Document:

LOAN AND SECURITY AGREEMENT

                                  by and among

                       GENERAL DATACOMM INDUSTRIES, INC.,
                             GENERAL DATACOMM, INC.
                          DATACOMM LEASING CORPORATION,
                            GDC HOLDING COMPANY, LLC,
                     GDC NAUGATUCK, INC., GDC REALTY, INC.,
                           GDC FEDERAL SYSTEMS, INC.,
                                  as Borrowers,

                                       and

                    THE FINANCIAL INSTITUTIONS NAMED HEREIN,
                                 as the Lenders

                                       and

                               ABLECO FINANCE LLC,
                                  as the Agent

                           Dated as of August 20, 2002

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                                TABLE OF CONTENTS

1.       DEFINITIONS AND CONSTRUCTION.......................................2
         1.1      Definitions...............................................2
         1.2      Accounting Terms.........................................17
         1.3      Code.....................................................17
         1.4      Construction.............................................17
         1.5      Schedules and Exhibits...................................17

2.       LOAN AND TERMS OF PAYMENT.........................................17
         2.1      [Intentionally Omitted]..................................17
         2.2      [Intentionally Omitted]..................................17
         2.3      [Intentionally Omitted]..................................17
         2.4      Term Loans...............................................17
         2.5      Payments.................................................20
         2.6      Agent Advances...........................................22
         2.7      Interest:  Rates, Payments, and Calculations.............22
         2.8      Collection of Accounts...................................23
         2.9      Crediting Payments.......................................24
         2.10     [Intentionally Omitted]..................................24
         2.11     Maintenance of Loan Account; Statements of Obligations...24
         2.12     Joint and Several Liability of the Borrowers.............24

3.       DELIVERIES; TERM OF AGREEMENT.....................................26
         3.1      Deliveries By Borrower...................................26
         3.2      [Intentionally Omitted]..................................28
         3.3      [Intentionally Omitted]..................................28
         3.4      Term.....................................................28
         3.5      Effect of Termination....................................28
         3.6      Early Termination by Borrower............................28

4.       CREATION OF SECURITY INTEREST.....................................29
         4.1      Grant of Security Interest...............................29
         4.2      Negotiable Collateral....................................29
         4.3      Collection of Accounts, General Intangibles, and
                  Negotiable Collateral....................................29
         4.4      Filing of Financing Statements; Commercial Tort Claims;
                  Pledge Amendments; Delivery of Additional
                  Documentation Required...................................29
         4.5      Power of Attorney........................................30
         4.6      Right to Inspect.........................................31
         4.7      Control Agreements.......................................31
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5.       REPRESENTATIONS AND WARRANTIES....................................31
         5.1      No Encumbrances..........................................31
         5.2      [Intentionally Omitted]..................................31
         5.3      [Intentionally Omitted]..................................31
         5.4      Equipment................................................31
         5.5      Location of Inventory and Equipment......................31
         5.6      Inventory Records........................................31
         5.7      State of Incorporation; Location of Chief Executive
                  Office; FEIN, Organizational ID Number;
                  Commercial Tort Claims...................................32
         5.8      Due Organization and Qualification; Subsidiaries.........32
         5.9      Due Authorization; No Conflict...........................33
         5.10     Litigation...............................................33
         5.11     Financial Statements; No Material Adverse Change.........34
         5.12     [Intentionally Omitted]..................................34
         5.13     Employee Benefits........................................34
         5.14     Environmental Condition..................................34
         5.15     Brokerage Fees...........................................35
         5.16     Permits and other Intellectual Property..................35
         5.17     Material Contracts; Restrictive Agreements...............35
         5.18     Government Contracts.....................................35

6.       AFFIRMATIVE COVENANTS.............................................35
         6.1      Accounting System........................................35
         6.2      Financial Statements, Reports, Certificates..............36
         6.3      Tax Returns..............................................37
         6.4      [Intentionally Omitted]..................................37
         6.5      Returns..................................................37
         6.6      Title to Equipment.......................................37
         6.7      Maintenance of Equipment.................................37
         6.8      Taxes....................................................37
         6.9      Insurance................................................38
         6.10     No Setoffs or Counterclaims..............................39
         6.11     Location of Inventory and Equipment; Segregation of
                  Inventory................................................39
         6.12     Compliance with Laws.....................................39
         6.13     Employee Benefits........................................39
         6.14     Leases...................................................40

7.       NEGATIVE COVENANTS................................................40
         7.1      Indebtedness.............................................40
         7.2      Liens....................................................41
         7.3      Restrictions on Fundamental Changes......................41
         7.4      Disposal of Assets.......................................41
         7.5      Change Name..............................................42

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         7.6      Guarantee................................................42
         7.7      Nature of Business.......................................42
         7.8      Prepayments and Amendments...............................42
         7.9      Change of Control........................................42
         7.10     Consignments.............................................43
         7.11     Distributions............................................43
         7.12     Accounting Methods.......................................43
         7.13     Investments..............................................43
         7.14     Transactions with Affiliates.............................43
         7.15     Suspension...............................................43
         7.16     [Intentionally Omitted]..................................44
         7.17     Use of Proceeds..........................................44
         7.18     Change in Location of Chief Executive Office; Inventory
                  and Equipment with Bailees...............................44
         7.19     No Prohibited Transactions Under ERISA...................44
         7.20     Financial Covenant.......................................45
         7.21     Capital Expenditures.....................................45
         7.22     Securities Accounts......................................45

8.       EVENTS OF DEFAULT.................................................45

9.       LENDER GROUP'S RIGHTS AND REMEDIES................................47
         9.1      Rights and Remedies......................................47
         9.2      Remedies Cumulative......................................49

10.      TAXES AND EXPENSES................................................50

11.      WAIVERS; INDEMNIFICATION..........................................50
         11.1     Demand; Protest; etc.....................................50
         11.2     Lender Group's Liability for Collateral..................50
         11.3     Indemnification..........................................50

12.      NOTICES...........................................................51

13.      CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER........................52

14.      DESTRUCTION OF BORROWER'S DOCUMENTS...............................53

15.      ISSUANCE OF EQUITY INTERESTS TO ________..........................53
         15.1     Authorization and Issuance of Warrants...................53
         15.2     Securities Act Matters...................................53
         15.3     Certain Taxes............................................54
         15.4     Cancellation and Issuance................................54
<PAGE>

16.      ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS........................55
         16.1     Assignments and Participations...........................55
         16.2     Successors...............................................57

17.      AMENDMENTS; WAIVERS...............................................58
         17.1     Amendments and Waivers...................................58
         17.2     No Waivers; Cumulative Remedies..........................59

18.      AGENT; LENDER GROUP...............................................59
         18.1     Appointment and Authorization of Agent...................59
         18.2     Delegation of Duties.....................................60
         18.3     Liability of Agent-Related Persons.......................60
         18.4     Reliance by Agent........................................60
         18.5     Notice of Default or Event of Default....................61
         18.6     Credit Decision..........................................61
         18.7     Costs and Expenses; Indemnification......................62
         18.8     Agent in Individual Capacity.............................62
         18.9     Successor Agent..........................................63
         18.10    Withholding Tax..........................................63
         18.11    Collateral Matters.......................................65
         18.12    Restrictions on Actions by Lenders; Sharing of Payments..66
         18.13    Agency for Perfection....................................66
         18.14    Payments by Agent to Lenders.............................67
         18.15    Concerning the Collateral and Related Loan Documents.....67
         18.16    Field Audits and Examination Reports; Confidentiality;
                  Disclaimers by Lenders; Other Reports and
                  Information..............................................67
         18.17    Several Obligations; No Liability........................68

19.      GENERAL PROVISIONS................................................69
         19.1     Effectiveness............................................69
         19.2     Successors and Assigns...................................69
         19.3     Section Headings.........................................69
         19.4     Interpretation...........................................69
         19.5     Severability of Provisions...............................69
         19.6     Amendments in Writing....................................69
         19.7     Counterparts; Telefacsimile Execution....................69
         19.8     Revival and Reinstatement of Obligations.................69
         19.9     Integration..............................................70
         19.10    General DataComm as Agent for Borrowers..................70

<PAGE>

SCHEDULES AND EXHIBITS

Schedule C-1               Term Loan Commitments
Schedule G-1               Guarantors
Schedule P-1               Permitted Liens
Schedule R-1               Real Property Collateral
Schedule 5.7               Borrowers' Organizational Information
Schedule 5.8               Capital Stock of Parent; Subsidiaries
Schedule 5.10              Litigation
Schedule 5.13              ERISA Benefit Plans
Schedule 5.14              Environmental Matters
Schedule 5.16              Permits and other Intellectual Property
Schedule 5.17              Material Contracts
Schedule 6.11              Location of Inventory and Equipment
Schedule 7.1               Indebtedness
Schedule 7.4               Permitted Dispositions
Schedule 7.6               Guarantees
Schedule 7.13              Investments

Exhibit C-1                Form of Compliance Certificate
Exhibit W-1                Form of Warrants

1.

<PAGE>

                           LOAN AND SECURITY AGREEMENT

         THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as
of August  20,  2002,  among  GENERAL  DATACOMM  INDUSTRIES,  INC.,  a  Delaware
corporation,  with its  chief  executive  office  located  at 6  Rubber  Avenue,
Naugatuck,  Connecticut  06770 ("Parent"),  GENERAL  DATACOMM,  INC., a Delaware
corporation,  with its  chief  executive  office  located  at 6  Rubber  Avenue,
Naugatuck, Connecticut 06770 ("General DataComm"), DATACOMM LEASING CORPORATION,
a Delaware  corporation,  with its chief  executive  office  located at 6 Rubber
Avenue, Naugatuck,  Connecticut 06770 ("DataComm Leasing"), GDC FEDERAL SYSTEMS,
INC.,  a Delaware  corporation,  with its chief  executive  office  located at 6
Rubber  Avenue,  Naugatuck,  Connecticut  06770  ("GDC  Federal"),  GDC  HOLDING
COMPANY,  LLC, a Delaware  limited  liability  company  formerly  known as Vital
Network  Services,  L.L.C.,  with its chief executive office located at 6 Rubber
Avenue, Naugatuck,  Connecticut 06770 ("GDC Holding"), GDC REALTY, INC., a Texas
corporation  with its mailing  address  located at 6 Rubber  Avenue,  Naugatuck,
Connecticut  06770  ("GDC  Realty"),   and  GDC  NAUGATUCK,   INC.,  a  Delaware
corporation,  with its  chief  executive  office  located  at 6  Rubber  Avenue,
Naugatuck,  Connecticut  06770 ("GDC  Naugatuck",  and together with the Parent,
General  DataComm,  DataComm Leasing,  GDC Federal,  GDC Holding and GDC Realty,
each a "Borrower"  and  collectively  the  "Borrowers"),  each of the  financial
institutions  signatories  hereto (such  financial  institutions,  together with
their respective successors and assigns,  each a "Lender" and collectively,  the
"Lenders"), and ABLECO FINANCE LLC, a Delaware limited liability company, with a
place of business located at 450 Park Avenue, New York, NY 10022 ("Ableco"),  as
arranger and  administrative  agent for the Lenders (in such capacity,  together
with its successors in such capacity, the "Agent").

                  WHEREAS,  each of the Debtors  (as  hereinafter  defined)  are
parties to that certain Loan and  Security  Agreement,  dated as of May 14, 1999
(as amended to date, the "Pre-Petition  Loan Agreement," among the Debtors,  the
lenders party  thereto from time to time and Foothill  Capital  Corporation,  as
agent for such lenders;

                  WHEREAS,  on November 2, 2001 (the "Filing Date"), each of the
Debtors commenced cases (the "Chapter 11 Cases") under Chapter 11 of Title 11 of
the United States Code in the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court");

                  WHEREAS, the Lenders have filed claims in the Chapter 11 Cases
and the Debtors and Lenders have agreed to the payment of Lenders' allowed claim
as provided in the Reorganization  Plan (as hereinafter  defined);  which claims
aggregate $30,000,000 subject to certain adjustments; and

                  WHEREAS,  Agent and the Lenders have agreed to such  repayment
in accordance with the  Reorganization  Plan subject to the terms and conditions
hereinafter set forth,

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

<PAGE>

1.       DEFINITIONS AND CONSTRUCTION.

1.1 Definitions.  As used in this Agreement,  the following terms shall have the
following definitions:
        "Account Debtor" means any Person who is or who may become
obligated under, with respect  to, or on account   of, an Account,  chattel
paper or a General  Intangible.
        "Accounts"  means all  currently  existing  and  hereafter
arising accounts, contract rights, and all other
forms of obligations  owing to any one of the Borrowers  arising out of the sale
or lease of goods or the  rendition  of  services  by any one of the  Borrowers,
irrespective of whether earned by performance, and any and all credit insurance,
guaranties, or security therefor.
         "Administrative  Borrower"  has the meaning set forth
in Section 19.10.

         "Adversary Proceeding" means that certain proceeding in the Bankruptcy
Court captioned Foothill Capital Corporation et. al. v. General DataComm
Industries, Inc. et. al. (In re General DataComm, Inc.),
Adversary Proceeding No. 02-2018.

         "Affiliate" means, as applied to any Person, any other Person
who directly or indirectly controls, is controlled  by, is under common control
with or is a director or officer of such Person.  For  purposes  of this
definition,  "control"  means  the  possession, directly  or  indirectly,
of the  power to vote  15% or more of the  securities having  ordinary  voting
power for the election of directors or other members of
the  governing  body of a Person or the direct or  indirect  power to direct the
management and policies of a Person.

          "Agent" means Ableco, solely in its capacity as agent for the
Lenders, and shall include any successor agent.

         "Agent's  Account"  means an  account  maintained  by
Agent at a depository selected by Agent.

        "Agent Advances" has the meaning set forth in Section
2.6(a).

        "Agent's Liens" means the Liens granted by the Borrowers to Agent for
the benefit of the Lender Group under this Agreement or the other
Loan Documents.

      "Agent-Related Persons" means the Agent, together with its Affiliates,
and the officers, directors, employees, counsel, agents and attorneys-in-fact
of the Agent and such Affiliates.

       "Agreement" has the meaning set forth in the preamble hereto.

       "Assignee"  has the  meaning  set  forth  in  Section
16.1(a).

        "Assignment and Acceptance" means an assignment and acceptance
agreement in form and substance reasonably acceptable to Agent.
                                       2
<PAGE>

         "Assignment  of Claims Act" means the  Assignment  of
Claims Act of 1940, as amended from time to time,
codified at 31 U.S.C.ss. 3727 and 41 U.S.C.ss. 15, and the
rules and regulations promulgated thereunder.

          "Authorized   Person"  means  any  officer  or  other
employee of Administrative Borrower.

          "Bankruptcy  Code" means the United States Bankruptcy
Code, as in effect from time to time.

          "Bankruptcy  Court" has the  meaning set forth in the
recitals to this Agreement.

           "Benefit Plan" means a "defined benefit plan"
(as defined in Section 3(35) of ERISA) for which a Borrower,
any Subsidiary of a Borrower,  or any ERISA Affiliate has been an "employer" (as
defined in Section 3(5) of ERISA) within the past six years.

            "Books" means each Borrower's now owned or hereafter acquired
books and records (including all of its Records  indicating,  summarizing,
or  evidencing  its  assets  (including  the Collateral)  or  liabilities,
all  of its  Records  relating  to  its  business operations or financial
condition,  and all of its goods or General Intangibles related to such
information).

             "Borrower" and  "Borrowers" has the meaning set forth in the
preamble hereto.

             "Business Day" means any day that is not a Saturday, Sunday,
or other day on which national banks are authorized or required to close.

             "Change of Control" shall be deemed to have occurred at
such time, other than as provided in the Reorganization  Plan,  as (i) a
"person"  or  "group"  (within  the  meaning of Sections 13(d) and 14(d)(2) of
the Securities  Exchange Act of 1934) becomes the "beneficial  owner"
(as defined in Rule 13d-3 under the Securities  Exchange Act
of 1934), directly or indirectly,  of more than 35% of the total voting power of
all classes of stock then outstanding of Parent entitled to vote in the election
of  directors,  or (ii) the Parent shall cease to,  directly or  indirectly,  of
record and  beneficially,  own and control 100% of the then outstanding Stock of
each of the Borrowers (other than the Parent).

               "Class B Stock"  means  the  Parent's  Class B Common
Stock, par value $.01 per share.

                "Closing Date" means August 20, 2002.

                "Code" means the New York Uniform Commercial Code.

                "Collateral" means all of each Borrower's now owned and
hereafter acquired right, title, and interest in and to each of the following:

                (a)      Accounts,

                                      3

<PAGE>

                (b)      Books,

                (c)      Equipment,

                (d)      General Intangibles,

                (e)      Inventory,

                (f)      Investment Property,

                (g)      Negotiable Collateral,

                (h)      Real Property Collateral,

                (i)      money or other assets of any Borrower that now or
hereafter come into the possession, custody, or control of any member of the
Lender Group, and
                (j)      the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of  insurance
covering any or all of the  Collateral,  and any and all Accounts, Books,
Equipment, General Intangibles,  Inventory, Investment Property Negotiable
Collateral, Real Property, money, deposit accounts, or other tangible
or intangible property resulting from the sale, exchange,  collection,  or other
disposition of any of the foregoing, or any portion thereof or interest therein,
and the proceeds thereof.

                 "Collateral Access Agreement" means a landlord waiver or
consent, mortgagee waiver or consent, bailee letter, or a similar
acknowledgment  agreement of any warehouseman,  processor, lessor,  consignee,
or other Person in  possession  of,  having a Lien upon, or
having rights or interests in the Equipment or Inventory,  in each case, in form
and substance satisfactory to Agent.

                 "Collections" means all cash, checks, notes, instruments,
and other items of payment (including, insurance proceeds, proceeds of cash
sales, rental proceeds, and tax refunds).

                 "Commercial  Tort Claim  Assignment"  has the meaning
set forth in Section 4.4(b).

                 "Commitment" means, as to any Lender, the Term A Loan
Commitment of such Lender, and the Term B Loan Commitment of such Lender, as
applicable, and "Commitments" means, collectively, the aggregate amount of the
Commitments of the Lenders.

                  "Common Stock" shall mean the common stock, par value
$0.01 per share, of the Parent.

                  "Compliance Certificate"  means a certificate substantially
in the form of Exhibit C-1 and delivered by the chief financial officer of
the Parent to Agent.

                                       4
<PAGE>

                 "Confirmation  Order" means that certain order of the
Bankruptcy Court, dated August 5, 2003, confirming the
Reorganization  Plan,  as the same may be  amended  from  time to time  with the
written consent of the Agent.

                 "Control Agreement" means a control agreement, in form and
substance reasonably satisfactory to Agent, between a Borrower,  Agent,  and
the  applicable  securities  intermediary  with
respect to a Securities Account or a bank with respect to a deposit account.

                 "DataComm    Leasing"    means    DataComm    Leasing
Corporation, a Delaware corporation.

                 "Debentures" means the 10% Adjustable Senior Subordinated
Debentures due 2008 issued to unsecured general creditors of Debtors under
the Indenture and in accordance with the Reorganization Plan.

                 "Debenture  Trustee"  means  HSBC  Bank  USA,  as the
trustee for the Debentures issued pursuant to the Indenture.

                 "Debtors" means,  collectively,  each Borrower, prior
to its reorganization at the Effective Time.

                  "Default" means an event, condition, or default that, with
the giving of notice, the passage of time, or both, would be an Event of
Default.

                  "Dollars or $" means United States dollars.

                  "EBITDA" means, with respect to any fiscal period, Parent's
 and its Subsidiaries' consolidated net earnings (or loss), minus extraordinary
gains, plus interest expense,  income taxes, and
depreciation and amortization for such period,  as determined in accordance with
GAAP.

                 "Effective   Date"  shall  mean  the  Effective  Date
defined in Section 1.27 of the Reorganization Plan.

                 "Effective Time" shall mean the time on the Effective Date at
which the Reorganization Plan becomes effective in accordance with its terms.

                 "Eligible Transferee" means: (a) a commercial bank organized
under the laws of the United  States,  or any state  thereof,  and having  total
assets in excess of $100,000,000; (b) a commercial bank organized under the laws
of any  other  country  which  is a  member  of the  Organization  for  Economic
Cooperation and Development or a political  subdivision of any such country, and
having total assets in excess of $100,000,000; provided that such bank is acting
through a branch or agency located in the United States;  (c) a finance company,
insurance  company  or other  financial  institution  or fund that is engaged in
making,  purchasing or otherwise  investing in commercial  loans in the ordinary
course of its business and having total assets in excess of $50,000,000; (d) any
Affiliate  (other than  individuals) of a Lender that was party hereto as of the
Closing Date, or any fund,  money market  account,  investment  account or other
account  managed by a Lender or an Affiliate  of such Lender;  (e) so long as no
Event of Default has occurred and is  continuing,  any other Person  approved by
Agent; and (f) during the continuation of an Event of Default,  any other Person
approved by Agent.

                                       5
<PAGE>

                "Equipment" means all of each Borrower's now owned or hereafter
acquired right, title, and interest with respect to equipment, machinery,
machine tools, motors, furniture,  furnishings, fixtures,  vehicles
(including motor vehicles),  tools, parts, goods (other than consumer goods,
farm products,  or Inventory),  wherever located,  including all
attachments,  accessories, accessions, replacements,  substitutions,  additions,
and improvements to any of the foregoing.

               "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto.

               "ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same
employer as the employees of a Borrower under IRC Section 414(b),  (b) any trade
or business subject to ERISA whose employees are treated as employed by the same
employer as the employees of a Borrower under IRC Section 414(c), (c) solely for
purposes of Section 302 of ERISA and  Section 412 of the IRC,  any  organization
subject  to ERISA  that is a member of an  affiliated  service  group of which a
Borrower is a member  under IRC Section  414(m),  or (d) solely for  purposes of
Section  302 of ERISA and Section  412 of the IRC,  any Person  subject to ERISA
that is a party to an  arrangement  with a  Borrower  and  whose  employees  are
aggregated with the employees of a Borrower under IRC Section 414(o).

                           "ERISA  Event"  means  (a) a  Reportable  Event  with
respect to any Benefit Plan or Multiemployer Plan, (b) the
withdrawal of a Borrower,  any of its  Subsidiaries  or ERISA  Affiliates from a
Benefit  Plan during a plan year in which it was a  "substantial  employer"  (as
defined in Section  4001(a)(2) of ERISA),  (c) the providing of notice of intent
to terminate a Benefit Plan in a distress  termination  (as described in Section
4041(c) of ERISA), (d) the institution by the PBGC of proceedings to terminate a
Benefit Plan or Multiemployer Plan, (e) any event or condition (i) that provides
a basis under Section  4042(a)(1),  (2), or (3) of ERISA for the termination of,
or the appointment of a trustee to administer, any Benefit Plan or Multiemployer
Plan, or (ii) that may result in termination of a Multiemployer Plan pursuant to
Section  4041A of ERISA,  (f) the  partial  or  complete  withdrawal  within the
meaning  of  Sections  4203  and  4205  of  ERISA,  of a  Borrower,  any  of its
Subsidiaries or ERISA Affiliates from a Multiemployer Plan, or (g) providing any
security to any Plan under  Section  401(a)(29)  of the IRC by a Borrower or its
Subsidiaries or any of their ERISA Affiliates.

                "Event  of  Default"  has the  meaning  set  forth in
Section 8.

               "Exchange Act" means the  Securities  Exchange Act of
1934, as amended, and any successor statute thereto.

                "FEIN" means Federal Employer Identification Number.

                "Final Order" means an order or judgment of the Bankruptcy
Court as entered on the docket that has not been reversed,  stayed,  modified or
amended,  and as to which the time to appeal,  petition for certiorari,  or seek
reargument  or  rehearing  has  expired  and as to which no appeal,  reargument,
petition  for  certiorari,  or  rehearing is pending or as to which any right to
appeal,  reargue,  petition for  certiorari or seek rehearing has been waived in
writing  in a manner  reasonably  satisfactory  to the Agent or, if any  appeal,
reargument,  petition for certiorari,  or rehearing thereof has been sought, the
order or judgment of the Bankruptcy Court has been affirmed by the highest court
to which the order was appealed or from which the  reargument  or rehearing  was
sought,  or certiorari has been denied,  and the time to take any further appeal
or to seek certiorari or further reargument has expired.

                                       6
<PAGE>

                "GAAP" means generally accepted accounting principles
as in effect from time to time in the United States,
consistently applied.

                 "GDC Federal" means GDC Federal Systems, Inc., a Delaware
corporation.

                 "GDC  Holding"  means GDC  Holding  Company,  LLC,  a
Delaware limited liability company formerly known as Vital
Network Services, L.L.C.

                  "GDC Naugatuck" means GDC Naugatuck, Inc., an indirect
Subsidiary of the Parent that is organized under the laws of Delaware.

                   "GDC Realty" means GDC Realty, Inc., a Texas corporation.

                    "General DataComm" means General DataComm, Inc., a
Delaware corporation.

                   "General Intangibles" means all of each Borrower's now
owned or hereafter acquired right, title, and interest with respect to general
intangibles  (including  payment  intangibles, contract rights,  rights to
payment,  rights arising under common law, statutes,
or  regulations,  choses or things in action,  goodwill,  patents,  trade names,
trademarks,  servicemarks,  copyrights,  blueprints,  drawings, purchase orders,
customer  lists,  monies due or  recoverable  from pension  funds,  route lists,
rights to payment and other rights  under any royalty or  licensing  agreements,
infringement claims, computer programs,  information contained on computer disks
or tapes,  software,  literature,  reports,  catalogs,  money, deposit accounts,
insurance premium rebates,  tax refunds, and tax refund claims), and any and all
supporting obligations in respect thereof, and any other personal property other
than goods, Accounts, Investment Property, and Negotiable Collateral.

                   "Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational or
governing documents of such Person.

                  "Governmental Authority" means any nation or government,
any state, province, or other political
subdivision  thereof,  any  central  bank (or  similar  monetary  or  regulatory
authority)  thereof,  any entity exercising  executive,  legislative,  judicial,
regulatory or administrative  functions of or pertaining to government,  and any
corporation  or other  entity  owned or  controlled,  through  Stock or  capital
ownership or otherwise, by any of the foregoing.

                                       7
<PAGE>

                  "Hazardous Materials" means (a) substances that are defined
or listed in, or otherwise classified pursuant
to, any applicable  laws or regulations  as "hazardous  substances,"  "hazardous
materials,"  "hazardous  wastes," "toxic  substances," or any other  formulation
intended  to define,  list,  or  classify  substances  by reason of  deleterious
properties  such  as  ignitability,  corrosivity,  reactivity,  carcinogenicity,
reproductive  toxicity,  or "EP  toxicity",  (b) oil,  petroleum,  or  petroleum
derived  substances,  natural gas, natural gas liquids,  synthetic gas, drilling
fluids,  produced  waters,  and other wastes  associated  with the  exploration,
development,  or production of crude oil, natural gas, or geothermal  resources,
(c) any flammable substances or explosives or any radioactive materials, and (d)
asbestos in any form or electrical equipment that contains any oil or dielectric
fluid containing levels of  polychlorinated  biphenyls in excess of 50 parts per
million.

                  "Holder" has the meaning set forth in Section 15.1

                  "Indebtedness" means: (a) all obligations of Borrowers for
borrowed money, (b) all obligations of Borrower evidenced by bonds,  debentures,
notes, or other similar  instruments and all  reimbursement or other obligations
of Borrowers in respect of letters of credit, bankers acceptances, interest rate
swaps,  or other  financial  products,  (c) all  obligations of Borrowers  under
capital  leases,  (d) all obligations or liabilities of others secured by a Lien
on any property or asset of a Borrower,  irrespective of whether such obligation
or liability is assumed,  and (e) any obligation of a Borrower  guaranteeing  or
intended to guarantee (whether guaranteed,  endorsed,  co-made,  discounted,  or
sold with recourse to such Borrower) any indebtedness,  lease, dividend,  letter
of credit, or other obligation of any other Person.

                  "Indemnified  Liabilities"  has the meaning set forth
in Section 11.3.

                  "Indemnified  Person"  has the  meaning  set forth in
Section 11.3.

                  "Indenture" means the trust indenture dated as of the
Effective Date between Parent and Debenture Trustee,
as amended, supplemented or otherwise modified from time to time entered into in
connection with the issuance of the Debentures.

                  "Insolvency Proceeding" means any proceeding commenced by
or against any Person under any provision of the
Bankruptcy Code or under any other bankruptcy or insolvency law, assignments for
the benefit of creditors, formal or informal moratoria, compositions, extensions
generally with creditors, or proceedings seeking reorganization, arrangement, or
other similar relief.

                  "Intellectual  Property" has the meaning set forth in
Section 5.16.

                  "Inventory" means all present and future inventory in which
any Borrower has any interest, including goods
held for sale or lease or to be furnished under a contract of service and all of
any  Borrower's  present and future raw  materials,  work in  process,  finished
goods, and packing and shipping materials, wherever located.

                  "Investment Property" means all of each Borrower's now
owned or hereafter acquired right, title, and
interest  with respect to  "investment  property" as that term is defined in the
Code, and any and all supporting obligations in respect thereof.

                                       8
<PAGE>

                  "IRC" means the  Internal  Revenue  Code of 1986,  as
amended, and the regulations thereunder.

                  "IRS" has the meaning set forth in Section 6.4.

                  "Legal Requirements" means all applicable international,
 foreign, federal, state, and local laws, judgments, decrees, orders,
statutes, ordinances, rules, regulations, or Permits.

                  "Lender" and "Lenders" have the respective meanings set forth
 in the preamble hereto, and shall include any
other Person made a party to this Agreement in accordance with the provisions of
Section 16.1.

                  "Lender Group" means,  individually and collectively,
each of the Lenders and the Agent.

                  "Lender Group Expenses" means all:  costs or expenses
(including taxes, and insurance premiums) required to
be paid by Borrowers  under any of the Loan  Documents that are paid or incurred
by any one or more members of the Lender Group; fees or charges paid or incurred
by any one or more  members of the Lender  Group in  connection  with any one or
more members of the Lender Group's transactions with Borrowers,  including, fees
or  charges   for   photocopying,   notarization,   couriers   and   messengers,
telecommunication, public record searches (including tax lien, judgment, and UCC
searches  and  including  searches  with the patent and  trademark  office,  the
copyright  office,  or the  department of motor  vehicles),  filing,  recording,
publication,  periodic Personal Property  Collateral or Real Property Collateral
appraisals,  real estate surveys,  real estate title policies and  endorsements,
and environmental audits; costs and expenses incurred by any one or more members
of the Lender Group in the  disbursement of funds to Borrowers (by wire transfer
or otherwise); charges paid or incurred by any one or more members of the Lender
Group resulting from the dishonor of checks; costs and expenses paid or incurred
by any one or more members of the Lender Group to correct any default or enforce
any provision of the Loan Documents,  or in gaining possession of,  maintaining,
handling,  preserving,  storing,  shipping,  selling,  preparing  for  sale,  or
advertising  to sell the  Personal  Property  Collateral  or the  Real  Property
Collateral,  or  any  portion  thereof,   irrespective  of  whether  a  sale  is
consummated;  costs and expenses  paid or incurred by any one or more members of
the Lender Group in examining Books; costs and expenses of third party claims or
any other suit paid or incurred by any one or more  members of the Lender  Group
in  enforcing  or  defending  the  Loan  Documents  or in  connection  with  the
transactions  contemplated  by the Loan  Documents or any one or more members of
the Lender Group's relationship with any Borrower or any Guarantor;  and any one
or more members of the Lender  Group's  reasonable  attorneys  fees and expenses
incurred in advising, structuring, drafting, reviewing, administering, amending,
terminating,  enforcing  (including  attorneys  fees and  expenses  incurred  in
connection  with a "workout," a  "restructuring,"  or an  Insolvency  Proceeding
concerning  any Borrower or any  Guarantor of the  Obligations),  defending,  or
concerning the Loan Documents, irrespective of whether suit is brought. No other
fees or expenses are  included in Lender  Group  Expenses or shall be payable by
Borrowers to Lenders under this Agreement.

                                       9
<PAGE>

              "Lender-Related  Persons" means,  with respect to any
Lender, such Lender, together with such Lender's
Affiliates,  and  the  officers,  directors,  employees,  counsel,  agents,  and
attorneys-in-fact of such Lender and such Lender's Affiliates.

               "Lien" means any interest in property securing an obligation
owed to, or a claim by, any Person other than
the owner of the property,  whether such  interest  shall be based on the common
law, statute, or contract, whether such interest shall be recorded or perfected,
and whether such interest shall be contingent upon the occurrence of some future
event or events or the existence of some future  circumstance or  circumstances,
including the lien or security interest arising from a mortgage,  deed of trust,
encumbrance,  pledge, hypothecation,  assignment, deposit arrangement,  security
agreement, adverse claim or charge, conditional sale or trust receipt, or from a
lease,  consignment,  or  bailment  for  security  purposes  and also  including
reservations,  exceptions, encroachments,  easements, rights-of-way,  covenants,
conditions,  restrictions,  leases,  and other title exceptions and encumbrances
affecting Real Property.

                "Loan  Account"  has the meaning set forth in Section 2.11.

                "Loan Documents" means this Agreement, the Lockbox Agreements,
each Pledge Agreement, the Patent Security
Agreement,  the Trademark Security  Agreement,  the Mortgages,  the Registration
Rights  Agreement,  the  Warrants,  any note or notes  executed by Borrowers and
payable to any Lender in connection with this Agreement, and any other agreement
entered into, now or in the future, in connection with this Agreement.

                "Lockbox  Account"  shall mean a  depository  account
established pursuant to one of the Lockbox Agreements.

                "Lockbox Agreements" means those certain Control Agreements,
in form and substance satisfactory to Agent, each of which is among the
applicable Borrower, Agent, and one of the Lockbox Banks.

                "Lockbox Banks" means, collectively,  The Bank of New
York, American National Bank and Peoples Bank.

                "Lockboxes" has the meaning set forth in Section 2.8.

                "Material Adverse Change" means (a) a material adverse change
in the business, operations, results of
operations,  assets,  liabilities  or financial  condition of the Parent and its
Subsidiaries  taken as a whole,  (b) the material  impairment of the Parent's or
any of its Subsidiaries' ability to perform their material obligations under the
Loan  Documents  to which  they are a party or of Agent or the  Lender  Group to
enforce the Obligations or realize upon the Collateral,  (c) a material  adverse
effect on the value of the  Collateral  or the  amount  that Agent or the Lender
Group  would be likely  to  receive  (after  giving  consideration  to delays in
payment and costs of enforcement) in the liquidation of such Collateral,  or (d)
a material  impairment  of the priority of Agent's or the Lender  Group's  Liens
with respect to the Collateral.

            "Material Contract" means any agreement or contract of any Borrower
or any Subsidiary of a Borrower

                                       10

(excluding  subcontracts  the  costs of which  by their  terms  are paid by such
Borrower's or Subsidiary's  customer) which (a) involves  consideration  to such
Borrower or Subsidiary of $250,000 or more, (b) involves  consideration  by such
Borrower or Subsidiary of $250,000 or more, (c) imposes financial obligations on
any Borrower or any Subsidiary of a Borrower of $250,000 or more (other than any
agreement  that by its terms may be terminated by any Borrower or any Subsidiary
of a Borrower upon sixty (60) days' notice or less) or (d) is otherwise material
(or  together  with  related  agreements  and  contracts,  is  material)  to the
business,  operations,  financial  condition,  performance  or properties of any
Borrower  excluding  from  clauses  (a),  (b),  (c) and (d),  however,  customer
purchase orders or purchase  orders to any vendor,  in each case entered into in
the ordinary course of a Borrower's business.

             "Maturity  Date" has the meaning set forth in Section 3.4.

             "Mortgages" means one or more mortgages, deeds of trust,
or deeds to secure debt, executed by any Borrower
in favor of Agent for the benefit of the Lender Group, the form and substance of
which shall be satisfactory to Agent, that encumber the Real Property Collateral
and the related improvements thereto.

              "Multiemployer Plan" means a "multiemployer plan" (as defined
in Section 4001(a)(3) of ERISA) to which a Borrower, any of its Subsidiaries, or
any ERISA Affiliate has contributed, or was obligated to contribute,  within the
past six years.
                           "Naugatuck Property" means that certain Real Property
owned by GDC Naugatuck and located at 6 Rubber
Avenue, Naugatuck, Connecticut 06770.

                "Negotiable Collateral" means all of each Borrower's now owned
and hereafter  acquired  right,  title,  and interest with respect to letters of
credit,  letter  of  credit  rights,  instruments,   promissory  notes,  drafts,
Investment Property, security entitlements,  securities (including the shares of
stock of subsidiaries of each Borrower),  documents,  personal  property leases,
and chattel  paper  (including  electronic  chattel  paper and tangible  chattel
paper), and any and all supporting obligations in respect thereof.

               "Net Proceeds" means:  (a) with respect to the sale or other
disposition of any asset (other than any
capital  stock or debt  security)  by any  Borrower  or any of its  Subsidiaries
(including in connection with any  sale-leaseback),  the excess,  if any, of (i)
the aggregate  amount  received in cash  (including  any cash received by way of
deferred payment pursuant to a note receivable,  other non-cash consideration or
otherwise,  but only as and when such cash is so  received) in  connection  with
such sale or other disposition, over (ii) the sum of (A) the principal amount of
any  Indebtedness  which is secured by any such asset  (other than  Indebtedness
assumed by the  purchaser  of such  asset) or which is  required  to be, and is,
repaid in  connection  with the sale or other  disposition  thereof  (other than
Indebtedness  hereunder),  (B) the  reasonable  out-of-pocket  expenses and fees
incurred by the such Borrower or its  Subsidiaries  in connection with such sale
or other  disposition (but only to the extent that such  out-of-pocket  expenses
and fees, if paid to an Affiliate of such Borrower, are approved by the Agent in
its sole discretion exercised  reasonably),  and provided that all such expenses
and fees are set forth on a certificate  provided to the Agent,  and (C) federal
and state taxes  incurred  in  connection  with such sale or other  disposition,
whether payable at such time or thereafter;  and (b) with respect to the sale or
other  disposition  of any capital stock or debt security by any Borrower or any
of its Subsidiaries,  excluding any sale or disposition of capital stock of such
Borrower pursuant to employee stock option or purchase plans or warrants of such

                                       11

<PAGE>

Borrower, the excess of (i) the aggregate amount received in cash (including any
cash received by way of deferred payment  pursuant to a note  receivable,  other
non-cash  consideration  or  otherwise,  but  only as and when  such  cash is so
received) in connection with such sale or other  disposition,  over (ii) the sum
of (A)  the  reasonable  fees,  commissions  and  other  out-of-pocket  expenses
incurred by such Borrower or its  Subsidiaries  in connection  with such sale or
other  disposition (but only to the extent such fees,  commissions and expenses,
if paid to an Affiliate of such Borrower,  are approved by the Agent in its sole
discretion  exercised  reasonably and provided that all such fees,  commissions,
discounts and expenses are set forth on a certificate provided to the Agent) and
(B)  federal  and state taxes  incurred  in  connection  with such sale or other
disposition, whether payable at such time or thereafter.

        "Obligations"  means all loans,  Term  Loans,  debts,
principal (including the Term B PIK Amount), interest
(including any interest  that,  but for the  provisions of the Bankruptcy  Code,
would have accrued),  liabilities  (including all amounts  charged to Borrowers'
Loan Account pursuant hereto),  obligations, or Lender Group Expenses (including
any fees or expenses that, but for the provisions of the Bankruptcy  Code, would
have accrued), lease payments,  guaranties,  covenants, and duties owing by each
Borrower to the Agent or the Lender Group of any kind and  description  (whether
pursuant  to or  evidenced  by the  Loan  Documents  or  pursuant  to any  other
agreement between a Borrower and the Agent or the Lender Group, and irrespective
of whether for the payment of money),  whether  direct or indirect,  absolute or
contingent,  due or to become  due,  now  existing  or  hereafter  arising,  and
including any debt,  liability,  or  obligation  owing from a Borrower to others
that the Agent or the Lender Group may have obtained by assignment or otherwise,
and  further  including  all  interest  not paid when due and all  Lender  Group
Expenses  that  any  Borrower  is  required  to pay  or  reimburse  by the  Loan
Documents, by law, or otherwise.  Any reference in this Agreement or in the Loan
documents to the Obligations shall include all amendments,  changes, extensions,
modifications,  renewals, replacements,  substitutions, and supplements, thereto
and thereof, as applicable.

        "Parent" means General DataComm Industries, Inc., a Delaware
corporation.

         "Participant" means any Person to which a Lender has sold a
participation interest in its rights under the Loan Documents.

         "Patent Security Agreement" means that certain Patent
Security Agreement, dated as of even date herewith,
between Borrowers and Agent, in form and substance satisfactory to Agent.

         "PBGC" means the Pension Benefit Guaranty Corporation as defined in
Title IV of ERISA, or any successor thereto.

         "Permits" of a Person shall mean all rights, franchises, permits,
authorities, licenses, certificates of
approval or authorizations, including licenses and other authorizations issuable
by a Governmental Authority, which pursuant to applicable Legal Requirements are
necessary to permit such Person  lawfully to conduct and operate its business as
currently conducted and to own and use its assets.

                                       12
<PAGE>

        "Permitted Discretion" means a determination made in good faith and in
the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.

         "Permitted Liens" means (a) Liens in favor of the Agent for the
benefit of the Lender Group, (b) Liens for
unpaid taxes that either (i) are not yet delinquent or (ii) do not constitute an
Event of Default  hereunder  and are the  subject  of  Permitted  Protests,  (c)
subordinated  Liens in favor of the Debenture  Trustee under the Indenture,  (d)
Liens set forth on Schedule  P-1, (e) purchase  money Liens or the  interests of
lessors under capital  leases to the extent that such Liens or interests  secure
Purchase Money  Indebtedness  permitted  under Section 7.1 hereof and so long as
the Lien  attaches  only to the assets  purchased  or acquired  and the proceeds
thereof,  (f)  Liens  arising  by  operation  of law in favor  of  warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in
the ordinary  course of business of each Borrower and not in connection with the
borrowing  of money,  and which  Liens  either  (i) are for sums not yet due and
payable, or (ii) are the subject of Permitted  Protests,  (g) Liens arising from
deposits  made in  connection  with  obtaining  worker's  compensation  or other
unemployment  insurance,  (h) Liens or deposits to secure  performance  of bids,
tenders,  or leases (to the extent permitted under this Agreement),  incurred in
the ordinary  course of business of each Borrower and not in connection with the
borrowing of money, (i) Liens arising by reason of security for surety or appeal
bonds in the ordinary  course of business of each Borrower,  (j) Liens resulting
from any judgment or award that would not have a Material  Adverse Change and as
to which the time for  appeal or  petition  for  rehearing  of which has not yet
expired,  or in  respect of which a Borrower  is in good  faith  prosecuting  an
appeal or proceeding  for a review,  and in respect of which a stay of execution
pending such appeal or proceeding  for review has been  secured,  (k) Liens with
respect to the Real Property  Collateral  that are exceptions to the commitments
for title  insurance  issued in connection  with the  Mortgages,  as accepted by
Agent,  (l)  with  respect  to any  Real  Property  that is not part of the Real
Property Collateral,  easements, rights of way, zoning and similar covenants and
restrictions,  and similar  encumbrances that customarily exist on properties of
Persons  engaged in similar  activities  and similarly  situated and that in any
event do not  materially  interfere  with or impair the use or  operation of the
Collateral  by any  Borrower  or the value of Lender  Group's  Lien  thereon  or
therein,  or materially  interfere with the ordinary  conduct of the business of
any  Borrower,  (m)  Liens on leases  (and the  underlying  Equipment)  in which
Datacomm  Leasing is the lessor,  provided that (i) Agent receives not less than
30  days  prior  written  notice  of  the  incurrence  of  such  Liens  and  the
Indebtedness  secured thereby and (ii) the proceeds of the Indebtedness  secured
by such  Liens are  deposited  in a lockbox,  and (n) Liens with  respect to the
Naugatuck  Property described on Schedule P-1 or as provided for or contemplated
under the Reorganization Plan.

         "Permitted Protest" means the right of the applicable Borrower to
protest any Lien (other than any such
Lien that secures the  Obligations),  taxes  (other than payroll  taxes or taxes
that are the subject of a United States  federal tax lien),  or rental  payment,
provided that (a) a reserve with respect to such  obligation is  established  on
the Books in such amount as is  required  under  GAAP,  (b) any such  protest is
instituted promptly and prosecuted diligently by the applicable Borrower in good
faith,  and (c) Required  Lenders are reasonably  satisfied that, while any such
protest is pending, there will be no impairment of the enforceability, validity,
or priority of any of the Agent's Liens.

                                       13
<PAGE>

           "Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships,   general  partnerships,  limited
liability  partnerships,  joint
ventures,   trusts,  land  trusts,  business  trusts,  or  other  organizations,
irrespective  of whether they are legal  entities,  and governments and agencies
and political subdivisions thereof.

            "Personal  Property  Collateral" means all Collateral
other than the Real Property Collateral.

           "Plan" means any employee benefit plan, program, or arrangement
maintained or contributed to by a Borrower
or with respect to which it may incur liability.

           "Pledge Agreements" means, collectively, (i) the Pledge Agreement,
dated as of even date herewith, made by
the Parent in favor of the Agent for the  benefit of the  Lenders,  as  amended,
supplemented or otherwise modified from time to time, (ii) the Pledge Agreement,
dated as of even date herewith,  made by General  DataComm in favor of the Agent
for the benefit of the Lenders,  as amended,  supplemented or otherwise modified
from  time to time,  and  (iii)  the  Pledge  Agreement,  dated as of even  date
herewith,  made by GDC  Realty  in favor of the  Agent  for the  benefit  of the
Lenders, as amended, supplemented or otherwise modified from time to time.

            "Pre-Petition  Loan  Agreement"  has the  meaning set
forth in the recitals to this Agreement.

             "Pro Rata Share" means:

                           (a)      with respect to a Lender's obligation to
make the Term A Loan and receive payments of principal,  interest,  fees, costs,
and expenses with respect thereto,  the percentage  obtained by dividing (i) the
principal  amount of such Lender's Term A Loan  Commitment by (ii) the principal
amount of the Term A Loan,

                           (b)      with respect to a Lender's obligation to
make the Term B Loan and receive payments of principal,  interest,  fees, costs,
and expenses with respect thereto,  the percentage  obtained by dividing (i) the
principal  amount of such Lender's Term B Loan  Commitment by (ii) the principal
amount of the Term B Loan,

                           (c)      with respect to all other matters as to a
particular  Lender  (including  the  indemnification  obligations  arising under
Section  18.7,  the  percentage  obtained by dividing  (i) the unpaid  principal
amount of such Lender's portion of the Term A Loan plus such Lender's portion of
the Term B Loan (inclusive of such Lender's portion of the Term B PIK Amount) by
the aggregate  amount of (ii) the Term A Loan plus the Term B Loan (inclusive of
the Term B PIK Amount).

                "Purchase Money Indebtedness" means Indebtedness (other than
the Obligations, but including obligations under  capital  leases),  incurred
at the time of, or within 20 days after,  the
acquisition  of any fixed assets for the purpose of financing all or any part of
the acquisition cost thereof.

                                       14
<PAGE>

               "Real Property" means any estates or interests in real property
now owned or hereafter acquired by any Borrower.

               "Real Property Collateral" means the parcel or parcels of real
property and the related improvements thereto identified on Schedule R-1, and
any Real Property hereafter acquired by any Borrower.

               "Record" means information that is inscribed on a tangible
medium or that is stored in an electronic or other medium and is retrievable in
perceivable form.

                "Reference  Bank"  means  JPMorgan  Chase  Bank,  its
successors or any other commercial bank designated by Agent
to the Administrative Borrower from time to time.

                "Reference Rate" means the rate of interest  publicly
announced by the Reference Bank in New York, New York
from time to time as its reference  rate, base rate or prime rate. The reference
rate,  base rate or prime rate is determined  from time to time by the Reference
Bank as a means of pricing  some loans to its  borrowers  and neither is tied to
any external rate of interest or index nor necessarily  reflects the lowest rate
of interest  actually  charged by the Reference Bank to any particular  class or
category of customers. Each change in the Reference Rate shall be effective from
and including the date such change is publicly announced as being effective.

                "Registration Rights Agreement" means the Registration Rights
Agreement, in form and substance satisfactory
to the Agent,  by and between the Parent and Holder,  with respect to the shares
of Warrant  Stock that Holder may acquire  pursuant to the  Warrants and certain
rights associated with such shares.

                "Reorganization" shall mean the reorganization of the Debtors
pursuant to the Reorganization Plan and the Confirmation Order.

                "Reorganization Plan" means the Plan of Reorganization of the
Debtors dated April 29, 2003 proposed pursuant to Section 1121 et. seq. of the
Bankruptcy Code.

                "Reportable Event" means any of the events described in Section
4043(c) of ERISA or the regulations thereunder  other than a Reportable  Event
as to which the  provision of 30 days notice to the PBGC is waived under
applicable regulations.

                "Required  Lenders" means, at any time, Lenders whose
Pro Rata Shares aggregate fifty-one percent (51%) or
more of the Commitments or, if the Commitments have been terminated irrevocably,
51% of the Obligations then outstanding.

                "Retiree  Health  Plan"  means an  "employee  welfare
benefit plan" within the meaning of Section 3(1) of ERISA
that provides  benefits to individuals  after  termination of their  employment,
other than as required by Section 601 of ERISA.

                "SEC" means the United States Securities and Exchange
Commission and any successor Federal agency having similar powers.

                                       15

<PAGE>

               "Securities  Account" means a "securities account" as
that term is defined in the Code.

              "Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of
how  designated) of or in a Person,  whether voting or nonvoting,  including all
classes of common stock,  preferred  stock,  or any other "equity  security" (as
such term is  defined  in Rule  3a11-1  of the  General  Rules  and  Regulations
promulgated by the SEC under the Exchange Act).

             "Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in
which that Person directly or indirectly owns or controls the shares of Stock or
other  ownership  interests  having ordinary voting power to elect a majority of
the  board  of  directors  (or  appoint  other  comparable   managers)  of  such
corporation, partnership, limited liability company, or other entity.

            "Term A Loan" has the  meaning  set forth in  Section
2.4(a)(i).

            "Term A Loan  Commitment"  means the amount set forth
opposite such Lender's name on Schedule C-1 as such
Lender's "Term A Loan Commitment", as the same may be adjusted from time to time
pursuant to the terms of this Agreement.

            "Term B Loan" has the  meaning  set forth in  Section
2.4(b)(i).

            "Term B Loan  Commitment"  means the amount set forth
opposite such Lender's name on Schedule C-1 as such
Lender's "Term B Loan Commitment", as the same may be adjusted from time to time
pursuant to the terms of this Agreement.

             "Term  B  PIK  Amount"  means,  as  of  any  date  of
determination, the amount of all interest accrued with respect
to the  Term B Loan  that has been  paid in kind by being  added to the  balance
thereof in accordance with Section 2.7(a).

             "Term Loans" means, collectively, the Term A Loan and
the Term B Loan.

              "Trademark  Security  Agreement"  means that  certain
Trademark Security Agreement, dated as of even date
herewith, among Borrowers and Agent, in form and substance satisfactory to
Agent.

              "UCC  Filing  Authorization  Letter"  means a  letter
executed by each Borrower authorizing Agent to file
appropriate  financing statements on Form UCC-1 in such office or offices as may
be necessary  or, in the opinion of Agent,  desirable to perfect the Liens to be
created by each applicable Loan Document.

             "Voidable  Transfer"  has the  meaning  set  forth in
Section 19.8.

             "Warrants" has the meaning set forth in Section 15.

                                       16

<PAGE>

            "Warrant  Stock"  means  each  share of Common  Stock
issuable by the Parent upon the exercise of the Warrants.

1.2 Accounting Terms. All accounting terms not specifically defined herein shall
be construed in  accordance  with GAAP.  When used herein,  the term  "financial
statements"  shall  include the notes and schedules  thereto.  Whenever the term
"Parent and its  Subsidiaries"  is used in respect of a financial  covenant or a
related  definition,  it  shall  be  understood  to  mean  the  Parent  and  its
Subsidiaries  on a  consolidated  basis  unless  the  context  clearly  requires
otherwise.

1.3 Code. Any terms used in this Agreement that are defined in the Code shall be
construed and defined as set forth in the Code unless otherwise defined herein.

1.4  Construction.  Unless  the  context  of this  Agreement  or any other  Loan
Document  clearly  requires  otherwise,  references  to the plural  include  the
singular, references to the singular include the plural, the term "including" is
not  limiting,  and the term "or" has,  except where  otherwise  indicated,  the
inclusive  meaning  represented  by the  phrase  "and/or."  The words  "hereof,"
"herein,"  "hereby,"  "hereunder,"  and similar  terms in this  Agreement or any
other Loan Document refer to this Agreement or any other Loan Documents,  as the
case may be, as a whole and not to any particular provision of this Agreement or
such  other  Loan  Document,  as the case may be.  An  Event  of  Default  shall
"continue"  or be  "continuing"  until such Event of Default  has been waived in
writing by Agent or cured. Section,  subsection,  clause,  schedule, and exhibit
references are to this Agreement  unless otherwise  specified.  Any reference in
this  Agreement or in the Loan  Documents  to this  Agreement or any of the Loan
Documents  shall  include  all  alterations,  amendments,  changes,  extensions,
modifications, renewals, replacements,  substitutions, joiners, and supplements,
thereto  and  thereof,  as  applicable  (subject  to any  restrictions  on  such
alterations,   amendments,   changes,   extensions,   modifications,   renewals,
replacements,  substitutions,  joinders,  and supplements set forth herein). Any
reference  herein to any Person  shall be  construed  to include  such  Person's
successors and assigns.  Any requirement of a writing contained herein or in the
other Loan Documents shall be satisfied by the  transmission of a Record and any
Record  transmitted  shall  constitute a  representation  and warranty as to the
accuracy and completeness of the information contained therein.

1.5      Schedules and Exhibits.  All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated  herein by reference.  Disclosure in
any schedule to this  Agreement  shall be deemed  disclosure for all purposes of
this Agreement

2.       LOAN AND TERMS OF PAYMENT.

2.1      [Intentionally Omitted].

2.2      [Intentionally Omitted].

2.3      [Intentionally Omitted].

2.4 Term Loans.  (a)(i) Subject to the terms and  conditions of this  Agreement,
each Lender that has a Term A Loan  Commitment  severally  agrees to make a term
loan as of the Closing  Date (the "Term A Loan") to  Borrowers  in the  original
aggregate  principal  amount  equal  to such  Lender's  Term A Loan  Commitment.

                                       17
<PAGE>

Notwithstanding the forgoing,  Borrower and Lenders agree that the entire Term A
Loan is  outstanding  as of the Closing Date. The Term A Loan shall be repaid on
the first day of each month during the applicable periods set forth below and in
the amounts corresponding to such periods, as follows:

                                            (A)      during the period from
 August 20, 2002 to and including December 31, 2004, the
Term A Loan  shall be repaid  in  monthly  installments  of  principal  equal to
$250,000,  provided that any and all adequate assurance payments made by Debtors
on or after  the  Closing  Date  shall be  deemed to have been made on and shall
reduce the  principal  balance of the Term A Loan on a dollar for dollar  basis;
and

                                            (B)      on January 1, 2005 and
 each month thereafter, the Term A Loan shall be repaid in
monthly installments of principal equal to the greater of (I) the product of (x)
the  principal  amount  of the Term A Loan  outstanding  on  December  31,  2004
multiplied by (y) 1/36th and (II) $250,000.

(ii)  Notwithstanding  the foregoing,  with respect to any monthly  amortization
installment  due and payable on the Term A Loan during the 2003  calendar  year,
Borrowers shall have the right to defer the payment of any such  installment for
thirty (30) days from the date such  installment  is  otherwise  due  hereunder,
provided that  Borrowers  may exercise such deferral  right once during the 2003
calendar year.

(iii)  Borrowers shall repay (A) at least  $7,500,000 of the original  principal
amount  of the  Term A Loan by  September  30,  2003  (i.e.,  the Term A Loan is
reduced  to  $17,500,000  by such  date)  and (B) at  least  $10,000,000  of the
original  principal  amount of the Term A Loan by December  31, 2003 (i.e.,  the
Term A Loan is reduced to $15,000,000  by such date);  provided,  however,  that
each  deadline set forth in clauses (A) and (B) above shall be extended by sixty
(60) days from the applicable  deadline if, at least two (2) Business Days prior
to such deadline,  Borrowers deliver to Agent a fully executed letter of intent,
in form and  substance  reasonably  satisfactory  to  Agent,  providing  for the
purchase by a Person  (other  than an  Affiliate  of a  Borrower)  of any of the
assets set forth on Schedule 7.4 and the Net Proceeds  resulting  from such sale
would,  when aggregated with all prior principal  repayments of the Term A Loan,
enable Borrowers to satisfy the minimum  repayment amount  corresponding to such
deadline.

(iv) The outstanding principal balance and all accrued and unpaid interest under
the Term A Loan shall be due and payable upon the termination of this Agreement,
whether by its terms, by prepayment,  by acceleration,  or otherwise. The unpaid
principal  balance of the Term A Loan may be prepaid in whole or in part without
penalty or premium at any time  during the term of this  Agreement  upon 10 days
prior  written  notice by  Borrowers to Agent,  all such  prepaid  amounts to be
applied  to the  principal  installments  due on the Term A Loan in the  inverse
order of their  maturity.  All amounts  outstanding  under the Term A Loan shall
constitute Obligations.

(v) Notwithstanding  anything contained in this Agreement to the contrary if (A)
on or before  June 30,  2003,  the  Borrowers  have  repaid  $23,000,000  of the
aggregate  principal  amount  of the  Term A Loan,  together  with  all  accrued
interest  thereon,  the remaining  principal  balance of the Term A Loan and any

                                       18

<PAGE>

interest accrued thereon shall be forgiven by the Lenders,  and (B) on or before
December  31, 2003,  the  Borrowers  have repaid  $24,000,000  of the  aggregate
principal amount of the Term A Loan, together with all accrued interest thereon,
the  remaining  principal  balance of the Term A Loan and any  interest  accrued
thereon shall be forgiven by the Lenders.

(b) (i) Subject to the terms and conditions of this Agreement,  each Lender that
has a Term B Loan  Commitment  severally  agrees  to make a term  loan as of the
Closing  Date  (the  "Term B  Loan")  to  Borrowers  in the  original  aggregate
principal amount equal to such Lender's Term B Loan Commitment.  Notwithstanding
the  foregoing,  Borrower  and Lenders  agree  that,  subject to  adjustment  in
accordance  with the subsequent  provisions of this Section  2.4(b),  the entire
Term B Loan is outstanding as of the Closing Date. The following portions of the
outstanding principal amount of the Term B Loan shall be forgiven, together with
all accrued interest on the principal amount so forgiven,  upon the satisfaction
of the condition corresponding to such forgiven amount:

                                            (A)      $1,250,000, if at
least $5,000,000 of the aggregate principal balance of the
Term A Loan has been  repaid  during the period from August 20, 2002 to June 30,
2003;

                                            (B)      $1,250,000, if at least
$10,000,000 of the aggregate principal balance of the
Term A Loan has been  repaid  during the period from August 20, 2002 to December
31, 2003;

                                            (C)      $1,250,000, if at least
$15,000,000 of the aggregate principal balance of the
Term A Loan has been  repaid  during the period from August 20, 2002 to June 30,
2004; and

                                            (D)      $1,250,000, if the
aggregate principal amount of the Term A Loan has been repaid
in full,  together with all accrued  interest  thereon,  by December 31, 2004 or
forgiven as provided in Section 2.4(a)(v).

(ii) If any  principal  amount of the Term B Loan is  outstanding  on January 1,
2005,  the  balance  owing  under  the Term B Loan  shall be  determined  by the
Bankruptcy  Court based upon the aggregate  amount  claimed by the Lenders to be
owing by the  Debtors  under the  Pre-Petition  Agreement  Loan as of August 20,
2002, less the amount  determined by the Bankruptcy Court in accordance with the
Reorganization  Plan as not owing to the Lenders thereunder (such  determination
having been made in connection with the Adversary Proceeding),  less $25,000,000
and less any reductions to the principal  balance of the Term B Loan pursuant to
clauses (A) through (D) of Section 2.4(b)(i).

(iii) The  outstanding  principal  balance and all  accrued and unpaid  interest
under the Term B Loan  shall be due and  payable  upon the  termination  of this
Agreement,  whether by its terms, by prepayment, by acceleration,  or otherwise.
If and only if the Term A Loan has been  repaid in full,  the  unpaid  principal
balance  of the Term B Loan may be  prepaid  in  whole or in part  without  fee,
penalty or premium at any time during the term of this  Agreement  upon  written
notice by  Borrowers  to Agent.  All amounts  outstanding  under the Term B Loan
shall constitute Obligations.

                                       19
<PAGE>

2.5      Payments.

(a)      Payments by Borrower.

(i) All  payments  to be made  by  Borrowers  shall  be  made  without  set-off,
recoupment,  deduction,  or counterclaim,  except as otherwise  required by law.
Except as otherwise  expressly  provided herein, all payments by Borrowers shall
be made to Agent for the account of the Lenders, at Agent's address set forth in
Section 12, and shall be made in immediately available funds, no later than 2:00
p.m. (New York time) on the date specified herein. Any payment received by Agent
later than 2:00 p.m. (New York time), at the option of Agent, shall be deemed to
have been received on the following Business Day and any applicable  interest or
fee shall continue to accrue until such following Business Day.

(ii)  Whenever  any  payment  is due on a day other than a  Business  Day,  such
payment shall be made on the following  Business Day, and such extension of time
shall in such case be included in the  computation  of interest or fees,  as the
case may be.

(iii) Unless Agent  receives  notice from  Administrative  Borrower prior to the
date on which any payment is due to Lenders  that  Borrowers  will not make such
payment in full as and when required,  Agent may assume that Borrowers have made
such payment in full to Agent on such date in  immediately  available  funds and
Agent may (but shall not be so  required),  in  reliance  upon such  assumption,
distribute  to each  Lender on such due date an amount  equal to the amount then
due such Lender.  If and to the extent  Borrowers  have not made such payment in
full to  Agent,  each  Lender  shall  repay  to  Agent  on  demand  such  amount
distributed to such Lender, together with interest thereon at the Reference Rate
for each day from the date such amount is  distributed  to such Lender until the
date repaid.

(iv)  Immediately upon the receipt by any Borrower or any of its Subsidiaries of
any Net Proceeds from the disposition of the assets set forth on Schedule 7.4 of
such Borrower or any of its Subsidiaries,  such Borrower shall prepay the Term A
Loan in an amount equal to 100% of such Net Proceeds. Lenders agree to cooperate
with  Borrowers  on the  realization  of  proceeds  from the sale of the  assets
identified in Schedule 7.4,  including (A) consent to the sale of such assets in
which Agent has security interests, provided that the Net Proceeds of such sales
are  applied  in  accordance  with the  immediately  preceding  sentence  to the
reduction  of the  Term A Loan,  and (B)  consent  to a  prior  mortgage  on the
Naugatuck  Property  and/or the  satisfaction  of Agent's Lien on the  Naugatuck
Property in  connection  with the sale or mortgage  of the  Naugatuck  Property,
provided  the  Net  Proceeds  therefrom  are  applied  in  accordance  with  the
immediately  preceding  sentence to the reduction of the Term A Loan and applied
to the satisfaction of any existing prior mortgages on the Naugatuck Property in
an  amount  not  exceeding  $635,000  using  cash on hand.  In  addition  to the
foregoing,  any Net  Proceeds  received  by  Borrowers  from any life  insurance
policies  maintained  by  Borrowers  on the life of  Howard S.  Modlin  shall be
promptly paid to Agent to prepay the Term A Loan.

(b) Apportionment, Application of Payments, and Reversal of Payments. (i) Except
as otherwise provided with respect to Defaulting  Lenders,  aggregate  principal

                                       20
<PAGE>

and interest payments shall be apportioned  ratably among the Lenders (according
to the unpaid  principal  balance of each  Lender's  Term Loans as to which such
payments  relate),  and  payments of the fees (other  than fees  designated  for
Agent's sole and separate account) shall, as applicable,  be apportioned ratably
among the Lenders.  Except as otherwise provided in paragraph (b)(ii) below, all
payments  shall be  remitted  to Agent and all such  payments  not  relating  to
principal of or interest on specific  Term Loans (other than  payments  received
while no Event of Default has occurred and is continuing  and that relate to the
payment of principal or interest of specific  Obligations  or that relate to the
payment of specific fees or other amounts) and all proceeds of Accounts or other
Collateral  received  by Agent  pursuant  to this  Agreement  or any other  Loan
Document, shall be applied as follows:

          first, to pay any Lender Group Expenses then due to Agent from
          Borrowers until paid in full;

          second, to pay any Lender Group Expenses then due to Lenders from
          Borrowers;

          third, to pay interest due in respect of all Agent Advances until
          paid in full;

          fourth, to pay interest due in respect of the Term A Loan until paid
          in full;

          fifth, to pay or prepay principal of Agent Advances until paid in
          full;

          sixth, to pay or prepay the principal of the Term A Loan until paid
          in full;

          seventh, when due and payable, to pay all Obligations in respect of
          the Term B Loan until paid in full; and

          eighth, ratably to pay any other Obligations due to Agent or any
          Lender by Borrowers.

Agent shall promptly distribute to each Lender,  pursuant to the applicable wire
transfer instructions received from each Lender in writing, such funds as it may
be entitled to receive, subject to a settlement delay.

(ii) In each  instance,  so long as no  Event of  Default  has  occurred  and is
continuing,  Section  2.5(b)(i)  shall not be deemed to apply to any  payment by
Borrowers  specified by Borrowers to Agent to be for the payment of  Obligations
in  respect  of a Term Loan when due and  payable  under any  provision  of this
Agreement or the  prepayment  of all or part of the principal of the Term A Loan
pursuant to Section 2.5(a)(iv).

(iii) For  purposes of the  foregoing,  "paid in full" with  respect to interest
shall  include  interest  accrued  after  the  commencement  of  any  Insolvency
Proceeding  irrespective  of whether a claim for such  interest is  allowable in
such Insolvency Proceeding.

(iv) In the event of a direct conflict  between the priority  provisions of this
Section 2.5(b) and other provisions contained in any other Loan Document,  it is
the intention of the parties  hereto that both such priority  provisions in such
documents shall be read together and construed,  to the fullest extent possible,
to be in concert  with each other.  In the event of any  actual,  irreconcilable
conflict that cannot be resolved as aforesaid,  the terms and provisions of this
Section 2.5(b) shall control and govern.

                                       21

2.6      Agent Advances.

(a)  Subject  to the  limitations  set forth in the  proviso  contained  in this
Section 2.6(a),  Agent hereby is authorized by Borrowers and Lenders,  from time
to time in  Agent's  sole  discretion,  after  the  occurrence  and  during  the
continuance  of a Default or an Event of Default  (but  without  constituting  a
waiver of such  Default or Event of Default),  to make  advances to Borrowers on
behalf of  Lenders  that  Agent,  in its  reasonable  business  judgment,  deems
necessary or desirable (i) to preserve or protect the Collateral, or any portion
thereof,  (ii) to enhance  the  likelihood  of, or  maximize  the amount of, the
repayment of the Obligations, or (iii) to pay any other amount chargeable to the
Borrowers  pursuant  to the  terms of this  Agreement,  including  Lender  Group
Expenses and the advances described in Section 10 (any of the advances described
in this  Section  2.6(a)  being  hereinafter  referred to as "Agent  Advances");
provided, that the Required Lenders may at any time revoke Agent's authorization
contained in this Section 2.6(a) to make Agent Advances,  any such revocation to
be in writing and to become effective upon Agent's receipt thereof.

(b) Agent  Advances shall be repayable by Borrowers on demand and secured by the
Collateral,  shall constitute Obligations hereunder,  and shall bear interest at
the rate then applicable to Obligations pursuant to Section 2.7.

2.7      Interest:  Rates, Payments, and Calculations.

(a) Interest Rate. Except as provided in clause (c) below, all Obligations shall
bear interest at a per annum rate of 7.25 percentage points, provided that after
December 31, 2003, all Obligations shall bear interest at a per annum rate equal
to the greater of (i) 7.25  percentage  points and (ii) the Reference  Rate plus
2.5 percentage points;  provided,  however, that the interest on the outstanding
principal amount of the Term B Loan shall be paid by capitalizing  such interest
and adding such capitalized interest to the then outstanding principal amount of
the Term B Loan. Any interest to be capitalized shall be capitalized on the date
such  interest is to be paid  pursuant  to Section  2.7(e) and added to the then
outstanding  principal  amount of the Term B Loan and,  thereafter,  shall  bear
interest  as  provided  hereunder  as if it  had  originally  been  part  of the
outstanding principal of the Term B Loan.

(b)      [Intentionally Omitted]
          ---------------------

(c) Default Rate. Upon the occurrence and during the continuation of an Event of
Default,  all Obligations  shall bear interest at a per annum rate equal to 2.00
percentage points above the interest rate applicable to such Obligations at such
time.

(d) Minimum  Interest.  In no event shall the rate of interest  chargeable under
Section  2.7(a)  for any day be less than 7.25% per  annum.  To the extent  that
interest  accrued  hereunder at the rate set forth herein would be less than the
foregoing  minimum daily rate, the interest rate  chargeable  hereunder for such
day automatically shall be deemed increased to the minimum rate.

                                       22
<PAGE>

(e)  Payments.  Interest  (other than the Term B PIK Amount)  payable  hereunder
shall be due and payable,  in arrears, on the first day of each month during the
term hereof. Borrowers will pay on demand, all Lender Group Expenses incurred by
Agent and each Lender.  Lenders and  Borrowers  hereby  authorize  Agent to, and
Agent may,  from time to time,  charge the Loan  Account of  Borrowers  with any
amount  due and  payable  by  Borrowers  under any Loan  Document.  Lenders  and
Borrowers  agree that Agent shall have the right to make such charges whether or
not any Default or Event of Default shall have occurred and be  continuing.  Any
amount  charged to the Loan Account of Borrowers  shall be deemed an  Obligation
hereunder and, if not paid within 10 days after the same are billed to Borrowers
by Agent,  thereafter  shall bear  interest as provided  hereunder.  Lenders and
Borrowers  confirm that any charges  which Agent may so make to the Loan Account
of Borrowers as herein  provided will be made as an  accommodation  to Borrowers
and solely at Agent's discretion.

(f)  Computation.  In the event the Reference  Rate is changed from time to time
hereafter,   the  applicable  rate  of  interest  hereunder   automatically  and
immediately shall be increased or decreased by an amount equal to such change in
the Reference  Rate. All interest and fees  chargeable  under the Loan Documents
shall be computed  on the basis of a 360 day year for the actual  number of days
elapsed.

(g) Intent to Limit  Charges  to  Maximum  Lawful  Rate.  In no event  shall the
interest rate or rates payable under this Agreement, plus any other amounts paid
in connection herewith, exceed the highest rate permissible under any law that a
court  of  competent   jurisdiction  shall,  in  a  final  determination,   deem
applicable.  Borrowers  and Lender  Group,  in  executing  and  delivering  this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided,  however, that, anything contained herein
to the contrary notwithstanding,  if said rate or rates of interest or manner of
payment exceeds the maximum  allowable under applicable law, then, ipso facto as
of the date of this  Agreement,  Borrowers  are and shall be liable only for the
payment of such maximum as allowed by law, and payment  received from  Borrowers
in excess of such legal maximum,  whenever received,  shall be applied to reduce
the principal balance of the Obligations to the extent of such excess.

2.8  Collection  of  Accounts.  (a) Each  Borrower  shall at all times  maintain
lockboxes (the "Lockboxes")  and,  immediately after the Closing Date, (i) shall
instruct all Account Debtors with respect to the Accounts,  General Intangibles,
and Negotiable  Collateral of such Borrower to remit all  Collections in respect
thereof to such Lockboxes and (ii) shall deposit all other Collections  received
by such Borrower from any source  immediately  upon receipt into the  Lockboxes.
Each  Borrower,  Agent,  and the  Lockbox  Banks  shall  enter into the  Lockbox
Agreements,  which among other things shall provide for the opening of a Lockbox
Account for the deposit of Collections at a Lockbox Bank.  Each Borrower  agrees
that all  Collections  and other  amounts  received  by such  Borrower  from any
Account Debtor or any other source  immediately  upon receipt shall be deposited
into a Lockbox Account. No Lockbox Agreement or arrangement contemplated thereby
shall be modified by any Borrower without the prior written consent of Agent. In
the absence of an Event of Default,  Borrowers shall be permitted to use any and
all cash deposited into any Lockbox Account.

                                       23
<PAGE>

(b) The  Lockbox  Accounts  shall be cash  collateral  accounts,  with all cash,
checks and similar  items of payment in such  accounts  securing  payment of the
Obligations,  and in which Borrowers are hereby deemed to have granted a Lien to
Agent.

2.9 Crediting  Payments.  Borrowers  will make each payment under this Agreement
not later  than 2:00 p.m.  (New York City  time) on the day when due,  in lawful
money of the United States of America and in immediately available funds, to the
Agent's Account.  All payments  received by Agent after 2:00 p.m. (New York City
time) on any  Business  Day will be  credited  to the Loan  Account  on the next
succeeding  Business  Day.  All  payments  shall  be made by  Borrowers  without
set-off, counterclaim, deduction or other defense to Agent and Lenders.

2.10     [Intentionally Omitted].

2.11 Maintenance of Loan Account; Statements of Obligations.  Agent on behalf of
the Lender Group shall maintain an account on its books in the name of Borrowers
(the "Loan Account") on which Borrowers will be charged with the Term Loans made
by Agent or the  Lenders to  Borrowers  or for  Borrowers'  account,  including,
accrued interest and Lender Group Expenses.  In accordance with Section 2.9, the
Loan Account will be credited with all payments received by Agent from Borrowers
or for Borrowers' account, including all amounts received in the Agent's Account
from any Lockbox Bank. Agent shall render statements  regarding the Loan Account
to Administrative  Borrower,  including  principal,  interest,  and including an
itemization  of all charges and  expenses  constituting  Lender  Group  Expenses
owing,  and such  statements  shall be  conclusively  presumed to be correct and
accurate and constitute an account stated between Borrowers and the Lender Group
unless,  within  30 days  after  receipt  thereof  by  Administrative  Borrower,
Administrative  Borrower  shall  deliver  to  Agent  written  objection  thereto
describing the error or errors contained in any such statements.

2.12     Joint and Several Liability of the Borrowers.

(a) Each Borrower is accepting joint and several  liability  hereunder and under
the other Loan Documents in consideration of the financial  accommodations to be
provided by Lender Group under this Agreement, for the mutual benefit,  directly
and indirectly, of each Borrower and in consideration of the undertakings of the
other Borrowers to accept joint and several liability for the Obligations.

(b) Each Borrower, jointly and severally, hereby irrevocably and unconditionally
accepts,  not  merely as a surety  but also as a  co-debtor,  joint and  several
liability with the other Borrowers,  with respect to the payment and performance
of  all of the  Obligations  (including,  without  limitation,  any  Obligations
arising under this Section  2.12),  it being the intention of the parties hereto
that all the  Obligations  shall be the joint and  several  obligations  of each
Borrower without preferences or distinction among them.

(c) If and to the extent that any  Borrower  shall fail to make any payment with
respect  to any of the  Obligations  as and  when due or to  perform  any of the
Obligations in accordance  with the terms  thereof,  then in each such event the
other  Borrowers  will make such  payment  with  respect  to, or  perform,  such
Obligation.

                                       24
<PAGE>

(d) The  Obligations  of each Borrower under the provisions of this Section 2.12
constitute  the absolute and  unconditional,  full recourse  Obligations of each
Borrower  enforceable  against  each  such  Borrower  to the full  extent of its
properties   and  assets,   irrespective   of  the   validity,   regularity   or
enforceability of this Agreement or any other circumstances whatsoever.

(e) Except as otherwise  expressly  provided in this  Agreement,  each  Borrower
hereby waives notice of acceptance of its joint and several liability, notice of
the  occurrence  of any  Default,  Event of  Default,  or of any  demand for any
payment under this Agreement,  notice of any action at any time taken or omitted
by Agent or the Lender Group under or in respect of any of the Obligations,  any
requirement of diligence or to mitigate  damages and,  generally,  to the extent
permitted by applicable law, all demands, notices and other formalities of every
kind in connection  with this  Agreement  (except as otherwise  provided in this
Agreement). Each Borrower hereby assents to, and waives notice of, any extension
or  postponement  of the time for the  payment  of any of the  Obligations,  the
acceptance  of any  payment of any of the  Obligations,  the  acceptance  of any
partial payment thereon, any waiver,  consent or other action or acquiescence by
Lender  Group at any time or times in respect of any default by any  Borrower in
the performance or satisfaction of any term, covenant, condition or provision of
this  Agreement,  any and all other  indulgences  whatsoever  by Lender Group in
respect of any of the  Obligations,  and the taking,  addition,  substitution or
release,  in whole or in part, at any time or times,  of any security for any of
the Obligations or the addition,  substitution or release,  in whole or in part,
of any Borrower. Without limiting the generality of the foregoing, each Borrower
assents to any other  action or delay in acting or failure to act on the part of
Agent or Lender Group with respect to the failure by any Borrower to comply with
any of its respective Obligations,  including,  without limitation,  any failure
strictly or  diligently to assert any right or to pursue any remedy or to comply
fully with applicable laws or regulations  thereunder,  which might, but for the
provisions of this Section 2.12 afford grounds for  terminating,  discharging or
relieving any Borrower,  in whole or in part, from any of its Obligations  under
this Section 2.12, it being the intention of each Borrower  that, so long as any
of the  Obligations  hereunder  remain  unsatisfied,  the  Obligations  of  such
Borrowers under this Section 2.12 shall not be discharged  except by performance
and  then  only to the  extent  of such  performance.  The  Obligations  of each
Borrower   under  this  Section  2.12  shall  not  be   diminished  or  rendered
unenforceable  by any  winding  up,  reorganization,  arrangement,  liquidation,
reconstruction or similar proceeding with respect to any Borrower,  Agent or any
Lender.  The  joint and  several  liability  of the  Borrowers  hereunder  shall
continue  in full  force and  effect  notwithstanding  any  absorption,  merger,
amalgamation or any other change  whatsoever in the name,  constitution or place
of formation of any Borrower, Agent or any Lender.

(f) The  provisions  of this  Section 2.12 are made for the benefit of Agent and
each Lender and their respective  successors and assigns, and may be enforced by
them from time to time against any or all of the  Borrowers as often as occasion
therefor may arise and without requirement on the part of Agent or any Lender or
such  successor  or assign  first to marshall  any of its or their  claims or to
exercise  any of its or their  rights  against any of the other  Borrowers or to
exhaust any remedies  available to it or them against any of the other Borrowers
or to resort to any other  source or means of  obtaining  payment  of any of the
Obligations  hereunder  or to elect any other  remedy.  The  provisions  of this

                                       25
<PAGE>

Section 2.12 shall remain in effect until all of the Obligations shall have been
indefeasibly  paid in full or otherwise fully and finally  satisfied.  If at any
time,  any  payment,  or  any  part  thereof,  made  in  respect  of  any of the
Obligations,  is rescinded  or must  otherwise be restored or returned by Lender
Group upon the  insolvency,  bankruptcy or  reorganization  of any Borrower,  or
otherwise,  the  provisions of this Section 2.12 will forthwith be reinstated in
effect, as though such payment had not been made.

(g) Each  Borrower  hereby  agrees that it will not enforce any of its rights of
contribution  or  subrogation  against the other  Borrowers  with respect to any
liability incurred by it hereunder or under any of the other Loan Documents, any
payments  made by it to Lender Group with respect to any of the  Obligations  or
any collateral security therefor.  Any claim which any Borrower may have against
any other  Borrower  with respect to any  payments to Lender Group  hereunder or
under any other Loan Documents are hereby  expressly made subordinate and junior
in right of payment,  without  limitation as to any increases in the Obligations
arising hereunder or thereunder,  to the prior  indefeasible  payment in full in
cash  of the  Obligations  and,  in the  event  of any  insolvency,  bankruptcy,
receivership,  liquidation, reorganization or other similar proceeding under the
laws of any  jurisdiction  relating  to any  Borrower,  its debts or its assets,
whether voluntary or involuntary,  all such Obligations shall be paid in full in
cash  before any  payment or  distribution  of any  character,  whether in cash,
securities or other property, shall be made to any other Borrower therefor.

(h) Each  Borrower  hereby  agrees  that,  after the  occurrence  and during the
continuance  of any Default or Event of Default,  the payment of any amounts due
with respect to the indebtedness  owing by any Borrower to any other Borrower is
hereby  subordinated  to the prior  indefeasible  payment in full in cash of the
Obligations.  Each Borrower  hereby agrees that after the  occurrence and during
the  continuance  of any Default or Event of  Default,  such  Borrower  will not
demand,  sue for or otherwise  attempt to collect any  indebtedness of any other
Borrower  owing to such Borrower until the  Obligations  shall have been paid in
full in cash. If,  notwithstanding the foregoing  sentence,  such Borrower shall
collect,  enforce or receive any amounts in respect of such  indebtedness,  such
amounts  shall be  collected,  enforced and received by such Borrower as trustee
for Lender Group.

3.       DELIVERIES; TERM OF AGREEMENT.

3.1      Deliveries By Borrower.  On or before the Effective Date, Borrowers
shall deliver to Agent the following:

(a) The UCC Filing  Authorization  Letter  duly  executed by each  Borrower  and
satisfactory evidence of the filing of all financing statements on Form UCC-1 in
such  office  or  offices  as may be  necessary  or,  in the  opinion  of Agent,
desirable  to perfect the  security  interests  purported  to be created by each
applicable Loan Document;

(b) The following documents,  in form and substance  satisfactory to Agent, duly
executed, and each such document shall be in full force and effect:

a.       the Lockbox Agreements;

b.       a Pledge Agreement, duly executed by the Parent, General DataComm, and
         GDC Realty;

                                       26
<PAGE>

c.       the Patent Security Agreement;

d.       the Trademark Security Agreement;

e.       the Warrants;

f.       the Registration Rights Agreement; and

g.       a collateral  assignment  of any and
         all life insurance policies owned by
         Parent on the life of Howard  Modlin
         together    with    duly    executed
         beneficiary  designations  for  such
         policies   naming   Agent   as   the
         Beneficiary of such policies.

(c) A  certificate  from  the  Secretary  of  each  Borrower  attesting  to  the
resolutions of such  Borrower's  Board of Directors  authorizing  its execution,
delivery,  and  performance  of this  Agreement  and the  other  Loan  Documents
(including  the  Warrants)  to which such  Borrower  is a party and  authorizing
specific officers of such Borrower to execute the same;

(d)Copies of each Borrower's Governing Documents, as amended, modified, or
supplemented to the Effective Date, certified by the Secretary of such Borrower;

(e) A certificate of status with respect to each Borrower,  dated within 10 days
of the Effective Date, such certificate to be issued by the appropriate  officer
of the jurisdiction of organization of such Borrower,  which  certificate  shall
indicate that such Borrower is in good standing in such  jurisdiction  except as
otherwise disclosed in the Chapter 11 Case;

(f)  Certificates of status with respect to each Borrower,  each dated within 15
days of the Effective  Date,  such  certificates to be issued by the appropriate
officer  of the  jurisdictions  in which its  failure  to be duly  qualified  or
licensed would constitute a Material Adverse Change,  which  certificates  shall
indicate that such Borrower is in good standing in such jurisdictions;

(g) A certificate of insurance,  together with the endorsements  thereto, as are
required by Section 6.11, the form and substance of which shall be  satisfactory
to Agent and its counsel;

(h) Agent shall have received such  Collateral  Access  Agreements from lessors,
warehousemen, bailees, and other third persons as Agent may require;

(i) Agent shall have received a certificate from the chief executive  officer of
each  Borrower  (on  behalf  of such  Borrower)  certifying  as to the truth and
accuracy of the representations and warranties of Borrowers contained in Article
5 and as to the absence of any Defaults or Events of Default;

(j) Agent shall have received evidence,  satisfactory to the Agent, that each of
the  conditions  precedent  to  the  Effective  Date  and  consummation  of  the
Reorganization  Plan shall have been satisfied and that the Effective Date shall
have occurred;

                                       27
<PAGE>

(k)  Borrowers  shall  have paid or caused to be paid all  amounts  accrued  and
unpaid  through and including  the  Effective  Time with respect to any adequate
protection  provided under the Bankruptcy  Code in accordance with the terms of,
and to the extent required by, the  Reorganization  Plan, the Confirmation Order
or any other order of the Bankruptcy Court;

(l) A copy of the  Confirmation  Order shall have become a Final Order and Agent
shall have received a copy thereof  certified by a clerk of the Bankruptcy Court
as true, complete and correct and such order shall be in full force and effect;

(m) Agent shall have received a fully executed copy of the Indenture  pertaining
to the Debentures and the Subordinated  Security  Agreement  securing payment of
the  Debentures,  each  certified  by the  Parent  as a true and  complete  copy
thereof; and

(n) all other  documents and legal matters in connection  with the  transactions
contemplated by this Agreement shall have been delivered,  executed, or recorded
and shall be in form and substance satisfactory to Agent and its counsel and the
fees and  disbursements  of Schulte  Roth & Zabel LLP and all other  accrued and
unpaid Lender Group Expenses (including the fees and disbursements of counsel to
any member of the Lender  Group on the  Effective  Date) that are required to be
paid under this Agreement shall be paid if invoiced as of the Effective Date.

Execution  and  delivery  to the  Agent by a  Lender  of a  counterpart  of this
Agreement  shall be deemed  confirmation  by such Lender that (i) all conditions
precedent in this Section 3.1 have been  fulfilled to the  satisfaction  of such
Lender and (ii) the  decision of such Lender to execute and deliver to the Agent
an executed  counterpart of this Agreement was made by such Lender independently
and without  reliance on the Agent or any other Lender as to the satisfaction of
any condition set forth in this Section 3.1.

3.2      [Intentionally Omitted].

3.3      [Intentionally Omitted].

3.4 Term. This Agreement shall become  effective upon the execution and delivery
hereof by each Borrower,  each of the Lenders and the Agent,  and shall continue
in full force and effect for a term ending on December  31, 2007 (the  "Maturity
Date"),  unless sooner  terminated  pursuant to the terms hereof.  The foregoing
notwithstanding,  Agent (on behalf of the Lender  Group) shall have the right to
terminate  Lender  Group's  obligations  under this  Agreement  immediately  and
without notice upon the occurrence  and during the  continuation  of an Event of
Default.

3.5 Effect of  Termination.  On the date of termination of this  Agreement,  all
Obligations  immediately  shall become due and payable without notice or demand.
No  termination  of this  Agreement,  however,  shall  relieve or discharge  any
Borrower of Borrower's duties,  Obligations, or covenants hereunder or under the
other Loan Documents,  and Lender Group's  continuing  security interests in the
Collateral  shall  remain in effect  until all  Obligations  have been fully and
finally  discharged and Lender Group's  obligation to provide  additional credit
hereunder is terminated.

                                       28

<PAGE>

3.6 Early  Termination by Borrower.  Borrowers have the option, at any time upon
written notice to Agent, to terminate this Agreement by paying to Agent (for the
ratable benefit of Lender Group),  in cash, the  Obligations,  in full,  without
fee, premium or penalty.

4.       CREATION OF SECURITY INTEREST.

4.1 Grant of Security  Interest.  Each Borrower hereby grants to Agent,  for the
benefit of the Lender Group, a continuing security interest in all of its right,
title, and interest in all currently  existing and hereafter acquired or arising
Personal Property  Collateral in order to secure prompt repayment of any and all
of the  Obligations  in  accordance  with the terms and  conditions  of the Loan
Documents and in order to secure prompt  performance by such Borrower of each of
its covenants and duties under the Loan  Documents.  The Agent's Liens in and to
the  Personal  Property   Collateral  shall  attach  to  all  Personal  Property
Collateral  without  further act on the part of Agent or any Borrower.  Anything
contained  in  this  Agreement  or any  other  Loan  Document  to  the  contrary
notwithstanding,  except for the sale of the properties and assets under Section
7.4 hereof and as otherwise  provided in this  Agreement,  the Borrowers have no
authority,  express  or  implied,  to  dispose  of any  item or  portion  of the
Collateral.

4.2 Negotiable Collateral. In the event that any Collateral, including proceeds,
is evidenced by or consists of Negotiable  Collateral,  and if and to the extent
that  perfection  or priority of Agent's  security  interest is  dependent on or
enhanced by possession,  each Borrower,  immediately  upon the request of Agent,
shall endorse and deliver physical  possession of such Negotiable  Collateral to
Agent.

4.3 Collection of Accounts,  General Intangibles,  and Negotiable Collateral. At
any time after the occurrence and during the continuance of an Event of Default,
Agent or its  designee  may (a)  notify  customers  or  Account  Debtors of each
Borrower  that the  Accounts,  chattel  paper or General  Intangibles  have been
assigned to Agent or that Agent has a security interest therein, and (b) collect
the  Accounts,  chattel  paper or General  Intangibles  directly  and charge the
collection costs and expenses to the Loan Account, and each Borrower agrees that
it will hold in trust for Lender Group, as Agent's trustee, any Collections that
it receives and  immediately  will deliver  said  Collections  to Agent in their
original form as received by such Borrower.

4.4      Filing of Financing Statements; Commercial Tort Claims; Pledge
Amendments; Delivery of Additional Documentation Required.

(a) Each  Borrower  authorizes  Agent to file any financing  statement  required
hereunder,  and any continuation statement or amendment with respect thereto, in
any  appropriate  filing  office  without the  signature of any  Borrower  where
permitted by applicable  law. Each  Borrower  hereby  ratifies the filing of any
financing  statement,  and any continuation  statement or amendment with respect
thereto, filed without the signature of any Borrower prior to the date hereof.

(b) If any Borrower  acquires any commercial  tort claims after the date hereof,
such Borrower shall immediately  deliver to Agent a written  description of such

                                       29
<PAGE>

commercial  tort  claim and  shall  deliver  a  written  agreement,  in form and
substance  reasonably  satisfactory  to Agent,  pursuant to which such  Borrower
shall pledge and collaterally assign all of its right, title and interest in and
to such  commercial  tort claim to Agent,  for the  benefit of the  Lenders,  as
security for the Obligations (a "Commercial Tort Claim Assignment").

(c) At any time upon the  request of Agent,  each  Borrower  shall  execute  and
deliver  to  Agent,  any  and  all  financing  statements,   original  financing
statements  in  lieu  of  continuation  statements,  fixture  filings,  security
agreements,   pledges,   assignments,   Commercial   Tort   Claim   Assignments,
endorsements of certificates of title,  and all other documents (the "Additional
Documents")  that Agent may  request in its  Permitted  Discretion,  in form and
substance reasonably satisfactory to Agent, to perfect and continue perfected or
better  perfect  the  Agent's  Liens in the  Collateral  (whether  now  owned or
hereafter arising or acquired), to create and perfect Liens in favor of Agent in
any  Real  Property  acquired  after  the  Closing  Date,  and in order to fully
consummate all of the transactions  contemplated hereby and under the other Loan
Documents, including any Mortgages.

(d) To the maximum extent permitted by applicable law, each Borrower  authorizes
Agent to execute  any such  Additional  Documents  in such  Borrower's  name and
authorizes Agent to file such executed  Additional  Documents in any appropriate
filing office.  To the maximum extent permitted by applicable law, each Borrower
authorizes the filing of any such Additional  Documents without the signature of
such Borrower in any appropriate  filing office.  In addition,  on such periodic
basis as Agent shall  require,  each  Borrower  shall (i)  provide  Agent with a
report of all new patentable, copyrightable, or trademarkable materials acquired
or generated by such Borrower  during the prior period,  (ii) cause all patents,
copyrights,  and trademarks  acquired or generated by such Borrower that are not
already the subject of a registration with the appropriate  filing office (or an
application   therefor  diligently   prosecuted)  to  be  registered  with  such
appropriate filing office in a manner sufficient to impart  constructive  notice
of such Borrower's ownership thereof, and (iii) cause to be prepared,  executed,
and delivered to Agent  supplemental  schedules to the applicable Loan Documents
to identify such  patents,  copyrights,  and  trademarks as being subject to the
security interests created thereunder.

4.5 Power of Attorney. Each Borrower hereby irrevocably makes, constitutes,  and
appoints Agent (and any of Agent's officers,  employees, or agents designated by
Agent)  as  Borrower's  true  and  lawful  attorney,  with  power to (a) if such
Borrower refuses to, or fails timely to execute and deliver any of the documents
described in Section 4.4, sign the name of such Borrower on any of the documents
described  in Section 4.4, (b) at any time that an Event of Default has occurred
and is continuing,  sign such  Borrower's  name on any invoice or bill of lading
relating  to  any  Account,  drafts  against  Account  Debtors,   schedules  and
assignments  of  Accounts,  verifications  of  Accounts,  and notices to Account
Debtors,  (c) send  requests  for  verification  of  Accounts,  (d) endorse such
Borrower's  name on any  Collection  item  that may  come  into  Lender  Group's
possession,  (e) at any time  that an  Event  of  Default  has  occurred  and is
continuing,  make,  settle,  and adjust all claims under Borrower's  policies of
insurance  and  make all  determinations  and  decisions  with  respect  to such
policies of insurance, and (f) at any time that an Event of Default has occurred
and is  continuing,  settle  and  adjust  disputes  and  claims  respecting  the
Accounts,  chattel paper or General  Intangibles  directly with Account Debtors,
for amounts and upon terms that Agent determines to be reasonable, and Agent may
cause to be  executed  and  delivered  any  documents  and  releases  that Agent

                                       30
<PAGE>

determines  to be  necessary.  The  appointment  of  Agent  as  each  Borrower's
attorney,  and each and every one of Agent's  rights and powers,  being  coupled
with an interest,  is irrevocable  until all of the Obligations  have been fully
and finally repaid and performed and Lender Group's obligations to extend credit
hereunder have been terminated.

4.6 Right to Inspect.  Agent and each Lender  (through  any of their  respective
officers,  employees,  or  agents)  shall  have  the  right,  from  time to time
hereafter to inspect the Books and to check,  test,  and appraise the Collateral
in order to verify each Borrower's  financial condition or the amount,  quality,
value, condition of, or any other matter relating to, the Collateral.

4.7 Control  Agreements.  Each Borrower  agrees that it will not transfer assets
out of any Securities  Accounts other than as permitted  under Section 7.22 and,
if to another  securities  intermediary,  unless such Borrower,  Agent,  and the
substitute  securities  intermediary have entered into a Control  Agreement.  No
arrangement  contemplated  hereby or by any Control  Agreement in respect of any
Securities  Accounts  or other  investment  property  shall be  modified  by any
Borrower  without the prior written  consent of Agent.  Upon the  occurrence and
during the  continuance  of a Default or Event of Default,  Agent may notify any
securities  intermediary  to  liquidate or transfer  the  applicable  Securities
Account or any related investment  property maintained or held thereby and remit
the proceeds thereof to the Agent's Account.

5.       REPRESENTATIONS AND WARRANTIES.

                  In order to induce Lender Group to enter into this  Agreement,
each Borrower makes the following  representations and warranties which shall be
true, correct,  and complete in all respects as of the Effective Date (except to
the extent that such  representations and warranties relate solely to an earlier
date) and such  representations  and warranties  shall survive the execution and
delivery of this Agreement:

5.1      No Encumbrances.  Each Borrower has good and indefeasible title to the
Collateral, free and clear of Liens except for Permitted Liens.

5.2      [Intentionally Omitted]

5.3      [Intentionally Omitted]

5.4      Equipment.  All of the Equipment is used or held for use in
Borrowers' business.

5.5     Location of Inventory  and  Equipment.  The  Inventory and Equipment
are not stored with a bailee,  warehouseman,  or similar party (without  Agent's
prior  written  consent) and no material  part of the  Inventory or Equipment is
located at locations  other than those  identified on Schedule 6.11 or otherwise
permitted by Section 6.11.

5.6      Inventory Records.  Each Borrower keeps records itemizing and
describing the kind,  type,  quality,  and quantity of the  Inventory,  and such
Borrower's cost therefor that are correct and accurate in all material respects.

                                       31
<PAGE>

5.7      State of Incorporation; Location of Chief Executive Office; FEIN,
Organizational ID Number; Commercial Tort Claims.

(a)      The state of incorporation of each Borrower is set forth in Schedule
5.7(a).

(b)      The chief executive office of each Borrower is located at the address
indicated in Schedule 5.7(b).

(c)      Each Borrower's FEIN and organizational identification number is
identified in Schedule 5.7(c).

(d)      None of the Borrowers holds any commercial tort claim as of the date
hereof, except as set forth in Schedule 5.7(d).

5.8      Due Organization and Qualification; Subsidiaries.

(a)  Except as  disclosed  in the  Chapter  11 Cases or in  Schedule  5.8,  each
Borrower is duly  organized and existing and in good standing  under the laws of
the  jurisdiction of its  organization and qualified and licensed to do business
in, and in good  standing  in, any state  where the failure to be so licensed or
qualified reasonably could be expected to have a Material Adverse Change.

(b) Set forth on Schedule  5.8, is a complete  and accurate  description  of the
authorized  capital stock of Parent,  by class, and, as of the Effective Date, a
description  of the  number of shares of each such  class  that are  issued  and
outstanding  and the number of such shares  that are held in Parent's  treasury.
All such  outstanding  shares have been validly  issued and, as of the Effective
Date,  are fully  paid,  nonassessable  shares  free of  contractual  preemptive
rights.  The issuance and sale of all such shares have been in  compliance  with
all applicable  federal and state  securities  laws.  Other than as described on
Schedule   5.8  or  disclosed  in  the   Reorganization   Plan,   there  are  no
subscriptions,  options,  warrants,  or calls relating to any shares of Parent's
capital  stock,  including  any  right  of  conversion  or  exchange  under  any
outstanding  security  or other  instruments  and  Parent is not  subject to any
obligation  (contingent  or otherwise)  to  repurchase  or otherwise  acquire or
retire any  shares of its  capital  stock or any  security  convertible  into or
exchangeable for any of its capital stock.

(c)  Set  forth  on  Schedule  5.8,  is a  complete  and  accurate  list of each
Borrower's direct and indirect  Subsidiaries,  showing:  (i) the jurisdiction of
their  organization;  and (ii) the number and the percentage of the  outstanding
shares of each such class owned directly or indirectly by such Borrower.  All of
the  outstanding  capital stock of each such  Subsidiary has been validly issued
and is fully paid and non-assessable.

(d) Except as set forth on Schedule  5.8, no capital  stock (or any  securities,
instruments,  warrants, options, purchase rights, conversion or exchange rights,
calls,  commitments or claims of any character  convertible  into or exercisable
for  capital  stock) of any direct or  indirect  Subsidiary  of any  Borrower is
subject to the issuance of any security,  instrument,  warrant, option, purchase
right,  conversion or exchange  right,  call,  commitment or claim of any right,
title, or interest therein or thereto.

                                       32
<PAGE>

(e) The Parent  has  reserved,  out of its  authorized  but  unissued  Stock,  a
sufficient  number of shares of Stock to permit Holder to purchase shares of the
Warrant Stock in accordance with the Warrants.

5.9      Due Authorization; No Conflict.

(a) The execution,  delivery, and performance by each Borrower of this Agreement
and the Loan  Documents to which it is a party have been duly  authorized by all
necessary corporate action.

(b) The execution,  delivery, and performance by each Borrower of this Agreement
and the Loan  Documents  to which it is a party do not and will not (i)  violate
any provision of federal,  state,  or local law or regulation  applicable to any
Borrower,  the Governing Documents of any Borrower,  or any order,  judgment, or
decree of any court or other  Governmental  Authority  binding on any  Borrower,
(ii) conflict  with,  result in a breach of, or  constitute  (with due notice or
lapse of time or both) a default  under any material  contractual  obligation or
material  lease of any  Borrower,  (iii)  result in or require  the  creation or
imposition of any Lien of any nature whatsoever upon any properties or assets of
any  Borrower,  other than  Permitted  Liens,  or (iv)  require any  approval of
stockholders  or any  approval  or  consent  of any  Person  under any  material
contractual obligation of any Borrower.

(c)  Except  as set  forth on  Schedule  5.9(c)  and  other  than the  filing of
appropriate financing statements,  filings or registrations in the United States
Patent  and   Trademark   Office  and  the   equivalent   foreign   filings  and
registrations,  fixture filings, mortgages and compliance with the Assignment of
Claims  Act or  any  state  or  foreign  statutory  equivalent,  the  execution,
delivery,  and  performance  by each  Borrower  of this  Agreement  and the Loan
Documents  to which such  Borrower  is a party do not and will not  require  any
registration with,  consent,  or approval of, or notice to, or other action with
or by, any federal,  state,  foreign,  or other Governmental  Authority or other
Person.

(d) This  Agreement and the Loan  Documents to which a Borrower is a party,  and
all other documents contemplated hereby and thereby, when executed and delivered
by a  Borrower  will  be the  legally  valid  and  binding  obligations  of such
Borrower,  enforceable against such Borrower in accordance with their respective
terms,  except as  enforcement  may be limited  by  equitable  principles  or by
bankruptcy, insolvency, reorganization,  moratorium, or similar laws relating to
or limiting creditors' rights generally.

(e)  Upon  the  filing  of   appropriate   financing   statements,   filings  or
registrations  in  the  United  States  Patent  and  Trademark  Office  and  the
equivalent foreign filings and registrations, fixture filings and mortgages, and
upon  delivery  to the  Agent  of the  Pledged  Collateral  (as  defined  in the
respective Pledge  Agreements),  the Liens granted by each Borrower to Agent for
the benefit of the Lender Group in and to its properties and assets  pursuant to
this Agreement and the other Loan Documents are validly created,  perfected, and
first priority Liens, subject only to Permitted Liens.

5.10 Litigation.  There are no actions or proceedings  pending by or against any
Borrower before any court or administrative agency and no Borrower has knowledge

                                       33
<PAGE>

of any pending, threatened, or imminent litigation, governmental investigations,
or claims,  actions,  or  prosecutions  involving any Borrower,  except for: (a)
ongoing  collection  matters in which a Borrower is the  plaintiff;  (b) matters
disclosed on Schedule  5.10 or in the  Reorganization  Plan;  (c) other  matters
existing on the  Effective  Date that,  if decided  adversely to such  Borrower,
would in the  aggregate  result in liability  to such  Borrower of not more than
$100,000 in the  aggregate;  and (d) matters  arising after the  Effective  Date
hereof that are not reasonably likely to have a Material Adverse Change.

5.11 Financial Statements; No Material Adverse Change. The most recent financial
statements (excluding financial projections) filed in the Bankruptcy Court prior
to the Effective  Date relating to any Borrower have been prepared in accordance
with GAAP (except for the lack of footnotes and being subject to year-end  audit
adjustments)  and fairly present such Borrower's  financial  condition as of the
date  thereof  and such  Borrower's  results of  operations  for the period then
ended. There has not been a Material Adverse Change with respect to any Borrower
since the date of such  financial  statements  submitted  to Lender  Group on or
before the Effective Date.

5.12     [Intentionally Omitted]

5.13 Employee Benefits.  No Borrower,  any of its Subsidiaries,  or any of their
ERISA Affiliates  maintains or contributes to any Benefit Plan, other than those
listed on Schedule 5.13. Each Borrower,  each of its Subsidiaries and each ERISA
Affiliate have satisfied the minimum funding standards of ERISA and the IRC with
respect to each Benefit Plan to which it is  obligated to  contribute.  No ERISA
Event has occurred nor has any other event  occurred that may result in an ERISA
Event that reasonably  could be expected to result in a Material Adverse Change.
No Borrower or its  Subsidiaries,  any ERISA Affiliate,  or any fiduciary of any
Plan is subject to any direct or  indirect  liability  with  respect to any Plan
under any applicable law, treaty, rule, regulation, or agreement. No Borrower or
its  Subsidiaries or any ERISA Affiliate is required to provide  security to any
Benefit Plan under Section 401(a)(29) of the IRC.

5.14 Environmental Condition.  Except as set forth in Schedule 5.14, none of any
Borrower's properties or assets has ever been used by a Borrower in the disposal
of, or to produce,  store, handle, treat,  release, or transport,  any Hazardous
Materials in violation of applicable  environmental  laws or, if in violation of
applicable  environmental laws, all such violations have been cured, none of any
Borrower's properties or assets has, to the best of Borrower's  knowledge,  been
designated or identified in any manner pursuant to any environmental  protection
statute as a Hazardous  Materials  disposal  site,  or a  candidate  for closure
pursuant to any  environmental  protection  statute,  no Lien arising  under any
environmental  protection statute has attached to any revenues or to any real or
personal  property  owned or  operated  by any  Borrower,  and no  Borrower  has
received  a summons,  citation,  notice,  or  directive  from the  Environmental
Protection Agency or any other federal or state  governmental  agency during the
year  prior to the  Effective  Date  concerning  any action or  omission  by any
Borrower resulting in the releasing or disposing of Hazardous Materials into the
environment.
                                       34
<PAGE>

5.15  Brokerage  Fees.  No brokerage  commission or finders fees has or shall be
incurred or payable in connection  with or as a result of  Borrowers'  obtaining
financing  from the Lender  Group  under this  Agreement,  and no  Borrower  has
utilized  the  services of any broker or finder in  connection  with  Borrowers'
obtaining financing from the Lender Group under this Agreement.

5.16 Permits and other  Intellectual  Property.  Set forth on Schedule 5.16 is a
complete  and  accurate  list  of all  Permits,  patents,  patent  applications,
trademarks,  trademark  applications,  service marks, service mark applications,
trade  names,  copyrights,   trade  secrets  and  know-how  (collectively,   the
"Intellectual Property"),  owned by each Borrower, showing as of the date hereof
the jurisdiction in which  registered,  the registration or application  number.
Each  Borrower  owns or  possesses  adequate  licenses or other  rights that are
necessary for the  operation of its business as currently  conducted or proposed
to be  conducted.  No  claim is  pending  or,  to the  knowledge  of  Borrowers,
threatened to the effect that any Borrower  infringes  upon, or conflicts  with,
the asserted rights of any other Person under any Intellectual Property, and, to
the best of each Borrower's  knowledge without  independent  investigation other
than  those   investigations   customarily   undertaken  by  owners  of  similar
businesses, there is no basis for any such claim (whether pending or threatened)
which is reasonably  likely to result in a Material Adverse Change.  No claim is
pending or, to the  knowledge of  Borrowers,  threatened  to the effect that any
such  Intellectual  Property owned or licensed by any Borrower,  or in which any
Borrower  otherwise  has the right to use is  invalid  or  unenforceable  by any
Borrower,  and, to the best of each  Borrower's  knowledge  without  independent
investigation other than those investigations  customarily  undertaken by owners
of  similar  businesses,  there is no basis for any such claim  (whether  or not
pending or threatened).

5.17 Material Contracts; Restrictive Agreements. Except for such changes as have
been  provided to Agent in writing,  each other  Material  Contract to which any
Borrower  or any  Subsidiary  of a Borrower is a party is set forth in Part I of
Schedule  5.17.  Borrower has  provided to Agent or its counsel each  definitive
written agreement relating to each such Material  Contract.  Except as set forth
in Part II of Schedule 5.17, no Borrower nor Subsidiary of a Borrower is a party
to or bound by any  agreement or instrument or subject to any corporate or other
restriction,  the  performance  or  observance of which has caused or, as far as
such  Borrower  or  Subsidiary  can  reasonably  foresee,  is  likely to cause a
Material Adverse Change.

5.18  Government  Contracts.  No Borrower nor any Subsidiary of a Borrower is in
receipt of any notice from any Governmental Authority that such Borrower or such
Subsidiary of a Borrower is disqualified, barred or suspended from bidding on or
performing any contract or proposed contract.

6.       AFFIRMATIVE COVENANTS.

                  Each Borrower  covenants and agrees that, until full and final
payment of the  Obligations,  each Borrower  shall,  and shall cause each of its
Subsidiaries to, do all of the following:

6.1 Accounting System.  Maintain a standard and modern system of accounting that
enables each Borrower to produce  financial  statements in accordance with GAAP,

                                       35
<PAGE>

and maintain  records  pertaining to the Collateral that contain  information as
from time to time may be reasonably requested by Agent. Each Borrower also shall
keep a modern  inventory  reporting  system  that  shows all  additions,  sales,
claims, returns, and allowances with respect to the Inventory.

6.2 Financial Statements, Reports, Certificates. Deliver to Agent with copies to
each Lender: (a) as soon as available, but in any event within 20 days after the
end of each month during each of  Borrowers'  fiscal years,  a company  prepared
balance sheet and income  statement,  covering the  operations of the Parent and
its  Subsidiaries  on a  consolidated  basis during such period;  (b) as soon as
available,  but in any event within 45 days after the end of each fiscal quarter
during each of Borrowers' fiscal years, a company prepared balance sheet, income
statement,  and  statements of cash flows  covering the operations of the Parent
and its Subsidiaries on a consolidated basis during such period; and (c) as soon
as  available,  but in any  event  within  90  days  after  the  end of  each of
Borrowers'  fiscal years,  consolidated  financial  statements of Parent and its
Subsidiaries for each such fiscal year, audited by independent  certified public
accountants  reasonably  acceptable to Agent and  certified  that they have been
prepared  in  accordance  with  GAAP,   together  with  a  certificate  of  such
accountants  addressed  to  Agent  stating  that  such  accountants  do not have
knowledge  of the  existence  of  any  Default  or  Event  of  Default  that  is
continuing.  Such audited  financial  statements  shall include a balance sheet,
profit and loss  statement,  and  statement of cash flow and, if prepared,  such
accountants' letter to management.

                  In addition to the above,  Parent also shall  deliver to Agent
Parent's Form 10-Q Quarterly  Reports,  Form 10-K Annual  Reports,  and Form 8-K
Current  Reports,  and any other filings made by Parent with the  Securities and
Exchange Commission, if any, as soon as the same are filed, or any other written
information  that is provided by  Borrower  to its  shareholders,  and any other
report  reasonably  requested by Agent  relating to the  financial  condition of
Parent and its Subsidiaries.

                  Each month,  together with the financial  statements  provided
pursuant to Sections  6.2(a) and (b),  Administrative  Borrower shall deliver to
Agent a certificate  signed by its chief  financial  officer to the effect that:
(i) all  financial  statements  delivered  or  caused to be  delivered  to Agent
hereunder  have been  prepared in accordance  with GAAP (except,  in the case of
unaudited financial  statements,  for the lack of footnotes and being subject to
year-end audit  adjustments) and fairly present the financial  condition of each
Borrower,  (ii) the representations and warranties of each Borrower contained in
this Agreement and the other Loan Documents are true and correct in all material
respects on and as of the date of such certificate,  as though made on and as of
such date (except to the extent that such  representations and warranties relate
solely to an earlier date),  (iii) for each month that also is the date on which
a financial  covenant in Section 7.20 is to be tested, a Compliance  Certificate
demonstrating in reasonable detail compliance at the end of such period with the
applicable financial covenant contained in Section 7.20, and (iv) on the date of
delivery  of such  certificate  to Agent there does not exist any  condition  or
event that  constitutes a Default or Event of Default that is continuing (or, in
the case of clauses  (i),  (ii),  or (iii),  the  extent of any  non-compliance,
describing such non-compliance as to which he or she may have knowledge and what
action  Borrowers  have  taken,  is taking,  or  proposes  to take with  respect
thereto).

                                       36
<PAGE>

6.3 Tax  Returns.  Deliver to Agent  copies of each  Borrower's  future  federal
income tax returns, and any amendments thereto,  within 30 days after the filing
thereof with the Internal Revenue Service ("IRS").

6.4      [Intentionally Omitted]

6.5 Returns. Cause returns and allowances, if any, as between a Borrower and its
Account  Debtors  to be on the same  basis  and in  accordance  with  the  usual
customary practices of such Borrower, as they exist at the time of the execution
and  delivery  of this  Agreement.  If, at a time when no Event of  Default  has
occurred  and is  continuing,  any Account  Debtor  returns any  Inventory  to a
Borrower, such Borrower promptly shall determine the reason for such return and,
if such Borrower accepts such return,  issue a credit memorandum (with a copy to
be sent to Agent) in the  appropriate  amount to such Account  Debtor.  If, at a
time when an Event of Default has occurred and is continuing, any Account Debtor
returns any Inventory to a Borrower,  such Borrower promptly shall determine the
reason for such  return  and,  if Agent  consents  (which  consent  shall not be
unreasonably  withheld),  issue a credit  memorandum  (with a copy to be sent to
Agent) in the appropriate amount to such Account Debtor.

6.6 Title to  Equipment.  Upon Agent's  request,  each Borrower  promptly  shall
deliver to Agent,  properly  endorsed,  any and all  evidences of ownership  of,
certificates of title, or applications for title to any items of Equipment.

6.7  Maintenance of Equipment.  Maintain the Equipment that is presently used in
Borrowers'  operations in its present  operating  condition and repair (ordinary
wear and tear excepted), and make all necessary replacements thereto so that the
value and operating  efficiency  thereof  shall at all times be  maintained  and
preserved.  Other than (i) those items of Equipment that constitute  fixtures on
the Effective Date and (ii) heating, ventilation and air conditioning equipment,
no  Borrower  shall  permit  any item of  Equipment  to become a fixture to real
estate or an accession to other property,  and such Equipment shall at all times
remain personal property.

6.8  Taxes.  Cause  all  assessments  and  taxes,  whether  real,  personal,  or
otherwise, due or payable by, or imposed, levied, or assessed against a Borrower
or any of its Subsidiaries or any of their  respective  properties to be paid in
accordance with the Reorganization Plan, in the case of any taxes accruing prior
to the  Filing  Date,  or,  in all  other  cases,  to be  paid in  full,  before
delinquency  or before the  expiration  of any extension  period,  except to the
extent that the validity of such  assessment or tax (other than payroll taxes or
taxes that are the  subject of a United  States  federal  tax lien) shall be the
subject  of a  Permitted  Protest.  Each  Borrower  shall  make,  and  cause its
Subsidiaries  to make,  due and timely  payment or deposit of all such  federal,
state,  and  local  taxes,  assessments,  or  contributions  accruing  after the
Effective  Date  required of them by law, and will execute and deliver to Agent,
on demand,  appropriate certificates attesting to the payment thereof or deposit
with respect  thereto.  Each Borrower will make, and cause its  Subsidiaries  to
make,  timely  payment or  deposit of all tax  payments  and  withholding  taxes
accruing after the Effective Date required of them by applicable laws, including
those laws concerning F.I.C.A.,  F.U.T.A.,  state disability,  and local, state,
and federal  income  taxes,  and will,  upon  request,  furnish Agent with proof
satisfactory to Agent  indicating that such Borrower and such  Subsidiaries  has
made such payments or deposits.

                                       37
<PAGE>

6.9      Insurance.

(a) At its expense,  keep the Personal Property  Collateral insured against loss
or damage by fire,  theft,  explosion,  sprinklers,  and all other  hazards  and
risks, and in such amounts, as are ordinarily insured against by other owners in
similar  businesses.  Each Borrower also shall maintain  business  interruption,
public liability,  product liability,  and property damage insurance relating to
such Borrower's ownership and use of the Personal Property  Collateral,  as well
as insurance against larceny, embezzlement, and criminal misappropriation to the
same extent as maintained on the Effective Date.

(b) At its expense,  obtain and maintain (i) insurance of the type  necessary to
insure  the  Improvements  and  Chattels  (as  such  terms  are  defined  in the
Mortgages),  for the full  replacement  cost  thereof,  subject  to  deductibles
consistent  with  historical  business  practice,  against  any  loss  by  fire,
lightning,  windstorm, hail, explosion,  aircraft, smoke damage, vehicle damage,
earthquakes,  elevator  collision,  and other  risks from time to time  included
under  "extended  coverage"  policies,  in such amounts as Agent may  reasonably
require,  but in any event in amounts  sufficient  to prevent any Borrower  from
becoming a co-insurer  under such  policies;  (ii) combined  single limit bodily
injury and property damages  insurance against any loss,  liability,  or damages
on, about, or relating to each parcel of Real Property Collateral,  in an amount
reasonably  acceptable to the Agent;  (iii) business rental  insurance  covering
annual  receipts  for a 12  month  period  for  each  parcel  of  Real  Property
Collateral;  and (iv)  insurance  for such  other  risks as Agent  may  require.
Replacement  costs,  at Agent's  option,  may be  redetermined  by an  insurance
appraiser,  satisfactory to Agent, not more frequently than once every 12 months
at Borrowers' cost. All such insurance shall be to the same extent as maintained
on the Effective Date.

(c) All such policies of insurance  shall be in such form,  with such companies,
and in such amounts as may be reasonably  satisfactory  to Agent.  All insurance
required  herein shall be written by companies  which have a Best's  rating of A
for capital and X for financial  stability.  All hazard insurance and such other
insurance as Agent shall  reasonably  require and shall  contain a  satisfactory
lender's  loss payable  endorsement  naming Agent as sole loss payee (other than
with  respect  to the  Real  Property  Collateral)  or  additional  insured,  as
appropriate, and shall contain a waiver of warranties. Every policy of insurance
referred to in this  Section 6.9 shall  contain an agreement by the insurer that
it will not cancel  such policy  except  after 30 days prior  written  notice to
Agent and that any loss payable thereunder shall be payable  notwithstanding any
act or negligence of any Borrower or Agent which might,  absent such  agreement,
result  in a  forfeiture  of  all  or a  part  of  such  insurance  payment  and
notwithstanding  (i)  occupancy  or use  of the  Real  Property  Collateral  for
purposes more  hazardous  than  permitted by the terms of such policy,  (ii) any
foreclosure  or other  action or  proceeding  taken by Agent or the Lender Group
pursuant to the Mortgages  upon the  happening of an Event of Default,  or (iii)
any change in title or ownership of the Real Property Collateral.  Each Borrower
shall  deliver to Agent  certified  copies of such  policies  of  insurance  and
evidence  of the  payment of all  premiums  therefor.  Agent  acknowledges  that
Borrowers'  policies  and  coverages  in  effect  as of the  Effective  Date are
satisfactory.

(d) Original policies or certificates  thereof  satisfactory to Agent evidencing
such  insurance  shall be  delivered  to  Agent  at  least 30 days  prior to the

                                       38
<PAGE>

expiration of the existing or preceding policies. Each Borrower shall give Agent
prompt  notice of any loss  covered  by such  insurance.  Agent  shall  have the
exclusive  right to adjust all losses payable under any such insurance  policies
without any liability to any Borrower whatsoever in respect of such adjustments;
provided  that either (i) an Event of Default has occurred and is  continuing at
the time of such adjustment, or (ii) the amount of any such loss covered by such
insurance is in excess of $750,000.  Any monies received as payment for any loss
under any insurance  policy  including the insurance  policies  mentioned above,
shall be paid over to Agent (for the ratable  benefit of the Lender Group) to be
applied  at the  option of Agent  either  to the  repayment  of the  Obligations
without  premium,  or shall be disbursed to a Borrower under stage payment terms
satisfactory to Agent for application to the cost of repairs,  replacements,  or
restorations,  except to the extent such  insurance  proceeds are required to be
paid to the holders of Permitted  Liens to the extent  required by the agreement
creating or evidencing such Permitted Lien or the indebtedness  secured thereby.
All repairs,  replacements,  or  restorations  shall be effected with reasonable
promptness  and shall be of a value at least  equal to the value of the items or
property  destroyed prior to such damage or destruction.  Upon the occurrence of
an Event of Default that is continuing,  Agent shall have the right to apply all
prepaid premiums to the payment of the Obligations.

6.10 No Setoffs or  Counterclaims.  Make payments  hereunder and under the other
Loan Documents by or on behalf of any Borrower  without  setoff or  counterclaim
and free and clear of, and without  deduction or  withholding  for or on account
of, any federal, state, or local taxes.

6.11 Location of Inventory and Equipment;  Segregation of Inventory. (a)Keep the
Inventory and  Equipment  only at the  locations  identified  on Schedule  6.11;
provided,  however,  that  Borrowers  may  amend  Schedule  6.11 so long as such
amendment  occurs by written  notice to Agent not less than 30 days prior to the
date on which the Inventory or Equipment is moved to such new location,  so long
as such new location is within the continental United States, and so long as, at
the  time of such  written  notification,  each  Borrower  provides  to  Agent a
Collateral Access Agreement.

(b)  Keep  all bill and hold  Inventory  physically  segregated  from all  other
Inventory of the Borrowers and marked to indicate that such segregated Inventory
is not the property of a Borrower.

6.12 Compliance with Laws.  Comply and cause its Subsidiaries to comply with the
requirements  of all  applicable  laws,  rules,  regulations,  and orders of any
Governmental Authority, including the Fair Labor Standards Act and the Americans
With  Disabilities  Act,  other than laws,  rules,  regulations,  and orders the
non-compliance with which, individually or in the aggregate, would not cause and
could not reasonably be expected to cause a Material Adverse Change.

6.13     Employee Benefits.

(a) Cause to be delivered  to Agent:  (i)  promptly,  and in any event within 10
Business Days after a Borrower or any of its Subsidiaries knows or has reason to
know that an ERISA  Event has  occurred  that  reasonably  could be  expected to

                                       39
<PAGE>

result in a Material Adverse Change, a written  statement of the chief financial
officer of such  Borrower  describing  such ERISA  Event and any action  that is
being taking with respect thereto by such Borrower, any such Subsidiary or ERISA
Affiliate,  and any action taken or threatened by the IRS,  Department of Labor,
or PBGC. A Borrower or such Subsidiary,  as applicable,  shall be deemed to know
all facts known by the administrator of any Benefit Plan of which it is the plan
sponsor, (ii) promptly, and in any event within 3 Business Days after the filing
thereof with the IRS, a copy of each funding  waiver  request filed with respect
to any Benefit Plan and all  communications  received by a Borrower,  any of its
Subsidiaries  or, to the knowledge of such  Borrower,  any ERISA  Affiliate with
respect to such request, and (iii) promptly,  and in any event within 3 Business
Days after receipt by a Borrower,  any of its  Subsidiaries or, to the knowledge
of such Borrower,  any ERISA  Affiliate,  of the PBGC's intention to terminate a
Benefit Plan or to have a trustee appointed to administer a Benefit Plan, copies
of each such notice.

(b) Cause to be delivered to Agent, upon Agent's request, each of the following:
(i) a copy of each Plan (or,  where any such plan is not in writing,  a complete
description  thereof)  (and if  applicable,  related  trust  agreements or other
funding  instruments) and all amendments  thereto,  all written  interpretations
thereof and written descriptions thereof that have been distributed to employees
or former  employees  of a Borrower  or its  Subsidiaries;  (ii) the most recent
determination  letter issued by the IRS with respect to each Benefit Plan; (iii)
for the three  most  recent  plan  years,  annual  reports  on Form 5500  Series
required to be filed with any  governmental  agency for each Benefit Plan;  (iv)
all  actuarial  reports  prepared for the last three plan years for each Benefit
Plan; (v) a listing of all Multiemployer Plans, with the aggregate amount of the
most recent annual contributions  required to be made by a Borrower or any ERISA
Affiliate to each such plan and copies of the collective  bargaining  agreements
requiring such  contributions;  (vi) any information that has been provided to a
Borrower  or any  ERISA  Affiliate  regarding  withdrawal  liability  under  any
Multiemployer  Plan;  and (vii) the  aggregate  amount of the most recent annual
payments made to former  employees of a Borrower or its  Subsidiaries  under any
Retiree Health Plan.

6.14  Leases.  Pay when due after the Filing Date,  all rents and other  amounts
payable  under  any  leases  to which  any  Borrower  is a party or by which any
Borrower's properties and assets are bound, unless such payments are the subject
of a Permitted Protest.

7.       NEGATIVE COVENANTS.

                  Each Borrower covenants and agrees that, so long as any credit
hereunder   shall  be  available  and  until  full  and  final  payment  of  the
Obligations,  no Borrower will, nor will permit any of its  Subsidiaries  to, do
any of the following:

7.1 Indebtedness.  Create, incur, assume, permit, guarantee, or otherwise become
or remain,  directly or  indirectly,  liable with  respect to any  Indebtedness,
except:

(a)      Indebtedness evidenced by this Agreement;

(b)      Indebtedness set forth on Schedule 7.1;
                                   ------------

(c)      Indebtedness secured by Permitted Liens;

                                       40
<PAGE>

(d) refinancings,  renewals,  exchanges, or extensions of Indebtedness permitted
by clauses (b) and (c) of this  Section 7.1 (and  continuance  or renewal of any
Permitted Liens  associated  therewith) so long as: (i) the terms and conditions
of such  refinancings,  renewals,  or  extensions do not  materially  impair the
prospects of repayment of the  Obligations  by any  Borrower,  (ii) the net cash
proceeds  of such  refinancings,  renewals,  or  extensions  do not result in an
increase in the aggregate  principal  amount of the  Indebtedness so refinanced,
renewed,  or  extended,  (iii)  such  refinancings,   renewals,  refundings,  or
extensions do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced,  renewed,  or extended,  and (iv) to the extent that
Indebtedness  that is  refinanced  was  subordinated  in right of payment to the
Obligations,  then the  subordination  terms and  conditions of the  refinancing
Indebtedness  must be at least as favorable to Lender Group as those  applicable
to the refinanced Indebtedness;

(e) Debentures in an aggregate  principal amount not to exceed the total allowed
general  unsecured claims allowed in the Chapter 11 cases at any time,  provided
that none of the  Borrowers  shall make any payment of  principal  of,  interest
(other  than  interest  that  is  paid-in-kind)  on or fees  in  respect  of the
Debentures  until all Obligations  have been paid in full and this Agreement has
terminated;

(f) Purchase Money Indebtedness  incurred after the Closing Date in an aggregate
amount  outstanding  at any  one  time  not to  exceed  the  amount  of  capital
expenditures permitted under Section 7.21.

7.2 Liens. Create,  incur,  assume, or permit to exist,  directly or indirectly,
any Lien on or with  respect  to any of its  property  or  assets,  of any kind,
whether now owned or  hereafter  acquired,  or any income or profits  therefrom,
except for Permitted Liens  (including  Liens that are replacements of Permitted
Liens to the extent that the original  Indebtedness is refinanced  under Section
7.1(d)  and so long as the  replacement  Liens  only  encumber  those  assets or
property that secured the original Indebtedness).

7.3 Restrictions on Fundamental Changes.  Enter into any merger,  consolidation,
reorganization,  or  recapitalization,  or  reclassify  its  capital  Stock,  or
liquidate,   wind  up,  or  dissolve   itself  (or  suffer  any  liquidation  or
dissolution), or convey, sell, assign, lease, transfer, or otherwise dispose of,
in one transaction or a series of  transactions,  all or any substantial part of
its  property or assets,  except that (a) a Borrower  may be merged into another
Borrower, (b) a Subsidiary of a Borrower may be merged into a Borrower and (c) a
Subsidiary that is not a Borrower may be merged into another  Subsidiary that is
not a Borrower, or liquidated or dissolved,  provided that if any such Person is
merged with or into the Administrative  Borrower,  the  Administrative  Borrower
shall be the surviving entity.

7.4 Disposal of Assets. Sell, lease, assign,  transfer,  or otherwise dispose of
any of such Borrower's properties or assets other than (a) sales of Inventory to
buyers in the ordinary  course of such  Borrower's  business and (b) the sale of
the assets  listed on Schedule 7.4 hereto so long as the Net Proceeds  from such
sales are remitted to Agent in accordance with Section 2.5(a)(iv).

                                       41
<PAGE>

7.5  Change  Name.  Change  its  name,  organizational   identification  number,
structure, or identity, or add any new fictitious name; provided,  however, that
any Borrower may change its name upon at least 30 days prior  written  notice to
Agent of such change and so long as, at the time of such  written  notification,
it provides any financing statements or fixture filings necessary to perfect and
continue perfected the Agent's Liens.

7.6 Guarantee.  Guarantee or otherwise  become in any way liable with respect to
the  obligations  of any third Person except by  endorsement  of  instruments or
items of  payment  for  deposit  to the  account  of a  Borrower  or  which  are
transmitted or turned over to Agent, except as set forth in Schedule 7.6.

7.7      Nature of Business.  Make any change in the principal nature of any
Borrower's business.

7.8      Prepayments and Amendments.

(a) Except in connection  with a refinancing  or exchange  permitted by Sections
7.1(d), and except for the prepayment,  redemption, retirement or defeasement of
any Indebtedness for a consideration  consisting solely of Stock, and except for
the prepayment of any  Indebtedness  that is secured solely by the Real Property
Collateral,  prepay, redeem, refinance,  retire, defease, purchase, or otherwise
acquire any Indebtedness  owing to any third Person,  other than the Obligations
in accordance with this Agreement, and

(b) Except in connection  with a refinancing  or exchange  permitted by Sections
7.1(d), directly or indirectly, amend, modify, alter, increase, or change any of
the terms or conditions of any agreement,  instrument,  document,  indenture, or
other writing  evidencing or concerning  Indebtedness  permitted  under Sections
7.1(b), (c), (d) or (e); and

(c) (i) Except as provided in or contemplated by the Reorganization Plan, amend,
modify  or  otherwise  change  its  Governing  Documents,   including,   without
limitation, by the filing or modification of any certificate of designation,  or
any  agreement  or  arrangement  entered  into by it with  respect to any of its
capital Stock  (including any  shareholders'  agreement),  or enter into any new
agreement  with respect to any of its capital  Stock,  or (ii) amend,  modify or
otherwise   change  any   Material   Contract,   except  any  such   amendments,
modifications or changes or any such new agreements or arrangements  pursuant to
this paragraph (c) that,  either  individually  or in the  aggregate,  could not
reasonably  be expected (A) to have a Material  Adverse  Effect,  (B) to have an
adverse impact on the Warrants or the Registration  Rights Agreement,  or (C) to
materially  impair any Borrower's  ability to conduct any aspect of its business
or perform or satisfy any representation, warranty or covenant contained in this
Agreement or any other Loan Document.

(d) The Parent  shall not satisfy  any of its  obligations  with  respect to any
redemption,  tender,  put or other similar  obligation  under the  Debentures by
paying cash or any other consideration other than its Common Stock.

7.9      Change of Control.  Cause, permit, or suffer, directly or indirectly,
any Change of Control.

                                       42
<PAGE>

7.10 Consignments. Consign any Inventory or sell any Inventory on bill and hold,
sale or return, sale on approval, or other conditional terms of sale, except (i)
bill and hold Inventory  having an aggregate  value up to  $1,000,000,  and (ii)
consignment  Inventory for short term demonstration  purposes,  and (iii) spares
used to service products.

7.11  Distributions.  Make any  distribution or declare or pay any dividends (in
cash or other property,  other than Stock) on, or purchase,  acquire, redeem, or
retire  any of such  Borrower's  capital  Stock,  of any class,  whether  now or
hereafter  outstanding,  except that (i) a Subsidiary of a Borrower  (other than
Parent) may pay dividends to such  Borrower,  (ii) Parent may receive  shares of
its Stock in  consideration  for the  exercise of stock  options  granted to its
employees and directors (so long as no cash  consideration  is paid by Parent or
any of  its  Subsidiaries),  (iii)  Parent  may  cancel  or  retire  options  in
accordance with its stock option plans (so long as Parent does not make any cash
payments in connection therewith),  and (iv) Parent may issue shares of Parent's
Stock upon the exercise of Parent's warrants  outstanding as of the Closing Date
(including the Warrants).

7.12 Accounting  Methods.  Modify or change its method of accounting,  except as
required to comply with GAAP or enter into,  modify,  or terminate any agreement
currently  existing,  or at any time hereafter entered into with any third party
accounting  firm or  service  bureau  for the  preparation  or  storage  of such
Borrower's  accounting  records  without said  accounting firm or service bureau
agreeing  to  provide  Agent  information   regarding  the  Collateral  or  such
Borrower's  financial  condition.  Each  Borrower  waives  the right to assert a
confidential  relationship,  if any,  it may have  with any  accounting  firm or
service bureau in connection with any information requested by Agent pursuant to
or in accordance with this Agreement, and agrees that Agent may contact directly
any such accounting firm or service bureau in order to obtain such information.

7.13 Investments. Directly or indirectly make, acquire, or incur any liabilities
(including contingent obligations) for or in connection with (a) the acquisition
of the securities  (whether debt or equity) of, or other interests in, a Person,
except for (i) those  securities  listed in Schedule 7.13, or (ii) securities of
the  aggregate  value of which does not exceed  $350,000,  (b) loans,  advances,
capital contributions, or transfers of property to a Person, except intercompany
loans made by a Borrower to a Borrower  provided  that (A) the repayment of each
such  intercompany loan shall be subordinated to the payment of the Obligations,
pursuant to the terms of and evidenced by one or more  promissory  notes in form
and substance  satisfactory to the Agent, and (B) such notes shall be pledged to
the Agent  pursuant to the Pledge  Agreement  or (c) the  acquisition  of all or
substantially all of the properties or assets of a Person.

7.14 Transactions  with Affiliates.  Directly or indirectly enter into or permit
to exist any material  transaction  with any Affiliate of a Borrower  except for
transactions  permitted  under Sections 7.11 and 7.13 hereof,  issuance of Stock
under  its 2003  Stock  and  Bonus  Plan  and  other  stock  option  plans,  and
transactions that are in the ordinary course of a Borrower's business, upon fair
and reasonable  terms,  that are fully disclosed to Agent,  and that are no less
favorable to such Borrower than would be obtained in an arm's length transaction
with a non-Affiliate.

7.15     Suspension.  Suspend or go out of a substantial portion of its
business.

                                       43
<PAGE>

7.16     [Intentionally Omitted]

7.17 Use of Proceeds.  Use the proceeds of the Term Loans made hereunder for any
purpose other than a purpose  consistent  with the terms and conditions  hereof,
for its lawful and  permitted  corporate  purposes.  7.18  Change in Location of
Chief Executive Office; Inventory and Equipment with Bailees. Relocate its chief
executive  office to a new  location  without  providing  30 days prior  written
notification  thereof  to  Agent,  and so long as,  at the time of such  written
notification,  the  applicable  Borrower  provides any  financing  statements or
fixture filings  necessary to perfect and continue  perfected  Agent's Liens and
also provides to Agent a Collateral  Access  Agreement  with respect to such new
location.  Except as set forth in Schedule  7.18,  the  Inventory  and Equipment
shall not at any time now or hereafter be stored with a bailee, warehouseman, or
similar party without Agent's prior written consent.

7.19     No Prohibited Transactions Under ERISA.  Directly or indirectly:

(a) engage,  or permit any Subsidiary of a Borrower to engage, in any prohibited
transaction  which is  reasonably  likely to result in a civil penalty or excise
tax  described in Sections 406 of ERISA or 4975 of the IRC for which a statutory
or  class  exemption  is not  available  or a  private  exemption  has not  been
previously obtained from the Department of Labor;

(b)      permit to exist with respect to any Benefit Plan any accumulated
funding deficiency (as defined in Sections 302 of ERISA
and 412 of the IRC), whether or not waived;

(c) fail, or permit any Subsidiary of a Borrower to fail, to pay timely required
contributions  or annual  installments  due with  respect to any waived  funding
deficiency to any Benefit Plan;

(d) terminate, or permit any Subsidiary of a Borrower to terminate,  any Benefit
Plan where such event would result in any  liability  of a Borrower,  any of its
Subsidiaries or any ERISA Affiliate under Title IV of ERISA;

(e)      fail, or permit any Subsidiary of a Borrower to fail, to make any
required contribution or payment to any Multiemployer Plan;

(f) fail,  or permit any  Subsidiary  of a Borrower to fail, to pay any required
installment  or any other  payment  required  under Section 412 of the IRC on or
before the due date for such installment or other payment;

(g) amend,  or permit any Subsidiary of a Borrower to amend, a Plan resulting in
an  increase  in  current  liability  for the plan year  such  that  either of a
Borrower,  any Subsidiary of such Borrower or any ERISA Affiliate is required to
provide security to such Plan under Section 401(a)(29) of the IRC; or

                                       44

<PAGE>

(h)  withdraw,  or permit any  Subsidiary  of a Borrower to  withdraw,  from any
Multiemployer  Plan where such withdrawal is reasonably  likely to result in any
liability of any such entity under Title IV of ERISA;

which,  individually  or in the  aggregate,  results in or  reasonably  would be
expected to result in a claim  against or  liability  of a Borrower,  any of its
Subsidiaries or any ERISA Affiliate in excess of $250,000.

7.20  Financial  Covenant.  Fail  to  maintain  EBITDA,  measured  on  a  fiscal
quarter-end  basis,  of not less than (a) for the fiscal quarter ending December
31, 2003, $0.01 and (b) for each fiscal quarter ending  thereafter,  the greater
of (i) $1,100,000 and (ii) $750,000 plus the aggregate amount of all interest on
the Term A Loan accrued during such fiscal quarter. For purposes of this Section
7.20,  EBITDA  shall be  calculated  on a  cumulative  basis by (i)  adding  the
aggregate  amount of EBITDA for each fiscal  quarter  subsequent to December 31,
2003 and (ii)  subtracting from such sum the aggregate amount of EBITDA required
to be maintained by the Borrowers  pursuant to this Section 7.20 for each fiscal
quarter  subsequent  to  December  31,  2003.   Notwithstanding  the  foregoing,
Borrowers  shall not be  required  to  maintain  the  applicable  EBITDA for any
particular fiscal quarter and thereafter if Borrowers' loan  availability  based
on the  traditional  asset-based  loan borrowing  structure in the  Pre-Petition
Agreement (as in effect  immediately prior to the Filing Date), as determined on
the last day of any fiscal  quarter,  equals or exceeds the aggregate  principal
amount of the Term A Loan outstanding as of such date.

7.21     Capital Expenditures.  Make capital expenditures in any fiscal year
in excess of $12,000,000.

7.22 Securities Accounts. No Borrower shall establish or maintain any Securities
Account unless Agent shall have received a Control Agreement,  duly executed and
in full force and effect, in respect of such Securities  Account.  Each Borrower
agrees  that  it  will  not  transfer  assets  out of any  Securities  Accounts;
provided,  however,  that,  so long as no Event of Default has  occurred  and is
continuing or would result  therefrom,  each Borrower may use such assets to the
extent permitted by this Agreement.

8.       EVENTS OF DEFAULT.

                  Any one or more of the following  events  occurring  after the
Effective  Date  shall  constitute  an event of  default  (each,  an  "Event  of
Default") under this Agreement:

                  8.1 ....If  Borrowers fail to pay when due and payable or when
declared due and payable,  any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Code,  would  have  accrued  on such  amounts),  reimbursement  of Lender  Group
Expenses  within  10 days  after  such  Lender  Group  Expenses  are  billed  to
Borrowers, or other amounts constituting Obligations);

                  8.2 ....If any Borrower fails to perform, keep, or observe any
term,  provision,  condition,  covenant, or agreement contained in 6.1, 6.2 (but
only up to three  times  during any  12-month  period,  and only in  relation to

                                       45
<PAGE>

Defaults caused by the failure of third Persons to provide required  information
or reporting,  and not in relation to Defaults caused by a Borrower),  6.3, 6.5,
6.7, 6.8, 6.12, 6.13 and 6.14 of this Agreement, or comparable provisions of the
other Loan Documents, within 10 days of the date when required (or within 5 days
of the date when  required in the case of Section  6.2 or Section  6.3) and such
failure  continues for 30 days after written notice thereof,  or if any Borrower
otherwise  fails to  perform,  keep,  or  observe  any  other  term,  provision,
condition,  covenant,  or agreement  contained in this Agreement,  in any of the
other Loan Documents,  or in any other present or future  agreement  between any
Borrower, Agent and/or the Lender Group and (with the exception of any breach of
Section 7.20 hereof) such failure  continues  for 30 days after  written  notice
thereof;

                  8.3  ....[Intentionally Omitted];

                  8.4 ....If any material  portion of any Borrower's  properties
or assets is attached,  seized,  subjected to a writ or distress warrant,  or is
levied upon,  or comes into the  possession  of any third Person and the same is
not  dismissed  or stayed  prior to the  earliest to occur of (x) any seizure or
taking and (y) the expiration of 30 days after any  attachment,  issuance of any
writ or distress warrant, or notice of levy;

                  8.5  ....If an Insolvency Proceeding is commenced by any
Borrower;

                  8.6 ....If an Insolvency  Proceeding is commenced  against any
Borrower and any of the following  events occur:  (a) such Borrower  consents to
the  institution  of the  Insolvency  Proceeding  against  it; (b) the  petition
commencing  the  Insolvency  Proceeding  is not  timely  controverted;  (c)  the
petition  commencing  the  Insolvency  Proceeding  is not  dismissed  within  45
calendar  days of the date of the  filing  thereof;  (d) an  interim  trustee is
appointed to take  possession of all or a substantial  portion of the properties
or assets of, or to operate all or any  substantial  portion of the business of,
such  Borrower;  or (e) an order for relief  shall  have been  issued or entered
therein;

                  8.7 ....If any Borrower is enjoined, restrained, or in any way
prevented by court order from  continuing to conduct all or any material part of
its business affairs;

                  8.8 ....If a notice of Lien  (other  than a  Permitted  Lien),
levy, or assessment in excess of $100,000 is filed of record with respect to any
Borrower's  properties  or  assets  by  the  United  States  Government,  or any
department,  agency,  or  instrumentality  thereof,  or by  any  state,  county,
municipal,  or governmental  agency,  or if any taxes or debts owing at any time
hereafter  to any one or more of such  entities  becomes  a Lien  (other  than a
Permitted Lien), whether choate or otherwise,  upon any Borrower's properties or
assets and the same is not paid on the payment date thereof;

                  8.9 ....If a judgment  or other  claim for an amount in excess
of  $100,000  becomes a Lien or  encumbrance  upon any  material  portion of any
Borrower's  properties  that  is not a  Permitted  Lien  and is  not  stayed  or
dismissed within 30 days thereafter;

                  8.10  ...Except  as  provided  in or  contemplated  under  the
Reorganization  Plan,  if there is a default in any material  agreement to which
any Borrower is a party with one or more third  Persons and such Borrower has an
obligation  to pay money  thereunder in an amount in excess of $1,000,000 to one
or more such third Persons and such default (a) occurs at the final  maturity of
                                       46
<PAGE>

the obligations  thereunder,  or (b) results in a right by such third Person(s),
irrespective of whether exercised, to accelerate the maturity of such Borrower's
obligations thereunder,  to terminate such agreement, or to refuse to renew such
agreement pursuant to an automatic renewal right therein;

                  8.11  ...If   Borrower   makes  any   payment  on  account  of
Indebtedness that has been contractually subordinated in right of payment to the
payment of the  Obligations,  except to the extent such  payment is permitted by
the terms of the subordination provisions applicable to such Indebtedness;

                  8.12  ...If any  material  misstatement  or  misrepresentation
exists now or  hereafter  as at the time made in any  warranty,  representation,
statement,  or  report  made to Lender  Group by any  Borrower  or any  officer,
authorized employee, agent, or director of any Borrower, or if any such material
warranty or representation is withdrawn;

                  8.13  ...[Intentionally Omitted]

                  8.14 ...If this  Agreement  or any other  Loan  Document  that
purports to create a Lien,  shall, for any reason (other than failure of Lenders
or Agent to make any required  filings or  registrations or to perform any other
action  authorized  hereunder to perfect such Liens),  fail or cease to create a
valid and perfected and,  except to the extent  permitted by the terms hereof or
thereof,  first priority Lien on or security  interest in the Collateral with an
aggregate value in excess of $250,000 covered hereby or thereby; or

                  8.15 ...Any  provision of any Loan Document  shall at any time
for  any  reason  be  declared  to  be  null  and  void,   or  the  validity  or
enforceability thereof shall be contested by any Borrower, or a proceeding shall
be  commenced  by  any  Borrower,  or  by  any  Governmental   Authority  having
jurisdiction  over  any  Borrower,   seeking  to  establish  the  invalidity  or
unenforceability  thereof,  or any Borrower shall deny that any Borrower has any
liability or obligation purported to be created under any Loan Document.

Upon the occurrence of any of the foregoing Events of Default or the cure of the
same by Borrowers,  Agent, without any liability for the failure to do so, shall
provide  notice (in the same manner  provided for notice to a party set forth in
Section 12 hereof)  of such  Event of Default to the  Debenture  Trustee at such
address  as the  Debenture  Trustee  may from time to time  provide to Agent for
purposes of such notice.

9.       LENDER GROUP'S RIGHTS AND REMEDIES.

9.1 Rights and Remedies. Upon the occurrence, and during the continuation, of an
Event of Default,  the Required Lenders (at their election but without notice of
their election and without demand) may, except to the extent otherwise expressly
provided or required  below,  authorize and instruct Agent to do any one or more
of the  following  on behalf of the Lender  Group (and  Agent,  acting  upon the
instructions of the Required Lenders,  shall do the same on behalf of the Lender
Group), all of which are authorized by each Borrower:

                                       47
<PAGE>

(a)      Declare all Obligations, whether evidenced by this Agreement, by any
of the other Loan Documents, or otherwise, immediately due and payable;

(b) Cease advancing money or extending credit to or for the benefit of Borrowers
under  this  Agreement,  under  any of the Loan  Documents,  or under  any other
agreement between Borrowers and Lender Group;

(c)  Terminate  this  Agreement  and any of the other Loan  Documents  as to any
future  liability or obligation of Lender Group,  but without  affecting  Lender
Group's rights and security interests in the Personal Property Collateral or the
Real Property Collateral and without affecting the Obligations;

(d) Settle or adjust  disputes  and claims  directly  with  Account  Debtors for
amounts and upon terms which Agent considers advisable, and in such cases, Agent
will credit  Borrowers' Loan Account with only the net amounts received by Agent
in payment of such disputed Accounts after deducting all Agent Expenses incurred
or expended in connection therewith;

(e) Cause a Borrower to hold all returned  Inventory in trust for Lender  Group,
segregate all returned  Inventory from all other property of such Borrower or in
such Borrower's  possession and conspicuously  label said returned  Inventory as
the property of Lender Group;

(f)  Without  notice to or demand  upon  Borrower  or any  Guarantor,  make such
payments and do such acts as Agent considers  necessary or reasonable to protect
its  security  interests in the  Collateral  of Agent (for the benefit of Lender
Group).  Each Borrower  agrees to assemble the Personal  Property  Collateral if
Agent so requires,  and to make the Personal  Property  Collateral  available to
Agent as Agent  may  designate.  Each  Borrower  authorizes  Agent to enter  the
premises where the Personal Property Collateral is located, to take and maintain
possession of the Personal Property  Collateral,  or any part of it, and to pay,
purchase,  contest,  or  compromise  any  encumbrance,  charge,  or Lien that in
Agent's  determination  appears to conflict  with the security  interests of the
Agent and to pay all expenses incurred in connection therewith.  With respect to
a Borrower's  owned or leased  premises,  such  Borrower  hereby  grants Agent a
license  to enter  into  possession  of such  premises  and to occupy  the same,
without  charge,  for up to 120 days in order to exercise any of Lender  Group's
rights or remedies provided herein, at law, in equity, or otherwise;

(g) Without notice to any Borrower  (such notice being  expressly  waived),  and
without  constituting  a  retention  of any  collateral  in  satisfaction  of an
obligation  (within  the  meaning  of  the  Code),  set  off  and  apply  to the
Obligations  any and all (i)  balances  and  deposits of each  Borrower  held by
Lender Group (including any amounts received in the Lockbox  Accounts),  or (ii)
indebtedness  at any time owing to or for the credit or the account of Borrowers
held by Lender Group;

(h) Hold, as cash collateral, any and all balances and deposits of each Borrower
held by Lender  Group,  and any amounts  received in the  Lockbox  Accounts,  to
secure the full and final repayment of all of the Obligations;

                                       48
<PAGE>

(i) Ship, reclaim,  recover, store, finish, maintain,  repair, prepare for sale,
advertise  for sale,  and sell (in the manner  provided for herein) the Personal
Property  Collateral.  Agent is hereby  granted a license or other right to use,
without charge for the benefit of Lender Group, each Borrower's labels, patents,
copyrights,  rights of use of any name, trade secrets, trade names,  trademarks,
service marks, and advertising  matter,  or any property of a similar nature, as
it pertains to the Personal Property  Collateral,  in completing  production of,
advertising  for sale,  and selling any Personal  Property  Collateral  and each
Borrower's rights under all licenses and all franchise agreements shall inure to
Lender Group's benefit;

(j) Sell the Personal Property Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions,  for cash or on terms, in
such manner and at such places  (including  any  Borrower's  premises)  as Agent
determines is  commercially  reasonable.  It is not necessary  that the Personal
Property Collateral be present at any such sale;

(k)      Agent shall give notice of the disposition of the Personal Property
Collateral as follows:

(1)  Agent  shall  give the  Borrower  with  rights in the  applicable  Personal
Property  Collateral  and each  holder of a security  interest  in the  Personal
Property  Collateral  who has filed with Agent a written  request for notice,  a
notice in  writing  of the time and place of public  sale,  or, if the sale is a
private sale or some other disposition other than a public sale is to be made of
the Personal  Property  Collateral,  then the time on or after which the private
sale or other disposition is to be made;

(2) The notice shall be personally delivered or mailed,  postage prepaid, to the
Borrower with rights in the applicable  Personal Property Collateral as provided
in Section 12, at least 5 days before the date fixed for the sale, or at least 5
days before the date on or after which the private sale or other  disposition is
to be made; no notice needs to be given prior to the  disposition of any portion
of the Personal  Property  Collateral that is perishable or threatens to decline
speedily in value or that is of a type customarily sold on a recognized  market.
Notice to Persons other than the Borrower with rights in the applicable Personal
Property  Collateral  shall be sent to such  addresses as they have furnished to
Agent;

(l)      Agent, on behalf of the Lender Group, may credit bid and purchase at
 any public sale;

(m) Agent may seek the appointment of a receiver or keeper to take possession of
all or any  portion of the  Collateral  or to operate  same and,  to the maximum
extent permitted by law, may seek the appointment of such a receiver without the
requirement of prior notice or a hearing;

(n)      The Lender Group shall have all other rights and remedies available
to it at law or in equity pursuant to any other Loan Documents; and

(o) Any  deficiency  that exists  after  disposition  of the  Personal  Property
Collateral as provided above will be paid  immediately by Borrowers.  Any excess
will be returned,  without  interest and subject to the rights of third Persons,
by Agent to Borrowers.

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<PAGE>

9.2  Remedies  Cumulative.   Lender  Group's  rights  and  remedies  under  this
Agreement,  the Loan Documents,  and all other  agreements  shall be cumulative.
Lender Group shall have all other rights and remedies not inconsistent  herewith
as provided under the Code, by law, or in equity. No exercise by Lender Group of
one right or remedy shall be deemed an  election,  and no waiver by Lender Group
of any Event of Default shall be deemed a continuing  waiver. No delay by Lender
Group shall constitute a waiver, election, or acquiescence by it.

10.      TAXES AND EXPENSES.

                  If any  Borrower  fails  to pay  any  monies  (whether  taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required  under the terms of this  Agreement,  then,  to the  extent  that Agent
reasonably  determines  that such  failure by such  Borrower  could  result in a
Material  Adverse  Change,  in  its  discretion  and  without  prior  notice  to
Borrowers,  Agent for the  benefit of the Lender  Group may do any or all of the
following:  (a) make payment of the same or any part thereof;  or (b) obtain and
maintain  insurance  policies of the type described in Section 6.9, and take any
action with respect to such  policies as Agent deems  prudent.  Any such amounts
paid by Agent shall constitute Lender Group Expenses.  Any such payments made by
Lender Group shall not  constitute  an agreement by Lender Group to make similar
payments in the future or a waiver by Lender Group of any Event of Default under
this  Agreement.  Agent need not inquire as to, or contest the  validity of, any
such expense,  tax, or Lien and the receipt of the usual official notice for the
payment  thereof shall be conclusive  evidence that the same was validly due and
owing.

11.      WAIVERS; INDEMNIFICATION.

11.1 Demand;  Protest;  etc. Each Borrower  waives  demand,  protest,  notice of
protest,  notice of  default or  dishonor,  notice of  payment  and  nonpayment,
nonpayment at maturity, release, compromise,  settlement,  extension, or renewal
of accounts, documents,  instruments,  chattel paper, and guarantees at any time
held by Lender Group on which any Borrower may in any way be liable.

11.2 Lender Group's Liability for Collateral.  Each Borrower hereby agrees that:
(a) so long as Agent complies with its obligations,  if any, under the Code, the
Lender  Group shall not in any way or manner be liable or  responsible  for: (i)
the safekeeping of the Collateral,  (ii) any loss or damage thereto occurring or
arising in any manner or fashion  from any cause,  (iii) any  diminution  in the
value thereof, or (iv) any act or default of any carrier, warehouseman,  bailee,
forwarding  agency,  or  other  Person,  and (b) all risk of  loss,  damage,  or
destruction of the Collateral shall be borne by Borrowers.

11.3 Indemnification.  Each Borrower shall pay, indemnify, defend, and hold each
Agent-Related Person, each Lender-Related Person, each Lender, each Participant,
and each of their respective officers,  directors,  employees,  counsel, agents,
and  attorneys-in-fact  (each, an "Indemnified Person") harmless (to the fullest
extent  permitted by law) from and against any and all claims,  demands,  suits,
actions, investigations,  proceedings, and damages, and all reasonable attorneys
fees and  disbursements  and  other  costs and  expenses  actually  incurred  in
connection  therewith (as and when they are incurred and irrespective of whether

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suit is brought), at any time asserted against, imposed upon, or incurred by any
of them in  connection  with or as a  result  of or  related  to the  execution,
delivery, enforcement, performance, and administration of this Agreement and any
other Loan Documents or the transactions  contemplated  herein, and with respect
to any investigation,  litigation,  or proceeding related to this Agreement, the
Pre-Petition  Agreement,  any other Loan Document, or the use of the proceeds of
the credit provided hereunder (irrespective of whether any Indemnified Person is
a party  thereto),  or any act,  omission,  event or  circumstance in any manner
related   thereto   (all   the   foregoing,   collectively,   the   "Indemnified
Liabilities"). Borrowers shall not have any obligation to any Indemnified Person
under this Section 11.3 with respect to any  Indemnified  Liability that a court
of competent  jurisdiction  finally  determines  to have resulted from the gross
negligence or willful  misconduct of such  Indemnified  Person.  This  provision
shall  survive  the  termination  of this  Agreement  and the  repayment  of the
Obligations.   If  any  Indemnified  Person  makes  any  payment  to  any  other
Indemnified  Person with  respect to an  Indemnified  Liability  as to which any
Borrower  was  required to  indemnify  the  Indemnified  Person  receiving  such
payment,   the  Indemnified  Person  making  such  payment  is  entitled  to  be
indemnified  and reimbursed by Borrowers with respect thereto in accordance with
and subject to the terms of this Agreement.

12.      NOTICES.

                  Unless  otherwise  provided in this Agreement,  all notices or
demands by any party relating to this Agreement or any other Loan Document shall
be in writing and  (except  for  financial  statements  and other  informational
documents  which may be sent by  first-class  mail,  postage  prepaid)  shall be
personally  delivered or sent by registered or certified mail (postage  prepaid,
return receipt  requested),  overnight  courier,  electronic mail (at such email
addresses as Administrative  Borrower or Agent, as applicable,  may designate to
each other in accordance herewith),  or telefacsimile to Administrative Borrower
or to Agent, as the case may be, at its address set forth below:

                If to a Borrower
                or Administrative Borrower:

                      c/o GENERAL DATACOMM INDUSTRIES, INC.
                          6 Rubber Avenue
                          Naugatuck, Connecticut  06770
                          Attn:  Mr. Howard Modlin, Chief Executive Officer
                          Fax No.  203-729-3182

   with copies to:        YOUNG CONAWAY STARGATT & TAYLOR
                          1000 West Street, 17th Floor
                          Wilmington, Delaware  19801
                          Attn:  Joel Waite, Esq.
                          Fax No.  302-571-6688

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<PAGE>

                If to Agent:

                         ABLECO FINANCE LLC
                         299 Park Avenue, 23rd Floor
                         New York, NY  10171
                         Attn:  Timothy Fording
                         Fax No.  212-909-1421

   with copies to:       SCHULTE ROTH & ZABEL LLP
                         919 Third Avenue
                         New York, New York  10022
                         Attn:  Eliot L. Relles, Esq.
                         Fax No.  212-593-5955

                  The parties hereto may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other. All notices or demands sent in accordance with this Section 12, other
than  notices  by  Agent in  connection  with  enforcement  rights  against  the
Collateral  under the  provisions of the Code,  shall be deemed  received on the
earlier  of the date of actual  receipt or 3  Business  Days  after the  deposit
thereof in the mail. Each Borrower  acknowledges and agrees that notices sent by
Agent in connection with the exercise of enforcement  rights against  Collateral
under the provisions of the Code shall be deemed sent when deposited in the mail
or  personally   delivered,   or,  where   permitted  by  law,   transmitted  by
telefacsimile or any other method set forth above.

13.      CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

                  EXCEPT  TO  THE  EXTENT   JURISDICTION   IS  RETAINED  BY  THE
BANKRUPTCY  COURT,  THE VALIDITY OF THIS  AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS AND TO THE EXTENT  EXPRESSLY  PROVIDED TO THE  CONTRARY IN ANOTHER  LOAN
DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF,
AND THE RIGHTS OF THE  PARTIES  HERETO AND THERETO  WITH  RESPECT TO ALL MATTERS
ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED
UNDER,  GOVERNED BY, AND CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF
NEW  YORK.  THE  PARTIES  AGREE  THAT ALL  ACTIONS  OR  PROCEEDINGS  ARISING  IN
CONNECTION  WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS  SHALL BE TRIED AND
LITIGATED  ONLY IN THE STATE AND  FEDERAL  COURTS  LOCATED  IN THE COUNTY OF NEW
YORK,  STATE OF NEW YORK OR, AT THE SOLE OPTION OF AGENT,  IN ANY OTHER COURT IN
WHICH AGENT SHALL INITIATE LEGAL OR EQUITABLE  PROCEEDINGS AND WHICH HAS SUBJECT
MATTER  JURISDICTION  OVER THE MATTER IN CONTROVERSY.  EACH BORROWER,  AGENT AND
EACH LENDER WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH
MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO
THE EXTENT ANY  PROCEEDING IS BROUGHT IN  ACCORDANCE  WITH THIS SECTION 13.

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<PAGE>

EACH
BORROWER,  AGENT AND EACH LENDER HEREBY WAIVE THEIR RESPECTIVE  RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION  BASED UPON OR  ARISING  OUT OF ANY OF THE
LOAN  DOCUMENTS  OR ANY  OF THE  TRANSACTIONS  CONTEMPLATED  THEREIN,  INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY  CLAIMS.  EACH BORROWER,  AGENT AND EACH LENDER REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER AND EACH  KNOWINGLY AND  VOLUNTARILY  WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION,  A
COPY OF THIS  AGREEMENT  MAY BE FILED  AS A  WRITTEN  CONSENT  TO A TRIAL BY THE
COURT.

14.      DESTRUCTION OF BORROWER'S DOCUMENTS.

                  All documents (excluding  Negotiable  Collateral),  schedules,
invoices,  agings,  or other  papers  delivered  to Agent  may be  destroyed  or
otherwise  disposed of by Agent 4 months after they are delivered to or received
by Agent, unless  Administrative  Borrower requests,  in writing,  the return of
said documents, schedules, or other papers and makes arrangements, at Borrowers'
expense, for their return.

15.      ISSUANCE OF EQUITY INTERESTS TO HOLDER.

15.1  Authorization  and Issuance of Warrants.  On the Closing Date,  the Parent
shall issue to Ableco Holding,  LLC, a Delaware limited  liability  company (the
"Holder"), one or more warrant certificates covering the purchase of the Warrant
Stock of the Parent substantially in the form of and upon the terms set forth in
Exhibit  W-1 hereto  (such  certificates,  together  with the rights to purchase
Common Stock provided thereby and all warrant  certificates  covering such stock
issued upon transfer,  division or combination of, or in  substitution  for, any
thereof,  being herein called the "Warrants").  The exercise price thereof shall
be an amount  equal to $0.01 per share.  It is  understood  and agreed  that the
Warrants contain provisions  affecting the number of shares of Common Stock that
may be  acquired by the holder of such  Warrant or issued by the  Parent,  which
provisions are set forth in the Warrants.

15.2     Securities Act Matters.  (a)  Holder represents and warrants to
the Parent that:

(i)      Holder is acquiring the Warrants hereunder for its own account, without
         a view to the distribution thereof, all without prejudice,  however, to
         the right of Holder at any time, in accordance with this Reorganization
         Plan,  lawfully to sell or  otherwise  to dispose of all or any part of
         the Warrants or Warrant Stock held by it after the fifth anniversary of
         the  Effective  Date  or,  prior  to  such  fifth  anniversary,  to any
         Affiliate of Holder.

(ii)     Holder is an "accredited  investor"  within the meaning of Regulation D
         under the Securities Act and was not organized for the specific purpose
         of acquiring the Warrant or the Warrant Stock.

(iii)    Holder  has  sufficient   knowledge  and  experience  in  investing  in
         companies  similar to Parent so as to be able to evaluate the risks and
         merits of its investment in Parent and is able  financially to bear the
         risks thereof; and

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<PAGE>

(iv)     Holder understands that (A) this Warrant and the Warrant Stock have not
         been registered  under the Securities Act in reliance upon an exemption
         from the  registration  requirements  of the Securities Act pursuant to
         Section 4(2) thereof or Rule 506  promulgated  under such act and under
         applicable  state  securities  laws,  (B) this  Warrant and the Warrant
         Stock must be held indefinitely unless a subsequent disposition thereof
         is  registered  under the  Securities  Act and under  applicable  state
         securities laws or is exempt from such  registration,  (C) this Warrant
         and the Warrant Stock will bear a legend to such effect, and (D) Parent
         will make a notation on its transfer books to such effect.

(b)      The Parent represents and warrants to Holder that:

(i)      Assuming  the  truth  and  accuracy  of  Holder's  representations  and
         warranties  contained  in the  immediately  preceding  paragraphs,  the
         issuance of the Warrants to Holder hereunder and the issuance of shares
         of Common Stock to Holder  pursuant to the Warrants are exempt from the
         registration  and prospectus  delivery  requirements  of the Securities
         Act.

(ii)     All stock and  securities of the Parent  heretofore  issued and sold by
         the Parent were,  and all  securities  of the Parent issued and sold by
         the Parent on and after the date  hereof are or will be issued and sold
         in accordance with, or are or will be exempt from, the registration and
         prospectus delivery requirements of the Securities Act.

(iii)    The Parent  agrees that neither it nor any Person  acting on its behalf
         has  offered or will offer the  Warrants  or Warrant  Stock or any part
         thereof  or any  similar  securities  for  issue  or  sale  to,  or has
         solicited  or will  solicit  any offer to acquire any of the same from,
         any  Person so as to bring the  issuance  and sale of the  Warrants  or
         Warrant Stock hereunder  within the provisions of the  registration and
         prospectus delivery requirements of the Securities Act.

15.3 Certain Taxes. The Parent shall pay all taxes (other than federal, state or
local income taxes) which may be payable in connection  with the issuance of the
Warrants or Warrant Stock hereunder and shall hold the Lenders  harmless without
limitation as to time against any and all  liabilities  with respect to all such
taxes.  The  obligations of the Parent under this Section 15.3 shall survive any
redemption,  repurchase  or  acquisition  of  Warrants  or Warrant  Stock by the
Parent,  any termination of this Agreement,  and any cancellation or termination
of the Warrants.

15.4 Cancellation and Issuance.  If Holder assigns or otherwise transfers all or
any of its  portion  of the Term  Loans  (including  by  selling  participations
therein) to any Person,  Holder may request  (upon 10 days' prior  notice to the
Parent) that (a) a number of Warrants  held by Holder be canceled on the date of
such  assignment and transfer and (b) a like number of Warrants be issued by the
Parent to the Person to whom such  Obligations  are being  assigned or otherwise
transferred. Upon the date specified in such request:

                                       54
<PAGE>

(i)      The Parent shall  issue,  and Holder  shall  surrender  (or cause to be
         surrendered)  for  cancellation,  such number of Warrants as aforesaid,
         provided that such issuance shall not violate the Securities Act or any
         applicable state securities laws;

(ii)     The Parent will deliver to each Person that receives a certificate  for
         Warrants  a  favorable   legal  opinion  from  counsel  to  the  Parent
         acceptable  to such  Person,  covering  the  matters  set  forth in the
         opinion of counsel to the Parent and its Subsidiaries  delivered to the
         Agent on the Closing Date (to the extent relating to the Warrants);

(iii)    each Person that receives  Warrants  will deliver a certificate  to the
         Parent  affirming  the  representations  and  warranties  contained  in
         Section 15.2(a) hereof as applied to such Person as of such date; and

(iv)     The Parent will  deliver a  certificate  to each  Person that  receives
         Warrants  affirming the  representations  and  warranties  contained in
         Section 15.2(b) hereof as of such date.

16.      ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

16.1     Assignments and Participations.

(a) Any Lender may,  with the written  consent of Agent,  assign and delegate to
one or more  assignees  (provided  that no  written  consent  of Agent  shall be
required in  connection  with any  assignment  and  delegation by a Lender to an
Eligible  Transferee)  (each an  "Assignee")  all, or any ratable  part,  of the
Obligations,  the  Commitments,  and the other  rights and  obligations  of such
Lender  hereunder  and under the other Loan  Documents,  in a minimum  amount of
$1,000,000  (provided  that no such minimum amount shall be required in the case
of an  Assignee  that is an  Affiliate  of a Lender),  provided,  however,  that
Borrowers and Agent may continue to deal solely and directly with such Lender in
connection with the interest so assigned to an Assignee until (i) written notice
of such assignment,  together with payment instructions,  addresses, and related
information with respect to the Assignee, shall have been given to Borrowers and
Agent by such Lender and the Assignee;  (ii) such Lender and its Assignee  shall
have  delivered  to  Borrowers  and  Agent  a  fully  executed   Assignment  and
Acceptance;  and (iii) other than with respect to an  assignment  by an existing
Lender to any Affiliate of such Lender, the assignor Lender or Assignee has paid
to Agent for Agent's sole and separate account a processing fee in the amount of
$2,500;  provided,  further,  that the written consent of the Borrowers shall be
required for an Assignment  and  Acceptance to be effective if, but only if, the
proposed  Assignee  has been a lender to a Borrower at any time during the three
years prior to the Closing Date unless the  assignor  Lender is selling all or a
substantial  portion of its loan portfolio to such proposed  Assignee,  in which
case no such  written  consent  of the  Borrowers  shall be  required.  Anything
contained herein to the contrary notwithstanding, the consent of Agent shall not
be required  (and payment of any fees shall not be required) if such  assignment
is in  connection  with any  merger,  consolidation,  sale,  transfer,  or other
disposition of all or any substantial  portion of the business or loan portfolio
of such Lender.

(b) From and after the date that Agent notifies the assignor  Lender that it has
received a fully executed  Assignment and Acceptance and payment (if applicable)

                                       55
<PAGE>

of the  above-referenced  processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations  hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and  obligations  of a Lender  under the Loan  Documents,  and (ii) the assignor
Lender shall, to the extent that rights and obligations  hereunder and under the
other Loan  Documents  have been assigned by it pursuant to such  Assignment and
Acceptance,  relinquish  its rights (except with respect to Section 11.3 hereof)
and be released from its obligations under this Agreement (and in the case of an
Assignment and Acceptance  covering all or the remaining portion of an assigning
Lender's  rights  and  obligations  under  this  Agreement  and the  other  Loan
Documents,  such Lender shall cease to be a party hereto and thereto),  and such
assignment shall effect a novation between Borrowers and the Assignee.

(c) By executing  and  delivering an Assignment  and  Acceptance,  the assigning
Lender  thereunder  and the Assignee  thereunder  confirm to and agree with each
other and the other  parties  hereto as  follows:  (1) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty  and  assumes  no  responsibility   with  respect  to  any  statements,
warranties,  or representations  made in or in connection with this Agreement or
the execution, legality, validity, enforceability,  genuineness, sufficiency, or
value of this Agreement or any other Loan Document  furnished  pursuant  hereto;
(2) such  assigning  Lender makes no  representation  or warranty and assumes no
responsibility  with respect to the  financial  condition of any Borrower or the
performance or observance by any Borrower of any of its  obligations  under this
Agreement  or any  other  Loan  Document  furnished  pursuant  hereto;  (3) such
Assignee  confirms that it has received a copy of this Agreement,  together with
such other  documents and  information as it has deemed  appropriate to make its
own credit  analysis and decision to enter into such  Assignment and Acceptance;
(4) such Assignee  will,  independently  and without  reliance upon Agent,  such
assigning  Lender,  or any  other  Lender,  and  based  on  such  documents  and
information as it shall deem  appropriate at the time,  continue to make its own
credit  decisions in taking or not taking action under this Agreement;  (5) such
Assignee  appoints  and  authorizes  Agent to take  such  action as agent on its
behalf and to exercise  such powers  under this  Agreement  as are  delegated to
Agent  by the  terms  hereof,  together  with  such  powers  as  are  reasonably
incidental  thereto;  and (6)  such  Assignee  agrees  that it will  perform  in
accordance  with their terms all of the  obligations  which by the terms of this
Agreement are required to be performed by it as a Lender.

(d) Immediately upon each Assignee's making its processing fee payment under the
Assignment and  Acceptance,  this Agreement shall be deemed to be amended to the
extent,  but only to the  extent,  necessary  to  reflect  the  addition  of the
Assignee and the resulting  adjustment of the Commitments of the assignor Lender
and Assignee arising therefrom.  The Commitment allocated to each Assignee shall
reduce such Commitments of the assigning Lender pro tanto.

(e) Any Lender may at any time, with the written  consent of Agent,  sell to one
or  more  commercial  banks,  financial  institutions,   or  other  Persons  not
Affiliates  of such  Lender (a  "Participant")  participating  interests  in the
Obligations owing to such Lender, such Lender's Commitment, and the other rights
and interests of that Lender (the "Originating  Lender") hereunder and under the
other  Loan  Documents  (provided  that no  written  consent  of Agent  shall be
required in connection with any sale of such participating interests by a Lender
to an Eligible Transferee); provided, however, that (i) the Originating Lender's

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<PAGE>

obligations  under this Agreement shall remain  unchanged,  (ii) the Originating
Lender shall remain solely  responsible for the performance of such obligations,
(iii)  Borrowers  and Agent shall  continue to deal solely and directly with the
Originating  Lender in  connection  with the  Originating  Lender's  rights  and
obligations  under  this  Agreement  and  the  other  Loan  Documents,  (iv)  no
Originating  Lender shall  transfer or grant any  participating  interest  under
which the  Participant has the sole and exclusive right to approve any amendment
to, or any consent or waiver with  respect to, this  Agreement or any other Loan
Document,  except to the extent  such  amendment  to, or consent or waiver  with
respect to this  Agreement  or of any other Loan  Document  would (A) extend the
final maturity date of the  Obligations  hereunder in which such  Participant is
participating;  (B) reduce  the  interest  rate  applicable  to the  Obligations
hereunder  in which such  Participant  is  participating;  (C)  release all or a
material portion of the Collateral or guaranties (except to the extent expressly
provided  herein or in any of the Loan  Documents)  supporting  the  Obligations
hereunder in which such Participant is  participating;  (D) postpone the payment
of, or reduce  the  amount  of, the  interest  or fees  hereunder  in which such
Participant  is  participating;  (E) change the amount or due dates of scheduled
principal  repayments or prepayments  or premiums in respect of the  Obligations
hereunder in which such  Participant is  participating;  or (F)  subordinate the
Liens of Agent for the  benefit  of the  Lender  Group to the Liens of any other
creditor of any  Borrower;  and (v) all amounts  payable by Borrowers  hereunder
shall  be  determined  as  if  such   Originating   Lender  had  not  sold  such
participation;  except that, if amounts outstanding under this Agreement are due
and  unpaid,  or shall have been  declared  or shall have become due and payable
upon the occurrence of an Event of Default,  each Participant shall be deemed to
have the right of set-off in respect of its  participating  interest  in amounts
owing  under  this  Agreement  to  the  same  extent  as if  the  amount  of its
participating  interest  were  owing  directly  to it  as a  Lender  under  this
Agreement.  The rights of any Participant  shall only be derivative  through the
Originating  Lender with whom such  Participant  participates and no Participant
shall have any direct  rights as to the other  Lenders,  Agent,  Borrowers,  the
Collections,  the  Collateral,  or  otherwise  in respect of the Term Loans.  No
Participant  shall  have the  right to  participate  directly  in the  making of
decisions by Lenders among  themselves.  The provisions of this Section  16.1(e)
are  solely for the  benefit of Lender  Group,  and no  Borrower  shall have any
rights as a third party beneficiary of any of such provisions.

(f) In  connection  with  any  such  assignment  or  participation  or  proposed
assignment or participation,  subject to Section 18.16(d), a Lender may disclose
to a third party all  documents  and  information  which it now or hereafter may
have relating to any Borrower's business.

(g) Notwithstanding any other provision in this Agreement, any Lender may at any
time create a security interest in, or pledge,  all or any portion of its rights
under and  interest in this  Agreement  in favor of any Federal  Reserve Bank in
accordance  with  Regulation  A of the  Federal  Reserve  Bank or U.S.  Treasury
Regulation 31 C.F.R.  ss.203.14,  and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable law.

16.2  Successors.  This  Agreement  shall  bind and inure to the  benefit of the
respective  successors  and  assigns of each of the  parties  hereto;  provided,
however,  that no  Borrower  may assign this  Agreement  or any rights or duties
hereunder  without Lenders' prior written consent and any prohibited  assignment

                                       57
<PAGE>

shall be absolutely  void. No consent to assignment by Lenders shall release any
Borrower from the Obligations.  A Lender may assign this Agreement and the other
Loan Documents and its rights and duties hereunder pursuant to Section 16.1 and,
except as expressly required pursuant to Section 16.1, no consent or approval by
any Borrower is required in connection with any such assignment.

17.      AMENDMENTS; WAIVERS.
17.1  Amendments  and Waivers.  No amendment or waiver of any  provision of this
Agreement  or any other  Loan  Document,  and no  consent  with  respect  to any
departure by any Borrower therefrom, shall be effective unless the same shall be
in writing and signed by Agent and Required  Lenders (or by Agent at the written
request of Required  Lenders) and Borrower,  and then any such waiver or consent
shall be effective  only in the specific  instance and for the specific  purpose
for which given; provided,  however, that no such waiver,  amendment, or consent
shall,  unless in  writing  and signed by all  Lenders  and each  Borrower,  and
acknowledged by Agent, do any of the following:

(a)      increase or extend the Commitment of any Lender;

(b)      postpone  or delay any date fixed by this  Agreement  or any other Loan
         Document for any payment of principal, interest, fees, or other amounts
         due to  Lenders  (or any of them)  hereunder  or under any  other  Loan
         Document;

(c)      reduce the principal of, or the rate of interest  specified  herein on,
         the Term Loans or any fees or other amounts payable  hereunder or under
         any other Loan Document;

(d)      change the  percentage  of the  Commitments  or the  percentage  of the
         aggregate unpaid  principal amount of the Obligations,  as the case may
         be,  which is  required  for  Lenders or any of them to take any action
         hereunder;

(e)      amend this Section 17.1 or any provision of this Agreement providing
         for consent or other action by all Lenders;

(f)      release Collateral other than as permitted by Section 18.11;

(g)      change the definition of "Required Lenders" or "Pro Rata Share";

(h)      release a Borrower from any Obligation for the payment of money;

(i)      amend any of the provisions of Article 17; or

(j)      subordinate the Liens of Agent for the benefit of the Lender Group to
the Liens of any other creditor of a Borrower.  and, provided  further,  that no
amendment,  waiver or  consent  shall,  unless in  writing  and signed by Agent,

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affect the  rights or duties of Agent  under  this  Agreement  or any other Loan
Document. The foregoing notwithstanding,  any amendment,  modification,  waiver,
consent,  termination,  or release of or with  respect to any  provision of this
Agreement or any other Loan  Document that relates only to the  relationship  of
Lender  Group  among  themselves,  and  that  does  not  affect  the  rights  or
obligations  of any Borrower,  shall not require  consent by or the agreement of
Borrowers.

17.2 No  Waivers;  Cumulative  Remedies.  No  failure  by Agent or any Lender to
exercise  any right,  remedy,  or option  under this  Agreement,  any other Loan
Document, or any present or future supplement hereto or thereto, or in any other
agreement  between or among  Borrowers and Agent and/or any Lender,  or delay by
Agent or any Lender in exercising the same, will operate as a waiver thereof. No
waiver by Agent or any Lender will be  effective  unless it is in  writing,  and
then only to the extent  specifically  stated.  No waiver by Agent or Lenders on
any  occasion  shall  affect  or  diminish  Agent's  and  each  Lender's  rights
thereafter to require  strict  performance by Borrowers of any provision of this
Agreement.  Agent's and each Lender's  rights under this Agreement and the other
Loan Documents will be cumulative and not exclusive of any other right or remedy
which Agent or any Lender may have.

18.      AGENT; LENDER GROUP.

18.1 Appointment and  Authorization of Agent.  Each Lender hereby designates and
appoints  Ableco as its Agent under this Agreement and the other Loan Documents.
Each Lender hereby  irrevocably  authorizes the Agent to take such action on its
behalf under the  provisions of this  Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to it
by the terms of this  Agreement or any other Loan  Document,  together with such
powers as are reasonably incidental thereto.  Agent agrees to act as such on the
express conditions  contained in this Article 18. The provisions of this Article
18 are solely for the benefit of Agent and Lenders,  and the Borrowers shall not
have any rights as a third party beneficiary of any of the provisions  contained
herein;  provided,  however,  that the provisions of Sections 18.10,  18.11, and
18.16(d)  also  shall be for the  benefit of  Borrowers.  Any  provision  to the
contrary  contained  elsewhere in this  Agreement or in any other Loan  Document
notwithstanding,  Agent  shall not have any duties or  responsibilities,  except
those expressly set forth herein,  nor shall Agent have or be deemed to have any
fiduciary  relationship with any Lender,  and no implied  covenants,  functions,
responsibilities,  duties,  obligations,  or liabilities shall be read into this
Agreement or any other Loan Document or otherwise  exist against Agent; it being
expressly  understood  and  agreed  that  the  use of the  word  "Agent"  is for
convenience only, that Ableco is merely the  representative of the Lenders,  and
has only the contractual duties set forth herein.  Except as expressly otherwise
provided in this  Agreement,  Agent  shall have and may use its sole  discretion
with respect to exercising  or  refraining  from  exercising  any  discretionary
rights or taking or refraining  from taking any actions which Agent is expressly
entitled to take or assert  under or pursuant  to this  Agreement  and the other
Loan  Documents.  Without  limiting the generality of the  foregoing,  or of any
other  provision of the Loan Documents that provides  rights or powers to Agent,
Lenders agree that Agent shall have the right to exercise the  following  powers
and to delegate  the  exercise of any such powers to any  sub-agent  of Agent as
long as this Agreement remains in effect:  (a) maintain,  in accordance with its
customary business  practices,  ledgers and records reflecting the status of the
Term Loans, the other Obligations,  the Collateral, the Collections, and related
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matters;  (b) execute and/or file any and all financing or similar statements or
notices, amendments,  renewals, supplements,  documents,  instruments, proofs of
claim for Lenders, notices and other written agreements with respect to the Loan
Documents;  (c) make the Term  Loans,  for  itself or on behalf  of  Lenders  as
provided  in  the  Loan  Documents;  (d)  receive,  apply,  and  distribute  the
Collections as provided in the Loan  Documents;  (e) open and maintain such bank
accounts and lock boxes as Agent deems  necessary and  appropriate in accordance
with  the  Loan  Documents  for  the  foregoing  purposes  with  respect  to the
Collateral and the Collections;  (f) perform,  exercise, and enforce any and all
other rights and remedies of Lender  Group with respect to  Borrowers,  the Term
Loans, the other  Obligations,  the Collateral,  the  Collections,  or otherwise
related to any of same as provided in the Loan Documents;  and (g) incur and pay
such Lender Group Expenses as Agent may deem  necessary or  appropriate  for the
performance  and  fulfillment  of its functions and powers  pursuant to the Loan
Documents.

18.2  Delegation of Duties.  Except as otherwise  provided in this Section 18.2,
Agent may  execute  any of its  duties  under this  Agreement  or any other Loan
Document by or through  agents,  employees,  or  attorneys-in-fact  and shall be
entitled to advice of counsel  concerning all matters pertaining to such duties.
Agent shall not be responsible  for the negligence or misconduct of any agent or
attorney-in-fact  that  it  selects  as  long  as  such  selection  was  made in
compliance  with this  Section  18.2 and  without  gross  negligence  or willful
misconduct.

18.3 Liability of Agent-Related Persons. None of Agent-Related Persons shall (i)
be liable for any action taken or omitted to be taken by any of them under or in
connection  with this  Agreement or any other Loan Document or the  transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or,  (ii) be  responsible  in any  manner  to any of  Lenders  for any  recital,
statement, representation or warranty made by any Borrower, or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement  or in  any  other  Loan  Document,  or in  any  certificate,  report,
statement,  or other document referred to or provided for in, or received by any
Agent under or in connection with, this Agreement or any other Loan Document, or
the validity, effectiveness,  genuineness, enforceability or sufficiency of this
Agreement  or any other Loan  Document,  or for any failure of a Borrower or any
other  party to any Loan  Document  to  perform  its  obligations  hereunder  or
thereunder.  No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the  observance  or  performance  of any of the
agreements  contained  in, or  conditions  of, this  Agreement or any other Loan
Document, or to inspect the properties, books, or records of a Borrower, or of a
Borrower's Subsidiaries or Affiliates.

18.4  Reliance by Agent.  Agent  shall be  entitled to rely,  and shall be fully
protected  in  relying,   upon  any  writing,   resolution,   notice,   consent,
certificate,   affidavit,  letter,  telegram,  facsimile,  telex,  or  telephone
message,  statement  or other  document  or  conversation  believed  by it to be
genuine and correct and to have been signed,  sent, or made by the proper Person
or Persons,  and upon advice and statements of legal counsel  (including counsel
to  Borrowers  or counsel to any  Lender),  independent  accountants,  and other
experts selected by Agent. Agent shall be fully justified in failing or refusing
to take any action  under this  Agreement or any other Loan  Document  unless it
shall first  receive  such  advice or  concurrence  of  Required  Lenders or all
Lenders,  as applicable,  and until such instructions are received,  Agent shall
act, or refrain from acting,  as it deems  advisable.  If Agent so requests,  it
shall first be indemnified to its reasonable satisfaction by Lenders against any
and all liability and expense which may be incurred by it by reason of taking or

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continuing to take any such action.  Agent shall in all cases be fully protected
in acting, or in refraining from acting,  under this Agreement or any other Loan
Document  in  accordance  with a request or consent of  Required  Lenders or all
Lenders, as applicable,  and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of Lenders.

18.5  Notice of Default or Event of  Default.  Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with  respect to defaults  in the  payment of  principal,  interest,  fees,  and
expenses  required  to be paid to Agent  for the  account  of Agent or  Lenders,
except with  respect to Defaults and Events of Default of which Agent has actual
knowledge,  unless  Agent shall have  received  written  notice from a Lender or
Borrowers  referring  to this  Agreement,  describing  such  Default or Event of
Default,  and stating that such notice is a "notice of default."  Agent promptly
will notify Lenders of its receipt of any such notice or of any Event of Default
of which Agent has actual  knowledge.  If any Lender obtains actual knowledge of
any Event of Default,  such Lender  promptly  shall notify the other Lenders and
Agent of such Event of Default.  Each  Lender  shall be solely  responsible  for
giving any notices to its  Participants,  if any. Subject to Section 18.4, Agent
shall take such action with  respect to such  Default or Event of Default as may
be  requested  by  Required  Lenders in  accordance  with  Section 9;  provided,
however,  that unless and until Agent has received any such  request,  Agent may
(but shall not be obligated  to) take such  action,  or refrain from taking such
action,  with  respect  to such  Default  or Event of  Default  as it shall deem
advisable:

(a)      At all times,  Agent may  propose  and,  with the  consent of  Required
         Lenders  (which shall not be  unreasonably  withheld and which shall be
         deemed to have been given by a Lender  unless such Lender has  notified
         Agent to the contrary in writing within three (3) days of  notification
         of such proposed  actions by Agent)  exercise any remedies on behalf of
         Lender Group; and

(b)      At all times,  once Agent and Required  Lenders or all Lenders,  as the
         case may be,  have  approved  the  exercise of a  particular  remedy or
         pursuit of a course of action,  Agent may,  but shall not be  obligated
         to, make all administrative  decisions in connection  therewith or take
         all other  actions  reasonably  incidental  thereto  (for  example,  if
         Required Lenders approve the foreclosure of certain  Collateral,  Agent
         shall not be required to seek consent for the administrative aspects of
         conducting such sale or handling of such Collateral).

18.6  Credit  Decision.  Each  Lender  acknowledges  that none of  Agent-Related
Persons has made any  representation or warranty to it, and that no act by Agent
hereinafter taken,  including any review of the affairs of each Borrower and its
respective  Subsidiaries  or  Affiliates,  shall be  deemed  to  constitute  any
representation  or warranty  by any  Agent-Related  Person to any  Lender.  Each
Lender represents to Agent that it has,  independently and without reliance upon
any  Agent-Related  Person and based on such documents and information as it has
deemed  appropriate,  made  its own  appraisal  of and  investigation  into  the
business,  prospects,  operations,  property, financial and other condition, and
creditworthiness  of any Borrower and any other Person (other than Lender Group)
party to a Loan Document,  and all applicable  bank  regulatory laws relating to
the transactions  contemplated  hereby,  and made its own decision to enter into
this  Agreement and to extend credit to Borrowers.  Each Lender also  represents
that it will,  independently and without reliance upon any Agent-Related  Person
and based on such documents and information as it shall deem  appropriate at the
time,  continue to make its own credit  analysis,  appraisals,  and decisions in
taking or not taking action under this  Agreement and the other Loan  Documents,

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<PAGE>

and to make such investigations as it deems necessary to inform itself as to the
business,  prospects,  operations,  property, financial and other condition, and
creditworthiness of any Borrower, and any other Person (other than Lender Group)
party to a Loan  Document.  Except for  notices,  reports,  and other  documents
expressly  herein required to be furnished to Lenders by Agent,  Agent shall not
have any duty or  responsibility  to provide any Lender with any credit or other
information concerning the business, prospects,  operations, property, financial
and other condition,  or creditworthiness of any Borrower,  and any other Person
party  to a  Loan  Document  that  may  come  into  the  possession  of  any  of
Agent-Related Persons.

18.7 Costs and Expenses;  Indemnification.  Agent may incur and pay Lender Group
Expenses to the extent Agent deems  reasonably  necessary or appropriate for the
performance and fulfillment of its functions,  powers, and obligations  pursuant
to the  Loan  Documents,  including,  without  limiting  the  generality  of the
foregoing,  but subject to any requirements of the Loan Documents that it obtain
any  applicable  consents or engage in any required  consultation,  court costs,
reasonable  attorneys  fees  and  expenses,   costs  of  collection  by  outside
collection  agencies  and  auctioneer  fees and  costs  of  security  guards  or
insurance premiums paid to maintain the Collateral, whether or not Borrowers are
obligated to reimburse  Agent or Lenders for such expenses  pursuant to the Loan
Agreement or otherwise.  Agent is  authorized  and directed to deduct and retain
sufficient  amounts from  Collections to reimburse Agent for such  out-of-pocket
costs and expenses prior to the  distribution of any amounts to Lenders.  In the
event Agent is not reimbursed for such costs and expenses from Collections, each
Lender  hereby  agrees that it is and shall be  obligated to pay to or reimburse
such Agent for the amount of such  Lender's Pro Rata Share  thereof.  Whether or
not  the  transactions  contemplated  hereby  are  consummated,   Lenders  shall
indemnify upon demand Agent-Related  Persons (to the extent not reimbursed by or
on behalf of Borrowers  and without  limiting the  obligation of Borrowers to do
so),  according  to  their  Pro  Rata  Shares,  from  and  against  any  and all
Indemnified Liabilities;  provided,  however, that no Lender shall be liable for
the  payment  to  Agent-Related  Persons  of any  portion  of  such  Indemnified
Liabilities  resulting  solely from such Person's gross  negligence,  or willful
misconduct.  Without  limitation of the foregoing,  each Lender shall  reimburse
Agent upon demand for its ratable share of any costs or  out-of-pocket  expenses
(including  attorney fees and expenses) incurred by Agent in connection with the
preparation,  execution, delivery, administration,  modification,  amendment, or
enforcement (whether through  negotiations,  legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities  under, this Agreement,
any other Loan Document,  or any document contemplated by or referred to herein,
to the extent that Agent is not  reimbursed for such expenses by or on behalf of
Borrowers. The undertaking in this Section 18.7 shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.

18.8 Agent in Individual Capacity.  Ableco and its Affiliates may make loans to,
issue letters of credit for the account of, accept deposits from, acquire equity
interests  in, and  generally  engage in any kind of  banking,  lending,  trust,
financial  advisory,  underwriting,  or other business with any Borrower and its
Subsidiaries  and Affiliates and any other Person party to any Loan Documents as
though  Ableco  were not Agent  hereunder  and  without  notice to or consent of
Lenders.  Lenders acknowledge that, pursuant to such activities,  Ableco and its

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Affiliates may receive  information  regarding a Borrower and its Affiliates and
any other Person (other than Lender Group) party to any Loan  Documents  that is
subject to  confidentiality  obligations in favor of such Borrower or such other
Person and that prohibit the  disclosure  of such  information  to Lenders,  and
Lenders  acknowledge that, in such circumstances (and in the absence of a waiver
of such confidentiality obligations,  which waiver Agent will use its reasonable
best  efforts to obtain),  Agent shall be under no  obligation  to provide  such
information to them. With respect to Agent Advances,  Ableco shall have the same
rights and powers under this  Agreement as any other Lender and may exercise the
same as though it were not Agent,  and the terms "Lender" and "Lenders"  include
Ableco in its individual  capacity.  With respect to Ableco Loans, Agent, in its
individual  capacity,  shall, if it is a Lender hereunder,  have the same rights
and powers under this Agreement as any other Lender and may exercise the same as
though it were not Agent,  and the terms "Lender" and "Lenders"  shall,  in such
case, include Agent in its individual capacity.

18.9  Successor  Agent.  Agent may  resign as Agent  upon 45 days  notice to the
Lenders.  If Agent  resigns  under this  Agreement,  the Required  Lenders shall
appoint a successor  Agent for the Lenders.  If no successor  Agent is appointed
prior to the  effective  date of the  resignation  of Agent,  Agent may appoint,
after  consulting with the Lenders,  a successor  Agent. If Agent has materially
breached or failed to perform any  material  provision  of this  Agreement or of
applicable law, the Required  Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights,  powers,  and duties of the retiring  Agent and
the term  "Agent"  shall  mean such  successor  Agent and the  retiring  Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation  hereunder as Agent, the provisions of this Section 18 shall
inure to its benefit as to any actions  taken or omitted to be taken by it while
it  was  Agent  under  this  Agreement.  If  no  successor  Agent  has  accepted
appointment as Agent by the date which is 45 days  following a retiring  Agent's
notice of  resignation,  the retiring  Agent's  resignation  shall  nevertheless
thereupon  become  effective  and the Lenders shall perform all of the duties of
Agent  hereunder  until such time,  if any, as the  Lenders  appoint a successor
Agent as provided for above.

18.10    Withholding Tax.

(a) If any Lender is a "foreign  corporation,  partnership  or trust" within the
meaning of the IRC and such Lender  claims  exemption  from,  or a reduction of,
U.S.  withholding tax under Sections 1441 or 1442 of the IRC, such Lender agrees
with and in favor of Agent and Borrowers, to deliver to Agent and Administrative
Borrower:

(i) if such Lender  claims an  exemption  from  withholding  tax pursuant to its
portfolio  interest  exception,  (a) a  statement  of the Lender,  signed  under
penalty  of  perjury,  that it is not a (I) a "bank"  as  described  in  Section
881(c)(3)(A) of the IRC, (II) a 10%  shareholder  (within the meaning of Section
881(c)(3)(B) of the IRC), or (III) a controlled foreign corporation described in
Section  881(c)(3)(C) of the IRC, and (B) a properly  completed IRS Form W-8BEN,
before the first payment of any interest  under this  Agreement and at any other
time reasonably requested by Agent or Administrative Borrower;

(ii) if such Lender claims an exemption from, or a reduction of, withholding tax
under a United States tax treaty,  properly completed IRS Form W-8BEN before the

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<PAGE>

first  payment  of any  interest  under  this  Agreement  and at any other  time
reasonably requested by Agent or Administrative Borrower;

(iii) if such Lender claims that  interest  paid under this  Agreement is exempt
from United States  withholding  tax because it is effectively  connected with a
United  States trade or business of such  Lender,  two  properly  completed  and
executed  copies of IRS Form W-8ECI  before the first payment of any interest is
due under this Agreement and at any other time reasonably  requested by Agent or
Administrative Borrower;

(iv) such other form or forms as may be required  under the IRC or other laws of
the United  States as a condition to exemption  from,  or reduction  of,  United
States withholding tax.

Such Lender agrees promptly to notify Agent and  Administrative  Borrower of any
change  in  circumstances  which  would  modify or render  invalid  any  claimed
exemption or reduction.

(b) If any Lender claims exemption from, or reduction of,  withholding tax under
a United  States tax treaty by providing  IRS Form W-8BEN and such Lender sells,
assigns,  grants a participation  in, or otherwise  transfers all or part of the
Obligations  of Borrowers to such Lender,  such Lender agrees to notify Agent of
the  percentage  amount  in  which  it is no  longer  the  beneficial  owner  of
Obligations  of  Borrowers  to such  Lender.  To the  extent of such  percentage
amount, Agent will treat such Lender's IRS Form W-8BEN as no longer valid.

(c) If any Lender is entitled to a reduction in the applicable  withholding tax,
Agent may withhold from any interest payment to such Lender an amount equivalent
to the applicable  withholding tax after taking into account such reduction.  If
the forms or other documentation  required by subsection (a) of this Section are
not  delivered to Agent,  then Agent may withhold  from any interest  payment to
such Lender not providing such forms or other documentation an amount equivalent
to the applicable withholding tax.

(d) If the IRS or any other Governmental Authority of the United States or other
jurisdiction  asserts a claim  that  Agent did not  properly  withhold  tax from
amounts paid to or for the account of any Lender (because the  appropriate  form
was not delivered,  was not properly executed,  or because such Lender failed to
notify Agent of a change in circumstances  which rendered the exemption from, or
reduction of, withholding tax ineffective,  or for any other reason) such Lender
shall  indemnify  and hold Agent  harmless  for all  amounts  paid,  directly or
indirectly, by Agent as tax or otherwise,  including penalties and interest, and
including any taxes imposed by any  jurisdiction on the amounts payable to Agent
under this Section,  together with all costs and expenses  (including  attorneys
fees and expenses).  The obligation of the Lenders under this  subsection  shall
survive the payment of all  Obligations  and the  resignation  or replacement of
Agent.

(e) All  payments  made by  Borrowers  hereunder  or under any note will be made
without setoff, counterclaim, or other defense, except as required by applicable
law other than for Taxes (as defined below). All such payments will be made free
and clear of, and without  deduction or  withholding  for, any present or future
taxes, levies,  imposts,  duties, fees, assessments or other charges of whatever
nature now or  hereafter  imposed  by any  jurisdiction  (other  than the United
States) or by any political  subdivision or taxing authority  thereof or therein
(other than of the United States) with respect to such payments (but  excluding,

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any tax imposed by any  jurisdiction  or by any political  subdivision or taxing
authority  thereof or therein (i)  measured by or based on the net income or net
profits of a Lender,  or (ii) to the extent that such tax results  from a change
in the circumstances of the Lender,  including a change in the residence,  place
of  organization,  or principal place of business of the Lender,  or a change in
the branch or lending office of the Lender participating in the transactions set
forth herein) and all interest,  penalties or similar  liabilities  with respect
thereto (all such non-excluded taxes, levies, imposts, duties, fees, assessments
or other charges being referred to collectively as "Taxes"). If any Taxes are so
levied or imposed,  Borrowers  agree to pay the full  amount of such Taxes,  and
such additional amounts as may be necessary so that every payment of all amounts
due under this  Agreement or under any note,  including any amount paid pursuant
to this Section 18.10(e) after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein; provided,  however,
that  Borrowers  shall not be required to increase any such  amounts  payable to
Agent or any  Lender  (i) that is not  organized  under  the laws of the  United
States,  if such  Person  fails to comply  with the other  requirements  of this
Section  18.10,  or (ii) if the  increase in such amount  payable  results  from
Agent's or such  Lender's  own  willful  misconduct  or gross  negligence.  Each
Borrower  will  furnish  to Agent as  promptly  as  possible  after the date the
payment of any Taxes is due pursuant to applicable  law certified  copies of tax
receipts evidencing such payment by such Borrower.

18.11    Collateral Matters.

(a)  Lenders  hereby  irrevocably  authorize  Agent to  release  any Lien on any
Collateral  (i)  upon  the  termination  of  the  Commitments  and  payment  and
satisfaction in full by or on behalf of Borrowers of all  Obligations;  and upon
such  termination  and payment Agent shall  deliver to Borrowers,  at Borrowers'
sole cost and expense,  all UCC  termination  statements and any other documents
necessary to terminate the Loan  Documents and release the Liens with respect to
the  Collateral;  (ii)  constituting  property  being sold or  disposed  of if a
release is required or desirable in  connection  therewith  and if each Borrower
certifies to Agent that the sale or disposition  is permitted  under Section 7.4
of this Agreement or the other Loan  Documents (and Agent may rely  conclusively
on any such certificate,  without further inquiry);  (iii) constituting property
in which a Borrower does not own an interest at the time the Lien was granted or
at any time thereafter; or (iv) constituting property leased to a Borrower under
a lease that has expired or been  terminated  in a transaction  permitted  under
this Agreement. Except as provided above, Agent will not release any Lien on any
Collateral  without the prior written  authorization of (y) if the release is of
all or any material portion of the Collateral,  of all Lenders or (z) otherwise,
of the Required Lenders. Upon request by Agent or Borrowers at any time, Lenders
will  confirm  in  writing  Agent's  authority  to  release  any  such  Liens on
particular  types  or  items  of  Collateral  pursuant  to this  Section  18.11;
provided,  however,  that (i) the Agent  shall not be  required  to execute  any
document  necessary to evidence such release on terms that, in Agent's  opinion,
would  expose  Agent to  liability  or  create  any  obligation  or  entail  any
consequence   other   than  the   release   of  such  Lien   without   recourse,
representation,  or  warranty,  and (ii) such  release  shall not in any  manner
discharge,  affect or impair  the  Obligations  or any Liens  (other  than those
expressly being released),  upon (or obligations of Borrowers in respect of) all
interests  retained by Borrowers,  including,  the proceeds of any sale,  all of
which shall continue to constitute part of the Collateral.

                                       65
<PAGE>

(b) Agent shall not have any obligation  whatsoever to any Lender to assure that
the Collateral  exists or is owned by a Borrower,  is cared for,  protected,  or
insured or has been  encumbered,  or that the Liens of Agent (for the benefit of
Lender Group) have been properly or sufficiently or lawfully created, perfected,
protected,  or  enforced  or are  entitled  to any  particular  priority,  or to
exercise  at all or in  any  particular  manner  or  under  any  duty  of  care,
disclosure,  or  fidelity,  or  to  continue  exercising,  any  of  the  rights,
authorities  and powers granted or available to the Agent pursuant to any of the
Loan  Documents,  it  being  understood  and  agreed  that  in  respect  of  the
Collateral,  or any act, omission or event related thereto, subject to the terms
and  conditions  contained  herein,  the Agent may act in any manner it may deem
appropriate,  absent Agent's gross negligence or willful misconduct, in its sole
discretion given the Agent's own interest in the Collateral in their capacity as
Lenders and that the Agent shall have no other duty or liability  whatsoever  to
any Lender as to any of the foregoing, except as otherwise provided herein.

18.12    Restrictions on Actions by Lenders; Sharing of Payments.

(a) Each of Lenders  agrees that it shall not,  without  the express  consent of
Agent,  and that it shall, to the extent it is lawfully  entitled to do so, upon
the request of Agent,  set off against the Obligations any amounts owing by such
Lender to a Borrower or any  deposit  accounts  of a Borrower  now or  hereafter
maintained  with such Lender.  Each of Lenders further agrees that it shall not,
unless  specifically  requested to do so by Agent, take or cause to be taken any
action,  including the  commencement of any legal or equitable  proceedings,  to
foreclose any Lien on, or otherwise enforce any security interest in, any of the
Collateral  the  purpose  of which is, or could  be,  to give  such  Lender  any
preference or priority against the other Lenders with respect to the Collateral.

(b) If,  at any  time  or  times,  any  Lender  shall  receive  (i) by  payment,
foreclosure,  setoff,  or otherwise,  any proceeds of Collateral or any payments
with respect to the Obligations arising under, or relating to, this Agreement or
the other Loan Documents,  except for any such proceeds or payments  received by
such Lender from Agent pursuant to the terms of this Agreement, or (ii) payments
from Agent in excess of such  Lender's Pro Rata Share of all such  distributions
by Agent,  such Lender shall promptly (1) turn the same over to Agent,  in kind,
and with such endorsements as may be required to negotiate the same to Agent, or
in immediately available funds, as applicable, for the account of all of Lenders
and for  application  to the  Obligations  in  accordance  with  the  applicable
provisions of this Agreement, or (2) purchase,  without recourse or warranty, an
undivided  interest  and  participation  in the  Obligations  owed to the  other
Lenders so that such excess payment  received shall be applied  ratably as among
Lenders in accordance with their Pro Rata Shares; provided, however, that if all
or part of such excess payment  received by the  purchasing  party is thereafter
recovered from it, those purchases of participations shall be rescinded in whole
or in part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the  extent  that  such  purchasing  party is  required  to pay  interest  in
connection with the recovery of the excess payment.

18.13 Agency for Perfection. Agent hereby appoints each Lender as its agent (and
each Lender  hereby  accepts  such  appointment)  for the purpose of  perfecting
Agent's Liens in assets which,  in accordance with Article 9 of the Code, can be

                                       66
<PAGE>

perfected  only by possession.  Should any Lender obtain  possession of any such
Collateral,  such Lender shall notify Agent thereof,  and, promptly upon Agent's
request  therefor,  shall deliver such Collateral to Agent or in accordance with
Agent's instructions.

18.14 Payments by Agent to Lenders.  All payments to be made by Agent to Lenders
shall  be made  by bank  wire  transfer  or  internal  transfer  of  immediately
available funds in accordance with such wire transfer instructions as each party
may designate for itself by written notice to Agent. Concurrently with each such
payment,  Agent shall  identify  whether such  payment (or any portion  thereof)
represents principal, premium or interest of the Obligations.

18.15  Concerning  the  Collateral  and Related Loan  Documents.  Each member of
Lender Group  authorizes  and directs Agent to enter into this Agreement and the
other Loan  Documents  relating  to the  Collateral,  for the  benefit of Lender
Group.  Each member of Lender  Group  agrees  that any action  taken by Agent in
accordance with the terms of this Agreement or the other Loan Documents relating
to the  Collateral  and the exercise by Agent of its powers set forth therein or
herein,  together with such other powers that are reasonably incidental thereto,
shall be binding upon all of Lenders.

18.16    Field Audits and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information.  By becoming a party to this Agreement,
each Lender:

(a) is deemed to have requested  that Agent furnish such Lender,  promptly after
it becomes  available,  a copy of each field audit or examination report (each a
"Report" and  collectively,  "Reports")  prepared by or at the request of Agent,
and Agent shall so furnish each Lender with such Reports;

(b)  expressly  agrees  and  acknowledges  that  Agent  does  not (i)  make  any
representation or warranty as to the accuracy of any Report,  and (ii) shall not
be liable for any information contained in any Report;

(c) expressly  agrees and  acknowledges  that the Reports are not  comprehensive
audits  or  examinations,  that  Agent or other  party  performing  any audit or
examination will inspect only specific information  regarding Borrowers and will
rely  significantly  upon  the  Books,  as  well as on  representations  of each
Borrower's personnel;

(d)  agrees to keep all  Reports  and  other  material,  non-public  information
regarding a Borrower and its  Subsidiaries  and their  operations,  assets,  and
existing and  contemplated  business  plans in a confidential  manner;  it being
understood  and agreed by the  Borrowers  that in any event such Lender may make
disclosures (i) to counsel for and other advisors,  accountants, and auditors to
such  Lender,  (ii)  reasonably  required by any bona fide  potential  or actual
Assignee,  transferee,  or Participant in connection  with any  contemplated  or
actual  assignment  or  transfer  by such  Lender of an  interest  herein or any
participation  interest in such Lender's  rights  hereunder,  provided that such
potential or actual  Assignee,  transferee or Participant  agrees to comply with
this Section  18.16(d) as if it were a Lender  hereunder,  (iii) of  information
that has become  public by  disclosures  made by Persons other than such Lender,

                                       67

<PAGE>

its Affiliates,  Assignees, transferees, or Participants, or (iv) as required or
requested by any court,  governmental or administrative agency,  pursuant to any
subpoena or other legal process,  or by any law, statute,  regulation,  or court
order;  provided,  however,  that, unless prohibited by applicable law, statute,
regulation,  or court order,  such Lender shall promptly  notify  Administrative
Borrower of any request by any court,  governmental or administrative agency, or
pursuant  to any  subpoena or other legal  process  for  disclosure  of any such
non-public material information concurrent with, or where practicable,  prior to
the disclosure thereof; and

(e) without  limiting  the  generality  of any other  indemnification  provision
contained  in this  Agreement,  agrees:  (i) to hold Agent and any other  Lender
preparing a Report harmless from any action the indemnifying  Lender may take or
conclusion  the  indemnifying  Lender  may  reach  or draw  from any  Report  in
connection with any loans or other credit  accommodations  that the indemnifying
Lender  has  made  or  may  make  to  Borrowers,  or the  indemnifying  Lender's
participation  in, or the indemnifying  Lender's purchase of, a loan or loans to
Borrowers;  and (ii) to pay and protect,  and indemnify,  defend, and hold Agent
and any such other Lender  preparing a Report  harmless  from and  against,  the
claims,  actions,  proceedings,  damages,  costs,  expenses  and  other  amounts
(including,  attorneys  fees and  costs)  incurred  by Agent and any such  other
Lender  preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.

                  In addition to the foregoing:  (x) any Lender may from time to
time request of Agent in writing that Agent provide to such Lender a copy of any
report  or  document  provided  by any  Borrower  to  Agent  that  has not  been
contemporaneously provided by such Borrower to such Lender, and, upon receipt of
such request, Agent promptly shall provide a copy of same to such Lender; (y) to
the extent that Agent is entitled, under any provision of the Loan Documents, to
request additional reports or information from a Borrower,  any Lender may, from
time to time,  reasonably  request  Agent to exercise such right as specified in
such Lender's  notice to Agent,  whereupon  Agent promptly shall request of such
Borrower the additional  reports or information  specified by such Lender,  and,
upon  receipt  thereof,  Agent  promptly  shall  provide  a copy of same to such
Lender;  and (z) any time that Agent renders to Borrowers a statement  regarding
the Loan Account, Agent shall send a copy of such statement to each Lender.

18.17 Several  Obligations;  No Liability.  Notwithstanding  that certain of the
Loan  Documents now or hereafter may have been or will be executed only by or in
favor of Agent in its capacity as such,  and not by or in favor of Lenders,  any
and all  obligations  on the part of the  Lenders to make any  credit  available
hereunder  shall  constitute  the  several  (and not joint)  obligations  of the
respective   Lenders  on  a  ratable  basis,   according  to  their   respective
Commitments,  to make an amount  of such  credit  not to  exceed,  in  principal
amount, at any one time outstanding, the amount of their respective Commitments.
Nothing  contained  herein  shall  confer  upon any Lender any  interest  in, or
subject any Lender to any liability for, or in respect of, the business, assets,
profits, losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its  Participants of any matters  relating to the Loan
Documents  to the extent any such notice may be  required,  and no Lender  shall
have any obligation,  duty, or liability to any Participant of any other Lender.
Except as provided  in Section  18.7,  no member of Lender  Group shall have any
liability for the acts of any other member of Lender Group.

                                       68
<PAGE>

19.      GENERAL PROVISIONS.

19.1  Effectiveness.  This Agreement shall be binding and deemed  effective when
executed by each Borrower,  the Agent and each of the Lenders whose signature is
provided for on the signature page hereof.

19.2  Successors and Assigns.  This Agreement shall inure to the benefit of, and
be binding  upon,  the parties  hereto and their  successors  and assigns to the
extent set forth in Section 18.

19.3     Section Headings.  Headings and numbers have been set forth herein for
convenience only.  Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.

19.4  Interpretation.  Neither this  Agreement nor any  uncertainty or ambiguity
herein shall be construed  against Lender Group or Borrowers,  whether under any
rule of  construction  or otherwise.  On the contrary,  this  Agreement has been
reviewed by all parties and shall be construed and interpreted  according to the
ordinary  meaning of the words used so as to accomplish  fairly the purposes and
intentions of all parties hereto.
19.5  Severability  of Provisions.  Each  provision of this  Agreement  shall be
severable  from every  other  provision  of this  Agreement  for the  purpose of
determining the legal enforceability of any specific provision.

19.6     Amendments in Writing.  This Agreement can only be amended by a
writing signed in accordance with Section 17.

19.7 Counterparts;  Telefacsimile  Execution.  This Agreement may be executed in
any number of counterparts  and by different  parties on separate  counterparts,
each of which,  when executed and delivered,  shall be deemed to be an original,
and all of which,  when taken  together,  shall  constitute but one and the same
Agreement.   Delivery  of  an  executed   counterpart   of  this   Agreement  by
telefacsimile  shall be equally as effective as delivery of an original executed
counterpart of this Agreement.  Any party delivering an executed  counterpart of
this  Agreement  by  telefacsimile  also  shall  deliver  an  original  executed
counterpart  of this  Agreement but the failure to deliver an original  executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement.  The foregoing  shall apply to each other Loan Document  mutatis
mutandis.

19.8 Revival and  Reinstatement of Obligations.  If the incurrence or payment of
the  Obligations  by  Borrowers  or the transfer to Lender Group of any property
should for any reason  subsequently be declared to be void or voidable under any
state or federal law relating to creditors' rights,  including provisions of the
Bankruptcy  Code  relating  to  fraudulent  conveyances,  preferences,  or other
voidable   or   recoverable   payments  of  money  or   transfers   of  property
(collectively,  a "Voidable Transfer"), and if Lender Group is required to repay
or restore, in whole or in part, any such Voidable Transfer,  or elects to do so
upon the  reasonable  advice  of its  counsel,  then,  as to any  such  Voidable
Transfer, or the amount thereof that Lender Group is required or elects to repay
or restore,  and as to all  reasonable  costs,  expenses,  and attorneys fees of

                                       69
<PAGE>

Lender Group related thereto, the liability of Borrowers  automatically shall be
revived,  reinstated,  and  restored  and shall  exist as though  such  Voidable
Transfer had never been made.

19.9  Integration.  This  Agreement,  together  with the other  Loan  Documents,
reflects  the  entire   understanding   of  the  parties  with  respect  to  the
transactions  contemplated  hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.

19.10 General DataComm as Agent for Borrowers.  Each Borrower hereby irrevocably
appoints  General DataComm as the borrowing agent and  attorney-in-fact  for the
Borrowers (the "Administrative Borrower") which appointment shall remain in full
force and effect unless and until Agent shall have received prior written notice
signed by all of the Borrowers that such  appointment  has been revoked and that
another  Borrower has been  appointed  Administrative  Borrower.  Each  Borrower
hereby irrevocably  appoints and authorizes the Administrative  Borrower to take
such action as the  Administrative  Borrower deems  appropriate on its behalf to
exercise such other powers as are reasonably incidental thereto to carry out the
purposes  of this  Agreement.  It is  understood  that the  handling of the Loan
Account and Collateral of the Borrowers in a combined fashion, as more fully set
forth herein,  is done solely as an  accommodation  to the Borrowers in order to
utilize the collective  borrowing  powers of the Borrowers in the most efficient
and  economical  manner and at their  request,  and that Lender  Group shall not
incur  liability to the  Borrowers  as a result  hereof.  Each of the  Borrowers
expects to derive benefit, directly or indirectly, from the handling of the Loan
Account and the Collateral in a combined fashion since the successful  operation
of each Borrower is dependent on the  continued  successful  performance  of the
integrated group. To induce Lender Group to do so, and in consideration thereof,
each of the Borrowers  hereby jointly and severally  agrees to indemnify  Lender
Group and hold Lender Group  harmless  against any and all  liability,  expense,
loss or claim of damage  or  injury,  made  against  Lender  Group by any of the
Borrowers or by any third party whosoever, arising from or incurred by reason of
(a) the  handling  of the Loan  Account and  Collateral  of the  Borrowers  in a
combined  fashion  as  herein  provided,  (b)  Lender  Group's  relying  on  any
instructions of the  Administrative  Borrower,  or (c) any other action taken by
Lender Group hereunder or under the other Loan Documents,  except that Borrowers
will have no liability to the relevant  Agent-Related  Person or  Lender-Related
Person under this  Section  19.10 with  respect to any  liability  that has been
finally determined by a court of competent  jurisdiction to have resulted solely
from the gross negligence or willful misconduct of such Agent-Related  Person or
Lender-Related Person, as the case may be.

                            {Signature Page Follows}

                                       70
<PAGE>

<PAGE>
IN WITNESS WHEREOF,  the parties hereto have caused this Agreement to be
executed on the date set forth above.

                             Borrowers:
                             ---------

                             GENERAL DATACOMM INDUSTRIES, INC.,
                             a Delaware corporation

                             By  /S/ HOWARD MODLIN
                             Title:  CHAIRMAN

                             GENERAL DATACOMM, INC.,
                             a Delaware corporation

                             By  /S/ HOWARD MODLIN
                             Title: CHAIRMAN

                             DATACOMM LEASING CORPORATION,
                             a Delaware corporation

                             By  /S/ HOWARD MODLIN
                             Title: CHAIRMAN

                             GDC HOLDING COMPANY, LLC,
                             a Delaware limited liability company

                             By  /S/ HOWARD MODLIN
                             Title:  CHAIRMAN

                             GDC FEDERAL SYSTEMS, INC.,
                             a Delaware corporation

                             By /S/ HOWARD MODLIN
                             Title:CHAIRMAN
<PAGE>

                              GDC REALTY, INC.,
                              a Texas corporation

                              By  /S/ HOWARD MODLIN
                              Title  CHAIRMAN

                              GDC NAUGATUCK, INC.,
                              a Delaware Corporation

                              By  /S/ HOWARD MODLIN
                              Title:  CHAIRMAN

                               Agent and Lender:
                               ----------------
                               ABLECO FINANCE LLC,
                               a Delaware limited liability company

                               By
                               Title:

<PAGE>

                                  Schedule C-1

                        Lenders and Lenders' Commitments

                                 Term A Loan             Term B Loan
Lender                            Commitment             Commitment
Ableco Finance LLC           $                       $

[Other Lenders]

All Lenders                   $25,000,000             $5,000,000================================================================================

                        FINANCIAL ASSET SECURITIES CORP.,
                                    Depositor

                           FREMONT INVESTMENT & LOAN,
                                    Servicer

                WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
                     Master Servicer and Trust Administrator

                                       and

                                  HSBC Bank USA
                                     Trustee

                         POOLING AND SERVICING AGREEMENT

                           Dated as of August 1, 2003

                           ___________________________

                         Fremont Home Loan Trust 2003-A

                    Asset-Backed Certificates, Series 2003-A

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

<PAGE>

<TABLE>
<CAPTION>
                                                 TABLE OF CONTENTS

                                                                                                               Page
<S>                                                                                                            <C>

                                                     ARTICLE I

                                                    DEFINITIONS
SECTION 1.01.     Defined Terms...................................................................................3
SECTION 1.02.     Accounting.....................................................................................46
SECTION 1.03.     Allocation of Certain Interest Shortfalls......................................................46

                                                    ARTICLE II

                                           CONVEYANCE OF MORTGAGE LOANS;
                                         ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01.     Conveyance of Mortgage Loans...................................................................48
SECTION 2.02.     Acceptance by Trustee..........................................................................51
SECTION 2.03.     Repurchase or Substitution of Mortgage Loans by the Originator.................................52
SECTION 2.04.     Representations and Warranties of the Master Servicer..........................................55
SECTION 2.05.     Representations, Warranties and Covenants of the Servicer......................................56
SECTION 2.06.     Representations and Warranties of the Depositor................................................59
SECTION 2.07.     Issuance of Certificates.......................................................................60
SECTION 2.08.     [Reserved].....................................................................................61
SECTION 2.09.     Acceptance of REMIC 1 and REMIC 2 by the Trustee; Conveyance of
                  REMIC 1 Regular Interests; Issuance of Certificates............................................61

                                                    ARTICLE III

                                           ADMINISTRATION AND SERVICING
                                               OF THE MORTGAGE LOANS
SECTION 3.01.     Servicer to Act as Servicer....................................................................62
SECTION 3.02.     Sub-Servicing Agreements Between Servicer and Sub-Servicers....................................64
SECTION 3.03.     Successor Sub-Servicers........................................................................65
SECTION 3.04.     Liability of the Servicer......................................................................66
SECTION 3.05.     No Contractual Relationship Between Sub-Servicers and the Trustee, the
                  Trust Administrator or Certificateholders......................................................66
SECTION 3.06.     Assumption or Termination of Sub-Servicing Agreements by Trust
                  Administrator or Trustee.......................................................................66
SECTION 3.07.     Collection of Certain Mortgage Loan Payments...................................................67
SECTION 3.08.     Sub-Servicing Accounts.........................................................................67
SECTION 3.09.     Collection of Taxes, Assessments and Similar Items; Servicing Accounts
                   ..............................................................................................68
SECTION 3.10.     Collection Account and Distribution Account....................................................69
SECTION 3.11.     Withdrawals from the Collection Account and Distribution Account...............................71

                                                         i

<PAGE>

SECTION 3.12.     Investment of Funds in the Collection Account and the Distribution
                  Account........................................................................................73
SECTION 3.13.     [Reserved].....................................................................................75
SECTION 3.14.     Maintenance of Hazard Insurance and Errors and Omissions and Fidelity
                  Coverage.......................................................................................75
SECTION 3.15.     Enforcement of Due-On-Sale Clauses; Assumption Agreements......................................76
SECTION 3.16.     Realization Upon Defaulted Mortgage Loans......................................................77
SECTION 3.17.     Trustee to Cooperate; Release of Mortgage Files................................................79
SECTION 3.18.     Servicing Compensation.........................................................................80
SECTION 3.19.     Reports to the Trustee and the Trust Administrator; Collection Account
                  Statements.....................................................................................81
SECTION 3.20.     Statement as to Compliance.....................................................................81
SECTION 3.21.     Independent Public Accountants' Servicing Report...............................................81
SECTION 3.22.     Annual Certification...........................................................................82
SECTION 3.23.     Access to Certain Documentation................................................................82
SECTION 3.24.     Title, Management and Disposition of REO Property..............................................83
SECTION 3.25.     Obligations of the Servicer in Respect of Prepayment Interest Shortfalls.......................86
SECTION 3.26.     [Reserved].....................................................................................86
SECTION 3.27.     Obligations of the Servicer in Respect of Mortgage Rates and Monthly
                  Payments.......................................................................................86
SECTION 3.28.     Solicitations..................................................................................87
SECTION 3.29.     Net WAC Rate Carryover Reserve Account.........................................................87
SECTION 3.30.     [Reserved].....................................................................................88
SECTION 3.31.     Servicer Indemnification.......................................................................89

                                                    ARTICLE IV

                                        ADMINISTRATION AND MASTER SERVICING
                                   OF THE MORTGAGE LOANS BY THE MASTER SERVICER
SECTION 4.01.     Master Servicer................................................................................90
SECTION 4.02.     REMIC-Related Covenants........................................................................91
SECTION 4.03.     Monitoring of Servicer.........................................................................91
SECTION 4.04.     Fidelity Bond..................................................................................92
SECTION 4.05.     Power to Act; Procedures.......................................................................92
SECTION 4.06.     Due-on-Sale Clauses; Assumption Agreements.....................................................93
SECTION 4.07.     Reserved.......................................................................................93
SECTION 4.08.     Documents, Records and Funds in Possession of Master Servicer To Be
                  Held for Trustee...............................................................................93
SECTION 4.09.     [Reserved].....................................................................................94
SECTION 4.10.     [Reserved].....................................................................................94
SECTION 4.11.     [Reserved].....................................................................................94
SECTION 4.12.      Trustee to Retain Possession of Certain Insurance Policies and
                  Documents......................................................................................94
SECTION 4.13.      [Reserved]....................................................................................94
SECTION 4.14.     Compensation for the Master Servicer...........................................................94

                                                        ii

<PAGE>

SECTION 4.15.     [Reserved].....................................................................................95
SECTION 4.16.     Annual Officer's Certificate as to Compliance..................................................95
SECTION 4.17.     Annual Independent Accountant's Servicing Report...............................................95
SECTION 4.18.     [Reserved].....................................................................................96
SECTION 4.19.     Obligation of the Master Servicer in Respect of Prepayment Interest
                  Shortfalls.....................................................................................96
SECTION 4.20.     [Reserved].....................................................................................96
SECTION 4.21.     [Reserved].....................................................................................96

                                                     ARTICLE V

                                                   FLOW OF FUNDS
SECTION 5.01.     Distributions..................................................................................97
SECTION 5.02.     [Reserved]....................................................................................103
SECTION 5.03.     Statements....................................................................................103
SECTION 5.04.     Remittance Reports; Advances..................................................................106
SECTION 5.05.     [Reserved]....................................................................................108
SECTION 5.06.     Reports Filed with Securities and Exchange Commission.........................................108
SECTION 5.07.     Distributions on the REMIC Regular Interests..................................................108

                                                    ARTICLE VI

                                                 THE CERTIFICATES
SECTION 6.01.     The Certificates..............................................................................112
SECTION 6.02.     Registration of Transfer and Exchange of Certificates.........................................112
SECTION 6.03.     Mutilated, Destroyed, Lost or Stolen Certificates.............................................118
SECTION 6.04.     Persons Deemed Owners.........................................................................118
SECTION 6.05.     Appointment of Paying Agent...................................................................118

                                                    ARTICLE VII

                                THE SERVICER, THE MASTER SERVICER AND THE DEPOSITOR
SECTION 7.01.     Liability of the Servicer, the Master Servicer and the Depositor..............................120
SECTION 7.02.     Merger or Consolidation of, or Assumption of the Obligations of, the
                  Servicer, the Master Servicer or the Depositor................................................120
SECTION 7.03.     Limitation on Liability of the Servicer, the Master Servicer and Others.......................120
SECTION 7.04.     Servicer Not to Resign........................................................................121
SECTION 7.05.     Master Servicer Not to Resign.................................................................122
SECTION 7.06.     Assignment of Master Servicing................................................................122
SECTION 7.07.     Delegation of Duties..........................................................................122
SECTION 7.08.     Reserved......................................................................................123
SECTION 7.09.     Inspection....................................................................................123

                                                        iii

<PAGE>

                                                   ARTICLE VIII

                                                      DEFAULT
SECTION 8.01.     Servicer Events of Termination and Master Servicer Events of
                  Termination...................................................................................124
SECTION 8.02.     Master Servicer to Act; Appointment of Successor..............................................128
SECTION 8.03.     Waiver of Defaults............................................................................129
SECTION 8.04.     Notification to Certificateholders............................................................129
SECTION 8.05.     Survivability of Servicer Liabilities.........................................................130

                                                    ARTICLE IX

                                      THE TRUSTEE AND THE TRUST ADMINISTRATOR
SECTION 9.01.     Duties of Trustee and the Trust Administrator.................................................130
SECTION 9.02.     Certain Matters Affecting the Trustee and the Trust Administrator.............................132
SECTION 9.03.     Neither Trustee nor Trust Administrator Liable for Certificates or
                  Mortgage Loans................................................................................133
SECTION 9.04.     Trustee and Trust Administrator May Own Certificates..........................................134
SECTION 9.05.     Trustee's and Trust Administrator's Fees and Expenses.........................................134
SECTION 9.06.     Eligibility Requirements for Trustee and Trust Administrator..................................135
SECTION 9.07.     Resignation or Removal of Trustee or Trust Administrator......................................136
SECTION 9.08.     Successor Trustee or Trust Administrator......................................................137
SECTION 9.09.     Merger or Consolidation of Trustee or Trust Administrator.....................................137
SECTION 9.10.     Appointment of Co-Trustee or Separate Trustee.................................................138
SECTION 9.11.     Limitation of Liability.......................................................................139
SECTION 9.12.     Trustee or Trust Administrator May Enforce Claims Without Possession
                  of Certificates...............................................................................139
SECTION 9.13.     Suits for Enforcement.........................................................................140
SECTION 9.14.     Waiver of Bond Requirement....................................................................140
SECTION 9.15.     Waiver of Inventory, Accounting and Appraisal Requirement.....................................140
SECTION 9.16.     Letter of Representations.....................................................................140

                                                     ARTICLE X

                                               REMIC ADMINISTRATION
SECTION 10.01.             REMIC Administration.................................................................141
SECTION 10.02.             Prohibited Transactions and Activities...............................................143
SECTION 10.03.             Indemnification with Respect to Certain Taxes and Loss of REMIC Status
                            ....................................................................................143

                                                    ARTICLE XI

                                                    TERMINATION
SECTION 11.01.             Termination..........................................................................145
SECTION 11.02.             Additional Termination Requirements..................................................147

                                                        iv

<PAGE>

                                                    ARTICLE XII

                                             MISCELLANEOUS PROVISIONS
SECTION 12.01.             Amendment............................................................................148
SECTION 12.02.             Recordation of Agreement; Counterparts...............................................149
SECTION 12.03.             Limitation on Rights of Certificateholders...........................................149
SECTION 12.04.             Governing Law; Jurisdiction..........................................................150
SECTION 12.05.             Notices..............................................................................150
SECTION 12.06.             Severability of Provisions...........................................................151
SECTION 12.07.             Article and Section References.......................................................151
SECTION 12.08.             Notice to the Rating Agencies........................................................151
SECTION 12.09.             Further Assurances...................................................................152
SECTION 12.10.             Benefits of Agreement................................................................152
SECTION 12.11.             Acts of Certificateholders...........................................................152
</TABLE>

                                                         v

<PAGE>

Exhibits:
--------

Exhibit A-1       Form of Class 1A-1 Certificates
Exhibit A-2       [Reserved]
Exhibit A-3       Form of Class 2A-1 Certificates
Exhibit A-4       Form of Class 2A-2 Certificates
Exhibit A-5       Form of Class M-1 Certificates
Exhibit A-6       Form of Class M-2 Certificates
Exhibit A-7       Form of Class M-3 Certificates
Exhibit A-8       Form of Class M-4 Certificates
Exhibit A-9       Form of Class M-5 Certificates
Exhibit A-10      Form of Class C Certificates
Exhibit A-11      Form of Class P Certificates
Exhibit A-12      Form of Class R Certificates
Exhibit B         Reserved
Exhibit C         Form of Mortgage Loan Purchase Agreement
Exhibit D         Mortgage Loan Schedule
Exhibit E         Request for Release
Exhibit F-1       Form of Trustee's Initial Certification
Exhibit F-2       Form of Trustee's Final Certification
Exhibit F-3       Form of Receipt of Mortgage Note
Exhibit G         [Reserved]
Exhibit H         Form of Lost Note Affidavit
Exhibit I         Form of Limited Power of Attorney
Exhibit J         Form of Investment Letter
Exhibit K         Form of Transfer Affidavit for Residual Certificates
Exhibit L         Form of Transferor Certificate
Exhibit M         Form of ERISA Representation Letter
Exhibit N-1       Form of Servicer's Certification
Exhibit N-2       Form of Master Servicer Certification
Exhibit O         Form of Cap Contract
Exhibit P-1       Form of Servicer's Annual Statement as to Compliance
Exhibit P-2       Form of Master Servicer's Annual Statement as to Compliance

Schedule I        Prepayment Charge Schedule

                                       vi

<PAGE>

                  This Pooling and Servicing Agreement is dated as of August 1,
2003 (the "Agreement"), among FINANCIAL ASSET SECURITIES CORP., as depositor
(the "Depositor"), FREMONT INVESTMENT & LOAN, as servicer, WELLS FARGO BANK
MINNESOTA, NATIONAL ASSOCIATION, as master servicer and trust administrator and
HSBC BANK USA, as trustee.

                             PRELIMINARY STATEMENT:

                  The Depositor intends to sell 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 Trust Fund created hereunder. The Certificates will consist of eleven
classes of certificates, designated as (i) the Class 1A-1 Certificates, (ii) the
Class 2A-1 Certificates, (iii) the Class 2A-2 Certificates (iv) the Class M-1
Certificates, (v) the Class M-2 Certificates, (vi) the Class M-3 Certificates,
(vii) the Class M-4 Certificates, (viii) the Class M-5 Certificates, (ix) the
Class C Certificates, (x) the Class P Certificates and (xi) the Class R
Certificates.

                                     REMIC 1
                                     -------

                  As provided herein, the Trustee will make an election to treat
the segregated pool of assets consisting of the Group I Mortgage Loans, the
Group II Mortgage Loans and certain other related assets subject to this
Agreement (exclusive of the Net WAC Rate Carryover Reserve Account, the Cap
Contract and any Servicer Prepayment Charge Payment Amounts) 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 1." The Class R-1
Interest will represent the sole class of "residual interests" in REMIC 1 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 1 Pass-Through Rate, the initial Uncertificated Principal
Balance, and solely for purposes of satisfying Treasury regulation Section
1.860G- 1(a)(4)(iii), the "latest possible maturity date" for each of the REMIC
1 Regular Interests. None of the REMIC 1 Regular Interests will be certificated.

<TABLE>
<CAPTION>
                                Uncertificated REMIC 1          Initial Uncertificated             Assumed Final
        Designation                Pass Through Rate               Principal Balance              Maturity Date(1)
        -----------                -----------------               -----------------              ----------------
<S>                             <C>                             <C>                               <C>
           LTAA                       Variable(2)                  $550,345,230.92                 August 2033
           LT1A1                      Variable(2)                  $  2,944,220.00                 August 2033
           LT2A1                      Variable(2)                  $    425,000.00                 August 2033
           LT2A2                      Variable(2)                  $  1,221,680.00                 August 2033
           LTM1                       Variable(2)                  $    365,020.00                 August 2033
           LTM2                       Variable(2)                  $    266,750.00                 August 2033
           LTM3                       Variable(2)                  $     84,240.00                 August 2033
           LTM4                       Variable(2)                  $     56,160.00                 August 2033
           LTM5                       Variable(2)                  $    126,350.00                 August 2033
           LTZZ                       Variable(2)                  $  5,742,115.32                 August 2033
            LTP                       Variable(2)                  $        100.00                 August 2033
</TABLE>
________________
(1)  Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
     regulations, the Distribution Date in the month immediately following the
     month of the maturity date for the Mortgage Loan with the latest possible
     maturity date has been designated as the "latest possible maturity date"
     for each REMIC 1 Regular Interest.
(2)  Calculated in accordance with the definition of "Uncertificated REMIC 1
     Pass-Through Rate" herein.

<PAGE>

                                     REMIC 2
                                     -------

                  As provided herein, the Trustee shall make an election to
treat the segregated pool of assets consisting of the REMIC 1 Regular Interests
as a REMIC for federal income tax purposes, and such segregated pool of assets
will be designated as "REMIC 2." The Class R-2 Interest represents the sole
class of "residual interests" in REMIC 2 for purposes of the REMIC Provisions.

                  The following table sets forth (or describes) the Class
designation, Pass-Through Rate and Original Class Certificate Principal Balance
for each Class of Certificates and REMIC 2 Regular Interest that represents one
or more of the "regular interests" in REMIC 2 created hereunder:

<TABLE>
<CAPTION>
                                Original Class Certificate                                         Assumed Final
     Class Designation               Principal Balance               Pass-Through Rate            Maturity Date(1)
     -----------------               -----------------               -----------------            ----------------
<S>                             <C>                                  <C>                          <C>
        Class 1A-1                   $294,422,000.00                   Variable(2)                 August 2033
        Class 2A-1                   $ 42,500,000.00                   Variable(2)                 August 2033
        Class 2A-2                   $122,168,000.00                   Variable(2)                 August 2033
         Class M-1                   $ 36,502,000.00                   Variable(2)                 August 2033
         Class M-2                   $ 26,675,000.00                   Variable(2)                 August 2033
         Class M-3                   $  8,424,000.00                   Variable(2)                 August 2033
         Class M-4                   $  5,616,000.00                   Variable(2)                 August 2033
         Class M-5                   $ 12,635,000.00                   Variable(2)                 August 2033
          Class C                    $ 12,634,766.24                   Variable(2)                 August 2033
          Class P                    $        100.00                      N/A(4)                   August 2033
</TABLE>
________________
(1)  Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
     regulations, the Distribution Date in the month immediately following the
     month of the maturity date for the Mortgage Loan with the latest possible
     maturity date has been designated as the "latest possible maturity date"
     for each REMIC 2 Regular Interest.
(2)  Calculated in accordance with the definition of "Pass-Through Rate" herein.
(3)  The Class C Certificates will accrue interest at their variable
     Pass-Through Rate on the Notional Amount of the Class C Certificates
     outstanding from time to time which shall equal the aggregate of the
     Uncertificated Principal Balances of the REMIC 1 Regular Interests. The
     Class C Certificates will not accrue interest on the Class Certificate
     Principal Balance of the Class C Certificates.
(4)  The Class P Certificates will not accrue interest.

                                        2

<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

                  SECTION 1.01. Defined Terms.

                  Whenever used in this Agreement or in the Preliminary
Statement, the following words and phrases, unless the context otherwise
requires, shall have the meanings specified in this Article. Unless otherwise
specified, all calculations in respect of interest on the Class A Certificates
and Mezzanine Certificates shall be made on the basis of the actual number of
days elapsed and a 360-day year and all calculations in respect of interest on
the Class C Certificates and all other calculations of interest described herein
shall be made on the basis of a 360-day year consisting of twelve 30-day months.
The Class P Certificates and the Residual Certificates are not entitled to
distributions in respect of interest and, accordingly, will not accrue interest.

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

                  "Accepted Master Servicing Practices": With respect to any
Mortgage Loan, as applicable, either (x) those customary mortgage master
servicing practices of prudent mortgage servicing institutions that master
service mortgage loans of the same type and quality as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located, to the extent
applicable to the Master Servicer (except in its capacity as successor to the
Servicer), or (y) as provided in Section 4.01 hereof, but in no event below the
standard set forth in clause (x).

                  "Account": Either of the Collection Account and Distribution
Account.

                  "Accrual Period": With respect to the Class A Certificates and
the Mezzanine Certificates and each Distribution Date, the period commencing on
the preceding Distribution Date (or in the case of the first such Accrual
Period, commencing on the Closing Date) and ending on the day preceding such
Distribution Date. With respect to the Class C Certificates, the calendar month
prior to the month of such Distribution Date.

                  "Adjustable-Rate Mortgage Loan": A first lien Mortgage Loan
which provides at any period during the life of such loan for the adjustment of
the Mortgage Rate payable in respect thereto. The Adjustable Rate Mortgage Loans
are identified as such on the Mortgage Loan Schedule.

                  "Adjusted Net Maximum Mortgage Rate": With respect to any
Mortgage Loan (or the related REO Property), as of any date of determination, a
per annum rate of interest equal to the applicable Maximum Mortgage Rate for
such Mortgage Loan (or the Mortgage Rate in the case of any Fixed-Rate Mortgage
Loan) as of the first day of the month preceding the month in which

                                       3
<PAGE>

the related Distribution Date occurs minus the sum of (i) the Servicing Fee
Rate, (ii) the Master Servicing Fee Rate and (iii) the Trust Administration Fee
Rate.

                  "Adjusted Net Mortgage Rate": With respect to any Mortgage
Loan (or the related REO Property), as of any date of determination, a per annum
rate of interest equal to the applicable Mortgage Rate for such Mortgage Loan as
of the first day of the month preceding the month in which the related
Distribution Date occurs minus the sum of (i) the Servicing Fee Rate, (ii) the
Master Servicing Fee Rate and (iii) the Trust Administration Fee Rate.

                  "Adjustment Date": With respect to each Adjustable-Rate
Mortgage Loan, each adjustment date, on which the Mortgage Rate of such Mortgage
Loan changes pursuant to the related Mortgage Note. The first Adjustment Date
following the Cut-off Date as to each Adjustable-Rate Mortgage Loan is set forth
in the Mortgage Loan Schedule.

                  "Advance": As to any Mortgage Loan or REO Property, any
advance made by the Servicer in respect of any Distribution Date pursuant to
Section 5.04.

                  "Adverse REMIC Event": As defined in Section 10.01(f) hereof.

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

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

                  "Allocated Realized Loss Amount": With respect to any
Distribution Date and any Class of Mezzanine Certificates, the sum of (i) any
Realized Losses allocated to such Class of Certificates on such Distribution
Date and (ii) the amount of any Allocated Realized Loss Amount for such Class of
Certificates remaining unpaid from the previous Distribution Date.

                  "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 or
record the sale of the Mortgage.

                  "Assumed Final Maturity Date": As to each Class of
Certificates, the date set forth as such in the Preliminary Statement.

                  "Available Funds": With respect to any Distribution Date, an
amount equal to the excess of (i) the sum of (a) the aggregate of the related
Monthly Payments received on the Mortgage Loans on or prior to the related
Determination Date, (b) Net Liquidation Proceeds, Insurance Proceeds, Principal
Prepayments, proceeds from repurchases of and substitutions for such Mortgage
Loans and other unscheduled recoveries of principal and interest in respect of
the Mortgage Loans received during the related Prepayment Period, (c) the
aggregate of any amounts received in respect of a related REO Property withdrawn
from any REO Account and deposited in the Collection Account for such
Distribution
Date, (d) the aggregate of any amounts deposited in the Collection Account by
the Servicer, or paid by the Master Servicer, in respect of related Prepayment
Interest Shortfalls for such Distribution Date, (e) the aggregate of any
Advances made by the Servicer for such Distribution Date in respect of the
Mortgage Loans, (f) the aggregate of any related advances made by the Master
Servicer, the Trustee or the Trust Administrator in respect of the Mortgage

                                       4
<PAGE>

Loans for such Distribution Date pursuant to Section 8.02 and (g) the amount of
any Prepayment Charges collected by the Servicer in connection with the full or
partial prepayment of any of the Mortgage Loans and any Servicer Prepayment
Charge Payment Amount over (ii) the sum of (a) amounts reimbursable or payable
to the Servicer or the Master Servicer pursuant to Section 3.11(a) or the Master
Servicer, the Trustee or the Trust Administrator pursuant to Section 3.11(b),
(b) amounts deposited in the Collection Account or the Distribution Account
pursuant to clauses (a) through (g) above, as the case may be, in error, (c) the
amount of any Prepayment Charges collected by the Servicer in connection with
the full or partial prepayment of any of the Mortgage Loans and any Servicer
Prepayment Charge Payment Amount, (d) the Master Servicing Fee payable from the
Distribution Account pursuant to Section 4.14, (e) the Trust Administration Fee
payable from the Distribution Account pursuant to Section 9.05 and (f) any
indemnification payments or expense reimbursements made by the Trust Fund
pursuant to Section 7.03 or Section 9.05.

                  "Balloon Mortgage Loan": A Mortgage Loan that provides for the
payment of the unamortized principal balance of such Mortgage Loan in a single
payment at the maturity of such Mortgage Loan that is substantially greater than
the preceding monthly payment.

                  "Balloon Payment": A payment of the unamortized principal
balance of a Mortgage Loan in a single payment at the maturity of such Mortgage
Loan that is substantially greater than the preceding Monthly Payment.

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

                  "Base Rate": For any Distribution Date and any Class of Class
A Certificates or Mezzanine Certificates, the sum of (i) LIBOR plus (ii) the
related Certificate Margin.

                  "Book-Entry Certificates": Any of the Certificates that shall
be registered in the name of the Depository or its nominee, the ownership of
which is reflected on the books of the Depository or on the books of a Person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 6.02 hereof). On the Closing
Date, the Class A Certificates and the Mezzanine Certificates shall be
Book-Entry Certificates.

                  "Business Day": Any day other than a Saturday, a Sunday or a
day on which banking or savings institutions in the State of Delaware, the State
of New York, the State of California or in the city in which the Corporate Trust
Office of the Trustee or the Corporate Trust Office of the Trust Administrator
is located are authorized or obligated by law or executive order to be closed.

                  "Cap Amount": The Cap Amount for any Class of Class A
Certificates or Mezzanine Certificates and any Distribution Date is equal to (i)
the aggregate amount received by the Trust from the Cap Contract for such
Distribution Date multiplied by (ii) a fraction equal to (a) the Certificate
Principal Balance of such Class immediately prior to the applicable Distribution
Date divided by (b) the aggregate Certificate Principal Balance of the Class A
Certificates and the Mezzanine Certificates immediately prior to the applicable
Distribution Date.

                                       5
<PAGE>

                  "Cap Contract": The Cap Contract between Greenwich Capital
Derivatives, Inc. and the counterparty thereunder, assigned to the Trustee
pursuant to Section 2.01, the form of which is attached hereto as Exhibit O.

                  "Certificate": Any Regular Certificate or Residual
Certificate.

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

                  "Certificate Margin": With respect to the Class 1A-1
Certificates on each Distribution Date (A) on or prior to the Optional
Termination Date, 0.3500% per annum and (B) after the Optional Termination Date,
0.7000% per annum. With respect to the Class 2A-1 Certificates on each
Distribution Date (A) on or prior to the Optional Termination Date, 0.1300% per
annum and (B) after the Optional Termination Date, 0.2600% per annum. With
respect to the Class 2A-2 Certificates on each Distribution Date (A) on or prior
to the Optional Termination Date, 0.3550% per annum and (B) after the Optional
Termination Date 0.7100% per annum. With respect to the Class M-1 Certificates
on each Distribution Date (A) on or prior to the Optional Termination Date,
0.6500% per annum and (B) after the Optional Termination Date, 0.9750% per
annum. With respect to the Class M-2 Certificates on each Distribution Date (A)
on or prior to the Optional Termination Date, 1.7250% per annum and (B) after
the Optional Termination Date, 2.5875% per annum. With respect to the Class M-3
Certificates on each Distribution Date (A) on or prior to the Optional
Termination Date, 2.0500% per annum and (B) after the Optional Termination Date,
3.0750% per annum. With respect to the Class M-4 Certificates on each
Distribution Date (A) on or prior to the Optional Termination Date, 3.1000% per
annum and (B) after the Optional Termination Date, 4.6500% per annum. With
respect to the Class M-5 Certificates on each Distribution Date (A) on or prior
to the Optional Termination Date, 4.0000% per annum and (B) after the Optional
Termination Date, 6.0000% per annum.

                  "Certificate Owner": With respect to each Book-Entry
Certificate, any beneficial owner thereof.

                  "Certificate Principal Balance": With respect to any Class of
Regular Certificates (other than the Class C Certificates) immediately prior to
any Distribution Date, will be equal to the

                                       6
<PAGE>

Initial Certificate Principal Balance thereof reduced by the sum of all amounts
actually distributed in respect of principal of such Class and, in the case of a
Mezzanine Certificate, Realized Losses allocated thereto on all prior
Distribution Dates. With respect to the Class C Certificates as of any date of
determination, an amount equal to the excess, if any, of (A) the then aggregate
Uncertificated Principal Balances of the REMIC 1 Regular Interests over (B) the
then aggregate Certificate Principal Balances of the Class A Certificates, the
Mezzanine Certificates and the Class P Certificates then outstanding.

                  "Certificate Register" and "Certificate Registrar": The
register maintained and registrar appointed pursuant to Section 6.02 hereof.

                  "Class": Collectively, Certificates which have the same
priority of payment and bear the same class designation and the form of which is
identical except for variation in the Percentage Interest evidenced thereby.

                  "Class A Certificates": Any Class 1A-1 Certificate, Class 2A-1
Certificate or Class 2A-2 Certificate.

                  "Class A Principal Distribution Amount": the sum of (i) the
Class 1A Principal Distribution Amount and (ii) the Class 2A Principal
Distribution Amount.

                  "Class 1A Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the Certificate Principal Balance of the
Class 1A-1 Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 63.50% and (ii) the aggregate Stated Principal
Balance of the Group I Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) and (B)
the aggregate Stated Principal Balance of the Group I Mortgage Loans as of the
last day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) minus the related Overcollateralization Floor.

                  "Class 1A-1 Certificate": Any one of the Class 1A-1
Certificates executed by the Trustee or Trust Administrator, and authenticated
and delivered by the Certificate Registrar, substantially in the form annexed
hereto as Exhibit A-1, representing the right to distributions as set forth
herein and therein and evidencing a regular interest in REMIC 2.

                  "Class 2A Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the aggregate Certificate Principal Balance
of the Class 2A-1 Certificates and the Class 2A-2 Certificates immediately prior
to such Distribution Date over (y) the lesser of (A) the product of (i) 63.50%
and (ii) the aggregate Stated Principal Balance of the Group II Mortgage Loans
as of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) and (B) the aggregate Stated Principal Balance of the
Group II Mortgage Loans as of the last day of the related Due Period (after
giving

                                       7
<PAGE>

effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) minus the related
Overcollateralization Floor.

                  "Class 2A-1 Certificate": Any one of the Class 2A-1
Certificates executed by the Trustee or Trust Administrator, and authenticated
and delivered by the Certificate Registrar, substantially in the form annexed
hereto as Exhibit A-3, representing the right to distributions as set forth
herein and therein and evidencing a regular interest in REMIC 2.

                  "Class 2A-2 Certificate": Any one of the Class 2A-2
Certificates executed by the Trustee or Trust Administrator, and authenticated
and delivered by the Certificate Registrar, substantially in the form annexed
hereto as Exhibit A-4, representing the right to distributions as set forth
herein and therein and evidencing a regular interest in REMIC 2.

                  "Class C Certificates": Any one of the Class C Certificates
executed by the Trustee or the Trust Administrator, and authenticated and
delivered by the Certificate Registrar, substantially in the form annexed hereto
as Exhibit A-10, representing the right to distributions as set forth herein and
therein and evidencing a regular interest in REMIC 2.

                  "Class M-1 Certificates": Any one of the Class M-1
Certificates executed by the Trustee or the Trust Administrator, and
authenticated and delivered by the Certificate Registrar, substantially in the
form annexed hereto as Exhibit A-5, representing the right to distributions as
set forth herein and therein and evidencing a regular interest in REMIC 2.

                  "Class M-1 Principal Distribution Amount": The excess of (x)
the sum of (i) the aggregate Certificate Principal Balance of the Class A
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date) and (ii) the Certificate
Principal Balance of the Class M-1 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 76.50% and (ii)
the Stated Principal Balance of the Mortgage Loans as of the last day of the
related Due Period (after giving effect to scheduled payments of principal due
during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) minus the related Overcollateralization Floor.

                  "Class M-2 Certificate": Any one of the Class M-2 Certificates
executed by the Trustee or the Trust Administrator, and authenticated and
delivered by the Certificate Registrar, substantially in the form annexed hereto
as Exhibit A-6, representing the right to distributions as set forth herein and
therein and evidencing a regular interest in REMIC 2.

                  "Class M-2 Principal Distribution Amount": The excess of (x)
the sum of (i) the aggregate Certificate Principal Balance of the Class A
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date), (ii) the Certificate Principal
Balance of the Class M-1 Certificates (after taking into account the payment of
the Class

                                       8
<PAGE>

M-1 Principal Distribution Amount on such Distribution Date) and (iii) the
aggregate Certificate Principal Balance of the Class M-2 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 86.00% and (ii) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) and (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) minus the related
Overcollateralization Floor.

                  "Class M-3 Certificate": Any one of the Class M-3 Certificates
executed by the Trustee or the Trust Administrator, and authenticated and
delivered by the Certificate Registrar, substantially in the form annexed hereto
as Exhibit A-7, representing the right to distributions as set forth herein and
therein and evidencing a regular interest in REMIC 2.

                  "Class M-3 Principal Distribution Amount": The excess of (x)
the sum of (i) the aggregate Certificate Principal Balance of the Class A
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date), (ii) the Certificate Principal
Balance of the Class M-1 Certificates (after taking into account the payment of
the Class M-1 Principal Distribution Amount on such Distribution Date), (iii)
the aggregate Certificate Principal Balance of the Class M-2 Certificates (after
taking into account the payment of the Class M-2 Principal Distribution Amount
on such Distribution Date) and (iv) the Certificate Principal Balance of the
Class M-3 Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 89.00% and (ii) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) and (B) the aggregate
Stated Principal Balance of the Mortgage Loans as of the last day of the related
Due Period (after giving effect to scheduled payments of principal due during
the related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
the related Overcollateralization Floor.

                  "Class M-4 Certificate": Any one of the Class M-4 Certificates
executed by the Trustee or the Trust Administrator, and authenticated and
delivered by the Certificate Registrar, substantially in the form annexed hereto
as Exhibit A-8, representing the right to distributions as set forth herein and
therein and evidencing a regular interest in REMIC 2.

                  "Class M-4 Principal Distribution Amount": The excess of (x)
the sum of (i) the aggregate Certificate Principal Balance of the Class A
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date), (ii) the Certificate Principal
Balance of the Class M-1 Certificates (after taking into account the payment of
the Class M-1 Principal Distribution Amount on such Distribution Date), (iii)
the aggregate Certificate Principal Balance of the Class M-2 Certificates (after
taking into account the payment of the Class M-2 Principal Distribution Amount
on such Distribution Date) (iv) the aggregate Certificate Principal Balance of
the Class M-3 Certificates (after taking into account the payment of the Class

                                       9
<PAGE>

M-3 Principal Distribution Amount on such Distribution Date) and (iv) the
Certificate Principal Balance of the Class M-4 Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 91.00% and
(ii) the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) minus the related Overcollateralization Floor.

                  "Class M-5 Certificate": Any one of the Class M-5 Certificates
executed by the Trustee or the Trust Administrator, and authenticated and
delivered by the Certificate Registrar, substantially in the form annexed hereto
as Exhibit A-9, representing the right to distributions as set forth herein and
therein and evidencing a regular interest in REMIC 2.

                  "Class M-5 Principal Distribution Amount": The excess of (x)
the sum of (i) the aggregate Certificate Principal Balance of the Class A
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date), (ii) the Certificate Principal
Balance of the Class M-1 Certificates (after taking into account the payment of
the Class M-1 Principal Distribution Amount on such Distribution Date), (iii)
the aggregate Certificate Principal Balance of the Class M-2 Certificates (after
taking into account the payment of the Class M-2 Principal Distribution Amount
on such Distribution Date), (iv) the aggregate Certificate Principal Balance of
the Class M-3 Certificates (after taking into account the payment of the Class
M-3 Principal Distribution Amount on such Distribution Date), (v) the aggregate
Certificate Principal Balance of the Class M-4 Certificates (after taking into
account the payment of the Class M-4 Principal Distribution Amount on such
Distribution Date) and (vi) the Certificate Principal Balance of the Class M-5
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) 95.50% and (ii) the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
the related Overcollateralization Floor.

                  "Class P Certificate": Any one of the Class P Certificates
executed by the Trustee or Trust Administrator, and authenticated and delivered
by the Certificate Registrar, substantially in the form annexed hereto as
Exhibit A-11, representing the right to distributions as set forth herein and
therein and evidencing a regular interest in REMIC 2.

                  "Class R Certificate": The Class R Certificate executed by the
Trustee or the Trust Administrator, and authenticated and delivered by the
Certificate Registrar, substantially in the form annexed hereto as Exhibit A-12
and evidencing the ownership of the Class R-1 Interest and the Class R-2
Interest.

                                       10
<PAGE>

                  "Class R-1 Interest": The uncertificated Residual Interest in
REMIC 1.

                  "Class R-2 Interest": The uncertificated Residual Interest in
REMIC 2.

                  "Close of Business": As used herein, with respect to any
Business Day, 5:00 p.m. (New York time).

                  "Closing Date": August 7, 2003.

                  "Code":  The Internal Revenue Code of 1986.

                  "Collection Account": The account or accounts created and
maintained by the Servicer pursuant to Section 3.10(a), which shall be entitled
"Wells Fargo Bank Minnesota, National Association, as Trust Administrator, in
trust for registered Holders of Fremont Home Loan Trust 2003-A, Asset- Backed
Certificates, Series 2003-A," which must be an Eligible Account.

                  "Compensating Interest":  As defined in Section 3.25 hereof.

                  "Corporate Trust Office": The principal corporate trust office
of the Trustee or the Trust Administrator, as the case may be, at which at any
particular time its corporate trust business in connection with this Agreement
shall be administered, which office at the date of the execution of this
instrument is located at (i) with respect to the Trustee, HSBC Bank USA, 452
Fifth Avenue, New York, NY 10018, or at such other address as the Trustee may
designate from time to time by notice to the Certificateholders, the Depositor,
the Servicer, the Master Servicer, the Originator and the Trust Administrator,
or (ii) with respect to the Trust Administrator, (A) for Certificate transfer
and surrender purposes, Wells Fargo Bank Minnesota, National Association, Sixth
and Marquette, Minneapolis, Minnesota 55479, Attention: Fremont Home Loan Trust
2003-A and (B) for all other purposes, Wells Fargo Bank Minnesota, National
Association, 9062 Old Annapolis Road, Columbia, Maryland 21045, Attention:
Fremont Home Loan Trust 2003-A, or at such other address as the Trust
Administrator may designate from time to time by notice to the
Certificateholders, the Depositor, the Servicer, the Master Servicer, the
Originator and the Trustee.

                  "Corresponding Certificate": With respect to

          REMIC1 Regular Interest LT1A1         Class 1A-1 Certificates
          REMIC 1 Regular Interest LT2A1        Class 2A-1 Certificates
          REMIC 1 Regular Interest LT2A2        Class 2A-2 Certificates
          REMIC 1 Regular Interest LTM1         Class M-1 Certificates
          REMIC 1 Regular Interest LTM2         Class M-2 Certificates
          REMIC 1 Regular Interest LTM3         Class M-3 Certificates
          REMIC 1 Regular Interest LTM4         Class M-4 Certificates

                                       11
<PAGE>

          REMIC 1 Regular Interest LTM5         Class M-5 Certificates
          REMIC 1 Regular Interest LTP          Class P Certificates

                  "Credit Enhancement Percentage": For any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the sum of
the aggregate Certificate Principal Balances of the Mezzanine Certificates and
the Class C Certificates, and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans, calculated prior to taking into account
payments of principal on the Mortgage Loans and distribution of the Group I
Principal Distribution Amount and the Group II Principal Distribution Amount to
the Holders of the Certificates then entitled to distributions of principal on
such Distribution Date.

                  "Cumulative Loss Percentage": With respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
aggregate amount of Realized Losses incurred from the Cut-off Date to the last
day of the preceding calendar month and the denominator of which is the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  "Custodian": The Trust Administrator, as custodian of the
Mortgage Files, or any successor thereto.

                  "Cut-off Date": August 1, 2003.

                  "Cut-off Date Principal Balance": With respect to any Mortgage
Loan, the unpaid principal balance thereof as of the Cut-off Date of such
Mortgage Loan (or as of the applicable date of substitution with respect to a
Qualified Substitute Mortgage Loan), after giving effect to scheduled payments
due on or before the Cut-off Date, whether or not received.

                  "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 resulting from a Deficient Valuation.

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

                  "Definitive Certificates": As defined in Section 6.02(c)
hereof.

                  "Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by one or more Qualified Substitute Mortgage Loans.

                  "Delinquency Percentage": For any Distribution Date, the
percentage obtained by dividing (x) the aggregate Principal Balance of Mortgage
Loans that are Delinquent 60 days or more, that are in foreclosure, that have
been converted to REO Properties or that have been discharged by

                                       12
<PAGE>

reason of bankruptcy by (y) the aggregate Principal Balance of the Mortgage
Loans, in each case, as of the last day of the previous calendar month.

                  "Delinquent": With respect to any Mortgage Loan and related
Monthly Payment, the Monthly Payment due on a Due Date which is not made by the
Close of Business on the next scheduled Due Date for such Mortgage Loan. For
example, a Mortgage Loan is 60 or more days Delinquent if the Monthly Payment
due on a Due Date is not made by the Close of Business on the second scheduled
Due Date after such Due Date.

                  "Depositor": Financial Asset Securities Corp., a Delaware
corporation, or any successor in interest.

                  "Depository": The initial Depository shall be The Depository
Trust Company, whose nominee is Cede & Co., or any other organization registered
as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended. The Depository shall initially be the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York. Upon request, the Depository may also be Clearstream
Banking Luxembourg and the Euroclear System.

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

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

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

                  "Disqualified Organization": A "disqualified organization"
under Section 860E of the Code, which as of the Closing Date is any of: (i) the
United States, any state or political subdivision thereof, any foreign
government, any international organization, or any agency or instrumentality of
any of the foregoing, (ii) any organization (other than a cooperative described
in Section 521 of the Code) which is exempt from the tax imposed by Chapter 1 of
the Code unless such organization is subject to the tax imposed by Section 511
of the Code, (iii) any organization described in Section 1381(a)(2)(C) of the
Code or (iv) an "electing large partnership" within the meaning of Section 775
of the Code. A corporation will not be treated as an instrumentality of the

                                       13
<PAGE>

United States or of any state or political subdivision thereof, if all of its
activities are subject to tax and, a majority of its board of directors is not
selected by a governmental unit. The term "United States", "state" and
"international organizations" shall have the meanings set forth in Section 7701
of the Code.

                  "Distribution Account": The trust account or accounts created
and maintained by the Trust Administrator pursuant to Section 3.10(b) which
shall be entitled "Distribution Account, Wells Fargo Bank Minnesota, National
Association as Trust Administrator, in trust for the registered
Certificateholders of Fremont Home Loan Trust 2003-A, Asset-Backed Certificates,
Series 2003-A" and which must be an Eligible Account.

                  "Distribution Date": The 25th day of any calendar month, or if
such 25th day is not a Business Day, the Business Day immediately following such
25th day, commencing in September 2003.

                  "Due Date": With respect to each Mortgage Loan and any
Distribution Date, the first day of the calendar month in which such
Distribution Date occurs on which the Monthly Payment for such Mortgage Loan was
due (or, in the case of any Mortgage Loan under the terms of which the Monthly
Payment for such Mortgage Loan was due on a day other than the first day of the
calendar month in which such Distribution Date occurs, the day during the
related Due Period on which such Monthly Payment was due), exclusive of any days
of grace.

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

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

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

                                       14
<PAGE>

                  "Escrow Payments": The amounts constituting ground rents,
taxes, assessments, water rates, fire and hazard insurance premiums and other
payments required to be escrowed by the Mortgagor with the mortgagee pursuant to
any Mortgage Loan.

                  "Excess Overcollateralized Amount": With respect to the Class
A Certificates and the Mezzanine Certificates and any Distribution Date, the
excess, if any, of (i) the Overcollateralized Amount for such Distribution Date,
assuming that 100% of the Principal Remittance Amount is applied as a principal
payment on such Distribution Date over (ii) the Overcollateralization Target
Amount for such Distribution Date.

                  "Extra Principal Distribution Amount": With respect to any
Distribution Date, the lesser of (x) the Monthly Interest Distributable Amount
payable on the Class C Certificates on such Distribution Date as reduced by
Realized Losses allocated thereto with respect to such Distribution Date
pursuant to Section 5.08 and (y) the Overcollateralization Deficiency Amount for
such Distribution Date.

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

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

                  "Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by the Originator or the Terminator pursuant to or as contemplated by
Section 2.03 or 11.01), a determination made by the Servicer that all Insurance
Proceeds, Liquidation Proceeds and other payments or recoveries which the
Servicer, in its reasonable good faith judgment, expects to be finally
recoverable in respect thereof have been so recovered. The Servicer shall
maintain records, prepared by a Servicing Officer, of each Final Recovery
Determination made thereby and deliver a certificate of a Servicing Officer
evidencing such determination to the Master Servicer.

                  "Fitch": Fitch Ratings, or its successor in interest.

                  "Fitch Servicer Termination Test": With respect to any
Distribution Date, if the Servicer is Fremont Investment & Loan, the Fitch
Servicer Termination Test will be failed if (A) the quotient obtained by
dividing (x) the sum of (I) the aggregate Principal Balance of Mortgage Loans
that are Delinquent 60 days or more, that are in foreclosure, that have been
converted to REO Properties or that have been discharged by reason of
bankruptcy, in each case as of the last day of the calendar month immediately
preceding the month of such Distribution Date, (II) the aggregate Principal
Balance of Mortgage Loans that are Delinquent 60 days or more, that are in
foreclosure, that have been converted to REO Properties or that have been
discharged by reason of bankruptcy, in each case as of the last day of the
second calendar month preceding the month of such Distribution Date and (III)
the aggregate Principal Balance of Mortgage Loans that are Delinquent 60 days or
more, that are in foreclosure, that have been converted to REO Properties or
that have been discharged by reason of bankruptcy, in each case as of the last
day of the third calendar month preceding the month of such Distribution Date by
(y) 3, is greater than (B) $73,004,992.61.

                                       15
<PAGE>

Notwithstanding the foregoing, the Fitch Servicer Termination Test shall not be
applicable hereunder from and after the time the Trustee shall have received
written notice from the Servicer containing evidence in writing that Fitch shall
have rated Fremont Investment & Loan "3-" or better as a servicer of residential
mortgage loans.

                  "Fixed-Rate Mortgage Loan": A first lien Mortgage Loan which
provides for a fixed Mortgage Rate payable with respect thereto. The Fixed-Rate
Mortgage Loans are identified as such on the Mortgage Loan Schedule.

                  "Formula Rate": For any Distribution Date and any Class of
Class A Certificates or Mezzanine Certificates, the lesser of (i) the related
Base Rate and (ii) the related Maximum Cap Rate.

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

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

                  "Group I Allocation Percentage": With respect to any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is (i) the Group I Principal Remittance Amount for such Distribution Date,
and the denominator of which is (ii) the Principal Remittance Amount for such
Distribution Date.

                  "Group I Basic Principal Distribution Amount": With respect to
any Distribution Date, the excess of (i) the Group I Principal Remittance Amount
for such Distribution Date over (ii)(a) the Overcollateralization Release
Amount, if any, for such Distribution Date multiplied by (b) the Group I
Allocation Percentage.

                  "Group I Interest Remittance Amount": With respect to any
Distribution Date, that portion of the Available Funds for such Distribution
Date attributable to interest received or advanced with respect to the Group I
Mortgage Loans.

                  "Group I Mortgage Loan": A Mortgage Loan assigned to Loan
Group I with a principal balance that conforms to Fannie Mae and Freddie Mac
guidelines and designated on the Mortgage Loan Schedule as a Group I Mortgage
Loan.

                  "Group I Principal Distribution Amount": With respect to any
Distribution Date, the sum of (i) the Group I Basic Principal Distribution
Amount for such Distribution Date and (ii)(a) the Extra Principal Distribution
Amount for such Distribution Date multiplied by (b) the Group I Allocation
Percentage.

                  "Group I Principal Remittance Amount": With respect to any
Distribution Date, the sum of (i) each scheduled payment of principal collected
or advanced on the Group I Mortgage

                                       16
<PAGE>

Loans by the Servicer that were due during the related Due Period, (ii) the
principal portion of all partial and full principal prepayments of the Group I
Mortgage Loans applied by the Servicer during the related Prepayment Period,
(iii) the principal portion of all related Net Liquidation Proceeds and
Insurance Proceeds received during such Prepayment Period with respect to the
Group I Mortgage Loans, (iv) that portion of the Purchase Price, representing
principal of any repurchased Group I Mortgage Loan, deposited to the Collection
Account during such Prepayment Period, (v) the principal portion of any related
Substitution Adjustments deposited in the Collection Account during such
Prepayment Period with respect to the Group I Mortgage Loans and (vi) on the
Distribution Date on which the Trust Fund is to be terminated pursuant to
Section 11.01, that portion of the Termination Price, in respect of principal on
the Group I Mortgage Loans.

                  "Group II Allocation Percentage": With respect to any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is (i) the Group II Principal Remittance Amount for such Distribution
Date, and the denominator of which is (ii) the Principal Remittance Amount for
such Distribution Date.

                  "Group II Basic Principal Distribution Amount": With respect
to any Distribution Date, the excess of (i) the Group II Principal Remittance
Amount for such Distribution Date over (ii)(a) the Overcollateralization Release
Amount, if any, for such Distribution Date multiplied by (b) the Group II
Allocation Percentage.

                  "Group II Interest Remittance Amount": With respect to any
Distribution Date, that portion of the Available Funds for such Distribution
Date attributable to interest received or advanced with respect to the Group II
Mortgage Loans.

                  "Group II Mortgage Loan": A Mortgage Loan assigned to Loan
Group II with a principal balance that may or may not conform to Fannie Mae and
Freddie Mac guidelines and designated on the Mortgage Loan Schedule as a Group
II Mortgage Loan.

                  "Group II Principal Distribution Amount": With respect to any
Distribution Date, the sum of (i) the Group II Basic Principal Distribution
Amount for such Distribution Date and (ii)(a) the Extra Principal Distribution
Amount for such Distribution Date multiplied by (b) the Group II Allocation
Percentage.

                  "Group II Principal Remittance Amount": With respect to any
Distribution Date, the sum of (i) each scheduled payment of principal collected
or advanced on the Group II Mortgage Loans by the Servicer that were due during
the related Due Period, (ii) the principal portion of all partial and full
principal prepayments of the Group II Mortgage Loans applied by the Servicer
during the related Prepayment Period, (iii) the principal portion of all related
Net Liquidation Proceeds and Insurance Proceeds received during such Prepayment
Period with respect to the Group II Mortgage Loans, (iv) that portion of the
Purchase Price, representing principal of any repurchased Group II Mortgage
Loan, deposited to the Collection Account during such Prepayment Period, (v) the
principal portion of any related Substitution Adjustments deposited in the
Collection Account during such Prepayment Period with respect to the Group II
Mortgage Loans and (vi) on the Distribution Date on which the Trust Fund is to
be terminated pursuant to Section 11.01, that portion of the Termination Price,
in respect of principal on the Group II Mortgage Loans.

                                       17
<PAGE>

                  "Indenture": An indenture relating to the issuance of notes
secured primarily by the Class C Certificates, the Class P Certificates and/or
the Class R Certificates (or any portion thereof) entered into between the
issuer of such notes and the Trust Administrator as indenture trustee.

                  "Independent": When used with respect to any specified Person,
any such Person who (a) is in fact independent of the Depositor, the Servicer,
the Master Servicer and their respective Affiliates, (b) does not have any
direct financial interest in or any material indirect financial interest in the
Depositor, the Servicer, the Master Servicer or any Affiliate thereof, and (c)
is not connected with the Depositor, the Servicer, the Master Servicer or any
Affiliate thereof as an officer, employee, promoter, underwriter, trustee,
partner, director or Person performing similar functions; provided, however,
that a Person shall not fail to be Independent of the Depositor, the Servicer,
the Master Servicer or any Affiliate thereof merely because such Person is the
beneficial owner of 1% or less of any class of securities issued by the
Depositor, the Servicer, the Master Servicer or any Affiliate thereof, as the
case may be.

                  "Independent Contractor": Either (i) any Person (other than
the Servicer) that would be an "independent contractor" with respect to any of
the REMICs created hereunder within the meaning of Section 856(d)(3) of the Code
if such REMIC were a real estate investment trust (except that the ownership
tests set forth in that section shall be considered to be met by any Person that
owns, directly or indirectly, 35% or more of any Class of Certificates), so long
as each such REMIC does not receive or derive any income from such Person and
provided that the relationship between such Person and such REMIC is at arm's
length, all within the meaning of Treasury Regulation Section 1.856-4(b)(5), or
(ii) any other Person (including the Servicer) if the Trustee and the Trust
Administrator have received an Opinion of Counsel to the effect that the taking
of any action in respect of any REO Property by such Person, subject to any
conditions therein specified, that is otherwise herein contemplated to be taken
by an Independent Contractor will not cause such REO Property to cease to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code (determined without regard to the exception applicable for purposes of
Section 860D(a) of the Code), or cause any income realized in respect of such
REO Property to fail to qualify as Rents from Real Property.

                  "Index": With respect to each Adjustable-Rate Mortgage Loan
and with respect to each related Adjustment Date, the index as specified in the
related Mortgage Note.

                  "Initial Certificate Principal Balance": With respect to any
Regular Certificate, the amount designated "Initial Certificate Principal
Balance" on the face thereof.

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

                  "Interest Determination Date": With respect to the Class A
Certificates and Mezzanine Certificates and each Accrual Period, the second
LIBOR Business Day preceding the commencement of such Accrual Period.

                                       18
<PAGE>

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

                  "LIBOR": With respect to each Accrual Period, the rate
determined by the Trust Administrator on the related Interest Determination Date
on the basis of the London interbank offered rate for one-month United States
dollar deposits, as such rate appears on the Telerate Page 3750, as of 11:00
a.m. (London time) on such Interest Determination Date. If such rate does not
appear on Telerate Page 3750, the rate for such Interest Determination Date will
be determined on the basis of the offered rates of the Reference Banks for
one-month United States dollar deposits, as of 11:00 a.m. (London time) on such
Interest Determination Date. The Trust Administrator will request the principal
London office of each of the Reference Banks to provide a quotation of its rate.
On such Interest Determination Date, LIBOR for the related Accrual Period will
be established by the Trust Administrator as follows:

                  (i) If on such Interest Determination Date two or more
         Reference Banks provide such offered quotations, LIBOR for the related
         Accrual Period shall be the arithmetic mean of such offered quotations
         (rounded upwards if necessary to the nearest whole multiple of 1/16 of
         1%); and

                  (ii) If on such Interest Determination Date fewer than two
         Reference Banks provide such offered quotations, LIBOR for the related
         Accrual Period shall be the higher of (i) LIBOR as determined on the
         previous Interest Determination Date and (ii) the Reserve Interest
         Rate.

                  The establishment of LIBOR on each Interest Determination Date
by the Trust Administrator and the Trust Administrator's calculation of the
Pass-Through Rates applicable to the Offered Certificates for the related
Accrual Period shall (in the absence of manifest error) be final and binding.

                  "LIBOR Business Day": Any day on which banks in London,
England and The City of New York are open and conducting transactions in foreign
currency and exchange.

                  "Liquidated Mortgage Loan": As to any Distribution Date, any
Mortgage Loan in respect of which the Servicer has determined, in accordance
with the servicing procedures specified herein, as of the end of the related
Prepayment Period, that all Liquidation Proceeds which it expects to recover
with respect to the liquidation of the Mortgage Loan or disposition of the
related REO Property have been recovered.

                  "Liquidation Event": With respect to any Mortgage Loan, any of
the following events: (i) such Mortgage Loan is paid in full, (ii) a Final
Recovery Determination is made as to such Mortgage Loan or (iii) such Mortgage
Loan is removed from the Trust Fund by reason of its being purchased, sold or
replaced pursuant to or as contemplated by Section 2.03 or Section 11.01. With

                                       19
<PAGE>

respect to any REO Property, either of the following events: (i) a Final
Recovery Determination is made as to such REO Property or (ii) such REO Property
is removed from the Trust Fund by reason of its being sold or purchased pursuant
to Section 3.24 or Section 11.01.

                  "Liquidation Proceeds": The amount (other than amounts
received in respect of the rental of any REO Property prior to REO Disposition)
received by the Servicer in connection with (i) the taking of all or a part of a
Mortgaged Property by exercise of the power of eminent domain or condemnation,
(ii) the liquidation of a defaulted Mortgage Loan by means of a trustee's sale,
foreclosure sale or otherwise or (iii) the repurchase, substitution or sale of a
Mortgage Loan or an REO Property pursuant to or as contemplated by Section 2.03,
Section 3.24 or Section 11.01.

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

                  "Loan Group": Either Loan Group I or Loan Group II, as the
context requires.

                  "Loan Group I": The group of Mortgage Loans identified in the
Mortgage Loan Schedule as having been assigned to Loan Group I.

                  "Loan Group II": The group of Mortgage Loans identified in the
Mortgage Loan Schedule as having been assigned to Loan Group II.

                  "Losses":  As defined in Section 10.03.

                  "Lost Note Affidavit": With respect to any Mortgage Loan as to
which the original Mortgage Note has been permanently lost, misplaced or
destroyed and has not been replaced, an affidavit from the Originator certifying
that the original Mortgage Note has been lost, misplaced or destroyed (together
with a copy of the related Mortgage Note) and indemnifying the Trust against any
loss, cost or liability resulting from the failure to deliver the original
Mortgage Note in the form of Exhibit H hereto.

                  "Majority Certificateholders": The Holders of Certificates
evidencing at least 51% of the Voting Rights.

                  "Marker Rate": With respect to the Class C Certificates and
any Distribution Date, a per annum rate equal to two (2) times the weighted
average of the Uncertificated REMIC 1 Pass-Through Rates for REMIC 1 Regular
Interest LT1A1, REMIC 1 Regular Interest LT2A1, REMIC 1 Regular Interest LT2A2,
REMIC 1 Regular Interest LTM1, REMIC 1 Regular Interest LTM2, REMIC 1 Regular
Interest LTM3, REMIC 1 Regular Interest LTM4, REMIC 1 Regular Interest LTM5 and
REMIC 1 Regular Interest LTZZ, with the rate on REMIC 1 Regular Interest LT1A1
subject to a cap equal to the lesser of (i) LIBOR plus the Certificate Margin of
the Class 1A-1 Certificates and (ii) the Maximum Cap Rate for the purpose of
this calculation; with the rate on REMIC 1 Regular Interest LT2A1 subject to a
cap equal to the lesser of (i) LIBOR plus the Certificate Margin of the Class
2A-1 Certificates and (ii) the Maximum Cap Rate for the purpose of this
calculation; with the rate on REMIC 1 Regular Interest LT2A2 subject to a cap
equal to the

                                       20
<PAGE>

lesser of (i) LIBOR plus the Certificate Margin of the Class 2A-2 Certificates
and (ii) the Maximum Cap Rate for the purpose of this calculation; with the rate
on REMIC 1 Regular Interest LTM1 subject to a cap equal to the lesser of (i)
LIBOR plus the Certificate Margin of the Class M-1 Certificates and (ii) the
Maximum Cap Rate for the purpose of this calculation; with the rate on REMIC 1
Regular Interest LTM2 subject to a cap equal to the lesser of (i) LIBOR plus the
Certificate Margin of the Class M-2 Certificates and (ii) the Maximum Cap Rate
for the purpose of this calculation; with the rate on REMIC 1 Regular Interest
LTM3 subject to a cap equal to the lesser of (i) LIBOR plus the Certificate
Margin of the Class M-3 Certificates and (ii) the Maximum Cap Rate for the
purpose of this calculation; with the rate on REMIC 1 Regular Interest LTM4
subject to a cap equal to the lesser of (i) LIBOR plus the Certificate Margin of
the Class M-4 Certificates and (ii) the Maximum Cap Rate for the purpose of this
calculation; with the rate on REMIC 1 Regular Interest LTM5 subject to a cap
equal to the lesser of (i) LIBOR plus the Certificate Margin of the Class M-5
Certificates and (ii) the Maximum Cap Rate for the purpose of this calculation;
and with the rate on REMIC 1 Regular Interest LTZZ subject to a cap of zero for
the purpose of this calculation; provided, however, that for this purpose,
calculations of the Uncertificated REMIC 1 Pass-Through Rate and the related
caps with respect to REMIC 1 Regular Interest LT1A1, REMIC 1 Regular Interest
LT2A1, REMIC 1 Regular Interest LT2A2, REMIC 1 Regular Interest LTM1, REMIC 1
Regular Interest LTM2, REMIC 1 Regular Interest LTM3, REMIC 1 Regular Interest
LTM4 and REMIC 1 Regular Interest LTM5 shall be multiplied by a fraction, the
numerator of which is the actual number of days in the Accrual Period and the
denominator of which is 30.

                  "Master Servicer": As of the Closing Date, Wells Fargo Bank
Minnesota, National Association and thereafter, its respective successors in
interest who meet the qualifications of this Agreement. The Master Servicer and
the Trust Administrator shall at all times be the same Person.

                  "Master Servicer Certification": A written certification,
substantially in the form attached hereto as Exhibit N-2, covering servicing of
the Mortgage Loans by the Servicer and signed by an officer of the Master
Servicer that complies with (i) the Sarbanes-Oxley Act of 2002, as amended from
time to time, and (ii) the February 21, 2003 Statement by the Staff of the
Division of Corporation Finance of the Securities and Exchange Commission
Regarding Compliance by Asset-Backed Issuers with Exchange Act Rules 13a-14 and
15d-14, as in effect from time to time; provided that if, after the Closing Date
(a) the Sarbanes-Oxley Act of 2002 is amended, (b) the Statement referred to in
clause (ii) is modified or superceded by any subsequent statement, rule or
regulation of the Securities and Exchange Commission or any statement of a
division thereof, or (c) any future releases, rules and regulations are
published by the Securities and Exchange Commission from time to time pursuant
to the Sarbanes-Oxley Act of 2002, which in any such case affects the form or
substance of the required certification and results in the required
certification being, in the reasonable judgment of the Master Servicer,
materially more onerous than the form of the required certification as of the
Closing Date, the Master Servicer Certification shall be as agreed to by the
Master Servicer and the Depositor following a negotiation in good faith to
determine how to comply with any such new requirements.

                  "Master Servicer Event of Termination": One or more of the
events described in Section 8.01(b).

                                       21
<PAGE>

                  "Master Servicing Fee Rate": 0.01% per annum; provided,
however, if Fremont Investment & Loan has been removed as Servicer or has
resigned as Servicer, and in either such case if a Master Servicer is no longer
required hereunder, then the Master Servicing Fee Rate shall be 0.00% per annum.

                  "Master Servicing Fee": With respect to the Mortgage Loans and
for any calendar month, an amount, payable as provided in Section 4.14, equal to
the Master Servicing Fee Rate accrued for one month on the same principal amount
on which interest on each Mortgage Loan accrues for such calendar month.

                  "Maximum Cap Rate": For any Distribution Date and the Class A
Certificates and the Mezzanine Certificates, a per annum rate equal to the
product of (x) the weighted average of the Adjusted Net Maximum Mortgage Rates
of the Mortgage Loans, weighted on the basis of the outstanding Principal
Balances of the Mortgage Loans as of the first day of the month preceding the
month of such Distribution Date, and (y) a fraction, the numerator of which is
30 and the denominator of which is the actual number of days elapsed in the
related Accrual Period.

                  "Maximum Uncertificated Accrued Interest Deferral Amount":
With respect to any Distribution Date, the excess of (a) accrued interest at the
Uncertificated REMIC 1 Pass-Through Rate applicable to REMIC 1 Regular Interest
LTZZ for such Distribution Date on a balance equal to the Uncertificated
Principal Balance of REMIC 1 Regular Interest LTZZ minus the REMIC 1
Overcollateralization Amount, in each case for such Distribution Date, over (b)
Uncertificated Accrued Interest on REMIC 1 Regular Interest LT1A1 with the rate
on REMIC 1 Regular Interest LT1A1 subject to a cap equal to the lesser of (i)
LIBOR plus the Certificate Margin of the Class 1A-1 Certificates and (ii) the
Maximum Cap Rate for the purpose of this calculation; Uncertificated Accrued
Interest on REMIC 1 Regular Interest LT2A1 with the rate on REMIC 1 Regular
Interest LT2A1 subject to a cap equal to the lesser of (i) LIBOR plus the
Certificate Margin of the Class 2A-1 Certificates and (ii) the Maximum Cap Rate
for the purpose of this calculation; Uncertificated Accrued Interest on REMIC 1
Regular Interest LT2A2 with the rate on REMIC 1 Regular Interest LT2A2 subject
to a cap equal to the lesser of (i) LIBOR plus the Certificate Margin of the
Class 2A-2 Certificates and (ii) the related Maximum Cap Rate for the purpose of
this calculation; Uncertificated Accrued Interest on REMIC 1 Regular Interest
LTM1 with the rate on REMIC 1 Regular Interest LTM1 subject to a cap equal to
the lesser of (i) LIBOR plus the Certificate Margin of the Class M-1
Certificates and (ii) the related Maximum Cap Rate for the purpose of this
calculation; Uncertificated Accrued Interest on REMIC 1 Regular Interest LTM2
with the rate on REMIC 1 Regular Interest LTM2 subject to a cap equal to the
lesser of (i) LIBOR plus the Certificate Margin of the Class M-2 Certificates
and (ii) the related Maximum Cap Rate for the purpose of this calculation;
Uncertificated Accrued Interest on REMIC 1 Regular Interest LTM3 with the rate
on REMIC 1 Regular Interest LTM3 subject to a cap equal to the lesser of (i)
LIBOR plus the Certificate Margin of the Class M-3 Certificates and (ii) the
related Maximum Cap Rate for the purpose of this calculation; Uncertificated
Accrued Interest on REMIC 1 Regular Interest LTM4 with the rate on REMIC 1
Regular Interest LTM4 subject to a cap equal to the lesser of (i) LIBOR plus the
Certificate Margin of the Class M-4 Certificates and (ii) the related Maximum
Cap Rate for the purpose of this calculation; and Uncertificated Accrued
Interest on REMIC 1 Regular Interest LTM5 with the rate on REMIC 1 Regular
Interest LTM5 subject to a cap equal to the lesser of (i) LIBOR plus the
Certificate Margin of the Class M-5 Certificates and (ii) the related Maximum
Cap

                                       22
<PAGE>

Rate for the purpose of this calculation, provided, however, that for this
purpose, calculations of the Uncertificated REMIC 1 Pass-Through Rate and the
related caps with respect to REMIC 1 Regular Interest LT1A1, REMIC 1 Regular
Interest LT2A1, REMIC 1 Regular Interest LT2A2, REMIC 1 Regular Interest LTM1,
REMIC 1 Regular Interest LTM2, REMIC 1 Regular Interest LTM3, REMIC 1 Regular
Interest LTM4 and REMIC 1 Regular Interest LTM5 shall be multiplied by a
fraction, the numerator of which is the actual number of days in the Accrual
Period and the denominator of which is 30.

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

                  "MERS": Mortgage Electronic Registration Systems, Inc., a
corporation organized and existing under the laws of the State of Delaware, or
any successor thereto.

                  "MERS(R) System": The system of recording transfers of
Mortgages electronically maintained by MERS.

                  "MIN": The Mortgage Identification Number of Mortgage Loans
registered with MERS on the MERS(R) System.

                  "MOM Loan": Any Mortgage Loan with respect to which MERS acted
as the mortgagee of such Mortgage Loan, solely as nominee for the originator of
such Mortgage Loan and its successors and assigns, at the origination thereof.

                  "Mezzanine Certificate": Any Class M-1 Certificate, Class M-2
Certificate, Class M-3 Certificate, Class M-4 Certificate, or Class M-5
Certificate.

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

                  "Monthly Interest Distributable Amount": With respect to the
Class A Certificates, Mezzanine Certificates and the Class C Certificates and
any Distribution Date, the amount of interest accrued during the related Accrual
Period at the related Pass-Through Rate on the Certificate Principal Balance (or
Notional Amount in the case of the Class C Certificates) of such Class
immediately prior to such Distribution Date, in each case, reduced by any Net
Prepayment Interest Shortfalls, Relief Act Interest Shortfalls or other
shortfalls allocated to such Certificate as provided in Section 1.03.

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

                                       23
<PAGE>

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

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

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

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

                  "Mortgage Loan Purchase Agreement": The agreement among the
Originator as seller and the Depositor as purchaser, regarding the transfer of
the Mortgage Loans by the Originator to or at the direction of the Depositor,
substantially in the form attached hereto as Exhibit C.

                  "Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans included in REMIC 1 on such date, separately identifying the Group I
Mortgage Loans and the Group II Mortgage Loans, attached hereto as Exhibit D.
The Mortgage Loan Schedule shall be prepared by the Originator and shall set
forth the following information with respect to each Mortgage Loan, as
applicable:

                  (1) the Mortgage Loan identifying number;

                  (2) [reserved];

                  (3) the state and zip code of the Mortgaged Property;

                  (4) a code indicating whether the Mortgaged Property was
         represented by the borrower, at the time of origination, as being
         owner-occupied;

                  (5) the type of Residential Dwelling constituting the
         Mortgaged Property;

                  (6) the original months to maturity;

                  (7) the stated remaining months to maturity from the Cut-off
         Date based on the original amortization schedule;

                  (8) the Loan-to-Value Ratio at origination;

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

                  (10) the date on which the first Monthly Payment was due on
         the Mortgage Loan;

                  (11) the stated maturity date;

                                       24
<PAGE>

                  (12) the amount of the Monthly Payment at origination;

                  (13) the amount of the Monthly Payment due on the first Due
         Date after the Cut- off Date;

                  (14) the last Due Date on which a Monthly Payment was actually
         applied to the unpaid Stated Principal Balance;

                  (15) the original principal amount of the Mortgage Loan;

                  (16) the Stated Principal Balance of the Mortgage Loan as of
         the Close of Business on the Cut-off Date;

                  (17) a code indicating the purpose of the Mortgage Loan (i.e.,
         purchase financing, rate/term refinancing, cash-out refinancing);

                  (18) the Mortgage Rate at origination;

                  (19) a code indicating the documentation program (i.e., full
         documentation, easy documentation, stated documentation);

                  (20) the risk grade;

                  (21) the Value of the Mortgaged Property;

                  (22) the sale price of the Mortgaged Property, if applicable;

                  (23) the actual unpaid principal balance of the Mortgage Loan
         as of the Cut-off Date;

                  (24) the type and term of the related Prepayment Charge; and

                  (25) with respect to any Adjustable-Rate Mortgage Loan, the
         rounding code, the minimum Mortgage Rate, the maximum Mortgage Rate,
         the Gross Margin, the next Adjustment Date and the Periodic Rate Cap.

                  The Mortgage Loan Schedule shall set forth the following
information, with respect to the Mortgage Loans in the aggregate and for each
Loan Group as of the Cut-off Date: (1) the number of Mortgage Loans (separately
identifying the number of Fixed-Rate Mortgage Loans and the number of
Adjustable-Rate Mortgage Loans); (2) the current Principal Balance of the
Mortgage Loans; (3) the weighted average Mortgage Rate of the Mortgage Loans and
(4) the weighted average remaining term to maturity of the Mortgage Loans. The
Mortgage Loan Schedule shall be amended from time to time by the Servicer in
accordance with the provisions of this Agreement. With respect to any Qualified
Substitute Mortgage Loan, Cut-off Date shall refer to the related Cut-off Date
for such Mortgage Loan, determined in accordance with the definition of Cut-off
Date herein. On the

                                       25
<PAGE>

Closing Date, the Depositor will deliver to the Servicer and the Master
Servicer, as of the Cut-off Date, an electronic copy of the Mortgage Loan
Schedule.

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

                  "Mortgage Pool": The pool of Mortgage Loans, identified on
Exhibit D from time to time, and any REO Properties acquired in respect thereof.

                  "Mortgage Rate": With respect to each Fixed-Rate Mortgage
Loan, the rate set forth in the related Mortgage Note. With respect to each
Adjustable-Rate Mortgage Loan, the annual rate at which interest accrues on such
Mortgage Loan from time to time in accordance with the provisions of the related
Mortgage Note, which rate (A) as of any date of determination until the first
Adjustment Date following the Cut-off Date shall be the rate set forth in the
Mortgage Loan Schedule as the Mortgage Rate in effect immediately following the
Cut-off Date and (B) as of any date of determination thereafter shall be the
rate as adjusted on the most recent Adjustment Date, to equal the sum, rounded
to the next highest or nearest 0.125% (as provided in the Mortgage Note), of the
Index, determined as set forth in the related Mortgage Note, plus the related
Gross Margin subject to the limitations set forth in the related Mortgage Note.
With respect to each Mortgage Loan that becomes an REO Property, as of any date
of determination, the annual rate determined in accordance with the immediately
preceding sentence as of the date such Mortgage Loan became an REO Property.

                  "Mortgaged Property": The underlying property securing a
Mortgage Loan, including any REO Property, consisting of a fee simple estate in
a parcel of real property improved by a Residential Dwelling.

                  "Mortgagor":  The obligor on a Mortgage Note.

                  "Net Liquidation Proceeds": With respect to any Liquidated
Mortgage Loan or any other disposition of related Mortgaged Property (including
REO Property) the related Liquidation Proceeds and Insurance Proceeds net of
Advances, Servicing Advances, Servicing Fees and any other accrued and unpaid
servicing fees received and retained in connection with the liquidation of such
Mortgage Loan or Mortgaged Property.

                  "Net Monthly Excess Cashflow": With respect to each
Distribution Date, the sum of (a) any Overcollateralization Release Amount for
such Distribution Date and (b) the excess of (x) Available Funds for such
Distribution Date over (y) the sum for such Distribution Date of (A) the Monthly
Interest Distributable Amounts for the Class A Certificates and the Mezzanine
Certificates, (B) the Unpaid Interest Shortfall Amounts for the Class A
Certificates and (C) the Principal Remittance Amount.

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

                                       26
<PAGE>

                  "Net Prepayment Interest Shortfall": With respect to any
Distribution Date, the excess, if any, of any Prepayment Interest Shortfalls for
such date over the related Compensating Interest.

                  "Net WAC Rate": For any Distribution Date and the Class A
Certificates and the Mezzanine Certificates, a per annum rate equal to the
product of (x) the weighted average of the Adjusted Net Mortgage Rates of the
Mortgage Loans, weighted on the basis of the outstanding Principal Balances of
the Mortgage Loans as of the first day of the month preceding the month of such
Distribution Date, and (y) a fraction, the numerator of which is 30 and the
denominator of which is the actual number of days elapsed in the related Accrual
Period. For federal income tax purposes, the economic equivalent of such rate
shall be expressed as the Uncertificated REMIC 1 Pass-Through Rate.

                  "Net WAC Rate Carryover Amount": With respect to the any Class
of Class A Certificates or Mezzanine Certificates and any Distribution Date, the
sum of (A) the positive excess, if any, of (i) the amount of interest such Class
of Certificates would have accrued for such Distribution Date had the applicable
Pass-Through Rate been the related Formula Rate over (ii) the amount of interest
accrued on such Class of Certificates at the Net WAC Rate for such Distribution
Date and (B) the unpaid portion of any related Net WAC Rate Carryover Amount
from the prior Distribution Date together with interest accrued on such unpaid
portion for the most recently ended Accrual Period at the related Formula Rate.

                  "Net WAC Rate Carryover Reserve Account": The account
established and maintained pursuant to Section 3.29.

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

                  "Nonrecoverable Advance": Any Advance or Servicing Advance
previously made or proposed to be made in respect of a Mortgage Loan or REO
Property that, in the good faith business judgment of the Servicer, will not be
ultimately recoverable from Late Collections, Insurance Proceeds, Liquidation
Proceeds or condemnation proceeds on such Mortgage Loan or REO Property as
provided herein.

                  "Notional Amount": Immediately prior to any Distribution Date
with respect to the Class C Certificates, the aggregate of the Uncertificated
Principal Balances of REMIC 1 Regular Interests.

                  "Offered Certificates": The Class A Certificates and the
Mezzanine Certificates offered to the public pursuant to the Prospectus
Supplement.

                  "Officers' Certificate": A certificate signed by the Chairman
of the Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Servicer, the Originator or
the Depositor, as applicable.

                                       27
<PAGE>

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

                  "Optional Termination Date": The first Distribution Date on
which the Servicer may opt to terminate the Trust Fund pursuant to Section
11.01.

                  "Original Class Certificate Principal Balance": With respect
to the Class A Certificates, the Mezzanine Certificates, the Class C
Certificates and the Class P Certificates, the corresponding amounts set forth
opposite such Class above in the Preliminary Statement.

                  "Original Mortgage Loan": Any of the Mortgage Loans included
in the Trust Fund as of the Closing Date. The aggregate principal balance of the
Original Mortgage Loans as of the Closing Date is equal to $561,576,866.24.

                  "Originator": Fremont Investment & Loan, a California state
chartered industrial bank, or its successor in interest.

                  "Overcollateralization Deficiency Amount": With respect to any
Distribution Date, the amount, if any, by which the Overcollateralization Target
Amount exceeds the Overcollateralized Amount on such Distribution Date (after
giving effect to distributions in respect of the Group I Basic Principal
Distribution Amount and the Group II Basic Principal Distribution Amount on such
Distribution Date).

                  "Overcollateralization Floor": With respect to the Class 1A
Principal Distribution Amount, $1,800,741.65. With respect to the Class 2A
Principal Distribution Amount, $1,007,142.68. With respect to each of the Class
M-1 Principal Distribution Amount, the Class M-2 Principal Distribution Amount,
the Class M-3 Principal Distribution Amount, the Class M-4 Principal
Distribution Amount and the Class M-5 Principal Distribution Amount,
$2,807,884.33

                  "Overcollateralization Release Amount": With respect to any
Distribution Date, the lesser of (x) the Principal Remittance Amount for such
Distribution Date and (y) the Excess Overcollateralized Amount.

                  "Overcollateralization Target Amount": With respect to any
Distribution Date, (i) prior to the Stepdown Date, $12,634,766.24 (ii) on or
after the Stepdown Date provided a Trigger Event is not in effect, the greater
of (A) the lesser of (x) 4.50% of the aggregate Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) and (y) $12,634,766.24 and (B)
$2,807,884.33 and (iii) on or after the Stepdown Date if a Trigger Event is in
effect, the Overcollateralization Target Amount for the immediately preceding
Distribution Date.

                                       28
<PAGE>

                  "Overcollateralized Amount": For any Distribution Date, the
amount equal to (i) the aggregate Principal Balance of the Mortgage Loans as of
the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) as of the related Determination Date minus (ii) the
sum of the aggregate Certificate Principal Balance of the Class A Certificates,
the Mezzanine Certificates and the Class P Certificates as of such Distribution
Date after giving effect to distributions to be made on such Distribution Date.

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

                  "Pass-Through Rate": With respect to the Class 1A-1
Certificates, the Class 2A-1 Certificates, the Class 2A-2 Certificates, the
Class M-1 Certificates, the Class M-2 Certificates, the Class M-3 Certificates,
the Class M-4 Certificates and the Class M-5 Certificates and any Distribution
Date, the lesser of (x) the related Formula Rate for such Distribution Date and
(y) the Net WAC Rate for such Distribution Date. With respect to the Class C
Certificates and any Distribution Date, a per annum rate equal to the percentage
equivalent of a fraction, the numerator of which is the sum of the amounts
calculated pursuant to clauses (A) through (K) below, and the denominator of
which is the aggregate of the Uncertificated Principal Balances of the REMIC 1
Regular Interests. For purposes of calculating the Pass-Through Rate for the
Class C Certificates, the numerator is equal to the sum of the following
components:

         (A) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTAA minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTAA;

         (B) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT1A1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT1A1;

         (C) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT2A1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT2A1;

         (D) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT2A2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT2A2;

         (E) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTM1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM1;

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<PAGE>

         (F) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTM2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM2;

         (G) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTM3 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM3;

         (H) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTM4 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM4;

         (I) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTM5 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM5;

         (J) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LTZZ minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTZZ; and

         (K) 100% of the interest on the REMIC 1 Regular Interest LTP.

                  "Paying Agent": Any paying agent appointed pursuant to Section
6.05.

                  "Percentage Interest": With respect to any Certificate (other
than a Residual Certificate), a fraction, expressed as a percentage, the
numerator of which is the Initial Certificate Principal Balance represented by
such Certificate and the denominator of which is the Original Class Certificate
Principal Balance of the related Class. With respect to a Residual Certificate,
the portion of the Class evidenced thereby, expressed as a percentage, as stated
on the face of such Certificate; provided, however, that the sum of all such
percentages for each such Class totals 100%.

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

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

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

                                       30
<PAGE>

                  (ii) (A) demand and time deposits in, certificates of deposit
         of, bankers' acceptances issued by or federal funds sold by any
         depository institution or trust company (including the Trustee or its
         agent acting in their respective commercial capacities) incorporated
         under the laws of the United States of America or any state thereof and
         subject to supervision and examination by federal and/or state
         authorities, so long as, at the time of such investment or contractual
         commitment providing for such investment, such depository institution
         or trust company (or, if the only Rating Agency is S&P, in the case of
         the principal depository institution in a depository institution
         holding company, debt obligations of the depository institution holding
         company) or its ultimate parent has a short-term uninsured debt rating
         in one of the two highest available ratings of Fitch and Moody's and
         the highest available rating category of S&P and provided that each
         such investment has an original maturity of no more than 365 days; and
         provided further that, if the only Rating Agency is S&P 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 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 S&P if S&P is
         the Rating Agency; and (B) any other demand or time deposit or deposit
         which is fully insured by the FDIC;

                  (iii) repurchase obligations with a term not to exceed 30 days
         with respect to any security described in clause (i) above and entered
         into with a depository institution or trust company (acting as
         principal) rated F1+ or higher by Fitch, P-1 by Moody's and rated A-1+
         or higher by S&P, provided, however, that collateral transferred
         pursuant to such repurchase obligation must be of the type described in
         clause (i) above and must (A) be valued daily at current market prices
         plus accrued interest, (B) pursuant to such valuation, be equal, at all
         times, to 105% of the cash transferred by the Trustee in exchange for
         such collateral and (C) be delivered to the Trustee or, if the Trustee
         is supplying the collateral, an agent for the Trustee, in such a manner
         as to accomplish perfection of a security interest in the collateral by
         possession of certificated securities;

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

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

                  (vi) units of money market funds, including those money market
         funds managed or advised by the Trustee, the Trust Administrator or an
         Affiliate of either of them, that have been rated "AAA" by Fitch (if
         rated by Fitch), "Aaa" by Moody's and "AAAm" by S&P; and

                                       31
<PAGE>

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

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

                  "Permitted Transferee": Any transferee of a Residual
Certificate other than a Disqualified Organization or a non-U.S. Person.

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

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

                  "Pool Balance": As of any date of determination, the aggregate
principal balance of the Mortgage Loans in both Loan Groups as of such date.

                  "Prepayment Assumption": As defined in the Prospectus
Supplement.

                  "Prepayment Charge": With respect to any Mortgage Loan, the
charges or premiums, if any, due in connection with a full or partial prepayment
of such Mortgage Loan in accordance with the terms thereof (other than any
Servicer Prepayment Charge Payment Amount).

                  "Prepayment Charge Schedule": As of any date, the list of
Prepayment Charges on the Mortgage Loans included in the Trust Fund on such
date, attached hereto as Schedule I (including the prepayment charge summary
attached thereto). The Prepayment Charge Schedule shall set forth the following
information with respect to each Prepayment Charge:

                  (i) the Mortgage Loan identifying number;

                  (ii) a code indicating the type of Prepayment Charge;

                  (iii) the state of origination of the related Mortgage Loan;

                  (iv) the date on which the first monthly payment was due on
         the related Mortgage Loan;

                                       32
<PAGE>

                  (v) the term of the related Prepayment Charge; and

                  (vi) the principal balance of the related Mortgage Loan as of
the Cut-off Date.

                  "Prepayment Interest Shortfall": With respect to any
Distribution Date, for each Mortgage Loan that was the subject of a Principal
Prepayment in full during the portion of the related Prepayment Period occurring
between the first day of the related Prepayment Period and the last day of the
calendar month preceding the month in which such Distribution Date occurs, an
amount equal to interest at the applicable Net Mortgage Rate on the amount of
such Principal Prepayment for the number of days commencing on the date on which
the prepayment is applied and ending on the last day of the calendar month
preceding the month in which such Distribution Date occurs. The obligations of
the Servicer and the Master Servicer in respect of any Prepayment Interest
Shortfall are set forth in Section 3.25 and Section 4.19, respectively.

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

                  "Principal Balance": As to any Mortgage Loan other than a
Liquidated Mortgage Loan, and any day, the related Cut-off Date Principal
Balance, MINUS the sum of (x) all collections credited against the Principal
Balance of any such Mortgage Loan and (y) the principal portion of Advances made
with respect to such Mortgage Loan. For purposes of this definition, a
Liquidated Mortgage Loan shall be deemed to have a Principal Balance equal to
the Principal Balance of the related Mortgage Loan as of the final recovery of
related Liquidation Proceeds and a Principal Balance of zero thereafter. As to
any REO Property and any day, the Principal Balance of the related Mortgage Loan
immediately prior to such Mortgage Loan becoming REO Property minus the sum of
(x) any REO Principal Amortization received with respect thereto on or prior to
such day and (y) the principal portion of Advances made with respect to such REO
Property from and after the time the related Mortgage Loan became such REO
Property.

                  "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 the full
amount of scheduled interest due on any Due Date in any month or months
subsequent to the month of prepayment.

                  "Principal Remittance Amount": With respect to any
Distribution Date, the sum of the Group I Principal Remittance Amount and the
Group II Principal Remittance Amount.

                  "Prospectus Supplement": That certain Prospectus Supplement
dated August 5, 2003 relating to the public offering of the Class A Certificates
and the Mezzanine Certificates.

                  "Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03, and as
confirmed by an Officers' Certificate from the Servicer to the Trustee and the
Trust Administrator, an amount equal to the sum of (i) 100% of the Principal
Balance thereof as of the date of purchase (or such other price as provided in
Section 11.01), (ii) in the case of (x) a Mortgage Loan, accrued interest on
such Principal Balance at the applicable Mortgage Rate in effect from time to
time from the Due Date as to which

                                       33
<PAGE>

interest was last covered by a payment by the Mortgagor or an advance by the
Servicer, which payment or advance had as of the date of purchase been
distributed pursuant to Section 5.01, through the end of the calendar month in
which the purchase is to be effected, and (y) an REO Property, the sum of (1)
accrued interest on such Principal Balance at the applicable Mortgage Rate in
effect from time to time from the Due Date as to which interest was last covered
by a payment by the Mortgagor or an advance by the Servicer through the end of
the calendar month immediately preceding the calendar month in which such REO
Property was acquired, plus (2) REO Imputed Interest for such REO Property for
each calendar month commencing with the calendar month in which such REO
Property was acquired and ending with the calendar month in which such purchase
is to be effected, net of the total of all net rental income, Insurance
Proceeds, Liquidation Proceeds and Advances that as of the date of purchase had
been distributed as or to cover REO Imputed Interest pursuant to Section 5.04,
(iii) any unreimbursed Servicing Advances and Advances and any unpaid Servicing
Fees allocable to such Mortgage Loan or REO Property, (iv) any amounts
previously withdrawn from the Collection Account in respect of such Mortgage
Loan or REO Property pursuant to Section 3.24 and (v) in the case of a Mortgage
Loan required to be purchased pursuant to Section 2.03, expenses reasonably
incurred or to be incurred by the Servicer, the Trustee or the Trust
Administrator in respect of the breach or defect giving rise to the purchase
obligation including any costs and damages incurred by the Trust in connection
with any violation by such loan of any predatory or abusive lending law.

                  "Qualified Insurer": Any insurance company acceptable to
Fannie Mae.

                  "Qualified Substitute Mortgage Loan": A mortgage loan
substituted for a Deleted Mortgage Loan pursuant to the terms of this Agreement
or the Mortgage Loan Purchase Agreement which must, on the date of such
substitution, (i) have an outstanding principal balance (or in the case of a
substitution of more than one mortgage loan for a Deleted Mortgage Loan, an
aggregate principal balance), after application of all scheduled payments of
principal and interest due during or prior to the month of substitution, not in
excess of, and not more than 5% less than, the outstanding principal balance of
the Deleted Mortgage Loan as of the Due Date in the calendar month during which
the substitution occurs, (ii) have a Mortgage Rate not less than (and not more
than one percentage point in excess of) the Mortgage Rate of the Deleted
Mortgage Loan, (iii) if the Qualified Substitute Mortgage Loan is an
Adjustable-Rate Mortgage Loan, have a Maximum Mortgage Rate not less than the
Maximum Mortgage Rate on the Deleted Mortgage Loan, (iv) if the Qualified
Substitute Mortgage Loan is an Adjustable-Rate Mortgage Loan, have a Minimum
Mortgage Rate not less than the Minimum Mortgage Rate of the Deleted Mortgage
Loan, (v) if the Qualified Substitute Mortgage Loan is an Adjustable-Rate
Mortgage Loan, have a Gross Margin equal to or greater than the Gross Margin of
the Deleted Mortgage Loan, (vi) if the Qualified Substitute Mortgage Loan is an
Adjustable-Rate Mortgage Loan, have a next Adjustment Date not more than two
months later than the next Adjustment Date on the Deleted Mortgage Loan, (vii)
[reserved], (viii) have a remaining term to maturity not greater than (and not
more than one year less than) that of the Deleted Mortgage Loan, (ix) be current
as of the date of substitution, (x) have a Loan-to-Value Ratio as of the date of
substitution equal to or lower than the Loan-to-Value Ratio of the Deleted
Mortgage Loan as of such date, (xi) have a risk grading determined by the
Originator at least equal to the risk grading assigned on the Deleted Mortgage
Loan, (xii) have been underwritten or reunderwritten by the Originator
in accordance with the same underwriting criteria and guidelines as the Deleted
Mortgage Loan, (xiii) [reserved]; and (xiv) conform to each

                                       34
<PAGE>

representation and warranty set forth in Section 3.01 of the Mortgage Loan
Purchase Agreement applicable to the Deleted Mortgage Loan. In the event that
one or more mortgage loans are substituted for one or more Deleted Mortgage
Loans, the amounts described in clause (i) hereof shall be determined on the
basis of aggregate principal balances, the Mortgage Rates described in clauses
(ii) through (vi) hereof shall be satisfied for each such mortgage loan, the
risk gradings described in clause (x) hereof shall be satisfied as to each such
mortgage loan, the terms described in clause (viii) hereof shall be determined
on the basis of weighted average remaining term to maturity (provided that no
such mortgage loan may have a remaining term to maturity longer than the Deleted
Mortgage Loan), the Loan-to-Value Ratios described in clause (x) hereof shall be
satisfied as to each such mortgage loan and, except to the extent otherwise
provided in this sentence, the representations and warranties described in
clause (xiv) hereof must be satisfied as to each Qualified Substitute Mortgage
Loan or in the aggregate, as the case may be.

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

                  "Realized Loss": With respect to any Liquidated Mortgage Loan,
the amount of loss realized equal to the portion of the Principal Balance
remaining unpaid after application of all Net Liquidation Proceeds in respect of
such Mortgage Loan.

                  "Record Date": With respect to (i) the Class C Certificates
and the Residual Certificates, the Close of Business on the last Business Day of
the calendar month preceding the month in which the related Distribution Date
occurs and (ii) with respect to all other Classes of Certificates, the Close of
Business on the Business Day immediately preceding the related Distribution
Date; provided, however, that following the date on which Definitive
Certificates for any of Class A Certificates or the Mezzanine Certificates are
available pursuant to Section 6.02, the Record Date for such Certificates that
are Definitive Certificates shall be the last Business Day of the calendar month
preceding the month in which the related Distribution Date occurs.

                  "Reference Banks": Those banks (i) with an established place
of business in London, England, (ii) not controlling, under the control of or
under common control with the Originator or the Servicer or any affiliate
thereof and (iii) which have been designated as such by the Trust Administrator
after consultation with the Depositor; provided, however, that if fewer than two
of such banks provide a LIBOR rate, then any leading banks selected by the Trust
Administrator after consultation with the Depositor which are engaged in
transactions in United States dollar deposits in the international Eurocurrency
market.

                  "Refinanced Mortgage Loan": A Mortgage Loan the proceeds of
which were not used to purchase the related Mortgaged Property.

                  "Regular Certificate": Any of the Class A Certificates,
Mezzanine Certificates, Class C Certificates or Class P Certificates.

                                       35
<PAGE>

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

                  "Relief Act Interest Shortfall": With respect to any
Distribution Date, for any Mortgage Loan with respect to which there has been a
reduction in the amount of interest collectible thereon for the most recently
ended Due Period as a result of the application of the Relief Act, the amount by
which (i) interest collectible on such Mortgage Loan during such Due Period is
less than (ii) one month's interest on the Principal Balance of such Mortgage
Loan at the Mortgage Rate for such Mortgage Loan before giving effect to the
application of the Relief Act.

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

                  "REMIC 1": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
with respect to which a REMIC election is to be made consisting of: (i) such
Mortgage Loans as from time to time are subject to this Agreement, together with
the Mortgage Files relating thereto, and together with all collections thereon
and proceeds thereof, (ii) any REO Property, together with all collections
thereon and proceeds thereof, (iii) the Trustee's rights with respect to the
Mortgage Loans under all insurance policies, required to be maintained pursuant
to this Agreement and any proceeds thereof, (iv) the Depositor's rights under
the Mortgage Loan Purchase Agreement (including any security interest created
thereby), (v) [reserved] and (vi) the Collection Account, the Distribution
Account (subject to the last sentence of this definition) and any REO Account
and such assets that are deposited therein from time to time and any investments
thereof, together with any and all income, proceeds and payments with respect
thereto. Notwithstanding the foregoing, however, a REMIC election will not be
made with respect to the Net WAC Rate Carryover Reserve Account, the Cap
Contract or any Servicer Prepayment Charge Payment Amounts.

                  "REMIC 1 Interest Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Principal Balance of the Mortgage Loans and related REO Properties then
outstanding and (ii) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LTAA minus the Marker Rate, divided by (b) 12.

                  "REMIC 1 Overcollateralization Target Amount": 1% of the
Overcollateralization Target Amount.

                  "REMIC 1 Overcollateralization Amount": With respect to any
date of determination, (i) 1% of the aggregate Uncertificated Principal Balances
of the REMIC 1 Regular Interests minus (ii) the aggregate of the Uncertificated
Principal Balances of REMIC 1 Regular Interest LT1A1, REMIC 1 Regular Interest
LT2A1, REMIC 1 Regular Interest LT2A2, REMIC 1 Regular Interest LTM1, REMIC 1
Regular Interest LTM2, REMIC 1 Regular Interest LTM3, REMIC 1 Regular Interest
LTM4, REMIC 1 Regular Interest LTM5 and REMIC 1 Regular Interest LTP, in each
case as of such date of determination.

                  "REMIC 1 Principal Loss Allocation Amount": With respect to
any Distribution Date, an amount equal to the product of (i) the aggregate
Principal Balance of the Mortgage Loans and related REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is

                                       36
<PAGE>

two times the aggregate of the Uncertificated Principal Balances of REMIC 1
Regular Interest LT1A1, REMIC 1 Regular Interest LT2A1, REMIC 1 Regular Interest
LT2A2, REMIC 1 Regular Interest LTM1, REMIC 1 Regular Interest LTM2, REMIC 1
Regular Interest LTM3, REMIC 1 Regular Interest LTM4 and REMIC 1 Regular
Interest LTM5 and the denominator of which is the aggregate of the
Uncertificated Principal Balances of REMIC 1 Regular Interest LT1A1, REMIC 1
Regular Interest LT2A1, REMIC 1 Regular Interest LT2A2, REMIC 1 Regular Interest
LTM1, REMIC 1 Regular Interest LTM2, REMIC 1 Regular Interest LTM3, REMIC 1
Regular Interest LTM4, REMIC 1 Regular Interest LTM5 and REMIC 1 Regular
Interest LTZZ.

                  "REMIC 1 Regular Interest LTAA": One of the separate
non-certificated beneficial ownership interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular Interest LTAA shall
accrue interest at the related Uncertificated REMIC 1 Pass- Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

                  "REMIC 1 Regular Interest LT1A1": One of the separate
non-certificated beneficial ownership interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1A1
shall accrue interest at the related Uncertificated REMIC 1 Pass- Through Rate
in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.

                  "REMIC 1 Regular Interest LT2A1": One of the separate
non-certificated beneficial ownership interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular Interest LT2A1
shall accrue interest at the related Uncertificated REMIC 1 Pass- Through Rate
in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.

                  "REMIC 1 Regular Interest LT2A2": One of the separate
non-certificated beneficial ownership interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular Interest LT2A2
shall accrue interest at the related Uncertificated REMIC 1 Pass- Through Rate
in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.

                  "REMIC 1 Regular Interest LTM1": One of the separate
non-certificated beneficial ownership interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular Interest LTM1 shall
accrue interest at the related Uncertificated REMIC 1 Pass- Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

                  "REMIC 1 Regular Interest LTM2": One of the separate
non-certificated beneficial ownership interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC

                                       37
<PAGE>

1. REMIC 1 Regular Interest LTM2 shall accrue interest at the related
Uncertificated REMIC 1 Pass- Through Rate in effect from time to time, and shall
be entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement hereto.

                  "REMIC 1 Regular Interest LTM3": One of the separate
non-certificated beneficial ownership interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular Interest LTM3 shall
accrue interest at the related Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

                  "REMIC 1 Regular Interest LTM4": One of the separate
non-certificated beneficial ownership interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular Interest LTM4 shall
accrue interest at the related Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

                  "REMIC 1 Regular Interest LTM5": One of the separate
non-certificated beneficial ownership interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC 1. Regular Interest LTM5 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

                  "REMIC 1 Regular Interest LTP": One of the separate
non-certificated beneficial ownership interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular Interest LTP shall
accrue interest at the related Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

                  "REMIC 1 Regular Interest LTZZ": One of the separate
non-certificated beneficial ownership interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular Interest LTZZ shall
accrue interest at the related Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

                  "REMIC 1 Regular Interests": REMIC 1 Regular Interest LTAA,
REMIC 1 Regular Interest LT1A1, REMIC 1 Regular Interest LT2A1, REMIC 1 Regular
Interest LT2A2, REMIC 1 Regular Interest LTM1, REMIC 1 Regular Interest LTM2,
REMIC 1 Regular Interest LTM3, REMIC 1 Regular Interest LTM4, REMIC 1 Regular
Interest LTM5, REMIC 1 Regular Interest LTZZ and REMIC 1 Regular Interest LTP.

                                       38
<PAGE>

                  "REMIC 2": The segregated pool of assets consisting of all of
the REMIC 1 Regular Interests conveyed in trust to the Trustee, for the benefit
of the Holders of the Regular Certificates and the Class R Certificates (in
respect of the Class R-2 Interest), pursuant to Article II hereunder, and all
amounts deposited therein, with respect to which a separate REMIC election is to
be made.

                  "REMIC 2 Regular Interests": The Regular Certificates.

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

                  "Remittance Report": A report prepared by the Servicer and
delivered to the Master Servicer and the Trust Administrator pursuant to Section
5.04 and meeting the requirements therefor set forth in Section 5.04.

                  "Rents from Real Property": With respect to any REO Property,
gross income of the character described in Section 856(d) of the Code.

                  "REO Account": The account or accounts maintained by the
Servicer in respect of an REO Property pursuant to Section 3.24.

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

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

                  "REO Principal Amortization": With respect to any REO
Property, for any calendar month, the excess, if any, of (a) the aggregate of
all amounts received in respect of such REO Property during such calendar month,
whether in the form of rental income, sale proceeds (including, without
limitation, that portion of the Termination Price paid in connection with a
purchase of all of the Mortgage Loans and REO Properties pursuant to Section
11.01 that is allocable to such REO Property) or otherwise, net of any portion
of such amounts (i) payable pursuant to Section 3.24 in respect of the proper
operation, management and maintenance of such REO Property or (ii) payable or
reimbursable to the Servicer pursuant to Section 3.24 for unpaid Servicing Fees
in respect of the related Mortgage Loan and unreimbursed Servicing Advances and
Advances in respect of such REO Property or the related Mortgage Loan, over (b)
the REO Imputed Interest in respect of such REO Property for such calendar
month.

                  "REO Property": A Mortgaged Property acquired by the Servicer
on behalf of the Trust Fund through foreclosure or deed-in-lieu of foreclosure,
as described in Section 3.24.

                                       39
<PAGE>

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

                  "Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Trust Administrator determines
to be either (i) the arithmetic mean (rounded upwards if necessary to the
nearest whole multiple of 1/16 of 1%) of the one-month United States dollar
lending rates which banks in The City of New York selected by the Depositor are
quoting on the relevant Interest Determination Date to the principal London
offices of leading banks in the London interbank market or (ii) in the event
that the Trust Administrator can determine no such arithmetic mean, in the case
of any Interest Determination Date after the initial Interest Determination
Date, the lowest one-month United States dollar lending rate which such New York
banks selected by the Depositor are quoting on such Interest Determination Date
to leading European banks.

                  "Residential Dwelling": Any one of the following: (i) a
detached one-family dwelling, (ii) a detached two- to four-family dwelling,
(iii) a one-family dwelling unit in a Fannie Mae eligible condominium project,
(iv) a manufactured home, or (v) a detached one-family dwelling in a planned
unit development, none of which is a co-operative or mobile home.

                  "Residual Certificate":  The Class R Certificates.

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

                  "Responsible Officer": When used with respect to the Trust
Administrator, the Chairman or Vice Chairman of the Board of Directors or
Trustees, the Chairman or Vice Chairman of the Executive or Standing Committee
of the Board of Directors or Trustees, the President, 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 Trust Administrator customarily performing functions
similar to those performed by any of the above designated officers and, with
respect to a particular matter, to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject. 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, 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
with direct responsibility for the Trustee's performance of functions to be
performed by the Trustee in connection with the administration of this
Agreement. and, with respect to a particular matter, to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.

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

                                       40
<PAGE>

                  "Servicer": Fremont Investment & Loan, a California state
chartered industrial bank, or any successor servicer appointed as herein
provided, in its capacity as Servicer hereunder.

                  "Servicer Certification": As defined in Section 3.22(a)
hereof.

                  "Servicer Event of Termination": One or more of the events
described in Section 8.01(a).

                  "Servicer Prepayment Charge Payment Amount": The amounts
payable by the Servicer in respect of any waived Prepayment Charges pursuant to
Section 2.05 or Section 3.01.

                  "Servicer Remittance Date": With respect to any Distribution
Date, the Business Day prior to such Distribution Date.

                  "Servicer Termination Test": With respect to any Distribution
Date, the Servicer Termination Test will be failed if the Cumulative Loss
Percentage the applicable percentages set forth below with respect to such
Distribution Date:

                  Distribution Date                           Percentage

         September 2006 through August 2007                       3.50%
         September 2007 through August 2008                       5.25%
         September 2008 through August 2009                       6.75%
         September 2009 through August 2010                       7.75%
         September 2010 and thereafter                            8.25%

                  "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 (including reasonable attorneys' fees and
expenses) incurred by the Servicer in the performance of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration, inspection and protection of the Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures related to a
Mortgage Loan and any such proceedings that result from the Mortgage Loan being
registered on the MERS(R) System, (iii) the management and liquidation of the
REO Property and (iv) compliance with the obligations under Sections 3.01, 3.09,
3.14, 3.16, and 3.24. The Servicer shall not be required to make any Servicing
Advance that would be a Nonrecoverable Advance.

                  "Servicing Fee": With respect to each Mortgage Loan and for
any calendar month, an amount, payable as provided in Section 3.18, equal to the
Servicing Fee Rate accrued for one month (or in the event of any payment of
interest which accompanies a Principal Prepayment in full made by the Mortgagor
during such calendar month, accrued for the number of days covered by such
payment of interest) on the same principal amount on which interest on such
Mortgage Loan accrues for such calendar month. A portion of such Servicing Fee
may be retained by any Sub-Servicer as its servicing compensation.

                                       41
<PAGE>

                  "Servicing Fee Rate": 0.49% per annum; provided, however, if
Fremont Investment & Loan has been removed as Servicer or has resigned as
Servicer, and in either such case if a Master Servicer is no longer required
hereunder, then the Servicing Fee Rate shall be 0.50% per annum thereupon and
thereafter.

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

                  "Servicing Transfer Costs": Shall mean all reasonable costs
and expenses incurred by the Trustee, the Trust Administrator or the Master
Servicer (in connection with a transfer of servicing) or by the Trustee (in
connection with a transfer of master servicing) in connection with the transfer
of servicing or master servicing from a predecessor servicer or master servicer,
including, without limitation, any reasonable costs or expenses associated with
the complete transfer of all servicing data or master servicing data and the
completion, correction or manipulation of such servicing data or master
servicing data as may be required by the Trustee, the Trust Administrator or the
Master Servicer (in connection with a transfer of servicing) or by the Trustee
(in connection with a transfer of master servicing) to correct any errors or
insufficiencies in the servicing data or master servicing data or otherwise to
enable the Master Servicer (or any successor Servicer appointed pursuant to
Section 8.02) to service the Mortgage Loans properly and effectively and any
fees associated with MERS or to enable the Trustee (or any successor Master
Servicer appointed pursuant to Section 8.02) to master service the Mortgage
Loans properly and effectively.

                  "Startup Day": As defined in Section 10.01(b) hereof.

                  "Stated Principal Balance": With respect to any Mortgage Loan:
(a) as of any date of determination up to but not including the Distribution
Date on which the proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan would be distributed, the outstanding principal balance of such
Mortgage Loan as of the Cut-off Date as shown in the Mortgage Loan Schedule,
minus the sum of (i) the principal portion of each Monthly Payment due on a Due
Date subsequent to the Cut-off Date to the extent received from the Mortgagor or
advanced by the Servicer and distributed pursuant to Section 5.01 on or before
such date of determination, (ii) all Principal Prepayments received after the
Cut-off Date to the extent distributed pursuant to Section 5.01 on or before
such date of determination, (iii) all Liquidation Proceeds and Insurance
Proceeds to the extent distributed pursuant to Section 5.01 on or before such
date of determination, and (iv) any Realized Loss incurred with respect thereto
as a result of a Deficient Valuation made during or prior to the Due Period for
the most recent Distribution Date coinciding with or preceding such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such Mortgage Loan would be distributed, zero.
With respect to any REO Property: (a) as of any date of determination up to but
not including the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, an
amount (not less than zero) equal to the Stated Principal Balance of the related
Mortgage Loan as of the date on which such REO Property was acquired on behalf
of the Trust Fund, minus the aggregate amount of REO

                                       42
<PAGE>

Principal Amortization in respect of such REO Property for all previously ended
calendar months, to the extent distributed pursuant to Section 5.01 on or before
such date of determination; and (b) as of any date of determination coinciding
with or subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, zero.

                  "Stepdown Date": The earlier to occur of (i) the Distribution
Date on which the aggregate Certificate Principal Balance of the Class A
Certificates has been reduced to zero and (ii) the later to occur of (x) the
Distribution Date occurring in September 2006 and (y) the first Distribution
Date on which the Credit Enhancement Percentage (calculated for this purpose
only after taking into account payments of principal on the Mortgage Loans and
distribution of the Group I Principal Distribution Amount and the Group II
Principal Distribution Amount to the Certificates then entitled to distributions
of principal on such Distribution Date) is equal to or greater than 36.50%.

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

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

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

                  "Substitution Adjustment": As defined in Section 2.03(d)
hereof.

                  "Tax Matters Person": The tax matters person appointed
pursuant to Section 10.01(e) hereof.

                  "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 the REMIC Taxable Income or Net Loss Allocation, or any successor
forms, to be filed by the Trust Administrator on behalf of each REMIC, together
with any and all other information reports or returns that may be required to be
furnished to the Certificateholders or filed with the Internal Revenue Service
or any other governmental taxing authority under any applicable provisions of
federal, state or local tax laws.

                  "Termination Price":  As defined in Section 11.01(a) hereof.

                  "Terminator":  As defined in Section 11.01(a) hereof.

                  "Trigger Event": A Trigger Event is in effect with respect to
any Distribution Date on or after the Stepdown Date if:

                                       43
<PAGE>

                  (a) the Delinquency Percentage exceeds 40.00% of the Credit
Enhancement Percentage or

                  (b) the aggregate amount of Realized Losses incurred since the
Cut-off Date through the last day of the related Due Period divided by the
aggregate principal balance of the Mortgage Loans as of the Cut-off Date exceeds
the applicable percentages set forth below with respect to such Distribution
Date:

     DISTRIBUTION DATE OCCURRING IN              PERCENTAGE
     ------------------------------              ----------

September 2006 through August 2007                  3.00%
September 2007 through August 2008                  4.75%
September 2008 through August 2009                  6.25%
September 2009 through August 2010                  7.25%
September 2010 and thereafter                       7.75%

                  "Trust": Fremont Home Loan Trust 2003-A, the trust created
hereunder.

                  "Trust Administration Fee": The amount payable to the Trust
Administrator on each Distribution Date pursuant to Section 9.05 as compensation
for all services rendered by it in the execution of the trust hereby created and
in the exercise and performance of any of the powers and duties of the Trust
Administrator hereunder, which amount, with respect to the Mortgage Loans and
for any calendar month, shall be equal to the Trust Administration Fee Rate
accrued for one month on the same principal amount on which interest on each
Mortgage Loan accrues for such calendar month.

                  "Trust Administration Fee Rate": 0.01% per annum.

                  "Trust Administrator": Wells Fargo Bank Minnesota, National
Association, or any successor trust administrator appointed as herein provided.

                  "Trust Fund": All of the assets of the Trust, which is the
trust created hereunder consisting of REMIC 1, REMIC 2, the Cap Contract, the
right to receive any amounts from the Net WAC Rate Carryover Reserve Account and
any Servicer Prepayment Charge Payment Amounts.

                  "Trustee": HSBC Bank USA, a New York banking corporation, or
any successor trustee appointed as herein provided.

                  "Unadjusted Net WAC 30/360 Rate": For any Distribution Date, a
per annum rate equal to the weighted average of the Adjusted Net Mortgage Rates
of the Mortgage Loans for such Distribution Date.

                  "Uncertificated Accrued Interest": With respect to each REMIC
1 Regular Interest on each Distribution Date, an amount equal to one month's
interest at the related Uncertificated

                                       44
<PAGE>

REMIC 1 Pass- Through Rate on the Uncertificated Principal Balance of such REMIC
1 Regular Interest. In each case, Uncertificated Accrued Interest will be
reduced by any Net Prepayment Interest Shortfalls, Relief Act Interest
Shortfalls or other shortfalls allocated to such Certificate as provided in
Section 1.03.

                  "Uncertificated Principal Balance": With respect to each REMIC
1 Regular Interest, the amount of such REMIC 1 Regular Interest outstanding as
of any date of determination. As of the Closing Date, the Uncertificated
Principal Balance of each REMIC 1 Regular Interest shall equal the amount set
forth in the Preliminary Statement hereto as its initial Uncertificated
Principal Balance. On each Distribution Date, the Uncertificated Principal
Balance of each REMIC 1 Regular Interest shall be reduced by all distributions
of principal made on such REMIC 1 Regular Interest on such Distribution Date
pursuant to Section 5.07 and, if and to the extent necessary and appropriate,
shall be further reduced on such Distribution Date by Realized Losses as
provided in Section 5.08, and the Uncertificated Principal Balances of REMIC 1
Regular Interest LTZZ shall be increased by interest deferrals as provided in
Section 5.07.

                  "Uncertificated REMIC 1 Pass-Through Rate": For any
Distribution Date and each REMIC 1 Regular Interest, the Unadjusted Net WAC
30/360 Rate of the Mortgage Loans for such Distribution Date.

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

                  "United States Person" or "U.S. Person": A citizen or resident
of the United States, a corporation, partnership (or other 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, any state
thereof, or the District of Columbia (except in the case of a partnership, to
the extent provided in Treasury regulations) provided that, for purposes solely
of the restrictions on the transfer of Residual Certificates, no partnership or
other entity treated as a partnership for United States federal income tax
purposes shall be treated as a United States Person unless all persons that own
an interest in such partnership either directly or through any entity that is
not a corporation for United States federal income tax purposes are required by
the applicable operative agreement to be United States Persons, or an estate the
income of which 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, 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 United States
persons have authority to control all substantial decisions of the trust. The
term "United States" shall have the meaning set forth in Section 7701 of the
Code or successor provisions.

                  "Unpaid Interest Shortfall Amount": With respect to the Class
A Certificates and the Mezzanine Certificates and (i) the first Distribution
Date, zero, and (ii) any Distribution Date after the first Distribution Date,
the amount, if any, by which (a) the sum of (1) the Monthly Interest
Distributable Amount for such Class for the immediately preceding Distribution
Date and (2) the outstanding Unpaid Interest Shortfall Amount, if any, for such
Class for such preceding Distribution Date exceeds (b) the aggregate amount
distributed on such Class in respect of interest pursuant to

                                       45
<PAGE>

clause (a) of this definition on such preceding Distribution Date, plus interest
on the amount of interest due but not paid on the Certificates of such Class on
such preceding Distribution Date, to the extent permitted by law, at the
Pass-Through Rate for such Class for the related Accrual Period.

                  "Value": With respect to any Mortgaged Property, the lesser of
(i) the lesser of (a) the value thereof as determined by an appraisal made for
the originator of the Mortgage Loan at the time of origination of the Mortgage
Loan by an appraiser who met the minimum requirements of Fannie Mae and Freddie
Mac, and (b) the value thereof as determined by a review appraisal conducted by
the Originator in the event any such review appraisal determines an appraised
value ten percent or more lower than the value thereof as determined by the
appraisal referred to in clause (i)(a) above and (ii) the purchase price paid
for the related Mortgaged Property by the Mortgagor with the proceeds of the
Mortgage Loan, provided, however, in the case of a Refinanced Mortgage Loan,
such value of the Mortgaged Property is based solely upon the lesser of (1) the
value determined by an appraisal made for the Originator of such Refinanced
Mortgage Loan at the time of origination of such Refinanced Mortgage Loan by an
appraiser who met the minimum requirements of Fannie Mae and Freddie Mac and (2)
the value thereof as determined by a review appraisal conducted by the
Originator in the event any such review appraisal determines an appraised value
ten percent or more lower than the value thereof as determined by the appraisal
referred to in clause (ii)(1) above.

                  "Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any Certificate. At all times the Class A
Certificates, the Mezzanine Certificates and the Class C Certificates shall have
98% of the Voting Rights (allocated among the Holders of the Class A
Certificates, the Mezzanine Certificates and the Class C Certificates in
proportion to the then outstanding Certificate Principal Balances of their
respective Certificates), the Class P Certificates shall have 1% of the Voting
Rights and the Residual Certificates shall have 1% of the Voting Rights. The
Voting Rights allocated to any Class of Certificates (other than the Class P
Certificates and the Residual Certificates) shall be allocated among all Holders
of each such Class in proportion to the outstanding Certificate Principal
Balance of such Certificates, and the Voting Rights allocated to the Class P
Certificates and the Residual Certificates shall be allocated among all Holders
of each such Class in proportion to such Holders' respective Percentage
Interest; provided, however that when none of the Regular Certificates are
outstanding, 100% of the Voting Rights shall be allocated among Holders of the
Residual Certificates in accordance with such Holders' respective Percentage
Interests in the Certificates of such Class.

                  SECTION 1.02. Accounting.

                  Unless otherwise specified herein, for the purpose of any
definition or calculation, whenever amounts are required to be netted,
subtracted or added or any distributions are taken into account such definition
or calculation and any related definitions or calculations shall be determined
without duplication of such functions.

                  SECTION 1.03. Allocation of Certain Interest Shortfalls.

                  For purposes of calculating the amount of the Monthly Interest
Distributable Amount for the Class A Certificates, the Mezzanine Certificates
and the Class C Certificates for any

                                       46
<PAGE>

Distribution Date, (1) the aggregate amount of any Net Prepayment Interest
Shortfalls and any Relief Act Interest Shortfalls incurred in respect of the
Mortgage Loans for any Distribution Date shall be allocated first, among the
Class C Certificates on a PRO RATA basis based on, and to the extent of, one
month's interest at the then applicable Pass-Through Rate on the Notional Amount
of each such Certificate and, thereafter, among the Class A Certificates and the
Mezzanine Certificates on a PRO RATA basis based on, and to the extent of, one
month's interest at the then applicable respective Pass-Through Rate on the
respective Certificate Principal Balance of each such Certificate and (2) the
aggregate amount of any Realized Losses and Net WAC Rate Carryover Amounts shall
be allocated among the Class C Certificates on a PRO RATA basis based on, and to
the extent of, one month's interest at the then applicable Pass-Through Rate on
the Notional Amount of each such Certificate.

                  For purposes of calculating the amount of Uncertificated
Accrued Interest for the REMIC 1 Regular Interests for any Distribution Date,
the aggregate amount of any Net Prepayment Interest Shortfalls and any Relief
Act Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first, to Uncertificated Accrued Interest
payable to REMIC 1 Regular Interest LTAA and REMIC 1 Regular Interest LTZZ up to
an aggregate amount equal to the REMIC 1 Interest Loss Allocation Amount, 98%
and 2%, respectively, and thereafter among REMIC 1 Regular Interest LTAA, REMIC
1 Regular Interest LT1A1, REMIC 1 Regular Interest LT2A1, REMIC 1 Regular
Interest LT2A2, REMIC 1 Regular Interest LTM1, REMIC 1 Regular Interest LTM2,
REMIC 1 Regular Interest LTM3, REMIC 1 Regular Interest LTM4, REMIC 1 Regular
Interest LTM5 and REMIC 1 Regular Interest LTZZ PRO RATA based on, and to the
extent of, one month's interest at the then applicable respective Uncertificated
REMIC 1 Pass-Through Rate on the respective Uncertificated Principal Balance of
each such REMIC 1 Regular Interest.

                                       47
<PAGE>

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

                  SECTION 2.01. Conveyance of Mortgage Loans.

                  The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey in trust to
the Trustee without recourse for the benefit of the Certificateholders all the
right, title and interest of the Depositor, including any security interest
therein for the benefit of the Depositor, in and to (i) each Mortgage Loan
identified on the Mortgage Loan Schedule, including the related Cut-off Date
Principal Balance, all interest accruing thereon on and after the Cut-off Date
and all collections in respect of interest and principal due after the Cut-off
Date; (ii) property which secured each such Mortgage Loan and which has been
acquired by foreclosure or deed in lieu of foreclosure; (iii) its interest in
any insurance policies in respect of the Mortgage Loans; (iv) the rights of the
Depositor under the Mortgage Loan Purchase Agreement, (v) the right to receive
any amounts payable under the Cap Contract; (vi) all other assets included or to
be included in the Trust Fund and (vii) all proceeds of any of the foregoing.
Such assignment includes all interest and principal due and collected by the
Depositor or the Servicer after the Cut-off Date with respect to the Mortgage
Loans.

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

                  (i) the original Mortgage Note, endorsed and signed in the
         name of the last endorsee by an authorized officer (which signature may
         be a facsimile) either (A) in blank, in which case the Trustee shall
         cause the endorsement to be completed or (B) in the following form:
         "Pay to the order of HSBC Bank USA, as Trustee, without recourse" or
         with respect to any lost Mortgage Note, an original Lost Note Affidavit
         stating that the original mortgage note was lost, misplaced or
         destroyed, together with a copy of the related mortgage note; provided,
         however, that such substitutions of Lost Note Affidavits for original
         Mortgage Notes may occur only with respect to Mortgage Loans, the
         aggregate Cut-off Date Principal Balance of which is less than or equal
         to 1.00% of the Pool Balance as of the Cut-off Date;

                  (ii) the original Mortgage (noting, if the related Mortgage
         Loan is registered on the MERS(R) System, the presence of the MIN of
         the Mortgage Loan and language indicating that the Mortgage Loan is a
         MOM Loan if the Mortgage Loan is a MOM Loan) with evidence of recording
         thereon, and the original recorded power of attorney, if the Mortgage
         was executed pursuant to a power of attorney, with evidence of
         recording thereon or, if such Mortgage or power of attorney has been
         submitted for recording but has not been returned from the applicable
         public recording office, has been lost or is not otherwise available, a
         copy of such Mortgage or power of attorney, as the case may be,
         certified to be a true and complete copy of the original submitted for
         recording;

                                       48
<PAGE>

                  (iii) unless the Mortgage Loan is registered on the MERS(R)
         System, an original Assignment, in form and substance acceptable for
         recording, assigning the related Mortgage either (A) in blank or (B) to
         "HSBC Bank USA, as Trustee, without recourse";

                  (iv) an original copy of any intervening assignment of
         Mortgage showing a complete chain of assignments to the Trustee (or to
         MERS if the Mortgage Loan is registered on the MERS(R) System and
         noting the presence of MIN);

                  (v) the original or a certified copy of lender's title
         insurance policy; and

                  (vi) the original or copies of each assumption, modification,
         written assurance or substitution agreement, if any.

                  The Depositor herewith also delivers to the Trustee and the
Trust Administrator an executed copy of the Mortgage Loan Purchase Agreement.

                  Except with respect to any Mortgage Loan for which MERS is
identified on the Mortgage, if any of the documents referred to in Section
2.01(ii), (iii) or (iv) above has as of the Closing Date been submitted for
recording but either (x) has not been returned from the applicable public
recording office or (y) has been lost or such public recording office has
retained the original of such document, the obligations of the Depositor to
deliver such documents shall be deemed to be satisfied upon (1) delivery to the
Trustee or the Custodian no later than the Closing Date, of a copy of each such
document certified by the Originator in the case of (x) above or the applicable
public recording office in the case of (y) above to be a true and complete copy
of the original that was submitted for recording and (2) if such copy is
certified by the Originator, delivery to the Trustee or the Custodian, promptly
upon receipt thereof of either the original or a copy of such document certified
by the applicable public recording office to be a true and complete copy of the
original. If the original lender's title insurance policy, or a certified copy
thereof, was not delivered pursuant to Section 2.01(v) above, the Depositor
shall deliver or cause to be delivered to the Trustee or the Custodian, the
original or a copy of a written commitment or interim binder or preliminary
report of title issued by the title insurance or escrow company, with the
original or a certified copy thereof to be delivered to the Trustee or the
Custodian, promptly upon receipt thereof. The Servicer or the Depositor shall
deliver or cause to be delivered to the Trustee or the Custodian promptly upon
receipt thereof any other documents constituting a part of a Mortgage File
received with respect to any Mortgage Loan, including, but not limited to, any
original documents evidencing an assumption or modification of any Mortgage
Loan.

                  Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File, the
Trustee shall notify (or shall cause a Custodian on its behalf to notify) the
Trust Administrator and the Servicer, and the Servicer (or, to the extent
provided in Section 3.02, the Trustee) shall enforce the obligations of the
Originator under the Mortgage Loan Purchase Agreement to cure such defect or
deliver such missing document to the Trustee or the Custodian within 90 days. If
the Originator does not cure such defect or deliver such missing document within
such time period, the Servicer (or, to the extent provided in Section 3.02, the
Trustee) shall enforce the obligations of the Originator to either repurchase or
substitute for such Mortgage Loan in accordance with Section 2.03. In connection
with the foregoing, it is understood

                                       49
<PAGE>

that the Trustee or a Custodian acting on its behalf shall have no duty to
discover any such defects except in the course of performing its review of the
Mortgage Files to the extent set forth herein.

                  The Trustee shall enforce the obligations of the Originator
under the Mortgage Loan Purchase Agreement to cause the Assignments which were
delivered in blank to be completed and to record all Assignments referred to in
Section 2.01(iii) hereof and, to the extent necessary, in Section 2.01(iv)
hereof. The Trustee shall enforce the obligations of the Originator under the
Mortgage Loan Purchase Agreement to deliver such assignments for recording
within 180 days of the Closing Date. In the event that any such Assignment is
lost or returned unrecorded because of a defect therein, the Trustee shall
enforce the obligations of the Originator under the Mortgage Loan Purchase
Agreement to promptly have a substitute Assignment prepared or have such defect
cured, as the case may be, and thereafter cause each such Assignment to be duly
recorded.

                  Notwithstanding the foregoing, the Assignments of Mortgage
shall not be required to be submitted for recording with respect to any Mortgage
Loan in any jurisdiction where the Rating Agencies do not require recordation in
order to receive the ratings on the Certificates at the time of their initial
issuance (the jurisdictions where the Rating Agencies do require recordation in
order to receive the ratings on the Certificates at the time of their initial
issuance being Maryland and Florida); provided, however, each Assignment, except
with respect to any Mortgage Loan for which MERS is identified on the Mortgage,
shall be submitted for recording in the manner described above, at no expense to
the Trust Fund, the Trustee or the Trust Administrator, upon the earliest to
occur of: (i) reasonable direction by the Holders of Certificates entitled to at
least 25% of the Voting Rights, (ii) the occurrence of a Servicer Event of
Termination, (iii) the occurrence of a bankruptcy, insolvency or foreclosure
relating to the Originator, (iv) the occurrence of a servicing transfer as
described in Section 8.02 hereof, (v) with respect to any particular Mortgage
Loan, upon the occurrence of a bankruptcy, insolvency or foreclosure relating to
the Mortgagor under the related Mortgage and (vi) with respect to any particular
Mortgage Loan, upon such Mortgage Loan becoming 90 days or more Delinquent. In
the event of (i) through (vi) set forth in the immediately preceding sentence,
the Trustee shall enforce the obligations of the Originator to deliver such
Assignments for recording as provided above, promptly and in any event within 30
days following receipt of notice by the Originator. Notwithstanding the
foregoing, if the Originator fails to pay the cost of recording the Assignments,
such expense will be paid by the Trustee and the Trustee shall be reimbursed for
such expenses by the Trust. In the event any such Assignment is not recorded
when required, a successor to the Originator acting as Servicer will not have
any liability for its failure to act on notices that were not received and would
have been had such Assignment been recorded, except with respect to Mortgage
Loans that are subject to provisions (i) through (vi) set forth in this
paragraph, if such successor Servicer shall have failed to timely request the
Originator to cause such Assignments to be recorded.

                  In the event that any Mortgage Note is endorsed in blank as of
the Closing Date, promptly following the Closing Date, the Trust Administrator
shall cause (at the Originator's expense) to be completed such endorsements "Pay
to the order of HSBC Bank USA, as Trustee, without recourse."

                  The Servicer shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in

                                       50
<PAGE>

accordance with this Agreement within two weeks of their execution; provided,
however, that the Servicer shall provide the Custodian with a certified true
copy of any such document submitted for recordation within two weeks of its
execution, and shall provide the original of any document submitted for
recordation or a copy of such document certified by the appropriate public
recording office to be a true and complete copy of the original within 365 days
of its submission for recordation. In the event that the Servicer cannot provide
a copy of such document certified by the public recording office within such 365
day period, the Servicer shall deliver to the Custodian, within such 365 day
period, an Officers' Certificate of the Servicer which shall (A) identify the
recorded document, (B) state that the recorded document has not been delivered
to the Custodian due solely to a delay caused by the public recording office,
(C) state the amount of time generally required by the applicable recording
office to record and return a document submitted for recordation, if known and
(D) specify the date the applicable recorded document is expected to be
delivered to the Custodian, and, upon receipt of a copy of such document
certified by the public recording office, the Servicer shall immediately deliver
such document to the Custodian. In the event the appropriate public recording
office will not certify as to the accuracy of such document, the Servicer shall
deliver a copy of such document certified by an officer of the Servicer to be a
true and complete copy of the original to the Custodian.

                  SECTION 2.02. Acceptance by Trustee.

                  Subject to the provisions of Section 2.01 and subject to the
review described below and any exceptions noted on the exception report
described in the next paragraph below, the Trustee acknowledges receipt of the
documents referred to in Section 2.01 above and all other assets included in the
definition of "Trust Fund" and declares that it holds and will hold such
documents and the other documents delivered to it constituting a Mortgage File,
and that it holds or will hold all such assets and such other assets included in
the definition of "Trust Fund" in trust for the exclusive use and benefit of all
present and future Certificateholders.

                  The Trustee agrees to execute and deliver (or cause the
Custodian to execute and deliver) to the Depositor and the Servicer on or prior
to the Closing Date an acknowledgment of receipt of the related original
Mortgage Note for each Mortgage Loan (with any exceptions noted), substantially
in the form attached as Exhibit F-3 hereto.

                  The Trustee agrees, for the benefit of the Certificateholders,
to review, or that it has reviewed pursuant to Section 2.01 (or to cause the
Custodian to review or that it has caused the Custodian to have reviewed) each
Mortgage File on or prior to the Closing Date, with respect to each Original
Mortgage Loan (or, with respect to any document delivered after the Startup Day,
within 45 days of receipt and with respect to any Qualified Substitute Mortgage,
within 45 days after the assignment thereof). The Trustee further agrees, for
the benefit of the Certificateholders, to certify (cause the Custodian to
certify) to the Depositor and the Servicer in substantially the form attached
hereto as Exhibit F-1, within 45 days after the Closing Date, with respect to
each Original Mortgage Loan (or, with respect to any document delivered after
the Startup Day, within 45 days of receipt and with respect to any Qualified
Substitute Mortgage, within 45 days after the assignment thereof) that, as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or any Mortgage Loan specifically identified in the exception
report annexed thereto as not being covered by such certification), (i) all
documents required to be delivered to it pursuant to

                                       51
<PAGE>

Section 2.01 of this Agreement are in its possession, (ii) such documents have
been reviewed by it and have not been mutilated, damaged or torn and appear on
their face to relate to such Mortgage Loan and (iii) based on its examination
and only as to the foregoing, the information set forth in the Mortgage Loan
Schedule that corresponds to items (1) and (2) of the Mortgage Loan Schedule
accurately reflects information set forth in the Mortgage File. It is herein
acknowledged that, in conducting such review, the Trustee (or the Custodian, as
applicable) is under no duty or obligation to inspect, review or examine any
such documents, instruments, certificates or other papers to determine that they
are genuine, legally enforceable, valid or binding or appropriate for the
represented purpose or that they have actually been recorded or that they are
other than what they purport to be on their face.

                  Prior to the first anniversary date of this Agreement the
Trustee shall deliver (or cause the Custodian to deliver) to the Depositor, the
Servicer and the Trust Administrator a final certification in the form annexed
hereto as Exhibit F-2, with any applicable exceptions noted thereon.

                  If in the process of reviewing the Mortgage Files and making
or preparing, as the case may be, the certifications referred to above, the
Trustee (or the Custodian, as applicable) finds any document or documents
constituting a part of a Mortgage File to be missing or not to conform with
respect to any characteristics which are within the scope of the Trustee's (or
the Custodian's, as applicable) review as provided herein, at the conclusion of
its review, the Trustee shall so notify (cause the Custodian to notify) the
Depositor, the Originator, the Servicer and the Trust Administrator. In
addition, upon the discovery by the Depositor or the Servicer (or upon receipt
by the Trustee of written notification of such breach) of a breach of any of the
representations and warranties made by the Originator in the Mortgage Loan
Purchase Agreement in respect of any Mortgage Loan which materially adversely
affects such Mortgage Loan or the interests of the related Certificateholders in
such Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other parties to this Agreement.

                  The Depositor and the Trustee intend that the assignment and
transfer herein contemplated constitute a sale of the Mortgage Loans, the
related Mortgage Notes and the related documents, conveying good title thereto
free and clear of any liens and encumbrances, from the Depositor to the Trustee
in trust for the benefit of the Certificateholders and that such property not be
part of the Depositor's estate or property of the Depositor in the event of any
insolvency by the Depositor. In the event that such conveyance is deemed to be,
or to be made as security for, a loan, the parties intend that the Depositor
shall be deemed to have granted and does hereby grant to the Trustee a first
priority perfected security interest in all of the Depositor's right, title and
interest in and to the Mortgage Loans, the related Mortgage Notes and the
related documents, and that this Agreement shall constitute a security agreement
under applicable law.

                  SECTION 2.03. Repurchase or Substitution of Mortgage Loans by
the Originator.

                  (a) Upon discovery or receipt of written notice of any
materially defective document in, or that a document is missing from, a Mortgage
File or of the breach by the Originator of any representation, warranty or
covenant under the Mortgage Loan Purchase Agreement in respect

                                       52
<PAGE>

of any Mortgage Loan which materially adversely affects the value of such
Mortgage Loan or the interest therein of the Certificateholders, the Trustee
shall promptly notify (cause the Custodian to notify) the Servicer of such
defect, missing document or breach and the Servicer shall request that the
Originator deliver such missing document or that the Originator cure such defect
or breach within 90 days from the date the Originator was notified of such
missing document, defect or breach, and if the Originator does not deliver such
missing document or if the Originator does not cure such defect or breach in all
material respects during such period, the Servicer (or, to the extent provided
in Section 3.02, the Trustee) shall enforce the Originator's obligation under
the Mortgage Loan Purchase Agreement and cause the Originator to repurchase such
Mortgage Loan from the Trust Fund at the Purchase Price on or prior to the
Determination Date following the expiration of such 90 day period (subject to
Section 2.03(e)). The Purchase Price for the repurchased Mortgage Loan shall be
remitted to the Servicer for deposit in the Collection Account, and the Trustee,
upon receipt of written certification from the Servicer of such deposit, shall
release or cause the Custodian to release to the Originator the related Mortgage
File and the Trustee shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as the Originator shall furnish to it
and as shall be necessary to vest in the Originator any Mortgage Loan released
pursuant hereto and neither the Trustee nor the Trust Administrator shall have
any further responsibility with regard to such Mortgage File (it being
understood that neither the Trustee nor the Trust Administrator shall have any
responsibility for determining the sufficiency of such assignment for its
intended purpose). In lieu of repurchasing any such Mortgage Loan as provided
above, the Originator may cause such Mortgage Loan to be removed from the Trust
Fund (in which case it shall become a Deleted Mortgage Loan) and substitute one
or more Qualified Substitute Mortgage Loans in the manner and subject to the
limitations set forth in Section 2.03(d). In furtherance of the foregoing, if
the Originator is not a member of MERS and repurchases a Mortgage Loan which is
registered on the MERS(R) System, the Originator at its own expense and without
any right of reimbursement, shall cause MERS to execute and deliver an
assignment of the Mortgage in recordable form to transfer the Mortgage from MERS
to the Originator and shall cause such Mortgage to be removed from registration
on the MERS(R) System in accordance with MERS' rules and regulations. It is
understood and agreed that the obligation of the Originator to cure or to
repurchase (or to substitute for) any Mortgage Loan as to which a document is
missing, a material defect in a constituent document exists or as to which such
a breach has occurred and is continuing shall constitute the sole remedy against
the Originator respecting such omission, defect or breach available to the
Trustee on behalf of the Certificateholders.

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

                  (c) Within 90 days of the earlier of discovery by the Servicer
or receipt of notice by the Servicer of the breach of any representation,
warranty or covenant of the Servicer set forth in Section 2.05 which materially
and adversely affects the interests of the Certificateholders in any Mortgage
Loan, the Servicer shall cure such breach in all material respects.

                  (d) Any substitution of Qualified Substitute Mortgage Loans
for Deleted Mortgage Loans made pursuant to Section 2.03(a) must be effected
prior to the last Business Day

                                       53
<PAGE>

that is within two years after the Closing Date. As to any Deleted Mortgage Loan
for which the Originator substitutes a Qualified Substitute Mortgage Loan or
Loans, such substitution shall be effected by the Originator delivering to the
Trustee, for such Qualified Substitute Mortgage Loan or Loans, the Mortgage
Note, the Mortgage and the Assignment to the Trustee, and such other documents
and agreements, with all necessary endorsements thereon, as are required by
Section 2.01, together with an Officers' Certificate providing that each such
Qualified Substitute Mortgage Loan satisfies the definition thereof and
specifying the Substitution Adjustment (as described below), if any, in
connection with such substitution. The Trustee shall acknowledge receipt for
such Qualified Substitute Mortgage Loan or Loans and, within 45 days thereafter,
shall review or cause the Custodian to review such documents as specified in
Section 2.02 and deliver or cause the Custodian to deliver to the Servicer, the
Master Servicer and the Trust Administrator, with respect to such Qualified
Substitute Mortgage Loan or Loans, a certification substantially in the form
attached hereto as Exhibit F-1, with any applicable exceptions noted thereon.
Within one year of the date of substitution, the Trustee shall deliver or cause
the Custodian to deliver to the Servicer, the Master Servicer and the Trust
Administrator a certification substantially in the form of Exhibit F-2 hereto
with respect to such Qualified Substitute Mortgage Loan or Loans, with any
applicable exceptions noted thereon. Monthly Payments due with respect to
Qualified Substitute Mortgage Loans in the month of substitution are not part of
the Trust Fund and will be retained by the Originator. For the month of
substitution, distributions to Certificateholders will reflect the collections
and recoveries in respect of such Deleted Mortgage Loan in the Due Period
preceding the month of substitution and the Originator shall thereafter be
entitled to retain all amounts subsequently received in respect of such Deleted
Mortgage Loan. The Servicer shall give or cause to be given written notice to
the Trustee, the Master Servicer and the Trust Administrator that such
substitution has taken place, shall amend the Mortgage Loan Schedule to reflect
the removal of such Deleted Mortgage Loan from the terms of this Agreement and
the substitution of the Qualified Substitute Mortgage Loan or Loans and shall
deliver a copy of such amended Mortgage Loan Schedule to the Trustee, the Master
Servicer and the Trust Administrator. Upon such substitution by the Originator,
such Qualified Substitute Mortgage Loan or Loans shall constitute part of the
Mortgage Pool and shall be subject in all respects to the terms of this
Agreement and the Mortgage Loan Purchase Agreement, including all applicable
representations and warranties thereof included in the Mortgage Loan Purchase
Agreement as of the date of substitution.

                  For any month in which the Originator substitutes one or more
Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
Servicer will determine the amount (the "Substitution Adjustment"), if any, by
which the aggregate Purchase Price of all such Deleted Mortgage Loans exceeds
the aggregate, as to each such Qualified Substitute Mortgage Loan, of the
principal balance thereof as of the date of substitution, together with one
month's interest on such principal balance at the applicable Mortgage Rate. On
the date of such substitution, the Originator will deliver or cause to be
delivered to the Servicer for deposit in the Collection Account an amount equal
to the Substitution Adjustment, if any, and the Trustee, upon receipt by it or
by the Custodian on its behalf of the related Qualified Substitute Mortgage Loan
or Loans and receipt by it of certification by the Servicer of such deposit and
a Request for Release, shall release or cause the Custodian to release to the
Originator the related Mortgage File or Files and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as the
Originator shall deliver to it and as shall be necessary to vest therein any
Deleted Mortgage Loan released pursuant hereto.

                                       54
<PAGE>

                  In addition, the Originator shall obtain at its own expense
and deliver to the Trustee and the Trust Administrator an Opinion of Counsel to
the effect that such substitution will not cause (a) any federal tax to be
imposed on the Trust Fund, including without limitation, any federal tax imposed
on "prohibited transactions" under Section 860F(a)(I) of the Code or on
"contributions after the startup date" under Section 860G(d)(I) of the Code or
(b) any REMIC to fail to qualify as a REMIC at any time that any Certificate is
outstanding. If such Opinion of Counsel can not be delivered, then such
substitution may only be effected at such time as the required Opinion of
Counsel can be given.

                  (e) Upon discovery by the Depositor, the Servicer, the Master
Servicer, the Trustee or the Trust Administrator that any Mortgage Loan does not
constitute a "qualified mortgage" within the meaning of Section 860G(a)(3) of
the Code, the party discovering such fact shall within two Business Days give
written notice thereof to the other parties hereto. In connection therewith, the
Originator or the Depositor, as the case may be, shall repurchase or, subject to
the limitations set forth in Section 2.03(d), substitute one or more Qualified
Substitute Mortgage Loans for the affected Mortgage Loan within 90 days of the
earlier of discovery or receipt of such notice with respect to such affected
Mortgage Loan. Such repurchase or substitution shall be made (i) by the
Originator if the affected Mortgage Loan's status as a non-qualified mortgage is
or results from a breach of any representation, warranty or covenant made by the
Originator under the Mortgage Loan Purchase Agreement or (ii) the Depositor, if
the affected Mortgage Loan's status as a non-qualified mortgage is a breach of
any representation or warranty of the Depositor set forth in Section 2.06, or if
its status as a non-qualified mortgage is a breach of no representation or
warranty. Any such repurchase or substitution shall be made in the same manner
as set forth in Section 2.03(a) or 2.03(d). The Trustee shall reconvey to the
Depositor or the Originator, as the case may be, the Mortgage Loan to be
released pursuant hereto in the same manner, and on the same terms and
conditions, as it would a Mortgage Loan repurchased by the Originator for breach
of a representation or warranty.

                  SECTION 2.04. Representations and Warranties of the Master
                                Servicer.

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

                  (i) The Master Servicer is a national banking association duly
formed, validly existing and in good standing under the laws of the United
States of America and is duly authorized and qualified to transact any and all
business contemplated by this Agreement to be conducted by the Master Servicer;

                  (ii) The Master Servicer has the full power and authority to
conduct its business as presently conducted by it and to execute, deliver and
perform, and to enter into and consummate, all transactions contemplated by this
Agreement. The Master Servicer has duly authorized the execution, delivery and
performance of this Agreement, has duly executed and delivered this Agreement,
and this Agreement, assuming due authorization, execution and delivery by the
Depositor and the Trustee, constitutes a legal, valid and binding obligation of
the Master Servicer, enforceable against it in accordance with its terms except
as the enforceability thereof may be limited

                                       55
<PAGE>

by bankruptcy, insolvency, reorganization or similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity;

                  (iii) The execution and delivery of this Agreement by the
Master Servicer, the consummation by the Master Servicer of any other of the
transactions herein contemplated, and the fulfillment of or compliance with the
terms hereof are in the ordinary course of business of the Master Servicer and
will not (A) result in a breach of any term or provision of charter and by-laws
of the Master Servicer or (B) conflict with, result in a breach, violation or
acceleration of, or result in a default under, the terms of any other material
agreement or instrument to which the Master Servicer is a party or by which it
may be bound, or any statute, order or regulation applicable to the Master
Servicer of any court, regulatory body, administrative agency or governmental
body having jurisdiction over the Master Servicer; and the Master Servicer is
not a party to, bound by, or in breach or violation of any indenture or other
agreement or instrument, or subject to or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or governmental
body having jurisdiction over it, which materially and adversely affects or, to
the Master Servicer's knowledge, would in the future materially and adversely
affect, the ability of the Master Servicer to perform its obligations under this
Agreement;

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

                  (v) No litigation is pending against the Master Servicer that
would materially and adversely affect the execution, delivery or enforceability
of this Agreement or the ability of the Master Servicer to perform any of its
other obligations hereunder in accordance with the terms hereof,

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

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

                  It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.04 shall survive the
resignation or termination of the parties hereto and the termination of this
Agreement and shall inure to the benefit of the Trustee, the Servicer, the
Depositor and the Certificateholders.

                  SECTION 2.05. Representations, Warranties and Covenants of the
                                Servicer.

                                       56
<PAGE>

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

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

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

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

                  (iv) The Servicer is a HUD approved mortgagee pursuant to
         Section 203 and Section 211 of the National Housing Act. No event has
         occurred, including but not limited

                                       57
<PAGE>

         to a change in insurance coverage, that would make the Servicer unable
         to comply with HUD eligibility requirements or that would require
         notification to HUD;

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

                  (vi) No litigation is pending against the Servicer that would
         materially and adversely affect the execution, delivery or
         enforceability of this Agreement or the ability of the Servicer to
         service the Mortgage Loans or to perform any of its other obligations
         hereunder in accordance with the terms hereof;

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

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

                  (ix) [reserved];

                  (x) Neither this Agreement nor any information, certificate of
         an officer, statement furnished in writing or report delivered to the
         Trustee or the Trust Administrator by the Servicer in connection with
         the transactions contemplated hereby contains or will contain any
         untrue statement of a material fact;

                  (xi) The Servicer will not waive any Prepayment Charge unless
         it is waived in accordance with the standard set forth in Section 3.01;
         and

                  (xii) With respect to each of the Mortgage Loans, the Servicer
         has fully furnished in accordance with the Fair Credit Reporting Act
         and its implementing regulations, accurate and complete information
         (e.g., favorable and unfavorable) on its borrower credit files to
         Equifax, Experian and Trans Union Credit Information Company or their
         successors (the "Credit Repositories") in a timely manner, and in
         connection therewith, in the case of each Group I Mortgage Loan, the
         Servicer has transmitted full-file credit reporting data for each such
         Mortgage Loan pursuant to Fannie Mae Guide Announcement 95-19.

                  It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.05 shall survive delivery
of the Mortgage Files to the Trustee and shall inure to the benefit of the
Trustee, the Trust Administrator, the Depositor, the Master Servicer and the
Certificateholders. Upon discovery by any of the Depositor, the Servicer, the
Trustee or the Trust

                                       58
<PAGE>

Administrator of a breach of any of the foregoing representations, warranties
and covenants which materially and adversely affects the value of any Mortgage
Loan, Prepayment Charge or the interests therein of the Certificateholders, the
party discovering such breach shall give prompt written notice (but in no event
later than two Business Days following such discovery) to the Servicer, the
Trustee and the Trust Administrator. Notwithstanding the foregoing, within 90
days of the earlier of discovery by the Servicer or receipt of notice by the
Servicer of the breach of the representation or covenant of the Servicer set
forth in Section 2.05(xi) above which materially and adversely affects the
interests of the Holders of the Class P Certificates in any Prepayment Charge,
the Servicer must pay the amount of such waived Prepayment Charge, for the
benefit of the holders of the Class P Certificates, by depositing such amount
into the Collection Account. The foregoing shall not, however, limit any
remedies available to the Certificateholders, the Depositor or the Trustee or
the Trust Administrator on behalf of the Certificateholders, pursuant to the
Mortgage Loan Purchase Agreement respecting a breach of the representations,
warranties and covenants of the Originator made in its capacity as a party to
the Mortgage Loan Purchase Agreement.

                  SECTION 2.06. Representations and Warranties of the Depositor.

                  The Depositor represents and warrants to the Trust, the
Trustee and the Trust Administrator on behalf of the Certificateholders as
follows:

                  (i) This agreement constitutes a legal, valid and binding
         obligation of the Depositor, enforceable against the Depositor in
         accordance with its terms, except as enforceability may be limited by
         applicable bankruptcy, insolvency, reorganization, moratorium or other
         similar laws now or hereafter in effect affecting the enforcement of
         creditors' rights in general and except as such enforceability may be
         limited by general principles of equity (whether considered in a
         proceeding at law or in equity);

                   (ii) Immediately prior to the sale and assignment by the
         Depositor to the Trustee on behalf of the Trust of each Mortgage Loan,
         the Depositor had good and marketable title to each Mortgage Loan
         (insofar as such title was conveyed to it by the Originator) subject to
         no prior lien, claim, participation interest, mortgage, security
         interest, pledge, charge or other encumbrance or other interest of any
         nature;

                  (iii) As of the Closing Date, the Depositor has transferred
         all right, title and interest in the Mortgage Loans to the Trustee on
         behalf of the Trust;

                  (iv) The Depositor has not transferred the Mortgage Loans to
         the Trustee on behalf of the Trust with any intent to hinder, delay or
         defraud any of its creditors;

                  (v) The Depositor has been duly incorporated and is validly
         existing as a corporation in good standing under the laws of Delaware,
         with full corporate power and authority to own its assets and conduct
         its business as presently being conducted;

                  (vi) The Depositor is not in violation of its articles of
         incorporation or by-laws or in default in the performance or observance
         of any material obligation, agreement, covenant or condition contained
         in any contract, indenture, mortgage, loan agreement, note, lease or

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<PAGE>

         other instrument to which the Depositor is a party or by which it or
         its properties may be bound, which default might result in any material
         adverse changes in the financial condition, earnings, affairs or
         business of the Depositor or which might materially and adversely
         affect the properties or assets, taken as a whole, of the Depositor;

                  (vii) The execution, delivery and performance of this
         Agreement by the Depositor, and the consummation of the transactions
         contemplated thereby, do not and will not result in a material breach
         or violation of any of the terms or provisions of, or, to the knowledge
         of the Depositor, constitute a default under, any indenture, mortgage,
         deed of trust, loan agreement or other agreement or instrument to which
         the Depositor is a party or by which the Depositor is bound or to which
         any of the property or assets of the Depositor is subject, nor will
         such actions result in any violation of the provisions of the articles
         of incorporation or by-laws of the Depositor or, to the best of the
         Depositor's knowledge without independent investigation, any statute or
         any order, rule or regulation of any court or governmental agency or
         body having jurisdiction over the Depositor or any of its properties or
         assets (except for such conflicts, breaches, violations and defaults as
         would not have a material adverse effect on the ability of the
         Depositor to perform its obligations under this Agreement);

                  (viii) To the best of the Depositor's knowledge without any
         independent investigation, no consent, approval, authorization, order,
         registration or qualification of or with any court or governmental
         agency or body of the United States or any other jurisdiction is
         required for the issuance of the Certificates, or the consummation by
         the Depositor of the other transactions contemplated by this Agreement,
         except such consents, approvals, authorizations, registrations or
         qualifications as (a) may be required under State securities or Blue
         Sky laws, (b) have been previously obtained or (c) the failure of which
         to obtain would not have a material adverse effect on the performance
         by the Depositor of its obligations under, or the validity or
         enforceability of, this Agreement; and

                  (ix) There are no actions, proceedings or investigations
         pending before or, to the Depositor's knowledge, threatened by any
         court, administrative agency or other tribunal to which
         the Depositor is a party or of which any of its properties is the
         subject: (a) which if determined adversely to the Depositor would have
         a material adverse effect on the business, results of operations or
         financial condition of the Depositor; (b) asserting the invalidity of
         this Agreement or the Certificates; (c) seeking to prevent the issuance
         of the Certificates or the consummation by the Depositor of any of the
         transactions contemplated by this Agreement, as the case may be; or (d)
         which might materially and adversely affect the performance by the
         Depositor of its obligations under, or the validity or enforceability
         of, this Agreement.

                  SECTION 2.07. Issuance of Certificates.

                  The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to it of the Mortgage Files, subject to the provisions of
Sections 2.01 and 2.02, together with the assignment to it of all other assets
included in the Trust Fund, receipt of which is hereby acknowledged.
Concurrently with such assignment and delivery and in exchange therefor, the
Trust Administrator, pursuant to the written request of the Depositor executed
by an officer of the

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<PAGE>

Depositor, has executed, authenticated and delivered to or upon the order of the
Depositor, the Certificates in authorized denominations. The interests evidenced
by the Certificates constitute the entire beneficial ownership interest in the
Trust Fund.

                  SECTION 2.08. [Reserved].

                  SECTION 2.09. Acceptance of REMIC 1 and REMIC 2 by the
                                Trustee; Conveyance of REMIC 1 Regular
                                Interests; Issuance of Certificates.

                  (a) The Depositor, concurrently with the execution and
delivery hereof, does hereby transfer, assign, set over and otherwise convey in
trust to the Trustee without recourse all the right, title and interest of the
Depositor in and to the assets described in the definition of REMIC 1 for the
benefit of the holders of the REMIC 1 Regular Interests (which are
uncertificated) and the Class R Certificates (in respect of the Class R-1
Interest). The Trustee acknowledges receipt of the REMIC 1 Regular Interests
(which are uncertificated) and declares that it holds and will hold the same in
trust for the exclusive use and benefit of the holders of the REMIC 1 Regular
Interests and the Class R Certificates (in respect of the Class R-1 Interest).
The interests evidenced by the Class R-1 Interest, together with the REMIC 1
Regular Interests, constitute the entire beneficial ownership interest in REMIC
1.

                  (b) The Depositor concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey in trust to
the Trustee without recourse all the right, title and interest of the Depositor
in and to the REMIC 1 Regular Interests (which are uncertificated) for the
benefit of the Holders of the Regular Certificates and the Class R Certificates
(in respect of the Class R-2 Interest). The interests evidenced by the Class R-2
Interest, together with the Regular Certificates constitute the entire
beneficial ownership interest in REMIC 2.

                  (c) In exchange for the REMIC 1 Regular Interests and,
concurrently with the assignment to the Trustee thereof, pursuant to the written
request of the Depositor executed by an officer of the Depositor, the Trust
Administrator has executed, authenticated and delivered to or upon the order of
the Depositor, the Regular Certificates in authorized denominations, which
Certificates, together with the Class R Certificates (in respect of the Class
R-2 Interest), evidence the entire beneficial ownership interest in REMIC 2.

                  (d) Concurrently with (i) the assignment and delivery to the
Trustee of REMIC 1 (including the Residual Interest therein represented by the
Class R-1 Interest) and the acceptance by the Trustee thereof, pursuant to
Section 2.01, Section 2.02 and Section 2.09(a) and (ii) the assignment and
delivery to the Trustee of REMIC 2 (including the Residual Interest therein
represented by the Class R-2 Interest) and the acceptance by the Trustee
thereof, pursuant to Section 2.09(b), the Trust Administrator, pursuant to the
written request of the Depositor executed by an officer of the Depositor, has
executed, authenticated and delivered to or upon the order of the Depositor, the
Class R Certificates (evidencing the Class R-1 Interest and the Class R-2
Interest) in authorized denominations.

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<PAGE>

                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                              OF THE MORTGAGE LOANS

                  SECTION 3.01. Servicer to Act as Servicer.

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

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

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

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

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

                  To the extent consistent with the foregoing, the Servicer (a)
shall seek the timely and complete recovery of principal and interest on the
Mortgage Notes and (b) shall waive (or permit a Sub- Servicer to waive) a
Prepayment Charge only under the following circumstances: (i) such waiver is
standard and customary in servicing similar Mortgage Loans and (ii) either (A)
such waiver relates to a default or a reasonably foreseeable default and would,
in the reasonable judgment of the Servicer, maximize recovery of total proceeds
taking into account the value of such Prepayment Charge and the related Mortgage
Loan or (B) the collection of such Prepayment Charge is prohibited by applicable
law. If a Prepayment Charge is waived other than as permitted by meeting the
standards described in clauses (i) and (ii) above, then as a remedy for the
breach of such covenant, the Servicer shall pay the amount of such waived
Prepayment Charge, for the benefit of the Holders of the Class P Certificates,
by depositing such amount into the Collection Account together with and at the
time that the amount prepaid on the related Mortgage Loan is required to be
deposited into the Collection Account. Notwithstanding any of the foregoing, and
notwithstanding any state or federal law or provision of this Agreement
permitting otherwise, the Servicer shall not require the payment of any
Prepayment Charge in any instance in which the mortgage debt is accelerated as
the result of the borrower's default in making required payments on such
Mortgage Loan, and no Servicer Prepayment Charge Payment Amount shall be payable
in connection with any noncollection of any Prepayment Charge in any such
instance. Notwithstanding any other provisions of this Agreement, any payments
made by the Servicer in respect of any Prepayment Charges waived other than as
permitted hereunder shall be deemed to be paid outside of any REMIC.

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<PAGE>

                  Subject only to the above-described servicing standards and
the terms of this Agreement and of the Mortgage Loans, the Servicer shall have
full power and authority, acting alone or through Sub- Servicers as provided in
Section 3.02, to do or cause to be done any and all things in connection with
such servicing and administration which it may deem necessary or desirable.
Without limiting the generality of the foregoing, the Servicer in its own name
or in the name of a Sub-Servicer is hereby authorized and empowered by the
Trustee when the Servicer believes it appropriate in its best judgment in
accordance with the servicing standards set forth above, to execute and deliver,
on behalf of the Certificateholders and the Trustee, and upon notice to the
Trustee, any and all instruments of satisfaction or cancellation, or of partial
or full release or discharge, and all other comparable instruments, with respect
to the Mortgage Loans and the Mortgaged Properties and to institute foreclosure
proceedings or obtain a deed-in-lieu of foreclosure so as to convert the
ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Trustee and Certificateholders. The Servicer shall
service and administer the Mortgage Loans in accordance with applicable state
and federal law and shall provide to the Mortgagors any reports required to be
provided to them thereby. The Servicer shall also comply in the performance of
this Agreement with all reasonable rules and requirements of each insurer under
any standard hazard insurance policy. Subject to Section 3.17, within 15 days of
the Closing Date, the Trustee shall execute, at the written request of the
Servicer, and furnish to the Servicer and any Sub-Servicer a limited power of
attorney in the form of Exhibit I, executed by each payee or last endorsee, as
applicable, of each of the Mortgage Notes and each mortgagee or last assignee,
as applicable, of each of the Mortgages and other documents necessary or
appropriate to enable the Servicer or any Sub-Servicer to carry out their
servicing and administrative duties hereunder; provided, such limited powers of
attorney or other documents shall be prepared by the Servicer and submitted to
the Trustee for execution. The Trustee shall not be liable for the actions of
the Servicer or any Sub-Servicers under such powers of attorney.

                  The Servicer further is authorized and empowered by the
Trustee, on behalf of the Certificateholders and the Trustee, in its own name,
when the Servicer believes it is appropriate in its best judgment to register
any Mortgage Loan on the MERS(R) System, or cause the removal from the
registration of any Mortgage Loan on the MERS(R) System, to execute and deliver,
on behalf of the Trustee and the Certificateholders or any of them, any and all
instruments of assignment and other comparable instruments with respect to such
assignment or re-recording of a Mortgage in the name of MERS, solely as nominee
for the Trustee and its successors and assigns. Any reasonable expenses incurred
in connection with the actions described in the preceding sentence or as a
result of MERS discontinuing or becoming unable to continue operations in
connection with the MERS(R) System, shall be subject to withdrawal by the
Servicer from the Collection Account.

                  Subject to Section 3.09 hereof, in accordance with the
standards of this Section 3.01, the Servicer, on escrowed accounts, 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 Servicing Advances reimbursable in the first instance from related
collections from the Mortgagors pursuant to Section 3.09, and further as
provided in Section 3.11. Any cost incurred by the Servicer or by Sub- Servicers
in effecting the payment of taxes and assessments on a Mortgaged Property shall
not, for the purpose of calculating distributions to Certificateholders, be
added to the unpaid Principal Balance of the related Mortgage Loan,
notwithstanding that the terms of such Mortgage Loan so permit.

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<PAGE>

                  Notwithstanding anything in this Agreement to the contrary,
the Servicer may not make any future advances with respect to a Mortgage Loan
(except as provided in Section 5.04) and the Servicer shall not (i) permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Rate, reduce or increase the Principal Balance (except for reductions resulting
from actual payments of principal) or change the final maturity date on such
Mortgage Loan (unless, as provided in Section 3.07, the Mortgagor is in default
with respect to the Mortgage Loan or such default is, in the judgment of the
Servicer, reasonably foreseeable) or (ii) permit any modification, waiver or
amendment of any term of any Mortgage Loan that would both (A) effect an
exchange or reissuance of such Mortgage Loan under Section 1001 of the Code (or
Treasury regulations promulgated thereunder) and (B) cause any REMIC created
hereunder 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.

                  With respect to each of the Mortgage Loans, the Servicer shall
furnish, in accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information (e.g., favorable and unfavorable)
on its borrower credit files to Equifax, Experian and Trans Union Credit
Information Company or their successors (the "Credit Repositories") in a timely
manner, and in connection therewith, in the case of each Group I Mortgage Loan,
the Servicer shall transmit full-file credit reporting data for each such
Mortgage Loan pursuant to Fannie Mae Guide Announcement 95-19 and shall report
one of the following statuses each month as follows: new origination, current,
delinquent (30-, 60-, 90-days, etc.), foreclosed, or charged-off.

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

                  (a) The Servicer may enter into Sub-Servicing Agreements with
Sub-Servicers for the servicing and administration of the Mortgage Loans;
provided, however, that such agreements would not result in a withdrawal,
qualification or a downgrading by any Rating Agency of the rating on any Class
of Certificates. The Trustee and the Trust Administrator are hereby authorized
to acknowledge, at the request of the Servicer, any Sub-Servicing Agreement that
meets the requirements applicable to Sub-Servicing Agreements set forth in this
Agreement and that is otherwise permitted under this Agreement. No such
acknowledgment shall be deemed to imply that either the Trustee or the Trust
Administrator has consented to any such Sub-Servicing Agreement, has passed upon
whether such Sub-Servicing Agreement meets the requirements applicable to
Sub-Servicing Agreements set forth in this Agreement or has passed upon whether
such Sub-Servicing Agreement is otherwise permitted under this Agreement.

                  Each Sub-Servicer shall be (i) authorized to transact business
in the state or states where the related Mortgaged Properties it is to service
are situated, if and to the extent required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder and under the Sub-Servicing
Agreement and (ii) a Freddie Mac or Fannie Mae approved mortgage servicer. Each
Sub-Servicing Agreement must impose on the Sub-Servicer requirements conforming
to the provisions set forth in Section 3.08 and provide for servicing of the
Mortgage Loans consistent with the terms of this Agreement. The Servicer will
examine each Sub-Servicing Agreement and will be familiar with the terms
thereof. The terms of any Sub- Servicing Agreement will not be inconsistent with
any of the provisions of this Agreement. The Servicer and the Sub-Servicers may
enter into and make

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<PAGE>

amendments to the Sub-Servicing Agreements or enter into different forms of
Sub-Servicing Agreements; provided, however, that any such amendments or
different forms shall be consistent with and not violate the provisions of this
Agreement, and that no such amendment or different form shall be made or entered
into which could be reasonably expected to be materially adverse to the
interests of the Certificateholders without the consent of the Holders of
Certificates entitled to at least 66% of the Voting Rights; provided, further,
that the consent of the Holders of Certificates entitled to at least 66% of the
Voting Rights shall not be required (i) to cure any ambiguity or defect in a
Sub-Servicing Agreement, (ii) to correct, modify or supplement any provisions of
a Sub- Servicing Agreement, or (iii) to make any other provisions with respect
to matters or questions arising under a Sub- Servicing Agreement, which, in each
case, shall not be inconsistent with the provisions of this Agreement. Any
variation without the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights from the provisions set forth in Section 3.08
relating to insurance or priority requirements of Sub-Servicing Accounts, or
credits and charges to the Sub- Servicing Accounts or the timing and amount of
remittances by the Sub-Servicers to the Servicer, are conclusively deemed to be
inconsistent with this Agreement and therefore prohibited. The Servicer shall
deliver to the Trustee, the Master Servicer and the Trust Administrator copies
of all Sub-Servicing Agreements, and any amendments or modifications thereof,
promptly upon the Servicer's execution and delivery of such instruments.

                  (b) As part of its servicing activities hereunder, the
Servicer, for the benefit of the Trustee and the Certificateholders, shall
enforce the obligations of each Sub-Servicer under the related Sub-Servicing
Agreement and (except as otherwise provided in Section 2.01) of the Originator
under the Mortgage Loan Purchase Agreement, including, without limitation, any
obligation to make advances in respect of delinquent payments as required by a
Sub-Servicing Agreement, or to purchase a Mortgage Loan on account of missing or
defective documentation or on account of a breach of a representation, warranty
or covenant, as described in Section 2.01 and Section 2.03(a). 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
Servicer, in its good faith business judgment, would require were it the owner
of the related Mortgage Loans. The Servicer shall pay the costs of such
enforcement at its own expense, and shall be reimbursed therefor only (i) from a
general recovery resulting from such enforcement, to the extent, if any, that
such recovery exceeds all amounts due in respect of the related Mortgage Loans,
or (ii) from a specific recovery of costs, expenses or attorneys' fees against
the party against whom such enforcement is directed. Except as otherwise
provided in Section 2.01, enforcement of the Mortgage Loan Purchase Agreement
against the Originator shall be effected by the Servicer to the extent it is not
the Originator and otherwise by the Trustee in accordance with the foregoing
provisions of this paragraph.

                  SECTION 3.03. Successor Sub-Servicers.

                  The Servicer shall be entitled to terminate any Sub-Servicing
Agreement and the rights and obligations of any Sub-Servicer pursuant to any
Sub-Servicing Agreement in accordance with the terms and conditions of such
Sub-Servicing Agreement. In the event of termination of any Sub-Servicer, all
servicing obligations of such Sub-Servicer shall be assumed simultaneously by
the Servicer without any act or deed on the part of such Sub-Servicer or the
Servicer, and the Servicer

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<PAGE>

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.

                  Any Sub-Servicing Agreement shall include the provision that
such agreement may be immediately terminated by the Servicer, (or by the Master
Servicer, the Trust Administrator or the Trustee, if such party is acting as
successor Servicer, or by another successor Servicer appointed pursuant to
Section 8.02) without fee, in accordance with the terms of this Agreement, in
the event that the Servicer that was a party to such Sub-Servicing Agreement
shall, for any reason, no longer be the Servicer (including termination due to a
Servicer Event of Termination).

                  SECTION 3.04. Liability of the Servicer.

                  Notwithstanding any Sub-Servicing Agreement or the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer or reference to actions taken through a Sub-Servicer or
otherwise, the Servicer shall remain obligated and primarily liable to the
Trustee, the Master Servicer, the Trust Administrator and the Certificateholders
for the servicing and administering of the Mortgage Loans in accordance with the
provisions of Section 3.01 without diminution of such obligation or liability by
virtue of such Sub-Servicing Agreements or arrangements or by virtue of
indemnification from the Sub-Servicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Mortgage Loans. The Servicer shall be entitled to enter into any agreement
with a Sub-Servicer for indemnification of the Servicer by such Sub-Servicer and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.

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

                  Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such shall be deemed to be between the Sub-Servicer and the
Servicer alone, and none of the Trustee, the Master Servicer, the Trust
Administrator or Certificateholders shall be deemed parties thereto and none of
the Trustee, the Master Servicer, the Trust Administrator or Certificateholders
shall have any claims, rights, obligations, duties or liabilities with respect
to the Sub-Servicer except as set forth in Section 3.06. The Servicer shall be
solely liable for all fees owed by it to any Sub-Servicer, irrespective of
whether the Servicer's compensation pursuant to this Agreement is sufficient to
pay such fees.

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

                  In the event the Servicer shall for any reason no longer be
the servicer (including by reason of the occurrence of a Servicer Event of
Termination), the successor Servicer ( which may be the Master Servicer or the
Trustee) may thereupon assume all of the rights and obligations of the Servicer
under each Sub-Servicing Agreement that the Servicer may have entered into, or
may terminate any Sub-Servicing Agreement in accordance with its terms as
provided in Section 3.03. Upon such assumption, the successor Servicer shall be
deemed, subject to Section 3.03, to have assumed all of the departing Servicer's
interest therein and to have replaced the departing Servicer

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<PAGE>

as a party to each Sub-Servicing Agreement to the same extent as if each
Sub-Servicing Agreement had been assigned to the assuming party, except that (i)
the departing Servicer shall not thereby be relieved of any liability or
obligations under any Sub-Servicing Agreement that arose before it ceased to be
the Servicer and (ii) No successor Servicer shall be deemed to have assumed any
liability or obligation of the Servicer that arose before it ceased to be the
Servicer.

                  The Servicer at its expense shall, upon request of the Master
Servicer or the Trustee, deliver to the assuming party all documents and records
relating to each Sub-Servicing Agreement and the Mortgage Loans then being
serviced and an accounting of amounts collected and held by or on behalf of it,
and otherwise use its best efforts to effect the orderly and efficient transfer
of the Sub-Servicing Agreements to the assuming party. All applicable Servicing
Transfer Costs shall be paid by the predecessor Servicer upon presentation of
reasonable documentation of such costs, and if such predecessor Servicer
defaults in its obligation to pay such costs, such costs shall be paid by the
successor Servicer or the Master Servicer (in which case the successor Servicer
or the Master Servicer, as applicable, shall be entitled to reimbursement
therefor from the assets of the Trust).

                  SECTION 3.07. Collection of Certain Mortgage Loan Payments.

                  The Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any applicable insurance policies, follow such
collection procedures as it would follow with respect to mortgage loans
comparable to the Mortgage Loans and held for its own account. Consistent with
the foregoing, the Servicer may in its discretion (i) waive any late payment
charge or, if applicable, any penalty interest, or (ii) extend the due dates for
the Monthly Payments due on a Mortgage Note for a period of not greater than 180
days; provided, however, that any extension pursuant to clause (ii) above shall
not affect the amortization schedule of any Mortgage Loan for purposes of any
computation hereunder, except as provided below. In the event of any such
arrangement pursuant to clause (ii) above, the Servicer shall make timely
advances on such Mortgage Loan during such extension pursuant to Section 5.04
and in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangement. Notwithstanding the
foregoing, in the event that any Mortgage Loan is in default or, in the judgment
of the Servicer, such default is reasonably foreseeable, the Servicer,
consistent with the standards set forth in Section 3.01, may also waive, modify
or vary any term of such Mortgage Loan (including modifications that would
change the Mortgage Rate, forgive the payment of principal or interest or extend
the final maturity date of such Mortgage Loan), accept payment from the related
Mortgagor of an amount less than the Stated Principal Balance in final
satisfaction of such Mortgage Loan, or consent to the postponement of strict
compliance with any such term or otherwise grant indulgence to any Mortgagor
(any and all such waivers, modifications, variances, forgiveness of principal or
interest, postponements, or indulgences collectively referred to herein as
"forbearance"). The Servicer's analysis supporting any forbearance and the
conclusion that any forbearance meets the standards of Section 3.01 shall be
reflected in writing in the Mortgage File.

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<PAGE>

                  SECTION 3.08. Sub-Servicing Accounts.

                  In those cases where a Sub-Servicer is servicing a Mortgage
Loan pursuant to a Sub- Servicing Agreement, the Sub-Servicer will be required
to establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall
comply with all requirements of this Agreement relating to the Collection
Account. The Sub-Servicer shall deposit in the clearing account in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Sub-Servicer's receipt thereof, all
proceeds of Mortgage Loans received by the Sub-Servicer less its servicing
compensation to the extent permitted by the Sub-Servicing Agreement, and shall
thereafter deposit such amounts in the Sub-Servicing Account, in no event more
than two Business Days after the receipt of such amounts. The Sub-Servicer shall
thereafter deposit such proceeds in the Collection Account or remit such
proceeds to the Servicer for deposit in the Collection Account not later than
two Business Days after the deposit of such amounts in the Sub-Servicing
Account. For purposes of this Agreement, the Servicer shall be deemed to have
received payments on the Mortgage Loans when the Sub-Servicer receives such
payments.

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

                  The Servicer shall establish and maintain, or cause to be
established and maintained, one or more accounts (the "Servicing Accounts"),
into which all Escrow Payments shall be deposited and retained. Servicing
Accounts shall be Eligible Accounts. The Servicer shall deposit in the clearing
account in which it customarily deposits payments and collections on mortgage
loans in connection with its mortgage loan servicing activities on a daily
basis, and in no event more than one Business Day after the Servicer's receipt
thereof, all Escrow Payments collected on account of the Mortgage Loans and
shall thereafter deposit such Escrow Payments in the Servicing Accounts, in no
event more than two Business Days after the receipt of such Escrow Payments, all
Escrow Payments collected on account of the Mortgage Loans for the purpose of
effecting the payment of any such items as required under the terms of this
Agreement. Withdrawals of amounts from a Servicing Account may be made only to
(i) effect payment of taxes, assessments, hazard insurance premiums, and
comparable items in a manner and at a time that assures that the lien priority
of the Mortgage is not jeopardized (or, with respect to the payment of taxes, in
a manner and at a time that avoids the loss of the Mortgaged Property due to a
tax sale or the foreclosure as a result of a tax lien); (ii) reimburse the
Servicer (or a Sub-Servicer to the extent provided in the related Sub- Servicing
Agreement) out of related collections for any Servicing Advances made pursuant
to Section 3.01 (with respect to taxes and assessments) and Section 3.14 (with
respect to hazard insurance); (iii) refund to Mortgagors any sums as may be
determined to be overages; (iv) pay interest, if required and as described
below, to Mortgagors on balances in the Servicing Account; or (v) clear and
terminate the Servicing Account at the termination of the Servicer's obligations
and responsibilities in respect of the Mortgage Loans under this Agreement in
accordance with Article X. In the event the Servicer shall deposit in a
Servicing Account any amount not required to be deposited therein, it may at any
time withdraw such amount from such Servicing Account, any provision herein to
the contrary notwithstanding. The Servicer will be responsible for the
administration of the Servicing Accounts and will be obligated to make Servicing
Advances to such accounts when and as necessary to avoid the lapse of insurance
coverage on the Mortgaged Property, or which the Servicer knows, or in the
exercise of the required standard of care of the Servicer

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hereunder should know, is necessary to avoid the loss of the Mortgaged Property
due to a tax sale or the foreclosure as a result of a tax lien. If any such
payment has not been made and the Servicer receives notice of a tax lien with
respect to the Mortgage being imposed, the Servicer will, promptly and to the
extent required to avoid loss of the Mortgaged Property, advance or cause to be
advanced funds necessary to discharge such lien on the Mortgaged Property. As
part of its servicing duties, the Servicer or Sub-Servicers shall pay to the
Mortgagors interest on funds in the Servicing Accounts, to the extent required
by law and, to the extent that interest earned on funds in the Servicing
Accounts is insufficient, to pay such interest from its or their own funds,
without any reimbursement therefor. The Servicer may pay to itself any excess
interest on funds in the Servicing Accounts, to the extent such action is in
conformity with the servicing standard set forth in Section 3.01, is permitted
by law and such amounts are not required to be paid to Mortgagors or used for
any of the other purposes set forth above.

                  SECTION 3.10. Collection Account and Distribution Account.

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

                  (i) all payments on account of principal, including Principal
         Prepayments (but not Prepayment Charges), on the Mortgage Loans;

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

                  (iii) all Insurance Proceeds and Liquidation Proceeds and
         condemnation proceeds (other than proceeds collected in respect of any
         particular REO Property and amounts paid in connection with a purchase
         of Mortgage Loans and REO Properties pursuant to Section 11.01);

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

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

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                  (vi) all proceeds of any Mortgage Loan repurchased or
         purchased in accordance with Section 2.03 or Section 11.01;

                  (vii) all amounts required to be deposited in connection with
         Substitution Adjustments pursuant to Section 2.03;

                  (viii) all Prepayment Charges collected by the Servicer and
         any Servicer Prepayment Charge Payment Amounts in connection with the
         Principal Prepayment of any of the Mortgage Loans; and

                  (ix) [reserved].

                  The foregoing requirements for deposit in the Collection
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of Servicing
Fees, late payment charges, assumption fees, insufficient funds charges and
ancillary income (other than Prepayment Charges) need not be deposited by the
Servicer in the Collection Account and may be retained by the Servicer as
additional compensation. In the event the Servicer shall deposit in the
Collection Account any amount not required to be deposited therein, it may at
any time withdraw such amount from the Collection Account, any provision herein
to the contrary notwithstanding.

                  (b) On behalf of the Trust Fund, the Trust Administrator shall
establish and maintain one or more accounts (such account or accounts, the
"Distribution Account"), held in trust for the benefit of the Trustee and the
Certificateholders. On behalf of the Trust Fund, the Servicer shall deliver to
the Trust Administrator in immediately available funds for deposit in the
Distribution Account on or before 2:00 p.m. New York time (i) on the Servicer
Remittance Date, that portion of the Available Funds (calculated without regard
to the references in the definition thereof to amounts that may be withdrawn
from the Distribution Account) for the related Distribution Date then on deposit
in the Collection Account, the amount of all Prepayment Charges collected during
the applicable Prepayment Period by the Servicer and Servicer Prepayment Charge
Payment Amounts in connection with the Principal Prepayment of any of the
Mortgage Loans then on deposit in the Collection Account and (ii) on each
Business Day as of the commencement of which the balance on deposit in the
Collection Account exceeds $75,000 following any withdrawals pursuant to the
next succeeding sentence, the amount of such excess, but only if the Collection
Account constitutes an Eligible Account solely pursuant to clause (ii) of the
definition of "Eligible Account." If the balance on deposit in the Collection
Account exceeds $75,000 as of the commencement of business on any Business Day
and the Collection Account constitutes an Eligible Account solely pursuant to
clause (ii) of the definition of "Eligible Account," the Servicer shall, on or
before 2:00 p.m. New York time on such Business Day, withdraw from the
Collection Account any and all amounts payable or reimbursable to the Servicer,
the Trustee, the Trust Administrator or any Sub-Servicer pursuant to Section
3.11 and shall pay such amounts to the Persons entitled thereto.

                  With respect to any remittance from the Servicer received by
the Trust Administrator after the Business Day on which such remittance was due
from the Servicer, the Servicer shall pay to the Trust Administrator interest on
the amount of such late remittance in an amount equal to the yield that would
have been earned had the amount of such late remittance been invested in

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investments of the type described in clause (ii) of the definition of Permitted
Investments, but in no event greater than the maximum amount permitted by
applicable law. Such interest shall be paid by the Servicer to the Trust
Administrator on the date such late remittance is made and shall cover th period
commencing with the Business Day on which such remittance was due and ending
with the Business Day immediately preceding the Business Day on which such
remittance is made, both inclusive. The payment by the Servicer of any such
interest shall not be deemed an extension of time for payment or a waiver of any
Servicer Event of Termination.

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

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

                  (i) any Advances, as required pursuant to Section 5.04;

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

                  (iii) any amounts to be paid in connection with a purchase of
         Mortgage Loans and REO Properties pursuant to Section 11.01;

                  (iv) any Compensating Interest to be deposited pursuant to
         Section 3.25 in connection with any Prepayment Interest Shortfall; and

                  (v) any amounts required to be paid to the Trustee, the
         Custodian, the Master Servicer, the Depositor or the Trust
         Administrator pursuant to the Agreement, including but not limited to
         funds required to be paid pursuant to Section 3.06, Section 7.03,
         Section 8.02 and Section 9.05;

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

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                  (a) The Servicer shall, from time to time, make withdrawals
from the Collection Account for any of the following purposes or as described in
Section 5.04:

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

                  (ii) subject to Section 3.16(d), to reimburse the Servicer for
         (a) any unreimbursed Advances to the extent of amounts received which
         represent Late Collections (net of the related Servicing Fees),
         Liquidation Proceeds and Insurance Proceeds on Mortgage Loans with
         respect to which such Advances were made in accordance with the
         provisions of Section 5.04; or (b) any unreimbursed Advances with
         respect to the final liquidation of a Mortgage Loan that are
         Nonrecoverable Advances, but only to the extent that Late Collections,
         Liquidation Proceeds and Insurance Proceeds received with respect to
         such Mortgage Loan are insufficient to reimburse the Servicer for such
         unreimbursed Advances.

                  (iii) subject to Section 3.16(d), to pay the Servicer or any
         Sub-Servicer (a) any unpaid Servicing Fees, (b) any unreimbursed
         Servicing Advances with respect to each Mortgage Loan, but only to the
         extent of any Late Collections, Liquidation Proceeds and Insurance
         Proceeds received with respect to such Mortgage Loan, and (c) any
         Servicing Advances made with respect to a Mortgage Loan that, upon a
         Final Recovery Determination with respect to such Mortgage Loan are
         Nonrecoverable Advances, but only to the extent that Late Collections,
         Liquidation Proceeds, Insurance Proceeds and condemnation proceeds
         received with respect to such Mortgage Loan are insufficient to
         reimburse the Servicer or any Sub-Servicer for Servicing Advances;

                  (iv) to pay to the Servicer as servicing compensation (in
         addition to the Servicing Fee) on the Servicer Remittance Date any
         interest or investment income earned on funds deposited in the
         Collection Account;

                  (v) to pay the Originator with respect to each Mortgage Loan
         that has previously been purchased or replaced pursuant to Section 2.03
         all amounts received thereon subsequent to the date of purchase or
         substitution;

                  (vi) to reimburse the Servicer for any Advance or Servicing
         Advance previously made which the Servicer has determined to be a
         Nonrecoverable Advance in accordance with the provisions of Section
         5.04;

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

                  (viii) to reimburse the Servicer for expenses incurred by or
         reimbursable to the Servicer pursuant to Section 7.03;

                  (ix) [reserved];

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<PAGE>

                  (x) [reserved];

                  (xi) [reserved]; and

                  (xii) to clear and terminate the Collection Account pursuant
         to Section 11.01.

                  The foregoing requirements for withdrawal from the Collection
Account shall be exclusive. In the event the Servicer shall deposit in the
Collection Account any amount not required to be deposited therein, it may at
any time withdraw such amount from the Collection Account, any provision herein
to the contrary notwithstanding.

                  The Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (ii), (iii), (iv), (v), (vi) and (vii) above. The
Servicer shall provide written notification to the Trustee and the Trust
Administrator, on or prior to the next succeeding Servicer Remittance Date, upon
making any withdrawals from the Collection Account pursuant to subclause (vi)
above; provided that an Officers' Certificate in the form described under
Section 5.04(d) shall suffice for such written notification to the Trustee or
Trust Administrator in respect hereof.

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

                  (i) to make distributions in accordance with Section 5.01;

                  (ii) to pay the Master Servicing Fee to the Master Servicer
         pursuant to Section 4.14;

                  (iii) to pay any amounts in respect of taxes pursuant to
         Section 10.01(g);

                  (iv) to clear and terminate the Distribution Account pursuant
         to Section 11.01;

                  (v) to pay any amounts required to be paid to the Trustee, the
         Custodian, the Master Servicer, the Depositor or the Trust
         Administrator pursuant to this Agreement, including but not limited to
         funds required to be paid pursuant to Section 3.06, Section 7.03,
         Section 8.02 and Section 9.05;

                  (vi) to pay to the Trust Administrator, any interest or
         investment income earned on funds deposited in the Distribution
         Account; and

                  (vii) [reserved].

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

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

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

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

                  (b) All income and gain realized from the investment of funds
deposited in the Collection Account and any REO Account held by or on behalf of
the Servicer shall be for the benefit of the Servicer and shall be subject to
its withdrawal in accordance with Section 3.11 or Section 3.24, as applicable.
The Servicer shall deposit in the Collection Account or any REO Account, as
applicable, the amount of any loss of principal incurred in respect of any such
Permitted Investment made with funds in such Account immediately upon
realization of such loss.

                  (c) All income and gain realized from the investment of funds
deposited in the Distribution Account shall be for the benefit of the Trust
Administrator. The Trust Administrator shall deposit in the Distribution Account
the amount of any loss of principal incurred in respect of any such Permitted
Investment made with funds in such Account immediately upon realization of such
loss. Notwithstanding the foregoing, the Trust Administrator may at its
discretion, and without liability, hold the funds in the Distribution Account
uninvested.

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                  (d) Except as otherwise expressly provided in this Agreement,
if any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under any
Permitted Investment, the Trust Administrator may and, subject to Section 9.01
and Section 9.02(a)(v), upon the request of the Holders of Certificates
representing more than 50% of the Voting Rights allocated to any Class of
Certificates, shall take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
proceedings.

                  SECTION 3.13. [Reserved].

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

                  (a) The Servicer shall cause to be maintained for each
Mortgage Loan hazard insurance with extended coverage on the Mortgaged Property
in an amount which is at least equal to the least of (i) the current Principal
Balance of such Mortgage Loan, (ii) the amount necessary to fully compensate for
any damage or loss to the improvements that are a part of such property on a
replacement cost basis, in each case in an amount not less than such amount as
is necessary to avoid the application of any coinsurance clause contained in the
related hazard insurance policy and (iii) the maximum insurable value of the
improvements which are a part of such Mortgaged Property. The Servicer shall
also cause to be maintained hazard insurance with extended coverage on each REO
Property in an amount which is at least equal to the lesser of (i) the maximum
insurable value of the improvements which are a part of such property and (ii)
the outstanding Principal Balance of the related Mortgage Loan at the time it
became an REO Property. The Servicer will comply in the performance of this
Agreement with all reasonable rules and requirements of each insurer under any
such hazard policies. Any amounts to be collected by the Servicer under any such
policies (other than amounts to be applied to the restoration or repair of the
property subject to the related Mortgage or amounts to be released to the
Mortgagor in accordance with the procedures that the Servicer would follow in
servicing loans held for its own account, subject to the terms and conditions of
the related Mortgage and Mortgage Note) shall be deposited in the Collection
Account, subject to withdrawal pursuant to Section 3.11, if received in respect
of a Mortgage Loan, or in the REO Account, subject to withdrawal pursuant to
Section 3.24, if received in respect of an REO Property. Any cost incurred by
the Servicer in maintaining any such insurance shall not, for the purpose of
calculating distributions to Certificateholders, be added to the unpaid
Principal Balance of the related Mortgage Loan, notwithstanding that the terms
of such Mortgage Loan so permit. It is understood and agreed that no earthquake
or other additional insurance is to be required of any Mortgagor other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require any Mortgagor to obtain such additional insurance. If
the Mortgaged Property or REO Property is at any time in an area identified in
the Federal Register by the Federal Emergency Management Agency as having
special flood hazards and flood insurance has been made available, the Servicer
will cause to be maintained a flood insurance policy in respect thereof. Such
flood insurance shall be in an amount equal to the lesser of (i) the unpaid
Principal Balance of the related Mortgage Loan and (ii) the maximum amount of
such insurance available for the related Mortgaged Property under the national
flood insurance program (assuming that the area in which such Mortgaged Property
is located is participating in such program).

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<PAGE>

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

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

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

                  The Servicer will, to the extent it has actual knowledge of
any conveyance or prospective conveyance of any Mortgaged Property by any
Mortgagor (whether by absolute conveyance or by contract of sale, and whether or
not the Mortgagor remains or is to remain liable under the Mortgage Note and/or
the Mortgage), exercise its rights to accelerate the maturity of such Mortgage
Loan under the "due- on-sale" clause, if any, applicable thereto; provided,
however, that the Servicer shall not be required to take such action if in its
sole business judgment the Servicer believes it is not in the best interests of
the Trust Fund and shall not exercise any such rights if prohibited by law from
doing so. If the Servicer reasonably believes it is unable under applicable law
to enforce such "due-on-sale" clause, or if any of the other conditions set
forth in the proviso to the preceding sentence apply, the Servicer will enter
into an assumption and modification agreement from or with the person to whom
such property has been conveyed or is proposed to be conveyed, pursuant to which
such person becomes liable under the Mortgage Note and, to the extent permitted

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<PAGE>

by applicable state law, the Mortgagor remains liable thereon. The Servicer is
also authorized to enter into a substitution of liability agreement with such
person, pursuant to which the original Mortgagor is released from liability and
such person is substituted as the Mortgagor and becomes liable under the
Mortgage Note, provided that no such substitution shall be effective unless such
person satisfies the underwriting criteria of the Servicer and has a credit risk
rating at least equal to that of the original Mortgagor. In connection with any
assumption or substitution, the Servicer shall apply such underwriting standards
and follow such practices and procedures as shall be normal and usual in its
general mortgage servicing activities and as it applies to other mortgage loans
owned solely by it. The Servicer shall not take or enter into any assumption and
modification agreement, however, unless (to the extent practicable in the
circumstances) it shall have received confirmation, in writing, of the continued
effectiveness of any applicable hazard insurance policy. Any fee collected by
the Servicer in respect of an assumption, modification or substitution of
liability agreement shall be retained by the Servicer as additional servicing
compensation. In connection with any such assumption, no material term of the
Mortgage Note (including but not limited to the related Mortgage Rate and the
amount of the Monthly Payment) may be amended or modified, except as otherwise
required pursuant to the terms thereof. The Servicer shall notify the Trustee
that any such substitution, modification or assumption agreement has been
completed by forwarding to the Trustee the executed original of such
substitution, modification or assumption agreement, which document shall be
added to the related Mortgage File and shall, for all purposes, be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof.

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

                  SECTION 3.16. Realization Upon Defaulted Mortgage Loans.

                  (a) The Servicer shall use its best efforts, consistent with
the servicing standards set forth in Section 3.01, to foreclose upon or
otherwise comparably convert the ownership of properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.07. The Servicer shall be responsible for all costs and
expenses incurred by it in any such proceedings; provided, however, that such
costs and expenses will be recoverable as Servicing Advances by the Servicer as
contemplated in Section 3.11(a) and Section 3.24. The foregoing is subject to
the provision that, in any case in which a Mortgaged Property shall have
suffered damage from an Uninsured Cause, the Servicer shall not be required to
expend its own funds toward the restoration of such property unless it shall
determine in its discretion that such restoration will increase the proceeds of
liquidation of the related Mortgage Loan after reimbursement to itself for such
expenses.

                  (b) Notwithstanding the foregoing provisions of this Section
3.16 or any other provision of this Agreement, with respect to any Mortgage Loan
as to which the Servicer has

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<PAGE>

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

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

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

                  The cost of the environmental audit report contemplated by
this Section 3.16 shall be advanced by the Servicer, subject to the Servicer's
right to be reimbursed therefor from the Collection Account as provided in
Section 3.11(a)(vii), such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received in
respect of the affected Mortgage Loan or other Mortgage Loans.

                  For the purposes of this Section 3.16(b), actual notice and
actual knowledge of the Servicer means notice to the Servicer in the manner
provided in Article XII or actual knowledge of an officer of the Servicer
involved in, or responsible for, the administration and servicing of Mortgage
Loans. Actual knowledge of the Servicer does not include knowledge imputable by
virtue of the availability of or accessibility to information relating to
environmental or hazardous waste sites or the locations thereof.

                  If the Servicer determines, as described above, that it is in
the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes or petroleum-based materials affecting any such Mortgaged Property, then
the Servicer shall take such action as it deems to be in the best economic
interest of the Trust Fund; provided that any amounts disbursed by the Servicer
pursuant to this Section 3.16(b) shall constitute Servicing Advances, subject to
Section 5.04(d). The cost of any such compliance, containment, clean-up or

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

                  (c) [Reserved]

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

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

                  (a) Upon the payment in full of any Mortgage Loan, or the
receipt by the Servicer of a notification that payment in full shall be escrowed
in a manner customary for such purposes, the Servicer shall (or, if it does not,
the Master Servicer may) deliver to the Trustee and the Custodian, in written
(with two executed copies) or electronic format, a Request for Release in the
form of Exhibit E hereto (which certification shall include a statement to the
effect that all amounts received or to be received in connection with such
payment which are required to be deposited in the Collection Account pursuant to
Section 3.10 have been or will be so deposited) signed by a Servicing Officer
(or in a mutually agreeable electronic format that will, in lieu of a signature
on its face, originate from a Servicing Officer) and shall request delivery to
it of the Mortgage File. Upon receipt of such certification and request, the
Trustee shall cause the Custodian to release and send by overnight mail, within
three Business Days, at the expense of the Servicer, the related Mortgage File
to the Servicer. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the Collection
Account or the Distribution Account.

                  (b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any insurance policy relating to the Mortgage Loans, the Trustee shall cause the
Custodian, upon any request made by or on behalf of the Servicer and delivery to
the Trustee and the Custodian, in written (with two executed copies) or
electronic format, of a Request for Release in the form of Exhibit E hereto
signed by a Servicing Officer (or in a mutually agreeable electronic format that
will, in lieu of a signature on its face, originate from a Servicing Officer),
to release the related Mortgage File to the Servicer within three Business Days,
and the Trustee shall, at the written direction of the Servicer, execute such
documents

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as shall be necessary to the prosecution of any such proceedings. Such Request
for Release shall obligate the Servicer to return each and every document
previously requested from the Mortgage File to the Custodian when the need
therefor by the Servicer no longer exists, unless the Mortgage Loan has been
liquidated and the Liquidation Proceeds relating to the Mortgage Loan have been
deposited in the Collection Account or the Mortgage File or such document has
been delivered to an attorney, or to a public trustee or other public official
as required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the Servicer has delivered, or caused to be delivered, to
the Trustee and the Custodian an additional Request for Release certifying as to
such liquidation or action or proceedings. Upon the request of the Trustee or
the Custodian, the Servicer shall provide notice to the Trustee or the
Custodian, as the case may be, of 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, in written (with two
executed copies) or electronic format, from a Servicing Officer stating that
such Mortgage Loan was liquidated and that all amounts received or to be
received in connection with such liquidation that are required to be deposited
into the Collection Account have been so deposited, or that such Mortgage Loan
has become an REO Property, the related Mortgage File shall be released by the
Trustee to the Servicer or its designee within three Business Days.

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

                  SECTION 3.18. Servicing Compensation.

                  As compensation for the activities of the Servicer hereunder,
the Servicer shall be entitled to the Servicing Fee with respect to each
Mortgage Loan payable solely from payments of interest in respect of such
Mortgage Loan, subject to Section 3.25. In addition, the Servicer shall be
entitled to recover unpaid Servicing Fees out of Insurance Proceeds, Liquidation
Proceeds or condemnation proceeds to the extent permitted by Section
3.11(a)(iii) and out of amounts derived from the operation and sale of an REO
Property to the extent permitted by Section 3.24. The right to receive the
Servicing Fee may not be transferred in whole or in part except in connection
with the transfer of all of the Servicer's responsibilities and obligations
under this Agreement; provided, however, that the Servicer may pay from the
Servicing Fee any amounts due to a Sub-Servicer pursuant to a Sub-Servicing
Agreement entered into under Section 3.02.

                  Additional servicing compensation in the form of assumption
fees, late payment charges, insufficient funds charges, ancillary income or
otherwise (other than Prepayment Charges)

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shall be retained by the Servicer only to the extent such fees or charges are
received by the Servicer. The Servicer shall also be entitled pursuant to
Section 3.11(a)(iv) to withdraw from the Collection Account and pursuant to
Section 3.24(b) to withdraw from any REO Account, as additional servicing
compensation, interest or other income earned on deposits therein, subject to
Section 3.12 and Section 3.25. The Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
(including premiums for the insurance required by Section 3.14, to the extent
such premiums are not paid by the related Mortgagors or by a Sub-Servicer and
servicing compensation of each Sub-Servicer) and shall not be entitled to
reimbursement therefor except as specifically provided herein.

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

                  Not later than twenty days after each Distribution Date, the
Servicer shall forward, upon request, to the Trustee, the Trust Administrator,
the Master Servicer and the Depositor the most current available bank statement
for the Collection Account. Copies of such statement shall be provided by the
Trust Administrator to any Certificateholder and to any Person identified to the
Trust Administrator as a prospective transferee of a Certificate, upon request
at the expense of the requesting party, provided such statement is delivered by
the Servicer to the Trust Administrator.

                  SECTION 3.20. Statement as to Compliance.

                  The Servicer will deliver to the Trustee, the Trust
Administrator, the Master Servicer and the Depositor not later than the 15th day
of March following the end of each fiscal year of the Servicer (which, as of the
Closing Date, ends on the last day of December), commencing in 2004, an
Officers' Certificate (upon which the Master Servicer can conclusively rely in
connection with its obligations under Section 5.06) in the form attached hereto
as Exhibit P-1 stating, as to each signatory thereof, that (i) a review of the
activities of the Servicer during the preceding year and of performance under
this Agreement has been made under such officers' supervision and (ii) to the
best of such officers' knowledge, based on such review, the Servicer has
fulfilled all of its obligations under this Agreement throughout such year, or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof. Copies of any such statement shall be provided by the Trust
Administrator to any Certificateholder and to any Person identified to the Trust
Administrator as a prospective transferee of a Certificate, upon request at the
expense of the requesting party, provided such statement is delivered by the
Servicer to the Trust Administrator.

                  SECTION 3.21. Independent Public Accountants' Servicing
                                Report.

                   Not later than the 15th day of March following the end of
each fiscal year of the Servicer (which, as of the Startup Day, ends on the last
day of December), commencing in 2004, the Servicer, at its expense, shall cause
a nationally recognized firm of independent certified public accountants to
furnish to the Servicer a report stating that (i) it has obtained a letter of
representation regarding certain matters from the management of the Servicer
which includes an assertion that the Servicer has complied with certain minimum
residential mortgage loan servicing standards, identified in the Uniform Single
Attestation Program for Mortgage Bankers established by the

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

                  SECTION 3.22. Annual Certification.

                  (a) The Servicer shall deliver to the Master Servicer, on or
before March 15th of each calendar year beginning in 2004 (or, if any such day
is not a Business Day, the immediately preceding Business Day) or such
alternative date reasonably specified by the Master Servicer which shall occur
not earlier than 15 days prior to the date any Form 10-K is required to be filed
with the Commission in connection with the transactions contemplated by this
Agreement, a certification in the form attached hereto as Exhibit N-1. Such
certification shall be signed by the senior officer in charge of servicing of
the Servicer. In addition, the Servicer shall provide such other information
with respect to the Mortgage Loans and the servicing and administration thereof
within the control of the Servicer which shall be required to enable the Master
Servicer to comply with the reporting requirements of the Securities and
Exchange Act of 1934, as amended pursuant to Section 5.06 hereof.

                  (b) The Servicer shall indemnify and hold harmless the Master
Servicer, the Trustee, the Depositor and their respective officers, directors,
agents and affiliates from and against any losses, damages, penalties, fines,
forfeitures, reasonable legal fees and related costs, judgments and other costs
and expenses arising out of or based upon a breach by the Servicer or any of its
officers, directors, agents or affiliates of its obligations under this Section
3.22 or the Servicer's negligence, bad faith or willful misconduct in connection
therewith. Such indemnity shall survive the termination or resignation of the
parties hereto or the termination of this Agreement. If the indemnification
provided for herein is unavailable or insufficient to hold harmless the Master
Servicer, the Trustee and the Depositor, then the Servicer agrees that it shall
contribute to the amount paid or payable by the Master Servicer, the Trustee and
the Depositor as a result of the losses, claims, damages or liabilities of the
Master Servicer, the Trustee and the Depositor in such proportion as is
appropriate to reflect the relative fault of the Master Servicer, the Trustee
and the Depositor on the one hand and the Servicer on the other in connection
with a breach of the Servicer's obligations under this Section 3.22.

                  SECTION 3.23. Access to Certain Documentation.

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

                  SECTION 3.24. Title, Management and Disposition of REO
                                Property.

                  (a) The deed or certificate of sale of any REO Property shall
be taken in the name of the Trustee, or its nominee, in trust for the benefit of
the Certificateholders. The Servicer, on behalf of REMIC 1, shall sell any REO
Property as soon as practicable and in any event no later than the end of the
third full taxable year after the taxable year in which such REMIC acquires
ownership of such REO Property for purposes of Section 860G(a)(8) of the Code or
request from the Internal Revenue Service, no later than 60 days before the day
on which the three-year grace period would otherwise expire, an extension of
such three-year period, unless the Servicer shall have delivered to the Trustee
and the Trust Administrator an Opinion of Counsel, addressed to the Trustee, the
Trust Administrator and the Depositor, to the effect that the holding by the
REMIC of such REO Property subsequent to three years after its acquisition will
not result in the imposition on the REMIC of taxes on "prohibited transactions"
thereof, as defined in Section 860F of the Code, or cause any of the REMICs
created hereunder to fail to qualify as a REMIC under Federal law at any time
that any Certificates are outstanding. The 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) of the Code or result in the receipt by any of the REMICs
created hereunder 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.

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

                  (c) The Servicer shall have full power and authority, subject
only to the specific requirements and prohibitions of this Agreement, to do any
and all things in connection with any REO Property as are consistent with the
manner in which the Servicer manages and operates similar property owned by the
Servicer or any of its Affiliates, all on such terms and for such period
(subject

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to the requirement of prompt disposition set forth in Section 3.24(a))as the
Servicer deems to be in the best interests of Certificateholders. In connection
therewith, the Servicer shall deposit, or cause to be deposited in the clearing
account in which it customarily deposits payments and collections on mortgage
loans in connection with its mortgage loan servicing activities on a daily
basis, and in no event more than one Business Day after the Servicer's receipt
thereof, and shall thereafter deposit in the REO Account, in no event more than
two Business Days after the Servicer's receipt thereof, all revenues received by
it with respect to an REO Property and shall withdraw therefrom funds necessary
for the proper operation, management and maintenance of such REO Property
including, without limitation:

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

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

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

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

                  Notwithstanding the foregoing, none of the Servicer, the
Master Servicer, the Trustee or the Trust Administrator shall:

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

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

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

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

unless, in any such case, the Servicer has obtained an Opinion of Counsel,
provided to the Trustee and the Trust Administrator, to the effect that such
action will not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code at any

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time that it is held by the REMIC, in which case the Servicer may take such
actions as are specified in such Opinion of Counsel.

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

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

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

                  (3) none of the provisions of this Section 3.24(c) relating to
         any such contract or to actions taken through any such Independent
         Contractor shall be deemed to relieve the Servicer of any of its duties
         and obligations to the Trustee or the Trust Administrator on behalf of
         the Certificateholders with respect to the operation and management of
         any such REO Property; and

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

                  The Servicer shall be entitled to enter into any agreement
with any Independent Contractor performing services for it related to its duties
and obligations hereunder for indemnification of the Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. The Servicer shall be solely liable for all fees
owed by it to any such Independent Contractor, irrespective of whether the
Servicer's compensation pursuant to Section 3.18 is sufficient to pay such fees;
provided, however, that to the extent that any payments made by such Independent
Contractor would constitute Servicing Advances if made by the Servicer, such
amounts shall be reimbursable as Servicing Advances made by the Servicer.

                  (d) In addition to the withdrawals permitted under Section
3.24(c), the Servicer may from time to time make withdrawals from the REO
Account for any REO Property: (i) to pay itself or any Sub-Servicer unpaid
Servicing Fees in respect of the related Mortgage Loan; and (ii) to reimburse
itself or any Sub-Servicer for unreimbursed Servicing Advances and Advances made
in respect of such REO Property or the related Mortgage Loan. On the Servicer
Remittance Date, the Servicer shall withdraw from each REO Account maintained by
it and deposit into the Distribution Account in accordance with Section
3.10(d)(ii), for distribution on the related Distribution Date in accordance
with Section 5.01, the income from the related REO Property received during the
prior calendar month, net of any withdrawals made pursuant to Section 3.24(c) or
this Section 3.24(d).

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                  (e) Subject to the time constraints set forth in Section
3.24(a), each REO Disposition shall be carried out by the Servicer in a manner,
at such price and upon such terms and conditions as shall be normal and usual in
the servicing standard set forth in Section 3.01.

                  (f) The proceeds from the REO Disposition, net of any amount
required by law to be remitted to the Mortgagor under the related Mortgage Loan
and net of any payment or reimbursement to the Servicer or any Sub-Servicer as
provided above, shall be deposited in the Distribution Account in accordance
with Section 3.10(d)(ii) on the Servicer Remittance Date in the month following
the receipt thereof for distribution on the related Distribution Date in
accordance with Section 5.01. Any REO Disposition shall be for cash only (unless
changes in the REMIC Provisions made subsequent to the Startup Day allow a sale
for other consideration).

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

                  SECTION 3.25. Obligations of the Servicer in Respect of
                                Prepayment Interest Shortfalls.

                  Not later than 2:00 p.m. New York time on each Servicer
Remittance Date, the Servicer shall remit to the Distribution Account an amount
("Compensating Interest") equal to the lesser of (A) the aggregate of the
Prepayment Interest Shortfalls for the related Distribution Date and (B) the
aggregate Servicing Fee received in the related Due Period. The Servicer shall
not have the right to reimbursement for any amounts remitted to the Trust
Administrator in respect of Compensating Interest. Such amounts so remitted
shall be included in the Available Funds and distributed therewith on the next
Distribution Date. The Servicer shall not be obligated to pay Compensating
Interest with respect to Relief Act Interest Shortfalls.

                  SECTION 3.26. [Reserved].

                  SECTION 3.27. Obligations of the Servicer in Respect of
                                Mortgage Rates and Monthly Payments.

                  In the event that a shortfall in any collection on or
liability with respect to the Mortgage Loans in the aggregate results from or is
attributable to adjustments to Mortgage Rates, Monthly Payments or Stated
Principal Balances that were made by the Servicer in a manner not consistent
with the terms of the related Mortgage Note and this Agreement, the Servicer,
upon discovery or receipt of notice thereof, immediately shall deposit in the
Collection Account from its own funds the amount of any such shortfall and shall
indemnify and hold harmless the Trust Fund, the Trustee, the Trust
Administrator, the Depositor and any successor servicer in respect of any such
liability. Such indemnities shall survive the termination or discharge of this
Agreement. Notwithstanding the foregoing, this Section 3.27 shall not limit the
ability of the Servicer to seek

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recovery of any such amounts from the related Mortgagor under the terms of the
related Mortgage Note, as permitted by law.

                  SECTION 3.28. Solicitations.

                  From and after the Closing Date, the Servicer agrees that it
will not take any action or permit or cause any action to be taken by any of its
agents and Affiliates, or by any independent contractors or independent mortgage
brokerage companies on the Servicer's behalf, to personally, by telephone or
mail, solicit the Mortgagor under any Mortgage Loan for the purpose of
refinancing such Mortgage Loan; provided, that the Servicer may solicit any
Mortgagor for whom the Servicer has received a request for verification of
mortgage, a request for demand for payoff, a mortgagor initiated written or
verbal communication indicating a desire to prepay the related Mortgage Loan,
another mortgage company has pulled a credit report on the mortgagor or the
mortgagor initiates a title search; provided further, it is understood and
agreed that promotions undertaken by the Servicer or any of its Affiliates which
(i) concern optional insurance products or other additional products or (ii) are
directed to the general public at large, including, without limitation, mass
mailings based on commercially acquired mailing lists, newspaper, radio,
telephone and television advertisements shall not constitute solicitation under
this Section 3.28, nor is the Servicer prohibited from responding to unsolicited
requests or inquiries made by a Mortgagor or an agent of a Mortgagor.
Furthermore, the Servicer shall be permitted to include in its monthly
statements to borrowers or otherwise, statements regarding the availability of
the Servicer's counseling services with respect to refinancing mortgage loans.

                  SECTION 3.29. Net WAC Rate Carryover Reserve Account.

                  No later than the Closing Date, the Trust Administrator shall
establish and maintain with itself a separate, segregated trust account titled,
"Net WAC Rate Carryover Reserve Account, Wells Fargo Bank Minnesota, National
Association, as agent for HSBC Bank USA, as Trustee, in trust for registered
Holders of Fremont Home Loan Trust 2003-A, Asset-Backed Certificates, Series
2003-A." On the Closing Date, the Depositor will deposit, or cause to be
deposited, into the Net WAC Rate Carryover Reserve Account $1,000. In addition,
the amount deposited in the Net WAC Rate Carryover Reserve Account will be
increased by any payments received by or on behalf of the Trustee under the Cap
Contract and deposited into the Net WAC Rate Carryover Reserve Account.

                  On each Distribution Date as to which there is a Net WAC Rate
Carryover Amount payable to the Class A Certificates or the Mezzanine
Certificates, the Trustee has been directed by the Class C Certificateholders
to, and therefore will, deposit into the Net WAC Rate Carryover Reserve Account
the amounts described in Section 5.01(d)(xii), rather than distributing such
amounts to the Class C Certificateholders. On each such Distribution Date, the
Trust Administrator shall hold all such amounts for the benefit of the Holders
of the Class A Certificates and the Mezzanine Certificates, and will distribute
such amounts to the Holders of the Class A Certificates and the Mezzanine
Certificates in the amounts and priorities set forth in Section 5.01(d). If no
Net WAC Rate Carryover Amounts are payable on a Distribution Date, the Trust
Adminsitrator shall deposit into the Net WAC Rate Carryover Reserve Account on
behalf of the Class C Certificateholders, from amounts otherwise distributable
to the Class C Certificateholders, an

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amount such that when added to other amounts already on deposit in the Net WAC
Rate Carryover Reserve Account, the aggregate amount on deposit therein is equal
to $1,000.

                  On each Distribution Date, any amounts remaining in the Net
WAC Rate Reserve Account after the payment of any Net WAC Rate Carryover Amounts
on the Class A Certificates and the Mezzanine Certificates for such Distribution
Date, shall be retained in the Net WAC Rate Carryover Reserve Account. On the
Distribution Date on which the Certificate Principal Balances of the Class A
Certificates and Mezzanine Certificates have been reduced to zero, after the
payment of any Net WAC Rate Carryover Amounts on the Class A Certificates and
Mezzanine Certificates for such Distribution Date, and on each Distribution Date
thereafter, the Trust Administrator shall withdraw therefrom the lesser of
$1,000 and the amount remaining on deposit therein and shall distribute such
amount to the Holders of the Class C Certificates, and after making such
distribution to the Holders of the Class C Certificates, shall withdraw the
remainder on deposit therein and shall distribute such amount to the Trustee. In
addition, upon any earlier termination of the Trust, after the payment of any
Net WAC Rate Carryover Amounts on the Class A Certificates and the Mezzanine
Certificates, the Trust Administrator shall withdraw from the Net WAC Rate
Carryover Account the lesser of $1,000 and the amount remaining on deposit
therein and shall distribute such amount to the Holders of the Class C
Certificates, and after making such distribution to the Holders of the Class C
Certificates, shall withdraw the remainder on deposit therein and shall
distribute such amount to the Trustee.

                  For federal and state income tax purposes, the Trustee will be
deemed to be the owner of the Net WAC Rate Carryover Reserve Account. The Net
WAC Rate Carryover Reserve Account will be an "outside reserve fund" within the
meaning of Treasury regulation Section 1.860G-2(h). The Net WAC Rate Carryover
Reserve Account will be part of the Trust but not part of any REMIC and any
payments to the Holders of the Certificates of Net WAC Rate Carryover Amounts
will not be payments with respect to a "regular interest" in a REMIC within the
meaning of Code Section 860(G)(a)(1).

                  By accepting a Class C Certificate, each Class C
Certificateholder hereby agrees to direct the Trust Administrator, and the Trust
Administrator hereby is directed, to deposit into the Net WAC Rate Carryover
Reserve Account the amounts described in Section 5.01(d)(xii) on each
Distribution Date as to which there is any Net WAC Rate Carryover Amount rather
than distributing such amounts to the Class C Certificateholders. By accepting a
Class C Certificate, each Class C Certificateholder further agrees that such
direction is given for good and valuable consideration, the receipt and
sufficiency of which is acknowledged by such acceptance.

                  The Trust Administrator shall hold all funds on deposit in the
Net WAC Rate Carryover Reserve Account uninvested.

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

                  SECTION 3.30. [Reserved].

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                  SECTION 3.31. Servicer Indemnification.

                  Without limiting the indemnification obligations of the
Servicer pursuant to Section 9.05 (b), the Servicer agrees to indemnify the
Trustee, the Master Servicer and the Trust Administrator, from, and hold the
Trustee, the Master Servicer and the Trust Administrator harmless against, any
loss, liability or expense (including reasonable attorney's fees and expenses)
incurred by any such Person by reason of the Servicer's willful misfeasance, bad
faith or gross negligence in the performance of its duties under this Agreement
or by reason of the Servicer's reckless disregard of its obligations and duties
under this Agreement. Such indemnity shall survive the termination or discharge
of this Agreement and the resignation or removal of the Servicer, the Trustee,
the Master Servicer and the Trust Administrator. Any payment hereunder made by
the Servicer to any such Person shall be from the Servicer's own funds, without
reimbursement from the Trust Fund therefor.

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                                   ARTICLE IV

                       ADMINISTRATION AND MASTER SERVICING
                  OF THE MORTGAGE LOANS BY THE MASTER SERVICER

                  SECTION 4.01. Master Servicer.

                  The Master Servicer shall supervise, monitor and oversee the
obligation of the Servicer to service and administer the Mortgage Loans in
accordance with the terms of the Agreement and shall have full power and
authority to do any and all things which it may deem necessary or desirable in
connection with such master servicing and administration. In performing its
obligations hereunder, the Master Servicer shall act in a manner consistent with
Accepted Master Servicing Practices. Furthermore, the Master Servicer shall
oversee and consult with the Servicer as necessary from time-to-time to carry
out the Master Servicer's obligations hereunder, shall receive, review and
evaluate all reports, information and other data provided to the Master Servicer
by the Servicer and shall cause the Servicer to perform and observe the
covenants, obligations and conditions to be performed or observed by the
Servicer under this Agreement. The Master Servicer shall independently and
separately monitor the Servicer's servicing activities with respect to each
related Mortgage Loan, reconcile the results of such monitoring with such
information provided in the previous sentence on a monthly basis and coordinate
corrective adjustments to the Servicer's and Master Servicer's records. The
Master Servicer shall reconcile the results of its Mortgage Loan monitoring with
the actual remittances of the Servicer to the Distribution Account pursuant to
the terms hereof based on information provided to the Master Servicer by the
Trust Administrator pursuant to the third paragraph of Section 9.01.

                  The Trustee shall furnish the Servicer and the Master Servicer
with any limited powers of attorney and other documents in form as provided to
it necessary or appropriate to enable the Servicer and the Master Servicer to
service and administer the related Mortgage Loans and REO Property. The Trustee
shall have no responsibility for any action of the Master Servicer or the
Servicer pursuant to any such limited power of attorney and shall be indemnified
by the Master Servicer or the Servicer, as applicable, for any cost, liability
or expense incurred by the Trustee in connection with such Person's use or
misuse of any such power of attorney.

                  The Trustee shall provide access and shall cause the Custodian
to provide access and the Trust Administrator shall provide access, in each case
to the records and documentation in possession of the Trustee, the Custodian or
the Trust Administrator, as the case may be, regarding the related Mortgage
Loans and REO Property and the servicing thereof to the Certificateholders, the
FDIC, and the supervisory agents and examiners of the FDIC, such access being
afforded only upon reasonable prior written request and during normal business
hours at the office of the Trustee, the Custodian or the Trust Administrator;
provided, however, that, unless otherwise required by law, none of the Trustee,
the Custodian or the Trust Administrator shall be required to provide access to
such records and documentation if the provision thereof would violate the legal
right to privacy of any Mortgagor. The Trustee shall allow representatives of
the above entities and shall cause the Custodian to allow representatives of the
above entities and the Trust Administrator shall allow representatives of the
above entities, in each case to photocopy any of the records and documentation

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and shall provide equipment for that purpose at a charge that covers the
Trustee's, the Custodian's or the Trust Administrator's, as the case may be,
actual costs.

                  The Trustee shall execute and deliver to the Servicer upon
written request any court pleadings, requests for trustee's sale or other
documents necessary or desirable to (i) the foreclosure or trustee's sale with
respect to a Mortgaged Property; (ii) any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or any other Mortgage Loan
Document; (iii) obtain a deficiency judgment against the Mortgagor; or (iv)
enforce any other rights or remedies provided by the Mortgage Note or any other
Mortgage Loan Document or otherwise available at law or equity.

                  SECTION 4.02. REMIC-Related Covenants.

                  For as long as each REMIC shall exist, the Trustee and the
Trust Administrator shall act in accordance herewith to treat such REMIC as a
REMIC, and the Trustee and the Trust Administrator shall comply with any
directions of the Servicer or the Master Servicer to assure such continuing
treatment. In particular, the Trustee shall not (a) sell or permit the sale of
all or any portion of the Mortgage Loans or of any investment of deposits in an
Account unless such sale is as a result of a repurchase of the Mortgage Loans
pursuant to this Agreement or the Trustee has received a REMIC Opinion prepared
at the expense of the Trust Fund; and (b) other than with respect to a
substitution pursuant to the Mortgage Loan Purchase Agreement or Section 2.03 of
this Agreement, as applicable, accept any contribution to any REMIC after the
Startup Day without receipt of a Opinion of Counsel stating that such
contribution will not result in an Adverse REMIC Event as defined in Section
10.01(f).

                  SECTION 4.03. Monitoring of Servicer.

                  (a) The Master Servicer shall be responsible for monitoring
the compliance by the Servicer with its duties under this Agreement. In the
review of the Servicer's activities, the Master Servicer may rely upon an
Officer's Certificate of the Servicer with regard to the Servicer's compliance
with the terms of this Agreement. In the event that the Master Servicer, in its
judgment, determines that the Servicer should be terminated in accordance with
the terms hereof, or that a notice should be sent pursuant to the terms hereof
with respect to the occurrence of an event that, unless cured, would constitute
a Servicer Event of Termination, the Master Servicer shall notify the Servicer
and the Trustee thereof and the Master Servicer shall issue such notice or take
such other action as it deems appropriate.

                  (b) The Master Servicer, for the benefit of the Trustee and
the Certificateholders, shall enforce the obligations of the Servicer under this
Agreement, and shall, in the event that the Servicer fails to perform its
obligations in accordance with this Agreement, subject to the preceding
paragraph and Article VIII, cause the Trustee to terminate the rights and
obligations of the Servicer hereunder in accordance with the provisions of
Article VIII. Such enforcement, including, without limitation, the legal
prosecution of claims 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, provided that the Master

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Servicer shall not be required to prosecute or defend any legal action except to
the extent that the Master Servicer shall have received reasonable indemnity for
its costs and expenses in pursuing such action.

                  (c) The Master Servicer shall be entitled to be reimbursed by
the Servicer (or from amounts on deposit in the Distribution Account if the
Servicer is unable to fulfill its obligations hereunder) for all reasonable
out-of-pocket or third party costs associated with the transfer of servicing
from the predecessor Servicer (or if the predecessor Servicer is the Master
Servicer, from the Servicer immediately preceding the Master Servicer),
including without limitation, any reasonable out-of-pocket or third party 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 Master Servicer to correct any errors or insufficiencies in the servicing
data or otherwise to enable the Master Servicer to service the Mortgage Loans
properly and effectively, upon presentation of reasonable documentation of such
costs and expenses.

                  (d) The Master Servicer shall require the Servicer to comply
with the remittance requirements and other obligations set forth in this
Agreement.

                  (e) If the Master Servicer acts as successor Servicer, it will
not assume liability for the representations and warranties of the terminated
Servicer.

                  (f) The Master Servicer shall not be liable for any acts or
omissions of the Servicer.

                  SECTION 4.04. Fidelity Bond.

                  The Master Servicer, at its expense, shall maintain in effect
a blanket fidelity bond and an errors and omissions insurance policy, affording
coverage with respect to all directors, officers, employees and other Persons
acting on such Master Servicer's behalf, and covering errors and omissions in
the performance of the Master Servicer's obligations hereunder. The errors and
omissions insurance policy and the fidelity bond shall be in such form and
amount generally acceptable for entities serving as master servicers or
trustees.

                  SECTION 4.05. Power to Act; Procedures.

                  The Master Servicer shall master service the Mortgage Loans
and shall have full power and authority, subject to the REMIC Provisions and the
provisions of Article IX, to do any and all things that it may deem necessary or
desirable in connection with the master servicing and administration of the
Mortgage Loans, including but not limited to the power and authority (i) to
execute and deliver, on behalf of the Certificateholders and the Trustee,
customary consents or waivers and other instruments and documents, (ii) to
consent to transfers of any Mortgaged Property and assumptions of the Mortgage
Notes and related Mortgages, (iii) to collect any Insurance Proceeds and
Liquidation Proceeds, and (iv) to effectuate foreclosure or other conversion of
the ownership of the Mortgaged Property securing any Mortgage Loan, in each
case, in accordance with the provisions of this Agreement; provided, however,
that the Master Servicer shall not (and, consistent with its responsibilities
under Section 4.03, shall not permit the Servicer to) knowingly

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or intentionally take any action, or fail to take (or fail to cause to be taken)
any action reasonably within its control and the scope of duties more
specifically set forth herein, that, under the REMIC Provisions, if taken or not
taken, as the case may be, would cause any REMIC created hereunder to fail to
qualify as a REMIC or result in the imposition of a tax upon the Trust Fund
(including but not limited to the tax on prohibited transactions as defined in
Section 860F(a)(2) of the Code and the tax on contributions to a REMIC set forth
in Section 860G(d) of the Code) unless the Master Servicer has received an
Opinion of Counsel (but not at the expense of the Master Servicer) to the effect
that the contemplated action will not would cause any REMIC created hereunder to
fail to qualify as a REMIC or result in the imposition of a tax upon any REMIC
created hereunder. The Trustee shall furnish the Master Servicer, upon written
request from a Servicing Officer, with any powers of attorney empowering the
Master Servicer or the Servicer to execute and deliver instruments of
satisfaction or cancellation, or of partial or full release or discharge, and to
foreclose upon or otherwise liquidate Mortgaged Property, and to appeal,
prosecute or defend in any court action relating to the Mortgage Loans or the
Mortgaged Property, in accordance with this Agreement, and the Trustee shall
execute and deliver such other documents, as the Master Servicer or the Servicer
may request, to enable the Master Servicer to master service and administer the
Mortgage Loans and carry out its duties hereunder, in each case in accordance
with Accepted Master Servicing Practices (and the Trustee shall have no
liability for misuse of any such powers of attorney by the Master Servicer or
the Servicer and shall be indemnified by the Master Servicer or the Servicer, as
applicable, for any cost, liability or expense incurred by the Trustee in
connection with such Person's use or misuse of any such power of attorney). If
the Master Servicer or the Trustee has been advised that it is likely that the
laws of the state in which action is to be taken prohibit such action if taken
in the name of the Trustee or that the Trustee would be adversely affected under
the "doing business" or tax laws of such state if such action is taken in its
name, the Master Servicer shall join with the Trustee in the appointment of a
co-trustee pursuant to Section 9.10. In the performance of its duties hereunder,
the Master Servicer shall be an independent contractor and shall not, except in
those instances where it is taking action in the name of the Trustee, be deemed
to be the agent of the Trustee.

                  SECTION 4.06. Due-on-Sale Clauses; Assumption Agreements.

                  To the extent Mortgage Loans contain enforceable due-on-sale
clauses, the Master Servicer shall cause the Servicer to enforce such clauses in
accordance with this Agreement.

                  SECTION 4.07. Reserved.

                  SECTION 4.08. Documents, Records and Funds in Possession of
                                Master Servicer To Be Held for Trustee.

                  (a) The Master Servicer shall transmit to the Trustee or
Custodian such documents and instruments coming into the possession of the
Master Servicer from time to time as are required by the terms hereof to be
delivered to the Trustee or Custodian. Any funds received by the Master Servicer
in respect of any Mortgage Loan or which otherwise are collected by the Master
Servicer as Liquidation Proceeds or Insurance Proceeds in respect of any
Mortgage Loan shall be remitted to the Trust Administrator for deposit in the
Distribution Account. The Master Servicer shall, and, subject to Section
3.23, shall cause the Servicer to, provide access to information and

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documentation regarding the Mortgage Loans to the Trustee, its agents and
accountants at any time upon reasonable request and during normal business
hours, and to Certificateholders that are savings and loan associations, banks
or insurance companies, the Office of Thrift Supervision, the FDIC and the
supervisory agents and examiners of such Office and Corporation or examiners of
any other federal or state banking or insurance regulatory authority if so
required by applicable regulations of the Office of Thrift Supervision or other
regulatory authority, such access to be afforded without charge but only upon
reasonable request in writing and during normal business hours at the offices of
the Master Servicer designated by it. In fulfilling such a request the Master
Servicer shall not be responsible for determining the sufficiency of such
information.

                  (b) All funds collected or held by, or under the control of,
the Master Servicer, in respect of any Mortgage Loans, whether from the
collection of principal and interest payments or from Liquidation Proceeds or
Insurance Proceeds, shall be remitted to the Trust Administrator for deposit in
the Distribution Account.

                  SECTION 4.09. [Reserved].

                  SECTION 4.10. [Reserved].

                  SECTION 4.11. [Reserved].

                  SECTION 4.12. Trustee to Retain Possession of Certain
                                Insurance Policies and Documents.

                  The Trustee or the applicable Custodian, shall retain
possession and custody of the originals (to the extent available) of any primary
mortgage insurance policies, or certificate of insurance if applicable, and any
certificates of renewal as to the foregoing as may be issued from time to time
as contemplated by this Agreement. Until all amounts distributable in respect of
the Certificates has been distributed in full and the Master Servicer and the
Servicer have otherwise fulfilled their respective obligations under this
Agreement, the Trustee or the Custodian shall also retain possession and custody
of each Mortgage File in accordance with and subject to the terms and conditions
of this Agreement and the applicable custodial agreement. The Master Servicer
shall promptly deliver or cause to be delivered to the Trustee or the Custodian,
upon the execution or receipt thereof the originals of any primary mortgage
insurance policies, any certificates of renewal, and such other documents or
instruments that constitute Mortgage Loan Documents that come into the
possession of the Master Servicer from time to time.

                  SECTION 4.13. [Reserved].

                  SECTION 4.14. Compensation for the Master Servicer.

                  As compensation for the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to the Master Servicing Fee,
payable to the Master Servicer by the Trust Administrator on each Distribution
Date (with respect to the calendar month that immediately preceded the month of
such Distribution Date) from funds in the Distribution Account. The Master
Servicing Fee payable to the Master Servicer in respect of any Distribution Date
shall be reduced in

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accordance with Section 4.19. The Master Servicer shall be required to pay all
expenses incurred by it in connection with its activities hereunder and shall
not be entitled to reimbursement therefor except as provided in this Agreement.

                  SECTION 4.15. [Reserved].

                  SECTION 4.16. Annual Officer's Certificate as to Compliance.

                  (a) The Master Servicer shall deliver to the Trustee and the
Rating Agencies on or before March 1st of each year, commencing on March 1,
2004, an Officer's Certificate, in the form attached hereto as Exhibit P-2,
certifying that with respect to the period ending December 31 of the prior year:
(i) such Servicing Officer has reviewed the activities of such Master Servicer
during the preceding calendar year or portion thereof and its performance under
this Agreement, (ii) to the best of such Servicing Officer's knowledge, based on
such review, such Master Servicer has performed and fulfilled its duties,
responsibilities and obligations under this Agreement in all material respects
throughout such year, or, if there has been a default in the fulfillment of any
such duties, responsibilities or obligations, specifying each such default known
to such Servicing Officer and the nature and status thereof, (iii) nothing has
come to the attention of such Servicing Officer to lead such Servicing Officer
to believe that the Servicer has failed to perform any of its duties,
responsibilities and obligations under this Agreement in all material respects
throughout such year, or, if there has been a material default in the
performance or fulfillment of any such duties, responsibilities or obligations,
specifying each such default known to such Servicing Officer and the nature and
status thereof.

                  (b) Copies of such statements shall be provided to any
Certificateholder upon request, by the Master Servicer or by the Trustee at the
Master Servicer's expense if the Master Servicer failed to provide such copies
(unless (i) the Master Servicer shall have failed to provide the Trustee with
such statement or (ii) the Trustee shall be unaware of the Master Servicer's
failure to provide such statement).

                  SECTION 4.17. Annual Independent Accountant's Servicing
                                Report.

                  If the Master Servicer has, during the course of any calendar
year, directly serviced any of the Mortgage Loans, then the Master Servicer at
its expense shall cause a nationally recognized firm of independent certified
public accountants to furnish a statement to the Trustee, the Rating Agencies
and the Seller on or before March 1st of each year, commencing on March 1, 2004
to the effect that, with respect to the most recently ended fiscal year, such
firm has examined certain records and documents relating to the Master
Servicer's performance of its servicing obligations under this Agreement and
pooling and servicing and trust agreements in material respects similar to this
Agreement and to each other and that, on the basis of such examination conducted
substantially in compliance with the audit program for mortgages serviced for
Freddie Mac or the Uniform Single Attestation Program for Mortgage Bankers, such
firm is of the opinion that the Master Servicer's activities have been conducted
in compliance with this Agreement, or that such examination has disclosed no
material items of noncompliance except for (i) such exceptions as such firm
believes to be immaterial, (ii) such other exceptions as are set forth in such
statement and (iii) such exceptions that the Uniform Single Attestation Program
for Mortgage Bankers or the Audit

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Program for Mortgages Serviced by Freddie Mac requires it to report. Copies of
such statements shall be provided to any Certificateholder upon request by the
Master Servicer, or by the Trustee at the expense of the Master Servicer if the
Master Servicer shall fail to provide such copies. If such report discloses
exceptions that are material, the Master Servicer shall advise the Trustee
whether such exceptions have been or are susceptible of cure, and will take
prompt action to do so.

                  SECTION 4.18. [Reserved].

                  SECTION 4.19. Obligation of the Master Servicer in Respect of
                                Prepayment Interest Shortfalls.

                  In the event of a Prepayment Interest Shortfall, the Master
Servicer shall remit to the Trustee not later than the Distribution Date an
amount equal to the lesser of (i) the aggregate amounts required to be paid by
the Servicer with respect to Prepayment Interest Shortfalls attributable to
Principal Prepayments on the related Mortgage Loans for the related Distribution
Date, and not so paid by the Servicer and (ii) the Master Servicing Fee for such
Distribution Date, without reimbursement therefor.

                  SECTION 4.20. [Reserved].

                  SECTION 4.21. [Reserved].

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                                    ARTICLE V

                                  FLOW OF FUNDS

                  SECTION 5.01. Distributions.

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

                  (i) to the Holders of the Class 1A-1 Certificates, the Monthly
         Interest Distributable Amount and the Unpaid Interest Shortfall Amount,
         if any, for such Certificates; and

                  (ii) concurrently, to the Holders of the Class 2A-1
         Certificates and the Class 2A-2 Certificates, on a PRO RATA basis based
         on the interest entitlement of each such Class, an amount equal to the
         excess, if any, of (x) the amount required to be distributed pursuant
         to Section 5.01(a)(II)(i) below for such Distribution Date over (y) the
         amount actually distributed pursuant to such clause from the Group II
         Interest Remittance Amount.

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

                  (i) concurrently, to the Holders of the Class 2A-1
         Certificates and the Class 2A-2 Certificates, on a PRO RATA basis based
         on the interest entitlement of each such Class, the Monthly Interest
         Distributable Amount and the Unpaid Interest Shortfall Amount, if any,
         for such Certificates; and

                  (ii) to the Holders of the Class 1A-1 Certificates, an amount
         equal to the excess, if any, of (x) the amount required to be
         distributed pursuant to Section 5.01(a)(I)(i) above for such
         Distribution Date over (y) the amount actually distributed pursuant to
         such clause from the Group I Interest Remittance Amount.

                  (III) On each Distribution Date, following the distributions
made pursuant to Section 5.01(a)(I) and (II) above, the Trust Administrator
shall make the following disbursements and transfers in the order of priority
described below, in each case to the extent of the sum of the Group I Interest
Remittance Amount and the Group II Interest Remittance Amount remaining
undistributed for such Distribution Date.

                  (i) to the Holders of the Class M-1 Certificates, the Monthly
         Interest Distributable Amount for to such Certificates;

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                  (ii) to the Holders of the Class M-2 Certificates, the Monthly
         Interest Distributable Amount for to such Certificates;

                  (iii) to the Holders of the Class M-3 Certificates, the
         Monthly Interest Distributable Amount for to such Certificates;

                  (iv) to the Holders of the Class M-4 Certificates, the Monthly
         Interest Distributable Amount for to such Certificates; and

                  (v) to the Holders of the Class M-5 Certificates, the Monthly
         Interest Distributable Amount for to such Certificates.

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

                  (i) first, to the Holders of the Class 1A-1 Certificates,
         until the Certificate Principal Balance thereof has been reduced to
         zero; and

                  (ii) second, after taking into account the amount distributed
         to the Holders of the Class 2A-1 Certificates and the Class 2A-2
         Certificates pursuant to clause (b)(II)(i) below on such Distribution
         Date, to the Holders of the Class 2A-1 Certificates, until the
         Certificate Principal Balance thereof has been reduced to zero and
         then, to the holders of the Class 2A-2 Certificates, until the
         Certificate Principal Balance thereof has been reduced to zero.

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

                  (i) first, to the Holders of the Class 2A-1 Certificates,
         until the Certificate Principal Balance thereof has been reduced to
         zero and then, to the holders of the Class 2A-2 Certificates, until the
         Certificate Principal Balance thereof has been reduced to zero; and

                  (ii) second, after taking into account the amount distributed
         to the Holders of the Class 1A-1 Certificates pursuant to clause
         (b)(I)(i) above on such Distribution Date, to the Holders of the Class
         1A-1 Certificates, until the Certificate Principal Balance thereof has
         been reduced to zero.

                  (III) On each Distribution Date (a) prior to the Stepdown Date
or (b) on which a Trigger Event is in effect, distributions in respect of
principal to the extent of the sum of the Group I Principal Distribution Amount
and the Group II Principal Distribution Amount remaining undistributed for such
Distribution Date shall be made in the following amounts and order of priority:

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

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

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

                  (iv) fourth, to the Holders of the Class M-4 Certificates,
until the Certificate Principal Balance thereof has been reduced to zero; and

                  (v) fifth, to the Holders of the Class M-5 Certificates, until
the Certificate Principal Balance thereof has been reduced to zero.

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

                  (i) first, to the Holders of the Class 1A-1 Certificates,
         until the Certificate Principal Balance thereof has been reduced to
         zero, the Class 1A Principal Distribution Amount;

                  (ii) second, to the holders of the Class 2A-1 Certificates and
         the Class 2A-2 Certificates (distributable to the holders of the Class
         2A-1 Certificates, until the Certificate Principal Balance thereof has
         been reduced to zero and then, to the holders of the Class 2A-2
         Certificates, until the Certificate Principal Balance has been reduced
         to zero), to extent of the portion, if any, of the Class 1A Principal
         Distribution Amount remaining undistributed pursuant to clause
         (c)(I)(i) above on such Distribution Date, and after taking into
         account the amount distributed to the Holders of the Class 2A-2
         Certificates and the Class 2A-2 Certificates pursuant to clause
         (c)(II)(i) below on such Distribution Date; and

                  (iii) third, to the holders of the Class 2A-1 Certificates and
         the Class 2A-2 Certificates (distributable to the holders of the Class
         2A-1 Certificates, until the Certificate Principal Balance thereof has
         been reduced to zero and then, to the holders of the Class 2A-2
         Certificates, until the Certificate Principal Balance has been reduced
         to zero), an amount equal to the excess, if any, of (x) the amount
         required to be distributed pursuant to clause (c)(II)(i) below for such
         Distribution Date over (y) the sum of (A) the amount actually
         distributed pursuant to clause (c)(II)(i) below from the Group II
         Principal Distribution Amount on such Distribution Date and (B) the
         amount, if any, distributed to the Holders of the Class 2A-1
         Certificates and the Class 2A-2 Certificates pursuant to clause
         (c)(I)(ii) above on such Distribution Date.

                  (II) On each Distribution Date (a) on or after the Stepdown
Date and (b) on which a Trigger Event is not in effect, distributions in respect
of principal to the extent of the Group II Principal Distribution Amount shall
be made in the following amounts and order of priority:

                  (i) first, to the holders of the Class 2A-1 Certificates and
         the Class 2A-2 Certificates (distributable to the holders of the Class
         2A-1 Certificates, until the Certificate

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         Principal Balance thereof has been reduced to zero and then, to the
         holders of the Class 2A-2 Certificates, until the Certificate Principal
         Balance has been reduced to zero), the Class 2A Principal Distribution
         Amount;

                  (ii) second, to the holders of the Class 1A-1 Certificates,
         until the Certificate Principal Balance thereof has been reduced to
         zero, to extent of the portion, if any, of the Class 2A Principal
         Distribution Amount remaining undistributed pursuant to clause
         (c)(II)(i) above on such Distribution Date, and after taking into
         account the amount distributed to the Holders of the Class 1A-1
         Certificates pursuant to clause (c)(I)(i) above on such Distribution
         Date; and

                  (iii) third, to the Holders of the Class 1A-1 Certificates,
         until the Certificate Principal Balance thereof has been reduced to
         zero, an amount equal to the excess, if any, of (x) the amount required
         to be distributed pursuant to clause (c)(I)(i) above for such
         Distribution Date over (y) the sum of (A) the amount actually
         distributed pursuant to clause (c)(I)(i) above from the Group I
         Principal Distribution Amount on such Distribution Date and (B) the
         amount, if any, distributed to the Holders of the Class 1A-1
         Certificates pursuant to clause (c)(II)(ii) above on such Distribution
         Date.

                  (III) On each Distribution Date (a) on or after the Stepdown
Date and (b) on which a Trigger Event is not in effect, distributions in respect
of principal to the extent of the sum of the Group I Principal Distribution
Amount and the Group II Principal Distribution Amount remaining undistributed
for such Distribution Date shall be made in the following amounts and order of
priority:

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

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

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

                  (iv) fourth, to the Holders of the Class M-4 Certificates, the
Class M-4 Principal Distribution Amount until the Certificate Principal Balance
thereof has been reduced to zero; and

                  (v) fifth, to the Holders of the Class M-5 Certificates, the
Class M-5 Principal Distribution Amount until the Certificate Principal Balance
thereof has been reduced to zero.

                  (d) On each Distribution Date, the Net Monthly Excess Cashflow
shall be distributed as follows:

                  (i) to the Holders of the Class or Classes of Certificates
         then entitled to receive distributions in respect of principal, in an
         amount equal to any Extra Principal Distribution Amount, distributable
         to such Holders as part of the Group I Principal Distribution Amount

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         and/or the Group II Principal Distribution Amount as described under
         Section 5.01(b) and Section 5.01(c) above;

                  (ii) to the Holders of the Class M-1 Certificates, in an
         amount equal to the Unpaid Interest Shortfall Amount allocable to such
         Certificates;

                  (iii) to the Holders of the Class M-1 Certificates, in an
         amount equal to the Allocated Realized Loss Amounts allocable to such
         Certificates;

                  (iv) to the Holders of the Class M-2 Certificates, in an
         amount equal to the Unpaid Interest Shortfall Amount allocable to such
         Certificates;

                  (v) to the Holders of the Class M-2 Certificates, in an amount
         equal to the Allocated Realized Loss Amounts allocable to such
         Certificates;

                  (vi) to the Holders of the Class M-3 Certificates, in an
         amount equal to the Unpaid Interest Shortfall Amount allocable to such
         Certificates;

                  (vii) to the Holders of the Class M-3 Certificates, in an
         amount equal to the Allocated Realized Loss Amount allocable to such
         Certificates;

                  (viii) to the Holders of the Class M-4 Certificates, in an
amount equal to the Unpaid Interest Shortfall Amount allocable to such
Certificates;

                  (ix) to the Holders of the Class M-4 Certificates, in an
         amount equal to the Allocated Realized Loss Amounts allocable to such
         Certificates;

                  (x) to the Holders of the Class M-5 Certificates, in an amount
         equal to the Unpaid Interest Shortfall Amount allocable to such
         Certificates;

                  (xi) to the Holders of the Class M-5 Certificates, in an
         amount equal to the Allocated Realized Loss Amounts allocable to such
         Certificates;

                  (xii) to the Net WAC Rate Carryover Reserve Account, the
         amount by which any Net WAC Rate Carryover Amounts for such
         Distribution Date exceed the amounts received by the Trustee under the
         Cap Contract;

                  (xiii) [reserved];

                  (xiv) to the Holders of the Class C Certificates, the Monthly
         Interest Distributable Amount for such Class and any remaining
         Overcollateralization Release Amount for such Distribution Date;

                  (xv) if such Distribution Date follows the Prepayment Period
         during which occurs the latest date on which a Prepayment Charge may be
         required to be paid in respect of any Mortgage Loans, to the Holders of
         the Class P Certificates, in reduction of the Certificate

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         Principal Balance thereof, until the Certificate Principal Balance
         thereof is reduced to zero; and

                  (xvi) any remaining amounts to the Holders of the Residual
         Certificates (in respect of the Class R-1 Interest or Class R-2
         Interest, as appropriate).

                  (e) On each Distribution Date, after making the distributions
of the Available Funds as set forth in Section 5.01(a) through (d) above, the
Trust Administrator will withdraw from the Net WAC Rate Carryover Reserve
Account, to the extent of amounts on deposit therein, the aggregate of any Net
WAC Rate Carryover Amounts for such Distribution Date and distribute such amount
in the following order of priority:

         (A) first, to the Offered Certificates, any related unpaid Net WAC Rate
Carryover Amount (in each case only up to a maximum amount equal to the Cap
Amount for the related Class) distributed in the following order of priority:

                  (i) concurrently, to each Class of the Class A Certificates,
on a PRO RATA basis based on the related unpaid Net WAC Rate Carryover Amount
for each such Class;

                  (ii) to the Class M-1 Certificates;

                  (iii) to the Class M-2 Certificates;

                  (iv) to the Class M-3 Certificates;

                  (v) to the Class M-4 Certificates; and

                  (vi) to the Class M-5 Certificates; and

         (B) second, to the Offered Certificates, any related unpaid Net WAC
Rate Carryover Amount (after taking into account distributions pursuant to (A)
above), distributed in the following order of priority:

                  (i) concurrently, to each Class of the Class A Certificates,
on a PRO RATA basis based on the related unpaid Net WAC Rate Carryover Amount
for each such Class;

                  (ii) to the Class M-1 Certificates;

                  (iii) to the Class M-2 Certificates;

                  (iv) to the Class M-3 Certificates;

                  (v) to the Class M-4 Certificates; and

                  (vi) to the Class M-5 Certificates.

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<PAGE>

                  (f) On each Distribution Date, all amounts representing
Prepayment Charges in respect of the Mortgage Loans received during the related
Prepayment Period and any Servicer Prepayment Charge Amounts paid by the
Servicer during the related Prepayment Period will be withdrawn from the
Distribution Account and distributed by the Trust Administrator to the Holders
of the Class P Certificates and shall not be available for distribution to the
Holders of any other Class of Certificates. The payment of the foregoing amounts
to the Holders of the Class P Certificates shall not reduce the Certificate
Principal Balances thereof.

                  (g) The Trust Administrator shall make distributions in
respect of a Distribution Date to each Certificateholder of record on the
related Record Date (other than as provided in Section 11.01 respecting the
final distribution), by check or money order mailed to such Certificateholder at
the address appearing in the Certificate Register, or by wire transfer.
Distributions among Certificateholders shall be made in proportion to the
Percentage Interests evidenced by the Certificates held by such
Certificateholders.

                  (h) Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, which shall credit 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.
All such credits and disbursements with respect to a Book-Entry Certificate are
to be made by the Depository and the Depository Participants in accordance with
the provisions of the Certificates. None of the Trustee, the Trust
Administrator, the Depositor, the Servicer or the Master Servicer shall have any
responsibility therefor except as otherwise provided by applicable law.

                  SECTION 5.02. [Reserved].

                  SECTION 5.03. Statements.

                  (a) On each Distribution Date, based, as applicable, on
information provided to it by the Servicer, the Trust Administrator shall
prepare and make available to each Holder of the Regular Certificates, the
Servicer and the Rating Agencies, a statement as to the distributions made on
such Distribution Date:

                  (i) the amount of the distribution made on such Distribution
         Date to the Holders of each Class of Regular Certificates, separately
         identified, allocable to principal and the amount of the distribution
         made to the Holders of the Class P Certificates allocable to Prepayment
         Charges and Servicer Prepayment Charge Payment Amounts;

                  (ii) the amount of the distribution made on such Distribution
         Date to the Holders of each Class of Regular Certificates (other than
         the Class P Certificates) allocable to interest, separately identified;

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<PAGE>

                  (iii) the Overcollateralized Amount, the Overcollateralization
         Release Amount, the Overcollateralization Deficiency Amount and the
         Overcollateralization Target Amount as of such Distribution Date and
         the Excess Overcollateralized Amount for the Mortgage Pool for such
         Distribution Date;

                  (iv) the aggregate amount of Servicing Fees and Master
         Servicing Fees received by the Servicer and the Master Servicer with
         respect to the related Due Period and such other customary information
         as the Trust Administrator deems necessary or desirable, or which a
         Certificateholder reasonably requests, to enable Certificateholders to
         prepare their tax returns;

                  (v) the aggregate amount of Advances for the related Due
         Period;

                  (vi) the Pool Balance at the Close of Business at the end of
         the related Due Period;

                  (vii) the number, aggregate principal balance, weighted
         average remaining term to maturity and weighted average Mortgage Rate
         of the Mortgage Loans as of the related Determination Date;

                  (viii) the number and aggregate unpaid principal balance of
         Mortgage Loans that were (A) Delinquent (exclusive of Mortgage Loans in
         bankruptcy or foreclosure and REO Properties) (1) 30 to 59 days, (2) 60
         to 89 days and (3) 90 or more days, (B) as to which foreclosure
         proceedings have been commenced and Delinquent (1) 30 to 59 days, (2)
         60 to 89 days and (3) 90 or more days, (C) in bankruptcy and Delinquent
         (1) 30 to 59 days, (2) 60 to 89 days and (3) 90 or more days, in each
         case as of the Close of Business on the last day of the calendar month
         preceding such Distribution Date and (D) REO Properties;

                  (ix) [reserved]

                  (x) the total number and cumulative principal balance of all
         REO Properties as of the Close of Business of the last day of the
         preceding Prepayment Period;

                  (xi) the aggregate amount of Principal Prepayments made during
         the related Prepayment Period;

                  (xii) the aggregate amount of Realized Losses incurred during
         the related Prepayment Period and the cumulative amount of Realized
         Losses;

                  (xiii) the aggregate amount of extraordinary Trust Fund
         expenses withdrawn from the Collection Account or the Distribution
         Account for such Distribution Date;

                  (xiv) the Certificate Principal Balance of the Class A
         Certificates, the Mezzanine Certificates and the Class C Certificates,
         after giving effect to the distributions made on such Distribution
         Date;

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<PAGE>

                  (xv) the Monthly Interest Distributable Amount in respect of
         each Class of Class A Certificates, each Class of Mezzanine
         Certificates and the Class C Certificates for such Distribution Date
         and the Unpaid Interest Shortfall Amount, if any, with respect to the
         Class A Certificates, the Mezzanine Certificates and the Class C
         Certificates for such Distribution Date;

                  (xvi) the aggregate amount of any Prepayment Interest
         Shortfalls for such Distribution Date, to the extent not covered by
         payments by the Servicer pursuant to Section 3.27 or the Master
         Servicer pursuant to Section 4.19;

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

                  (xviii) the Net WAC Rate Carryover Amount for the Class A
         Certificates and the Mezzanine Certificates, if any, for such
         Distribution Date and the amount remaining unpaid after reimbursements
         therefor on such Distribution Date;

                  (xix) any Overcollateralization Target Amount,
         Overcollateralized Amount and Overcollateralization Deficiency Amount
         after giving effect to the distribution of principal on such
         Distribution Date;

                  (xx) when the Stepdown Date or a Trigger Event has occurred
         and when the Servicer Termination Test or the Fitch Servicer
         Termination Test has been failed;

                  (xxi) the Available Funds for such Distribution Date;

                  (xxii) the respective Pass-Through Rates applicable to each
         Class of Class A Certificates, each Class of Mezzanine Certificates and
         the Class C Certificates for such Distribution Date and the
         Pass-Through Rate applicable to each Class of Class A Certificates and
         each Class of Mezzanine Certificates for the immediately succeeding
         Distribution Date; and

                  (xxiii) payments, if any, made under the Cap Contract.

                  The Trust Administrator will make such statement (and, at its
option, any additional files containing the same information in an alternative
format) available each month to Certificateholders and the Rating Agencies via
the Trust Administrator's internet website. The Trust Administrator's internet
website shall initially be located at "www.ctslink.com". Assistance in using the
website can be obtained by calling the Trust Administrator's customer service
desk at (301) 815-6600. Parties that are unable to use the above distribution
option are entitled to have a paper copy mailed to them via first class mail by
calling the customer service desk and indicating such. The Trust Administrator
shall have the right to change the way such statements are distributed in order
to make such distribution more convenient and/or more accessible to the above
parties and the Trust Administrator shall provide timely and adequate
notification to all above parties regarding any such changes. As a condition to
access to the Trust Administrator's internet website, the Trust Administrator
may require registration and the acceptance of a disclaimer.

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                  The Trust Administrator will not be liable for the
dissemination of information in accordance with this Agreement. The Trust
Administrator shall also be entitled to rely on but shall not be responsible for
the content or accuracy of any information provided by third parties for
purposes of preparing the Distribution Date statement and may affix thereto any
disclaimer it deems appropriate in its reasonable discretion (without suggesting
liability on the part of any other party thereto).

                  In the case of information furnished pursuant to subclauses
(i) through (iii) above, the amounts shall be expressed in a separate section of
the report as a dollar amount for each Class for each $1,000 original dollar
amount as of the Cut-off Date.

                  (b) Within a reasonable period of time after the end of each
calendar year, the Trust Administrator shall, upon written request, furnish to
each Person who at any time during the calendar year was a Certificateholder of
a Regular Certificate, if requested in writing by such Person, such information
as is reasonably necessary to provide to such Person a statement containing the
information set forth in subclauses (i) through (iii) above, aggregated for such
calendar year or applicable portion thereof during which such Person was a
Certificateholder. Such obligation of the Trust Administrator shall be deemed to
have been satisfied to the extent that substantially comparable information
shall be prepared and furnished by the Trust Administrator to Certificateholders
pursuant to any requirements of the Code as are in force from time to time.

                  (c) On each Distribution Date, the Trust Administrator shall
make available to the Residual Certificateholders a copy of the reports
forwarded to the Regular Certificateholders in respect of such Distribution Date
with such other information as the Trust Administrator deems necessary or
appropriate.

                  (d) Within a reasonable period of time after the end of each
calendar year, the Trust Administrator shall deliver to each Person who at any
time during the calendar year was a Residual Certificateholder, if requested in
writing by such Person, such information as is reasonably necessary to provide
to such Person a statement containing the information provided pursuant to the
previous paragraph aggregated for such calendar year or applicable portion
thereof during which such Person was a Residual Certificateholder. Such
obligation of the Trust Administrator shall be deemed to have been satisfied to
the extent that substantially comparable information shall be prepared and
furnished to Certificateholders by the Trust Administrator pursuant to any
requirements of the Code as from time to time in force.

                  SECTION 5.04. Remittance Reports; Advances.

                  (a) On each Determination Date, the Servicer shall deliver to
the Master Servicer and the Trust Administrator by telecopy or electronic mail
(or by such other means as the Servicer, the Master Servicer and the Trust
Administrator may agree from time to time) a Remittance Report with respect to
the related Distribution Date in form and substance acceptable to the Master
Servicer with such additions, deletions and modifications as agreed to by the
Master Servicer, the Trust Administrator and the Servicer. Not later than each
Determination Date, the Servicer shall deliver or cause to be delivered to the
Trust Administrator in addition to the information provided on the Remittance
Report, such other information reasonably available to it with respect to the
Mortgage

                                      106
<PAGE>

Loans as the Master Servicer or the Trust Administrator may reasonably require
so as to enable the Master Servicer to master service the Mortgage Loans and
oversee the servicing by the Servicer and the Trust Administrator to perform the
calculations necessary to make the distributions contemplated by Section 5.01
and to prepare the statements to Certificateholders contemplated by Section
5.03. Neither the Trust Administrator nor, subject to Section 4.01, the Master
Servicer shall be responsible to recompute, recalculate or verify any
information provided to it by the Servicer.

                  (b) The amount of Advances to be made by the Servicer for any
Distribution Date shall equal, subject to Section 5.04(d), the sum of (i) the
aggregate amount of Monthly Payments (net of the related Servicing Fee), due
during the related Due Period in respect of the Mortgage Loans, which Monthly
Payments were delinquent on a contractual basis as of the Close of Business on
the related Determination Date and (ii) with respect to each REO Property, which
REO Property was acquired during or prior to the related Due Period and as to
which REO Property an REO Disposition did not occur during the related Due
Period, an amount equal to the excess, if any, of the REO Imputed Interest on
such REO Property for the most recently ended calendar month, over the net
income from such REO Property transferred to the Distribution Account pursuant
to Section 3.24 for distribution on such Distribution Date. For purposes of the
preceding sentence, the Monthly Payment on each Balloon Mortgage Loan with a
delinquent Balloon Payment is equal to the assumed monthly payment that would
have been due on the related Due Date based on the original principal
amortization schedule for such Balloon Mortgage Loan.

                  On or before 2:00 p.m. New York time on the Servicer
Remittance Date, the Servicer shall remit in immediately available funds to the
Trust Administrator for deposit in the Distribution Account an amount equal to
the aggregate amount of Advances, if any, to be made in respect of the Mortgage
Loans and REO Properties for the related Distribution Date either (i) from its
own funds or (ii) from the Collection Account, to the extent of funds held
therein for future distribution (in which case it will cause to be made an
appropriate entry in the records of Collection Account that amounts held for
future distribution have been, as permitted by this Section 5.04, used by the
Servicer in discharge of any such Advance) or (iii) in the form of any
combination of (i) and (ii) aggregating the total amount of Advances to be made
by the Servicer with respect to the Mortgage Loans and REO Properties. Any
amounts held for future distribution used by the Servicer to make an Advance as
permitted in the preceding sentence shall be appropriately reflected in the
Servicer's records and replaced by the Servicer by deposit in the Collection
Account on or before any future Servicer Remittance Date to the extent that the
Available Funds for the related Distribution Date (determined without regard to
Advances to be made on the Servicer Remittance Date) shall be less than the
total amount that would be distributed to the Classes of Certificateholders
pursuant to Section 5.01 on such Distribution Date if such amounts held for
future distributions had not been so used to make Advances. The Trust
Administrator will provide notice to the Servicer by telecopy by the Close of
Business on any Servicer Remittance Date in the event that the amount remitted
by the Servicer to the Trust Administrator on such date is less than the
Advances required to be made by the Servicer for the related Distribution Date,
as set forth in the related Remittance Report.

                  (c) The obligation of the Servicer to make such Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Mortgage Loan, shall continue until the
Mortgage Loan is paid in full or until all Liquidation Proceeds thereon have
been recovered, or a Final Recovery Determination has been made thereon.

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<PAGE>

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

                  (e) Subject to and in accordance with the provisions of
Article VIII, in the event the Servicer fails to make any such P&I Advance, then
the Master Servicer (in its capacity as successor Servicer) or any other
successor Servicer shall be required to make such P&I Advance on the
Distribution Date on which the Servicer was required to make such Advance,
subject to its determination of recoverability.

                  SECTION 5.05. [Reserved]

                  SECTION 5.06. Reports Filed with Securities and Exchange
                                Commission.

                  The Depositor shall prepare or cause to be prepared the
initial current report on Form 8-K. Within 15 days after each Distribution Date,
the Trust Administrator shall, in accordance with industry standards, file with
the Commission via the Electronic Data Gathering and Retrieval System ("EDGAR"),
a Form 8-K with a copy of the statement to be furnished to the
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
January 30, 2004, the Trust Administrator shall, in accordance with industry
standards, file a Form 15 Suspension Notice with respect to the Trust Fund, if
applicable. Prior to (i) March 31, 2004 and (ii) unless and until a Form 15
Suspension Notice shall have been filed, March 31st of each year thereafter, the
Master Servicer, in its capacity as master servicer hereunder, shall execute and
file a Form 10-K, in substance conforming to industry standards, with respect to
the Trust. Such Form 10-K shall include the Master Servicer Certification
(substantially in the form attached hereto as Exhibit N-2), the annual
independent accountant's servicing report and annual statement of compliance to
be delivered by the Servicer pursuant to Sections 3.20 and 3.21 and the annual
independent accountant's servicing report and annual statement of compliance to
be delivered by the Master Servicer pursuant to Sections 4.16 and 4.17. The
Depositor hereby grants to the Trust Administrator a limited power of attorney
to execute and file the Form 8-K on behalf of the Depositor. Such power of
attorney shall continue until either the earlier of (i) receipt by the Trust
Administrator from the Depositor of written termination of such power of
attorney and (ii) the termination of the Trust Fund. The Depositor agrees to
promptly furnish to the Trust Administrator and the Master Servicer, from time
to time upon request, such further information, reports and financial statements
within its control related to this Agreement or the Mortgage Loans as the Trust
Administrator or the Master Servicer reasonably deems appropriate to prepare and
file all necessary reports with the Commission. Neither the Trust Administrator
nor the Master Servicer shall have any responsibility to file any items other
than those specified in this Section 5.06; provided, however, the Trust
Administrator and the Master Servicer will cooperate with the Depositor in
connection with any additional filings with respect to the Trust Fund as the
Depositor deems necessary under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Fees and expenses incurred by the Trust Administrator or
the Master Servicer in connection with this Section 5.06 shall not be
reimbursable from the Trust Fund.

                  SECTION 5.07. Distributions on the REMIC Regular Interests.

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<PAGE>

                  (a) On each Distribution Date, the Trust Administrator shall
cause in the following order of priority, the following amounts to be
distributed by REMIC 1 to REMIC 2 on account of the REMIC 1 Regular Interests or
withdrawn from the Distribution Account and distributed to the holders of the
Class R Certificates (in respect of the Class R-1 Interest), as the case may be:

         (i) first, to the extent of Available Funds, to Holders of REMIC 1
Regular Interest LTAA, REMIC 1 Regular Interest LT1A1, REMIC 1 Regular Interest
LT2A1, REMIC 1 Regular Interest LT2A2, REMIC 1 Regular Interest LTM1, REMIC 1
Regular Interest LTM2, REMIC 1 Regular Interest LTM3, REMIC 1 Regular Interest
LTM4, REMIC 1 Regular Interest LTM5, REMIC 1 Regular Interest LTZZ and REMIC 1
Regular Interest LTP, PRO RATA, in an amount equal to (A) the Uncertificated
Accrued Interest for such Distribution Date, plus (B) any amounts in respect
thereof remaining unpaid from previous Distribution Dates. Amounts payable as
Uncertificated Accrued Interest in respect of REMIC 1 Regular Interest LTZZ
shall be reduced and deferred when the REMIC 1 Overcollateralization Amount is
less than the REMIC 1 Overcollateralization Target Amount, by the lesser of (x)
the amount of such difference and (y) the Maximum Uncertificated Accrued
Interest Deferral Amount; and

                  (ii) second, to the Holders of REMIC 1 Regular Interests, in
an amount equal to the remainder of the Available Funds for such Distribution
Date after the distributions made pursuant to clause (i) above, allocated as
follows:

                           (a) to the Holders of REMIC 1 Regular Interest LTAA
and REMIC Regular Interest LTP, 98.00% of such remainder, until the
Uncertificated Principal Balance of such Uncertificated REMIC 1 Regular Interest
is reduced to zero; provided, however, that REMIC 1 Regular Interest LTP shall
not be reduced until the Distribution Date immediately following the expiration
of the latest Prepayment Charge as identified on the Prepayment Charge Schedule
or any Distribution Date thereafter, at which point such amount shall be
distributed to REMIC 1 Regular Interest LTP, until $100 has been distributed
pursuant to this clause;

                           (b)      to the Holders of REMIC 1 Regular Interest
LT1A1, REMIC 1 Regular Interest LT2A1, REMIC 1 Regular Interest LT2A2, REMIC 1
Regular Interest LTM1, REMIC 1 Regular Interest LTM2, REMIC 1 Regular Interest
LTM3, REMIC 1 Regular Interest LTM4 and REMIC 1 Regular Interest LTM5, 1.00% of
such remainder, in the same proportion as principal payments are allocated to
the Corresponding Certificates, until the Uncertificated Principal Balances of
such REMIC 1 Regular Interests are reduced to zero;

                           (c) to the Holders of REMIC 1 Regular Interest LTZZ,
                  1.00% of such remainder, until the Uncertificated Principal
                  Balance of such REMIC 1 Regular Interest is reduced to zero;
                  and

                           (d) any remaining amount to the Holders of the Class
                  R Certificates (in respect of the Class R-1 Interest);

provided, however, that (i) 98.00% and (ii) 2.00% of any principal payments that
are attributable to an Overcollateralization Release Amount shall be allocated
to Holders of (i) REMIC 1 Regular

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Interest LTAA and REMIC 1 Regular Interest LTP, in that order and (ii) REMIC 1
Regular Interest LTZZ, respectively; provided that REMIC 1 Regular Interest LTP
shall not be reduced until the Distribution Date immediately following the
expiration of the latest Prepayment Charge as identified on the Prepayment
Charge Schedule or any Distribution Date thereafter, at which point such amount
shall be distributed to REMIC 1 Regular Interest LT1P, until $100 has been
distributed pursuant to this clause.

                  (a) All Realized Losses on the Mortgage Loans allocated to any
Regular Certificate shall be allocated by the Trust Administrator on each
Distribution Date as follows: first, to Net Monthly Excess Cashflow; second, to
the Class C Certificates, until the Certificate Principal Balance thereof has
been reduced to zero; third, to the Class M-5 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; fourth, to the
Class M-4 Certificates, until the Certificate Principal Balance thereof has been
reduced to zero; fifth, to the Class M-3 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; sixth, to the Class M-2
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero; and seventh, to the Class M-1 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero. All Realized Losses to be
allocated to the Certificate Principal Balances of all Classes on any
Distribution Date shall be so allocated after the actual distributions to be
made on such date as provided above. All references above to the Certificate
Principal Balance of any Class of Certificates shall be to the Certificate
Principal Balance of such Class immediately prior to the relevant Distribution
Date, before reduction thereof by any Realized Losses, in each case to be
allocated to such Class of Certificates, on such Distribution Date.

                  Any allocation of Realized Losses to a Mezzanine Certificate
on any Distribution Date shall be made by reducing the Certificate Principal
Balance thereof by the amount so allocated; any allocation of Realized Losses to
a Class C Certificates shall be made first by reducing the amount otherwise
payable in respect thereof pursuant to Section 5.01(d)(xiv). No allocations of
any Realized Losses shall be made to the Certificate Principal Balances of the
Class A Certificates or the Class P Certificates.

                  (b) All Realized Losses on the Mortgage Loans shall be deemed
to have been allocated in the specified percentages, as follows: first, to
Uncertificated Accrued Interest payable to the REMIC 1 Regular Interest LTAA and
REMIC 1 Regular Interest LTZZ up to an aggregate amount equal to the REMIC 1
Interest Loss Allocation Amount, 98% and 2%, respectively; second, to the
Uncertificated Principal Balances of REMIC 1 Regular Interest LTAA and REMIC 1
Regular Interest LTZZ up to an aggregate amount equal to the REMIC 1 Principal
Loss Allocation Amount, 98% and 2%, respectively; third, to the Uncertificated
Principal Balances of REMIC 1 Regular Interest LTAA, REMIC 1 Regular Interest
LTM5 and REMIC 1 Regular Interest LTZZ, 98%, 1% and 1%, respectively, until the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM5 has been
reduced to zero; fourth, to the Uncertificated Principal Balances of REMIC 1
Regular Interest LTAA, REMIC 1 Regular Interest LTM4 and REMIC 1 Regular
Interest LTZZ, 98%, 1% and 1%, respectively, until the Uncertificated Principal
Balance of REMIC 1 Regular Interest LTM4 has been reduced to zero; fifth, to the
Uncertificated Principal Balances of REMIC 1 Regular Interest LTAA, REMIC 1
Regular Interest LTM3 and REMIC 1 Regular Interest LTZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC 1 Regular
Interest LTM3 has been reduced to zero; sixth, to the Uncertificated Principal
Balances of REMIC 1 Regular Interest LTAA,

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REMIC 1 Regular Interest LTM2 and REMIC 1 Regular Interest LTZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC 1 Regular
Interest LTM2 has been reduced to zero; and seventh, to the Uncertificated
Principal Balances of REMIC 1 Regular Interest LTAA, REMIC 1 Regular Interest
LTM1 and REMIC 1 Regular Interest LTZZ, 98%, 1% and 1%, respectively, until the
Uncertificated Principal Balance of REMIC 1 Regular Interest LTM1 has been
reduced to zero.

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                                   ARTICLE VI

                                THE CERTIFICATES

                  SECTION 6.01. The Certificates.

                  Each of the Class A Certificates, the Mezzanine Certificates,
the Class P Certificates, the Class C Certificates and the Residual Certificates
shall be substantially in the forms annexed hereto as exhibits, and shall, on
original issue, be executed, authenticated and delivered by the Trustee or the
Trust Administrator to or upon the order of the Depositor concurrently with the
sale and assignment to the Trustee of the Trust Fund. The Class A Certificates
and the Mezzanine Certificates shall be initially evidenced by one or more
Certificates representing a Percentage Interest with a minimum dollar
denomination of $50,000 and integral dollar multiples of $1.00 in excess
thereof, except that one Certificate of each such Class of Certificates may be
in a different denomination so that the sum of the denominations of all
outstanding Certificates of such Class shall equal the Certificate Principal
Balance of such Class on the Closing Date. The Class P Certificates, the Class C
Certificates and the Residual Certificates are issuable in any Percentage
Interests; provided, however, that the sum of all such percentages for each such
Class totals 100% and no more than ten Certificates of each Class may be issued
and outstanding at any one time.

                  The Certificates shall be executed on behalf of the Trust by
manual or facsimile signature on behalf of the Trustee or the Trust
Administrator by a Responsible Officer. Certificates bearing the manual or
facsimile signatures of individuals who were, at the time when such signatures
were affixed, authorized to sign on behalf of the Trustee or the Trust
Administrator shall bind the Trust, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of such
Certificate. No Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose, unless such Certificate shall have been
manually authenticated by the Trustee or the Trust Administrator substantially
in the form provided for herein, and such authentication upon any Certificate
shall be conclusive evidence, and the only evidence, that such Certificate has
been duly authenticated and delivered hereunder. All Certificates shall be dated
the date of their authentication. Subject to Section 6.02(c), the Class A
Certificates and the Mezzanine Certificates shall be Book-Entry Certificates.
The other Classes of Certificates shall not be Book-Entry Certificates.

                  SECTION 6.02. Registration of Transfer and Exchange of
                                Certificates.

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

                  Upon surrender for registration of transfer of any Certificate
at the Corporate Trust Office of the Certificate Registrar maintained for such
purpose pursuant to the foregoing paragraph which office shall initially be the
Corporate Trust Office of the Trust Administrator for certificate

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transfer and surrender purposes, and, in the case of a Residual Certificate,
upon satisfaction of the conditions set forth below, the Trust Administrator on
behalf of the Trust shall execute, authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
aggregate Percentage Interest.

                  At the option of the Certificateholders, Certificates may be
exchanged for other Certificates in authorized denominations and the same
aggregate Percentage Interests, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange, the Trustee or the Trust Administrator shall execute
on behalf of the Trust and authenticate and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for registration of transfer or exchange shall (if so
required by the Trustee, the Trust Administrator or the Certificate Registrar)
be duly endorsed by, or be accompanied by a written instrument of transfer
satisfactory to the Trustee, the Trust Administrator and the Certificate
Registrar duly executed by, the Holder thereof or his attorney duly authorized
in writing. In addition, with respect to each Class R Certificate, the holder
thereof may exchange, in the manner described above, such Class R Certificate
for two separate certificates, each representing such holder's respective
Percentage Interest in the Class R-1 Interest and the Class R-2 Interest that
was evidenced by the Class R Certificate being exchanged.

                  (b) Except as provided in paragraph (c) below, the Book-Entry
Certificates shall at all times remain registered in the name of the Depository
or its nominee and at all times: (i) registration of such Certificates may not
be transferred by the Trustee or the Trust Administrator except to another
Depository; (ii) the Depository shall maintain book-entry records with respect
to the Certificate Owners and with respect to ownership and transfers of such
Certificates; (iii) ownership and transfers of registration of such Certificates
on the books of the Depository shall be governed by applicable rules established
by the Depository; (iv) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants; (v) the Trustee and the
Trust Administrator shall for all purposes deal with the Depository as
representative of the Certificate Owners of the Certificates for purposes of
exercising the rights of Holders under this Agreement, and requests and
directions for and votes of such representative shall not be deemed to be
inconsistent if they are made with respect to different Certificate Owners; (vi)
the Trustee and the Trust Administrator may rely and shall be fully protected in
relying upon information furnished by the Depository with respect to its
Depository Participants and furnished by the Depository Participants with
respect to indirect participating firms and Persons shown on the books of such
indirect participating firms as direct or indirect Certificate Owners; and (vii)
the direct participants of the Depository shall have no rights under this
Agreement under or with respect to any of the Certificates held on their behalf
by the Depository, and the Depository may be treated by the Trustee, the Trust
Administrator and either the Trustee's or the Trust Administrator's agents,
employees, officers and directors as the absolute owner of the Certificates for
all purposes whatsoever.

                  All transfers by Certificate Owners of Book-Entry Certificates
shall be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owners. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners that it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures. The parties hereto
are hereby authorized to execute a Letter of Representations with the Depository
or take such other action as may be

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<PAGE>

necessary or desirable to register a Book-Entry Certificate to the Depository.
In the event of any conflict between the terms of any such Letter of
Representation and this Agreement, the terms of this Agreement shall control.

                  (c) If (i)(x) the Depository or the Depositor advises the
Trust Administrator in writing that the Depository is no longer willing or able
to discharge properly its responsibilities as Depository and (y) the Trust
Administrator or the Depositor is unable to locate a qualified successor, (ii)
the Depositor, at its sole option, with the consent of the Trust Administrator,
elects to terminate the book-entry system through the Depository or (iii) after
the occurrence of a Servicer Event of Termination, the Certificate Owners of the
Book-Entry Certificates representing Percentage Interests of such Classes
aggregating not less than 51% advise the Trust Administrator and Depository
through the Financial Intermediaries and the Depository Participants in writing
that the continuation of a book-entry system through the Depository to the
exclusion of definitive, fully registered certificates (the "Definitive
Certificates") to Certificate Owners is no longer in the best interests of the
Certificate Owners. Upon surrender to the Certificate Registrar of the
Book-Entry Certificates by the Depository, accompanied by registration
instructions from the Depository for registration, the Trust Administrator
shall, at the Depositor's expense, in the case of (ii) above, or the Servicer's
expense, in the case of (i) and (iii) above, execute on behalf of the Trust and
authenticate the Definitive Certificates. None of the Depositor, the Master
Servicer, the Trustee or the Trust Administrator shall be liable for any delay
in delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, the Trustee, the Trust Administrator, the Certificate Registrar,
the Servicer, any Paying Agent and the Depositor shall recognize the Holders of
the Definitive Certificates as Certificateholders hereunder.

                  (d) No transfer, sale, pledge or other disposition of any
Class C Certificate, Class P Certificate or Residual Certificate shall be made
unless such disposition is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and any applicable state
securities laws or is made in accordance with the 1933 Act and laws. In the
event of any such transfer, except with respect to the initial transfer of any
Class C Certificate, Class P Certificate or Residual Certificates by the
Depositor (i) unless such transfer is made in reliance upon Rule 144A (as
evidenced by the investment letter delivered to the Trustee and the Trust
Administrator, in substantially the form attached hereto as Exhibit J) under the
1933 Act, the Trustee, the Trust Administrator and the Depositor shall require a
written Opinion of Counsel (which may be in-house counsel) acceptable to and in
form and substance reasonably satisfactory to the Trustee, the Trust
Administrator and the Depositor that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from the
1933 Act or is being made pursuant to the 1933 Act, which Opinion of Counsel
shall not be an expense of the Trustee, the Trust Administrator, the Master
Servicer or the Depositor or (ii) the Trust Administrator shall require the
transferor to execute a transferor certificate (in substantially the form
attached hereto as Exhibit L) and the transferee to execute an investment letter
(in substantially the form attached hereto as Exhibit J) acceptable to and in
form and substance reasonably satisfactory to the Depositor, the Trustee and the
Trust Administrator certifying to the Depositor, the Trustee and the Trust
Administrator the facts surrounding such transfer, which investment letter shall
not be an expense of the Trustee, the Trust Administrator or the Depositor. The
Holder of a Class C Certificate, Class P Certificate or Residual Certificate
desiring to effect such transfer shall, and does hereby agree to,

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indemnify the Trustee, the Trust Administrator, the Master Servicer and the
Depositor 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.

                  Notwithstanding the foregoing, no certification or Opinion of
Counsel described in this Section 6.02(d) will be required in connection with
the transfer, on the Closing Date, of any Residual Certificate by the Depositor
to an "accredited investor" within the meaning of Rule 501 of the 1933 Act.

                  No transfer of a Class C Certificate, Class P Certificate or
Residual Certificate or any interest therein shall be made to any Plan subject
to ERISA or Section 4975 of the Code, any Person acting, directly or indirectly,
on behalf of any such Plan or any Person acquiring such Certificates with "Plan
Assets" of a Plan within the meaning of the Department of Labor regulation
promulgated at 29 C.F.R. ss. 2510.3-101 ("Plan Assets"), as certified by such
transferee in the form of Exhibit M, unless the Trust Administrator is provided
with an Opinion of Counsel for the benefit of the Depositor, the Master
Servicer, the Trustee, the Trust Administrator and the Servicer and on which
they may rely which establishes to the satisfaction of the Trust Administrator
that the purchase of such Certificates is permissible under applicable law, will
not constitute or result in any prohibited transaction under ERISA or Section
4975 of the Code and will not subject the Depositor, the Servicer, the Master
Servicer, the Trustee, the Trust Administrator or the Trust Fund 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,
which Opinion of Counsel shall not be an expense of the Depositor, the Servicer,
the Master Servicer, the Trustee, the Trust Administrator or the Trust Fund.
Neither a certification nor an Opinion of Counsel will be required in connection
with the initial transfer of any such Certificate by the Depositor to an
affiliate of the Depositor (in which case, the Depositor or any affiliate
thereof shall have deemed to have represented that such affiliate is not a Plan
or a Person investing Plan Assets) and the Trustee and the Trust Administrator
shall be entitled to conclusively rely upon a representation (which, upon the
request of the Trustee or the Trust Administrator, shall be a written
representation) from the Depositor of the status of such transferee as an
affiliate of the Depositor.

                  Each Transferee of a Mezzanine Certificate will be deemed to
have represented by virtue of its purchase or holding of such Certificate (or
interest therein) that either (a) such Transferee is not a Plan or purchasing
such Certificate with Plan Assets, (b) it has acquired and is holding such
Certificate in reliance on Prohibited Transaction Exemption ("PTE") 90-59, 55
Fed. Reg. 36724 (September 6, 1990), as amended by PTE 97-34, 62 Fed. Reg. 39021
(July 21, 1997), PTE 2000-58, 65 Fed. Reg. 67765 (November 13, 2000) and PTE
2002-41 67 Fed. Reg. 54487 (August 22, 2002) (the "Exemption"), and that it
understands that there are certain conditions to the availability of the
Exemption including that such Certificate must be rated, at the time of
purchase, not lower than "BBB-" (or its equivalent) by a Rating Agency or (c)
the following conditions are satisfied: (i) such Transferee is an insurance
company, (ii) the source of funds used to purchase or hold such Certificate (or
interest therein) is an "insurance company general account" (as defined in U.S.
Department of Labor Prohibited Transaction Class Exemption ("PTCE") 95-60, and
(iii) the conditions set forth in Sections I and III of PTCE 95-60 have been
satisfied.

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<PAGE>

                  If any Mezzanine Certificate, Class C Certificate, Class P
Certificate or Residual Certificate or any interest therein is acquired or held
in violation of the provisions of the two preceding paragraphs, the next
preceding permitted beneficial owner will be treated as the beneficial owner of
that Certificate retroactive to the date of transfer to the purported beneficial
owner. Any purported beneficial owner whose acquisition or holding of any such
Certificate or interest therein was effected in violation of the provisions of
the two preceding paragraphs shall indemnify and hold harmless the Depositor,
the Servicer, the Master Servicer, the Trustee, the Trust Administrator and the
Trust from and against any and all liabilities, claims, costs or expenses
incurred by those parties as a result of that acquisition or holding.

                  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 appointed the Depositor or its designee as its attorney-
in-fact to negotiate the terms of any mandatory sale under clause (v) below and
to execute all instruments of transfer and to do all other things necessary in
connection with any such sale, and the rights of each Person acquiring any
Ownership Interest in a Residual Certificate are expressly subject to the
following provisions:

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

                  (ii)     No Person shall acquire an Ownership Interest in a
         Residual Certificate unless such Ownership Interest is a PRO RATA
         undivided interest.

                  (iii)    In connection with any proposed transfer of any
         Ownership Interest in a Residual Certificate, the Trust Administrator
         shall as a condition to registration of the transfer, require delivery
         to it, in form and substance satisfactory to it, of each of the
         following:

                  (A)      an affidavit in the form of Exhibit K hereto from the
                           proposed transferee to the effect that such
                           transferee is a Permitted Transferee and 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; and

                  (B)      a covenant of the proposed transferee to the effect
                           that the proposed transferee agrees to be bound by
                           and to abide by the transfer restrictions applicable
                           to the Residual Certificates.

                  (iv)     Any attempted or purported transfer of any Ownership
Interest in a Residual Certificate in violation of the provisions of this
Section shall be absolutely null and void and shall vest no rights in the
purported transferee. If any purported transferee shall, in violation of the
provisions of this Section, become a Holder of a Residual Certificate, then the
prior Holder of such Residual Certificate that is a Permitted Transferee shall,
upon discovery that the registration of transfer of such Residual Certificate
was not in fact permitted by this Section, be restored to all rights

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as Holder thereof retroactive to the date of registration of transfer of such
Residual Certificate. The Trust Administrator shall be under no liability to any
Person for any registration of transfer of a Residual Certificate that is in
fact not permitted by this Section or for making any distributions due on such
Residual Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of this Agreement so long as the
Trust Administrator received the documents specified in clause (iii). The Trust
Administrator shall be entitled to recover from any Holder of a Residual
Certificate that was in fact not a Permitted Transferee at the time such
distributions were made all distributions made on such Residual Certificate. Any
such distributions so recovered by the Trust Administrator shall be distributed
and delivered by the Trust Administrator to the prior Holder of such Residual
Certificate that is a Permitted Transferee.

                  (v) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section, then the Trust Administrator shall have the right
but not the obligation, without notice to the Holder of such Residual
Certificate or any other Person having an Ownership Interest therein, to notify
the Depositor to arrange for the sale of such Residual Certificate. The proceeds
of such sale, net of commissions (which may include commissions payable to the
Depositor or its affiliates in connection with such sale), expenses and taxes
due, if any, will be remitted by the Trust Administrator to the previous Holder
of such Residual Certificate that is a Permitted Transferee, except that in the
event that the Trust Administrator determines that the Holder of such Residual
Certificate may be liable for any amount due under this Section or any other
provisions of this Agreement, the Trust Administrator may withhold a
corresponding amount from such remittance as security for such claim. The terms
and conditions of any sale under this clause (v) shall be determined in the sole
discretion of the Trust Administrator and it shall not be liable to any Person
having an Ownership Interest in a Residual Certificate as a result of its
exercise of such discretion.

                  (vi) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section, then the Trust Administrator upon receipt of
reasonable compensation will provide to the Internal Revenue Service, and to the
persons specified in Sections 860E(e)(3) and (6) of the Code, information needed
to compute the tax imposed under Section 860E(e)(5) of the Code on transfers of
residual interests to Disqualified Organizations.

                  The foregoing provisions of this Section shall cease to apply
to transfers occurring on or after the date on which there shall have been
delivered to the Trust Administrator, in form and substance satisfactory to the
Trust Administrator, (i) written notification from each Rating Agency that the
removal of the restrictions on transfer set forth in this Section will not cause
such Rating Agency to downgrade its rating of the Certificates and (ii) an
Opinion of Counsel to the effect that such removal will not cause any REMIC
created hereunder to fail to qualify as a REMIC.

                  (e) No service charge shall be made for any registration of
transfer or exchange of Certificates of any Class, but the Certificate Registrar
may require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of Certificates.

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                  All Certificates surrendered for registration of transfer or
exchange shall be canceled by the Certificate Registrar and disposed of pursuant
to its standard procedures.

                  SECTION 6.03. Mutilated, Destroyed, Lost or Stolen
                                Certificates.

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

                  SECTION 6.04. Persons Deemed Owners.

                  The Servicer, the Master Servicer, the Depositor, the Trustee,
the Trust Administrator, the Certificate Registrar, any Paying Agent and any
agent of the Servicer, the Depositor, the Trustee, the Trust Administrator, the
Certificate Registrar or any Paying Agent may treat the Person, including a
Depository, in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section 5.01
and for all other purposes whatsoever, and none of the Servicer, the Master
Servicer, the Trust, the Trustee, the Trust Administrator nor any agent of any
of them shall be affected by notice to the contrary.

                  SECTION 6.05. Appointment of Paying Agent.

                  (a) The Paying Agent shall make distributions to
Certificateholders from the Distribution Account pursuant to Section 5.01 and
shall report the amounts of such distributions to the Trust Administrator. The
duties of the Paying Agent may include the obligation (i) to withdraw funds from
the Collection Account pursuant to Section 3.11(a) and for the purpose of making
the distributions referred to above and (ii) to distribute statements and
provide information to Certificateholders as required hereunder. The Paying
Agent hereunder shall at all times be an entity duly organized and validly
existing under the laws of the United States of America or any state thereof,
authorized under such laws to exercise corporate trust powers and subject to
supervision or examination by federal or state authorities. The Paying
Agent shall initially be the Trust Administrator. The Trust Administrator may
appoint a successor to act as Paying Agent, which appointment shall be
reasonably satisfactory to the Depositor.

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<PAGE>

                  (b) The Trust Administrator shall cause the Paying Agent (if
other than the Trust Administrator) to execute and deliver to the Trust
Administrator an instrument in which such Paying Agent shall agree with the
Trust Administrator that such Paying Agent shall hold all sums, if any, held by
it for payment to the Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders and shall agree that it shall comply with all requirements of
the Code regarding the withholding of payments in respect of Federal income
taxes due from Certificate Owners and otherwise comply with the provisions of
this Agreement applicable to it.

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                                   ARTICLE VII

               THE SERVICER, THE MASTER SERVICER AND THE DEPOSITOR

                  SECTION 7.01. Liability of the Servicer, the Master Servicer
                                and the Depositor.

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

                  SECTION 7.02. Merger or Consolidation of, or Assumption of the
                                Obligations of, the Servicer, the Master
                                Servicer or the Depositor.

                  Any entity into which the Servicer, the Master Servicer or
Depositor may be merged or consolidated, or any entity resulting from any
merger, conversion or consolidation to which the Servicer, the Master Servicer
or the Depositor shall be a party, or any corporation succeeding to the business
of the Servicer, the Master Servicer or the Depositor, shall be the successor of
the Servicer, the Master Servicer or the Depositor, 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 any successor to the Servicer or the
Master Servicer shall satisfy all the requirements of Section 8.02 or Section
7.06, as applicable, with respect to the qualifications of a successor Servicer
or successor Master Servicer, as applicable. In addition, any corporation
succeeding to the servicing-for- third-parties business of the Servicer shall be
the successor of the Servicer hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding; provided, however, that (i) any
successor to the Servicer shall satisfy all the requirements of Section 8.02
with respect to the qualifications of a successor Servicer, (ii) the Trustee
shall have received written confirmation from each Rating Agency that such
transfer of servicing by the Servicer and the related appointment of a successor
Servicer would not result in a withdrawal, qualification or a downgrading by
such Rating Agency of the then-outstanding rating on any Class of Certificates
rated by it or of any class of notes issued pursuant to an Indenture and (iii)
the Trustee shall have received the written consent of holders of notes
evidencing not less than 66 2/3% of any notes issued pursuant to an Indenture to
such transfer of servicing by the Servicer and the related appointment of a
successor Servicer.

                  SECTION 7.03. Limitation on Liability of the Servicer, the
                                Master Servicer and Others.

                  None of the Servicer, the Master Servicer or the Depositor nor
any of the directors or officers or employees or agents of the Servicer, the
Master Servicer or the Depositor shall be under any liability to the Trust or
the Certificateholders for any action taken or for refraining from the taking of
any action by the Servicer, the Master Servicer or the Depositor in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect

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the Servicer, the Master Servicer, the Depositor or any such Person against any
liability which would otherwise be imposed by reason of its willful misfeasance,
bad faith or negligence in the performance of duties of the Servicer, the Master
Servicer or the Depositor, as the case may be, or by reason of its reckless
disregard of the obligations and duties of the Servicer, the Master Servicer or
the Depositor, as the case may be, hereunder; provided, further, that this
provision shall not be construed to entitle the Servicer to indemnity in the
event that amounts advanced by the Servicer to retire any senior lien exceed
Liquidation Proceeds (in excess of related liquidation expenses) realized with
respect to the related Mortgage Loan. The Servicer or the Master Servicer and
any director or officer or employee or agent of either of them 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 Servicer, the Master
Servicer, the Depositor, and any director or officer or employee or agent of any
of them, shall be indemnified by the Trust and held harmless against any loss,
liability or expense incurred in connection with any legal action relating to
this Agreement or the Certificates, other than any loss, liability or expense
related to any specific Mortgage Loan or Mortgage Loans (except as any such
loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement) and any loss, liability or expense incurred by reason of its willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of its reckless disregard of obligations and duties hereunder. The
Servicer, the Master Servicer or the Depositor may undertake any such action
which it may deem necessary or desirable in respect of this Agreement, and the
rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, unless the Depositor, the Servicer
or the Master Servicer acts without the consent of the Holders of Certificates
entitled to at least 51% of the Voting Rights, the reasonable legal expenses and
costs of such action and any liability resulting therefrom shall be expenses,
costs and liabilities of the Trust and each of the Servicer, the Master Servicer
and the Depositor shall be entitled to be reimbursed therefor from the
Collection Account as and to the extent provided in Section 3.11, any such right
of reimbursement being prior to the rights of the Certificateholders to receive
any amount in the Collection Account. Each of the Servicer's and the Master
Servicer's right to indemnity or reimbursement pursuant to this Section shall
survive any resignation or termination of the Servicer or the Master Servicer
pursuant to Section 6.04, 7.04 or 7.05 with respect to any losses, expenses,
costs or liabilities arising prior to such resignation or termination (or
arising from events that occurred prior to such resignation or termination).
This paragraph shall apply to the Servicer and Master Servicer solely in their
capacities as Servicer and Master Servicer hereunder and in no other capacities.

                  SECTION 7.04. Servicer Not to Resign.

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

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                  Except as expressly provided herein, the Servicer shall not
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, or delegate to or subcontract with, or authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by the Servicer hereunder. The foregoing prohibition on assignment
shall not prohibit the Servicer from designating a Sub-Servicer as payee of any
indemnification amount payable to the Servicer hereunder; provided, however, no
Sub-Servicer shall be a third-party beneficiary hereunder and the parties hereto
shall not be required to recognize any Subservicer as an indemnitee under this
Agreement.

                  SECTION 7.05. Master Servicer Not to Resign.

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

                  SECTION 7.06. Assignment of Master Servicing.

                  The Master Servicer may sell and assign its rights and
delegate its duties and obligations in its entirety as Master Servicer under
this Agreement; provided, however, that: (i) the purchaser or transferee accept
in writing such assignment and delegation and assume the obligations of the
Master Servicer hereunder and that the purchaser or transferee (a) be a Person
which shall be qualified to service mortgage loans for Fannie Mae or Freddie
Mac; (b) have a net worth of not less than $15,000,000 (unless otherwise
approved by each Rating Agency pursuant to clause (ii) below); (c) be reasonably
satisfactory to the Trustee (as evidenced in a writing signed by the Trustee);
and (d) 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 after the date of such assumption as
master servicer under this Agreement, 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, qualified or
withdrawn as a result of such assignment, sale and delegation, as evidenced by a
letter to such effect delivered to the Master Servicer and 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 Independent
counsel, 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 out of acts or omissions prior to the
effective date thereof.

                  SECTION 7.07. Delegation of Duties.

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                  In the ordinary course of business, the Servicer at any time
may delegate any of its duties hereunder to any Person, including any of its
Affiliates, who agrees to conduct such duties in accordance with standards
comparable to those set forth in Section 3.01. Such delegation shall not relieve
the Servicer of its liabilities and responsibilities with respect to such duties
and shall not constitute a resignation within the meaning of Section 7.04.
Except as provided in Section 3.02, no such delegation is permitted that results
in the delegee subservicing any Mortgage Loans. The Servicer shall provide the
Trustee, the Master Servicer and the Trust Administrator with 60 days prior
written notice prior to the delegation of any of its duties to any Person other
than any of the Servicer's Affiliates or their respective successors and
assigns.

                  SECTION 7.08. Reserved.

                  SECTION 7.09. Inspection.

                  Each of the Servicer and the Master Servicer, in its capacity
as such, shall afford the Trustee and the Trust Administrator, upon reasonable
notice, during normal business hours, access to all records maintained by the
Servicer or the Master Servicer, as applicable, in respect of its rights and
obligations hereunder and access to officers of the Servicer and Master Servicer
responsible for such obligations. Upon request, each of the Servicer and the
Master Servicer shall furnish to the Trustee and the Trust Administrator its
most recent publicly available financial statements and such other information
relating to its capacity to perform its obligations under this Agreement.

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                                  ARTICLE VIII

                                     DEFAULT

                  SECTION 8.01. Servicer Events of Termination and Master
                                Servicer Events of Termination.

                  (a) If any one of the following events ("Servicer Events of
Termination") shall occur and be continuing:

                  (i) (A) The failure by the Servicer to make any Advance; or
         (B) any other failure by the Servicer to deposit in the Collection
         Account or Distribution Account any deposit required to be made under
         the terms of this Agreement which continues unremedied for a period of
         one Business Day after the date upon which written notice of such
         failure shall have been given to the Servicer by the Trustee, the
         Master Servicer or the Trust Administrator or to the Servicer, the
         Trustee, the Master Servicer and the Trust Administrator by any Holders
         of a Regular Certificate evidencing at least 25% of the Voting Rights;
         or

                  (ii) The failure by the Servicer to make any required
         Servicing Advance which failure continues unremedied for a period of 30
         days, or the failure by the Servicer duly to observe or perform, in any
         material respect, any other covenants, obligations or agreements of the
         Servicer as set forth in this Agreement, which failure continues
         unremedied for a period of 30 days, after the date (A) on which written
         notice of such failure, requiring the same to be remedied, shall have
         been given to the Servicer by the Trustee, the Master Servicer or the
         Trust Administrator or to the Trustee, the Master Servicer and the
         Trust Administrator by any Holders of a Regular Certificate evidencing
         at least 25% of the Voting Rights or (B) of actual knowledge of such
         failure by a Servicing Officer of the Servicer; or

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

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

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         become due, file a petition to take advantage of any applicable
         insolvency or reorganization statute, make an assignment for the
         benefit of its creditors or voluntarily suspend payment of its
         obligations;

                  (v) Any failure by the Servicer of the Servicer Termination
         Test;

                  (vi) Without limiting clause (ii) above, any failure by the
         Servicer to duly perform, within the required time period, its
         obligations under Section 3.20, Section 3.21 or Section 3.22, which
         failure continues unremedied for a period of 30 days after the date on
         which written notice of such failure, requiring the same to be
         remedied, shall have been given to the Servicer by any party to this
         Agreement; or

                  (vii) Any failure by the Servicer of the Fitch Servicer
         Termination Test, if applicable.

then, and in each and every such case, so long as a Servicer Event of
Termination shall not have been remedied within the applicable grace period, (x)
with respect solely to clause (i)(A) above, if such Advance is not made by 11:00
A.M., New York time, on the Business Day immediately following the Servicer
Remittance Date (provided the Trust Administrator shall give the Servicer notice
of such failure to advance by 5:00 P.M. New York time on the Servicer Remittance
Date), the Trustee shall terminate all of the rights and obligations of the
Servicer under this Agreement, to the extent permitted by law, and in and to the
Mortgage Loans and the proceeds thereof and the Master Servicer, or a successor
servicer appointed in accordance with Section 8.02, shall immediately make such
Advance and assume, pursuant to Section 8.02, the duties of a successor
Servicer, (y) in the case of (i)(B), (ii), (iii), (iv), (v) and (vi) above, the
Trustee shall, at the direction of the Master Servicer or the Holders of each
Class of Regular Certificates evidencing Percentage Interests aggregating not
less than 51%, by notice then given in writing to the Servicer (and to the
Master Servicer and the Trust Administrator if given by Holders of
Certificates), terminate all of the rights and obligations of the Servicer as
servicer under this Agreement and (z) in the case of (vii) above, the Trust
Administrator shall, not later than 15 days after the Distribution Date on which
such Servicer Termination Event occurred, notify the Certificateholders of the
existence of such Servicer Event of Termination such notice shall state that
Certificateholders may waive such Servicer Event of Termination by written
notice to the Trust Administrator not later than 75 days after the Distribution
Date on which such Servicer Termination Event occurred, and if the Majority
Certificateholders shall not have so waived such Servicer Event of Termination,
then the Trust Administrator shall direct the Trustee to, and the Trustee shall,
by notice then given in writing to the Servicer, terminate all of the rights and
obligations of the Servicer as servicer under this Agreement. Any such notice to
the Servicer shall also be given to each Rating Agency, the Trust Administrator,
the Depositor and the Master Servicer. On or after the receipt by the Servicer
(and by the Trustee if such notice is given by the Holders) of such written
notice, all authority and power of the Servicer under this Agreement, whether
with respect to the Certificates or the Mortgage Loans or otherwise, shall pass
to and be vested in the Master Servicer pursuant to and under this Section; and,
without limitation, the Master Servicer is hereby authorized and empowered to
execute and deliver, on behalf of the 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 of each
Mortgage Loan and

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related documents or otherwise. The Servicer agrees to cooperate with the Master
Servicer (or the applicable successor Servicer) in effecting the termination of
the responsibilities and rights of the Servicer hereunder, including, without
limitation, the delivery to the Master Servicer within ten Business Days
subsequent to such notice of all documents and records requested by it to enable
it to assume the Servicer's functions under this Agreement, the transfer within
one Business Day subsequent to such notice to the Master Servicer (or the
applicable successor Servicer) for the administration by it of all cash amounts
that shall at the time be held by the Servicer and to be deposited by it in the
Collection Account, the Distribution Account, any REO Account or any Servicing
Account or that have been deposited by the Servicer in such accounts or
thereafter received by the Servicer with respect to the Mortgage Loans or any
REO Property received by the Servicer. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with transferring the
Mortgage Files to the successor Servicer and amending this Agreement to reflect
such succession as Servicer pursuant to this Section and all other applicable
Servicing Transfer Costs shall be paid by the predecessor Servicer (or if the
predecessor Servicer is the Master Servicer or the Trustee, the initial
Servicer) upon presentation of reasonable documentation of such costs and
expenses and to the extent not paid by the Servicer, by the Trust.

                  (b) If any one of the following events ("Master Servicer
Events of Termination") shall occur and be continuing:

                           (i) 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
         this Agreement, or the breach by the Master Servicer of any
         representation and warranty contained in Section 2.04, which continues
         unremedied for a period of 30 days after the date on which written
         notice of such failure, requiring the same to be remedied, shall have
         been given to the Master Servicer by the Depositor or the Trustee or to
         the Master Servicer, the Depositor and the Trustee by the Holders of
         Certificates entitled to at least 25% of the Voting Rights; or

                           (ii) a decree or order of a court or agency or
         supervisory authority having jurisdiction in the premises in an
         involuntary case under any present or future federal or state
         bankruptcy, insolvency or similar law or the appointment of a
         conservator or receiver or liquidator in any insolvency, readjustment
         of debt, marshalling of assets and liabilities or similar proceeding,
         or for the winding-up or liquidation of its affairs, shall have been
         entered against the Master Servicer and such decree or order shall have
         remained in force undischarged or unstayed for a period of 90 days; or

                           (iii) the Master Servicer shall consent to the
         appointment of a conservator or receiver or liquidator in any
         insolvency, readjustment of debt, marshalling of assets and liabilities
         or similar proceedings of or relating to it or of or relating to all or
         substantially all of its property; or

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

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then, and in each and every such case, so long as such Master Servicer Event of
Termination shall not have been remedied, the Depositor or the Trustee may, and
at the written direction of the Holders of Certificates entitled to at least 51%
of Voting Rights, the Trustee shall, by notice in writing to the Master Servicer
(and to the Depositor if given by the Trustee or to the Trustee if given by the
Depositor) with a copy to each Rating Agency, terminate all of the rights and
obligations of the Master Servicer in its capacity as Master Servicer under this
Agreement, to the extent permitted by law, and in and to the Mortgage Loans and
the proceeds thereof. On or after the receipt by the Master Servicer of such
written notice, all authority and power of the Master Servicer under this
Agreement, whether with respect to the Certificates (other than as a Holder of
any Certificate) or the Mortgage Loans or otherwise including, without
limitation, the compensation payable to the Master Servicer under this Agreement
after the date of such Termination, 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, as attorney-in-fact or otherwise, to execute
and deliver, on behalf of and at the expense of the Master Servicer, any and all
documents and other instruments and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement or assignment of the Mortgage
Loans and related documents, or otherwise. The Master Servicer agrees promptly
(and in any event no later than ten Business Days subsequent to such notice) to
provide the Trustee with all documents and records requested by it to enable it
to assume the Master Servicer's functions under this Agreement, and to cooperate
with the Trustee in effecting the termination of the Master Servicer's
responsibilities and rights under this Agreement (provided, however, that the
Master Servicer shall continue to be entitled to receive all amounts accrued or
owing to it under this Agreement on or prior to the date of such termination and
shall continue to be entitled to the benefits of Section 7.03, notwithstanding
any such termination, with respect to events occurring prior to such
termination). For purposes of this Section 8.01(b), the Trustee shall not be
deemed to have knowledge of a Master Servicer Event of Termination unless a
Responsible Officer of the Trustee assigned to and working in the Trustee's
Corporate Trust Office has actual knowledge thereof or unless written notice of
any event which is in fact such a Master Servicer Event of Termination is
received by the Trustee and such notice references the Certificates, the Trust
or this Agreement. The Trustee shall promptly notify the Rating Agencies of the
occurrence of a Master Servicer Event of Termination of which it has knowledge
as provided above.

                  To the extent that the costs and expenses of the Trustee
related to the termination of the Master Servicer, appointment of a successor
Master Servicer or the transfer and assumption of the master servicing by the
Trustee (including, without limitation, (i) all legal costs and expenses and all
due diligence costs and expenses associated with an evaluation of the potential
termination of the Master Servicer as a result of a Master Servicer Event of
Termination and (ii) all costs and expenses associated with the complete
transfer of the master servicing, including all servicing files and all
servicing data and the completion, correction or manipulation of such servicing
data as may be required by the successor Master Servicer to correct any errors
or insufficiencies in the servicing data or otherwise to enable the successor
Master Servicer to master service the Mortgage Loans in accordance with this
Agreement) and any other Servicing Transfer Costs applicable with respect to a
transfer of master servicing are not fully and timely reimbursed by the
terminated Master Servicer, the Trustee shall be entitled to reimbursement of
such costs and expenses from the Distribution Account.

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                  SECTION 8.02. Master Servicer to Act; Appointment of
                                Successor.

                  (a) Within 90 days of the time the Servicer and the Master
Servicer receive a notice of termination of the Servicer pursuant to Section
8.01 or of resignation of the Servicer pursuant to Section 7.04, the Master
Servicer shall be the successor in all respects to the Servicer in its capacity
as servicer under this Agreement and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer by the terms and provisions hereof
arising on and after its succession. Notwithstanding the foregoing, the parties
hereto agree that the Master Servicer, in its capacity as successor Servicer,
immediately will assume all of the obligations of the Servicer to make Advances.
Notwithstanding the foregoing, the Master Servicer, in its capacity as successor
Servicer, shall not be responsible for the lack of information and/or documents
that it cannot obtain through reasonable efforts. As compensation therefor, the
Master Servicer (or such other successor Servicer) shall be entitled to such
compensation as the Servicer would have been entitled to hereunder if no such
notice of termination had been given. Notwithstanding the above, (i) if the
Master Servicer is unwilling to act as successor Servicer or (ii) if the Master
Servicer is legally unable so to act, the Master Servicer shall appoint or
petition a court of competent jurisdiction to appoint, any established housing
and home finance institution, bank or other mortgage loan or home equity loan
servicer having a net worth of not less than $50,000,000 as the successor to the
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder; provided, that the appointment
of any such successor Servicer will not result in the qualification, reduction
or withdrawal of the ratings assigned to the Certificates by the Rating Agencies
as evidenced by a letter to such effect from the Rating Agencies. Pending
appointment of a successor to the Servicer hereunder the Trustee shall act in
such capacity as hereinabove provided. In connection with such appointment and
assumption, the successor shall be entitled to receive compensation out of
payments on Mortgage Loans in an amount equal to the compensation which the
Servicer would otherwise have received pursuant to Section 3.18 (or such other
compensation as the Trustee and such successor shall agree, not to exceed the
Servicing Fee). The appointment of a successor Servicer shall not affect any
liability of the predecessor Servicer which may have arisen under this Agreement
prior to its termination as Servicer to pay any deductible under an insurance
policy pursuant to Section 3.14 or to reimburse the Trustee, the Master Servicer
or the Trust Administrator pursuant to Section 3.06), nor shall any successor
Servicer be liable for any acts or omissions of the predecessor Servicer or for
any breach by such Servicer of any of its representations or warranties
contained herein or in any related document or agreement. The Trust
Administrator, the Master Servicer and the Trustee and such successor shall take
such action, consistent with this Agreement, as shall be necessary to effectuate
any such succession. All applicable Servicing Transfer Costs shall be paid by
the predecessor Servicer upon presentation of reasonable documentation of such
costs, and if such predecessor Servicer defaults in its obligation to pay such
costs, such costs shall be paid by the successor Servicer (in which case the
successor Servicer shall be entitled to reimbursement therefor from the assets
of the Trust).

                  (b) Any successor to the Servicer, including the Master
Servicer, shall during the term of its service as servicer continue to service
and administer the Mortgage Loans for the benefit of Certificateholders, and
maintain in force a policy or policies of insurance covering errors and
omissions in the performance of its obligations as Servicer hereunder and a
fidelity bond in respect

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of its officers, employees and agents to the same extent as the Servicer is so
required pursuant to Section 3.14.

                  (c) [Reserved].

                  (d) In connection with the resignation, removal or expiration
of the term of the Servicer hereunder, or in connection with the resignation or
removal of any successor to the Servicer (or any other successor to the Servicer
appointed hereunder) acting as successor Servicer hereunder, either (i) the
successor Servicer, (or any other successor to the Servicer appointed hereunder)
acting as successor Servicer hereunder, shall represent and warrant that it is a
member of MERS in good standing and shall agree to comply in all material
respects with the rules and procedures of MERS in connection with the servicing
of the Mortgage Loans that are registered with MERS, in which case the
predecessor Servicer shall cooperate with the successor Servicer in causing MERS
to revise its records to reflect the transfer of servicing to the successor
Servicer as necessary under MERS' rules and regulations and the predecessor
Servicer shall execute and deliver such other notices, documents and other
instruments as may be necessary or desirable to effect a transfer of such
Mortgage Loan or servicing of such Mortgage Loan on the MERS(R) System to the
successor Servicer or (ii) the predecessor Servicer shall cooperate with the
successor Servicer in causing MERS to execute and deliver an assignment of
Mortgage in recordable form to transfer the Mortgage from MERS to the Trustee.
The predecessor Servicer shall file or cause to be filed any such assignment in
the appropriate recording office. The predecessor Servicer shall bear any and
all fees of MERS, costs of preparing any assignments of Mortgage, and fees and
costs of filing any assignments of Mortgage that may be required under this
paragraph.

                  SECTION 8.03. Waiver of Defaults.

                  The Majority Certificateholders may, on behalf of all
Certificateholders, waive any events permitting removal of the Servicer or
Master Servicer pursuant to this Article VII, provided, however, that the
Majority Certificateholders may not waive a default in making a required
distribution on a Certificate without the consent of the Holder of such
Certificate. Upon any waiver of a past default, such default shall cease to
exist and any Servicer Event of Termination or Master Servicer Event of
Termination arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto except to the extent
expressly so waived. Notice of any such waiver shall be given by the Trust
Administrator to the Rating Agencies.

                  SECTION 8.04. Notification to Certificateholders.

                  (a) Upon any termination or appointment of a successor to the
Servicer or the Master Servicer pursuant to this Article VIII or Section 7.04,
the Trust Administrator shall give prompt written notice thereof to the
Certificateholders at their respective addresses appearing in the Certificate
Register and each Rating Agency.

                  (b) No later than 60 days after the occurrence of any event
which constitutes or which, with notice or a lapse of time or both, would
constitute a Servicer Event of Termination or a Master Servicer Event of
Termination for five Business Days after a Responsible Officer of the

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Trustee or the Trust Administrator becomes aware of the occurrence of such an
event, the Trustee or the Trust Administrator shall transmit by mail to all
Certificateholders notice of such occurrence unless such default, Servicer Event
of Termination or Master Servicer Event of Termination shall have been waived or
cured.

                  SECTION 8.05. Survivability of Servicer Liabilities.

                  Notwithstanding anything herein to the contrary, upon
termination of the Servicer or the Master Servicer hereunder, any liabilities of
the Servicer or the Master Servicer which accrued prior to such termination, and
any rights of the Servicer or the Master Servicer to payment or reimbursement
hereunder that accrued prior to such termination, shall in each case survive
such termination.

                                   ARTICLE IX

                     THE TRUSTEE AND THE TRUST ADMINISTRATOR

                  SECTION 9.01. Duties of Trustee and the Trust Administrator.

                  The Trustee and the Trust Administrator, prior to the
occurrence of a Master Servicer Event of Termination and after the curing of all
Master Servicer Events of Termination which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If a Master Servicer Event of Termination has occurred (which has not
been cured) of which a Responsible Officer has knowledge, each of the Trustee
and the Trust Administrator shall exercise such of the rights and powers vested
in it by this Agreement, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.

                  Each of the Trustee and the Trust Administrator, upon receipt
of all resolutions, certificates, statements, opinions, reports, documents,
orders or other instruments furnished to it which are specifically required to
be furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they conform to the requirements of this Agreement; provided,
however, that neither the Trustee nor the Trust Administrator will be
responsible for the accuracy or content of any such resolutions, certificates,
statements, opinions, reports, documents or other instruments. If any such
instrument is found not to conform to the requirements of this Agreement in a
material manner the Trustee or the Trust Administrator, as applicable, shall
take such action as it deems appropriate to have the instrument corrected, and
if the instrument is not corrected to the Trustee's or the Trust Administrator's
satisfaction, the Trustee or the Trust Administrator, as applicable, will
provide notice thereof to the Certificateholders.

                  The Trust Administrator agrees to notify the Master Servicer
                  in writing no later than 5:00 pm
(Eastern Time) on each Servicer Remittance Date of the aggregate dollar amount
of the funds received by the Trustee from the Servicer on such Servicer
Remittance Date and any other information reasonably requested by the Master
Servicer, so as to enable the Master Servicer to make the reconciliations and
verifications required to be made by it pursuant to Section 4.01.

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

                  (i) prior to the occurrence of a Master Servicer Event of
         Termination, and after the curing of all such Master Servicer Events of
         Termination which may have occurred, the duties and obligations of the
         Trustee and the Trust Administrator shall be determined solely by the
         express provisions of this Agreement, the Trustee and the Trust
         Administrator 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 or the Trust Administrator and, in the absence of
         bad faith on the part of the Trustee or the Trust Administrator, as
         applicable, the Trustee or the Trust Administrator, as applicable, may
         conclusively rely, as to the truth of the statements and the
         correctness of the opinions expressed therein, upon any certificates or
         opinions furnished to the Trustee or the Trust Administrator, as the
         case may be, and conforming to the requirements of this Agreement;

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

                  (iii) Neither the Trustee nor the Trust Administrator shall be
         personally liable with respect to any action taken, suffered or omitted
         to be taken by it in good faith in accordance with the direction of the
         Majority Certificateholders relating to the time, method and place of
         conducting any proceeding for any remedy available to the Trustee or
         the Trust Administrator, as applicable, or exercising or omitting to
         exercise any trust or power conferred upon the Trustee, under this
         Agreement; and

                  (iv) Neither the Trustee nor the Trust Administrator shall be
         charged with knowledge of any failure by the Servicer to comply with
         the obligations of the Servicer referred to in clauses (i) and (ii) of
         Section 8.01(a) or of the existence of any Servicer Termination Event
         unless a Responsible Officer of the Trustee or the Trust Administrator,
         as applicable, at the Corporate Trust Office obtains actual knowledge
         of such failure or the Trustee or the Trust Administrator, as
         applicable, receives written notice of such failure from the Depositor,
         the Servicer or the Majority Certificateholders.

                  Neither the Trustee nor the Trust Administrator shall be
required to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if there is reasonable ground for believing that the
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it, and none of the provisions contained in this
Agreement shall in any event require the Trustee, the Trust Administrator or the
Master Servicer to perform, or be responsible for the manner of performance of,
any of the obligations of the Servicer under this Agreement, except during such
time, if any, as the Master Servicer shall be the successor to, and be vested
with the rights, duties, powers and privileges of, the Servicer in accordance
with the terms of this Agreement.

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                  SECTION 9.02. Certain Matters Affecting the Trustee and the
                                Trust Administrator.

                  (a) Except as otherwise provided in Section 9.01:

                  (i) Either the Trustee or the Trust Administrator may request
         and rely upon, and shall be protected in acting or refraining from
         acting upon, any resolution, Officers' Certificate, certificate of
         auditors or any other certificate, statement, instrument, opinion,
         report, notice, request, consent, order, appraisal, bond or other paper
         or document reasonably believed by it to be genuine and to have been
         signed or presented by the proper party or parties, and the manner of
         obtaining consents and of evidencing the authorization of the execution
         thereof by Certificateholders shall be subject to such reasonable
         regulations as the Trustee or the Trust Administrator may prescribe;

                  (ii) Either the Trustee or the Trust Administrator may consult
         with counsel and any Opinion of Counsel shall be full and complete
         authorization and protection in respect of any action taken or suffered
         or omitted by it hereunder in good faith and in accordance with such
         Opinion of Counsel;

                  (iii) Neither the Trustee nor the Trust Administrator shall be
         under any obligation to exercise any of the rights or powers vested in
         it by this Agreement, or to institute, conduct or defend any litigation
         hereunder or in relation hereto, at the request, order or direction of
         any of the Certificateholders, pursuant to the provisions of this
         Agreement, unless such Certificateholders shall have offered to the
         Trustee or the Trust Administrator, as applicable, reasonable security
         or indemnity against the costs, expenses and liabilities which may be
         incurred therein or thereby; the right of the Trustee or the Trust
         Administrator to perform any discretionary act enumerated in this
         Agreement shall not be construed as a duty, and neither the Trustee nor
         the Trust Administrator shall be answerable for other than its
         negligence or willful misconduct in the performance of any such act;

                  (iv) Neither the Trustee nor the Trust Administrator shall be
         personally liable for any action taken, suffered or omitted by it in
         good faith and believed by it to be authorized or within the discretion
         or rights or powers conferred upon it by this Agreement;

                  (v) prior to the occurrence of a Master Servicer Event of
         Termination and after the curing of all Master Servicer Events of
         Termination which may have occurred, neither the Trustee nor the Trust
         Administrator shall be bound to make any investigation into the facts
         or matters stated in any resolution, certificate, statement,
         instrument, opinion, report, notice, request, consent, order, approval,
         bond or other paper or documents, unless requested in writing to do so
         by the Majority Certificateholder; provided, however, that if the
         payment within a reasonable time to the Trustee or the Trust
         Administrator, as applicable, of the costs, expenses or liabilities
         likely to be incurred by it in the making of such investigation is, in
         the opinion of the Trustee or the Trust Administrator, as applicable,
         not reasonably assured to the Trustee or the Trust Administrator, as
         applicable, by the security afforded to it by the terms of this
         Agreement, the Trustee or the Trust Administrator, as applicable, may
         require reasonable indemnity against such cost, expense or liability as
         a condition to such

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         proceeding. The reasonable expense of every such examination shall be
         paid by the Servicer or, if paid by the Trustee or the Trust
         Administrator, shall be reimbursed by the Servicer upon demand and, if
         not reimbursed by the Servicer, shall be reimbursed by the Trust.
         Nothing in this clause (v) shall derogate from the obligation of the
         Servicer to observe any applicable law prohibiting disclosure of
         information regarding the Mortgagors;

                  (vi) Neither the Trustee nor the Trust Administrator shall be
         accountable, shall have any liability and makes no representation as to
         any acts or omissions hereunder of the Servicer;

                  (vii) Either the Trustee or the Trust Administrator may
         execute any of the trusts or powers hereunder or perform any duties
         hereunder either directly or by or through agents or attorneys,
         custodians or nominees;

                  (viii) the right of the Trustee or the Trust Administrator to
         perform any discretionary act enumerated in this Agreement shall not be
         construed as a duty, and neither the Trustee nor the Trust
         Administrator shall be answerable for other than its negligence or
         willful misconduct in the performance of such act;

                  (ix) The Trust Administrator shall not be personally liable
         for any loss resulting from the investment of funds held in the
         Collection Account or the REO Account made at the direction of the
         Servicer pursuant to Section 3.12; and

                  (x) Neither the Trustee, the Trust Administrator, nor any
         Affiliate of either of them is permitted to receive compensation that
         could be deemed to be in the Trustee's or the Trust Administrator's, as
         applicable, economic self-interest for (i) serving as investment
         adviser, administrator, shareholder, servicing agent, custodian or
         sub-custodian with respect to certain of the Permitted Investments,
         (ii) using Affiliates to effect transactions in certain Permitted
         Investments and (iii) effecting transactions in certain Permitted
         Investments. Such compensation shall not be considered an amount that
         is reimbursable or payable pursuant to Section 3.11.

                  SECTION 9.03. Neither Trustee nor Trust Administrator Liable
                                for Certificates or Mortgage Loans.

                  The recitals contained herein and in the Certificates (other
than the authentication of the Trustee or the Trust Administrator on the
Certificates) shall be taken as the statements of the Depositor, and neither the
Trustee nor the Trust Administrator (in its role as such) assumes any
responsibility for the correctness of the same. Neither the Trustee nor the
Trust Administrator makes any representations as to the validity or sufficiency
of this Agreement or of the Certificates (other than the signature and
authentication of the Trustee or the Trust Administrator on the Certificates) or
of any Mortgage Loan or related document or MERS or the MERS System other than
with respect to the Trustee's or the Trust Administrator's execution and
authentication of the Certificates. Neither the Trustee nor the Trust
Administrator (in its role as such) shall be accountable for the use or
application by the Servicer or the Master Servicer, or for the use or
application of any funds paid to the Servicer or the Master Servicer (in its
role as such) in respect of the Mortgage Loans or deposited

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in or withdrawn from the Collection Account by the Servicer. Neither the Trustee
nor the Trust Administrator (in its role as such) shall at any time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Mortgage or any Mortgage Loan, or the perfection and
priority of any Mortgage or the maintenance of any such perfection and priority,
or for or with respect to the sufficiency of the Trust or its ability to
generate the payments to be distributed to Certificateholders under this
Agreement, including, without limitation: the existence, condition and ownership
of any Mortgaged Property; the existence and enforceability of any hazard
insurance thereon; the validity of the assignment of any Mortgage Loan to the
Trustee or of any intervening assignment; the completeness of any Mortgage Loan;
the performance or enforcement of any Mortgage Loan; the compliance by the
Depositor, the Originator, the Master Servicer or the Servicer with any warranty
or representation made under this Agreement or in any related document or the
accuracy of any such warranty or representation prior to the Trustee's or the
Trust Administrator receipt of notice or other discovery of any non-compliance
therewith or any breach thereof; any investment of monies by or at the direction
of the Servicer or Master Servicer or any loss resulting therefrom, it being
understood that the Trustee or the Trust Administrator, as applicable, shall
remain responsible for any Trust property that it may hold in its individual
capacity; the acts or omissions of any of the Servicer, the Master Servicer, any
Sub-Servicer or any Mortgagor; any action of the Servicer, the Master Servicer
or any Sub- Servicer taken in the name of the Trustee or the Trust
Administrator; the failure of the Servicer, the Master Servicer or any
Sub-Servicer to act or perform any duties required of it hereunder; or any
action by the Trustee or the Trust Administrator taken at the instruction of the
Servicer or the Master Servicer; provided, however, that the foregoing shall not
relieve the Trustee or the Trust Administrator of its obligation to perform its
duties under this Agreement, including, without limitation, the Trustee's duty
to review the Mortgage Files pursuant to Section 2.01. Neither the Trustee nor
the Trust Administrator (in its capacity as such) shall have any responsibility
for filing any financing or continuation statement in any public office at any
time or to otherwise perfect or maintain the perfection of any security interest
or lien granted to it hereunder.

                  SECTION 9.04. Trustee and Trust Administrator May Own
                                Certificates.

                  Either the Trustee or the Trust Administrator in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights as it would have if it were not Trustee or Trust
Administrator and may transact any banking and trust business with the
Originator, the Servicer, the Depositor or their Affiliates.

                  SECTION 9.05. Trustee's and Trust Administrator's Fees and
                                Expenses.

                  (a) The Trust Administrator shall withdraw from the
Distribution Account on each Distribution Date and pay to itself the Trust
Administration Fee with respect to the calendar month that immediately preceded
the month of such Distribution Date. As additional compensation for all services
rendered by it in the execution of the trust hereby created and in the exercise
and performance of any of the powers and duties of the Trust Administrator
hereunder, the Trust Administrator shall be permitted to retain the income,
payable to the Trust Administrator from time to time, from investment of or
earnings on the funds from time to time in the Distribution Account, as provided
in Section 3.12. The annual fees of the Trustee hereunder and of the Custodian
shall be paid in accordance with a side letter agreement with the Trust
Administrator and at the sole expense

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of the Trust Administrator. The Trustee, the Trust Administrator, the Custodian
or any director, officer, employee or agent of any of them, shall be indemnified
by the Trust Fund and held harmless against any loss, liability or expense (not
including expenses and disbursements incurred or made by the Trustee or the
Trust Administrator, including the compensation and the expenses and
disbursements of its agents and counsel, in the ordinary course of the
Trustee's, the Custodian's on its behalf or the Trust Administrator's
performance in accordance with the provisions of this Agreement) incurred by the
Trustee, by the Custodian on its behalf or by the Trust Administrator arising
out of or in connection with the acceptance or administration of the obligations
and duties of the Trustee or the Trust Administrator under this Agreement, other
than any loss, liability or expense (i) resulting from a breach of the
Servicer's or the Master Servicer's obligations and duties under this Agreement
for which the Trustee, the Custodian or the Trust Administrator, as applicable,
is indemnified under Section 9.05(b) or Section 9.05(c) or (ii) any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence of the Trustee, of the Custodian on its behalf or of the Trust
Administrator, as applicable, in the performance of its duties hereunder or by
reason of the Trustee's, the Custodian's on its behalf or the Trust
Administrator's , as applicable, reckless disregard of obligations and duties
hereunder or as a result of a breach of the Trustee's or the Trust
Administrator's, as applicable, obligations under Article X hereof. Any amounts
payable to the Trustee, the Custodian, the Trust Administrator or any director,
officer, employee or agent of the Trustee, the Custodian or the Trust
Administrator, in respect of the indemnification provided by this Section
9.05(a), or pursuant to any other right of reimbursement from the Trust Fund
that the Trustee, the Custodian, the Trust Administrator or any director,
officer, employee or agent of the Trustee, the Custodian or the Trust
Administrator, may have hereunder in its capacity as such, may be withdrawn by
the Trust Administrator from the Distribution Account at any time. The foregoing
indemnity shall survive the resignation or removal of the Trustee or the Trust
Administrator.

                  (b) The Servicer agrees to indemnify the Trustee, the Trust
Administrator or any director, officer, employee or agent of the Trustee or the
Trust Administrator from, and hold it harmless against, any loss, liability or
expense resulting from a breach of the Servicer's obligations and duties under
this Agreement. Such indemnity shall survive the termination or discharge of
this Agreement and the resignation or removal of the Trustee, the Trust
Administrator and the Servicer for actions prior to such resignation or removal.
Any payment hereunder made by the Servicer to the Trustee or the Trust
Administrator shall be from the Servicer's own funds, without reimbursement from
the Trust Fund therefor.

                  (c) The Master Servicer agrees to indemnify the Trustee, the
Trust Administrator or any director, officer, employee or agent of the Trustee
or the Trust Administrator from, and hold it harmless against, any loss,
liability or expense resulting from a breach of the Master Servicer's
obligations and duties under this Agreement, to the extent the Master Servicer
is not excluded from such liability pursuant to Section 7.03. Such indemnity
shall survive the termination or discharge of this Agreement and the resignation
or removal of the Trustee, the Trust Administrator and the Master Servicer for
actions prior to such resignation or removal. Any payment hereunder made by the
Master Servicer to the Trustee or the Trust Administrator shall be from the
Master Servicer's own funds, without reimbursement from the Trust Fund therefor.

                  SECTION 9.06. Eligibility Requirements for Trustee and Trust
                                Administrator.

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<PAGE>

                  Each of the Trustee and the Trust Administrator hereunder
shall at all times be an entity duly organized and validly existing under the
laws of the United States of America or any state thereof, 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. If such entity 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 9.06, the combined
capital and surplus of such entity shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published.
The principal offices of each of the Trustee and the Trust Administrator (other
than the initial Trustee and initial Trust Administrator) shall be in a state
with respect to which an Opinion of Counsel has been delivered to such Trustee
or Trust Administrator, as applicable, at the time such Trustee or Trust
Administrator, as applicable, is appointed Trustee or Trust Administrator, as
applicable, to the effect that the Trust will not be a taxable entity under the
laws of such state. In case at any time the Trustee or the Trust Administrator
shall cease to be eligible in accordance with the provisions of this Section
9.06, the Trustee or the Trust Administrator, as applicable, shall resign
immediately in the manner and with the effect specified in Section 9.07.

                  SECTION 9.07. Resignation or Removal of Trustee or Trust
                                Administrator.

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

                  If at any time the Trustee or the Trust Administrator shall
cease to be eligible in accordance with the provisions of Section 9.06 and shall
fail to resign after written request therefor by the Depositor (or in the case
of the Trust Administrator, the Trustee), or if at any time the Trustee or the
Trust Administrator shall be legally unable to act, or shall be adjudged a
bankrupt or insolvent, or a receiver of the Trustee or the Trust Administrator
or of its property shall be appointed, or any public officer shall take charge
or control of the Trustee or the Trust Administrator or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor or the Servicer may remove the Trustee or the Trust Administrator, as
applicable. If the Depositor or the Servicer removes the Trustee or the Trust
Administrator under the authority of the immediately preceding sentence, the
Depositor shall promptly appoint a successor Trustee or Trust Administrator, as
applicable, by written instrument, in duplicate, one copy of which instrument
shall be delivered to the Trustee or Trust Administrator so removed and one copy
to the successor Trustee or Trust Administrator.

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<PAGE>

                  The Majority Certificateholders may at any time remove the
Trustee or the Trust Administrator by written instrument or instruments
delivered to the Servicer, the Depositor and, if the Trustee is resigning, to
the Trust Administrator, or, if the Trust Administrator is resigning, to the
Trustee; the Depositor shall thereupon use its best efforts to appoint a
successor Trustee or Trust Administrator in accordance with this Section 9.07.

                  Any resignation or removal of the Trustee or the Trust
Administrator and appointment of a successor Trustee or Trust Administrator
pursuant to any of the provisions of this Section 9.07 shall not become
effective until acceptance of appointment by the successor Trustee or Trust
Administrator, as applicable, as provided in Section 9.08.

                  Notwithstanding anything to the contrary contained herein, the
Master Servicer and the Trust Administrator shall at all times be the same
Person.

                  SECTION 9.08. Successor Trustee or Trust Administrator.

                  Any successor Trustee or Trust Administrator appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the
Depositor, the Servicer and to its predecessor Trustee or Trust Administrator an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor Trustee or Trust Administrator shall become
effective, and such successor Trustee or Trust Administrator, without any
further act, deed or conveyance, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as Trustee or Trust Administrator. The Depositor, the
Servicer and the predecessor Trustee or Trust Administrator shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor Trustee Trust
Administrator all such rights, powers, duties and obligations.

                  No successor Trustee or Trust Administrator shall accept
appointment as provided in this Section 9.08 unless at the time of such
acceptance such successor Trustee or Trust Administrator shall be eligible under
the provisions of Section 9.06 and the appointment of such successor Trustee or
Trust Administrator shall not result in a downgrading of the Regular
Certificates by either Rating Agency, as evidenced by a letter from each Rating
Agency.

                  Upon acceptance of appointment by a successor Trustee or Trust
Administrator as provided in this Section 9.08, the successor Trustee or Trust
Administrator shall mail notice of the appointment of a successor Trustee or
Trust Administrator hereunder to all Holders of Certificates at their addresses
as shown in the Certificate Register and to each Rating Agency.

                  SECTION 9.09. Merger or Consolidation of Trustee or Trust
                                Administrator.

                  Any entity into which the Trustee or the Trust Administrator
may be merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which the Trustee or
the Trust Administrator shall be a party, or any entity succeeding to the
business of the Trustee or Trust Administrator, shall be the successor of the
Trustee or the Trust Administrator hereunder, as applicable, provided such
entity shall be eligible

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<PAGE>

under the provisions of Section 9.06 and 9.08, 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 9.10. Appointment of Co-Trustee or Separate Trustee.

                  Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Trust or any Mortgaged Property may at the time be
located, the Depositor 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, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust, or any part thereof,
and, subject to the other provisions of this Section 9.10, such powers, duties,
obligations, rights and trusts as the Servicer and the Trustee may consider
necessary or desirable. Any such co-trustee or separate trustee shall be subject
to the written approval of the Servicer. If the Servicer shall not have joined
in such appointment within 15 days after the receipt by it of a request so to
do, or in the case a Servicer Event of Termination shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 9.06, and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 9.08. The Servicer shall be responsible for the
fees of any co-trustee or separate trustee appointed hereunder.

                  Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:

                  (i) all rights, powers, duties and obligations conferred or
         imposed upon the Trustee shall be conferred or imposed upon and
         exercised or performed by the Trustee and such separate trustee or
         co-trustee jointly (it being understood that such separate trustee or
         co-trustee is not authorized to act separately without the Trustee
         joining in such act), 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 or any portion
         thereof in any such jurisdiction) shall be exercised and performed
         singly by such separate trustee or co-trustee, but solely at the
         direction of the Trustee;

                  (ii) no trustee hereunder shall be held personally liable by
         reason of any act or omission of any other trustee hereunder; and

                  (iii) the Servicer and the Trustee, acting jointly, may at any
         time accept the resignation of or remove any separate trustee or
         co-trustee except that following the occurrence of a Servicer Event of
         Termination, the Trustee acting alone may accept the resignation or
         remove any separate trustee or co-trustee.

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<PAGE>

                  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, 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 and a
copy thereof given to the Depositor and the Servicer.

                  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 9.11. Limitation of Liability.

                  The Certificates are executed by the Trustee or the Trust
Administrator, as applicable, not in its individual capacity but solely as
Trustee or Trust Administrator of the Trust, in the exercise of the powers and
authority conferred and vested in it by this Agreement. Each of the undertakings
and agreements made on the part of the Trustee or the Trust Administrator in the
Certificates is made and intended not as a personal undertaking or agreement by
the Trustee or the Trust Administrator but is made and intended for the purpose
of binding only the Trust.

                  SECTION 9.12. Trustee or Trust Administrator May Enforce
                                Claims Without Possession of Certificates.

                  (a) All rights of action and claims under this Agreement or
the Certificates may be prosecuted and enforced by the Trustee or the Trust
Administrator without the possession of any of the Certificates or the
production thereof in any proceeding relating thereto, and such proceeding
instituted by the Trustee or the Trust Administrator shall be brought in its own
name or in its capacity as Trustee or Trust Administrator for the benefit of all
Holders of such Certificates, subject to the provisions of this Agreement. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursement and advances of the Trustee or the Trust
Administrator and its agents and counsel, be for the ratable benefit of the
Certificateholders in respect of which such judgment has been recovered.

                  (b) The Trustee and the Trust Administrator shall afford the
Originator, the Depositor, the Servicer and each Certificateholder upon
reasonable prior notice during normal business hours, access to all records
maintained by the Trustee and the Trust Administrator in respect of its duties
hereunder and access to officers of the Trustee or the Trust Administrator, as
applicable, responsible for performing such duties. Upon request, the Trustee or
the Trust Administrator shall furnish the Depositor, the Servicer and any
requesting Certificateholder with its most recent financial statements. The
Trustee and the Trust Administrator shall cooperate fully with the Originator,
the

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<PAGE>

Servicer, the Depositor and such Certificateholder and shall make available
to the Originator, the Servicer, the Depositor and such Certificateholder for
review and copying such books, documents or records as may be requested with
respect to the Trustee's or the Trust Administrator's duties hereunder. The
Originator, the Depositor, the Servicer and the Certificateholders shall not
have any responsibility or liability for any action or failure to act by the
Trustee or the Trust Administrator and are not obligated to supervise the
performance of the Trustee or the Trust Administrator under this Agreement or
otherwise.

                  SECTION 9.13. Suits for Enforcement.

                  In case a Servicer Event of Termination or other default by
the Servicer or the Depositor hereunder shall occur and be continuing, the
Trustee, shall, at the direction of the Majority Certificateholders, or the
Trustee or the Trust Administrator may, proceed to protect and enforce its
rights and the rights of the Certificateholders under this Agreement by a suit,
action or proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy, as the Trustee or the Trust
Administrator, being advised by counsel, and subject to the foregoing, shall
deem most effectual to protect and enforce any of the rights of the Trustee, the
Trust Administrator and the Certificateholders.

                  SECTION 9.14. Waiver of Bond Requirement.

                  The Trustee and the Trust Administrator shall be relieved of,
and each Certificateholder hereby waives, any requirement of any jurisdiction in
which the Trust, or any part thereof, may be located that the Trustee or the
Trust Administrator post a bond or other surety with any court, agency or body
whatsoever.

                  SECTION 9.15. Waiver of Inventory, Accounting and Appraisal
                                Requirement.

                  The Trustee and the Trust Administrator shall be relieved of,
and each Certificateholder hereby waives, any requirement of any jurisdiction in
which the Trust, or any part thereof, may be located that the Trustee or the
Trust Administrator file any inventory, accounting or appraisal of the Trust
with any court, agency or body at any time or in any manner whatsoever.

                  SECTION 9.16. Letter of Representations.

                  The Depositor and the Trustee hereby authorize the Trust
Administrator to execute the Letter of Representations to the Depository, in its
capacity as Trust Administrator, on behalf of the Trustee in its capacity as
Trustee of the Trust, in turn on behalf of the Certificateholders. The action of
the Trust Administrator, in so executing such Letter of Representations prior to
the Closing Date, is hereby approved and ratified by the Depositor and the
Trustee.

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                                    ARTICLE X

                              REMIC ADMINISTRATION

                  SECTION 10.01. REMIC Administration.

                  (a) REMIC elections as set forth in the Preliminary Statement
shall be made by the Trust Administrator on Form 1066 or other appropriate
federal tax or information return for the taxable year ending on the last day of
the calendar year in which the Certificates are issued. The regular interests
and residual interest in each REMIC shall be as designated in the Preliminary
Statement.

                  (b) The Closing Date is hereby designated as the "Startup Day"
of each REMIC within the meaning of section 860G(a)(9) of the Code.

                  (c) The Trust Administrator shall pay any and all expenses
relating to any tax audit of any REMIC (including, but not limited to, any
professional fees or any administrative or judicial proceedings with respect to
any Trust REMIC that involve the Internal Revenue Service or state tax
authorities), including the expense of obtaining any tax related Opinion of
Counsel. The Trust Administrator shall be entitled to reimbursement of expenses
incurred pursuant to this Section 10.01(c) to the extent provided in Section
9.05.

                  (d) The Trust Administrator shall prepare, sign and file, all
of the REMICs' federal and state tax and information returns (including Form
8811) as the direct representative each REMIC created hereunder. The expenses of
preparing and filing such returns shall be borne by the Trust Administrator.

                  (e) The Holder of the Class R Certificate at any time holding
the largest Percentage Interest thereof shall be the "tax matters person" as
defined in the REMIC Provisions (the related "Tax Matters Person") with respect
to REMIC 1 and REMIC 2 and shall act as Tax Matters Person for REMIC 1 and REMIC
2. The Trust Administrator, as agent for the Tax Matters Person, shall perform
on behalf of each REMIC all reporting and other tax compliance duties that are
the responsibility of such REMIC under the Code, the REMIC Provisions, or other
compliance guidance issued by the Internal Revenue Service or any state or local
taxing authority. Among its other duties, if required by the Code, the REMIC
Provisions, or other such guidance, the Trust Administrator, as agent for the
Tax Matters Person, shall provide (i) to the Treasury or other governmental
authority such information as is necessary for the application of any tax
relating to the transfer of a Residual Certificate to any disqualified person or
organization and (ii) to the Certificateholders such information or reports as
are required by the Code or REMIC Provisions. The Trust Administrator, as agent
for the Tax Matters Person, shall represent each REMIC in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year of
any REMIC, enter into settlement agreements with any government taxing agency,
extend any statute of limitations relating to any item of any REMIC and
otherwise act on behalf of any REMIC in relation to any tax matter involving the
Trust.

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                  (f) The Trustee, the Trust Administrator, the Servicer, the
Master Servicer and the Holders of Certificates shall take any action or cause
the REMIC to take any action necessary to create or maintain the status of each
REMIC as a REMIC under the REMIC Provisions and shall assist each other as
necessary to create or maintain such status. Neither the Trustee, the Trust
Administrator, the Servicer, the Master Servicer nor the Holder of any Residual
Certificate shall take any action, cause any REMIC created hereunder 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 such REMIC as a REMIC or (ii) result in the imposition of a tax
upon such REMIC (including but not limited to the tax on prohibited transactions
as defined in Code Section 860F(a)(2) and the tax on prohibited contributions
set forth on Section 860G(d) of the Code) (either such event, an "Adverse REMIC
Event") unless the Trustee, the Trust Administrator, the Servicer and the Master
Servicer have received an Opinion of Counsel (at the expense of the party
seeking to take such action) to the effect that the contemplated action will not
endanger such status or result in the imposition of such a tax. In addition,
prior to taking any action with respect to any REMIC created hereunder or the
assets therein, or causing such REMIC to take any action, which is not expressly
permitted under the terms of this Agreement, any Holder of a Residual
Certificate will consult with the Trustee, the Trust Administrator, the Master
Servicer and the Servicer, or their respective designees, in writing, with
respect to whether such action could cause an Adverse REMIC Event to occur with
respect to any REMIC, and no such Person shall take any such action or cause any
REMIC to take any such action as to which the Trustee, the Trust Administrator,
the Master Servicer or the Servicer has advised it in writing that an Adverse
REMIC Event could occur.

                  (g) Each Holder of a Residual Certificate shall pay when due
any and all taxes imposed on each REMIC created hereunder by federal or state
governmental authorities. To the extent that such Trust taxes are not paid by a
Residual Certificateholder, the Trust Administrator shall pay any remaining
REMIC taxes out of current or future amounts otherwise distributable to the
Holder of the Residual Certificate in the REMICs or, if no such amounts are
available, out of other amounts held in the Distribution Account, and shall
reduce amounts otherwise payable to Holders of regular interests in the related
REMIC. Subject to the foregoing, in the event that a REMIC incurs a state or
local tax, including franchise taxes, as a result of a determination that such
REMIC is domiciled in the State of California for state tax purposes by virtue
of the location of the Servicer, the Servicer agrees to pay on behalf of such
REMIC when due, any and all state and local taxes imposed as a result of such a
determination, in the event that the Holder of the related Residual Certificate
fails to pay such taxes, if any, when imposed.

                  (h) The Trust Administrator, as agent for the Tax Matters
Person, shall, for federal income tax purposes, maintain books and records with
respect to each REMIC created hereunder on a calendar year and on an accrual
basis.

                  (i) No additional contributions of assets shall be made to any
REMIC created hereunder, except as expressly provided in this Agreement with
respect to eligible substitute mortgage loans.

                  (j) Neither the Trustee, the Trust Administrator, the Servicer
nor the Master Servicer shall enter into any arrangement by which any REMIC
created hereunder will receive a fee or other compensation for services.

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                  (k) On or before April 15 of each calendar year beginning in
2003, the Servicer shall deliver to the Trustee, the Trust Administrator and
each Rating Agency an Officers' Certificate stating the Servicer's compliance
with the provisions of this Section 10.01.

                  (l) The Trust Administrator will apply for an Employee
Identification Number from the Internal Revenue Service via a Form SS-4 or other
acceptable method for all tax entities and shall complete the Form 8811.

                  SECTION 10.02. Prohibited Transactions and Activities.

                  None of the Depositor, the Servicer, the Master Servicer, the
Trustee nor the Trust Administrator shall sell, dispose of, or substitute for
any of the Mortgage Loans, except in a disposition pursuant to (i) the
foreclosure of a Mortgage Loan, (ii) the bankruptcy of the Trust Fund, (iii) the
termination of any REMIC created hereunder pursuant to Article X of this
Agreement, (iv) a substitution pursuant to Article II of this Agreement or (v) a
repurchase of Mortgage Loans pursuant to Article II of this Agreement, nor
acquire any assets for any REMIC, nor sell or dispose of any investments in the
Distribution Account for gain, nor accept any contributions to either REMIC
after the Closing Date, unless it has received an Opinion of Counsel (at the
expense of the party causing such sale, disposition, or substitution) that such
disposition, acquisition, substitution, or acceptance will not (a) affect
adversely the status of any REMIC created hereunder as a REMIC or of the
interests therein other than the Residual Certificates as the regular interests
therein, (b) affect the distribution of interest or principal on the
Certificates, (c) result in the encumbrance of the assets transferred or
assigned to the Trust Fund (except pursuant to the provisions of this Agreement)
or (d) cause any REMIC created hereunder to be subject to a tax on prohibited
transactions or prohibited contributions pursuant to the REMIC Provisions.

                  SECTION 10.03. Indemnification with Respect to Certain Taxes
                                 and Loss of REMIC Status.

                  (a) In the event that any REMIC fails to qualify as a REMIC,
loses its status as a REMIC, or incurs federal, state or local taxes as a result
of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Servicer of its duties and
obligations set forth herein, the Servicer shall indemnify the Trustee, the
Trust Administrator and the Trust Fund against any and all losses, claims,
damages, liabilities or expenses ("Losses") resulting from such negligence;
provided, however, that the Servicer shall not be liable for any such Losses
attributable to the action or inaction of the Trustee, the Trust Administrator,
the Depositor or the Holder of such Residual Certificate, as applicable, nor for
any such Losses resulting from misinformation provided by the Holder of such
Residual Certificate on which the Servicer has relied. The foregoing shall not
be deemed to limit or restrict the rights and remedies of the Holder of such
Residual Certificate now or hereafter existing at law or in equity.
Notwithstanding the foregoing, however, in no event shall the Servicer have any
liability (1) for any action or omission that is taken in accordance with and in
compliance with the express terms of, or which is expressly permitted by the
terms of, this Agreement, (2) for any Losses other than arising out of a
negligent performance by the Servicer of its duties and obligations set forth
herein, and (3) for any special or consequential damages to Certificateholders
(in addition to payment of principal and interest on the Certificates).

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                  (b) In the event that any REMIC fails to qualify as a REMIC,
loses its status as a REMIC, or incurs federal, state or local taxes as a result
of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Trustee or the Trust
Administrator of its duties and obligations set forth herein, the Trustee or the
Trust Administrator, as applicable, shall indemnify the Trust Fund against any
and all Losses resulting from its own negligence; provided, however, that
neither the Trustee nor the Trust Administrator shall be liable for any such
Losses attributable to the action or inaction of the Servicer, the Depositor or
the Holder of such Residual Certificate, as applicable, nor for any such Losses
resulting from misinformation provided by the Holder of such Residual
Certificate on which the Trustee or the Trust Administrator has relied. The
foregoing shall not be deemed to limit or restrict the rights and remedies of
the Holder of such Residual Certificate now or hereafter existing at law or in
equity. Notwithstanding the foregoing, however, in no event shall the Trustee or
the Trust Administrator have any liability (1) for any action or omission that
is taken in accordance with and in compliance with the express terms of, or
which is expressly permitted by the terms of, this Agreement, (2) for any Losses
other than arising out of a negligent performance by the Trustee or the Trust
Administrator, as applicable, of its duties and obligations set forth herein,
and (3) for any special or consequential damages to Certificateholders (in
addition to payment of principal and interest on the Certificates).

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                                   ARTICLE XI

                                   TERMINATION

                  SECTION 11.01. Termination.

                  (a) The respective obligations and responsibilities of the
Servicer, the Depositor, the Trustee and the Trust Administrator created hereby
(other than the obligation of the Trust Administrator to make certain payments
to Certificateholders after the final Distribution Date and the obligation of
the Servicer to send certain notices as hereinafter set forth) shall terminate
upon notice to the Trustee and the Trust Administrator upon the earliest of (i)
the Distribution Date on which the Certificate Principal Balances of the Regular
Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase
by the Terminator of the Mortgage Loans as described below and (iv) the
Distribution Date in August 2033. Notwithstanding the foregoing, in no event
shall the trust created hereby continue beyond the expiration of 21 years from
the death of the last survivor of the descendants of Joseph P. Kennedy, the late
ambassador of the United States to the Court of St. James's, living on the date
hereof.

                  The Holders of a majority in Percentage Interest in the Class
C Certificates (unless any such Holder constituting such majority is Greenwich
Capital Markets, Inc. or an Affiliate of it), or if such Holders fail to
exercise such option or if any such Holder constituting such majority is
Greenwich Capital Markets, Inc. or an Affiliate of it, the Servicer (with the
written consent of the Depositor or an Affiliate thereof, such consent not to be
unreasonably withheld) (either such majority Holders or the Servicer, as
applicable, the "Terminator"), may, at its option, terminate this Agreement on
any date on which the aggregate of the Principal Balances of the Mortgage Loans
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) on such date is equal
to or less than 10% of the aggregate Principal Balances of the Original Mortgage
Loans on the Cut-off Date, by purchasing, on the next succeeding Distribution
Date, all of the outstanding Mortgage Loans and REO Properties at a price equal
to the greater of (i) the Principal Balance of the Mortgage Loans (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and the appraised value of the
REO Properties and (ii) fair market value of the Mortgage Loans and REO
Properties (as determined and as agreed upon as of the close of business on the
third Business Day next preceding the date upon which notice of any such
termination is furnished to the related Certificateholders pursuant to Section
11.01(c) by (x) the Servicer, if it is the Terminator, (y) the Holders of a
majority in Percentage Interest in the Class C Certificates and (z) if the Class
A Certificates or a Class of Mezzanine Certificates will not receive all amounts
owed to it as a result of the termination, the Trustee, provided that if this
clause (z) applies to such determination, such determination shall be based
solely upon an appraisal obtained as provided in the last sentence of this
paragraph), plus accrued and unpaid interest thereon at the weighted average of
the Mortgage Rates through the end of the Due Period preceding the final
Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid
Servicing Fees allocable to such Mortgage Loans and REO Properties and any
accrued and unpaid Net WAC Rate Carryover Amounts (the "Termination Price");
provided,

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however, such option may only be exercised if the Termination Price is
sufficient to result in the payment of all interest accrued on, as well as
amounts necessary to retire the principal balance of, each class of notes issued
pursuant to an Indenture. If the determination of the fair market value of the
Mortgage Loans and REO Properties shall be required to be made and agreed upon
by the Servicer, if it is the Terminator, the Holders of a majority in
Percentage Interest in the Class C Certificates and the Trustee as provided in
above, such determination shall be based on an appraisal of the value of the
Mortgage Loans and REO Properties conducted by an independent appraiser mutually
agreed upon by the Servicer, if it is the Terminator, the Holders of a majority
in Percentage Interest in the Class C Certificates and the Trustee in their
reasonable discretion, and (A) such appraisal shall be obtained at no expense to
the Trustee and (B) the Trustee may conclusively rely on, and shall be protected
in relying on, such appraisal.

                  In connection with any such purchase pursuant to the preceding
paragraph, the Terminator shall deposit in the Distribution Account all amounts
then on deposit in the Collection Account, which deposit shall be deemed to have
occurred immediately preceding such purchase.

                  Any such purchase shall be accomplished by deposit into the
Distribution Account on the Determination Date before such Distribution Date of
the Termination Price.

                  (b) Notice of any termination, specifying the Distribution
Date (which shall be a date that would otherwise be a Distribution Date) upon
which the Certificateholders may surrender their Certificates to the Trust
Administrator for payment of the final distribution and cancellation, shall be
given promptly by the Trust Administrator upon the Trust Administrator receiving
notice of such date from the Terminator, by letter to the Certificateholders
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 (1) the
Distribution Date upon which final distribution of the Certificates will be made
upon presentation and surrender of such Certificates at the office or agency of
the Trust Administrator therein designated, (2) the amount of any such final
distribution and (3) that the Record Date otherwise applicable to such
Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office or agency of the
Trust Administrator therein specified.

                  (c) Upon presentation and surrender of the Certificates, the
Trust Administrator shall cause to be distributed to the Holders of the
Certificates on the Distribution Date for such final distribution, in proportion
to the Percentage Interests of their respective Class and to the extent that
funds are available for such purpose, an amount equal to the amount required to
be distributed to such Holders in accordance with the provisions of Section 5.01
for such Distribution Date. By acceptance of the Residual Certificates, the
Holders of the Residual Certificates agree, in connection with any termination
hereunder, to assign and transfer any amounts in excess of the par value of the
Mortgage Loans, and to the extent received in respect of such termination, to
pay any such amounts to the Holders of the Class C Certificates.

                  (d) In the event that all Certificateholders shall not
surrender their Certificates for final payment and cancellation on or before
such final Distribution Date, the Trust Administrator shall promptly following
such date cause all funds in the Distribution Account not distributed in final
distribution to Certificateholders to be withdrawn therefrom and credited to the
remaining

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Certificateholders by depositing such funds in a separate Servicing Account for
the benefit of such Certificateholders, and the Servicer (if the Servicer has
exercised its right to purchase the Mortgage Loans) or the Trust Administrator
(in any other case) shall give a second written notice to the remaining
Certificateholders, to surrender their Certificates for cancellation and receive
the final distribution with respect thereto. 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, and the Trust Administrator
upon transfer of such funds shall be discharged of any responsibility for such
funds, and the Certificateholders shall look to the Residual Certificateholders
for payment.

                  SECTION 11.02. Additional Termination Requirements.

                  (a) In the event that the Terminator exercises its purchase
option as provided in Section 11.01, each REMIC shall be terminated in
accordance with the following additional requirements, unless the Trustee and
the Trust Administrator shall have been furnished with an Opinion of Counsel to
the effect that the failure of the Trust to comply with the requirements of this
Section will not (i) result in the imposition of taxes on "prohibited
transactions" of the Trust as defined in Section 860F of the Code or (ii) cause
any REMIC constituting part of the Trust Fund to fail to qualify as a REMIC at
any time that any Certificates are outstanding:

                  (i) Within 90 days prior to the final Distribution Date, the
         Terminator shall adopt and the Trust Administrator shall sign a plan of
         complete liquidation of each REMIC created hereunder meeting the
         requirements of a "Qualified Liquidation" under Section 860F of the
         Code and any regulations thereunder; and

                  (ii) At or after the time of adoption of such a plan of
         complete liquidation and at or prior to the final Distribution Date,
         the Trust Administrator shall sell all of the assets of the Trust Fund
         to the Terminator for cash pursuant to the terms of the plan of
         complete liquidation.

                  (b) By their acceptance of Certificates, the Holders thereof
hereby agree to appoint the Trust Administrator as their attorney in fact to:
(i) adopt such a plan of complete liquidation (and the Certificateholders hereby
appoint the Trust Administrator as their attorney in fact to sign such plan) as
appropriate and (ii) to take such other action in connection therewith as may be
reasonably required to carry out such plan of complete liquidation all in
accordance with the terms hereof.

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                                   ARTICLE XII

                            MISCELLANEOUS PROVISIONS

                  SECTION 12.01. Amendment.

                  This Agreement may be amended from time to time by the
Depositor, the Servicer, the Master Servicer, the Trustee and the Trust
Administrator; and without the consent of the Certificateholders (i) to cure any
ambiguity, (ii) to correct or supplement any provisions herein which may be
defective or inconsistent with any other provisions herein (iii) to amend the
provisions of Section 5.06 or (iv) to make any other provisions with respect to
matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement; provided that such action
shall not (as evidenced by either (a) an Opinion of Counsel delivered to the
Trustee and the Trust Administrator or (b) written notice to the Depositor, the
Servicer, the Trustee and the Trust Administrator from the party seeking such
amendment containing evidence that such action will not result in the reduction
or withdrawal of the rating of any outstanding Class of Certificates by any
Rating Agency) adversely affect in any material respect the interests of any
Certificateholder. No amendment shall be deemed to adversely affect in any
material respect the interests of any Certificateholder who shall have consented
thereto, and no Opinion of Counsel or evidence of Rating Agency approval shall
be required to address the effect of any such amendment on any such consenting
Certificateholder. Notwithstanding the foregoing, neither an Opinion of Counsel
nor written notice to the Depositor, the Servicer, the Trustee or the Trust
Administrator from the Rating Agencies will be required in connection with an
amendment to the provisions of Section 5.06.

                  In addition, this Agreement may be amended from time to time
by the Depositor, the Servicer, the Master Servicer, the Trustee and the Trust
Administrator with the consent of the Majority Certificateholders for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Holders of Certificates; provided, however, that no such amendment or waiver
shall (x) reduce in any manner the amount of, or delay the timing of, payments
on the Certificates or distributions which are required to be made on any
Certificate without the consent of the Holder of such Certificate, (y) adversely
affect in any material respect the interests of the Holders of any Class of
Certificates (as evidenced by either (i) an Opinion of Counsel delivered to the
Trustee and the Trust Administrator or (ii) written notice to the Depositor, the
Servicer, the Trustee and the Trust Administrator from the party seeking such
amendment containing evidence that such action will not result in the reduction
or withdrawal of the rating of any outstanding Class of Certificates by any
Rating Agency) in a manner other than as described in clause (x) above, without
the consent of the Holders of Certificates of such Class evidencing at least a
66% Percentage Interest in such Class, or (z) reduce the percentage of Voting
Rights required by clause (y) above without the consent of the Holders of all
Certificates of such Class then outstanding. Upon approval of an amendment, a
copy of such amendment shall be sent to the Rating Agencies.

                  Notwithstanding any provision of this Agreement to the
contrary, neither the Trustee nor the Trust Administrator shall consent to any
amendment to this Agreement unless it shall have first received an Opinion of
Counsel, delivered by (and at the expense of) the Person seeking such Amendment,
to the effect that such amendment is permitted hereunder and will not result in
the

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imposition of a tax on any REMIC created hereunder constituting part of the
Trust Fund pursuant to the REMIC Provisions or cause any REMIC created hereunder
constituting part of the Trust to fail to qualify as a REMIC at any time that
any Certificates are outstanding and that the amendment is being made in
accordance with the terms hereof.

                  Promptly after the execution of any such amendment the Trustee
shall furnish, at the expense of the Person that requested the amendment if such
Person is the Servicer (but in no event at the expense of the Trustee),
otherwise at the expense of the Trust, a copy of such amendment and the Opinion
of Counsel referred to in the immediately preceding paragraph to the Servicer
and each Rating Agency.

                  It shall not be necessary for the consent of
Certificateholders under this Section 12.01 to approve the particular form of
any proposed amendment; instead it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable regulations as the Trustee or the Trust
Administrator may prescribe.

                  Each of the Trustee or the Trust Administrator may, but shall
not be obligated to, enter into any amendment pursuant to this Section 12.01
that affects its rights, duties and immunities under this Agreement or
otherwise.

                  SECTION 12.02. Recordation of Agreement; Counterparts.

                  To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Servicer at the expense of the Trust, but only upon direction of
Certificateholders 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 counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
together constitute but one and the same instrument.

                  SECTION 12.03. Limitation on Rights of Certificateholders.

                  The death or incapacity of any Certificateholder shall not (i)
operate to terminate this Agreement or the Trust, (ii) 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, or (iii) otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.

                  Except as expressly provided for herein, no Certificateholder
shall have any right to vote or in any manner otherwise control the operation
and management of the Trust, or the

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obligations of the parties hereto, nor shall anything herein set forth or
contained in the terms of the Certificates be construed so as to constitute the
Certificateholders from time to time as partners or members of an association;
nor shall any Certificateholder be under any liability to any third person by
reason of any action taken by the parties to 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 written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates entitled to at least 25% of the Voting Rights shall have
made written request upon the Trustee 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 15 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding. It is
understood and intended, and expressly covenanted by each Certificateholder with
every other Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue of any
provision of 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, which priority or
preference is not otherwise provided for herein, 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 12.03 each and every Certificateholder, the
Trustee shall be entitled to such relief as can be given either at law or in
equity.

                  SECTION 12.04. Governing Law; Jurisdiction.

                  This Agreement shall be construed in accordance with the laws
of the State of New York, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws. With respect
to any claim arising out of this Agreement, each party irrevocably submits to
the exclusive jurisdiction of the courts of the State of New York and the United
States District Court located in the Borough of Manhattan in The City of New
York, and each party irrevocably waives any objection which it may have at any
time to the laying of venue of any suit, action or proceeding arising out of or
relating hereto brought in any such courts, irrevocably waives any claim that
any such suit, action or proceeding brought in any such court has been brought
in any inconvenient forum and further irrevocably waives the right to object,
with respect to such claim, suit, action or proceeding brought in any such
court, that such court does not have jurisdiction over such party, provided that
service of process has been made by any lawful means.

                  SECTION 12.05. Notices.

                  All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by first class mail, postage prepaid, by facsimile or by express
delivery service, to (a) in the case of the Servicer, Fremont Investment & Loan,
175 North Riverview Drive, Anaheim, California 92808, Attention: SVP Finance, or
such other address or telecopy number as may hereafter be furnished to the
Depositor, the Master Servicer, the Trustee and the Trust Administrator in
writing by the Servicer, (b) in the case of the

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Trustee, HSBC Bank USA, 452 Fifth Avenue, New York, NY 10018, Attention: Issuer
Services, or such other address or telecopy number as may hereafter be furnished
to the Depositor, the Servicer, the Master Servicer and the Trust Administrator
in writing by the Trustee, (c) in the case of the Master Servicer or the Trust
Administrator, Wells Fargo Bank Minnesota, National Association, P.O. Box 98,
Columbia, Maryland 21046, Attention: Fremont Home Loan Trust 2003-A, with a copy
to Wells Fargo Bank Minnesota, National Association, 9062 Old Annapolis Road,
Columbia, Maryland 21045, Attention: Fremont Home Loan Trust 2003-A, with a copy
to Wells Fargo Bank Minnesota, National Association, Sixth and Marquette,
Minneapolis, Minnesota 55479, Attention: Fremont Home Loan Trust 2003-A, or such
other address or telecopy number as may hereafter be furnished to the Depositor,
the Servicer and the Trustee in writing by the Trust Administrator (d) in the
case of the Depositor, Financial Asset Securities Corp., 600 Steamboat Road,
Greenwich, Connecticut 06830, Attention: Legal, or such other address as may be
furnished to the Servicer, the Master Servicer, the Trustee and the Trust
Administrator in writing by the Depositor. 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.
Notice of any Servicer Event of Termination shall be given by telecopy and by
certified mail. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have duly been given when mailed,
whether or not the Certificateholder receives such notice. A copy of any notice
required to be telecopied hereunder shall also be mailed to the appropriate
party in the manner set forth above.

                  SECTION 12.06. Severability of Provisions.

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

                  SECTION 12.07. Article and Section References.

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

                  SECTION 12.08. Notice to the Rating Agencies.

                  (a) Each of the Trustee, the Trust Administrator and the
Servicer shall be obligated to use its best reasonable efforts promptly to
provide notice to the Rating Agencies with respect to each of the following of
which a Responsible Officer of the Trustee, the Trust Administrator or Servicer,
as the case may be, has actual knowledge:

                  (i) any material change or amendment to this Agreement;

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

                                      151
<PAGE>

                  (iii) the resignation or termination of the Servicer, the
         Master Servicer, the Trustee or the Trust Administrator;

                  (iv) the final payment to Holders of the Certificates of any
         Class;

                  (v) any change in the location of any Account; and

                  (vi) if the Trustee or the Master Servicer is acting as
         successor Servicer pursuant to Section 8.02 hereof, any event that
         would result in the inability of the Trustee or the Master Servicer, as
         applicable, to make Advances.

                  (b) In addition, the Trust Administrator shall promptly make
available to each Rating Agency copies of each Statement to Certificateholders
described in Sections 5.03 and 3.19 hereof and the Servicer shall promptly
furnish to each Rating Agency copies of the following:

                  (i) each annual statement as to compliance described in
         Section 3.20 hereof;

                  (ii) each annual independent public accountants' servicing
         report described in Section 3.21 hereof; and

                  (iii) each notice delivered pursuant to Section 8.01(a) hereof
         which relates to the fact that the Servicer has not made an Advance.

                  Any such notice pursuant to this Section 12.08 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) Fitch Ratings, One State Street Plaza, New York, New York 10004, (ii)
Moody's Investors Service, Inc., 99 Church Street, New York, New York 10007 and
(iii) Standard & Poor's, a division of The McGraw-Hill Companies, Inc., 55 Water
Street, 41st Floor, New York, NY 10041, Attention: Residential Mortgage
Surveillance Group.

                  SECTION 12.09. Further Assurances.

                  Notwithstanding any other provision of this Agreement, neither
the Regular Certificateholders, the Trustee nor the Trust Administrator shall
have any obligation to consent to any amendment or modification of this
Agreement unless they have been provided reasonable security or indemnity
against their out-of-pocket expenses (including reasonable attorneys' fees) to
be incurred in connection therewith.

                  SECTION 12.10. Benefits of Agreement.

                  Nothing in this Agreement or in the Certificates, expressed or
implied, shall give to any Person, other than the Certificateholders and the
parties hereto and their successors hereunder, any benefit or any legal or
equitable right, remedy or claim under this Agreement.

                  SECTION 12.11. Acts of Certificateholders.

                                      152
<PAGE>

                  (a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or taken
by the Certificateholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Certificateholders in
person or by agent duly appointed in writing, and such action shall become
effective when such instrument or instruments are delivered to the Trustee, the
Trust Administrator and the Servicer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "act" of the Certificateholders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Agreement and conclusive in
favor of the Trustee, the Trust Administrator and the Trust, if made in the
manner provided in this Section 12.11.

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

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

                                      153
<PAGE>

                  IN WITNESS WHEREOF, the Depositor, the Servicer, the Master
Servicer, the Trustee and the Trust Administrator 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.

                                FINANCIAL ASSET SECURITIES CORP.,
                                as Depositor

                                By:      /s/ James Raezer
                                         -----------------------------
                                Name:    James Raezer
                                Title:   Senior Vice-President

                                FREMONT INVESTMENT & LOAN, as Servicer

                                By:      /s/ Jeff Crusinberry
                                         -----------------------------
                                Name:    Jeff Crusinberry
                                Title:   Senior Vice-President-Finance

                                HSBC BANK USA, as Trustee

                                By:      /s/ Wendy Zhang
                                         -----------------------------
                                Name:    Wendy Zhang
                                Title:   Trust Officer

                                WELLS FARGO BANK MINNESOTA, NATIONAL
                                ASSOCIATION, as Master Servicer and Trust
                                Administrator

                                By:      /s/ Amy Doyle
                                         -----------------------------
                                Name:    Amy Doyle
                                Title:   Vice-President

<PAGE>

STATE OF     )
                  ) ss.:
COUNTY OF    )

                  On the __day of August, 2003 before me, a notary public in and
for said State, personally appeared _______________ known to me to be a
______________ of Financial Asset Securities Corp., a Delaware 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

<PAGE>

STATE OF       )
                   ) ss.:
COUNTY OF      )

                  On the __day of August, 2003 before me, a notary public in and
for said State, personally appeared _______________ known to me to be a
_______________ of Fremont Investment & Loan, a California 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

STATE OF        )
                     ) ss.:
COUNTY OF       )

                  On the __day of August, 2003 before me, a notary public in and
for said State, personally appeared __________________, known to me to be
a_____________________ of HSBC Bank USA, a New York banking corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said association, 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

<PAGE>

STATE OF         )
                      ) ss.:
COUNTY OF        )

                  On the ___day of August, 2003 before me, a notary public in
and for said State, personally appeared __________________, known to me to be
a_____________________ of Wells Fargo Bank Minnesota, National Association, a
national banking association that executed the within instrument, and also known
to me to be the person who executed it on behalf of said association, 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

<PAGE>

                                   EXHIBIT A-1

                         FORM OF CLASS 1A-1 CERTIFICATES

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

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

Certificate No.                                 :     1
Cut-off Date                                    :     August 1, 2003
First Distribution Date                         :     September 25, 2003
Initial Certificate Principal Balance
of this Certificate ("Denomination")            :     $294,422,000.00
Original Class Certificate
Principal Balance of this Class                 :     $294,422,000.00
Percentage Interest                             :     100%
Pass-Through Rate                               :     Variable
CUSIP                                           :     35729P BH 2
Class                                           :     1A-1
Assumed Maturity Date                           :     July 2034

                                      A-1-1

<PAGE>

                         Fremont Home Loan Trust 2003-A
                           Asset-Backed Certificates,
                                  Series 2003-A
                                   Class 1A-1

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien adjustable rate and fixed rate mortgage
         loans (the "Mortgage Loans")

                 FINANCIAL ASSET SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
1A-1 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class 1A-1
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, the Master Servicer, the Trustee or
the Trust Administrator referred to below or any of their respective affiliates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class 1A-1 Certificate (obtained by
dividing the Denomination of this Class 1A-1 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Financial Asset
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of August 1, 2003 (the "Agreement") among the
Depositor, Fremont Investment & Loan as servicer (in such capacity, the
"Servicer"), Wells Fargo Bank Minnesota, National Association as master servicer
(in such capacity, the "Master Servicer") and trust administrator (in such
capacity, the "Trust Administrator") and HSBC Bank, USA (the "Trustee"). To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Class 1A-1 Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class 1A-1 Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

         Reference is hereby made to the further provisions of this Class 1A-1
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.

         This Class 1A-1 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trust Administrator.

                                      A-1-2

<PAGE>

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

Dated: August __, 2003

                              FREMONT HOME LOAN TRUST 2003-A

                              Wells Fargo Bank Minnesota, National
                              Association, not in its individual capacity, but
                              solely as Trust Administrator

                              By:_________________________________

This is one of the Certificates referenced
in the within-mentioned Agreement

By:__________________________________________
         Authorized Signatory of
         Wells Fargo Bank Minnesota, National Association
         as Trust Administrator

                                      A-1-3

<PAGE>

                       [Reverse of Class 1A-1 Certificate]

                         Fremont Home Loan Trust 2003-A
                           Asset-Backed Certificates,
                                  Series 2003-A

         This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2003-A, Asset-Backed Certificates, Series
2003-A (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that neither the Trustee nor the Trust Administrator is
liable to the Certificateholders for any amount payable under this Certificate
or the Agreement or, except as expressly provided in the Agreement, subject to
any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trust and the Trust Administrator.

         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, then the
Business Day immediately following such Distribution Date (the "Distribution
Date"), commencing on the first Distribution Date specified on the face hereof,
to the Person in whose name this Certificate is registered at the close of
business on the applicable Record Date in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
Corporate Trust Office of the Trust Administrator specified in the notice to
Certificateholders of such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trust or the Trust Administrator and the rights of the Certificateholders under
the Agreement at any time by the Depositor, the Servicer, the Master Servicer,
the Trustee, the Trust Administrator and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. 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 therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                                      A-1-4

<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the Corporate Trust offices or agencies of the Trust
Administrator as provided in the Pooling and Servicing Agreement accompanied by
a written instrument of transfer in form satisfactory to the Trust Administrator
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 the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust will be issued to the designated
transferee or transferees.

         The Certificates are issuable only as registered Certificates without
coupons 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 the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trust Administrator may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

         The Depositor, the Servicer, the Master Servicer, the Trustee, the
Trust Administrator and any agent of the Depositor, the Servicer, the Master
Servicer, the Trustee or the Trust Administrator may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Trustee, the Trust
Administrator or any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Original Mortgage Loans as of the Cut-off
Date, the Servicer may purchase, in whole, from the Trust the Mortgage Loans at
a purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee and the Trust
Administrator upon the earliest of (i) the Distribution Date on which the
Certificate Principal Balances of the Regular Certificates have been reduced to
zero, (ii) the final payment or other liquidation of the last Mortgage Loan in
the Trust, (iii) the Distribution Date in July 2034.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                      A-1-5

<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)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trust Administrator 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

                                      A-1-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of ____________________________________________________________
account number ________________________________, or, if mailed by check, to
_______________________________________________________________________________
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.

         This information is provided by ______________________________________,
the assignee named above, or __________________________________________________,
as its agent.

                                      A-1-7

<PAGE>

                                   EXHIBIT A-2

                                   [RESERVED]

                                      A-2-1

<PAGE>

                                   EXHIBIT A-3

                         FORM OF CLASS 2A-1 CERTIFICATES

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

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

Certificate No.                                 :     1
Cut-off Date                                    :     August 1, 2003
First Distribution Date                         :     September 25, 2003
Initial Certificate Principal Balance
of this Certificate ("Denomination")            :     $42,500,000.00
Original Class Certificate
Principal Balance of this Class                 :     $42,500,000.00
Percentage Interest                             :     100%
Pass-Through Rate                               :     Variable
CUSIP                                           :     35729P BJ 8
Class                                           :     2A-1
Assumed Maturity Date                           :     July 2034

                                      A-3-1

<PAGE>

                         Fremont Home Loan Trust 2003-A
                           Asset-Backed Certificates,
                                  Series 2003-A
                                   Class 2A-1

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien adjustable rate and fixed rate mortgage
         loans (the "Mortgage Loans")

                 FINANCIAL ASSET SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
2A-1 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class 2A-1
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, the Master Servicer, the Trustee or
the Trust Administrator referred to below or any of their respective affiliates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class 2A-1 Certificate (obtained by
dividing the Denomination of this Class 2A-1 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Financial Asset
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of August 1, 2003 (the "Agreement") among the
Depositor, Fremont Investment & Loan as servicer (in such capacity, the
"Servicer"), Wells Fargo Bank Minnesota, National Association as master servicer
(in such capacity, the "Master Servicer") and trust administrator (in such
capacity, the "Trust Administrator") and HSBC Bank, USA (the "Trustee"). To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Class 2A-1 Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class 2A-1 Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

         Reference is hereby made to the further provisions of this Class 2A-1
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.

         This Class 2A-1 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trust Administrator.

                                      A-3-2

<PAGE>

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

Dated: August __, 2003

                               FREMONT HOME LOAN TRUST 2003-A

                               Wells Fargo Bank Minnesota, National
                               Association, not in its individual capacity, but
                               solely as Trust Administrator

                               By:_________________________________

This is one of the Certificates referenced
in the within-mentioned Agreement

By:__________________________________________
         Authorized Signatory of
         Wells Fargo Bank Minnesota, National Association
         as Trust Administrator

                                      A-3-3

<PAGE>

                       [Reverse of Class 2A-1 Certificate]

                         Fremont Home Loan Trust 2003-A
                           Asset-Backed Certificates,
                                  Series 2003-A

         This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2003-A, Asset-Backed Certificates, Series
2003-A (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that neither the Trustee nor the Trust Administrator is
liable to the Certificateholders for any amount payable under this Certificate
or the Agreement or, except as expressly provided in the Agreement, subject to
any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trust and the Trust Administrator.

         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, then the
Business Day immediately following such Distribution Date (the "Distribution
Date"), commencing on the first Distribution Date specified on the face hereof,
to the Person in whose name this Certificate is registered at the close of
business on the applicable Record Date in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
Corporate Trust Office of the Trust Administrator specified in the notice to
Certificateholders of such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trust or the Trust Administrator and the rights of the Certificateholders under
the Agreement at any time by the Depositor, the Servicer, the Master Servicer,
the Trustee, the Trust Administrator and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. 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 therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                                      A-3-4

<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the Corporate Trust offices or agencies of the Trust
Administrator as provided in the Pooling and Servicing Agreement accompanied by
a written instrument of transfer in form satisfactory to the Trust Administrator
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 the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust will be issued to the designated
transferee or transferees.

         The Certificates are issuable only as registered Certificates without
coupons 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 the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trust Administrator may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

         The Depositor, the Servicer, the Master Servicer, the Trustee, the
Trust Administrator and any agent of the Depositor, the Servicer, the Master
Servicer, the Trustee or the Trust Administrator may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Trustee, the Trust
Administrator or any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Original Mortgage Loans as of the Cut-off
Date, the Servicer may purchase, in whole, from the Trust the Mortgage Loans at
a purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee and the Trust
Administrator upon the earliest of (i) the Distribution Date on which the
Certificate Principal Balances of the Regular Certificates have been reduced to
zero, (ii) the final payment or other liquidation of the last Mortgage Loan in
the Trust, (iii) the Distribution Date in July 2034.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                      A-3-5

<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)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trust Administrator 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

                                      A-3-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of ____________________________________________________________
account number ________________________________, or, if mailed by check, to
_______________________________________________________________________________
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.

         This information is provided by ______________________________________,
the assignee named above, or __________________________________________________,
as its agent.

                                      A-3-7

<PAGE>

                                                    EXHIBIT A-4

                                          FORM OF CLASS 2A-2 CERTIFICATES

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

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

Certificate No.                                 :     1
Cut-off Date                                    :     August 1, 2003
First Distribution Date                         :     September 25, 2003
Initial Certificate Principal Balance
of this Certificate ("Denomination")            :     $122,168,000.00
Original Class Certificate
Principal Balance of this Class                 :     $122,168,000.00
Percentage Interest                             :     100%
Pass-Through Rate                               :     Variable
CUSIP                                           :     35729P BK 5
Class                                           :     2A-2
Assumed Maturity Date                           :     July 2034

                                                       A-4-1

<PAGE>

                                          Fremont Home Loan Trust 2003-A
                                            Asset-Backed Certificates,
                                  Series 2003-A
                                   Class 2A-2

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien adjustable rate and fixed rate mortgage
         loans (the "Mortgage Loans")

                                  FINANCIAL ASSET SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
2A-2 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class 2A-2
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, the Master Servicer, the Trustee or
the Trust Administrator referred to below or any of their respective affiliates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class 2A-2 Certificate (obtained by
dividing the Denomination of this Class 2A-2 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Financial Asset
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of August 1, 2003 (the "Agreement") among the
Depositor, Fremont Investment & Loan as servicer (in such capacity, the
"Servicer"), Wells Fargo Bank Minnesota, National Association as master servicer
(in such capacity, the "Master Servicer") and trust administrator (in such
capacity, the "Trust Administrator") and HSBC Bank, USA (the "Trustee"). To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Class 2A-2 Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class 2A-2 Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

         Reference is hereby made to the further provisions of this Class 2A-2
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.

         This Class 2A-2 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trust Administrator.

                                      A-4-2

<PAGE>

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

Dated: August __, 2003

                               FREMONT HOME LOAN TRUST 2003-A

                               Wells Fargo Bank Minnesota, National
                               Association, not in its individual capacity, but
                               solely as Trust Administrator

                               By:_________________________________

This is one of the Certificates referenced
in the within-mentioned Agreement

By:__________________________________________
         Authorized Signatory of
         Wells Fargo Bank Minnesota, National Association
         as Trust Administrator

                                                       A-4-3

<PAGE>

                                        [Reverse of Class 2A-2 Certificate]

                                          Fremont Home Loan Trust 2003-A
                                            Asset-Backed Certificates,
                                                   Series 2003-A

         This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2003-A, Asset-Backed Certificates, Series
2003-A (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that neither the Trustee nor the Trust Administrator is
liable to the Certificateholders for any amount payable under this Certificate
or the Agreement or, except as expressly provided in the Agreement, subject to
any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trust and the Trust Administrator.

         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, then the
Business Day immediately following such Distribution Date (the "Distribution
Date"), commencing on the first Distribution Date specified on the face hereof,
to the Person in whose name this Certificate is registered at the close of
business on the applicable Record Date in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
Corporate Trust Office of the Trust Administrator specified in the notice to
Certificateholders of such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trust or the Trust Administrator and the rights of the Certificateholders under
the Agreement at any time by the Depositor, the Servicer, the Master Servicer,
the Trustee, the Trust Administrator and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. 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 therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                                                       A-4-4

<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the Corporate Trust offices or agencies of the Trust
Administrator as provided in the Pooling and Servicing Agreement accompanied by
a written instrument of transfer in form satisfactory to the Trust Administrator
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 the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust will be issued to the designated
transferee or transferees.

         The Certificates are issuable only as registered Certificates without
coupons 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 the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trust Administrator may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

         The Depositor, the Servicer, the Master Servicer, the Trustee, the
Trust Administrator and any agent of the Depositor, the Servicer, the Master
Servicer, the Trustee or the Trust Administrator may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Trustee, the Trust
Administrator or any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Original Mortgage Loans as of the Cut-off
Date, the Servicer may purchase, in whole, from the Trust the Mortgage Loans at
a purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee and the Trust
Administrator upon the earliest of (i) the Distribution Date on which the
Certificate Principal Balances of the Regular Certificates have been reduced to
zero, (ii) the final payment or other liquidation of the last Mortgage Loan in
the Trust, (iii) the Distribution Date in July 2034.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                                       A-4-5

<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)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trust Administrator 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

                                      A-4-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of ____________________________________________________________
account number ________________________________, or, if mailed by check, to
_______________________________________________________________________________
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.

         This information is provided by ______________________________________,
the assignee named above, or __________________________________________________,
as its agent.

                                      A-4-7

<PAGE>

                                   EXHIBIT A-5

                         FORM OF CLASS M-1 CERTIFICATES

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

THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES TO THE EXTENT
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

ANY PURCHASE OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE MADE THE
REPRESENTATIONS SET FORTH IN SECTION 6.02(d) OF THE AGREEMENT.

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, AS AMENDED (THE "CODE").

Certificate No.                                 :     1
Cut-off Date                                    :     August 1, 2003
First Distribution Date                         :     September 25, 2003
Initial Certificate Principal Balance
of this Certificate ("Denomination")            :     $36,502,000.00
Original Class Certificate
Principal Balance of this Class                 :     $36,502,000.00
Percentage Interest                             :     100%
Pass-Through Rate                               :     Variable
CUSIP                                           :     35729P BL 3
Class                                           :     M-1
Assumed Maturity Date                           :     July 2034

                                                       A-5-1

<PAGE>

                                          Fremont Home Loan Trust 2003-A
                                            Asset-Backed Certificates,
                                                   Series 2003-A
                                                     Class M-1

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien adjustable rate and fixed rate mortgage
         loans (the "Mortgage Loans")

                                  FINANCIAL ASSET SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
M-1 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-1
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, the Master Servicer, the Trustee or
the Trust Administrator referred to below or any of their respective affiliates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class M-1 Certificate (obtained by
dividing the Denomination of this Class M-1 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Financial Asset
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of August 1, 2003 (the "Agreement") among the
Depositor, Fremont Investment & Loan as servicer (in such capacity, the
"Servicer"), Wells Fargo Bank Minnesota, National Association as master servicer
(in such capacity, the "Master Servicer") and trust administrator (in such
capacity, the "Trust Administrator") and HSBC Bank, USA (the "Trustee"). To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Class M-1 Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class M-1 Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

         Reference is hereby made to the further provisions of this Class M-1
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.

         This Class M-1 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trust Administrator.

                                      A-5-2

<PAGE>

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

Dated: August __, 2003

                                FREMONT HOME LOAN TRUST 2003-A

                                Wells Fargo Bank Minnesota, National
                                Association, not in its individual capacity, but
                                solely as Trust Administrator

                                By:_________________________________

This is one of the Certificates referenced
in the within-mentioned Agreement

By:__________________________________________
         Authorized Signatory of
         Wells Fargo Bank Minnesota, National Association
         as Trust Administrator

                                                       A-5-3

<PAGE>

                                        [Reverse of Class M-1 Certificate]

                                          Fremont Home Loan Trust 2003-A
                                            Asset-Backed Certificates,
                                                   Series 2003-A

         This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2003-A, Asset-Backed Certificates, Series
2003-A (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that neither the Trustee nor the Trust Administrator is
liable to the Certificateholders for any amount payable under this Certificate
or the Agreement or, except as expressly provided in the Agreement, subject to
any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trust and the Trust Administrator.

         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, then the
Business Day immediately following such Distribution Date (the "Distribution
Date"), commencing on the first Distribution Date specified on the face hereof,
to the Person in whose name this Certificate is registered at the close of
business on the applicable Record Date in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
Corporate Trust Office of the Trust Administrator specified in the notice to
Certificateholders of such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trust or the Trust Administrator and the rights of the Certificateholders under
the Agreement at any time by the Depositor, the Servicer, the Master Servicer,
the Trustee, the Trust Administrator and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. 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 therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                                                       A-5-4

<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the Corporate Trust offices or agencies of the Trust
Administrator as provided in the Pooling and Servicing Agreement accompanied by
a written instrument of transfer in form satisfactory to the Trust Administrator
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 the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust will be issued to the designated
transferee or transferees.

         The Certificates are issuable only as registered Certificates without
coupons 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 the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trust Administrator may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

         Any purchaser of this Certificate shall be deemed to make the
representation set forth in Section 6.02 of the Agreement.

         The Depositor, the Servicer, the Master Servicer, the Trustee, the
Trust Administrator and any agent of the Depositor, the Servicer, the Master
Servicer, the Trustee or the Trust Administrator may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Trustee, the Trust
Administrator or any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Original Mortgage Loans as of the Cut-off
Date, the Servicer may purchase, in whole, from the Trust the Mortgage Loans at
a purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee and the Trust
Administrator upon the earliest of (i) the Distribution Date on which the
Certificate Principal Balances of the Regular Certificates have been reduced to
zero, (ii) the final payment or other liquidation of the last Mortgage Loan in
the Trust, (iii) the Distribution Date in July 2034.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                                       A-5-5

<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)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trust Administrator 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

                                      A-5-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of ____________________________________________________________
account number ________________________________, or, if mailed by check, to
_______________________________________________________________________________
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.

         This information is provided by ______________________________________,
the assignee named above, or __________________________________________________,
as its agent.

                                      A-5-7

<PAGE>

                                   EXHIBIT A-6

                         FORM OF CLASS M-2 CERTIFICATES

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

THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES AND THE CLASS M-1
CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.

ANY PURCHASER OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE MADE THE
REPRESENTATIONS SET FORTH IN SECTION 6.02(d) OF THE AGREEMENT.

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, AS AMENDED (THE "CODE").

Certificate No.                                 :     1
Cut-off Date                                    :     August 1, 2003
First Distribution Date                         :     September 25, 2003
Initial Certificate Principal Balance
of this Certificate ("Denomination")            :     $26,675,000.00
Original Class Certificate
Principal Balance of this Class                 :     $26,675,000.00
Percentage Interest                             :     100%
Pass-Through Rate                               :     Variable
CUSIP                                           :     35729P BM 1
Class                                           :     M-2
Assumed Maturity Date                           :     July 2034

                                      A-6-1

<PAGE>

                         Fremont Home Loan Trust 2003-A
                           Asset-Backed Certificates,
                                  Series 2003-A
                                    Class M-2

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien adjustable rate and fixed rate mortgage
         loans (the "Mortgage Loans")

                 FINANCIAL ASSET SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
M-2 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-2
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, the Master Servicer, the Trustee or
the Trust Administrator referred to below or any of their respective affiliates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class M-2 Certificate (obtained by
dividing the Denomination of this Class M-2 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Financial Asset
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of August 1, 2003 (the "Agreement") among the
Depositor, Fremont Investment & Loan as servicer (in such capacity, the
"Servicer"), Wells Fargo Bank Minnesota, National Association as master servicer
(in such capacity, the "Master Servicer") and trust administrator (in such
capacity, the "Trust Administrator") and HSBC Bank, USA (the "Trustee"). To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Class M-2 Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class M-2 Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

         Reference is hereby made to the further provisions of this Class M-2
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.

         This Class M-2 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trust Administrator.

                                      A-6-2

<PAGE>

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

Dated: August __, 2003

                                FREMONT HOME LOAN TRUST 2003-A

                                Wells Fargo Bank Minnesota, National
                                Association, not in its individual capacity, but
                                solely as Trust Administrator

                                By:_________________________________

This is one of the Certificates referenced
in the within-mentioned Agreement

By:__________________________________________
         Authorized Signatory of
         Wells Fargo Bank Minnesota, National Association
         as Trust Administrator

                                      A-6-3

<PAGE>

                       [Reverse of Class M-2 Certificate]

                         Fremont Home Loan Trust 2003-A
                           Asset-Backed Certificates,
                                  Series 2003-A

         This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2003-A, Asset-Backed Certificates, Series
2003-A (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that neither the Trustee nor the Trust Administrator is
liable to the Certificateholders for any amount payable under this Certificate
or the Agreement or, except as expressly provided in the Agreement, subject to
any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trust and the Trust Administrator.

         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, then the
Business Day immediately following such Distribution Date (the "Distribution
Date"), commencing on the first Distribution Date specified on the face hereof,
to the Person in whose name this Certificate is registered at the close of
business on the applicable Record Date in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
Corporate Trust Office of the Trust Administrator specified in the notice to
Certificateholders of such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trust or the Trust Administrator and the rights of the Certificateholders under
the Agreement at any time by the Depositor, the Servicer, the Master Servicer,
the Trustee, the Trust Administrator and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. 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 therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                                      A-6-4

<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the Corporate Trust offices or agencies of the Trust
Administrator as provided in the Pooling and Servicing Agreement accompanied by
a written instrument of transfer in form satisfactory to the Trust Administrator
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 the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust will be issued to the designated
transferee or transferees.

         The Certificates are issuable only as registered Certificates without
coupons 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 the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trust Administrator may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

         Any purchaser of this Certificate shall be deemed to make the
representation set forth in Section 6.02 of the Agreement.

         The Depositor, the Servicer, the Master Servicer, the Trustee, the
Trust Administrator and any agent of the Depositor, the Servicer, the Master
Servicer, the Trustee or the Trust Administrator may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Trustee, the Trust
Administrator or any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Original Mortgage Loans as of the Cut-off
Date, the Servicer may purchase, in whole, from the Trust the Mortgage Loans at
a purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee and the Trust
Administrator upon the earliest of (i) the Distribution Date on which the
Certificate Principal Balances of the Regular Certificates have been reduced to
zero, (ii) the final payment or other liquidation of the last Mortgage Loan in
the Trust, (iii) the Distribution Date in July 2034.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                      A-6-5

<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)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trust Administrator 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

                                      A-6-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of ____________________________________________________________
account number ________________________________, or, if mailed by check, to
_______________________________________________________________________________
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.

         This information is provided by ______________________________________,
the assignee named above, or __________________________________________________,
as its agent.

                                      A-6-7

<PAGE>

                                   EXHIBIT A-7

                         FORM OF CLASS M-3 CERTIFICATES

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

THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE CLASS M-1
CERTIFICATES AND THE CLASS M-2 CERTIFICATES TO THE EXTENT DESCRIBED IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

ANY PURCHASER OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE MADE THE
REPRESENTATIONS SET FORTH IN SECTION 6.02(d) OF THE AGREEMENT.

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, AS AMENDED (THE "CODE").

Certificate No.                                 :     1
Cut-off Date                                    :     August 1, 2003
First Distribution Date                         :     September 25, 2003
Initial Certificate Principal Balance
of this Certificate ("Denomination")            :     $8,424,000.00
Original Class Certificate
Principal Balance of this Class                 :     $8,424,000.00
Percentage Interest                             :     100%
Pass-Through Rate                               :     Variable
CUSIP                                           :     35729P BN 9
Class                                           :     M-3
Assumed Maturity Date                           :     July 2034

                                      A-7-1

<PAGE>

                         Fremont Home Loan Trust 2003-A
                           Asset-Backed Certificates,
                                  Series 2003-A
                                    Class M-3

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien adjustable rate and fixed rate mortgage
         loans (the "Mortgage Loans")

                 FINANCIAL ASSET SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
M-3 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-3
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, the Master Servicer, the Trustee or
the Trust Administrator referred to below or any of their respective affiliates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class M-3 Certificate (obtained by
dividing the Denomination of this Class M-3 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Financial Asset
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of August 1, 2003 (the "Agreement") among the
Depositor, Fremont Investment & Loan as servicer (in such capacity, the
"Servicer"), Wells Fargo Bank Minnesota, National Association as master servicer
(in such capacity, the "Master Servicer") and trust administrator (in such
capacity, the "Trust Administrator") and HSBC Bank, USA (the "Trustee"). To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Class M-3 Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class M-3 Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

         Reference is hereby made to the further provisions of this Class M-3
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.

         This Class M-3 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trust Administrator.

                                      A-7-2

<PAGE>

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

Dated: August __, 2003

                                FREMONT HOME LOAN TRUST 2003-A

                                Wells Fargo Bank Minnesota, National
                                Association, not in its individual capacity, but
                                solely as Trust Administrator

                                By:_________________________________

This is one of the Certificates referenced
in the within-mentioned Agreement

By:__________________________________________
         Authorized Signatory of
         Wells Fargo Bank Minnesota, National Association
         as Trust Administrator

                                      A-7-3

<PAGE>

                       [Reverse of Class M-3 Certificate]

                         Fremont Home Loan Trust 2003-A
                           Asset-Backed Certificates,
                                  Series 2003-A

         This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2003-A, Asset-Backed Certificates, Series
2003-A (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that neither the Trustee nor the Trust Administrator is
liable to the Certificateholders for any amount payable under this Certificate
or the Agreement or, except as expressly provided in the Agreement, subject to
any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trust and the Trust Administrator.

         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, then the
Business Day immediately following such Distribution Date (the "Distribution
Date"), commencing on the first Distribution Date specified on the face hereof,
to the Person in whose name this Certificate is registered at the close of
business on the applicable Record Date in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
Corporate Trust Office of the Trust Administrator specified in the notice to
Certificateholders of such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trust or the Trust Administrator and the rights of the Certificateholders under
the Agreement at any time by the Depositor, the Servicer, the Master Servicer,
the Trustee, the Trust Administrator and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. 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 therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                                      A-7-4

<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the Corporate Trust offices or agencies of the Trust
Administrator as provided in the Pooling and Servicing Agreement accompanied by
a written instrument of transfer in form satisfactory to the Trust Administrator
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 the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust will be issued to the designated
transferee or transferees.

         The Certificates are issuable only as registered Certificates without
coupons 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 the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trust Administrator may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

         Any purchaser of this Certificate shall be deemed to make the
representation set forth in Section 6.02 of the Agreement.

         The Depositor, the Servicer, the Master Servicer, the Trustee, the
Trust Administrator and any agent of the Depositor, the Servicer, the Master
Servicer, the Trustee or the Trust Administrator may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Trustee, the Trust
Administrator or any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Original Mortgage Loans as of the Cut-off
Date, the Servicer may purchase, in whole, from the Trust the Mortgage Loans at
a purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee and the Trust
Administrator upon the earliest of (i) the Distribution Date on which the
Certificate Principal Balances of the Regular Certificates have been reduced to
zero, (ii) the final payment or other liquidation of the last Mortgage Loan in
the Trust, (iii) the Distribution Date in July 2034.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                      A-7-5

<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)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trust Administrator 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

                                      A-7-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of ____________________________________________________________
account number ________________________________, or, if mailed by check, to
_______________________________________________________________________________
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.

         This information is provided by ______________________________________,
the assignee named above, or __________________________________________________,
as its agent.

                                      A-7-7

<PAGE>

                                   EXHIBIT A-8

                         FORM OF CLASS M-4 CERTIFICATES

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

THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE CLASS M-1
CERTIFICATES, THE CLASS M-2 CERTIFICATES AND THE CLASS M-3 CERTIFICATES TO THE
EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

ANY PURCHASER OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE MADE THE
REPRESENTATIONS SET FORTH IN SECTION 6.02(d) OF THE AGREEMENT.

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, AS AMENDED (THE "CODE").

Certificate No.                                 :     1
Cut-off Date                                    :     August 1, 2003
First Distribution Date                         :     September 25, 2003
Initial Certificate Principal Balance
of this Certificate ("Denomination")            :     $5,616,000.00
Original Class Certificate
Principal Balance of this Class                 :     $5,616,000.00
Percentage Interest                             :     100%
Pass-Through Rate                               :     Variable
CUSIP                                           :     35729P BP 4
Class                                           :     M-4
Assumed Maturity Date                           :     July 2034

                                      A-8-1

<PAGE>

                         Fremont Home Loan Trust 2003-A
                           Asset-Backed Certificates,
                                  Series 2003-A
                                    Class M-4

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien adjustable rate and fixed rate mortgage
         loans (the "Mortgage Loans")

                 FINANCIAL ASSET SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
M-4 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-4
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, the Master Servicer, the Trustee or
the Trust Administrator referred to below or any of their respective affiliates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class M-4 Certificate (obtained by
dividing the Denomination of this Class M-4 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Financial Asset
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of August 1, 2003 (the "Agreement") among the
Depositor, Fremont Investment & Loan as servicer (in such capacity, the
"Servicer"), Wells Fargo Bank Minnesota, National Association as master servicer
(in such capacity, the "Master Servicer") and trust administrator (in such
capacity, the "Trust Administrator") and HSBC Bank, USA (the "Trustee"). To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Class M-4 Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class M-4 Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

         Reference is hereby made to the further provisions of this Class M-4
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.

         This Class M-4 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trust Administrator.

                                      A-8-2

<PAGE>

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

Dated: August __, 2003

                                FREMONT HOME LOAN TRUST 2003-A

                                Wells Fargo Bank Minnesota, National
                                Association, not in its individual capacity, but
                                solely as Trust Administrator

                                By:_________________________________

This is one of the Certificates referenced
in the within-mentioned Agreement

By:__________________________________________
         Authorized Signatory of
         Wells Fargo Bank Minnesota, National Association
         as Trust Administrator

                                      A-8-2

<PAGE>

                       [Reverse of Class M-4 Certificate]

                         Fremont Home Loan Trust 2003-A
                           Asset-Backed Certificates,
                                  Series 2003-A

         This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2003-A, Asset-Backed Certificates, Series
2003-A (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that neither the Trustee nor the Trust Administrator is
liable to the Certificateholders for any amount payable under this Certificate
or the Agreement or, except as expressly provided in the Agreement, subject to
any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trust and the Trust Administrator.

         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, then the
Business Day immediately following such Distribution Date (the "Distribution
Date"), commencing on the first Distribution Date specified on the face hereof,
to the Person in whose name this Certificate is registered at the close of
business on the applicable Record Date in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
Corporate Trust Office of the Trust Administrator specified in the notice to
Certificateholders of such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trust or the Trust Administrator and the rights of the Certificateholders under
the Agreement at any time by the Depositor, the Servicer, the Master Servicer,
the Trustee, the Trust Administrator and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. 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 therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                                      A-8-3

<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the Corporate Trust offices or agencies of the Trust
Administrator as provided in the Pooling and Servicing Agreement accompanied by
a written instrument of transfer in form satisfactory to the Trust Administrator
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 the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust will be issued to the designated
transferee or transferees.

         The Certificates are issuable only as registered Certificates without
coupons 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 the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trust Administrator may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

         Any purchaser of this Certificate shall be deemed to make the
representation set forth in Section 6.02 of the Agreement.

         The Depositor, the Servicer, the Master Servicer, the Trustee, the
Trust Administrator and any agent of the Depositor, the Servicer, the Master
Servicer, the Trustee or the Trust Administrator may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Trustee, the Trust
Administrator or any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Original Mortgage Loans as of the Cut-off
Date, the Servicer may purchase, in whole, from the Trust the Mortgage Loans at
a purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee and the Trust
Administrator upon the earliest of (i) the Distribution Date on which the
Certificate Principal Balances of the Regular Certificates have been reduced to
zero, (ii) the final payment or other liquidation of the last Mortgage Loan in
the Trust, (iii) the Distribution Date in July 2034.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                      A-8-4

<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)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trust Administrator 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

                                      A-8-5

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of ____________________________________________________________
account number ________________________________, or, if mailed by check, to
_______________________________________________________________________________
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.

         This information is provided by ______________________________________,
the assignee named above, or __________________________________________________,
as its agent.

                                     A-8-6

<PAGE>

                                   EXHIBIT A-9

                         FORM OF CLASS M-5 CERTIFICATES

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

THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE CLASS M-1
CERTIFICATES, THE CLASS M-2 CERTIFICATES, THE CLASS M-3 CERTIFICATES AND THE
CLASS M-4 CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.

ANY PURCHASER OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE MADE THE
REPRESENTATIONS SET FORTH IN SECTION 6.02(d) OF THE AGREEMENT.

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, AS AMENDED (THE "CODE").

Certificate No.                                 :     1
Cut-off Date                                    :     August 1, 2003
First Distribution Date                         :     September 25, 2003
Initial Certificate Principal Balance
of this Certificate ("Denomination")            :     $12,635,00.00
Original Class Certificate
Principal Balance of this Class                 :     $12,635,00.00
Percentage Interest                             :     100%
Pass-Through Rate                               :     Variable
CUSIP                                           :     35729P BQ 2
Class                                           :     M-5
Assumed Maturity Date                           :     July 2034

                                      A-9-1

<PAGE>

                         Fremont Home Loan Trust 2003-A
                           Asset-Backed Certificates,
                                  Series 2003-A
                                    Class M-5

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien adjustable rate and fixed rate mortgage
         loans (the "Mortgage Loans")

                 FINANCIAL ASSET SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
M-5 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-5
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, the Master Servicer, the Trustee or
the Trust Administrator referred to below or any of their respective affiliates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class M-5 Certificate (obtained by
dividing the Denomination of this Class M-5 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Financial Asset
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of August 1, 2003 (the "Agreement") among the
Depositor, Fremont Investment & Loan as servicer (in such capacity, the
"Servicer"), Wells Fargo Bank Minnesota, National Association as master servicer
(in such capacity, the "Master Servicer") and trust administrator (in such
capacity, the "Trust Administrator") and HSBC Bank, USA (the "Trustee"). To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Class M-5 Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class M-5 Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

         Reference is hereby made to the further provisions of this Class M-5
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.

         This Class M-5 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trust Administrator.

                                      A-9-2

<PAGE>

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

Dated: August __, 2003

                                FREMONT HOME LOAN TRUST 2003-A

                                Wells Fargo Bank Minnesota, National
                                Association, not in its individual capacity, but
                                solely as Trust Administrator

                                By:_________________________________

This is one of the Certificates referenced
in the within-mentioned Agreement

By:__________________________________________
         Authorized Signatory of
         Wells Fargo Bank Minnesota, National Association
         as Trust Administrator

                                      A-9-3

<PAGE>

                       [Reverse of Class M-5 Certificate]

                         Fremont Home Loan Trust 2003-A
                           Asset-Backed Certificates,
                                  Series 2003-A

         This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2003-A, Asset-Backed Certificates, Series
2003-A (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that neither the Trustee nor the Trust Administrator is
liable to the Certificateholders for any amount payable under this Certificate
or the Agreement or, except as expressly provided in the Agreement, subject to
any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trust and the Trust Administrator.

         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, then the
Business Day immediately following such Distribution Date (the "Distribution
Date"), commencing on the first Distribution Date specified on the face hereof,
to the Person in whose name this Certificate is registered at the close of
business on the applicable Record Date in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
Corporate Trust Office of the Trust Administrator specified in the notice to
Certificateholders of such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trust or the Trust Administrator and the rights of the Certificateholders under
the Agreement at any time by the Depositor, the Servicer, the Master Servicer,
the Trustee, the Trust Administrator and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. 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 therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                                      A-9-4

<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the Corporate Trust offices or agencies of the Trust
Administrator as provided in the Pooling and Servicing Agreement accompanied by
a written instrument of transfer in form satisfactory to the Trust Administrator
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 the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust will be issued to the designated
transferee or transferees.

         The Certificates are issuable only as registered Certificates without
coupons 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 the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         Any purchaser of this Certificate shall be deemed to make the
representation set forth in Section 6.02 of the Agreement.

         No service charge will be made for any such registration of transfer or
exchange, but the Trust Administrator may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

         The Depositor, the Servicer, the Master Servicer, the Trustee, the
Trust Administrator and any agent of the Depositor, the Servicer, the Master
Servicer, the Trustee or the Trust Administrator may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Trustee, the Trust
Administrator or any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Original Mortgage Loans as of the Cut-off
Date, the Servicer may purchase, in whole, from the Trust the Mortgage Loans at
a purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee and the Trust
Administrator upon the earliest of (i) the Distribution Date on which the
Certificate Principal Balances of the Regular Certificates have been reduced to
zero, (ii) the final payment or other liquidation of the last Mortgage Loan in
the Trust, (iii) the Distribution Date in July 2034.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                      A-9-5

<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)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trust Administrator 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

                                      A-9-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of ____________________________________________________________
account number ________________________________, or, if mailed by check, to
_______________________________________________________________________________
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.

         This information is provided by ______________________________________,
the assignee named above, or __________________________________________________,
as its agent.

                                      A-9-7

<PAGE>

                                  EXHIBIT A-10

                          FORM OF CLASS C CERTIFICATES

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, AS AMENDED (THE "CODE").

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES AND THE CLASS M
CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.

NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.

Certificate No.                                 :     1
Cut-off Date                                    :     August 1, 2003
First Distribution Date                         :     September 25, 2003
Initial Certificate Principal Balance
of this Certificate ("Denomination")            :     $12,634,766.00
Original Class Certificate
Principal Balance of this Class                 :     $12,634,766.00
Percentage Interest                             :     100%
Class                                           :     C

                                     A-10-1

<PAGE>

                         Fremont Home Loan Trust 2003-A
                           Asset-Backed Certificates,
                                  Series 2003-A
                                     Class C

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien adjustable rate and fixed rate mortgage
         loans (the "Mortgage Loans")

                 FINANCIAL ASSET SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class C
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class C
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, the Master Servicer, the Trustee or
the Trust Administrator referred to below or any of their respective affiliates.

         This certifies that _____________________ is the registered owner of
the Percentage Interest evidenced by this Class C Certificate (obtained by
dividing the Denomination of this Class C Certificate by the Original Class
Certificate Principal Balance) in certain distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Financial Asset
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of August 1, 2003 (the "Agreement") among the
Depositor, Fremont Investment & Loan as servicer (in such capacity, the
"Servicer"), Wells Fargo Bank Minnesota, National Association as master servicer
(in such capacity, the "Master Servicer") and trust administrator (in such
capacity, the "Trust Administrator") and HSBC Bank, USA (the "Trustee"). To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Class C Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class C Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

         No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee, the Trust Administrator and the Depositor in
writing the facts surrounding the transfer. In the event that such a transfer is
not to be made pursuant to Rule 144A of the Act, there shall be delivered to the
Trustee, the Trust Administrator and the Depositor an Opinion of Counsel that
such transfer may be made pursuant to an exemption from the Act, which Opinion
of Counsel shall not be obtained at the expense of the Trustee, the Trust
Administrator, the Servicer, the Master Servicer or the Depositor; or there
shall be delivered to the Trustee, the Trust Administrator and the Depositor a
transferor certificate by the transferor and an investment letter shall be
executed by the transferee. The Holder hereof desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Trust Administrator

                                     A-10-2

<PAGE>

and the Depositor against any liability that may result if the transfer is not
so exempt or is not made in accordance with such federal and state laws.

         No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any person using Plan Assets to acquire this Certificate shall be
made except in accordance with Section 6.02(d) of the Agreement.

         Reference is hereby made to the further provisions of this Class C
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.

         This Class C Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trust Administrator.

                                     A-10-3

<PAGE>

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

Dated: August __, 2003

                                FREMONT HOME LOAN TRUST 2003-A

                                WELLS FARGO BANK MINNESOTA, NATIONAL
                                ASSOCIATION, not in its individual capacity, but
                                solely as Trust Administrator

                                By:_______________________________________

This is one of the Certificates referenced
in the within-mentioned Agreement

By:__________________________________________
         Authorized Signatory of
         Wells Fargo Bank Minnesota, National Association,
         as Trust Administrator

                                     A-10-4

<PAGE>

                        [Reverse of Class C Certificate]

                         Fremont Home Loan Trust 2003-A
                           Asset-Backed Certificates,
                                  Series 2003-A

         This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2003-A, Asset-Backed Certificates, Series
2003-A (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that neither the Trustee nor the Trust Administrator is
liable to the Certificateholders for any amount payable under this Certificate
or the Agreement or, except as expressly provided in the Agreement, subject to
any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trust and the Trust Administrator.

         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, then the
Business Day immediately following such Distribution Date (the "Distribution
Date"), commencing on the first Distribution Date specified on the face hereof,
to the Person in whose name this Certificate is registered at the close of
business on the applicable Record Date in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
Corporate Trust Office of the Trust Administrator specified in the notice to
Certificateholders of such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trust or the Trust Administrator and the rights of the Certificateholders under
the Agreement at any time by the Depositor, the Servicer, the Master Servicer,
the Trustee, the Trust Administrator and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. 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 therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                                     A-10-5

<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the Corporate Trust offices or agencies of the Trust
Administrator as provided in the Pooling and Servicing Agreement accompanied by
a written instrument of transfer in form satisfactory to the Trust Administrator
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 the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust will be issued to the designated
transferee or transferees.

         The Certificates are issuable only as registered Certificates without
coupons 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 the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trust Administrator may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

         The Depositor, the Servicer, the Master Servicer, the Trustee, the
Trust Administrator and any agent of the Depositor, the Servicer, the Master
Servicer, the Trustee or the Trust Administrator may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Trustee, the Trust
Administrator or any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Original Mortgage Loans as of the Cut-off
Date, the Servicer may purchase, in whole, from the Trust the Mortgage Loans at
a purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee and the Trust
Administrator upon the earliest of (i) the Distribution Date on which the
Certificate Principal Balances of the Regular Certificates have been reduced to
zero, (ii) the final payment or other liquidation of the last Mortgage Loan in
the Trust, (iii) the Distribution Date in July 2034.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                     A-10-6

<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)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trust Administrator 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

                                     A-10-7

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of ____________________________________________________________
account number ________________________________, or, if mailed by check, to
_______________________________________________________________________________
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.

         This information is provided by ______________________________________,
the assignee named above, or __________________________________________________,
as its agent.

                                     A-10-8

<PAGE>

                                  EXHIBIT A-11

                           FORM OF CLASS P 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, AS AMENDED (THE "CODE").

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.

Certificate No.                                 :     1
Cut-off Date                                    :     August 1, 2003
First Distribution Date                         :     September 25, 2003
Initial Certificate Principal Balance
of this Certificate ("Denomination")            :     $100.00
Original Class Certificate
Principal Balance of this Class                 :     $100.00
Percentage Interest                             :     100%
Class                                           :     P

                                     A-11-1

<PAGE>

                         Fremont Home Loan Trust 2003-A
                           Asset-Backed Certificates,
                                  Series 2003-A
                                     Class P

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien adjustable rate and fixed rate mortgage
         loans (the "Mortgage Loans")

                 FINANCIAL ASSET SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class P
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class P
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, the Trustee or the Trust
Administrator referred to below or any of their respective affiliates.

         This certifies that________________ is the registered owner of the
Percentage Interest evidenced by this Class P Certificate (obtained by dividing
the Denomination of this Class P Certificate by the Original Class Certificate
Principal Balance) in certain distributions with respect to a Trust consisting
primarily of the Mortgage Loans deposited by Financial Asset Securities Corp.
(the "Depositor"). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as of August 1, 2003 (the "Agreement") among the Depositor,
Fremont Investment & Loan as servicer (in such capacity, the "Servicer"), Wells
Fargo Bank Minnesota, National Association as master servicer (in such capacity,
the "Master Servicer") and trust administrator (in such capacity, the "Trust
Administrator") and HSBC Bank, USA (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Class P Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class P Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound.

         This Certificate does not have a pass-through rate and will be entitled
to distributions only to the extent set forth in the Agreement.

         No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee, the Trust Administrator and the Depositor in
writing the facts surrounding the transfer. In the event that such a transfer is
not to be made pursuant to Rule 144A of the Act, there shall be delivered to the
Trustee, the Trust Administrator and the Depositor an Opinion of Counsel that
such transfer may be made pursuant to an exemption from the Act, which Opinion
of Counsel shall not be obtained at the expense of the Trustee, the Trust
Administrator, the Servicer, the Master Servicer or the Depositor; or there
shall

                                     A-11-2

<PAGE>

be delivered to the Trustee, the Trust Administrator and the Depositor a
transferor certificate by the transferor and an investment letter shall be
executed by the transferee. The Holder hereof desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Trust Administrator
and the Depositor against any liability that may result if the transfer is not
so exempt or is not made in accordance with such federal and state laws.

         No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any person using Plan Assets to acquire this Certificate shall be
made except in accordance with Section 6.02(d) of the Agreement.

         Reference is hereby made to the further provisions of this Class P
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.

         This Class P Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trust Administrator.

                                     A-11-3

<PAGE>

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

Dated: August __, 2003

                               FREMONT HOME LOAN TRUST 2003-A

                               Wells Fargo Bank Minnesota, National
                               Association, not in its individual capacity, but
                               solely as Trust Administrator

                               By:_________________________________

This is one of the Certificates referenced
in the within-mentioned Agreement

By:__________________________________________
         Authorized Signatory of
         Wells Fargo Bank Minnesota, National Association
         as Trust Administrator

                                     A-11-4

<PAGE>

                        [Reverse of Class P Certificate]

                         Fremont Home Loan Trust 2003-A
                           Asset-Backed Certificates,
                                  Series 2003-A

         This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2003-A, Asset-Backed Certificates, Series
2003-A (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that neither the Trustee nor the Trust Administrator is
liable to the Certificateholders for any amount payable under this Certificate
or the Agreement or, except as expressly provided in the Agreement, subject to
any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trust and the Trust Administrator.

         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, then the
Business Day immediately following such Distribution Date (the "Distribution
Date"), commencing on the first Distribution Date specified on the face hereof,
to the Person in whose name this Certificate is registered at the close of
business on the applicable Record Date in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
Corporate Trust Office of the Trust Administrator specified in the notice to
Certificateholders of such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trust or the Trust Administrator and the rights of the Certificateholders under
the Agreement at any time by the Depositor, the Servicer, the Master Servicer,
the Trustee, the Trust Administrator and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. 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 therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                                     A-11-5

<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the Corporate Trust offices or agencies of the Trust
Administrator as provided in the Pooling and Servicing Agreement accompanied by
a written instrument of transfer in form satisfactory to the Trust Administrator
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 the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust will be issued to the designated
transferee or transferees.

         The Certificates are issuable only as registered Certificates without
coupons 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 the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trust Administrator may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

         The Depositor, the Servicer, the Master Servicer, the Trustee, the
Trust Administrator and any agent of the Depositor, the Servicer, the Master
Servicer, the Trustee or the Trust Administrator may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Trustee, the Trust
Administrator or any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Original Mortgage Loans as of the Cut-off
Date, the Servicer may purchase, in whole, from the Trust the Mortgage Loans at
a purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee and the Trust
Administrator upon the earliest of (i) the Distribution Date on which the
Certificate Principal Balances of the Regular Certificates have been reduced to
zero, (ii) the final payment or other liquidation of the last Mortgage Loan in
the Trust, (iii) the Distribution Date in July 2034.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                     A-11-6

<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)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trust Administrator 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

                                     A-11-7

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of ____________________________________________________________
account number ________________________________, or, if mailed by check, to
_______________________________________________________________________________
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.

         This information is provided by ______________________________________,
the assignee named above, or __________________________________________________,
as its agent.

                                     A-11-8

<PAGE>

                                  EXHIBIT A-12

                          FORM OF CLASS R CERTIFICATES

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, AS AMENDED (THE "CODE").

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

THIS CLASS R CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE AND THE TRUST ADMINISTRATOR A
TRANSFER AFFIDAVIT IN ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED
TO HEREIN.

NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.

Certificate No.                                 :     1
Cut-off Date                                    :     August 1, 2003
First Distribution Date                         :     September 25, 2003
Percentage Interest                             :     100.00%
Class                                           :     R

                                     A-12-1

<PAGE>

                         Fremont Home Loan Trust 2003-A
                           Asset-Backed Certificates,
                                  Series 2003-A
                                     Class R

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting primarily of a pool of first lien adjustable rate and
         fixed rate mortgage loans (the "Mortgage Loans")

                 FINANCIAL ASSET SECURITIES CORP., as Depositor

         This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Depositor, the Servicer, the Master Servicer, the
Trustee or the Trust Administrator referred to below or any of their respective
affiliates.

         This certifies that __________________ is the registered owner of the
Percentage Interest evidenced by this Certificate specified above in the
interest represented by all Certificates of the Class to which this Certificate
belongs in a Trust consisting primarily of the Mortgage Loans deposited by
Financial Asset Securities Corp. (the "Depositor"). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as of August 1, 2003 (the
"Agreement") among the Depositor, Fremont Investment & Loan as servicer (in such
capacity, the "Servicer"), Wells Fargo Bank Minnesota, National Association as
master servicer (in such capacity, the "Master Servicer") and trust
administrator (in such capacity, the "Trust Administrator") and HSBC Bank, USA
(the "Trustee"). 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.

         This Certificate does not have a principal balance or pass-through rate
and will be entitled to distributions only to the extent set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
Corporate Trust Office of the Trust Administrator specified in the notice to
Certificateholders of such final distribution.

         No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee, the Trust Administrator and the Depositor in
writing the facts surrounding the transfer. In the event that such a transfer is
not to be made pursuant to Rule 144A of the Act, there shall be delivered to the
Trustee, the Trust Administrator and the Depositor an Opinion of Counsel that
such transfer may be made pursuant to an exemption from the Act, which Opinion
of Counsel shall not be obtained at the expense of the Trustee, the Trust
Administrator, the Servicer, the Master Servicer or the Depositor; or there
shall be delivered to the Trustee, the Trust Administrator and the Depositor a
transferor certificate by the

                                     A-12-2

<PAGE>

transferor and an investment letter shall be executed by the transferee. The
Holder hereof desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee, the Trust Administrator and the Depositor against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.

         No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any person using Plan Assets to acquire this Certificate shall be
made except in accordance with Section 6.02(d) of the Agreement.

         Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Certificate must be a Permitted Transferee, (ii) no Ownership Interest in
this Certificate may be transferred without delivery to the Trust and the Trust
Administrator of (a) a transfer affidavit of the proposed transferee and (b) a
transfer certificate of the transferor, each of such documents to be in the form
described in the Agreement, (iii) each person holding or acquiring any Ownership
Interest in this Certificate must agree to require a transfer affidavit and to
deliver a transfer certificate to the Trustee and the Trust Administrator as
required pursuant to the Agreement, (iv) each person holding or acquiring an
Ownership Interest in this Certificate must agree not to transfer an Ownership
Interest in this Certificate if it has actual knowledge that the proposed
transferee is not a Permitted Transferee and (v) 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. Pursuant to the Agreement, The Trust Administrator will
provide the Internal Revenue Service and any pertinent persons with the
information needed to compute the tax imposed under the applicable tax laws on
transfers of residual interests to disqualified organizations, if any person
other than a Permitted Transferee acquires an Ownership Interest on a Class R
Certificate in violation of the restrictions mentioned above.

         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.

         This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized officer of the Trust Administrator.

                                     A-12-3

<PAGE>

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

Dated: August __, 2003

                               FREMONT HOME LOAN TRUST 2003-A

                               Wells Fargo Bank Minnesota, National
                               Association, not in its individual capacity, but
                               solely as Trust Administrator

                               By:_________________________________

This is one of the Certificates referenced
in the within-mentioned Agreement

By:__________________________________________
         Authorized Signatory of
         Wells Fargo Bank Minnesota, National Association
         as Trust Administrator

                                     A-12-4

<PAGE>

                        [Reverse of Class R Certificate]

                         Fremont Home Loan Trust 2003-A
                           Asset-Backed Certificates,
                                  Series 2003-A

         This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2003-A, Asset-Backed Certificates, Series
2003-A (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that neither the Trustee nor the Trust Administrator is
liable to the Certificateholders for any amount payable under this Certificate
or the Agreement or, except as expressly provided in the Agreement, subject to
any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trust and the Trust Administrator.

         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, then the
Business Day immediately following such Distribution Date (the "Distribution
Date"), commencing on the first Distribution Date specified on the face hereof,
to the Person in whose name this Certificate is registered at the close of
business on the applicable Record Date in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
Corporate Trust Office of the Trust Administrator specified in the notice to
Certificateholders of such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trust or the Trust Administrator and the rights of the Certificateholders under
the Agreement at any time by the Depositor, the Servicer, the Master Servicer,
the Trustee, the Trust Administrator and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. 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 therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                                     A-12-5

<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the Corporate Trust offices or agencies of the Trust
Administrator as provided in the Pooling and Servicing Agreement accompanied by
a written instrument of transfer in form satisfactory to the Trust Administrator
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 the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust will be issued to the designated
transferee or transferees.

         The Certificates are issuable only as registered Certificates without
coupons 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 the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trust Administrator may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

         The Depositor, the Servicer, the Master Servicer, the Trustee, the
Trust Administrator and any agent of the Depositor, the Servicer, the Master
Servicer, the Trustee or the Trust Administrator may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Trustee, the Trust
Administrator or any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
aggregate Principal Balance of the Mortgage Loans is less than 10% of the sum of
the aggregate Principal Balance of the Original Mortgage Loans as of the Cut-off
Date, the Servicer may purchase, in whole, from the Trust the Mortgage Loans at
a purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee and the Trust
Administrator upon the earliest of (i) the Distribution Date on which the
Certificate Principal Balances of the Regular Certificates have been reduced to
zero, (ii) the final payment or other liquidation of the last Mortgage Loan in
the Trust, (iii) the Distribution Date in July 2034.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                     A-12-6

<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)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trust Administrator 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

                                     A-12-7

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of ____________________________________________________________
account number ________________________________, or, if mailed by check, to
_______________________________________________________________________________
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.

         This information is provided by ______________________________________,
the assignee named above, or __________________________________________________,
as its agent.

                                     A-12-8

<PAGE>

                                    EXHIBIT B

                                   [RESERVED]

                                       B-1

<PAGE>

                                    EXHIBIT C

                    FORM OF MORTGAGE LOAN PURCHASE AGREEMENT

                                       C-1

<PAGE>

                            FREMONT INVESTMENT & LOAN

                                    as Seller

                                       and

                        FINANCIAL ASSET SECURITIES CORP.,

                                  as Purchaser

                        MORTGAGE LOAN PURCHASE AGREEMENT

                           Dated as of August 5, 2003

                  Adjustable-Rate and Fixed-Rate Mortgage Loans

                         Fremont Home Loan Trust 2003-A

<PAGE>

<TABLE>
<CAPTION>
                                                 TABLE OF CONTENTS
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>

                                                    ARTICLE I.

DEFINITIONS
         Section 1.01      DEFINITIONS............................................................................2

                                                    ARTICLE II.

SALE OF MORTGAGE LOANS; PAYMENT OF PURCHASE PRICE
         Section 2.01      SALE OF MORTGAGE LOANS AND YIELD MAINTENANCE AGREEMENT.................................3
         Section 2.02      OBLIGATIONS OF THE SELLER AND SELLER UPON SALE.........................................3
         Section 2.03      PAYMENT OF PURCHASE PRICE FOR THE MORTGAGE LOANS.......................................6

                                                   ARTICLE III.

REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH
         Section 3.01      SELLER REPRESENTATIONS AND WARRANTIES RELATING TO THE MORTGAGE LOANS...................6
         Section 3.02      SELLER REPRESENTATIONS AND WARRANTIES RELATING TO THE SELLER...........................6
         Section 3.03      [Reserved].............................................................................8
         Section 3.04      [Reserved].............................................................................8
         Section 3.05      REMEDIES FOR BREACH OF REPRESENTATIONS AND WARRANTIES..................................8

                                                    ARTICLE IV.

SELLER'S COVENANTS
         Section 4.01      COVENANTS OF THE SELLER...............................................................10
         Section 5.01      INDEMNIFICATION.......................................................................11

                                                    ARTICLE VI.

TERMINATION
         Section 6.01      TERMINATION...........................................................................15

                                                   ARTICLE VII.

MISCELLANEOUS PROVISIONS
         Section 7.01      AMENDMENT.............................................................................15
         Section 7.02      GOVERNING LAW.........................................................................15
         Section 7.03      NOTICES. .............................................................................15
         Section 7.05      COUNTERPARTS..........................................................................16
         Section 7.06      FURTHER AGREEMENTS....................................................................16
         Section 7.07      INTENTION OF THE PARTIES..............................................................16
         Section 7.08      SUCCESSORS AND ASSIGNS; ASSIGNMENT OF PURCHASE AGREEMENT..............................16
         Section 7.09      OBLIGATIONS OF GREENWICH CAPITAL MARKETS, INC.........................................17
         Section 7.10      SURVIVAL..............................................................................17
</TABLE>

<PAGE>

         MORTGAGE LOAN PURCHASE AGREEMENT, dated as of August 5, 2003 (the
"Agreement"), among Fremont Investment & Loan (the "Seller") and Financial Asset
Securities Corp. (the "Purchaser").

                                   WITNESSETH
                                   ----------

                  WHEREAS, the Seller is the owner of (a) the notes or other
evidence of indebtedness (the "Mortgage Notes") so indicated on Schedule I
hereto referred to below and (b) the other documents or instruments constituting
the Mortgage File (collectively, the "Mortgage Loans"); and

                  WHEREAS, the Seller, as of the date hereof, owns the mortgages
(the "Mortgages") on the properties (the "Mortgaged Properties") securing such
Mortgage Loans, including rights to (a) any property acquired by foreclosure or
deed in lieu of foreclosure or otherwise and (b) the proceeds of any insurance
policies covering the Mortgage Loans or the Mortgaged Properties or the obligors
on the Mortgage Loans; and

                  WHEREAS, the parties hereto desire that the Seller sell the
Mortgage Loans to the Purchaser pursuant to the terms of this Agreement; and

                  WHEREAS, pursuant to the terms of a Pooling and Servicing
Agreement dated as of August 1, 2003 (the "Pooling and Servicing Agreement")
among the Purchaser as depositor, the Seller as servicer, Wells Fargo Bank
Minnesota, National Association, as master servicer (in such capacity, the
"Master Servicer") and as trust administrator (in such capacity, the "Trust
Administrator") and HSBC Bank USA as trustee (the "Trustee"), the Purchaser will
convey the Mortgage Loans to Fremont Home Loan Trust 2003-A (the "Trust"); and

                  WHEREAS, in connection with the transactions contemplated by
this Agreement, the Seller will make certain representations, warranties and
covenants with respect to itself and the Mortgage Loans.

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

                                   ARTICLE I.

                                   DEFINITIONS

         Section 1.01 DEFINITIONS. All capitalized terms used but not defined
herein and below shall have the meanings assigned thereto in the Pooling and
Servicing Agreement.

                                        2

<PAGE>

                                   ARTICLE II.

                SALE OF MORTGAGE LOANS; PAYMENT OF PURCHASE PRICE

         Section 2.01 SALE OF MORTGAGE LOANS AND YIELD MAINTENANCE AGREEMENT.

                  (a) The Seller, concurrently with the execution and delivery
of this Agreement, does hereby sell, assign, set over, and otherwise convey to
the Purchaser, without recourse, (i) all of its right, title and interest in and
to each Mortgage Loan, including the related Cut-off Date Principal Balance, all
interest accruing thereon on or after the Cut-off Date and all collections in
respect of interest and principal due after the Cut-off Date; (ii) property
which secured such Mortgage Loan and which has been acquired by foreclosure or
deed in lieu of foreclosure; (iii) its interest in any insurance policies in
respect of the Mortgage Loans and (iv) all proceeds of any of the foregoing.

                  (b) The Seller, concurrently with the execution and delivery
of this Agreement does hereby sell, and in connection therewith hereby assigns
to the Purchaser, effective as of the Closing Date, without recourse, (i) all of
its right, title and interest in the Yield Maintenance Agreement, dated August
4, 2003 (and the novation relating thereto dated August 7, 2003) and (ii) all
proceeds of the foregoing.

         Section 2.02 OBLIGATIONS OF THE SELLER AND SELLER UPON SALE. In
connection with any transfer pursuant to Section 2.01 hereof, the Seller further
agrees, at its own expense on or prior to the Closing Date, (a) to cause its
books and records to indicate that the Mortgage Loans have been sold to the
Purchaser pursuant to this Agreement and (b) to deliver to the Purchaser, the
Trust Administrator and the Trustee a computer file containing a true and
complete list of all such Mortgage Loans meeting the definition of Mortgage Loan
Schedule as set forth in the Pooling and Servicing Agreement and specifying for
each such Mortgage Loan, as of the Cut-off Date, among other things, (i) its
account number and (ii) the Cut-off Date Principal Balance. Such file, which
forms a part of Exhibit C to the Pooling and Servicing Agreement, shall also be
marked as Schedule I to this Agreement and is hereby incorporated into and made
a part of this Agreement.

                  In connection with any conveyance by the Seller, the Seller
shall on behalf of the Purchaser deliver to, and deposit with the Trustee, as
assignee of the Purchaser, or the Trustee's designated agent (the "Custodian"),
on or before the Closing Date, the following documents or instruments with
respect to each Mortgage Loan:

                  (i) the original Mortgage Note, endorsed and signed in the
         name of the last endorsee by an authorized officer (which signature may
         be a facsimile) either (A) in blank, in which case the Trustee shall
         cause the endorsement to be completed or (B) in the following form:
         "Pay to the order of HSBC Bank USA, as Trustee, without recourse" or
         with respect to any lost Mortgage Note, an original Lost Note Affidavit
         stating that the original mortgage note was lost, misplaced or
         destroyed, together with a copy of the related mortgage note; provided,
         however, that such substitutions of Lost Note Affidavits for original
         Mortgage Notes may occur only with respect to Mortgage Loans, the
         aggregate Cut-off Date Principal Balance of which is less than or equal
         to 1.00% of the Pool Balance as of the Cut-off Date;

                                        3

<PAGE>

                  (ii) the original Mortgage (noting, if the related Mortgage
         Loan is registered on the MERS(R) System, the presence of the MIN of
         the Mortgage Loan and language indicating that the Mortgage Loan is a
         MOM Loan if the Mortgage Loan is a MOM Loan) with evidence of recording
         thereon or, if such Mortgage or power of attorney has been submitted
         for recording but has not been returned from the applicable public
         recording office, has been lost or is not otherwise available, a copy
         of such Mortgage or power of attorney, as the case may be, certified to
         be a true and complete copy of the original submitted for recording;

                  (iii) unless the Mortgage Loan is registered on the MERS(R)
         System, an original Assignment, in form and substance acceptable for
         recording, assigning the related Mortgage either (A) in blank or (B) to
         "HSBC Bank USA, as Trustee, without recourse";

                  (iv) an original copy of any intervening assignment of
         Mortgage showing a complete chain of assignments to the Trustee (or to
         MERS if the Mortgage Loan is registered on the MERS(R) System and
         noting the presence of MIN);

                  (v) the original or a certified copy of lender's title
         insurance policy; and

                  (vi) the original or copies of each assumption, modification,
         written assurance or substitution agreement, if any.

                  The Seller hereby confirms to the Purchaser, the Trust
Administrator and the Trustee that it has caused the appropriate entries to be
made in its general accounting records to indicate that such Mortgage Loans have
been transferred to the Trustee and constitute part of the Trust in accordance
with the terms of the Pooling and Servicing Agreement.

                  Except with respect to any Mortgage Loan for which MERS is
identified on the Mortgage, if any of the documents referred to in Section
2.02(ii), (iii) or (iv) above has as of the Closing Date been submitted for
recording but either (x) has not been returned from the applicable public
recording office or (y) has been lost or such public recording office has
retained the original of such document, the obligations of the Seller to deliver
such documents shall be deemed to be satisfied upon (1) delivery to the Trustee
or the Custodian, no later than the Closing Date, of a copy of each such
document certified by the Seller in the case of (x) above or the applicable
public recording office in the case of (y) above to be a true and complete copy
of the original that was submitted for recording and (2) if such copy is
certified by the Seller, delivery to the Trustee or the Custodian, promptly upon
receipt thereof of either the original or a copy of such document certified by
the applicable public recording office to be a true and complete copy of the
original. If the original lender's title insurance policy, or a certified copy
thereof, was not delivered pursuant to Section 2.02(v) above, the Seller shall
deliver or cause to be delivered to the Trustee or the Custodian, the original
or a copy of a written commitment or interim binder or preliminary report of
title issued by the title insurance or escrow company, with the original or a
certified copy thereof to be delivered to the Trustee or the Custodian, promptly
upon receipt thereof. The Seller shall deliver or cause to be delivered to the
Trustee or the Custodian promptly upon receipt thereof any other documents
constituting a part of a Mortgage File received with respect to any Mortgage
Loan, including, but not limited to, any original documents evidencing an
assumption or modification of any Mortgage Loan.

                                        4

<PAGE>

                  Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File, the
Seller shall have 90 days to cure such defect or deliver such missing document
to the Purchaser. If the Seller does not cure such defect or deliver such
missing document within such time period, the Seller shall either repurchase or
substitute for such Mortgage Loan pursuant to Section 2.03 of the Pooling and
Servicing Agreement.

                  The Purchaser hereby acknowledges its acceptance of all right,
title and interest to the Mortgage Loans and other property, now existing and
hereafter created, conveyed to it pursuant to Section 2.01.

                  The parties hereto intend that the transaction set forth
herein be a sale by the Seller to the Purchaser of all the Seller's right, title
and interest in and to the Mortgage Loans and other property described above. In
the event the transaction set forth herein is deemed not to be a sale, the
Seller hereby grants to the Purchaser a security interest in all of the Seller's
right, title and interest in, to and under the Mortgage Loans and other property
described above, whether now existing or hereafter created, to secure all of the
Seller's obligations hereunder; and this Agreement shall constitute a security
agreement under applicable law.

                  The Seller shall cause the Assignments which were delivered in
blank to be completed and shall cause all Assignments referred to in Section
2.02(iii) hereof and, to the extent necessary, in Section 2.02(iv) hereof to be
recorded. The Seller shall be required to deliver such assignments for recording
within 180 days of the Closing Date. The Seller shall furnish the Trustee, or
the Custodian, with a copy of each Assignment submitted for recording. In the
event that any such Assignment is lost or returned unrecorded because of a
defect therein, the Seller shall, at its own expense, promptly have a substitute
Assignment prepared or have such defect cured, as the case may be, and
thereafter cause each such Assignment to be duly recorded.

                  Notwithstanding the foregoing, the Assignments of Mortgage
shall not be required to be submitted for recording with respect to any Mortgage
Loan in any jurisdiction where the Rating Agencies do not require recordation in
order to receive the ratings on the Certificates at the time of their initial
issuance (which jurisdictions, as of such time of their initial issuance, are
Maryland and Florida); provided, however, each Assignment, except with respect
to any Mortgage Loan for which MERS is identified on the Mortgage, shall be
submitted for recording in the manner described above, at no expense to the
Trust Fund, the Trustee or the Trust Administrator, upon the earliest to occur
of: (i) reasonable direction by the Holders of Certificates entitled to at least
25% of the Voting Rights, (ii) the occurrence of a Servicer Event of
Termination, (iii) the occurrence of a bankruptcy, insolvency or foreclosure
relating to the Seller, (iv) the occurrence of a servicing transfer as described
in Section 8.02 of the Pooling and Servicing Agreement, (v) with respect to any
particular Mortgage Loan, upon the occurrence of a bankruptcy, insolvency or
foreclosure relating to the Mortgagor under the related Mortgage and (vi) with
respect to any particular Mortgage Loan, upon such Mortgage Loan becoming 90
days or more Delinquent. In the event of (i) through (vi) set forth in the
immediately preceding sentence, the Seller at its own expense shall deliver or
cause to be delivered such assignments for recording as provided above, promptly
and in any event within 30 days following such event.

                                        5

<PAGE>

                  In the event that any Mortgage Note is endorsed in blank as of
the Closing Date, promptly following the Closing Date, the Seller at its own
expense shall cause such endorsements to be completed "Pay to the order of HSBC
Bank USA, as Trustee, without recourse."

         Section 2.03 PAYMENT OF PURCHASE PRICE FOR THE MORTGAGE LOANS.

                  In consideration of the sale of the Mortgage Loans from the
Seller to the Purchaser on the Closing Date, the Purchaser agrees to pay to the
Seller on the Closing Date the "Purchase Price" consisting of (i) an amount,
payable by transfer of immediately available funds, equal to the net sale
proceeds received by the Purchaser for its sale of the Class 1A-1 Certificates,
the Class 2A-1 Certificates, the Class 2A-2 Certificates, the Class M-1
Certificates, the Class M-2 Certificates, the Class M-3 Certificates, the Class
M-4 Certificates and the Class M-5 Certificates (collectively, the "Offered
Certificates") and (ii) the delivery to the Seller or its designee of the Class
C Certificates, the Class P Certificates and the Class R Certificates
(collectively the "Non-Offered Certificates"), which Non-Offered Certificates
shall be registered in the name of the Seller or its designee. The Seller shall
pay, and be billed directly for, all reasonable expenses incurred by the
Purchaser in connection with the issuance of the Certificates, including,
without limitation, printing fees incurred in connection with the prospectus
(the "Base Prospectus") and prospectus supplement (the "Prospectus Supplement"
and, together with the Base Prospectus, the "Prospectus") relating to the
Offered Certificates, blue sky registration fees and expenses, fees and expenses
of Purchaser's counsel, fees of the rating agencies requested to rate the
Certificates, accountant's fees and expenses and the initial fees and expenses
of the Trustee, the Trust Administrator, the Custodian and the Master Servicer
and other out-of-pocket costs, if any.

                                  ARTICLE III.

               REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH

         Section 3.01 SELLER REPRESENTATIONS AND WARRANTIES RELATING TO THE
MORTGAGE LOANS. The Seller hereby makes the representations and warranties set
forth in Exhibit A to the Purchaser with respect to the Mortgage Loans as of the
Closing Date or as of such other date specifically provided herein.

         Section 3.02 SELLER REPRESENTATIONS AND WARRANTIES RELATING TO THE
SELLER. The Seller hereby represents, warrants and covenants to the Purchaser as
of the Closing Date or as of such other date specifically provided herein:

                  (a) The Seller is duly organized, validly existing and in good
standing under the laws of the state of California and is and will remain in
compliance with the laws of each state in which any Mortgaged Property is
located to the extent necessary to ensure the enforceability of each Mortgage
Loan and the Seller's ability to service each Mortgage Loan in accordance with
the terms of the Pooling and Servicing Agreement;

                  (b) The Seller has the full power and authority to hold each
Mortgage Loan, to sell each Mortgage Loan to the Purchaser, and to execute,
deliver and perform, and to enter into and

                                        6

<PAGE>

consummate, all transactions contemplated by this Agreement. The Seller has duly
authorized the execution, delivery and performance of this Agreement, has duly
executed and delivered this Agreement, and this Agreement, assuming due
authorization, execution and delivery by the Purchaser, constitutes a legal,
valid and binding obligation of the Seller, enforceable against it in accordance
with its terms except as the enforceability thereof may be limited by
bankruptcy, insolvency or reorganization;

                  (c) The execution and delivery of this Agreement by the Seller
and the performance of and compliance with the terms of this Agreement will not
violate the Seller's articles of incorporation or by-laws or constitute a
default under or result in a breach or acceleration of, any material contract,
agreement or other instrument to which the Seller is a party or which may be
applicable to the Seller or its assets;

                  (d) The Seller is not in violation of, and the execution and
delivery of this Agreement by the Seller and its performance and compliance with
the terms of this Agreement will not constitute a violation with respect to, any
order or decree of any court or any order or regulation of any federal, state,
municipal or governmental agency having jurisdiction over the Seller or its
assets, which violation might have consequences that would materially and
adversely affect the condition (financial or otherwise) or the operation of the
Seller or its assets or might have consequences that would materially and
adversely affect the performance of its obligations and duties hereunder;

                  (e) The Seller does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant contained in
this Agreement;

                  (f) Immediately prior to the transfer hereunder of each
Mortgage Loan by the Seller to the Purchaser, the Seller was the owner of record
of the related Mortgage and the indebtedness evidenced by the related Mortgage
Note and upon the payment of the Purchase Price by the Purchaser, in the event
that the Seller retains record title, the Seller shall retain such record title
to each Mortgage, each related Mortgage Note and the related Mortgage Files with
respect thereto in trust for the Purchaser as the owner thereof and only for the
purpose of servicing and supervising the servicing of each Mortgage Loan;

                  (g) The Seller has not transferred the Mortgage Loans to the
Purchaser with any intent to hinder, delay or defraud any of its creditors;

                  (h) There are no actions or proceedings against, or to the
Seller's knowledge investigations of, the Seller before any court,
administrative or other tribunal (A) that might prohibit its entering into this
Agreement, (B) seeking to prevent the sale of the Mortgage Loans or the
consummation of the transactions contemplated by this Agreement or (C) that
might prohibit or materially and adversely affect the performance by the Seller
of its obligations under, or the validity or enforceability of, this Agreement;

                  (i) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery and
performance by the Seller of, or compliance by the Seller with, this Agreement
or the consummation of the transactions contemplated

                                        7

<PAGE>

by this Agreement, except for such consents, approvals, authorizations or
orders, if any, that have been obtained prior to the Closing Date;

                  (j) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Seller, and the
transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by
the Seller are not subject to the bulk transfer or any similar statutory
provisions;

                  (k) Except with respect to any statement regarding the
intentions of the Purchaser, or any other statement contained herein the truth
or falsity of which is dependant solely upon the actions of the Purchaser, this
Agreement does not contain any untrue statement of material fact or omit to
state a material fact necessary to make the statements contained herein not
misleading. The written statements, reports and other documents prepared and
furnished or to be prepared and furnished by the Seller pursuant to this
Agreement or in connection with the transactions contemplated hereby taken in
the aggregate do not contain any untrue statement of material fact or omit to
state a material fact necessary to make the statements contained therein not
misleading; and

                  (l) Except with respect to liens released immediately prior to
the transfer herein contemplated, each Mortgage Note and related Mortgage have
not been assigned or pledged and immediately prior to the transfer and
assignment herein contemplated, the Seller held good, marketable and
indefeasible title to, and was the sole owner and holder of, each Mortgage Loan
subject to no liens, charges, mortgages, claims, participation interests,
equities, pledges or security interests of any nature, encumbrances or rights of
others (collectively, a "Lien"); the Seller has full right and authority under
all governmental and regulatory bodies having jurisdiction over the Seller,
subject to no interest or participation of, or agreement with, any party, to
sell and assign the same pursuant to this Agreement; and immediately upon the
transfers and assignments herein contemplated the Seller shall have transferred
all of its right, title and interest in and to each Mortgage Loan and the
Trustee will hold good, marketable and indefeasible title to, and be the sole
owner of, each Mortgage Loan subject to no Liens.

         Section 3.03      [Reserved].

         Section 3.04      [Reserved].

                  Section 3.05 REMEDIES FOR BREACH OF REPRESENTATIONS AND
WARRANTIES. It is understood and agreed that the representations and warranties
set forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage Loans
to the Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment or the examination or lack of examination of any Mortgage File. With
respect to the representations and warranties contained herein that are made to
the knowledge or the best knowledge of the Seller or as to which the Seller has
no knowledge, if it is discovered that the substance of any such representation
and warranty is inaccurate and the inaccuracy materially and adversely affects
the value of the related Mortgage Loan or the interest therein of the Purchaser
or the Purchaser's assignee, designee or transferee (it being understood that
with respect to the representations and warranties set forth in (qq), (tt),
(eee), (fff), (ggg) and (lll) of Exhibit A hereto, a breach of any such
representation or warranty shall in and of itself be deemed to materially

                                        8

<PAGE>

adversely affect the interest therein of the Purchaser and the Purchaser's
assignees, designees and transferees), then notwithstanding the Seller's lack of
knowledge with respect to the substance of such representation and warranty
being inaccurate at the time the representation and warranty was made, such
inaccuracy shall be deemed a breach of the applicable representation and
warranty and the Seller shall take such action described in the following
paragraphs of this Section 3.05 in respect of such Mortgage Loan. Upon discovery
by either the Seller or the Purchaser of a breach of any of the foregoing
representations and warranties that materially and adversely affects the value
of a Mortgage Loan or the interest therein of the Purchaser (it being understood
that with respect to the representations and warranties set forth in (qq), (tt),
(eee), (fff), (ggg) and (lll) of Exhibit A hereto, a breach of any such
representation or warranty shall in and of itself be deemed to materially
adversely affect the interest therein of the Purchaser and the Purchaser's
assignees, designees and transferees), the party discovering such breach shall
give prompt written notice to the others.

                  Within 90 days of the earlier of either discovery by or notice
to the Seller of any breach of a representation or warranty made by the Seller
that materially and adversely affects the value of a Mortgage Loan or the
Mortgage Loans or the interest therein of the Purchaser (it being understood
that with respect to the representations and warranties set forth in (qq), (tt),
(eee), (fff), (ggg) and (lll) of Exhibit A hereto, a breach of any such
representation or warranty shall in and of itself be deemed to materially
adversely affect the interest therein of the Purchaser and the Purchaser's
assignees, designees and transferees), the Seller shall use its best efforts
promptly to cure such breach in all material respects and, if such breach cannot
be cured, the Seller shall, at the Purchaser's option, repurchase such Mortgage
Loan at the Purchase Price (as defined in the Pooling and Servicing Agreement).
The Seller may, at the request of the Purchaser and assuming the Seller has a
Qualified Substitute Mortgage Loan, rather than repurchase a deficient Mortgage
Loan as provided above, remove such Mortgage Loan and substitute in its place a
Qualified Substitute Mortgage Loan or Loans. If the Seller does not provide a
Qualified Substitute Mortgage Loan or Loans, it shall repurchase the deficient
Mortgage Loan. Any repurchase of a Mortgage Loan(s) pursuant to the foregoing
provisions of this Section 3.05 shall occur on a date designated by the
Purchaser and shall be accomplished by deposit in accordance with Section 2.03
of the Pooling and Servicing Agreement. Any repurchase or substitution required
by this Section shall be made in a manner consistent with Section 2.03 of the
Pooling and Servicing Agreement.

                  Notwithstanding the foregoing, within 90 days of the earlier
of discovery by the Seller or receipt of notice by the Seller of the breach of
the representation (aaa) of the Seller on Exhibit A, which materially and
adversely affects the interests of the Holders of the Class P Certificates in
any Prepayment Charge, the Seller shall pay the amount of the scheduled
Prepayment Charge, for the benefit of the Holders of the Class P Certificates,
by remitting such amount to the Servicer for deposit into the Collection
Account, net of any amount previously collected by the Servicer or the Master
Servicer or paid by the Servicer, for the benefit of the Holders of the Class P
Certificates, in respect of such Prepayment Charge.

                  At the time of substitution or repurchase of any deficient
Mortgage Loan, the Purchaser and the Seller shall arrange for the reassignment
of the repurchased or substituted Mortgage Loan to the Seller and the delivery
to the Seller of any documents held by the Trustee or the Custodian relating to
the deficient or repurchased Mortgage Loan. The Seller shall, simultaneously
with the payment of the Purchase Price (as defined in the Pooling and Servicing
Agreement) or Substitution Adjustment for any Mortgage Loan repurchased or
substituted hereunder,

                                        9

<PAGE>

give written notice to the Purchaser that such payment has taken place. Upon
such repurchase or substitution, the Mortgage Loan Schedule shall be amended to
reflect the withdrawal of the repurchased Mortgage Loan from this Agreement and,
if applicable, the substitution of the applicable Qualified Substitute Mortgage
Loan or Loans.

                  As to any Deleted Mortgage Loan for which the Seller
substitutes a Qualified Substitute Mortgage Loan or Loans, the Seller shall
effect such substitution by delivering to the Purchaser or its designee for such
Qualified Substitute Mortgage Loan or Loans the Mortgage Note, the Mortgage, the
Assignment and such other documents and agreements as are required by the
Pooling and Servicing Agreement, with the Mortgage Note endorsed as required
therein. The Seller shall remit for deposit in the Collection Account the
Monthly Payment due on such Qualified Substitute Mortgage Loan or Loans in the
month following the date of such substitution. Monthly payments due with respect
to Qualified Substitute Mortgage Loans in the month of substitution will be
retained by the Seller. For the month of substitution, distributions to the
Purchaser will include the Monthly Payment due on such Deleted Mortgage Loan in
the month of substitution, and the Seller shall thereafter be entitled to retain
all amounts subsequently received by the Seller in respect of such Deleted
Mortgage Loan. Upon such substitution, the Qualified Substitute Mortgage Loans
shall be subject to the terms of this Agreement in all respects, and the Seller
shall be deemed to have made with respect to such Qualified Substitute Mortgage
Loan or Loans as of the date of substitution, the covenants, representations and
warranties set forth in Subsections 3.01 and 3.02.

                  It is understood and agreed that the representations and
warranties set forth in Sections 3.01 and shall survive delivery of the
respective Mortgage Files to the Trustee on behalf of the Purchaser.

                  It is understood and agreed that the obligations of the Seller
set forth in this Section 3.05 to cure, repurchase and substitute for a
defective Mortgage Loan and the obligations of the Seller to indemnify the
Purchaser and the Underwriters as provided in Section 5.01 constitute the sole
remedies of the Purchaser respecting a missing or defective document or a breach
of the representations and warranties contained in Section 3.01 or 3.02.

                                   ARTICLE IV.

                               SELLER'S COVENANTS

         Section 4.01 COVENANTS OF THE SELLER. The Seller hereby covenants that
except for the transfer hereunder, the Seller will not sell, pledge, assign or
transfer to any other Person, or grant, create, incur, assume or suffer to exist
any Lien on any Mortgage Loan, or any interest therein; the Seller will notify
the Trustee, as assignee of the Purchaser, and the Trust Administrator of the
existence of any Lien on any Mortgage Loan immediately upon discovery thereof,
and the Seller will defend the right, title and interest of the Trustee, as
assignee of the Purchaser, in, to and under the Mortgage Loans, against all
claims of third parties claiming through or under the Seller; PROVIDED, HOWEVER,
that nothing in this Section 4.01 shall prevent or be deemed to prohibit the
Seller from suffering to exist upon any of the Mortgage Loans any Liens for
municipal or other local taxes and other governmental charges if such taxes or
governmental charges shall not at the time be due and payable or if the Seller
shall currently be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with respect
thereto.

                                       10

<PAGE>

                                   ARTICLE V.

               INDEMNIFICATION WITH RESPECT TO THE MORTGAGE LOANS

         Section 5.01      INDEMNIFICATION.

                  (a) The Seller agrees to indemnify and hold harmless the
Purchaser, Greenwich Capital Markets, Inc. ("Greenwich"), Credit Suisse First
Boston LLC (together with Greenwich, the "Underwriters"), their respective
officers and directors and each person, if any, who controls the Purchaser or
either Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, as follows:

                           (i) against any and all losses, claims, expenses,
damages or liabilities, joint or several, to which the Purchaser, the
Underwriters or such officers, directors or controlling persons may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof including, but not limited
to, any loss, claim, expense, damage or liability related to purchases and sales
of the Certificates) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Underwriter
Information or in Prospectus Supplement, or any amendment or supplement thereto,
or arise out of, or are based upon, the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements made therein not misleading, but only to the extent that any untrue
statement or alleged untrue statement or omission or alleged omission therein
results (or is alleged to have resulted) from an error or material omission in
(A) the information under the headings "Summary of Terms--Servicer", "--
Originator" and "--Mortgage Loans", "Risk Factors-- Unpredictability of
Prepayments and Effect on Yields" (fourth bullet), "--Delinquency of the
Mortgage Loans", "Balloon Loan Risk" (third sentence), "--Interest Generated by
the Mortgage Loans May Be Insufficient to Maintain Overcollateralization" (first
two sentences of third bullet), "--Effect of Mortgage Rates on the Offered
Certificates" (first two sentences of second paragraph), "--High Loan-to-Value
Ratios Increase Risk of Loss", "--Simultaneous Second Lien Risk", "--Violation
of Various Federal and State Laws May Result in Losses on the Mortgage Loans--
HIGH COST LOANS" (third paragraph), "--Nature of the Mortgage Loans" (first
sentence) and "--Limited Experience of the Servicer", "The Mortgage Pool",
"Fremont Investment & Loan" and "The Pooling Agreement-- The Servicer" in the
Prospectus Supplement (the information identified in this clause (A), the
"Fremont Prospectus Supplement Information"), (B) any Derived Information (as
defined below) to the extent that such error or material omission in any Derived
Information results (or is alleged to have resulted) from an error or material
omission in the Seller Provided Information (as defined below) or (C) any
representation, warranty or covenant made by the Seller in this Agreement, which
error, in the case of either (A) above or (B) above, was not superseded or
corrected by the delivery to the Purchaser or the Underwriters, as the case may
be, of corrected written or electronic information, or for which the Seller
provided written notice of such error to the Purchaser or the Underwriters, as
the case may be, prior to the confirmation of the sale of the Certificates; and
will reimburse the Purchaser, the Underwriters and any controlling person of the
Purchaser or either Underwriter for any legal or other expenses reasonably
incurred by the Purchaser, either Underwriter or any such controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred;

                                       11

<PAGE>

                           (ii) against any and all loss, liability, claim,
damage and expense whatsoever, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of the
Purchaser and the Underwriters; and

                           (iii) against any and all expense whatsoever
(including the fees and disbursements of counsel chosen by the Purchaser or the
Underwriters, as the case may be), reasonably incurred by the Purchaser or
either Underwriter in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under clause (i) or clause (ii) above.

                  This indemnity agreement will be in addition to any liability
which the Seller may otherwise have.

                  (b) The Purchaser agrees to indemnify and hold harmless the
Seller, its officers and directors and each person, if any, who controls the
Seller within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, as follows:

                           (i) against any and all losses, claims, expenses,
damages or liabilities, joint or several, to which the Seller or such officers,
directors or controlling persons may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof including, but not limited to, any loss, claim, expense, damage
or liability related to purchases and sales of the Certificates) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in Underwriter Information or in the Prospectus Supplement, or
any amendment or supplement thereto, or arise out of, or are based upon, the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements made therein not misleading,
but in the case of the Prospectus Supplement, only to the extent that any untrue
statement or alleged untrue statement or omission or alleged omission therein
results (or is alleged to have resulted) from an error or material omission in
the information under the heading "Yield, Prepayment and Maturity
Considerations-- Weighted Average Lives", and in each case, except to the extent
that any untrue statement or alleged untrue statement or omission or alleged
omission therein results (or is alleged to have resulted) from an error or
material omission in (A) the Fremont Prospectus Supplement Information or (B)
any Derived Information to the extent that such error or material omission in
any such Derived Information results (or is alleged to have resulted) from an
error or material omission in the Seller Provided Information (as defined
below), which error, in the case of either (A) above or (B) above, was not
superseded or corrected by the delivery to the Purchaser or the Underwriters, as
the case may be, of corrected written or electronic information, or for which
the Seller provided written notice of such error to the Purchaser or the
Underwriters, as the case may be, prior to the confirmation of the sale of the
Certificates; and will reimburse the Seller and each such controlling person for
any legal or other expenses reasonably incurred by the Seller or such
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred;

                                       12

<PAGE>

                           (ii) against any and all loss, liability, claim,
damage and expense whatsoever, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of the Seller;
and

                           (iii) against any and all expense whatsoever
(including the fees and disbursements of counsel chosen by the Seller),
reasonably incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under clause (i) or clause (ii) above.

                  This indemnity agreement will be in addition to any liability
which the Purchaser may otherwise have.

                  (c) For purposes of this Agreement:

         "Derived Information" means the information in the Underwriter
Information or in the Prospectus Supplement that has been derived by the
Purchaser or its Affiliates from Seller Provided Information;

         "Seller Provided Information" means any computer tape (or other
information) concerning characteristics of the Mortgage Loans furnished to the
Purchaser or to any of the Purchaser's Affiliates by or on behalf of the Seller
in connection with the purchase by the Purchaser of the Mortgage Loans from the
Seller;

         "Underwriter Information" means such information, if any, in the Series
Term Sheets, Collateral Term Sheets, Structural Term Sheets and/or Computational
Materials that is not contained (i) in the Prospectus or any or amendment or
supplement thereto or (ii) in the Seller Provided Information.

         "Series Term Sheets", "Collateral Term Sheets" and "Structural Term
Sheets" shall have the respective meanings assigned to them (a) in the case of
Series Term Sheets, in the no-action letter addressed to Greenwood Trust
Company, Discover Card Master Trust I dated April 5, 1996 and (b) in the case of
Collateral Term Sheets and Structural Term Sheets, in the February 13, 1995
letter of Cleary, Gottlieb, Steen & Hamilton on behalf of the Public Securities
Association (which letter, and the SEC staff's response thereto, are publicly
available February 17, 1995); the term "Collateral Term Sheet" as used herein
includes any subsequent Collateral Term Sheet that reflects a substantive change
in the information presented;

         "Computational Materials" has the meaning assigned to it in the
no-action letter dated May 20, 1994 issued by the Division of Corporation
Finance of the Commission to Kidder, Peabody Acceptance Corporation I. Kidder,
Peabody & Co. Incorporated, and Kidder Structured Asset Corporation, the
no-action letter dated May 27, 1994 issued by the Division of Corporation
Finance

                                       13

<PAGE>

of the Commission to the Public Securities Association and the no-action letter
of February 17, 1995 issued by the Commission to the Public Securities
Association;

                  (d) Promptly after receipt by any indemnified party under this
Article V of notice of any claim or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Article V, notify the indemnifying party in
writing of the claim or the commencement of that action; PROVIDED, HOWEVER, that
the failure to notify an indemnifying party shall not relieve it from any
liability which it may have under this Article V except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify any indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under this Article V.

                  If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Article V for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.

                  Any indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such indemnified
party unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised in writing by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to local counsel) at any time for all such indemnified parties, which
firm shall be designated in writing by the Purchaser, if the indemnified parties
under this Article V consist of the Purchaser.

                  Each indemnified party, as a condition of the indemnity
agreement contained in Section 5.01(a) hereof or Section 5.01(b) hereof, as
applicable, shall use its best efforts to cooperate with the indemnifying party
in the defense of any such action or claim. No indemnifying party shall be
liable for any settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld), but if settled with
its written consent or if there be a final judgment for the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have

                                       14

<PAGE>

requested an indemnifying party to consent to a settlement of any action, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if such settlement is entered
into more than 30 days after receipt by such indemnifying party of the aforesaid
request and the indemnifying party has not previously provided the indemnified
party with written notice of its objection to such settlement. No indemnifying
party shall effect any settlement of any pending or threatened proceeding in
respect of which an indemnified party is or could have been a party and
indemnity is or could have been sought hereunder, without the written consent of
such indemnified party, unless settlement includes an unconditional release of
such indemnified party from all liability and claims that are the subject matter
of such proceeding.

                  (e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for Section 5.01(a)
above is unavailable or insufficient to hold harmless an indemnified party, the
Seller shall contribute to the aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by such indemnity agreement incurred by
such indemnified party in such proportion as shall be appropriate to reflect the
relative benefits received by the Seller on the one hand (from the sale of the
Mortgage Loans to the Purchaser) and the Purchaser and the Underwriters on the
other (from the underwriting fees and discounts received by the Underwriters);
PROVIDED, HOWEVER, that 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. For purposes of this Section, each officer and director of
the Purchaser, the Underwriters and each person, if any, who controls the
Purchaser or either Underwriter within the meaning of Section 15 of the
Securities Act shall have the same rights to contribution as the Purchaser or
the related Underwriter.

                  (f) The Seller agrees to indemnify and to hold each of the
Purchaser, the Trust Administrator, the Trustee, each of the officers and
directors of each such entity and each person or entity who controls each such
entity or person and each Certificateholder harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs, judgments,
and any other costs, fees and expenses that the Purchaser, the Trust
Administrator, the Trustee, or any such person or entity or any
Certificateholder may sustain in any way (i) related to the failure of the
Seller to perform its duties in compliance with the terms of this Agreement,
(ii) arising from a breach by the Seller of its representations and warranties
in Sections 3.01 and 3.02 of this Agreement or (iii) related to the servicing of
the Mortgage Loans by reason of any acts, omissions, or alleged acts or
omissions of the Seller, acting either in its capacity as Seller under this
Agreement or in its capacity as Servicer under the Pooling and Servicing
Agreement. The Seller shall immediately notify the Purchaser, the Trust
Administrator and the Trustee if a claim is made by a third party with respect
to this Agreement. The indemnifying party shall assume the defense of any such
claim and pay all expenses in connection therewith, including reasonable counsel
fees, and promptly pay, discharge and satisfy any judgment or decree which may
be entered against the Purchaser, the Trust Administrator, the Trustee or any
such person or entity and/or any Certificateholder in respect of such claim.

         This indemnity agreement will be in addition to any liability which the
Seller may otherwise have.

         (g) Solely for purposes of this Section 5.01, the Underwriters shall be
deemed third party beneficiaries of this Agreement.

                                       15

<PAGE>

                                   ARTICLE VI.

                                   TERMINATION

         Section 6.01 TERMINATION. The respective obligations and
responsibilities of the Seller and the Purchaser created hereby shall terminate
(except for (i) the Seller's indemnity obligations as provided herein and (ii)
the representations and warranties made by the Seller hereunder and the Seller's
obligations to remedy breaches thereof to the extent set forth herein) upon the
termination of the Trust as provided in Article X of the Pooling and Servicing
Agreement.

                                  ARTICLE VII.

                            MISCELLANEOUS PROVISIONS

         Section 7.01 AMENDMENT. This Agreement may be amended from time to time
by the Seller and the Purchaser, by written agreement signed by the Seller and
the Purchaser.

         Section 7.02 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.

         Section 7.03 NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by registered mail, postage prepaid, addressed as
follows: (i) if to the Seller, Fremont Investment & Loan, 175 North Riverview
Drive, Anaheim, California 92808, Attention: Steve Patton, or such other address
as may hereafter be furnished by the Seller and (ii) if to the Purchaser,
Financial Asset Securities Corp., 600 Steamboat Road, Greenwich, Connecticut
06830, Attention: Legal, or such other address as may hereafter be furnished by
the Purchaser.

         Section 7.04 SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions of terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity of
enforceability of the other provisions of this Agreement.

         Section 7.05 COUNTERPARTS. This Agreement 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 and such
counterparts, together, shall constitute one and the same agreement.

         Section 7.06 FURTHER AGREEMENTS. The Seller and the Purchaser each
agree to execute and deliver to the other such additional documents, instruments
or agreements as may be necessary or reasonable and appropriate to effectuate
the purposes of this Agreement or in connection with the issuance of any series
of Certificates representing interests in the Mortgage Loans.

         Without limiting the generality of the foregoing, as a further
inducement for the Purchaser to purchase the Mortgage Loans from the Seller, the
Seller will cooperate with the Purchaser in

                                       16

<PAGE>

connection with the sale of any of the securities representing interests in the
Mortgage Loans. In that connection, the Seller will provide to the Purchaser any
and all information and appropriate verification of information, whether through
letters of its auditors and counsel or otherwise, as the Purchaser shall
reasonably request and will provide to the Purchaser such additional
representations and warranties, covenants, opinions of counsel, letters from
auditors, and certificates of public officials or officers of the Seller as are
reasonably required in connection with such transactions and the offering of
investment grade securities rated by the Rating Agencies.

         Section 7.07 INTENTION OF THE PARTIES. It is the intention of the
parties that the Purchaser is purchasing, and the Seller is selling, the
Mortgage Loans and not pledging the Mortgage Loans to secure a loan by the
Purchaser to the Seller. Accordingly, the parties hereto each intend to treat
the transaction for federal income tax purposes and all other purposes as a sale
by the Seller, and a purchase by the Purchaser, of the Mortgage Loans. The
Purchaser will have the right to review the Mortgage Loans and the related
Mortgage Files to determine the characteristics of the Mortgage Loans which will
affect the federal income tax consequences of owning the Mortgage Loans and the
Seller will cooperate with all reasonable requests made by the Purchaser in the
course of such review.

         Section 7.08 SUCCESSORS AND ASSIGNS; ASSIGNMENT OF PURCHASE AGREEMENT.
This Agreement shall bind and inure to the benefit of and be enforceable by the
Seller, the Purchaser, the Trustee.

         The obligations of the Seller under this Agreement cannot be assigned
or delegated to a third party without the consent of the Purchaser which consent
shall be at the Purchaser's sole discretion, except that the Purchaser
acknowledges and agrees that the Seller may assign its obligations hereunder to
any Person into which the Seller is merged or any corporation resulting from any
merger, conversion or consolidation to which the Seller is a party or any Person
succeeding to the business of the Seller. The parties hereto acknowledge that
the Purchaser is acquiring the Mortgage Loans for the purpose of contributing
them to a trust that will issue a series of Certificates representing undivided
interests in such Mortgage Loans. As an inducement to the Purchaser to purchase
the Mortgage Loans, the Seller acknowledges and consents to the assignment by
the Purchaser to the Trustee of all of the Purchaser's rights against the Seller
pursuant to this Agreement insofar as such rights relate to Mortgage Loans and
other assets transferred to the Trustee and to the enforcement or exercise of
any right or remedy against the Seller pursuant to this Agreement by the Trustee
or any party acting on behalf of the Trustee. Such enforcement of a right or
remedy by the Trustee or such other party shall have the same force and effect
as if the right or remedy had been enforced or exercised by the Purchaser
directly. As an inducement to the Seller to sell the Mortgage Loans, the
Purchaser agrees to cooperate with the Seller and its accountants by agreeing to
such provisions in the Pooling and Servicing Agreement and in the Cap Contract
(to the extent such provisions are commercially reasonable and to the extent
such provisions do not cause the Prospectus Supplement, absent an amendment or
supplement thereto, to contain an untrue statement of any material fact or an
omission to state therein a material fact required to be stated therein or
necessary to make the statements made therein not misleading) as may be
reasonably required by such accountants as a condition to such accountants'
concluding that the aforementioned trust, if beneficial interests therein are to
be retained by the Seller or its Affiliates, would be as of the Closing Date a
"qualified special purpose entity" within the meaning of the Financial
Accounting Standards Board Statement of Financial Accounting Standards No. 140.

                                       17

<PAGE>

         Section 7.09 OBLIGATIONS OF GREENWICH CAPITAL MARKETS, INC. Greenwich
Capital Markets, Inc. agrees with the Seller, for the sole and exclusive benefit
of the Seller, the Seller's officers and directors and each person, if any, who
controls the Seller within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, and not for the benefit of any assignee thereof
or any other person or persons dealing with the Seller or any such officer,
director or controlling person, as follows: in consideration of and as an
inducement to their agreement to sell the Mortgage Loans to the Purchaser, to
indemnify and hold harmless the Seller and each such officer, director and
controlling person against any failure by the Purchaser to perform its
obligations to the Seller under Article V hereof. In the case of any claim
against Greenwich Capital Markets, Inc. pursuant to this Section 7.09 by the
Seller or any such officer, director or controlling person, it shall not be
necessary for such claimant to first pursue any remedy from or exhaust any
procedures against the Purchaser.

         Section 7.10 SURVIVAL. The representations and warranties set forth in
Sections 3.01 and 3.02 and the provisions of Article V hereof and Section 7.09
hereof shall survive the purchase of the Mortgage Loans hereunder.

                                       18

<PAGE>

                  IN WITNESS WHEREOF, the Seller and the Purchaser have caused
their names to be signed to this Mortgage Loan Purchase Agreement by their
respective officers thereunto duly authorized as of the day and year fist above
written.

                                              FREMONT INVESTMENT & LOAN,
                                              as Seller

                                              By:_______________________________
                                              Name:
                                              Title:

                                              FINANCIAL ASSET SECURITIES CORP.,
                                              as Purchaser

                                              By:_______________________________
                                              Name:
                                              Title:

                                              Solely in respect of its
                                              obligations under Section 7.09
                                              hereof,
                                              GREENWICH CAPITAL MARKETS, INC.

                                              By:_______________________________
                                              Name:
                                              Title:

<PAGE>

                                   SCHEDULE I

                                 MORTGAGE LOANS

                             AVAILABLE UPON REQUEST

                                       20

<PAGE>

                                    EXHIBIT A

        Representation and Warranties with Respect to the Mortgage Loans

The Seller hereby represents and warrants to the Purchaser that, as to each
Mortgage Loan, as of the Closing Date or as of such other date specified:

                  (a) The information set forth in the Mortgage Loan Schedule
with respect to each Mortgage Loan is complete, true and correct;

                  (b) The Mortgage Loans are in compliance with all requirements
set forth in the Prospectus Supplement, and the characteristics of the Mortgage
Loans as set forth in the Prospectus Supplement are true and correct;

                  (c) All payments required to be made up to the close of
business on the Closing Date for such Mortgage Loan under the terms of the
Mortgage Note have been made; the Seller has not advanced funds, or induced,
solicited or knowingly received any advance of funds from a party other than the
owner of the related Mortgaged Property, directly or indirectly, for the payment
of any amount required by the Mortgage Note or Mortgage; and there has been no
delinquency, exclusive of any period of grace, in any payment by the Mortgagor
thereunder since the origination of the Mortgage Loan;

                  (d) To the best of the Seller's knowledge, there are no
delinquent taxes, ground rents, water charges, sewer rents, assessments,
insurance premiums, leasehold payments, including assessments payable in future
installments or other outstanding charges affecting the related Mortgaged
Property;

                  (e) The terms of the Mortgage Note and the Mortgage have not
been impaired, waived, altered or modified in any respect, except by written
instruments, recorded in the applicable public recording office if necessary to
maintain the lien priority of the Mortgage, and which have been delivered to the
Custodian; the substance of any such waiver, alteration or modification has been
approved by the title insurer, to the extent required by the related policy, and
is reflected on the related Mortgage Loan Schedule. No instrument of waiver,
alteration or modification has been executed, and no Mortgagor has been
released, in whole or in part, except in connection with an assumption agreement
approved by the title insurer, to the extent required by the policy, and which
assumption agreement has been delivered to the Custodian and the terms of which
are reflected in the related Mortgage Loan Schedule;

                  (f) The Mortgage Note and the Mortgage are not subject to any
right of rescission, set off, counterclaim or defense, including the defense of
usury, nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder,

                                       21

<PAGE>

render the Mortgage unenforceable, in whole or in part, or subject to any right
of rescission, set off, counterclaim or defense, including the defense of usury
and no such right of rescission, set off, counterclaim or defense has been
asserted with respect thereto;

                  (g) All buildings upon the Mortgaged Property are insured by a
generally acceptable insurer in the secondary market against loss by fire,
hazards of extended coverage and such other hazards as are customary in the area
where the Mortgaged Property is located, pursuant to insurance policies
conforming to the requirements of this Agreement and the Pooling and Servicing
Agreement. All such insurance policies contain a standard mortgagee clause
naming the Seller, its successors and assigns as mortgagee and all premiums
thereon have been paid. If the Mortgaged Property is in an area identified on a
Flood Hazard Map or Flood Insurance Rate Map issued by the Federal Emergency
Management Agency as having special flood hazards (and such flood insurance has
been made available) a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration is in effect which
policy conforms to the requirements of FNMA and FHLMC. The Mortgage obligates
the Mortgagor thereunder to maintain all such insurance at the Mortgagor's cost
and expense, and on the Mortgagor's failure to do so, authorizes the holder of
the Mortgage to maintain such insurance at Mortgagor's cost and expense and to
seek reimbursement therefor from the Mortgagor;

                  (h) Any and all requirements of any federal, state or local
law including, without limitation, usury, truth in lending, real estate
settlement procedures, consumer credit protection, equal credit opportunity,
fair housing or disclosure laws applicable to the origination and servicing of
mortgage loans of a type similar to the Mortgage Loans have been complied with;

                  (i) The Mortgage has not been satisfied, cancelled,
subordinated or rescinded, in whole or in part, and the Mortgaged Property has
not been released from the lien of the Mortgage, in whole or in part, nor has
any instrument been executed that would effect any such satisfaction,
cancellation, subordination, rescission or release;

                  (j) The Mortgage is a valid, existing and enforceable first
lien on the Mortgaged Property (including all improvements on the Mortgaged
Property), which Mortgaged Property is free and clear of all encumbrances and
liens (including mechanics liens) having priority over the first lien of the
Mortgage except for: (a) the lien of current real property taxes and assessments
not yet due and payable, (b) covenants, conditions and restrictions, rights of
way, easements and other matters of the public record as of the date of
recording being acceptable to mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy delivered to the
originator of the Mortgage Loan and which do not adversely affect the Value of
the Mortgaged Property and (c) other matters to which like properties are
commonly subject which do not materially interfere with the benefits of the
security intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property. Any security agreement, chattel
mortgage or equivalent document related to and delivered in connection with the
Mortgage Loan establishes

                                       22

<PAGE>

and creates a valid, existing and enforceable first lien and first priority
security interest on the property described therein and the Seller has full
right to sell and assign the same to the Purchaser;

                  (k) The Mortgage Note and the related Mortgage are genuine and
each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms;

                  (l) All parties to the Mortgage Note and the Mortgage had
legal capacity to enter into the Mortgage Loan and to execute and deliver the
Mortgage Note and the Mortgage, and the Mortgage Note and the Mortgage have been
duly and properly executed by such parties. The Mortgagor is a natural person
who is a party to the Mortgage Note and the Mortgage is in an individual
capacity or family trust that is guaranteed by a natural person;

                  (m) The proceeds of the Mortgage Loan have been fully
disbursed to or for the account of the Mortgagor and there is no obligation for
the Mortgagee to advance additional funds thereunder and any and all
requirements as to completion of any on site or off site improvement and as to
disbursements of any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making or closing the Mortgage Loan and the
recording of the Mortgage have been paid, and the Mortgagor is not entitled to
any refund of any amounts paid or due to the Mortgagee pursuant to the Mortgage
Note or Mortgage;

                  (n) Immediately prior to the sale of the Mortgage Loan to the
Purchaser on the Closing Date, the Seller will be the sole legal, beneficial and
equitable owner of the Mortgage Note and the Mortgage and will have full right
to transfer and sell the Mortgage Loan to the Purchaser free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security interest;

                  (o) All parties which have had any interest in the Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) in compliance
with any and all applicable "doing business" and licensing requirements of the
laws of the state wherein the Mortgaged Property is located;

                  (p) The Mortgage Loan is covered by an American Land Title
Association ("ALTA") ALTA lender's title insurance policy (which, in the case of
an Adjustable Rate Mortgage Loan has an adjustable rate mortgage endorsement in
the form of ALTA 6.0 or 6.1) acceptable to FNMA and FHLMC, issued by a title
insurer acceptable to FNMA and FHLMC and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring (subject to the
exceptions contained in (j)(a) and (b) above) the Seller, its successors and
assigns as to the first lien of the Mortgage in the original principal amount of
the Mortgage Loan and, with respect to any Adjustable Rate Mortgage Loan,
against any loss by reason of the invalidity or unenforceability of the lien
resulting from the provisions of the Mortgage providing for adjustment in the
Mortgage Interest Rate and Monthly Payment. Additionally, such lender's title
insurance policy affirmatively insures ingress and egress to and from the
Mortgaged Property, and against encroachments by or

                                       23

<PAGE>

upon the Mortgaged Property or any interest therein. The Seller is the sole
insured of such lender's title insurance policy, and such lender's title
insurance policy is in full force and effect and will be in full force and
effect upon the consummation of the transactions contemplated by this Agreement.
No claims are pending under such lender's title insurance policy, and no prior
holder of the related Mortgage, including the Seller, has done, by act or
omission, anything which would impair the coverage of such lender's title
insurance policy;

                  (q) Other than delinquencies of fewer than 30 days and
delinquencies of 30 or more days that are disclosed in the Prospectus
Supplement, there has been no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and no event
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach, violation or event of
acceleration, and neither the Seller nor the Servicer has waived any default,
breach, violation or event of acceleration;

                  (r) As of the date of origination and to the best of the
Seller's knowledge as of the Closing Date, there are no mechanics' or similar
liens or claims which have been filed for work, labor or material (and no rights
are outstanding that under law could give rise to such lien) affecting the
related Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage that are not insured against
by the related title insurance policy;

                  (s) All improvements which were considered in determining the
Value of the related Mortgaged Property lay wholly within the boundaries and
building restriction lines of the Mortgaged Property, and no improvements on
adjoining properties encroach upon the Mortgaged Property;

                  (t) The Mortgage Loan was originated by the Seller or by a
savings and loan association, a savings bank, a commercial bank or similar
banking institution which is supervised and examined by a federal or state
authority, or by a mortgagee approved as such by the Secretary of HUD;

                  (u) Principal payments on the Mortgage Loan commenced no more
than sixty days after the proceeds of the Mortgage Loan were disbursed. The
Mortgage Loan bears interest at the Mortgage Interest Rate. With respect to each
Mortgage Loan, the Mortgage Note is payable on the first or fifteenth day of
each month in Monthly Payments, which, in the case of a Fixed Rate Mortgage
Loans, are sufficient to fully amortize the original principal balance over the
original term thereof and to pay interest at the related Mortgage Interest Rate,
and, in the case of an Adjustable Rate Mortgage Loan, are changed on each
Adjustment Date, and in any case, are sufficient to fully amortize the original
principal balance over the original term thereof and to pay interest at the
related Mortgage Interest Rate. The Index for each Adjustable Rate Mortgage Loan
is as listed on the Mortgage Loan Schedule. The Mortgage Note does not permit
negative amortization. No Mortgage Loan is a Convertible Mortgage Loan;

                                       24

<PAGE>

                  (v) The origination and collection practices used by the
Seller with respect to each Mortgage Note and Mortgage have been in all respects
legal, proper, prudent and customary in the mortgage origination and servicing
industry. The Mortgage Loan has been serviced by the Seller and any predecessor
servicer in accordance with the terms of the Mortgage Note. With respect to
escrow deposits and Escrow Payments, if any, all such payments are in the
possession of, or under the control of, the Seller and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. No escrow deposits or Escrow Payments or
other charges or payments due to the Seller have been capitalized under any
Mortgage or the related Mortgage Note and no such escrow deposits or Escrow
Payments are being held by the Seller for any work on a Mortgaged Property which
has not been completed;

                  (w) To the best of the Seller's knowledge, the Mortgaged
Property is free of damage and waste and there is no proceeding pending for the
total or partial condemnation thereof;

                  (x) The Mortgage and related Mortgage Note contain customary
and enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the Mortgaged Property of
the benefits of the security provided thereby, including, (a) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (b) otherwise by
judicial foreclosure. The Mortgaged Property is not subject to any bankruptcy
proceeding or foreclosure proceeding and the Mortgagor is not subject to
protection under applicable bankruptcy laws. There is no homestead or other
exemption available to the Mortgagor which would interfere with the right to
sell the Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage. The Mortgagor has not notified the Seller and the Seller has no
knowledge of any relief requested or allowed to the Mortgagor under the Soldiers
and Sailors Civil Relief Act of 1940;

                  (y) The Mortgage Loan was underwritten in accordance with the
underwriting standards of the Seller in effect at the time the Mortgage Loan was
originated; and the Mortgage Note and Mortgage are on forms acceptable to FNMA
and FHLMC;

                  (z) The Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage on the Mortgaged
Property and the security interest of any applicable security agreement or
chattel mortgage referred to in (j) above;

                  (aa) The Mortgage File contains an appraisal of the related
Mortgaged Property which satisfied the standards of FNMA and FHLMC and was made
and signed, prior to the funding of the Mortgage Loan application, by a
qualified appraiser, duly appointed by the Seller, who had no interest, direct
or indirect in the Mortgaged Property or in any loan made on the security
thereof, whose compensation is not affected by the approval or disapproval of
the Mortgage Loan and who met the minimum qualifications of FNMA and FHLMC. Each
appraisal of the Mortgage Loan was made in accordance with the relevant
provisions of the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989;

                                       25

<PAGE>

                  (bb) In the event the Mortgage constitutes a deed of trust, 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, and no fees or
expenses are or will become payable by the Purchaser to the trustee under the
deed of trust, except in connection with a trustee's sale after default by the
Mortgagor or the reconveyance of the deed of trust;

                  (cc) No Mortgage Loan contains provisions pursuant to which
Monthly Payments are (a) paid or partially paid with funds deposited in any
separate account established by the Seller, the Mortgagor, or anyone on behalf
of the Mortgagor, (b) paid by any source other than the Mortgagor or (c)
contains any other similar provisions which may constitute a "buydown"
provision. The Mortgage Loan is not a graduated payment mortgage loan and the
Mortgage Loan does not have a shared appreciation or other contingent interest
feature;

                  (dd) The Mortgagor has executed a statement to the effect that
the Mortgagor has received all disclosure materials required by applicable law
with respect to the making of fixed rate mortgage loans in the case of
Fixed-Rate Mortgage Loans, and adjustable rate mortgage loans in the case of
Adjustable-Rate Mortgage Loans and rescission materials with respect to
Refinanced Mortgage Loans, and such statement is and will remain in the Mortgage
File;

                  (ee) No Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property or (b) facilitating the
trade in or exchange of a Mortgaged Property;

                  (ff) To the best of the Seller's knowledge, there are no
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor or the Mortgagor's credit standing that can reasonably
be expected to cause the Mortgage Loan to be an unacceptable investment, cause
the Mortgage Loan to become delinquent, or adversely affect the value of the
Mortgage Loan;

                  (gg) As of the date of origination of the Mortgage Loan and to
the best of the Seller's knowledge as of the Closing Date, the Mortgaged
Property is lawfully occupied under applicable law; 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 certificates of occupancy, have been made
or obtained from the appropriate authorities;

                  (hh) No error, omission, misrepresentation, negligence, fraud
or similar occurrence with respect to a Mortgage Loan has taken place on the
part of any person, including without limitation the Mortgagor, any appraiser,
any builder or developer, or any other party involved in the origination of the
Mortgage Loan or in the application of any insurance in relation to such
Mortgage Loan;

                                       26

<PAGE>

                  (ii) With respect to Mortgage Loans, other than MERS loans,
the Assignment of Mortgage is in recordable form and is acceptable for recording
under the laws of the jurisdiction in which the Mortgaged Property is located;

                  (jj) Any principal advances made to the Mortgagor prior to the
Cut off Date have been consolidated with the outstanding principal amount
secured by the Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term. The lien of the Mortgage
securing the consolidated principal amount is expressly insured as having first
lien priority by a title insurance policy, an endorsement to the policy insuring
the mortgagee's consolidated interest or by other title evidence acceptable to
FNMA and FHLMC. The consolidated principal amount does not exceed the original
principal amount of the Mortgage Loan;

                  (kk) No Mortgage Loan has a balloon payment feature, except as
set forth in the Mortgage Loan Schedule;

                  (ll) The source of the down payment with respect to each
Mortgage Loan has been fully verified by the Seller pursuant to the Seller's
underwriting guidelines;

                  (mm) Interest on each Mortgage Loan is calculated on the basis
of a 360-day year consisting of twelve 30-day months;

                  (nn) The Mortgaged Property is in material compliance with all
applicable environmental laws pertaining to environmental hazards including,
without limitation, asbestos, and neither the Seller nor, to the Seller's
knowledge, the related Mortgagor, has received any notice of any violation or
potential violation of such law;

                  (oo) Each Mortgage Loan is covered by a fully assignable, life
of loan Tax Service Contract which is assignable to the Purchaser or its
designee without the payment of any fee by the Purchaser or its designee;

                  (pp) Each Mortgage Loan is covered by a Flood Zone Service
Contract which is assignable to the Purchaser or its designee or, for each
Mortgage Loan not covered by such Flood Zone Service Contract, the Seller agrees
to purchase such Flood Zone Service Contract;

                  (qq) No Group I Mortgage Loan is covered by the Home Ownership
and Equity Protection Act of 1994 and no Group I Mortgage Loan is in violation
of any comparable state law;

                  (rr) No predatory or deceptive lending practices, including
but not limited to, the extension of credit to a mortgagor without regard for
the mortgagor's ability to repay the Mortgage Loan and the extension of credit
to a mortgagor which has no apparent benefit to the mortgagor, were employed in
connection with the origination of the Mortgage Loan;

                                       27

<PAGE>

                  (ss) The debt-to-income ratio of the related Mortgagor was not
greater than 60% at the origination of the related Mortgage Loan;

                  (tt) No proceeds from any Group I Mortgage Loan were used to
finance single- premium credit insurance policies;

                  (uu) No Mortgage loan is secured by property located in the
city of Oakland, California is subject to the provisions of the City of Oakland,
California Anti-Predatory Lending Ordinance No. 12361;

                  (vv) No Mortgage Loan had a Loan-to-Value Ratio in excess of
100% at the time of the origination of such Mortgage Loan;

                  (ww) The Mortgage Loans were not selected from the outstanding
fixed and adjustable rate one to four-family mortgage loans in the Seller's
portfolio at the related Closing Date as to which the representations and
warranties set forth in this Agreement could be made in a manner so as to
intentionally affect adversely the interests of the Purchaser;

                  (xx) The related Mortgagor under the Mortgage Loan had a FICO
Score not less than 500 at the time of the origination of the Mortgage Loan,
unless such Mortgage Loan was originated under an origination program which does
not require FICO scores to be obtained under the Seller's underwriting
guidelines;

                  (yy) The Mortgage, and if required by applicable law the
related Mortgage Note, contains an enforceable provision for the acceleration of
the payment of the unpaid principal balance of the Mortgage Loan in the event
that the Mortgaged Property is sold or transferred without the prior written
consent of the mortgagee thereunder;

                  (zz) The Mortgage Loan complies with all applicable consumer
credit statutes and regulations, including, without limitation, the respective
Uniform Consumer Credit Code laws in effect in Colorado, Idaho, Indiana, Iowa,
Kansas, Maine, Oklahoma, South Carolina, Utah and Wyoming, has been originated
by a properly licensed entity, and in all other respects, complies with all of
the material requirements of any such applicable laws;

                  (aaa) The information set forth in the Prepayment Charge
schedule is complete, true and correct in all material respects, each Prepayment
Charge is permissible, enforceable and collectable under applicable federal and
state law and each Prepayment Charge was originated in compliance with all
applicable federal, state and local laws;

                                       28

<PAGE>

                  (bbb) The Mortgage Loan was not prepaid in full prior to the
Closing Date, and the Seller has not received notification from a Mortgagor that
a prepayment in full shall be made after the Closing Date;

                  (ccc) Information provided to the rating agencies, including
loan level detail, is true and correct according to rating agency requirements;

                  (ddd) No Mortgage Loan is subject to the Georgia Fair Lending
Act effective from Oct 1, 2002 to March 6, 2003;

                  (eee) There is no Group I Mortgage Loan that was originated on
or after October 1, 2002 and before March 7, 2003, which is secured by a
Mortgaged Property located in the State of Georgia; there is no Group I Mortgage
Loan that was originated on or after March 7, 2003 which is a "high cost home
loan" as defined under the Georgia Fair Lending Act;

                  (fff) No Group I Mortgage Loan originated on or after October
1, 2002 will impose a Prepayment Charge for a term in excess of three years; any
Group I Mortgage Loan originated prior to such date will not impose a Prepayment
Charge in excess of five years;

                  (ggg) There is no Group I Mortgage Loan that (a) is secured by
property located in the State of New York; (b) had an original principal balance
of $300,000 or less, and (c) has an application date on or after April 1, 2003,
the terms of which loan equal or exceed either the APR or the points and fees
threshold for "high-cost home loans," as defined in Section 6-L of the New York
State Banking Law;

                  (hhh) The total combined points and fees charged in connection
with the originator of the Mortgage Loan does not exceed 8% of the original
principal balance of the Mortgage Loan;

                  (iii) No Mortgage Loans are subject to the Geogia Fair Lending
Act effective from October 1, 2002 to March 6, 2003;

                  (jjj) Each Mortgage Loan at the time it was made complied in
all material respects with applicable local, state, and federal laws, including,
but not limited to, all applicable predatory and abusive lending laws;

                  (kkk) None of the Mortgage Loans are High Cost as defined by
any state, local or federal law (including the applicable predatory and abusive
lending laws);

                  (lll) The servicer for each Group I Mortgage Loan has fully
furnished, and with respect to each such Mortgage Loan Fremont Investment & Loan
for so long as it remains the Servicer will continue to fully furnish, in
accordance with the Fair Credit Reporting Act and its

                                       29

<PAGE>

implementing regulations, accurate and complete information (i.e., favorable and
unfavorable) on its borrower credit files to Equifax, Experian, and Trans Union
Credit Information Company (three of the credit repositories), on a monthly
basis;

                  (mmm) Each Group I Mortgage Loan is in compliance with the
anti-predatory lending eligibility for purchase requirements of Fannie Mae's
Selling Guide;

                  (nnn) No Group I Mortgage Loan is subject to the requirements
of the Home Ownership and Equity Protection Act of 1994;

                  (ooo) No Group I Mortgage Loan is a "High Cost Home Loan" as
defined in the Georgia Fair Lending Act, as amended. No Mortgage Loan secured by
owner occupied real property or an owner occupied manufactured home located in
the State of Georgia was originated (or modified) on or after October 1, 2002
through and including March 6, 2003.

                  (ppp) No Group I Mortgage Loan is a "High Cost Home Loan" as
defined in New York Banking Law 6-1;

                  (qqq) Each borrower under a Group I Mortgage Loan was assigned
the highest credit grade available with respect to a mortgage loan product
offered by such Mortgage Loan's originator, taking into account the credit
history, debt to income ratio and loan requirements of such borrower;

                  (rrr) The methodology used in underwriting the extension of
credit for each Group I Mortgage Loan employs objective mathematical principles
which relate the borrower's income, assets and liabilities to the proposed
payment and such underwriting methodology does not rely on the extent of the
borrower's equity in the collateral as the principal determining factor in
approving such credit extension. Such underwriting methodology confirmed that,
with respect to each Group I Mortgage Loan, at the time of origination
(application/approval) the borrower had a reasonable ability to make timely
payments on such Mortgage Loan;

                  (sss) With respect to any Group I Mortgage Loan that contains
a provision permitting imposition of a premium upon a prepayment prior to
maturity: (i) prior to such Mortgage Loan's origination, the borrower agreed to
such premium in exchange for a monetary benefit, including but not limited to a
rate or fee reduction, (ii) the Originator had available programs that offered
the option of obtaining a mortgage loan that did not require payment of such a
premium, and prior to the Mortgage Loan's origination the Mortgage Loan was
available to the borrower with and without the prepayment penalty, (iii) the
prepayment premium was disclosed to the borrower in the related loan documents
pursuant to applicable state and federal law and (iv) notwithstanding any state
or federal law to the contrary, Fremont Investment & Loan for so long as it
remains the Servicer shall not impose such prepayment premium in any instance
when the mortgage debt is accelerated as the result of the borrower's default in
making the loan payments on such Mortgage Loan;

                                       30

<PAGE>

                  (ttt) No borrower under any Group I Mortgage Loan was required
to purchase any credit life, disability, accident or health insurance product as
a condition of obtaining the extension of credit; no borrower under any Group I
Mortgage Loan obtained a prepaid single premium credit life, disability,
accident or health insurance policy in connection with the origination of such
Mortgage Loan; no proceeds from any Group I Mortgage Loan were used to purchase
single premium credit insurance policies as part of the origination of, or as a
condition to closing, such Mortgage Loan;

                  (uuu) All points and fees related to each Group I Mortgage
Loan were disclosed in writing to the borrower in accordance with applicable
state and federal law and regulation; with respect to each Group I Mortgage
Loan, except in the case of a Group I Mortgage Loan in an original principal
amount of less than $60,000 which would have resulted in an unprofitable
origination, no borrower was charged "points and fees" (whether or not financed)
in an amount greater than 5% of the principal amount of such Mortgage Loan, such
5% limitation being calculated in accordance with Fannie Mae's anti-predatory
lending requirements as set forth in the Fannie Mae Selling Guide;

                  (vvv) With respect to each Group I Mortgage Loan, all fees and
charges (including finance charges) and whether or not financed, assessed,
collected or to be collected in connection with the origination and servicing of
each such Mortgage Loan has been disclosed in writing to the borrower in
accordance with applicable state and federal law and regulation;

                  (www) Fremont Investment & Loan for so long as it remains the
Servicer will transmit full-file credit reporting data for each Group I Mortgage
Loan pursuant to Fannie Mae Guide Announcement 95-19 and that for each such
Mortgage Loan, Fremont Investment & Loan for so long as it remains the Servicer
agrees it shall report one of the following statuses each month as follows: new
origination, current, delinquent (30-, 60-, 90-days, etc.), foreclosed, or
charged-off;

                  (xxx) The Mortgage Loans will be delivered on the Closing Date
free and clear of any servicing agreements. No servicing arrangements currently
exist or are contemplated and no servicing fees are owed with respect to the
Mortgage Loans other than the servicing arrangement, the Servicing Fee and
Master Servicing Fee contemplated by the Pooling and Servicing Agreement;

                  (yyy) With respect to any assumption, modification,
consolidation or extension agreements, such agreement has been recorded by the
servicer of the related Mortgage Loan if required under applicable law;

                  (zzz) Except as disclosed to the Purchaser or Greenwich
Capital Markets, Inc., neither the Seller nor any affiliate of the Seller has
made a Mortgage Loan secured by any Mortgaged Property other than the related
Mortgage Loan at origination or subsequent to the time of the origination of
such Mortgage Loan;

                                       31

<PAGE>

                  (aaaa) No Mortgage Loan is secured by cooperative housing
commercial property or mixed use property;

                  (bbbb) The Seller has complied with all applicable anti-money
laundering laws and regulations, including without limitation the USA PATRIOT
Act of 2001; and

                  (cccc) No Mortgage Loan is subject to the requirements of the
Home Ownership and Equity Protection Act of 1994 and no Mortgage Loan is in
violation of any state law or ordinance similar to the Home Ownership and Equity
Protection Act of 1994.

                                       32

<PAGE>

                                    EXHIBIT D

                             MORTGAGE LOAN SCHEDULE

                             Available Upon Request

                                       D-1

<PAGE>

                                    EXHIBIT E

                        REQUEST FOR RELEASE OF DOCUMENTS

To:      HSBC Bank, USA
         452 Fifth Avenue
         New York, NY 10018

          Re:  Pooling and Servicing Agreement, dated as of August 1, 2003,
               among Financial Asset Securities Corp. as depositor, Fremont
               Investment & Loan as servicer, Wells Fargo Bank Minnesota,
               National Association as master servicer and trust administrator
               and HSBC Bank, USA, as trustee

         In connection with the administration of the Mortgage Loans held by you
as Trustee pursuant to the above-captioned Pooling and Servicing Agreement, we
request the release, and hereby acknowledge receipt of the Trustee's Mortgage
File Or the Mortgage Loan described below, for the reason indicated.

MORTGAGE LOAN NUMBER:

MORTGAGOR NAME, ADDRESS & ZIP CODE:

REASON FOR REQUESTING DOCUMENTS (CHECK ONE):

_________1. Mortgage Paid in Full

_________2. Foreclosure

_________3. Substitution

_________4. Other Liquidation (Repurchases, etc.)

_________5. Nonliquidation                      Reason:_____________________

Address to which Trustee should deliver the Trustee's Mortgage File:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                                       E-1

<PAGE>

                                        By:
                                           -----------------------------------
                                                 (authorized signer)

                                        Issuer:
                                               -------------------------------

                                        Address:
                                                 -----------------------------

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

                                        Date:
                                             ---------------------------------

TRUSTEE

HSBC Bank, USA

         Please acknowledge the execution of the above request by your signature
and date below:

         ____________________________               __________________
         Signature                                  Date

         Documents returned to Trustee:

         ______________________________             __________________
         Trustee                                    Date

                                       E-2

<PAGE>

                                   EXHIBIT F-1

                     FORM OF TRUSTEE'S INITIAL CERTIFICATION

                                                   August __, 2003

Financial Asset Securities Corp.
600 Steamboat Road
Greenwich, Connecticut 06830

          Re:  Pooling and Servicing Agreement, dated as of August 1, 2003,
               among Financial Asset Securities Corp. as depositor, Fremont
               Investment & Loan as servicer, Wells Fargo Bank Minnesota,
               National Association as master servicer and trust administrator
               and HSBC Bank, USA, as Trustee
               ----------------------------------------------------------------

Ladies and Gentlemen:

         Attached is the Trustee's preliminary exception report delivered in
accordance with Section 2.02 of the referenced Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement"). Capitalized terms used but not
otherwise defined herein shall have the meanings set forth in the Pooling and
Servicing Agreement.

         The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in the Mortgage File pertaining to the Mortgage Loans
identified on the Mortgage Loan Schedule, (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan or (iii) whether any
Mortgage File includes any of the documents specified in clause (v) of Section
2.01 of the Pooling and Servicing Agreement.

                                        HSBC BANK, USA

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

                                      F-1-1

<PAGE>

                                   EXHIBIT F-2

                      FORM OF TRUSTEE'S FINAL CERTIFICATION

                                                        ________________
                                                                 [Date]

Financial Asset Securities Corp.
600 Steamboat Road
Greenwich, Connecticut 06830

          Re:  Pooling and Servicing Agreement, dated as of August 1, 2003,
               among Financial Asset Securities Corp. as depositor, Fremont
               Investment & Loan as servicer, Wells Fargo Bank Minnesota,
               National Association as master servicer and trust administrator
               and HSBC Bank, USA, as trustee with respect to Fremont Home Loan
               Trust 2003-A, Asset-Backed Certificates, Series 2003-A
               ----------------------------------------------------------------

Ladies and Gentlemen:

         In accordance with Section 2.02 of the Pooling and Servicing Agreement,
the undersigned, as Trustee, hereby certifies that as to each Mortgage Loan
listed in the Mortgage Loan Schedule (other than any Mortgage loan paid in full
or listed on Schedule I hereto) it (or its custodian) has received the
applicable documents listed in Section 2.01 of the Pooling and Servicing
Agreement.

         The undersigned hereby certifies that as to each Mortgage Loan
identified on the Mortgage Loan Schedule, other than any Mortgage Loan listed on
Schedule I hereto, it has reviewed the documents listed above and has determined
that each such document appears to be complete and, based on an examination of
such documents, the information set forth in items 1, 2, 3, 10, 11, 15 and 28 of
the definition of Mortgage Loan Schedule in the Pooling and Servicing Agreement
accurately reflects information in the Mortgage File.

         Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement. This
Certificate is qualified in all respects by the terms of said Pooling and
Servicing Agreement.

                                    HSBC BANK, USA, as Trustee

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

                                      F-2-1

<PAGE>

                                   EXHIBIT F-3

                        FORM OF RECEIPT OF MORTGAGE NOTE

Financial Asset Securities Corp.
600 Steamboat Road
Greenwich, Connecticut 06830

         Re:      Fremont Home Loan Trust 2003-A,
                  Asset-Backed Certificates Series 2003-A
                  ---------------------------------------

Ladies and Gentlemen:

         Pursuant to Section 2.01 of the Pooling and Servicing Agreement, dated
as of August 1, 2003, among Financial Asset Securities Corp. as depositor,
Fremont Investment & Loan as servicer, Wells Fargo Bank Minnesota, National
Association as master servicer and trust administrator and HSBC Bank, USA, as
trustee, we hereby acknowledge the receipt of the original Mortgage Notes (a
copy of which is attached hereto as Exhibit 1) with any exceptions thereto
listed on Exhibit 2.

         Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.

                                    HSBC BANK, USA, as Trustee

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

                                      F-3-1

<PAGE>

                                    EXHIBIT G

                                   [RESERVED]

                                       G-1

<PAGE>

                                    EXHIBIT H

                           FORM OF LOST NOTE AFFIDAVIT

         Personally appeared before me the undersigned authority to administer
oaths, __________________ who first being duly sworn deposes and says: Deponent
is __________________________ of ____________________________, successor by
merger to _________________________ ("Seller") and who has personal knowledge of
the facts set out in this affidavit.

On _________________________________, _____________________________ did execute
and deliver a promissory note in the principal amount of $____________________.

         That said note has been misplaced or lost through causes unknown and is
presently lost and unavailable after diligent search has been made. Seller's
records show that an amount of principal and interest on said note is still
presently outstanding, due, and unpaid, and Seller is still owner and holder in
due course of said lost note.

         Seller executes this Affidavit for the purpose of inducing HSBC Bank,
USA, as trustee on behalf of Fremont Home Loan Trust 2003-A, Asset-Backed
Certificates Series 2003-A, to accept the transfer of the above described loan
from Seller.

         Seller agrees to indemnify and hold harmless HSBC Bank, USA and
Financial Asset Securities Corp. for any losses incurred by such parties
resulting from the above described promissory note has been lost or misplaced.

By:      _______________________
         _______________________

STATE OF                                    )
                                            ) SS:
COUNTY OF                                   )

         On this ______ day of ______________, 20_, before me, a Notary Public,
in and for said County and State, appeared , who acknowledged the extension of
the foregoing and who, having been duly sworn, states that any representations
therein contained are true.

         Witness my hand and Notarial Seal this _________ day of 20__.

____________________________
____________________________
My commission expires __________________________.

                                       H-1

<PAGE>

                                    EXHIBIT I

                        FORM OF LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that [NAME OF MORTGAGEE, ASSIGNEE OR LAST
ENDORSEE, AS APPLICABLE], [a ___________________ corporation][a national banking
organization], having its principal place of business at
__________________________, (the "Undersigned"), pursuant to that Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") among Financial
Asset Securities Corp. (the "Owner"), Fremont Investment & Loan as servicer
("Fremont"), Wells Fargo Bank Minnesota, National Association as master servicer
and trust administrator and HSBC Trust, USA, hereby constitutes and appoints
Fremont, by and through Fremont's officers, the undersigned's true and lawful
Attorney-in-Fact, in the Undersigned's name, place and stead, as their interests
may appear, and for the Undersigned's respective benefit, in connection with all
Mortgage Loans serviced by Fremont pursuant to the Pooling and Servicing
Agreement, for the purpose of performing all acts and executing all documents in
the name of the Undersigned as may be customarily and reasonably necessary and
appropriate to effectuate the following enumerated transactions in respect of
any of the mortgages, deeds of trust or security instrument (each a "Mortgage"
or a "Deed of Trust" respectively) and promissory notes secured thereby (each a
"Mortgage Note") for which the Undersigned is acting as Servicer pursuant to the
Pooling and Servicing Agreement (whether the Undersigned is named therein as
mortgagee or beneficiary or has become mortgagee by virtue of endorsement of the
Mortgage Note secured by any such Mortgage or Deed of Trust) all subject to the
terms of the related Pooling and Servicing Agreement.

This appointment shall apply to the following enumerated transactions only:

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

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

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

4. The completion of loan assumption agreements.

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

                                       I-1

<PAGE>

6. The assignment of any Mortgage or Deed of Trust and the related Mortgage
Note, in connection with the repurchase of the mortgage loan secured and
evidenced thereby.

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

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

a) the substitution of trustee(s) serving under a Deed of Trust, in accordance
with state law and the Deed of Trust; b) the preparation and issuance of
statements of breach or non-performance; c) the preparation and filing of
notices of default and/or notices of sale; d) the cancellation/rescission of
notices of default and/or notices of sale; e) the taking of a deed in lieu of
foreclosure; and f) the preparation and execution of such other documents and
performance of such other actions as may be necessary under the terms of the
Mortgage, Deed of Trust or state law to expeditiously complete said transactions
in paragraphs 8(a) through 8(e) above.

9. The full assignment of a Mortgage or Deed of Trust upon sale of a loan
pursuant to a mortgage loan sale agreement for the sale of a loan or pool of
loans, including, without limitation, the assignment of the related Mortgage
Note.

The Undersigned gives said Attorney-in-Fact full power and authority to execute
such instruments and to do and perform all and every act and thing necessary and
proper to carry into effect the power or powers granted by or under this Limited
Power of Attorney, each subject to the terms and conditions set forth in the
related Pooling and Servicing Agreement and in accordance with the standard of
care applicable to servicers in the Pooling and Servicing Agreement as fully as
the undersigned might or could do, and hereby does ratify and confirm to all
that said Attorney-in-Fact shall lawfully do or cause to be done by authority
hereof. This Limited Power of Attorney shall be effective as of [SERVICING
TRANSFER EFFECTIVE DATE].

Nothing contained herein shall (i) limit in any manner any indemnification
provided by Fremont to the Owner under the Pooling and Servicing Agreement, or
(ii) be construed to grant Fremont the power to initiate or defend any suit,
litigation or proceeding in the name of the Undersigned except as specifically
provided for herein or under the Pooling and Servicing Agreement.

The Owner hereby agrees to indemnify and hold the Undersigned and its directors,
officers, employees and agents harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever incurred by
reason or result of or in connection with the exercise by Fremont of the powers
granted to it hereunder. The foregoing indemnity shall survive the termination
of this Limited Power of Attorney and the Pooling and Servicing Agreement or the
earlier resignation or removal of the Undersigned under the Pooling and
Servicing Agreement.

                                       I-2

<PAGE>

Any third party without actual notice of fact to the contrary may rely upon the
exercise of the power granted under this Limited Power of Attorney; and may be
satisfied that this Limited Power of Attorney shall continue in full force and
effect and has not been revoked unless an instrument of revocation has been made
in writing by the undersigned, and such third party put on notice thereof. This
Limited Power of Attorney shall be in addition to and shall not revoke or in any
way limit the authority granted by any previous power of attorney executed by
the Undersigned.

IN WITNESS WHEREOF, ____________________ pursuant to the Pooling and Servicing
Agreement, has caused its corporate seal to be hereto affixed and these presents
to be signed and acknowledged in its name and behalf by ______________________,
its duly elected and authorized _________________________ this ___ day of
_________________, 2003.

By:_____________________________________
Name:   ______________________
Title:  ___________________________

Acknowledged and Agreed
Fremont Investment & Loan

By:_________________________
Name:
Title:

                                       I-3

<PAGE>

                                    EXHIBIT J

                    FORM OF INVESTMENT LETTER [NON-RULE 144A]

                                                              [DATE]

Financial Asset Securities Corp.
600 Steamboat Road
Greenwich, Connecticut 06830

Wells Fargo Bank Minnesota, National Association
9062 Old Annapolis Road
Columbia, Maryland 21045

HSBC Bank, USA
452 Fifth Avenue
New York, NY 10018

                  Re:      Fremont Home Loan Trust 2003-A,
                           Asset-Backed Certificates Series 2003-A
                           ---------------------------------------

Ladies and Gentlemen:

         In connection with our acquisition of the above-captioned Certificates,
we certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we are an
"accredited investor," as defined in Regulation D under the Act, and have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or a
plan that is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended, nor are we acting on behalf of any such plan, (e) we are acquiring the
Certificates for investment for our own account and not with a view to any
distribution of such Certificates (but without prejudice to our right at all
times to sell or otherwise dispose of the Certificates in accordance with clause
(g) below), (f) we have not offered or sold any Certificates to, or solicited
offers to buy any Certificates from, any person, or otherwise approached or
negotiated with any person with respect thereto, or taken any other action which
would result in a violation of Section 5 of the Act, and (g) we will not sell,
transfer or otherwise dispose of any Certificates unless (1) such sale, transfer
or other disposition is made pursuant to an effective registration statement
under the Act or is exempt from such registration requirements, and if
requested, we will at our expense provide an opinion of counsel satisfactory to
the addressees of this Certificate that such sale, transfer or other disposition
may be made pursuant to an exemption from the Act, (2) the purchaser or
transferee of such Certificate has executed and delivered to you a certificate
to substantially the same effect as this certificate, and (3) the purchaser or
transferee has otherwise complied with any conditions for transfer set forth in
the Pooling and Servicing Agreement.

                                       J-1

<PAGE>

                                Very truly yours,

                                [NAME OF TRANSFEREE]

                                By:
                                   -----------------------------------------
                                         Authorized Officer

                                       J-2

<PAGE>

                       FORM OF RULE 144A INVESTMENT LETTER

                                                     [DATE]
Financial Asset Securities Corp.
600 Steamboat Road
Greenwich, Connecticut 06830

Wells Fargo Bank Minnesota, National Association
9062 Old Annapolis Road
Columbia, Maryland 21045

HSBC Bank, USA
452 Fifth Avenue
New York, NY 10018

                  Re:      Fremont Home Loan Trust 2003-A,
                           Asset-Backed Certificates Series 2003-A
                           ---------------------------------------

Ladies and Gentlemen:

         In connection with our acquisition of the above Certificates we certify
that (a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we have had the
opportunity to ask questions of and receive answers from the Depositor
concerning the purchase of the Certificates and all matters relating thereto or
any additional information deemed necessary to our decision to purchase the
Certificates, (c) we are not an employee benefit plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended, or a plan that is
subject to Section 4975 of the Internal Revenue Code of 1986, as amended, nor
are we acting on behalf of any such plan, (d) we have not, nor has anyone acting
on our behalf offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar security to,
or solicited any offer to buy or accept a transfer, pledge or other disposition
of the Certificates, any interest in the Certificates or any other similar
security from, or otherwise approached or negotiated with respect to the
Certificates, any interest in the Certificates 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 Certificates under the Securities Act or
that would render the disposition of the Certificates a violation of Section 5
of the Securities Act or require registration pursuant thereto, nor will act,
nor has authorized or will authorize any person to act, in such manner with
respect to the Certificates, (e) we are a "qualified institutional buyer" as
that term is defined in Rule 144A under the Securities Act and have completed
either of the forms of certification to that effect attached hereto as Annex 1
or Annex 2. We are aware that the sale to us is being made in reliance on Rule
144A. We are acquiring the Certificates for our own account or for resale
pursuant to Rule 144A and further, understand that such Certificates 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 Securities Act.

                                       J-3

<PAGE>

                                   Very truly yours,

                                   [NAME OF TRANSFEREE]

                                   By:
                                      ----------------------------------------
                                                     Authorized Officer

                                       J-4

<PAGE>

                                                            ANNEX 1 TO EXHIBIT J

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

          [For Transferees Other Than Registered Investment Companies]

         The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

         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, as amended ("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 of 1986, as amended.

                  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 statements, 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, a copy of which is
                  attached hereto.

                  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.

                                       J-5

<PAGE>

                  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 ADVISOR. The Buyer is an investment advisor
                  registered under the Investment Advisors Act of 1940.

                  SMALL BUSINESS INVESTMENT COMPANY. 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. Buyer is a business
                  development company as defined in Section 202(a)(22) of the
                  Investment Advisors Act of 1940.

         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) securities issued or guaranteed by the U.S. or any instrumentality
thereof, (iv) bank deposit notes and certificates of deposit (v) loan
participations, (vi) repurchase agreements, (vii) securities owned but subject
to a repurchase agreement and (viii) currency, interest rate and commodity
swaps.

         4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the 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, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. 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 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, as
amended.

         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.

                                       J-6

<PAGE>

         6. Until the date of purchase of the Rule 144A Securities, 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 the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.

                                       ---------------------------------------
                                       Print Name of Buyer

                                       By:

                                       Name:
                                       Title:

                                       Date:

                                       J-7

<PAGE>

                                                            ANNEX 2 TO EXHIBIT J
                                                            --------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

           [For Transferees That are Registered Investment Companies]

         The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

         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, as amended ("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, as
amended 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, except (i) where the Buyer or the Buyers Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.

                  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) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.

                                       J-8

<PAGE>

         5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made 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. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.

                                          ------------------------------------
                                          Print Name of Buyer or Adviser

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

                                          IF AN ADVISER:

                                          ------------------------------------
                                          Print Name of Buyer

                                          Date:
                                               ------------------------------

                                       J-9

<PAGE>

                                    EXHIBIT K

              FORM OF TRANSFER AFFIDAVIT FOR RESIDUAL CERTIFICATES

FREMONT HOME LOAN TRUST 2003-A
ASSET-BACKED CERTIFICATES, SERIES 2003-A

STATE OF          )
                  ) ss.:
COUNTY OF         )

         The undersigned, being first duly sworn, deposes and says as follows:

         1. The undersigned is an officer of , the proposed Transferee of an
Ownership Interest in Class R Certificates (the "Certificate") issued pursuant
to the Pooling and Servicing Agreement, dated as of August 1, 2003 (the
"Agreement"), among Financial Asset Securities Corp. as depositor, Fremont
Investment & Loan as servicer, Wells Fargo Bank Minnesota, National Association
as master servicer and trust administrator and HSBC Bank, USA, as trustee.
Capitalized terms used, but not defined herein shall have the meanings ascribed
to such terms in the Agreement. The Transferee has authorized the undersigned to
make this affidavit on behalf of the Transferee.

         2. The Transferee is, as of the date hereof and will be, as of the date
of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificate either (i) for its own account or (ii) as
nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.

         3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) to a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.

         4. The Transferee has been advised of, and understands that a tax will
be imposed on a "pass-through entity" holding the Certificate if at any time
during the taxable year of the pass- through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (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 and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person).

                                       K-1

<PAGE>

         5. The Transferee has reviewed the provisions of Section 6.02(d) of the
Agreement and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by and
to abide by the provisions of Section 6.02(d) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.

         6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee and the Trust Administrator a
certificate substantially in the form set forth as Exhibit K to the Agreement (a
"Transferor Certificate") to the effect that such Transferee has no actual
knowledge that the Person to which the Transfer is to be made is not a Permitted
Transferee.

         7. The Transferee does not have the intention to impede the assessment
or collection of any tax legally required to be paid with respect to the
Certificate.

         8. The Transferee's taxpayer identification number is _____________.

         9. The Transferee is a U.S. Person as defined in Code Section
7701-(a)(30).

         10. The Transferee is aware that the Certificate may be a "noneconomic
residual interest" within the meaning of proposed 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.

         11. The Transferee is not an employee benefit plan that is subject to
ERISA or a plan that is subject to Section 4975 of the Code, nor is it acting on
behalf of such a plan.

                                       K-2

<PAGE>

         IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this ___ day of __________, ___.

                                        [NAME OF TRANSFEREE]

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

[Corporate Seal]

ATTEST:

__________________________
[Assistant] Secretary

         Personally appeared before me the above-named , known or proved to me
to be the same person who executed the foregoing instrument and to be the of the
Transferee, and acknowledged that he executed the same as his free act and deed
and the free act and deed of the Transferee.

         Subscribed and sworn before me this __ day of _______, ___.

                              --------------------------------------------------
                                      NOTARY PUBLIC

                              My Commission expires the ____ day of ____, ___.

                                       K-3

<PAGE>

                                    EXHIBIT L

                         FORM OF TRANSFEROR CERTIFICATE

                                                              [DATE]

Financial Asset Securities Corp.
600 Steamboat Road
Greenwich, Connecticut 06830

               Re:  Fremont Home Loan Trust 2003-A, Asset-Backed Certificates
                    Series 2003-A
                    ---------------------------------------------------------

Ladies and Gentlemen:

         In connection with our disposition of the above Certificates we certify
that (a) we understand that the Certificates have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are being disposed by us in
a transaction that is exempt from the registration requirements of the Act, (b)
we have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, in a manner that would be deemed, or taken any
other action which would result in, a violation of Section 5 of the Act, (c) to
the extent we are disposing of a Class [ ] Certificate, we have no knowledge the
Transferee is not a Permitted Transferee and (d) no purpose of the proposed
disposition of a Class [ ] Certificate is to impede the assessment or collection
of tax.

                                         Very truly yours,

                                         TRANSFEROR

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

                                       L-1

<PAGE>

                                    EXHIBIT M

            FORM OF CERTIFICATION WITH RESPECT TO ERISA AND THE CODE

                                                _____________, 20__

<TABLE>
<CAPTION>

<S>                                               <C>
Financial Asset Securities Corp.                  Wells Fargo Bank Minnesota, National Association
600 Steamboat Road                                9062 Old Annapolis Road
Greenwich, Connecticut 06830                      Columbia, Maryland 21045
</TABLE>

                 Re: Fremont Home Loan Trust 2003-A,
                     Asset-Backed Certificates Series 2003-A
Dear Sirs:

                  _______________________ (the "Transferee") intends to acquire
from _____________________ (the "Transferor") $____________ Initial Certificate
Principal Balance Fremont Home Loan Trust 2003-A, Asset-Backed Certificates
Series 2003-A, Class [C][P][R] (the "Certificates"), issued pursuant to a
Pooling and Servicing Agreement, dated as of August 1, 2003, among Financial
Asset Securities Corp. as depositor, Fremont Investment & Loan as servicer,
Wells Fargo Bank Minnesota, National Association as master servicer and trust
administrator and HSBC Bank USA, as trustee with respect to Fremont Home Loan
Trust 2003-A, Asset-Backed Certificates, Series 2003-A. Capitalized terms used
herein and not otherwise defined shall have the meanings assigned thereto in the
Pooling and Servicing Agreement. The Transferee hereby certifies, represents and
warrants to, and covenants with the Depositor, the Trustee, the Trust
Administrator, the Servicer and the Master Servicer the following:

                  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,
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 at 29 C.F.R. ss.
2510.3-101.

                                        Very truly yours,

                                        [Transferee]

                                        By:_____________________________
                                        Name:
                                        Title:

                                       M-1

<PAGE>

                                   EXHIBIT N-1

                            FORM CERTIFICATION TO BE
                   PROVIDED TO MASTER SERVICER BY THE SERVICER

                Re: Fremont Home Loan Trust, Series 2003-A
                    Asset Backed Certificates, Series 2003-A

                  I, [identify the certifying individual], certify to Financial
Asset Securities Corp. (the "Depositor"), Wells Fargo Bank Minnesota, National
Association ("Wells Fargo") and HSBC Bank USA (the "Trustee") and their
respective officers, directors and affiliates, and with the knowledge and intent
that they will rely upon this certification, that:

                  1. I have reviewed the information provided to the Trust
Administrator by the Servicer pursuant to the Pooling and Servicing Agreement
and information correctly derived by the Trust Administrator from such
information and included in the annual report on Form 10-K for the fiscal year
[___] and on all reports on Form 8-K filed in respect of periods included in the
year covered by that annual report, of the Depositor relating to the Trust Fund
(the "Servicing Information");

                  2. Based on my knowledge, the Servicing Information in these
reports, taken as a whole, does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading
as of the last day of the period covered by that annual report;

                  3. Based on my knowledge, the Servicing Information is
correct;

                  4. I am responsible for reviewing the activities performed by
the Servicer under the Pooling and Servicing Agreement and based upon the review
required under the Pooling and Servicing Agreement, and except as disclosed to
the Depositor, the Trustee and the Trust Administrator, the Servicer has
fulfilled its obligations under the Pooling and Servicing Agreement; and

                  5. I have disclosed to the Servicer's certified public
accountants and the Depositor all significant deficiencies relating to the
Servicer's compliance with the minimum servicing standards in accordance with a
review conducted in compliance with the Uniform Single Attestation Program for
Mortgage Bankers or similar standard as set forth in the Pooling and Servicing
Agreement.

                                      N-1-1

<PAGE>

                  Capitalized terms used but not defined herein have the
meanings ascribed to them in the Pooling and Servicing Agreement, dated August
1, 2003 (the "Pooling and Servicing Agreement"), among the Depositor, Fremont
Investment & Loan as servicer, Wells Fargo as trustee and trust administrator
and the Trustee.

                                           FREMONT INVESTMENT & LOAN

                                           By:____________________________
                                           Name:
                                           Title:
                                           Date:

                                      N-1-2

<PAGE>

                                   EXHIBIT N-2

                      FORM OF MASTER SERVICER CERTIFICATION

                Re: Fremont Home Loan Trust 2003-A
                    Asset-Backed Certificates, Series 2003-A

                  I, _______________, the senior officer of Wells Fargo Bank
Minnesota, National Association, certify that:

                  l. I have reviewed this annual report on Form 10-K, and all
reports on Form 8-K containing distribution and servicing reports filed in
respect of periods included in the year covered by this annual report, of
Financial Asset Securities Corp. (the "Registrant");

                  2. Based on my knowledge, the information in these reports,
taken as a whole, does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading as of
the last day of the period covered by this annual report;

                  3. Based on my knowledge, the distribution of servicing
information required to be provided to the Trust Administrator by the Servicer
under the Pooling and Servicing Agreement is included in these reports;

                  4. Based on my knowledge and upon the annual compliance
statement included in the report and required to be delivered to the Trust
Administrator in accordance with the terms of the Pooling and Servicing
Agreement, and except as disclosed in the reports, the Servicer has fulfilled
its obligations under the servicing agreement; and

                  5. The reports disclose all significant deficiencies relating
to the Servicer's compliance with the minimum servicing standards based upon the
report provided by an independent public accountant, after conducting a review
in compliance with the Uniform Single Attestation Program for Mortgage Bankers
or similar procedure, as set forth in the Pooling and Servicing Agreement that
is included in these reports.

                  In giving the certifications above, I have reasonably relied
on information provided to me by the following unaffiliated parties: Fremont
Investment & Loan.

                  Capitalized terms used but not defined herein have the
meanings ascribed to them in the Pooling and Servicing Agreement, dated August
1, 2003 (the "Pooling and Servicing Agreement"), among the Registrant as
depositor, Fremont Investment & Loan as servicer, Wells Fargo Bank Minnesota,
National Association as master servicer and trust administrator and HSBC Bank
USA as trustee.

                                      N-2-1

<PAGE>

                                       WELLS FARGO BANK MINNESOTA, NATIONAL
                                       ASSOCIATION

                                       By:____________________________________
                                       Name:
                                       Title:
                                       Date:

                                      N-2-2

<PAGE>

                                    EXHIBIT O

                              FORM OF CAP CONTRACT

                             Available Upon Request

                                       O-1

<PAGE>

                                   EXHIBIT P-1

              FORM OF SERVICER'S ANNUAL STATEMENT AS TO COMPLIANCE

___________________ Trust, Series 200_-___
_______________ Pass-Through Certificates

                  I, _____________________, hereby certify that I am a duly
appointed __________________________ of _______________________________ (the
"Servicer"), and further certify as follows:

                  1. This certification is being made pursuant to the terms of
the Pooling and Servicing Agreement, dated as of August 1, 2003 (the
"Agreement"), among Financial Asset Securities Corp. as depositor, Fremont
Investment & Loan as servicer, Wells Fargo Bank Minnesota, National Association
as master servicer and trust administrator and HSBC Bank USA as trustee.

                  2. I have reviewed the activities of the Servicer during the
preceding year and the Servicer's performance under the Agreement and to the
best of my knowledge, based on such review, the Servicer has fulfilled all of
its obligations under the Agreement throughout the year.

                  Capitalized terms not otherwise defined herein have the
meanings set forth in the Agreements.

Dated: _________________

                                      P-1-1

<PAGE>

                   IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of _____________.

                                            By:  _____________________________
                                            Name:
                                            Title:

                  I, _________________________, a (an) __________________ of the
Servicer, hereby certify that _________________ is a duly elected, qualified,
and acting _______________________ of the Servicer and that the signature
appearing above is his/her genuine signature.

                   IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of ______________.

                                           By:  ______________________________
                                           Name:
                                           Title:

                                      P-1-2

<PAGE>

                                   EXHIBIT P-2

           FORM OF MASTER SERVICER'S ANNUAL STATEMENT AS TO COMPLIANCE

___________________ Trust, Series 200_-___
_______________ Pass-Through Certificates

                  I, _____________________, hereby certify that I am a duly
appointed __________________________ of _______________________________ (the
"Master Servicer"), and further certify as follows:

                  1. This certification is being made pursuant to the terms of
the Pooling and Servicing Agreement, dated as of August 1, 2003 (the
"Agreement"), among Financial Asset Securities Corp. as depositor, Fremont
Investment & Loan as servicer, Wells Fargo Bank Minnesota, National Association
as master servicer and trust administrator and HSBC Bank USA as trustee.

                  2. I have reviewed the activities of the Master Servicer
during the preceding year and the Master Servicer's performance under the
Agreement and to the best of my knowledge, based on such review, the Master
Servicer has fulfilled all of its obligations under the Agreement throughout the
year.

                  Capitalized terms not otherwise defined herein have the
meanings set forth in the Agreements.

Dated: _________________

                                      P-2-1

<PAGE>

                   IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of _____________.

                                          By:  _____________________________
                                          Name:
                                          Title:

                  I, _________________________, a (an) __________________ of the
Master Servicer, hereby certify that _________________ is a duly elected,
qualified, and acting _______________________ of the Master Servicer and that
the signature appearing above is his/her genuine signature.

                   IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of ______________.

                                          By:  ______________________________
                                          Name:
                                          Title:

                                      P-2-2

<PAGE>

                                   SCHEDULE I

                           PREPAYMENT CHARGE SCHEDULE

                             Available Upon Request

                                    Sch. I-1

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