such date, whether or not received. The Certificates
will be substantially in the forms annexed to the Pooling and Servicing
Agreement. Unless otherwise provided in the Pooling and Servicing Agreement, the
Certificates of each Class will be issuable in registered form. Each Certificate
will share ratably in all rights of the related Class.

         Upon original issue, the Certificates shall be executed and delivered
by the Trustee and the Trustee shall cause the Certificates to be authenticated
by the Certificate Registrar to or upon the order of the Depositor. The
Certificates shall be executed and attested by manual or facsimile signature on
behalf of the Trustee by an authorized Officer under its seal imprinted thereon.
Certificates bearing the manual or facsimile signatures of individuals who were
at any time the proper Officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates. No Certificate shall
represent entitlement to any benefit under the Pooling and Servicing Agreement
or be valid for any purpose, unless there appears on such Certificate a
certificate of authentication substantially in the form provided in the Pooling
and Servicing Agreement (in the forms of Certificates attached thereto as
Exhibits) executed by the Certificate Registrar by manual signature, and such
certificate of authentication shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their execution, except
that those Certificates delivered on the Closing Date may be dated the Accrual
Date.

SECTION 5.03.  BOOK-ENTRY CERTIFICATES.

         (a) The Book-Entry Certificates will be represented initially by one or
more certificates registered in the name of CEDE & Co., as nominee of the
Clearing Agency. The Depositor, the Master Servicer and the Trustee may for all
intents and purposes (including the making of payments on the Book-Entry
Certificates) deal with the Clearing Agency as the authorized representative of
the Beneficial Owners of the Book-Entry Certificates for as long as those
Certificates are registered in the name of the Clearing Agency. The rights of
Beneficial Owners of the Book-Entry Certificates shall be limited to those
established by law and agreements between such Beneficial Owners and the
Clearing Agency and Clearing Agency Participants. The Beneficial Owners of the
Book-Entry Certificates shall not be entitled to certificates for the Book-Entry
Certificates as to which they are the Beneficial Owners, except as provided in
subsection (c) below. Requests and directions from, and votes of, the Clearing
Agency, as Holder, shall not be deemed to be inconsistent if they are made with
respect to different Beneficial Owners. Without the consent of the Depositor,
the Master Servicer and the Trustee, a Book-Entry Certificate may not be
transferred by the Clearing Agency except to another Clearing Agency that agrees
to hold the Book-Entry Certificate for the account of the respective Clearing
Agency Participants and Beneficial Owners.

         (b) Neither the Depositor, the Master Servicer nor the Trustee will
have any liability for any aspect of the records relating to or payment made on
account of Beneficial Owners of the Book-Entry Certificates held by the Clearing
Agency, for monitoring or restricting any transfer of beneficial ownership in a
Book-Entry Certificate or for maintaining, supervising or reviewing any records
relating to such Beneficial Owners.

         (c) The Book-Entry Certificates will be issued in fully-registered,
certificated form to Beneficial Owners of Book-Entry Certificates or their
nominees, rather than to the Clearing Agency or its nominee, only if (1) the
Depositor advises the Trustee in writing that the Clearing Agency is no longer
willing or able to discharge properly its responsibilities as depository with
respect to the Book-Entry Certificates and the Depositor is unable to locate a
qualified successor within 30 days or (2) the Depositor, at its option, elects
to terminate the book-entry system operating through the Clearing Agency. Upon
the occurrence of either such event, the Trustee shall notify the Clearing
Agency, which in turn will notify all Beneficial Owners of Book-Entry
Certificates through Clearing Agency Participants, of the availability of
certificated Certificates. Upon surrender by the Clearing Agency of the
certificates representing the Book-Entry Certificates and receipt of
instructions for re-registration, the Trustee will reissue the Book-Entry
Certificates as certificated Certificates to the Beneficial Owners identified in
writing by the Clearing Agency. Such certificated Certificates shall not
constitute Book-Entry Certificates. All reasonable costs associated with the
preparation and delivery of certificated Certificates shall be borne by the
Depositor.

                                      -42-
<PAGE>   47

SECTION 5.04.    REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.

         The Trustee shall cause to be kept at its Corporate Trust Office a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided. The Trustee will
initially serve as Certificate Registrar for the purpose of registering
Certificates and transfers and exchanges of Certificates as herein provided.

         If a Person other than the Trustee is appointed by the Trustee as
Certificate Registrar, such Person will give the Trustee prompt written notice
of the location, and any change in the location, of the Certificate Register,
and the Trustee shall have the right to inspect the Certificate Register at all
reasonable times and to obtain copies thereof, and the Trustee shall have the
right to rely upon a certificate executed on behalf of the Certificate Registrar
by an Officer thereof as to the names and addresses of the Holders of the
Certificates and the principal amounts and numbers of such Certificates.

         Subject to Section 5.05 below, upon surrender for registration of
transfer of any Certificate at the Corporate Trust Office of the Trustee or at
any other office or agency of the Trustee maintained for such purpose, the
Trustee shall execute and the Certificate Registrar shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Certificates of the same Class of a like aggregate Percentage Interest.

         At the option of the Certificateholders, each Certificate may be
exchanged for other Certificates of the same Class with the same and authorized
denominations and a like aggregate Percentage Interest, upon surrender of such
Certificate to be exchanged at any such office or agency. Whenever any
Certificates are so surrendered for exchange, the Trustee shall execute and
cause the Certificate Registrar to authenticate and deliver the Certificates
which the Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for transfer or exchange shall (if so
required by the Trustee) be duly endorsed by, or be accompanied by a written
instrument of transfer in the form satisfactory to the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing.

         No service charge to the Certificateholders shall be made for any
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

         All Certificates surrendered for transfer and exchange shall be
destroyed by the Certificate Registrar.

         The Depositor will (or will cause the Certificate Registrar to) provide
notice to the Trustee of each transfer of a Certificate, and will provide the
Trustee and Master Servicer with an updated copy of the Certificate Register on
January 1 and July 1 of each year (or at such other time as the Master Servicer
may request).

SECTION 5.05.  RESTRICTIONS ON TRANSFER.

         (a) Securities Law Compliance. No transfer of any Private Certificate
shall be made unless that transfer is made pursuant to an effective registration
statement under the Securities Act and effective registration or qualification
under applicable state securities laws, or is made in a transaction that does
not require such registration or qualification. Any Holder of a Private
Certificate shall, and, by acceptance of such Certificate, does agree to,
indemnify the Depositor, the Trustee and the Master Servicer against any
liability that may result if any transfer of such Certificates by such Holder is
not exempt from registration under the Securities Act and all applicable state
securities laws or is not made in accordance with such federal and state laws.
Neither the Depositor, the Trustee nor the Master Servicer is obligated to
register or qualify any Private Certificate under the Securities Act or any
other securities law or to take any action not otherwise required under these
Standard Terms or the related Pooling and Servicing Agreement to permit the
transfer of such Certificates without such registration or qualification. The
Trustee shall not register any transfer of a Private Certificate (other than a
Residual Certificate) unless and until the prospective transferee provides the
Trustee with a Transferee Agreement or, if the Certificate to be transferred is
a Rule 144A Certificate, a Rule 144A Agreement certifying to facts which, if
true, would mean that the proposed transferee is a Qualified Institutional
Buyer, and unless and until the transfer otherwise complies with the provisions

                                      -43-
<PAGE>   48
of this Section 5.05. If a proposed transfer does not involve a Rule 144A
Certificate or the transferee's Rule 144A Agreement does not certify to facts
which, if true, would mean that the transferee is a Qualified Institutional
Buyer, (i) the Master Servicer and the Trustee shall require that the transferor
and transferee certify as to the factual basis for the registration exemption(s)
relied upon and (ii) if such transfer is made within three years after the
acquisition thereof by a non-Affiliate of the Depositor from the Depositor or an
Affiliate of the Depositor, the Master Servicer or the Trustee may also may
require an Opinion of Counsel that such transfer may be made without
registration or qualification under the Securities Act and applicable state
securities laws, which Opinion of Counsel shall not be obtained at the expense
of the Depositor, the Trustee or the Master Servicer. Notwithstanding the
foregoing, no Rule 144A Agreement, Transferee Agreement or Opinion of Counsel
shall be required in connection with the initial transfer of the Private
Certificates and no Opinion of Counsel shall be required in connection with the
transfer of the Private Certificates by a broker or dealer, if such broker or
dealer was the initial transferee.

         The Depositor shall provide to any transferee Holder of a Rule 144A
Certificate and any prospective transferee designated by such Holder information
regarding the related Certificates and the related Assets and such other
information as shall be necessary to satisfy the condition to eligibility set
forth in Rule 144A(d)(4) for transfer of any such Certificate without
registration thereof under the Securities Act pursuant to the registration
exemption provided by Rule 144A, upon the request for such information by such
Holder.

         (b) ERISA Compliance.

             (i)  Book-Entry Certificates. No transfer of all or any
         portion of any Class of Book-Entry Certificates that are ERISA
         Restricted Certificates shall be made to a transferee that is a Plan
         Investor, and each Beneficial Owner of such a Certificate shall be
         deemed to have represented, by virtue of its acquisition of such a
         Certificate, that it is not a Plan Investor.

             (ii) Certificated Certificates. No transfer of all or any
         portion of any Class of Certificates that (A) are not Book-Entry
         Certificates and (B) are ERISA Restricted Certificates shall be made
         unless and until the prospective transferee provides the Trustee and
         the Master Servicer with a properly completed and executed Benefit Plan
         Affidavit, together with a Benefit Plan Opinion if required in order to
         comply with such Affidavit. Notwithstanding anything else to the
         contrary herein, any purported transfer of such a Certificate to or on
         behalf of a Plan Investor without delivery of a Benefit Plan Opinion
         shall be null and void.

         (c) Residual Certificates. The Trustee shall not register any transfer
of a Residual Certificate (including any beneficial interest therein) unless it
shall have received the written consent of the Master Servicer. No Residual
Certificate may be transferred to a Disqualified Organization. The Master
Servicer will not consent to any proposed transfer or sale of a Residual
Certificate (1) to any investor that it knows is a Disqualified Organization or
(2) if the transfer involves less than an entire interest in a Residual
Certificate, unless (A) the interest transferred is an undivided interest or (B)
the transferor or the transferee provides the Master Servicer with an Opinion of
Counsel obtained at its own expense to the effect that the transfer will not
jeopardize the REMIC status of any REMIC consisting of assets of the Trust. The
Master Servicer's consent to any transfer is further conditioned upon the Master
Servicer's receipt from the proposed transferee of (x) a Residual Transferee
Agreement, (y) a Benefit Plan Affidavit, and (z) either (A) if the transferee is
a Non-U.S. Person, an affidavit of the proposed transferee in substantially the
form attached as Exhibit 7-A to Exhibit 7 hereto and a certificate of the
transferor stating whether the Residual Certificate has "tax avoidance
potential" as defined in Treasury Regulations Section 1.860G-3(a)(2), or (B) if
the transferee is a U.S. Person, an affidavit in substantially the form attached
as Exhibit 7-B to Exhibit 7 hereto. In addition, if a proposed transfer involves
a Private Certificate, the transfer shall be subject to the additional
restrictions set forth in Section 5.05(a) above. Notwithstanding the foregoing,
no Opinion of Counsel shall be required in connection with the initial transfer
of the Residual Certificates or their transfer by a broker or dealer, if such
broker or dealer was the initial transferee. Notwithstanding the fulfillment of
the prerequisites described above, the Master Servicer may withhold its consent
to, or the Trustee may refuse to recognize, a transfer of a Residual
Certificate, but only to the extent necessary to avoid a risk of
disqualification as a REMIC of a REMIC consisting of Trust assets or the
imposition of a tax upon a REMIC. Any attempted transfer in violation of the
foregoing restrictions shall be null and void and shall not be recognized by the
Trustee.

                                      -44-
<PAGE>   49
         If a tax or a reporting cost is borne by a REMIC consisting of Trust
assets as a result of the transfer of a Residual Certificate or any beneficial
interest therein in violation of the restrictions set forth in this Section, the
transferor shall pay such tax or cost and, if such tax or cost is not so paid,
the Trustee, upon notification from the Master Servicer, shall pay such tax or
cost or may pay such tax or reporting cost with amounts that otherwise would
have been paid to the transferee of the Residual Certificate (or beneficial
interest therein). In that event, neither the transferee nor the transferor
shall have any right to seek repayment of such amounts from the Depositor, the
Trustee, the REMIC, the Master Servicer, or the other Holders of any of the
Certificates, and none of such parties shall have any liability for payment of
any such tax or reporting cost. In the event that a Residual Certificate is
transferred to a Disqualified Organization, the Master Servicer shall make, or
cause to be made, available the information necessary for the computation of the
excise tax imposed under section 860E(e) of the Code.

SECTION 5.06.    ACCRUAL OF INTEREST ON THE CERTIFICATES.

         Certificates entitled to receive interest in accordance with the
related Pooling and Servicing Agreement shall accrue interest at the applicable
Pass-Through Rates on the basis of a 360-day year consisting of twelve 30-day
months and on the assumption that each Interest Accrual Period consists of 30
days, unless otherwise provided in the Pooling and Servicing Agreement.

SECTION 5.07.    MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.

         If (a) any mutilated Certificate is surrendered to the Trustee or the
Certificate Registrar, or the Trustee and the Certificate Registrar receive
evidence to their satisfaction of the destruction, loss or theft of any
Certificate, and (b) there is delivered to the Trustee and the Certificate
Registrar such security or indemnity as may be required by them to save each of
them harmless, then, in the absence of notice to the Trustee or the Certificate
Registrar that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of the same
Class, tenor and denomination or Percentage Interest. Upon the issuance of any
new Certificate under this Section, the Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the fees and
expenses of the Trustee and the Certificate Registrar) connected therewith.
Every new Certificate issued pursuant to this Section shall constitute complete
and indefeasible evidence of ownership in the Trust, as if originally issued on
the Closing Date, regardless of whether any destroyed, lost or stolen
Certificate in lieu of which such new Certificate was issued shall be found at
any time.

SECTION 5.08.    PERSONS DEEMED OWNERS.

         Prior to due presentment for registration of transfer of any
Certificate, the Master Servicer, the Trustee and any agent of the Master
Servicer or of the Trustee may treat the Person in whose name any Certificate is
registered on the Certificate Register as the owner of such Certificate for the
purpose of receiving distributions on such Certificate and for all other
purposes whatsoever (whether or not such Certificate is overdue), and neither
the Master Servicer, the Trustee nor any agent of the Master Servicer or the
Trustee shall be affected by notice to the contrary.

SECTION 5.09.    APPOINTMENT OF PAYING AGENT.

         The Trustee, at its own expense, may appoint a Paying Agent approved by
the Depositor for the purpose of making distributions to Certificateholders. The
Trustee shall cause such Paying Agent to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee that such
Paying Agent will hold all sums held by it for the payment to Certificateholders
in an Eligible Account in trust for the benefit of the Certificateholders
entitled thereto until such sums shall be paid to such Certificateholders. All
funds remitted by the Trustee to any such Paying Agent for the purpose of making
distributions shall be paid to Certificateholders on each Distribution Date and
any amounts not so paid shall be returned on such Distribution Date to the
Trustee.

                                      -45-
<PAGE>   50
                                   ARTICLE VI

                      THE DEPOSITOR AND THE MASTER SERVICER

SECTION 6.01.   LIABILITY OF THE DEPOSITOR AND THE MASTER SERVICER.

         The Depositor and the Master Servicer each shall be liable in
accordance with the terms of the Pooling and Servicing Agreement only to the
extent of the obligations specifically imposed by the Pooling and Servicing
Agreement and undertaken hereunder by the Depositor or the Master Servicer,
respectively.

SECTION 6.02.  THE DEPOSITOR'S REPRESENTATIONS AND WARRANTIES.

         The Depositor represents and warrants to the Trustee, as of the date of
a Pooling and Servicing Agreement and as of the related Closing Date, as
follows:

         (a) The Depositor has been duly organized and is validly existing as a
limited liability company under the laws of the State of Delaware and is in good
standing under such laws, with full power and authority to own its properties
and conduct its business as now conducted by it and to enter into and perform
its obligations under the Pooling and Servicing Agreement, and has duly
qualified to do business and is in good standing under the laws of each
jurisdiction wherein it conducts any material business or in which the
performance of its duties under the Pooling and Servicing Agreement would
require such qualification.

         (b) The Depositor has all requisite corporate power and authority to
own its properties and to conduct any and all business required or contemplated
by the Pooling and Servicing Agreement to be conducted by the Depositor and to
perform the covenants and obligations to be performed by it hereunder; the
execution and delivery by the Depositor of the Pooling and Servicing Agreement
are within the corporate power of the Depositor and have been duly authorized by
all necessary action on the part of the Depositor; and neither the execution and
delivery of the Pooling and Servicing Agreement by the Depositor, nor the
consummation by the Depositor of the transactions herein contemplated, nor
compliance with the provisions hereof by the Depositor, will (1) conflict with
or result in a breach of, or will constitute a default under, any of the
provisions of the articles of organization or operating agreement of the
Depositor or any law, governmental rule or regulation, or any judgment, decree
or order binding on the Depositor or its properties, or any of the provisions of
any indenture, mortgage, deed of trust or other instrument to which the
Depositor is a party or by which it is bound or (2) result in the creation or
imposition of any lien, charge or encumbrance upon any of its property pursuant
to the terms of any such indenture, mortgage, deed of trust or other instrument.

         (c) The Pooling and Servicing Agreement and all other documents and
instruments required or contemplated hereby to be executed or delivered by the
Depositor under the Pooling and Servicing Agreement have been duly authorized,
executed and delivered by the Depositor and, assuming due authorization,
execution and delivery thereof by all other parties thereto, constitute legal,
valid and binding agreements enforceable against the Depositor in accordance
with their terms, subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency or other similar laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity.

         (d) No consent, approval, order or authorization of, or registration,
qualification or declaration with, any state, federal or other governmental
authority by the Depositor is required in connection with the authorization,
execution or delivery of the Pooling and Servicing Agreement or the performance
by the Depositor of the covenants and obligations to be performed by it
hereunder.

         (e) As of the Closing Date, no Proceedings are pending or, to the best
of the Depositor's knowledge, threatened against the Depositor that would
prohibit its entering into the Pooling and Servicing Agreement or performing its
obligations under the Pooling and Servicing Agreement, including assisting in
the issuance of the Certificates.

                                      -46-
<PAGE>   51
         (f) The Depositor has obtained or made all necessary consents,
approvals, waivers and notifications of stockholders, creditors, lessors and
other nongovernmental persons, in each case, in connection with the execution
and delivery of the Pooling and Servicing Agreement, and the consummation of all
the transactions herein contemplated.

         (g) The Depositor does not believe, nor does it have any reason or
cause to believe, that it cannot perform its obligations under the Pooling and
Servicing Agreement.

         Upon discovery by any of the Depositor, the Master Servicer or the
Trustee of a breach of any of the foregoing representations, warranties and
covenants that materially and adversely affects the interest of the
Certificateholders in any underlying Asset, the party discovering such breach
shall give prompt written notice thereof (but in no event later than two
Business Days following such discovery) to the other parties hereto.

SECTION 6.03.  REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MASTER
               SERVICER.

         The Master Servicer hereby represents, warrants and covenants to the
Trustee, as of the date hereof and as of the Closing Date, as follows:

         (a) The Master Servicer has been duly organized and is validly existing
as a national banking association under the laws of the United States and is in
good standing under such laws, with full power and authority to own its
properties and conduct its business as now conducted by it and to enter into and
perform its obligations under the Pooling and Servicing Agreement, and is
authorized to conduct business in each jurisdiction where it conducts any
material business or in which the performance of its duties under the Pooling
and Servicing Agreement would require such qualification, except where the
failure so to qualify would not have a material adverse effect on the
performance of its obligations under the Pooling and Servicing Agreement. The
Master Servicer holds all material licenses, certificates, franchises, and
permits from all governmental authorities necessary for the conduct of its
business and will have received no notice of proceedings relating to the
revocation of any such license, certificate or permit, that, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
affect materially and adversely the conduct of the business, results of
operations, net worth or condition (financial or otherwise) of the Master
Servicer.

         (b) The Master Servicer has all requisite power and authority to own
its properties and to conduct any and all business required or contemplated by
the Pooling and Servicing Agreement to be conducted by the Master Servicer and
to perform the covenants and obligations to be performed by it hereunder; the
execution and delivery by the Master Servicer of the Pooling and Servicing
Agreement are within the corporate power of the Master Servicer and have been
duly authorized by all necessary corporate action on the part of the Master
Servicer; and neither the execution and delivery of the Pooling and Servicing
Agreement by the Master Servicer, nor the consummation by the Master Servicer of
the transactions herein contemplated, nor compliance with the provisions hereof
by the Master Servicer, will (1) conflict with or result in a breach of, or will
constitute a default under, any of the provisions of the articles of
incorporation or by-laws of the Master Servicer or any law, governmental rule or
regulation, or any judgment, decree or order binding on the Master Servicer or
its properties, or any of the provisions of any indenture, mortgage, deed of
trust or other instrument to which the Master Servicer is a party or by which it
is bound or (2) result in the creation or imposition of any lien, charge or
encumbrance upon any of its property pursuant to the terms of any such
indenture, mortgage, deed of trust or other instrument.

         (c) The Pooling and Servicing Agreement and all other documents and
instruments required or contemplated hereby to be executed or delivered by the
Master Servicer under the Pooling and Servicing Agreement have been duly
authorized, executed and delivered by the Master Servicer and, assuming due
authorization, execution and delivery thereof by all other parties thereto,
constitute legal, valid and binding agreements enforceable against the Master
Servicer in accordance with their terms, subject, as to enforcement of remedies,
to applicable bankruptcy, reorganization, insolvency or other similar laws
affecting creditors' rights generally from time to time in effect and to general
principles of equity.

                                      -47-
<PAGE>   52

         (d) No consent, approval, order or authorization of, or registration,
qualification or declaration with, any federal, state or other governmental
authority by the Master Servicer is required in connection with the
authorization, execution or delivery of the Pooling and Servicing Agreement or
the performance by the Master Servicer of the covenants and obligations to be
performed by it hereunder.

         (e) No Proceedings are pending or, to the best of the Master Servicer's
knowledge, threatened against the Master Servicer that would prohibit its
entering into the Pooling and Servicing Agreement or performing its obligations
under the Pooling and Servicing Agreement, including assisting in the issuance
of the Certificates.

         (f) The Master Servicer maintains an errors and omissions policy and
fidelity bond that covers the Master Servicer's performance under the Pooling
and Servicing Agreement and such policy and bond are in full force and effect.

         (g) The Master Servicer has obtained or made all necessary consents,
approvals, waivers and notifications of stockholders, creditors, lessors and
other nongovernmental persons, in each case, in connection with the execution
and delivery of the Pooling and Servicing Agreement, and the consummation of all
the transactions herein contemplated.

         (h) The Master Servicer does not believe, nor does it have any reason
or cause to believe, that it cannot perform its obligations under the Pooling
and Servicing Agreement.

         (i) The Master Servicer is and shall remain through the duration of the
Pooling and Servicing Agreement (1) a HUD approved mortgagee and (2) approved by
HUD to service FHA insured mortgage loans. If at any time the Master Servicer
fails to remain either (1) a HUD approved mortgagee and (2) approved by HUD to
service FHA insured mortgage loans, then the Master Servicer shall be required
to resign as Master Servicer and shall give immediate written notice to the
Trustee of such failure.

         Upon discovery by any of the Depositor, the Master Servicer or the
Trustee of a breach of any of the foregoing representations, warranties and
covenants that materially and adversely affects the interest of the
Certificateholders in any underlying Asset, the party discovering such breach
shall give prompt written notice thereof (but in no event later than two
Business Days following such discovery) to the other parties hereto. The Master
Servicer shall use its reasonable best efforts to cure promptly (and in no event
later than 30 days after such notice, shall cure), any breach of the
representations, warranties and covenants contained in this Section 6.03.

SECTION 6.04.  CORPORATE EXISTENCE.

         Subject to the provisions of the following paragraph, the Depositor and
the Master Servicer each will keep in full effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction in which it is
incorporated and will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of the Pooling and
Servicing Agreement, any Certificates or any of the Assets included in the Trust
Estate, and to perform its duties under the Pooling and Servicing Agreement.

         Any Person (a) into which the Depositor or the Master Servicer may be
merged or consolidated, (b) that may result from any merger, conversion or
consolidation to which the Depositor or the Master Servicer shall be a party,
(c) that may succeed to the business of the Depositor or the Master Servicer, or
(d) to which the Depositor or the Master Servicer may transfer all of its
assets, shall be the successor to the Depositor or the Master Servicer
hereunder, respectively, without the execution or filing of any document or any
further act by any of the parties to the Pooling and Servicing Agreement,
anything herein to the contrary notwithstanding; provided, that any such
successor to the Master Servicer must agree in writing to be bound by each of
the Master Servicer's obligations hereunder and that each applicable Rating
Agency must deliver to the Trustee a letter to the effect that such
successorship shall not result in a downgrading of the rating initially assigned
by the Rating Agency to any Class of Certificates as to which the Depositor has
requested a rating from such Rating Agency.

                                      -48-
<PAGE>   53
SECTION 6.05.   LIMITATION ON LIABILITY OF THE DEPOSITOR, THE MASTER SERVICER
                AND OTHERS.

         Neither the Depositor, the Master Servicer nor any of the directors,
officers, employees or agents of any of the Depositor or the Master Servicer
shall be under any liability to the Trust or the Certificateholders and all such
Persons shall be held harmless for any action taken or for refraining from the
taking of any action in good faith pursuant to the Pooling and Servicing
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect any such Person against any breach of warranties or
representations made herein or against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder. The Depositor, the Master Servicer and any of the directors,
officers, employees or agents of either the Depositor or the Master Servicer may
rely in good faith on any document of any kind which, prima facie, is properly
executed and submitted by any Person respecting any matters arising hereunder.
Neither the Depositor nor the Master Servicer shall be under any obligation to
appear in, prosecute or defend any legal action unless such action is related to
its respective duties under the Pooling and Servicing Agreement and such action
in its opinion does not involve it in any expense or liability, except as
provided in Section 10.01(b) hereof; provided, however, that the Depositor or
the Master Servicer may each in its discretion undertake any such action that it
deems necessary or desirable with respect to the Pooling and Servicing Agreement
and the rights and duties of the parties thereto and the interests of the
Certificateholders thereunder if the Certificateholders offer to the Depositor
or the Master Servicer, as the case may be, reasonable security or indemnity
against the costs, expenses and liabilities that may be incurred therein or
thereby.

SECTION 6.06.  MASTER SERVICER RESIGNATION.

         The Master Servicer shall not resign from the obligations and duties
imposed on it under the Pooling and Servicing Agreement, except (a) upon
appointment of a successor servicer and receipt by the Trustee of a letter from
each applicable Rating Agency that such a resignation and appointment will not,
in and of itself, result in a downgrading of any rated Certificates or (b) upon
determination by its Board of Directors that the performance of its duties under
the Pooling and Servicing Agreement is no longer permissible under applicable
law. Any such determination permitting the resignation of the Master Servicer
shall be evidenced by a resolution of its Board of Directors and an Opinion of
Counsel to such effect delivered to the Trustee. No such resignation shall
become effective until the Trustee or a successor servicer shall have assumed
the responsibilities and obligations of the Master Servicer in accordance with
Section 7.02 hereof.

SECTION 6.07. ASSIGNMENT OR DELEGATION OF DUTIES BY THE MASTER SERVICER AND
              THE DEPOSITOR.

         (a) The Master Servicer may at any time without notice or consent
delegate certain computational, data processing, collection and foreclosure
duties hereunder to any entity. No such delegation shall relieve the Master
Servicer in any respect of its responsibility with respect to such duties.

         (b) Neither the Master Servicer nor the Depositor may assign the
Pooling and Servicing Agreement or any of its rights, power, duties or
obligations hereunder (except as provided in Section 6.07(a) above), provided
that the Master Servicer and the Depositor may assign the Pooling and Servicing
Agreement in connection with a consolidation, merger, conveyance, transfer or
lease made in compliance with Section 6.04 hereof.

         (c) Except as provided in Sections 6.04 and 6.06 hereof, the duties and
obligations of the Master Servicer and the Depositor under the Pooling and
Servicing Agreement shall continue until the Pooling and Servicing Agreement
shall have been terminated as provided in Section 9.01 hereof, and shall survive
the exercise by the Trustee of any right or remedy under the Pooling and
Servicing Agreement, or the enforcement by the Trustee of any provisions of the
Pooling and Servicing Agreement.

SECTION 6.08.    THE DEPOSITOR AND MASTER SERVICER MAY OWN CERTIFICATES.

         The Depositor, the Master Servicer and any Affiliate of the foregoing
may in its individual or any other capacity become the owner or pledgee of
Certificates with the same rights as it would have if it were not the Depositor,
the Master Servicer or an Affiliate of the Depositor or the Master Servicer.

                                      -49-

<PAGE>   54
SECTION 6.09.  PROTECTION OF TRUST ESTATE.

         Except as limited by Section 2.02(a) above, the Master Servicer (and
the Depositor, to the extent necessary) will execute and deliver from time to
time all amendments to the Pooling and Servicing Agreement and all financing
statements, continuation statements, instruments of further assurance and other
instruments necessary or advisable in order to, and will take such other action
as the Trustee deems necessary or advisable in order to:

         (a) grant to the Trustee more effectively all or any portion of the
Trust Estate;

         (b) preserve and defend the Trust's title to the Trust Estate and the
rights therein of the Trustee and the Holders of Certificates against the claims
of all persons and parties;

         (c) maintain or preserve the lien (and the priority thereof) created by
the Pooling and Servicing Agreement or to carry out more effectively the
purposes hereof (including the filing of continuation statements under the UCC
as necessary);

         (d) perfect, publish notice of, or protect the validity of any grant
made or to be made pursuant to the Pooling and Servicing Agreement; or

         (e) enforce any of the related Asset Documents.

The Depositor and the Master Servicer each hereby designates the Trustee its
agent and attorney-in-fact to execute any financing statement, continuation
statement or other instrument required pursuant to this Section 6.09; provided,
that the Trustee shall have no duty to determine whether the filing of any
financing statement shall be necessary or to file such statements except upon
written request of the Depositor or the Master Servicer. After execution of any
continuation statement or other instrument pursuant to this Section, the Trustee
shall deliver such instrument to the Master Servicer for filing. Promptly after
filing any such instrument or causing any such instrument to be filed, the
Master Servicer shall deliver an Officer's Certificate, signed by an Officer of
the Master Servicer, to the Trustee stating that such continuation statement or
other instrument has been filed.

         The Master Servicer shall pay or cause to be paid, on behalf of the
Trust, any taxes levied on the account of the ownership by the Trust of the
related Assets.

SECTION 6.10.    PERFORMANCE OF OBLIGATIONS.

         The Master Servicer shall not take any action, and will use its best
efforts not to permit any action to be taken by others, that would release any
Person from any of such Person's covenants or obligations under any of the
related Asset Documents or under any instrument included in the Trust Estate, or
that would result in the amendment, hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of, any of the related
Asset Documents or any such instrument, except as expressly provided in the
Pooling and Servicing Agreement or such Asset Documents or other instrument or
unless such action will not adversely affect the interests of the Holders of the
Certificates.

                                   ARTICLE VII

             EVENT OF DEFAULT; TERMINATION OF SERVICING ARRANGEMENTS

SECTION 7.01.  EVENTS OF DEFAULT.

         Any of the following acts or occurrences shall constitute an Event of
Default by the Master Servicer:

         (a) any failure by the Master Servicer to remit funds in the
Certificate Account to the Distribution Account or to make a required P&I
Advance that is not deemed by the Master Servicer to be a Non-Recoverable
Advance or pay Compensating Interest, in either case as required by Section
3.07(b) hereof or to provide the Trustee

                                      -50-
<PAGE>   55
with the information required under Section 4.01, and the continuance of such
failure unremedied for a period of five days after the date upon which such
deposit, payment or remittance was due;

         (b) if the Master Servicer breaches in any material respect any of the
representations, warranties, covenants or agreements on the part of the Master
Servicer (other than covenants referred to in clause (a) above) contained in the
Certificates or in the Pooling and Servicing Agreement, which breach continues
unremedied for a period of 30 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Master Servicer by the Trustee or the Depositor, or to the Master Servicer, the
Depositor and the Trustee by the Holders of Certificates of a Series entitled to
at least 25% of the related Voting Rights;

         (c) the issuance of a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency or similar
law or appointing a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, against the
Master Servicer, and the remaining of such decree or order in force undischarged
or unstayed for a period of 60 consecutive days;

         (d) the Master Servicer's consent 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 Master
Servicer or of, or relating to, all or substantially all of the property of the
Master Servicer; or

         (e) the Master Servicer's (1) admission in writing of its inability to
pay its debts generally as they become due, (2) filing of a petition to take
advantage of, or commence a voluntary case under, any applicable insolvency or
reorganization statute, (3) making of an assignment for the benefit of its
creditors, or (4) voluntarily suspending payment of its obligations.

         If an Event of Default concerning the Master Servicer shall occur
hereunder, then, and in each and every such case, so long as such Event of
Default shall not have been remedied or waived, the Trustee may, and at the
direction of the Holders of Certificates evidencing greater than 51% of the
Voting Rights, shall, by notice then given in writing to the Master Servicer,
terminate all of the rights and obligations of the Master Servicer as servicer.
On and after the receipt by the Master Servicer of any such written notice, all
authority and power of the Master Servicer hereunder, whether with respect to
the Certificates (except its rights as a Holder thereof) or the Assets or
otherwise, shall pass to and be vested in the Trustee pursuant to and under this
Section 7.01 (provided, however, that the Master Servicer shall continue to be
entitled to receive all amounts accrued and owing to it as Master Servicer under
the Pooling and Servicing Agreement on or prior to the occurrence of a Event of
Default specified in Section 7.01(a) above or, in the case of any other Event of
Default, on or prior to the date of such termination); and, without limitation,
the Trustee hereby is authorized and empowered on behalf of the Master Servicer,
as attorney-in-fact or otherwise, to execute and deliver any and all documents
and other instruments, and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement or assignment of the Assets and
related documents or otherwise.

         The holders of Certificates representing at least 66 2/3% of the Voting
Rights allocated to the respective Classes of Certificates affected by any Event
of Default will be entitled to waive such Event of Default; provided, however,
that an Event of Default involving a failure to distribute a required payment to
Certificateholders described in clause (a) of this Section 7.01 may be waived
only by all of affected Certificateholders. Upon any such waiver of an Event of
Default, such Event of Default shall cease to exist and shall be deemed to have
been remedied for every purpose under this Agreement.

         The Master Servicer shall cooperate with the Trustee in effecting the
termination of the responsibilities and rights of the Master Servicer hereunder,
including, without limitation, (1) transferring to the Trustee for
administration by it of all cash amounts that shall be held at the time by the
Master Servicer for deposit, shall have been deposited by the Master Servicer
into the Collection Account, the Certificate Account or the Distribution
Account, or shall be received thereafter with respect to an Asset, and (2) the
prompt provision to the Trustee (in no event later than ten Business Days
subsequent to its receipt of such notice of termination) of all documents and

                                      -51-
<PAGE>   56
records, electronic and otherwise, reasonably requested by the Trustee or its
designee in order for the Trustee or its designee to assume and carry out the
duties and obligations that otherwise were to have been performed and carried
out by the Master Servicer under the Pooling and Servicing Agreement but for the
termination of the Master Servicer.

         Upon any termination of the Master Servicer pursuant to this Section,
the Trustee or its designee shall pay over to the Master Servicer that portion
of any future proceeds of the related Assets that, if it were acting hereunder
at such future time, it would be permitted to retain or withdraw from the
Certificate Account or Distribution Account in consideration of, or in
reimbursement for, previous services performed, or advances made, by it or for
other matters for which it is entitled to reimbursement pursuant hereto or to
the terms of the Pooling and Servicing Agreement. Prior to appointment of any
successor Master Servicer, the Trustee must notify the Rating Agency in writing
of the identity of such prospective successor.

SECTION 7.02.    TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.

         On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.01 hereof or resigns pursuant to Section 6.06
or 6.03(i) hereof, the Trustee shall be the successor in all respects to the
Master Servicer in its capacity as servicer under the Pooling and Servicing
Agreement and in connection with the transactions provided for herein and shall
be subject to all the responsibilities, duties and liabilities placed on the
Master Servicer by the terms and provisions hereof. As compensation therefor,
the Trustee, except as provided in Section 7.01 hereof, shall be entitled to
such compensation (whether payable out of the Distribution Account or otherwise)
as the Master Servicer would have been entitled to receive hereunder if no such
notice of termination had been given, as well as all protections and
indemnification afforded the Master Servicer pursuant to Section 6.05 above.
Notwithstanding the above, the Trustee may, if it is unwilling or unable so to
act, it may or, at the written request of Certificateholders entitled to at
least 51% of the Voting Rights, it shall appoint, or petition a court of
competent jurisdiction to appoint, any established housing finance institution
having a net worth of not less than $15,000,000 and acceptable to each Rating
Agency, as the successor to the Master Servicer hereunder in the assumption of
all or any part of the responsibilities, duties or liabilities of the Master
Servicer hereunder. No appointment of a successor to the Master Servicer shall
be effective until the assumption by the successor of all future
responsibilities, duties and liabilities of the Master Servicer under the
Pooling and Servicing Agreement. Pending appointment of a successor to the
Master Servicer hereunder, unless the Trustee is prohibited by law from so
acting, the Trustee or an Affiliate of the Trustee shall act as Master Servicer
hereunder as provided above. Notwithstanding any of the foregoing, the successor
Master Servicer shall not be required to purchase any Assets from the Trust
pursuant to these Standard Terms except (i) under Section 2.05(a)(2) hereof to
the extent the obligation to repurchase arose out of a breach of a
representation, warranty or covenant by the successor Master Servicer and (ii)
under Section 2.05(b) hereof to the extent the Master Servicer's obligation to
effect remedial action as described in such Section arose after the successor
Master Servicer began serving as Master Servicer. It is understood that any
predecessor Master Servicer shall remain liable for any breaches of
representations, warranties and covenants that it committed while it was the
Master Servicer, and shall remain responsible for effecting remedial actions
described in Section 2.05(b) hereof (and for repurchasing Assets pursuant to
such Section 2.05(b)) to the extent the obligation to undertake such remedial
action arose while such predecessor Master Servicer was the Master Servicer
hereunder.

         In connection with the appointment of a successor Master Servicer, the
Trustee may make such arrangements for the compensation of such successor
servicer out of payments on the related Assets as it and such successor shall
agree; provided, however, that no such compensation shall be in excess of that
permitted the Master Servicer under the terms of the Pooling and Servicing
Agreement. The Trustee and such successor servicer shall take such action,
consistent with the Pooling and Servicing Agreement, as shall be necessary to
effectuate any such succession.

         Any successor to the Master Servicer shall maintain in force during the
term of its service as Master Servicer the policy or policies that the Master
Servicer is required to maintain pursuant to Section 3.15(c) hereof.

                                      -52-
<PAGE>   57
         Upon any Event of Default described hereunder, the Trustee, in addition
to the rights specified in this Section, shall have the right, in its own name
and as "Trustee," to take all actions now or hereafter existing at law, in
equity or by statute to enforce its rights and remedies and to protect the
interests of the Certificateholders, and enforce the rights and remedies of the
Certificateholders (including the institution and prosecution of all judicial,
administrative and other proceedings and the filings of proofs of claim and debt
in connection therewith). No remedy provided for by the Pooling and Servicing
Agreement shall be exclusive of any other remedy, and each and every remedy
shall be cumulative and in addition to any other remedy and no delay or omission
to exercise any right or remedy shall impair any such right or remedy or shall
be deemed to be a waiver of any Event of Default. Amounts payable to the Trustee
to reimburse it for any expenses it incurs in connection with any actions taken
by it pursuant to this paragraph are intended to constitute administrative
expenses. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Certificateholder any plan of reorganization, arrangement, adjustment or
composition affecting the Certificates or the rights of any Holder thereof, or
to authorize the Trustee to vote in respect of the claim of any
Certificateholder in any such Proceeding.

         If the Master Servicer shall be required to resign pursuant to the
terms of Section 6.03 (i) herein, then upon receiving such notice of
resignation, the Trustee shall promptly appoint a successor Master Servicer. The
Trustee may remove the Master Servicer if the FHA Assets or VA Assets included
in the Trust Fund are not serviced in accordance with HUD, FHA and/or VA
requirements, as applicable, or if the Master Servicer fails to service the FHA
Assets or VA Assets according to reasonable and customary requirements. Any
resignation or removal of the Master Servicer shall not become effective until
acceptance of appointment by a qualified successor master servicer. The Trustee
shall not appoint a successor master servicer unless such successor master
servicer is both approved by HUD as a mortgagee and approved by HUD to service
FHA insured mortgage loans.

         For the purposes of this Section 7.02 and Section 7.03 hereof, the
Trustee shall not be deemed to have knowledge of a Default or an Event of
Default hereunder unless an Officer of the Trustee having direct responsibility
for the administration of the Pooling and Servicing Agreement has actual
knowledge thereof or unless written notice of any Event of Default is received
by the Trustee and such notice references the Certificates or the Trust.

SECTION 7.03.  NOTIFICATIONS TO MASTER SERVICER AND TO CERTIFICATEHOLDERS.

         (a) Upon obtaining actual knowledge of any Default, the Trustee shall
promptly notify the Master Servicer and each Certificateholder (at their
respective addresses appearing in the Certificate Register) thereof.

         (b) Upon any termination of, or appointment of a successor to, the
Master Servicer pursuant to Section 7.02 hereof, the Trustee shall give prompt
written notice thereof to the Certificateholders at their respective addresses
appearing in the Certificate Register.

         (c) As soon as practicable after the Trustee's obtaining knowledge of
the occurrence of an Event of Default, the Trustee shall transmit by certified
mail to all Holders of the Certificates (at their respective addresses appearing
in the Certificate Register) notice of such Event of Default or occurrence known
to the Trustee, unless such Event of Default shall have been cured or waived.

                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

SECTION 8.01.    DUTIES OF TRUSTEE.

         If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by the Pooling and
Servicing Agreement, and shall use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs. Prior to the occurrence of an Event of Default or
after all Events of Default which may have occurred have been cured or waived,
the Trustee shall exercise such of the rights and powers vested in it by the
Pooling and Servicing Agreement,

                                      -53-
<PAGE>   58
and shall use the same degree of care and skill in their exercise, as a
corporate trustee would exercise or use under the circumstances in the
administration of a corporate trust agreement.

         The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of the Pooling and Servicing Agreement, shall examine them to determine whether
they conform to the requirements of the Pooling and Servicing Agreement;
provided, however, that the Trustee shall be under no duty to recalculate,
verify or recompute the information provided to it hereunder by the Depositor or
the Master Servicer. If any such instrument is found not to conform to the
requirements of the Pooling and Servicing Agreement in a material manner, the
Trustee shall take action as it deems appropriate to have the instrument
corrected, and if the instrument is not corrected to the Trustee's satisfaction,
the Trustee will provide notice thereof to the related Certificateholders.

         No provision of the Pooling and Servicing Agreement shall be construed
to relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct; provided, however, that:

         (a) prior to the occurrence of an Event of Default with respect to the
Master Servicer of which the Trustee has notice or knowledge, and after the
curing or waiver of any such Event of Default, the duties and obligations of the
Trustee shall be determined solely by the express provisions of the Pooling and
Servicing Agreement, the Trustee shall not be liable except for the performance
of such duties and obligations as are specifically set forth in the Pooling and
Servicing Agreement, no implied covenants or obligations shall be read into the
Pooling and Servicing Agreement against the Trustee and, in the absence of bad
faith on the part of the Trustee, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Trustee that conform to the
requirements of the Pooling and Servicing Agreement;

         (b) the Trustee shall not be liable in its individual capacity for any
error of judgment made in good faith by an Officer of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the pertinent
facts;

         (c) the Trustee shall not be liable in its individual capacity with
respect to any action taken, suffered or omitted to be taken by it in good faith
in accordance with the direction of the Holders of Certificates of a Series
entitled to at least 25% of the related Voting Rights relating to the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under the
Pooling and Servicing Agreement;

         (d) Any determination of negligence or bad faith of the Trustee shall
be made only upon a finding that there is clear and convincing evidence (and not
upon the mere preponderance of evidence) thereof in a proceeding before a court
of competent jurisdiction in which the Trustee has had an opportunity to defend;
and

         (e) in no event shall the Trustee be held liable for the actions or
omissions of the Master Servicer or the Depositor (excepting the Trustee's own
actions as Master Servicer), and in connection with any action or claim or
recovery sought against the Trustee based upon facts involving the acts or
omissions of the Master Servicer or the Depositor, or involving any allegation
or claim of liability or recovery against the Trustee by the Master Servicer or
by the Depositor, the Trustee shall not be held to a greater standard of care
than the Master Servicer or the Depositor would be held in such situation.

         Except as specifically required herein, the Trustee shall not be
required to expend, advance or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it, unless such risk or liability
relates to its ordinary services hereunder.

                                      -54-
<PAGE>   59

SECTION 8.02.    CERTAIN MATTERS AFFECTING THE TRUSTEE.

         (a)     Except as otherwise provided in Section 8.01 hereof:

                 (i)    In the absence of bad faith, the Trustee may rely,
         and shall be protected in acting or refraining from acting in reliance
         upon, any resolution, certificate of auditors or any other certificate,
         statement, instrument, opinion, report, notice, request, consent,
         order, appraisal, bond or other paper or document believed by it to be
         genuine and to have been signed or presented by the proper party or
         parties. Further, the Trustee may accept a copy of the vote of the
         board of directors of any party certified by its clerk or assistant
         clerk or secretary or assistant secretary as conclusive evidence of the
         authority of any person to act in accordance with such vote, and such
         vote may be considered as in full force and effect until receipt by the
         Trustee of written notice to the contrary.

                 (ii)   The Trustee may rely, in the absence of bad faith on its
         part, upon a certificate of an Officer of the appropriate Person
         whenever in the administration of the Pooling and Servicing Agreement
         the Trustee shall deem it desirable that a matter be proved or
         established (unless other evidence be prescribed herein specifically)
         prior to taking, suffering or omitting any action hereunder.

                 (iii)  The Trustee may consult with counsel and the written
         advice of such counsel or any Opinion of Counsel shall be full and
         complete authorization and protection in respect of any action taken or
         suffered or omitted by it hereunder in good faith and in accordance
         with such written advice or Opinion of Counsel.

                 (iv)   The Trustee shall be under no obligation to exercise any
         of the trusts or powers vested in it by the Pooling and Servicing
         Agreement or to institute, conduct or defend any litigation hereunder
         or in relation hereto at the request, order or direction of any of the
         Certificateholders, pursuant to the provisions of the Pooling and
         Servicing Agreement, unless such Certificateholders shall have offered
         to the Trustee reasonable security or indemnity against the costs,
         expenses and liabilities that may be incurred therein or thereby.

                 (v)    The Trustee shall not be bound to make any investigation
         into the facts or matters stated in any resolution, certificate,
         statement, instrument, opinion, report, notice, request, consent,
         order, approval, bond or other paper or document, unless requested in
         writing to do so by the Holders of Certificates of a Series entitled to
         at least 25% of the related Voting Rights; provided, however, that if
         the payment within a reasonable time to the Trustee of the costs,
         expenses or liabilities likely to be incurred by it in the making of
         such investigation, in the opinion of the Trustee, is not assured to
         the Trustee by the security afforded to it by the terms of the Pooling
         and Servicing Agreement, the Trustee may require indemnity against such
         expense or liability as a condition to taking any such action. The
         expense of every such examination shall be paid by the Master Servicer
         or, if paid by the Trustee, shall be repaid by the Master Servicer upon
         demand.

                 (vi)   The Trustee may execute any of the trusts or powers
         under the Pooling and Servicing Agreement or perform any duties
         hereunder either directly or by or through agents, attorneys or
         co-trustees and the Trustee shall not be responsible for any misconduct
         or negligence on the part of any agent or attorney appointed with due
         care by it under the Pooling and Servicing Agreement.

                 (vii)  Whenever the Trustee is authorized herein to require
         acts or documents in addition to those required to be provided it in
         respect of any matter, it shall be under no obligation to make any
         determination as to whether such additional acts or documents should be
         required unless obligated to do so under Section 8.01 hereof.

                 (viii) The Trustee shall not be deemed to have notice or
         knowledge of any matter, including, without limitation, any Event of
         Default, unless one of its Officers having direct responsibility for
         the administration of the Pooling and Servicing Agreement has actual
         knowledge or record thereof or unless

                                      -55-
<PAGE>   60

         written notice thereof is received by the Trustee at the Corporate
         Trust Office and such notice references the Certificates generally, the
         Depositor, the Trust or the Pooling and Servicing Agreement.

                  (ix)  The Trustee shall not be personally liable for any
         action taken, suffered or omitted by it in good faith and believed by
         it to be authorized or within the discretion or rights or powers
         conferred upon it by the Pooling and Servicing Agreement.

                  (x)   The permissive right or authority of the Trustee to take
         any action enumerated in the Pooling and Servicing Agreement shall not
         be construed as a duty or obligation.

         Certificateholders shall have rights to institute suits, actions or
proceedings in equity or at law upon or under or with respect to the Pooling and
Servicing Agreement only under the circumstances described in the third
paragraph of Section 11.03 hereof.

         (b) All rights of action under the Pooling and Servicing Agreement or
under any of the Certificates enforceable by the Trustee may be enforced by it
without the possession of any of the Certificates, or the production thereof at
the trial or other Proceeding relating thereto, and any such suit, action or
Proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the Holders of the Certificates, subject to the provisions of the
Pooling and Servicing Agreement.

SECTION 8.03.  TRUSTEE NOT LIABLE FOR CERTIFICATES OR ASSETS.

         The recitals contained in the Pooling and Servicing Agreement and in
the Certificates (other than the signature and countersignature of the Trustee
on the Certificates) shall be taken as the statements of the Depositor or the
Master Servicer and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations or warranties as to the validity or
sufficiency of the Pooling and Servicing Agreement or of the Certificates (other
than the signature and countersignature of the Trustee on the Certificates) or
of any underlying Asset or related document. The Trustee shall not be
accountable for the use or application by the Depositor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Master Servicer in respect of the
underlying Assets or deposited in or withdrawn from the Collection Account, the
Certificate Account or the Distribution Account other than any funds held by or
on behalf of the Trustee in accordance with the Pooling and Servicing Agreement.

SECTION 8.04.    TRUSTEE MAY OWN CERTIFICATES.

         The Trustee, in its individual capacity or any other capacity, may
become the owner or pledgee of Certificates with the same rights it would have
if it were not Trustee.

SECTION 8.05.  TRUSTEE'S FEES AND EXPENSES.

         The Trustee shall receive for services performed for a Series
(including Remittance Reports and regulatory reporting) and ordinary expenses
incurred by the Trustee under the Pooling and Servicing Agreement, on each
Distribution Date the Trustee shall be entitled to receive the Trustee Fee on
each Asset from amounts collected on such Asset. The Trustee Fee relating to any
Asset shall be payable in the manner and in the priority set forth in Section
3.07(d). The Trustee also shall be entitled to pay itself additional servicing
compensation as specified in Section 4.02 hereof. The Trustee and any director,
officer, employee or agent of the Trustee shall be indemnified by the Master
Servicer (unless the Trustee is the Master Servicer, in which case the Seller
shall provide such indemnification) against any loss, liability or expense
(including costs and expenses of litigation, and of investigation, counsel fees,
damages, judgments and amounts paid in settlement), incurred in connection with
the Trustee's (i) enforcing its rights and remedies and protecting the
interests, and enforcing the rights and remedies, of the Certificateholders
during the continuance of an Event of Default, (ii) defending or prosecuting any
legal action in respect of this Agreement or the related Certificates, (iii)
being the mortgagee of record with respect to the Mortgage Loans in a Trust Fund
and the owner of record with respect to any Mortgaged Property acquired in
respect thereof for the benefit of Certificateholders, or (iv) acting or
refraining from acting in good faith at the direction of the

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<PAGE>   61

holders of the Certificates entitled to not less than 25% of the Voting Rights
for the related Series; provided, however, that such indemnification will not
extend to any loss, liability or expense that constitutes a specific liability
of the Trustee pursuant to this Agreement, or to any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence on the part
of the Trustee in the performance of its obligations and duties hereunder, or by
reason of its reckless disregard of such obligations or duties, or as may arise
from a breach of any representation, warranty or covenant of the Trustee made
herein. To the extent that the Trustee has not been paid for any of the
foregoing items, the Trustee shall be entitled to be paid for such items from
amounts on deposit in the Distribution Account, if set forth in the related
Pooling and Servicing Agreement. The obligations under this Section 8.05 shall
survive the resignation or removal of the Trustee.

SECTION 8.06.    ELIGIBILITY REQUIREMENTS FOR TRUSTEE.

         The Trustee shall at all times be a corporation or national banking
association that is not an Affiliate of the Depositor or the Master Servicer,
organized and doing business under the laws of any state or the United States of
America, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000 (or qualifying as a
Qualified Bank) and subject to supervision or examination by federal or state
regulatory authorities. If such corporation or association publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section the combined capital and surplus of such corporation or association
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of conditions so published. In case at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 8.07 hereof.

SECTION 8.07.  RESIGNATION AND REMOVAL OF THE TRUSTEE.

         The Trustee may at any time resign and be discharged from the trusts
created pursuant to the Pooling and Servicing Agreement by giving written notice
of such resignation to the Depositor, the Master Servicer and to all related
Certificateholders. Upon receiving such notice of resignation, the Depositor
shall promptly appoint a successor Trustee by written instrument, in duplicate,
which instrument shall be delivered to the resigning Trustee and to the
successor Trustee. A copy of such instrument shall be delivered to the
Certificateholders and to the Master Servicer by the Depositor. If no successor
Trustee shall have been so appointed and have accepted appointment within 30
days after the resigning Trustee's giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.

         If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 hereof and shall fail to resign after
written request therefor by the Depositor, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation thereof,
then the Depositor may remove the Trustee and appoint a successor Trustee by
written instrument, in duplicate, which instrument shall be delivered to the
Trustee so removed and to the successor Trustee. A copy of such instrument shall
be delivered to the Certificateholders and to the Master Servicer by the
Depositor.

         The Holders of Certificates entitled to at least 51% of the Voting
Rights may remove the Trustee at any time and appoint a successor Trustee by
written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered to the Depositor, one complete set to the Trustee so removed
and one complete set to the successor so appointed. A copy of such instrument
shall be delivered to the Certificateholders and to the Master Servicer by the
Depositor. If the Holders remove the Trustee otherwise than for reasonable cause
based upon the Trustee's failure to continue to meet the eligibility
requirements set forth in Section 8.06 above or the Trustee's failure to perform
its duties as described herein, then the Holders so removing the Trustee shall
bear any and all costs and expenses arising from such removal and substitution.

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<PAGE>   62

         Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee as
provided in Section 8.08 hereof.

SECTION 8.08.    SUCCESSOR TRUSTEE.

         Any successor Trustee appointed as provided in Section 8.07 hereof
shall execute, acknowledge and deliver to the Depositor, the Master Servicer and
to its predecessor Trustee an instrument accepting such appointment under the
Pooling and Servicing Agreement and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with the
like effect as if originally named as Trustee herein. The predecessor Trustee
shall deliver to the successor Trustee all related Asset Documents and related
documents and statements held by it under the Pooling and Servicing Agreement
and the Depositor, the Master Servicer and the predecessor Trustee shall execute
and deliver such instruments and do such other things as reasonably may be
required for more fully and certainly vesting and confirming in the successor
Trustee all such rights, powers, duties and obligations.

         No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 8.06 hereof.

         Upon acceptance of appointment by a successor Trustee as provided in
this Section, the Depositor shall mail notice of the succession of such Trustee
under the Pooling and Servicing Agreement to all Holders of the Certificates at
their addresses as shown in the Certificate Register. If the Depositor fails to
mail such notice within ten days after acceptance of appointment by the
successor Trustee, the successor Trustee shall cause such notice to be mailed at
the expense of the Depositor.

SECTION 8.09.  MERGER OR CONSOLIDATION OF TRUSTEE.

         Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated or any corporation or association
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation or association succeeding to the business
of the Trustee, shall be the successor of the Trustee under the Pooling and
Servicing Agreement provided such corporation or association shall be eligible
under the provisions of Section 8.06 hereof, 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. Prior to any such merger, conversion or
consolidation, the Trustee shall notify each applicable Rating Agency in writing
of the pendency of such merger, conversion or consolidation.

SECTION 8.10.    APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.

         For the purpose of meeting any legal requirements of any jurisdiction
in which any part of the Trust Estate or property securing the same may be
located at any time, the Depositor, the Master Servicer and the Trustee, acting
jointly, shall have the power and shall execute and deliver all instruments
necessary to appoint one or more Persons approved by the Trustee to act as
co-Trustee or co-Trustees, jointly with the Trustee, or separate Trustee or
Trustees, of all or any part of the Trust Estate, and to vest in such Person or
Persons, in such capacity, such title to the Trust Estate or any part thereof,
and, subject to the other provisions of this Section 8.10, such powers, duties,
obligations, rights and trusts as the Depositor, the Master Servicer and the
Trustee may consider necessary or desirable. If the Depositor or the Master
Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, the Trustee alone shall have the power to
make such appointment. No co-Trustee or separate Trustee(s) hereunder shall be
required to meet the terms of eligibility as a successor Trustee under Section
8.06 hereof and no notice to Holders of Certificates of the appointment of
co-Trustee(s) or separate Trustee(s) shall be required under Section 8.08
hereof.

         In the case of any appointment of a co-Trustee or separate Trustee
pursuant to this Section 8.10, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and

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<PAGE>   63
exercised or performed by the Trustee and such separate Trustee or co-Trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee under the
Pooling and Servicing Agreement or as successor to the Master Servicer pursuant
to Section 7.02 hereof), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Estate or any portion
thereof in any such jurisdiction) shall be exercised and performed by such
separate Trustee or co-Trustee at the direction of the Trustee.

         Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate Trustees and co-Trustees,
as effectively as if given to each of them. Every instrument appointing any
separate Trustee or co-Trustee shall refer to the Pooling and Servicing
Agreement and the conditions of this Article VIII. Each separate Trustee and
co-Trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject to
all the provisions of the Pooling and Servicing Agreement, specifically
including every provision of the Pooling and Servicing Agreement relating to the
conduct of, affecting the liability of, or affording protection to, the Trustee.
Every such instrument shall be filed with the Trustee.

         Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of the
Pooling and Servicing Agreement on its behalf and in its name. If any separate
Trustee or co-Trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest
in and be exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor Trustee.

SECTION 8.11.  APPOINTMENT OF CUSTODIANS.

         The Trustee may, with the consent of the Master Servicer, such consent
not to be unreasonably withheld, appoint one or more Custodians to hold all or a
portion of the Trustee Mortgage Loan Files as agent for the Trustee, by entering
into a custodial agreement. The appointment of any Custodian may at any time be
terminated and a substitute Custodian appointed therefor by the Trustee. The
Trustee shall terminate the appointment of any Custodian and appoint a
substitute custodian upon the request of the Master Servicer to the Trustee.
Subject to this Article VIII, the Trustee agrees to comply with the terms of
each custodial agreement and to enforce the terms and provisions thereof against
the Custodian for the benefit of the Certificateholders. Each Custodian shall be
a depository institution or trust company subject to supervision by federal or
state authority, shall have combined capital and surplus of at least $10,000,000
and shall be qualified to do business in the jurisdiction in which it holds any
Trustee Mortgage Loan File. Any such Custodian may not be an affiliate of the
Depositor or any Seller with respect to the applicable Trust.

SECTION 8.12.    TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF CERTIFICATES.

         All rights of action and claims under the Pooling and Servicing
Agreement or the Certificates may be prosecuted and enforced by the Trustee
without the possession of any of the Certificates or the production thereof in
any proceeding relating thereto and any such proceeding instituted by the
Trustee shall be brought in its own name or in its capacity as Trustee. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Certificateholders in respect of
which such judgment has been recovered.

                                   ARTICLE IX

                                   TERMINATION

SECTION 9.01.  TERMINATION UPON REPURCHASE OR LIQUIDATION OF ALL ASSETS.

         (a) The respective obligations and responsibilities of the Depositor,
the Master Servicer and the Trustee under the Pooling and Servicing Agreement
(other than the obligations of the Trustee to make distributions

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<PAGE>   64
to Certificateholders, to reimburse the Master Servicer for outstanding
Advances, to pay the Master Servicer accrued and previously unpaid Servicing
Fees or to provide tax information as provided in Section 4.01(a) hereof and
other than the obligations of the Master Servicer under Article X hereof) shall
terminate upon distribution to the Certificateholders of all amounts held by or
on behalf of the Trustee and required hereunder to be so distributed on the
Distribution Date coinciding with or following the earlier to occur of (1) a
Terminating Purchase for an amount equal to the Termination Price and (2) the
final payment or other liquidation (or any advance with respect thereto) of the
last Asset remaining in the Trust or the disposition of the last REO Property
remaining in the Trust; provided, however, that in no event shall the Trust
created hereby continue beyond the expiration of 21 years after the death of the
last survivor of the descendants of Joseph P. Kennedy, the late ambassador of
the United States to the Court of St. James's, living on the date hereof.

         (b) Unless otherwise provided in the Pooling and Servicing Agreement,
the Master Servicer or the Holders of the majority of the Percentage Interest in
the Residual Certificates of a REMIC (or, in the case of a double REMIC Series,
the Pooling REMIC) (the "Residual Majority") may, at their respective options,
make, or cause a Person to make, a Terminating Purchase on any Distribution Date
on or after the earlier to occur of (1) the Master Servicer's determination,
based upon an Opinion of Counsel, that the REMIC status of any REMIC related to
the Trust has been lost or that a substantial risk exists that such REMIC status
will be lost for the then-current taxable year, or (2) the Distribution Date on
which the aggregate Scheduled Principal Balance of the Assets is less than 5% of
the sum of the Scheduled Principal Balance of the Assets as of the Cutoff Date.

         (c) The Master Servicer or the Residual Majority shall notify the
Trustee and the Certificate Registrar in writing of its election to make or to
cause a Terminating Purchase no later than the Distribution Date preceding the
Distribution Date on which the Certificates will be retired as a result of such
Terminating Purchase. The Master Servicer shall advise the Trustee and the
Certificate Registrar of the final payment or other liquidation of the last
Asset remaining in the Trust or the disposition of the last REO Property
remaining in the Trust at least two Business Days prior to the Remittance Date
in the month in which the Trust will terminate as a result thereof.

         Notice of any termination of the Trust shall be given promptly by the
Trustee by letter sent to the Certificateholders by certified mail (1) in the
event such notice is given in connection with a Terminating Purchase, not
earlier than the fifth day of the month preceding the month of such termination
and not later than the first day of the month of such termination or (2)
otherwise not later than the Remittance Date preceding the final Distribution
Date, in each case specifying (A) the Distribution Date upon which the Trust
will terminate and that final payment of the Certificates will be made on such
Distribution Date and (B) the amount of any such final distribution. The Trustee
shall give such notice to the Certificate Registrar at the time such notice is
given to Certificateholders. In the event such notice is given in connection
with a Terminating Purchase, the Terminator shall deliver to the Trustee for
deposit into the Distribution Account on the Business Day immediately preceding
the Distribution Date on which the Terminating Purchase is to take place an
amount in next day funds equal to the Termination Price. Notwithstanding the
foregoing, if the Terminator is the Master Servicer, the Terminator, upon notice
to the Trustee, shall be entitled to remit the Termination Price net of amounts
owed to the Terminator in respect of unreimbursed outstanding Advances made by
such Terminator or amounts required to be reimbursed or paid to such Terminator
hereunder.

         (d) On the final Distribution Date, the Trustee shall distribute to the
Certificateholders as of the related Record Date the amount otherwise
distributable on the Certificates on such Distribution Date (if such final
Distribution Date is not the result of a Terminating Purchase).

         Upon any termination of the Trust as the result of a Terminating
Purchase, the Trustee and the Master Servicer shall distribute the Termination
Price as though it were the amount on deposit in the Certificate Account in
accordance with Section 3.07(d) hereof and in accordance with the related
Pooling and Servicing Agreement.

         Following such final distribution, the Master Servicer and the Trustee
shall promptly release to the Terminator the related Asset Files or portions
thereof in their respective possessions for the remaining Assets, and REO
Properties, and the Trustee shall execute all assignments, endorsements and
other instruments necessary to effectuate transfer of such Asset Files to such
Terminator, whereupon the Trust shall terminate.

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<PAGE>   65

         (e) In the event that all of the Certificateholders shall not surrender
their Certificates within six months after the date specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates and receive
the final distribution with respect thereto, net of the cost of such second
notice. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Trustee may take appropriate
steps, or may appoint an agent to take appropriate steps, to contact the
remaining Certificateholders concerning surrender of their Certificates, and the
cost thereof shall be paid out of the amounts otherwise payable on such
Certificates. Any funds payable to Certificateholders that are not distributed
on the final Distribution Date shall be deposited in a Termination Account, as
the case may be, each of which shall be an Eligible Account, to be held for the
benefit of Certificateholders not presenting and surrendering their Certificates
in the aforesaid manner, and shall be disposed of in accordance with this
Section.

SECTION 9.02.    ADDITIONAL TERMINATION REQUIREMENTS.

         (a) In the event of a Terminating Purchase as provided in Section 9.01
hereof, the Trust shall be terminated in accordance with the following
additional requirements, unless the Master Servicer, the Depositor, and the
Trustee receive (1) a Special Tax Opinion and (2) a Special Tax Consent from
each of the Holders of the Residual Certificates (unless the Special Tax Opinion
specifically provides that no REMIC-level tax will result from such Terminating
Purchase).

             (i)   Within 90 days prior to the time of the making of the
         final payment on the Certificates, the Depositor on behalf of each
         related REMIC shall adopt a plan of complete liquidation meeting the
         requirements set forth in the REMIC Provisions for a qualified
         liquidation (which plan may be adopted by the Trustee's attachment of a
         statement specifying the first day of the 90-day liquidation period to
         the REMIC's final federal income tax return) and the REMIC will sell
         all of its assets (other than cash).

             (ii)  At the time of the making of the final payment on the
         Regular Certificates or the deposit to the Termination Account, the
         Trustee shall distribute or credit, or cause to be distributed or
         credited, pro rata, to the Holders of the Residual Certificates, all
         remaining cash on hand relating to the REMIC after such final payment
         (other than cash retained to meet claims against the Trust) and the
         REMIC shall terminate at that time.

             (iii) In no event may the final payment on the Regular
         Certificates or the final distribution or credit to the Holders of the
         Residual Certificates be made after the 90th day after the date on
         which the plan of complete liquidation relating thereto is adopted. A
         payment into the Termination Account with respect to any Certificate
         pursuant to Section 9.01 hereof shall be deemed a final payment on, or
         final distribution with respect to, such Certificate for the purposes
         of this Section 9.02(a)(3).

         (b) By their acceptance of Residual Certificates, the Holders thereof
agree (1) to authorize such action as may be necessary to adopt a plan of
complete liquidation of any related REMIC and (2) to take such action as may be
necessary to adopt a plan of complete liquidation of any related REMIC upon the
written request of the Master Servicer, which authorization shall be binding
upon all successor Holders of such Residual Certificates.

                                    ARTICLE X

                              REMIC TAX PROVISIONS

SECTION 10.01.  REMIC ADMINISTRATION.

         Unless otherwise specified in the related Pooling and Servicing
Agreement, an election will be made to treat the Assets and the Distribution
Account underlying a Series as one or more REMICs under the Code. Each Holder of
a Residual Certificate in each REMIC shall, in its Residual Transferee
Agreement, designate the Master Servicer or an Affiliate of the Master Servicer,
as its agent, to act as the Tax Matters Person for such REMIC. The Master
Servicer agrees that it or one of its Affiliates will serve as such Tax Matters
Person for each REMIC, and also will perform various tax administration
functions for each REMIC, as its agent, as set forth in this Section 10.01.

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<PAGE>   66

         (a) The Trustee shall elect (on behalf of each REMIC to be created) to
have the Trust (or designated assets thereof) treated as a REMIC on Form 1066 or
other appropriate federal tax or information return for the taxable year ending
on the last day of the calendar year in which the Certificates are issued as
well as on any corresponding state tax or information return necessary to have
such assets treated as a REMIC under relevant state law.

         (b) The Master Servicer shall pay any and all tax related expenses (not
including taxes) specifically in respect of the Trust and each related REMIC,
including but not limited to any professional fees or expenses related to audits
or any administrative or judicial proceedings with respect to each such REMIC
that involve the Internal Revenue Service or state tax authorities or related to
the adoption of a plan of complete liquidation.

         (c) The Trustee shall prepare any necessary forms for election as well
as all of the Trust's and each related REMIC's federal and state tax and
information returns. The Trustee shall sign and file such returns on behalf of
each such REMIC. The expenses of preparing and filing such returns shall be
borne by the Master Servicer.

         (d) The Trustee shall perform all reporting and other tax compliance
duties that are the responsibility of the Trust and the REMIC under the REMIC
Provisions or state or local tax law. Among its other duties, if required by the
REMIC Provisions, the Trustee, acting as agent of the REMIC, shall provide (1)
to the Treasury or to other governmental authorities such information as is
necessary for the application of any tax relating to the transfer of a Residual
Certificate to any Disqualified Organization and (2) to the Trustee such
information as is necessary for the Trustee to discharge its obligations under
the REMIC Provisions to report tax information to the Certificateholders.

         (e) The Depositor, the Master Servicer, the Trustee (to the extent the
Trustee has been instructed by the Depositor or the Master Servicer), and the
Holders of Residual Certificates shall take any action or cause each related
REMIC to take any action necessary to create or maintain the status of each such
REMIC as a REMIC under the REMIC Provisions and shall assist each other as
necessary to create or maintain such status.

         (f) The Depositor, the Master Servicer, the Trustee (to the extent the
Trustee has been instructed by the Depositor or the Master Servicer), and the
Holders of the Residual Certificates shall not take any action or fail to take
any action, or cause each related REMIC to take any action or fail to take any
action that, if taken or not taken, could endanger the status of each such REMIC
as a REMIC unless the Trustee and the Master Servicer have received an Opinion
of Counsel (at the expense of the party seeking to take or to omit to take such
action) to the effect that the contemplated action or failure to act will not
endanger such status.

         (g) Any taxes that are imposed upon the Trust or any related REMIC by
federal or state (including local) governmental authorities (other than taxes
paid by a party pursuant to Section 10.02 hereof or as provided in the following
sentence) shall be allocated to the Certificates (including, for this purpose,
the regular interests in any Pooling REMIC) out of the Available Distribution
Amount before any distributions are made on the related Certificates on the
related Distribution Date. Any state or local taxes imposed upon the Trust, any
related REMIC or any related Certificateholder that would not have been imposed
on the Trust, such REMIC or such Certificateholder in the absence of any legal
or business connection between the Trustee and the state or locality imposing
such taxes (including any federal, state or local taxes imposed on such Trust,
such REMIC or such Certificateholder as a result of such Trust, such REMIC or
such Certificateholder being deemed to have received income as a result of the
Trustee's payment of state or local taxes) shall be paid by the Trustee, and,
notwithstanding anything to the contrary in these Standard Terms, such taxes
shall be deemed to be part of the Trustee's cost of doing business and shall not
be reimbursable to the Trustee.

         (h) If the Master Servicer (or an Affiliate thereof) is unable for any
reason to fulfill its duties as Tax Matters Person, then the holder of the
largest Percentage Interest of the Residual Certificates, without compensation,
shall become the successor Tax Matters Person for each related REMIC; provided,
however, that in no event shall the Trustee be required to act as Tax Matters
Person (regardless of whether the Trustee is acting as successor Master
Servicer).

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SECTION 10.02.  PROHIBITED ACTIVITIES.

         Except as otherwise provided elsewhere in the Pooling and Servicing
Agreement, neither the Depositor, the Master Servicer, the Holders of Residual
Certificates, nor the Trustee shall engage in, nor shall the Trustee permit, any
of the following transactions or activities unless it has received (1) a Special
Tax Opinion and (2) a Special Tax Consent from each of the Holders of the
Residual Certificates (unless the Special Tax Opinion specially provides that no
REMIC-level tax will result from the transaction or activity in question):

         (a) the sale or other disposition of, or substitution for, any of the
underlying Assets except pursuant to (1) a foreclosure or default with respect
to such an Asset, (2) a purchase or repurchase pursuant to Section 2.05 hereof,
(3) the bankruptcy or insolvency of any related REMIC, or (4) the termination of
any related REMIC pursuant to Article IX hereof;

         (b) the acquisition of any Assets for the Trust after the related
Closing Date except (1) during the three-month period beginning on the Closing
Date pursuant to a fixed-price contract in effect on the Closing Date that has
been reviewed and approved by tax counsel acceptable to the Master Servicer or
(2) a substitution in accordance with Section 2.05 hereof;

         (c) the sale or other disposition of any investment in the Distribution
Account at a gain;

         (d) the acceptance of any contribution to the Trust except the
following cash contributions: (1) a cash contribution received during the
three-month period beginning on the Closing Date; (2) a cash contribution to
facilitate a Terminating Purchase that is made within the 90-day period
beginning on the date on which a plan of complete liquidation is adopted
pursuant to Section 9.02(a)(1) hereof; (3) a contribution to a Reserve Fund
owned by a related REMIC that is made pro rata by the Holders of the Residual
Certificates; or (4) any other contribution approved by the Master Servicer
after consultation with tax counsel;

         (e) except in the case of an Asset that is in default, or as to which,
in the reasonable judgment of the Master Servicer, default is reasonably
foreseeable, neither the Trustee nor the Master Servicer shall permit any
modification of any material term of an Asset (including, but not limited to,
the interest rate, the principal balance, the amortization schedule (except as
provided in the Pooling and Servicing Agreement), the remaining term to
maturity, or any other term affecting the amount or timing of payments on the
Asset) unless the Trustee and Master Servicer have received an Opinion of
Counsel (at the expense of the party seeking to modify the Asset) to the effect
that such modification would not be treated as giving rise to a new debt
instrument for REMIC purposes;

         (f) any other transaction or activity that is not contemplated by the
Pooling and Servicing Agreement;

         (g) the sale or other disposition of any asset held in a Reserve Fund
for a period of less than three months (a "Short-Term Reserve Fund Investment")
if such sale or disposition would cause 30% or more of a related REMIC's income
from all of its Reserve Funds for the taxable year to consist of gain from the
sale or disposition of Short-Term Reserve Fund Investments; or

         (h) the withdrawal of any amounts from any Reserve Fund except (A) for
the distribution pro rata to the Holders of the Residual Certificates or (B) to
provide for the payment of Trust expenses or amounts payable on the Certificates
in the event of defaults or late payments on the related Assets or lower than
expected returns on funds held in the Distribution Account, as provided under
section 860G(a)(7) of the Code.

Any party causing the Trust to engage in any of the activities prohibited in
this Section shall be liable for the payment of any tax imposed on the Trust
pursuant to Code section 860F(a)(1) or 860G(d) as a result of the Trust engaging
in such activities.

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                                   ARTICLE XI
                            MISCELLANEOUS PROVISIONS

SECTION 11.01.  AMENDMENTS.

         The Pooling and Servicing Agreement may be amended or supplemented
from time to time by the Depositor, the Master Servicer and the Trustee without
the consent of any of the Certificateholders (a) to cure any ambiguity herein,
(b) to correct or supplement any provisions herein that may be inconsistent
with any other provisions herein, (c) to modify, eliminate or add to any of its
provisions to such extent as shall be necessary or appropriate to maintain the
qualification of any related REMIC as a REMIC under the Code at all times that
any Certificates are outstanding or (d) to make any other provisions with
respect to matters or questions arising under the Pooling and Servicing
Agreement or matters arising with respect to the Trust that are not covered by
the Pooling and Servicing Agreement; provided, that such action shall not
affect adversely the interests of any Certificateholder, as evidenced by an
opinion of counsel independent from the Depositor, the Master Servicer and the
Trustee or a letter from each Rating Agency from whom the Depositor requested a
rating of any of the related Certificates stating that such action will not
result in a downgrading of the rating of any of the related Certificates rated
by such Rating Agency at the request of the Depositor. Promptly after the
execution of any such amendment, the Trustee shall furnish a copy of such
amendment to each Holder of Certificates.

         The Pooling and Servicing Agreement also may be amended from time to
time by the Depositor, the Master Servicer and the Trustee with the consent of
the Holders entitled to at least a majority of the Voting Rights of each Class
of Certificates that would be affected by such amendment for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Pooling and Servicing Agreement or of modifying in any manner
the rights of the Holders of the Certificates; provided, however, that no such
amendment shall (a) reduce in any manner the amount of, or delay the timing of,
payments received on Mortgage Loans that are required to be distributed on any
Certificate without the consent of the Holder of such Certificate, (b) affect
adversely in any material respect the interests of the Holders of any Class of
Certificates in a manner other than described in clause (a) of this paragraph,
without the consent of the Holders of Certificates of such Class evidencing at
least 66_% of the Voting Rights with respect to such Class, or (c) reduce the
aforesaid percentage of Certificates the Holders of which are required to
consent to any such amendment, without the consent of such Holders of all
Certificates then outstanding.

         It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment,
but it shall be sufficient if such consent shall approve the substance thereof.
The manner of obtaining such consents and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.

SECTION 11.02.  RECORDATION OF AGREEMENT; COUNTERPARTS.

         To the extent permitted by applicable law, the Pooling and Servicing
Agreement is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the Mortgaged Properties included in the Trust Estate and subject
to the related Mortgages are situated, and in any other appropriate public
recording office or elsewhere, such recordation to be effected by the Master
Servicer and at its expense, but only upon direction of the Trustee accompanied
by an Opinion of Counsel to the effect that such recordation is necessary to
protect the interests of the Certificateholders. The Trustee shall not be
responsible for determining whether the Pooling and Servicing Agreement should
be recorded in any such office.

         For the purpose of facilitating the recordation of the Pooling and
Servicing Agreement as herein provided and for other purposes, the Pooling and
Servicing Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall together constitute but one and the same instrument.

                                     -64-
<PAGE>   69

SECTION 11.03.  LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.

         The death or incapacity of any Certificateholder shall not operate to
terminate the Pooling and Servicing Agreement or the Trust, nor will such death
or incapacity entitle such Certificateholder's legal representatives or heirs
to claim an accounting or to take any action or proceeding in any court for a
partition or winding up of the Trust, nor shall it otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.

         No Certificateholder shall have any right to vote (except as expressly
provided for herein) or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Certificates, be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to the Pooling and Servicing Agreement pursuant to any provision hereof.

         No Certificateholder shall have any right by virtue of any provision
of the Pooling and Servicing Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to the Pooling and
Servicing Agreement, unless such Holder previously shall have given to the
Trustee a written notice of default and of the continuance thereof, as
hereinbefore provided, and unless also the Holders of Certificates entitled to
at least 25% of the Voting Rights allocated to the Certificates shall have made
written request upon the Trustee to institute such action, suit or proceeding
in its own name as Trustee under the Pooling and Servicing Agreement and shall
have offered to the Trustee such reasonable indemnity as it may require against
the costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 15 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit
or proceeding. It is understood and intended, and expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner whatever
by virtue of any provision of the Pooling and Servicing Agreement to affect,
disturb or prejudice the rights of the Holders of any other of such
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under the Pooling and Servicing
Agreement, except in the manner herein provided and for the equal, ratable and
common benefit of all Holders of Certificates. For the protection and
enforcement of the provisions of this Section, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.

SECTION 11.04.  NOTICES.

         All demands and notices under the Pooling and Servicing Agreement
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by first class mail, postage prepaid, or by express
delivery service, to (a) in the case of the Depositor, 7130 Goodlett Farms
Parkway, Cordova, Tennessee 38018, Attention: President, telecopy number (901)
580-6923, or such other address or telecopy number as may hereafter be
furnished to each party to the Pooling and Servicing Agreement in writing by
the Depositor, (b) in the case of the Master Servicer, 7130 Goodlett Farms
Parkway, Cordova, Tennessee 38018, Attention: President, Union Planters
Mortgage, telecopy number (901) 580-2468, or such other address or telecopy
number as may subsequently be furnished to each party to the Pooling and
Servicing Agreement in writing by the Master Servicer and (c) in the case of
the Trustee, at its address set forth in the Pooling and Servicing Agreement or
such other address or telecopy number as may subsequently be furnished to each
party to the Pooling and Servicing Agreement in writing by the Trustee. Any
notice required or permitted to be mailed to a Certificateholder shall be given
by registered mail, postage prepaid, or by express delivery service, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in the Pooling and Servicing Agreement shall
be conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice. A copy of any notice required to be
telecopied hereunder also shall be mailed to the appropriate party in the
manner set forth above. A copy of any notice given hereunder to any other party
shall be delivered to the Trustee.

                                     -65-
<PAGE>   70

SECTION 11.05.  SEVERABILITY OF PROVISIONS.

         If any one or more of the covenants, agreements, provisions or terms
of the Pooling and Servicing Agreement shall be held invalid for any reason
whatsoever, then such covenants, agreements, provisions or terms shall be
deemed severable from the remaining covenants, agreements, provisions or terms
of the Pooling and Servicing Agreement and shall in no way affect the validity
or enforceability of the other provisions of the Pooling and Servicing
Agreement or of the Certificates or the rights of the Holders thereof.

SECTION 11.06.  SALE OF ASSETS.

         It is the express intent of the Depositor and the Trustee that the
conveyance of the Assets underlying a Series by the Depositor to the Trustee
pursuant to the related Pooling and Servicing Agreement be construed as a sale
of such Assets by the Depositor to the Trustee. It is, further, not the
intention of the Depositor or the Trustee that such conveyance be deemed a
pledge of such Assets by the Depositor to the Trustee to secure a debt or other
obligation of the Depositor. However, in the event that, notwithstanding the
intent of the parties, such Assets are held to continue to be property of the
Depositor, then (a) the Pooling and Servicing Agreement also shall be deemed to
be a security agreement within the meaning of Article 9 of the applicable UCC;
(b) the conveyance by the Depositor provided for in the Pooling and Servicing
Agreement shall be deemed to be a grant by the Depositor to the Trustee of a
security interest in all of the Depositor's right, title and interest in and to
the Assets and all amounts payable to the holders of the Assets 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, including without limitation all amounts, other than investment
earnings, from time to time held or invested in the related Certificate Account
or Distribution Account, whether in the form of cash, instruments, securities
or other property, and including without limitation all amounts from time to
time held or invested in any related Reserve Fund; (c) the possession by the
Trustee or its agent of items of property that 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 applicable UCC; 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 Trustee for the purpose of perfecting such security interest
under applicable law. The Depositor and the Trustee (to the extent the Trustee
has been instructed by the Depositor or the Master Servicer) shall take, to the
extent consistent with the Pooling and Servicing Agreement, such actions as may
be necessary to ensure that, if the Pooling and Servicing Agreement were deemed
to create a security interest in the related Assets, 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 the
Pooling and Servicing Agreement.

SECTION 11.07.  NOTICE TO RATING AGENCY.

         (a)      The Trustee shall use its best efforts promptly to provide
notice to each applicable Rating Agency and each Certificateholder with respect
to each of the following of which it has actual knowledge, except that no
notice specified below need be sent to any such Certificateholder or each
applicable Rating Agency if already sent pursuant to other provisions of the
Pooling and Servicing Agreement:

                  (i)      any amendment to the Pooling and Servicing Agreement
         or any agreement assigned to the Trust;

                  (ii)     the occurrence of any Event of Default involving the
         Master Servicer that has not been cured or waived;

                  (iii)    the resignation, termination or merger of the
         Depositor, the Master Servicer or the Trustee;

                  (iv)     the purchase or repurchase or substitution of Assets
         pursuant to Section 2.05 hereof;

                                     -66-
<PAGE>   71

                  (v)      the final payment to the Certificateholders;

                  (vi)     any change in the location of the related
         Certificate Account or the Distribution Account;

                  (vii)    any event that would result in the inability of the
         Master Servicer to make Advances regarding the related Assets;

                  (viii)   any change in applicable law that would require an
         assignment of a Mortgage, not previously recorded, to be recorded in
         order to protect the right, title and interest of the Trustee in and
         to the related Mortgaged Property or, in case a court should
         recharacterize the sale of the related Asset as a financing, to
         perfect a first priority security interest in favor of the Trustee in
         the related Asset; or

                  (ix)     any change in the Depositor's or the Master
         Servicer's name or place of business or the relocation of the Master
         Servicer Mortgage Loan Files to a location outside the State of
         California or the relocation of the Trustee Mortgage Loan Files to a
         location outside of the state where they are originally held by the
         Trustee or its Custodian.

         (b)      The Master Servicer shall promptly notify the Trustee of any
of the events listed in Section 11.07(a) hereof of which it has actual
knowledge. In addition, the Trustee shall furnish promptly to each Rating
Agency, at its address set forth in the Pooling and Servicing Agreement, copies
of the following:

                  (i)      Each Remittance Report; and

                  (ii)     Each Officer's Certificate supplied by the Master
         Servicer to the Trustee and the Certificateholders pursuant to Section
         3.12 hereof.

         (c)      Any notice pursuant to this Section 11.07 shall be in writing
and shall be deemed to have been duly given if personally delivered or mailed
by first class mail, postage prepaid or by express delivery service to each
Rating Agency at its address specified in the Pooling and Servicing Agreement.

                                  ARTICLE XII

                  CONCERNING THE CONTRACT OF INSURANCE HOLDER

SECTION 12.01. COMPLIANCE WITH FHA REGULATIONS AND FILING OF FHA CLAIMS.

         (a)      The Contract of Insurance Holder shall at all times be
reflected as the mortgagee of record solely for FHA regulatory purposes with
respect to each FHA Asset and shall maintain its status as a HUD approved
mortgagee. To the extent applicable to the duties of the Contract of Insurance
Holder hereunder, the Contract of Insurance Holder shall take or refrain from
taking such actions as directed by the Claims Administrator, as necessary or
appropriate to maintain FHA Insurance for the FHA Assets.

         (b)      As of the Closing Date and at all times thereafter until the
Termination Date, FHA Insurance will cover the FHA Assets. The Master Servicer
and Claims Administrator, in each such capacity, covenants and agrees that it
shall not take any action that would reduce or otherwise diminish the
protection of the FHA Insurance.

         (c)      The Trustee hereby appoints the Claims Administrator to
facilitate the servicing of FHA Loans. The Claim Administrator shall perform on
behalf of the Contract of Insurance Holder the duties associated with the
submission of FHA claims in connection with the FHA Insurance, except to the
extent that certain documents must be signed by the Contract of Insurance
Holder (in which case the Contract of Insurance Holder may appoint an
attorney-in-fact to sign on its behalf) and shall not, in its capacity as
Claims Administrator or as Master Servicer, take any action or omit to take any
action that would cause the Contract of Insurance Holder to violate this
Section 12.01 or otherwise fail to maintain valid FHA Insurance or cause any
denial by FHA of an insurance claim.

                                     -67-
<PAGE>   72

         (d)      The Contract of Insurance Holder shall not be deemed to have
violated this Section 12.01 and shall otherwise incur no liability hereunder if
any failure to maintain valid FHA Insurance or to comply with FHA regulations
requirements or any denial by FHA of an insurance claim shall have been caused
by any act or omission of the Master Servicer or Claims Administrator in the
performance of its duties hereunder.

         (e)      No Certificateholder, by virtue of holding a Certificate that
evidences a beneficial interest in any FHA Asset, shall have any right against
FHA or HUD with respect to the FHA Insurance applicable to any FHA Asset, and
each Certificateholder, by its acceptance of such Certificate, or any interest
therein, shall be deemed to have agreed to the foregoing.

SECTION 12.02.00  REGARDING THE CONTRACT OF INSURANCE HOLDER.

         (a)      The Trustee, as Contract of Insurance Holder, shall at all
times be approved by HUD as a mortgagee and not resign from the obligations and
duties imposed on it by this Agreement as Contract of Insurance Holder except
upon a determination that by reason of a change in legal requirements or
requirements imposed by the FHA (including, without limitation, loss of its
status as a HUD approved mortgagee) the performance of its duties under this
Agreement would cause it to be in violation of such legal requirements or FHA
imposed requirements in a manner which would result in a material adverse
effect on the Contract of Insurance Holder or cause it to become ineligible to
hold the FHA Insurance. Any such determination permitting the resignation of
the Contract of Insurance Holder shall be evidenced by an Opinion of Counsel to
such effect delivered and acceptable to the Trustee. Upon receiving such notice
of resignation, the FHA Insurance shall be transferred to a qualified successor
appointed by the Master Servicer (which qualified successor must be a HUD
approved mortgagee) by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Contract of Insurance Holder and
one copy to the successor contract of insurance holder.

         (b)      If at any time the Contract of Insurance Holder shall become
incapable of acting, or shall fail to perform its obligations hereunder, or its
long-term credit rating assigned by Moody's Investors Service, Inc. shall fall
below "A1" (or such other credit rating as may be determined by the Rating
Agencies from time to time) or shall be adjudged as bankrupt or insolvent, or a
receiver of the Contract of Insurance Holder or of its property shall be
appointed, or any public officer shall take charge or control of the Contract
of Insurance Holder or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, or the Contract of Insurance
Holder shall fail to be "well capitalized" within the meaning of the Federal
Deposit Insurance Act and the regulations thereunder, then, in any such case
the Trustee or Master Servicer shall remove the Contract of Insurance Holder
and appoint a successor contract of insurance holder (which successor must be a
HUD approved mortgagee) by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Contract of Insurance Holder so removed
and one copy to the successor contract of insurance holder. Upon removal of the
Contract of Insurance Holder, the outgoing Contract of Insurance Holder shall
take all action required to maintain the benefits of the FHA Insurance;
provided that, if the Contract of Insurance Holder is removed because it has
failed to be "well capitalized" as provided in the preceding sentence, the
Master Servicer shall bear the expenses incurred in connection with such
transfer.

         (c)      Any resignation or removal of the Contract of Insurance
Holder and appointment of a successor contract of insurance holder pursuant to
any of the provisions of this Section 12.02 shall become effective upon
acceptance of appointment by the successor contract of insurance holder.

         (d)      The rights and protections afforded the Trustee pursuant to
Article 8 hereof shall also be afforded to the Contract of Insurance Holder if
the Trustee and the Contract of Insurance Holder are the same Person.

                                     -68-
<PAGE>   73

                                                                    EXHIBIT 1-A

                         FORM OF INITIAL CERTIFICATION

                                                                         [Date]

Union Planters Home Equity Corp.
7130 Goodlett Farms Parkway
Cordova, Tennessee  38018
Attention: Secretary

[Master Servicer]
[Address]
[Address]
Attention: [________________]

         Re:      Pooling and Servicing Agreement, dated as of _________,
                  20___, among Union Planters Home Equity Corp.,
                  ____________________________, as Master Servicer, and
                  _______________, as Trustee, Pass-Through Certificates,
                  __________________ UPHEC Trust 20_____-_____.

Gentlemen:

         In accordance with Section 2.02 of the Depositor's Standard Terms to
Pooling and Servicing Agreement (September 2000 Edition) (the "Standard
Terms"), which are incorporated by reference into the above-referenced Pooling
and Servicing Agreement, the undersigned, as Trustee, hereby certifies that, as
to each Mortgage Loan listed in the Mortgage Loan Schedule to the Pooling and
Servicing Agreement (other than any Mortgage Loan paid in full or listed on the
attachment hereto) it, or a Custodian on its behalf, has reviewed the Trustee
Mortgage Loan File and has determined that, except as noted on the Schedule of
Exceptions attached hereto: (i) all documents required to be included in the
Trustee Mortgage Loan File (as set forth in the definition of "Trustee Mortgage
Loan File" in the Standard Terms), other than documents noted in (G) thereof
and any flood insurance policy, are in its possession or in the possession of a
Custodian on its behalf; (ii) such documents have been reviewed by it, or a
Custodian on its behalf, and appear regular on their face and relate to such
Mortgage Loan; and (iii) based on examination by it, or by a Custodian on its
behalf, and only as to such documents, the information set forth on the
Mortgage Loan Schedule to the Pooling and Servicing Agreement accurately
reflects the information set forth in the Trustee Mortgage Loan File. The
undersigned further certifies that the Trustee's review, or the review of its
Custodian, of each Trustee Mortgage Loan File included each of the procedures
listed in Section 2.02(c)(2) of the Standard Terms.

         Except as described herein, neither the Trustee, nor any Custodian on
its behalf, has made an independent examination of any documents contained in
any Trustee Mortgage Loan File. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any
documents contained in any Trustee Mortgage Loan File for any of the Mortgage
Loans listed on the Mortgage Loan Schedule to the Pooling and Servicing
Agreement, (ii) the collectibility, insurability, effectiveness or suitability
of any such Mortgage Loan or (iii) whether any Trustee Mortgage Loan File
should include any assumption agreement, modification agreement, written
assurance or substitution agreement.

         Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement").

                                        [TRUSTEE]

                                        By:
                                             ----------------------------------
                                        Its:
                                             ----------------------------------

                              Exhibit 1-A - Page 1

<PAGE>   74

                                                                    EXHIBIT 1-B

                          FORM OF FINAL CERTIFICATION

                                                                         [Date]

Union Planters Home Equity Corp.
7130 Goodlett Farms Parkway
Cordova, Tennessee  38018
Attention: Secretary

[Master Servicer]
[Address]
[Address]
Attention: [________________]

         Re:      Pooling and Servicing Agreement, dated as of _________ ,
                  20___, among Union Planters Home Equity Corp.,
                  ____________________________, as Master Servicer, and
                  _______________, as Trustee, Pass-Through Certificates,
                  __________________ UPHEC Trust 20_____-_____.

Gentlemen:

         In accordance with Section 2.02 of the Depositor's Standard Terms to
Pooling and Servicing Agreement (May 1998 Edition) (the "Standard Terms"),
which are incorporated by reference into the above-referenced Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, except
as noted on the Schedule of Exceptions attached hereto, for each Mortgage Loan
listed in the Mortgage Loan Schedule to the Pooling and Servicing Agreement
(other than any Mortgage Loan paid in full or listed on the attachment hereto)
it, or a Custodian on its behalf, has received a complete Trustee Mortgage Loan
File which includes each of the documents required to be included in the
Trustee Mortgage Loan File as set forth in the definition of "Trustee Mortgage
Loan File" in the Standard Terms other than documents noted in (G) thereof and
any flood insurance policy.

         Neither the Trustee nor any Custodian on its behalf has made an
independent examination of any documents contained in any Trustee Mortgage Loan
File beyond the review specifically required in the above captioned Pooling and
Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in any Trustee Mortgage Loan File or any of the Mortgage
Loans listed on the Mortgage Loan Schedule, (ii) the collectibility,
insurability, effectiveness or suitability of any such Mortgage Loan or (iii)
whether any Trustee Mortgage Loan File should include any assumption agreement,
modification agreement, written assurance or substitution agreement.

         Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement").

                                              [TRUSTEE]

                                              By:
                                                  ---------------------------
                                              Its:
                                                  ---------------------------

                             Exhibit 1-B - Page 1

<PAGE>   75

                                                                      EXHIBIT 2

                           FORM OF RECORDATION REPORT

                                                                         [Date]

[Master Servicer]
[Address]
[Address]
Attention: [________________]

         Re:      Pooling and Servicing Agreement, dated as of _________ ,
                  20___, among Union Planters Home Equity Corp.,
                  _______________________, as Master Servicer, and
                  _______________, as Trustee, Pass-Through Certificates,
                  __________________ UPHEC Trust 20_____-_____.

Gentlemen:

         In accordance with Section 2.02 of the Depositor's Standard Terms to
Pooling and Servicing Agreement (September 2000 Edition) (the "Standard
Terms"), which are incorporated by reference into the above-referenced Pooling
and Servicing Agreement, the undersigned, as Trustee hereby notifies you, that
as of the date hereof with respect to the following Mortgage Loans it has not
received the indicated documents:

<TABLE>
<CAPTION>
MORTGAGE LOANS                        DOCUMENTS NOT RECEIVED
--------------       --------------------------------------------------------
                                                            ORIGINAL RECORDED
                     ORIGINAL RECORDED                        ASSIGNMENT OF
                         MORTGAGE                               MORTGAGE
                     OR CERTIFIED COPY                      OR CERTIFIED COPY
LOAN NUMBER               THEREOF                                 THEREOF*
-----------               -------                                 --------
<S>                  <C>                                    <C>
</TABLE>

                                             [TRUSTEE]
                                             as Trustee

                                             By:
                                                 --------------------------
                                             Its:
                                                 --------------------------

--------------------------
* Not required for Mortgage Loans for which the Depositor has waived
recordation of Assignments.

                               Exhibit 2 - Page 1

<PAGE>   76

                                                                      EXHIBIT 3

                  REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT

TO:      [Name and Address of Trustee or Custodian]

         RE:      Pooling and Servicing Agreement, dated as of __________ ,
                  20__, among Union Planters Home Equity Corp. (the
                  "Depositor"), ________________________, as Master Servicer,
                  and ____________________, as Trustee, which incorporates by
                  reference the Depositor's Standard Terms to Pooling and
                  Servicing Agreement (September 2000 Edition) (collectively,
                  the "Pooling and Servicing Agreement")

         In connection with the administration of the Mortgage Loans held by
you as the Trustee or Custodian, we request the release and acknowledge
receipt, of the Trustee Mortgage Loan File [specify documents if only a partial
Trustee Mortgage Loan File is being released]) for the Mortgage Loan described
below, for the reason indicated.

Mortgagor's Name and Address & Zip Code:

Mortgage Loan Number:

Reason for Requesting Documents (check one)

___               1.       Mortgage Loan Paid in Full. (The Master Servicer
                  hereby certifies that all amounts received in connection
                  therewith have been deposited into the applicable Certificate
                  Account as provided in the Pooling and Servicing Agreement.)

___               2.       Mortgage Loan Liquidated by _________________. (The
                  Master Servicer hereby certifies that all proceeds of
                  foreclosure, insurance, condemnation or other liquidation
                  have been finally received.)

___               3.       Mortgage Loan in Foreclosure.

___               4.       Other (explain).  _______________________________

         If item 1 or 2 above is checked, and if all or part of the Trustee
Mortgage Loan File was previously released to us, please release to us our
previous request and receipt on file with you, as well as any additional
documents in your possession relating to the specified Mortgage Loan.

         If item 3 or 4 above is checked, upon our return of all of the above
documents to you as the Trustee or Custodian, please acknowledge your receipt
by signing in the space indicated below, and returning this form.

         Capitalized terms used herein but not defined herein have the meanings
ascribed to them in the Pooling and Servicing Agreement.

                         [___________________________],
                               as Master Servicer

                               Exhibit 3 - Page 1

<PAGE>   77

                                         By:
                                             --------------------------------

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

                                            Date:
                                                     ------------------------

Acknowledgment of Documents returned to the Trustee or Custodian:

                                          NAME OF TRUSTEE OR CUSTODIAN

                                          By:
                                             --------------------------------

                                             Name:
                                                     ------------------------

                                             Title:
                                                     ------------------------

                                             Date:
                                                     ------------------------

                               Exhibit 3 - Page 2

<PAGE>   78

                                                                      EXHIBIT 4

                     RULE 144A AGREEMENT--QIB CERTIFICATION

                UNION PLANTERS HOME EQUITY CORP., SERIES 20__-_
                      PASS-THROUGH CERTIFICATES, CLASS ___

                                ----------------
                                     (DATE)

[Trustee]
[Address]
[Address]
Attention: [________________]

Union Planters Home Equity Corp.
7130 Goodlett Farms Parkway
Cordova, Tennessee  38018
Attention: Secretary

[Master Servicer]
[Address]
[Address]
Attention: [________________]

Gentlemen:

         In connection with the purchase on the date hereof of the captioned
securities (the "Purchased Certificates"), the undersigned (the "Transferee")
hereby certifies and covenants to the transferor, Union Planters Home Equity
Corp.
(the "Depositor"), the Master Servicer, the Trustee and the Trust as follows:

         1.       The Transferee is a "qualified institutional buyer" as that
term is defined in Rule 144A ("Rule 144A") promulgated under the Securities Act
of 1933, as amended (the "1933 Act") and has completed the form of
certification to that effect attached hereto as Annex A1 (if the Transferee is
not a registered investment company) or Annex A2 (if the Transferee is a
registered investment company). The Transferee is aware that the sale to it is
being made in reliance on Rule 144A.

         2.       The Transferee understands that the Purchased Certificates
have not been registered under the 1933 Act or registered or qualified under
any state securities laws and that no transfer may be made unless the Purchased
Certificates are registered under the 1933 Act and under applicable state law
or unless an exemption from such registration is available. The Transferee
further understands that neither the Depositor, the Master Servicer, the
Trustee nor the Trust is under any obligation to register the Purchased
Certificates or make an exemption from such registration available.

         3.       The Transferee is acquiring the Purchased Certificates for
its own account or for the account of a "qualified institutional buyer" (as
defined in Rule 144A, a "QIB"), and understands that such Purchased
Certificates may be resold, pledged or transferred only (a) to a person
reasonably believed to be such a QIB that purchases for its own account or for
the account of a QIB to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A, or (b) pursuant to another
exemption from registration under the 1933 Act and under applicable state
securities laws. IN ADDITION, SUCH TRANSFER MAY BE SUBJECT TO ADDITIONAL
RESTRICTIONS, AS SET FORTH IN SECTION 5.05 OF THE STANDARD TERMS TO THE POOLING
AND SERVICING AGREEMENT (THE "STANDARD TERMS") REFERRED TO BELOW. By its
execution of this agreement, the Transferee agrees that it will not resell,
pledge or transfer any of the Purchased Certificates to anyone otherwise than
in strict compliance with Rule 144A, or pursuant to another exemption from

                              Exhibit 4 - Page 1
<PAGE>   79

registration under the 1933 Act and all applicable state securities laws, and
in strict compliance with the transfer restrictions set forth in Section 5.05
of the Standard Terms. The Transferee will not attempt to transfer any or all
of the Purchased Certificates pursuant to Rule 144A unless the Transferee
offers and sells such Certificates only to QIBs or to offerees or purchasers
that the Transferee and any person acting on behalf of the Transferee
reasonably believe (as described in paragraph (d)(l) of Rule 144A) is a QIB.

         4.       The Transferee has been furnished with all information that
it requested regarding (a) the Purchased Certificates and distributions thereon
and (b) the Pooling and Servicing Agreement referred to below.

         5.       If applicable, the Transferee has complied, will comply in
all material respects with applicable regulatory guidelines relating to the
ownership of mortgage derivative products.

         All capitalized terms used but not otherwise defined herein have the
respective meanings assigned thereto in the Pooling and Servicing Agreement,
dated as of _____________, 20__, which incorporates by reference the Standard
Terms thereto (September 2000 Edition), among the Depositor, the Master
Servicer and ____________________, as Trustee, pursuant to which the Purchased
Certificates were issued.

         IN WITNESS WHEREOF, the undersigned has caused this Rule 144A
Agreement to be executed by its duly authorized representative as of the day
and year first above written.

                                         [TRANSFEREE]

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

                              Exhibit 4 - Page 2
<PAGE>   80

                                                          ANNEX A1 TO EXHIBIT 4

             TRANSFEREES OTHER THAN REGISTERED INVESTMENT COMPANIES

         1.       As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Transferee.

         2.       The Transferee is a "qualified institutional buyer" as that
term is defined in Rule 144A ("Rule 144A") promulgated under the Securities Act
of 1933, as amended (the "1933 Act"), because (a) the Transferee owned and/or
invested on a discretionary basis at least $____________ in securities [Note to
reviewer - the amount in the previous blank must be at least $100,000,000
unless the Transferee is a dealer, in which case the amount filled in the
previous blank must be at least $10,000,000.] (except for the excluded
securities referred to in paragraph 3 below) as of _______________ [specify a
date on or since the end of the Transferee's most recently ended fiscal year]
(such amount being calculated in accordance with Rule 144A) and (b) the
Transferee meets the criteria listed in the category marked below.

_____             Corporation, etc. The Transferee is an organization described
                  in Section 501(c)(3) of the Internal Revenue Code of 1986, as
                  amended, a corporation (other than a bank as defined in
                  Section 3(a)(2) of the 1933 Act or a savings and loan
                  association or other similar institution referenced in
                  Section 3(a)(5)(A) of the Act), a partnership, or a
                  Massachusetts or similar business trust.

_____             Bank. The Transferee (a) is a national bank or banking
                  institution as defined in Section 3(a)(2) of the 1933 Act and
                  is organized under the laws of a state, territory or the
                  District of Columbia. The business of the Transferee is
                  substantially confined to banking and is supervised by the
                  appropriate state or territorial banking commission or
                  similar official or is a foreign bank or equivalent
                  institution, and (b) has an audited net worth of at least
                  $25,000,000 as demonstrated in its latest annual financial
                  statements as of a date not more than 16 months preceding the
                  date of this certification in the case of a U.S. bank, and
                  not more than 18 months preceding the date of this
                  certification in the case of a foreign bank or equivalent
                  institution, a copy of which financial statements is attached
                  hereto.

_____             Savings and Loan. The Transferee is a savings and loan
                  association, building and loan association, cooperative bank,
                  homestead association or similar institution referenced in
                  Section 3(a)(5)(A) of the 1933 Act. The Transferee is
                  supervised and examined by a state or federal authority
                  having supervisory authority over any such institutions or is
                  a foreign savings and loan association or equivalent
                  institution and has an audited net worth of at least
                  $25,000,000 as demonstrated in its latest annual financial
                  statements as of a date not more than 16 months preceding the
                  date of this certification in the case of a U.S. savings and
                  loan association or similar institution, and not more than 18
                  months preceding the date of this certification in the case
                  of a foreign savings and loan association or equivalent
                  institution, a copy of which financial statements is attached
                  hereto.

_____             Broker-dealer. The Transferee is a dealer registered pursuant
                  to Section 15 of the Certificates Exchange Act of 1934, as
                  amended (the "1934 Act").

_____             Insurance Company. The Transferee is an insurance company as
                  defined in Section 2(13) of the 1933 Act, whose primary and
                  predominant business activity is the writing of insurance or
                  the reinsuring of risks underwritten by insurance companies
                  and which is subject to supervision by the insurance
                  commissioner or a similar official or agency of a state,
                  territory or the District of Columbia.

                              Exhibit 4 - Page 3
<PAGE>   81

_____             State or Local Plan. The Transferee is a plan established and
                  maintained by a state, its political subdivisions, or any
                  agency or instrumentality of a state or its political
                  subdivisions, for the benefit of its employees.

_____             ERISA Plan. The Transferee is an employee benefit plan within
                  the meaning of Title I of the Employee Retirement Income
                  Certificate Act of 1974, as amended.

_____             Investment Adviser. The Transferee is an investment adviser
                  registered under the Investment Advisers Act of 1940, as
                  amended.

_____             Other. The Transferee qualifies as a "qualified institutional
                  buyer" as defined in Rule 144A on the basis of facts other
                  than those listed in any of the entries above. If this
                  response is marked, the Transferee must certify on additional
                  pages, to be attached to this certification, to facts that
                  satisfy the Master Servicer that the Transferee is a
                  "qualified institutional buyer" as defined in Rule 144A.

         3.       The term "securities" as used herein does not include (a)
securities of issuers that are affiliated with the Transferee, (b) securities
constituting the whole or part of an unsold allotment to or subscription by the
Transferee, if the Transferee is a dealer, (c) bank deposit notes and
certificates of deposit, (d) loan participations, (e) repurchase agreements,
(f) securities owned but subject to a repurchase agreement and (g) currency,
interest rate and commodity swaps.

         4.       For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Transferee,
the Transferee used the cost of such securities to the Transferee and did not
include any of the securities referred to in the preceding paragraph. Further,
in determining such aggregate amount, the Transferee may have included
securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Transferee's direction.
However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the
Transferee is not itself a reporting company under the 1934 Act.

         5.       The Transferee acknowledges that it is familiar with Rule
144A and understands that the Transferor and other parties related to the
Purchased Certificates are relying and will continue to rely on the statements
made herein because one or more sales to the Transferee may be made in reliance
on Rule 144A.

                  6.       Will the Transferee be purchasing      ______   _____
                           the Purchased Certificates only         YES        NO
                           for the Transferee's own account?

         If the answer to the foregoing question is "NO", the Transferee agrees
that, in connection with any purchase of securities sold to the Transferee for
the account of a third party (including any separate account) in reliance on
Rule 144A, the Transferee will only purchase for the account of a third party
that at the time is a "qualified institutional buyer" within the meaning of
Rule 144A. In addition, the Transferee agrees that the Transferee will not
purchase securities for a third party unless the Transferee has obtained a
current representation letter from such third party or taken other appropriate
steps contemplated by Rule 144A to conclude that such third party independently
meets the definition of "qualified institutional buyer" set forth in Rule 144A.

         7.       The Transferee will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Transferee's purchase of the Purchased
Certificates will constitute a reaffirmation of this certification as of the
date of such purchase. In addition, if the Transferee is a bank or savings and
loan as provided above, the Transferee agrees that it will furnish to such
parties updated annual financial statements promptly after they become
available.

                              Exhibit 4 - Page 4
<PAGE>   82

         IN WITNESS WHEREOF, the undersigned has caused this certificate to be
executed by its duly authorized representative this ____ day of ___________,
20____.

                                            -----------------------------
                                            Print Name of Transferee

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

                              Exhibit 4 - Page 5
<PAGE>   83

                                                          ANNEX A2 TO EXHIBIT 4

                        REGISTERED INVESTMENT COMPANIES

         1.       As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Purchased Certificates (the "Transferee") or, if the Transferee is part of a
Family of Investment Companies (as defined in paragraph 3 below), is an officer
of the related investment adviser (the "Adviser").

         2.       The Transferee is a "qualified institutional buyer" as that
term is defined in Rule 144A ("Rule 144A") promulgated under the Securities Act
of 1933, as amended (the "1933 Act"), because (a) the Transferee is an
investment company (a "Registered Investment Company") registered under the
Investment Company Act of 1940, as amended (the "1940 Act") and (b) as marked
below, the Transferee alone, or the Transferee's Family of Investment
Companies, owned at least $___________ [Note to reviewer - the amount in the
previous blank must be at least $100,000,000] in securities (other than the
excluded securities referred to in paragraph 4 below) as of ________________
[specify a date on or since the end of the Transferee's most recently ended
fiscal year]. For purposes of determining the amount of securities owned by the
Transferee or the Transferee's Family of Investment Companies, the cost of such
securities to the Transferee or the Transferee's Family of Investment Companies
was used.

_____    The Transferee owned $____________ in securities (other than the
         excluded securities referred to in paragraph 4 below) as of the end of
         the Transferee's most recent fiscal year (such amount being calculated
         in accordance with Rule 144A).

_____    The Transferee is part of a Family of Investment Companies which owned
         in the aggregate $____________ in securities (other than the excluded
         securities referred to in paragraph 4 below) as of the end of the
         Transferee's most recent fiscal year (such amount being calculated in
         accordance with Rule 144A).

         3.       The term "Family of Investment Companies" as used herein
means two or more Registered Investment Companies except for a unit investment
trust whose assets consist solely of shares of one or more Registered
Investment Companies (provided that each series of a "series company," as
defined in Rule 18f-2 under the 1940 Act, shall be deemed to be a separate
investment company) that have the same investment adviser (or, in the case of a
unit investment trust, the same depositor) or investment advisers (or
depositors) that are affiliated (by virtue of being majority-owned subsidiaries
of the same parent or because one investment adviser is a majority-owned
subsidiary of the other).

         4.       The term "securities" as used herein does not include (a)
securities of issuers that are affiliated with the Transferee or are part of
the Transferee's Family of Investment Companies, (b) bank deposit notes and
certificates of deposit, (c) loan participations, (d) repurchase agreements,
(e) securities owned but subject to a repurchase agreement and (f) currency,
interest rate and commodity swaps.

         5.       The Transferee is familiar with Rule 144A and understands
that the parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A. In addition, the Transferee will
only purchase for the Transferee's own account.

         6.       The undersigned will notify the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Transferee's purchase of the Purchased Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.

                              Exhibit 4 - Page 6
<PAGE>   84

         IN WITNESS WHEREOF, the undersigned has caused this certificate to be
executed by its duly authorized representative this ____ of ____________,
20____.

                                       ----------------------------------------
                                       Print Name of Transferee or
                                          Adviser

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

                                       IF AN ADVISER:

                        --------------------------------------------
                                Print Name of Transferee

Date:
     ------------------------------

                              Exhibit 4 - Page 7
<PAGE>   85
                                                                      EXHIBIT 5

                          FORM OF TRANSFEREE AGREEMENT

               UNION PLANTERS HOME EQUITY CORP., SERIES 20___-___
                           PASS-THROUGH CERTIFICATES

                                    CLASS __

                                ---------------
                              [Name of Transferee]

                                ----------------
                                     (DATE)

[Trustee]
[Address]
[Address]
Attention: [________________]

Union Planters Home Equity Corp.
7130 Goodlett Farms Parkway
Cordova, Tennessee  38018
Attention: Secretary

[Master Servicer]
[Address]
[Address]
Attention: [________________]

         Re:      Union Planters Home Equity Corp., Series 20___-____
                  Pass-Through Certificates, Class __, representing a [___%
                  Percentage Interest] [$            denomination]

Gentlemen:

         The undersigned (the "Transferee") proposes to purchase all or some of
the Class __, Class __, Class __ and Class __ Certificates (the "Purchased
Certificates"), issued by the Trust established pursuant to a pooling and
servicing agreement, dated as of ____________ (the "Series Agreement"), among
Union Planters Home Equity Corp. (the "Depositor"), ___________________, as
Master Servicer (the "Master Servicer") and _____________________________, as
Trustee, which incorporates by reference the Depositor's Standard Terms to
Pooling and Servicing Agreement (September 2000 Edition) (the "Standard Terms,"
and, collectively with the Series Agreement, the "Agreement"). In doing so the
Transferee hereby acknowledges and agrees as follows:

         SECTION 1. DEFINITIONS. Each capitalized term used herein and not
otherwise defined herein shall have the meaning ascribed to it in the
Agreement.

         SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEREE. In
connection with the proposed transfer of the Purchased Certificates, the
Transferee represents and warrants to the Depositor, the Master Servicer, the
Trustee and the Trust as follows:

                              Exhibit 5 - Page 1
<PAGE>   86

                  (a)      The Transferee is purchasing the Purchased
         Certificates for its own account as principal for investment purposes
         and not with a view to the distribution of the Purchased Certificates,
         in whole or in part, in violation of Section 5 of the Securities Act
         of 1933, as amended (the "Act").

                  (b)      The Transferee has knowledge in financial and
         business matters and is capable of evaluating the merits and risks of
         an investment in the Purchased Certificates; the Transferee has sought
         such accounting, legal and tax advice as it has considered necessary
         to make an informed investment decision; and the Transferee is able to
         bear the economic risk of an investment in the Purchased Certificates
         and can afford a complete loss of such investment.

                  (c)      The Transferee confirms that the Depositor and the
         Master Servicer have made available to the Transferee the opportunity
         to ask questions of, and receive answers from, the Depositor and the
         Master Servicer concerning the Depositor, the Master Servicer, the
         Trust, the purchase by the Transferee of the Purchased Certificates
         and all matters relating thereto, and to obtain additional information
         relating thereto that the Depositor or the Master Servicer possesses
         or can acquire without unreasonable effort or expense.

                  (d)      The Transferee is an "accredited investor" as
         defined in paragraph (1), (2), (3) or (7) of Rule 501(a) under the
         Act.

         SECTION 3. COVENANTS OF THE TRANSFEREE. In consideration of the
proposed transfer, the Transferee covenants with each of the Depositor, the
Master Servicer, the Trustee and the Trust as follows:

                  (a)      The Transferee will not make a public offering of
         the Purchased Certificates, and will not reoffer or resell the
         Purchased Certificates in a manner that would render the issuance and
         sale of the Purchased Certificates, whether considered together with
         the resale or otherwise, a violation of the Act or any state
         securities or "Blue Sky" laws or require registration pursuant
         thereto.

                  (b)      The Transferee agrees that, in its capacity as a
         holder of the Purchased Certificates, it will assert no claim or
         interest in the Assets by reason of owning the Purchased Certificates
         other than with respect to amounts that may be properly and actually
         payable to the Transferee pursuant to the terms of the Pooling and
         Servicing Agreement and the Purchased Certificates.

                  (c)      The Transferee hereby agrees to abide by the terms
         of the Agreement that will be applicable to it as a Certificateholder,
         including, without limitation, the indemnification provisions
         contained in the second sentence of Section 5.05(a) of the Agreement.

                  (d)      If applicable, the Transferee will comply in all
         material respects with applicable regulatory guidelines relating to
         the ownership of mortgage derivative products.

         SECTION 4.  TRANSFER OF PURCHASED CERTIFICATES.

         (a)      The Transferee understands that the Purchased Certificates
have not been registered under the Act or any state securities laws and that no
transfer may be made unless the Purchased Certificates are registered under the
Act and under applicable state law or unless an exemption from such
registration is available. If requested by the Master Servicer or the Trustee,
the Transferee and the Holder of Purchased Certificates who desires to effect
this transfer have certified to the Trustee, the Depositor and the Master
Servicer as to the factual basis for the registration or qualification
exemption relied upon. The Transferee further understands that neither the
Depositor, the Master Servicer, the Trustee nor the Trust is under any
obligation to register the Purchased Certificates or make an exemption from
such registration available.

         (b)      In the event that the transfer is to be made within three
years of the date the Purchased Certificates were acquired by a non-Affiliate
of the Depositor from the Depositor or an Affiliate of the Depositor, the
Master Servicer or the Trustee may require an Opinion of Counsel (which shall
not be an expense of the Depositor, the Master Servicer or the Trustee) that
such transfer is not required to be registered under the Act or state
securities laws.

                              Exhibit 5 - Page 2
<PAGE>   87

         (c)      Any Certificateholder desiring to effect a transfer shall,
and does hereby agree to, indemnify the Depositor, the Master Servicer and the
Trustee against any liability that may result if the transfer is not exempt
under federal or applicable state securities laws.

         (d)      The transfer of the Purchased Certificates may be subject to
additional restrictions, as set forth in Section 5.05 of the Standard Terms of
the Pooling and Servicing Agreement, a copy of which is attached hereto as
Annex A.

         All capitalized terms used but not otherwise defined herein have the
respective meanings assigned thereto in the Pooling and Servicing Agreement.

         IN WITNESS WHEREOF, the undersigned has caused this Transferee
Certification and Agreement to be validly executed by its duly authorized
representative this ____ day of ___________, 20__.

                                            --------------------------------,

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

                                            By:
                                               ------------------------------
                                            Its:
                                               ------------------------------

                               Exhibit 5 - Page 3

<PAGE>   88

                                                           ANNEX A TO EXHIBIT 5

                       ATTACH COPY OF SECTION 5.05 OF THE
               STANDARD TERMS TO POOLING AND SERVICING AGREEMENT

                              Exhibit 5 - Page 4
<PAGE>   89

                                                                      EXHIBIT 6

                             BENEFIT PLAN AFFIDAVIT

Re:      Union Planters Home Equity Corp.,
         UPHEC Trust 20__-__ (the "Trust")
         Pass-Through Certificates, Class ___,
         Class __ and Class __

                             )
                             ) ss:
                             )

         Under penalties of perjury, I, the undersigned, declare that, to the
best of my knowledge and belief, the following representations are true,
correct, and complete.

         1.       That I am a duly authorized officer of ___________________, a
_________ corporation (the "Purchaser"), whose taxpayer identification number
is __________, and on behalf of which I have the authority to make this
affidavit.

         2.       That the Purchaser is acquiring the Class ______ Certificates
("the Purchased Certificates"), each representing an interest in the Trust, for
certain assets of which one or more real estate mortgage investment conduit
("REMIC") elections are to be made under Section 860D of the Internal Revenue
Code of 1986, as amended (the "Code").

         3.       The Purchaser either:

                  (i) (A) is not a plan ("Plan") described in or subject to the
         Department of Labor regulations set forth in 29 C.F.R. ss. 2510.3-101
         (the "Plan Asset Regulations"), a person acting on behalf of a Plan,
         or a person using the assets of a Plan and (B) either (I) is not an
         insurance company or (II) is an insurance company, in which case none
         of the funds used by the Purchaser in connection with its purchase of
         the Purchased Certificates constitute plan assets as defined in the
         Plan Asset Regulations ("Plan Assets") and its purchase of the
         Purchased Certificates shall not result in the certificates issued by
         or the assets of the Trust being deemed to be Plan Assets;

                  (ii) is an insurance company and (A) the Purchaser is
         acquiring the Purchased Certificates with funds held in an "insurance
         company general account" (as defined in Section V(e) of Prohibited
         Transaction Class Exemption 95-60 ("PTCE 95-60"), as published in 60
         Fed. Reg. 35925 (July 12, 1995)), (B) there is no Plan with respect to
         which the amount of such general account's reserves and liabilities
         for all contracts held by or on behalf of such Plan and all other
         Plans maintained by the same employer, or its affiliates (as defined
         in Section V(a)(1) of PTCE 95-60), or by the same employee
         organization exceeds or will exceed 10% of the total of all reserves
         and liabilities of such general account (as such amounts are
         determined under Section I(a) of PTCE 95-60) at the date of
         acquisition, and (C) the conditions set forth in PTCE 95-60 have been
         satisfied and the purchase and holding of the Private Certificates by
         or on behalf of the Purchaser, and the transactions in connection with
         the servicing, operation and management of the Trust, are exempt under
         PTCE 95-60; or

                  (iii) has provided a "Benefit Plan Opinion," obtained at the
         Purchaser's expense, satisfactory to the Depositor, the Master
         Servicer, and the Trustee. A Benefit Plan Opinion is an opinion of
         counsel to the effect that the proposed transfer will not (a) cause
         the assets of the Trust to be regarded as Plan Assets, (b) give rise
         to

                              Exhibit 6 - Page 1
<PAGE>   90

         a fiduciary duty under the Employee Retirement Income Security Act of
         1974, as amended ("ERISA"), on the part of the Depositor, the Master
         Servicer, or the Trustee, or (c) be treated as, or result in, a
         prohibited transaction under Section 406 or 407 of ERISA or Section
         4975 of the Code.

         Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Pooling and Servicing Agreement, dated
as of ____________ __, _______, which incorporates by reference the Standard
Terms thereto (September 2000 Edition), among the Depositor, the Master
Servicer, and ___________________, as Trustee.

                              Exhibit 6 - Page 2
<PAGE>   91

         IN WITNESS WHEREOF, the Purchaser has caused this instrument to be
duly executed on its behalf, by its duly authorized officer this ____ day of
___________, 20__.

                                    -----------------------------
                                    [Name of Purchaser]

                                    By:
                                            ------------------------------------
                                    Its:
                                            ------------------------------------

         Personally appeared before me ________________, known or proved to me
to be the same person who executed the foregoing instrument and to be a
_________________________ of the Purchaser, and acknowledged to me that he
executed the same as his or her free act and deed and as the free act and deed
of the Purchaser.

Subscribed and sworn before me this ______ day of ___________, ____.

-----------------------------------
Notary Public

My commission expires:                                .
                        ------------------------------

                              Exhibit 6 - Page 3
<PAGE>   92

                                                                      EXHIBIT 7

                     FORM OF RESIDUAL TRANSFEREE AGREEMENT

             UNION PLANTERS HOME EQUITY CORP., SERIES 20__-_______

                           PASS-THROUGH CERTIFICATES,
                                    CLASS __

                              RESIDUAL TRANSFEREE
                               -----------------
                              [Name of Transferee]

                                ----------------
                                     (DATE)

[Trustee]
[Address]
[Address]
Attention: [________________]

Union Planters Home Equity Corp.
7130 Goodlett Farms Parkway
Cordova, Tennessee  38018
Attention: Secretary

[Master Servicer]
[Address]
[Address]
Attention: [________________]

         Re:      Union Planters Home Equity Corp., Series 20__-____,
                  Pass-Through Certificates, Class __, representing a [___%
                  Percentage Interest] [$            denomination]

Gentlemen:

         The undersigned (the "Transferee") proposes to purchase all or some of
the captioned Certificates (the "Residual Certificates"), issued by the Trust
established pursuant to a pooling and servicing agreement dated as of
__________________, 20____ (the "Series Agreement"), among Union Planters Home
Equity Corp. (the "Depositor"), ________________________, as master servicer
(the "Master Servicer"), and _____________________________, as Trustee, which
incorporates by reference the Standard Terms thereto, _____ 1997 Edition (the
"Standard Terms" and, collectively with the Series Agreement, the "Agreement").
In doing so the Transferee hereby acknowledges and agrees as follows:

         SECTION 1. DEFINITIONS. Each capitalized term used herein and not
otherwise defined herein shall have the meaning ascribed to it in the
Agreement.

                              Exhibit 7 - Page 1
<PAGE>   93

         SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEREE. In
connection with the proposed transfer of the Purchased Certificates, the
Transferee represents and warrants to the Depositor, the Master Servicer, the
Trustee and the Trust as follows:

                  (a)      The Transferee has knowledge in financial and
         business matters and is capable of evaluating the merits and risks of
         an investment in the Residual Certificates; the Transferee has sought
         such accounting, legal and tax advice as it has considered necessary
         to make an informed decision; and the Transferee is able to bear the
         economic risk of an investment in the Residual Certificates and can
         afford a complete loss of such investment.

                  (b)      The Transferee represents that (i) it understands
         that each of the Residual Certificates represents for federal income
         tax purposes a "residual interest" in a real estate mortgage
         investment conduit (a "REMIC") and that, as the holder of the Residual
         Certificates, it will be required to take into account, in determining
         its taxable income, its pro rata share of the taxable income of the
         REMIC, (ii) it understands that it may incur federal income tax
         liabilities with respect to the Residual Certificates in excess of any
         cash flows generated by the Residual Certificates and (iii) it has
         historically paid its debts as they became due and has the financial
         wherewithal and intends to continue to pay its debts as they come due
         in the future, including any tax imposed on the income that it derives
         from the Residual Certificates as such taxes become due.

                  *(c)     The Transferee is acquiring the Residual
         Certificates for its own account as principal and not with a view to
         the resale or distribution thereof, in whole or in part, in violation
         of Section 5 of the Securities Act of 1933, as amended (the "Act").

                  *(d)     The Transferee confirms that the Depositor has made
         available to the Transferee the opportunity to ask questions of, and
         receive answers from, the Depositor concerning the Depositor, the
         Trust, the purchase by the Transferee of the Residual Certificates and
         all matters relating thereto, and to obtain additional information
         relating thereto that the Depositor possesses or can acquire
         unreasonable effort or expense.

         SECTION 3.  COVENANTS.  The Transferee covenants:

                  *(a)     The Transferee will not make a public offering of
         the Residual Certificates, and will not reoffer or resell the Residual
         Certificates in a manner that would render the issuance and sale of
         the Residual Certificates whether considered together with the resale
         or otherwise, a violation of the Act, or any state securities or "Blue
         Sky" laws or require registration pursuant thereto.

                  (b)      The Transferee agrees that, in its capacity as a
         holder of the Residual Certificates, it will assert no claim or
         interest in the Mortgage Loans by reason of owning the Residual
         Certificates other than with respect to amounts that may be properly
         and actually payable to the Transferee pursuant to the terms of the
         Pooling and Servicing Agreement and the Certificates.

                  (c)      If applicable, the Transferee will comply with
         respect to the Residual Certificates in all material respects with
         applicable regulatory guidelines relating to the ownership of mortgage
         derivative products.

                  (d)      Upon notice thereof, the Transferee agrees to any
         future amendment to the provisions of the Pooling and Servicing
         Agreement relating to the transfer of the Residual Certificates (or
         any interest therein) that counsel to the Depositor or the Trust may
         deem necessary to ensure that any such transfer will not result in the
         imposition of any tax on the Trust.

                  (e)      The Transferee hereby agrees that the Master Servicer
         or an affiliate thereof will (i) supervise or engage in any action
         necessary or advisable to preserve the status of the REMIC as a REMIC,
         (ii) be, and perform the functions of, the REMIC's tax matters person
         ("TMP"), and (iii) employ on a reasonable basis counsel, accountants,
         and professional assistance to aid in the preparation of tax returns or
         the performance of the above.

------------------
* These representations and covenants are to be deleted if the Residual
Securities are not Private Securities.

                              Exhibit 7 - Page 2
<PAGE>   94

                  (f)      The Transferee hereby agrees to cooperate with the
         TMP and to take any action required of it by the REMIC Provisions in
         order to create or maintain the REMIC status of the REMIC.

                  (g)      The Transferee hereby agrees that it will not take
         any action that could endanger the REMIC status of any related REMIC
         or result in the imposition of tax on any such REMIC unless counsel
         for, or acceptable to, the TMP has provided an opinion that such
         action will not result in the loss of such REMIC status or the
         imposition of such tax, as applicable.

         SECTION 4.  ADDITIONAL TRANSFER RESTRICTIONS.

                  (a)      No transfer of the Residual Certificates shall be
         made unless the Master Servicer has consented in writing to such
         transfer. No Residual Certificate may be transferred to a Disqualified
         Organization. The Master Servicer will not consent to any proposed
         transfer (i) to any investor that it knows is a Disqualified
         Organization or (ii) if the transfer involves less than an entire
         interest in a Residual Certificate unless (A) the interest transferred
         is an undivided interest or (B) the transferor or the transferee
         provides the Master Servicer with an Opinion of Counsel obtained at
         its own expense to the effect that the transfer will not jeopardize
         the REMIC status of any related REMIC. The Master Servicer's consent
         to any transfer is further conditioned the Master Servicer's receipt
         from the proposed transferee of (x) a Residual Transferee Agreement,
         (y) a Benefit Plan Affidavit, and (z) either (A) if the transferee is
         a Non-U.S. Person, an affidavit of the proposed transferee in
         substantially the form attached as Exhibit 7-A to Exhibit 7 to the
         Standard Terms and a certificate of the transferor stating whether the
         Class R Certificate has "tax avoidance potential" as defined in
         Treasury Regulations Section 1.860G-3(a)(2), or (B) if the transferee
         is a U.S. Person, an affidavit in substantially the form attached as
         Exhibit 7-B to Exhibit 7 to the Standard Terms. In addition, if a
         proposed transfer involves a Private Certificate, (1) the Master
         Servicer or the Trustee shall require that the transferor and
         transferee certify as to the factual basis for the registration or
         qualification exemption(s) relied upon to exempt the transfer from
         registration under the Act and all applicable state securities or
         "blue sky" laws, and (2) if the transfer is to be made within three
         years after the acquisition thereof by a non-Affiliate of the
         Depositor from the Depositor or an Affiliate of the Depositor, the
         Master Servicer or the Trustee also may require an Opinion of Counsel
         that such transfer may be made without registration or qualification
         under the Act and applicable state securities laws, which Opinion of
         Counsel shall not be obtained at the expense of the Depositor, the
         Trustee or the Master Servicer. Notwithstanding the foregoing, no
         Opinion of Counsel shall be required in connection with the initial
         transfer of the Residual Certificates or their transfer by a broker or
         dealer, if such broker or dealer was the initial transferee.
         Notwithstanding the fulfillment of the prerequisites described above,
         the Master Servicer may withhold its consent to, or the Trustee may
         refuse to recognize, a transfer of a Residual Certificate, but only to
         the extent necessary to avoid a risk of disqualification of a related
         REMIC as a REMIC or the imposition of a tax upon any such REMIC. Any
         attempted transfer in violation of the foregoing restrictions shall be
         null and void and shall not be recognized by the Trustee.

                  (b)      If a tax or a reporting cost is borne by a related
         REMIC as a result of the transfer of the Residual Certificates or any
         beneficial interest therein, in violation of the restrictions
         referenced herein, the Transferor shall pay such tax or cost and, if
         such tax or costs are not so paid, the Trustee, upon notification from
         the Master Servicer, shall pay such tax or reporting cost with amounts
         that otherwise would have been paid to the transferee of such Residual
         Certificates. In that event, neither the Transferee nor the transferor
         shall have any right to seek repayment of such amounts from the
         Depositor, the Master Servicer, the Trustee, the Trust, the REMIC or
         the holders of any other Certificates, and none of such parties shall
         have any liability for payment of any such tax or reporting cost. In
         the event that a Residual Certificate is transferred to a Disqualified
         Organization, the Master Servicer shall make, or cause to be made,
         available the information necessary for the computation of the excise
         tax imposed under section 860E(e) of the Code.

                              Exhibit 7 - Page 3
<PAGE>   95

         SECTION 5.  ACKNOWLEDGMENTS.

                  (a)      The Transferee acknowledges that, if the Residual
         Certificates are Private Certificates, the Residual Certificates have
         not been registered under the Act or registered or qualified under any
         state securities laws and that no transfer may be made unless the
         Purchased Certificates are registered under the Act and under
         applicable state law or unless an exemption from such registration is
         available. The Transferee further understands that neither the
         Depositor, the Master Servicer nor the Trust is under any obligation
         to register the Certificate or make an exemption from such
         registration available.

                  (b)      The Transferee acknowledges that if any United
         States federal income tax is due at the time a Non-U.S. Person
         transfers a Residual Certificate, the Trustee or its designated Paying
         Agent or other person who is liable to withhold federal income tax
         from a distribution on a Residual Certificate under sections 1441 and
         1442 of the Code and the regulations thereunder (the "Withholding
         Agent") may (i) withhold an amount equal to the taxes due upon
         disposition of the Certificate from future distributions made with
         respect to the Certificate to the transferee (after giving effect to
         the withholding of taxes imposed on such transferee), and (ii) pay the
         withheld amount to the Internal Revenue Service unless satisfactory
         written evidence of payment of the taxes due by the transferor has
         been provided to the Withholding Agent. Moreover, the Withholding
         Agent may (x) hold distributions on a Certificate, without interest,
         pending determination of amounts to be withheld, (y) withhold other
         amounts required to be withheld pursuant to United States federal
         income tax law, if any, from distributions that otherwise would be
         made to such transferee on each Certificate it holds, and (z) pay to
         the Internal Revenue Service all such amounts withheld.

                  (c)      The Transferee acknowledges that the transfer of all
         or part of the Residual Certificates that have "tax avoidance
         potential" (as defined in Treasury Regulations section 1.860G-3(a)(2)
         or any successor provision) to a Non-U.S. Person will be disregarded
         for all federal income tax purposes.

                  (d)      The Transferee acknowledges that the transfer of the
         Residual Certificates to a U.S. Person will be disregarded for all
         federal income tax purposes if a significant purpose of the transfer
         is to impede the assessment or collection of the taxes and expenses
         associated with the security within the meaning of Treasury regulation
         section 1.860E-1(c)(1).

         IN WITNESS WHEREOF, the undersigned has caused the Pooling and
Servicing Agreement be validly executed by its duly authorized representative
as of the day and year first above written.

                                 --------------------------------------------
                                 [Name of Transferee]

                                 By:
                                      ---------------------------------------

                                 Its:
                                      ---------------------------------------

                              Exhibit 7 - Page 4
<PAGE>   96

                                                                    EXHIBIT 7-A

                        UNION PLANTERS HOME EQUITY CORP.

                            FOREIGN PERSON AFFIDAVIT
                       AND AFFIDAVIT PURSUANT TO SECTIONS
                          860D(A)(6)(A) AND 860E(E)(4)
                OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED

Re:      Union Planters Home Equity Corp.
         Series __________ Trust (the "Trust")
         Pass-Through Certificates, Class __

STATE OF ___________       )
                           )        ss.:
COUNTY OF __________       )

         Under penalties of perjury, I, the undersigned, declare that to the
best of my knowledge and belief, the following representations are true,
correct, and complete:

         1.       I am a duly authorized officer of ___________________ (the
"Transferee"), and on behalf of which I have the authority to make this
affidavit.

         2.       The Transferee is acquiring all or a portion of the
securities (the "Residual Certificates"), which represent a residual interest
in one or more real estate mortgage investment conduits (each, a "REMIC") for
which elections are to be made under Section 860D of the Internal Revenue Code
of 1986, as amended (the "Code").

         3.       The Transferee is a foreign person within the meaning of
Treasury Regulation Section 1.860G-3(a)(1) (i.e., a person other than (i) a
citizen or resident of the United States, (ii) a corporation or partnership
that is organized under the laws of the United States or any jurisdiction
thereof or therein, or (iii) an estate or trust that is subject to United
States federal income tax regardless of the source of its income) who would be
subject to United States income tax withholding pursuant to Section 1441 or
1442 of the Code on income derived from the Residual Certificates (a "Non-U.S.
Person").

         4.       The Transferee agrees that it will not hold the Residual
Certificates in connection with a trade or business in the United States, and
the Transferee understands that it will be subject to United States federal
income tax under sections 871 and 881 of the Code in accordance with section
860G of the Code and any Treasury regulations issued thereunder on "excess
inclusions" that accrue with respect to the Residual Certificates during the
period the Transferee holds the Residual Certificates.

         5.       The Transferee understands that the federal income tax on
excess inclusions with respect to the Residual Certificates may be withheld in
accordance with section 860G(b) of the Code from distributions that otherwise
would be made to the Transferee on the Residual Certificates and, to the extent
that such tax has not been imposed previously, that such tax may be imposed at
the time of disposition of any such Residual Certificate pursuant to section
860G(b) of the Code.

         6.       The Transferee agrees (i) to file a timely United States
federal income tax return for the year in which disposition of a Residual
Certificate it holds occurs (or earlier if required by law) and will pay any
United States federal income tax due at that time and (ii) if any tax is due at
that time, to provide satisfactory written evidence of payment to the Trustee
or its designated paying agent or other person who is liable to withhold
federal income tax from a

                             Exhibit 7-A - Page 1
<PAGE>   97

distribution on the Residual Certificates under sections 1441 and 1442 of the
Code and the regulations thereunder (the "Withholding Agent").

         7.       The Transferee understands that, until such written notice is
provided, the Withholding Agent may (i) withhold an amount equal to the taxes
due upon disposition of a Residual Certificates from future distributions made
with respect to the Residual Certificate to subsequent transferees (after
giving effect to the withholding of taxes imposed on such subsequent
transferees), and (ii) pay the withheld amount to the Internal Revenue Service.

         8.       The Transferee understands that (i) the Withholding Agent may
withhold other amounts required to be withheld pursuant to United States
federal income tax law, if any, from distributions that otherwise would be made
to such transferee on each Residual Certificates it holds and (ii) the
Withholding Agent may pay to the Internal Revenue Service amounts withheld on
behalf of any and all former holders of each Residual Certificate held by the
Transferee.

         9.       The Transferee understands that if it transfers a Residual
Certificate (or any interest therein) to a United States Person (including a
foreign person who is subject to net United States federal income taxation with
respect to such Residual Certificate), the Withholding Agent may disregard the
transfer for federal income tax purposes if the transfer would have the effect
of allowing the Transferee to avoid tax on accrued excess inclusions and may
continue to withhold tax from future distributions as though the Residual
Certificate were still held by the Transferee.

         10.      The Transferee understands that a transfer of a Residual
Certificate (or any interest therein) to a Non-U.S. Person (i.e., a foreign
person who is not subject to net United States federal income tax with respect
to such Residual Certificate) will not be recognized unless the Withholding
Agent has received from the transferee an affidavit in substantially the same
form as this affidavit containing these same agreements and representations.

         11.      The Transferee understands that distributions on a Residual
Certificate may be delayed, without interest, pending determination of amounts
to be withheld.

         12.      The Transferee is not a "Disqualified Organization" (as
defined below), and the Transferee is not acquiring a Residual Certificate for
the account of, or as agent or nominee of, or with a view to the transfer of
direct or indirect record or beneficial ownership to, a Disqualified
Organization. For the purposes hereof, a Disqualified Organization is any of
the following: (i) the United States, any State or political subdivision
thereof, any foreign government, any international organization, or any agency
or instrumentality of any of the foregoing; (ii) any organization (other than a
farmer's cooperative as defined in Section 521 of the Code) that is exempt from
federal income taxation (including taxation under the unrelated business
taxable income provisions of the Code); (iii) any rural telephone or electrical
service cooperative described in Section 1381(a)(2)(C) of the Code; or (iv) any
other entity so designated by Treasury rulings or regulations promulgated or
otherwise in effect as of the date hereof. In addition, a corporation will not
be treated as an instrumentality of the United States or of any state or
political subdivision thereof if all of its activities are subject to tax and,
with the exception of the Federal Home Loan Mortgage Corporation, a majority of
its board of directors is not selected by such governmental unit.

         13.      The Transferee agrees to consent to any amendment of the
Pooling and Servicing Agreement that shall be deemed necessary by the Depositor
(upon the advice of counsel to the Depositor) to constitute a reasonable
arrangement to ensure that no interest in a Residual Certificate will be owned
directly or indirectly by a Disqualified Organization.

         14.      The Transferee acknowledges that Section 860E(e) of the Code
would impose a substantial tax on the transferor or, in certain circumstances,
on an agent for the transferee, with respect to any transfer of any interest in
any Residual Certificate to a Disqualified Organization.

         Capitalized terms used and not otherwise defined herein shall have the
meanings assigned to them in the Pooling and Servicing Agreement, dated as of
_______________, 20__, which incorporates by reference the Standard Terms
thereto (September 2000 Edition), among the Depositor, the Master Servicer, and
____________________, as Trustee.

                             Exhibit 7-A - Page 2
<PAGE>   98

         IN WITNESS WHEREOF, the Transferee has caused this instrument to be
duly executed on its behalf, by its duly authorized officer as of the _______
day of _____________, 20__.

                                    ------------------------------------------
                                    [Name of Transferee]

                                    By:
                                        --------------------------------------

                                    Its:
                                        --------------------------------------

         Personally appeared before me ___________________________, known or
proved to me to be the same person who executed the foregoing instrument and to
be a ______________________ of the Transferee, and acknowledged to me that he
or she executed the same as his or her free act and deed and as the free act
and deed of the Transferee.

         Subscribed and sworn before me this ______ day of __________, 20__.

                                    -----------------------------------------
                                    Notary Public

         My commission expires the _____ day of ________________, 20__.

                             Exhibit 7-A - Page 3
<PAGE>   99

                                                                    EXHIBIT 7-B

                        UNION PLANTERS HOME EQUITY CORP.

                         AFFIDAVIT PURSUANT TO SECTIONS
                          860D(A)(6)(A) AND 860E(E)(4)
                            OF THE INTERNAL REVENUE
                            CODE OF 1986, AS AMENDED

Re:      Union Planters Home Equity Corp.
         Series ________ Trust (the "Trust")
         Pass-Through Certificates, Class ___

STATE OF __________________________ )
                                    )      ss.:
COUNTY OF _________________________ )

         Under penalties of perjury, I, the undersigned declare that, to the
best of my knowledge and belief, the following representations are true,
correct and complete:

         1.       I am a duly authorized officer of ______________________ (the
"Transferee"), on behalf of which I have the authority to make this affidavit.

         2.       The Transferee is acquiring all or a portion of the
securities (the "Residual Certificates"), which represent residual interests in
one or more real estate mortgage investment conduits (each, a "REMIC") for
which elections are to be made under Section 860D of the Internal Revenue Code
of 1986, as amended (the "Code").

         3.       The Transferee is a U.S. Person.

         4.       The Transferee is a not a "Disqualified Organization" (as
defined below), and the Transferee is not acquiring a Residual Certificate for
the account of, or as agent or nominee of, or with a view to the transfer of
direct or indirect record or beneficial ownership to, a Disqualified
Organization. For the purposes hereof, a Disqualified Organization is any of
the following: (i) the United States, any State or political subdivision
thereof, any foreign government, any international organization, or any agency
or instrumentality of any of the foregoing; (ii) any organization (other than a
farmer's cooperative as defined in Section 521 of the Code) that is exempt from
federal income taxation (including taxation under the unrelated business
taxable income provisions of the Code); (iii) any rural telephone or electrical
service cooperative described in ss. 1381(a)(2)(C) of the Code; or (iv) any
other entity so designated by Treasury rulings or regulations promulgated or
otherwise in effect as of the date hereof. In addition, a corporation will not
be treated as an instrumentality of the United States or of any state or
political subdivision thereof if all of its activities are subject to tax and,
with the exception of the Federal Home Loan Mortgage Corporation, a majority of
its board of directors is not selected by such governmental unit.

         5.       The Transferee agrees to consent to any amendment of the
Pooling and Servicing Agreement that shall be deemed necessary by the Issuer
(upon advice of counsel to the Issuer) to constitute a reasonable arrangement
to ensure that no interest in a Residual Certificate will be owned directly or
indirectly by a Disqualified Organization.

         6.       The Transferee acknowledges that Section 860E(e) of the Code
would impose a substantial tax on the transferor or, in certain circumstances,
on an agent for the transferee, with respect to any transfer of any interest in
any Residual Certificate to a Disqualified Organization.

                             Exhibit 7-B - Page 1
<PAGE>   100

         Capitalized terms used and not otherwise defined herein shall have the
meanings assigned to them in the Pooling and Servicing Agreement, dated as of
_______________, 20__, which incorporates by reference the Standard Terms
thereto (September 2000 Edition), among the Depositor, the Master Servicer, and
____________________, as Trustee.

         IN WITNESS WHEREOF, the Transferee has caused this instrument to be
duly executed on its behalf by its duly authorized officer this ____ day of
______, 20__.

                                            ------------------------------------
                                            [Name of Transferee]

                                            By:
                                                --------------------------------
                                            Its:
                                                --------------------------------

         Personally appeared before me ___________________, known or proved to
me to be the same person who executed the foregoing instrument and to be a
_______________ of the Transferee, and acknowledged to me that he or she
executed the same as his or her free act and deed and as the free act and deed
of the Transferee.

         Subscribed and sworn before me this ____ day of ________, 20__.

                                            ------------------------------------
                                                        Notary Public

         My commission expires the ____ day of ____________________, 20__.

                             Exhibit 7-B - Page 2
<PAGE>   101

                                                                      EXHIBIT 8

                   [Exhibit 8 is contained in Exhibit 4.1(a)]

                               Exhibit 8 - Page 1
<PAGE>   102

                                                                      EXHIBIT 9

                                 UNION PLANTERS
            MORTGAGE LOAN COLLECTION AND LOSS MITIGATION PROCEDURES

-        The Collections call center operates with a Unix based Melita call
         distribution system in tandem with the Alltel CPI MSP system platform.

-        Past due mortgages are tracked utilizing the CPI system through the
         use of work "queues". These queues are downloaded into the dialer for
         automated dialing. Delinquencies are categorized by aging and
         campaigns are devised daily. (Example: collectors work the "less than
         30 day" accounts on the 17th through the 20th days of the month in
         accordance with investor requirements.

-        Loans are normally considered late on the 15th day after the due date.
         Late fees are assessed after payment processing on the 16th day unless
         the terms of the security instruments provide alternate terms. In
         those instances, the loans are modified at the loan level.
         Additionally, notices are forwarded to borrowers who are contractually
         current with outstanding late fees due and payable.

-        Contact with the borrowers via telephone begins when required by the
         investor. Many investors, such as FNMA, require telephone contact on
         new loan delinquencies begin on or around the 10th day of delinquency.
         Generally, first contact is required between the 17th and 20th days of
         delinquency. The Melita and CPI systems provide "queues" that can be
         accessed by the team according to the daily campaign strategy.

-        All collection activity is documented on the collections workstation
         for review. Most comments are coded to facilitate investor reporting
         via EDI transmission. Loans are not systematically presented for
         collection activity for 25 days after noting productive comments.
         Payment arrangements are excluded from the call center downloads until
         the arrangement is broken.

-        First contacts are critical. Loss mitigation efforts and repayment
         plans are most effective when established early in the default.
         Collectors are required to obtain a full financial disclosure on the
         first contact with the delinquent borrower without regard to the age
         of the delinquency. The first contact also involves a complete
         discussion of the borrower's intent, as well as current programs and
         options available.

-        All delinquent borrowers are solicited for interest in loss mitigation
         programs on the 35th day of delinquency via letter.

-        On the 33rd day of delinquency, a demand letter is generated for each
         loan product type, formally demanding full reinstatement within thirty
         days of the date of the letter. HUD borrowers receive an additional
         pamphlet outlining alternatives to foreclosure.

-        Between the 45th and 60th day of delinquency, field representatives
         are dispatched to visit the properties and report the condition.
         Vacant properties are secured and preventive maintenance is completed
         where required. (i.e. grass cut, winterization)

-        All notices, certified cards and required documentation is compiled
         into a file folder and given to the foreclosure review committee for
         approval.

-        The foreclosure review committee, consisting of supervisors from the
         loss mitigation, collections and foreclosure areas, meets as often as
         is necessary to complete the loans ready for review. If accepted, the
         loan is coded as such and loaded into the foreclosure workstation. If
         rejected, the loan is coded as such and returned to the collections
         department to correct the reasons for the rejection. Once complete,
         the file is returned to the review committee for approval.

                               Exhibit 9 - Page 1
<PAGE>   103

-        The foreclosure referral department receives the approved files,
         orders the original documents and activates the foreclosure
         workstation, assigning the appropriate template for processing. The
         template then becomes a tracking checklist for the foreclosure
         specialist to follow complete with target dates for completion within
         regulatory guidelines.

-        When the required information is received, the package is referred to
         an attorney located in the state or district of the mortgaged
         property.

-        Efforts related to ensuring that all attempts to mitigate or control
         losses associated with defaulted mortgages are administered by the
         Loss Mitigation Department.

-        Cases or referrals to the unit are typically generated through the
         Collections call center, however referrals may also be accepted from
         the Foreclosure or Bankruptcy units.

-        The active cases are monitored using the ALLTEL Loss Mitigation
         Workstation. The workstation allows the user to monitor the
         significant events associated with the applicable loss mitigation
         effort using an "alternative" specific template that has been designed
         to act as a checklist for monitoring the progress of the case.

-        The unit is responsible for ensuring that all cases are processed
         within the applicable investor, agency or regulatory guidelines. The
         unit also participates in the foreclosure review committee to
         determine that adequate consideration has been granted in cases
         subject to the initiation of foreclosure.

                               Exhibit 9 - Page 2

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