Document:

SHAREHOLDERS AGREEMENT

                              Dated as of [ ], 2000

                                      among

                          WINSTAR COMMUNICATIONS, INC.

                                       [ ]

                                       [ ]

                                       and

                            THE OTHER PERSONS LISTED
                         ON THE SIGNATURES PAGES HEREOF

<PAGE>

                                TABLE OF CONTENTS

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

                                                                       PAGE

ARTICLE 1
         DEFINITIONS
SECTION 1.01.  Definitions..............................................1

ARTICLE 2
         RIGHTS AND OBLIGATIONS WITH RESPECT TO TRANSFER
SECTION 2.01.  General Restrictions.....................................5
SECTION 2.02.  Agreement to Be Bound....................................6
SECTION 2.03.  Legends..................................................6

ARTICLE 3
         REGISTRATION RIGHTS
SECTION 3.01.  Definitions..............................................7
SECTION 3.02.  Demand Registration Rights...............................8
SECTION 3.03.  Piggy-Back Registration Rights..........................11
SECTION 3.04.  Registration Procedures.................................13
SECTION 3.05.  Participation in Underwritten Registrations.............16
SECTION 3.06.  Holdback Agreements.....................................16
SECTION 3.07.  Indemnification.........................................17
SECTION 3.08.  Shelf Registration......................................20

ARTICLE 4
         CORPORATE GOVERNANCE; COVENANTS
SECTION 4.01.  Board of Directors......................................21
SECTION 4.02.  Financial Information...................................23

ARTICLE 5
         STANDSTILL
SECTION 5.01.  Definitions.............................................23
SECTION 5.02.  Acquisition of Voting Securities........................24
SECTION 5.03.  Certain Actions.........................................25

                                        i

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                                                                       PAGE

ARTICLE 6
         MISCELLANEOUS
SECTION 6.01.  Headings................................................26
SECTION 6.02.  No Inconsistent Agreements..............................26
SECTION 6.03.  Entire Agreement........................................26
SECTION 6.04.  Notices.................................................26
SECTION 6.05.  Applicable Law; Submission to Jurisdiction..............27
SECTION 6.06.  Severability............................................27
SECTION 6.07.  Successors, Assigns, Transferees........................27
SECTION 6.08.  Amendments; Waivers.....................................28
SECTION 6.09.  Counterparts............................................28
SECTION 6.10.  Recapitalization, etc...................................28
SECTION 6.11.  Remedies................................................28
SECTION 6.12.  Fees and Expenses.......................................28
SECTION 6.13.  Reasonable Best Efforts.................................29

                                       ii

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                             SHAREHOLDERS AGREEMENT

         SHAREHOLDERS AGREEMENT dated as of [ ], 2000 among Winstar
Communications, Inc., a Delaware corporation (the "Issuer"), [
              ], [ ], and each of the other Persons listed on the signature
pages hereof. Each of the parties to this Agreement (other than the Issuer) and
any other Person who, pursuant to the terms hereof, shall become a party to or
agree to be bound by the terms of this Agreement after the date hereof is
sometimes hereinafter referred to as a "Holder".

         WHEREAS, the parties hereto are among the parties to a Securities
Purchase Agreement dated as of December 15, 1999 (as amended from time to time,
the "Subscription Agreement") pursuant to which the Holders purchased Series G
Shares (as defined below) from the Issuer; and

         WHEREAS, the parties hereto desire to provide for certain rights and
obligations relating to the capital stock of the Issuer and certain matters
relating to the conduct of the business and the affairs of the Issuer following
the date hereof.

         NOW, THEREFORE, the parties hereto agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         SECTION 1.01.  Definitions.  (a) The following terms, as used herein,
have the following meanings:

         "Affiliate" means, with respect to any Person, any other Person,
directly or indirectly, controlling, controlled by, or under common control
with, such Person; provided that, for purposes of this Agreement, (i) the Issuer
shall not be treated as an Affiliate of any Holder or its Affiliates, (ii) a
Holder and its Affiliates shall not be treated as Affiliates of the Issuer or
its Affiliates or as Affiliates of any other Holder or such Holder's Affiliates
solely by reason of its ownership interest in the Issuer and (iii) any portfolio
company of a Holder shall not be treated as an Affiliate of such Holder. For
purposes of this definition, the term "control" (including the correlative terms
"controlling", "controlled by" and "under common control with") means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise.

<PAGE>

         "beneficial ownership" and "beneficially own" shall be determined in
accordance with Rules 13d-3 and 13d-5 under the Exchange Act.

         "Board of Directors" means the Board of Directors of the Issuer.

         "Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the City of New York are authorized by law to close.

         ["CSFB" means Credit Suisse First Boston Equity Partners, L.P., a
Delaware limited partnership.]1

         ["CSFB Bermuda" means Credit Suisse First Boston Equity Partners
(Bermuda), L.P., a Bermuda limited partnership.]1

         ["CSFB EMA" means EMA Private Equity Fund 1999, L.P., a Delaware
limited partnership.]1

         ["CSFB Entities " means, collectively, CSFB, CSFB Bermuda and CSFB
EMA.]1

         "Commission" means the Securities and Exchange Commission or any
successor commission or agency having similar powers.

         "Common Shares" means shares of the common stock of the Issuer, par
value $0.01 per share.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

         "Fully-Diluted Basis" means to take into account all outstanding shares
of Common Stock, shares issuable in respect of stock appreciation rights or
options, warrants and other rights to purchase or subscribe for Common Stock or
securities convertible into or exchangeable for Common Stock.

         "group" shall have the meaning set forth in Section 13(d)(3) of the
Exchange Act.

         "Initial Holdings" means, with respect to any Person, the number of
Common Shares that would be received upon conversion of the Series G Shares
purchased by such Person pursuant to the Subscription Agreement.

--------
    1  CSFB Agreement only.

                                        2

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         ["Microsoft" means Microsoft Corporation, a Washington corporation.]2

         "Permitted Transferee" means:

             [(i) with respect to any [ ] Entity, (v) any Affiliate of such [ ]
         Entity, [(w) any general or limited partner of such [ ] Entity (a
         "Partner"),]3 (x) any officer, general partner, director or limited
         partner of such [ ] Entity or Partner (collectively, "Associates"), (y)
         the heirs, executors, administrators, testamentary trustees, legatees
         or beneficiaries of any Associate and (z) a trust, corporation,
         partnership or other entity substantially all the economic interests of
         which are held by or for the benefit of such [ ] Entity or any of its
         Affiliates, Partners, Associates, and any of their spouses or children
         (whether by birth or adoption);]4

             (ii) with respect to any Holder that is an individual, (x) the
         spouse, children (whether by birth or adoption) grandparents,
         grandchildren, aunts, uncles, nieces and nephews of such Holder, (y) a
         Person to whom Shares are Transferred by such Holder by will or the
         laws of descent and distribution and (z) a trust established for the
         exclusive benefit of such Holder or any of the Persons referred to in
         clause (x); and

             [(iii)   with respect to [       ], any Affiliate of such Holder.]2

         "Person" means an individual, partnership, corporation, limited
liability company, trust, joint stock company, association, joint venture, or
any other entity or organization.

         "Public Offering" means any underwritten public offering of equity
securities of the Issuer pursuant to an effective registration statement under
the Securities Act other than pursuant to a registration statement on Form S-4
or Form S-8 or any successor or similar form.

         "Rouhana Letter Agreement" means a letter agreement dated as of the
date hereof among William Rouhana, Jr., the Issuer and the persons listed on the
signature pages thereof.

         "Series G Shares" means shares of Series G Senior Cumulative
Participating Convertible Preferred Stock, par value $0.01 per share, of the
Issuer.

--------
     2  Microsoft Agreement only.

     3  CSFB Agreement and WCAS Agreement only.

     4  CSFB Agreement and WCAS Agreement only.

                                        3

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         "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

         "Shares" means the Common Shares and the Series G Shares.

         "Subsidiary" means any entity of which ownership interests having
ordinary voting power to elect a majority of the board of directors or other
Persons performing similar functions are at the time directly or indirectly
owned by the Issuer.

         "Transaction Agreements" means this Agreement, the Subscription
Agreement and the Rouhana Letter Agreement.

         "Transfer" means, with respect to any security, (i) when used as a
verb, to sell, assign, dispose of, exchange or otherwise transfer such security
or any interest therein, whether directly or indirectly, or agree or commit to
do any of the foregoing and (ii) when used as a noun, a direct or indirect sale,
assignment, disposition, exchange or other transfer of such security or any
interest therein or any agreement or commitment to do any of the foregoing.

         ["WCAS Entities" means each of WCAS VIII, WCAS IP and WCAS
Individual Investors.]5

         ["WCAS Individual Investors" means, collectively, the individual
investors that are listed on the signature pages hereof.]5

         ["WCAS IP" means WCAS Information Partners, L.P., a Delaware limited
partnership.]5

         ["WCAS VIII" means Welsh, Carson, Anderson & Stowe VIII, L.P., a
Delaware limited partnership.]5

          (b) Each of the following terms is defined in the Section set forth
opposite such term:

               Term                                  Section
            -----------                             ---------
Acquisition Proposal                                   5.01
Daily Price                                            5.01
Disadvantageous Condition                          3.02(a)(ii)
Holder                                               Preamble
Indemnified Party                                    3.07(c)
Indemnifying Party                                   3.07(c)

--------
     5  WCAS Agreement only.

                                        4

<PAGE>

               Term                                  Section
            -----------                             ---------
Inspectors                                           3.04(h)
Issuer                                               Preamble
Majority Requesting Holders                        3.02(a)(ii)
Market Price Per Common Share                          5.01
Maximum Offering Size                                3.02(b)
Records                                              3.04(h)
Registering Holders                                    3.01
Registrable Common Shares                              3.01
Registration Expenses                                  3.01
Requesting Holder                                      3.01
Rule 144                                               2.01(a)
Subscription Agreement                               Recitals
Voting Securities                                      5.01

                                    ARTICLE 2
                 RIGHTS AND OBLIGATIONS WITH RESPECT TO TRANSFER

         SECTION 2.01. General Restrictions. (a) No Holder may Transfer any
Shares to any Person or group to the extent that, after giving effect to such
Transfer, such Holder knows, or has reason to believe, after asking such Person
or group, that such Person or group would beneficially own more than 5% of the
outstanding Common Shares calculated on a Fully-Diluted Basis, except (i)
pursuant to a Public Offering in which the underwriters have been instructed to
pursue a broad distribution or pursuant to Rule 144 (or any successor provision)
under the Securities Act (as such rule may be amended from time to time, "Rule
144"), (ii) to the Issuer or to a Permitted Transferee of such Holder or (iii)
with the prior written consent of the Issuer.

          (b) Each Transfer of Shares must be made in compliance with the
Securities Act, any applicable state and foreign securities law and this Article
2. Each Holder understands and agrees that the Shares have not been registered
under the Securities Act and that they are restricted securities. Any attempt to
Transfer, pledge, grant a security interest in, or otherwise encumber any Shares
not in compliance with this Agreement shall be null and void and neither the
Issuer nor any transfer agent shall give any effect in the Issuer's transfer
records to such Transfer, pledge, grant or encumbrance.

         SECTION 2.02. Agreement to Be Bound. No Transfer of Shares otherwise
permitted pursuant to Article 2 (other than Transfers pursuant to a Public
Offering or Rule 144 or Transfers to the Issuer) shall be effective unless (i)
the certificates representing such Shares delivered to such transferee shall
bear the legend set forth in Section 2.03, if required by such Section, and (ii)
prior to such Transfer, (A) such transferee (if not already a party to this
Agreement) shall have executed and delivered to the Issuer an instrument or

                                        5

<PAGE>

instruments substantially in the form of Exhibit A hereto confirming that such
transferee has agreed to be bound as a "Holder" by the terms of this Agreement,
a copy of which instrument shall be maintained on file with the Secretary of the
Issuer and shall include the address of such transferee to which notices
hereunder shall be sent and (B) if so requested by the Issuer, upon receipt of
an opinion of counsel (which shall be reasonably acceptable to the Issuer) to
the effect that such Shares may be sold or transferred pursuant to an exemption
from registration under the Securities Act, [ ; provided that the provisions of
clause (ii) above shall not be applied to any Transfer by a Holder of any of its
Shares to the partners of such Holder pursuant to a distribution in respect of
the partnership interests of such Holder].6

         SECTION 2.03.  Legends.  (a) Each certificate evidencing outstanding
Shares acquired by any Holder shall bear a legend in substantially the following
form:

                  THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
                  ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, OR
                  TRANSFERRED EXCEPT IN COMPLIANCE THEREWITH. THE SECURITIES
                  REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL
                  RESTRICTIONS ON TRANSFER AS SET FORTH IN THE SHAREHOLDERS
                  AGREEMENT DATED AS OF [ ], 2000, A COPY OF WHICH WILL BE
                  FURNISHED BY THE ISSUER UPON REQUEST AND WITHOUT CHARGE.

          (b) If any Shares (i) shall (in the case of Common Shares) cease to be
Registrable Common Shares, (ii) may be sold pursuant to Rule 144(k) or otherwise
in the public market without being registered under the Securities Act or (iii)
are sold pursuant to Rule 144 (other than Rule 144(k)), upon the written request
of the holder thereof, the Issuer shall issue, in the case of clauses (i) and
(ii) above, to such holder and, in the case of clause (iii), to the purchaser
thereof, a new certificate evidencing such Shares without the first sentence of
the legend required by Section 2.03(a) hereof endorsed thereon. If any Shares
shall cease to be subject to the restrictions on Transfer set forth in this
Agreement, the Issuer shall, upon the written request of the holder thereof,
issue to such holder a new certificate evidencing such Shares without the second
sentence of the legend (or the reference therein to the applicable agreement)
required by Section 2.03(a) hereof endorsed thereon.

--------
    6 CSFB Agreement and WCAS Agreement only.

                                        6

<PAGE>

                                    ARTICLE 3
                               REGISTRATION RIGHTS

         SECTION 3.01.  Definitions.  The following terms, as used in this
Article 3, have the following meanings:

         "Piggyback Holders" means Persons (other than the Holders) who hold
Series G Shares or Common Shares received upon conversion of Series G Shares and
who are entitled to incidental registration rights pursuant to an agreement
(other than this Agreement) with the Issuer.

         "Registering Holders" means Holders and Piggyback Holders whose
Registrable Common Shares are covered by or offered pursuant to a registration
statement filed pursuant to this Article 3.

         "Registrable Common Shares" means all Common Shares of the Issuer owned
by the Holders and the Piggyback Holders or into which the Series G Shares owned
by the Holders and the Piggyback Holders may be converted. Registrable Common
Shares shall cease to be Registrable Common Shares when (i) a registration
statement with respect to the sale of such Common Shares shall have become
effective under the Securities Act and such Common Shares shall have been
disposed of pursuant to such registration statement, or (ii) such Common Shares
shall have ceased to be outstanding.

         "Registration Expenses" means all (i) registration, qualification and
filing fees, (ii) fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of a qualified independent
underwriter, if any, counsel in connection therewith and the reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Common Shares), (iii) printing expenses, (iv) internal expenses of
the Issuer (including, without limitation, all salaries and expenses of officers
and employees performing legal or accounting duties), (v) fees and disbursements
of counsel for the Issuer, (vi) customary fees and expenses for independent
certified public accountants retained by the Issuer (including the expenses of
any comfort letters or costs associated with the delivery by independent
certified public accountants of a comfort letter or comfort letters), (vii) fees
and expenses of any special experts retained by the Issuer in connection with
such registration, (viii) reasonable fees and expenses of one separate firm of
attorneys for the Registering Holders (which counsel shall be selected by the
Registering Holders selling securities constituting a majority of all securities
to be included in such registration in the case of any registration pursuant to
Section 3.02) and (ix) fees and expenses of listing the Registrable Common
Shares on a securities exchange; but shall not include any underwriting fees or
discounts or commissions attributable to the sale of Registrable Common Shares.

                                        7

<PAGE>

         "Requesting Holder" means [any WCAS Entity] [any CSFB Entity]
[Microsoft].

         SECTION 3.02. Demand Registration Rights. (a) Registration on Request.
Subject to Section 3.08, if one or more Requesting Holders desire to effect the
registration under the Securities Act of outstanding Registrable Common Shares
pursuant to a Public Offering, such Requesting Holders may make a written
request that the Issuer effect such registration; provided that, no Requesting
Holder shall make any such written request (1) during the pendency of, and for a
period of 90 days after the effective date of, any Public Offering of securities
for the account of the Issuer, (2) for a period of six months after the
effective date of any Public Offering of Common Shares for the account of any
Person other than the Issuer pursuant to the exercise of a demand registration
right covering Common Shares acquired upon exercise of Series G Shares and (3)
prior to the first anniversary of the date hereof. Each such request will
specify the number of shares of Registrable Common Shares proposed to be sold
and will also specify the intended method of disposition thereof. The Issuer
will promptly give written notice of such requested registration to all other
Holders of Registrable Common Shares and all Piggyback Holders of Registrable
Common Shares, and thereupon will use its best efforts to effect, as promptly as
practicable, the registration under the Securities Act of:

          (i) the Registrable Common Shares which the Issuer has been so
         requested to register by such Requesting Holders pursuant to this
         Section 3.02; and

          (ii) the Registrable Common Shares which the Issuer has been requested
         to register by all Holders (other than such Requesting Holders) and all
         Piggyback Holders by written request given to the Issuer within 15 days
         after the giving of such written notice by the Issuer;

all to the extent necessary to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Common Shares so to be
registered; provided that:

          (x) the Issuer shall not be obligated to effect a registration
         pursuant to this Section 3.02 unless the aggregate number of
         Registrable Common Shares to be sold is greater than or equal to
         2,500,000;

          (y) subject to Section 3.02(f), the Issuer shall not be obligated to
         effect more than one registration pursuant to this Section 3.02; and

          (z) at the time of any request to register Registrable Common Shares
         pursuant to this Section 3.02, if the Board of Directors determines in
         its good faith reasonable judgment that the Issuer should not file any
         registration statement otherwise required to be filed pursuant to

                                        8

<PAGE>

         Section 3.02(a) because the Issuer is engaged in any financing,
         acquisition or other material transaction which would require the
         Issuer to disclose material non-public information (a "Disadvantageous
         Condition"), the Issuer shall be entitled to postpone for the shortest
         reasonable period of time (but not exceeding 90 days from the date of
         the request), the filing of such registration statement and shall
         promptly give the Requesting Holders written notice of such
         determination, containing a general statement of the reasons for such
         postponement and an approximation of the anticipated delay. Such right
         to delay a request for registration pursuant to this Section 3.02 may
         not be exercised more than twice in any 12-month period. If the Issuer
         shall so postpone the filing of the registration statement, the
         Requesting Holders proposing to sell securities constituting a
         majority of all securities requested to be included by all Requesting
         Holders (the "Majority Requesting Holders") shall have the right to
         withdraw (without prejudice to their rights under clause (y) above)
         the request for registration by giving written notice to the Issuer
         within 30 days after receipt of the notice of postponement.

         Promptly after the expiration of the 15-day period referred to in
clause (ii) above, the Issuer shall notify each holder of Registrable Common
Shares to be included in the registration of the other holders requesting
Registrable Common Shares to be included therein and the number of Registrable
Common Shares requested to be included therein. The Majority Requesting Holders
may, at any time prior to the effective date of the registration statement
relating to such registration, revoke such request, without liability to any
other holder holding Registrable Common Shares requested to be registered
pursuant to clause (ii) above, by providing a written notice to the Issuer
revoking such request; provided that, if as a result thereof such registration
is abandoned, all Registration Expenses shall be borne by the Requesting Holders
revoking such registration pro rata in accordance with the number of securities
requested by them to be included in such registration, in which case such
revocation shall be without prejudice to the rights of the Holders under clause
(y) above.

          (b) Priority Participation in Requested Registrations. If the managing
underwriter shall advise the Issuer that, in its view, the number of securities
requested to be included in such registration (including securities which the
Issuer may request to be included which are not Registrable Common Shares)
exceeds the largest number of securities which can be sold without having a
material adverse effect on such offering (the "Maximum Offering Size"),
including the price at which such securities can be sold, the Issuer will
include in such registration:

           (i) first, the Registrable Common Shares requested to be included in
         such registration pursuant to Section 3.02(a)(i) or (ii) by all Holders
         and their Permitted Transferees and all Piggyback Holders, allocated
         (if necessary) among such holders pro rata based on the number

                                        9

<PAGE>

         of Registrable Common Shares requested to be included in such
         registration; and

           (ii) second, Common Shares to be sold for the account of other
         Persons (including the Issuer), with such priorities among them as the
         Issuer shall determine.

          (c) Registration Statement Form. Registrations under this Section 3.02
shall be on such appropriate registration form of the Commission (i) as shall be
selected by the Issuer, subject to Section 3.02(a), and as shall be reasonably
acceptable to the Requesting Holders and (ii) as shall permit the disposition of
such Registrable Common Shares in accordance with the method or methods of
disposition intended on the part of the Requesting Holders who initiated the
request. Notwithstanding anything herein to the contrary, if, pursuant to a
registration request under this Section 3.02, the Issuer proposes to effect
registration by filing of a registration statement on Form S-3 (or any successor
or similar short-form registration statement) and any managing underwriter shall
advise the Issuer in writing that, in its opinion, the use of another form of
registration statement is of material importance to the success of such proposed
offering, then such registration shall be effected on such other form.

          (d) Expenses. The Issuer will pay promptly all Registration Expenses
in connection with the registration requests made pursuant to this Section 3.02.

          (e) Underwriters. The managing underwriter or underwriters of any
Public Offering effected pursuant to this Section 3.02 shall be selected by the
Registering Holders proposing to sell securities constituting a majority of all
securities requested to be included by all Registering Holders, which selection
shall be reasonably satisfactory to the Issuer, it being understood that the
selection of Credit Suisse First Boston Corporation shall be deemed to be
satisfactory to the Issuer. The price, terms and provisions of such offering
shall be subject to the approval of the Requesting Holders. The Issuer will
enter into customary agreements (including an underwriting agreement in
customary form) and take such other actions as are reasonably required in order
to expedite or facilitate the disposition of such Registrable Common Shares. The
Holders shall not be required by the Issuer to make any representation or
warranty in the underwriting agreement in connection with such offering other
than as to their ownership and authority to Transfer, free of liens, claims and
encumbrances (other than those that arise under the terms of this Agreement).

          (f) If at least 75% of the Registrable Common Shares requested to be
registered by the Requesting Holders are not included in such registration, then
the Requesting Holders shall have the right to require the Issuer to effect an

                                       10

<PAGE>

additional registration under the Securities Act of all or part of the
Requesting Holders' Registrable Common Shares in accordance with this Section
3.02 and the Issuer shall pay the Registration Expenses in connection with such
additional registration.

         SECTION 3.03. Piggy-Back Registration Rights. (a) Right to Include
Registrable Common Shares. Subject to Section 3.08, if the Issuer at any time
proposes to register any of its equity securities under the Securities Act
(other than (i) by a registration on Form S-4, Form S-8 or any successor or
similar form, (ii) pursuant to a registration requested pursuant to Section
3.02, (iii) in connection with a direct acquisition by the Issuer of another
Person or (iv) pursuant to an employee share purchase plan, dividend
reinvestment plan or similar plan of the Issuer), in each case whether or not
for sale for its own account, it will at each such time give prompt written
notice at least 30 days prior to the anticipated filing date of the registration
statement relating to such registration to all Holders of Registrable Common
Shares of its intention to do so and of such Holders' rights under this Section
3.03. Any such notice shall offer all such Holders, subject to Section 3.08, the
opportunity to include in such registration such number of Registrable Common
Shares as each such Holder may request. Upon the written request of any Holder
made within 15 days after the receipt of any such notice (which request shall
specify the number of Registrable Common Shares intended to be disposed of by
such Holder), the Issuer will use its best efforts to effect the registration
with the Commission under the Securities Act and any related qualification or
other compliance of all Registrable Common Shares which the Issuer has been so
requested to register, to the extent required to permit the disposition of the
Registrable Common Shares to be so registered; provided that if, at any time
after giving written notice of its intention to register any securities and
prior to the effective date of the registration statement filed in connection
with such registration, the Issuer shall determine for any reason not to
register or to delay registration of such securities, the Issuer shall give
written notice of such determination to each Holder and, thereupon, (x) in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Common Shares in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights of any Holder entitled to
do so, to request that such registration be effected as a registration under
Section 3.02, and (y) in the case of a determination to delay registering, shall
be permitted to delay registering any Registrable Common Shares, for the same
period as the delay in registering such other securities. Each Holder holding
Registrable Common Shares requesting to be included in such registration may
elect, in writing not less than 5 Business Days prior to the effective date of
the registration statement filed in connection with such registration, not to
register such securities in connection with such registration. No registration
effected under this Section 3.03 shall relieve the Issuer of its obligation to
effect any registration upon request under Section 3.02. The Issuer will pay

                                       11

<PAGE>

promptly all Registration Expenses in connection with each registration of
Registrable Common Shares requested pursuant to this Section 3.03.

          (b) Priority in Incidental Registrations. If a registration pursuant
to this Section 3.03 involves a Public Offering and the managing underwriter
shall advise the Issuer that, in its view, the number or proposed mix of
securities (including all Registrable Common Shares) which the Issuer, the
Holders and any other Persons intend to include in such registration exceeds the
Maximum Offering Size, the Issuer will include in such registration, in the
priority listed below, securities up to the Maximum Offering Size:

            (i) first, (A) if such registration has been initiated by the Issuer
         for its own account, the equity securities the Issuer proposes to sell
         or (B) if such registration has not been initiated by the Issuer or a
         Piggyback Holder, the equity securities proposed to be sold by the
         security holder(s) initiating such registration;

            (ii) second, the Registrable Common Shares requested to be included
         in such registration by all Holders and their Permitted Transferees and
         all Piggyback Holders, allocated (if necessary) among such holders pro
         rata based on the number of Registrable Common Shares requested by them
         to be included in such registration, subject to any incidental
         registration rights granted a higher priority under contracts existing
         on the date hereof; and

            (iii) third, equity securities to be sold for the account of other
         Persons having incidental registration rights and, if such registration
         has not been initiated by the Issuer, the Issuer, with such priorities
         among them as the Issuer shall determine.

         SECTION 3.04. Registration Procedures. If the Issuer is required to use
its best efforts to effect the registration of any Registrable Common Shares
under the Securities Act as provided in Section 3.02 or 3.03, the Issuer will,
as promptly as possible:

          (a) prepare and file with the Commission a registration statement on
an appropriate form (subject to 3.02(c)), and thereafter use its best efforts to
cause such registration statement to become effective and to remain effective
pursuant to the terms of the underwriting agreement and prepare and file with
the Commission such amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for the period specified pursuant to the terms
of the underwriting agreement and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement until such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the
Registering Holders thereof set forth in such registration statement; provided
that the Issuer will, at least 5 Business Days (or at least 3 Business Days in
the case of incidental registrations) prior to filing a registration statement
or prospectus or any amendment or supplement thereto, furnish to each
Registering Holder copies of such registration statement or prospectus (or

                                       12

<PAGE>

amendment or supplement) as proposed to be filed (including, upon the request of
such Holder, documents to be incorporated by reference therein) which documents
will be subject to the reasonable review and comments of such Holder (and its
attorneys) during such 5-Business Day period (or 3-Business Day period, as the
case may be) and the Issuer will not file any registration statement, any
prospectus or any amendment or supplement thereto (or any such documents
incorporated by reference) containing any statements with respect to such Holder
to which such Holder shall reasonably object in writing;

          (b) furnish to each Registering Holder and to any underwriter such
number of conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case including all exhibits), the
prospectus contained in such registration statement (including each preliminary
prospectus and any summary prospectus) and any other prospectus filed under Rule
424 or Rule 430A under the Securities Act, in conformity with the requirements
of the Securities Act, documents incorporated by reference in such registration
statement, amendment, supplement or prospectus and such other documents (in each
case including all exhibits), as a Registering Holder or underwriter may
reasonably request;

          (c) after the filing of the registration statement, promptly notify
each Registering Holder of the effectiveness thereof and of any stop order
issued or threatened by the Commission and take all reasonable actions required
to prevent the entry of such stop order or to remove it if entered and promptly
notify such Registering Holder of such lifting or withdrawal of such order;

          (d) use its reasonable best efforts to register or qualify all
Registrable Common Shares and other securities covered by such registration
statement under such other securities or blue sky laws of such jurisdictions as
the Registering Holders holding a majority of the Registrable Common Shares to
be included in such registration or the underwriter shall reasonably request, to
keep such registration or qualification in effect for so long as such
registration statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable the Registering Holders to
consummate the disposition in such jurisdictions of the securities owned by such
Registering Holders, except that the Issuer shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this Section
3.04(d) be obligated to be so qualified, to subject itself to taxation in any
such jurisdiction or to consent to general service of process in any such
jurisdiction;

                                       13

<PAGE>

          (e) use its reasonable best efforts to cause all Registrable Common
Shares covered by such registration statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to enable
the Registering Holders to consummate the disposition of such Registrable Common
Shares;

          (f) furnish to each Registering Holder and to each underwriter, if
any, a signed counterpart of: (i) an opinion of counsel for the Issuer addressed
to such Holder and underwriter on which opinion both Holder and such underwriter
are entitled to rely and (ii) a "comfort" letter signed by the independent
public accountants who have certified the Issuer's financial statements included
in such registration statement, each in customary form and covering such matters
of the type customarily covered by opinions or comfort letters, as the case may
be, as the Registering Holders holding a majority of the Registrable Common
Shares included in such registration or the managing underwriter therefor
reasonably request. The Issuer will use its best efforts to have such comfort
letters addressed to each Registering Holder;

          (g) immediately notify each Registering Holder at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, upon discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made, and promptly prepare and furnish to such Registering Holder a reasonable
number of copies of any supplement to or amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such securities,
such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
statements therein not misleading in the light of the circumstances under which
they were made;

          (h) make available for inspection by any Registering Holder, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other professional retained by any
such Holder or underwriter (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the Issuer
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and shall cause (i) the Issuer's
officers, directors and employees to supply all information reasonably requested
by any Inspectors and (ii) the senior management of the Issuer and its
Subsidiaries to participate in any "road show" presentations to investors for
such period of time as is reasonably requested by the managing underwriters, in
each case in connection with such registration statement. Each such Holder
agrees that information obtained by it as a result of such inspections shall be
deemed confidential and shall not be used by it as the basis for any market
transactions in the securities of the Issuer or its Affiliates unless and until
such information is made generally available to the public. Each such Holder
further agrees that it will, upon learning that disclosure of such Records is

                                       14

<PAGE>

sought in a court of competent jurisdiction, give notice to the Issuer and allow
the Issuer, at its expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential;

          (i) use its reasonable best efforts to list all Registrable Common
Shares covered by such registration statement on any securities exchange or
quotation system on which any of the Registrable Common Shares is then listed or
traded; and

          (j) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement or
such other document that shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder.

         The Issuer may require each Registering Holder to promptly furnish to
the Issuer, as a condition precedent to including such Registering Holder's
Registrable Common Shares in any registration, such written information
regarding such Registering Holder and the distribution of such securities as the
Issuer may from time to time reasonably request in writing.

         Each Holder agrees that upon receipt of any notice from the Issuer of
the happening of any event of the kind described in Section 3.04(g), such Holder
will forthwith discontinue such Holder's disposition of Registrable Common
Shares pursuant to the registration statement relating to such Registrable
Common Shares until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3.04(g) and, if so directed by the
Issuer, will deliver to the Issuer (at the Issuer's expense) all copies, other
than permanent file copies, then in such Holder's possession, of the prospectus
and any amendments or supplements thereto relating to such Registrable Common
Shares current at the time of receipt of such notice. In the event the Issuer
shall give such notice, the Issuer shall extend the period during which the
effectiveness of such registration statement shall be maintained by the number
of days during the period from and including the date of the giving of notice
pursuant to Section 3.04(g) to the date when the Issuer shall make available to
the Holders a prospectus supplemented or amended to conform with the
requirements of Section 3.04(g).

         SECTION 3.05. Participation in Underwritten Registrations. No Person
may participate in any Public Offering pursuant to Section 3.02 or 3.03 unless
such Person (i) agrees to sell such Person's securities on the basis provided in
any underwriting arrangements approved by the Persons entitled hereunder to

                                       15

<PAGE>

approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements.

         SECTION 3.06. Holdback Agreements. If any registration or offering of
Registrable Common Shares shall be in connection with a Public Offering, the
Issuer and each Holder agrees not to effect any public sale or distribution of
any Common Shares or any securities convertible into or exchangeable or
exercisable for Common Shares (in each case other than as part of such Public
Offering), if and to the extent requested by the managing underwriter during the
90-day period beginning on the effective date of such registration statement
without the written consent of such managing underwriter; provided that each
such Holder has received written notice of such registration at least 5 Business
Days prior to the anticipated beginning of the 90-day period referred to above.

         SECTION 3.07. Indemnification. (a) Indemnification by the Issuer. The
Issuer agrees to indemnify and hold harmless each Registering Holder, its
officers, directors and agents and each Person, if any, who controls such
Registering Holder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages, liabilities or expenses caused by any untrue statement or alleged
untrue statement of a material fact contained in any registration statement or
prospectus relating to the Registrable Common Shares (as amended or supplemented
if the Issuer shall have furnished any amendments or supplements thereto) or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and the Issuer will reimburse such Registering Holders for any legal
or any other expenses reasonably incurred by them in connection with
investigating or defending such loss, claim, damage, liability or expense,
except insofar as such losses, claims, damages, liabilities or expenses are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information furnished in writing to the Issuer by such
Registering Holder or on such Registering Holder's behalf expressly for use
therein; provided that with respect to any untrue statement or omission or
alleged untrue statement or omission made in any preliminary prospectus, or in
any prospectus, as the case may be, the indemnity agreement contained in this
paragraph shall not apply to the extent that any such loss, claim, damage,
liability or expense results from the fact that a current copy of the prospectus
(or the amended or supplemented prospectus, as the case may be) was not sent or
given to the Person asserting any such loss, claim, damage, liability or expense
at or prior to the written confirmation of the sale of the Registrable Common
Shares concerned to such Person if it is determined that the Issuer has provided
such prospectus (or amended or supplemented prospectus) and it was the
responsibility of such Registering Holder to provide such Person with a current
copy of the prospectus (or such amended or supplemented prospectus, as the case
may be) and such current copy of the prospectus (or such amended or supplemented
prospectus, as the case may be) would have cured the defect giving rise to such

                                       16

<PAGE>

loss, claim, damage, liability or expense. The Issuer also agrees to indemnify
any underwriters of the Registrable Common Shares, their officers and directors
and each Person who controls such underwriters on substantially the same basis
as that of the indemnification of the Registering Holders provided in this
Section 3.07(a).

          (b) Indemnification by the Registering Holders. Each Registering
Holder agrees, severally but not jointly, to indemnify and hold harmless the
Issuer, its officers, directors and agents and each Person, if any, who controls
the Issuer within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Issuer to such Registering Holder, but only (i) with respect to
information furnished in writing by such Registering Holder or on such
Registering Holder's behalf expressly for use in any registration statement or
prospectus relating to the Registrable Common Shares, or any amendment or
supplement thereto, or any preliminary prospectus or (ii) to the extent that any
loss, claim, damage, liability or expense described in Section 3.07(a) results
from the fact that a current copy of the prospectus (or the amended or
supplemented prospectus, as the case may be) was not sent or given to the Person
asserting any such loss, claim, damage, liability or expense at or prior to the
written confirmation of the sale of the Registrable Common Shares concerned to
such Person if it is determined that it was the responsibility of such
Registering Holder to provide such Person with a current copy of the prospectus
(or such amended or supplemented prospectus, as the case may be) and such
current copy of the prospectus (or such amended or supplemented prospectus, as
the case may be) would have cured the defect giving rise to such loss, claim,
damage, liability or expense. Each such Registering Holder also agrees to
indemnify and hold harmless the underwriters of the Registrable Common Shares,
their officers and directors and each Person who controls such underwriters on
substantially the same basis as that of the indemnification of the Issuer
provided in this Section 3.07(b). Each Registering Holder's obligation to
indemnify pursuant to this Section is several in the proportion that the
proceeds of the offering received by such Holder bears to the total proceeds of
the offering received by all the Holders and not joint.

          (c) Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to this Section
3.07, such Person (an "Indemnified Party") shall promptly notify the Person
against whom such indemnity may be sought (the "Indemnifying Party") in writing
and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified Party, and
shall assume the payment of all fees and expenses; provided that the failure of
any Indemnified Party so to notify the Indemnifying Party shall not relieve the
Indemnifying Party of its obligations hereunder except to the extent that the
Indemnifying Party is materially prejudiced by such failure to notify. In any
such proceeding, any Indemnified Party shall have the right to retain its own

                                       17

<PAGE>

counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) in the
reasonable judgment of such Indemnified Party representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses shall
be reimbursed as they are incurred. In the case of any such separate firm for
the Indemnified Parties, such firm shall be designated in writing by the
Indemnified Party that had the largest number of Registrable Common Shares
included in such registration. The Indemnifying Party shall not be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent, or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Party is or
could have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability arising out of such proceeding.

          (d) Contribution. If the indemnification provided for in this Section
3.07 is unavailable to the Indemnified Parties in respect of any losses, claims,
damages or liabilities referred to herein, then each Indemnifying Party, in lieu
of indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities (i) as between the Issuer and the Registering Holders on the one
hand and the underwriters on the other, in such proportion as is appropriate to
reflect the relative benefits received by the Issuer and such Registering
Holders on the one hand and the underwriters on the other, from the offering of
the Registrable Common Shares, or if such allocation is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits but also the relative fault of the Issuer and such Registering
Holders on the one hand and of such underwriters on the other in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations and (ii) as
between the Issuer on the one hand and each such Registering Holder on the
other, in such proportion as is appropriate to reflect the relative fault of the
Issuer and of each such Registering Holder in connection with such statements or
omissions, as well as any other relevant equitable considerations. The relative
benefits received by the Issuer and such Registering Holders on the one hand and

                                       18

<PAGE>

such underwriters on the other shall be deemed to be in the same proportion as
the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Issuer and such
Registering Holders bear to the total underwriting discounts and commissions
received by such underwriters, in each case as set forth in the table on the
cover page of the prospectus. The relative fault of the Issuer and such
Registering Holders on the one hand and of such underwriters on the other shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Issuer and such
Registering Holders or by such underwriters. The relative fault of the Issuer on
the one hand and of each such Registering Holder on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.

         The Issuer and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 3.07 were determined by pro
rata allocation (even if the underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 3.07, no underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Common Shares underwritten by it and distributed
to the public were offered to the public exceeds the aggregate amount of any
damages which such underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, and no
Holder shall be required to contribute any amount in excess of the amount by
which the total price at which the Registrable Common Shares of such Holder were
offered to the public exceeds the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. Each such Holder's obligation to contribute
pursuant to this Section 3.07 is several in the proportion that the proceeds of
the offering received by such Holder bears to the total proceeds of the offering
received by all such Holders and not joint.

                                       19

<PAGE>

         SECTION 3.08. Shelf Registration. Notwithstanding anything herein to
the contrary, if the Issuer prepares and files with the Commission a shelf
registration statement on an appropriate form relating to all (but not less than
all) of the Registrable Common Shares of the Holders in accordance with Rule 415
under the Securities Act (the "Shelf Registration Statement"), the registration
rights of the Holders pursuant to Sections 3.02 and 3.03 shall be suspended for
so long as such Shelf Registration Statement is maintained continuously
effective and in compliance with the Securities Act and usable for resale of
Registrable Common Shares. The provisions set forth in Section 3.02(d), the last
sentence of Section 3.03(a), Section 3.04 and Section 3.07 shall, to the extent
relevant, apply to any such Shelf Registration Statement. In the event that the
Shelf Registration Statement is withdrawn or ceases to be effective for any
reason, the Holder's rights under Sections 3.02 and 3.03 shall be reinstated in
accordance with their original terms without any action by any party.

                                    ARTICLE 4
                         CORPORATE GOVERNANCE; COVENANTS

         SECTION 4.01. Board of Directors. (a) [WCAS VIII]7 [CSFB]8 shall be
entitled to designate one director nominee to the Board of Directors for so long
as it continues (together with its Permitted Transferees) to beneficially own
Shares representing at least 40% of its Initial Holdings. Such director nominee
shall be reasonably acceptable to the Issuer (it being understood that without
limiting the generality of the foregoing, [Larry Sorrel and each general partner
of WCAS VIII]7 [Hartley Rogers]8 shall be deemed to be acceptable.) The Issuer
agrees to use its best efforts to take all actions necessary to have such
director nominee elected to the Board of Directors. The Issuer shall be deemed
to have used its best efforts to elect a nominee director to the Board of
Directors if it nominates such designee, includes the designee in the Issuer's
proxy statement, recommends a vote for such designee and casts proxies given to
the Issuer in favor of such designee.

          (b) For so long as [WCAS VIII]7 [CSFB]8 has the right to designate a
director nominee pursuant to Section 4.01(a), it shall have the right to have
such director appointed to either the Audit or Compensation committee of the
Board of Directors. Such director initially shall be appointed to the [ ]
committee. The Issuer agrees to use its best efforts to take all actions
necessary to appoint such committee member.

--------
     7  WCAS Agreement only.
     8  CSFB Agreement only.

                                       20

<PAGE>

          (c) If, as a result of death, disability, retirement, resignation,
removal (with or without cause) or otherwise, there shall exist or occur any
vacancy on the Board of Directors, [WCAS VIII]9 [CSFB]10 may designate another
individual nominee to be appointed by the Board of Directors to fill such
capacity and serve as such director.

          (d) The Issuer hereby agrees to take, or cause to be taken, all
reasonable actions and to do, or cause to be done, all reasonable things
necessary to give effect to the rights of [WCAS VIII]9 [CSFB]10 hereunder.

          (e) The director nominated pursuant to Section 4.01(a) shall be
entitled to receive the same compensation and benefits (including equity-based
compensation) that are provided to the other non-executive members of the Board
of Directors.

          (f) For so long as [WCAS VIII]9 [CSFB]10 retains its right to nominate
a director pursuant to Section 4.01(a), the Issuer shall maintain policies of
directors and officers liability insurance, with financially sound and reputable
insurers, having terms that are customary for companies similarly situated and
providing coverage in amounts at least equal to the amounts in effect on the
date hereof.

          (g) Until such time as it shall cease to own [40%]11 [20%]12 of its
Initial Holdings, [Microsoft]11, [WCAS VIII]9 [CSFB]10 [but only to the extent
that it no longer has the right to designate a director nominee pursuant to
Section 4.01(a))]12 shall be entitled to designate one individual as a
non-voting observer to the Board of Directors. Such observer shall have the
right to (i) receive notice of each meeting of the Board of Directors in the
same manner as such notice is provided to the Issuer's directors, (ii) attend
and participate in discussions at each such meeting and (iii) receive copies of
all materials distributed to the directors in connection with such meetings at
the same time as such materials are distributed to the directors. In the event
that an observer, for whatever reason, fails to attend a meeting of the Board of
Directors, the Chairman of the Board of Directors or his designee shall, upon
the observer's request, brief the observer on the matters discussed at such
meeting, other than any such matters with respect to which such observer would
have been excluded from such meeting pursuant to Section 4.01(h). Any observer
will be required to sign appropriate confidentiality and similar agreements as
the Issuer shall reasonably request. Each observer shall be entitled to
reimbursement from the Issuer for all reasonable and customary expenses
associated with attending meetings of the Board of Directors, but shall not be
entitled to any other form of compensation or benefits.

--------
    9  WCAS Agreement only.
   10  CSFB Agreement only.
   11  Microsoft Agreement only.
   12  WCAS and CSFB Agreements only.

                                       21

<PAGE>

          (h) In respect of any director nominated pursuant to Section 4.01(a)
and observer designated pursuant to Section 4.01(g), materials relating to any
matter may be withheld from such director or observer, and such director or
observer may be excluded from a meeting of the Board of Directors during
consideration of any matter, if, in the good faith determination of a majority
of the members of the Board of Directors excluding any conflicted director, such
matter is competitively sensitive.

         SECTION 4.02. Financial Information. [CSFB]13 [WCAS]14 shall be
entitled to (i) receive all information made available to shareholders of the
Issuer or members of the Board of Directors, in each case, at the same time as
such materials are distributed to the shareholders or directors, as the case may
be, (ii) meet on a quarterly basis with members of senior management, (iii)
receive copies of management "flash" reports (to be mutually agreed upon), in
each such case, for so long as the [CSFB Entities and their Permitted
Transferees]12 [WCAS Entities and their Permitted Transferees]13 beneficially
own Shares representing at least 20% of their Initial Holdings and (iv) disclose
on a confidential basis all such information referred to in clauses (i) and
(iii) above to the other [CSFB Entities]12 [WCAS Entities].13

                                   ARTICLE 5
                                   STANDSTILL

         SECTION 5.01.  Definitions.  The following terms, as used in this
Article 5, have the following meanings:

         "Acquisition Proposal" means any offer or proposal for, or any
indication of interest in, a merger or other business combination involving the
Issuer or any Subsidiary or the acquisition of any equity interest in, or a
substantial portion of the assets of, the Issuer or any Subsidiary, including
engaging in any tender offer or exchange offer for Voting Securities.

         "Daily Price" means, as of any date, (i) if the Common Shares then are
listed and traded on the New York Stock Exchange, Inc. ("NYSE"), the closing
price on such date as reported on the NYSE Composite Transactions Tape; (ii) if
the Common Shares then are not listed and traded on the NYSE, the closing price
on such date as reported by the principal national securities exchange on which

--------
   13  CSFB Agreement only.
   14  WCAS Agreement only.

                                       22

<PAGE>

the shares are listed and traded; (iii) if the Common Shares then are not listed
and traded on any such securities exchange, the last reported sale price on such
date on the National Market of the National Association of Securities Dealers,
Inc. Automated Quotation System ("NASDAQ"); or (iv) if the Common Shares then
are not traded on the NASDAQ National Market, the average of the highest
reported bid and lowest reported asked price on such date as reported by NASDAQ.

         "Market Price Per Common Share" means, as of any date, the average
(weighted by daily trading volume) of the Daily Prices per Common Share for the
20 consecutive trading days immediately prior to such date.

         "Voting Securities" means all securities of the Issuer entitled, in the
ordinary course, to vote in the election of directors of the Issuer.

         SECTION 5.02. Acquisition of Voting Securities. (a) Each Holder agrees
that, until the earlier of (i) the tenth anniversary of the date hereof or (ii)
the date on which such Holder owns less than 20% of its Initial Holdings, such
Holder will not, directly or indirectly, purchase or otherwise acquire, or agree
or offer to purchase or otherwise acquire, beneficial ownership of any Voting
Securities without the Issuer's prior written consent, except (x) for Voting
Securities owned by such Holder on the date hereof, (y) upon conversion or
exchange of securities outstanding on the date hereof or (z) for Voting
Securities acquired as a dividend or in connection with any transaction
described in Section 6.10.

         [(b) Notwithstanding anything to the contrary herein, the parties
hereto agree that the provisions of this Section 5.02 shall apply only to the
[CSFB] [WCAS] Entities and not to any of their Partners, other Affiliates or
portfolio companies that are not otherwise a holder of Shares and a Holder under
this Agreement.]15

         SECTION 5.03. Certain Actions. [(a)] Each Holder agrees that, until the
earlier of (x) the tenth anniversary of the date hereof, (y) the date on which
such Holder owns less than 20% of its Initial Holdings and (z) from and after
the third anniversary of the date hereof, such time as the Market Price Per
Common Share has been less than $15.00 for any continuous 90-day period, without
the Issuer's prior written consent, such Holder will not, directly or
indirectly:

              (i) make, or take any action to solicit, initiate or encourage,
         either alone or in conjunction with another Person, an Acquisition
         Proposal;

--------
     15  WCAS and CSFB Agreements only.

                                       23

<PAGE>

              (ii) "solicit", or become a "participant" in any "solicitation"
          of, any "proxy" (as such terms are defined in Regulation 14A under the
          Exchange Act) from any holder of Voting Securities in connection with
          any vote on any matter, or agree or announce its intention to vote
          with any Person undertaking a "solicitation" in opposition to any
          matter which has been approved by the Issuer's Board of Directors;

             (iii) initiate, support or in any way participate in a "group" with
          respect to any Voting Securities (other than a group comprised solely
          of such Holder and its Affiliates);

             (iv) grant any proxies with respect to any Voting Securities to any
          Person (other than as recommended by the Board of Directors) or
          deposit any Voting Securities in a voting trust or enter into any
          other arrangement or agreement with respect to the voting thereof
          (other than a proxy granted to, or a voting trust or arrangement with,
          one or more of its Affiliates); or

             (v) except as otherwise provided in Article 4, take any action to
          seek to control or influence the management, policies or affairs, of
          the Issuer;

            (vi) initiate, support or otherwise solicit stockholders for the
          approval of one or more stockholder proposals with respect to the
          Issuer as described in Rule 14a-8 under the Exchange Act, or induce or
          attempt to induce any other Person to initiate any such stockholder
          proposal; or

            (vii) propose any amendment to or waiver of this Article 5 that is
          or may be required to be publicly disclosed or publicly announce such
          Holder's intentions, views or opinions in favor of any of the
          foregoing.

         [(b) Notwithstanding anything to the contrary herein, the parties
hereto agree that the provisions of this Section 5.03 shall apply only to the
[CSFB]16 [WCAS]17 Entities and not to any of their financial partners, portfolio
companies or other Affiliates that are not otherwise a holder of Shares and a
Holder under this Agreement.]18

--------
    16  CSFB Agreement only.
    17  WCAS Agreement only.
    18  CSFB Agreement and WCAS Agreement only.

                                       24

<PAGE>

                                    ARTICLE 6
                                  MISCELLANEOUS

         SECTION 6.01.  Headings.  The headings in this Agreement are for
convenience of reference only and shall not control or affect the meaning or
construction of any provisions hereof.

         SECTION 6.02. No Inconsistent Agreements. The Issuer will not hereafter
enter into or amend any agreement with respect to its securities which prevents
the Issuer from discharging its obligations under this Agreement or grant rights
superior to the rights granted to the Holders in this Agreement.

         SECTION 6.03. Entire Agreement. The Transaction Agreements constitute
the entire agreement and understanding of the parties hereto and thereto in
respect of the subject matter contained herein and therein, and there are no
restrictions, promises, representations, warranties, covenants, or undertakings
with respect to the subject matter hereof or thereof, other than those expressly
set forth or referred to herein or therein. The Transaction Agreements supersede
all prior agreements and understandings between the parties hereto and thereto
with respect to the subject matter hereof and thereof.

         SECTION 6.04. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopier) and shall be
deemed to have been duly given or made if sent by telecopy, delivered personally
or sent by registered or certified mail (postage prepaid, return receipt
requested) to such party at its address or telecopier number set forth on the
signature pages hereof, or such other address or telecopier number as such party
may hereinafter specify for the purpose to the party giving such notice. All
such notices, requests and other communications shall be deemed received on the
date of receipt by the recipient thereof if received prior to 5:00 p.m. in the
place of receipt and such day is a Business Day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to have
been received until the next succeeding Business Day in the place of receipt.

         SECTION 6.05. Applicable Law; Submission to Jurisdiction. This
Agreement shall be construed in accordance with and governed by the laws of the
State of Delaware, without regard to the conflicts of law rules of such state.
Each of the parties hereto hereby consents to the exclusive jurisdiction of the
United States District Court for the District of Delaware and the Chancery Court
of the State of Delaware (and of the appropriate appellate courts therefrom)
over any suit, action or proceeding arising out of or relating to this
Agreement. Each party hereto irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying of venue
in any such court or that any such proceeding which is brought in accordance
with this Section has been brought in an inconvenient forum. Subject to
applicable law, process in any such proceeding may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing and subject to applicable law, each party
agrees that service of process on such party as provided in Section 6.04 shall
be deemed effective service of process on such party. Nothing herein shall

                                       25

<PAGE>

affect the right of any party to serve legal process in any other manner
permitted by law or at equity or to enforce in any lawful manner a judgment
obtained in one jurisdiction in any other jurisdiction. WITH RESPECT TO A
PROCEEDING IN ANY SUCH COURT, EACH OF THE PARTIES IRREVOCABLY WAIVES AND
RELEASES TO THE OTHER ITS RIGHT TO A TRIAL BY JURY, AND AGREES THAT IT WILL NOT
SEEK A TRIAL BY JURY IN ANY SUCH PROCEEDING.

         SECTION 6.06. Severability. The invalidity or unenforceability of any
provisions of this Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of this Agreement,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.

         SECTION 6.07. Successors, Assigns, Transferees. The provisions of this
Agreement shall be binding upon and accrue to the benefit of the parties hereto
and their respective heirs, executors, administrators, successors and permitted
assigns. Notwithstanding the foregoing, neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by the Issuer or any Holder, except (i) as specifically provided
pursuant to the terms hereof and (ii) in connection with a Transfer of
securities of the Issuer described in Section 2.02 and otherwise permitted
pursuant to the terms hereof. Nothing in this Agreement, expressed or implied,
is intended to confer on any Person other than the parties hereto, and their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.

         SECTION 6.08. Amendments; Waivers. (a) No failure or delay on the part
of any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.

          (b) Any provision of this Agreement may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by the parties hereto, or in the case of a waiver, by the party
against whom the waiver is to be effective.

                                       26

<PAGE>

         SECTION 6.09. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original with the same effect
as if the signatures thereto and hereto were upon the same instrument.

         SECTION 6.10. Recapitalization, etc. In the event that any capital
stock or other securities are issued in respect of, in exchange for, or in
substitution of, any Shares by reason of any reorganization, recapitalization,
reclassification, merger, consolidation, spin-off, partial or complete
liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the Shares or any other change in capital
structure of the Issuer, appropriate adjustments shall be made with respect to
the relevant provisions of this Agreement so as to fairly and equitably
preserve, as far as practicable, the original rights and obligations of the
parties hereto under this Agreement.

         SECTION 6.11. Remedies. The parties hereto acknowledge and agree that
in the event of any breach of this Agreement, the parties would be irreparably
harmed and could not be made whole by monetary damages. Each party hereto
accordingly agrees (i) not to assert by way of defense or otherwise that a
remedy at law would be adequate, and (ii) that the parties agree, in addition to
any other remedy to which they may be entitled, that the remedy of specific
performance of this Agreement is appropriate in any action in court.

         SECTION 6.12. Fees and Expenses. Unless otherwise provided herein or in
the other Transaction Agreements, all costs and expenses incurred in connection
with the transactions contemplated by the Transaction Agreements shall be paid
by the party incurring such costs and expenses.

         SECTION 6.13. Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, the Issuer and each of the Holders will use its
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or desirable under applicable laws and
regulations to give effect to the terms and conditions of the Transaction
Agreements.

                                       27

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

                                    WINSTAR COMMUNICATIONS, INC.

                                    By: _________________________________
                                        Name:
                                        Title:

                                    Address for notices:

                                           [TO COME]
                                           Facsimile:
                                           Attention:

                                    [HOLDER]

                                    By: _________________________________
                                        Name:
                                        Title:

                                    Address for notices:

                                           [TO COME]
                                           Facsimile:
                                           Attention:

                                       28

<PAGE>

                                    [HOLDER]

                                    By: _______________________________
                                        Name:
                                        Title:

                                    Address for notices:

                                           [TO COME]
                                           Facsimile:
                                           Attention:

                                    [HOLDER]

                                    By: _______________________________
                                        Name:
                                        Title:

                                    Address for notices:

                                           [TO COME]
                                           Facsimile:
                                           Attention:

                                       29

<PAGE>

                                                                     EXHIBIT A

                          FORM OF AGREEMENT TO BE BOUND

                                                 [Date]

To the Parties to the Shareholders
Agreement dated as of [                     ], 2000

Ladies and Gentlemen:

         Reference is made to the Shareholders Agreement dated as of [        ],
2000 (the "Shareholders Agreement") among Winstar Communications, Inc., a
Delaware corporation, [           ], [           ], and the other Persons listed
on the signature pages thereof and each other Person who has or shall become a
party to the Shareholders Agreement as provided therein. Capitalized terms used
herein and not defined have the meanings ascribed to them in the Shareholders
Agreement to the same extent and in the same manner as the assignor.

         In consideration of the covenants and agreements contained in the
Shareholders Agreement, the undersigned hereby confirms and agrees that it shall
be bound as a "Holder" by all of the provisions of the Shareholders Agreement.

         This letter shall be construed and enforced in accordance with the
internal laws of the State of Delaware.

                                                 Very truly yours,

                                                  ___________________________

                                      A-1EXHIBIT

<PAGE>

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

                           IMPAC SECURED ASSETS CORP.,
                                   Depositor,

                            IMPAC FUNDING CORPORATION
                                Master Servicer,

                                       and

                  NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
                                     Trustee

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

                         POOLING AND SERVICING AGREEMENT

                          Dated as of December 1, 1999

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

                       Mortgage Pass-Through Certificates

                                  Series 1999-2

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

<PAGE>

                                TABLE OF CONTENTS
                                -----------------
                                                                            Page
                                                                            ----

ARTICLE I

    DEFINITIONS................................................................3
    1.01.  Defined Terms.......................................................3
    Accrued Certificate Interest...............................................3
    Advance  ..................................................................4
    Aggregate Stated Principal Balance.........................................4
    Agreement..................................................................4
    Anniversary................................................................4
    Assignment.................................................................4
    Available Distribution Amount..............................................4
    Balloon Loan...............................................................4
    Balloon Payment............................................................5
    Bankruptcy Amount..........................................................5
    Bankruptcy Code............................................................5
    Bankruptcy Loss............................................................5
    Book-Entry Certificate.....................................................5
    Business Day...............................................................5
    Cash Liquidation...........................................................5
    Certificate................................................................6
    Certificate Account........................................................6
    Certificate Account Deposit Date...........................................6
    Certificateholder" or "Holder..............................................6
    Certificate Owner..........................................................6
    Certificate Principal Balance..............................................6
    Certificate Register.......................................................7
    Class .....................................................................7
    Class A Certificate........................................................7
    Class A-7 Priority Amount..................................................7
    Class A-7 Priority Percentage..............................................8
    Class A-7 Prepayment Priority Percentage...................................8
    Class A-7 Shift Percentage.................................................8
    Class B Certificate........................................................8
    Class B Percentage.........................................................8
    Class B-1 Certificate......................................................8
    Class B-1 Percentage.......................................................8
    Class B-1 Prepayment Distribution Trigger..................................9
    Class B-2 Certificate......................................................9
    Class B-2 Percentage.......................................................9
    Class B-2 Prepayment Distribution Trigger..................................9
    Class B-3 Certificate......................................................9
    Class B-3 Percentage.......................................................9

                                        i

<PAGE>

                                                                            Page
                                                                            ----

    Class B-3 Prepayment Distribution Trigger.................................10
    Class M Certificate.......................................................10
    Class M Percentage........................................................10
    Class M-1 Certificate.....................................................10
    Class M-1 Percentage......................................................10
    Class M-1-X Certificate...................................................10
    Class M-2 Certificate.....................................................10
    Class M-2 Percentage......................................................11
    Class M-2 Prepayment Distribution Trigger.................................11
    Class M-2-X Certificate...................................................11
    Class M-3 Certificate.....................................................11
    Class M-3 Percentage......................................................11
    Class M-3 Prepayment Distribution Trigger.................................11
    Closing Date..............................................................12
    Code .....................................................................12
    Collateral Value..........................................................12
    Commission................................................................12
    Compensating Interest.....................................................12
    Corporate Trust Office....................................................12
    Curtailment...............................................................12
    Custodial Account.........................................................13
    Cut-off Date..............................................................13
    Debt Service Reduction....................................................13
    Defaulted Mortgage Loan...................................................13
    Deficient Valuation.......................................................13
    Definitive Certificate....................................................13
    Deleted Mortgage Loan.....................................................13
    Depositor.................................................................13
    Depository................................................................13
    Depository Participant....................................................14
    Determination Date........................................................14
    Discount Fraction.........................................................14
    Discount Mortgage Loan....................................................14
    Disqualified Organization.................................................14
    Distribution Date.........................................................14
    Due Date .................................................................14
    Due Period................................................................15
    Eligible Account..........................................................15
    Eligible Funds............................................................15
    Event of Default..........................................................15
    Excess Bankruptcy Loss....................................................15
    Excess Fraud Loss.........................................................15
    Excess Proceeds...........................................................15
    Excess Special Hazard Loss................................................16

                                       ii

<PAGE>

                                                                            Page
                                                                            ----

    Extraordinary Events......................................................16
    Extraordinary Losses......................................................16
    Fannie Mae................................................................16
    FDIC .....................................................................16
    Fraud Loss Amount.........................................................17
    Fraud Losses..............................................................17
    Freddie Mac...............................................................17
    Funding Date..............................................................17
    Initial Certificate Principal Balance.....................................17
    Initial Notional Amount...................................................17
    Insurance Policy..........................................................17
    Insurance Proceeds........................................................18
    Interest Accrual Period...................................................18
    Interest Only Certificate.................................................18
    Late Collections..........................................................18
    LIBOR    .................................................................18
    LIBOR Business Day........................................................18
    Liquidation Proceeds......................................................18
    Loan-to-Value Ratio.......................................................18
    Lost Note Affidavit.......................................................19
    Maturity Date.............................................................19
    Master Servicer...........................................................19
    Monthly Payment...........................................................19
    Moody's  .................................................................19
    Mortgage .................................................................19
    Mortgage File.............................................................19
    Mortgage Loan.............................................................19
    Mortgage Loan Purchase Agreement..........................................19
    Mortgage Loan Schedule....................................................20
    Mortgage Note.............................................................21
    Mortgage Rate.............................................................21
    Mortgaged Property........................................................21
    Mortgagor.................................................................21
    Net Mortgage Rate.........................................................21
    Non-Discount Mortgage Loan................................................21
    Nonrecoverable Advance....................................................21
    Non-United States Person..................................................22
    Notional Amount...........................................................22
    Officers' Certificate.....................................................22
    Opinion of Counsel........................................................22
    Original Senior Percentage................................................23
    OTS ......................................................................23
    Outstanding Mortgage Loan.................................................23
    Ownership Interest........................................................23

                                       iii

<PAGE>

                                                                            Page
                                                                            ----

    Pass-Through Rate.........................................................23
    Percentage Interest.......................................................24
    Permitted Investment......................................................24
    Permitted Transferee......................................................25
    Person ...................................................................25
    Pool Strip Rate...........................................................25
    Prepayment Distribution Percentage........................................26
    Prepayment Distribution Trigger...........................................27
    Prepayment Interest Shortfall.............................................27
    Prepayment Period.........................................................27
    Primary Hazard Insurance Policy...........................................27
    Primary Insurance Policy..................................................27
    Principal Only Certificates...............................................27
    Principal Prepayment......................................................28
    Principal Prepayment in Full..............................................28
    Purchase Price............................................................28
    Qualified Insurer.........................................................28
    Qualified Substitute Mortgage Loan........................................28
    Radian ...................................................................29
    Radian Insured Loans......................................................29
    Radian PMI Policy.........................................................29
    Radian PMI Policy Rate....................................................29
    Rate Adjustment Date......................................................29
    Rating Agency.............................................................29
    Realized Loss.............................................................30
    Record Date...............................................................30
    Regular Certificate.......................................................30
    Relief Act................................................................30
    REMIC ....................................................................30
    REMIC Provisions..........................................................31
    Remittance Report.........................................................31
    REO Acquisition...........................................................31
    REO Disposition...........................................................31
    REO Imputed Interest......................................................31
    REO Proceeds..............................................................32
    REO Property..............................................................32
    Request for Release.......................................................32
    Reserve Banks.............................................................32
    Reserve Interest Rate.....................................................32
    Residual Certificate......................................................32
    Responsible Officer.......................................................32
    Seller ...................................................................33
    Senior Accelerated Distribution Percentage................................33
    Senior Interest Distribution Amount.......................................34

                                       iv

<PAGE>

                                                                            Page
                                                                            ----

    Senior Percentage.........................................................34
    Senior Principal Distribution Amount......................................34
    Servicing Account.........................................................34
    Servicing Advances........................................................34
    Servicing Fees............................................................34
    Servicing Fee Rate........................................................35
    Servicing Officer.........................................................35
    Single Certificate........................................................35
    Special Deposit...........................................................35
    Special Hazard Amount.....................................................35
    Special Hazard Loss.......................................................36
    Special Hazard Percentage.................................................36
    Standard & Poor's.........................................................36
    Startup Day...............................................................36
    Stated Principal Balance..................................................36
    Subordinate Certificate...................................................36
    Subordinate Percentage....................................................36
    Subordinate Principal Distribution Amount.................................37
    Sub-Servicer..............................................................37
    Sub-Servicer Remittance Date..............................................37
    Sub-Servicing Account.....................................................37
    Sub-Servicing Agreement...................................................37
    Tax Returns...............................................................37
    Transfer .................................................................38
    Transferor................................................................38
    Trust Fund................................................................38
    Trustee  .................................................................38
    Trustee's Fee.............................................................38
    Trustee Fee Rate..........................................................38
    Uncertificated Principal Balance..........................................38
    Uncertificated REMIC I Accrued Interest...................................38
    Uncertificated REMIC I IO Notional Amount.................................39
    Uncertificated REMIC I IO Regular Interests...............................39
    Uncertificated REMIC I Pass-Through Rate..................................40
    Uncertificated REMIC I Regular Interest N.................................40
    Uncertificated REMIC I Regular Interest O.................................40
    Uncertificated REMIC I Regular Interest P.................................40
    Uncertificated REMIC I Regular Interest Q.................................40
    Uncertificated REMIC I Regular Interest S.................................41
    Uncertificated REMIC I Regular Interest T.................................41
    Uncertificated REMIC I Regular Interest U.................................41
    Uncertificated REMIC I Regular Interest W.................................41
    Uncertificated REMIC I Regular Interest X.................................41
    Uncertificated REMIC I Regular Interest Y.................................41

                                        v

<PAGE>

                                                                            Page
                                                                            ----

    Uncertificated REMIC I Regular Interests..................................42
    Uncertificated REMIC I IO Regular Interest Distribution Amount............42
    Uncertificated REMIC I Regular Interest N Distribution Amount.............42
    Uncertificated REMIC I Regular Interest O Distribution Amount.............42
    Uncertificated REMIC I Regular Interest P Distribution Amount.............42
    Uncertificated REMIC I Regular Interest Q Distribution Amount.............42
    Uncertificated REMIC I Regular Interest S Distribution Amount.............42
    Uncertificated REMIC I Regular Interest T Distribution Amount.............42
    Uncertificated REMIC I Regular Interest U Distribution Amount.............42
    Uncertificated REMIC I Regular Interest W Distribution Amount.............43
    Uncertificated REMIC I Regular Interest X Distribution Amount.............43
    Uncertificated REMIC I Regular Interest Y Distribution Amount.............43
    Uncertificated REMIC I Regular Interest Distribution Amounts..............43
    Uninsured Cause...........................................................43
    United States Person......................................................43
    Voting Rights.............................................................44
    Wendover .................................................................44
    1.02   Determination of LIBOR.............................................44

ARTICLE II

    CONVEYANCE OF MORTGAGE LOANS;
    ORIGINAL ISSUANCE OF CERTIFICATES.........................................45
    2.01.  Conveyance of Mortgage Loans.......................................45
    2.02.  Acceptance of the Trust Fund by the Trustee........................48
    2.03.  Representations, Warranties and Covenants of the Master Servicer
           and the Depositor..................................................49
    2.04.  Representations and Warranties of the Seller.......................51
    2.05.  Issuance of Certificates Evidencing Interests in the REMIC I
           Certificates.......................................................53
    2.06.  Conveyance of Uncertificated REMIC I Regular Interests;
           Acceptance by the Trustee..........................................53
    2.07.  Issuance of Certificates Evidencing Interest in REMIC II...........54

ARTICLE III

    ADMINISTRATION AND SERVICING
    OF THE TRUST FUND.........................................................55
    3.01.  Master Servicer to Act as Master Servicer..........................55
    3.02.  Sub-Servicing Agreements Between Master Servicer and
           Sub-Servicers......................................................56
    3.03.  Successor Sub-Servicers............................................57
    3.04.  Liability of the Master Servicer...................................57
    3.05.  No Contractual Relationship Between Sub-Servicers and Trustee
           or Certificateholders..............................................58
    3.06.  Assumption or Termination of Sub-Servicing Agreements by Trustee...58

                                       vi

<PAGE>

                                                                            Page
                                                                            ----

    3.07.  Collection of Certain Mortgage Loan Payments.......................59
    3.08.  Sub-Servicing Accounts.............................................60
    3.09.  Collection of Taxes, Assessments and Similar Items; Servicing
           Accounts......................... .................................61
    3.10.  Custodial Account..................................................61
    3.11.  Permitted Withdrawals From the Custodial Account...................62
    3.12.  Permitted Investments..............................................63
    3.13.  Maintenance of Primary Hazard Insurance. ..........................64
    3.14.  Enforcement of Due-on-Sale Clauses; Assumption Agreements..........66
    3.15.  Realization Upon Defaulted Mortgage Loans..........................67
    3.16.  Trustee to Cooperate; Release of Mortgage Files....................68
    3.17.  Servicing Compensation.............................................70
    3.18.  Maintenance of Certain Servicing Policies..........................70
    3.19.  Annual Statement as to Compliance..................................71
    3.20.  Annual Independent Public Accountants' Servicing Statement.........71
    3.21.  Access to Certain Documentation....................................72
    3.22.  Title, Conservation and Disposition of REO Property................72
    3.23.  Additional Obligations of the Master Servicer......................74
    3.24   Optional Purchase of Defaulted Mortgage Loans......................75
    3.25.  Additional Obligations of the Depositor............................75
    3.26.  Periodic Filings with the Securities and Exchange Commission;
           Additional Information.............................................75

ARTICLE IV

    PAYMENTS TO CERTIFICATEHOLDERS............................................77
    4.01.  Certificate Account; Distributions.................................77
    4.02.  Statements to Certificateholders...................................85
    4.03.  Remittance Reports; Advances by the Master Servicer................88
    4.04.  Allocation of Realized Losses......................................89
    4.05.  Information Reports to Be Filed by the Master Servicer.............91
    4.06.  Compliance with Withholding Requirements...........................91

ARTICLE V

    THE CERTIFICATES..........................................................93
    5.01.  The Certificates...................................................93
    5.02.  Registration of Transfer and Exchange of Certificates..............95
    5.03.  Mutilated, Destroyed, Lost or Stolen Certificates.................100
    5.04.  Persons Deemed Owners.............................................100
    5.05.  Rule 144A Information.............................................100

ARTICLE VI

    THE DEPOSITOR AND THE MASTER SERVICER....................................101

                                       vii

<PAGE>

                                                                            Page
                                                                            ----

    6.01.  Liability of the Depositor and the Master Servicer................101
    6.02.  Merger, Consolidation or Conversion of the Depositor or the
           Master Servicer ..................................................101
    6.03.  Limitation on Liability of the Depositor, the Master Servicer
           and Others...................... .................................101
    6.04.  Limitation on Resignation of the Master Servicer..................102
    6.05.  Sale and Assignment of Master Servicing...........................103

ARTICLE VII

    DEFAULT..................................................................104
    7.01.  Events of Default.................................................104
    7.02.  Trustee to Act; Appointment of Successor..........................106
    7.03.  Notification to Certificateholders................................107
    7.04.  Waiver of Events of Default.......................................107
    7.05.  List of Certificateholders........................................107

ARTICLE VIII

    CONCERNING THE TRUSTEE...................................................108
    8.01.  Duties of Trustee.................................................108
    8.02.  Certain Matters Affecting the Trustee.............................109
    8.03.  Trustee Not Liable for Certificates or Mortgage Loans.............110
    8.04.  Trustee May Own Certificates......................................111
    8.05.  Trustee's Fees....................................................111
    8.06.  Eligibility Requirements for Trustee..............................111
    8.07.  Resignation and Removal of the Trustee............................112
    8.08.  Successor Trustee.................................................113
    8.09.  Merger or Consolidation of Trustee................................113
    8.10.  Appointment of Co-Trustee or Separate Trustee.....................114
    SECTION 8.11.     Appointment of Custodians..............................115

ARTICLE IX

    TERMINATION..............................................................116
    9.01.  Termination Upon Repurchase or Liquidation of All Mortgage
           Loans or upon Purchase of Certificates............................116
    9.03.  Additional Termination Requirements...............................119

ARTICLE X

    REMIC PROVISIONS.........................................................121
    10.01. REMIC Administration..............................................121
    10.02. Prohibited Transactions and Activities............................124
    10.03. Master Servicer and Trustee Indemnification.......................124

                                      viii

<PAGE>

ARTICLE XI

    MISCELLANEOUS PROVISIONS.................................................125
    11.01. Amendment.........................................................125
    11.02. Recordation of Agreement; Counterparts............................126
    11.03. Limitation on Rights of Certificateholders........................127
    11.04. Governing Law.....................................................127
    11.05. Notices...........................................................128
    11.06. Severability of Provisions........................................128
    11.07. Successors and Assigns; Third Party Beneficiary...................128
    11.08. Article and Section Headings......................................128
    11.09. Notice to Rating Agencies.........................................129

    Signatures
    Acknowledgments

    Exhibit A    Form of Class A Certificate
    Exhibit B-1  Form of Class M Certificate
    Exhibit B-2  Form of Class B Certificate
    Exhibit B-3  Form of Class R-I and Class R-II Certificate
    Exhibit C    [Reserved]
    Exhibit D    [Reserved]
    Exhibit E    Form of Remittance Report
    Exhibit F    [Reserved]
    Exhibit G-1  Form of Investor Representation Letter
    Exhibit G-2  Form of Transferor Representation Letter
    Exhibit G-3  Form of Rule 144A Investment Representation
    Exhibit G-4  Transferor Certificate for Transfers of Residual Certificates
    Exhibit G-5  Transfer Affidavit and Agreement for Transfers of Residual
                 Certificates
    Exhibit G-6  Form of Investor Representation Letter for Insurance Companies
    Exhibit H    Mortgage Loan Schedule
    Exhibit I    Seller Representations and Warranties
    Exhibit J    Form of Notice Under Section 3.25
    Exhibit K    Schedule of Discount Fractions
    Exhibit L    Form of Custodial Agreement

                                       ix

<PAGE>

          This Pooling and Servicing Agreement, dated and effective as of
December 1, 1999, among Impac Secured Assets Corp., as depositor (the
"Depositor"), Impac Funding Corporation, as master servicer (the "Master
Servicer"), and Norwest Bank Minnesota, National Association, as trustee (the
"Trustee").

                             PRELIMINARY STATEMENT:

          The Depositor intends to sell mortgage pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple classes,
which in the aggregate will evidence the entire beneficial ownership interest in
the Mortgage Loans (as defined herein). As provided herein, the Trustee will
make, in accordance with Section 10.01, an election to treat the entire
segregated pool of assets described in the definition of REMIC I (as defined
herein), and subject to this Agreement (including the Mortgage Loans), as a real
estate mortgage investment conduit (a "REMIC") for federal income tax purposes
and such segregated pool of assets will be designated as "REMIC I." The
Uncertificated REMIC I Regular Interests will be "regular interests" in REMIC I
and the Class R-I Certificates will be the sole class of "residual interests" in
REMIC I for purposes of the REMIC Provisions (as defined herein) under the
federal income tax law. A segregated pool of assets consisting of the
Uncertificated REMIC I Regular Interests will be designated as "REMIC II," and
the Trustee will make, in accordance with Section 10.01, a separate REMIC
election with respect thereto. The Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class M-1, Class M-1-X,
Class M-2, Class M-2-X, Class M-3, Class B-1, Class B-2 and Class B-3
Certificates will be "regular interests" in REMIC II, and the Class R-II
Certificates will be the sole class of "residual interests" therein for purposes
of the REMIC Provisions (as defined herein) under federal income tax law.

          The following table irrevocably sets forth the designation, the
Uncertificated REMIC I Pass- Through Rate, the initial Uncertificated Balance
and, solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of the REMIC I
Regular Interests. None of the REMIC I Regular Interests will be certificated.

<TABLE>
<CAPTION>
                          Uncertificated REMIC I    Initial Uncertificated       Latest Possible
         Designation         Pass-Through Rate         Principal Balance        Maturity Date(1)
         -----------         -----------------         -----------------        ----------------
<S>                                <C>                 <C>                      <C>
Uncertificated REMIC I             9.00%               $68,900,000.00           January 25, 2030
  Regular Interest N
Uncertificated REMIC I             9.00%               $70,000,000.00           January 25, 2030
  Regular Interest O
Uncertificated REMIC I             9.00%               $33,548,430.00           January 25, 2030
  Regular Interest P
Uncertificated REMIC I             9.00%               $36,500,000.00           January 25, 2030
  Regular Interest Q
Uncertificated REMIC I             0.00%                $2,741,660.00           January 25, 2030
  Regular Interest S
Uncertificated REMIC I             9.00%                      $100.00           January 25, 2030
  Regular Interest T
</TABLE>

<PAGE>

                                                      -2-

<TABLE>
<CAPTION>
<S>                                <C>                  <C>                     <C>
Uncertificated REMIC I             9.00%                $9,434,000.00           January 25, 2030
Regular Interest U
Uncertificated REMIC I             9.00%                $4,027,000.00           January 25, 2030
Regular Interest W
  REMIC I Regular Interest X       9.00%                $1,725,000.00           January 25, 2030
  REMIC I Regular Interest Y       9.00%                $3,222,457.00           January 25, 2030
 REMIC I IO Regular Interest    Variable(2)                    $(3)             January 25, 2030
</TABLE>

___________________________

(1)  Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
     regulations, the Distribution Date immediately following the latest
     possible maturity date for the Mortgage Loans has been designated as the
     "latest possible maturity date" for each REMIC I Regular Interest.

(2)  Calculated in accordance with the definition of "Uncertificated REMIC I
     Pass-Through Rate" herein.

(3)  Based on the Uncertificated REMIC I IO Notional Amount.

          The following table sets forth the designation, initial Pass-Through
Rate, aggregate initial Certificate Principal Balance and certain features for
each Class of Certificates comprising the certificated interests in the Trust
Fund created hereunder.

<TABLE>
<CAPTION>
                                            Aggregate Initial
                                             Certificate                                                             Initial
                         Pass-Through         Principal                                             Maturity         Ratings
Designation    Type           Rate              Balance                  Designations                  Date             S&P     DCR
-----------   -------    ---------------   ------------------   ------------------------------   -----------------   --------   ---
<S>     <C>                   <C>             <C>               <C>                              <C>                    <C>     <C>
Class A-1      Senior         7.35%           $68,900,000.00           Senior/Fixed Rate          January 25, 2030      AAA     AAA
Class A-2      Senior    Adjustable Rate      $70,000,000.00          Senior/Floating Rate        January 25, 2030      AAA     AAA
Class A-3      Senior    Adjustable Rate      $33,548,430.00          Senior/Floating Rate        January 25, 2030      AAA     AAA
Class A-4      Senior    Adjustable Rate          $0(1)               Senior/Interest Only/       January 25, 2030      AAAr    AAA
                                                                     Inverse Floating Rate
Class A-5      Senior         9.00%               $0(1)         Senior/Interest Only/Fixed Rate   January 25, 2030      AAAr    AAA
Class A-6      Senior         9.00%               $0(1)         Senior/Interest Only/Fixed Rate   January 25, 2030      AAAr    AAA
Class A-7      Senior         7.50%           $36,500,000.00       Senior/Lockout/Fixed Rate      January 25, 2030      AAA     AAA
Class A-8      Senior         0.00%            $2,741,660.00          Senior/Principal Only       January 25, 2030      AAAr    AAA
Class A-9      Senior         9.00%               $0(1)          Senior/Interest Only/Fixed Rate  January 25, 2030      AAAr    AAA
Class R-I      Senior         9.00%               $100.00               Senior/Residual           January 25, 2030      AAA     AAA
Class R-II     Senior         9.00%               $100.00               Senior/Residual           January 25, 2030      AAA     AAA
Class M-1     Mezzanine       8.00%           $9,434,000.00           Mezzanine/Fixed Rate        January 25, 2030      N/A      AA
Class M-1-X   Mezzanine       9.00%               0(1)              Mezzanine/Interest Only/      January 25, 2030      N/A      AA
                                                                           Fixed Rate
Class M-2     Mezzanine       8.25%           $4,207,000.00           Mezzanine/Fixed Rate        January 25, 2030      N/A      A
Class M-2-X   Mezzanine       9.00%                  0(1)           Mezzanine/Interest Only/      January 25, 2030      N/A      A
                                                                           Fixed Rate
Class M-3     Mezzanine       9.00%           $1,725,000.00           Mezzanine/Fixed Rate        January 25, 2030      N/A     BBB
Class B-1    Subordinate      9.00%           $1,265,000.00          Subordinate/Fixed Rate       January 25, 2030      N/A      BB
Class B-2    Subordinate      9.00%             $575,000.00          Subordinate/Fixed Rate       January 25, 2030      N/A      B
Class B-3    Subordinate      9.00%           $1,382,456.99          Subordinate/Fixed Rate       January 25, 2030      N/A     N/A
</TABLE>

          ___________________________

<PAGE>

                                       -3-

(1)      Based on the related Notional Amount.

     Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity date for
the Mortgage Loan with the latest maturity date in the Mortgage Pool has been
designated as the "latest possible maturity date" for the Certificates.

     As of the Cut-off Date, the Mortgage Loans have an aggregate Stated
Principal Balance equal to approximately $230,098,747.

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

                                    ARTICLE I

                                   DEFINITIONS

          SECTION 1.01. Defined Terms.

          Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the meanings specified in this
Article.

          "Accrued Certificate Interest": With respect to each Distribution
Date, (a) as to any Certificate other than the Interest Only Certificates and
the Principal Only Certificates, interest accrued during the related Interest
Accrual Period at the related Pass-Through Rate on the Certificate Principal
Balance thereof immediately prior to such Distribution Date; (b) as to any
Interest Only Certificate (other than the Class A-9 Certificates), interest
accrued during the related Interest Accrual Period at the then-applicable
Pass-Through Rate on the related Notional Amount thereof immediately prior to
such Distribution Date; and (c) as to the Class A-9 Certificates, the aggregate
amount of interest accrued during the related Interest Accrual Period at the
then applicable Uncertificated REMIC I Pass-Through Rate on each Uncertificated
REMIC I IO Regular Interest on the related Uncertificated REMIC I IO Notional
Amount thereof immediately prior to such Distribution Date. Accrued Certificate
Interest will be calculated on the basis of a 360-day year consisting of twelve
30-day months. In each case Accrued Certificate Interest on any Class of
Certificates will be reduced by the amount of (i) Prepayment Interest
Shortfalls, if any, which are not covered by the Master Servicer with a payment
of Compensating Interest pursuant to Section 3.23 with respect to such
Distribution Date, (ii) the interest portion (adjusted to the related Net
Mortgage Rate) of Realized Losses (including Excess Special Hazard Losses,
Excess Fraud Losses, Excess Bankruptcy Losses and Extraordinary Losses) not
allocated solely to one or more Classes of Certificates pursuant to Section 4.04
and (iii) any other interest shortfalls not covered by the subordination
provided by the Class M Certificates or Class B Certificates, including interest
that is not collectible from the Mortgagor pursuant to the Relief Act or similar
legislation or regulations

<PAGE>

                                       -4-

as in effect from time to time, with all such reductions in clauses (i) through
(iii) allocated among all of the Certificates in proportion to their respective
amounts of Accrued Certificate Interest payable on such Distribution Date which
would have resulted absent such reductions. In addition to that portion of the
reductions described in the preceding sentence that are allocated to any Class
of Class M Certificates or Class B Certificates, Accrued Certificate Interest on
any Class of the Class M Certificates or Class B Certificates, as applicable,
will be reduced by the interest portion (adjusted to the related Net Mortgage
Rate) of the portion of Realized Losses that are allocated solely to the Class M
and Class B Certificates, as applicable, pursuant to Section 4.04. The Principal
Only Certificates do not have a Pass-Through Rate and are not entitled to
Accrued Certificate Interest.

          "Advance": As to any Mortgage Loan, any advance made by the Master
Servicer on any Distribution Date pursuant to Section 4.03.

          "Aggregate Stated Principal Balance": As of any date of determination,
the aggregate Stated Principal Balance of the Mortgage Loans.

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

          "Anniversary": Each anniversary of December 1, 1999.

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

          "Available Distribution Amount": With respect to any Distribution
Date, an amount equal to (a) the sum of (i) the balance on deposit in the
Custodial Account as of the close of business on the related Determination Date
and (ii) the aggregate amount of any Advances made and all amounts required to
be paid by the Master Servicer pursuant to Sections 3.13 and 3.23 by deposits
into the Certificate Account on the immediately preceding Certificate Account
Deposit Date, reduced by (b) the sum, as of the close of business on the related
Determination Date, of (i) Monthly Payments collected but due during a Due
Period subsequent to the Due Period ending on the first day of the month of the
related Distribution Date, (ii) all interest or other income earned on deposits
in the Custodial Account or the Certificate Account, (iii) any other amounts
reimbursable or payable to the Trustee, Master Servicer or any Sub-Servicer
pursuant to Section 3.11, (iv) the Servicing Fees payable on such Distribution
Date and (v) Insurance Proceeds, Liquidation Proceeds, Principal Prepayments,
REO Proceeds and the proceeds of Mortgage Loan purchases made pursuant to
Section 2.02, 2.04, 3.14, 3.22 or 3.24, in each case received or made in the
month of such Distribution Date.

          "Balloon Loan": Each of the Mortgage Loans identified in the Mortgage
Loan Schedule as having an original term to maturity that is shorter than the
related amortization term.

<PAGE>

                                       -5-

          "Balloon Payment": With respect to any Balloon Loan, the related
Monthly Payment payable on the stated maturity date of such Balloon Loan.

          "Bankruptcy Amount": As of any date of determination prior to the
first Anniversary, an amount equal to the excess, if any, of (A) $125,285 over
(B) the aggregate amount of Bankruptcy Losses allocated solely to one or more
specific Classes of Certificates in accordance with Section 4.04. As of any date
of determination on or after the first Anniversary, an amount equal to the
excess, if any, of the lesser of (a) the Bankruptcy Amount calculated as of the
close of business on the Business Day immediately preceding the most recent
Anniversary coinciding with or preceding such date of determination (or, if such
date of determination is an Anniversary, the Business Day immediately preceding
such date of determination) (for purposes of this definition, the "Relevant
Anniversary") and (b) the greater of (i) $75,000 and (ii) 0.0006 times the
aggregate principal balance of all the Mortgage Loans in the Mortgage Pool as of
the Relevant Anniversary having a Loan-to-Value Ratio at origination which
exceeds 75%.

     The Bankruptcy Amount may be further reduced by the Master Servicer
(including accelerating the manner in which such coverage is reduced) provided
that prior to any such reduction, the Master Servicer shall (i) obtain written
confirmation from each Rating Agency that such reduction shall not reduce the
rating assigned to any Class of Certificates by such Rating Agency below the
lower of the then-current rating or the rating assigned to such Certificates as
of the Closing Date by such Rating Agency and (ii) provide a copy of such
written confirmation to the Trustee.

          "Bankruptcy Code": The Bankruptcy Code of 1978, as amended.

          "Bankruptcy Loss": With respect to any Mortgage Loan, a Deficient
Valuation or Debt Service Reduction.

          "Book-Entry Certificate": Any Certificate registered in the name of
the Depository or its nominee.

          "Business Day": Any day other than a Saturday, a Sunday or a day on
which banking institutions in California, Maryland or New York (and such other
state or states in which the Custodial Account or the Certificate Account are at
the time located) or in the city in which the Corporate Trust Office of the
Trustee is located are authorized or obligated by law or executive order to
close.

          "Cash Liquidation": As to any defaulted Mortgage Loan other than a
Mortgage Loan as to which an REO Acquisition occurred, a determination by the
Master Servicer that it has received all Insurance Proceeds, Liquidation
Proceeds and other payments or cash recoveries which the

<PAGE>

                                       -6-

Master Servicer reasonably and in good faith expects to be finally recoverable
with respect to such Mortgage Loan.

          "Certificate": Any Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class M-1, Class M-1-X, Class
M-2, Class M-2-X, Class M-3, Class B-1, Class B-2, Class B-3, Class R-I or Class
R-II Certificate.

          "Certificate Account": The trust account or accounts created and
maintained pursuant to Section 4.01, which shall be entitled "Norwest Bank
Minnesota, National Association, in trust for registered holders of Impac
Secured Assets Corp., Mortgage Pass-Through Certificates, Series 1999- 2, and
which account or accounts must each be an Eligible Account.

          "Certificate Account Deposit Date": With respect to any Distribution
Date, the third Business Day immediately preceding such Distribution Date.

          "Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that only a
Permitted Transferee shall be a holder of a Residual Certificate for any
purposes hereof and, solely for the purposes of giving any consent pursuant to
this Agreement, any Certificate registered in the name of the Depositor or the
Master Servicer or any affiliate thereof shall be deemed not to be outstanding
and the Voting Rights to which such Certificate is entitled shall not be taken
into account in determining whether the requisite percentage of Voting Rights
necessary to effect any such consent has been obtained, except as otherwise
provided in Section 11.01. The Trustee shall be entitled to rely upon a
certification of the Depositor or the Master Servicer in determining if any
Certificates are registered in the name of the respective affiliate. All
references herein to "Holders" or "Certificateholders" shall reflect the rights
of Certificate Owners as they may indirectly exercise such rights through the
Depository and participating members thereof, except as otherwise specified
herein; provided, however, that the Trustee shall be required to recognize as a
"Holder" or "Certificateholder" only the Person in whose name a Certificate is
registered in the Certificate Register.

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

          "Certificate Principal Balance": With respect to any Certificate other
than an Interest Only Certificate, on any date of determination, an amount equal
to (i) the Initial Certificate Principal Balance of such Certificate as
specified on the face thereof, minus (ii) the sum of (a) the aggregate of all
amounts previously distributed with respect to such Certificate (or any
predecessor Certificate) and applied to reduce the Certificate Principal Balance
thereof pursuant to Section 4.01, and (b) the aggregate of all reductions in
Certificate Principal Balance deemed to have occurred in connection

<PAGE>

                                       -7-

with Realized Losses which were previously allocated to such Certificate (or any
predecessor Certificate) pursuant to Section 4.04. With respect to each Class M
Certificate, on any date of determination, an amount equal to (i) the Initial
Certificate Principal Balance of such Class M Certificate as specified on the
face thereof, minus (ii) the sum of (x) the aggregate of all amounts previously
distributed with respect to such Certificate (or any predecessor Certificate)
and applied to reduce the Certificate Principal Balance thereof pursuant to
Section 4.01 and (y) the aggregate of all reductions in Certificate Principal
Balance deemed to have occurred in connection with Realized Losses which were
previously allocated to such Certificate (or any predecessor Certificate)
pursuant to Section 4.04; provided, that if the Certificate Principal Balances
of all of the Class B Certificates have been reduced to zero, the Certificate
Principal Balance of each Class M Certificate of those Class M Certificates
outstanding with the highest numerical designation at any given time shall
thereafter be calculated to equal the Percentage Interest evidenced by such
Certificate times the excess, if any, of (A) the then aggregate Stated Principal
Balance of the Mortgage Loans over (B) the then aggregate Certificate Principal
Balance of all Certificates of all other Classes then outstanding. With respect
to each Class B Certificate, on any date of determination, an amount equal to
(i) the Initial Certificate Principal Balance of such Class B Certificate as
specified on the face thereof, minus (ii) the sum of (x) the aggregate of all
amounts previously distributed with respect to such Certificate (or any
predecessor Certificate) and applied to reduce the Certificate Principal Balance
thereof pursuant to Section 4.01 and (y) the aggregate of all reductions in
Certificate Principal Balance deemed to have occurred in connection with
Realized Losses which were previously allocated to such Certificate (or any
predecessor Certificate) pursuant to Section 4.04; provided, that the
Certificate Principal Balance of each Class B Certificate of those Class B
Certificates outstanding with the highest numerical designation at any given
time shall be calculated to equal the Percentage Interest evidenced by such
Certificate times the excess, if any, of (A) the then aggregate Stated Principal
Balance of the Mortgage Loans over (B) the then aggregate Certificate Principal
Balance of all Certificates of all other Classes then outstanding. The Interest
Only Certificates have no Certificate Principal Balance.

          "Certificate Register": The register maintained pursuant to Section
5.02.

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

          "Class A Certificate": Any one of the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 or Class A-9 Certificates,
each executed, authenticated and delivered by the Trustee substantially in the
form annexed hereto as Exhibit A and each evidencing an interest designated as a
"regular interest" in REMIC II for purposes of the REMIC Provisions.

          "Class A-7 Priority Amount": For any Distribution Date, the lesser of
(i) the Certificate Principal Balance of the Class A-7 Certificates and (ii) the
sum of (x) the product of (1) the Class A-7 Priority Percentage, (2) the Class
A-7 Shift Percentage, and (3) the amounts described

<PAGE>

                                       -8-

in Section 4.01(c)(ii)(Y)(A) (without giving effect to the Senior Percentage)
and (y) the product of (1) the Class A-7 Priority Percentage, (2) the Class A-7
Prepayment Priority Percentage and (3) the amounts described in Section
4.01(c)(ii)(Y)(B) and (C) (in each case without giving effect to the Senior
Percentage or the Senior Accelerated Distribution Percentage).

          "Class A-7 Priority Percentage" With respect to any Distribution Date,
the lesser of (i) 100% and (ii) a fraction equal to (x) the sum of (a) the
Certificate Principal Balance of the Class A-7 Certificates immediately prior to
such Distribution Date and (b) $17,000,000 divided by (y) the aggregate Stated
Principal Balance of the Mortgage Loans (other than the related Discount
Fraction of each Discount Mortgage Loan).

          "Class A-7 Prepayment Priority Percentage" With respect to any
Distribution Date, the percentage indicated below:

                                                Class A-7 Prepayment
     Month of Distribution Date                  Priority Percentage
     --------------------------                  -------------------
January 2000 through December 2004.........              0%
January 2005 through December 2005.........             30%
January 2006 through December 2006.........             40%
January 2007 through December 2007.........             60%
January 2008 through December 2008.........             80%
January 2009 and thereafter................            100%

          "Class A-7 Shift Percentage" With respect to any Distribution Date on
or prior to the Distribution Date occurring in December 2004, 0%, and
thereafter, 100%.

          "Class B Certificate": Any one of the Class B-1 Certificates, Class
B-2 Certificates or Class B-3 Certificates.

          "Class B Percentage": The Class B-1 Percentage, Class B-2 Percentage
and Class B-3 Percentage.

          "Class B-1 Certificate": Any one of the Class B-1 Certificates
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit B-2, subordinate to the Class A Certificates and the
Class M Certificates with respect to distributions and the allocation of
Realized Losses as set forth in Section 4.04 and evidencing an interest
designated as a "regular interest" in REMIC II for purposes of the REMIC
Provisions.

          "Class B-1 Percentage": With respect to any Distribution Date, the
lesser of 100% and a fraction, expressed as a percentage, the numerator of which
is the aggregate Certificate Principal Balance of the Class B-1 Certificates
immediately prior to such Distribution Date and the

<PAGE>

                                       -9-

denominator of which is the aggregate Stated Principal Balance of all of the
Mortgage Loans (or related REO Properties) (other than the related Discount
Fraction of each Discount Mortgage Loan) immediately prior to such Distribution
Date.

          "Class B-1 Prepayment Distribution Trigger": With respect to any
Distribution Date, a test that shall be satisfied if the fraction (expressed as
a percentage) equal to the sum of the Certificate Principal Balances of the
Class B-1 Certificates, Class B-2 Certificates and Class B-3 Certificates
immediately prior to such Distribution Date divided by the aggregate Stated
Principal Balance of all of the Mortgage Loans (or related REO Properties)
immediately prior to such Distribution Date is greater than or equal to 1.40%.

          "Class B-2 Certificate": Any one of the Class B-2 Certificates
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit B-2, subordinate to the Class A Certificates, Class M
Certificates and Class B-1 Certificates with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.04 and evidencing an
interest designated as a "regular interest" in REMIC II for purposes of the
REMIC Provisions.

          "Class B-2 Percentage": With respect to any Distribution Date, the
lesser of 100% and a fraction, expressed as a percentage, the numerator of which
is the aggregate Certificate Principal Balance of the Class B-2 Certificates
immediately prior to such Distribution Date and the denominator of which is the
aggregate Stated Principal Balance of all of the Mortgage Loans (and related REO
Properties) (other than the related Discount Fraction of each Discount Mortgage
Loan) immediately prior to such Distribution Date.

          "Class B-2 Prepayment Distribution Trigger": With respect to any
Distribution Date, a test that shall be satisfied if the fraction (expressed as
a percentage) equal to the sum of the Certificate Principal Balances of the
Class B-2 Certificates and Class B-3 Certificates immediately prior to such
Distribution Date divided by the aggregate Stated Principal Balance of all of
the Mortgage Loans (and related REO Properties) immediately prior to such
Distribution Date is greater than or equal to 0.85%.

          "Class B-3 Certificate": Any one of the Class B-3 Certificates
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit B-2, subordinate to the Class A Certificates, Class M
Certificates, Class B-1 Certificates and Class B-2 Certificates with respect to
distributions and the allocation of Realized Losses as set forth in Section 4.04
and evidencing an interest designated as a "regular interest" in REMIC II for
purposes of the REMIC Provisions.

          "Class B-3 Percentage": With respect to any Distribution Date, the
lesser of 100% and a fraction, expressed as a percentage, the numerator of which
is the aggregate Certificate Principal Balance of the Class B-3 Certificates
immediately prior to such Distribution Date and the

<PAGE>

                                      -10-

denominator of which is the aggregate Stated Principal Balance of all of the
Mortgage Loans (and related REO Properties) (other than the related Discount
Fraction of each Discount Mortgage Loan) immediately prior to such Distribution
Date.

          "Class B-3 Prepayment Distribution Trigger": With respect to any
Distribution Date, a test that shall be satisfied if the fraction (expressed as
a percentage) equal to the aggregate Certificate Principal Balance of the Class
B-3 Certificates immediately prior to such Distribution Date divided by the
aggregate Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) immediately prior to such Distribution Date is greater than or equal
to 0.60%.

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

          "Class M Percentage": The Class M-1 Percentage, Class M-2 Percentage
and Class M-3 Percentage.

          "Class M-1 Certificate": Any one of the Class M-1 Certificates
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit B-1, subordinate to the Class A Certificates with
respect to distributions and the allocation of Realized Losses as set forth in
Section 4.04 and evidencing an interest designated as a "regular interest" in
REMIC II for purposes of the REMIC Provisions.

          "Class M-1 Percentage": With respect to any Distribution Date, the
lesser of 100% and a fraction, expressed as a percentage, the numerator of which
is the aggregate Certificate Principal Balance of the Class M-1 Certificates
immediately prior to such date and the denominator of which is the aggregate
Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) (other than the related Discount Fraction of each Discount Mortgage
Loan) immediately prior to such Distribution Date.

          "Class M-1-X Certificate": Any one of the Class M-1-X Certificates
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit B-1, subordinate to the Class A Certificates with
respect to distributions and the allocation of Realized Losses as set forth in
Section 4.04 and evidencing an interest designated as a "regular interest" in
REMIC II for purposes of the REMIC Provisions.

          "Class M-2 Certificate": Any one of the Class M-2 Certificates
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit B-1, subordinate to the Class A, Class M-1 and Class
M-1-X Certificates with respect to distributions and the allocation of Realized
Losses as set forth in Section 4.04 and evidencing an interest designated as a
"regular interest" in REMIC II for purposes of the REMIC Provisions.

<PAGE>

                                      -11-

          "Class M-2 Percentage": With respect to any Distribution Date, the
lesser of 100% and a fraction, expressed as a percentage, the numerator of which
is the aggregate Certificate Principal Balance of the Class M-2 Certificates
immediately prior to such date and the denominator of which is the aggregate
Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) (other than the related Discount Fraction of each Discount Mortgage
Loan) immediately prior to such Distribution Date.

          "Class M-2 Prepayment Distribution Trigger": With respect to any
Distribution Date, a test that shall be satisfied if the fraction (expressed as
a percentage) equal to the sum of the Certificate Principal Balances of the
Class M-2 Certificates, Class M-3 Certificates, Class B-1 Certificates, Class
B-2 Certificates and Class B-3 Certificates immediately prior to such
Distribution Date divided by the aggregate Stated Principal Balance of all of
the Mortgage Loans (or related REO Properties) immediately prior to such
Distribution Date is greater than or equal to 3.90%.

          "Class M-2-X Certificate": Any one of the Class M-2-X Certificates
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit B-1, subordinate to the Class A, Class M-1 and Class
M-1-X Certificates with respect to distributions and the allocation of Realized
Losses as set forth in Section 4.04 and evidencing an interest designated as a
"regular interest" in REMIC II for purposes of the REMIC Provisions.

          "Class M-3 Certificate": Any one of the Class M-3 Certificates
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit B-1, subordinate to the Class A, Class M-1, Class
M-1-X, Class M-2 and Class M-2-X Certificates with respect to distributions and
the allocation of Realized Losses as set forth in Section 4.04 and evidencing an
interest designated as a "regular interest" in REMIC II for purposes of the
REMIC Provisions.

          "Class M-3 Percentage": With respect to any Distribution Date, the
lesser of 100% and a fraction, expressed as a percentage, the numerator of which
is the aggregate Certificate Principal Balance of the Class M-3 Certificates
immediately prior to such date and the denominator of which is the aggregate
Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) (other than the related Discount Fraction of each Discount Mortgage
Loan) immediately prior to such Distribution Date.

          "Class M-3 Prepayment Distribution Trigger": With respect to any
Distribution Date, a test that shall be satisfied if the fraction (expressed as
a percentage) equal to the sum of the Certificate Principal Balances of the
Class M-3 Certificates, Class B-1 Certificates, Class B-2 Certificates and Class
B-3 Certificates immediately prior to such Distribution Date divided by the
aggregate Stated Principal Balance of all of the Mortgage Loans (and related REO
Properties) immediately prior to such Distribution Date is greater than or equal
to 2.15%.

<PAGE>

                                      -12-

          "Class R Certificate": Any one of the Class R-I Certificates or Class
R-II Certificates.

          "Class R-I Certificate": Any one of the Class R-I Certificates
executed by the Trustee and authenticated by the Certificate Registrar
substantially in the form annexed hereto as Exhibit B-3 and evidencing an
interest designated as a "residual interest" in REMIC I for purposes of the
REMIC Provisions.

          "Class R-II Certificate": Any one of the Class R-II Certificates
executed by the Trustee and authenticated by the Certificate Registrar
substantially in the form annexed hereto as Exhibit B-3 and evidencing an
interest designated as a "residual interest" in REMIC II for purposes of the
REMIC Provisions.

          "Closing Date": December 20, 1999.

          "Code": The Internal Revenue Code of 1986.

          "Collateral Value": The appraised value of a Mortgaged Property based
upon the lesser of (i) the appraisal (as reviewed and approved by the Seller)
made at the time of the origination of the related Mortgage Loan, or (ii) the
sales price of such Mortgaged Property at such time of origination. With respect
to a Mortgage Loan the proceeds of which were used to refinance an existing
mortgage loan, the appraised value of the Mortgaged Property based upon the
appraisal (as reviewed and approved by the Seller) obtained at the time of
refinancing.

          "Commission": The Securities and Exchange Commission.

          "Compensating Interest": With respect to any Distribution Date, an
amount equal to Prepayment Interest Shortfalls resulting from Principal
Prepayments during the related Prepayment Period, but not more than the
Servicing Fees for the immediately preceding Due Period.

          "Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business related to
this Agreement shall be administered, which office at the date of the execution
of this Agreement is located at Sixth Street and Marquette Avenue, Minneapolis,
Minnesota 55479, Attention: Impac Secured Assets Corp. Series 1999-2.

          "Credit Support Depletion Date": The first Distribution Date on which
the Senior Percentage equals 100%.

          "Curtailment": Any Principal Prepayment made by a Mortgagor which is
not a Principal Prepayment in Full.

<PAGE>

                                      -13-

          "Custodial Account": The custodial account or accounts created and
maintained pursuant to Section 3.10 in the name of a depository institution, as
custodian for the holders of the Certificates. Any such account or accounts
shall be an Eligible Account.

          "Custodial Agreement": An agreement that may be entered into among the
Depositor, Impac Funding (individually and as Master Servicer), the Trustee and
a Custodian in substantially the form of Exhibit L hereto.

          "Custodian": A custodian appointed pursuant to a Custodial Agreement.

          "Cut-off Date": December 1, 1999.

          "DCR": Duff & Phelps Credit Rating Co., or any successor.

          "Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction constituting a Deficient Valuation or any reduction that results in a
permanent forgiveness of principal.

          "Defaulted Mortgage Loan" means any Mortgage Loan as to which the
Mortgagor has failed to make unexcused three or more consecutive scheduled
Monthly Payments.

          "Deficient Valuation": With respect to any Mortgage Loan, a valuation
by a court of competent jurisdiction of the Mortgaged Property in an amount less
than the then outstanding indebtedness under the Mortgage Loan, or any reduction
in the amount of principal to be paid in connection with any scheduled Monthly
Payment that constitutes a permanent forgiveness of principal, which valuation
or reduction results from a proceeding under the Bankruptcy Code.

          "Definitive Certificate": Any definitive, fully registered
Certificate.

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

          "Depositor": Impac Secured Assets Corp., or its successor in interest.

          "Depository" The Depository Trust Company, or any successor Depository
hereafter named. The nominee of the initial Depository for purposes of
registering those Certificates that are to be Book-Entry Certificates is Cede &
Co. The Depository shall at all times be a "clearing corporation" as defined in
Section 8-102(5) of the Uniform Commercial Code of the State of New York and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended.

<PAGE>

                                      -14-

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

          "Determination Date": The 15th day (or if such 15th day is not a
Business Day, the Business Day immediately preceding such 15th day) of the month
of the related Distribution Date.

          "Discount Fraction": With respect to each Discount Mortgage Loan, the
fraction expressed as a percentage, the numerator of which is 9.000% minus the
Net Mortgage Rate (or the initial Net Mortgage Rate with respect to any Discount
Mortgage Loans as to which the Mortgage Rate for such Mortgage Loan is modified
pursuant Article III of this Agreement) and the denominator of which is 9.000%.
The Discount Fraction with respect to each Discount Mortgage Loan as of the
Cut-off Date is set forth on Exhibit K attached hereto.

          "Discount Mortgage Loan": Any Mortgage Loan having a Net Mortgage Rate
(or the initial Net Mortgage Rate) of less than 9.000% per annum and any
Mortgage Loan deemed to be a Discount Mortgage Loan pursuant to the definition
of Qualified Substitute Mortgage Loan.

          "Disqualified Organization": Any organization defined as a
"disqualified organization" under Section 860E(e)(5) of the Code, which includes
any of the following: (i) the United States, any State or political subdivision
thereof, any possession of the United States, or any agency or instrumentality
of any of the foregoing (other than an instrumentality which is a corporation if
all of its activities are subject to tax and, except for the Freddie Mac, a
majority of its board of directors is not selected by such governmental unit),
(ii) a foreign government, any international organization, or any agency or
instrumentality of any of the foregoing, (iii) any organization (other than
certain farmers' cooperatives described in Section 521 of the Code) which is
exempt from the tax imposed by Chapter 1 of the Code (including the tax imposed
by Section 511 of the Code on unrelated business taxable income), (iv) rural
electric and telephone cooperatives described in Section 1381(a)(2)(C) of the
Code and (v) any other Person so designated by the Trustee based upon an Opinion
of Counsel that the holding of an Ownership Interest in a Class R Certificate by
such Person may cause either REMIC I or REMIC II or any Person having an
Ownership Interest in any Class of Certificates (other than such Person) to
incur a liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the Transfer of an Ownership Interest in a Class R
Certificate to such Person. The terms "United States", "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions.

          "Distribution Date": The 25th day of any month, or if such 25th day is
not a Business Day, the Business Day immediately following such 25th day,
commencing in January 2000.

          "Due Date": The first day of the month of the related Distribution
Date.

<PAGE>

                                      -15-

          "Due Period": With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month of such
Distribution Date (or, with respect to the first Due Period, the day following
the Cut-off Date) and ending on the related Due Date.

          "Eligible Account": An account maintained with a federal or state
chartered depository institution (i) the short-term obligations of which are
rated A-1 or better by Standard & Poors and D-1 or better by DCR at the time of
any deposit therein, or (ii) insured by the FDIC (to the limits established by
such Corporation), the uninsured deposits in which account are otherwise secured
such that, as evidenced by an Opinion of Counsel (obtained by the Person
requesting that the account be held pursuant to this clause (ii)) delivered to
the Trustee prior to the establishment of such account, the Certificateholders
will have a claim with respect to the funds in such account and a perfected
first priority security interest against any collateral (which shall be limited
to Permitted Investments, each of which shall mature not later than the Business
Day immediately preceding the Distribution Date next following the date of
investment in such collateral or the Distribution Date if such Permitted
Investment is an obligation of the institution that maintains the Certificate
Account or Custodial Account) securing such funds that is superior to claims of
any other depositors or general creditors of the depository institution with
which such account is maintained or (iii) a trust account or accounts maintained
with a federal or state chartered depository institution or trust company with
trust powers acting in its fiduciary capacity or (iv) an account or accounts of
a depository institution acceptable to the Rating Agencies (as evidenced in
writing by the Rating Agencies that use of any such account as the Custodial
Account or the Certificate Account will not have an adverse effect on the
then-current ratings assigned to the Classes of the Certificates then rated by
the Rating Agencies). Eligible Accounts may bear interest.

          "Eligible Funds": On any Distribution Date, the portion, if any, of
the Available Distribution Amount remaining after reduction by the sum of (i)
the Trustee's Fees for such Distribution Date, (ii) the aggregate amount of
Accrued Certificate Interest on the Class A and Class R Certificates, (iii) the
Senior Principal Distribution Amount, (iv) the Principal Only Distribution
Amount (determined without regard to Section 4.01(d)(i)(E) hereof) and (v) the
aggregate amount of Accrued Certificate Interest on the Class M, Class B-1 and
Class B-2 Certificates.

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

          "Excess Bankruptcy Loss": Any Bankruptcy Loss, or portion thereof,
which exceeds the then applicable Bankruptcy Amount.

          "Excess Fraud Loss": Any Fraud Loss, or portion thereof, which exceeds
the then applicable Fraud Loss Amount.

          "Excess Proceeds": As defined in Section 3.22.

<PAGE>

                                      -16-

          "Excess Special Hazard Loss": Any Special Hazard Loss, or portion
thereof, that exceeds the then applicable Special Hazard Amount.

          "Extraordinary Events": Any of the following conditions with respect
to a Mortgaged Property or Mortgage Loan causing or resulting in a loss which
causes the liquidation of such Mortgage Loan:

          (a) losses which are otherwise covered by the fidelity bond and the
     errors and omissions insurance policy maintained pursuant to Section 3.18,
     but are in excess of the coverage maintained thereunder;

          (b) nuclear reaction or nuclear radiation or radioactive
     contamination, all whether controlled or uncontrolled, or remote or be in
     whole or in part caused by, contributed to or aggravated by a peril covered
     by the definition of the term "Special Hazard Loss";

          (c) hostile or warlike action in time of peace or war, including
     action in hindering, combating or defending against an actual, impending or
     expected attack;

               1. by any government or sovereign power, de jure or de facto, or
          by any authority maintaining or using military, naval or air forces;
          or

               2. by military, naval or air forces; or

               3. by an agent of any such government, power, authority or
          forces;

          (d) any weapon of war employing atomic fission or radioactive force
     whether in time of peace or war; or

          (e) insurrection, rebellion, revolution, civil war, usurped power or
     action taken by governmental authority in hindering, combating or defending
     against such an occurrence, seizure or destruction under quarantine or
     customs regulations, confiscation by order of any government or public
     authority; or risks of contraband or illegal transportation or trade.

          "Extraordinary Losses": Any loss incurred on a Mortgage Loan caused by
or resulting from an Extraordinary Event.

          "Fannie Mae": Federal National Mortgage Association or any successor.

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

<PAGE>

                                      -17-

          "Fraud Loss Amount": As of any date of determination after the Cut-off
Date, an amount equal to: (X) prior to the first Anniversary, an amount equal to
2.00% of the aggregate outstanding principal balance of all of the Mortgage
Loans as of the Cut-off Date minus the aggregate amount of Fraud Losses
allocated solely to one or more specific Classes of Certificates in accordance
with Section 4.04 since the Cut-off Date up to such date of determination and
(Y) from the first to the fifth Anniversary, an amount equal to the lesser of
(a) the Fraud Loss Amount as of the most recent anniversary of the Cut-off Date
and (b) 1.00% of the aggregate outstanding principal balance of all of the
Mortgage Loans as of the most recent Anniversary minus (2) the Fraud Losses
allocated solely to one or more specific Classes of Certificates in accordance
with Section 4.04 since the most recent Anniversary up to such date of
determination. On and after the fifth Anniversary, the Fraud Loss Amount shall
be zero.

          The Fraud Loss Amount may be further reduced by the Master Servicer
(including accelerating the manner in which such coverage is reduced) provided
that prior to any such reduction, the Master Servicer shall (i) obtain written
confirmation from each Rating Agency that such reduction shall not reduce the
rating assigned to any Class of Certificates by such Rating Agency below the
lower of the then-current rating or the rating assigned to such Certificates as
of the Closing Date by such Rating Agency and (ii) provide a copy of such
written confirmation to the Trustee.

          "Fraud Losses": Losses on Mortgage Loans as to which there was fraud
in the origination of such Mortgage Loan.

          "Freddie Mac": Federal Home Loan Mortgage Corporation or any
successor.

          "Funding Date": With respect to each Mortgage Loan, the date on which
funds were advanced by or on behalf of the Seller and interest began to accrue
thereunder.

          "Initial Certificate Principal Balance": With respect to each Class of
Certificates (other than the Interest Only Certificates), the Certificate
Principal Balance of such Class of Certificates as of the Cut-off Date as set
forth in the Preliminary Statement hereto.

          "Initial Notional Amount": With respect to the Class A-4, Class A-5,
Class A-6, Class A-9, Class M-1-X and Class M-2-X Certificates, $103,548,430,
$12,631,666.67, $6,083,333.33, $7,512,422.68, $1,048,222.22 and $335,583.33,
respectively.

          "Insurance Policy": With respect to any Mortgage Loan, any insurance
policy (including a Radian PMI Policy) which is required to be maintained from
time to time under this Agreement in respect of such Mortgage Loan.

<PAGE>

                                      -18-

          "Insurance Proceeds": Proceeds paid in respect of the Mortgage Loans
pursuant to any Primary Hazard Insurance Policy, any title insurance policy or
any other insurance policy covering a Mortgage Loan, to the extent such proceeds
are not applied to the restoration of the related Mortgaged Property or released
to the Mortgagor in accordance with the procedures that the Master Servicer
would follow in servicing mortgage loans held for its own account.

          "Interest Accrual Period": With respect to any Certificate and each
Uncertificated REMIC I IO Regular Interest, and any Distribution Date (other
than the Class A-2, Class A-3 and Class A-4 Certificates) the calendar month
preceding the month in which the Distribution Date occurs. The Interest Accrual
Period for the Class A-2, Class A-3 and Class A-4 Certificates is the one-month
period commencing on the 25th day of the month preceding the month in which such
Distribution Date occurs and ending on the 24th day of the month in which such
Distribution Date occurs.

          "Interest Only Certificate": Any Class A-4, Class A-5, Class A-6,
Class A-9, Class M-1-X or Class M-2-X Certificate.

          "Late Collections": With respect to any Mortgage Loan, all amounts
received during any Due Period, whether as late payments of Monthly Payments or
as Insurance Proceeds, Liquida tion Proceeds or otherwise, which represent late
payments or collections of Monthly Payments due but delinquent for a previous
Due Period and not previously recovered.

          "LIBOR": With respect to any Distribution Date and the Pass-Through
Rates on the Class A-2, Class A-3 and Class A-4 Certificates, the arithmetic
mean of the London interbank offered rate quotations of reference banks (which
will be selected by the Trustee after consultation with the Master Servicer) for
one-month U.S. dollar deposits, expressed on a per annum basis, determined in
accordance with Section 1.02.

          "LIBOR Business Day": Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the city of London, England and New
York City are required or authorized by law to be closed.

          "Liquidation Proceeds": Amounts (other than Insurance Proceeds)
received by the Master Servicer in connection with the taking of an entire
Mortgaged Property by exercise of the power of eminent domain or condemnation or
in connection with the liquidation of a defaulted Mortgage Loan through
trustee's sale, foreclosure sale or otherwise, other than amounts received in
respect of any REO Property.

          "Loan-to-Value Ratio": As of any date, the fraction, expressed as a
percentage, the numerator of which is the current principal balance of the
related Mortgage Loan at the date of

<PAGE>

                                      -19-

determination and the denominator of which is the Collateral Value of the
related Mortgaged Property.

          "Lost Note Affidavit": With respect to any Mortgage Note, an original
lost note affidavit from the Seller stating that the original Mortgage Note was
lost, misplaced or destroyed, together with a copy of the related Mortgage Note.

          "Maturity Date": The latest possible maturity date, solely for
purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations, by which
(i) the Certificate Principal Balance of each Class of Certificates (other than
the Interest Only Certificates) or (ii) the Notional Amount of the Interest Only
Certificate would be reduced to zero, which is January 25, 2030, the
Distribution Date immediately following the latest scheduled maturity date of
any Mortgage Loan.

          "Master Servicer": Impac Funding Corporation, or any successor master
servicer appointed as herein provided.

          "Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment of principal and interest on such Mortgage Loan which is payable
by a Mortgagor from time to time under the related Mortgage Note as originally
executed (after adjustment, if any, for Deficient Valuations occurring prior to
such Due Date, and after any adjustment by reason of any bankruptcy or similar
proceeding or any moratorium or similar waiver or grace period).

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

          "Mortgage": The mortgage, deed of trust or any other instrument
securing the Mortgage Loan.

          "Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement; provided, that
whenever the term "Mortgage File" is used to refer to documents actually
received by the Trustee, such term shall not be deemed to include such
additional documents required to be added unless they are actually so added.

          "Mortgage Loan": Each of the mortgage loans, transferred and assigned
to the Trustee pursuant to Section 2.01 or Section 2.04 and from time to time
held in the Trust Fund (including any Qualified Substitute Mortgage Loans), the
Mortgage Loans so transferred, assigned and held being identified in the
Mortgage Loan Schedule. As used herein, the term "Mortgage Loan" includes the
related Mortgage Note and Mortgage.

          "Mortgage Loan Purchase Agreement": The Mortgage Loan Purchase
Agreement dated as of December 1, 1999, among Impac Funding Corporation, as
seller, Impac Mortgage

<PAGE>

                                      -20-

Holdings, Inc., as guarantor, and the Depositor as purchaser, and all amendments
thereof and supplements thereto.

          "Mortgage Loan Schedule": As of any date of determination, the
schedule of Mortgage Loans included in the Trust Fund. The initial schedule of
Mortgage Loans with accompanying information transferred on the Closing Date to
the Trustee as part of the Trust Fund for the Certificates, attached hereto as
Exhibit H (as amended from time to time to reflect the addition of Qualified
Substitute Mortgage Loans) (and, for purposes of the Trustee pursuant to Section
2.02, in computer-readable form as delivered to the Trustee), which list shall
set forth the following information with respect to each Mortgage Loan:

        (i)     the loan number and name of the Mortgagor;

        (ii)    the street address, city, state and zip code of the Mortgaged
                Property;

        (iii)   (A) the original term to maturity and (B) if such Mortgage Loan
                is a Balloon Loan, the amortization term thereof;

        (iv)    the original principal balance and the original Mortgage Rate;

        (v)     the first payment date;

        (vi)    whether the Mortgage Loan is a Balloon Mortgage Loan or a
                Mortgage Loan the terms of which do not provide for a Balloon
                Payment;

        (vii)   the type of Mortgaged Property;

        (viii)  the Monthly Payment in effect as of the Cut-off Date;

        (ix)    the principal balance as of the Cut-off Date;

        (xi)    the Mortgage Rate as of the Cut-off Date and the Pool Strip
                Rate;

        (xii)   the occupancy status;

        (xiii)  the purpose of the Mortgage Loan;

        (xiv)   the Collateral Value of the Mortgaged Property;

        (xv)    the original term to maturity;

<PAGE>

                                      -21-

        (xvi)   the paid-through date of the Mortgage Loan;

        (xvii)  the Servicing Fee Rate;

        (xviii) the Net Mortgage Rate for such Mortgage Loan;

        (xix)   whether such Mortgage Loan is a Radian PMI Loan and, if so, the
                related Radian PMI Policy Rate;

        (xx)    whether the Mortgage Loan is covered by a private mortgage
                insurance policy or an original certificate of private mortgage
                insurance; and

        (xxi)   the documentation type.

          The Mortgage Loan Schedule may be in the form of more than one
schedule, collectively setting forth all of the information required.

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

          "Mortgage Rate": With respect to any Mortgage Loan, the annual rate at
which interest accrues on such Mortgage Loan, as adjusted from time to time in
accordance with the provisions of the Mortgage Note.

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

          "Mortgagor": The obligor or obligors on a Mortgage Note.

          "Net Mortgage Rate": With respect to each Mortgage Loan Due Date, a
per annum rate of interest equal to the then-applicable Mortgage Rate on such
Mortgage Loan less the sum of the Servicing Fee Rate and the Trustee Fee Rate
and, with respect to the Radian Insured Loans, the Radian PMI Policy Rate.

          "Non-Discount Mortgage Loan": The Mortgage Loans other than the
Discount Mortgage Loans.

          "Nonrecoverable Advance": Any Advance or Servicing Advance previously
made or proposed to be made in respect of a Mortgage Loan which, in the good
faith judgment of the Master Servicer, will not or, in the case of a proposed
Advance or Servicing Advance, would not be ultimately recoverable from related
Late Collections, Insurance Proceeds, Liquidation Proceeds or REO Proceeds. The
determination by the Master Servicer that it has made a Nonrecoverable

<PAGE>

                                      -22-

Advance or that any proposed Advance or Servicing Advance would constitute a
Nonrecoverable Advance, shall be evidenced by a certificate of a Servicing
Officer delivered to the Depositor and
the Trustee.

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

          "Notional Amount": With respect to the Class A-4 Certificates as of
any Distribution Date, the aggregate of the Certificate Principal Balances of
the Class A-2 Certificates and Class A-3 Certificates immediately prior to such
date. With respect to the Class A-5 Certificates as of any Distribution Date,
11/60 multiplied by the Certificate Principal Balance of the Class A-1
Certificates, immediately prior to such date. However, for federal income tax
purposes, the Notional Amount of the Class A-5 Certificates will be the
Uncertificated Principal Balance of Uncertificated REMIC I Regular Interest N.
With respect to the Class A-6 Certificates as of any Distribution Date, 1/6
multiplied by the Certificate Principal Balance of the Class A-7 Certificates,
immediately prior to such date. However, for federal income tax purposes, the
Notional Amount of the Class A-6 Certificates will be the Uncertificated
Principal Balance of Uncertificated REMIC I Regular Interest Q. With respect to
the Class A-9 Certificates as of any Distribution Date, the product of (x) the
fraction, the numerator of which is the excess of the weighted average (by
Stated Principal Balance) of the Net Mortgage Rates of the Non-Discount Mortgage
Loans over 9.00%, and the denominator of which is 9.00%, and (y) the aggregate
Stated Principal Balance of the Non-Discount Mortgage Loans as of the first date
of the related Due Period for such Distribution Date. With respect to the Class
M-1-X Certificates as of any Distribution Date, the 1/9 multiplied by the
Certificate Principal Balance of the Class M-1 Certificates, immediately prior
to such date. However, for federal income tax purposes, the Notional Amount of
the Class M-1-X Certificates will be the Uncertificated Principal Balance of
Uncertificated REMIC I Regular Interest U. With respect to the Class M-2-X
Certificates as of any Distribution Date, 1/12 multiplied by the Certificate
Principal Balance of the Class M-2 Certificates, immediately prior to such date.
However, for federal income tax purposes, the Notional Amount of the Class M-2-X
Certificates will be the Uncertificated Principal Balance of Uncertificated
REMIC I Regular Interest W.

          "Officers' Certificate": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a vice president and by
the Treasurer, the Secretary, or one of the assistant treasurers or assistant
secretaries of the Depositor, the Seller, the Master Servicer or of any
Sub-Servicer and delivered to the Depositor and Trustee.

          "Opinion of Counsel": A written opinion of counsel, who may be counsel
for the Depositor, the Seller, or the Master Servicer, reasonably acceptable to
the Trustee; except that any opinion of counsel relating to (a) the
qualification of any account required to be maintained pursuant to this
Agreement as an Eligible Account, (b) the qualification of REMIC I or REMIC II
as REMICs, (c) compliance with the REMIC Provisions or (d) resignation of the
Master Servicer pursuant to Section 6.04 must be an opinion of counsel who (i)
is in fact independent of the Depositor and the

<PAGE>

                                      -23-

Master Servicer, (ii) does not have any direct financial interest or any
material indirect financial interest in the Depositor or the Master Servicer or
in an affiliate of either and (iii) is not connected with the Depositor or the
Master Servicer as an officer, employee, director or person performing
similar functions.

          "Original Senior Percentage": The fraction, expressed as a percentage,
the numerator of which is the aggregate Initial Certificate Principal Balance of
the Senior Certificates (other than the Principal Only Certificates) and the
denominator of which is the aggregate Stated Principal Balance of the Mortgage
Loans (other than the Discount Fraction of the Discount Mortgage Loans) as of
the Cut-off Date, which percentage is approximately 91.90% as of the Closing
Date.

          "OTS": Office of Thrift Supervision or any successor.

          "Outstanding Mortgage Loan": As to any Due Date, a Mortgage Loan
(including an REO Property) which was not the subject of a Principal Prepayment
in Full, Cash Liquidation or REO Disposition and which was not purchased prior
to such Due Date pursuant to Sections 2.02, 2.04, 3.14 or 3.24.

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

          "Pass-Through Rate": A rate equal to, (i) with respect to all
Certificates other than the Class A-2, Class A-3 and Class A-4 Certificates and
the Principal Only Certificates, a fixed rate set forth in the Preliminary
Statement hereto; provided however, for federal income tax purposes, the
Pass-Through Rate for the Class A-5, Class A-6, Class M-1-X and Class M-2-X
Certificates will be 1.65% and 1.50%, 1.00% and 0.75%, respectively, and (ii)
with respect to the Class A-2, Class A-3 and Class A-4 Certificates, as follows:

          (1) The Pass-Through Rate on the Class A-2 Certificates with respect
     to the initial Interest Accrual Period is 6.30% per annum, and as to any
     Interest Accrual Period thereafter, will be a per annum rate equal to 0.70%
     plus LIBOR, with a maximum rate of 9.00% per annum and a minimum rate of
     0.70% per annum.

          (2) The Pass-Through Rate on the Class A-3 Certificates with respect
     to the initial Interest Accrual Period is 6.30% per annum, and as to any
     Interest Accrual Period thereafter, will be a per annum rate equal to 0.70%
     plus LIBOR, with a maximum rate of 9.00% per annum and a minimum rate of
     0.70% per annum.

          (3) The Pass-Through Rate on the Class A-4 Certificates with respect
     to the initial Interest Accrual Period is 2.70% per annum, and as to any
     Interest Accrual Period thereafter,

<PAGE>

                                      -24-

     will be a per annum rate equal to 8.30% minus LIBOR, with a maximum rate of
     8.30% per annum and a minimum rate of 0.00% per annum.

The Principal Only Certificates do not have a Pass-Through Rate and are not
entitled to Accrued Certificate Interest.

          "Percentage Interest": With respect to any Certificate (other than a
Class R Certificate), the undivided percentage ownership interest in the related
Class evidenced by such Certificate, which percentage ownership interest shall
be equal to the Initial Certificate Principal Balance thereof or Initial
Notional Amount (in the case of the Interest Only Certificates) divided by the
aggregate Initial Certificate Principal Balance or initial Notional Amount, as
applicable, of all of the Certificates of the same Class. With respect to a
Class R Certificate, the interest in distributions to be made with respect to
such Class evidenced thereby, expressed as a percentage, as stated on the face
of each such Certificate.

          "Permitted Investment": One or more of the following:

          (i) obligations of or guaranteed as to principal and interest by the
     United States or any agency or instrumentality thereof when such
     obligations are backed by the full faith and credit of the United States;

          (ii) repurchase agreements on obligations specified in clause (i)
     maturing not more than one month from the date of acquisition thereof,
     provided that the unsecured obligations of the party agreeing to repurchase
     such obligations are at the time rated by each Rating Agency in its highest
     short-term rating available;

          (iii) federal funds, certificates of deposit, demand deposits, time
     deposits and bankers' acceptances (which shall each have an original
     maturity of not more than 90 days and, in the case of bankers' acceptances,
     shall in no event have an original maturity of more than 365 days or a
     remaining maturity of more than 30 days) denominated in United States
     dollars of any U.S. depository institution or trust company incorporated
     under the laws of the United States or any state thereof or of any domestic
     branch of a foreign depository institution or trust company; provided that
     the debt obligations of such depository institution or trust company (or,
     if the only Rating Agency is Standard & Poor's, in the case of the
     principal depository institution in a depository institution holding
     company, debt obligations of the depository institution holding company) at
     the date of acquisition thereof have been rated by each Rating Agency in
     its highest short-term rating available; and provided further that, if the
     only Rating Agency is Standard & Poor's and if the depository or trust
     company is a principal subsidiary of a bank holding company and the debt
     obligations of such subsidiary are not separately rated, the applicable
     rating shall be that of the bank holding company; and, provided further
     that, if the original maturity of such short-term obligations

<PAGE>

                                      -25-

     of a domestic branch of a foreign depository institution or trust company
     shall exceed 30 days, the short-term rating of such institution shall be
     A-1+ in the case of Standard & Poor's if Standard & Poor's is the Rating
     Agency;

          (iv) commercial paper (having original maturities of not more than 365
     days) of any corporation incorporated under the laws of the United States
     or any state thereof which on the date of acquisition has been rated by DCR
     in its highest short-term rating available and by Standard & Poor's at
     least A-1; provided that such commercial paper shall have a remaining
     maturity of not more than 30 days;

          (v) a money market fund or a qualified investment fund rated by each
     Rating Agency in its highest long-term rating available, including any such
     funds for which Norwest Bank Minnesota, National Association or any
     affiliate thereof serves as an investment advisor, manager, administrator,
     shareholder, servicing agent, and/or custodian or sub-custodian; and

          (vi) other obligations or securities that are acceptable to each
     Rating Agency as a Permitted Investment hereunder and will not reduce the
     rating assigned to any Class of Certificates by such Rating Agency below
     the lower of the then-current rating or the rating assigned to such
     Certificates as of the Closing Date by such Rating Agency, as evidenced in
     writing;

provided, however, that no instrument shall be a Permitted Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the
principal and interest payments with respect to such instrument provide a yield
to maturity greater than 120% of the yield to maturity at par of such underlying
obligations.

          "Permitted Transferee": Any transferee of a Residual Certificate other
than a Disqualified Organization, a Non-United States Person or an "electing
large partnership" (as defined in Section 775 of the Code)..

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

          "Pool Strip Rate": With respect to any Distribution Date and any
Non-Discount Mortgage Loan, the Net Mortgage Rate thereon minus 9.00%, but not
less than 0.00%.

          "Prepayment Assumption": represents an assumed rate of prepayment each
month relative to the then outstanding principal balance of a pool of new
mortgage loans. A prepayment

<PAGE>

                                      -26-

assumption of 100% of the Prepayment Assumption assumes a constant prepayment
rate of 4% per annum of the then outstanding principal balance of such mortgage
loans in the first month of the life of the mortgage loans and an additional
amount of approximately 1.2727% per annum in each month thereafter until the
twelfth month. Beginning in the twelfth month and in each month thereafter
during the life of the mortgage loans, 100% of the Prepayment Assumption assumes
a constant prepayment rate of 18% per annum each month.

          "Prepayment Distribution Percentage": With respect to any Distribution
Date and each Class of Class M Certificates and Class B Certificates, under the
applicable circumstances set forth below, the respective percentages set forth
below:

     (i)  For any Distribution Date on which any Class of Class M or Class B
          Certificates are outstanding:

               (a) in the case of the Class of Class M Certificates then
          outstanding with the lowest numerical designation, or in the event the
          Class M Certificates are no longer outstanding, the Class of Class B
          Certificates then outstanding with the lowest numerical designation
          and each other Class of Class M Certificates and Class B Certificates
          for which the related Prepayment Distribution Trigger has been
          satisfied, a fraction, expressed as a percentage, the numerator of
          which is the Certificate Principal Balance of such Class immediately
          prior to such date and the denominator of which is the sum of the
          Certificate Principal Balances immediately prior to such date of (1)
          the Class of Class M Certificates then outstanding with the lowest
          numerical designation, or in the event the Class M Certificates are no
          longer outstanding, the Class of Class B Certificates then outstanding
          with the lowest numerical designation and (2) all other Classes of
          Class M Certificates and Class B Certificates for which the respective
          Prepayment Distribution Triggers have been satisfied; and

               (b) in the case of each other Class of Class M Certificates and
          Class B Certificates for which the Prepayment Distribution Triggers
          have not been satisfied, 0%; and

          (ii) Notwithstanding the foregoing, if the application of the
     foregoing percentages on any Distribution Date as provided in Section 4.01
     (determined without regard to the proviso to the definition of "Subordinate
     Principal Distribution Amount") would result in a distribution in respect
     of principal of any Class or Classes of Class M Certificates and Class B
     Certificates in an amount greater than the remaining Certificate Principal
     Balance thereof (any such class, a "Maturing Class"), then: (a) the
     Prepayment Distribution Percentage of each Maturing Class shall be reduced
     to a level that, when applied as described above, would exactly reduce the
     Certificate Principal Balance of such Class to zero; (b) the Prepayment

<PAGE>

                                      -27-

         Distribution Percentage of each other Class of Class M Certificates and
         Class B Certificates (any such Class, a "Non-Maturing Class") shall be
         recalculated in accordance with the provisions in paragraph (i) above,
         as if the Certificate Principal Balance of each Maturing Class had been
         reduced to zero (such percentage as recalculated, the "Recalculated
         Percentage"); (c) the total amount of the reductions in the Prepayment
         Distribution Percentages of the Maturing Class or Classes pursuant to
         clause (a) of this sentence, expressed as an aggregate percentage,
         shall be allocated among the Non-Maturing Classes in proportion to
         their respective Recalculated Percentages (the portion of such
         aggregate reduction so allocated to any Non-Maturing Class, the
         "Adjustment Percentage"); and (d) for purposes of such Distribution
         Date, the Prepayment Distribution Percentage of each Non- Maturing
         Class shall be equal to the sum of (1) the Prepayment Distribution
         Percentage thereof, calculated in accordance with the provisions in
         paragraph (i) above as if the Certificate Principal Balance of each
         Maturing Class had not been reduced to zero, plus (2) the related
         Adjustment Percentage.

          "Prepayment Distribution Trigger": The Class M-2 Prepayment
Distribution Trigger, Class M-3 Prepayment Distribution Trigger, Class B-1
Prepayment Distribution Trigger, Class B-2 Prepayment Distribution Trigger or
Class B-3 Prepayment Distribution Trigger.

          "Prepayment Interest Shortfall": As to any Distribution Date and any
Mortgage Loan (other than a Mortgage Loan relating to an REO Property) that was
the subject of (a) a Principal Prepayment in Full during the related Prepayment
Period, an amount equal to the excess of one month's interest at the Net
Mortgage Rate on the Stated Principal Balance of such Mortgage Loan over the
amount of interest (adjusted to the Net Mortgage Rate) paid by the Mortgagor for
such Prepayment Period to the date of such Principal Prepayment in Full or (b) a
Curtailment during the prior calendar month, an amount equal to one month's
interest at the Net Mortgage Rate on the amount of such Curtailment.

          "Prepayment Period": As to any Distribution Date, the calendar month
preceding the month in which such Distribution Date occurs.

          "Primary Hazard Insurance Policy": Each primary hazard insurance
policy (other than a Radian PMI Policy) required to be maintained pursuant to
Section 3.13.

          "Primary Insurance Policy": Any primary policy of mortgage guaranty
insurance other than the Radian PMI Policy, or any replacement policy therefor
providing coverage for certain Mortgage Loans included in the Trust Fund with
Loan-to-Value Ratios in excess of 80.00%.

          "Principal Only Certificates": The Class A-8 Certificates.

<PAGE>

                                      -28-

          "Principal Only Collection Shortfalls": With respect to the Cash
Liquidation or REO Disposition of a Discount Mortgage Loan and any Distribution
Date, the excess of the amount described in Section 4.01(d)(i)(C)(1) over the
amount described in Section 4.01(d)(i)(C)(2).

          "Principal Only Distribution Amount": As defined in Section
4.01(d)(i).

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

          "Principal Prepayment in Full": Any Principal Prepayment made by a
Mortgagor of the entire unpaid principal balance of the Mortgage Loan.

          "Purchase Price": With respect to any Mortgage Loan (or REO Property)
required to be purchased pursuant to Section 2.02, 2.04 or 3.14 or that the
Master Servicer is entitled to repurchase pursuant to Section 3.24, an amount
equal to the sum of (i) 100% of the Stated Principal Balance thereof, (ii)
unpaid accrued interest (or REO Imputed Interest) at the applicable Net Mortgage
Rate on the Stated Principal Balance thereof outstanding during each Due Period
that such interest was not paid or advanced, from the date through which
interest was last paid by the Mortgagor or advanced and distributed to
Certificateholders together with unpaid Servicing Fees, Trustee's Fees and, if
such Mortgage Loan is a Radian Insured Loan, fees due Radian at the Radian PMI
Policy Rate, from the date through which interest was last paid by the
Mortgagor, in each case to the first day of the month in which such Purchase
Price is to be distributed, plus (iii) the aggregate of all Advances and
Servicing Advances made in respect thereof that were not previously reimbursed.

          "Qualified Insurer": Any insurance company duly qualified as such
under the laws of the state or states in which the related Mortgaged Property or
Mortgaged Properties is or are located, duly authorized and licensed in such
state or states to transact the type of insurance business in which it is
engaged and approved as an insurer by the Master Servicer, so long as the claims
paying ability of which is acceptable to the Rating Agencies for pass-through
certificates having the same rating as the Certificates rated by the Rating
Agencies as of the Closing Date.

          "Qualified Substitute Mortgage Loan": A Mortgage Loan substituted by
the Depositor for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in an Officers' Certificate of the Seller delivered
to the Trustee, (i) have an outstanding principal balance, after deduction of
the principal portion of the monthly payment due in the month of substitution
(or in the case of a substitution of more than one Mortgage Loan for a Deleted
Mortgage Loan, an aggregate outstanding principal balance, after such
deduction), not in excess of the Stated Principal Balance of the Deleted
Mortgage Loan (the amount of any shortfall to be paid to the Master

<PAGE>

                                      -29-

Servicer for deposit in the Custodial Account in the month of substitution);
(ii) have a Mortgage Rate and a Net Mortgage Rate no lower than and not more
than 1% per annum higher than the Mortgage Rate and Net Mortgage Rate,
respectively, of the Deleted Mortgage Loan as of the date of substitution; (iii)
have a Loan-to-Value Ratio at the time of substitution no higher than that of
the Deleted Mortgage Loan at the time of substitution; (iv) have a remaining
term to stated maturity not greater than (and not more than one year less than)
that of the Deleted Mortgage Loan; (v) comply with each representation and
warranty set forth in Section 2.04 hereof; (vi) have a Pool Strip Rate equal to
or greater than that of the Deleted Mortgage Loan and, (vii) comply with each
representation and warranty set forth in the Mortgage Loan Purchase Agreement.
Notwithstanding any other provisions herein, (x) with respect to any Qualified
Substitute Mortgage Loan substituted for a Deleted Mortgage Loan which was a
Discount Mortgage Loan, such Qualified Substitute Mortgage Loan shall be deemed
to be a Discount Mortgage Loan and to have a Discount Fraction equal to the
Discount Fraction of the Deleted Mortgage Loan and (y) in the event that the
"Pool Strip Rate" of any Qualified Substitute Mortgage Loan as calculated
pursuant to the definition of "Pool Strip Rate" is greater than the Pool Strip
Rate of the related Deleted Mortgage Loan, (i) the Pool Strip Rate of such
Qualified Substitute Mortgage Loan shall be equal to the Pool Strip Rate of the
related Deleted Mortgage Loan for purposes of calculating the Uncertificated
REMIC I Pass-Through Rate for the Uncertificated REMIC I IO Regular Interests
and (ii) the excess of the Pool Strip Rate on such Qualified Substitute Mortgage
Loan as calculated pursuant to the definition of "Pool Strip Rate" over the Pool
Strip Rate on the related Deleted Mortgage Loan shall be payable to the Class
R-II Certificates pursuant to Section 4.01 hereof.

          "Radian": Radian Guaranty, Inc. (f/k/a Commonwealth Mortgage Assurance
Company), or its successors or assigns.

          "Radian Insured Loans": The Mortgage Loans included in the Trust Fund
covered by the Radian PMI Policy, as indicated on the Mortgage Loan Schedule.

          "Radian PMI Policy": Either one of the two modified primary insurance
pool policies issued with respect to certain of the Mortgage Loans by Radian.

          "Radian PMI Policy Rate": With respect to any Radian Insured Loan, the
rate per annum at which the related premium on the Radian PMI Policy accrues.

          "Rate Adjustment Date": With respect to each Distribution Date and the
Class A-2, Class A-3 and Class A-4 Certificates, the second LIBOR Business Day
immediately preceding the commencement of the related Interest Accrual Period on
which banks are open for dealing in foreign currency and exchange in London,
England.

          "Rating Agency": Standard & Poor's or DCR and each of their
successors. If such agencies and their successors are no longer in existence,
"Rating Agency" shall be such nationally

<PAGE>

                                      -30-

recognized statistical rating agency, or other comparable Person, designated by
the Depositor, notice of which designation shall be given to the Trustee and
Master Servicer. References herein to the two highest long term debt rating
categories of a Rating Agency shall mean "AA" or better in the case of DCR, and
"AA" or better in the case of Standard & Poor's and references herein to the
highest short-term debt rating of a Rating Agency shall mean "A-1+" in the case
of Standard & Poor's, and "D-1+" in the case of DCR, and in the case of any
other Rating Agency such references shall mean such rating categories without
regard to any plus or minus.

          "Realized Loss": With respect to each Mortgage Loan or REO Property as
to which a Cash Liquidation or REO Disposition has occurred, an amount (not less
than zero) equal to (i) the Stated Principal Balance of the Mortgage Loan as of
the date of Cash Liquidation or REO Disposition, plus (ii) interest (and REO
Imputed Interest, if any) at the Net Mortgage Rate from the Due Date as to which
interest was last paid or advanced to Certificateholders up to the date of the
Cash Liquidation or REO Disposition on the Stated Principal Balance of such
Mortgage Loan outstanding during each Due Period that such interest was not paid
or advanced, minus (iii) the proceeds, if any, received during the month in
which such Cash Liquidation or REO Disposition occurred, to the extent applied
as recoveries of interest at the Net Mortgage Rate and to principal of the
Mortgage Loan, net of the portion thereof reimbursable to the Master Servicer or
any Sub- Servicer with respect to related Advances or Servicing Advances not
previously reimbursed. With respect to each Mortgage Loan which has become the
subject of a Deficient Valuation, the difference between the principal balance
of the Mortgage Loan outstanding immediately prior to such Deficient Valuation
and the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation.

          "Record Date": The last Business Day of the month immediately
preceding the month of the related Distribution Date.

          "Regular Certificate": Any of the Certificates other than a Residual
Certificate.

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

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

          "REMIC I": The segregated pool of assets, with respect to which a
REMIC election is to be made, consisting of: (i) each Mortgage Loan (exclusive
of payments of principal and interest due on or before the Cut-off Date, if any,
received by the Master Servicer which shall not constitute an asset of the Trust
Fund) as from time to time are subject to this Agreement and all payments under
and proceeds of such Mortgage Loans (exclusive of any prepayment fees and late
payment charges received on the Mortgage Loans), together with all documents
included in the related Mortgage File, subject to Section 2.01; (ii) such funds
or assets as from time to time are deposited in the Custodial Account or the
Certificate Account and belonging to the Trust Fund; (iii) any REO Property;
(iv) the

<PAGE>

                                      -31-

Primary Hazard Insurance Policies, if any, the Primary Insurance Policies, if
any, and all other Insurance Policies with respect to the Mortgage Loans; (v)
the Radian PMI Policies; and (vi) the Depositor's interest in respect of the
representations and warranties made by the Seller in the Mortgage Loan Purchase
Agreement as assigned to the Trustee pursuant to Section 2.04 hereof.

          "REMIC I Certificates": The Class R-I Certificates.

          "REMIC II": The segregated pool of assets consisting of the
Uncertificated REMIC I Regular Interests conveyed in trust to the Trustee for
the benefit of the holders of the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class M-1, Class M-1-X,
Class M-2, Class M-2-X, Class M-3, Class B-1, Class B-2, Class B-3 and Class
R-II Certificates pursuant to Section 2.06, with respect to which a separate
REMIC election is to be made.

          "REMIC II Certificates": Any of the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class M-1,
Class M-2, Class M-3, Class B-1, Class B-2, Class B-3 and Class R-II
Certificates.

          "REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and proposed, temporary and final regulations and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in effect from
time to time.

          "Remittance Report": A report prepared by the Master Servicer
providing the information set forth in Exhibit E attached hereto.

          "REO Acquisition": The acquisition by the Master Servicer on behalf of
the Trustee for the benefit of the Certificateholders of any REO Property
pursuant to Section 3.15.

          "REO Disposition": The receipt by the Master Servicer of Insurance
Proceeds, Liquidation Proceeds and other payments and recoveries (including
proceeds of a final sale) which the Master Servicer expects to be finally
recoverable from the sale or other disposition of the REO Property.

          "REO Imputed Interest": As to any REO Property, for any period, an
amount equivalent to interest (at the Mortgage Rate that would have been
applicable to the related Mortgage Loan had it been outstanding) on the unpaid
principal balance of the Mortgage Loan as of the date of acquisition thereof (as
such balance is reduced pursuant to Section 3.15 by any income from the REO
Property treated as a recovery of principal).

<PAGE>

                                      -32-

          "REO Proceeds": Proceeds, net of directly related expenses, received
in respect of any REO Property (including, without limitation, proceeds from the
rental of the related Mortgaged Property and of any REO Disposition), which
proceeds are required to be deposited into the Custodial Account as and when
received.

          "REO Property": A Mortgaged Property acquired by the Master Servicer
on behalf of the Trust Fund through foreclosure or deed-in-lieu of foreclosure
in connection with a defaulted Mortgage Loan.

          "Request for Release": A release signed by a Servicing Officer, in the
form of Exhibit 3 to the Custodial Agreement attached hereto.

          "Reserve Banks": Leading banks selected by the Trustee and engaged in
transactions in Eurodollar deposits in the international Eurocurrency market (i)
with an established place of business in London, (ii) whose quotations appear on
the Telerate Screen Page 3750 on the Interest Determination Date in question,
(iii) which have been designated as such by the Trustee and (iv) not
controlling, controlled by, or under common control with, the Company or the
Seller.

          "Reserve Interest Rate": As determined by the Trustee, either (i) the
arithmetic mean (rounded upwards if necessary to the nearest whole multiple of
0.0625%) of the rates quoted by one or more major banks in New York City,
selected by the Trustee after consultation with the Master Servicer, as of 11:00
a.m., New York time, on such date for loans in U.S. Dollars to the principal
London offices of leading banks in the London interbank market for a period of
one month in amounts approximately equal to the aggregate Certificate Principal
Balance of the Class A-2 Certificates and the Class A-3 Certificates then
outstanding or (ii) if no such quotations can be obtained, the rate shall be the
lowest one-month United States dollar lending rate which New York City banks
selected by the Trustee are quoting on such Rate Adjustment Date to leading
European banks.

          "Residual Certificate": Any of the Class R-I Certificates or Class
R-II Certificates.

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

<PAGE>

                                      -33-

          "Seller": Impac Funding Corporation, or its successor in interest.

          "Senior Accelerated Distribution Percentage": With respect to any
Distribution Date, the percentage indicated below:

                                    Senior Accelerated
Distribution Date                   Distribution Percentage
-----------------------------------------------------------
January 2000 through           100%
 December 2004

January 2005 through           Senior Percentage, plus 70% of
   December 2005                            the Subordinate Percentage

January 2006 through           Senior Percentage, plus 60% of
   December 2006                            the Subordinate Percentage

January 2007 through           Senior Percentage, plus 40% of
   December 2007                            the Subordinate Percentage

January 2008 through           Senior Percentage, plus 20% of
   December 2008                            the Subordinate Percentage

January 2009 and                      Senior Percentage,
  thereafter

provided, however, (i) that any scheduled reduction to the Senior Accelerated
Distribution Percentage described above shall not occur as of any Distribution
Date unless either (a)(1)(x) the outstanding principal balance of Mortgage Loans
delinquent 60 days or more (including foreclosure and REO Property) averaged
over the last six months as a percentage of the aggregate outstanding
Certificate Principal Balance of the Class M Certificates and the Class B
Certificates, is less than 50%, or (y) the outstanding principal balance of
Mortgage Loans delinquent 60 days or more (including foreclosure and REO
Property) averaged over the last six months, as a percentage of the aggregate
outstanding principal balance of all Mortgage Loans averaged over the last six
months, does not exceed 2% and (2) Realized Losses on the Mortgage Loans to date
for such Distribution Date if occurring during the sixth, seventh, eighth, ninth
or tenth year (or any year thereafter) after the Closing Date are less than 30%,
35%, 40%, 45% or 50%, respectively, of the sum of the Initial Certificate
Principal Balances of the Class M Certificates and Class B Certificates or (b)
(1) the aggregate outstanding principal balance of the Mortgage Loans delinquent
60 days or more (including foreclosure and REO Property) averaged over the last
six months, as a percentage of the aggregate outstanding principal balance of
all Mortgage Loans averaged over the last six months,

<PAGE>

                                      -34-

does not exceed 4% and (2) Realized Losses on the Mortgage Loans on or prior to
such Distribution Date are less than 10% of the sum of the Initial Certificate
Principal Balances of the Class M Certificates and Class B Certificates and (ii)
that for any Distribution Date on which the Senior Percentage is greater than
the Original Senior Percentage, the Senior Accelerated Distribution Percentage
for such Distribution Date shall be 100%. Notwithstanding the foregoing, upon
the reduction of the aggregate Certificate Principal Balance of the Class A
Certificates (other than the Certificate Principal Balance of the Principal Only
Certificates) and the Class R Certificates to zero, the Senior Accelerated
Distribution Percentage will equal 0%.

          "Senior Interest Distribution Amount": As defined in Section
4.01(c)(i).

          "Senior Percentage": As of any Distribution Date, the lesser of 100%
and a fraction, expressed as a percentage, the numerator of which is the
aggregate Certificate Principal Balance of the Class A Certificates (other than
the Principal Only Certificates) and Class R Certificates immediately prior to
such Distribution Date and the denominator of which is the aggregate Stated
Principal Balance of all of the Mortgage Loans or related REO Properties (other
than the Discount Fraction of the Discount Mortgage Loans) immediately prior to
such Distribution Date.

          "Senior Principal Distribution Amount": As to any Distribution Date,
the lesser of (a) the balance of the Available Distribution Amount remaining
after the distribution of all amounts required to be distributed pursuant to
Section 4.01(c)(i) and (b) the sum of the amounts required to be distributed to
the Class A Certificates and Class R Certificates on such Distribution Date
pursuant to Section 4.01(c)(ii)(Y), (xv) and (xvi).

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

          "Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in connection with a default, delinquency or
other unanticipated event in the performance by the Master Servicer or any
Sub-Servicer of its servicing obligations, including, but not limited to, the
cost of (i) the preservation, restoration and protection of a Mortgaged
Property, (ii) any enforcement or judicial proceedings, including foreclosures,
(iii) the management and liquidation of any REO Property and (iv) compliance
with the obligations under the second paragraph of Section 3.01, Section 3.09
and Section 3.13 (other than any deductible described in the last paragraph
thereof).

          "Servicing Fees": As to each Mortgage Loan, an amount, payable out of
any payment of interest on the Mortgage Loan, equal to interest at the Servicing
Fee Rate on the Stated Principal Balance of such Mortgage Loan for the calendar
month preceding the month in which the payment is due (alternatively, in the
event such payment of interest accompanies a Principal Prepayment in full made
by the Mortgagor, interest for the number of days covered by such payment of
interest).

<PAGE>

                                      -35-

          "Servicing Fee Rate": With respect to each Mortgage Loan, the per
annum rate of 0.28%.

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

          "Single Certificate": A Certificate of any Class evidencing an Initial
Certificate Principal Balance of $1,000.

          "Special Deposit": As defined in Section 2.01(a).

          "Special Hazard Amount": As of any Distribution Date, an amount equal
to $2,300,987 (the initial "Special Hazard Amount") minus the sum of (i) the
aggregate amount of Special Hazard Losses allocated solely to one or more
Classes of Certificates in accordance with Section 4.04 and (ii) the Adjustment
Amount (as defined below) as most recently calculated. For each Anniversary, the
"Adjustment Amount" shall be calculated and shall be equal to the amount, if
any, by which the amount calculated in accordance with the preceding sentence
(without giving effect to the deduction of the Adjustment Amount for such
Anniversary) exceeds the greater of (A) the greatest of (i) twice the
outstanding principal balance of the Mortgage Loan in the Trust Fund which has
the largest outstanding principal balance on the Distribution Date immediately
preceding such anniversary, (ii) the product of 1.00% multiplied by the
outstanding principal balance of all Mortgage Loans on the Distribution Date
immediately preceding such anniversary and (iii) the aggregate outstanding
principal balance (as of the immediately preceding Distribution Date) of the
Mortgage Loans in any single five-digit California zip code area with the
largest amount of Mortgage Loans by aggregate principal balance as of such
anniversary and (B) the greater of (i) the product of 0.50% multiplied by the
outstanding principal balance of all Mortgage Loans on the Distribution Date
immediately preceding such anniversary multiplied by a fraction, the numerator
of which is equal to the aggregate outstanding principal balance (as of the
immediately preceding Distribution Date) of all of the Mortgage Loans secured by
Mortgaged Properties located in the State of California divided by the aggregate
outstanding principal balance (as of the immediately preceding Distribution
Date) of all of the Mortgage Loans, expressed as a percentage, and the
denominator of which is equal to 19.83% (which percentage is equal to the
percentage of Mortgage Loans initially secured by Mortgaged Properties located
in the State of California) and (ii) the aggregate outstanding principal balance
(as of the immediately preceding Distribution Date) of the largest Mortgage Loan
secured by a Mortgaged Property located in the State of California.

          The Special Hazard Amount may be further reduced by the Master
Servicer (including accelerating the manner in which coverage is reduced)
provided that prior to any such reduction, the Master Servicer shall (i) obtain
written confirmation from each Rating Agency that

<PAGE>

                                      -36-

such reduction shall not reduce the rating assigned to any Class of Certificates
by such Rating Agency below the lower of the then-current rating or the rating
assigned to such Certificates as of the Closing Date by such Rating Agency and
(ii) provide a copy of such written confirmation to the
Trustee.

          "Special Hazard Loss": Any Realized Loss not in excess of the cost of
the lesser of repair or replacement of a Mortgaged Property suffered by such
Mortgaged Property on account of direct physical loss, exclusive of (i) any loss
of a type covered by a hazard policy or a flood insurance policy required to be
maintained in respect of such Mortgaged Property pursuant to Section 3.13(a),
except to the extent of the portion of such loss not covered as a result of any
coinsurance provision and (ii) any Extraordinary Loss.

          "Special Hazard Percentage": As of each Anniversary, the greater of
(i) 1.00% and (ii) the largest percentage obtained by dividing the aggregate
outstanding principal balance (as of the immediately preceding Distribution
Date) of the Mortgage Loans secured by Mortgaged Properties located in a single,
five-digit zip code area in the State of California by the outstanding principal
balance of all the Mortgage Loans as of such immediately preceding Distribution
Date.

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

          "Startup Day": The day designated as such pursuant to Article X
hereof.

          "Stated Principal Balance": With respect to any Mortgage Loan or
related REO Property at any given time, (i) the principal balance of the
Mortgage Loan outstanding as of the Cutoff Date, after application of principal
payments due on or before such date, whether or not received, minus (ii) the sum
of (a) the principal portion of the Monthly Payments due with respect to such
Mortgage Loan or REO Property during each Due Period ending prior to the most
recent Distribution Date which were received or with respect to which an Advance
was made, and (b) all Principal Prepayments with respect to such Mortgage Loan
or REO Property, and all Insurance Proceeds, Liquidation Proceeds and REO
Proceeds to the extent applied by the Master Servicer as recoveries of principal
in accordance with Section 3.15 with respect to such Mortgage Loan or REO
Property, which were distributed pursuant to Section 4.01 on any previous
Distribution Date, and (c) any Realized Loss with respect thereto allocated
pursuant to Section 4.04 for any previous Distribution Date.

          "Subordinate Certificate": Any of the Class M, Class B-1, Class B-2 or
Class B-3 Certificates.

          "Subordinate Percentage": As of any date of determination, a
percentage equal to 100% minus Senior Percentage as of such date.

<PAGE>

                                      -37-

          "Subordinate Principal Distribution Amount": With respect to any
Distribution Date and each Class of Class M Certificates and Class B
Certificates, the sum of (i) the product of (x) the related Class M Percentage
or Class B Percentage for such Class and (y) the aggregate of the amounts
calculated for such Distribution Date under clauses (1), (2) and (3) of Section
4.01(c)(ii)(Y)(A) without giving effect to the Senior Percentage; (ii) such
Class's pro rata share, based on the Certificate Principal Balance of each Class
of Class M Certificates and Class B Certificates then outstanding, of the
principal collections described in Section 4.01(c)(ii)(Y)(B)(b) (without giving
effect to the Senior Accelerated Distribution Percentage), to the extent such
collections are not otherwise distributed to the Senior Certificates; (iii) the
product of (x) the related Prepayment Distribution Percentage for such
Distribution Date and (y) the aggregate of all Principal Prepayments in Full and
Curtailments received in the related Prepayment Period to the extent not payable
to the Senior Certificates; and (iv) any amounts described in clauses (i), (ii)
and (iii) as determined for any previous Distribution Date, that remain
undistributed to the extent that such amounts are not attributable to Realized
Losses which have been allocated to a subordinate Class of Class M or Class B
Certificates; provided, however, that such amount shall in no event exceed the
outstanding Certificate Principal Balance of such Class of Certificates
immediately prior to such date.

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

          "Sub-Servicer Remittance Date": The 18th day of each month, or if such
day is not a Business Day, the immediately preceding Business Day.

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

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

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

<PAGE>

                                      -38-

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

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

          "Trust Fund": REMIC I and REMIC II.

          "Trustee": Norwest Bank Minnesota, National Association, or its
successor in interest, or any successor trustee appointed as herein provided.

          "Trustee's Fee": As to each Mortgage Loan and Distribution Date, an
amount equal to interest at the Trustee Fee Rate on the Stated Principal Balance
of such Mortgage Loan as of the Due Date in the month immediately preceding the
month in which such Distribution Date occurs.

          "Trustee Fee Rate": With respect to each Mortgage Loan, the per annum
rate of 0.0125%.

          "Uncertificated Principal Balance": With respect to each
Uncertificated REMIC I Regular Interest on any date of determination, the amount
set forth in the Preliminary Statement hereto minus the sum of (x) the aggregate
of all amounts previously deemed distributed with respect to such interest and
applied to reduce the Uncertificated Principal Balance thereof pursuant to
Section 4.07(a)(ii) and (y) the aggregate of all reductions in Certificate
Principal Balance deemed to have occurred in connection with Realized Losses
that were previously deemed allocated to the Uncertificated Principal Balance of
such Uncertificated REMIC I Regular Interest pursuant to Section 4.07(d).

          "Uncertificated REMIC I Accrued Interest": With respect to each
Distribution Date, (i) as to Uncertificated REMIC I Regular Interest N, an
amount equal to the aggregate amount of Accrued Certificate Interest that would
result under the terms of the definition thereof on the Class A-1 Certificates
if the Pass-Through Rate on such Class were equal to the Uncertificated REMIC I
Pass-Through Rate on Uncertificated REMIC I Regular Interest N; (ii) as to
Uncertificated REMIC I Regular Interest O, an amount equal to the aggregate
amount of Accrued Certificate Interest that would result under the terms of the
definition thereof on the Class A-2 Certificates if the Pass- Through Rate on
such Classes were equal to the Uncertificated REMIC I Pass-Through Rate on
Uncertificated REMIC I Regular Interest O; (iii) as to Uncertificated REMIC I
Regular Interest P, an amount equal to the aggregate amount of Accrued
Certificate Interest that would result under the terms of the definition thereof
on the Class A-3 Certificates if the Pass-Through Rate on such Classes were
equal to the Uncertificated REMIC I Pass-Through Rate on Uncertificated REMIC I
Regular Interest P; (iv) as to Uncertificated REMIC I Regular Interest Q, an
amount equal to the aggregate amount of Accrued Certificate Interest that would
result under the terms of the definition

<PAGE>

                                      -39-

thereof on the Class A-7 Certificates if the Pass-Through Rate on such Class
were equal to the Uncertificated REMIC I Pass-Through Rate on Uncertificated
REMIC I Regular Interest Q; (v) as to Uncertificated REMIC I Regular Interest S,
the Uncertificated REMIC I Regular Interest S will receive no Uncertificated
REMIC I Accrued Interest; (vi) as to Uncertificated REMIC I Regular Interest T,
an amount equal to the aggregate amount of Accrued Certificate Interest that
would result under the terms of the definition thereof on the Class R-II
Certificates if the Pass-Through Rate on such Class were equal to the
Uncertificated REMIC I Pass-Through Rate on Uncertificated REMIC I Regular
Interest T, (vii) as to Uncertificated REMIC I Regular Interest U, an amount
equal to the aggregate amount of Accrued Certificate Interest that would result
under the terms of the definition thereof on the Class M-1 Certificates if the
Pass-Through Rate on such Class were equal to the Uncertificated REMIC I
Pass-Through Rate on Uncertificated REMIC I Regular Interest U; (viii) as to
Uncertificated REMIC I Regular Interest W, an amount equal to the aggregate
amount of Accrued Certificate Interest that would result under the terms of the
definition thereof on the Class M-2 Certificates if the Pass-Through Rate on
such Class were equal to the Uncertificated REMIC I Pass-Through Rate on
Uncertificated REMIC I Regular Interest W, (ix) as to Uncertificated REMIC I
Regular Interest X, an amount equal to the aggregate amount of Accrued
Certificate Interest that would result under the terms of the definition thereof
on the Class M-3 Certificates if the Pass-Through Rate on such Class were equal
to the Uncertificated REMIC I Pass-Through Rate on Uncertificated REMIC I
Regular Interest X; (viii) as to Uncertificated REMIC I Regular Interest Y, an
amount equal to the aggregate amount of Accrued Certificate Interest that would
result under the terms of the definition thereof on the Class B-1 Certificates,
Class B-2 Certificates and Class B-3 Certificates if the Pass-Through Rate on
such Classes were equal to the Uncertificated REMIC I Pass-Through Rate on
Uncertificated REMIC I Regular Interest Y, and (ix) as to each Uncertificated
REMIC I IO Regular Interest, an amount equal to the aggregate amount of Accrued
Certificate Interest that would result under the terms of the definition thereof
on each such uncertificated interest, if the Pass-Through Rate on such
uncertificated interest was equal to the related Uncertificated REMIC I
Pass-Through Rate and the notional amount of such uncertificated interest was
equal to the related Uncertificated REMIC I IO Notional Amount; provided, that
any reduction in the amount of Accrued Certificate Interest resulting from the
allocation of Prepayment Interest Shortfalls, Realized Losses or other amounts
to the Class A-9 Certificateholders pursuant to Sections 4.02(a) and 4.05 hereof
shall be allocated to the Uncertificated REMIC I IO Regular Interests pro rata
in accordance with the amount of interest accrued with respect to each related
Uncertificated REMIC I IO Notional Amount and such Distribution Date.

          "Uncertificated REMIC I IO Notional Amount": With respect to each
Uncertificated REMIC I IO Regular Interest, the Stated Principal Balance of the
related Non-Discount Mortgage Loan.

          "Uncertificated REMIC I IO Regular Interests": The uncertificated
partial undivided beneficial ownership interests in REMIC I, each relating to a
particular Non-Discount Mortgage

<PAGE>

                                      -40-

Loan, having no principal balance, and bearing interest at the Uncertificated
REMIC I Pass-Through Rate on the Uncertificated REMIC I IO Notional Amount.

          "Uncertificated REMIC I Pass-Through Rate": With respect to each of
Uncertificated REMIC I Regular Interests as follows:

     (i)   Uncertificated REMIC I Regular Interests N, O, P, Q, T, U, W, X and
           Y, 9.00%;

     (ii)  Uncertificated REMIC I Regular Interest S, 0.00%; and

     (iii) Uncertificated REMIC I IO Regular Interest, the Pool Strip Rate.

          "Uncertificated REMIC I Regular Interest N": An uncertificated partial
undivided beneficial ownership interest in REMIC I having a principal balance
equal to the Stated Principal Balance of the Mortgage Loans and REO Property
from time to time multiplied by a fraction, the numerator of which is the
aggregate Certificate Principal Balance of the Class A-1 Certificates and the
denominator of which is the aggregate Certificate Principal Balance of all of
the Certificates, and which bears interest at a rate equal to 9.00% per annum.

          "Uncertificated REMIC I Regular Interest O": An uncertificated partial
undivided beneficial ownership interest in REMIC I having a principal balance
equal to the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties from time to time multiplied by a fraction, the numerator of which is
the aggregate Certificate Principal Balance of the Class A-2 Certificates and
the denominator of which is the aggregate Certificate Principal Balance of all
of the Certificates, and which bears interest at a rate equal to 9.00% per
annum.

          "Uncertificated REMIC I Regular Interest P": An uncertificated partial
undivided beneficial ownership interest in REMIC I having a principal balance
equal to the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties from time to time multiplied by a fraction, the numerator of which is
the aggregate Certificate Principal Balance of the Class A-3 Certificates and
the denominator of which is the aggregate Certificate Principal Balance of all
of the Certificates, and which bears interest at a rate equal to 9.00% per
annum.

          "Uncertificated REMIC I Regular Interest Q": An uncertificated partial
undivided beneficial ownership interest in REMIC I having a principal balance
equal to the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties from time to time multiplied by a fraction, the numerator of which is
the aggregate Certificate Principal Balance of the Class A-7 Certificates and
the denominator of which is the aggregate Certificate Principal Balance of all
of the Certificates, and which bears interest at a rate equal to 9.00% per
annum.

<PAGE>

                                      -41-

          "Uncertificated REMIC I Regular Interest S": An uncertificated partial
undivided beneficial ownership interest in REMIC I having a principal balance
equal to the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties from time to time multiplied by a fraction, the numerator of which is
the aggregate Certificate Principal Balance of the Class A-8 Certificates and
the denominator of which is the aggregate Certificate Principal Balance of all
of the Certificates, and which bears interest at a rate equal to 0.00% per
annum.

          "Uncertificated REMIC I Regular Interest T": An uncertificated partial
undivided beneficial ownership interest in REMIC I having a principal balance
equal to the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties from time to time multiplied by a fraction, the numerator of which is
the aggregate Certificate Principal Balance of the Class R-II Certificates and
the denominator of which is the aggregate Certificate Principal Balance of all
of the Certificates, and which bears interest at a rate equal to 9.00% per
annum.

          "Uncertificated REMIC I Regular Interest U": An uncertificated partial
undivided beneficial ownership interest in REMIC I having a principal balance
equal to the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties from time to time multiplied by a fraction, the numerator of which is
the aggregate Certificate Principal Balance of the Class M-1 Certificates and
the denominator of which is the aggregate Certificate Principal Balance of all
of the Certificates, and which bears interest at a rate equal to 9.00% per
annum.

          "Uncertificated REMIC I Regular Interest W": An uncertificated partial
undivided beneficial ownership interest in REMIC I having a principal balance
equal to the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties from time to time multiplied by a fraction, the numerator of which is
the aggregate Certificate Principal Balance of the Class M-2 Certificates and
the denominator of which is the aggregate Certificate Principal Balance of all
of the Certificates, and which bears interest at a rate equal to 9.00% per
annum.

          "Uncertificated REMIC I Regular Interest X": An uncertificated partial
undivided beneficial ownership interest in REMIC I having a principal balance
equal to the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties from time to time multiplied by a fraction, the numerator of which is
the aggregate Certificate Principal Balance of the Class M-3 Certificates and
the denominator of which is the aggregate Certificate Principal Balance of all
of the Certificates, and which bears interest at a rate equal to 9.00% per
annum.

          "Uncertificated REMIC I Regular Interest Y": An uncertificated partial
undivided beneficial ownership interest in REMIC I having a principal balance
equal to the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties from time to time multiplied by a fraction, the numerator of which is
the aggregate Certificate Principal Balance of the Class B-1, Class B-2 and
Class B-3 Certificates and the denominator of which is the aggregate Certificate

<PAGE>

                                      -42-

Principal Balance of all of the Certificates, and which bears interest at a rate
equal to 9.00% per annum.

          "Uncertificated REMIC I Regular Interests": Uncertificated REMIC I
Regular Interest N, Uncertificated REMIC I Regular Interest O, Uncertificated
REMIC I Regular Interest P, Uncertificated REMIC I Regular Interest Q,
Uncertificated REMIC I Regular Interest S, Uncertificated REMIC I Regular
Interest T, Uncertificated REMIC I Regular Interest U, Uncertificated REMIC I
Regular Interest W, Uncertificated REMIC I Regular Interest X, Uncertificated
REMIC I Regular Interest Y and the Uncertificated REMIC I IO Regular Interests.

          "Uncertificated REMIC I IO Regular Interest Distribution Amount":
With respect to any Distribution Date, the sum of the amounts deemed to be
distributed on the Uncertificated REMIC I IO Regular Interest for such
Distribution Date pursuant to Section 4.07(a).

          "Uncertificated REMIC I Regular Interest N Distribution Amount":
With respect to any Distribution Date, the sum of the amounts deemed to be
distributed on the Uncertificated REMIC I Regular Interest N for such
Distribution Date pursuant to Section 4.07(a).

          "Uncertificated REMIC I Regular Interest O Distribution Amount":
With respect to any Distribution Date, the sum of the amounts deemed to be
distributed on the Uncertificated REMIC I Regular Interest O for such
Distribution Date pursuant to Section 4.07(a).

          "Uncertificated REMIC I Regular Interest P Distribution Amount":
With respect to any Distribution Date, the sum of the amounts deemed to be
distributed on the Uncertificated REMIC I Regular Interest P for such
Distribution Date pursuant to Section 4.07(a).

          "Uncertificated REMIC I Regular Interest Q Distribution Amount":
With respect to any Distribution Date, the sum of the amounts deemed to be
distributed on the Uncertificated REMIC I Regular Interest Q for such
Distribution Date pursuant to Section 4.07(a).

          "Uncertificated REMIC I Regular Interest S Distribution Amount":
With respect to any Distribution Date, the sum of the amounts deemed to be
distributed on the Uncertificated REMIC I Regular Interest S for such
Distribution Date pursuant to Section 4.07(a).

          "Uncertificated REMIC I Regular Interest T Distribution Amount":
With respect to any Distribution Date, the sum of the amounts deemed to be
distributed on the Uncertificated REMIC I Regular Interest T for such
Distribution Date pursuant to Section 4.07(a).

          "Uncertificated REMIC I Regular Interest U Distribution Amount":
With respect to any Distribution Date, the sum of the amounts deemed to be
distributed on the Uncertificated REMIC I Regular Interest U for such
Distribution Date pursuant to Section 4.07(a).

<PAGE>

                                      -43-

          "Uncertificated REMIC I Regular Interest W Distribution Amount":
With respect to any Distribution Date, the sum of the amounts deemed to be
distributed on the Uncertificated REMIC I Regular Interest W for such
Distribution Date pursuant to Section 4.07(a).

          "Uncertificated REMIC I Regular Interest X Distribution Amount":
With respect to any Distribution Date, the sum of the amounts deemed to be
distributed on the Uncertificated REMIC I Regular Interest X for such
Distribution Date pursuant to Section 4.07(a).

          "Uncertificated REMIC I Regular Interest Y Distribution Amount":
With respect to any Distribution Date, the sum of the amounts deemed to be
distributed on the Uncertificated REMIC I Regular Interest Y for such
Distribution Date pursuant to Section 4.07(a).

          "Uncertificated REMIC I Regular Interest Distribution Amounts": The
Uncertificated REMIC I Regular Interest N Distribution Amount, Uncertificated
REMIC I Regular Interest O Distribution Amount, Uncertificated REMIC I Regular
Interest P Distribution Amount, Uncertificated REMIC I Regular Interest Q
Distribution Amount, Uncertificated REMIC I Regular Interest S Distribution
Amount, Uncertificated REMIC I Regular Interest T Distribution Amount,
Uncertificated REMIC I Regular Interest U Distribution Amount, Uncertificated
REMIC I Regular Interest W Distribution Amount, Uncertificated REMIC I Regular
Interest X Distribution Amount, Uncertificated REMIC I Regular Interest Y
Distribution Amount and Uncertificated REMIC I IO Regular Interest Distribution
Amount.

          "Uninsured Cause": Any cause of damage to property subject to a
Mortgage such that the complete restoration of such property is not fully
reimbursable by the hazard insurance policies or flood insurance policies
required to be maintained pursuant to Section 3.13.

          "United States Person": A citizen or resident of the United States, a
corporation or a partnership (including an entity treated as a corporation or
partnership for United States federal income tax purposes) created or organized
in, or under the laws of, the United States or any State thereof or the District
of Columbia (except, in the case of a partnership, to the extent provided in
regulations) or an estate whose income is subject to United States federal
income tax regardless of its source, or a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more such United States Persons have the authority to control
all substantial decisions of the trust. To the extent prescribed in regulations
by the Secretary of the Treasury, which have not yet been issued, a trust which
was in existence on August 20, 1996 (other than a trust treated as owned by the
grantor under subpart E of part I of subchapter J of chapter 1 of the Code), and
which was treated as a United States person on August 20, 1996 may elect to
continue to be treated as a United States person notwithstanding the previous
sentence.

<PAGE>

                                      -44-

          "Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. At all times during the term
of this Agreement, 93% of all of the Voting Rights shall be allocated among
Holders of the Certificates (other than the Interest Only and Residual
Certificates), 1% of all Voting Rights shall be allocated to the Holders of the
Class A-4 Certificates, 1% of all Voting Rights shall be allocated to the
Holders of the Class A-5 Certificates, 1% of all Voting Rights shall be
allocated to the Holders of the Class A-6 Certificates, 1% of all Voting Rights
shall be allocated to the Holders of the Class A-9 Certificates, 1% of all
Voting Rights shall be allocated to the Holders of the Class M-1-X Certificates,
1% of all Voting Rights shall be allocated to the Holders of the M-2-X
Certificates, and the Holders of the Class R-I Certificates and Class R-II
Certificates shall be entitled to 0.5% and 0.5% of all of the Voting Rights,
respectively, allocated among the Certificates of each such Class in accordance
with their respective Percentage Interests.

          "Wendover": Wendover Funding, Inc.

     SECTION 1.02 Determination of LIBOR.

     LIBOR applicable to the calculation of the Pass-Through Rates on the Class
A-2, Class A-3 and Class A-4 Certificates for any Interest Accrual Period (other
than the initial Interest Accrual Period) will be determined on each Rate
Adjustment Date as follows:

     For the first Interest Accrual Period, LIBOR will equal 5.60%. For any
Interest Accrual Period other than the first Interest Accrual Period, the rate
for United States dollar deposits on the basis of the offered rates of the
Reserve Banks for one-month United States dollar deposits, as such rate appears
on the Dow Jones Telerate Screen Page 3750 as of 11:00 A.M., London, England
time, on the second LIBOR Business Day prior to the first day of such Interest
Accrual Period. If such rate does not appear on such page (or such other page as
may replace that page on that service, or if such service is no longer offered,
such other service for displaying LIBOR or comparable rates as may be reasonably
selected by the Trustee after consultation with the Master Servicer), the rate
will be the Reserve Interest Rate. If no such quotations can be obtained and no
Reserve Interest Rate is available, LIBOR will be LIBOR applicable to the
preceding Distribution Date; provided however, if, under the priorities
described above, LIBOR for a Distribution Date would be based on LIBOR for the
previous Distribution Date for the third consecutive Distribution Date, the
Trustee shall select an alternative comparable index (over which the Trustee has
no control), used for determining one-month Eurodollar lending rates that is
calculated and published (or otherwise made available) by an independent party.

     The establishment of LIBOR by the Trustee on any Rate Adjustment Date and
the Trustee's subsequent calculation of the Pass-Through Rates applicable to the
Class A-2, Class A-3 and Class A-4 Certificates for the relevant Interest
Accrual Period, in the absence of manifest error, will be final and binding.

<PAGE>

                                      -45-

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

          SECTION 2.01. Conveyance of Mortgage Loans.

          The Depositor, as of the Closing Date, and concurrently with the
execution and delivery hereof, does hereby assign, transfer, sell, set over and
otherwise convey to the Trustee without recourse all the right, title and
interest of the Depositor in and to the Mortgage Loans identified on the
Mortgage Loan Schedule (exclusive of any prepayment fees and late payment
charges received thereon) and all other assets included or to be included in the
Trust Fund for the benefit of the Certificateholders. Such assignment includes
all principal and interest received by the Master Servicer on or with respect to
the Mortgage Loans (other than payment of principal and interest due on or
before the Cut-off Date).

          The Master Servicer hereby acknowledges the receipt by it of cash in
an amount equal to $3,782.40 (the "Special Deposit"), representing interest at
the Mortgage Rate, for the calendar month of December 1999, for those Mortgage
Loans which do not have Monthly Payments due on January 1, 2000. The Master
Servicer shall hold such amount in the Custodial Account and shall include such
amount in the Available Distribution Amount for the Distribution Date in January
2000.

          In connection with such transfer and assignment, the Depositor has
caused the Seller to deliver to, and deposit with the Custodian, for the benefit
of the Trustee, as described in the Mortgage Loan Purchase Agreement the
following documents or instruments:

          (i) the original Mortgage Note endorsed without recourse, "Norwest
     Bank Minnesota, National Association, as trustee under the Pooling and
     Servicing Agreement relating to Impac Secured Assets Corp., Mortgage
     Pass-Through Certificates, Series 1999-2" with all intervening endorsements
     showing a complete chain of endorsements from the originator to the Person
     endorsing it to the Trustee or, with respect to any Mortgage Loan as to
     which the original Mortgage Note has been permanently lost or destroyed and
     has not been replaced, a Lost Note Affidavit;

          (ii) the original recorded Mortgage or, if the original Mortgage has
     not been returned from the public recording office, a copy of the Mortgage
     certified by the Seller or the public recording office in which such
     original Mortgage has been recorded to be a true and complete copy of the
     original Mortgage submitted for recording;

          (iii) a duly executed original Assignment of the Mortgage, without
     recourse, in recordable form to "Norwest Bank Minnesota, National
     Association, as trustee," or to

<PAGE>

                                      -46-

     "Norwest Bank Minnesota, National Association, as trustee for holders of
     Impac Secured Assets Corp., Mortgage Pass-Through Certificates, Series
     1999-2";

          (iv) the original recorded Assignment or Assignments of the Mortgage
     showing a complete chain of assignment from the originator thereof to the
     Person assigning it to the Trustee or, if any such Assignment has not been
     returned from the applicable public recording office, a copy of such
     Assignment certified by the Seller to be a true and complete copy of the
     original Assignment submitted to the title insurance company for recording;

          (v) the original title insurance policy, or, if such policy has not
     been issued, any one of an original or a copy of the preliminary title
     report, title binder or title commitment on the Mortgaged Property with the
     original policy of the insurance to be delivered promptly following the
     receipt thereof;

          (vi) a copy of the related hazard insurance policy;

          (vii) a true and correct copy of any assumption, modification,
     consolidation or substitution agreement; and

          (vii) the original or a copy of the private mortgage insurance policy
     or original certificate of private mortgage insurance for each Mortgage
     Loan so identified on the Mortgage Loan Schedule.

          The Seller is obligated as described in the Mortgage Loan Purchase
Agreement to deliver to the Custodian: (a) either the original recorded
Mortgage, or in the event such original cannot be delivered by the Seller, a
copy of such Mortgage certified as true and complete by the appropriate
recording office, in those instances where a copy thereof certified by the
Seller was delivered to the Custodian pursuant to clause (ii) above; and (b)
either the original Assignment or Assignments of the Mortgage, with evidence of
recording thereon, showing a complete chain of assignment from the originator to
the Seller, or in the event such original cannot be delivered by the Seller, a
copy of such Assignment or Assignments certified as true and complete by the
appropriate recording office, in those instances where copies thereof certified
by the Seller were delivered to the Custodian pursuant to clause (iv) above.
Notwithstanding anything to the contrary contained in this Section 2.01, in
those instances where the public recording office retains the original Mortgage
after it has been recorded, the Seller shall be deemed to have satisfied its
obligations hereunder upon delivery to the Custodian of a copy of such Mortgage
certified by the public recording office to be a true and complete copy of the
recorded original thereof.

          If any Assignment is lost or returned unrecorded to the Custodian
because of any defect therein, the Seller is required, as described in the
Mortgage Loan Purchase Agreement, to

<PAGE>

                                      -47-

prepare a substitute Assignment or cure such defect, as the case may be, and the
Seller shall cause such Assignment to be recorded in accordance with this
section.

          The Seller is required as described in the Mortgage Loan Purchase
Agreement to exercise its best reasonable efforts to deliver or cause to be
delivered to the Custodian within 120 days of the Closing Date the original or a
photocopy of the title insurance policy with respect to each Mortgage Loan
assigned to the Trustee pursuant to this Section 2.01.

          All original documents relating to the Mortgage Loans which are not
delivered to the Custodian are and shall be held by the Master Servicer in trust
for the benefit of the Trustee on behalf of the Certificateholders.

          Except as may otherwise expressly be provided herein, none of the
Depositor, the Master Servicer, the Trustee or the Custodian shall (and the
Master Servicer shall ensure that no Sub- Servicer shall) assign, sell, dispose
of or transfer any interest in the Trust Fund or any portion thereof, or cause
the Trust Fund or any portion thereof to be subject to any lien, claim,
mortgage, security interest, pledge or other encumbrance.

          It is intended that the conveyance of the Mortgage Loans by the
Depositor to the Trustee as provided in this Section be, and be construed as, a
sale of the Mortgage Loans and the Uncertificated REMIC I Regular Interests as
provided for in this Section 2.01 by the Depositor to the Trustee for the
benefit of the Certificateholders. It is, further, not intended that such
conveyance be deemed a pledge of the Mortgage Loans and the Uncertificated REMIC
I Regular Interests by the Depositor to the Trustee to secure a debt or other
obligation of the Depositor. However, in the event that the Mortgage Loans and
the Uncertificated REMIC I Regular Interests are held to be property of the
Depositor, or if for any reason this Agreement is held or deemed to create a
security interest in the Mortgage Loans and the Uncertificated REMIC I Regular
Interests, then it is intended that, (a) this Agreement shall also be deemed to
be a security agreement within the meaning of Articles 8 and 9 of the New York
Uniform Commercial Code and the Uniform Commercial Code of any other applicable
jurisdiction; (b) the conveyance provided for in this Section shall be deemed to
be (1) a grant by the Depositor to the Trustee of a security interest in all of
the Depositor's right (including the power to convey title thereto), title and
interest, whether now owned or hereafter acquired, in and to (A) the Mortgage
Loans, including the Mortgage Notes, the Mortgages, any related Insurance
Policies and all other documents in the related Mortgage Files, (B) all amounts
payable to the holders of the Mortgage Loans in accordance with the terms
thereof, (C) the Uncertificated REMIC I Regular Interests and (D) all proceeds
of the conversion, voluntary or involuntary, of the foregoing into cash,
instruments, securities or other property, including without limitation all
amounts from time to time held or invested in the Certificate Account or the
Custodial Account, whether in the form of cash, instruments, securities or other
property and (2) an assignment by the Depositor to the Trustee of any security
interest in any and all of the Seller's right (including the power to convey
title thereto), title and interest, whether now owned or hereafter acquired, in
and to the property described in the

<PAGE>

                                      -48-

foregoing clauses (1)(A) through (D); (c) the possession by the Trustee, the
Custodian or any other agent of the Trustee of Mortgage Notes and such other
items of property as constitute instruments, money, negotiable documents or
chattel paper shall be deemed to be "possession by the secured party" or
possession by a purchaser or a person designated by such secured party, for
purposes of perfecting the security interest pursuant to the New York Uniform
Commercial Code and the Uniform Commercial Code of any other applicable
jurisdiction (including, without limitation, Sections 9-115, 9-305, 8-102,
8-301, 8-501 and 8-503 thereof); and (d) notifications to persons holding such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Trustee for the purpose of perfecting such security interest under
applicable law. The Depositor and the Trustee shall, to the extent consistent
with this Agreement, take such actions as may be necessary to ensure that, if
this Agreement were deemed to create a security interest in the Mortgage Loans
and the Uncertificated REMIC I Regular Interests, such security interest would
be deemed to be a perfected security interest of first priority under applicable
law and will be maintained as such throughout the term of the Agreement.

          SECTION 2.02. Acceptance of the Trust Fund by the Trustee.

          The Trustee acknowledges the assignment of the Mortgage Loans to it
for the benefit of the Certificateholders and declares that the Custodian, as
its agent, holds and will hold such documents and the other documents delivered
to the Custodian, as its agent, constituting the Mortgage Files, and that it
holds or will hold such other assets included in the definition of "Trust Fund"
(to the extent delivered or assigned to the Trustee), in trust for the exclusive
use and benefit of all present and future Certificateholders.

          If in the process of reviewing the Mortgage Files and preparing the
certifications required by the Custodial Agreement and attached thereto as
Exhibits 1 and 2, the Custodian, as the Trustee's agent, finds any document or
documents constituting a part of a Mortgage File to be missing or defective in
any material respect, the Trustee shall promptly notify the Seller, the Master
Servicer and the Depositor. Pursuant to Section 2.4 of the Custodial Agreement,
the Custodian will notify the Master Servicer, the Depositor, the Seller and the
Trustee of any such omission or defect found by it in respect of any Mortgage
File held by it. The Trustee shall promptly notify the Seller of such defect and
request that the Seller cure any such defect within 60 days from the date on
which the Seller was notified of such defect, and if the Seller does not cure
such defect in all material respects during such period, request on behalf of
the Certificateholders that the Seller purchase such Mortgage Loan from REMIC I
at the Purchase Price within 90 days after the date on which the Seller was
notified of such defect; provided that if such defect would cause the Mortgage
Loan to be other than a "qualified mortgage" as defined in Section 860G(a)(3) of
the Code, any such cure or repurchase must occur within 90 days from the date
such breach was discovered. It is understood and agreed that the obligation of
the Seller to cure a material defect in, or purchase any Mortgage

<PAGE>

                                      -49-

Loan as to which a material defect in a constituent document exists shall
constitute the sole remedy respecting such defect available to
Certificateholders or the Trustee on behalf of Certificateholders. The Purchase
Price for the purchased Mortgage Loan shall be deposited or caused to be
deposited upon receipt by the Master Servicer in the Custodial Account and, upon
receipt by the Custodian of a request for release including a notification of
such deposit signed by a Servicing Officer, the Custodian shall release or cause
to be released to the Seller the related Mortgage File and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, as the Seller shall require as necessary to vest in the Seller
ownership of any Mortgage Loan released pursuant hereto and at such time the
Trustee shall have no further responsibility with respect to the related
Mortgage File.

          SECTION 2.03. Representations, Warranties and Covenants of the Master
                        Servicer and the Depositor.

          (a) The Master Servicer hereby represents and warrants to and
covenants with the Depositor and the Trustee for the benefit of
Certificateholders that:

               (i) The Master Servicer is, and throughout the term hereof shall
     remain, a corporation duly organized, validly existing and in good standing
     under the laws of the state of its incorporation (except as otherwise
     permitted pursuant to Section 6.02), the Master Servicer is, and shall
     remain, in compliance with the laws of each state in which any Mortgaged
     Property is located to the extent necessary to perform its obligations
     under this Agreement, and the Master Servicer is, and shall remain,
     approved to sell mortgage loans to and service mortgage loans for Fannie
     Mae and Freddie Mac;

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

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

               (iv) This Agreement, assuming due authorization, execution and
     delivery by the Depositor and the Trustee, constitutes a valid, legal and
     binding obligation of the Master Servicer, enforceable against the Master
     Servicer in accordance with the terms hereof, subject to (A) applicable
     bankruptcy, insolvency, reorganization, moratorium and other laws

<PAGE>

                                      -50-

     affecting the enforcement of creditors' rights generally, and (B) general
     principles of equity, regardless of whether such enforcement is considered
     in a proceeding in equity or at law;

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

               (vi) No litigation is pending (other than litigation with respect
     to which pleadings or documents have been filed with a court, but not
     served on the Master Servicer) or, the best of the Master Servicer's
     knowledge, threatened against the Master Servicer which would prohibit its
     entering into this Agreement or performing its obligations under this
     Agreement or is likely to affect materially and adversely either the
     ability of the Master Servicer to perform its obligations under this
     Agreement or the financial condition of the Master Servicer;

               (vii) The Master Servicer will comply in all material respects in
     the performance of this Agreement with all reasonable rules and
     requirements of each insurer under each Insurance Policy;

               (viii) The execution of this Agreement and the performance of the
     Master Servicer's obligations hereunder do not require any license, consent
     or approval of any state or federal court, agency, regulatory authority or
     other governmental body having jurisdiction over the Master Servicer, other
     than such as have been obtained;

               (ix) No information, certificate of an officer, statement
     furnished in writing or report delivered to the Depositor, any affiliate of
     the Depositor or the Trustee by the Master Servicer in its capacity as
     Master Servicer, and not in its capacity as a Seller hereunder, will, to
     the knowledge of the Master Servicer, contain any untrue statement of a
     material fact or omit a material fact necessary to make the information,
     certificate, statement or report not misleading; and

               (x) the Master Servicer's computer programs, systems and
     applications used in master servicing the Mortgage Loans, have been
     replaced or modified and maintained to operate in such a manner that at all
     times, including on and after January 1, 2000, it can master service the
     Mortgage Loans in accordance with the terms of this Agreement.

<PAGE>

                                      -51-

          It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.03(a) shall survive the execution and
delivery of this Agreement, and shall inure to the benefit of the Depositor, the
Trustee and the Certificateholders. Upon discovery by the Depositor, the Trustee
or the Master Servicer of a breach of any of the foregoing representations,
warranties and covenants that materially and adversely affects the interests of
the Depositor or the Trustee, the party discovering such breach shall give
prompt written notice to the other parties.

          (b) The Depositor hereby represents and warrants to the Master
Servicer and the Trustee for the benefit of Certificateholders that as of the
Closing Date, the representations and warranties of the Seller with respect to
the Mortgage Loans and the remedies therefor that are contained in the Mortgage
Loan Purchase Agreement are as set forth in Exhibit I hereto.

          It is understood and agreed that the representations and warranties
set forth in this Section 2.03(b) shall survive delivery of the respective
Mortgage Files to the Custodian.

          Upon discovery by either the Depositor, the Master Servicer or the
Trustee of a breach of any representation or warranty set forth in this Section
2.03 which materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, the party discovering such breach shall
give prompt written notice to the other parties.

          SECTION 2.04. Representations and Warranties of the Seller.

          The Depositor hereby assigns to the Trustee for the benefit of
Certificateholders all of its rights (but none of its obligations) in, to and
under the Mortgage Loan Purchase Agreement. Insofar as the Mortgage Loan
Purchase Agreement relates to such representations and warranties and any
remedies provided thereunder for any breach of such representations and
warranties, such right, title and interest may be enforced by the Trustee on
behalf of the Certificateholders. Upon the discovery by the Depositor, the
Master Servicer or the Trustee of a breach of any of the representations and
warranties made in the Mortgage Loan Purchase Agreement in respect of any
Mortgage Loan which materially and adversely affects the interests of the
Certificateholders in such Mortgage Loan, the party discovering such breach
shall give prompt written notice to the other parties. The Trustee shall
promptly notify the Seller of such breach and request that the Seller shall,
within 90 days from the date that the Seller was notified or otherwise obtained
knowledge of such breach, either (i) cure such breach in all material respects
or (ii) purchase such Mortgage Loan from the Trust Fund at the Purchase Price
and in the manner set forth in Section 2.02; provided that if such breach would
cause the Mortgage Loan to be other than a "qualified mortgage" as defined in
Section 860G(a)(3) of the Code, any such cure or repurchase must occur within 90
days from the date such breach was discovered. However, in the case of a breach
under the Mortgage Loan Purchase Agreement, subject to the approval of the
Depositor the Seller shall have the option to substitute a Qualified Substitute
Mortgage Loan or Loans for such Mortgage Loan if such substitution occurs within
two years following the Closing Date, except that if the breach would cause the
Mortgage

<PAGE>

                                      -52-

Loan to be other than a "qualified mortgage" as defined in Section 860G(a)(3) of
the Code, any such substitution must occur within 90 days from the date the
breach was discovered if such 90 day period expires before two years following
the Closing Date. In the event that the Seller elects to substitute a Qualified
Substitute Mortgage Loan or Loans for a Deleted Mortgage Loan pursuant to this
Section 2.04, the Trustee shall enforce the obligation of the Seller under the
Mortgage Loan Purchase Agreement to deliver to the Custodian and the Master
Servicer, as appropriate, with respect to such Qualified Substitute Mortgage
Loan or Loans, the original Mortgage Note, the Mortgage, an Assignment of the
Mortgage in recordable form, and such other documents and agreements as are
required by Section 2.01, with the Mortgage Note endorsed as required by Section
2.01. No substitution will be made in any calendar month after the Determination
Date for such month. Monthly Payments due with respect to Qualified Substitute
Mortgage Loans in the month of substitution shall not be part of the Trust Fund
and will be retained by the Master Servicer and remitted by the Master Servicer
to the Seller on the next succeeding Distribution Date. For the month of
substitution, distributions to Certificateholders will include the Monthly
Payment due on a Deleted Mortgage Loan for such month and thereafter the Seller
shall be entitled to retain all amounts received in respect of such Deleted
Mortgage Loan. The Depositor shall amend or cause to be amended the Mortgage
Loan Schedule for the benefit of the Certificateholders to reflect the removal
of such Deleted Mortgage Loan and the substitution of the Qualified Substitute
Mortgage Loan or Loans and the Depositor shall deliver the amended Mortgage Loan
Schedule to the Trustee. Upon such substitution, the Qualified Substitute
Mortgage Loan or Loans shall be subject to the terms of this Agreement in all
respects, the Seller shall be deemed to have made the representations and
warranties with respect to the Qualified Substitute Mortgage Loan contained in
the Mortgage Loan Purchase Agreement as of the date of substitution, and the
Depositor shall be deemed to have made with respect to any Qualified Substitute
Mortgage Loan or Loans, as of the date of substitution, the representations and
warranties set forth in Section 2.03 hereof.

          In connection with the substitution of one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (if any) by which the aggregate principal
balance of all such Qualified Substitute Mortgage Loans as of the date of
substitution is less than the aggregate Stated Principal Balance of all such
Deleted Mortgage Loans (in each case after application of the principal portion
of the Monthly Payments due in the month of substitution that are to be
distributed to Certificateholders in the month of substitution). The Trustee
shall enforce the obligation of the Seller under the Mortgage Loan Purchase
Agreement to provide the Master Servicer on the day of substitution for
immediate deposit into the Custodial Account the amount of such shortfall,
without any reimbursement therefor. In accordance with the Mortgage Loan
Purchase Agreement, the Seller shall give notice in writing to the Trustee of
such event, which notice shall be accompanied by an Officers' Certificate as to
the calculation of such shortfall and by an Opinion of Counsel to the effect
that such substitution will not cause (a) any federal tax to be imposed on REMIC
I or REMIC II, including without limitation, any federal tax imposed on
"prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the Code or
(b) any portion of

<PAGE>

                                      -53-

REMIC I or REMIC II to fail to qualify as a REMIC at any time that any
Certificate is outstanding. The costs of any substitution as described above,
including any related assignments, opinions or other documentation in connection
therewith shall be borne by the Seller.

          Except as expressly set forth herein neither the Trustee nor the
Master Servicer is under any obligation to discover any breach of the above
mentioned representations and warranties. It is understood and agreed that the
obligation of the Seller to cure such breach, purchase or to substitute for such
Mortgage Loan as to which such a breach has occurred and is continuing shall
constitute the sole remedy respecting such breach available to
Certificateholders or the Trustee on behalf of Certificateholders.

          SECTION 2.05. Issuance of Certificates Evidencing Interests in the
                        REMIC I Certificates.

          The Trustee acknowledges the assignment to it of the Mortgage Loans
and the delivery of the Mortgage Files to the Custodian on its behalf, subject
to any exceptions noted by the Custodian in its initial certification pursuant
to the Custodial Agreement, together with the assignment to it of all other
assets included in REMIC I, receipt of which is hereby acknowledged.
Concurrently with such delivery and in exchange therefor, the Trustee, pursuant
to the written request of the Depositor, executed by an officer of the
Depositor, has executed and caused to be authenticated and delivered to, or upon
the order of, the Depositor the Class R-I Certificates in authorized
denominations which together with the Uncertificated REMIC I Regular Interests,
evidence ownership of REMIC I. The rights of the Class R-I Certificateholders
and REMIC II to receive distributions from the proceeds of REMIC I in respect of
the Class R-I Certificates and the Uncertificated REMIC I Regular Interests, and
all ownership interests of the Class R-I Certificateholders and REMIC II in such
distributions, shall be as set forth in this Agreement.

          SECTION 2.06. Conveyance of Uncertificated REMIC I Regular Interests;
                        Acceptance by the Trustee.

          The Depositor, as of the Closing Date, and concurrently with the
execution and delivery hereof, does hereby assign without recourse all the
right, title and interest of the Depositor in and to the Uncertificated REMIC I
Regular Interests to the Trustee for the benefit of the Class A- 1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9,
Class M-1, Class M-1-X, Class M-2, Class M-2-X, Class M-3, Class B-1, Class B-2,
Class B-3 and Class R-II Certificateholders. The Trustee acknowledges receipt of
the Uncertificated REMIC I Regular Interests and declares that it holds and will
hold the same in trust for the exclusive use and benefit of all present and
future Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class
A-7, Class A-8, Class A-9, Class M-1, Class M-1-X, Class M-2, Class M-2-X, Class
M-3, Class B-1, Class B-2, Class B-3 and Class R-II Certificateholders. The
rights of the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6,
Class A-7, Class A-8, Class A-9, Class M-1, Class M-1-X,

<PAGE>

                                      -54-

Class M-2, Class M-2-X, Class M-3, Class B-1, Class B-2, Class B-3 and Class
R-II Certificateholders to receive distributions from the proceeds of REMIC II
in respect of the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7, Class A-8, Class A-9, Class M-1, Class M-1-X, Class M-2, Class
M-2-X, Class M-3, Class B-1, Class B-2, Class B-3 and Class R-II Certificates,
and all ownership interests of the Class A-1, Class A-2, Class A-3, Class A-4,
Class A- 5, Class A-6, Class A-7, Class A-8, Class A-9, Class M-1, Class M-1-X,
Class M-2, Class M-2-X, Class M-3, Class B-1, Class B-2, Class B-3 and Class
R-II Certificateholders in such distributions, shall be as set forth in this
Agreement.

          SECTION 2.07. Issuance of Certificates Evidencing Interest in
                        REMIC II.

          The Trustee acknowledges the assignment to it of the Uncertificated
REMIC I Regular Interests and, concurrently therewith and in exchange therefor,
pursuant to the written request of the Depositor executed by an officer of the
Depositor, the Trustee has executed and caused to be authenticated and delivered
to or upon the order of the Depositor, the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class M-1,
Class M-1- X, Class M-2, Class M-2-X, Class M-3, Class B-1, Class B-2, Class B-3
and Class R-II Certificates in authorized denominations evidencing ownership of
the entire REMIC II.

<PAGE>

                                      -55-

                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF THE TRUST FUND

          SECTION 3.01. Master Servicer to Act as Master Servicer.

          The Master Servicer shall supervise, or take such actions as are
necessary to ensure, the servicing and administration of the Mortgage Loans and
any REO Property in accordance with this Agreement and its normal servicing
practices, which generally shall conform to the standards of an institution
prudently servicing mortgage loans for its own account and shall have full
authority to do anything it reasonably deems appropriate or desirable in
connection with such servicing and administration. The Master Servicer may
perform its responsibilities relating to servicing through other agents or
independent contractors, but shall not thereby be released from any of its
responsibilities as hereinafter set forth. The authority of the Master Servicer,
in its capacity as master servicer, and any Sub-Servicer acting on its behalf,
shall include, without limitation, the power to (i) consult with and advise any
Sub-Servicer regarding administration of a related Mortgage Loan, (ii) approve
any recommendation by a Sub-Servicer to foreclose on a related Mortgage Loan,
(iii) supervise the filing and collection of insurance claims and take or cause
to be taken such actions on behalf of the insured Person thereunder as shall be
reasonably necessary to prevent the denial of coverage thereunder, and (iv)
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing a related Mortgage Loan, including the employment of
attorneys, the institution of legal proceedings, the collection of deficiency
judgments, the acceptance of compromise proposals, the filing of claims under
any Insurance Policy and any other matter pertaining to a delinquent Mortgage
Loan. The authority of the Master Servicer shall include, in addition, the power
on behalf of the Certificateholders, the Trustee or any of them to (i) execute
and deliver customary consents or waivers and other instruments and documents,
(ii) consent to transfer of any related Mortgaged Property and assumptions of
the related Mortgage Notes and Security Instruments (in the manner provided in
this Agreement) and (iii) collect any Insurance Proceeds and Liquidation
Proceeds. Without limiting the generality of the foregoing, the Master Servicer
and any Sub-Servicer acting on its behalf may, and is hereby authorized, and
empowered by the Trustee to, execute and deliver, on behalf of itself, the
Certificateholders or the Trustee or any of them, any instruments of
satisfaction, cancellation, partial or full release, discharge and all other
comparable instruments, with respect to the related Mortgage Loans, the
Insurance Policies and the accounts related thereto, and the Mortgaged
Properties. The Master Servicer may exercise this power in its own name or in
the name of a Sub-Servicer.

          In accordance with the standards of the preceding paragraph, the
Master Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first

<PAGE>

                                      -56-

instance from related collections from the Mortgagors pursuant to Section 3.09,
and further as provided in Section 3.11; provided that the Master Servicer shall
not be obligated to make such advance if, in its good faith judgment, the Master
Servicer determines that such advance to be a Nonrecoverable Advance.

          Notwithstanding anything in this Agreement to the contrary, the Master
Servicer shall not (unless the Mortgagor is in default with respect to the
Mortgage Loan or such default is, in the judgment of the Master Servicer,
reasonably foreseeable) make or permit any modification, waiver or amendment of
any term of any Mortgage Loan that would both (i) effect an exchange or
reissuance of such Mortgage Loan under Section 1001 of the Code (or Treasury
regulations promulgated thereunder) and (ii) cause either REMIC I or REMIC II to
fail to qualify as a REMIC under the Code or the imposition of any tax on
"prohibited transactions" or "contributions" after the startup date under the
REMIC Provisions.

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

          SECTION 3.02. Sub-Servicing Agreements Between Master Servicer and
                        Sub- Servicers.

          (a) The Master Servicer may enter into Sub-Servicing Agreements with
Sub- Servicers for the servicing and administration of the Mortgage Loans and
for the performance of any and all other activities of the Master Servicer
hereunder; provided, however, that such agreements would not result in a
withdrawal or a downgrading by S&P of its rating on any Class of Certificates.
Each Sub-Servicer shall be either (i) an institution the accounts of which are
insured by the FDIC or (ii) another entity that engages in the business of
originating or servicing mortgage loans comparable to the Mortgage Loans, and in
either case shall be authorized to transact business in the state or states in
which the related Mortgaged Properties it is to service are situated, if and to
the extent required by applicable law to enable the Sub-Servicer to perform its
obligations hereunder and under the Sub-Servicing Agreement, and in either case
shall be a Freddie Mac or Fannie Mae approved mortgage servicer. Any
Sub-Servicing Agreement entered into by the Master Servicer shall include the
provision that such Agreement may be immediately terminated (x) with cause and
without any termination fee by any Master Servicer hereunder or (y) without
cause in which case the Master Servicer shall be responsible for any termination
fee or penalty resulting therefrom. In addition, each Sub-Servicing Agreement
shall provide for servicing of the Mortgage Loans consistent with the terms of
this Agreement. With the consent of the Trustee, the Master Servicer and the
Sub-Servicers may enter into Sub-Servicing Agreements and make amendments to the
Sub- Servicing Agreements or enter into different forms of Sub-Servicing
Agreements providing for, among other things, the delegation by the Master
Servicer to a Sub-Servicer of additional duties regarding the administration of
the Mortgage Loans; provided, however, that any such amendments

<PAGE>

                                      -57-

or different forms shall be consistent with and not violate the provisions of
this Agreement, and that no such amendment or different form shall be made or
entered into which could be reasonably expected to be materially adverse to the
interests of the Certificateholders, without the consent of the Holders of
Certificates entitled to at least 51% of the Voting Rights. The parties hereto
acknowledge that the initial Sub-Servicer shall be Wendover.

     The Master Servicer has entered into a Sub-Servicing Agreement with
Wendover for the servicing and administration of the Mortgage Loans and may
enter into additional Sub-Servicing Agreements with Sub-Servicers acceptable to
the Trustee for the servicing and administration of certain of the Mortgage
Loans.

          (b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall
enforce the obligations of each Sub-Servicer under the related Sub-Servicing
Agreement. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Sub-Servicing Agreements and the pursuit
of other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Master Servicer, in its good faith business
judgment, would require were it the owner of the related Mortgage Loans. The
Master Servicer shall pay the costs of such enforcement at its own expense, but
shall be reimbursed therefor only (i) from a general recovery resulting from
such enforcement only to the extent, if any, that such recovery exceeds all
amounts due in respect of the related Mortgage Loan or (ii) from a specific
recovery of costs, expenses or attorneys' fees against the party against whom
such enforcement is directed.

          (c) The Master Servicer represents that it has entered into a
commitment letter regarding the sale of sub-servicing rights with respect to the
Mortgage Loans with Countrywide Home Loans, Inc. ("Countrywide"). The Master
Servicer shall use its best efforts to transfer the subservicing of the Mortgage
Loans from Wendover to Countrywide on or before March 1, 2000.

          SECTION 3.03. Successor Sub-Servicers.

          The Master Servicer shall be entitled to terminate any Sub-Servicing
Agreement and the rights and obligations of any Sub-Servicer pursuant to any
Sub-Servicing Agreement in accor dance with the terms and conditions of such
Sub-Servicing Agreement. In the event of termination of any Sub-Servicer, all
servicing obligations of such Sub-Servicer shall be assumed simultaneously by
the Master Servicer without any act or deed on the part of such Sub-Servicer or
the Master Servicer, and the Master Servicer either shall service directly the
related Mortgage Loans or shall enter into a Sub-Servicing Agreement with a
successor Sub-Servicer which qualifies under Section 3.02.

          SECTION 3.04. Liability of the Master Servicer.

<PAGE>

                                      -58-

          Notwithstanding any Sub-Servicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer and a Sub-Servicer or reference to actions taken through a Sub-Servicer
or otherwise, the Master Servicer shall under all circumstances remain obligated
and primarily liable to the Trustee and Certificateholders for the servicing and
administering of the Mortgage Loans and any REO Property in accordance with the
provisions of Article III without diminution of such obligation or liability by
virtue of such Sub- Servicing Agreements or arrangements or by virtue of
indemnification from the Sub-Servicer and to the same extent and under the same
terms and conditions as if the Master Servicer alone were servicing and
administering the Mortgage Loans. For purposes of this Agreement, the Master
Servicer shall be deemed to have received payments on Mortgage Loans when the
Sub-Servicer has received such payments. The Master Servicer shall be entitled
to enter into any agreement with a Sub-Servicer for indemnification of the
Master Servicer by such Sub-Servicer and nothing contained in this Agreement
shall be deemed to limit or modify such indemnification.

          SECTION 3.05. No Contractual Relationship Between Sub-Servicers and
                        Trustee or Certificateholders.

          Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such and not as an originator shall be deemed to be between
the Sub-Servicer and the Master Servicer alone, and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Sub-Servicer
except as set forth in Section 3.06. The Master Servicer (or Sub-Servicer) shall
be liable for the payment of any minimum franchise tax imposed on REMICs
pursuant to Section 24874 of the California Revenue and Taxation Code that
accrues while the Master Servicer is the Master Servicer in connection with the
activities of the Trust under this Agreement.

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

          (a) If the Trustee or its designee shall assume the master servicing
obligations of the Master Servicer in accordance with Section 7.02 below, the
Trustee, to the extent necessary to permit the Trustee to carry out the
provisions of Section 7.02 with respect to the Mortgage Loans, shall succeed to
all of the rights and obligations of the Master Servicer under each of the Sub-
Servicing Agreements. In such event, the Trustee or its designee as the
successor master servicer shall be deemed to have assumed all of the Master
Servicer's rights and obligations therein and to have replaced the Master
Servicer as a party to such Sub-Servicing Agreements to the same extent as if
such Sub-Servicing Agreements had been assigned to the Trustee or its designee
as a successor master servicer, except that the Trustee or its designee as a
successor master servicer shall not be deemed to have assumed any obligations or
liabilities of the Master Servicer arising prior to such assumption (other than
the obligation to make any Advances hereunder) and the Master Servicer

<PAGE>

                                      -59-

shall not thereby be relieved of any liability or obligations under such
Sub-Servicing Agreements arising prior to such assumption. Nothing in the
foregoing shall be deemed to entitle the Trustee or its designee as a successor
master servicer at any time to receive any portion of the servicing compensation
provided under Section 3.17 except for such portion as the Master Servicer would
be entitled to receive.

          (b) In the event that the Trustee or its designee as successor master
servicer for the Trustee assumes the servicing obligations of the Master
Servicer under Section 7.02, upon the reasonable request of the Trustee or such
designee as successor master servicer the Master Servicer shall at its own
expense deliver to the Trustee, or at its written request to such designee,
photocopies of all documents, files and records, electronic or otherwise,
relating to the Sub-Servicing Agreements and the related Mortgage Loans or REO
Property then being serviced and an accounting of amounts collected and held by
it, if any, and will otherwise cooperate and use its reasonable efforts to
effect the orderly and efficient transfer of the Sub-Servicing Agreements, or
responsibilities hereunder to the Trustee, or at its written request to such
designee as successor master servicer.

          SECTION 3.07. Collection of Certain Mortgage Loan Payments.

          (a) The Master Servicer will coordinate and monitor remittances by
Sub- Servicers to the Master Servicer with respect to the Mortgage Loans in
accordance with this Agreement.

          (b) The Master Servicer shall make its reasonable efforts to collect
or cause to be collected all payments required under the terms and provisions of
the Mortgage Loans and shall follow, and use its reasonable efforts to cause
Sub-Servicers to follow, collection procedures comparable to the collection
procedures of prudent mortgage lenders servicing mortgage loans for their own
account to the extent such procedures shall be consistent with this Agreement.
Consistent with the foregoing, the Master Servicer may in its discretion (i)
waive or permit to be waived any late payment charge, prepayment charge,
assumption fee, or any penalty interest in connection with the prepayment of a
Mortgage Loan and (ii) suspend or reduce or permit to be suspended or reduced
regular monthly payments for a period of up to six months, or arrange or permit
an arrangement with a Mortgagor for a scheduled liquidation of delinquencies. In
the event the Master Servicer shall consent to the deferment of the due dates
for payments due on a Mortgage Note, the Master Servicer shall nonetheless make
an Advance or shall cause the related Sub-Servicer to make an advance to the
same extent as if such installment were due, owing and delinquent and had not
been deferred through liquidation of the Mortgaged Property; provided, however,
that the obligation of the Master Servicer or related Sub-Servicer to make an
Advance shall apply only to the extent that the Master Servicer believes, in
good faith, that such advances are not Nonrecoverable Advances.

          (c) Within five Business Days after the Master Servicer has determined
that all amounts which it expects to recover from or on account of a Mortgage
Loan have been recovered

<PAGE>

                                      -60-

and that no further Liquidation Proceeds will be received in connection
therewith, the Master Servicer shall provide to the Trustee a certificate of a
Servicing Officer that such Mortgage Loan became a Liquidated Mortgage Loan in a
Cash Liquidation or REO Disposition as of the date of such
determination.

          The Master Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any related Insurance Policy, follow such collection
procedures as it would follow with respect to mortgage loans comparable to the
Mortgage Loans and held for its own account. The Master Servicer shall not be
required to institute or join in litigation with respect to collection of any
payment (whether under a Mortgage, Mortgage Note, Primary Hazard Insurance
Policy or otherwise or against any public or governmental authority with respect
to a taking or condemnation) if it reasonably believes that it is prohibited by
applicable law from enforcing the provision of the Mortgage or other instrument
pursuant to which such payment is required. The Master Servicer shall be
responsible for preparing and distributing all information statements relating
to payments on the Mortgage Loans, in accordance with all applicable federal and
state tax laws and regulations.

          SECTION 3.08. Sub-Servicing Accounts.

          In those cases where a Sub-Servicer is servicing a Mortgage Loan
pursuant to a Sub- Servicing Agreement, the Sub-Servicer will be required to
establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall
otherwise be acceptable to the Master Servicer. All amounts held in a
Sub-Servicing Account shall be held in trust for the Trustee for the benefit of
the Certificateholders. Any investment of funds held in such an account shall be
in Permitted Investments maturing not later than the Business Day immediately
preceding the next Sub-Servicer Remittance Date. The Sub- Servicer will be
required to deposit into the Sub-Servicing Account no later than the first
Business Day after receipt all proceeds of Mortgage Loans received by the
Sub-Servicer, less its servicing compensation and any unreimbursed expenses and
advances, to the extent permitted by the Sub- Servicing Agreement. On each
Sub-Servicer Remittance Date the Sub-Servicer will be required to remit to the
Master Servicer for deposit in the Custodial Account all funds held in the
Sub-Servicing Account with respect to any Mortgage Loan as of the Sub-Servicer
Remittance Date, after deducting from such remittance an amount equal to the
servicing compensation (including interest on Permitted Investments) and
unreimbursed expenses and advances to which it is then entitled pursuant to the
related Sub-Servicing Agreement, to the extent not previously paid to or
retained by it. In addition, on each Sub-Servicer Remittance Date the
Sub-Servicer will be required to remit to the Master Servicer any amounts
required to be advanced pursuant to the related Sub-Servicing Agreement. The
Sub-Servicer will also be required to remit to the Master Servicer, within one
Business Day of receipt, the proceeds of any Principal Prepayment made by the
Mortgagor and any Insurance Proceeds or Liquidation Proceeds.

<PAGE>

                                      -61-

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

          The Master Servicer and the Sub-Servicers shall establish and maintain
one or more accounts (the "Servicing Accounts"), and shall deposit and retain
therein all collections from the Mortgagors (or related advances from
Sub-Servicers) for the payment of taxes, assessments, Primary Hazard Insurance
Policy premiums, and comparable items for the account of the Mortgagors, to the
extent that the Master Servicer customarily escrows for such amounts.
Withdrawals of amounts so collected from a Servicing Account may be made only to
(i) effect payment of taxes, assessments, Primary Hazard Insurance Policy
premiums, payments under the Radian PMI Policy and comparable items; (ii)
reimburse the Master Servicer (or a Sub-Servicer to the extent provided in the
related Sub- Servicing Agreement) out of related collections for any payments
made pursuant to Sections 3.01 (with respect to taxes and assessments), and 3.13
(with respect to Primary Hazard Insurance Policies); (iii) refund to Mortgagors
any sums as may be determined to be overages; or (iv) clear and terminate the
Servicing Account at the termination of this Agreement pursuant to Section 9.01.
As part of its servicing duties, the Master Servicer or Sub-Servicers shall, if
and to the extent required by law, pay to the Mortgagors interest on funds in
Servicing Accounts from its or their own funds, without any reimbursement
therefor.

          SECTION 3.10. Custodial Account.

          (a) The Master Servicer shall establish and maintain one or more
accounts (collectively, the "Custodial Account") in which the Master Servicer
shall deposit or cause to be deposited on a daily basis, or as and when received
from the Sub-Servicers, the following payments and collections received or made
by or on behalf of it subsequent to the Cut-off Date, or received by it prior to
the Cut-off Date but allocable to a period subsequent thereto (other than in
respect of principal and interest on the Mortgage Loans due on or before the
Cut-off Date):

          (i) all payments (including advances by a Sub-Servicer) on account of
     principal, including Principal Prepayments, on the Mortgage Loans;

          (ii) all payments (including advances by a Sub-Servicer) on account of
     interest on the Mortgage Loans, net of any portion thereof retained by the
     Master Servicer or any Sub-Servicer as Servicing Fees and net of any
     portion thereof payable to Radian under a Radian PMI Policy;

          (iii) all Insurance Proceeds, other than proceeds that represent
     reimbursement of costs and expenses incurred by the Master Servicer or any
     Sub-Servicer in connection with presenting claims under the related
     Insurance Policies, Liquidation Proceeds and REO Proceeds;

<PAGE>

                                      -62-

          (iv) all proceeds of any Mortgage Loan or REO Property repurchased or
     purchased in accordance with Sections 2.02, 2.04 , 3.14, 3.24 or 9.01; and
     all amounts required to be deposited in connection with the substitution of
     a Qualified Substitute Mortgage Loan pursuant to Section 2.04; and

          (v) any amounts required to be deposited pursuant to Section 3.12,
     3.13, 3.15 or 3.22.

          The foregoing requirements for deposit in the Custodial Account shall
be exclusive. In the event the Master Servicer shall deposit in the Custodial
Account any amount not required to be deposited therein, it may withdraw such
amount from the Custodial Account, any provision herein to the contrary
notwithstanding. The Custodial Account shall be maintained as a segregated
account, separate and apart from trust funds created for mortgage pass-through
certificates of other series, and the other accounts of the Master Servicer.

          (b) Funds in the Custodial Account may be invested in Permitted
Investments in accordance with the provisions set forth in Section 3.12. The
Master Servicer shall give notice to the Trustee and the Depositor of the
location of the Custodial Account after any change thereof.

          SECTION 3.11. Permitted Withdrawals From the Custodial Account.

          The Master Servicer may, from time to time as provided herein, make
withdrawals from the Custodial Account of amounts on deposit therein pursuant to
Section 3.10 that are attributable to the Mortgage Loans for the following
purposes:

               (i) to make deposits into the Certificate Account in the amounts
     and in the manner provided for in Section 4.01;

               (ii) to pay to itself, the Depositor, the Seller or any other
     appropriate person, as the case may be, with respect to each Mortgage Loan
     that has previously been purchased or repurchased pursuant to Sections
     2.02, 2.04, 3.14, 3.24 or 9.01 all amounts received thereon and not yet
     distributed as of the date of purchase or repurchase;

               (iii) to reimburse itself or any Sub-Servicer for Advances not
     previously reimbursed, the Master Servicer's or any Sub-Servicer's right to
     reimbursement pursuant to this clause (iii) being limited to amounts
     received which represent Late Collections (net of the related Servicing
     Fees) of Monthly Payments on Mortgage Loans with respect to which such
     Advances were made and as further provided in Section 3.15;

               (iv) to reimburse or pay itself, the Trustee or the Depositor for
     expenses incurred by or reimbursable to the Master Servicer, the Trustee or
     the Depositor pursuant to

<PAGE>

                                      -63-

     Sections 3.22, 6.03, 8.05 or 10.01(g), except as otherwise provided in such
     Sections hereof and, in the case of the Trustee, Section 3.4 of the
     Custodial Agreement;

               (v) to reimburse itself or any Sub-Servicer for costs and
     expenses incurred by or reimbursable to it relating to the prosecution of
     any claims pursuant to Section 3.13 that are in excess of the amounts so
     recovered;

               (vi) to reimburse itself or any Sub-Servicer for unpaid Servicing
     Fees and unreimbursed Servicing Advances, the Master Servicer's or any
     Sub-Servicer's right to reimbursement pursuant to this clause (vi) with
     respect to any Mortgage Loan being limited to late recoveries of the
     payments for which such advances were made pursuant to Section 3.01 or
     Section 3.09 and any other related Late Collections;

               (vii) to pay itself as servicing compensation (in addition to the
     Servicing Fee), on or after each Distribution Date, any interest or
     investment income earned on funds deposited in the Custodial Account for
     the period ending on such Distribution Date;

               (viii) to reimburse itself or any Sub-Servicer for any Advance or
     Servicing Advance previously made, after a Realized Loss has been allocated
     with respect to the related Mortgage Loan if the Advance or Servicing
     Advance was not reimbursed pursuant to clauses (iii) and (vi); and

               (ix) to clear and terminate the Custodial Account at the
     termination of this Agreement pursuant to Section 9.01.

          The Master Servicer shall keep and maintain separate accounting
records on a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying
any withdrawal from the Custodial Account pursuant to such subclauses (ii)
through (viii).

          SECTION 3.12. Permitted Investments.

          Any institution maintaining the Custodial Account shall at the
direction of the Master Servicer invest the funds in such account in Permitted
Investments, each of which shall mature not later than (i) the Business Day
immediately preceding the date on which such funds are required to be withdrawn
from such account pursuant to this Agreement, if a Person other than the Trustee
is the obligor thereon, and (ii) no later than the date on which such funds are
required to be withdrawn from such account pursuant to this Agreement, if the
Trustee is the obligor thereon and shall not be sold or disposed of prior to its
maturity. All income and gain realized from any such investment as well as any
interest earned on deposits in the Custodial Account shall be for the benefit of
the Master Servicer. The Master Servicer shall deposit in the Custodial Account
an amount equal to the amount

<PAGE>

                                      -64-

of any loss incurred in respect of any such investment immediately upon
realization of such loss without right of reimbursement.

          SECTION 3.13. Maintenance of Primary Hazard Insurance.

          (a) The Master Servicer shall cause to be maintained for each Mortgage
Loan primary hazard insurance by a Qualified Insurer or other insurer
satisfactory to the Rating Agencies with extended coverage on the related
Mortgaged Property in an amount equal to the lesser of (i) 100% of the
replacement value of the improvements, as determined by the insurance company,
on such Mortgaged Property or (ii) the unpaid principal balance of the Mortgage
Loan. The Master Servicer shall also cause to be maintained on property acquired
upon foreclosure, or deed in lieu of foreclosure, of any Mortgage Loan, fire
insurance with extended coverage in an amount equal to the replacement value of
the improvements thereon. Any costs incurred in maintaining any insurance
described in this Section 3.13 (other than any deductible described in the last
paragraph hereof) shall be recoverable as a Servicing Advance. The Master
Servicer shall not be obligated to advance any amounts pursuant to this Section
3.13 if, in its good faith judgment, the Master Servicer determines that such
advance would be a Nonrecoverable Advance. Pursuant to Section 3.10, any amounts
collected by the Master Servicer under any such policies (other than amounts to
be applied to the restoration or repair of the related Mortgaged Property or
property thus acquired or amounts released to the Mortgagor in accordance with
the Master Servicer's normal servicing procedures) shall be deposited in the
Custodial Account, subject to withdrawal pursuant to Section 3.11. Any cost
incurred by the Master Servicer in maintaining any such insurance shall not, for
the purpose of calculating monthly distributions to Certificateholders, be added
to the amount owing under the Mortgage Loan, notwithstanding that the terms of
the Mortgage Loan so permit. It is understood and agreed that no earthquake or
other additional insurance is to be required of any Mortgagor or maintained on
property acquired in respect of a Mortgage Loan other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance.

          The Master Servicer shall, or shall cause the related Sub-Servicer to,
exercise its best reasonable efforts to maintain and keep in full force and
effect each Primary Insurance Policy by a Qualified Insurer, or other insurer
satisfactory to the Rating Agencies, with respect to each first lien Mortgage
Loan as to which as of the Cut-Off Date such a Primary Insurance Policy was in
effect (or, in the case of a Qualified Substitute Mortgage Loan, the date of
substitution) and the original principal amount of the related Mortgage Note
exceeded 80% of the Collateral Value in an amount at least equal to the excess
of such original principal amount over 75% of such Collateral Value until the
principal amount of any such first lien Mortgage Loan is reduced below 80% of
the Collateral Value or, based upon a new appraisal, the principal amount of
such first lien Mortgage Loan represents less than 80% of the new appraised
value. The Master Servicer shall, or shall cause the related Sub-Servicer to,
effect the timely payment of the premium on each Primary Insurance Policy. The
Master Servicer and the related Sub-Servicer shall have the power to substitute
for any Primary

<PAGE>

                                      -65-

Insurance Policy another substantially equivalent policy issued by another
Qualified Insurer, PROVIDED, THAT, such substitution shall be subject to the
condition that it will not cause the ratings on the Certificates to be
downgraded or withdrawn, as evidenced in writing from each Rating
Agency.

     The Master Servicer shall take all such actions on behalf of the Trust Fund
as are necessary to service, maintain and administer each Radian PMI Policy and
to enforce the Trust Fund's rights under each Radian PMI Policy. The Master
Servicer shall effect the timely payment of the premium on the Radian PMI
Policies. To the extent the Mortgagor with respect to a Radian PMI Insured Loan
is delinquent, the Master Servicer shall advance the related premium as a
Servicing Advance. Except as expressly set forth herein, the Master Servicer
shall have full authority on behalf of the Trust Fund to do anything it
reasonably deems appropriate or desirable in connection with the servicing,
maintenance and administration of the Radian PMI Policies. The Master Servicer
shall make its best reasonable efforts to file all insured claims under the
Radian PMI Policies and collect from Radian all Insurance Proceeds due to the
Trust Fund under the Radian PMI Policies. The Master Servicer shall not take, or
permit any subservicer to take, any action which would result in non-coverage
under the Radian PMI Policies of any loss which, but for the actions of the
Master Servicer or any Subservicer, would have been covered thereunder. To the
extent coverage is available, the Master Servicer shall keep or cause to be kept
in full force and effect each Radian PMI Policy for the life of the Mortgage
Loan. Neither the Master Servicer nor the Trustee shall terminate the Radian PMI
Policies with respect to any Mortgage Loan, except in accordance with the terms
thereof. The Master Servicer shall cooperate with Radian and shall use its best
efforts to furnish all reasonable aid, evidence and information in the
possession of the Master Servicer or to which the Master Servicer has access
with respect to any Radian PMI Loan.

     No earthquake or other additional insurance is to be required of any
Mortgagor or maintained on property acquired with respect to a security
instrument other than pursuant to such applicable laws and regulations as shall
at any time be in force and shall require such additional insurance. When, at
the time of origination of the Mortgage Loan or at any subsequent time, the
Mortgaged Property is located in a federally designated special flood hazard
area, the Master Servicer shall use its best reasonable efforts to cause with
respect to the Mortgage Loans and each REO Property flood insurance (to the
extent available and in accordance with mortgage servicing industry practice) to
be maintained. Such flood insurance shall cover the Mortgaged Property,
including all items taken into account in arriving at the Collateral Value on
which the Mortgage Loan was based, and shall be in an amount equal to the lesser
of (i) the Stated Principal Balance of the related Mortgage Loan and (ii) the
minimum amount required under the terms of coverage to compensate for any damage
or loss on a replacement cost basis, but not more than the maximum amount of
such insurance available for the related Mortgaged Property under either the
regular or emergency programs of the National Flood Insurance Program (assuming
that the area in which such Mortgaged Property is located is participating in
such program). Unless applicable state law requires a higher deductible, the
deductible on such flood insurance may not exceed $1,000 or 1% of the applicable
amount of coverage, whichever is less.

<PAGE>

                                      -66-

          In the event that the Master Servicer shall obtain and maintain a
blanket fire insurance policy with extended coverage insuring against hazard
losses on all of the Mortgage Loans, it shall conclusively be deemed to have
satisfied its obligations as set forth in the first two sentences of this
Section 3.13, it being understood and agreed that such policy may contain a
deductible clause, in which case the Master Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property a policy
complying with the first two sentences of this Section 3.13 and there shall have
been a loss which would have been covered by such policy, deposit in the
Certificate Account from its own funds the amount not otherwise payable under
the blanket policy because of such deductible clause. Any such deposit by the
Master Servicer shall be made on the Certificate Account Deposit Date next
preceding the Distribution Date which occurs in the month following the month in
which payments under any such policy would have been deposited in the Custodial
Account. Any such deposit shall not be deemed Servicing Advances and the Master
Servicer shall not be entitled to reimbursement therefor. In connection with its
activities as administrator and servicer of the Mortgage Loans, the Master
Servicer agrees to present, on behalf of itself, the Trustee and
Certificateholders, claims under any such blanket policy.

          SECTION 3.14. Enforcement of Due-on-Sale Clauses; Assumption
                        Agreements.

          The Master Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance by any Mortgagor of the Mortgaged Property
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note or the
Mortgage), exercise or cause to be exercised its rights to accelerate the
maturity of such Mortgage Loan under any "due-on-sale" clause applicable
thereto; provided, however, that the Master Servicer shall not exercise any such
rights if it reasonably believes that it is prohibited by law from doing so. The
Master Servicer or the related Sub-Servicer may repurchase a Mortgage Loan at
the Purchase Price when the Master Servicer requires acceleration of the
Mortgage Loan, but only if the Master Servicer is satisfied, as evidenced by an
Officer's Certificate delivered to the Trustee, that either (i) such Mortgage
Loan is in default or default is reasonably foreseeable or (ii) if such Mortgage
Loan is not in default or default is not reasonably foreseeable, such repurchase
will have no adverse tax consequences for the Trust Fund or any
Certificateholder. If the Master Servicer is unable to enforce such
"due-on-sale" clause (as provided in the second preceding sentence) or if no
"due-on-sale" clause is applicable, the Master Servicer or the Sub-Servi cer is
authorized to enter into an assumption and modification agreement with the
Person to whom such property has been conveyed or is proposed to be conveyed,
pursuant to which such Person becomes liable under the Mortgage Note and, to the
extent permitted by applicable state law, the Mortgagor remains liable thereon;
provided, however, that the Master Servicer shall not enter into any assumption
and modification agreement if the coverage provided under the Primary Insurance
Policy, if any, would be impaired by doing so. The Master Servicer shall notify
the Trustee, whenever possible, before the completion of such assumption
agreement, and shall forward to the Trustee the original copy of such assumption
agreement, which copy shall be added by the Trustee

<PAGE>

                                      -67-

to the related Mortgage File and which shall, for all purposes, be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. In connection with any such assumption
agreement, the interest rate on the related Mortgage Loan shall not be changed
and no other material alterations in the Mortgage Loan shall be made unless such
material alteration would not cause either REMIC I or REMIC II to fail to
qualify as a REMIC for federal income tax purposes, as evidenced by an Opinion
of Counsel. The Master Servicer is also authorized to enter into a substitution
of liability agreement with such Person, pursuant to which the original
Mortgagor is released from liability and such Person is substituted as the
Mortgagor and becomes liable under the Mortgage Note. Any fee collected by or on
behalf of the Master Servicer for entering into an assumption or substitution of
liability agreement will be retained by or on behalf of the Master Servicer as
additional servicing compensation. In connection with any such assumption, no
material term of the Mortgage Note (including but not limited to the Mortgage
Rate, the amount of the Monthly Payment and any other term affecting the amount
or timing of payment on the Mortgage Loan) may be changed. The Master Servicer
shall not enter into any substitution or assumption if such substitution or
assumption shall (i) both constitute a "significant modification" effecting an
exchange or reissuance of such Mortgage Loan under the Code (or Treasury
regulations promulgated thereunder) and cause either REMIC I or REMIC II to fail
to qualify as a REMIC under the REMIC Provisions or (ii) cause the imposition of
any tax on "prohibited transactions" or "contributions" after the Startup Day
under the REMIC Provisions. The Master Servicer shall forward to the Custodian
the original copy of such substitution or assumption agreement, which copy shall
be added to the related Mortgage File and shall, for all purposes, be considered
a part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. A portion equal to up to 2% of the
Collateral Value of the related Mortgage Loan, of any fee or additional interest
collected by the related Sub-Servicer for consenting in any such conveyance or
entering into any such assumption agreement may be retained by the related
Sub-Servicer as additional servicing compensation.

          Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or any assumption that the Master Servicer
may be restricted by law from preventing, for any reason whatsoever. For
purposes of this Section 3.14, the term "assumption" is deemed to also include a
sale of a Mortgaged Property that is not accompanied by an assumption or
substitution of liability agreement.

          SECTION 3.15. Realization Upon Defaulted Mortgage Loans.

          The Master Servicer shall exercise reasonable efforts, consistent with
the procedures that the Master Servicer would use in servicing loans for its own
account, to foreclose upon or other wise comparably convert (which may include
an REO Acquisition) the ownership of properties securing such of the Mortgage
Loans as come into and continue in default and as to which no

<PAGE>

                                      -68-

satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.07, and which are not released from the Trust Fund
pursuant to any other provision hereof. The Master Servicer shall use reasonable
efforts to realize proceeds from such defaulted Mortgage Loans in such manner
(including short sales) as will maximize the receipt of principal and interest
by Certificateholders, taking into account, among other things, the timing of
foreclosure proceedings. The foregoing is subject to the provisions that, in any
case in which Mortgaged Property shall have suffered damage from an Uninsured
Cause, the Master Servicer shall not be required to expend its own funds toward
the restoration of such property unless it shall determine in its sole
discretion (i) that such restoration will increase the net proceeds of
liquidation of the related Mortgage Loan to Certificateholders after
reimbursement to itself for such expenses, and (ii) that such expenses will be
recoverable by the Master Servicer through Insurance Proceeds or Liquidation
Proceeds from the related Mortgaged Property, as contemplated in Section 3.11.
The Master Servicer shall be responsible for all other costs and expenses
incurred by it in any such proceedings; provided, however, that it shall be
entitled to reimbursement thereof from the related property, as contemplated in
Section 3.11.

          The proceeds of any Cash Liquidation or REO Disposition, as well as
any recovery resulting from a partial collection of Insurance Proceeds or
Liquidation Proceeds or any income from an REO Property, will be deposited into
the Custodial Account and applied in the following order of priority: first, to
reimburse the Master Servicer or any Sub-Servicer for any related unreimbursed
Servicing Advances, pursuant to Section 3.11(vi) or 3.22; second, to accrued and
unpaid interest on the Mortgage Loan or REO Imputed Interest, at the Mortgage
Rate, to the date of the Cash Liquidation or REO Disposition, or to the Due Date
prior to the Distribution Date on which such amounts are to be distributed if
not in connection with a Cash Liquidation or REO Disposition; and third, as a
recovery of principal of the Mortgage Loan. If the amount of the recovery so
allocated to interest is less than a full recovery thereof, that amount will be
allocated as follows: first, to unpaid Servicing Fees; and second, to interest
at the Net Mortgage Rate. The portion of the recovery so allocated to unpaid
Servicing Fees shall be reimbursed to the Master Servicer or any Sub-Servicer
pursuant to Section 3.11(vi). The portions of the recovery so allocated to
interest at the Net Mortgage Rate and to principal of the Mortgage Loan shall be
applied as follows: first, to reimburse the Master Servicer or any Sub-Servicer
for any related unreimbursed Advances in accordance with Section 3.11(iii) or
3.22, and second, for distribution in accordance with the provisions of Section
4.01, subject to Section 3.22 with respect to certain recoveries from an REO
Disposition constituting Excess Proceeds.

          SECTION 3.16. Trustee to Cooperate; Release of Mortgage Files.

          Upon the payment in full of any Mortgage Loan, or the receipt by the
Master Servicer of a notification that payment in full shall be escrowed in a
manner customary for such purposes, the Master Servicer will immediately notify
the Custodian on behalf of the Trustee by a certification (which certification
shall include a statement to the effect that all amounts received or to be
received

<PAGE>

                                      -69-

in connection with such payment which are required to be deposited in the
Custodial Account pursuant to Section 3.10 have been or will be so deposited) of
a Servicing Officer and shall request delivery to it of the Mortgage File in the
form of a Request for Release. Upon receipt of such certification and request,
the Custodian shall release the related Mortgage File to the Master
Servicer.
Subject to the receipt by the Master Servicer of the proceeds of such payment in
full and the payment of all related fees and expenses, the Master Servicer shall
arrange for the release to the Mortgagor of the original cancelled Mortgage
Note. All other documents in the Mortgage File shall be retained by the Master
Servicer to the extent required by applicable law. The Master Servicer shall
provide for preparation of the appropriate instrument of satisfaction covering
any Mortgage Loan which pays in full and the Custodian shall cooperate in the
execution and return of such instrument to provide for its delivery or recording
as may be required. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the Custodial
Account or the Certificate Account.

          From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan, including, for this purpose, collection under any
insurance policy relating to the Mortgage Loan, the Custodian shall, upon
request of the Master Servicer and delivery to the Custodian of a Request for
Release, release the related Mortgage File to the Master Servicer and the
Custodian shall execute such documents as the Master Servicer shall prepare and
request as being necessary to the prosecution of any such proceedings. Such
Request for Release shall obligate the Master Servicer to return each document
previously requested from the Mortgage File to the Trustee, or the Custodian as
agent for the Trustee, when the need therefor by the Master Servicer no longer
exists; and in any event within 21 days of the Master Servicer's receipt
thereof, unless the Mortgage Loan has been liquidated and the Liquidation
Proceeds relating to the Mortgage Loan have been deposited in the Custodial
Account or the Mortgage File or such document has been delivered to an attorney,
or to a public trustee or other public official as required by law, for purposes
of initiating or pursuing legal action or other proceedings for the foreclosure
of the Mortgaged Property either judicially or non-judicially, and the Master
Servicer has delivered to the Custodian a certificate of a Servicing Officer
certifying as to the name and address of the Person to which such Mortgage File
or such document was delivered and the purpose or purposes of such delivery.
Upon receipt of a Request for Release stating that such Mortgage Loan was
liquidated and that all amounts received or to be received in connection with
such liquidation which are required to be deposited into the Custodial Account
have been or will be so deposited, or that such Mortgage Loan has become an REO
Property, a copy of the Request for Release shall be released by the Custodian
to the Master Servicer.

          Upon written request of a Servicing Officer, the Trustee shall execute
and deliver to the Master Servicer any court pleadings, requests for trustee's
sale or other documents prepared by the Master Servicer that are necessary to
the foreclosure or trustee's sale in respect of a Mortgaged Property or to any
legal action brought to obtain judgment against any Mortgagor on the Mortgage
Note or Mortgage or to obtain a deficiency judgment, or to enforce any other
remedies or rights provided by the Mortgage Note or Mortgage or otherwise
available at law or in equity. Each such

<PAGE>

                                      -70-

request that such pleadings or documents be executed by the Trustee shall
include a certification signed by a Servicing Officer as to the reason such
documents or pleadings are required and that the execution and delivery thereof
by the Trustee will not invalidate or otherwise affect the lien of the Mortgage,
except for the termination of such a lien upon completion of the foreclosure or
trustee's sale.

          SECTION 3.17. Servicing Compensation.

          As compensation for its activities hereunder, the Master Servicer
shall be entitled to withhold and retain, from deposits to the Custodial Account
of amounts representing payments or recoveries of interest, the Servicing Fees
with respect to each Mortgage Loan (less any portion of such amounts retained by
any Sub-Servicer). In addition, the Master Servicer shall be entitled to recover
unpaid Servicing Fees out of related Late Collections to the extent permitted in
Section 3.11.

          The Master Servicer also shall be entitled pursuant to Section 3.11 to
receive from the Custodial Account as additional servicing compensation interest
or other income earned on deposits therein, subject to Section 3.23, as well as
any prepayment charges, assumption fees, late payment charges and reconveyance
fees. The Master Servicer shall be required to pay all expenses incurred by it
in connection with its servicing activities hereunder (including payment of the
premiums for any blanket policy insuring against hazard losses pursuant to
Section 3.13 and servicing compensation of the Sub-Servicer to the extent not
retained by it), and shall not be entitled to reimbursement therefor except as
specifically provided in Section 3.11. The Servicing Fee may not be transferred
in whole or in part except in connection with the transfer of all of the Master
Servicer's responsibilities and obligations under this Agreement.

          SECTION 3.18. Maintenance of Certain Servicing Policies.

          The Master Servicer shall obtain and maintain at its own expense and
shall cause each Sub- Servicer to obtain and maintain for the duration of this
Agreement a blanket fidelity bond and an errors and omissions insurance policy
covering the Master Servicer's and such Sub-Servicer's officers, employees and
other persons acting on its behalf in connection with its activities under this
Agreement. The amount of coverage shall be at least equal to the coverage
maintained by the Master Servicer or Sub-Servicer in order to be acceptable to
Fannie Mae or Freddie Mac to service loans for it or otherwise in an amount as
is commercially available at a cost that is generally not regarded as excessive
by industry standards. The Master Servicer shall promptly notify the Trustee of
any material change in the terms of such bond or policy. The Master Servicer
shall provide annually to the Trustee a certificate of insurance that such bond
and policy are in effect. If any such bond or policy ceases to be in effect, the
Master Servicer shall, to the extent possible, give the Trustee ten days' notice
prior to any such cessation and shall use its reasonable best efforts to obtain
a comparable replacement bond or policy, as the case may be.

<PAGE>

                                      -71-

          SECTION 3.19. Annual Statement as to Compliance.

          Within 120 days after December 31 of each year, commencing December
2000, the Master Servicer at its own expense shall deliver to the Trustee, with
a copy to the Rating Agencies, a certificate signed by a Servicing Officer
stating, as to the signers thereof, that (i) a review of the activities of the
Master Servicer during the preceding calendar year and of performance under this
Agreement has been made under such officers' supervision, (ii) to the best of
such officers' knowledge, based on such review, the Master Servicer has
fulfilled all its obligations under this Agreement for such year, or, if there
has been a default in the fulfillment of any such obligation, specifying each
such default known to such officer and the nature and status thereof including
the steps being taken by the Master Servicer to remedy such default; (iii) a
review of the activities of each Sub-Servicer during the Sub-Servicer's most
recently ended fiscal year on or prior to such December 31 and its performance
under its Sub-Servicing Agreement has been made under such officer's
supervision; and (iv) to the best of the Servicing Officer's knowledge, based on
his review and the certification of an officer of the Sub-Servicer (unless the
Servicing Officer has reason to believe that reliance on such certification is
not justified), either each Sub-Servicer has performed and fulfilled its duties,
responsibilities and obligations under this Agreement and its Sub-Servicing
Agreement in all material respects throughout the year, or, if there has been a
default in performance or fulfillment of any such duties, responsibilities or
obligations, specifying the nature and status of each such default known to the
Servicing Officer. Copies of such statements shall be provided by the Master
Servicer to the Certificateholders upon request or by the Trustee at the expense
of the Master Servicer should the Master Servicer fail to provide such copies.

          SECTION 3.20. Annual Independent Public Accountants' Servicing
                        Statement.

          (a) Within 120 days after December 31 of each year, commencing
December, 2000, the Master Servicer, at its expense, shall cause a firm of
independent public accountants who are members of the American Institute of
Certified Public Accountants to furnish a statement to the Master Servicer,
which will be provided to the Trustee and the Rating Agencies, to the effect
that, in connection with the firm's examination of the Master Servicer's
financial statements as of the end of such calendar year, nothing came to their
attention that indicated that the Master Servicer was not in compliance with the
provisions of this Agreement except for (i) such exceptions as such firm
believes to be immaterial and (ii) such other exceptions as are set forth in
such statement.

          (b) Within 120 days after December 31 of each year, commencing
December 2000, the Master Servicer, at its expense, shall or shall cause each
Sub-Servicer to cause a nationally recognized firm of independent certified
public accountants to furnish to the Master Servicer or such Sub-Servicer a
report stating that (i) it has obtained a letter of representation regarding
certain matters from the management of the Master Servicer or such Sub-Servicer
which includes an assertion that the Master Servicer or such Sub-Servicer has
complied with certain minimum

<PAGE>

                                      -72-

mortgage loan servicing standards (to the extent applicable to commercial and
multifamily mortgage loans) identified in the Uniform Single Attestation Program
for Mortgage Bankers established by the Mortgage Bankers Association of America
with respect to the servicing of first and second lien conventional single
family mortgage loans during the most recently completed calendar year and (ii)
on the basis of an examination conducted by such firm in accordance with
standards established by the American Institute of Certified Public Accountants,
such representation is fairly stated in all material respects, subject to such
exceptions and other qualifications that may be appropriate. Immediately upon
receipt of such report, the Master Servicer shall or shall cause each
Sub-Servicer to furnish a copy of such report to the Trustee and the Rating
Agencies.

          SECTION 3.21. Access to Certain Documentation.

          The Master Servicer shall provide, and shall cause any Sub-Servicer to
provide, to the Trustee, access to the documentation in their possession
regarding the related Mortgage Loans and REO Properties and to the
Certificateholders, the FDIC, and the supervisory agents and examiners of the
FDIC (to which the Trustee shall also provide) access to the documentation
regarding the related Mortgage Loans required by applicable regulations, such
access being afforded without charge but only upon reasonable request and during
normal business hours at the offices of the Master Servicer or the Sub-Servicers
that are designated by these entities; provided, however, that, unless otherwise
required by law, the Trustee, the Master Servicer or the Sub-Servicer shall not
be required to provide access to such documentation if the provision thereof
would violate the legal right to privacy of any Mortgagor; provided, further,
however, that the Trustee shall coordinate its requests for such access so as
not to impose an unreasonable burden on, or cause an unreasonable interruption
of, the business of the Master Servicer or any Sub-Servicer. The Master
Servicer, the Sub-Servicers and the Trustee shall allow representatives of the
above entities to photocopy any of the documentation and shall provide equipment
for that purpose at a charge that covers their own actual out-of-pocket costs.

          SECTION 3.22. Title, Conservation and Disposition of REO Property.

          This Section shall apply only to REO Properties acquired for the
account of REMIC I and shall not apply to any REO Property relating to a
Mortgage Loan which was purchased or repurchased from REMIC I pursuant to
Sections 2.02, 2.04, 3.14 or 3.24. In the event that title to any such REO
Property is acquired, the deed or certificate of sale shall be issued to the
Trustee, or to its nominee, on behalf of the Certificateholders. The Master
Servicer, on behalf of REMIC I, shall either sell any REO Property before the
close of the third taxable year following the taxable year in which REMIC I
acquires ownership of such REO Property for purposes of Section 860G(a)(8) of
the Code or, at the expense of REMIC I, request, more than 60 days before the
day on which the three-year grace period would otherwise expire an extension of
the three-year grace period, unless the Master Servicer has delivered to the
Trustee an Opinion of Counsel (which shall not be at the expense of the
Trustee), addressed to the Trustee and the Master Servicer, to the effect that
the

<PAGE>

                                      -73-

holding by REMIC I of such REO Property subsequent to the close of the third
taxable year following the taxable year in which REMIC I acquires ownership of
such REO Property will not result in the imposition on REMIC I of taxes on
"prohibited transactions" thereof, as defined in Section 860F of the Code, or
cause either REMIC I or REMIC II to fail to qualify as a REMIC under the REMIC
Provisions or comparable provisions of the laws of the State of California at
any time that any Certificates are outstanding. The Master Servicer shall
manage, conserve, protect and operate each REO Property for the
Certificateholders solely for the purpose of its prompt disposition and sale in
a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) or result in the
receipt by either REMIC I or REMIC II of any "income from non-permitted assets"
within the meaning of Section 860F(a)(2)(B) of the Code or any "net income from
foreclosure property" which is subject to taxation under the REMIC Provisions.
Pursuant to its efforts to sell such REO Property, the Master Servicer shall
either itself or through an agent selected by the Master Servicer protect and
conserve such REO Property in the same manner and to such extent as is customary
in the locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Certificateholders, rent the
same, or any part thereof, as the Master Servicer deems to be in the best
interest of the Certificateholders for the period prior to the sale of such REO
Property.

          Any REO Disposition shall be for cash only (unless changes in the
REMIC Provisions made subsequent to the Startup Day allow a sale for other
consideration).

          The Master Servicer shall segregate and hold all funds collected and
received in connection with the operation of any REO Property separate and apart
from its own funds and general assets. The Master Servicer shall deposit, or
cause to be deposited, on a daily basis in the Custodial Account all revenues
received with respect to the REO Properties, net of any directly related
expenses incurred or withdraw therefrom funds necessary for the proper
operation, management and maintenance of the REO Property.

          If as of the date of acquisition of title to any REO Property there
remain outstanding unreimbursed Servicing Advances with respect to such REO
Property or any outstanding Advances allocated thereto the Master Servicer, upon
an REO Disposition, shall be entitled to reimbursement for any related
unreimbursed Servicing Advances and any unreimbursed related Advances as well as
any unpaid Servicing Fees from proceeds received in connection with the REO
Disposition, as further provided in Section 3.15. The Master Servicer shall not
be obligated to advance any amounts with respect to an REO Property if, in its
good faith judgment, the Master Servicer determines that such advance would
constitute a Nonrecoverable Advance.

          The REO Disposition shall be carried out by the Master Servicer at
such price and upon such terms and conditions as the Master Servicer shall
determine.

<PAGE>

                                      -74-

          The Master Servicer shall deposit the proceeds from the REO
Disposition, net of any payment to the Master Servicer as provided above, in the
Custodial Account upon receipt thereof for distribution in accordance with
Section 4.01; provided, that any such net proceeds received by the Master
Servicer which are in excess of the applicable Stated Principal Balance plus all
unpaid REO Imputed Interest thereon through the last day of the month in which
the REO Disposition occurred ("Excess Proceeds") shall be retained by the Master
Servicer as additional servicing compensation.

          With respect to any Mortgage Loan as to which the Master Servicer has
received notice of, or has actual knowledge of, the presence of any toxic or
hazardous substance on the Mortgaged Property, the Master Servicer shall not, on
behalf of the Trustee, either (i) obtain title to the related Mortgaged Property
as a result of or in lieu of foreclosure or otherwise, or (ii) otherwise acquire
possession of, the related Mortgaged Property, unless the Master Servicer has,
at least 30 days prior to taking such action, obtained and delivered to the
Trustee an environmental audit report prepared by a Person who regularly
conducts environmental audits using customary industry standards. The Master
Servicer shall take such action as it deems to be in the best economic interest
of the Trust Fund (other than proceeding against the Mortgaged Property) and is
hereby authorized at such time as it deems appropriate to release such Mortgaged
Property from the lien of the related Mortgage.

          The cost of the environmental audit report contemplated by this
Section 3.22 shall be advanced by the Master Servicer as an expense of the Trust
Fund, and the Master Servicer shall be reimbursed therefor from the Custodial
Account as provided in Section 3.11, any such right of reimbursement being prior
to the rights of the Certificateholders to receive any amount in the Custodial
Account.

          If the Master Servicer determines, as described above, that it is in
the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property in compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials affecting any such Mortgaged Property, then
the Master Servicer shall take such action as it deems to be in the best
economic interest of the Trust Fund. The cost of any such compliance,
containment, clean-up or remediation shall be advanced by the Master Servicer as
an expense of the Trust Fund, and the Master Servicer shall be entitled to be
reimbursed therefor from the Custodial Account as provided in Section 3.11, any
such right of reimbursement being prior to the rights of the Certificateholders
to receive any amount in the Custodial Account.

          SECTION 3.23. Additional Obligations of the Master Servicer.

          On each Certificate Account Deposit Date, the Master Servicer shall
deliver to the Trustee for deposit in the Certificate Account from its own funds
and without any right of reimburse-

<PAGE>

                                      -75-

ment therefor, a total amount equal to the amount of Compensating Interest for
the related Distribution Date.

          SECTION 3.24 Optional Purchase of Defaulted Mortgage Loans.

     The Master Servicer or any affiliate of the Master Servicer, in its sole
discretion, shall have the right to elect (by written notice sent to the Master
Servicer, and the Trustee), but shall not be obligated, to purchase for its own
account from the Trust Fund any Mortgage Loan which is 90 days or more
delinquent in the manner and at the price specified in Section 2.04. The
purchase price for any Mortgage Loan purchased hereunder shall be deposited in
the Certificate Account and upon receipt of a Request for Release stating such,
the Custodian shall release to the purchaser of such Mortgage Loan the related
Mortgage File and shall execute and deliver such instruments of transfer or
assignment prepared by the purchaser of such Mortgage Loan, in each case without
recourse, as shall be necessary to vest in the purchaser of such Mortgage Loan
any Mortgage Loan released pursuant hereto and the purchaser of such Mortgage
Loan shall succeed to all the Trustee's right, title and interest in and to such
Mortgage Loan and all security and documents related thereto. Such assignment
shall be an assignment outright and not for security. The purchaser of such
Mortgage Loan shall thereupon own such Mortgage Loan, and all security and
documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto.

          SECTION 3.25. Additional Obligations of the Depositor.

          The Depositor agrees that on or prior to the tenth day after the
Closing Date, the Depositor shall provide the Trustee with a written
notification, substantially in the form of Exhibit J attached hereto, relating
to each Class of Certificates, setting forth (i) in the case of each Class of
such Certificates, (a) if less than 10% of the aggregate Certificate Principal
Balance of such Class of Certificates has been sold as of such date, the value
calculated pursuant to clause (b)(iii) of Exhibit J hereto, or, (b) if 10% or
more of such Class of Certificates has been sold as of such date but no single
price is paid for at least 10% of the aggregate Certificate Principal Balance of
such Class of Certificates, then the weighted average price at which the
Certificates of such Class were sold and the aggregate percentage of
Certificates of such Class sold, (c) the first single price at which at least
10% of the aggregate Certificate Principal Balance of such class of Certificates
was sold, or (d) if any Certificates of each Class of Certificates are retained
by the Depositor or an affiliate corporation, or are delivered to the Seller,
the fair market value of such Certificates as of the Closing Date, (ii) the
Prepayment Assumption used in pricing the Certificates, and (iii) such other
information as to matters of fact as the Trustee may reasonably request to
enable it to comply with its reporting requirements with respect to each Class
of such Certificates to the extent such information can in the good faith
judgment of the Depositor be determined by it.

          SECTION 3.26. Periodic Filings with the Securities and Exchange
                        Commission; Additional Information.

<PAGE>

                                      -76-

          Within 15 days after each Distribution Date, the Trustee shall file
with the Commission via the Electronic Data Gathering and Retrieval System
(EDGAR) , a Form 8-K with a copy of the statement to the Certificateholders for
such Distribution Date as an exhibit thereto. Prior to January 30, 2000, the
Trustee shall file a Form 15 Suspension Notification with respect to the Trust
Fund, if applicable. Prior to March 30, 2000, the Trustee shall file a Form
10-K, in substance conforming to industry standards, with respect to the Trust
Fund. The Depositor hereby grants to the Trustee a limited power of attorney to
execute and file each such document on behalf of the Depositor. Such power of
attorney shall continue until either the earlier of (i) receipt by the Trustee
from the Depositor of written termination of such power of attorney and (ii) the
termination of the Trust Fund. The Depositor agrees to promptly furnish to the
Trustee, from time to time upon request, such further information, reports, and
financial statements within its control related to this Agreement and the
Mortgage Loans as the Trustee reasonably deems appropriate to prepare and file
all necessary reports with the Commission. The Trustee shall have no
responsibility to file any items with the Commission other than those specified
in this section.

<PAGE>

                                      -77-

                                   ARTICLE IV

                         PAYMENTS TO CERTIFICATEHOLDERS

          SECTION 4.01. Certificate Account; Distributions.

          (a) The Trustee shall establish and maintain a Certificate Account, in
which the Master Servicer shall cause to be deposited on behalf of the Trustee
on or before 5:00 P.M. New York time on each Certificate Account Deposit Date by
wire transfer of immediately available funds an amount equal to the sum of (i)
any Advance for the immediately succeeding Distribution Date, (ii) any amount
required to be deposited in the Certificate Account pursuant to Sections 3.11,
3.13, 3.22 or 3.23 and (iii) all other amounts constituting the Available
Distribution Amount for the immediately succeeding Distribution Date.

          (b) On each Distribution Date, prior to making any other distributions
referred to in Section 4.01, the Trustee shall withdraw from the Certificate
Account and pay itself the Trustee's Fee for such Distribution Date.

          (c) On each Distribution Date the Trustee shall distribute to each
Certificateholder of record as of the next preceding Record Date (other than as
provided in Section 9.01 respecting the final distribution) either in
immediately available funds (by wire transfer or otherwise) to the account of
such Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder has so notified the Trustee at least 5
Business Days prior to the related Record Date, or otherwise by check mailed to
such Certificateholder at the address of such Holder appearing in the
Certificate Register, such Certificateholder's share (based on the aggregate of
the Percentage Interests represented by Certificates of the applicable Class
held by such Holder) of the following amounts, in the following order of
priority, in each case to the extent of the remaining Available Distribution
Amount:

               (i) to the Class A Certificateholders (other than the Principal
          Only Certificateholders) and the Class R Certificateholders, on a pro
          rata basis based on Accrued Certificate Interest payable on such
          Certificates with respect to such Distribution Date, Accrued
          Certificate Interest on such Classes of Certificates, as applicable,
          for such Distribution Date, plus any Accrued Certificate Interest
          thereon remaining unpaid from any previous Distribution Date (the
          "Senior Interest Distribution Amount");

               (ii) (X) to the Principal Only Certificateholders, the Principal
          Only Distribution Amount; and

<PAGE>

                                      -78-

                    (Y) to the Class A Certificateholders (other than the
          Interest Only and Principal Only Certificateholders) and Class R
          Certificateholders, in the priorities and amounts set forth in Section
          4.01(d)(ii) and (iii) and Sections 4.01(e), the sum of the following
          (applied to reduce the Certificate Principal Balances of such Class A
          Certificates or Class R Certificates, as applicable):

                    (A) the Senior Percentage for such Distribution Date times
               the sum of the following:

                         (1) the principal portion of each Monthly Payment due
                    during the related Due Period on each Outstanding Mortgage
                    Loan (other than the related Discount Fraction of the
                    principal portion of such payment with respect to a Discount
                    Mortgage Loan), whether or not received on or prior to the
                    related Determination Date, minus the principal portion of
                    any Debt Service Reduction (other than the related Discount
                    Fraction of the principal portion of such Debt Service
                    Reductions with respect to each Discount Mortgage Loan)
                    which together with other Bankruptcy Losses exceeds the
                    Bankruptcy Amount;

                         (2) the Stated Principal Balance of any Mortgage Loan
                    repurchased during the related Prepayment Period pursuant to
                    Section 2.02, 2.04, 3.14 or 3.24 and the amount of any
                    shortfall deposited in the Custodial Account in connection
                    with the substitution of a Deleted Mortgage Loan pursuant to
                    Section 2.04 during the related Prepayment Period (other
                    than the related Discount Fraction of such Stated Principal
                    Balance or shortfall with respect to a Discount Mortgage
                    Loan); and

                         (3) the principal portion of all other unscheduled
                    collections (other than Principal Prepayments in Full and
                    Curtailments and amounts received in connection with a Cash
                    Liquidation or REO Disposition of a Mortgage Loan described
                    in Section 4.01(c)(ii)(Y)(B), including without limitation
                    Insurance Proceeds, Liquidation Proceeds and REO Proceeds)
                    received during the related Prepayment Period to the extent
                    applied by the Master Servicer as recoveries of principal of
                    the related Mortgage Loan pursuant to Section 3.15 (other
                    than the related Discount Fraction of the principal portion
                    of such unscheduled collections with respect to a Discount
                    Mortgage Loan);

<PAGE>

                                      -79-

                    (B) with respect to each Mortgage Loan for which a Cash
               Liquidation or a REO Disposition occurred during the related
               Prepayment Period and did not result in any Excess Special Hazard
               Losses, Excess Fraud Losses, Excess Bankruptcy Losses or
               Extraordinary Losses, an amount equal to the lesser of (a) the
               Senior Percentage for such Distribution Date times the Stated
               Principal Balance of such Mortgage Loan (other than the related
               Discount Fraction of such Stated Principal Balance, with respect
               to a Discount Mortgage Loan) and (b) the Senior Accelerated
               Distribution Percentage for such Distribution Date times the
               related unscheduled collections (including without limitation
               Insurance Proceeds, Liquidation Proceeds and REO Proceeds) to the
               extent applied by the Master Servicer as recoveries of principal
               of the related Mortgage Loan pursuant to Section 3.15 (in each
               case other than the portion of such unscheduled collections, with
               respect to a Discount Mortgage Loan included in Section
               4.01(d)(i)(C)));

                    (C) the Senior Accelerated Distribution Percentage for such
               Distribution Date times the aggregate of all Principal
               Prepayments in Full and Curtailments received in the related
               Prepayment Period (other than the related Discount Fraction of
               such Principal Prepayments in Full and Curtailments, with respect
               to a Discount Mortgage Loan); and

                    (D) any amounts described in subsection (ii)(Y), clauses
               (A), (B) or (C) of this Section 4.01(c), as determined for any
               previous Distribution Date, which remain unpaid after application
               of amounts previously distributed pursuant to this clause (D) to
               the extent that such amounts are not attributable to Realized
               Losses which have been allocated to the Class M Certificates or
               Class B Certificates;

               (iii) to the Holders of the Class M-1 and Class M-1-X
          Certificates, on a pro rata basis, based on Accrued Certificate
          Interest payable to such Certificate with respect to such Distribution
          Date, the Accrued Certificate Interest thereon for such Distribution
          Date, plus any Accrued Certificate Interest thereon remaining unpaid
          from any previous Distribution Date, except as provided below;

               (iv) to the Holders of the Class M-1 Certificates, an amount
          equal to (x) the Subordinate Principal Distribution Amount for such
          Class of Certificates for such Distribution Date, minus (y) the amount
          of any Principal Only Collection Shortfalls for such Distribution Date
          or remaining unpaid for all previous Distribution Dates, to the extent
          the amounts available pursuant to clause (x) of Sections 4.01(c)(vi),
          (viii), (x), (xii), (xiii) and (xiv) are insufficient therefor,
          applied in reduction of the Certificate Principal Balance of the Class
          M-1 Certificates;

<PAGE>

                                      -80-

               (v) to the Holders of the Class M-2 and Class M-2 X Certificates,
          on a pro rata basis, based on Accrued Certificate Interest payable to
          such Certificate with respect to such Distribution Date, the Accrued
          Certificate Interest thereon for such Distribution Date, plus any
          Accrued Certificate Interest thereon remaining unpaid from any
          previous Distribution Date, except as provided below;

               (vi) to the Holders of the Class M-2 Certificates, an amount
          equal to (x) the Subordinate Principal Distribution Amount for such
          Class of Certificates for such Distribution Date, minus (y) the amount
          of any Principal Only Collection Shortfalls for such Distribution Date
          or remaining unpaid for all previous Distribution Dates, to the extent
          the amounts available pursuant to clause (x) of Sections
          4.01(c)(viii), (x), (xii), (xiii) and (xiv) are insufficient therefor,
          applied in reduction of the Certificate Principal Balance of the Class
          M-2 Certificates;

               (vii) to the Holders of the Class M-3 Certificates, the Accrued
          Certificate Interest thereon for such Distribution Date, plus any
          Accrued Certificate Interest thereon remaining unpaid from any
          previous Distribution Date, except as provided below;

               (viii) to the Holders of the Class M-3 Certificates, an amount
          equal to (x) the Subordinate Principal Distribution Amount for such
          Class of Certificates for such Distribution Date minus (y) the amount
          of any Principal Only Collection Shortfalls for such Distribution Date
          or remaining unpaid for all previous Distribution Dates, to the extent
          the amounts available pursuant to clause (x) of Sections 4.01(c)(x),
          (xii), (xiii) and (xiv) are insufficient therefor, applied in
          reduction of the Certificate Principal Balance of the Class M-3
          Certificates;

               (ix) to the Holders of the Class B-1 Certificates, the Accrued
          Certificate Interest thereon for such Distribution Date, plus any
          Accrued Certificate Interest thereon remaining unpaid from any
          previous Distribution Date, except as provided below;

               (x) to the Holders of the Class B-1 Certificates, an amount equal
          to (x) the Subordinate Principal Distribution Amount for such Class of
          Certificates for such Distribution Date minus (y) the amount of any
          Principal Only Collection Shortfalls for such Distribution Date or
          remaining unpaid for all previous Distribution Dates, to the extent
          the amounts available pursuant to clause (x) of Sections 4.01(c)(xii),
          (xiii) and (xiv) are insufficient therefor, applied in reduction of
          the Certificate Principal Balance of the Class B-1 Certificates;

<PAGE>

                                      -81-

               (xi) to the Holders of the Class B-2 Certificates, the Accrued
          Certificate Interest thereon for such Distribution Date, plus any
          Accrued Certificate Interest thereon remaining unpaid from any
          previous Distribution Date, except as provided below;

               (xii) to the Holders of the Class B-2 Certificates, an amount
          equal to (x) the Subordinate Principal Distribution Amount for such
          Class of Certificates for such Distribution Date minus (y) the amount
          of any Principal Only Collection Shortfalls for such Distribution Date
          or remaining unpaid for all previous Distribution Dates, to the extent
          the amounts available pursuant to clause (x) of Sections 4.01(c)(xiii)
          and (xiv) are insufficient therefor, applied in reduction of the
          Certificate Principal Balance of the Class B-2 Certificates;

               (xiii) to the Holders of the Class B-3 Certificates, an amount
          equal to (x) the Accrued Certificate Interest thereon for such
          Distribution Date, plus any Accrued Certificate Interest thereon
          remaining unpaid from any previous Distribution Date, except as
          provided below minus (y) the amount of any Principal Only Collection
          Shortfalls for such Distribution Date or remaining unpaid for all
          previous Distribution Dates to the extent the amounts available
          pursuant to clause (x) of Section 4.01(c)(xiv) are insufficient
          therefor;

               (xiv) to the Holders of the Class B-3 Certificates, an amount
          equal to (x) the Subordinate Principal Distribution Amount for such
          Class of Certificates for such Distribution Date minus (y) the amount
          of any Principal Only Collection Shortfalls for such Distribution Date
          or remaining unpaid for all previous Distribution Dates applied in
          reduction of the Certificate Principal Balance of the Class B-3
          Certificates;

               (xv) to the Class A Certificateholders and Class R
          Certificateholders in the priority set forth in Section 4.01(d), the
          portion, if any, of the Available Distribution Amount remaining after
          the foregoing distributions, applied to reduce the Certificate
          Principal Balances of such Class A and Class R Certificates, but in no
          event more than the aggregate of the outstanding Certificate Principal
          Balances of each such Class of Class A and Class R Certificates, and
          thereafter, to each Class of Class M Certificates then outstanding
          beginning with such Class with the lowest numerical designation, any
          portion of the Available Distribution Amount remaining after the Class
          A Certificates and Class R Certificates have been retired, applied to
          reduce the Certificate Principal Balance of each such Class of Class M
          Certificates, but in no event more than the outstanding Certificate
          Principal Balance of each such Class of Class M Certificates; and
          thereafter to each such Class of Class B Certificates then outstanding
          beginning with such Class with the lowest numerical designation, any
          portion of the Available Distribution Amount remaining after the Class
          M

<PAGE>

                                      -82-

          Certificates have been retired, applied to reduce the Certificate
          Principal Balance of each such Class of Class B Certificates, but in
          no event more than the outstanding Certificate Principal Balance of
          each such Class of Class B Certificates; and

               (xvi) to the Class R Certificateholders, the balance, if any, of
          the Available Distribution Amount.

          (d) Distributions of principal on the Class A Certificates (other than
the Interest Only Certificates) and Class R Certificates on each Distribution
Date occurring prior to the occurrence of the Credit Support Depletion Date will
be made as follows:

               (i) first, to the Principal Only Certificates, until the
          Certificate Principal Balance thereof is reduced to zero, an amount
          (the "Principal Only Distribution Amount") equal to the aggregate of:

                    (A) the related Discount Fraction of the principal portion
               of each Monthly Payment on each Discount Mortgage Loan due during
               the related Due Period, whether or not received on or prior to
               the related Determination Date, minus the Discount Fraction of
               the principal portion of any related Debt Service Reduction which
               together with other Bankruptcy Losses exceeds the Bankruptcy
               Amount;

                    (B) the related Discount Fraction of the principal portion
               of all unscheduled collections on each Discount Mortgage Loan
               received during the preceding calendar month (other than amounts
               received in connection with the Cash Liquidation or REO
               Disposition of a Discount Mortgage Loan described in clause (C)
               below), including Principal Prepayments in Full, Curtailments and
               repurchases of Discount Mortgage Loans (or, in the case of a
               substitution of a Deleted Mortgage Loan, the Discount Fraction of
               the amount of any shortfall deposited in the Custodial Account in
               connection with such substitution);

                    (C) in connection with the Cash Liquidation or REO
               Disposition of a Discount Mortgage Loan that did not result in
               any Excess Special Hazard Losses, Excess Fraud Losses, Excess
               Bankruptcy Losses or Extraordinary Losses, an amount equal to the
               lesser of (1) the applicable Discount Fraction of the Stated
               Principal Balance of such Discount Mortgage Loan immediately
               prior to such Distribution Date and (2) the aggregate amount of
               the collections on such Discount Mortgage Loan to the extent
               applied as recoveries of principal;

<PAGE>

                                      -83-

                    (D) any amounts allocable to principal for any previous
               Distribution Date (calculated pursuant to clauses (A) through (C)
               above) that remain undistributed; and

                    (E) the amount of any Principal Only Collection Shortfalls
               for such Distribution Date and the amount of any Principal Only
               Collection Shortfalls remaining unpaid for all previous
               Distribution Dates, but only to the extent of the Eligible Funds
               for such Distribution Date;

               (ii) second, from the Senior Principal Distribution Amount, to
          the Class A-7 Certificates in reduction of the Certificate Principal
          Balances thereof, until the Certificate Principal Balances thereof
          have been reduced to zero, an amount equal to the lesser of (a) the
          Class A-7 Priority Amount for such Distribution Date and (b) 98.6% of
          the Senior Principal Distribution Amount;

               (iii) third, the balance of the Senior Principal Distribution
          Amount, if any, remaining after the distribution described in clause
          (ii) above shall be distributed as follows:

                    (A) first, to the to the Class R-I and Class R-II
               Certificates on a pro rata basis, based on the Certificate
               Principal Balances thereof, in reduction of the Certificate
               Principal Balances thereof, until the Certificate Principal
               Balances thereof have been reduced to zero;

                    (B) second, up to $985,000 to be distributed on each
               Distribution Date, concurrently, in reduction of the Certificate
               Principal Balances of the Class A-1 Certificates, Class A-2
               Certificates, and Class A-3 Certificates in the following manner
               and priority:

                         (1) 99.00% of such amount to the Class A-1
                         Certificates; and

                         (2) 1.00% of such amount in the following manner and
                         priority:

                              (a) 68.1275616571% of such amount to the Class A-2
                         Certificates and 31.8724383429% of such amount to the
                         Class A-3 Certificates, concurrently, in reduction of
                         the Certificate Principal Balances thereof, until the
                         Certificate Principal Balance of the Class A-2
                         Certificates has been reduced to zero;

<PAGE>

                                      -84-

                              (b) the remainder of such amount to the Class A-3
                         Certificates, until the Certificate Principal Balance
                         thereof has been reduced to zero;

                    (C) third, 68.1275616571% to the Class A-2 Certificates and
               31.8724383429% to the Class A-3 Certificates, concurrently, in
               reduction of the Certificate Principal Balances thereof, until
               the Certificate Principal Balance of the Class A-2 Certificates
               has been reduced to zero;

                    (D) fourth, sequentially, to the Class A-3 Certificates and
               Class A- 1 Certificates, in reduction of the Certificate
               Principal Balances thereof, until the Certificate Principal
               Balances thereof have been reduced to zero; and

                    (E) fifth, to the Class A-7 Certificates in reduction of the
               Certificate Principal Balance thereof, until the Certificate
               Principal Balance thereof has been reduced to zero.

          (e) On or after the occurrence of the Credit Support Depletion Date,
all priorities relating to distributions as described above in respect of
principal among the Senior Certificates (other than the Principal Only
Certificates) will be disregarded, an amount equal to the Discount Fraction of
the principal portion of scheduled payments and unscheduled collections received
or advanced in respect of Discount Mortgage Loans will be distributed to the
Principal Only Certificates, and the Senior Principal Distribution Amount will
be distributed to all classes of Senior Certificates (other than the Principal
Only Certificates) pro rata in accordance with their respective outstanding
Certificate Principal Balances and the Senior Interest Distribution Amount will
be distributed as set forth in Section 4.01(c)(i) above.

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

          (g) The Trustee may invest or cause the institution maintaining the
Certificate Account to invest the funds in the Certificate Account in Permitted
Investments designated in the name of the Trustee for the benefit of the
Certificateholders, which shall mature not later than the Business Day next
preceding the Distribution Date next following the date of such investment

<PAGE>

                                      -85-

(except that (i) any investment in the institution with which the Certificate
Account is maintained may mature on such Distribution Date and (ii) any other
investment may mature on such Distribution Date if the Trustee shall advance
funds on such Distribution Date to the Certificate Account in the amount payable
on such investment on such Distribution Date, pending receipt thereof to the
extent necessary to make distributions on the Certificates) and shall not be
sold or disposed of prior to maturity. All income and gain realized from any
such investment shall be for the benefit of the Trustee and shall be subject to
its withdrawal or order from time to time. The amount of any losses incurred in
respect of any such investments shall be deposited in the Certificate Account by
the Trustee out of its own funds immediately as realized without any right of
reimbursement.

          (h) Except as otherwise provided in Section 9.01, if the Master
Servicer anticipates that a final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Master Servicer
shall, no later than the Determination Date in the month of such final
distribution, notify the Trustee and the Trustee shall, no later than two (2)
Business Days after such Determination Date, mail on such date to each Holder of
such Class of Certificates a notice to the effect that: (i) the Trustee
anticipates that the final distribution with respect to such Class of
Certificates will be made on such Distribution Date but only upon presentation
and surrender of such Certificates at the office of the Trustee or as otherwise
specified therein, and (ii) no interest shall accrue on such Certificates from
and after the end of the prior calendar month.

          Any funds not distributed to any Holder or Holders of Certificates of
such Class on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such date, be set aside and held
in trust and credited to the account of the appropriate non- tendering Holder or
Holders. If any Certificates as to which notice has been given pursuant to this
Section 4.01(h) shall not have been surrendered for cancellation within six
months after the time specified in such notice, the Trustee shall mail a second
notice to the remaining non-tendering Certificateholders to surrender their
Certificates for cancellation in order to receive the final distribution with
respect thereto. If within six months after the second notice all such
Certificates shall not have been surrendered for cancellation, the Trustee shall
take reasonable steps as directed by the Depositor, or appoint an agent to take
reasonable steps, to contact the remaining non-tendering Certificateholders
concerning surrender of their Certificates. The costs and expenses of
maintaining the funds in trust and of contacting such Certificateholders shall
be paid out of the assets remaining in the Trust Fund. If within nine months
after the second notice any such Certificates shall not have been surrendered
for cancellation, the Class R Certificateholders shall be entitled to all
unclaimed funds and other assets which remain subject hereto. No interest shall
accrue or be payable to any Certificateholder on any amount held in trust as a
result of such Certificateholder's failure to surrender its Certificate(s) for
final payment thereof in accordance with this Section 4.01(h).

          SECTION 4.02. Statements to Certificateholders.

<PAGE>

                                      -86-

          On each Distribution Date the Trustee shall make available to each
Holder of a Certificate and to the Depositor, the Master Servicer and the Rating
Agencies, a statement based on information provided by the Master Servicer as to
such distribution setting forth:

          (i)   (a) the amount of such distribution to the Certificateholders of
     each Class applied to reduce the Certificate Principal Balance thereof, and
     (b) the aggregate amount included therein representing Principal
     Prepayments;

          (ii   the amount of such distribution to Holders of each Class of
     Certificates allocable to interest and the Pass-Through Rate on each Class
     of Certificates for such Distribution Date;

          (iii) if the distribution to the Holders of any Class of Certificates
     is less than the full amount that would be distributable to such Holders if
     there were sufficient funds available therefor, the amount of the
     shortfall;

          (iv)  the aggregate amount of Advances for such Distribution Date;

          (v)   the number and aggregate Stated Principal Balance of the
     Mortgage Loans as of the end of the related Due Period;

          (vi)  the aggregate Certificate Principal Balance of each Class of
     Certificates, and each of the Senior, Class M and Class B Percentages,
     after giving effect to the amounts distributed on such Distribution Date,
     separately identifying any reduction thereof due to Realized Losses other
     than pursuant to an actual distribution of principal;

          (vii) the related Subordinate Principal Distribution Amount and
     Prepayment Distribution Percentage, if applicable;

          (viii) the number and aggregate Stated Principal Balance of Mortgage
     Loans (a) delinquent 31 to 60 days, (b) delinquent 61 to 90 days, (c)
     delinquent 91 days or more;

          (ix)  the number, aggregate principal balance and book value of any
     REO Properties;

          (x)   the aggregate Accrued Certificate Interest remaining unpaid, if
     any, for each Class of Certificates, after giving effect to the
     distribution made on such Distribution Date;

<PAGE>

                                      -87-

          (xi)  the Special Hazard Amount, Fraud Loss Amount and Bankruptcy
     Amount as of the close of business on such Distribution Date and a
     description of any change in the calculation of such amounts;

          (xii) the weighted average Net Mortgage Rate for such Distribution
     Date;

          (xiii) the occurrence of the Credit Support Depletion Date;

          (xiv) the Senior Accelerated Distribution Percentage applicable to
     such distribution;

          (xv)  the Senior Percentage and Class A-7 Priority Percentage for such
     Distribution Date;

          (xvi) the aggregate amount of Realized Losses for such Distribution
     Date;

          (xvii) the weighted average remaining term to maturity of the Mortgage
     Loans prior to giving effect to the amounts distributed on such
     Distribution Date; and

          (xviii) the weighted average Mortgage Rates of the Mortgage Loans
     prior to giving effect to the amounts distributed on such Distribution
     Date.

          The Trustee will make the monthly statements (and, at its option, any
additional files containing the same information in an alternative format)
available each month to Certificateholders, and other parties to the Pooling and
Servicing Agreement via the Trustee's internet website and its fax-on-demand
service. The Trustee's fax-on-demand service may be accessed by calling (301)
815- 6610. The Trustee's internet website shall initially be located at
"www.ctslink.com". Assistance in using the website or the fax-on-demand service
can be obtained by calling the Trustee's customer service desk at (301)
815-6600. Parties 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 Trustee shall have the right to
change the way monthly statements are distributed in order to make such
distribution more convenient and/or more accessible to the above parties and the
Trustee shall provide timely and adequate notification to all above parties
regarding any such changes.

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

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

<PAGE>

                                      -88-

          The Trustee shall provide to each Certificateholder any written
reports or other information required by the Code and regulations thereunder as
from time to time are in force. In addition, upon written request, within a
reasonable period of time after the end of each calendar year, the Trustee shall
prepare and forward, to each Person who at any time during the calendar year was
a Certificateholder, a statement containing the information set forth in
subclauses (i) - (iii) above, aggregated for such calendar year or applicable
portion thereof during which such person was a Certificateholder.

          SECTION 4.03. Remittance Reports; Advances by the Master Servicer.

          (a) On the Business Day following each Determination Date, the Master
Servicer shall deliver to the Trustee a report, prepared as of the close of
business on the Determination Date (the "Remittance Report"), in the form of an
electromagnetic tape or disk. The Remittance Report and any written information
supplemental thereto shall include such information with respect to the Mortgage
Loans that is required by the Trustee for purposes of making the calculations
and preparing the statement described in Sections 4.01 and 4.02, as set forth in
written specifications or guidelines issued by the Trustee from time to time.
The Trustee shall have no obligation to recompute, recalculate or verify any
information provided to it by the Master Servicer.

          (b) The Master Servicer shall determine the aggregate amount of
Advances required to be made for the related Distribution Date, which shall be
in an aggregate amount equal to the sum of (1) the aggregate amount of Monthly
Payments (with each interest portion thereof adjusted to the Mortgage Rate less
the Servicing Fee Rate), other than Balloon Payments, less the amount of any
related Debt Service Reductions or reductions in the amount of interest
collectable from the Mortgagor pursuant to the Relief Act, on the Outstanding
Mortgage Loans as of the related Due Date, which Monthly Payments were
delinquent as of the close of business as of the related Determination Date plus
(2) with respect to each Balloon Loan delinquent in respect of its Balloon
Payment as of the close of business on the related Determination Date, an amount
equal to the assumed Monthly Payment (net of the related Servicing Fees) that
would have been due on the related Due Date based on the original principal
amortization scheduled for such Balloon Loan until such Balloon Loan is finally
liquidated; provided that no Advance shall be made if it would be a
Nonrecoverable Advance. On or before 4:00 P.M. New York time on each Certificate
Account Deposit Date, the Master Servicer shall either (i) deposit in the
Certificate Account from its own funds, or funds received therefor from the
Sub-Servicers, an amount equal to the Advances to be made by the Master Servicer
in respect of the related Distribution Date, (ii) withdraw from amounts on
deposit in the Custodial Account and deposit in the Certificate Account all or a
portion of the amounts held for future distribution in discharge of any such
Advance, or (iii) make advances in the form of any combination of (i) and (ii)
aggregating the amount of such Advance. Any portion of the amounts held for
future distribution so used shall be replaced by the Master Servicer by deposit
in the Certificate Account on or before 1:00 P.M. New York time on any future
Certificate Account Deposit Date to the extent that funds attributable to the
Mortgage Loans that are available in the

<PAGE>

                                      -89-

Custodial Account for deposit in the Certificate Account on such Certificate
Account Deposit Date shall be less than payments to Certificateholders required
to be made on the following Distribution Date. The amount of any reimbursement
pursuant to Section 3.11 in respect of outstanding Advances on any Distribution
Date shall be allocated to specific Monthly Payments due but delinquent for
previous Due Periods, which allocation shall be made, to the extent practicable,
to Monthly Payments which have been delinquent for the longest period of time.
Such allocations shall be conclusive for purposes of reimbursement to the Master
Servicer from recoveries on related Mortgage Loans pursuant to Section 3.11. The
determination by the Master Servicer that it has made a Nonrecoverable Advance
or that any proposed Advance, if made, would constitute a Nonrecoverable
Advance, shall be evidenced by a certificate of a Servicing Officer delivered to
the Seller and the Trustee with the Remittance Report. The Trustee shall deposit
all funds it receives pursuant to this Section 4.03 into the Certificate
Account.

          (c) In the event that the Master Servicer determines as of any
Certificate Account Deposit Date that it will be unable to deposit in the
Certificate Account an amount equal to the Advance required to be made for the
immediately succeeding Distribution Date in the amount determined by the Trustee
pursuant to paragraph (b) above, it shall give notice to the Trustee of its
inability to Advance (such notice may be given by telecopy), not later than 4:00
P.M., New York time, on such date, specifying the portion of such amount that it
will be unable to deposit. Not later than 4:00 P.M., New York time, on the
earlier of (x) two Business Days following such Certificate Account Deposit Date
or (y) the Business Day preceding the related Distribution Date, unless by such
time the Master Servicer shall have directly or indirectly deposited in the
Certificate Account the entire amount of the Advances required to be made for
the related Distribution Date, pursuant to Section 7.01, unless the Trustee
determines (in its sole discretion) that the failure by the Master Servicer to
make any required Advance was due to circumstances beyond its control, and the
required Advance was otherwise made, the Trustee shall (a) terminate all of the
rights and obligations of the Master Servicer under this Agreement in accordance
with Section 7.01 and (b) assume the rights and obligations of the Master
Servicer hereunder, including the obligation to deposit in the Certificate
Account an amount equal to the Advance for the immediately succeeding
Distribution Date.

          SECTION 4.04. Allocation of Realized Losses.

          Prior to each Distribution Date, the Master Servicer shall determine
the total amount of Realized Losses, if any, that resulted from any Cash
Liquidation, Debt Service Reduction, Deficient Valuation or REO Disposition that
occurred during the related Prepayment Period. The amount of each Realized Loss
shall be evidenced by an Officers' Certificate. All Realized Losses, other than
Excess Special Hazard Losses, Extraordinary Losses, Excess Bankruptcy Losses or
Excess Fraud Losses, shall be allocated as follows: first, to the Class B-3
Certificates until the Certificate Principal Balance thereof has been reduced to
zero; second, to the Class B-2 Certificates until the Certificate Principal
Balance thereof has been reduced to zero; third, to the Class B-1 Certificates

<PAGE>

                                      -90-

until the Certificate Principal Balance thereof has been reduced to zero;
fourth, to the Class M-3 Certificates until the Certificate Principal Balance
thereof has been reduced to zero; fifth, to the Class M-2 Certificates until the
Certificate Principal Balance thereof has been reduced to zero and, to the
extent of the interest portion of such Realized Losses, to the Class M-2-X
Certificates on a pro rata basis; sixth, to the Class M-1 Certificates until the
Certificate Principal Balance thereof has been reduced to zero and, to the
extent of the interest portion of such Realized Losses, to the Class M-2-X
Certificates on a pro rata basis; and, thereafter, if such Realized Losses are
on a Discount Mortgage Loan, to the Principal Only Certificates, in an amount
equal to the Discount Fraction of the principal portion thereof, and the
remainder of such Realized Losses and the entire amount of such Realized Losses
on Non-Discount Mortgage Loans among all the Class A Certificates (other than
the Principal Only Certificates) and Class R Certificates, on a pro rata basis,
as described below. Any Excess Special Hazard Losses, Excess Bankruptcy Losses,
Excess Fraud Losses and Extraordinary Losses on Non-Discount Mortgage Loans will
be allocated among the Class A (other than the Principal Only Certificates),
Class M, Class B and Class R Certificates, on a pro rata basis, as described
below. The principal portion of such losses on Discount Mortgage Loans will be
allocated to the Principal Only Certificates in an amount equal to the related
Discount Fraction thereof, and the remainder of such losses on Discount Mortgage
Loans will be allocated among the Class A Certificates (other than the Principal
Only Certificates), Class M, Class B and Class R Certificates on a pro rata
basis, as described below.

          As used herein, an allocation of a Realized Loss on a "pro rata basis"
among two or more specified Classes of Certificates means an allocation on a pro
rata basis, among the various Classes so specified, to each such Class of
Certificates on the basis of their then outstanding Certificate Principal
Balances prior to giving effect to distributions to be made on such Distribution
Date in the case of the principal portion of a Realized Loss or based on the
Accrued Certificate Interest thereon payable on such Distribution Date (without
regard to any Compensating Interest for such Distribution Date) in the case of
an interest portion of a Realized Loss. Any allocation of the principal portion
of Realized Losses (other than Debt Service Reductions) to the Class B
Certificates or, after the Certificate Principal Balances of the Class B
Certificates have been reduced to zero, to the Class of Class M Certificates
then outstanding with the highest numerical designation shall be made by
operation of the definition of "Certificate Principal Balance" and by operation
of the provisions of Section 4.01. Allocations of the interest portions of
Realized Losses shall be made by operation of the definition of "Accrued
Certificate Interest" and by operation of the provisions of Section 4.01.
Allocations of the principal portion of Debt Service Reductions shall be made by
operation of the provisions of Section 4.01. All Realized Losses and all other
losses allocated to a Class of Certificates hereunder will be allocated among
the Certificates of such Class in proportion to the Percentage Interests
evidenced thereby.

<PAGE>

                                      -91-

          SECTION 4.05. Information Reports to Be Filed by the Master Servicer.

          The Master Servicer or the Sub-Servicers shall file information
reports with respect to the receipt of mortgage interest received in a trade or
business, foreclosures and abandonments of any Mortgaged Property and the
information returns relating to cancellation of indebtedness income with respect
to any Mortgaged Property required by Sections 6050H, 6050J and 6050P of the
Code, respectively, and deliver to the Trustee an Officers' Certificate stating
that such reports have been filed. Such reports shall be in form and substance
sufficient to meet the reporting requirements imposed by such Sections 6050H,
6050J and 6050P of the Code.

          SECTION 4.06. Compliance with Withholding Requirements.

          Notwithstanding any other provision of this Agreement, the Trustee
shall comply with all federal withholding requirements respecting payments to
Certificateholders of interest or original issue discount on the Mortgage Loans,
that the Trustee reasonably believes are applicable under the Code. The consent
of Certificateholders shall not be required for such withholding. In the event
the Trustee withholds any amount from interest or original issue discount
payments or advances thereof to any Certificateholder pursuant to federal
withholding requirements, the Trustee shall, together with its monthly report to
such Certificateholders pursuant to Section 4.02 hereof, indicate such amount
withheld.

          SECTION 4.07. Distributions on the Uncertificated REMIC I Regular
                        Interests.

          (a) On each Distribution Date the Trustee shall be deemed to
distribute to itself, as the holder of the Uncertificated REMIC I Regular
Interests, the Uncertificated REMIC I Regular Interest Distribution Amounts in
the following order of priority to the extent of the Available Distribution
Amount (less the Trustee's Fees for such Distribution Date) reduced by
distributions made to the Class R-I Certificates pursuant to Section 4.01(a):

               (i) Uncertificated REMIC I Accrued Interest on the Uncertificated
          REMIC I Regular Interests for such Distribution Date, plus any
          Uncertificated REMIC I Accrued Interest thereon remaining unpaid from
          any previous Distribution Date; and

               (ii) In accordance with the priority set forth in Section
          4.07(b), an amount equal to the sum of the amounts in respect of
          principal distributable on the Class A-1, Class A-2, Class A-3, Class
          A-7, Class A-8, Class M-1, Class M-2, Class M-3, Class B-1, Class B-2,
          Class B-3 and Class R-II Certificates under Section 4.01(c), as
          allocated thereto.

         (b) The amount described in Section 4.07(a)(ii) shall be deemed
distributed to (i) Uncertificated REMIC I Regular Interest N, (ii)
Uncertificated REMIC I Regular Interest O, (iii)

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                                      -92-

Uncertificated REMIC I Regular Interest P, (iv) Uncertificated REMIC I Regular
Interest Q, (v) Uncertificated REMIC I Regular Interest S, (vi) Uncertificated
REMIC I Regular Interest T, (vii) Uncertificated REMIC I Regular Interest U,
(viii) Uncertificated REMIC I Regular Interest W, (ix) Uncertificated REMIC I
Regular Interest X and (x) Uncertificated REMIC I Regular Interest Y with the
amount to be distributed allocated among such interests in accordance with the
priority assigned to the (i) Class A-1 Certificates, (ii) Class A-2
Certificates, (iii) Class A-3 Certificates, (iv) Class A- 7 Certificates, (v)
Class A-8 Certificates, (vi) Class R-I Certificates, (vii) Class M-1
Certificates, (viii) Class M-2 Certificates, (ix) Class M-3 Certificates, (x)
Class B-1, Class B-2 and Class B-3 Certificates, respectively, under Section
4.01(c) and (d) until the Uncertificated Principal Balance of each such interest
is reduced to zero.

          (c) The portion of the Uncertificated REMIC I Regular Interest
Distribution Amounts described in Section 4.07(a)(ii) shall be deemed
distributed by REMIC I to REMIC II in accordance with the priority assigned to
the REMIC II Certificates relative to that assigned to the REMIC I Certificates
under Section 4.01(c).

          (d) In determining from time to time the Uncertificated REMIC I
Regular Interest N Distribution Amount, Uncertificated REMIC I Regular Interest
P Distribution Amount, Uncertificated REMIC I Regular Interest Q Distribution
Amount, Uncertificated REMIC I Regular Interest S Distribution Amount,
Uncertificated REMIC I Regular Interest T Distribution Amount, Uncertificated
REMIC I Regular Interest U Distribution Amount, Uncertificated REMIC I Regular
Interest X Distribution Amount, Uncertificated REMIC I Regular Interest Y
Distribution Amount and Uncertificated REMIC I IO Regular Interest Distribution
Amount, Realized Losses allocated to the Certificates under Section 4.04 shall
be allocated to the Uncertificated REMIC I Regular Interests in the same amounts
and priorities as allocated to the Certificates in the corresponding numercial
designation in 4.07(b) above.

          (e) On each Distribution Date the Trustee shall be deemed to
distribute from REMIC II, in the priority set forth in Sections 4.01(a) and (b),
to the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class
A-7, Class A-8, Class A-9, Class M-1, Class M-1-X, Class M-2, Class M-2-X, Class
M-3, Class B-1, Class B-2, Class B-3 and Class R-II Certificates the amounts
distributable thereon, from the Uncertificated REMIC I Regular Interest
Distribution Amounts deemed to have been received by REMIC II from REMIC I under
this Section 4.07.

          (f) Notwithstanding the deemed distributions on the Uncertificated
REMIC I Regular Interests described in this Section 4.07, distributions of funds
from the Certificate Account shall be made only in accordance with Section 4.01.

<PAGE>

                                      -93-

                                    ARTICLE V

                                THE CERTIFICATES

          SECTION 5.01. The Certificates.

          (a) The Certificates will be substantially in the respective forms
annexed hereto as Exhibits A, B-1, B-2 and B-3. The Certificates will be
issuable in registered form only. The Class A, Class M-1 and Class M-1-X
Certificates will be issued in minimum denominations of $25,000 and integral
multiples of $1 in excess thereof. The Class M-2, Class M-2-X, Class M-3 and
Class B Certificates of each Class will be offered in registered, certificated
form in minimum denominations of $250,000 and integral multiples of $1 in excess
thereof, with one Certificate of each such Class evidencing the remainder of the
aggregate initial Certificate Principal Balance of such Class. The Residual
Certificates will each be issuable in minimum denominations of any Percentage
Interest representing 20.00% and multiples of 0.01% in excess thereof.

          Upon original issue, the Certificates shall, upon the written request
of the Depositor executed by an officer of the Depositor, be executed and
delivered by the Trustee, authenticated by the Trustee and delivered to or upon
the order of the Depositor upon receipt by the Trustee of the documents
specified in Section 2.01. The Certificates shall be executed by manual or
facsimile signature on behalf of the Trustee in its capacity as trustee
hereunder by a Responsible Officer. Cer tificates bearing the manual or
facsimile signatures of individuals who were at the time they signed the proper
officers of the Trustee shall bind the Trustee, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificates or did not hold such offices at
the date of such Certificates. No Certificate shall be entitled to any benefit
under this Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form provided
for herein executed by the Trustee by manual signature, and such certificate
upon any Certificate shall be conclusive evidence, and the only evidence, that
such Certificate has been duly authenticated and delivered hereunder. All Certif
icates issued on the Closing Date shall be dated the Closing Date and any
Certificates delivered thereafter shall be dated the date of their
authentication.

          (b) The Class A Certificates and the Class M Certificates shall
initially be issued as one or more Certificates registered in the name of the
Depository or its nominee and, except as provided below, registration of such
Certificates may not be transferred by the Trustee except to another Depository
that agrees to hold such Certificates for the respective Certificate Owners with
Ownership Interests therein. The Certificate Owners shall hold their respective
Ownership Interests in and to each of such Class A Certificates and Class M
Certificates through the book-entry facilities of the Depository and, except as
provided below, shall not be entitled to Definitive Certificates in respect of
such Ownership Interests. All transfers by Certificate Owners of their
respective

<PAGE>

                                      -94-

Ownership Interests in the Book-Entry Certificates shall be made in accordance
with the procedures established by the Depository Participant or brokerage firm
representing such Certificate Owner. Each Depository Participant shall transfer
the Ownership Interests only in the Book-Entry Certificates of Certificate
Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The Trustee shall not be
required to monitor, determine or inquire as to compliance with the transfer
restrictions with respect to the Class M Certificates (so long as they are
Book-Entry Certificates), and the Trustee shall have no liability for transfers
of Class M Certificates made through the book-entry facilities of the Depositary
or between or among Depositary Participants or Certificate Owners, made in
violation of the applicable restrictions.

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

          If (i)(A) the Depositor advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Depositor is unable to locate a
qualified successor or (ii) the Depositor at its option advises the Trustee in
writing that it elects to terminate the book-entry system through the
Depository, the Trustee shall notify all Certificate Owners, through the
Depository, of the occurrence of any such event and of the availability of
Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Trustee of the Book-Entry Certificates by the Depository,
accompanied by registration instructions from the Depository for registration of
transfer, the Trustee shall, at the expense of the Depositor, issue the
Definitive Certificates. Neither the Depositor, the Master Servicer nor the
Trustee shall be liable for any actions taken by the Depository or its nominee,
including, without limitation, any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Certificates the Trustee and the
Master Servicer shall recognize the Holders of the Definitive Certificates as
Certificateholders hereunder.

<PAGE>

                                      -95-

          SECTION 5.02. Registration of Transfer and Exchange of Certificates.

          (a) The Trustee shall maintain a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Certif icates and of transfers and exchanges of
Certificates as herein provided.

          (b) Except as provided in Section 5.02(c), no transfer, sale, pledge
or other disposition of a Class B Certificate shall be made unless such
transfer, sale, pledge or other disposition is exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Act"), and any
applicable state securities laws or is made in accordance with said Act and
laws. In the event that a transfer of a Class B Certificate is to be made under
this Section 5.02(b), (i) the Trustee shall require an Opinion of Counsel
acceptable to and in form and substance satisfactory to the Trustee that such
transfer shall be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from said Act and laws or is being made
pursuant to said Act and laws, which Opinion of Counsel shall not be an expense
of the Trustee, the Depositor or the Master Servicer, provided that such Opinion
of Counsel will not be required in connection with the initial transfer of any
such Certificate by the Depositor or any affiliate thereof, to a non-affiliate
of the Depositor and (ii) the Trustee shall require the transferee to execute a
representation letter, substantially in the form of Exhibit G-1 hereto, and the
Trustee shall require the transferor to execute a representation letter,
substantially in the form of Exhibit G-2 hereto, each acceptable to and in form
and substance satisfactory to the Trustee certifying to the Depositor and the
Trustee the facts surrounding such transfer, which representation letters shall
not be an expense of the Trustee, the Depositor or the Master Servicer; provided
however that such representation letters will not be required in connection with
any transfer of any such Certificate by the Depositor to an affiliate of the
Depositor and the Trustee shall be entitled to conclusively rely upon a
representation (which, upon the request of the Trustee, shall be a written
representation) from the Depositor of the status of such transferee as an
affiliate of the Depositor. Any such Certificateholder desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, the Depositor
and the Master Servicer against any liability that may result if the transfer is
not so exempt or is not made in accordance with such applicable federal and
state laws.

          (c) Notwithstanding the requirements of Section 5.02(b), transfers of
Class B Certificates may be made in accordance with this Section 5.02(c) if the
prospective transferee of a Certificate provides the Trustee and the Depositor
with an investment letter substantially in the form of Exhibit G-3 attached
hereto, which investment letter shall not be an expense of the Trustee, the
Depositor or the Master Servicer, and which investment letter states that, among
other things, such transferee is a "qualified institutional buyer" as defined
under Rule 144A. Such transfers shall be deemed to have complied with the
requirements of Section 5.02(b) hereof; provided, however, that no Transfer of
any of the Class B Certificates may be made pursuant to this Section 5.02(c) by
the Depositor. Any such Certificateholder desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Depositor and the
Master Servicer against any liability that may result

<PAGE>

                                      -96-

if the transfer is not so exempt or is not made in accordance with such
applicable federal and state laws.

          (d) The Trustee shall require an Opinion of Counsel from a prospective
transferee prior to the transfer of any Residual Certificate or Class B
Certificate to any employee benefit plan or other retirement arrangement,
including individual retirement accounts and Keogh plans, that is subject to
Section 406 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or Section 4975 of the Code (any of the foregoing, a "Plan"), to a
trustee or other Person acting on behalf of any Plan, or to any other person who
is using "plan assets" of any Plan to effect such acquisition (including any
insurance company using funds in its general or separate accounts that may
constitute "plan assets"). Such Opinion of Counsel must establish to the
satisfaction of the Trustee that such disposition will not violate the
prohibited transaction provisions of Section 406 of ERISA and Section 4975 of
the Code. Neither the Depositor, the Master Servicer nor the Trustee will be
required to obtain such Opinion of Counsel on behalf of any prospective
transferee. In the case of the Class B Certificates, in lieu of such Opinion of
Counsel, the Trustee shall require a certification in the form of Exhibit G-6
(or in a form substantially similar to such Exhibit G-6 as shall be agreed upon
by the Trustee), in the case of the transfer of any of the foregoing Class B
Certificates to a person capable of providing such certification, substantially
to the effect that all funds used by such transferee to purchase such Class B
Certificates will be funds held by it in its general account which it reasonably
believes do not constitute "plan assets" of any Plan (as defined above);
provided however that such certification will not be required in connection with
any transfer of any such Class B Certificate by the Depositor to an affiliate of
the Depositor and the Trustee shall be entitled to conclusively rely upon a
representation (which, upon the request of the Trustee, shall be a written
representation) from the Depositor of the status of such transferee as an
affiliate of the Depositor. The permission of any transfer in violation of the
restriction on transfer set forth in this paragraph shall not constitute a
default or an Event of Default.

          Any person purchasing a Class M Certificate shall be deemed to have
represented that either: (i) such person is not a Plan subject to ERISA or the
Code (or comparable provisions of any subsequent enactments) and is not acting,
directly or indirectly, on behalf of any such Plan or acquiring such Certificate
with Plan Assets; or (ii) the purchase of such Certificate is permissible under
applicable law, will not constitute or result in any non-exempt prohibited
transaction under ERISA or Section 4975 of the Code, will not subject the
Depositor, the Trustee or the Master Servicer to any obligation or liability
(including obligations or liabilities under ERISA or Section 4975 of the Code)
in addition to those undertaken in this Agreement and the exemptive relief
granted by the DOL pursuant to Prohibited Transaction Class Exemption 95-60 is
available with respect to the purchase, sale and holding of such Certificate.

          (e) (i) Each Person who has or who acquires any Ownership Interest in
a Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably authorized the Trustee

<PAGE>

                                      -97-

or its designee under clause (iii)(A) below to deliver payments to a Person
other than such Person and to negotiate the terms of any mandatory sale under
clause (iii)(B) below and to execute all instruments of transfer and to do all
other things necessary in connection with any such sale. The rights of each
Person acquiring any Ownership Interest in a Residual Certificate are expressly
subject to the following provisions:

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

          (B) In connection with any proposed Transfer of any Ownership Interest
     in a Residual Certificate, the Trustee shall require delivery to it, and
     shall not register the Transfer of any Residual Certificate until its
     receipt of (I) an affidavit and agreement (a "Transfer Affidavit and
     Agreement" in the form attached hereto as Exhibit G-5) from the proposed
     Transferee, in form and substance satisfactory to the Trustee representing
     and warranting, among other things, that it is a Permitted Transferee, that
     it is not acquiring its Ownership Interest in the Residual Certificate that
     is the subject of the proposed Transfer as a nominee, trustee or agent for
     any Person who is not a Permitted Transferee, that for so long as it
     retains its Ownership Interest in a Residual Certificate, it will endeavor
     to remain a Permitted Transferee, and that it has reviewed the provisions
     of this Section 5.02 and agrees to be bound by them, and (II) a
     certificate, in the form attached hereto as Exhibit G-4, from the Holder
     wishing to transfer the Residual Certificate, in form and substance
     satisfactory to the Trustee representing and warranting, among other
     things, that no purpose of the proposed Transfer is to impede the
     assessment or collection of tax.

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

          (D) Each Person holding or acquiring any Ownership Interest in a
     Residual Certificate shall agree (x) to require a Transfer Affidavit and
     Agreement from any other Person to whom such Person attempts to transfer
     its Ownership Interest in a Residual Certificate and (y) not to transfer
     its Ownership Interest unless it provides a certificate to the Trustee in
     the form attached hereto as Exhibit G-4.

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

<PAGE>

                                      -98-

     an Ownership Interest in a Residual Certificate, if it is "a pass-through
     interest holder", or is holding an Ownership Interest in a Residual
     Certificate on behalf of a "pass-through interest holder."

          (ii) The Trustee will register the Transfer of any Residual
Certificate only if it shall have received the Transfer Affidavit and Agreement
in the form attached hereto as Exhibit G-5, a certificate of the Holder
requesting such transfer in the form attached hereto as Exhibit G-4 and all of
such other documents as shall have been reasonably required by the Trustee as a
condition to such registration. Transfers of the Residual Certificates other
than to Permitted Transferees are prohibited.

          (iii) (A) If any Person other than a Permitted Transferee shall become
a Holder of a Residual Certificate, then the last preceding Permitted Transferee
shall be restored, to the extent permitted by law, to all rights and obligations
as Holder thereof retroactive to the date of registration of such Transfer of
such Residual Certificate. If a Non-United States Person shall become a Holder
of a Residual Certificate, then the last preceding Permitted Transferee shall be
restored, to the extent permitted by law, to all rights and obligations as
Holder thereof retroactive to the date of registration of such Transfer of such
Residual Certificate. If a transfer of a Residual Certificate is disregarded
pursuant to the provisions of Treasury Regulations Section 1.860E-1 or Section
1.860G-3, then the last preceding Permitted Transferee shall be restored, to the
extent permitted by law, to all rights and obligations as Holder thereof
retroactive to the date of registration of such transfer of such Residual
Certificate. The prior Holder shall be entitled to recover from any purported
Holder of a Residual Certificate that was in fact not a Permitted Transferee
under this Section 5.05(b) at the time it became a Holder all payments made on
such Residual Certificate. Each Holder of a Residual Certificate, by acceptance
thereof, shall be deemed for all purposes to have consented to the provisions of
this clause (b) and to any amendment of this Agreement deemed necessary (whether
as a result of new legislation or otherwise) by counsel of the Depositor to
ensure that the Residual Certificates are not transferred to any Person who is
not a Permitted Transferee and that any transfer of such Residual Certificates
will not cause the imposition of a tax upon the Trust or cause any such REMIC to
fail to qualify as a REMIC. The Trustee shall be under no liability to any
Person for any registration of Transfer of a Residual Certificate that is in
fact not permitted by this Section 5.02 or for making any payments due on such
Certificate to the holder thereof or for taking any other action with respect to
such holder under the provisions of this Agreement.

               (B) If any purported Transferee shall become a Holder of a
Residual Certificate in violation of the restrictions in this Section 5.02 and
to the extent that the retroactive restoration of the rights of the Holder of
such Residual Certificate as described in clause (iii)(A) above shall be
invalid, illegal or unenforceable, then the Trustee shall have the right,
without notice to the holder or any prior holder of such Residual Certificate,
to sell such Residual Certificate to a purchaser selected by the Trustee on such
terms as the Trustee may choose. Such purported Transferee shall promptly
endorse and deliver each Residual Certificate in accordance with the

<PAGE>

                                      -99-

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

          (iv) The Trustee shall make available to the Internal Revenue Service
and those Persons specified by the REMIC Provisions, all information necessary
to compute any tax imposed (A) as a result of the transfer of an ownership
interest in a Residual Certificate to any Person who is a Disqualified
Organization, including the information regarding "excess inclusions" of such
Residual Certificates required to be provided to the Internal Revenue Service
and certain Persons as described in Treasury Regulations Sections 1.860D-1(b)(5)
and 1.860E-2(a)(5), and (B) as a result of any regulated investment company,
real estate investment trust, common trust fund, partnership, trust, estate or
organization described in Section 1381 of the Code that holds an Ownership
Interest in a Residual Certificate having as among its record holders at any
time any Person who is a Disqualified Organization. The Trustee may charge and
shall be entitled to reasonable compensation for providing such information as
may be required from those Persons which may have had a tax imposed upon them as
specified in clauses (A) and (B) of this paragraph for providing such
information.

          (f) Subject to the preceding paragraphs, upon surrender for
registration of transfer of any Certificate at the office of the Trustee
maintained for such purpose, the Trustee shall execute and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of the same Class of a like aggregate
Percentage Interest. Every Certificate surrendered for transfer shall be
accompanied by notification of the account of the designated transferee or
transferees for the purpose of receiving distributions pursuant to Section 4.01
by wire transfer, if any such transferee desires and is eligible for
distribution by wire transfer.

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

          (h) No service charge shall be made to the Certificateholders for any
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax

<PAGE>

                                      -100-

or governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.

          (i) All Certificates surrendered for transfer and exchange shall be
cancelled and retained by the Trustee in accordance with the Trustee's standard
procedures.

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

          If (i) any mutilated Certificate is surrendered to the Trustee and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) there is delivered to the Trustee such security or
indemnity as may be required by it to save it harmless, then, in the absence of
notice to the Trustee that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute, authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of the same Class and Percentage Interest. Upon the issuance of any
new Certificate under this Section, the Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee) connected therewith. Any replacement Certificate issued pursuant to
this Section shall constitute complete and indefeasible evidence of ownership in
the Trust Fund, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.

          SECTION 5.04. Persons Deemed Owners.

          The Depositor, the Master Servicer, the Trustee and any agent of any
of them may treat the person in whose name any Certificate is registered as the
owner of such Certificate for the purpose of receiving distributions pursuant to
Section 4.01 and for all other purposes whatsoever, and neither the Depositor,
the Master Servicer, the Trustee nor any agent of any of them shall be affected
by notice to the contrary.

          SECTION 5.05. Rule 144A Information.

          For so long as any Class B Certificates are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) of the Securities
Act, (1) the Depositor will provide or cause to be provided to any holder of
such Certificates and any prospective purchaser thereof designated by such a
holder, upon the request of such holder or prospective purchaser, the
information required to be provided to such holder or prospective purchaser by
Rule 144A(d)(4) under the Securities Act; and (2) the Depositor shall update
such information from time to time in order to prevent such information from
becoming false and misleading and will take such other actions as are necessary
to ensure that the safe harbor exemption from the registration requirements of
the Securities Act under Rule 144A is and will be available for resales of such
Certificates conducted in accordance with Rule 144A. The Master Servicer shall
cooperate with the Depositor and furnish the Depositor such information in the
Master Servicer's possession as the Depositor may reasonably request.

<PAGE>

                                      -101-

                                   ARTICLE VI

                      THE DEPOSITOR AND THE MASTER SERVICER

          SECTION 6.01. Liability of the Depositor and the Master Servicer.

          The Depositor and the Master Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
upon and undertaken by the Depositor and the Master Servicer herein. Only the
Master Servicer, any successor Master Servicer or the Trustee acting as Master
Servicer shall be liable with respect to the servicing of the Mortgage Loans and
the REO Property for actions taken by any such Person in contravention of the
Master Servicer's duties hereunder.

          SECTION 6.02. Merger, Consolidation or Conversion of the Depositor or
                        the Master Servicer.

          The Depositor and the Master Servicer each will keep in full effect
its existence, rights and franchises as a corporation under the laws of the
state of its incorporation, and each will obtain and preserve its qualification
to do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.

          Any Person into which the Depositor or the Master Servicer may be
merged, consol idated or converted, or any corporation resulting from any merger
or consolidation to which the Depositor or the Master Servicer shall be a party,
or any Person succeeding to the business of the Depositor or the Master
Servicer, shall be the successor of the Depositor or the Master Servicer, as the
case may be, hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however, that the successor or surviving
Person to the Master Servicer shall be qualified to sell mortgage loans to and
service mortgage loans for Fannie Mae or Freddie Mac.

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

          Neither the Depositor, the Master Servicer nor any of the directors,
officers, employees or agents of the Depositor or the Master Servicer shall be
under any liability to the Trust Fund or the Certificateholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Depositor or the Master Servicer (but this
provision shall protect the above described persons) against any breach of
warranties or representations made herein, or against

<PAGE>

                                      -102-

any specific liability imposed on the Master Servicer pursuant to Section 3.01
or any other Section hereof; and provided further that this provision shall not
protect the Depositor, the Master Servicer or any such person, against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Depositor, the Master
Servicer and any director, officer, employee or agent of the Depositor or the
Master Servicer may rely in good faith on any document of any kind PRIMA FACIE
properly executed and submitted by any Person respecting any matters arising
hereunder. The Depositor, the Master Servicer and any director, officer,
employee or agent of the Depositor or the Master Servicer shall be indemnified
and held harmless by the Trust Fund against any loss, liability or expense
incurred in connection with any legal action relating to this Agreement or the
Certificates (including reasonable legal fees and disbursements of counsel),
other than (a) any loss, liability or expense related to Master Servicer's
servicing obligations with respect to any specific Mortgage Loan or Mortgage
Loans (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) or related to the Master Servicer's
obligations under Section 3.01, or (b) any loss, liability or expense incurred
by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Depositor nor the Master Servicer
shall be under any obligation to appear in, prosecute or defend any legal action
which is not incidental to its respective duties under this Agreement and which
in its opinion may involve it in any expense or liability; provided, however,
that the Depositor or the Master Servicer may in its sole discretion undertake
any such action which it may deem necessary or desirable with respect to this
Agreement and the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any lia bility resulting therefrom (except any action or
liability related to the Master Servicer's obligations under Section 3.01) shall
be expenses, costs and liabilities of the Trust Fund, and the Depositor and the
Master Servicer shall be entitled to be reimbursed therefor from the Certificate
Account as provided in Section 3.11, any such right of reimbursement being prior
to the rights of Certificateholders to receive any amount in the Certificate
Account.

          SECTION 6.04. Limitation on Resignation of the Master Servicer.

          The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except (a) upon appointment of a successor servicer
reasonably acceptable to the Trustee upon receipt by the Trustee of a letter
from each Rating Agency (obtained by the Master Servicer and at its expense)
that such a resignation and appointment will not, in and of itself, result in a
downgrading of the Certificates or (b) upon determination that its duties
hereunder are no longer permissible under applicable law. Any such determination
permitting the resignation of the Master Servicer shall be evidenced by an
Opinion of Counsel (at the expense of the resigning Master Servicer) to such
effect delivered to the Trustee. No such resignation shall become effective
until the Trustee or a successor servicer shall have assumed the Master
Servicer's responsibilities, duties, liabilities and obligations hereunder.

<PAGE>

                                      -103-

          SECTION 6.05. Sale and Assignment of Master Servicing.

          The Master Servicer may sell and assign its rights and delegate its
duties and obligations in their entirety as Master Servicer under this
Agreement; provided, however, that: (i) the purchaser or transferee accepting
such assignment and delegation (a) shall be a Person which shall be qualified to
service mortgage loans for Fannie Mae or Freddie Mac; (b) shall, in the case of
successor master servicers only, have a net worth of not less than $10,000,000
(unless otherwise approved by each Rating Agency pursuant to clause (ii) below);
(c) shall be reasonably satisfactory to the Trustee (as evidenced in a writing
signed by the Trustee) as having a comparable servicing ability to that of the
Master Servicer on the Closing Date; (d) shall execute and deliver to the
Trustee an agreement, in form and substance reasonably satisfactory to the
Trustee, which contains an assumption by such Person of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by it as master servicer under this Agreement and any custodial
agreement, from and after the effective date of such agreement; (ii) each Rating
Agency shall be given prior written notice of the identity of the proposed
successor to the Master Servicer and each Rating Agency's rating of the
Certificates in effect immediately prior to such assignment, sale and delegation
will not be downgraded or withdrawn as a result of such assignment, sale and
delegation, as evidenced by a letter to such effect obtained by the Master
Servicer at its expense and delivered to the Trustee; and (iii) the Master
Servicer assigning and selling the master servicing shall deliver to the Trustee
an Officer's Certificate and an Opinion of Counsel (at the expense of the Master
Servicer), each stating that all conditions precedent to such action under this
Agreement have been completed and such action is permitted by and complies with
the terms of this Agreement. No such assignment or delegation shall affect any
liability of the Master Servicer arising prior to the effective date thereof.

<PAGE>

                                      -104-

                                   ARTICLE VII

                                     DEFAULT

          SECTION 7.01. Events of Default.

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

          (i) any failure by the Master Servicer to deposit into the Certificate
     Account on each Certificate Account Deposit Date the amounts required to be
     deposited therein (other than an Advance) under the terms of this Agreement
     which continues unremedied for two (2) Business Days after such amount was
     required to be remitted; or

          (ii) any failure on the part of the Master Servicer duly to observe or
     perform in any material respect any other of the covenants or agreements on
     the part of the Master Servicer contained in the Certificates or in this
     Agreement (including any breach of the Master Servicer's representations
     and warranties pursuant to Section 2.03(a) which materially and adversely
     affects the interests of the Certificateholders) which continues unremedied
     for a period of 60 days after the date on which written notice of such
     failure, requiring the same to be remedied, shall have been given to the
     Master Servicer by the Trustee, or to the Master Servicer and the Trustee
     by the Holders of Certificates entitled to at least 25% of the Voting
     Rights; or

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

          (iv) the Master Servicer shall consent to the appointment of a
     conservator or receiver or liquidator in any insolvency, readjustment of
     debt, marshaling of assets and liabilities or similar proceedings of or
     relating to the Master Servicer or of or relating to all or substantially
     all of its property; or

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

<PAGE>

                                      -105-

          (vi) the Master Servicer shall fail to deposit in the Certificate
     Account on any Certificate Account Deposit Date an amount equal to any
     required Advance which continues unremedied for the earlier of (a) a period
     of two (2) Business Days or (b) the Business Day immediately preceding the
     Distribution Date.

If an Event of Default described in clauses (i) - (v) of this Section shall
occur, then, and in each and every such case, so long as such Event of Default
shall not have been remedied, the Trustee or the Holders of Certificates
entitled to at least 51% of the Voting Rights, by notice in writing to the
Master Servicer (and to the Trustee if given by such Holders of Certificates),
with a copy to the Rating Agencies, may terminate all of the rights and
obligations (but not the liabilities) of the Master Servicer under this
Agreement and in and to the Trust Fund, other than its rights as a
Certificateholder hereunder; provided, however, that the successor to the Master
Servicer appointed pursuant to Section 7.02 shall have accepted the duties of
Master Servicer effective upon the resignation or termination of the Master
Servicer. If an Event of Default described in clause (vi) hereof shall occur,
the Trustee shall, by notice to the Master Servicer, and the Depositor,
terminate all of the rights and obligations of the Master Servicer under this
Agreement and in and to the Trust Fund, other than its rights as a
Certificateholder hereunder; provided, however, that if the Trustee determines
(in its sole discretion) that the failure by the Master Servicer to make any
required Advance was due to circumstances beyond its control, and the required
Advance was otherwise made, the Trustee shall not terminate the Master Servicer.
On or after the receipt by the Master Servicer of such notice, all authority and
power of the Master Servicer under this Agreement, whether with respect to the
Certificates (other than as a holder thereof) or the Mortgage Loans or
otherwise, shall pass to and be vested in the Trustee pursuant to and under this
Section, and, without limitation, the Trustee is hereby authorized and empowered
to execute and deliver, on behalf of the Master Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement or
assignment of the Mortgage Loans and related documents, or otherwise at the
expense of the Master Servicer. Notwithstanding the foregoing, the parties
hereto and the Certificateholders by their acceptance of any Certificate,
acknowledge and agree that there will be a period of transition before the
actual servicing functions can be fully transferred to the Trustee, as successor
Master Servicer, or to a successor Master Servicer appointed by the Trustee
pursuant to the provisions hereof; provided, that the Trustee shall use its
reasonable best efforts to succeed to the actual servicing functions or find a
successor Master Servicer as soon as possible but no later than 90 days after
such termination. The Master Servicer agrees to cooperate with (and pay any
related costs and expenses of) the Trustee in effecting the termination of the
Master Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the Trustee or the successor Master Servicer for
administration by it of (i) the property and amounts which are then or should be
part of the Trust Fund or which thereafter become part of the Trust Fund; (ii)
originals or copies of all documents of the Master Servicer reasonably requested
by the Trustee to enable it to assume the Master Servicer's duties thereunder;
(iii) the rights and obligations of the Master Servicer under the Sub- Servicing

<PAGE>

                                      -105-

Agreements with respect to the Mortgage Loans; (iv) all cash amounts which shall
at the time be deposited by the Master Servicer or should have been deposited to
the Custodial or the Certificate Account or thereafter be received with respect
to the Mortgage Loans; and (v) all costs or expenses associated with the
complete transfer of all servicing data and the completion, correction or
manipulation of such servicing data as may be required by the Trustee or any
successor Master Servicer to correct any errors or insufficiencies in the
servicing data or otherwise to enable the Trustee or successor Master Servicer
to service the Mortgage Loans properly and effectively. The Trustee shall not be
deemed to have breached any obligation hereunder as a result of a failure to
make or delay in making any distribution as and when required hereunder caused
by the failure of the Master Servicer to remit any amounts received by it or to
deliver any documents held by it with respect to the Mortgage Loans. For
purposes of this Section 7.01, the Trustee shall not be deemed to have knowledge
of an Event of Default unless a Responsible Officer of the Trustee assigned to
and working in the Trustee's corporate trust division has actual knowledge
thereof or unless notice of any event which is in fact such an Event of Default
is received by the Trustee and such notice references the Certificates, the
Trust Fund or this Agreement.

          SECTION 7.02. Trustee to Act; Appointment of Successor.

          Within 90 days of the time the Master Servicer receives a notice of
termination pursuant to Section 7.01(i)-(v), the Trustee or its appointed agent
shall be the successor in all respects to the Master Servicer in its capacity as
Master Servicer under this Agreement and the transactions set forth or provided
for herein and shall be subject thereafter to all the responsibilities, duties
and liabilities relating thereto placed on the Master Servicer including the
obligation to make Advances which have been or will be required to be made
(except for the responsibilities, duties and liabilities contained in Section
2.03 and its obligations to deposit amounts in respect of losses pursuant to
Section 3.12 and 4.01(i)) by the terms and provisions hereof; and provided
further, that any failure to perform such duties or responsibilities caused by
the Master Servicer's failure to provide information required by Section 4.03
shall not be considered a default by the Trustee hereunder. As compensation
therefor, the Trustee shall be entitled to all funds relating to the Mortgage
Loans which the Master Servicer would have been entitled to charge to the
Custodial Account and the Certificate Account if the Master Servicer had
continued to act hereunder. If the Trustee has become the successor to the
Master Servicer in accordance with Section 6.04 or Section 7.02, then
notwithstanding the above, if the Trustee shall be unwilling to so act, or shall
be unable to so act, the Trustee may appoint, or petition a court of competent
jurisdiction or appoint, any established housing and home finance institution,
which is also a Fannie Mae- or Freddie Mac- approved mortgage servicing
institution, having a net worth of not less than $10,000,000 as the successor to
the Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder.
Pending appointment of a successor to the Master Servicer hereunder, the Trustee
shall act in such capacity as herein above provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall

<PAGE>

                                      -107-

agree; provided, however, that no such compensation shall be in excess of that
permitted the Master Servicer hereunder. Each of the Seller, the Trustee, the
Custodian and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.

          Any successor, including the Trustee, to the Master Servicer shall
maintain in force during its term as master servicer hereunder policies and
fidelity bonds to the same extent as the Master Servicer is so required pursuant
to Section 3.18.

          SECTION 7.03. Notification to Certificateholders.

          (a) Upon any such termination or appointment of a successor to the
Master Servicer, the Trustee shall give prompt notice thereof to
Certificateholders and to the Rating Agencies.

          (b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Holders of Certificates notice of each
such Event of Default hereunder known to the Trustee, unless such Event of
Default shall have been cured or waived.

          SECTION 7.04. Waiver of Events of Default.

          The Holders representing at least 51% of the Voting Rights of
Certificates affected by a default or Event of Default hereunder, may waive such
default or Event of Default (other than an Event of Default set forth in Section
7.01 (vi)); PROVIDED, HOWEVER, that (a) a default or Event of Default under
clause (i) of Section 7.01 may be waived only by all of the Holders of
Certificates affected by such default or Event of Default and (b) no waiver
pursuant to this Section 7.04 shall affect the Holders of Certificates in the
manner set forth in the second paragraph of Section 11.01 or materially
adversely affect any non-consenting Certificateholder. Upon any such waiver of a
default or Event of Default by the Holders representing the requisite percentage
of Voting Rights of Certificates affected by such default or Event of Default,
such default or Event of Default shall cease to exist and shall be deemed to
have been remedied for every purpose hereunder. No such waiver shall extend to
any subsequent or other default or Event of Default or impair any right
consequent thereon except to the extent expressly so waived. The Master Servicer
shall give notice of any such waiver to the Rating Agencies.

          SECTION 7.05. List of Certificateholders.

          Upon written request of three or more Certificateholders of record,
for purposes of communicating with other Certificateholders with respect to
their rights under this Agreement, the Trustee will afford such
Certificateholders access during business hours to the most recent list of
Certificateholders held by the Trustee.

<PAGE>

                                      -108-

                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

          SECTION 8.01. Duties of Trustee.

          The Trustee, prior to the occurrence of an Event of Default and after
the curing or waiver of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. If an Event of Default occurs, is continuing and has
not been waived, the Trustee shall exercise such of the rights and powers vested
in it by this Agreement, and use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs. Any permissive right of the Trustee enumerated in
this Agreement shall not be construed as a duty.

          The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them in accordance with the
requirements of this Agreement. If any such instrument is found not to conform
to the requirements of this Agreement in a material manner, the Trustee shall
take such action as it deems appropriate to have the instrument corrected, and
if the instrument is not corrected to the Trustee's satisfaction, the Trustee
will provide notice thereof to the Certificateholders. Notwithstanding the
foregoing, the Trustee shall not be responsible for the accuracy or content of
any resolution, certificate, statement, opinion, report, document, order or
other instrument furnished by the Master Servicer hereunder or any Opinion of
Counsel required hereunder.

          The Trustee shall prepare and file or cause to be filed on behalf of
the Trust Fund any tax return that is required with respect to both REMIC I and
REMIC II pursuant to applicable federal, state or local tax laws.

          The Trustee covenants and agrees that it shall perform its obligations
hereunder in a manner so as to maintain the status of both REMIC I and REMIC II
under the REMIC Provisions and to prevent the imposition of any federal, state
or local income, prohibited transaction, contribution or other tax on either
REMIC I or REMIC II to the extent that maintaining such status and avoiding such
taxes are within the control of the Trustee and are within the scope of specific
responsibilities under this Agreement.

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

<PAGE>

                                      -109-

               (i) Prior to the occurrence of an Event of Default, and after the
          curing or waiver of all such Events of Default which may have
          occurred, the duties and obliga tions of the Trustee shall be
          determined solely by the express provisions of this Agreement, the
          Trustee shall not be liable except for the performance of such duties
          and obligations as are specifically set forth in this Agreement, no
          implied covenants or obligations shall be read into this Agreement
          against the Trustee and, in the absence of bad faith on the part of
          the Trustee, the Trustee may conclusively rely, as to the truth of the
          statements and the correctness of the opinions expressed therein, upon
          any certificates or opinions furnished to the Trustee and conforming
          to the requirements of this Agreement;

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

               (iii) The Trustee shall not be liable with respect to any action
          taken, suffered or omitted to be taken by it in good faith in
          accordance with the direction of the Holders of Certificates entitled
          to at least 25% of the Voting Rights relating to the time, method and
          place of conducting any proceeding for any remedy available to the
          Trustee, or exercising any trust or power conferred upon the Trustee,
          under this Agreement.

          SECTION 8.02. Certain Matters Affecting the Trustee.

               Except as otherwise provided in Section 8.01:

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

          (b) The Trustee may consult with counsel and any Opinion of Counsel
     shall be full and complete authorization and protection in respect of any
     action taken or suffered or omitted by it hereunder in good faith and in
     accordance therewith;

          (c) The Trustee shall be under no obligation to exercise any of the
     trusts or powers vested in it by this Agreement, other than its obligation
     to give notice pursuant to this Agreement, or to institute, conduct or
     defend any litigation hereunder or in relation hereto at the request, order
     or direction of any of the Certificateholders, pursuant to the provisions
     of this Agreement, unless such Certificateholders shall have offered to the
     Trustee reasonable

<PAGE>

                                      -110-

     security or indemnity against the costs, expenses and liabilities which may
     be incurred therein or thereby; nothing contained herein shall, however,
     relieve the Trustee of the obligation, upon the occurrence of an Event of
     Default of which a Responsible Office of the Trustee's corporate trust
     department has actual knowledge (which has not been waived or cured), to
     exercise such of the rights and powers vested in it by this Agreement, and
     to use the same degree of care and skill in their exercise as a prudent man
     would exercise or use under the circumstances in the conduct of his own
     affairs;

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

          (e) Prior to the occurrence of an Event of Default hereunder and after
     the curing or waiver of all Events of Default which may have occurred, the
     Trustee shall not be bound to make any investigation into the facts or
     matters stated in any resolution, certificate, state ment, instrument,
     opinion, report, notice, request, consent, order, approval, bond or other
     paper or document, unless requested in writing to do so by the Holders of
     Certificates entitled to at least 25% of the Voting Rights; provided,
     however, that if the payment within a reasonable time to the Trustee of the
     costs, expenses or liabilities likely to be incurred by it in the making of
     such investigation is, in the opinion of the Trustee, reasonably assured to
     the Trustee by the security afforded to it by the terms of this Agreement
     reasonable expense of every such examination shall be paid by the
     Certificateholders requesting the investigation;

          (f) The Trustee may execute any of the trusts or powers hereunder or
     perform any duties hereunder either directly or by or through agents or
     attorneys; and

          (g) The Trustee shall not be required to give any bond or surety with
     respect to the execution of the trust created hereby or the powers granted
     hereunder.

          SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans.

          The recitals contained herein and in the Certificates (other than the
signature of the Trustee, the authentication of the Trustee on the Certificates,
the acknowledgments of the Trustee contained in Article II and the
representations and warranties of the Trustee in Section 8.12) shall be taken as
the statements of the Depositor and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations or warranties as to the
validity or sufficiency of this Agreement (other than as specifically set forth
in Section 8.12) or of the Certificates (other than the signature and
authentication of the Trustee on the Certificates) or of any Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by the Depositor of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any

<PAGE>

                                      -111-

funds paid to the Depositor or the Master Servicer in respect of the Mortgage
Loans or deposited in or withdrawn from the Custodial Account by the Master
Servicer.

          SECTION 8.04. Trustee May Own Certificates.

          The Trustee in its individual or any other capacity (other than as
Trustee hereunder) may become the owner or pledgee of Certificates with the same
rights it would have if it were not Trustee and may otherwise deal with the
parties hereto.

          SECTION 8.05. Trustee's Fees.

          On each Distribution Date, the Trustee shall be entitled to withdraw
from the Certificate Account as compensation hereunder the Trustee Fees. Such
compensation (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) shall be paid for all
services rendered by it in the execution of the trusts hereby created and in the
exercise and performance of any of the powers and duties hereunder or of the
Trustee. Except as otherwise provided in this Agreement, the Trustee and any
director, officer, employee or agent of the Trustee shall be indemnified and
held harmless by the Trust Fund against any claim, loss, liability, fee or
expense incurred (a) in connection with any Event of Default, any breach of this
Agreement or any claim or legal action (including any pending or threatened
claim or legal action) relating to the acceptance or administration of its
trusts hereunder or the Certificates or (b) arising from the selection of the
Custodian or from the failure of the Custodian to perform its obligations under
the Custodial Agreement, other than any claim, loss, liability or expense (i)
sustained in connection with this Agreement or the Mortgage Loan Purchase
Agreement related to the willful misfeasance, bad faith or negligence of the
Master Servicer in the performance of its duties hereunder or (ii) incurred in
connection with a breach constituting willful misfeasance, bad faith or
negligence of the Trustee in the performance of its duties hereunder or by
reason of reckless disregard of its obligations and duties hereunder.

          The Master Servicer shall indemnify the Trustee and any director,
officer, employee or agent of the Trustee against any such claim or legal action
(including any pending or threatened claim or legal action), loss, liability,
fee or expense that may be sustained in connection with this Agreement related
to the willful misfeasance, bad faith, or negligence in the performance of the
Master Servicer's duties hereunder and under the Custodial Agreement.

          The provisions of this Section 8.05 shall survive the resignation or
removal of the Trustee or the termination of this Agreement.

          SECTION 8.06. Eligibility Requirements for Trustee.

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                                      -112-

          The Trustee hereunder shall at all times be a corporation or a
national banking association organized and doing business under the laws of any
state or the United States of America or the District of Columbia, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $50,000,000 and subject to supervision or examination by
federal or state authority. In addition, the Trustee shall at all times be
acceptable to the Rating Agency rating the Certificates. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 8.07. The corporation or national banking association serving as Trustee
may have normal banking and trust relationships with the Seller and their
affiliates or the Master Servicer and its affiliates; provided, however, that
such corporation cannot be an affiliate of the Master Servicer other than the
Trustee in its role as successor to the Master Servicer.

          SECTION 8.07. Resignation and Removal of the Trustee.

          The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Master Servicer; with a
copy to the Rating Agencies; provided, that such resignation shall not be
effective until a successor trustee is appointed and accepts appointment in
accordance with the following provisions. Upon receiving such notice of
resignation, the Master Servicer shall promptly appoint a successor trustee who
meets the eligibility requirements of Section 8.06 by written instrument, in
triplicate, one copy of which instrument shall be delivered to each of the
resigning Trustee and to the successor trustee. If no successor trustee shall
have been so appointed and have accepted appointment within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee;
provided, however, that the resigning Trustee shall not resign and be discharged
from the trusts hereby created until such time as the Rating Agency rating the
Certificates approves the successor trustee.

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

<PAGE>

                                      -113-

          The Holders of Certificates entitled to at least 51% of the Voting
Rights, may at any time remove the Trustee and appoint a successor trustee by
written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered to the Master Servicer, one complete set to the Trustee so
removed and one complete set to the successor so appointed. A copy of such
instrument shall be delivered to the Certificateholders and the Depositor by the
Master Servicer.

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

          SECTION 8.08. Successor Trustee.

          Any successor trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Master Servicer and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee
herein. The predecessor trustee shall after payment of its outstanding fees and
expenses, promptly deliver to the successor trustee all assets and records of
the Trust Fund held by it hereunder (other than any Mortgage Files at the time
held by a Custodian, which shall become the agent of any successor trustee named
hereunder), and the Master Servicer and the predecessor trustee shall execute
and deliver all such instruments and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in the successor
trustee all such rights, powers, duties and obligations.

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

          Upon acceptance of appointment by a successor trustee as provided in
this Section, the Master Servicer shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates at their addresses as shown in
the Certificate Register. If the Master Servicer fails to mail such notice
within ten days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Master Servicer.

          SECTION 8.09. Merger or Consolidation of Trustee.

          Any state bank or trust company or national banking association into
which the Trustee may be merged or converted or with which it may be
consolidated or any state bank or trust company or national banking association
resulting from any merger, conversion or consolidation to

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                                      -114-

which the Trustee shall be a party, or any state bank or trust company or
national banking association succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such state bank or trust company or national banking
association shall be eligible under the provisions of Section 8.06 without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.

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

          Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Fund or property securing the same may at the time be located, the
Master Servicer and the Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons, in such capacity, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
8.10, such powers, duties, obligations, rights and trusts as the Master Servicer
and the Trustee may consider necessary or desirable. If the Master Servicer
shall not have joined in such appointment within 15 days after the receipt by it
of a request so to do, or in case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment
without the Master Servicer. No co-trustee or separate trustee hereunder shall
be required to meet the terms of eligibility as a successor trustee under
Section 8.06 hereunder and no notice to Holders of Certificates of the
appointment of co-trustee(s) or separate trustee(s) shall be required under
Section 8.08 hereof.

          In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee and required to be conferred or such
co-trustee shall be conferred or imposed upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly, except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed (whether as Trustee hereunder or as successor to the Master
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Fund or any portion thereof in any
such jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.

          Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment,

<PAGE>

                                      -115-

either jointly with the Trustee or separately, as may be provided therein,
subject to all the provisions of this Agreement, specifically including every
provision of this Agreement relating to the conduct of, affecting the liability
of, or affording protection to, the Trustee. Every such instrument shall be
filed with the Trustee.

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

          SECTION 8.11. Appointment of Custodians.

     The Depositor has appointed Bankers Trust Company of California, N.A., to
serve as initial Custodian. If the initial Custodian is removed or resigns, the
Trustee may, with the consent of the Master Servicer and the Depositor appoint
one or more Custodians who are not Affiliates of the Depositor, the Master
Servicer or any Seller to hold all or a portion of the Mortgage Files as agent
for the Trustee, by entering into a Custodial Agreement, or, with the consent of
the Master Servicer and the Depositor, assume the responsibilities and duties of
the Custodian contained in the Custodial Agreement. Subject to Article VIII, the
Trustee agrees to comply with the terms of each Custodial Agreement and to
enforce the terms and provisions thereof against the Custodian for the benefit
of the Certificateholders. Each Custodian shall be a depository institution
subject to supervision by federal or state authority, shall have a combined
capital and surplus of at least $15,000,000 and shall be qualified to do
business in the jurisdiction in which it holds any Mortgage File. Each Custodial
Agreement may be amended only in accordance with the terms thereof. The Trustee
shall notify the Certificateholders of the appointment of any Custodian (other
than the Custodian appointed as of the Closing Date) pursuant to this Section
8.11.

<PAGE>

                                      -116-

                                   ARTICLE IX

                                   TERMINATION

          SECTION 9.01. Termination Upon Repurchase or Liquidation of All
                        Mortgage Loans or upon Purchase of Certificates.

     (a) Subject to Section 9.03, the respective obligations and
responsibilities of the Depositor, the Master Servicer and the Trustee created
hereby (other than the obligations of the Master Servicer to the Trustee
pursuant to Section 8.05 and of the Master Servicer to provide for and the
Trustee to make payments to Certificateholders as hereafter set forth) shall
terminate upon payment to the Certificateholders of all amounts held by or on
behalf of the Trustee and required to be paid to them hereunder following the
earlier to occur of (i) the repurchase by the Master Servicer or its designee of
all Mortgage Loans and each REO Property in respect thereof remaining in the
Trust Fund at a price equal to (a) 100% of the unpaid principal balance of each
Mortgage Loan (other than one as to which a REO Property was acquired) on the
day of repurchase together with accrued interest on such unpaid principal
balance at the Net Mortgage Rate to the first day of the month in which the
proceeds of such repurchase are to be distributed, plus (b) the appraised value
of any REO Property (but not more than the unpaid principal balance of the
related Mortgage Loan, together with accrued interest on that balance at the Net
Mortgage Rate to the first day of the month such repurchase price is
distributed), less the good faith estimate of the Master Servicer of liquidation
expenses to be incurred in connection with its disposal thereof, such appraisal
to be conducted by an appraiser mutually agreed upon by the Master Servicer and
the Trustee at the expense of the Master Servicer, and (ii) the final payment or
other liquidation (or any Advance with respect thereto) of the last Mortgage
Loan remaining in the Trust Fund (or the disposition of all REO Property in
respect thereof); provided, however, that in no event shall the trust created
hereby continue beyond the earlier of (i) the Distribution Date occurring in
January 2033 and (ii) the expiration of 21 years from the death of the last
survivor of the descendants of Joseph P. Kennedy, the late ambassador of the
United States to the Court of St. James, living on the date hereof, and provided
further that the purchase price set forth above shall be increased as is
necessary, as determined by the Master Servicer, to avoid disqualification of
either REMIC I or REMIC II as a REMIC. In the case of any repurchase by the
Master Servicer pursuant to clause (i), the Master Servicer shall include in
such repurchase price the amount of any Advances that will be reimbursed to the
Master Servicer pursuant to Section 3.11(iii) and the Master Servicer shall
exercise reasonable efforts to cooperate fully with the Trustee in effecting
such repurchase and the transfer of the Mortgage Loans and related Mortgage
Files and related records to the Master Servicer.

          The right of the Master Servicer or its designee to repurchase all
Mortgage Loans pursuant to (i) above shall be conditioned upon the aggregate
Stated Principal Balance of such Mortgage Loans at the time of any such
repurchase aggregating an amount equal to or less than 10% of the aggregate
Stated Principal Balance of the Mortgage Loans at the Cut-off Date. If such
right

<PAGE>

                                      -117-

is exercised, the Master Servicer upon such repurchase shall provide to the
Trustee, notice of such exercise prior to the Determination Date in the month
preceding the month of purchase and the
certification required by Section 3.16.

          Notice of any termination, specifying the Distribution Date upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee by letter to the Certificateholders mailed (a) in the event such
notice is given in connection with the Master Servicer's election to repurchase,
not earlier than the 15th day and not later than the 25th day of the month next
preceding the month of such final distribution or (b) otherwise during the month
of such final distribution on or before the Determination Date in such month, in
each case specifying (i) the Distribution Date upon which final payment of the
Certificates will be made upon presentation and surrender of Certificates at the
office of the Trustee therein designated, (ii) the amount of any such final
payment and (iii) that the Record Date otherwise applicable to such Distribution
Date is not applicable, payments being made only upon presentation and surrender
of the Certificates at the office of the Trustee therein specified. In the event
such notice is given in connection with the Master Servicer or its designee's
election to repurchase, the Master Servicer or its designee shall deliver to the
Trustee for deposit in the Certificate Account on the Business Day immediately
preceding the Distribution Date specified in such notice an amount equal to the
above-described repurchase price payable out of its own funds. Upon presentation
and surrender of the Certificates by the Certificateholders, the Trustee shall
first, pay itself the Trustee's Fees for such Distribution Date and any other
amounts owing to the Trustee under this Agreement, and second, distribute to the
Certificateholders (i) the amount otherwise distributable on such Distribution
Date, if not in connection with the Master Servicer's election to repurchase, or
(ii) if the Master Servicer elected to so repurchase, an amount determined as
follows: with respect to each Class A Certificate and Subordinate Certificate,
the outstanding Certificate Principal Balance thereof, plus one month's interest
thereon at the applicable Pass-Through Rate and any previously unpaid Accrued
Certificate Interest; and with respect to the Residual Certificates, the
Percentage Interest evidenced thereby multiplied by the difference, if any,
between the above de scribed repurchase price and the aggregate amount to be
distributed to the Holders of the Class A Certificates and Subordinate
Certificates, subject to the priorities set forth in Section 4.01(c). Upon
certification to the Custodian by a Servicing Officer, following such final
deposit, the Custodian shall promptly release the Mortgage Files as directed by
the Master Servicer for the remaining Mortgage Loans, and the Trustee
acknowledges that the Custodian shall execute all assignments, endorsements and
other instruments required by the Master Servicer as being necessary to
effectuate such transfer.

          In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the time specified
in the above-mentioned notice, the Trustee shall give a second notice to the
remaining Certificateholders to surrender their Certificates for cancellation
and receive the final distribution with respect thereto. If within six months
after the second notice all of the Certificates shall not have been surrendered
for cancellation, the Trustee

<PAGE>

                                      -118-

shall take reasonable steps as directed by the Depositor, or appoint an agent to
take reasonable steps, to contact the remaining Certificateholders concerning
surrender of their Certificates, and the cost thereof shall be paid out of the
funds and other assets which remain subject hereto. If within nine months after
the second notice all the Certificates shall not have been surrendered for
cancellation, the Residual Certificateholders shall be entitled to all unclaimed
funds and other assets which remain subject hereto.

     (b) On any Distribution Date on which the Stated Principal Balance of the
Mortgage Loans is less than ten percent of the Cut-off Date Stated Principal
Balance of the Mortgage Loans, either the Master Servicer or the Depositor,
whichever gives notice first, shall have the right, at its option, to purchase
the Certificates in whole, but not in part, at a price equal to the outstanding
Certificate Principal Balance of such Certificates plus the sum of one month's
Accrued Certificate Interest thereon and any previously unpaid Accrued
Certificate Interest.

          The Master Servicer or the Depositor, as applicable, shall give the
Trustee not less than 60 days' prior notice of the Distribution Date on which
the Master Servicer or the Depositor, as applicable, anticipates that it will
purchase the Certificates pursuant to Section 9.01(b). Notice of any such
purchase, specifying the Distribution Date upon which the Holders may surrender
their Certificates to the Trustee for payment in accordance with this Section
9.01(b), shall be given promptly by the Master Servicer or the Depositor, as
applicable, by letter to Certificateholders (with a copy to the Trustee and each
Rating Agency) mailed not earlier than the 15th day and not later than the 25th
day of the month next preceding the month of such final distribution,
specifying:

          (i) the Distribution Date upon which purchase of the Certificates is
     anticipated to be made upon presentation and surrender of such Certificates
     at the office or agency of the Trustee therein designated,

          (ii) the purchase price therefor, and

          (iii) that the Record Date otherwise applicable to such Distribution
     Date is not applicable, payments being made only upon presentation and
     surrender of the Certificates at the office or agency of the Trustee
     therein specified.

If either the Master Servicer or the Depositor gives the notice specified above,
the Master Servicer or the Depositor, as applicable, shall deposit in the
Certificate Account before the Distribution Date on which the purchase pursuant
to Section 9.01(b) is to be made, in immediately available funds, an amount
equal to the purchase price for the Certificates computed as provided above.

          Upon presentation and surrender of the Certificates to be purchased
pursuant to Section 9.01(b) by the Holders thereof, the Trustee shall first, pay
itself the Trustee's Fees for such Distribution Date and any other amounts owing
to the Trustee under this Agreement, and second,

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                                      -119-

distribute to such Holders an amount equal to the outstanding Certificate
Principal Balance thereof plus the sum of one month's Accrued Certificate
Interest thereon and any previously unpaid Accrued
Certificate Interest with respect thereto.

          In the event that any Certificateholders do not surrender their
Certificates on or before the Distribution Date on which a purchase pursuant to
this Section 9.01(b) is to be made, the Trustee shall on such date cause all
funds in the Certificate Account deposited therein by the Master Servicer or the
Depositor, as applicable, pursuant to this Section 9.01(b) to be withdrawn
therefrom and deposited in a separate escrow account for the benefit of such
Certificateholders, and the Master Servicer or the Depositor, as applicable,
shall give a second written notice to such Certificateholders to surrender their
Certificates for payment of the purchase price therefor. If within six months
after the second notice any Certificate shall not have been surrendered for
cancellation, the Trustee shall take appropriate steps as directed by the Master
Servicer or the Depositor, as applicable, to contact the Holders of such
Certificates concerning surrender of their Certificates. The costs and expenses
of maintaining the escrow account and of contacting Certificateholders shall be
paid out of the assets which remain in the escrow account. No interest shall
accrue or be payable to any Certificateholder on any amount held in the escrow
account or by the Master Servicer or the Depositor, as applicable, as a result
of such Certificateholder's failure to surrender its Certificate(s) for payment
in accordance with this Section 9.01. Any Certificate that is not surrendered on
the Distribution Date on which a purchase pursuant to this Section 9.01 occurs
as provided above will be deemed to have been purchased and the Holder as of
such date will have no rights with respect thereto except to receive the
purchase price therefor minus any costs and expenses associated with such escrow
account and notices allocated thereto. Any Certificates so purchased or deemed
to have been purchased on such Distribution Date shall remain outstanding
hereunder. The Master Servicer or the Depositor, as applicable, shall be for all
purposes the Holder thereof as of such date.

          SECTION 9.02. Termination of REMIC II.

          REMIC II shall be terminated on the earlier of the Final Distribution
Date and the date on which it is deemed to receive the last deemed distributions
on the Uncertificated REMIC I Regular Interests and the last distribution due on
the Class A, Class M, Class B and Class R-II Certificates is made.

          SECTION 9.03. Additional Termination Requirements.

          (a) In the event the Master Servicer repurchases the Mortgage Loans as
provided in Section 9.01, the Trust Fund shall be terminated in accordance with
the following additional re quirements, unless the Master Servicer, at its own
expense, obtains for the Trustee an Opinion of Counsel to the effect that the
failure of the Trust Fund to comply with the requirements of this Section 9.03
will not (i) result in the imposition on the Trust of taxes on "prohibited
transactions,"

<PAGE>

                                      -119-

as described in Section 860F of the Code, or (ii) cause either REMIC I or REMIC
II to fail to qualify as a REMIC at any time that any Certificate is
outstanding:

          (i) The Master Servicer shall establish a 90-day liquidation period
     for REMIC I and REMIC II, as the case may be, and specify the first day of
     such period in a statement attached to the Trust Fund's final Tax Return
     pursuant to Treasury regulations Section 1.860F-1. The Master Servicer also
     shall satisfy all of the requirements of a qualified liquidation for REMIC
     I and REMIC II, as the case may be, under Section 860F of the Code and
     regulations thereunder;

          (ii) The Master Servicer shall notify the Trustee at the commencement
     of such 90-day liquidation period and, at or prior to the time of making of
     the final payment on the Certificates, the Trustee shall sell or otherwise
     dispose of all of the remaining assets of the Trust Fund in accordance with
     the terms hereof; and

          (iii) If the Master Servicer or the Depositor is exercising its right
     to purchase the assets of the Trust Fund, the Master Servicer shall, during
     the 90-day liquidation period and at or prior to the Final Distribution
     Date, purchase all of the assets of the Trust Fund for cash; PROVIDED,
     HOWEVER, that in the event that a calendar quarter ends after the
     commencement of the 90-day liquidation period but prior to the Final
     Distribution Date, the Master Servicer or the Depositor shall not purchase
     any of the assets of the Trust Fund prior to the close of that calendar
     quarter.

          (b) Each Holder of a Certificate and the Trustee hereby irrevocably
approves and appoints the Master Servicer as its attorney-in-fact to adopt a
plan of complete liquidation for REMIC I and REMIC II at the expense of the
Trust Fund in accordance with the terms and conditions of this Agreement.

<PAGE>

                                      -121-

                                    ARTICLE X

                                REMIC PROVISIONS

          SECTION 10.01. REMIC Administration.

     (a) The Trustee shall make an election to treat each of REMIC I and REMIC
II as a REMIC under the Code and, if necessary, under applicable state law. Each
such election will be made on Form 1066 or other appropriate federal tax or
information return (including Form 8811) or any appropriate state return for the
taxable year ending on the last day of the calendar year in which the
Certificates are issued. For the purposes of the REMIC I election in respect of
the Trust Fund, Uncertificated REMIC I Regular Interests shall be designated as
the "regular interests" and the Class R-I Certificates shall be designated as
the sole class of "residual interest" in REMIC I. For the purposes of the REMIC
II election in respect of the Trust Fund, the Class A Certificates, Class M
Certificates and Class B Certificates shall be designated as the "regular
interests" and the Class R-II Certificates shall be designated as the sole class
of "residual interests" in REMIC II. The Master Servicer and the Trustee shall
not permit the creation of any "interests" (within the meaning of Section 860G
of the Code) in REMIC I or REMIC II other than the Uncertificated REMIC I
Regular Interests and the Class R-I Certificates and the REMIC II Certificates,
respectively.

     The Trustee will apply for an Employee Identification Number from the IRS
via form SS-4 or any other acceptable method for all tax entities.

     (b) The Closing Date is hereby designated as the "startup day" of the Trust
Fund within the meaning of Section 860G(a)(9) of the Code.

     (c) The Trustee shall pay out of its own funds, without any right of
reimbursement, any and all expenses relating to any tax audit of REMIC I or
REMIC II other than the expense of obtaining any tax related Opinion of Counsel
except as specified herein and except that the Trustee shall be entitled to be
reimbursed from the Custodial Account for any professional fees and expenses
related to any non-routine audits or any administrative or judicial proceedings
that do not result from any breach of its tax duties under this Section 10.01.
The Trustee, as agent for REMIC I and REMIC II's tax matters person, shall (i)
act on behalf of REMIC I and REMIC II in relation to any tax matter or
controversy involving the Trust Fund and (ii) represent the Trust Fund in any
administrative or judicial proceeding relating to an examination or audit by any
governmental taxing authority with respect thereto. By their acceptance thereof,
the holder of the largest Percentage Interest of the Residual Certificates
hereby agrees to irrevocably appoint the Trustee or an Affiliate as its agent to
perform all of the duties of the tax matters person for REMIC I and REMIC II.

          (d) The Trustee shall prepare, sign and file all of the Tax Returns in
respect of the REMICs created hereunder. The expenses of preparing and filing
such returns shall be borne by the

<PAGE>

                                      -122-

Trustee without any right of reimbursement therefor. The Master Servicer shall
provide on a timely basis to the Trustee or its designee such information with
respect to the assets of REMIC I and REMIC II as is in its possession and
reasonably required by the Trustee to enable it to perform its
obligations under this Article X.

          (e) The Trustee shall perform on behalf of REMIC I and REMIC II all
reporting and other tax compliance duties that are the responsibility of the
REMIC under the Code, the REMIC Provisions or other compliance guidance issued
by the Internal Revenue Service or any state or local taxing authority. Among
its other duties, as required by the Code, the REMIC Provisions or other such
compliance guidance, the Trustee shall provide (i) to any Transferor of a
Residual Certificate such information as is necessary for the application of any
tax relating to the transfer of a Residual Certificate to any Person who is not
a Permitted Transferee, (ii) to the Certificateholders such information or
reports as are required by the Code or the REMIC Provisions including reports
relating to interest, original issue discount and market discount or premium
(using the Prepayment Assumption as required) and (iii) to the Internal Revenue
Service the name, title, address and telephone number of the person who will
serve as the representative of REMIC I and REMIC II. The Master Servicer shall
provide on a timely basis to the Trustee such information with respect to the
assets of REMIC I and REMIC II, including, without limitation, the Mortgage
Loans, as is in its possession and reasonably required by the Trustee to enable
it to perform its obligations under this subsection. In addition, the Depositor
shall provide or cause to be provided to the Trustee, within ten (10) days after
the Closing Date, all information or data that the Trustee reasonably determines
to be relevant for tax purposes as to the valuations and issue prices of the
Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.

          (f) To the extent that the affairs of the Trust Fund are within its
control and the scope of its specific responsibilities under this Agreement, the
Trustee shall take such action and shall cause either REMIC created hereunder to
take such action as shall be necessary to create or maintain the status thereof
as a REMIC under the REMIC Provisions (and the Master Servicer shall assist it,
to the extent reasonably requested by it). The Trustee shall not knowingly take
any action, cause REMIC I and REMIC II to take any action or fail to take (or
fail to cause to be taken) any action that, under the REMIC Provisions, if taken
or not taken, as the case may be, could (i) endanger the status of REMIC I and
REMIC II as a REMIC or (ii) result in the imposition of a tax upon REMIC I and
REMIC II (including but not limited to the tax on prohibited transactions as
defined in Section 860F(a)(2) of the Code and the tax on contributions to a
REMIC set forth in Section 860G(d) of the Code) (either such event, an "Adverse
REMIC Event") unless the Trustee has received an Opinion of Counsel, addressed
to the Trustee (at the expense of the party seeking to take such action but in
no event at the expense of the Trustee) to the effect that the contemplated
action will not, with respect to the REMICs created hereunder, endanger such
status or result in the imposition of such a tax, nor shall the Master Servicer
take or fail to take any action (whether or not authorized hereunder) as to
which the Trustee has advised it in writing that it has received an

<PAGE>

                                      -123-

Opinion of Counsel to the effect that an Adverse REMIC Event could occur with
respect to such action. In addition, prior to taking any action with respect to
REMIC I and REMIC II or the assets of REMIC I and REMIC II, or causing REMIC I
and REMIC II to take any action, which is not contemplated under the terms of
this Agreement, the Master Servicer will consult with counsel with respect to
whether such action could cause an Adverse REMIC Event to occur with respect to
either REMIC I or REMIC II, and the Master Servicer shall not take any such
action or cause either REMIC I or REMIC II to take any such action as to which
counsel has advised it in writing that an Adverse REMIC Event could occur. The
Trustee may consult with counsel to make such written advice, and the cost of
same shall be borne by the party seeking to take the action not permitted by
this Agreement, but in no event shall such cost be an expense of the Trustee.

          (g) In the event that any tax is imposed on "prohibited transactions"
of the REMICs created hereunder as defined in Section 860F(a)(2) of the Code, on
the "net income from foreclosure property" of the REMIC as defined in Section
860G(c) of the Code, on any contributions to REMIC I or REMIC II after the
Startup Day therefor pursuant to Section 860G(d) of the Code, or any other tax
is imposed by the Code or any applicable provisions of state or local tax laws,
such tax shall be charged (i) to the Trustee pursuant to Section 10.03 hereof,
if such tax arises out of or results from a breach by the Trustee of any of its
obligations under this Article X, (ii) to the Master Servicer pursuant to
Section 10.03 hereof, if such tax arises out of or results from a breach by the
Master Servicer of any of its obligations under Article III or this Article X,
or otherwise, (iii) to the Master Servicer as provided in Section 3.05 and (iv)
against amounts on deposit in the Certificate Account and shall be paid by
withdrawal therefrom to the extent not required to be paid by the Master
Servicer or the Trustee pursuant to another provision of this Agreement.

          (h) On or before April 15 of each calendar year, commencing April 15,
2000, the Trustee shall deliver to the Master Servicer and the Rating Agency a
Certificate from a Responsible Officer of the Trustee stating (without regard to
any action taken by any party other than the Trustee) the Trustee's compliance
with this Article X.

          (i) The Trustee shall, for federal income tax purposes, maintain books
and records with respect to REMIC I and REMIC II on a calendar year and on an
accrual basis.

          (j) Following the Startup Day, the Trustee shall not accept any
contributions of assets to REMIC I and REMIC II other than in connection with
any Qualified Substitute Mortgage Loan delivered in accordance with Section 2.04
unless it shall have received an Opinion of Counsel (which shall be at the
expense of the party requesting to make such contribution and not at the expense
of the Trustee) to the effect that the inclusion of such assets in the REMIC
will not cause either REMIC I or REMIC II to fail to qualify as a REMIC at any
time that any Certificates are outstanding or subject either REMIC to any tax
under the REMIC Provisions or other applicable provisions of federal, state and
local law or ordinances.

<PAGE>

                                      -124-

          (k) Neither the Trustee nor the Master Servicer shall enter into any
arrangement by which either REMIC I and REMIC II will receive a fee or other
compensation for services nor knowingly permit the REMIC to receive any income
from assets other than "qualified mortgages" as defined in Section 860G(a)(3) of
the Code or "permitted investments" as defined in Section 860G(a)(5) of the
Code.

          SECTION 10.02. Prohibited Transactions and Activities.

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

          SECTION 10.03. Master Servicer and Trustee Indemnification.

          (a) The Trustee agrees to indemnify REMIC I and REMIC II, the
Depositor, and the Master Servicer for any taxes and costs including, without
limitation, any reasonable attorneys fees imposed on or incurred by REMIC I and
REMIC II, the Depositor or the Master Servicer, as a result of a breach of the
Trustee's covenants set forth in this Article X, subject, however, to the
provision of Sections 8.01 and 8.02 of this Agreement.

          (b) The Master Servicer agrees to indemnify REMIC I and REMIC II, the
Depositor and the Trustee for any taxes and costs including, without limitation,
any reasonable attorneys' fees imposed on or incurred by either REMIC I or REMIC
II, the Depositor or the Trustee, as a result of a breach of the Master
Servicer's covenants set forth in Article III or this Article X.

<PAGE>

                                      -125-

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

          SECTION 11.01. Amendment.

          This Agreement or any Custodial Agreement may be amended from time to
time by the Depositor, the Master Servicer and the Trustee, without the consent
of any of the Certificate holders, (i) to cure any ambiguity, (ii) to correct or
supplement any provisions herein which may be defective or inconsistent with any
other provisions herein or to correct any error, (iii) to amend this Agreement
or any Custodial Agreement in any respect subject to the provisions in clauses
(A) and (B) below, or (iv) if such amendment, as evidenced by an Opinion of
Counsel (provided by the Person requesting such amendment) delivered to the
Trustee, is reasonably necessary to comply with any requirements imposed by the
Code or any successor or amendatory statute or any temporary or final
regulation, revenue ruling, revenue procedure or other written official
announcement or interpretation relating to federal income tax laws or any
proposed such action which, if made effective, would apply retroactively to the
Trust Fund at least from the effective date of such amendment; provided that
such action (except any amendment described in (iv) above) shall not adversely
affect in any material respect the interests of any Certificateholder (other
than Certificateholders who shall consent to such amendment), as evidenced by
(A) an Opinion of Counsel (provided by the Person requesting such amendment)
delivered to the Trustee, and (B) a letter from each Rating Agency, confirming
that such amendment shall not cause it to lower its rating on any of the
Certificates.

          This Agreement or any Custodial Agreement may also be amended from
time to time by the Depositor, the Master Servicer and the Trustee and Holders
of Certificates entitled to at least 66-2/3% of the Voting Rights for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or such Custodial Agreement or of modifying
in any manner the rights of the Holders of Certificates; provided, however, that
no such amendment shall (i) reduce in any manner the amount of, or delay the
timing of, payments received on Mortgage Loans which are required to be
distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in (i),
without the consent of the Holders of Certificates of such Class evidencing at
least 66-2/3% of the Voting Rights of such Class, or (iii) reduce the aforesaid
percentage of Certificates the Holders of which are required to consent to any
such amendment, without the consent of the Holders of all Certificates then
outstanding. Notwithstanding any other provision of this Agreement, for purposes
of the giving or withholding of consents pursuant to this Section 11.01,
Certificates registered in the name of the Seller or the Master Servicer or any
affiliate thereof shall be entitled to Voting Rights with respect to matters
described in (i), (ii) and (iii) of this paragraph.

<PAGE>

                                      -125-

          Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel (provided by the Person requesting such
amendment) to the effect that such amendment will not result in the imposition
of any tax on either REMIC I or REMIC II pursuant to the REMIC Provisions or
cause either REMIC I or REMIC II to fail to qualify as a REMIC at any time that
any Certificates are outstanding.

          Promptly after the execution of any such amendment the Trustee shall
furnish a copy of such amendment or a written statement describing the amendment
to each Certificateholder, with a copy to the Rating Agencies.

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

          Prior to executing any amendment pursuant to this Section, the Trustee
shall be entitled to receive an Opinion of Counsel (provided by the Person
requesting such amendment) to the effect that such amendment is authorized or
permitted by this Agreement. The cost of any Opinion of Counsel delivered
pursuant to this Section 11.01 shall be an expense of the party requesting such
amendment, but in any case shall not be an expense of the Trustee.

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

          SECTION 11.02. Recordation of Agreement; Counterparts.

          To the extent permitted by applicable law, this Agreement is subject
to recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Master Servicer at the expense of the Certificateholders, but only upon
direction of the Depositor accompanied by an Opinion of Counsel to the effect
that such recordation materially and beneficially affects the interests of the
Certificateholders.

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

<PAGE>

                                      -127-

          SECTION 11.03. Limitation on Rights of Certificateholders.

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

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

          No Certificateholder shall have any right by virtue of any provision
of this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement, unless such Holder
previously shall have given to the Trustee a notice of an Event of Default, or
of a default by the Seller or the Trustee in the performance of any obligation
hereunder, and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Certificates entitled to at least 51% of the Voting Rights
shall have made written request upon the Trustee to institute such action, suit
or proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding. It is
understood and intended, and expressly covenanted by each Certificateholder with
every other Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner herein provided and for the equal,
ratable and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.

          SECTION 11.04. Governing Law.

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

<PAGE>

                                      -128-

          SECTION 11.05. Notices.

          All demands, notices and direction hereunder shall be in writing and
shall be deemed effective upon receipt when delivered to (a) in the case of the
Depositor, Impac Funding, 1401 Dove Avenue, Newport Beach, California 92660,
Attention: General Counsel, or such other address as may hereafter be furnished
to the other parties hereto in writing; (b) in the case of Impac Funding, 1401
Dove Avenue, Newport Beach, California 92660, Attention: General Counsel, or
such other address as may hereafter be furnished to the other parties hereto in
writing; (c) in the case of the Trustee, at to Norwest Bank Minnesota, National
Association, 11000 Broken Land Parkway, Columbia, Maryland 21044 (Attn:
Corporate Trust Services -- Impac 1999-2) with a copy to its Corporate Trust
Office, or such other address as may hereafter be furnished to the other parties
hereto in writing; or (d) in the case of the Rating Agencies, S&P, 25 Broadway,
New York, New York 10004 Attention: Residential Mortgage Surveillance Group and
DCR, Duff & Phelps Credit Rating Co., 17 State Street, 12th Floor New York, New
York 10004, Attention of Mortgage Backed Securities Department, IMPAC 1999-2.
Any notice required or permitted to be mailed to a Certificateholder shall be
given by first class mail, postage prepaid, at the address of such Holder as
shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Certificateholder receives such notice.

          SECTION 11.06. Severability of Provisions.

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

          SECTION 11.07. Successors and Assigns; Third Party Beneficiary.

          The provisions of this Agreement shall be binding upon and inure to
the benefit of the respective successors and assigns of the parties hereto, and
all such provisions shall inure to the benefit of the Trustee and the
Certificateholders.

          SECTION 11.08. Article and Section Headings.

          The article and section headings herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning hereof.

<PAGE>

                                      -129-

          SECTION 11.09. Notice to Rating Agencies.

          The Trustee shall use its best efforts to promptly provide notice to
each Rating Agency referred to below with respect to each of the following of
which it has actual knowledge:

          1. Any material change or amendment to this Agreement;

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

          3. The resignation or termination of the Master Servicer or the
             Trustee;

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

          5. The final payment to Certificateholders; and

          6. Any change in the location of the Custodial Account or the
             Certificate Account.

          In addition, the Trustee shall promptly furnish to the Rating Agency
copies of each report to Certificateholders described in Section 4.02; and the
Master Servicer shall promptly furnish to the Rating Agency copies of each
annual independent public accountants' servicing report received as described in
Section 3.20.

          Any such notice pursuant to this Section 11.09 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to (i) in the
case of DCR, Duff & Phelps Credit Rating Co., , 17 State Street, 12th Floor New
York, New York 10004, Attention of Mortgage Backed Securities Department, IMPAC
1999-2, (ii) in the case of Standard & Poor's, 26 Broadway, 15th Floor, New
York, New York 10004 or, in each case, such other address as either such Rating
Agency may designate in writing to the parties thereto.

<PAGE>

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

                                          IMPAC SECURED ASSETS CORP.,
                                               Depositor

                                          By:      /s/ Richard J. Johnson
                                             --------------------------------

                                          IMPAC FUNDING CORPORATION,
                                               Master Servicer

                                          By:      /s/ Richard J. Johnson
                                             --------------------------------

                                          NORWEST BANK MINNESOTA, NATIONAL
                                          ASSOCIATION,
                                               Trustee

                                          By:      /s/ Peter A. Gobell
                                             --------------------------------

<PAGE>

STATE OF                  )
                          )  ss.:
COUNTY OF                 )

          On the 20th day of December, 1999 before me, a notary public in and
for said State, personally appeared _______________________, known to me to be
the [Senior] Vice President of Impac Secured Assets Corp., the corporation that
executed the within instrument, and also known to me to be the persons who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

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

                                          ____________________________________
                                                      Notary Public

[Notarial Seal]

<PAGE>

STATE OF CALIFORNIA       )
                          )  ss.:
COUNTY OF ____________    )

          On the 20th day of December, 1999 before me, a notary public in and
for said State, personally appeared _______________________________, known to me
to be the ____________________________________ of Impac Funding Corporation, and
also known to me to be the person who executed the within instrument as a duly
authorized officer of said corporation on behalf of said corporation, and
acknowledged to me that such corporation executed the within instrument.

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

                                          ____________________________________
                                                       Notary Public

[Notarial Seal]

<PAGE>

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

          On the 20th day of December, 1999, before me, a notary public in and
for said State, personally appeared ___________, known to me to be an Assistant
Vice President of Norwest Bank Minnesota, National Association, the corporation
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

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

                                          ____________________________________
                                                        Notary Public

[Notarial Seal]

<PAGE>

                                    EXHIBIT A

                           FORM OF CLASS A CERTIFICATE

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

          [THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO
THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS DECEMBER 20, 1999.
ASSUMING THAT THE MORTGAGE LOANS PREPAY AT ___% OF THE STANDARD PREPAYMENT
ASSUMPTION (AS DESCRIBED IN THE PROSPECTUS SUPPLEMENT), [AND ASSUMING A CONSTANT
PASS-THROUGH RATE EQUAL TO THE INITIAL PASS-THROUGH RATE,] THIS CERTIFICATE HAS
BEEN ISSUED WITH NO MORE THAN $_____ OF OID PER $__________ OF INITIAL
CERTIFICATE PRINCIPAL BALANCE, THE YIELD TO MATURITY IS ___% AND THE AMOUNT OF
OID ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $_______ PER
$__________ OF INITIAL CERTIFICATE PRINCIPAL BALANCE, COMPUTED USING THE
APPROXIMATE METHOD. NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL
PREPAY AT A RATE BASED ON THE STANDARD PREPAYMENT ASSUMPTION OR AT ANY OTHER
RATE OR AS TO THE CONSTANCY OF THE PASS-THROUGH RATE.]

<PAGE>

                                       -2-

Certificate No. __                  [_____%] [Adjustable][Variable]
                                    Pass-Through Rate
Class A-__ Senior

Date of Pooling and Servicing       Percentage Interest: ____%
Agreement and Cut-off Date:
December 1, 1999

First Distribution Date:            Aggregate Initial [Certificate Principal
January 25, 2000                    Balance] [Notional Amount] of the Class A-__
                                    Certificates: $____________

Master Servicer:                    Initial [Certificate Principal
Impac Funding Corporation           Balance] [Notional Amount] of this
                                    Certificate: $____________

Assumed Final                       CUSIP _________
Distribution Date:
January 25, 2030

                        MORTGAGE PASS-THROUGH CERTIFICATE
                                  SERIES 1999-2

     evidencing a percentage interest in the distributions allocable to the
     Class  A-__  Certificates  with  respect  to a Trust  Fund  consisting
     primarily of a pool of conforming  one- to four-family  fixed interest
     rate first  mortgage  loans  formed and sold by IMPAC  SECURED  ASSETS
     CORP.

          This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Impac Secured Assets
Corp., the Master Servicer, the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality or by Impac
Secured Assets Corp., the Master Servicer, the Trustee or any of their
affiliates. None of the Company, the Master Servicer or any of their affiliates
will have any obligation with respect to any certificate or other obligation
secured by or payable from payments on the Certificates.

          This certifies that _____________________________ is the registered
owner of the Percentage Interest evidenced by this Certificate (obtained by
dividing the Initial [Certificate Principal Balance] [Notional Amount] of this
Certificate by the aggregate Initial [Certificate Principal Balance] [Notional
Amount] of all Class A-___ Certificates, both as specified above) in certain
distributions with respect to the Trust Fund consisting primarily of an interest
in a pool of conventional one- to four-family fixed interest rate first mortgage
loans (the "Mortgage Loans"), formed and sold by Impac Secured Assets Corp.
(hereinafter called the "Company," which term

<PAGE>

                                       -3-

includes any successor entity under the Agreement referred to below). The Trust
Fund was created pursuant to a Pooling and Servicing Agreement dated as
specified above (the "Agreement") among the Company, the Master Servicer and
Norwest Bank Minnesota, National Association as trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last day (or if such last day is not
a Business Day, the Business Day immediately preceding such last day) of the
month immediately preceding the month of such distribution (the "Record Date"),
from the Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount of [interest
and] [principal], if any, required to be distributed to Holders of Class A-__
Certificates on such Distribution Date.

          Distributions on this Certificate will be made either by the Trustee
or by a Paying Agent appointed by the Trustee in immediately available funds (by
wire transfer or otherwise) for the account of the Person entitled thereto if
such Person shall have so notified the Trustee or such Paying Agent, or by check
mailed to the address of the Person entitled thereto, as such name and address
shall appear on the Certificate Register.

          Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose in the City and State of New York. The Initial
[Certificate Principal Balance] [Notional Amount] of this Certificate is set
forth above. The [Certificate Principal Balance] [Notional Amount] hereof will
be reduced to the extent of [distributions allocable to principal and] any
Realized Losses allocable hereto.

          This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Mortgage Pass-Through Certificates of
the Series specified hereon (herein collectively called the "Certificates").

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. In the event Master Servicer
funds are advanced with respect to any Mortgage Loan, such advance is
reimbursable to the Master Servicer, to the extent provided in the Agreement,
from related recoveries on such Mortgage Loan or from other cash that would have
been distributable to Certificateholders.

          As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders may
be made by the Master Servicer

<PAGE>

                                       -4-

from time to time for purposes other than distributions to Certificateholders,
such purposes including without limitation reimbursement to the Trustee, the
Company and the Master Servicer of advances made, or certain expenses incurred,
by either of them.

          The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Company, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Company, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of
any of the Certificates and, in certain additional circumstances, without the
consent of the Holders of certain Classes of Certificates.

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

          The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.

          No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.

          The Company, the Master Servicer, the Trustee and the Certificate
Registrar and any agent of the Company, the Master Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Company, the
Master Servicer, the Trustee nor any such agent shall be affected by notice to
the contrary.

          This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.

<PAGE>

                                       -5-

          The obligations created by the Agreement in respect of the
Certificates and the Trust Fund created thereby shall terminate upon the payment
to Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by the Master Servicer or
the Company from the Trust Fund of all remaining Mortgage Loans and all property
acquired in respect of such Mortgage Loans, thereby effecting early retirement
of the Certificates. The Agreement permits, but does not require, the Master
Servicer or the Company to (i) purchase at a price determined as provided in the
Agreement all remaining Mortgage Loans and all property acquired in respect of
any Mortgage Loan or (ii) purchase in whole, but not in part, all of the
Certificates from the Holders thereof; provided, that any such option may only
be exercised if the Aggregate Stated Principal Balance of the Mortgage Loans as
of the Distribution Date upon which the proceeds of any such purchase are
distributed is less than ten percent of the Aggregate Stated Principal Balance
of the Mortgage Loans at the Cut-off Date.

          Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

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

<PAGE>

                                       -6-

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

Dated:  December 20, 1999                   NORWEST BANK MINNESOTA,
                                            NATIONAL ASSOCIATION,
                                            as Trustee

                                            By:_______________________________
                                            Authorized Signatory

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

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

                                            NORWEST BANK MINNESOTA,
                                            NATIONAL ASSOCIATION,
                                            as Trustee

                                            By:_______________________________
                                            Authorized Signatory

<PAGE>

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Percentage Interest
evidenced by the within Mortgage Pass-Through Certificate and hereby authorizes
the transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.

          I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:_____________________________

_______________________________________________________________________________

Dated:                           ______________________________________________
                                    Signature by or on behalf of assignor

                                             ___________________________________
                                                  Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of ____________________________________________ account number _______________,
or, if mailed by check, to ____________________________________________________
Applicable statements should be mailed to __________________________________.

          This information is provided by ____________________________, the
assignee named above, or ______________________________, as its agent.

<PAGE>

                                   EXHIBIT B-1

                           FORM OF CLASS M CERTIFICATE

     THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE SENIOR
CERTIFICATES, [THE CLASS M-1 CERTIFICATES] [AND THE CLASS M-2 CERTIFICATES] AS
DESCRIBED IN THE AGREEMENT (AS DEFINED BELOW).

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

     ANY PERSON PURCHASING A CLASS M CERTIFICATE SHALL BE DEEMED TO HAVE
REPRESENTED THAT EITHER: (I) SUCH PERSON IS NOT A PLAN SUBJECT TO ERISA OR THE
CODE (OR COMPARABLE PROVISIONS OF ANY SUBSEQUENT ENACTMENTS) AND IS NOT ACTING,
DIRECTLY OR INDIRECTLY, ON BEHALF OF ANY SUCH PLAN OR ACQUIRING SUCH CERTIFICATE
WITH PLAN ASSETS; OR (II) THE PURCHASE OF SUCH CERTIFICATE IS PERMISSIBLE UNDER
APPLICABLE LAW, WILL NOT CONSTITUTE OR RESULT IN ANY NON-EXEMPT PROHIBITED
TRANSACTION UNDER ERISA OR SECTION 4975 OF THE CODE, WILL NOT SUBJECT THE
COMPANY, THE TRUSTEE OR THE MASTER SERVICER TO ANY OBLIGATION OR LIABILITY
(INCLUDING OBLIGATIONS OR LIABILITIES UNDER ERISA OR SECTION 4975 OF THE CODE)
IN ADDITION TO THOSE UNDERTAKEN IN THIS AGREEMENT AND THE EXEMPTIVE RELIEF
GRANTED BY THE DOL PURSUANT TO PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 IS
AVAILABLE WITH RESPECT TO THE PURCHASE, SALE AND HOLDING OF SUCH CERTIFICATE.

     [THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING
THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS DECEMBER 20, 1999. ASSUMING
THAT THE MORTGAGE LOANS PREPAY AT _____% OF THE STANDARD PREPAYMENT ASSUMPTION
(AS DESCRIBED IN THE PROSPECTUS SUPPLEMENT), AND ASSUMING A CONSTANT
PASS-THROUGH RATE EQUAL TO THE INITIAL PASS-THROUGH RATE, THIS CERTIFICATE HAS
BEEN ISSUED WITH NO MORE THAN $______ OF OID PER $__________ OF INITIAL
CERTIFICATE PRINCIPAL BALANCE, THE YIELD TO MATURITY IS ______% AND THE AMOUNT
OF OID ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $______ PER
$__________ OF INITIAL CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER THE
APPROXIMATE METHOD. NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL
PREPAY AT A RATE BASED ON THE STANDARD PREPAYMENT ASSUMPTION OR AT ANY OTHER
RATE.]

<PAGE>

                                       -2-

Certificate No. __                      ______% Pass-Through Rate

Class M-__ Subordinate                  Aggregate Initial [Certificate Principal
                                        Balance] [Notional Amount] of
                                        the Class M-__ Certificates:
                                        $______________

Date of Pooling and Servicing           Initial [Certificate Principal Balance]
Agreement and Cut-off Date:             [Notional Amount] of this Certificate:
December 1, 1999                        $_______________

First Distribution Date:                CUSIP: ______________
January 25, 2000

Master Servicer:
Impac Funding Corporation

Assumed Final Distribution Date:
January 25, 2030

                       MORTGAGE PASS-THROUGH CERTIFICATE,
                                  Series 1999-2

     evidencing a percentage interest in any distributions allocable to the
     Class M-__  Certificates  with  respect  to the Trust Fund  consisting
     primarily of a pool of conforming  one- to four-family  fixed interest
     rate first  mortgage  loans  formed and sold by IMPAC  SECURED  ASSETS
     CORP.

          This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Impac Secured Assets
Corp., the Master Servicer, the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality or by Impac
Secured Assets Corp., the Master Servicer, the Trustee or any of their
affiliates. None of the Company, the Master Servicer or any of their affiliates
will have any obligation with respect to any certificate or other obligation
secured by or payable from payments on the Certificates.

          This certifies that ____________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Initial [Certificate Principal Balance] [Notional Amount] of this Certificate by
the aggregate Initial [Certificate Principal Balance] [Notional Amount] of all
Class M-__ Certificates, both as specified above) in certain distributions with
respect to a Trust Fund consisting primarily of a pool of conforming one- to
four-family fixed interest rate first mortgage loans (the "Mortgage Loans"),
formed and sold by Impac Secured Assets Corp. (hereinafter called the "Company,"
which term includes any successor entity under the Agreement referred to below).
The Trust Fund was created pursuant to a Pooling and Servicing Agreement dated
as specified above (the "Agreement") among the Company, the Master Servicer

<PAGE>

                                       -3-

and Norwest Bank Minnesota, National Association, as trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last day (or if such last day is not
a Business Day, the Business Day immediately preceding such last day) of the
month immediately preceding the month of such distribution (the "Record Date"),
from the Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount (of [interest]
[and principal], if any) required to be distributed to Holders of Class M-__
Certificates on such Distribution Date.

          Distributions on this Certificate will be made either by the Trustee
or by a Paying Agent appointed by the Trustee in immediately available funds (by
wire transfer or otherwise) for the account of the Person entitled thereto if
such Person shall have so notified the Trustee or such Paying Agent, or by check
mailed to the address of the Person entitled thereto, as such name and address
shall appear on the Certificate Register.

          Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose in the City and State of New York. The Initial
[Certificate Principal Balance] [Notional Amount] of this Certificate is set
forth above. The [Certificate Principal Balance] [Notional Amount] hereof will
be reduced to the extent of [the distributions allocable to principal and] any
Realized Losses allocable hereto.

          Any person purchasing a Class M Certificate shall be deemed to have
represented that either: (i) such person is not a Plan subject to ERISA or the
Code (or comparable provisions of any subsequent enactments) and is not acting,
directly or indirectly, on behalf of any such Plan or acquiring such Certificate
with Plan Assets; or (ii) the purchase of such Certificate is permissible under
applicable law, will not constitute or result in any non-exempt prohibited
transaction under ERISA or Section 4975 of the Code, will not subject the
Company, the Trustee or the Master Servicer to any obligation or liability
(including obligations or liabilities under ERISA or Section 4975 of the Code)
in addition to those undertaken in this Agreement and the exemptive relief
granted by the DOL pursuant to Prohibited Transaction Class Exemption 95-60 is
available with respect to the purchase, sale and holding of such Certificate.

          This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Mortgage Pass-Through Certificates of
the Series specified hereon (herein collectively called the "Certificates").

<PAGE>

                                       -4-

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. In the event Master Servicer
funds are advanced with respect to any Mortgage Loan, such advance is
reimbursable to the Master Servicer, to the extent provided in the Agreement,
from related recoveries on such Mortgage Loan or from other cash that would have
been distributable to Certificateholders.

          As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders may
be made by the Master Servicer from time to time for purposes other than
distributions to Certificateholders, such purposes including without limitation
reimbursement to the Trustee, the Company and the Master Servicer of advances
made, or certain expenses incurred, by either of them.

          The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Company, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Company, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of
any of the Certificates and, in certain additional circumstances, without the
consent of the Holders of certain Classes of Certificates.

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

          The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.

          No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.

<PAGE>

                                       -5-

          The Company, the Master Servicer, the Trustee and the Certificate
Registrar and any agent of the Company, the Master Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Company, the
Master Servicer, the Trustee nor any such agent shall be affected by notice to
the contrary.

          This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.

          The obligations created by the Agreement in respect of the
Certificates and the Trust Fund created thereby shall terminate upon the payment
to Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by the Master Servicer or
the Company from the Trust Fund of all remaining Mortgage Loans and all property
acquired in respect of such Mortgage Loans, thereby effecting early retirement
of the Certificates. The Agreement permits, but does not require, the Master
Servicer or the Company to (i) purchase at a price determined as provided in the
Agreement all remaining Mortgage Loans and all property acquired in respect of
any Mortgage Loan or (ii) purchase in whole, but not in part, all of the
Certificates from the Holders thereof; provided, that any such option may only
be exercised if the Aggregate Stated Principal Balance of the Mortgage Loans as
of the Distribution Date upon which the proceeds of any such purchase are
distributed is less than ten percent of the Aggregate Stated Principal Balance
of the Mortgage Loans at the Cut-off Date.

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

<PAGE>

                                       -6-

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

Dated:  December 20, 1999                   NORWEST BANK MINNESOTA,
                                            NATIONAL ASSOCIATION,
                                            as Trustee

                                            By:_______________________________
                                                    Authorized Signatory

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

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

                                            NORWEST BANK MINNESOTA,
                                            NATIONAL ASSOCIATION,
                                            as Trustee

                                            By:_______________________________
                                                     Authorized Signatory

<PAGE>

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Percentage Interest
evidenced by the within Mortgage Pass-Through Certificate and hereby authorizes
the transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.

          I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:_____________________________

_______________________________________________________________________________

Dated:                              ____________________________________________
                                    Signature by or on behalf of assignor

                                             ___________________________________
                                                  Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of ____________________________________________ account number _______________,
or, if mailed by check, to ____________________________________________________
Applicable statements should be mailed to __________________________________.

          This information is provided by ____________________________, the
assignee named above, or ______________________________, as its agent.

<PAGE>

                                   EXHIBIT B-2

                           FORM OF CLASS B CERTIFICATE

     THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE SENIOR
CERTIFICATES [AND] THE CLASS M CERTIFICATES [,] [AND] [THE CLASS B-1
CERTIFICATES], [AND THE CLASS B-2 CERTIFICATES] AS DESCRIBED IN THE AGREEMENT
(AS DEFINED HEREIN).

     THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.

     NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 5.02(D) OF THE
AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE THAT THE PURCHASE
OF THIS CERTIFICATE WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED
TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE
MASTER SERVICER, THE COMPANY OR THE TRUSTEE TO ANY OBLIGATION OR LIABILITY IN
ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.

<PAGE>

                                       -2-

Certificate No. __                       _____ % Pass-Through Rate

Class B-__ Subordinate                   Aggregate Certificate Principal Balance
                                         of the Class B-__ Certificates as of
Date of Pooling and Servicing            the Cut-off Date:
Agreement and Cut-off Date:              $_______________
December 1, 1999
                                         Initial Certificate Principal
                                         Balance of this Certificate:
First Distribution Date:                 $_______________
January 25, 2000

Master Servicer:
Impac Funding Corporation

Assumed Final Distribution Date:
January 25, 2030

                       MORTGAGE PASS-THROUGH CERTIFICATE,
                                  Series 1999-2

     evidencing a percentage interest in any distributions allocable to the
     Class B-__  Certificates  with  respect  to the Trust Fund  consisting
     primarily of a pool of conforming  one- to four-family  fixed interest
     rate first  mortgage  loans  formed and sold by IMPAC  SECURED  ASSETS
     CORP.

          This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Impac Secured Assets
Corp., the Master Servicer, the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality or by Impac
Secured Assets Corp., the Master Servicer, the Trustee or any of their
affiliates. None of the Company, the Master Servicer or any of their affiliates
will have any obligation with respect to any certificate or other obligation
secured by or payable from payments on the Certificates.

          This certifies that ____________________ is the registered owner of
the Percentage Interest evidenced by this Certificate (obtained by dividing the
Certificate Principal Balance of this Certificate by the aggregate Certificate
Principal Balance of all Class B-__ Certificates, both as specified above) in
certain distributions with respect to a Trust Fund consisting primarily of a
pool of conforming one- to four-family fixed interest rate first mortgage loans
(the "Mortgage Loans"), formed and sold by Impac Secured Assets Corp.
(hereinafter called the "Company," which term includes any successor entity
under the Agreement referred to below). The Trust Fund was created pursuant to a
Pooling and Servicing Agreement dated as specified above (the "Agreement") among
the Company, the Master Servicer and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To

<PAGE>

                                       -3-

the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last day (or if such
last day is not a Business Day, the Business Day immediately preceding such last
day) of the month next preceding the month of such distribution (the "Record
Date"), from the Available Distribution Amount in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount (of
interest and principal, if any) required to be distributed to Holders of Class
B-__ Certificates on such Distribution Date.

          Distributions on this Certificate will be made either by the Trustee
or by a Paying Agent appointed by the Trustee in immediately available funds (by
wire transfer or otherwise) for the account of the Person entitled thereto if
such Person shall have so notified the Trustee or such Paying Agent, or by check
mailed to the address of the Person entitled thereto, as such name and address
shall appear on the Certificate Register.

          Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose in the City and State of New York. The Initial
Certificate Principal Balance of this Certificate is set forth above. The
Certificate Principal Balance hereof will be reduced to the extent of the
distributions allocable to principal and any Realized Losses allocable hereto.

          No transfer of this Class B-__ Certificate will be made unless such
transfer is exempt from the registration requirements of the Securities Act of
1933, as amended, and any applicable state securities laws or is made in
accordance with said Act and laws. In the event that such a transfer is to be
made, (i) the Trustee shall require an opinion of counsel acceptable to and in
form and substance satisfactory to the Trustee that such transfer is exempt
(describing the applicable exemption and the basis therefor) from or is being
made pursuant to the registration requirements of the Securities Act of 1933, as
amended, and of any applicable statute of any state and (ii) the transferee and
transferor shall execute a representation letter in the form described by the
Agreement. The Holder hereof desiring to effect such transfer shall, and does
hereby agree to, indemnify the Trustee, the Company, the Master Servicer and the
Certificate Registrar acting on behalf of the Trustee against any liability that
may result if the transfer is not so exempt or is not made in accordance with
such Federal and state laws. In connection with any such transfer, the Trustee
will also require either (i) an opinion of counsel acceptable to and in form and
substance satisfactory to the Trustee with respect to the permissibility of such
transfer under the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and Section 4975 of the Internal Revenue Code (the "Code") and
stating, among other things, that the transferee's acquisition of a Class B
Certificate will

<PAGE>

                                       -4-

not constitute or result in a non-exempt prohibited transaction under Section
406 of ERISA or Section 4975 of the Code or (ii) a representation letter, in the
form as described by the Agreement, either stating that the transferee is not an
employee benefit or other plan subject to the prohibited transaction provisions
of ERISA or Section 4975 of the Code (a "Plan"), or any other person (including
an investment manager, a named fiduciary or a trustee of any Plan) acting,
directly or indirectly, on behalf of or purchasing any Certificate with "plan
assets" of any Plan, or stating that the transferee is an insurance company, the
source of funds to be used by it to purchase the Certificate is an "insurance
company general account" (within the meaning of Department of Labor Prohibited
Transaction Class Exemption ("PTCE") 95-60), and the purchase is being made in
reliance upon the availability of the exemptive relief afforded under Section
III of PTCE 95-60.

          This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Mortgage Pass-Through Certificates of
the Series specified hereon (herein collectively called the "Certificates").

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. In the event Master Servicer
funds are advanced with respect to any Mortgage Loan, such advance is
reimbursable to the Master Servicer, to the extent provided in the Agreement,
from related recoveries on such Mortgage Loan or from other cash that would have
been distributable to Certificateholders.

          As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders may
be made by the Master Servicer from time to time for purposes other than
distributions to Certificateholders, such purposes including without limitation
reimbursement to the Trustee, the Company and the Master Servicer of advances
made, or certain expenses incurred, by either of them.

          The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Company, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Company, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of
any of the Certificates and, in certain additional circumstances, without the
consent of the Holders of certain Classes of Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee, duly endorsed by,
or accompanied by an assignment in the form below or other written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the Holder hereof or such

<PAGE>

                                       -5-

Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same Class and aggregate
Percentage Interest will be issued to the designated transferee or transferees.

          The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.

          No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.

          The Company, the Master Servicer, the Trustee and the Certificate
Registrar and any agent of the Company, the Master Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Company, the
Master Servicer, the Trustee nor any such agent shall be affected by notice to
the contrary.

          This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.

          The obligations created by the Agreement in respect of the
Certificates and the Trust Fund created thereby shall terminate upon the payment
to Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by the Master Servicer or
the Company from the Trust Fund of all remaining Mortgage Loans and all property
acquired in respect of such Mortgage Loans, thereby effecting early retirement
of the Certificates. The Agreement permits, but does not require, the Master
Servicer or the Company to (i) purchase at a price determined as provided in the
Agreement all remaining Mortgage Loans and all property acquired in respect of
any Mortgage Loan or (ii) purchase in whole, but not in part, all of the
Certificates from the Holders thereof; provided, that any such option may only
be exercised if the Aggregate Stated Principal Balance of the Mortgage Loans as
of the Distribution Date upon which the proceeds of any such purchase are
distributed is less than ten percent of the Aggregate Stated Principal Balance
of the Mortgage Loans at the Cut-off Date.

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

<PAGE>

                                       -6-

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

Dated:  December 20, 1999                   NORWEST BANK MINNESOTA,
                                            NATIONAL ASSOCIATION,
                                            as Trustee

                                            By:_______________________________
                                               Authorized Signatory

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

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

                                            NORWEST BANK MINNESOTA,
                                            NATIONAL ASSOCIATION,
                                            as Trustee

                                            By:_______________________________
                                               Authorized Signatory

<PAGE>

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Percentage Interest
evidenced by the within Mortgage Pass-Through Certificate and hereby authorizes
the transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.

          I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:_____________________________

_______________________________________________________________________________

Dated:                           ______________________________________________
                                    Signature by or on behalf of assignor

                                             ___________________________________
                                                  Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of ____________________________________________ account number _______________,
or, if mailed by check, to ____________________________________________________
Applicable statements should be mailed to __________________________________.

          This information is provided by ____________________________, the
assignee named above, or ______________________________, as its agent.

<PAGE>

                                   EXHIBIT B-3

                           FORM OF CLASS R CERTIFICATE

     THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED STATES
PERSON OR A DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).

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

     NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 5.02(E) OF THE
AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE MASTER SERVICER, THE
COMPANY AND THE TRUSTEE THAT THE PURCHASE OF THIS CERTIFICATE IS PERMISSIBLE
UNDER APPLICABLE LAW, WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED
TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE
MASTER SERVICER, THE COMPANY OR THE TRUSTEE TO ANY OBLIGATION OR LIABILITY IN
ADDITION TO THOSE UNDERTAKEN IN THE POOLING AND SERVICING AGREEMENT (THE
"AGREEMENT").

     ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE
ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE MASTER
SERVICER AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) THE UNITED STATES,
ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
FOREGOING, (B) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION
521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE
CODE, (C) ANY ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE, (ANY
SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B) OR (C) BEING HEREIN
REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR (D) AN AGENT OF A DISQUALIFIED
ORGANIZATION, (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR
COLLECTION OF TAX AND (3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL
CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE.
NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OR ANY TRANSFER,
SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR
AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL

<PAGE>

                                       -2-

BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT
BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT
NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF
THIS CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE
CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.

<PAGE>

                                       -3-

Certificate No. __                         ____% Pass-Through Rate

Class R Senior                             Aggregate Initial Certificate
                                           Principal Balance of the Class R
                                           Certificates:  $______________

Date of Pooling and Servicing
Agreement and Cut-off Date:
December 1, 1999                           Percentage Interest: _______%

First Distribution Date:
January 25, 2000                           Initial Certificate Principal Balance
                                           of this Certificate:  $____________

Master Servicer:
Impac Funding Corporation                  CUSIP: _____________________

Assumed Final Distribution Date:
January 25, 2030

                       MORTGAGE PASS-THROUGH CERTIFICATE,
                                  SERIES 1999-2

     evidencing a percentage interest in any distributions allocable to the
     Class R Certificates with respect to a Trust Fund consisting primarily
     of a pool of conforming one- to four-family  fixed interest rate first
     mortgage loans formed and sold by IMPAC SECURED ASSETS CORP.

          This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Impac Secured Assets
Corp., the Master Servicer, the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality or by Impac
Secured Assets Corp., the Master Servicer, the Trustee or any of their
affiliates. None of the Company, the Master Servicer or any of their affiliates
will have any obligation with respect to any certificate or other obligation
secured by or payable from payments on the Certificates.

          This certifies that _______________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Initial Certificate Principal Balance of this Certificate by the aggregate
Initial Certificate Principal Balance of all Class R Certificates, both as
specified above) in certain distributions with respect to a Trust Fund,
consisting primarily of a pool of conforming one- to four-family fixed interest
rate first mortgage loans (the "Mortgage Loans"), formed and sold by Impac
Secured Assets Corp. (hereinafter called the "Company," which term includes any
successor entity under the Agreement referred to below). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") among

<PAGE>

                                       -4-

the Company, the Master Servicer and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last day (or if such last day is not
a Business Day, the Business Day immediately preceding such last day) of the
month immediately preceding the month of such distribution (the "Record Date"),
from the Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount of interest and
principal, if any, required to be distributed to Holders of Class R Certificates
on such Distribution Date.

          Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions set forth in the Agreement to the effect that (i) each
person holding or acquiring any Ownership Interest in this Certificate must be a
United States Person and a Permitted Transferee, (ii) the transfer of any
Ownership Interest in this Certificate will be conditioned upon the delivery to
the Trustee of, among other things, an affidavit to the effect that it is a
United States Person and Permitted Transferee, (iii) any attempted or purported
transfer of any Ownership Interest in this Certificate in violation of such
restrictions will be absolutely null and void and will vest no rights in the
purported transferee, and (iv) if any person other than a United States Person
and a Permitted Transferee acquires any Ownership Interest in this Certificate
in violation of such restrictions, then the Company will have the right, in its
sole discretion and without notice to the Holder of this Certificate, to sell
this Certificate to a purchaser selected by the Company, which purchaser may be
the Company, or any affiliate of the Company, on such terms and conditions as
the Company may choose.

          Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose in the City and State of New York. The Initial
Certificate Principal Balance of this Certificate is set forth above. The
Certificate Principal Balance hereof will be reduced to the extent of
distributions allocable to principal and any Realized Losses allocable hereto.
Notwithstanding the reduction of the Certificate Principal Balance hereof to
zero, this Certificate will remain outstanding under the Agreement and the
Holder hereof may have additional obligations with respect to this Certificate,
including tax liabilities, and may be entitled to certain additional
distributions hereon, in accordance with the terms and provisions of the
Agreement.

          In connection with any transfer of this Certificate, the Trustee will
also require either (i) an opinion of counsel acceptable to and in form and
substance satisfactory to the Trustee with respect

<PAGE>

                                       -5-

to the permissibility of such transfer under the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and Section 4975 of the Internal
Revenue Code (the "Code") and stating, among other things, that the transferee's
acquisition of a Class R Certificate will not constitute or result in a
non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code or (ii) a representation letter, in the form as described by the
Agreement, either stating that the transferee is not an employee benefit or
other plan subject to the prohibited transaction provisions of ERISA or Section
4975 of the Code (a "Plan"), or any other person (including an investment
manager, a named fiduciary or a trustee of any Plan) acting, directly or
indirectly, on behalf of or purchasing any Certificate with "plan assets" of any
Plan, or stating that the transferee is an insurance company, the source of
funds to be used by it to purchase the Certificate is an "insurance company
general account" (within the meaning of Department of Labor Prohibited
Transaction Class Exemption ("PTCE") 95-60), and the purchase is being made in
reliance upon the availability of the exemptive relief afforded under Section
III of PTCE 95-60.

          This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Mortgage Pass-Through Certificates of
the Series specified hereon (herein collectively called the "Certificates").

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. In the event Master Servicer
funds are advanced with respect to any Mortgage Loan, such advance is
reimbursable to the Master Servicer, to the extent provided in the Agreement,
from related recoveries on such Mortgage Loan or from other cash that would have
been distributable to Certificateholders.

          As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders may
be made by the Master Servicer from time to time for purposes other than
distributions to Certificateholders, such purposes including without limitation
reimbursement to the Trustee, the Company and the Master Servicer of advances
made, or certain expenses incurred, by either of them.

          The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Company, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Company, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of
any of the Certificates and, in certain additional circumstances, without the
consent of the Holders of certain Classes of Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate

<PAGE>

                                       -6-

for registration of transfer at the offices or agencies appointed by the
Trustee, duly endorsed by, or accompanied by an assignment in the form below or
other written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.

          The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.

          No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.

          The Company, the Master Servicer, the Trustee and the Certificate
Registrar and any agent of the Company, the Master Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Company, the
Master Servicer, the Trustee nor any such agent shall be affected by notice to
the contrary.

          This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.

          The obligations created by the Agreement in respect of the
Certificates and the Trust Fund created thereby shall terminate upon the payment
to Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by the Master Servicer or
the Company from the Trust Fund of all remaining Mortgage Loans and all property
acquired in respect of such Mortgage Loans, thereby effecting early retirement
of the Certificates. The Agreement permits, but does not require, the Master
Servicer or the Company to (i) purchase at a price determined as provided in the
Agreement all remaining Mortgage Loans and all property acquired in respect of
any Mortgage Loan or (ii) purchase in whole, but not in part, all of the
Certificates from the Holders thereof; provided, that any such option may only
be exercised if the Aggregate Stated Principal Balance of the Mortgage Loans as
of the Distribution Date upon which the proceeds of any such purchase are
distributed is less than ten percent of the Aggregate Stated Principal Balance
of the Mortgage Loans at the Cut-off Date.

          Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purpose
have the same effect as if set forth at this place.

<PAGE>

                                       -7-

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

<PAGE>

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

Dated:  December 20, 1999                   NORWEST BANK MINNESOTA,
                                            NATIONAL ASSOCIATION,
                                            as Trustee

                                            By:_______________________________
                                            Authorized Signatory

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

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

                                            NORWEST BANK MINNESOTA,
                                            NATIONAL ASSOCIATION,
                                            as Trustee

                                            By:_______________________________
                                            Authorized Signatory

<PAGE>

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Percentage Interest
evidenced by the within Mortgage Pass-Through Certificate and hereby authorizes
the transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.

          I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:_____________________________

_______________________________________________________________________________

Dated:                           ______________________________________________
                                    Signature by or on behalf of assignor

                                             ___________________________________
                                                  Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of ____________________________________________ account number _______________,
or, if mailed by check, to ____________________________________________________
Applicable statements should be mailed to __________________________________.

          This information is provided by ____________________________, the
assignee named above, or ______________________________, as its agent.

<PAGE>

                                    EXHIBIT C

                    FORM OF CUSTODIAN'S INITIAL CERTIFICATION

                                                December 20, 1999

Impac Funding Corporation
1401 Dove Street
Newport Beach, California 92660

Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, MD  21044

         Re:  Pooling and Servicing Agreement, dated as of December 1, 1999
              among Impac Secured Assets Corp., Impac Funding Corporation,
              and Norwest Bank Minnesota, National Association, Mortgage
              Pass-Through Certificates, Series 1999-2
              --------------------------------------------------------------

Ladies and Gentlemen:

          In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Custodian, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed on the attachment hereto) it has reviewed the
Mortgage File and the Mortgage Loan Schedule and has determined that: (i) all
documents required to be included in the Mortgage File are in its possession;
(ii) such documents have been reviewed by it and appear regular on their face
and relate to such Mortgage Loan; and (iii) based on examination by it, and only
as to such documents, the information set forth in items (i), (ii), (iii) and
(iv) of the definition or description of "Mortgage Loan Schedule" is correct.

          The Custodian has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Custodian makes no
representation that any documents specified in clause (vi) of Section 2.01
should be included in any Mortgage File. The Custodian makes no representations
as to and shall not be responsible to verify: (i) the validity, legality,
sufficiency, enforceability, due authorization, recordability or genuineness of
any of the documents contained in each Mortgage File of any of the Mortgage
Loans identified on the Mortgage Loan Schedule, (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan, or (iii)
the existence of any assumption, modification, written assurance or substitution
agreement with respect to any Mortgage File if no such documents appear in the
Mortgage File delivered to the Custodian.

<PAGE>

                                       -2-

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

                                           BANKERS TRUST COMPANY OF
                                           CALIFORNIA, N.A.

                                           By:_________________________________
                                           Name:_______________________________
                                           Title:______________________________

<PAGE>

                                    EXHIBIT D

                      FORM OF CUSTODIAN FINAL CERTIFICATION

                                                     December 20, 1999

Impac Funding Corporation
1401 Dove Street
Newport Beach, California 92660

Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, MD  21044

         Re:  Pooling and Servicing Agreement, dated as of December 1, 1999
              among Impac Secured Assets Corp., Impac Funding Corporation,
              and Norwest Bank Minnesota, National Association, Mortgage
              Pass-Through Certificates, Series 1999-2
              --------------------------------------------------------------

Ladies and Gentlemen:

          In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Custodian, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed on the attachment hereto) it has received the
documents set forth in Section 2.01.

          The Custodian has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Custodian makes no
representation that any documents specified in clause (vi) of Section 2.01
should be included in any Mortgage File. The Custodian makes no representations
as to and shall not be responsible to verify: (i) the validity, legality,
sufficiency, enforceability, due authorization, recordability or genuineness of
any of the documents contained in each Mortgage File of any of the Mortgage
Loans identified on the Mortgage Loan Schedule, (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan or (iii)
the existence of any assumption, modification, written assurance or substitution
agreement with respect to any Mortgage File if no such documents appear in the
Mortgage File delivered to the Custodian.

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

                                           BANKERS TRUST COMPANY OF
                                           CALIFORNIA, N.A.

                                           By:_________________________________
                                           Name:_______________________________
                                           Title:______________________________

<PAGE>

<TABLE>
<CAPTION>
                                                     EXHIBIT E

                                             FORM OF REMITTANCE REPORT

                                                MONTHLY FILE LAYOUT

         *Fields are comma delimited and should contain commas even if the field is empty.

<S>                                      <C>                                   <C>
              FIELD NAME                             DESCRIPTION                              FORMAT
                                         A numeric identifier for each loan
Loan Number                              - no more than 10 digits.             up to 10 characters/numbers

                                         The date that the borrower's next
Borrower Next Pay Due Date               payment is due to the servicer.       "MM/DD/YYYY"

                                         The current interest rate that the
                                         borrower is paying on the
Current Loan Rate                        outstanding principal.                number w/2 decimal places

                                         The borrowers beginning principal     number w/2 decimal places and no
Actual Beginning Principal Balance       balance according to the servicers.   or $ signs

                                         The scheduled principal payment due   number w/2 decimal places and no
Scheduled Principal Pay Amount           to the Servicer.                      or $ signs

                                         All curtailments and curtailment
                                         interest, unscheduled, prepayment     number w/2 decimal places and no
Curtailment Principal Amount             and principal adjustments.            or $ signs

                                                                               number w/2 decimal places and no
Paid in Full Amount                      Liquidation amount/proceeds.          or $ signs

                                         The borrower's scheduled interest
                                         payment due to the servicer.  This    number w/2 decimal places and no
Scheduled Gross Interest Amount          is inclusive of servicing fee.        and $ signs

                                         The borrower's principal balance      number w/2 decimal places and no
Actual Ending Principal Balance          according to the servicer.            and $ signs

                                         The date that the loan was actually
Paid in Full Date                        liquidated.                           "MM/DD/YYYY"

                                                                               Action Key Code
                                                                               15 = Bankruptcy
                                                                               30 = Foreclosure
                                                                               70 = REO
                                         Industry Standard delinquency codes   60 = PIF
Reported Action Code                     used to determine the type of loan.   65 = Repurchase

                                         Scheduled principal and interest      number w/2 decimal places and no
Scheduled Pay Amount                     due to the servicer.                  and $ signs

                                         The outstanding principal amount
                                         (ending) due to be passed through     number w/2 decimal places and no
Scheduled Ending Principal Balance       to the investors.                     and $ signs

<PAGE>

                                       -2-

Scheduled Beginning Principal           The outstanding principal amount        number w/2 decimal places and no
Balance                                 (beginning) due to be passed            (because) and $ signs
                                        through to the investors
</TABLE>

<PAGE>

                                   EXHIBIT F-1

                               REQUEST FOR RELEASE
                                 (for Custodian)

LOAN INFORMATION

              Name of Mortgagor:               _____________________________

              Master Servicer
              Loan No.:                        _____________________________

TRUSTEE

              Name:                            _____________________________

              Address:                         _____________________________

                                               _____________________________

              Custodian
              Mortgage File No.:               _____________________________

REQUEST FOR REQUESTING DOCUMENTS (check one):

1.            Mortgage Loan Liquidated.
                    (The Master Servicer hereby certifies that all proceeds of
                    foreclosure, insurance or other liquidation have been
                    finally received and deposited into the Custodial Account to
                    the extent required pursuant to the Pooling and Servicing
                    Agreement.)

2.            Mortgage Loan in Foreclosure.

3.            Mortgage Loan Repurchased Pursuant to Section 9.01 of the Pooling
              and Servicing Agreement.

4.            Mortgage Loan Repurchased Pursuant to Article II of the Pooling
              and Servicing Agreement.
                    (The Master Servicer hereby certifies that the repurchase
                    price has been deposited into the Custodial Account pursuant
                    to the Pooling and Servicing Agreement.)

5.            Other (explain).

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

<PAGE>

                                       -2-

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

          The undersigned Master Servicer hereby acknowledges that it has
received from the Custodian, as agent for the Trustee for the Holders of
Mortgage Pass-Through Certificates, Series 1999-2, the documents referred to
below (the "Documents"). All capitalized terms not otherwise defined in this
Request for Release shall have the meanings given them in the Pooling and Ser
vicing Agreement, dated as of December 1, 1999 (the "Pooling and Servicing
Agreement"), among Impac Secured Assets Corp., Impac Funding Corporation and the
Trustee.

( )       Promissory Note dated _______________, 19__, in the original principal
          sum of $__________, made by _____________________, payable to, or
          endorsed to the order of, the Trustee.

( )       Mortgage recorded on _____________________ as instrument no.
          ____________________ in the County Recorder's Office of the County of
          _________________, State of __________________ in book/reel/docket
          _________________ of official records at page/image _____________.

( )       Deed of Trust recorded on ___________________ as instrument no.
          ________________ in the County Recorder's Office of the County of
          _________________, State of __________________ in book/reel/docket
          _________________ of official records at page/image ______________.

( )       Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
          ___________________ as instrument no. _________ in the County
          Recorder's Office of the County of __________, State of
          _______________ in book/reel/docket ____________ of official records
          at page/image ____________.

( )       Other documents, including any amendments, assignments or other
          assumptions of the Mortgage Note or Mortgage.

          ( )  ________________________________________

          ( )  ________________________________________

          ( )  ________________________________________

          ( )  ________________________________________

              The ndersigned Master Servicer hereby acknowledges and agrees as
follows:

<PAGE>

                                       -3-

               (1) The Master Servicer shall hold and retain possession of the
          Documents in trust for the benefit of the Trustee, solely for the
          purposes provided in the Agreement.

               (2) The Master Servicer shall not cause or knowingly permit the
          Documents to become subject to, or encumbered by, any claim, liens,
          security interest, charges, writs of attachment or other impositions
          nor shall the Master Servicer assert or seek to assert any claims or
          rights of setoff to or against the Documents or any proceeds thereof.

               (3) The Master Servicer shall return each and every Document
          previously requested from the Mortgage File to the Custodian when the
          need therefor no longer exists, unless the Mortgage Loan relating to
          the Documents has been liquidated and the proceeds thereof have been
          remitted to the Custodial Account and except as expressly provided in
          the Agreement.

               (4) The Documents and any proceeds thereof, including any
          proceeds of proceeds, coming into the possession or control of the
          Master Servicer shall at all times be earmarked for the account of the
          Trustee, and the Master Servicer shall keep the Documents and any
          proceeds separate and distinct from all other property in the Master
          Servicer's possession, custody or control.

                                          IMPAC FUNDING CORPORATION

                                          By:___________________________________

                                          Title:________________________________

Date: _____________________, 19__

<PAGE>

                                   EXHIBIT F-2

                               REQUEST FOR RELEASE
                          [Mortgage Loans Paid in Full]

                     OFFICER'S CERTIFICATE AND TRUST RECEIPT
                       MORTGAGE PASS-THROUGH CERTIFICATES
                                  SERIES 1999-2

______________________________________ HEREBY CERTIFIES THAT HE/SHE IS AN
OFFICER OF THE MASTER SERVICER, HOLDING THE OFFICE SET FORTH BENEATH HIS/HER
SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:

WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:

ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN MADE.

LOAN NUMBER:  _______________                  BORROWER'S NAME:_____________

COUNTY:_____________________

WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE CUSTODIAL ACCOUNT PURSUANT TO SECTION
3.10 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE CREDITED.

___________       ______________________       DATED:______________

/ /      VICE PRESIDENT

/ /      ASSISTANT VICE PRESIDENT

<PAGE>

                                   EXHIBIT G-1

                     FORM OF INVESTOR REPRESENTATION LETTER

                                 _________, 19__

Impac Secured Assets Corp.
1401 Dove Street
Newport Beach, California 92660

Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, MD  21044

Attention: Impac Secured Assets Corp. Series 1999-2

           Re: Impac Secured Assets Corp.
               Mortgage Pass-Through Certificates, Series 1999-2, Class ___
               ------------------------------------------------------------

Ladies and Gentlemen:

          ___________________ (the "Purchaser") intends to purchase from (the
"Seller") $ Initial Certificate Principal Balance of Mortgage Pass-Through
Certificates, Series 1999-2, Class (the "Certificates"), issued pursuant to the
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"), dated
as of December 1, 1999 among Impac Secured Assets Corp. as depositor (the
"Company"), Impac Funding Corporation, as master servicer and Norwest Bank
Minnesota, National Association, as trustee (the "Trustee"). All terms used
herein and not otherwise defined shall have the meanings set forth in the
Pooling and Servicing Agreement. The Purchaser hereby certifies, represents and
warrants to, and covenants with, the Company and the Trustee that:

               1. The Purchaser understands that (a) the Certificates have not
          been and will not be registered or qualified under the Securities Act
          of 1933, as amended (the "Act") or any state securities law, (b) the
          Company is not required to so register or qualify the Certificates,
          (c) the Certificates may be resold only if registered and qualified
          pursuant to the provisions of the Act or any state securities law, or
          if an exemption from such registration and qualification is available,
          (d) the Pooling and Servicing Agreement contains restrictions
          regarding the transfer of the Certificates and (e) the Certificates
          will bear a legend to the foregoing effect.

               2. The Purchaser is acquiring the Certificates for its own
          account for investment only and not with a view to or for sale in
          connection with any

<PAGE>

                                       -2-

          distribution thereof in any manner that would violate the Act or any
          applicable state securities laws.

               3. The Purchaser is (a) a substantial, sophisticated
          institutional investor having such knowledge and experience in
          financial and business matters, and, in particular, in such matters
          related to securities similar to the Certificates, such that it is
          capable of evaluating the merits and risks of investment in the
          Certificates, (b) able to bear the economic risks of such an
          investment and (c) an "accredited investor" within the meaning of Rule
          501(a) promulgated pursuant to the Act.

               4. The Purchaser has been furnished with, and has had an
          opportunity to review (a) [a copy of the Private Placement Memorandum,
          dated ___________________, 19__, relating to the Certificates (b)] a
          copy of the Pooling and Servicing Agreement and [b] [c] such other
          information concerning the Certificates, the Mortgage Loans and the
          Company as has been requested by the Purchaser from the Company or the
          Seller and is relevant to the Purchaser's decision to purchase the
          Certificates. The Purchaser has had any questions arising from such
          review answered by the Company or the Seller to the satisfaction of
          the Purchaser. [If the Purchaser did not purchase the Certificates
          from the Seller in connection with the initial distribution of the
          Certificates and was provided with a copy of the Private Placement
          Memorandum (the "Memorandum") relating to the original sale (the
          "Original Sale") of the Certificates by the Company, the Purchaser
          acknowledges that such Memorandum was provided to it by the Seller,
          that the Memorandum was prepared by the Company solely for use in
          connection with the Original Sale and the Company did not participate
          in or facilitate in any way the purchase of the Certificates by the
          Purchaser from the Seller, and the Purchaser agrees that it will look
          solely to the Seller and not to the Company with respect to any
          damage, liability, claim or expense arising out of, resulting from or
          in connection with (a) error or omission, or alleged error or
          omission, contained in the Memorandum, or (b) any information,
          development or event arising after the date of the Memorandum.]

               5. The Purchaser has not and will not nor has it authorized or
          will it authorize any person to (a) offer, pledge, sell, dispose of or
          otherwise transfer any Certificate, any interest in any Certificate or
          any other similar security to any person in any manner, (b) solicit
          any offer to buy or to accept a pledge, disposition of other transfer
          of any Certificate, any interest in any Certificate or any other
          similar security from any person in any manner, (c) otherwise approach
          or negotiate with respect to any Certificate, any interest in any
          Certificate or any other similar security with any person in any
          manner, (d) make any general solicitation by means of general
          advertising or in any other manner or (e) take any other action, that
          (as to any of (a) through (e) above) would constitute a distribution
          of any Certificate under the Act, that would render the disposition of

<PAGE>

                                       -3-

          any Certificate a violation of Section 5 of the Act or any state
          securities law, or that would require registration or qualification
          pursuant thereto. The Purchaser will not sell or otherwise transfer
          any of the Certificates, except in compliance with the provisions of
          the Pooling and Servicing Agreement.

               [6. The Purchaser

                    (a) is not an employee benefit or other plan subject to the
          prohibited transaction provisions of the Employee Retirement Income
          Security Act of 1974, as amended ("ERISA"), or Section 4975 of the
          Internal Revenue Code of 1986, as amended (the "Code") (a "Plan"), or
          any other person (including an investment manager, a named fiduciary
          or a trustee of any Plan) acting, directly or indirectly, on behalf of
          or purchasing any Certificate with "plan assets" of any Plan within
          the meaning of the Department of Labor ("DOL") regulation at 29 C.F.R.
          ss.2510.3-101; or

                    (b) is an insurance company, the source of funds to be used
          by it to purchase the Certificates is an "insurance company general
          account" (within the meaning of DOL Prohibited Transaction Class
          Exemption ("PTCE") 95-60), and the purchase is being made in reliance
          upon the availability of the exemptive relief afforded under Sections
          I and III of PTCE 95-60; or

                    (c) has provided the Trustee, the Company and the Master
          Servicer with an opinion of counsel acceptable to and in form and
          substance satisfactory to the Trustee, the Company and the Master
          Servicer to the effect that the purchase of Certificates is
          permissible under applicable law, will not constitute or result in any
          non-exempt prohibited transaction under ERISA or Section 4975 of the
          Code and will not subject the Trustee, the Company or the Master
          Servicer to any obligation or liability (including obligations or
          liabilities under ERISA or Section 4975 of the Code) in addition to
          those undertaken in the Pooling and Servicing Agreement.

          In addition, the Purchaser hereby certifies, represents and warrants
to, and covenants with, the Company, the Trustee and the Master Servicer that
the Purchaser will not transfer such Certificates to any Plan or person unless
either such Plan or person meets the requirements set forth in either (a), (b)
or (c) above.

                                        Very truly yours,

                                        _______________________________________
                                        (purchaser)

                                        By:____________________________________

<PAGE>

                                       -4-

                                        Name:__________________________________
                                        Title:_________________________________

<PAGE>

                                   EXHIBIT G-2

                    FORM OF TRANSFEROR REPRESENTATION LETTER

                                             ________, 19___

Impac Secured Assets Corp.
1401 Dove Street
Newport Beach, California 92660

Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, MD  21044

Attention: Impac Secured Assets Corp. Series 1999-2

              Re:  Impac Secured Assets Corp.
                   Mortgage Pass-Through Certificates, Series 1999-2, Class ___
                   ------------------------------------------------------------

Ladies and Gentlemen:

          In connection with the sale by (the "Seller") to (the "Purchaser") of
$ Initial Certificate Principal Balance of Mortgage Pass-Through Certificates,
Series 1999-2, Class (the "Certificates"), issued pursuant to the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of
December 1, 1999 among Impac Secured Assets Corp., as depositor (the "Company"),
Impac Funding Corporation, as master servicer and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee"). The Seller hereby certifies,
represents and warrants to, and covenants with, the Company and the Trustee
that:

          Neither the Seller nor anyone acting on its behalf has (a) offered,
pledged, sold, disposed of or otherwise transferred any Certificate, any
interest in any Certificate or any other similar security to any person in any
manner, (b) has solicited any offer to buy or to accept a pledge, disposition or
other transfer of any Certificate, any interest in any Certificate or any other
similar security from any person in any manner, (c) has otherwise approached or
negotiated with respect to any Certificate, any interest in any Certificate or
any other similar security with any person in any manner, (d) has made any
general solicitation by means of general advertising or in any other manner, or
(e) has taken any other action, that (as to any of (a) through (e) above) would
constitute a distribution of the Certificates under the Securities Act of 1933
(the "Act"), that would render the disposition of any Certificate a violation of
Section 5 of the Act or any state securities law, or that would require
registration or qualification pursuant thereto. The Seller will not act in any
manner set forth in the foregoing sentence with

<PAGE>

                                       -2-

respect to any Certificate. The Seller has not and will not sell or otherwise
transfer any of the Certificates, except in compliance with the provisions of
the Pooling and Servicing Agreement.

                                   Very truly yours,

                                   ____________________________________________
                                   (Seller)

                                   By:_________________________________________
                                   Name:_______________________________________
                                   Title:______________________________________

<PAGE>

                                   EXHIBIT G-3

                   FORM OF RULE 144A INVESTMENT REPRESENTATION

             Description of Rule 144A Securities, including numbers:

                           Impac Secured Assets Corp.
                       Mortgage Pass-Through Certificates
                        Series 1999-2, Class ___, No. ___

          The undersigned seller, as registered holder (the "Transferor"),
intends to transfer the Rule 144A Securities described above to the undersigned
buyer (the "Buyer").

          1. In connection with such transfer and in accordance with the
agreements pursuant to which the Rule 144A Securities were issued, the
Transferor hereby certifies the following facts: Neither the Transferor nor
anyone acting on its behalf has offered, transferred, pledged, sold or otherwise
disposed of the Rule 144A Securities, any interest in the Rule 144A Securities
or any other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Rule 144A Securities, or otherwise
approached or negotiated with respect to the Rule 144A Securities, any interest
in the Rule 144A Securities or any other similar security with, any person in
any manner, or made any general solicitation by means of general advertising or
in any other manner, or taken any other action, which would constitute a
distribution of the Rule 144A Securities under the Securities Act of 1933, as
amended (the "1933 Act"), or which would render the disposition of the Rule 144A
Securities a violation of Section 5 of the 1933 Act or require registration
pursuant thereto, and that the Transferor has not offered the Rule 144A
Securities to any person other than the Buyer or another "qualified
institutional buyer" as defined in Rule 144A under the 1933 Act.

          2. The Buyer warrants and represents to, and covenants with, the
Transferor, the Trustee and the Master Servicer pursuant to Section 5.02 of the
Pooling and Servicing Agreement as follows:

                    a. The Buyer understands that the Rule 144A Securities have
     not been registered under the 1933 Act or the securities laws of any state.

                    b. The Buyer considers itself a substantial, sophisticated
     institutional investor having such knowledge and experience in financial
     and business matters that it is capable of evaluating the merits and risks
     of investment in the Rule 144A Securities.

                    c. The Buyer has been furnished with all information
     regarding the Rule 144A Securities that it has requested from the
     Transferor, the Trustee or the Master Servicer.

<PAGE>

                                                        -2-

                    d. Neither the Buyer nor anyone acting on its behalf has
     offered, transferred, pledged, sold or otherwise disposed of the Rule 144A
     Securities, any interest in the Rule 144A Securities or any other similar
     security to, or solicited any offer to buy or accept a transfer, pledge or
     other disposition of the Rule 144A Securities, any interest in the Rule
     144A Securities or any other similar security from, or otherwise approached
     or negotiated with respect to the Rule 144A Securities, any interest in the
     Rule 144A Securities or any other similar security with, any person in any
     manner, or made any general solicitation by means of general advertising or
     in any other manner, or taken any other action, that would constitute a
     distribution of the Rule 144A Securities under the 1933 Act or that would
     render the disposition of the Rule 144A Securities a violation of Section 5
     of the 1933 Act or require registration pursuant thereto, nor will it act,
     nor has it authorized or will it authorize any person to act, in such
     manner with respect to the Rule 144A Securities.

                    e. The Buyer is a "qualified institutional buyer" as that
     term is defined in Rule 144A under the 1933 Act and has completed either of
     the forms of certification to that effect attached hereto as Annex 1 or
     Annex 2. The Buyer is aware that the sale to it is being made in reliance
     on Rule 144A. The Buyer is acquiring the Rule 144A Securities for its own
     account or the account of other qualified institutional buyers, understands
     that such Rule 144A Securities may be resold, pledged or transferred only
     (i) to a person reasonably believed to be a qualified institutional buyer
     that purchases for its own account or for the account of a qualified
     institutional buyer to whom notice is given that the resale, pledge or
     transfer is being made in reliance on Rule 144A, or (ii) pursuant to
     another exemption from registration under the 1933 Act.

          3. The Buyer warrants and represents to, and covenants with, the
Transferor, the Servicer and the Depositor that either (1) the Buyer is not an
employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") ("Plan"), or a plan
within the meaning of Section 4975(e)(1) of the Internal Revenue Code of 1986
(the "Code") (also a "Plan"), and the Buyer is not directly or indirectly
purchasing the Rule 144A Securities on behalf of, as investment manager of, as
named fiduciary of, as trustee of, or with assets of a Plan, or (2) the Buyer's
purchase of the Rule 144A Securities will not result in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code.

          4. This document may be executed in one or more counterparts and by
the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same document.

<PAGE>

                                                        -3-

          IN WITNESS WHEREOF, each of the parties has executed this document as
of the date set forth below.

___________________________________        _____________________________________
     Print Name of Transferor                        Print Name of Buyer

By:________________________________        By:__________________________________
Name:                                      Name:
Title:                                     Title:

Taxpayer Identification:                   Taxpayer Identification:

No.____________________________            No.__________________________________

Date:__________________________            Date:________________________________

<PAGE>

                                                          ANNEX 1 TO EXHIBIT G-3
                                                          ----------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

             [For Buyers Other Than Registered Investment Companies]

      The undersigned hereby certifies as follows in connection with the Rule
144A Investment Representation to which this Certification is attached:

          1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.

          2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Buyer owned and/or invested
on a discretionary basis $______________________1 in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A) and (ii)
the Buyer satisfies the criteria in the category marked below.

     ___  CORPORATION, ETC. The Buyer is a corporation (other than a bank,
          savings and loan association or similar institution), Massachusetts or
          similar business trust, partnership, or charitable organization
          described in Section 501(c)(3) of the Internal Revenue Code.

     ___  BANK. The Buyer (a) is a national bank or banking institution
          organized under the laws of any State, territory or the District of
          Columbia, the business of which is substantially confined to banking
          and is supervised by the State or territorial banking commission or
          similar official or is a foreign bank or equivalent institution, and
          (b) has an audited net worth of at least $25,000,000 as demonstrated
          in its latest annual financial statement, a copy of which is attached
          hereto.

     ___  SAVINGS AND LOAN. The Buyer (a) is a savings and loan association,
          building and loan association, cooperative bank, homestead association
          or similar institution, which is supervised and examined by a State or
          Federal authority having supervision over any such institutions or is
          a foreign savings and loan association or equivalent institution and
          (b) has an audited net worth of at least $25,000,000 as demonstrated
          in its latest annual financial statements.

     ___  BROKER-DEALER. The Buyer is a dealer registered pursuant to Section 15
          of the Securities Exchange Act of 1934.

______________
1 Buyer must own and/or invest on a discretionary basis at least $100,000,000 in
securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities.

<PAGE>

                                       -2-

     ___  INSURANCE COMPANY. The Buyer is an insurance company whose primary and
          predominant business activity is the writing of insurance or the
          reinsuring of risks underwritten by insurance companies and which is
          subject to supervision by the insurance commissioner or a similar
          official or agency of a State, territory or the District of Columbia.

     ___  STATE OR LOCAL PLAN. The Buyer is a plan established and maintained by
          a State, its political subdivisions, or any agency or instrumentality
          of the State or its political subdivisions, for the benefit of its
          employees.

     ___  ERISA PLAN. The Buyer is an employee benefit plan within the meaning
          of Title I of the Employee Retirement Income Security Act of 1974.

     ___  INVESTMENT ADVISER. The Buyer is an investment adviser registered
          under the Investment Advisers Act of 1940.

     ___  SBIC. The Buyer is a Small Business Investment Company licensed by the
          U.S. Small Business Administration under Section 301(c) or (d) of the
          Small Business Investment Act of 1958.

     ___  BUSINESS DEVELOPMENT COMPANY. The Buyer is a business development
          company as defined in Section 202(a)(22) of the Investment Advisers
          Act of 1940.

     ___  TRUST FUND. The Buyer is a trust fund whose trustee is a bank or trust
          company and whose participants are exclusively (a) plans established
          and maintained by a State, its political subdivisions, or any agency
          or instrumentality of the State or its political subdivisions, for the
          benefit of its employees, or (b) employee benefit plans within the
          meaning of Title I of the Employee Retirement Income Security Act of
          1974, but is not a trust fund that includes as participants individual
          retirement accounts or H.R. 10 plans.

          3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) bank deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned but subject to
a repurchase agreement and (vii) currency, interest rate and commodity swaps.

          4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such

<PAGE>

                                       -3-

securities were not included if the Buyer is a majority-owned, consolidated
subsidiary of another enterprise and the Buyer is not itself a reporting company
under the Securities Exchange Act of 1934.

          5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.

  ___     ___  Will the Buyer be purchasing the Rule 144A
  Yes     No   Securities only for the Buyer's own account?

          6. If the answer to the foregoing question is "no", the Buyer agrees
that, in connection with any purchase of securities sold to the Buyer for the
account of a third party (including any separate account) in reliance on Rule
144A, the Buyer will only purchase for the account of a third party that at the
time is a "qualified institutional buyer" within the meaning of Rule 144A. In
addition, the Buyer agrees that the Buyer will not purchase securities for a
third party unless the Buyer has obtained a current representation letter from
such third party or taken other appropriate steps contemplated by Rule 144A to
conclude that such third party independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.

          7. The Buyer will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of Rule 144A Securities will
constitute a reaffirmation of this certification as of the date of such
purchase.

                                       _______________________________________
                                       Print Name of Buyer

                                       By:____________________________________
                                       Name:
                                       Title:

                                       Date:__________________________________

<PAGE>

                                                          ANNEX 2 TO EXHIBIT G-3
                                                          ----------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

              [For Buyers That Are Registered Investment Companies]

          The undersigned hereby certifies as follows in connection with the
Rule 144A Investment Representation to which this Certification is attached:

          1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.

          2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, and (ii)
as marked below, the Buyer alone, or the Buyer's Family of Investment Companies,
owned at least $100,000,000 in securities (other than the excluded securities
referred to below) as of the end of the Buyer's most recent fiscal year. For
purposes of determining the amount of securities owned by the Buyer or the
Buyer's Family of Investment Companies, the cost of such securities was used.

____         The Buyer owned $___________________ in securities (other than the
             excluded securities referred to below) as of the end of the Buyer's
             most recent fiscal year (such amount being calculated in accordance
             with Rule 144A).

____         The Buyer is part of a Family of Investment Companies which owned
             in the aggregate $______________ in securities (other than the
             excluded securities referred to below) as of the end of the Buyer's
             most recent fiscal year (such amount being calculated in accordance
             with Rule 144A).

          3. The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

          4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) bank deposit notes and certificates
of deposit, (iii) loan participations, (iv) repurchase agreements, (v)
securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps.

          5. The Buyer is familiar with Rule 144A and understands that each of
the parties to which this certification is made are relying and will continue to
rely on the statements made

<PAGE>

                                       -2-

herein because one or more sales to the Buyer will be in reliance on Rule 144A.
In addition, the Buyer will only purchase for the Buyer's own account.

          6. The undersigned will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Buyer's purchase of Rule 144A Securities will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.

                                      ________________________________________
                                      Print Name of Buyer

                                      By:_____________________________________
                                      Name:
                                      Title:

                                      IF AN ADVISER:

                                      ________________________________________
                                      Print Name of Buyer

                                      Date:___________________________________

<PAGE>

                                   EXHIBIT G-4

                         FORM OF TRANSFEROR CERTIFICATE

                                      ___________________, 19__

Impac Secured Assets Corp.
1401 Dove Street
Newport Beach, California 92660

Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, MD  21044

Attention: Impac Secured Assets Corp. Series 1999-2

             Re: Impac Secured Assets Corp.
                 Mortgage Pass-Through Certificates
                 Series 1999-2, Class __
                 ----------------------------------

Ladies and Gentlemen:

          This letter is delivered to you in connection with the sale by
___________________________ (the "Seller") to _____________________________ (the
"Purchaser") of a ___% Percentage Interest in the Mortgage Pass-Through
Certificates, Series 1999-2, Class R-I and Class R-II (the "Certificates"),
issued pursuant to Section 5.02 of the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement"), dated as of December 1, 1999, among Impac
Secured Assets Corp., as depositor (the "Company"), Impac Funding Corporation,
as master servicer and Norwest Bank Minnesota, National Association, as trustee
(the "Trustee"). All terms used herein and not otherwise defined shall have the
meaning set forth in the Pooling and Servicing Agreement. The Seller hereby
certifies, represents and warrants to, and covenants with, the Company and the
Trustee that:

          1. No purpose of the Seller relating to the sale of the Certificates
by the Seller to the Purchaser is or will be to impede the assessment or
collection of any tax.

          2. The Seller understands that the Purchaser has delivered to the
Trustee and the Master Servicer a transfer affidavit and agreement in the form
attached to the Pooling and Servicing Agreement as Exhibit G-5. The Seller does
not know or believe that any representation contained therein is false.

          3. The Seller has at the time of the transfer conducted a reasonable
investigation of the financial condition of the Purchaser as contemplated by
Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result of that
investigation, the Seller has determined that the Purchaser has historically
paid its debts as they have become due and has found no significant evidence to
indicate that the Purchaser will not continue to pay its debts as they become
due in

<PAGE>

                                       -2-

the future. The Seller understands that the transfer of the Certificates may not
be respected for United States income tax purposes (and the Seller may continue
to be liable for United States income taxes associated therewith) unless the
Seller has conducted such an investigation.

          4. The Seller has no actual knowledge that the proposed Transferee is
a Disqualified Organization, an agent of a Disqualified Organization or a
Non-United States Person.

                                            Very truly yours,

                                            ____________________________________
                                            (Seller)

                                            By:_________________________________
                                            Name:_________________________
                                            Title:______________________________

<PAGE>

                                   EXHIBIT G-5

                    FORM OF TRANSFER AFFIDAVIT AND AGREEMENT

STATE OF                            )
                           : ss.:
COUNTY OF                           )

          ___________________, being first duly sworn, deposes, represents and
warrants:

          1. That he/she is [Title of Officer] of [Name of Owner], a [savings
institution] [corporation] duly organized and existing under the laws of [the
State of ___________] [the United States], (the "Owner"), (record or beneficial
owner of the Class R-I and Class R-II Certificates on behalf of which he/she
makes this affidavit and agreement). This Class R and Class R-II Certificate was
issued pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement") dated as of December 1, 1999 among Impac Secured Assets
Corp., as depositor, Impac Funding Corporation, as master servicer (the "Master
Servicer"), and Norwest Bank Minnesota, National Association, as trustee (the
"Trustee").

          2. That the Owner (i) is not and will not be a "disqualified
organization" as of _______________[date of transfer] within the meaning of
Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended (the
"Code"), (ii) will endeavor to remain other than a disqualified organization for
so long as it retains its ownership interest in the Class R Certificates, and
(iii) is acquiring the Class R Certificates for its own account or for the
account of another Owner from which it has received an affidavit and agreement
in substantially the same form as this affidavit and agreement. (For this
purpose, a "disqualified organization" means the United States, any state or
political subdivision thereof, any agency or instrumentality of any of the
foregoing (other than an instrumentality all of the activities of which are
subject to tax and, except for the Federal Home Loan Mortgage Corporation, a
majority of whose board of directors is not selected by any such governmental
entity) or any foreign government, international organization or any agency or
instrumentality of such foreign government or organization, any rural electric
or telephone cooperative, or any organization (other than certain farmers'
cooperatives) that is generally exempt from federal income tax unless such
organization is subject to the tax on unrelated business taxable income).

          3. That the Owner is aware (i) of the tax that would be imposed on
transfers of Class R Certificates to disqualified organizations under the Code,
that applies to all transfers of Class R Certificates after March 31, 1988; (ii)
that such tax would be on the transferor, or, if such transfer is through an
agent (which person includes a broker, nominee or middleman) for a disqualified
organization, on the agent; (iii) that the person otherwise liable for the tax
shall be relieved of liability for the tax if the transferee furnishes to such
person an affidavit that the transferee is not a disqualified organization and,
at the time of transfer, such person does not have actual knowledge that the
affidavit is false; and (iv) that the Class R Certificates may be "noneconomic

<PAGE>

                                       -2-

residual interests" within the meaning of Treasury regulations promulgated
pursuant to the Code and that the transferor of a noneconomic residual interest
will remain liable for any taxes due with respect to the income on such residual
interest, unless no significant purpose of the transfer was to impede the
assessment or collection of tax.

          4. That the Owner is aware of the tax imposed on a "pass-through
entity" holding Class R Certificates if at any time during the taxable year of
the pass-through entity a disqualified organization is the record holder of an
interest in such entity. (For this purpose, a "pass through entity" includes a
regulated investment company, a real estate investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives.)

          5. That the Owner is aware that the Trustee will not register the
transfer of any Class R Certificates unless the transferee, or the transferee's
agent, delivers to it an affidavit and agreement, among other things, in
substantially the same form as this affidavit and agreement. The Owner expressly
agrees that it will not consummate any such transfer if it knows or believes
that any of the representations contained in such affidavit and agreement are
false.

          6. That the Owner has reviewed the restrictions set forth on the face
of the Class R Certificates and the provisions of Section 5.02(f) of the Pooling
and Servicing Agreement under which the Class R Certificates were issued (in
particular, clause (iii)(A) and (iii)(B) of Section 5.02(f) which authorize the
Trustee to deliver payments to a person other than the Owner and negotiate a
mandatory sale by the Trustee in the event the Owner holds such Certificates in
violation of Section 5.02(f)). The Owner expressly agrees to be bound by and to
comply with such restrictions and provisions.

          7. That the Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Class R Certificates will only be
owned, directly or indirectly, by an Owner that is not a disqualified
organization.

          8. The Owner's Taxpayer Identification Number is ______________.

          9. This affidavit and agreement relates only to the Class R
Certificates held by the Owner and not to any other holder of the Class R
Certificates. The Owner understands that the liabilities described herein relate
only to the Class R Certificates.

          10. That no purpose of the Owner relating to the transfer of any of
the Class R Certificates by the Owner is or will be to impede the assessment or
collection of any tax.

          11. That the Owner has no present knowledge or expectation that it
will be unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding. In this regard, the Owner hereby represents to
and for the benefit of the person from whom it acquired the Class R Certificate
that the Owner intends to pay taxes associated with holding such

<PAGE>

                                       -3-

Class R Certificate as they become due, fully understanding that it may incur
tax liabilities in excess of any cash flows generated by the Class R
Certificate.

          12. That the Owner has no present knowledge or expectation that it
will become insolvent or subject to a bankruptcy proceeding for so long as any
of the Class R Certificates remain outstanding.

          13. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.

          14. (a) The Certificates (i) are not being acquired by, and will not
be transferred to, any employee benefit plan within the meaning of section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or
other retirement arrangement, including individual retirement accounts and
annuities, Keogh plans and bank collective investment funds and insurance
company general or separate accounts in which such plans, accounts or
arrangements are invested, that is subject to Section 406 of ERISA or Section
4975 of the Internal Revenue Code of 1986 (the "Code") (any of the foregoing, a
"Plan"), (ii) are not being acquired with "plan assets" of a Plan within the
meaning of the Department of Labor ("DOL") regulation, 29 C.F.R. ss. 2510.3-101
or otherwise under ERISA, and (iii) will not be transferred to any entity that
is deemed to be investing in plan assets within the meaning of the DOL
regulation, 29 C.F.R. ss. 2510.3-101 or otherwise under ERISA; or

          (b) The purchase of Certificates is permissible under applicable law,
will not constitute or result in any prohibited transaction under ERISA or
Section 4975 of the Code, will not subject the Company, the Trustee or the
Master Servicer to any obligation in addition to those undertaken in the Pooling
and Servicing Agreement and, with respect to each source of funds ("Source")
being used by the Purchaser to acquire the Certificates, each of the following
statements are accurate: (a) the Purchaser is an insurance company; (b) the
source is assets of the Purchaser's "general account;" (c) the conditions set
forth in Sections I and III of Prohibited Transaction Class Exemption ("PTCE")
95-60 issued by the DOL have been satisfied and the purchase, holding and
transfer of Certificates by or on behalf of the Purchaser are exempt under PTCE
95-60; and (d) the amount of reserves and liabilities for such general account
contracts held by or on behalf of any Plan do not exceed 10% of the total
reserves and liabilities of such general account plus surplus as of the date
hereof (for purposes of this clause, all Plans maintained by the same employer
(or affiliate thereof) or employee organization are deemed to be a single Plan)
in connection with its purchase and holding of such Certificates; or

          (c) The Owner will provide the Trustee, the Company and the Master
Servicer with an opinion of counsel acceptable to and in form and substance
satisfactory to the Trustee, the Company and the Master Servicer to the effect
that the purchase of Certificates is permissible under applicable law, will not
constitute or result in any non-exempt prohibited transaction under

<PAGE>

                                       -4-

ERISA or Section 4975 of the Code and will not subject the Trustee, the Company
or the Master Servicer to any obligation or liability (including obligations or
liabilities under ERISA or Section 4975 of the Code) in addition to those
undertaken in the Pooling and Servicing Agreement.

     In addition, the Owner hereby certifies, represents and warrants to, and
covenants with, the Company, the Trustee and the Master Servicer that the Owner
will not transfer such Certificates to any Plan or person unless either such
Plan or person meets the requirements set forth in either (a), (b) or (c) above.

     Capitalized terms used but not defined herein shall have the meanings
assigned in the Pooling and Servicing Agreement.

<PAGE>

     IN WITNESS WHEREOF, the Owner has caused this instrument to be executed on
its behalf, by its [Title of Officer] and its corporate seal to be hereunto
attached, attested by its [Assistant] Secretary, this ___ day of _________, ___.

                                                  [NAME OF OWNER]

                                            By:_________________________________
                                                  [Name of Officer]
                                                  [Title of Officer]

[Corporate Seal]

ATTEST:

________________________________
[Assistant] Secretary

          Personally appeared before me the above-named [Name of Officer], known
or proved to me to be the same person who executed the foregoing instrument and
to be the [Title of Officer] of the Owner, and acknowledged to me that such
person executed the same as such person's free act and deed and the free act and
deed of the Owner.

          Subscribed and sworn before me this ___ day of _____________, 19__.

                                   ________________________________________
                                            NOTARY PUBLIC

                                   COUNTY OF _______________________________
                                   STATE OF ________________________________
                                   My Commission expires the ____ day of
                                   _______, 19__.

<PAGE>

                                   EXHIBIT G-6

         FORM OF INVESTOR REPRESENTATION LETTER FOR INSURANCE COMPANIES

                                 ________, 199__

Impac Secured Assets Corp.
1401 Dove Street
Newport Beach, California 92660

Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, MD  21044

Attention: Impac Secured Assets Corp. Series 1999-2

           Re:   Impac Secured Assets Corp.
                 Mortgage Pass-Through Certificates, Series 1999-2, Class ___
                 ------------------------------------------------------------

Ladies and Gentlemen:

          _______________ (the "Purchaser") intends to purchase from __________
(the "Seller") $____________ Initial Certificate Principal Balance of Mortgage
Pass-Through Certificates, Series 1999-2, Class __ (the "Certificate"), issued
pursuant to the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of December 1, 1999, among Impac Secured Assets Corp., as
depositor (the "Company"), Impac Funding Corporation, as master servicer and
Norwest Bank Minnesota, National Association, as trustee (the "Trustee"). All
terms used herein and not otherwise defined shall have the meanings set forth in
the Pooling and Servicing Agreement. The Purchaser hereby certifies, represents
and warrants to, and covenants with, the Company and the Trustee that:

               1. The Certificates purchased pursuant hereto will not be
          transferred to any employee benefit plan or other retirement
          arrangement including individual retirement accounts and Keogh plans
          that is subject to Section 406 of the Employee Retirement Income
          Security Act of 1974, as amended ("ERISA") or Section 4975 of the
          Internal Revenue Code of 1986 (the "Code") (any of the foregoing, a
          "Plan").

<PAGE>

                                       -1-

               2. The Purchaser is an insurance company and the source of funds
          used to purchase the Certificates is an "insurance company general
          account" (as such term is defined in Prohibited Transaction Class
          Exemption 95-60 issued by the U.S. Department of Labor ("PTCE 95-60")
          and there is no plan with respect to which the amount of such general
          account's reserves and liabilities for the contract(s) held by or on
          behalf of such Plan and all other plans maintained by the same
          employer (or affiliate thereof as defined in PTCE 95-60) or by the
          same employee organization, exceed 10% of the total of all reserves
          and liabilities of such general account (as such amounts are
          determined under PTCE 95-60) as of the date of acquisition of such
          Certificates.

                                       Very truly yours,

                                       _______________________________________
                                       (Purchaser)

                                       By:____________________________________
                                       Name:_____________________________
                                       Title:_________________________________

<PAGE>

                                    EXHIBIT H

                             MORTGAGE LOAN SCHEDULE

(Provided Upon Request)

<PAGE>

                                    EXHIBIT I

                      SELLER REPRESENTATIONS AND WARRANTIES

Seller's Representations Assigned by Depositor to Trustee

          Representations and Warranties. Pursuant to the Mortgage Loan Purchase
Agreement, the Seller has made certain representations and warranties to the
Depositor. The Seller shall confirm such representations and warranties and
shall deliver a Seller's Warranty Certificate and an Officers' Certificate on
the Closing Date (i) reaffirming such representations and warranties and (ii)
specifically restating and reaffirming the following representations and
warranties as of such date. The following representations are, pursuant to the
Pooling and Servicing Agreement, assigned by the Depositor to the Trustee for
the benefit of the Certificateholders, together with the related repurchase
rights specified in the Mortgage Loan Purchase Agreement. Pursuant to the
Mortgage Loan Purchase Agreement, the Seller's Warranty Certificate and related
Officer's Certificate, the Seller affirms each such representation and warranty
and agrees, consents to and acknowledges the assignment thereof to the Trustee.
All capitalized terms herein shall have the meanings assigned in the Pooling and
Servicing Agreement and the Seller's Warranty Certificate, as applicable.

          The Seller hereby represents and warrants to the Depositor and
Trustee, as to each Mortgage Loan, that as of the Closing Date or as of such
other date specifically provided herein:

          (i)       the information set forth in the Mortgage Loan Schedule
                    hereto is true and correct in all material respects;

          (ii)      the terms of the Mortgage Note and the Mortgage have not
                    been impaired, waived, altered or modified in any respect,
                    except by written instruments, (i) if required by law in the
                    jurisdiction where the Mortgaged Property is located, or
                    (ii) to protect the interests of the Trustee on behalf of
                    the Certificateholders;

          (iii)     the Mortgage File for each Mortgage Loan contains a true and
                    complete copy of each of the documents contained in such
                    Mortgage File, including all amendments, modifications and,
                    if applicable, waivers and assumptions that have been
                    executed in connection with such Mortgage Loan;

          (iv)      immediately prior to the transfer to the Purchaser, the
                    Seller was the sole owner of beneficial title and holder of
                    each Mortgage and Mortgage Note relating to the Mortgage
                    Loans and is conveying the same free and clear of any and
                    all liens, claims, encumbrances, participation interests,
                    equities, pledges, charges or security interests of any
                    nature and the Seller has full right and authority to sell
                    or assign the same pursuant to this Agreement;

          (v)       each Mortgage is a valid and enforceable first lien on the
                    property securing the related Mortgage Note and each
                    Mortgaged Property is owned by the

<PAGE>

                                       -2-

                    Mortgagor in fee simple (except with respect to common areas
                    in the case of condominiums, PUDs and de minimis PUDs) or by
                    leasehold for a term longer than the term of the related
                    Mortgage, subject only to (i) the lien of current real
                    property taxes and assessments, (ii) covenants, conditions
                    and restrictions, rights of way, easements and other matters
                    of public record as of the date of recording of such
                    Mortgage, such exceptions being acceptable to mortgage
                    lending institutions generally or specifically reflected in
                    the appraisal obtained in connection with the origination of
                    the related Mortgage Loan or referred to in the lender's
                    title insurance policy delivered to the originator of the
                    related Mortgage Loan and (iii) other matters to which like
                    properties are commonly subject which do not materially
                    interfere with the benefits of the security intended to be
                    provided by such Mortgage;

          (vi)      no payment of principal of or interest on or in respect of
                    any Mortgage Loan is 30 or more days past due;

          (vii)     there is no mechanics' lien or claim for work, labor or
                    material affecting the premises subject to any Mortgage
                    which is or may be a lien prior to, or equal with, the lien
                    of such Mortgage except those which are insured against by
                    the title insurance policy referred to in (xii) below;

          (viii)    as of the Cut-Off Date, (i) no Mortgage Loan had been 30
                    days or more delinquent more than once during the preceding
                    12 months, (ii) no Mortgage Loan had been delinquent for 60
                    days or more during the preceding 12 months and (iii) to
                    Seller's knowledge, there was no delinquent tax or
                    assessment lien against the property subject to any
                    Mortgage, except where such lien was being contested in good
                    faith and a stay had been granted against levying on the
                    property;

          (ix)      there is no valid offset, defense or counterclaim to any
                    Mortgage Note or Mortgage, including the obligation of the
                    Mortgagor to pay the unpaid principal and interest on such
                    Mortgage Note;

          (x)       to Seller's knowledge, except to the extent insurance is in
                    place which will cover such damage, the physical property
                    subject to any Mortgage is free of material damage and is in
                    good repair and there is no proceeding pending or threatened
                    for the total or partial condemnation of any Mortgaged
                    Property;

          (xi)      to the best of Seller's knowledge, each Mortgage Loan at the
                    time it was made complied in all material respects with
                    applicable state and federal laws, including, without
                    limitation, usury, equal credit opportunity and disclosure
                    laws; and each Mortgage Loan is being serviced in all
                    material

<PAGE>

                                       -3-

                    respects in accordance with applicable state and federal
                    laws, including, without limitation, usury, equal credit
                    opportunity and disclosure laws;

          (xii)     a lender's title insurance policy (on an ALTA or CLTA form)
                    or binder, or other assurance of title customary in the
                    relevant jurisdiction therefor in a form acceptable to
                    Fannie Mae or Freddie Mac, was issued on the date that each
                    Mortgage Loan was created by a title insurance company
                    which, to the best of Seller's knowledge, was qualified to
                    do business in the jurisdiction where the related Mortgaged
                    Property is located, insuring the Seller and its successors
                    and assigns that the Mortgage is a first priority lien on
                    the related Mortgaged Property in the original principal
                    amount of the Mortgage Loan. Seller is the sole insured
                    under such lender's title insurance policy, and such policy,
                    binder or assurance is valid and remains in full force and
                    effect, and each such policy, binder or assurance shall
                    contain all applicable endorsements including a negative
                    amortization endorsement, if applicable;

          (xiii)    in the event the Mortgage constitutes a deed of trust,
                    either a trustee, duly qualified under applicable law to
                    serve as such, has been properly designated and currently so
                    serves and is named in the Mortgage or if no duly qualified
                    trustee has been properly designated and so serves, the
                    Mortgage contains satisfactory provisions for the
                    appointment of such trustee by the holder of the Mortgage at
                    no cost or expense to such holder, and no fees or expenses
                    are or will become payable by Purchaser to the trustee under
                    the deed of trust, except in connection with a trustee's
                    sale after default by the mortgagor;

          (xiv)     (i) the Loan-to-Value Ratio of each Mortgage Loan at
                    origination was not more than 95.04%; (ii) except with
                    respect to approximately 0.47% of the Mortgage Loans, each
                    Mortgage Loan with a Loan-to-Value Ratio at origination in
                    excess of 80.00% will be insured by either (a) a Primary
                    Mortgage Insurance Policy issued by a private mortgage
                    insurer or (b) a Radian PMI Policy, which will insure
                    against default under the related Mortgage Note as follows:
                    (1) with respect to each Mortgage Loan originated under the
                    Seller's "Progressive Series Program", (A) for which the
                    outstanding principal balance at origination of such
                    Mortgage Loan is at least 80.01% and up to and including
                    90.00% of the value of the Appraised Value, such Mortgage
                    Loan is covered by a Primary Insurance Policy in an amount
                    equal to at least 20.00% of the Appraised Value, and (B) for
                    which the outstanding principal balance at origination of
                    such Mortgage Loan exceeded 90.00% of the Appraised Value,
                    such Mortgage Loan is covered by a Primary Insurance Policy
                    in an amount equal to at least 30.00% of the Appraised
                    Value, (2) with respect to each Mortgage Loan originated
                    under the Seller's "Progressive Express(TM)Program" and

<PAGE>

                                       -4-

                    covered by one of the Radian Policies, (A) for which the
                    outstanding principal balance at origination of such
                    Mortgage Loan is at least 80.01% and up to and including
                    89.99% of the Appraised Value, such Mortgage Loan is covered
                    by the Radian PMI Policy in an amount equal to at least
                    22.00% of the Appraised Value and (B) for which the
                    outstanding principal balance at origination of such
                    Mortgage Loan equaled or exceeded 90.00% of the Appraised
                    Value, such Mortgage Loan is covered by the Radian PMI
                    Policy in an amount equal to at least 30.00% of the
                    Appraised Value, and (3) with respect to each Mortgage Loan
                    originated under the Seller's "ConformPlus(TM)" or "Express
                    Priority Refi(TM)" programs, (A) for which the outstanding
                    principal balance at origination of such Mortgage Loan is at
                    least 80.01% and up to and including 90.00% of the Appraised
                    Value, such Mortgage Loan is covered by a Radian PMI Policy
                    in an amount equal to at least 25.00% of the Appraised Value
                    and (B) for which the outstanding principal balance at
                    origination of such Mortgage Loan exceeded 90.00% of the
                    Appraised Value, such Mortgage Loan is covered by a Radian
                    PMI Policy in an amount equal to at least 30.00% of the
                    Appraised Value;

          (xv)      at the time of origination, each Mortgaged Property was the
                    subject of an appraisal which conforms to the Seller's
                    underwriting requirements, and a complete copy of such
                    appraisal is contained in the Mortgage File;

          (xvi)     on the basis of a representation by the borrower at the time
                    of origination of the Mortgage Loans, at least 96.81% of the
                    Mortgage Loans (by aggregate principal balance) will be
                    secured by Mortgages on owner-occupied primary residence
                    properties;

          (xvii)    neither the Seller nor any servicer of the related Mortgage
                    Loans has advanced funds or knowingly received any advance
                    of funds by a party other than the Mortgagor, directly or
                    indirectly, for the payment of any amount required by the
                    Mortgage, except for (i) interest accruing from the date of
                    the related Mortgage Note or date of disbursement of the
                    Mortgage Loan proceeds, whichever is later, to the date
                    which precedes by 30 days the first Due Date under the
                    related Mortgage Note, and (ii) customary advances for
                    insurance and taxes;

          (xviii)   each Mortgage Note, the related Mortgage and other
                    agreements executed in connection therewith are genuine, and
                    each is the legal, valid and binding obligation of the maker
                    thereof, enforceable in accordance with its terms except as
                    such enforcement may be limited by bankruptcy, insolvency,
                    reorganization or other similar laws affecting the
                    enforcement of creditors' rights generally and by general
                    equity principles (regardless of whether such enforcement is
                    considered in a proceeding in equity or at

<PAGE>

                                       -5-

                    law); and, to the best of Seller's knowledge, all parties to
                    each Mortgage Note and the Mortgage had legal capacity to
                    execute the Mortgage Note and the Mortgage and each Mortgage
                    Note and Mortgage has been duly and properly executed by the
                    Mortgagor;

          (xix)     to the extent required under applicable law, each conduit
                    seller and subsequent mortgagee or servicer of the Mortgage
                    Loans was authorized to transact and do business in the
                    jurisdiction in which the related Mortgaged Property is
                    located at all times when it held or serviced the Mortgage
                    Loan; and any obligations of the holder of the related
                    Mortgage Note, Mortgage and other loan documents have been
                    complied with in all material respects; servicing of each
                    Mortgage Loan has been in accordance with the servicing
                    standard set forth in Section 3.01 of the Pooling Agreement
                    and the terms of the Mortgage Notes, the Mortgage and other
                    loan documents, whether the creation of such Mortgage Loan
                    and servicing was done by the Seller, its affiliates, or any
                    third party which created the Mortgage Loan on behalf of, or
                    sold the Mortgage Loan to, any of them, or any servicing
                    agent of any of the foregoing;

          (xx)      the related Mortgage Note and Mortgage contain customary and
                    enforceable provisions such as to render the rights and
                    remedies of the holder adequate for the realization against
                    the Mortgaged Property of the benefits of the security,
                    including realization by judicial, or, if applicable,
                    non-judicial foreclosure, and, to Seller's knowledge, there
                    is no homestead or other exemption available to the
                    Mortgagor which would interfere with such right to
                    foreclosure;

          (xxi)     except with respect to holdbacks required by certain
                    Mortgage Loans which holdbacks create a fund for (i) the
                    repair of Mortgaged Property due to damage from adverse
                    weather conditions, or (ii) the completion of new
                    construction, or both, the proceeds of the Mortgage Loans
                    have been fully disbursed, there is no requirement for
                    future advances thereunder and any and all requirements as
                    to completion of any on-site or off-site improvements and as
                    to disbursements of any escrow funds therefor have been
                    complied with; and all costs, fees and expenses incurred in
                    making, closing or recording the Mortgage Loan have been
                    paid, except recording fees with respect to Mortgages not
                    recorded as of the Closing Date;

          (xxii)    as of the Closing Date, the improvements on each Mortgaged
                    Property securing a Mortgage Loan is insured (by an insurer
                    which is acceptable to the Seller) against loss by fire and
                    such hazards as are covered under a standard extended
                    coverage endorsement in the locale in which the Mortgaged
                    Property is located, in an amount which is not less than the

<PAGE>

                                       -6-

                    lesser of the maximum insurable value of the improvements
                    securing such Mortgage Loan or the outstanding principal
                    balance of the Mortgage Loan, but in no event in an amount
                    less than an amount that is required to prevent the
                    Mortgagor from being deemed to be a co-insurer thereunder;
                    if the improvement on the Mortgaged Property is a
                    condominium unit, it is included under the coverage afforded
                    by a blanket policy for the condominium project; if upon
                    origination of the related Mortgage Loan, the improvements
                    on the Mortgaged Property were in an area identified as a
                    federally designated flood area, a flood insurance policy is
                    in effect in an amount representing coverage not less than
                    the least of (i) the outstanding principal balance of the
                    Mortgage Loan, (ii) the restorable cost of improvements
                    located on such Mortgaged Property or (iii) the maximum
                    coverage available under federal law; and each Mortgage
                    obligates the Mortgagor thereunder to maintain the insurance
                    referred to above at the Mortgagor's cost and expense;

          (xxiii)   there is no monetary default existing under any Mortgage or
                    the related Mortgage Note and there is no material event
                    which, with the passage of time or with notice and the
                    expiration of any grace or cure period, would constitute a
                    default, breach or event of acceleration; and neither the
                    Seller, any of its affiliates nor any servicer of any
                    related Mortgage Loan has taken any action to waive any
                    default, breach or event of acceleration; no foreclosure
                    action is threatened or has been commenced with respect to
                    the Mortgage Loan;

          (xxiv)    to Seller's knowledge, no Mortgagor, at the time of
                    origination of the applicable Mortgage, was a debtor in any
                    state or federal bankruptcy or insolvency proceeding;

          (xxv)     Each Mortgage Loan was originated or funded by (a) a savings
                    and loan association, savings bank, commercial bank, credit
                    union, insurance company or similar institution which is
                    supervised and examined by a federal or state authority (or
                    originated by (i) a subsidiary of any of the foregoing
                    institutions which subsidiary is actually supervised and
                    examined by applicable regulatory authorities or (ii) a
                    mortgage loan correspondent of any of the foregoing and that
                    was originated pursuant to the criteria established by any
                    of the foregoing) or (b) a mortgagee approved by the
                    Secretary of Housing and Urban Development pursuant to
                    sections 203 and 211 of the National Housing Act, as
                    amended;

          (xxvi)    all inspections, licenses and certificates required to be
                    made or issued with respect to all occupied portions of the
                    Mortgaged Property and, with respect to the use and
                    occupancy of the same, including, but not limited to,

<PAGE>

                                       -7-

                    certificates of occupancy and fire underwriting
                    certificates, have been made or obtained from the
                    appropriate authorities;

          (xxvii)   to Seller's knowledge, the Mortgaged Property and all
                    improvements thereon comply with all requirements of any
                    applicable zoning and subdivision laws and ordinances;

          (xxviii)  no instrument of release or waiver has been executed in
                    connection with the Mortgage Loans, and no Mortgagor has
                    been released, in whole or in part, except in connection
                    with an assumption agreement which has been approved by the
                    primary mortgage guaranty insurer, if any, and which has
                    been delivered to the Trustee;

          (xxix)    except with respect to 3.94% of the mortgage loans (by
                    aggregate principal balance) which provide for a balloon
                    payment, each Mortgage Note contains provisions providing
                    for its full amortization by the end of its original term
                    and is payable on the first day of each month in monthly
                    installments of principal and interest, with interest
                    payable in arrears, over an original term of not more than
                    30 years;

          (xxx)     no Mortgage Loan was originated based on an appraisal of the
                    related Mortgaged Property made prior to completion of
                    construction of the improvements thereon unless a
                    certificate of completion was obtained prior to closing of
                    the Mortgage Loan;

          (xxxi)    each of the Mortgaged Properties consists of a single parcel
                    of real property with a detached single-family residence
                    erected thereon, or a two- to four-family dwelling, or an
                    individual condominium unit in a condominium project or a
                    townhouse, or an individual unit in a planned unit
                    development.

          (xxxii)   no Mortgaged Property consists of a single parcel of real
                    property with a cooperative housing development erected
                    thereon. Any condominium unit or planned unit development
                    conforms with Progressive Loan Series Program requirements
                    regarding such dwellings or is covered by a waiver
                    confirming that such condominium unit or planned unit
                    development is acceptable to Seller.

          (xxxiii)  as of the Cut-Off Date, the Mortgage Rate of each Mortgage
                    Loan was not

<PAGE>

                                       -8-

                    more than 7.500% per annum and not less than 12.750% per
                    annum, and the weighted average Mortgage Rate of the
                    Mortgage Loans was approximately 9.732% per annum;

          (xxxiv)   measured by principal balance, no more than 5.74% of the
                    Mortgage Loans are secured by an individual unit in a
                    condominium project or hi-rise, and at least 91.12% of the
                    Mortgage Loans are secured by real property with a detached
                    single-family residence erected thereon, including de
                    minimis PUDs.

          (xxxv)    as of the Cut-Off Date, the remaining term to scheduled
                    maturity of each Mortgage Loan is not more than 360 months
                    and not less than 164 months;

          (xxxvi)   as of the Cut-Off Date, no more than 12.15% (by aggregate
                    principal balance) of the Mortgage Loans are cash-out
                    refinances;

          (xxxvii)  as of the Cut-Off Date, no more than 6.99% (by aggregate
                    principal balance) of the Mortgage Loans are rate and term
                    refinances;

          (xxxviii) as of the Cut-Off Date, no fewer than 80.83% (by aggregate
                    principal balance) of the Mortgage Loans are purchase money
                    loans;

          (xxxix)   as of the Cut-Off Date, no more than 20.79 and 19.82% of the
                    Mortgage Loans (by aggregate principal balance) are secured
                    by properties located in the states of Florida and
                    California, respectively;

          (xl)      as of the Cut-off Date, the principal balances of the
                    Mortgage Loans range from approximately $17,934 to
                    approximately $600,000, and the average unpaid principal
                    balance is $133,468.

          (xli)     with respect to Mortgaged Properties at the time of
                    origination of the related Mortgage Loans, measured by
                    aggregate unpaid principal balance as of the Cut-off Date,
                    at least 96.81% of the Mortgaged Properties are owner
                    occupied primary residences, no more than 2.09% of the
                    Mortgaged Properties are second homes and no more than 1.10%
                    of the Mortgaged Properties are investor owned properties;

<PAGE>

                                       -9-

          (xlii)    each Mortgage Loan constitutes a "qualified mortgage" under
                    Section 860G(a)(3)(A) of the Code and Treasury Regulation
                    Section 1.860G-2(a)(1);

          (xliii)   with respect to each Mortgage Loan directly originated by
                    Impac Funding (and not through a third-party broker or other
                    third party) as of the Closing Date, to the best of Seller's
                    knowledge, there has been no fraud, misrepresentation or
                    dishonesty with respect to the origination of any Mortgage
                    Loan; and

          (xliv)    No selection procedure reasonably believed by the Seller to
                    be adverse to the interests of the Certificateholders was
                    utilized in selecting the Mortgage Loans.

<PAGE>

                                    EXHIBIT J

      FORM OF NOTICE UNDER SECTION 3.25 OF POOLING AND SERVICING AGREEMENT

                                          December 20, 1999

Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, MD  21044

                 Re:    Impac Secured Assets Corp.
                        Mortgage Pass-Through Certificates
                        Series 1999-2
                        -----------------------------------

          Pursuant to Section 3.25 of the Pooling and Servicing Agreement, dated
as of December 1, 1999, relating to the Certificates referenced above, the
undersigned does hereby notify you that:

          (a) The prepayment assumption used in pricing the Certificates with
respect to the Mortgage Loans in Series 1999-2 consisted of a Prepayment
Assumption (the "Prepayment Assumption") of 100% per annum.

          (b) With respect to each Class of Certificates comprising the
captioned series, set forth below is (i), the first price, as a percentage of
the Certificate Principal Balance of each Class of Certificates, at which 10% of
the aggregate Certificate Principal Balance of each such Class of Certificates
was first sold at a single price, if applicable, or (ii) if more than 10% of a
Class of Certificates have been sold but no single price is paid for at least
10% of the aggregate Certificate Principal Balance of such Class of
Certificates, then the weighted average price at which the Certificates of such
Class were sold expressed as a percentage of the Certificate Principal Balance
of such Class of Certificates, (iii) if less than 10% of the aggregate
Certificate Principal Balance of a Class of Certificates has been sold, the
purchase price for each such Class of Certificates paid by Lehman Brothers Inc.
(the "Underwriter") expressed as a percentage of the Certificate Principal
Balance of such Class of Certificates calculated by: (1) estimating the fair
market value of each such Class of Certificates as of December 20, 1999; (2)
adding such estimated fair market value to the aggregate purchase prices of each
Class of Certificates described in clause (i) or (ii) above; (3) dividing each
of the fair market values determined in clause (1) by the sum obtained in clause
(2); (4) multiplying the quotient obtained for each Class of Certificates in
clause (3) by the purchase price paid by the Underwriter for all the
Certificates purchased by it; and (5) for each Class of Certificates, dividing
the product obtained from such Class of Certificates in clause (4) by the
initial Certificate Principal Balance of such Class of Certificates or (iv) the
fair market value (but not less than zero) as of the Closing Date of each
Certificate of each Class of Certificates retained by the Depositor or an
affiliate corporation, or delivered to the seller:

<PAGE>

                                       -2-

Series 1999-2
-------------
Class A-1:       ____________________
Class A-2:       ____________________
Class A-3:       ____________________
Class A-4:       ____________________
Class A-5:       ____________________
Class A-6:       ____________________
Class A-7:       ____________________
Class A-8:       ____________________
Class A-9:       ____________________
Class R-I:       ____________________
Class R-II:      ____________________
Class M-1:       ____________________
Class M-2:       ____________________
Class M-3:       ____________________
Class B-1:       ____________________
Class B-2:       ____________________
Class B-3:       ____________________

          The prices and values set forth above do not include accrued interest
with respect to periods before the closing.

                                       IMPAC SECURED ASSETS CORP.

                                       By:_____________________________________
                                       Name:
                                       Title:

<PAGE>

                                    EXHIBIT K

                         SCHEDULE OF DISCOUNT FRACTIONS

<PAGE>

                                   EXHIBIT L

                              CUSTODIAL AGREEMENT

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