Document:

TECHSYS, INC.
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                        2000 Incentive Compensation Plan
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                                  TECHSYS, INC.
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                        2000 Incentive Compensation Plan
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<S>      <C>                                                                                                   <C>
1.       Purpose..................................................................................................1

2.       Definitions..............................................................................................1

3.       Administration...........................................................................................3
         (a)      Authority of the Committee......................................................................3
         (b)      Manner of Exercise of Committee Authority.......................................................4
         (c)      Limitation of Liability.........................................................................4

4.       Stock Subject to Plan....................................................................................4
         (a)      Overall Number of Shares Available for Delivery.................................................4
         (b)      Application of Limitation to Grants of Awards...................................................4
         (c)      Availability of Shares Not Delivered under Awards...............................................5

5.       Eligibility; Per-Person Award Limitations................................................................5

6.       Specific Terms of Awards.................................................................................5
         (a)      General.........................................................................................5
         (b)      Options.........................................................................................5
         (c)      Stock Appreciation Rights.......................................................................6
         (d)      Restricted Stock................................................................................6
         (e)      Deferred Stock..................................................................................7
         (f)      Bonus Stock and Awards in Lieu of Obligations...................................................8
         (g)      Dividend Equivalents............................................................................8
         (h)      Other Stock-Based Awards........................................................................8

7.       Certain Provisions Applicable to Awards..................................................................9
         (a)      Stand-Alone, Additional, Tandem, and Substitute Awards..........................................9
         (b)      Term of Awards..................................................................................9
         (c)      Form and Timing of Payment under Awards; Deferrals..............................................9
         (d)      Exemptions from Section 16(b) Liability........................................................10

8.       Performance and Annual Incentive Awards.................................................................10
         (a)      Performance Conditions.........................................................................10
         (b)      Performance Awards Granted to Designated Covered Employees.....................................10
         (c)      Annual Incentive Awards Granted to Designated Covered Employees................................11
         (d)      Written Determinations.........................................................................12
         (e)      Status of Section 8(b) and 8(c) Awards under Code Section 162(m)...............................13

9.       Change in Control.......................................................................................13
         (a)      Effect of "Change in Control"..................................................................13
         (b)      Definition of "Change in Control"..............................................................14
         (c)      Definition of "Change in Control Price"........................................................14

10.      General Provisions......................................................................................14
         (a)      Compliance with Legal and Other Requirements...................................................14
         (b)      Limits on Transferability; Beneficiaries.......................................................15
         (c)      Adjustments....................................................................................15
         (d)      Taxes..........................................................................................16
         (e)      Changes to the Plan and Awards.................................................................16
         (f)      Limitation an Rights Conferred under Plan......................................................16
         (g)      Unfunded Status of Awards; Creation of Trusts..................................................17
         (h)      Nonexclusivity of the Plan.....................................................................17
         (i)      Payments in the Event of Forfeitures; Fractional Shares........................................17
         (j)      Governing Law..................................................................................17
         (k)      Plan Effective Date and Shareholder Approval...................................................17

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                                  TECHSYS, INC.

                        2000 Incentive Compensation Plan

         1.  Purpose.   The  purpose  of  this  TechSys,   Inc.  2000  Incentive
Compensation  Plan (the "Plan") is to assist  TechSys,  Inc.  Inc., a New Jersey
corporation (the "Company"), and its subsidiaries in attracting,  retaining, and
rewarding  high-quality  executives,  employees,  and other  persons who provide
services  to the  Company  and/or its  subsidiaries,  enabling  such  persons to
acquire or increase a proprietary interest in the Company in order to strengthen
the mutuality of interests between such persons and the Company's  shareholders,
and providing such persons with annual and long-term  performance  incentives to
expend their maximum efforts in the creation of shareholder  value.  The Plan is
also  intended  to  qualify  certain  compensation  awarded  hereunder  for  tax
deductibility  under Section  162(m) of the Code (as  hereafter  defined) to the
extent deemed  appropriate by the Committee (or any successor  committee) of the
Board of Directors of the Company.

         2. Definitions.  For purposes of the Plan, the following terms shall be
defined as set forth  below,  in  addition  to such  terms  defined in Section 1
hereof:

                  (a)  "Annual  Incentive  Award"  means  a  conditional  right,
granted to a Participant  under Section 8(c) hereof,  to receive a cash payment,
Stock or other Award,  unless otherwise  determined by the Committee,  after the
end of a specified fiscal year.

                  (b) "Award"  means any Option,  SAR  (including  Limited SAR),
Restricted Stock, Deferred Stock, Stock granted as a bonus or in lieu of another
award, Dividend Equivalent, Other Stock-Based Award, Performance Award or Annual
Incentive  Award,  together  with any  other  right  or  interest  granted  to a
Participant under the Plan.

                  (c) "Beneficiary" means the person,  persons,  trust or trusts
which have been  designated by a Participant  in his or her most recent  written
beneficiary  designation  filed  with  the  Committee  to  receive  the  benefit
specified  under the Plan upon such  Participant's  death or to which  Awards or
other rights are transferred if and to the extent  permitted under Section 10(b)
hereof. If, upon a Participant's  death,  there is no designated  Beneficiary or
surviving  designated  Beneficiary,  then the  term  Beneficiary  means  person,
persons,  trust  or  trusts  entitled  by  will  or  the  laws  of  descent  and
distribution to receive such benefits.

                  (d) "Beneficial Owner" shall have the meaning ascribed to such
term in Rule 13d-3 under the Exchange Act and any successor to such rule.

                  (e) "Board" means the Company's Board of Directors.

                  (f) "Change in Control"  means Change in Control as defined in
Section 9 hereof.

                  (g) "Change in Control  Price" means the amount  calculated in
accordance with Section 9(c) hereof.

                  (h) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, including regulations thereunder and successor provisions and
regulations thereto.

                  (i)  "Committee"  means a committee  of two or more  directors
designated by the Board to administer the Plan; provided,  however, that, unless
otherwise  determined by the Board, the Committee shall consist solely of two or
more directors,  each of whom shall be (i) a "non-employee  director" within the
meaning  of Rule  16b-3,  unless  administration  of the  Plan by  "non-employee
directors"  is not then  required  in order for  exemptions  under Rule 16b-3 to
apply to transactions  under the Plan, and (ii) an "outside director" as defined
under Section 162(m) of the Code, unless  administration of the Plan by "outside
directors" is not then required in order to qualify for tax deductibility  under
Section 162(m) of the Code.

                  (j)  "Covered  Employee"  means an  Eligible  Person  who is a
Covered Employee as specified in Section 8(e) hereof.

                  (k) "Deferred  Stock" means a right,  granted to a Participant
under Section 6(e) hereof,  to receive Stock,  cash or a combination  thereof at
the end of a specified deferral period.

                  (l)  "Dividend   Equivalent"  means  a  right,  granted  to  a
Participant under Section 6(g) hereof,  to receive cash, Stock,  other Awards or
other  property  equal in value to  dividends  paid with  respect to a specified
number of shares of Stock, or other periodic payments.

                  (m)  "Effective  Date" means the effective date of the Plan as
defined in Section 10(k) hereof.

                  (n) "Eligible  Person" means each Executive  Officer and other
officers  and  employees  of the Company or of any  subsidiary,  including  such
persons who may also be directors  of the Company and other  persons who provide
services to the Company and/or its subsidiaries. An employee on leave of absence
may be  considered  as still in the employ of the  Company or a  subsidiary  for
purposes of eligibility for participation in the Plan.

                  (o) "Exchange Act" means the Securities  Exchange Act of 1934,
as  amended  from  time  to  time,  including  rules  thereunder  and  successor
provisions and rules thereto.

                  (p)  "Executive  Officer"  means an  executive  officer of the
Company as defined under the Exchange Act.

                  (q) "Fair Market  Value" means the fair market value of Stock,
Awards or other  property as  determined  by the  Committee or under  procedures
established by the Committee.  Unless otherwise determined by the Committee, the
Fair Market  Value of Stock as of any given date shall be the closing sale price
per share  reported on a  consolidated  basis for Stock listed on the  principal
stock  exchange  or market on which Stock is traded on the date as of which such
value is being determined or, if there is no sale on that date, then on the last
previous day on which a sale was reported.

                  (r)  "Incentive  Stock  Option"  or  "ISO"  means  any  Option
intended to be and designated as an incentive stock option within the meaning of
Section 422 of the Code or any successor provision thereto.

                  (s) "Limited SAR" means a right granted to a Participant under
Section 6(c) hereof.

                  (t) "Option"  means a right,  granted to a  Participant  under
Section 6(b)  hereof,  to purchase  Stock or other  Awards at a specified  price
during specified time periods.

                  (u) "Other  Stock  Based  Awards"  means  Awards  granted to a
Participant under Section 6(h) hereof.

                  (v) "Participant" means a person who has been granted an Award
under the Plan which remains outstanding, including a person who is no longer an
Eligible Person.

                  (w) "Performance   Award"  means  a  right,   granted  to  a
Participant  under Section 8 hereof,  to receive  Awards based upon  performance
criteria specified by the Committee.

                  (x) "Person"  shall have the meaning  ascribed to such term in
Section  3(a)(9)  of the  Exchange  Act and used in  Sections  13(d)  and  14(d)
thereof, and shall include a "group" as defined in Section 13(d) thereof.

                  (y) "Restricted  Stock" means Stock,  granted to a Participant
under Section 6(d) hereof, that is subject to certain restrictions and to a risk
of forfeiture.

                  (z)  "Rule  16b-3"  means  Rule  16b-3   promulgated   by  the
Securities and Exchange Commission under Section 16 of the Exchange Act, as from
time to time in effect and applicable to the Plan and Participants.

                  (aa) "SAR" or "Stock Appreciation Right" means a right granted
to a Participant under Section 6(c) hereof.

                  (bb) "Stock" means the Company's  Common Stock, and such other
securities  as may be  substituted  (or  resubstituted)  for Stock  pursuant  to
Section 10(c) hereof.

                  (cc) "Stock Appreciation Right" or "SAR" means a right granted
to a Participant under Section 6(c) hereof.

         3.       Administration.

                  (a) Authority of the Committee. The Plan shall be administered
by the Committee  except to the extent that the Board elects to  administer  the
Plan itself,  in which case references herein to the "Committee" shall be deemed
to include  references to the "Board".  The Committee  shall have full and final
authority,  in each case subject to and  consistent  with the  provisions of the
Plan, to select Eligible Persons to become Participants, grant Awards, determine
the type,  number  and other  terms and  conditions  of,  and all other  matters
relating to, Awards, prescribe Award agreements (which need not be identical for
each Participant) and rules and regulations for the  administration of the Plan,
construe and interpret the Plan and Award agreements and correct defects, supply
omissions or reconcile  inconsistencies therein, and to make all other decisions
and  determinations  as the  Committee  may deem  necessary or advisable for the
administration of the Plan.

                  (b) Manner of Exercise of Committee  Authority.  Any action of
the Committee shall be final,  conclusive and binding on all persons,  including
the Company, its subsidiaries,  Participants,  Beneficiaries,  transferees under
Section  10(b)  hereof  or other  persons  claiming  rights  from or  through  a
Participant,  and  shareholders.  The express grant of any specific power to the
Committee, and the taking of any action by the Committee, shall not be construed
as limiting any power or authority of the Committee.  The Committee may delegate
to officers or managers of the Company or any subsidiary, or committees thereof,
the authority,  subject to such terms as the Committee shall  determine,  (i) to
perform administrative  functions, (ii) with respect to Participants not subject
to Section  16 of the  Exchange  Act,  to perform  such other  functions  as the
Committee  may  determine,  and (iii) with  respect to  Participants  subject to
Section 16, to perform such other  functions of the  Committee as the  Committee
may determine to the extent performance of such functions will not result in the
loss of an exemption  under Rule 16b-3 otherwise  available for  transactions by
such persons,  in each case to the extent  permitted  under  applicable  law and
subject to the requirements set forth in Section 8(d) hereof.  The Committee may
appoint agents to assist it in administering the Plan.

                  (c)  Limitation  of  Liability.  The Committee and each member
thereof  shall be  entitled  to, in good  faith,  rely or act upon any report or
other information  furnished to it, him or her by any executive  officer,  other
officer or employee of the Company or a subsidiary,  the  Company's  independent
auditors, consultants or any other agents assisting in the administration of the
Plan.  Members of the  Committee and any officer or employee of the Company or a
subsidiary  acting at the direction of, or on behalf of, the Committee shall not
be personally liable for any action or determination taken or made in good faith
with respect to the Plan,  and shall,  to the extent  permitted by law, be fully
indemnified  and  protected  by the Company  with  respect to any such action or
determination.

         4.       Stock Subject to Plan.

                  (a) Overall Number of Shares  Available for Delivery.  Subject
to adjustment as provided in Section 10(c) hereof, the total number of shares of
Stock  reserved and available  for delivery in connection  with Awards under the
Plan shall be 3,500,000  provided,  however,  that the total number of shares of
Stock with respect to which ISOs may be granted shall be  3,000,000.  Any shares
of  Stock  delivered  under  the  Plan may  consist,  in  whole  or in part,  of
authorized and unissued shares or treasury shares.

                  (b)  Application  of Limitation to Grants of Awards.  No Award
may be granted if the number of shares of Stock to be  delivered  in  connection
with  such  Award or,  in the case of an Award  relating  to shares of Stock but
settleable only in cash (such as cash-only  SARs), the number of shares to which
such Award relates,  exceeds the number of shares of Stock  remaining  available
under the Plan minus the number of shares of Stock  issuable in settlement of or
relating to then-outstanding Awards. The Committee may adopt reasonable counting
procedures  to ensure  appropriate  counting,  avoid  double  counting  (as, for
example, in the case of tandem or substitute awards) and make adjustments if the
number of shares of Stock actually  delivered  differs from the number of shares
previously counted in connection with an Award.

                  (c) Availability of Shares Not Delivered under Awards.  Shares
of  Stock  subject  to an  Award  under  the  Plan  that is  canceled,  expired,
forfeited,  settled in cash or otherwise terminated without a delivery of shares
to the  Participant,  including (i) the number of shares  withheld in payment of
any exercise or purchase  price of an Award or award or taxes relating to Awards
or awards,  and (ii) the number of shares surrendered in payment of any exercise
or purchase  price of an Award or award or taxes relating to any Award or award,
will again be  available  for  Awards  under the Plan,  except  that if any such
shares could not again be available for Awards to a particular Participant under
any applicable law or regulation, such shares shall be available exclusively for
Awards to Participants who are not subject to such limitation.

         5.  Eligibility;  Per-Person  Award  Limitation.  Awards may be granted
under the Plan only to Eligible Persons.  In each fiscal year during any part of
which the Plan is in  effect,  an  Eligible  Person  may not be  granted  Awards
relating  to more than  1,000,000  shares of Stock,  subject  to  adjustment  as
provided in Section 10(c) hereof, under each of Sections 6(b), 6(c), 6(d), 6(e),
6(f),  6(g),  6(h), 8(b) and 8(c) hereof.  In addition,  the maximum cash amount
that may be earned  under the Plan as a final  Annual  Incentive  Award or other
cash annual Award in respect of any fiscal year by any one Participant  shall be
$3 million,  and the maximum  cash amount that may be earned under the Plan as a
final Performance  Award or other cash Award in respect of a performance  period
by any one Participant shall be $5 million.

         6.       Specific Terms of Awards.

                  (a) General. Awards may be granted on the terms and conditions
set forth in this Section 6. In addition,  the Committee may impose on any Award
or the exercise thereof,  at the date of grant or thereafter (subject to Section
10(e) hereof),  such additional terms and conditions,  not inconsistent with the
provisions  of the Plan,  as the  Committee  shall  determine,  including  terms
requiring  forfeiture of Awards in the event of termination of employment by the
Participant and terms permitting a Participant to make elections relating to his
or  her  Award.  The  Committee  shall  retain  full  power  and  discretion  to
accelerate, waive or modify, at any time, any term or condition of an Award that
is not  mandatory  under the Plan.  Except  in cases in which the  Committee  is
authorized  to require  other forms of  consideration  under the Plan, or to the
extent other forms of consideration  must by paid to satisfy the requirements of
the New Jersey Business  Corporation Act, no  consideration  other than services
may be required for the grant (but not the exercise) of any Award.

                  (b) Options.  The  Committee is authorized to grant Options to
Participants on the following terms and conditions:

                           (i) Exercise  Price.  The exercise price per share of
         Stock purchasable under an Option shall be determined by the Committee,
         provided  that  such  exercise  price  shall  not be less than the Fair
         Market  Value of a share  of Stock on the date of grant of such  Option
         except as provided under Section 7(a) hereof.

                           (ii) Time and Method of Exercise. The Committee shall
         determine the time or times at which or the  circumstances  under which
         an Option  may be  exercised  in whole or in part  (including  based on
         achievement of performance  goals and/or future service  requirements),
         the  methods by which such  exercise  price may be paid or deemed to be
         paid, the form of such payment,  including,  without limitation,  cash,
         Stock,  other Awards or awards granted under other plans of the Company
         or  any  subsidiary,  or  other  property  (including  notes  or  other
         contractual  obligations of  Participants to make payment on a deferred
         basis), and the methods by or forms in which Stock will be delivered or
         deemed to be delivered to Participants.

                           (iii) ISOs.  The terms of any ISO  granted  under the
         Plan shall comply in all respects with the provisions of Section 422 of
         the Code. Anything in the Plan to the contrary notwithstanding, no term
         of the Plan relating to ISOs  (including  any SAR in tandem  therewith)
         shall be interpreted,  amended or altered,  nor shall any discretion or
         authority  granted  under the Plan be  exercised,  so as to  disqualify
         either  the Plan or any ISO under  Section  422 of the Code  unless the
         Participant  has first  requested  the change  that will result in such
         disqualification.

                  (c) Stock Appreciation  Rights. The Committee is authorized to
grant SARs to Participants on the following terms and conditions:

                           (i)  Right to  Payment.  A SAR  shall  confer  on the
         Participant  to whom it is granted a right to  receive,  upon  exercise
         thereof,  the excess of (A) the Fair Market Value of one share of Stock
         on the date of exercise  (or, in the case of a "Limited  SAR," the Fair
         Market Value determined by reference to the Change in Control Price, as
         defined  under Section 9(c) hereof) over (B) the grant price of the SAR
         as determined by the Committee.

                           (ii) Other Terms.  The Committee  shall  determine at
         the  date of grant or  thereafter,  the time or times at which  and the
         circumstances  under which a SAR may be  exercised  in whole or in part
         (including  based on  achievement  of  performance  goals and/or future
         service  requirements),  the method of exercise,  method of settlement,
         form of  consideration  payable  in  settlement,  method by or forms in
         which  Stock  will  be   delivered   or  deemed  to  be   delivered  to
         Participants, whether or not a SAR shall be in tandem or in combination
         with any other Award,  and any other terms and  conditions  of any SAR.
         Limited SARs that may only be exercised in connection  with a Change in
         Control or other event as specified by the  Committee may be granted on
         such terms, not  inconsistent  with this Section 6(c), as the Committee
         may determine.  SARs and Limited SARs may be either free-standing or in
         tandem with other Awards.

                  (d)  Restricted  Stock.  The  Committee is authorized to grant
Restricted Stock to Participants on the following terms and conditions:

                           (i) Grant and Restrictions. Restricted Stock shall be
         subject to such restrictions on transferability, risk of forfeiture and
         other  restrictions,  if  any,  as  the  Committee  may  impose,  which
         restrictions  may lapse  separately  or in  combination  at such times,
         under such circumstances (including based on achievement of performance
         goals and/or future  service  requirements),  in such  installments  or
         otherwise,  as the  Committee  may  determine  at the  date of grant or
         thereafter. Except to the extent restricted under the terms of the Plan
         and any Award agreement relating to the Restricted Stock, a Participant
         granted Restricted Stock shall have all of the rights of a shareholder,
         including  the  right to vote the  Restricted  Stock  and the  right to
         receive  dividends  thereon  (subject to any mandatory  reinvestment or
         other  requirement  imposed by the  Committee).  During the  restricted
         period  applicable to the  Restricted  Stock,  subject to Section 10(b)
         hereof,  the Restricted  Stock may not be sold,  transferred,  pledged,
         hypothecated, margined or otherwise encumbered by the Participant.

                           (ii)  Forfeiture.  Except as otherwise  determined by
         the Committee,  upon  termination  of employment  during the applicable
         restriction  period,  Restricted  Stock that is at that time subject to
         restrictions shall be forfeited and reacquired by the Company; provided
         that, the Committee may provide,  by rule or regulation or in any Award
         agreement,  or may determine in any individual case, that  restrictions
         or forfeiture  conditions  relating to Restricted Stock shall be waived
         in  whole  or in part  in the  event  of  terminations  resulting  from
         specified  causes,  and the Committee may in other cases waive in whole
         or in part the forfeiture of Restricted Stock.

                           (iii)   Certificates  for  Stock.   Restricted  Stock
         granted under the Plan may be evidenced in such manner as the Committee
         shall  determine.  If certificates  representing  Restricted  Stock are
         registered  in the name of the  Participant,  the Committee may require
         that such  certificates  bear an  appropriate  legend  referring to the
         terms, conditions and restrictions applicable to such Restricted Stock,
         that the Company retain physical  possession of the  certificates,  and
         that the Participant deliver a stock power to the Company,  endorsed in
         blank, relating to the Restricted Stock.

                           (iv)  Dividends  and Splits.  As a  condition  to the
         grant of an Award of Restricted  Stock,  the Committee may require that
         any cash dividends paid on a share of Restricted Stock be automatically
         reinvested in additional  shares of Restricted  Stock or applied to the
         purchase  of  additional   Awards  under  the  Plan.  Unless  otherwise
         determined by the Committee,  Stock  distributed  in connection  with a
         Stock split or Stock  dividend,  and other  property  distributed  as a
         dividend,  shall be subject to restrictions and a risk of forfeiture to
         the same  extent as the  Restricted  Stock  with  respect to which such
         Stock or other property has been distributed.

                  (e)  Deferred  Stock.  The  Committee is  authorized  to grant
Deferred Stock to  Participants,  which are rights to receive Stock,  cash, or a
combination  thereof at the end of a specified  deferral period,  subject to the
following terms and conditions:

                           (i) Award and Restrictions.  Satisfaction of an Award
         of Deferred  Stock shall occur upon  expiration of the deferral  period
         specified for such Deferred Stock by the Committee (or, if permitted by
         the Committee,  as elected by the Participant).  In addition,  Deferred
         Stock shall be subject to such  restrictions  (which may include a risk
         of forfeiture) as the Committee may impose, if any, which  restrictions
         may  lapse at the  expiration  of the  deferral  period  or at  earlier
         specified times  (including  based on achievement of performance  goals
         and/or future service requirements),  separately or in combination,  in
         installments  or otherwise,  as the Committee may  determine.  Deferred
         Stock may be  satisfied  by delivery  of Stock,  cash equal to the Fair
         Market Value of the specified  number of shares of Stock covered by the
         Deferred  Stock,  or  a  combination  thereof,  as  determined  by  the
         Committee at the date of grant or thereafter.

                           (ii)  Forfeiture.  Except as otherwise  determined by
         the Committee,  upon  termination  of employment  during the applicable
         deferral period or portion thereof to which forfeiture conditions apply
         (as provided in the Award agreement evidencing the Deferred Stock), any
         Deferred  Stock that is at that time subject to deferral  (other than a
         deferral  at the  election  of the  Participant)  shall  be  forfeited;
         provided that the  Committee  may provide,  by rule or regulation or in
         any Award  agreement,  or may determine in any  individual  case,  that
         restrictions or forfeiture  conditions relating to Deferred Stock shall
         be waived in whole or in part in the  event of  terminations  resulting
         from specified  causes,  and this Committee may in other cases waive in
         whole or in part the forfeiture of Deferred Stock.

                           (iii)   Dividend   Equivalents.    Unless   otherwise
         determined by the Committee at date of grant,  Dividend  Equivalents on
         the specified number of shares of Stock covered by an Award of Deferred
         Stock shall be either (A) paid with respect to such  Deferred  Stock at
         the dividend  payment date in cash or in shares of  unrestricted  Stock
         having a Fair Market  Value equal to the amount of such  dividends,  or
         (B)  deferred  with  respect to such  Deferred  Stock and the amount or
         value thereof  automatically  deemed reinvested in additional  Deferred
         Stock,  other Awards or other  investment  vehicles,  as the  Committee
         shall determine or permit the Participant to elect.

                  (f)  Bonus  Stock  and  Awards  in  Lieu of  Obligations.  The
Committee is  authorized  to grant Stock as a bonus,  or to grant Stock or other
Awards in lieu of  Company  obligations  to pay cash or deliver  other  property
under the Plan or under other plans or compensatory arrangements, provided that,
in the case of  Participants  subject  to Section 16 of the  Exchange  Act,  the
amount of such grants  remains  within the  discretion  of the  Committee to the
extent necessary to ensure that acquisitions of Stock or other Awards are exempt
from liability  under Section 16(b) of the Exchange Act. Stock or Awards granted
hereunder  shall be subject to such other  terms as shall be  determined  by the
Committee.

                  (g) Dividend Equivalents. The Committee is authorized to grant
Dividend  Equivalents  to a  Participant,  entitling the  Participant to receive
cash,  Stock,  other Awards,  or other property equal in value to dividends paid
with  respect  to a  specified  number of shares  of  Stock,  or other  periodic
payments.  Dividend  Equivalents may be awarded on a  free-standing  basis or in
tandem with another Award.  The Committee may provide that Dividend  Equivalents
shall be paid or  distributed  when  accrued  or shall be  deemed  to have  been
reinvested  in additional  Stock,  Awards,  or other  investment  vehicles,  and
subject to such restrictions on transferability and risks of forfeiture,  as the
Committee may specify.

                  (h) Other  Stock-Based  Awards.  The Committee is  authorized,
subject to limitations under applicable law, to grant to Participants such other
Awards  that may be  denominated  or payable  in,  valued in whole or in part by
reference  to, or  otherwise  based on, or related to,  Stock,  as deemed by the
Committee to be  consistent  with the purposes of the Plan,  including,  without
limitation,   convertible  or  exchangeable   debt   securities,   other  rights
convertible or exchangeable into Stock,  purchase rights for Stock,  Awards with
value and  payment  contingent  upon  performance  of the  Company  or any other
factors designated by the Committee,  and Awards valued by reference to the book
value of Stock or the value of  securities  of or the  performance  of specified
subsidiaries.  The Committee  shall  determine the terms and  conditions of such
Awards.  Stock delivered  pursuant to an Award in the nature of a purchase right
granted under this Section 6(h) shall be purchased for such consideration,  paid
for at such  times,  by such  methods,  and in such  forms,  including,  without
limitation, cash, Stock, other Awards, or other property, as the Committee shall
determine.  Cash awards, as an element of or supplement to any other Award under
the Plan, may also be granted pursuant to this Section 6(h).

         7.       Certain Provisions Applicable to Awards.

                  (a) Stand-Alone,  Additional,  Tandem,  and Substitute Awards.
Awards  granted  under the Plan may,  in the  discretion  of the  Committee,  be
granted  either alone or in addition to, in tandem with, or in  substitution  or
exchange  for, any other Award or any award  granted  under  another plan of the
Company, any subsidiary, or any business entity to be acquired by the Company or
a subsidiary,  or any other right of a Participant  to receive  payment from the
Company or any subsidiary.  Such additional,  tandem, and substitute or exchange
Awards  may be granted at any time.  If an Award is granted in  substitution  or
exchange for another Award or award,  the Committee should require the surrender
of such other Award or award in consideration for the grant of the new Award. In
addition, Awards may be granted in lieu of cash compensation,  including in lieu
of cash amounts payable under other plans of the Company or any  subsidiary,  in
which the value of Stock subject to the Award is equivalent in value to the cash
compensation (for example,  Deferred Stock or Restricted Stock), or in which the
exercise  price,  grant price or purchase  price of the Award in the nature of a
right that may be exercised is equal to the Fair Market Value of the  underlying
Stock minus the value of the cash compensation surrendered (for example, Options
granted  with  an  exercise  price  "discounted'  by  the  amount  of  the  cash
compensation surrendered).

                  (b) Term of Awards.  The term of each Award  shall be for such
period as may be  determined by the  Committee;  provided that in no event shall
the term of any Option or SAR exceed a period of ten years (or such shorter term
as may be required in respect of an ISO under Section 422 of the Code).

                  (c)  Form and  Timing  of  Payment  under  Awards;  Deferrals.
Subject to the terms of the Plan and any applicable Award agreement, payments to
be made by the Company or a  subsidiary  upon the exercise of an Option or other
Award or settlement of an Award may be made in such forms as the Committee shall
determine,  including,  without  limitation,  cash, Stock, other Awards or other
property,  and may be made in a single payment or transfer, in installments,  or
on a deferred basis.  The settlement of any Award may be  accelerated,  and cash
paid in lieu of Stock in connection with such  settlement,  in the discretion of
the Committee or upon occurrence of one or more specified events (in addition to
a Change in Control).  Installment  or deferred  payments may be required by the
Committee  (subject to Section  10(e) hereof,  including the consent  provisions
thereof in the case of any deferral of an outstanding  Award not provided for in
the original Award agreement) or permitted at the election of the Participant on
terms and conditions established by the Committee. Payments may include, without
limitation,  provisions  for the payment or crediting of reasonable  interest on
installment  or  deferred  payments  or  the  grant  or  crediting  of  Dividend
Equivalents  or other  amounts in respect of  installment  or deferred  payments
denominated in Stock.

                  (d) Exemptions from Section 16(b) Liability.  It is the intent
of the  Company  that the  grant of any  Awards  to or  other  transaction  by a
Participant  who is subject to  Section 16 of the  Exchange  Act shall be exempt
under  Rule  16b-3  (except  for  transactions  acknowledged  in  writing  to be
non-exempt by such Participant).  Accordingly,  if any provision of this Plan or
any Award agreement does not comply with the  requirements of Rule 16b-3 as then
applicable to any such transaction,  such provision shall be construed or deemed
amended to the extent  necessary to conform to the  applicable  requirements  of
Rule 16b-3 that such Participant shall avoid liability under Section 16(b).

         8.       Performance and Annual Incentive Awards.

                  (a)  Performance  Conditions.  The right of a  Participant  to
exercise or receive a grant or settlement of any Award,  and the timing thereof,
may be  subject  to  such  performance  conditions  as may be  specified  by the
Committee.  The Committee may use such business  criteria and other  measures of
performance  as  it  may  deem   appropriate  in  establishing  any  performance
conditions,  and may exercise its  discretion  to reduce or increase the amounts
payable under any Award  subject to  performance  conditions,  except as limited
under Sections 8(b) and 8(c) hereof in the case of a Performance Award or Annual
Incentive Award intended to qualify under Section 162(m) of the Code.

                  (b)   Performance   Awards   Granted  to  Designated   Covered
Employees. If the Committee determines that a Performance Award to be granted to
an Eligible  Person who is designated by the Committee as likely to be a Covered
Employee  should  qualify as  "performance-based  compensation"  for purposes of
Section  162(m) of the Code,  the  grant,  exercise  and/or  settlement  of such
Performance  Award  shall  be  contingent  upon  achievement  of  preestablished
performance goals and other terms set forth in this Section 8(b).

                           (i)  Performance  Goals  Generally.  The  performance
         goals for such Performance Awards shall consist of one or more business
         criteria and a targeted level or levels of performance  with respect to
         each of such criteria,  as specified by the Committee  consistent  with
         this  Section  8(b).  Performance  goals shall be  objective  and shall
         otherwise  meet the  requirements  of  Section  162(m)  of the Code and
         regulations  thereunder  (including  Regulation  Section  1.162-27  and
         successor  regulations  thereto),  including the  requirement  that the
         level or levels of performance  targeted by the Committee result in the
         achievement of performance goals being  "substantially  uncertain." The
         Committee may determine that such Performance  Awards shall be granted,
         exercised  and/or settled upon  achievement of any one performance goal
         or that two or more of the  performance  goals  must be  achieved  as a
         condition to grant,  exercise  and/or  settlement  of such  Performance
         Awards.  Performance goals may differ for Performance Awards granted to
         any one Participant or to different Participants.

                           (ii) Business Criteria.  One or more of the following
         business criteria for the Company,  on a consolidated basis, and/or for
         specified  subsidiaries  or business units of the Company  (except with
         respect  to  the  total  shareholder  return  and  earnings  per  share
         criteria),  shall be used by the Committee in establishing  performance
         goals  for  such  Performance  Awards:  (1)  earnings  per  share;  (2)
         revenues; (3) cash flow; (4) cash flow return on investment; (5) return
         on assets, return on investment,  return on capital,  return on equity;
         (6) economic value added; (7) operating margin; (8) net income;  pretax
         earnings;   pretax   earnings   before   interest,   depreciation   and
         amortization;  pretax  operating  earnings after  interest  expense and
         before  incentives,  service fees, and  extraordinary or special items;
         operating  earnings;  (9) total shareholder return; and (10) any of the
         above goals as compared to the  performance  of a published  or special
         index deemed applicable by the Committee including, but not limited to,
         the  Standard & Poor's 500 Stock  Index.  One or more of the  foregoing
         business  criteria  shall  also be  exclusively  used  in  establishing
         performance  goals for  Annual  Incentive  Awards  granted to a Covered
         Employee under Section 8(c) hereof.

                           (iii)  Performance  Period;  Timing for  Establishing
         Performance Goals.  Achievement of performance goals in respect of such
         Performance Awards shall be measured over a performance period of up to
         ten years,  as specified by the Committee.  Performance  goals shall be
         established  not  later  than  90  days  after  the  beginning  of  any
         performance  period  applicable to such Performance  Awards, or at such
         other  date as may be  required  or  permitted  for  "performance-based
         compensation" under Section 162(m) of the Code.

                           (iv)  Performance   Award  Pool.  The  Committee  may
         establish a Performance  Award pool,  which shall be an unfunded  pool,
         for  purposes of  measuring  Company  performance  in  connection  with
         Performance  Awards. The amount of such Performance Award pool shall be
         based upon the achievement of a performance  goal or goals based on one
         or more of the business  criteria set forth in Section  8(b)(ii) hereof
         during the given  performance  period, as specified by the Committee in
         accordance with Section 8(b)(iii) hereof. The Committee may specify the
         amount of the  Performance  Award pool as a  percentage  of any of such
         business  criteria,  a  percentage  thereof  in excess  of a  threshold
         amount,   or  as  another   amount  which  need  not  bear  a  strictly
         mathematical relationship to such business criteria.

                           (v)  Settlement of Performance  Awards,  Other Terms.
         Settlement of such Performance  Awards shall be in cash,  Stock,  other
         Awards or other  property,  in the  discretion  of the  Committee.  The
         Committee  may, in its  discretion,  reduce the amount of a  settlement
         otherwise to be made in connection with such  Performance  Awards,  but
         may not exercise  discretion  to increase any such amount  payable to a
         Covered  Employee  in respect of a  Performance  Award  subject to this
         Section 8(b). The Committee  shall specify the  circumstances  in which
         such  Performance  Awards  shall be paid or  forfeited  in the event of
         termination  of  employment  by the  Participant  prior to the end of a
         performance period or settlement of Performance Awards.

                  (c) Annual  Incentive  Awards  Granted to  Designated  Covered
Employees.  If the Committee  determines  that an Annual  Incentive  Award to be
granted to an Eligible Person who is designated by the Committee as likely to be
a Covered  Employee  should  qualify  as  "performance-based  compensation"  for
purposes of Code Section 162(m),  the grant,  exercise and/or settlement of such
Annual  Incentive Award shall be contingent upon  achievement of  preestablished
performance goals and other terms set forth in this Section 8(c).

                           (i) Annual  Incentive  Award Pool.  The Committee may
         establish an Annual  Incentive  Award pool,  which shall be an unfunded
         pool, for purposes of measuring Company  performance in connection with
         Annual Incentive Awards. The amount of such Annual Incentive Award pool
         shall be based  upon the  achievement  of a  performance  goal or goals
         based on one or more of the  business  criteria  set  forth in  Section
         8(b)(ii) hereof during the given  performance  period,  as specified by
         the  Committee  in  accordance  with  Section  8(b)(iii)  hereof.   The
         Committee may specify the amount of the Annual  Incentive Award pool as
         a percentage of any of such business criteria,  a percentage thereof in
         excess of a threshold  amount, or as another amount which need not bear
         a strictly mathematical relationship to such business criteria.

                           (ii) Potential  Annual  Incentive  Awards.  Not later
         than the end of the 90th day of each fiscal year, or at such other date
         as may be required or  permitted  in the case of Awards  intended to be
         "performance-based  compensation" under Section 162(m) of the Code, the
         Committee  shall  determine the Eligible  Persons who will  potentially
         receive Annual Incentive Awards,  and the amounts  potentially  payable
         thereunder,  for that fiscal  year,  either out of an Annual  Incentive
         Award pool  established by such date under Section 8(c)(i) hereof or as
         individual  Annual Incentive  Awards.  In the case of individual Annual
         Incentive  Awards intended to qualify under Section 162(m) of the Code,
         the amount potentially payable shall be based upon the achievement of a
         performance goal or goals based on one or more of the business criteria
         set forth in Section 8(b)(ii) hereof in the given  performance year, as
         specified by the Committee;  in other cases, such amount shall be based
         on such  criteria  as shall be  established  by the  Committee.  In all
         cases, the maximum Annual  Incentive Award of any Participant  shall be
         subject to the limitation set forth in Section 5 hereof.

                           (iii) Payout of Annual  Incentive  Awards.  After the
         end of each fiscal year, the Committee shall  determine the amount,  if
         any, of (A) the Annual  Incentive Award pool, and the maximum amount of
         potential  Annual  Incentive  Awards payable to each Participant in the
         Annual  Incentive  Award pool,  or (B) the amount of  potential  Annual
         Incentive Awards otherwise payable to each  Participant.  The Committee
         may,  in its  discretion,  determine  that the  amount  payable  to any
         Participant  as a final  Annual  Incentive  Award shall be increased or
         reduced from the amount of his or her potential Annual Incentive Award,
         including a determination  to make no final Award  whatsoever,  but may
         not exercise  discretion  to increase any such amount in the case of an
         Annual  Incentive Award intended to quality under Section 162(m) of the
         Code. The Committee shall specify the  circumstances in which an Annual
         Incentive  Award shall be paid or forfeited in the event of termination
         of employment by the  Participant  prior to the end of a fiscal year or
         settlement of such Annual Incentive Award.

                  (d)  Written   Determinations.   All   determinations  by  the
Committee  as to the  establishment  of  performance  goals,  the  amount of any
Performance Award pool or potential individual  Performance Awards and as to the
achievement  of performance  goals relating to Performance  Awards under Section
8(b)  hereof,  and the amount of any Annual  Incentive  Award pool or  potential
individual  Annual  Incentive  Awards and the amount of final  Annual  Incentive
Awards under  Section  8(c) hereof,  shall be made in writing in the case of any
Award  intended to quality under Section  162(m) of the Code.  The Committee may
not delegate any  responsibility  relating to such Performance  Awards or Annual
Incentive Awards.

                  (e) Status of  Section  8(b) and  Section  8(c)  Awards  under
Section  162(m) of the Code.  It is the intent of the Company  that  Performance
Awards and Annual  Incentive  Awards under Sections 8(b) and 8(c) hereof granted
to persons who are designated by the Committee as likely to be Covered Employees
within  the  meaning of Section  162(m) of the Code and  regulations  thereunder
(including  Regulation 1.162-27 and successor  regulations thereto) shall, if so
designated by the Committee, constitute "performance-based  compensation" within
the  meaning  of  Section  162(m)  of  the  Code  and  regulations   thereunder.
Accordingly,  the terms of Sections 8(b), (c), (d) and (e) hereof, including the
definitions  of  Covered  Employee  and  other  terms  used  therein,  shall  be
interpreted  in a  manner  consistent  with  Section  162(m)  of  the  Code  and
regulations  thereunder.  The foregoing  notwithstanding,  because the Committee
cannot  determine with certainty  whether a given  Participant will be a Covered
Employee with respect to a fiscal year that has not yet been completed, the term
Covered  Employee  as used  herein  shall mean only a person  designated  by the
Committee,  at the time of grant of  Performance  Awards or an Annual  Incentive
Award,  as likely to be a Covered  Employee with respect to that fiscal year. If
any provision of the Plan as in effect on the date of adoption or any agreements
relating to Performance Awards or Annual Incentive Awards that are designated as
intended  to  comply  with  Section  162(m)  of the Code  does not  comply or is
inconsistent  with the requirements of Section 162(m) of the Code or regulations
thereunder,  such  provision  shall be construed or deemed amended to the extent
necessary to conform to such requirements.

         9.       Change In Control.

                  (a) Effect of "Change in  Control."  In the event of a "Change
in Control," as defined in Section 9(b) hereof,  the following  provisions shall
apply unless otherwise provided in the Award agreement:

                           (i) Any Award  carrying a right to exercise  that was
         not previously  exercisable  and vested shall become fully  exercisable
         and  vested as of the time of the Change in  Control  and shall  remain
         exercisable and vested for the balance of the stated term of such Award
         without  regard to any  termination  of employment by the  Participant,
         subject  only to  applicable  restrictions  set forth in Section  10(a)
         hereof;

                           (ii)  Any  optionee  who  holds  an  Option  shall be
         entitled to elect,  during the 60-day  period  immediately  following a
         Change in Control,  in lieu of acquiring the shares of Stock covered by
         such Option, to receive,  and the Company shall be obligated to pay, in
         cash the excess of the Change in Control Price over the exercise  price
         of such Option,  multiplied by the number of shares of Stock covered by
         such Option;

                           (iii) The restrictions,  deferral of settlement,  and
         forfeiture  conditions  applicable to any other Award granted under the
         Plan shall lapse and such Awards shall be deemed fully vested as of the
         time of the  Change in  Control,  except to the extent of any waiver by
         the  Participant  and subject to applicable  restrictions  set forth in
         Section 10(a) hereof, and

                           (iv) With respect to any outstanding Award subject to
         achievement of performance  goals and conditions  under the Plan,  such
         performance  goals and other conditions will be deemed to be met if and
         to the  extent so  provided  by the  Committee  in the Award  agreement
         relating to such Award.

                  (b)  Definition  of Change in  Control.  A "Change in Control"
shall mean (i) the  approval by a majority  of the public  holders of the voting
stock of the Company of a merger, reorganization or consolidation as a result of
which the shareholders of the Company immediately prior to such approval do not,
immediately  after the consummation of such transaction own more than 50% of the
voting stock of the surviving entity; (ii) the liquidation or dissolution of the
Company,  if and solely to the extent the Company  has engaged in a  substantial
business  following the Effective  Date or, if the Company shall then be engaged
in a  business,  upon  the  sale of all or  substantially  all of the  Company's
assets;  (iii) the  acquisition,  other than from the Company  directly,  by any
Person or group,  within the meaning of Section  13(d) or 14(d) of the  Exchange
Act, of beneficial  ownership of fifty percent (50%) or more of the  outstanding
common stock of the Company;  or (iv) if the  individuals who serve on the Board
as of the Effective  Date no longer  constitute a majority of the members of the
Board;  provided,  however, that any person who becomes a director subsequent to
the  Effective  Date who is  elected  to fill a  vacancy  by a  majority  of the
individuals  then serving on the Board shall be considered as if such person was
a member prior to the Effective Date.

                  (c)  Definition  of Change in Control  Price.  The  "Change in
Control  Price" means an amount in cash equal to the higher of (i) the amount of
cash and fair market value of property  that is the highest price per share paid
(including  extraordinary  dividend) in any transaction of stock  triggering the
Change  in  Control  under  Section  9(b)  hereof  or any  liquidation  of stock
following a sale of substantially all of the assets of the Company,  or (ii) the
highest  Fair  Market  Value per share at any time during the twenty-day  period
preceding and twenty-day period following the Change in Control.

         10.      General Provisions.

                  (a) Compliance with Legal and Other Requirements.  The Company
may, to the extent deemed necessary or advisable by the Committee,  postpone the
issuance or delivery of Stock or payment of other benefits under any Award until
completion of such registration or qualification of such Stock or other required
action  under any  federal or state law,  rule or  regulation,  listing or other
required action with respect to any stock exchange or automated quotation system
upon  which the Stock or other  Company  securities  are  listed or  quoted,  or
compliance  with any other  obligation  of the  Company,  as the  Committee  may
consider  appropriate  in  connection  with the issuance or delivery of Stock or
payment  of other  benefits  in  compliance  with  applicable  law,  rules,  and
regulations,   listing  requirements,   or  other  obligations.   The  foregoing
notwithstanding,  in connection with a Change in Control, the Company shall take
or cause to be taken no action,  and shall undertake to permit to arise no legal
or  contractual  obligation,  that  results or would  result in any  issuance or
delivery of Stock or Payment of benefit under any Award or the imposition of any
other conditions on such issuance,  delivery or payment, to the extent that such
postponement   or  other  condition  would  represent  a  greater  burden  on  a
Participant than existed on the 90th day preceding the Change in Control.

                  (b)  Limits  on  Transferability;  Beneficiaries.  No Award or
other  right or  interest  of a  Participant  under the Plan  shall be  pledged,
hypothecated  or  otherwise  encumbered  or subject to any lien,  obligation  or
liability  of such  Participant  to any  party  (other  than  the  Company  or a
subsidiary),  or assigned or transferred by such  Participant  otherwise than by
will or the laws of descent and  distribution or to a Beneficiary upon the death
of a  Participant,  and such Awards or rights that may be  exercisable  shall be
exercised  during the lifetime of the Participant only by the Participant or his
or her  guardian or legal  representative,  except that Awards and other  rights
(other then ISOs and SARs in tandem therewith) may be transferred to one or more
Beneficiaries  or other transferee  during the lifetime of the Participant,  and
may be exercised by such transferees in accordance with the terms of such Award,
but only if and to the extent such  transfers  are  permitted  by the  Committee
pursuant to the express  terms of an Award  agreement  (subject to any terms and
conditions which the Committee may impose thereon).  A Beneficiary,  transferee,
or other  person  claiming  any  rights  under  the  Plan  from or  through  any
Participant  shall be  subject to all terms and  conditions  of the Plan and any
Award agreement applicable to such Participant except as otherwise determined by
the Committee,  and to any additional  terms and conditions  deemed necessary or
appropriate by the Committee.

                  (c)  Adjustments.  In the  event  that any  dividend  or other
distribution   (whether  in  the  form  of  cash,   Stock  or  other  property),
recapitalization,    forward   or   reverse   split,   reorganization,   merger,
consolidation,  spin-off, combination,  repurchase, share exchange, liquidation,
dissolution  or other similar  corporate  transaction or event affects the Stock
such that an adjustment is determined by the Committee to be  appropriate  under
the Plan,  then the Committee  shall,  in such manner as it may deem  equitable,
adjust  any or all of (i) the  number  and kind of shares of Stock  which may be
delivered in connection with Awards granted thereafter, (ii) the number and kind
of shares of Stock by which annual  per-person  Award  limitations  are measured
under Section 5 hereof,  (iii) the number and kind of shares of Stock subject to
or deliverable in respect of outstanding  Awards,  and (iv) the exercise  price,
grant price or purchase  price  relating to any Award and/or make  provision for
payment  of cash or other  property  in  respect of any  outstanding  Award.  In
addition,  the  Committee is  authorized  to make  adjustments  in the terms and
conditions  of, and the criteria  included  in,  Awards  (including  Performance
Awards  and  performance  goals,  and  Annual  Incentive  Awards  and any Annual
Incentive  Award pool or performance  goals relating  thereto) in recognition of
unusual or nonrecurring events (including,  without limitation, events described
in  the  preceding  sentence,  as  well  as  acquisitions  and  dispositions  of
businesses  and assets)  affecting the Company,  any  subsidiary or any business
unit,  or the  financial  statements  of the  Company or any  subsidiary,  or in
response to changes in applicable laws, regulations,  accounting principles, tax
rates and  regulations  or  business  conditions  or in view of the  Committee's
assessment of the business  strategy of the Company,  any subsidiary or business
unit thereof,  performance  of comparable  organizations,  economic and business
conditions,  personal performance of a Participant,  and any other circumstances
deemed relevant; provided that no such adjustment shall be authorized or made if
and to the extent that such  authority  or the making of such  adjustment  would
cause  Options,  SARs,  Performance  Awards granted under Section 8(b) hereof or
Annual  Incentive  Awards  granted  under  Section  8(c) hereof to  Participants
designated  by the  Committee  as Covered  Employees  and intended to qualify as
"performance-based   compensation"   under  Section   162(m)  of  the  Code  and
regulations  thereunder  to  otherwise  fail to  qualify  as  "performance-based
compensation" under Section 162(m) of the Code and regulations thereunder.

                  (d) Taxes.  The Company and any  subsidiary  are authorized to
withhold  from any Award  granted,  any  payment  relating to an Award under the
Plan, including from a distribution of Stock, or any payroll or other payment to
a Participant, amounts of withholding and other taxes due or potentially payable
in connection  with any transaction  involving an Award,  and to take such other
action  as  the  Committee  may  deem   advisable  to  enable  the  Company  and
Participants  to satisfy  obligations  for the payment of withholding  taxes and
other tax  obligations  relating  to any Award.  This  authority  shall  include
authority  to  withhold  or  receive  Stock or other  property  and to make cash
payments  with  respect  thereof  in   satisfaction   of  a  Participant's   tax
obligations,  either on a mandatory or elective  basis in the  discretion of the
Committee.

                  (e)  Changes  to the Plan and  Awards.  The Board  may  amend,
alter,  suspend,  discontinue or terminate the Plan or the Committee's authority
to  grant  Awards  under  the  Plan  without  the  consent  of  shareholders  or
Participants,  except  that any  amendment  or  alteration  to the Plan shall be
subject to  approval  of the  Company's  shareholders  not later than the annual
meeting  next  following  such  Board  action if such  shareholder  approval  is
required  by any  federal or state law or  regulation  or the rules of any stock
exchange or automated  quotation system on which the Stock may then be listed or
quoted,  and the Board may  otherwise,  in its  discretion,  determine to submit
other such changes to the Plan to  shareholders  for  approval;  provided  that,
without  the  consent  of an  affected  Participant,  no such  Board  action may
materially  and  adversely  affect  the  rights  of such  Participant  under any
previously granted and outstanding Award. The Committee may waive any conditions
or rights under, or amend,  after,  suspend,  discontinue or terminate any Award
theretofore  granted  and  any  Award  agreement  relating  thereto,  except  as
otherwise  provided  in the Plan;  provided  that,  without  the  consent  of an
affected  Participant,  no such  Committee  action may  materially and adversely
affect the rights of such Participant under such Award. Notwithstanding anything
in the  Plan to the  contrary,  if any  right  under  this  Plan  would  cause a
transaction to be ineligible for pooling of interest  accounting that would, but
for the  right  hereunder,  be  eligible  for  such  accounting  treatment,  the
Committee may modify or adjust the right so that pooling of interest  accounting
shall be  available,  including the  substitution  of Stock having a Fair Market
Value equal to the cash otherwise  payable  hereunder for the right which caused
the transaction to be ineligible for pooling of interest accounting.

                  (f)  Limitation on Rights  Conferred  under Plan.  Neither the
Plan nor any  action  taken  hereunder  shall be  construed  as (i)  giving  any
Eligible  Person or Participant  the right to continue as an Eligible  Person or
Participant  or in the employ or service of the  Company or a  subsidiary,  (ii)
interfering  in any way  with  the  right  of the  Company  or a  subsidiary  to
terminate any Eligible  Person's or  Participant's  employment or service at any
time, (iii) giving an Eligible Person or Participant any claim to be granted any
Award  under the Plan or to be treated  uniformly  with other  Participants  and
employees,  or  (iv)  conferring  on  a  Participant  any  of  the  rights  of a
shareholder  of the Company  unless and until the  Participant is duly issued or
transferred shares of Stock in accordance with the terms of an Award.

                  (g) Unfunded Status of Awards; Creation of Trusts. The Plan is
intended  to  constitute   an   "unfunded"   plan  for  incentive  and  deferred
compensation.  With  respect to any payments  not yet made to a  Participant  or
obligation to deliver Stock pursuant to an Award,  nothing contained in the Plan
or any Award shall give any such  Participant  any rights that are greater  than
those of a general  creditor of the Company;  provided  that the  Committee  may
authorize the creation of trusts and deposit therein cash,  Stock,  other Awards
or other property,  or make other arrangements to meet the Company's obligations
under the Plan. Such trusts or other  arrangements  shall be consistent with the
"unfunded" status of the Plan unless the Committee otherwise determines with the
consent  of  each  affected  Participant.  The  trustee  of such  trusts  may be
authorized  to dispose of trust assets and reinvest the proceeds in  alternative
investments,  subject to such terms and  conditions as the Committee may specify
and in accordance with applicable law.

                  (h)  Nonexclusivity  of the Plan.  Neither the adoption of the
Plan by the Board nor its  submission  to the  shareholders  of the  Company for
approval  shall be  construed as creating  any  limitations  on the power of the
Board or a committee  thereof to adopt such other  incentive  arrangements as it
may deem  desirable  including  incentive  arrangements  and awards which do not
qualify under Section 162(m) of the Code.

                  (i) Payments in the Event of Forfeitures;  Fractional  Shares.
Unless otherwise determined by the Committee, in the event of a forfeiture of an
Award with respect to which a Participant paid cash or other consideration,  the
Participant shall be repaid the amount of such cash or other  consideration.  No
fractional shares of Stock shall be issued or delivered  pursuant to the Plan or
any Award.  The Committee  shall determine  whether cash,  other Awards or other
property  shall be issued or paid in lieu of such  fractional  shares or whether
such  fractional  shares or any rights  thereto  shall be forfeited or otherwise
eliminated.

                  (j) Governing  Law. The validity,  construction  and effect of
the Plan,  any rules and  regulations  under the Plan,  and any Award  agreement
shall be determined in accordance with New Jersey Law,  without giving effect to
principles of conflicts of laws, and applicable federal law.

                  (k) Plan Effective Date and Shareholder Approval. The Plan has
been  adopted by the Board with the consent of the  shareholders  of the Company
and shall become effective as of July 1, 2000.EXHIBIT 4.3

                                 EXECUTION COPY

                        RESIDENTIAL FUNDING CORPORATION,

                               as Master Servicer

                        HOME EQUITY LOAN TRUST 2000-HS1,

                                    as Issuer

                                       and

                            THE CHASE MANHATTAN BANK

                              as Indenture Trustee

                               SERVICING AGREEMENT

                         Dated as of September 26, 2000

                             Revolving Credit Loans

<PAGE>

               This Servicing  Agreement,  dated as of September 26, 2000, among
Residential Funding  Corporation (the "Master  Servicer"),  the Home Equity Loan
Trust 2000-HS1 (the  "Issuer"),  and The Chase  Manhattan  Bank (the  "Indenture
Trustee").

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

               WHEREAS,  pursuant  to the  terms of the  Revolving  Credit  Loan
Purchase Agreement,  Residential Funding Corporation (in its capacity as Seller)
will sell to the Depositor the Revolving  Credit Loans together with the Related
Documents on the Closing Date, and thereafter all Additional Balances created on
or after the Cut-off Date (except as set forth herein);

               WHEREAS,  the Depositor will sell the Revolving  Credit Loans and
all of its rights  under the  Revolving  Credit Loan  Purchase  Agreement to the
Issuer,  together with the Related Documents on the Closing Date, and thereafter
all  Additional  Balances  created on or after the Cut-off  Date  (except as set
forth herein);

               WHEREAS, pursuant to the terms of the Trust Agreement, the Issuer
will  issue  and  transfer  to  or  at  the  direction  of  the  Depositor,  the
Certificates;

     WHEREAS,  pursuant to the terms of the Indenture, the Issuer will issue and
transfer to or at the direction of the Depositor, the Notes; and

               WHEREAS,  pursuant to the terms of this Servicing Agreement,  the
Master Servicer will service the Revolving  Credit Loans directly or through one
or more Subservicers;

               NOW,  THEREFORE,  in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

Section 1.01 Definitions.  For all purposes of this Servicing Agreement,  except
as otherwise expressly provided herein or unless the context otherwise requires,
capitalized  terms not otherwise defined herein shall have the meanings assigned
to such terms in the Definitions  contained in Appendix A to the Indenture dated
the date hereof (the  "Indenture"),  between the Issuer and The Chase  Manhattan
Bank, as indenture trustee, which is incorporated by reference herein. All other
capitalized terms used herein shall have the meanings specified herein.

Section  1.02  Other  Definitional  Provisions.  (a) All terms  defined  in this
Servicing Agreement shall have the defined meanings when used in any certificate
or other document made or delivered  pursuant  hereto unless  otherwise  defined
therein.

(b) As used in this Servicing Agreement and in any certificate or other document
made or delivered  pursuant hereto or thereto,  accounting  terms not defined in
this  Servicing  Agreement or in any such  certificate  or other  document,  and
accounting  terms  partly  defined in this  Servicing  Agreement  or in any such

 <PAGE>

certificate  or other  document,  to the  extent  not  defined,  shall  have the
respective   meanings  given  to  them  under  generally   accepted   accounting
principles.  To the extent  that the  definitions  of  accounting  terms in this
Servicing   Agreement  or  in  any  such   certificate  or  other  document  are
inconsistent with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Servicing Agreement or in any such
certificate or other document shall control.

(c) The words "hereof,"  "herein,"  "hereunder" and words of similar import when
used in this Servicing  Agreement  shall refer to this Servicing  Agreement as a
whole and not to any particular provision of this Servicing  Agreement;  Section
and Exhibit references  contained in this Servicing  Agreement are references to
Sections  and  Exhibits  in or to  this  Servicing  Agreement  unless  otherwise
specified;  the term "including" shall mean "including without limitation";  and
the term "proceeds" shall have the meaning ascribed thereto in the UCC.

(d) The definitions  contained in this Servicing Agreement are applicable to the
singular as well as the plural forms of such terms and to the  masculine as well
as the feminine and neuter genders of such terms.

(e) Any agreement, instrument or statute defined or referred to herein or in any
instrument or certificate delivered in connection herewith means such agreement,
instrument or statute as from time to time amended, modified or supplemented and
includes  (in  the  case  of  agreements  or  instruments)   references  to  all
attachments thereto and instruments incorporated therein; references to a Person
are also to its permitted successors and assigns.

Section 1.03 Interest Calculations.  All calculations of interest hereunder that
are made in respect of the Loan Balance of a Revolving Credit Loan shall be made
on a daily  basis  using a 365-day  year.  All  calculations  of interest on the
Securities  shall  be made  on the  basis  of the  actual  number  of days in an
Interest  Period and a year assumed to consist of 360 days.  The  calculation of
the  Servicing  Fee shall be made on the basis of a 360-day year  consisting  of
twelve 30-day months. All dollar amounts  calculated  hereunder shall be rounded
to the nearest penny with one-half of one penny being rounded up.

ARTICLE II

                         REPRESENTATIONS AND WARRANTIES

Section 2.01 Representations and Warranties  Regarding the Master Servicer.  The
Master Servicer represents and warrants to the Issuer and for the benefit of the
Indenture  Trustee,  as pledgee of the Revolving Credit Loans, as of the Cut-off
Date:

(a) The Master Servicer is a corporation duly organized, validly existing and in
good  standing  under the laws of the State of  Delaware  and has the  corporate
power to own its assets and to transact  the  business in which it is  currently
engaged.  The Master  Servicer  is duly  qualified  to do  business as a foreign
corporation and is in good standing in each  jurisdiction in which the character
of the business  transacted by it or  properties  owned or leased by it requires
such  qualification and in which the failure to so qualify would have a material
adverse effect on the business,  properties,  assets, or condition (financial or
other) of the Master Servicer;

 <PAGE>

(b) The Master  Servicer has the power and authority to make,  execute,  deliver
and perform this Servicing  Agreement and all of the  transactions  contemplated
under this Servicing Agreement,  and has taken all necessary corporate action to
authorize the execution,  delivery and performance of this Servicing  Agreement.
When executed and delivered, this Servicing Agreement will constitute the legal,
valid and binding  obligation of the Master  Servicer  enforceable in accordance
with  its  terms,  except  as  enforcement  of  such  terms  may be  limited  by
bankruptcy,  insolvency or similar laws affecting the  enforcement of creditors'
rights generally and by the availability of equitable remedies;

(c) The Master  Servicer  is not  required  to obtain  the  consent of any other
Person or any consent,  license, approval or authorization from, or registration
or declaration with, any governmental authority,  bureau or agency in connection
with the execution,  delivery,  performance,  validity or enforceability of this
Servicing   Agreement,   except  for  such   consent,   license,   approval   or
authorization,  or registration  or declaration,  as shall have been obtained or
filed, as the case may be;

(d) The execution and delivery of this Servicing  Agreement and the  performance
of the transactions  contemplated hereby by the Master Servicer will not violate
any  provision of any existing law or  regulation  or any order or decree of any
court  applicable to the Master  Servicer or any provision of the Certificate of
Incorporation or Bylaws of the Master Servicer,  or constitute a material breach
of any  mortgage,  indenture,  contract or other  agreement  to which the Master
Servicer is a party or by which the Master Servicer may be bound; and

(e) No litigation or administrative  proceeding of or before any court, tribunal
or  governmental  body is currently  pending,  or to the knowledge of the Master
Servicer  threatened,  against the Master  Servicer or any of its  properties or
with respect to this Servicing  Agreement or the Securities which in the opinion
of the Master  Servicer has a reasonable  likelihood  of resulting in a material
adverse effect on the transactions contemplated by this Servicing Agreement.

        The  foregoing   representations   and  warranties   shall  survive  any
termination of the Master Servicer hereunder.

Section 2.02  Representations  and  Warranties of the Issuer.  The Issuer hereby
represents  and  warrants  to the  Master  Servicer  and for the  benefit of the
Indenture  Trustee,  as pledgee of the Revolving Credit Loans, as of the Cut-off
Date:

(a) The Issuer is a business  trust duly formed and in good  standing  under the
laws of the State of Delaware and has full power,  authority  and legal right to
execute and deliver  this  Servicing  Agreement  and to perform its  obligations
under this Servicing Agreement,  and has taken all necessary action to authorize
the execution, delivery and performance by it of this Servicing Agreement; and

(b) The execution and delivery by the Issuer of this Servicing Agreement and the
performance by the Issuer of its obligations under this Servicing Agreement will
not violate any provision of any law or  regulation  governing the Issuer or any

 <PAGE>

order,  writ,  judgment  or  decree of any  court,  arbitrator  or  governmental
authority  or  agency  applicable  to the  Issuer  or any  of its  assets.  Such
execution,  delivery,  authentication and performance will not conflict with, or
result in a breach or violation of, any mortgage,  deed of trust, lease or other
agreement or instrument to which the Issuer is bound.

Section 2.03 Enforcement of Representations and Warranties. The Master Servicer,
on behalf of and subject to the direction of the Indenture  Trustee,  as pledgee
of the Revolving Credit Loans, or the Issuer,  shall enforce the representations
and  warranties  of the Seller  pursuant to the  Revolving  Credit Loan Purchase
Agreement. Upon the discovery by the Seller, the Depositor, the Master Servicer,
the Indenture  Trustee,  the Credit Enhancer,  the Issuer, or any Custodian of a
breach of any of the representations and warranties made in the Revolving Credit
Loan  Purchase  Agreement,  in  respect  of  any  Revolving  Credit  Loan  which
materially  and adversely  affects the interests of the  Securityholders  or the
Credit  Enhancer,  the party  discovering  such breach shall give prompt written
notice to the other parties (any Custodian  being so obligated under a Custodial
Agreement).  The Master Servicer shall promptly notify the Seller of such breach
and request that,  pursuant to the terms of the  Revolving  Credit Loan Purchase
Agreement,  the Seller  either  (i) cure such  breach in all  material  respects
within 45 days (with respect to a breach of the  representations  and warranties
contained in Section 3.1(a) of the Revolving Credit Loan Purchase  Agreement) or
90  days  (with  respect  to a  breach  of the  representations  and  warranties
contained in Section  3.1(b) of the Revolving  Credit Loan  Purchase  Agreement)
from the date the Seller  was  notified  of such  breach or (ii)  purchase  such
Revolving  Credit  Loan from the Issuer at the price and in the manner set forth
in Section 3.1(b) of the Revolving Credit Loan Purchase Agreement; provided that
the Seller shall, subject to compliance with all the conditions set forth in the
Revolving  Credit Loan  Purchase  Agreement,  have the option to  substitute  an
Eligible  Substitute Loan or Loans for such Revolving  Credit Loan. In the event
that the Seller  elects to  substitute  one or more  Eligible  Substitute  Loans
pursuant to Section 3.1(b) of the Revolving Credit Loan Purchase Agreement,  the
Seller  shall  deliver to the Issuer with  respect to such  Eligible  Substitute
Loans,  the  original  Credit  Line  Agreement,  the  Mortgage,  and such  other
documents and  agreements as are required by the Revolving  Credit Loan Purchase
Agreement.  Payments due with respect to Eligible  Substitute Loans in the month
of  substitution  shall not be transferred to the Issuer and will be retained by
the Master  Servicer  and  remitted by the Master  Servicer to the Seller on the
next succeeding Payment Date provided a payment at least equal to the applicable
Minimum  Monthly  Payment  has been  received  by the  Issuer  for such month in
respect of the Revolving  Credit Loan to be removed.  The Master  Servicer shall
amend or cause to be amended the  Revolving  Credit Loan Schedule to reflect the
removal of such  Revolving  Credit  Loan and the  substitution  of the  Eligible
Substitute  Loans and the Master  Servicer  shall  promptly  deliver the amended
Revolving Credit Loan Schedule to the Owner Trustee and the Indenture Trustee.

        It is  understood  and agreed that the  obligation of the Seller to cure
such breach or purchase or substitute for such Revolving Credit Loan as to which
such a breach has occurred and is continuing  shall  constitute  the sole remedy
respecting  such breach  available to the Issuer and the Indenture  Trustee,  as
pledgee of the Revolving  Credit Loans,  against the Seller.  In connection with
the  purchase  of or  substitution  for any such  Revolving  Credit  Loan by the
Seller,  the Issuer  shall  assign to the  Seller  all of its  right,  title and
interest in respect of the Revolving Credit Loan Purchase  Agreement  applicable
to such Revolving  Credit Loan.  Upon receipt of the Repurchase  Price,  or upon
completion of such substitution,  the Master Servicer shall notify the Custodian
and then the Custodian shall deliver the Mortgage Files to the Master  Servicer,
together with all relevant  endorsements and assignments  prepared by the Master
Servicer which the Indenture Trustee shall execute.

 <PAGE>

                                  ARTICLE III

                    ADMINISTRATION AND SERVICING OF REVOLVING CREDIT LOANS

Section 3.01   The Master Servicer.

(a) The Master Servicer shall service and administer the Revolving  Credit Loans
in a manner  generally  consistent  with the terms of the Program Guide and in a
manner consistent with the terms of this Servicing  Agreement and which shall be
normal and usual in its general  mortgage  servicing  activities  and shall have
full power and authority,  acting alone or through a subservicer,  to do any and
all things in connection  with such  servicing and  administration  which it may
deem  necessary or  desirable,  it being  understood,  however,  that the Master
Servicer  shall at all times remain  responsible to the Issuer and the Indenture
Trustee,  as pledgee of the Revolving  Credit Loans,  for the performance of its
duties and  obligations  hereunder in  accordance  with the terms hereof and the
Program Guide.  Without  limiting the  generality of the  foregoing,  the Master
Servicer shall  continue,  and is hereby  authorized and empowered by the Issuer
and the Indenture Trustee,  as pledgee of the Revolving Credit Loans, to execute
and deliver,  on behalf of itself,  the Issuer,  the Indenture Trustee or any of
them, 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  Revolving  Credit Loans and with respect to the Mortgaged  Properties.  The
Issuer,  the Indenture Trustee and the Custodian,  as applicable,  shall furnish
the Master Servicer with any powers of attorney and other documents necessary or
appropriate  to  enable  the  Master  Servicer  to carry out its  servicing  and
administrative  duties hereunder.  In addition,  the Master Servicer may, at its
own discretion and on behalf of the Indenture Trustee, obtain credit information
in the form of a Credit Score from a credit repository. On the Closing Date, the
Indenture  Trustee  shall  deliver  to the Master  Servicer  a limited  power of
attorney substantially in the form of Exhibit B hereto.

        If the Mortgage  relating to a Revolving Credit Loan did not have a lien
senior to the Revolving Credit Loan on the related Mortgaged  Property as of the
Cut-off Date, then the Master Servicer, in such capacity, may not consent to the
placing  of a lien  senior  to that of the  Mortgage  on the  related  Mortgaged
Property.  If the Mortgage relating to a Revolving Credit Loan had a lien senior
to the Revolving Credit Loan on the related Mortgaged Property as of the Cut-off
Date, then the Master Servicer, in such capacity, may consent to the refinancing
of the prior senior lien, provided that the following requirements are met:

(i) the resulting Combined Loan-to-Value Ratio ("Combined  Loan-to-Value Ratio")
of such  Revolving  Credit Loan is no higher than that  permitted by the Program
Guide, provided,  however, the Mortgagor's debt-to-income ratio is less than the
original  debt-to-income  ratio  as set  forth  on  the  Revolving  Credit  Loan
Schedule; or

(ii) the resulting Combined Loan-to-Value Ratio of such Revolving Credit Loan is
no higher than the Combined  Loan-to-Ratio prior to such refinancing;  provided,
however,  if such  refinanced  mortgage loan is a "rate and term"  mortgage loan
(meaning,  the Mortgagor  does not receive any cash from the  refinancing),  the

 <PAGE>

Combined  Loan-to-Value  Ratio may  increase  to the  extent  of either  (a) the
reasonable closing costs of such refinancing or (b) any decrease in the value of
the related Mortgaged Property, if the Mortgagor is in good standing;

(iii) the interest rate, or, in the case of an adjustable  rate existing  senior
lien, the maximum  interest rate, for the loan evidencing the refinanced  senior
lien is no higher than the interest  rate or the maximum  interest  rate, as the
case may be, on the loan evidencing the existing senior lien  immediately  prior
to the date of such refinancing;  provided,  however, (a) if the loan evidencing
the existing senior lien prior to the date of refinancing has an adjustable rate
and the loan  evidencing the refinanced  senior lien has a fixed rate,  then the
current  interest rate on the loan evidencing the refinanced  senior lien may be
up to 2.0% higher than the then  current  loan rate of the loan  evidencing  the
existing  senior lien and (b) if the loan  evidencing  the existing  senior lien
prior to the date of  refinancing  has a fixed rate and the loan  evidencing the
refinanced senior lien has an adjustable rate, then the maximum interest rate on
the loan  evidencing the  refinanced  senior lien shall be less than or equal to
(x) the interest rate on the loan  evidencing the existing  senior lien prior to
the date of refinancing plus (y) 2.0%; and

(b) the loan evidencing the refinanced senior lien is not subject to negative
amortization.

        The Master  Servicer  may also,  without  prior  approval  of the Rating
Agencies or the Credit Enhancer,  increase the Credit Limits on Revolving Credit
Loans  (a  "Credit  Limit  Increase"),  provided  that  (i) a new  appraisal  is
obtained, (ii) the new Combined Loan-to-Value Ratio of any such Revolving Credit
Loan after giving  effect to such increase is less than or equal to the Combined
Loan-to-Value  Ratio of the Revolving  Credit Loan as of the Cut-off Date, (iii)
the Master Servicer  receives  verbal  verification of employment of the related
Mortgagor  and (iv) the payment  history of the related  Mortgagor is within the
underwriting  parameters of the Program Guide. In addition,  the Master Servicer
may increase the Credit Limits on Revolving  Credit Loans without  obtaining new
appraisals  provided that clauses  (iii) and (iv) of the preceding  sentence are
satisfied,  the  Combined  Loan-to-Value  Ratio  of the  Revolving  Credit  Loan
following the Credit Limit Increase will be limited to 100% and at no time shall
the aggregate Principal Balance of such Revolving Credit Loans exceed 10% of the
current Pool Balance;  provided,  further,  however,  that for Revolving  Credit
Loans with original Combined Loan-to-Value Ratios in excess of 80%, the Combined
Loan-to-Value  Ratio resulting from such Credit Limit Increase must be less than
or equal to the original Combined  Loan-to-Value  Ratio and at no time shall the
aggregate  Principal  Balance of such  Revolving  Credit  Loans exceed 5% of the
current Pool Balance.

        In connection  with  servicing the  Revolving  Credit Loans,  the Master
Servicer may take  reasonable  actions to encourage or effect the termination of
Loan Agreements that have become dormant.

        The  relationship  of the Master  Servicer  (and of any successor to the
Master Servicer as servicer under this Servicing  Agreement) to the Issuer under
this Servicing Agreement is intended by the parties to be that of an independent
contractor and not that of a joint venturer, partner or agent.

 <PAGE>

(c) The Master Servicer may enter into Subservicing Agreements with Subservicers
for the servicing and  administration  of certain of the Revolving Credit Loans.
References  in this  Servicing  Agreement to actions taken or to be taken by the
Master Servicer in servicing the Revolving Credit Loans include actions taken or
to be taken by a  Subservicer  on behalf of the Master  Servicer  and any amount
actually  received by such  Subservicer  in respect of a  Revolving  Credit Loan
shall be deemed to have been  received  by the  Master  Servicer  whether or not
actually received by the Master Servicer.  Each  Subservicing  Agreement will be
upon such  terms and  conditions  as are not  inconsistent  with this  Servicing
Agreement and as the Master Servicer and the Subservicer  have agreed.  With the
approval of the Master  Servicer,  a  Subservicer  may  delegate  its  servicing
obligations  to  third-party  servicers,   but  such  Subservicers  will  remain
obligated under the related Subservicing Agreements. The Master Servicer and the
Subservicer  may enter into amendments to the related  Subservicing  Agreements;
provided, however, that any such amendments shall not cause the Revolving Credit
Loans to be serviced in a manner that would be materially  inconsistent with the
standards set forth in this Servicing  Agreement.  The Master  Servicer shall be
entitled to terminate any  Subservicing  Agreement in accordance  with the terms
and  conditions  thereof and without any  limitation by virtue of this Servicing
Agreement;   provided,  however,  that  in  the  event  of  termination  of  any
Subservicing  Agreement by the Master  Servicer or the  Subservicer,  the Master
Servicer  shall either act as servicer of the related  Revolving  Credit Loan or
enter into a Subservicing  Agreement with a successor  Subservicer which will be
bound by the terms of the related  Subservicing  Agreement.  The Master Servicer
shall  be  entitled  to  enter  into  any  agreement  with  a  Subservicer   for
indemnification  of the Master Servicer and nothing  contained in this Servicing
Agreement shall be deemed to limit or modify such indemnification.

        In the event  that the  rights,  duties  and  obligations  of the Master
Servicer are terminated  hereunder,  any successor to the Master Servicer in its
sole  discretion may, to the extent  permitted by applicable law,  terminate the
existing  Subservicing  Agreement with any  Subservicer  in accordance  with the
terms of the applicable  Subservicing  Agreement or assume the terminated Master
Servicer's  rights and obligations under such  subservicing  arrangements  which
termination or assumption will not violate the terms of such arrangements.

        As part of its servicing activities hereunder,  the Master Servicer, for
the benefit of the Securityholders and the Credit Enhancer, shall use reasonable
efforts  to  enforce  the  obligations  of each  Subservicer  under the  related
Subservicing  Agreement,  to the  extent  that the  non-performance  of any such
obligation would have a material adverse effect on a Revolving Credit Loan. Such
enforcement,  including,  without  limitation,  the legal prosecution of claims,
termination  of  Subservicing  Agreements  and the pursuit of other  appropriate
remedies,  shall be in such form and  carried  out to such an extent and at such
time as the Master Servicer, in its good faith business judgment,  would require
were it the owner of the related  Revolving  Credit Loans.  The Master  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 Revolving Credit Loan or (ii) from a specific recovery of
costs,   expenses  or  attorneys  fees  against  the  party  against  whom  such
enforcement is directed.

Section 3.02  Collection  of Certain  Revolving  Credit Loan  Payments.  (a) The
Master Servicer shall make reasonable efforts to collect all payments called for

 <PAGE>

under the terms and provisions of the Revolving  Credit Loans, and shall, to the
extent such  procedures  shall be consistent  with this Servicing  Agreement and
generally  consistent with the Program Guide, follow such collection  procedures
as shall be  normal  and usual in its  general  mortgage  servicing  activities.
Consistent  with the  foregoing,  and without  limiting  the  generality  of the
foregoing,  the Master  Servicer  may in its  discretion  waive any late payment
charge,  penalty  interest or other fees which may be  collected in the ordinary
course of servicing  such Revolving  Credit Loan.  The Master  Servicer may also
extend the Due Date for  payment due on a  Revolving  Credit Loan in  accordance
with the Program Guide, provided,  however, that the Master Servicer shall first
determine  that any such waiver or extension will not impair the coverage of any
related insurance policy or materially  adversely affect the lien of the related
Mortgage (except as described below) or the interests of the Securityholders and
the Credit Enhancer.  Consistent with the terms of this Servicing Agreement, the
Master Servicer may also:

(i)  waive,  modify or vary any term of any  Revolving  Credit  Loan  (including
reduce the Credit Limit or extend the period  during which a Draw may be made by
the  Mortgagor  pursuant to the Loan  Agreement  with  respect to any  Revolving
Credit Loan);

(ii) consent to the  postponement of strict  compliance with any such term or in
any manner grant indulgence to any Mortgagor;

(iii)  arrange  with a Mortgagor a schedule  for the  payment of  principal  and
interest due and unpaid;

(iv) forgive any portion of the amounts  contractually  owed under the Revolving
Credit Loan;

(v)  capitalize  any past due amounts  owed under the  Revolving  Credit Loan by
adding amounts in arrearage to the existing  principal  balance of the Revolving
Credit Loan (a "Capitalization  Workout"),  provided,  however,  that the Master
Servicer  shall not enter into a  Capitalization  Workout  unless  the  Combined
Loan-to-Value  Ratio of the  Revolving  Credit Loan prior to the  Capitalization
Workout equals or exceeds 80%;

(vi) reset the due date for the Revolving Credit Loan, or any combination of the
foregoing;

if  in  the  Master   Servicer's   determination   such  waiver,   modification,
postponement or indulgence, arrangement or other action referred to above is not
materially  adverse  to the  interests  of  the  Securityholders  or the  Credit
Enhancer and is generally  consistent with the Master  Servicer's  policies with
respect to revolving credit loans similar to Revolving  Credit Loans;  provided,
however, that the Master Servicer may not, except in the case of an extension of
the period  during which a Draw may be made by the  Mortgagor,  pursuant to this
Section 3.02,  modify or permit any  Subservicer to modify any Revolving  Credit
Loan (including  without  limitation any modification that would change the Loan
Rate,  forgive the payment of any  principal or interest  (unless in  connection
with the  liquidation  of the related  Revolving  Credit Loan),  capitalize  any
arrearage  for the related  Revolving  Credit Loan or extend the final  maturity
date of such  Revolving  Credit  Loan) unless such  Revolving  Credit Loan is in
default or, in the judgment of the Master  Servicer,  such default is reasonably
foreseeable.  Notwithstanding  the  foregoing,  the final  maturity date of such
Revolving  Credit Loans will not be extended beyond the Final Scheduled  Payment

 <PAGE>

Date. The general terms of any waiver, modification,  postponement or indulgence
with  respect  to any of the  Revolving  Credit  Loans will be  included  in the
Servicing  Certificate,  and such Revolving  Credit Loans will not be considered
"delinquent"  for the purposes of the Basic  Documents so long as the  Mortgagor
complies  with  the  terms  of  such  waiver,   modification,   postponement  or
indulgence.  In  addition,  if a Revolving  Credit Loan is in default or, in the
judgment of the Master  Servicer,  such default is reasonably  foreseeable,  the
Master Servicer may, through modification, convert such Revolving Credit Loan to
a fully amortizing  closed-end loan.  Notwithstanding the foregoing,  the Master
Servicer in its sole  discretion (i) may permit the Mortgagor (or may enter into
a  modification  agreement  which  will  allow the  Mortgagor)  to make  monthly
payments, with respect to any Billing Cycle during the related Draw Period, in a
minimum amount that will be equal to the related finance charge for such Billing
Cycle and (ii) may reduce  the amount of the Credit  Limit (to an amount no less
than the then  current  Principal  Balance  of such  Revolving  Credit  Loan) in
connection  with  any  refinancing  of a  senior  lien  pursuant  to the  second
paragraph of Section 3.01(a) of this Agreement.

(b) The Master Servicer shall establish a Custodial  Account,  which shall be an
Eligible  Account  in which the  Master  Servicer  shall  deposit or cause to be
deposited any amounts  representing  payments and  collections in respect of the
Revolving Credit Loans received by it subsequent to the Cut-off Date (other than
in respect of the payments  referred to in the following  paragraph)  within one
Business Day following  receipt thereof (or otherwise on or prior to the Closing
Date),  including the following payments and collections  received or made by it
(without duplication):

(i) all payments of principal or interest on the Revolving Credit Loans received
by the Master  Servicer from the respective  Subservicer,  net of any portion of
the interest thereof retained by the Subservicer as Subservicing Fees;

(ii) the aggregate  Repurchase  Price of the Revolving Credit Loans purchased by
the Master Servicer pursuant to Section 3.15;

(iii)   Net Liquidation Proceeds net of any related Foreclosure Profit;

(iv) all  proceeds  of any  Revolving  Credit  Loans  repurchased  by the Seller
pursuant to the Revolving Credit Loan Purchase  Agreement,  and all Substitution
Adjustment  Amounts required to be deposited in connection with the substitution
of an Eligible  Substitute  Loan pursuant to the Revolving  Credit Loan Purchase
Agreement;

(v) insurance proceeds, other than Net Liquidation Proceeds,  resulting from any
insurance policy maintained on a Mortgaged Property; and

(vi) amounts required to be paid by the Master Servicer pursuant to Section 8.08

provided,  however,  that with  respect to each  Collection  Period,  the Master
Servicer  shall be permitted  to retain from  payments in respect of interest on
the Revolving Credit Loans, the Master Servicing Fee for such Collection Period.
The foregoing  requirements  respecting  deposits to the  Custodial  Account are
exclusive,  it being  understood  that,  without  limiting the generality of the

 <PAGE>

foregoing, the Master Servicer need not deposit in the Custodial Account amounts
representing  Foreclosure  Profits,  fees (including annual fees) or late charge
penalties  payable by  Mortgagors  (such  amounts to be retained  as  additional
servicing  compensation  in  accordance  with Section 3.09  hereof),  or amounts
received by the Master  Servicer for the accounts of Mortgagors for  application
towards the payment of taxes, insurance premiums, assessments and similar items.
In the event any amount not required to be deposited in the Custodial Account is
so deposited,  the Master Servicer may at any time withdraw such amount from the
Custodial  Account,  any provision herein to the contrary  notwithstanding.  The
Custodial  Account  may  contain  funds that  belong to one or more trust  funds
created for the notes or  certificates  of other  series and may  contain  other
funds  respecting  payments on revolving  credit loans or other  mortgage  loans
belonging to the Master  Servicer or serviced or master serviced by it on behalf
of others.  Notwithstanding such commingling of funds, the Master Servicer shall
keep  records  that  accurately  reflect  the funds on deposit in the  Custodial
Account that have been  identified by it as being  attributable to the Revolving
Credit  Loans and shall hold all  collections  in the  Custodial  Account to the
extent they represent  collections on the Revolving Credit Loans for the benefit
of the Trust, the  Securityholders and the Indenture Trustee, as their interests
may  appear.  The  Master  Servicer  shall  retain  all  Foreclosure  Profits as
additional servicing compensation.

        The Master Servicer may cause the institution  maintaining the Custodial
Account to invest any funds in the  Custodial  Account in Permitted  Investments
(including obligations of the Master Servicer or any of its Affiliates,  if such
obligations otherwise qualify as Permitted Investments),  which shall mature not
later than the  Business  Day  preceding  the next Payment Date and shall not be
sold or disposed of prior to its maturity.  Except as provided above, all income
and gain  realized  from any such  investment  shall inure to the benefit of the
Master  Servicer  and shall be subject to its  withdrawal  or order from time to
time.  The amount of any losses  incurred in respect of the principal  amount of
any such investments  shall be deposited in the Custodial  Account by the Master
Servicer out of its own funds immediately as realized.

(c) The  Master  Servicer  will  require  each  Subservicer  to hold  all  funds
constituting  collections  on the  Revolving  Credit Loans,  pending  remittance
thereof to the Master Servicer, in one or more accounts meeting the requirements
of an Eligible Account, and invested in Permitted Investments.

Section 3.03 Withdrawals from the Custodial Account.  The Master Servicer shall,
from  time to time as  provided  herein,  make  withdrawals  from the  Custodial
Account  of  amounts  on  deposit  therein  pursuant  to  Section  3.02 that are
attributable to the Revolving Credit Loans for the following purposes:

(a) to deposit in the Payment Account, on the Business Day prior to each Payment
Date,  an amount equal to the Interest  Collections  and  Principal  Collections
required to be distributed on such Payment Date;

(b) prior to either an Amortization  Event or the Collection Period during which
the Revolving  Period ends, to pay to the Seller,  the amount of any  Additional
Balances as and when created  during the related  Collection  Period,  provided,
that the  aggregate  amount  so paid to the  Seller  in  respect  of  Additional
Balances at any time during any Collection Period shall not exceed the amount of
Principal Collections theretofore received for such Collection Period;

 <PAGE>

(c) to the extent deposited to the Custodial Account, to reimburse itself or the
related Subservicer for previously unreimbursed expenses incurred in maintaining
individual  insurance policies pursuant to Section 3.04, or Liquidation Expenses
paid pursuant to Section 3.07 or otherwise reimbursable pursuant to the terms of
this Servicing  Agreement (to the extent not payable  pursuant to Section 3.09),
such withdrawal right being limited to amounts received on particular  Revolving
Credit  Loans  (other  than any  Repurchase  Price  in  respect  thereof)  which
represent late  recoveries of the payments for which such advances were made, or
from  related  Liquidation  Proceeds  or the  proceeds  of the  purchase of such
Revolving Credit Loan;

(d) to pay to itself out of each  payment  received  on account of interest on a
Revolving  Credit Loan as  contemplated  by Section 3.09, an amount equal to the
related  Master  Servicing  Fee (to the extent not retained  pursuant to Section
3.02),  and to pay to any  Subservicer  any  Subservicing  Fees  not  previously
withheld by the Subservicer;

(e) to the  extent  deposited  in the  Custodial  Account  to pay to  itself  as
additional  servicing  compensation any interest or investment  income earned on
funds deposited in the Custodial Account and Payment Account that it is entitled
to withdraw pursuant to Sections 3.02(b) and 5.01;

(f) to the  extent  deposited  in the  Custodial  Account,  to pay to  itself as
additional  servicing  compensation  any  Foreclosure  Profits  (to  the  extent
permitted by law);

(g) to pay to itself or the Seller, with respect to any Revolving Credit Loan or
property  acquired  in respect  thereof  that has been  purchased  or  otherwise
transferred  to the Seller,  the Master  Servicer or other  entity,  all amounts
received thereon and not required to be distributed to Securityholders as of the
date on which the related Purchase Price or Repurchase Price is determined;

(h) to withdraw any other amount deposited in the Custodial Account that was not
required to be deposited therein pursuant to Section 3.02; and

(i) after the occurrence of an  Amortization  Event,  to pay to the Seller,  the
Excluded Amount for each Revolving Credit Loan.

Since, in connection with withdrawals pursuant to clauses (c), (d), (f) and (g),
the Master  Servicer's  entitlement  thereto is limited to  collections or other
recoveries on the related  Revolving Credit Loan, the Master Servicer shall keep
and maintain separate accounting, on a Revolving Credit Loan by Revolving Credit
Loan basis,  for the purpose of  justifying  any  withdrawal  from the Custodial
Account  pursuant to such clauses.  Notwithstanding  any other provision of this
Servicing  Agreement,  the Master Servicer shall be entitled to reimburse itself
for any previously  unreimbursed  expenses  incurred pursuant to Section 3.07 or
otherwise  reimbursable  pursuant to the terms of this Servicing  Agreement that
the Master  Servicer  determines  to be  otherwise  nonrecoverable  (except with
respect to any Revolving  Credit Loan as to which the Repurchase  Price has been
paid),  by withdrawal  from the Custodial  Account of amounts on deposit therein

 <PAGE>

attributable  to the  Revolving  Credit  Loans on any  Business Day prior to the
Payment Date succeeding the date of such determination.

Section 3.04 Maintenance of Hazard Insurance;  Property Protection Expenses. The
Master  Servicer  shall cause to be maintained  for each  Revolving  Credit Loan
hazard insurance naming the Master Servicer or related Subservicer as loss payee
thereunder  providing  extended coverage in an amount which is at least equal to
the lesser of (i) the maximum insurable value of the improvements  securing such
Revolving Credit Loan from time to time or (ii) the combined  principal  balance
owing  on such  Revolving  Credit  Loan and any  mortgage  loan  senior  to such
Revolving Credit Loan from time to time; provided,  however,  that such coverage
may not be less than the minimum  amount  required to fully  compensate  for any
loss or damage on a replacement cost basis. The Master Servicer shall also cause
to be  maintained  on property  acquired  upon  foreclosure,  or deed in lieu of
foreclosure, of any Revolving Credit Loan, fire insurance with extended coverage
in an  amount  which is at least  equal to the  amount  necessary  to avoid  the
application of any co-insurance clause contained in the related hazard insurance
policy.  Amounts collected by the Master Servicer under any such policies (other
than amounts to be applied to the restoration or repair of the related Mortgaged
Property  or property  thus  acquired or amounts  released to the  Mortgagor  in
accordance with the Master  Servicer's  normal  servicing  procedures)  shall be
deposited in the Custodial  Account to the extent called for by Section 3.02. In
cases in which any Mortgaged  Property is located at any time during the life of
a  Revolving  Credit  Loan in a  federally  designated  flood  area,  the hazard
insurance to be maintained for the related  Revolving  Credit Loan shall include
flood insurance (to the extent available).  All such flood insurance shall be in
amounts  equal to the lesser of (i) the amount  required to  compensate  for any
loss or damage to the Mortgaged  Property on a  replacement  cost basis 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).  The
Master  Servicer  shall be under no  obligation  to require  that any  Mortgagor
maintain  earthquake  or  other  additional  insurance  and  shall  be  under no
obligation itself to maintain any such additional insurance on property acquired
in respect of a Revolving  Credit Loan,  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 Master Servicer shall obtain and maintain a blanket
policy  consistent  with its  general  mortgage  servicing  activities  insuring
against  hazard  losses  on  all  of  the  Revolving   Credit  Loans,  it  shall
conclusively  be deemed to have  satisfied its  obligations  as set forth in the
first  sentence of this Section 3.04, it being  understood  and agreed that such
policy may contain a deductible clause, in which case the Master Servicer shall,
in the event that there shall not have been maintained on the related  Mortgaged
Property a policy  complying  with the first  sentence of this  Section 3.04 and
there  shall have been a loss  which  would  have been  covered by such  policy,
deposit in the  Custodial  Account the amount not  otherwise  payable  under the
blanket policy because of such deductible clause. Any such deposit by the Master
Servicer shall be made on the last Business Day of the Collection  Period in the
month in which  payments  under any such policy would have been deposited in the
Custodial  Account.  In  connection  with  its  activities  as  servicer  of the
Revolving  Credit Loans,  the Master  Servicer  agrees to present,  on behalf of
itself,  the Issuer and the  Indenture  Trustee,  claims  under any such blanket
policy.

Section 3.05 Modification  Agreements;  Release or Substitution of Lien. (a) The
Master  Servicer  or the  related  Subservicer,  as the  case  may be,  shall be
entitled to (A) execute  assumption  agreements,  substitution  agreements,  and

 <PAGE>

instruments of  satisfaction  or  cancellation  or of partial or full release or
discharge,  or any other document  contemplated by this Servicing  Agreement and
other comparable instruments with respect to the Revolving Credit Loans and with
respect to the Mortgaged Properties subject to the Mortgages (and the Issuer and
the Indenture  Trustee each shall promptly execute any such documents on request
of the Master  Servicer) and (B) approve the granting of an easement  thereon in
favor of another Person,  any alteration or demolition of the related  Mortgaged
Property or other similar  matters,  if it has  determined,  exercising its good
faith  business  judgment in the same manner as it would if it were the owner of
the related  Revolving  Credit Loan,  that the security  for, and the timely and
full  collectability  of,  such  Revolving  Credit  Loan would not be  adversely
affected  thereby.  A partial  release  pursuant to this  Section  3.05 shall be
permitted only if the Combined  Loan-to-Value  Ratio for such  Revolving  Credit
Loan after such partial release does not exceed the Combined Loan-to-Value Ratio
for such Revolving  Credit Loan as of the Cut-off Date. Any fee collected by the
Master  Servicer or the related  Subservicer for processing such request will be
retained by the Master  Servicer or such  Subservicer  as  additional  servicing
compensation.

(b) The Master  Servicer may enter into an agreement with a Mortgagor to release
the lien on the  Mortgaged  Property  relating to a  Revolving  Credit Loan (the
"Existing  Lien"), if at the time of such agreement the Revolving Credit Loan is
current  in  payment  of  principal  and  interest,  under any of the  following
circumstances:

(i) in any case in which,  simultaneously with the release of the Existing Lien,
the  Mortgagor  executes  and  delivers  to the Master  Servicer a Mortgage on a
substitute Mortgaged Property, provided that the Combined Loan-to-Value Ratio of
the  Revolving  Credit  Loan  (calculated  based on the  Appraised  Value of the
substitute  Mortgaged  Property) is not greater than the Combined  Loan-to-Value
Ratio prior to releasing the Existing Lien;

(ii) in any case in which, simultaneously with the release of the Existing Lien,
the  Mortgagor  executes  and  delivers  to the Master  Servicer a Mortgage on a
substitute  Mortgaged  Property,  provided that: (A) the Combined  Loan-to-Value
Ratio of the Revolving Credit Loan  (calculated  based on the Appraised Value of
the  substitute  Mortgaged  Property) is not greater than the lesser of (1) 100%
and (2) 105% of the Combined Loan-to-Value Ratio prior to releasing the Existing
Lien;  and (B) the  Master  Servicer  determines  that at least two  appropriate
compensating  factors are present  (compensating  factors may  include,  without
limitation, an increase in the Mortgagor's monthly cash flow after debt service,
the Mortgagor's debt-to-income ratio has not increased since origination,  or an
increase in the Mortgagor's credit score); or

(iii) in any case in which,  at the time of release of the  Existing  Lien,  the
Mortgagor  does not provide the Master  Servicer with a Mortgage on a substitute
Mortgaged Property (any Revolving Credit Loan that becomes and remains unsecured
in accordance with this subsection, an "Unsecured Loan"), provided that: (A) the
current  Combined  Loan-to-Value  Ratio is greater than or equal to 85%; (B) the
Master  Servicer  shall not permit the  release of an  Existing  Lien under this
clause (iii) as to more than 100  Revolving  Credit Loans in any calendar  year;
(C) at no time shall the aggregate  Principal  Balance of Unsecured Loans exceed
2.5% of the then Pool Balance;  (D) the Mortgagor  agrees to an automatic  debit

 <PAGE>

payment plan;  and (E) the Master  Servicer  shall provide notice to each Rating
Agency that has requested notice of such releases.

In  connection  with any  Unsecured  Loan,  the Master  Servicer may require the
Mortgagor  to enter  into an  agreement  under  which:  (i) the Loan Rate may be
increased  effective until a substitute  Mortgage meeting the criteria under (i)
or (ii) above is  provided;  or (ii) any other  provision  may be made which the
Master  Servicer  considers to be appropriate.  Thereafter,  the Master Servicer
shall determine in its discretion whether to accept any proposed Mortgage on any
substitute Mortgaged Property as security for the Revolving Credit Loan, and the
Master  Servicer may require the  Mortgagor  to agree to any further  conditions
which  the  Master  Servicer  considers  appropriate  in  connection  with  such
substitution,  which may include a reduction of the Loan Rate (but not below the
Loan Rate in effect at the Closing Date).  Any Revolving Credit Loan as to which
a Mortgage on a substitute Mortgaged Property is provided in accordance with the
preceding sentence shall no longer be deemed to be an Unsecured Loan.

Section 3.06 Trust Estate; Related Documents (a) When required by the provisions
of this Servicing  Agreement,  the Issuer or the Indenture Trustee shall execute
instruments to release property from the terms of the Trust Agreement, Indenture
or Custodial Agreement,  as applicable,  or convey the Issuer's or the Indenture
Trustee's  interest in the same, in a manner and under  circumstances  which are
not  inconsistent  with the  provisions of this  Servicing  Agreement.  No party
relying upon an instrument  executed by the Issuer or the  Indenture  Trustee as
provided in this Section  3.06 shall be bound to  ascertain  the Issuer's or the
Indenture Trustee's  authority,  inquire into the satisfaction of any conditions
precedent or see to the application of any moneys.

(b) If from time to time the Master  Servicer  shall  deliver  to the  Custodian
copies of any written assurance,  assumption agreement or substitution agreement
or other similar  agreement  pursuant to Section 3.05, the Custodian shall check
that each of such documents  purports to be an original executed copy (or a copy
of the  original  executed  document  if the  original  executed  copy  has been
submitted for recording  and has not yet been  returned)  and, if so, shall file
such  documents,  and  upon  receipt  of the  original  executed  copy  from the
applicable  recording  office or  receipt  of a copy  thereof  certified  by the
applicable  recording  office shall file such originals or certified copies with
the Related Documents. If any such documents submitted by the Master Servicer do
not meet the above qualifications,  such documents shall promptly be returned by
the Custodian to the Master Servicer, with a direction to the Master Servicer to
forward the correct documentation.

(c)  Upon  receipt  of  a  Request  for  Release   from  the  Master   Servicer,
substantially  in the form of  Exhibit  C (or an  electronic  request  in a form
acceptable to the Custodian) to the effect that a Revolving Credit Loan has been
the subject of a final payment or a prepayment in full and the related Revolving
Credit Loan has been terminated or that  substantially all Liquidation  Proceeds
which have been determined by the Master Servicer in its reasonable  judgment to
be finally  recoverable  have been recovered,  and upon deposit to the Custodial
Account of such final monthly payment,  prepayment in full together with accrued
and unpaid  interest to the date of such payment with respect to such  Revolving
Credit  Loan or,  if  applicable,  Liquidation  Proceeds,  the  Custodian  shall
promptly  release  the  Related  Documents  to the  Master  Servicer,  which the
Indenture  Trustee  shall  execute,  along  with such  documents  as the  Master
Servicer or the Mortgagor may request to evidence  satisfaction and discharge of

 <PAGE>

such Revolving Credit Loan, upon request of the Master Servicer. If from time to
time and as appropriate for the servicing or foreclosure of any Revolving Credit
Loan,  the  Master  Servicer  requests  the  Custodian  to release  the  Related
Documents and delivers to the Custodian a trust receipt reasonably  satisfactory
to the Custodian and signed by a Responsible Officer of the Master Servicer, the
Custodian shall release the Related  Documents to the Master  Servicer.  If such
Revolving  Credit  Loans  shall  be  liquidated  and the  Custodian  receives  a
certificate  from the Master Servicer as provided  above,  then, upon request of
the Master Servicer, the Custodian shall release the trust receipt to the Master
Servicer.

Section 3.07 Realization Upon Defaulted Revolving Credit Loans; Loss Mitigation.
With respect to such of the Revolving  Credit Loans as come into and continue in
default,  the Master  Servicer  will decide  whether to (i)  foreclose  upon the
Mortgaged  Properties  securing such Revolving Credit Loans,  (ii) write off the
unpaid principal balance of the Revolving Credit Loans as bad debt, (iii) take a
deed in lieu of foreclosure, (iv) accept a short sale (a payoff of the Revolving
Credit Loan for an amount less than the total amount contractually owed in order
to  facilitate a sale of the  Mortgaged  Property by the  Mortgagor) or permit a
short refinancing (a payoff of the Revolving Credit Loan for an amount less than
the  total  amount  contractually  owed  in  order  to  facilitate   refinancing
transactions  by the Mortgagor not involving a sale of the Mortgaged  Property),
(v) arrange for a repayment  plan,  (vi) agree to a  modification  in accordance
with this Servicing  Agreement,  or (vii) take an unsecured  note, in connection
with a negotiated  release of the lien of the Mortgage in order to  facilitate a
settlement with the Mortgagor; in each case subject to the rights of any related
first lien holder;  provided that in connection with the foregoing if the Master
Servicer  has actual  knowledge  that any  Mortgaged  Property  is  affected  by
hazardous  or toxic  wastes  or  substances  and that  the  acquisition  of such
Mortgaged  Property  would  not be  commercially  reasonable,  then  the  Master
Servicer will not cause the Issuer or the Indenture  Trustee to acquire title to
such Mortgaged  Property in a foreclosure or similar  proceeding.  In connection
with such decision,  the Master Servicer shall follow such practices (including,
in the case of any default on a related  senior  mortgage loan, the advancing of
funds to  correct  such  default  if  deemed  to be  appropriate  by the  Master
Servicer) and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general  mortgage  servicing  activities and as shall be
required or permitted by the Program  Guide;  provided that the Master  Servicer
shall not be liable in any respect hereunder if the Master Servicer is acting in
connection  with any such  foreclosure  or  attempted  foreclosure  which is not
completed or other conversion in a manner that is consistent with the provisions
of this  Servicing  Agreement.  The foregoing is subject to the proviso that the
Master Servicer shall not be required to expend its own funds in connection with
any foreclosure or attempted  foreclosure  which is not completed or towards the
correction of any default on a related  senior  mortgage loan or  restoration of
any property unless it shall determine that such  expenditure  will increase Net
Liquidation  Proceeds.  In the event of a  determination  by the Master Servicer
that any such expenditure previously made pursuant to this Section 3.07 will not
be  reimbursable  from Net  Liquidation  Proceeds,  the Master Servicer shall be
entitled to reimbursement of its funds so expended pursuant to Section 3.03.

        Notwithstanding any provision of this Servicing  Agreement,  a Revolving
Credit Loan may be deemed to be finally  liquidated if substantially all amounts
expected by the Master  Servicer to be received in  connection  with the related
defaulted Revolving Credit Loan have been received;  provided, however, that any

 <PAGE>

subsequent  collections  with respect to any such Revolving Credit Loan shall be
deposited  to the  Custodial  Account and treated as Interest  Collections.  For
purposes of  determining  the amount of any  Liquidation  Proceeds or  Insurance
Proceeds,  or other unscheduled  collections,  the Master Servicer may take into
account  minimal amounts of additional  receipts  expected to be received or any
estimated additional  liquidation expenses expected to be incurred in connection
with the related defaulted Revolving Credit Loan.

        In the  event  that  title to any  Mortgaged  Property  is  acquired  in
foreclosure or by deed in lieu of  foreclosure,  the deed or certificate of sale
shall be issued to the Indenture  Trustee,  who shall hold the same on behalf of
the Issuer in accordance with Section 3.13 of the Indenture. Notwithstanding any
such acquisition of title and cancellation of the related Revolving Credit Loan,
such Mortgaged Property shall (except as otherwise expressly provided herein) be
considered to be an  outstanding  Revolving  Credit Loan held as an asset of the
Issuer  until  such time as such  property  shall be sold.  Consistent  with the
foregoing for purposes of all calculations  hereunder, so long as such Mortgaged
Property shall be considered to be an outstanding Revolving Credit Loan it shall
be assumed that,  notwithstanding that the indebtedness evidenced by the related
Credit Line Agreement shall have been discharged,  such Credit Line Agreement in
effect  at the  time of any such  acquisition  of title  before  any  adjustment
thereto by reason of any  bankruptcy or similar  proceeding or any moratorium or
similar waiver or grace period will remain in effect.

        Any proceeds from the purchase or  repurchase  of any  Revolving  Credit
Loan  pursuant  to the  terms of this  Servicing  Agreement  (including  without
limitation  Sections  2.03 and 3.15) will be applied in the  following  order of
priority:  first,  to the  Master  Servicer  or  the  related  Subservicer,  all
Servicing  Fees payable  therefrom to the Payment Date on which such amounts are
to be deposited in the Payment Account; second, as Interest Collections, accrued
and unpaid interest on the related  Revolving  Credit Loan, at the Net Loan Rate
to the Payment  Date on which such  amounts are to be  deposited  in the Payment
Account; and third, as Principal Collections,  as a recovery of principal on the
Revolving Credit Loan.

        Liquidation  Proceeds with respect to a Liquidated Revolving Credit Loan
will be applied in the  following  order of priority:  first,  to reimburse  the
Master Servicer or the related  Subservicer in accordance with this Section 3.07
for any  Liquidation  Expenses;  second,  to the Master  Servicer or the related
Subservicer,  all unpaid Servicing Fees through the date of receipt of the final
Liquidation  Proceeds;  third,  as  Principal  Collections,  as  a  recovery  of
principal  on the  Revolving  Credit  Loan,  up to an  amount  equal to the Loan
Balance of the related  Revolving Credit Loan  immediately  prior to the date it
became a Liquidated  Revolving  Credit Loan;  fourth,  as Interest  Collections,
accrued and unpaid interest on the related Revolving Credit Loan at the Net Loan
Rate through the date of receipt of the final Liquidation  Proceeds;  and fifth,
to Foreclosure Profits.

        Proceeds  and other  recoveries  from a  Revolving  Credit Loan after it
becomes a  Liquidated  Revolving  Credit  Loan will be applied in the  following
order of  priority:  first,  to  reimburse  the Master  Servicer  or the related
Subservicer  in  accordance  with this Section 3.07 for any expenses  previously

 <PAGE>

unreimbursed  from  Liquidation  Proceeds or  otherwise;  second,  to the Master
Servicer or the related  Subservicer,  all unpaid Servicing Fees payable thereto
through  the  date of  receipt  of the  proceeds  previously  unreimbursed  from
Liquidation  Proceeds or otherwise;  third,  as Interest  Collections,  up to an
amount equal to the sum of (a) the Loan Balance of the related  Revolving Credit
Loan immediately prior to the date it became a Liquidated Revolving Credit Loan,
less any Net  Liquidation  Proceeds  previously  received  with  respect to such
Revolving  Credit Loan and applied as a recovery of  principal,  and (b) accrued
and unpaid  interest on the related  Revolving  Credit Loan at the Net Loan Rate
through the date of receipt of the proceeds; and fourth, to Foreclosure Profits.

Section  3.08  Issuer and  Indenture  Trustee to  Cooperate.  On or before  each
Payment  Date,  the Master  Servicer  will notify the  Indenture  Trustee or the
Custodian,  with a copy to the Issuer,  of the  termination of or the payment in
full and the  termination  of any  Revolving  Credit Loan  during the  preceding
Collection  Period.  Upon  receipt of payment in full,  the Master  Servicer  is
authorized to execute,  pursuant to the authorization contained in Section 3.01,
if the  assignments of Mortgage have been recorded to the extent  required under
the Revolving  Credit Loan  Purchase  Agreement,  an instrument of  satisfaction
regarding  the related  Mortgage,  which  instrument  of  satisfaction  shall be
recorded by the Master  Servicer if required by applicable  law and be delivered
to the Person  entitled  thereto.  It is understood and agreed that any expenses
incurred in connection with such instrument of satisfaction or transfer shall be
reimbursed from amounts  deposited in the Custodial  Account.  From time to time
and as  appropriate  for the servicing or  foreclosure  of any Revolving  Credit
Loan, the Indenture  Trustee or the Custodian shall,  upon request of the Master
Servicer and delivery to the Indenture Trustee or Custodian,  with a copy to the
Issuer, of a Request for Release, in the form annexed hereto as Exhibit C (or an
electronic  request,  in a  form  acceptable  to  the  Custodian),  signed  by a
Servicing Officer,  release or cause to be released the related Mortgage File to
the Master Servicer and the Issuer or Indenture  Trustee shall promptly  execute
such  documents,  in the forms  provided  by the  Master  Servicer,  as shall be
necessary for the  prosecution  of any such  proceedings  or the taking of other
servicing  actions.  Such trust  receipt shall  obligate the Master  Servicer to
return the Mortgage File to the Indenture Trustee or the Custodian (as specified
in such receipt) when the need therefor by the Master  Servicer no longer exists
unless the  Revolving  Credit  Loan shall be  liquidated,  in which  case,  upon
receipt of a  certificate  of a Servicing  Officer  similar to that  hereinabove
specified, the trust receipt shall be released to the Master Servicer.

        In order to  facilitate  the  foreclosure  of the Mortgage  securing any
Revolving  Credit  Loan  that  is  in  default  following   recordation  of  the
assignments  of Mortgage in  accordance  with the  provisions  of the  Revolving
Credit Loan Purchase Agreement, the Indenture Trustee or the Issuer shall, if so
requested in writing by the Master  Servicer,  promptly  execute an  appropriate
assignment in the form provided by the Master  Servicer to assign such Revolving
Credit  Loan for the  purpose of  collection  to the Master  Servicer  (any such
assignment shall  unambiguously  indicate that the assignment is for the purpose
of collection  only),  and, upon such  assignment,  such assignee for collection
will thereupon bring all required actions in its own name and otherwise  enforce
the terms of the Revolving Credit Loan and deposit or credit the Net Liquidation
Proceeds, exclusive of Foreclosure Profits, received with respect thereto in the
Custodial Account.  In the event that all delinquent payments due under any such
Revolving  Credit  Loan are paid by the  Mortgagor  and any other  defaults  are
cured,  then the assignee for collection shall promptly  reassign such Revolving
Credit Loan to the  Indenture  Trustee and return all Related  Documents  to the
place where the related Mortgage File was being maintained.

 <PAGE>

        In connection  with the Issuer's  obligation to cooperate as provided in
this Section 3.08 and all other provisions of this Servicing Agreement requiring
the Issuer to  authorize  or permit any actions to be taken with  respect to the
Revolving  Credit  Loans,  the  Indenture  Trustee,  as pledgee of the Revolving
Credit Loans and as assignee of record of the  Revolving  Credit Loans on behalf
of the Issuer pursuant to Section 3.13 of the Indenture,  expressly  agrees,  on
behalf of the  Issuer,  to take all such  actions on behalf of the Issuer and to
promptly  execute and return all instruments  reasonably  required by the Master
Servicer in connection  therewith;  provided,  that if the Master Servicer shall
request a signature  of the  Indenture  Trustee,  on behalf of the  Issuer,  the
Master Servicer will deliver to the Indenture  Trustee an Officer's  Certificate
stating that such  signature is  necessary or  appropriate  to enable the Master
Servicer  to carry  out its  servicing  and  administrative  duties  under  this
Servicing Agreement.

Section  3.09  Servicing  Compensation;  Payment of Certain  Expenses  by Master
Servicer.  The Master Servicer shall be entitled to receive the Master Servicing
Fee in accordance with Sections 3.02 and 3.03 as  compensation  for its services
in connection with servicing the Revolving  Credit Loans.  Moreover,  additional
servicing  compensation  in the form of late payment  charges and other receipts
not required to be deposited  in the  Custodial  Account as specified in Section
3.02 shall be  retained by the Master  Servicer.  The Master  Servicer  shall be
required to pay all expenses  incurred by it in connection  with its  activities
hereunder (including payment of all other fees and expenses not expressly stated
hereunder  to be for the  account  of the  Securityholders,  including,  without
limitation,  the fees and expenses of the Owner Trustee,  Indenture  Trustee and
any Custodian) and shall not be entitled to reimbursement therefor.

Section 3.10 Annual  Statement as to  Compliance.  (a) The Master  Servicer will
deliver to the Issuer,  each Underwriter and the Indenture Trustee,  with a copy
to the Credit Enhancer,  on or before March 31 of each year, beginning March 31,
2001, an Officer's  Certificate  stating that (i) a review of the  activities of
the Master  Servicer  during the preceding  calendar year and of its performance
under  servicing  agreements,  including this Servicing  Agreement has been made
under  such  officer's  supervision  and  (ii) to the  best  of  such  officer's
knowledge,  based on such  review,  the  Master  Servicer  has  complied  in all
material respects with the minimum servicing  standards set forth in the Uniform
Single  Attestation  Program for Mortgage  Bankers and has  fulfilled all of its
material obligations in all material respects throughout such year, or, if there
has been material  noncompliance  with such servicing  standards or a default in
the fulfillment in all material respects of any such obligation relating to this
Servicing  Agreement,  such  statement  shall  include  a  description  of  such
noncompliance  or specify each such  default,  as the case may be, known to such
officer and the nature and status thereof.

(b) The Master  Servicer shall deliver to the Issuer and the Indenture  Trustee,
with a copy to the Credit  Enhancer,  promptly after having  obtained  knowledge
thereof,  but in no event  later than five  Business  Days  thereafter,  written
notice by means of an Officer's  Certificate  of any event which with the giving
of notice or the lapse of time or both, would become a Servicing Default.

Section  3.11  Annual  Servicing  Report.  On or before  March 31 of each  year,
beginning  March 31, 2001, the Master Servicer at its expense shall cause a firm
of nationally  recognized  independent  public  accountants (who may also render

 <PAGE>

other  services to the Master  Servicer) to furnish a report to the Issuer,  the
Indenture Trustee, the Depositor, each Underwriter, the Credit Enhancer and each
Rating Agency stating its opinion that, on the basis of an examination conducted
by such firm  substantially  in accordance  with  standards  established  by the
American Institute of Certified Public Accountants, the assertions made pursuant
to Section 3.10 regarding  compliance with the minimum  servicing  standards set
forth in the Uniform Single Attestation  Program for Mortgage Bankers during the
preceding calendar year are fairly stated in all material  respects,  subject to
such exceptions and other qualifications that, in the opinion of such firm, such
accounting  standards  require it to report.  In rendering such statement,  such
firm may rely,  as to matters  relating  to the direct  servicing  of  revolving
credit  loans by  Subservicers,  upon  comparable  statements  for  examinations
conducted by independent  public  accountants  substantially  in accordance with
standards  established by the American Institute of Certified Public Accountants
(rendered within one year of such statement) with respect to such Subservicers.

Section  3.12 Access to Certain  Documentation  and  Information  Regarding  the
Revolving Credit Loans.  Whenever required by statute or regulation,  the Master
Servicer  shall  provide  to  the  Credit  Enhancer,   any  Securityholder  upon
reasonable  request  (or a  regulator  for a  Securityholder)  or the  Indenture
Trustee,  reasonable access to the documentation  regarding the Revolving Credit
Loans such access being afforded without charge but only upon reasonable request
and during normal business hours at the offices of the Master Servicer.  Nothing
in this Section 3.12 shall derogate from the  obligation of the Master  Servicer
to observe any applicable law  prohibiting  disclosure of information  regarding
the  Mortgagors  and the  failure of the Master  Servicer  to provide  access as
provided  in  this  Section  3.12  as a  result  of such  obligation  shall  not
constitute a breach of this Section 3.12.

Section 3.13 Maintenance of Certain  Servicing  Insurance  Policies.  The Master
Servicer shall during the term of its service as servicer  maintain in force (i)
a  policy  or  policies  of  insurance  covering  errors  and  omissions  in the
performance of its obligations as master servicer  hereunder and (ii) a fidelity
bond in respect  of its  officers,  employees  or  agents.  Each such  policy or
policies and bond shall be at least equal to the coverage that would be required
by Fannie Mae or Freddie  Mac,  whichever  is greater,  for  Persons  performing
servicing for revolving credit loans purchased by such entity.

Section 3.14 Information Required by the Internal Revenue Service and Reports of
Foreclosures and Abandonments of Mortgaged  Property.  The Master Servicer shall
prepare and deliver all federal and state  information  reports  with respect to
the  Revolving  Credit  Loans when and as required by all  applicable  state and
federal income tax laws. In particular,  with respect to the  requirement  under
Section 6050J of the Code to the effect that the Master  Servicer or Subservicer
shall make reports of foreclosures  and  abandonments of any mortgaged  property
for each year beginning in 2000, the Master  Servicer or Subservicer  shall file
reports relating to each instance occurring during the previous calendar year in
which the Master  Servicer (i) on behalf of the Issuer,  acquires an interest in
any Mortgaged  Property through  foreclosure or other  comparable  conversion in
full or partial  satisfaction  of a Revolving  Credit Loan, or (ii) knows or has
reason to know that any Mortgaged Property has been abandoned.  The reports from
the Master Servicer or Subservicer shall be in form and substance  sufficient to
meet the  reporting  requirements  imposed by Section  6050J and  Section  6050H
(reports relating to mortgage interest received) of the Code.

 <PAGE>

Section 3.15   Optional Repurchase of Defaulted Revolving Credit Loans.

(a)  Notwithstanding  any provision in Section 3.07 to the contrary,  the Master
Servicer, at its option and in its sole discretion, may repurchase any Revolving
Credit Loan  delinquent in payment for a period of 60 days or longer for a price
equal to the Repurchase Price.

(b) Subject to the  conditions  set forth below,  the Servicer,  upon receipt of
written  notice and  direction  from the Issuer,  shall cause the  retransfer of
Revolving  Credit Loans from the Trust to the Issuer as of the close of business
on a  Payment  Date  (the  "Transfer  Date").  On the  fifth  Business  Day (the
"Transfer  Notice Date") prior to the Transfer  Date  designated in such notice,
the  Servicer  shall give the  Indenture  Trustee,  the Rating  Agencies and the
Credit Enhancer a notice of the proposed  retransfer that contains a list of the
Revolving Credit Loans to be retransferred. Such retransfers of Revolving Credit
Loans shall be permitted upon satisfaction of the following conditions:

(i)     No Amortization Event has occurred;

(ii) On the Transfer Date, the  Outstanding  Reserve Amount (after giving effect
to the  removal  from the Trust of the  Revolving  Credit  Loans  proposed to be
transferred) will equal or exceed Reserve Amount Target;

(iii) On or before the Transfer  Date,  the Servicer shall have delivered to the
Indenture  Trustee a revised  Revolving  Credit Loan  Schedule  showing that the
Revolving Credit Loans transferred to the Certificateholders are no longer owned
by the Trust;

(iv) The Servicer  shall  represent  and warrant  that no  selection  procedures
reasonably  believed  by the  Servicer  to be  adverse to the  interests  of the
Noteholders  or the  Credit  Enhancer  were  utilized  in the  selection  of the
Revolving  Credit Loans to be removed from the Trust and the Servicer shall have
received  the  consent  of  the  Credit  Enhancer  as to  the  selection  of the
particular Revolving Credit Loans to be removed; and

(v) The Servicer  shall have  delivered to the Indenture  Trustee and the Credit
Enhancer  an  officer's  certificate  certifying  that the  items  set  forth in
subparagraphs (i) through (iv),  inclusive,  have been performed or are true and
correct, as the case may be. The Indenture Trustee may conclusively rely on such
officer's  certificate,  shall have no duty to make inquiries with regard to the
matters set forth therein and shall incur no liability in so relying.

        The  Servicer  shall not be permitted  to effect the  retransfer  of any
Revolving  Credit  Loan  except  under  the  conditions  specified  above.  Upon
receiving the requisite notice and direction from the Issuer, the Servicer shall
perform in a timely manner those acts required of it, as specified  above.  Upon
satisfaction of the above conditions, on the Transfer Date the Indenture Trustee
shall deliver, or cause to be delivered,  to the Issuer a written itemization of
each Revolving Credit Loan being transferred, together with the Revolving Credit
File for each such  Revolving  Credit  Loan,  and the  Indenture  Trustee  shall
execute and deliver to the Issuer or its designee such other documents  prepared
by the  Servicer as shall be  reasonably  necessary to transfer  such  Revolving
Credit Loans to the Certificateholders.  Any such transfer of the Trust's right,
title and interest in and to Revolving  Credit Loans shall be without  recourse,
representation  or warranty by or of the  Indenture  Trustee or the Trust to the
Issuer or its designee.

 <PAGE>

ARTICLE IV

                              SERVICING CERTIFICATE

Section 4.01  Statements  to  Securityholders.  (a) With respect to each Payment
Date, on the Business Day following the related  Determination  Date, the Master
Servicer  shall  forward to the  Indenture  Trustee  and the  Indenture  Trustee
pursuant to Section 3.26 of the Indenture shall forward or cause to be forwarded
by  mail  to  each  Certificateholder,  Noteholder,  the  Credit  Enhancer,  the
Depositor,  the Owner  Trustee,  the  Certificate  Paying  Agent and each Rating
Agency,  a statement  setting forth the following  information  (the  "Servicing
Certificate") as to the Notes and Certificates, to the extent applicable:

(a) the aggregate amount of (a) Interest Collections,  (b) Principal Collections
and (c) Substitution Adjustment Amounts;

(b)     the amount of such distribution as principal to the Noteholders;

(c) the amount of such  distribution as interest to the Noteholders,  separately
stating the portion thereof in respect of overdue accrued interest;

(d) the amount of any Credit  Enhancement Draw Amount,  if any, for such Payment
Date and the aggregate amount of prior draws thereunder not yet reimbursed;  (e)
the  amount  of  such   distribution   as   principal   and   interest   to  the
Certificateholders  of the Certificates,  separately stating the portion thereof
which resulted in a reduction of the Certificate Principal Balance thereof;

(f) the aggregate  Loan Balance of the  Revolving  Credit Loans as of the end of
the preceding Collection Period;

(g) the aggregate  amount of  Additional  Balances  created  during the previous
Collection Period conveyed to the Issuer;

(h) the number and aggregate  Loan Balances of Revolving  Credit Loans (a) as to
which the Minimum Monthly  Payment is Delinquent for 30-59 days,  60-89 days and
90 or more days, respectively,  (b) that are foreclosed and (c) that have become
REO,  in each case as of the end of the  related  Collection  Period;  provided,
however,  that such information will not be provided on the statements  relating
to the first Payment Date;

(i)     the weighted average Net Loan Rate for the related Collection Period;

(j)  the  aggregate  Liquidation  Loss  Amounts  with  respect  to  the  related
Collection Period, the amount of any Liquidation Loss Distribution  Amounts with

 <PAGE>

respect to the Notes, and the aggregate of the Liquidation Loss Amounts from all
Collection  Periods to date  expressed  as dollars  and as a  percentage  of the
aggregate Cut-off Date Loan Balance;

(k) the  aggregate  Excess Loss Amounts  with respect to the related  Collection
Period and the aggregate of the Excess Loss Amounts from all Collection  Periods
to date;

(l) the aggregate  Special Hazard Losses,  Fraud Losses,  Bankruptcy  Losses and
losses caused by or resulting  from an  Extraordinary  Event with respect to the
related  Collection  Period and the  aggregate  of each of such  losses from all
Collection Periods to date;

(m) the  Note  Balance  of each  Class of Notes  and the  Certificate  Principal
Balance of the Certificates after giving effect to the distribution of principal
on such Payment Date;

(n) the  aggregate  Servicing  Fees for the  related  Collection  Period and the
aggregate amount of Draws for the related Collection Period;

(o) the number and amount of any increases in the Credit Limits of the Revolving
Credit Loans during the related Collection Period;

(p) the  Outstanding  Reserve Amount,  the  Undercollateralization  Amount,  the
Special Hazard Amount, the Fraud Loss Amount, the Bankruptcy Loss Amount and the
Reserve Amount Target immediately following such Payment Date; and

(q) (1) the  number  and  principal  amount of release  agreements  pursuant  to
Section  3.05(b)  entered  into during the  calendar  year and since the Closing
Date,  stated  separately,  for the  Revolving  Credit Loans and, the  aggregate
outstanding   principal  amount  of  such  release  agreements  expressed  as  a
percentage of the Pool Balance with information provided separately with respect
to all Unsecured Loans and (2) the number and principal amount of Capitalization
Workouts  pursuant to Section  3.02(a)(v)  entered into during the calendar year
and since the Closing Date,  stated  separately for the Revolving  Credit Loans,
and the aggregate outstanding amount of the Capitalization Workouts expressed as
a percentage of the Pool Balance.

        In the case of information  furnished pursuant to clauses (ii) and (iii)
above, the amounts shall be expressed as an aggregate dollar amount per Variable
Funding  Note,  Term  Note  or  Certificate,   as  applicable,   with  a  $1,000
denomination.

        In addition,  the Master Servicer shall forward to the Indenture Trustee
any other information reasonably requested by the Indenture Trustee necessary to
make distributions pursuant to Section 3.05 of the Indenture. Prior to the close
of business on the Business Day next  succeeding  each  Determination  Date, the
Master  Servicer  shall furnish a written  statement to the  Certificate  Paying
Agent and the Indenture  Trustee setting forth the aggregate amounts required to
be withdrawn from the Custodial  Account and deposited into the Payment  Account
on the Business Day preceding the related Payment Date pursuant to Section 3.03.
The  determination  by the Master Servicer of such amounts shall, in the absence
of  obvious  error,  be  presumptively  deemed to be  correct  for all  purposes
hereunder  and the Owner  Trustee and  Indenture  Trustee  shall be protected in

 <PAGE>

relying  upon  the same  without  any  independent  check  or  verification.  In
addition,  upon the Issuer's written request, the Master Servicer shall promptly
furnish  information  reasonably  requested  by the  Issuer  that is  reasonably
available to the Master Servicer to enable the Issuer to perform its federal and
state income tax reporting obligations.

Section 4.02 Tax Reporting.  So long as Residential  Funding  Corporation or any
Affiliate  thereof owns 100% of the  Certificates,  then no separate federal and
state income tax returns and  information  returns or reports will be filed with
respect to the Issuer,  and the Issuer will be treated as an entity wholly owned
by Residential Funding Corporation or an affiliate thereof.

                                   ARTICLE V

                                 PAYMENT ACCOUNT

Section 5.01 Payment Account. The Indenture Trustee shall establish and maintain
a Payment Account titled "The Chase Manhattan  Bank, as Indenture  Trustee,  for
the benefit of the Securityholders,  the Certificate Paying Agent and the Credit
Enhancer pursuant to the Indenture, dated as of September 26, 2000, between Home
Equity Loan Trust 2000-HS1 and The Chase  Manhattan  Bank".  The Payment Account
shall be an Eligible  Account.  On each Payment Date,  amounts on deposit in the
Payment Account will be distributed by the Indenture  Trustee in accordance with
Section 3.05 of the Indenture. The Indenture Trustee shall, upon written request
from the  Master  Servicer,  invest or cause  the  institution  maintaining  the
Payment  Account  to  invest  the  funds in the  Payment  Account  in  Permitted
Investments  designated in the name of the Indenture Trustee, which shall mature
not later than the Business Day next  preceding the Payment Date next  following
the date of such  investment  (except that (i) any investment in the institution
with which the Payment Account is maintained may mature on such Payment Date and
(ii) any other  investment  may  mature on such  Payment  Date if the  Indenture
Trustee shall  advance funds on such Payment Date to the Payment  Account in the
amount payable on such investment on such Payment Date,  pending receipt thereof
to the extent  necessary to make  distributions on the Securities) and shall not
be sold or disposed of prior to maturity.  All income and gain realized from any
such  investment  shall be for the benefit of the Master  Servicer  and shall be
subject to its  withdrawal or order from time to time.  The amount of any losses
incurred in respect of any such  investments  shall be  deposited in the Payment
Account by the Master Servicer out of its own funds immediately as realized.

                                   ARTICLE VI

                               THE MASTER SERVICER

Section 6.01  Liability of the Master  Servicer.  The Master  Servicer  shall be
liable in accordance herewith only to the extent of the obligations specifically
imposed upon and undertaken by the Master Servicer herein.

Section 6.02 Merger or  Consolidation  of, or Assumption of the  Obligations of,
the Master  Servicer.  Any  corporation  into which the Master  Servicer  may be
merged or converted  or with which it may be  consolidated,  or any  corporation
resulting  from any  merger,  conversion  or  consolidation  to which the Master
Servicer shall be a party, or any corporation  succeeding to the business of the
Master  Servicer,  shall be the  successor  of the Master  Servicer,  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.

 <PAGE>

        The Master  Servicer  may assign its rights and  delegate its duties and
obligations under this Servicing Agreement;  provided, that the Person accepting
such  assignment or  delegation  shall be a Person which is qualified to service
revolving credit loans, is reasonably  satisfactory to the Indenture Trustee (as
pledgee of the Revolving Credit Loans),  the Issuer and the Credit Enhancer,  is
willing to service the  Revolving  Credit Loans and executes and delivers to the
Indenture Trustee and the Issuer an agreement,  in form and substance reasonably
satisfactory to the Credit Enhancer, the Indenture Trustee and the Issuer, which
contains an  assumption by such Person of the due and punctual  performance  and
observance  of each  covenant  and  condition to be performed or observed by the
Master Servicer under this Servicing  Agreement;  provided,  further,  that each
Rating  Agency's  rating of the Securities in effect  immediately  prior to such
assignment  and  delegation  will not be qualified,  reduced,  or withdrawn as a
result of such  assignment  and  delegation  (as  evidenced  by a letter to such
effect from each Rating  Agency),  if  determined  without  regard to the Credit
Enhancement Instrument;  and provided,  further, that the Owner Trustee receives
an Opinion of Counsel to the effect that such assignment or delegation shall not
cause the Trust to be treated as a  corporation  for federal or state income tax
purposes.

Section 6.03 Limitation on Liability of the Master Servicer and Others.  Neither
the Master  Servicer nor any of the directors or officers or employees or agents
of the Master  Servicer  shall be under any  liability to the Issuer,  the Owner
Trustee,  the Indenture Trustee or the  Securityholders  for any action taken or
for  refraining  from the taking of any action in good  faith  pursuant  to this
Servicing Agreement,  provided,  however,  that this provision shall not protect
the Master  Servicer  or any such  Person  against  any  liability  which  would
otherwise  be imposed by reason of its willful  misfeasance,  bad faith or gross
negligence  in the  performance  of its  duties  hereunder  or by  reason of its
reckless disregard of its obligations and duties hereunder.  The Master Servicer
and any director or officer or employee or agent of the Master Servicer may rely
in good faith on any  document of any kind prima  facie  properly  executed  and
submitted by any Person  respecting any matters  arising  hereunder.  The Master
Servicer and any director or officer or employee or agent of the Master Servicer
shall be indemnified by the Issuer and held harmless against any loss, liability
or  expense  incurred  in  connection  with any legal  action  relating  to this
Servicing  Agreement or the  Securities,  including any amount paid to the Owner
Trustee or the Indenture  Trustee  pursuant to Section  6.06(b),  other than any
loss,  liability or expense incurred by reason of its willful  misfeasance,  bad
faith or gross  negligence  in the  performance  of its duties  hereunder  or by
reason of its reckless  disregard of its obligations and duties  hereunder.  The
Master  Servicer  shall not be under any  obligation to appear in,  prosecute or
defend any legal  action  which is not  incidental  to its duties to service the
Revolving Credit Loans in accordance with this Servicing Agreement, and which in
its opinion may involve it in any expense or liability;  provided, however, that
the Master Servicer may in its sole  discretion  undertake any such action which
it may deem necessary or desirable in respect of this Servicing  Agreement,  and
the  rights  and  duties  of  the  parties  hereto  and  the  interests  of  the
Securityholders.  In such event, the reasonable legal expenses and costs of such
action  and any  liability  resulting  therefrom  shall be  expenses,  costs and
liabilities  of the  Issuer,  and the Master  Servicer  shall be  entitled to be

 <PAGE>

reimbursed  therefor.  The Master Servicer's right to indemnity or reimbursement
pursuant to this Section 6.03 shall survive any  resignation  or  termination of
the Master Servicer pursuant to Section 6.04 or 7.01 with respect to any losses,
expenses,  costs or liabilities arising prior to such resignation or termination
(or arising from events that occurred prior to such resignation or termination).

Section 6.04 Master Servicer Not to Resign. Subject to the provisions of Section
6.02,  the Master  Servicer  shall not resign  from the  obligations  and duties
hereby imposed on it except (i) upon  determination  that the performance of its
obligations or duties hereunder are no longer  permissible  under applicable law
or are in  material  conflict  by  reason  of  applicable  law  with  any  other
activities  carried  on by it or  its  subsidiaries  or  Affiliates,  the  other
activities of the Master Servicer so causing such a conflict being of a type and
nature carried on by the Master  Servicer or its  subsidiaries  or Affiliates at
the date of this Servicing  Agreement or (ii) upon satisfaction of the following
conditions:  (a) the Master  Servicer has  proposed a successor  servicer to the
Issuer and the Indenture Trustee in writing and such proposed successor servicer
is  reasonably  acceptable to the Issuer,  the Indenture  Trustee and the Credit
Enhancer;  (b) each Rating  Agency shall have  delivered a letter to the Issuer,
the Credit  Enhancer and the Indenture  Trustee prior to the  appointment of the
successor  servicer  stating that the  proposed  appointment  of such  successor
servicer  as Master  Servicer  hereunder  will not  result in the  reduction  or
withdrawal of the then current rating of the Securities,  if determined  without
regard to the Credit  Enhancement  Instrument;  and (c) such proposed  successor
servicer is  reasonably  acceptable  to the Credit  Enhancer,  as evidenced by a
letter to the Issuer and the Indenture Trustee; provided,  however, that no such
resignation by the Master  Servicer shall become  effective until such successor
servicer or, in the case of (i) above, the Indenture Trustee,  as pledgee of the
Revolving   Credit   Loans,   shall   have   assumed   the   Master   Servicer's
responsibilities and obligations  hereunder or the Indenture Trustee, as pledgee
of the Revolving  Credit Loans,  shall have  designated a successor  servicer in
accordance with Section 7.02. Any such resignation  shall not relieve the Master
Servicer of responsibility for any of the obligations specified in Sections 7.01
and 7.02 as  obligations  that survive the  resignation  or  termination  of the
Master Servicer. Any such determination permitting the resignation of the Master
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered to
the Indenture Trustee and the Credit Enhancer.

Section  6.05  Delegation  of Duties.  In the ordinary  course of business,  the
Master  Servicer at any time may  delegate  any of its duties  hereunder  to any
Person,  including any of its  Affiliates,  who agrees to conduct such duties in
accordance  with  standards  comparable to those with which the Master  Servicer
complies  pursuant to Section 3.01. Such delegation shall not relieve the Master
Servicer of its liabilities and responsibilities with respect to such duties and
shall not constitute a resignation within the meaning of Section 6.04.

Section 6.06 Master Servicer to Pay Indenture Trustee's and Owner Trustee's Fees
and Expenses;  Indemnification.  (a) The Master Servicer covenants and agrees to
pay to the Owner  Trustee,  the  Indenture  Trustee  and any  co-trustee  of the
Indenture Trustee or the Owner Trustee from time to time, and the Owner Trustee,
the Indenture  Trustee and any such co-trustee shall be entitled to,  reasonable
compensation  (which  shall not be limited by any  provision of law in regard to
the compensation of a trustee of an express trust) for all services  rendered by
each of them in the execution of the trusts  created  under the Trust  Agreement
and the Indenture and in the exercise and  performance  of any of the powers and
duties under the Trust  Agreement or the  Indenture,  as the case may be, of the
Owner Trustee, the Indenture Trustee and any co-trustee, and the Master Servicer
will pay or reimburse the Indenture  Trustee and any co-trustee upon request for
all  reasonable  expenses,  disbursements  and advances  incurred or made by the

 <PAGE>

Indenture  Trustee or any co-trustee in accordance with any of the provisions of
this Servicing Agreement except any such expense, disbursement or advance as may
arise from its negligence, willful misfeasance or bad faith.

(b) The Master Servicer agrees to indemnify the Indenture  Trustee and the Owner
Trustee for, and to hold the  Indenture  Trustee and the Owner  Trustee,  as the
case may be, harmless against,  any loss,  liability or expense incurred without
negligence, bad faith or willful misconduct on the part of the Indenture Trustee
or the Owner Trustee, as the case may be, arising out of, or in connection with,
the  acceptance  and  administration  of the  Issuer  and  the  assets  thereof,
including the costs and expenses (including  reasonable legal fees and expenses)
of defending the  Indenture  Trustee or the Owner  Trustee,  as the case may be,
against any claim in connection  with the exercise or  performance of any of its
powers or duties under any Basic Document, provided that:

(i) with respect to any such claim, the Indenture  Trustee or Owner Trustee,  as
the case may be, shall have given the Master  Servicer  written  notice  thereof
promptly after the Indenture Trustee or Owner Trustee, as the case may be, shall
have actual knowledge thereof;

(ii) while maintaining  control over its own defense,  the Issuer, the Indenture
Trustee or Owner Trustee,  as the case may be, shall cooperate and consult fully
with the Master Servicer in preparing such defense; and

(iii) notwithstanding  anything in this Servicing Agreement to the contrary, the
Master Servicer shall not be liable for settlement of any claim by the Indenture
Trustee or the Owner Trustee, as the case may be, entered into without the prior
consent of the Master Servicer.

        No termination of this Servicing  Agreement shall affect the obligations
created by this Section 6.06 of the Master  Servicer to indemnify  the Indenture
Trustee and the Owner Trustee under the  conditions  and to the extent set forth
herein.

        Notwithstanding  the  foregoing,  the  indemnification  provided  by the
Master Servicer in this Section 6.06(b) shall not pertain to any loss, liability
or expense of the Indenture  Trustee or the Owner  Trustee,  including the costs
and expenses of defending itself against any claim,  incurred in connection with
any actions taken by the Indenture Trustee or the Owner Trustee at the direction
of the  Noteholders or  Certificateholders,  as the case may be, pursuant to the
terms of this Servicing Agreement.

                                  ARTICLE VII

                                     DEFAULT

Section 7.01 Servicing  Default.  If any one of the following events ("Servicing
Default") shall occur and be continuing:

 <PAGE>

(a) Any failure by the Master  Servicer to deposit in the  Custodial  Account or
Payment  Account  any  deposit  required  to be made  under  the  terms  of this
Servicing  Agreement  which  continues  unremedied for a period of five Business
Days after the date upon which  written  notice of such failure  shall have been
given to the Master Servicer by the Issuer or the Indenture  Trustee,  or to the
Master Servicer, the Issuer and the Indenture Trustee by the Credit Enhancer; or

(b) Failure on the part of the Master Servicer duly to observe or perform in any
material  respect any other  covenants or agreements of the Master  Servicer set
forth in the Securities or in this Servicing  Agreement,  which failure, in each
case,  materially and adversely affects the interests of  Securityholders or the
Credit Enhancer and which continues unremedied for a period of 45 days after the
date on which written notice of such failure, requiring the same to be remedied,
and stating that such notice is a "Notice of Default" hereunder, shall have been
given to the Master Servicer by the Issuer or the Indenture  Trustee,  or to the
Master Servicer, the Issuer and the Indenture Trustee by the Credit Enhancer; or

(c) The entry  against  the Master  Servicer  of a decree or order by a court or
agency or  supervisory  authority  having  jurisdiction  in the premises for the
appointment of a trustee, conservator, receiver or liquidator in any insolvency,
conservatorship,  receivership,  readjustment of debt, marshalling of assets and
liabilities or similar proceedings,  or for the winding up or liquidation of its
affairs,  and the continuance of any such decree or order unstayed and in effect
for a period of 60 consecutive days; or

(d) The Master Servicer shall  voluntarily go into  liquidation,  consent to the
appointment  of a  conservator,  receiver,  liquidator or similar  person in any
insolvency,  readjustment  of debt,  marshalling  of assets and  liabilities  or
similar  proceedings of or relating to the Master  Servicer or of or relating to
all or  substantially  all of its  property,  or a  decree  or order of a court,
agency or  supervisory  authority  having  jurisdiction  in the premises for the
appointment  of a  conservator,  receiver,  liquidator or similar  person in any
insolvency,  readjustment  of debt,  marshalling  of assets and  liabilities  or
similar proceedings,  or for the winding-up or liquidation of its affairs, shall
have been  entered  against the Master  Servicer  and such decree or order shall
have  remained in force  undischarged,  unbonded or unstayed  for a period of 60
days;  or the Master  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,

then, and in every such case, so long as a Servicing Default shall not have been
remedied by the Master  Servicer,  either the Issuer or the  Indenture  Trustee,
with the consent of the Credit Enhancer,  or the Credit Enhancer, by notice then
given in  writing to the Master  Servicer  (and to the Issuer and the  Indenture
Trustee if given by the Credit  Enhancer)  may  terminate  all of the rights and
obligations of the Master  Servicer as servicer  under this Servicing  Agreement
other  than  its  right to  receive  servicing  compensation  and  expenses  for
servicing the Revolving  Credit Loans  hereunder  during any period prior to the
date of such  termination  and the  Issuer or the  Indenture  Trustee,  with the
consent of the Credit Enhancer,  or the Credit Enhancer may exercise any and all
other  remedies  available  at law or  equity.  Any such  notice  to the  Master
Servicer shall also be given to each Rating Agency,  the Credit Enhancer and the
Issuer.  On or after the receipt by the Master  Servicer of such written notice,
all authority and power of the Master  Servicer under this Servicing  Agreement,
whether  with  respect  to the  Securities  or the  Revolving  Credit  Loans  or
otherwise,  shall pass to and be vested in the  Indenture  Trustee as pledgee of
the  Revolving  Credit  Loans,  pursuant to and under this  Section  7.01;  and,
without limitation,  the Indenture Trustee is hereby authorized and empowered to
execute and deliver,  on behalf of the Master Servicer,  as  attorney-in-fact or

 <PAGE>

otherwise, 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 of each
Revolving Credit Loan and related documents,  or otherwise.  The Master Servicer
agrees to cooperate with the Indenture  Trustee in effecting the  termination of
the  responsibilities  and rights of the Master Servicer  hereunder,  including,
without limitation, the transfer to the Indenture Trustee for the administration
by it of all cash amounts  relating to the Revolving  Credit Loans that shall at
the  time  be held  by the  Master  Servicer  and to be  deposited  by it in the
Custodial  Account,  or that have been  deposited by the Master  Servicer in the
Custodial Account or thereafter  received by the Master Servicer with respect to
the Revolving Credit Loans. All reasonable  costs and expenses  (including,  but
not limited to,  attorneys'  fees)  incurred in  connection  with  amending this
Servicing  Agreement to reflect such succession as Master  Servicer  pursuant to
this Section 7.01 shall be paid by the  predecessor  Master  Servicer (or if the
predecessor  Master  Servicer  is the  Indenture  Trustee,  the  initial  Master
Servicer)  upon  presentation  of  reasonable  documentation  of such  costs and
expenses.

        Notwithstanding any termination of the activities of the Master Servicer
hereunder,  the Master  Servicer  shall be entitled to receive,  out of any late
collection  of a payment on a  Revolving  Credit Loan which was due prior to the
notice  terminating the Master Servicer's  rights and obligations  hereunder and
received after such notice, that portion to which the Master Servicer would have
been entitled pursuant to Sections 3.03 and 3.09 as well as its Master Servicing
Fee in respect  thereof,  and any other amounts  payable to the Master  Servicer
hereunder  the  entitlement  to  which  arose  prior to the  termination  of its
activities hereunder.

        Notwithstanding  the  foregoing,  a delay in or failure  of  performance
under  Section  7.01(a) or under  Section  7.01(b)  after the  applicable  grace
periods specified in such Sections,  shall not constitute a Servicing Default if
such delay or failure  could not be  prevented  by the  exercise  of  reasonable
diligence by the Master  Servicer and such delay or failure was caused by an act
of God or the public enemy, acts of declared or undeclared war, public disorder,
rebellion or  sabotage,  epidemics,  landslides,  lightning,  fire,  hurricanes,
earthquakes,  floods or similar causes. The preceding sentence shall not relieve
the Master  Servicer  from using  reasonable  efforts to perform its  respective
obligations  in a timely manner in accordance  with the terms of this  Servicing
Agreement  and the Master  Servicer  shall provide the  Indenture  Trustee,  the
Credit Enhancer and the Securityholders  with notice of such failure or delay by
it,  together with a description  of its efforts to so perform its  obligations.
The Master Servicer shall immediately notify the Indenture  Trustee,  the Credit
Enhancer and the Owner Trustee in writing of any Servicing Default.

Section 7.02  Indenture  Trustee to Act;  Appointment  of Successor.  (a) On and
after the time the Master Servicer receives a notice of termination  pursuant to
Section 7.01 or sends a notice  pursuant to Section 6.04, the Indenture  Trustee
as pledgee of the Revolving  Credit Loans shall be the successor in all respects
to the  Master  Servicer  in its  capacity  as  servicer  under  this  Servicing
Agreement  and the  transactions  set forth or provided  for herein and shall be

 <PAGE>

subject to all the  responsibilities,  duties and liabilities  relating  thereto
placed on the Master  Servicer by the terms and  provisions  hereof.  Nothing in
this Servicing  Agreement or in the Trust Agreement shall be construed to permit
or require the Indenture Trustee to (i) succeed to the responsibilities,  duties
and  liabilities of the initial Master  Servicer in its capacity as Seller under
the Revolving Credit Loan Purchase Agreement, (ii) be responsible or accountable
for any act or omission of the Master Servicer prior to the issuance of a notice
of termination  hereunder,  (iii) require or obligate the Indenture Trustee,  in
its capacity as successor Master Servicer, to purchase, repurchase or substitute
any Revolving Credit Loan, (iv) fund any Additional Balances with respect to any
Revolving Credit Loan, (v) fund any losses on any Permitted  Investment directed
by any other Master Servicer, or (vi) be responsible for the representations and
warranties  of the Master  Servicer.  As  compensation  therefor,  the Indenture
Trustee shall be entitled to such compensation as the Master Servicer would have
been  entitled to  hereunder  if no such notice of  termination  had been given.
Notwithstanding  the above, (i) if the Indenture  Trustee is unwilling to act as
successor Master Servicer, or (ii) if the Indenture Trustee is legally unable so
to act, the Indenture  Trustee as pledgee of the Revolving  Credit Loans may (in
the situation  described in clause (i)) or shall (in the situation  described in
clause (ii))  appoint or petition a court of competent  jurisdiction  to appoint
any  established  housing and home finance  institution,  bank or other mortgage
loan  or  home  equity  loan  servicer  having  a net  worth  of not  less  than
$10,000,000 as the successor to the Master Servicer  hereunder in the assumption
of all or any part of the responsibilities,  duties or liabilities of the Master
Servicer hereunder;  provided,  that any such successor Master Servicer shall be
acceptable to the Credit Enhancer,  as evidenced by the Credit  Enhancer's prior
written  consent which consent shall not be  unreasonably  withheld and provided
further that the  appointment  of any such  successor  Master  Servicer will not
result in the qualification,  reduction or withdrawal of the ratings assigned to
the  Securities  by the Rating  Agencies,  if determined  without  regard to the
Credit Enhancement Instrument.  Pending appointment of a successor to the Master
Servicer here under,  unless the Indenture  Trustee is prohibited by law from so
acting,  the  Indenture  Trustee  shall  act in  such  capacity  as  hereinabove
provided.  In connection with such  appointment  and  assumption,  the successor
shall be entitled to receive  compensation  out of payments on Revolving  Credit
Loans in an amount equal to the  compensation  which the Master  Servicer  would
otherwise have received pursuant to Section 3.09 (or such lesser compensation as
the Indenture  Trustee and such  successor  shall agree).  The  appointment of a
successor  Master  Servicer  shall not affect any  liability of the  predecessor
Master  Servicer which may have arisen under this Servicing  Agreement  prior to
its  termination  as  Master  Servicer  (including,   without  limitation,   the
obligation to purchase  Revolving  Credit Loans pursuant to Section 3.01, to pay
any  deductible  under  an  insurance  policy  pursuant  to  Section  3.04 or to
indemnify  the  Indenture  Trustee  pursuant  to  Section  6.06),  nor shall any
successor Master Servicer be liable for any acts or omissions of the predecessor
Master  Servicer  or for  any  breach  by  such  Master  Servicer  of any of its
representations  or warranties  contained  herein or in any related  document or
agreement.  The  Indenture  Trustee and such  successor  shall take such action,
consistent  with this Servicing  Agreement,  as shall be necessary to effectuate
any such succession.

(b) Any successor,  including the Indenture  Trustee,  to the Master Servicer as
servicer  shall  during the term of its  service as  servicer  (i)  continue  to
service  and  administer  the  Revolving  Credit  Loans for the  benefit  of the
Securityholders,  (ii)  maintain  in force a policy  or  policies  of  insurance
covering  errors and omissions in the  performance of its  obligations as Master

 <PAGE>

Servicer hereunder and a fidelity bond in respect of its officers, employees and
agents to the same  extent as the Master  Servicer  is so  required  pursuant to
Section 3.13 and (iii) be bound by the terms of the Insurance Agreement.

(c) Any successor Master Servicer, including the Indenture Trustee, shall not be
deemed in default or to have  breached its duties  hereunder if the  predecessor
Master  Servicer  shall fail to deliver any  required  deposit to the  Custodial
Account  or  otherwise   cooperate  with  any  required  servicing  transfer  or
succession hereunder.

Section  7.03  Notification  to  Securityholders.  Upon  any  termination  of or
appointment of a successor to the Master  Servicer  pursuant to this Article VII
or Section 6.04, the Indenture  Trustee shall give prompt written notice thereof
to the Securityholders, the Credit Enhancer, the Issuer and each Rating Agency.

                                  ARTICLE VIII

                            MISCELLANEOUS PROVISIONS

Section 8.01  Amendment.  This  Servicing  Agreement may be amended from time to
time by the parties  hereto,  provided  that any amendment be  accompanied  by a
letter  from the  Rating  Agencies  that the  amendment  will not  result in the
downgrading  or  withdrawal of the rating then  assigned to the  Securities,  if
determined without regard to the Credit Enhancement Instrument,  and the consent
of the Credit Enhancer and the Indenture Trustee.

Section 8.02  GOVERNING  LAW.  THIS  SERVICING  AGREEMENT  SHALL BE CONSTRUED IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK AND THE  OBLIGATIONS,  RIGHTS
AND REMEDIES OF THE PARTIES  HEREUNDER  SHALL BE DETERMINED  IN ACCORDANCE  WITH
SUCH LAWS.

Section 8.03 Notices. All demands, notices and communications hereunder shall be
in writing and shall be deemed to have been duly given if  personally  delivered
at or mailed by certified mail, return receipt requested,  to (a) in the case of
the Master  Servicer,  10  Universal  City Plaza,  Suite 2100,  Universal  City,
California 91608, Attention: Director - Bond Administration,  (b) in the case of
the Credit Enhancer,  Ambac Assurance Corporation,  One State Street Plaza, 19th
Floor, New York, New York 10004,  Attention:  Consumer  Asset-Backed  Securities
Group, (c) in the case of Standard & Poor's, 55 Water Street, New York, New York
10041,  Attention:  Residential Mortgage  Surveillance Group, (d) in the case of
Fitch, One State Street Plaza, New York, New York 10004, Attention:  Residential
Mortgage Group, (e) in the case of the Owner Trustee,  Wilmington Trust Company,
Rodney Square North, 1100 North Market Street, Wilmington,  Delaware 19890-0001,
Attention:  Corporate Trust  Administration,  (f) in the case of the Issuer,  to
Home Equity Loan Trust 2000-HS1,  c/o Owner Trustee,  Wilmington  Trust Company,
Rodney Square North, 1100 North Market Street, Wilmington,  Delaware 19890-0001,
Attention:  Corporate  Trust  Administration,  (g) in the case of the  Indenture
Trustee,  The Chase Manhattan  Bank, 450 West 33rd Street,  New York, NY, 10001,
Attention:  Structured  Finance Services and (h) in the case of the Underwriter,
Residential  Funding  Securities  Corporation,  4800 Montgomery Lane, Suite 150,
Bethesda,  Maryland  20814,  Attention:  Director of Compliance;  or, as to each
party,  at such other  address as shall be designated by such party in a written
notice to each other party.  Any notice  required or permitted to be mailed to a
Securityholder  shall be given by first  class  mail,  postage  prepaid,  at the

 <PAGE>

address of such  Securityholder  as shown in the Register.  Any notice so mailed
within the time  prescribed in this Servicing  Agreement  shall be  conclusively
presumed to have been duly  given,  whether or not the  Securityholder  receives
such notice.  Any notice or other document required to be delivered or mailed by
the  Indenture  Trustee  to any  Rating  Agency  shall be given on a  reasonable
efforts  basis  and only as a  matter  of  courtesy  and  accommodation  and the
Indenture Trustee shall have no liability for failure to delivery such notice or
document to any Rating Agency.

Section 8.04  Severability  of Provisions.  If any one or more of the covenants,
agreements,  provisions or terms of this  Servicing  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  Servicing  Agreement and shall in no way affect the
validity or enforceability  of the other provisions of this Servicing  Agreement
or of the Securities or the rights of the Securityholders thereof.

Section 8.05 Third-Party  Beneficiaries.  This Servicing Agreement will inure to
the benefit of and be binding upon the parties hereto, the Securityholders,  the
Credit Enhancer, the Owner Trustee and their respective successors and permitted
assigns.  Except as otherwise  provided in this  Servicing  Agreement,  no other
Person will have any right or obligation hereunder.

Section  8.06  Counterparts.  This  instrument  may be executed in any number of
counterparts,  each of which so executed shall be deemed to be an original,  but
all such counterparts shall together constitute but one and the same instrument.

Section 8.07 Effect of Headings  and Table of Contents.  The Article and Section
headings herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.

Section 8.08  Termination Upon Purchase by the Master Servicer or Liquidation of
All Revolving Credit Loans; Partial Redemption.  (a) The respective  obligations
and  responsibilities  of the Master  Servicer,  the  Issuer  and the  Indenture
Trustee created hereby shall terminate upon the last action required to be taken
by the Issuer  pursuant  to the Trust  Agreement  and by the  Indenture  Trustee
pursuant to the Indenture following the earlier of:

(i) the date on or before which the Indenture or Trust  Agreement is terminated,
or

(ii) the purchase by the Master Servicer from the Issuer of all Revolving Credit
Loans and all  property  acquired in respect of any  Revolving  Credit Loan at a
price equal to 100% of the unpaid Loan  Balance of each  Revolving  Credit Loan,
plus accrued and unpaid interest  thereon at the Weighted  Average Net Loan Rate
up to the day  preceding  the  Payment  Date on  which  such  amounts  are to be
distributed  to  Securityholders,  plus any  amounts due and owing to the Credit
Enhancer under the Insurance Agreement (any unpaid Master Servicing Fee shall be
deemed paid at such time).

 <PAGE>

The right of the Master  Servicer to purchase the assets of the Issuer  pursuant
to clause (ii) above is conditioned upon the Pool Balance as of such date (after
application of payments  received  during the related  Collection  Period) being
less than ten percent of the  aggregate of the Cut-off Date Loan Balances of the
Revolving Credit Loans. If such right is exercised by the Master  Servicer,  the
Master  Servicer  shall  deposit the amount  calculated  pursuant to clause (ii)
above with the Indenture  Trustee pursuant to Section 4.10 of the Indenture and,
upon the receipt of such  deposit,  the  Indenture  Trustee or  Custodian  shall
release to the Master  Servicer,  the files  pertaining to the Revolving  Credit
Loans being purchased.

(b) Subject to the provisions of clause (c) below,  the Master  Servicer has the
right to purchase a portion of the assets of the Issuer upon the Pool Balance as
of such  date  (after  application  of  payments  received  during  the  related
Collection  Period)  being less than ten percent of the aggregate of the Cut-off
Date Loan Balances of the Revolving Credit Loans at a price equal to 100% of the
unpaid Loan Balance of each Revolving Credit Loan so purchased, plus accrued and
unpaid  interest  thereon at the  Weighted  Average  Net Loan Rate up to the day
preceding  the  Payment  Date on which such  amounts  are to be  distributed  to
Securityholders, plus any amounts due and owing to the Credit Enhancer under the
Insurance  Agreement  (any unpaid  Master  Servicing Fee shall be deemed paid at
such  time).  If such  right is  exercised  by the Master  Servicer,  the Master
Servicer shall deposit the amount  calculated  above with the Indenture  Trustee
pursuant to Section 5.02 of the Indenture and, upon the receipt of such deposit,
the Indenture  Trustee or Custodian  shall release to the Master  Servicer,  the
files pertaining to the Revolving Credit Loans being purchased.

(c) With respect to any purchase of a portion of the  Revolving  Credit Loans by
the Master Servicer  pursuant to subsection (b) above, the following  conditions
must be satisfied: (i) the Master Servicer shall have delivered to the Indenture
Trustee  and  the  Credit  Enhancer  a loan  schedule  containing  a list of all
Revolving  Credit  Loans  remaining  in the Trust after such  removal;  (ii) the
Master Servicer shall represent and warrant that no selection procedures adverse
to the interests of the  Securityholders or the Credit Enhancer were used by the
Master Servicer in selecting such Revolving  Credit Loans; and (iii) each Rating
Agency shall have notified the Master  Servicer that such  retransfer  would not
result in a  reduction  or  withdrawal  of the  ratings  of the  Securities,  if
determined  without regard to the Credit  Enhancement  Instrument.  In lieu of a
cash payment, if an Amortization Event had previously occurred, all or a portion
of such purchase  price by the Master  Servicer may be in the form of Additional
Balances on other Revolving Credit Loans not previously conveyed to the Issuer.

(d) The Master  Servicer,  at its  expense,  shall  prepare  and  deliver to the
Indenture  Trustee for execution,  at the time the Revolving Credit Loans are to
be released to the Master Servicer,  appropriate  documents  assigning each such
Revolving  Credit  Loan from the  Indenture  Trustee or the Issuer to the Master
Servicer or the appropriate party.

Section 8.09 Certain Matters Affecting the Indenture  Trustee.  For all purposes
of this Servicing  Agreement,  in the performance of any of its duties or in the
exercise of any of its powers hereunder,  the Indenture Trustee shall be subject
to and entitled to the benefits of Article VI of the Indenture.

 <PAGE>

Section  8.10 Owner  Trustee  Not Liable for  Related  Documents.  The  recitals
contained  herein shall be taken as the  statements  of the  Depositor,  and the
Owner Trustee assumes no responsibility for the correctness  thereof.  The Owner
Trustee  makes no  representations  as to the  validity or  sufficiency  of this
Servicing  Agreement,  of any Basic Document or of the Certificates  (other than
the signatures of the Owner Trustee on the Certificates) or the Notes, or of any
Related Documents. The Owner Trustee shall at no time have any responsibility or
liability  with  respect to the  sufficiency  of the Owner  Trust  Estate or its
ability to generate the payments to be distributed to  Certificateholders  under
the Trust  Agreement or the  Noteholders  under the  Indenture,  including,  the
compliance  by the  Depositor or the Seller with any warranty or  representation
made under any Basic Document or in any related  document or the accuracy of any
such warranty or representation,  or any action of the Certificate Paying Agent,
the  Certificate  Registrar or the  Indenture  Trustee  taken in the name of the
Owner Trustee.

<PAGE>

        IN WITNESS WHEREOF,  the Master Servicer,  the Indenture Trustee and the
Issuer  have  caused  this  Servicing  Agreement  to be duly  executed  by their
respective  officers or  representatives  all as of the day and year first above
written.

                                            RESIDENTIAL FUNDING CORPORATION,
                                            as Master Servicer

                                            By:  /s/ Julie Steinhagen
                                            Name:  Julie Steinhagen
                                            Title:    Director

                                            HOME EQUITY LOAN TRUST 2000-HS1

                                            By:  Wilmington Trust Company, not
                                                in its individual capacity but
                                                solely as Owner Trustee

                                            By:  /s/ W. Chris Sponenberg
                                            Name:  W. Chris Sponenberg
                                            Title:     Assistant Vice President

                                            THE CHASE MANHATTAN BANK,
                                            as Indenture Trustee

                                            By:  /s/ Mark McDermott
                                            Name:  Mark McDermott
                                            Title:    Trust Officer

<PAGE>

                                    EXHIBIT A

                         REVOLVING CREDIT LOAN SCHEDULE

                  See Exhibit 1 of Revolving Credit Loan Purchase Agreement

<PAGE>

                                    EXHIBIT B

                            LIMITED POWER OF ATTORNEY

                               KNOW ALL MEN BY THESE PREMISES:

        That The Chase  Manhattan  Bank, as Indenture  Trustee (the  "Trustee"),
under the  Indenture  (the  "Indenture")  among  and the  Indenture  Trustee,  a
national banking association  organized and existing under the laws of the State
of New York, and having its principal office located at 450 West 33rd Street, in
the City of New York in the  State  of New  York,  hath  made,  constituted  and
appointed,  and does by these presents make,  constitute and appoint Residential
Funding Corporation,  a corporation organized and existing under the laws of the
State of  Delaware,  its true and lawful  Attorney-in-Fact,  with full power and
authority to sign, execute,  acknowledge,  deliver,  file for record, and record
any  instrument  on its behalf  and to perform  such other act or acts as may be
customarily and reasonably necessary and appropriate to effectuate the following
enumerated  transactions  in respect of any of the  mortgages  or deeds of trust
(the  "Mortgages"  and the "Deeds of Trust",  respectively)  creating a trust or
second  lien or an estate in fee simple  interest  in real  property  securing a
Revolving  Credit Loan and  promissory  notes  secured  thereby  (the  "Mortgage
Notes") for which the  undersigned  is acting as  Indenture  Trustee for various
Securityholders  (whether  the  undersigned  is named  therein as  mortgagee  or
beneficiary  or has become  mortgagee by virtue of  Endorsement  of the Mortgage
Note  secured by any such  Mortgage or Deed of Trust) and for which  Residential
Funding  Corporation  is acting  as  master  servicer  pursuant  to a  Servicing
Agreement, dated as of September 26, 2000 (the "Servicing Agreement").

        This appointment  shall apply only to transactions  which the Trustee is
authorized to enter into under the Indenture, but in no event shall apply to any
transactions other than the following enumerated transactions only:

1. The  modification or re-recording of a Mortgage or Deed of Trust,  where said
modification  or  re-recording  is for the purpose of correcting the Mortgage or
Deed of Trust to conform same to the original  intent of the parties  thereto or
to correct  title errors  discovered  after such title  insurance was issued and
said modification or re-recording, in either instance, does not adversely affect
the lien of the Mortgage or Deed of Trust as insured.

2. The  subordination  of the lien of a Mortgage or Deed of Trust to an easement
in favor of a public utility company or a government  agency or unit with powers
of eminent domain; this section shall include, without limitation, the execution
of partial  satisfactions/releases,  partial  reconveyances  or the execution of
requests to trustees to accomplish same.

3. With respect to a Mortgage or Deed of Trust, the foreclosure, the taking of a
deed in lieu of  foreclosure,  or the  completion  of judicial  or  non-judicial
foreclosure or termination,  cancellation or rescission of any such foreclosure,
including, without limitation, any and all of the following acts:

a.   The substitution of trustee(s) serving under a Deed of Trust, in accordance
     with state law and the Deed of Trust;

 <PAGE>

b.      Statements of breach or non-performance;

c.      Notices of default;

d.      Cancellations/rescissions of notices of default and/or notices of sale;

e.      The taking of a deed in lieu of foreclosure; and

f.   Such other documents and actions as may be necessary under the terms of the
     Mortgage,  Deed of  Trust  or  state  law to  expeditiously  complete  said
     transactions.

4. The conveyance of the properties to the mortgage  insurer,  or the closing of
the title to the property to be acquired as real estate owned,  or conveyance of
title to real estate owned.

5.      The completion of loan assumption agreements.

6.  The  full  satisfaction/release  of a  Mortgage  or  Deed of  Trust  or full
reconveyance upon payment and discharge of all sums secured thereby,  including,
without limitation, cancellation of the related Mortgage Note.

7. The  assignment  of any  Mortgage or Deed of Trust and the  related  Mortgage
Note, in connection with the repurchase of the Revolving Credit Loan secured and
evidenced  thereby  pursuant  to  the  requirements  of  a  Residential  Funding
Corporation Seller Contract, including, with limitation, by reason of conversion
of an adjustable rate mortgage loan from a variable rate to a fixed rate.

8. The full assignment of a Mortgage or Deed of Trust upon payment and discharge
of all  sums  secured  thereby  in  conjunction  with the  refinancing  thereof,
including, without limitation, the endorsement of the related Mortgage Note.

9. The  modification or re-recording of a Mortgage or Deed of Trust,  where said
modification or re-recording is for the purpose of any modification  pursuant to
Section 3.01 of the Servicing Agreement.

10. The  subordination  of the lien of a Mortgage  or Deed of Trust,  where said
subordination is in connection with any modification pursuant to Section 3.01 of
the Servicing Agreement, and the execution of partial  satisfactions/releases in
connection with such same Section 3.01.

The undersigned gives said  Attorney-in-Fact full power and authority to execute
such instruments and to do and perform all and every act and thing necessary and
proper to carry into effect the power or powers granted by or under this Limited
Power of Attorney as fully as the undersigned might or could do, and hereby does
ratify and confirm to all that said Attorney-in-Fact  shall lawfully do or cause
to be done by authority hereof.

Third  parties  without  actual  notice may rely upon the  exercise of the power
granted  under this Limited  Power of Attorney;  and may be satisfied  that this
Limited Power of Attorney  shall  continue in full force and effect has not been
revoked  unless an  instrument  of  revocation  has been made in  writing by the
undersigned.

                                            THE CHASE MANHATTAN BANK, not in its
                                            individual  capacity,  but solely as
                                            Indenture    Trustee    under    the
                                            Agreements and the Indentures

                                       By:
                                      Name:
                                     Title:

STATE OF              )

                      SS.

COUNTY OF             )

        On this th day of , 2000,  before me the  undersigned,  Notary Public of
said State,  personally  appeared  personally  known to me to be duly authorized
officers of The Chase  Manhattan  Bank that executed the within  instrument  and
personally  known to me to be the persons who executed the within  instrument on
behalf of The Chase  Manhattan Bank therein named,  and  acknowledged to me such
The Chase Manhattan Bank executed the within instrument pursuant to its by-laws.

                                            WITNESS my hand and official seal.

                                            Notary Public in and for the
                                    State of
After recording, please mail to:

Attn:

<PAGE>

                                    EXHIBIT C

                           FORM OF REQUEST FOR RELEASE

DATE:

TO:

Re:     REQUEST FOR RELEASE OF DOCUMENTS

In connection with your administration of the Revolving Credit Loans, we request
the release of the Mortgage File described below.

Servicing Agreement Dated:

Series #:

Account #:

Pool #:

Loan #:

Borrower Name(s):

Reason for Document Request: (circle one)   Revolving Credit LoanPrepaid in Full

                        Revolving Credit Loan Repurchased

"We hereby  certify  that all amounts  received or to be received in  connection
with such  payments  which are required to be deposited  have been or will be so
deposited as provided in the Servicing Agreement."

                         Residential Funding Corporation

                              Authorized Signature
 ...............................................................................

TO CUSTODIAN/INDENTURE  TRUSTEE:  Please acknowledge this request, and check off
documents  being  enclosed with a copy of this form. You should retain this form
for your files in accordance with the terms of the Servicing Agreement.
               Enclosed Documents:          [  ]   Promissory Note
                                            [  ] Mortgage or Deed of Trust
                                            [  ] Assignment(s) of Mortgage or
                                                 Deed of Trust
                                            [  ] Title Insurance Policy
                                            [  ] Other:
Name
Title
Date

<PAGE>

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