Document:

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

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
                                    Depositor

                            LITTON LOAN SERVICING LP
                                    Servicer

                               JPMORGAN CHASE BANK
                                     Trustee

                                       and

                                 CITIBANK, N.A.
                               Trust Administrator

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

                         POOLING AND SERVICING AGREEMENT
                          Dated as of November 1, 2001

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

                       Mortgage Pass-Through Certificates

                                  Series 2001-2

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

<PAGE>

<TABLE>
<CAPTION>
                                                 TABLE OF CONTENTS

         SECTION                                                                                               PAGE
         -------                                                                                               ----
<S>                                                                                                            <C>
ARTICLE I

         DEFINITIONS

         1.01.     Defined Terms..................................................................................3
                   401(c) Regulations.............................................................................3
                   Accrued Certificate Interest...................................................................3
                   Adjusted Legal Balance.........................................................................3
                   Adjusted Mortgaged Rate........................................................................3
                   Adjustment Date................................................................................4
                   Administrative Fee.............................................................................4
                   Administrative Fee Rate........................................................................4
                   Advancing Person...............................................................................4
                   Affiliate......................................................................................4
                   Agreement......................................................................................4
                   Arrearage......................................................................................4
                   Assignment.....................................................................................5
                   Available Funds................................................................................5
                   Bankruptcy Code................................................................................5
                   Book-Entry Certificate.........................................................................5
                   Book-Entry Custodian...........................................................................5
                   BPO     .......................................................................................5
                   Business Day...................................................................................6
                   Certificate....................................................................................6
                   Certificate Factor.............................................................................6
                   Certificate Owner..............................................................................6
                   Certificate Principal Balance..................................................................6
                   Certificate Register" and "Certificate Registrar...............................................6
                   Certificateholder" or "Holder..................................................................7
                   Class   .......................................................................................7
                   Class A Certificate............................................................................7
                   Class A Principal Distribution Amount..........................................................7
                   Class M Certificate............................................................................7
                   Class M-1 Certificate..........................................................................7
                   Class M-1 Principal Distribution Amount........................................................7
                   Class M-2 Certificate..........................................................................8
                   Class M-2 Principal Distribution Amount........................................................8
                   Class M-3 Certificate..........................................................................8
                   Class M-3 Principal Distribution Amount........................................................8
                   Class M-4 Certificate..........................................................................8
                   Class M-4 Principal Distribution Amount........................................................8
                   Class M-5 Certificate..........................................................................9

                                       i

<PAGE>

         SECTION                                                                                               PAGE
         -------                                                                                               ----

                   Class M-5 Principal Distribution Amount........................................................9
                   Class M-6 Certificate..........................................................................9
                   Class M-6 Principal Distribution Amount........................................................9
                   Class R Certificate...........................................................................10
                   Closing Date..................................................................................10
                   Code    ......................................................................................10
                   Collection Account............................................................................10
                   Commission....................................................................................10
                   Compensating Interest.........................................................................10
                   Corporate Trust Office........................................................................10
                   Constant Prepayment Rate......................................................................11
                   Credit Enhancement Percentage.................................................................11
                   Cumulative Loss Limit.........................................................................11
                   Custodian.....................................................................................11
                   Cut-off Date..................................................................................11
                   Cut-off Date Pool Adjusted Legal Balance......................................................11
                   Cut-off Date Pool Arrearage...................................................................11
                   Cut-off Date Pool Legal Balance...............................................................11
                   Cut-off Date Pool Unpaid Principal Balance....................................................11
                   Debt Service Reduction........................................................................11
                   Deficient Valuation...........................................................................12
                   Definitive Certificates.......................................................................12
                   Deleted Mortgage Loan.........................................................................12
                   Delinquency Rate..............................................................................12
                   Depositor.....................................................................................12
                   Depository....................................................................................12
                   Depository Institution........................................................................12
                   Depository Participant........................................................................12
                   Determination Date............................................................................13
                   Directly Operate..............................................................................13
                   Disqualified Organization.....................................................................13
                   Distribution Account..........................................................................13
                   Distribution Date.............................................................................13
                   Due Date......................................................................................14
                   Due Period....................................................................................14
                   Eligible Account..............................................................................14
                   ERISA   ......................................................................................14
                   Estate in Real Property.......................................................................14
                   Expense Account...............................................................................14
                   Extraordinary Trust Fund Expenses.............................................................14
                   FDIC    ......................................................................................14
                   FHA     ......................................................................................15
                   FHA Approved Mortgagee........................................................................15
                   FHA Regulations...............................................................................15

                                       ii

<PAGE>

         SECTION                                                                                               PAGE
         -------                                                                                               ----

                   FHLMC   ......................................................................................15
                   Final Recovery Determination..................................................................15
                   FNMA    ......................................................................................15
                   Gross Margin..................................................................................15
                   HUD     ......................................................................................15
                   Independent...................................................................................15
                   Independent Contractor........................................................................15
                   Index   ......................................................................................16
                   Insurance Proceeds............................................................................16
                   Interest Accrual Period.......................................................................16
                   Interest Carry Forward Amount.................................................................16
                   Interest Distribution Amount..................................................................16
                   Interest Remittance Amount....................................................................16
                   Late Collections..............................................................................17
                   Legal Balance.................................................................................17
                   Liquidation Event.............................................................................17
                   Liquidation Proceeds..........................................................................17
                   Loan-to-Value Ratio...........................................................................17
                   Maximum Mortgage Rate.........................................................................17
                   Minimum Mortgage Rate.........................................................................17
                   Modified Scheduled Payment....................................................................17
                   Moody's ......................................................................................18
                   Mortgage......................................................................................18
                   Mortgage File.................................................................................18
                   Mortgage Loan.................................................................................18
                   Mortgage Loan Purchase Agreement..............................................................18
                   Mortgage Loan Schedule........................................................................18
                   Mortgage Loan Seller..........................................................................19
                   Mortgage Note.................................................................................19
                   Mortgage Pool.................................................................................19
                   Mortgage Rate.................................................................................19
                   Mortgaged Property............................................................................20
                   Mortgagor.....................................................................................20
                   Net Monthly Excess Cash Flow..................................................................20
                   Net Mortgage Rate.............................................................................20
                   Net WAC Rate..................................................................................20
                   Net WAC Rate Carryover Amount.................................................................20
                   New Lease.....................................................................................20
                   Nonrecoverable Payment Advance................................................................20
                   Non-United States Person......................................................................21
                   Officers' Certificate.........................................................................21
                   Opinion of Counsel............................................................................21
                   Original Mortgage Loan........................................................................21
                   Original Scheduled Payment....................................................................21

                                      iii

<PAGE>

         SECTION                                                                                               PAGE
         -------                                                                                               ----

                   Overcollateralized Amount.....................................................................21
                   Ownership Interest............................................................................21
                   Pass-Through Rate.............................................................................21
                   Payment Advance...............................................................................22
                   Percentage Interest...........................................................................22
                   Periodic Rate Cap.............................................................................22
                   Permitted Investments.........................................................................22
                   Permitted Transferee..........................................................................23
                   Person  ......................................................................................23
                   Plan    ......................................................................................23
                   Plurality Residual Certificateholder..........................................................23
                   Prepayment Assumption.........................................................................23
                   Prepayment Interest Shortfall.................................................................24
                   Prepayment Period.............................................................................24
                   Principal and Arrearage Distribution Amount...................................................24
                   Principal and Arrearage Remittance Amount.....................................................24
                   Principal Prepayment..........................................................................24
                   Private Certificate...........................................................................24
                   Purchase Price................................................................................24
                   Qualified Substitute Mortgage Loan............................................................25
                   Rating Agency or Rating Agencies..............................................................26
                   Realized Loss.................................................................................26
                   Record Date...................................................................................27
                   Regular Interest..............................................................................27
                   Relief Act....................................................................................27
                   Relief Act Interest Shortfall.................................................................27
                   REMIC   ......................................................................................27
                   REMIC Regular Certificate.....................................................................27
                   REMIC Provisions..............................................................................27
                   Remittance Report.............................................................................27
                   Rents from Real Property......................................................................28
                   REO Account...................................................................................28
                   REO Disposition...............................................................................28
                   REO Imputed Interest..........................................................................28
                   REO Principal Amortization....................................................................28
                   REO Property..................................................................................28
                   Request for Release...........................................................................28
                   Reserve Fund..................................................................................28
                   Residential Dwelling..........................................................................28
                   Residual Certificate..........................................................................28
                   Residual Interest.............................................................................29
                   Responsible Officer...........................................................................29
                   S&P     ......................................................................................29
                   Senior Residual Distribution Amount...........................................................29

                                       iv

<PAGE>

         SECTION                                                                                               PAGE
         -------                                                                                               ----

                   Servicer......................................................................................29
                   Servicer Event of Default.....................................................................29
                   Servicer Remittance Date......................................................................29
                   Servicing Account.............................................................................29
                   Servicing Advances............................................................................29
                   Servicing Fee.................................................................................30
                   Servicing Fee Rate............................................................................30
                   Servicing Officer.............................................................................30
                   Servicing Rights Pledgee......................................................................30
                   Single Certificate............................................................................30
                   Startup Day...................................................................................30
                   Stayed Funds..................................................................................30
                   Stepdown Date.................................................................................30
                   Sub-Servicer..................................................................................30
                   Sub-Servicing Account.........................................................................31
                   Sub-Servicing Agreement.......................................................................31
                   Tax Returns...................................................................................31
                   Termination Price.............................................................................31
                   Transfer......................................................................................31
                   Transferee....................................................................................31
                   Transferor....................................................................................31
                   Trigger Event.................................................................................31
                   Trust Administrator...........................................................................31
                   Trust Fund....................................................................................31
                   Trust   ......................................................................................31
                   REMIC   ......................................................................................31
                   Trustee ......................................................................................32
                   Uninsured Cause...............................................................................32
                   United States Person..........................................................................32
                    Principal Balance............................................................................32
                   VA      ......................................................................................33
                   VA Approved Lender............................................................................33
                   VA Regulations................................................................................33
                   Value   ......................................................................................33
                   Voting Rights.................................................................................33
         1.02.     Allocation of Certain Interest Shortfalls.....................................................33

ARTICLE II

         CONVEYANCE OF MORTGAGE LOANS;
         ORIGINAL ISSUANCE OF CERTIFICATES

         2.01.     Conveyance of Mortgage Loans..................................................................34
         2.02.     Acceptance of the Trust REMIC by Trustee......................................................36

                                       v

<PAGE>

         SECTION                                                                                               PAGE
         -------                                                                                               ----

         2.03.     Cure of Breaches; Repurchase or Substitution of Mortgage Loans................................37
         2.04.     Representations and Warranties of the Depositor...............................................39
         2.05.     Execution, Authentication and Delivery of Class R Certificates; Creation of REMIC
                   Regular Certificates..........................................................................41
         2.06.     Representations, Warranties and Covenants of the Servicer.....................................41

ARTICLE III

         ADMINISTRATION AND SERVICING
         OF THE TRUST FUND

         3.01.     Servicer to Act as Servicer...................................................................45
         3.02.     Sub-Servicing Agreements Between Servicer and Sub-Servicers; Enforcement of Sub-
                   Servicing Agreements and the Mortgage Loan Purchase Agreement.................................47
         3.03.     Successor Sub-Servicers.......................................................................48
         3.04.     Liability of the Servicer.....................................................................48
         3.05.     No Contractual Relationship Between Sub-Servicers, Trust Administrator, Trustee or
                   Certificateholders............................................................................49
         3.06.     Assumption or Termination of Sub-Servicing Agreements by Trust Administrator
                    .............................................................................................49
         3.07.     Collection of Certain Mortgage Loan Payments..................................................49
         3.08.     Sub-Servicing Accounts........................................................................50
         3.09.     Collection of Taxes, Assessments and Similar Items; Servicing Accounts........................50
         3.10.     Collection Account and Distribution Account...................................................51
         3.11.     Withdrawals from the Collection Account and Distribution Account..............................53
         3.12.     Investment of Funds in the Collection Account and the Distribution Account....................56
         3.13.     [intentionally omitted].......................................................................57
         3.14.     Maintenance of Hazard Insurance and Errors and Omissions and Fidelity Coverage
                    .............................................................................................57
         3.15.     Enforcement of Due-On-Sale Clauses; Assumption Agreements.....................................58
         3.16.     Realization Upon Defaulted Mortgage Loans.....................................................59
         3.17.     Trustee to Cooperate; Release of Mortgage Files...............................................61
         3.18.     Servicing Compensation........................................................................62
         3.19.     Reports to the Trust Administrator and the Trustee; Collection Account Statements
                    .............................................................................................63
         3.20.     Statement as to Compliance....................................................................63
         3.21.     Independent Public Accountants' Servicing Report..............................................64
         3.22.     Access to Certain Documentation...............................................................64
         3.23.     Title, Management and Disposition of REO Property.............................................65
         3.24.     Obligations of the Servicer in Respect of Prepayment Interest Shortfalls......................68
         3.25.     Expense Account...............................................................................68
         3.26.     Obligations of the Servicer in Respect of Mortgage Rates and Monthly Payments
                    .............................................................................................69
         3.27.     Reserve Fund..................................................................................69

                                       vi
<PAGE>

         SECTION                                                                                               PAGE
         -------                                                                                               ----

         3.28.     Advance Facility..............................................................................70

ARTICLE IV

         PAYMENTS TO CERTIFICATEHOLDERS

         4.01.     Distributions.................................................................................71
         4.02.     Statements to Certificateholders..............................................................76
         4.03.     Remittance Reports; Payment Advances..........................................................80
         4.04.     Allocation of Extraordinary Trust Fund Expenses and Realized Losses...........................81
         4.05.     Commission Reporting..........................................................................82
         4.06.     Compliance with Withholding Requirements......................................................83

ARTICLE V

         THE CERTIFICATES

         5.01.     The Certificates..............................................................................84
         5.02.     Registration of Transfer and Exchange of Certificates.........................................86
         5.03.     Mutilated, Destroyed, Lost or Stolen Certificates.............................................90
         5.04.     Persons Deemed Owners.........................................................................90
         5.05.     Certain Available Information.................................................................91

ARTICLE VI

         THE DEPOSITOR AND THE SERVICER

         6.01.     Liability of the Depositor and the Servicer...................................................92
         6.02.     Merger or Consolidation of the Depositor or the Servicer......................................92
         6.03.     Limitation on Liability of the Depositor, the Servicer and Others.............................92
         6.04.     Limitation on Resignation of the Servicer.....................................................93
         6.05.     Rights of the Depositor in Respect of the Servicer............................................94

ARTICLE VII

         DEFAULT

         7.01.     Servicer Events of Default....................................................................95
         7.02.     Trust Administrator to Act; Appointment of Successor..........................................97
         7.03.     Notification to Certificateholders............................................................98
         7.04.     Waiver of Servicer Events of Default..........................................................99

ARTICLE VIII

                                      vii

<PAGE>

         SECTION                                                                                               PAGE
         -------                                                                                               ----

         CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR

         8.01.     Duties of Trustee and Trust Administrator....................................................100
         8.02.     Certain Matters Affecting the Trustee and the Trust
                                                              Administrator.....................................101
         8.03.     Neither the Trustee nor Trust Administrator Liable for Certificates or Mortgage Loans
                    ............................................................................................102
         8.04.     Trustee and Trust Administrator May Own Certificates.........................................103
         8.05.     Trustee's and Trust Administrator's Fees and Expenses........................................103
         8.06.     Eligibility Requirements for Trustee and Trust Administrator.................................104
         8.07.     Resignation and Removal of the Trustee and the Trust
                                                              Administrator.....................................104
         8.08.     Successor Trustee or Trust Administrator.....................................................105
         8.09.     Merger or Consolidation of Trustee...........................................................106
         8.10.     Appointment of Co-Trustee or Separate Trustee................................................106
         8.11.     Appointment of Custodians....................................................................107
         8.12.     Appointment of Office or Agency..............................................................108
         8.13.     Representations and Warranties...............................................................108

ARTICLE IX

         [RESERVED]

ARTICLE X

         TERMINATION

         10.01.    Termination Upon Repurchase or Liquidation of All Mortgage Loans.............................111
         10.02.    Additional Termination Requirements..........................................................113

ARTICLE XI

         REMIC PROVISIONS

         11.01.    REMIC Administration.........................................................................114
         11.02.    Prohibited Transactions and Activities.......................................................117
         11.03.    Servicer and Trustee and Trust Administrator Indemnification.................................117

ARTICLE XII

         MISCELLANEOUS PROVISIONS

         12.01.    Amendment....................................................................................118

                                      viii

<PAGE>

         SECTION                                                                                               PAGE
         -------                                                                                               ----

         12.02.    Recordation of Agreement; Counterparts.......................................................119
         12.03.    Limitation on Rights of Certificateholders...................................................119
         12.04.    Governing Law................................................................................120
         12.05.    Notices......................................................................................120
         12.06.    Severability of Provisions...................................................................121
         12.07.    Notice to Rating Agencies....................................................................121
         12.08.    Article and Section References...............................................................122
         12.09.    Grant of Security Interest...................................................................122
</TABLE>

                                       ix

<PAGE>

<TABLE>
<CAPTION>
                                    EXHIBITS
                                    --------
<S>                        <C>
         Exhibit A-1       Form of Class A Certificate
         Exhibit A-2       Form of Class M-1 Certificate
         Exhibit A-3       Form of Class M-2 Certificate
         Exhibit A-4       Form of Class M-3 Certificate
         Exhibit A-5       Form of Class M-4 Certificate
         Exhibit A-6       Form of Class M-5 Certificate
         Exhibit A-7       Form of Class M-6 Certificate
         Exhibit A-8       Form of Class R Certificate
         Exhibit B         [Reserved]
         Exhibit C-1       Form of Trustee's Initial Certification
         Exhibit C-2       Form of Trustee's Final Certification
         Exhibit D         Form of Mortgage Loan Purchase Agreement
         Exhibit E         Request for Release
         Exhibit F-1       Form of Transferor Representation Letter and Form of Transferee
                           Representation Letter in Connection with Transfer of the Private Certificates
                           Pursuant to Rule 144A
         Exhibit F-2       Form of Transfer Affidavit and Agreement and Form of Transferor Affidavit
                           in Connection with Transfer of Class R Certificates

         Schedule 1        Mortgage Loan Schedule
         Schedule 2        Schedule of Mortgage Loans with Reconstructed Mortgage Files
</TABLE>

<PAGE>

                   This Pooling and Servicing Agreement, is dated and effective
as of November 1, 2001, among Salomon Brothers Mortgage Securities VII, Inc. as
Depositor, Litton Loan Servicing LP as Servicer, JPMorgan Chase Bank as Trustee
and Citibank, N.A. as Trust Administrator.

                             PRELIMINARY STATEMENT:

                   The Depositor intends to sell the Certificates, to be issued
hereunder in multiple classes, which in the aggregate will evidence the entire
beneficial ownership interest in the Trust Fund created hereunder.

                   As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement (exclusive of the Reserve Fund) as a
REMIC for federal income tax purposes (the "Trust REMIC"). The Class R
Certificates will represent the sole class of "residual interests" in the Trust
REMIC for purposes of the REMIC Provisions under federal income tax law. The
following table irrevocably sets forth the designation, the Pass-Through Rate,
the initial Certificate Principal Balance and, solely for purposes of satisfying
Treasury regulation Section 1.860G-1(a)(4)(iii), the latest possible maturity
date for each of the Classes of Certificates representing "regular interests" in
the Trust REMIC.

<TABLE>
<CAPTION>
             Class                        Pass-Through                     Initial                 Latest Possible
          Designation                         Rate                  Certificate Principal          Maturity Date(1)
                                                                           Balance
<S>                                     <C>                         <C>                            <C>
Class A                                 5.25% per annum(2)              $204,097,000               January 25, 2035
Class M-1                               6.00% per annum(2)              $ 22,450,000               January 25, 2035
Class M-2                               6.00% per annum(2)              $ 12,246,000               January 25, 2035
Class M-3                               6.00% per annum(2)              $  8,844,000               January 25, 2035
Class M-4                               6.00% per annum(2)              $ 14,287,000               January 25, 2035
Class M-5                               6.00% per annum(2)              $  8,164,000               January 25, 2035
Class M-6                               6.00% per annum(2)              $  2,041,440               January 25, 2035
</TABLE>

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

(1)      Designated as the date ten years after the first Distribution Date
         following the stated maturity date of the Mortgage Loan with the
         longest remaining term to scheduled maturity.

(2)      Subject to the limitation set forth herein in the definition of
         "Pass-Through Rate."

<PAGE>

                                       -2-

                  The aggregate Cut-off Date Pool Adjusted Legal Balance of the
Mortgage Loans and the aggregate initial Certificate Principal Balance of the
respective Classes of REMIC Regular Certificates in each case will be
$272,129,440.

                  Capitalized terms used but not otherwise defined in this
Preliminary Statement, have the meanings assigned thereto in Article I.

                  In consideration of the mutual agreements herein contained,
the Depositor, the Servicer, the Trustee and the Trust Administrator agree as
follows:

<PAGE>

                                       -3-

                                    ARTICLE I

                                   DEFINITIONS

                  SECTION 1.01.             Defined Terms.

                  Whenever used in this Agreement, including, without
limitation, in the Preliminary Statement hereto, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified 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.

                  "401(c) Regulations": The regulations to be issued by the
United States Department of Labor pursuant to Section 401(c) of ERISA by no
later than December 31, 2001 relating to which assets of an insurance company
general account constitute "plan assets" of a Plan.

                  "Accrued Certificate Interest": With respect to any Class of
REMIC Regular Certificates for any Distribution Date, one month's interest at
the Pass-Through Rate applicable to such Class of Certificates for such
Distribution Date, accrued on the related Certificate Principal Balance
outstanding immediately prior to such Distribution Date. Accrued Certificate
Interest for each Class of REMIC Regular Certificates shall be calculated on the
basis of a 360-day year consisting of twelve 30-day months. Accrued Certificate
Interest with respect to each Distribution Date, as to any Class of REMIC
Regular Certificates, shall be reduced by an amount equal to the portion
allocable to such Certificate pursuant to Section 1.02 hereof of the sum of (a)
the aggregate Prepayment Interest Shortfall, if any, for such Distribution Date
to the extent not covered by payments pursuant to Section 3.24 and (b) the
aggregate amount of any Relief Act Interest Shortfall, if any, for such
Distribution Date.

                  "Adjusted Legal Balance": With respect to any Mortgage Loan as
of any date of determination, the sum of (i) the then outstanding Unpaid
Principal Balance of such Mortgage Loan and (ii) 92% of the then outstanding
Arrearage of such Mortgage Loan.

                  "Adjusted Mortgaged Rate": For any Distribution Date, the
Adjusted Mortgage Rate on any Mortgage Loan is equal to the excess, if any, of
(i) the product of (A) the applicable Mortgage Rate on the Mortgage Loan as of
the first day of the month preceding the month in which such Distribution Date
occurs and (B) a fraction, the numerator of which is (w) prior to the Legal
Balance Interest Date of that Mortgage Loan, the Unpaid Principal Balance of
that Mortgage Loan, or after the the Legal Balance Interest Date of that
Mortgage Loan, the Legal Balance of that Mortgage Loan, and the denominator of
which is (y) the Legal Balance of that Mortgage Loan, in each case as of the
first day of the month preceding the month in which such Distribution Date
occurs, over (ii) the percentage equivalent of a fraction, the numerator of
which is (x) twelve times the sum of the Servicing Fee due to the Servicer for
the Due Period relating to such Distribution Date and the Administrative Fee
payable to the Trust Administrator on such Distribution Date, and the
denominator of which is (y) the Legal Balance of that Mortgage Loan as of the
first day of the month preceding the month in which such Distribution Date
occurs.

<PAGE>

                                       -4-

                  "Adjustment Date": With respect to each adjustable-rate
Mortgage Loan, the first day of the month on which the Mortgage Rate of an
adjustable-rate Mortgage Loan changes pursuant to the related Mortgage Note. The
first Adjustment Date following the Cut-off Date as to each adjustable-rate
Mortgage Loan is set forth in the Mortgage Loan Schedule.

                  "Administrative Fee": The amount payable to the Trust
Administrator on each Distribution Date pursuant to Section 8.05 as compensation
for all services rendered by it and the Trustee in the execution of the trust
hereby created and in the exercise and performance of any of the powers and
duties of the Trust Administrator and the Trustee hereunder, which amount shall
equal the product of (i) the Administrative Fee Rate, multiplied by (ii) the
aggregate Unpaid Principal Balance of each Mortgage Loan and each REO Property
(in each case prior to the Legal Balance Interest Date of the related Mortgage
Loan) or the Legal Balance of each Mortgage Loan and each REO Property (in each
case after the Legal Balance Interest Date of the related Mortgage Loan). The
fee payable to the Trustee for all services rendered by it in the execution of
the trust hereby created and the exercise and performance of any of the powers
and duties of the Trustee hereunder (including the fees and expenses in its
capacity as Custodian) will be paid by the Trust Administrator out of the Trust
Administrator's own funds or out of the Administrative Fee received by the Trust
Administrator in such amounts as the Trust Administrator and the Trustee shall
have agreed upon in a separate agreement between them.

                  "Administrative Fee Rate":  0.0225% per annum.

                  "Advancing Person":  As defined in Section 3.28.

                  "Affiliate": With respect 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.

                  "Agreement": This Pooling and Servicing Agreement and all
amendments hereof and supplements hereto.

                  "Arrearage": With respect to each Mortgage Loan, the sum of
the following, to the extent not received subsequent to the Cut-off Date and
applied in reduction of the Arrearage of such Mortgage Loan: (i) all accrued but
unpaid interest due on the Mortgage Loan as of the expiration of the forbearance
period, reduced by any amounts paid in respect of Arrearage from the expiration
of the forbearance period to the Cut-off Date, (ii) all other accrued but unpaid
interest due on the Mortgage Loan on or before the Cut-off Date but not received
prior to the Cut-off Date, (iii) the amount of any tax and insurance advances
made with respect to the Mortgage Loan from the acquisition of the Mortgage Loan
by the Mortgage Loan Seller to but not including the Cut-off Date, and (iv) the
amount of certain service charges and Servicing Advances, the rights to which
the Mortgage Loan Seller acquired in connection with its purchase of the
Mortgage Loan. Notwithstanding the foregoing, with

<PAGE>

                                       -5-

respect each Bankruptcy Mortgage Loan, the computation of the amount described
in the clauses (i) and (ii) above will be the lesser of (A) the amount described
in such clauses and (B) the unpaid interest amount that was indicated in the
applicable proof of claim plus any additional accrued but unpaid interest due on
the Mortgage Loan under the applicable payment plan subsequent to the applicable
date for the proof of claim but on or before the Cut-off Date, to the extent not
received on or before the Cut-off Date. The aggregate Arrearage for each
Mortgage Loan as of the Cut-off Date is set forth on the Mortgage Loan Schedule.

                  "Arrearage Repayment Percentage": As defined in Section 1.01
under "Prepayment Assumption."

                  "Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws of
the jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage.

                  "Available Funds": With respect to any Distribution Date, an
amount equal to (1) the sum of (a) the aggregate of the amounts on deposit in
the Collection Account and Distribution Account as of the close of business on
the related Determination Date, (b) the aggregate of any amounts received in
respect of an REO Property withdrawn from any REO Account and deposited in the
Distribution Account for such Distribution Date pursuant to Section 3.23, (c)
the aggregate of any amounts deposited in the Distribution Account by the
Servicer in respect of Prepayment Interest Shortfalls for such Distribution Date
pursuant to Section 3.24, (d) the aggregate of any Payment Advances made by the
Servicer for such Distribution Date pursuant to Section 4.03, and (e) the
aggregate of any advances made by the Trust Adminstrator or the Trustee, as
applicable, for such Distribution Date pursuant to Section 7.02, reduced (to not
less than zero) by (2) the sum of (x) the portion of the amount described in
clause (1)(a) hereof that represents (i) Modified Scheduled Payments on the
related Mortgage Loans received from a Mortgagor on or prior to the
Determination Date but due during any Due Period subsequent to the related Due
Period, (ii) Principal Prepayments on the related Mortgage Loans received after
the related Prepayment Period (together with any interest payments received with
such Principal Prepayments to the extent they represent the payment of interest
accrued on the related Mortgage Loans during a period subsequent to the related
Prepayment Period), (iii) Liquidation Proceeds and Insurance Proceeds received
in respect of the Mortgage Loans after the related Prepayment Period, (iv)
amounts reimbursable or payable to the Depositor, the Servicer, the Trustee, the
Trust Administrator, the Mortgage Loan Seller or any Sub-Servicer pursuant to
Section 3.11 or Section 3.12 or otherwise payable in respect of Extraordinary
Trust Fund Expenses, (v) Stayed Funds and (vi) amounts deposited in the
Collection Account or the Distribution Account, as the case may be, in error,
and (y) amounts reimbursable to the Trust Administrator for an advance made
pursuant to Section 7.02(b) which advance the Trust Administrator has determined
to be nonrecoverable from the Stayed Funds in respect of which it was made.

                  "Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11
of the United States Code), as amended.

<PAGE>

                                       -6-

                  "Bankruptcy Mortgage Loan": Mortgage Loans which as of the
Cut-off Date had borrowers subject to cases under the Bankruptcy Code or had
confirmed bankruptcy plans.

                  "Book-Entry Certificate": The Class A Certificates, the Class
M-1 Certificates, the Class M-2 Certificates and the Class M-3 Certificates for
so long as the Certificates of such Classes shall be registered in the name of
the Depository or its nominee.

                  "Book-Entry Custodian": The custodian appointed pursuant to
Section 5.01.

                  "BPO": With respect to each Mortgaged Property relating to a
Mortgage Loan, the drive-by valuation (I.E., the interior of the property is
generally not inspected) prepared by a real estate broker in the community in
which such Mortgaged Property is located who is independent of the Mortgage Loan
Seller, Servicer and their Affiliates, which valuation indicates the expected
proceeds of a sale of such Mortgaged Property on an "as is" basis based upon a
normal marketing time for similar types of Mortgaged Properties in similar
areas, and includes certain assumptions, including those as to the condition of
the interior of the applicable Mortgaged Property.

                  "Business Day": Any day other than (i) a Saturday or Sunday,
(ii) a day on which the Depository is authorized or obligated by law or
executive order to remain closed, (iii) a day on which the banking or savings
and loan institutions in the State of New York or the State of Texas, or in the
city in which the Corporate Trust Office of the Trust Administrator or the
Corporate Trust Office of the Trustee is located, are authorized or obligated by
law or executive order to be closed or (iv) a day on which the Servicer, the
Trustee, the Certificate Registrar or the Trust Administrator is authorized or
obligated by law or executive order to be closed.

                  "Certificate": Any one of the Salomon Brothers Mortgage
Securities VII, Inc., Mortgage Pass-Through Certificates, Series 2001-2, Class
A, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6 or Class R,
issued under this Agreement.

                  "Certificate Factor": With respect to any Class of REMIC
Regular Certificates as of any Distribution Date, a fraction, expressed as a
decimal carried to seven places, the numerator of which is the Certificate
Principal Balance of such Class of Certificates on such Distribution Date (after
giving effect to any distributions of principal and allocations of Realized
Losses and Extraordinary Trust Fund Expenses in reduction of the Certificate
Principal Balance of such Class of Certificates to be made on such Distribution
Date), and the denominator of which is the initial Certificate Principal Balance
of such Class of Certificates as of the Closing Date.

                  "Certificate Owner": With respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Certificate as reflected on the
books of the Depository or on the books of a Depository Participant or on the
books of an indirect participating brokerage firm for which a Depository
Participant acts as agent.

                  "Certificate Principal Balance": With respect to each REMIC
Regular Certificate as of any date of determination, the Certificate Principal
Balance of such Certificate on the Distribution

<PAGE>

                                       -7-

Date immediately prior to such date of determination, minus all distributions
allocable to principal made thereon and any Realized Losses and Extraordinary
Trust Fund Expenses allocated thereto on the immediately preceding Distribution
Date (or, in the case of any date of determination up to and including the first
Distribution Date, the initial Certificate Principal Balance of such
Certificate, as stated on the face thereof). With respect to any Class of REMIC
Regular Certificates as of any date of determination, the aggregate Certificate
Principal Balance of the Certificates of such Class as of such date of
determination.

                  "Certificate Register" and "Certificate Registrar": The
register maintained and the registrar appointed pursuant to Section 5.02.

                  "Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or a Non-United States Person shall not be a Holder of
a Residual Certificate for any purposes hereof and, solely for the purposes of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor or the Servicer or any Affiliate thereof shall be deemed
not to be outstanding and the Voting Rights to which it is entitled shall not be
taken into account in determining whether the requisite percentage of Voting
Rights necessary to effect any such consent has been obtained, except as
otherwise provided in Section 12.01 and except at any time that all Certificates
outstanding shall be held by the Depositor or the Servicer or any Affiliate
thereof, as applicable. The Trustee and the Trust Administrator may conclusively
rely upon a certificate of the Depositor or the Servicer in determining whether
a Certificate is held by an Affiliate thereof. All references herein to
"Holders" or "Certificateholders" shall reflect the rights of Certificate Owners
as they may indirectly exercise such rights through the Depository and
participating members thereof, except as otherwise specified herein; provided,
however, that the Trustee and the Trust Administrator shall be required to
recognize as a "Holder" or "Certificateholder" only the Person in whose name a
Certificate is registered in the Certificate Register.

                  "Class": Collectively, all of the Certificates bearing the
same class designation.

                  "Class A Certificate": Any one of the Class A Certificates
executed by the Trust Administrator, and authenticated and delivered by the
Certificate Registrar, substantially in the form annexed hereto as Exhibit A-1
and evidencing a Regular Interest in the Trust REMIC for purposes of the REMIC
Provisions.

                  "Class A Principal Distribution Amount": With respect to any
Distribution Date, an amount equal to the excess of: (1) the Certificate
Principal Balance of the Class A Certificates immediately prior to such
Distribution Date over (2) the lesser of (A) the product of (i) 40.00% and (ii)
the aggregate Adjusted Legal Balance of the Mortgage Loans as of the last day of
the related Due Period and (B) the aggregate Adjusted Legal Balance of the
Mortgage Loans as of the last day of the related Due Period minus $13,606,472.

                  "Class M Certificate": Any one of the Class M-1, Class M-2,
Class M-3, Class M-4, Class M-5 or Class M-6 Certificates.

<PAGE>

                                       -8-

                  "Class M-1 Certificate": Any one of the Class M-1 Certificates
executed by the Trust Administrator, and authenticated and delivered by the
Certificate Registrar, substantially in the form annexed hereto as Exhibit A-2
and evidencing a Regular Interest in the Trust REMIC for purposes of the REMIC
Provisions.

                  "Class M-1 Principal Distribution Amount": With respect to any
Distribution Date, an amount equal to the excess of: (1) the sum of (i) the
Certificate Principal Balance of the Class A Certificates after taking into
account the payment of the Class A Principal Distribution Amount on such
Distribution Date and (ii) the Certificate Principal Balance of the Class M-1
Certificates immediately prior to such Distribution Date over (2) the lesser of
(A) the product of (i) 56.50% and (ii) the aggregate Adjusted Legal Balance of
the Mortgage Loans as of the last day of the related Due Period and (B) the
aggregate Adjusted Legal Balance of the Mortgage Loans as of the last day of the
related Due Period minus $13,606,472.

                  "Class M-2 Certificate": Any one of the Class M-2 Certificates
executed by the Trust Administrator, and authenticated and delivered by the
Certificate Registrar, substantially in the form annexed hereto as Exhibit A-3
and evidencing a Regular Interest in the Trust REMIC for purposes of the REMIC
Provisions.

                  "Class M-2 Principal Distribution Amount": With respect to any
Distribution Date, an amount equal to the excess of: (1) the sum of (i) the
Certificate Principal Balance of the Class A Certificates after taking into
account the payment of the Class A Principal Distribution Amount on such
Distribution Date, (ii) the Certificate Principal Balance of the Class M-1
Certificates after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date and (iii) the Certificate
Principal Balance of the Class M-2 Certificates immediately prior to such
Distribution Date over (2) the lesser of (A) the product of (i) 65.50% and (ii)
the aggregate Adjusted Legal Balance of the Mortgage Loans as of the last day of
the related Due Period and (B) the aggregate Adjusted Legal Balance of the
Mortgage Loans as of the last day of the related Due Period minus $13,606,472.

                  "Class M-3 Certificate": Any one of the Class M-3 Certificates
executed by the Trust Administrator, and authenticated and delivered by the
Certificate Registrar, substantially in the form annexed hereto as Exhibit A-4
and evidencing a Regular Interest in the Trust REMIC for purposes of the REMIC
Provisions.

                  "Class M-3 Principal Distribution Amount": With respect to any
Distribution Date, an amount equal to the excess of: (1) the sum of (i) the
Certificate Principal Balance of the Class A Certificates after taking into
account the payment of the Class A Principal Distribution Amount on such
Distribution Date, (ii) the Certificate Principal Balance of the Class M-1
Certificates after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date, (iii) the Certificate Principal
Balance of the Class M-2 Certificates after taking into account the payment of
the Class M-2 Principal Distribution Amount on such Distribution Date and (iv)
the Certificate Principal Balance of the Class M-3 Certificates immediately
prior to such Distribution Date over (2) the lesser of (A) the product of (i)
72.00% and (ii) the aggregate Adjusted Legal Balance of the

<PAGE>

                                       -9-

Mortgage Loans as of the last day of the related Due Period and (B) the
aggregate Adjusted Legal Balance of the Mortgage Loans as of the last day of the
related Due Period minus $13,606,472.

                  "Class M-4 Certificate": Any one of the Class M-4 Certificates
executed by the Trust Administrator, and authenticated and delivered by the
Certificate Registrar, substantially in the form annexed hereto as Exhibit A-5
and evidencing a Regular Interest in the Trust REMIC for purposes of the REMIC
Provisions.

                  "Class M-4 Principal Distribution Amount": With respect to any
Distribution Date, an amount equal to the excess of: (1) the sum of (i) the
Certificate Principal Balance of the Class A Certificates after taking into
account the payment of the Class A Principal Distribution Amount on such
Distribution Date, (ii) the Certificate Principal Balance of the Class M-1
Certificates after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date, (iii) the Certificate Principal
Balance of the Class M-2 Certificates after taking into account the payment of
the Class M-2 Principal Distribution Amount on such Distribution Date, (iv) the
Certificate Principal Balance of the Class M-3 Certificates after taking into
account the payment of the Class M-3 Principal Distribution Amount on such
Distribution Date and (v) the Certificate Principal Balance of the Class M-4
Certificates immediately prior to such Distribution Date over (2) the lesser of
(A) the product of (i) 82.50% and (ii) the aggregate Adjusted Legal Balance of
the Mortgage Loans as of the last day of the related Due Period and (B) the
aggregate Adjusted Legal Balance of the Mortgage Loans as of the last day of the
related Due Period minus $13,606,472.

                  "Class M-5 Certificate": Any one of the Class M-5 Certificates
executed by the Trust Administrator, and authenticated and delivered by the
Certificate Registrar, substantially in the form annexed hereto as Exhibit A-6
and evidencing a Regular Interest in the Trust REMIC for purposes of the REMIC
Provisions.

                  "Class M-5 Principal Distribution Amount": With respect to any
Distribution Date, an amount equal to the excess of: (1) the sum of (i) the
Certificate Principal Balance of the Class A Certificates after taking into
account the payment of the Class A Principal Distribution Amount on such
Distribution Date, (ii) the Certificate Principal Balance of the Class M-1
Certificates after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date, (iii) the Certificate Principal
Balance of the Class M-2 Certificates after taking into account the payment of
the Class M-2 Principal Distribution Amount on such Distribution Date, (iv) the
Certificate Principal Balance of the Class M-3 Certificates after taking into
account the payment of the Class M-3 Principal Distribution Amount on such
Distribution Date, (v) the Certificate Principal Balance of the Class M-4
Certificates after taking into account the payment of the Class M-4 Principal
Distribution Amount on such Distribution Date and (vi) the Certificate Principal
Balance of the Class M-5 Certificates immediately prior to such Distribution
Date over (2) the lesser of (A) the product of (i) 88.50% and (ii) the aggregate
Adjusted Legal Balance of the Mortgage Loans as of the last day of the related
Due Period and (B) the aggregate Adjusted Legal Balance of the Mortgage Loans as
of the last day of the related Due Period minus $13,606,472.
..

<PAGE>

                                      -10-

                  "Class M-6 Certificate": Any one of the Class M-6 Certificates
executed by the Trust Administrator, and authenticated and delivered by the
Certificate Registrar, substantially in the form annexed hereto as Exhibit A-7
and evidencing a Regular Interest in the Trust REMIC for purposes of the REMIC
Provisions.

                  "Class M-6 Principal Distribution Amount": With respect to any
Distribution Date, an amount equal to the excess of: (1) the sum of (i) the
Certificate Principal Balance of the Class A Certificates after taking into
account the payment of the Class A Principal Distribution Amount on such
Distribution Date, (ii) the Certificate Principal Balance of the Class M-1
Certificates after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date, (iii) the Certificate Principal
Balance of the Class M-2 Certificates after taking into account the payment of
the Class M-2 Principal Distribution Amount on such Distribution Date, (iv) the
Certificate Principal Balance of the Class M-3 Certificates after taking into
account the payment of the Class M-3 Principal Distribution Amount on such
Distribution Date, (v) the Certificate Principal Balance of the Class M-4
Certificates after taking into account the payment of the Class M-4 Principal
Distribution Amount on such Distribution Date, (vi) the Certificate Principal
Balance of the Class M-5 Certificates after taking into account the payment of
the Class M-5 Principal Distribution Amount on such Distribution Date and (vii)
the Certificate Principal Balance of the Class M-6 Certificates immediately
prior to such Distribution Date over (2) the lesser of (A) the product of (i)
90.00% and (ii) the aggregate Adjusted Legal Balance of the Mortgage Loans as of
the last day of the related Due Period and (B) the aggregate Adjusted Legal
Balance of the Mortgage Loans as of the last day of the related Due Period minus
$13,606,472.

                  "Class R Certificate": Any one of the Certificates with a
"Class R" designation on the face thereof, substantially in the form of Exhibit
A-8 attached hereto, and evidencing the sole class of "residual interests" in
the Trust REMIC for purposes of the REMIC Provisions.

                  "Closing Date": November 30, 2001.

                  "Code":  The Internal Revenue Code of 1986.

                  "Collection Account": The account or accounts created and
maintained by the Servicer pursuant to Section 3.10(a), which shall be entitled
"Litton Loan Servicing LP, as Servicer for JPMorgan Chase Bank, as Trustee, in
trust for registered holders of Salomon Brothers Mortgage Securities VII, Inc.,
Mortgage Pass-Through Certificates, Series 2001-2." The Collection Account must
be an Eligible Account.

                  "Commission":  The Securities and Exchange Commission.

                  "Compensating Interest": With respect to any principal
prepayments, the amount paid by the Servicer from its own funds to cover
Prepayment Interest Shortfalls, but only to the extent of its Servicing Fee for
the related Due Period.

<PAGE>

                                      -11-

                  "Corporate Trust Office": The principal corporate trust office
of the Trust Administrator or the Trustee at which at any particular time its
corporate trust business in connection with this Agreement shall be
administered, which office, with respect to the Trust Administrator, at the date
of the execution of this instrument is located at 111 Wall Street, 14th Floor,
New York, New York 10005, Attention: Structured Finance/Salomon 2001-2, or at
such other address as the Trust Administrator may designate from time to time by
notice to the Certificateholders, the Depositor, the Servicer and the Trustee
and, with respect to the Trustee, at the date of the execution of this
instrument is located at 450 West 33rd Street, 14th Floor, New York, New York
10001-2697, Attention: Institutional Trust Services/Structured Finance Services
-- Salomon 2001-2, or at such other address as the Trustee may designate from
time to time by notice to the Certificateholders, the Depositor, the Servicer
and the Trust Administrator.

                  "Constant Prepayment Rate": As defined in Section 1.01 under
"Prepayment Assumption."

                  "Credit Enhancement Percentage": The percentage obtained by
dividing (1) the sum of the Overcollateralized Amount and the aggregate
Certificate Principal Balance of the Class M Certificates by (2) the aggregate
Adjusted Legal Balance of the Mortgage Loans, calculated after taking into
account distributions of principal and Arrearage on the Mortgage Loans and
distribution of the Principal and Arrearage Distribution Amount to the Holders
of the Certificates then entitled to distributions of principal on the related
Distribution Date.

                  "Cumulative Loss Limit": For any Distribution Date indicated
below, the Cumulative Loss Limit will have been exceeded if the cumulative
amount of Realized Losses incurred on the Mortgage Loans from the Cut-off Date
through the end of the calendar month preceding the month of such Distribution
Date has exceeded the indicated percentage of the Cut-off Date Pool Legal
Balance:

         Distribution Date                                        Percentage
         -----------------                                        ----------

         December 2003 through November 2004                      3.60%
         December 2004 through November 2005                      4.80%
         December 2005 through November 2006                      5.70%
         December 2006 through November 2007                      6.00%
         December 2007 and subsequent distribution dates          7.25%

                  "Custodian": A Person who is at any time appointed by the
Trustee pursuant to Section 8.11 as a document custodian for the Mortgage Files,
which Person shall not be the Depositor or an Affiliate of the Depositor.

                  "Cut-off Date": With respect to each Original Mortgage Loan,
November 1, 2001. With respect to any Qualified Substitute Mortgage Loan, the
date of substitution. References herein to the "Cut-off Date," when used with
respect to more than one Mortgage Loan, shall be to the respective Cut-off Dates
for such Mortgage Loans.

<PAGE>

                                      -12-

                  "Cut-off Date Pool Adjusted Legal Balance":  $272,129,440.

                  "Cut-off Date Pool Arrearage":  $60,068,902.

                  "Cut-off Date Pool Legal Balance":  $276,934,952.

                  "Cut-off Date Pool Unpaid Principal Balance":  $216,866,050.

                  "Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.

                  "Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding Legal Balance of the Mortgage Loan,
which valuation results from a proceeding initiated under the Bankruptcy Code.

                  "Definitive Certificates":  As defined in Section 5.01(b).

                  "Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.

                  "Delinquency Rate": With respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is (x) the aggregate
Legal Balance of Mortgage Loans that are 60 or more days delinquent in their
Modified Scheduled Payments as of the last day of the calendar month immediately
preceding the month of such Distribution Date, and the denominator of which is
(y) the aggregate Legal Balance of the Mortgage Loans as of the last day of the
calendar month immediately preceding the month of such Distribution Date. For
purposes of the foregoing, a Mortgage Loan is 30 days delinquent if a payment
due on a Due Date has not been received by the close of business on the next
succeeding Due Date, and accordingly, a Mortgage Loan is 60 days delinquent if a
payment due on a Due Date has not been received by the close of business on the
second succeeding Due Date.

                  "Depositor": Salomon Brothers Mortgage Securities VII, Inc., a
Delaware corporation, or its successor in interest.

                  "Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository, for purposes
of registering those Certificates that are to be Book-Entry Certificates, is
CEDE & Co. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(3) of the Uniform Commercial Code of the State of New
York and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended.

                  "Depository Institution": Any depository institution or trust
company, including the Trustee and the Trust Administrator, that (a) is
incorporated under the laws of the United States of

<PAGE>

                                      -13-

America or any State thereof, (b) is subject to supervision and examination by
federal or state banking authorities and (c) has outstanding unsecured
commercial paper or other short-term unsecured debt obligations (or, in the case
of a depository institution that is the principal subsidiary of a holding
company, such holding company has unsecured commercial paper or other short-term
unsecured debt obligations) that are rated P-1 by Moody's and A-1+ by S&P (or
comparable ratings if Moody's and S&P are not the Rating Agencies).

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

                  "Determination Date": With respect to each Distribution Date,
the 15th day of the calendar month in which such Distribution Date occurs or, if
such 15th day is not a Business Day, the Business Day immediately preceding such
15th day.

                  "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 Fund other
than through an Independent Contractor; provided, however, that the Trustee (or
the Servicer on behalf of the Trustee) shall not be considered to Directly
Operate an REO Property solely because the Trustee (or the 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": A "disqualified organization"
under Section 860E of the Code, which as of the Closing Date is any of: (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 cooperative described
in Section 521 of the Code) which is exempt from the tax imposed by Chapter 1 of
the Code unless such organization is subject to the tax imposed by Section 511
of the Code, (iii) any organization described in Section 1381(a)(2)(C) of the
Code, (iv) an "electing large partnership" within the meaning of Section 775 of
the Code or (v) any other Person so designated by the Trustee or the Trust
Administrator based upon an Opinion of Counsel provided by nationally recognized
counsel to the Trustee and the Trust Administrator that the holding of an
ownership interest in a Class R Certificate by such Person may cause the REMIC
formed hereunder or any Person having an ownership interest in any Class of
Certificates (other than such Person) to incur liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the transfer
of an ownership interest in the Class R Certificate to such Person. 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, a majority of its board of directors is not selected by a
governmental unit. The term "United States", "state" and "international
organizations" shall have the meanings set forth in Section 7701 of the Code.

<PAGE>

                                      -14-

                  "Distribution Account": The trust account or accounts created
and maintained by the Trust Administrator pursuant to Section 3.10(b) which
shall be entitled "Citibank, N.A., as Trust Administrator for JPMorgan Chase
Bank, as Trustee, in trust for registered holders of Salomon Brothers Mortgage
Securities VII, Inc., Mortgage Pass-Through Certificates, Series 2001-2." The
Distribution Account must be an Eligible Account.

                  "Distribution Date": The 25th day of any month, or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day, commencing in December 2001.

                  "Due Date": With respect to each Distribution Date, the first
day of the calendar month in which such Distribution Date occurs, which is the
day of the month on which the Modified Scheduled Payment is due on a Mortgage
Loan, exclusive of any days of grace.

                  "Due Period": With respect to any Distribution Date, the
period commencing on the second day of the calendar month preceding the calendar
month in which such Distribution Date occurs and ending on the related Due Date.

                  "Eligible Account": Any of (i) an account or accounts
maintained with a federal or state chartered depository institution or trust
company the short-term unsecured debt obligations of which (or, in the case of a
depository institution or trust company that is the principal subsidiary of a
holding company, the short-term unsecured debt obligations of such holding
company) are rated P-1 by Moody's or A-1 by S&P (or comparable ratings if
Moody's and S&P are not the Rating Agencies) at the time any amounts are held on
deposit therein, (ii) an account or accounts the deposits in which are fully
insured by the FDIC (to the limits established by such corporation), the
uninsured deposits in which account are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to the Trustee, the Trust
Administrator and to each Rating Agency, the Certificateholders will have a
claim with respect to the funds in such account or a perfected first priority
security interest against such collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution with which such account is
maintained, (iii) a trust account or accounts maintained with the trust
department of a federal or state chartered depository institution, national
banking association or trust company acting in its fiduciary capacity or (iv) an
account otherwise acceptable to each Rating Agency without reduction or
withdrawal of their then current ratings of the Certificates as evidenced by a
letter from each Rating Agency to the Trustee and the Trust Administrator.
Eligible Accounts may bear interest.

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

                  "Estate in Real Property": A fee simple estate in a parcel of
land.

                  "Expense Account": The account established and maintained
pursuant to Section 3.25.

                  "Extraordinary Trust Fund Expenses": Any amounts reimbursable
to the Servicer or the Depositor pursuant to Section 6.03, any amounts payable
from the Distribution Account in respect of taxes pursuant to Section
11.01(h)(iv), any amounts reimbursable to the Trust Administrator or the

<PAGE>

                                      -15-

Trustee by the Trust Fund pursuant to the indemnification from the Trust Fund
set forth in the second sentence of Section 8.05, and any other costs, expenses,
liabilities and losses borne by the Trust Fund (exclusive of any cost, expense,
liability or loss that is specific to a particular Mortgage Loan or REO Property
and is taken into account in calculating a Realized Loss in respect thereof) for
which the Trust Fund has not and, in the reasonable good faith judgment of the
Trustee shall not, obtain reimbursement or indemnification from any other
Person.

                  "FDIC": Federal Deposit Insurance Corporation or any successor
thereto.

                  "FHA": The Federal Housing Administration of the United States
Department of Housing and Urban Development and any successor thereto.

                  "FHA Approved Mortgagee": Those institutions which are
approved by FHA to act as servicer and mortgagee of record pursuant to FHA
Regulations.

                  "FHA Regulations": Regulations promulgated by HUD under the
National Housing Act, codified in 24 Code of Federal Regulations, and other HUD
issuances relating to FHA mortgage loans, including the related handbooks,
circulars, notices and mortgagee letters.

                  "FHLMC": Federal Home Loan Mortgage Corporation or any
successor thereto.

                  "Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by the Mortgage Loan Seller, the Depositor or the Servicer pursuant to
or as contemplated by Section 2.03, Section 3.16(c) or Section 10.01), a
determination made by the Servicer that all Insurance Proceeds, Liquidation
Proceeds and other payments or recoveries which the Servicer, in its reasonable
good faith judgment, expects to be finally recoverable in respect thereof have
been so recovered. The Servicer shall maintain records, prepared by a Servicing
Officer, of each Final Recovery Determination made thereby.

                  "FNMA": Federal National Mortgage Association or any successor
thereto.

                  "Gross Margin": With respect to each adjustable-rate Mortgage
Loan, the fixed percentage set forth in the related Mortgage Note that is added
to the Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Rate for such Mortgage Loan.

                  "HUD": The United States Department of Housing and Urban
Development and any successor thereto.

                  "Independent": When used with respect to any specified Person,
any such Person who (a) is in fact independent of the Depositor, the Servicer
and their respective Affiliates, (b) does not have any direct financial interest
in or any material indirect financial interest in the Depositor or the Servicer
or any Affiliate thereof, and (c) is not connected with the Depositor or the
Servicer or any Affiliate thereof as an officer, employee, promoter,
underwriter, trustee, trust administrator, partner, director or

<PAGE>

                                      -16-

Person performing similar functions; provided, however, that a Person shall not
fail to be Independent of the Depositor or the Servicer or any Affiliate thereof
merely because such Person is the beneficial owner of 1% or less of any class of
securities issued by the Depositor or the Servicer or any Affiliate thereof, as
the case may be.

                  "Independent Contractor": Either (i) any Person (other than
the Servicer and its Affiliates) that would be an "independent contractor" with
respect to the Trust Fund within the meaning of Section 856(d)(3) of the Code if
the Trust Fund were a real estate investment trust (except that the ownership
tests set forth in that section shall be considered to be met by any Person that
owns, directly or indirectly, 35% or more of any Class of Certificates), so long
as the Trust Fund does not receive or derive any income from such Person and
provided that the relationship between such Person and the Trust Fund is at
arm's length, all within the meaning of Treasury Regulation Section
1.856-4(b)(5), or (ii) any other Person (including the Servicer) if the Trustee
and the Trust Administrator have received an Opinion of Counsel 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.

                  "Index": With respect to each adjustable-rate Mortgage Loan
and each related Adjustment Date the weekly average yield on U.S. Treasury
securities adjusted to a constant maturity of one year as published by the
Federal Reserve Board in Statistical Release H.15(519) as of a date specified in
the related Mortgage Note or such other index as may be specified in the related
Mortgage Note.

                  "Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan, to the extent such
proceeds are not to be applied to the restoration of the related Mortgaged
Property or released to the Mortgagor in accordance with the procedures that the
Servicer would follow in servicing mortgage loans held for its own account,
subject to the terms and conditions of the related Mortgage Note and Mortgage.

                  "Interest Accrual Period": With respect to any Distribution
Date and any REMIC Regular Certificate, the one-month period ending on the last
day of the calendar month preceding the month in which such Distribution Date
occurs, based on a 360-day year consisting of twelve 30-day months.

                  "Interest Carry Forward Amount": With respect to any
Distribution Date and any REMIC Regular Certificate, an amount equal to the sum
of (i) any portion of the Interest Distribution Amount for that Class of
Certificates for the immediately preceding Distribution Date that was unpaid on
such immediately preceding Distribution Date, (ii) any portion of any Interest
Carry Forward Amount for that Class of Certificates for the immediately
preceding Distribution Date that was unpaid on such immediately preceding
Distribution Date and (iii) interest accrued on the sum of (i) and (ii)

<PAGE>

                                      -17-

above at the related Pass-through Rate on that Class of Certificates for the
most recently ended Interest Accrual Period.

                  "Interest Distribution Amount": With respect to any
Distribution Date and any Class of REMIC Regular Certificates, the Accrued
Certificate Interest on the Certificates of such Class for such Distribution
Date.

                  "Interest Remittance Amount": The portion of the Available
Funds for the related Distribution Date that represents interest received or
advanced on the Mortgage Loans net of Servicing Fees and Administrative Fees.

                  "Late Collections": With respect to any Mortgage Loan, all
amounts received subsequent to the Determination Date immediately following any
Due Period, whether as late payments of Modified Scheduled Payments or as
Insurance Proceeds, Liquidation Proceeds or otherwise, which represent late
payments or collections of principal and/or interest due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) but
delinquent for such Due Period and not previously recovered.

                  "Legal Balance": With respect to each Mortgage Loan and each
REO Property, the Unpaid Principal Balance thereof plus any related Arrearage.

                  "Legal Balance Interest Date": With respect to each Mortgage
Loan other than a Bankruptcy Mortgage Loan, the original stated maturity date of
such Mortgage Loan. With respect to each Bankruptcy Mortgage Loan, the later of
(i) the original stated maturity date of such Mortgage Loan and (ii) the earlier
of (A) the end of the period during which such Mortgage Loan is subject to a
confirmed bankruptcy plan and (B) the date on which interest shall commence to
accrue on the Legal Balance of such Mortgage Loan pursuant to a voluntary
agreement by the related borrower to pay interest on the Legal Balance of such
Mortgage Loan in connection with an extension of the maturity date of such
Mortgage Loan for a period generally not to exceed ten years from the original
stated maturity date of such Mortgage Loan.

                  "Liquidation Event": With respect to any Mortgage Loan, any of
the following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to such Mortgage Loan; or (iii) such Mortgage
Loan is removed from the Trust Fund by reason of its being purchased, sold or
replaced pursuant to or as contemplated by Section 2.03, Section 3.16(c) or
Section 10.01. With respect to any REO Property, either of the following events:
(i) a Final Recovery Determination is made as to such REO Property; or (ii) such
REO Property is removed from the Trust Fund by reason of its being purchased
pursuant to Section 10.01.

                  "Liquidation Proceeds": The amount (other than Insurance
Proceeds or amounts received in respect of the rental of any REO Property prior
to REO Disposition) received by the Servicer in connection with (i) the taking
of all or a part of a Mortgaged Property by exercise of the power of eminent
domain or condemnation, (ii) the liquidation of a defaulted Mortgage Loan
through a trustee's sale, foreclosure sale or otherwise, or (iii) the
repurchase, substitution or sale of a Mortgage

<PAGE>

                                      -18-

Loan or an REO Property pursuant to or as contemplated by Section 2.03, Section
3.16(c), Section 3.23 or Section 10.01.

                  "Loan-to-Value Ratio": As of any date of determination, the
fraction, expressed as a percentage, the numerator of which is the Legal Balance
of the related Mortgage Loan at such date and the denominator of which is the
Value of the related Mortgaged Property.

                  "Maximum Mortgage Rate": With respect to each adjustable-rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
maximum Mortgage Rate thereunder.

                  "Minimum Mortgage Rate": With respect to each adjustable-rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
minimum Mortgage Rate thereunder.

                  "Modified Scheduled Payment": With respect to any Mortgage
Loan, the scheduled monthly payment of principal, interest and Arrearage on such
Mortgage Loan which is payable by the related Mortgagor from time to time under
the related Mortgage Note as modified by any payment plan agreement, determined:
(a) after giving effect to (i) any Deficient Valuation and/or Debt Service
Reduction with respect to such Mortgage Loan and (ii) any reduction in the
amount of interest collectible from the related Mortgagor pursuant to the Relief
Act; (b) without giving effect to any extension granted or agreed to by the
Servicer pursuant to Section 3.07; and (c) on the assumption that all other
amounts, if any, due under such Mortgage Loan are paid when due.

                  "Moody's": Moody's Investors Service, Inc. or its successor in
interest.

                  "Mortgage": The mortgage, deed of trust or other instrument
creating a first lien or second lien on, or first priority security interest in,
a Mortgaged Property securing a Mortgage Note.

                  "Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.

                  "Mortgage Loan": Each mortgage loan transferred and assigned
to the Trustee pursuant to Section 2.01 or Section 2.03(d) as from time to time
held as a part of the Trust Fund, the Mortgage Loans so held being identified in
the Mortgage Loan Schedule.

                  "Mortgage Loan Purchase Agreement": The agreement between the
Mortgage Loan Seller and the Depositor, regarding the transfer of the Mortgage
Loans by the Mortgage Loan Seller to or at the direction of the Depositor,
substantially in the form of Exhibit D annexed hereto.

                  "Mortgage Loan Schedule": The list of Mortgage Loans included
in the Trust REMIC on such date attached hereto as Schedule 1. The Mortgage Loan
Schedule shall set forth the following information with respect to each Mortgage
Loan:

            (i)   the Mortgage Loan identifying number;

<PAGE>

                                      -19-

           (ii)   a code indicating whether the Mortgaged Property is
                  owner-occupied;

          (iii)   the original months to maturity;

           (iv)   the stated remaining months to maturity from the Cut-off Date;

            (v)   the Loan-to-Value Ratio;

           (vi)   the Mortgage Rate in effect immediately following the Cut-off
                  Date;

          (vii)   the Mortgaged Property type;

         (viii)   the stated maturity date;

           (ix)   the amount of the principal and interest payment at
                  origination;

            (x)   the amount of the Modified Scheduled Payment due on the first
                  Due Date after the Cut- off Date;

           (xi)   [intentionally omitted];

          (xii)   the original principal amount of the Mortgage Loan (if
                  available);

         (xiii)   the Unpaid Principal Balance of the Mortgage Loan as of the
                  close of business on the Cut-off Date;

          (xiv)   the Arrearage with respect to the Mortgage Loan as of the
                  close of business on the Cut- off Date;

           (xv)   [intentionally omitted];

          (xvi)   in the case of each adjustable-rate Mortgage Loan, the Gross
                  Margin;

         (xvii)   in the case of each adjustable-rate Mortgage Loan, the Maximum
                  Mortgage Rate;

         (xviii)  in the case of each adjustable-rate Mortgage Loan, the Minimum
                  Mortgage Rate;

          (xix)   in the case of each adjustable-rate Mortgage Loan, the
                  Periodic Rate Cap;

           (xx)   in the case of each adjustable-rate Mortgage Loan, the first
                  Adjustment Date immediately following the Cut-off Date; and

          (xxi)   the Value of the Mortgaged Property.

                  The Mortgage Loan Schedule shall set forth the following
information, as of the Cut-off Date with respect to the Mortgage Loans in the
aggregate: (1) the number of Mortgage Loans; (2) the current principal balance
of the Mortgage Loans; (3) the weighted average Mortgage Rate of the Mortgage
Loans; and (4) the aggregate Arrearage on the Mortgage Loans. The Mortgage Loan
Schedule shall be amended from time to time by the Depositor in accordance with
the provisions of this Agreement. With respect to any Qualified Substitute
Mortgage Loan, Cut-off Date shall refer to the related Cut-off Date for such
Mortgage Loan, determined in accordance with the definition of Cut-off Date
herein.

                  "Mortgage Loan Seller": Salomon Brothers Realty Corp., or its
successor in interest, in its capacity as seller under the Mortgage Loan
Purchase Agreement.

<PAGE>

                                      -20-

                  "Mortgage Note": The original executed note or other evidence
of indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage
Loan.

                  "Mortgage Pool": Collectively, all of the Mortgage Loans
identified on Schedule 1 from time to time, and any REO Properties acquired in
respect thereof.

                  "Mortgage Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note, which rate (i) in
the case of each Mortgage Loan other than an adjustable-rate Mortgage Loan,
shall remain constant at the rate set forth in the Mortgage Loan Schedule as the
Mortgage Rate in effect immediately following the Cut-off Date and (ii) in the
case of each adjustable- rate Mortgage Loan (A) as of any date of determination
until the first Adjustment Date following the Cut-off Date shall be the rate set
forth in the Mortgage Loan Schedule as the Mortgage Rate in effect immediately
following the Cut-off Date and (B) as of any date of determination thereafter
shall be the rate as adjusted on the most recent Adjustment Date, to equal the
sum, rounded to the nearest 0.125% if so provided in the Mortgage Note, of the
Index, as most recently available as of a date prior to the Adjustment Date as
set forth in the related Mortgage Note, plus the related Gross Margin; provided
that the Mortgage Rate on such Mortgage Loan on any Adjustment Date shall never
be more than the lesser of (i) the sum of the Mortgage Rate in effect
immediately prior to the Adjustment Date plus the related Periodic Rate Cap, if
any, and (ii) the related Maximum Mortgage Rate, and shall never be less than
the greater of (i) the Mortgage Rate in effect immediately prior to the
Adjustment Date less the Periodic Rate Cap, if any, and (ii) the related Minimum
Mortgage Rate. With respect to each Mortgage Loan that becomes an REO Property,
as of any date of determination, the annual rate determined in accordance with
the immediately preceding sentence as of the date such Mortgage Loan became an
REO Property.

                  "Mortgaged Property": The underlying property securing a
Mortgage Loan, including any REO Property, consisting of an Estate in Real
Property improved by a Residential Dwelling.

                  "Mortgagor":  The obligor on a Mortgage Note.

                  "Net Monthly Excess Cash Flow": An amount equal to the sum of
(i) any Senior Residual Distribution Amount and (ii) the excess of: (1) the
Available Funds for the related Distribution Date over (2) the sum for the
related Distribution Date of (a) the aggregate of the Interest Distribution
Amounts and any Interest Carry Forward Amounts for the Certificates and (b) the
Principal and Arrearage Remittance Amount.

                  "Net Mortgage Rate": With respect to any Mortgage Loan (or the
related REO Property), as of any date of determination, a per annum rate of
interest equal to (i) the then applicable Mortgage Rate for such Mortgage Loan
(or the related REO Property) minus (ii) the Servicing Fee Rate applicable to
the Unpaid Principal Balance of such Mortgage Loan (or the related REO
Property).

                  "Net WAC Rate": A rate per annum equal to the weighted average
of the Adjusted Mortgage Rates of the Mortgage Loans.

<PAGE>

                                      -21-

                  "Net WAC Rate Carryover Amount": If on any Distribution Date,
the Pass-Through Rate for any Class of REMIC Regular Certificates is the Net WAC
Rate, then the Net WAC Rate Carryover Amount for such class for such
Distribution Date is an amount equal to the sum of: (1) the excess of (x) the
amount of interest such Class of Certificates would have been entitled to
receive on such Distribution Date had such Pass-Through Rate not been limited by
the Net WAC Rate over (y) the amount of interest such Class of Certificates
accrued for such Distribution Date at the Net WAC Rate and (2) the unpaid
portion of any related Net WAC Rate Carryover Amount from the prior Distribution
Date together with interest accrued on such unpaid portion for the most recently
ended Interest Accrual Period at the Pass-Through Rate calculated for such Class
without regard to the Net WAC Rate.

                  "New Lease": Any lease of REO Property entered into on behalf
of the Trust Fund, including any lease renewed or extended on behalf of the
Trust Fund if the Trust Fund has the right to renegotiate the terms of such
lease.

                  "Nonrecoverable Payment Advance": Any Payment Advance
previously made or proposed to be made in respect of a Mortgage Loan or REO
Property that, in the good faith business judgment of the Servicer (or the Trust
Adminstrator or the Trustee, as applicable, if such party is required to make a
Payment Advance pursuant to the terms hereof), as evidenced by an Officers'
Certificate, will not or, in the case of a proposed Payment Advance, would not
be ultimately recoverable from related late payments, Insurance Proceeds or
Liquidation Proceeds on such Mortgage Loan or REO Property as provided herein.

                  "Non-United States Person": Any Person other than a United
States Person.

                  "Officers' Certificate": A certificate signed by the Chairman
of the Board, the Vice Chairman of the Board, the President or a vice president
(however denominated) of the Servicer or the Mortgage Loan Seller, as
applicable.

                  "Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be salaried or in-house counsel for the Depositor or the
Servicer, in such form as is reasonably acceptable to the Trustee and the Trust
Adminstrator, except that any opinion of counsel relating to (a) the
qualification of the Trust REMIC as a REMIC or (b) compliance with the REMIC
Provisions must be an opinion of Independent counsel.

                  "Original Mortgage Loan": Any of the Mortgage Loans included
in the Trust REMIC as of the Closing Date.

                  "Original Scheduled Payment": With respect to any Mortgage
Loan, the scheduled monthly payment of principal and interest on such Mortgage
Loan which was payable by the related Mortgagor under the related Mortgage Note
as originally executed, without modification thereto during any forbearance
period or subsequent to any forbearance period.

<PAGE>

                                      -22-

                  "Overcollateralized Amount": With respect to any Distribution
Date, an amount equal to the excess, if any, of: (1) the aggregate Adjusted
Legal Balance of the Mortgage Loans after taking into account the application of
Modified Scheduled Payments due during the related Due Period, to the extent
received or advanced, and unscheduled collections of principal during the
calendar month preceding the month in which such Distribution Date occurs over
(2) the aggregate Certificate Principal Balance of the Certificates as of such
Distribution Date after giving effect to distributions to be made on such
Distribution Date.

                  "Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.

                  "Pass-Through Rate":  With respect to:

            (i)   the Class A-1 Certificates, for any Distribution Date, the
                  lesser of (A) a fixed rate equal to 5.25% per annum and (B)
                  the Net WAC Rate for such Distribution Date;

           (ii)   the Class M-1 Certificates, for any Distribution Date, the
                  lesser of (A) a fixed rate equal to 6.00% per annum and (B)
                  the Net WAC Rate for such Distribution Date;

          (iii)   the Class M-2 Certificates, for any Distribution Date, the
                  lesser of (A) a fixed rate equal to 6.00% per annum and (B)
                  the Net WAC Rate for such Distribution Date;

           (iv)   the Class M-3 Certificates, for any Distribution Date, the
                  lesser of (A) a fixed rate equal to 6.00% per annum and (B)
                  the Net WAC Rate for such Distribution Date;

            (v)   the Class M-4 Certificates, for any Distribution Date, the
                  lesser of (A) a fixed rate equal to 6.00% per annum and (B)
                  the Net WAC Rate for such Distribution Date;

           (vi)   the Class M-5 Certificates, for any Distribution Date, the
                  lesser of (A) a fixed rate equal to 6.00% per annum and (B)
                  the Net WAC Rate for such Distribution Date; and

          (vii)   the Class M-6 Certificates, for any Distribution Date, the
                  lesser of (A) a fixed rate equal to 6.00% per annum and (B)
                  the Net WAC Rate for such Distribution Date.

                  "Payment Advance": With respect to any Mortgage Loan or REO
Property and any Distribution Date, any advance made by the Servicer pursuant to
Section 4.03 or by the Trust Administrator pursuant to Section 7.02.

                  "Percentage Interest": With respect to any REMIC Regular
Certificate, the undivided percentage ownership in the Class evidenced by such
Certificate, expressed as a percentage, the numerator of which is the initial
Certificate Principal Balance represented by such Certificate and the
denominator of which is the aggregate initial Certificate Principal Balance of
all of the Certificates of such Class. With respect to any Residual Certificate,
the undivided percentage ownership in such Class evidenced by such Certificate,
as set forth on the face of such Residual Certificate. The Residual Certificates
are issuable only in minimum Percentage Interests of 25%.

<PAGE>

                                      -23-

                  "Periodic Rate Cap": With respect to each adjustable-rate
Mortgage Loan and any Adjustment Date therefor, the fixed percentage set forth
in the related Mortgage Note, which is the maximum amount by which the Mortgage
Rate for such Mortgage Loan may increase or decrease (without regard to the
Maximum Mortgage Rate or the Minimum Mortgage Rate) on such Adjustment Date from
the Mortgage Rate in effect immediately prior to such Adjustment Date.

                  "Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
regardless of whether issued by the Depositor, the Servicer, the Trust
Administrator, the Trustee or any of their respective Affiliates:

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

                           (ii) demand and time deposits in, certificates of
         deposit of, or bankers' acceptances issued by, any Depository
         Institution;

                           (iii) repurchase obligations with respect to any
         security described in clause (i) above entered into with a Depository
         Institution (acting as principal);

                           (iv) securities bearing interest or sold at a
         discount that are issued by any corporation incorporated under the laws
         of the United States of America or any State thereof and that are rated
         by each Rating Agency in its highest long-term unsecured rating
         category at the time of such investment or contractual commitment
         providing for such investment;

                           (v) commercial paper (including both
         non-interest-bearing discount obligations and interest-bearing
         obligations payable on demand or on a specified date not more than 30
         days after the date of acquisition thereof) that is rated by each
         Rating Agency in its highest short-term unsecured debt rating category
         at the time of such investment;

                           (vi) units of money market funds that have been rated
         "Aaa" by Moody's and "AAAm" or "AAAm-G" by S&P; and

                           (viii) if previously confirmed in writing to the
         Trustee and the Trust Administrator, any other demand, money market or
         time deposit, or any other obligation, security or investment, as may
         be acceptable to the Rating Agencies as a permitted investment of funds
         backing securities having ratings equivalent to its initial rating of
         the Class A Certificates;

provided that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provide a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations.

<PAGE>

                                      -24-

                  "Permitted Transferee": Any Transferee of a Residual
Certificate other than a Disqualified Organization, a Non-United States Person
or an electing large partnership within the meaning of Section 775 of the Code.

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

                  "Plan": Any employee benefit plan and certain other retirement
plans and arrangements, including individual retirement accounts and annuities,
Keogh plans and bank collective investment funds and insurance company general
or separate accounts in which such plans, accounts or arrangements are invested,
that are subject to the prohibited transaction and fiduciary responsibility
provisions of ERISA and Section 4975 of the Code.

                  "Plurality Residual Certificateholder": As to any taxable year
of the Trust REMIC, the Holder of Certificates evidencing the largest Percentage
Interest in the Residual Certificates.

                  "Prepayment Assumption": For purposes of determining the
accrual of original issue discount, market discount and premium, if any, on the
Certificates for federal income tax purposes, 12% CPR and an Arrearage Repayment
Percentage of 108%. The Constant Prepayment Rate ("CPR") model assumes that the
outstanding principal balance of a pool of mortgage loans prepays at a specified
constant annual rate or CPR (it being understood the "outstanding principal
balance of a pool" shall be deemed, in the case of the Mortgage Loans, to mean
the aggregate outstanding Legal Balance of the Mortgage Loans). The "Arrearage
Repayment Percentage" is an expression of Modified Scheduled Payments as a
percent of Original Scheduled Payments. The Trust Administrator shall perform
all calculations of with respect to the Prepayment Assumption, CPR and the
Arrearage Repayment Percentage in such manner as the Depositor shall direct.

                  "Prepayment Interest Shortfall": With respect to any
Distribution Date, for each Mortgage Loan that was during the related Prepayment
Period the subject of a Principal Prepayment in full or in part that was applied
by the Servicer to reduce the outstanding principal balance of such loan on a
date preceding the Due Date in the succeeding Prepayment Period, an amount equal
to interest at the applicable Net Mortgage Rate on the amount of such Principal
Prepayment for the number of days commencing on the date on which the prepayment
is applied and ending on the last day of the related Prepayment Period. The
obligations of the Servicer in respect of any Prepayment Interest Shortfall are
set forth in Section 3.24.

                  "Prepayment Period": With respect to any Distribution Date,
the immediately preceding calendar month.

                  "Principal and Arrearage Distribution Amount": With respect to
any Distribution Date, an amount equal to the excess of (i) the Principal and
Arrearage Remittance Amount for such Distribution Date over (ii) any Senior
Residual Distribution Amount for such Distribution Date.

<PAGE>

                                      -25-

                  "Principal and Arrearage Remittance Amount": With respect to
any Distribution Date, an amount equal to that portion of Available Funds for
such Distribution Date that represents principal or Arrearage received or
advanced on the Mortgage Loans (other than, in the case of such Arrearage, 8%
thereof reserved to the Servicer).

                  "Principal Prepayment": Any payment of principal and/or
Arrearage made by the Mortgagor on a Mortgage Loan which is received in advance
of its scheduled Due Date and which is not accompanied by an amount of interest
representing the full amount of scheduled interest due on any Due Date in any
month or months subsequent to the month of prepayment.

                  "Private Certificate":  As defined in Section 5.02(b).

                  "Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03, Section
3.16(c) or Section 10.01, and as confirmed by an Officers' Certificate from the
Servicer to the Trustee and the Trust Administrator, an amount equal to the sum
of: (i) 100% of the Legal Balance thereof as of the date of purchase (or such
other price as provided in Section 10.01); (ii) in the case of (x) a Mortgage
Loan, accrued interest on the Unpaid Principal Balance thereof (if such purchase
occurs on or prior to the Legal Balance Interest Date of such Mortgage Loan) or
on the Legal Balance thereof (if such purchase occurs after the Legal Balance
Interest Date of such Mortgage Loan) at the applicable Net Mortgage Rate in
effect from time to time from the Due Date as to which interest was last covered
by a payment by the Mortgagor or an advance by the Servicer, which payment or
advance had as of the date of purchase been distributed pursuant to Section
4.01, through the end of the calendar month in which the purchase is to be
effected, and (y) an REO Property, the sum of (1) accrued interest on the Unpaid
Principal Balance thereof (if such purchase occurs on or prior to the Legal
Balance Interest Date of such Mortgage Loan) or on the Legal Balance thereof (if
such purchase occurs after the Legal Balance Interest Date of such Mortgage
Loan) at the applicable Net Mortgage Rate in effect from time to time from the
Due Date as to which interest was last covered by a payment by the Mortgagor or
an advance by the Servicer through the end of the calendar month immediately
preceding the calendar month in which such REO Property was acquired, plus (2)
REO Imputed Interest for such REO Property for each calendar month commencing
with the calendar month in which such REO Property was acquired and ending with
the calendar month in which such purchase is to be effected, minus the total of
all net rental income, Insurance Proceeds, Liquidation Proceeds and Payment
Advances that had as of the date of purchase been distributed as or to cover REO
Imputed Interest pursuant to Section 4.01; (iii) any unreimbursed Servicing
Advances and Payment Advances and any unpaid Servicing Fees allocable to such
Mortgage Loan or REO Property; (iv) any amounts previously withdrawn from the
Collection Account in respect of such Mortgage Loan or REO Property pursuant to
Section 3.11(a)(ix) and Section 3.16(b); and (v) in the case of a Mortgage Loan
required to be purchased pursuant to Section 2.03, expenses reasonably incurred
or to be incurred by the Servicer, the Trust Administrator or the Trustee in
respect of the breach or defect giving rise to the purchase obligation.

                  "Qualified Substitute Mortgage Loan": A mortgage loan
substituted for a Deleted Mortgage Loan pursuant to the terms of this Agreement
which must, on the date of such substitution, (i) have an outstanding principal
balance, after application of all scheduled payments of principal and

<PAGE>

                                      -26-

interest due in the month of substitution, not in excess of (and not more than
$10,000 less than) the outstanding principal balance, after deduction of all
scheduled payments due as of the date of substitution, of the Deleted Mortgage
Loan, (ii) have a Mortgage Rate not less than (and not more than one percentage
point in excess of) the Mortgage Rate of the Deleted Mortgage Loan, (iii) have a
Net Mortgage Rate not less than (and not more than one percentage point in
excess of) the Net Mortgage Rate of the Deleted Mortgage Loan, (iv) have a
remaining term to maturity not greater than (and not more than one year less
than) that of the Deleted Mortgage Loan, (v) have the same Due Date as the Due
Date on the Deleted Mortgage Loan, (vi) have a Loan-to-Value Ratio as of the
date of substitution equal to or lower than the Loan-to-Value Ratio of the
Deleted Mortgage Loan as of such date, (vii) pay the same or a greater
percentage of its Original Scheduled Payment, (viii) have an Arrearage, if any,
not greater than the Arrearage of the Deleted Mortgage Loan and (ix) conform to
each representation and warranty set forth in the Mortgage Loan Purchase
Agreement applicable to the Deleted Mortgage Loan, and with respect to the
substitution of any adjustable rate Mortgage Loan, such mortgage loan must, (x)
have a Maximum Mortgage Rate not less than the Maximum Mortgage Rate on the
Deleted Mortgage Loan, (xi) have a Minimum Mortgage Rate not less than the
Minimum Mortgage Rate of the Deleted Mortgage Loan, (xii) have a Gross Margin
equal to the Gross Margin of the Deleted Mortgage Loan, (xiii) have the same
Index as the Deleted Mortgage Loan, and (xiv) have a next Adjustment Date not
more than two months later than the next Adjustment Date on the Deleted Mortgage
Loan. In the event that one or more mortgage loans are substituted for one or
more Deleted Mortgage Loans, the amounts described in clause (i) hereof shall be
determined on the basis of aggregate principal balances, the Mortgage Rates
described in clauses (ii), (iii), (x) and (xi) hereof shall be determined on the
basis of weighted average Mortgage Rates, the terms described in clauses (iv),
(xii) and (xiv) hereof shall be determined on the basis of weighted average
remaining term to maturity, weighted average Gross Margins and weighted average
next Adjustment Dates, respectively, the Loan-to-Value Ratios described in
clause (vi) hereof shall be satisfied as to each such mortgage loan and, except
to the extent otherwise provided in this sentence, the representations and
warranties described in clause (viii) hereof must be satisfied as to each
Qualified Substitute Mortgage Loan or in the aggregate, as the case may be.

                  "Rating Agency or Rating Agencies": Moody's and S&P or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Depositor, notice of
which designation shall be given to the Trustee, the Trust Administrator and
Servicer.

                  "Realized Loss": With respect to each Mortgage Loan as to
which a Final Recovery Determination has been made, an amount (not less than
zero) equal to (i) the unpaid Legal Balance of such Mortgage Loan as of the
commencement of the calendar month in which the Final Recovery Determination was
made, plus (ii) accrued and unpaid interest from the Due Date as to which
interest was last paid by the Mortgagor through the end of the calendar month in
which such Final Recovery Determination was made, calculated in the case of each
calendar month during such period (A) at an annual rate equal to the annual rate
at which interest was then accruing on such Mortgage Loan and (B) on a principal
amount equal to the Unpaid Principal Balance (if such Realized Loss occurs on or
prior to the Legal Balance Interest Date of such Mortgage Loan) or on the Legal
Balance thereof (if such Realized Loss occurs after the Legal Balance Interest
Date of such Mortgage Loan) of such Mortgage

<PAGE>

                                      -27-

Loan as of the close of business on the Distribution Date during such calendar
month, plus (iii) any amounts previously withdrawn from the Collection Account
in respect of such Mortgage Loan pursuant to Section 3.11(a)(ix) and Section
3.16(b), minus (iv) the proceeds, if any, received in respect of such Mortgage
Loan during the calendar month in which such Final Recovery Determination was
made, net of amounts that are payable therefrom to the Servicer with respect to
such Mortgage Loan pursuant to Section 3.11(a)(iii).

                  With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
unpaid Legal Balance of the related Mortgage Loan as of the date of acquisition
of such REO Property on behalf of the Trust Fund, plus (ii) accrued and unpaid
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on the related Mortgage Loan and (B) on a principal amount equal to the Unpaid
Principal Balance (if such Realized Loss occurs on or prior to the Legal Balance
Interest Date of such Mortgage Loan) or on the Legal Balance thereof (if such
Realized Loss occurs after the Legal Balance Interest Date of such Mortgage
Loan) of the related Mortgage Loan as of the close of business on the
Distribution Date during such calendar month, plus (iii) REO Imputed Interest
for such REO Property for each calendar month commencing with the calendar month
in which such REO Property was acquired and ending with the calendar month in
which such Final Recovery Determination was made, plus (iv) any amounts
previously withdrawn from the Collection Account in respect of the related
Mortgage Loan pursuant to Section 3.11(a)(ix) and Section 3.16(b), minus (v) the
aggregate of all Payment Advances made by the Servicer in respect of such REO
Property or the related Mortgage Loan for which the Servicer has been or, in
connection with such Final Recovery Determination, will be reimbursed pursuant
to Section 3.23 out of rental income, Insurance Proceeds and Liquidation
Proceeds received in respect of such REO Property, minus (vi) the total of all
net rental income, Insurance Proceeds and Liquidation Proceeds received in
respect of such REO Property that has been, or in connection with such Final
Recovery Determination, will be transferred to the Distribution Account pursuant
to Section 3.23.

                  With respect to each Mortgage Loan which has become the
subject of a Deficient Valuation, the difference between the principal balance
of the Mortgage Loan outstanding immediately prior to such Deficient Valuation
and the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation.

                  With respect to each Mortgage Loan which has become the
subject of a Debt Service Reduction, the portion, if any, of the reduction in
each affected scheduled payment attributable to a reduction in the Mortgage Rate
imposed by a court of competent jurisdiction. Each such Realized Loss shall be
deemed to have been incurred on the Due Date for each affected Modified
Scheduled Payment.

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

<PAGE>

                                      -28-

                  "Regular Interest": A "regular interest" in a REMIC within the
meaning of Section 860G(a)(1) of the Code.

                  "Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.

                  "Relief Act Interest Shortfall": With respect to any
Distribution Date and any Mortgage Loan, any reduction in the amount of interest
collectible on such Mortgage Loan for the most recently ended calendar month as
a result of the application of the Relief Act.

                  "REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.

                  "REMIC Regular Certificate": Any Class A, Class M-1, Class
M-2, Class M-3, Class M-4, Class M-5 or Class M-6 Certificate.

                  "REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G of the Code, and related provisions, and proposed, temporary
and final regulations and published rulings, notices and announcements
promulgated thereunder, as the foregoing may be in effect from time to time.

                  "Remittance Report": A report in form and substance acceptable
to the Trust Administrator on an electronic data file or tape prepared by the
Servicer pursuant to Section 4.03 with such additions, deletions and
modifications as agreed to by the Trust Administrator and the Servicer.

                  "Rents from Real Property": With respect to any REO Property,
gross income of the character described in Section 856(d) of the Code as being
included in the term "rents from real property."

                  "REO Account": The account or accounts maintained by the
Servicer in respect of an REO Property pursuant to Section 3.23.

                  "REO Disposition": The sale or other disposition of an REO
Property on behalf of the Trust Fund.

                  "REO Imputed Interest": As to any REO Property, for any
calendar month during which such REO Property was at any time part of the Trust
Fund, one month's interest at the applicable Net Mortgage Rate on the Unpaid
Principal Balance of such REO Property (or, in the case of the first such
calendar month, of the related Mortgage Loan if appropriate) as of the close of
business on the Distribution Date in such calendar month.

                  "REO Principal Amortization": With respect to any REO
Property, for any calendar month, the excess, if any, of (a) the aggregate of
all amounts received in respect of such REO Property during such calendar month,
whether in the form of rental income, sale proceeds (including, without
limitation, that portion of the Termination Price paid in connection with a
purchase of all of the

<PAGE>

                                      -29-

Mortgage Loans and REO Properties pursuant to Section 10.01 that is allocable to
such REO Property) or otherwise, net of any portion of such amounts (i) payable
pursuant to Section 3.23(c) in respect of the proper operation, management and
maintenance of such REO Property or (ii) payable or reimbursable to the Servicer
pursuant to Section 3.23(d) for unpaid Servicing Fees in respect of the related
Mortgage Loan and unreimbursed Servicing Advances and Payment Advances in
respect of such REO Property or the related Mortgage Loan, over (b) the REO
Imputed Interest in respect of such REO Property for such calendar month.

                  "REO Property": A Mortgaged Property acquired by the Servicer
on behalf of the Trust Fund through foreclosure or deed-in-lieu of foreclosure,
as described in Section 3.23.

                  "Request for Release": A release signed by a Servicing
Officer, in the form of Exhibit E attached hereto.

                  "Reserve Fund": The account established on the Closing Date by
the Trust Administrator pursuant to Section 3.27.

                  "Residential Dwelling": Any one of the following: (i) a
detached one-family dwelling, (ii) a detached two- to four-family dwelling,
(iii) a one-family dwelling unit in a FNMA eligible condominium project, or (iv)
a detached one-family dwelling in a planned unit development, none of which is a
co-operative, mobile or manufactured home (as defined in 42 United States Code,
Section 5402(6)).

                  "Residual Certificate":  A Class R Certificate.

                  "Residual Interest": The sole class of "residual interests" in
a REMIC within the meaning of Section 860G(a)(2) of the Code.

                  "Responsible Officer": When used with respect to the Trustee
or the Trust Administrator, the Chairman or Vice Chairman of the Board of
Directors or Trustees, the Chairman or Vice Chairman of the Executive or
Standing Committee of the Board of Directors or Trustees, the President, the
Chairman of the Committee on Trust Matters, any vice president, any assistant
vice president, the Secretary, any assistant secretary, the Treasurer, any
assistant treasurer, the Cashier, any assistant cashier, any trust officer or
assistant trust officer, the Controller and any assistant controller or any
other officer of the Trustee or the Trust Administrator, as the case may be,
directly responsible for performing functions similar to those performed by any
of the above designated officers and, with respect to a particular matter, to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.

                  "S&P": Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or its successor in interest.

                  "Senior Residual Distribution Amount": With respect to any
Distribution Date, the lesser of (i) the aggregate amount of Net WAC Rate
Carryover Amounts payable to the holders of the

<PAGE>

                                      -30-

REMIC Regular Certificates for such Distribution Date and (ii) the sum of (A)
the amount of excess interest remaining after the distributions made pursuant to
Section 4.01(a) and (B) the lesser of (x) the Principal and Arrearage Remittance
Amount and (y) the sum of the amount of any Realized Losses to be allocated on
such Distribution Date and the Overcollateralized Amount for such Distribution
Date.

                  "Servicer": Litton Loan Servicing LP, a Delaware limited
partnership, or any successor servicer appointed as herein provided, in its
capacity as Servicer hereunder.

                  "Servicer Event of Default": One or more of the events
described in Section 7.01.

                  "Servicer Remittance Date": With respect to any Distribution
Date, 3:00 p.m., New York time, on the Business Day immediately preceding such
Distribution Date.

                  "Servicing Account": The account or accounts created and
maintained pursuant to Section 3.09.

                  "Servicing Advances": The reasonable "out-of-pocket" costs and
expenses incurred by the Servicer in connection with a default, delinquency or
other unanticipated event by the Servicer in the performance of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of a Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, in respect of a particular
Mortgage Loan, (iii) the management (including reasonable fees in connection
therewith) and liquidation of any REO Property, and (iv) the performance of its
obligations under Section 3.01, Section 3.09, Section 3.14, Section 3.16 and
Section 3.23 (in the case of Section 3.23, including but not limited to the cost
of obtaining any Opinion of Counsel of the kind described in Section 3.23(a)).
The Servicer shall not be required to make any Servicing Advance in respect of a
Mortgage Loan or REO Property that, in the good faith business judgment of the
Servicer, would not be ultimately recoverable from related Insurance Proceeds,
Late Collections or Liquidation Proceeds on such Mortgage Loan or REO Property
as provided herein.

                  "Servicing Fee": For any calendar month, with respect to each
Mortgage Loan and any REO Properties during such calendar month, an amount equal
to one month's interest (or, in the event of any payment of interest which
accompanies a Principal Prepayment in full made by the Mortgagor during such
calendar month, interest for the number of days covered by such payment of
interest) on the Unpaid Principal Balance of such Mortgage Loan (and any REO
Properties) at the applicable Servicing Fee Rate accrued on the basis of a
360-day year of twelve 30-day months.

                  "Servicing Fee Rate": 0.60% per annum with respect to the
Unpaid Principal Balance of each Mortgage Loan (or related REO Property).

                  "Servicing Officer": Any officer of the Servicer involved in,
or responsible for, the administration and servicing of Mortgage Loans, whose
name and specimen signature appear on a list of servicing officers furnished by
the Servicer to the Trust Administrator, the Trustee and the Depositor on the
Closing Date, as such list may from time to time be amended.

<PAGE>

                                      -31-

                  "Servicing Rights Pledgee": One or more lenders, selected by
the Servicer, to which the Servicer will pledge and assign all of its right,
title and interest in, to and under this Agreement, including First Union
National Bank, as the representative of certain lenders.

                  "Single Certificate": With respect to any Class of
Certificates (other than the Residual Certificates), a hypothetical Certificate
of such Class evidencing a Percentage Interest for such Class corresponding to
an initial Certificate Principal Balance of $1,000. With respect to the Residual
Certificates, a hypothetical Certificate of such Class evidencing a 100%
Percentage Interest in such Class.

                  "Startup Day": The day designated as such pursuant to Section
11.01(c) hereof.

                  "Stayed Funds":  As defined in Section 7.02(b).

                  "Stepdown Date": The earlier to occur of (i) the reduction of
the Certificate Principal Balance of the Class A Certificates to zero and (ii)
the later to occur of: (1) the Distribution Date occurring in December 2006 and
(2) the first Distribution Date on which the percentage obtained by dividing (x)
the sum of the Overcollateralized Amount and the aggregate Certificate Principal
Balance of the Class M Certificates immediately prior to such Distribution Date
by (y) the aggregate Adjusted Legal Balance of the Mortgage Loans as of the last
day of the related Due Period, is greater than or equal to 60.00%.

                  "Sub-Servicer": Any Person with which the Servicer has entered
into a Sub-Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.

                  "Sub-Servicing Account": An account established by a
Sub-Servicer which meets the requirements set forth in Section 3.08 and is
otherwise acceptable to the Servicer.

                  "Sub-Servicing Agreement": The written contract between the
Servicer and a Sub- Servicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 3.02.

                  "Tax Returns": The federal income tax return on Internal
Revenue Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income
Tax Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the Trust Fund due to its classification as a REMIC
under the REMIC Provisions, together with any and all other information reports
or returns that may be required to be furnished to the Certificateholders or
filed with the Internal Revenue Service or any other governmental taxing
authority under any applicable provisions of federal, state or local tax laws.

                  "Termination Price":  As defined in Section 10.01.

                  "Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.

<PAGE>

                                      -32-

                  "Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.

                  "Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.

                  "Trigger Event": With respect to any Distribution Date, a
Trigger Event is in effect if (i) the Delinquency Rate for such Distribution
Date as of the last day of the calendar month preceding such Distribution Date
equals or exceeds approximately 18.00% or (ii) the Cumulative Loss Limit is
exceeded for such distribution date.

                  "Trust Administrator": Citibank, N.A., its successor in
interest, or any successor trust administrator appointed as herein provided.

                  "Trust Fund": Collectively, all of the assets of the Trust
REMIC and the Reserve Fund.

                  "Trust REMIC": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
with respect to which a REMIC election is to be made, consisting of: (i) such
Mortgage Loans as from time to time are subject to this Agreement, together with
the Mortgage Files relating thereto, and together with all collections thereon
and proceeds thereof, (ii) any REO Property, together with all collections
thereon and proceeds thereof, (iii) the Trustee's rights with respect to the
Mortgage Loans under all insurance policies required to be maintained pursuant
to this Agreement and any proceeds thereof, (iv) the Depositor's rights under
the Mortgage Loan Purchase Agreement (including any security interests created
thereby) and (v) the Collection Account, the Distribution Account, any REO
Account and the Expense Account and such assets that are deposited therein from
time to time and any investments thereof, together with any and all income,
proceeds and payments with respect thereto. Notwithstanding the foregoing,
however, the Trust REMIC specifically excludes (A) all payments and other
collections of principal received on the Mortgage Loans on or before the Cut-off
Date and (B) the Reserve Fund.

                  "Trustee": JPMorgan Chase Bank, its successor in interest, or
any successor trustee appointed as herein provided.

                  "Uninsured Cause": Any cause of damage to a Mortgaged Property
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies required to be maintained pursuant to Section
3.14.

                  "United States Person": A citizen or resident of the United
States, a corporation or a partnership (including an entity treated as a
corporation or partnership for United States federal income tax purposes)
created or organized in, or under the laws of, the United States or any State
thereof or the District of Columbia (except, in the case of a partnership, to
the extent provided in regulations) provided that, for purposes solely of the
restrictions on the transfer of Class R Certificates, no partnership or other
entity treated as a partnership for United States federal income tax purposes
shall be treated as a United States Person unless all persons that own an
interest in such partnership either

<PAGE>

                                      -33-

directly or through any entity that is not a corporation for United States
federal income tax purposes are required by the applicable operative agreement
to be United States Persons, or an estate whose income is subject to United
States federal income tax regardless of its source, or 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 such United States Persons have the
authority to control all substantial decisions of the trust. To the extent
prescribed in regulations by the Secretary of the Treasury, which have not yet
been issued, a trust which was in existence on August 20, 1996, (other than a
trust treated as owned by the grantor under subpart E of part I of subchapter J
of chapter 1 of the Code), and which was treated as a United States person on
August 20, 1996 may elect to continue to be treated as a United States person
notwithstanding the previous sentence.

                  "Unpaid Principal Balance": With respect to any Mortgage Loan:
(a) as of any date of determination up to but not including the Distribution
Date on which the proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan would be distributed, the principal balance of such Mortgage Loan
as of the Cut-off Date, as shown in the Mortgage Loan Schedule, minus the sum
(excluding any amounts allocable to Arrearage) of (i) the principal portion of
each Modified Scheduled Payment due on a Due Date subsequent to the Cut-off
Date, to the extent received from the Mortgagor or advanced by the Servicer or
the Trust Administrator pursuant to Section 4.03 and Section 7.02, respectively,
and distributed pursuant to Section 4.01 on or before such date of
determination, (ii) all Principal Prepayments received after the Cut-off Date,
to the extent distributed pursuant to Section 4.01 on or before such date of
determination, (iii) all Liquidation Proceeds and Insurance Proceeds applied by
the Servicer as recoveries of principal in accordance with the provisions of
Section 3.16(d), to the extent distributed pursuant to Section 4.01 on or before
such date of determination, and (iv) any Realized Loss incurred with respect
thereto as a result of a Deficient Valuation made during or prior to the
Prepayment Period for the most recent Distribution Date coinciding with or
preceding such date of determination; and (b) as of any date of determination
coinciding with or subsequent to the Distribution Date on which the proceeds, if
any, of a Liquidation Event with respect to such Mortgage Loan would be
distributed, zero. With respect to any REO Property: (a) as of any date of
determination up to but not including the Distribution Date on which the
proceeds, if any, of a Liquidation Event with respect to such REO Property would
be distributed, an amount (not less than zero) equal to the Unpaid Principal
Balance of the related Mortgage Loan as of the date on which such REO Property
was acquired on behalf of the Trust Fund, minus the sum of (i) if such REO
Property was acquired before the Distribution Date in any calendar month, the
principal portion of the Modified Scheduled Payment due on the Due Date in the
calendar month of acquisition, to the extent advanced by the Servicer, the Trust
Administrator or the Trustee pursuant to Section 4.03 or Section 7.02 and
distributed pursuant to Section 4.01 on or before such date of determination,
and (ii) the aggregate amount of REO Principal Amortization in respect of such
REO Property for all previously ended calendar months, to the extent distributed
pursuant to Section 4.01 on or before such date of determination; and (b) as of
any date of determination coinciding with or subsequent to the Distribution Date
on which the proceeds, if any, of a Liquidation Event with respect to such REO
Property would be distributed, zero.

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

<PAGE>

                                      -34-

                  "VA Approved Lender": Those institutions which are approved by
the VA to act as servicer and mortgagee of record pursuant to VA Regulations.

                  "VA Regulations": Any and all regulations promulgated by the
VA under the Servicemen's Readjustment Act of 1944, as amended.

                  "Value": With respect to any Mortgaged Property, the value
thereof as determined by a BPO obtained by the Mortgage Loan Seller or HUD.

                  "Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any Certificate. With respect to any date
of determination, (i) 99% of all the Voting Rights shall be allocated among the
holders of the REMIC Regular Certificates on a PRO RATA basis based on the then
current Certificate Principal Balances of their respective Certificates, and
(ii) 1% of all the Voting Rights shall be allocated among the holders of the
Residual Certificates.

                  SECTION 1.02.             Allocation of Certain Interest
                                            Shortfalls.

                  For purposes of calculating the amount of Accrued Certificate
Interest and the amount of the Interest Distribution Amount for each Class of
REMIC Regular Certificates for any Distribution Date, the aggregate amount of
any Prepayment Interest Shortfalls (to the extent not covered by payments by the
Servicer pursuant to Section 3.24) and any Relief Act Interest Shortfalls
incurred in respect of the Mortgage Loans for any Distribution Date shall be
allocated among such REMIC Regular Certificates on a PRO RATA basis based on,
and to the extent of, one month's interest at the then applicable respective
Pass-Through Rate on the respective Certificate Principal Balance of each such
Certificate.

                  SECTION 1.03.             Rules of Construction Regarding the
                                            Bankruptcy Mortgage Loans.

                  For purposes of the calculation of the Unpaid Principal
Balances of the Mortgage Loans, the conveyance of Mortgage Loans to the Trust,
the servicing of the Mortgage Loans, the calculation of Payment Advances to be
made by the Servicer and for purposes of other calculations herein, the Trust
will be entitled to a Modified Scheduled Payment on each Bankruptcy Mortgage
Loan for each month commencing in January 2002 (regardless of whether such
Modified Scheduled Payment was due for an earlier month). Accordingly, the next
Modified Scheduled Payment due on each Bankruptcy Mortgage Loan as of the
Cut-off Date shall be considered due for the Due Period that ends on the Cut-
off Date (regardless of whether such Modified Scheduled Payment was due for an
earlier month), and the next succeeding Modified Scheduled Payment due on such
Bankruptcy Mortgage Loan shall be considered due for the Due Period commencing
on the day following the Cut-off Date and shall be the property of the Trust,
and each succeeding Modified Scheduled Payment due thereafter shall be
considered shall due for each succeeding Due Period thereafter and shall be the
property of the Trust.

<PAGE>

                                      -35-

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

                  SECTION 2.01.             Conveyance of Mortgage Loans.

                  The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse for the benefit of the Certificateholders all the
right, title and interest of the Depositor, including any security interest
therein for the benefit of the Depositor, in and to the Mortgage Loans
identified on the Mortgage Loan Schedule, the rights of the Depositor under the
Mortgage Loan Purchase Agreement, and all other assets included or to be
included in the Trust Fund. Such assignment includes all interest due and
principal and Arrearage received by the Depositor or the Servicer on or with
respect to the Mortgage Loans after the Cut-off Date.

                  In connection with such transfer and assignment, the Depositor
does hereby deliver to, and deposit with, the Trustee or a Custodian on its
behalf the following documents or instruments with respect to each Mortgage Loan
(a "Mortgage File") so transferred and assigned:

                         (i) the original Mortgage Note, endorsed in blank or in
                  the following form: "Pay to the order of JPMorgan Chase Bank,
                  as Trustee for registered holders of Salomon Brothers Mortgage
                  Securities VII, Inc., Mortgage Pass-Through Certificates,
                  Series 2001-2, without recourse," with all prior and
                  intervening endorsements showing a complete chain of
                  endorsement from the originator to the Person so endorsing to
                  the Trustee;

                        (ii) the original Mortgage with evidence of recording
                  thereon, and the original recorded power of attorney, if the
                  Mortgage was executed pursuant to a power of attorney, with
                  evidence of recording thereon;

                       (iii) an original Assignment of the Mortgage in blank or
                  executed in the following form: "JPMorgan Chase Bank, as
                  Trustee for registered holders of Salomon Brothers Mortgage
                  Securities VII, Inc., Mortgage Pass-Through Certificates,
                  Series 2001-2";

                        (iv) the original recorded Assignment or Assignments of
                  the Mortgage showing a complete chain of assignment from the
                  originator to the Person assigning the Mortgage to the Trustee
                  as contemplated by the immediately preceding clause (iii);

                       (v) the original or copies of each assumption,
                  modification, written assurance or substitution agreement, if
                  any; and

<PAGE>

                                      -36-

                        (vi) the original or copies of each lender's title
                  insurance policy, certificate of insurance or binder, or a
                  copy of the title insurance policy or certificate of insurance
                  certified by the applicable title insurer to be a true copy.

                  The Servicer shall promptly submit or cause to be submitted
for recording, at the Mortgage Loan Seller's expense pursuant to the Mortgage
Loan Purchase Agreement but at no expense to the Trust Fund, the Custodian, the
Trustee or the Trust Administrator, in the appropriate public office for real
property records, each Assignment referred to in Sections 2.01(iii) and (iv)
above. In the event that any such Assignment is lost or returned unrecorded
because of a defect therein, the Servicer shall promptly prepare or cause to be
prepared a substitute Assignment or cure or cause to be cured such defect, as
the case may be, and thereafter cause each such Assignment to be duly recorded.
If the Mortgage Loan Seller is unable to pay the cost of recording the
Assignments, such expense will be paid by the Trust Administrator and shall be
reimbursable to the Trust Administrator as an Extraordinary Trust Fund Expense.

                  If any original Mortgage Note referred to in Section 2.01(i)
cannot be located, the obligations of the Depositor to deliver such documents
shall be deemed to be satisfied upon delivery to the Trustee or a Custodian on
its behalf of a photocopy of the original of such Mortgage Note, if available,
with a lost note affidavit to follow within five Business Days. If any of the
documents referred to in Sections 2.01(ii), (iii) or (iv) above has as of the
Closing Date been submitted for recording but either (x) has not been returned
from the applicable public recording office or (y) has been lost or such public
recording office has retained the original of such document, the obligations of
the Depositor to deliver such documents shall be deemed to be satisfied upon (1)
delivery to the Trustee or a Custodian on its behalf of a copy of each such
document certified by the Mortgage Loan Seller in the case of (x) above or the
applicable public recording office in the case of (y) above to be a true and
complete copy of the original that was submitted for recording and (2) if such
copy is certified by the Mortgage Loan Seller, delivery to the Trustee or a
Custodian on its behalf promptly upon receipt thereof of either the original or
a copy of such document certified by the applicable public recording office to
be a true and complete copy of the original. Notice shall be provided to the
Trustee, the Trust Administrator, any Custodian and the Rating Agencies by the
Mortgage Loan Seller if delivery pursuant to clause (2) above will be made more
than 180 days after the Closing Date. The Depositor shall deliver or cause to be
delivered to the Trustee or a Custodian on its behalf promptly upon receipt
thereof any other original documents constituting a part of a Mortgage File
received with respect to any Mortgage Loan, including, but not limited to, any
original documents evidencing an assumption or modification of any Mortgage
Loan.

                  All original documents relating to the Mortgage Loans that are
not delivered to the Trustee or a Custodian on its behalf are and shall be held
by or on behalf of the Mortgage Loan Seller, the Depositor or the Servicer, as
the case may be, in trust for the benefit of the Trustee on behalf of the
Certificateholders. In the event that any such original document is required
pursuant to the terms of this Section to be a part of a Mortgage File, such
document shall be delivered promptly to the Trustee or a Custodian on its
behalf. Any such original document delivered to or held by the Depositor that is
not required pursuant to the terms of this Section to be a part of a Mortgage
File, shall be delivered promptly to the Servicer.

<PAGE>

                                      -37-

                  The Depositor herewith delivers to the Trustee, the Trust
Administrator, the Servicer and the initial Custodian an executed copy of the
Mortgage Loan Purchase Agreement.

                  SECTION 2.02.             Acceptance of the Trust REMIC by
                                            Trustee.

                  Subject to the provisions of Section 2.01 and subject to any
exceptions noted on the exception report described in the next paragraph below,
the Trustee acknowledges receipt by it, or a Custodian on its behalf, of the
Mortgage Files (other than such documents described in Section 2.01(vi)) above
and all other assets included in the definition of the "Trust REMIC" under
clauses (i), (iii), (iv) and (v) (to the extent of amounts deposited into the
Distribution Account) and declares that it holds and will hold such documents
and the other documents delivered to it constituting a Mortgage File, and all
such assets and such other assets included in the definition of the "Trust
REMIC," and all other assets of the Trust Fund, in trust for the exclusive use
and benefit of all present and future Certificateholders.

                  The Trustee or a Custodian on its behalf agrees, for the
benefit of the Certificateholders, to review each Mortgage File on or before the
Closing Date and to certify in substantially the form attached hereto as Exhibit
C-1 that, as to each Mortgage Loan listed in the Mortgage Loan Schedule (other
than any Mortgage Loan paid in full or any Mortgage Loan specifically identified
in the exception report annexed thereto as not being covered by such
certification), (i) the Mortgage Note included in each Mortgage File required to
be delivered to it pursuant to this Agreement is in its possession and (ii) such
Mortgage Note has been reviewed by it and appears regular on its face and
relates to such Mortgage Loan. It is herein acknowledged that, in conducting
such review, the Trustee or any Custodian on its behalf is under no duty or
obligation (i) to inspect, review or examine any such documents, instruments,
certificates or other papers to determine that they are valid, legal, genuine,
enforceable, in recordable form 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 (ii) to determine whether any Mortgage File
should include any of the documents specified in clauses (ii) through (vi) of
Section 2.01.

                  Prior to the first anniversary date of this Agreement the
Trustee shall deliver to the Depositor, the Trust Administrator and the Servicer
a final certification in the form annexed hereto as Exhibit C-2 evidencing the
completeness of the Mortgage Files, with any applicable exceptions noted
thereon.

                  If while in the process of reviewing the Mortgage Files and
making or preparing, as the case may be, the certifications referred to above,
the Trustee or a Custodian on its behalf finds any document or documents
constituting a part of a Mortgage File to be missing or defective in any
material respect, at the conclusion of its review the Trustee shall so notify
(or cause a Custodian on its behalf to so notify) the Depositor, the Trust
Administrator and the Servicer.

                  The Trustee or a Custodian on its behalf shall, at the written
request and expense of any Certificateholder, provide a written report to such
Certificateholder of all Mortgage Files released by the Trustee or the Custodian
to the Servicer for servicing purposes.

<PAGE>

                                      -38-

                  SECTION 2.03.             Cure of Breaches; Repurchase or
                                            Substitution of Mortgage Loans.

                  (a) Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File, the
lack of which materially and adversely affects the value of such Mortgage Loan,
or of the breach by the Mortgage Loan Seller of any representation, warranty or
covenant under the Mortgage Loan Purchase Agreement in respect of any Mortgage
Loan which materially and adversely affects the value of such Mortgage Loan or
the interest therein of the Certificateholders, the party discovering such fact
shall promptly give written notice thereof to the other parties hereto. The
Servicer shall promptly notify the Mortgage Loan Seller of such defective or
missing document or breach and request that the Mortgage Loan Seller deliver
such missing document or cure such defect or breach within 60 days from the date
the Mortgage Loan Seller was notified of such defective or missing document. If
the Mortgage Loan Seller does not deliver such missing document or cure such
defect or breach in all material respects during such period, the Servicer (or,
in accordance with Section 3.02(b), the Trustee or Trust Administrator) shall
enforce the Mortgage Loan Seller's obligation under the Mortgage Loan Purchase
Agreement (i) with respect to any such breach that could not reasonably have
been cured within such 60 day period, if the Mortgage Loan Seller shall have
commenced to cure such breach within such 60 day period, to proceed thereafter
diligently and expeditiously to cure the same within the additional period
provided under the Mortgage Loan Purchase Agreement and (ii) with respect to any
such breach (subject to clause (i) above) or any such defective or missing
document, to repurchase such Mortgage Loan from the Trust Fund at the Purchase
Price within 120 days after the date on which the Mortgage Loan Seller was
notified (subject to Section 2.03(e)) of such defective or missing document or
breach, if and to the extent that the Mortgage Loan Seller is obligated to do so
under the Mortgage Loan Purchase Agreement. The Purchase Price for the
repurchased Mortgage Loan shall be deposited in the Collection Account and the
Trustee or a Custodian on its behalf, upon receipt of written certification from
the Servicer of such deposit, shall release to the Mortgage Loan Seller the
related Mortgage File and shall execute and deliver such instruments of transfer
or assignment, in each case without recourse, as the Mortgage Loan Seller shall
furnish to it and as shall be necessary to vest in the Mortgage Loan Seller any
Mortgage Loan released pursuant hereto, and neither the Trustee nor the Trust
Administrator shall have any further responsibility with regard to the related
Mortgage File. In lieu of repurchasing any such Mortgage Loan as set forth
above, as provided in the Mortgage Loan Purchase Agreement, the Mortgage Loan
Seller may cause such Mortgage Loan to be removed from the Trust Fund (in which
case it shall become a Deleted Mortgage Loan) and substitute one or more
Qualified Substitute Mortgage Loans in the manner and subject to the limitations
set forth in Section 2.03(d). It is understood and agreed that the obligation of
the Mortgage Loan Seller to cure or to repurchase (or to substitute for) any
Mortgage Loan as to which a document is missing, a material defect in a
constituent document exists or as to which such a breach has occurred and is
continuing shall constitute the sole remedy respecting such omission, defect or
breach available to the Trustee on behalf of the Certificateholders.

                  (b) Within 90 days of the earlier of discovery by the
Depositor or receipt of notice by the Depositor of the breach of any
representation or warranty of the Depositor set forth in Section 2.04 which
materially adversely affects the interest of the Certificateholders in any
Mortgage Loan, the Depositor shall cure such breach in all material respects.

<PAGE>

                                      -39-

                  (c) Within 90 days of the earlier of discovery by the Servicer
or receipt of notice by the Servicer of the breach of any representation,
warranty or covenant of the Servicer set forth in Section 2.06 which materially
and adversely affects the interests of the Certificateholders in any Mortgage
Loan, the Servicer shall cure such breach in all material respects.

                  (d) Any substitution of Qualified Substitute Mortgage Loans
for Deleted Mortgage Loans made pursuant to Section 2.03(a) by the Mortgage Loan
Seller must be effected within two years after the Startup Day for the Trust
Fund.

                  As to any Deleted Mortgage Loan for which the Mortgage Loan
Seller substitutes a Qualified Substitute Mortgage Loan or Loans, such
substitution shall be effected by the Mortgage Loan Seller delivering to the
Trustee, with respect to each such Qualified Substitute Mortgage Loan or Loans,
the Mortgage Note, the Mortgage, the Assignment to the Trustee, and such other
documents and agreements, with all necessary prior and other endorsements
thereon, as are required by Section 2.01, together with an Officers' Certificate
providing that each such Qualified Substitute Mortgage Loan satisfies the
definition thereof and specifying the Substitution Shortfall Amount (as
described below), if any, in connection with such substitution. The Trustee or a
Custodian on its behalf shall acknowledge receipt of such Qualified Substitute
Mortgage Loan or Loans and, within ten Business Days thereafter, review such
documents as specified in Section 2.02 and deliver to the Depositor and the
Servicer, with respect to such Qualified Substitute Mortgage Loan or Loans, a
certification substantially in the form attached hereto as Exhibit C-1, with any
applicable exceptions noted thereon. Within one year of the date of
substitution, the Trustee or a Custodian on its behalf shall deliver to the
Depositor, the Trust Administrator and the Servicer a certification
substantially in the form of Exhibit C-2 hereto with respect to such Qualified
Substitute Mortgage Loan or Loans, with any applicable exceptions noted thereon.
Modified Scheduled Payments due with respect to Qualified Substitute Mortgage
Loans in the month of substitution are not part of the Trust Fund and will be
retained by the Mortgage Loan Seller. For the month of substitution,
distributions to Certificateholders will reflect the Modified Scheduled Payment
due on such Deleted Mortgage Loan on or before the Due Date in the month of
substitution, and the Mortgage Loan Seller shall thereafter be entitled to
retain all amounts subsequently received in respect of such Deleted Mortgage
Loan. The Depositor shall give or cause to be given written notice to the
Certificateholders that such substitution has taken place, shall amend the
Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan from
the terms of this Agreement and the substitution of the Qualified Substitute
Mortgage Loan or Loans and shall deliver a copy of such amended Mortgage Loan
Schedule to the Trustee and the Trust Administrator. Upon such substitution,
such Qualified Substitute Mortgage Loan or Loans shall constitute part of the
Mortgage Pool and shall be subject in all respects to the terms of this
Agreement and the Mortgage Loan Purchase Agreement, including as of the date of
substitution all applicable representations and warranties of the Mortgage Loan
Seller under the Mortgage Loan Purchase Agreement.

                  For any month in which the Mortgage Loan Seller substitutes
one or more Qualified Substitute Mortgage Loans for one or more Deleted Mortgage
Loans, the Servicer will determine the amount (the "Substitution Shortfall
Amount"), if any, by which the aggregate Purchase Price of all such Deleted
Mortgage Loans exceeds the aggregate of the Legal Balance of each such Qualified
Substitute Mortgage Loan as of the date of substitution, together with one
month's interest on the related Unpaid

<PAGE>

                                      -40-

Principal Balance of each such Qualified Substitute Mortgage Loan at the
applicable Mortgage Rate. On the date of such substitution, pursuant to the
terms of the Mortgage Loan Purchase Agreement, the Mortgage Loan Seller will
deliver or cause to be delivered to the Servicer for deposit in the Collection
Account an amount equal to the Substitution Shortfall Amount, if any, and the
Trustee, upon receipt of the related Qualified Substitute Mortgage Loan or Loans
and certification by the Servicer of such deposit, shall release, or cause any
Custodian to release on its behalf, to the Mortgage Loan Seller the related
Mortgage File or Files and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as the Mortgage Loan
Seller shall deliver to it and as shall be necessary to vest therein any Deleted
Mortgage Loan released pursuant hereto.

                  In addition, pursuant to the Mortgage Loan Purchase Agreement,
the Mortgage Loan Seller shall obtain at its own expense and deliver to the
Trustee and the Trust Administrator an Opinion of Counsel to the effect that
such substitution will not cause (a) any federal tax to be imposed on the Trust
Fund, including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code, or (b) the Trust REMIC
to fail to qualify as a REMIC at any time that any Certificate is outstanding.

                  (e) Upon discovery by the Depositor, the Mortgage Loan Seller,
the Servicer, any Custodian, the Trust Administrator or the Trustee that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning of
Section 860G(a)(3) of the Code, the party discovering such fact shall within two
Business Days give written notice thereof to the other parties hereto and the
Mortgage Loan Seller. In connection therewith, pursuant to the Mortgage Loan
Purchase Agreement, the Mortgage Loan Seller shall repurchase or, subject to the
limitations set forth in Section 2.03(d), substitute one or more Qualified
Substitute Mortgage Loans for the affected Mortgage Loan within 90 days of the
earlier of discovery or receipt of such notice with respect to such affected
Mortgage Loan. Any such repurchase or substitution shall be made in the same
manner as set forth in Section 2.03(a) and Section 2.03(d), respectively. The
Trustee and the Trust Administrator shall reconvey to the Mortgage Loan Seller
the Mortgage Loan to be released pursuant hereto in the same manner, and on the
same terms and conditions, as it would a Mortgage Loan repurchased for breach of
a representation or warranty.

                  SECTION 2.04.             Representations and Warranties of
                                            the Depositor.

                  (a) The Depositor hereby represents and warrants to the Trust
Administrator and the Trustee for the benefit of each of the Trustee, the Trust
Administrator, the Certificateholders and the Servicer that as of the Closing
Date or as of such other date specifically provided herein:

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

                        (ii) The execution and delivery of this Agreement by the
                  Depositor, and the performance and compliance with the terms
                  of this Agreement by the Depositor, will not violate the
                  Depositor's certificate of incorporation or by-laws or
                  constitute a default

<PAGE>

                                      -41-

                  (or an event which, with notice or lapse of time, or both,
                  would constitute a default) under, or result in the breach of,
                  any material agreement or other instrument to which it is a
                  party or which is applicable to it or any of its assets.

                       (iii) The Depositor has the full power and authority to
                  enter into and consummate all transactions contemplated by
                  this Agreement, has duly authorized the execution, delivery
                  and performance of this Agreement, and has duly executed and
                  delivered this Agreement.

                        (iv) This Agreement, assuming due authorization,
                  execution and delivery by each of the other parties hereto,
                  constitutes a valid, legal and binding obligation of the
                  Depositor, enforceable against the Depositor in accordance
                  with the terms hereof, subject to (A) applicable bankruptcy,
                  insolvency, reorganization, moratorium and other laws
                  affecting the enforcement of creditors' rights generally, and
                  (B) general principles of equity, regardless of whether such
                  enforcement is considered in a proceeding in equity or at law.

                         (v) The Depositor is not in violation of, and its
                  execution and delivery of this Agreement and its performance
                  and compliance with the terms of this Agreement will not
                  constitute a violation of, any law, any order or decree of any
                  court or arbiter, or any order, regulation or demand of any
                  federal, state or local governmental or regulatory authority,
                  which violation, in the Depositor's good faith and reasonable
                  judgment, is likely to affect materially and adversely either
                  the ability of the Depositor to perform its obligations under
                  this Agreement or the financial condition of the Depositor.

                        (vi) The transfer of the Mortgage Loans to the Trust
                  Fund as contemplated herein requires no regulatory approval,
                  other than any such approvals as have been obtained, and is
                  not subject to any bulk transfer or similar law in effect in
                  any applicable jurisdiction.

                       (vii) No litigation is pending or, to the best of the
                  Depositor's knowledge, threatened against the Depositor that,
                  if determined adversely to the Depositor, would prohibit the
                  Depositor from entering into this Agreement or, in the
                  Depositor's good faith and reasonable judgment, is likely to
                  materially and adversely affect either the ability of the
                  Depositor to perform its obligations under this Agreement or
                  the financial condition of the Depositor.

                      (viii) Immediately prior to the transfer of the Mortgage
                  Loans to the Trust Fund pursuant to this Agreement, (A) the
                  Depositor has marketable title to, and is the sole owner and
                  holder of, each Mortgage Loan, and (B) the Depositor has full
                  right and authority to sell, assign and transfer the Mortgage
                  Loans.

<PAGE>

                                      -42-

                        (ix) The Depositor is transferring the Mortgage Loans to
                  the Trust Fund free and clear of any liens, pledges, charges
                  and security interests.

                  (b) It is understood and agreed that the representations and
warranties set forth in this Section 2.04 shall survive delivery of the Mortgage
Files to the Trustee or any Custodian on its behalf and shall inure to the
benefit of the Certificateholders, the Trustee and the Trust Administrator. Upon
discovery by any Person of a breach of any of the foregoing representations and
warranties which materially and adversely affects the value of any Mortgage Loan
or the interests therein of the Certificateholders, the Person discovering such
breach shall give prompt written notice to the other parties, and in no event
later than two Business Days from the date of such discovery. The obligation of
the Depositor set forth in Section 2.03(b) to cure breaches shall constitute the
sole remedy 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.

                  SECTION 2.05.             Execution, Authentication and
                                            Delivery of Class R Certificates;
                                            Creation of REMIC Regular
                                            Certificates.

                  The Trustee hereby acknowledges the assignment to it of the
assets included in the Trust REMIC. Concurrently with such assignment and in
exchange therefor, the Trust Administrator on behalf of the Trustee, pursuant to
the written request of the Depositor executed by an officer of the Depositor,
has executed, authenticated and delivered to or upon the order of the Depositor,
the Class R Certificates in authorized denominations. The interests evidenced by
the Class R Certificates, together with the REMIC Regular Certificates,
constitute the entire beneficial ownership of the Trust REMIC. The rights of the
Class R Certificateholders to receive distributions from the proceeds of the
Trust REMIC in respect of the Class R Certificates and all ownership interests
evidenced or constituted by the Class R Certificates shall be as set forth in
this Agreement.

                  SECTION 2.06.             Representations, Warranties and
                                            Covenants of the Servicer.

                  (a) The Servicer hereby represents, warrants and covenants to
the Trust Administrator and the Trustee, for the benefit of each of the Trustee,
the Trust Administrator, the Certificateholders and the Depositor that as of the
Closing Date or as of such date specifically provided herein:

                         (i) The Servicer is a limited partnership duly formed,
                  validly existing and in good standing as a limited partnership
                  under the laws of the State of Delaware and is duly authorized
                  and qualified to transact any and all business contemplated by
                  this Agreement to be conducted by the Servicer in any state in
                  which a Mortgaged Property is located or is otherwise not
                  required under applicable law to effect such qualification
                  and, in any event, is in compliance with the doing business
                  laws of any such State, to the extent necessary to ensure its
                  ability to enforce each Mortgage Loan and to service the
                  Mortgage Loans in accordance with the terms of this Agreement.

<PAGE>

                                      -43-

                        (ii) The Servicer has the full power and authority to
                  conduct its business as presently conducted by it and to
                  execute, deliver and perform, and to enter into and
                  consummate, all transactions contemplated by this Agreement.
                  The Servicer has duly authorized the execution, delivery and
                  performance of this Agreement, has duly executed and delivered
                  this Agreement, and this Agreement, assuming due
                  authorization, execution and delivery by the Depositor, the
                  Trust Administrator and the Trustee, constitutes a legal,
                  valid and binding obligation of the Servicer, enforceable
                  against it in accordance with its terms except as the
                  enforceability thereof may be limited by bankruptcy,
                  insolvency, reorganization or similar laws affecting the
                  enforcement of creditors' rights generally and by general
                  principles of equity.

                       (iii) The execution and delivery of this Agreement by the
                  Servicer, the servicing of the Mortgage Loans by the Servicer
                  hereunder, the consummation by the Servicer of any other of
                  the transactions herein contemplated, and the fulfillment of
                  or compliance with the terms hereof are in the ordinary course
                  of business of the Servicer and will not (A) result in a
                  breach of any term or provision of the limited partnership
                  agreement of the Servicer or (B) conflict with, result in a
                  breach, violation or acceleration of, or result in a default
                  under, the terms of any other material agreement or instrument
                  to which the Servicer is a party or by which it may be bound,
                  or any statute, order or regulation applicable to the Servicer
                  of any court, regulatory body, administrative agency or
                  governmental body having jurisdiction over the Servicer; and
                  the Servicer is not a party to, bound by, or in breach or
                  violation of any indenture or other agreement or instrument,
                  or subject to or in violation of any statute, order or
                  regulation of any court, regulatory body, administrative
                  agency or governmental body having jurisdiction over it, which
                  materially and adversely affects or, to the Servicer's
                  knowledge, would in the future materially and adversely
                  affect, (x) the ability of the Servicer to perform its
                  obligations under this Agreement, (y) the business,
                  operations, financial condition, properties or assets of the
                  Servicer taken as a whole or (z) the legality, validity or
                  enforceability of this Agreement.

                        (iv) The Servicer is an approved seller/servicer of
                  conventional mortgage loans for FNMA, and is an FHA Approved
                  Mortgagee in good standing to service mortgages, is a VA
                  Approved Lender and has not been suspended as a mortgagee or
                  servicer by the FHA or VA and has the facilities, procedures
                  and experienced personnel necessary for the sound servicing of
                  mortgage loans of the same type as the Mortgage Loans. The
                  Servicer is, and shall remain for as long as it is servicing
                  the Mortgage Loans hereunder, in good standing as a FHA
                  Approved Mortgagee and a VA Approved Lender and to service
                  mortgage loans for HUD (pursuant to Section 203 and Section
                  211 of the National Housing Act), FNMA or FHLMC, and no event
                  has occurred, including but not limited to a change in
                  insurance coverage, which would make the Servicer unable to
                  comply with HUD, FNMA, FHLMC, FHA or VA eligibility
                  requirements or which would require notification to any of
                  HUD, FNMA, FHLMC, FHA or VA.

<PAGE>

                                      -44-

                         (v) The Servicer does not believe, nor does it have any
                  reason or cause to believe, that it cannot perform each and
                  every covenant made by it and contained in this Agreement.

                        (vi) [Reserved].

                        (vii) There are no actions or proceedings against, or
                  investigations known to it of, the Servicer before any court,
                  administrative or other tribunal (A) that might prohibit its
                  entering into this Agreement, (B) seeking to prevent the
                  consummation of the transactions contemplated by this
                  Agreement or (C) that might prohibit or materially and
                  adversely affect the performance by the Servicer of its
                  obligations under, or the validity or enforceability of, this
                  Agreement.

                      (viii) No consent, approval, authorization or order of any
                  court or governmental agency or body is required for the
                  execution, delivery and performance by the Servicer of, or
                  compliance by the Servicer with, this Agreement or the
                  consummation by it of the transactions contemplated by this
                  Agreement, except for such consents, approvals, authorizations
                  or orders, if any, that have been obtained prior to the
                  Closing Date;

                        (ix) No litigation is pending or, to the best of the
                  Servicer's knowledge, threatened against the Servicer which
                  would prohibit the Servicer from entering into this Agreement
                  or, in the Servicer's good faith reasonable judgment, is
                  likely to materially and adversely affect either the ability
                  of the Servicer to perform its obligations under this
                  Agreement or the financial condition of the Servicer.

                         (x) With respect to each Mortgage Loan, the Servicer
                  will comply in the performance of this Agreement with all
                  applicable rules and regulations of each insurer under each
                  insurance policy required under this Agreement necessary to
                  keep such policy in full force and effect.

                  (b) It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.06 shall survive delivery
of the Mortgage Files to the Trustee or any Custodian on its behalf and shall
inure to the benefit of the Trustee, the Trust Administrator, the Depositor and
the Certificateholders. Upon discovery by any Person of a breach of any of the
foregoing representations, warranties and covenants which materially and
adversely affects the value of any Mortgage Loan or the interests therein of the
Certificateholders, the party discovering such breach shall give prompt written
notice (but in no event later than two Business Days following such discovery)
to the Trustee and the Trust Administrator. The obligation of the Servicer set
forth in Section 2.03(c) to cure breaches shall constitute the sole remedy
available to the Certificateholders, the Depositor, the Trust Administrator or
to the Trustee on behalf of the Certificateholders, respecting a breach of the
representations, warranties and covenants contained in this Section 2.06.

<PAGE>

                                      -45-

                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF THE TRUST FUND

                  SECTION 3.01.             Servicer to Act as Servicer.

                  The Servicer shall service and administer the Mortgage Loans
on behalf of the Trustee and the Trust Administrator and in the best interests
of and for the benefit of the Certificateholders (as determined by the Servicer
in its reasonable judgment) in accordance with the terms of this Agreement and
the respective Mortgage Loans and, to the extent consistent with such terms, in
the same manner in which it services and administers similar mortgage loans for
its own portfolio, giving due consideration to customary and usual standards of
practice of prudent mortgage lenders and loan servicers administering similar
mortgage loans but without regard to:

                         (i) any relationship that the Servicer, any
                  Sub-Servicer or any Affiliate of the Servicer or any
                  Sub-Servicer may have with any Mortgagor;

                         (ii) the ownership of any Certificate by the Servicer
                  or any Affiliate of the Servicer;

                         (iii) the Servicer's obligation to make Payment
                  Advances or Servicing Advances; or

                         (iv) the Servicer's or any Sub-Servicer's right to
                  receive compensation for its services hereunder or with
                  respect to any particular transaction.

The Servicer shall follow any applicable HUD or FHA requirements and/or
regulations regarding the servicing of the Mortgage Loans, including but not
limited to any limitations on the ability to institute foreclosure proceedings
upon the occurrence of a default in the payment of the Modified Scheduled
Payments; it being understood that the foregoing shall not be construed to
require the Servicer to follow HUD or FHA procedures designed to maintain HUD or
FHA insurance. The Servicer will not foreclose on any Mortgage Loan based on the
delinquency circumstances in existence on the Closing Date. To the extent
consistent with the foregoing, the Servicer shall also seek to maximize the
timely and complete recovery of principal, interest and Arrearage on the
Mortgage Notes. Subject only to the above-described servicing standards and the
terms of this Agreement and of the respective Mortgage Loans, the Servicer shall
have full power and authority, acting alone or through Sub-Servicers as provided
in Section 3.02, to do or cause to be done any and all things in connection with
such servicing and administration which it may deem necessary or desirable.
Without limiting the generality of the foregoing, the Servicer in its own name
or in the name of a Sub-Servicer is hereby authorized and empowered by the
Trustee when the Servicer believes it appropriate in its best judgment, to
execute and deliver, on behalf of the Certificateholders and the Trustee or any
of them, and upon written notice to the Trustee and the Trust Administrator, any
and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the

<PAGE>

                                      -46-

Mortgage Loans and the Mortgaged Properties and to institute foreclosure
proceedings or obtain a deed-in-lieu of foreclosure so as to convert the
ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Trustee and the Certificateholders. The Servicer
shall service and administer the Mortgage Loans in accordance with applicable
state and federal law and shall provide to the Mortgagors any reports required
to be provided to them thereby. The Servicer shall also comply in the
performance of this Agreement with all reasonable rules and requirements of each
insurer under any standard hazard insurance policy. Subject to Section 3.17, the
Trustee shall execute, at the written request of the Servicer, and furnish to
the Servicer and any Sub-Servicer, any special or limited powers of attorney and
other documents necessary or appropriate to enable the Servicer or any
Sub-Servicer to carry out their servicing and administrative duties hereunder
and the Trustee shall not be liable for the actions of the Servicer or any
Sub-Servicers under such powers of attorney.

                  In accordance with the standards of the preceding paragraph,
the Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the timely payment of taxes and assessments on the
Mortgaged Properties, which advances shall be reimbursable in the first instance
from related collections from the Mortgagors pursuant to Section 3.09, and
further as provided in Section 3.11; provided, however, the Servicer shall only
make such Servicing Advance (i) if the Mortgagor has made such payment as
contemplated by Section 3.09 or (ii) if the Mortgagor has not made such payment,
if the failure to make such Servicing Advance would affect the lien position of
the Mortgage Loan. Any cost incurred by the Servicer or by Sub-Servicers in
effecting the timely payment of taxes and assessments on a Mortgaged Property
shall not, for the purpose of calculating distributions to Certificateholders,
be added to the unpaid principal balance of the related Mortgage Loan,
notwithstanding that the terms of such Mortgage Loan so permit.

                  Notwithstanding anything in this Agreement to the contrary,
the Servicer may not make any future advances with respect to a Mortgage Loan
and the Servicer shall not (i) permit any modification with respect to any
Mortgage Loan (unless, as provided in Section 3.07, the Mortgagor is in default
with respect to the Mortgage Loan or such default is, in the judgment of the
Servicer, reasonably foreseeable) that would change the Mortgage Rate, reduce or
increase the principal balance (except for reductions resulting from actual
payments of principal) or change the final maturity date on such Mortgage Loan
(other than as required pursuant to HUD regulations regarding an "Additional
Extension Period") or (ii) permit any modification, waiver or amendment of any
term of any Mortgage Loan that would both (A) effect an exchange or reissuance
of such Mortgage Loan under Section 1001 of the Code (or final, temporary or
proposed Treasury regulations promulgated thereunder) and (B) cause the Trust
Fund 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 Servicer may delegate its responsibilities under this
Agreement; provided, however, that no such delegation shall release the Servicer
from the responsibilities or liabilities arising under this Agreement.

<PAGE>

                                      -47-

                  SECTION 3.02.             Sub-Servicing Agreements Between
                                            Servicer and Sub- Servicers;
                                            Enforcement of Sub-Servicing
                                            Agreements and the Mortgage Loan
                                            Purchase Agreement.

                  (a) The Servicer may enter into Sub-Servicing Agreements with
Sub- Servicers for the servicing and administration of the Mortgage Loans;
provided, however, that such agreements would not result in a withdrawal or a
downgrading by any Rating Agency of the rating on any Class of Certificates. The
Trustee and the Trust Administrator are hereby authorized to acknowledge, at the
request of the Servicer, any Sub-Servicing Agreement that meets the requirements
applicable to Sub-Servicing Agreements set forth in this Agreement and that is
otherwise permitted under this Agreement.

                  Each Sub-Servicer shall be (i) authorized to transact business
in the state or states where the related Mortgaged Properties it is to service
are situated, if and to the extent required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder and under the Sub-Servicing
Agreement, (ii) an institution approved as a mortgage loan originator by the
Federal Housing Administration or an institution the deposit accounts in which
are insured by the FDIC and (iii) at all times, a FHLMC or FNMA approved
mortgage servicer and a HUD approved mortgagee. Each Sub- Servicing Agreement
must impose on the Sub-Servicer requirements conforming to the provisions set
forth in Section 3.08 and provide for servicing of the Mortgage Loans consistent
with the terms of this Agreement. The Servicer will examine each Sub-Servicing
Agreement and will be familiar with the terms thereof. The terms of any
Sub-Servicing Agreement will not be inconsistent with any of the provisions of
this Agreement. The Servicer and the Sub-Servicers may enter into and make
amendments to the Sub-Servicing Agreements or enter into different forms of
Sub-Servicing Agreements; provided, however, that any such amendments or
different forms shall be consistent with and not violate the provisions of this
Agreement, and that no such amendment or different form shall be made or entered
into which could be reasonably expected to be materially adverse to the
interests of the Certificateholders, without the consent of the Holders of
Certificates entitled to at least 66% of the Voting Rights. Any variation
without the consent of the Holders of Certificates entitled to at least 66% of
the Voting Rights from the provisions set forth in Section 3.08 relating to
insurance or priority requirements of Sub-Servicing Accounts, or credits and
charges to the Sub-Servicing Accounts or the timing and amount of remittances by
the Sub-Servicers to the Servicer, are conclusively deemed to be inconsistent
with this Agreement and therefore prohibited. The Servicer shall deliver to the
Trust Administrator and the Trustee copies of all Sub-Servicing Agreements, and
any amendments or modifications thereof, promptly upon the Servicer's execution
and delivery of such instruments.

                  (b) As part of its servicing activities hereunder, the
Servicer, for the benefit of the Trustee, the Trust Administrator and the
Certificateholders, shall enforce the obligations of each Sub- Servicer under
the related Sub-Servicing Agreement and of the Mortgage Loan Seller under the
Mortgage Loan Purchase Agreement, including, without limitation, any obligation
to make advances in respect of delinquent payments as required by a
Sub-Servicing Agreement, or to purchase a Mortgage Loan on account of missing or
defective documentation or on account of a breach of a representation, warranty
or covenant, as described in Section 2.03. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of Sub-Servicing
Agreements, and the

<PAGE>

                                      -48-

pursuit of other appropriate remedies, shall be in such form and carried out to
such an extent and at such time as the Servicer, in its good faith business
judgment, would require were it the owner of the related Mortgage Loans. The
Servicer shall pay the costs of such enforcement at its own expense, and shall
be reimbursed therefor only (i) from a general recovery resulting from such
enforcement, to the extent, if any, that such recovery exceeds all amounts due
in respect of the related Mortgage Loans, or (ii) from a specific recovery of
costs, expenses or attorneys' fees against the party against whom such
enforcement is directed. Notwithstanding the first sentence of this Section
3.02(b), enforcement of the Mortgage Loan Purchase Agreement against the
Mortgage Loan Seller shall be effected by the Servicer to the extent it is not
the Mortgage Loan Seller or an Affiliate of the Mortgage Loan Seller, and
otherwise by the Trustee or the Trust Administrator, in accordance with the
foregoing provisions of this paragraph; provided, however, that if such
enforcement is by the Trustee or the Trust Administrator, the Trustee or the
Trust Administrator, as applicable, shall be reimbursed for the costs of such
enforcement (A) first (i) from a general recovery resulting from such
enforcement, to the extent, if any, that such recovery exceeds all amounts due
in respect of the related Mortgage Loans, or (ii) from a specific recovery of
costs, expenses or attorneys' fees against the party against whom such
enforcement is directed and (B) second, to the extent amounts described in
clause (A) above are insufficient for such reimbursement and to the extent such
costs of enforcement are reasonable, from the Trust Fund.

                  SECTION 3.03.             Successor Sub-Servicers.

                  The Servicer shall be entitled to terminate any Sub-Servicing
Agreement and the rights and obligations of any Sub-Servicer pursuant to any
Sub-Servicing Agreement in accordance with the terms and conditions of such
Sub-Servicing Agreement. In the event of termination of any Sub- Servicer, all
servicing obligations of such Sub-Servicer shall be assumed simultaneously by
the Servicer without any act or deed on the part of such Sub-Servicer or the
Servicer (provided, however, that the Servicer shall not assume such servicing
obligations unless each Rating Agency confirms to the Trustee and the Trust
Administrator that such assumption would not result in a withdrawal or
downgrading of the ratings on the Certificates), and the Servicer shall either
service directly the related Mortgage Loans or enter into a Sub-Servicing
Agreement with a successor Sub-Servicer which qualifies under Section 3.02.

                  Any Sub-Servicing Agreement shall include the provision that
such agreement may be immediately terminated by the Trustee or the Trust
Administrator without fee, in accordance with the terms of this Agreement, in
the event that the Servicer shall, for any reason, no longer be the Servicer
(including termination due to a Servicer Event of Default).

                  SECTION 3.04.             Liability of the Servicer.

                  Notwithstanding any Sub-Servicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Servicer and a Sub-Servicer or reference to actions taken through a Sub-Servicer
or otherwise, the Servicer shall remain obligated and primarily liable to the
Trustee, the Trust Administrator and the Certificateholders for the servicing
and administering of the Mortgage Loans in accordance with the provisions of
Section 3.01 without diminution of such obligation or liability by virtue of
such Sub-Servicing Agreements or arrangements or by virtue of

<PAGE>

                                      -49-

indemnification from the Sub-Servicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Mortgage Loans. The Servicer shall be entitled to enter into any agreement
with a Sub-Servicer for indemnification of the Servicer by such Sub-Servicer and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.

                  SECTION 3.05.             No Contractual Relationship Between
                                            Sub-Servicers, Trust Administrator,
                                            Trustee or Certificateholders.

                  Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such shall be deemed to be between the Sub-Servicer and the
Servicer alone, and the Trust Administrator, the Trustee and Certificateholders
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Sub-Servicer except as
set forth in Section 3.06. The Servicer shall be solely liable for all fees owed
by it to any Sub-Servicer, irrespective of whether the Servicer's compensation
pursuant to this Agreement is sufficient to pay such fees.

                  SECTION 3.06.             Assumption or Termination of
                                            Sub-Servicing Agreements by Trust
                                            Administrator.

                  In the event the Servicer shall for any reason no longer be
the servicer (including by reason of the occurrence of a Servicer Event of
Default), the Trust Administrator, its designee or the successor servicer for
the Trust Administrator appointed pursuant to Section 7.02 shall thereupon
assume all of the rights and obligations of the Servicer under each
Sub-Servicing Agreement that the Servicer may have entered into, unless the
Trust Administrator elects to terminate any Sub-Servicing Agreement in
accordance with its terms as provided in Section 3.03. Upon such assumption, the
Trust Administrator, its designee or the successor servicer for the Trust
Administrator appointed pursuant to Section 7.02 shall be deemed, subject to
Section 3.03, to have assumed all of the Servicer's interest therein and to have
replaced the Servicer as a party to each Sub-Servicing Agreement to the same
extent as if each Sub-Servicing Agreement had been assigned to the assuming
party, except that the Servicer shall not thereby be relieved of any liability
or obligations under any Sub-Servicing Agreement.

                  The Servicer at its expense shall, upon request of the Trust
Administrator, deliver to the assuming party all documents and records relating
to each Sub-Servicing Agreement and the Mortgage Loans then being serviced and
an accounting of amounts collected and held by or on behalf of it, and otherwise
use its best efforts to effect the orderly and efficient transfer of the
Sub-Servicing Agreements to the assuming party.

                  SECTION 3.07.             Collection of Certain Mortgage Loan
                                            Payments.

                  The Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement and
any related insurance policy, follow such collection procedures as it would
follow with respect to mortgage loans comparable to the Mortgage Loans and held
for its own account.

<PAGE>

                                      -50-

Consistent with the foregoing and subject to Section 3.01, the Servicer may in
its discretion (i) waive any late payment charge or, if applicable, any penalty
interest or (ii) extend the due dates for the Modified Scheduled Payments due on
a Mortgage Note for a period of not greater than 180 days; provided that any
extension pursuant to clause (ii) above shall not affect the amortization
schedule of any Mortgage Loan for purposes of any computation hereunder, except
as provided below. In the event of any such arrangement pursuant to clause (ii)
above, the Servicer shall make timely advances on such Mortgage Loan during such
extension pursuant to Section 4.03 and in accordance with the amortization
schedule of such Mortgage Loan without modification thereof by reason of such
arrangement. Notwithstanding the foregoing, in the event that any Mortgage Loan
is in default or, in the judgment of the Servicer, such default is reasonably
foreseeable, the Servicer, consistent with the standards set forth in Section
3.01, may also waive, modify or vary any term of such Mortgage Loan (including
modifications that would change the Mortgage Rate, forgive the payment of
principal or interest or extend the final maturity date of such Mortgage Loan),
accept payment from the related Mortgagor of an amount less than the Unpaid
Principal Balance in final satisfaction of such Mortgage Loan (such payment, a
"Short Pay-off"), or consent to the postponement of strict compliance with any
such term or otherwise grant indulgence to any Mortgagor if in the Servicer's
determination such waiver, modification, postponement or indulgence is not
materially adverse to the interests of the Certificateholders (taking into
account any estimated Realized Loss that might result absent such action).

                  SECTION 3.08.             Sub-Servicing Accounts.

                  In those cases where a Sub-Servicer is servicing a Mortgage
Loan pursuant to a Sub- Servicing Agreement, the Sub-Servicer will be required
to establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall
comply with all requirements of this Agreement relating to the Collection
Account. The Sub- Servicer will be required to deposit into the Sub-Servicing
Account no later than the first Business Day after receipt all proceeds of
Mortgage Loans received by the Sub-Servicer, less its servicing compensation to
the extent permitted by the Sub-Servicing Agreement, and to remit such proceeds
to the Servicer for deposit in the Collection Account not later than the first
Business Day thereafter. For purposes of this Agreement, the Servicer shall be
deemed to have received payments on the Mortgage Loans when the Sub-Servicer
receives such payments.

                  SECTION 3.09.             Collection of Taxes, Assessments and
                                            Similar Items; Servicing Accounts.

                  The Servicer shall establish and maintain one or more accounts
(the "Servicing Accounts"), into which all collections from the Mortgagors (or
related advances from Sub-Servicers) for the payment of taxes, assessments,
hazard insurance premiums and comparable items for the account of the Mortgagors
("Escrow Payments") shall be deposited and retained. Servicing Accounts shall be
Eligible Accounts. The Servicer shall deposit in the Servicing Accounts on a
daily basis and in no event later than the second Business Day following
receipt, and retain therein, all Escrow Payments collected on account of the
Mortgage Loans, for the purpose of effecting the timely payment of any such
items as required under the terms of this Agreement. Withdrawals of amounts from
a

<PAGE>

                                      -51-

Servicing Account may be made only to (i) effect timely payment of taxes,
assessments, hazard insurance premiums and comparable items; (ii) reimburse the
Servicer (or a Sub-Servicer to the extent provided in the related Sub-Servicing
Agreement) out of related collections for any advances made pursuant to Section
3.01 (with respect to taxes and assessments) and Section 3.14 (with respect to
hazard insurance); (iii) refund to Mortgagors any sums as may be determined to
be overages; (iv) pay interest, if required and as described below, to
Mortgagors on balances in the Servicing Account; or (v) clear and terminate the
Servicing Account at the termination of the Servicer's obligations and
responsibilities in respect of the Mortgage Loans under this Agreement in
accordance with Article X. As part of its servicing duties, the Servicer or
Sub-Servicers shall pay to the Mortgagors interest on funds in Servicing
Accounts, to the extent required by law or the related Mortgage Loan Documents
and, to the extent that interest earned on funds in the Servicing Accounts is
insufficient, to pay such interest from its or their own funds, without any
reimbursement therefor. To the extent such interest is not required by law or
the related Mortgage Loan Documents to be paid to the related Mortgagors, the
Servicer may retain such interest as additional servicing compensation.
Notwithstanding the foregoing, the Servicer shall not be obligated to collect
Escrow Payments if the related Mortgage Loan does not require such payments but
the Servicer shall nevertheless be obligated to make Servicing Advances as
provided in Section 3.01. In the event the Servicer shall deposit in the
Servicing Accounts any amount not required to be deposited therein, it may at
any time withdraw such amount from the Servicing Accounts, any provision to the
contrary notwithstanding.

                  SECTION 3.10.             Collection Account and Distribution
                                            Account.

                  (a) On behalf of the Trust Fund, the Servicer shall establish
and maintain one or more trust accounts (such account or accounts, the
"Collection Account"), held in trust for the benefit of the Trustee, the Trust
Administrator and the Certificateholders. On behalf of the Trust Fund, the
Servicer shall deposit or cause to be deposited in the clearing account in which
it customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Servicer's receipt thereof, and shall
thereafter deposit in the Collection Account, in no event more than two Business
Days after the Servicer's receipt thereof, as and when received or as otherwise
required hereunder, the following payments and collections received or made by
it subsequent to the Cut-off Date (other than in respect of principal received
or interest due on the related Mortgage Loans on or before the Cut-off Date), or
payments (other than Principal Prepayments) received by it on or prior to the
Cut-off Date but allocable to a Due Period subsequent thereto:

                         (i) all payments on account of principal, including
                  Principal Prepayments, on the Mortgage Loans;

                         (ii) all payments on account of interest (net of the
                  related Servicing Fee) on each Mortgage Loan;

                         (iii) all payments on account of Arrearage on the
                  Mortgage Loans;

<PAGE>

                                      -52-

                        (iv) all Insurance Proceeds and Liquidation Proceeds
                  (other than proceeds collected in respect of any particular
                  REO Property and amounts paid by the Servicer in connection
                  with a purchase of Mortgage Loans and REO Properties pursuant
                  to Section 10.01);

                         (v) any amounts required to be deposited pursuant to
                  Section 3.12 in connection with any losses realized on
                  Permitted Investments with respect to funds held in the
                  Collection Account;

                         (vi) any amounts required to be deposited by the
                  Servicer pursuant to the second paragraph of Section 3.14(a)
                  in respect of any blanket policy deductibles;

                         (vii) all proceeds of any Mortgage Loan repurchased or
                  purchased in accordance with Section 2.03 or Section 10.01;
                  and

                         (viii) all amounts required to be deposited in
                  connection with shortfalls in principal amount of Qualified
                  Substitute Mortgage Loans pursuant to Section 2.03.

                  The foregoing requirements for deposit in the Collection
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of prepayment
or late payment charges or assumption fees need not be deposited by the Servicer
in the Collection Account and may be retained by the Servicer as additional
compensation as provided in Section 3.18. In the event the Servicer shall
deposit in the Collection Account any amount not required to be deposited
therein, it may at any time withdraw such amount from the Collection Account,
any provision herein to the contrary notwithstanding.

                  (b) On behalf of the Trust Fund, the Trust Administrator shall
establish and maintain one or more trust accounts (such account or accounts, the
"Distribution Account"), held in trust for the benefit of the Trustee and the
Certificateholders. On behalf of the Trust Fund, the Servicer shall deliver to
the Trust Administrator in immediately available funds for deposit in the
Distribution Account on or before 3:00 p.m. New York time (i) on the Servicer
Remittance Date, that portion of the Available Funds (calculated without regard
to the references in clause (2) of the definition thereof to amounts that may be
withdrawn from the Distribution Account) for the related Distribution Date then
on deposit in the Collection Account, and (ii) on each Business Day as of the
commencement of which the balance on deposit in the Collection Account exceeds
$75,000 following any withdrawals pursuant to the next succeeding sentence, the
amount of such excess, but only if the Collection Account constitutes an
Eligible Account solely pursuant to clause (ii) of the definition of "Eligible
Account"; provided, however, that the Servicer in accordance with Section
3.12(b) shall be entitled to any income or gain realized from the investment of
such funds so delivered to the Trust Administrator for deposit in the
Distribution Account pursuant to clause (ii) above for the period commencing on
the date of such delivery and ending on the Servicer Remittance Date, during
which period such funds shall be deemed, for purposes of determining the
entitlement to any income or gain realized from the investment of such funds, to
remain in the Collection Account.

<PAGE>

                                      -53-

                  (c) Funds in the Collection Account and the Distribution
Account may be invested in Permitted Investments in accordance with the
provisions set forth in Section 3.12. The Servicer shall give notice to the
Trustee and the Trust Administrator of the location of the Collection Account
maintained by it when established and prior to any change thereof. The Trust
Administrator shall give notice to the Servicer, the Trustee and the Depositor
of the location of the Distribution Account when established and prior to any
change thereof.

                  (d) Funds held in the Collection Account at any time may be
delivered by the Servicer to the Trust Administrator for deposit in an account
(which may be the Distribution Account and must satisfy the standards for the
Distribution Account as set forth in the definition thereof) and for all
purposes of this Agreement shall be deemed to be a part of the Collection
Account; provided, however, that the Trust Administrator shall have the sole
authority to withdraw any funds held pursuant to this subsection (d). In the
event the Servicer shall deliver to the Trust Administrator for deposit in the
Distribution Account any amount not required to be deposited therein, it may at
any time request that the Trust Administrator withdraw such amount from the
Distribution Account and remit to it any such amount, any provision herein to
the contrary notwithstanding. In addition, the Servicer shall deliver to the
Trust Administrator from time to time for deposit, and the Trust Administrator
shall so deposit, in the Distribution Account:

                         (i) any Payment Advances, as required pursuant to
                  Section 4.03;

                         (ii) any amounts required to be deposited pursuant to
                  Section 3.23(d) or (f) in connection with any REO Property;

                         (iii) any amounts to be paid by the Servicer in
                  connection with a purchase of Mortgage Loans and REO
                  Properties pursuant to Section 10.01;

                         (iv) any amounts required to be deposited pursuant to
                  Section 3.24 in connection with any Prepayment Interest
                  Shortfalls; and

                         (v) any Stayed Funds, as soon as permitted by the
                  federal bankruptcy court having jurisdiction in such matters.

                  (e) Promptly upon receipt of any Stayed Funds, whether from
the Servicer, a trustee in bankruptcy, or federal bankruptcy court or other
source, the Trust Administrator shall deposit such funds in the Distribution
Account, subject to withdrawal thereof pursuant to Section 7.02(b) or as
otherwise permitted hereunder.

                  SECTION 3.11.             Withdrawals from the Collection
                                            Account and Distribution Account.

                  (a) The Servicer shall, from time to time, make withdrawals
from the Collection Account for any of the following purposes, without priority,
or as described in Section 4.03:

<PAGE>

                                      -54-

                         (i) to remit to the Trust Administrator for deposit in
                  the Distribution Account the amounts required to be so
                  remitted pursuant to Section 3.10(b) or permitted to be so
                  remitted pursuant to the first sentence of Section 3.10(d);

                        (ii) subject to Section 3.16(d), to reimburse the
                  Servicer or the Trust Administrator for Payment Advances, but
                  only to the extent of amounts received which represent Late
                  Collections (net of the related Servicing Fees) of Modified
                  Scheduled Payments on Mortgage Loans with respect to which
                  such Payment Advances were made in accordance with the
                  provisions of Section 4.03 or Section 7.02; provided that no
                  such Payment Advances shall be reimbursed to the Servicer
                  until all Payment Advances, if any, made by the Trust
                  Administrator have been reimbursed to the Trust Administrator;

                       (iii) subject to Section 3.16(d), to pay the Servicer or
                  any Sub-Servicer any unpaid Servicing Fees and reimburse any
                  unreimbursed Servicing Advances with respect to each Mortgage
                  Loan, but only to the extent of any Liquidation Proceeds, Late
                  Collections and Insurance Proceeds received with respect to
                  such Mortgage Loan (provided, however, that if in the good
                  faith business judgment of the Servicer, any unreimbursed
                  Servicing Advance will not be ultimately recoverable from
                  related Late Collections, Liquidation Proceeds or Insurance
                  Proceeds on such Mortgage Loan, then withdrawal from the
                  general funds in the Collection Account, without regard to the
                  limitation set forth above, will be permitted);

                        (iv) subject to Section 3.12(b), to pay to the Servicer
                  as servicing compensation (in addition to the Servicing Fee)
                  on the Servicer Remittance Date any interest income earned on
                  funds deposited in the Collection Account;

                         (v) to pay to the Servicer or the Mortgage Loan Seller,
                  as the case may be, with respect to each Mortgage Loan that
                  has previously been purchased or replaced pursuant to Section
                  2.03 or Section 3.16(c) all amounts received thereon
                  subsequent to the date of purchase or substitution, as the
                  case may be;

                        (vi) to reimburse the Servicer or the Trust
                  Administrator for any Payment Advance previously made which
                  the Servicer or the Trust Administrator has determined to be a
                  Nonrecoverable Payment Advance in accordance with the
                  provisions of Section 4.03;

                       (vii) to reimburse the Servicer or the Depositor for
                  expenses incurred by or reimbursable to the Servicer or the
                  Depositor, as the case may be, pursuant to Section 6.03;

                      (viii) to reimburse the Trust Administrator or the Trustee
                  for expenses reasonably incurred in respect of the breach or
                  defect giving rise to the purchase obligation under Section
                  2.03 of this Agreement that were included in the Purchase

<PAGE>

                                      -55-

                  Price of the Mortgage Loan, including any expenses arising out
                  of the enforcement of the purchase obligation;

                        (ix) to pay, or to reimburse the Servicer for advances
                  in respect of, expenses incurred in connection with any
                  Mortgage Loan pursuant to Section 3.16(b);

                         (x) to pay to the Servicer 8% of any amount collected
                  on a Mortgage Loan and applied in accordance with the
                  provisions of this Agreement in reduction of the outstanding
                  Arrearage of such Mortgage Loan; and

                        (xi) to clear and terminate the Collection Account
                  pursuant to Section 10.01.

                  The Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (ii), (iii), (v), (vi), (viii), (ix) and (x) above.
The Servicer shall provide written notification to the Trustee and the Trust
Administrator, on or prior to the next succeeding Servicer Remittance Date, upon
making any withdrawals from the Collection Account pursuant to subclauses (vi)
and (vii) above.

                  (b) The Trust Administrator shall, from time to time, make
withdrawals from the Distribution Account, for any of the following purposes,
without priority:

                         (i) to make distributions to Certificateholders in
                  accordance with Section 4.01;

                         (ii) to transfer to the Expense Account the
                  Administrative Fee pursuant to Section 3.25 and Section 8.05;

                       (iii) to pay itself any interest income earned on funds
                  deposited in the Distribution Account pursuant to Section
                  3.12(c) and to pay to the Servicer any interest income earned
                  on funds on deposit in the Distribution Account that are
                  deemed to remain in the Collection Account as set forth in
                  Section 3.10(b) or Section 3.10(d);

                         (iv) to reimburse itself pursuant to Section 7.02;

                         (v) to reimburse itself or the Trustee pursuant to
                  Section 8.05 in respect of indemnification amounts payable by
                  the Trust Fund to the Trust Administrator or the Trustee
                  pursuant to Section 8.05;

                         (vi) to pay any amounts in respect of taxes pursuant to
                  Section 11.01(h)(iv); and

                         (vii) to clear and terminate the Distribution Account
                  pursuant to Section 10.01.

<PAGE>

                                      -56-

                  SECTION 3.12.             Investment of Funds in the
                                            Collection Account and the
                                            Distribution Account.

                  (a) The Servicer may direct any depository institution
maintaining the Collection Account (for purposes of this Section 3.12, an
"Investment Account"), and the Trust Administrator, in its individual capacity,
may direct any depository institution maintaining the Distribution Account (for
purposes of this Section 3.12, also an "Investment Account"), to hold such funds
uninvested or to invest the funds in such Investment Account in one or more
Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand, (i) no later than the Business Day immediately
preceding the date on which such funds are required to be withdrawn from such
account pursuant to this Agreement, if a Person other than the Trust
Administrator is the obligor thereon, and (ii) no later than the date on which
such funds are required to be withdrawn from such account pursuant to this
Agreement, if the Trust Administrator is the obligor thereon. All such Permitted
Investments shall be held to maturity, unless payable on demand. Any investment
of funds in an Investment Account shall be made in the name of the Trust
Administrator (in its capacity as such) or in the name of a nominee of the Trust
Administrator. The Trust Administrator shall be entitled to sole possession
(except with respect to investment direction of funds held in the Collection
Account and any income or gain realized thereon) over each such investment, and
any certificate or other instrument evidencing any such investment shall be
delivered directly to the Trust Administrator or its agent, together with any
document of transfer necessary to transfer title to such investment to the Trust
Administrator or its nominee. In the event amounts on deposit in an Investment
Account are at any time invested in a Permitted Investment payable on demand,
the Trust Administrator shall:

                  (x)      consistent with any notice required to be given
                           thereunder, demand that payment thereon be made on
                           the last day such Permitted Investment may otherwise
                           mature hereunder in an amount equal to the lesser of
                           (1) all amounts then payable thereunder and (2) the
                           amount required to be withdrawn on such date; and

                  (y)      demand payment of all amounts due thereunder promptly
                           upon determination by a Responsible Officer of the
                           Trust Administrator that such Permitted Investment
                           would not constitute a Permitted Investment in
                           respect of funds thereafter on deposit in the
                           Investment Account.

                  (b) All income and gain realized from the investment of funds
deposited in the Collection Account held by or on behalf of the Servicer, shall
be for the benefit of the Servicer and shall be subject to its withdrawal in
accordance with Section 3.11(a). The Servicer shall deposit in the Collection
Account the amount of any loss of principal incurred in respect of any such
Permitted Investment made with funds in such accounts immediately upon
realization of such loss.

                  (c) All income and gain realized from the investment of funds
deposited in the Distribution Account held by or on behalf of the Trust
Administrator, shall be for the benefit of the Trust Administrator and shall be
subject to its withdrawal at any time. The Trust Administrator shall

<PAGE>

                                      -57-

deposit in the Distribution Account, the amount of any loss of principal
incurred in respect of any such Permitted Investment made with funds in such
accounts immediately upon realization of such loss.

                  (d) Except as otherwise expressly provided in this Agreement,
if any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under any
Permitted Investment, the Trust Administrator may and, subject to Section 8.01
and Section 8.02(a)(iii) and Section 8.02(a)(v), upon the request of the Holders
of Certificates representing more than 50% of the Voting Rights allocated to any
Class of Certificates, shall take such action as may be appropriate to enforce
such payment or performance, including the institution and prosecution of
appropriate proceedings.

                  (e) Any funds in the Distribution Account but deemed to be in
the Collection Account pursuant to Section 3.10(b) or Section 3.10(d) shall be
invested (and are hereby directed by the Servicer to be invested) by the Trust
Administrator for the Servicer in Permitted Investments of the kind described in
clause (vi) of the definition of Permitted Investments, unless the Servicer
shall direct the Trust Administrator otherwise in writing.

                  SECTION 3.13.             [intentionally omitted]

                  SECTION 3.14.             Maintenance of Hazard Insurance and
                                            Errors and Omissions and Fidelity
                                            Coverage.

                  (a) The Servicer shall cause to be maintained for each
Mortgage Loan fire insurance with extended coverage on the related Mortgaged
Property in an amount which is at least equal to the lesser of the current
principal balance of such Mortgage Loan and the amount necessary to fully
compensate for any damage or loss to the improvements which are a part of such
property on a replacement cost basis, in each case in an amount not less than
such amount as is necessary to avoid the application of any coinsurance clause
contained in the related hazard insurance policy. The Servicer shall also cause
to be maintained fire insurance with extended coverage on each REO Property in
an amount which is at least equal to the lesser of (i) the maximum insurable
value of the improvements which are a part of such property and (ii) the
outstanding principal balance of the related Mortgage Loan at the time it became
an REO Property, plus accrued interest at the Mortgage Rate and related
Servicing Advances. The Servicer will comply in the performance of this
Agreement with all reasonable rules and requirements of each insurer under any
such hazard policies. Any amounts to be collected by the Servicer under any such
policies (other than amounts to be applied to the restoration or repair of the
property subject to the related Mortgage or amounts to be released to the
Mortgagor in accordance with the procedures that the Servicer would follow in
servicing loans held for its own account, subject to the terms and conditions of
the related Mortgage and Mortgage Note) shall be deposited in the Collection
Account, subject to withdrawal pursuant to Section 3.11, if received in respect
of a Mortgage Loan, or in the REO Account, subject to withdrawal pursuant to
Section 3.23, if received in respect of an REO Property. Any cost incurred by
the Servicer in maintaining any such insurance shall not, for the purpose of
calculating distributions to Certificateholders, be added to the unpaid
principal balance of the related Mortgage Loan, notwithstanding that the terms
of such Mortgage Loan so permit. It is understood and agreed that no earthquake
or other additional insurance

<PAGE>

                                      -58-

is to be required of any Mortgagor other than pursuant to such applicable laws
and regulations as shall at any time be in force and as shall require such
additional insurance. If the Mortgaged Property or REO Property is at any time
in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, the Servicer will cause to be
maintained a flood insurance policy in respect thereof. Such flood insurance
shall be in an amount equal to the lesser of (i) the unpaid principal balance of
the related Mortgage Loan and (ii) the maximum amount of such insurance
available for the related Mortgaged Property under the national flood insurance
program (assuming that the area in which such Mortgaged Property is located is
participating in such program).

                  In the event that the Servicer shall obtain and maintain a
blanket policy with an insurer having a General Policy Rating of B:VI or better
in Best's Key Rating Guide or four crowns or better under Standard & Poor's
Ratings Services' syndicate stability rankings insuring against hazard losses on
all of the Mortgage Loans, it shall conclusively be deemed to have satisfied its
obligations as set forth in the first two sentences of this Section 3.14, it
being understood and agreed that such policy may contain a deductible clause, in
which case the Servicer shall, in the event that there shall not have been
maintained on the related Mortgaged Property or REO Property a policy complying
with the first two sentences of this Section 3.14, and there shall have been one
or more losses which would have been covered by such policy, deposit to the
Collection Account from its own funds the amount not otherwise payable under the
blanket policy because of such deductible clause. In connection with its
activities as administrator and servicer of the Mortgage Loans, the Servicer
agrees to prepare and present, on behalf of itself, the Trust Administrator, the
Trustee and Certificateholders, claims under any such blanket policy in a timely
fashion in accordance with the terms of such policy.

                  (b) The Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of the Servicer's obligations under this Agreement,
which policy or policies shall be in such form and amount that would meet the
requirements of FHLMC or FNMA if it were the purchaser of the Mortgage Loans,
unless the Servicer has obtained a waiver of such requirements from FHLMC or
FNMA (as applicable). The Servicer shall also maintain a fidelity bond in the
form and amount that would meet the requirements of FHLMC or FNMA, unless the
Servicer has obtained a waiver of such requirements from FHLMC or FNMA (as
applicable). The Servicer shall be deemed to have complied with this provision
if an Affiliate of the Servicer has such errors and omissions and fidelity bond
coverage and, by the terms of such insurance policy or fidelity bond, the
coverage afforded thereunder extends to the Servicer. Any such errors and
omissions policy and fidelity bond shall by its terms not be cancelable without
thirty days' prior written notice to the Trustee and the Trust Administrator.
The Servicer shall also cause each Sub-Servicer to maintain a policy of
insurance covering errors and omissions and a fidelity bond which would meet
such requirements.

<PAGE>

                                      -59-

                  SECTION 3.15.             Enforcement of Due-On-Sale Clauses;
                                            Assumption Agreements.

                  The Servicer will, to the extent it has actual knowledge of
any conveyance or prospective conveyance of any Mortgaged Property by any
Mortgagor (whether by absolute conveyance or by contract of sale, and whether or
not the Mortgagor remains or is to remain liable under the Mortgage Note and/or
the Mortgage), exercise its rights to accelerate the maturity of such Mortgage
Loan under the "due-on-sale" clause, if any, applicable thereto; provided,
however, that the Servicer shall not exercise any such rights if prohibited by
law from doing so. If the Servicer reasonably believes it is unable under
applicable law to enforce such "due-on-sale" clause, or if any of the other
conditions set forth in the proviso to the preceding sentence apply, the
Servicer will enter into an assumption and modification agreement from or with
the person to whom such property has been conveyed or is proposed to be
conveyed, pursuant to which such person becomes liable under the Mortgage Note
and, to the extent permitted by applicable state law, the Mortgagor remains
liable thereon. The Servicer is also authorized to enter into a substitution of
liability agreement with such person, pursuant to which the original Mortgagor
is released from liability and such person is substituted as the Mortgagor and
becomes liable under the Mortgage Note, provided that no such substitution shall
be effective unless such person satisfies the underwriting criteria of the
Servicer and has a credit risk rating at least equal to that of the original
Mortgagor. In connection with any assumption or substitution, the Servicer shall
apply such underwriting standards and follow such practices and procedures as
shall be normal and usual in its general mortgage servicing activities and as it
applies to other mortgage loans owned solely by it. The Servicer shall not take
or enter into any assumption and modification agreement, however, unless (to the
extent practicable in the circumstances) it shall have received confirmation, in
writing, of the continued effectiveness of any applicable hazard insurance
policy. Any fee collected by the Servicer in respect of an assumption or
substitution of liability agreement will be retained by the Servicer as
additional servicing compensation. In connection with any such assumption, no
material term of the Mortgage Note (including but not limited to the related
Mortgage Rate and the amount of the Modified Scheduled Payment) may be amended
or modified, except as otherwise required pursuant to the terms thereof. The
Servicer shall notify the Trustee and the Trust Administrator that any such
substitution or assumption agreement has been completed by forwarding to the
Trustee or any Custodian on its behalf (with a copy to the Trust Administrator)
the executed original of such substitution or assumption agreement, which
document shall be added to the related Mortgage File and shall, for all
purposes, be considered a part of such Mortgage File to the same extent as all
other documents and instruments constituting a part thereof.

                  Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Servicer may be restricted by law from preventing, for any
reason whatever. For purposes of this Section 3.15, the term "assumption" is
deemed to also include a sale (of the Mortgaged Property) subject to the
Mortgage that is not accompanied by an assumption or substitution of liability
agreement.

                  SECTION 3.16.             Realization Upon Defaulted Mortgage
                                            Loans.

<PAGE>

                                      -60-

                  (a) The Servicer shall use its best efforts, consistent with
the servicing standard set forth in Section 3.01, to foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Mortgage
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant to
Section 3.07. The Servicer shall be responsible for all costs and expenses
incurred by it in any such proceedings; provided, however, that such costs and
expenses will be recoverable as Servicing Advances by the Servicer as
contemplated in Section 3.11 and 3.23. The foregoing is subject to the provision
that, in any case in which Mortgaged Property shall have suffered damage from an
Uninsured Cause, the Servicer shall not be required to expend its own funds
toward the restoration of such property unless it shall determine in its
discretion that such restoration will increase the proceeds of liquidation of
the related Mortgage Loan after reimbursement to itself for such expenses.

                  (b) Notwithstanding the foregoing provisions of this Section
3.16 or any other provision of this Agreement, with respect to any Mortgage Loan
as to which the Servicer has received actual notice of, or has actual knowledge
of, the presence of any toxic or hazardous substance on the related Mortgaged
Property, the Servicer shall not, on behalf of the Trust Fund, either (i) obtain
title to such Mortgaged Property as a result of or in lieu of foreclosure or
otherwise, or (ii) otherwise acquire possession of, or take any other action,
with respect to, such Mortgaged Property, if, as a result of any such action,
the Trustee, the Trust Administrator or the Certificateholders would be
considered to hold title to, to be a "mortgagee-in-possession" of, or to be an
"owner" or "operator" of such Mortgaged Property within the meaning of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended from time to time, or any comparable law, unless the Servicer
determines, based on its reasonable judgment and a prudent report prepared by a
Person who regularly conducts environmental audits using customary industry
standards, that:

                         (1) such Mortgaged Property is in compliance with
                  applicable environmental laws or, if not, that it would be in
                  the best economic interest of the Trust Fund to take such
                  actions as are necessary to bring the Mortgaged Property into
                  compliance therewith; and

                         (2) there are no circumstances present at such
                  Mortgaged Property relating to the use, management or disposal
                  of any hazardous substances, hazardous materials, hazardous
                  wastes, or petroleum-based materials for which investigation,
                  testing, monitoring, containment, clean-up or remediation
                  could be required under any federal, state or local law or
                  regulation, or that if any such materials are present for
                  which such action could be required, that it would be in the
                  best economic interest of the Trust Fund to take such actions
                  with respect to the affected Mortgaged Property.

                  The cost of the environmental audit report contemplated by
this Section 3.23 shall be advanced by the Servicer, subject to the Servicer's
right to be reimbursed therefor from the Collection Account as provided in
Section 3.11(a)(ix), such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received in
respect of the affected Mortgage Loan or other Mortgage Loans.

<PAGE>

                                      -61-

                  If the Servicer determines, as described above, that it is in
the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes, or petroleum- based materials affecting any such Mortgaged Property,
then the Servicer shall take such action as it deems to be in the best economic
interest of such Trust Fund. The cost of any such compliance, containment,
cleanup or remediation shall be advanced by the Servicer, subject to the
Servicer's right to be reimbursed therefor from the Collection Account as
provided in Section 3.11(a)(iii) and (ix), such right of reimbursement being
prior to the rights of Certificateholders to receive any amount in the
Collection Account received in respect of the affected Mortgage Loan or other
Mortgage Loans.

                  (c) The Servicer may at its option purchase from the Trust
Fund any Mortgage Loan which is 90 days or more delinquent and which the
Servicer determines in good faith will otherwise become subject to foreclosure
proceedings (evidence of such determination to be delivered in writing to the
Trustee and the Trust Administrator prior to purchase), at a price equal to the
Purchase Price. The Purchase Price for any Mortgage Loan purchased hereunder
shall be deposited in the Collection Account, and the Trustee, upon receipt of
written certification from the Servicer of such deposit, shall release or cause
to be released by the Custodian, to the Servicer the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment, in each
case without recourse, as the Servicer shall furnish and as shall be necessary
to vest in the Servicer title to any Mortgage Loan released pursuant hereto.

                  (d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: first, to reimburse the
Servicer (or any Sub-Servicer) or the Trust Administrator for any related
unreimbursed Servicing Advances and Payment Advances, pursuant to Section
3.11(a)(ii) or (iii); second, to accrued and unpaid interest on the Mortgage
Loan and the principal portion of Modified Scheduled Payments on the Mortgage
Loan, to the date of the Final Recovery Determination, or to the Due Date prior
to the Distribution Date on which such amounts are to be distributed if not in
connection with a Final Recovery Determination; third, as a recovery of
Arrearage with respect to the Mortgage Loan; and fourth, as a recovery of
principal of the Mortgage Loan. Notwithstanding the foregoing, proceeds received
in connection with any Final Recovery Determination, as well as any recovery
resulting from a partial collection of Insurance Proceeds or Liquidation
Proceeds, in respect of any defaulted Mortgage Loan, will be applied in the
following order of priority: first, to reimburse the Servicer (or any Sub-
Servicer) or the Trust Administrator for any related unreimbursed Servicing
Advances and Payment Advances, pursuant to Section 3.11(a)(ii) or (iii); second,
to accrued and unpaid interest on the Mortgage Loan and the principal portion of
Modified Scheduled Payments on the Mortgage Loan, to the date of the Final
Recovery Determination, or to the Due Date prior to the Distribution Date on
which such amounts are to be distributed if not in connection with a Final
Recovery Determination; third, as a recovery of principal of the Mortgage Loan;
and fourth, as a recovery of Arrearage with respect to the Mortgage Loan. If the
amount of the recovery so allocated to interest is less than the full amount of
accrued and unpaid interest due on such Mortgage Loan, the amount of such
recovery will be allocated by the Servicer as follows: first, to unpaid
Servicing Fees and Administrative Fees; and

<PAGE>

                                      -62-

second, to the balance of the interest then due and owing. The portion of the
recovery so allocated to unpaid Servicing Fees shall be reimbursed to the
Servicer or any Sub-Servicer pursuant to Section 3.11(a)(iii). The portion of
the recovery allocated to interest (net of unpaid Servicing Fees and
Administrative Fees) and the portion of the recovery allocated to principal of
the Mortgage Loan shall be applied as follows: first, to reimburse the Servicer
or the Trust Administrator, as applicable, for any related unreimbursed Payment
Advances in accordance with Section 3.11(a)(ii), and second, as part of the
amounts to be transferred to the Distribution Account in accordance with Section
3.10(b).

                  (e) If such action is consistent with the servicing standard
set forth in Section 3.01, the Servicer may sell any Mortgage Loan which is 90
days or more delinquent for less than its outstanding Legal Balance plus all
prior Payment Advances and Servicing Advances thereon.

                  SECTION 3.17.             Trustee to Cooperate; Release of
                                            Mortgage Files.

                  Upon the payment in full of any Mortgage Loan, or the receipt
by the Servicer of a notification that payment in full shall be escrowed in a
manner customary for such purposes, the Servicer will immediately notify the
Trust Administrator and the Trustee (or a Custodian on its behalf) by a
certification in the form of Exhibit E (which certification shall include a
statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the
Collection Account pursuant to Section 3.10 have been or will be so deposited)
of a Servicing Officer and shall request delivery to it of the Mortgage File.
Upon receipt of such certification and request, the Trustee shall promptly
release or cause the related Custodian to release the related Mortgage File to
the Servicer. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the Collection
Account or the Distribution Account.

                  From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any insurance policy relating to the Mortgage Loans, the Trustee or the
Custodian, upon request of the Servicer and delivery to the Trustee of a Request
for Release in the form of Exhibit E, shall release the related Mortgage File to
the Servicer, and the Trustee shall, at the direction of the Servicer, execute
such documents as shall be necessary to the prosecution of any such proceedings.
Such Request for Release shall obligate the Servicer to return each and every
document previously requested from the Mortgage File to the Trustee or any
related Custodian on its behalf when the need therefor by the Servicer no longer
exists, unless the Mortgage Loan has been liquidated and the Liquidation
Proceeds relating to the Mortgage Loan have been deposited in the Collection
Account or the Mortgage 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 Servicer
has delivered to the Trustee or the related Custodian a certificate of a
Servicing Officer certifying as to the name and address of the Person to which
such Mortgage File or such document was delivered and the purpose or purposes of
such delivery. Upon receipt of a certificate of a Servicing Officer stating that
such 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 Collection Account have been so deposited, or that such Mortgage Loan
has become an REO

<PAGE>

                                      -63-

Property, a copy of the Request for Release shall be released by the Trustee or
the Custodian on its behalf to the Servicer.

                  Upon written certification of a Servicing Officer, the Trustee
shall execute and deliver to the Servicer any court pleadings, requests for
trustee's sale or other documents necessary to the foreclosure or trustee's sale
in respect of a Mortgaged Property or to any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or Mortgage or to obtain a
deficiency judgment, or to enforce any other remedies or rights provided by the
Mortgage Note or Mortgage or otherwise available at law or in equity. Each such
certification shall include a request that such pleadings or documents be
executed by the Trustee and a statement as to the reason such documents or
pleadings are required and that the execution and delivery thereof by the
Trustee will not invalidate or otherwise affect the lien of the Mortgage, except
for the termination of such a lien upon completion of the foreclosure or
trustee's sale.

                  SECTION 3.18.             Servicing Compensation.

                  As compensation for the activities of the Servicer hereunder,
the Servicer shall be entitled to the Servicing Fee with respect to each
Mortgage Loan payable solely from payments of interest in respect of such
Mortgage Loan subject to Section 3.24. In addition, the Servicer shall be
entitled to recover unpaid Servicing Fees out of Insurance Proceeds, Late
Collections or Liquidation Proceeds to the extent permitted by Section
3.11(a)(iii) and out of amounts derived from the operation and sale of an REO
Property to the extent permitted by Section 3.23. The right to receive the
Servicing Fee may not be transferred in whole or in part except in connection
with the transfer of all of the Servicer's responsibilities and obligations
under this Agreement.

                  Additional servicing compensation in the form of prepayment
charges, assumption fees, late payment charges or otherwise shall be retained by
the Servicer (subject to Section 3.24) only to the extent such fees or charges
are received by the Servicer. The Servicer shall also be entitled pursuant to
Section 3.11(a)(iv) to withdraw from the Collection Account and pursuant to
Section 3.23(b) to withdraw from any REO Account, as additional servicing
compensation, interest or other income earned on deposits therein, subject to
Section 3.12 and Section 3.24. As a performance incentive, the Servicer shall
also be entitled to 8% of any amount collected on a Mortgage Loan and applied in
accordance with the provisions of this Agreement in reduction of the outstanding
Arrearage of such Mortgage Loan.

                  The Servicer shall be required to pay all expenses incurred by
it in connection with its servicing activities hereunder (including premiums for
the insurance required by Section 3.14, to the extent such premiums are not paid
by the related Mortgagors or by a Sub-Servicer and servicing compensation of
each Sub-Servicer) and shall not be entitled to reimbursement therefor except as
specifically provided herein.

<PAGE>

                                      -64-

                  SECTION 3.19.             Reports to the Trust Administrator
                                            and the Trustee; Collection Account
                                            Statements.

                  Not later than fifteen days after each Distribution Date, the
Servicer shall forward to the Trust Administrator, the Trustee and the Depositor
a statement prepared by the Servicer setting forth the status of the Collection
Account as of the close of business on such Distribution Date and showing, for
the period covered by such statement, the aggregate amount of deposits into and
withdrawals from the Collection Account of each category of deposit specified in
Section 3.10(a) and each category of withdrawal specified in Section 3.11(a).
Such statement shall also include information as to the aggregate of the
outstanding principal balances of all of the Mortgage Loans as of the last day
of the calendar month immediately preceding such Distribution Date. In lieu of
such statement, the Servicer may include such information in its Remittance
Report to the Trust Administrator pursuant to Section 4.03. Copies of such
statement or report shall be provided by the Trust Administrator to any
Certificateholder and to any Person identified to the Trust Administrator as a
prospective transferee of a Certificate, upon request at the expense of the
requesting party, provided such statement is delivered by the Servicer to the
Trust Administrator.

                  SECTION 3.20.             Statement as to Compliance.

                  The Servicer will deliver to the Trustee, the Trust
Administrator and the Depositor not later than April 30 of each year commencing
in 2003 an Officers' Certificate stating, as to each signatory thereof, that (i)
a review of the activities of the Servicer during the preceding year and of
performance under this Agreement has been made under such officers' supervision
and (ii) to the best of such officers' knowledge, based on such review, the
Servicer has fulfilled all of its obligations under this 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. Copies of any such statement shall be provided by the Trust
Administrator to any Certificateholder and to any Person identified to the Trust
Administrator as a prospective transferee of a Certificate, upon request at the
expense of the requesting party, provided such statement is delivered by the
Servicer to the Trust Administrator.

                  SECTION 3.21.             Independent Public Accountants'
                                            Servicing Report.

                  Not later than 120 days following the end of each fiscal year
of the Servicer commencing with the Servicer's fiscal year 2002, the Servicer,
at its expense, shall cause a nationally recognized firm of independent
certified public accountants to furnish to the Servicer a report to the effect
that, on the basis of an examination by such firm conducted substantially in
compliance with either the Uniform Single Attestation Program for Mortgage
Bankers established by the Mortgage Bankers Association of America or the Audit
Program for Mortgages serviced for FHLMC, the servicing by or on behalf of the
Servicer of mortgage loans under agreements substantially similar to each other
(including this Agreement) was conducted in compliance with the terms of such
agreements except for any significant exceptions or errors in records that, in
the opinion of the firm, the Audit Program for Mortgages serviced for FHLMC or
the Uniform Single Attestation Program for Mortgage Bankers requires it to
report with respect to the servicing of residential mortgage loans during the
most

<PAGE>

                                      -65-

recently completed fiscal year and (ii) on the basis of an examination conducted
by such firm in accordance with standards established by the American Institute
of Certified Public Accountants, such representation is fairly stated in all
material respects, subject to such exceptions and other qualifications that may
be appropriate. In rendering its report such firm may rely, as to matters
relating to the direct servicing of residential mortgage loans by Sub-Servicers,
upon comparable reports of firms of independent certified public accountants
rendered on the basis of examinations conducted in accordance with the same
standards (rendered within one year of such report) with respect to those Sub-
Servicers. Immediately upon receipt of such report, the Servicer shall furnish a
copy of such report to the Trust Administrator, the Trustee and each Rating
Agency. Copies of such statement shall be provided by the Trust Administrator to
any Certificateholder upon request at the expense of the requesting party,
provided that such statement is delivered by the Servicer to the Trust
Administrator.

                  SECTION 3.22.             Access to Certain Documentation.

                  The Servicer shall provide to the Office of Thrift
Supervision, the FDIC, and any other federal or state banking or insurance
regulatory authority that may exercise authority over any Certificateholder,
access to the documentation regarding the Mortgage Loans required by applicable
laws and regulations. Such access shall be afforded without charge, but only
upon reasonable request and during normal business hours at the offices of the
Servicer designated by it. In addition, access to the documentation regarding
the Mortgage Loans will be provided to any Certificateholder, the Trustee, the
Trust Administrator and to any Person identified to the Servicer as a
prospective transferee of a Certificate, upon reasonable request during normal
business hours at the offices of the Servicer designated by it at the expense of
the Person requesting such access.

                  SECTION 3.23.             Title, Management and Disposition of
                                            REO Property.

                  (a) The deed or certificate of sale of any REO Property shall
be taken in the name of the Trustee, or its nominee, on behalf of the
Certificateholders. The Servicer, on behalf of the Trust Fund, shall either sell
any REO Property within three years after the Trust Fund acquires ownership of
such REO Property for purposes of Section 860G(a)(8) of the Code or request from
the Internal Revenue Service, more than 60 days before the day on which the
three-year grace period would otherwise expire, an extension of the three-year
grace period, unless the Servicer shall have delivered to the Trustee and the
Trust Administrator an Opinion of Counsel, addressed to the Trustee, the Trust
Administrator and the Servicer, to the effect that the holding by the Trust Fund
of such REO Property subsequent to three years after its acquisition will not
result in the imposition on the Trust Fund of taxes on "prohibited transactions"
thereof, as defined in Section 860F of the Code, or cause the Trust Fund to fail
to qualify as a REMIC under Federal law at any time that any Certificates are
outstanding. The Servicer shall manage, acquire, conserve, protect and operate
each REO Property for the Certificateholders solely for the purpose of its
prompt disposition and sale in a manner which does not cause such REO Property
to fail to qualify as "foreclosure property" within the meaning of Section
860G(a)(8) of the Code or result in the receipt by the Trust Fund of any "income
from non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the
Code, or any "net income from foreclosure property" which is subject to taxation
under the REMIC Provisions.

<PAGE>

                                      -66-

                  (b) The Servicer shall segregate and hold all funds collected
and received in connection with the operation of any REO Property separate and
apart from its own funds and general assets and shall establish and maintain
with respect to REO Properties an account held in trust for the Trustee for the
benefit of the Certificateholders (the "REO Account"), which shall be an
Eligible Account. The Servicer shall be permitted to allow the Collection
Account to serve as the REO Account, subject to separate ledgers for each REO
Property. The Servicer shall be entitled to retain or withdraw any interest
income paid on funds deposited in the REO Account.

                  (c) The Servicer shall have full power and authority, subject
only to the specific requirements and prohibitions of this Agreement, to do any
and all things in connection with any REO Property as are consistent with the
manner in which the Servicer manages and operates similar property owned by the
Servicer or any of its Affiliates, all on such terms and for such period as the
Servicer deems to be in the best interests of Certificateholders. In connection
therewith, the Servicer shall deposit, or cause to be deposited, on a daily
basis and, in no event later than the second Business Day following receipt, in
the REO Account all revenues received by it with respect to an REO Property and
shall withdraw therefrom funds necessary for the proper operation, management
and maintenance of such REO Property including, without limitation:

                         (i) all insurance premiums due and payable in respect
                  of such REO Property;

                         (ii) all real estate taxes and assessments in respect
                  of such REO Property that may result in the imposition of a
                  lien thereon; and

                         (iii) all costs and expenses necessary to maintain such
                  REO Property.

To the extent that amounts on deposit in the REO Account with respect to an REO
Property are insufficient for the purposes set forth in clauses (i) through
(iii) above with respect to such REO Property, the Servicer shall advance from
its own funds as a Servicing Advance such amount as is necessary for such
purposes if, but only if, the Servicer would make such advances if the Servicer
owned the REO Property and if in the Servicer's judgment, the payment of such
amounts will be recoverable from the rental or sale of the REO Property.

                  Notwithstanding the foregoing, the Servicer shall not:

                         (i) permit the Trust Fund to 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

<PAGE>

                                      -67-

                  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) allow any Person to Directly Operate any REO
                  Property on any date more than 90 days after its date of
                  acquisition by the Trust Fund;

unless, in any such case, the Servicer has obtained an Opinion of Counsel,
provided to the Trustee and the Trust Administrator, to the effect that such
action will not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code at any time that
it is held by the Trust Fund, in which case the Servicer may take such actions
as are specified in such Opinion of Counsel.

                  The Servicer may contract with any Independent Contractor for
the operation and management of any REO Property, provided that:

                         (i) the terms and conditions of any such contract shall
                  not be inconsistent herewith;

                        (ii) any such contract shall require, or shall be
                  administered to require, that the Independent Contractor pay
                  all costs and expenses incurred in connection with the
                  operation and management of such REO Property, including those
                  listed above and remit all related revenues (net of such costs
                  and expenses) to the Servicer as soon as practicable, but in
                  no event later than thirty days following the receipt thereof
                  by such Independent Contractor;

                       (iii) none of the provisions of this Section 3.23(c)
                  relating to any such contract or to actions taken through any
                  such Independent Contractor shall be deemed to relieve the
                  Servicer of any of its duties and obligations to the Trustee
                  on behalf of the Certificateholders with respect to the
                  operation and management of any such REO Property; and

                        (iv) the Servicer shall be obligated with respect
                  thereto to the same extent as if it alone were performing all
                  duties and obligations in connection with the operation and
                  management of such REO Property.

The Servicer shall be entitled to enter into any agreement with any Independent
Contractor performing services for it related to its duties and obligations
hereunder for indemnification of the Servicer by such Independent Contractor,
and nothing in this Agreement shall be deemed to limit or modify such
indemnification. The Servicer shall be solely liable for all fees owed by it to
any such Independent Contractor, irrespective of whether the Servicer's
compensation pursuant to Section 3.18 is sufficient to pay such fees.

<PAGE>

                                      -68-

                  (d) In addition to the withdrawals permitted under Section
3.23(c), the Servicer may from time to time make withdrawals from the REO
Account for any REO Property: (i) to pay itself or any Sub-Servicer unpaid
Servicing Fees in respect of the related Mortgage Loan; and (ii) to reimburse
itself or any Sub-Servicer for unreimbursed Servicing Advances and Payment
Advances made in respect of such REO Property or the related Mortgage Loan. On
the Servicer Remittance Date, the Servicer shall withdraw from each REO Account
maintained by it and deposit into the Distribution Account in accordance with
Section 3.10(d)(ii), for distribution on the related Distribution Date in
accordance with Section 4.01, the income from the related REO Property received
during the prior calendar month, net of any withdrawals made pursuant to Section
3.23(c) or this Section 3.23(d).

                  (e) Subject to the time constraints set forth in Section
3.23(a), each REO Disposition shall be carried out by the Servicer at such price
and upon such terms and conditions as the Servicer shall deem necessary or
advisable, as shall be normal and usual in its general servicing activities.

                  (f) The proceeds from the REO Disposition, net of (i) any
amount required by law to be remitted to the Mortgagor under the related
Mortgage Loan, (ii) any payment or reimbursement to the Servicer or any
Sub-Servicer as provided above and (iii) brokers' commissions and closing costs
customary for the locale of the related REO Property, shall be deposited in the
Distribution Account in accordance with Section 3.10(d)(ii) on the Servicer
Remittance Date in the month following the receipt thereof for distribution on
the related Distribution Date in accordance with Section 4.01. Any REO
Disposition shall be for cash only (unless changes in the REMIC Provisions made
subsequent to the Startup Day allow a sale for other consideration).

                  (g) The Servicer shall file information returns with respect
to the receipt of mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any Mortgaged Property and cancellation of
indebtedness income with respect to any Mortgaged Property as required by
Sections 6050H, 6050J and 6050P of the Code, respectively. Such reports shall be
in form and substance sufficient to meet the reporting requirements imposed by
such Sections 6050H, 6050J and 6050P of the Code.

                  SECTION 3.24.             Obligations of the Servicer in
                                            Respect of Prepayment Interest
                                            Shortfalls.

                  The Servicer shall deliver to the Trust Administrator for
deposit into the Distribution Account on or before 3:00 p.m. New York time on
the Servicer Remittance Date from its own funds an amount equal to the lesser of
(i) the aggregate of the Prepayment Interest Shortfalls for the related
Distribution Date resulting solely from Principal Prepayments during the related
Prepayment Period and (ii) its aggregate Servicing Fee for the most recently
ended calendar month. Any amounts paid by the Servicer pursuant to this Section
3.24 shall not be reimbursed by the Trust Fund.

                  The Servicer shall have no obligation to pay from its own
funds any amounts in respect of Relief Act Interest Shortfalls.

<PAGE>

                                      -69-

                  SECTION 3.25.             Expense Account.

                  (a) The Trust Administrator shall establish and maintain in
its name, for the benefit of the Trustee in trust for the Certificateholders,
the Expense Account. The Expense Account shall be an Eligible Account, and funds
on deposit therein shall be held separate and apart from, and shall not be
commingled with, any other moneys, including, without limitation, other moneys
of the Trust Administrator held pursuant to this Agreement.

                  (b) On the Business Day immediately preceding each
Distribution Date, the Trust Administrator shall withdraw from the Distribution
Account and deposit into the Expense Account an amount equal to the
Administrative Fee for such Distribution Date.

                  (c) The Trust Administrator shall make withdrawals from the
Expense Account to pay the Administrative Fee on each Distribution Date by 10:00
a.m. New York City time.

                  (d) Funds in the Expense Account may not be invested.

                  (e) Upon termination of the Trust Fund in accordance with
Section 10.01, any amounts, if any, remaining in the Expense Account following
the payment of all unpaid Administrative Fees shall be released to the Servicer
as additional servicing compensation.

                  SECTION 3.26.             Obligations of the Servicer in
                                            Respect of Mortgage Rates and
                                            Monthly Payments.

                  In the event that a shortfall in any collection on or
liability with respect to any Mortgage Loan results from or is attributable to
adjustments to Mortgage Rates, Modified Scheduled Payments or Unpaid Principal
Balances that were made by the Servicer in a manner not consistent with the
terms of the related Mortgage Note and this Agreement, the Servicer, upon
discovery or receipt of notice thereof, immediately shall deliver to the Trust
Administrator for deposit in the Distribution Account from its own funds the
amount of any such shortfall and shall indemnify and hold harmless the Trust
Fund, the Trustee, the Trust Administrator, the Depositor and any successor
servicer in respect of any such liability. Such indemnities shall survive the
termination or discharge of this Agreement.

                  SECTION 3.27.             Reserve Fund.

                  No later than the Closing Date, the Trust Administrator shall
establish and maintain with itself a separate, segregated trust account titled,
"Reserve Fund, Citibank, N.A., as Trust Administrator for JPMorgan Chase Bank,
as Trustee, in trust for registered holders of Salomon Brothers Mortgage
Securities VII, Inc., Mortgage Pass-Through Certificates, Series 2001-2."

                  On each Distribution Date as to which there is a Net WAC Rate
Carryover Amount payable to the Class A Certificates or the Mezzanine
Certificates, the Trust Administrator has been directed by the Class R
Certificateholders to, and therefore will, deposit into the Reserve Fund the
amounts described in Section 4.01(d)(i), rather than distributing such amounts
to the Class R

<PAGE>

                                      -70-

Certificateholders. On each such Distribution Date, the Trust Administrator
shall hold all such amounts for the benefit of the Holders of the Class A
Certificates and the Mezzanine Certificates, and will distribute such amounts to
the Holders of the Class A Certificates and the Mezzanine Certificates in the
amounts and priorities set forth in Section 4.01(d). If no Net WAC Rate
Carryover Amounts are payable on a Distribution Date, the Trust Administrator
shall deposit into the Reserve Fund on behalf of the Class R Certificateholders,
from amounts otherwise distributable to the Class R Certificateholders, an
amount such that when added to other amounts already on deposit in the Reserve
Fund, the aggregate amount on deposit therein is equal to $1,000.

                  For federal and state income tax purposes, the Class R
Certificateholders will be deemed to be the owners of the Reserve Fund and all
amounts deposited into the Reserve Fund (other than the initial deposit therein
of $1,000) shall be treated as amounts distributed by the Trust REMIC to the
Holders of the Class R Certificates. Upon the termination of the Trust, or the
payment in full of the Class A Certificates and the Mezzanine Certificates, all
amounts remaining on deposit in the Reserve Fund will be released by the Trust
and distributed to the Class R Certificateholders or their designees. The
Reserve Fund will be part of the Trust Fund but not part of the Trust REMIC and
any payments to the Holders of the Class A Certificates or the Mezzanine
Certificates of Net WAC Rate Carryover Amounts will not be payments with respect
to a "regular interest" in a REMIC within the meaning of Code Section
860(G)(a)(1).

                  By accepting a Class R Certificate, each Class R
Certificateholder hereby agrees to direct the Trust Administrator, and the Trust
Administrator hereby is directed, to deposit into the Reserve Fund the amounts
described above on each Distribution Date as to which there is any Net WAC Rate
Carryover Amount rather than distributing such amounts to the Class R
Certificateholders. By accepting a Class R Certificate, each Class R
Certificateholder further agrees that such direction is given for good and
valuable consideration, the receipt and sufficiency of which is acknowledged by
such acceptance.

                  At the direction of the Holders of a majority in Percentage
Interest in the Class R Certificates, the Trust Administrator shall direct any
depository institution maintaining the Reserve Fund to invest the funds in such
account in one or more Permitted Investments bearing interest or sold at a
discount, and maturing, unless payable on demand, (i) no later than the Business
Day immediately preceding the date on which such funds are required to be
withdrawn from such account pursuant to this Agreement, if a Person other than
the Trust Administrator or an Affiliate manages or advises such investment, and
(ii) no later than the date on which such funds are required to be withdrawn
from such account pursuant to this Agreement, if the Trust Administrator or an
Affiliate manages or advises such investment. If no investment direction of the
Holders of a majority in Percentage Interest in the Class R Certificates with
respect to the Reserve Fund is received by the Trust Administrator, the Trust
Administrator shall invest the funds in such account in Permitted Investments
managed by the Trust Administrator or an Affiliate of the kind described in
clause (vi) of the definition of Permitted Investments.

<PAGE>

                                      -71-

                  For federal tax return and information reporting, the right of
the Class A Certificateholders and the Mezzanine Certificateholders to receive
payments from the Reserve Fund in respect of any Net Wac Rate Carryover Amount
shall be assigned a value of zero.

                  SECTION 3.28.             Advance Facility.

                  (a) The Trust Administrator and the Trustee on behalf of the
Trust Fund, with the consent of the Servicer, are hereby authorized to enter
into a facility with any Person which provides that such Person (an "Advancing
Person") may make all or a portion of the Payment Advances and/or Servicing
Advances to the Trust Fund under this Agreement, although no such facility shall
reduce or otherwise affect the Servicer's obligation to fund such Payment
Advances and/or Servicing Advances. To the extent that an Advancing Person makes
all or a portion of any Payment Advance or any Servicing Advance and provides
the Trust Administrator with notice acknowledged by the Servicer that such
Advancing Person is entitled to reimbursement, such Advancing Person shall be
entitled to receive reimbursement pursuant to this Agreement for such amount to
the extent provided in Section 3.28(b). Such notice from the Advancing Person
must specify the amount of the reimbursement and must specify which Section of
this Agreement permits the applicable Payment Advance or Servicing Advance to be
reimbursed. The Trustee shall be entitled to rely without independent
investigation on the Advancing Person's statement with respect to the amount of
any reimbursement pursuant to this Section 3.28 and with respect to the
Advancing Person's statement with respect to the Section of this Agreement that
permits the applicable Payment Advance or Servicing Advance to be reimbursed. An
Advancing Person whose obligations are limited to the making of Payment Advances
and/or Servicing Advances shall not be required to meet the qualifications of a
Servicer or a Sub-Servicer specified herein and will not be deemed to be a
Sub-Servicer under this Agreement.

                  (b) If an advancing facility is entered into, then if the
terms of such advancing facility so provide, the Servicer shall not be permitted
to reimburse itself therefor under Section 3.11(a)(ii), Section 3.11(a)(iii),
Section 3.11(a)(vi), Section 3.11(a)(ix) and Section 4.04(b) prior to the
remittance to the Trust Fund, but instead the Servicer shall include such
amounts in the applicable remittance to the Trustee made pursuant to Section
3.10(b) and Section 3.10(d). The Trustee is hereby authorized to pay to the
Advancing Person, reimbursements for Payment Advances and Servicing Advances
from the Distribution Account to the same extent the Servicer would have been
permitted to reimburse itself for such Payment Advances and/or Servicing
Advances in accordance with Section 3.11(a)(ii), Section 3.11(a)(iii), Section
3.11(a)(vi), Section 3.11(a)(ix) or Section 4.04(b), as the case may be, had the
Servicer itself funded such Payment Advance or Servicing Advance. The Trust
Administrator is hereby authorized to pay directly to the Advancing Person such
portion of the Servicing Fee, the amount payable to the Servicer pursuant to
Section 3.11(a)(iv) and the amount payable to the Servicer pursuant to Section
3.11(a)(x) as the parties to any advancing facility agree.

                  (c) All Payment Advances and Servicing Advances made pursuant
to the terms of this Agreement shall be deemed made and shall be reimbursed on a
"first in-first out" (FIFO) basis.

<PAGE>

                                      -72-

                                   ARTICLE IV

                         PAYMENTS TO CERTIFICATEHOLDERS

                  SECTION 4.01.             Distributions.

                  (a) On each Distribution Date the Trust Administrator shall
withdraw from the Distribution Account that portion of Available Funds for such
Distribution Date consisting of the Interest Remittance Amount for such
Distribution Date, and make the following disbursements and transfers in the
order of priority described below, in each case to the extent of the Interest
Remittance Amount remaining for such Distribution Date:

         (i) to the Class A Certificates, the Interest Distribution Amount and
any Interest Carry Forward Amount for such Class;

         (ii) to the Class M-1 Certificates, the Interest Distribution Amount
and any Interest Carry Forward Amount for such Class;

         (iii) to the Class M-2 Certificates, the Interest Distribution Amount
and any Interest Carry Forward Amount for such Class;

         (iv) to the Class M-3 Certificates, the Interest Distribution Amount
and any Interest Carry Forward Amount for such Class;

         (v) to the Class M-4 Certificates, the Interest Distribution Amount and
any Interest Carry Forward Amount for such Class;

         (vi) to the Class M-5 Certificates, the Interest Distribution Amount
and any Interest Carry Forward Amount for such Class;

         (vii) to the Class M-6 Certificates, the Interest Distribution Amount
and any Interest Carry Forward Amount for such class; and

         (viii) for application as part of Net Monthly Excess Cashflow.

                  (b) On each Distribution Date (I) prior to the Stepdown Date
or (II) on which a Trigger Event is in effect, the Holders of the Certificates
shall be entitled to receive distributions in respect of principal to the extent
of the Principal and Arrearage Distribution Amount in the following amounts and
order of priority:

         (i) to the Class A Certificates, until the Certificate Principal
Balance thereof has been reduced to zero;

<PAGE>

                                      -73-

         (ii) to the Class M-1 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero;

         (iii) to the Class M-2 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero;

         (iv) to the Class M-3 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero;

         (v) to the Class M-4 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero;

         (vi) to the Class M-5 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero;

         (vii) to the Class M-6 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; and

         (viii) for application as part of Net Monthly Excess Cashflow.

                (c) On each Distribution Date (I) on or after the Stepdown Date
and (II) on which a Trigger Event is not in effect, the Holders of the
Certificates shall be entitled to receive distributions in respect of principal
to the extent of the Principal and Arrearage Distribution Amount in the
following amounts and order of priority:

         (i) to the Class A Certificates, the Class A Principal Distribution
Amount until the Certificate Principal Balance of the Class A Certificates has
been reduced to zero;

         (ii) to the Class M-1 Certificates, the Class M-1 Principal
Distribution Amount until the Certificate Principal Balance of the Class M-1
Certificates has been reduced to zero;

         (iii) to the Class M-2 Certificates, the Class M-2 Principal
Distribution Amount until the Certificate Principal Balance of the Class M-2
Certificates has been reduced to zero;

         (iv) to the Class M-3 Certificates, the Class M-3 Principal
Distribution Amount until the Certificate Principal Balance of the Class M-3
Certificates has been reduced to zero;

         (v) to the Class M-4 Certificates, the Class M-4 Principal Distribution
Amount until the Certificate Principal Balance of the Class M-4 Certificates has
been reduced to zero;

         (vi) to the Class M-5 Certificates, the Class M-5 Principal
Distribution Amount until the Certificate Principal Balance of the Class M-5
Certificates has been reduced to zero;

<PAGE>

                                      -74-

         (vii) to the Class M-6 Certificates, the Class M-6 Principal
Distribution Amount until the Certificate Principal Balance of the Class M-6
Certificates has been reduced to zero; and

         (viii) for application as part of Net Monthly Excess Cashflow.

                (d) With respect to any Distribution Date, any Net Monthly
Excess Cashflow shall be paid as follows:

         (i) to the Class R Certificates, for deposit into the Reserve Fund, the
Senior Residual Distribution Amount, if any, for such Distribution Date;

         (ii) to the Class or Classes of Certificates then entitled to receive
distributions in respect of principal, (1) in the case of each Distribution Date
(I) prior to the Stepdown Date or (II) on which a Trigger Event is in effect, as
provided in clause (b) above, or (2) in the case of each Distribution Date (I)
on or after the Stepdown Date and (II) on which a Trigger Event is not in
effect, as provided in clause (c) above;

         (iii) to the Class M-6 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero;

         (iv) to the Class M-5 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero;

         (v) to the Class M-4 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero;

         (vi) to the Class M-3 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero;

         (vii) to the Class M-2 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero;

         (viii) to the Class M-1 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero;

         (ix) to the Class A Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; and

         (x) to the Class R Certificates, any remaining amounts.

         On each Distribution Date, to the extent required following the
distribution of Net Monthly Excess Cashflow as described above, the Trust
Administrator will withdraw from amounts in the Reserve Fund deposited therein
pursuant to clause (i) above to pay the Class A Certificates and the Class M
Certificates any Net WAC Rate Carryover Amounts in the following order of
priority, in each

<PAGE>

                                      -75-

case to the extent of amounts remaining in the Reserve Fund: first, to the Class
A Certificates; second, to the Class M-1 Certificates, third, to the Class M-2
Certificates, fourth, to the Class M-3 Certificates, fifth, to the Class M-4
Certificates, sixth, to the Class M-5 Certificates and seventh, to the Class M-6
Certificates.

                  (e) All distributions made with respect to each Class of
Certificates on each Distribution Date shall be allocated PRO RATA among the
outstanding Certificates in such Class based on their respective Percentage
Interests. Payments in respect of each Class of Certificates on each
Distribution Date will be made to the Holders of the respective Class of record
on the related Record Date (except as otherwise provided in Section 4.01(g) or
Section 10.01 respecting the final distribution on such Class), based on the
aggregate Percentage Interest represented by their respective Certificates, and
shall be made by wire transfer of immediately available funds to the account of
any such Holder at a bank or other entity having appropriate facilities
therefor, if such Holder shall have so notified the Trust Administrator in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Certificates having an
initial aggregate Certificate Principal Balance that is in excess of the lesser
of (i) $5,000,000 or (ii) two-thirds of the initial Certificate Principal
Balance (or, in the case of the Class R Certificates, a 66% Percentage Interest)
of such Class of Certificates, or otherwise by check mailed by first class mail
to the address of such Holder appearing in the Certificate Register. The final
distribution on each Certificate will be made in like manner, but only upon
presentment and surrender of such Certificate at the Corporate Trust Office or
such other location specified in the notice to Certificateholders of such final
distribution.

                  Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trust Administrator,
the Trustee, the Certificate Registrar, the Depositor or the Servicer shall have
any responsibility therefor except as otherwise provided by this Agreement or
applicable law.

                  (f) The rights of the Certificateholders to receive
distributions in respect of the Certificates, and all interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. Neither the Holders of any Class of Certificates nor the Trust
Administrator nor the Trustee nor the Servicer shall in any way be responsible
or liable to the Holders of any other Class of Certificates in respect of
amounts properly previously distributed on the Certificates.

                  (g) Except as otherwise provided in Section 10.01, whenever
the Trust Administrator expects that the final distribution with respect to any
Class of Certificates will be made on the next Distribution Date, the Trust
Administrator shall, no later than five (5) days after the related Determination
Date, mail to each Holder on such date of such Class of Certificates a notice to
the effect that:

<PAGE>

                                      -76-

                (i) the Trust Administrator expects that the final distribution
         with respect to such Class of Certificates will be made on such
         Distribution Date but only upon presentation and surrender of such
         Certificates at the office of the Trust Administrator therein
         specified, and

               (ii) no interest shall accrue on such Certificates from and after
         the end of the related Interest Accrual Period.

Any funds not distributed to any Holder or Holders of Certificates of such Class
on such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such date, be set aside and held in trust
and credited to the account of the appropriate non-tendering Holder or Holders.
If any Certificates as to which notice has been given pursuant to this Section
4.01(g) shall not have been surrendered for cancellation within six months after
the time specified in such notice, the Trust Administrator shall mail a second
notice to the remaining non-tendering Certificateholders to surrender their
Certificates for cancellation in order to receive the final distribution with
respect thereto. If within one year after the second notice all such
Certificates shall not have been surrendered for cancellation, the Trust
Administrator shall, directly or through an agent, mail a final notice to the
remaining non-tendering Certificateholders concerning surrender of their
Certificates but shall continue to hold any remaining funds for the benefit of
non-tendering Certificateholders. The costs and expenses of maintaining the
funds in trust and of contacting such Certificateholders shall be paid out of
the assets remaining in such trust fund. If within one year after the final
notice any such Certificates shall not have been surrendered for cancellation,
the Trust Administrator shall pay to Salomon Smith Barney Inc. all such amounts,
and all rights of non-tendering Certificateholders in or to such amounts shall
thereupon cease. No interest shall accrue or be payable to any Certificateholder
on any amount held in trust by the Trust Administrator as a result of such
Certificateholder's failure to surrender its Certificate(s) for final payment
thereof in accordance with this Section 4.01(g). Any such amounts held in trust
by the Trust Administrator shall be held in an Eligible Account and the Trust
Administrator may direct any depository institution maintaining such account to
invest the funds in one or more Permitted Investments. All income and gain
realized from the investment of funds deposited in such accounts held in trust
by the Trust Administrator shall be for the benefit of the Trust Administrator;
provided, however, that the Trust Administrator shall deposit in such account
the amount of any loss of principal incurred in respect of any such Permitted
Investment made with funds in such accounts immediately upon the realization of
such loss.

                  SECTION 4.02.             Statements to Certificateholders.

                  On each Distribution Date, the Trust Administrator shall
prepare and make available on its website at www.sf.citidirect.com until the
next Distribution Date for access by each Holder of the REMIC Regular
Certificates a statement as to the distributions made on such Distribution Date
setting forth:

                         (i) the amount of the distribution made on such
                  Distribution Date to the Holders of Certificates of each such
                  Class allocable to principal;

<PAGE>

                                      -77-

                         (ii) the amount of the distribution made on such
                  Distribution Date to the Holders of Certificates of each such
                  Class allocable to interest;

                       (iii) the aggregate amount of compensation received by
                  the Servicer for the related Due Period, the amount of
                  Arrearage collections for the related Due Period or Prepayment
                  Period, as applicable, which the Servicer has retained and
                  such other customary information as the Trust Administrator
                  deems necessary or desirable, or which a Certificateholder
                  reasonably requests, to enable Certificateholders to prepare
                  their tax returns;

                        (iv) the aggregate amount of Payment Advances for such
                  Distribution Date, the aggregate amount of Payment Advances
                  reimbursed during the calendar month preceding such
                  Distribution Date and the aggregate amount of unreimbursed
                  Payment Advances at the close of business on such Distribution
                  Date;

                         (v) (a) the aggregate Unpaid Principal Balance of the
                  Mortgage Loans and any REO Properties and (b) the aggregate
                  amount of Arrearage, in each case, after taking into account
                  scheduled payments received or advanced for the related Due
                  Period and unscheduled collections received during the related
                  Prepayment Period;

                        (vi) the number, aggregate Legal Balance, weighted
                  average remaining term to original maturity and weighted
                  average Mortgage Rate of the Mortgage Loans as of the last day
                  of the related Due Period;

                       (vii) the number, aggregate Unpaid Principal Balance, and
                  aggregate amount of Arrearage of Mortgage Loans (a) delinquent
                  one payment, (b) delinquent two payments, (c) delinquent three
                  or more payments, (d) as to which foreclosure proceedings have
                  been commenced and (e) with respect to which related Mortgagor
                  has filed for protection under applicable bankruptcy laws,
                  with respect to whom bankruptcy proceedings are pending or
                  with respect to whom bankruptcy protection is in force (in
                  each case as of the last day of the calendar month immediately
                  preceding the month of such Distribution Date, it being
                  understood that for purposes of calculating the information
                  described in clauses (a), (b), and (c) above, a Mortgage Loan
                  is delinquent one payment as of last day of such calendar
                  month if a payment due on a Due Date has not been received by
                  the close of business on the next succeeding Due Date which
                  next succeeding Due Date falls on or before such last day of
                  such calendar month, a Mortgage Loan delinquent two payments
                  as of last day of such calendar month if a payment due on a
                  Due Date has not been received by the close of business on the
                  second succeeding Due Date which second succeeding Due Date
                  falls on or before such last day of such calendar month and a
                  Mortgage Loan delinquent three payments as of last day of such
                  calendar month if a payment due on a Due Date has not been
                  received by the close of business on the third succeeding Due
                  Date which third succeeding Due Date falls on or before such
                  last day of such calendar month), and the

<PAGE>

                                      -78-

                  number, aggregate Unpaid Principal Balance and aggregate
                  amount of Arrearage of Mortgage Loans solely with respect to
                  the information described in clause (e) above;

                      (viii) with respect to any Mortgage Loan purchased by the
                  Servicer pursuant to Section 3.16(c), the loan number of such
                  Mortgage Loan, the Unpaid Principal Balance of such Mortgage
                  Loan and the amount of Arrearage with respect to such Mortgage
                  Loan;

                        (ix) with respect to any Mortgage Loan that became an
                  REO Property during the preceding calendar month, the loan
                  number of such Mortgage Loan, the Unpaid Principal Balance of
                  such Mortgage Loan and the amount of Arrearage of such
                  Mortgage Loan as of the date it became an REO Property;

                         (x) with respect to any Mortgage Loan that was an REO
                  Property as of the last day of the preceding calendar month,
                  the loan number of such Mortgage Loan, the Unpaid Principal
                  Balance of such Mortgage Loan and the amount of Arrearage of
                  such Mortgage Loan as of the last day of such calendar month;

                        (xi) with respect to any REO Property liquidated during
                  the preceding calendar month, the loan number of such Mortgage
                  Loan, the Unpaid Principal Balance of such Mortgage Loan, the
                  amount of Arrearage of such Mortgage Loan and the amount of
                  Realized Losses incurred with respect to such Mortgage Loan as
                  of the date it became a liquidated REO Property;

                         (xii) the aggregate amount of Principal Prepayments and
                  actual collections of Arrearage made during the related
                  Prepayment Period;

                         (xiii) the aggregate amount of Realized Losses incurred
                  during the related Prepayment Period and since the Closing
                  Date;

                         (xiv) the aggregate amount of Extraordinary Trust Fund
                  Expenses withdrawn from the Collection Account or the
                  Distribution Account for such Distribution Date and since the
                  Closing Date;

                        (xv) the aggregate Certificate Principal Balance of each
                  such Class of Certificates, after giving effect to the
                  distributions, and allocations of Realized Losses and
                  Extraordinary Trust Fund Expenses, made on such Distribution
                  Date, separately identifying any reduction thereof due to
                  allocations of Realized Losses and Extraordinary Trust Fund
                  Expenses;

                         (xvi) the Certificate Factor for each such Class of
                  Certificates applicable to such Distribution Date;

<PAGE>

                                      -79-

                         (xvii) the Interest Distribution Amount in respect of
                  each such Class of Certificates for such Distribution Date and
                  the respective portions thereof, if any, remaining unpaid
                  following the distributions made in respect of such
                  Certificates on such Distribution Date;

                         (xviii) the aggregate amount of any Prepayment Interest
                  Shortfalls for such Distribution Date, to the extent not
                  covered by payments by the Servicer pursuant to Section 3.24;

                         (xix) the aggregate amount of Relief Act Interest
                  Shortfalls for such Distribution Date;

                         (xx) the Adjusted Legal Balance as of the last day of
                  the related Due Period;

                         (xxi) the Pass-Through Rate for each class of REMIC
                  Regular Certificates for such Distribution Date and the Net
                  WAC Rate for such Distribution Date;

                         (xxii) the Overcollateralized Amount for such
                  Distribution Date;

                         (xxiii) the aggregate Net WAC Rate Carryover Amount for
                  such Distribution Date, the Senior Residual Distribution
                  Amount for such Distribution Date, the amounts paid from the
                  Reserve Fund to the REMIC Regular Certificates in respect of
                  Net WAC Rate Carryover Amounts for such Distribution Date, the
                  amount of any Net WAC Rate Carryover Amount for any Class of
                  REMIC Regular Certificates remaining unpaid on such
                  Distribution Date and the amount remaining on deposit in the
                  Reserve Fund after taking into account all deposits into and
                  withdrawals therefrom on such Distribution Date;

                         (xxiv) the Credit Enhancement Percentage for such
                  Distribution Date;

                         (xxv) when the Stepdown Date has occurred and whether a
                  Trigger Event is in effect for such Distribution Date;

                         (xxvi) the Available Funds for such Distribution Date;

                         (xxvii) to the extent the Trust Administrator using
                  reasonable efforts can determine and provide, the Constant
                  Prepayment Rate (A) for the calendar month preceding such
                  Distribution Date and (B) from the Cut-off Date through the
                  calendar month preceding such Distribution Date; and

                         (xxviii) to the extent the Trust Administrator using
                  reasonable efforts can determine and provide, Arrearage
                  Repayment Percentage (A) for the calendar month preceding such
                  Distribution Date and (B) from the Cut-off Date through the
                  calendar month preceding such Distribution Date.

<PAGE>

                                      -80-

                  In the case of information furnished pursuant to subclauses
(i) through (iii) above, the amounts shall be expressed as a dollar amount per
Single Certificate of the relevant Class.

                  Within a reasonable period of time after the end of each
calendar year, the Trust Administrator shall furnish to each Person who at any
time during the calendar year was a Holder of a REMIC Regular Certificate a
statement containing the information set forth in subclauses (i) through (iii)
above, aggregated for such calendar year or applicable portion thereof during
which such person was a Certificateholder. Such obligation of the Trust
Administrator shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Trust
Administrator pursuant to any requirements of the Code as from time to time are
in force.

                  On each Distribution Date, the Trust Administrator shall make
available on its website at www.sf.citidirect.com for access by the Depositor,
each Holder of a Residual Certificate, the Trustee and the Servicer, the reports
made available to the REMIC Regular Certificateholders on such Distribution Date
and a statement setting forth the amounts, if any, actually distributed with
respect to the Residual Certificates, respectively, on such Distribution Date.

                  Within a reasonable period of time after the end of each
calendar year, the Trust Administrator shall furnish to each Person who at any
time during the calendar year was a Holder of a Residual Certificate a statement
setting forth the amount, if any, actually distributed with respect to the
Residual Certificates, as appropriate, aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.

                  The Trust Administrator shall, upon request, furnish to each
Certificateholder, during the term of this Agreement, such periodic, special, or
other reports or information, whether or not provided for herein, as shall be
reasonable with respect to the Certificateholder, or otherwise with respect to
the purposes of this Agreement, all such reports or information to be provided
at the expense of the Certificateholder in accordance with such reasonable and
explicit instructions and directions as the Certificateholder may provide. For
purposes of this Section 4.02, the Trust Administrator's duties are limited to
the extent that the Trust Administrator receives timely reports as required from
the Servicer.

                  On each Distribution Date, the Trust Administrator shall
provide Bloomberg Financial Markets, L.P. ("Bloomberg") CUSIP level factors for
each Class of Certificates as of such Distribution Date using a format and media
mutually acceptable to the Trust Administrator and Bloomberg.

                  SECTION 4.03.             Remittance Reports; Payment
                                            Advances.

                  (a) On the Business Day following each Determination Date, the
Servicer shall deliver to the Trust Administrator by telecopy (or by such other
means as the Servicer and the Trust Administrator may agree from time to time) a
Remittance Report with respect to the related Distribution Date. On the same
date, the Servicer shall forward to the Trust Administrator by electronic
transmission (in a format acceptable to the Trust Administrator) on the day
thereafter, a data file containing the information set forth in such Remittance
Report with respect to the related Distribution

<PAGE>

                                      -81-

Date. Such Remittance Report will include (i) the amount of Payment Advances to
be made by the Servicer in respect of the related Distribution Date, the
aggregate amount of Payment Advances outstanding after giving effect to such
Payment Advances, and the aggregate amount of Nonrecoverable Payment Advances in
respect of such Distribution Date and (ii) such other information with respect
to the Mortgage Loans as the Trust Administrator may reasonably require to
perform the calculations necessary to make the distributions contemplated by
Section 4.01 and to prepare the statements to Certificateholders contemplated by
Section 4.02. The Trust Administrator shall not be responsible to recompute,
recalculate or verify any information provided to it by the Servicer.

                  (b) The amount of Payment Advances to be made by the Servicer
for any Distribution Date shall equal, subject to Section 4.03(d), (i) in the
case of any Mortgage Loans or related REO Properties on or prior to the Legal
Balance Interest Date of each such Mortgage Loan, the sum of (A) the aggregate
amount of Modified Scheduled Payments (with each interest portion thereof net of
the related Servicing Fee), other than any portion thereof representing
Arrearage, due on the related Due Date in respect of such Mortgage Loans, which
Modified Scheduled Payments were delinquent as of the close of business on the
related Determination Date and (B) with respect to each REO Property, an amount
equal to the excess, if any, of the Modified Scheduled Payment in effect
immediately prior to foreclosure, other than any portion thereof representing
Arrearage, over the net income from such REO Property transferred to the
Distribution Account pursuant to Section 3.23 for distribution on such
Distribution Date or (ii) in the case of any Mortgage Loans or related REO
Properties after the Legal Balance Interest Date of each such Mortgage Loan, the
sum of (A) the aggregate amount of Modified Scheduled Payments (with each
interest portion thereof net of the related Servicing Fee, if any) due on the
related Due Date in respect of the Mortgage Loans, which Modified Scheduled
Payments were delinquent as of the close of business on the related
Determination Date and (B) with respect to each REO Property, an amount equal to
the excess, if any, of the Modified Scheduled Payment in effect immediately
prior to foreclosure, over the net income from such REO Property transferred to
the Distribution Account pursuant to Section 3.23 for distribution on such
Distribution Date.

                  On or before 3:00 p.m. New York time on the Servicer
Remittance Date, the Servicer shall remit in immediately available funds to the
Trust Administrator for deposit in the Distribution Account an amount equal to
the aggregate amount of Payment Advances, if any, to be made in respect of the
Mortgage Loans and REO Properties for the related Distribution Date either (i)
from its own funds or (ii) from the Collection Account, to the extent of funds
held therein for future distribution (in which case it will cause to be made an
appropriate entry in the records of Collection Account that amounts held for
future distribution have been, as permitted by this Section 4.03, used by the
Servicer in discharge of any such Payment Advance) or (iii) in the form of any
combination of (i) and (ii) aggregating the total amount of Payment Advances to
be made by the Servicer with respect to the Mortgage Loans and REO Properties.
Any amounts held for future distribution and so used shall be appropriately
reflected in the Servicer's records and replaced by the Servicer by deposit in
the Collection Account on or before any future Servicer Remittance Date to the
extent that the Available Funds for the related Distribution Date (determined
without regard to Payment Advances to be made on the Servicer Remittance Date)
shall be less than the total amount that would be distributed to the Classes of
Certificateholders pursuant to Section 4.01 on such Distribution Date

<PAGE>

                                      -82-

if such amounts held for future distributions had not been so used to make
Payment Advances. The Trust Administrator will provide, pursuant to Section
7.02, notice to the Servicer and the Trustee by facsimile by the close of
business on any Servicer Remittance Date in the event that the amount remitted
by the Servicer to the Trust Administrator on such date is less than the Payment
Advances required to be made by the Servicer for the related Distribution Date.

                  (c) The obligation of the Servicer to make such Payment
Advances is mandatory, notwithstanding any other provision of this Agreement but
subject to (d) below, and, with respect to any Mortgage Loan or REO Property,
shall continue until a Final Recovery Determination in connection therewith or
the removal thereof from the Trust Fund pursuant to any applicable provision of
this Agreement, except as otherwise provided in this Section.

                  (d) Notwithstanding anything herein to the contrary, no
Payment Advance shall be required to be made hereunder by the Servicer if such
Payment Advance would, if made, constitute a Nonrecoverable Payment Advance. The
determination by the Servicer that it has made a Nonrecoverable Payment Advance
or that any proposed Payment Advance, if made, would constitute a Nonrecoverable
Payment Advance, shall be evidenced by an Officers' Certificate of the Servicer
delivered to the Depositor, the Trustee and the Trust Administrator.

                  SECTION 4.04.             Allocation of Extraordinary Trust
                                            Fund Expenses and Realized Losses.

                  (a) Prior to each Determination Date, the Servicer shall
determine as to each Mortgage Loan and REO Property: (i) the total amount of
Realized Losses, if any, incurred in connection with any Final Recovery
Determination made during the related Prepayment Period; and (ii) the respective
portion of such Realized Losses allocable to interest and allocable to principal
and Arrearage. Prior to each Determination Date, the Servicer shall also
determine as to each Mortgage Loan: (i) the total amount of Realized Losses, if
any, incurred in connection with any Deficient Valuation made during the related
Prepayment Period; and (ii) the total amount of Realized Losses, if any,
incurred in connection with any Debt Service Reduction in respect of scheduled
payments due during the related Due Period. The information described in the two
preceding sentences that is to be supplied by the Servicer shall be evidenced by
an Officers' Certificate delivered to the Trust Administrator and the Trustee by
the Servicer prior to the Determination Date immediately following the end of
(i) in the case of Bankruptcy Losses allocable to interest, the Due Period
during which any such Realized Loss was incurred, and (ii) in the case of all
other Realized Losses, the Prepayment Period during which any such Realized Loss
was incurred.

                  (b) All Realized Losses on the Mortgage Loans and all
Extraordinary Trust Fund Expenses shall be allocated on each Distribution Date
as follows: first to the Net Monthly Excess Cashflow; second in reduction of the
Overcollateralized Amount, third to the Class M-6 Certificates; fourth to the
Class M-5 Certificates; fifth to the Class M-4 Certificates; sixth to the Class
M-3 Certificates; seventh to the Class M-2 Certificates; and eighth to the Class
M-1 Certificates, in each case, until the Certificate Principal Balance thereof
has been reduced to zero. All Realized Losses to be allocated to the Certificate
Principal Balances of all Classes on any Distribution Date shall be

<PAGE>

                                                      -83-

so allocated after the actual distributions to be made on such date as provided
above. All references above to the Certificate Principal Balance of any Class of
Certificates shall be to the Certificate Principal Balance of such Class
immediately prior to the relevant Distribution Date, before reduction thereof by
any Realized Losses, in each case to be allocated to such Class of Certificates,
on such Distribution Date.

                  Any allocation of Realized Losses to a Mezzanine Certificate
on any Distribution Date shall be made by reducing the Certificate Principal
Balance thereof by the amount so allocated. No allocations of any Realized
Losses shall be made to the Certificate Principal Balances of the Class A
Certificates. All Realized Losses and all other losses allocated to a Class of
Certificates hereunder will be allocated among the Certificates of such Class in
proportion to the Percentage Interests evidenced thereby.

                  SECTION 4.05.             Commission Reporting.

                  Within 15 days after each Distribution Date, the Trust
Administrator shall file with the Commission via the Electronic Data Gathering
and Retrieval System, a Form 8-K with a copy of the statement to
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
January 30, 2002, the Trust Administrator shall file a Form 15 Suspension
Notification with respect to the Trust Fund, if applicable and unless otherwise
instructed by the Depositor. Prior to March 30, 2002, the Trust Administrator
shall file a Form 10-K, in substance conforming to industry standards, with
respect to the Trust Fund. The Depositor hereby grants to the Trust
Administrator a limited power of attorney to execute and file each such document
on behalf of the Depositor. Such power of attorney shall continue until the
earlier of (i) receipt by the Trust Administrator from the Depositor of written
termination of such power of attorney and (ii) the termination of the Trust
Fund. At least three Business Days prior to filing any Form 8-K or Form 10-K
pursuant to this Section 4.05, the Trust Administrator shall deliver a copy of
such Form 8-K or Form 10-K, as the case may be, to the Depositor.

                  SECTION 4.06.             Compliance with Withholding
                                            Requirements.

                  Notwithstanding any other provision of this Agreement, the
Trust Administrator shall comply with all federal withholding requirements
respecting payments to Certificateholders of interest or original issue discount
that the Trust Administrator reasonably believes are applicable under the Code.
The consent of Certificateholders shall not be required for such withholding. In
the event the Trust Administrator does withhold any amount from interest or
original issue discount payments or advances thereof to any Certificateholder
pursuant to federal withholding requirements, the Trust Administrator shall
indicate the amount withheld to such Certificateholders.

<PAGE>

                                      -84-

                                    ARTICLE V

                                THE CERTIFICATES

                  SECTION 5.01.             The Certificates.

                  (a) The Certificates in the aggregate will represent the
entire beneficial ownership interest in the Mortgage Loans and all other assets
included in the Trust Fund.

                  The Certificates will be substantially in the forms annexed
hereto as Exhibits A-1 through A-8. The Certificates of each Class will be
issuable in registered form only, in denominations of authorized Percentage
Interests as described in the definition thereof. Each Certificate will share
ratably in all rights of the related Class.

                  Upon original issue, the Certificates shall be executed by the
Trust Administrator on behalf of the Trustee and authenticated and delivered by
the Trust Administrator to or upon the order of the Depositor. The Certificates
shall be executed by manual or facsimile signature on behalf of theTrust
Administrator by an authorized signatory. Certificates bearing the manual or
facsimile signatures of individuals who were at any time the proper officers of
the Trust Administrator shall bind the Trust Administrator, as applicable,
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 be
entitled to any benefit under this Agreement or be valid for any purpose, unless
there appears on such Certificate a certificate of authentication substantially
in the form provided herein executed by the Trust Administrator 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
authentication.

                  (b) The Class A Certificates and the Mezzanine Certificates
shall initially be issued as one or more Certificates held by the Book-Entry
Custodian or, if appointed to hold such Certificates as provided below, the
Depository and registered in the name of the Depository or its nominee and,
except as provided below, registration of such Certificates may not be
transferred by the Trust Administrator except to another Depository that agrees
to hold such Certificates for the respective Certificate Owners with Ownership
Interests therein. The Certificate Owners shall hold their respective Ownership
Interests in and to such Certificates through the book-entry facilities of the
Depository and, except as provided below, shall not be entitled to definitive,
fully registered Certificates (" Definitive Certificates") in respect of such
Ownership Interests. All transfers by Certificate Owners of their respective
Ownership Interests in the Book-Entry Certificates shall be made in accordance
with the procedures established by the Depository Participant or brokerage firm
representing such Certificate Owner. Each Depository Participant shall only
transfer the Ownership Interests in the Book-Entry Certificates of Certificate
Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The Trust Administrator is
hereby initially appointed as the Book-Entry Custodian and hereby agrees to act
as such in accordance herewith and in accordance with the agreement that it has
with the Depository

<PAGE>

                                      -85-

authorizing it to act as such. The Book-Entry Custodian may, and, if it is no
longer qualified to act as such, the Book-Entry Custodian shall, appoint, by a
written instrument delivered to the Depositor, the Servicer, the Trustee and, if
the Trust Administrator is not the Book-Entry Custodian, the Trust
Administrator, any other transfer agent (including the Depository or any
successor Depository) to act as Book-Entry Custodian under such conditions as
the predecessor Book-Entry Custodian and the Depository or any successor
Depository may prescribe, provided that the predecessor Book-Entry Custodian
shall not be relieved of any of its duties or responsibilities by reason of any
such appointment of other than the Depository. If the Trust Administrator
resigns or is removed in accordance with the terms hereof, the Trustee, the
successor Trust Administrator or, if it so elects, the Depository shall
immediately succeed to its predecessor's duties as Book-Entry Custodian. The
Depositor shall have the right to inspect, and to obtain copies of, any
Certificates held as Book-Entry Certificates by the Book-Entry Custodian.

                  The Trust Administrator, the Trustee, the Servicer and the
Depositor may for all purposes (including the making of payments due on the
Book-Entry Certificates) deal with the Depository as the authorized
representative of the Certificate Owners with respect to the Book-Entry
Certificates for the purposes of exercising the rights of Certificateholders
hereunder. The rights of Certificate Owners with respect to the Book-Entry
Certificates shall be limited to those established by law and agreements between
such Certificate Owners and the Depository Participants and brokerage firms
representing such Certificate Owners. Multiple requests and directions from, and
votes of, the Depository as Holder of the Book-Entry Certificates with respect
to any particular matter shall not be deemed inconsistent if they are made with
respect to different Certificate Owners. The Trust Administrator may establish a
reasonable record date in connection with solicitations of consents from or
voting by Certificateholders and shall give notice to the Depository of such
record date.

                  If (i)(A) the Depositor advises the Trust Administrator in
writing that the Depository is no longer willing or able to properly discharge
its responsibilities as Depository, and (B) the Depositor is unable to locate a
qualified successor, (ii) the Depositor at its option advises the Trust
Administrator in writing that it elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of a Servicer Event of
Default, Certificate Owners representing in the aggregate not less than 51% of
the Ownership Interests of the Book-Entry Certificates advise the Trust
Administrator through the Depository, in writing, that the continuation of a
book-entry system through the Depository is no longer in the best interests of
the Certificate Owners, the Trust Administrator shall notify all Certificate
Owners, through the Depository, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Trust Administrator of the Book-Entry Certificates
by the Book-Entry Custodian or the Depository, as applicable, accompanied by
registration instructions from the Depository for registration of transfer, the
Trust Administrator shall cause the Definitive Certificates to be issued. Such
Definitive Certificates will be issued in minimum denominations of $100,000,
except that any beneficial ownership that was represented by a Book-Entry
Certificate in an amount less than $100,000 immediately prior to the issuance of
a Definitive Certificate shall be issued in a minimum denomination equal to the
amount represented by such Book-Entry Certificate. None of the Depositor, the
Servicer, the Trust Administrator or the Trustee shall be liable for any delay
in the

<PAGE>

                                      -86-

delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed by
the Trust Administrator, to the extent applicable with respect to such
Definitive Certificates, and the Trust Administrator shall recognize the Holders
of the Definitive Certificates as Certificateholders hereunder.

                  SECTION 5.02.             Registration of Transfer and
                                            Exchange of Certificates.

                  (a) The Trust Administrator shall cause to be kept at one of
the offices or agencies to be appointed by the Trust Administrator in accordance
with the provisions of Section 8.11, a Certificate Register for the Certificates
in which, subject to such reasonable regulations as it may prescribe, the Trust
Administrator shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided.

                  (b) No transfer of any Class M-4, Class M-5, Class M-6 or
Residual Certificate (the "Private Certificates") shall be made unless that
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 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. In the
event that such a transfer of a Private Certificate is to be made without
registration or qualification (other than in connection with the initial
transfer of any such Certificate by the Depositor to an affiliate of the
Depositor), the Trust Administrator shall require receipt of: (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Certificateholder desiring to effect the
transfer and from such Certificateholder's prospective transferee, substantially
in the forms attached hereto as Exhibit F-1; and (ii) in all other cases, an
Opinion of Counsel satisfactory to it that such transfer may be made without
such registration or qualification (which Opinion of Counsel shall not be an
expense of the Trust Fund or of the Depositor, the Trust Administrator, the
Trustee, the Servicer in its capacity as such or any Sub-Servicer), together
with copies of the written certification(s) of the Certificateholder desiring to
effect the transfer and/or such Certificateholder's prospective transferee upon
which such Opinion of Counsel is based, if any. None of the Depositor, the Trust
Administrator or the Trustee is obligated to register or qualify any such
Certificates under the 1933 Act or any other securities laws or to take any
action not otherwise required under this Agreement to permit the transfer of
such Certificates without registration or qualification. Any Certificateholder
desiring to effect the transfer of any such Certificate shall, and does hereby
agree to, indemnify the Trust Administrator, the Trustee, the Depositor and the
Servicer against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.

                  (c) No transfer of any Certificates or any interest therein
shall be made to any Person acting, directly or indirectly, on behalf of any
Plan subject to ERISA or Section 4975 of the Code (or comparable provisions of
any subsequent enactments) or any Person acquiring such Certificates or interest
therein with "Plan Assets" of a Plan within the meaning of the Department

<PAGE>

                                      -87-

of Labor regulation promulgated at 29 C.F.R. ss. 2510.3-101. Each purchaser of a
Certificate or any interest therein shall be required to represent (and in the
case of any Book-Entry Certificate shall be deemed to represent) that such
purchaser (i) is not a Person acting, directly or indirectly, on behalf of any
Plan subject to ERISA or Section 4975 of the Code (or comparable provisions of
any subsequent enactments) or any Person acquiring such Certificates or any
interest therein with "Plan Assets" of a Plan within the meaning of the
Department of Labor regulation promulgated at 29 C.F.R. ss. 2510.3-101 and (ii)
will not transfer such Certificate or any interest therein to such a Person.

                  (d) (i) Each Person who has or who acquires any Ownership
Interest in a Residual Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions and to have irrevocably authorized the Trustee or its
designee under clause (iii)(A) below to deliver payments to a Person other than
such Person and to negotiate the terms of any mandatory sale under clause
(iii)(B) below and to execute all instruments of Transfer and to do all other
things necessary in connection with any such sale. The rights of each Person
acquiring any Ownership Interest in a Residual Certificate are expressly subject
to the following provisions:

                                    (A) Each Person holding or acquiring any
                           Ownership Interest in a Residual Certificate shall be
                           a Permitted Transferee and shall promptly notify the
                           Trust Administrator of any change or impending change
                           in its status as a Permitted Transferee.

                                    (B) In connection with any proposed Transfer
                           of any Ownership Interest in a Residual Certificate,
                           the Trust Administrator shall require delivery to it,
                           and shall not register the Transfer of any Residual
                           Certificate until its receipt of, an affidavit and
                           agreement (a "Transfer Affidavit and Agreement," in
                           the form attached hereto as Exhibit F-2) from the
                           proposed Transferee, in form and substance
                           satisfactory to the Trust Administrator, representing
                           and warranting, among other things, that such
                           Transferee is a Permitted Transferee, that it is not
                           acquiring its Ownership Interest in the Residual
                           Certificate that is the subject of the proposed
                           Transfer as a nominee, trustee or agent for any
                           Person that is not a Permitted Transferee, that for
                           so long as it retains its Ownership Interest in a
                           Residual Certificate, it will endeavor to remain a
                           Permitted Transferee, and that it has reviewed the
                           provisions of this Section 5.02(d) and agrees to be
                           bound by them.

                                    (C) Notwithstanding the delivery of a
                           Transfer Affidavit and Agreement by a proposed
                           Transferee under clause (B) above, if a Responsible
                           Officer of the Trust Administrator who is assigned to
                           this transaction has actual knowledge that the
                           proposed Transferee is not a Permitted Transferee, no
                           Transfer of an Ownership Interest in a Residual
                           Certificate to such proposed Transferee shall be
                           effected.

<PAGE>

                                      -88-

                                    (D) Each Person holding or acquiring any
                           Ownership Interest in a Residual Certificate shall
                           agree (x) to require a Transfer Affidavit and
                           Agreement (in the form attached hereto as Exhibit
                           F-2) from any other Person to whom such Person
                           attempts to transfer its Ownership Interest in a
                           Residual Certificate and (y) not to transfer its
                           Ownership Interest unless it provides a Transferor
                           Affidavit (in the form attached hereto as Exhibit
                           F-2) to the Trust Administrator stating that, among
                           other things, it has no actual knowledge that such
                           other Person is not a Permitted Transferee.

                                    (E) Each Person holding or acquiring an
                           Ownership Interest in a Residual Certificate, by
                           purchasing an Ownership Interest in such Certificate,
                           agrees to give the Trust Administrator written notice
                           that it is a "pass-through interest holder" within
                           the meaning of temporary Treasury regulation Section
                           1.67-3T(a)(2)(i)(A) immediately upon acquiring an
                           Ownership Interest in a Residual Certificate, if it
                           is, or is holding an Ownership Interest in a Residual
                           Certificate on behalf of, a "pass-through interest
                           holder."

                        (ii) The Trust Administrator will register the Transfer
                  of any Residual Certificate only if it shall have received the
                  Transfer Affidavit and Agreement and all of such other
                  documents as shall have been reasonably required by the Trust
                  Administrator as a condition to such registration. In
                  addition, no Transfer of a Residual Certificate shall be made
                  unless the Trust Administrator shall have received a
                  representation letter from the Transferee of such Certificate
                  to the effect that such Transferee is a Permitted Transferee.

                       (iii) (A) If any purported Transferee shall become a
                  Holder of a Residual Certificate in violation of the
                  provisions of this Section 5.02(d), then the last preceding
                  Permitted Transferee shall be restored, to the extent
                  permitted by law, to all rights as holder thereof retroactive
                  to the date of registration of such Transfer of such Residual
                  Certificate. The Trust Administrator shall be under no
                  liability to any Person for any registration of Transfer of a
                  Residual Certificate that is in fact not permitted by this
                  Section 5.02(d) or for making any payments due on such
                  Certificate to the holder thereof or for taking any other
                  action with respect to such holder under the provisions of
                  this Agreement.

                                    (B) If any purported Transferee shall become
                  a holder of a Residual Certificate in violation of the
                  restrictions in this Section 5.02(d) and to the extent that
                  the retroactive restoration of the rights of the holder of
                  such Residual Certificate as described in clause (iii)(A)
                  above shall be invalid, illegal or unenforceable, then the
                  Trust Administrator shall have the right (but not the
                  obligation), without notice to the holder or any prior holder
                  of such Residual Certificate, to sell such Residual
                  Certificate to a purchaser selected by the Trust Administrator
                  on such terms as the Trust Administrator may choose. Such
                  purported Transferee shall promptly endorse and deliver each
                  Residual Certificate in

<PAGE>

                                      -89-

                  accordance with the instructions of the Trust Administrator.
                  The proceeds of such sale, net of the commissions (which may
                  include commissions payable to the Trust Administrator or its
                  Affiliates), expenses and taxes due, if any, will be remitted
                  by the Trust Administrator to such purported Transferee. The
                  terms and conditions of any sale under this clause (iii)(B)
                  shall be determined in the sole discretion of the Trust
                  Administrator, and the Trust Administrator shall not be liable
                  to any Person having an Ownership Interest in a Residual
                  Certificate as a result of its exercise of such discretion.

                        (iv) The Trust Administrator shall make available to the
                  Internal Revenue Service and those Persons specified by the
                  REMIC Provisions all information necessary to compute any tax
                  imposed (A) as a result of the Transfer of an Ownership
                  Interest in a Residual Certificate to any Person who is a
                  Disqualified Organization, including the information described
                  in Treasury regulations sections 1.860D-1(b)(5) and
                  1.860E-2(a)(5)with respect to the "excess inclusions" of such
                  Residual Certificate and (B) as a result of any regulated
                  investment company, real estate investment trust, common trust
                  fund, partnership, trust, estate or organization described in
                  Section 1381 of the Code that holds an Ownership Interest in a
                  Residual Certificate having as among its record holders at any
                  time any Person which is a Disqualified Organization.
                  Reasonable compensation for providing such information may be
                  accepted by the Trust Administrator.

                         (v) The provisions of this Section 5.02(d) set forth
                  prior to this subsection (v) may be modified, added to or
                  eliminated, provided that there shall have been delivered to
                  the Trust Administrator at the expense of the party seeking to
                  modify, add to or eliminate any such provision the following:

                                    (A) written notification from each Rating
                           Agency to the effect that the modification, addition
                           to or elimination of such provisions will not cause
                           such Rating Agency to downgrade its then-current
                           ratings of any Class of Certificates; and

                                    (B) an Opinion of Counsel, in form and
                           substance satisfactory to the Trust Administrator, to
                           the effect that such modification of, addition to or
                           elimination of such provisions will not cause the
                           Trust Fund to cease to qualify as a REMIC and will
                           not cause the Trust Fund to be subject to an
                           entity-level tax caused by the Transfer of any
                           Residual Certificate to a Person that is not a
                           Permitted Transferee or a Person other than the
                           prospective transferee to be subject to a REMIC-tax
                           caused by the Transfer of a Residual Certificate to a
                           Person that is not a Permitted Transferee.

                  (e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the Trust
Administrator maintained for such purpose pursuant to Section 8.11, the Trustee,
or the Trust Administrator on behalf of the Trustee

<PAGE>

                                      -90-

shall execute, and the Trustee or the Trust Administrator 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.

                  (f) At the option of the Holder thereof, any Certificate may
be exchanged for other Certificates of the same Class with authorized
denominations and a like aggregate Percentage Interest, upon surrender of such
Certificate to be exchanged at any office or agency of the Trust Administrator
maintained for such purpose pursuant to Section 8.11. Whenever any Certificates
are so surrendered for exchange, the Trustee, or the Trust Administrator on
behalf of the Trustee, shall execute, 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 Trust Administrator) be duly endorsed by, or be accompanied by a
written instrument of transfer in the form satisfactory to the Trust
Administrator duly executed by, the Holder thereof or his attorney duly
authorized in writing.

                  (g) No service charge to the Certificateholders shall be made
for any transfer or exchange of Certificates, but the Trust Administrator 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.

                  (h) All Certificates surrendered for transfer and exchange
shall be canceled and destroyed by the Trust Administrator in accordance with
its customary procedures.

                  SECTION 5.03.             Mutilated, Destroyed, Lost or Stolen
                                            Certificates.

                  If (i) any mutilated Certificate is surrendered to the Trust
Administrator, or the Trust Administrator receives evidence to its satisfaction
of the destruction, loss or theft of any Certificate, and (ii) there is
delivered to each of the Trustee and the Trust Administrator such security or
indemnity as may be required by it to save it harmless, then, in the absence of
actual knowledge by the Trust Administrator or the Trustee that such Certificate
has been acquired by a bona fide purchaser, the Trustee, or the Trust
Administrator on behalf of the Trustee shall execute, and the Trustee or the
Trust Administrator shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of the same Class and of like denomination and Percentage Interest. Upon the
issuance of any new Certificate under this Section, the Trust Administrator 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 expenses (including
the fees and expenses of the Trustee and the Trust Administrator) connected
therewith. Any replacement Certificate issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership in the applicable
REMIC created hereunder, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.

                  SECTION 5.04.             Persons Deemed Owners.

<PAGE>

                                      -91-

                  The Depositor, the Servicer, the Trust Administrator, the
Trustee and any agent of any of them may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 4.01 and for all other purposes
whatsoever, and none of the Depositor, the Servicer, the Trust Administrator,
the Trustee or any agent of any of them shall be affected by notice to the
contrary.

                  SECTION 5.05.             Certain Available Information.

                  On or prior to the date of the first sale of any Private
Certificate to an Independent third party, the Depositor shall provide to the
Trust Administrator ten copies of any private placement memorandum or other
disclosure document used by the Depositor in connection with the offer and sale
of such Certificates. In addition, if any such private placement memorandum or
disclosure document is revised, amended or supplemented at any time following
the delivery thereof to the Trust Administrator, the Depositor promptly shall
inform the Trust Administrator of such event and shall deliver to the Trust
Administrator ten copies of the private placement memorandum or disclosure
document, as revised, amended or supplemented. The Trust Administrator shall
maintain at its Corporate Trust Office and shall make available free of charge
during normal business hours for review by any Holder of a Certificate or any
Person identified to the Trust Administrator as a prospective transferee of a
Certificate, originals or copies of the following items: (i) in the case of a
Holder or prospective transferee of a Private Certificate, the related private
placement memorandum or other disclosure document relating to such Class of
Certificates, in the form most recently provided to the Trust Administrator; and
(ii) in all cases, (A) this Agreement and any amendments hereof entered into
pursuant to Section 12.01, (B) all monthly statements required to be delivered
to Certificateholders of the relevant Class pursuant to Section 4.02 since the
Closing Date, and all other notices, reports, statements and written
communications delivered to the Certificateholders of the relevant Class
pursuant to this Agreement since the Closing Date, (C) all certifications
delivered by a Responsible Officer of the Trust Administrator since the Closing
Date pursuant to Section 11.01(i), (D) any and all Officers' Certificates
delivered to the Trust Administrator by the Servicer since the Closing Date to
evidence the Servicer's determination that any Payment Advance was, or if made,
would be a Nonrecoverable Payment Advance and (E) any and all Officers'
Certificates delivered to the Trust Administrator by the Servicer since the
Closing Date pursuant to Section 4.04(a). Copies and mailing of any and all of
the foregoing items will be available from the Trust Administrator upon request
at the expense of the Person requesting the same.

<PAGE>

                                      -92-

                                   ARTICLE VI

                         THE DEPOSITOR AND THE SERVICER

                  SECTION 6.01.             Liability of the Depositor and the
                                            Servicer.

                  The Depositor and the Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
by this Agreement and undertaken hereunder by the Depositor and the Servicer
herein.

                  SECTION 6.02.             Merger or Consolidation of the
                                            Depositor or the Servicer.

                  Subject to the following paragraph, the Depositor will keep in
full effect its existence, rights and franchises as a corporation under the laws
of the jurisdiction of its incorporation. Subject to the following paragraph,
the Servicer will keep in full effect its existence, rights and franchises as a
limited partnership under the laws of the jurisdiction of its formation, and the
Servicer, or the Affiliate of the Servicer that is sub-servicing the Mortgage
Loans, will keep in full effect its qualification as an approved conventional
servicer for FHLMC or FNMA, and its qualifications as a HUD approved mortgagee,
in good standing. The Depositor and the Servicer each 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 this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.

                  The Depositor or the Servicer may be merged or consolidated
with or into any Person, or transfer all or substantially all of its assets to
any Person, in which case any Person resulting from any merger or consolidation
to which the Depositor or the Servicer shall be a party, or any Person
succeeding to the business of the Depositor or the Servicer, shall be the
successor of the Depositor or the Servicer, as the case may be, hereunder,
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;
provided, however, that the successor or surviving Person to the Servicer shall
be qualified to service mortgage loans on behalf of FHLMC or FNMA and shall be
qualified as a HUD approved mortgagee; and provided further that the Rating
Agencies' ratings of the Certificates of any Class in effect immediately prior
to such merger or consolidation will not be qualified, reduced or withdrawn as a
result thereof (as evidenced by a letter to such effect from the Rating
Agencies).

                  SECTION 6.03.             Limitation on Liability of the
                                            Depositor, the Servicer and Others.

                  None of the Depositor, the Servicer or any of the directors,
officers, employees or agents of the Depositor or the Servicer shall be under
any liability to the Trust Fund or the Certificateholders for any action taken
or for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor, the Servicer or any such person against any
breach of warranties, representations or covenants made herein, or against any
specific liability imposed on the Servicer

<PAGE>

                                                      -93-

pursuant hereto, 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 Servicer and any director, officer, employee or agent of the
Depositor or the 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. The Depositor, the Servicer and any director,
officer, employee or agent of the Depositor or the Servicer shall be indemnified
and held harmless by the Trust Fund against any loss, liability or expense
incurred in connection with any legal action relating to this Agreement or the
Certificates, other than any loss, liability or expense related to any specific
Mortgage Loan or Mortgage Loans (except as any such loss, liability or expense
shall be otherwise reimbursable pursuant to this Agreement) or related to the
Depositor's or Servicer's obligations under this Agreement or any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder. Neither the Depositor nor the
Servicer shall be under any obligation to appear in, prosecute or defend any
legal action unless such action is incidental to its respective duties under
this Agreement and, in its opinion, does not involve it in any expense or
liability; provided, however, that each of the Depositor and the Servicer may in
its discretion undertake any such action which it may deem necessary or
desirable with respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Certificateholders hereunder. In such
event, unless the Depositor or the Servicer acts without the consent of Holders
of Certificates entitled to at least 51% of the Voting Rights, the reasonable
legal expenses and costs of such action and any liability resulting therefrom
(except any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of reckless disregard of obligations and duties hereunder) shall be
expenses, costs and liabilities of the Trust Fund, and the Depositor and the
Servicer shall be entitled to be reimbursed therefor from the Collection Account
as and to the extent provided in Section 3.11, any such right of reimbursement
being prior to the rights of the Certificateholders to receive any amount in the
Collection Account.

                  SECTION 6.04.             Limitation on Resignation of the
                                            Servicer.

                  The Servicer shall not resign from the obligations and duties
hereby imposed on it except upon determination that its duties hereunder are no
longer permissible under applicable law. Any such determination pursuant to the
preceding sentence permitting the resignation of the Servicer shall be evidenced
by an Opinion of Counsel to such effect obtained at the expense of the Servicer
and delivered to the Trustee and the Trust Administrator. No resignation of the
Servicer shall become effective until the Trust Administrator or a successor
servicer shall have assumed the Servicer's responsibilities, duties, liabilities
(other than those liabilities arising prior to the appointment of such
successor) and obligations under this Agreement.

                  Except as expressly provided herein, the Servicer shall not
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, or delegate to or subcontract with, or authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by the Servicer hereunder. If, pursuant to any provision hereof, the
duties of the Servicer are transferred to a successor servicer, the entire
amount of the Servicing Fee and other

<PAGE>

                                      -94-

compensation payable to the Servicer pursuant hereto shall thereafter be payable
to such successor servicer.

         The Trust Administrator, the Trustee and the Depositor hereby
specifically (i) consent to the pledge and assignment by the Servicer of all of
the Servicer's right, title and interest in, to and under this Agreement to the
Servicing Rights Pledgee, for the benefit of certain lenders and (ii) provided
that no Servicer Event of Default exists, agree that upon delivery to the Trust
Administrator by the Servicing Rights Pledgee of a letter signed by the Servicer
whereunder the Servicer shall resign as Servicer under this Agreement, the Trust
Administrator shall appoint the Servicing Rights Pledgee or its designee as
successor Servicer, provided that at the time of such appointment, the Servicing
Rights Pledgee or such designee meets the requirements of a successor Servicer
pursuant to Section 7.02(a) hereof and agrees to be subject to the terms of this
Agreement.

                  SECTION 6.05.             Rights of the Depositor in Respect
                                            of the Servicer.

                  The Servicer shall afford the Depositor, Trust Administrator
and the Trustee, upon reasonable notice, during normal business hours, access to
all records maintained by the Servicer in respect of its rights and obligations
hereunder and access to officers of the Servicer responsible for such
obligations. Upon request, the Servicer shall furnish to the Depositor, the
Trust Administrator and the Trustee its most recent financial statements and
such other information relating to its capacity to perform its obligations under
this Agreement it possesses. To the extent such information is not otherwise
available to the public, the Depositor, the Trust Administrator and the Trustee
shall not disseminate any information obtained pursuant to the preceding two
sentences without the Servicer's written consent, except as required pursuant to
this Agreement or to the extent that it is appropriate to do so (i) in working
with legal counsel, auditors, taxing authorities or other governmental agencies
or (ii) pursuant to any law, rule, regulation, order, judgment, writ, injunction
or decree of any court or governmental authority having jurisdiction over the
Depositor, Trust Administrator, the Trustee or the Trust Fund, and in either
case, the Depositor, Trust Administrator or the Trustee, as the case may be,
shall use its best efforts to assure the confidentiality of any such
disseminated non-public information. The Depositor may, but is not obligated to,
enforce the obligations of the Servicer under this Agreement and may, but is not
obligated to, perform, or cause a designee to perform, any defaulted obligation
of the Servicer under this Agreement or exercise the rights of the Servicer
under this Agreement; provided that the Servicer shall not be relieved of any of
its obligations under this Agreement by virtue of such performance by the
Depositor or its designee. The Depositor shall not have any responsibility or
liability for any action or failure to act by the Servicer and is not obligated
to supervise the performance of the Servicer under this Agreement or otherwise.

<PAGE>

                                      -95-

                                   ARTICLE VII

                                     DEFAULT

                  SECTION 7.01.             Servicer Events of Default.

                  "Servicer Event of Default," wherever used herein, means any
one of the following events:

                         (i) any failure by the Servicer to remit to the Trust
                  Administrator for distribution to the Certificateholders any
                  payment (other than a Payment Advance required to be made from
                  its own funds on any Servicer Remittance Date pursuant to
                  Section 4.03) required to be made under the terms of the
                  Certificates and this Agreement which continues unremedied for
                  a period of one Business Day after the date upon which written
                  notice of such failure (provided that the Depositor, the Trust
                  Administrator and the Trustee hereby agree to give prompt
                  written notice upon its discovery of any such failure),
                  requiring the same to be remedied, shall have been given to
                  the Servicer by the Depositor, the Trust Administrator or the
                  Trustee (in which case, such notice shall be provided by
                  facsimile), or to the Servicer, the Depositor, the Trust
                  Administrator and the Trustee by the Holders of Certificates
                  entitled to at least 25% of the Voting Rights; or

                        (ii) any failure on the part of the Servicer duly to
                  observe or perform in any material respect any other of the
                  covenants or agreements on the part of the Servicer contained
                  in the Certificates or in this Agreement which continues
                  unremedied for a period of 30 days after the earlier of (i)
                  the date on which written notice of such failure, requiring
                  the same to be remedied, shall have been given to the Servicer
                  by the Depositor, Trust Administrator or the Trustee, or to
                  the Servicer, the Depositor, Trust Administrator and the
                  Trustee by the Holders of Certificates entitled to at least
                  25% of the Voting Rights and (ii) actual knowledge of such
                  failure by a Servicing Officer of the Servicer; or

                       (iii) 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 the appointment
                  of a conservator or receiver or liquidator in any insolvency,
                  readjustment of debt, marshalling of assets and liabilities or
                  similar proceeding, or for the winding-up or liquidation of
                  its affairs, shall have been entered against the Servicer and
                  such decree or order shall have remained in force undischarged
                  or unstayed for a period of 90 days; or

                        (iv) the Servicer shall 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 it or of or relating to
                  all or substantially all of its property; or

<PAGE>

                                      -96-

                         (v) the Servicer shall admit in writing its inability
                  to pay its debts generally as they become due, file a petition
                  to take advantage of any applicable insolvency or
                  reorganization statute, make an assignment for the benefit of
                  its creditors, or voluntarily suspend payment of its
                  obligations; or

                        (vi) any failure of the Servicer to make any Payment
                  Advance on any Servicer Remittance Date required to be made
                  from its own funds pursuant to Section 4.03 which continues
                  unremedied until 12:00 noon New York time on the Business Day
                  immediately following the Servicer Remittance Date.

If a Servicer Event of Default described in clauses (i) through (v) of this
Section shall occur, then, and in each and every such case, so long as such
Servicer Event of Default shall not have been remedied, the Depositor or the
Trustee may, and at the written direction of the Holders of Certificates
entitled to at least 51% of Voting Rights, the Trustee shall, by notice in
writing to the Servicer (and to the Depositor and the Trust Administrator if
given by the Trustee and to the Trustee and Trust Administrator if given by the
Depositor), terminate all of the rights and obligations of the Servicer in its
capacity as Servicer under this Agreement, to the extent permitted by law, and
in and to the Mortgage Loans and the proceeds thereof. If a Servicer Event of
Default described in clause (vi) hereof shall occur, the Trustee shall, by
notice in writing to the Servicer, Trust Administrator and the Depositor,
terminate all of the rights and obligations of the Servicer in its capacity as
Servicer under this Agreement and in and to the Mortgage Loans and the proceeds
thereof. On or after the receipt by the Servicer of such written notice, all
authority and power of the Servicer under this Agreement, whether with respect
to the Certificates (other than as a Holder of any Certificate) or the Mortgage
Loans or otherwise, shall pass to and be vested in the Trust Administrator
pursuant to and under this Section subject to Section 7.02, and, without
limitation, the Trust Administrator is hereby authorized and empowered, as
attorney-in-fact or otherwise, to execute and deliver, on behalf of and at the
expense of the Servicer, 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 Mortgage Loans and related documents, or
otherwise. The Servicer agrees promptly (and in any event no later than ten
Business Days subsequent to such notice) to provide the Trust Administrator with
all documents and records requested by it to enable it to assume the Servicer's
functions under this Agreement, and to cooperate with the Trust Administrator
and the Trustee in effecting the termination of the Servicer's responsibilities
and rights under this Agreement, including, without limitation, the transfer
within one Business Day to the Trust Administrator for administration by it of
all cash amounts which at the time shall be or should have been credited by the
Servicer to the Collection Account held by or on behalf of the Servicer, the
Distribution Account or any REO Account or Servicing Account held by or on
behalf of the Servicer or thereafter be received with respect to the Mortgage
Loans or any REO Property serviced by the Servicer (provided, however, that the
Servicer shall continue to be entitled to receive all amounts accrued or owing
to it under this Agreement on or prior to the date of such termination, whether
in respect of Payment Advances or otherwise, and shall continue to be entitled
to the benefits of Section 6.03 notwithstanding any such termination). For
purposes of this Section 7.01, each of the Trustee and the Trust Administrator
shall not be deemed to have knowledge of a Servicer Event of Default unless a
Responsible Officer of the Trustee or the Trust Administrator,

<PAGE>

                                      -97-

as applicable, assigned to and working in the Trustee's Corporate Trust Office
or Trust Administrator's Corporate Trust Office, as applicable, has actual
knowledge thereof or unless written notice of any event which is in fact such a
Servicer Event of Default is received by the Trustee or the Trust Administrator,
as applicable, and such notice references the Certificates, the Trust Fund or
this Agreement.

                  SECTION 7.02.             Trust Administrator to Act;
                                            Appointment of Successor.

                  (a) On and after the time the Servicer receives a notice of
termination, the Trust Administrator shall be the successor in all respects to
the Servicer in its capacity as Servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto and arising thereafter
placed on the Servicer (except for any representations or warranties of the
Servicer under this Agreement, the responsibilities, duties and liabilities
contained in Section 2.03(c) and its obligation to deposit amounts in respect of
losses pursuant to Section 3.12) by the terms and provisions hereof including,
without limitation, the Servicer's obligations to make Payment Advances pursuant
to Section 4.03; provided, however, that if the Trust Administrator is
prohibited by law or regulation from obligating itself to make advances
regarding delinquent mortgage loans, then the Trust Administrator shall not be
obligated to make Payment Advances pursuant to Section 4.03; and provided
further, that any failure to perform such duties or responsibilities caused by
the Servicer's failure to provide information required by Section 7.01 shall not
be considered a default by the Trust Administrator as successor to the Servicer
hereunder. As compensation therefor, the Trust Administrator shall be entitled
to the Servicing Fees and all funds relating to the Mortgage Loans to which the
Servicer would have been entitled if it had continued to act hereunder.
Notwithstanding the above, the Trust Administrator may, if it shall be unwilling
to so act, or shall, if it is unable to so act or if it is prohibited by law
from making advances regarding delinquent mortgage loans or if the Holders of
Certificates entitled to at least 51% of the Voting Rights so request in writing
to the Trust Administrator to promptly appoint, or petition a court of competent
jurisdiction to appoint, an established mortgage loan servicing institution
having a net worth of not less than $15,000,000 and whose appointment, as
confirmed in writing by each Rating Agency, will not result in a downgrade,
qualification or withdrawal of the ratings of such Rating Agency on any Class of
Certificates, as the successor to the Servicer under this Agreement in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Servicer under this Agreement. No appointment of a successor to the Servicer
under this Agreement shall be effective until the assumption by the successor of
all of the Servicer's responsibilities, duties and liabilities hereunder. In
connection with such appointment and assumption described herein, the Trust
Administrator may make such arrangements for the compensation of such successor
out of payments on Mortgage Loans as it and such successor shall agree;
provided, however, that no such compensation shall be in excess of that
permitted the Servicer as such hereunder. The Depositor, Trust Administrator,
the Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. Pending
appointment of a successor to the Servicer under this Agreement, the Trust
Administrator shall act in such capacity as hereinabove provided.

<PAGE>

                                      -98-

                  (b) If the Servicer fails to remit to the Trust Administrator
for distribution to the Certificateholders any payment required to be made under
the terms of this Agreement (for purposes of this Section 7.02(b), a
"Remittance") because the Servicer is the subject of a proceeding under the
federal Bankruptcy Code and the making of such Remittance is prohibited by
Section 362 of the federal Bankruptcy Code, the Trust Administrator, upon its
appointment as successor Servicer, or any other successor Servicer appointed
pursuant to Section 7.02(a)(1), shall upon notice of such prohibition,
regardless of whether it has received a notice of termination under Section
7.01, advance the amount of such Remittance by depositing such amount in the
Distribution Account on the related Distribution Date. The Trust Administrator
shall be obligated to make such advance only if (i) such advance, in the good
faith judgment of the Trust Administrator can reasonably be expected to be
ultimately recoverable from Stayed Funds and (ii) the Trust Administrator is not
prohibited by law from making such advance or obligating itself to do so. Upon
remittance of the Stayed Funds to the Trust Administrator or the deposit thereof
in the Distribution Account by the Servicer, a trustee in bankruptcy or a
federal bankruptcy court, the Trust Administrator may recover the amount so
advanced, without interest, by withdrawing such amount from the Distribution
Account; however, nothing in this Agreement shall be deemed to affect the Trust
Administrator's rights to recover from the Servicer's own funds interest on the
amount of any such advance. If the Trust Administrator at any time makes an
advance under this Subsection which it later determines in its good faith
judgment will not be ultimately recoverable from the Stayed Funds with respect
to which such advance was made, the Trust Administrator shall be entitled to
reimburse itself for such advance, without interest, by withdrawing from the
Distribution Account, out of amounts on deposit therein, an amount equal to the
portion of such advance attributable to the Stayed Funds.

                  (c) In the event of a Servicer Event of Default,
notwithstanding anything to the contrary above, the Trust Administrator, the
Trustee and the Depositor hereby agree that upon delivery to the Trust
Administrator by the Servicing Rights Pledgee of a letter signed by the Servicer
within ten Business Days of when notification of such event shall have been
provided to the Trust Administrator, whereunder the Servicer shall resign as
Servicer under this Agreement, the Trust Administrator shall appoint the
Servicing Rights Pledgee or its designee as successor Servicer, provided that at
the time of such appointment, the Servicing Rights Pledgee or such designee
meets the requirements of a successor Servicer set forth above and the Servicing
Rights Pledgee or such designee agrees to be subject to the terms of this
Agreement.

                  SECTION 7.03.             Notification to Certificateholders.

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

<PAGE>

                                      -99-

                  (b) Not later than the later of 60 days after the occurrence
of any event, which constitutes or which, with notice or lapse of time or both,
would constitute a Servicer Event of Default or five days after a Responsible
Officer of the Trustee or the Trust Administrator becomes aware of the
occurrence of such an event, the Trustee or the Trust Administrator shall
transmit (or in the case of the Trustee, the Trustee shall cause the Trust
Administrator to transmit) by mail to all Holders of Certificates notice of each
such occurrence, unless such default or Servicer Event of Default shall have
been cured or waived.

                  SECTION 7.04.             Waiver of Servicer Events of
                                            Default.

                  The Holders representing at least 66% of the Voting Rights
evidenced by all Classes of Certificates affected by any default or Servicer
Event of Default hereunder may waive such default or Servicer Event of Default;
provided, however, that a default or Servicer Event of Default under clause (i)
or (vi) of Section 7.01 may be waived only by all of the Holders of the REMIC
Regular Certificates; provided, further, that a Servicer Event of Default may be
waived only during the ten (10) Business Days following the receipt by the Trust
Administrator of written notice of an Event of Default. Upon any such waiver of
a default or Servicer Event of Default, such default or Servicer Event of
Default shall cease to exist and shall be deemed to have been remedied for every
purpose hereunder. No such waiver shall extend to any subsequent or other
default or Servicer Event of Default or impair any right consequent thereon
except to the extent expressly so waived.

<PAGE>

                                      -100-

                                  ARTICLE VIII

               CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR

                  SECTION 8.01.             Duties of Trustee and Trust
                                            Administrator.

                  Each of the Trustee and the Trust Administrator, prior to the
occurrence of a Servicer Event of Default and after the curing of all Servicer
Events of Default which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement. During a
Servicer Event of Default, each of the Trustee and the Trust Administrator shall
exercise such of the rights and powers vested in it by this Agreement, and use
the same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs. Any permissive right of the Trustee or the Trust Administrator
enumerated in this Agreement shall not be construed as a duty.

                  Each of the Trustee and the Trust Administrator, upon receipt
of all resolutions, certificates, statements, opinions, reports, documents,
orders or other instruments furnished to the Trustee or the Trust Administrator,
as applicable, which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement. If any such instrument is found
not to conform to the requirements of this Agreement in a material manner, the
Trustee or the Trust Administrator, as applicable, shall take such action as it
deems appropriate to have the instrument corrected, and if the instrument is not
corrected to it's satisfaction, it will provide notice thereof to the
Certificateholders.

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

                  (i) Prior to the occurrence of a Servicer Event of Default,
         and after the curing of all such Servicer Events of Default which may
         have occurred, the duties and obligations of each of the Trustee and
         the Trust Administrator shall be determined solely by the express
         provisions of this Agreement, neither the Trustee nor the Trust
         Administrator shall be liable except for the performance of such duties
         and obligations as are specifically set forth in this Agreement, no
         implied covenants or obligations shall be read into this Agreement
         against the Trustee or the Trust Administrator and, in the absence of
         bad faith on the part of the Trustee or the Trust Administrator, as
         applicable, the Trustee or the Trust Administrator, as the case may be,
         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 or the Trust Administrator, as the
         case may be, that conform to the requirements of this Agreement;

                  (ii) Neither the Trustee nor the Trust Administrator shall be
         personally liable for an error of judgment made in good faith by a
         Responsible Officer or Responsible Officers of it unless it shall be
         proved that it was negligent in ascertaining the pertinent facts; and

<PAGE>

                                      -101-

                  (iii) Neither the Trustee nor the Trust Administrator shall be
         personally liable 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 entitled to at least 25% of the Voting Rights
         relating to the time, method and place of conducting any proceeding for
         any remedy available to it or exercising any trust or power conferred
         upon it under this Agreement.

                  SECTION 8.02.             Certain Matters Affecting the
                                            Trustee and the Trust Administrator.

                  (a)      Except as otherwise provided in Section 8.01:

                           (i) Each of the Trustee and the Trust Administrator
                  may request and rely upon and shall be protected in acting or
                  refraining from acting upon any resolution, Officers'
                  Certificate, certificate of auditors or any other certificate,
                  statement, instrument, opinion, report, notice, request,
                  consent, order, appraisal, bond or other paper or document
                  reasonably believed by it to be genuine and to have been
                  signed or presented by the proper party or parties;

                           (ii) Each of the Trustee and the Trust Administrator
                  may consult with counsel and 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 Opinion of Counsel;

                           (iii) Neither the Trustee nor the Trust Administrator
                  shall be under any obligation to exercise any of the trusts or
                  powers vested in it by this 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 this
                  Agreement, unless such Certificateholders shall have offered
                  to the Trustee or the Trust Administrator, as applicable,
                  reasonable security or indemnity against the costs, expenses
                  and liabilities which may be incurred therein or thereby;
                  nothing contained herein shall, however, relieve the Trustee
                  or the Trust Administrator of the obligation, upon the
                  occurrence of a Servicer Event of Default (which has not been
                  cured or waived), to exercise such of the rights and powers
                  vested in it by this Agreement, and to use the same degree of
                  care and skill in their exercise as a prudent person would
                  exercise or use under the circumstances in the conduct of such
                  person's own affairs;

                           (iv) Neither the Trustee nor the Trust Administrator
                  shall 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 this Agreement;

                           (v) Prior to the occurrence of a Servicer Event of
                  Default hereunder and after the curing of all Servicer Events
                  of Default which may have occurred, neither

<PAGE>

                                      -102-

                  the Trustee nor the Trust Administrator shall 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 entitled to at least 25% of the
                  Voting Rights; provided, however, that if the payment within a
                  reasonable time to the Trustee or the Trust Administrator, as
                  applicable, of the costs, expenses or liabilities likely to be
                  incurred by it in the making of such investigation is, in the
                  opinion of the Trustee or the Trust Administrator, as
                  applicable, not reasonably assured to the Trustee or Trust
                  Administrator, as applicable, by such Certificateholders, the
                  Trustee or the Trust Administrator, as applicable, may require
                  reasonable indemnity against such expense, or liability from
                  such Certificateholders as a condition to taking any such
                  action;

                           (vi) Each of the Trustee and the Trust Administrator
                  may execute any of the trusts or powers hereunder or perform
                  any duties hereunder either directly or by or through agents
                  or attorneys; and

                           (vii) Neither the Trustee nor the Trust Administrator
                  shall be personally liable for any loss resulting from the
                  investment of funds held in the Collection Account at the
                  direction of the Servicer pursuant to Section 3.12.

                  (b) All rights of action under this Agreement or under any of
the Certificates, enforceable by the Trustee or the Trust Administrator, 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 or the Trust
Administrator shall be brought in its name for the benefit of all the Holders of
such Certificates, subject to the provisions of this Agreement.

                  SECTION 8.03.             Neither the Trustee nor Trust
                                            Administrator Liable for
                                            Certificates or Mortgage Loans.

                  The recitals contained herein and in the Certificates (other
than the signature of the Trustee or the Trust Administrator, on behalf of the
Trustee, the authentication of the Trustee or the Trust Administrator on the
Certificates, the acknowledgments of the Trustee and the Trust Administrator
contained in Article II and the representations and warranties of the Trustee
and the Trust Administrator in Section 8.13) shall be taken as the statements of
the Depositor and neither the Trustee nor the Trust Administrator assumes any
responsibility for their correctness. Neither the Trustee nor the Trust
Administrator makes any representations or warranties as to the validity or
sufficiency of this Agreement (other than as specifically set forth in Section
8.13) or of the Certificates (other than the signature of the Trustee, or the
Trust Administrator on behalf of the Trustee, and authentication of the Trustee
or the Trust Administrator on the Certificates) or of any Mortgage Loan or
related document. Neither the Trustee nor the Trust Administrator shall 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 Depositor or the Servicer

<PAGE>

                                      -103-

in respect of the Mortgage Loans or deposited in or withdrawn from the
Collection Account by the Servicer, other than any funds held by or on behalf of
the Trustee or the Trust Administrator in accordance with Section 3.10.

                  SECTION 8.04.             Trustee and Trust Administrator May
                                            Own Certificates.

                  Each of the Trustee and the Trust Administrator 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 or Trust
Administrator, as applicable.

                  SECTION 8.05.             Trustee's and Trust Administrator's
                                            Fees and Expenses.

                  (a) The Trust Administrator shall withdraw from the
Distribution Account on each Distribution Date and pay to itself the
Administration Fee. To the extent that the funds therein are at anytime
insufficient for such purpose, the Servicer shall pay such fees (provided,
however, that the Servicer shall be permitted to withdraw from the Collection
Account at any time the amount of any such fee paid to the Trust Administrator
by it). The Trust Administrator shall also be entitled to any income or gain on
amounts on deposit in the Distribution Account from time to time as provided in
Section 3.12(c). The Trust Administrator shall pay to the Trustee (from its own
funds or from a portion of the Administration Fee that it has so withdrawn) such
compensation as the Trust Administrator and the Trustee shall have agreed upon
in a separate agreement between them. Each of the Trustee and the Trust
Administrator and any director, officer, employee or agent of the Trustee or the
Trust Administrator, as applicable, shall be indemnified by the Trust Fund and
held harmless against any loss, liability or expense (not including expenses,
disbursements and advances incurred or made by the Trustee or the Trust
Administrator, as applicable, including the compensation and the expenses and
disbursements of its agents and counsel, in the ordinary course of the Trustee's
or Trust Administrator's, as the case may be, performance in accordance with the
provisions of this Agreement) incurred by the Trustee or the Trust
Administrator, as applicable, in connection with any claim or legal action or
any pending or threatened claim or legal action arising out of or in connection
with the acceptance or administration of its obligations and duties under this
Agreement, other than any loss, liability or expense (i) resulting from any
breach of the Servicer's obligations in connection with this Agreement for which
the Servicer has performed its obligation to indemnify the Trustee and the Trust
Administrator as provided below in this Section 8.05 or pursuant to Section
11.03(c) (and in the case of the Trustee, resulting from any breach of the Trust
Administrator's obligations in connection with this Agreement for which the
Trust Administrator has performed its obligation to indemnify the Trustee
pursuant to Section 11.03(b) and in the case of the Trust Administrator,
resulting from any breach of the Trustee's obligations in connection with this
Agreement for which the Trustee has performed its obligation to indemnify the
Trust Administrator pursuant to Section 11.03(a)), (ii) that constitutes a
specific liability of the Trustee or the Trust Administrator, as applicable,
pursuant to Section 11.01(g) or (iii) any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or negligence in the performance of
duties hereunder or by reason of reckless disregard of obligations and duties
hereunder or in the case of the Trust Administrator, as a result of a breach of
the Trust Administrator's obligations under Article XI hereof. The Servicer
agrees to indemnify the Trustee and the Trust Administrator, from, and hold

<PAGE>

                                      -104-

it harmless against, any loss, liability or expense arising in respect of any
breach by the Servicer of its obligations in connection with this Agreement.
Such indemnity shall survive the termination or discharge of this Agreement and
the resignation or removal of the Trustee or the Trust Administrator, as the
case may be. Any payment hereunder made by the Servicer to the Trustee or the
Trust Administrator shall be from the Servicer's own funds, without
reimbursement from the Trust Fund therefor.

                  (b) The Trust Administrator shall pay any annual rating agency
fees of the Rating Agencies for ongoing surveillance from its own funds without
right of reimbursement.

                  SECTION 8.06.             Eligibility Requirements for Trustee
                                            and Trust Administrator.

                  Each of the Trustee and the Trust Administrator hereunder
shall at all times be a corporation or an association (other than the Depositor,
the Seller, the Servicer or, in the case of the Trustee, any Affiliate of the
foregoing) 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 a
member of a bank holding company whose capital and surplus is at least
$50,000,000) and subject to supervision or examination by federal or state
authority. If such corporation or association publishes reports of conditions 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 or the Trust
Administrator shall cease to be eligible in accordance with the provisions of
this Section, the Trustee or the Trust Administrator, as the case may be, shall
resign immediately in the manner and with the effect specified in Section 8.07.

                  SECTION 8.07.             Resignation and Removal of the
                                            Trustee and the Trust Administrator.

                  Either the Trustee or the Trust Administrator may at any time
resign and be discharged from the trust hereby created by giving written notice
thereof to the Depositor, the Servicer, to the Certificateholders and, if the
Trustee is resigning, to the Trust Administrator, or, if the Trust Administrator
is resigning, to the Trustee. Upon receiving such notice of resignation, the
Depositor shall promptly appoint a successor Trustee or Trust Administrator
(which may be the same Person in the event both the Trustee and the Trust
Administrator resign or are removed) by written instrument, in duplicate, which
instrument shall be delivered to the resigning Trustee or Trust Administrator
and to the successor Trustee or Trust Administrator, as applicable. A copy of
such instrument shall be delivered to the Certificateholders, the Trustee or
Trust Administrator, as applicable, and the Servicer by the Depositor. If no
successor Trustee or Trust Administrator shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee or Trust Administrator, as applicable, may
petition any court of competent jurisdiction for the appointment of a successor
Trustee or Trust Administrator, as applicable.

<PAGE>

                                      -105-

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

                  The Holders of Certificates entitled to at least 51% of the
Voting Rights may at any time remove the Trustee or the Trust Administrator and
appoint a successor Trustee or Trust Administrator 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 or to the Trust Administrator, as the
case may be, so removed and one complete set to the successor so appointed. A
copy of such instrument shall be delivered to the Certificateholders and the
Servicer by the Depositor. In addition, if the Trustee has knowledge that the
Trust Administrator has breached any of its duties under this Agreement, the
Trustee may remove the Trust Administrator in the same manner as provided in the
prior sentence. For purposes of this Section, the Trustee shall not be deemed to
have knowledge of a breach by the Trust Administrator of any of its duties
hereunder, unless a Responsible Officer of the Trustee , assigned to and working
in the Trustee's Corporate Trust Office has actual knowledge thereof or unless
written notice of any event which is in fact such a breach is received by the
Trustee, and such notice references the Certificates, the Trust Fund or this
Agreement.

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

                  SECTION 8.08.             Successor Trustee or Trust
                                            Administrator.

                  Any successor Trustee or Trust Administrator appointed as
provided in Section 8.07 shall execute, acknowledge and deliver to the
Depositor, the Trustee or the Trust Administrator, as applicable, and its
predecessor Trustee or Trust Administrator an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee or Trust Administrator shall become effective and such
successor Trustee or Trust Administrator, 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 or

<PAGE>

                                      -106-

Trust Administrator herein. The predecessor Trustee or Trust Administrator shall
deliver to the successor Trustee or Trust Administrator all Mortgage Files and
related documents and statements to the extent held by it hereunder, as well as
all moneys, held by it hereunder, and the Depositor and the predecessor Trustee
or Trust Administrator shall execute and deliver such instruments and do such
other things as may reasonably be required for more fully and certainly vesting
and confirming in the successor Trustee or Trust Administrator all such rights,
powers, duties and obligations.

                  No successor Trustee or Trust Administrator shall accept
appointment as provided in this Section unless at the time of such acceptance
such successor Trustee or Trust Administrator shall be eligible under the
provisions of Section 8.06 and the appointment of such successor Trustee or
Trust Administrator shall not result in a downgrading of any Class of
Certificates by either Rating Agency, as evidenced by a letter from each Rating
Agency.

                  Upon acceptance of appointment by a successor Trustee or Trust
Administrator as provided in this Section, the Depositor shall mail notice of
the succession of such Trustee or Trust Administrator hereunder to all Holders
of Certificates at their addresses as shown in the Certificate Register. If the
Depositor fails to mail such notice within 10 days after acceptance of
appointment by the successor Trustee or Trust Administrator, the successor
Trustee or Trust Administrator 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 either the Trustee
or the Trust Administrator 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 or the Trust Administrator, as
the case may be, shall be a party, or any corporation or association succeeding
to the business of the Trustee or the Trust Administrator, as applicable, shall
be the successor of the Trustee or the Trust Administrator, as the case may be,
hereunder, provided such corporation or association shall be eligible under the
provisions of Section 8.06, 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.

                  SECTION 8.10.             Appointment of Co-Trustee or
                                            Separate Trustee.

                  Notwithstanding any other provisions hereof, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust REMIC or property securing the same may at the time be
located, the Trustee shall have the power and shall execute and deliver all
instruments 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
separate trustees, of all or any part of the Trust REMIC, and to vest in such
Person or Persons, in such capacity, such title to the Trust REMIC, or any part
thereof, and, subject to the other provisions of this Section 8.10, such powers,
duties, obligations, rights and trusts as the Trustee may consider necessary or
desirable. No co-trustee or separate trustee hereunder shall be required to meet
the terms of eligibility as a successor trustee

<PAGE>

                                      -107-

under Section 8.06 hereunder 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
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 by the Trustee (whether as
Trustee hereunder or as successor to a defaulting Servicer hereunder), 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 REMIC 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 this Agreement and
the conditions of this Article VIII. Each separate trustee and co-trustee, upon
its acceptance of the trust 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 this Agreement, specifically including every provision of this
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 this 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 or co-trustee.

                  SECTION 8.11.             Appointment of Custodians.

                  The Trustee may appoint one or more Custodians to hold all or
a portion of the Mortgage Files as agent for the Trustee, and the expense of any
such Custodian shall be paid by the Trustee. Each Custodian shall be a
depository institution supervised and regulated by a federal or state banking
authority, shall have combined capital and surplus of at least $10,000,000,
shall be qualified to do business in the jurisdiction in which it holds any
Mortgage File and shall not be the Depositor or any Affiliate of the Depositor.
The Servicer shall not have any duty to verify that any such Custodian is
qualified to act as such in accordance with the preceding sentence. Each
Custodian shall be subject to the same obligations, standard of care, protection
and indemnities as would be imposed on, or would protect, the Trustee hereunder
in connection with the retention of Mortgage Files directly by the Trustee. The
appointment of one or more Custodians shall not relieve the Trustee from any of
its obligations hereunder, and the Trustee shall remain responsible for all acts
and omissions of any Custodian.

<PAGE>

                                      -108-

                  SECTION 8.12.             Appointment of Office or Agency.

                  The Trust Administrator hereby appoints its Corporate Trust
Office as the office or agency in the City of New York, New York where the
Certificates may be surrendered for registration of transfer or exchange, and
presented for final distribution, and where notices and demands to or upon the
Trust Administrator in respect of the Certificates and this Agreement may be
served.

                  SECTION 8.13.             Representations and Warranties.

                  Each of the Trustee and the Trust Administrator hereby
represents and warrants to the Servicer, the Depositor and the Trustee or the
Trust Administrator, as applicable, as of the Closing Date, that:

                  (i) It is a New York banking corporation or a national banking
         association, as applicable, duly organized, validly existing and in
         good standing under the laws of New York or the United States of
         America, as applicable.

                  (ii) The execution and delivery of this Agreement by it, and
         the performance and compliance with the terms of this Agreement by it,
         will not violate its articles of association or bylaws or constitute a
         default (or an event which, with notice or lapse of time, or both,
         would constitute a default) under, or result in the breach of, any
         material agreement or other instrument to which it is a party or which
         is applicable to it or any of its assets.

                  (iii) It has the full power and authority to enter into and
         consummate all transactions contemplated by this Agreement, has duly
         authorized the execution, delivery and performance of this Agreement,
         and has duly executed and delivered this Agreement.

                  (iv) This Agreement, assuming due authorization, execution and
         delivery by the other parties hereto, constitutes a valid, legal and
         binding obligation of it, enforceable against it in accordance with the
         terms hereof, subject to (A) applicable bankruptcy, insolvency,
         receivership, reorganization, moratorium and other laws affecting the
         enforcement of creditors' rights generally, and (B) general principles
         of equity, regardless of whether such enforcement is considered in a
         proceeding in equity or at law.

                  (v) It is not in violation of, and its execution and delivery
         of this Agreement and its performance and compliance with the terms of
         this Agreement will not constitute a violation of, any law, any order
         or decree of any court or arbiter, or any order, regulation or demand
         of any federal, state or local governmental or regulatory authority,
         which violation, in its good faith and reasonable judgment, is likely
         to affect materially and adversely either the ability of it to perform
         its obligations under this Agreement or its financial condition.

                  (vi) No litigation is pending or, to the best of its
         knowledge, threatened against it, which would prohibit it from entering
         into this Agreement or, in its good faith reasonable

<PAGE>

                                      -109-

         judgment, is likely to materially and adversely affect either the
         ability of it to perform its obligations under this Agreement or its
         financial condition.

<PAGE>

                                      -110-

                                   ARTICLE IX

                                   [RESERVED]

<PAGE>

                                      -111-

                                    ARTICLE X

                                   TERMINATION

                  SECTION 10.01.            Termination Upon Repurchase or
                                            Liquidation of All Mortgage Loans.

                  Subject to Section 10.02, the respective obligations and
responsibilities under this Agreement of the Depositor, the Servicer, the Trust
Administrator and the Trustee (other than the obligations of the Servicer to the
Trustee and the Trust Administrator pursuant to Section 8.05 and of the Servicer
to provide for and the Trust Administrator to make payments to
Certificateholders as hereafter set forth) shall terminate upon payment to the
Certificateholders and the deposit of all amounts held by or on behalf of the
Trustee and required hereunder to be so paid or deposited on the Distribution
Date coinciding with or following the earlier to occur of (i) the purchase by
the Servicer of all Mortgage Loans and each REO Property remaining in the Trust
Fund at a price equal to the greater of (A) the aggregate Purchase Price of all
the Mortgage Loans included in the Trust Fund, plus the appraised value of each
REO Property, if any, included in the Trust Fund, such appraisal to be conducted
by an appraiser mutually agreed upon by such Holder and the Trust Administrator
in their reasonable discretion and (B) the aggregate fair market value of all of
the assets of the Trust Fund (as determined by the Servicer and the Trust
Administrator, as of the close of business on the third Business Day next
preceding the date upon which notice of any such termination is furnished to
Certificateholders pursuant to the third paragraph of this Section 10.01) and
(ii) the final payment or other liquidation (or any advance with respect
thereto) of the last Mortgage Loan or REO Property remaining in the Trust Fund;
provided, however, that in no event shall the trust created hereby continue
beyond the expiration of 21 years from 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, living on the date hereof.

                  The Servicer shall have the right to purchase all of the
Mortgage Loans and each REO Property remaining in the Trust Fund pursuant to
clause (i) of the preceding paragraph no later than the Determination Date in
the month immediately preceding the Distribution Date on which the Certificates
will be retired; provided, however, that the Servicer may elect to purchase all
of the Mortgage Loans and each REO Property remaining in the Trust Fund pursuant
to clause (i) above only if the aggregate Legal Balance of the Mortgage Loans
and each REO Property remaining in the Trust Fund after taking into account all
payments made in respect thereof through the last day of the month preceding
such date is less than 10% of the aggregate Legal Balance of the Mortgage Loans
as of the Cut-off Date.

                  Notice of any termination shall be given promptly by the Trust
Administrator by letter to Certificateholders mailed (a) in the event such
notice is given in connection with the purchase of the Mortgage Loans and each
REO Property by the Servicer, not earlier than the 15th day and not later than
the 25th day of the month next preceding the month of the final distribution on
the Certificates or (b) otherwise during the month of such final distribution on
or before the Determination Date in such month, in each case specifying (i) the
Distribution Date upon which the

<PAGE>

                                      -112-

Trust Fund will terminate and the final payment of the Certificates will be made
upon presentation and surrender of Certificates at the office of the Trust
Administrator therein designated, (ii) the amount of any such final payment,
(iii) that no interest shall accrue in respect of the Certificates from and
after the Interest Accrual Period relating to the final Distribution Date
therefor and (iv) that the Record Date otherwise applicable to such Distribution
Date is not applicable, payments being made only upon presentation and surrender
of the Certificates at the office of the Trust Administrator. The Trust
Administrator 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 the purchase of all of the Mortgage Loans and each REO Property
remaining in the Trust Fund by the Servicer, the Servicer shall deliver to the
Trust Administrator for deposit in the Distribution Account not later than the
last Business Day of the month next preceding the month of the final
distribution on the Certificates an amount in immediately available funds equal
to the above-described purchase price. Upon certification to the Trust
Administrator by a Servicing Officer of the making of such final deposit, the
Trust Administrator shall promptly release to the Servicer the Mortgage Files
for the remaining Mortgage Loans, and the Trustee shall execute all assignments,
endorsements and other instruments necessary to effectuate such transfer.

                  Upon presentation of the Certificates by the
Certificateholders on the final Distribution Date, the Trust Administrator shall
distribute to each Certificateholder so presenting and surrendering its
Certificates the amount otherwise distributable on such Distribution Date in
accordance with Section 4.01 in respect of the Certificates so presented and
surrendered. Any funds not distributed to any Holder or Holders of Certificates
being retired on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such date, be set aside and held
in trust and credited to the account of the appropriate non-tendering Holder or
Holders. If any Certificates as to which notice has been given pursuant to this
Section 10.01 shall not have been surrendered for cancellation within six months
after the time specified in such notice, the Trust Administrator shall mail a
second notice to the remaining non-tendering Certificateholders to surrender
their Certificates for cancellation in order to receive the final distribution
with respect thereto. If within one year after the second notice all such
Certificates shall not have been surrendered for cancellation, the Trust
Administrator shall, directly or through an agent, mail a final notice to the
remaining non-tendering Certificateholders concerning surrender of their
Certificates. The costs and expenses of maintaining the funds in trust and of
contacting such Certificateholders shall be paid out of the assets remaining in
the trust funds. If within one year after the final notice any such Certificates
shall not have been surrendered for cancellation, the Trust Administrator shall
pay to Salomon Smith Barney Inc. all such amounts, and all rights of
non-tendering Certificateholders in or to such amounts shall thereupon cease. No
interest shall accrue or be payable to any Certificateholder on any amount held
in trust by the Trust Administrator as a result of such Certificateholder's
failure to surrender its Certificate(s) for final payment thereof in accordance
with this Section 10.01. Any such amounts held in trust by the Trust
Administrator shall be held in an Eligible Account and the Trust Administrator
may direct any depository institution maintaining such account to invest the
funds in one or more Permitted Investments. All income and gain realized from
the investment of funds deposited in such accounts held in trust by the Trust
Administrator shall be for the benefit of the Trust Administrator; provided,
however, that the Trust Administrator shall

<PAGE>

                                      -113-

deposit in such account the amount of any loss of principal incurred in respect
of any such Permitted Investment made with funds in such accounts immediately
upon the realization of such loss.

                  Immediately following the deposit of funds in trust hereunder
in respect of the Certificates, the Trust Fund shall terminate.

                  SECTION 10.02.            Additional Termination Requirements.

                  (a) In the event that the Servicer purchases all the Mortgage
Loans and each REO Property or the final payment on or other liquidation of the
last Mortgage Loan or REO Property remaining in the Trust Fund pursuant to
Section 10.01, the Trust Fund shall be terminated in accordance with the
following additional requirements:

                         (i) The Trust Administrator on behalf of the Trustee
                  shall specify or cause to be specified the first day in the
                  90-day liquidation period in a statement attached to the Trust
                  Fund's final Tax Return pursuant to Treasury regulation
                  Section 1.860F-1 and shall satisfy all requirements of a
                  qualified liquidation under Section 860F of the Code and any
                  regulations thereunder, as evidenced by an Opinion of Counsel
                  obtained at the expense of the Servicer or the Depositor, as
                  applicable;

                        (ii) During such 90-day liquidation period, and at or
                  prior to the time of making of the final payment on the
                  Certificates, the Trust Administrator on behalf of the Trustee
                  shall sell all of the assets of the Trust Fund to the Servicer
                  for cash; and

                       (iii) At the time of the making of the final payment on
                  the Certificates, the Trust Administrator shall distribute or
                  credit, or cause to be distributed or credited, to the Holders
                  of the applicable Residual Certificates all cash on hand in
                  the Trust Fund (other than cash retained to meet claims), and
                  the Trust Fund shall terminate at that time.

                  (b) At the expense of the requesting party (or, if the Trust
Fund is being terminated as a result of the occurrence of the event described in
clause (ii) of the first paragraph of Section 10.01, at the expense of the Trust
Administrator without the right of reimbursement from the Trust Fund), the
Servicer shall prepare the documentation required in connection with the
adoption of a plan of liquidation of a Trust Fund pursuant to this Section
10.02.

                  (c) By their acceptance of Certificates, the Holders thereof
hereby agree to authorize the Trust Administrator to specify the 90-day
liquidation period for the Trust Fund, which authorization shall be binding upon
all successor Certificateholders.

<PAGE>

                                      -114-

                                   ARTICLE XI

                                REMIC PROVISIONS

                  SECTION 11.01.            REMIC Administration.

                  (a) The Trust Administrator shall elect to treat the Trust
REMIC as a REMIC under the Code and, if necessary, under applicable state law.
Such election will be made on Form 1066 or other appropriate federal tax or
information return or any appropriate state return for the taxable year ending
on the last day of the calendar year in which the Certificates are issued.

                  (b) The Class A, Class M-1, Class M-2, Class M-3, Class M-4,
Class M-5 and Class M-6 Certificates are hereby designated as "regular
interests" (within the meaning of Section 860G(a)(1) of the Code), and the Class
R Certificates are hereby designated as the single class of "residual interests"
(within the meaning of Section 860G(a)(2) of the Code), in the Trust REMIC. None
of the Servicer, the Trustee or the Trust Administrator shall, to the extent
within the control of such Person, create or permit the creation of any other
"interests" in the Trust REMIC (within the meaning of Treasury regulation
Section 1.860D-1(b)(1)).

                  (c) The Closing Date is hereby designated as the "Startup Day"
of the Trust REMIC within the meaning of Section 860G(a)(9) of the Code.

                  (d) The Trust Administrator shall be reimbursed for any and
all expenses relating to any tax audit of the Trust Fund (including, but not
limited to, any professional fees or any administrative or judicial proceedings
with respect to the Trust REMIC that involve the Internal Revenue Service or
state tax authorities), including the expense of obtaining any tax related
Opinion of Counsel except as specified herein. The Trust Administrator, as agent
for the Trust REMIC's tax matters person shall (i) act on behalf of the Trust
Fund in relation to any tax matter or controversy involving the Trust REMIC and
(ii) represent the Trust Fund in any administrative or judicial proceeding
relating to an examination or audit by any governmental taxing authority with
respect thereto. The holder of the largest Percentage Interest of Class R
Certificates shall be designated, in the manner provided under Treasury
regulations section 1.860F-4(d) and Treasury regulations section
301.6231(a)(7)-1, as the tax matters person of the Trust REMIC created
hereunder. By their acceptance thereof, the holder of the largest Percentage
Interest of the Class R Certificates hereby agrees to irrevocably appoint the
Trust Administrator or an Affiliate as its agent to perform all of the duties of
the tax matters person for the Trust Fund.

                  (e) The Trust Administrator shall prepare, the Trustee shall
sign and the Trust Administrator shall file all of the Tax Returns (including
Form 8811, which must be filed within 30 days following the Closing Date) in
respect of the Trust REMIC created hereunder. The expenses of preparing and
filing such returns shall be borne by the Trust Administrator without any right
of reimbursement therefor.

<PAGE>

                                      -115-

                  (f) The Trust Administrator shall perform on behalf of the
Trust REMIC all reporting and other tax compliance duties that are the
responsibility of such REMIC under the Code, the REMIC Provisions or other
compliance guidance issued by the Internal Revenue Service or any state or local
taxing authority. Among its other duties, as required by the Code, the REMIC
Provisions or other such compliance guidance, the Trust Administrator shall
provide (i) to any Transferor of a Class R Certificate such information as is
necessary for the application of any tax relating to the transfer of a Class R
Certificate to any Person who is not a Permitted Transferee, (ii) to the
Certificateholders such information or reports as are required by the Code or
the REMIC Provisions including reports relating to interest, original issue
discount and market discount or premium (using the Prepayment Assumption as
required) and (iii) to the Internal Revenue Service the name, title, address and
telephone number of the person who will serve as the representative of the Trust
REMIC. The Depositor shall provide or cause to be provided to the Trust
Administrator, within ten (10) days after the Closing Date, all information or
data that the Trust Administrator reasonably determines to be relevant for tax
purposes as to the valuations and issue prices of the Certificates, including,
without limitation, the price, yield, prepayment assumption and projected cash
flow of the Certificates.

                  (g) The Trustee and the Trust Administrator shall take such
action and shall cause the Trust REMIC created hereunder to take such action as
shall be necessary to create or maintain the status thereof as a REMIC under the
REMIC Provisions. The Trustee and the Trust Administrator shall not take any
action or cause the Trust Fund to take any action or fail to take (or fail to
cause to be taken) any action that, under the REMIC Provisions, if taken or not
taken, as the case may be, could (i) endanger the status of the Trust REMIC as a
REMIC or (ii) result in the imposition of a tax upon the Trust Fund (including
but not limited to the tax on prohibited transactions as defined in Section
860F(a)(2) of the Code and the tax on contributions to a REMIC set forth in
Section 860G(d) of the Code) (either such event, an "Adverse REMIC Event")
unless the Trustee and the Trust Administrator have received an Opinion of
Counsel, addressed to the Trustee and the Trust Administrator (at the expense of
the party seeking to take such action but in no event at the expense of the
Trust Administrator or the Trustee) to the effect that the contemplated action
will not, with respect to the Trust REMIC, endanger such status or result in the
imposition of such a tax, nor shall the Servicer take or fail to take any action
(whether or not authorized hereunder) as to which the Trustee or the Trust
Administrator has advised it in writing that it has received an Opinion of
Counsel to the effect that an Adverse REMIC Event could occur with respect to
such action; provided that the Servicer may conclusively rely on such Opinion of
Counsel and shall incur no liability for its action or failure to act in
accordance with such Opinion of Counsel. In addition, prior to taking any action
with respect to the Trust REMIC or the respective assets of each, or causing the
Trust REMIC to take any action, which is not contemplated under the terms of
this Agreement, the Servicer will consult with the Trustee and the Trust
Administrator or its designee, in writing, with respect to whether such action
could cause an Adverse REMIC Event to occur with respect to the Trust REMIC and
the Servicer shall not take any such action or cause the Trust REMIC to take any
such action as to which the Trustee or the Trust Administrator has advised it in
writing that an Adverse REMIC Event could occur; provided that the Servicer may
conclusively rely on such writing and shall incur no liability for its action or
failure to act in accordance with such writing. The Trust Administrator and the
Trustee may consult with counsel to make such written

<PAGE>

                                      -116-

advice, and the cost of same shall be borne by the party seeking to take the
action not permitted by this Agreement, but in no event shall such cost be an
expense of the Trustee or Trust Administrator, as applicable. At all times as
may be required by the Code, the Trust Administrator will ensure that
substantially all of the assets of the Trust REMIC will consist of "qualified
mortgages" as defined in Section 860G(a)(3) of the Code and "permitted
investments" as defined in Section 860G(a)(5) of the Code, to the extent such
obligations are within the Trust Administrator's control and not otherwise
inconsistent with the terms of this Agreement.

                  (h) In the event that any tax is imposed on "prohibited
transactions" of the Trust REMIC created hereunder as defined in Section
860F(a)(2) of the Code, on the "net income from foreclosure property" of such
REMIC as defined in Section 860G(c) of the Code, on any contributions to any
such REMIC after the Startup Day therefor pursuant to Section 860G(d) of the
Code, or any other tax is imposed by the Code or any applicable provisions of
state or local tax laws, such tax shall be charged (i) to the Trust
Administrator pursuant to Section 11.03 hereof, if such tax arises out of or
results from a breach by the Trust Administrator of any of its obligations under
this Article XI, (ii) to the Trustee pursuant to Section 11.03 hereof, if such
tax arises out of or results from a breach by the Trustee of any of its
obligations under this Article XI, (iii) to the Servicer pursuant to Section
11.03 hereof, if such tax arises out of or results from a breach by the Servicer
of any of its obligations under Article III or this Article XI, or (iv) against
amounts on deposit in the Distribution Account and shall be paid by withdrawal
therefrom.

                  (i) On or before April 15 of each calendar year, commencing
April 15, 2002, the Trust Administrator shall deliver to each Rating Agency an
Officer's Certificate of the Trust Administrator stating the Trust
Administrator's compliance with this Article XI.

                  (j) The Trust Administrator shall, for federal income tax
purposes, maintain books and records with respect to the Trust REMIC on a
calendar year and on an accrual basis.

                  (k) Following the Startup Day, none of the Servicer, the
Trustee or the Trust Administrator shall accept any contributions of assets to
the Trust REMIC other than in connection with any Qualified Substitute Mortgage
Loan delivered in accordance with Section 2.03 unless it shall have received an
Opinion of Counsel to the effect that the inclusion of such assets in the Trust
Fund will not cause the Trust REMIC to fail to qualify as a REMIC at any time
that any Certificates are outstanding or subject the Trust REMIC to any tax
under the REMIC Provisions or other applicable provisions of federal, state and
local law or ordinances.

                  (l) None of the Trustee, the Trust Administrator or the
Servicer shall enter into any arrangement by which the Trust REMIC will receive
a fee or other compensation for services nor permit the Trust REMIC to receive
any income from assets other than "qualified mortgages" as defined in Section
860G(a)(3) of the Code or "permitted investments" as defined in Section
860G(a)(5) of the Code.

<PAGE>

                                      -117-

                  SECTION 11.02.            Prohibited Transactions and
                                            Activities.

                  None of the Depositor, the Servicer, the Trust Administrator
or the Trustee shall sell, dispose of or substitute for any of the Mortgage
Loans (except in connection with (i) the foreclosure of a Mortgage Loan,
including but not limited to, the acquisition or sale of a Mortgaged Property
acquired by deed in lieu of foreclosure, (ii) the bankruptcy of the Trust REMIC
(iii) the termination of the Trust REMIC pursuant to Article X of this
Agreement, (iv) a substitution pursuant to Article II of this Agreement or (v) a
purchase of Mortgage Loans pursuant to Article II or III of this Agreement), nor
acquire any assets for the Trust REMIC (other than REO Property acquired in
respect of a defaulted Mortgage Loan), nor sell or dispose of any investments in
the Collection Account or the Distribution Account for gain, nor accept any
contributions to the Trust REMIC after the Closing Date (other than a Qualified
Substitute Mortgage Loan delivered in accordance with Section 2.03), unless it
has received an Opinion of Counsel, addressed to the Trustee and the Trust
Administrator (at the expense of the party seeking to cause such sale,
disposition, substitution, acquisition or contribution but in no event at the
expense of the Trustee or Trust Administrator) that such sale, disposition,
substitution, acquisition or contribution will not (a) affect adversely the
status of the Trust REMIC as a REMIC or (b) cause the Trust REMIC to be subject
to a tax on "prohibited transactions" or "contributions" pursuant to the REMIC
Provisions.

                  SECTION 11.03.            Servicer and Trustee and Trust
                                            Administrator Indemnification.

                  (a) The Trustee agrees to indemnify the Trust Fund, the
Depositor, the Trust Administrator and the Servicer for any taxes and costs
including, without limitation, any reasonable attorneys fees imposed on or
incurred by the Trust Fund, the Depositor, the Trust Administrator or the
Servicer, as a result of a breach of the Trustee's covenants set forth in this
Article XI.

                  (b) The Trust Administrator agrees to indemnify the Trust
Fund, the Depositor, the Trustee and the Servicer for any taxes and costs
including, without limitation, any reasonable attorneys fees imposed on or
incurred by the Trust Fund, the Depositor, the Trustee or the Servicer, as a
result of a breach of the Trust Administrator's covenants set forth in this
Article XI.

                  (c) The Servicer agrees to indemnify the Trust Fund, the
Depositor, the Trust Administrator and the Trustee for any taxes and costs
including, without limitation, any reasonable attorneys' fees imposed on or
incurred by the Trust Fund, the Depositor, the Trust Administrator or the
Trustee, as a result of a breach of the Servicer's covenants set forth in
Article III or this Article XI.

<PAGE>

                                      -118-

                                   ARTICLE XII

                            MISCELLANEOUS PROVISIONS

                  SECTION 12.01.            Amendment.

                   This Agreement may be amended from time to time by the
parties hereto without the consent of any of the Certificateholders, (i) to cure
any ambiguity or defect, (ii) to correct, modify or supplement any provisions
herein (including to give effect to the expectations of Certificateholders), or
(iii) to make any other provisions with respect to matters or questions arising
under this Agreement which shall not be inconsistent with the provisions of this
Agreement, provided that such action shall not, as evidenced by an Opinion of
Counsel delivered to the Trustee and the Trust Administrator, adversely affect
in any material respect the interests of any Certificateholder. No amendment
shall be deemed to adversely affect in any material respect the interests of any
Certificateholder who shall have consented thereto, and no Opinion of Counsel
shall be required to address the effect of any such amendment on any such
consenting Certificateholder.

                   This Agreement may also be amended from time to time by the
Depositor, the Servicer, the Trust Administrator and the Trustee with the
consent of Holders of Certificates entitled to at least 66% of the Voting Rights
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Holders of Certificates; provided, however, that no
such amendment shall (i) reduce in any manner the amount of, or delay the timing
of, payments received on Mortgage Loans which are required to be distributed on
any Certificate without the consent of the Holder of such Certificate, (ii)
adversely affect in any material respect the interests of the Holders of any
Class of Certificates in a manner other than as described in (i), without the
consent of the Holders of Certificates of such Class evidencing at least 66% of
the Voting Rights allocated to such Class, or (iii) modify the consents required
by the immediately preceding clauses (i) and (ii) without the consent of the
Holders of all Certificates then outstanding. Notwithstanding any other
provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 12.01, Certificates registered in the name of
the Depositor or the Servicer or any Affiliate thereof shall be entitled to
Voting Rights with respect to matters affecting such Certificates.

                  Notwithstanding any contrary provision of this Agreement,
neither the Trustee nor the Trust Administrator shall consent to any amendment
to this Agreement unless it shall have first received an Opinion of Counsel to
the effect that such amendment will not result in the imposition of any tax on
the Trust Fund pursuant to the REMIC Provisions or cause the Trust Fund to fail
to qualify as a REMIC at any time that any Certificates are outstanding.

                  Promptly after the execution of any such amendment the Trust
Administrator shall furnish a copy of such amendment to each Certificateholder.

<PAGE>

                                      -119-

                  It shall not be necessary for the consent of
Certificateholders under this Section 12.01 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 or the Trust Administrator
may prescribe.

                  The cost of any Opinion of Counsel to be delivered pursuant to
this Section 12.01 shall be borne by the Person seeking the related amendment,
but in no event shall such Opinion of Counsel be an expense of the Trustee or
the Trust Administrator.

                  Each of the Trustee and the Trust Administrator may, but shall
not be obligated to enter into any amendment pursuant to this Section that
affects its rights, duties and immunities under this Agreement or otherwise.

                  SECTION 12.02.            Recordation of Agreement;
                                            Counterparts.

                  To the extent permitted by applicable law, this 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 properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Servicer servicing the larger aggregate principal amount of
Mortgage Loans and at the expense of the Certificateholders, but only upon
direction of the Trustee or the Trust Administrator accompanied by an Opinion of
Counsel (at the expense of the Trust Fund) to the effect that such recordation
materially and beneficially affects the interests of the Certificateholders.

                  For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this 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
constitute but one and the same instrument.

                  SECTION 12.03.            Limitation on Rights of
                                            Certificateholders.

                  The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor 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 Fund, nor 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 Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of any 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

<PAGE>

                                      -120-

third person by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.

                  No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee and the Trust Administrator 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 shall have made written request upon the Trustee and the
Trust Administrator to institute such action, suit or proceeding in its own name
as Trustee or Trust Administrator hereunder and shall have offered to the
Trustee and the Trust Administrator such reasonable indemnity as it may require
against the costs, expenses and liabilities to be incurred therein or thereby,
and the Trustee or the Trust Administrator, 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 and the Trust Administrator, that no one or
more Holders of Certificates shall have any right in any manner whatsoever by
virtue of any provision of this 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 this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section, each and every
Certificateholder, the Trustee and the Trust Administrator shall be entitled to
such relief as can be given either at law or in equity.

                  SECTION 12.04.            Governing Law.

                  This Agreement shall be construed in accordance with the laws
of the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.

                  SECTION 12.05.            Notices.

                  All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when received if personally
delivered at or mailed by first class mail, postage prepaid, or by express
delivery service or delivered in any other manner specified herein, to (a) in
the case of the Depositor, 390 Greenwich Street, 4th Floor, New York, New York
10013, Attention: Mortgage Finance Group (facsimile number (212) 723-8604), or
such other address or facsimile number as may hereafter be furnished to the
other parties hereto in writing by the Depositor, (b) in the case of the
Servicer, 4828 Loop Central Drive, Houston, Texas 77081-2226, Attention: Janice
McClure (facsimile number: (713) 960-0539), or such other address or facsimile
number as may hereafter be furnished to the other parties hereto in writing by
the Servicer, (c) in the case of the Trustee, 450 West 33rd Street, 14th Floor,
New York, New York 10001-2697, Attention: Institutional Trust
Services/Structured Finance Services -- Salomon 2001-2 (facsimile number (212)
946-8191), or such other address or facsimile number as may hereafter be
furnished to the other parties hereto in writing by the Trustee, or (c) in the
case of the Trust Administrator, 111 Wall Street,

<PAGE>

                                      -121-

14th Floor, New York, New York 10005, Attention: Structured Finance/SBMSVII
2001-2 (facsimile number (212) 657-4009), or such other address or facsimile
number as may hereafter be furnished to the other parties hereto in writing by
the Trust Administrator. Any notice required or permitted to be given to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given when mailed, 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.

                  SECTION 12.06.            Severability of Provisions.

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

                  SECTION 12.07.            Notice to Rating Agencies.

                  The Trust Administrator shall use its best efforts promptly to
provide notice to the Rating Agencies with respect to each of the following of
which it has actual knowledge:

                  1.       Any material change or amendment to this Agreement;

                  2.       The occurrence of any Servicer Event of Default that
                           has not been cured or waived;

                  3.       The resignation or termination of the Servicer or the
                           Trustee or the Trust Administrator;

                  4.       The repurchase or substitution of Mortgage Loans
                           pursuant to or as contemplated by Section 2.03;

                  5.       The final payment to the Holders of any Class of
                           Certificates;

                  6.       Any change in the location of the Collection Account
                           or the Distribution Account; and

                  7.       Any event that would result in the inability of the
                           Trust Administrator to make advances regarding
                           delinquent Mortgage Loans.

                  In addition, the Trust Administrator shall promptly furnish to
each Rating Agency copies of each report to Certificateholders described in
Section 4.02 and the Servicer shall promptly furnish to each Rating Agency
copies of the following:

<PAGE>

                                      -122-

                  1.       Each annual statement as to compliance described in
                           Section 3.20; and

                  2.       Each annual independent public accountants' servicing
                           report described in Section 3.21.

                  Any such notice pursuant to this Section 12.07 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 Moody's Investors Service, Inc., 99 Church Street, New York, New York 10007,
and to Standard & Poor's Ratings Services, a division of the McGraw-Hill
Companies, Inc., 55 Water Street, New York, New York 10007, or such other
addresses as the Rating Agencies may designate in writing to the parties hereto.

                  SECTION 12.08.            Article and Section References.

                  All article and section references used in this Agreement,
unless otherwise provided, are to articles and sections in this Agreement.

                  SECTION 12.09.            Grant of Security Interest.

                  It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans by the Depositor to the Trustee, be, and be
construed as, a sale of the Mortgage Loans by the Depositor and not a pledge of
the Mortgage Loans to secure a debt or other obligation of the Depositor.
However, in the event that, notwithstanding the aforementioned intent of the
parties, the Mortgage Loans are held to be property of the Depositor, then, (a)
it is the express intent of the parties that such conveyance be deemed a pledge
of the Mortgage Loans by the Depositor to the Trustee to secure a debt or other
obligation of the Depositor and (b)(1) this Agreement shall also be deemed to be
a security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code as in effect from time to time in the State of New York; (2) the
conveyance provided for in Section 2.01 hereof 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 Mortgage Loans and all amounts payable
to the holders of the Mortgage Loans in accordance with the terms thereof and
all proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including without limitation
all amounts, other than investment earnings, from time to time held or invested
in the Collection Account and the Distribution Account, whether in the form of
cash, instruments, securities or other property; (3) the obligations secured by
such security agreement shall be deemed to be all of the Depositor's obligations
under this Agreement, including the obligation to provide to the
Certificateholders the benefits of this Agreement relating to the Mortgage Loans
and the Trust Fund; and (4) 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.
Accordingly, the Depositor hereby grants to the Trustee a security interest in
the Mortgage Loans and all other property described in clause (2) of the
preceding sentence, for the purpose of securing to the Trustee the performance
by the Depositor of the

<PAGE>

                                      -123-

obligations described in clause (3) of the preceding sentence. Notwithstanding
the foregoing, the parties hereto intend the conveyance pursuant to Section 2.01
to be a true, absolute and unconditional sale of the Mortgage Loans and assets
constituting the Trust Fund by the Depositor to the Trustee.

<PAGE>

                  IN WITNESS WHEREOF, the Depositor, the Servicer, the Trustee
and the Trust Administrator have caused their names to be signed hereto by their
respective officers thereunto duly authorized, in each case as of the day and
year first above written.

                                      SALOMON BROTHERS MORTGAGE
                                      SECURITIES VII, INC.,
                                      as Depositor

                                      By: /s/ Matthew R. Bollo
                                         ----------------------------------
                                      Name: Matthew R. Bollo
                                      Title:   Assistant Vice President

                                      LITTON LOAN SERVICING LP,
                                      as Servicer

                                      By: /s/ Janice McClure
                                         -----------------------------------
                                      Name: Janice McClure
                                      Title:   Sr. Vice President

                                      JPMORGAN CHASE BANK,
                                      as Trustee

                                      By: /s/ Rebekah S. Pappachen
                                          -----------------------------
                                      Name: Rebekah S. Pappachen
                                      Title:   Trust Officer

                                      CITIBANK, N.A.,
                                      as Trust Administrator

                                      By: /s/ Kristen Driscoll
                                          ----------------------------------
                                      Name: Kristen Driscoll
                                      Title:   Assistant Vice President

<PAGE>

STATE OF NEW YORK       )
                        ) ss.:
COUNTY OF NEW YORK      )

                  On the ___ day of November 2001, before me, a notary public in
and for said State, personally appeared ___________, known to me to be an
Assistant Vice President of Salomon Brothers Mortgage Securities VII, Inc., one
of the entities that executed the within instrument, and also known to me to be
the person who executed it on behalf of said entity, and acknowledged to me that
such entity executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                                ___________________________
                                                       Notary Public

[Notarial Seal]

<PAGE>

STATE OF________________        )
                                ) ss.:
COUNTY OF _________________     )

                  On the ___ day of November 2001, before me, a notary public in
and for said State, personally appeared ____________________, known to me to be
a _______________ of Litton Loan Servicing LP, one of the entities that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said entity, and acknowledged to me that such entity executed the
within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                                _______________________
                                                     Notary Public

[Notarial Seal]

<PAGE>

STATE OF NEW YORK       )
                        ) ss.:
COUNTY OF NEW YORK      )

                  On the ___ day of November 2001, before me, a notary public in
and for said State, personally appeared _______________________, known to me to
be a _____________________ of JPMorgan Chase Bank, one of the entities that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said entity, and acknowledged to me that such entity
executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                                ________________________
                                                      Notary Public

[Notarial Seal]

<PAGE>

STATE OF                )
                        ) ss.:
COUNTY OF               )

                  On the ___ day of November 2001, before me, a notary public in
and for said State, personally appeared ________________________________, known
to me to be a _________________________ of Citibank, N.A., one of the entities
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said entity, and acknowledged to me that such entity
executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                                ________________________
                                                      Notary Public

[Notarial Seal]

<PAGE>

                                   EXHIBIT A-1

                           FORM OF CLASS A CERTIFICATE

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
     OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
     THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
     PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
     CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
     REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
     SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
     DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
     OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
     OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

     SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
     "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
     AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
     OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

     NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
     OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
     INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
     REGISTERED.

<TABLE>
<CAPTION>
<S>                                                <C>
Salomon Brothers Mortgage Securities VII,          Aggregate Certificate Principal Balance of the
Inc., Mortgage Pass-Through Certificates,          Class A Certificates as of the Issue Date:
Series 2001-2                                      $____________

Pass-Through Rate: Variable                        Denomination: $______________

Cut-off Date and date of Pooling and               Servicer: Litton Loan Servicing LP
Servicing Agreement: November 1, 2001
                                                   Trustee: JPMorgan Chase Bank
First Distribution Date: December 26, 2001
                                                   Trust Administrator: Citibank, N.A.
No. __
                                                   Issue Date: November 30, 2001

                                                   CUSIP: 79548K 6H 6
</TABLE>

                                  A-1-1

<PAGE>

     DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
     THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
     ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT
     ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION
     OF THIS CERTIFICATE.

                        MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund (the
"Trust Fund") consisting primarily of a pool of conventional one- to
four-family, fixed-rate and adjustable-rate, first lien and second lien mortgage
loans (the "Mortgage Loans") formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
     SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE SERVICER, THE
     TRUSTEE, THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE
     AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
     LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
     STATES.

          This certifies that ___________________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the Class A Certificates in the Trust Fund created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Servicer, the
Trustee and the Trust Administrator, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to

                                      A-1-2

<PAGE>

such Distribution Date and is the registered owner of Class A Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class A Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trust Administrator for that purpose as provided in the Agreement.

          The Pass-Through Rate applicable to the calculation of interest
payable with respect to this Certificate on any Distribution Date shall equal a
rate per annum equal to the lesser of ____% per annum and the Net WAC Rate
calculated as provided in the Agreement in the case of each Distribution Date..

          This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Trust Administrator and the rights of
the Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Trustee and the Trust Administrator with the consent of the
Holders of Certificates entitled to at least 66% of the Voting Rights. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

                                      A-1-3

<PAGE>

          No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall be
made.
          The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

          The Depositor, the Servicer, the Trustee, the Trust Administrator and
any agent of the Depositor, the Servicer, the Trustee or the Trust Administrator
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Servicer, the Trustee,
the Trust Administrator nor any such agent shall be affected by notice to the
contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held in the Trust Fund and required to be paid to them pursuant to the Agreement
following the earlier of (i) the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan and REO Property
remaining in the Trust Fund and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from in the Trust
Fund of all the Mortgage Loans and all property acquired in respect of such
Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from in the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will effect
early retirement of the Certificates; however, such right to purchase is subject
to the aggregate Legal Balance of the Mortgage Loans at the time of purchase
being less than 10% of the aggregate Legal Balance of the Mortgage Loans as of
the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee and the Trust Administrator assume no responsibility
for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-1-4

<PAGE>

          IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.

Dated: November __, 2001

                                        CITIBANK, N.A., as Trust Administrator

                                        By:____________________________________
                                                  Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Class A Certificates referred to in the
within-mentioned Agreement.

                                        CITIBANK, N.A., as Trust Administrator

                                        By:____________________________________
                                                   Authorized Signatory

                                      A-1-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common               UNIF GIFT MIN ACT - Custodian
                                                                 ---------

TEN ENT - as tenants by the entireties                      (Cust) (Minor) under
                                                          Uniform Gifts
JT TEN - as joint tenants with right                          to Minors Act
         if survivorship and not as                           _______________
          tenants in common                                       (State)

     Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
_______________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                          _____________________________________
                                          Signature by or on behalf of assignor

                                          _____________________________________
                                          Signature Guaranteed

                                      A-1-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ____________________________,
or, if mailed by check, to______________________________________________________
________________________________________________________________. Applicable
statements should be mailed to__________________________________________________
________________________________________________________________________________
___________________________. This information is provided by ___________________
________________________, the assignee named above, or _________________________
________________________________, as its agent.

                                      A-1-7

<PAGE>

                                   EXHIBIT A-2
                                   -----------

                          FORM OF CLASS M-1 CERTIFICATE

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
     OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
     THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
     PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
     CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
     REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
     SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
     DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
     OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
     OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

     SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
     "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
     AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
     OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

     THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, TO THE
     EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
     HEREIN.

     NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
     OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
     INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
     REGISTERED.

                                  A-2-1

<PAGE>

<TABLE>
<CAPTION>
<S>                                                 <C>
Salomon Brothers Mortgage Securities VII,           Aggregate Certificate Principal Balance of the
Inc., Mortgage Pass-Through Certificates,           Class M-1 Certificates as of the Issue Date:
Series 2001-2                                       $____________

Pass-Through Rate: Variable                         Denomination: $______________

Cut-off Date and date of Pooling and                Servicer: Litton Loan Servicing LP
Servicing Agreement: November 1, 2001
                                                    Trustee: JPMorgan Chase Bank
First Distribution Date: December 26, 2001
                                                    Trust Administrator: Citibank, N.A.
No. __
                                                    Issue Date: November 30, 2001

                                                    CUSIP: 79548K 6E 3
</TABLE>

     DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
     THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
     ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT
     ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION
     OF THIS CERTIFICATE.

                        MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund (the
"Trust Fund") consisting primarily of a pool of conventional one- to
four-family, fixed-rate and adjustable-rate, first lien and second lien mortgage
loans (the "Mortgage Loans") formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
     SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE SERVICER, THE
     TRUSTEE, THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE
     AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
     LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
     STATES.

          This certifies that ___________________. is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-1 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-1 Certificates in the Trust Fund created pursuant to a Pooling
and Servicing Agreement, dated as specified above (the "Agreement"), among
Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any

                                      A-2-2

<PAGE>

successor entity under the Agreement), the Servicer, the Trustee and the Trust
Administrator, a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-1 Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class M-1 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class M-1 Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trust Administrator for that purpose as provided in the Agreement.

          The Pass-Through Rate applicable to the calculation of interest
payable with respect to this Certificate on any Distribution Date shall equal a
rate per annum equal to the lesser of ____% per annum and the Net WAC Rate
calculated as provided in the Agreement in the case of each Distribution Date

          This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                                      A-2-3

<PAGE>

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Trust Administrator and the rights of
the Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Trustee and the Trust Administrator with the consent of the
Holders of Certificates entitled to at least 66% of the Voting Rights. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

          No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall be
made.

          The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

          The Depositor, the Servicer, the Trustee, the Trust Administrator and
any agent of the Depositor, the Servicer, the Trustee or the Trust Administrator
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Servicer, the Trustee,
the Trust Administrator nor any such agent shall be affected by notice to the
contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held in the Trust Fund and required to be paid to them pursuant to the Agreement
following the earlier of (i) the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan and REO Property
remaining in the Trust Fund and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from in the Trust
Fund of all the Mortgage Loans and all property acquired in respect of such
Mortgage Loans. The Agreement permits, but does not require,

                                      A-2-4

<PAGE>

the party designated in the Agreement to purchase from in the Trust Fund all the
Mortgage Loans and all property acquired in respect of any Mortgage Loan at a
price determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase is
subject to the aggregate Legal Balance of the Mortgage Loans at the time of
purchase being less than 10% of the aggregate Legal Balance of the Mortgage
Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee and the Trust Administrator assume no responsibility
for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-2-5

<PAGE>

          IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.

Dated: November __, 2001

                                        CITIBANK, N.A., as Trust Administrator

                                        By:___________________________________
                                                 Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class M-1 Certificates referred to in the
within-mentioned Agreement.

                                        CITIBANK, N.A., as Trust Administrator

                                        By:____________________________________
                                                    Authorized Signatory

                                      A-2-6

<PAGE>

                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common              UNIF GIFT MIN ACT - Custodian
                                                                ---------

TEN ENT - as tenants by the entireties                      (Cust) (Minor) under
                                                       Uniform Gifts
JT TEN - as joint tenants with right                         to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                       (State)

          Additional abbreviations may also be used though not in the above
list.

                                   ASSIGNMENT

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                        ______________________________________
                                        Signature by or on behalf of assignor

                                        ______________________________________
                                        Signature Guaranteed

                                      A-2-7

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ____________________________,
or, if mailed by check, to_____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________
___________________________.This information is provided by ____________________
_______________________, the assignee named above, or __________________________
___________________________________, as its agent.

                                      A-2-8

<PAGE>

                                   EXHIBIT A-3
                                   -----------

                          FORM OF CLASS M-2 CERTIFICATE

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
     OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
     THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
     PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
     CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
     REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
     SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
     DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
     OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
     OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

     SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
     "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
     AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
     OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

     THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES AND THE
     CLASS M-1 CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND
     SERVICING AGREEMENT REFERRED TO HEREIN.

     NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
     RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
     SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED.

                                  A-3-1

<PAGE>

<TABLE>
<CAPTION>
<S>                                               <C>
Salomon Brothers Mortgage Securities VII,         Aggregate Certificate Principal Balance of the
Inc., Mortgage Pass-Through Certificates,         Class M-2 Certificates as of the Issue Date:
Series 2001-2                                     $____________

Pass-Through Rate: Variable                       Denomination: $______________

Cut-off Date and date of Pooling and              Servicer: Litton Loan Servicing LP
Servicing Agreement: November 1, 2001
                                                  Trustee:  JPMorgan Chase Bank
First Distribution Date: December 26, 2001
                                                  Trust Administrator: Citibank, N.A.
No. __
                                                  Issue Date: November 30, 2001

                                                  CUSIP: 79548K 6F 0
</TABLE>

     DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
     THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
     ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT
     ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION
     OF THIS CERTIFICATE.

                        MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund (the
"Trust Fund") consisting primarily of a pool of conventional one- to
four-family, fixed-rate and adjustable, first lien and second lien mortgage
loans (the "Mortgage Loans") formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
     SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE SERVICER, THE
     TRUSTEE, THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE
     AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
     LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
     STATES.

          This certifies that _________________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-2 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-2 Certificates in the Trust Fund created pursuant to a Pooling
and Servicing Agreement, dated as specified above (the "Agreement"), among
Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer, the Trustee and the Trust Administrator, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not

                                      A-3-2

<PAGE>

defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-2 Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class M-2 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class M-2 Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trust Administrator for that purpose as provided in the Agreement.

          The Pass-Through Rate applicable to the calculation of interest
payable with respect to this Certificate on any Distribution Date shall equal a
rate per annum equal to the lesser of ____% per annum and the Net WAC Rate
calculated as provided in the Agreement in the case of each Distribution Date.

          This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Trust Administrator and the rights of
the Certificateholders under the Agreement at any time by

                                      A-3-3

<PAGE>

the Depositor, the Servicer, the Trustee and the Trust Administrator with the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and upon all future Holders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

          No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall be
made.

          The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

          The Depositor, the Servicer, the Trustee, the Trust Administrator and
any agent of the Depositor, the Servicer, the Trustee or the Trust Administrator
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Servicer, the Trustee,
the Trust Administrator nor any such agent shall be affected by notice to the
contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held in the Trust Fund and required to be paid to them pursuant to the Agreement
following the earlier of (i) the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan and REO Property
remaining in the Trust Fund and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from in the Trust
Fund of all the Mortgage Loans and all property acquired in respect of such
Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from in the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will effect
early retirement of the Certificates; however, such

                                      A-3-4

<PAGE>

right to purchase is subject to the aggregate Legal Balance of the Mortgage
Loans at the time of purchase being less than 10% of the aggregate Legal Balance
of the Mortgage Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee and the Trust Administrator assume no responsibility
for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-3-5

<PAGE>

          IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.

Dated: November __, 2001

                                        CITIBANK, N.A., as Trust Administrator

                                        By:_____________________________________
                                                    Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Class M-2 Certificates referred to in the
within-mentioned Agreement.

                                        CITIBANK, N.A., as Trust Administrator

                                        By:_____________________________________
                                                    Authorized Signatory

                                      A-3-6

<PAGE>

                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common              UNIF GIFT MIN ACT - Custodian
                                                                ---------

TEN ENT - as tenants by the entireties                     (Cust) (Minor) under
                                                       Uniform Gifts
JT TEN - as joint tenants with right                        to Minors Act
         if survivorship and not as                         _______________
          tenants in common                                      (State)

          Additional abbreviations may also be used though not in the above
list.

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                       ________________________________________
                                       Signature by or on behalf of assignor

                                       ________________________________________
                                       Signature Guaranteed

                                      A-3-7

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ____________________________,
or, if mailed by check, to ____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to ______________________________________
________________________________________________________________________________
___________________________. This information is provided by ___________________
________________________, the assignee named above, or _________________________
_________________________, as its agent.

                                      A-3-8

<PAGE>

                                   EXHIBIT A-4
                                   -----------

                          FORM OF CLASS M-3 CERTIFICATE

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
     OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
     THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
     PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
     CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
     REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
     SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
     DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
     OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
     OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

     SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
     "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
     AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
     OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

     THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE
     CLASS M-1 CERTIFICATES AND THE CLASS M-2 CERTIFICATES TO THE EXTENT
     DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

     NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
     RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
     SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED.

                                      A-4-1

<PAGE>

<TABLE>
<CAPTION>
<S>                                               <C>
Salomon Brothers Mortgage Securities VII,         Aggregate Certificate Principal Balance of the
Inc., Mortgage Pass-Through Certificates,         Class M-3 Certificates as of the Issue Date:
Series 2001-2                                     $____________

Pass-Through Rate: Variable                       Denomination: $______________

Cut-off Date and date of Pooling and              Servicer: Litton Loan Servicing LP
Servicing Agreement: November 1, 2001
                                                  Trustee: JPMorgan Chase Bank
First Distribution Date: December 26, 2001
                                                  Trust Administrator: Citibank, N.A.
No. __
                                                  Issue Date: November 30, 2001

                                                  CUSIP:  79548K 6G 8
</TABLE>

     DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
     THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
     ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT
     ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION
     OF THIS CERTIFICATE.

                    MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund (the
"Trust Fund") consisting primarily of a pool of conventional one- to
four-family, fixed-rate and adjustable-rate, first lien and second lien mortgage
loans (the "Mortgage Loans") formed and sold by

              SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
     SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE SERVICER, THE
     TRUSTEE, THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE
     AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
     LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
     STATES.

          This certifies that__________________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-3 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-3 Certificates in the Trust Fund created pursuant to a Pooling
and Servicing Agreement, dated as specified above (the "Agreement"), among
Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer, the Trustee and the Trust Administrator, a

                                      A-4-2

<PAGE>

summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-3 Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class M-3 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class M-3 Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trust Administrator for that purpose as provided in the Agreement.

          The Pass-Through Rate applicable to the calculation of interest
payable with respect to this Certificate on any Distribution Date shall equal a
rate per annum equal to the lesser of ______% per annum and the Net WAC Rate
calculated as provided in the Agreement in the case of each Distribution Date.

          This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Trust Administrator and the rights of
the Certificateholders under the Agreement at any time by

                                      A-4-3

<PAGE>

the Depositor, the Servicer, the Trustee and the Trust Administrator with the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and upon all future Holders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

          No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall be
made.

          The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

          The Depositor, the Servicer, the Trustee, the Trust Administrator and
any agent of the Depositor, the Servicer, the Trustee or the Trust Administrator
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Servicer, the Trustee,
the Trust Administrator nor any such agent shall be affected by notice to the
contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held in the Trust Fund and required to be paid to them pursuant to the Agreement
following the earlier of (i) the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan and REO Property
remaining in the Trust Fund and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from in the Trust
Fund of all the Mortgage Loans and all property acquired in respect of such
Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from in the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will effect
early retirement of the Certificates; however, such right to purchase is subject
to the aggregate Legal Balance of the Mortgage Loans at the time of

                                      A-4-4

<PAGE>

purchase being less than 10% of the aggregate Legal Balance of the Mortgage
Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee and the Trust Administrator assume no responsibility
for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-4-5

<PAGE>

          IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.

Dated: November __, 2001

                                        CITIBANK, N.A., as Trust Administrator

                                        By:_____________________________________
                                                    Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class M-3 Certificates referred to in the
within-mentioned Agreement.

                                        CITIBANK, N.A., as Trust Administrator

                                        By:_____________________________________
                                                     Authorized Signatory

                                      A-4-6

<PAGE>

                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common             UNIF GIFT MIN ACT - Custodian
                                                               ---------

TEN ENT - as tenants by the entireties                      (Cust) (Minor) under
                                                         Uniform Gifts
JT TEN - as joint tenants with right                         to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                        (State)

          Additional abbreviations may also be used though not in the above
list.

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
_______________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                        _______________________________________
                                        Signature by or on behalf of assignor

                                        _______________________________________
                                        Signature Guaranteed

                                      A-4-7

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ____________________________,
or, if mailed by check, to_____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to ______________________________________
________________________________________________________________________________
___________________________.  This information is provided by __________________
___________________________________________, the assignee named above, or
________________________________________, as its agent.

                                      A-4-8

<PAGE>

                                   EXHIBIT A-5
                                   -----------

                          FORM OF CLASS M-4 CERTIFICATE

     SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
     "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
     AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
     OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

     THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE
     CLASS M-1 CERTIFICATES, THE CLASS M-2 CERTIFICATES AND THE CLASS M-3
     CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING
     AGREEMENT REFERRED TO HEREIN.

     THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
     SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
     STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
     PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
     TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
     UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE
     PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.

     NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
     RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
     SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED.

<TABLE>
<CAPTION>
<S>                                                 <C>
Salomon Brothers Mortgage Securities VII,           Aggregate Certificate Principal Balance of the
Inc., Mortgage Pass-Through Certificates,           Class M-4 Certificates as of the Issue Date:
Series 2001-2                                       $____________

Pass-Through Rate: Variable                         Denomination: $______________

Cut-off Date and date of Pooling and                Servicer: Litton Loan Servicing LP
Servicing Agreement: November 1, 2001
                                                    Trustee:  JPMorgan Chase Bank
First Distribution Date: December 26, 2001
                                                    Trust Administrator: Citibank, N.A.
No. __
                                                    Issue Date: November 30, 2001

                                                    CUSIP: 796641 9H 3
</TABLE>

                                      A-5-1

<PAGE>

     DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
     THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
     ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT
     ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION
     OF THIS CERTIFICATE.

                        MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund (the
"Trust Fund") consisting primarily of a pool of conventional one- to
four-family, fixed-rate and adjustable-rate, first lien and second lien mortgage
loans (the "Mortgage Loans") formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
     SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE SERVICER, THE
     TRUSTEE, THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE
     AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
     LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
     STATES.

          This certifies that ____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-4 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-4 Certificates in the Trust Fund created pursuant to a Pooling
and Servicing Agreement, dated as specified above (the "Agreement"), among
Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer, the Trustee and the Trust Administrator, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-4 Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class M-4 Certificates the
aggregate initial

                                      A-5-2

<PAGE>

Certificate Principal Balance of which is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the aggregate initial Certificate Principal
Balance of the Class M-4 Certificates, or otherwise by check mailed by first
class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trust Administrator for that purpose as provided in the Agreement.

          The Pass-Through Rate applicable to the calculation of interest
payable with respect to this Certificate on any Distribution Date shall equal a
rate per annum equal to the lesser of ___% per annum and the Net WAC Rate
calculated as provided in the Agreement in the case of each Distribution Date.

          This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Trust Administrator and the rights of
the Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Trustee and the Trust Administrator with the consent of the
Holders of Certificates entitled to at least 66% of the Voting Rights. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

                                      A-5-3

<PAGE>

          No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Trust Administrator or the Servicer in their respective capacities as such),
together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trust Administrator or the Trustee is obligated to register or qualify the
Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Trust Administrator, the
Depositor and the Servicer against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.

          No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall be
made.

          The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

          The Depositor, the Servicer, the Trustee, the Trust Administrator and
any agent of the Depositor, the Servicer, the Trustee or the Trust Administrator
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Servicer, the Trustee,
the Trust Administrator nor any such agent shall be affected by notice to the
contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held in the Trust Fund and required to be paid to them pursuant to the Agreement
following the earlier of (i) the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan and REO Property
remaining in the Trust Fund and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from in the Trust
Fund of all the Mortgage Loans and all property acquired in respect of such
Mortgage Loans. The Agreement permits, but does not require,

                                      A-5-4

<PAGE>

the party designated in the Agreement to purchase from in the Trust Fund all the
Mortgage Loans and all property acquired in respect of any Mortgage Loan at a
price determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase is
subject to the aggregate Legal Balance of the Mortgage Loans at the time of
purchase being less than 10% of the aggregate Legal Balance of the Mortgage
Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee and the Trust Administrator assume no responsibility
for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-5-5

<PAGE>

          IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.

Dated: November __, 2001

                                        CITIBANK, N.A., as Trust Administrator

                                        By:_____________________________________
                                                      Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class M-4 Certificates referred to in the
within-mentioned Agreement.

                                        CITIBANK, N.A., as Trust Administrator

                                        By:_____________________________________
                                                     Authorized Signatory

                                      A-5-6

<PAGE>

                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common               UNIF GIFT MIN ACT - Custodian
                                                                 ---------

TEN ENT - as tenants by the entireties                     (Cust) (Minor) under
                                                        Uniform Gifts
JT TEN - as joint tenants with right                        to Minors Act
         if survivorship and not as                         _______________
          tenants in common                                      (State)

          Additional abbreviations may also be used though not in the above
list.

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                        ______________________________________
                                        Signature by or on behalf of assignor

                                        ______________________________________
                                        Signature Guaranteed

                                      A-5-7

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ____________________________,
or, if mailed by check, to _____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to ______________________________________
________________________________________________________________________________
___________________________.  This information is provided by _________________
___________________________________________, the assignee named above, or
________________________________________, as its agent.

                                      A-5-8

<PAGE>

                                   EXHIBIT A-6
                                   -----------

                          FORM OF CLASS M-5 CERTIFICATE

     SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
     "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
     AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
     OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

     THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE
     CLASS M-1 CERTIFICATES, THE CLASS M-2 CERTIFICATES, THE CLASS M-3
     CERTIFICATES AND THE CLASS M-4 CERTIFICATES TO THE EXTENT DESCRIBED
     IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

     THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
     SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
     STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
     PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
     TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
     UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE
     PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.

     NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
     RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
     SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED.

<TABLE>
<CAPTION>
<S>                                             <C>
Salomon Brothers Mortgage Securities VII,       Aggregate Certificate Principal Balance of the
Inc., Mortgage Pass-Through Certificates,       Class M-5 Certificates as of the Issue Date:
Series 2001-2                                   $____________

Cut-off Date and date of Pooling and            Denomination: $______________
Servicing Agreement: November 1, 2001
                                                Servicer: Litton Loan Servicing LP
First Distribution Date: December 26, 2001
                                                Trustee:  JPMorgan Chase Bank
No. __
                                                Trust Administrator: Citibank, N.A.

                                                Issue Date: November 30, 2001

                                                CUSIP:  796641 9J 9
</TABLE>

                                     A-6-1

<PAGE>

     DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
     THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
     ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT
     ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION
     OF THIS CERTIFICATE.

                        MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund (the
"Trust Fund") consisting primarily of a pool of conventional one- to
four-family, fixed-rate and adjustable-rate, first lien and second lien mortgage
loans (the "Mortgage Loans") formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
     SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE SERVICER, THE
     TRUSTEE, THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE
     AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
     LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
     STATES.

          This certifies that _______________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-5 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-5 Certificates in the Trust Fund created pursuant to a Pooling
and Servicing Agreement, dated as specified above (the "Agreement"), among
Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer, the Trustee and the Trust Administrator, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-5 Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class M-5 Certificates the
aggregate initial

                                      A-6-2

<PAGE>

Certificate Principal Balance of which is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the aggregate initial Certificate Principal
Balance of the Class M-5 Certificates, or otherwise by check mailed by first
class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trust Administrator for that purpose as provided in the Agreement.

          The Pass-Through Rate applicable to the calculation of interest
payable with respect to this Certificate on any Distribution Date shall equal a
rate per annum equal to the lesser of ____% per annum and the Net WAC Rate
calculated as provided in the Agreement in the case of each Distribution Date.

          This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass-Through Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Trust Administrator and the rights of
the Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Trustee and the Trust Administrator with the consent of the
Holders of Certificates entitled to at least 66% of the Voting Rights. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

                                      A-6-3

<PAGE>

          No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Trust Administrator or the Servicer in their respective capacities as such),
together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trust Administrator or the Trustee is obligated to register or qualify the
Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Trust Administrator, the
Depositor and the Servicer against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.

          No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall be
made.

          The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

          The Depositor, the Servicer, the Trustee, the Trust Administrator and
any agent of the Depositor, the Servicer, the Trustee or the Trust Administrator
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Servicer, the Trustee,
the Trust Administrator nor any such agent shall be affected by notice to the
contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held in the Trust Fund and required to be paid to them pursuant to the Agreement
following the earlier of (i) the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan and REO Property
remaining in the Trust Fund and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from in the Trust
Fund of all the Mortgage Loans and all property acquired in respect of such
Mortgage Loans. The Agreement permits, but does not require,

                                      A-6-4

<PAGE>

the party designated in the Agreement to purchase from in the Trust Fund all the
Mortgage Loans and all property acquired in respect of any Mortgage Loan at a
price determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase is
subject to the aggregate Legal Balance of the Mortgage Loans at the time of
purchase being less than 10% of theLegal Balance balance of the Mortgage Loans
as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee and the Trust Administrator assume no responsibility
for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-6-5

<PAGE>

          IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.

Dated: November __, 2001

                                        CITIBANK, N.A., as Trust Administrator

                                        By:____________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Class M-5 Certificates referred to in the
within-mentioned Agreement.

                                        CITIBANK, N.A., as Trust Administrator

                                        By:____________________________________
                                                     Authorized Signatory

                                     A-6-6

<PAGE>

                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common               UNIF GIFT MIN ACT - Custodian
                                                                 ---------

TEN ENT - as tenants by the entireties                      (Cust) (Minor) under
                                                       Uniform Gifts
JT TEN - as joint tenants with right                         to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                        (State)

          Additional abbreviations may also be used though not in the above
list.

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                        ________________________________________
                                        Signature by or on behalf of assignor

                                        ________________________________________
                                        Signature Guaranteed

                                      A-6-7

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ____________________________,
or, if mailed by check, to_____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to______________________________________
________________________________________________________________________________
___________________________. This information is provided by ___________________
________________________, the assignee named above, or _________________________
_______________, as its agent.

                                      A-6-8

<PAGE>

                                   EXHIBIT A-7
                                   -----------

                          FORM OF CLASS M-6 CERTIFICATE

     SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
     "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
     AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
     OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

     THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE
     CLASS M-1 CERTIFICATES, THE CLASS M-2 CERTIFICATES, THE CLASS M-3
     CERTIFICATES, THE CLASS M-4 CERTIFICATES AND THE CLASS M-5
     CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING
     AGREEMENT REFERRED TO HEREIN.

     THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
     SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
     STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
     PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
     TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
     UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE
     PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.

     NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
     RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
     SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED.

<TABLE>
<CAPTION>
<S>                                               <C>
Salomon Brothers Mortgage Securities VII,         Aggregate Certificate Principal Balance of the
Inc., Mortgage Pass-Through Certificates,         Class M-6 Certificates as of the Issue Date:
Series 2001-2                                     $____________

Cut-off Date and date of Pooling and              Denomination: $______________
Servicing Agreement: November 1, 2001
                                                  Servicer: Litton Loan Servicing LP
First Distribution Date: December 26, 2001
                                                  Trustee:  JPMorgan Chase Bank
No. __
                                                  Trust Administrator: Citibank, N.A.

                                                  Issue Date: November 30, 2001

                                                  CUSIP: 796641 9K 6
</TABLE>

                                      A-7-1

<PAGE>

     DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
     THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
     ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT
     ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION
     OF THIS CERTIFICATE.

                        MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund (the
"Trust Fund") consisting primarily of a pool of conventional one- to
four-family, fixed-rate and adjustable-rate, first lien and second lien mortgage
loans (the "Mortgage Loans") formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
     SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE SERVICER, THE
     TRUSTEE, THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE
     AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
     LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
     STATES.

          This certifies that ____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-6 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-6 Certificates in the Trust Fund created pursuant to a Pooling
and Servicing Agreement, dated as specified above (the "Agreement"), among
Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer, the Trustee and the Trust Administrator, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-6 Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class M-6 Certificates the
aggregate initial

                                      A-7-2

<PAGE>

Certificate Principal Balance of which is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the aggregate initial Certificate Principal
Balance of the Class M-6 Certificates, or otherwise by check mailed by first
class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trust Administrator for that purpose as provided in the Agreement.

          The Pass-Through Rate applicable to the calculation of interest
payable with respect to this Certificate on any Distribution Date shall equal a
rate per annum equal to the lesser of ____% per annum and the Net WAC Rate
calculated as provided in the Agreement in the case of each Distribution Date.

          This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Trust Administrator and the rights of
the Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Trustee and the Trust Administrator with the consent of the
Holders of Certificates entitled to at least 66% of the Voting Rights. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

                                      A-7-3

<PAGE>

          No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Trust Administrator or the Servicer in their respective capacities as such),
together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trust Administrator or the Trustee is obligated to register or qualify the
Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Trust Administrator, the
Depositor and the Servicer against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.

          No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall be
made.

          The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

          The Depositor, the Servicer, the Trustee, the Trust Administrator and
any agent of the Depositor, the Servicer, the Trustee or the Trust Administrator
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Servicer, the Trustee,
the Trust Administrator nor any such agent shall be affected by notice to the
contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held in the Trust Fund and required to be paid to them pursuant to the Agreement
following the earlier of (i) the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan and REO Property
remaining in the Trust Fund and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from in the Trust
Fund of all the Mortgage Loans and all property acquired in respect of such
Mortgage Loans. The Agreement permits, but does not require,

                                      A-7-4

<PAGE>

the party designated in the Agreement to purchase from in the Trust Fund all the
Mortgage Loans and all property acquired in respect of any Mortgage Loan at a
price determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase is
subject to the aggregate Legal Balance of the Mortgage Loans at the time of
purchase being less than 10% of the aggregate Legal Balance of the Mortgage
Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee and the Trust Administrator assume no responsibility
for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-7-5

<PAGE>

          IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.

Dated: November __, 2001

                                        CITIBANK, N.A., as Trust Administrator

                                        By:____________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class M-6 Certificates referred to in the
within-mentioned Agreement.

                                        CITIBANK, N.A., as Trust Administrator

                                        By:____________________________________
                                                    Authorized Signatory

                                      A-7-6

<PAGE>

                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common              UNIF GIFT MIN ACT - Custodian
                                                                ---------

TEN ENT - as tenants by the entireties                      (Cust) (Minor) under
                                                         Uniform Gifts
JT TEN - as joint tenants with right                         to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                       (State)

          Additional abbreviations may also be used though not in the above
list.

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                        _______________________________________
                                        Signature by or on behalf of assignor

                                        _______________________________________
                                        Signature Guaranteed

                                      A-7-7

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ____________________________,
or, if mailed by check, to_____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to_______________________________________
________________________________________________________________________________
___________________________. This information is provided by ___________________
________________________, the assignee named above, or _________________________
________________________, as its agent.

                                      A-7-8

<PAGE>

                                   EXHIBIT A-8
                                   -----------

                           FORM OF CLASS R CERTIFICATE

     THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES
     PERSON.

     SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
     "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
     ("REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
     860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

     ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
     MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
     POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

     THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
     SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
     STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
     PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
     TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
     UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE
     PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.

     NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
     RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
     SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED..

     ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
     MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT TO
     THE TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT (1) THE UNITED STATES OR
     ANY POSSESSION THEREOF, ANY STATE OR POLITICAL SUBDIVISION THEREOF,
     ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY
     AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING, (2) ANY
     ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION 521 OF
     THE CODE) THAT IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE
     CODE UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY
     SECTION 511 OF THE CODE, (3) ANY ORGANIZATION DESCRIBED IN SECTION
     1381(A)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE
     FOREGOING CLAUSES (1), (2) OR (3) SHALL HEREINAFTER BE REFERRED TO
     AS A "DISQUALIFIED ORGANIZATION") OR (4) AN AGENT OF A DISQUALIFIED
     ORGANIZATION

                                      A-8-1

<PAGE>

     AND (B) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR
     COLLECTION OF TAX, AND (II) SUCH TRANSFEREE SATISFIES CERTAIN
     ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE
     PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE
     CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR OTHER DISPOSITION OF
     THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A
     DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE
     OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE
     DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER,
     INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
     CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE HEREOF
     SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS
     PARAGRAPH AND THE PROVISIONS OF SECTION 5.02(D) OF THE POOLING AND
     SERVICING AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A
     DISQUALIFIED ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL
     OWNERSHIP OF THIS CERTIFICATE.

<TABLE>
<CAPTION>
<S>                                              <C>
Salomon Brothers Mortgage Securities VII,        Aggregate Percentage Interest of the Class R
Inc., Mortgage Pass-Through Certificates,        Certificates as of the Issue Date: 100%
Series 2001-2
                                                 Percentage Interest: __________________
Cut-off Date and date of Pooling and
Servicing Agreement: November 1, 2001            Servicer: Litton Loan Servicing LP

First Distribution Date: December 26, 2001       Trustee: JPMorgan Chase Bank

No. __                                           Trust Administrator: Citibank, N.A.

                                                 Issue Date: November 30, 2001
</TABLE>

                                      A-8-2

<PAGE>

                        MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
     SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE SERVICER, THE
     TRUSTEE, THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE
     AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
     LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
     STATES.

          This certifies that ___________ is the registered owner of a
Percentage Interest (as specified above) in that certain beneficial ownership
interest evidenced by all the Certificates of the Class to which this
Certificate belongs created pursuant to a Pooling and Servicing Agreement, dated
as specified above (the "Agreement"), among Salomon Brothers Mortgage Securities
VII, Inc. (hereinafter called the "Depositor," which term includes any successor
entity under the Agreement), the Servicer, the Trustee and the Trust
Administrator, a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class R Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class R Certificates having a
66% Percentage Interest in the Class R Certificates, or otherwise by check
mailed by first class mail to the address of the Person entitled thereto, as
such name and address shall appear on the Certificate Register. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trust Administrator of the pendency of such distribution and only
upon presentation and surrender of this Certificate at the office or agency
appointed by the Trust Administrator for that purpose as provided in the
Agreement.

          This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (herein called the

                                      A-8-3

<PAGE>

"Certificates") and representing a Percentage Interest in the Class of
Certificates specified on the face hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the Trust Administrator and the rights
of the Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Trustee and the Trust Administrator with the consent of the
Holders of Certificates entitled to at least 66% of the Voting Rights. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

          No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trust Administrator shall require receipt of
(i) if such transfer is purportedly being made in reliance upon Rule 144A under
the 1933 Act, written certifications from the Holder of the Certificate desiring
to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Trust Administrator or the Servicer in their respective capacities as such),
together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trust Administrator or the Trustee is obligated to register or qualify the
Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any

                                      A-8-4

<PAGE>

Holder desiring to effect a transfer of this Certificate shall be required to
indemnify the Trustee, the Trust Administrator, the Depositor and the Servicer
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.

          No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall be
made.

          The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

          Prior to registration of any transfer, sale or other disposition of
this Certificate, the proposed transferee shall provide to the Trust
Administrator (i) an affidavit to the effect that such transferee is any Person
other than a Disqualified Organization or the agent (including a broker, nominee
or middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a PRO RATA share
of the net income of the Trust REMIC and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R Certificates. Notwithstanding the registration
in the Certificate Register of any transfer, sale or other disposition of this
Certificate to a Disqualified Organization or an agent (including a broker,
nominee or middleman) of a Disqualified Organization, such registration shall be
deemed to be of no legal force or effect whatsoever and such Person shall not be
deemed to be a Certificateholder for any purpose, including, but not limited to,
the receipt of distributions in respect of this Certificate.

          The Holder of this Certificate, by its acceptance hereof, shall be
deemed to have consented to the provisions of Section 5.02 of the Agreement and
to any amendment of the Agreement deemed necessary by counsel of the Depositor
to ensure that the transfer of this Certificate to any Person other than a
Permitted Transferee or any other Person will not cause the Trust REMIC to cease
to qualify as a REMIC or cause the imposition of a tax upon the Trust REMIC.

          The Depositor, the Servicer, the Trustee, the Trust Administrator and
any agent of the Depositor, the Servicer, the Trustee or the Trust Administrator
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Servicer, the Trustee,
the Trust Administrator nor any such agent shall be affected by notice to the
contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held in the Trust Fund and required

                                      A-8-5

<PAGE>

to be paid to them pursuant to the Agreement following the earlier of (i) the
final payment or other liquidation (or any advance with respect thereto) of the
last Mortgage Loan and REO Property remaining in the Trust Fund and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from in the Trust Fund of all the Mortgage Loans and
all property acquired in respect of such Mortgage Loans. The Agreement permits,
but does not require, the party designated in the Agreement to purchase from in
the Trust Fund all the Mortgage Loans and all property acquired in respect of
any Mortgage Loan at a price determined as provided in the Agreement. The
exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Legal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
Legal Balance of the Mortgage Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee and the Trust Administrator assumes no responsibility
for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-8-6

<PAGE>

          IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.

Dated: November __, 2001

                                        CITIBANK, N.A., as Trust Administrator

                                        By:_____________________________________
                                                      Authorized Officer

                                           CERTIFICATE OF AUTHENTICATION

         This is one of the Class R Certificates referred to in the
within-mentioned Agreement.

                                        CITIBANK, N.A., as Trust Administrator

                                        By:_____________________________________
                                                    Authorized Signatory

                                      A-8-7

<PAGE>

                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common             UNIF GIFT MIN ACT - Custodian
                                                               ---------
TEN ENT - as tenants by the entireties                      (Cust) (Minor) under
                                                         Uniform Gifts
JT TEN - as joint tenants with right                         to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                         (State)

         Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                        ________________________________________
                                        Signature by or on behalf of assignor

                                        ________________________________________
                                        Signature Guaranteed

                                      A-8-8

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ____________________________,
or, if mailed by check, to ____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
___________________________. This information is provided by __________________
___________________________________________, the assignee named above, or
________________________________________, as its agent.

                                      A-8-9

<PAGE>

                                    EXHIBIT B
                                    ---------

                                   [Reserved]

                                       B-1

<PAGE>

                                   EXHIBIT C-1
                                   -----------

                     FORM OF TRUSTEE'S INITIAL CERTIFICATION

                                                           [Date]

Salomon Brothers Mortgage Securities VII, Inc.
390 Greenwich Street, 4th Floor
New York, NY 10013

Litton Loan Servicing LP
4828 Loop Central Drive,
Houston, Texas  77081-2226

          Re:  Pooling and Servicing Agreement, dated as of November 1, 2001,
               among Salomon Brothers Mortgage Securities VII, Inc., Litton Loan
               Servicing LP, JPMorgan Chase Bank and Citibank, N.A.,
               Mortgage Pass-Through Certificates, Series 2001-2
               -----------------------------------------------------------------

Ladies and Gentlemen:

          Attached is the Trustee's preliminary exceptions in accordance with
Section 2.02 of the referenced Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"). Capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to them in the Pooling and Servicing Agreement.

          The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
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 the Mortgage File of any of the Mortgage Loans identified on the
Mortgage Loan Schedule, (ii) the collectability, insurability, effectiveness or
suitability of any such Mortgage Loan, or (iii) whether any Mortgage File
included any of the documents specified in clause (v) of Section 2.01 of the
Pooling and Servicing Agreement.

                                        JPMORGAN CHASE BANK

                                        By:_________________________________
                                        Name:
                                        Title:

                                                       C-2-1

<PAGE>

                                   EXHIBIT C-2
                                   -----------

                      FORM OF TRUSTEE'S FINAL CERTIFICATION

                                                      [Date]

Salomon Brothers Mortgage Securities VII, Inc.
390 Greenwich Street, 4th Floor
New York, NY 10013

Litton Loan Servicing LP
4828 Loop Central Drive,
Houston, Texas 77081-2226

          Re:  Pooling and Servicing Agreement, dated as ofNovember 1, 2001,
               among Salomon Brothers Mortgage Securities VII, Inc., Litton Loan
               Servicing LP, JPMorgan Chase Bank and Citibank, N.A.,
               Mortgage Pass-Through Certificates, Series 2001-2
               -----------------------------------------------------------------

Ladies and Gentlemen:

          In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed on the attachment hereto), it or a Custodian on its
behalf has received:

          (i) the original recorded Mortgage, and the original recorded power of
     attorney, if the Mortgage was executed pursuant to a power of attorney, or
     a certified copy thereof in those instances where the public recording
     office retains the original or where the original has been lost; and

          (ii) an original Assignment in recordable form or a recorded
     Assignment to the Trustee together with the original recorded Assignment or
     Assignments showing a complete chain of assignment from the originator, or
     a certified copy of such Assignments in those instances where the public
     recording retains the original or where original has been lost; and

          (iii) the original lender's title insurance policy.

          The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced 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 the Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.

                                      C-2-1

<PAGE>

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

                                        JPMORGAN CHASE BANK

                                        By:___________________________________
                                        Name:
                                        Title:

                                      C-2-2

<PAGE>

                                    EXHIBIT D
                                    ---------

                    FORM OF MORTGAGE LOAN PURCHASE AGREEMENT

                                       D-1

<PAGE>

                        MORTGAGE LOAN PURCHASE AGREEMENT

         This Mortgage Loan Purchase Agreement (this "Agreement") is dated as of
November 30, 2001 and is between Salomon Brothers Mortgage Securities VII, Inc.,
a Delaware corporation (the "Purchaser") and Salomon Brothers Realty Corp., a
New York corporation (the "Seller"). The Seller sells, and the Purchaser
purchases, the mortgage loans (the "Mortgage Loans") described in, and set forth
in, the Mortgage Loan Schedule attached hereto as Schedule 1. Reference is made
to the Pooling and Servicing Agreement dated as of November 1, 2001 (the
"Pooling and Servicing Agreement"), among the Purchaser as depositor, Litton
Loan Servicing LP as servicer (in such capacity, the "Servicer"), JPMorgan Chase
Bank as trustee (the "Trustee") and Citibank, N.A. as trust administrator (the
"Trust Administrator"), relating to the issuance of the Salomon Brothers
Mortgage Securities VII, Inc., Mortgage Pass-Through Certificates, Series 2001-2
(the "Certificates"). Capitalized terms used without definition herein shall
have the respective meanings assigned to them in the Pooling and Servicing
Agreement.

         1. PURCHASE PRICE; PURCHASE AND SALE. The purchase price (the "Purchase
Price") for the Mortgage Loans shall be $__________________________ payable by
the Purchaser to the Seller on November 30, 2001 (the "Closing Date") in
immediately available funds. The closing for the purchase and sale of the
Mortgage Loans shall take place at the offices of Thacher Proffitt & Wood, New
York, New York, at 9:00 a.m. New York time, on the Closing Date.

         On the Closing Date, the Purchaser shall pay the Purchase Price to the
Seller. The Seller hereby transfers, assigns, sets over and otherwise conveys to
the Purchaser all of the Seller's right, title and interest in and to the
Mortgage Loans, including all interest due and principal and Arrearage received
or receivable by the Seller on or with respect to the Mortgage Loans after the
Cut-off Date, together with all of the Seller's right, title and interest in and
to any contractual rights against HUD relating to the Mortgage Loans and in and
to the proceeds of any related title, hazard, primary mortgage or other
insurance policies relating to the Mortgage Loans. In connection with such
transfer and assignment of the Mortgage Loans, the Seller shall promptly deliver
to the Purchaser all cash received by it in respect of the Mortgage Loans after
the Cut-off Date related to the Mortgage Loans. The Purchaser hereby directs the
Seller, and the Seller hereby agrees, to deliver to the Trustee or Custodian on
its behalf, all documents, instruments and agreements related to the Mortgage
Loans, including but not limited to those specified in Section 2.01 of the
Pooling and Servicing Agreement.

         2. REPRESENTATIONS AND WARRANTIES. (a) The Seller hereby represents and
warrants to the Purchaser and any assignee or designee of the Purchaser as of
the date hereof and as of the Closing Date that:

         (i)      The Seller is a corporation duly organized, validly existing
                  and in good standing under the laws of the State of New York
                  with full power and authority to own its properties, to carry
                  on its business as presently conducted by it and to enter and
                  perform its obligations under this Agreement;

<PAGE>

         (ii)     The Seller has taken all necessary action to authorize the
                  execution, delivery and performance of this Agreement by it,
                  and has the power and authority to execute, deliver and
                  perform this Agreement and all the transactions contemplated
                  hereby, including, but not limited to, the power and authority
                  to sell, assign and transfer the Mortgage Loans in accordance
                  with this Agreement and the Seller has duly executed and
                  delivered the Agreement;

         (iii)    Assuming the due authorization, execution and delivery of this
                  Agreement by the Purchaser, this Agreement and all of the
                  obligations of the Seller hereunder are the legal, valid and
                  binding obligations of the Seller, enforceable in accordance
                  with the terms of this Agreement, except as such enforcement
                  may be limited by (A) bankruptcy, insolvency, reorganization,
                  liquidation, receivership, moratorium or other laws relating
                  to or affecting creditors' rights generally, (B) by general
                  principles of equity (regardless of whether such
                  enforceability is considered in a proceeding in equity or at
                  law) or (C) public policy considerations underlying the
                  securities laws, to the extent that such public policy
                  considerations limit the enforceability of the provisions of
                  this Agreement which purport to provide indemnification from
                  securities laws liabilities;

         (iv)     The execution and delivery of this Agreement and the
                  performance of its obligations hereunder by the Seller does
                  not conflict with any provision of the certificate of
                  incorporation or by-laws of the Seller or any law or
                  regulation to which the Seller is subject, or conflict with,
                  result in a breach of or constitute a default under any of the
                  terms, conditions or provisions of any agreement or instrument
                  to which the Seller is a party or by which it is bound, or any
                  order or decree applicable to the Seller, or result in the
                  creation or imposition of any lien on any of the Seller's
                  assets or property, which would materially and adversely
                  affect the ability of the Seller to carry out the transactions
                  contemplated by this Agreement. The Seller has obtained any
                  consent, approval, authorization or order of any court or
                  governmental agency or body required for the execution,
                  delivery and performance by the Seller of this Agreement;

         (v)      There is no action, suit or proceeding pending against the
                  Seller in any court or by or before any other governmental
                  agency or instrumentality which would materially and adversely
                  affect the ability of the Seller to carry out its obligations
                  under this Agreement or have a material adverse effect on the
                  financial condition of the Seller or the ability of the Seller
                  to perform its obligations under this Agreement; and

         (vi)     The Seller is transferring the Mortgage Loans to the Purchaser
                  free and clear of any and all liens, pledges, charges and
                  security interests created by or through the Seller.

                  (b) The Seller hereby represents, warrants and covenants to
the Purchaser and any assignee or designee of the Purchaser that as of the
Closing Date or as of such date specifically provided herein:

                                       -2-

<PAGE>

         (i)      The information set forth on the Mortgage Loan Schedule with
                  respect to each Mortgage Loan is true and correct in all
                  material respects as of the Cut-off Date, unless another date
                  is set forth on the Mortgage Loan Schedule;

         (ii)     As of the Cut-off Date, except with respect to approximately
                  4.21% of the Mortgage Loans, by Unpaid Principal Balance as of
                  the Cut-off Date, each borrower has paid an amount equal to at
                  least 97.5% of the aggregate amount of Original Scheduled
                  Payments due for the six (6) calendar months immediately
                  preceding the Cut-off Date.

         (iii)    Each Mortgage Loan transferred hereunder is a valid first lien
                  (or, if indicated in the Mortgage Loan Schedule, second lien
                  on the Mortgaged Property subject only to (a) the lien of
                  current real property taxes and assessments, (b) covenants,
                  conditions and restriction, rights of way, easements and other
                  matters of public record as of the date of recording of such
                  Mortgage, such exceptions appearing of record being acceptable
                  to mortgage lending institutions generally or specifically
                  reflected in the appraisal made in connection with the
                  origination of the related Mortgage Loan, (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 such Mortgage and (d) in the case
                  of a second lien, the related first lien;

         (iv)     Immediately prior to the assignment of the Mortgage Loans to
                  the Purchaser hereunder for deposit into the Trust Fund, the
                  Seller had good title to, and was the sole owner of, each
                  Mortgage Loan free and clear of any pledge, lien, encumbrance
                  or security interest;

         (v)      There is no delinquent tax or assessment lien against any
                  Mortgaged Property that is superior in lien status to the
                  related Mortgage Loan;

         (vi)     There is no valid offset, defense or counterclaim to any
                  Mortgage Note or Mortgage transferred to the Trust Fund;

         (vii)    To the best of the Seller's knowledge, there are no mechanics'
                  liens or claims for work, labor or material affecting any
                  Mortgaged Property which are or may be a lien prior to, or
                  equal with, the lien of the related Mortgage except those
                  which are insured against by the title insurance policy
                  referred to in (ix) below;

         (viii)   The Seller has not, except as the Mortgage File may reflect,
                  modified the Mortgage in any material respect, satisfied,
                  canceled or subordinated such Mortgage in whole or in part,
                  released the related Mortgaged Property in whole or in part
                  from the lien of such Mortgage, or executed any instrument of
                  release, cancellation, modification or satisfaction with
                  respect thereto;

         (ix)     A lender's policy of title insurance or a commitment (binder)
                  to issue the same (or, in the case of Mortgaged Properties
                  located in areas in which such policies are not

                                       -3-

<PAGE>

                  generally available, an attorney's certificate or opinion of
                  title) is valid and remains in full force and effect;

         (x)      Each Mortgage Loan was originated by a savings and loan
                  association, savings bank, commercial bank, credit union,
                  insurance company or similar institution which is supervised
                  and examined by a federal or state authority, or by a
                  mortgagee approved by the Secretary of Housing and Urban
                  Development;

         (xi)     Each Mortgage Loan, as of the Closing Date, is a fixed rate or
                  adjustable rate Mortgage Loan having an original term to
                  stated maturity from the date on which the first monthly
                  payment is due of generally not more than 30 years. The
                  related Mortgage Note is payable on the first day of each
                  month in monthly installments of principal and interest, with
                  interest payable in arrears;

         (xii)    Each Mortgage Loan is directly secured by a Mortgage on real
                  property and either (1) substantially all of the proceeds of
                  such Mortgage Loan were used to acquire or improve or protect
                  an interest in real property that, as of the origination date,
                  was the only security for the Mortgage Loan, provided, that
                  the Mortgage Loan has not been modified in a manner that
                  constituted a deemed exchange under Section 1001 of the Code
                  at a time when the Mortgage Loan was not in default or default
                  thereto was not reasonably foreseeable or (2) the fair market
                  value of such real property was at least equal to 80% of the
                  adjusted issue price of the Mortgage Loan (A) at origination
                  (or, if the Mortgage Loan has been modified in a manner that
                  constituted a deemed exchange under Section 1001 of the Code
                  at a time when the Mortgage Loan was not in default or default
                  with respect thereto was not reasonably foreseeable, the date
                  of the last such modification) or (B) at the Startup Day;

         (xiii)   If the improvements securing a Mortgage Loan are in a
                  federally designated special flood hazard area, flood
                  insurance in the amount required under the program covers the
                  related Mortgaged Property (either by coverage under the
                  federal flood insurance program or by coverage by private
                  insurers);

         (xiv)    Each Mortgage Loan was originated generally in accordance with
                  the applicable HUD program;

         (xv)     The Seller has no reason to believe that each BPO that was
                  used to determine the value of the related Mortgaged Property
                  does not reflect the fair market value of the related
                  Mortgaged Property at the time of the BPO;

         (xvi)    No misrepresentation of a material fact or fraud in respect of
                  the origination, modification or amendment of any Mortgage
                  Loan has taken place on the part of any person, including,
                  without limitation, the related mortgagor, any appraiser, any
                  builder or developer or any party involved in the origination
                  of such Mortgage Loan; and

                                       -4-

<PAGE>

         (xvii)   Each Mortgage Loan constitutes a qualified mortgage under
                  Section 860G(a)(3)(A) of the Code and Treasury Regulations
                  Section 1.860G-2(a)(1) and (3).

         3. CURE OF BREACHES; REPURCHASE OR SUBSTITUTION OF MORTGAGE LOANS.

                  (a) Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File, the
lack of which materially and adversely affects the value of such Mortgage Loan
or the interest therein of the Purchaser or any assignee or designee of the
Purchaser, or of the breach by the Seller of any representation, warranty or
covenant under this Agreement in respect of any related Mortgage Loan which
materially and adversely affects the value of such Mortgage Loan or the interest
therein of the Purchaser or any assignee or designee of the Purchaser, the party
discovering such fact shall promptly give or cause to be given written notice
thereof to the other party hereto. The Purchaser shall cause the Servicer to
request that the Seller deliver such missing document or cure such defect or
breach within 60 days from the date the Seller was notified of such missing
document, defect or breach, and if the Seller does not deliver such missing
document or cure such defect or breach in all material respects during such
period, then (i) in connection with any such breach that could not reasonably
have been cured within such 60 day period, if the Seller shall have commenced to
cure such breach within such 60 day period, to proceed thereafter diligently and
expeditiously to cure the same within an additional 60 day period and (ii) in
connection with any such breach (subject to clause (i) above) or in connection
with any missing document or defect, to repurchase such Mortgage Loan at the
Purchase Price within 120 days after the date on which the Seller was notified
(subject to Section 2.03(e) of the Pooling and Servicing Agreement). In lieu of
repurchasing any such Mortgage Loan as set forth above, the Seller may
substitute for such Mortgage Loan (in which case it shall become a Deleted
Mortgage Loan) one or more Qualified Substitute Mortgage Loans in the manner and
subject to the limitations set forth in Section 3(b) hereof. It is understood
and agreed that the obligation of the Seller to cure or to repurchase (or to
substitute for) any Mortgage Loan as to which a document is missing, a material
defect in a constituent document exists or as to which such a breach has
occurred and is continuing shall constitute the sole remedy respecting such
omission, defect or breach available to the Purchaser or any assignee or
designee of the Purchaser.

                  (b) Any substitution of Qualified Substitute Mortgage Loans
for Deleted Mortgage Loans made pursuant to Section 3(a) by the Seller must be
effected prior to the date which is two years after the Startup Day for the
Trust Fund.

                  As to any Deleted Mortgage Loan for which the Seller
substitutes a Qualified Substitute Mortgage Loan or Loans, such substitution
shall be effected by such Seller delivering to the Trustee, for such Qualified
Substitute Mortgage Loan or Loans, the Mortgage Note, the Mortgage, the
Assignment to the Trustee, and such other documents and agreements, with all
necessary prior and other endorsements thereon, as are required by Section 2.01
of the Pooling and Servicing Agreement, together with an Officers' Certificate
providing that each such Qualified Substitute Mortgage Loan satisfies the
definition thereof and specifying the Substitution Shortfall Amount (as
described below), if any, in connection with such substitution. Modified
Scheduled Payments due with respect to Qualified Substitute Mortgage Loans in
the month of substitution will

                                       -5-

<PAGE>

be retained by the Seller. For the month of substitution, distributions to
Certificateholders will reflect the Modified Monthly Payment due on such Deleted
Mortgage Loan on or before the Due Date in the month of substitution, and the
Seller shall thereafter be entitled to retain all amounts subsequently received
in respect of such Deleted Mortgage Loan. Upon such substitution, such Qualified
Substitute Mortgage Loan or Loans shall be subject in all respects to the terms
of this Agreement, including as of the date of substitution all applicable
representations and warranties of the Seller in Section 2(b) hereof.

                  For any month in which the Seller substitutes one or more
Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
Purchaser will cause to be determined the amount (the "Substitution Shortfall
Amount"), if any, by which the aggregate Purchase Price of all such Deleted
Mortgage Loans exceeds the aggregate of, as to each such Qualified Substitute
Mortgage Loan, the Legal Balance thereof as of the date of substitution,
together with one month's interest on the related Scheduled Principal Balance at
the applicable Mortgage Rate. On the date of such substitution, the Seller will
deliver or cause to be delivered an amount equal to the Substitution Shortfall
Amount, if any.

                  In addition, the Seller shall obtain at its own expense and
deliver to the Trustee an Opinion of Counsel to the effect that such
substitution will not cause (A) any federal tax to be imposed on the Trust Fund,
including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code, or (B) the Trust REMIC
to fail to qualify as a REMIC at any time that any Certificate is outstanding.

                  (c) Upon discovery by the Purchaser or the Seller that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning of
Section 860G(a)(3) of the Code, the party discovering such fact shall within two
Business Days give written notice thereof to the other party hereto. In
connection therewith, the Seller shall repurchase or, subject to the limitations
set forth in Section 3(b), substitute one or more Qualified Substitute Mortgage
Loans for the affected Mortgage Loan within 90 days of the earlier of discovery
or receipt of such notice with respect to such affected Mortgage Loan. Any such
repurchase or substitution shall be made in the same manner as set forth in
Section 3(a).

         4. ASSIGNMENT TO TRUSTEE. The Seller consents to the assignment by the
Purchaser to the Trustee, as trustee under the Pooling and Servicing Agreement
for the benefit of the Holders of the Certificates, of all the Purchaser's
rights under this Agreement.

         5. OPINIONS OF COUNSEL. The Seller hereby covenants to deliver or cause
to be delivered to the Purchaser, simultaneously with the execution hereof,
opinions of counsel as to various corporate matters in form satisfactory to the
Purchaser.

         6. NOTICES. All communications hereunder shall be in writing and
effective only upon receipt and, if sent to the Purchaser, will be mailed,
delivered or telegraphed and confirmed to it at Salomon Brothers Mortgage
Securities VII, Inc., 390 Greenwich Street, New York, New York 10013, Attention:
Mortgage Finance Group, telephone: (212) 783-7000, facsimile: (212) 723-8604, or
such other address as may be designated by the Purchaser to the Seller in
writing, or, if sent to the

                                       -6-

<PAGE>

Seller, will be mailed, delivered or telegraphed and confirmed to it at Salomon
Brothers Realty Corp., 390 Greenwich Street, New York, New York 10013,
Attention: Mortgage Finance Group, telephone: (212) 783-7000, facsimile: (212)
723-8604, or such other address as may be designated by the Seller to the
Purchaser in writing.

         7. TRUSTEE BENEFICIARY. The representations, warranties and agreements
made by the Seller in this Agreement are made for the benefit of, and may be
enforced by or on behalf of, the Trustee and the Certificateholders to the same
extent that the Purchaser has rights against the Seller under this Agreement in
respect of representations, warranties and agreements made by the Seller herein
and such representations and warranties shall survive delivery of the respective
Mortgage Files to the Trustee until the termination of the Pooling and Servicing
Agreement.

         8. MISCELLANEOUS. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Neither this Agreement nor
any term hereof may be changed, waived, discharged or terminated except by a
writing signed by the party against whom enforcement of such change, waiver,
discharge or termination is sought. This Agreement may not be changed in any
manner which would have a material adverse effect on Holders of the Certificates
without the prior written consent of the Trustee. This Agreement may be executed
in any number of counterparts, each of which shall for all purposes be deemed to
be an original and all of which shall together constitute one and the same
instrument. This Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns, and no other person
will have any right or obligation hereunder, other than as provided herein.

         9. CHARACTERIZATION. It is the express intent of the parties hereto
that the conveyance contemplated by this Agreement be, and be treated for all
purposes as, a sale by the Seller of all the Seller's right, title and interest
in and to the Mortgage Loans. It is, further, not the intention of the parties
that such conveyance be deemed a pledge of the Mortgage Loans by the Seller to
secure a debt or other obligation of the Seller. However, in the event that,
notwithstanding the intent of the parties, the Mortgage Loans are held to
continue to be property of the Seller then (a) this Agreement shall also be
deemed to be a security agreement under applicable law; (b) the transfer of the
Mortgage Loans provided for herein shall be deemed to be a grant by the Seller
to the Purchaser of a first priority security interest in all of the Seller's
right, title and interest in and to the Mortgage Loans and all amounts payable
to the holder of the Mortgage Loans in accordance with the terms thereof and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property; (c) the possession by the
Purchaser or any successor thereto of the related Mortgage Notes and such other
items of property as constitute instruments, money, negotiable documents or
chattel paper shall be deemed to be "possession by the secured party" for
purposes of perfecting the security interest pursuant to Section 9-305 of the
New York Uniform Commercial Code and the Uniform Commercial Code of any other
applicable jurisdiction; 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 Purchaser or any successor thereto for the purpose of perfecting such
security interest under applicable law. Any assignment of the interest of the
Purchaser pursuant to any provision hereof shall also be deemed to be an
assignment of any security interest created hereby.

                                       -7-

<PAGE>

         IN WITNESS WHEREOF, the Purchaser and the Seller have caused this
Agreement to be duly executed by their respective officers as of the day and
year first above written.

                                           SALOMON BROTHERS MORTGAGE
                                           SECURITIES VII, INC.

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

                                           SALOMON BROTHERS REALTY CORP.

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

                                       -8-

<PAGE>

                                   SCHEDULE 1

                             MORTGAGE LOAN SCHEDULE

                             AVAILABLE UPON REQUEST

<PAGE>

                                    EXHIBIT E
                                    ---------

                               REQUEST FOR RELEASE
                             (for Trustee/Custodian)

Loan Information
----------------

         Name of Mortgagor:          __________________________________

         Servicer
         Loan No.:                   __________________________________

Trustee/Custodian
-----------------

         Name:                       __________________________________

         Address:                    __________________________________
                                     __________________________________

         Trustee/Custodian
         Mortgage File No.:          __________________________________

Trust Administrator
-------------------

         Name:                       __________________________________

         Address:                    __________________________________
                                     __________________________________

Depositor
---------

         Name:             SALOMON BROTHERS MORTGAGE
                                     SECURITIES VII, INC.

         Address:                    _________________________________
                                     _________________________________

         Certificates:               Salomon Brothers Mortgage Securities VII,
                                     Inc., Mortgage Pass-Through Certificates,
                                     Series 2001-2

          The undersigned Servicer hereby acknowledges that it has received from
_______________________, as Trustee for the Holders of Salomon Brothers Mortgage
Securities VII, Inc., Mortgage Pass-Through Certificates, Series 2001-2 the
documents referred to below (the "Documents"). All capitalized terms not
otherwise defined in this Request for Release shall have the meanings given them
in the Pooling and Servicing Agreement, dated as of November 1, 2001, among the
Trustee, the Trust Administrator, the Depositor and the Servicer (the "Pooling
and Servicing Agreement").

                                      E-1-1

<PAGE>

          ( ) Promissory Note dated _______________, 20__, in the original
principal sum of $__________, made by _____________________, payable to, or
endorsed to the order of, the Trustee.

          ( ) Mortgage recorded on _________________________ as instrument no.
____________________ in the County Recorder's Office of the County of
_________________, State of __________________ in book/reel/docket
_________________ of official records at page/image _____________.

          ( ) Deed of Trust recorded on ___________________ as instrument no.
________________ in the County Recorder's Office of the County of
_________________, State of ____________________ in book/reel/docket
_________________ of official records at page/image ______________.

          ( ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded
on ___________________ as instrument no. _________ in the County Recorder's
Office of the County of _______________, State of _______________________ in
book/reel/docket ____________ of official records at page/image ____________.

          ( ) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.

          ( )  ____________________________________________________

          ( )  ____________________________________________________

          ( )  ____________________________________________________

          ( )  ____________________________________________________

          The undersigned Servicer hereby acknowledges and agrees as follows:

          (1) The Servicer shall hold and retain possession of the Documents in
trust for the benefit of the Trustee and the Trust Administrator, solely for the
purposes provided in the Agreement.

          (2) The Servicer shall not cause or permit the Documents to become
subject to, or encumbered by, any claim, liens, security interest, charges,
writs of attachment or other impositions nor shall the Servicer assert or seek
to assert any claims or rights of setoff to or against the Documents or any
proceeds thereof.

          (3) The Servicer shall return each and every Document previously
requested from the Mortgage File to the Trustee when the need therefor no longer
exists, unless the Mortgage Loan relating to the Documents has been liquidated
and the proceeds thereof have been remitted to the Collection Account and except
as expressly provided in the Agreement.

                                      E-1-2

<PAGE>

          (4) The Documents and any proceeds thereof, including any proceeds of
proceeds, coming into the possession or control of the Servicer shall at all
times be earmarked for the account of the Trustee, and the Servicer shall keep
the Documents and any proceeds separate and distinct from all other property in
the Servicer's possession, custody or control.

Dated:

                                        LITTON LOAN SERVICING LP

                                        By:__________________________
                                        Name:
                                        Title:

                                      E-1-3

<PAGE>

                               REQUEST FOR RELEASE
                          [Mortgage Loans Paid in Full]

                     OFFICER'S CERTIFICATE AND TRUST RECEIPT
                       MORTGAGE PASS-THROUGH CERTIFICATES
                                  SERIES 2001-2

___________________________________________________ HEREBY CERTIFIES THAT HE/SHE
IS AN OFFICER OF THE SERVICER, HOLDING THE OFFICE SET FORTH BENEATH HIS/HER
SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:

WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:

ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), ARREARAGE AND INTEREST
HAVE BEEN MADE.

LOAN NUMBER: _________________            BORROWER'S NAME:______________________

COUNTY: ______________________

WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE COLLECTION ACCOUNT PURSUANT TO SECTION
3.10 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE CREDITED.

______________________________                      DATED:______________________

/ / VICE PRESIDENT

/ / ASSISTANT VICE PRESIDENT

                                      E-2-1

<PAGE>

                                   EXHIBIT F-1
                                   -----------

                    FORM OF TRANSFEROR REPRESENTATION LETTER

                                                     [Date]

Citibank, N.A.
111 Wall Street
New York, New York 10005

           Re:   Salomon Brothers Mortgage Securities VII, Inc.,
                 Mortgage Pass-Through Certificates, Series 2001-2, Class ___,
                 representing a ___% Class ___ Percentage Interest
                 --------------------------------------------------------------

Ladies and Gentlemen:

          In connection with the transfer by ________________ (the "Transferor")
to ________________ (the "Transferee") of the captioned mortgage pass-through
certificates (the "Certificates"), the Transferor hereby certifies as follows:

          Neither the Transferor nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, (e) has taken any other action, that (in the case of each of
subclauses (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933, as amended (the "1933 Act"), or
would render the disposition of any Certificate a violation of Section 5 of the
1933 Act or any state securities law or would require registration or
qualification pursuant thereto. The Transferor will not act, nor has it
authorized or will it authorize any person to act, in any manner set forth in
the foregoing sentence with respect to any Certificate. The Transferor will not
sell or otherwise transfer any of the Certificates, except in compliance with
the provisions of that certain Pooling and Servicing Agreement, dated as of
November 1, 2001, among Salomon Brothers Mortgage Securities VII, Inc. as
Depositor, Litton Loan Servicing LP as Servicer, JPMorgan Chase Bank as Trustee
and Citibank, N.A. as Trust Administrator (the "Pooling and Servicing
Agreement"), pursuant to which Pooling and Servicing Agreement the Certificates
were issued.

                                      F-1-1

<PAGE>

          Capitalized terms used but not defined herein shall have the meanings
assigned thereto in the Pooling and Servicing Agreement.

                                             Very truly yours,

                                             [Transferor]

                                             By:___________________________
                                             Name:
                                             Title:

                                      F-1-2

<PAGE>

                    FORM OF TRANSFEREE REPRESENTATION LETTER

                                                         [Date]

Citibank, N.A.
111 Wall Street
New York, New York 10005

         Re:    Salomon Brothers Mortgage Securities VII, Inc.,
                Mortgage Pass-Through Certificates, Series 2001-2, Class ___,
                representing a ___% Percentage Interest
                --------------------------------------------------------------

Ladies and Gentlemen:

          In connection with the purchase from ______________________ (the
"Transferor") on the date hereof of the captioned trust certificates (the
"Certificates"), _______________ (the "Transferee") hereby certifies as follows:

          1. The Transferee is a "qualified institutional buyer" as that term is
defined in Rule 144A ("Rule 144A") under the Securities Act of 1933 (the "1933
Act") and has completed either of the forms of certification to that effect
attached hereto as Annex 1 or Annex 2. The Transferee is aware that the sale to
it is being made in reliance on Rule 144A. The Transferee is acquiring the
Certificates for its own account or for the account of a qualified institutional
buyer, and understands that such Certificate may be resold, pledged or
transferred only (i) to a person reasonably believed to be a qualified
institutional buyer that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A, or (ii) pursuant to another
exemption from registration under the 1933 Act.

          2. The Transferee has been furnished with all information regarding
(a) the Certificates and distributions thereon, (b) the nature, performance and
servicing of the Mortgage Loans, (c) the Pooling and Servicing Agreement
referred to below, and (d) any credit enhancement mechanism associated with the
Certificates, that it has requested.

          All capitalized terms used but not otherwise defined herein have the
respective meanings assigned thereto in the Pooling and Servicing Agreement,
dated as of November 1, 2001, among Salomon Brothers Mortgage Securities VII,
Inc. as Depositor, Litton Loan Servicing LP as Servicer, JPMorgan Chase Bank as
Trustee and Citibank, N.A. as Trust Administrator, pursuant to which the
Certificates were issued.

                                                  [TRANSFEREE]

                                                  By:__________________________
                                                  Name:
                                                  Title:

                                      F-1-3

<PAGE>

                                                          ANNEX 1 TO EXHIBIT F-1
                                                          ----------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

          [For Transferees Other Than Registered Investment Companies]

          The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor") and Ctibibank, N.A., as Trust Administrator, with respect to
the mortgage pass-through certificates (the "Certificates") described in the
Transferee Certificate to which this certification relates and to which this
certification is an Annex:

          1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
entity purchasing the Certificates (the "Transferee").

          2. In connection with purchases by the Transferee, the Transferee is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Transferee owned and/or
invested on a discretionary basis $______________________1 in securities (except
for the excluded securities referred to below) as of the end of the Transferee's
most recent fiscal year (such amount being calculated in accordance with Rule
144A) and (ii) the Transferee satisfies the criteria in the category marked
below.

     ___ CORPORATION, ETC. The Transferee is a corporation (other than a bank,
savings and loan association or similar institution), Massachusetts or similar
business trust, partnership, or any organization described in Section 501(c)(3)
of the Internal Revenue Code of 1986.

     ___ BANK. The Transferee (a) is a national bank or banking institution
organized under the laws of any State, territory or the District of Columbia,
the business of which is substantially confined to banking and is supervised by
the 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, a copy of
which is attached hereto.

     ___ SAVINGS AND LOAN. The Transferee (a) is a savings and loan association,
building and loan association, cooperative bank, homestead association or
similar institution, which is supervised and examined by a State or Federal
authority having supervision over any such institutions or is a foreign savings
and loan association or equivalent institution and (b) has an audited net worth
of at least

--------------------------
         1 Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that case,
Transferee must own and/or invest on a discretionary basis at least $10,000,000
in securities. $25,000,000 as demonstrated in its latest annual financial
statements, A COPY OF WHICH IS ATTACHED HERETO.

                                      F-1-4

<PAGE>

     ___ BROKER-DEALER. The Transferee is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.

     ___ INSURANCE COMPANY. The Transferee is an insurance company 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.

     ___ STATE OR LOCAL PLAN. The Transferee is a plan established and
maintained by a State, its political subdivisions, or any agency or
instrumentality of the 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 Security Act of 1974.

     ___ INVESTMENT ADVISOR. The Transferee is an investment advisor registered
under the Investment Advisers Act of 1940.

          3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee is a dealer, (iii) securities issued or guaranteed by the U.S. or
any instrumentality thereof, (iv) bank deposit notes and certificates of
deposit, (v) loan participations, (vi) repurchase agreements, (vii) securities
owned but subject to a repurchase agreement and (viii) 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 Securities Exchange Act of 1934.

          5. The Transferee acknowledges that it is familiar with Rule 144A and
understands that the Transferor and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Transferee may be in reliance on Rule 144A.

         ___     ___    Will the Transferee be purchasing the Certificates
         Yes     No     only for the Transferee's own account?

          6. 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

                                      F-1-5

<PAGE>

(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 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.

Dated:

                                     _____________________________________
                                     Print Name of Transferee

                                     By:_________________________________
                                     Name:
                                     Title:

                                      F-1-6

<PAGE>

                                                          ANNEX 2 TO EXHIBIT F-1
                                                          ----------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

           [For Transferees That Are Registered Investment Companies]

          The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor") and Citibank, N.A., as Trust Administrator, with respect to
the mortgage pass- through certificates (the "Certificates") described in the
Transferee Certificate to which this certification relates and to which this
certification is an Annex:

          1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Certificates (the "Transferee") or, if the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because the Transferee is part of a Family of
Investment Companies (as defined below), is such an officer of the investment
adviser (the "Adviser").

          2. In connection with purchases by the Transferee, the Transferee is a
"qualified institutional buyer" as defined in Rule 144A because (i) the
Transferee is an investment company registered under the Investment Company Act
of 1940, and (ii) as marked below, the Transferee alone, or the Transferee's
Family of Investment Companies, owned at least $100,000,000 in securities (other
than the excluded securities referred to below) as of the end of the
Transferee's most recent 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 was used.

     ____   The Transferee owned $___________________ in securities (other than
            the excluded securities referred to 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 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 (or series thereof) that have the same
investment adviser or investment advisers 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 (i)
securities of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (ii) securities issued or
guaranteed by the U.S. or any instrumentality thereof, (iii) bank deposit notes
and certificates of deposit, (iv) loan participations, (v) repurchase
agreements, (vi) securities owned but subject to a repurchase agreement and
(vii) currency, interest rate and commodity swaps.

                                      F-1-7

<PAGE>

          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 Certificates will constitute a
reaffirmation of this certification by the undersigned as of the date of such
purchase.

Dated:

                                       _____________________________________
                                       Print Name of Transferee or Advisor

                                       By:__________________________________
                                       Name:
                                       Title:

                                       IF AN ADVISER:

                                       _____________________________________
                                       Print Name of Transferee

                                      F-1-8

<PAGE>

                                   EXHIBIT F-2
                                   -----------

                    FORM OF TRANSFER AFFIDAVIT AND AGREEMENT

STATE OF                  )
                          : ss.:
COUNTY OF                 )

          _______________, being duly sworn, deposes, represents and warrants as
follows:

          1. I am the ___________________ of________________________________
(the "Owner"), a corporation duly organized and existing under the laws of the
State of Delaware, on behalf of whom I make this affidavit and agreement. The
Owner is the record owner of Salomon Brothers Mortgage Securities VII, Inc.,
Mortgage Pass-Through Certificates, Series 2001-2, Class R Certificates (the
"Class R Certificates"), issued pursuant to a Pooling and Servicing Agreement,
dated as of November 1, 2001 (the "Pooling and Servicing Agreement"), among
Salomon Brothers Mortgage Securities VII, Inc. as depositor, Litton Loan
Servicing LP as servicer, JPMorgan Chase Bank as trustee and Citibank, N.A. as
trust administrator. Capitalized terms used but not defined herein have the
meanings assigned to them in the Pooling and Servicing Agreement.

          2. The Owner (i) is and will be a "Permitted Transferee" as of
November __, 2001 and (ii) is acquiring the Class R Certificates for its own
account or for the account of another Owner from which it has received an
affidavit in substantially the same form as this affidavit. A "Permitted
Transferee" is any person other than a "disqualified organization" or a
possession of the United States. For this purpose, a "disqualified organization"
means the United States, any state or political subdivision thereof, any agency
or instrumentality of any of the foregoing (other than an instrumentality all of
the activities of which are subject to tax and, except for the Federal Home Loan
Mortgage Corporation, a majority of whose board of directors is not selected by
any such governmental entity) or any foreign government, international
organization or any agency or instrumentality of such foreign government or
organization, any rural electric or telephone cooperative, or any organization
(other than certain farmers' cooperatives) that is generally exempt from federal
income tax unless such organization is subject to the tax on unrelated business
taxable income.

          3. The Owner is aware (i) of the tax that would be imposed on
transfers of the Class R Certificates to disqualified organizations under the
Internal Revenue Code of 1986 that applies to all transfers of the Class R
Certificates after December 31, 1988; (ii) that such tax would be on the
transferor or, if such transfer is through an agent (which person includes a
broker, nominee or middleman) for a non-Permitted Transferee, on the agent;
(iii) that the person otherwise liable for the tax shall be relieved of
liability for the tax if the transferee furnishes to such person an affidavit
that the transferee is a Permitted Transferee and, at the time of transfer, such
person does not have actual knowledge that the affidavit is false; and (iv) that
each of the Class R Certificates may be a "noneconomic residual interest" within
the meaning of proposed Treasury regulations promulgated

                                      F-2-1

<PAGE>

under the Code and that the transferor of a "noneconomic residual interest" will
remain liable for any taxes due with respect to the income on such residual
interest, unless no significant purpose of the transfer is to impede the
assessment or collection of tax.

          4. The Owner is aware of the tax imposed on a "pass-through entity"
holding the Class R Certificates if, at any time during the taxable year of the
pass-through entity, a non-Permitted Transferee is the record holder of an
interest in such entity. (For this purpose, a "pass-through entity" includes a
regulated investment company, a real estate investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives.)

          5. The Owner is aware that the Trust Administrator will not register
the transfer of any Class R Certificate unless the transferee, or the
transferee's agent, delivers to the Trust Administrator, among other things, an
affidavit in substantially the same form as this affidavit. The Owner expressly
agrees that it will not consummate any such transfer if it knows or believes
that any of the representations contained in such affidavit and agreement are
false.

          6. The Owner consents to any additional restrictions or arrangements
that shall be deemed necessary upon advice of counsel to constitute a reasonable
arrangement to ensure that the Class R Certificates will only be owned, directly
or indirectly, by an Owner that is a Permitted Transferee.

          7. The Owner's taxpayer identification number is [________________].

          8. The Owner has reviewed the restrictions set forth on the face of
the Class R Certificates and the provisions of Section 5.02(d) of the Pooling
and Servicing Agreement under which the Class R Certificates were issued (in
particular, clauses (iii)(A) and (iii)(B) of Section 5.02(d), which authorize
the Trust Administrator to deliver payments to a person other than the Owner and
negotiate a mandatory sale by the Trust Administrator in the event that the
Owner holds such Certificate in violation of Section 5.02(d)), and that the
Owner expressly agrees to be bound by and to comply with such restrictions and
provisions.

          9. The Owner is not acquiring and will not transfer the Class R
Certificates in order to impede the assessment or collection of any tax.

          10. The Owner anticipates that it will, so long as it holds the Class
R Certificates, have sufficient assets to pay any taxes owed by the holder of
such Class R Certificates, and hereby represents to and for the benefit of the
person from whom it acquired the Class R Certificates that the Owner intends to
pay taxes associated with holding such Class R Certificates as they become due,
fully understanding that it may incur tax liabilities in excess of any cash
flows generated by the Class R Certificates.

          11. The Owner has no present knowledge that it may become insolvent or
subject to a bankruptcy proceeding for so long as it holds the Class R
Certificates.

          12. The Owner has no present knowledge or expectation that it will be
unable to pay any United States taxes owed by it so long as any of the Class R
Certificates remain outstanding.

                                      F-2-2

<PAGE>

          13. The Owner is not acquiring the Class R Certificates with the
intent to transfer the Class R Certificates to any person or entity that will
not have sufficient assets to pay any taxes owed by the holder of such Class R
Certificates, or that may become insolvent or subject to a bankruptcy
proceeding, for so long as the Class R Certificates remain outstanding.

          14. The Owner will, in connection with any transfer that it makes of
the Class R Certificates, obtain from its transferee the representations
required by Section 5.02(d) of the Pooling and Servicing Agreement under which
the Class R Certificates were issued and will not consummate any such transfer
if it knows, or knows facts that should lead it to believe, that any such
representations are false.

          15. The Owner will, in connection with any transfer that it makes of
the Class R Certificates, deliver to the Trust Administrator an affidavit, which
represents and warrants that it is not transferring the Class R Certificates to
impede the assessment or collection of any tax and that it has no actual
knowledge that the proposed transferee: (i) has insufficient assets to pay any
taxes owed by such transferee as holder of the Class R Certificates; (ii) may
become insolvent or subject to a bankruptcy proceeding for so long as the Class
R Certificates remain outstanding; and (iii) is not a "Permitted Transferee."

          16. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States, as
defined in Code Section 7701(a)(30).

          17. The Owner (i) is not a Plan subject to ERISA or Section 4975 of
the Code (or comparable provisions of any subsequent enactments) or a Person
acquiring the Certificates or interest therein with "Plan Assets" of a Plan
within the meaning of the Department of Labor regulation promulgated at 29
C.F.R. ss. 2510.3-101 and (ii) will not transfer such Certificates to Plan
subject to ERISA or Section 4975 of the Code (or comparable provisions of any
subsequent enactments) or a Person acquiring the Certificates or interest
therein with "Plan Assets" of a Plan within the meaning of the Department of
Labor regulation promulgated at 29 C.F.R. ss. 2510.3-101.

                                      F-2-3

<PAGE>

          IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of
its_________________________, by its _________________, attested by its
______________, this __ day of__________________, 2001.

                                        [Transferee-Owner]

                                        By:_____________________________________
                                        Name:
                                        Title:

ATTEST:

By:__________________________________
Name:
Title:

          Personally appeared before me the above-named , known or proved to me
to be the same person who executed the foregoing instrument and to be a
______________ of the Owner, and acknowledged to me that he executed the same as
his free act and deed and the free act and deed of the Owner.

                  Subscribed and sworn before me this __ day of November, 2001.

                                        _____________________________________
                                                    Notary Public

                                        County of _________________________
                                        State of __________________________
                                        My Commission expires:

                                      F-2-4

<PAGE>

                          FORM OF TRANSFEROR AFFIDAVIT

STATE OF NEW YORK           )
                            :ss.:
COUNTY OF NEW YORK          )

          [______________], being duly sworn, deposes, represents and warrants
as follows:

          1. I am an [_________________________] of ________________________
(the "Owner"), a ____________________ duly organized and existing under the laws
of ____________________________, on behalf of whom I make this affidavit.

          2. The Owner is not transferring the Class R Certificates (the
"Residual Certificates") to impede the assessment or collection of any tax.

          3. The Owner has no actual knowledge that the Person that is the
proposed transferee (the "Purchaser") of the Residual Certificates: (i) has
insufficient assets to pay any taxes owed by such proposed transferee as holder
of the Residual Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Residual Certificates remain
outstanding and (iii) is not a Permitted Transferee.

          4. The Owner understands that the Purchaser has delivered to the Trust
Administrator a transfer affidavit and agreement in the form attached to the
Pooling and Servicing Agreement as Exhibit F-2. The Owner does not know or
believe that any representation contained therein is false.

          5. At the time of transfer, the Owner has conducted a reasonable
investigation of the financial condition of the Purchaser as contemplated by
Treasury Regulations Section 1.860E- 1(c)(4)(i) and, as a result of that
investigation, the Owner has determined that the Purchaser has historically paid
its debts as they became due and has found no significant evidence to indicate
that the Purchaser will not continue to pay its debts as they become due in the
future. The Owner understands that the transfer of a Residual Certificate may
not be respected for United States income tax purposes (and the Owner may
continue to be liable for United States income taxes associated therewith)
unless the Owner has conducted such an investigation.

          6. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Pooling and Servicing Agreement.

          7. The Owner (i) is not a Plan subject to ERISA or Section 4975 of the
Code (or comparable provisions of any subsequent enactments) or a Person
acquiring the Certificates or interest therein with "Plan Assets" of a Plan
within the meaning of the Department of Labor regulation promulgated at 29
C.F.R. ss. 2510.3-101 and (ii) will not transfer such Certificates to Plan
subject to ERISA or Section 4975 of the Code (or comparable provisions of any
subsequent enactments) or a Person acquiring the Certificates or interest
therein with "Plan Assets" of a Plan within the meaning of the Department of
Labor regulation promulgated at 29 C.F.R. ss. 2510.3-101.

                                      F-2-5

<PAGE>

          IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its _____________________,
by its ___________________, attested by its ___________________, this __ day of
____________________.

                                     [Transferor-Owner]

                                     By:____________________________________
                                     Name:
                                     Title:

ATTEST:

By: _______________________
Name:
Title:

                                      F-2-6

<PAGE>

                                   Schedule 1

                             MORTGAGE LOAN SCHEDULE

                                 Filed By Paper

                                  Schedule 1-1

<PAGE>

                                   Schedule 2

                           SCHEDULE OF MORTGAGE LOANS
                        WITH RECONSTRUCTED MORTGAGE FILES

                             Available Upon Request

                                  Schedule 3-1Exhibit 10.1

                        SETTLEMENT AGREEMENT AND RELEASE

     THIS SETTLEMENT AGREEMENT AND RELEASE, dated as of April 12, 2002 (this
"Agreement"), by and among (i) The Cornerhouse Limited Partnership, a New York
limited partnership ("Cornerhouse"), (ii) The Winsome Limited Partnership, a New
York limited partnership ("Winsome"), (iii) David H. Peipers, an individual
("DHP"), (iv) Thorn Tree Resources LLC, a Delaware limited liability company
("Thorn Tree," and together with Cornerhouse, Winsome and DHP, the "Thorn Tree
Parties"), (v) Vincent P. Iannazzo, an individual ("Iannazzo"), (vi) Milton E.
Stanson, an individual ("Stanson"), (vii) Universal Equities Consolidated LLC, a
Nevada limited liability company ("Universal" and together with Iannazzo and
Stanson, the "Universal Parties"), on its own behalf and as successor to the
obligations of Universal Equities Ltd., a Delaware corporation, (viii) Equistar
Consolidated Holdings LLC, a Nevada limited liability company ("Equistar"), (ix)
Sixth Avenue Associates LLC, a Delaware limited liability company and assignee
of Ms. Dorothy Eweson ("Sixth Avenue"), (x) Ms. Dorothy D. Eweson, an individual
("Ms. Eweson"), and (xi) Emex Corporation, a Nevada corporation ("Emex").

                                 R E C I T A L S

     WHEREAS, Thorn Tree and Universal are the sole members of Equistar and each
owns half of the membership interests of Equistar;

     WHEREAS, Universal is the record holder of 11,110,938 shares (the
"Universal Original Shares") of the common stock, par value $0.01 per share (the
"Common Stock"), of Emex and stock dividends paid or payable thereon which, as
of the date hereof, total 1,146,162 shares of Common Stock (the "Universal
Dividend Shares") for an aggregate of 12,257,100 shares of Common Stock
(collectively, the "Universal Shares");

     WHEREAS, Thorn Tree is the record owner of 11,110,938 shares of the Common
Stock (the "Thorn Tree Original Shares") and stock dividends paid or payable
thereon which, as of the date hereof, total 1,146,162 shares of Common Stock
(the "Thorn Tree Dividend Shares") for an aggregate of 12,257,100 shares of
Common Stock (collectively, the "Thorn Tree Shares");

     WHEREAS, as of February 15, 2002, Iannazzo and Stanson, jointly and
severally, owed the aggregate amount as set forth on Schedule A to Cornerhouse,
Winsome and DHP, and issued promissory notes therefor (plus all interest accrued
thereon after February 15, 2002, the "DHP Debt");

     WHEREAS, as of February 15, 2002, the Universal Parties owed the aggregate
amount as set forth on Schedule B to Equistar (plus all interest accrued thereon
after February 15, 2002, the "Equistar Debt");

<PAGE>

     WHEREAS, Universal and Thorn Tree pledged the Universal Shares and the
Thorn Tree Shares, respectively, and any dividend shares subsequently paid in
respect thereof (such shares pledged by Thorn Tree, the "Thorn Tree Pledged
Shares") and any and all stock dividends paid and payable thereon to J.P. Morgan
Chase Bank and HSBC Bank USA as security for the debt owed to such banks by
Equistar, in the aggregate amount as set forth on Schedule C (plus all interest
accrued thereon after February 15, 2002, the "Bank Debt"), and Sixth Avenue was
subsequently subrogated to the rights of such banks under (i) the Stock Pledge
Agreement, dated as of September 19, 2000, from Universal and Thorn Tree, as
Grantors, to HSBC USA, as Secured Party, (ii) the Collateral Agreement by and
between The Chase Manhattan Bank and Thorn Tree, dated as of September 29, 2000,
and (iii) the Collateral Agreement by and between Universal and The Chase
Manhattan Bank, dated as of September 29, 2000 (collectively, the "Bank Pledge
Agreements"), and is currently the secured party thereunder;

     WHEREAS, Thorn Tree and Universal are entering into an Amended and Restated
Pledge Agreement (the "Standstill Pledge Agreement") concurrently herewith and
attached hereto as Exhibit F, which amends and restates the Bank Pledge
Agreements providing for the pledge (the "Pledge") of the Universal Shares, any
and all stock dividends paid and payable thereon, and the Thorn Tree Pledged
Shares, first, to Sixth Avenue as security for the portion of the Sixth Avenue
Debt which constitutes a Universal Obligation or is attributable to the Thorn
Tree Parties, as applicable, and second, with respect to the Universal Shares,
to DHP as security for the DHP Debt and the Equistar Debt;

     WHEREAS, as of February 15, 2002, Equistar owed the aggregate amount set
forth on Schedule D to Ms. Eweson, and Equistar issued to Ms. Eweson promissory
notes therefor, which notes were assigned to Sixth Avenue (plus all interest
accrued thereon after February 15, 2002, the "Eweson Debt," and collectively
with the Bank Debt, the "Sixth Avenue Debt");

     WHEREAS, as of February 15, 2002, the Universal Parties owed to
Cornerhouse, Winsome, DHP, Equistar, Ms. Eweson and Sixth Avenue the aggregate
amount as set forth on Schedule E hereto (plus all interest accrued thereon
after February 15, 2002, the "Universal Obligations");

     WHEREAS, as of February 15, 2002, Equistar owed to the Thorn Tree Parties
the aggregate amount as set forth on Schedule F hereto (plus all interest
accrued thereon after February 15, 2002, the "Thorn Tree Debt");

     WHEREAS, in May 2001, Universal loaned to Emex the aggregate principal
amount of $200,000, and as of the date hereof, Emex owes such amount plus all
interest accrued thereon, and issued a promissory note therefor (such note, the
"Universal Note");

     WHEREAS, in May and June 2001, Thorn Tree loaned to Emex the aggregate
principal amount of $1,065,040, and as of the date hereof, Emex owes such amount
plus

                                       2
<PAGE>

all interest accrued thereon, and issued a promissory note therefor (such note,
the "Thorn Tree Note," and together with the Universal Note, the "Emex Notes");

     WHEREAS, as of September 30, 2001, Emex owed to Equistar the aggregate
amount of $1,699,000, and as of the date hereof, Emex owes such amount plus all
interest accrued thereon (the "Emex Debt"); and

     WHEREAS, the parties hereto desire to settle all disputes among them
arising from or relating to, among other things, the November Agreements (as
defined herein) the DHP Debt, the Equistar Debt, the Thorn Tree Debt and the
Sixth Avenue Debt;

     NOW THEREFORE, for good and valuable consideration, including their mutual
promises, releases, representations, covenants and obligations contained herein
or contemplated hereby, the sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:

1. Settlement of Dispute.

     (a) Covenant Not to Sue. (i) Each of the parties, except Emex, agrees that,
beginning on the date hereof and continuing until the earlier of (x) the
satisfaction in full in cash in accordance with this Agreement of the Universal
Obligations and (y) the date that is three (3) years from the date hereof (as
may be extended pursuant to Section 1(a)(iii) hereof, the "Standstill Period"),
it shall not commence, maintain, prosecute or participate in any action, charge,
complaint, proceeding, litigation or foreclosure (it being understood that any
sale of shares of Common Stock or the exercise of voting or other consensual
rights with respect to the shares of Common Stock in accordance with the terms
of this Agreement shall not be deemed a foreclosure) of any kind (on its own
behalf and/or on behalf of any other person and/or on behalf of or as a member
of any alleged class of persons, including as a shareholder of Emex) in any
court, or before any administrative or investigative body or agency (whether
public, quasi-public or private), against any of the other parties, except Emex,
to this Agreement that in any way relates to the matters covered by this
Agreement, including, without limitation, the DHP Debt, the Equistar Debt, the
Pledge, the Sixth Avenue Debt, the Universal Obligations, the Universal Note,
the Thorn Tree Debt and the November Agreements.

          (ii) Each of the parties hereto agrees that in the event of any future
     action, charge, complaint, proceeding, litigation or foreclosure of any
     kind by and between any of the parties hereto, each waives any claim or
     defense it ever had, now has or hereafter can, shall or may have, based
     solely on the passage of time during the Standstill Period, including,
     without limitation, any defense based on a statute of limitations or
     laches.

          (iii) If less than 50% of the Universal Obligations remain outstanding
     as of the date that is three (3) years from the date hereof, the Standstill
     Period shall be extended and continue for one (1) additional year, until
     the date that is four (4) years from the date hereof.

                                       3
<PAGE>

     (b) Releases. Except as set forth in Section 1(n) of this Agreement, and
effective at the conclusion of the Standstill Period, each of the parties,
except Emex, for itself and its respective officers, directors, affiliates,
parent and direct and indirect subsidiary corporations, stockholders, members,
partners or other equity holders, agents, representatives, employees, attorneys,
controlling persons, successors, heirs, executors, administrators and all
respective successors and assigns, and anyone claiming any right through it or
under it (each, a "Releasor," and collectively, the "Releasors"), mutually,
irrevocably and unconditionally releases and forever discharges each of the
other parties, except Emex, and their present and former officers, directors,
affiliates, parent and direct and indirect subsidiary corporations,
stockholders, members, partners or other equity holders, agents,
representatives, employees, attorneys, controlling persons, successors, heirs,
executors, administrators and all respective successors and assigns (each, a
"Releasee," and collectively, the "Releasees"), from any and all claims,
actions, causes of action, suits, liabilities, losses, costs, debts, rights,
offsets, demands, sums of money, accounts, damages, judgments and any other
obligations of any nature whatsoever, in law or in equity, whether known or
unknown, suspected or unsuspected, fixed or contingent, which the Releasors ever
had, now have or hereafter can, shall or may have, from the beginning of the
world until the date hereof, based on, relating or with respect to, or arising
out of any matters covered by this Agreement, including, without limitation:

          (A) the DHP Debt;

          (B) the Equistar Debt;

          (C) the Thorn Tree Debt;

          (D) the Sixth Avenue Debt;

          (E) the Agreement, dated as of November 1, 2000, between Universal and
     Thorn Tree (the "Chase Take Out Agreement") with respect to the pledge of
     the Universal Original Shares to The Chase Manhattan Bank;

          (F) the Agreement, dated as of November 1, 2000, between Universal and
     Thorn Tree (the "HSBC Take Out Agreement") with respect to the pledge of
     the Universal Original Shares to HSBC Bank USA;

          (G) the Management Agreement, dated as of November 1, 2000, by and
     between The Buckingham Management Group, LLC and Thorn Tree (the
     "Buckingham Agreement," and together with the Chase Take Out Agreement and
     the HSBC Take Out Agreement, the "November Agreements"); and

          (H) the Bank Pledge Agreements;

but excluding any rights and obligations arising under this Agreement.

                                       4
<PAGE>

     (c) Retention of Shares. As of the date hereof, each of Universal and Thorn
Tree has delivered to Sixth Avenue all Universal Dividend Shares and Thorn Tree
Dividend Shares in accordance with the Standstill Pledge Agreement. On the date
hereof, Sixth Avenue shall release from the Pledge, and reassign and deliver
certificates to Universal for 300,000 of the Universal Dividend Shares (the
"Universal Retained Shares"). Solely for the convenience of the members of
Universal, 150,000 of the Universal Dividend Shares shall be issued in the name
of Iannazzo, and 150,000 of the Universal Dividend Shares shall be issued in the
name of Stanson. Subject to Section 1(d)(ii) below, Sixth Avenue shall continue
to hold the remaining 11,957,100 Universal Shares and any dividend shares
subsequently paid with respect to the remaining Universal Shares (the "Universal
Pledged Shares," and together with the Thorn Tree Pledged Shares, the "Pledged
Shares") pursuant to the Standstill Pledge Agreement as security for the Sixth
Avenue Debt.

     (d) Irrevocable Proxies. (i) On the date hereof, each of Thorn Tree and
Universal shall execute and deliver to Sixth Avenue an irrevocable proxy,
coupled with an interest, substantially in the form attached hereto as Exhibit A
and Exhibit B, respectively (together, the "Proxies"), for the purpose of
enabling Sixth Avenue to exercise the voting and/or consensual rights and powers
accruing to an owner of the Pledged Shares. The Proxies shall (A) grant Sixth
Avenue the full power to exercise any and all voting and/or other consensual
rights and powers accruing to an owner of the Pledged Shares throughout the
Standstill Period, subject to Section 1(d)(ii) hereof, and (B) terminate as to
Sixth Avenue, (1) with respect to Thorn Tree, upon the full satisfaction in cash
(for the purposes of this Agreement and the Standstill Pledge Agreement, cash
shall be deemed to include any Pledged Shares retained in satisfaction of any
outstanding obligations in accordance with Section 1(o) hereof) of the portion
of the Sixth Avenue Debt attributable to the Thorn Tree Parties, and (2) with
respect to Universal, upon the full satisfaction in cash of the portion of the
Sixth Avenue Debt that constitutes a Universal Obligation. Notwithstanding
anything contained elsewhere in this Agreement but subject to its fiduciary
duties under applicable law, if any, Sixth Avenue may vote the Pledged Shares in
its sole discretion, including, without limitation, with respect to any
corporate transaction proposed by the Board (as defined herein).

          (ii) Notwithstanding the terms set forth in Section 1(d)(i) hereof,
     upon the full satisfaction in cash in accordance with this Agreement of the
     portion of the Sixth Avenue Debt that constitutes a Universal Obligation,
     the right to exercise the voting and/or consensual rights and powers
     accruing to an owner of the Universal Pledged Shares will inure to the
     benefit of DHP until the DHP Debt, the Thorn Tree Debt and the Equistar
     Debt are satisfied in full in cash in accordance with this Agreement. Each
     of Thorn Tree and Universal shall execute and deliver to DHP on the date
     hereof an irrevocable proxy, coupled with an interest, substantially in the
     form attached hereto as Exhibit C and Exhibit D, respectively, which
     proxies shall become effective (A) with respect to Thorn Tree, upon the
     satisfaction in full in cash of the portion of the Sixth Avenue Debt
     attributable to the Thorn Tree Parties, and (B) with respect to Universal,
     upon the satisfaction in full in cash of the Sixth Avenue Debt that
     constitutes a Universal Obligation. The Proxy granted by Universal to DHP
     shall terminate upon the full

                                       5
<PAGE>

     satisfaction in cash of the DHP Debt, the Equistar Debt and the Thorn Tree
     Debt. Notwithstanding anything contained elsewhere in this Agreement, but
     subject to the preceding sentence and his fiduciary duties under applicable
     law, if any, after the portion of the Sixth Avenue Debt attributable to
     Thorn Tree or that constitutes a Universal Obligation is paid in full, DHP
     may vote the Thorn Tree Pledged Shares and the Universal Pledged Shares, as
     the case may be, in his sole discretion, including, without limitation,
     with respect to any corporate transaction proposed by the Board.

     (e) Registration Rights. (i) Promptly, and in any event within 120 days of
the date hereof, Emex agrees to file a shelf registration statement (the
"Registration Statement") for an offering to be made on a continuous basis
pursuant to Rule 415 under the Securities Act of 1933, as amended ("Securities
Act"), covering the Pledged Shares (which term, as used herein, shall include
any Released Shares as defined in Section 1(h)(ii) below) and the Universal
Retained Shares, to become effective (the "Effective Date") under the Securities
Act on the day next following the date such Registration Statement is declared
effective by the United States Securities Exchange Commission (the
"Commission"), or at the earliest possible time thereafter. The foregoing
Registration Statement shall be on Form S-3 under the Securities Act or another
appropriate form permitting registration of such Pledged Shares and the
Universal Retained Shares for resale by the pledgees or holders thereof, as
appropriate, in the manner or manners reasonably designated by them (including,
without limitation, one or more underwritten offerings, within the time periods
and otherwise in accordance with the provisions hereof). Concurrently herewith,
the appropriate parties will execute the Registration Rights Agreement attached
hereto as Exhibit E.

          (ii) Emex shall pay any and all expenses arising from or incident to
     its performance of, or compliance with, its obligation to file the
     Registration Statement, including, without limitation, (A) Commission and
     stock exchange, if any, registration and filing fees, (B) all fees and
     expenses incurred in complying with securities or "blue sky" laws
     (including reasonable fees, charges and disbursements of counsel to any
     underwriter incurred in connection with "blue sky" qualifications of the
     Pledged Shares and the Universal Retained Shares as may be set forth in any
     underwriting agreement), (C) all printing messenger and delivery expenses,
     (D) the fees, charges and disbursements of counsel to Emex and of its
     independent public accountants and any other accounting fees, charges and
     expenses incurred by Emex (including, without limitation, any expenses
     arising from any "cold comfort" letters or any special audits incident to
     or required by any registration or qualification) and any charges and
     expenses incurred by Emex, (E) any liability insurance or other premiums
     for insurance, if any, obtained by Emex in connection with any registration
     pursuant to the terms of this Agreement, regardless of whether such
     Registration Statement is declared effective, and (F) in an amount up to
     and including $5,000, the fees, charges and disbursements of one counsel on
     behalf of each of (x) the Universal Parties and (y) the Thorn Tree Parties
     (provided, that, their Pledged Shares, Released Shares or Retained Shares
     are being sold pursuant to such Registration Statement).

                                       6
<PAGE>

     (f) Sale of Pledged Shares by Sixth Avenue and DHP. (i) Subject to the
provisions of this Section 1(f), from and after the date that is six months
following the date hereof, Sixth Avenue may, in accordance with the provisions
and terms of the Registration Statement or in arms length private transactions,
sell the Pledged Shares at any time, and DHP, the Thorn Tree Parties and the
Universal Parties shall cooperate with Sixth Avenue to make the Pledged Shares
available for such sale; provided, however, subject to Section 1(f)(vi) hereof,
that the price per share of Common Stock in any such sale shall not be less than
$4.00 per share (the "Floor Price").

          (ii) Any sale of all or a portion of the Pledged Shares by Sixth
     Avenue shall be made equally from the Universal Pledged Shares and the
     Thorn Tree Pledged Shares.

          (iii) Subject to the provisions of Section 1(f)(iv) hereof, (A) 70% of
     the proceeds of any sale of all or any portion of the Universal Pledged
     Shares by Sixth Avenue shall be applied to satisfy in cash the portion of
     the amounts outstanding under the Sixth Avenue Debt that constitute
     Universal Obligations and (B) 70% of the proceeds of any sale of all or any
     portion of the Thorn Tree Pledged Shares by Sixth Avenue shall be applied
     to satisfy in cash the portion of the amounts outstanding under the Sixth
     Avenue Debt attributable to the Thorn Tree Parties. The remaining 30% of
     the proceeds of any sale of all or any portion of the Universal Pledged
     Shares or the Thorn Tree Pledged Shares, as the case may be, by Sixth
     Avenue shall be paid to the Universal Parties or the Thorn Tree Parties, as
     applicable.

          (iv) Upon full satisfaction in cash of the portion of the Sixth Avenue
     Debt attributable to the Thorn Tree Parties, the Thorn Tree Pledged Shares
     shall be released from the Pledge and delivered to Thorn Tree. Upon full
     satisfaction in cash of the portion of the Sixth Avenue Debt that
     constitutes a Universal Obligation, Sixth Avenue shall transfer all of the
     remaining Universal Pledged Shares, with stock powers executed by Universal
     in blank, to DHP to hold in accordance with the terms of this Agreement and
     the Standstill Pledge Agreement. Upon full satisfaction in cash of the
     portion of the Sixth Avenue Debt that constitutes a Universal Obligation,
     and subject to the provisions of this Section 1(f), from and after the date
     that is six months following the date hereof, DHP may, in accordance with
     the provisions and terms of the Registration Statement or in arms length
     transactions, sell the Universal Pledged Shares at any time, and Sixth
     Avenue, the Thorn Tree Parties and the Universal Parties shall cooperate
     with DHP to make the Universal Pledged Shares available for such sale;
     provided, however, that, subject to Section 1(f)(vi) hereof, the price per
     share of Common Stock in any such sale shall not be less than the Floor
     Price. Sixty-five percent (65%) of the proceeds of a sale of all or a
     portion of the Universal Pledged Shares by DHP shall be, first, applied to
     satisfy in full in cash the amounts outstanding under the DHP Debt and,
     second, to satisfy in full in cash the amounts outstanding under the
     Equistar Debt. The remaining 35% of the proceeds of any sale of all or any
     portion of the Universal Pledged Shares by DHP shall be paid to the
     Universal Parties.

                                       7
<PAGE>

          (v) In the event that Sixth Avenue, pursuant to Section 1(f)(i) above,
     or DHP, pursuant to Section 1(f)(iv) above, elects to sell the Universal
     Pledged Shares, Sixth Avenue or DHP, as the case may be, shall be required
     to notify Universal in writing (the "Sale Notice") of the estimated number
     of Universal Pledged Shares to be sold, the estimated price per share and
     any other proposed substantive terms of such sale. Universal shall have a
     period of five business days in the case of a private sale and two business
     days in the case of a sale pursuant to the Registration Statement (the
     "Notice Period") from the date of its receipt of such Sale Notice to (x)
     arrange a sale for the number of Universal Pledged Shares for at least the
     same price and on comparable terms as set forth in the Sale Notice or (y)
     make a payment for the number of Universal Pledged Shares set forth in the
     Sale Notice pursuant to Section 1(h)(i) below; provided, that, Universal
     has given notice within one business day that it will attempt to arrange a
     sale of the Universal Pledged Shares or make a payment during the Notice
     Period (it being understood, however, that such notice of intent does not
     obligate Universal to effectuate such sale or to make such payment if its
     attempt shall not be successful). If Universal makes such an arrangement or
     such payment within the Notice Period, then no Universal Pledged Shares
     shall be included in the sale by Sixth Avenue or DHP, as the case may be.
     If Universal is not able to make such an arrangement or such payment or
     does not respond by the end of the Notice Period, then the sale by Sixth
     Avenue or DHP, as the case may be, may include the Universal Pledged Shares
     as set forth in the Sale Notice.

          (vi) In the event of any spin-off or distribution (the "Emex
     Spin-Off") of the stock of any subsidiary or business of Emex to the
     existing stockholders of Emex ("Newco"), the Floor Price following the Emex
     Spin-Off shall be adjusted to a price per share equal to the product of (A)
     $4.00, multiplied by (B) a fraction with (x) a numerator equal to the
     Average Trading Price of Emex, and (y) a denominator equal to the sum of
     the Average Trading Price of Emex plus the Average Trading Price of Newco.
     The shares of capital stock of Newco (the "Newco Stock") distributed to
     Emex stockholders pursuant to the Emex Spin-Off will remain subject to the
     Pledge and all the terms and conditions of this Agreement. The Floor Price
     of Newco Stock following the Emex Spin-Off shall be a price per share equal
     to the product of (A) $4.00, multiplied by (B) a fraction with (x) a
     numerator equal to the Average Trading Price of Newco, and (y) a
     denominator equal to the sum of the Average Trading Price of Emex plus the
     Average Trading Price of Newco. The "Average Trading Price of Emex" shall
     mean the average of the closing prices of the Common Stock on the Nasdaq
     National or SmallCap Market (or if not listed thereon, on such other
     over-the-counter market or national securities exchange, as applicable)
     over the twenty (20) trading day period following the consummation of the
     Emex Spin-Off. The "Average Trading Price of Newco" shall mean the average
     of the closing prices of the Newco Stock on the Nasdaq National or SmallCap
     Market (or if not listed thereon, on such other over-the-counter market or
     national securities exchange, as applicable) over the twenty (20) trading
     day period following the consummation of the Emex Spin-Off. The Floor Price
     will also be adjusted pursuant to the provisions of this Section 1(f)(vi)
     in the event of any spin-off or distribution of the stock of any subsidiary
     or business of Newco to the existing stockholders of Newco.

                                       8
<PAGE>

     (g) Sale of the Universal Shares by the Universal Parties. From and after
the date hereof, the Universal Parties may direct Sixth Avenue or DHP, as the
case may be, to sell or cause the sale of the Universal Shares in a private,
arms length transaction or in accordance with the provisions and terms of a
Registration Statement, provided, that (A) any such sale shall be made for
purposes of paying the Universal Obligations, (B) the cash proceeds from such
sale (net of expenses of the sale) shall be sufficient to pay in full in cash
the Universal Obligations, and (C) notwithstanding anything to the contrary
contained herein, the cash proceeds from such sale (net of expenses of the sale)
shall be applied exclusively to the payment of the Universal Obligations until
such Universal Obligations are paid in full in cash. In the event that the
proceeds (net of expenses of the sale) from such sale exceed the amount of the
Universal Obligations, the remaining proceeds shall be paid to the Universal
Parties.

     (h) Payment of the Universal Obligations. (i) The Universal Parties may, at
any time, pay, in cash, any portion of the Universal Obligations.

          (ii) Subject to Article XX of the Standstill Pledge Agreement, upon
     payment of all or a portion of the Universal Obligations, there shall be
     released from the Pledge and the Standstill Pledge Agreement and delivered
     to Universal that number of Universal Pledged Shares which bears the same
     proportion to the total amount of Universal Pledged Shares as the amount of
     the repayment bears to the total amount of Universal Obligations
     outstanding as of the date payment is tendered by Universal (the "Released
     Shares"). The Released Shares shall be released and delivered to the
     Universal Parties in accordance with Section 1(h)(iii) hereof.

          (iii) Upon payment of all or a portion of the Universal Obligations,
     Sixth Avenue or DHP, as the case may be, shall execute and deliver to
     Universal such documents as Universal shall reasonably request to evidence
     the termination of the Pledge with respect to the Released Shares. Subject
     to Article XX of the Standstill Pledge Agreement, Sixth Avenue, the Thorn
     Tree Parties and DHP shall cooperate with Universal and use reasonable
     efforts to effect the timely release of the Universal Pledged Shares (and
     shall take all actions required by it to release such Universal Pledged
     Shares within three (3) business days of the date of payment) in connection
     with any Universal sale pursuant to Section 1(g) or any payment of
     Universal Obligations pursuant to this Section 1(h).

     (i) Equistar's Payment of the Sixth Avenue Debt and the Thorn Tree Debt.
(i) Notwithstanding anything to the contrary contained in the Equistar Operating
Agreement, in the event that Equistar receives any proceeds or other assets
(including, without limitation, any Universal Pledged Shares) in repayment of
the Equistar Debt or any other revenues, repayment of debt or returns on its
investments, such proceeds or such other assets shall be first applied to
satisfy the Sixth Avenue Debt until such debt is paid in full in cash, and,
second, to satisfy the Thorn Tree Debt until such debt is paid in full in cash.
With respect to the repayment of the Thorn Tree Debt, such proceeds shall be
paid to each of the Thorn Tree Parties pro rata in the same proportion as (x)
the debt outstanding to each of the Thorn Tree Parties, respectively, bears to
(y) the total amount

                                       9
<PAGE>

     of the Thorn Tree Debt. Notwithstanding anything to the contrary in the
     Equistar Operating Agreement, in the event that the Thorn Tree Debt is paid
     in full in cash, any such proceeds shall be distributed to Universal and
     Thorn Tree, pro rata in accordance with the respective ownership
     percentages of Universal and Thorn Tree in Equistar at the time such
     payment is made.

          (ii) Pledge by Equistar. In consideration of the Thorn Tree Debt and
     the agreements contained herein, Equistar hereby grants a first priority
     security interest to each of the Thorn Tree Parties in any proceeds
     Equistar receives from (A) Emex in partial or full satisfaction of the
     amount outstanding under the Emex Debt, and (B) Universal in partial or
     full satisfaction of the Equistar Debt. Such security interests shall inure
     to each of the Thorn Tree Parties pro rata in the same proportion as (x)
     the debt outstanding to each of the Thorn Tree Parties, respectively, bears
     to (y) the total amount of Thorn Tree Debt. Such security interests shall
     terminate upon the satisfaction of the Thorn Tree Debt in full in cash in
     accordance with the terms of this Agreement.

          (iii) Equistar hereby authorizes the Thorn Tree Parties to make,
     execute, endorse, acknowledge and file, from time to time, such financing
     statements, transfer endorsements, powers of attorney, certificates,
     reports and other assurances or instruments and take such further steps
     relating to the security interest hereby granted, which the Thorn Tree
     Parties deem appropriate or advisable to perfect, preserve or protect the
     security interest. Equistar hereby constitutes the Thorn Tree Parties as
     its attorneys-in-fact to execute and file in the name and on behalf of
     Equistar such additional financing statements as the Thorn Tree Parties may
     reasonably request, such acts of such attorneys being hereby ratified and
     confirmed; such power, being coupled with an interest, is irrevocable until
     the Thorn Tree Debt is paid in full in accordance with this Agreement.
     Further, to the extent permitted by applicable law, Equistar authorizes the
     Thorn Tree Parties to file any such financing statements without the
     signature of Equistar, provided, that the Thorn Tree Parties notify
     Equistar in writing prior to filing. Equistar will pay all applicable
     filing fees and related expenses in connection with any such financing
     statements. Notwithstanding anything to the contrary contained herein, to
     the extent that any of the Universal Pledged Shares are retained in
     satisfaction of all or part of the Equistar Debt in accordance with Section
     1(o)(v) hereof, the Thorn Tree Debt shall be discharged pro tanto.

     (j) Payment of the Universal Notes and the Thorn Tree Notes. (i) Universal
hereby agrees to extend the maturity date for the payment of all principal of
and interest on the Universal Note until the date of the completion of the
Standstill Period. Notwithstanding anything to the contrary in the Universal
Note, Universal hereby agrees that it shall only have the right to collect and
enforce any obligation to pay the principal and/or interest owed by Emex
pursuant to the Universal Note if Thorn Tree receives payment of the principal
and/or interest owed by Emex pursuant to the Thorn Tree Note in accordance with
the following sentence. Any such payment from Emex shall be paid to each of
Universal and Thorn Tree pro rata in the same proportion as (x) the debt
outstanding under the Universal Note and the Thorn Tree Note, respectively,
bears to (y) the total amount of debt outstanding under the Emex Notes;
provided, however, that until the Sixth Avenue Debt is paid in full in cash,
neither Universal nor Thorn Tree shall

                                       10
<PAGE>

     exercise any of their respective rights to repayment of and Emex shall not
     repay the Emex Notes and/or the Emex Debt without the prior written consent
     of Sixth Avenue.

          (ii) Equistar hereby agrees to extend the maturity date for the
     payment of all principal or and interest in the Emex Debt until the date of
     the completion of the Standstill Period.

     (k) Transactions between Emex and Sixth Avenue and/or the Thorn Tree
Parties. Emex, on the one hand, and Sixth Avenue and/or any or all of the Thorn
Tree Parties, on the other hand, may not enter into any transaction or group of
related transactions with a value to Emex, Sixth Avenue and/or the Thorn Tree
Parties of greater than $750,000 unless such transaction is approved by a vote
of a majority of the independent directors of Emex, as that term is defined in
Section 4200(a)(14) of the NASD Marketplace Rules.

     (l) Preemptive Rights. (i) Emex shall not issue or sell any Common Stock or
any shares convertible into common stock or any warrants or options exercisable
for common stock (collectively, the "Common Stock Equivalents") (other than (A)
in connection with or pursuant to an employee stock option plan, (B) in
connection with a transaction approved by the board of directors of Emex (the
"Board") in which the Common Stock to be issued represents no more than 10% of
the issued and outstanding Common Stock (calculated on a fully diluted basis
taking into account all outstanding Common Stock Equivalents), (C) in connection
with the conversion or exercise of Common Stock Equivalents by Thorn Tree, Sixth
Avenue or Universal, or (D) in connection with any other transaction approved by
the unanimous vote of all of the members of the Board then in office), unless
prior to the issuance or sale of such Common Stock or Common Stock Equivalents
each of Universal and Thorn Tree shall have been given the opportunity to
purchase (on the same terms as such shares of Common Stock or Common Stock
Equivalents are proposed to be sold) the same proportion of such shares of
Common Stock or Common Stock Equivalents being issued or offered for sale by
Emex as (x) the number of shares of Common Stock or Common Stock Equivalents
then held of record (including, without limitation, the Pledged Shares, whether
or not held of record) by Universal and Thorn Tree, respectively, bears to (y)
all of the shares of Common Stock and Common Stock Equivalents issued and
outstanding at the close of the NASDAQ National Market on that day (such
proportion, the "Basic Amount").

          (ii) Prior to the issuance or sale by Emex of any Common Stock or
     Common Stock Equivalents, where pre-emptive rights attach pursuant to
     Section 1(l)(i) above, Emex shall give written notice thereof (the "Notice
     of Preemptive Rights") to each of Universal and Thorn Tree which shall
     specify the total aggregate number of shares of Common Stock or Common
     Stock Equivalents to be issued, the price and other terms of their proposed
     issuance and the Basic Amount that each of Universal and Thorn Tree is
     entitled to purchase.

          (iii) If Universal and/or Thorn Tree desires to purchase Common Stock
     or Common Stock Equivalents, it shall notify Emex in writing (the "Notice
     of

                                       11
<PAGE>

     Acceptance") within (A) seven (7) days of receipt of the Notice of
     Preemptive Rights or (B) such shorter period, if any (but not less than two
     (2) business days), that the Board may fix, in its sole discretion, if it
     believes that the timing of the Notice of Acceptance will interfere with
     any proposed or potential financing of Emex. The Notice of Acceptance shall
     state the proportion of the Basic Amount Universal and/or Thorn Tree wish
     to purchase.

          (iv) Any Common Stock or Common Stock Equivalent which is not
     purchased in accordance with the provisions of this Section 1(l) may,
     within a period of 90 days after the expiration of the time for making such
     election, be sold by Emex to any person at not less than the price and upon
     other terms and conditions not less favorable to Emex than those set forth
     in the Notice of Preemptive Rights.

     (m) Election of Directors. (i) During the Standstill Period, Universal
shall have the right to nominate one person, with the consent of each of Stanson
and Iannazzo, reasonably acceptable to Sixth Avenue, to serve on the Board (such
person, the "Universal Designee"). Sixth Avenue shall have the right to nominate
all other members to serve on the Board until the portion of the Sixth Avenue
Debt that constitutes a Universal Obligation is satisfied in cash in full in
accordance with this Agreement. Upon the full satisfaction in cash in accordance
with this Agreement of the portion of the Sixth Avenue Debt that constitutes a
Universal Obligation, the right to nominate all other members to serve on the
Board will inure to the benefit of DHP until the DHP Debt, the Thorn Tree Debt
and the Equistar Debt are satisfied in full in cash in accordance with this
Agreement.

          (ii) During the Standstill Period, at each annual stockholders'
     meeting of Emex, the Board shall duly nominate for election to the Board
     (A) the Universal Designee, and (B) those persons designated as nominees by
     Sixth Avenue or DHP, as the case may be, as directors.

          (iii) During the Standstill Period, Sixth Avenue or DHP, as the case
     may be, shall vote all the Pledged Shares in favor of those persons
     nominated in accordance with the terms hereto to serve as directors of
     Emex.

          (iv) During the Standstill Period, Sixth Avenue or DHP, as the case
     may be, shall vote all the Pledged Shares in favor of removal of the
     Universal Designee, if such removal is approved by the mutual agreement of
     Stanson and Iannazzo.

     (n) Retention of Certain Claims. (i) Notwithstanding Section 1(b) hereof,
after the completion of the Standstill Period, Sixth Avenue and the Thorn Tree
Parties shall retain their claims, actions, causes of action, rights and demands
with respect to any outstanding principal of and interest on the Universal
Obligations, if any, as of that date (the "Universal Outstanding Obligations");
provided, that any such claims shall be without recourse to the Universal
Parties beyond satisfaction from the proceeds from the sale of the Universal
Pledged Shares in accordance with the Standstill Pledge Agreement.

                                       12
<PAGE>

          (ii) After the completion of the Standstill Period and subject to
     compliance in all material respects with this Agreement by the Thorn Tree
     Parties, Ms. Eweson, Sixth Avenue and DHP, the Universal Parties shall
     waive any and all of their claims, actions, causes of action, rights and
     demands, if any, with respect to the November Agreements.

     (o) Valuation of the Pledged Shares and Payment of Obligations at the
Completion of the Standstill Period. (i) Upon the completion of the Standstill
Period, if principal or interest remains outstanding on the Universal
Obligations or the portion of the Sixth Avenue Debt attributable to the Thorn
Tree Parties, the fair market value (the "Appraised Value") of the Pledged
Shares that have not been otherwise released as of the completion of the
Standstill Period (as applicable, the "Remaining Universal Pledged Shares" and
the "Remaining Thorn Tree Pledged Shares," and collectively, the "Remaining
Pledged Shares") shall be determined in accordance with this Section 1(o). The
Universal Parties, on the one hand, and the Thorn Tree Parties, Sixth Avenue and
Ms. Eweson, on the other hand, shall attempt in good faith for a period of ten
(10) days to agree on the Appraised Value.

          (ii) If the parties are unable to agree upon the Appraised Value
     within such ten (10) day period, the Universal Parties, on the one hand,
     and the Thorn Tree Parties, Sixth Avenue and Ms. Eweson, on the other hand,
     shall attempt in good faith for a period of five (5) days to agree on a
     nationally recognized investment banking firm (an "Investment Bank") to
     serve as the appraiser and advise the parties of its determination of the
     Appraised Value.

          (iii) If the parties are unable to agree upon an Investment Bank to
     determine the Appraised Value within such five (5) day period, the
     Universal Parties, on the one hand, and the Thorn Tree Parties, Sixth
     Avenue and Ms. Eweson, on the other hand, shall each select, within a
     period of five (5) days, one Investment Bank, and such Investment Banks
     together shall choose a third Investment Bank to serve as the appraiser and
     advise the parties of its determination of the Appraised Value.

          (iv) The Appraised Value shall be based upon the Investment Bank's
     determination of the fair market value of Emex (and its subsidiaries) as a
     going concern after taking into account all indebtedness and any
     outstanding preferred capital stock of Emex, without regard to public
     market price (the "Emex Value"). In order to determine the appraised fair
     market value per share of Common Stock, the Investment Bank shall divide
     the Emex Value by the number of outstanding shares of Common Stock as of
     the date of the appraisal (the "Per Share Value"). The Appraised Value
     shall equal the Per Share Value multiplied by the number of Remaining
     Pledged Shares outstanding as of the date of the appraisal.

          (v) At the completion of the Standstill Period, (A) Sixth Avenue and
     Ms. Eweson, (B) DHP, Cornerhouse and Winsome and (C) Equistar, as
     applicable, shall each retain, as satisfaction in full of the portion of
     the Sixth Avenue Debt that constitutes a Universal Obligation, the DHP Debt
     and the Equistar Debt, respectively, that number of Universal Pledged
     Shares equal to the quotient of (x) the amount outstanding on the

                                       13
<PAGE>

     portion of the Sixth Avenue Debt that constitutes a Universal Obligation,
     the DHP Debt and the Equistar Debt, as the case may be, divided by the (y)
     the Per Share Value (the "Universal Payment Shares"). If the number of
     Remaining Universal Pledged Shares is less than the number of Universal
     Payment Shares, (1) first, that number of the Remaining Universal Pledged
     Shares sufficient to satisfy in full (based on the Per Share Value) the
     outstanding portion of the Sixth Avenue Debt that constitutes a Universal
     Obligation, or such lesser Remaining Universal Pledged Shares, shall be
     retained by Sixth Avenue, (2) second, that number of the Remaining
     Universal Pledged Shares sufficient to satisfy in full (based on the Per
     Share Value) the outstanding DHP Debt, or such lesser Remaining Universal
     Pledged Shares, if any, shall be retained by DHP, Cornerhouse and Winsome,
     and (3) lastly, that number of Remaining Universal Pledged Shares
     remaining, if any, shall be retained by Equistar, if any portion of the
     Equistar Debt is outstanding at such time. In the event that the number of
     Remaining Universal Pledged Shares exceeds the number of Universal Payment
     Shares, the difference between (a) the Remaining Universal Pledged Shares
     and (b) the Universal Payment Shares shall promptly be released and
     delivered to the Universal Parties. Notwithstanding anything to the
     contrary contained herein, to the extent that any of the Universal Pledged
     Shares are retained in satisfaction of all or part of the Equistar Debt,
     the Thorn Tree Debt shall be discharged pro tanto.

          (vi) At the completion of the Standstill Period, Sixth Avenue and Ms.
     Eweson, shall retain, as satisfaction in full of the portion of the Sixth
     Avenue Debt attributable to the Thorn Tree Parties, that number of Thorn
     Tree Pledged Shares equal to the quotient of (x) the amount outstanding on
     the portion of the Sixth Avenue Debt attributable to the Thorn Tree Parties
     divided by the (y) the Per Share Value (the "Thorn Tree Payment Shares"),
     or if the number of Remaining Thorn Tree Pledged Shares is less than the
     number of Thorn Tree Payment Shares, the Remaining Thorn Tree Pledged
     Shares. In the event that the number of Remaining Thorn Tree Pledged Shares
     exceeds the number of Thorn Tree Payment Shares, the difference between (a)
     the Remaining Thorn Tree Pledged Shares and (b) the Thorn Tree Payment
     Shares shall promptly be released and delivered to the Thorn Tree Parties.

     (p) Interest Rates. Commencing February 15, 2002, the DHP Debt, the
Equistar Debt, the Eweson Debt, the Bank Debt and the Thorn Tree Debt shall
accrue interest at the rates set forth in the Schedules attached hereto.

     (q) Payments to Universal. (i) Any payments made or delivery of the
Released Shares to Universal or the Universal Parties pursuant to this
Agreement, the Registration Rights Agreement or the Standstill Pledge Agreement
shall be made as follows: 50% of such payment or delivery to Iannazzo and 50% of
such payment or delivery to Stanson.

          (ii) Any distributions of cash or Shares to Stanson (including but not
     limited to such distributions pursuant to Section 1(c), 1(f)(iii),
     1(f)(iv), 1(g), 1(h), 1(j), 1(l), 1(m)(i) or 1(o)(v) of this Agreement or
     pursuant to the Registration Rights Agreement) shall be made as follows:

                                       14
<PAGE>

     If cash, by wire transfer as follows:

                JP Morgan Chase
                Account Number: 060-053026565
                ABA #: 021-000-021

     If Shares, by deposit into the applicable account:

                Milton E. Stanson
                Account Number: 353-28208
                T.D. Waterhouse Securities, Inc.
                Tax ID Number: 13-384-2038

                    (i)   For DTC eligible securities:
                          National Investor Services Corp.
                          Deliver to DTC Clearing Code 0044, Code 40
                          All deliveries must include client name and TD
                          Waterhouse Account Number

                    (ii)  For physical delivery of securities:
                          National Investor Services Corp.
                          or deliver through NSCC Clearing #0044
                          Attention: Cashiers Department
                                     55 Water Street, 32nd floor
                                     New York, New York 10041

          (iii) Any such distributions of cash or Shares to Iannazzo (including
     but not limited to such distributions pursuant to Section 1(c), 1(f)(iii),
     1(f)(iv), 1(g), 1(h), 1(j), 1(l), 1(m)(i) or 1(o)(v) of this Agreement or
     pursuant to the Registration Rights Agreement) shall be made in accordance
     with such written instructions as Iannazzo shall furnish.

          (iv) Notwithstanding anything to the contrary contained herein, any
     options received by either Stanson or Iannazzo in their capacity as a
     director of Emex, whether as the Universal Designee or otherwise, shall be
     retained solely by Iannazzo or Stanson, as the case may be.

2. Representations and Warranties.

     (a) Each of the parties hereto represents and warrants to each other party
hereto as follows:

          (i) It has the full power and authority (including under its governing
     documents if the party is not a natural person and under applicable laws),
     to execute and deliver this Agreement and any agreements to which it is a
     party (the "Related Agreements") and to enter into any transactions
     contemplated hereunder and to perform its obligations hereunder and
     thereunder. The execution, delivery and performance by it

                                       15
<PAGE>

     of this Agreement and the Related Agreements to which it is a party, if
     any, have been duly authorized by all necessary action (including corporate
     or organizational action, if necessary) on its part, and this Agreement and
     each of the Related Agreements to which it is a party constitutes a valid
     and binding obligation of it, enforceable against it in accordance with its
     terms, and no consent, approval or authorization of any party or
     governmental entity which is not a party to this Agreement is necessary to
     consummate the transactions contemplated by this Agreement.

          (ii) Universal and Thorn Tree own and are the sole legal and
     beneficial owners of the Universal Shares and the Thorn Tree Shares,
     respectively, free and clear of any lien, except for the lien created under
     the Bank Pledge Agreements, which agreements shall be superceded by the
     Standstill Pledge Agreement and this Agreement.

          (iii) Each party has carefully read this Agreement and has decided to
     enter into this Agreement based upon its analysis of the matters described
     in this Agreement and the advice of its counsel.

          (iv) Each party represents and warrants that it has not transferred,
     assigned or hypothecated any claim or cause of action it may have, had or
     may have had, against any other party to this Agreement.

3. Notices. All notices, requests, demands, consents and other communications
required or permitted under this Agreement (collectively, "Notice") shall be
effective only if given in writing and shall be considered to have been duly
given when (A) delivered by hand, (B) sent by telecopier (with receipt confirmed
otherwise than by the sender's fax machine), provided that a copy is mailed (on
the same date) by certified or registered mail, return receipt requested,
postage prepaid, or (C) received by the addressee, if sent by Express Mail,
Federal Express or other reputable express delivery service (receipt requested),
or by first class certified or registered mail, return receipt requested,
postage prepaid. Notice shall be sent in each case to the appropriate addresses
or telecopier numbers set forth below (or to such other addresses and telecopier
numbers as a party may from time to time designate as to itself by notice
similarly given to the other parties in accordance herewith, which shall not be
deemed given until received by the addressee). Notice shall be given:

          if to any of the Thorn Tree Parties:

                 Thorn Tree Resources LLC
                 888 Seventh Avenue, Suite 1608
                 New York, New York 10106
                 Attn: David H. Peipers
                 Telephone: 212-489-2288
                 Telecopier: 212-489-2002

                                       16
<PAGE>

          with a copy to:

                 Kronish Lieb Weiner & Hellman LLP
                 1114 Avenue of the Americas
                 New York, New York 10036
                 Attn: Ralph J. Sutcliffe, Esq.
                 Telephone: 212-479-6170
                 Telecopier: 212-479-6275

          if to Universal:

                 Universal Equities Consolidated LLC
                 Twin Bridges Closters Dock Road
                 Alpine, New Jersey 07620
                 Attn: Vincent Iannazzo
                 Telephone: 201-750-2345
                 Telecopier: 201-750-2361

                 Milton E. Stanson
                 24 Fifth Avenue, Suite 1515
                 New York, New York 10011-8822
                 Telephone: 212-228-9340
                 Telecopier: 212-228-7276

          with copies to:

                 Paul, Weiss, Rifkind, Wharton & Garrison
                 1285 Avenue of the Americas
                 New York, New York 10019
                 Attn: Judith R. Thoyer, Esq.
                 Telephone: 212-373-3002
                 Telecopier: 212-373-2085

                 Bressler Armery & Ross
                 325 Columbia Turnpike
                 Florham Park, New Jersey 07932
                 Attn: Lawrence Ross, Esq.
                 Telephone: 973-966-9672
                 Telecopier: 973-514-1660

          if to Iannazzo:

                 Vincent P. Iannazzo
                 Twin Bridges Closters Dock Road
                 Alpine, New Jersey 07620
                 Telephone: 201-750-2345
                 Telecopier: 201-750-2361

                                       17
<PAGE>

          with a copy to:

                 Paul, Weiss, Rifkind, Wharton & Garrison
                 1285 Avenue of the Americas
                 New York, New York 10019
                 Attn: Judith R. Thoyer, Esq.
                 Telephone: 212-373-3002
                 Telecopier: 212-373-2085

          if to Stanson:

                 Milton E. Stanson
                 24 Fifth Avenue, Suite 1515
                 New York, New York 10011-8822
                 Telephone: 212-228-9340
                 Telecopier: 212-228-7276

          with a copy to:

                 Bressler Armery & Ross
                 325 Columbia Turnpike
                 Florham Park, New Jersey 07932
                 Attn: Lawrence Ross, Esq.
                 Telephone: 973-966-9672
                 Telecopier: 973-514-1660

          if to Sixth Avenue or Ms. Eweson:

                 c/o Keswick Management Inc.
                 1330 Avenue of the Americas, 27th floor
                 New York, New York 10019
                 Attn: Crosby Smith
                 Telephone: 212-315-8340
                 Telecopier: 212-315-8349

          with a copy to:

                 Shearman & Sterling
                 599 Lexington Avenue
                 New York, New York 10022
                 Attn: Reade H. Ryan, Jr., Esq.
                 Telephone: 212-848-7322
                 Telecopier: 212-848-7179

                                       18
<PAGE>

          if to Emex:

                 12600 West Colfax Avenue, Suite C-500
                 Lakewood, Colorado 80215
                 Attn: President
                 Telephone: 303-986-0100
                 Telecopier: 303-986-0500

          with a copy to:

                 299 Broadway, Suite 1600
                 New York, New York 10007
                 Attn: Stuart G. Schwartz, Esq.
                 Telephone: 212-385-0668
                 Telecopier: 212- 595-6299

4. No Admission of Liability. Neither this Agreement nor any of the terms
hereof, nor any negotiations, proceedings or agreements in connection herewith
shall constitute, or be construed as or be deemed to be evidence of, an
admission on the part of any party of any liability or wrongdoing whatsoever, or
of the truth or untruth of any of the claims or counterclaims made by any party,
or of the merit or any lack of merit of any of the defenses thereto; nor shall
this Agreement, or any of the terms hereof, or any negotiations or proceedings
in connection herewith, be offered or received in evidence, or used in any
proceeding against any of the parties, or used in any proceeding for any purpose
whatsoever, except with respect to the effectuation and enforcement of this
Agreement and any of the agreements or transactions contemplated by this
Agreement.

5. Further Assurances. Each of the parties hereto shall, at any time and from
time to time after the date hereof, fairly and in good faith, do, execute,
acknowledge and deliver, or cause to be done, executed, acknowledged and
delivered, all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney, receipts, acknowledgments, acceptances and assurances as may
be reasonably required to procure for each of the parties and their respective
successors and assigns, the consideration to be delivered to them as provided
for herein or otherwise to carry out the intent and purposes of this Agreement
or to consummate any of the transactions contemplated hereby.

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

7. Miscellaneous Provisions.

     (a) This Agreement may not be amended, modified, discharged or terminated,
nor may the rights of any party hereunder be waived, unless in writing and
executed by each party hereto. No waiver of any provision of this Agreement
shall be

                                       19
<PAGE>

deemed to constitute a waiver of any other provision hereof, nor shall
any waiver constitute a continuing waiver.

     (b) This Agreement may be executed in any number of counterparts, each of
which when executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement.

     (c) None of the parties hereto may assign its rights or delegate its
obligations under this Agreement without the written consent of the other
parties hereto; provided, however, that Universal may assign any and all of its
rights and obligations hereunder, other than the Universal Obligations, to
Stanson or Iannazzo. This Agreement and all of the provisions hereof shall be
binding upon and inure only to the benefit of the parties hereto and their
respective heirs, executors, personal representatives and successors.

     (d) The Exhibits and Schedules referred to herein are part of this
Agreement for all purposes. Terms used in this Agreement shall have the same
meanings when used in such Exhibits and Schedules.

     (e) Captions and headings are employed herein for convenience of reference
only and shall not affect the construction or interpretation of any provision
hereof.

     (f) This Agreement is made under and shall be governed by and construed in
accordance with the substantive laws of the State of New York applicable to
contracts made and to be performed entirely within that state. Each party agrees
that any action, suit or proceeding in respect of or arising out of this
Agreement shall be initiated and prosecuted in the state or federal courts, as
the case may be, located in the city of New York.

     (g) This Agreement, together with all Schedules and Exhibits attached
hereto, shall supercede all settlement agreements and discussions relating to
the subject matter hereof.

     (h) Party Representatives. (i) Universal hereby appoint and designate
Iannazzo and Stanson to act on its behalf and Iannazzo and Stanson will each act
on their own behalf; Sixth Avenue and Ms. Eweson each hereby appoint and
designate Sixth Avenue to act on its behalf; and DHP and the Thorn Tree Parties
each hereby appoint and designate DHP to act on its behalf (each designee, a
"Party Representative"), respectively, as such party's attorney(s)-in-fact and
representative(s) to do any and all things and to execute any and all documents
in such party's name, place and stead in any way which such party could do if
personally present, in connection with this Agreement and the transactions
contemplated hereby, including (A) to accept on such party's behalf any
deliveries to such party under this Agreement or (B) to amend, cancel or extend,
or waive the terms of, this Agreement.

                                       20
<PAGE>

          (ii) Each party hereto shall be entitled to rely, as being binding
     upon such party, upon any document or other paper believed by such party to
     be genuine and correct and to have been signed by the party in question's
     Party Representative.

          (iii) By executing and delivering this Agreement, each party hereby
     ratifies and confirms, and hereby agrees to ratify and confirm, any action
     taken by such party's Party Representative in exercise of the
     powers-of-attorney granted to the Party Representatives pursuant to this
     Section 7(h), which powers-of-attorney, being coupled with an interest of
     the Party Representatives, are irrevocable and will survive the death,
     incapacity or incompetence of any party who is a natural person.

              [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                       21
<PAGE>

     IN WITNESS WHEREOF, and intending to be legally bound thereby, the parties
hereto have duly executed and delivered this Agreement or caused this Agreement
to be duly executed and delivered by their duly authorized officers as of the
day and year first above written.

                                           THE CORNERHOUSE
                                           LIMITED PARTNERSHIP

                                           By: /s/ David H. Peipers
                                               -----------------------
                                                  David H. Peipers
                                                  General Partner

                                           THE WINSOME
                                           LIMITED PARTNERSHIP

                                           By: /s/ David H. Peipers
                                               ---------------------------
                                                  David H. Peipers
                                                  General Partner

                                           DAVID H. PEIPERS, individually

                                           /s/ David H. Peipers
                                           -------------------------------
                                           THORN TREE RESOURCES LLC

                                           By: /s/ David H. Peipers
                                               ---------------------------
                                                 David H. Peipers
                                                 Manager

                                           UNIVERSAL EQUITIES
                                           CONSOLIDATED LLC, on its
                                           own behalf and as successor
                                           to the obligations of
                                           Universal Equities Ltd.

                                           By: /s/ Vincent P. Iannazzo
                                               ---------------------------
                                                 Name: Vincent P. Iannazzo
                                                 Title: Manager

<PAGE>

                                           By: /s/ Milton E. Stanson
                                               ---------------------------
                                                 Name: Milton E. Stanson
                                                 Title: Manager

                                           VINCENT P. IANNAZZO, individually

                                           /s/ Vincent P. Iannazzo
                                           _______________________________

                                           MILTON E. STANSON, individually

                                           /s/ Milton E. Stanson
                                           _______________________________

                                           SIXTH AVENUE ASSOCIATES LLC

                                           By: /s/ Crosby R. Smith
                                               ---------------------------
                                                 Name: Crosby R. Smith
                                                 Title: Vice President

                                           By: /s/ Lawrence R. Glenn
                                               ---------------------------
                                                 Name: Lawrence R. Glenn
                                                 Title: Manager

                                           DOROTHY D. EWESON

                                           By: /s/ Dorothy D. Eweson
                                               ---------------------------
                                                 Name:
                                                 Title:

                                           EMEX CORPORATION

                                           By: /s/ Walter Tyler
                                               ---------------------------
                                                 Name: Walter Tyler
                                                 Title: President

<PAGE>

                                           EQUISTAR CONSOLIDATED HOLDINGS LLC

                                           By: /s/ Milton E. Stanson
                                               ---------------------------
                                                 Name: Milton E. Stanson
                                                 Title: Manager

                                           By: /s/ Vincent P. Iannazzo
                                               ---------------------------
                                                 Name: Vincent P. Iannazzo
                                                 Title: Manager

<PAGE>

                                   SCHEDULE A

                                  The DHP Debt

     Each of the following loans were made to Milton E. Stanson and Vincent P.
Iannazzo, as individuals. The total amount due includes principal and interest
(at the rate listed below) accrued until February 15, 2002.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
     Date of                                      Principal        Interest Rate          Total Amount
     -------                                      ---------        --------------         ------------
      Loan                  Lender                 Amount           (per annum)         Due as of 2/15/02
      ----                                         ------           -----------         -----------------
-------------------------------------------------------------------------------------------------------------
<S>                    <C>                        <C>                   <C>                <C>
     4/29/93           David H. Peipers           $175,000              10%                329,000.00
-------------------------------------------------------------------------------------------------------------
     6/17/93           David H. Peipers           $150,000              10%                278,794.52
-------------------------------------------------------------------------------------------------------------
     7/28/93           David H. Peipers           $175,000              10%                324,684.93
-------------------------------------------------------------------------------------------------------------
     9/15/95           David H. Peipers           $100,000               8%                151,353.42
-------------------------------------------------------------------------------------------------------------
     9/25/95           David H. Peipers            $50,000               8%                 75,567.12
-------------------------------------------------------------------------------------------------------------
     9/28/95           David H. Peipers           $100,000               8%                151,068.49
-------------------------------------------------------------------------------------------------------------
    11/02/95           David H. Peipers           $150,000               8%                225,452.05
-------------------------------------------------------------------------------------------------------------
    11/08/95           David H. Peipers           $350,000               8%                525,594.52
-------------------------------------------------------------------------------------------------------------
    11/20/95           David H. Peipers           $350,000               8%                524,673.97
-------------------------------------------------------------------------------------------------------------
    12/27/95           David H. Peipers           $100,000               8%                149,095.89
-------------------------------------------------------------------------------------------------------------
     1/05/96           David H. Peipers           $100,000               8%                148,898.63
-------------------------------------------------------------------------------------------------------------
     9/14/93              Cornerhouse             $500,000              10%                921,095.89
-------------------------------------------------------------------------------------------------------------
     9/29/93              Cornerhouse             $500,000              10%                919,041.09
-------------------------------------------------------------------------------------------------------------
     3/21/95              Cornerhouse              $75,000               8%                116,441.09
-------------------------------------------------------------------------------------------------------------
     3/31/95              Cornerhouse             $250,000               8%                387,589.04
-------------------------------------------------------------------------------------------------------------
     6/23/95              Cornerhouse             $100,000               8%                153,194.52
-------------------------------------------------------------------------------------------------------------
     7/15/95              Cornerhouse             $150,000               8%                229,068.49
-------------------------------------------------------------------------------------------------------------
     8/10/95              Cornerhouse              $75,000               8%                114,106.84
-------------------------------------------------------------------------------------------------------------
     8/17/95              Cornerhouse              $75,000               8%                113,991.78
-------------------------------------------------------------------------------------------------------------
     9/29/93                Winsome               $500,000              10%                919,041.09
-------------------------------------------------------------------------------------------------------------
                                                                       TOTAL:             6,757,753.37
                                                                 --------------------------------------------
</TABLE>

The DHP Debt shall accrue interest on and after February 15, 2002 at the rate of
8.99% per annum, compounded annually.

<PAGE>

                                   SCHEDULE B

                                  Equistar Debt

     The following list sets forth the loans made by Equistar Consolidated
Holdings LLC to the Universal Parties. The total amount includes principal and
interest accrued at 8% per annum until February 15, 2002.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
     Date of                                      Principal        Interest Rate           Total Amount
     -------                                      ---------        -------------           ------------
      Loan              Borrowing Party            Amount           (per annum)         Due as of 2/15/02
      ----                                         ------           -----------         -----------------
-------------------------------------------------------------------------------------------------------------
<S>                   <C>                         <C>                    <C>              <C>
  (prior to Dec       Universal Equities
      1999)           Consolidated LLC(1)         1,949,000              8%               2,292,878.35
-------------------------------------------------------------------------------------------------------------
    (prior to         Universal Equities
    12/31/00)          Consolidated LLC        2,154,817.52              8%               2,348,928.20
-------------------------------------------------------------------------------------------------------------
    (prior to
    12/31/00)          Milton E. Stanson          86,181.29              8%                  93,944.68
-------------------------------------------------------------------------------------------------------------
    (prior to
    12/31/00)         Vincent P. Iannazzo          1,000.00              8%                   1,090.08
-------------------------------------------------------------------------------------------------------------
    (prior to        Stanson and Iannazzo
    12/31/00)               jointly              124,350.00              8%                 135,551.72
-------------------------------------------------------------------------------------------------------------
                                                                       TOTAL:             4,872,393.03
                                                                 --------------------------------------------
</TABLE>

The Equistar Debt shall accrue interest on and after February 15, 2002 at the
rate of 8% per annum, compounded annually.

-------------
(1) Any and all obligations of Universal Equities Ltd. have been replaced by the
obligations of Universal Equities Consolidated LLC undertaken in this Agreement.

<PAGE>

                                   SCHEDULE C

                                    Bank Debt

Aggregate amount of Bank Debt outstanding as of December 27, 2001 (principal and
interest): $30,461,715.28

Universal Parties' portion of the Bank Debt is 50% of the aggregate amount of
the Bank Debt for a total of $15,230,857.64 at December 27, 2001.

The Bank Debt shall accrue interest on and after December 27, 2001 at the rate
stated in each of the loan documents.

<PAGE>

                                   SCHEDULE D

                                   Eweson Debt

     The following list sets forth the loans made by Ms. Eweson to Equistar
Consolidated Holdings LLC. The total amount includes principal and interest (at
the rate listed below) accrued until February 15, 2002.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
     Date of Loan            Principal Amount          Interest Rate          Total Amount Due as of
     ------------            ----------------          -------------          ----------------------
                                                        (per annum)                   2/15/02
                                                         ---------                    -------
-----------------------------------------------------------------------------------------------------
<S>                            <C>                          <C>                     <C>
       2/25/99                 2,000,000.00                 9.0%                    2,535,068.49
-----------------------------------------------------------------------------------------------------
        5/6/99                 1,000,000.00                 7.75%                   1,215,513.69
-----------------------------------------------------------------------------------------------------
       6/10/99                 1,000,000.00                 7.75%                   1,208,082.19
-----------------------------------------------------------------------------------------------------
      10/18/99                 1,000,000.00                 9.0%                    1,209,589.04
-----------------------------------------------------------------------------------------------------
       11/5/99                  300,000.00                  7.75%                    352,997.26
-----------------------------------------------------------------------------------------------------
       1/12/00                  700,000.00                  7.75%                    813,553.42
-----------------------------------------------------------------------------------------------------
       1/26/00                  300,000.00                  7.75%                    347,773.97
-----------------------------------------------------------------------------------------------------
                                                           TOTAL:                   7,682,578.06
                                                    -------------------------------------------------
</TABLE>

Total amount of Eweson Debt as of February 15, 2002: $7,682,578.06
Total amount of Bank Debt as of December 27, 2001: $30,461,715.28
Sixth Avenue Debt as of December 27, 2001: $38,144,293.34

The portion of the Sixth Avenue Debt that constitutes a Universal Obligation as
of 12/27/01: $19,072,146.67

The Eweson Debt shall accrue interest on and after February 15, 2002 at the rate
of 8.31% per annum, compounded annually.

<PAGE>

                                   SCHEDULE E

                              Universal Obligations

DHP Debt total from Schedule A: $6,757,753.37
Equistar Debt total from Schedule B: $4,872,393.03
50% of Bank Debt total from Schedule C: $15,230,857.64
50% of Eweson Debt from Schedule D: $3,841,289.03

Total of Universal Obligations: $30,702,293.07

<PAGE>

                                   SCHEDULE F

                                 Thorn Tree Debt

     The following list sets forth the loans made by the Thorn Tree Parties to
Equistar. The total amount includes principal and interest accrued at 8% per
annum until February 15, 2002.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
     Date of                                     Principal         Interest Rate          Total Amount
     -------                                     ---------         -------------          ------------
       Loan                 Lender                 Amount           (per annum)         Due as of 2/15/02
       ----                                        ------           -----------         -----------------
-----------------------------------------------------------------------------------------------------------
<S>                    <C>                       <C>                     <C>              <C>
    (prior to
    12/31/00)          David H. Peipers          975,000.00              8%               1,062,830.13
-----------------------------------------------------------------------------------------------------------
    (prior to
    12/31/00)             Cornerhouse            540,000.00              8%                588,644.38
-----------------------------------------------------------------------------------------------------------
    (prior to
    12/31/00)               Winsome               75,000.00              8%                 81,756.16
-----------------------------------------------------------------------------------------------------------
   (11/29/01)             Thorn Tree            2,666,807.09             8%               2,844,597.27

-----------------------------------------------------------------------------------------------------------
                                                                       TOTAL:             4,577,827.94
                                                                 ------------------------------------------
</TABLE>

The Thorn Tree Debt shall accrue interest on and after February 15, 2002 at the
rate of 8% per annum, compounded annually.

<PAGE>

                                    EXHIBIT A

                                IRREVOCABLE PROXY

     KNOW ALL MEN BY THESE PRESENTS:

     For good and valuable consideration, receipt and sufficiency of which is
hereby acknowledged, the undersigned, on behalf of Universal Equities
Consolidated LLC, indirectly owning 11,957,100 shares of the common stock, $0.01
par value per share, of Emex Corporation (the "Corporation") (such shares,
together with any shares issued as a dividend or otherwise distributed in
respect of or in exchange therefor, shall hereinafter be referred to as the
"Shares") and pursuant to that certain Settlement Agreement and Release (the
"Settlement Agreement"), between The Cornerhouse Limited Partnership, The
Winsome Limited Partnership, David H. Peipers, Thorn Tree Resources LLC, Vincent
P. Iannazzo, Milton E. Stanson, Universal Equities Consolidated LLC, on its own
behalf and as successor to the obligations of Universal Equities Ltd., Equistar
Consolidated Holdings LLC, Sixth Avenue Associates LLC, Ms. Dorothy D. Eweson
and the Corporation, dated as of April ______, 2002, does hereby constitute and
appoint Sixth Avenue Associates LLC, its successors and assigns, the true and
lawful substitute, attorney and proxy, with full power of substitution, of the
undersigned, for, and in the name, place and stead of the undersigned to vote
the Shares and to give all consents, waivers and ratifications in respect
thereof and otherwise act with respect thereto as though Sixth Avenue Associates
LLC was the owner thereof, and with all the powers which the undersigned would
be entitled to exercise, if personally present, at any meeting of the
shareholders of the Corporation, or which the undersigned would be entitled to
exercise in regard to a written consent of the shareholders of the Corporation
in lieu of a meeting.

     The foregoing Irrevocable Proxy is coupled with an interest, is given
pursuant to the terms of the Settlement Agreement and shall continue to be in
full force and effect until such time as the portion of the Sixth Avenue Debt
that constitutes a Universal Obligation (as such terms are defined in the
Settlement Agreement) is satisfied in full in cash in accordance with the terms
of the Settlement Agreement.

     All capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Settlement Agreement.

Dated:  April _____, 2002

                                                      UNIVERSAL EQUITIES
                                                      CONSOLIDATED LLC

                                                      By: __________________
                                                          Name:
                                                          Title:

<PAGE>

                                    EXHIBIT B

                                IRREVOCABLE PROXY

     KNOW ALL MEN BY THESE PRESENTS:

     For good and valuable consideration, receipt and sufficiency of which is
hereby acknowledged, the undersigned, on behalf of Thorn Tree Resources LLC,
indirectly owning 12,257,100 shares of the common stock, $0.01 par value per
share, of Emex Corporation (the "Corporation") (such shares, together with any
shares issued as a dividend or otherwise distributed in respect of or in
exchange therefor, shall hereinafter be referred to as the "Shares") and
pursuant to that certain Settlement Agreement and Release (the "Settlement
Agreement"), between The Cornerhouse Limited Partnership, The Winsome Limited
Partnership, David H. Peipers, Thorn Tree Resources LLC, Vincent P. Iannazzo,
Milton E. Stanson, Universal Equities Consolidated LLC, on its own behalf and as
successor to the obligations of Universal Equities Ltd., Equistar Consolidated
Holdings LLC, Sixth Avenue Associates LLC, Ms. Dorothy D. Eweson and the
Corporation, dated as of April ______, 2002, does hereby constitute and appoint
Sixth Avenue Associates LLC, its successors and assigns, the true and lawful
substitute, attorney and proxy, with full power of substitution, of the
undersigned, for, and in the name, place and stead of the undersigned to vote
the Shares and to give all consents, waivers and ratifications in respect
thereof and otherwise act with respect thereto as though Sixth Avenue Associates
LLC was the owner thereof, and with all the powers which the undersigned would
be entitled to exercise, if personally present, at any meeting of the
shareholders of the Corporation, or which the undersigned would be entitled to
exercise in regard to a written consent of the shareholders of the Corporation
in lieu of a meeting.

     The foregoing Irrevocable Proxy is coupled with an interest, is given
pursuant to the terms of the Settlement Agreement and shall continue to be in
full force and effect until such time as the portion of the Sixth Avenue Debt
attributable to the Thorn Tree Parties (as such terms are defined in the
Settlement Agreement) is satisfied in full in cash in accordance with the terms
of the Settlement Agreement.

     All capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Settlement Agreement.

Dated:  April _____, 2002

                                                   THORN TREE
                                                   RESOURCES LLC

                                                   By: ___________________
                                                       Name:
                                                       Title:

<PAGE>

                                    EXHIBIT C

                                IRREVOCABLE PROXY

     KNOW ALL MEN BY THESE PRESENTS:

     For good and valuable consideration, receipt and sufficiency of which is
hereby acknowledged, the undersigned, on behalf of Universal Equities
Consolidated LLC, indirectly owning 11,957,100 shares of the common stock, $0.01
par value per share, of Emex Corporation (the "Corporation") (such shares,
together with any shares issued as a dividend or otherwise distributed in
respect of or in exchange therefor, shall hereinafter be referred to as the
"Shares") and pursuant to that certain Settlement Agreement and Release (the
"Settlement Agreement"), between The Cornerhouse Limited Partnership, The
Winsome Limited Partnership, David H. Peipers, Thorn Tree Resources LLC, Vincent
P. Iannazzo, Milton E. Stanson, Universal Equities Consolidated LLC, on its own
behalf and as successor to the obligations of Universal Equities Ltd., Equistar
Consolidated Holdings LLC, Sixth Avenue Associates LLC, Ms. Dorothy D. Eweson
and the Corporation, dated as of April ______, 2002, does hereby constitute and
appoint David H. Peipers, his successors and assigns, the true and lawful
substitute, attorney and proxy, with full power of substitution, of the
undersigned, for, and in the name, place and stead of the undersigned to vote
the Shares and to give all consents, waivers and ratifications in respect
thereof and otherwise act with respect thereto as though David H. Peipers was
the owner thereof, and with all the powers which the undersigned would be
entitled to exercise, if personally present, at any meeting of the shareholders
of the Corporation, or which the undersigned would be entitled to exercise in
regard to a written consent of the shareholders of the Corporation in lieu of a
meeting.

     The foregoing Irrevocable Proxy is coupled with an interest, is given
pursuant to the terms of the Settlement Agreement and shall become effective
after payment in full in cash of the portion of the Sixth Avenue Debt that
constitutes a Universal Obligation and continue to be in full force and effect
until such time as the DHP Debt, the Thorn Tree Debt and the Equistar Debt (as
such terms are defined in the Settlement Agreement) are paid in full in cash in
accordance with the terms of the Settlement Agreement.

     All capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Settlement Agreement.

Dated:  April _____, 2002

                                                   UNVIERSAL EQUITIES
                                                   CONSOLIDATED LLC

                                                   By: ____________________
                                                       Name:
                                                       Title:

<PAGE>

                                    EXHIBIT D

                                IRREVOCABLE PROXY

     KNOW ALL MEN BY THESE PRESENTS:

     For good and valuable consideration, receipt and sufficiency of which is
hereby acknowledged, the undersigned, on behalf of Thorn Tree Resources LLC,
indirectly owning 12,257,100 shares of the common stock, $0.01 par value per
share, of Emex Corporation (the "Corporation") (such shares, together with any
shares issued as a dividend or otherwise distributed in respect of or in
exchange therefor, shall hereinafter be referred to as the "Shares") and
pursuant to that certain Settlement Agreement and Release (the "Settlement
Agreement"), between The Cornerhouse Limited Partnership, The Winsome Limited
Partnership, David H. Peipers, Thorn Tree Resources LLC, Vincent P. Iannazzo,
Milton E. Stanson, Universal Equities Consolidated LLC, on its own behalf and as
successor in interest to Universal Equities Ltd., Equistar Consolidated Holdings
LLC, Sixth Avenue Associates LLC, Ms. Dorothy D. Eweson and the Corporation,
dated as of April ______, 2002, does hereby constitute and appoint David H.
Peipers, his successors and assigns, the true and lawful substitute, attorney
and proxy, with full power of substitution, of the undersigned, for, and in the
name, place and stead of the undersigned to vote the Shares and to give all
consents, waivers and ratifications in respect thereof and otherwise act with
respect thereto as though David H. Peipers was the owner thereof, and with all
the powers which the undersigned would be entitled to exercise, if personally
present, at any meeting of the shareholders of the Corporation, or which the
undersigned would be entitled to exercise in regard to a written consent of the
shareholders of the Corporation in lieu of a meeting.

     The foregoing Irrevocable Proxy is coupled with an interest, is given
pursuant to the terms of the Settlement Agreement and shall become effective
after payment in full of the portion of the Sixth Avenue Debt attributable to
the Thorn Tree parties and continue to be in full force and effect until such
time as the DHP Debt, the Thorn Tree Debt and the Equistar Debt (as such terms
are defined in the Settlement Agreement) are paid in full in cash in accordance
with the terms of the Settlement Agreement.

     All capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Settlement Agreement.

Dated:  April _____, 2002

                                                      THORN TREE
                                                      RESOURCES LLC

                                                      By: ____________________
                                                          Name:
                                                          Title:

<PAGE>

                                    EXHIBIT E

<PAGE>

                                    EXHIBIT F

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00037-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00037-of-00352.parquet"}]]