Document:

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                                                                     EXHIBIT 4.2

                                    INDENTURE

                                     BETWEEN

                         [        ] LOAN TRUST 200 -,

                                   AS ISSUER,

                                       AND

                              [                 ],
                              AS INDENTURE TRUSTEE

                           Dated as of            , 200

                                   Relating to

                       [                    ] TRUST 200 -
                       MORTGAGE BACKED NOTES, SERIES 200 -

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                                TABLE OF CONTENTS

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                                                                                                               Page
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<S>                    <C>                                                                                     <C>
ARTICLE I DEFINITIONS 2

      Section 1.01.     General Definitions.......................................................................2

ARTICLE II THE NOTES ............................................................................................25

      Section 2.01.     Forms Generally..........................................................................25
      Section 2.02.     Forms of Certificate of Authentication...................................................25
      Section 2.03.     General Provisions With Respect to Principal and Interest Payment........................26
      Section 2.04.     Denominations............................................................................26
      Section 2.05.     Execution, Authentication, Delivery and Dating...........................................27
      Section 2.06.     Registration, Registration of Transfer and Exchange......................................27
      Section 2.07.     Mutilated, Destroyed, Lost or Stolen Notes...............................................28
      Section 2.08.     Payments of Principal and Interest.......................................................29
      Section 2.09.     Persons Deemed Owner.....................................................................31
      Section 2.10.     Cancellation.............................................................................31
      Section 2.11.     Authentication and Delivery of Notes.....................................................31
      Section 2.12.     Book-Entry Note..........................................................................33
      Section 2.13.     Termination of Book Entry System.........................................................33

ARTICLE III COVENANTS ...........................................................................................34

      Section 3.01.     Payment of Notes.........................................................................34
      Section 3.02.     Maintenance of Office or Agency..........................................................34
      Section 3.03.     Money for Note Payments to Be Held In Trust..............................................34
      Section 3.04.     Existence of Issuer......................................................................36
      Section 3.05.     Protection of Trust Estate...............................................................37
      Section 3.06.     Annual Opinions as to Collateral.........................................................37
      Section 3.07.     Performance of Obligations; Servicing Agreement..........................................38
      Section 3.08.     Investment Company Act...................................................................38
      Section 3.09.     Negative Covenants.......................................................................38
      Section 3.10.     Annual Statement as to Compliance........................................................39
      Section 3.11.     Restricted Payments......................................................................40
      Section 3.12.     Treatment of Notes as Debt for Tax Purposes..............................................40
      Section 3.13.     Notice of Events of Default..............................................................40
      Section 3.14.     Further Instruments and Acts.............................................................40

ARTICLE IV SATISFACTION AND DISCHARGE............................................................................40

      Section 4.01.     Satisfaction and Discharge of Indenture..................................................40
      Section 4.02.     Application of Trust Money...............................................................42

ARTICLE V DEFAULTS AND REMEDIES..................................................................................42

      Section 5.01.     Event of Default.........................................................................42
      Section 5.02.     Acceleration of Maturity; Rescission and Annulment.......................................43
</TABLE>

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<TABLE>
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<S>                                                                                                             <C>
      Section 5.03.     Collection of Indebtedness and Suits for Enforcement by Indenture Trustee................44
      Section 5.04.     Remedies.................................................................................44
      Section 5.05.     Indenture Trustee May File Proofs of Claim...............................................45
      Section 5.06.     Indenture Trustee May Enforce Claims Without Possession of Notes.........................46
      Section 5.07.     Application of Money Collected...........................................................46
      Section 5.08.     Limitation on Suits......................................................................47
      Section 5.09.     Unconditional Rights of Noteholders to Receive Principal and Interest....................48
      Section 5.10.     Restoration of Rights and Remedies.......................................................48
      Section 5.11.     Rights and Remedies Cumulative...........................................................48
      Section 5.12.     Delay or Omission Not Waiver.............................................................48
      Section 5.13.     Control by Noteholders...................................................................49
      Section 5.14.     Waiver of Past Defaults..................................................................49
      Section 5.15.     Undertaking for Costs....................................................................49
      Section 5.16.     Waiver of Stay or Extension Laws.........................................................50
      Section 5.17.     Sale of Trust Estate.....................................................................50
      Section 5.18.     Action on Notes..........................................................................51
      Section 5.19.     No Recourse to Other Trust Estates or Other Assets of the Issuer.........................52
      Section 5.20.     Application of the Trust Indenture Act...................................................52

ARTICLE VI THE INDENTURE TRUSTEE.................................................................................52

      Section 6.01.     Duties of Indenture Trustee..............................................................52
      Section 6.02.     Notice of Default........................................................................53
      Section 6.03.     Rights of Indenture Trustee..............................................................54
      Section 6.04.     Not Responsible for Recitals or Issuance of Notes........................................54
      Section 6.05.     May Hold Notes...........................................................................54
      Section 6.06.     Money Held in Trust......................................................................54
      Section 6.07.     Eligibility, Disqualification............................................................55
      Section 6.08.     Indenture Trustee's Capital and Surplus..................................................55
      Section 6.09.     Resignation and Removal; Appointment of Successor........................................55
      Section 6.10.     Acceptance of Appointment by Successor...................................................56
      Section 6.11.     Merger, Conversion, Consolidation or Succession to Business of Indenture Trustee.........57
      Section 6.12.     Preferential Collection of Claims Against Issuer.........................................57
      Section 6.13.     Co-Indenture Trustees and Separate Indenture Trustees....................................57
      Section 6.14.     Authenticating Agents....................................................................59
      Section 6.15.     Review of Mortgage Files.................................................................60
      Section 6.16.     Indenture Trustee Fees and Expenses......................................................62
      Section 6.17.     Tax Reporting............................................................................62

ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS.......................................................................62

      Section 7.01.     Issuer to Furnish Indenture Trustee Names and Addresses of Noteholders...................62
      Section 7.02.     Preservation of Information; Communications to Noteholders...............................62
      Section 7.03.     Reports by Indenture Trustee.............................................................63
</TABLE>

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<TABLE>
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<S>                                                                                                             <C>
      Section 7.04.     Reports by Issuer........................................................................63

ARTICLE VIII ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES..........................................63

      Section 8.01.     Collection of Moneys.....................................................................63
      Section 8.02.     Note Account; Distributions..............................................................64
      Section 8.03.     Claims Upon the Insurance Policy; Insurance Policy Payments Account......................66
      Section 8.04.     General Provisions Regarding the Note Accounts and Mortgage Loans........................68
      Section 8.05.     Releases of Defective Mortgage Loans.....................................................69
      Section 8.06.     Reports by Indenture Trustee to Noteholders; Access to Certain Information...............69
      Section 8.07.     Trust Estate Mortgage Files..............................................................70
      Section 8.08.     Amendment to Servicing Agreement.........................................................70
      Section 8.09.     Delivery of the Mortgage Files Pursuant to Servicing Agreement...........................70
      Section 8.10.     Servicer as Agent........................................................................71
      Section 8.11.     Termination of Servicer..................................................................71
      Section 8.12.     Opinion of Counsel.......................................................................71
      Section 8.13.     Appointment of Custodians................................................................71
      Section 8.14.     Rights of the Note Insurer to Exercise Rights of Noteholders.............................72
      Section 8.15.     Trust Estate and Accounts Held for Benefit of the Note Insurer...........................72
      Section 8.16.     [RESERVED.]..............................................................................73

ARTICLE IX SUPPLEMENTAL INDENTURES...............................................................................73

      Section 9.01.     Supplemental Indentures Without Consent of Noteholders...................................73
      Section 9.02.     Supplemental Indentures With Consent of Noteholders......................................74
      Section 9.03.     Execution of Supplemental Indentures.....................................................75
      Section 9.04.     Effect of Supplemental Indentures........................................................75
      Section 9.05.     Conformity With Trust Indenture Act......................................................75
      Section 9.06.     Reference in Notes to Supplemental Indentures............................................76
      Section 9.07.     Amendments to Governing Documents........................................................76

ARTICLE X REDEMPTION OF NOTES....................................................................................76

      Section 10.01.     Redemption..............................................................................76
      Section 10.02.     Form of Redemption Notice...............................................................77
      Section 10.03.     Notes Payable on Optional Redemption....................................................78

ARTICLE XI MISCELLANEOUS.........................................................................................78

      Section 11.01.     Compliance Certificates and Opinions....................................................78
      Section 11.02.     Form of Documents Delivered to Indenture Trustee........................................79
      Section 11.03.     Acts of Noteholders.....................................................................79
      Section 11.04.     Notices, etc., to Indenture Trustee, the Note Insurer and Issuer........................80
      Section 11.05.     Notices and Reports to Noteholders; Waiver of Notices...................................81
      Section 11.06.     Rules by Indenture Trustee..............................................................82
</TABLE>

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<S>                                                                                                             <C>
      Section 11.07.     Conflict With Trust Indenture Act.......................................................82
      Section 11.08.     Effect of Headings and Table of Contents................................................82
      Section 11.09.     Successors and Assigns..................................................................82
      Section 11.10.     Separability............................................................................82
      Section 11.11.     Benefits of Indenture...................................................................82
      Section 11.12.     Legal Holidays..........................................................................82
      Section 11.13.     Governing Law...........................................................................83
      Section 11.14.     Counterparts............................................................................83
      Section 11.15.     Recording of Indenture..................................................................83
      Section 11.16.     Issuer Obligation.......................................................................83
      Section 11.17.     No Petition.............................................................................83
      Section 11.18.     Inspection..............................................................................84
      Section 11.19.     Usury...................................................................................84
      Section 11.20.     Third Party Beneficiary.................................................................84
</TABLE>

                             SCHEDULES AND EXHIBITS

Schedule 1        Mortgage Loan Schedule
Exhibit A         Form of Note
Exhibit B         Insurance Policy
Exhibit C         Form of Notice of Claim
Exhibit D         PMI Mortgage Loans

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                              CROSS-REFERENCE TABLE

         Cross-reference sheet showing the location in the Indenture of the
provisions inserted pursuant to Sections 310 through 318(a) inclusive of the
Trust Indenture Act of 1939.*

<TABLE>
<CAPTION>
              Trust Indenture Act of 1939                                            Indenture Section
              ---------------------------                                            -----------------
<S>                                                                                  <C>
Section 310
         (a)(1).................................................................           6.07
         (a)(2).................................................................        6.07, 6.08
         (a)(3).................................................................           6.13
         (a)(4).................................................................      Not Applicable
         (a)(5).................................................................           6.07
         (b)....................................................................        6.07, 6.09
         (c)....................................................................      Not Applicable
Section 311
         (a)....................................................................           6.12
         (b)....................................................................           6.12
         (c)....................................................................      Not Applicable
Section 312
         (a)....................................................................     7.01(a), 7.02(a)
         (b)....................................................................          7.02(b)
         (c)....................................................................          7.02(c)
Section 313
         (a)....................................................................          7.03(a)
         (b)....................................................................          7.03(a)
         (c)....................................................................           11.05
         (d)....................................................................          7.03(b)
Section 314
         (a)(1).................................................................           7.04
         (a)(2).................................................................           7.04
         (a)(3).................................................................           7.04
         (a)(4).................................................................           7.04
         (b)(1).................................................................      2.11(c), 11.01
         (b)(2).................................................................           3.06
         (c)(1).................................................................      2.11(d), 4.01,
                                                                                      8.02(d), 11.01
         (c)(2).................................................................      2.11(c), 4.01,
                                                                                      8.02(d), 11.01
         (c)(3).................................................................          8.02(d)
         (d)(1).................................................................         11.01(a)
         (d)(2).................................................................         11.01(a)
         (d)(3).................................................................         11.01(a)
         (e)....................................................................         11.0 1(b)
Section 315
</TABLE>

----------
*  This Cross-Reference Table is not part of the Indenture.

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<TABLE>
<CAPTION>
<S>                                                                                 <C>
         (a)....................................................................    6.01(b), 6.01(c)(1)
         (b)....................................................................        6.02, 11.05
         (c)....................................................................          6.01(a)
         (d)(1).................................................................     6.01(b), 6.01(c)
         (d)(2).................................................................        6.01(c)(2)
         (d)(3).................................................................        6.01(c)(3)
         (e)....................................................................           5.15
Section 316
         (a)....................................................................           5.20
         (b)....................................................................           5.09
         (c)....................................................................           5.20
Section 317
         (a)(1).................................................................           5.03
         (a)(2).................................................................           5.05
         (b)....................................................................           3.01
Section 318
         (a)....................................................................           11.07
</TABLE>

                                      -vi-

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         THIS INDENTURE, dated as of                (as amended or supplemented
from time to time as permitted hereby, this "Indenture"), is between
TRUST 200 -, a Delaware business trust (together with its permitted successors
and assigns, the "Issuer") and                    , as indenture trustee
(together with its permitted successors in the trusts hereunder, the "Indenture
Trustee").

                              PRELIMINARY STATEMENT

         The Issuer has duly authorized the execution and delivery of this
Indenture to provide for its Mortgage Backed Notes, Series 200 - (the "Notes"),
issuable as provided in this Indenture. All covenants and agreements made by the
Issuer herein are for the benefit and security of the Holders of the Notes and
the Note Insurer. The Issuer is entering into this Indenture, and the Indenture
Trustee is accepting the trusts created hereby, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged.

         All things necessary to make this Indenture a valid agreement of the
Issuer in accordance with its terms have been done.

                                 GRANTING CLAUSE

         The Issuer hereby Grants to the Indenture Trustee, for the exclusive
benefit of the Holders of the Notes and the Note Insurer, all of the Issuer's
right, title and interest in and to (a) the Mortgage Loans listed in Schedule I
to this Indenture (including property that secures a Mortgage Loan that becomes
an REO Property), including the related Mortgage Files delivered or to be
delivered to the Custodian, on behalf of the Indenture Trustee, pursuant to the
Mortgage Loan Sale Agreement, all payments of principal received, collected or
otherwise recovered after the Cut-off Date for each Mortgage Loan, all payments
of interest accruing on each Mortgage Loan after the Cut-off Date therefor
whenever received and all other proceeds received in respect of such Mortgage
Loans, and any Qualified Replacement Mortgage Loan, (b) the Servicing Agreement,
(c) the Mortgage Loan Sale Agreement, (d) the Mortgage Loan Contribution
Agreement, (e) the Management Agreement, (f) the Other Insurance Policies, (g)
all cash, instruments or other property held or required to be deposited in the
Collection Account and the Note Account, including all investments made with
funds in such accounts (but not including any income on funds deposited in, or
investments made with funds deposited in, the Collection Account and the Note
Account, which income shall belong to and be for the account of the Servicer),
and (h) all proceeds of the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquid assets, including, without limitation, all
insurance proceeds and condemnation awards. Such Grants are made, however, in
trust, to secure the Notes equally and ratably without prejudice, priority or
distinction between any Note and any other Note by reason of difference in time
of issuance or otherwise, and for the benefit of the Note Insurer to secure (x)
the payment of all amounts due on the Notes in accordance with their terms, (y)
the payment of all other sums payable under this Indenture and (z) compliance
with the provisions of this Indenture, all as provided in this Indenture. All
terms used in the foregoing granting clauses that are defined in Section 1.01
are used with the meanings given in said Section.

         The Indenture Trustee acknowledges such Grant, accepts the trusts
hereunder in accordance with the provisions of this Indenture and agrees to
perform the duties herein required

<PAGE>

to the end that the interests of the Holders of the Notes may be adequately and
effectively protected. The Indenture Trustee agrees that it will hold the
Insurance Policy and the PMI Policy in trust and that it will hold any proceeds
of any claim upon the Insurance Policy and PMI Policy, solely for the use and
benefit of the Noteholders in accordance with the terms hereof and the Insurance
Policy and the PMI Policy, respectively.

                                    ARTICLE I

                                   DEFINITIONS

         SECTION 1.01. GENERAL DEFINITIONS.

         Except as otherwise specified or as the context may otherwise require,
the following terms have the respective meanings set forth below for all
purposes of this Indenture, and the definitions of such terms are applicable to
the singular as well as to the plural forms of such terms and to the masculine
as well as to the feminine genders of such terms. Whenever reference is made
herein to an Event of Default or a Default known to the Indenture Trustee or of
which the Indenture Trustee has notice or knowledge, such reference shall be
construed to refer only to an Event of Default or Default of which the Indenture
Trustee is deemed to have notice or knowledge pursuant to Section 6.01(d). All
other terms used herein that are defined in the Trust Indenture Act (as
hereinafter defined), either directly or by reference therein, have the meanings
assigned to them therein.

         "ACCOUNTANT": A Person engaged in the practice of accounting who
(except when this Indenture provides that an Accountant must be Independent) may
be employed by or affiliated with the Issuer or an Affiliate of the Issuer.

         "ACT": With respect to any Noteholder, as defined in Section 11.03.

         "ADMINISTRATIVE FEE AMOUNT": For the Notes and any Payment Date, the
sum of the Monthly Servicing Fee and the Indenture Trustee's Fee, each relating
to such Payment Date.

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

         "AGENT": Any Note Registrar, Paying Agent, Authenticating Agent or
Custodian.

         "AGGREGATE PRINCIPAL BALANCE": With respect to the Mortgage Loan Pool
and any Payment Date, the aggregate of the Principal Balances of the Mortgage
Loans as of the related Determination Date (or other specified date).

         "ASSIGNMENTS": The original instrument of assignment of a Mortgage,
including any interim assignments, from the originator or any other holder of
any Mortgage Loan to the Indenture Trustee (that in each case may, to the extent
permitted by the laws of the state in which

                                      -2-
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the related Mortgaged Property is located, be a blanket instrument of assignment
covering other Mortgages and Mortgage Notes as well and that may also be an
instrument of assignment running directly from the mortgagee of record under the
related Mortgage to the Indenture Trustee).

         "AUTHENTICATING AGENT": The Person, if any, appointed as Authenticating
Agent by the Issuer pursuant to Section 6.14, until any successor Authenticating
Agent for the Notes is named, and thereafter "Authenticating Agent" shall mean
such successor. The Authenticating Agent shall be the Indenture Trustee. Any
Authenticating Agent other than the Indenture Trustee shall sign an instrument
under which it agrees to be bound by all of the terms of this Indenture
applicable to the Authenticating Agent.

         "AUTHORIZED OFFICER": With respect to (i) the Indenture Trustee, any
Responsible Officer, (ii) the Owner Trustee, the president, any vice president,
any assistant vice president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, any trust officer, any financial services
officer or any other officer of the Owner Trustee customarily performing
functions similar to those performed by the above officers and (iii) any other
Person, the Chairman, Chief Operating Officer, President or any Vice President
of such Person.

         "AVAILABLE FUNDS": With respect to any Payment Date, the sum of the
amounts described in clauses (a) through (g) below, less (i) the Administrative
Fee Amount in respect of such Payment Date, (ii) Monthly Advances and Servicing
Advances previously made that are reimbursable to the Servicer (other than those
included in liquidation expenses for any Liquidated Mortgage Loan and reimbursed
from the related Liquidation Proceeds and from Insurance Proceeds) with respect
to the related Collection Period to the extent permitted by the Servicing
Agreement and (iii) the aggregate amounts (A) deposited into the Collection
Account or the Note Account that may not be withdrawn therefrom pursuant to a
final and nonappealable order of a United States bankruptcy court of competent
jurisdiction imposing a stay pursuant to Section 362 of the Bankruptcy Code and
that would otherwise have been included in Available Funds on such Payment Date
and (B) received by the Indenture Trustee that are recoverable and sought to be
recovered from the Issuer as a voidable preference by a trustee in bankruptcy
pursuant to the Bankruptcy Code in accordance with a final nonappealable order
of a court of competent jurisdiction:

                 (a)      all scheduled payments of interest received with
         respect to the Mortgage Loans and due during the related Due Period and
         all other interest payments on or in respect of such Mortgage Loans
         received by or on behalf of the Servicer during the related Collection
         Period (including Payments Ahead that are allocable to interest for the
         related Due Period), net of amounts representing interest accrued on
         such Mortgage Loans in respect of any period prior to the Cut-off
         Dates, plus any Compensating Interest payments made by the Servicer in
         respect of the related Mortgage Loans and any net income from related
         REO Properties for such Collection Period;

                 (b)      all scheduled payments of principal received with
         respect to the Mortgage Loans and due during the related Due Period and
         all other principal payments (including Principal Prepayments and
         Prepayment Premiums) received or deemed to be received

                                      -3-
<PAGE>

         during the related Collection Period (including Payments Ahead that are
         allocable as principal for the related Due Period) in respect of such
         Mortgage Loans;

                 (c)      the aggregate of any Trust Insurance Proceeds
         collected by the Servicer during the related Collection Period;

                 (d)      the aggregate of any Net Liquidation Proceeds
         collected by the Servicer during the related Collection Period;

                 (e)      the aggregate of the Purchase Prices received in
         respect of any Mortgage Loans that are required or permitted to be
         repurchased, released, removed or substituted by the Seller during or
         in respect of the related Collection Period, to the extent such amounts
         are received by the Indenture Trustee on or before the related Deposit
         Date;

                 (f)      the amount of any Monthly Advances made by the
         Servicer for such Payment Date; and

                 (g)      the aggregate of amounts deposited in the Note Account
         during such Collection Period in connection with redemption of the
         Notes pursuant to Article X.

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

         "BASIC DOCUMENTS": This Indenture, the Trust Agreement, the Servicing
Agreement, the Mortgage Loan Sale Agreement, the Mortgage Loan Contribution
Agreement, the Management Agreement, the Insurance Agreement and the
Indemnification Agreement.

         "BENEFICIAL OWNER": With respect to a Book-Entry Note, the Person who
is the beneficial owner of such Note as reflected on the books of the Clearing
Agency for the Notes or on the books of a Person maintaining an account with
such Clearing Agency (directly or as an indirect participant, in accordance with
the rules of such Clearing Agency).

         "BEST EFFORTS": Efforts determined to be in good faith and reasonably
diligent by the Person performing such efforts, specifically the Issuer or the
Servicer, as the case may be, in its reasonable discretion. Such efforts do not
require the Issuer or the Servicer, as the case may be, to enter into any
litigation, arbitration or other legal or quasi-legal proceeding, nor do they
require the Issuer or the Servicer, as the case may be, to advance or expend
fees or sums of money in addition to those specifically set forth in this
Indenture and the Servicing Agreement.

         "BOOK-ENTRY NOTES": Any Notes registered in the name of the Clearing
Agency or its nominee, ownership of which is reflected on the books of the
Clearing Agency or on the books of a person maintaining an account with such
Clearing Agency (directly or as an indirect participant in accordance with the
rules of such Clearing Agency).

         "BOOK-ENTRY TERMINATION": The time at which the book-entry registration
of the Book-Entry Notes shall terminate, as specified in Section 2.13.

                                      -4-
<PAGE>

         "BUSINESS DAY": Any day other than (i) a Saturday or Sunday or (ii) a
day that is either a legal holiday or a day on which the Note Insurer is closed
or on which banking institutions in the State of New York, the State of North
Carolina, the state in which the Corporate Trust Office is located or the State
of Delaware are authorized or obligated by law, regulation or executive order to
be closed.

         "CERTIFICATE": As defined in the Trust Agreement.

         "CERTIFICATE DISTRIBUTION ACCOUNT": As defined in the Trust Agreement.

         "CERTIFICATEHOLDERS": As defined in the Trust Agreement.

         "CLEARING AGENCY": An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities and Exchange Act of 1934, as amended,
and the regulations of the Commission thereunder and shall initially be The
Depository Trust Company of New York, the nominee for which is Cede & Co.

         "CLEARING AGENCY PARTICIPANTS": The entities for whom the Clearing
Agency will maintain book-entry records of ownership and transfer of Book-Entry
Notes, which may include securities brokers and dealers, banks and trust
companies and clearing corporations and certain other organizations.

         "CLOSING DATE":            , the date of initial issuance of the Notes.

         "CODE": The Internal Revenue Code of 1986, as amended, and as may be
further amended from time to time, as successor statutes thereto, and applicable
U.S. Department of Treasury regulations issued pursuant thereto in temporary or
final form and proposed regulations thereunder to the extent that, by reason of
their proposed effective date, such proposed regulations would apply.

         "COLLATERAL": The items Granted to the Indenture Trustee under the
Granting Clause of this Indenture.

         "COLLECTION ACCOUNT": The segregated trust account established by the
Servicer and maintained pursuant to Section 2.02(b) of the Servicing Agreement.

         "COLLECTION PERIOD": As to any Payment Date, the period beginning on
the first day of the calendar month immediately preceding the month in which
such Payment Date occurs (except that, in the case of the first Payment Date,
the related Collection Period will commence on the Cut-off Date for each
Mortgage Loan) and ending on the last day of such calendar month.

         "COMBINED LOAN-TO-VALUE RATIO": As defined in the Mortgage Loan Sale
Agreement.

         "COMMISSION": The Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or if at
any time such Commission is not existing and performing the duties now assigned
to it under the Trust Indenture Act, then the body performing such duties at
such time under the Trust Indenture Act or similar legislation replacing the
Trust Indenture Act.

                                      -5-
<PAGE>

         "COMPENSATING INTEREST": As defined in the Servicing Agreement.

         "CORPORATE TRUST OFFICE": The principal office of the Indenture Trustee
at which at any particular time its corporate trust business with respect to
this Indenture shall be principally administered, which office at the date of
the execution of this Indenture is located at                                ,
Attention:                 Trust   200 -,   Series   200 -,with  a  copy  to
the Indenture Trustee at                   , Attention:          Loan Trust 200.

         "CUMULATIVE LOSS PERCENTAGE": As defined in the Servicing Agreement.

         "CURRENT NOTE BALANCE": With respect to any Note as of any date of
determination, the original principal amount of such Note, reduced by all prior
payments (including Insured Payments), if any, made with respect to principal of
such Note.

         "CUSTODIAL AGREEMENT": The Custody Agreement, dated as of             ,
among the Servicer, the Custodian and the Indenture Trustee.

         "CUSTODIAN": A Person who is at any time appointed by the Indenture
Trustee pursuant to Section 8.13 as a document custodian for the Mortgage Files,
which Person shall not be the Issuer or an Affiliate of the Issuer. The
Custodian shall initially be               .

         "CUT-OFF DATE":            .

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

         "DEFECTIVE MORTGAGE LOAN": Any Mortgage Loan that is required to be
repurchased or substituted by the Seller pursuant to the Mortgage Loan Sale
Agreement.

         "DEFICIENCY AMOUNT": With respect to the Notes and any Payment Date,
(A) the excess, if any, of (i) the Note Interest (net of any Relief Act Interest
Shortfalls and Prepayment Interest Shortfalls) for such Payment Date over (ii)
funds on deposit in the Note Account available to be distributed therefor on
such Payment Date and (B) the Guaranteed Principal Amount.

         "DEFINITIVE NOTES": Notes other than Book-Entry Notes.

         "DELETED MORTGAGE LOAN": A Mortgage Loan replaced or to be replaced by
a Qualified Replacement Mortgage Loan.

         "DELINQUENCY AMOUNT": As of any Payment Date, the product of the
Rolling Delinquency Percentage for such Payment Date and the Mortgage Loans as
of the average Aggregate Principal Balance of the Mortgage Loans as of the
immediately preceding three Determination Dates.

         "DELINQUENCY PERCENTAGE": For any Payment Date, the rolling three month
average of the fraction, expressed as a percentage, (i) the numerator of which
is the aggregate of the Principal Balances as of the related Determination Date
of all Mortgage Loans that were 90 or more days contractually delinquent, in
foreclosure, REO Property or for which the related

                                      -6-
<PAGE>

Mortgagor was in a bankruptcy proceeding and the related Mortgage Loan was 90 or
more days contractually delinquent or paying a reduced Monthly Payment as a
result of a bankruptcy workout as of end of the related Collection Period and
the denominator of which is the Aggregate Principal Balance of all Mortgage
Loans as of the related Determination Date.

         "DEPOSIT DATE": The date each month on which funds on deposit in the
Collection Account are remitted by the Servicer to the Indenture Trustee for
deposit into the Note Account, which date shall be with respect to any Payment
Date, the 18th day of the month in which such Payment Date occurs, or the next
succeeding Business Day, if such 18th day is not a Business Day.

         "DEPOSITOR":  Wachovia Asset Securitization, Inc.

         "DETERMINATION DATE": As to any Payment Date, the last day of the Due
Period relating to such Payment Date.

         "DUE PERIOD": With respect to any Payment Date, the period commencing
on the second day of the calendar month immediately preceding the calendar month
in which such Payment Date occurs (or, with respect to the first Payment Date,
commencing the day following the Cut-off Date for each Mortgage Loan) and ending
on the first day of the calendar month in which such Payment Date occurs.

         "ELIGIBLE ACCOUNT": Either (A) a segregated account or accounts
maintained with an institution the deposits of which are insured by the Bank
Insurance Fund or the Savings Association Insurance Fund of the FDIC, the
unsecured and uncollateralized debt obligations of which shall be rated " " or
better by [Rating Agency] and " " or better by [Rating Agency] and in the
highest short term rating category by [Rating Agencies], and that is either (i)
a federal savings and loan association duly organized, validly existing and in
good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (iii) a national banking association duly organized, validly
existing and in good standing under the federal banking laws, (iv) a principal
subsidiary of a bank holding company, or (v) which is approved in writing by the
Note Insurer or (B) a trust account maintained with the trust department of a
federal or state chartered depository institution or trust company, having
capital and surplus of not less than $50,000,000, acting in its fiduciary
capacity, the unsecured and uncollateralized debt obligations of which shall be
rated " " or better by [Rating Agency]. Any Eligible Accounts maintained with
the Indenture Trustee shall conform to the preceding clause (B).

         "EVENT OF DEFAULT":  As defined in Section 5.01.

         "EXCESS CASH": With respect to any Payment Date, will be equal to
Available Funds for such Payment Date, reduced by the sum of (i) the amount
payable to the PMI Insurer as premium for such Payment Date under the PMI
Policy, (ii) the Note Insurer Premium owing to the Note Insurer in respect of
the Notes for such Payment Date, (iii) the Note Interest for such Payment Date,
(iv) the Monthly Principal for such Payment Date and (v) the amount owing to the
Note Insurer under the Insurance Agreement for reimbursement for prior draws
made on the Insurance

                                      -7-
<PAGE>

Policy in respect of the Notes and any other amounts owing to the Note Insurer
under the Insurance Agreement (including any unpaid Note Insurer Premiums in
respect of the Notes).

         "EXCESS CASH PAYMENT". As defined in clause fourth of Section 8.02(c).

         "FDIC": The Federal Deposit Insurance Corporation and its successors in
interest.

         "FINAL CERTIFICATION": A certification as to the completeness of each
Mortgage File prepared by the Custodian on behalf of the Indenture Trustee, and
provided by the Indenture Trustee on or before the first anniversary of the
Closing Date pursuant to Section 6.15(b).

         "FINAL MATURITY DATE": The Payment Date in November 2030.

         "FISCAL AGENT": As defined in the Insurance Policy.

         "FULL PREPAYMENT": With respect to any Mortgage Loan, when any one of
the following occurs: (i) payment is made by the Mortgagor to the Servicer of
100% of the outstanding principal balance of such Mortgage Loan, together with
all accrued and unpaid interest thereon at the Mortgage Interest Rate on such
Mortgage Loan, (ii) payment is made to the Indenture Trustee of the Purchase
Price of such Mortgage Loan in connection with the purchase of such Mortgage
Loan by the Seller or the Servicer or (iii) payment is made to the Servicer of
all Insurance Proceeds and Liquidation Proceeds, and other payments, if any,
that have been determined by the Servicer in accordance with the provisions of
the Servicing Agreement to be finally recoverable, in the Servicer's reasonable
judgment, in respect of such Mortgage Loan.

         "GRANT": To assign, transfer, mortgage, pledge, create and grant a
security interest in, deposit, set-over and confirm. A Grant of a Mortgage Loan
and related Mortgage Files, a Permitted Investment, the Servicing Agreement, the
Mortgage Loan Sale Agreement, the Mortgage Loan Contribution Agreement, or any
other instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including, without limitation,
the immediate and continuing right to claim for, collect, receive and give
receipts for principal and interest payments thereunder, insurance proceeds,
Purchase Prices and all other moneys payable thereunder and all proceeds
thereof, to give and receive notices and other communications, to make waivers
or other agreements, to exercise all rights and options, to bring Proceedings in
the name of the Granting party or otherwise, and generally to do and receive
anything that the Granting party is or may be entitled to do or receive
thereunder or with respect thereto.

         "GUARANTEED PRINCIPAL AMOUNT": (a) With respect to any Payment Date
(other than Payment Date specified in (b)), the Overcollateralization Deficit,
if any, for such Payment Date and (b) on the earlier to occur of the Payment
Date in December, 2030 (after giving effect to all distributions of principal on
the Notes) or the Redemption Date (after giving effect to all distribution of
principal on the Notes), an amount equal to the Note Balance.

         "HIGHEST LAWFUL RATE": As defined in Section 11.19.

         "INDEMNIFICATION AGREEMENT": As defined in the Insurance Agreement.

                                      -8-
<PAGE>

         "INDENTURE": This instrument as originally executed and, if from time
to time supplemented or amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof, as so supplemented or
amended. All references in this instrument to designated "Articles", "Sections",
"Subsections" and other subdivisions are to the designated Articles, Sections,
Subsections and other subdivisions of this instrument as originally executed.
The words "herein", "hereof", "hereunder" and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section,
Subsection or other subdivision.

         "INDENTURE TRUSTEE":                     , and any Person resulting
from or surviving any consolidation or merger to which it may be a party until a
successor Person shall have become the Indenture Trustee pursuant to the
applicable provisions of this Indenture, and thereafter "Indenture Trustee"
shall mean such successor Person.

         "INDENTURE TRUSTEE'S FEE": With respect to the Notes, the Indenture
Trustee's monthly fee, equal to 1/12th of     % of the Aggregate Principal
Balance of the Mortgage Loans as of the first day of the applicable Due Period.

         "INDEPENDENT": When used with respect to any specified Person, means
such a Person who (i) is in fact independent of the Issuer and any other obligor
upon the Notes, (ii) does not have any direct financial interest or any material
indirect financial interest in the Issuer or in any such other obligor or in an
Affiliate of the Issuer or such other obligor, and (iii) is not connected with
the Issuer or any such other obligor as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
Whenever it is herein provided that any Independent Person's opinion or
certificate shall be furnished to the Indenture Trustee, such Person shall be
appointed by an Issuer Order and such opinion or certificate shall state that
the signer has read this definition and that the signer is Independent within
the meaning hereof.

         "INDIVIDUAL NOTE": A Note of an original principal amount of $
(provided, however, one Note may be less than that amount); a Note of an
original principal amount in excess of $       shall be deemed to be a number of
Individual Notes equal to the quotient obtained by dividing such original
principal amount by $       .

         "INITIAL CERTIFICATION": A certification as to the completeness of each
Mortgage File prepared by the Custodian on behalf of the Indenture Trustee and
provided by the Custodian on the Closing Date pursuant to Section 6.15(a).

         "INITIAL REDEMPTION DATE": The first Payment Date on which the
aggregate Note Balance is less than 10% of the Original Note Balance.

         "INSURANCE AGREEMENT": The Insurance and Indemnity Agreement, dated as
of           , among the Note Insurer, the Issuer, the Seller and the Depositor.

         "INSURANCE POLICY": The note guaranty insurance policy No.      , dated
               , issued by the Note Insurer to the Indenture Trustee for the
benefit of the Noteholders, pursuant to which the Note Insurer guarantees
payment of Insured Payments. A specimen of the Insurance Policy is attached
hereto as Exhibit B.

                                      -9-
<PAGE>

         "INSURANCE POLICY PAYMENTS ACCOUNT": The account established pursuant
to Section 8.03 hereof.

         "INSURED PAYMENTS": As to the Notes and any Payment Date, the amount
required to be paid by the Note Insurer under the Insurance Policy.

         "INSURANCE PROCEEDS": As defined in the Servicing Agreement.

         "INTEREST PERIOD": With respect to a Payment Date, the calendar month
immediately preceding the month in which such Payment Date occurs.

         "ISSUER":                 Loan Trust 200 - , a Delaware business trust.

         "ISSUER ORDER" and "ISSUER REQUEST": A written order or request of the
Issuer signed on behalf of the Issuer by an Authorized Officer of the Owner
Trustee or, in the case of such order or request required by Section 2.11, by an
Authorized Officer of the holder of the Certificate and delivered to the
Indenture Trustee or the Authenticating Agent, as applicable.

         "LETTER AGREEMENT": The Letter of Representations to The Depository
Trust Company from the Indenture Trustee and the Issuer dated .

         "LIQUIDATED MORTGAGE LOAN": As defined in the Servicing Agreement.

         "LIQUIDATION DATE": With respect to any Mortgage Loan, the date of the
final receipt of all Liquidation Proceeds, Insurance Proceeds or other payments
with respect to such Mortgage Loan.

         "LIQUIDATION PROCEEDS": As defined in the Servicing Agreement.

         "LOAN-TO-VALUE RATIO": As defined in the Mortgage Loan Sale Agreement.

         "MANAGEMENT AGREEMENT": That certain agreement, dated as of           ,
between the Issuer and the Indenture Trustee pursuant to which the Indenture
Trustee, as manager, will perform certain obligations of the Issuer hereunder.

         "MATURITY": With respect to any Note, the date on which the entire
unpaid principal amount of such Note becomes due and payable as therein or
herein provided, whether at the Final Maturity Date or by declaration of
acceleration, call for redemption or otherwise.

         "MONTHLY ADVANCE": As defined the Servicing Agreement.

         "MONTHLY PAYMENT": With respect to any Mortgage Note, the amount of
each monthly payment payable under such Mortgage Note by the Mortgagor in
accordance with its terms, including, one month's accrued interest on the
related Principal Balance at the then applicable Mortgage Interest Rate, but net
of any portion of such monthly payment that represents late payment charges,
extension fees or collections allocable to payments to be made by Mortgagors for
payment of insurance premiums or similar items.

                                      -10-
<PAGE>

         "MONTHLY PRINCIPAL": For the Notes and any Payment Date, an amount
equal to (a) the aggregate of (i) all scheduled payments of principal received
(or advanced or to be advanced on the related Deposit Date) with respect to the
Mortgage Loans and due during the related Due Period and all other amounts
collected, received or otherwise recovered in respect of principal on such
Mortgage Loans (including Principal Prepayments, but not including Payments
Ahead that are not allocable to principal for the related Due Period) during or
in respect of the related Collection Period, (ii) the aggregate of the amounts
allocable to principal deposited in the Note Account on the related Deposit Date
by the Issuer, the Depositor, the Servicer or the Note Insurer in connection
with a repurchase, release, removal or substitution of any Mortgage Loans
pursuant to this Indenture, and (iii) in connection with the redemption of the
Notes, that portion of the Redemption Price in respect of principal, reduced by
(b) the amount of any Overcollateralization Surplus and Payment Date.

         "MONTHLY SERVICING FEE": As defined in the Servicing Agreement.

         ["MOODY'S": Moody's Investors Service, Inc. and its successors in
interest.]

         "MORTGAGE": The mortgage, deed of trust or other instrument creating a
first lien on an estate in fee simple in real property securing a Mortgage Loan.

         "MORTGAGE FILE": As defined in the Mortgage Loan Sale Agreement.

         "MORTGAGE INTEREST RATE": With respect to each Mortgage Loan, the rate
per annum set forth in the related Mortgage Note at which interest accrues on
such Mortgage Loan, in each case after giving effect to any modification of a
Mortgage Loan for any period in connection with a bankruptcy or similar
proceeding involving the related Mortgagor or a modification, waiver or
amendment of such Mortgage Loan granted or agreed to by the Servicer in
accordance with the Servicing Agreement.

         "MORTGAGE LOAN": Each of the mortgage loans Granted to the Indenture
Trustee under this Indenture as security for the Notes and that from time to
time comprise part of the Trust Estate, including any property that secures a
Mortgage that becomes REO Property. The Mortgage Loans are listed on the
Mortgage Loan Schedule annexed hereto as Schedule I.

         "MORTGAGE LOAN CONTRIBUTION AGREEMENT": That certain agreement, dated
as of                  , between the Depositor and the Issuer pursuant to which
the Mortgage Loans will be acquired from the Depositor by the Issuer for
inclusion in the Trust Estate.

         "MORTGAGE LOAN POOL": The pool of Mortgage Loans Granted to the
Indenture Trustee under this Indenture as security for the Notes.

         "MORTGAGE LOAN SALE AGREEMENT": That certain agreement, dated as
of           , between the Seller and the Depositor pursuant to which the
Mortgage Loans will be acquired from the Seller by the Depositor.

         "MORTGAGE LOAN SCHEDULE": As of any date, the schedule of mortgage
loans included in the Trust Estate, Schedule I hereto identifies the Mortgage
Loans being Granted to the Indenture Trustee on the Closing Date. The Mortgage
Loan Schedule shall be amended by the Servicer as

                                      -11-
<PAGE>

appropriate from time to time to reflect the deletion and substitution of
Mortgage Loans in accordance with the terms of the Basic Documents. The Mortgage
Loan Schedule shall identify each Mortgage Loan by the Servicer's loan number
and address (including the state) of the related Mortgaged Property and shall
set forth as to each Mortgage Loan the initial Loan-to-Value Ratio or Combined
Loan-to-Value Ratio, the Principal Balance as of the Cut-off Date, the Mortgage
Interest Rate, the currently Monthly Payment amount and the stated maturity date
of the related Mortgage Note. The Issuer shall cause the initial Mortgage Loan
Schedule to be delivered by the Seller to the Indenture Trustee in both physical
and computer-readable form.

         "MORTGAGE NOTE": The note or other instrument evidencing the
indebtedness of a Mortgagor under the related Mortgage Loan.

         "MORTGAGED PROPERTY": The underlying property securing a Mortgage Note.

         "MORTGAGOR": The obligor under a Mortgage Note.

         "NET LIQUIDATION PROCEEDS": As defined in the Servicing Agreement.

         "NONRECOVERABLE ADVANCE": As defined in the Servicing Agreement.

         "NOTE ACCOUNT": The segregated trust account, which shall be an
Eligible Account, established and maintained pursuant to Section 8.02 and
entitled "                , as Indenture Trustee for            Loan Trust 200 -
Loan             Backed Notes, Series 200 - Note Account," on behalf of the
Noteholders and the Note Insurer.

         "NOTE BALANCE": With respect to the Notes, the aggregate of the Current
Note Balances of all Notes Outstanding at the time of determination.

         "NOTEHOLDER" or "HOLDER": The Person in whose name a Note is registered
in the Note Register, except that, solely for the purpose of taking any action
under Section 5.02 or giving of any consent pursuant to this Indenture, any Note
registered in the name of the Issuer, the Seller, the Servicer or the Depositor
or any Persons actually known by a Responsible Officer of the Indenture Trustee
to be an Affiliate of the Issuer, the Seller, the Servicer or the Depositor
shall be deemed not to be Outstanding and the percentage interest evidenced
thereby shall not be taken into account in determining whether Holders of the
requisite percentage interests necessary to take any such action or effect any
such consent have acted or consented unless the Issuer, the Seller, the
Servicer, the Depositor or any such Person is an owner of record of all of the
Notes.

         "NOTE INSURER":                    , a                  stock insurance
company, and successors thereto.

         "NOTE INSURER PREMIUM LETTER": The commitment letter dated            ,
from the Note Insurer to the Seller regarding the issuance of a financial
guaranty insurance policy.

         "NOTE INSURER DEFAULT": The existence and continuance of any of the
following:

                  (a)     the Note Insurer fails to make a payment required
         under the Insurance Policy in accordance with its terms;

                                      -12-
<PAGE>

                  (b)     the Note Insurer (A) files any petition or commences
         any case or proceeding under any provision or chapter of the Bankruptcy
         Code or any other similar federal or state law relating to insolvency,
         bankruptcy, rehabilitation, liquidation or reorganization, (B) makes a
         general assignment for the benefit of its creditors, or (C) has an
         order for relief entered against it under the Bankruptcy Code or any
         other similar federal or state law relating to insolvency, bankruptcy,
         rehabilitation, liquidation or reorganization which is final and
         nonappealable; or

                  (c)     a court of competent jurisdiction, the New York
         Department of Insurance or other competent regulatory authority enters
         a final and nonappealable order, judgment or decree (A) appointing a
         custodian, trustee, agent or receiver for the Note Insurer or for all
         or any material portion of its property or (B) authorizing the taking
         of possession by a custodian, trustee, agent or receiver of the Note
         Insurer (or the taking of possession of all or any material portion of
         the property of the Note Insurer).

         Notwithstanding anything to the contrary contained herein, upon the
existence and continuance of a Note Insurer Default, the consent by the Note
Insurer shall not be required to any action or inaction hereunder and the Note
Insurer shall not have any rights with respect thereto; provided, however, that
such rights shall be immediately reinstated following cure of such Note Insurer
Default.

         "NOTE INSURER PREMIUM": The premium due to the Note Insurer under the
Note Insurer Premium Letter on the Closing Date and on each Payment Date
thereafter, which amount as to each Payment Date shall be equal to the product
of the Note Insurer Premium Rate and the related Note Balance immediately prior
to such Payment Date.

         "NOTE INSURER PREMIUM RATE": The premium percentage specified in the
Note Insurer Premium Letter.

         "NOTE INTEREST": As to the Notes and any Payment Date, the amount of
interest payable to Holders of such Notes on such Payment Date, which amount
shall be equal to interest at 1/12th of the Note Interest Rate on the Note
Balance as of the preceding Payment Date (after giving effect to the payment, if
any, in reduction of principal made on such Notes on such preceding Payment
Date). All calculations of interest on the Notes will be computed on the basis
of twelve thirty-day months and a year of 360 days.

         "NOTE INTEREST RATE": With respect to each Interest Period prior to the
Initial Redemption Date,   % per annum, and for each Interest Period thereafter,
     % per annum.

         "NOTE REGISTER": As defined in Section 2.06.

         "NOTE REGISTRAR": As defined in Section 2.06.

         "NOTES": The             Loan Trust 200 - Mortgage Backed Notes,
Series 200 - , issued pursuant to this Indenture.

                                      -13-
<PAGE>

         "NOTICE OF CLAIM": The notice required to be furnished by the Indenture
Trustee to the Note Insurer in the event an Insured Payment is required to be
paid under the Insurance Policy with respect to any Payment Date, in the form
set forth as Exhibit C hereto.

         "OFFICERS' CERTIFICATE": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, Chief Operating Officer or
a Vice President of the Seller, the Depositor, the Servicer or, in the case of
the Issuer, an Authorized Officer of the Owner Trustee, as the case may be, and
delivered to the Indenture Trustee, Note Insurer or each Rating Agency, as the
case may be.

         "OPINION OF COUNSEL": A written opinion of counsel reasonably
acceptable to the Indenture Trustee and, in the case of opinions delivered to
the Note Insurer, reasonably acceptable to it. Any expense related to obtaining
an Opinion of Counsel for an action requested by a party shall be borne by the
party required to obtain such opinion or seeking to effect the action that
requires the delivery of such Opinion of Counsel, except in such instances where
such opinion is at the request of the Indenture Trustee, in which case such
expense shall be an expense of the Servicer.

         "ORIGINAL NOTE BALANCE": The aggregate principal balance of the Notes
at the issue date thereof, equal to $ .

         "OTHER INSURANCE POLICIES": All insurance policies insuring any
Mortgage Loan or Mortgaged Property, to the extent the Issuer or the Indenture
Trustee has any interest therein, including the PMI Policy.

         "OUTSTANDING": As of the date of determination, all Notes theretofore
authenticated and delivered under this Indenture except:

                  (i)     Definitive Notes theretofore canceled by the Note
         Registrar or delivered to the Note Registrar for cancellation;

                  (ii)    Notes or portions thereof for whose payment or
         redemption money in the necessary amount has been theretofore deposited
         with the Indenture Trustee or any Paying Agent (other than the Issuer)
         in trust for the Holders of such Notes; provided, however, that if such
         Notes are to be redeemed, notice of such redemption has been duly given
         pursuant to this Indenture or provision therefor, satisfactory to the
         Indenture Trustee, has been made;

                  (iii)   Notes in exchange for or in lieu of which other Notes
         have been authenticated and delivered pursuant to this Indenture unless
         proof satisfactory to the Indenture Trustee is presented that any such
         Notes are held by a bona fide purchaser (as defined by the Uniform
         Commercial Code of the applicable jurisdiction); and

                  (iv)    Notes alleged to have been destroyed, lost or stolen
         that have been paid as provided for in Section 2.07;

provided, however, that in determining whether the Holders of the requisite
percentage of the Note Balance of the Outstanding Notes have given any request,
demand, authorization, direction,

                                      -14-
<PAGE>

notice, consent or waiver hereunder, Notes owned by the Issuer, any other
obligor upon the Notes or any Affiliate of the Issuer, the Seller, the Servicer
or the Depositor or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Indenture Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Notes that the Indenture Trustee knows to be so
owned shall be so disregarded. Notes so owned that have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Indenture Trustee the pledgee's right so to act with respect
to such Notes and that the pledgee is not the Issuer, any other obligor upon the
Notes or any Affiliate of the Issuer, the Seller, the Servicer or the Depositor
or such other obligor; provided, further, however, that Notes that have been
paid with the proceeds of the Insurance Policy shall be deemed to be Outstanding
for the purposes of this Indenture, such payment to be evidenced by written
notice from the Note Insurer to the Indenture Trustee, and the Note Insurer
shall be deemed to the Holder thereof to the extent of any payments thereon made
by the Note Insurer.

         "OVERCOLLATERALIZATION AMOUNT": As to any Payment Date, the amount, if
any, by which (x) the Aggregate Principal Balance of the Mortgage Loans as of
the end of the related Due Period exceeds (y) the Note Balance for such Payment
Date, after taking into account Monthly Principal (disregarding any permitted
reduction thereof in such Monthly Principal due to an Overcollateralization
Surplus made on such Payment Date) to be applied in reduction of the Note
Balance on such Payment Date. If the Aggregate Principal Balance of the Mortgage
Loans is less than the Note Balance for such Payment Date, determined as
provided above, the Overcollateralization Amount and Payment Date shall be zero.

         "OVERCOLLATERALIZATION DEFICIENCY AMOUNT": With respect to any Payment
Date is the amount, if any, by which the Required Overcollateralization Amount
exceeds the Overcollateralization Amount.

         "OVERCOLLATERALIZATION DEFICIT": As to any Payment Date, the amount, if
any, by which the Note Balance on such Payment Date (after taking into account
any payments to be paid on such Payment Date in reduction of the Note Balance,
including Excess Cash payments) exceeds the Aggregate Principal Balance of the
Mortgage Loans as of the end of the related Due Period. If the Aggregate
Principal Balance of the Mortgage Loans as determined pursuant to the preceding
sentence is greater than the related Note Balance for such Payment Date
determined as provided above, the Overcollateralization Deficit for such Payment
Date shall be zero.

         "OVERCOLLATERALIZATION SURPLUS": As to any Payment Date, the amount, if
any, by which (x) the related Overcollateralization Amount on such Payment Date
exceeds (y) the related Required Overcollateralization Amount on such Payment
Date.

         "OWNER TRUSTEE":                  , not in its individual capacity, but
solely as owner trustee under the Trust Agreement, and any successor owner
trustee thereunder.

         "OWNER TRUSTEE FEE": The fee payable to the Owner Trustee pursuant to
the Trust Agreement.

                                      -15-
<PAGE>

         "PAYING AGENT": The Indenture Trustee or any other depository
institution or trust company that is authorized by the Issuer pursuant to
Section 3.03 to pay the principal of, or interest on, any Notes on behalf of the
Issuer, which agent, if not the Indenture Trustee, shall have signed an
instrument agreeing to be bound by the terms of this Indenture applicable to the
Paying Agent.

         "PAYMENT AHEAD": As defined in the Servicing Agreement.

         "PAYMENT DATE": The     day of each month or, if any such day is not a
Business Day, the Business Day immediately following such              day,
beginning                .

         "PAYMENT DATE STATEMENT": The statement prepared pursuant to Section
2.08(d) with respect to collection on or in respect of the Mortgage Loans and
other assets of the Trust Estate and payments on or in respect of the Notes,
based upon the information contained in the Servicer Remittance Report prepared
pursuant to the Servicing Agreement and setting forth the following information
with respect to each Payment Date (to the extent the Servicer has made such
information (other than the information described in clause (ii), (iii), (iv),
(v) and (xv) below) available to the Indenture Trustee):

                  (i)     the amount of such payment to Noteholders allocable to
         (x) Monthly Principal (separately setting forth Principal Prepayments)
         and (y) any principal payments made pursuant to Section 8.02(c)(vi)
         hereof;

                  (ii)    the amount of such payment to Noteholders allocable to
         Note Interest;

                  (iii)   the Note Balance, after giving effect to the payment
         of Monthly Principal and any principal payment made pursuant to Section
         8.02(c)(vi) hereof applied to reduce such Note Balance on such Payment
         Date;

                  (iv)    the Aggregate Principal Balance of the Mortgage Loans
         as of the end of the related Due Period;

                  (v)     the amount of Monthly Advances made with respect to
         such Payment Date and the aggregate amount of unreimbursed Monthly
         Advances and Servicing Advances, if any;

                  (vi)    the number and aggregate of the Principal Balances of
         Mortgage Loans (including the Principal Balances of all Mortgage Loans
         in foreclosure) contractually delinquent (i) one month, (ii) two months
         and (iii) three or more months, as of the end of the related Collection
         Period;

                  (vii)   the number and aggregate of the Principal Balances of
         the Mortgage Loans in foreclosure or subject to other similar
         proceedings, and the number and aggregate of the Principal Balance of
         Mortgage Loans and in the aggregate, the Mortgagor of which is known by
         the Servicer to be in bankruptcy as of the end of the related
         Collection Period and the book value of any real estate acquired
         through foreclosure, grant of a deed in lieu of foreclosure or other
         similar proceedings during the related Collection Period;

                                      -16-
<PAGE>

                  (viii)  the aggregate of the Principal Balances of the
         Mortgage Loans repurchased by the Seller or purchased by the Servicer,
         separately setting forth the aggregate of the Principal Balances of
         Mortgage Loans and in the aggregate delinquent for three consecutive
         monthly installments purchased by the Servicer at its option pursuant
         to the Servicing Agreement;

                  (ix)    the amount of any Insured Payments for such Payment
         Date;

                  (x)     the aggregate amount of the Monthly Servicing Fee paid
         to or retained by the Servicer for the related Collection Period;

                  (xi)    the Overcollateralization Amount, the then applicable
         Required Overcollateralization Amount, the Overcollateralization
         Surplus, if any, and the Overcollateralization Deficit, if any, with
         respect to such Payment Date;

                  (xii)   the aggregate Principal Balance of the three largest
         outstanding Mortgage Loans as of the related Determination Date;

                  (xiii)  the aggregate amount of Realized Losses incurred
         during the related Collection Period and the cumulative amount of
         Realized Losses since the Cut-off Date;

                  (xiv)   the amount of premium due to the PMI Insurer under the
         PMI Policy;

                  (xv)    the Delinquency Percentage and the Rolling Loss
         Percentage (as defined in the Servicing Agreement) relating to such
         Payment Date; and

                  (xvi)   the number of Mortgage Loan modifications made by the
         Servicer during the Collection Period and the type of modification made
         with respect to each such Mortgage Loan.

In the case of information furnished pursuant to subclauses (i) and (ii) above,
the amounts shall be expressed as a dollar amount per Individual Note.

         "PERCENTAGE INTEREST": With respect to a Note, the undivided percentage
interest (carried to eight places rounded down) obtained by dividing the
original principal balance of such Note by the Original Note Balance and
multiplying the result by 100.

         "PERMITTED INVESTMENTS": One or more of the following obligations,
instruments and securities:

                  (a)     direct general obligations of, or obligations fully
         guaranteed by, the United States of America, the Federal Home Loan
         Mortgage Corporation, Federal National Mortgage Corporation, the
         Federal Home Loan Banks or any agency or instrumentality of the United
         States of America rated "   " or higher by [Rating Agency], the
         obligations of which are backed by the full faith and credit of the
         United States of America;

                  (b)     (i)demand and time deposits in, certificates of
         deposit of, banker's acceptances issued by, or federal funds sold by
         any depository institution or trust

                                      -17-
<PAGE>

         company (including the Indenture Trustee or its agent acting in their
         respective commercial capacities) incorporated under the laws of the
         United States of America or any state thereof and subject to
         supervision and examination by federal and/or state authorities, so
         long as, at the time of such investment or contractual commitment
         providing for such investment, such depository institution or trust
         company or its ultimate parent has a short-term uninsured debt rating
         in one of the two highest available rating categories of [Rating
         Agency] and of [Rating Agency] and provided that each such investment
         has an original maturity of no more than 365 days and (ii) any other
         demand or time deposit or deposit which is fully insured by the FDIC;

                  (c)     repurchase obligations with a term not to exceed 30
         days with respect to any security described in clause (a) above and
         entered into with a depository institution or trust company (acting as
         a principal) rated "  " or higher by [Rating Agency] and rated "  " or
         higher by [Rating Agency]; provided, however, that collateral
         transferred pursuant to such repurchase obligation must be of the type
         described in clause (a) above and must (i) be valued daily at current
         market price plus accrued interest, (ii) pursuant to such valuation, be
         equal, at all times, to 105% of the cash transferred by the Indenture
         Trustee in exchange for such collateral and (iii) be delivered to the
         Indenture Trustee or, if the Indenture Trustee is supplying the
         collateral, an agent for the Indenture Trustee, in such a manner as to
         accomplish perfection of a security interest in the collateral by
         possession of certified securities.

                  (d)     securities bearing interest or sold at a discount
         issued by any corporation incorporated under the laws of the United
         States of America or any state thereof which has a long-term unsecured
         debt rating in the highest available rating category of each of the
         Rating Agencies at the time of such investment;

                  (e)     commercial paper having an original maturity of less
         than 365 days and issued by an institution having a short-term
         unsecured debt rating in the highest available rating category of each
         of the Rating Agencies at the time of such investment;

                  (f)     a guaranteed investment contract approved by each of
         the Rating Agencies and the Note Insurer and issued by an insurance
         company or other corporation having a long-term unsecured debt rating
         in the highest available rating category of each of the Rating Agencies
         at the time of such investment;

                  (g)     money market funds having ratings in the two highest
         available rating category of [Rating Agency] and one of the two highest
         available rating categories of [Rating Agency] at the time of such
         investment which invest only in other Permitted Investments (any such
         money market funds which provide for demand withdrawals being
         conclusively deemed to satisfy any maturity requirements for Permitted
         Investments set forth herein) including money market funds of the
         Indenture Trustee and any such funds that are managed by the Indenture
         Trustee or its affiliates or which Indenture Trustee or any affiliate
         acts as advisor as long as such money market funds satisfy the criteria
         of this subparagraph (g); and

                                      -18-
<PAGE>

                  (h)     any investment approved in writing by the Note Insurer
         and written evidence that any such investment will not result in a
         downgrading or withdrawal of the rating by each Rating Agency on the
         Notes.

         The Indenture Trustee may purchase from or sell to itself or an
affiliate, as principal or agent, the Permitted Investments listed above. All
Permitted Investments in a trust account under the Indenture shall be made in
the name of the Indenture Trustee for the benefit of the Noteholders and the
Note Insurer.

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

         "PMI INSURER":                , a monoline private insurance company
organized and created under the laws of the State of                    , or its
successors in interest.

         "PMI MORTGAGE LOANS": The list of Mortgage Loans insured by the PMI
Insurer attached hereto as Exhibit D.

         "PMI POLICY": The Primary Mortgage Insurance Policy (No.        ) with
respect to the PMI Mortgage Loans and all endorsements thereto dated the Closing
Date, issued by the PMI Insurer.

         "PREDECESSOR NOTES": With respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.07 in lieu of a lost, destroyed or
stolen Note shall be deemed to evidence the same debt as the lost, destroyed or
stolen Note.

         "PREFERENCE CLAIM":  As defined in Section 8.03(g) of this Indenture.

         "PREPAYMENT INTEREST SHORTFALL": With respect to any Mortgage Loan as
to which a prepayment in whole or in part was received by the Servicer from the
related Mortgagor during a Collection Period, an amount equal to the difference
between (1) 30 days' interest at the Mortgage Interest Rate on the Principal
Balance of such Mortgage Loan (immediately prior to such prepayment) and (2) the
amount of interest actually collected by the Servicer on such Mortgage Loan
during the related Due Period.

         "PREPAYMENT PREMIUM": With respect to any Collection Period, any
prepayment premium, penalty or charge payable by a Mortgagor in connection with
any Principal Prepayment on a Mortgage Loan pursuant to the terms of the related
Mortgage Note.

         "PRINCIPAL BALANCE": As to any Mortgage Loan and any Determination
Date, the actual outstanding principal amount thereof as of the close of
business on the Determination Date in the preceding month (or, in the case of
the first Payment Date, as of the Cut-off Date) less (i) all scheduled payments
of principal received or advanced (or to be advanced on the related Deposit
Date) with respect to the Mortgage Loan and due during the related Due Period
and all other amounts collected, received or otherwise recovered in respect of
principal on the Mortgage Loan

                                      -19-
<PAGE>

(including Principal Prepayments, but not including Payments Ahead that are not
allocable to principal for the related Due Period) during or in respect of the
related Collection Period, Net Liquidation Proceeds and Trust Insurance Proceeds
allocable to principal recovered or collected in respect of such Mortgage Loan
during the related Collection Period, (ii) the portion of the Purchase Price
allocable to principal to be remitted by the Seller or the Servicer to the
Indenture Trustee on or prior to the related Deposit Date in connection with a
repurchase of such Mortgage Loan pursuant to the Mortgage Loan Sale Agreement,
the Servicing Agreement or Section 8.05 hereof, to the extent such amount is
actually remitted on or prior to such Deposit Date, and (iii) the amount to be
remitted by the Seller to the Indenture Trustee on the related Deposit Date in
connection with a substitution of a Qualified Replacement Mortgage Loan for such
Mortgage Loan pursuant to the Mortgage Loan Sale Agreement and Section 8.05
hereof, to the extent such amount is actually remitted on or prior to such
Deposit Date; provided, however, that Mortgage Loans that have become Liquidated
Mortgage Loans since the end of the preceding Determination Date (or, in the
case of the first Determination Date, since the Cut-off Date) will be deemed to
have a Principal Balance of zero on the current Determination Date.

         "PRINCIPAL PREPAYMENT": As to any Mortgage Loan and Collection Period,
any payment by a Mortgagor or other recovery in respect of principal on a
Mortgage Loan (including Net Liquidation Proceeds and Trust Insurance Proceeds)
that, in the case of a payment by a Mortgagor, is received in advance of its
scheduled due date and is not a Payment Ahead.

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

         "PURCHASE PRICE": With respect to any Defective Mortgage Loan, an
amount equal to (i) the sum of (A) the Principal Balance of such Defective
Mortgage Loan as of the beginning of the Due Period next preceding the Deposit
Date on which such repurchase or purchase is required to occur, (B) interest
computed at the applicable Mortgage Interest Rate on such Principal Balance from
the date to which interest was last paid by the Mortgagor to the last day of the
Due Period immediately preceding the Deposit Date on which such repurchase
occurs and (C) any previously unreimbursed Monthly Advances with respect to
principal and Servicing Advances made on or in respect of such Defective
Mortgage Loan, less (ii) any payments of principal and interest in respect of
such Defective Mortgage Loan made by or on behalf of the related Mortgagor
during such Due Period. With respect to any Qualified Replacement Mortgage Loan,
the amount remitted by the Seller to the Indenture Trustee on or prior to the
Deposit Date relating to a Payment Date in connection with a substitution of
such Qualified Replacement Mortgage Loan for a Mortgage Loan pursuant to the
Mortgage Loan Sale Agreement or Section 8.05 hereof.

         "QUALIFIED REPLACEMENT MORTGAGE LOAN": A Mortgage Loan that is
substituted for a Deleted Mortgage Loan pursuant to Section 8.05 that must, at
the end of the Due Period preceding the date of such substitution, (i) have an
outstanding principal balance (when taken together with any other Qualified
Replacement Mortgage Loan being substituted for such Deleted Mortgage Loan), not
in excess of and not substantially less than the unpaid principal balance of the
Deleted Mortgage Loan at the end of the Due Period preceding the date of
substitution, (ii) be of the same type of Mortgage Interest Rate (i.e. fixed or
adjustable) and have the Mortgage Interest Rate not less than the Mortgage
Interest Rate on the Deleted Mortgage

                                      -20-
<PAGE>

Loan, and, with respect to Mortgage Loans which have an adjustable Mortgage
Rate, have maximum rates, minimum rates, margin indices, gross margins, and caps
no more than 1% greater than or less than those of the Deleted Mortgage Loan,
(iii) have a remaining term to maturity not greater than (and not more than one
year less than) that of the Deleted Mortgage Loan, (iv) have a Loan-to-Value
Ratio or Combined Loan-to-Value Ratio equal to or lower than the Loan-to-Value
Ratio or Combined Loan-to-Value Ratio of the Deleted Mortgage Loan, (v) have the
same or better lien priority as the Deleted Mortgage Loan, (vi) comply as of the
date of substitution with each representation and warranty set forth in Section
4(b) and Exhibit B of the Mortgage Loan Sale Agreement, (vii) have the same or
better property type as the Deleted Mortgage Loan, (viii) have the same or
better occupancy status and (ix) be otherwise acceptable to the Note Insurer. In
the event that one or more mortgage loans are proposed to be substituted for one
or more Deleted Mortgage Loans, the foregoing tests may be met on a weighted
average basis or other aggregate basis acceptable to the Note Insurer, except
that the requirements of clauses (v), (vi), (vii) and (viii) hereof must be
satisfied as to each Qualified Replacement Mortgage Loan.

         "RATING AGENCIES": [Rating Agency] and [Rating Agency] (each, a "Rating
Agency"). If any such agency or a successor is no longer in existence, "Rating
Agency" shall be such nationally recognized statistical credit rating agency, or
other comparable Person, designated by the Servicer, notice of which designation
shall be given to the Indenture Trustee.

         "REALIZED LOSS": As defined in the Servicing Agreement.

         "RECORD DATE": With respect to any Payment Date, the date on which the
Persons entitled to receive any payment of principal of or interest on any Notes
(or notice of a payment in full of principal) due and payable on such Payment
Date are determined; such date shall be the last Business Day preceding such
Payment Date or, with respect to Definitive Notes, the last Business Day of the
month preceding the month of such Payment Date. With respect to a vote of
Noteholders required or allowed hereunder, the Record Date shall be the later of
(i) 30 days prior to the first solicitation of consents or (ii) the date of the
most recent list of Noteholders furnished to the Indenture Trustee pursuant to
Section 7.01(a) prior to such solicitation.

         "REDEMPTION DATE": With respect to the Notes, the Payment Date, if any,
on which the Notes are redeemed pursuant to Article X hereof which date may
occur on or after the Initial Redemption Date.

         "REDEMPTION PRICE": With respect to any Note to be redeemed in whole or
in part, an amount equal to 100% of the Current Note Balance of the Note to be
so redeemed, together with accrued and unpaid interest on such amount at the
Note Interest Rate.

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

         "RELIEF ACT INTEREST SHORTFALL": With respect to any Payment Date, for
any Mortgage Loan to which there has been a reduction in the amount of interest
collectible thereon for the most recently ended Due Period as a result of the
application of the Relief Act, the amount by which (i) interest collectible on
such Mortgage Loan during such Due Period is less than (ii) 30

                                      -21-
<PAGE>

days' at the Mortgage Interest Rate on the Principal Balance of such Mortgage
Loan before giving effect to the application of the Relief Act.

         "REMITTABLE FUNDS":  As defined in the Servicing Agreement.

         "REO PROPERTY":  As defined in the Servicing Agreement.

         "REPRESENTATIVE":                                     .

         "REQUIRED OVERCOLLATERALIZATION AMOUNT":  Means with respect to the
Notes:

                  (a)     for any Payment Date on which the Step Down Trigger is
         not occurring, the greater of: (i)    % of the Aggregate Principal
         Balance of the Mortgage Loans as of the Cut-off Date and (ii) either
         (A) if the Step Up Rolling Delinquency Test is met on such Payment Date
         but neither the Step Up Rolling Loss Test nor the Step Up Cumulative
         Loss Test is met on such Payment Date,   % of the Delinquency Amount
         for such Payment Date or (B) if either the Step Up Rolling Loss Test or
         the Step Up Cumulative Loss Test is met on such Payment Date,   % of
         the Delinquency Amount for such Payment Date.

                  (b)     for any Payment Date on which the Step Down
         Trigger is occurring the greatest of (i) the lesser of (A)    % of the
         Aggregate Principal Balance of the Mortgage Loans as of the Cut-off
         Date and (B) the Stepped Down Required Overcollateralized Percentage of
         the Aggregate Principal Balance of the Mortgage Loans as of the
         Determination Date relating to such Payment Date, (ii) either (A) if
         the Step Up Rolling Delinquency Test is met as such Payment Date but
         neither the Step Up Rolling Loss Test nor the Step Up Cumulative Loss
         Test is met on such Payment Date,   % of the Delinquency Amount for
         such Payment Date or (B) if either the Step Up Rolling Loss Test or the
         Step Up Cumulative Loss Test is met on such Payment Date,   % of the
         Delinquency Amount for such Payment Date, (iii)    % of the Aggregate
         Principal Balance of the Mortgage Loans as of the Cut-Off Date and (iv)
         three times the Principal Balance of the largest Mortgage Loan then
         outstanding.

                  (c)     provided, however, for any Payment Date on which the
         Step Up Claims Denial Test is met, the Required Overcollateralization
         Amount determined pursuant to clause (a) or (b) above, as applicable,
         shall be increased by an amount equal to the product of    % and the
         Aggregate Principal Balance of the Mortgage Loans as of the Cut-Off
         Date.

         The Note Insurer may, in its sole discretion, at the request of the
holders of 50% or more of the ownership interests of the Issuer, modify clause
(a), (b) or (c) above.

         "REQUIRED PAYMENT AMOUNT": With respect to the Notes and any Payment
Date, the Note Interest (net of any Relief Act Interest Shortfalls and
Prepayment Interest Shortfalls) for such Payment Date plus the amount of any
Overcollateralization Deficit for such Payment Date.

         "RESPONSIBLE OFFICER": With respect to the Indenture Trustee, the
chairman or vice-chairman of the board of directors, the chairman or
vice-chairman of the executive committee of

                                      -22-
<PAGE>

the board of directors, the president, any vice president, any assistant vice
president, the secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any trust officer or assistant trust officer, the
controller, any assistant controller or any other officer of the Indenture
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.

         "ROLLING DELINQUENCY PERCENTAGE": As defined in the Servicing
Agreement.

         "ROLLING LOSS PERCENTAGE": As defined in the Servicing Agreement.

         "SALE": The meaning specified in Section 5.17.

         "SELLER":                       .

         "SERVICER": With respect to any Mortgage Loan,                       ,
a corporation, as Servicer under the Servicing Agreement, and its permitted
successors and assigns thereunder, including any successor servicers appointed
pursuant to Section 6.02 of the Servicing Agreement.

         "SERVICER REMITTANCE REPORT": As defined in the Servicing Agreement.

         "SERVICING ADVANCE": As defined in the Servicing Agreement.

         "SERVICING AGREEMENT": The Servicing Agreement, dated as of           ,
among the Issuer, the Servicer and the Indenture Trustee, as indenture trustee,
providing, among other things, for the servicing of the Mortgage Loans, as such
agreement may be amended or supplemented from time to time as permitted hereby
and thereby. Such term shall also include any servicing agreement entered into
with a successor servicer.

         "SERVICING FEE RATE":    % per annum.

         ["S&P": Standard & Poor's Rating Services, a Division of The
McGraw-Hill Companies, Inc., and its successors in interest.]

         "STEP DOWN CUMULATIVE LOSS TEST": The Step Down Cumulative Loss Test
will be met with respect to a Payment Date as follows: (i) for the
through the                Payment Dates, if the Cumulative Loss Percentage for
such Payment Date is    % or less; (ii) for the               through the
            Payment Dates, if the Cumulative Loss Percentage for such Payment
Date is   % or less; (iii) for the            through the         Payment Dates,
if the Cumulative Loss Percentage for such Payment Date is   % or less; and
(iv) for any Payment Date after the                Payment Date, if  the
Cumulative Loss Percentage  for such Payment Date is   % or less.

         "STEP DOWN ROLLING DELINQUENCY TEST": The Step Down Rolling Delinquency
Test will be met with respect to a Payment Date if the Rolling Delinquency
Percentage for such Payment Date is   % or less.

                                      -23-
<PAGE>

         "STEP DOWN ROLLING LOSS TEST": The Step Down Rolling Loss Test will be
met with respect to a Payment Date if the Rolling Loss Percentage is less than
   %.

         "STEP DOWN TRIGGER": For any Payment Date after the
Payment Date, the Step Down Trigger will have occurred if each of the Step Down
Cumulative Loss Test, the Step Down Rolling Delinquency Test and the Step Down
Rolling Loss Test is met. In no event will the Step Down Trigger be deemed to
have occurred for the               Payment Date or any preceding Payment Date.

         "STEPPED DOWN REQUIRED OVERCOLLATERALIZED PERCENTAGE": For any Payment
Date for which the Step Down Trigger has occurred, a percentage equal to the
greater of (x)   % and (y) (i) the percentage equivalent of a fraction, the
numerator of which is the Overcolleralization Amount as of the immediately
preceding Payment Date and the denominator of which is the Aggregate Principal
Balance of the Mortgage Loans and REO Properties as of such Payment Date, minus
(ii) the percentage equivalent of a fraction, the numerator of which is the
product of (A) the percentage calculated under clause (i) above minus    %
multiplied by (B) the number of consecutive Payment Dates through and including
the Payment Date for which the Stepped Down Required Overcollateralized
Percentage is being calculated, up to a maximum of six, for which the Step Down
Trigger has occurred, and the denominator of which is six.

         "STEP UP CLAIMS DENIAL TEST": The Step Up Claims Denial Test will be
met if either of the following events occurs (i) the PMI Insurer is downgraded
below "  " by [Rating Agency] or [Rating Agency], or (ii) the cumulative claims
denials for any 12-months preceding a Payment Date exceed    % of the Aggregate
Principal Balance of the Mortgage Loans covered by the PMI Policy at the
beginning of such 12-month period.

         "STEP UP CUMULATIVE LOSS TEST": The Step Up Cumulative Loss Test will
be met with respect to a Payment Date as follows: (i) for the   through the
Payment Dates, if the Cumulative Loss Percentage for such Payment Date is more
than      %; (ii) for the      through the     Payment Dates, if the Cumulative
Loss Percentage for such Payment Date is more than     %; (iii) for the
through the    Payment Dates, if the Cumulative Loss Percentage for such Payment
Date is more than     %; (iv) for the    through the    Payment Dates, if the
Cumulative Loss Percentage for such Payment Date is more than    %; and (v) for
the         Payment Date and any Payment Date thereafter, if the Cumulative Loss
Percentage for such Payment Date is more than    %  .

         "STEP UP ROLLING DELINQUENCY TEST": The Step Up Rolling Delinquency
Test will be met with respect to a Payment Date if the Rolling Delinquency
Percentage for such Payment Date is more than    %.

         "STEP UP ROLLING LOSS TEST": The Step Up Rolling Loss Test will be met
with respect to a Payment Date, if the Rolling Loss Percentage is equal to or
more than    %.

         "TRANSITION EXPENSES": As defined in the Servicing Agreement.

         "TRUST AGREEMENT": That certain Deposit Trust Agreement, dated as of
    200, among the Depositor, the Owner Trustee,               and the Servicer.

                                      -24-
<PAGE>

         "TRUST ESTATE": All money, instruments and other property subject or
intended to be subject to the lien of this Indenture for the benefit of the
Noteholders and the Note Insurer as of any particular time (including, without
limitation, all property and interests Granted to the Indenture Trustee,
including all proceeds thereof).

         "TRUST INDENTURE ACT" or "TIA": The Trust Indenture Act of 1939, as it
may be amended from time to time.

         "TRUST INSURANCE PROCEEDS": As defined in the Servicing Agreement.

         "TRUST PAYING AGENT": The entity appointed to act as paying agent
pursuant to the Trust Agreement with respect to amounts on deposit from time to
time in the Certificate Distribution Account and distributions thereof to
Certificateholders. The initial Trust Paying Agent is .

         "U.S. BANKRUPTCY CODE" shall mean the United States Bankruptcy Code, 11
U.S.C. Sections 101, et seq., as amended or supplemented from time to
time.

         "VICE PRESIDENT": Any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president".

                                   ARTICLE II

                                    THE NOTES

         SECTION 2.01. FORMS GENERALLY.

         The Notes shall be in substantially the form set forth on Exhibit A
attached hereto. Each Note may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange on which the Notes
may be listed, or as may, consistently herewith, be determined by the Issuer, as
evidenced by its execution thereof. Any portion of the text of any Note may be
set forth on the reverse thereof with an appropriate reference on the face of
the Note.

         The Definitive Notes may be produced in any manner determined by the
Issuer, as evidenced by its execution thereof.

         SECTION 2.02. FORMS OF CERTIFICATE OF AUTHENTICATION.

         The form of the Authenticating Agent's certificate of authentication is
as follows:

         This is one of the Notes referred to in the within-mentioned Indenture.

                                 [Authentication Agent], as Authenticating Agent

                                  By:_________________________________________
                                     Authorized Signatory

                                      -25-
<PAGE>

         SECTION 2.03. GENERAL PROVISIONS WITH RESPECT TO PRINCIPAL AND INTEREST
PAYMENT.

         The Notes shall be designated generally as the "Mortgage Backed Notes,
Series 200 - " of the Issuer.

         The aggregate principal amount of Notes that may be authenticated and
delivered under this Indenture is limited to $           , except for the Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes pursuant to Sections 2.06, 2.07, or 9.06 of this
Indenture. The Notes shall consist of one class designated as Class , having a
Note Interest Rate and Final Maturity Date as follows:

<TABLE>
<CAPTION>
       Designation             Original Note Balance            Note Interest Rate            Final Maturity Date
       -----------             ---------------------            ------------------            -------------------
       <S>                     <C>                               <C>                           <C>
                                                                      %
</TABLE>

         The Notes shall be issued in the form specified in Section 2.01.

         Subject to the provisions of Section 3.01, Section 5.07, Section 5.09
and Section 8.02(d), the principal of the Notes shall be payable in installments
ending no later than the Final Maturity Date unless the unpaid principal of such
Notes become due and payable at an earlier date by declaration of acceleration
or call for redemption or otherwise.

         All payments made with respect to any Note shall be applied first to
the interest then due and payable on such Note and then to the principal
thereof. All computations of interest accrued on any Note shall be made on the
basis of a year of 360 days and twelve 30-day months.

         Interest on the Notes shall accrue at the Note Interest Rate during
each Interest Period on the Current Note Balance of each Outstanding Note at the
end of such Interest Period. Interest accrued during an Interest Period shall be
payable on the next following Payment Date.

         All payments of principal of and interest on any Note shall be made in
the manner specified in Section 2.

         Notwithstanding any of the foregoing provisions with respect to
payments of principal of and interest on the Notes, if the Notes have become or
been declared due and payable following an Event of Default and such
acceleration of maturity and its consequences have not been rescinded and
annulled, then payments of principal of and interest on the Notes shall be made
in accordance with Section 5.07.

         SECTION 2.04. DENOMINATIONS.

         The Notes shall be issuable only as registered Notes in the minimum
denomination of $        and integral multiples of $          in excess thereof,
with the exception of one Note which may be issued in a lesser amount.

                                      -26-
<PAGE>

         SECTION 2.05. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.

         The Notes shall be executed on behalf of the Issuer by an Authorized
Officer of the Owner Trustee. The signature of such Authorized Officer of the
Owner Trustee on the Notes may be manual or by facsimile.

         Notes bearing the manual or facsimile signature of an individual who
was at any time an Authorized Officer of the Owner Trustee shall bind the
Issuer, notwithstanding that such individual has ceased to be an Authorized
Officer of the Owner Trustee prior to the authentication and delivery of such
Notes or was not an Authorized Officer of the Owner Trustee at the date of such
Notes.

         At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may deliver Notes executed on behalf of the Issuer to
the Authenticating Agent for authentication; and the Authenticating Agent shall
authenticate and deliver such Notes as in this Indenture provided and not
otherwise.

         Each Note authenticated on the Closing Date shall be dated the Closing
Date. All other Notes that are authenticated after the Closing Date for any
other purpose hereunder shall be dated the date of their authentication.

         No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Authenticating Agent by the manual signature of one of its
authorized officers or employees, and such certificate upon any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.

         SECTION 2.06. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.

         The Issuer shall cause to be kept a register (the "Note Register") in
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee is hereby initially appointed "Note Registrar" for
the purpose of registering Notes and transfers of Notes as herein provided. The
Indenture Trustee shall remain the Note Registrar throughout the term hereof.
Upon any resignation of the Indenture Trustee, the Issuer shall promptly appoint
a successor, with the approval of the Note Insurer, or, in the absence of such
appointment, the Issuer shall assume the duties of Note Registrar.

         Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.02, the Owner
Trustee on behalf of the Issuer, shall execute, and the Authenticating Agent
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes of any authorized denominations and of a like
aggregate principal amount.

         At the option of the Holder, Notes may be exchanged for other Notes of
any authorized denominations, and of a like aggregate initial principal amount,
upon surrender of the Notes to be exchanged at such office or agency. Whenever
any Notes are so surrendered for exchange,

                                      -27-
<PAGE>

the Owner Trustee shall execute, and the Authenticating Agent shall authenticate
and deliver, the Notes that the Noteholder making the exchange is entitled to
receive.

         All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.

         Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Note Registrar duly executed by the Holder
thereof or its attorney duly authorized in writing.

         No service charge shall be made for any registration of transfer or
exchange of Notes, but the Issuer and the Note Registrar may require payment of
a sum sufficient to cover any tax or other governmental charge as may be imposed
in connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.07 not involving any transfer or any exchange
made by the Note Insurer.

         The Note Registrar shall not register the transfer of a Note unless the
Note Registrar has received a representation letter from the transferee to the
effect that either (i) the transferee is not, and is not acquiring the Note on
behalf of or with the assets of, an employee benefit plan or other retirement
plan or arrangement that is subject to Title I of the Employee Retirement Income
Security Act or 1974, as amended, or Section 4975 of the Code or (ii) the
acquisition and holding of the Note by the transferee qualifies for exemptive
relief under a Department of Labor Prohibited Transaction Class Exemption. Each
Beneficial Owner of a Book-Entry Note shall be deemed to make one of the
foregoing representations.

         SECTION 2.07. MUTILATED, DESTROYED, LOST OR STOLEN NOTES.

         If (1) any mutilated Note is surrendered to the Note Registrar or the
Note Registrar receives evidence to its satisfaction of the destruction, loss or
theft of any Note, and (2) there is delivered to the Note Registrar such
security or indemnity as may be required by the Note Registrar to save each of
the Issuer, the Note Insurer and the Note Registrar harmless, then, in the
absence of notice to the Issuer or the Note Registrar that such Note has been
acquired by a bona fide purchaser, the Owner Trustee on behalf of the Issuer
shall execute and upon its request the Note Registrar shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Note, a new Note or Notes of the same tenor and aggregate initial
principal amount bearing a number not contemporaneously outstanding. If, after
the delivery of such new Note, a bona fide purchaser of the original Note in
lieu of which such new Note was issued presents for payment such original Note,
the Issuer and the Note Registrar shall be entitled to recover such new Note
from the person to whom it was delivered or any person taking therefrom, except
a bona fide purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expenses
incurred by the Issuer or the Note Registrar in connection therewith. If any
such mutilated, destroyed, lost or stolen Note shall have become or shall be
about to become due and payable, or shall have become subject to redemption in
full, instead of issuing a new Note, the Issuer may pay such Note without
surrender thereof, except that any mutilated Note shall be surrendered.

                                      -28-
<PAGE>

         Upon the issuance of any new Note under this Section, the Issuer or the
Note Registrar may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
reasonable expenses (including the fees and expenses of the Indenture Trustee or
the Note Registrar) connected therewith.

         Every new Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.

         The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.

         SECTION 2.08. PAYMENTS OF PRINCIPAL AND INTEREST.

         (a) Payments on Notes issued as Book-Entry Notes will be made by or on
behalf of the Indenture Trustee to the Clearing Agency or its nominee. Any
installment of interest or principal payable on any Definitive Notes that is
punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall be paid to the Person in whose name such Note (or one or more
Predecessor Notes) is registered at the close of business on the Record Date for
such Payment Date by either (i) check mailed to such Person's address as it
appears in the Note Register on such Record Date, or (ii) by wire transfer of
immediately available funds to the account of a Noteholder, if such Noteholder
(A) is the registered holder of Definitive Notes having an initial principal
amount of at least $1,000,000 and (B) has provided the Indenture Trustee with
wiring instructions in writing by five Business Days prior to the related Record
Date or has provided the Indenture Trustee with such instructions for any
previous Payment Date, except for the final installment of principal payable
with respect to such Note (or the Redemption Price for any Note called for
redemption, if such redemption will result in payment of the then entire unpaid
principal amount of such Note), which shall be payable as provided in subsection
(b) below of this Section 2.08. A fee may be charged by the Indenture Trustee to
a Noteholder of Definitive Notes for any payment made by wire transfer. Any
installment of interest or principal not punctually paid or duly provided for
shall be payable as soon as funds are available to the Indenture Trustee for
payment thereof, or if Section 5.07 applies, pursuant to Section 5.07.

         (b) All reductions in the principal amount of a Note (or one or more
Predecessor Notes) effected by payments of installments of principal made on any
Payment Date shall be binding upon all Holders of such Note and of any Note
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, whether or not such payment is noted on such Note. The final
installment of principal of each Note (including the Redemption Price of any
Note called for optional redemption, if such optional redemption will result in
payment of the entire unpaid principal amount of such Note) shall be payable
only upon presentation and surrender thereof on or after the Payment Date
therefor at the Indenture Trustee's presenting office located within the United
States of America pursuant to Section 3.02.

                                      -29-
<PAGE>

         Whenever the Indenture Trustee expects that the entire remaining unpaid
principal amount of any Note will become due and payable on the next Payment
Date other than pursuant to a redemption pursuant to Article X, it shall, no
later than two days prior to such Payment Date, telecopy or hand deliver to each
Person in whose name a Note to be so retired is registered at the close of
business on such otherwise applicable Record Date a notice to the effect that:

                  (i)     the Indenture Trustee expects that funds sufficient to
         pay such final installment will be available in the Note Account on
         such Payment Date; and

                  (ii)    if such funds are available, (A) such final
         installment will be payable on such Payment Date, but only upon
         presentation and surrender of such Note at the office or agency of the
         Note Registrar maintained for such purpose pursuant to Section 3.02
         (the address of which shall be set forth in such notice) and (B) no
         interest shall accrue on such Note after such Payment Date.

         A copy of such form of notice shall be sent to the Note Insurer by the
Indenture Trustee.

         Notices in connection with redemptions of Notes shall be mailed to
Noteholders in accordance with Section 10.02.

         (c)      Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to unpaid principal and
interest that were carried by such other Note. Any checks mailed pursuant to
subsection (a) of this Section 2.08 and returned undelivered shall be held in
accordance with Section 3.03.

         (d)      Each Payment Date Statement, prepared by the Indenture Trustee
based on the Servicer Remittance Report delivered to the Indenture Trustee
pursuant to the Servicing Agreement, shall be made available via the Indenture
Trustee's internet website and its fax-on-demand service to the Note Insurer,
the Rating Agencies, the Owner Trustee, the Underwriters (as defined in the
Insurance Agreement) and each Noteholder as the statement required pursuant to
Section 8.06. Noteholders that are unable to use the above distribution options
are entitled to have a paper copy mailed to them via first class mail by calling
the customer service desk at          and indicating such. Neither the Indenture
Trustee nor the Paying Agent shall have any responsibility to recalculate,
verify or recompute information contained in any such tape, electronic data file
or disk or any such Servicer Remittance Report except to the extent necessary to
satisfy all obligations under this Section 2.08(d) and under Article III of the
Servicing Agreement.

         Within 90 days after the end of each calendar year, the Indenture
Trustee will be required to furnish to each person who at any time during the
calendar year was a Noteholder, if requested in writing by such person, a
statement containing the information set forth in subclauses (i) and (ii) in the
definition of "Payment Date Statement," aggregated for such calendar year or the
applicable portion thereof during which such person was a Noteholder. Such
obligation will be deemed to have been satisfied to the extent that
substantially comparable information is provided pursuant to any requirements of
the Code as are from time to time in force.

                                      -30-
<PAGE>

         SECTION 2.09. PERSONS DEEMED OWNER.

         Prior to due presentment for registration of transfer of any Note, the
Issuer, the Indenture Trustee, any Paying Agent and any other agent of the
Issuer, the Note Insurer or the Indenture Trustee may treat the Person in whose
name any Note is registered as the owner of such Note (a) on the applicable
Record Date for the purpose of receiving payments of the principal of and
interest on such Note and (b) on any other date for all other purposes
whatsoever, and neither the Issuer, the Indenture Trustee, any Paying Agent nor
any other agent of the Issuer, the Note Insurer or the Indenture Trustee shall
be affected by notice to the contrary.

         SECTION 2.10. CANCELLATION.

         All Notes surrendered for payment, registration of transfer, exchange
or redemption shall, if surrendered to any Person other than the Note Registrar,
be delivered to the Note Registrar and shall be promptly canceled by it. The
Issuer may at any time deliver to the Note Registrar for cancellation any Note
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
canceled by the Note Registrar. No Notes shall be authenticated in lieu of or in
exchange for any Notes canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Notes held by the Note Registrar shall
be held by the Note Registrar in accordance with its standard retention policy,
unless the Issuer shall direct by an Issuer Order that they be destroyed or
returned to it.

         SECTION 2.11. AUTHENTICATION AND DELIVERY OF NOTES.

         The Notes shall be executed by an Authorized Officer of the Owner
Trustee on behalf of the Issuer and delivered to the Authenticating Agent for
authentication, and thereupon the same shall be authenticated and delivered by
the Authenticating Agent, upon Issuer Request and upon receipt by the
Authenticating Agent of all of the following:

         (a)   An Issuer Order authorizing the execution, authentication and
delivery of the Notes and specifying the Final Maturity Date, the principal
amount and the Note Interest Rate (or the manner in which such Note Interest
Rate is to be determined) of such Notes to be authenticated and delivered.

         (b)   An Issuer Order authorizing the execution and delivery of this
Indenture.

         (c)   One or more Opinions of Counsel addressed to the Authenticating
Agent and the Note Insurer or upon which the Authenticating Agent and the Note
Insurer is expressly permitted to rely, complying with the requirements of
Section 11.01, reasonably satisfactory in form and substance to the
Authenticating Agent and the Note Insurer.

         In rendering the opinions set forth above, such counsel may rely upon
officer's certificates of the Issuer, the Owner Trustee, the Servicer and the
Indenture Trustee, without independent confirmation or verification with respect
to factual matters relevant to such opinions. In rendering the opinions set
forth above, such counsel need express no opinion as to (A) the existence of, or
the priority of the security interest created by the Indenture against, any
liens or other interests that arise by operation of law and that do not require
any filing or similar

                                      -31-
<PAGE>

action in order to take priority over a perfected security interest or (B) the
priority of the security interest created by this Indenture with respect to any
claim or lien in favor of the United States or any agency or instrumentality
thereof (including federal tax liens and liens arising under Title IV of the
Employee Retirement Income Security Act of 1974).

         The acceptability to the Note Insurer of the Opinion of Counsel
delivered to the Indenture Trustee and the Note Insurer at the Closing Date
shall be conclusively evidenced by the delivery on the Closing Date of the
Insurance Policy.

         (d)   Pursuant to the authorization of the Depositor, an Officers'
Certificate of the Issuer complying with the requirements of Section 11.01 and
stating that:

                  (i)     the Issuer is not in Default under this Indenture
         and the issuance of the Notes will not result in any breach of any of
         the terms, conditions or provisions of, or constitute a default under,
         the Issuer's Certificate of Trust or any indenture, mortgage, deed of
         trust or other agreement or instrument to which the Issuer is a party
         or by which it is bound, or any order of any court or administrative
         agency entered in any proceeding to which the Issuer is a party or by
         which it may be bound or to which it may be subject, and that all
         conditions precedent provided in this Indenture relating to the
         authentication and delivery of the Notes have been complied with;

                  (ii)    the Issuer is the owner of each Mortgage Loan, free
         and clear of any lien, security interest or charge, has not assigned
         any interest or participation in any such Mortgage Loan (or, if any
         such interest or participation has been assigned, it has been released)
         and has the right to Grant each such Mortgage Loan to the Indenture
         Trustee;

                  (iii)   the information set forth in the Mortgage Loan
         Schedule attached as Schedule I to this Indenture is correct;

                  (iv)    the Issuer has Granted to the Indenture Trustee all of
         its right, title and interest in each Mortgage Loan;

                  (v)     as of the Closing Date, no lien in favor of the United
         States described in Section 6321 of the Code, or lien in favor of the
         Pension Benefit Guaranty Corporation described in Section 4068(a) of
         the Employee Retirement Income Security Act of 1974, as amended, has
         been filed as described in subsections 6323(f) and 6323(g) of the Code
         upon any property belonging to the Issuer; and

                  (vi)    attached thereto is a true and correct copy of letters
         signed by each Rating Agency confirming that the Notes have been rated
         in the highest rating category of such Rating Agency.

         (e)   An executed counterpart of the Servicing Agreement.

         (f)   An executed counterpart of the Mortgage Loan Sale Agreement.

         (g)   An executed counterpart of the Mortgage Loan Contribution
Agreement.

                                      -32-
<PAGE>

         (h)   An executed counterpart of the Trust Agreement.

         SECTION 2.12. BOOK-ENTRY NOTE.

         The Notes will be issued initially as one or more certificates in the
name of the Cede & Co., as nominee for the Clearing Agency maintaining
book-entry records with respect to ownership and transfer of such Notes, and
held by the Clearing Agency or, pursuant to the Clearing Agency's instructions
on behalf of the Clearing Agency, deposited with the Indenture Trustee, and
registration of the Notes may not be transferred by the Note Registrar except
upon Book-Entry Termination. In such case, the Note Registrar shall deal with
the Clearing Agency as representatives of the Beneficial Owners of such Notes
for purposes of exercising the rights of Noteholders hereunder. Each payment of
principal of and interest on a Book-Entry Note shall be paid to the Clearing
Agency, which shall credit the amount of such payments to the accounts of its
Clearing Agency Participants in accordance with its normal procedures. Each
Clearing Agency Participant shall be responsible for disbursing such payments to
the Beneficial Owners of the Book-Entry Notes that it represents and to each
indirect participating brokerage firm (a "brokerage firm" or "indirect
participating firm") for which it acts as agent. Each brokerage firm shall be
responsible for disbursing funds to the Beneficial Owners of the Book-Entry
Notes that it represents. All such credits and disbursements are to be made by
the Clearing Agency and the Clearing Agency Participants in accordance with the
provisions of the Notes. None of the Indenture Trustee, the Note Registrar, if
any, the Issuer, or any Paying Agent or the Note Insurer shall have any
responsibility therefor except as otherwise provided by applicable law. Requests
and directions from, and votes of, such representatives shall not be deemed to
be inconsistent if they are made with respect to different Beneficial Owners.

         SECTION 2.13. TERMINATION OF BOOK ENTRY SYSTEM.

         (a)   The book-entry system through the Clearing Agency with respect to
the Book-Entry Notes may be terminated upon the happening of any of the
following:

                  (i)     The Clearing Agency advises the Indenture Trustee that
         the Clearing Agency is no longer willing or able to discharge properly
         its responsibilities as nominee and depositary with respect to the
         Notes and the Indenture Trustee is unable to locate a qualified
         successor clearing agency satisfactory to the Issuer;

                  (ii)    The Issuer, in its sole discretion, elects to
         terminate the book-entry system by notice to the Clearing Agency and
         the Indenture Trustee; or

                  (iii)   After the occurrence of an Event of Default (at which
         time the Indenture Trustee shall use all reasonable efforts to promptly
         notify each Beneficial Owner through the Clearing Agency of such Event
         of Default), the Beneficial Owners of no less than 51% of the Note
         Balance of the Book-Entry Notes advise the Indenture Trustee in
         writing, through the related Clearing Agency Participants and the
         Clearing Agency, that the continuation of a book-entry system through
         the Clearing Agency to the exclusion of any Definitive Notes being
         issued to any person other than the Clearing Agency or its nominee is
         no longer in the best interests of the Beneficial Owners.

                                      -33-
<PAGE>

         (b)  Upon the occurrence of any event described in subsection (a)above,
the Indenture Trustee shall use all reasonable efforts to notify all Beneficial
Owners, through the Clearing Agency, of the occurrence of such event and of the
availability of Definitive Notes to Beneficial Owners requesting the same, in an
aggregate Current Note Balance representing the interest of each, making such
adjustments and allowances as it may find necessary or appropriate as to accrued
interest and previous calls for redemption. Definitive Notes shall be issued
only upon surrender to the Indenture Trustee of the global Note by the Clearing
Agency, accompanied by registration instructions for the Definitive Notes.
Neither the Issuer nor the Indenture Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon issuance of the Definitive
Notes, all references herein to obligations imposed upon or to be performed by
the Clearing Agency shall cease to be applicable and the provisions relating to
Definitive Notes shall be applicable.

                                  ARTICLE III

                                    COVENANTS

         SECTION 3.01. PAYMENT OF NOTES.

         The Issuer will pay or cause to be duly and punctually paid the
principal of, and interest on, the Notes in accordance with the terms of the
Notes and this Indenture. The Notes shall be non-recourse obligations of the
Issuer and shall be limited in right of payment to amounts available from the
Trust Estate as provided in this Indenture and the Issuer shall not otherwise be
liable for payments on the Notes. No person shall be personally liable for any
amounts payable under the Notes. If any other provision of this Indenture
conflicts or is deemed to conflict with the provisions of this Section 3.01, the
provisions of this Section 3.01 shall control.

         SECTION 3.02. MAINTENANCE OF OFFICE OR AGENCY.

         The Issuer will cause the Note Registrar to maintain its corporate
trust office at a location where Notes may be surrendered for registration of
transfer or exchange, and where notices and demands to or upon the Issuer in
respect of the Notes and this Indenture may be served.

         The Issuer may also from time to time at its own expense designate one
or more other offices or agencies within the United States of America where the
Notes may be presented or surrendered for any or all such purposes and may from
time to time rescind such designations; provided, however, any designation of an
office or agency for payment of Notes shall be subject to Section 3.03. The
Issuer will give prompt written notice to the Indenture Trustee and the Note
Insurer of any such designation or rescission and of any change in the location
of any such other office or agency.

         SECTION 3.03. MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST.

         All payments of amounts due and payable with respect to any Notes that
are to be made from amounts withdrawn from the Note Account pursuant to Section
8.02(c) or Section 5.07 shall be made on behalf of the Issuer by the Paying
Agent, and no amounts so withdrawn from the Note Account for payments of Notes
shall be paid over to the Issuer under any circumstances except as provided in
this Section 3.03 or in Section 5.07 or Section 8.02.

                                      -34-
<PAGE>

         With respect to Definitive Notes, if the Issuer shall have a Paying
Agent that is not also the Note Registrar, such Note Registrar shall furnish, no
later than the fifth calendar day after each Record Date, a list, in such form
as such Paying Agent may reasonably require, of the names and addresses of the
Holders of Notes and of the number of Individual Notes held by each such Holder.

         Whenever the Issuer shall have a Paying Agent other than the Indenture
Trustee, it will, on or before the Business Day next preceding each Payment Date
direct the Indenture Trustee to deposit with such Paying Agent an aggregate sum
sufficient to pay the amounts then becoming due (to the extent funds are then
available for such purpose in the Note Account), such sum to be held in trust
for the benefit of the Persons entitled thereto. Any moneys deposited with a
Paying Agent in excess of an amount sufficient to pay the amounts then becoming
due on the Notes with respect to which such deposit was made shall, upon Issuer
Order, be paid over by such Paying Agent to the Indenture Trustee for
application in accordance with Article VIII.

         Subject to the prior consent of the Note Insurer, any Paying Agent
other than the Indenture Trustee may be appointed by Issuer Order and at the
expense of the Issuer. The Issuer shall not appoint any Paying Agent (other than
the Indenture Trustee) that is not, at the time of such appointment, a
depository institution or trust company whose obligations would be Permitted
Investments pursuant to clause (c) of the definition of the term Permitted
Investments. The Issuer will cause each Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee an instrument in which
such Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section, that such Paying Agent will:

                  (1)     allocate all sums received for payment to the Holders
         of Notes on each Payment Date among such Holders in the proportion
         specified in the applicable Payment Date Statement, in each case to the
         extent permitted by applicable law;

                  (2)     hold all sums held by it for the payment of amounts
         due with respect to the Notes in trust for the benefit of the Persons
         entitled thereto until such sums shall be paid to such Persons or
         otherwise disposed of as herein provided and pay such sums to such
         Persons as herein provided;

                  (3)     if such Paying Agent is not the Indenture Trustee,
         immediately resign as a Paying Agent and forthwith pay to the Indenture
         Trustee all sums held by it in trust for the payment of the Notes if at
         any time the Paying Agent ceases to meet the standards set forth above
         required to be met by a Paying Agent at the time of its appointment;

                  (4)     if such Paying Agent is not the Indenture Trustee,
         give the Indenture Trustee notice of any Default by the Issuer (or any
         other obligor upon the Notes) in the making of any payment required to
         be made with respect to any Notes for which it is acting as Paying
         Agent;

                  (5)     if such Paying Agent is not the Indenture Trustee, at
         any time during the continuance of any such Default, upon the written
         request of the Indenture Trustee, forthwith pay to the Indenture
         Trustee all sums so held in trust by such Paying Agent; and

                                      -35-
<PAGE>

                  (6)     comply with all requirements of the Code, and all
         regulations thereunder, with respect to withholding from any payments
         made by it on any Notes of any applicable withholding taxes imposed
         thereon and with respect to any applicable reporting requirements in
         connection therewith; provided, however, that with respect to
         withholding and reporting requirements applicable to original issue
         discount (if any) on any of the Notes, the Issuer has provided the
         calculations pertaining thereto to the Indenture Trustee and the Paying
         Agent.

         The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or any other purpose, by Issuer
Order direct any Paying Agent, if other than the Indenture Trustee, to pay to
the Indenture Trustee all sums held in trust by such Paying Agent, such sums to
be held by the Indenture Trustee upon the same trusts as those upon which such
sums were held by such Paying Agent; and upon such payment by any Paying Agent
to the Indenture Trustee, such Paying Agent shall be released from all further
liability with respect to such money.

         Any money held by the Indenture Trustee or any Paying Agent in trust
for the payment of any amount due with respect to any Note and remaining
unclaimed for two and one-half years after such amount has become due and
payable to the Holder of such Note (or if earlier, three months before the date
on which such amount would escheat to a governmental entity under applicable
law) shall be discharged from such trust and paid to the Issuer; and the Holder
of such Note shall thereafter, as an unsecured general creditor, look only to
the Issuer for payment thereof (but only to the extent of the amounts so paid to
the Issuer), and all liability of the Indenture Trustee or such Paying Agent
with respect to such trust money shall thereupon cease. The Indenture Trustee
may adopt and employ, at the expense of the Issuer, any reasonable means of
notification of such repayment (including, but not limited to, mailing notice of
such repayment to Holders whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Indenture
Trustee or any Agent, at the last address of record for each such Holder).

         SECTION 3.04. EXISTENCE OF ISSUER.

         (a)   Subject to Sections 3.04(b) and (c) and Section 6.2(a)(ii) of the
Deposit Trust Agreement, the Issuer will keep in full effect its existence,
rights and franchises as a business trust under the laws of the State of
Delaware or under the laws of any other state or the United States of America,
and will obtain and preserve its qualification to do business in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Indenture, the Notes, the Servicing
Agreement, the Insurance Agreement and the Mortgage Loan Contribution Agreement.

         (b)   Subject to Section 3.09(vii), the prior written consent of the
Note Insurer, and written notice to the Rating Agencies, any entity into which
the Issuer may be merged or with which it may be consolidated, or any entity
resulting from any merger or consolidation to which the Issuer shall be a party,
shall be the successor Issuer under this Indenture without the execution or
filing of any paper, instrument or further act to be done on the part of the
parties hereto, anything in any agreement relating to such merger or
consolidation, by which any such Issuer may seek to retain certain powers,
rights and privileges therefore obtaining for any period

                                      -36-
<PAGE>

of time following such merger or consolidation to the contrary notwithstanding
(other than Section 3.09(vii)).

         (c)   Upon any consolidation or merger of or other succession to the
Issuer in accordance with this Section 3.04, the Person formed by or surviving
such consolidation or merger (if other than the Issuer) may exercise every right
and power of, and shall have all of the obligations of, the Issuer under this
Indenture with the same effect as if such Person had been named as the Issuer
herein.

         SECTION 3.05. PROTECTION OF TRUST ESTATE.

         (a)   The Issuer will from time to time execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other instruments,
and will take such other action as may be necessary or advisable to:

                  (i)     Grant more effectively all or any portion of the Trust
         Estate;

                  (ii)    maintain or preserve the lien of this Indenture or
         carry out more effectively the purposes hereof;

                  (iii)   perfect, publish notice of or protect the validity of
         any Grant made or to be made by this Indenture;

                  (iv)    enforce any of the Mortgage Loans, the Servicing
         Agreement, the Mortgage Loan Sale Agreement or the Mortgage Loan
         Contribution Agreement; or

                  (v)     preserve and defend title to the Trust Estate and the
         rights of the Indenture Trustee, and of the Noteholders, in the
         Mortgage Loans and the other property held as part of the Trust Estate
         against the claims of all Persons and parties.

         (b)   The Indenture Trustee shall not remove any portion of the Trust
Estate that consists of money or is evidenced by an instrument, certificate or
other writing from the jurisdiction in which it was held, or to which it is
intended to be removed, as described in the Opinion of Counsel delivered at the
Closing Date pursuant to Section 2.1l(c), or cause or permit ownership or the
pledge of any portion of the Trust Estate that consists of book-entry securities
to be recorded on the books of a Person located in a different jurisdiction from
the jurisdiction in which such ownership or pledge was recorded at such time
unless the Indenture Trustee shall have first received an Opinion of Counsel to
the effect that the lien and security interest created by this Indenture with
respect to such property will continue to be maintained after giving effect to
such action or actions.

         SECTION 3.06. ANNUAL OPINIONS AS TO COLLATERAL.

         On or before December 31st in each calendar year, beginning in 200 ,
the Issuer shall furnish to the Indenture Trustee and the Note Insurer an
Opinion of Counsel either stating that, in the opinion of such counsel, such
action has been taken with respect to the recording, filing, re-recording and
refiling of this Indenture, any indentures supplemental hereto and any other

                                      -37-
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requisite documents and with respect to the execution and filing of any
financing statements and continuation statements as is necessary to maintain the
lien and security interest created by this Indenture and reciting the details of
such action or stating that in the opinion of such counsel no such action is
necessary to maintain such lien and security interest. Such Opinion of Counsel
shall also describe the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite documents
and the execution and filing of any financing statements and continuation
statements that will, in the opinion of such counsel, be required to maintain
the lien and security interest of this Indenture until December 31st of the
following calendar year.

         SECTION 3.07. PERFORMANCE OF OBLIGATIONS; SERVICING AGREEMENT.

         (a)   The Issuer shall punctually perform and observe all of its
obligations under this Indenture and the Servicing Agreement.

         (b)   The Issuer shall not take any action and will use its Best
Efforts not to permit any action to be taken by others that would release any
Person from any of such Person's covenants or obligations under any of the
Mortgage Files or under any instrument included in the Trust Estate, or that
would result in the amendment, hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of, any of the documents
or instruments contained in the Mortgage Files, except as expressly permitted in
this Indenture, the Servicing Agreement or such document included in the
Mortgage File or other instrument or unless such action will not adversely
affect the interests of the Holders of the Notes.

         (c)   If the Issuer shall have knowledge of the occurrence of a default
under the Servicing Agreement, the Issuer shall promptly notify the Indenture
Trustee, the Note Insurer and the Rating Agencies thereof, and shall specify in
such notice the action, if any, the Issuer is taking with respect to such
default.

         (d)   Upon any termination of the Servicer's rights and powers pursuant
to the Servicing Agreement, the Indenture Trustee shall promptly notify the
Rating Agencies. As soon as any successor Servicer is appointed, the Indenture
Trustee shall notify the Rating Agencies, specifying in such notice the name and
address of such successor Servicer.

         SECTION 3.08. INVESTMENT COMPANY ACT.

         The Issuer shall at all times conduct its operations so as not to be
subject to, or shall comply with, the requirements of the Investment Company Act
of 1940, as amended (or any successor statute), and the rules and regulations
thereunder.

         SECTION 3.09. NEGATIVE COVENANTS.

         The Issuer shall not:

                  (i)     sell, transfer, exchange or otherwise dispose of any
         portion of the Trust Estate except as expressly permitted by this
         Indenture or the Servicing Agreement;

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<PAGE>

                  (ii)    claim any credit on, or make any deduction from, the
         principal of, or interest on, any of the Notes by reason of the payment
         of any taxes levied or assessed upon any portion of the Trust Estate;

                  (iii)   engage in any business or activity other than as
         permitted by the Trust Agreement or other than in connection with, or
         relating to, the issuance of the Notes pursuant to this Indenture or
         amend the Trust Agreement, as in effect on the Closing Date, other than
         in accordance with Section 11.01;

                  (iv)    incur, issue, assume or otherwise become liable for a
         indebtedness other than the Notes;

                  (v)     incur, assume, guaranty or agree to indemnify any
         Person with respect to any indebtedness of any Person, except for such
         indebtedness as may be incurred by the Issuer in connection with the
         issuance of the Notes pursuant to this Indenture;

                  (vi)    dissolve or liquidate in whole or in part (until the
         Notes are paid in full);

                  (vii)(1)  permit the validity or effectiveness of this
         Indenture or any Grant to be impaired, or permit the lien of this
         Indenture to be impaired, amended, hypothecated, subordinated,
         terminated or discharged, or permit any Person to be released from any
         covenants or obligations under this Indenture, except as may be
         expressly permitted hereby, (2) permit any lien, charge, security
         interest, mortgage or other encumbrance (other than the lien of this
         Indenture or any Permitted Encumbrance) to be created on or extend to
         or otherwise arise upon or burden the Trust Estate or any part thereof
         or any interest therein or the proceeds thereof, or (3) permit the lien
         of this Indenture not to constitute a valid perfected first priority
         security interest in the Trust Estate; or

                  (viii)  take any other action that should reasonably be
         expected to, or fail to take any action if such failure should
         reasonably be expected to, cause the Issuer to be taxable as (a) an
         association pursuant to Section 7701 of the Code or (b) a taxable
         mortgage pool pursuant to Section 7701(i) of the Code.

         SECTION 3.10. ANNUAL STATEMENT AS TO COMPLIANCE.

         On or before December 31, 200 , and each December 31 thereafter and
upon receipt of instruction pursuant to the terms of the Management Agreement,
the Issuer shall deliver to the Indenture Trustee, the Note Insurer, the Rating
Agencies and the Underwriters a written statement prepared by the manager
pursuant to the terms of the Management Agreement, signed by an Authorized
Officer of the Owner Trustee, stating that:

                  (1)     a review of the fulfillment by the Issuer during such
         year of its obligations under this Indenture has been made under such
         Authorized Officer's supervision; and

                  (2)     to the best of such Authorized Officer's knowledge,
         based on such review, the Issuer has complied with all conditions and
         covenants under this Indenture throughout such year, or, if there has
         been a Default in the fulfillment of any such covenant or

                                      -39-
<PAGE>

         condition, specifying each such Default known to such Authorized
         Officer and the nature and status thereof.

         SECTION 3.11. RESTRICTED PAYMENTS.

         The Issuer shall not, directly or indirectly, (i) pay any dividend or
make any distribution (by reduction of capital or otherwise), whether in cash,
property, securities or a combination thereof, to the Owner Trustee or any owner
of a beneficial interest in the Issuer or otherwise with respect to any
ownership or equity interest or security in or of the Issuer or to the Servicer,
(ii) redeem, purchase, retire or otherwise acquire for value any such ownership
or equity interest or security or (iii) set aside or otherwise segregate any
amounts for any such purpose; provided, however, that the Issuer may make, or
cause to be made, distributions to the Servicer, the Indenture Trustee, the
Owner Trustee, the Note Insurer and the Certificateholders as contemplated by,
and to the extent funds are available for such purpose under this Indenture, the
Servicing Agreement or the Trust Agreement and the Issuer will not, directly or
indirectly, make or cause to be made payments to or distributions from either
Note Account except in accordance with this Indenture.

         SECTION 3.12. TREATMENT OF NOTES AS DEBT FOR TAX PURPOSES.

         The Issuer shall treat the Notes as indebtedness for all federal and
state tax purposes.

         SECTION 3.13. NOTICE OF EVENTS OF DEFAULT.

         The Issuer shall give the Indenture Trustee, the Note Insurer, the
Rating Agencies and the Underwriters prompt written notice of each Event of
Default hereunder, each default on the part of the Servicer of its obligations
under the Servicing Agreement and each default on the part of the Seller of its
obligations under the Mortgage Loan Sale Agreement.

         SECTION 3.14. FURTHER INSTRUMENTS AND ACTS.

         Upon request of the Indenture Trustee or the Note Insurer, the Issuer
will execute and deliver such further instruments and do such further acts as
may be reasonably necessary or proper to carry out more effectively the purpose
of this Indenture.

                                   ARTICLE IV

                           SATISFACTION AND DISCHARGE

         SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE.

         Whenever the following conditions shall have been satisfied:

                  (1)  either

                       (A)  all Notes theretofore authenticated and delivered
                  (other than (i) Notes that have been destroyed, lost or stolen
                  and that have been replaced or paid as provided in Section
                  2.07, and (ii) Notes for whose payment money has

                                      -40-
<PAGE>

                  theretofore been deposited in trust and thereafter repaid to
                  the Issuer, as provided in Section 3.03) have been delivered
                  to the Note Registrar for cancellation; or

                       (B)  all Notes not theretofore delivered to the Note
                  Registrar for cancellation

                            (i)   have become due and payable, or

                            (ii)  will become due and payable at the Final
                       Maturity Date within one year, or

                            (iii) are to be called for redemption within one
                       year under irrevocable arrangements satisfactory to the
                       Indenture Trustee for the giving of notice of redemption
                       by the Indenture Trustee in the name, and at the expense,
                       of the Issuer or the Servicer,

                  and the Issuer or the Servicer, in the case of clauses (B)(i),
                  (B)(ii) or (B)(iii) above, has irrevocably deposited or caused
                  to be deposited with the Indenture Trustee, in trust for such
                  purpose, an amount sufficient to pay and discharge the entire
                  indebtedness on such Notes not theretofore delivered to the
                  Indenture Trustee for cancellation, for principal and interest
                  to the Final Maturity Date or to the applicable Redemption
                  Date, as the case may be, and in the case of Notes that were
                  not paid at the Final Maturity Date of their entire unpaid
                  principal amount, for all overdue principal and all interest
                  payable on such Notes to the next succeeding Payment Date
                  therefor;

                  (2)  the Issuer has paid or caused to be paid all other sums
         payable hereunder by the Issuer (including, without limitation, amounts
         due the Note Insurer hereunder); and

                  (3)  the Issuer has delivered to the Indenture Trustee and the
         Note Insurer an Officers' Certificate and an Opinion of Counsel
         satisfactory in form and substance to the Indenture Trustee and the
         Note Insurer each stating that all conditions precedent herein
         providing for the satisfaction and discharge of this Indenture have
         been complied with;

then, upon Issuer Request, this Indenture and the lien, rights and interests
created hereby and thereby shall cease to be of further effect, and the
Indenture Trustee and each co-trustee and separate trustee, if any, then acting
as such hereunder shall, at the expense of the Issuer (or of the Servicer in the
case of a redemption by the Servicer), execute and deliver all such instruments
as may be necessary to acknowledge the satisfaction and discharge of this
Indenture and shall pay, or assign or transfer and deliver, to the Issuer or
upon Issuer Order all cash, securities and other property held by it as part of
the Trust Estate remaining after satisfaction of the conditions set forth in
clauses (1) and (2) above.

         Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Indenture Trustee and the Paying Agent to the Issuer and the
Holders of Notes under Section 3.03, the obligations of the Indenture Trustee to
the Holders of Notes under Section 4.02 and the provisions of Section 2.07 with
respect to lost, stolen, destroyed or mutilated Notes,

                                      -41-
<PAGE>

registration of transfers of Notes and rights to receive payments of principal
of and interest on the Notes shall survive.

         SECTION 4.02. APPLICATION OF TRUST MONEY.

         All money deposited with the Indenture Trustee pursuant to Sections
3.03 and 4.01 shall be held in trust and applied by it, in accordance with the
provisions of the Notes and this Indenture, to the payment, either directly or
through any Paying Agent, as the Indenture Trustee may determine, to the Persons
entitled thereto, of the principal and interest for whose payment such money has
been deposited with the Indenture Trustee.

                                   ARTICLE V

                              DEFAULTS AND REMEDIES

         SECTION 5.01. EVENT OF DEFAULT.

         "Event of Default", wherever used herein, means, with respect to Notes
issued hereunder, any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

                  (1)  if the Issuer shall default in the payment on any Payment
         Date of any Required Payment Amount or fail to pay the Notes in full on
         or before the Final Maturity Date (and in the case of any such default,
         such default or failure shall continue for a period of 5 days
         unremedied);

                  (2)  if the Issuer shall breach or default in the due
         observance of any one or more of the covenants set forth in clauses (i)
         through (viii) of Section 3.09;

                  (3)  if the Issuer shall breach, or default in the due
         observance or performance of, any other of its covenants in this
         Indenture, and such Default shall continue for a period of 30 days
         after there shall have been given, by registered or certified mail, to
         the Issuer and the Note Insurer by the Indenture Trustee at the
         direction of the Note Insurer, or to the Issuer and the Indenture
         Trustee by the Holders of Notes representing at least 25% of the Note
         Balance of the Outstanding Notes, with the prior written consent of the
         Note Insurer, a written notice specifying such Default and requiring it
         to be remedied and stating that such notice is a "Notice of Default"
         hereunder;

                  (4)  if any representation or warranty of the Issuer made in
         this Indenture or any certificate or other writing, delivered by the
         Issuer pursuant hereto or in connection herewith shall prove to be
         incorrect in any material respect as of the time when the same shall
         have been made and, within 30 days after there shall have been given,
         by registered or certified mail, written notice thereof to the Issuer
         and the Note Insurer by the Indenture Trustee at the direction of the
         Note Insurer, or to the Issuer and the Indenture Trustee by the Holders
         of Notes representing at least 25% of the Note Balance of the
         Outstanding Notes, with the prior written consent of the Note Insurer,
         the circumstance or condition in

                                      -42-
<PAGE>

         respect of which such representation or warranty was incorrect shall
         not have been eliminated or otherwise cured; provided, however, that in
         the event that there exists a remedy with respect to any such breach
         that consists of a purchase obligation, repurchase obligation or right
         to substitute under the Basic Documents, then such purchase obligation,
         repurchase obligation or right to substitute shall be the sole remedy
         with respect to such breach and shall not constitute an Event of
         Default hereunder;

                  (5)  the entry of a decree or order for relief by a court
         having jurisdiction in respect of the Issuer in an involuntary case
         under the federal bankruptcy laws, as now or hereafter in effect, or
         any other present or future federal or state bankruptcy, insolvency or
         similar law, or appointing a receiver, liquidator, assignee, trustee,
         custodian, sequestrator or other similar official of the Issuer or of
         any substantial part of its property, or ordering the winding up or
         liquidation of the affairs of the Issuer and the continuance of any
         such decree or order unstayed and in effect for a period of 60
         consecutive days;

                  (6)  the commencement by the Issuer of a voluntary case under
         the federal bankruptcy laws, as now or hereafter in effect, or any
         other present or future federal or state bankruptcy, insolvency or
         similar law, or the consent by the Issuer to the appointment of or
         taking possession by a receiver, liquidator, assignee, trustee,
         custodian, sequestrator or other similar official of the Issuer or of
         any substantial part of its property or the making by the Issuer of an
         assignment for the benefit of creditors or the failure by the Issuer
         generally to pay its debts as such debts become due or the taking of
         corporate action by the Issuer in furtherance of any of the foregoing;
         or

                  (7) the occurrence of an "event of default" under the
         Insurance Agreement.

         The payment by the Note Insurer of any Insured Payment in an amount
sufficient to cover the related Required Payment Amount pursuant to the
Insurance Policy in respect of any Payment Date shall, at the option of the Note
Insurer, constitute an Event of Default with respect to the Notes.

         SECTION 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.

         If an Event of Default occurs and is continuing, then and in every such
case, but in each case only with the consent of the Note Insurer in the absence
of a Note Insurer Default, the Indenture Trustee may, and on request of the
Holders of Notes representing not less than 50% of the Note Balance of the
Outstanding Notes, shall, declare all the Notes to be immediately due and
payable by a notice in writing to the Issuer (and to the Indenture Trustee if
given by Noteholders), and upon any such declaration such Notes, in an amount
equal to the Note Balance of such Notes, together with accrued and unpaid
interest thereon to the date of such acceleration, shall become immediately due
and payable, all subject to the prior written consent of the Note Insurer in the
absence of a Note Insurer Default.

         At any time after such a declaration of acceleration of maturity of the
Notes has been made and before a judgment or decree for payment of the money due
has been obtained by the Indenture Trustee as hereinafter in this Article
provided the Note Insurer or the Holders of Notes representing more than 50% of
the Note Balance of the Outstanding Notes, with the prior written

                                      -43-
<PAGE>

consent of the Note Insurer, by written notice to the Issuer and the Indenture
Trustee, may rescind and annul such declaration and its consequences if:

                  (1)  the Issuer has paid or deposited with the Indenture
         Trustee a sum sufficient to pay:

                       (A)  all payments of principal of, and interest on, all
                  Notes and all other amounts that would then be due hereunder
                  or upon such Notes if the Event of Default giving rise to such
                  acceleration had not occurred; and

                       (B)  all sums paid or advanced by the Indenture Trustee
                  hereunder and the reasonable compensation, expenses,
                  disbursements and advances of the Indenture Trustee, its
                  agents and counsel; and

                  (2)  all Events of Default, other than the nonpayment of the
         principal of Notes that have become due solely by such acceleration,
         have been cured or waived as provided in Section 5.14.

         No such rescission shall affect any subsequent Default or impair any
right consequent thereon.

         SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
INDENTURE TRUSTEE.

         Subject to the provisions of Section 3.01 and the following sentence,
if an Event of Default occurs and is continuing, the Indenture Trustee shall (at
the direction of the Note Insurer) and may, with the prior written consent of
the Note Insurer, proceed to protect and enforce its rights and the rights of
the Noteholders and the Note Insurer by any Proceedings the Indenture Trustee
deems appropriate to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or enforce any other proper remedy.
Any proceedings brought by the Indenture Trustee on behalf of the Noteholders
and the Note Insurer or any Noteholder against the Issuer shall be limited to
the preservation, enforcement and foreclosure of the liens, assignments, rights
and security interests under the Indenture and no attachment, execution or other
unit or process shall be sought, issued or levied upon any assets, properties or
funds of the Issuer, other than the Trust Estate relative to the Notes in
respect of which such Event of Default has occurred. If there is a foreclosure
of any such liens, assignments, rights and security interests under this
Indenture, by private power of sale or otherwise, no judgment for any deficiency
upon the indebtedness represented by the Notes may be sought or obtained by the
Indenture Trustee or any Noteholder against the Issuer. The Indenture Trustee
shall be entitled to recover the costs and expenses expended by it pursuant to
this Article V including reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee, its agents and counsel.

         SECTION 5.04. REMEDIES.

         If an Event of Default shall have occurred and be continuing and the
Notes have been declared due and payable and such declaration and its
consequences have not been rescinded and annulled, the Indenture Trustee, at the
direction of the Note Insurer (subject to Section 5.17, to

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<PAGE>

the extent applicable) shall, for the benefit of the Noteholders and the Note
Insurer, do one or more of the following:

         (a) institute Proceedings for the collection of all amounts then
payable on the Notes, or under this Indenture, whether by declaration or
otherwise, enforce any judgment obtained, and collect from the Issuer moneys
adjudged due, subject in all cases to the provisions of Sections 3.01 and 5.03;

         (b) in accordance with Section 5.17, sell the Trust Estate or any
portion thereof or rights or interest therein, at one or more public or private
Sales called and conducted in any manner permitted by law; (c) institute
Proceedings from time to time for the complete or partial foreclosure of this
Indenture with respect to the Trust Estate;

         (d) exercise any remedies of a secured party under the Uniform
Commercial Code and take any other appropriate action to protect and enforce the
rights and remedies of the Indenture Trustee or the Holders of the Notes and the
Note Insurer hereunder; and

         (e) refrain from selling the Trust Estate and apply all Remittable
Funds pursuant to Section 5.07.

         SECTION 5.05. INDENTURE TRUSTEE MAY FILE PROOFS OF CLAIM.

         In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, composition or other judicial
Proceeding relative to the Issuer or any other obligor upon any of the Notes or
the property of the Issuer or of such other obligor or their creditors, the
Indenture Trustee (irrespective of whether the Notes shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Indenture Trustee shall have made any demand on the Issuer for the
payment of any overdue principal or interest) shall, with the prior written
consent of the Note Insurer, be entitled and empowered, by intervention in such
Proceeding or otherwise to:

                  (i)  file and prove a claim for the whole amount of principal
         and interest owing and unpaid in respect of the Notes and file such
         other papers or documents as may be necessary or advisable in order to
         have the claims of the Indenture Trustee (including any claim for the
         reasonable compensation, expenses, disbursements and advances of the
         Indenture Trustee, its agents and counsel) and of the Noteholders and
         the Note Insurer allowed in such Proceeding, and

                  (ii) collect and receive any moneys or other property payable
         or deliverable on any such claims and to distribute the same; and any
         receiver, assignee, trustee, liquidator, or sequestrator (or other
         similar official) in any such Proceeding is hereby authorized by each
         Noteholder and the Note Insurer to make such payments to the Indenture
         Trustee and, in the event that the Indenture Trustee shall consent to
         the making of such payments directly to the Noteholders and the Note
         Insurer, to pay to the Indenture Trustee any amount due to it for the
         reasonable compensation, expenses, disbursements and advances of the
         Indenture Trustee, its agents and counsel.

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<PAGE>

         Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder or the Note Insurer any plan of reorganization, arrangement,
adjustment or composition affecting any of the Notes or the rights of any Holder
thereof, or the Note Insurer, or to authorize the Indenture Trustee to vote in
respect of the claim of any Noteholder or the Note Insurer in any such
Proceeding.

         SECTION 5.06. INDENTURE TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION
OF NOTES.

         All rights of action and claims under this Indenture or any of the
Notes may be prosecuted and enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any Proceeding
relating thereto, and any such Proceeding instituted by the Indenture Trustee,
at the direction of the Note Insurer, shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall be for the
ratable benefit of the Holders of the Notes and the Note Insurer in respect of
which such judgment has been recovered after payment of amounts required to be
paid pursuant to clause (i) Section 5.07.

         SECTION 5.07. APPLICATION OF MONEY COLLECTED.

         If the Notes have been declared due and payable following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, any money collected by the Indenture Trustee pursuant to this Article
or otherwise and any other monies that may then be held or thereafter received
by the Indenture Trustee as security shall be applied in the following order, at
the date or dates fixed by the Indenture Trustee and, in case of the payment of
the entire amount due on account of principal of, and interest on, the Notes,
upon presentation and surrender thereof:

                  (i)  to the Servicer and Indenture Trustee, the unpaid Monthly
         Servicing Fee and Indenture Trustee's Fee due under this Indenture;

                  (ii) to the Servicer any Monthly Advances and Servicing
         Advances previously made that are reimbursable to the Servicer (other
         than those included in liquidation expenses for any Liquidated Mortgage
         Loan and reimbursed from the related Liquidation Proceeds and from
         Insurance Proceeds) under the Servicing Agreement;

                  (iii) to the PMI Insurer, the amount owing to the PMI Insurer
         for the premium payable in respect of the PMI Mortgage Loans;

                  (iv) to the Note Insurer, the Note Insurer Premium due under
         the Insurance Agreement;

                  (v)  to the Noteholders, the Note Interest due under this
         Indenture;

                  (vi) to the Noteholders, the amount of Monthly Principal for
         the Notes with respect to such date, in reduction of the Note Balance
         until the Note Balance is reduced to zero;

                  (vii) to the Note Insurer, the amount owing to the Note
         Insurer under the Insurance Agreement for reimbursement for prior draws
         made on the Insurance Policy in

                                      -46-
<PAGE>

         respect of the Notes and any other amounts owing to the Note Insurer
         under the Insurance Agreement (including any unpaid Note Insurer
         Premium in respect of the Notes);

                  (viii) to the Noteholders, the Overcollateralization
         Deficiency Amount, if any, due under this Indenture;

                  (ix) to the Indenture Trustee pursuant to the terms of the
         Servicing Agreement, Transition Expenses in excess of $50,000, if any,
         and other costs and expenses, if not paid by the Servicer pursuant to
         the Servicing Agreement or the Custodial Agreement; and

                  (x)  to the payment of the Note Balance of the Outstanding
         Notes, up to the amount of their Current Note Balances, without
         preference or priority of any kind;

         SECTION 5.08. LIMITATION ON SUITS.

         No Holder of a Note shall have any right to institute any Proceedings,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless:

                  (1)  such Holder has previously given written notice to the
         Indenture Trustee and the Note Insurer of a continuing Event of
         Default;

                  (2)  the Holders of Notes representing not less than 25% of
         the Note Balance of the Outstanding Notes shall have made written
         request to the Indenture Trustee to institute Proceedings in respect of
         such Event of Default in its own name as Indenture Trustee hereunder;

                  (3)  such Holder or Holders have offered to the Indenture
         Trustee indemnity in full against the costs, expenses and liabilities
         to be incurred in compliance with such request;

                  (4)  the Indenture Trustee for 60 days after its receipt of
         such notice,
         request and offer of indemnity has failed to institute any such
         Proceeding;

                  (5)  no direction inconsistent with such written request has
         been given to the Indenture Trustee during such 60-day period by the
         Holders of Notes representing more than 50% of the Note Balance of the
         Outstanding Notes; and

                  (6)  the consent of the Note Insurer shall have been obtained;
         it being understood and intended that no one or more Holders of Notes
         shall have any right in any manner whatever by virtue of, or by
         availing of, any provision of this Indenture to affect, disturb or
         prejudice the rights of any other Holders of Notes or to obtain or to
         seek to obtain priority or preference over any other Holders or to
         enforce any right under this Indenture, except in the manner herein
         provided and for the equal and ratable benefit of all the Holders of
         Notes.

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<PAGE>

         In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than 50% of the Note Balances of the Outstanding Notes,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken notwithstanding any other provision herein to the contrary.

         SECTION 5.09. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE PRINCIPAL
AND INTEREST.

         Subject to the provisions in this Indenture (including Sections 3.01
and 5.03) limiting the right to recover amounts due on a Note to recovery from
amounts in the Trust Estate, the Holder of any Note shall have the right, to the
extent permitted by applicable law, which right is absolute and unconditional,
to receive payment of each installment of interest on such Note on the
respective Payment Date for such installments of interest, to receive payment of
each installment of principal of such Note when due (or, in the case of any Note
called for redemption, on the date fixed for such redemption) and to institute
suit for the enforcement of any such payment, and such right shall not be
impaired without the consent of such Holder.

         SECTION 5.10. RESTORATION OF RIGHTS AND REMEDIES.

         If the Indenture Trustee, the Note Insurer or any Noteholder has
instituted any Proceeding to enforce any right or remedy under this Indenture
and such Proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Indenture Trustee, the Note Insurer or to such
Noteholder, then and in every such case the Issuer, the Indenture Trustee, the
Note Insurer and the Noteholders shall, subject to any determination in such
Proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Indenture Trustee, the
Note Insurer and the Noteholders shall continue as though no such Proceeding had
been instituted.

         SECTION 5.11. RIGHTS AND REMEDIES CUMULATIVE.

         No right or remedy herein conferred upon or reserved to the Indenture
Trustee, the Note Insurer or to the Noteholders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.

         SECTION 5.12. DELAY OR OMISSION NOT WAIVER.

         No delay or omission of the Indenture Trustee, the Note Insurer or of
any Holder of any Note to exercise any right or remedy accruing upon any Event
of Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy given
by this Article or by law to the Indenture Trustee, the Note Insurer or to the
Noteholders may be exercised from time to time, and as often as may be deemed
expedient, by the Indenture Trustee, the Note Insurer or by the Noteholders with
the prior consent of the Note Insurer, as the case may be.

                                      -48-
<PAGE>

         SECTION 5.13. CONTROL BY NOTEHOLDERS.

         The Holders of Notes representing more than 50% of the Note Balance of
the Outstanding Notes on the applicable Record Date shall, with the consent of
the Note Insurer, have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Indenture Trustee or
exercising any trust or power conferred on the Indenture Trustee; provided that:

                  (1)  such direction shall not be in conflict with any rule of
         law or with this Indenture;

                  (2)  any direction to the Indenture Trustee to undertake a
         Sale of the Trust Estate shall be by the Holders of Notes representing
         the percentage of the Note Balance of the Outstanding Notes specified
         in Section 5.17(b)(1), unless Section 5.17(b)(2) is applicable; and

                  (3)  the Indenture Trustee may take any other action deemed
         proper by the Indenture Trustee that is not inconsistent with such
         direction; provided, however, that, subject to Section 6.01, the
         Indenture Trustee need not take any action that it determines might
         involve it in liability or be unjustly prejudicial to the Noteholders
         not consenting.

         SECTION 5.14. WAIVER OF PAST DEFAULTS.

         The Holders of Notes representing more than 50% of the Note Balance of
the Outstanding Notes on the applicable Record Date may on behalf of the Holders
of all the Notes, and with the consent of the Note Insurer, waive any past
Default hereunder and its consequences, except a Default:

                  (1)  in the payment of principal or any installment of
         interest on any Note; or

                  (2)  in respect of a covenant or provision hereof that under
         Section 9.02 cannot be modified or amended without the consent of the
         Holder of each Outstanding Note affected.

         Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.

         SECTION 5.15. UNDERTAKING FOR COSTS.

         All parties to this Indenture agree, and each Holder of any Note by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Indenture Trustee for any action
taken, suffered or omitted by it as Indenture Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply to any suit

                                      -49-
<PAGE>

instituted by the Indenture Trustee, to any suit instituted by any Noteholder,
or group of Noteholders, holding in the aggregate Notes representing more than
10% of the Note Balance of the Outstanding Notes, or to any suit instituted by
any Noteholder for the enforcement of the payment of any Required Payment Amount
on any Note on or after the related Payment Date or for the enforcement of the
payment of principal of any Note on or after the Final Maturity Date (or, in the
case of any Note called for redemption, on or after the applicable Redemption
Date).

         SECTION 5.16. WAIVER OF STAY OR EXTENSION LAWS.

         The Issuer covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension of law wherever enacted,
now or at any time hereafter in force, that may affect the covenants in, or the
performance of, this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Indenture Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.

         SECTION 5.17. SALE OF TRUST ESTATE.

         (a) The power to effect any sale (a "Sale") of any portion of the Trust
Estate pursuant to Section 5.04 shall not be exhausted by any one or more Sales
as to any portion of the Trust Estate remaining unsold, but shall continue
unimpaired until the entire Trust Estate shall have been sold or all amounts
payable on the Notes and under this Indenture with respect thereto shall have
been paid. The Indenture Trustee may from time to time postpone any public Sale
by public announcement made at the time and place of such Sale.

         (b)  To the extent permitted by law, the Indenture Trustee shall not
(unless directed by the Note Insurer) in any private Sale sell or otherwise
dispose of the Trust Estate, or any portion thereof, unless:

                  (1)  the Holders of Notes representing not less than 50% of
         the Note Balance of the Notes then Outstanding consent to or direct the
         Indenture Trustee to make such Sale; or

                  (2)  the proceeds of such Sale would be not less than the
         entire amount that would be payable to the Holders of the Notes, in
         full payment thereof in accordance with Section 5.07, on the Payment
         Date next succeeding the date of such Sale.

         The purchase by the Indenture Trustee of all or any portion of the
Trust Estate at a private Sale shall not be deemed a Sale or disposition thereof
for purposes of this Section 5.17(b). In the absence of a Note Insurer Default,
no sale hereunder shall be effective without the consent of the Note Insurer.

         (c)  Unless the Holders of all Outstanding Notes have otherwise
consented or directed the Indenture Trustee, at any public Sale of all or any
portion of the Trust Estate at which a minimum bid equal to or greater than the
amount described in paragraph (2) of subsection (b) of this Section 5.17 has not
been established by the Indenture Trustee and no Person bids an amount

                                      -50-
<PAGE>

equal to or greater than such amount, the Indenture Trustee, acting in its
capacity as Indenture Trustee on behalf of the Noteholders, shall prevent such
sale and bid an amount (which shall include the Indenture Trustee's right, in
its capacity as Indenture Trustee, to credit bid) at least $1.00 more than the
highest other bid in order to preserve the Trust Estate on behalf of the
Noteholders.

         (d)  In connection with a Sale of all or any portion of the Trust
Estate:

                  (1)  any Holder or Holders of Notes may bid for and purchase
         the property offered for Sale, and upon compliance with the terms of
         sale may hold, retain and possess and dispose of such property, without
         further accountability, and may, in paying the purchase money therefor,
         deliver any Outstanding Notes or claims for interest thereon in lieu of
         cash up to the amount that shall, upon distribution of the net proceeds
         of such Sale, be payable thereon, and such Notes, in case the amounts
         so payable thereon shall be less than the amount due thereon, shall be
         returned to the Holders thereof after being appropriately stamped to
         show such partial payment;

                  (2)  the Indenture Trustee may bid for and acquire the
         property offered for Sale in connection with any public Sale thereof,
         and, in lieu of paying cash therefor, may make settlement for the
         purchase price by crediting the gross Sale price against the sum of (A)
         the amount that would be payable to the Holders of the Notes as a
         result of such Sale in accordance with Section 5.07 on the Payment Date
         next succeeding the date of such Sale and (B) the expenses of the Sale
         and of any Proceedings in connection therewith which are reimbursable
         to it, without being required to produce the Notes in order to complete
         any such Sale or in order for the net Sale price to be credited against
         such Notes, and any property so acquired by the Indenture Trustee shall
         be held and dealt with by it in accordance with the provisions of this
         Indenture;

                  (3)  the Indenture Trustee shall execute and deliver an
         appropriate instrument of conveyance transferring its interest in any
         portion of the Trust Estate in connection with a Sale thereof,

                  (4)  the Indenture Trustee is hereby irrevocably appointed the
         agent and attorney-in-fact of the Issuer to transfer and convey its
         interest in any portion of the Trust Estate in connection with a Sale
         thereof, and to take all action necessary to effect such Sale; and

                  (5)  no purchaser or transferee at such a Sale shall be bound
         to ascertain the Indenture Trustee's authority, inquire into the
         satisfaction of any conditions precedent or see to the application of
         any moneys.

         SECTION 5.18. ACTION ON NOTES.

         The Indenture Trustee's right to seek and recover judgment under this
Indenture shall not be affected by the seeking, obtaining or application of any
other relief under or with respect to this Indenture. Neither the lien of this
Indenture nor any rights or remedies of the Indenture Trustee, the Note Insurer
or the Holders of Notes shall be impaired by the recovery of any

                                      -51-
<PAGE>

judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Trust Estate.

         SECTION 5.19. NO RECOURSE TO OTHER TRUST ESTATES OR OTHER ASSETS OF THE
ISSUER.

         The Trust Estate Granted to the Indenture Trustee as security for the
Notes serves as security only for the Notes. Holders of the Notes shall have no
recourse against the trust estate granted as security for any other series of
Notes issued by the Issuer, and no judgment against the Issuer for any amount
due with respect to the Notes may be enforced against either the trust estate
securing any other series or any other assets of the Issuer, nor may any
prejudgment lien or other attachment be sought against any such other trust
estate or any other assets of the Issuer.

         SECTION 5.20. APPLICATION OF THE TRUST INDENTURE ACT.

         Pursuant to Section 316(a) of the TIA, all provisions automatically
provided for in Section 316(a) are hereby expressly excluded.

                                   ARTICLE VI

                              THE INDENTURE TRUSTEE

         SECTION 6.01. DUTIES OF INDENTURE TRUSTEE.

         (a)  If an Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise, as
a prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.

         (b)  Except during the continuance of an Event of Default:

                  (1)  The Indenture Trustee need perform only those duties that
         are specifically set forth in this Indenture and no others and no
         implied covenants or obligations shall be read into this Indenture
         against the Indenture Trustee; and

                  (2)  In the absence of bad faith on its part, the Indenture
         Trustee may request and conclusively rely, as to the truth of the
         statements and the correctness of the opinions expressed therein, upon
         certificates or opinions furnished to the Indenture Trustee and
         conforming to the requirements of this Indenture. The Indenture Trustee
         shall, however, examine such certificates and opinions to determine
         whether they conform on their face to the requirements of this
         Indenture.

         (c)  The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:

                  (1) This paragraph does not limit the effect of subsection (b)
         of this Section 6.01;

                                      -52-
<PAGE>

                  (2) The Indenture Trustee shall not be liable for any error of
         judgment made in good faith by a Responsible Officer, unless it is
         proved that the Indenture Trustee was negligent in ascertaining the
         pertinent facts; and

                  (3) The Indenture Trustee shall not be liable with respect to
         any action it takes or omits to take in good faith in accordance with a
         direction received by it pursuant to Section 5.13 or 5.17 or exercising
         any trust or power conferred upon the Indenture Trustee under this
         Indenture.

         (d)  Except with respect to duties of the Indenture Trustee prescribed
by the TIA, as to which this Section 6.01(d) shall not apply, for all purposes
under this Indenture, the Indenture Trustee shall not be deemed to have notice
or knowledge of any Event of Default described in Section 5.01(2), 5.01(5) or
5.01(6) or any Default described in Section 5.01(3) or 5.01(4) or of any event
described in Section 3.05 unless a Responsible Officer assigned to and working
in the Indenture Trustee's corporate trust department has actual knowledge
thereof or unless written notice of any event that is in fact such an Event of
Default or Default is received by the Indenture Trustee at the Corporate Trust
Office, and such notice references the Notes generally, the Issuer, the Trust
Estate or this Indenture.

         (e)  No provision of this Indenture shall require the Indenture Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it under the Servicing Agreement or otherwise.

         (f)  Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to the provisions of this Section.

         (g) Notwithstanding any extinguishment of all right, title and interest
of the Issuer in and to the Trust Estate following an Event of Default and a
consequent declaration of acceleration of the Maturity of the Notes, whether
such extinguishment occurs through a Sale of the Trust Estate to another Person,
the acquisition of the Trust Estate by the Indenture Trustee or otherwise, the
rights, powers and duties of the Indenture Trustee with respect to the Trust
Estate (or the proceeds thereof) and the Noteholders and the Note Insurer and
the rights of Noteholders and the Note Insurer shall continue to be governed by
the terms of this Indenture.

         (h)  The Indenture Trustee or any Custodian appointed pursuant to
Section 8.13 shall at all times retain possession of the Mortgage Files in the
State of              or the State of             , except for those Mortgage
Files or portions thereof released to the Servicer or the Note Insurer pursuant
to this Indenture or the Servicing Agreement.

         SECTION 6.02. NOTICE OF DEFAULT.

         Immediately after the occurrence of any Default known to the Indenture
Trustee, the Indenture Trustee shall transmit by mail to the Note Insurer and
the Underwriters notice of each such Default and, within 90 days after the
occurrence of any Default known to the Indenture Trustee, the Indenture Trustee
shall transmit by mail to all Holders of Notes notice of each such Default,
unless such Default shall have been cured or waived; provided, however, that in
no

                                      -53-
<PAGE>

event shall the Indenture Trustee provide notice, or fail to provide notice
of a Default known to the Indenture Trustee in a manner contrary to the
requirements of the Trust Indenture Act. Concurrently with the mailing of any
such notice to the Holders of the Notes, the Indenture Trustee shall transmit by
mail a copy of such notice to the Rating Agencies.

         SECTION 6.03. RIGHTS OF INDENTURE TRUSTEE.

         (a) Except as otherwise provided in Section 6.01, the Indenture Trustee
may rely on any document believed by it to be genuine and to have been signed or
presented by the proper Person. The Indenture Trustee need not investigate any
fact or matter stated in any such document.

         (b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel reasonably
satisfactory in form and substance to the Indenture Trustee. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on any such Officer's Certificate or Opinion of Counsel.

         (c) With the consent of the Note Insurer, which consent shall not be
unreasonably withheld, the Indenture Trustee may act through agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.

         (d) The Indenture Trustee shall not be liable for any action it takes
or omits to take in good faith that it believes to be authorized or within its
rights or powers.

         SECTION 6.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES.

         The recitals contained herein and in the Notes, except the certificates
of authentication on the Notes, shall be taken as the statements of the Issuer,
and the Indenture Trustee and the Authenticating Agent assume no responsibility
for their correctness. The Indenture Trustee makes no representations with
respect to the Trust Estate or as to the validity or sufficiency of this
Indenture or of the Notes. The Indenture Trustee shall not be accountable for
the use or application by the Issuer of the Notes or the proceeds thereof or any
money paid to the Issuer or upon Issuer Order pursuant to the provisions hereof.

         SECTION 6.05. MAY HOLD NOTES.

         The Indenture Trustee, any Agent, or any other agent of the Issuer, in
its individual or any other capacity, may become the owner or pledgee of Notes
and, subject to Sections 6.07 and 6.13, may otherwise deal with the Issuer or
any Affiliate of the Issuer with the same rights it would have if it were not
Indenture Trustee, Agent or such other agent.

         SECTION 6.06. MONEY HELD IN TRUST.

         Money held by the Indenture Trustee in trust hereunder need not be
segregated from other funds except to the extent required by this Indenture or
by law. The Indenture Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Issuer and
except to the extent of income or other gain on investments that are

                                      -54-
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obligations of the Indenture Trustee, in its commercial capacity, and income or
other gain actually received by the Indenture Trustee on investments, which are
obligations of others.

         SECTION 6.07. ELIGIBILITY, DISQUALIFICATION.

         Irrespective of whether this Indenture is qualified under the TIA, this
Indenture shall always have a Indenture Trustee who satisfies the requirements
of TIA Sections 310(a)(1) and 310(a)(5). The Indenture Trustee shall always have
a combined capital and surplus as stated in Section 6.08. The Indenture Trustee
shall be subject to TIA Section 310(b).

         SECTION 6.08. INDENTURE TRUSTEE'S CAPITAL AND SURPLUS.

         The Indenture Trustee shall at all times have a combined capital and
surplus of at least $50,000,000 or shall be a member of a bank holding company
system, the aggregate combined capital and surplus of which is at least
$100,000,000 and shall at all times be rated " " or better by [Rating Agency]
and " " or better by [Rating Agency]; provided, however, that the Indenture
Trustee's separate capital and surplus shall at all times be at least the amount
required by TIA Section 310(a)(2). If the Indenture Trustee publishes annual
reports of condition of the type described in TIA Section 310(a)(1), its
combined capital and surplus for purposes of this Section 6.08 shall be as set
forth in the latest such report. If at any time the Indenture Trustee shall
cease to be eligible in accordance with the provisions of this Section 6.08 and
TIA Section 310(a)(2), it shall resign immediately in the manner and with the
effect hereinafter specified in this Article.

         SECTION 6.09. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.

         (a) No resignation or removal of the Indenture Trustee and no
appointment of a successor Indenture Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Indenture
Trustee under Section 6.10.

         (b) The Indenture Trustee may resign at any time by giving written
notice thereof to the Issuer, the Note Insurer and each Rating Agency, in which
event the Issuer will, with the consent of the Note Insurer (and if the Issuer
fails to do so within 30 days, the Note Issuer may) appoint a successor
Indenture Trustee. If an instrument of acceptance by a successor Indenture
Trustee shall not have been delivered to the Indenture Trustee within 30 days
after the giving of such notice of resignation, the resigning Indenture Trustee
may petition any court of competent jurisdiction for the appointment of a
successor Indenture Trustee.

         (c) The Indenture Trustee may be removed at any time by the Note
Insurer or, with the consent of the Note Insurer, by Act of the Holders
representing at least 51% of the Note Balance of the Outstanding Notes, by
written notice delivered to the Indenture Trustee and to the Issuer.

         (d) If at any time:

                  (1) the Indenture Trustee shall have a conflicting interest
         prohibited by Section 6.07 and shall fail to resign or eliminate such
         conflicting interest in accordance with Section 6.07 after written
         request therefor by the Issuer or by any Noteholder; or

                                      -55-
<PAGE>

                  (2) the Indenture Trustee shall cease to be eligible under
         Section 6.08 or shall become incapable of acting or shall be adjudged a
         bankrupt or insolvent, or a receiver of the Indenture Trustee or of its
         property shall be appointed, or any public officer shall take charge or
         control of the Indenture Trustee or of its property or affairs for the
         purpose of rehabilitation, conservation or liquidation;

then, in any such case, (i) the Issuer by an Issuer Order, with the consent of
the Note Insurer, may remove the Indenture Trustee, and the Issuer shall join
with the Indenture Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to appoint a successor Indenture
Trustee acceptable to the Note Insurer and to vest in such successor Indenture
Trustee any property, title, right or power deemed necessary or desirable,
subject to the other provisions of this Indenture; provided, however, if the
Issuer and the Note Insurer do not join in such appointment within fifteen (15)
days after the receipt by it of a request to do so, or in case an Event of
Default has occurred and is continuing, the Indenture Trustee may petition a
court of competent jurisdiction to make such appointment, or (ii) subject to
Section 5.15, and, in the case of a conflicting interest as described in clause
(1) above, unless the Indenture Trustee's duty to resign has been stayed as
provided in TIA Section 310(b), the Note Insurer or any Noteholder who has been
a bona fide Holder of a Note for at least six months may, on behalf of himself
and all others similarly situated, with the consent of the Note Insurer,
petition any court of competent jurisdiction for the removal of the Indenture
Trustee and the appointment of a successor Indenture Trustee.

         (e) If the Indenture Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Indenture
Trustee for any cause, the Issuer (and if the Issuer fails to do so within 30
days, the Note Issuer may), by an Issuer Order shall promptly appoint a
successor Indenture Trustee acceptable to the Note Insurer. If within one year
after such resignation, removal or incapability or the occurrence of such
vacancy a successor Indenture Trustee shall be appointed by the Note Insurer or,
with the consent of the Note Insurer, by Act of the Holders of Notes
representing more than 50% of the Note Balance of the Outstanding Notes
delivered to the Issuer and the retiring Indenture Trustee, the successor
Indenture Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Indenture Trustee and supersede the successor
Indenture Trustee appointed by the Issuer. If no successor Indenture Trustee
shall have been so appointed by the Issuer, the Note Insurer or Noteholders and
shall have accepted appointment in the manner hereinafter provided, any
Noteholder who has been a bona fide Holder of a Note for at least six months
may, on behalf of himself and all others similarly situated, with the consent of
the Note Insurer, petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.

         (f) The Issuer shall give notice of each resignation and each removal
of the Indenture Trustee and each appointment of a successor Indenture Trustee
to the Holders of Notes and the Note Insurer. Each notice shall include the name
of the successor Indenture Trustee and the address of its Corporate Trust
Office.

         SECTION 6.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.

         Every successor Indenture Trustee appointed hereunder shall execute,
acknowledge and deliver to the Issuer, the Note Insurer and the retiring
Indenture Trustee an instrument accepting

                                      -56-
<PAGE>

such appointment, and thereupon the resignation or removal of the retiring
Indenture Trustee shall become effective and such successor Indenture Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Indenture Trustee.
Notwithstanding the foregoing, on request of the Issuer or the successor
Indenture Trustee, such retiring Indenture Trustee shall, upon payment of its
charges, execute and deliver an instrument transferring to such successor
Indenture Trustee all the rights, powers and trusts of the retiring Indenture
Trustee, and shall duly assign, transfer and deliver to such successor Indenture
Trustee all property and money held by such retiring Indenture Trustee
hereunder. Upon request of any such successor Indenture Trustee, the Issuer
shall execute and deliver any and all instruments for more fully and certainly
vesting in and confirming to such successor Indenture Trustee all such rights,
powers and trusts.

         No successor Indenture Trustee shall accept its appointment unless at
the time of such acceptance such successor Indenture Trustee shall be qualified
and eligible under this Article.

         SECTION 6.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS OF INDENTURE TRUSTEE.

         Any corporation into which the Indenture Trustee 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 Indenture Trustee
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of the Indenture Trustee, shall be the successor of
the Indenture Trustee hereunder, provided such corporation shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto. In case
any Notes have been authenticated, but not delivered, by the Indenture Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Indenture Trustee may adopt such authentication and deliver the
Notes so authenticated with the same effect as if such successor Indenture
Trustee had authenticated such Notes.

         SECTION 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER.

         The Indenture Trustee (and any co-trustee or separate trustee) shall be
subject to TIA Section 311(a), excluding any creditor relationship listed in TIA
Section 31l(b), and an Indenture Trustee (and any co-trustee or separate
trustee) who has resigned or been removed shall be subject to TIA Section 311(a)
to the extent indicated.

         SECTION 6.13. CO-INDENTURE TRUSTEES AND SEPARATE INDENTURE TRUSTEES.

         At any time or times, for the purpose of meeting the legal requirements
of the TIA or of any jurisdiction in which any of the Trust Estate may at the
time be located, the Indenture Trustee shall have power to appoint, and, upon
the written request of the Indenture Trustee, of the Note Insurer or of the
Holders of Notes representing more than 50% of the Note Balance of the
Outstanding Notes with respect to which a co-trustee or separate trustee is
being appointed with the consent of the Note Insurer, the Issuer shall for such
purpose jointly with the Indenture Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to appoint,
one or more Persons approved by the Indenture Trustee either to act as

                                      -57-
<PAGE>

co-trustee, jointly with the Indenture Trustee, of all or any part of the Trust
Estate, or to act as separate trustee of any such property, in either case with
such powers as may be provided in the instrument of appointment, and to vest in
such Person or Persons in the capacity aforesaid, any property, title, right or
power deemed necessary or desirable, subject to the other provisions of this
Section. If the Issuer does not join in such appointment within 15 days after
the receipt by it of a request to do so, or in case an Event of Default has
occurred and is continuing, the Indenture Trustee alone shall have power to make
such appointment. All fees and expenses of any co-trustee or separate trustee
shall be payable by the Issuer.

         Should any written instrument from the Issuer be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right or power, any and all
such instruments shall, on request, be executed, acknowledged and delivered by
the Issuer.

         Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms:

                  (1) The Notes shall be authenticated and delivered and all
         rights, powers, duties and obligations hereunder in respect of the
         custody of securities, cash and other personal property held by, or
         required to be deposited or pledged with, the Indenture Trustee
         hereunder, shall be exercised, solely by the Indenture Trustee.

                  (2) The rights, powers, duties and obligations hereby
         conferred or imposed upon the Indenture Trustee in respect of any
         property covered by such appointment shall be conferred or imposed upon
         and exercised or performed by the Indenture Trustee or by the Indenture
         Trustee and such co-trustee or separate trustee jointly, as shall be
         provided in the instrument appointing such co-trustee or separate
         trustee, except to the extent that under any law of any jurisdiction in
         which any particular act is to be performed, the Indenture Trustee
         shall be incompetent or unqualified to perform such act, in which event
         such rights, powers, duties and obligations shall be exercised and
         performed by such co-trustee or separate trustee.

                  (3) The Indenture Trustee at any time, by an instrument in
         writing, executed by it, with the concurrence of the Issuer evidenced
         by an Issuer Order, may accept the resignation of or remove any
         co-trustee or separate trustee appointed under this Section, and, in
         case an Event of Default has occurred and is continuing, the Indenture
         Trustee shall have power to accept the resignation of, or remove, any
         such co-trustee or separate trustee without the concurrence of the
         Issuer upon the written request of the Indenture Trustee, the Issuer
         shall join with the Indenture Trustee in the execution, delivery and
         performance of all instruments and agreements necessary or proper to
         effectuate such resignation or removal. A successor to any co-trustee
         or separate trustee so resigned or removed may be appointed in the
         manner provided in this Section.

                  (4) No co-trustee or separate trustee hereunder shall be
         personally liable by reason of any act or omission of the Indenture
         Trustee, or any other such trustee hereunder.

                                      -58-
<PAGE>

                  (5) Any Act of Noteholders delivered to the Indenture Trustee
         shall be deemed to have been delivered to each such co-trustee and
         separate trustee.

         SECTION 6.14. AUTHENTICATING AGENTS.

         The Issuer shall appoint an Authenticating Agent with power to act on
its behalf and subject to its direction in the authentication and delivery of
the Notes designated for such authentication by the Issuer and containing
provisions therein for such authentication (or with respect to which the Issuer
has made other arrangements, satisfactory to the Indenture Trustee and such
Authenticating Agent, for notation on the Notes of the authority of an
Authenticating Agent appointed after the initial authentication and delivery of
such Notes) in connection with transfers and exchanges under Section 2.06, as
fully to all intents and purposes as though the Authenticating Agent had been
expressly authorized by that Section to authenticate and deliver Notes. For all
purposes of this Indenture (other than in connection with the authentication and
delivery of Notes pursuant to Sections 2.05 and 2.11 in connection with their
initial issuance), the authentication and delivery of Notes by the
Authenticating Agent pursuant to this Section shall be deemed to be the
authentication and delivery of Notes "by the Indenture Trustee." Such
Authenticating Agent shall at all times be a Person that both meets the
requirements of Section 6.07 for the Indenture Trustee hereunder and has an
office for presentation of Notes in the United States of America. The Indenture
Trustee shall initially be the Authenticating Agent and shall be the Note
Registrar as provided in Section 2.06. The office from which the Indenture
Trustee shall perform its duties as Note Registrar and Authenticating Agent
shall be the Corporate Trust Office. Any Authenticating Agent appointed pursuant
to the terms of this Section 6.14 or pursuant to the terms of any supplemental
indenture shall deliver to the Indenture Trustee as a condition precedent to the
effectiveness of such appointment an instrument accepting the trusts, duties and
responsibilities of Authenticating Agent and of Note Registrar or co-Note
Registrar and indemnifying the Indenture Trustee for and holding the Indenture
Trustee harmless against, any loss, liability or expense (including reasonable
attorneys' fees) incurred without negligence or bad faith on its part, arising
out of or in connection with the acceptance, administration of the trust or
exercise of authority by such Authenticating Agent, Note Registrar or co-Note
Registrar.

         Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authenticating Agent, shall be the successor of the Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any further act on the part of the
parties hereto or the Authenticating Agent or such successor corporation.

         Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Issuer. The Issuer may at any time terminate the
agency of any Authenticating Agent by giving written notice of termination to
such Authenticating Agent and the Issuer. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section, the Issuer
shall promptly appoint a successor Authenticating Agent, shall give written
notice of such appointment to the Indenture Trustee, and shall mail notice of
such appointment to all Holders of Notes.

                                      -59-
<PAGE>

         The Indenture Trustee agrees, subject to Section 6.01(e), to pay to any
Authenticating Agent from time to time reasonable compensation for its services
and the Indenture Trustee shall be entitled to be reimbursed for such payments
pursuant to Section 6.04 of the Servicing Agreement. The provisions of Sections
2.09, 6.04 and 6.05 shall be applicable to any Authenticating Agent.

         SECTION 6.15. REVIEW OF MORTGAGE FILES.

         (a) Initial Certification. The Indenture Trustee shall, for the benefit
of the Noteholders and the Note Insurer, cause the Custodian to review each
Mortgage File prior to the Closing Date to ascertain that all documents required
to be included in the Mortgage File are included therein, and shall cause the
Custodian to deliver to the Seller, the Representative, the Depositor, the Note
Insurer, the Indenture Trustee and the Servicer on the Closing Date an Initial
Certification in the form attached as Exhibit E-1 to the Custodial Agreement
with respect to each Mortgage Loan to the effect that, except as specifically
noted on a schedule of exceptions thereto, (A) all documents required to be
contained in the Mortgage File are in its possession, (B) such documents have
been reviewed by it and appear regular on their face and relate to such Mortgage
Loan, and (C) based on its examination and only as to the foregoing documents,
the information set forth on the related Mortgage Loan Schedule accurately
reflects information set forth in the Mortgage File.

         It is understood that before making the Initial Certification, the
Indenture Trustee shall cause the Custodian to examine the related Mortgage Loan
Documents to confirm that:

                  (1) each Mortgage Note and Mortgage bears an original
         signature or signatures purporting to be that of the Person or Persons
         named as the maker and mortgagor/trustor or, if photocopies are
         permitted, that such copies bear a reproduction of such signature or
         signatures;

                  (2) except for the endorsement in blank, neither the Mortgage
         nor any Assignment, on the face or the reverse side(s) thereof,
         contains evidence of any unsatisfied claims, liens, security interests,
         encumbrances or restrictions on transfer;

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

                  (4) the Assignment of the related Mortgage from the Seller to
         the Indenture Trustee is in the form required pursuant to clause (e) of
         the definition of "Mortgage Loan Documents" in the Mortgage Loan Sale
         Agreement, and bears an original signature of the Seller and any other
         necessary party (or signatures purporting to be that of the Seller and
         any such other party) or, if photocopies are permitted, that such
         copies bear a reproduction of such signature or signatures;

                  (5) if intervening Assignments are included in the Mortgage
         File, each such intervening Assignment bears an original signature of
         the related mortgagee and/or the assignee (and any other necessary
         party) (or signatures purporting to be that of each such party) or, if
         photocopies are permitted, that such copies bear a reproduction of such
         signature or signatures;

                                      -60-
<PAGE>

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

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

         (b) Final Certification. On or before one year following the Closing
Date, the Indenture Trustee shall cause the Custodian to deliver to the Seller,
the Representative, the Depositor, the Note Insurer, the Indenture Trustee and
the Servicer a Final Certification in the form attached as Exhibit E-2 to the
Custodial Agreement evidencing the completeness of the Mortgage File for each
Mortgage Loan, except as specifically noted on a schedule of exceptions thereto.

         (c) In giving each of the Initial Certification and the Final
Certification, neither the Indenture Trustee nor the Custodian shall be under
any duty or obligation (1) to inspect, review or examine any such documents,
instruments, securities or other papers to determine that they or the signatures
thereto are genuine, enforceable, or appropriate for the represented purpose or
that they have actually been recorded or that they are other than what they
purport to be on their face or (2) to determine whether any Mortgage File should
include a flood insurance policy, any rider, addenda, surety or guaranty
agreement, power of attorney, buy down agreement, assumption agreement,
modification agreement, written assurance or substitution agreement.

         (d) Recordation Report. In the event that the Mortgage Loans are
required to be recorded in accordance with the provisions of the Mortgage Loan
Sale Agreement, no later than the fifth Business Day of each third month,
commencing in       200 , the Indenture Trustee shall cause the Custodian to
deliver to the Servicer and the Note Insurer a recordation report dated as of
the first day of such month, identifying those Mortgage Loans for which it has
not yet received (1) an original recorded Mortgage or a copy thereof certified
to be true and correct by the public recording office in possession of such
Mortgage or (2) an original recorded Assignment of the Mortgage to the Indenture
Trustee and any required intervening Assignments or a copy thereof certified to
be a true and correct copy by the public recording office in possession of such
Assignment.

                                      -61-
<PAGE>

         SECTION 6.16. INDENTURE TRUSTEE FEES AND EXPENSES.

         The Indenture Trustee shall be entitled to receive the Indenture
Trustee Fee on each Payment Date as provided herein. The Indenture Trustee also
shall be entitled, pursuant to the provisions of Section 6.04 of the Servicing
Agreement, to (i) payment of or reimbursement for expenses, disbursements and
advances incurred or made by the Indenture Trustee in accordance with any of the
provisions of this Agreement (including, but not limited to, the reasonable
compensation and the expenses and disbursements of its counsel and of all
persons not regularly in its employ) as provided in the Servicing Agreement, and
(ii) indemnification against losses, liability and expenses, including
reasonable attorney's fees, incurred, arising out of or in connection with this
Agreement and the Notes as provided in the Servicing Agreement.

         SECTION 6.17. TAX REPORTING.

         The Indenture Trustee shall provide on an annual basis, or as otherwise
required by the Owner Trustee, all information relating to payments on the Notes
as is reasonably required by the Owner Trustee pursuant to its obligations under
Section 2(b)(i) of the Management Agreement and Section 2.11(k) of the Deposit
Trust Agreement.

                                  ARTICLE VII

                         NOTEHOLDERS' LISTS AND REPORTS

         SECTION 7.01. ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND ADDRESSES
OF NOTEHOLDERS.

         (a) The Issuer shall furnish or cause to be furnished to the Indenture
Trustee (i) semiannually, not less than 45 days nor more than 60 days after the
Payment Date occurring closest to six months after the Closing Date and each
Payment Date occurring at six-month intervals thereafter, all information in the
possession or control of the Issuer, in such form as the Indenture Trustee may
reasonably require, as to names and addresses of the Holders of Notes, and (ii)
at such other times, as the Indenture Trustee may request in writing, within 30
days after receipt by the Issuer of any such request, a list of similar form and
content as of a date not more than 10 days prior to the time such list is
furnished; provided, however, that so long as the Indenture Trustee is the Note
Registrar, no such list shall be required to be furnished.

         (b) In addition to furnishing to the Indenture Trustee the Noteholder
lists, if any, required under subsection (a), the Issuer shall also furnish all
Noteholder lists, if any, required under Section 3.03 at the times required by
Section 3.03.

         SECTION 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO
NOTEHOLDERS.

         (a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list, if any, furnished to the Indenture Trustee as
provided in Section 7.01 and the names and addresses of the Holders of Notes
received by the Indenture Trustee in its capacity as Note Registrar. The
Indenture Trustee may destroy any list furnished to it as provided in Section
7.01 upon receipt of a new list so furnished.

                                      -62-
<PAGE>

         (b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.

         (c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA Section 312(c).

         SECTION 7.03. REPORTS BY INDENTURE TRUSTEE.

         (a) Within 60 days after December 31 of each year (the "reporting
date"), commencing with the year after the issuance of the Notes, (i) the
Indenture Trustee shall, if required by TIA Section 313(a), mail to all Holders
a brief report dated as of such reporting date that complies with TIA Section
313(a); (ii) the Indenture Trustee shall, to the extent not set forth in the
Payment Date Statement pursuant to Section 2.08(d), also mail to Holders of
Notes and the Note Insurer with respect to which it has made advances, any
reports with respect to such advances that are required by TIA Section
313(b)(2); and, the Indenture Trustee shall also mail to Holders of Notes and
the Note Insurer any reports required by TIA Section 313(b)(1). For purposes of
the information required to be included in any such reports pursuant to TIA
Sections 313(a)(2), 313(b)(1) (if applicable), or 313(b)(2), the principal
amount of indenture securities outstanding on the date as of which such
information is provided shall be the Note Balance of the then Outstanding Notes
covered by the report.

         (b) A copy of each report required under this Section 7.03 shall, at
the time of such transmission to Holders of Notes and the Note Insurer be filed
by the Indenture Trustee with the Commission and with each securities exchange
upon which the Notes are listed. The Issuer will notify the Indenture Trustee
when the Notes are listed on any securities exchange.

         SECTION 7.04. REPORTS BY ISSUER.

         The Issuer (a) shall deliver to the Indenture Trustee within 15 days
after the Issuer is required to file the same with the Commission copies of the
annual reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may by rules and
regulations prescribe) that the Issuer is required to file with the Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, and (b) shall also comply with the other provisions of TIA Section
314(a).

                                  ARTICLE VIII

           ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES

         SECTION 8.01. COLLECTION OF MONEYS.

         Except as otherwise expressly provided herein, the Indenture Trustee
may demand payment or delivery of, and shall receive and collect, directly and
without intervention or assistance of any fiscal agent or other intermediary,
all money and other property payable to or receivable by the Indenture Trustee
pursuant to this Indenture. The Indenture Trustee shall hold all such money and
property received by it as part of the Trust Estate and shall apply it as
provided in this Indenture.

                                      -63-
<PAGE>

         If the Indenture Trustee shall not have received the Remittable Funds
by close of business on any related Deposit Date, the Indenture Trustee shall,
unless the Issuer or the Servicer shall have made provisions satisfactory to the
Indenture Trustee for delivery to the Indenture Trustee of an amount equal to
such Remittable Funds, deliver a notice, with a copy to the Note Insurer, to the
Issuer and the Servicer of their failure to remit such Remittable Funds and that
such failure, if not remedied by the close of business on the Business Day after
the date upon which such notice is delivered to the Servicer, shall constitute
an event of default under the Servicing Agreement. If the Indenture Trustee
shall subsequently receive any such Remittable Funds by 2:00 p.m. Eastern Time
on such Business Day, such Event of Default shall not be deemed to have
occurred. Notwithstanding any other provision hereof, the Indenture Trustee
shall deliver to the Issuer or the Servicer, or their respective designee or
assignee, any Remittable Funds received with respect to a Mortgage Loan after
the related Deposit Date to the extent that the Issuer or the Servicer,
respectively, previously made payment or provision for payment with respect to
such Remittable Funds in accordance with this Section 8.01, and any such
Remittable Funds shall not be deemed part of the Trust Estate.

         Except as otherwise expressly provided in this Indenture and the
Servicing Agreement, if, following delivery by the Indenture Trustee of the
notice described above, the Servicer shall fail to remit the Remittable Funds on
any Deposit Date, the Indenture Trustee shall deliver a second notice to the
Servicer, the Issuer and the Note Insurer by 2:00 p.m. Eastern Time on the third
Business Day prior to the related Payment Date indicating that an event of
default occurred and is continuing under the Servicing Agreement. Thereupon, the
Indenture Trustee shall take such actions as are required of the Indenture
Trustee under Article VI of the Servicing Agreement. In addition, if a default
occurs in any other performance required under the Servicing Agreement, the
Indenture Trustee may, and upon the request of the Note Insurer or, with the
consent of the Note Insurer, the Holders of Notes representing more than 50% of
the Note Balance of the Outstanding Notes shall, take such action as may be
appropriate to enforce such payment or performance including the institution and
prosecution of appropriate Proceedings. Any such action shall be without
prejudice to any right to claim a Default or Event of Default under this
Indenture and to proceed thereafter as provided in Article V.

         SECTION 8.02. NOTE ACCOUNT; DISTRIBUTIONS.

         (a) The Issuer hereby directs the Indenture Trustee to establish, at
the Corporate Trust Office, one or more separate trust accounts that shall
collectively be the "Note Account" on or before the Closing Date. The Indenture
Trustee shall promptly deposit in the Note Account (i) all Remittable Funds
received by it from the Servicer pursuant to the Servicing Agreement, (ii) any
other funds from any deposits to be made by the Servicer pursuant to the
Servicing Agreement, (iii) any amount required to be deposited in the Note
Account pursuant to Section 8.01, (iv) all amounts received pursuant to Section
8.03, and (v) all other amounts received for deposit in the Note Account,
including the payment of any Purchase Price for a Mortgage Loan received by the
Indenture Trustee. All amounts that are deposited from time to time in a Note
Account are subject to withdrawal by the Indenture Trustee for the purposes set
forth in subsections (c) and (d) of this Section 8.02. All funds withdrawn from
the Note Account pursuant to subsection (c) of this Section 8.02 for the purpose
of making payments to the Holders of Notes shall be applied in accordance with
Section 3.03.

                                      -64-
<PAGE>

         (b) So long as no Default or Event of Default shall have occurred and
be continuing, amounts held in the Note Accounts shall be invested in Permitted
Investments, which Permitted Investments shall mature no later than the Business
Day preceding the immediately following Payment Date.

         All income or other gains, if any, from investment of moneys deposited
in the Note Accounts shall be for the benefit of the Servicer and on each
Payment Date, any such amounts may be released from the Note Accounts and paid
to the Servicer as part of its compensation for acting as Servicer. Any loss
resulting from such investment of moneys deposited in a Note Account shall be
reimbursed immediately as incurred to the Note Account by the Servicer. Subject
to Section 6.01 and the preceding sentence, neither the Indenture Trustee nor
the Servicer shall in any way be held liable by reason of any insufficiency in
the Note Accounts.

         (c) On each Payment Date, the Indenture Trustee shall withdraw amounts
on deposit in the Note Account and pay on a pari passu basis the Indenture
Trustee Fee, Transition Expenses, if any not paid by the Servicer pursuant to
the Servicing Agreement (not to exceed $50,000 in the aggregate), any gains or
income from investments on the Note Account to the Servicer and, provided notice
is given to the Indenture Trustee no later than the 4th Business Day prior to
the Payment Date and to the extent such amounts have not been withdrawn pursuant
to Sections 2.02 and 4.01 of the Servicing Agreement, amounts required to pay
the Servicer any unpaid Servicing Fees then due and to reimburse the Servicer
for Monthly Advances and Servicing Advances previously made by, and not
previously reimbursed to or retained by, the Servicer, which are so reimbursable
to the Servicer pursuant to the Servicing Agreement (as reported in writing by
the Servicer to the Indenture Trustee). After payment of such amounts, unless
the Notes have been declared due and payable pursuant to Section 5.02 and moneys
collected by the Indenture Trustee are being applied in accordance with Section
5.07, Available Funds on deposit in the Note Account on any Payment Date or
Redemption Date shall be withdrawn from such Note Account, in the amounts
required, for application on such Payment Date as follows:

                  (i) first, to the PMI Insurer, the amount owing for such
         Payment Date to the PMI Insurer for the premium payable in respect of
         the PMI Mortgage Loans;

                  (ii) second, to the Note Insurer, the Note Insurer Premium for
         such Payment Date in respect of the Notes;

                  (iii) third, to the Noteholders, the Note Interest with
         respect to such Payment Date;

                  (iv) fourth, to the Noteholders, the amount of Monthly
         Principal for the Notes with respect to such Payment Date, in reduction
         of the Note Balance until the Note Balance is reduced to zero;

                  (v) fifth, to the Note Insurer, the amount owing to the Note
         Insurer under the Insurance Agreement for reimbursement for prior draws
         made on the Insurance Policy in respect of the Notes and any other
         amounts owing to the Note Insurer under the Insurance Agreement
         (including any unpaid Note Insurer Premium in respect of the Notes);

                                      -65-
<PAGE>

                  (vi) sixth, to the Noteholders, the Overcollateralization
         Deficiency Amount, if any, on such Payment Date (after giving effect to
         application of Monthly Principal for such Payment Date), in reduction
         of the Note Balance until the Note Balance is reduced to zero; and

                  (vii) seventh, to the Indenture Trustee pursuant to the terms
         of the Servicing Agreement, Transition Expenses in excess of $50,000,
         if any, and other costs and expenses, if not paid by the Servicer
         pursuant to the Servicing Agreement or the Custody Agreement.

         (d) On or after each Payment Date, so long as the Indenture Trustee
shall have prepared a Payment Date Statement in respect of such Payment Date and
(1) shall have made, or, in accordance with Section 3.03, set aside from amounts
in the Note Account an amount sufficient to make, the payments required to be
made as set forth in Section 8.02(c) as indicated in such Payment Date
Statement, and (2) shall have set aside any amounts that have been deposited in
the Note Account prior to such time that represent amounts that are to be used
to make payments on the Notes on the next succeeding Payment Date, the cash
balance, if any, then remaining in such Note Account shall be withdrawn from
such Note Account by the Indenture Trustee and, so long as no Default or Event
of Default shall have occurred and be continuing, shall be released from the
lien of this Indenture and paid by the Indenture Trustee to the Issuer.

         (e) Any payments made by the Indenture Trustee to the Issuer pursuant
to this Section 8.02 shall be remitted to the Certificate Distribution Account
established and maintained pursuant to the Trust Agreement.

         (f) In the event the Indenture Trustee is required to establish a
Collection Account pursuant to the Servicing Agreement, the Indenture Trustee
shall establish and maintain such account in the manner required under the
Servicing Agreement. The Indenture Trustee shall reinvest amounts in the
Collection Account at the direction of the Servicer in Permitted Investments.
All income or other gains, if any, from investment of moneys deposited in the
Collection Account shall be for the benefit of the Servicer, and the Indenture
Trustee shall release any such amounts from the Collection Account to the
Servicer on each Deposit Date.

         SECTION 8.03. CLAIMS UPON THE INSURANCE POLICY; INSURANCE POLICY
PAYMENTS ACCOUNT.

         (a) If, by the close of business on the third Business Day prior to a
Payment Date, the Indenture Trustee determines that a Deficiency Amount for any
Payment Date is greater than zero or that a claim may be made under the
Insurance Policy in respect to any amount paid to Noteholders which is
recoverable in bankruptcy as a preference, then the Indenture Trustee shall give
notice to the Note Insurer by telephone or telecopy of the amount of such
Deficiency Amount or preference. Such notice of such Deficiency Amount shall be
confirmed in writing in the form set forth as Exhibit A to the Endorsement of
the Insurance Policy, to the Note Insurer and the Fiscal Agent (as defined in
the Insurance Policy), if any, at or before 12:00 noon New York time on the
third Business Day prior to such Payment Date. Following Receipt (as defined in
the Insurance Policy) by the Note Insurer of such notice in such form, the Note
Insurer will pay any amount payable under the Insurance Policy on the later to
occur of (i) 12:00 noon New

                                      -66-
<PAGE>

York time on the third Business Day following such receipt and (ii) 12:00 noon
New York time on the Payment Date to which such deficiency relates, as provided
in the Endorsement to the Insurance Policy.

         (b) The Indenture Trustee shall establish a separate special purpose
trust account for the benefit of Holders of the Notes and the Note Insurer
referred to herein as the "Insurance Policy Payments Account" over which the
Indenture Trustee shall have exclusive control and sole right of withdrawal. The
Indenture Trustee shall deposit any amount paid under the Insurance Policy in
the Insurance Policy Payments Account and distribute such amount only for
purposes of payment to Holders of Notes of the Insured Payment for which a claim
was made, and such amount may not be applied to satisfy any costs, expenses or
liabilities of the Servicer, the Indenture Trustee or the Trust Estate. Amounts
paid under the Insurance Policy shall be transferred to the Note Account in
accordance with the next succeeding paragraph and disbursed by the Indenture
Trustee to Holders of Notes in accordance with Section 8.02(c). It shall not be
necessary for such payments to be made by checks or wire transfers separate from
the checks or wire transfers used to pay the Insured Payment with other funds
available to make such payment. However, the amount of any payment of principal
of or interest on the Notes to be paid from funds transferred from the Insurance
Policy Payments Account shall be noted as provided in paragraph (c) below in the
Note Register and in the statement to be furnished to Holders of the Notes
pursuant to Section 7.02. Funds held in the Insurance Policy Payments Account
shall not be invested. Proceeds of the Insurance Policy shall not be considered
payment by the Issuer with respect to such Notes, and the Note Insurer shall
become the owner of such unpaid amounts due from the Issuer in respect of such
Insured Payments as the deemed assignee and subrogee of such Noteholders and
shall be entitled to received the reimbursement in respect thereof. The
Indenture Trustee hereby agrees on behalf of each Noteholder for the benefit of
the Note Insurer that it recognizes that to the extent the Note Insurer makes
Insured Payments for the benefit of the Noteholders, the Note Insurer will be
entitled to receive the related reimbursement in accordance with the priority of
distributions referenced in Section 8.02(c) hereof.

         (c) Each Noteholder, by its purchase of Notes, and the Indenture
Trustee hereby agree that, unless a Note Insurer Default exists and is
continuing, the Note Insurer shall have the right to direct all matters relating
to the Notes in any proceeding in a bankruptcy of the Issuer, including, without
limitation, any proceeding relating to a Preference Claim and the posting of any
surety or Note pending any such appeal.

         (d) Unless a Note Insurer Default exists and is continuing, the
Indenture Trustee shall cooperate in all respects with any reasonable request by
the Note Insurer for action to preserve or enforce the Note Insurer's rights or
interests hereunder without limiting the rights or affecting the interests of
the Noteholders as otherwise set forth herein.

         (e) The Indenture Trustee shall surrender the Insurance Policy to the
Note Insurer for cancellation upon the expiration of the term of the Insurance
Policy as provided in the Insurance Agreement.

         On any Payment Date with respect to which a claim has been made under
the Insurance Policy, the amount of any funds received by the Indenture Trustee
as a result of any claim under the Insurance Policy, to the extent required to
make the Insured Payment on such Payment Date,

                                      -67-
<PAGE>

shall be withdrawn from the Insurance Policy Payments Account and deposited in
the Distribution Account and applied by the Indenture Trustee, together with the
other funds to be withdrawn from the Note Account pursuant to Section 8.02(c)
directly to the payment in full of the Insured Payment due on the Notes. Funds
received by the Indenture Trustee as a result of any claim under the Insurance
Policy shall be deposited by the Indenture Trustee in the Insurance Policy
Payments Account and used solely for payment to the Holders of the Notes and may
not be applied to satisfy any costs, expenses or liabilities of the Servicer,
the Indenture Trustee, or the Trust Estate. Any funds remaining in the Insurance
Policy Payments Account on the first Business Day following a Payment Date shall
be remitted to the Note Insurer, pursuant to the instructions of the Note
Insurer, by the end of such Business Day.

         (f) The Indenture Trustee shall keep a complete and accurate record of
the amount of interest and principal paid in respect of any Note from moneys
received under the Insurance Policy. The Note Insurer shall have the right to
inspect such records at reasonable times during normal business hours upon one
Business Day's prior notice to the Indenture Trustee.

         (g) The Indenture Trustee shall promptly notify the Note Insurer and
Fiscal Agent of any proceeding or the institution of any action, of which a
Responsible Officer of the Indenture Trustee has actual knowledge seeking the
avoidance as a preferential transfer under applicable bankruptcy, insolvency,
receivership or similar law (a "Preference Claim") of any Insured Payment made
with respect to the Notes. Each Holder of the Notes, by its purchase of such
Certificates, the Servicer, and the Indenture Trustee hereby agree that the Note
Insurer (so long as no Note Insurer Default has occurred and is continuing) may
at any time during the continuation of any proceeding relating to a Preference
Claim direct all matters relating to such Preference Claim, including, without
limitation, (i) the direction of any appeal of any order relating to such
Preference Claim and (ii) the posting of any surety, supersedeas or performance
bond pending any such appeal. In addition and without limitation of the
foregoing, the Note Insurer shall be subrogated to the rights of the Servicer,
the Indenture Trustee, and each Holder of the Notes in the conduct of any such
Preference Claim, including, without limitation, all rights of any party to an
adversary proceeding action with respect to any court order issued in connection
with any such Preference Claim.

         SECTION 8.04. GENERAL PROVISIONS REGARDING THE NOTE ACCOUNTS AND
MORTGAGE LOANS.

         (a) Each Note Account shall relate solely to the Notes and to the
Mortgage Loans, Permitted Investments and other property securing the Notes.
Funds and other property in the Note Account shall not be commingled with any
other moneys or property of the Issuer or any Affiliate thereof except as
otherwise expressly provided for herein. Notwithstanding the foregoing, the
Indenture Trustee may hold any funds or other property received or held by it as
part of the Note Account in collective accounts maintained by it in the normal
course of its business and containing funds or property held by it for other
Persons (which may include the Issuer or an Affiliate), provided that such
accounts are under the sole control of the Indenture Trustee and the Indenture
Trustee maintains adequate records indicating the ownership of all such funds or
property and the portions thereof held for credit to a Note Account.

                                      -68-
<PAGE>

         (b) If any amounts are needed for payment from the Note Account and
sufficient uninvested funds are not available therein to make such payment, the
Indenture Trustee shall cause to be sold or otherwise converted to cash a
sufficient amount of the investments in such Note Account.

         (c) The Indenture Trustee shall, at all times while any Notes are
Outstanding, maintain in its possession, or in the possession of an agent whose
actions with respect to such items are under the sole control of the Indenture
Trustee, all certificates or other instruments, if any, evidencing any
investment of funds in the Note Account. The Indenture Trustee shall relinquish
possession of such items, or direct its agent to do so, only for purposes of
collecting the final payment receivable on such investment or certificate or, in
connection with the sale of any investment held in the Note Account, against
delivery of the amount receivable in connection with any sale.

         (d) The Indenture Trustee shall not invest any part of the Trust Estate
in Permitted Investments that constitute uncertificated securities (as defined
in Section 8-102 of the Uniform Commercial Code, as enacted in the relevant
jurisdiction) or in any other book-entry securities unless it has received an
Opinion of Counsel reasonably satisfactory in form and substance to the
Indenture Trustee setting forth, with respect to each type of security for which
authority to invest is being sought, the procedures that must be followed to
maintain the lien and security interest created by this Indenture with respect
to the Trust Estate.

         SECTION 8.05. RELEASES OF DEFECTIVE MORTGAGE LOANS.

         Upon notice or discovery that any of the representations or warranties
of the Seller set forth in Section 4(b) and Exhibit B of the Mortgage Loan Sale
Agreement was materially incorrect or otherwise misleading with respect to any
Mortgage Loan as of the time made, the Indenture Trustee shall direct the Seller
to either (i) within 60 days after the Seller receives actual knowledge of such
incorrectness, eliminate or otherwise cure the circumstance or condition in
respect of which such representation or warranty was incorrect as of the time
made, (ii) withdraw such Defective Mortgage Loan from the lien of this Indenture
following the expiration of such 60-day period by depositing to the Note Account
an amount equal to the Purchase Price for such Mortgage Loan or (iii) substitute
a Qualified Replacement Mortgage Loan for such Defective Mortgage Loan and
deposit any Purchase Price required to be paid in connection with such
substitution pursuant to Section 7 of the Mortgage Loan Sale Agreement, all as
provided in Section 7 of the Mortgage Loan Sale Agreement. Upon any purchase of
or substitution for a Defective Mortgage Loan by the Seller in accordance with
Section 7 of the Mortgage Sale Agreement, the Indenture Trustee shall deliver
the Mortgage File relating to such Defective Mortgage Loan to the Seller, and
the Issuer and the Indenture Trustee shall execute such instruments of transfer
as are necessary to convey title to such Defective Mortgage Loan to the Seller
from the lien of this Indenture.

         SECTION 8.06. REPORTS BY INDENTURE TRUSTEE TO NOTEHOLDERS; ACCESS TO
CERTAIN INFORMATION.

         On each Payment Date, the Indenture Trustee shall make available the
written report required by Section 2.08(d) to Noteholders of record as of the
related Record Date (including the

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<PAGE>

Clearing Agency, if any). via the Indenture Trustee's internet website and its
fax-on-demand service. The Indenture Trustee's internet website shall be
initially located at "                      ". Assistance in using the website
or the fax-on-demand service can be obtained by calling the Indenture Trustee's
customer service desk at             .  Noteholders that are unable to use the
above  distribution options are entitled to have a paper copy mailed to them via
first class mail by calling the customer service desk and indicating such.

         The Indenture Trustee shall make available at its Corporate Trust
Office, during normal business hours, for review by any Noteholder or any person
identified to the Indenture Trustee as a prospective Noteholder, originals or
copies of the following items: (a) the Indenture and any amendments thereto, (b)
all Payment Date Statements delivered to the Issuer since the Closing Date, (c)
any Officers' Certificates delivered to the Indenture Trustee since the Closing
Date as described in the Indenture and (d) any Accountants' reports delivered to
the Indenture Trustee since the Closing Date as required under the Servicing
Agreement. Copies of any and all of the foregoing items will be available from
the Indenture Trustee upon request; however, the Indenture Trustee will be
permitted to require payment of a sum sufficient to cover the reasonable costs
and expenses of providing such copies and shall not be required to provide such
copies without reasonable assurances that such sum will be paid.

         SECTION 8.07. TRUST ESTATE MORTGAGE FILES.

         (a) The Indenture Trustee shall release Mortgage Files or portions
thereof to the Servicer on the terms specified in the Servicing Agreement.

         (b) The Indenture Trustee shall, at such time as there are no Notes
outstanding, release all of the Trust Estate to the Issuer (other than any cash
held for the payment of the Notes pursuant to Section 3.03 or 4.02).

         SECTION 8.08. AMENDMENT TO SERVICING AGREEMENT.

         The Indenture Trustee may, without the consent of any Holder, enter
into or consent to any amendment or supplement to the Servicing Agreement for
the purpose of increasing the obligations or duties of any party other than the
Indenture Trustee or the Holders of the Notes. The Indenture Trustee may, in its
discretion, decline to enter into or consent to any such supplement or
amendment: (i) unless the Indenture Trustee receives an Opinion of Counsel that
the position of the Holders would not be materially adversely affected or
written confirmation from the Rating Agencies that the then-current implied
ratings on the Notes (without taking into account the Insurance Policy) would
not be adversely affected by such supplement or amendment or (ii) if its own
rights, duties or immunities would be adversely affected.

         SECTION 8.09. DELIVERY OF THE MORTGAGE FILES PURSUANT TO SERVICING
AGREEMENT.

         As is appropriate for the servicing or foreclosure of any Mortgage
Loan, the Indenture Trustee shall cause the Custodian to deliver to the Servicer
of such Mortgage the Mortgage Files for such Mortgage Loan upon receipt by the
Indenture Trustee and the Custodian on or prior to the date such release is to
be made of:

         (a) such Officers' Certificates, if any, as are required by the
Servicing Agreement; and

                                      -70-
<PAGE>

         (b) a "Request for Release" in the form prescribed by the Servicing
Agreement, executed by the Servicer, providing that the Servicer will hold or
retain the Mortgage Files in trust for the benefit of the Indenture Trustee, the
Note Insurer and the Holders of Notes.

         SECTION 8.10. SERVICER AS AGENT.

         In order to facilitate the servicing of the Mortgage Loans by the
Servicer of such Mortgage Loans, the Servicer of the Mortgage Loans has been
appointed by the Issuer to retain, in accordance with the provisions of the
Servicing Agreement and this Indenture, all Remittable Funds on such Mortgage
Loans prior to their deposit into the Note Account on or prior to the related
Deposit Date.

         SECTION 8.11. TERMINATION OF SERVICER.

         In the event of an event of default specified in Section 6.01 of the
Servicing Agreement, the Indenture Trustee may, with the consent of the Note
Insurer, and shall, upon the direction of the Note Insurer (or as otherwise
provided in the Servicing Agreement), terminate the Servicer as provided in
Section 6.01 and Section 6.02 of the Servicing Agreement. If the Indenture
Trustee terminates the Servicer, the Indenture Trustee shall, pursuant to
Sections 6.01 and 6.02 of the Servicing Agreement, assume the duties of the
Servicer or appoint a successor servicer acceptable to the Issuer, the Note
Insurer and the Rating Agencies and meeting the requirements set forth in the
Servicing Agreement.

         SECTION 8.12. OPINION OF COUNSEL.

         The Indenture Trustee shall be entitled to receive at least five
Business Days' notice of any action to be taken pursuant to Sections 8.07(a)
(other than in connection with releases of Mortgage Loans that were the subject
of a Full Prepayment of the type described in clause (i) of the definition of
the term "Full Prepayment") and 8.08, accompanied by copies of any instruments
involved, and the Indenture Trustee shall be entitled to receive an Opinion of
Counsel, in form and substance reasonably satisfactory to the Indenture Trustee,
stating the legal effect of any such action, outlining the steps required to
complete the same, and concluding that all conditions precedent to the taking of
such action have been complied with. Counsel rendering any such opinion may
rely, without independent investigation, on the accuracy and validity of any
certificate or other instrument delivered to the Indenture Trustee in connection
with any such action.

         SECTION 8.13. APPOINTMENT OF CUSTODIANS.

         The Indenture Trustee may, at the written direction of the Issuer and
at no additional cost to the Issuer or to the Indenture Trustee, with the
consent of the Note Insurer, appoint one or more Custodians to hold all or a
portion of the Mortgage Files as agent for the Indenture Trustee. Each Custodian
shall (i) be a financial institution supervised and regulated by the Comptroller
of the Currency, the Board of Governors of the Federal Reserve System, the
Office of Thrift Supervision, or the Federal Deposit Insurance Corporation; (ii)
have combined capital and surplus of at least $10,000,000; (iii) be equipped
with secure, fireproof storage facilities, and have adequate controls on access
to assure the safety and security of the Mortgage Files; (iv) utilize in its
custodial function employees who are knowledgeable in the handling of

                                      -71-

<PAGE>

mortgage documents and of the functions of a mortgage document custodian; and
(v) satisfy any other reasonable requirements that the Issuer may from time to
time deem necessary to protect the interests of Noteholders and the Note Insurer
in the Mortgage Files. Each Custodian shall be subject to the same obligations
and standard of care as would be imposed on the Indenture Trustee hereunder
assuming the Indenture Trustee retained the Mortgage Files directly. The
appointment of one or more Custodians shall not relieve the Indenture Trustee
from any of its obligations hereunder. If the Servicer is appointed as a
Custodian in accordance with this Section 8.14, it shall fulfill its servicing
and custodial duties and obligations through separate departments and, if it
maintains a trust department, shall fulfill its custodial duties and obligations
through such trust department.

         SECTION 8.14. RIGHTS OF THE NOTE INSURER TO EXERCISE RIGHTS OF
NOTEHOLDERS.

         By accepting its Notes, each Noteholder agrees that unless a Note
Insurer Default exists, the Note Insurer shall have the right to exercise all
rights of the Noteholders under this Agreement without any further consent of
the Noteholders, including, without limitation:

                  (i) the right to require the Servicer to effect foreclosures
         upon Mortgage Loans upon failure of the Servicer to do so;

                  (ii) the right to require the Seller to repurchase or
         substitute for Defective Mortgage Loans pursuant to Section 8.05;

                  (iii) the right to direct the actions of the Indenture Trustee
         during the continuance of an Event of Default; and

                  (iv) the right to vote on proposed amendments to this
         Indenture.

         In addition, each Noteholder agrees that, unless a Note Insurer Default
exists, the rights specifically set forth above may be exercised by the
Noteholders only with the prior written consent of the Note Insurer.

         Except as otherwise provided in Section 8.03 and notwithstanding any
provision in this Indenture to the contrary, so long as a Note Insurer Default
has occurred and is continuing, the Note Insurer shall have no rights to
exercise any voting rights of the Noteholders hereunder, nor shall the Indenture
Trustee be required to obtain the consent of, or act at the direction of, the
Note Insurer.

         SECTION 8.15. TRUST ESTATE AND ACCOUNTS HELD FOR BENEFIT OF THE NOTE
INSURER.

         The Indenture Trustee shall hold the Trust Estate and the Mortgage
Files for the benefit of the Noteholders and the Note Insurer and all references
in this Agreement and in the Notes to the benefit of Holders of the Notes shall
be deemed to include the Note Insurer (provided there does not exist a Note
Insurer Default).

         All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to the Noteholders shall
also be sent to the Note Insurer.

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<PAGE>

         SECTION 8.16. [RESERVED.]

                                   ARTICLE IX

                             SUPPLEMENTAL INDENTURES

         SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.

         With the consent of the Note Insurer and without the consent of the
Holders of any Notes, the Issuer and the Indenture Trustee, at any time and from
time to time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Indenture Trustee, for any of the following purposes:

                  (1) to correct or amplify the description of any property at
         any time subject to the lien of this Indenture, or better to assure,
         convey and confirm unto the Indenture Trustee any property subject or
         required to be subjected to the lien of this Indenture, or to subject
         to the lien of this Indenture additional property;

                  (2) to add to the conditions, limitations and restrictions on
         the authorized amount, terms and purposes of the issuance,
         authentication and delivery of any Notes, as herein set forth,
         additional conditions, limitations and restrictions thereafter to be
         observed;

                  (3) to evidence the succession of another Person to the Issuer
         to the extent permitted herein, and the assumption by any such
         successor of the covenants of the Issuer herein and in the Notes
         contained;

                  (4) to add to the covenants of the Issuer, for the benefit of
         the Holders of all Notes and the Note Insurer or to surrender any right
         or power herein conferred upon the Issuer;

                  (5) to cure any ambiguity, to correct or supplement any
         provision herein that may be defective or inconsistent with any other
         provision herein, or to amend any other provisions with respect to
         matters or questions arising under this Indenture, which shall not be
         inconsistent with the provisions of this Indenture, provided that such
         action shall not adversely affect in any material respect the interests
         of the Holders of the Notes or the Holders of the Certificates; and
         provided, further, that the amendment shall not be deemed to adversely
         affect in any material respect the interests of the Holders of the
         Notes and the Note Insurer if the Person requesting the amendment
         obtains letters from the Rating Agencies that the amendment would not
         result in the downgrading or withdrawal of the implied ratings then
         assigned to the Notes (without taking into account the Insurance
         Policy); or

                  (6) to modify, eliminate or add to the provisions of this
         Indenture to such extent as shall be necessary to effect the
         qualification of this Indenture under the TIA or under any similar
         federal statute hereafter enacted, and to add to this Indenture such
         other provisions as may be expressly required by the TIA.

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<PAGE>

         SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS.

         With the consent of the Note Insurer and with the consent of Holders of
Notes representing not less than a majority of the Note Balance of all
Outstanding Notes by Act of said Holders delivered to the Issuer and the
Indenture Trustee, the Issuer and the Indenture Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Holders of
the Notes under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Note
affected thereby:

                  (1) change any Payment Date or the Final Maturity Date of the
         Notes or reduce the principal amount thereof, the Note Interest Rate
         thereon or the Redemption Price with respect thereto, change the
         earliest date on which any Note may be redeemed at the option of the
         Issuer, change any place of payment where, or the coin or currency in
         which, any Note or any interest thereon is payable, or impair the right
         to institute suit for the enforcement of the payment of any installment
         of interest due on any Note on or after the Final Maturity Date thereof
         or for the enforcement of the payment of the entire remaining unpaid
         principal amount of any Note on or after the Final Maturity Date (or,
         in the case of redemption, on or after the applicable Redemption Date);

                  (2) reduce the percentage of the Note Balance of the
         Outstanding Notes, the consent of the Holders of which is required for
         any such supplemental indenture, or the consent of the Holders of which
         is required for any waiver of compliance with provisions of this
         Indenture or Defaults hereunder and their consequences provided for in
         this Indenture;

                  (3) modify any of the provisions of this Section, Section 5.13
         or Section 5.17(b), except to increase any percentage specified therein
         or to provide that certain other provisions of this Indenture cannot be
         modified or waived without the consent of the Holder of each
         Outstanding Note affected thereby;

                  (4) modify or alter the provisions of the proviso to the
         definition of the term "Outstanding";

                  (5) permit the creation of any lien other than the lien of
         this Indenture with respect to any part of the Trust Estate (except for
         Permitted Encumbrances) or terminate the lien of this Indenture on any
         property at any time subject hereto or deprive the Holder of any Note
         of the security afforded by the lien of this Indenture;

                  (6) modify any of the provisions of this Indenture in such
         manner as to affect the calculation of the Required Payment Amount for
         any Payment Date (including the calculation of any of the individual
         components of such Required Payment Amount) or to affect rights of the
         Holders of the Notes to the benefits of any provisions for the
         mandatory redemption of Notes contained herein; or

                                      -74-
<PAGE>

                  (7) incur any indebtedness, other than the Notes, that would
         cause the Issuer or the Trust Estate to be treated as a "taxable
         mortgage pool" within the meaning of Code Section 7701(i).

         The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.

         It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.

         Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section, the Indenture Trustee shall
mail to the Holders of the Notes to which such supplemental indenture relates a
notice setting forth in general terms the substance of such supplemental
indenture. Any failure of the Indenture Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.

         SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES.

         In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Indenture Trustee shall be entitled to
receive, and (subject to Section 6.01) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture. The Indenture Trustee may, but
shall not be obligated to, enter into any such supplemental indenture that
affects the Indenture Trustee's own rights, duties or immunities under this
Indenture or otherwise. The Issuer shall cause executed copies of any
Supplemental Indentures to be delivered to the Rating Agencies and the Note
Insurer.

         SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURES.

         Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes to which such supplemental indenture relates that have theretofore been
or thereafter are authenticated and delivered hereunder shall be bound thereby.

         SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT.

         Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the TIA as then in effect so long as this
Indenture shall then be qualified under the TIA.

                                      -75-
<PAGE>

         SECTION 9.06. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES.

         Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and if required by the
Indenture Trustee shall, bear a notation in form approved by the Indenture
Trustee as to any matter provided for in such supplemental indenture. If the
Issuer shall so determine, new Notes so modified as to conform, in the opinion
of Indenture Trustee and the Issuer, to any such supplemental indenture may be
prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.

         SECTION 9.07. AMENDMENTS TO GOVERNING DOCUMENTS.

         The Indenture Trustee shall, subject to Sections 9.01 and 9.02 hereof,
upon Issuer Request, consent to any proposed amendment to the Issuer's governing
documents, or an amendment to or waiver of any provision of any other document
relating to the Issuer's governing documents, such consent to be given without
the necessity of obtaining the consent of the Holders of any Notes upon receipt
by the Indenture Trustee of:

                  (i) an Officers' Certificate, to which such proposed amendment
         or waiver shall be attached, stating that such attached copy is a true
         copy of the proposed amendment or waiver and that all conditions
         precedent to such consent specified in this Section 9.07 have been
         satisfied; and

                  (ii) written confirmation from the Rating Agencies that the
         implementation of the proposed amendment or waiver will not adversely
         affect their implied ratings of the Notes (without taking into account
         the Insurance Policy).

         Notwithstanding the foregoing, the Indenture Trustee may decline to
consent to a proposed waiver or amendment that adversely affects its own rights,
duties or immunities under this Indenture or otherwise.

         Nothing in this Section 9.07 shall be construed to require that any
Person obtain the consent of the Indenture Trustee to any amendment or waiver or
any provision of any document where the making of such amendment or the giving
of such waiver without obtaining the consent of the Indenture Trustee is not
prohibited by this Indenture or by the terms of the document that is the subject
of the proposed amendment or waiver.

                                   ARTICLE X

                               REDEMPTION OF NOTES

         SECTION 10.01. REDEMPTION.

         (a) All the Notes may be redeemed in whole, but not in part, on or
after the Initial Redemption Date at the Redemption Price at the option of the
holders of a majority of the ownership interest of the Issuer (the "Residual
Majority"), or at the option of the Servicer if the Residual Majority shall not
have exercised its option to direct the Servicer to redeem the Notes on such
Redemption Date or, if such option is not exercised by the Servicer, at the
option of the

                                      -76-
<PAGE>

Note Insurer; provided, however, that funds in an amount equal to the Redemption
Price, plus any amounts owed to the Note Insurer under the Insurance Agreement,
any unreimbursed Nonrecoverable Advances and any unreimbursed amounts due and
owing to the Indenture Trustee hereunder, must have been deposited with the
Indenture Trustee prior to the Indenture Trustee's giving notice of such
redemption pursuant to Section 10.02 or the Issuer shall have complied with the
requirements for satisfaction and discharge of the Notes specified in Section
4.01. Notice of the election to redeem the Notes shall be furnished to the
Indenture Trustee not later than thirty (30) days prior to the Payment Date
selected for such redemption, whereupon all such Notes shall be due and payable
on such Payment Date upon the furnishing of a notice pursuant to Section 10.02
to each Holder of such Notes and the Note Insurer. Any expenses associated with
the compliance of the provisions hereof in connection with a redemption of the
Notes shall be paid by the Note Insurer or the Servicer, depending upon which
party redeems the Notes. In no event shall the Note Insurer redeem the Notes
unless the proceeds received from the Note Insurer would be not less than the
greater of (x) the entire amount that would be payable to the Holders of the
Notes, in full payment thereof on the Payment Date next succeeding the date of
such Sale and (y) the fair market value of the Mortgage Loans as of the related
Payment Date. Upon the redemption of the Notes, Mortgage Loans in the Trust
Estate shall be released and delivered to the Issuer.

         (b) Upon receipt of the notice from the Servicer or the Note Insurer of
its election to redeem the Notes pursuant to Section 10.01(a), the Indenture
Trustee shall prepare and deliver to the Issuer, the Servicer and the Note
Insurer, no later than the related Redemption Date, a Payment Date Statement
stating therein that it has determined that the conditions to redemption at the
option of the Servicer or Note Insurer have been satisfied and setting forth the
amount, if any, to be withdrawn from each Note Account and paid to the Servicer
as reimbursement for Nonrecoverable Advances and such other information as may
be required to accomplish such redemption.

         SECTION 10.02. FORM OF REDEMPTION NOTICE.

         Notice of redemption shall be given by the Indenture Trustee in the
name of and at the expense of the Issuer by first class mail, postage prepaid,
mailed not less than ten days prior to the Redemption Date to each Holder of
Notes to be redeemed, such Holders being determined as of the Record Date for
such Payment Date, and to the Note Insurer.

         All notices of redemption shall state:

                   (1) the Redemption Date;

                   (2) the Redemption Price at which the Notes of such Series
         will be redeemed,

                   (3) the fact of payment in full on such Notes, the place
         where such Notes are to be surrendered for payment of the Redemption
         Price (which shall be the office or agency of the Issuer to be
         maintained as provided in Section 3.02), and that no interest shall
         accrue on such Note for any period after the date fixed for redemption.

                                      -77-
<PAGE>

         Failure to give notice of redemption, or any defect therein, to any
Holder of any Note selected for redemption shall not impair or affect the
validity of the redemption of any other Note.

         SECTION 10.03. NOTES PAYABLE ON OPTIONAL REDEMPTION.

         Notice of redemption having been given as provided in Section 10.02,
the Notes to be redeemed shall, on the applicable Redemption Date, become due
and payable at the Redemption Price and (unless the Issuer shall default in the
payment of the Redemption Price) no interest shall accrue on such Redemption
Price for any period after such Redemption Date; provided, however, that if such
Redemption Price is not paid on the Redemption Date, the Note Balance shall,
until paid, bear interest from the Redemption Date at the Note Interest Rate.

                                   ARTICLE XI

                                  MISCELLANEOUS

         SECTION 11.01. COMPLIANCE CERTIFICATES AND OPINIONS.

         (a) Upon any application or request by the Issuer to the Indenture
Trustee to take any action under any provision of this Indenture, the Issuer
shall furnish to the Indenture Trustee and the Note Insurer an Officers'
Certificate stating that all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and an Opinion
of Counsel (with a copy to the Note Insurer), if requested by the Indenture
Trustee, stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.

         (b) Every certificate, opinion or letter with respect to compliance
with a condition or covenant provided for in this Indenture, including one
furnished pursuant to specific requirements of this Indenture relating to a
particular application or request (other than certificates provided pursuant to
TIA Section 314(a)(4)) shall include and shall be deemed to include (regardless
of whether specifically stated therein) the following:

                  (1) a statement that each individual signing such certificate,
         opinion or letter has read such covenant or condition and the
         definitions herein relating thereto;

                  (2) a brief statement as to the nature and scope of the
         examination or investigation upon which the statements or opinions
         contained in such certificate, opinion or letter are based;

                  (3) a statement that, in the opinion of each such individual,
         he has made such examination or investigation as is necessary to enable
         him to express an informed opinion as to whether or not such covenant
         or condition has been complied with; and

                  (4) a statement as to whether, in the opinion of each such
         individual, such condition or covenant has been complied with.

                                      -78-
<PAGE>

         SECTION 11.02. FORM OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE.

         In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.

         Any certificate or opinion of the Issuer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
Opinion of Counsel may be based on the written opinion of other counsel, in
which event such Opinion of Counsel shall be accompanied by a copy of such other
counsel's opinion and shall include a statement to the effect that such counsel
believes that such counsel and the Indenture Trust may reasonably rely upon the
opinion of such other counsel.

         Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

         Wherever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Section 6.01(b)(2).

         Whenever in this Indenture it is provided that the absence of the
occurrence and continuation of a Default or Event of Default is a condition
precedent to the taking of any action by the Indenture Trustee at the request or
direction of the Issuer, then, notwithstanding that the satisfaction of such
condition is a condition precedent to the Issuer's right to make such request or
direction, the Indenture Trustee shall be protected in acting in accordance with
such request or direction if it does not have knowledge of the occurrence and
continuation of such Default or Event of Default as provided in Section 6.01(d).

         SECTION 11.03. ACTS OF NOTEHOLDERS.

         (a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered

                                      -79-
<PAGE>

to the Indenture Trustee, and, where it is hereby expressly required, to the
Issuer. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive in
favor of the Indenture Trustee and the Issuer, if made in the manner provided in
this Section.

         (b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.

         (c) The ownership of Notes shall be proved by the Note Register.

         (d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration of transfer thereof or in exchange therefor or
in lieu thereof, in respect of anything done, omitted or suffered to be done by
the Indenture Trustee or the Issuer in reliance thereon, whether or not notation
of such action is made upon such Notes.

         SECTION 11.04. NOTICES, ETC., TO INDENTURE TRUSTEE, THE NOTE INSURER
AND ISSUER.

         Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other documents provided or permitted by this Indenture
to be made upon, given or furnished to, or filed with:

                  (1) the Indenture Trustee by any Noteholder or by the Issuer
         shall be sufficient for every purpose hereunder if made, given,
         furnished or filed in writing to or with and received by the Indenture
         Trustee at its Corporate Trust Office and at                      ; or

                  (2) the Issuer by the Indenture Trustee or by any Noteholder
         shall be sufficient for every purpose hereunder (except as provided in
         Section 5.01(3) and (4)) if in writing and mailed, first-class postage
         prepaid, to the Issuer addressed to it at                       Loan
         Trust 200 - ), in care of                          ,  Attention:
         Corporate Trust Administration,  or at any other address previously
         furnished in  writing to the Indenture Trustee by the Issuer; or

                  (3) the Note Insurer by the Indenture Trustee or by any
         Noteholder shall be sufficient for every purpose hereunder if in
         writing and mailed, first-class, postage prepaid, to
         addressed to it at                                        , Attention:
         Structured Finance Group (                     Loan Trust 200 - ,
         Mortgage Backed Notes,          Series 200 - ), or at any other
         address previously furnished in writing to the Indenture Trustee by the
         Note Insurer; or

                                      -80-
<PAGE>

                  (4) the Depositor by the Indenture Trustee or by any
         Noteholder shall be sufficient for every purpose hereunder if in
         writing and mailed, first-class, postage paid, to Wachovia Asset
         Securitization, Inc.,                     , Charlotte, North Carolina
         28211, Attention:                            , or at any other address
         previously furnished in writing to the Indenture Trustee by the
         Depositor; or

                  (5) the Seller or the Servicer by the Indenture Trustee or by
         any Noteholder shall be sufficient for every purpose hereunder if in
         writing and mailed, first-class, postage paid, to                    ,
         Attention: General Counsel or at any other address previously furnished
         in writing to the Indenture Trustee by the Seller or the Servicer; or

(6)      the Underwriters by any party or by any Noteholder shall be sufficient
         for every purpose hereunder if in writing and mailed, first-class,
         postage prepaid, to (a)                       , Attn:
         and (b)                       Attn:           .

         Notices required to be given to the Rating Agencies by the Issuer or
the Indenture Trustee shall be in writing, personally delivered or mailed
first-class postage pre-paid, to (i) in the case of [Rating Agency], at
the  following  address:                       ,  Attention:                  ,
(ii) in the case [Rating Agency], at the following address:                   ,
Attention:                  ; or as to each of the foregoing, at such other
address as shall be designed by written to the other parties.

         SECTION 11.05. NOTICES AND REPORTS TO NOTEHOLDERS; WAIVER OF NOTICES.

         Where this Indenture provides for notice to Noteholders of any event or
the mailing of any report to Noteholders, such notice or report shall be
sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Noteholder affected by such event or to
whom such report is required to be mailed, at the address of such Noteholder as
it appears on the Note Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice or the mailing
of such report. In any case where a notice or report to Noteholders is mailed in
the manner provided above, neither the failure to mail such notice or report,
nor any defect in any notice or report so mailed, to any particular Noteholder
shall affect the sufficiency of such notice or report with respect to other
Noteholders, and any notice or report that is mailed in the manner herein
provided shall be conclusively presumed to have been duly given or provided.

         Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.

         In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any

                                      -81-
<PAGE>

manner of giving such notice as shall be satisfactory to the Indenture Trustee
shall be deemed to be a sufficient giving of such notice.

         SECTION 11.06. RULES BY INDENTURE TRUSTEE.

         The Indenture Trustee may make reasonable rules for any meeting of
Noteholders.

         SECTION 11.07. CONFLICT WITH TRUST INDENTURE ACT.

         If any provision hereof limits, qualifies or conflicts with another
provision hereof that is required to be included in this Indenture by any of the
provisions of the TIA, such required provision shall control.

         SECTION 11.08. 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 11.09. SUCCESSORS AND ASSIGNS.

         All covenants and agreements in this Indenture by the Issuer shall bind
its successors and assigns, whether so expressed or not.

         SECTION 11.10. SEPARABILITY.

         In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

         SECTION 11.11. BENEFITS OF INDENTURE.

         Nothing in this Indenture or in the Notes, expressed or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, any separate trustee or Co-trustee appointed under Section 6.14, the
Note Insurer and the Noteholders, any benefit or any legal or equitable right,
remedy or claim under this Indenture.

         SECTION 11.12. LEGAL HOLIDAYS.

         In any case where the date of any Payment Date, Redemption Date or any
other date on which principal of or interest on any Note is proposed to be paid
shall not be a Business Day, then (notwithstanding any other provision of the
Notes or this Indenture) payment need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made on
the nominal date of any such Payment Date, Redemption Date or other date for the
payment of principal of or interest on any Note and no interest shall accrue for
the period from and after any such nominal date, provided such payment is made
in full on such next succeeding Business Day.

                                      -82-
<PAGE>

         SECTION 11.13. GOVERNING LAW.

         IN VIEW OF THE FACT THAT NOTEHOLDERS ARE EXPECTED TO RESIDE IN MANY
STATES AND OUTSIDE THE UNITED STATES AND THE DESIRE TO ESTABLISH WITH CERTAINTY
THAT THIS INDENTURE WILL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAW OF A STATE HAVING A WELL-DEVELOPED BODY OF COMMERCIAL
AND FINANCIAL LAW RELEVANT TO TRANSACTIONS OF THE TYPE CONTEMPLATED HEREIN, THIS
INDENTURE AND EACH NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED THEREIN.

         SECTION 11.14. 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 11.15. RECORDING OF INDENTURE.

         This Indenture is subject to recording in any appropriate public
recording offices, such recording to be effected by the Issuer and at its
expense in compliance with any Opinion of Counsel delivered pursuant to Section
2.11(c) or 3.06.

         SECTION 11.16. ISSUER OBLIGATION.

         No recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under this Indenture or any certificate or other writing delivered in
connection herewith or therewith, against (i) the Indenture Trustee or the Owner
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director,
employee or agent of the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed (it being understood that the Indenture
Trustee and the Owner Trustee have no such obligations in their individual
capacity) and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity. For all purposes of this Indenture, in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of the
Trust Agreement.

         SECTION 11.17. NO PETITION.

         The Indenture Trustee, by entering into this Indenture, and each
Noteholder and Beneficial Owner, by accepting a Note, hereby covenant and agree
that they will not at any time institute against                    or the
Issuer, or join in any institution against                   or the Issuer of,
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other

                                      -83-
<PAGE>

proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, this Indenture or any
of the Basic Documents. In addition, the Indenture Trustee will on behalf of the
holders of the Notes, (a) file a written objection to any motion or other
proceeding seeking the substantive consolidation of the Seller with,
           or the Issuer, (b) file an appropriate memorandum of points and
authorities or other brief in support of such objection, or (c) endeavor to
establish at the hearing on such objection that the substantive consolidation of
such entity would be materially prejudicial to the Noteholders.

         This Section 11.17 will survive for one year and one day following the
termination of this Indenture.

         SECTION 11.18. INSPECTION.

         The Issuer agrees that, on reasonable prior notice, it will permit any
representative of the Indenture Trustee and the Note Insurer, during the
Issuer's normal business hours, to examine all of books of account, records,
reports and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by Independent Accountants selected by the
Indenture Trustee or the Note Insurer, as the case may be, and to discuss its
affairs, finances and accounts with its officers, employees and Independent
Accountants (and by this provision the Issuer hereby authorizes its Accountants
to discuss with such representatives such affairs, finances and accounts), all
at such reasonable times and as often as may be reasonably requested. Any
expense incident to the exercise by the Indenture Trustee of any right under
this Section 11.18 shall be borne by the Issuer.

         SECTION 11.19. USURY.

         The amount of interest payable or paid on any Note under the terms of
this Indenture shall be limited to an amount that shall not exceed the maximum
nonusurious rate of interest allowed by the applicable laws of the United States
or the State of New York (whichever shall permit the higher rate), that could
lawfully be contracted for, charged or received (the "Highest Lawful Rate"). In
the event any payment of interest on any Note exceeds the Highest Lawful Rate,
the Issuer stipulates that such excess amount will be deemed to have been paid
as a result of an error on the part of both the Indenture Trustee, acting on
behalf of the Holder of such Note, and the Issuer, and the Holder receiving such
excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Issuer or the Indenture Trustee, refund the amount of such
excess or, at the option of the Indenture Trustee, apply the excess to the
payment of principal of such Note, if any, remaining unpaid. In addition, all
sums paid or agreed to be paid to the Indenture Trustee for the benefit of
Holders of Notes for the use, forbearance or detention of money shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Notes.

         SECTION 11.20. THIRD PARTY BENEFICIARY.

         The Note Insurer is intended as a third party beneficiary of this
Indenture shall be binding upon and inure to the benefit of the Note Insurer;
provided that, notwithstanding the foregoing, for so long as a Note Insurer
Default is continuing with respect to its obligations under the

                                      -84-
<PAGE>

Insurance Policy, the Noteholders shall succeed to the Note Insurer's rights
hereunder. Without limiting the generality of the foregoing, all covenants and
agreements in this Indenture that expressly confer rights upon the Note Insurer
shall be for the benefit of and run directly to the Note Insurer, and the Note
Insurer shall be entitled to rely on and enforce such covenants to the same
extent as if it were a party to this Indenture.

                                      -85-
<PAGE>

         IN WITNESS WHEREOF, the Issuer and the Indenture Trustee and the have
caused this Indenture to be duly executed by their respective officers thereunto
duly authorized, all as of the day and year first above written.

                              [                          ] LOAN TRUST 200 -

                              By: [OWNER TRUSTEE],
                                  not in its individual capacity,
                                  but solely as Owner Trustee

                              By:
                                 ----------------------------------------
                                  Authorized Signatory

                              [INDENTURE TRUSTEE],

                                  as Indenture Trustee

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

<PAGE>

                        SCHEDULE I MORTGAGE LOAN SCHEDULE

<PAGE>

                             EXHIBIT A FORM OF NOTE

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

THE NOTE IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT OF
PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AND THE INSURANCE POLICY AS
PROVIDED IN THE INDENTURE REFERRED TO BELOW. THE ISSUER IS NOT OTHERWISE
PERSONALLY LIABLE FOR PAYMENTS ON THIS NOTE.

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

Date of Indenture: As of               Original Note Balance: $___________
First Payment Date:                                 CUSIP No.: ___________
Denomination:  $____________                                  Note No.: __

                           [        ] LOAN TRUST 200 -
                           NOTES, SERIES 200 - , CLASS

         Loan Trust 200 - , a business trust organized and existing under the
laws of the State of Delaware (herein referred to as the "Issuer"), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of $___________ payable on each Payment Date in an amount equal to
the result obtained by multiplying (i) a fraction the numerator of which is
$___________ and the denominator of which is $_____________ (this Note's
"Percentage Interest") by (ii) the aggregate amount, if any, payable from the
Note Account in respect of principal on the Notes pursuant to the Indenture
dated as of                   , between the Issuer and               , a
national banking association, as Indenture Trustee (the "Indenture Trustee");
provided, however, that the entire unpaid principal amount of this Note shall be
due and payable on the earlier of (i) the Payment Date occurring in December
2030 (the "Final Maturity Date"), (ii) the Redemption Date, if any, pursuant to
Article X of the Indenture or (iii) the date on which an Event of Default shall
have occurred and be continuing, if the Notes have been declared to be
immediately due and payable in the manner provided in Section 5.02 of the
Indenture. Capitalized terms used but not defined herein are defined in Article
I of the Indenture.

<PAGE>

         Pursuant to the terms of the Indenture, payments will be made on the
25th day of each month or, if such day is not a Business Day, on the Business
Day immediately following such 25th day (each a "Payment Date"), commencing on
the first Payment Date specified above, to the Person in whose name this Note is
registered at the close of business on the applicable Record Date, in an amount
equal to the product of (a) the Percentage Interest evidenced by this Note and
(b) the sum of the amounts to be paid on Notes with respect to such Payment
Date, all as more specifically set forth in the Indenture.

         Notwithstanding the foregoing, in the case of Definitive Notes, upon
written request at least five days prior to the related Record Date with
appropriate instructions by the Holder of this Note (holding an aggregate
initial Note Balance of at least $1,000,000), any payment of principal or
interest, other than the final installment of principal or interest, shall be
made by wire transfer to an account in the United States designated by such
Holder reasonably satisfactory to the Indenture Trustee.

         Payments of principal and interest on the Notes will be made on each
Payment Date to Noteholders of record as of the related Record Date. On each
Payment Date, Noteholders will be entitled to receive interest payments in an
aggregate amount equal to the related Note Interest for such Payment Date,
together with principal payments in an aggregate amount equal to the Monthly
Principal plus, until the Overcollateralization Amount is equal to the Required
Overcollateralization Amount, Excess Cash, if any, for such Payment Date. The
"Note Balance" of a Note as of any date of determination is equal to the initial
principal balance thereof as of the Closing Date, reduced by the aggregate of
all amounts previously paid with respect to such Note on account of principal.

         The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.

         This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Mortgage Backed Notes, Series 200 - , Class     , issued under
the Indenture, to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. To the extent that any provision of this Note contradicts or is
inconsistent with the provisions of the Indenture, the provisions of the
Indenture shall control and supersede such contradictory or inconsistent
provision herein. The Notes are subject to all terms of the Indenture.

         The Notes are and will be equally and ratably secured by the Mortgage
Loans and the other collateral related thereto pledged as security therefor as
provided in the Indenture.

         As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Final Maturity Date and the
Redemption Date, if any, pursuant to Article X of the Indenture. Notwithstanding
the foregoing, the entire unpaid principal amount of the Notes shall be due and
payable on the date on which an Event of Default shall have occurred

                                      A-2
<PAGE>

and be continuing if the Indenture Trustee, at the direction or upon the prior
written consent of Financial Security Assurance Inc. (the "Note Insurer") in the
absence of a Note Insurer Default, or the Holders of the Notes representing not
less than 50% of the Note Balance of the Outstanding Notes (with the prior
written consent of the Note Insurer in the absence of a Note Insurer Default),
shall have declared the Notes to be immediately due and payable in the manner
provided in Section 5.02 of the Indenture. All principal payments on the Notes
shall be made pro rata to the Noteholders entitled thereto.

         The Note Insurer in consideration of the payment of the premium and
subject to the terms of the Note Guaranty Insurance Policy (the "Insurance
Policy") thereby has unconditionally and irrevocably guaranteed the payment of
the Insured Payments.

         Pursuant to the Indenture, unless a Note Insurer Default exists (i) the
Note Insurer shall be deemed to be the holder of the Notes for certain purposes
specified in the Indenture and will be entitled to exercise all rights of the
Noteholders thereunder, including the rights of Noteholders relating to the
occurrence of, and the remedies with respect to, an Event of Default, without
the consent of such Noteholders, and (ii) the Indenture Trustee may take actions
which would otherwise be at its option or within its discretion, including
actions relating to the occurrence of, and the remedies with respect to, an
Event of Default, only at the direction of the Note Insurer. In addition, on
each Payment Date, after the Noteholders have been paid all amounts to which
they are entitled, the Note Insurer will be entitled to be reimbursed for any
unreimbursed draws under the Insurance Policy, paid Note Insurer Premium (each
with interest thereon at the "Late Payment Rate" specified in the Insurance
Agreement) and any other amounts owed under the Insurance Policy.

         The Issuer shall not be liable upon the indebtedness evidenced by the
Notes except to the extent of amounts available from the Trust Estate which
constitutes security for the payment of the Notes. The assets included in the
Trust Estate and payments under the Insurance Policy will be sole source of
payments on the Notes, and each Holder hereof, by its acceptance of this Note,
agrees that (i) such Note will be limited in right of payment to amounts
available from the Trust Estate and the Insurance Policy as provided in the
Indenture and (ii) such Holder shall have no recourse to the Issuer, the Owner
Trustee, the Indenture Trustee, the Depositor, the Seller, the Servicer or any
of their respective affiliates, or to the assets of any of the foregoing
entities, except the assets of the Issuer pledged to secure the Notes pursuant
to the Indenture.

         Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Holder of this Note (or one or more Predecessor Notes) on the
Note Register as of the close of business on each Record Date, except that with
respect to Notes registered on the Record Date in the name of the nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payments will be
made by wire transfer in immediately available funds to the account designated
by such nominee. Such checks shall be mailed to the Person entitled thereto at
the address of such Person as it appears on the Note Register as of the
applicable Record Date without requiring that this Note be submitted for
notation of payment. Notwithstanding the foregoing, in the case of Definitive
Notes, upon written request at least five days prior to the related Record Date
with appropriate instructions by the Holder of this Note (holding an aggregate
initial Note Balance of at least $1,000,000), any

                                      A-3
<PAGE>

payment of principal or interest, other than the final installment of principal
or interest, shall be made by wire transfer to an account in the United States
designated by such Holder reasonably satisfactory to the Indenture Trustee. Any
reduction in the principal amount of this Note (or any one or more Predecessor
Notes) effected by any payments made on any Payment Date shall be binding upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof, whether or not noted
hereon. If funds are expected to be available, as provided in the Indenture, for
payment in full of the then remaining unpaid principal amount of this Note on a
Payment Date, then the Indenture Trustee, in the name of and on behalf of the
Issuer, will notify the Person who was the Holder hereof as of the Record Date
preceding such Payment Date by notice mailed or transmitted by facsimile prior
to such Payment Date, and the amount then due and payable shall be payable only
upon presentation and surrender of this Note at the Indenture Trustee's
principal Corporate Trust Office or at the office of the Indenture Trustee's
agent appointed for such purposes.

         As provided in the Indenture, the Notes may be redeemed in whole, but
not in part, at the option of the Issuer, on any Payment Date on and after the
date on which the Note Balance is less than 10% of the Original Note Balance.

         As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the transferor may be required to pay a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any such registration of transfer or exchange.

         The Note Registrar shall not register the transfer of this Note unless
the Note Registrar has received a representation letter from the transferee to
the effect that either (i) the transferee is not, and is not acquiring the Note
on behalf of or with the assets of, an employee benefit plan or other retirement
plan or arrangement that is subject to Title I of the Employee Retirement Income
Security Act or 1974, as amended, or Section 4975 of the Code or (ii) the
acquisition and holding of this Note by the transferee qualifies for exemptive
relief under a Department of Labor Prohibited Transaction Class Exemption. Each
Beneficial Owner, by acceptance of a beneficial interest herein, shall be deemed
to make one of the foregoing representations.

         Each Noteholder or Beneficial Owner, by acceptance of a Note or, in the
case of a Beneficial Owner, a beneficial interest in a Note, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing

                                      A-4
<PAGE>

delivered in connection therewith, against (i) the Indenture Trustee or the
Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director or employee of the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.

         Each Noteholder or Beneficial Owner, by acceptance of a Note or, in the
case of a Beneficial Owner, a beneficial interest in a Note, covenants and
agrees by accepting the benefits of the Indenture that such Noteholder or
Beneficial Owner will not at any time institute against the                   or
the Issuer, or join in any institution against the            or the Issuer of,
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, the Indenture, the
Mortgage Loan Sale Agreement, the Mortgage Loan Contribution Agreement, the
Servicing Agreement, the Management Agreement, the Insurance Agreement and the
Indemnification Agreement (the "Basic Documents").

         The Issuer has entered into the Indenture and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Beneficial Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.

         Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Note Insurer and the Holders of Notes
representing a majority of the Note Balance of all Outstanding Notes. The
Indenture also contains provisions permitting the (i) Note Insurer or (ii) if a
Note Insurer Default exists, the Holders of Notes representing specified
percentages of the Note Balance of Outstanding Notes, on behalf of the Holders
of all the Notes, to waive compliance by the Issuer with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Note Insurer or by the Holder of
this Note (or any one or more Predecessor Notes) shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note. The
Indenture also permits the amendment thereof, in certain limited

                                      A-5
<PAGE>

circumstances, or the waiver of certain terms and conditions set forth in the
Indenture, without the consent of Holders of the Notes issued thereunder.

         The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.

         Initially, the Notes will be represented by one Note registered in the
name of CEDE & Co. as nominees of the Clearing Agency. The Notes will be
delivered as provided in the Indenture and subject to certain limitations
therein set forth. The Notes are exchangeable for a like aggregate initial Note
Balance of Notes of different authorized denominations, as requested by the
Holder surrendering the same.

         THIS NOTE AND THE INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

         No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.

         Unless the certificate of authentication hereon has been executed by
the Authenticating Agent whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.

                                      A-6
<PAGE>

         IN WITNESS WHEREOF, the Issuer has caused this Instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.

DATE:  __________ __, ____

                         [               ] LOAN TRUST 200 -

                         By:   [OWNER TRUSTEE], not in its individual capacity
                         but solely as Owner Trustee under the Trust Agreement

                                  By:
                                      -------------------------------------
                                                Authorized Signatory

                                      A-7
<PAGE>

                          CERTIFICATE OF AUTHENTICATION

This is one of the Class A Notes designated above and referred to in the
within-mentioned Indenture.

Date: __________ __, ____

                               [AUTHENTICATING AGENT],

                               Authenticating Agent

                               By:
                                   -----------------------------------
                                           Authorized Signatory

                                      A-8
<PAGE>

                                   ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee:

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:

     ----------------------------------------------------------------------
                         (name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _______________________________________, attorney, to transfer said
Note on the books kept for registration thereof, with full power of substitution
in the premises.

Dated:
                                       */
---------------------------------------

Signature Guaranteed:

                                       */
---------------------------------------

         */ NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within Note in
every particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.

<PAGE>

                           EXHIBIT B INSURANCE POLICY

<PAGE>

                        EXHIBIT C FORM OF NOTICE OF CLAIM

<PAGE>

                          EXHIBIT D PMI MORTGAGE LOANS<PAGE>
                                                                   EXHIBIT 10.9

SILICON VALLEY BANK

                          LOAN AND SECURITY AGREEMENT

BORROWER:         CYPRESS COMMUNICATIONS, INC.
ADDRESS:          15 PIEDMONT CENTER, SUITE 100
                  ATLANTA, GEORGIA 30305

DATE:             JULY 12, 2002

       THIS LOAN AND SECURITY AGREEMENT is entered into on the above date
between SILICON VALLEY BANK ("Silicon"), whose address is 3003 Tasman Drive,
Santa Clara, California 95054 and with a loan production office located at 3343
Peachtree Road, NE, Suite 312, Atlanta, Georgia 30326 and the borrower(s) named
above (jointly and severally, the "Borrower"), whose chief executive office is
located at the above address ("Borrower's Address"). The Schedule to this
Agreement (the "Schedule") shall for all purposes be deemed to be a part of
this Agreement, and the same is an integral part of this Agreement.
(Definitions of certain terms used in this Agreement are set forth in Section 8
below.)

1.       LOANS.

         1.1      LOANS. Silicon will make loans to Borrower (the "Loans"), in
amounts determined by Silicon in its good faith business judgment, up to the
amounts (the "Credit Limit") shown on the Schedule, provided no Default or
Event of Default has occurred and is continuing, and subject to deduction of
Reserves for accrued interest and such other Reserves as Silicon deems proper
from time to time in its good faith business judgment. Amounts advanced under
the Loans, may be repaid and readvanced from time to time.

         1.2      INTEREST. All Loans and all other monetary Obligations shall
bear interest at the rate shown on the Schedule, except where expressly set
forth to the contrary in this Agreement. Interest shall be payable monthly, on
the last day of the month. Interest may, in Silicon's discretion, be charged to
Borrower's loan account, and the same shall thereafter bear interest at the
same rate as the other Loans. Silicon may, in its discretion, charge interest
to Borrower's Deposit Accounts maintained with Silicon.

         1.3      OVERADVANCES. Except as set forth in Section 1.6 with respect
to any Permitted Overadvance, if at any time or for any reason the total of all
outstanding Loans and all other monetary Obligations exceeds the Credit Limit
(an "Overadvance"), Borrower shall immediately pay the amount of the excess to
Silicon, without notice or demand. Without limiting Borrower's obligation to
repay to Silicon the amount of any Overadvance, Borrower agrees to pay Silicon
interest on the outstanding amount of any Overadvance, on demand, at the
Default Rate.

         1.4      FEES. Borrower shall pay Silicon the fees shown on the
Schedule, which are in addition to all interest and other sums payable to
Silicon and are not refundable.

         1.5      LOAN REQUESTS. To obtain a Loan, Borrower shall make a
request to Silicon by facsimile or telephone. Loan requests received after
12:00 Noon (Pacific time) will not be considered by Silicon until the next
Business Day. Silicon may rely on any telephone request for a Loan given by a
person whom Silicon believes is an authorized representative of Borrower, and
Borrower will indemnify Silicon for any loss Silicon suffers as a result of
that reliance.

                                      -1-
<PAGE>
SILICON VALLEY BANK                                 LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------

         1.6      PERMITTED OVERADVANCES/THE PURCHASE TRANSACTION. Some portion
or all of the initial advance under the Loans shall be used by Borrower to
close on the acquisition of certain assets (the "Acquired Assets") pursuant to
that certain Asset Purchase Agreement dated on or about May 31, 2002 by and
among Borrower, Intermedia Communications, Inc., Shared Technologies Fairchild,
Inc., Shared Technologies Fairchild Telecom, Inc., MCI Worldcom Communications,
Inc. and Worldcom, Inc. (as amended from time to time, the "Purchase
Agreement"). In connection with the Purchase Agreement Transaction, Borrower
shall be permitted to create Overadvances (each a "Permitted Overadvance" and
collectively, the "Permitted Overadvances"), provided that at the time of each
Permitted Overadvance the following conditions are met to Silicon's
satisfaction: (a) no Event of Default or Default shall have occurred and be
continuing; (b) each Permitted Overadvance shall be fully secured by cash on
deposit with and assigned to Silicon and (c) the amount of any Permitted
Overadvance will not cause the maximum principal amount of all Loans to exceed
Ten Million Dollars ($10,000,000).

2.       SECURITY INTEREST. To secure the payment and performance of all of the
Obligations when due, Borrower hereby grants to Silicon a security interest in
all of the following (collectively, the "Collateral"): all right, title and
interest of Borrower in and to all of the following, whether now owned or
hereafter arising or acquired and wherever located: all Accounts; all
Inventory; all Equipment; all Deposit Accounts; all General Intangibles
(including without limitation all intellectual property); all Investment
Property; all other property; and any and all claims, rights and interests in
any of the above, and all guaranties and security for any of the above, and all
substitutions and replacements for, additions, accessions, attachments,
accessories, and improvements to, and proceeds (including proceeds of any
insurance policies, proceeds of proceeds and claims against third parties) of,
any and all of the above, and all Borrower's books relating to any and all of
the above.

3.       REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.

         In order to induce Silicon to enter into this Agreement and to make
Loans, Borrower represents and warrants to Silicon as follows, and Borrower
covenants that the following representations will continue to be true, and that
Borrower will at all times comply with all of the following covenants,
throughout the term of this Agreement and until all Obligations have been paid
and performed in full:

         3.1      CORPORATE EXISTENCE AND AUTHORITY. Borrower is and will
continue to be, duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. Borrower is and will continue to
be qualified and licensed to do business in all jurisdictions in which any
failure to do so would result in a Material Adverse Change. The execution,
delivery and performance by Borrower of this Agreement, and all other documents
contemplated hereby (i) have been duly and validly authorized, (ii) are
enforceable against Borrower in accordance with their terms (except as
enforcement may be limited by equitable principles and by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to creditors'
rights generally), and (iii) do not violate Borrower's articles or certificate
of incorporation, or Borrower's by-laws, or any law or any material agreement
or instrument which is binding upon Borrower or its property, and (iv) do not
constitute grounds for acceleration of any material indebtedness or obligation
under any agreement or instrument which is binding upon Borrower or its
property.

         3.2      NAME; TRADE NAMES AND STYLES. The name of Borrower set forth
in the heading to this Agreement is its correct name. Listed in the
Representations are all prior names of Borrower and all of Borrower's present
and prior trade names. Borrower shall give Silicon 30 days' prior written
notice before changing its name or doing business under any other name.
Borrower has complied, and will in the future comply, in all material respects,
with all laws relating to the conduct of business under a fictitious business
name, except where the failure to so comply would not reasonably be expected to
result in a Material Adverse Change.

         3.3      PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set
forth in the heading to this Agreement is Borrower's chief executive office. In
addition, Borrower has places of business only at the locations set forth in
the Representations. Borrower will give Silicon at least 30 days prior written
notice before opening any additional place of business or changing its chief
executive office, except that Borrower may maintain sales offices in the
ordinary course of business at which not more than a total of $10,000 fair
market value of Equipment is located.

         3.4      TITLE TO COLLATERAL; PERFECTION; PERMITTED LIENS.

                  (a)      Borrower is now, and will at all times in the future
be, the sole owner of all the Collateral, except for items of Equipment which
are leased to Borrower. The Collateral now is and will remain free and clear of
any and all liens, charges, security interests, encumbrances and adverse
claims, except for Permitted Liens. Silicon now has, and will continue to have,
a first-priority perfected and enforceable security interest in all of the
Collateral, subject only to the Permitted Liens, and Borrower will at all times
defend Silicon and the Collateral against all claims of others.

                                      -2-
<PAGE>
SILICON VALLEY BANK                                 LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------

                  (b)      Borrower has set forth in the Representations all of
Borrower's Deposit Accounts, and Borrower will give Silicon five Business Days
advance written notice before establishing any new Deposit Accounts and will
cause the institution where any such new Deposit Account is maintained to
execute and deliver to Silicon a control agreement in form sufficient to
perfect Silicon's security interest in the Deposit Account and otherwise
satisfactory to Silicon in its good faith business judgment. Nothing herein
limits any requirements which may be set forth in the Schedule as to where
Deposit Accounts will be maintained.

                  (c)      In the event that Borrower shall at any time after
the date hereof have any commercial tort claims against others, which it is
asserting or intends to assert, and in which the potential recovery exceeds
$100,000, Borrower shall promptly notify Silicon thereof in writing and provide
Silicon with such information regarding the same as Silicon shall request
(unless providing such information would waive the Borrower's attorney-client
privilege). Such notification to Silicon shall constitute a grant of a security
interest in the commercial tort claim and all proceeds thereof to Silicon, and
Borrower shall execute and deliver all such documents and take all such actions
as Silicon shall request in connection therewith.

                  (d)      Whenever any Equipment or Inventory is located in a
warehouse or other premises in which any third party has an interest, Borrower
shall, whenever requested by Silicon, use its best efforts to cause such third
party to execute and deliver to Silicon, in form acceptable to Silicon, such
waivers and subordinations as Silicon shall specify in its good faith business
judgment. Borrower will keep in full force and effect, and will comply with all
material terms of, any lease of real property where any of the Collateral now
or in the future may be located.

         3.5      MAINTENANCE OF COLLATERAL. Borrower will maintain the
Collateral in good working condition (ordinary wear and tear excepted), and
Borrower will not use the Collateral for any unlawful purpose. Borrower will
immediately advise Silicon in writing of any material loss or damage to the
Collateral.

         3.6      BOOKS AND RECORDS. Borrower has maintained and will maintain
at Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with GAAP.

         3.7      FINANCIAL CONDITION, STATEMENTS AND REPORTS. All financial
statements now or in the future delivered to Silicon have been, and will be,
prepared in conformity with GAAP and now and in the future will fairly present
the results of operations and financial condition of Borrower, in accordance
with GAAP, at the times and for the periods therein stated. Between the last
date covered by any such statement provided to Silicon and the date hereof,
there has been no Material Adverse Change.

         3.8      TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has
timely filed, and will timely file, all required tax returns and reports, and
Borrower has timely paid, and will timely pay, all foreign, federal, state and
local taxes, assessments, deposits and contributions now or in the future owed
by Borrower. Borrower may, however, defer payment of any contested taxes,
provided that Borrower (i) in good faith contests Borrower's obligation to pay
the taxes by appropriate proceedings promptly and diligently instituted and
conducted, (ii) notifies Silicon in writing of the commencement of, and any
material development in, the proceedings, and (iii) posts bonds or takes any
other steps required to keep the contested taxes from becoming a lien upon any
of the Collateral. Borrower is unaware of any claims or adjustments proposed
for any of Borrower's prior tax years which could result in additional taxes
becoming due and payable by Borrower. Borrower has paid, and shall continue to
pay all amounts necessary to fund all present and future pension, profit
sharing and deferred compensation plans in accordance with their terms, and
Borrower has not and will not withdraw from participation in, permit partial or
complete termination of, or permit the occurrence of any other event with
respect to, any such plan which could reasonably be expected to result in any
liability of Borrower, including any liability to the Pension Benefit Guaranty
Corporation or its successors or any other governmental agency.

         3.9      COMPLIANCE WITH LAW. Borrower has, to the best of its
knowledge, complied, and will comply, in all material respects, with all
provisions of all foreign, federal, state and local laws and regulations
applicable to Borrower, including, but not limited to, those relating to
Borrower's ownership of real or personal property, the conduct and licensing of
Borrower's business, and all environmental matters.

         3.10     LITIGATION. There is no claim, suit, litigation, proceeding
or investigation pending or (to best of Borrower's knowledge) threatened
against or affecting Borrower in any court or before any governmental agency
(or any basis therefor known to Borrower) which could reasonably be expected to
result, either separately or in the aggregate, in any Material Adverse Change.
Borrower will promptly inform Silicon in writing of any claim, proceeding,
litigation or investigation in the future threatened or instituted against
Borrower involving any single claim of $100,000 or more, or involving $200,000
or more in the aggregate.

         3.11     USE OF PROCEEDS. All proceeds of all Loans shall be used
solely for lawful business purposes and may be used in connection with the
Purchase Agreement Transaction. Borrower is not purchasing or carrying any
"margin stock" (as

                                      -3-
<PAGE>
SILICON VALLEY BANK                                 LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------

defined in Regulation U of the Board of Governors of the Federal Reserve
System) and no part of the proceeds of any Loan will be used to purchase or
carry any "margin stock" or to extend credit to others for the purpose of
purchasing or carrying any "margin stock."

         3.12     PURCHASE AGREEMENT TRANSACTION. Silicon has received true and
correct photocopies of the Purchase Agreement and each of the other Purchase
Agreement Documents, executed, delivered and/or furnished on or before the
Closing Date in connection with the Purchase Agreement Transaction. Neither the
Purchase Agreement nor any of the other Purchase Agreement Documents have been
modified, changed, supplemented, canceled, amended or otherwise altered or
affected, except as otherwise disclosed to Silicon in writing on or before the
Closing Date. The Purchase Agreement Transaction has been effected, closed and
consummated pursuant to, and in accordance with, the terms and conditions of
the Purchase Agreement and with all applicable laws.

4.       ACCOUNTS.

         4.1      REPRESENTATIONS RELATING TO ACCOUNTS. Borrower represents and
warrants to Silicon as follows: Each Account with respect to which Loans are
requested by Borrower shall, on the date each Loan is requested and made, (i)
represent an undisputed bona fide existing unconditional obligation of the
Account Debtor created by the sale, delivery, and acceptance of goods or the
rendition of services, or the non-exclusive licensing of Intellectual Property,
in the ordinary course of Borrower's business, and (ii) meet the Minimum
Eligibility Requirements set forth in Section 8 below.

         4.2      REPRESENTATIONS RELATING TO DOCUMENTS AND LEGAL COMPLIANCE.
Borrower represents and warrants to Silicon as follows: All statements made and
all unpaid balances appearing in all invoices, instruments and other documents
evidencing the Accounts are and shall be true and correct and all such
invoices, instruments and other documents and all of Borrower's books and
records are and shall be genuine and in all respects what they purport to be.
All sales and other transactions underlying or giving rise to each Account
shall comply in all material respects with all applicable laws and governmental
rules and regulations. To the best of Borrower's knowledge, all signatures and
endorsements on all documents, instruments, and agreements relating to all
Accounts are and shall be genuine, and all such documents, instruments and
agreements are and shall be legally enforceable in accordance with their terms.

         4.3      SCHEDULES AND DOCUMENTS RELATING TO ACCOUNTS. Borrower shall
deliver to Silicon transaction reports and schedules of collections, as
provided in the Schedule, on Silicon's standard forms; provided, however, that
Borrower's failure to execute and deliver the same shall not affect or limit
Silicon's security interest and other rights in all of Borrower's Accounts, nor
shall Silicon's failure to advance or lend against a specific Account affect or
limit Silicon's security interest and other rights therein. If requested by
Silicon, Borrower shall furnish Silicon with copies (or, at Silicon's request,
originals) of all contracts, orders, invoices, and other similar documents, and
all shipping instructions, delivery receipts, bills of lading, and other
evidence of delivery, for any goods the sale or disposition of which gave rise
to such Accounts, and Borrower warrants the genuineness of all of the
foregoing. Borrower shall also furnish to Silicon an aged accounts receivable
trial balance as provided in the Schedule. In addition, Borrower shall deliver
to Silicon, on its request, the originals of all instruments, chattel paper,
security agreements, guarantees and other documents and property evidencing or
securing any Accounts, in the same form as received, with all necessary
indorsements, and copies of all credit memos.

         4.4      COLLECTION OF ACCOUNTS. Borrower shall have the right to
collect all Accounts, unless and until a Default or an Event of Default has
occurred and is continuing. Whether or not an Event of Default has occurred and
is continuing, Borrower shall hold all payments on, and proceeds of, Accounts
in trust for Silicon, and Borrower shall immediately deliver all such payments
and proceeds to Silicon in their original form, duly endorsed, to be applied to
the Obligations in such order as Silicon shall determine. Silicon may, in its
good faith business judgment, require that all proceeds of Collateral be
deposited by Borrower into a lockbox account, or such other "blocked account"
as Silicon may specify, pursuant to a blocked account agreement in such form as
Silicon may specify in its good faith business judgment.

         4.5.     REMITTANCE OF PROCEEDS. All proceeds arising from the
disposition of any Collateral shall be delivered, in kind, by Borrower to
Silicon in the original form in which received by Borrower not later than the
following Business Day after receipt by Borrower, to be applied to the
Obligations in such order as Silicon shall determine; provided that, if no
Default or Event of Default has occurred and is continuing, Borrower shall not
be obligated to remit to Silicon the proceeds of the sale of worn out or
obsolete Equipment disposed of by Borrower in good faith in an arm's length
transaction for an aggregate purchase price of $100,000 or less (for all such
transactions in any fiscal year). Borrower agrees that it will not commingle
proceeds of Collateral with any of Borrower's other funds or property, but will
hold such proceeds separate and apart from such other funds and property and in
an express trust for Silicon. Nothing in this Section limits the restrictions
on disposition of Collateral set forth elsewhere in this Agreement.

                                      -4-
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         4.6      DISPUTES. Borrower shall notify Silicon promptly of all
disputes or claims relating to Accounts. Borrower shall not forgive (completely
or partially), compromise or settle any Account for less than payment in full
(than customary credits and discounts given in the ordinary course of
business), or agree to do any of the foregoing, except that Borrower may do so,
provided that: (i) Borrower does so in good faith, in a commercially reasonable
manner, in the ordinary course of business, and in arm's length transactions,
which are reported to Silicon on the regular reports provided to Silicon; (ii)
no Default or Event of Default has occurred and is continuing; and (iii) taking
into account all such discounts, settlements and forgiveness, the total
outstanding Loans will not exceed the Credit Limit.

         4.7      RETURNS. Provided no Event of Default has occurred and is
continuing, if any Account Debtor returns any Inventory to Borrower, Borrower
shall promptly determine the reason for such return and promptly issue a credit
memorandum to the Account Debtor in the appropriate amount. In the event any
attempted return occurs after the occurrence and during the continuance of any
Event of Default, Borrower shall hold the returned Inventory in trust for
Silicon, and immediately notify Silicon of the return of the Inventory.

         4.8      VERIFICATION. Silicon may, from time to time, verify directly
with the respective Account Debtors the validity, amount and other matters
relating to the Accounts, by means of mail, telephone or otherwise, either in
the name of Borrower or Silicon or such other name as Silicon may choose.

         4.9      NO LIABILITY. Silicon shall not be responsible or liable for
any shortage or discrepancy in, damage to, or loss or destruction of, any
goods, the sale or other disposition of which gives rise to an Account, or for
any error, act, omission, or delay of any kind occurring in the settlement,
failure to settle, collection or failure to collect any Account, or for
settling any Account in good faith for less than the full amount thereof, nor
shall Silicon be deemed to be responsible for any of Borrower's obligations
under any contract or agreement giving rise to an Account. Nothing herein
shall, however, relieve Silicon from liability for its own gross negligence or
willful misconduct.

5.       ADDITIONAL DUTIES OF BORROWER.

         5.1      FINANCIAL AND OTHER COVENANTS. Borrower shall at all times
comply with the financial and other covenants set forth in the Schedule.

         5.2      INSURANCE. Borrower shall, at all times insure all of the
tangible personal property Collateral and carry such other business insurance,
with insurers reasonably acceptable to Silicon, in such form and amounts as
Silicon may reasonably require and that are customary and in accordance with
standard practices for Borrower's industry and locations, and Borrower shall
provide evidence of such insurance to Silicon. All such insurance policies
shall name Silicon as an additional loss payee, and shall contain a lenders
loss payee endorsement in form reasonably acceptable to Silicon. Upon receipt
of the proceeds of any such insurance, Silicon shall apply such proceeds in
reduction of the Obligations as Silicon shall determine in its good faith
business judgment, except that, provided no Default or Event of Default has
occurred and is continuing, Silicon shall release to Borrower insurance
proceeds with respect to Equipment totaling less than $100,000, which shall be
utilized by Borrower for the replacement of the Equipment with respect to which
the insurance proceeds were paid. Silicon may require reasonable assurance that
the insurance proceeds so released will be so used. If Borrower fails to
provide or pay for any insurance, Silicon may, but is not obligated to, obtain
the same at Borrower's expense. Borrower shall promptly deliver to Silicon
copies of all material reports made to insurance companies.

         5.3      REPORTS. Borrower, at its expense, shall provide Silicon with
the written reports set forth in the Schedule, and such other written reports
with respect to Borrower (including budgets, sales projections, operating plans
and other financial documentation), as Silicon shall from time to time specify
in its good faith business judgment.

         5.4      ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times,
and on one Business Day's notice, Silicon, or its agents, shall have the right
to inspect the Collateral, and the right to audit and copy Borrower's books and
records. Silicon shall take reasonable steps to keep confidential all
information obtained in any such inspection or audit, but Silicon shall have
the right to disclose any such information to its auditors, regulatory
agencies, and attorneys, and pursuant to any subpoena or other legal process.
The foregoing inspections and audits shall be at Borrower's expense and the
charge therefor shall be $750 per person per day (or such higher amount as
shall represent Silicon's then current standard charge for the same), plus
reasonable out of pocket expenses.

         5.5      NEGATIVE COVENANTS. Except as may be permitted in the
Schedule, Borrower shall not, without Silicon's prior written consent (which
shall be a matter of its good faith business judgment), do any of the
following: (i) merge or consolidate with another corporation or entity; (ii)
acquire any assets, other than the Acquired Assets, except in the ordinary
course of business; (iii) enter into any other transaction outside the ordinary
course of business; (iv) sell or transfer any Collateral, except for the sale
of finished Inventory in the ordinary course of Borrower's business, and except
for the sale of obsolete or

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unneeded Equipment in the ordinary course of business; (v) store any Inventory
or other Collateral with any warehouseman or other third party , unless such
Collateral is subject to a lien waiver from such warehouseman or third party in
form and substance satisfactory in all respects to Bank; (vi) sell any
Inventory on a sale-or-return, guaranteed sale, consignment, or other
contingent basis; (vii) make any loans of any money or other assets; (viii)
incur any debts other than Permitted Debt; (ix) guarantee or otherwise become
liable with respect to the obligations of another party or entity; (x) pay or
declare any dividends on Borrower's stock (except for dividends payable solely
in stock of Borrower); (xi) redeem, retire, purchase or otherwise acquire,
directly or indirectly, any of Borrower's stock; (xii) make any change in
Borrower's capital structure which would result in a Material Adverse Change;
or (xiii) engage, directly or indirectly, in any business other than the
businesses currently engaged in by Borrower or reasonably related thereto; or
(xiv) dissolve or elect to dissolve. Transactions permitted by the foregoing
provisions of this Section are only permitted if no Default or Event of Default
would occur as a result of such transaction.

         5.6      LITIGATION COOPERATION. Should any third-party suit or
proceeding be instituted by or against Silicon with respect to any Collateral
or relating to Borrower, Borrower shall, without expense to Silicon, make
available Borrower and its officers, employees and agents and Borrower's books
and records, to the extent that Silicon may deem them reasonably necessary in
order to prosecute or defend any such suit or proceeding.

         5.7      FURTHER ASSURANCES. Borrower agrees, at its expense, on
request by Silicon, to execute all documents and take all actions, as Silicon,
may, in its good faith business judgment, deem necessary or useful in order to
perfect and maintain Silicon's perfected first-priority security interest in
the Collateral (subject to Permitted Liens), and in order to fully consummate
the transactions contemplated by this Agreement.

6.       TERM.

         6.1      MATURITY DATE. This Agreement shall continue in effect until
the maturity date set forth on the Schedule (the "Maturity Date"), subject to
Section 6.3 below.

         6.2      EARLY TERMINATION. This Agreement may be terminated prior to
the Maturity Date as follows: (i) by Borrower, effective three Business Days
after written notice of termination is given to Silicon; or (ii) by Silicon at
any time after the occurrence and during the continuance of an Event of
Default, without notice, effective immediately. If this Agreement is terminated
by Borrower or by Silicon under this Section 6.2 prior to July __, 2003,
Borrower shall pay to Silicon a termination fee in an amount equal to one
percent (1.0%) of the Maximum Credit Limit if such termination occurs after the
Closing Date and prior to January __, 2003 and one half of one percent (.50%)
of the Maximum Credit Limit if such termination occurs after January __, 2003,
but prior to July __, 2003, provided that no termination fee shall be charged
if the credit facility hereunder is replaced with a new facility from another
division of Silicon Valley Bank or from the proceeds of an initial public
offering or other equity event. The termination fee shall be due and payable on
the effective date of termination and thereafter shall bear interest at a rate
equal to the highest rate applicable to any of the Obligations.

         6.3      PAYMENT OF OBLIGATIONS. On the Maturity Date or on any
earlier effective date of termination, Borrower shall pay and perform in full
all Obligations, whether evidenced by installment notes or otherwise, and
whether or not all or any part of such Obligations are otherwise then due and
payable. Without limiting the generality of the foregoing, if on the Maturity
Date, or on any earlier effective date of termination, there are any
outstanding Letters of Credit issued by Silicon or issued by another
institution based upon an application, guarantee, indemnity or similar
agreement on the part of Silicon, then on such date Borrower shall provide to
Silicon cash collateral in an amount equal to 105% of the face amount of all
such Letters of Credit plus all interest, fees and cost due or to become due in
connection therewith (as estimated by Silicon in its good faith business
judgment), to secure all of the Obligations relating to said Letters of Credit,
pursuant to Silicon's then standard form cash pledge agreement. Notwithstanding
any termination of this Agreement, all of Silicon's security interests in all
of the Collateral and all of the terms and provisions of this Agreement shall
continue in full force and effect until all Obligations have been paid and
performed in full; provided that Silicon may, in its sole discretion, refuse to
make any further Loans after termination. No termination shall in any way
affect or impair any right or remedy of Silicon, nor shall any such termination
relieve Borrower of any Obligation to Silicon, until all of the Obligations
have been paid and performed in full. Upon payment and performance in full of
all the Obligations and termination of this Agreement, Silicon shall promptly
terminate its financing statements with respect to the Borrower and deliver to
Borrower such other documents as may be required to fully terminate Silicon's
security interests.

7.       EVENTS OF DEFAULT AND REMEDIES.

         7.1      EVENTS OF DEFAULT. The occurrence of any of the following
events shall constitute an "Event of Default" under this Agreement, and
Borrower shall give Silicon immediate written notice thereof: (a) Any warranty,
representation, statement, report or certificate made or delivered to Silicon
by Borrower or any of Borrower's officers, employees or agents, now or in

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the future, shall be untrue or misleading in a material respect when made or
deemed to be made; or (b) Borrower shall fail to pay when due any Loan or any
interest thereon or any other monetary Obligation; or (c) the total Loans and
other Obligations outstanding at any time shall exceed the Credit Limit; or (d)
Borrower shall fail to comply with any of the financial covenants set forth in
the Schedule, or shall fail to perform any other non-monetary Obligation which
by its nature cannot be cured, or shall fail to permit Silicon to conduct an
inspection or audit as specified in Section 5.4 hereof; or (e) Borrower shall
fail to perform any other non-monetary Obligation, which failure is not cured
within five Business Days after the date due; or (f) any levy, assessment,
attachment, seizure, lien or encumbrance (other than a Permitted Lien) is made
on all or any part of the Collateral which is not cured within 10 days after
the occurrence of the same; or (g) any default or event of default occurs under
any obligation secured by a Permitted Lien, which is not cured within any
applicable cure period or waived in writing by the holder of the Permitted
Lien; or (h) Borrower breaches any material contract or obligation, which has
resulted or may reasonably be expected to result in a Material Adverse Change;
or (i) dissolution, termination of existence, insolvency or business failure of
Borrower; or appointment of a receiver, trustee or custodian, for all or any
part of the property of, assignment for the benefit of creditors by, or the
commencement of any proceeding by Borrower under any reorganization,
bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future in effect;
or (j) the commencement of any proceeding against Borrower or any guarantor of
any of the Obligations under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, now or in the future in effect, which is not cured by the
dismissal thereof within 30 days after the date commenced; or (k) revocation or
termination of, or limitation or denial of liability upon, any guaranty of the
Obligations or any attempt to do any of the foregoing, or commencement of
proceedings by any guarantor of any of the Obligations under any bankruptcy or
insolvency law; or (l) revocation or termination of, or limitation or denial of
liability upon, any pledge of any certificate of deposit, securities or other
property or asset of any kind pledged by any third party to secure any or all
of the Obligations, or any attempt to do any of the foregoing, or commencement
of proceedings by or against any such third party under any bankruptcy or
insolvency law; or (m) Borrower makes any payment on account of any
indebtedness or obligation which has been subordinated to the Obligations other
than as permitted in the applicable subordination agreement, or if any Person
who has subordinated such indebtedness or obligations terminates or in any way
limits his subordination agreement; or (n) there shall be a change in the
record or beneficial ownership of an aggregate of more than 25% of the
outstanding shares of stock of Borrower, in one or more transactions, compared
to the ownership of outstanding shares of stock of Borrower in effect on the
date hereof, without the prior written consent of Silicon; or (o) Borrower
shall generally not pay its debts as they become due, or Borrower shall
conceal, remove or transfer any part of its property, with intent to hinder,
delay or defraud its creditors, or make or suffer any transfer of any of its
property which may be fraudulent under any bankruptcy, fraudulent conveyance or
similar law; or (p) a Material Adverse Change shall occur; or (q) Silicon,
acting in good faith and in a commercially reasonable manner, deems itself
insecure because of the occurrence of an event prior to the effective date
hereof of which Silicon had no knowledge on the effective date or because of
the occurrence of an event on or subsequent to the effective date. Silicon may
cease making any Loans hereunder during any of the above cure periods, and
thereafter if an Event of Default has occurred and is continuing.

         7.2      REMEDIES. Upon the occurrence and during the continuance of
any Event of Default, and at any time thereafter, Silicon, at its option, and
without notice or demand of any kind (all of which are hereby expressly waived
by Borrower), may do any one or more of the following: (a) Cease making Loans
or otherwise extending credit to Borrower under this Agreement or any other
Loan Document; (b) Accelerate and declare all or any part of the Obligations to
be immediately due, payable, and performable, notwithstanding any deferred or
installment payments allowed by any instrument evidencing or relating to any
Obligation; (c) Take possession of any or all of the Collateral wherever it may
be found, and for that purpose Borrower hereby authorizes Silicon without
judicial process to enter onto any of Borrower's premises without interference
to search for, take possession of, keep, store, or remove any of the
Collateral, and remain on the premises or cause a custodian to remain on the
premises in exclusive control thereof, without charge for so long as Silicon
deems it necessary, in its good faith business judgment, in order to complete
the enforcement of its rights under this Agreement or any other agreement;
provided, however, that should Silicon seek to take possession of any of the
Collateral by court process, Borrower hereby irrevocably waives: (i) any bond
and any surety or security relating thereto required by any statute, court rule
or otherwise as an incident to such possession; (ii) any demand for possession
prior to the commencement of any suit or action to recover possession thereof;
and (iii) any requirement that Silicon retain possession of, and not dispose
of, any such Collateral until after trial or final judgment; (d) Require
Borrower to assemble any or all of the Collateral and make it available to
Silicon at places designated by Silicon which are reasonably convenient to
Silicon and Borrower, and to remove the Collateral to such locations as Silicon
may deem advisable; (e) Complete the processing, manufacturing or repair of any
Collateral prior to a disposition thereof and, for such purpose and for the
purpose of removal, Silicon shall have the right to use Borrower's premises,
vehicles, hoists, lifts, cranes, and other Equipment and all other property
without charge; (f) Sell, lease or otherwise dispose of any of the Collateral,
in its condition at the time Silicon obtains possession of it or after further
manufacturing,

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processing or repair, at one or more public and/or private sales, in lots or in
bulk, for cash, exchange or other property, or on credit, and to adjourn any
such sale from time to time without notice other than oral announcement at the
time scheduled for sale. Silicon shall have the right to conduct such
disposition on Borrower's premises without charge, for such time or times as
Silicon deems reasonable, or on Silicon's premises, or elsewhere and the
Collateral need not be located at the place of disposition. Silicon may
directly or through any affiliated company purchase or lease any Collateral at
any such public disposition, and if permissible under applicable law, at any
private disposition. Any sale or other disposition of Collateral shall not
relieve Borrower of any liability Borrower may have if any Collateral is
defective as to title or physical condition or otherwise at the time of sale;
(g) Demand payment of, and collect any Accounts and General Intangibles
comprising Collateral and, in connection therewith, Borrower irrevocably
authorizes Silicon to endorse or sign Borrower's name on all collections,
receipts, instruments and other documents, to take possession of and open mail
addressed to Borrower and remove therefrom payments made with respect to any
item of the Collateral or proceeds thereof, and, in Silicon's good faith
business judgment, to grant extensions of time to pay, compromise claims and
settle Accounts and the like for less than face value; (h) Offset against any
sums in any of Borrower's general, special or other Deposit Accounts with
Silicon against any or all of the Obligations; and (i) Demand and receive
possession of any of Borrower's federal and state income tax returns and the
books and records utilized in the preparation thereof or referring thereto. All
reasonable attorneys' fees, expenses, costs, liabilities and obligations
incurred by Silicon with respect to the foregoing shall be added to and become
part of the Obligations, shall be due on demand, and shall bear interest at a
rate equal to the highest interest rate applicable to any of the Obligations.
Without limiting any of Silicon's rights and remedies, from and after the
occurrence and during the continuance of any Event of Default, the interest
rate applicable to the Obligations shall be increased by an additional four
percent per annum (the "Default Rate").

         7.3      STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower
and Silicon agree that a sale or other disposition (collectively, "sale") of
any Collateral which complies with the following standards will conclusively be
deemed to be commercially reasonable: (i) Notice of the sale is given to
Borrower at least ten days prior to the sale, and, in the case of a public
sale, notice of the sale is published at least five days before the sale in a
newspaper of general circulation in the county where the sale is to be
conducted; (ii) Notice of the sale describes the collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by
Silicon, with or without the Collateral being present; (iv) The sale commences
at any time between 8:00 a.m. and 6:00 p.m.; (v) Payment of the purchase price
in cash or by cashier's check or wire transfer is required; (vi) With respect
to any sale of any of the Collateral, Silicon may (but is not obligated to)
direct any prospective purchaser to ascertain directly from Borrower any and
all information concerning the same. Silicon shall be free to employ other
methods of noticing and selling the Collateral, in its discretion, if they are
commercially reasonable.

         7.4      POWER OF ATTORNEY. Upon the occurrence and during the
continuance of any Event of Default, without limiting Silicon's other rights
and remedies, Borrower grants to Silicon an irrevocable power of attorney
coupled with an interest, authorizing and permitting Silicon (acting through
any of its employees, attorneys or agents) at any time, at its option, but
without obligation, with or without notice to Borrower, and at Borrower's
expense, to do any or all of the following, in Borrower's name or otherwise,
but Silicon agrees that if it exercises any right hereunder, it will do so in
good faith and in a commercially reasonable manner: (a) Execute on behalf of
Borrower any documents that Silicon may, in its good faith business judgment,
deem advisable in order to perfect and maintain Silicon's security interest in
the Collateral, or in order to exercise a right of Borrower or Silicon, or in
order to fully consummate all the transactions contemplated under this
Agreement, and all other Loan Documents; (b) Execute on behalf of Borrower, any
invoices relating to any Account, any draft against any Account Debtor and any
notice to any Account Debtor, any proof of claim in bankruptcy, any Notice of
Lien, claim of mechanic's, materialman's or other lien, or assignment or
satisfaction of mechanic's, materialman's or other lien; (c) Take control in
any manner of any cash or non-cash items of payment or proceeds of Collateral;
endorse the name of Borrower upon any instruments, or documents, evidence of
payment or Collateral that may come into Silicon's possession; (d) Endorse all
checks and other forms of remittances received by Silicon; (e) Pay, contest or
settle any lien, charge, encumbrance, security interest and adverse claim in or
to any of the Collateral, or any judgment based thereon, or otherwise take any
action to terminate or discharge the same; (f) Grant extensions of time to pay,
compromise claims and settle Accounts and General Intangibles for less than
face value and execute all releases and other documents in connection
therewith; (g) Pay any sums required on account of Borrower's taxes or to
secure the release of any liens therefor, or both; (h) Settle and adjust, and
give releases of, any insurance claim that relates to any of the Collateral and
obtain payment therefor; (i) Instruct any third party having custody or control
of any books or records belonging to, or relating to, Borrower to give Silicon
the same rights of access and other rights with respect thereto as Silicon has
under this Agreement; and (j) Take any action or pay any sum required of
Borrower pursuant to this Agreement and any other Loan Documents. Any and all
reasonable sums paid and any and all reasonable costs, expenses, liabilities,
obligations and attorneys' fees incurred by Silicon with respect to the
foregoing shall be added to and become part of the Obligations, shall be
payable on demand, and shall bear interest at a rate equal to the highest
interest rate applicable to any of the Obligations. In no event shall Silicon's

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rights under the foregoing power of attorney or any of Silicon's other rights
under this Agreement be deemed to indicate that Silicon is in control of the
business, management or properties of Borrower.

         7.5      APPLICATION OF PROCEEDS. All proceeds realized as the result
of any sale of the Collateral shall be applied by Silicon first to the
reasonable costs, expenses, liabilities, obligations and attorneys' fees
incurred by Silicon in the exercise of its rights under this Agreement, second
to the interest due upon any of the Obligations, and third to the principal of
the Obligations, in such order as Silicon shall determine in its sole
discretion. Any surplus shall be paid to Borrower or other persons legally
entitled thereto; Borrower shall remain liable to Silicon for any deficiency.
If, Silicon, in its good faith business judgment, directly or indirectly enters
into a deferred payment or other credit transaction with any purchaser at any
sale of Collateral, Silicon shall have the option, exercisable at any time, in
its good faith business judgment, of either reducing the Obligations by the
principal amount of purchase price or deferring the reduction of the
Obligations until the actual receipt by Silicon of the cash therefor, and to
the extent Silicon defers applying the purchase price to the Obligations and
receives interest on the purchase price from such purchaser, Silicon will
reduce the amount of the Obligations by the amount of interest actually
received by Silicon.

         7.6      REMEDIES CUMULATIVE. In addition to the rights and remedies
set forth in this Agreement, Silicon shall have all the other rights and
remedies accorded a secured party under the California Uniform Commercial Code
and under all other applicable laws, and under any other instrument or
agreement now or in the future entered into between Silicon and Borrower, and
all of such rights and remedies are cumulative and none is exclusive. Exercise
or partial exercise by Silicon of one or more of its rights or remedies shall
not be deemed an election, nor bar Silicon from subsequent exercise or partial
exercise of any other rights or remedies. The failure or delay of Silicon to
exercise any rights or remedies shall not operate as a waiver thereof, but all
rights and remedies shall continue in full force and effect until all of the
Obligations have been fully paid and performed.

8.       DEFINITIONS. As used in this agreement, the following terms have the
following meanings:

         "Account Debtor" means the obligor on an Account.

         "Accounts" means all present and future "accounts" as defined in the
Code in effect on the date hereof with such additions to such term as may
hereafter be made, and includes without limitation all accounts receivable and
other sums owing to Borrower.

         "Affiliate" means, with respect to any Person, a relative, partner,
shareholder, director, officer, or employee of such Person, or any parent or
subsidiary of such Person, or any Person controlling, controlled by or under
common control with such Person.

         "Bridge Loan Debt" shall mean indebtedness of U.S. RealTel, Inc. and
Borrower of up to $8,000,000 pursuant to that certain Loan Agreement dated July
__, 2002 by and among U.S. RealTel, Inc., and Borrower (as borrowers), and J.
Oliver Cunningham Trust dated February 26, 1971, an Indiana trust, the Anne C.
McClure Trust dated February 26, 1971, an Illinois trust, the Jane C. Warriner
Trust dated February 26, 1971, an Indiana trust, Noro-Moseley Partners V, L.P.,
a Georgia limited partnership and Wakefield Group III, LLC, a North Carolina
limited liability company (as lenders).

         "Business Day" means a day on which Silicon is open for business.

         "Code" means the Uniform Commercial Code as adopted and in effect in
the State of California from time to time.

         "Collateral" has the meaning set forth in Section 2 above.

         "continuing" and "during the continuance of" when used with reference
to a Default or Event of Default means that the Default or Event of Default has
occurred and has not been either waived in writing by Silicon or cured within
any applicable cure period.

         "Convertible Notes" shall mean indebtedness of U.S. RealTel, Inc.
which is guaranteed by Borrower of up to $12,000,000 pursuant to U.S. RealTel's
7.5% convertible notes due July 1, 2009.

         "Default" means any event which with notice or passage of time or
both, would constitute an Event of Default.

         "Default Rate" has the meaning set forth in Section 7.2 above.

         "Deposit Accounts" means all present and future "deposit accounts" as
defined in the Code in effect on the date hereof with such additions to such
term as may hereafter be made, and includes without limitation all general and
special bank accounts, demand accounts, checking accounts, savings accounts and
certificates of deposit.

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         "Eligible Accounts" means Accounts and General Intangibles arising in
the ordinary course of Borrower's business from the sale of goods or the
rendition of services, or the non-exclusive licensing of Intellectual Property,
which Silicon, in its good faith business judgment, shall deem eligible for
borrowing. Without limiting the fact that the determination of which Accounts
are eligible for borrowing is a matter of Silicon's good faith business
judgment, the following (the "Minimum Eligibility Requirements") are the
minimum requirements for a Account to be an Eligible Account: (i) the Account
must not be outstanding for more than 90 days from its invoice date (the
"Eligibility Period"), (ii) the Account must not represent progress billings,
or be due under a fulfillment or requirements contract with the Account Debtor,
(iii) the Account must not be subject to any contingencies (including Accounts
arising from sales on consignment, guaranteed sale or other terms pursuant to
which payment by the Account Debtor may be conditional), (iv) the Account must
not be owing from an Account Debtor with whom Borrower has any dispute (whether
or not relating to the particular Account), (v) the Account must not be owing
from an Affiliate of Borrower, (vi) the Account must not be owing from an
Account Debtor which is subject to any insolvency or bankruptcy proceeding, or
whose financial condition is not acceptable to Silicon, or which, fails or goes
out of a material portion of its business, (vii) the Account must not be owing
from the United States or any department, agency or instrumentality thereof
(unless there has been compliance, to Silicon's satisfaction, with the United
States Assignment of Claims Act), (viii) the Account must not be owing from an
Account Debtor located outside the United States or Canada (unless pre-approved
by Silicon in its discretion in writing, or backed by a letter of credit
satisfactory to Silicon, or FCIA insured satisfactory to Silicon), (ix) the
Account must not be owing from an Account Debtor to whom Borrower is or may be
liable for goods purchased from such Account Debtor or otherwise (but, in such
case, the Account will be deemed not eligible only to the extent of any amounts
owed by Borrower to such Account Debtor). Accounts owing from one Account
Debtor will not be deemed Eligible Accounts to the extent they exceed 25% of
the total Accounts outstanding. In addition, if more than 50% of the Accounts
owing from an Account Debtor are outstanding for a period longer than their
Eligibility Period (without regard to unapplied credits) or are otherwise not
Eligible Accounts, then all Accounts owing from that Account Debtor will be
deemed ineligible for borrowing. In addition, prior to including any Accounts
acquired as part of the Acquired Assets as Eligible Accounts, Silicon shall
have completed a satisfactory audit of such Accounts. Silicon may, from time to
time, in its good faith business judgment, revise the Minimum Eligibility
Requirements, upon written notice to Borrower.

         "Eligible Inventory" means all Inventory of Borrower held for sale in
the ordinary course of business, valued at the lowest of the net purchase cost
or the lowest bulk market price, provided, however, that at any time that a
Permitted Overadvance occurs and is continuing under this Agreement, the value
of such Inventory shall be determined based upon an appraisal of the Inventory
from an appraiser acceptable to Silicon. Eligible Inventory shall exclude, any
Inventory which consists of: (a) any Inventory located outside of the United
States; (b) any Inventory located outside of a state in which Silicon has
properly and unavoidably perfected the Liens of Silicon under this Agreement,
free and clear of all other Liens; (b) any Inventory not in the actual
possession of Borrower, except to the extent provided in subsection (d) below;
(c) any Inventory in the possession of a bailee, warehouseman, consignee or
similar third party, except to the extent that such bailee, warehouseman,
consignee or similar third party has entered into an agreement with Silicon in
which such bailee, warehouseman, consignee or similar third party consents and
agrees to Silicon's Lien on such Inventory and to such other terms and
conditions as may be required by Silicon; (d) any Inventory located on premises
leased or rented to Borrower or otherwise not owned by Borrower, unless Silicon
has received a waiver and consent from the lessor, landlord and/or owner, in
form and substance satisfactory to Silicon; (e) any Inventory the sale or other
disposition of which has given rise to a Eligible Account; (f) work-in-process,
supplies, displays, packaging and promotional materials; (g) any Inventory as
to which Silicon determines in the exercise of its sole and absolute discretion
at any time and in good faith is not in good condition or is defective,
unmerchantable, post-seasonal, slow moving or obsolete; and (h) any Inventory
which in Silicon's good faith business judgment has deemed to be ineligible
because Silicon otherwise considers the collateral value to Silicon to be
impaired or its or their ability to realize such value to be insecure. In the
event of any dispute under the foregoing criteria, as to whether Inventory is,
or has ceased to be, Eligible Inventory, the decision of Silicon shall control.

         "Equipment" means all present and future "equipment" as defined in the
Code in effect on the date hereof with such additions to such term as may
hereafter be made, and includes without limitation all machinery, fixtures,
goods, vehicles (including motor vehicles and trailers), and any interest in
any of the foregoing.

         "Event of Default" means any of the events set forth in Section 7.1 of
this Agreement.

         "GAAP" means generally accepted accounting principles consistently
applied.

         "General Intangibles" means all present and future "general
intangibles" as defined in the Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without
limitation all Intellectual Property, payment intangibles, royalties, contract
rights, goodwill, franchise agreements, purchase orders, customer lists, route
lists, telephone

                                     -10-
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SILICON VALLEY BANK                                 LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------

numbers, domain names, claims, income tax refunds, security and other deposits,
options to purchase or sell real or personal property, rights in all litigation
presently or hereafter pending (whether in contract, tort or otherwise),
insurance policies (including without limitation key man, property damage, and
business interruption insurance), payments of insurance and rights to payment
of any kind.

         "good faith business judgment" means honesty in fact and good faith
(as defined in Section 1201 of the Code) in the exercise of Silicon's business
judgment.

         "including" means including (but not limited to).

         "Intellectual Property" means all present and future (a) copyrights,
copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work thereof, whether
published or unpublished, (b) trade secret rights, including all rights to
unpatented inventions and know-how, and confidential information; (c) mask work
or similar rights available for the protection of semiconductor chips; (d)
patents, patent applications and like protections including without limitation
improvements, divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same; (e) trademarks, servicemarks, trade styles,
and trade names, whether or not any of the foregoing are registered, and all
applications to register and registrations of the same and like protections,
and the entire goodwill of the business of Borrower connected with and
symbolized by any such trademarks; (f) computer software and computer software
products; (g) designs and design rights; (h) technology; (i) all claims for
damages by way of past, present and future infringement of any of the rights
included above; and (j) all licenses or other rights to use any property or
rights of a type described above.

         "Inventory" means all present and future "inventory" as defined in the
Code in effect on the date hereof with such additions to such term as may
hereafter be made, and includes without limitation all merchandise, raw
materials, parts, supplies, packing and shipping materials, work in process and
finished products, including without limitation such inventory as is
temporarily out of Borrower's custody or possession or in transit and including
any returned goods and any documents of title representing any of the above.

         "Investment Property" means all present and future investment
property, securities, stocks, bonds, debentures, debt securities, partnership
interests, limited liability company interests, options, security entitlements,
securities accounts, commodity contracts, commodity accounts, and all financial
assets held in any securities account or otherwise, and all options and
warrants to purchase any of the foregoing, wherever located, and all other
securities of every kind, whether certificated or uncertificated.

         "Loan Documents" means, collectively, this Agreement, the
Representations, and all other present and future documents, instruments and
agreements between Silicon and Borrower, including, but not limited to those
relating to this Agreement, and all amendments and modifications thereto and
replacements therefor.

         "Material Adverse Change" means any of the following: (i) a material
adverse change in the business, operations, or financial or other condition of
the Borrower, or (ii) a material impairment of the prospect of repayment of any
portion of the Obligations; or (iii) a material impairment of the value or
priority of Silicon's security interests in the Collateral.

         "Obligations" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Borrower to Silicon, whether evidenced by this Agreement or any
note or other instrument or document, or otherwise, whether arising from an
extension of credit, opening of a letter of credit, banker's acceptance, loan,
guaranty, indemnification or otherwise, whether direct or indirect (including,
without limitation, those acquired by assignment and any participation by
Silicon in Borrower's debts owing to others), absolute or contingent, due or to
become due, including, without limitation, all interest, charges, expenses,
fees, attorney's fees, expert witness fees, audit fees, letter of credit fees,
collateral monitoring fees, closing fees, facility fees, termination fees,
minimum interest charges and any other sums chargeable to Borrower under this
Agreement or under any other Loan Documents.

         "Other Property" means the following as defined in the Code in effect
on the date hereof with such additions to such term as may hereafter be made,
and all rights relating thereto: all present and future "commercial tort
claims" (including without limitation any commercial tort claims identified in
the Representations), "documents", "instruments", "promissory notes", "chattel
paper", "letters of credit", "letter-of-credit rights", "fixtures", "farm
products" and "money"; and all other goods and personal property of every kind,
tangible and intangible, whether or not governed by the California Uniform
Commercial Code.

         "Permitted Debt" means: (i) the Loans; (ii) any unsecured indebtedness
arising in the ordinary course of business of Borrowers, including trade
payables, utility costs, payroll and benefit obligations, accrued tax
liabilities and other non-

                                     -11-
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SILICON VALLEY BANK                                 LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------

extraordinary accounts payable; (iii) the Bridge Loan Debt; (iv) the
Convertible Notes; (v) the Seller Debt; and (vi) such other indebtedness
described on EXHIBIT ___ attached hereto. [TO BE DETERMINED IF THERE SHALL BE
ANY].

         "Permitted Liens" means the following: (i) purchase money security
interests in specific items of Equipment; (ii) leases of specific items of
Equipment; (iii) liens for taxes not yet payable; (iv) additional security
interests and liens consented to in writing by Silicon, which consent may be
withheld in its good faith business judgment; (v) security interests being
terminated substantially concurrently with this Agreement; (vi) liens of
materialmen, mechanics, warehousemen, carriers, or other similar liens arising
in the ordinary course of business and securing obligations which are not
delinquent; (vii) liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by liens of the type described above in
clauses (i) or (ii) above, provided that any extension, renewal or replacement
lien is limited to the property encumbered by the existing lien and the
principal amount of the indebtedness being extended, renewed or refinanced does
not increase; (viii) liens in favor of customs and revenue authorities which
secure payment of customs duties in connection with the importation of goods.
Silicon will have the right to require, as a condition to its consent under
subparagraph (iv) above, that the holder of the additional security interest or
lien sign an intercreditor agreement on Silicon's then standard form,
acknowledge that the security interest is subordinate to the security interest
in favor of Silicon, and agree not to take any action to enforce its
subordinate security interest so long as any Obligations remain outstanding,
and that Borrower agree that any uncured default in any obligation secured by
the subordinate security interest shall also constitute an Event of Default
under this Agreement.

         "Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.

         "Purchase Agreement Transaction" means the asset purchase agreement
transaction contemplated by the provisions of the Purchase Agreement.

         "Representations" means the written Representations and Warranties
provided by Borrower to Silicon referred to in the Schedule.

         "Reserves" means, as of any date of determination, such amounts as
Silicon may from time to time establish and revise in its good faith business
judgment, reducing the amount of Loans, Letters of Credit and other financial
accommodations which would otherwise be available to Borrower under the lending
formula(s) provided in the Schedule: (a) to reflect events, conditions,
contingencies or risks which, as determined by Silicon in its good faith
business judgment, do or may adversely affect (i) the Collateral or any other
property which is security for the Obligations or its value (including without
limitation any increase in delinquencies of Accounts), (ii) the assets,
business or prospects of Borrower or any guarantor of the Obligations, or (iii)
the security interests and other rights of Silicon in the Collateral (including
the enforceability, perfection and priority thereof); or (b) to reflect
Silicon's good faith belief that any collateral report or financial information
furnished by or on behalf of Borrower or any Guarantor to Silicon is or may
have been incomplete, inaccurate or misleading in any material respect; or (c)
in respect of any state of facts which Silicon determines in good faith
constitutes an Event of Default or may, with notice or passage of time or both,
constitute an Event of Default.

         "Seller Debt" shall mean indebtedness of U.S. RealTel, Inc., and/or
Borrower payable to Worldcom, Inc. and/or any of its subsidiaries and/or
affiliates under the terms of the Purchase Agreement, as amended.

         Other Terms. All accounting terms used in this Agreement, unless
otherwise indicated, shall have the meanings given to such terms in accordance
with GAAP, consistently applied. All other terms contained in this Agreement,
unless otherwise indicated, shall have the meanings provided by the Code, to
the extent such terms are defined therein.

9.       GENERAL PROVISIONS.

         9.1      INTEREST COMPUTATION. In computing interest on the
Obligations, all wire transfers shall be deemed applied on account of the
Obligations on the day of receipt by Silicon thereof and all checks and other
items of payment received by Silicon (including proceeds of Accounts and
payment of the Obligations in full) shall be deemed applied by Silicon on
account of the Obligations two (2) Business Days after receipt by Silicon. For
purposes of the foregoing, any such funds received after 12:00 Noon (Pacific
standard time) on any day shall be deemed received on the next Business Day.
Silicon shall not, however, be required to credit Borrower's account for the
amount of any item of payment which is unsatisfactory to Silicon in its good
faith business judgment, and Silicon may charge Borrower's loan account for the
amount of any item of payment which is returned to Silicon unpaid.

         9.2      APPLICATION OF PAYMENTS. All payments with respect to the
Obligations may be applied, and in Silicon's good faith business judgment
reversed and re-applied, to the Obligations, in such order and manner as
Silicon shall determine in its good faith business judgment.

                                     -12-
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SILICON VALLEY BANK                                 LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------

         9.3      CHARGES TO ACCOUNTS. Silicon may, in its discretion, require
that Borrower pay monetary Obligations in cash to Silicon, or charge them to
Borrower's Loan account, in which event they will bear interest at the same
rate applicable to the Loans. Silicon may also, in its discretion, charge any
monetary Obligations to Borrower's Deposit Accounts maintained with Silicon.

         9.4      MONTHLY ACCOUNTINGS. Silicon shall provide Borrower monthly
with an account of advances, charges, expenses and payments made pursuant to
this Agreement. Such account shall be deemed correct, accurate and binding on
Borrower and an account stated (except for reverses and reapplications of
payments made and corrections of errors discovered by Silicon), unless Borrower
notifies Silicon in writing to the contrary within 60 days after such account
is rendered, describing the nature of any alleged errors or omissions.

         9.5      NOTICES. All notices to be given under this Agreement shall
be in writing and shall be given either personally or by reputable private
delivery service or by regular first-class mail, or certified mail return
receipt requested, addressed to Silicon or Borrower at each of the addresses
shown in the heading to this Agreement, or at any other address designated in
writing by one party to the other party. Notices to Silicon shall be directed
to the Commercial Finance Division, to the attention of the Division Manager or
the Division Credit Manager. All notices shall be deemed to have been given
upon delivery in the case of notices personally delivered, or at the expiration
of one Business Day following delivery to the private delivery service, or five
(5) Business Days following the deposit thereof in the United States mail, with
postage prepaid.

         9.6      SEVERABILITY. Should any provision of this Agreement be held
by any court of competent jurisdiction to be void or unenforceable, such defect
shall not affect the remainder of this Agreement, which shall continue in full
force and effect.

         9.7      INTEGRATION. This Agreement and such other written
agreements, documents and instruments as may be executed in connection herewith
are the final, entire and complete agreement between Borrower and Silicon and
supersede all prior and contemporaneous negotiations and oral representations
and agreements, all of which are merged and integrated in this Agreement. There
are no oral understandings, representations or agreements between the parties
which are not set forth in this Agreement or in other written agreements signed
by the parties in connection herewith.

         9.8      WAIVERS; INDEMNITY. The failure of Silicon at any time or
times to require Borrower to strictly comply with any of the provisions of this
Agreement or any other Loan Document shall not waive or diminish any right of
Silicon later to demand and receive strict compliance therewith. Any waiver of
any default shall not waive or affect any other default, whether prior or
subsequent, and whether or not similar. None of the provisions of this
Agreement or any other Loan Document shall be deemed to have been waived by any
act or knowledge of Silicon or its agents or employees, but only by a specific
written waiver signed by an authorized officer of Silicon and delivered to
Borrower. Borrower waives the benefit of all statutes of limitations relating
to any of the Obligations or this Agreement or any other Loan Document, and
Borrower waives demand, protest, notice of protest and notice of default or
dishonor, notice of payment and nonpayment, release, compromise, settlement,
extension or renewal of any commercial paper, instrument, account, General
Intangible, document or guaranty at any time held by Silicon on which Borrower
is or may in any way be liable, and notice of any action taken by Silicon,
unless expressly required by this Agreement. Borrower hereby agrees to
indemnify Silicon and its affiliates, subsidiaries, parent, directors,
officers, employees, agents, and attorneys, and to hold them harmless from and
against any and all claims, debts, liabilities, demands, obligations, actions,
causes of action, penalties, costs and expenses (including reasonable
attorneys' fees), of every kind, which they may sustain or incur based upon or
arising out of any of the Obligations, or any relationship or agreement between
Silicon and Borrower, or any other matter, relating to Borrower or the
Obligations; provided that this indemnity shall not extend to damages
proximately caused by the indemnitee's own gross negligence or willful
misconduct. Notwithstanding any provision in this Agreement to the contrary,
the indemnity agreement set forth in this Section shall survive any termination
of this Agreement and shall for all purposes continue in full force and effect.

         9.9      NO LIABILITY FOR ORDINARY NEGLIGENCE. Neither Silicon, nor
any of its directors, officers, employees, agents, attorneys or any other
Person affiliated with or representing Silicon shall be liable for any claims,
demands, losses or damages, of any kind whatsoever, made, claimed, incurred or
suffered by Borrower or any other party through the ordinary negligence of
Silicon, or any of its directors, officers, employees, agents, attorneys or any
other Person affiliated with or representing Silicon, but nothing herein shall
relieve Silicon from liability for its own gross negligence or willful
misconduct.

         9.10     AMENDMENT. The terms and provisions of this Agreement may not
be waived or amended, except in a writing executed by Borrower and a duly
authorized officer of Silicon.

         9.11     TIME OF ESSENCE. Time is of the essence in the performance by
Borrower of each and every obligation under this Agreement.

                                     -13-
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SILICON VALLEY BANK                                 LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------

         9.12     ATTORNEYS FEES AND COSTS. Borrower shall reimburse Silicon
for all reasonable attorneys' fees and all filing, recording, search, title
insurance, appraisal, audit, and other reasonable costs incurred by Silicon,
pursuant to, or in connection with, or relating to this Agreement (whether or
not a lawsuit is filed), including, but not limited to, any reasonable
attorneys' fees and costs Silicon incurs in order to do the following: prepare
and negotiate this Agreement and all present and future documents relating to
this Agreement; obtain legal advice in connection with this Agreement or
Borrower; enforce, or seek to enforce, any of its rights; prosecute actions
against, or defend actions by, Account Debtors; commence, intervene in, or
defend any action or proceeding; initiate any complaint to be relieved of the
automatic stay in bankruptcy; file or prosecute any probate claim, bankruptcy
claim, third-party claim, or other claim; examine, audit, copy, and inspect any
of the Collateral or any of Borrower's books and records; protect, obtain
possession of, lease, dispose of, or otherwise enforce Silicon's security
interest in, the Collateral; and otherwise represent Silicon in any litigation
relating to Borrower. In satisfying Borrower's obligation hereunder to
reimburse Silicon for attorneys fees, Borrower may, for convenience, issue
checks directly to Silicon's attorneys, Troutman Sanders LLP, but Borrower
acknowledges and agrees that Troutman Sanders LLP is representing only Silicon
and not Borrower in connection with this Agreement. If either Silicon or
Borrower files any lawsuit against the other predicated on a breach of this
Agreement, the prevailing party in such action shall be entitled to recover its
reasonable costs and attorneys' fees, including (but not limited to) reasonable
attorneys' fees and costs incurred in the enforcement of, execution upon or
defense of any order, decree, award or judgment. All attorneys' fees and costs
to which Silicon may be entitled pursuant to this Paragraph shall immediately
become part of Borrower's Obligations, shall be due on demand, and shall bear
interest at a rate equal to the highest interest rate applicable to any of the
Obligations.

         9.13     BENEFIT OF AGREEMENT. The provisions of this Agreement shall
be binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of Borrower and Silicon; provided,
however, that Borrower may not assign or transfer any of its rights under this
Agreement without the prior written consent of Silicon, and any prohibited
assignment shall be void. No consent by Silicon to any assignment shall release
Borrower from its liability for the Obligations.

         9.14     JOINT AND SEVERAL LIABILITY. If Borrower consists of more
than one Person, their liability shall be joint and several, and the compromise
of any claim with, or the release of, any Borrower shall not constitute a
compromise with, or a release of, any other Borrower.

         9.15     LIMITATION OF ACTIONS. Any claim or cause of action by
Borrower against Silicon, its directors, officers, employees, agents,
accountants or attorneys, based upon, arising from, or relating to this Loan
Agreement, or any other Loan Document, or any other transaction contemplated
hereby or thereby or relating hereto or thereto, or any other matter, cause or
thing whatsoever, occurred, done, omitted or suffered to be done by Silicon,
its directors, officers, employees, agents, accountants or attorneys, shall be
barred unless asserted by Borrower by the commencement of an action or
proceeding in a court of competent jurisdiction by the filing of a complaint
within one year after the first act, occurrence or omission upon which such
claim or cause of action, or any part thereof, is based, and the service of a
summons and complaint on an officer of Silicon, or on any other person
authorized to accept service on behalf of Silicon, within thirty (30) days
thereafter. Borrower agrees that such one-year period is a reasonable and
sufficient time for Borrower to investigate and act upon any such claim or
cause of action. The one-year period provided herein shall not be waived,
tolled, or extended except by the written consent of Silicon in its sole
discretion. This provision shall survive any termination of this Loan Agreement
or any other Loan Document.

         9.16     PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are only
used in this Agreement for convenience. Borrower and Silicon acknowledge that
the headings may not describe completely the subject matter of the applicable
paragraph, and the headings shall not be used in any manner to construe, limit,
define or interpret any term or provision of this Agreement. This Agreement has
been fully reviewed and negotiated between the parties and no uncertainty or
ambiguity in any term or provision of this Agreement shall be construed
strictly against Silicon or Borrower under any rule of construction or
otherwise.

         9.17     GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all
acts and transactions hereunder and all rights and obligations of Silicon and
Borrower shall be governed by the laws of the State of Georgia. As a material
part of the consideration to Silicon to enter into this Agreement, Borrower (i)
agrees that all actions and proceedings relating directly or indirectly to this
Agreement shall, at Silicon's option, be litigated in courts located within the
State of Georgia, provided that if for any reason Silicon can not avail itself
of the courts of Georgia then the exclusive venue therefor shall be Santa Clara
County, California; (ii) consents to the jurisdiction and venue of any such
court and consents to service of process in any such action or proceeding by
personal delivery or any other method permitted by law; and (iii) waives any
and all rights Borrower may have to object to the jurisdiction of any such
court, or to transfer or change the venue of any such action or proceeding.

         9.18     MUTUAL WAIVER OF JURY TRIAL. BORROWER AND SILICON EACH HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY

                                     -14-
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SILICON VALLEY BANK                                 LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------

RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR
AGREEMENT BETWEEN SILICON AND BORROWER, OR ANY CONDUCT, ACTS OR OMISSIONS OF
SILICON OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SILICON OR BORROWER, IN ALL OF
THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

Borrower:                                    Silicon:

CYPRESS COMMUNICATIONS, INC.                 SILICON VALLEY BANK

By                                           By
  ------------------------------               --------------------------------
  President or Vice President                Title
                                                  -----------------------------

By
  ------------------------------
  Secretary or Ass't Secretary

                                     -15-
<PAGE>
SILICON VALLEY BANK                                 LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------

SILICON VALLEY BANK

                                  SCHEDULE TO

                          LOAN AND SECURITY AGREEMENT

BORROWER:         CYPRESS COMMUNICATIONS, INC.
ADDRESS:          15 PIEDMONT CENTER, SUITE 100
                  ATLANTA, GEORGIA 30305

DATE:             JULY ____ , 2002

This Schedule forms an integral part of the Loan and Security Agreement between
Silicon Valley Bank and the above-borrower of even date.

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

1.  CREDIT LIMIT
     (Section 1.1):                     An amount not to exceed the lesser of:
                                        (i) $10,000,000 at any one time
                                        outstanding (the "Maximum Credit
                                        Limit"); or (ii) the sum of (a) eighty
                                        percent (80%) (the "Advance Rate") of
                                        the amount of Borrower's Eligible
                                        Accounts and (b) the lesser of (i)
                                        fifty percent (50%) of Eligible
                                        Inventory or (ii) $1,000,000 (both as
                                        defined in Section 8 above).

                                        Silicon may, from time to time, modify
                                        the Advance Rate, in its good faith
                                        business judgment, upon notice to the
                                        Borrower, based on changes in
                                        collection experience with respect to
                                        Accounts or other issues or factors
                                        relating to the Accounts or other
                                        Collateral.

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

2.  INTEREST.

         INTEREST RATE (Section 1.2):

                                        A rate equal to the "Prime Rate" in
                                        effect from time to time, plus two
                                        percent (2.0%) per annum.
                                        Notwithstanding the foregoing, Silicon
                                        agrees that if Borrower generates
                                        EBITDA equal to or in excess of seventy
                                        percent (70%) of the amounts set forth
                                        in the projections provided to, and
                                        accepted by Silicon, for two (2)
                                        successive calendar quarters, the rate
                                        of interest in effect from time to time
                                        hereunder will be reduced to the Prime
                                        Rate plus one and one quarter percent
                                        (1.25%) per

<PAGE>
SILICON VALLEY BANK                                 LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------

                                        annum. The Prime Rate in effect on any
                                        day shall not be less than four and
                                        three quarter percent (4.75%) per annum.
                                        Interest shall be calculated on the
                                        basis of a 360-day year for the actual
                                        number of days elapsed. "Prime Rate"
                                        means the rate announced from time to
                                        time by Silicon as its "prime rate;"
                                        it is a base rate upon which other
                                        rates charged by Silicon are based,
                                        and it is not necessarily the best
                                        rate available at Silicon. The
                                        interest rate applicable to the
                                        Obligations shall change on each date
                                        there is a change in the Prime Rate.

                                        For purposes hereof, "EBITDA" means
                                        Borrower's earnings before interest,
                                        taxes and depreciation expense for such
                                        period.

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

3.  FEES (Section 1.4):

         Loan Fee:                      Seventy Five Thousand Dollars ($75,000)
                                        payable concurrently herewith and Fifty
                                        Thousand Dollars ($50,000) payable on
                                        the first anniversary of the Closing
                                        Date.

         Collateral Monitoring
         Fee:                           One Thousand Five Hundred  Dollars
                                        ($1,500) per month, payable in arrears
                                        (prorated for any partial month at the
                                        beginning and at termination of this
                                        Agreement).

         Unused Portion Fee:            The Borrower shall pay to Silicon a
                                        fee (collectively, the "Unused Line
                                        Fees" and individually, a "Unused Line
                                        Fee") in an amount equal to one
                                        quarter of one percent (0.25%) per
                                        annum of the average daily unused and
                                        undisbursed portion of the Maximum
                                        Credit Limit accruing during each
                                        month. The accrued and unpaid portion
                                        of the Unused Line Fee shall be paid by
                                        the Borrower to Silicon on the last day
                                        of each month, commencing on the first
                                        such date following the date hereof,
                                        and on the Maturity Date.

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

4.  MATURITY DATE
     (Section 6.1):                     July __, 2004.

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

5.  FINANCIAL COVENANTS
     (Section 5.1):

                                        Borrower shall comply with each of the
                                        following covenants. Compliance shall
                                        be determined as of the end of each
                                        month, except as otherwise specifically
                                        provided below:

<PAGE>
SILICON VALLEY BANK                                 LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------

MINIMUM TANGIBLE

NET WORTH:                              Borrower shall maintain a Tangible Net
                                        Worth, tested as of the last day of
                                        each month of not less than $23,000,000,
                                        plus fifty percent (50%) of
                                        consolidated net income (without regard
                                        to any loss) from each year of the
                                        Borrower commencing with the fiscal year
                                        ending in 2002.

         DEFINITIONS.                   For purposes of the foregoing financial
                                        covenants, the following term shall
                                        have the following meaning:

                                        "Tangible Net Worth" shall mean the
                                        excess of total assets over total
                                        liabilities, determined in accordance
                                        with GAAP, with the following
                                        adjustments:

                                            (A)       there shall be excluded
                                            from assets: (i) notes, accounts
                                            receivable and other obligations
                                            owing to Borrower from its officers
                                            or other Affiliates, and (ii) all
                                            assets which would be classified as
                                            intangible assets under GAAP,
                                            including without limitation
                                            goodwill, licenses, patents,
                                            trademarks, trade names,
                                            copyrights, capitalized software
                                            and organizational costs, licenses
                                            and franchises

                                            (B)       there shall be excluded
                                            from liabilities: all indebtedness
                                            which is subordinated to the
                                            Obligations under a subordination
                                            agreement in form specified by
                                            Silicon or by language in the
                                            instrument evidencing the
                                            indebtedness which Silicon agrees
                                            in writing is acceptable to Silicon
                                            in its good faith business judgment.

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

6.  REPORTING.
      (Section 5.3):

                                        Borrower shall provide Silicon with the
                                        following:

                                        1.   Weekly transaction reports and
                                             schedules of collections, on
                                             Silicon's standard form.

                                        2.   Monthly accounts receivable
                                             agings, aged by invoice date,
                                             within fifteen days after the end
                                             of each month.

                                        3.   Monthly accounts payable agings,
                                             aged by invoice date, and
                                             outstanding or held check
                                             registers, if any, within fifteen
                                             days after the end of each month.

                                        4.   Monthly reconciliations of
                                             accounts receivable agings (aged
                                             by invoice date), transaction
                                             reports, and general ledger,
                                             within fifteen days after the end
                                             of each month.

<PAGE>
SILICON VALLEY BANK                                 LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------

                                        5.   Monthly perpetual inventory
                                             reports for the Inventory valued
                                             on a first-in, first-out basis at
                                             the lower of cost or market (in
                                             accordance with GAAP) or such
                                             other inventory reports as are
                                             requested by Silicon in its good
                                             faith business judgment, all
                                             within fifteen days after the end
                                             of each month.

                                        6.   Monthly unaudited financial
                                             statements, as soon as available,
                                             and in any event within thirty
                                             days after the end of each month.

                                        7.   Monthly Compliance Certificates,
                                             within thirty days after the end
                                             of each month, in such form as
                                             Silicon shall reasonably specify,
                                             signed by the Chief Financial
                                             Officer of Borrower, certifying
                                             that as of the end of such month
                                             Borrower was in full compliance
                                             with all of the terms and
                                             conditions of this Agreement, and
                                             setting forth calculations showing
                                             compliance with the financial
                                             covenants set forth in this
                                             Agreement and such other
                                             information as Silicon shall
                                             reasonably request, including,
                                             without limitation, a statement
                                             that at the end of such month
                                             there were no held checks.

                                        8.   Quarterly unaudited financial
                                             statements, as soon as available,
                                             and in any event within forty-five
                                             days after the end of each fiscal
                                             quarter of Borrower.

                                        9.   Annual operating budgets
                                             (including income statements,
                                             balance sheets and cash flow
                                             statements, by month) for the
                                             upcoming fiscal year of Borrower
                                             within thirty days prior to the
                                             end of each fiscal year of
                                             Borrower.

                                        10.  Annual financial statements, as
                                             soon as available, and in any
                                             event within 120 days following
                                             the end of Borrower's fiscal year,
                                             certified by, and with an
                                             unqualified opinion of,
                                             independent certified public
                                             accountants acceptable to Silicon.

<PAGE>
SILICON VALLEY BANK                                 LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------

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

7.  BORROWER INFORMATION:

                                        Borrower represents and warrants that
                                        the information set forth in the
                                        Representations and Warranties of the
                                        Borrower dated July 11, 2002 previously
                                        submitted to Silicon (the
                                        "Representations") is true and correct
                                        as of the date hereof.

===============================================================================
8.  ADDITIONAL PROVISIONS

                                        1.   BANKING RELATIONSHIP. Borrower
                                             shall at all times maintain its
                                             primary banking relationship
                                             with Silicon. As to any Deposit
                                             Accounts and investment accounts
                                             maintained with another
                                             institution, Borrower shall
                                             cause such institution, within
                                             30 days after the date of this
                                             Agreement, to enter into a
                                             control agreement in form
                                             acceptable to Silicon in its
                                             good faith business judgment in
                                             order to perfect Silicon's
                                             first-priority security interest
                                             in said Deposit Accounts and
                                             investment accounts.

                                        2.   SUBORDINATION OF INSIDE DEBT.
                                             All present and future
                                             indebtedness of Borrower to its
                                             officers, directors and
                                             shareholders ("Inside Debt")
                                             shall, at all times, be
                                             subordinated to the Obligations
                                             pursuant to a subordination
                                             agreement on Silicon's standard
                                             form. Borrower represents and
                                             warrants that there is no Inside
                                             Debt presently outstanding,
                                             except for the following: the
                                             Bridge Loans and the Convertible
                                             Notes. Prior to incurring any
                                             Inside Debt in the future,
                                             Borrower shall cause the person
                                             to whom such Inside Debt will be
                                             owed to execute and deliver to
                                             Silicon a subordination
                                             agreement on Silicon's standard
                                             form.

                                        3.   INTELLECTUAL PROPERTY SECURITY
                                             AGREEMENT. As a condition
                                             precedent to the effectiveness of
                                             this Agreement, the Borrower shall
                                             have executed and delivered an
                                             Intellectual Property Security
                                             Agreement (the "IP Security
                                             Agreement"), substantially in the
                                             form attached hereto as Exhibit B.

<PAGE>
SILICON VALLEY BANK                                 LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------

Borrower:                                    Silicon:

CYPRESS COMMUNICATIONS, INC.                 SILICON VALLEY BANK

By                                         By
  ------------------------------               --------------------------------
  President or Vice President              Title
                                                  -----------------------------

By
  ------------------------------
  Secretary or Ass't Secretary

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