Document:

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                                                                  EXECUTION COPY

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                           DELTA FUNDING CORPORATION,
                                   as Seller,

                             OCWEN FEDERAL BANK FSB,
                                   as Servicer

                                       And

                WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
                                   as Trustee

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

                         POOLING AND SERVICING AGREEMENT

                          Dated as of September 1, 2001

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

                   Home Equity Loan Asset-Backed Certificates

                                  Series 2001-2

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                                TABLE OF CONTENTS

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                                    ARTICLE I

                                   Definitions

Section 1.01.     Definitions.....................................................................................1
Section 1.02.     Interest Calculations..........................................................................31

                                   ARTICLE II

               Conveyance of Initial Mortgage Loans; Original Issuance of Certificates Tax Treatment

Section 2.01.     Conveyance of Initial Mortgage Loans...........................................................31
Section 2.02.     Acceptance by Trustee..........................................................................34
Section 2.03.     Representations and Warranties Regarding the Seller and the Servicer...........................36
Section 2.04.     Representations and Warranties of the Seller Regarding the Mortgage Loans......................39
Section 2.05.     Substitution of Mortgage Loans.................................................................47
Section 2.06.     Execution and Authentication of Certificates...................................................48
Section 2.07.     Designation of Interests in REMICs.............................................................48
Section 2.08.     Designation of Startup Day of REMIC............................................................52
Section 2.09.     REMIC Certificate Maturity Date................................................................52
Section 2.10.     Tax Returns and Reports to Certificateholders..................................................52
Section 2.11.     Tax Matters Person.............................................................................53
Section 2.12.     REMIC Related Covenants........................................................................53
Section 2.13.     Subsequent Transfers...........................................................................57

                                   ARTICLE III

                 Administration and Servicing of Mortgage Loans

Section 3.01.     The Servicer...................................................................................59
Section 3.02.     Collection of Certain Mortgage Loan Payments...................................................61
Section 3.03.     Withdrawals from the Collection Account........................................................63
Section 3.04.     Maintenance of Hazard Insurance; Property Protection Expenses..................................64
Section 3.05.     Maintenance of Mortgage Impairment Insurance Policy............................................64
Section 3.06.     Management and Realization Upon Defaulted Mortgage Loans.......................................65
Section 3.07.     Trustee to Cooperate...........................................................................67
Section 3.08.     Servicing Compensation; Payment of Certain Expenses by Servicer................................68
Section 3.09.     Annual Statement as to Compliance..............................................................68
Section 3.10.     Annual Servicing Review........................................................................68
Section 3.11.     Access to Certain Documentation and Information Regarding the Mortgage Loans...................68
Section 3.12.     Maintenance of Certain Servicing Insurance Policies............................................69
Section 3.13.     Reports to the Securities and Exchange Commission..............................................69
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Section 3.14.     Reports of Foreclosures and Abandonments of Mortgaged Properties, Returns Relating to
                  Mortgage Interest Received from Individuals and Returns Relating to Cancellation of
                  Indebtedness...................................................................................69
Section 3.15.     Advances by the Servicer.......................................................................69
Section 3.16.     Optional Purchase of Defaulted Mortgage Loans..................................................70
Section 3.17.     Superior Liens.................................................................................70
Section 3.18.     Assumption Agreements..........................................................................71
Section 3.19.     Payment of Taxes, Insurance and Other Charges..................................................71
Section 3.20.     Advance Facility...............................................................................72

                                   ARTICLE IV

              Certificate Insurance Policy, Initial Interest Coverage Account and Pre-Funding Account

Section 4.01.     Certificate Insurance Policy...................................................................74
Section 4.02.     Initial Interest Coverage Account and Pre-Funding Account......................................75
Section 4.03.     Claims Upon the Certificate Insurance Policy...................................................76

                                    ARTICLE V

                    Payments and Statements to Certificateholders; Rights of Certificateholders

Section 5.01.     Distributions..................................................................................77
Section 5.02.     Compensating Interest..........................................................................80
Section 5.03.     Statements.....................................................................................80
Section 5.04.     Distribution Account...........................................................................84
Section 5.05.     Investment of Accounts.........................................................................84
Section 5.06.     Allocation of Losses...........................................................................85
Section 5.07.     [Reserved].....................................................................................85
Section 5.08.     Net Rate Cap Fund..............................................................................85

                                   ARTICLE VI

                                The Certificates

Section 6.01.     The Certificates...............................................................................86
Section 6.02.     Registration of Transfer and Exchange of Certificates..........................................87
Section 6.03.     Mutilated, Destroyed, Lost or Stolen Certificates..............................................91
Section 6.04.     Persons Deemed Owners..........................................................................91
Section 6.05.     Appointment of Paying Agent....................................................................91

                                   ARTICLE VII

                           The Seller and the Servicer

Section 7.01.     Liability of the Seller and the Servicer.......................................................92
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Section 7.02.     Merger or Consolidation of, or Assumption of the Obligations of, the Seller or the
                  Servicer.......................................................................................92
Section 7.03.     Limitation on Liability of the Servicer and Others.............................................92
Section 7.04.     Servicer Not to Resign.........................................................................93
Section 7.05.     Delegation of Duties...........................................................................93
Section 7.06.     Indemnification of the Trust by the Servicer...................................................94

                                  ARTICLE VIII

                                     Default

Section 8.01.     Events of Default..............................................................................94
Section 8.02.     Appointment of Successor.......................................................................96
Section 8.03.     Waiver of Defaults.............................................................................97
Section 8.04.     Notification to Certificateholders.............................................................98
Section 8.05.     Rights of the Certificate Insurer..............................................................98
Section 8.06.     Certificate Insurer Default....................................................................98

                                   ARTICLE IX

                                   The Trustee

Section 9.01.     Duties of Trustee..............................................................................99
Section 9.02.     Certain Matters Affecting the Trustee.........................................................100
Section 9.03.     Trustee Not Liable for Certificates or Mortgage Loans.........................................101
Section 9.04.     Trustee May Own Certificates..................................................................102
Section 9.05.     Trustee Fees and Expenses.....................................................................102
Section 9.06.     Eligibility Requirements for Trustee..........................................................103
Section 9.07.     Resignation or Removal of Trustee.............................................................103
Section 9.08.     Successor Trustee.............................................................................104
Section 9.09.     Merger or Consolidation of Trustee............................................................104
Section 9.10.     Appointment of Co-Trustee or Separate Trustee.................................................104
Section 9.11.     Limitation of Liability.......................................................................106
Section 9.12.     Trustee May Enforce Claims Without Possession of Certificates; Inspection.....................106
Section 9.13.     Suits for Enforcement.........................................................................106

                                    ARTICLE X

                                   Termination

Section 10.01.    Termination...................................................................................107
Section 10.02.    Additional Termination Requirements...........................................................108
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                                   ARTICLE XI

                            Miscellaneous Provisions

Section 11.01.    Amendment.....................................................................................109
Section 11.02.    Recordation of Agreement......................................................................111
Section 11.03.    Limitation on Rights of Certificateholders....................................................111
Section 11.04.    Governing Law.................................................................................112
Section 11.05.    Notices.......................................................................................112
Section 11.06.    Severability of Provisions....................................................................113
Section 11.07.    Assignment....................................................................................113
Section 11.08.    Certificates Nonassessable and Fully Paid.....................................................114
Section 11.09.    Third-Party Beneficiaries.....................................................................114
Section 11.10.    Counterparts..................................................................................114
Section 11.11.    Effect of Headings and Table of Contents......................................................114
Section 11.12.    Mortgage Loans and Accounts Held for Benefit of the Certificate Insurer.......................114
Section 11.13.    Effect of Payments by the Certificate Insurer; Subrogation....................................114
Section 11.14.    Notices to the Certificate Insurer............................................................115
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EXHIBIT A         FORMS OF OFFERED CERTIFICATES.................................................................A-1
EXHIBIT B         FORM OF CLASS BIO CERTIFICATE.................................................................B-1
EXHIBIT B-1       FORM OF CLASS R CERTIFICATES................................................................B-1-1
EXHIBIT C         MORTGAGE LOAN SCHEDULE........................................................................C-1
EXHIBIT D         FORM OF SUBSEQUENT TRANSFER AGREEMENT.........................................................D-1
EXHIBIT E         FORM OF MORTGAGE NOTE.........................................................................E-1
EXHIBIT F         FORM OF MORTGAGE..............................................................................F-1
EXHIBIT G         TRANSFER AFFIDAVITS...........................................................................G-1
EXHIBIT H         LETTER OF REPRESENTATIONS.....................................................................H-1
EXHIBIT I         FORM OF REQUEST FOR RELEASE FOR DOCUMENTS.....................................................I-1
EXHIBIT J         RESERVED......................................................................................J-1
EXHIBIT K         FORM OF CUSTODIAL AGREEMENT...................................................................K-1
EXHIBIT L         DELINQUENCY AND LOSS INFORMATION............................................................. L-1
EXHIBIT M         FORM OF TRANSFEROR CERTIFICATE ...............................................................M-1
EXHIBIT N-1       FORM OF INVESTMENT LETTER (NON-RULE 144A)...................................................N-1-1
EXHIBIT N-2       FORM OF RULE 144A LETTER ...................................................................N-2-1
EXHIBIT O         FORM OF INITIAL CERTIFICATION.................................................................O-1
EXHIBIT P         FORM OF FINAL CERTIFICATION...................................................................P-1
EXHIBIT Q         SUBSEQUENT FUNDING PARAMETERS.................................................................Q-1
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<PAGE>

         This Pooling and Servicing Agreement, dated as of September 1, 2001,
among Delta Funding Corporation, as Seller (the "Seller"), Ocwen Federal Bank
FSB, as Servicer (the "Servicer") and Wells Fargo Bank Minnesota, National
Association, as Trustee (the "Trustee").

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

         In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:

                                    ARTICLE I

                                   Definitions

         Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article.

         Accounts: Collectively, the Collection Account, the Initial Interest
Coverage Account, the Pre-Funding Account and the Distribution Account.

         Addition Notice: The notice given pursuant to Section 2.13 with respect
to the transfer of Subsequent Mortgage Loans to the Trust pursuant to such
Section.

         Adjustable Rate Certificates: The Class A-1A Certificates and the
Subordinate Certificates.

         Adjusted Certificate Rate: As to any class of Senior Certificates and
any date of determination, a per annum rate equal to the sum of (i) the
applicable Certificate Rate, (ii) the Premium Percentage and (iii) the Trustee
Fee Rate. As to any class of Subordinate Certificates and any date of
determination, a per annum rate equal to the sum of (i) the applicable
Certificate Rate and (ii) the Trustee Fee Rate.

         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.

         Aggregate Principal Amount: As to any Distribution Date, the sum of
each Basic Principal Amount.

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

         Applied Realized Loss Amounts: As to any Distribution Date, an amount
equal to the excess, if any, of (i) the aggregate of the Class Principal
Balances of the Offered Certificates, after giving effect to all distributions
on such Distribution Date over (ii) the sum of (x) the Pool Balance as of the
last day of the related Due Period and (y) the Pre-Funded Amount, if any.

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         Appraised Value: The appraised value of the Mortgaged Property based
upon the appraisal made by or for the originator at the time of the origination
of the related Mortgage Loan.

         Approved Servicer: For purposes of Sections 3.01(b), 7.04 and 8.02
hereof any of the following:

                  1. An affiliate of Wells Fargo Bank Minnesota, National
                  Association that services mortgage loans similar to the
                  Mortgage Loans.

                  2. If at the relevant time, the aggregate Class Principal
                  Balance of the Senior Certificates is more than 50% of the
                  aggregate Class Principal Balance of all the Certificates, the
                  Person approved by Holders of Certificates evidencing at least
                  51% of the Voting Rights in the Trust.

                  3. If at the relevant time, the aggregate Class Principal
                  Balance of the Senior Certificates is 50% or less of the
                  aggregate Class Principal Balance of all the Certificates, a
                  Person who is an approved servicer by S&P.

         Assignment of Mortgage: With respect to any Mortgage, an assignment,
notice of transfer or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect the sale of the Mortgage to the Trustee.

         Authorized Newspaper: A newspaper of general circulation in the Borough
of Manhattan, The City of New York, printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.

         Available Funds: As to any Distribution Date, the sum, without
duplication of the following amounts with respect to the Mortgage Loans: (i)
scheduled payments of principal and interest on the Mortgage Loans due during
the related Due Period and received by the Servicer (net of amounts representing
the Servicing Fee with respect to each Mortgage Loan and reimbursement for
Monthly Advances and Servicing Advances); (ii) Net Liquidation Proceeds and
Insurance Proceeds with respect to the Mortgage Loans (net of amounts applied to
the restoration or repair of a Mortgaged Property) and unscheduled payments of
principal and interest on the Mortgage Loans received by the Servicer during the
related Prepayment Period (net of amounts representing the Servicing Fee with
respect to each Mortgage Loan and reimbursement for Monthly Advances and
Servicing Advances); (iii) the Purchase Price for repurchased Defective Mortgage
Loans and any related Substitution Adjustment Amounts; (iv) payments from the
Servicer in connection with (a) Monthly Advances, (b) Compensating Interest and
(c) the termination of the Trust with respect to the Mortgage Loans as provided
in this Agreement; (v) on the Distribution Dates during and immediately
following the Funding Period, amounts from the Initial Interest Coverage Account
in respect of the Capitalized Interest Requirement; and (vi) on the Distribution
Date at or immediately following the end of the Funding Period, any Excess
Funding Amount.

         Available Funds Cap: For any Distribution Date a per annum rate equal
to (i) the weighted average Net Loan Rate of the Mortgage Loans minus (ii) the
product of (x) the applicable Certificate Rate on the Notional Amount
Certificates and (y) a fraction, the numerator

                                      -2-
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of which is the Notional Amount of such Notional Amount Certificates immediately
prior to such Distribution Date, and the denominator of which is the sum of the
Pool Balance and the Pre-Funded Amount as of the end of the second preceding Due
Period and minus (iii) the Premium Amount, expressed as a per annum rate.

         Balloon Loan: Any Mortgage Loan that provided on the date of
origination for scheduled monthly payment in level amounts substantially lower
than the amount of the final scheduled payment.

         Basic Principal Amount: As to any Distribution Date and Loan Group, an
amount equal to the sum of the following amounts (without duplication) with
respect to the Mortgage Loans in that Loan Group: (i) each scheduled payment of
principal on a Mortgage Loan due during such Due Period and received by the
Servicer; (ii) the Net Liquidation Proceeds allocable to principal and all full
and partial principal prepayments received by the Servicer during the related
Prepayment Period; (iii) the portion of the Purchase Price allocable to
principal of all repurchased Defective Mortgage Loans with respect to such
Distribution Date; (iv) any Substitution Adjustment allocable to principal
received on or prior to the previous Determination Date and not yet distributed;
(v) any Monthly Advances with respect to scheduled payments of principal due
during the related Due Period; and (vi) any related Excess Funding Amount.

         BIF: The Bank Insurance Fund, as from time to time constituted, created
under the Financial Institutions Reform, Recovery and Enhancement Act of 1989,
or, if at any time after the execution of this Agreement the Bank Insurance Fund
is not existing and performing duties now assigned to it, the body performing
such duties on such date.

         Blanket Mortgage: The mortgage or mortgages encumbering a Cooperative
Property.

         Book-Entry Certificate: Any Regular Certificate registered in the name
of the Depository or its nominee, ownership of which is reflected on the books
of the Depository or on the books of a Person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).

         Business Day: Any day other than a Saturday, a Sunday or a day on which
banking institutions in New York City, the States of Florida and New Jersey or
the city in which the Corporate Trust Office of the Trustee or the executive
office of the Certificate Insurer is located are authorized or obligated by law
or executive order to close.

         Capitalized Interest Requirement: With respect to each Pre-Funding
Distribution Date, (A) the sum of (i) the amount of interest accrued during the
related Interest Period for the Class A Certificates at the weighted average
Adjusted Certificate Rate thereof on the Senior Portion of the Pre-Funded Amount
as of the first day of the related Due Period and (ii) interest at the
Certificate Rate for the Notional Amount Certificates on an amount equal to the
product of (x) the Pre-Funded Amount and (y) a fraction, the numerator of which
is the Notional Amount of the Notional Amount Certificates and the denominator
of which is the Pool Balance plus the Pre-Funded Amount as of the end of the
second preceding Due Period plus (B) the amount of interest accrued during the
related Interest Period for the Subordinate Certificates at the weighted average
Adjusted Certificate Rate thereof on the Subordinate Portion of the Pre-Funded
Amount

                                      -3-
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as of the first day of the related Due Period, minus (C) the interest received
or advanced on each Subsequent Mortgage Loan added to the Trust during such Due
Period if such Subsequent Mortgage Loan has a Due Date in such Due Period.

         Certificate: Any Offered Certificate, Class BIO Certificate or Residual
Certificate.

         Certificate Balance: As of any date of determination, the aggregate of
the Class Principal Balances of the Certificates.

         Certificate Index: The rate for one month United States dollar deposits
quoted on Telerate Page 3750 as of 11:00 A.M., London time, on the second LIBOR
Business Day prior to the first day of any Interest Period relating to the
Adjustable Rate Certificates. "Telerate Page 3750" means the display designated
as page 3750 on Bridge Telerate Service (or such other page as may replace page
3750 on that service for the purpose of displaying London interbank offered
rates of major banks). If such rate does not appear on such page (or such other
page as may replace that page on that service, or if such service is no longer
offered, such other service for displaying LIBOR or comparable rates as may be
reasonably selected by the Trustee after consultation with the Seller), the rate
will be the Reference Bank Rate. If no such quotations can be obtained and no
Reference Bank Rate is available, the Certificate Index will be the Certificate
Index applicable to the preceding Distribution Date. On the second LIBOR
Business Day immediately preceding each Distribution Date, the Trustee shall
determine the Certificate Index for the Interest Period commencing on such
Distribution Date and inform the Seller and the Servicer of such rate.

         Certificate Insurance Policy: The Certificate Guaranty Insurance Policy
(No.51177N), and all endorsements thereto dated the Closing Date, issued by the
Certificate Insurer for the benefit of the Holders of each Class of Senior
Certificates, a copy of which is attached hereto as Exhibit J.

         Certificate Insurer: Financial Security Assurance Inc., a monoline
insurance company organized and created under the laws of the State of New York,
or any successor thereto.

         Certificate Insurer Default: One of the following events shall have
occurred and be continuing:

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

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

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                           (iii) a court of competent jurisdiction, the New York
                  Department of Insurance or other competent regulatory
                  authority enters a final and nonappealable order, judgment or
                  decree (1) appointing a custodian, trustee, agent or receiver
                  for the Certificate Insurer or for all or any material portion
                  of its property or (2) authorizing the taking of possession by
                  a Custodian, trustee, agent or receiver of the Certificate
                  Insurer (or the taking of possession of all or any material
                  portion of the property of the Certificate Insurer).

         Certificate Margin: As to any Adjustable Rate Certificate, the
respective amount set forth below:

                                    Class             Certificate Margin
                                    -----             ------------------
                                                      (1)             (2)
                               A-1A                 0.430%          0.860%
                               M-1                  1.250%          1.875%
                               M-2                  1.950%          2.925%
                               B                    3.600%          5.400%

         -----------------
         (1)      On or before the Optional Termination Date.
         (2)      After the Optional Termination Date.

         Certificate Owner: The Person who is the beneficial owner of a
Book-Entry Certificate.

         Certificate Rate: As to any Class of Certificates, the respective per
annum rate set forth or described below:

Class                       Certificate Rate
-----                       ----------------
A-1F                            5.036% (1)(2)
A-1A                            (4)
IO                              (3)
M-1                             (4)
M-2                             (4)
B                               (4)
BIO                             (3)
R-1                             0.00%
R-2                             0.00%
R-3                             0.00%

--------
(1)   As to any Distribution Date, the lesser of (x) the fixed rate set forth
and (y) the applicable Available Funds Cap.

                                      -5-
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(2) On any Distribution Date after the Optional Termination Date, the
Certificate Rate shall increase by 50 basis points (0.50% per annum).

(3) Calculated as provided in Section 2.07.

(4) As to any Distribution Date, the least of (i) the Certificate Index plus the
applicable Certificate Margin, (ii) 14% per annum and (iii) the Available Funds
Cap.

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

         Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent, direction, waiver or request pursuant to this Agreement, (x)
any Offered Certificate registered in the name of the Seller or any Person known
to a Responsible Officer to be an Affiliate of the Seller and (y) any Offered
Certificate for which the Seller or any Person known to a Responsible Officer to
be an Affiliate of the Seller is the Certificate Owner or Holder shall be deemed
not to be outstanding (unless to the knowledge of a Responsible Officer (i) the
Seller or such Affiliate is acting as trustee or nominee for a Person who is not
an Affiliate of such Seller and who makes the voting decision with respect to
such Offered Certificates or (ii) the Seller or such Affiliate is the
Certificate Owner or Holder of all the Certificates of a Class, but only with
respect to the Class as to which the Seller or such Affiliate owns all the
Certificates) and the Percentage Interest evidenced thereby shall not be taken
into account in determining whether the requisite amount of Percentage Interests
necessary to effect any such consent, direction, waiver or request has been
obtained.

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

         Civil Relief Act Interest Shortfall: With respect to any Distribution
Date, for any Mortgage Loan as 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 Civil 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
Loan Rate for such Mortgage Loan before giving effect to the application of the
Civil Relief Act.

         Class: All Certificates having the same designation.

         Class A-1A Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class A-1A Certificate pursuant to Section 6.01.

         Class A-1F Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class A-1F Certificate pursuant to Section 6.01.

         Class A Certificates: The Class A-1F and Class A-1A Certificates.

                                      -6-
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         Class Allocation Percentage: As to the Class A-1F Certificates, the
percentage equivalent of a fraction, the numerator of which is the Basic
Principal Amount for Loan Group 1 for the applicable Distribution Date and the
denominator of which is the Aggregate Principal Amount. As to the Class A-1A
Certificates, the percentage equivalent of a fraction, the numerator of which is
the Basic Principal Amount for Loan Group 2 for the applicable Distribution Date
and the denominator of which is the Aggregate Principal Amount.

         Class B Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class B Certificate pursuant to Section 6.01.

         Class BIO Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit B and
designated as a Class BIO Certificate pursuant to Section 6.01.

         Class BIO Distribution Amount: As to any Distribution Date, the amount
allocable to the Class BIO Certificates as provided in Section 2.07 for such
Distribution Date and all prior Distribution Dates, less the aggregate of all
amounts distributed or deemed distributed with respect to the Class BIO
Certificates on prior Distribution Dates.

         Class B Principal Distribution Amount: On any Distribution Date on and
after the Stepdown Date and so long as a Delinquency Event is not in effect, an
amount equal to the excess of (1) the sum of (A) the aggregate Class Principal
Balance of the Senior Certificates (after giving effect to the distribution of
the Senior Principal Distribution Amount on such Distribution Date), (B) the
Class Principal Balance of the Class M-1 Certificates (after giving effect to
the distribution of the Class M-1 Principal Distribution Amount on such
Distribution Date), (C) the Class Principal Balance of the Class M-2
Certificates (after giving effect to the distribution of the Class M-2 Principal
Distribution Amount on such Distribution Date) and (D) the Class Principal
Balance of the Class B Certificates immediately prior to such Distribution Date,
over (2) the lesser of (A) the Pool Balance as of the last day of the related
Due Period, minus the Subordination Required Overcollateralization Amount for
that Distribution Date and (B) the Pool Balance as of the last day of the
related Due Period minus the OC Floor, provided, however, that after the Class
Principal Balances of the Senior, Class M-1 and Class M-2 Certificates are
reduced to zero, the Class B Principal Distribution Amount for such Distribution
Date will equal 100% of the Principal Distribution Amount.

         Class Interest Carryover Shortfall: As to any Class of Regular
Certificates and any Distribution Date, an amount equal to the sum of (i) the
excess of the related Class Monthly Interest Amount for the preceding
Distribution Date and any outstanding Class Interest Carryover Shortfall with
respect to such Class on such preceding Distribution Date, over the amount in
respect of interest that is actually distributed to the Holders of such Class on
such preceding Distribution Date plus (ii) one month's interest on such excess,
to the extent permitted by law, at the related Certificate Rate.

         Class Interest Distribution: As to any Class of Regular Certificates
and Distribution Date, an amount equal to the sum of (a) the related Class
Monthly Interest Amount and (b) any Class Interest Carryover Shortfall for such
Class of Certificates for such Distribution Date.

                                      -7-
<PAGE>

         Class IO Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class IO Certificate pursuant to Section 6.01.

         Class M-1 Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class M-1 Certificate pursuant to Section 6.01.

         Class M-1 Principal Distribution Amount: As to any Distribution Date on
or after the Stepdown Date, 100% of the Principal Distribution Amount if the
Class Principal Balance of each Class of Senior Certificates has been reduced to
zero and a Delinquency Event exists, or, if a Delinquency Event is not in
effect, the excess of (1) the sum of (A) the aggregate Class Principal Balance
of the Senior Certificates (after giving effect to distributions of the Senior
Principal Distribution Amount for such Distribution Date) and (B) the Class
Principal Balance of the Class M-1 Certificates immediately prior to such
Distribution Date over (2) the lesser of (A) 80.00% of the Pool Balance as of
the last day of the related Due Period, minus the Subordination Required
Overcollateralization Amount for that Distribution Date and (B) the Pool Balance
as of the last day of the related Due Period minus the OC Floor.

         Class M-2 Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class M-2 Certificate pursuant to Section 6.01.

         Class M-2 Principal Distribution Amount: As to any Distribution Date on
or after the Stepdown Date, 100% of the Principal Distribution Amount if the
aggregate Class Principal Balance of each of the Senior and Class M-1
Certificates has been reduced to zero and a Delinquency Event exists or, if a
Delinquency Event is not in effect, the excess of (1) the sum of (A) the
aggregate Class Principal Balance of the Senior Certificates (after giving
effect to distributions of the Senior Principal Distribution Amount for such
Distribution Date), (B) the Class Principal Balance of the Class M-1
Certificates (after giving effect to distribution of the Class M-1 Principal
Distribution Amount for such Distribution Date) and (C) the Class Principal
Balance of the Class M-2 Certificates immediately prior to such Distribution
Date over (2) the lesser of (A) 90.00% of the Pool Balance as of the last day of
the related Due Period, minus the Subordination Required Overcollateralization
Amount for that Distribution Date and (B) the Pool Balance as of the last day of
the related Due Period minus the OC Floor.

         Class Monthly Interest Amount: As to any Distribution Date and Class of
Regular Certificates, interest (i) for the related Interest Period at the
related Certificate Rate on the related Class Principal Balance or Notional
Amount minus (ii) such Class' pro rata portion of any Civil Relief Act Interest
Shortfall during the related Due Period based on the amount of interest to which
each such Class would otherwise be entitled in the absence of such shortfall.

         Class Principal Balance: As of any date of determination and Class of
Certificates, other than the Notional Amount Certificates, the Original Class
Principal Balance for such Class reduced by the sum of all amounts previously
distributed to the Certificateholders of such Class in respect of principal from
the related Principal Distribution Amount on all previous

                                      -8-
<PAGE>

Distribution Dates and, in the case of any Class of Subordinate Certificates,
reduced by any Applied Realized Loss Amounts allocated to such Class on prior
Distribution Dates.

         Class Principal Carryover Shortfall: As to any Class of Subordinate
Certificates and any Distribution Date, the excess, if any, of (i) the sum of
(x) the amount of the reduction in the Class Principal Balance of that Class of
Subordinate Certificates on such Distribution Date and (y) the amount of such
reductions on prior Distribution Dates over (ii) the amount distributed in
respect of principal thereof on prior Distribution Dates.

         Class R-1 Certificate: Any Certificate designated as such and executed
and authenticated by the Trustee substantially in the form set forth in Exhibit
B-1 hereto.

         Class R-2 Certificate: Any Certificate designated as such and executed
and authenticated by the Trustee substantially in the form attached hereto as
Exhibit B-1 hereto.

         Class R-3 Certificate: Any Certificate designated as such and executed
and authenticated by the Trustee substantially in the form attached hereto as
Exhibit B-1 hereto.

         Class R Certificateholder:  The Holder of a Residual Certificate.

         Closing Date: October 18, 2001.

         Code: The Internal Revenue Code of 1986, as the same may be amended
from time to time (or any successor statute thereto).

         Collection Account: The custodial account or accounts created and
maintained for the benefit of the Certificateholders pursuant to Section
3.02(b). The Collection Account shall be an Eligible Account.

         Combined Loan-to-Value Ratio or CLTV: With respect to any Mortgage
Loan, the sum of the original principal balance of such Mortgage Loan and the
outstanding principal balance of the related First Lien, if any, as of the date
of origination of the Mortgage Loan, divided by the Appraised Value.

         Compensating Interest: As to any Distribution Date, the amount
calculated pursuant to Section 5.02.

         Cooperative Corporation: The entity that holds title (fee or an
acceptable leasehold estate) to the real property and improvements constituting
the Cooperative Property and which governs the Cooperative Property, which
Cooperative Corporation must qualify as a Cooperative Housing Corporation under
Section 216 of the Code.

         Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares and a
Proprietary Lease.

         Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, including the allocation of individual dwelling units
to the holders of the Cooperative Shares of the Cooperative Corporation.

                                      -9-
<PAGE>

         Cooperative Shares: Shares issued by a Cooperative Corporation.

         Cooperative Unit: A single family dwelling located in a Cooperative
Property.

         Corporate Trust Office: The designated offices of the Trustee at which
at any particular time its corporate trust business with respect to this
Agreement shall be administered, which offices at the date of the execution of
this Agreement are located, for Certificate transfer services, at Wells Fargo
Center, Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479-0113,
Attn: Corporate Trust Services - DFC HEL Trust 2001-2, and for all other
purposes at 11000 Broken Land Parkway, Columbia, Maryland 21044-3562, Attn:
Corporate Trust Services - DFC HEL Trust 2001-2, and which are the respective
addresses to which notices to and correspondence with the Trustee should be
directed.

         Cumulative Loss Event: For any Distribution Date in the applicable
period below, if Cumulative Net Losses exceed the applicable percentage of the
aggregate Original Class Principal Balances of the Offered Certificates:

          Number of
          Distribution Dates                       Percentages
          ------------------                       -----------
          37-48                                    2.50%
          49-60                                    2.90%
          61-72                                    3.40%
          73-84                                    3.80%
          85 and thereafter                        4.00%

         Cumulative Net Losses: As of any date of determination, the aggregate
of the Liquidation Loan Losses incurred from the Cut-Off Date through the end of
the calendar month preceding such date of determination.

         Curtailment: With respect to a Mortgage Loan, any payment of principal
received during a Due Period as part of a payment that is in excess of the
amount of the Monthly Payment due for such Due Period and which is not intended
to satisfy the Mortgage Loan in full, nor is intended to cure a delinquency.

         Custodial Agreement: Any Custodial Agreement, as amended and
supplemented from time to time, dated as of the date hereof, by and among the
Trustee, the Seller, the Servicer, and the Custodian substantially in the form
set forth as Exhibit K hereto.

         Custodian: The Person acting as custodian under a Custodial Agreement
from time to time.

         Cut-Off Date: As to any Initial Mortage Loan, the close of business on
September 1, 2001, except that the Cut-Off Date for any Initial Mortgage Loan
originated after September 1, 2001, will be the date of origination of such
Mortgage Loan. As to any Subsequent Mortgage Loan, the later of the first day of
the month of the related Subsequent Transfer Date and the date of origination of
such Subsequent Mortgage Loan.

                                      -10-
<PAGE>

         Cut-Off Date Pool Principal Balance:  $145,695,424.63.

         Cut-Off Date Principal Balance: With respect to any Mortgage Loan, the
unpaid principal balance thereof as of the related Cut-Off Date after giving
effect to payments of principal due on or before the Cut-Off Date (or as of the
applicable date of substitution with respect to an Eligible Substitute Mortgage
Loan pursuant to Section 2.02 or 2.04).

         Defective Mortgage Loan: Any Mortgage Loan subject to repurchase or
substitution pursuant to Section 2.02 or 2.04.

         Deficiency Amount: With respect to any Distribution Date, the amount,
if any, by which the Guaranteed Distributions for such Distribution Date exceeds
the Available Funds for such Distribution Date that will be available to make
payment of the Guaranteed Distributions on such Distribution Date pursuant to
Section 5.01.

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

         Delinquency Amount: As to any Distribution Date, the aggregate
Principal Balance of the Mortgage Loans that are (a) 60 or more days delinquent,
(b) in bankruptcy or foreclosure or (c) REO in each case, as of the last day of
the preceding month.

         Delinquency Event: A Delinquency Event shall have occurred and be
continuing, if at any time the Three Month Delinquency Rate exceeds 40% of the
Senior Enhancement Percentage.

         Delta: Delta Funding Corporation, a New York corporation, or any
successor thereto.

         Deposit Date: As to any Distribution Date, the Business Day preceding
such Distribution Date.

         Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is Cede & Co., as the registered Holder of the
Regular Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the UCC of the State of New York.

         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 fourth
Business Day prior to such Distribution Date.

         Distribution Account: The account established and maintained by the
Trustee pursuant to Section 5.04. The Distribution Account shall be an Eligible
Account.

         Distribution Date: The 25th day of each month, or, if such day is not a
Business Day, then the next Business Day, beginning in October 2001.

                                      -11-
<PAGE>

         Due Date: As to any Mortgage Loan, the day of the month on which the
Monthly Payment is due from the Mortgagor.

         Due Period: With respect to each Distribution Date for scheduled
payments of both interest and principal, the period from and including the
second day of the month preceding the month of such Distribution Date to and
including the first day of the month of such Distribution Date.

         Electronic Ledger: The electronic master record of home equity mortgage
loans maintained by the Seller.

         Eligible Account: A segregated account that is (i) maintained with a
depository institution whose debt obligations at the time of any deposit therein
have the highest short-term debt rating by the Rating Agencies and whose
accounts are insured to the maximum extent provided by either the Savings
Association Insurance Fund ("SAIF") or the Bank Insurance Fund ("BIF") of the
Federal Deposit Insurance Corporation established by such fund with a minimum
long-term unsecured debt rating of A by S&P and A2 by Moody's, and which is any
of (A) a federal savings and loan association duly organized, validly existing
and in good standing under the federal banking laws, (B) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (C) a national banking association duly organized, validly
existing and in good standing under the federal banking laws, (D) a principal
subsidiary of a bank holding company; (ii) a segregated trust account maintained
with the corporate trust department of a federal or state chartered depository
institution or trust company, having capital and surplus of not less than
$50,000,000, acting in its fiduciary capacity; (iii) maintained at Wells Fargo
Bank Minnesota, National Association so long as its debt obligations at the time
of any deposit therein have a short-term debt rating of at least A-1 for S&P,
P-1 for Moody's and F-1 for Fitch; or (iv) otherwise acceptable to each Rating
Agency as evidenced by a letter from each Rating Agency to the Trustee, without
reduction or withdrawal of the then current ratings of the Certificates without
giving effect to the Certificate Insurance Policy.

         Eligible Investments: One or more of the following (excluding any
callable investments purchased at a premium):

                  (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 that such obligations
         are backed by the full faith and credit of the United States;

                  (ii) repurchase agreements on obligations specified in clause
         (i) maturing not more than three months from the date of acquisition
         thereof, provided that the short-term unsecured debt obligations of the
         party agreeing to repurchase such obligations are at the time rated by
         each Rating Agency in its highest short-term rating category (which is
         "A-1+" for S&P, "P-1" for Moody's and "F-1+" for Fitch);

                  (iii) certificates of deposit, time deposits and bankers'
         acceptances of any U.S. depository institution or trust company
         incorporated under the laws of the United States or any state thereof
         and subject to supervision and examination by federal and/or state
         banking authorities, provided that the unsecured short-term debt
         obligations of such

                                      -12-
<PAGE>

         depository institution or trust company at the date of acquisition
         thereof have been rated by S&P and Fitch in their respective highest
         unsecured short-term debt rating category;

                  (iv) commercial paper (having original maturities of not more
         than 90 days) of any corporation incorporated under the laws of the
         United States or any state thereof which on the date of acquisition has
         been rated by S&P and Moody's and, if rated by Fitch, Fitch in their
         respective highest short-term rating categories;

                  (v) short term investment funds ("STIFS") sponsored by any
         trust company or national banking association incorporated under the
         laws of the United States or any state thereof which on the date of
         acquisition has been rated by each Rating Agency in their respective
         highest rating category of long term unsecured debt;

                  (vi) interests in any money market fund which at the date of
         acquisition of the interests in such fund including any such fund that
         is managed by the Trustee or an Affiliate of the Trustee or for which
         the Trustee or an Affiliate acts as advisor and throughout the time as
         the interest is held in such fund has a rating of "AAA" by S&P, "Aaa"
         by Moody's or "AAA" by Fitch; and

                  (vii) other obligations or securities that are acceptable to
         each Rating Agency as an Eligible Investment hereunder and will not
         result in a reduction in the then current rating of the Certificates,
         as evidenced by a letter to such effect from such Rating Agency and
         with respect to which the Servicer has received confirmation that, for
         tax purposes, the investment complies with the last clause of this
         definition;

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 provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; provided, further, that
no instrument described hereunder may be purchased at a price greater than par
if such instrument may be prepaid or called at a price less than its purchase
price prior to its stated maturity; and provided further, that if S&P is rating
any of the Certificates, an instrument described hereunder shall be rated the
applicable rating of S&P set forth above.

         Eligible Substitute Mortgage Loan: A Mortgage Loan substituted by the
Seller for a Defective Mortgage Loan which must, on the date of such
substitution: (i) have an outstanding Principal Balance after deducting all
scheduled principal payments due in the month of substitution (or in the case of
a substitution of more than one Mortgage Loan for a Defective Mortgage Loan, an
aggregate Principal Balance), not in excess of and not less than 95% of the
Principal Balance of the Defective Mortgage Loan; (ii) have a Loan Rate not less
than the Loan Rate of the Defective Mortgage Loan and not more than 1% in excess
of the Loan Rate of such Defective Mortgage Loan; (iii) if such Defective
Mortgage Loan is an adjustable-rate Mortgage Loan, have a Loan Rate based on the
same Loan Index with adjustments to such Loan Rate made on the same interval
between Interest Rate Adjustment Dates as that of the Defective Mortgage Loan
and have a Margin that is not less than the Margin of the Defective Mortgage
Loan and not more than 100 basis points higher than the Margin for the Defective
Mortgage Loan; (iv) have a

                                      -13-
<PAGE>

Mortgage of the same or higher level of priority as the Mortgage relating to the
Defective Mortgage Loan at the time such Mortgage was transferred to the Trust;
(v) have a remaining term to maturity not more than six months earlier and not
later than the remaining term to maturity of the Defective Mortgage Loan; (vi)
comply with each representation and warranty set forth in Section 2.04 (deemed
to be made as of the date of substitution); (vii) have an original Combined
Loan-to-Value Ratio not greater than that of the Defective Mortgage Loan; (viii)
if such Defective Mortgage Loan is an adjustable-rate Mortgage Loan, have a
Lifetime Rate Cap and a Periodic Rate Cap no lower than the Lifetime Rate Cap
and Periodic Rate Cap, respectively, applicable to such Defective Mortgage Loan;
(ix) have a credit risk not less than the credit risk of the Defective Mortgage
Loan; and (x) be of the same type of Mortgaged Property as the Defective
Mortgage Loan or a detached single family residence. More than one Eligible
Substitute Mortgage Loan may be substituted for a Defective Mortgage Loan if
such Eligible Substitute Mortgage Loans meet the foregoing attributes in the
aggregate.

         ERISA Restricted Certificate: The Class M-1, Class M-2, Class B and
Class BIO Certificates and each Residual Certificate.

         Escrow Repair Loan: A Mortgage Loan as to which the Servicer holds a
portion of the proceeds in escrow pending repair of the related Mortgaged
Property as specified in the related Mortgage and Mortgage Note.

         Event of Default: As defined in Section 8.01.

         Excess Funding Amount: As to either Loan Group, the Pre-Funded Amount
remaining on deposit in the Pre-Funding Account at the end of the Funding Period
and allocated to such Loan Group.

         Excess Interest: As to any Distribution Date, the Available Funds
remaining after the application of payments pursuant to clauses (1) through (8)
of Section 5.01(a).

         Excess Overcollateralization Amount: As to any Distribution Date, the
lesser of (i) the Aggregate Principal Amount for such Distribution Date and (ii)
the excess, if any, of (x) the Overcollateralization Amount (assuming 100% of
the Aggregate Principal Amount is distributed on the Offered Certificates) over
(y) the Required Overcollateralization Amount.

         Expense Fee Rate: The sum of the Servicing Fee Rate and the Trustee Fee
Rate, which is 0.6750% per annum.

         Fannie Mae: Fannie Mae (formerly known as the Federal National Mortgage
Association).

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

         Final Scheduled Distribution Date: As to any Class of Certificates, the
Distribution Date occurring in the respective month set forth below:

                                      -14-
<PAGE>

                                 Final Scheduled
                  Class          Distribution Date
                  -----          -----------------
                  A-1F           December 2031
                  A-1A           December 2031
                  IO             September 2004
                  M-1            December 2031
                  M-2            December 2031
                  B              December 2031

         First Lien: With respect to any Mortgage Loan which is a second
priority lien, the mortgage loan relating to the corresponding Mortgaged
Property having a first priority lien.

         Fiscal Agent: As defined in the Certificate Insurance Policy.

         Fitch: Fitch, Inc. or its successor in interest.

         Foreclosure Profits: With respect to a Liquidated Mortgage Loan, the
amount, if any, by which (i) the aggregate of its Net Liquidation Proceeds
exceeds (ii) the related Principal Balance (plus accrued and unpaid interest
thereon at the applicable Loan Rate from the date interest was last paid (or
advanced and not reimbursed) through the date of receipt of the final
Liquidation Proceeds) of such Liquidated Mortgage Loan immediately prior to the
final recovery of its Liquidation Proceeds.

         Freddie Mac: Freddie Mac (formerly known as the Federal Home Loan
Mortgage Corporation).

         Funding Period: The period from the Closing Date until the earlier of,
(i) the date on which the amount on deposit in the Pre-Funding Account is less
than $100,000 and (ii) the close of business on November 25, 2001.

         GAAP: Generally accepted accounting principles as in effect from time
to time, consistently applied.

         Guaranteed Distributions: For any Distribution Date and each Class of
Senior Certificates, the sum of (x) the Class Monthly Interest Amount on each
Class of Senior Certificates, plus (y) the Subordination Deficit, plus (z)
without duplication of clause (y) the outstanding Class Principal Balance of
each Class of Senior Certificates (other than the Notional Amount Certificates)
on their respective Final Scheduled Distribution Dates after giving effect to
distributions thereon on that Distribution Date, determined in accordance with
the original terms of the Senior Certificates when issued and without regard to
any subsequent amendment or modification of the Senior Certificates or this
Agreement except amendments or modifications to which the Certificate Insurer
has given its prior written consent. Guaranteed Distributions shall not include,
nor shall coverage be provided under the Certificate Insurance Policy in respect
of, any taxes, withholding or other charges imposed by a governmental authority
due to, or in connection with, the payment of any Guaranteed Distributions to a
Holder.

                                      -15-
<PAGE>

         Initial Interest Coverage Account: The Initial Interest Coverage
Account established pursuant to Section 4.02.

         Initial Mortgage Loan Schedule: The schedule of Initial Mortgage Loans
included in the Trust as of the Closing Date, specifying with respect to each
such Initial Mortgage Loan the information set forth on Exhibit C attached
hereto.

         Initial Mortgage Loans: The Mortgage Loans transferred to the Trust on
the Closing Date pursuant to Section 2.01, as set forth in Exhibit C hereto.

         Insurance Agreement: The Insurance Agreement dated as of September 1,
2001, among the Servicer, the Seller, and the Certificate Insurer, including any
amendments and supplements thereto.

         Insurance Proceeds: Proceeds paid by any insurer (other than the
Certificate Insurer) pursuant to any insurance policy covering a Mortgage Loan
or Mortgaged Property, or amounts required to be paid by the Servicer pursuant
to Section 3.05, net of any component thereof (i) covering any expenses incurred
by or on behalf of the Servicer in connection with obtaining such proceeds, (ii)
applied to the restoration or repair of the related Mortgaged Property, (iii)
released to the Mortgagor in accordance with the Servicer's normal servicing
procedures or (iv) required to be paid to any holder of a mortgage senior to
such Mortgage Loan.

         Insured Payments: As to any Distribution Date, amounts actually paid
under the Certificate Insurance Policy.

         Interest Period: As to the Class A-1F and Class IO Certificates, the
calendar month preceding the month of the applicable Distribution Date,
calculated on the basis of a 360-day year comprised of twelve 30-day months. As
to the Adjustable Rate Certificates, the period from the preceding Distribution
Date (or in the case of the first Distribution Date, from the Closing Date)
through the day preceding the applicable Distribution Date, calculated on the
basis of a 360-day year and the actual number of days in the applicable Interest
Period.

         Interest Rate Adjustment Date: With respect to each adjustable-rate
Mortgage Loan, the date or dates on which the Loan Rate is subject to adjustment
in accordance with the related Mortgage Note.

         Interest Remittance Amount: As of any Distribution Date, the portion of
Available Funds that constitutes amounts in respect of interest.

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

         Lifetime Rate Cap: With respect to each adjustable-rate Mortgage Loan,
the maximum Loan Rate permitted over the life of such Mortgage Loan, as provided
by the terms of the related Mortgage Note.

                                      -16-
<PAGE>

         Liquidated Mortgage Loan: As to any Distribution Date, a Mortgage Loan
with respect to which the Servicer has determined, in accordance with the
servicing procedures specified herein as of the end of the preceding Prepayment
Period, that all Liquidation Proceeds which it expects to recover with respect
to such Mortgage Loan (including the disposition of the related REO Property)
have been received.

         Liquidation Loan Losses: For each Liquidated Mortgage Loan the amount,
if any, by which the Principal Balance thereof plus accrued and unpaid interest
thereon is in excess of the Liquidation Proceeds realized thereon net of
unreimbursed Servicing Fees, Servicing Advances and Monthly Advances with
respect thereto.

         Liquidation Proceeds: Proceeds (including Insurance Proceeds) received
in connection with the liquidation of any Mortgage Loan or related REO Property,
whether through trustee's sale, foreclosure sale or otherwise.

         Loan Index: With respect to each Interest Rate Adjustment Date for each
adjustable-rate Mortgage Loan that is identified on the Mortgage Loan Schedule
as having a LIBOR Loan Index, the average of the interbank offered rate for
six-month U.S. dollar denominated deposits in the London Market, as determined
according to the terms of the related Note.

         Loan Group: Either Loan Group 1 or Loan Group 2.

         Loan Group 1: The Mortgage Loans identified on the Mortgage Loan
Schedule as being part of Loan Group 1.

         Loan Group 2: The Mortgage Loans identified on the Mortgage Loan
Schedule as being part of Loan Group 2.

         Loan Rate: With respect to any Mortgage Loan as of any day, the per
annum rate of interest applicable under the related Mortgage Note to the
calculation of interest for such day on the Principal Balance.

         Maintenance: With respect to any Cooperative Unit, the rent paid by the
Mortgagor to the Cooperative Corporation pursuant to the Proprietary Lease.

         Majority Certificateholder: The Holder or Holders of Certificates
evidencing Voting Rights in excess of 51% in the aggregate.

         Margin: As to any adjustable-rate Mortgage Loan, the percentage set
forth as the "Margin" for such Mortgage Loan on the Mortgage Loan Schedule.

         Monthly Advance: An advance made by the Servicer pursuant to Section
3.15.

         Monthly Payment: The scheduled monthly payment of principal and/or
interest required to be made by a Mortgagor on the related Mortgage Loan.

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

                                      -17-
<PAGE>

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

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

         Mortgage Loan Schedule: With respect to any date, the schedule of
Mortgage Loans constituting assets of the Trust, which on the Closing Date shall
consist of the Initial Mortgage Loan Schedule, together with each Subsequent
Mortgage Loan Schedule reflecting the Subsequent Mortgage Loans transferred to
the Trust after the Closing Date. The Initial Mortgage Loan Schedule is the
schedule set forth herein as Exhibit C, which schedule sets forth as to each
Initial Mortgage Loan: (i) the Cut-Off Date Principal Balance, (ii) the account
number, (iii) the original principal amount, (iv) the CLTV as of the date of the
origination of the related Initial Mortgage Loan, (v) the Due Date, (vi) the
Loan Rate as of the Cut-Off Date, (vii) the first date on which a Monthly
Payment is or was due under the Mortgage Note, (viii) the original stated
maturity date of the Mortgage Note and if the Mortgage Loan is a Balloon Loan,
the amortization terms, (ix) the remaining number of months to maturity as of
the Cut-Off Date, (x) the state in which the related Mortgaged Property is
situated, (xi) the type of property, (xii) the lien status, (xiii) with respect
to each adjustable-rate Mortgage Loan, (a) the Periodic Rate Cap, (b) the
Margin, (c) the Lifetime Rate Cap and (d) the next Interest Rate Adjustment Date
after the Cut-Off Date and (xiv) the applicable Loan Group. The Seller shall
indicate to the Trustee which Mortgage Loans, if any, are Cooperative Loans. The
Mortgage Loan Schedule will be amended by the Seller from time to time to
reflect the substitution of an Eligible Substitute Mortgage Loan for a Defective
Mortgage Loan from time to time hereunder.

         Mortgage Loans: The mortgage loans that are transferred and assigned to
the Trustee pursuant to Sections 2.01, 2.05 and 2.13, together with the Related
Documents, exclusive of Mortgage Loans that are transferred to the Servicer or
the Seller, as the case may be, from time to time pursuant to Section 2.02, 2.04
or 3.16, as from time to time are held by the Custodian on behalf of the Trustee
as a part of the Trust, such mortgage loans originally so held being identified
in the Mortgage Loan Schedule delivered on the Closing Date.

         Mortgage Note: With respect to a Mortgage Loan, the note pursuant to
which the related mortgagor agrees to pay the indebtedness evidenced thereby
which is secured by the related Mortgage.

         Mortgaged Property: The underlying property, including real property
and improvements thereon, securing a Mortgage Loan, which, with respect to a
Cooperative Loan, is the related Cooperative Shares and Proprietary Lease.

         Mortgagor: The obligor or obligors under a Mortgage Note.

         Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan,
Liquidation Proceeds net of unreimbursed Servicing Fees, Servicing Advances and
Monthly Advances with respect thereto.

                                      -18-
<PAGE>

         Net Loan Rate: With respect to any Mortgage Loan as to any day, the
Loan Rate less the Expense Fee Rate.

         Net Rate Cap Carryover: As to any Distribution Date and any Class of
Offered Certificates (other than the Class IO Certificates), the sum of (i) the
excess, if any, of the related Class Monthly Interest Amount, calculated at the
applicable Certificate Rate (without regard to the Available Funds Cap), over
the Class Monthly Interest Amount for such Distribution Date, (ii) any Net Rate
Cap Carryover remaining unpaid from prior Distribution Dates and (iii) interest
on the amount in clause (ii) for the related Interest Accrual Period calculated
at the applicable Certificate Rate (without regard to the Available Funds Cap).

         Net Rate Cap Fund: The account established and maintained pursuant to
Section 5.08.

         Net Rate Cap Fund Deposit: As defined in Section 5.08.

         Ninety Day Delinquency Rate: As to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the aggregate
Principal Balances of the Mortgage Loans that are (a) 90 or more days delinquent
as of the last day of such Prepayment Period plus (b) REO Property and Mortgage
Loans in foreclosure or in bankruptcy and the denominator of which is the Pool
Balance as of the last day of the related Due Period.

         Nonrecoverable Advances: With respect to any Mortgage Loan, (i) any
Servicing Advance or Monthly Advance previously made and not reimbursed pursuant
to Section 3.03(ii) or (ii) a Servicing Advance or Monthly Advance proposed to
be made in respect of a Mortgage Loan or REO Property which, in the good faith
business judgment of the Servicer, as evidenced by an Officer's Certificate
delivered to the Seller and the Trustee no later than the Business Day following
such determination, would not be ultimately recoverable pursuant to Section
3.03(ii).

         Notional Amount: The Notional Amount of the Class IO Certificates for
any Distribution Date prior to the 37th Distribution Date will equal the lesser
of (i) the Pool Balance as of the end of the second preceding Due Period and
(ii) the applicable amount set forth below:

            Distribution Date                   Notional Amount
            -----------------                   ---------------

              1  through 3                        $84,150,000
              4  through 6                        $80,025,000
              7  through 9                        $73,700,000
              10 through 12                       $60,000,000
              13 through 15                       $53,250,000
              16 through 18                       $46,750,000
              19 through 21                       $40,750,000
              22 through 24                       $35,000,000
              25 through 27                       $30,000,000
              28 through 30                       $25,500,000
              31 through 33                       $24,500,000
              34 through 36                       $18,500,000

                                      -19-
<PAGE>

         On and after the 37th Distribution Date, the Notional Amount of the
Notional Amount Certificates will be zero.

         Notional Amount Certificates: The Class IO Certificates.

         OC Floor: An amount equal to 0.50% of the aggregate Original Class
Principal Balance of the Offered Certificates as of the Closing Date (i.e.,
$900,000).

         Offered Certificates: The Senior Certificates and the Subordinate
Certificates.

         Officer's Certificate: A certificate signed by the President, an
Executive Vice President, a Senior Vice President, a First Vice President, a
Vice President, Assistant Vice President, the Treasurer, Assistant Treasurer,
Assistant Secretary, Controller or Assistant Controller of the Servicer and
delivered to the Trustee or the Custodian.

         Opinion of Counsel: A written opinion of counsel reasonably acceptable
to the Trustee, who may be in-house counsel for the Servicer or the Seller
(except that any opinion relating to the qualification of the Trust as a REMIC
or compliance with the REMIC Provisions must be an opinion of independent
outside counsel) and who, in the case of opinions delivered to each Rating
Agency or the Certificate Insurer, is reasonably acceptable to it.

         Optional Termination Date: The Distribution Date following the Due
Period at the end of which the Pool Balance is less than 10% of the sum of the
aggregate Principal Balance of the Initial Mortgage Loans as of the related
Cut-Off Date and the amount deposited in the Pre-Funding Account on the Closing
Date.

         Original Capitalized Interest Deposit: $131,449.58.

         Original Class Principal Balance: As to the Class BIO Certificates and
the Residual Certificates, $0. As to any Class of Offered Certificates, the
respective amount set forth below opposite such Class:

                                                    Original Class
         Class                                      Principal Balance
         -----                                      -----------------

         Class A-1F                                 $107, 900,000
         Class A-1A                                 $41,500,000
         Class IO                                         (1)
         Class M-1                                  $12,600,000
         Class M-2                                  $9,000,000
         Class B                                    $9,000,000
         Total                                      $180,000,000

----------

(1) This Class has no Class Principal Balance, but will accrue interest on its
Notional Amount.

                                      -20-
<PAGE>

         Original Pre-Funded Amount: $34,304,575.37 of which $25,570,435.77 is
allocated to Loan Group 1 and $8,734,139.60 is allocated to Loan Group 2.

         Original Pool Balance: The sum of (i) the aggregate Cut-Off Date
Principal Balance of the Initial Mortgage Loans as of the Closing Date and (ii)
the aggregate unpaid principal balances of the Subsequent Mortgage Loans as of
the related Cut-Off Date.

         Outstanding Class Interest Carryover Shortfall: As to any Class of
Certificates and any Distribution Date, the amount of Class Interest Carryover
Shortfall for such Distribution Date.

         Overcollateralization Amount: As to any Distribution Date, the excess,
if any, of (i) the sum of (x) the Pool Balance as of the end of the related Due
Period and (y) the Pre-Funded Amount as of the end of the related Due Period
over (ii) the aggregate Class Principal Balance of the Certificates after giving
effect to the distribution of the Principal Distribution Amount on such
Distribution Date.

         Overfunded Amount: As to any Subsequent Transfer Date, the excess, if
any, of (x) the sum of (i) the amount on deposit on the Initial Interest
Coverage Account on such date and (ii) investment earnings on such amount at the
rate of 2.5% per annum from such Subsequent Transfer Date to the next
Pre-Funding Distribution Date over (y) the Capitalized Interest Requirement for
each remaining Pre-Funding Distribution Date.

         Ownership Interest: As to any Certificate 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.

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

         Percentage Interest: With respect to any Offered Certificate, the
percentage obtained by dividing the denomination of such Certificate by the
aggregate of the denominations of all Certificates of the same Class. With
respect to a Residual Certificate, the portion of the Class evidenced thereby as
stated on the face thereof, which shall be either 99.999999% or, but only with
respect to the Tax Matters Person Residual Interest held by the Tax Matters
Person, 0.000001%. With respect to a Class BIO Certificate, the percentage set
forth on the face thereof.

         Periodic Rate Cap: With respect to each adjustable-rate Mortgage Loan
with respect to which the related Mortgage Note provides for a periodic rate
cap, the maximum percentage increase or decrease in the Loan Rate permitted for
such Mortgage Loan over the Loan Rate in effect as of an Interest Rate
Adjustment Date, as set forth on the Mortgage Loan Schedule.

         Permitted Transferee: Any Person other than (i) the United States or
any State or any political subdivision thereof or any agency or instrumentality
of any of the foregoing; (ii) a foreign government, international organization
or any agency or instrumentality of either of the foregoing; (iii) an
organization which is exempt from tax imposed by Chapter 1 of the Code
(including the tax imposed by section 511 of the Code on unrelated business
taxable income) (except certain farmers' cooperatives described in Code section
521) on any excess inclusions (as defined in Section 860E(c)(1)) with respect to
any Residual Certificate; (iv) rural electric and telephone cooperatives
described in Code section 1381(a)(2)(C); (v) a Person that is not (a) a

                                      -21-
<PAGE>

citizen or resident of the United States, (b) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
any political subdivision thereof, (c) an estate whose income from sources
without the United States is includible in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States or (d) a trust if a court within the
United States is able to exercise primary supervision of the administration of
the trust and one or more United States fiduciaries have the authority to
control all substantial decisions of the trust; or (vi) any other Person so
designated by the Trustee based on an Opinion of Counsel to the effect that any
transfer to such Person may cause the Trust to fail to qualify as a REMIC at any
time the Certificates are outstanding. The terms "United States", "State" and
"international organization" shall have the meanings set forth in Code section
7701 or successor provisions. A corporation will not be treated as an
instrumentality of the United States or of any State or political subdivision
thereof if all of its activities are subject to tax, and, with the exception of
the Freddie Mac, a majority of its board of directors is not selected by such
governmental unit.

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

         Pool Balance: With respect to any date, the aggregate of the Principal
Balances of all Mortgage Loans as of such date.

         Pre-Funded Amount: As of the Closing Date, the Original Pre-Funded
Amount. As of any date thereafter, the amount on deposit in the Pre-Funding
Account, excluding any Pre-Funding Earnings included therein.

         Pre-Funding Account: The Pre-Funding Account established pursuant to
Section 4.02.

         Pre-Funding Distribution Date: Each Distribution Date during the
Funding Period and the Distribution Date immediately following the end of the
Funding Period.

         Pre-Funding Earnings: As of any date of determination, the amount of
investment earnings or income, net of any losses from such investments, on
deposit in the Pre-Funding Account.

         Premium Amount: As to any Distribution Date, the product of the Premium
Percentage divided by 12 and the aggregate Class Principal Balance of the Class
A Certificates as of the first day of the calendar month in which such
Distribution Date occurs.

         Premium Letter: The letter, dated the Closing Date, from the
Certificate Insurer to the Seller setting forth the Premium Amount and other
amounts.

         Premium Percentage: The per annum rate at which the premium due to the
Certificate Insurer accrues, as set forth in the Premium Letter.

         Prepayment Assumption: With respect to the fixed-rate Mortgage Loans, a
conditional rate of prepayment equal to 4.0% per annum in the first month of the
life of the fixed rate Mortgage Loans and an additional amount of approximately
1.454545% (precisely 16/11 percent

                                      -22-
<PAGE>

per annum) in each month thereafter until the twelfth month; beginning in the
twelfth month and in each month thereafter during the life of the Mortgage
Loans, a conditional prepayment rate of 20% per annum each month is assumed.
With respect to the adjustable-rate Mortgage Loans, a conditional rate of
prepayment equal to 4.0% per annum in the first month of the life of the
adjustable-rate mortgage loans and an additional amount of approximately
1.068966% (precisely 31/29 percent per annum) in each month thereafter until the
30th month; beginning in the 30th month and in each month thereafter during the
life of the mortgage loans, a conditional prepayment rate of 35% per annum each
month is assumed.

         Prepayment Interest Shortfall: With respect to any Distribution Date,
for each Mortgage Loan that was the subject during the related Due Period of a
voluntary Principal Prepayment an amount equal to the excess, if any, of (i) 30
days' interest on the Principal Balance of such Mortgage Loan at the Loan Rate
(or at such lower rate as may be in effect for such Mortgage Loan pursuant to
application of the Civil Relief Act), net of the Servicing Fee Rate (which shall
constitute payment of the Servicing Fee with respect to such Mortgage Loan),
over (ii) the amount of interest actually remitted by the Mortgagor in
connection with such Principal Prepayment.

         Prepayment Period: As to any Distribution Date, the preceding calendar
month.

         Principal Balance: As to any Mortgage Loan and any day, other than a
Liquidated Mortgage Loan, the related Cut-Off Date Principal Balance, minus all
collections credited against the Cut-Off Date Principal Balance of any 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 immediately prior to the final recovery of related
Liquidation Proceeds and a Principal Balance of zero thereafter.

         Principal Distribution Amount: As to any Distribution Date, the lesser
of (a) the aggregate Class Principal Balances of the Offered Certificates
immediately preceding such Distribution Date and (b) sum of (i) the Aggregate
Principal Amount minus the Excess Overcollateralization Amount and (ii) the
Subordination Increase Amount.

         Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan equal to the outstanding principal balance thereof, received in
advance of the final scheduled Due Date which is intended to satisfy a Mortgage
Loan in full (without regard to any prepayment penalty that may have been
collected by the Servicer in connection with such payment of principal).

         Proprietary Lease: With respect to any Cooperative Unit, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.

         Prospectus: The base prospectus of the Seller dated October 16, 2001.

         Prospectus Supplement: The prospectus supplement dated October 16,
2001, relating to the offering of the Offered Certificates.

         Purchase Price: As to any Mortgage Loan repurchased on any date
pursuant to Section 2.02, 2.04 or 3.16, an amount equal to the sum of (i) the
unpaid Principal Balance thereof, (ii) the

                                      -23-
<PAGE>

greater of (a) all unpaid accrued interest thereon to the end of the Due Period
preceding the Distribution Date on which such Purchase Price is included in
Available Funds and (b) 30 days' interest thereon, computed at the applicable
Loan Rate; provided, however, that if the purchaser is the Servicer, the amount
described in clause (ii) shall be computed at the Loan Rate net of the Servicing
Fee Rate (which shall constitute payment of the Servicing Fee with respect to
such Mortgage Loan), (iii) if the purchaser is the Seller, (x) any unreimbursed
Servicing Advances with respect to such Mortgage Loan and (y) expenses
reasonably incurred or to be incurred by the Servicer, the Trust or the Trustee
in respect of the breach or defect giving rise to the purchase obligation and
(iv) the amount of any penalties, fines, forfeitures, legal fees and related
costs, judgments and any other costs, fees and expenses incurred by or imposed
on the Trustee, the Servicer or the Trust or with respect to which any of them
are liable arising from a breach by the Seller of its representations and
warranties in Section 2.04.

         Rating Agency: Any statistical credit rating agency, or its successor,
that rated the Offered Certificates at the request of the Seller at the time of
the initial issuance of the Certificates. If such agency or a successor is no
longer in existence, "Rating Agency" shall be such statistical credit rating
agency, or other comparable Person, designated by the Seller, notice of which
designation shall be given to the Trustee. References herein to the highest
short term unsecured rating category of a Rating Agency shall mean "A-1" or
better in the case of S&P, "P-1" or better in the case of Moody's and "F-1" or
better in the case of Fitch. References herein to the highest long-term rating
category of a Rating Agency shall mean "AAA" in the case of S&P and Fitch and
"Aaa" in the case of Moody's.

         Recognition Agreement: With respect to any Cooperative Loan, an
agreement between the Cooperative Corporation and the originator of such
Mortgage Loan, which establishes the rights of such originator in the
Cooperative Property.

         Record Date: As to the Certificates and the first Distribution Date,
the Closing Date. As to the Class A-1F, Class IO and Class BIO Certificates and
the Residual Certificates and any other Distribution Date, the last Business Day
of the month immediately preceding the month in which the related Distribution
Date occurs. As to the Adjustable Rate Certificates and any other Distribution
Date, the Business Day preceding such Distribution Date; provided, however, that
if the Adjustable Rate Certificates are no longer Book-Entry Certificates, the
"Record Date" shall be the last Business Day of the month immediately preceding
the month in which the related Distribution Date occurs.

         Reference Bank Rate: As to any Interest Period relating to the
Adjustable Rate Certificates as follows: the arithmetic mean (rounded upwards,
if necessary, to the nearest one sixteenth of a percent) of the offered rates
for United States dollar deposits for one month which are offered by the
Reference Banks as of 11:00 A.M., London time, on the second LIBOR Business Day
prior to the first day of such Interest Period to prime banks in the London
interbank market for a period of one month in amounts approximately equal to the
aggregate Class Principal Balance of the Adjustable Rate Certificates; provided
that at least two such Reference Banks provide such rate. If fewer than two
offered rates appear, the Reference Bank Rate will be the arithmetic mean of the
rates quoted by one or more major banks in New York City, selected by the
Trustee after consultation with the Seller, as of 11:00 A.M., New York City
time, on such date for loans in U.S. Dollars to leading European Banks for a
period of one month

                                      -24-
<PAGE>

in amounts approximately equal to the aggregate Class Principal Balance of the
Adjustable Rate Certificates. If no such quotations can be obtained, the
Reference Bank Rate shall be the Reference Bank Rate applicable to the preceding
Interest Period.

         Reference Banks: Three major banks that are engaged in the London
interbank market, selected by the Seller after consultation with the Trustee.

         Regular Certificates: The Offered Certificates and the Class BIO
Certificates.

         Reimbursement Amount: As to any Distribution Date, the amount, if any,
owing to the Certificate Insurer under the Insurance Agreement.

         Related Documents: As defined in Section 2.01.

         Released Mortgaged Property Proceeds: As to any Mortgage Loan, proceeds
received by the Servicer in connection with (a) a taking of an entire Mortgaged
Property by exercise of the power of eminent domain or condemnation or (b) any
release of part of the Mortgaged Property from the lien of the related Mortgage,
whether by partial condemnation, sale or otherwise, which are not released to
the Mortgagor in accordance with applicable law and mortgage servicing standards
the Servicer would use in servicing mortgage loans for its own account and this
Agreement.

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

         REMIC I: The segregated pool of assets consisting of the assets of the
Trust other than the REMIC I Interests, the REMIC II Interests, the Initial
Interest Coverage Account, the Pre-Funding Account and the Net Rate Cap Fund.

         REMIC I Certificates: As defined in Section 2.07.

         REMIC I Regular Interest: As defined in Section 2.07.

         REMIC II: The segregated pool of assets consisting of the REMIC I
Regular Interests.

         REMIC II Certificates: As defined in Section 2.07.

         REMIC II Regular Interest: As defined in Section 2.07.

         REMIC III: The segregated pool of assets consisting of the REMIC II
Regular Interests.

         REMIC III Certificates: As defined in Section 2.07.

         REMIC Certificate Maturity Date: The "latest possible maturity date" as
that term is defined in Section 2.09.

         REMIC Change of Law: Any proposed, temporary or final regulation,
revenue ruling, revenue procedure or other official announcement or
interpretation relating to any REMIC and the REMIC Provisions issued after the
Closing Date.

                                      -25-
<PAGE>

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

         REO Property: A Mortgaged Property that is acquired by the Servicer on
behalf of the Trust in foreclosure or by deed in lieu of foreclosure.

         Required Overcollateralization Amount: As to any Distribution Date (a)
prior to the Stepdown Date, the product of (i) 2.50% and (ii) the aggregate
Original Class Principal Balance of the Offered Certificates; and (b) on and
after the Stepdown Date, the greater of (i) the lesser of (x) the product of
2.50% and the aggregate Original Class Principal Balance of the Offered
Certificates and (y) the product of 5.00% and the Pool Balance as of the end of
the related Due Period and (ii) the OC Floor; provided, however, that on each
Distribution Date during the continuance of (a) a Cumulative Loss Event, the
Required Overcollateralization Amount will equal the lesser of (x) the product
of 2.50% and the aggregate Original Class Principal Balance of the Offered
Certificates and (y) the product of 10.00% and the Pool Balance as of the end of
the related Due Period or (b) a Delinquency Event (and a Cumulative Loss Event
is not then continuing), the Required Overcollateralization Amount will equal
the Required Overcollateralization Amount in effect as of the immediately
preceding Distribution Date.

         Residential Dwelling: A one- to five-family dwelling, a five- to
eight-family dwelling, a mixed use property, a unit in a planned unit
development, a unit in a condominium development, a townhouse, a unit in a
cooperative or a mobile home treated as real property under local law.

         Residual Certificates: The Class R-1, Class R-2 and Class R-3
Certificates collectively.

         Responsible Officer: When used with respect to the Trustee, any officer
assigned to the corporate trust group (or any successor thereto), including any
vice president, assistant vice president, trust officer, any assistant
secretary, any trust officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and having direct responsibility for the administration of this
Agreement. When used with respect to the Seller or Servicer, the President or
any Vice President, Assistant Vice President or any Secretary or Assistant
Secretary.

         SAIF: The Savings Association Insurance Fund, as from time to time
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or, if at any time after the execution of this
Agreement the Savings Association Insurance Fund is not existing and performing
duties now assigned to it, the body performing such duties on such date.

         Security Agreement: With respect to any Cooperative Loan, the agreement
between the owner of the related Cooperative Shares and the originator of the
related Mortgage Note, which defines the terms of the security interest in such
Cooperative Shares and the related Proprietary Lease.

         Seller: Delta Funding Corporation, a New York corporation, or any
successor thereto.

                                      -26-
<PAGE>

         Senior Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form set forth in Exhibit A and designated as a
Class A or Class IO Certificate pursuant to Section 6.01.

         Senior Certificateholder: The Holder of a Senior Certificate.

         Senior Enhancement Percentage: As to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the sum of (i)
the aggregate Class Principal Balances of the Subordinate Certificates and (ii)
the Overcollateralization Amount (in each case, prior to taking into account the
distribution of the Principal Distribution Amount on such Distribution Date) and
the denominator of which is the Pool Balance as of the last day of the related
Due Period.

         Senior Portion: As to any Distribution Date, the percentage equivalent
of a fraction the numerator of which is the aggregate Class Principal Balance of
the Class A Certificates and the denominator of which is the aggregate Class
Principal Balance of the Offered Certificates.

         Senior Principal Distribution Amount: As to (a) any Distribution Date
prior to the Stepdown Date or during the continuance of a Delinquency Event, the
lesser of (i) 100% of the Principal Distribution Amount and (ii) the aggregate
Class Principal Balances of the Senior Certificates, and (b) any other
Distribution Date, an amount equal to the lesser of (x) the Principal
Distribution Amount and (y) the excess, if any, of (i) the aggregate Class
Principal Balance of the Senior Certificates immediately prior to such
Distribution Date over (ii) the lesser of (x) the product of 66.00% and the Pool
Balance as of the last day of the related Due Period , minus the Subordination
Required Overcollateralization Amount for that Distribution Date and (y) the
Pool Balance as of the last day of the related Due Period minus the OC Floor.

         Servicer: Ocwen Federal Bank FSB, a federally chartered savings bank,
or any successor thereto or any successor hereunder.

         Servicer Termination Test: The Servicer Termination Test is failed if
either (x) Cumulative Net Losses for the Mortgage Loans exceed 5.10% of the
aggregate Original Class Principal Balance of the Offered Certificates or (y)
the most recent Three Month 90-Day Delinquency Rate exceeds 30%.

         Servicing Advances: All reasonable and customary "out of pocket" costs
and expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures and any litigation related to a
Mortgage Loan, (iii) the management and liquidation of the REO Property,
including reasonable fees paid to any independent contractor in connection
therewith, (iv) compliance with the obligations under Section 3.04, 3.06 or 3.19
and (v) in connection with the liquidation of a Mortgage Loan, expenditures
relating to the purchase or maintenance of the First Lien pursuant to Section
3.17, all of which reasonable and customary out-of-pocket costs and expenses are
reimbursable to the Servicer to the extent provided in Sections 3.03(ii) and
(vi), and 3.06.

         Servicing Certificate: A certificate completed and executed by a
Servicing Officer on behalf of the Servicer.

                                      -27-
<PAGE>

         Servicing Compensation: The Servicing Fee and other amounts to which
the Servicer is entitled pursuant to Section 3.08.

         Servicing Fee: As to each Distribution Date and each Mortgage Loan, the
monthly fee payable to the Servicer, which is calculated as an amount equal to
the product of one-twelfth of the Servicing Fee Rate and the Principal Balance
thereof at the beginning of the related Due Period.

         Servicing Fee Rate: 0.65% per annum.

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

         Servicing Transfer Costs: All reasonable costs and expenses incurred by
the Successor Servicer in connection with the transfer of servicing from a
predecessor servicer, including, without limitation, any reasonable costs or
expenses associated with the complete transfer of all electronic servicing data
and the completion, correction or manipulation of such electronic servicing data
as may be required by the Successor Servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the Successor
Servicer to service the Mortgage Loans properly and effectively.

         Sixty Day Delinquency Rate: As to any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the aggregate Principal
Balances of the Mortgage Loans that are (a) 60 or more days delinquent as of the
last day of the related Prepayment Period plus (b) REO Property and Mortgage
Loans in foreclosure or in bankruptcy and the denominator of which is the Pool
Balance as of the last day of the related Due Period.

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

         Startup Day: The day designated as such pursuant to Section 2.08.

         Stepdown Date: The later to occur of (x) the earlier to occur of (i)
the Distribution Date in October 2004 and (ii) the Distribution Date on which
the aggregate Class Principal Balance of the Senior Certificates is reduced to
zero, and (y) the first Distribution Date on which the Senior Enhancement
Percentage (assuming 100% of the Principal Distribution Amount is distributed on
the Offered Certificates) is at least equal to 39.00%.

         Subordinate Certificates: Any Certificate executed and authenticated by
the Trustee substantially in the form set forth in Exhibit A and designated as a
Class M-1, Class M-2 or Class B Certificate pursuant to Section 6.01.

         Subordinate Portion: As to Subordinate Certificates and any
Distribution Date, 100% minus the Senior Portion.

                                      -28-
<PAGE>

         Subordination Deficiency: As to any Distribution Date, the excess, if
any, of (i) the Required Overcollateralization Amount for such Distribution Date
over (ii) the Overcollateralization Amount for such Distribution Date after
giving effect to the distribution of the Aggregate Principal Amount on such
Distribution Date.

         Subordination Deficit: For any Distribution Date, the amount, if any,
by which the aggregate Class Principal Balance of the Offered Certificates
exceeds the Pool Balance as of the last day of the related Due Period, in each
case, after giving effect to all distributions of principal and allocations of
Liquidated Loan Losses on such Distribution Date.

         Subordination Increase Amount: As to any subsequent Distribution Date,
the lesser of (i) the Subordination Deficiency and (ii) the Excess Interest.

         Subordination Required Overcollateralization Amount: As to any
Distribution Date on which a Delinquency Event does not exist, the Required
Overcollateralization Amount without giving effect to the OC Floor calculation.
As to any other Distribution Date, the Required Overcollateralization Amount.

         Subsequent Mortgage Loan Schedule: As of any date of determination, the
schedule that is identified as the schedule of Subsequent Mortgage Loans and is
attached to the Subsequent Transfer Agreement.

         Subsequent Mortgage Loans: The Mortgage Loans identified on the
Subsequent Mortgage Loan Schedule.

         Subsequent Transfer Agreement: A Subsequent Transfer Agreement entered
into between the Seller and the Trustee, substantially in the form attached as
Exhibit D.

         Subsequent Transfer Date: Each date during the Funding Period on which
Subsequent Mortgage Loans are sold to the Trust.

         Subservicer: Any Person with whom the Servicer has entered into a
Subservicing Agreement and who satisfies the requirements set forth in Section
3.01(b) in respect of the qualification of a Subservicer.

         Subservicing Agreement: Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of certain Mortgage
Loans as provided in Section 3.01(b), a copy of which shall be delivered, along
with any modifications thereto, to the Trustee.

         Substitution Adjustment: As to any date on which a substitution occurs
pursuant to Section 2.05, the sum of (a) the excess of (i) the aggregate
Principal Balances of all Defective Mortgage Loans to be replaced by Eligible
Substitute Mortgage Loans (after application of principal payments received on
or before the date of substitution of any Eligible Substitute Mortgage Loans as
of the date of substitution) over (ii) the Principal Balance of such Eligible
Substitute Mortgage Loans and (b) the greater of (x) accrued and unpaid interest
on such excess through the Due Period relating to the Distribution Date for
which such Substitution Adjustment will be included as part of Available Funds
and (y) 30 days' interest on such excess calculated on a 360-day year in each
case at the Loan Rate and (c) the amount of any unreimbursed Servicing

                                      -29-
<PAGE>

Advances made by the Servicer with respect to such Defective Mortgage Loan and
(d) the amount referred to in clause (iv) of the definition of Purchase Price in
respect of such Defective Mortgage Loan.

         Successor Servicer: As defined in Section 8.02.

         Tax Matters Person: As defined in Section 2.11.

         Tax Matters Person Residual Interest: A 0.000001% interest in each of
the Class R-1, Class R-2 and Class R-3 Certificates, which shall be issued to
and held by the Tax Matters Person.

         Three Month Delinquency Rate: As to any Distribution Date the
arithmetic average of the Sixty Day Delinquency Rates for the three Distribution
Dates preceding such Distribution Date.

         Three Month 90-Day Delinquency Rate: As to any Distribution Date the
arithmetic average of the Ninety Day Delinquency Rates for the three
Distribution Dates preceding such Distribution Date.

         Trust: The trust created by this Agreement, the corpus of which
consists of the Mortgage Loans, such assets as shall from time to time be
deposited in the Collection Account, the Initial Interest Coverage Account, the
Pre-Funding Account and the Distribution Account in accordance with this
Agreement, property that secured a Mortgage Loan and that has become REO
Property, certain hazard insurance policies maintained by the Mortgagors or the
Servicer in respect of the Mortgage Loans and all proceeds of each of the
foregoing.

         Trustee: Wells Fargo Bank Minnesota, National Association, or any
successor Trustee appointed in accordance with this Agreement that has accepted
such appointment in accordance with this Agreement.

         Trustee Fee: As to any Distribution Date, an amount equal to the
product of (i) one-twelfth of the Trustee Fee Rate and (ii) the sum of (x) the
Pool Balance as of the beginning of the related Due Period and (y) the
Pre-Funded Amount as of the beginning of the related Due Period.

         Trustee Fee Rate: 0.025% per annum, of which 0.005% per annum is
allocable for custodial services and 0.020% per annum is allocable for trustee
services.

         Voting Rights: The right to vote evidenced by a Certificate as follows:
the Class BIO Certificates, in the aggregate, shall evidence Voting Rights equal
to the percentage equivalent of a fraction, the numerator of which is the
Required Overcollateralization Amount and the denominator of which is the Pool
Balance; the Certificates, other than the Class BIO Certificates, shall evidence
Voting Rights equal to 100% minus the Voting Rights evidenced by the Class BIO
Certificates. The Voting Rights allocated to the Certificates, other than the
Class BIO Certificates, shall be allocated 1% to the Notional Amount
Certificates and 1% to the Residual Certificates, in the aggregate and the
remainder among the other Classes of Offered Certificates in proportion to their
respective Class Principal Balances. Voting Rights allocated to a Class of

                                      -30-
<PAGE>

Certificates shall be allocated among the Certificates of such Class in
proportion to their respective Percentage Interests.

         Section 1.02. Interest Calculations. All calculations of interest that
are made in respect of the Principal Balance of the Mortgage Loans shall be made
on the basis of a 360-day year consisting of twelve 30-day months. The
Certificate Rates for the Certificates shall be calculated on the basis set
forth in the definition of Interest Period. The calculation of the Servicing Fee
and the Trustee Fee shall be made on the basis of a 360-day year consisting of
twelve 30-day months. All dollar amounts calculated hereunder shall be rounded
to the nearest penny with one-half of one penny being rounded down.

                                   ARTICLE II

                              Conveyance of Initial
                            Mortgage Loans; Original
                            Issuance of Certificates
                                  Tax Treatment

         Section 2.01. Conveyance of Initial Mortgage Loans. (a) The Seller,
concurrently with the execution and delivery of this Agreement, does hereby
transfer, assign, set over and otherwise convey to the Trust without recourse
(subject to Sections 2.02 and 2.04) (i) all of its right, title and interest in
and to each Initial Mortgage Loan, including the Cut-Off Date Principal Balance
and all collections in respect of interest and principal received after the
Cut-Off Date (other than payments in respect of accrued interest and principal
due on or before September 1, 2001); (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 Initial Mortgage
Loans; (iv) such amounts as may be deposited into and held by the Trustee in the
Pre-Funding Account and the Initial Interest Coverage Account, together with all
investment earnings on such amounts; and (v) all proceeds of any of the
foregoing. In addition, on or prior to the Closing Date, the Seller shall cause
the Certificate Insurer to deliver the Certificate Insurance Policy to the
Trustee.

         In connection with such transfer, assignment and conveyance the Seller
shall deliver to, and deposit with, the Trustee or the Custodian on behalf of
the Trustee, on or before the Closing Date, the following documents or
instruments with respect to each Initial Mortgage Loan (the "Related Documents")
and the related Mortgage Loan Schedule in computer readable format:

                  (i) The original Mortgage Note, with all prior and intervening
         endorsements showing a complete chain of endorsements from the
         originator of the Mortgage Loan to the Person so endorsing the Mortgage
         Loan to the Trustee, endorsed by such Person "Pay to the order of Wells
         Fargo Bank Minnesota, National Association, as Trustee for DFC HEL
         Trust 2001-2 without recourse" and signed, by facsimile or manual
         signature, in the name of the Seller by a Responsible Officer;

                  (ii) Any of: (1) the original Mortgage and related power of
         attorney, if any, with evidence of recording thereon, (2) a copy of the
         Mortgage and related power of attorney, if any, certified as a true
         copy of the original Mortgage or power of attorney by

                                      -31-
<PAGE>

         a Responsible Officer of the Seller by facsimile or manual signature or
         by the closing attorney or by an officer of the title insurer or agent
         of the title insurer that issued the related title insurance policy, in
         each case, if the original has been transmitted for recording until
         such time as the original is returned by the public recording office or
         (3) a copy of the original recorded Mortgage and related power of
         attorney, if any, certified by the public recording office;

                  (iii) The original Assignment of Mortgage in recordable form,
         from the Seller in blank, or to "Wells Fargo Bank Minnesota, National
         Association, as Trustee for DFC HEL Trust 2001-2";

                  (iv) The original lender's policy of title insurance or a true
         copy thereof or, if such original lender's title insurance policy has
         been lost, a copy thereof certified by the appropriate title insurer to
         be true and complete or, if such lender's title insurance policy has
         not been issued as of the Closing Date, a marked up commitment (binder)
         to issue such policy;

                  (v) All intervening assignments, if any, showing a complete
         chain of assignments from the originator to the Seller, including any
         recorded warehousing assignments, with evidence of recording thereon,
         or a copy thereof certified by a Responsible Officer of the Seller by
         facsimile or manual signature, or by the closing attorney or by an
         officer of the title insurer or agent of the title insurer that issued
         the related title insurance policy, as a true copy of the original of
         such intervening assignments if the original has been transmitted for
         recording until such time as the original is returned by the public
         recording office or a copy of the original recorded intervening
         assignments certified by the public recording office;

                  (vi) Originals of all assumption, written assurance,
         substitution and modification agreements, if any; and

                  (vii) In the case of a Cooperative Loan, the originals of the
         following documents or instruments:

                  (a)      The Cooperative Shares, together with a stock power
                           in blank;

                  (b)      The executed Security Agreement;

                  (c)      The executed Proprietary Lease;

                  (d)      The executed Recognition Agreement;

                  (e)      The executed assignment of Recognition Agreement;

                  (f)      The executed UCC-1 financing statements with evidence
                           of recording thereon which have been filed in all
                           places required to perfect the Seller's interest in
                           the Cooperative Shares and the Proprietary Lease; and

                                      -32-
<PAGE>

                  (g)      Executed UCC-3 financing statements or other
                           appropriate UCC financing statements required by
                           state law, evidencing a complete and unbroken line
                           from the mortgagee to the Trustee with evidence of
                           recording thereon (or in a form suitable for
                           recordation).

         In instances where the original recorded Mortgage is not delivered as
provided above, and in instances where intervening assignments called for by
clause (v) above are unavailable, the Seller will deliver or cause to be
delivered the original recorded Mortgage and intervening assignments to the
Trustee or the Custodian on behalf of the Trustee promptly upon receipt thereof
but in no event later than one year after the Closing Date.

         The Seller hereby confirms to the Trustee that it has caused the
portions of the Electronic Ledger relating to the Mortgage Loans to be clearly
and unambiguously marked, and has made the appropriate entries 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 trust created hereunder.

         (b) The parties hereto intend that the transaction set forth herein be
a sale by the Seller to the Trust 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 Trust 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;
and this Agreement shall constitute a security agreement under applicable law.
The Seller and the Trustee shall, to the extent consistent with this Agreement,
take such actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Mortgage Loans, such security
interest would be deemed to be a perfected security interest of first priority
under applicable law and will be maintained as such throughout the term of the
Agreement.

         Except as may otherwise expressly be provided herein, neither the
Seller, the Servicer nor the Trustee shall (and the Servicer shall ensure that
no Subservicer shall) assign, sell, dispose of or transfer any interest in the
Trust or any portion thereof, or permit the Trust or any portion thereof to be
subject to any lien, claim, mortgage, security interest, pledge or other
encumbrance of, any other Person.

         In the event that the parties hereto have failed to transfer the entire
legal ownership in and to each Mortgage Loan to the Trust, the parties hereto
intend that this document operate to transfer the entire equitable ownership
interest in and to each Mortgage Loan to the Trust.

         (c) Within 30 days of the Closing Date, the Seller, at its own expense,
shall prepare and send for recording the Assignments of Mortgage in favor of the
Trustee in the appropriate real property or other records; provided, however,
that the Seller shall not be required to record Assignments of Mortgage if the
related Mortgaged Property is located in a jurisdiction in which the recording
thereof is not necessary to protect the interests of the Trustee or
Certificateholders in the related Mortgage as evidenced by an Opinion of
Counsel, in form and substance satisfactory to the Rating Agencies, delivered to
the Trustee and the Rating Agencies. With respect to any Assignment of Mortgage
as to which the related recording information is unavailable within 30 days
following the Closing Date, such Assignment of Mortgage shall be

                                      -33-
<PAGE>

submitted for recording within 30 days after receipt of such information but in
no event later than one year after the Closing Date. The Trustee or the
Custodian on behalf of the Trustee shall be required to retain a copy of each
Assignment of Mortgage submitted for recording. In the event that any such
Assignment of Mortgage is lost or returned unrecorded because of a defect
therein, the Seller shall promptly prepare a substitute Assignment of Mortgage
or cure such defect, as the case may be, and thereafter the Seller shall be
required to submit each such Assignment of Mortgage for recording. Any failure
of the Seller to comply with this Section 2.01(c) shall result in the obligation
of the Seller to purchase or substitute for the related Mortgage Loans pursuant
to the provisions of Section 2.02.

         (d) Neither the Trustee nor the Custodian on behalf of the Trustee
shall have any responsibility for reviewing any Mortgage File except as
expressly provided in Section 2.02. Without limiting the effect of the preceding
sentence, in reviewing any Mortgage File pursuant to such subsection, neither
the Trustee nor the Custodian shall have any responsibility for determining
whether any document is valid and binding, whether the text of any assignment or
endorsement is in proper or recordable form (except, if applicable, to determine
if the Trustee is the assignee or endorsee), whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction, or
whether a blanket assignment is permitted in any applicable jurisdiction, but
shall only be required to determine whether a document has been executed, that
it appears to be what it purports to be, and, where applicable, that it purports
to be recorded, but shall not be required to determine whether any Person
executing any document is authorized to do so or whether any signature thereon
is genuine.

         (e) Notwithstanding the delivery of the Opinion of Counsel referred to
in Section 2.01(c), Assignments of Mortgage shall be submitted by the Seller for
recording within five Business Days after the earlier to occur of (i) a transfer
of the servicing of the Mortgage Loans from the Servicer and (ii) an Event of
Default.

         Section 2.02. Acceptance by Trustee. The Trustee hereby acknowledges
the sale and assignment of the Mortgage Loans, and, subject to the review
provided for in this Section 2.02 and the period for delivery provided for in
Section 2.01, its receipt or that of the Custodian on behalf of the Trustee of
the Mortgage Files, and declares that the Trustee or the Custodian on behalf of
the Trustee holds and will hold such documents and all amounts received by it
thereunder and hereunder in trust, upon the terms herein set forth, for the use
and benefit of all present and future Certificateholders and the Certificate
Insurer. If the Seller is given notice under this Section 2.02 that a Mortgage
File is defective or incomplete and if the Seller does not correct or cure such
omission or defect within the 90-day period specified in this Section 2.02, the
Seller shall purchase such Mortgage Loan from the Trustee (i) on the
Determination Date in the month following the month in which such 90-day period
expired at the Purchase Price of such Mortgage Loan or (ii) upon the expiration
of such 90-day period if the omission or defect would result in the related
Mortgage Loan not being a Qualified Mortgage Loan for purposes of Section
860G(a)(3) of the Code. The Purchase Price for the purchased Mortgage Loan shall
be delivered to the Servicer for deposit in the Collection Account (and the
Servicer shall deposit such amount upon receipt) no later than the applicable
Determination Date or the Business Day preceding the expiration of such 90-day
period, as the case may be; and, upon receipt by the Trustee or the Custodian on
behalf of the Trustee of written notification of such deposit signed by a
Responsible Officer of the Seller, the Trustee or the Custodian on behalf of the
Trustee shall

                                      -34-
<PAGE>

release to the Seller the related Mortgage File and the Trustee shall execute
and deliver such instruments of transfer or assignment, in each case without
recourse, as shall be necessary to vest in the Seller or its designee any
Mortgage Loan released pursuant hereto. It is understood and agreed that the
obligation of the Seller to purchase any Mortgage Loan as to which a material
defect in or omission of a constituent document exists shall constitute the sole
remedy against the Seller respecting such defect or omission available to the
Servicer (in its role as such), the Certificateholders, or the Trustee on behalf
of Certificateholders. An Opinion of Counsel to the effect set forth in Section
2.05(d) shall be delivered to the Trustee in connection with any such
repurchase.

         The Seller, promptly following the transfer of (i) a Defective Mortgage
Loan from or (ii) an Eligible Substitute Mortgage Loan to the Trust pursuant to
this Section 2.02 or Section 2.05, as the case may be, shall amend the Mortgage
Loan Schedule, appropriately mark the Electronic Ledger and make appropriate
entries in its general account records to reflect such transfer and the addition
of any Eligible Substitute Mortgage Loan, if applicable.

         On the Closing Date or no later than the 45th day following the Closing
Date, the Trustee or the Custodian on behalf of the Trustee shall certify to the
Seller and the Servicer (and the Trustee if the Custodian is so certifying) that
it has reviewed each Mortgage File and that, as to each Mortgage Loan listed in
the related Mortgage Loan Schedule (other than any Mortgage Loan paid in full or
any Mortgage Loan specifically identified in the certification in the form
annexed hereto as Exhibit O as not covered by such certification), (i) all
documents constituting part of such Mortgage File required to be delivered to it
pursuant to paragraphs (i) - (v) and (vii) of Section 2.01(a) are in its
possession, (ii) such documents have been reviewed by it and appear regular on
their face and relate to such Mortgage Loan, (iii) based on its examination and
only as to the foregoing, the information set forth in the Mortgage Loan
Schedule which corresponds to items (ii) and (iii) of the definition of
"Mortgage Loan Schedule" accurately reflects information set forth in the
Mortgage File. If within such 45-day period the Trustee or the Custodian on
behalf of the Trustee finds any document constituting a part of a Mortgage File
not to have been executed or received or to be unrelated to the Mortgage Loans
identified in said Mortgage Loan Schedule or, if in the course of its review,
the Trustee or the Custodian on behalf of the Trustee determines that such
Mortgage File is otherwise defective in any material respect, the Trustee or the
Custodian on behalf of the Trustee shall promptly upon the conclusion of its
review notify in the form of an exception report and the Seller shall have a
period of 90 days after such notice within which to correct or cure any such
defect.

         On the 360th day following the Closing Date, the Trustee or the
Custodian on behalf of the Trustee shall deliver to the Seller and the Servicer
an updated exception report showing the documents outstanding pursuant to
Section 2.01(a) along with a final certification annexed hereto as Exhibit P
from the previous certification issued in the form of Exhibit O. The Trustee or
the Custodian on behalf of the Trustee shall also maintain records adequate to
determine the date on which any document required to be delivered to it after
such 360th day following the Closing Date must be delivered to it, and on each
such date, the Trustee or the Custodian on behalf of the Trustee shall review
the related Mortgage File to determine whether such document has, in fact, been
delivered. After the delivery of the final certification, a form of which is
attached hereto as Exhibit P, (i) the Trustee or the Custodian on behalf of the
Trustee shall provide to the Servicer and the Seller (and to the Trustee if
delivered by the Custodian), no less

                                      -35-
<PAGE>

frequently than monthly, updated exception reports showing the documents
outstanding pursuant to Section 2.01(a) until all such exceptions have been
eliminated and (ii) the Seller shall provide to the Trustee or the Custodian on
behalf of the Trustee and the Servicer, no less frequently than monthly, updated
certifications indicating the then current status of exceptions until all such
exceptions have been eliminated; provided that the delivery of the final
certification shall not act as a waiver of any of the rights the
Certificateholders may have with respect to such exceptions, and all rights are
reserved with respect thereto.

         Neither the Trustee nor the Custodian makes any representations as to
and shall not be responsible to verify (i) the validity, sufficiency, legality,
due authorization, recordation or genuineness of any document or (ii) the
collectability, insurability or effectiveness of any of the Mortgage Loans.

         Section 2.03. Representations and Warranties Regarding the Seller and
the Servicer. (a) The Seller represents and warrants that, as of the Closing
Date:

                  (i) The Seller is a corporation licensed as a mortgage banker
         duly organized, validly existing and in good standing under the laws of
         the state of its incorporation and has, and had at all relevant times,
         full corporate power to originate the Mortgage Loans, to own its
         property, to carry on its business as presently conducted and to enter
         into and perform its obligations under this Agreement. The Seller has
         all necessary licenses and is qualified to transact business in and is
         in good standing under the laws of each state where a Mortgaged
         Property is located or is otherwise exempt under applicable law from
         such qualification or is otherwise not required under applicable law to
         effect such qualification and no demand for such qualification has been
         made upon the Seller by any state having jurisdiction;

                  (ii) The execution and delivery of this Agreement by the
         Seller and the performance by it 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 (or an event which, with notice or
         lapse of time or both, would constitute a default) under, or result in
         the 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 any of its assets;

                  (iii) The Seller has the full power and authority to enter
         into and consummate all transactions contemplated by this Agreement to
         be consummated by it, has duly authorized the execution, delivery and
         performance of this Agreement, and has duly executed and delivered this
         Agreement. This Agreement, assuming due authorization, execution and
         delivery by the other parties hereto, constitutes a valid, legal and
         binding obligation of the Seller, enforceable against it in accordance
         with the terms hereof, except as such enforcement may be limited by
         bankruptcy, insolvency, reorganization, receivership, moratorium or
         other similar laws relating to or affecting the rights of creditors
         generally, and by general equity principles (regardless of whether such
         enforcement is considered in a proceeding in equity or at law);

                  (iv) The Seller is not in violation of, and the execution and
         delivery of this Agreement by the Seller and the performance by it and
         compliance with the terms of this

                                      -36-
<PAGE>

         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, which violation
         would materially and adversely affect the condition (financial or
         otherwise) or operations of the Seller or any of its properties or
         materially and adversely affect the performance of any of its duties
         hereunder;

                  (v) There are no actions or proceedings against, or
         investigations of, the Seller pending or, to the knowledge of the
         Seller, threatened, before any court, administrative agency or other
         tribunal (A) that, if determined adversely, would prohibit its entering
         into this Agreement, (B) seeking to prevent the consummation of any of
         the transactions contemplated by this Agreement or (C) that, if
         determined adversely, would prohibit or materially and adversely affect
         the performance by the Seller of any of its obligations under, or the
         validity or enforceability of, this Agreement;

                  (vi) 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 for the consummation of the transactions
         contemplated by this Agreement, except for such consents, approvals,
         authorizations and orders, if any, that have been obtained prior to the
         Closing Date;

                  (vii) The Seller did not sell the Mortgage Loans to the Trust
         with any intent to hinder, delay or defraud any of its creditors; and
         the Seller will not be rendered insolvent as a result of the sale of
         the Mortgage Loans to the Trust;

                  (viii) The Seller acquired title to the Mortgage Loans in good
         faith, without notice of any adverse claim;

                  (ix) [reserved];

                  (x) No Officer's Certificate, statement, report or other
         document prepared by the Seller and furnished or to be furnished by it
         pursuant to this Agreement or in connection with the transactions
         contemplated hereby contains any untrue statement of material fact;

                  (xi) The transfer, assignment and conveyance of the Mortgage
         Notes and the Mortgages by the Seller pursuant to this Agreement are
         not subject to the bulk transfer laws or any similar statutory
         provisions in effect in any applicable jurisdiction;

                  (xii) The transactions contemplated by this Agreement are in
         the ordinary course of business of the Seller; and

                  (xiii) The Seller has caused or hereby agrees to cause to be
         performed any and all acts required to be performed to preserve the
         rights and remedies of the Trustee in any insurance policies applicable
         to the Mortgage Loans, including, without limitation, any necessary
         notifications of insurers, assignments of policies or interests
         therein, and establishments of co-insured, joint loss payee and
         mortgagee rights in favor of the Trustee.

                                      -37-
<PAGE>

         (b)      The Servicer represents and warrants that, as of the Closing
                  Date:

                  (i) The Servicer is a federally chartered savings bank duly
         organized, validly existing and in good standing under the laws of the
         United States and has, and had at all relevant times, full power to
         service the Mortgage Loans, to own its property, to carry on its
         business as presently conducted and to enter into and perform its
         obligations under this Agreement;

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

                  (iii) The Servicer has the full power and authority to enter
         into and consummate all transactions contemplated by this Agreement to
         be consummated by it, has duly authorized the execution, delivery and
         performance of this Agreement, and has duly executed and delivered this
         Agreement. This Agreement, assuming due authorization, execution and
         delivery by the other parties hereto, constitutes a valid, legal and
         binding obligation of the Servicer, enforceable against it in
         accordance with the terms hereof, except as such enforcement may be
         limited by insolvency, reorganization, receivership, moratorium or
         other similar laws relating to or affecting the rights of creditors
         generally or the rights of creditors of insured institutions, and by
         general equity principles (regardless of whether such enforcement is
         considered in a proceeding in equity or at law);

                  (iv) The Servicer is not in violation of, and the execution
         and delivery of this Agreement by the Servicer and the performance by
         it 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, which violation would materially and
         adversely affect the condition (financial or otherwise) or operations
         of the Servicer or any of its properties or materially and adversely
         affect the performance of any of its duties hereunder;

                  (v) There are no actions or proceedings against, or
         investigations of, the Servicer pending or, to the knowledge of the
         Servicer, threatened, before any court, administrative agency or other
         tribunal (A) that, if determined adversely, would prohibit its entering
         into this Agreement, (B) seeking to prevent the consummation of any of
         the transactions contemplated by this Agreement or (C) that, if
         determined adversely, would prohibit or materially and adversely affect
         the performance by the Servicer of any of its obligations under, or the
         validity or enforceability of, this Agreement;

                  (vi) 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 for the consummation of the

                                      -38-
<PAGE>

         transactions contemplated by this Agreement, except for such consents,
         approvals, authorizations and orders, if any, that have been obtained
         prior to the Closing Date;

                  (vii) No Officer's Certificate, statement, report or other
         document prepared by the Servicer and furnished or to be furnished by
         it pursuant to this Agreement or in connection with the transactions
         contemplated hereby contains any untrue statement of material fact;

                  (viii) The Servicer believes that the Servicing Fee Rate
         provides a reasonable level of base compensation to the Servicer for
         servicing the Mortgage Loans on the terms set forth herein;

                  (ix) The transactions contemplated by this Agreement are in
         the ordinary course of business of the Servicer; and

                  (x) The collection practices used by the Servicer with respect
         to the Mortgage Loans have been, in all material respects, legal,
         proper, prudent and customary in the non-conforming mortgage servicing
         business.

         (c) The representations and warranties set forth in this Section 2.03
shall survive the sale and assignment of the Mortgage Loans to the Trust. Upon
discovery of a breach of any representations and warranties which materially and
adversely affects the interests of the Certificateholders or the Certificate
Insurer, the Person discovering such breach shall give prompt written notice to
the other parties. Within 60 days of its discovery or its receipt of notice of
such breach, or, with the prior written consent of a Responsible Officer of the
Trustee, such longer period specified in such consent, the Seller or the
Servicer, as the case may be, shall cure such breach in all material respects.

         Section 2.04. Representations and Warranties of the Seller Regarding
the Mortgage Loans. (a) The Seller represents and warrants to the Servicer and
the Trustee on behalf of the Certificateholders as follows as of the Closing
Date:

                  1. The information set forth on the Mortgage Loan Schedule is
         complete, true and correct as of the dates as of which the information
         therein is given;

                  2. The Mortgage Notes and the Mortgages have not been assigned
         or pledged by the Seller to any Person other than warehouse lenders,
         and immediately prior to the transactions herein contemplated, the
         Seller had good and marketable title thereto, and was the sole owner
         and holder of the Mortgage Loans free and clear of any and all liens,
         claims, encumbrances, participation interests, equities, pledges,
         charges or security interests of any nature (collectively, a "Lien"),
         other than any such Lien released simultaneously with the sale
         contemplated herein, and had full right and authority, subject to no
         interest or participation of, or agreement with, any other party, to
         sell and assign the same pursuant to this Agreement, and immediately
         upon the transfer and assignment of each Mortgage Loan as contemplated
         by this Agreement, the Trust will be the sole beneficial owner of, each
         Mortgage Loan free and clear of any lien, claim, participation
         interest, mortgage, security interest, pledge, charge or other
         encumbrance or other interest of any nature;

                                      -39-
<PAGE>

                  3. With respect to any Mortgage Loan that is not a Cooperative
         Loan, each Mortgage is a valid and existing lien on the property
         therein described, and each Mortgaged Property is free and clear of all
         encumbrances and liens having priority over the lien of the Mortgage,
         except (i) liens for real estate taxes and special assessments not yet
         due and payable, (ii) covenants, conditions and restrictions, rights of
         way, easements and other matters of public record as of the date of
         recording such Mortgage, such exceptions appearing of record being
         acceptable to mortgage lending institutions generally or specifically
         reflected in the appraisal made in connection with the origination of
         the related Mortgage Loan, (iii) other matters to which like properties
         are commonly subject which do not materially interfere with the
         benefits of the security intended to be provided by such Mortgage, (iv)
         in the case of a Mortgaged Property that is a condominium or an
         individual unit in a planned unit development, liens for common charges
         permitted by statute and (v) in the case of a Mortgage Loan secured by
         a second lien on the related Mortgaged Property, the related First
         Lien. Any security agreement, chattel mortgage or equivalent document
         related to the Mortgage and delivered to the Trustee or the Custodian
         on behalf of the Trustee establishes in the Seller a valid and
         subsisting lien on the property described therein, and the Seller has
         full right to sell and assign the same to the Trust;

                  4. The terms of each Mortgage Note and Mortgage have not been
         impaired, altered or modified in any respect, except by a written
         instrument which has been recorded, if necessary to protect the
         interests of the Trust, and which has been delivered to the Trustee or
         the Custodian on behalf of the Trustee. The substance of any such
         alteration or modification is reflected on the Mortgage Loan Schedule;

                  5. No instrument of release or waiver has been executed in
         connection with any Mortgage Loan, and no Mortgagor has been released,
         in whole or in part, except in connection with an assumption agreement
         which has been approved by the primary mortgage guaranty insurer, if
         any, and which has been delivered to the Trustee or the Custodian on
         behalf of the Trustee;

                  6. Except with respect to delinquencies described in clause
         (12) hereof, no Mortgagor is in default in complying with the terms of
         its Mortgage Note or Mortgage, and the Seller has not waived any
         default, breach, violation or event of acceleration except that the
         Seller may have accepted late payments, and all taxes, governmental
         assessments, insurance premiums or water, sewer and municipal charges
         which previously became due and owing have been paid, or an escrow of
         funds has been established in an amount sufficient to pay for every
         such item which remains unpaid and which has been assessed but is not
         yet due and payable. The Seller has not advanced funds or induced,
         solicited or knowingly received any advance of funds by a party other
         than the Mortgagor, directly or indirectly, for the payment of any
         amount required by the Mortgage, except for interest accruing from the
         date of the Mortgage Note or date of disbursement of the Mortgage
         proceeds, whichever is more recent, to the day which precedes by one
         month the Due Date of the first installment of principal and interest;

                  7. There is no proceeding pending or threatened for the total
         or partial condemnation of any Mortgaged Property, nor is such a
         proceeding currently occurring, and such property is undamaged by
         waste, fire, earthquake or earth movement,

                                      -40-
<PAGE>

         windstorm, flood, tornado or otherwise, so as to affect adversely the
         value of the Mortgaged Property as security for the Mortgage Loan or
         the use for which the premises were intended;

                  8. 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 any
         Mortgaged Property which are, or may be, liens prior or equal to, or
         coordinate with, the lien of the Mortgage except those that are stated
         in the title insurance policy and for which related losses are
         affirmatively insured against by such policy;

                  9. All of the improvements that were included for the purpose
         of determining the Appraised Value of each Mortgaged Property lie
         wholly within the boundaries and building restriction lines of such
         property, and no improvements on adjoining properties encroach upon the
         Mortgaged Property except those that are stated in the title insurance
         policy and for which related losses are affirmatively insured against
         by such policy;

                  10. No improvement located on or being part of any Mortgaged
         Property is in violation of any applicable zoning law or regulation.
         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 and fire underwriting
         certificates, have been made or obtained from the appropriate
         authorities and the Mortgaged Property is lawfully occupied under
         applicable law;

                  11. All parties that have had any interest in any Mortgage
         Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
         during the period in which they held and disposed of such interest,
         were) (1) in compliance with any and all licensing requirements of the
         United States and of the laws of the state wherein the Mortgaged
         Property is located that are applicable to such parties and (2)(A)
         organized under the laws of such state or (B) qualified to do business
         in such state or exempt from such qualification in a manner so as not
         to affect adversely the enforceability of such Mortgage Loan or (C)
         federal savings and loan associations or national banks having
         principal offices in such state or (D) not doing business in such
         state;

                  12. With respect to the Initial Mortgage Loans, as of
         September 1, 2001, (i) all payments required to be made on each Initial
         Mortgage Loan under the terms of the related Mortgage Note have been
         made, except for approximately 0.95% of the Initial Mortgage Loans (by
         Principal Balance as of September 1, 2001) which are up to 59 days
         delinquent and (ii) no payment required to be made on any Initial
         Mortgage Loan has been more than 59 days delinquent more than once
         during the twelve month period immediately preceding September 1, 2001;

                  13. Each of the documents and instruments included in a
         Mortgage File is duly executed and in due and proper form and each such
         document or instrument

                                      -41-
<PAGE>

         is in a form generally acceptable to prudent institutional mortgage
         lenders that regularly originate or purchase mortgage loans;

                  14. The Mortgage Notes and the related Mortgages are genuine,
         and each is the legal, valid and binding obligation of the maker
         thereof, enforceable in accordance with its terms, except as such
         enforcement may be limited by bankruptcy, insolvency, reorganization,
         receivership, moratorium or other similar laws relating to or affecting
         the rights of creditors generally, and by general equity principles
         (regardless of whether such enforcement is considered in a proceeding
         in equity or at law). All parties to the Mortgage Note and the Mortgage
         had legal capacity to execute the Mortgage Note and the Mortgage, and
         each Mortgage Note and 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 in an individual capacity, and not in
         the capacity of a trustee or otherwise;

                  15. 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 or disclosure laws, applicable to the origination and
         servicing of the Mortgage Loans or otherwise applicable to the Mortgage
         Loans have been complied with, and the Seller has and shall maintain in
         its possession, available for the Trustee's and the Certificate
         Insurer's inspection, and shall deliver to the Trustee or the
         Certificate Insurer, as applicable, upon demand, evidence of compliance
         with all such requirements;

                  16. Except for Escrow Repair Loans, the proceeds of the
         Mortgage Loans have been fully disbursed, there is no requirement for
         future advances thereunder and any and all requirements as to
         completion of any on-site or off-site improvements and as to
         disbursements of any escrow funds therefor have been complied with. All
         costs, fees and expenses incurred in making, closing or recording the
         Mortgage Loan have been paid;

                  17. Each Mortgage Loan is covered by an ALTA mortgage title
         insurance policy or such other form of policy acceptable to Fannie Mae
         or Freddie Mac, issued by and constituting the valid and binding
         obligation of a title insurer generally acceptable to prudent mortgage
         lenders that regularly originate or purchase mortgage loans comparable
         to the Mortgage Loans for sale to prudent investors in the secondary
         market that invest in mortgage loans such as the Mortgage Loans and
         qualified to do business in the jurisdiction where the Mortgaged
         Property is located, insuring the Seller, its successors and assigns,
         as to the first priority lien of the Mortgage in the case of a Mortgage
         Loan secured by a First Lien on the related Mortgaged Property and the
         second priority lien of the Mortgage in the case of a Mortgage Loan
         secured by a second lien on the related Mortgaged Property, in the
         original principal amount of the Mortgage Loan. The Seller is the sole
         named insured of such mortgage title insurance policy, the assignment
         to the Trustee of the Seller's interest in such mortgage title
         insurance policy does not require the consent of or notification to the
         insurer or the same has been obtained, and such mortgage title
         insurance policy is in full force and effect and will be in full force
         and effect and inure to the benefit of the Trustee upon the
         consummation of the transactions contemplated by this Agreement. No
         claims have been made under such mortgage title

                                      -42-
<PAGE>

         insurance policy and no prior holder of the related Mortgage, including
         the Seller, has done, by act or omission, anything that would impair
         the coverage of such mortgage title insurance policy;

                  18. All improvements upon the Mortgaged Properties are insured
         by a generally acceptable insurer 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. If a Mortgaged
         Property was, at the time of origination of the related Mortgage Loan,
         in an area identified on a Flood Hazard Boundary Map or Flood Hazard
         Rate Map issued by the Federal Emergency Management Agency as having
         special flood hazards (and if the flood insurance policy referenced
         herein has been made available), a flood insurance policy is in effect
         with respect to such Mortgaged Property with a generally acceptable
         carrier in an amount representing coverage described in this Agreement.
         All individual insurance policies (collectively, the "hazard insurance
         policy") are the valid and binding obligation of the insurer and
         contain a standard mortgagee clause naming the Seller, its successors
         and assigns, as mortgagee. All premiums thereon have been paid. The
         Mortgage obligates the Mortgagor thereunder to maintain all such
         insurance at the Mortgagor's cost and expense, and upon the Mortgagor's
         failure to do so, authorizes the holder of the Mortgage to obtain and
         maintain such insurance at the Mortgagor's cost and expense and to seek
         reimbursement therefor from the Mortgagor;

                  19. No Mortgage Loan is 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 any Mortgage Note or the
         related Mortgage, or the exercise of any right thereunder in accordance
         with the terms thereof, render either the Mortgage Note or 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;

                  20. Each Mortgage Loan was originated or purchased and
         reunderwritten by the Seller;

                  21. Except with respect to any Balloon Loan, each Mortgage
         Loan is payable in equal monthly installments of principal and interest
         which would be sufficient, in the absence of late payments, to fully
         amortize such loan within the term thereof, beginning no later than 60
         days after disbursement of the proceeds of the Mortgage Loan. Each
         Mortgage Loan bears a fixed interest rate for the term of the Mortgage
         Loan or an adjustable-interest rate based on the related Loan Index.
         Each Balloon Loan has an original term of not less than fifteen (15)
         years and provides for level monthly payments based on a thirty (30)
         year amortization schedule and a final Monthly Payment substantially
         greater than the preceding Monthly Payments;

                  22. Each Mortgage contains a customary provision for the
         acceleration of the payment of the unpaid principal balance of the
         Mortgage Loan in the event the related Mortgaged Property is sold
         without the prior consent of the holder thereunder;

                                      -43-
<PAGE>

                  23. No Mortgage Loan is a construction loan;

                  24. The Mortgage Notes are not and have not been secured by
         any collateral, pledged account or other security except the lien of
         the corresponding Mortgage and the security interest of any applicable
         security agreement or chattel mortgage referred to in clause 3 above;

                  25. Each Mortgage contains customary and enforceable
         provisions which render the rights and remedies of the holder thereof
         adequate for the realization against the Mortgaged Property of the
         benefits of the security, including (i) in the case of a Mortgage
         designated as a deed of trust, by trustee's sale and (ii) otherwise by
         judicial or nonjudicial foreclosure. There is no homestead or other
         exemption available to the Mortgagor that would interfere with the
         right to sell the Mortgaged Property at a trustee's sale or the right
         to foreclose the Mortgage;

                  26. With respect to each Mortgage constituting 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
         such Mortgage, and no fees or expenses are or will become payable by
         the Trustee or the Certificateholders to the trustee under the deed of
         trust, except in connection with a trustee's sale after default by the
         Mortgagor, which fees and expenses shall constitute Servicing Advances;

                  27. Each Mortgaged Property is located in the state identified
         in the Mortgage Loan Schedule. No residence or dwelling is a
         manufactured dwelling that is not treated as real property under local
         law. No Mortgaged Properties are held under a ground lease;

                  28. The Mortgage Loans were underwritten in accordance with
         the Seller's underwriting guidelines described in the Prospectus under
         the heading "The Seller--Underwriting";

                  29. There exist no deficiencies with respect to escrow
         deposits and payments, if such are required, for which customary
         arrangements for repayment thereof have not been made, and no escrow
         deposits or payments of other charges or payments due the Seller have
         been capitalized under any Mortgage or the related Mortgage Note;

                  30. No Mortgage Loan was originated under a buy-down plan;

                  31. Other than as provided by this Agreement, there is no
         obligation on the part of the Seller or any other party to make
         payments in addition to those made by the Mortgagors;

                  32. With respect to each Mortgage Loan, the Seller is in
         possession of a complete Mortgage File, except those documents
         delivered to the Trustee or Custodian on behalf of the Trustee, and
         there are no custodial agreements in effect adversely affecting the
         right or ability of the Seller to make the document deliveries required
         hereby;

                                      -44-
<PAGE>

                  33. No Mortgage Loan was selected for inclusion under this
         Agreement on any basis which was intended to have a material adverse
         effect on the Certificateholders;

                  34. No Mortgage Loan has a shared appreciation or other
         contingent interest feature;

                  35. With respect to each Mortgage Loan secured by a second
         lien on the related Mortgaged Property:

                           (a) if the Combined Loan-to-Value Ratio is higher
                  than 80%, either the related First Lien does not provide for a
                  balloon payment or, if the related First Lien does provide for
                  a balloon payment, the maturity date of the second lien is
                  prior to the maturity date of the First Lien;

                           (b) the related First Lien does not provide for
                  negative amortization;

                           (c) either no consent for the Mortgage Loan secured
                  by a second lien on the related Mortgaged Property is required
                  by the holder of the related First Lien or such consent has
                  been obtained and is contained in the Mortgage File; and

                           (d) except with respect to no more than 10% of the
                  Initial Mortgage Loans which are fixed-rate Mortgage Loans
                  secured by a second lien on the related Mortgaged Property,
                  measured by outstanding Principal Balances as of the Cut-Off
                  Date, the related First Lien is not held by an individual;

                  36. Each Mortgage Loan conforms, and all the Mortgage Loans in
         the aggregate conform, in all material respects to the description
         thereof set forth in the Prospectus Supplement;

                  37. A full appraisal on forms approved by Fannie Mae or
         Freddie Mac was performed in connection with the origination of each
         Mortgage Loan. Each appraisal meets guidelines that would be generally
         acceptable to prudent mortgage lenders that regularly originate or
         purchase mortgage loans comparable to the Mortgage Loans for sale to
         prudent investors in the secondary market that invest in mortgage loans
         such as the Mortgage Loans;

                  38. To the best of the Seller's knowledge, no Mortgaged
         Property was, as of the related Cut-Off Date, located within a one-mile
         radius of any site listed in the National Priorities List as defined
         under the Comprehensive Environmental Response, Compensation and
         Liability Act of 1980, as amended, or on any similar state list of
         hazardous waste sites which are known to contain any hazardous
         substance or hazardous waste;

                                      -45-
<PAGE>

                  39. None of the Mortgage Loans are subject to a bankruptcy
         proceeding;

                  40. No more than 27.57% of the aggregate Principal Balance of
         all the Initial Mortgage Loans as of the Cut-Off Date relates to
         Mortgage Loans originated or purchased under the Seller's limited
         documentation program, non-income verification program for
         self-employed borrowers or stated income program;

                  41. Each Mortgage Loan constitutes a "qualified mortgage"
         within the meaning of Section 860G(a)(3) of the Code;

                  42. Each Cooperative Loan is secured by a valid, subsisting
         and enforceable perfected first lien and security interest in the
         related Mortgaged Property, subject only to (i) the rights of the
         Cooperative Corporation to collect Maintenance and assessments from the
         Mortgagor, (ii) the lien of the Blanket Mortgage, if any, on the
         Cooperative Property and of real property taxes, water and sewer
         charges, rents and assessments on the Cooperative Property not yet due
         and payable, and (iii) other matters to which like Cooperative Units
         are commonly subject which do not materially interfere with the
         benefits of the security intended to be provided by the Security
         Agreement or the use, enjoyment, value or marketability of the
         Cooperative Unit. Each original UCC financing statement, continuation
         statement or other governmental filing or recordation necessary to
         create or preserve the perfection and priority of the first priority
         lien and security interest in the Cooperative Shares and Proprietary
         Lease has been timely and properly made. Any security agreement,
         chattel mortgage or equivalent document related to the Cooperative Loan
         and delivered to the Seller or its designee establishes in the Seller a
         valid and subsisting perfected first lien on and security interest in
         the property described therein, and the Seller has full right to sell
         and assign the same;

                  43. Each Cooperative Corporation qualifies as a "cooperative
         housing corporation" as defined in Section 216 of the Code;

                  44. Each adjustable-rate Mortgage Loan is secured by a first
         lien;

                  45. Each Mortgage Loan will comply with the undertakings in,
         and no Mortgage Loan will be subject to the requirement for
         retrospective relief pursuant to, either (a) the Stipulated Order on
         Consent, dated as of September 17, 1999, among Delta Funding
         Corporation, Delta Financial Corporation and the Office of the Attorney
         General of the State of New York or (b) the Remediation Agreement,
         dated as of September 17, 1999, between Delta Funding Corporation and
         the Banking Department of the State of New York; and

                  46. Each Mortgage Loan in Loan Group 1 bears interest at a
         fixed rate for the life of the Mortgage Loan.

         (b) It is understood and agreed that the representations and warranties
set forth in this Section 2.04 shall survive delivery of the respective Mortgage
Files to the Trustee or the Custodian on behalf of the Trustee and the
termination of the rights and obligations of the Servicer pursuant to Section
7.04 or 8.01. Upon discovery by the Seller, the Servicer or a

                                      -46-
<PAGE>

Responsible Officer of the Trustee of a breach of any of the foregoing
representations and warranties, which materially and adversely affects the value
of, or the interests of the Trust, the Certificateholders or the Certificate
Insurer in, the related Mortgage Loan, the party discovering such breach shall
give prompt written notice to the other parties. Within 60 days of its discovery
or its receipt of notice of breach, the Seller shall use all reasonable efforts
to cure such breach in all material respects or shall purchase such Mortgage
Loan from the Trust or substitute an Eligible Substitute Mortgage Loan as
provided in Section 2.05 for such Mortgage Loan. Any such purchase by the Seller
shall be at the Purchase Price, and in each case shall be accomplished in the
manner set forth in Section 2.02. The Trustee shall enforce the Seller's
obligations under this subparagraph. It is understood and agreed that the
obligation of the Seller to cure, substitute or purchase any Mortgage Loan as to
which such a breach has occurred and is continuing shall constitute the sole
remedy against the Seller respecting such breach available to the Servicer (in
its role as such), the Certificateholders or the Trustee on behalf of
Certificateholders. An Officer's Certificate and Opinion of Counsel to the
effect set forth in Section 2.05(d) shall be delivered to the Trustee in
connection with any such repurchase.

         Section 2.05. Substitution of Mortgage Loans. (a) On a Determination
Date within two years following the Closing Date and which is on or before the
date on which the Seller would otherwise be required to repurchase a Mortgage
Loan under Section 2.02 or 2.04, the Seller may deliver to the Trustee or the
Custodian on behalf of the Trustee one or more Eligible Substitute Mortgage
Loans in substitution for any one or more of the Defective Mortgage Loans which
the Seller would otherwise be required to repurchase pursuant to Section 2.02 or
2.04.

         (b) The Seller shall notify the Servicer and the Trustee in writing not
less than five Business Days before the related Determination Date which is on
or before the date on which the Seller would otherwise be required to repurchase
such Mortgage Loan pursuant to Section 2.02 or 2.04 of its intention to effect a
substitution under this Section 2.05. On such Determination Date (the
"Substitution Date"), the Seller shall deliver to the Trustee or the Custodian
on behalf of the Trustee (1) the Eligible Substitute Mortgage Loans to be
substituted for the Defective Mortgage Loans, (2) a list of the Defective
Mortgage Loans to be substituted for by such Eligible Substitute Mortgage Loans,
(3) an Officer's Certificate (A) stating that the aggregate Principal Balance of
all Eligible Substitute Mortgage Loans (determined with respect to each Eligible
Substitute Mortgage Loan as of the Determination Date on which it was
substituted) including the principal balance of Eligible Substitute Mortgage
Loans being substituted on such Determination Date does not exceed an amount
equal to 5% of the aggregate Original Class Principal Balance as of the Closing
Date, (B) stating that all conditions precedent to such substitution specified
in subsection (a) have been satisfied and attaching as an exhibit a supplemental
Mortgage Loan schedule (the "Supplemental Mortgage Loan Schedule") setting forth
the same type of information as appears on the Mortgage Loan Schedule and
representing as to the accuracy thereof and (C) confirming that the
representations and warranties contained in Section 2.04 are true and correct in
all material respects with respect to the Substitute Mortgage Loans on and as of
such Determination Date, provided that remedies for the inaccuracy of such
representations are limited as set forth in Sections 2.02, 2.04 and this Section
2.05, (4) an Opinion of Counsel to the effect set forth below and (5) a
certificate stating that cash in the amount of the related Substitution
Adjustment, if any, has been delivered to the Servicer for deposit in the
Collection Account. Upon receipt of the foregoing, the Trustee or the Custodian
on behalf of the Trustee shall release such Defective Mortgage Loans to the
Seller.

                                      -47-
<PAGE>

         (c) Concurrently with the satisfaction of the conditions set forth in
Sections 2.05(a) and (b) above and the transfer of such Eligible Substitute
Mortgage Loans to the Trustee pursuant to Section 2.05(a), Exhibit C to this
Agreement shall be deemed to be amended to exclude all Mortgage Loans being
replaced by such Eligible Substitute Mortgage Loans and to include the
information set forth on the Supplemental Mortgage Loan Schedule with respect to
such Eligible Substitute Mortgage Loans, and all references in this Agreement to
Mortgage Loans shall include such Eligible Substitute Mortgage Loans and be
deemed to be made on or after the related Substitution Date, as the case may be,
as to such Eligible Substitute Mortgage Loans.

         (d) In connection with any Mortgage Loan that the Seller is required to
purchase or replace, the Seller shall deliver to the Trustee an Opinion of
Counsel to the effect that such purchase or substitution will not cause (x) any
federal tax to be imposed on the Trust, including, without limitation, any
Federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of the
Code or on "contributions after the start-up day" under Section 860G(d)(1) of
the Code or (y) any portion of any REMIC to fail to qualify as a REMIC at any
time that any Certificate is outstanding. In the event that such opinion
indicates that a repurchase or substitution will result in the imposition of a
prohibited transaction tax, give rise to net taxable income or be deemed a
contribution to a REMIC after its Startup Day, the Seller shall not be required
to repurchase or replace any such Mortgage Loan unless and until the Servicer
has determined and given the Seller and the Trustee written notice that there is
an actual or imminent default with respect thereto or that such defect or breach
adversely affects the enforceability of such Mortgage Loan.

         Section 2.06. Execution and Authentication of Certificates. The Trustee
on behalf of the Trust shall cause to be executed, authenticated and delivered
on the Closing Date to or upon the order of the Seller, in exchange for the
Mortgage Loans, concurrently with the sale, assignment and conveyance to the
Trustee of the Mortgage Loans, each Class of Certificates in authorized
denominations or Percentage Interests, together evidencing the ownership of the
entire Trust.

         Section 2.07. Designation of Interests in REMICs.

         (a) The Trustee shall elect that each of REMIC I, REMIC II and REMIC
III (which together constitute the Trust) shall be treated as a REMIC under
Section 860D of the Code. Any inconsistencies or ambiguities in this Agreement
or in the administration of this Agreement shall be resolved in a manner that
preserves the validity of such REMIC elections. The assets of REMIC I shall
include the Mortgage Loans, the Accounts (other than the Pre-Funding Account,
the Net Rate Cap Fund and the Initial Interest Coverage Account), any REO
Property, and any proceeds of the foregoing. The REMIC I Regular Interests (as
defined below) shall constitute the assets of REMIC II. The REMIC II Regular
Interests shall constitute the assets of REMIC III.

         (b) REMIC I will be evidenced by (x) the Class IA, Class IB, Class IC,
Class ID, Class IE, Class IF, Class IG, Class IH, Class II, Class IJ, Class IK
and Class IL Interests and the Class IQ Certificates (together, the "REMIC I
Regular Interests"), which (i) will be uncertificated and non-transferable, and
(ii) are hereby designated as the "regular interests" in REMIC I and (y) the
Class R-1 Certificates, which are hereby designated as the single "residual
interest" in

                                      -48-
<PAGE>

REMIC I (the REMIC I Regular Interests, together with the Class R-1
Certificates, the "REMIC I Certificates"). The REMIC I Regular Interests (other
than the Class P Certificates) shall be recorded on the records of REMIC I as
being issued to and held by the Trustee on behalf of REMIC II.

         The REMIC I Certificates will have the following designations, initial
principal balances and pass-through rates:

                                                                  Pass-
                      REMIC I             Initial                Through
                    Certificates          Balance                  Rate
                    ------------          -------                  ----

                         IA              $ 18,500,000              (1)
                         IB                 6,000,000              (1)
                         IC                 1,000,000              (1)
                         ID                 4,500,000              (1)
                         IE                 5,000,000              (1)
                         IF                 5,750,000              (1)
                         IG                 6,000,000              (1)
                         IH                 6,500,000              (1)
                         II                 6,750,000              (1)
                         IJ                13,700,000              (1)
                         IK                 6,325,000              (1)
                         IL                 4,125,000              (1)
                         IQ                95,850,000              (1)
                        R-1                         0               0%

         (1)       The Pass-Through Rate on these REMIC I Regular Interests
                   shall at any time of determination equal the weighted average
                   of the Net Loan Rates of the Mortgage Loans, provided that
                   the Pass-Through Rate for the first month during the
                   Pre-Funding Period shall not exceed the weighted average of
                   the Certificate Rates of the REMIC III Regular Certificates.

         On each Distribution Date, principal collections and realized losses on
the Mortgage Loans shall be allocated sequentially, in reverse order to which
they are listed above, to the REMIC I Regular Interests, until the principal
balance of each such class is reduced to zero. The Class R-1 Certificates shall
have no principal balance and no pass-through rate and shall be entitled to only
those distributable assets, if any, remaining in REMIC I on each Distribution
Date after all amounts required to be distributed to the REMIC I Regular
Interests and applicable Trust expenses have been paid. It is expected that
there will not be any distributions on the Class R-1 Certificate.

         (c) REMIC II will be evidenced by (x) the Class II-A-1F, Class II-A-1A,
Class II-M-1, Class II-M-2, Class II-B, the 12 components of Class II-A-IO
described in note (2) below, Class II-Q Interests (the "REMIC II Regular
Interests"), which will be uncertificated and non-transferable and are hereby
designated as the "regular interests" in REMIC II and (y) the Class

                                      -49-
<PAGE>

R-2 Certificates, which are hereby designated as the single "residual interest"
in REMIC II (the REMIC II Regular Interests, together with the Class R-II
Certificates, the "REMIC II Certificates"). The REMIC II Regular Interests shall
be recorded on the records of REMIC II as being issued to and held by the
Trustee on behalf of REMIC III.

         Interest from the Mortgage Loans that is allocable to payments of
principal on the Certificates (the "Turbo Amount") will not be paid directly as
principal to the REMIC II Regular Interests, but instead a portion of the
interest payable with respect to the Class II-Q Interest which equals 1% of the
Turbo Amount will be payable as a reduction of the principal balances of the
Class II-A-1F, Class II-A-1A, Class II-M-1, Class II-M-2 and Class II-B
Interests in the same manner in which the Turbo Amount is allocated among the
Class A-1F, Class A-1A, Class M-1, Class M-2 and Class B Certificates,
respectively (and will be accrued and added to principal on the Class II-Q
Interest). Principal payments on the Mortgage Loans shall be allocated 99% to
the Class II-Q Interest and 1% to the Class II-A-1F, Class II-A-1A, Class
II-M-1, Class II-M-2 and Class II-B Interests, until paid in full. The aggregate
amount of principal allocated to the Class II-A-1F, Class II-A-1A, Class II-M-1,
Class II-M-2 and Class II-B Interests shall be apportioned among such classes in
the same manner as principal is payable with respect to the Class A-1F, Class
A-1A, Class M-1, Class M-2 and Class B Certificates, respectively.
Notwithstanding the above, principal payments on Mortgage Loans that are
attributable to the Excess Overcollateralization Amount shall be allocated to
the Class II-Q Interest. Realized losses shall be applied such that after all
distributions have been made on such Distribution Date (i) the principal
balances of the Class II-A-1F, Class II-A-1A, Class II-M-1, Class II-M-2 and
Class II-B Interests are each 1% of the principal balances of the Class A-1F,
Class A-1A, Class M-1, Class M-2 and Class B Certificates, respectively; and
(ii) the aggregate principal balance of the Class II-Q Interest is equal to the
sum of the aggregate Principal Balance of the Mortgage Loans and the Pre-Funded
Amount, less an amount equal 1% of the aggregate Class Principal Balances of the
Certificates. The REMIC II Certificates will have the following designations and
pass-through rates, and distributions of principal and interest thereon shall be
allocated to the Certificates in the following manner:

                                            Pass-      Allocation     Allocation
            REMIC II          Initial      Through         of             of
          Certificates        Balance       Rate       Principal       Interest
          ------------        -------       ----       ---------       --------
            II-A-1F       $  1,079,000       (1)          (3)           (4),(5)
             II-A-2            415,000       (1)          (3)           (4),(5)
             II-M-1            126,000       (1)          (3)           (4),(5)
             II-M-2             90,000       (1)          (3)           (4),(5)
              II-B              90,000       (1)          (3)           (4),(5)
              II-Q         178,200,000       (1)          (3)           (4),(5)
            II-A-IO           Notional       (2)          N/A          Class IO
              R-2                    0        0%          N/A           N/A(6)

---------------
(1)      The Pass-Through Rate on these REMIC II Regular Interests shall at any
         time of determination equal the weighted average of the Pass-Through
         Rates of the REMIC I Regular Interests, after first subtracting 6.0%
         from the Pass-Through Rates of each of such regular interests (other
         than the Class IQ Interest) for the Distribution Dates indicated below
         for each of such regular interests, but for the first month during the
         Pre-

                                      -50-
<PAGE>

         Funding Period such Pass-Through Rate shall not exceed the weighted
         average of the Certificate Rates on the REMIC III Regular Certificates.

                         6.00% Subtraction                    6.00% Subtraction
            REMIC I         Distribution        REMIC I          Distribution
          Certificates         Dates          Certificates          Dates

               IA              1 - 36              IG               1 - 18
               IB               1-33               IH               1 - 15
               IC              1 - 30              II               1 - 12
               ID              1 - 27              IJ               1 - 9
               IE              1 - 24              IK               1 - 6
               IF              1 - 21              IL               1 - 3

(2)      Interest on the Class II-A-IO will equal the sum of 12 strips of
         interest, with each strip being a strip off the principal balance of a
         REMIC I Regular Interest at 6.0% per annum for the Distribution Dates
         indicated in the table in note (1) for such regular interest, and 0.0%
         thereafter. Each of the 12 interest strips comprising the interest on
         the Class II-A-IO shall constitute 12 separate components of the Class
         II-A-IO, each of which shall be designated as a separate REMIC II
         Regular Interest.

(3)      Principal will be allocated to and apportioned among the Class A-1F
         Class A-1A, Class M-1, Class M-2 and Class B Certificates, in the same
         proportion as principal is payable with respect to such Certificates,
         except that a portion of such principal in an amount up to the Excess
         Overcollateralization Amount shall first be allocated as a payment of
         interest to the Class BIO Certificates, and all principal will be
         allocated as a payment of interest to the Class BIO Certificates after
         the principal balances of the other Regular Certificates have been
         reduced to zero.

(4)      Except as provided in note (5), interest will be allocated among the
         Class A-1F, Class A-1A, Class M-1, Class M-2 and Class B Certificates
         in the same proportion as interest is payable on such Certificates.

(5)      Any interest with respect to this REMIC II Regular Interest in excess
         of the product of (i) 100 times the weighted average coupon of the
         Class II-A-1F, Class II-A-1A, Class II-M-1, Class II-M-2, Class II-B
         and Class II-Q, where each of such classes, other than the Class II-Q
         Interest is first subject to a cap and floor equal to the Class A-1F,
         Class A-1A, Class M-1, Class M-2 and Class B Pass-Through Rates,
         respectively, and the Class II-Q

                                      -51-
<PAGE>

         Interest is subject to a cap equal to 0%, and (ii) the principal
         balance of this REMIC II Regular Interest, shall not be allocated to
         the other Certificates but will be allocated to the Class BIO
         Certificates. However, the Class BIO Certificates shall be subordinated
         to the extent provided in Section 5.01.

(6)      On each Distribution Date, available funds, if any, remaining in REMIC
         II after payments of interest and principal, as designated above, will
         be distributed to the Class R-2 Certificate. It is expected that there
         will not be any distributions on the Class R-2 Certificates.

         (d) The Class A-1F, Class A-1A, Class M-1, Class M-2, Class B, Class
A-IO and Class BIO Certificates are hereby designated as "regular interests"
with respect to REMIC III (the "REMIC III Regular Interests") and the Class R-3
Certificate is hereby designated as the single "residual interest" with respect
to REMIC III. On each Distribution Date, Available Funds, if any, remaining in
REMIC III after payments of interest and principal as designated herein shall be
distributed to the Class R-3 Certificates. It is expected that there will not be
any distributions on the Class R-3 Certificates.

         Section 2.08. Designation of Startup Day of REMIC. The Closing Date is
hereby designated as the "start-up day" of each REMIC within the meaning of
Section 860G(a)(9) of the Code.

         Section 2.09. REMIC Certificate Maturity Date. Solely for purposes of
satisfying Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, the "latest
possible maturity date" of the regular interests in each REMIC is the
Distribution Date in December, 2035.

         Section 2.10. Tax Returns and Reports to Certificateholders. (a) For
federal income tax purposes, each REMIC comprising the Trust shall have a
calendar year and shall maintain its books on the accrual method of accounting.

         (b) The Tax Matters Person shall prepare, or cause to be prepared,
execute and deliver to the Trustee, the Servicer or Certificateholders, as
applicable, any income tax information returns for each taxable year with
respect to the Trust containing such information at the times and in the manner
as may be required by the Code or state or local tax laws, regulations or rules,
and shall furnish or cause to be furnished to the Trust and the
Certificateholders the schedules, statements or information at such times and in
such manner as may be required thereby. Within thirty (30) days of the Closing
Date, the Tax Matters Person shall furnish or cause to be furnished to the
Internal Revenue Service, on Form 8811 or as otherwise required by the Code, the
name, title, address and telephone number of the person that Holders of the
Certificates may contact for tax information relating thereto, together with
such additional information at the time or times and in the manner required by
the Code and shall apply for an employer identification number from the Internal
Revenue Service via Form SS-4 or any other acceptable method. Such federal,
state or local income tax or information returns shall be signed

                                      -52-
<PAGE>

by the Trustee or such other Person as may be required to sign such returns by
the Code or state or local tax laws, regulations or rules.

         (c) In the first federal income tax return of the Trust for its short
taxable year ending December 31, 2001, a REMIC election shall be made with
respect to each of REMIC I, REMIC II and REMIC III for such taxable year and all
succeeding taxable years.

         (d) The Tax Matters Person will maintain or cause to be maintained such
records relating to the Trust, including, but not limited to, the income,
expenses, assets and liabilities of the Trust, and adjusted basis of the Trust
property and assets determined at such intervals as may be required by the Code,
as may be necessary to prepare the foregoing returns, schedules, statements or
information.

         (e) The Servicer and the Trustee, upon request, shall promptly furnish
the Tax Matters Person with all such information as may be reasonably available
to, or in the possession of, the Servicer or the Trustee, as applicable and as
may be required in connection with the Tax Matters Person's REMIC reporting
obligations pursuant to this Agreement. The Tax Matters Person shall have no
responsibility for the lack of any information required in connection with REMIC
reporting obligations that is not provided to it by the Servicer or the Trustee,
as applicable.

         Section 2.11. Tax Matters Person. The tax matters person with respect
to each REMIC (the "Tax Matters Person") shall be the holder of the Tax Matters
Person Residual Interest which initially is the Seller. The Tax Matters Person
shall at all times hold the Tax Matters Person Residual Interest and shall have
the same duties with respect to the Trust as those of a "tax matters partner"
under Subchapter C of Chapter 63 of Subtitle F of the Code. Each holder of a
Residual Certificate shall be deemed to have agreed, by acceptance thereof, to
be bound by this Section 2.11.

         Section 2.12. REMIC Related Covenants. It is intended that each REMIC
formed hereunder shall constitute, and that the affairs of each REMIC shall be
conducted so as to qualify it as, a REMIC as defined in and in accordance with
the REMIC Provisions. For as long as the Trust shall exist, the Trustee, the
Servicer and the Tax Matters Person shall act in accordance herewith to assure
continuing treatment of each REMIC as a REMIC and avoid the imposition of tax on
the Trust. In particular:

         (a) The Trustee shall not create, or knowingly permit the creation of,
any "interests" in any REMIC within the meaning of Code Section 860D(a)(2) other
than the interests represented by the Regular Certificates, the REMIC I Regular
Interests, the REMIC II Regular Interests and the Residual Certificates.

         (b) Except as otherwise provided in the Code, the Seller shall not
grant and the Trustee shall not accept property unless (i) substantially all of
the property held in the Trust constitutes either "qualified mortgages" or
"permitted investments" as defined in Code Sections 860G(a)(3) and (5),
respectively, and (ii) no property shall be contributed to the Trust after the
Startup Day unless such grant would not subject any REMIC to the 100% tax on
contributions to a REMIC after its Startup Day imposed by Code Section 860G(d).

                                      -53-
<PAGE>

         (c) The Trustee shall not accept on behalf of the Trust any fee or
other compensation for services (other than as otherwise provided herein) and
shall not accept on behalf of the Trust any income from assets other than those
permitted to be held by a REMIC.

         (d) The Trustee shall not sell or permit the sale of all or any portion
of the Mortgage Loans (other than in accordance with Section 2.02, 2.04 or
3.16), unless such sale is pursuant to a "qualified liquidation" as defined in
Code Section 860F(a)(4)(A) and in accordance with Article VIII.

         (e) The Trustee and the Tax Matters Person shall maintain books with
respect to each REMIC on a calendar year and on an accrual basis.

         (f) Upon filing with the Internal Revenue Service, the Tax Matters
Person shall furnish to the Holders of the Residual Certificates the Form 1066
and each Form 1066Q for the applicable REMIC and shall respond promptly to
written requests made not more frequently than quarterly by any Holder of
Residual Certificates with respect to the following matters:

                  (i) The original projected principal and interest cash flows
         on the Closing Date on each class of regular and residual interests
         created hereunder and on the Mortgage Loans, based on 115% and 100% of
         the applicable Prepayment Assumption in the case of the fixed rate and
         adjustable rate Mortgage Loans, respectively;

                  (ii) The projected remaining principal and interest cash flows
         as of the end of any calendar quarter with respect to each class of
         regular and residual interests created hereunder and the Mortgage
         Loans, based on 115% and 100% of the applicable Prepayment Assumption
         in the case of the fixed rate and adjustable rate Mortgage Loans,
         respectively;

                  (iii) The applicable percentage of the Prepayment Assumption
         and any interest rate assumptions used in determining the projected
         principal and interest cash flows described above;

                  (iv) The original issue discount (or, in the case of the
         Mortgage Loans, market discount) or premium accrued or amortized
         through the end of such calendar quarter with respect to each class of
         regular or residual interests created hereunder and with respect to the
         Mortgage Loans, together with each constant yield to maturity used in
         computing the same;

                  (v) The treatment of losses realized with respect to the
         Mortgage Loans or the regular interests created hereunder, including
         the timing and amount of any cancellation of indebtedness income of
         each REMIC with respect to such regular interests or bad debt
         deductions claimed with respect to the Mortgage Loans;

                  (vi) The amount and timing of any non-interest expenses of
         each REMIC; and

                  (vii) Any taxes (including penalties and interest) imposed on
         each REMIC, including, without limitation, taxes on "prohibited
         transactions," "contributions" or "net income from foreclosure
         property" or state or local income or franchise taxes.

                                      -54-
<PAGE>

         In the event that any tax is imposed on "prohibited transactions" of
the Trust as defined in Section 860F(a)(2) of the Code, on the "net income from
foreclosure property" of a REMIC as defined in Section 860G(c) of the Code, on
any contribution to the Trust after the Startup Day pursuant to Section 860G(d)
of the Code, or any other tax (other than any minimum tax imposed by Section
24874 and 23153 of the California Revenue and Taxation Code) is imposed, such
tax shall be paid by (i) the Trustee, if such tax arises out of or results from
a breach by the Trustee of any of its obligations under this Agreement, (ii) the
Tax Matters Person, if such tax arises out of or results from a breach by the
Tax Matters Person of any of the obligations under this Agreement, (iii) the
Servicer, if such tax arises out of or results from a breach by the Servicer of
any of its obligations under this Agreement or (iv) otherwise the Holders of the
applicable Residual Certificates in proportion to their Percentage Interests. To
the extent any tax is chargeable against the Holders of the Residual
Certificates, notwithstanding anything to the contrary contained herein, the
Trustee is hereby authorized to retain from amounts otherwise distributable to
the Holders of the applicable Residual Certificates on any Distribution Date
sufficient funds to reimburse the Trustee for the payment of such tax (to the
extent that the Trustee has not been previously reimbursed or indemnified
therefor).

         The Trustee shall not engage in a "prohibited transaction" (as defined
in Code Section 860F(a)(2)), except that, with the prior written consent of the
Seller , the Trustee may engage in the activities otherwise prohibited by the
foregoing clauses (b), (c) and (d), provided that the Seller shall have
delivered to the Trustee an Opinion of Counsel to the effect that such
transaction will not result in the imposition of a contribution or prohibited
transaction tax on the Trust and will not disqualify any REMIC from treatment as
a REMIC; and provided that the Seller shall have demonstrated to the
satisfaction of the Trustee that such action will not adversely affect the
rights of the holders of the Certificates and the Trustee and that such action
will not adversely impact the rating of the Offered Certificates.

         (g) Except as provided below, the Tax Matters Person shall pay out of
its own funds, without any right of reimbursement, any and all tax related
expenses of the Trust (including, but not limited to, tax return preparation and
filing expenses and any professional fees or expenses related to audits or any
administrative or judicial proceedings with respect to the Trust that involve
the Internal Revenue Service or state tax authorities), other than the expense
of obtaining any Opinion of Counsel required pursuant to Sections 2.05, 3.06 and
10.02 and other than taxes except as specified herein. The Trustee and the Tax
Matters Person shall be entitled to be reimbursed for any professional fees or
expenses related to audits or any administrative or judicial proceedings that do
not result from any breach of their respective duties hereunder.

         (h) On behalf of each REMIC, the Trustee, Servicer or Tax Matters
Person, as applicable, shall do the following:

                  (i) the Tax Matters Person shall prepare, sign and file, or
         cause to be prepared and filed, in a timely manner, a U.S. Real Estate
         Mortgage Investment Conduit Income Tax Return (Form 1066) and any other
         Tax Return required to be filed by each REMIC, using a calendar year as
         the taxable year for each REMIC;

                                      -55-
<PAGE>

                  (ii) the Tax Matters Person shall make, or cause to be made,
         an election, on behalf of each REMIC, to be treated as a REMIC on the
         federal tax return of each REMIC for its first taxable year;

                  (iii) the Tax Matters Person shall prepare and forward, or
         cause to be prepared and forwarded, to the Servicer, the Seller, the
         Trustee (which, subject to receipt thereof shall forward to the
         Certificateholders) and to the Internal Revenue Service and any other
         relevant governmental taxing authority all information returns or
         reports as and when required to be provided to them in accordance with
         the REMIC Provisions;

                  (iv) the Trustee, the Tax Matters Person and the Servicer
         shall to the extent that the affairs of any REMIC are within its
         control, conduct such affairs of each REMIC at all times that any
         Certificates are outstanding so as to maintain the status of each REMIC
         as a REMIC under the REMIC Provisions and any other applicable federal,
         state and local laws, including, without limitation with respect to the
         Trustee, information reports relating to "original issue discount," as
         defined in the Code, based upon 115% of the applicable Prepayment
         Assumption for fixed rate Mortgage Loans and 100% of the applicable
         Prepayment Assumption for adjustable rate Mortgage Loans, calculated by
         using the issue price of the Certificates;

                  (v) the Trustee, the Servicer and Tax Matters Person shall not
         knowingly or intentionally take any action or omit to take any action
         that would cause the termination of the REMIC status of any REMIC;

                  (vi) the Trustee shall pay the amount of any and all federal,
         state and local taxes upon the Trustee or the Certificateholders in
         connection with the Trust or the Mortgage Loans, prohibited transaction
         taxes as defined in Section 860F of the Code, other than any amount due
         as a result of a transfer or attempted or purported transfer in
         violation of Section 6.02, imposed on the Trust when and as the same
         shall be due and payable (but such obligation shall not prevent the
         Trustee or any other appropriate Person from contesting any such tax in
         appropriate proceedings and shall not prevent the Trustee from
         withholding payment of such tax, if permitted by law, pending the
         outcome of such proceedings). The Trustee shall be entitled to
         reimbursement for all such amounts in accordance with Section 2.12;

                  (vii) the Trustee and the Tax Matters Person shall ensure that
         any such returns or reports filed on behalf of the Trust are properly
         executed by the appropriate person;

                  (viii) the Tax Matters Person shall represent the Trust 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 the Trust, enter into settlement
         agreements with any government taxing agency, extend any statute of
         limitations relating to any item of the Trust and otherwise act on
         behalf of the Trust in relation to any tax matter involving the Trust;

                  (ix) the Trustee and the Tax Matters Person shall as provided
         in Section 6.02, make available information necessary for the
         computation of any tax imposed (1) on

                                      -56-
<PAGE>

         transferors of residual interests to transferees that are not Permitted
         Transferees or (2) on pass-through entities, any interest in which is
         held by an entity which is not a Permitted Transferee;

                  (x) the Trustee and the Tax Matters Person shall make
         available to the Internal Revenue Service and those Persons specified
         by the REMIC Provisions all information necessary to compute any tax
         imposed (A) as a result of the Transfer of an Ownership Interest in a
         Residual Certificate to any Person who is not a Permitted Transferee,
         including the information described in Treasury regulations sections
         1.860D-1(b)(5) and 1.860E-2(a)(5) with respect to the "excess
         inclusions" of such Residual Certificate and (B) as a result of any
         regulated investment company, real estate investment trust, common
         trust fund, partnership, trust, estate or organization described in
         Section 1381 of the Code that holds an Ownership Interest in a Residual
         Certificate having as among its record holders at any time any Person
         that is not a Permitted Transferee. Reasonable compensation for
         providing such information may be accepted by the Trustee; and

                  (xi) the Trustee, the Servicer and the Tax Matters Person
         shall cooperate with each other in connection with the foregoing
         obligations, including signing any Tax Returns to the extent required
         by law.

         Section 2.13. Subsequent Transfers. (a) Subject to the satisfaction of
the conditions set forth in paragraph (b) below and pursuant to the terms of
each Subsequent Transfer Agreement, in consideration of the Trustee's delivery,
on behalf of the Trust, on the related Subsequent Transfer Date to or upon the
order of the Seller of the purchase price therefor, the Seller shall on any
Subsequent Transfer Date sell, transfer, assign, set over and otherwise convey
without recourse to the Trust, all right, title and interest of the Seller in
and to each Subsequent Mortgage Loan transferred pursuant to such Subsequent
Transfer Agreement, including (i) the related Principal Balance as of the
related Cut-Off Date after giving effect to payments of principal due on or
before the Cut-Off Date; (ii) all collections in respect of interest and
principal received after the related Cut-Off Date (other than principal and
interest due on or before such Cut-off Date); (iii) property which secured such
Subsequent Mortgage Loan and which has been acquired by foreclosure or deed in
lieu of foreclosure; (iv) its interest in any insurance policies in respect of
such Subsequent Mortgage Loan; and (v) all proceeds of any of the foregoing. The
transfer by the Seller of the Subsequent Mortgage Loans set forth on the
Subsequent Mortgage Loan Schedule to the Trust shall be absolute and shall be
intended by the Seller and all parties hereto to be treated as a sale by the
Seller to the Trust. If the assignment and transfer of the Mortgage Loans and
the other property specified in this Section 2.13 from the Seller to the Trust
pursuant to this Agreement is held or deemed not to be a sale or is held or
deemed to be a pledge of security for a loan, the Seller intends that the rights
and obligations of the parties shall be established pursuant to the terms of
this Agreement and that, in such event, (i) the Seller shall be deemed to have
granted and does hereby grant to the Trust as of such Subsequent Transfer Date a
first priority security interest in the entire right, title and interest of the
Seller in and to the Subsequent Mortgage Loans and all other property conveyed
to the Trust pursuant to this Section 2.13 and all proceeds thereof and (ii)
this Agreement shall constitute a security agreement under applicable law. The
purchase price shall be one hundred percent (100%) of the Principal Balances of
the Subsequent Mortgage Loans as of the related Cut-Off Date. On or before each
Subsequent Transfer Date, the Seller shall deliver to, and deposit with the
Trustee or the

                                      -57-
<PAGE>

Custodian on behalf of the Trustee, the Related Documents with respect to each
Subsequent Mortgage Loan transferred on such Subsequent Transfer Date, and the
related Subsequent Mortgage Loan Schedule in computer readable format with
respect to such Subsequent Mortgage Loans.

         (b) The Seller shall transfer and deliver to the Trustee or the
Custodian on behalf of the Trustee the Subsequent Mortgage Loans and the other
property and rights related thereto described in paragraph (a) above only upon
the satisfaction of each of the following conditions on or prior to the
applicable Subsequent Transfer Date:

                  (i) The Seller shall have provided the Servicer, the Trustee
         and the Rating Agencies with an Addition Notice, which notice shall be
         given not less than two Business Days prior to the applicable
         Subsequent Transfer Date and shall designate the Subsequent Mortgage
         Loans to be sold to the Trust and the aggregate Principal Balance of
         such Mortgage Loans and the Rating Agencies shall not have informed the
         Seller or the Trustee prior to the applicable Subsequent Transfer Date
         that the inclusion of such Subsequent Mortgage Loans would result in
         the downgrade or withdrawal of the ratings assigned to the Offered
         Certificates without regard to the Certificate Insurance Policy;

                  (ii) The Seller shall have delivered to the Trustee and the
         Servicer a duly executed Subsequent Transfer Agreement in substantially
         the form of Exhibit D;

                  (iii) The Seller shall have delivered to the Servicer for
         deposit in the Collection Account all principal collected and interest
         collected to the extent accrued and due after the related Cut-off Date;

                  (iv) As of each Subsequent Transfer Date, the Seller was not
         insolvent nor will the Seller be made insolvent by such transfer nor is
         the Seller aware of any pending insolvency;

                  (v) Such addition will not result in a material adverse tax
         consequence to any REMIC or the Holders of the Certificates;

                  (vi) The Funding Period shall not have terminated;

                  (vii) The Seller shall have provided the Trustee, the
         Certificate Insurer and the Rating Agencies with an Opinion of Counsel
         relating to the sale (i.e., "True Sale Opinion") of the Subsequent
         Mortgage Loans to the Trustee, the enforceability of the Subsequent
         Transfer Agreement and to the effect that the transfer of such
         Subsequent Mortgage Loans will not adversely affect the status of any
         REMIC as a REMIC which matters may be covered in the opinions delivered
         on the Closing Date;

                  (viii) The aggregate Principal Balance of Subsequent Mortgage
         Loans in Loan Group 1 and Loan Group 2 does not exceed the Original
         Pre-Funded Amount allocated to the applicable Loan Group;

                  (ix) The conditions specified in Exhibit Q hereto shall be
         met; and

                                      -58-
<PAGE>

                  (x) On the last Subsequent Transfer Date, the Trustee shall
         have received an accountant's letter confirming that the
         characteristics of the Mortgage Loans (including the Subsequent
         Mortgage Loans), satisfy the parameters set forth in Exhibit Q hereto.

         (c) The Seller, the Custodian and the Trustee shall comply with their
respective obligations set forth in Section 2.01, 2.02, 2.04 and 2.05 with
respect to the Subsequent Mortgage Loans delivered on each Subsequent Transfer
Date. References in such Sections to the Initial Mortgage Loans or Mortgage
Loans shall be deemed to refer to the Subsequent Mortgage Loans and references
to the Closing Date shall be deemed to refer to the applicable Subsequent
Transfer Date except that references to 360 days after the Closing Date shall
remain unchanged as shall representations made with specific reference to the
Initial Mortgage Loans.

                                  ARTICLE III

                 Administration and Servicing of Mortgage Loans

         Section 3.01. The Servicer. (a) It is intended that the Trust formed
hereunder shall constitute, and that the affairs of the Trust shall be conducted
so as to qualify each REMIC as, a "real estate mortgage investment conduit"
("REMIC") as defined in and in accordance with the REMIC Provisions. In
furtherance of such intentions, the Servicer covenants and agrees that it shall
not knowingly or intentionally take any action or omit to take any action that
would cause the termination of the REMIC status of any REMIC.

         (b) The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans consistent with the terms of this Agreement. The
Servicer may enter into Subservicing Agreements for any servicing and
administration of Mortgage Loans with any institution which (i) is in compliance
with the laws of each state necessary to enable it to perform its obligations
under such Subservicing Agreement and (ii) is an Approved Servicer or is an
affiliate of the Servicer. The Servicer shall give notice to the Trustee of the
appointment of any Subservicer. Any such Subservicing Agreement shall be
consistent with and not violate the provisions of this Agreement. The Servicer
shall be entitled to terminate any Subservicing Agreement in accordance with the
terms and conditions of such Subservicing Agreement and either itself directly
service the related Mortgage Loans or enter into a Subservicing Agreement with a
successor subservicer which qualifies hereunder.

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

                                      -59-
<PAGE>

         (d) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Servicer alone, and the Trustee and Certificateholders
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Subservicer except as set
forth in Section 3.01(e). The Servicer shall be solely liable for all fees owed
by it to any Subservicer irrespective of whether the Servicer's compensation
pursuant to this Agreement is sufficient to pay such fees.

         (e) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the Successor Servicer or
its designee approved by the Trustee shall thereupon assume all of the rights
and obligations of the Servicer under each Subservicing Agreement that the
Servicer may have entered into, unless the Successor Servicer or designee
approved by the Trustee elects to terminate any Subservicing Agreement. Any fee
payable in connection with such a termination will be payable by the outgoing
Servicer. If the Successor Servicer does not terminate the Subservicing
Agreements, the Successor Servicer, its designee or the successor servicer for
the Successor Servicer shall be deemed to have assumed all of the Servicer's
interest therein and to have replaced the Servicer as a party to each
Subservicing Agreement to the same extent as if the Subservicing Agreements had
been assigned to the assuming party, except that the Servicer shall not thereby
be relieved of any liability or obligations under the Subservicing Agreements
with regard to events that occurred prior to the date the Servicer ceased to be
the Servicer hereunder. The Servicer, at its expense and without right of
reimbursement therefor, shall, upon the request of the Successor Servicer,
deliver to the assuming party all documents and records relating to each
Subservicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of the Subservicing
Agreements to the assuming party.

         (f) Consistent with the terms of this Agreement, the Servicer may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Servicer's good faith determination such
waiver, modification, postponement or indulgence is not materially adverse to
the interests of the Certificateholders, provided, however, that (unless (x) the
Mortgagor is in default with respect to the Mortgage Loan, or such default is,
in the judgment of the Servicer, imminent and (y) such waiver, modification,
postponement or indulgence would not cause any REMIC to be disqualified or
otherwise cause a tax to be imposed on any REMIC) the Servicer may not permit
any modification with respect to any Mortgage Loan that would change the Loan
Rate, defer or forgive the payment of any principal or interest (unless in
connection with the liquidation of the related Mortgage Loan) or extend the
final maturity date on the Mortgage Loan. No costs incurred by the Servicer or
any Subservicer in respect of Servicing Advances shall, for the purposes of
distributions to Certificateholders, be added to the amount owing under the
related Mortgage Loan. Without limiting the generality of the foregoing, the
Servicer shall continue, and is hereby authorized and empowered to execute and
deliver on behalf of the Trustee and each Certificateholder, all instruments of
satisfaction or cancellation, or of partial or full release, discharge and all
other comparable instruments with respect to the Mortgage Loans and with respect
to the Mortgaged Properties. If reasonably required by the Servicer, the Trustee
shall furnish the Servicer with any powers of attorney and other documents
necessary or

                                      -60-
<PAGE>

appropriate to enable the Servicer to carry out its servicing and administrative
duties under this Agreement.

         Notwithstanding anything to the contrary contained herein, the
Servicer, in servicing and administering the Mortgage Loans, shall employ or
cause to be employed procedures (including collection, foreclosure and REO
Property management procedures) and exercise the same care that it customarily
employs and exercises in servicing and administering mortgage loans for its own
account, in accordance with accepted mortgage servicing practices of prudent
lending institutions servicing mortgage loans similar to the Mortgage Loans and
giving due consideration to the Certificateholders' reliance on the Servicer.

         (g) Within ninety (90) days after such time as the Trustee receives the
resignation of, or notice of the removal of, the Servicer from its rights and
obligations under this Agreement, and with respect to resignation pursuant to
Section 7.04, after receipt by the Trustee of the Opinion of Counsel required
pursuant to Section 7.04, the Successor Servicer shall assume all of the rights
and obligations of the Servicer, subject to Section 8.02; provided that if the
Servicer is removed pursuant to Section 8.02, the Successor Servicer shall
immediately be obligated to make Monthly Advances and Servicing Advances as
required in this Agreement. The Servicer shall, upon request of the Successor
Servicer but at the expense of the Servicer, deliver to the Successor Servicer
all documents and records relating to the Mortgage Loans and an accounting of
amounts collected and held by the Servicer and otherwise use its best efforts to
effect the orderly and efficient transfer of servicing rights and obligations to
the assuming party who shall be entitled to reimbursement by the Servicer (or,
to the extent not paid by the Servicer, by the Trust pursuant to Section
5.01(a)(16) for Servicing Transfer Costs.

         (h) The Servicer shall deliver a list of Servicing Officers to the
Trustee on or before the Closing Date.

         (i) Consistent with the terms of this Agreement, the Servicer may
consent to the placing of a lien senior to that of the Mortgage on the related
Mortgaged Property; provided that such senior lien secures a mortgage loan that
refinances a First Lien and the combined loan-to-value ratio of the related
Mortgage Loan immediately following the refinancing (based on the outstanding
principal balance of the Mortgage Loan and the original principal balance of
such refinanced mortgage loan) is not greater than the Combined Loan-to-Value
Ratio of such Mortgage Loan as of the related Cut-Off Date.

         Section 3.02. Collection of Certain Mortgage Loan Payments. (a) 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, follow such collection
procedures as it follows with respect to mortgage loans in its servicing
portfolio comparable to the Mortgage Loans. Consistent with the foregoing, and
without limiting the generality of the foregoing, the Servicer may in its
discretion (i) waive any prepayment charge, late payment charge or any
assumption fees or other fees which may be collected in the ordinary course of
servicing such Mortgage Loan and (ii) arrange with a Mortgagor a schedule for
the payment of interest due and unpaid; provided that such arrangement is
consistent with the Servicer's policies with respect to the mortgage loans it
owns or services; provided, further, that notwithstanding such arrangement such
Mortgage Loans will

                                      -61-
<PAGE>

be included in the monthly information delivered by the Servicer to the Trustee
pursuant to Section 5.03.

         (b) The Servicer shall establish and maintain a separate trust account
(the "Collection Account") titled "Wells Fargo Bank Minnesota, National
Association, as Trustee, in trust for the registered holders of DFC HEL Trust
2001-2 Asset-Backed Certificates, Series 2001-2." The Collection Account shall
be an Eligible Account. On the Closing Date, the Seller shall cause to be
deposited in the Collection Account any amounts representing payments on and any
collections in respect of the Mortgage Loans received after the related Cut-Off
Date (other than principal and interest accrued and due on or prior to September
1, 2001) and prior to the Closing Date. The Servicer shall deposit within two
Business Days, following receipt thereof the following payments and collections
received or made by it (without duplication):

                  (i) all payments received after the related Cut-Off Date on
         account of principal on the Mortgage Loans (exclusive of payments in
         respect of principal on the Mortgage Loans which were due on or prior
         to the related Cut-off Date) and all Principal Prepayments and
         Curtailments collected after the related Cut-Off Date;

                  (ii) all payments received after the related Cut-Off Date on
         account of interest on the Mortgage Loans (exclusive of payments in
         respect of interest on the Mortgage Loans which have accrued and were
         due on or prior to the related Cut-Off Date);

                  (iii) all Net Liquidation Proceeds net of Foreclosure Profits;

                  (iv) all Insurance Proceeds other than any portion thereof
         constituting Net Liquidation Proceeds;

                  (v) all Released Mortgaged Property Proceeds;

                  (vi) any amounts payable in connection with the repurchase of
         any Mortgage Loan and the amount of any Substitution Adjustment
         pursuant to Sections 2.02, 2.04, 2.06 and 3.16; and

                  (vii) any amount required to be deposited in the Collection
         Account pursuant to Sections 3.05, 3.06, 3.07, 5.02 or 5.05.

provided, however, that, with respect to each Due Period, the Servicer shall be
permitted to retain (x) from payments in respect of interest on a Mortgage Loan,
the Servicing Fee for such Mortgage Loan and (y) from payments from Mortgagors,
Liquidation Proceeds, Insurance Proceeds and Released Mortgaged Property
Proceeds, any unreimbursed Servicing Advances and Monthly Advances related
thereto. The foregoing requirements respecting deposits to the Collection
Account are exclusive, it being understood that, without limiting the generality
of the foregoing, the Servicer need not deposit in the Collection Account
amounts representing Servicing Compensation or amounts received by the Servicer
for the accounts of Mortgagors for application toward the payment of taxes,
insurance premiums, assessments and similar items.

         The Servicer may cause the institution maintaining the Collection
Account to invest any funds in the Collection Account in Eligible Investments
(including obligations of the Servicer or

                                      -62-
<PAGE>

any of its Affiliates, if such obligations otherwise qualify as Eligible
Investments) pursuant to Section 5.05.

         Section 3.03. Withdrawals from the Collection Account. The Servicer
shall withdraw or cause to be withdrawn funds from the Collection Account for
the following purposes:

                  (i) before 1:00 p.m. (New York City time) on (x) the third
         Business Day preceding each Distribution Date, to withdraw the lesser
         of the Available Funds then in the Collection Account and an amount
         equal to the Guaranteed Distributions for such Distribution Date and
         (y) on the related Deposit Date to withdraw the remaining Available
         Funds, and, in each case, remit such funds to the Trustee for deposit
         to the Distribution Account;

                  (ii) to reimburse the Servicer for any accrued unpaid
         Servicing Compensation which the Servicer would not have been required
         to deposit in the Collection Account and for unreimbursed Monthly
         Advances and Servicing Advances. The Servicer's right to reimbursement
         for unpaid Servicing Fees and unreimbursed Servicing Advances shall be
         limited to late collections on the related Mortgage Loan, including
         Liquidation Proceeds, Released Mortgaged Property Proceeds, Insurance
         Proceeds and such other amounts as may be collected by the Servicer
         from the related Mortgagor or otherwise relating to the Mortgage Loan
         in respect of which such reimbursed amounts are owed. The Servicer's
         right to reimbursement for unreimbursed Monthly Advances shall be
         limited to late collections on any Mortgage Loan and to Liquidation
         Proceeds, Released Mortgaged Property Proceeds, Insurance Proceeds and
         any purchase or repurchase proceeds on related Mortgage Loans;

                  (iii) to withdraw any amount received from a Mortgagor that is
         recoverable and sought to be recovered as a voidable preference by a
         trustee in bankruptcy pursuant to the United States Bankruptcy Code in
         accordance with a final, nonappealable order of a court having
         competent jurisdiction;

                  (iv) to withdraw any funds deposited in the Collection Account
         that were not required to be deposited therein (such as Servicing
         Compensation) or were deposited therein in error and to pay such funds
         to the appropriate Person;

                  (v) to withdraw funds necessary for the conservation and
         disposition of REO Property pursuant to Section 3.06 to the extent not
         advanced by the Servicer;

                  (vi) to reimburse the Servicer for Nonrecoverable Advances;

                  (vii) to pay to the Seller collections received in respect of
         accrued interest and principal on the Mortgage Loans due on or before
         the related Cut-Off Date;

                  (viii) to pay to the Servicer or the Trustee the portion of
         any Purchase Price in respect of clause (iv) of the definition thereof
         or of any Substitution Adjustment in respect of clause (d) of the
         definition thereof to the extent paid in respect of amounts incurred by
         or imposed on the Servicer or the Trustee, as the case may be;

                                      -63-
<PAGE>

                  (ix) to reimburse the Servicer for expenses incurred by it in
         connection with the Mortgage Loans or Certificates and reimbursable
         pursuant to Section 7.03 hereof provided that such amount shall only be
         withdrawn following the withdrawal from the Collection Account for
         deposit into the Distribution Account pursuant to clause (i)(y) above;
         and

                  (x) to clear and terminate the Collection Account upon the
         termination of this Agreement and to pay any amounts remaining therein
         to the applicable Class R Certificateholders.

         Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses. The Servicer shall cause to be maintained for each Mortgage Loan fire
and hazard insurance naming the Servicer as loss payee thereunder providing
extended coverage in an amount which is at least equal to the lesser of (i) the
maximum insurable value of the improvements securing such Mortgage Loan from
time to time, (ii) the combined principal balance owing on such Mortgage Loan
and any mortgage loan senior to such Mortgage Loan and (iii) the minimum amount
required to compensate for damage or loss on a replacement cost basis. The
Servicer shall also maintain on property acquired upon foreclosure or by deed in
lieu of foreclosure hazard insurance with extended coverage in an amount which
is at least equal to the lesser of (i) the maximum insurable value from time to
time of the improvements which are a part of such property, (ii) the combined
principal balance owing on such Mortgage Loan and any mortgage loan senior to
such Mortgage Loan and (iii) the minimum amount required to compensate for
damage or loss on a replacement cost basis at the time of such foreclosure, fire
and or deed in lieu of foreclosure plus accrued interest and the good-faith
estimate of the Servicer of related Servicing Advances to be incurred in
connection therewith. Amounts collected by the Servicer under any such policies
shall be deposited in the Collection Account to the extent called for by Section
3.02. In cases in which any Mortgaged Property is located in a federally
designated flood area, the hazard insurance to be maintained for the related
Mortgage Loan shall include flood insurance to the extent such flood insurance
is available and the Servicer has determined such insurance to be necessary in
accordance with accepted mortgage loan servicing standards for mortgage loans
similar to the Mortgage Loans. All such flood insurance shall be in amounts
equal to the least of (A) the amount in clause (i) above, (B) the amount in
clause (ii) above and (C) the maximum amount of insurance available under the
National Flood Insurance Act of 1968, as amended. The Servicer shall be under no
obligation to require that any Mortgagor maintain earthquake or other additional
insurance and shall be under no obligation itself to maintain any such
additional insurance on property acquired in respect of a Mortgage Loan, other
than pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. The costs and expenses
incurred by the Servicer in maintaining any such insurance shall constitute
Servicing Advances.

         Section 3.05. Maintenance of Mortgage Impairment Insurance Policy. In
the event that the Servicer shall obtain and maintain a blanket policy with an
insurer having a General Policy rating of A:VIII or better in Best's Key Rating
Guide, then, to the extent such policy names the Servicer as loss payee and
provides coverage in an amount equal to the aggregate unpaid principal balance
on the Mortgage Loans without co-insurance, and otherwise complies with the
requirements of Section 3.04, the Servicer shall be deemed conclusively to have
satisfied its obligations with respect to fire and hazard insurance coverage
under Section 3.04, it being

                                      -64-
<PAGE>

understood and agreed that such blanket 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 a policy complying with Section
3.04, and there shall have been a loss which would have been covered by such
policy, deposit in the Collection Account the difference, if any, between the
amount that would have been payable under a policy complying with Section 3.04
and the amount paid under such blanket policy. Upon the request of the Trustee,
the Servicer shall cause to be delivered to the Trustee, a certified true copy
of such policy. 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 the Certificateholders, claims under any such policy in
a timely fashion in accordance with the terms of such policy.

         Section 3.06. Management and Realization Upon Defaulted Mortgage Loans.
The Servicer shall manage, conserve, protect and operate each REO Property for
the Certificateholders solely for the purpose of its prudent and prompt
disposition and sale; provided that the Servicer shall not be required to expend
its own funds in connection with any foreclosure or towards the restoration of
any property unless it shall determine (i) that such restoration and/or
foreclosure will increase the proceeds of liquidation of the Mortgage Loan after
reimbursement to itself of such expenses and (ii) that such expenses will be
recoverable to it through Liquidation Proceeds (respecting which it shall have
priority for purposes of withdrawals from the Certificate Account pursuant to
Section 3.03 hereof). The Servicer shall be responsible for all other costs and
expenses incurred by it in any such proceedings; provided that it shall be
entitled to reimbursement thereof from the proceeds of liquidation of the
related Mortgaged Property, as contemplated in Section 3.03 hereof. The Servicer
shall, either itself or through an agent selected by the Servicer, manage,
conserve, protect and operate the REO Property in the same manner that it
manages, conserves, protects and operates other foreclosed property for its own
account, and in the same manner that similar property in the same locality as
the REO Property is managed. The Servicer shall attempt to sell the same (and
may temporarily rent the same) on such terms and conditions as the Servicer
deems to be in the best interest of the Certificateholders.

         The Servicer shall cause to be deposited, no later than two Business
Days after the receipt thereof, in the Collection Account, all revenues received
with respect to the related REO Property and shall retain, or cause the Trustee
to withdraw therefrom, funds necessary for the proper operation, management and
maintenance of the REO Property and the fees of any managing agent acting on
behalf of the Servicer.

         The disposition of REO Property shall be carried out by the Servicer
for cash at such price, and upon such terms and conditions, as the Servicer
deems to be in the best interest of the Certificateholders and, as soon as
practicable thereafter, the expenses of such sale shall be paid out of the
proceeds of such sale. The cash proceeds of sale of the REO Property shall be
promptly deposited in the Collection Account, net of Foreclosure Profits and of
any related unreimbursed Servicing Advances, accrued and unpaid Servicing Fees
and unreimbursed Monthly Advances payable to the Servicer in accordance with
Section 3.03, for distribution to the Certificateholders in accordance with
Section 5.01.

         The Servicer shall foreclose upon or otherwise comparably convert to
ownership Mortgaged Properties securing such of the Mortgage Loans as come into
and continue in default

                                      -65-
<PAGE>

either when no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Section 3.02 subject to the provisions contained
in the last paragraph of this Section 3.06.

         In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee or to its nominee on behalf of
Certificateholders.

         In the event any Mortgaged Property is acquired as aforesaid or
otherwise in connection with a default or imminent default on a Mortgage Loan,
the Servicer shall (i) dispose of such Mortgaged Property within three years
after the close of the taxable year in which the Mortgaged Property was acquired
(the "grace period") or (ii) prior to the expiration of any extension to such
grace period which is requested on behalf of the Trust by the Servicer (at the
expense of the Trust) more than 60 days prior to the end of the grace period and
granted by the Internal Revenue Service, unless the Trust shall have received an
Opinion of Counsel to the effect that the holding of such Mortgaged Property
subsequent to expiration of the grace period will not result in the imposition
of taxes on "prohibited transactions" as defined in Section 860F of the Code or
cause any REMIC to fail to qualify as a REMIC at any time that any Regular
Certificates are outstanding. Notwithstanding any other provision of this
Agreement, (i) no Mortgaged Property acquired by the Servicer pursuant to this
Section 3.06 shall be rented (or allowed to continue to be rented) or otherwise
used for the production of income by or on behalf of the Trust and (ii) no
construction shall take place on such Mortgaged Property in such a manner or
pursuant to any terms, in either case, that would cause such Mortgaged Property
to fail to qualify as "foreclosure property" within the meaning of Section
860G(a)(8) of the Code or result in the receipt by the Trust of any "net income
from foreclosure property" which is subject to taxation within the meaning of
Sections 860G(c) and 857(b)(4)(B) of the Code. If a period greater than the
grace period is permitted under this Agreement and is necessary to sell any REO
Property, the Servicer shall give appropriate notice to the Trustee and shall
report monthly to the Trustee as to the progress being made in selling such REO
Property.

         If the Servicer has actual knowledge that a Mortgaged Property which
the Servicer is contemplating acquiring in foreclosure or by deed in lieu of
foreclosure is located within a one-mile radius of any site with environmental
or hazardous waste risks known to the Servicer, the Servicer will notify the
Trustee prior to acquiring the Mortgaged Property. Nothing in this Section 3.06
shall affect the Servicer's right to deem certain advances proposed to be made
Nonrecoverable Advances. For the purpose of this Section 3.06, actual knowledge
of the Servicer means actual knowledge of a Responsible Officer of the Servicer
involved in the servicing of the relevant Mortgage Loan. 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.

         Notwithstanding the other provisions of this Section 3.06 or any other
provision of this Agreement to the contrary, if any Mortgage Loan that is more
than 89 days delinquent as of the Closing Date (hereafter a "Foreclosure
Restricted Mortgage Loan") comes into and continues in default, the Servicer
will nevertheless not complete foreclosure upon, accept a deed in-lieu of
foreclosure of, or otherwise comparably convert the ownership of any property
securing such Foreclosure Restricted Mortgage Loan (hereafter, "Foreclosure
Restricted Property") if the value

                                      -66-
<PAGE>

of such Foreclosure Restricted Property (measured in all cases as the
outstanding principal balance of the Foreclosure Restricted Mortgage Loan plus
accrued interest), when added to the value of all other Foreclosure Restricted
Property then held as part of the Trust, would exceed 3/4 of one percent (0.75%)
of the aggregate Principal Balance of all Mortgage Loans then held as part of
the Trust. Moreover, if, as of the next Distribution Date, the value of all
Foreclosure Restricted Property held as part of the Trust will exceed one
percent (1.00%) of the aggregate Principal Balance of all Mortgage Loans held as
part of the Trust, then prior to such Distribution Date, the Servicer will sell
as much Foreclosure Restricted Property as necessary so that as of such
Distribution Date, the value of all Foreclosure Restricted Property held as part
of the Trust will be less than one percent (1.00%) of the aggregate Principal
Balance of all Mortgage Loans held as part of the Trust.

         Section 3.07. Trustee to Cooperate. Upon any Principal Prepayment, the
Servicer is authorized to execute, pursuant to the authorization contained in
Section 3.01(f), if the related Assignment of Mortgage has been recorded as
required hereunder, an instrument of satisfaction regarding the related
Mortgage, which instrument of satisfaction shall be recorded by the Servicer if
required by applicable law and be delivered to the Person entitled thereto. It
is understood and agreed that no expenses incurred in connection with such
instrument of satisfaction or transfer shall be reimbursed from amounts
deposited in the Collection Account. If the Trustee or Custodian is holding the
Mortgage Files, from time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, the Trustee or Custodian shall, upon request
of the Servicer and delivery to the Custodian two copies of a Request for
Release, one of which will be returned to the Servicer with the Mortgage File,
in the form annexed hereto as Exhibit I, signed by a Servicing Officer or in a
mutually agreeable electronic format which originates from a Servicing Officer,
release the related Mortgage File to the Servicer, and the Trustee or Custodian
shall execute such documents, in the forms provided by the Servicer, as shall be
necessary for the prosecution of any such proceedings or the taking of other
servicing actions. Such Request for Release shall obligate the Servicer to
return the Mortgage File to the Trustee or the Custodian, as the case may be,
when the need therefor by the Servicer no longer exists unless the Mortgage Loan
shall be liquidated, in which case, upon receipt of a certificate of a Servicing
Officer similar to that hereinabove specified, the Mortgage File shall be
released by the Trustee or Custodian to the Servicer.

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

                                      -67-
<PAGE>

         Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Servicer. Subject to Section 5.02, the Servicer shall be entitled to retain the
Servicing Fee in accordance with Section 3.02 as compensation for its services
in connection with servicing the Mortgage Loans. Moreover, prepayment charges,
late payment charges or other receipts not required to be deposited in the
Collection Account, including, without limitation, Foreclosure Profits and,
subject to Section 5.05, investment income on the Collection Account and the
Distribution Account shall be additional servicing compensation and retained by
the Servicer. The 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 specifically provided herein.

         Section 3.09. Annual Statement as to Compliance. (a) The Servicer will
deliver to the Seller, the Trustee, the Certificate Insurer and the Rating
Agencies, on or before May 31 of each year, beginning May 31, 2002, an Officer's
Certificate stating that (i) a review of the activities of the Servicer during
the preceding fiscal year and of its performance under this Agreement has been
made under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all its material
obligations under this Agreement throughout such fiscal 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. The Servicer
shall promptly notify the Seller, the Trustee and each Rating Agency upon any
change in the basis on which its fiscal year is determined.

         (b) The Servicer shall deliver to the Trustee, the Certificate Insurer
and each of the Rating Agencies, promptly after having obtained knowledge
thereof, but in no event later than five Business Days thereafter, written
notice by means of an Officer's Certificate of any event which, with the giving
of notice or the lapse of time or both, would become an Event of Default.

         Section 3.10. Annual Servicing Review. Not later than May 31 of each
year, beginning May 31, 2002, the Servicer, at its expense, shall cause a firm
of independent public accountants which is a member of the American Institute of
Certified Public Accountants to furnish a letter or letters to the Seller, the
Trustee, the Certificate Insurer and each Rating Agency to the effect that such
firm has, with respect to the Servicer's overall servicing operations, examined
such operations in accordance with the requirements of the Uniform Single
Attestation Program for Mortgage Bankers, and stating such firm's conclusions
relating thereto.

         Section 3.11. Access to Certain Documentation and Information Regarding
the Mortgage Loans. The Servicer shall provide to the Seller, the Trustee, the
Custodian, the Certificate Insurer, Certificateholders which are federally
insured savings and loan associations, the Office of Thrift Supervision, the
FDIC and the supervisory agents and examiners of the Office of Thrift
Supervision access to the documentation in the Servicer's possession regarding
the Mortgage Loans required by applicable regulations of the Office of Thrift
Supervision and the FDIC (acting as operator of the SAIF or the BIF), such
access being afforded without charge but only upon reasonable request and during
normal business hours at the offices of the Servicer. Nothing in this Section
3.11 shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Mortgagors
and the failure of the Servicer to provide access as provided in this Section
3.11 as a result of such obligation shall not constitute a breach of this
Section 3.11.

                                      -68-
<PAGE>

         Section 3.12. Maintenance of Certain Servicing Insurance Policies. The
Servicer shall during the term of its service as servicer maintain in force (i)
a policy or policies of insurance covering errors and omissions in the
performance of its obligations as servicer hereunder and (ii) a fidelity bond in
respect of its officers, employees or agents. Each such policy or policies and
bond shall, together, comply with the requirements from time to time of Fannie
Mae for persons performing servicing for mortgage loans purchased by Fannie Mae.

         Section 3.13. Reports to the Securities and Exchange Commission. Within
15 days after each Distribution Date, the Trustee shall, on behalf of the Trust,
cause to be filed with the Securities and Exchange Commission via the Electronic
Data Gathering and Retrieval System (EDGAR), a Form 8-K with a copy of the
Remittance Report for such Distribution Date as an exhibit thereto. Prior to
January 30, 2002, the Trustee shall file a Form 15 Suspension Notification with
respect to the Trust, if applicable. Prior to March 30, 2002, the Trustee shall
file a Form 10-K, in substance conforming to industry standards, with respect to
the Trust. The Seller hereby grants to the Trustee a limited power of attorney
to execute and file each such document on behalf of the Seller. Such power of
attorney shall continue until either the earlier of (i) receipt by the Trustee
from the Seller of written termination of such power of attorney and (ii) the
termination of the Trust. Each of the Seller and the Servicer agrees to promptly
furnish to the Trustee, from time to time upon request, such further
information, reports, and financial statements within its control related to
this Agreement and the Mortgage Loans as the Trustee reasonably deems
appropriate to prepare and file all necessary reports with the Securities and
Exchange Commission

         Section 3.14. Reports of Foreclosures and Abandonments of Mortgaged
Properties, Returns Relating to Mortgage Interest Received from Individuals and
Returns Relating to Cancellation of Indebtedness. The Servicer shall make
reports of foreclosures and abandonments of any Mortgaged Property for each year
beginning in 2001. The Servicer shall file reports relating to each instance
occurring during the previous calendar year in which the Servicer (i) on behalf
of the Trust acquires an interest in any Mortgaged Property through foreclosure
or other comparable conversion in full or partial satisfaction of a Mortgage
Loan or (ii) knows or has reason to know that any Mortgaged Property has been
abandoned. The reports from the Servicer shall be in form and substance
sufficient to meet the reporting requirements imposed by Sections 6050J, 6050H
and 6050P of the Code.

         Section 3.15. Advances by the Servicer. (a) Not later than 1:00 p.m.
New York time on the Deposit Date related to each Distribution Date, the
Servicer shall remit to the Trustee for deposit in the Distribution Account an
amount to be distributed on the related Distribution Date pursuant to Section
5.01, equal to the Monthly Payment due on each Mortgage Loan during the related
Due Period, but not received as of the related Determination Date (net of the
Servicing Fee) such amount being defined herein as the "Monthly Advance";
provided, however that if the amount of Available Funds withdrawn from the
Collection Account on the third Business Day before such Distribution Date is
less than the Guaranteed Distributions for such Distribution Date, on such third
Business Day the Servicer shall remit to the Trustee for deposit in the
Distribution Account such portion of the aggregate Monthly Advance for the
Distribution Date as shall be necessary to eliminate the shortfall. With respect
to any Balloon Loan that is delinquent on its maturity date, the Servicer will
continue to make Monthly Advances with respect to such Balloon Loan in an amount
equal to one month's interest on the unpaid principal

                                      -69-
<PAGE>

balance at the applicable Loan Rate (net of the Servicing Fee) according to the
original amortization schedule for such Mortgage Loan. The obligation to make
Monthly Advances with respect to each Mortgage Loan shall continue until such
Mortgage Loan becomes a Liquidated Mortgage Loan.

         (b) Notwithstanding anything herein to the contrary, (i) no Servicing
Advance or Monthly Advance shall be required to be made hereunder if the
Servicer determines that such Servicing Advance or Monthly Advance would, if
made, constitute a Nonrecoverable Advance and (ii) no Monthly Advance or
Servicing Advance shall be required with respect to Civil Relief Act Interest
Shortfalls.

         (c) All Monthly Advances and Servicing Advances, including any
Nonrecoverable Advances shall be reimbursed on a first in, first out basis.

         (d) So long as the Servicer is Ocwen Federal Bank FSB or otherwise has
long-term debt rated at least investment grade by one of the Rating Agencies,
Monthly Advances may be made by the Servicer 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 3.15, used by the Servicer in discharge of
any such Monthly Advance) or (iii) in the form of any combination of (i) and
(ii) aggregating the total amount of Monthly Advances to be made by the Servicer
with respect to the Mortgage Loans and REO Properties. Any amounts held for
future distribution and so used shall be appropriately reflected in the
Servicer's records and replaced by the Servicer by deposit in the Collection
Account on or before the next Deposit Date.

         Section 3.16. Optional Purchase of Defaulted Mortgage Loans. The
Servicer, in its sole discretion, shall have the right to elect (by written
notice sent to the Trustee) to purchase for its own account from the Trust any
Mortgage Loan which is 90 days or more delinquent in the manner and at the price
specified in Section 2.02. The Purchase Price for any Mortgage Loan purchased
hereunder shall be deposited in the Collection Account and the Trustee, upon
receipt of such deposit, shall release or cause to be released to the purchaser
of such Mortgage Loan the related Mortgage File and shall execute and deliver
such instruments of transfer or assignment prepared by the purchaser of such
Mortgage Loan, in each case without recourse, as shall be necessary to vest in
the purchaser of such Mortgage Loan any Mortgage Loan released pursuant hereto
and the purchaser of such Mortgage Loan shall succeed to all the Trustee's
right, title and interest in and to such Mortgage Loan and all security and
documents related thereto. Such assignment shall be an assignment outright and
not for security. The purchaser of such Mortgage Loan shall thereupon own such
Mortgage Loan, and all security and documents, free of any further obligation to
the Trustee or the Certificateholders with respect thereto.

         Section 3.17. Superior Liens. The Servicer shall file (or cause to be
filed) a request for notice of any action by a superior lienholder under a First
Lien for the protection of the Trustee's interest, where permitted by local law
and whenever applicable state law does not require that a junior lienholder be
named as a party defendant in foreclosure proceedings in order to foreclose such
junior lienholder's equity of redemption.

                                      -70-
<PAGE>

         If the Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations secured by the First Lien,
or has declared or intends to declare a default under the mortgage or the
promissory note secured thereby, or has filed or intends to file an election to
have the Mortgaged Property sold or foreclosed, the Servicer shall take, on
behalf of the Trust, whatever actions are necessary to protect the interests of
the Certificateholders and/or to preserve the security of the related Mortgage
Loan, subject to the application of the REMIC Provisions in accordance with the
terms of this Agreement. The Servicer shall promptly notify the Trustee of any
such action or circumstances. The Servicer shall advance the necessary funds to
cure the default or reinstate the superior lien, if such advance is in the best
interests of the Certificateholders in accordance with the servicing standards
in Section 3.01. The Servicer shall not make such an advance except to the
extent that it determines in its reasonable good faith judgment that the advance
would be recoverable from Liquidation Proceeds on the related Mortgage Loan and
in no event in an amount that is greater than the Principal Balance of the
related Mortgage Loan. The Servicer shall thereafter take such action as is
necessary to recover the amount so advanced.

         Section 3.18. Assumption Agreements. When a Mortgaged Property has been
or is about to be conveyed by the Mortgagor, the Servicer shall, to the extent
it has knowledge of such conveyance or prospective conveyance, exercise its
right to accelerate the maturity of the related Mortgage Loan under any
"due-on-sale" clause contained in the related Mortgage or Mortgage Note;
provided, however, that the Servicer shall not exercise any such right if the
"due-on-sale" clause, in the reasonable belief of the Servicer, is not
enforceable under applicable law. In such event, the Servicer shall enter into
an assumption and modification agreement with the person to whom such property
has been or is about to be conveyed, pursuant to which such person shall become
liable under the Mortgage Note and, unless prohibited by applicable law, the
Mortgagor shall remain liable thereon. The Servicer, in accordance with accepted
mortgage loan servicing standards for mortgage loans similar to the Mortgage
Loans, is also authorized to enter into a substitution of liability whereby such
person is substituted as mortgagor and becomes liable under the Mortgage Note.
The Servicer shall notify the Trustee that any such substitution or assumption
agreement has been completed by forwarding to the Trustee the original of such
substitution or assumption agreement which original shall be added by the
Trustee 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. In connection with any assumption or
substitution agreement entered into pursuant to this Section 3.18, the Servicer
shall not change the Loan Rate or the Monthly Payment, defer or forgive the
payment of principal or interest, reduce the outstanding principal amount or
extend the final maturity date on such Mortgage Loan.

         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 any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.

         Section 3.19. Payment of Taxes, Insurance and Other Charges. With
respect to each Mortgage Loan, the Servicer shall maintain accurate records
reflecting fire and hazard insurance coverage.

                                      -71-
<PAGE>

         With respect to each Mortgage Loan as to which the Servicer maintains
escrow accounts, the Servicer shall maintain accurate records reflecting the
status of ground rents, taxes, assessments, water rates and other charges which
are or may become a lien upon the Mortgaged Property and the status of primary
mortgage guaranty insurance premiums, if any, and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment thereof prior to
the applicable penalty or termination date and at a time appropriate for
securing maximum discounts allowable, employing for such purpose deposits of the
Mortgagor in any escrow account which shall have been estimated and accumulated
by the Servicer in amounts sufficient for such purposes, as allowed under the
terms of the Mortgage. To the extent that a Mortgage does not provide for escrow
payments, the Servicer shall, if it has received notice of a default or
deficiency, monitor such payments to determine if they are made by the
Mortgagor. The Servicer shall maintain a third-party (which may be an Affiliate
of the Servicer) tax monitoring service.

         Section 3.20. Advance Facility.

         (a) With the prior written consent of the Certificate Insurer, the
Servicer is hereby authorized to enter in to a financing or other facility (any
such arrangement, an "Advance Facility") under which (1) the Servicer assigns or
pledges to another Person (an "Advancing Person") the Servicer's rights under
this Agreement to be reimbursed for any Monthly Advances or Servicing Advances
and/or (2) an Advancing Person agrees to fund some or all Monthly Advances
and/or Servicing Advances required to be made by the Servicer pursuant to this
Agreement. No consent of the Trustee, Certificateholders or any other party is
required before the Servicer may enter into an Advance Facility; provided,
however, that the consent of the Trustee shall be required before the Servicer
may cause to be outstanding at one time more than one Advance Facility with
respect to Monthly Advances or more than one Advance Facility with respect to
Servicing Advances. Notwithstanding the existence of any Advance Facility under
which an Advancing Person agrees to fund Monthly Advances and/or Servicing
Advances on the Servicer's behalf, the Servicer shall remain obligated pursuant
to this Agreement to make Monthly Advances and Servicing Advances pursuant to
and as required by this Agreement, and if Servicer enters into an Advance
Facility, and for so long as an Advancing Person remains entitled to receive
reimbursement for any Monthly Advances and/or Servicing Advances, as applicable,
pursuant to Section 3.02(b), Section 3.03(ii) or Section 3.03(vi) of this
Agreement, but instead the Servicer shall be required to include amounts
collected that would otherwise be retained by the Servicer to reimburse it for
previously unreimbursed Monthly Advances ("Monthly Advance Reimbursement
Amounts") and/or previously unreimbursed Servicing Advances ("Servicing Advance
Reimbursement Amounts" and together with Monthly Advance Reimbursement Amounts,
"Reimbursement Amounts")(in each case to the extent such type of Reimbursement
Amount is included in the Advance Facility), in the remittance to the Trustee
made pursuant to Section 3.03(i) of this Agreement, to the extent of amounts on
deposit in the Collection Account on the related Master Servicer Remittance
Date. Notwithstanding anything to the contrary herein, in no event shall Monthly
Advance Reimbursement Amounts or Servicing Advance Reimbursement Amounts be
included in "Available Funds" or distributed to Certificateholders. If the
Servicer makes a remittance to the Trustee of Reimbursement Amounts under
Section 3.03(i) as described above, the Servicer shall report to the Trustee the
portions of such remittance that consist of Available Funds, Monthly Advance
Reimbursement Amounts and Servicing Advance Reimbursement Amounts, respectively.

                                      -72-
<PAGE>

         (b) If the Servicer enters into an Advance Facility, the Servicer and
the related Advancing Person shall deliver to the Trustee a written notice and
payment instruction (an "Advance Facility Notice"), providing the Trustee with
written payment instructions as to where to remit Monthly Advance Reimbursement
Amounts and/or Servicing Advance Reimbursement Amounts (each to the extent such
type of Reimbursement Amount is included within the Advance Facility) on
subsequent Distribution Dates. The payment instruction shall require the
applicable Reimbursement Amounts to be distributed to the Advancing Person or to
a trustee or custodian (an "Advance Facility Trustee") designated in the Advance
Facility Notice. An Advance Facility Notice may only be terminated by the joint
written direction of the Servicer and the related Advancing Person (and any
related Advance Facility Trustee); provided, however, that the provisions of
this Section 3.20 shall cease to be applicable when all Monthly Advances and
Servicing Advances funded by an Advancing Person, and when all Monthly Advances
and Servicing Advances the rights to be reimbursed for which have been assigned
or pledged to an Advancing Person, have been repaid to the related Advancing
Person in full.

         (c) Reimbursement Amounts shall consist solely of amounts in respect of
Monthly Advances and/or Servicing Advances made with respect to the Mortgage
Loans for which the Servicer would be permitted to reimburse itself in
accordance with Section 3.03(ii) or Section 3.03(vi) hereof, assuming the
Servicer had made the related Monthly Advance(s) and/or Servicing Advance(s).
Notwithstanding the foregoing, no Person shall be entitled to reimbursement from
funds held in the Collection Account for future distribution to
Certificateholders pursuant to the provisions of Section 3.15. Neither the
Trustee nor the Certificate Insurer shall have any duty or liability with
respect to the calculation of any Reimbursement Amount and shall be entitled to
rely without independent investigation on the Advance Facility Notice and on the
Servicer's report of the amount of Monthly Advance Reimbursement Amounts and
Servicing Advance Reimbursement Amounts that were included in the remittance
from the Servicer to the Trustee pursuant to Section 3.03(i). The Servicer shall
maintain and provide to any successor Servicer and (upon request) the
Certificate Insurer a detailed accounting on a loan-by-loan basis as to amounts
advanced by, pledged or assigned to, and reimbursed to any Advancing Person. The
successor Servicer shall be entitled to rely on any such information provided by
the predecessor Servicer, and the successor Servicer shall not be liable for any
errors in such information.

         (d) An Advancing Person who receives an assignment or pledge of the
rights to be reimbursed for Monthly Advances and/or Servicing Advances, and/or
whose obligations hereunder are limited to the funding of Monthly Advances
and/or Servicing Advances shall not be required to meet the criteria for
qualification of a Sub-Servicer set forth in Section 3.01 hereof.

         (e) The documentation establishing any Advance Facility shall require
that Reimbursement Amounts distributed with respect to each Mortgage Loan be
allocated to outstanding unreimbursed Monthly Advances or Servicing Advances (as
the case may be) made with respect to that Mortgage Loan on a "first-in,
first-out" (FIFO) basis. Such documentation shall also require the Servicer to
provide to the related Advancing Person or Advance Facility Trustee loan-by-loan
information with respect to each Reimbursement Amount distributed by the Trustee
to such Advancing Person or Advance Facility Trustee on each Distribution Date,
to enable the Advancing Person or Advance Facility Trustee to make the FIFO
allocation of each

                                      -73-
<PAGE>

Reimbursement Amount with respect to each Mortgage Loan. The Servicer shall
remain entitled to be reimbursed by the Advancing Person or Advance Facility
Trustee for all Monthly Advances and Servicing Advances funded by the Servicer
to the extent the related rights to be reimbursed therefor have not been
assigned or pledged to an Advancing Person.

         (f) Notwithstanding anything to the contrary in this Agreement, the
Certificate Insurer is not and shall not be responsible to track or monitor
Reimbursement Amounts or any Advance Facility, and is not and shall not be
obligated to make any payment with respect to any Reimbursement Amount. The
Servicer who enters into an Advance Facility shall indemnify the Certificate
Insurer, the Trustee, the Trust and any successor resulting from any claim by
the related Advancing Person, except to the extent that such claim, loss,
liability or damage resulted from or arose out of negligence, recklessness or
willful misconduct on the part of the Certificate Insurer, the Trustee or the
successor Servicer, or failure by the successor Servicer or the Trustee to remit
funds as required by this Agreement or the commission of an act or omission to
act by the successor Servicer or the Trustee, and the passage of any applicable
cure or grace period, such that an Event of Default under this Agreement occurs
or such entity is subject to termination for cause under this Agreement.

         (g) Notwithstanding anything to the contrary in this Section 3.20, the
Servicer shall consult with the Certificate Insurer in determining the manner in
which any Advance Facility shall affect a successor Servicer before the Servicer
shall enter into an Advance Facility. Any amendment to this Section 3.20 or to
any other provision of this Agreement that may be necessary or appropriate to
effect the terms of an Advance Facility as described generally in this Section
3.20, including amendments to add provisions relating to a successor Servicer,
may be entered into by the Trustee, the Seller and the Servicer without the
consent of any Certificateholder, but only with the consent of the Certificate
Insurer, notwithstanding anything to the contrary in Section 11.01 of or
elsewhere in this Agreement.

                                   ARTICLE IV

             Certificate Insurance Policy, Initial Interest Coverage
                        Account and Pre-Funding Account

         Section 4.01. Certificate Insurance Policy. As soon as possible, and in
no event later than 11:00 a.m., New York time, on the second Business Day
immediately preceding each Distribution Date, the Trustee shall determine the
amount of Available Funds for such Distribution Date minus the amount of any
Premium Amount and any Trustee Fee to be paid on such Distribution Date.

         If for any Distribution Date a Deficiency Amount exists, the Trustee
shall complete a notice in the form set forth as Exhibit A to the Certificate
Insurance Policy (the "Notice") and shall submit such Notice to the Fiscal Agent
no later than 12:00 noon, New York time, on the second Business Day preceding
such Distribution Date. The Notice shall constitute a claim for an Insured
Payment pursuant to the Certificate Insurance Policy. Upon receipt of the
Insured Payment, at or prior to the latest time payments of the Insured Payment
are to be made by the Certificate Insurer pursuant to the Certificate Insurance
Policy, on behalf of the Senior Certificateholders, the Trustee shall deposit
such Insured Payments in the Distribution Account

                                      -74-
<PAGE>

and shall distribute such Insured Payments only in accordance with Section
5.01(a)(2) and 5.01(a)(4), if applicable.

         The Trustee shall receive, as attorney-in-fact of each Holder of a
Senior Certificate, any Insured Payment from the Certificate Insurer and
disburse the same to each Holder of a Senior Certificate in accordance with the
provisions of Article V. Insured Payments disbursed by the Trustee from proceeds
of the Certificate Insurance Policy shall not be considered payment by the Trust
nor shall such payments discharge the obligation of the Trust with respect to
such Senior Certificate, and the Certificate Insurer shall become the owner of
such unpaid amounts due from the Trust in respect of such Insured Payments as
the deemed assignee of such Holder and shall be entitled to receive the
Reimbursement Amount pursuant to Section 5.01(a)(5). The Trustee hereby agrees
on behalf of each Holder of a Senior Certificate for the benefit of the
Certificate Insurer that it and they recognize that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as by
paying through the Trustee), to the Senior Certificateholders, the Certificate
Insurer will be entitled to receive the Reimbursement Amount pursuant to Section
5.01(a)(5).

         It is understood and agreed that the intention of the parties is that
the Certificate Insurer shall not be entitled to reimbursement on any
Distribution Date for amounts previously paid by it unless on such Distribution
Date the Senior Certificateholders shall also have received the full amount of
the Guaranteed Distributions for such Distribution Date.

         Section 4.02. Initial Interest Coverage Account and Pre-Funding
Account. (a) The Trustee has heretofore established or caused to be established
and shall hereafter maintain or cause to be maintained a separate account
denominated the Initial Interest Coverage Account, which is and shall continue
to be an Eligible Account in the name of the Trustee and shall be designated
"Wells Fargo Bank Minnesota, National Association, as Trustee of the DFC HEL
Trust 2001-2 Initial Interest Coverage Account". The Initial Interest Coverage
Account shall be treated as an "outside reserve fund" under applicable Treasury
regulations and will not be part of any REMIC. Any investment earnings on the
Initial Interest Coverage Account will be treated as owned by the Seller and
will be taxable to the Seller. The amount on deposit in the Initial Interest
Coverage Account shall be invested in Eligible Investments in accordance with
the provisions of Section 5.05.

         The Trustee has heretofore established or caused to be established and
shall hereafter maintain or cause to be maintained a separate account
denominated the Pre-Funding Account, which is and shall continue to be an
Eligible Account in the name of the Trustee and shall be designated "Wells Fargo
Bank Minnesota, National Association, as Trustee of the DFC HEL Trust 2001-2
Pre-Funding Account." The Pre-Funding Account shall be treated as an "outside
reserve fund" under applicable Treasury regulations and will not be part of any
REMIC. Any Pre-Funding Earnings will be deposited into the Initial Interest
Coverage Account on each Pre-Funding Distribution Date; provided, however, that
if the final Subsequent Transfer Date occurs after the Distribution Date in a
month, on such Subsequent Transfer Date, the Trustee shall (i) transfer the
Excess Funding Amount from the Pre-Funding Account to the Distribution Account,
(ii) transfer the Pre-Funding Earnings to the Initial Interest Coverage Account
and (iii) close the Pre-Funding Account. The amount on deposit in the
Pre-Funding Account shall be invested in Eligible Investments at the direction
of the Seller in accordance with the provisions of Section

                                      -75-
<PAGE>

5.05. All investment earnings on funds on deposit in the Initial Interest
Coverage Account and the Pre-Funding Account will be treated as owned by, and
will be taxable to, the Seller.

         (b) On the Closing Date, the Seller will cause to be deposited the
Original Capitalized Interest Deposit into the Initial Interest Coverage Account
from the sale of the Offered Certificates. On the Closing Date, the Seller will
cause to be deposited the Pre-Funded Amount in the Pre-Funding Account from the
sale of the Offered Certificates.

         (c) On each Pre-Funding Distribution Date, the Trustee shall transfer
from the Initial Interest Coverage Account to the Distribution Account the
Capitalized Interest Requirement, if any, for such Distribution Date; provided,
however, that on the final Subsequent Transfer Date the Trustee shall (i)
transfer the Capitalized Interest Requirement, if any, for the following
Distribution Date from the Initial Interest Coverage Account to the Distribution
Account, (ii) remit the balance of the funds on deposit in the Initial Interest
Coverage Account to the Seller and (iii) close the Initial Interest Coverage
Account.

         (d) On each Subsequent Transfer Date, (i) the Seller shall instruct the
Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of the
aggregate Principal Balances of the Subsequent Mortgage Loans sold to the Trust
on such Subsequent Transfer Date, (ii) the Trustee shall withdraw the Overfunded
Amount, if any, from the Initial Interest Coverage Account and (iii) the Trustee
shall pay such amounts to or upon the order of the Seller with respect to such
transfer.

         (e) If at the end of the Funding Period amounts still remain in the
Pre-Funding Account, the Seller shall instruct the Trustee to withdraw such
amounts from the Pre-Funding Account on the immediately following Distribution
Date and deposit such amounts in the Distribution Account.

         (f) Unless sooner closed as provided above, the Initial Interest
Coverage Account and Pre-Funding Account shall be closed at the close of
business on the Distribution Date immediately following the end of the Funding
Period. All amounts, if any, remaining in the Initial Interest Coverage Account
on such day shall be paid to the Seller.

         Section 4.03. Claims Upon the Certificate Insurance Policy. (a) The
Trustee shall comply with the provisions of the Certificate Insurance Policy
with respect to claims upon the Certificate Insurance Policy.

         (b) At the time of the execution and delivery of this Agreement, the
Trustee shall establish a separate special purpose trust account for the benefit
of Holders of the Senior Certificates referred to herein as the "Policy Payments
Account" and over which the Trustee shall have exclusive control and sole right
of withdrawal. The Trustee shall deposit any Insured Payment made under the
Certificate Insurance Policy in the Policy Payments Account and thereafter into
the Distribution Account for distribution of such amount only for purposes of
payment to Holders of the Senior Certificates of Guaranteed Distributions for
the Senior Certificates for which a claim was made and such amount may not be
applied to satisfy any costs, expenses or liabilities of the Trustee or the
Trust. Insured Payments made under the Certificate Insurance Policy shall be
disbursed by the Trustee to Senior Certificateholders in the

                                      -76-
<PAGE>

same manner as distributions on the Senior Certificates are made under Section
5.01. It shall not be necessary for such distributions to be made by checks or
wire transfers separate from the check or wire transfer used to pay Guaranteed
Distributions with other funds available to make such distributions. However,
the amount of any Insured Payments made on the Senior Certificates to be paid
from funds transferred from the Policy Payments Account shall be noted in the
Certificate Register and in the statements to be furnished to Holders of the
Certificates pursuant to Section 5.03 hereof. Funds held in the Policy Payments
Account shall not be invested by the Trustee.

         On any Distribution Date with respect to which a claim has been made
under the Certificate Insurance Policy, the amount of any Insured Payment
received by the Trustee as a result of any claim under the Certificate Insurance
Policy and which is required to make distributions on the Senior Certificates
equal to Guaranteed Distributions on the Senior Certificates on such
Distribution Date, shall be withdrawn from the Policy Payments, Account,
deposited into the Distribution Account and applied directly by the Trustee,
together with all other funds to be withdrawn from the Distribution Account, to
the payment in full of Guaranteed Distributions on the Senior Certificates. Any
funds remaining in the Policy Payments Account on the first Business Day
following a Distribution Date shall be remitted in immediately available funds
to the Certificate Insurer, pursuant to the instructions of the Certificate
Insurer, by the end of such Business Day. The Trustee shall keep a complete and
accurate record of the amount of interest and principal paid in respect of any
Senior Certificate from moneys received under the Certificate Insurance Policy.
The Certificate Insurer shall have the right to inspect such records at
reasonable times during normal business hours upon reasonable prior written
notice to the Trustee.

         (c) The Trustee shall promptly notify the Certificate Insurer of any
proceeding or the institution of any action, of which a Responsible Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under the Bankruptcy Code (a "Preference Claim") of any distribution
made with respect to the Senior Certificates. Each Certificateholder of Senior
Certificates, by its purchase of Senior Certificates, the Seller, the Servicer
and the Trustee hereby agree that the Certificate Insurer (so long as no
Certificate Insurer Default exists) may at any time during the continuation of
any proceeding relating to a Preference Claim direct all matters relating to
such Preference Claim, including, without limitation, (i) the direction of any
appeal of any order relating to such Preference Claim and (ii) the posting of
any surety, supersedeas or performance bond pending any such appeal.

                                   ARTICLE V

                           Payments and Statements to
                Certificateholders; Rights of Certificateholders

         Section 5.01. Distributions. (a) On each Distribution Date, the Trustee
shall withdraw from (x) the Policy Payments Account, any amounts on deposit
therein and apply them to make the Guaranteed Distributions and (y) the
Distribution Account, Available Funds for such Distribution Date, and apply such
amounts in the following order of priority, in each case, to the extent of the
funds remaining therefor:

                                      -77-
<PAGE>

                  (1)      Concurrently, to the Trustee and the Certificate
                           Insurer, respectively, the Trustee Fee and the
                           Premium Amount for such Distribution Date;

                  (2)      Concurrently, to each Class of Senior Certificates,
                           the related Class Interest Distribution for such
                           Distribution Date;

                  (3)      Sequentially, to the Class M-1, Class M-2 and Class B
                           Certificates, in that order, the related Class
                           Monthly Interest Amounts for such Distribution Date;

                  (4)      To the Class A Certificates, (x) the Senior Principal
                           Distribution Amount for such Distribution Date,
                           excluding any Subordination Increase Amount included
                           therein, and (y) the principal portion of any Insured
                           Payments for such Distribution Date, allocated as
                           provided in Section 5.01(b);

                  (5)      To the Certificate Insurer, any amount owing to it
                           under the Insurance Agreement;

                  (6)      To the Class M-1 Certificates, the Class M-1
                           Principal Distribution Amount for such Distribution
                           Date, excluding any Subordination Increase Amount
                           included therein;

                  (7)      To the Class M-2 Certificates, the Class M-2
                           Principal Distribution Amount for such Distribution
                           Date, excluding any Subordination Increase Amount
                           included therein;

                  (8)      To the Class B Certificates, the Class B Principal
                           Distribution Amount for such Distribution Date,
                           excluding any Subordination Increase Amount included
                           therein;

                  (9)      To the Class A, Class M-1, Class M-2 and Class B
                           Certificates, the Subordination Increase Amount for
                           such Distribution Date applied in the same order as
                           other principal distributions on that Distribution
                           Date;

                  (10)     To the Class M-1 Certificates, any related (a) Class
                           Interest Carryover Shortfall and then (b) Class
                           Principal Carryover Shortfall;

                  (11)     To the Class M-2 Certificates, any related (a) Class
                           Interest Carryover Shortfall and then (b) Class
                           Principal Carryover Shortfall;

                  (12)     To the Class B Certificates, any related (a) Class
                           Interest Carryover Shortfall and then (b) Class
                           Principal Carryover Shortfall;

                  (13)     To the Class BIO Certificates for concurrent deposit
                           in the Net Rate Cap Fund, the Net Rate Cap Fund
                           Deposit;

                  (14)     Sequentially, to the Class A, Class M-1, Class M-2
                           and Class B Certificates, in that order, the related
                           Net Rate Cap Carryover, to be

                                      -78-
<PAGE>

                           treated as paid from and to the extent of funds on
                           deposit in the Net Rate Cap Fund;

                  (15)     To the Class BIO Certificates, the Class BIO
                           Distribution Amount, less amounts distributed
                           pursuant to Section 5.01(a)(13) on such Distribution
                           Date;

                  (16)     To the Successor Servicer and the Trustee, as
                           applicable, any Servicing Transfer Costs and other
                           amounts payable to the Successor Servicer or the
                           Trustee, as applicable, pursuant to Sections 3.01(g),
                           8.01 and 9.05, to the extent not otherwise paid by
                           the Servicer; and

                  (17)     To the Class R-1 Certificateholders, Class R-2
                           Certificateholders and Class R-3 Certificateholders,
                           the remainder in REMIC I, REMIC II and REMIC III,
                           respectively.

         On each Distribution Date, the Class Interest Distribution for each
Class of Senior Certificates will be distributed on an equal priority and any
shortfall in the amount required to be distributed as interest thereon to each
such Class will be allocated between such Classes pro rata based on the amount
that would have been distributed on each such Class in the absence of such
shortfall.

         (b) Distributions of the Senior Principal Distribution Amount shall be
allocated between the Class A-1F and Class A-1A Certificates based on their
respective Class Allocation Percentages until the Class Principal Balance of
either of those Classes is reduced to zero. Thereafter, the Senior Principal
Distribution Amount will be allocated to the remaining Class of Class A
Certificates.

         (c) [Reserved].

         (d) The Trustee 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 10.01 respecting the final distribution), in the case of
Holders of Offered Certificates, by check or money order mailed to such
Certificateholder at the address appearing in the Certificate Register, or, upon
written request by a Holder of an Offered Certificate delivered to the Trustee
at least five Business Days prior to the related Distribution Date, by wire
transfer or otherwise, and, in the case of Holders of Class BIO Certificates or
Residual Certificates, by wire transfer, if appropriate wiring instructions have
been received by the Trustee at least five Business Days prior to the related
Distribution Date, or, if not, by check or money order to such Certificateholder
at the address appearing in the Certificate Register. Distributions among
Certificateholders of a Class shall be made in proportion to the Percentage
Interests evidenced by the Certificates of such Class held by such
Certificateholders.

         (e) 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

                                      -79-
<PAGE>

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 Paying Agent, the Certificate
Registrar, the Depositor, the Servicer, the Certificate Insurer or the Seller
shall have any responsibility therefor except as otherwise provided by
applicable law.

         Section 5.02. Compensating Interest. Not later than the Determination
Date, the Servicer shall deposit to the Collection Account an amount equal to
the lesser of (A) the aggregate of the Prepayment Interest Shortfalls for the
related Distribution Date resulting from Principal Prepayments during the
related Prepayment Period and (B) an amount equal to the product of (i) 1/12,
(ii) 0.50% and (iii) the Pool Balance as of the first day of the related Due
Period. The Servicer shall not have the right to reimbursement for any amounts
deposited to the Collection Account pursuant to this Section 5.02.

         Section 5.03. Statements. (a) Not later than 1:00 p.m., New York time,
on the fifth Business Day prior to each Distribution Date, the Servicer shall
deliver to the Trustee by electronic means and to the Certificate Insurer via
e-mail at rmgtapes@fsa.com, a computer file containing the loan level
information necessary to permit the Trustee to calculate the information
required by clauses (i) through (xxvii) below as of the end of the preceding
Prepayment Period or Due Period, as applicable, and such other information as
the Trustee shall reasonably require. Not later than each Distribution Date the
Trustee shall prepare a statement (the "Remittance Report") containing the
information set forth below with respect to such Distribution Date, which
information shall be based upon the loan level information furnished by the
Servicer upon which the Trustee shall conclusively rely without independent
verification thereof:

                  (i) Available Funds and each Class' Certificate Rate for the
         related Distribution Date;

                  (ii) the aggregate amount of the distribution to each Class of
         Certificates on such Distribution Date;

                  (iii) the amount of the distribution set forth in paragraph
         (i) above in respect of interest and the amount thereof in respect of
         any Class Interest Carryover Shortfall, and the amount of any Class
         Interest Carryover Shortfall remaining;

                  (iv) the amount of the distribution set forth in paragraph (i)
         above in respect of principal and the amount thereof in respect of the
         Class Principal Carryover Shortfall, and any remaining Class Principal
         Carryover Shortfall;

                  (v) the amount of Excess Interest paid as principal;

                  (vi) the Servicing Fee, the Premium Amount and the
         Reimbursement Amount;

                  (vii) the Pool Balance as of the close of business on the last
         day of the preceding Due Period;

                                      -80-
<PAGE>

                  (viii) the Class Principal Balance of each Class of
         Certificates after giving effect to payments allocated to principal
         above;

                  (ix) the Overcollateralization Amount and the Required
         Overcollateralization Amount as of the close of business on the
         Distribution Date, after giving effect to distributions of principal on
         such Distribution Date;

                  (x) whether a Cumulative Loss Event or a Delinquency Event has
         occurred and is continuing and the calculation thereof;

                  (xi) the number and Principal Balances of all Mortgage Loans
         that were the subject of Principal Prepayments during the Due Period;

                  (xii) the amount of all Curtailments that were received during
         the Due Period;

                  (xiii) the principal portion of all Monthly Payments received
         during the Due Period;

                  (xiv) the interest portion of all Monthly Payments received on
         the Mortgage Loans during the Due Period;

                  (xv) the amount of the Monthly Advances and the Compensating
         Interest payment to be made on the Determination Date;

                  (xvi) the amount to be distributed to the Class BIO and Class
         R Certificateholders, respectively for the Distribution Date;

                  (xvii) the weighted average remaining term to maturity of the
         Mortgage Loans and the weighted average Loan Rate as of the first day
         of the month prior to the Distribution Date;

                  (xviii) the amount of all payments or reimbursements to the
         Servicer pursuant to Sections 3.03(ii) and (vi);

                  (xix) the number of Mortgage Loans outstanding at the
         beginning and at the end of the related Due Period;

                  (xx) the amount of Liquidation Loan Losses experienced during
         the preceding Due Period and the Cumulative Net Losses as a percentage
         of the Cut-Off Date Pool Balance;

                  (xxi) as of the end of the preceding calendar month, the
         number and Principal Balance of Mortgage Loans which are 30-59 days
         delinquent; the number and Principal Balance of Mortgage Loans which
         are 60-89 days delinquent; the number and Principal Balance of Mortgage
         Loans which are 90 or more days delinquent (including the number and
         Principal Balance of Mortgage Loans which are in foreclosure; the
         number and Principal Balance of Mortgage Loans in bankruptcy; and the
         number and Principal Balance of Mortgage Loans which are REO Property,
         each separately set forth);

                                      -81-
<PAGE>

                  (xxii) [Reserved];

                  (xxiii) the number and aggregate Principal Balance of Mortgage
         Loans, other than Mortgage Loans in default or imminent default, that
         were modified by the Servicer during the related Due Period;

                  (xxiv) the amount of Net Rate Cap Carryover distributed to
         each Class of Offered Certificates, other than the Class IO
         Certificates, and the amount of Net Rate Cap Carryover remaining for
         each such Class;

                  (xxv) for each Pre-Funding Distribution Date, the amount in
         the Initial Interest Coverage Account;

                  (xxvi) for each Pre-Funding Distribution Date, the remaining
         amount in the Pre-Funding Account; and

                  (xxvii) the amount of the Insured Payments, if any, to be made
         on such Distribution Date.

         The Trustee shall make available such report to the Servicer, the
Seller, the Certificate Insurer, the Certificateholders, the Rating Agencies,
Bloomberg (at 499 Park Avenue, New York, New York 10022, Attention: Mike Geller)
and Intex Solutions (at 35 Highland Circle, Needham, Massachusetts 02144,
Attention: Harold Brennman) on the Distribution Date; provided, however, that
the Trustee shall remove from the report the Premium Amount to be paid to the
Certificate Insurer prior to the submission to Bloomberg and Intex Solutions.
The Trustee may fully rely upon and shall have no liability with respect to
information provided by the Servicer.

         To the extent that there are inconsistencies between the telecopy of
the Remittance Report and the hard copy thereof, the Servicer may rely upon the
latter.

         In the case of information furnished pursuant to subclauses (ii),
(iii), (iv) and (vi) 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 related Cut-Off Date.

         The Trustee will make the Remittance Report (and, at its option, any
additional files containing the same information in an alternative format)
available each month to Certificateholders, and the parties to this Agreement
via the Trustee's internet website. The Trustee's internet website shall
initially be located at "www.ctslink.com". Assistance in using the website can
be obtained by calling the Trustee's customer service desk at (301) 815-6600.
Parties that are unable to use the above distribution options are entitled to
have a paper copy mailed to them via first class mail by calling the customer
service desk and indicating such. The Trustee shall have the right to change the
way Remittance Reports are distributed in order to make such distribution more
convenient and/or more accessible to the above parties and the Trustee shall
provide timely and adequate notification to all above parties regarding any such
changes. As a condition to access the Trustee's internet website, the Trustee
may require registration and the acceptance of a disclaimer. The Trustee will
not be liable for the dissemination of information in accordance with this
Agreement. The Trustee shall also be

                                      -82-
<PAGE>

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
Remittance Report and may affix thereto any disclaimer it deems appropriate in
its reasonable discretion (without suggesting liability on the part of any other
party hereto).

         (b) Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each Person who at any time during the
calendar year was a Holder 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 (iii) and
(iv) above, aggregated for such calendar year or applicable portion thereof
during which such Person was a Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be prepared and furnished by the Trustee to
Certificateholders pursuant to any requirements of the Code as are in force from
time to time.

         (c) On each Distribution Date, the Trustee shall forward to the Class R
Certificateholders a copy of the reports forwarded to the Holders of the Regular
Certificates in respect of such Distribution Date and a statement setting forth
the amounts actually distributed to the Class R Certificateholders on such
Distribution Date together with such other information as the Trustee deems
necessary or appropriate.

         (d) Within a reasonable period of time after the end of each calendar
year, the Trustee shall deliver to each Person who at any time during the
calendar year was a Class R 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 Class R Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be prepared by the Trustee or and furnished to
Certificateholders by the Trustee pursuant to any requirements of the Code as
from time to time in force.

         (e) The Servicer and the Trustee shall furnish to the Certificate
Insurer, the Seller and each Certificateholder (if requested in writing), during
the term of this Agreement, such periodic, special or other reports or
information, whether or not provided for herein, as shall be necessary,
reasonable or appropriate with respect to the Certificateholder or otherwise
with respect to the purposes of this Agreement, all such reports or information
to be provided by and in accordance with such applicable instructions and
directions (if requested in writing) as the Certificateholder may reasonably
require; provided that the Servicer and the Trustee shall be entitled to be
reimbursed by such Certificateholder for their respective fees and actual
expenses associated with providing such reports, if such reports are not
generally produced in the ordinary course of their respective businesses or
readily obtainable.

         (f) Reports and computer diskettes or files furnished by the Servicer
pursuant to this Agreement shall be deemed confidential and of a proprietary
nature, and shall not be copied or distributed except to the extent required by
law or to the Rating Agencies. No Person entitled to receive copies of such
reports or diskettes or files or lists of Certificateholders shall use the

                                      -83-
<PAGE>

information therein for the purpose of soliciting the customers of the Seller or
for any other purpose except as set forth in this Agreement.

         Section 5.04. Distribution Account. The Trustee shall establish with
itself, a separate account (the "Distribution Account") titled "Wells Fargo Bank
Minnesota, National Association, as Trustee, in trust for the registered holders
of DFC HEL Trust 2001-2 Asset-Backed Certificates, Series 2001-2." The
Distribution Account shall be an Eligible Account. The Trustee shall deposit any
amounts representing payments on and any collections in respect of the Mortgage
Loans received by it immediately following receipt thereof, including, without
limitation, all amounts withdrawn by the Servicer from the Collection Account
pursuant to Section 3.03 for deposit to the Distribution Account. Amounts on
deposit in the Distribution Account may be invested in Eligible Investments
pursuant to Section 5.05.

         Section 5.05. Investment of Accounts. (a) Consistent with any
requirements of the Code, all or a portion of any Account held by the Trustee
shall be invested and reinvested by the Trustee, as directed in writing by the
Servicer (in the case of the Distribution Account) or the Seller (in the case of
any other Account) (the applicable Person, the "Directing Party"), in one or
more Eligible Investments bearing interest or sold at a discount. If the
applicable Directing Party does not provide investment directions, or if the
Directing Party is the Servicer and an Event of Default shall have occurred and
be continuing the Trustee shall invest all Accounts in Eligible Investments
described in paragraph (vi) of the definition of Eligible Investments. No such
investment in any Account shall mature later than the Business Day immediately
preceding the next Distribution Date (except that for any such Account other
than the Distribution Account (i) if such Eligible Investment is an obligation
of the Trustee or a money market fund for which the Trustee or any Affiliate is
the manager or the advisor, then such Eligible Investment shall mature not later
than such Distribution Date and (ii) any other date may be approved by the
Rating Agencies).

         (b) If any amounts are needed for disbursement from any Account held by
the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. The Trustee shall not be
liable for any investment loss or other charge resulting therefrom unless the
Trustee's failure to perform in accordance with this Section 5.05 is the cause
of such loss or charge.

         (c) Subject to Section 9.01, the Trustee shall not in any way be held
liable by reason of any insufficiency in any Account held by the Trustee
resulting from any investment loss on any Eligible Investment included therein
(except to the extent that the Trustee is the obligor and has defaulted thereon
or as provided in subsection (b) of this Section 5.05).

         (d) The Trustee shall invest and reinvest funds in the Accounts held by
the Trustee, to the fullest extent practicable, in such manner as the applicable
Directing Party shall from time to time direct as set forth in Section 5.05(a),
but only in one or more Eligible Investments.

         (e) So long as no Event of Default shall have occurred and be
continuing, all net income and gain realized from investment of, and all
earnings on, funds deposited in the Collection Account shall be for the benefit
of the Servicer as Servicing Compensation (in

                                      -84-
<PAGE>

addition to the Servicing Fee), and shall be subject to withdrawal on or before
the first Business Day of the month following the month in which such income or
gain is received. The Servicer shall deposit in the Collection Account, the
amount of any loss incurred in respect of any Eligible Investment held therein
which is in excess of the income and gain thereon immediately upon realization
of such loss, without any right to reimbursement therefore from its own funds.

         (f) All net income and gain realized from investment of, and all
earnings on, funds deposited in the Distribution Account shall be for the
benefit of (x) the Servicer for the period from the date of deposit to the
Deposit Date, as Servicing Compensation in addition to the Servicing Fee and (y)
the Trustee for the period from the Deposit Date to the Distribution Date, as
compensation (in addition to the Trustee Fee). Any such income shall be subject
to withdrawal on or before the first Business Day of the month following the
month in which such income or gain is received. The Servicer or the Trustee, as
applicable, shall deposit in the Distribution Account the amount of any loss
incurred in respect of any Eligible Investment held therein which is in excess
of the income and gain thereon payable to the Servicer or the Trustee, as the
case may be, immediately upon the realization of such loss, without any right to
reimbursement therefore from its own funds.

         Section 5.06. Allocation of Losses. On each Distribution Date, the
Trustee shall determine the total of the Applied Realized Loss Amounts for such
Distribution Date. The Applied Realized Loss Amount for any Distribution Date
shall be applied by reducing the Class Principal Balance of each Class of
Subordinate Certificates beginning with the Class of Subordinate Certificates
then outstanding with the lowest relative payment priority, in each case until
the respective Class Principal Balance thereof is reduced to zero. Any Applied
Realized Loss Amount allocated to a Class of Subordinate Certificates shall be
allocated among the Subordinate Certificates of such Class in proportion to
their respective Percentage Interests.

         Section 5.07. [Reserved].

         Section 5.08. Net Rate Cap Fund. (a) On the Closing Date, the Trustee
shall establish and maintain in its name, in trust for the benefit of the
Offered Certificates, other than the Class IO Certificates, the Net Rate Cap
Fund and deposit therein the amount of $5,000 paid to the Trustee by the Seller
therefor. The Net Rate Cap Fund shall be an Eligible Account, and funds on
deposit therein shall be held separate and apart from, and shall not be
commingled with, any other moneys, including without limitation, other moneys
held by the Trustee pursuant to this Agreement. The Net Rate Cap Fund shall be
treated as an "outside reserve fund" under applicable Treasury regulations and
will not be part of any REMIC. Any investment earnings on the Net Rate Cap Fund
will be treated as owned by the Class BIO Certificateholder and will be taxable
to the Class BIO Certificateholder. Distributions made or deemed deposited to
any outside reserve fund under this Agreement shall be treated as made to the
owner of such fund. The Trustee shall treat the Net Rate Cap Fund as having a
nominal (zero) value for the Holders of the Offered Certificates.

         (b) On each Distribution Date, the Trustee shall deposit amounts from
the Distribution Account to the Net Rate Cap Fund pursuant to Section
5.01(a)(13). The amount required to be deposited into the Net Rate Cap Fund on
any Distribution Date (the "Net Rate Cap Fund Deposit") will equal the lesser of
(i) amounts remaining after distributions pursuant to

                                      -85-
<PAGE>

clauses (1) through (12) of Section 5.01(a) and (ii) any Net Rate Cap Carryover
for such Distribution Date or, if no Net Rate Cap Carryover is payable on such
Distribution Date, an amount such that when added to other amounts already on
deposit in the Net Rate Cap Fund, the aggregate amount on deposit therein will
be equal to $10,000. The Trustee shall make withdrawals from the Net Rate Cap
Fund to make distributions pursuant to Section 5.01(a)(14) hereof.

         (c) Funds in the Net Rate Cap Fund may be invested in Eligible
Investments. Any earnings on such amounts shall be payable to the Class BIO
Certificates. The Class BIO Certificates shall evidence ownership of the Net
Rate Cap Fund for federal tax purposes and shall direct the Trustee in writing
as to the investment of amounts therein.

         (d) Upon termination of the Trust, any amounts remaining in the Net
Rate Cap Fund shall be distributed to the Certificateholders of the Class BIO
Certificates in the same manner as if distributed pursuant to Section
5.01(a)(15) hereof.

                                   ARTICLE VI

                                The Certificates

         Section 6.01. The Certificates. Each of the Offered Certificates, the
Class BIO Certificates, and the Residual Certificates shall be substantially in
the forms set forth in Exhibits A and B respectively, and shall, on original
issue, be executed, authenticated and delivered by the Trustee to or upon the
order of the Seller concurrently with the sale and assignment to the Trustee of
the Trust. Each Class of Offered Certificates shall be initially evidenced by
one or more certificates representing a fraction of the applicable Original
Class Principal Balance or Notional Amount, as applicable, and shall be held in
minimum dollar denominations of $25,000 and integral multiples of $1,000 in
excess thereof, except that one of each Class of the Offered Certificate may be
in a different denomination so that the sum of the denominations of all
outstanding Offered Certificates shall equal the aggregate Original Class
Principal Balance or Notional Amount, as applicable. The Residual Certificates
and Class BIO Certificates shall be held in minimum Percentage Interests of 20%.

         The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee 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 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 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 Offered Certificates shall be Book-Entry Certificates. The Class
BIO Certificates and the Residual Certificates shall not be Book-Entry
Certificates.

                                      -86-
<PAGE>

         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 Trustee 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 any
office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph, and, in the case of a Residual Certificate,
upon satisfaction of the conditions set forth below, the Trustee 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 shall execute 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 or the Certificate Registrar)
be duly endorsed by, or be accompanied by a written instrument of transfer in
form satisfactory to the Trustee and the Certificate Registrar duly executed by,
the Holder thereof or his attorney duly authorized in writing.

         (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 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 shall 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; and
(vi) the Trustee 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.

         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 necessary or desirable to register a Book-Entry
Certificate to the Depository. In

                                      -87-
<PAGE>

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 Seller advises the Trustee in
writing that the Depository is no longer willing or able to discharge properly
its responsibilities as Depository and (y) the Trustee or the Seller is unable
to locate a qualified successor, (ii) the Seller, at its sole option elects to
terminate the book-entry system through the Depository or (iii) after the
occurrence of an Event of Default, the Certificate Owners of each Class of
Offered Certificates representing Percentage Interests aggregating not less than
51% advises the Trustee 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 each Class of Offered Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall at the Seller's expense, execute and authenticate the
Definitive Certificates. Neither the Seller nor the Trustee shall be liable for
any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates, the Trustee, the Certificate Registrar, the Servicer,
any Paying Agent, the Certificate Insurer and the Seller shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.

         (d) Except with respect to the initial transfer of the Class BIO
Certificates and the Residual Certificates by the Seller, no transfer, sale,
pledge or other disposition of any Class BIO Certificates or any 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, other than the
transfer of the Tax Matters Person Residual Interest to the Trustee in reliance
upon Rule 144A under the 1933 Act, the Trustee and the Seller shall require
either (i) a written Opinion of Counsel (which may be in-house counsel)
acceptable to and in form and substance reasonably satisfactory to the Trustee
and the Seller 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 Servicer or the Seller or (ii) the Trustee shall
require the transferor to execute a transferor certificate (in substantially the
form attached hereto as Exhibit M) and the transferee to execute an investment
letter (in substantially the form attached hereto as Exhibit N-1 or N-2)
acceptable to and in form and substance reasonably satisfactory to the Seller
and the Trustee certifying to the Seller and the Trustee the facts surrounding
such transfer, which investment letter shall not be an expense of the Trustee,
the Servicer or the Seller. The Holder of a Class BIO Certificates or a Residual
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee and the Seller 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 an ERISA Restricted Certificate shall be made unless the
Trustee shall have received either (i) a representation from the transferee of
such Certificate acceptable to and in form and substance satisfactory to the
Trustee, such requirement is satisfied only by the Trustee's receipt of a
representation letter from the transferee substantially in the form of Exhibit

                                      -88-
<PAGE>

N-1 or Exhibit N-2, as appropriate), to the effect that such transferee is not
an employee benefit plan or arrangement subject to Section 406 of ERISA or a
plan subject to Section 4975 of the Code, or a person acting on behalf of any
such plan or arrangement or using the assets of any such plan or arrangement to
effect such transfer ("Benefit Plan Investor") or (ii) if an ERISA Restricted
Certificate which is an Offered Certificate is being purchased by an insurance
company, a representation that an insurance company is purchasing such
Certificates with funds contained in an "insurance company general account" (as
such term is defined in Section V(e) of Prohibited Transaction Class Exemption
95-60 ("PTCE 95-60") and that the purchase and holding of such Certificates are
covered under Sections I and III of PTCE 95-60 or (iii) if an ERISA Restricted
Certificate which is an Offered Certificate is purchased by a Benefit Plan
Investor, a representation that the Benefit Plan Investor understands that the
eligibility of the Certificates for purchase is conditioned upon such
Certificates being rated at least "BBB-" at the time of acquisition of such
Certificates by the Benefit Plan Investor or (iv) in the case of any ERISA
Restricted Certificate presented for registration in the name of a Benefit Plan
Investor, an Opinion of Counsel satisfactory to the Trustee, which Opinion of
Counsel shall not be an expense of either the Trustee or the Trust, addressed to
the Trustee, to the effect that the purchase or holding of such ERISA Restricted
Certificate will not result in prohibited transactions under ERISA and/or
Section 4975 of the Code and will not subject the Trustee to any obligation in
addition to those expressly undertaken in this Agreement or to any liability.
Notwithstanding anything else to the contrary herein, the representation
required by clause (i), (ii) or (iii) above with respect to any ERISA Restricted
Certificate that is a Book-Entry Certificate shall be deemed to have been made
by the Certificate Owner by virtue of such Certificate Owner's acquisition of
such Certificate; and any purported transfer of an ERISA Restricted Certificate
to or on behalf of a Benefit Plan Investor pursuant to clause (iv) above without
the delivery to the Trustee of an Opinion of Counsel satisfactory to the Trustee
as described above shall be void and of no effect.

         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 Seller 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 Trustee 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 Trustee 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 G from the
                  proposed transferee to the effect that such transferee is a
                  Permitted Transferee and that it is not acquiring its

                                      -89-
<PAGE>

                  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 6.02 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 6.02, 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 6.02, be restored to all rights as
         Holder thereof retroactive to the date of registration of transfer of
         such Residual Certificate. The Trustee shall be under no liability to
         any Person for any registration of transfer of a Residual Certificate
         that is in fact not permitted by this Section 6.02 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 the Agreement so long as the Trustee received the
         documents specified in clause (iii). The Trustee 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 Trustee shall be distributed and delivered by the
         Trustee 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 6.02, then the Trustee 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 Seller to arrange for the sale of such Residual
         Certificate. The proceeds of such sale, net of commissions (which may
         include commissions payable to the Seller or its Affiliates in
         connection with such sale), expenses and taxes due, if any, will be
         remitted by the Trustee to the previous Holder of such Residual
         Certificate that is a Permitted Transferee, except that in the event
         that the Trustee determines that the Holder of such Residual
         Certificate may be liable for any amount due under this Section 6.02 or
         any other provisions of this Agreement, the Trustee 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 Trustee, 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 6.02, then the Trustee, based on
         information provided to the Trustee by the Seller will provide to the
         Internal Revenue Service, and to the persons specified in Sections
         860E(e)(3) and (6) of

                                      -90-
<PAGE>

         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 6.02(d) shall cease to apply to
transfers occurring on or after the date on which there shall have been
delivered to the Trustee, in form and substance satisfactory to the Trustee, (i)
written notification from each Rating Agency that the removal of the
restrictions on Transfer set forth in this Section 6.02 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 to fail to
qualify as a REMIC.

         Each Tax Matters Person Residual Interest shall at all times be
registered in the name of the Tax Matters Person.

         (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.

         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
Seller 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 or the Certificate Registrar that such Certificate has been
acquired by a bona fide purchaser, the Trustee shall execute, authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Percentage Interest.
Upon the issuance of any new Certificate under this Section 6.03, the Trustee 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 and the
Certificate Registrar) in connection therewith. Any duplicate Certificate issued
pursuant to this Section 6.03, 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. Prior to due presentation of a
Certificate for registration of transfer, the Servicer, the Seller, the Trustee,
the Certificate Registrar, the Certificate Insurer, any Paying Agent and any
agent of any of them 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 Seller, the Trustee, the Certificate
Insurer, the Certificate Registrar 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

                                      -91-
<PAGE>

shall report the amounts of such distributions to the Trustee. The duties of the
Paying Agent may include the obligation (i) to withdraw funds from the
Collection Account pursuant to Section 3.03 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 a corporation duly incorporated 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 Trustee. The Trustee may appoint a successor to act as
Paying Agent, which appointment shall be reasonably satisfactory to the Seller.

         (a) The Trustee shall cause the Paying Agent (if other than the
Trustee) to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee 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.

                                   ARTICLE VII

                           The Seller and the Servicer

         Section 7.01. Liability of the Seller and the Servicer. The Seller and
the Servicer shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Seller or Servicer,
as the case may be, herein.

         Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Seller or the Servicer. Any corporation into which the
Seller or the Servicer may be merged or consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Seller or
the Servicer shall be a party, or any corporation succeeding to the business of
the Seller or the Servicer, shall be the successor of the Seller or the
Servicer, as the case may be, hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding; provided, however, that the successor
Servicer shall satisfy all the requirements of Section 8.02 with respect to the
qualifications of a successor Servicer.

         Section 7.03. Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of the directors or officers or employees or agents
of the Servicer 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 in good faith pursuant to this Agreement, or for errors
in judgment; provided, however, that this provision shall not protect the
Servicer 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 or by reason of its reckless disregard of
its obligations and duties of the Servicer hereunder. The Servicer and any
director or officer or employee or agent of the Servicer may rely in good faith
on any document of any kind prima facie properly executed and submitted by any
Person respecting any

                                      -92-
<PAGE>

matters arising hereunder. The Servicer and any director or officer or employee
or agent of the Servicer 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 or results from a breach of representation by the
Seller) 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 shall be under no obligation to appear in, prosecute or defend any
legal action that is not incidental to its duties hereunder and that in its
opinion, may involve it in any expense or liability; provided, however, that the
Servicer 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, the
reasonable legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust. The Servicer's
right to indemnity or reimbursement pursuant to this Section 7.03 shall survive
any resignation or termination of the Servicer pursuant to Section 7.04 or 8.01
with respect to any losses, expenses, costs or liabilities arising prior to such
resignation or termination (or arising from events that occurred prior to such
resignation or termination).

         Section 7.04. Servicer Not to Resign. Subject to the provisions of
Section 7.02, the Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) upon determination that the performance of its
obligations or duties hereunder are no longer permissible under applicable law
or are in material conflict by reason of applicable law with any other
activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Servicer so causing such a conflict being of a type and nature
carried on by the Servicer or its subsidiaries or Affiliates at the date of this
Agreement or (ii) upon satisfaction of each of the following conditions: (a) the
Servicer has proposed an Approved Servicer to the Seller and the Trustee in
writing and such proposed Approved Servicer is reasonably acceptable to the
Seller and the Trustee; and (b) each Rating Agency shall have delivered a letter
to the Trustee prior to the appointment of the Approved Servicer stating that
the proposed appointment of such Approved Servicer as Servicer hereunder will
not result in the reduction or withdrawal of the then current ratings of the
Offered Certificates; provided, however, that no such resignation by the
Servicer shall become effective until such successor servicer or, in the case of
(i) above, the Successor Servicer shall have assumed the Servicer's
responsibilities and obligations hereunder or the Trustee shall have designated
a successor servicer in accordance with Section 8.02. Any such resignation shall
not relieve the Servicer of responsibility for any of the obligations specified
in Sections 8.01 and 8.02 as obligations that survive the resignation or
termination of the Servicer. Any such determination permitting the resignation
of the Servicer pursuant to clause (i) above shall be evidenced by an Opinion of
Counsel to such effect delivered to the Seller, the Trustee and the Certificate
Insurer.

         Section 7.05. Delegation of Duties. 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

                                      -93-
<PAGE>

7.04. The Servicer shall provide the Trustee with 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 7.06. Indemnification of the Trust by the Servicer. (a) The
Servicer shall indemnify and hold harmless the Trust and the Trustee from and
against any loss, liability, expense, damage or injury suffered or sustained by
reason of the Servicer's willful misfeasance, bad faith or negligence in the
performance of its activities in servicing or administering the Mortgage Loans
pursuant to this Agreement, including, but not limited to, any judgment, award,
settlement, reasonable attorneys' fees and other costs or expenses incurred in
connection with the defense of any actual or threatened action, proceeding or
claim related to the Servicer's misfeasance, bad faith or negligence. Any such
indemnification shall not be payable from the assets of the Trust. The
provisions of this Section 7.06 shall survive the termination of this Agreement.

         (b) If the Servicer fails to make when due (without regard to any cure
period) any Monthly Advance or deposit required by it hereunder, the Servicer
shall pay the Trustee for the account of the Trustee interest at the prime rate
from the date on which such payment was due (without regard to any cure period)
to and including the date on which the Servicer makes such payment.

                                  ARTICLE VIII

                                     Default

         Section 8.01. Events of Default. (a) If any one of the following events
("Events of Default") shall occur and be continuing:

                  (i) (A) The failure by the Servicer to make any Monthly
         Advance which continues unremedied for a period of one Business Day
         after it was due; or (B) any other failure by the Servicer to deposit
         in the Collection Account or the Distribution Account any deposit
         required to be made under the terms of this Agreement which continues
         unremedied for a period of two Business Days after such deposit was
         due;

                  (ii) The failure by the Servicer to make any required
         Servicing Advance which failure continues unremedied for a period of 60
         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 materially and
         adversely affects the interests of the Certificateholders, without
         regard to the Certificate Insurance Policy, continues unremedied for a
         period of 60 days, after the date on which written notice of such
         failure, requiring the same to be remedied, shall have been given to
         the Servicer by the Trustee or to the Servicer and the Trustee, by any
         Holder with Certificates evidencing Voting Interests of at least 25%;
         provided, however, that in the case of a failure that cannot be cured
         within 60 days, the cure period may be extended if the Servicer can
         demonstrate to the reasonable satisfaction of the Trustee and the
         Certificate Insurer that the Servicer is diligently pursuing remedial
         action;

                                      -94-
<PAGE>

                  (iii) The filing of a petition against the Servicer in 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,
         marshaling 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 30
         consecutive days;

                  (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, marshaling
         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, marshaling of assets and liabilities or similar
         proceedings, or for the winding-up or liquidation of its affairs, shall
         have been entered against the Servicer; or the Servicer shall admit in
         writing its inability to pay its debts generally as they become due,
         file a petition to take advantage of any applicable bankruptcy
         insolvency or reorganization statute, make an assignment for the
         benefit of its creditors or voluntarily suspend payment of its
         obligations; or

                  (v) the Servicer Termination Test is failed;

         (b) then, and in each and every such case, so long as an Event of
Default shall not have been remedied, (x) with respect solely to clause
(a)(i)(A) above, upon receipt of written notice or discovery by a Responsible
Officer of the Trustee of such failure, the Trustee shall give immediate
telephonic notice of such failure to a Servicing Officer of the Servicer and the
Trustee shall terminate all of the rights and obligations of the Servicer under
this Agreement and the Successor Servicer appointed in accordance with Section
8.02, shall immediately make such Monthly Advance and assume, pursuant to
Section 8.02, the duties of a successor Servicer and (y) in the case of clause
(a)(i)(B), (ii), (iii), (iv), and (v) above, the Trustee shall, at the direction
of the Holders of Offered Certificates evidencing not less than 51% of all of
the Voting Rights by notice then given in writing to the Servicer (and to the
Trustee if given by Holders of Certificates), 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 and the Seller. On or
after receipt by the Servicer 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 Successor
Servicer pursuant to and under this Section 8.01; and, without limitation, the
Successor 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
related documents, or otherwise. The Servicer agrees to cooperate with the
Successor Servicer and the Trustee in effecting the termination of the
responsibilities and rights of the Servicer hereunder, including, without
limitation, the transfer to the Successor Servicer for the administration by it
of all cash amounts that shall at the time be held by the predecessor Servicer
and to be deposited by it in the Collection Account, or that have been deposited
by the predecessor Servicer in the Collection

                                      -95-
<PAGE>

Account or thereafter received by the predecessor Servicer with respect to the
Mortgage Loans. All Servicing Transfer Costs and other reasonable out-of-pocket
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 8.01
shall be paid by the predecessor Servicer or, to the extent not paid by the
predecessor Servicer, by the Trust pursuant to Section 5.01(a)(16) (or, if the
predecessor Servicer is the Trustee, by the initial Servicer), upon presentation
of reasonable documentation of such costs and expenses. If the predecessor
Servicer is required but fails to pay the amounts specified in the preceding
sentence and such amounts are paid by the Trust, the Trustee shall, at the
direction and expense of the Class BIO Certificateholders, take appropriate
action to enforce such obligation and recover such amounts on behalf of such
Class BIO Certificateholders.

         (c) Upon the occurrence of an Event of Default, the Servicer shall act
as Servicer under this Agreement, subject to the right of removal set forth in
subsection (b) hereof, for an initial period commencing on the date on which
such Event of Default occurred and ending on the last day of the calendar
quarter in which such Event of Default occurred, which period shall be extended
by the Trustee (an "Extension Notice") for a succeeding quarterly period ending
on December 31, March 31, June 30 and September 30 of each year (each such
quarterly period for which the Servicer shall be designated to act as Servicer
hereunder, a "Term of Service") until such time as the Trustee receives written
direction from the Holders of Certificates evidencing at least 51% of the Voting
Rights not to deliver an Extension Notice, in which event the Trustee shall
follow such direction; provided that nothing in this clause (c) shall prohibit
the Trustee from removing (or prohibit Certificateholders from directing the
Trustee to remove) the Servicer pursuant to clause (b) above. In the event the
Trustee fails to deliver an Extension Notice prior to the end of any Term of
Service, the Servicer shall be automatically terminated.

         (d) If the Successor Servicer or another Person succeeds to the
obligations of Servicer hereunder, the term of the Successor Servicer or such
Person shall not be limited unless and until an Event of Default thereafter
occurs with respect to such Successor Servicer or other Person. At such time,
the provisions of Section 8.01 (c) and (d) shall become applicable to the
then-acting Servicer and the Person then-obligated to succeed such then-acting
Servicer.

         Section 8.02. Appointment of Successor. (a) The Seller and the Trustee
hereby appoint, and Wells Fargo Bank Minnesota, National Association, hereby
accepts appointment, on behalf of itself or an affiliate, upon receipt by the
Servicer of a notice of termination pursuant to Section 8.01 or upon resignation
of the Servicer pursuant to Section 7.04(i), to be the successor (the "Successor
Servicer") 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; provided, however, that, without affecting the immediate
termination of the rights of the Servicer hereunder, it is understood and
acknowledged by the parties hereto that there will be a period of transition not
to exceed 90 days (the "Transition Period") before the servicing transfer is
fully effected.

         During the Transition Period, neither the Successor Servicer nor the
Trustee shall be responsible for the lack of information and documents that it
cannot reasonably obtain on a practicable basis under the circumstances.

                                      -96-
<PAGE>

         As compensation therefor, the 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, if the
Successor Servicer is unwilling or legally unable to act as successor servicer,
the Trustee may 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
$25,000,000 and that is an Approved Servicer 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 Offered Certificates by the Rating
Agencies. Pending appointment of a successor to the Servicer hereunder, unless
the Successor Servicer is prohibited by law from so acting, the Successor
Servicer 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 the Mortgage Loans in an amount equal to the
compensation which the Servicer would otherwise have received pursuant to
Section 3.08 (or such lesser compensation as the Trustee and such successor
shall agree). 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 3.05 or to indemnify the Trustee pursuant to Section
7.06, 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 Trustee or a successor Servicer shall have no responsibility or
obligation (i) to repurchase or substitute for any of the Mortgage Loans or (ii)
for any acts or omissions of a predecessor Servicer during the Transition
Period. The Trustee and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.

         (b) Any successor, including the Successor Servicer, to the Servicer as
servicer shall during the term of its service as servicer (i) continue to
service and administer the Mortgage Loans for the benefit of Certificateholders
and (ii) 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 of its officers, employees and agents to the same
extent as the Servicer is so required pursuant to Section 3.12.

         Section 8.03. Waiver of Defaults. The Majority Certificateholders may,
on behalf of all Certificateholders, waive any events permitting removal of the
Servicer as servicer pursuant to this Article VIII, 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 Event of Default 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
Trustee to the Rating Agencies.

         Section 8.04. Notification to Certificateholders. Upon any termination
or appointment of a successor to the Servicer pursuant to this Article VIII or
Section 7.04, the Trustee shall give

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<PAGE>

prompt written notice thereof to the Certificateholders at their respective
addresses appearing in the Certificate Register, the Certificate Insurer and to
each Rating Agency.

         Section 8.05. Rights of the Certificate Insurer. By accepting its
Senior Certificate, each holder of a Senior Certificate agrees that unless a
Certificate Insurer Default exists, the Certificate Insurer shall be deemed to
be the holder of the Senior Certificates for all purposes (other than with
respect to payment on the Senior Certificates) and shall have the right to
exercise all rights of the Certificateholders of the Senior Certificates under
this Agreement and under each Class of Senior Certificates without any further
consent of the Certificateholders. In addition, each Certificateholder of a
Senior Certificate agrees that unless a Certificate Insurer Default exists, the
rights specifically enumerated in this Agreement may be exercised by the
Certificateholders of a Senior Certificate only with the prior written consent
of the Certificate Insurer.

         The Certificate Insurer may, in writing and in its sole discretion
renounce all or any of its rights under Section 8.05 or any requirement for the
Certificate Insurer's consent for any period of time.

         Section 8.06. Certificate Insurer Default. Notwithstanding anything
elsewhere in this Agreement or in the Certificates to the contrary, if a
Certificate Insurer Default exists, or if and to the extent the Certificate
Insurer has delivered its written renunciation of its rights, the provisions of
this Article VIII and all other provisions of this Agreement which (a) permit
the Certificate Insurer to exercise rights of the Certificateholders of the
Senior Certificates, (b) restrict the ability of the Certificateholders of the
Senior Certificates, to act without the consent or approval of the Certificate
Insurer, (c) provide that a particular act or thing must be acceptable to the
Certificate Insurer, (d) permit the Certificate Insurer to direct (or otherwise
to require) the actions of the Trustee, the Servicer or the Certificateholders,
(e) provide that any action or omission taken with the consent, approval or
authorization of the Certificate Insurer shall be authorized hereunder or shall
not subject the party taking or omitting to take such action to any liability
hereunder or (f) which have a similar effect, shall be of no further force and
effect and the Trustee shall administer the Trust and perform its obligations
hereunder solely for the benefit of the Holders of the Certificates; provided,
however, that the Certificate Insurer's rights to consent to amendments, to
payments pursuant to Section 5.01(a)(5) and to receive reports and notices shall
not be affected by a Certificate Insurer Default and all other rights shall be
immediately reinstated following the cure of such Certificate Insurer Default.
Nothing in the foregoing sentence, nor any action taken pursuant thereto or in
compliance therewith, shall be deemed to have released the Certificate Insurer
from any obligation or liability it may have to any party or to the
Certificateholders of the Senior Certificates hereunder, under any other
agreement, instrument or document (including, without limitation, the
Certificate Insurance Policy) or under applicable law.

                                   ARTICLE IX

                                   The Trustee

         Section 9.01. Duties of Trustee. (a) The Trustee, prior to the
occurrence of an Event of Default and after the curing of all Events of Default
which may have occurred, undertakes to

                                      -98-
<PAGE>

perform such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Default has occurred (which has not been cured) of
which a Responsible Officer has knowledge, the Trustee shall exercise such of
the rights and powers vested in it by this Agreement, and use the same degree of
care and skill in their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.

         The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement. If any such instrument is found
not to be in the form specified in this Agreement, on its face, the Trustee
shall take action as it deems appropriate to have the instrument corrected, and
if the instrument is not corrected to the Trustee's satisfaction, the Trustee
will, at the expense of the Seller, provide notice thereof to the
Certificateholders and will, at the expense of the Seller, which expense shall
be reasonable given the scope and nature of the required action, take such
further action as directed by the Majority Certificateholders.

         The Trustee may, in accordance with its duties hereunder, do all things
necessary and proper as may be required in connection with any secondary
mortgage licensing laws and similar requirements, including, but not limited to,
consenting to jurisdiction, and the appointment of agents for service of
process, in jurisdictions in which the Mortgaged Properties are located.

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

                  (i) prior to the occurrence of an Event of Default, and after
         the curing or waiver of all such Events of Default which may have
         occurred, the duties and obligations of the Trustee shall be determined
         solely by the express provisions of this Agreement, the Trustee shall
         not be liable except for the performance of such duties and obligations
         as are specifically set forth in this Agreement, no implied covenants
         or obligations shall be read into this Agreement against the Trustee
         and, in the absence of bad faith on the part of the Trustee, the
         Trustee may conclusively rely, as to the truth of the statements and
         the correctness of the opinions expressed therein, upon any
         certificates or opinions furnished to the Trustee and conforming to the
         requirements of this Agreement;

                  (ii) the Trustee shall not be personally liable for an error
         of judgment made in good faith by a Responsible Officer of the Trustee,
         unless it shall be proved that the Trustee was negligent in
         ascertaining or investigating the facts related thereto;

                  (iii) the Trustee shall not be personally liable with respect
         to any action taken, suffered or omitted to be taken by it in good
         faith in accordance with the consent or direction of the Holders of
         Offered Certificates evidencing Percentage Interests aggregating not
         less than 51% relating to the time, method and place of conducting any
         proceeding for any remedy available to the Trustee, or exercising or
         omitting to exercise any trust or power conferred upon the Trustee,
         under this Agreement; and

                                      -99-
<PAGE>

                  (iv) the Trustee shall not be charged with knowledge of any
         failure by the Servicer to comply with the obligations of the Servicer
         referred to in clauses (a)(i) and (ii) of Section 8.01 unless a
         Responsible Officer of the Trustee at the Corporate Trust Office
         obtains actual knowledge of such failure or the Trustee receives
         written notice of such failure from the Servicer or the Holders of
         Offered Certificates evidencing Percentage Interests aggregating not
         less than 51%. This paragraph shall not be construed to limit the
         effect of the first paragraph of this Section 9.01.

         The Trustee shall not 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 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 Trustee 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.

         Section 9.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 9.01:

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

                  (ii) the Trustee may consult with counsel and any written
         advice of such counsel or 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 advice or Opinion of Counsel;

                  (iii) the Trustee shall be under no 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 reasonable
         security or indemnity against the costs, expenses and liabilities which
         may be incurred therein or thereby; the right of the Trustee to perform
         any discretionary act enumerated in this Agreement shall not be
         construed as a duty, and the Trustee shall not be answerable for other
         than its negligence or willful misconduct in the performance of any
         such act; nothing contained herein shall, however, relieve the Trustee
         of the obligations, upon the occurrence of an Event of Default (which
         has not been cured) of which a Responsible Officer has knowledge, to
         exercise such of the rights and powers vested in it by this Agreement,
         and to use the same degree of care and skill in their exercise as a
         prudent man would exercise or use under the circumstances in the
         conduct of his own affairs;

                                     -100-
<PAGE>

                  (iv) the Trustee shall not 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 an Event of Default and after
         the curing of all Events of Default which may have occurred, the
         Trustee shall not be bound to make any investigation into the facts or
         matters stated in any resolution, certificate, statement, instrument,
         opinion, report, notice, request, consent, order, approval, bond or
         other paper or documents, unless requested in writing to do so by the
         Holders of Certificates evidencing Percentage Interests aggregating not
         less than 51%; provided, however, that if the payment within a
         reasonable time to the Trustee of the costs, expenses or liabilities
         likely to be incurred by it in the making of such investigation is, in
         the opinion of the Trustee, not reasonably assured to the Trustee by
         the security afforded to it by the terms of this Agreement, the Trustee
         may require reasonable indemnity against such cost, expense or
         liability as a condition to such proceeding. The reasonable expense of
         every such examination shall be paid by the Seller or, if paid by the
         Trustee, shall be reimbursed by the Seller upon demand. 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) the Trustee shall not be accountable, shall have no
         liability and makes no representation as to any acts or omissions
         hereunder of the Servicer until such time as the Trustee may act as
         Servicer pursuant to Section 8.02;

                  (vii) the Trustee may execute any of the trusts or powers
         hereunder or perform any duties hereunder either directly or by or
         through agents or attorneys or a custodian; and

                  (viii) the right of the Trustee to perform any discretionary
         act enumerated in this Agreement shall not be construed as a duty, and
         the Trustee shall not be answerable for other than its negligence or
         willful misconduct in the performance of such act.

         Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Agreement, the Insurance Agreement, the Certificate
Insurance Policy or of the Certificates (other than the signature and
authentication of the Trustee on the Certificates) or of any Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by the Servicer or for the use or application of any funds paid to
the Servicer in respect of the Mortgage Loans or deposited in or withdrawn from
the Collection Account by the Servicer. The Trustee shall at no 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

                                     -101-
<PAGE>

enforceability of any hazard insurance thereon (other than if the Trustee shall
assume the duties of the Servicer pursuant to Section 8.02); 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 (other than if the Trustee shall assume the duties of the Servicer
pursuant to Section 8.02); the compliance by the Seller 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
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 any loss resulting therefrom, it being understood that the Trustee shall
remain responsible for any Trust property that it may hold in its individual
capacity; the acts or omissions of any of the Servicer (other than if the
Trustee shall assume the duties of the Servicer pursuant to Section 8.02), any
Subservicer or any Mortgagor; any action of the Servicer (other than if the
Trustee shall assume the duties of the Servicer pursuant to Section 8.02) or any
Subservicer taken in the name of the Trustee; the failure of the Servicer or any
Subservicer to act or perform any duties required of it as agent of the Trustee
hereunder; or any action by the Trustee taken at the instruction of the Servicer
(other than if the Trustee shall assume the duties of the Servicer pursuant to
Section 8.02); provided, however, that the foregoing shall not relieve the
Trustee 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 2.02. Until such time as the Trustee shall have become the Successor
Servicer, the Trustee shall have no responsibility to perfect or maintain the
perfection of any security interest or lien granted to it hereunder.

         Section 9.04. Trustee May Own Certificates. The Trustee 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 and may transact
any banking and trust business with the Seller or the Servicer.

         Section 9.05. Trustee Fees and Expenses. The Trustee will be paid the
Trustee Fee pursuant to Section 5.01 and such other amounts as agreed with the
Seller. The Seller will pay or reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Agreement or the Insurance
Agreement (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ)
except any such expense, disbursement or advance as may arise from its
negligence or bad faith or which is the responsibility of Certificateholders
hereunder. In addition, the Seller covenants and agrees to indemnify the Trustee
and its officers, directors, employees and agents from, and hold it harmless
against, any and all losses, liabilities, damages, claims or expenses incurred
in connection with or relating to this Agreement, the Insurance Agreement or the
Certificates, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence of the Trustee in the performance
of its duties hereunder or by reason of the Trustee's reckless disregard of
obligations and duties hereunder. To the extent that amounts payable to the
Trustee under this Section 9.05, other than the Trustee Fee, are not paid by the
Seller, such amounts shall be payable to the Trustee by the Trust pursuant to
Section 5.01(a)(16). This Section 9.05 shall survive termination of this
Agreement or the resignation or removal of any Trustee hereunder.

                                     -102-
<PAGE>

         Section 9.06. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a corporation duly incorporated 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 a minimum long-term debt rating
of "Baa3", and subject to supervision or examination by federal or state
authority. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 9.06, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 9.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 9.07.

         Section 9.07. Resignation or Removal of Trustee. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Seller, the Servicer and each Rating Agency. Upon
receiving such notice of resignation, the Seller shall promptly appoint a
successor Trustee (approved in writing by the Servicer, so long as such approval
shall not unreasonably be withheld) by written instrument, in duplicate, copies
of which instrument shall be delivered to the resigning Trustee and the
Successor Trustee; provided, however, that any such successor Trustee shall be
subject to the prior written approval of the Servicer. If no successor Trustee
shall have been so appointed and having accepted appointment within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.

         If at any time the Trustee 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 Seller or if at any time the Trustee shall be legally
unable to act, or shall be adjudged a bankrupt or insolvent, or a receiver of
the Trustee or of its property shall be appointed, or any public officer shall
take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Seller or the
Servicer may remove the Trustee. If the Seller or the Servicer removes the
Trustee under the authority of the immediately preceding sentence, the Seller
shall promptly appoint a successor Trustee by written instrument, in duplicate,
copies of which instrument shall be delivered to the Trustee so removed and to
the successor Trustee.

         The Holders of Certificates evidencing Voting Rights aggregating over
50% of all Voting Rights may, at any time remove the Trustee by written
instrument or instruments delivered to the Servicer, the Seller and the Trustee;
and the Seller shall thereupon use its best efforts to appoint a successor
trustee in accordance with this Section 9.07.

         Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.07 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 9.08.

         Section 9.08. Successor Trustee. Any successor Trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the Seller,
the Servicer and to its predecessor Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor

                                     -103-
<PAGE>

Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as Trustee. The Seller, the
Servicer and the predecessor Trustee 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 all such rights, powers, duties
and obligations.

         No successor Trustee shall accept appointment as provided in this
Section 9.08 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 9.06.

         If a successor Trustee is to become the Successor Servicer hereunder,
it shall be an Approved Servicer. If a successor Trustee is not to become the
Successor Servicer hereunder, the entity then acting as Successor Servicer
hereunder shall continue to act in such capacity until such time as an Approved
Servicer has agreed to assume the role of Successor Servicer hereunder.

         Upon acceptance of appointment by a successor Trustee as provided in
this Section 9.08, the Servicer shall mail notice of the succession of such
Trustee hereunder to all Holders of Certificates at their addresses as shown in
the Certificate Register and to the Certificate Insurer and each Rating Agency.
If the Servicer fails to mail such notice within 30 days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Servicer.

         Section 9.09. Merger or Consolidation of Trustee. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder, provided that such corporation shall be eligible under the provisions
of Section 9.06, without the execution or filing of any paper or any further act
on the part of any of the parties hereto.

         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 Servicer
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
to act as co-trustee or co-trustees, jointly with the Trustee, or separate
trustee or separate trustees, of all or any part of the Trust, 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 an Event of Default 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

                                     -104-
<PAGE>

Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 9.08. The Seller 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 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 an Event of Default,
         the Trustee may accept the resignation or remove any separate trustee
         or co-trustee.

         Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. 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
Seller 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, not in its individual capacity but solely as Trustee 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

                                     -105-
<PAGE>

made on the part of the Trustee in the Certificates is made and intended not as
a personal undertaking or agreement by the Trustee but is made and intended for
the purpose of binding only the Trust.

         Section 9.12. Trustee May Enforce Claims Without Possession of
Certificates; Inspection. (a) All rights of action and claims under this
Agreement or the Certificates may be prosecuted and enforced by the Trustee
without the possession of any of the Certificates or the production thereof in
any proceeding relating thereto, and such proceeding instituted by the Trustee
shall be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursement and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Certificateholders or in respect of which such
judgment has been recovered.

         (b) The Trustee shall afford the Seller, the Servicer and each
Certificateholder upon reasonable notice during normal business hours, access to
all records maintained by the Trustee in respect of its duties hereunder and
access to officers of the Trustee responsible for performing such duties. Upon
request, the Trustee shall furnish the Seller, the Servicer and any requesting
Certificateholder with its most recent financial statements. The Trustee shall
cooperate fully with the Seller, the Servicer and such Certificateholder and
shall make available to the Seller, the Servicer and such Certificateholder for
review and copying such books, documents or records as may be requested with
respect to the Trustee's duties hereunder. The Seller, the Servicer and the
Certificateholders shall not have any responsibility or liability for any action
or failure to act by the Trustee and are not obligated to supervise the
performance of the Trustee under this Agreement or otherwise.

         Section 9.13. Suits for Enforcement. In case an Event of Default or
other default by the Servicer or the Seller hereunder shall occur and be
continuing, the Trustee 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, being advised by
counsel, shall deem most effectual to protect and enforce any of the rights of
the Trustee and the Certificateholders.

         Section 9.14. Appointment of Custodians. The Trustee may, with the
consent of the Seller and the Servicer (such consent to be evidenced by their
execution of a Custodial Agreement), appoint one or more Custodians to hold all
or a portion of the Mortgage Files as agent for the Trustee, by entering into a
Custodial Agreement. Each Custodian shall be a depository institution or trust
company subject to supervision by federal or state authority, shall have
combined capital and surplus of at least $50,000,000 and a minimum long-term
debt rating of "Baa3" and shall be qualified to do business in the jurisdiction
in which it holds any Mortgage File.

                                     -106-
<PAGE>

                                    ARTICLE X

                                   Termination

         Section 10.01. Termination. (a) The respective obligations and
responsibilities of the Seller, the Servicer, the Custodian and the Trustee
created hereby (other than the obligation of the Trustee 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 of the later of (x) the distribution
to Certificateholders of the final payment or collection with respect to the
last Mortgage Loan (or Monthly Advances of same by the Servicer) and (y) the
disposition of all funds with respect to the last Mortgage Loan and the
remittance of all funds due under the Agreement and the payment of all amounts
due and payable to the Certificate Insurer and the Trustee. Notwithstanding the
foregoing, in no event shall the trust created hereby continue beyond the
expiration of 21 years from the death of the last surviving descendant of Joseph
P. Kennedy, the late ambassador of the United States to the Court of St. James,
living on the date hereof.

         The Servicer may, at its option, terminate this Agreement on any
Distribution Date on or after the Optional Termination Date, by purchasing, on
such Distribution Date, all of the outstanding Mortgage Loans and REO Properties
at a price equal to the sum of (w) 100% of the aggregate Principal Balance of
the Mortgage Loans plus (x) the lesser of (A) the appraised value of any REO
Property as determined by the higher of two appraisals completed by two
independent appraisers selected by the Servicer and at the Servicer's expense
and (B) the Principal Balance of the Mortgage Loan related to such REO Property
plus (y) in each case, the greater of (i) the aggregate amount of accrued and
unpaid interest on the Mortgage Loans through the related Due Period and (ii) 30
days' accrued interest thereon at a rate equal to the Loan Rate, in each case
net of the Servicing Fee plus (z) any amounts due to the Certificate Insurer
under the Insurance Agreement (the "Termination Price").

         In connection with any such purchase pursuant to the preceding
paragraph, the Servicer shall deposit in the Distribution Account all amounts
then on deposit in the Collection Account (less amounts permitted to be
withdrawn by the Servicer pursuant to Section 3.03), 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 Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee by letter to Certificateholders and the Certificate Insurer mailed not
earlier than the 15th day and not later than the 25th day of the month next
preceding the month of such final distribution specifying (i) the Distribution
Date upon which final distribution of the Certificates will be made upon
presentation and surrender of Certificates at the office or agency of the
Trustee therein designated, (ii) the amount of any such final distribution and
(iii) that the Record Date otherwise applicable to such Distribution Date is not
applicable,

                                     -107-
<PAGE>

distributions being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified.

         (c) On the final Distribution Date, the Trustee will withdraw from the
Distribution Account and remit to the Certificate Insurer the lesser of (x) the
amount available for distribution on such final Distribution Date, net of any
portion thereof necessary to pay Certificateholders pursuant to Sections 5.01
and (y) the unpaid amounts due and owing to the Certificate Insurer pursuant to
Section 5.01. Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to the holders of Certificates on the Distribution
Date for such final distribution, in proportion to the Percentage Interests of
their respective Certificates and to the extent that funds are available for
such purpose, an amount equal to the amount required to be distributed to
Certificateholders pursuant to Section 5.01 for such Distribution Date.

         (d) In the event that all of the Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before such final
Distribution Date, the Trustee 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
Certificateholders by depositing such funds in a separate escrow account for the
benefit of such Certificateholders and the Servicer (if the Servicer has
exercised its right to purchase the Mortgage Loans) or the Trustee (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 one year after the second notice all the Offered
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds on deposit in
such escrow account.

         Section 10.02. Additional Termination Requirements. (a) In the event
that the Servicer exercises its purchase option as provided in Section 10.01,
the Trust shall be terminated in accordance with the following additional
requirements, unless the Trustee 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 10.02 will not (1) result in the imposition of
taxes on "prohibited transactions" of the Trust as defined in Section 860F of
the Code or (2) cause any REMIC to fail to qualify as a REMIC at any time that
any Regular Certificates are outstanding:

                  (i) Within 90 days prior to the final Distribution Date, the
         Servicer shall adopt and the Trustee shall sign a plan of complete
         liquidation for each REMIC meeting the requirements of a "Qualified
         Liquidation" under Section 860F of the Code and any regulations
         thereunder;

                  (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 Trustee shall sell all of the assets of the Trust to the Servicer
         for cash; and

                  (iii) At the time of the making of the final payment on the
         Certificates, the Trustee shall distribute or credit, or cause to be
         distributed or credited (A) to the Trustee, as holder of the REMIC I
         Regular Interests and REMIC II Regular Interests, the unpaid

                                     -108-
<PAGE>

         principal balance thereof plus accrued interest thereon, (B) to each
         Class of Certificates the amounts payable pursuant to Section 5.01, (C)
         to the Certificate Insurer, all amounts owing to the Certificate
         Insurer under this Agreement and the Insurance Agreement and (D) to the
         Class R-1 Certificateholders, Class R-2 Certificateholders and Class
         R-3 Certificateholders, all cash on hand in REMIC I, REMIC II and REMIC
         III, respectively, after such payments.

         (b) By their acceptance of the Certificates, the Holders thereof hereby
agree to appoint the Trustee as their attorney in fact to: (i) adopt such a plan
of complete liquidation (and the Certificateholders hereby appoint the Trustee
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.

                                   ARTICLE XI

                            Miscellaneous Provisions

         Section 11.01. Amendment. (a) This Agreement may be amended from time
to time by the Seller, the Servicer, and the Trustee subject, in the case of any
amendment or modification which affects any right, benefit, duty or obligation
of the Certificate Insurer or the Custodian, to the consent of the Certificate
Insurer or the Custodian, as applicable, in each case without the consent of any
of the Certificateholders, (i) to cure any ambiguity, (ii) to correct any
defective provisions or to correct or supplement any provisions herein that may
be inconsistent with any other provisions herein or the expectations of
Certificateholders, (iii) to add to the duties of the Servicer, (iv) to add any
other provisions with respect to matters or questions arising under this
Agreement which shall not be inconsistent with the provisions of this Agreement,
(v) to add or amend any provisions of this Agreement as required by any Rating
Agency or any other nationally recognized statistical rating agency in order to
maintain or improve any rating of each Class of Offered Certificates (it being
understood that, after obtaining the ratings in effect on the Closing Date, none
of the Certificate Insurer, the Trustee, the Seller, or the Servicer is
obligated to obtain, maintain or improve any such rating), (vi) to provide for
gross deposits to the Collection Account by the Servicer or (vii) to add or
amend any provisions of this Agreement to such extent as shall be necessary to
maintain the qualification of any REMIC as a REMIC; provided, however, that (x)
as evidenced by an Opinion of Counsel (at the expense of the requesting party)
in each case such action shall not adversely affect in any material respect the
interest of any Certificateholder, without regard to the existence of the
Certificate Insurance Policy, (y) in each case, such action is necessary or
desirable to maintain the qualification of any REMIC as a REMIC or shall not
adversely affect such qualification and (z) if the opinion called for in clause
(x) cannot be delivered with regard to an amendment pursuant to clause (vii)
above, such amendment is necessary to maintain the qualification of any REMIC as
a REMIC; and provided, further, that the amendment shall not be deemed to
adversely affect in any material respect the interests of the Certificateholders
and no Opinion of Counsel to that effect shall be required if the Person
requesting the amendment obtains a letter from each Rating Agency stating that
the amendment would not result in the downgrading or withdrawal of the
respective ratings then assigned to the Offered Certificates, without regard to
the existence of the Certificate Insurance Policy.

                                     -109-
<PAGE>

         (b) This Agreement also may be amended from time to time by the Seller,
the Servicer, and the Trustee, subject, in the case of any amendment or
modification which affects any right, benefit, duty or obligation of the
Certificate Insurer or the Custodian, to the consent of the Certificate Insurer
or the Custodian, as applicable, with the consent of the Holders of each Class
of Certificates which is affected by such amendment, evidencing Voting Rights
aggregating not less than 51% of such Class (or in the case of an amendment
which affects all classes, not less than 51% of all of the Voting Rights in the
Trust), 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 Certificateholders; provided, however, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
payments on the Certificates which are required to be made on any Certificate
without the consent of the Holder of such Certificate or (ii) reduce the
aforesaid percentage required to consent to any such amendment, without the
consent of the Holders of all Certificates then outstanding.

         (c) Without limiting the provisions of Sections 11.01(a) or 11.01(b)
the amendment to any of the following provisions shall be deemed to affect the
rights, benefits, duties or obligations of the Certificate Insurer and therefore
require the consent of the Certificate Insurer: (i) the amount and timing of any
amounts payable to the Certificate Insurer hereunder; (ii) the definitions of
Class Interest Distribution, Cumulative Loss Event, Delinquency Event,
Guaranteed Distributions, Required Overcollateralization Amount, Senior
Principal Distribution Amount, Servicing Termination Test; (iii) any other
definition to the extent that the amendment of such definition would increase or
decrease the amounts or limits calculated or specified pursuant to any of the
definitions listed in clause (ii) above or otherwise affect the intended use of
any of the definitions listed in clause (ii) above; and (iv) Section 4.01, 4.03,
8.05, 11.01, 11.09, 11.12, 11.13, and 11.14 of this Agreement. In addition, if
the Trustee is acting as Servicer hereunder, any proposed amendment shall
require the consent of the Certificate Insurer.

         (d) Prior to the solicitation of consent of Certificateholders in
connection with any such amendment, the party seeking such amendment shall
furnish the Trustee with an Opinion of Counsel stating whether such amendment
would adversely affect the qualification of any REMIC as a REMIC and notice of
the conclusion expressed in such Opinion of Counsel shall be included with any
such solicitation. An amendment made with the consent of all Certificateholders
and executed in accordance with this Section 11.01 shall be permitted or
authorized by this Agreement notwithstanding that such Opinion of Counsel may
conclude that such amendment would adversely affect the qualification of any
REMIC as a REMIC.

         (e) Prior to the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each Rating
Agency. In addition, promptly after the execution of any such amendment made
with the consent of the Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder and
the Certificate Insurer.

         (f) It shall not be necessary for the consent of Certificateholders
under this Section 11.01 to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.

                                     -110-
<PAGE>

         (g) Notwithstanding the permissive language in Section 11.01(a) and
11.01(b), upon satisfaction of the conditions in Section 11.01(a) or 11.01(b) as
applicable, the Trustee shall execute and deliver the applicable amendment;
provided, however, that the Trustee shall not be required to execute any
amendment which, based on an Opinion of Counsel, materially and adversely
affects the rights, duties or immunities of the Trustee hereunder.

         Section 11.02. Recordation of Agreement. 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
Trustee, 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 Certificateholders. The Certificateholders
requesting such recordation shall bear all costs and expenses of such
recordation. The Trustee shall have no obligation to ascertain whether such
recordation so affects the interests of the Certificateholders.

         Section 11.03. Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.

         No Certificateholder shall have any right to vote (except as provided
in Sections 8.01, 9.01, 9.02 and 11.01) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third 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 or by availing
itself of any provisions 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 Offered Certificates evidencing Voting Rights aggregating
not less than 51% of all the Voting Interests shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee, hereunder and shall have offered to the Trustee, such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding; it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder, the Trustee that no one or more Holders of Certificates shall
have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder, or to enforce
any right under this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all Certificateholders. For the

                                     -111-
<PAGE>

protection and enforcement of the provisions of this Section 11.03, each and
every Certificateholder, the Trustee shall be entitled to such relief as can be
given either at law or in equity.

         Section 11.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (EXCLUDING PROVISIONS
REGARDING CONFLICTS OF LAWS) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

         Section 11.05. Notices. (a) All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by certified mail, return receipt requested,
to (a) in the case of the Seller, Delta Financial Corporation, 1000 Woodbury
Road, Suite 200 Woodbury, NY 11797, (b) in the case of the Servicer, Ocwen
Federal Bank FSB, The Forum, Suite 1002, 1675 Palm Beach Lakes Boulevard, West
Palm Beach, Florida 33401, Attention: Secretary, (c) in the case of the Trustee,
Wells Fargo Bank Minnesota, National Association, at the Corporate Trust Office,
Attention Delta 2001-2; (d) in the case of S&P, 55 Water Street, 41st Floor, New
York, New York 10041, Attention: Residential Mortgage Group, (e) in the case of
Fitch, One State Street Plaza, New York, New York 10004, (f) in the case of
Moody's, 99 Church Street, 4th Fl., New York, New York 10004, (g) in the case of
the Certificate Insurer, Financial Security Assurance, Inc., 350 Park Avenue,
New York, New York 10022, Attention: Surveillance Department Re:, (Home Equity
Loan Asset-Backed Certificates, Series 2001-2, Telecopy No. (212) 339-3518 or
3529 Confirmation: (212) 826-0100 (in each case in which notice or other
communication to the Certificate Insurer refers to an Event of Default, a claim
on the Certificate Insurance Policy or with respect to which failure on the part
of the Certificate Insurer to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication shall be marked to
indicate "URGENT MATERIAL ENCLOSED"), or (h) as to each party, at such other
address as shall be designated by such party in a written notice to each other
party. Any notice required or permitted to be mailed to a Certificateholder
shall be given by first class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice. Any
notice or other document required to be delivered or mailed by the Trustee to
any Rating Agency shall be given on a best efforts basis and only as a matter of
courtesy and accommodation and the Trustee shall have no liability for failure
to delivery such notice or document to any Rating Agency.

         (b) Notice to Rating Agencies. The Trustee and the Servicer shall each
be obligated to use its best efforts promptly to provide notice, at the expense
of the Servicer, to each Rating Agency with respect to each of the following of
which a Responsible Officer of the Trustee or Servicer, as the case may be, has
actual knowledge:

                  (i) Any material change or amendment to this Agreement;

                  (ii) The occurrence of any Event of Default that has not been
         cured or waived;

                  (iii) The resignation or termination of the Servicer or the
         Trustee;

                                     -112-
<PAGE>

                  (iv)     The final payment to Holders of the Certificates of
                           any Class;

                  (v)      Any change in the location of any Account; and

                  (vi) Any event that would result in the inability of the
         Trustee to make advances regarding delinquent Mortgage Loans.

         (c) The Trustee shall promptly furnish to each Rating Agency copies of
the following:

                  (i) Each annual report to Certificateholders described in
         Section 5.03; and

                  (ii) Each statement to Certificateholders described in Section
         5.03; and

         (d) The Servicer shall promptly furnish to each Rating Agency copies of
the following:

                  (i) Each annual statement as to compliance described in
         Section 3.09;

                  (ii) Each annual independent public accountants' servicing
         report described in Section 3.10; and

                  (iii) Each notice delivered pursuant to Section 8.01(b) which
         relates to the fact that the Servicer has not made a Monthly Advance.

         Any such notice pursuant to this Section 11.05 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 the
addresses specified above for each such Rating Agency.

Section 11.06. Severability of Provisions. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, 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 11.07. Assignment. Notwithstanding anything to the contrary contained
herein, except as provided in Sections 7.02, 7.04 and 7.05 (or 3.01), this
Agreement may not be assigned by the Seller or the Servicer without the prior
written consent of the Holders of the Certificates evidencing Percentage
Interests aggregating not less than 66%. Notwithstanding the foregoing, the
Servicer may assign its rights to reimbursement for Monthly Advances, Servicing
Advances and Noncoverable Advances without Certificateholder consent.

Section 11.08. Certificates Nonassessable and Fully Paid. The parties agree that
the Certificateholders shall not be personally liable for obligations of the
Trust, that the beneficial ownership interests represented by the Certificates
shall be nonassessable for any losses or expenses of the Trust or for any reason
whatsoever, and that the Certificates upon execution,

                                     -113-
<PAGE>

authentication and delivery thereof by the Trustee pursuant to Section 6.02 are
and shall be deemed fully paid.

         Section 11.09. Third-Party Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Certificateholders,
the Certificate Owners, the Certificate Insurer and their respective successors
and permitted assigns. The Certificate Insurer shall be a third-party
beneficiary of this Agreement, entitled to enforce the provisions hereof as if a
party hereto. Except as otherwise provided in this Agreement, no other person
will have any right or obligation hereunder.

         Section 11.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.

         Section 11.11. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.

         Section 11.12. Mortgage Loans and Accounts Held for Benefit of the
Certificate Insurer. The Trustee shall hold the Mortgage Loans for the benefit
of the Certificateholders and the Certificate Insurer and all references in this
Agreement and in the Certificates to the benefit of Holders of the Certificates
shall be deemed to include the Certificate Insurer. The Trustee shall cooperate
in all reasonable respects with any reasonable request by the Certificate
Insurer for action to preserve or enforce the Certificate Insurer's rights or
interests under this Agreement and the Senior Certificates. The Servicer hereby
acknowledges and agrees that it shall service the Mortgage Loans for the benefit
of the Certificateholders and for the benefit of the Certificate Insurer, and
all references in this Agreement to the benefit of or actions on behalf of the
Certificateholders shall be deemed to include the Certificate Insurer.

         Section 11.13. Effect of Payments by the Certificate Insurer;
Subrogation. Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on the Senior Certificates which is made
with moneys received pursuant to the terms of the Certificate Insurance Policy
shall not be considered payment of the Senior Certificates from the Trust and
shall not result in the payment of or the provision for the payment of the
principal of or interest on the Senior Certificates within the meaning of
Section 5.01. The Seller, the Servicer and the Trustee acknowledge, and each
Holder by its acceptance of a Certificate agrees, that without the need for any
further action on the part of the Certificate Insurer, the Seller, the Servicer,
the Trustee or the Certificate Registrar, to the extent the Certificate Insurer
makes payments, directly or indirectly, on account of principal of or interest
on the Senior Certificates to the Holders of such Senior Certificates, (i) the
Certificate Insurer will be fully subrogated to the rights of such Holders to
receive such principal and interest from the Trust and (ii) the Certificate
Insurer shall be paid such principal and interest but only from the sources and
in the manner provided herein for the payment of such principal and interest.

         The Seller and the Servicer shall cooperate in all respects with any
reasonable request by the Certificate Insurer for action to preserve or enforce
the Certificate Insurer's rights or interests

                                     -114-
<PAGE>

under this Agreement without limiting the rights or affecting the interests of
the Holders as otherwise set forth herein.

Section 11.14. Notices to the Certificate Insurer. All notices, statements,
reports, certificates or opinions required by this Agreement to be sent to any
other party hereto or to the Certificateholders or the Rating Agencies shall
also be sent to the Certificate Insurer.

                                     -115-
<PAGE>

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

                                    DELTA FUNDING CORPORATION,
                                    as Seller

                                    By /s/ MORRIS KUTCHER
                                       ----------------------------------------
                                       Name:  Morris Kutcher
                                       Title:  Vice President

                                    OCWEN FEDERAL BANK FSB
                                    as Servicer

                                    By /s/ RICHARD DELGADO
                                       ----------------------------------------
                                       Name: Richard Delgado
                                       Title:  Vice President

                                    WELLS FARGO BANK MINNESOTA,
                                    NATIONAL ASSOCIATION,
                                    as Trustee

                                    By /s/ PETER A. GOBELL
                                       ----------------------------------------
                                       Name:        Peter A. Gobell
                                       Title:       Assistant Vice President

                                     -116-
<PAGE>

State of New York       )
                        ) ss.:
County of New York      )

                  On the 18th day of October, 2001 before me, a notary public in
and for the State of New York, personally appeared Morris Kutcher known to me
who, being by me duly sworn, did depose and say that he is the Vice President of
Delta Funding Corporation, a New York corporation, one of the parties that
executed the foregoing instrument; and that she signed her name thereto by order
of the Board of Directors.

                                                 -----------------------
                                                      Notary Public

[Notarial Seal]

<PAGE>

State of Florida      )
                      ) ss.:
County of             )

                  On the 18th day of October, 2001 before me, a notary public in
and for the State of Florida, personally appeared ___________________________
known to me who, being by me duly sworn, did depose and say that he/she is the
______________ of Ocwen Federal Bank FSB, a federally charted savings bank, one
of the parties that executed the foregoing instrument; and that he/she signed
his/her name thereto by order of the Board of Directors.

                                                 -----------------------
                                                      Notary Public

[Notarial Seal]

<PAGE>

State of New York       )
                        ) ss.:
County of New York      )

                  On the 18th day of October 2001, before me, a notary public in
and for the State of New York, _______________ personally appeared, known to me
who, being by me duly did depose and say that he is an Authorized Officer of
Wells Fargo Bank Minnesota, National Association, a national banking
association, one of the parties that executed the foregoing instrument; and that
he signed his name thereto by order of the Board of Directors of said
association.

                                                 -----------------------
                                                      Notary Public

[Notarial Seal]

<PAGE>

                                    EXHIBIT A

                          FORMS OF OFFERED CERTIFICATES

                                     A-1-1

<PAGE>

                                   EXHIBIT A-1

                        FORM OF CLASS A-1__ CERTIFICATES

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

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

Certificate No.                     :

Cut-Off Date                        :

First Distribution Date             :

Final Scheduled Distribution Date:  :

Initial Certificate Principal
Balance of this Certificate
("Denomination")                    :

Initial Class Principal
Balance                             :

Certificate Rate                    :

CUSIP                               :

Class                               :        A-1__

                                     A-1-2
<PAGE>

                              DFC HEL TRUST 2001-_
            Home Equity Loan Asset-Backed Certificates, Series 2001-_
                                    Class A-_

         evidencing a percentage interest in the distributions allocable to the
         Certificates of the above-referenced Class with respect to a Trust
         consisting primarily of a pool of closed-end fixed rate and adjustable
         rate home equity loans (the "Mortgage Loans")

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Certificate does
not evidence an obligation of, or an interest in, and is not guaranteed by the
Seller or the Trustee referred to below or any of their respective affiliates.
Neither this Certificate nor the Mortgage Loans are guaranteed or insured by any
governmental agency or instrumentality.

         This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Denomination of this Certificate by the Class Principal Balance) in certain
monthly distributions with respect to the Trust. The Trust was created pursuant
to a Pooling and Servicing Agreement dated as of the Cut-Off Date specified
above (the "Agreement") among Delta Funding Corporation, as seller (the
"Seller"), Ocwen Federal Bank FSB, as servicer (the "Servicer") and Wells Fargo
Bank Minnesota, National Association, as trustee (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 Class 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 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 signatory of the Trustee.

                                     A-1-3

<PAGE>

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

Dated:  ______________, 20__

                           WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
                            as Trustee

                   By _______________________________________

This is one of the Class A-1__ Certificates
referenced in the within-mentioned Agreement

By _________________________________________
     Authorized Signatory of
     WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
       as Trustee

                                     A-1-4

<PAGE>

                            [Reverse of Certificate]

                              DFC HEL TRUST 2001-_
                   Home Equity Loan Asset-Backed Certificates,
                                  Series 2001-_

         This Certificate is one of a duly authorized issue of Certificates
designated as DFC HEL Trust 2001-_, Home Equity Loan Asset-Backed Certificates,
Series 2001-_ (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 the Trustee is not 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 Trustee.

         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
first Business Day 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, upon the written request of a Certificateholder
delivered to the Trustee at least five Business Days prior to the related
Distribution Date, 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 office or agency of
the Trustee 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
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Seller, the Trustee with the consent of the Holders of the requisite
percentage of the Voting Rights 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-1-5

<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 Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in Minneapolis,
Minnesota, accompanied by a written instrument of transfer in form satisfactory
to the Trustee and the Certificate Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of 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 Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Seller, the Trustee and any agent of the Seller or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Seller or the Trustee or any such agent
shall be affected by any notice to the contrary.

         On any Distribution Date following the Due Period at the end of which
the Pool Balance is less than 10% of the sum of the aggregate Principal Balance
of the Mortgage Loans as of the Cut-Off Date and the amount deposited in the
Pre-Funding Account on the Closing Date, the Servicer will have the option to
repurchase, 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 the earlier of (i) the day following the
Distribution Date on which the aggregate Class Principal Balance has been
reduced to zero and (ii) the final payment or other liquidation of the last
Mortgage Loan in the Trust. In no event, however, will the trust created by the
Agreement continue beyond the expiration of 21 years from the death of the last
survivor of the descendants living at the date of the Agreement of a certain
person named in the Agreement.

         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-1-6

<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 Trustee 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-1-7

<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-1-8

<PAGE>

                                   EXHIBIT A-2

                          FORM OF CLASS IO CERTIFICATES

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

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

THIS CLASS IO CERTIFICATE HAS NO PRINCIPAL BALANCE.

Certificate No.                     :

Cut-Off Date                        :

First Distribution Date             :

Final Scheduled Distribution Date   :

Initial Notional Amount
("Denomination")                    :

Initial Class Principal
Balance                             :       None

Certificate Rate                    :       ______

CUSIP                               :

Class                               :        IO

Percentage Interest
Evidenced by this Certificate       :

                                     A-2-1

<PAGE>

                              DFC HEL TRUST 2001-_
            Home Equity Loan Asset-Backed Certificates, Series 2001-_
                                    Class IO

         evidencing a percentage interest in the distributions allocable to the
         Certificates of the above-referenced Class with respect to a Trust
         consisting primarily of a pool of closed-end fixed rate and adjustable
         rate home equity loans (the "Mortgage Loans")

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Certificate does
not evidence an obligation of, or an interest in, and is not guaranteed by the
Seller or the Trustee referred to below or any of their respective affiliates.
Neither this Certificate nor the Mortgage Loans are guaranteed or insured by any
governmental agency or instrumentality.

         This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Denomination of this Certificate by the Class Principal Balance) in certain
monthly distributions with respect to the Trust. The Trust was created pursuant
to a Pooling and Servicing Agreement dated as of the Cut-Off Date specified
above (the "Agreement") among Delta Funding Corporation, as seller (the
"Seller"), Ocwen Federal Bank FSB, as servicer (the "Servicer") and Wells Fargo
Bank Minnesota, National Association, as trustee (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 Class 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 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 signatory of the Trustee.

                                     A-2-2

<PAGE>

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

Dated:  _______________, 20__

                           WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
                            as Trustee

                   By _______________________________________

This is one of the Class IO Certificates
referenced in the within-mentioned Agreement

By _________________________________________
         Authorized Signatory of
         WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
            as Trustee

                                     A-2-3

<PAGE>

                            [Reverse of Certificate]

                              DFC HEL TRUST 2001-_
                   Home Equity Loan Asset-Backed Certificates,
                                  Series 2001-_

         This Certificate is one of a duly authorized issue of Certificates
designated as DFC HEL Trust 2001-_, Home Equity Loan Asset-Backed Certificates,
Series 2001-_ (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 the Trustee is not 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 Trustee.

         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
first Business Day 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, upon the written request of a Certificateholder
delivered to the Trustee at least five Business Days prior to the related
Distribution Date, 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 office or agency of
the Trustee 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
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Seller, the Trustee with the consent of the Holders of the requisite
percentage of the Voting Rights 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-2-4

<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 Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in Minneapolis,
Minnesota, accompanied by a written instrument of transfer in form satisfactory
to the Trustee and the Certificate Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of 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 Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Seller, the Trustee and any agent of the Seller or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Seller or the Trustee or any such agent
shall be affected by any notice to the contrary.

         On any Distribution Date following the Due Period at the end of which
the Pool Balance is less than 10% of the sum of the aggregate Principal Balance
of the Mortgage Loans as of the Cut-Off Date and the amount on deposit in the
Pre-Funding Account on the Closing Date, the Servicer will have the option to
repurchase, 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 the earlier of (i) the day following the
Distribution Date on which the aggregate Class Principal Balance has been
reduced to zero and (ii) the final payment or other liquidation of the last
Mortgage Loan in the Trust. In no event, however, will the trust created by the
Agreement continue beyond the expiration of 21 years from the death of the last
survivor of the descendants living at the date of the Agreement of a certain
person named in the Agreement.

         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-2-5

<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 Trustee 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-2-6

<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-2-7

<PAGE>

                                   EXHIBIT A-3

        FORM OF SUBORDINATE [CLASS M-1, CLASS M-2 OR CLASS B] CERTIFICATE

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

THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO CERTAIN CERTIFICATES AS
DESCRIBED IN THE AGREEMENT REFERRED TO 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").

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER (i) A REPRESENTATION LETTER TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE ("PLAN"), (ii) IF THE PURCHASER IS AN INSURANCE
COMPANY, A REPRESENTATION THAT THE PURCHASER IS AN INSURANCE COMPANY WHICH IS
PURCHASING SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY
GENERAL ACCOUNT" (AS SUCH TERM IS DEFINED IN SECTION V(e) OF PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE AND
HOLDING OF SUCH CERTIFICATES ARE COVERED UNDER SECTIONS I AND III OF PTCE 95-60,
(iii) A REPRESENTATION THAT THE TRANSFEREE UNDERSTANDS THAT THE ELIGIBILITY OF
SUCH CERTIFICATES IS CONDITIONED UPON SUCH CERTIFICATES BEING RATED AT LEAST
"BBB-" AT THE TIME OF ACQUISITION BY THE PLAN, OR (iv) AN OPINION OF COUNSEL IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 6.02(d) OF THE AGREEMENT REFERRED TO
HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED
TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT
TO ERISA OR TO THE CODE WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE
TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.

                                     A-3-1

<PAGE>

Certificate No.                     :

Cut-Off Date                        :

First Distribution Date             :

Final Scheduled Distribution Date   :

Initial Certificate Principal
Balance of this Certificate
("Denomination")                    :

Initial Class Principal
Balance                             :

Certificate Rate                    :

CUSIP                               :

Class                               :        [M-1, M-2 or B]

                              DFC HEL TRUST 2001-_
            Home Equity Loan Asset-Backed Certificates, Series 2001-_
                           [Class M-1, M-2 or Class B]

         evidencing a percentage interest in the distributions allocable to the
         Certificates of the above-referenced Class with respect to a Trust
         consisting primarily of a pool of closed-end fixed rate and adjustable
         rate home equity loans (the "Mortgage Loans")

                                     A-3-2

<PAGE>

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Certificate does
not evidence an obligation of, or an interest in, and is not guaranteed by the
Seller or the Trustee referred to below or any of their respective affiliates.
Neither this Certificate nor the Mortgage Loans are guaranteed or insured by any
governmental agency or instrumentality.

         This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Denomination of this Certificate by the Class Principal Balance) in certain
monthly distributions with respect to the Trust. The Trust was created pursuant
to a Pooling and Servicing Agreement dated as of the Cut-Off Date specified
above (the "Agreement") among Delta Funding Corporation, as seller(the
"Seller"), Ocwen Federal Bank FSB, as servicer (the "Servicer") and Wells Fargo
Bank Minnesota, National Association, as trustee (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 Class 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 the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, or a person acting on behalf of any such plan ("Benefit Plan Investor"),
which representation letter shall not be an expense of the Trustee, or (ii) if
the purchaser is an insurance company, a representation that the purchaser is an
insurance company which is purchasing such Certificates with funds contained in
an "insurance company general account" (as such term is defined in Section V(e)
of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the
purchase and holding of such Certificates are covered under PTCE 95-60, (iii) a
representation that the transferee is a plan purchasing such Certificates on or
after the date the final PTE referred to in section 6.02(d) of the Agreement is
published in the Federal Register and that such purchase meets the conditions of
the final PTE, or (iv) in the case of any such Certificate presented for
registration in the name of a Benefit Plan Investor, an Opinion of Counsel
satisfactory to the Trustee to the effect that the purchase or holding of such
Certificate will not result in prohibited transactions under ERISA and/or
Section 4975 of the Code and will not subject the Trustee to any obligation in
addition to those undertaken in this Agreement, which Opinion of Counsel shall
not be an expense of the Trustee. Notwithstanding anything else to the contrary
herein, any purported transfer of a Certificate of this Class to or on behalf of
a Benefit Plan Investor pursuant to clause (iv) above without the Opinion of
Counsel satisfactory to the Trustee as described above shall be void and of no
effect.

         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 signatory of the Trustee.

                                     A-3-3

<PAGE>

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

Dated:  _______________, 20__

                           WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
                            as Trustee

                   By _______________________________________

This is one of the Class [M-_ or Class B] Certificates
referenced in the within-mentioned Agreement

By _________________________________________
         Authorized Signatory of
         WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
           as Trustee

                                     A-3-4

<PAGE>

                            [Reverse of Certificate]

                              DFC HEL TRUST 2001-_
                   Home Equity Loan Asset-Backed Certificates,
                                  Series 2001-_

         This Certificate is one of a duly authorized issue of Certificates
designated as DFC HEL Trust 2001-_, Home Equity Loan Asset-Backed Certificates,
Series 2001-_ (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 the Trustee is not 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 Trustee.

         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
first Business Day 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, upon the written request of a Certificateholder
delivered to the Trustee at least five Business Days prior to the related
Distribution Date, 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 office or agency of
the Trustee 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
Trustee and the Securities Administrator and the rights of the
Certificateholders under the Agreement at any time by the Seller and the Trustee
with the consent of the Holders of the requisite percentage of the Voting Rights
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-3-5
<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 Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in Minneapolis,
Minnesota, accompanied by a written instrument of transfer in form satisfactory
to the Trustee and the Certificate Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of 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 Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Seller and the Trustee and any agent of the Seller or the Trustee
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Seller or the Trustee or any such agent
shall be affected by any notice to the contrary.

         On any Distribution Date following the Due Period at the end of which
the Pool Balance is less than 10% of the sum of the aggregate Principal Balance
of the Mortgage Loans as of the Cut-Off Date and the amount in the Pre-Funding
Account on the Closing Date, the Servicer will have the option to repurchase, 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 the earlier of (i) the day following the Distribution Date on
which the aggregate Class Principal Balance has been reduced to zero and (ii)
the final payment or other liquidation of the last Mortgage Loan in the Trust.
In no event, however, will the trust created by the Agreement continue beyond
the expiration of 21 years from the death of the last survivor of the
descendants living at the date of the Agreement of a certain person named in the
Agreement.

         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-3-6

<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 Trustee 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-3-7

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________ for the account of
______________, account number ___________, or, if mailed by check, to
_____________________. Applicable statements should be mailed to
___________________.

         This information is provided by ____________________, the assignee
named above, or ________________, as its agent.

                                     A-3-8

<PAGE>

                                    EXHIBIT B

                          FORM OF CLASS BIO 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.

THIS CLASS BIO 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 A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER (i) A REPRESENTATION LETTER TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE, OR (ii) AN OPINION OF COUNSEL IN ACCORDANCE WITH
THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING
ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON
BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE
OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID
AND OF NO EFFECT.

                                      B-1

<PAGE>

Certificate No.                             :

Percentage Interest evidenced by this
Certificate                                 :

Class                                       :        BIO

                              DFC HEL TRUST 2001-_
            Home Equity Loan Asset-Backed Certificates, Series 2001-_
                                    Class BIO

         evidencing a percentage interest in the distributions allocable to the
         Certificates of the above-referenced Class with respect to a Trust
         consisting primarily of a pool of closed-end fixed rate and and
         adjustable rate home equity loans (the "Mortgage Loans")

         This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Seller or the Trustee referred to below or any of
their respective affiliates. Neither this Certificate nor the Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality.

         This certifies that DF ACCEPTANCE CORPORATION 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 the Trust. The Trust was created pursuant to a Pooling and Servicing
Agreement dated as of ___________, 20__ (the "Agreement") among the Delta
Funding Corporation, as seller (the "Seller"), Ocwen Federal Bank FSB, as
servicer (the "Servicer") and Wells Fargo Bank Minnesota, National Association,
as trustee (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.

         No distributions are expected to be made on this Certificate. 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. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
Corporate Trust Office or the office or agency maintained by the Trustee in
Minneapolis, Minnesota.

         No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities 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 Securities Act and
such laws, in order to assure compliance with the Securities Act and such laws,
the Certificateholder desiring to effect such transfer and such
Certificateholder's prospective transferee shall each certify to the Trustee in
writing the facts surrounding the transfer. In the event that such a transfer is
to be made within three years from the date of the initial issuance of
Certificates pursuant to the Agreement,

                                      B-2

<PAGE>

there shall also be delivered (except in the case of a transfer pursuant to Rule
144A of the Securities Act) to the Trustee an Opinion of Counsel that such
transfer may be made pursuant to an exemption from the Securities Act, which
Opinion of Counsel shall not be obtained at the expense of the Trustee or the
Seller. The Holder hereof desiring to effect such transfer shall, and does
hereby agree to, indemnify the Trustee against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal and
state laws.

         No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, nor a person acting on behalf of any such plan ("Benefit Plan Investor"),
which representation letter shall not be an expense of the Trustee, or (ii) in
the case of any such Certificate presented for registration in the name of a
Benefit Plan Investor, an Opinion of Counsel satisfactory to the Trustee to the
effect that the purchase or holding of such Certificate will not result in
prohibited transactions under ERISA and/or Section 4975 of the Code and will not
subject the Trustee to any obligation in addition to those undertaken in this
Agreement, which Opinion of Counsel shall not be an expense of the Trustee.
Notwithstanding anything else to the contrary herein, any purported transfer of
a Certificate of this Class to or on behalf of a Benefit Plan Investor without
the Opinion of Counsel satisfactory to the Trustee as described above shall be
void and of no effect.

         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 Trustee.

                                      * * *

                                      B-3

<PAGE>

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

Dated:   _______________, 20__

                           WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
                            as Trustee

                   By _______________________________________

This is one of the Class BIO Certificates
referenced in the within-mentioned Agreement

By _________________________________________
         Authorized Signatory of
WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
   as Trustee

                                      B-4

<PAGE>

                       [Reverse of Class BIO Certificate]

                              DFC HEL TRUST 2001-_
                   Home Equity Loan Asset-Backed Certificates,
                                  Series 2001-_

         This Certificate is one of a duly authorized issue of Certificates
designated as DFC HEL Trust 2001-_, Home Equity Loan Asset-Backed Certificates,
Series 2001-_ (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 the Trustee is not 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 Trustee.

         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
first Business Day following such Distribution Date (the "Distribution Date"),
commencing in _________, 20__, 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 wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Distribution Date, or, if not, by check mailed by first class
mail to the address of such Certificateholder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee 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
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Seller, the Trustee with the consent of the 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.

                                      B-5

<PAGE>

         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 Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Seller and the Trustee and any agent of the Seller or the Trustee
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Seller or the Trustee or any such agent
shall be affected by any notice to the contrary.

         On any Distribution Date following the Due Period at the end of which
the Pool Balance is less than 10% of the sum of the aggregate Principal Balance
of the Mortgage Loans as of the Cut-Off Date, the Servicer will have the option
to repurchase, 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 the earlier of (i) the day following the
Distribution Date on which the aggregate Class Principal Balance of the
Certificates has been reduced to zero and (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust. In no event, however, will
the trust created by the Agreement continue beyond the expiration of 21 years
from the death of the last survivor of the descendants living at the date of the
Agreement of a certain person named in the Agreement.

         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.

                                      B-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 Trustee 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

                                      B-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.

                                       B-8

<PAGE>

                                   EXHIBIT B-1

                          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 REPRESENTS THE "TAX MATTERS PERSON RESIDUAL INTEREST" ISSUED
UNDER THE AGREEMENT REFERRED TO BELOW AND MAY NOT BE TRANSFERRED TO ANY PERSON
EXCEPT IN CONNECTION WITH THE ASSUMPTION BY THE TRANSFEREE OF CERTAIN DUTIES
SPECIFIED IN THE AGREEMENT.]

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 A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER (i) A REPRESENTATION LETTER TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE, OR (ii) AN OPINION OF COUNSEL IN ACCORDANCE WITH
THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING
ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON
BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE
OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID
AND OF NO EFFECT.

Certificate No.                             :

Percentage Interest
evidenced by this

                                     B-1-1
<PAGE>

Certificate                                 :        [99.999999%] [0.000001%]

Class                                                :        R-_

                              DFC HEL TRUST 2001-_
            Home Equity Loan Asset-Backed Certificates, Series 2001-_
                                    Class R-_

         evidencing a percentage interest in the distributions allocable to the
         Certificates of the above-referenced Class with respect to a Trust
         consisting primarily of a pool of closed-end fixed rate and and
         adjustable rate home equity loans (the "Mortgage Loans")

         This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Seller or the Trustee referred to below or any of
their respective affiliates. Neither this Certificate nor the Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality.

         This certifies that [DF ACCEPTANCE CORPORATION] [DELTA FUNDING
CORPORATION] 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 the Trust. The Trust was
created pursuant to a Pooling and Servicing Agreement dated as of _______, 20__
(the "Agreement") among the Delta Funding Corporation, as seller (the "Seller"),
Ocwen Federal Bank FSB, as servicer (the "Servicer") and Wells Fargo Bank
Minnesota, National Association, as trustee (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.

         No distributions are expected to be made on this Certificate. 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. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
Corporate Trust Office or the office or agency maintained by the Trustee in
Minneapolis, Minnesota.

         No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities 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 Securities Act and
such laws, in order to assure compliance with the Securities Act and such laws,
the Certificateholder desiring to effect such transfer and such
Certificateholder's prospective transferee shall each certify to the Trustee in
writing the facts surrounding the transfer. In the event that such a transfer is
to be made within three years from the date of the initial issuance of
Certificates pursuant to the Agreement, there shall also be delivered (except in
the case of a transfer pursuant to Rule 144A of the Securities Act) to the
Trustee an Opinion of Counsel that such transfer may be made pursuant to an
exemption from the Securities Act, which Opinion of Counsel shall not be
obtained at the expense of the Trustee or the Seller. The Holder hereof desiring
to effect such transfer shall, and does hereby agree

                                     B-1-2
<PAGE>

to, indemnify the Trustee against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.

         No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, or a person acting on behalf of any such plan ("Benefit Plan Investor"),
which representation letter shall not be an expense of the Trustee, or (ii) in
the case of any such Certificate presented for registration in the name of a
Benefit Plan Investor, an Opinion of Counsel satisfactory to the Trustee to the
effect that the purchase or holding of such Certificate will not result in
prohibited transactions under ERISA and/or Section 4975 of the Code and will not
subject the Trustee to any obligation in addition to those undertaken in this
Agreement, which Opinion of Counsel shall not be an expense of the Trustee.
Notwithstanding anything else to the contrary herein, any purported transfer of
a Certificate of this Class to or on behalf of a Benefit Plan Investor without
the Opinion of Counsel satisfactory to the Trustee as described above shall be
void and of no effect.

         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 Trustee 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 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.

         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 Trustee.

                                     B-1-3
<PAGE>

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

Dated:   _______________, 20__

                               WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
                               as Trustee

                           By _______________________________________

This is one of the Class R-_ Certificates
referenced in the within-mentioned Agreement

By _________________________________________
         Authorized Signatory of
         WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
             as Trustee

                                     B-1-4
<PAGE>

                        [Reverse of Class R Certificate]

                              DFC HEL TRUST 2001-_
                   Home Equity Loan Asset-Backed Certificates,
                                  Series 2001-_

         This Certificate is one of a duly authorized issue of Certificates
designated as DFC HEL Trust 2001-_, Home Equity Loan Asset-Backed Certificates,
Series 2001-_ (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 the Trustee is not 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 Trustee.

         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
first Business Day following such Distribution Date (the "Distribution Date"),
commencing in _______, 20__, 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 wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Distribution Date, or, if not, by check mailed by first class
mail to the address of such Certificateholder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee 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
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Seller, the Trustee with the consent of the 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.

                                     B-1-5
<PAGE>

         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 Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Seller and the Trustee and any agent of the Seller or the Trustee
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Seller or the Trustee or any such agent
shall be affected by any notice to the contrary.

         On any Distribution Date following the Due Period at the end of which
the Pool Balance is less than 10% of the sum of the aggregate Principal Balance
of the Mortgage Loans as of the Cut-Off Date and the amount deposited in the
Pre-Funding Account on the Closing Date, the Servicer will have the option to
repurchase, 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 the earlier of (i) the day following the
Distribution Date on which the aggregate Class Principal Balance of the Offered
Certificates has been reduced to zero and (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust. In no event, however, will
the trust created by the Agreement continue beyond the expiration of 21 years
from the death of the last survivor of the descendants living at the date of the
Agreement of a certain person named in the Agreement.

         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.

                                     B-1-6
<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 Trustee 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

                                     B-1-7
<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.

                                     B-1-8
<PAGE>

                                    EXHIBIT C

                             MORTGAGE LOAN SCHEDULE

                        [DELIVERED TO TRUSTEE AT CLOSING]

                                      C-1

<PAGE>

                                    EXHIBIT D

                      FORM OF SUBSEQUENT TRANSFER AGREEMENT

         SUBSEQUENT TRANSFER AGREEMENT (the "Agreement"), dated as of
________, 200_ by and among Delta Funding Corporation (the "Seller") and DFC HEL
Trust 2001-2 (the "Trust") pursuant to the Pooling and Servicing Agreement
referred to below.

                                   WITNESSETH:

         WHEREAS, pursuant to a Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement"), dated as of September 1, 2001, between the Seller,
Ocwen Federal Bank FSB, as servicer (the "Servicer") and Wells Fargo Bank
Minnesota, National Association, as trustee (the "Trustee"), the Seller wishes
to convey the Subsequent Mortgage Loans (as defined below) to the Trust, and the
Trust wishes to acquire the same for the consideration set forth in Section IV
below; and

         WHEREAS, the Seller shall timely deliver to the Trustee an Addition
Notice related to such conveyance as required by Section 2.13 of the Pooling and
Servicing Agreement;

         NOW THEREFORE, the Trust and the Seller hereby agree as follows:

         Section I. Capitalized terms used herein shall have the meanings
ascribed to them in the Pooling and Servicing Agreement unless otherwise
defined.

                  "Subsequent Mortgage Loans" shall mean, for purposes of this
         Agreement, the Subsequent Mortgage Loans listed in the Subsequent
         Mortgage Loan Schedule attached hereto as Schedule I.

                  "Subsequent Transfer Date" shall mean, with respect to the
         Subsequent Mortgage Loans transferred hereby, the date hereof.

         Section II. Subsequent Mortgage Loan Schedule. The Subsequent Mortgage
Loan Schedule attached hereto as Schedule I is a supplement to the Initial
Mortgage Loan Schedule attached as Exhibit C to the Pooling and Servicing
Agreement. The Mortgage Loans listed in the Subsequent Mortgage Loan Schedule
constitute the Subsequent Mortgage Loans to be transferred pursuant to this
Agreement on the Closing Date.

         Section III. Transfer of Subsequent Mortgage Loans. As of the related
Cut-off Date, subject to and upon the terms and conditions set forth in Sections
2.01, 2.04 and 2.13 of the Pooling and Servicing Agreement and set forth in this
Agreement, the Seller hereby irrevocably sells, transfers, assigns, sets over
and otherwise conveys to the Trust without recourse other than as expressly
provided herein and in the Pooling and Servicing Agreement, all the right, title
and interest of the Seller in and to the (i) Subsequent Mortgage Loans including
the related Principal Balance as of the related Cut-off Date, all interest
accruing thereon after the related Cut-off Date, and all collections in respect
of principal received after the related Cut-Off Date; (ii) property which
secured a Subsequent Mortgage Loan and which is acquired by foreclosure or in
lieu of

                                      D-1

<PAGE>

foreclosure; (iii) interest of the Seller in any insurance policies in respect
of the Subsequent Mortgage Loans; and (iv) all proceeds of any of the foregoing.

         Section IV. Representations and Warranties of the Seller. (a) The
Seller hereby represents and warrants to the Trust for the benefit of the
Certificateholders that the representations and warranties of the Seller set
forth in Sections 2.03 and 2.04(a) of the Pooling and Servicing Agreement are
true and correct with respect to the Seller and the Subsequent Mortgage Loans as
of the Closing Date.

         (b) The Seller hereby represents and warrants that (i) the aggregate of
the Principal Balances of the Subsequent Mortgage Loans listed on the Subsequent
Mortgage Loan Schedule and conveyed to the Trust pursuant to this Agreement as
of the related Cut-off Date is $__________ for Loan Group 1, and $__________ for
Loan Group 2, and (ii) the conditions precedent for the transfer of Subsequent
Mortgage Loans set forth in Section 2.13 of the Pooling and Servicing Agreement
have been satisfied as of the Closing Date.

         (c) The Seller hereby represents and warrants that the Seller is not
(i) insolvent and will not be rendered insolvent by the transfer of Subsequent
Mortgage Loans pursuant to this Agreement or (ii) aware of any pending
insolvency of the Seller.

         Section V. Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.

         Section VI. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.

                                      D-2

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their respective officers thereunto authorized as of the date first
written above.

                                    DELTA FUNDING CORPORATION
                                    as Seller

                                    By:________________________________
                                       Name:
                                       Title:

                                    DFC HEL TRUST 2001-2
                                    By:  WELL FARGO BANK MINNESOTA,
                                         NATIONAL ASSOCIATION,
                                           as Trustee

                                    By:________________________________
                                       Name:
                                       Title:

                                      D-3

<PAGE>

STATE OF NEW YORK    )
                     )
COUNTY OF NEW YORK   )

         On the ____ day of _________, 200_ before me, a Notary Public in and
for said State, personally appeared ______________, known to me to be a Vice
President of DELTA FUNDING CORPORATION, the corporation that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.

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

-----------------------------
Notary Public

STATE OF NEW YORK     )
                      )
COUNTY OF NEW YORK    )

         On the ____ day of ________, 200_ before me, a Notary Public in and for
said State, personally appeared _______________, known to me to be an
_______________________ of WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, the
company 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

                                      D-4

<PAGE>

                                    EXHIBIT E

                              FORM OF MORTGAGE NOTE

                              [NOT INCLUDED HEREIN]

                                      E-1

<PAGE>

                                    EXHIBIT F

                                FORM OF MORTGAGE

                              [NOT INCLUDED HEREIN]

                                      F-1

<PAGE>

                                    EXHIBIT G

                 AFFIDAVIT OF TRANSFER OF RESIDUAL CERTIFICATES
                           PURSUANT TO SECTION 6.02(d)

                              DFC HEL TRUST 2001-2
                   Home Equity Loan Asset-Backed Certificates,
                                  Series 2001-2

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 a Residual Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement, (the
"Agreement"), relating to the above-referenced Series, by and between Delta
Funding Corporation, as seller (the "Seller"), Ocwen Federal Bank FSB, as
servicer (the "Servicer") and Wells Fargo Bank Minnesota, National Association,
as trustee (the "Trustee"). Capitalized terms used, but not defined herein or in
Exhibit 1 hereto, 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) for 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

                                      G-1

<PAGE>

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.)

         5. The Transferee has reviewed the provisions of Section 6.02(d) of the
Agreement (attached hereto as Exhibit 2 and incorporated herein by reference)
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 a certificate substantially in the
form set forth as Exhibit M 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 either (i) not an employee benefit plan that is
subject to ERISA or a plan that is subject to Section 4975 of the Code (a
"Plan"), nor is acting on behalf of such a plan, or (ii) is a Plan which has
provided the Trustee with the Opinion of Counsel referred to in Section 6.02(d)
of the Agreement.

                                      * * *

                                       G-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 _________, 20__.

                                                NOTARY PUBLIC

                                       My Commission expires the ____ day of
                                       ___________________, ____.

                                      G-3

<PAGE>

                                                          EXHIBIT 1 to EXHIBIT G

                               Certain Definitions

         "Ownership Interest": As to any Certificate 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.

         "Permitted Transferee": Any Person other than (i) the United States or
any State or any political subdivision thereof or any agency or instrumentality
of any of the foregoing; (ii) a foreign government, international organization
or any agency or instrumentality of either of the foregoing; (iii) an
organization which is exempt from tax imposed by Chapter 1 of the Code
(including the tax imposed by section 511 of the Code on unrelated business
taxable income) (except certain farmers' cooperatives described in Code section
521) on any excess inclusions (as defined in Section 860E(c)(1)) with respect to
any Residual Certificate; (iv) rural electric and telephone cooperatives
described in Code section 1381(a)(2)(C); (v) a Person that is not (a) a citizen
or resident of the United States, (b) a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, (c) an estate whose income from sources without the United
States is includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States or (d) a trust if a court within the United States is
able to exercise primary supervision of the administration of the trust and one
or more United States fiduciaries have the authority to control all substantial
decisions of the trust; or (vi) any other Person so designated by the Trustee
based on an Opinion of Counsel to the effect that any transfer to such Person
may cause the Trust to fail to qualify as a REMIC at any time the Certificates
are outstanding. The terms "United States", "State" and "international
organization" shall have the meanings set forth in Code section 7701 or
successor provisions. A corporation will not be treated as an instrumentality of
the United States or of any State or political subdivision thereof if all of its
activities are subject to tax, and, with the exception of the Freddie Mac, a
majority of its board of directors is not selected by such governmental unit.

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

         "Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Depositor.

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

                                     G-1-1

<PAGE>

                                                          EXHIBIT 2 to EXHIBIT G

                        Section 6.02(d) of the Agreement

         (d) Except with respect to the initial transfer of the Class BIO, and
the Residual Certificates by the Seller, no transfer, sale, pledge or other
disposition of any Class BIO, any 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, other than the transfer of the Tax Matters Person Residual Interest to
the Trustee in reliance upon Rule 144A under the 1933 Act, the Trustee and the
Seller shall require either (i) a written Opinion of Counsel (which may be
in-house counsel) acceptable to and in form and substance reasonably
satisfactory to the Trustee and the Seller 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 or the Seller or (ii)
the Trustee shall require the transferor to execute a transferor certificate (in
substantially the form attached hereto as Exhibit M) and the transferee to
execute an investment letter (in substantially the form attached hereto as
Exhibit N-1 or N-2) acceptable to and in form and substance reasonably
satisfactory to the Seller and the Trustee certifying to the Seller and the
Trustee the facts surrounding such transfer, which investment letter shall not
be an expense of the Trustee or the Seller. The Holder of a Class BIO, or a
Residual Certificate desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee and the Seller 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 an ERISA Restricted Certificate shall be made unless the
Trustee shall have received either (i) a representation from the transferee of
such Certificate acceptable to and in form and substance satisfactory to the
Trustee, such requirement is satisfied only by the Trustee's receipt of a
representation letter from the transferee substantially in the form of Exhibit
N-1 or Exhibit N-2, as appropriate), to the effect that such transferee is not
an employee benefit plan or arrangement subject to Section 406 of ERISA or a
plan subject to Section 4975 of the Code, or a person acting on behalf of any
such plan or arrangement or using the assets of any such plan or arrangement to
effect such transfer ("Benefit Plan Investor") or (ii) if an ERISA Restricted
Certificate which is an Offered Certificate is being purchased by an insurance
company, a representation that an insurance company is purchasing such
Certificates with funds contained in an "insurance company general account" (as
such term is defined in Section V(e) of Prohibited Transaction Class Exemption
95-60 ("PTCE 95-60") and that the purchase and holding of such Certificates are
covered under Sections I and III of PTCE 95-60 or (iii) if an ERISA Restricted
Certificate which is an Offered Certificate is purchased by a Benefit Plan
Investor, a representation that the Benefit Plan Investor understands that the
eligibility of the Certificates for purchase is conditioned upon such
Certificates being rated at least "BBB-" at the time of acquisition of such
Certificates by the Benefit Plan Investor or (iv) in the case of any ERISA
Restricted Certificate presented for registration in the name of a Benefit Plan
Investor, an Opinion of Counsel satisfactory to the Trustee, which Opinion of
Counsel shall not be an expense of either the Trustee or the Trust, addressed to
the Trustee, to the effect that the purchase or holding of such ERISA Restricted
Certificate will not result in prohibited transactions under

                                     G-2-1

<PAGE>

ERISA and/or Section 4975 of the Code and will not subject the Trustee to any
obligation in addition to those expressly undertaken in this Agreement or to any
liability. Notwithstanding anything else to the contrary herein, the
representation required by clause (i), (ii) or (iii) above with respect to any
ERISA Restricted Certificate that is a Book-Entry Certificate shall be deemed to
have been made by the Certificate Owner by virtue of such Certificate Owner's
acquisition of such Certificate; and any purported transfer of an ERISA
Restricted Certificate to or on behalf of a Benefit Plan Investor pursuant to
clause (iv) above without the delivery to the Trustee of an Opinion of Counsel
satisfactory to the Trustee as described above shall be void and of no effect.

         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 Seller 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 Trustee 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 Trustee 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 G 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 6.02 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 6.02, 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 6.02, be restored to all rights as
         Holder thereof retroactive to the date of registration of transfer of
         such Residual Certificate. The Trustee shall be under no

                                     G-2-2

<PAGE>

         liability to any Person for any registration of transfer of a Residual
         Certificate that is in fact not permitted by this Section 6.02 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 the Agreement so long as the Trustee received the
         documents specified in clause (iii). The Trustee 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 Trustee shall be distributed and delivered by the
         Trustee 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 6.02, then the Trustee 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 Seller to arrange for the sale of such Residual
         Certificate. The proceeds of such sale, net of commissions (which may
         include commissions payable to the Seller or its Affiliates in
         connection with such sale), expenses and taxes due, if any, will be
         remitted by the Trustee to the previous Holder of such Residual
         Certificate that is a Permitted Transferee, except that in the event
         that the Trustee determines that the Holder of such Residual
         Certificate may be liable for any amount due under this Section 6.02 or
         any other provisions of this Agreement, the Trustee 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 Trustee, 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 6.02, then the Trustee, based on
         information provided to the Trustee by the Seller 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 6.02(d) shall cease to apply to
transfers occurring on or after the date on which there shall have been
delivered to the Trustee, in form and substance satisfactory to the Trustee, (i)
written notification from each Rating Agency that the removal of the
restrictions on Transfer set forth in this Section 6.02 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 to fail to
qualify as a REMIC.

         Each Tax Matters Person Residual Interest shall at all times be
registered in the name of the Seller.

                                     G-2-3

<PAGE>

                                    EXHIBIT H

                            LETTER OF REPRESENTATIONS

                          [Not included in 8-K filing]

                                      H-1

<PAGE>

                                    EXHIBIT I

                    FORM OF REQUEST FOR RELEASE OF DOCUMENTS

Wells Fargo Bank Minnesota, National Association
2030 Main Street, Suite 100
Irvine, California 92614
Attn: Inventory Control

         Re:      Custodial Agreement dated as of September 1, 2001 among Delta
                  Funding Corporation, Ocwen Federal Bank FSB, as Servicer and
                  Wells Fargo Bank Minnesota, National Association, as Trustee
                  and Custodian for DFC HEL Trust 2001-2, Home Equity Loan
                  Asset-Backed Certificates, Series 2001-2.

         In connection with the administration of the Mortgage Loans held by
you, as Custodian, pursuant to the above-captioned Custodial Agreement, we
request the release, and hereby acknowledge receipt, of the Mortgage File for
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
-------
                  5.       Nonliquidation   Reason:______________________
-------

                                         By:__________________________
                                         (authorized signer)

                                         Issuer:______________________

                                         Address:_____________________

                                      I-1

<PAGE>

                                         Date:________________________

Custodian
Wells Fargo Bank Minnesota, National Association
Please acknowledge the execution of the above request by your signature and date
below:

--------------------------               ----------------------
Signature                                Date

Documents returned to Custodian:

--------------------------               ---------------------
Custodian                                Date

                                      I-2

<PAGE>

                                    EXHIBIT J

                                   [RESERVED]

<PAGE>

                                    EXHIBIT K

                           FORM OF CUSTODIAL AGREEMENT

                               CUSTODIAL AGREEMENT

THIS CUSTODIAL AGREEMENT (as amended and supplemented from time to time, the
"Custodial Agreement"), dated as of September 1, 2001, by and among Wells Fargo
Bank Minnesota, National Association, not individually, but as trustee (the
"Trustee") and as custodian (together with any successor in interest or any
successor appointed hereunder, the "Custodian"), Delta Funding Corporation
("Delta") and Ocwen Federal Bank FSB, as Servicer ("Ocwen").

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

WHEREAS, Delta, in its capacity as seller (the "Seller), Ocwen, as servicer (the
"Servicer") and the Trustee, have entered into a Pooling and Servicing Agreement
dated as of September 1, 2001, relating to the issuance of Delta's Home Equity
Loan Asset-Backed Certificates, Series 2001-2 (as amended and supplemented from
time to time, the "Agreement"); and

WHEREAS, the Custodian has agreed to act as agent for the Trustee for the
purposes of receiving and holding certain documents and other instruments
delivered by Delta under the Agreement, all upon the terms and conditions and
subject to the limitations hereinafter set forth;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter set forth, the Trustee and the Custodian hereby agree as
follows:

Definitions

         Capitalized terms used in this Custodial Agreement and not defined
herein shall have the meanings assigned in the Agreement, unless otherwise
required by the context herein.

Custody of Mortgage Documents

Custodian to Act as Agent; Acceptance of Mortgage Files.

         The Custodian, as the duly appointed agent of the Trustee for these
purposes, acknowledges that it will hold the Mortgage Notes, the Related
Documents, the assignments and other documents required to be delivered by the
Seller to the Custodian pursuant to Section 2.01(a) of the Agreement and
relating to the Mortgage Loans identified on Schedule I hereto and declares that
it will hold such Mortgage Notes, Related Documents, assignments and other
documents and any similar documents received by the Trustee subsequent to the
date hereof (the "Mortgage Files") as agent for the Trustee, in trust, for the
benefit of all present and future Certificateholders. The Custodian agrees to
execute the Initial Certification and the Final Certification described in
Section 2.02 and set forth on Exhibits O and P of the Agreement.

                                      K-1

<PAGE>

Recordation of Assignments.

         If any Mortgage File includes one or more assignments to the Trustee of
Related Documents that have not been recorded, within 30 days of the Closing
Date, Delta, at no expense to the Custodian, shall cause to be recorded in the
appropriate public office for real property records each such assignment and,
upon receipt thereof from such public office, shall return each such assignment
to the Custodian; provided, however, that Delta shall not be required to cause
to be recorded such assignments if the related Mortgage Property is located in a
jurisdiction in which the recording thereof is not necessary to protect the
interests of the Trustee or the Certificateholders in the related Mortgage, as
set forth in Section 2.01(c) of the Agreement. The Custodian also agrees to
perform its other obligations under the Agreement, including, but not limited
to, its obligations under Sections 2.01, 2.02, 2.05, 2.13, 2.14 and 3.07
thereof.

Review of Mortgage Files.

         The Custodian agrees, for the benefit of the Seller and the
Certificateholders, to review, in accordance with the provisions of Section 2.02
of the Agreement, each Mortgage File. If in performing the reviews required by
this Section 2.3, the Custodian finds any document or documents constituting a
part of a Mortgage File to be unexecuted or missing or, based on the criteria
set forth in Section 2.02 of the Agreement, to be unrelated to the applicable
Mortgage Loan, the Custodian shall promptly so notify Delta and the Trustee.

         In connection with such review, the Custodian makes no representations
as to, and shall not be responsible to verify (A) the validity, legality,
enforceability, due authorization, recordability, sufficiency, or genuineness of
any of the documents contained in any Mortgage File or (B) the collectability,
insurability, effectiveness, or suitability of any Mortgage Loan.

Notification of Breaches of Representations and Warranties.

         Upon discovery by the Custodian of a breach of any representation or
warranty made by Delta as set forth in Section 2.03 of the Agreement, the
Custodian shall give prompt written notice to Delta and to the Trustee.

Custodian to Cooperate; Release of Mortgage Files.

         Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer shall promptly notify the Custodian by
delivering to the Custodian two copies of a Request for Release (Exhibit I to
the Agreement), one of which will be returned to the Servicer with the Mortgage
File, executed by a Servicing Officer or in a mutually agreeable electronic
format that originates from a Servicing Officer and shall request delivery to it
of the Mortgage File. The Custodian agrees, upon receipt of such certification
and request, promptly to release the related Mortgage File to the Servicer.

         From time to time as is appropriate for the servicing or foreclosure of
any Mortgage Loan, the Servicer shall deliver to the Custodian two copies of a
Request for Release requesting that possession of all of the Mortgage File be
released to the Servicer and certifying as to the reason for such release. With
such Request for Release, the Servicer shall deliver to the Custodian a receipt
signed by a Servicing Officer of the Servicer on behalf of the Servicer (or in

                                      K-2

<PAGE>

a mutually agreeable electronic format that originates from a Servicing
Officer), and upon receipt of the foregoing, the Custodian shall deliver the
Mortgage File or such document to the Servicer and the Servicer shall hold the
Mortgage File or such document in trust for the benefit of the Seller and the
Certificateholders. The Servicer shall cause each Mortgage File to be returned
to the Custodian when the need therefor by the Servicer no longer exists, unless
(i) the Mortgage Loan has been liquidated and the Liquidation Proceeds relating
to the Mortgage Loan have been deposited in the Collection Account to the extent
required by the Agreement or (ii) the Mortgage File has been delivered to an
attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Servicer has delivered to the Custodian a certificate of a Servicing Officer
of the Servicer certifying as to the name and address of the Person to which
such Mortgage File was delivered and the purpose or purposes of such delivery.
In the event of the liquidation of a Mortgage Loan, the Custodian shall deliver
such receipt with respect thereto to the Servicer upon deposit of the related
Liquidation Proceeds in the Distribution Account to the extent required by the
Agreement.

Assumption Agreements.

         In the event that any assumption agreement or substitution of liability
agreement is entered into with respect to any Mortgage Loan subject to this
Custodial Agreement in accordance with the terms and provisions of the
Agreement, the Servicer shall notify the Custodian that such assumption or
substitution agreement has been completed by forwarding to the Custodian the
original of such assumption or substitution agreement, which document shall be
added to the related Mortgage File and, for all purposes, shall be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting parts thereof.

Concerning the Custodian

Custodian a Bailee and Agent of the Trustee.

         With respect to each Mortgage Note, Related Document and other
documents constituting each Mortgage File which are delivered to the Custodian,
the Custodian is exclusively the bailee and agent of the Trustee, holds such
documents for the benefit of the Trust and the Certificateholders and undertakes
to perform such duties and only such duties as are specifically set forth in
this Agreement. Except upon compliance with the provisions of Section 2.5 of
this Custodial Agreement, no Mortgage Note, Related Document or other document
constituting a part of a Mortgage File shall be delivered by the Custodian to
the Interim Servicer or the Servicer or otherwise released from the possession
of the Custodian.

Indemnification.

         Delta hereby agrees to indemnify and hold the Custodian harmless from
and against all claims, liabilities, losses, actions, suits or proceedings at
law or in equity, or any other expenses, fees or charges of any character or
nature, which the Custodian may incur or with which the Custodian may be
threatened by reason of its acting as custodian under this Custodial

                                      K-3

<PAGE>

Agreement, including indemnification of the Custodian against any and all
expenses, including attorney's fees if counsel for the Custodian has been
approved by the Seller, which approval shall not be unreasonably withheld, and
the cost of defending any action, suit or proceedings or resisting any claim.
Notwithstanding the foregoing, it is specifically understood and agreed that in
the event any such claim, liability, loss, action, suit or proceeding or other
expense, fees, or charge shall have been caused by reason of any negligent act,
negligent failure to act, or willful misconduct on the part of the Custodian, or
which shall constitute a willful breach of its duties hereunder, the
indemnification provisions of this Custodial Agreement shall not apply. The
indemnification provided by this Section 3.2 shall survive the termination or
assignment of this Custodial Agreement or the resignation or removal of the
Custodian hereunder.

Custodian May Own Certificates.

         The Custodian in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights it would have if it were
not Custodian.

Custodian's Fees and Expenses.

         Delta will pay the initial fees of the Custodian. Other fees payable to
the Custodian hereunder for all services rendered by it in the exercise and
performance of any of the powers and duties hereunder of the Custodian, as set
forth in a separate letter agreement shall be paid by the Servicer. The Servicer
will pay or reimburse the Custodian upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Custodian in
accordance with any of the provisions of this Custodial Agreement (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ), except any such expense, disbursement
or advance as may arise from its negligence or bad faith.

Custodian May Resign; Trustee May Remove Custodian.

         The Custodian may resign from the obligations and duties hereby imposed
upon it as such obligations and duties relate to its acting as Custodian of the
Mortgage Loans upon giving 60 days written notice to the Trustee. Upon receiving
such notice of resignation, the Trustee shall either take custody of the
Mortgage Files itself and give prompt notice thereof to Delta and the Custodian
or promptly appoint a successor Custodian which is able to satisfy the
requirements of Section 3.7 (i) of this Custodial Agreement by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Custodian and one copy to the successor Custodian. If the Trustee
shall not have taken custody of the Mortgage Files and no successor Custodian
shall have been so appointed and have accepted resignation, the resigning
Custodian may petition any court of competent jurisdiction for the appointment
of a successor Custodian. All fees and expenses of any successor Custodian shall
be the responsibility of Delta.

         The Trustee may remove the Custodian at any time for cause, or
otherwise the Trustee may remove the Custodian at any time upon giving 60 days
written notice. In such event, the Trustee shall take custody of the Mortgage
Files itself, or shall appoint, or petition a court of competent jurisdiction to
appoint, a successor Custodian hereunder. Any successor Custodian

                                       K-4
<PAGE>

shall be a depository institution subject to supervision or examination by
federal or state authority and shall be able to satisfy the other requirements
contained in Section 3.7 (i) of this Custodial Agreement.

         Any resignation or removal of the Custodian and appointment of a
successor Custodian pursuant to any of the provisions of this Section 3.5 shall
become effective only upon acceptance of appointment by the successor Custodian
and subject to the prior approval of Delta. The Trustee shall give prompt notice
to Delta, Ocwen, and the Custodian of the appointment of any successor
Custodian.

Merger or Consolidation of Custodian.

         Any Person into which the Custodian may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Custodian shall be a party, or any
Person succeeding to the business of the Custodian, shall be the successor of
the Custodian 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.

Representations of the Custodian.

         The Custodian hereby represents and warrants as follows:

It is a national banking association subject to supervision or examination by a
federal authority, has a combined capital and surplus of at least $50,000,000
and is qualified to do business in the jurisdiction in which it will hold any
Mortgage File;

It has full power, authority and legal right to execute and deliver this
Custodial Agreement and to perform its obligations hereunder and has taken all
necessary action to authorize the execution, delivery and performance by it of
this Custodial Agreement;

To the best of its knowledge, after reasonable investigation, the execution and
delivery by it of this Custodial Agreement and the performance by it of its
obligations hereunder will not violate any provision of its Charter or By-Laws
or any law or regulation governing it or any order, writ, judgment or decree of
any court, arbitrator or governmental authority or agency applicable to it or
any of its assets. To the best of its knowledge, after reasonable investigation,
such execution, delivery and performance will not require the authorization,
consent or approval of, the giving of notice to, the filing or registration
with, or the taking of any other action with respect to, any governmental
authority or agency regulating its activities. To the best of its knowledge,
after reasonable investigation, such execution, delivery and performance will
not conflict with, or result in a breach or violation of, any material
indenture, mortgage, deed of trust, lease or other agreement or instrument to
which it is a party or by which it or its properties are bound; and

This Custodial Agreement has been duly executed and delivered by it. This
Custodial Agreement, when executed and delivered by the other parties hereto,
will constitute its valid, legal and binding obligation, enforceable against it
in accordance with its terms, except as the

                                      K-5

<PAGE>

enforcement thereof may be limited by applicable debtor relief laws and that
certain equitable remedies may not be available regardless of whether
enforcement is sought in equity or at law.

Limitations on the Responsibilities of the Custodian.

Neither the Custodian nor any of its Affiliates, directors, officers, agents,
counsel, attorneys-in-fact, and employees shall be liable for any action or
omission to act hereunder except for its own or such person's gross negligence
or willful misconduct. Notwithstanding the foregoing sentence, in no event shall
the Custodian or its Affiliates, directors, officers, agents, counsel,
attorneys-in-fact, and employees be held liable for any special, indirect,
punitive or consequential damages resulting from any action taken or omitted to
be taken by it or them hereunder or in connection herewith even if advised of
the possibility of such damages. The provisions of this Section 3.8 shall
survive the resignation or removal of the Custodian and the termination of this
Agreement.

The Custodian shall not be responsible for preparing or filing any reports or
returns relating to federal, state or local income taxes with respect to this
Agreement, other than for the Custodian's compensation or for reimbursement of
expenses.

The Custodian shall not be responsible or liable for, and makes no
representation or warranty with respect to, the validity, adequacy or perfection
of any lien upon or security interest in any Mortgage File.

The Custodian shall not be responsible for delays or failures in performance
resulting from acts beyond its control. Such acts shall include, but not be
limited to, acts of God, strikes, lockouts, riots, acts or war or terrorism,
epidemics, nationalization, expropriation, currency restrictions, governmental
regulations superimposed after the fact, fire, communication line failures,
computer viruses, power failures, earthquakes or other disasters.

The duties and obligations of the Custodian shall only be such as are expressly
set forth in this Agreement or as set forth in a written amendment to this
Agreement executed by the parties hereto or their successors and assigns. In the
event that any provision of this Agreement implies or requires that action or
forbearance be taken by a party, but is silent as to which party has the duty to
act or refrain from acting, the parties agree that the Custodian shall not be
the party required to take the action or refrain from acting. In no event shall
the Custodian have any responsibility to ascertain or take action except as
expressly provided herein.

Nothing in this Agreement shall be deemed to impose on the Custodian any duty to
qualify to do business in any jurisdiction, other than (i) any jurisdiction
where any Mortgage File is or may be held by the Custodian from time to time
hereunder, and (ii) any jurisdiction where its ownership of property or conduct
of business requires such qualification and where failure to qualify could have
a material adverse effect on the Custodian or its property or business or on the
ability of the Custodian to perform it duties hereunder.

The Trustee and Delta agree that the Custodian may delegate any of its duties
under this Agreement to any of its agents, attorneys-in-fact, or Affiliates. Any
such agent, attorney-in-fact, or Affiliate (and such Affiliate's directors,
officers, agents and employees) which performs

                                      K-6

<PAGE>

duties in connection with this Agreement shall be entitled to the same benefits
of the indemnification, waiver and other protective provisions to which the
Custodian is entitled under this Agreement.

The Custodian shall have no duty to ascertain whether or not any cash amount or
payment has been received by the Seller, Interim Servicer, Servicer or any third
person.

Miscellaneous Provisions

Notices.

         All notices, requests, consents and demands and other communications
required under this Custodial Agreement or pursuant to any other instrument or
document delivered hereunder shall be in writing and, unless otherwise
specifically provided, may be delivered personally, by telegram or telex, or by
registered or certified mail, postage prepaid, return receipt requested, at the
addresses specified below (unless changed by the particular party whose address
is stated herein by similar notice in writing), in which case the notice will be
deemed delivered when received:

         The Trustee/Custodian: Wells Fargo Bank Minnesota, National Association
                                Wells Fargo Center
                                Sixth Street and Marquette Avenue
                                Minneapolis, Minnesota  55479-0113
                                Attention:        Corporate Trust Services
                                Telecopy:
                                Confirmation:

         Delta:                 Delta Funding Corporation
                                1000 Woodbury Road, Suite 200
                                Woodbury, New York  11797
                                Attention:  Executive Department
                                Telecopy:         (516) 364-9450
                                Confirmation:     (516) 364-8500

         Ocwen:                 Ocwen Federal Bank FSB
                                1665 Palm Beach Lakes Blvd., Suite 200
                                West Palm Beach, Florida 33401
                                Attention: Secretary
                                Telecopy: (561) 682-8177
                                Confirmation: (561) 682-8000

Amendments.

         No modification or amendment of or supplement to this Custodial
Agreement shall be valid or effective unless the same is in writing and signed
by all parties hereto, and the Trustee shall not enter into any amendment hereof
except as permitted by the Agreement. The Trustee

                                      K-7

<PAGE>

shall give prompt notice to the Custodian of any amendment or supplement to the
Agreement and furnish the Custodian with written copies thereof. Delta, Ocwen
and the Trustee agree to obtain the Custodian's written consent prior to
entering into any amendment or modification of the Agreement which affects any
right, benefit, duty, or obligation of the Custodian thereunder.

Governing Law.

         This Custodial Agreement shall be deemed a contract made under the laws
of the State of New York and shall be construed and enforced in accordance with
and governed by the laws of the State of New York (without regard to its
conflicts of laws provisions)

Recordation of Agreement.

         To the extent permitted by applicable law, this Custodial 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 Mortgaged Properties subject to the Mortgage Loans are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by Delta and at its expense on direction by the Trustee, but only
upon direction 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 Custodial
Agreement as herein provided and for other purposes, this Custodial Agreement
may be executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.

Severability of Provisions.

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

Waiver of Trial By Jury.

         Each party hereto waives the right to trial by jury in any action,
suit, proceeding, or counterclaim of any kind arising out of or related to this
Custodial Agreement. In the event of litigation, this Custodial Agreement may be
filed as a written consent to a trial by the court.

Counterparts.

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

                                      K-8

<PAGE>

Reliance of Custodian.

         In the absence of bad faith, negligence or willful misconduct on the
part of the Custodian, the Custodian may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon any
request, instructions, certificate, opinion or the document furnished to the
Custodian, reasonably believed by the Custodian to be genuine and to have been
signed or presented by the proper party or parties and conforming to the
requirements of this Custodial Agreement; but in the case of any Related
Document or other request, instruction, document or certificate which by any
provision hereof is specifically required to be furnished to the Custodian, the
Custodian shall be under a duty to examine the same to determine whether or not
it conforms to the requirements of this Custodial Agreement.

         The Custodian may rely upon the validity of documents delivered to it,
without investigation as to their authenticity or legal effectiveness and Delta
will hold the Custodian harmless from any claims that may arise or be asserted
against the Custodian because of the invalidity of any such documents. Except as
provided herein, no provision of this Custodial Agreement shall require the
Custodian to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, if it should have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it. The
Custodian may consult with competent counsel with regard to legal questions
arising out of or in connection with this Custodial Agreement and the informed
advice or opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken, omitted or suffered by the Custodian
in good faith in accordance herewith.

Transmission of Mortgage Files.

         Written instructions as to the method of shipment and shipper(s) the
Custodian is directed to utilize in connection with the transmission of Mortgage
Files and Related Documents in the performance of the Custodian's duties
hereunder shall be delivered by the Servicer to the Custodian prior to any
shipment of any Mortgage Files and Related Documents hereunder. The Servicer
will arrange for the provision of such services at its sole cost and expense
(or, at the Custodian's option, reimburse the Custodian for all costs and
expenses incurred by the Custodian consistent with such instructions) and will
maintain such insurance against loss or damage to Mortgage Files and Related
Documents as the Servicer deems appropriate. Without limiting the generality of
the provisions of Section 3.2 above, it is expressly agreed that in no event
shall the Custodian have any liability for any losses or damages to any person,
including without limitation the Servicer, arising out of actions of the
Custodian consistent with instructions of the Servicer, as the case may be. If
the Custodian does not receive written direction, the Custodian is hereby
authorized and indemnified to utilize a nationally recognized courier service.

                                      K-9

<PAGE>

IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.

WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
   as Trustee

By:      _____________________________
         Name:
         Title:

WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
   as Custodian

By:      _____________________________
         Name:
         Title:

DELTA FUNDING CORPORATION,
   as Seller

By:      _____________________________
         Name:    Dawn Ceccarini
         Title:   Vice President

OCWEN FEDERAL BANK FSB,
   as Servicer

By:      _____________________________
         Name:    Richard Delgado
         Title:   Vice President

                                      K-10

<PAGE>

                                                                      Schedule I

                         DELIVERED TO TRUSTEE AT CLOSING
                         AS PROVIDED IN EXHIBIT C TO THE
                         POOLING AND SERVICING AGREEMENT

                                      K-11

<PAGE>

                                    EXHIBIT L

                        DELINQUENCY AND LOSS INFORMATION

                              [NOT INCLUDED HEREIN]

                                      L-1

<PAGE>

                                    EXHIBIT M

                         FORM OF TRANSFEROR CERTIFICATE

[DATE]

Wells Fargo Bank Minnesota, National Association,
 as trustee
Wells Fargo Center
Sixth Street and Marquette Avenue
Minneapolis, Minnesota  55479-0113
Attn:    Delta Funding Home Equity Loan Asset-Backed
         Certificates, Series 2001-2

         Re:      Delta Funding Home Equity Loan Asset-Backed
                  Certificates, Series 2001-2, [Class BIO] and [Class R-1]

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 and
(c) with respect to our disposition of the [Class BIO] or [Class R-1]
Certificates, we have no knowledge that the transferee is not a Permitted
Transferee.

                                    Very truly yours,

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

                                    By:  _________________________
                                          Authorized Officer

                                      M-1

<PAGE>

                                   EXHIBIT N-1

                    FORM OF INVESTMENT LETTER (NON-RULE 144A)

[DATE]

[Seller]
[Seller Address]

Wells Fargo Bank Minnesota, National Association,
 as trustee
Wells Fargo Center
Sixth Street and Marquette Avenue
Minneapolis, Minnesota  55479-0113
Attn:    Delta Funding Home Equity Loan Asset-Backed
         Certificates, Series 2001-2

                  Re:  DFC HEL Trust 2001-2
                           Home Equity Loan Asset-Backed Certificates,
                           Series 2001-2, [Class BIO,] and [Class R-1]

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
Seller 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) either (i) 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, ("Plan") nor are we acting on behalf of any such Plan or
(ii) we are a Plan which has provided the Trustee with the Opinion of Counsel
referred to in Section 6.02(d) of the Agreement, (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

                                     N-1-1

<PAGE>

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, dated as of September 1, 2001, among Delta Funding
Corporation, as Seller, Ocwen Federal Bank FSB, as Servicer, and Wells Fargo
Bank Minnesota, National Association, as Trustee.

                                     Very truly yours,

                                     [NAME OF TRANSFEREE]

                                     By:________________________
                                          Authorized Officer

                                     N-1-2

<PAGE>

                                   EXHIBIT N-2

                            FORM OF RULE 144A LETTER

[DATE]

[Seller]
[Seller Address]

Wells Fargo Bank Minnesota, National Association,
 as trustee
Wells Fargo Center
Sixth Street and Marquette Avenue
Minneapolis, Minnesota  55479-0113
Attn:    Delta Funding Home Equity Loan Asset-Backed
         Certificates, Series 2001-2

                  Re:  DFC HEL Trust 2001-2
                           Home Equity Loan Asset-Backed Certificates,
                           Series 2001-2, [Class BIO,] and [Class R-1]

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 Seller 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) either (i) 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, ("Plan") nor are we acting on behalf of any such Plan or (ii) we are a
Plan which has provided the Trustee with the Opinion of Counsel referred to in
Section 6.02(d) of the Agreement, (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 Act or that would
render the disposition of the Certificates a violation of Section 5 of the 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

                                     N-2-1

<PAGE>

that term is defined in Rule 144A under the 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 (A)(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 Act, and (B)(i) the purchaser or
transferee of such Certificates has executed and delivered to you a certificate
to substantially the same effect as this certificate, and (ii) the purchaser or
transferee has otherwise complied with any conditions for transfer set forth in
the Pooling and Servicing Agreement, dated as of September 1, 2001, among Delta
Funding Corporation, as Seller, Ocwen Federal Bank FSB, as Servicer, and Wells
Fargo Bank Minnesota, National Association, as Trustee.

                                            Very truly yours,

                                            [NAME OF TRANSFEREE]

                                            By: ________________________
                                                Authorized Officer

                                     N-2-2

<PAGE>

                                                          ANNEX 1 TO EXHIBIT N-2

            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:

                  (a) As indicated below, the undersigned is the President,
Chief Financial Officer, Senior Vice President or other executive officer of the
Buyer.

                  (b) 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.

----------
(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.

                                    N-2-1-1

<PAGE>

                  ___      Broker-dealer. The Buyer is a dealer registered
                           pursuant to Section 15 of the Securities Exchange Act
                           of 1934.

                  ___      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.

                  (c) 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.

                  (d) 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.

                                    N-2-1-2

<PAGE>

                  (e) 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.

                  (f) 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:

                                    N-2-1-3

<PAGE>

                                                          ANNEX 2 TO EXHIBIT N-2

            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:

                  (a) 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.

                  (b) 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 Buyer's 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.

                                    N-2-2-1

<PAGE>

                  ___      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).

                  (c) 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).

                  (d) 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.

                  (e) The Buyer is familiar with Rule 144A and under-stands 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.

                                     N-2-2
<PAGE>

                  (f) 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:

                                    N-2-2-3

<PAGE>

                                    EXHIBIT O

                                     FORM OF
                              INITIAL CERTIFICATION

[DATE]

Delta Funding Corporation
1000 Woodbury Road
Woodbury, New York  11797

         Re:      Pooling and Servicing Agreement, dated as of September 1, 2001
                  between Delta Funding Corporation, as Seller, Ocwen Federal
                  Bank FSB, as Servicer and Wells Fargo Bank Minnesota, National
                  Association, as Trustee, Home Equity Loan Asset-Backed
                  Certificates, Series 2001-2

Ladies and Gentlemen:

                  In accordance with the provisions of Section 2.02 of the
above-referenced Pooling and Servicing Agreement, the undersigned, as Custodian,
hereby certifies that as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified on the attachment hereto), it has reviewed the documents
delivered to it pursuant to Section 2.02 of the Pooling and Servicing Agreement
and has determined that (i) all documents required to be delivered to it
pursuant to the above-referenced Pooling and Servicing Agreement are in its
possession, (ii) such documents have been reviewed by it and appear regular on
their face and have not been mutilated, damaged, torn or otherwise physically
altered and relate to such Mortgage Loans, (iii) based on its examination and
only as to the foregoing documents, the information set forth in the Mortgage
Loan Schedule as to the information set forth in clauses (ii) and (iii) of the
definition "Mortgage Loan Schedule" set forth in the Pooling and Servicing
Agreement accurately reflects the information set forth in the Trustee's
Mortgage File and (iv) each Mortgage Note has been endorsed as provided in
Section 2.01 of the Pooling and Servicing Agreement. The Custodian has made no
independent examination of such documents beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The Custodian
makes no representations as to: (i) the validity, legality, enforceability or
genuineness of any such documents contained in each or any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectibility,
insurability, effectiveness or suitability of any such Mortgage Loan.

                  Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement.

                                           WELLS FARGO BANK MINNESOTA,
                                           NATIONAL ASSOCIATION,

                                      O-1

<PAGE>

                                           as Custodian

                                           By:_______________________________
                                              Name:
                                              Title:

                                      O-2

<PAGE>

                                    EXHIBIT P

                           FORM OF FINAL CERTIFICATION

[DATE]

Delta Funding Corporation
1000 Woodbury Road
Suite 200
Woodbury, New York  11797-9003

         Re:      Pooling and Servicing Agreement, dated as of September 1, 2001
                  relating to DFC HEL Trust 2001-2

Ladies and Gentlemen:

         In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Custodian, hereby certifies that,
except as noted on the attachment hereto, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
the attachment hereto) the Custodian has reviewed the documents delivered to it
pursuant to Section 2.01 (other than items listed in Section 2.01(a)(vii)) of
the Pooling and Servicing Agreement and has determined that (i) all such
documents are in its possession, (ii) such documents have been reviewed by it
and have not been mutilated, damaged, torn or otherwise physically altered and
relate to such Mortgage Loan, (iii) based on its examination, and only as to the
foregoing documents, the information set forth in clauses (ii) and (iii) of the
Mortgage Loan Schedule respecting such Mortgage Loan is correct and (iv) each
Mortgage Note has been endorsed as provided in Section 2.01 of the Pooling and
Servicing Agreement.

         The Custodian has made no independent examination of such documents
beyond the review specifically required in the above-referenced Pooling and
Servicing Agreement. The Custodian makes no representations as to: (i) the
validity, legality, enforceability or genuineness of any such documents
contained in each or any of the Mortgage Loans identified on the Mortgage Loan
Schedule, or (ii) the collectibility, insurability, effectiveness or suitability
of any such Mortgage Loan.

         Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.

                                            WELLS FARGO BANK MINNESOTA,
                                            NATIONAL ASSOCIATION,
                                            as Custodian

                                       P-1

<PAGE>

                                            By:_____________________________
                                               Name:
                                               Title:

                                      P-2

<PAGE>

                                    EXHIBIT Q
                          SUBSEQUENT FUNDING PARAMETERS

       Subsequent Loan Criteria. Following the addition of the Subsequent
         Mortgage Loans, the Mortgage Loans must be in compliance with
                         the following characteristics:

         (a)      The weighted average original CLTV ratio shall be no greater
                  than __%;

         (b)      The weighted average coupon shall not be less than ____%;

         (c)      The weighted average remaining term to stated maturity shall
                  be at least ___ months;

         (d)      Single zip code concentrations shall not exceed __%;

         (e)      Single state concentration shall not exceed __%;

         (f)      Mortgage Loans secured by second liens shall not exceed __%;

         (g)      Investor properties shall not exceed __%

         (h)      The weighted average credit score (FICO) shall be at least __;

         (i)      No Subsequent Mortgage Loan will be more than thirty days
                  delinquent as of the related Cut-off Date;

         (j)      All Mortgage Loans will be secured by a first or second lien;

         (k)      C grade credit borrowers shall not exceed __%; and

         (l)      D grade credit borrowers shall not exceed __%

                                       Q-1

<PAGE>

                                    EXHIBIT R

                           PREPAYMENT CHARGE SCHEDULE

                [to be attached, but not included in 8-K filing]

                                      R-1<PAGE>
                                                                     EXHIBIT 4.5

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

                                 KELLOGG COMPANY

                                       AND

                      [______________________], as Trustee

                          SUBORDINATED DEBT SECURITIES

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

                                    INDENTURE

                         Dated as of ________ __, 20___

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

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

<PAGE>

                             CROSS REFERENCE SHEET*

         Provisions of Trust Indenture Act of 1939, as amended, and Indenture to
be dated as of October ___, 20__, between Kellogg Company and [______________],
as Trustee:

<TABLE>
<CAPTION>
Section of the Act                                           Section of Indenture
------------------                                           --------------------
<S>                                                          <C>
310(a)(1) and (2)                                            6.9
310(a)(3) and (4)                                            Inapplicable
310(b)                                                       6.8 and 6.10(a), (b) and (d)
310(c)                                                       Inapplicable
311(a)                                                       6.13(a) and (c)(1) and (2)
311(b)                                                       6.13(b)
311(c)                                                       Inapplicable
312(a)                                                       4.1 and 4.2(a)
312(b)                                                       4.2(a) and (b)
312(c)                                                       4.2(c)
313(a)                                                       4.4(a)(i), (ii), (iii), (iv),(v), (vi) and (vii)
313(b)(1)                                                    Inapplicable
313(b)(2)                                                    4.4
313(c)                                                       4.4
313(d)                                                       4.4
314(a)                                                       4.3
314(b)                                                       Inapplicable
314(c)(1) and (2)                                            11.5
314(c)(3)                                                    Inapplicable
314(d)                                                       Inapplicable
314(e)                                                       11.5
314(f)                                                       Inapplicable
315(a), (c) and (d)                                          6.1
315(b)                                                       5.11
315(e)                                                       5.12
316(a)(1)                                                    5.9 and 5.10
316(a)(2)                                                    Not required
316(a) (last sentence)                                       7.4
316(b)                                                       5.7
316(c)                                                       7.6
317(a)                                                       5.2
317(b)                                                       3.4(a) and (b)
318(a)                                                       11.7
</TABLE>

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

                                       2
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                               Page
                                                                                                               ----
<S>               <C>                                                                                         <C>
ARTICLE ONE                    DEFINITIONS........................................................................1
         SECTION 1.1           Certain Terms Defined..............................................................1
                  Additional Amounts..............................................................................1
                  Attributable Debt...............................................................................1
                  Bankruptcy Law..................................................................................2
                  Board of Directors..............................................................................2
                  Business Day....................................................................................2
                  Capital Stock...................................................................................2
                  Commission......................................................................................2
                  Company.........................................................................................2
                  Company Notice..................................................................................2
                  Component Currency..............................................................................2
                  Consolidated Total Assets.......................................................................2
                  Conversion Date.................................................................................2
                  Conversion Event................................................................................2
                  Corporate Trust Office..........................................................................3
                  Coupon..........................................................................................3
                  Coupon Security.................................................................................3
                  Currency........................................................................................3
                  Currency Determination..........................................................................3
                  Debt............................................................................................3
                  Dollar..........................................................................................3
                  Dollar Equivalent of the Currency Unit..........................................................3
                  Dollar Equivalent of the Foreign Currency.......................................................3
                  Euro............................................................................................3
                  European Communities............................................................................3
                  European Monetary System........................................................................3
                  Event of Default................................................................................3
                  Exchange Rate Officer's Certificate.............................................................3
                  Foreign Currency................................................................................4
                  Government Obligations..........................................................................4
                  Holder..........................................................................................4
                  Holder of Securities............................................................................4
                  Securityholder..................................................................................4
                  Indenture.......................................................................................4
                  interest........................................................................................4
                  Market Exchange Rate............................................................................4
                  non-United States Person........................................................................4
                  Officers' Certificate...........................................................................4
</TABLE>

                                       i
<PAGE>

                         TABLE OF CONTENTS (Continued)

<TABLE>
<CAPTION>

                                                                                                               Page
                                                                                                               ----
<S>                                                                                                           <C>
                  Opinion of Counsel..............................................................................4
                  Original Issue Date.............................................................................4
                  Original Issue Discount Security................................................................5
                  Outstanding.....................................................................................5
                  Paying Agent....................................................................................5
                  Permitted Junior Securities.....................................................................5
                  Person..........................................................................................5
                  Place of Payment................................................................................5
                  principal.......................................................................................5
                  Principal Property..............................................................................6
                  Registered Holder...............................................................................6
                  Registered Security.............................................................................6
                  Responsible Officer.............................................................................6
                  Restricted Subsidiary...........................................................................6
                  Sale and Lease-Back Transaction.................................................................6
                  Security........................................................................................6
                  Senior Indebtedness.............................................................................6
                  Series..........................................................................................6
                  Series of Securities............................................................................6
                  Specified Amount................................................................................6
                  Subsidiary......................................................................................7
                  Tranche.........................................................................................7
                  Trustee.........................................................................................7
                  Trust Indenture Act of 1939.....................................................................7
                  United States of America........................................................................7
                  United States Person............................................................................7
                  Unregistered Security...........................................................................7
                  Unrestricted Subsidiary.........................................................................7
                  Valuation Date..................................................................................7
                  Vice president..................................................................................7

ARTICLE TWO                    SECURITIES.........................................................................7
         SECTION 2.1           Forms Generally....................................................................7
         SECTION 2.2           Form of Trustee's Certificate of Authentication....................................8
         SECTION 2.3           Amount Unlimited; Issuable in Series...............................................8
         SECTION 2.4           Authentication and Delivery of Securities.........................................11
         SECTION 2.5           Execution of Securities...........................................................13
         SECTION 2.6           Certificate of Authentication.....................................................13
         SECTION 2.7           Denomination and Date of Securities; Payments of Interest.........................13
         SECTION 2.8           Registration, Transfer and Exchange...............................................15
         SECTION 2.9           Mutilated, Defaced, Destroyed, Lost and Stolen Securities.........................17
         SECTION 2.10          Cancellation of Securities........................................................18
         SECTION 2.11          Temporary Securities..............................................................18
</TABLE>

                                       ii
<PAGE>

                         TABLE OF CONTENTS (Continued)

<TABLE>
<CAPTION>

                                                                                                               Page
                                                                                                               ----
<S>                            <C>                                                                             <C>
         SECTION 2.12          Currency and Manner of Payments in Respect of Securities..........................18
         SECTION 2.13          Compliance with Certain Laws and Regulations......................................22
         SECTION 2.14          CUSIP Numbers.....................................................................22
         SECTION 2.15          Securities in Global Form.........................................................22

ARTICLE THREE                  COVENANTS OF THE ISSUER...........................................................23
         SECTION 3.1           Payment of Principal and Interest.................................................23
         SECTION 3.2           Offices for Payment, etc..........................................................23
         SECTION 3.3           Appointment to Fill a Vacancy in Office of Trustee................................24
         SECTION 3.4           Paying Agents.....................................................................24
         SECTION 3.5           Written Statement to Trustee......................................................25
         SECTION 3.6           Limitation on Liens...............................................................25
         SECTION 3.7           Limitation on Sale and Lease-Back.................................................28
         SECTION 3.8           Additional Amounts................................................................28
         SECTION 3.9           Calculation of Original Issue Discount............................................29

ARTICLE FOUR                   SECURITYHOLDERS' LISTS AND REPORTS BY THE.........................................29
         SECTION 4.1           Company to Furnish Trustee Information as to Names and Addresses of
                               Securityholders...................................................................29
         SECTION 4.2           Preservation and Disclosure of Securityholders' Lists.............................30
         SECTION 4.3           Reports by the Company............................................................31
         SECTION 4.4           Reports by the Trustee............................................................32

ARTICLE FIVE                   REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS.......................................32
         SECTION 5.1           Event of Default Defined; Acceleration of Maturity; Waiver of Default.............32
         SECTION 5.2           Collection of Indebtedness by Trustee; Trustee May Prove Debt.....................34
         SECTION 5.3           Application of Proceeds...........................................................36
         SECTION 5.4           Suits for Enforcement.............................................................37
         SECTION 5.5           Restoration of Rights on Abandonment of Proceedings...............................37
         SECTION 5.6           Limitations on Suits by Securityholders...........................................38
         SECTION 5.7           Unconditional Right of Securityholders to Institute Certain Suits.................38
         SECTION 5.8           Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default...........38
         SECTION 5.9           Control by Securityholders........................................................39
         SECTION 5.10          Waiver of Past Defaults...........................................................39
         SECTION 5.11          Trustee to Give Notice of Default, But May Withhold in Certain
                               Circumstances.....................................................................39
         SECTION 5.12          Right of Court to Require Filing of Undertaking to Pay Costs......................40
</TABLE>

                                      iii
<PAGE>

                         TABLE OF CONTENTS (Continued)

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                            <C>                                                                             <C>
ARTICLE SIX                    CONCERNING THE TRUSTEE............................................................40
         SECTION 6.1           Duties and Responsibilities of the Trustee; During Default; Prior to
                               Default...........................................................................40
         SECTION 6.2           Certain Rights of the Trustee.....................................................41
         SECTION 6.3           Trustee Not Responsible for Recitals, Disposition of Securities or
                               Application of Proceeds Thereof...................................................43
         SECTION 6.4           Trustee and Agents May Hold Securities; Collections, etc..........................43
         SECTION 6.5           Moneys Held by Trustee............................................................43
         SECTION 6.6           Compensation and Indemnification of Trustee and Its Prior Claim...................43
         SECTION 6.7           Right of Trustee to Rely on Officers' Certificate, etc............................44
         SECTION 6.8           Disqualification of Trustee; Conflicting Interests................................44
         SECTION 6.9           Persons Eligible for Appointment as Trustee.......................................44
         SECTION 6.10          Resignation and Removal; Appointment of Successor Trustee.........................45
         SECTION 6.11          Acceptance of Appointment by Successor Trustee....................................46
         SECTION 6.12          Merger, Conversion, Consolidation or Succession to Business of Trustee............47
         SECTION 6.13          Preferential Collection of Claims Against the Company.............................47

ARTICLE SEVEN                  CONCERNING THE SECURITYHOLDERS....................................................48
         SECTION 7.1           Evidence of Action Taken by Securityholders.......................................48
         SECTION 7.2           Proof of Execution of Instruments.................................................48
         SECTION 7.3           Holders to Be Treated as Owners...................................................48
         SECTION 7.4           Securities Owned by Company Deemed Not Outstanding................................49
         SECTION 7.5           Right of Revocation of Action Taken...............................................49
         SECTION 7.6           Record Date for Determination of Holders Entitled to Vote.........................49

ARTICLE EIGHT                  SUPPLEMENTAL INDENTURES...........................................................50
         SECTION 8.1           Supplemental Indentures Without Consent of Securityholders........................50
         SECTION 8.2           Supplemental Indentures With Consent of Securityholders...........................51
         SECTION 8.3           Effect of Supplemental Indenture..................................................52
         SECTION 8.4           Documents to Be Given to Trustee..................................................52
         SECTION 8.5           Notation on Securities in Respect of Supplemental Indentures......................53

ARTICLE NINE                   CONSOLIDATION, MERGER, SALE OR CONVEYANCE.........................................53
         SECTION 9.1           Company May Consolidate, etc., on Certain Terms...................................53
         SECTION 9.2           Intentionally Omitted.............................................................53
         SECTION 9.3           Successor Corporation Substituted.................................................54
         SECTION 9.4           Opinion of Counsel to Trustee.....................................................54

ARTICLE TEN                    SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS.........................54
         SECTION 10.1          Satisfaction and Discharge of Indenture...........................................54
</TABLE>

                                       iv
<PAGE>
                         TABLE OF CONTENTS (Continued)

<TABLE>
<CAPTION>

                                                                                                               Page
                                                                                                               ----
<S>                            <C>                                                                             <C>
         SECTION 10.2          Application by Trustee of Funds Deposited for Payment of Securities...............56
         SECTION 10.3          Repayment of Moneys Held by Paying Agent..........................................57
         SECTION 10.4          Return of Unclaimed Moneys Held by Trustee and Paying Agent.......................57
         SECTION 10.5          Reinstatement of Company's Obligations............................................57

ARTICLE ELEVEN                 MISCELLANEOUS PROVISIONS..........................................................57
         SECTION 11.1          Incorporators, Stockholders, Officers and Directors of Company Exempt
                               from Individual Liability.........................................................57
         SECTION 11.2          Provisions of Indenture for the Sole Benefit of Parties and
                               Securityholders...................................................................58
         SECTION 11.3          Successors and Assigns of Company Bound by Indenture..............................58
         SECTION 11.4          Notices and Demands on Company, Trustee and Securityholders.......................58
         SECTION 11.5          Officers' Certificates and Opinions of Counsel; Statements to Be
                               Contained Therein.................................................................59
         SECTION 11.6          Payments Due on Saturdays, Sundays and Holidays...................................60
         SECTION 11.7          Conflict of Any Provision of Indenture with Trust Indenture Act of 1939...........60
         SECTION 11.8          New York Law to Govern............................................................60
         SECTION 11.9          Counterparts......................................................................60
         SECTION 11.10         Effect of Headings................................................................60
         SECTION 11.11         Determination of Principal Amount.................................................60

ARTICLE TWELVE                 REDEMPTION OF SECURITIES AND SINKING FUNDS........................................60
         SECTION 12.1          Applicability of Article..........................................................60
         SECTION 12.2          Notice of Redemption; Partial Redemptions.........................................61
         SECTION 12.3          Payment of Securities Called for Redemption.......................................62
         SECTION 12.4          Exclusion of Certain Securities from Eligibility for Selection for
                               Redemption........................................................................63
         SECTION 12.5          Mandatory and Optional Sinking Funds..............................................63
         SECTION 12.6          Repayment at the Option of the Holders............................................65

ARTICLE THIRTEEN               HOLDERS' MEETINGS.................................................................66
         SECTION 13.1          Purposes of Meetings..............................................................66
         SECTION 13.2          Call of Meetings by Trustee.......................................................66
         SECTION 13.3          Call of Meetings by Company or Holders............................................66
         SECTION 13.4          Qualifications for Voting.........................................................66
         SECTION 13.5          Regulations.......................................................................67
         SECTION 13.6          Voting............................................................................67
         SECTION 13.7          No Delay of Rights by Meeting.....................................................68
</TABLE>

                                       v
<PAGE>

                         TABLE OF CONTENTS (Continued)

<TABLE>
<CAPTION>

                                                                                                               Page
                                                                                                               ----
<S>                            <C>                                                                            <C>
ARTICLE FOURTEEN SUBORDINATION ..................................................................................68
         SECTION 14.1          Securities Subordinate to Senior Indebtedness.....................................68
         SECTION 14.2          Payment Over of Proceeds Upon Dissolution, Etc....................................69
         SECTION 14.3          Acceleration of Securities........................................................70
         SECTION 14.4          Default in Senior Indebtedness....................................................71
         SECTION 14.5          Payment Permitted if No Default...................................................71
         SECTION 14.6          Subrogation Rights of Holders of Senior Indebtedness..............................71
         SECTION 14.7          Provision Solely to Define Relative Rights........................................72
         SECTION 14.8          Trustee to Effectuate Subordination...............................................72
         SECTION 14.9          No Waiver of Subordination Provisions.............................................72
         SECTION 14.10         Notice to Trustee.................................................................73
         SECTION 14.11         Reliance on Judicial Order or Certificate of Liquidating Agent....................74
         SECTION 14.12         Trustee Not Fiduciary for Holders of Senior Indebtedness..........................74
         SECTION 14.13         Rights of Trustee as Holder of Senior Indebtedness; Preservation of
                               Trustee's Rights..................................................................74
         SECTION 14.14         Article XIV Applicable to Paying Agents...........................................74
         SECTION 14.15         Certain Conversions or Exchanges Deemed Payments..................................74
</TABLE>

                                       vi
<PAGE>

         THIS INDENTURE, dated as of _________ 20__, between KELLOGG COMPANY, a
Delaware corporation (the "Company"), and [____________________], a banking
corporation organized and existing under the laws of the State of [___________],
as Trustee (the "Trustee"),

                              W I T N E S S E T H:

         WHEREAS, the Company has duly authorized the issue from time to time of
its unsecured subordinated debentures, notes or other evidences of indebtedness
to be issued in one or more Series (the "Securities") up to such principal
amount or amounts as may from time to time be authorized in accordance with the
terms of this Indenture and to provide, among other things, for the
authentication, delivery and administration thereof, the Company has duly
authorized the execution and delivery of this Indenture; and

         WHEREAS, all things necessary to make this Indenture a valid indenture
and agreement according to its terms have been done;

         NOW, THEREFORE:

         In consideration of the premises and the purchases of the Securities by
the holders thereof, the Company and the Trustee mutually covenant and agree for
the equal and proportionate benefit of the respective holders from time to time
of the Securities as follows:

                                   ARTICLE ONE

                                   DEFINITIONS

         SECTION 1.1 Certain Terms Defined. The following terms (except as
otherwise expressly provided or unless the context otherwise clearly requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section. All other terms
used in this Indenture that are defined in the Trust Indenture Act of 1939 or
the definitions of which in the Securities Act of 1933 are referred to in the
Trust Indenture Act of 1939, including terms defined therein by reference to the
Securities Act of 1933 (except as herein otherwise expressly provided or unless
the context otherwise clearly requires), shall have the meanings assigned to
such terms in said Trust Indenture Act and in said Securities Act as in force at
the date of this Indenture. All accounting terms used herein and not expressly
defined shall have the meanings assigned to such terms in accordance with
generally accepted accounting principles, and the term "generally accepted
accounting principles" means such accounting principles as are generally
accepted at the time of any computation. The words "herein", "hereof" and
"hereunder" and other words of similar import refer to this Indenture as a
whole, as supplemented and amended from time to time, and not to any particular
Article, Section or other subdivision. The terms defined in this Article have
the meanings assigned to them in this Article and include the plural as well as
the singular.

         "Additional Amounts" has the meaning specified in Section 3.8.

         "Attributable Debt" has the meaning specified in Section 3.7.

                                       1
<PAGE>

         "Bankruptcy Law" means Title 11, United States Code, or any similar
Federal or state law for the relief of debtors.

         "Board of Directors" means either the Board of Directors of the Company
or any committee of such Board duly authorized to act hereunder.

         "Business Day" means, except as may otherwise be provided in the form
of Securities of any particular Series, with respect to any Place of Payment,
any day, other than a Saturday or Sunday, that is not a legal holiday, or a day
on which banking institutions are authorized or required by law or regulation to
close in [___________]or that Place of Payment, or, with respect to Securities
denominated in a Foreign Currency, the capital city of the country of such
Foreign Currency, or, with respect to Securities denominated in the Euro,
Brussels, Belgium.

         "Capital Stock" for any corporation means any and all shares,
interests, rights to purchase, options, participations or other equivalents of
or interests in (however designated) stock issued by that corporation.

         "Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, or if at
any time after the execution and delivery of this Indenture such Commission is
not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties on such date.

         "Company" means (except as otherwise provided in Article Six) Kellogg
Company, a Delaware corporation, and, subject to Article Nine, its successors
and assigns.

         "Company Notice" means the confirmation of the Company signed by an
officer, transmitted by facsimile and confirmed in writing to the Trustee of the
terms of the issuance of any Securities issuable in Tranches.

         "Component Currency" has the meaning specified in Section 2.12.

         "Consolidated Total Assets" means, as of any particular time, the total
amount of assets (less applicable reserves) as shown in the latest quarterly
consolidated balance sheet of the Company contained in the Company's then most
recent annual report to stockholders or quarterly report filed with the
Commission, as the case may be, except that assets shall include an amount equal
to the Attributable Debt in respect of any Sale and Lease-Back Transaction not
capitalized on such balance sheet.

         "Conversion Date" has the meaning specified in Section 2.12.

         "Conversion Event" means the cessation of use of (i) a Foreign Currency
both by the government of the country that issued such Currency and for the
settlement of transactions by a central bank or other public institutions of or
within the international banking community, (ii) the Euro both within the
European Monetary System and for the settlement of transactions by public
institutions of or within the European Communities, or (iii) any currency unit
(or composite currency) other than the Euro for the purposes for which it was
established.

                                        2
<PAGE>

         "Corporate Trust Office" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date as of which this
Indenture is dated, located at 101 Barclay Street, Floor 21 West, New York, New
York 10286.

         "Coupon" means any interest coupon appertaining to any Security.

         "Coupon Security" means any Security authenticated and delivered with
one or more Coupons appertaining thereto.

         "Currency" means any currency or currencies, composite currency,
currency unit or currency units including, without limitation, the Euro, issued
by the government of one or more countries or by any reorganized confederation
or association of such governments.

         "Currency Determination Agent" means the New York Clearing House Bank,
if any, from time to time selected by the Company for purposes of Section 2.12.

         "Debt" means with respect to any Person at any date, without
duplication (i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all Debt of others secured by a lien on any asset of
such Person, whether or not such Debt is assumed by such Person, (iv) all
obligations of such Person pursuant to leases which are required to be
capitalized under generally accepted accounting principles consistently applied
and (v) all Debt of others for the payment of which such Person is responsible
or liable as obligor or guarantor.

         "Dollar" means the coin or currency of the United States of America
which as of the time of payment is legal tender for the payment of public and
private debts.

         "Dollar Equivalent of the Currency Unit" has the meaning specified in
Section 2.12.

         "Dollar Equivalent of the Foreign Currency" has the meaning specified
in Section 2.12.

         "Euro" means the single currency of the participating member states of
the European Union as defined under EC Regulation 1103/97 adopted under Article
235 of the Treaty on European Union and under EC Regulation 974/98 adopted under
Article 1091(4) of the Treaty on European Union or any successor European
legislation from time to time.

         "European Communities" means the European Union, the European Coal and
Steel Community and the European Atomic Energy Community.

         "European Monetary System" means the European Monetary System
established by Resolution of December 5, 1978 of the Council of the European
Communities.

         "Event of Default" means any event or condition specified as such in
Section 5.1.

         "Exchange Rate Officer's Certificate" means a certificate setting forth
(i) the applicable Market Exchange Rate or the applicable quotation and (ii) the
Dollar or Foreign Currency amounts payable on the basis of such Market Exchange
Rate or quotation in respect of the

                                       3
<PAGE>

principal of and interest on the applicable series of Registered Securities,
signed by the treasurer or any assistant treasurer of the Company, and delivered
to the Trustee.

         "Foreign Currency" means any Currency, including, without limitation,
the Euro, issued by the government of one or more countries other than the
United States of America or by any recognized confederation or association of
such governments.

         "Government Obligations" means securities which are (i) direct
obligations of the government which issued the currency in which the Securities
of a particular Series are denominated or (ii) obligations of a Person
controlled or supervised by, or acting as an agency or instrumentality of, the
government which issued the currency in which the Securities of such Series are
denominated, the payment of which obligations is unconditionally guaranteed by
such government, and which, in either case, are full faith and credit
obligations of such government, are denominated in the currency in which the
Securities of such Series are denominated and which are not callable or
redeemable at the option of the issuer thereof.

         "Holder", "Holder of Securities", "Securityholder" or other similar
terms mean the bearer of an Unregistered Security or a Registered Holder of a
Registered Security and, when used with respect to any Coupon, means the bearer
thereof.

         "Indenture" means this instrument as originally executed and delivered
or, if amended or supplemented as herein provided, as so amended or supplemented
or both, and shall include the forms and terms of particular Series of
Securities established as contemplated hereunder.

         "interest," when used with respect to non-interest bearing Securities,
means interest payable at maturity and, when used with respect to a Security
which provides for the payment of Additional Amounts pursuant to Section 3.8 or
otherwise, includes such Additional Amounts.

         "Market Exchange Rate" has the meaning specified in Section 2.12.

         "non-United States Person" means a Person other than a United States
Person.

         "Officers' Certificate" means a certificate signed by the chairman of
the Board of Directors or the president or any vice president and by the
treasurer or the secretary or any assistant secretary of the Company and
delivered to the Trustee. Each such certificate shall include the statements
provided for in Section 11.5.

         "Opinion of Counsel" means an opinion in writing signed by legal
counsel who may be an employee of or counsel to the Company and who shall be
satisfactory to the Trustee. Each such opinion shall include the statements
provided for in Section 11.5, if and to the extent required hereby.

         "Original Issue Date" of any Security (or portion thereof) means the
earlier of (a) the date of such Security or (b) the date of any Security (or
portion thereof) for which such Security was issued (directly or indirectly) on
registration of transfer, exchange or substitution.

                                       4
<PAGE>

         "Original Issue Discount Security" means any Security which provides
for an amount less than the stated principal amount thereof to be due and
payable upon declaration of acceleration of the maturity thereof pursuant to
Section 5.1.

         "Outstanding" when used with reference to Securities, shall, subject to
the provisions of Section 7.4, mean, as of any particular time, all Securities
authenticated and delivered by the Trustee under this Indenture, except

                  (a) Securities theretofore cancelled by the Trustee or
         delivered to the Trustee for cancellation;

                  (b) Securities, or portions thereof, for the payment or
         redemption of which moneys in the necessary amount and in the specified
         currency or currency unit shall have been deposited in trust with the
         Trustee or with any paying agent (other than the Company) or shall have
         been set aside, segregated and held in trust by the Company for the
         holders of such Securities (if the Company shall act as its own paying
         agent), provided that if such Securities, or portions thereof, are to
         be redeemed prior to the maturity thereof, notice of such redemption
         shall have been given as herein provided, or provision satisfactory to
         the Trustee shall have been made for giving such notice; and

                  (c) Securities in substitution for which other Securities
         shall have been authenticated and delivered, or which shall have been
         paid, pursuant to the terms of Section 2.9 (except with respect to any
         such Security as to which proof satisfactory to the Trustee and the
         Company is presented that such Security is held by a Person in whose
         hands such Security is a legal, valid and binding obligation of the
         Company).

         "Paying Agent" means any Person (which may include the Company)
authorized by the Company to pay the principal of or interest, if any, on any
Security on behalf of the Company.

         "Permitted Junior Securities" means either (i) shares of any class of
Capital Stock of the Company or (ii) securities of the Company which are (A)
payable no earlier than the final stated maturity of the Securities, (B) subject
to covenants and obligations no more restrictive than those set forth herein and
(C) subordinated in right of payment to all Senior Indebtedness which may be
outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in Article XIV.

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

         "Place of Payment," when used with respect to the Securities of any
Series, means the place or places where the principal of and interest, if any,
on the Securities of that Series are payable as specified pursuant to Section
3.2.

         "principal" whenever used with reference to the Securities or any
Security or any portion thereof, shall be deemed to include "and premium, if
any".

                                       5
<PAGE>

         "Principal Property" means any manufacturing plant or facility which is
located within the continental United States of America and is owned by the
Company or any Restricted Subsidiary, except any such plant or facility which
the Board of Directors by resolution declares is not of material importance to
the total business conducted by the Company and its Restricted Subsidiaries as
an entirety and which, when taken together with all other plants and facilities
as to which such a declaration has been made, are so declared by the Board of
Directors to be not of material importance to the total business conducted by
the Company and its Restricted Subsidiaries as an entirety.

         "Registered Holder" when used with respect to a Registered Security
means the Person in whose name such Security is registered in the Security
register.

         "Registered Security" means any Security registered in the Security
register.

         "Responsible Officer" when used with respect to the Trustee shall mean
any officer within the corporate trust department (or any successor group) of
the Trustee including any vice president, assistant vice president, assistant
secretary, or any other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by the Persons who at the time
shall be such officers, respectively, or to whom any corporate trust matter is
referred at the Corporate Trust Office because of his or her knowledge of and
familiarity with the particular subject.

         "Restricted Subsidiary" means any Subsidiary (i) substantially all the
property of which is located within the continental United States of America,
(ii) which owns a Principal Property, and (iii) in which the Company's
investment, direct or indirect and whether in the form of equity, debt or
advances, as shown on the consolidating balance sheet used in the preparation of
the latest quarterly consolidated financial statements of the Company preceding
the date of determination, is in excess of 1% of the total consolidated assets
of the Company as shown on such quarterly consolidated financial statements;
provided, however, that the term "Restricted Subsidiary" shall not include any
Subsidiary which is principally engaged in leasing or in financing installment
receivables or which is principally engaged in financing the Company's
operations outside the continental United States of America.

         "Sale and Lease-Back Transaction" has the meaning specified in Section
3.7.

         "Security" or "Securities" has the meaning stated in the first recital
of this Indenture, or, as the case may be, Securities that have been
authenticated and delivered under this Indenture.

         "Senior Indebtedness" has the meaning specified in Section 14.1.

         "Series" or "Series of Securities" means a series of Securities. Except
in Sections 1.1 - "Outstanding," 2.3 and 7.4 and Articles Five, Six and Eleven,
the terms "Series" or "Series of Securities" shall also mean a Tranche in the
event that the applicable Series may be issued in separate Tranches.

         "Specified Amount" has the meaning specified in Section 2.12.

                                       6
<PAGE>

         "Subsidiary" means any corporation which is consolidated in the
Company's accounts and any corporation of which at least a majority of the
outstanding stock having by the terms thereof ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of whether
or not at the time stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of any contingency)
is at the time directly or indirectly owned or controlled by the Company, or by
one or more Subsidiaries, or by the Company and one or more Subsidiaries.

         "Tranche" means all Securities of the same Series which have the same
issue date, maturity date, interest rate or method of determining interest, and,
in the case of Original Issue Discount Securities, which have the same issue
price.

         "Trustee" means the Person identified as "Trustee" in the first
paragraph hereof and, subject to the provisions of Article Six, any successor
trustee.

         "Trust Indenture Act of 1939" or "Trust Indenture Act" (except as
otherwise provided in Sections 8.1 and 8.2) means the Trust Indenture Act of
1939, as amended, as in force at the date as of which this Indenture was
originally executed.

         "United States of America" means the fifty states constituting the
United States of America as of the date of this Indenture.

         "United States Person" means, unless otherwise specified with respect
to any Securities pursuant to Section 2.3, an individual who is a citizen or
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source. For purposes of this definition, the term United
States means the United States of America (including the states and the District
of Columbia), its territories, its possessions and other areas subject to its
jurisdiction.

         "Unregistered Security" means any Security not registered in the
Security register as to principal.

         "Unrestricted Subsidiary" means any Subsidiary other than a Restricted
Subsidiary.

         "Valuation Date" has the meaning specified in Section 2.12.

         "vice president" when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title of "vice president".

                                   ARTICLE TWO

                                   SECURITIES

         SECTION 2.1 Forms Generally. The Securities of each Series and the
Coupons, if any, shall be substantially in such form (not inconsistent with this
Indenture) as shall be established by or pursuant to a resolution of the Board
of Directors or in one or more indentures

                                       7
<PAGE>

supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture (the provisions of which shall be appropriate to reflect the terms of
each Series of Securities, including the currency or denomination, which may be
Dollars or any Foreign Currency) and may have imprinted or otherwise reproduced
thereon such legend or legends, not inconsistent with the provisions of this
Indenture, as may be required to comply with any law or with any rules or
regulations pursuant thereto, or with any rules of any securities exchange or to
conform to general usage, all as may be determined by the officers executing
such Securities and Coupons, if any, as evidenced by their execution of the
Securities and Coupons, if any.

         The definitive Securities and Coupons, if any, shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Securities and
Coupons, if any, as evidenced by their execution of such Securities and Coupons,
if any.

         SECTION 2.2 Form of Trustee's Certificate of Authentication. The
Trustee's certificate of authentication on all Securities shall be in
substantially the following form:

         This one of the Securities of the Series designated herein and referred
to in the within-mentioned Indenture.

                                         [                        ]
                                          ------------------------

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

                                         or

                                         By:
                                            ------------------------------------
                                            as Authentication Agent

                                         By:
                                            ------------------------------------
                                            Authorized Officer

         SECTION 2.3 Amount Unlimited; Issuable in Series. The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.

         The Securities may be issued in one or more Series. There shall be
established in or pursuant to a resolution of the Board of Directors and set
forth in an Officers' Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any Series,

                  (1) the title of the Securities of the Series (which title
         shall distinguish the Securities of the Series from all other
         Securities issued by the Company);

                                       8
<PAGE>

                  (2) any limit upon the aggregate principal amount of the
         Securities of the Series that may be authenticated and delivered under
         this Indenture (except for Securities authenticated and delivered upon
         registration of transfer of, or in exchange for, or in lieu of, other
         Securities of the Series pursuant to Sections 2.8, 2.9, 2.11 or 12.3);

                  (3) if other than 100% of their principal amount, the
         percentage of their principal amount at which the Securities of the
         Series will be offered;

                  (4) the date or dates on which the principal of the Securities
         of the Series is payable;

                  (5) the rate or rates, which may be fixed or variable, at
         which the Securities of the Series shall bear interest, if any, the
         date or dates from which such interest shall accrue, the interest
         payment dates on which such interest shall be payable and, in the case
         of Registered Securities, the record dates for the determination of
         Holders to whom interest is payable;

                  (6) the place or places where the principal and interest on
         Securities of the Series shall be payable (if other than as provided in
         Section 3.2);

                  (7) the price or prices at which, the period or periods within
         which and the terms and conditions upon which Securities of the Series
         may be redeemed, in whole or in part, at the option of the Company,
         pursuant to any sinking fund or otherwise;

                  (8) if other than the principal amount thereof, the portion of
         the principal amount of Securities of the Series which shall be payable
         upon declaration of acceleration of the maturity pursuant to Section
         5.1 or provable in bankruptcy pursuant to Section 5.2;

                  (9) the obligation, if any, of the Company to redeem, purchase
         or repay Securities of the Series pursuant to any sinking fund or
         analogous provisions or at the option of a Holder thereof and the price
         or prices in the currency or currency unit in which the Securities of
         such Series are payable, at which and the period or periods within
         which and the terms and conditions upon which Securities of the Series
         shall be redeemed, purchased or repaid, in whole or in part, pursuant
         to such obligation;

                  (10) the issuance as Registered Securities or Unregistered
         Securities or both, and the rights of the Holders to exchange
         Unregistered Securities for Registered Securities of the Series or to
         exchange Registered Securities of the Series for Unregistered
         Securities of the Series and the circumstances under which any such
         exchanges, if permitted, may be made;

                  (11) if other than denominations of $1,000 and any integral
         multiple thereof, the denominations, which may be in Dollars or any
         Foreign Currency, in which Securities of the Series shall be issuable;

                  (12) the form of the Securities (or forms thereof if
         Unregistered and Registered Securities shall be issuable in such
         Series), including such legends as required by law or

                                       9
<PAGE>

         as the Company deems necessary or appropriate, the form of any coupons
         or temporary global security which may be issued and the forms of any
         certificates which may be required hereunder or which the Company may
         require in connection with the offering, sale, delivery or exchange of
         Unregistered Securities;

                  (13) the Currency or Currencies in which payments of interest
         or principal and other amounts are payable with respect to the
         Securities of the Series are to be denominated, payable, redeemable or
         repurchasable, as the case may be;

                  (14) whether Securities of the Series are issuable in
         Tranches;

                  (15) whether, and under what circumstances, the Securities of
         any Series shall be convertible into, or exchangeable for, any other
         Securities, shares of common stock or other securities of the Company;

                  (16) if other than the Trustee, any trustees, authenticating
         or paying agents, transfer agents or registrars or any other agents
         with respect to the Securities of such Series;

                  (17) if the Securities of such Series do not bear interest,
         the applicable dates for purposes of Section 4.1 hereof;

                  (18) any deletions from, modifications of or additions to the
         Events of Default or covenants of the Company with respect to
         Securities of the Series, whether or not such Events of Default or
         covenants are consistent with the Events of Default or covenants set
         forth herein;

                  (19) whether, under what circumstances and the Currency in
         which, the Company will pay Additional Amounts as contemplated by
         Section 3.8 on the Securities of the Series to any Holder who is a
         non-United States Person (including any modification to the definition
         of such term) in respect of any tax, assessment or governmental charge
         and, if so, whether the Company will have the option to redeem such
         Securities rather than pay such Additional Amounts (and the terms of
         any such option);

                  (20) if applicable, that the subordination provisions in
         Article XIV shall apply to the Securities of the Series or that any
         different subordination provisions, including a different definition of
         "Senior Indebtedness," shall apply to the Securities of such Series;
         and

                  (21) any other terms or conditions upon which the Securities
         of the Series are to be issued (which terms shall not be inconsistent
         with the provisions of this Indenture).

         All Securities of any one Series shall be substantially identical
except as to denomination, except as provided in the immediately succeeding
paragraph, and except as may otherwise be provided in or pursuant to such
resolution of the Board of Directors or in any such indenture supplemental
hereto. All Securities of any one Series need not be issued at the same time,
and unless otherwise provided, a Series may be reopened, without the consent of
the Holders, for

                                       10
<PAGE>

issuances of additional Securities of such Series or to establish additional
terms of such Series of Securities (which additional terms shall only be
applicable to unissued or additional Securities of such Series).

         Each Series may be issued in one or more Tranches. Except as provided
in the foregoing paragraph, all Securities of a Tranche shall have the same
issue date, maturity date, interest rate or method of determining interest, and,
in the case of Original Issue Discount Securities, the same issue price.

         SECTION 2.4 Authentication and Delivery of Securities. At any time and
from time to time after the execution and delivery of this Indenture, the
Company may deliver Securities of any Series having attached thereto appropriate
Coupons, if any, executed by the Company to the Trustee for authentication, and
the Trustee shall thereupon authenticate and deliver such Securities to or upon
the written order of the Company, signed by both (a) the chairman of its Board
of Directors, or any vice chairman of its Board of Directors, or its president
or any vice president and (b) by its treasurer or any assistant treasurer,
secretary or any assistant secretary without any further action by the Company.
In authenticating such Securities and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive and (subject to Section 6.1) shall be fully protected in
relying upon:

                  (a) a certified copy of any resolution or resolutions of the
Board of Directors authorizing the action taken pursuant to the resolution or
resolutions delivered under clause (2) below;

                  (b) a copy of any resolution or resolutions of the Board of
Directors relating to such Series, in each case certified by the secretary or an
assistant secretary of the Company;

                  (c) an executed supplemental indenture, if any;

                  (d) an Officers' Certificate setting forth the form and terms
of the Securities of such Series as required pursuant to Sections 2.1 and 2.3,
respectively, and prepared in accordance with Section 11.5;

                  (e) an Opinion of Counsel, prepared in accordance with Section
11.5, which shall state:

                           (i) that the form or forms and terms of such
         Securities and Coupons, if any have been established by or pursuant to
         a resolution of the Board of Directors or by a supplemental indenture
         as permitted by Sections 2.1 and 2.3 in conformity with the provisions
         of this Indenture;

                           (ii) that such Securities and Coupons, if any have
         been duly authorized, and, when authenticated and delivered by the
         Trustee and issued by the Company in the manner and subject to any
         conditions specified in such Opinion of Counsel, will constitute valid
         and binding obligations of the Company enforceable in accordance with
         their terms, subject to applicable bankruptcy, insolvency,
         reorganization or other laws relating to or affecting the enforcement
         of creditors' rights and by general

                                       11
<PAGE>

         equitable principles, regardless of whether such enforceability is
         considered in a proceeding in equity or at law;

                           (iii) that all laws and requirements in respect of
         the execution and delivery by the Company of the Securities and
         Coupons, if any, and the related supplemental indenture, if any, have
         been complied with;

                           (iv) the registration statement, if any, relating to
         the Securities of such series and any amendments thereto has become
         effective under the Securities Act of 1933 and to the best knowledge of
         such counsel, no stop order suspending the effectiveness of such
         registration statement, as amended, has been issued and no proceedings
         for that purpose have been instituted or threatened;

                           (v) no consent, approval, authorization or order of
         any court or governmental agency or body in the United States is
         required for the issuance of the Securities of such Series, except such
         as have been obtained and such as may be required under the blue sky
         laws of any jurisdiction in the United States in connection with the
         purchase and distribution of the Securities of such Series;

                           (vi) neither the issue nor sale of the Securities of
         such Series will contravene the charter or by-laws of the Company or
         will conflict with, result in a breach of or constitute a default under
         the terms of any indenture or other agreement or instrument known to
         such counsel and to which the Company or any of its Subsidiaries is a
         party or is bound, or any order or regulation known to such counsel to
         be applicable to the Company or any of its Subsidiaries of any court,
         regulatory body, administrative agency or governmental body having
         jurisdiction over the Company or any of its Subsidiaries; and

                           (vii) the authentication and delivery of the
         Securities of such series by the Trustee in accordance with the
         directions of the Company so to do, and the Company's execution and
         delivery of the Securities of such series, will not violate the terms
         of this Indenture;

provided, however, that in the case of any Series issuable in Tranches, if the
Trustee has previously received the documents referred to in Section 2.4(1)-(5)
with respect to such Series, the Trustee shall authenticate and deliver
Securities of such Series executed and delivered by the Company for original
issuance upon receipt by the Trustee of the applicable Company Notice.

         The Trustee shall have the right to decline to authenticate and deliver
any Securities and Coupons, if any, under this Section if the Trustee, being
advised by counsel, determines that such action may not lawfully be taken by the
Company or if the issue of such Securities pursuant to this Indenture will
affect the Trustee's own rights, duties or immunities under this Indenture in a
manner not reasonably acceptable to the Trustee.

         Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Security to the Trustee for cancellation as
provided in Section 2.10, together with a written statement (which need not
comply with Section 11.5 and need not be accompanied by an

                                       12
<PAGE>

Opinion of Counsel) stating that such Security has never been issued and sold by
the Company, for all purposes of this Indenture such Security shall be deemed
never to have been authenticated and delivered hereunder and shall never be
entitled to the benefits of this Indenture.

         SECTION 2.5 Execution of Securities. The Securities shall be signed on
behalf of the Company by both (a) its chairman or its president or any vice
president and (b) its treasurer or any assistant treasurer or its secretary or
any assistant secretary, which may, but need not, be attested. Such signatures
may be the manual or facsimile signatures of the present or any future such
officers. The seal of the Company may be in the form of a facsimile thereof and
may be impressed, affixed, imprinted or otherwise reproduced on the Securities.
Typographical and other minor errors or defects in any such reproduction of the
seal or any such signature shall not affect the validity or enforceability of
any Security that has been duly authenticated and delivered by the Trustee. Any
Coupons attached to any Unregistered Security shall be executed on behalf of the
Company by the manual or facsimile signature of any such officer of the Company.

         In case any officer of the Company who shall have signed any of the
Securities or Coupons shall cease to be such officer before the Security or
Coupon so signed shall be authenticated (in the case of the Securities) and
delivered by the Trustee or disposed of by the Company, such Security or Coupon
nevertheless may be authenticated and delivered or disposed of as though the
Person who signed such Security or Coupon had not ceased to be such officer of
the Company; and any Security or Coupon may be signed on behalf of the Company
by such Persons as, at the actual date of the execution of such Security or
Coupon, shall be the proper officers of the Company, although at the date of the
execution and delivery of this Indenture any such Person was not such an
officer.

         SECTION 2.6 Certificate of Authentication. Only such Securities as
shall bear thereon a certificate of authentication substantially in the form
hereinbefore recited, executed by the Trustee by the manual signature of one of
its authorized signatories, shall be entitled to the benefits of this Indenture
or be valid or obligatory for any purpose. Such certificate by the Trustee upon
any Security executed by the Company shall be conclusive evidence that the
Security so authenticated has been duly authenticated and delivered hereunder
and that the Holder is entitled to the benefits of this Indenture.

         The Trustee shall not authenticate or deliver any Unregistered Security
until any matured Coupons appertaining thereto have been detached and canceled,
except as otherwise provided or permitted by this Indenture.

         SECTION 2.7 Denomination and Date of Securities; Payments of Interest.
The Securities shall be issuable in denominations as shall be specified as
contemplated by Section 2.3. In the absence of any such specification with
respect to the Securities of any Series, the Securities of such Series shall be
issuable in denominations of $1,000 and any multiple thereof, which may be in
Dollars or any Foreign Currency, and interest shall be computed on the basis of
a 360-day year of twelve 30-day months. The Securities shall be numbered,
lettered, or otherwise distinguished in such manner or in accordance with such
plan as the officers of the Company executing the same may determine with the
approval of the Trustee as evidenced by the execution and authentication
thereof.

                                       13
<PAGE>

         Each Security shall be dated the date of its authentication, shall bear
interest from the date and shall be payable on the dates, in each case, which
shall be specified as contemplated by Section 2.3.

         Interest on any Security which is payable, and is punctually paid or
duly provided for, on any interest payment date shall be paid, in the case of
Registered Securities, to the Person in whose name that Security (or one or more
predecessor Securities) is registered at the close of business on the regular
record date for the payment of such interest and, in the case of Unregistered
Securities, upon surrender of the Coupon appertaining thereto in respect of the
interest due on such interest payment date.

         The term "record date" as used with respect to any interest payment
date (except for a date for payment of defaulted interest) shall mean the date
specified as such in the terms of the Securities of any particular Series, or,
if no such date is so specified, if such interest payment date is the first day
of a calendar month, the close of business on the fifteenth day of the next
preceding calendar month or, if such interest payment date is the fifteenth day
of a calendar month, the close of business on the first day of such calendar
month, whether or not such record date is a Business Day.

         Any interest on any Security of any Series which is payable, but is not
punctually paid or duly provided for, on any interest payment date (called
"defaulted interest" for the purpose of this Section) shall forthwith cease to
be payable to the Registered Holder on the relevant record date by virtue of his
having been such Holder; and such defaulted interest may be paid by the Company,
at its election in each case, as provided in clause (1) or clause (2) below:

                  (1) The Company may elect to make payment of any defaulted
         interest to the Persons in whose names any such Registered Securities
         (or their respective predecessor Securities) are registered at the
         close of business on a special record date for the payment of such
         defaulted interest, which shall be fixed in the following manner. The
         Company shall notify the Trustee in writing of the amount of defaulted
         interest proposed to be paid on each Security of such Series and the
         date of the proposed payment, and at the same time the Company shall
         deposit with the Trustee an amount of money equal to the aggregate
         amount proposed to be paid in respect of such defaulted interest or
         shall make arrangements satisfactory to the Trustee for such deposit
         prior to the date of the proposed payment, such money when deposited to
         be held in trust for the benefit of the Persons entitled to such
         defaulted interest as in this clause provided. Thereupon the Trustee
         shall fix a special record date for the payment of such defaulted
         interest in respect of Registered Securities of such Series which shall
         be not more than 15 nor less than 10 days prior to the date of the
         proposed payment and not less than 10 days after the receipt by the
         Trustee of the notice of the proposed payment. The Trustee shall
         promptly notify the Company of such special record date and, in the
         name and at the expense of the Company, shall cause notice of the
         proposed payment of such defaulted interest and the special record date
         thereof to be mailed, first class postage prepaid, to each Registered
         Holder at his address as it appears in the Security register, not less
         than 10 days prior to such special record date. Notice of the proposed
         payment of such defaulted interest and the special record date therefor
         having been mailed as aforesaid, such defaulted interest in respect of
         Registered Securities of such Series shall be paid to the Person in
         whose names

                                       14
<PAGE>

         such Securities (or their respective predecessor Securities) are
         registered on such special record date and such defaulted interest
         shall no longer be payable pursuant to the following clause (2).

                  (2) The Company may make payment of any defaulted interest on
         the Registered Securities of any Series in any other lawful manner not
         inconsistent with the requirements of any securities exchange on which
         the Securities of that Series may be listed, and upon such notice as
         may be required by such exchange, if, after notice given by the Company
         to the Trustee of the proposed payment pursuant to this clause, such
         payment shall be deemed practicable by the Trustee.

         Any defaulted interest payable in respect of any Security of any Series
which is not a Registered Security shall be payable pursuant to such procedures
as may be satisfactory to the Trustee in such manner that there is no
discrimination as between the Holders of Registered Securities and other
Securities of the same Series, and notice of the payment date therefor shall be
given by the Trustee, in the name and at the expense of the Company, by
publication at least once in a newspaper of general circulation in New York, New
York and London, England.

         Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.

         SECTION 2.8 Registration, Transfer and Exchange. The Company will keep
at the office or agency of the Trustee to be maintained for the purpose as
provided in Section 3.2 a register or registers in which, subject to such
reasonable regulations as it may prescribe, it will register, and will register
the transfer of, Registered Securities as in this Article Two provided. Such
register shall be in written form in the English language or in any other form
capable of being converted into such form within a reasonable time. At all
reasonable times such register or registers shall be open for inspection by the
Trustee.

         Upon due presentation for registration of transfer of any Registered
Security of any Series at any such office or agency to be maintained for the
purpose as provided in Section 3.2, the Company shall execute and the Trustee
shall authenticate and deliver in the name of the transferee or transferees a
new Registered Security or Registered Securities of the same Series in
authorized denominations for a like aggregate principal amount.

         At the option of the Holder thereof, Unregistered Securities of a
Series, which by their terms are registerable as to principal and interest, may,
to the extent and under the circumstances specified pursuant to Section 2.3, be
exchanged for Registered Securities of such Series, as may be issued by the
terms thereof. At the option of the Holder thereof, Registered Securities of a
Series, which by their terms provide for the issuance of Unregistered
Securities, may, to the extent and under the circumstances specified pursuant to
Section 2.3, be exchanged for Unregistered Securities of such Series. Securities
so issued in exchange for other Securities shall be of any authorized
denomination and of like principal amount and maturity date, interest rate or
method of determining interest, and shall be issued upon surrender of the
Securities for which they are to be exchanged and, in the case of Coupon
Securities, together with all unmatured Coupons and matured Coupons in default
appertaining thereto, at the office of the Company

                                       15
<PAGE>

provided for in Section 3.2 and upon payment, if the Company shall require, of
charges provided therein. Unregistered Securities of any Series issued in
exchange for Registered Securities of such Series between the regular record
date for such Registered Security and the next interest payment date will be
issued without the Coupon relating to such interest payment date, and
Unregistered Securities surrendered in exchange for Registered Securities
between such dates shall be surrendered without the Coupon relating to such
interest payment date. Whenever any Securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
Notwithstanding the foregoing, an Unregistered Security will not be delivered in
exchange for a Registered Security or Securities unless the Trustee receives a
certificate signed by the Person entitled to delivery of such Security or other
items or documents fulfilling such conditions as shall be required by
regulations of the United States Department of the Treasury, or shall be
notified by the Company that such a certificate shall not be required by such
regulations; provided, however, that no such Unregistered Security shall be
delivered by the Trustee if the Trustee or such agent shall have, or shall have
been notified in writing by the Company that the Company has, actual knowledge
that such certificate is false.

         Upon presentation for registration of any Unregistered Securities of
any Series which by its terms is registerable as to principal, at the office or
agency of the Company to be maintained as provided in Section 3.2, such Security
shall be registered as to principal in the name of the Holder thereof and such
registration shall be noted on such Security. Any Security so registered shall
be transferable on the registry books of the Company upon presentation of such
Security at such office or agency for similar notation thereon, but such
Security may be discharged from registration by being in a like manner
transferred to bearer, whereupon transferability by delivery shall be restored.
Except as otherwise provided pursuant to Section 2.3 hereof, Unregistered
Securities shall continue to be subject to successive registrations and
discharges from registration at the option of the Holders thereof.

         Unregistered Securities shall be transferable by delivery, except while
registered as to principal. Registration of any Coupon Security shall not effect
the transferability by delivery of the Coupons appertaining thereto which shall
continue to be payable to bearer and transferable by delivery.

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

         Every Security presented or surrendered for registration of transfer or
exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed, by the Holder thereof or his attorney
duly authorized in writing.

         No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Securities, other than exchanges pursuant to
Sections 2.11, 8.5 or 12.3 not involving any transfer.

                                       16
<PAGE>

         The Company shall not be required (i) to issue, register the transfer
of or exchange any Security during a period beginning at the opening of business
15 days before the day of mailing of a notice of redemption of Securities for
redemption under Article Twelve or (ii) to register the transfer of or exchange
any Security so selected for redemption in whole or in part, except, in the case
of any Security to be redeemed in part, the portion thereof not redeemed.

         SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen Securities.
In case any temporary or definitive Security or Coupon shall become mutilated,
defaced or be destroyed, lost or stolen, the Company in its discretion may
execute, and upon the written request of any officer of the Company, the Trustee
shall authenticate and deliver, a new Security of the same Series or Coupon,
bearing a number not contemporaneously outstanding, in exchange and substitution
for the mutilated or defaced Security or Coupon, or in lieu of and substitution
for the Security or Coupon so destroyed, lost or stolen. In every case the
applicant for a substitute Security or Coupon shall furnish to the Company and
to the Trustee and to any agent of the Company or the Trustee such security or
indemnity as may be required by them to indemnify and defend and to save each of
them harmless and, in every case of destruction, loss or theft, evidence to
their satisfaction of the destruction, loss or theft of such Security or Coupon
and of the ownership thereof.

         Upon the issuance of any substitute Security or Coupon, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith. In case any Security
or Coupon which has matured or is about to mature or has been called for
redemption in full shall become mutilated or defaced or be destroyed, lost or
stolen, the Company may, instead of issuing a substitute Security or Coupon, pay
or authorize the payment of the same (without surrender thereof except in the
case of a mutilated or defaced Security or Coupon); provided, however, that
interest represented by Coupons shall be payable only upon presentation and
surrender of such Coupons at an office or agency of the Company located outside
of the United States, unless otherwise provided pursuant to Section 2.3, if the
applicant for such payment shall furnish to the Company and to the Trustee and
any agent of the Company or the Trustee such security or indemnity as any of
them may require to save each of them harmless, and, in every case of
destruction, loss or theft, the applicant shall also furnish to the Company and
the Trustee and any agent of the Company or the Trustee evidence to their
satisfaction of the destruction, loss or theft of such Security or Coupon and of
the ownership thereof.

         Every substitute Security of any Series or Coupon issued pursuant to
the provisions of this Section by virtue of the fact that any such Security or
Coupon is destroyed, lost or stolen shall constitute an additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security
or Coupon shall be at any time enforceable by anyone and shall be entitled to
all the benefits of (but shall be subject to all the limitations of rights set
forth in) this Indenture equally and proportionately with any and all other
Securities of such Series or Coupons duly authenticated and delivered hereunder.
All Securities or Coupons shall be held and owned upon the express condition
that, to the extent permitted by the law, the foregoing provisions are exclusive
with respect to the replacement or payment of mutilated, defaced, destroyed,
lost or stolen Securities or Coupons and shall preclude any and all other rights
or remedies notwithstanding any law or statute existing or hereafter enacted to
the contrary with

                                       17
<PAGE>

respect to the replacement or payment of negotiable instruments or other
securities without their surrender.

         SECTION 2.10 Cancellation of Securities. All Securities surrendered for
payment, redemption, registration of transfer or exchange, or for credit against
any payment in respect of a sinking or analogous fund and all Coupons
surrendered for payment or exchange, shall, if surrendered to the Company or any
agent of the Company or the Trustee, be delivered to the Trustee for
cancellation or, if surrendered to the Trustee, shall be cancelled by it; and no
Securities or Coupons shall be issued in lieu thereof, except as expressly
permitted by any of the provisions of this Indenture. The Trustee shall dispose
cancelled Securities in accordance with its customary procedures. If the Company
shall acquire any of the Securities and Coupons, such acquisition shall not
operate as a redemption or satisfaction of the indebtedness represented by such
Securities and Coupons unless and until the same are delivered to the Trustee
for cancellation.

         SECTION 2.11 Temporary Securities. Pending the preparation of
definitive Securities for any Series, the Company may execute and the Trustee
shall authenticate and deliver temporary Securities for such Series (printed,
lithographed, typewritten or otherwise reproduced, in each case in form
satisfactory to the Trustee). Temporary Securities of any Series may be issued
as Registered Securities or Unregistered Securities with or without Coupons
attached thereto, of any authorized denomination, and substantially in the form
of the definitive Securities of such Series but with such omissions, insertions
and variations as may be appropriate for temporary Securities, all as may be
determined by the Company with the concurrence of the Trustee. Temporary
Securities may contain such reference to any provisions of this Indenture as may
be appropriate. Every temporary Security shall be executed by the Company and be
authenticated by the Trustee upon the same conditions and in substantially the
same manner, and with like effect, as the definitive Securities. Without
unreasonable delay the Company shall execute and shall furnish definitive
Securities of such Series and thereupon temporary Securities of such Series may
be surrendered in exchange therefor without charge at each office or agency to
be maintained by the Company for that purpose pursuant to Section 3.2, and the
Trustee shall authenticate and deliver in exchange for such temporary Securities
of such Series a like aggregate principal amount of definitive Securities of the
same Series of authorized denominations and, in the case of Unregistered
Securities, having attached thereto any appropriate Coupons. Until so exchanged,
the temporary Securities of any Series shall be entitled to the same benefits
under this Indenture as definitive Securities of such Series.

         SECTION 2.12 Currency and Manner of Payments in Respect of Securities.

                  (a) With respect to Registered Securities of any Series with
respect to which the Holders of such Securities have not made the election
provided for in paragraph (b) below, the following payment provisions shall
apply:

                           (i) Except as provided in subparagraph (a)(2) or in
         paragraph (e) below, payment of the principal of any Registered
         Security will be made at the Place of Payment by delivery of a check in
         the Currency in which the Security is denominated on the payment date
         against surrender of such Registered Security, and any interest on any
         Registered Security will be paid at the Place of Payment by mailing a
         check in the

                                       18
<PAGE>

         Currency in which the Securities were issued to the Person entitled
         thereto at the address of such Person appearing on the Security
         register.

                           (ii) Payment of the principal of and interest on such
         Security may also, subject to applicable laws and regulations, be made
         at such other place or places as may be designated by the Company by
         any appropriate method.

                  (b) With respect to Registered Securities of any Series, the
following payment provisions shall apply, except as otherwise provided in
paragraphs (e) and (f) below:

                           (i) The Board of Directors may provide with respect
         to any Series of such Securities that Holders shall have the option to
         receive payments of principal of and interest on such Security in any
         of the Currencies which may be designated for such election in such
         Security by delivering to the Trustee a written election, to be in form
         and substance satisfactory to the Trustee, not later than the close of
         business on the record date immediately preceding the applicable
         payment date. Such election will remain in effect for such Holder until
         changed by the Holder by written notice to the Trustee (but any such
         change must be made not later than the close of business on the record
         date immediately preceding the next payment date to be effective for
         the payment to be made on such payment date and no such change may be
         made with respect to payments to be made on any Security with respect
         to which notice of redemption has been given by the Company pursuant to
         Article Twelve). Any Holder of any such Security who shall not have
         delivered any such election to the Trustee not later than the close of
         business on the applicable record date will be paid the amount due on
         the applicable payment date in the relevant Currency as provided in
         paragraph (a) of this Section 2.12. Payment of principal shall be made
         on the payment date against surrender of such Securities. Payment of
         principal and interest shall be made at the Place of Payment by mailing
         a check in the applicable currency to the Person entitled thereto at
         the address of such Person appearing on the Security register.

                           (ii) Payment of the principal of and interest on such
         Security may also, subject to applicable laws and regulations, be made
         at such other place or places as may be designated by the Company by
         any appropriate method.

                  (c) Payment of the principal of any Unregistered Security and
of interest on any Coupon Security will be made at such place or places outside
the United States as may be designated by the Company by any appropriate method
only in the Currency in which the Security is payable (except as provided in
paragraph (e) below) on the payment date against surrender of the Unregistered
Security, in the case of payment of principal, or the relevant Coupon, in the
case of payment of interest. Except as provided in paragraph (e) below, payment
with respect to Unregistered Securities and Coupons will be made by check,
subject to any limitations on the methods of effecting such payment as shall be
specified in the terms of the Security established as provided in Section 2.3
and as shall be required under applicable laws and regulations. Payment of the
principal of and interest on Unregistered Securities may also, subject to
applicable laws and regulations, be made at such other place or places as may be
designated by the Company by any appropriate method.

                                       19
<PAGE>

                  (d) Not later than the fourth Business Day after the record
date for each payment date, the Trustee will deliver to the Company a written
notice specifying, in the Currency in which each Series of the Securities are
denominated, the respective aggregate amounts of principal of and interest on
the Securities to be made on such payment date, specifying the amounts so
payable in respect of the Registered and the Unregistered Securities and in
respect of the Registered Securities as to which the Holders shall have elected
to be paid in another Currency as provided in paragraph (b) above. If the Board
of Directors has provided for the election referred to in paragraph (b) above
and if at least one Holder has made such election, then not later than the
second Business Day preceding such record date the Company will deliver to the
Trustee an Exchange Rate Officer's Certificate in respect of the Dollar or
Foreign Currency payments to be made on such payment date. The Dollar or Foreign
Currency amount receivable by Holders of Registered Securities who have elected
payment in another Currency as provided in paragraph (b) above shall be
determined by the Company on the basis of the applicable Market Exchange Rate in
effect on the second Business Day (the "Valuation Date") prior to such payment
date and set forth in the applicable Exchange Rate Officer's Certificate.

                  (e) If a Conversion Event occurs with respect to a Foreign
Currency in which any of the Securities are denominated or payable, then with
respect to each date for the payment of principal of, premium, if any, and
interest on the applicable Foreign Currency denominated Securities occurring
after the last date on which the Foreign Currency was so used (the "Conversion
Date"), the Dollar shall be the currency of payment for use on each such payment
date. The Dollar amount to be paid by the Company to the Trustee and by the
Trustee or any Paying Agent to the Holders of such Securities with respect to
such payment date shall be, in the case of a Foreign Currency other than a
currency unit, the Dollar Equivalent of the Foreign Currency or, in the case of
a currency unit, the Dollar Equivalent of the Currency Unit, in each case as
determined by the Currency Determination Agent in the manner provided in
paragraphs (g) or (h) below.

                  (f) If the Holder of a Registered Security elects payment in a
specified Currency as provided for by paragraph (b) and a Conversion Event
occurs with respect to such elected Currency, such Holder shall receive payment
in the Currency in which payment would have been made in the absence of such
election; and if a Conversion Event occurs with respect to the Currency in which
payment would have been made in the absence of such election, such Holder shall
receive payment in Dollars.

                  (g) The "Dollar Equivalent of the Foreign Currency" shall be
determined by the Currency Determination Agent as of each Valuation Date and
shall be obtained by converting the specified Foreign Currency into Dollars at
the Market Exchange Rate on the Conversion Date.

                  (h) The "Dollar Equivalent of the Currency Unit" shall be
determined by the Currency Determination Agent as of each Valuation Date and
shall be the sum obtained by adding together the results obtained by converting
the Specified Amount of each Component Currency into Dollars at the Market
Exchange Rate on the Valuation Date for such Component Currency.

                                       20
<PAGE>

                  (i) For purposes of this Section 2.12 the following terms
shall have the following meanings:

         A "Component Currency" shall mean any currency which, on the Conversion
Date, was a component currency of the relevant currency unit, including but not
limited to the Euro.

         A "Specified Amount" of a Component Currency shall mean the number of
units or fractions thereof which such Component Currency represented in the
relevant currency unit, including but not limited to the Euro, on the Conversion
Date. If after the Conversion Date the official unit of any Component Currency
is altered by way of combination or subdivision, the Specified Amount of such
Component Currency shall be divided or multiplied in the same proportion. If
after the Conversion Date two or more Component Currencies are consolidated into
a single currency, the respective Specified Amounts of such Component Currencies
shall be replaced by an amount in such single currency equal to the sum of the
respective Specified Amounts of such consolidated Component Currencies expressed
in such single currency, and such amount shall thereafter be a Specified Amount
and such single currency shall thereafter be a Component Currency. If after the
Conversion Date any Component Currency shall be divided into two or more
currencies, the Specified Amount of such Component Currency shall be replaced by
specified amounts of such two or more currencies, the sum of which, at the
Market Exchange Rate of such two or more currencies on the date of such
replacement, shall be equal to the Specified Amount of such former Component
Currency and such amounts shall thereafter be Specified Amounts and such
currencies shall thereafter be Component Currencies. If, after the Conversion
Date of the relevant currency unit, including, but not limited to, the Euro, a
Conversion Event (other than any event referred to above in this definition of
"Specified Amount") occurs with respect to any Component Currency of such
currency unit and is continuing on the applicable Valuation Date, the Specified
Amount of such Component Currency shall, for purposes of calculating the Dollar
Equivalent of the Currency Unit, be converted into Dollars at the Market
Exchange Rate in effect on the Conversion Date of such Component Currency.

         "Market Exchange Rate" shall mean for any currency the noon Dollar
buying rate for that currency for cable transfers quoted in New York City on the
Valuation Date as certified for customs purposes by the Federal Reserve Bank of
New York. If such rates are not available for any reason with respect to one or
more Currencies for which an exchange rate is required, the Currency
Determination Agent shall use, in its sole discretion and without liability on
its part, such quotation of the Federal Reserve Bank of New York as of the most
recent available date, or quotations from one or more major banks in New York
City or in the country of issue of the currency in question, or such other
quotations as the Currency Determination Agent shall deem appropriate. Unless
otherwise specified by the Currency Determination Agent, if there is more than
one market for dealing in any currency by reason of foreign exchange regulations
or otherwise, the market to be used in respect of such currency shall be that
upon which a nonresident issuer of securities designated in such currency would
purchase such currency in order to make payments in respect of such securities.

         All decisions and determinations of the Currency Determination Agent
regarding the Dollar Equivalent of the Foreign Currency, the Dollar Equivalent
of the Currency Unit, the Market Exchange Rate and changes in Specified Amounts
as specified above shall be in its sole

                                       21
<PAGE>

discretion and shall, in the absence of manifest error, be conclusive for all
purposes and irrevocably binding upon the Company, the Trustee for the relevant
series of Securities and all Holders of such Securities.

         In the event that a Conversion Event has occurred with respect to a
Foreign Currency, the Company, after learning thereof, will immediately give
notice thereof to the Trustee (and the Trustee will promptly thereafter give
notice in the manner provided in Section 11.4 to the affected Holders)
specifying the Conversion Date. In the event that a Conversion Event has
occurred with respect to the Euro or any other currency unit in which Securities
are denominated or payable, the Company, after learning thereof, will
immediately give notice thereof to the Trustee (and the Trustee will promptly
thereafter give notice in the manner provided in Section 11.4 to the affected
Holders) specifying the Conversion Date and the Specified Amount of each
Component Currency on the Conversion Date. In the event of any subsequent change
in any Component Currency as set forth in the definition of Specified Amount
above, the Company, after learning thereof, will similarly give notice to the
Trustee.

         The Trustee shall be fully justified and protected in relying on and
acting upon the information so received by it from the Company and the Currency
Determination Agent and shall not otherwise have any duty or obligation to
determine such information independently.

         SECTION 2.13 Compliance with Certain Laws and Regulations. If any
Unregistered Securities or Coupon Securities are to be issued in any Series of
Securities, the Company will use reasonable efforts to provide for arrangements
and procedures designed pursuant to then applicable laws and regulations, if
any, to ensure that Unregistered Securities or Coupon Securities are sold or
resold, exchanged, transferred and paid only in compliance with such laws and
regulations and without adverse consequences to the Company.

         SECTION 2.14 CUSIP Numbers. The Company in issuing the Securities may
use "CUSIP" or "ISIN" numbers (if then generally in use), and, if so, the
Trustee shall indicate the "CUSIP" or "ISIN" numbers of the Securities in
notices of redemption as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of redemption
and that reliance may be placed only on the other identification numbers printed
on the Securities, and any such redemption shall not be affected by any defect
in or omission of such numbers. The Company will promptly notify the Trustee of
any change in the "CUSIP" or "ISIN" numbers.

         SECTION 2.15 Securities in Global Form. If Securities of or within a
Series are issuable in whole or in part in global form, any such Security may
provide that it shall represent the aggregate amount of Outstanding Securities
from time to time endorsed thereon and may also provide that the aggregate
amount of Outstanding Securities represented thereby may from time to time be
reduced or increased to reflect exchanges. Any endorsement of a Security in
global form to reflect the amount, or any increase or decrease in the amount, or
changes in the rights of Holders, of Outstanding Securities represented thereby,
shall be made in such manner and by such Person or Persons as shall be specified
therein or in the Company order to be delivered to the Trustee pursuant to
Section 2.4 or 2.11. Subject to the provisions of Section 2.4 and, if
applicable, Section 2.11, the Trustee shall deliver and redeliver any Security
in permanent global

                                       22
<PAGE>

form in the manner and upon instructions given by the Person or Persons
specified therein or in the applicable Company order. Any instructions by the
Company with respect to endorsement or deliver or redelivery of a Security in
global form shall be in writing but need not comply with Section 11.5 and need
not be accompanied by an Opinion of Counsel.

         The provisions of the last paragraph of Section 2.4 shall apply to any
Security in global form if such Security was never issued and sold by the
Company and the Company delivers to the Trustee the Security in global form
together with written instructions (which need not comply with Section 11.5 and
need not be accompanied by an Opinion of Counsel) with regard to the reduction
in the principal amount of Securities represented thereby, together with the
written statement contemplated by the last paragraph of Section 2.4.

         Notwithstanding the provisions of Section 3.1, unless otherwise
specified as contemplated by Section 2.4, payment of principal of and interest
on any Security in permanent global form shall be made to the Person or Persons
specified in such Security.

                                  ARTICLE THREE

                             COVENANTS OF THE ISSUER

         SECTION 3.1 Payment of Principal and Interest. The Company covenants
and agrees for the benefit of each Series of Securities that it will duly and
punctually pay or cause to be paid (in the currency or currency unit in which
the Securities of such Series and Coupons, if any, are payable, except as
otherwise provided pursuant to Section 2.3 for the Securities of such Series and
except as provided in Section 2.12(b), (e) and (f) hereof) the principal of, and
interest on, each of the Securities of such Series in accordance with the terms
of the Securities of such Series, any Coupons appertaining thereto and this
Indenture.

         The interest on Unregistered Securities shall be payable only upon
presentation and surrender of the several Coupons for such interest installments
as are evidenced thereby as they severally mature at the office of a Paying
Agent outside the United States. The interest on any temporary Unregistered
Security shall be paid, as to any installment of interest evidenced by a Coupon
attached thereto, if any, only upon presentation and surrender of such Coupon,
and, as to the other installments of interest, if any, only upon presentation of
such Securities for notation thereon of the payment of such interest.

         SECTION 3.2 Offices for Payment, etc. So long as any of the Securities
remain outstanding, the Company will maintain the following for each Series: an
office or agency (a) where the Securities may be presented for payment, (b)
where the Securities may be presented for registration of transfer and for
exchange as in this Indenture provided and (c) where notices and demands to or
upon the Company in respect of the Securities or of this Indenture may be
served. The Company will give to the Trustee written notice of the location of
any such office or agency and of any change of location thereof. In case the
Company shall fail to so designate or maintain any such office or agency or
shall fail to give such notice of the location or of any change in the location
thereof, presentations and demands may be made and notices may be served at the
corporate trust office. Unless otherwise specified pursuant to Section 2.3, the
Trustee is appointed Paying Agent and Registrar.

                                       23
<PAGE>

         So long as any Coupon Securities or Unregistered Securities of any
Series remain outstanding, the Company will (except as specified pursuant to
Section 2.3) maintain one or more offices or agencies outside the United States
in such city or cities as may be specified elsewhere in this Indenture or as
contemplated by Section 2.3, and shall maintain such office or offices for a
period of two years (or any period thereafter for which it is necessary in order
to conform to United States tax laws or regulations) after the principal on such
Coupon Securities or Unregistered Securities has become due and payable, with
respect to such Series where Coupons appertaining to Securities of such Series
or Unregistered Securities of such Series may be surrendered or presented for
payment, or surrendered for exchange pursuant to Section 2.8 and where notices
and demands to or upon the Company in respect of Coupons appertaining to
Securities of such Series or the Unregistered Securities of such Series or of
this Indenture may be served. The Company will give prompt written notice to the
Trustee of the location and any change in the location, of any such office or
agency. If at any time the Company shall fail to maintain such required office
or agency or shall fail to furnish the Trustee with the address thereof,
presentations, surrenders, notices and demands in respect of Unregistered
Securities may be made or served at the Corporate Trust Office of the Trustee
and the corporate trust office of any authenticating agent appointed hereunder,
and presentations, surrenders, notices and demands in respect of Coupons
appertaining to Securities of any Series and Unregistered Securities may be made
or served at the corporate trust office of the Trustee in the other city or
cities referred to above; and the Company hereby appoints the Trustee and any
authenticating agent appointed hereunder its agents to receive all such
presentations, surrenders, notices and demands.

         SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 6.10, a Trustee, so that there
shall at all times be a Trustee with respect to each Series of Securities
hereunder.

         SECTION 3.4 Paying Agents. Whenever the Company shall appoint a Paying
Agent other than the Trustee with respect to the Securities of any Series, it
will cause such Paying Agent to execute and deliver to the Trustee an instrument
in which such Agent shall agree with the Trustee, subject to the provisions of
this Section,

                  (a) that it will hold all sums received by it as such Agent
         for the payment of the principal of or interest on the Securities of
         such Series or Coupons (whether such sums have been paid to it by the
         Company or by any other obligor on the Securities of such Series or
         Coupons) in trust for the benefit of the Holders of the Securities of
         such Series or Coupons or of the Trustee, and upon the occurrence of an
         Event of Default and upon the written request of the Trustee, pay over
         all such sums received by it to the Trustee,

                  (b) that it will give the Trustee notice of any failure by the
         Company (or by any other obligor on the Securities of such Series) to
         make any payment of the principal of or interest on the Securities of
         such Series or Coupons when the same shall be due and payable, and

                                       24
<PAGE>

                  (c) that it will give the Trustee notice of any change of
         address of any Holder of which it is aware.

         The Company will, on or prior to each due date of the principal of or
interest on the Securities of such Series or Coupons, deposit with the Paying
Agent a sum sufficient to pay such principal or interest so becoming due, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of any failure to take such action.

         If the Company shall act as its own Paying Agent with respect to the
Securities of any Series or Coupons, it will, on or before each due date of the
principal of or interest on the Securities of such Series or Coupons, set aside,
segregate and hold in trust for the benefit of the Holders of the Securities of
such Series or Holders of such Coupons a sum sufficient to pay such principal or
interest so becoming due. The Company will promptly notify the Trustee of any
failure to take such action.

         Anything in this Section to the contrary notwithstanding, the Company
may at any time, for the purpose of obtaining a satisfaction and discharge with
respect to one or more or all Series of Securities or Coupons hereunder, or for
any other reason, pay or cause to be paid to the Trustee all sums held in trust
for any such Series by the Company or any Paying Agent hereunder, as required by
this Section, such sums to be held by the Trustee upon the trusts herein
contained.

         Anything in this Section to the contrary notwithstanding, the agreement
to hold sums in trust as provided in this Section is subject to the provisions
of Sections 10.3 and 10.4.

         SECTION 3.5 Written Statement to Trustee. The Company will deliver to
the Trustee for each Series of Securities on or before a date not more than four
months after the end of each of its fiscal years ending after the date hereof
during which any Securities are outstanding a written statement, signed by two
of its officers (which need not comply with Section 11.5), stating that in the
course of the performance of their duties as officers of the Company they would
normally have knowledge of any default by the Company in the performance or
fulfillment of any covenant, agreement or condition contained in this Indenture,
stating whether or not they have knowledge of any such default and, if so,
specifying each such default of which the signers have knowledge and the nature
thereof.

         SECTION 3.6 Limitation on Liens.

                  (a) The Company will not, nor will it permit any Restricted
Subsidiary to, issue, assume or guarantee any Debt that ranks pari passu with or
junior in interest to the Securities, secured by a mortgage, security interest,
pledge, lien or other encumbrance (mortgages, security interests, pledges, liens
and other encumbrances being hereinafter in this Article Three called "mortgage"
or "mortgages") upon any Principal Property of the Company or any Restricted
Subsidiary or upon any shares of stock or indebtedness of any Restricted
Subsidiary (whether such Principal Property, shares of stock or indebtedness are
now owned or hereafter acquired) without in any such case effectively providing
concurrently with the issuance, assumption or guaranty of any such Debt that the
Securities (together with, if the Company shall so determine, any other
indebtedness of or guaranteed by the Company or such

                                       25
<PAGE>

Restricted Subsidiary ranking equally with the Securities and then existing or
thereafter created) shall be secured equally and ratably with (or, at the option
of the Company, prior to) such Debt so long as such Debt shall be so secured;
provided, however, that the foregoing restrictions shall not apply to Debt
secured by:

                           (i) mortgages on property, shares of stock or
         indebtedness (hereinafter in this Article Three called "property") of
         any corporation existing at the time such corporation becomes a
         Restricted Subsidiary;

                           (ii) mortgages on property existing at the time of
         acquisition of the affected property by the Company or a Restricted
         Subsidiary, or mortgages to secure the payment of all or any part of
         the purchase price of such property upon the acquisition of such
         property by the Company or a Restricted Subsidiary or to secure any
         Debt incurred by the Company or a Restricted Subsidiary prior to, at
         the time of, or within 360 days after the later of the acquisition, the
         completion of construction (including any improvements on an existing
         property) or the commencement of commercial operation of such property,
         which Debt is incurred for the purpose of financing all or any part of
         the purchase price thereof or construction or improvements thereon;
         provided, however, that in the case of any such acquisition,
         construction or improvement the mortgage shall not apply to any
         property theretofore owned by the Company or a Restricted Subsidiary,
         other than, in the case of any such construction or improvement, any
         real property on which the property so constructed, or the improvement,
         is located which in the opinion of the Board of Directors was, prior to
         such construction or improvement, substantially unimproved for the use
         intended by the Company or such Restricted Subsidiary;

                           (iii) mortgages on property of a Restricted
         Subsidiary securing Debt owing to the Company or to another Restricted
         Subsidiary;

                           (iv) mortgages on property of a corporation existing
         at the time such corporation is merged into or consolidated with the
         Company or a Restricted Subsidiary or at the time of a sale, lease or
         other disposition of the properties of a corporation or firm as an
         entirety or substantially as an entirety to the Company or a Restricted
         Subsidiary provided, however, that any such mortgages do not attach to
         or affect property theretofore owned by the Company or such Restricted
         Subsidiary;

                           (v) mortgages on property owned or leased by the
         Company or a Restricted Subsidiary in favor of the United States of
         America or any State thereof, or any department, agency or
         instrumentality or political subdivision of the United States of
         America or any State thereof, or in favor of any other country or any
         political subdivision thereof, or in favor of holders of securities
         issued by any such entity, pursuant to any contract or statute
         (including, without limitation, mortgages to secure Debt of the
         pollution control or industrial revenue bond type) or to secure any
         indebtedness incurred for the purpose of financing all or any part of
         the purchase price or the cost of construction of the property subject
         to such mortgages;

                           (vi) mortgages existing at the date of this
         Indenture;

                                       26
<PAGE>

                           (vii) landlords' liens on fixtures located on
         premises leased by the Company or a Restricted Subsidiary in the
         ordinary course of business;

                           (viii) mortgages on property of the Company or a
         Restricted Subsidiary to secure partial, progress, advance or other
         payments or any Debt incurred for the purpose of financing all or any
         part of the purchase price or the cost of construction, development, or
         substantial repair, alteration or improvement of the property subject
         to such mortgages if the commitment for the financing is obtained not
         later than one year after the later of the completion of or the placing
         into operation (exclusive of test and start-up periods) of such
         constructed, developed, repaired, altered or improved property;

                           (ix) mortgages arising in connection with contracts
         and subcontracts with or made at the request of the United States of
         America, or any state thereof, or any department, agency or
         instrumentality of the United States or any state thereof;

                           (x) mechanics', materialmen's, carriers' or other
         like liens arising in the ordinary course of business (including
         construction of facilities) in respect of obligations which are not due
         or which are being contested in good faith;

                           (xi) any mortgage arising by reason of deposits with,
         or the giving of any form of security to, any governmental agency or
         any body created or approved by law or governmental regulations, which
         is required by law or governmental regulation as a condition to the
         transaction of any business, or the exercise of any privilege,
         franchise or license;

                           (xii) mortgages for taxes, assessments or
         governmental charges or levies not yet delinquent, or mortgages for
         taxes, assessments or governmental charges or levies already delinquent
         but the validity of which is being contested in good faith;

                           (xiii) mortgages (including judgment liens) arising
         in connection with legal proceedings so long as such proceedings are
         being contested in good faith and, in the case of judgment liens,
         execution thereon is stayed; or

                           (xiv) any extension, renewal or replacement (or
         successive extensions, renewals or replacements) in whole or in part of
         any mortgage referred to in the foregoing clauses (i) to (xiii),
         inclusive, provided, however, that the principal amount of Debt secured
         thereby shall not exceed the principal amount of Debt so secured at the
         time of such extension, renewal or replacement mortgage, and that such
         extension, renewal or replacement mortgage shall be limited to all or a
         part of the property which secured the mortgage so extended, renewed or
         replaced (plus improvements on such property).

                  (b) Notwithstanding the foregoing provisions of this Section,
the Company and any one or more Restricted Subsidiaries may issue, assume or
guarantee Debt secured by mortgages which would otherwise be subject to the
foregoing restrictions in an aggregate amount which, together with all other
Debt of the Company and its Restricted Subsidiaries which (if originally issued,
assumed or guaranteed at such time) would otherwise be subject to the foregoing
restrictions (not including Debt permitted to be secured under clauses (i)
through (xiv)

                                       27
<PAGE>

above), does not at the time exceed 10% of Consolidated Total Assets, as shown
on the latest quarterly consolidated financial statements of the Company
preceding the date of determination.

         SECTION 3.7 Limitation on Sale and Lease-Back. The Company will not,
nor will it permit any Restricted Subsidiary to, enter into any arrangement with
any Person providing for the leasing by the Company or any Restricted Subsidiary
of any Principal Property of the Company or any Restricted Subsidiary (whether
such Principal Property is now owned or hereafter acquired) (except for
temporary leases for a term of not more than three years and except for leases
between the Company and a Restricted Subsidiary or between Restricted
Subsidiaries), which Principal Property has been or is to be sold or transferred
by the Company or such Restricted Subsidiary to such Person (herein referred to
as a "Sale and Lease-Back Transaction"), unless (a) the Company or such
Restricted Subsidiary would be entitled, pursuant to the provisions of Section
3.6, to issue, assume or guarantee Debt secured by a mortgage upon such
Principal Property at least equal in amount to the Attributable Debt in respect
of such arrangement without equally and ratably securing the Securities,
provided, however, that from and after the date on which such arrangement
becomes effective the Attributable Debt in respect of such arrangement shall be
deemed for all purposes under Sections 3.6 and 3.7 to be Debt subject to the
provisions of Section 3.6; or (b) the Company shall apply an amount in cash
equal to the Attributable Debt in respect of such arrangement to the retirement
(other than any mandatory retirement or by way of payment at maturity), within
120 days of the effective date of any such arrangement, of Debt of the Company
or any Restricted Subsidiary (other than Debt owned by the Company or any
Restricted Subsidiary and other than Debt of the Company which is subordinated
to the Securities) which by its terms matures at or is extendible or renewable
at the option of the obligor to a date more than twelve months after the date of
the creation of such Debt.

         The term "Attributable Debt" shall mean the present value (discounted
at the actual percentage rate inherent in such arrangement as determined in good
faith by the Company, compounded semi-annually) of the obligation of a lessee
for rental payments during the remaining term of any lease (including any period
for which such lease has been extended). Such rental payments shall not include
amounts payable by the lessee for maintenance and repairs, insurance, taxes,
assessments and similar charges and for contingent rents (such as those based on
sales). In case of any lease which is terminable by the lessee upon the payment
of a penalty, such rental payments shall also include such penalty, but no rent
shall be considered as required to be paid under such lease subsequent to the
first date upon which it may be so terminated. Any determination of any actual
percentage rate inherent in any such arrangement made in good faith by the
Company shall be binding and conclusive, and the Trustee shall have no duty with
respect to any determination made under this Section 3.7.

         SECTION 3.8 Additional Amounts. If Securities of a Series provide for
the payment of additional amounts to any Holder who is a non-United States
Person in respect of any tax, assessment or governmental charge ("Additional
Amounts"), the Company will pay to the Holder of any Security of such Series or
any Coupon appertaining thereto such Additional Amounts as may be so provided by
Section 2.3. Whenever in this Indenture there is mentioned, in any context, the
payment of the principal of or interest on, or in respect of, any Security of a
Series or payment of any related Coupon or the net proceeds received on the sale
or exchange of a Security of a Series, such mention shall be deemed to include
mention of the payment of

                                       28
<PAGE>

Additional Amounts provided for by the terms of such Series established pursuant
to Section 2.3 to the extent that, in such context, Additional Amounts are, were
or would be payable in respect thereof pursuant to such terms and express
mention of the payment of Additional Amounts (if applicable) in any provisions
hereof shall not be construed as excluding Additional Amounts in those
provisions hereof where such express mention is not made.

         Except as otherwise specified as contemplated by Section 2.3, if the
Securities of a Series provide for the payment of Additional Amounts, at least
10 days prior to each date of payment of principal or interest on which any
Additional Amount shall be payable, the Company will furnish the Trustee and the
Company's principal Paying Agent or Paying Agents, if other than the Trustee,
with a compliance certificate instructing the Trustee and such Paying Agent or
Paying Agents whether such payment of principal of or interest on the Securities
of that Series shall be made to Holders of Securities of that Series or any
related Coupons who are non-United States Persons without withholding for or on
account of any tax, assessment or other governmental charge described in the
Securities of that Series. If any such withholding shall be required, then such
compliance certificate shall specify by country the amount, if any, required to
be withheld on such payments to such Holders of Securities of that Series or
related Coupons and the Company will pay to the Trustee or such Paying Agent the
Additional Amounts required by the terms of such Securities. The Company
covenants to indemnify the Trustee and any Paying Agent for, and to hold them
harmless against, any loss, liability or expense reasonably incurred without
negligence or bad faith on their part arising out of or in connection with
actions taken or omitted by any of them in reliance on any Officer's Certificate
furnished pursuant to this Section or in the event the Trustee shall not
withhold or deduct any sums as a result of the non-receipt of a compliance
certificate pursuant to this Section.

         SECTION 3.9 Calculation of Original Issue Discount. The Company shall
file with the Trustee promptly at the end of each calendar year (i) a written
notice specifying the amount of original issue discount (including daily rates
and accrual periods) accrued on Outstanding Securities as of the end of such
year and (ii) such other specific information relating to such original issue
discount as may then be relevant under the Internal Revenue Code of 1986, as
amended from time to time.

                                  ARTICLE FOUR

                    SECURITYHOLDERS' LISTS AND REPORTS BY THE
                             ISSUER AND THE TRUSTEE

         SECTION 4.1 Company to Furnish Trustee Information as to Names and
Addresses of Securityholders. The Company covenants and agrees that it will
furnish or cause to be furnished to the Trustee for the Securities of each
Series a list in such form as the Trustee may reasonably require of the names
and addresses of the Holders of the Registered Securities of each Series:

                  (a) semiannually and not more than 15 days after each record
         date for the payment of interest on such Securities, as hereinabove
         specified, as of such record date and on dates to be determined
         pursuant to Section 2.3 for non-interest bearing securities in each
         year, and

                                       29
<PAGE>

                  (b) at such other times as the Trustee may request in writing,
         within 30 days after receipt by the Company of any such request such
         list to be as of a date not more than 15 days prior to the time such
         information is furnished,

provided that if and so long as the Trustee shall be the Security registrar for
such Series, such list shall not be required to be furnished but in any event
the Company shall be required to furnish such information concerning the Holders
of Coupon Securities and Unregistered Securities which is known to it; provided,
further, that the Company shall have no obligation to investigate any matter
relating to any Holder of an Unregistered Security or any Holder of a Coupon.

         SECTION 4.2 Preservation and Disclosure of Securityholders' Lists.

                  (a) The Trustee for the Securities of each Series shall
preserve, in as current a form as is reasonably practicable, all information as
to the names and addresses of the Holders of each Series of Securities contained
in the most recent list furnished to it as provided in Section 4.1 or maintained
by the Trustee in its capacity as Security registrar for such Series, if so
acting. The Trustee may destroy any list furnished to it as provided in Section
4.1 upon receipt of a new list so furnished.

                  (b) In case three or more Holders of Registered Securities of
any Series (hereinafter referred to as "applicants") apply in writing to the
Trustee and furnish to the Trustee reasonable proof that each such applicant has
owned a Security for a period of at least six months preceding the date of such
application, and such application states that the applicants desire to
communicate with other Holders of Securities of a particular Series (in which
case the applicants must all hold Securities of such Series) or with Holders of
all Securities with respect to their rights under this Indenture or under such
Securities and such application is accompanied by a copy of the form of proxy or
other communication which such applicants propose to transmit, then the Trustee
shall, within five business days after the receipt of such application, at its
election, either

                           (i) afford to such applicants access to the
         information preserved at the time by the Trustee in accordance with the
         provisions of subsection (a) of this Section 4.2, or

                           (ii) inform such applicants as to the approximate
         number of Holders of Securities of such Series or all Securities, as
         the case may be, whose names and addresses appear in the information
         preserved at the time by the Trustee, in accordance with the provisions
         of subsection (a) of this Section, as to the approximate cost of
         mailing to such Securityholders the form of proxy or other
         communication, if any, specified in such application.

         If the Trustee shall elect not to afford to such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each Securityholder of such Series or all Securities, as the
case may be, whose name and address appear in the information preserved at the
time by the Trustee in accordance with the provisions of subsection (a) of this
Section, a copy of the form of proxy or other communication which is specified
in such request, with reasonable promptness after a tender to the Trustee of the
material to be mailed and of

                                       30
<PAGE>

payment, or provision for the payment, of the reasonable expenses of mailing,
unless within five days after such tender, the Trustee shall mail to such
applicants and file with the Commission together with a copy of the material to
be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best interests of the Holders of
Securities of such Series or all Securities, as the case may be, or could be in
violation of applicable law. Such written statement shall specify the basis of
such opinion. If the Commission, after opportunity for a hearing upon the
objections specified in the written statement so filed, shall enter an order
refusing to sustain any of such objections or if, after the entry of such order
sustaining one or more of such objections, the Commission shall find, after
notice and opportunity for hearing, that all the objections so sustained have
been met, and shall enter an order so declaring, the Trustee shall mail copies
of such material to all such Securityholders with reasonable promptness after
the entry of such order and the renewal of such tender; otherwise the Trustee
shall be relieved of any obligation or duty to such applicants respecting their
application.

                  (c) Each and every Holder of Securities, by receiving and
holding the same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any agent of the Company or the Trustee shall be
held accountable by reason of the disclosure of any such information as to the
names and addresses of the Holders of Securities in accordance with the
provisions of subsection (b) of this Section, regardless of the source from
which such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
such subsection (b).

         SECTION 4.3 Reports by the Company. The Company covenants:

                  (a) to file with the Trustee for the Securities of each
Series, within 15 days after the Company is required to file the same with the
Commission, copies of the annual reports and of the information, documents, and
other reports (or copies of such portions of any of the foregoing as the
Commissioner may from time to time by rules and regulations prescribe) which the
Company may be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, or if the Company is not
required to file information, documents, or reports pursuant to either of such
Sections, then to file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such of
the supplementary and periodic information, documents, and reports which may be
required pursuant to Section 13 of the Securities Exchange Act of 1934, or in
respect of a security listed and registered on a national securities exchange as
may be prescribed from time to time in such rules and regulations;

                  (b) to file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the Commission, such
additional information, documents, and reports with respect to compliance by the
Company with the conditions and covenants provided for in this Indenture as may
be required from time to time by such rules and regulations; and

                  (c) to transmit by mail to the Holders of Registered
Securities in the manner and to the extent required by Sections 4.4(c) and 11.4,
within 30 days after the filing thereof with the Trustee, such summaries of any
information, documents, and reports required to be filed by

                                       31
<PAGE>

the Company pursuant to subsection (a) and (b) of this Section as may be
required to be transmitted to such Holders by rules and regulations prescribed
from time to time by the Commission; and

                  (d) to furnish to the Trustee, not less often than annually, a
brief certificate from the principal executive officer, principal financial
officer or principal accounting officer of the Company as to his or her
knowledge of the Company's compliance with all conditions and covenants under
this Indenture. For purposes of this paragraph, such compliance shall be
determined without regard to any period of grace or requirement of notice
provided under this Indenture.

         Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).

         SECTION 4.4 Reports by the Trustee.

                  (a) The Trustee shall transmit to Holders such reports
concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant thereto. If required by Section 313(a) of the Trust Indenture Act, the
Trustee shall, within sixty days after each May 15 following the date of this
Indenture deliver to Holders a brief report, dated as of such May 15, which
complies with the provisions of such Section 313(a).

                  (b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange, if
any, upon which the Securities are listed, with the Commission and with the
Company. The Company will promptly notify the Trustee when the Securities are
listed on any stock exchange and of any delisting thereof.

                                  ARTICLE FIVE

                   REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
                               ON EVENT OF DEFAULT

         SECTION 5.1 Event of Default Defined; Acceleration of Maturity; Waiver
of Default. In case one or more of the following Events of Default (unless it is
either inapplicable to a particular Series or it is specifically deleted from or
modified in the instrument establishing such Series and the form of Security for
such Series) shall have occurred and be continuing with respect to any Series of
Securities, that is to say:

                  (a) default in the payment of any installment of interest upon
any Security of such Series as and when the same shall become due and payable,
and continuance of such default for a period of 30 days; or

                                       32
<PAGE>

                  (b) default in the payment of the principal of the Securities
of such Series as and when the same shall become due and payable either at
maturity, upon redemption (for any sinking fund payment or otherwise), by
declaration or otherwise; or

                  (c) failure on the part of the Company duly to observe or
perform any other of the covenants or agreements on the part of the Company in
the Securities of such Series, or in this Indenture contained and relating to
such Series, for a period of 90 days after the date on which written notice
specifying such failure and requiring the Company to remedy the same and stating
that such notice is a "Notice of Default" hereunder shall have been given by
registered or certified mail to the Company by the Trustee for the Securities of
such Series, or to the Company and the Trustee by the Holders of at least
twenty-five percent in aggregate principal amount at maturity of the Securities
of such Series at the time outstanding; or

                  (d) the Company shall make an assignment for the benefit of
creditors, or shall file a petition in bankruptcy; or the Company shall be
adjudicated insolvent or bankrupt, or shall petition or shall apply to any court
having jurisdiction in the premises for the appointment of a receiver, trustee,
liquidator or sequestrator of, or for, the Company or any substantial portion of
the property of the Company; or the Company shall commence any proceeding
relating to the Company or any substantial portion of the property of the
Company under any insolvency, reorganization, arrangement, or readjustment of
debt, dissolution, winding-up, adjustment, composition or liquidation law or
statute of any jurisdiction, whether now or hereafter in effect (hereinafter in
this subsection (d) called "Proceeding"); or if there shall be commenced against
the Company any Proceeding and an order approving the petition shall be entered,
or such Proceeding shall remain undischarged for a period of 60 days; or a
receiver, trustee, liquidator or sequestrator of, or for, the Company or any
substantial portion of the property of the Company shall be appointed and shall
not be discharged within a period of 60 days; or the Company by any act shall
indicate consent to or approval of or acquiescence in any Proceeding or the
appointment of a receiver, trustee, liquidator or sequestrator of, or for, the
Company or any substantial portion of the property of the Company; provided that
a resolution or order for winding-up the Company with a view to its
consolidation, amalgamation or merger with another company or the transfer of
its assets as a whole, or substantially as a whole, to such other company as
provided in Section 9.1 shall not make the rights and remedies herein
enforceable under this subsection (d) of Section 5.1 if such last-mentioned
company shall, as a part of such consolidation, amalgamation, merger or
transfer, and within 60 days from the passing of the resolution or the date of
the order, comply with the conditions to that end stated in Section 9.1; or

                  (e) any other Event of Default provided in the Supplemental
Indenture or resolution of the Board of Directors under which such Series of
Securities is issued or in the form of Security for such Series;

then and in each and every such case, so long as such Event of Default with
respect to such Series shall not have been remedied or waived, unless the
principal of all Securities of such Series shall have already become due and
payable, either the Trustee for such Series or the Holders of not less than
twenty-five percent in aggregate principal amount at maturity of the Securities
of such Series then Outstanding hereunder, by notice in writing to the Company
(and to the Trustee if given by such Holders), may declare the principal (or, in
the case of Original Issue Discount Securities, such principal amount as may be
determined in accordance with the

                                       33
<PAGE>

terms thereof) of all the Securities of such Series to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable, anything in this Indenture or in the Securities of
such Series contained to the contrary notwithstanding. This provision, however,
is subject to the condition that if at any time after the principal of the
Securities of such Series (or, in the case of Original Issue Discount
Securities, such principal amount as may be determined in accordance with the
terms thereof) shall have been so declared due and payable, and before any
judgment or decree for the payment of the moneys due shall have been obtained or
entered as hereinafter provided, the Company shall pay or shall deposit with the
Trustee a sum sufficient to pay in the currency or currency unit in which the
Securities of such Series are payable (except as otherwise provided pursuant to
Section 2.3 for the Securities of such Series and except as provided in Section
2.12(b), (e) and (f) hereof) all matured installments of interest, if any, upon
all the Securities of such Series and the principal of any and all Securities of
such Series which shall have become due otherwise than by such acceleration
(with interest upon such principal and, to the extent that payment of such
interest is enforceable under applicable law, upon overdue installments of
interest, at the rate borne by the Securities of such Series (or, in the case of
Original Issue Discount Securities, at the yield to maturity) to the date of
such payment or deposit) and in Dollars such amount as shall be sufficient to
cover reasonable compensation to the Trustee, its agents, attorneys and counsel
and all other expenses and liabilities incurred, and all advances made, by the
Trustee, its agents, attorneys and counsel and any and all defaults under this
Indenture, other than the nonpayment of the principal of Securities of such
Series which shall have become due by such acceleration, shall have been
remedied then and in every such case the Holders of a majority in aggregate
principal amount at maturity of the Securities of such Series then Outstanding,
by written notice to the Company and to the Trustee for the Securities of such
Series, may waive all defaults and rescind and annul such declaration and its
consequences; but no such waiver or rescission and annulment shall extend to or
shall affect any subsequent default or shall impair any right consequent
thereon.

         SECTION 5.2 Collection of Indebtedness by Trustee; Trustee May Prove
Debt. The Company covenants that (a) in case default shall be made in the
payment of any installment of interest on any of the Securities of any Series
when such interest shall have become due and payable, and such default shall
have continued for a period of 30 days or (b) in case default shall be made in
the payment of all or any part of the principal of any of the Securities of any
Series when the same shall have become due and payable, whether upon maturity of
the Securities of such Series or upon any redemption or by declaration or
otherwise, then upon demand of the Trustee for the Securities of such Series,
the Company will pay to the Trustee for the Securities of such Series for the
benefit of the Holders of the Securities of such Series and the Holders of any
Coupons appertaining thereto the whole amount that then shall have become due
and payable on all Securities of such Series or such Coupons for principal of or
interest, as the case may be (with interest to the date of such payment upon the
overdue principal and, to the extent that payment of such interest is
enforceable under applicable law, on overdue installments of interest at the
same rate as the rate of interest specified in the Securities of such Series);
and in addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including reasonable compensation to the
Trustee and each predecessor Trustee, their respective agents, attorneys and
counsel, and any expenses and liabilities incurred, and all advances made, by
the Trustee and each predecessor Trustee.

                                       34
<PAGE>

         Until such demand is made by the Trustee, the Company may pay the
principal of and interest on the Securities of any Series to the Persons
entitled thereto, whether or not the principal of and interest on the Securities
of such Series are overdue.

         In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee for the Securities of such Series, in its own name and as
trustee of an express trust, shall be entitled and empowered to institute any
action or proceedings at law or in equity for the collection of the sums so due
and unpaid, and may prosecute any such action or proceedings to judgment or
final decree, and may enforce any such judgment or final decree against the
Company or other obligor upon such Securities and collect in the manner provided
by law out of the property of the Company or other obligor upon such Securities
and Coupons, wherever situated, the moneys adjudged or decreed to be payable.

         In case there shall be pending proceedings relative to the Company or
any other obligor upon the Securities and Coupons under Title 11 of the United
States Code or any other applicable Federal or state bankruptcy, insolvency or
other similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Company or its property or such other
obligor, or in case of any other comparable judicial proceedings relative to the
Company or other obligor under the Securities of any Series and Coupons, if any,
or to the creditors or property of the Company or such other obligor, the
Trustee, irrespective of whether the principal of any Securities shall then be
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand pursuant to the
provisions of this Section, shall be entitled and empowered, by intervention in
such proceedings or otherwise:

                  (a) to file and prove a claim or claims for the whole amount
         of principal (or, if the Securities of such Series are Original Issue
         Discount Securities, such portion of the principal amount as may be due
         and payable with respect to the Securities of such Series pursuant to a
         declaration in accordance with Section 5.1 hereof) and interest owing
         and unpaid in respect of the Securities of any Series, and to file such
         other papers or documents as may be necessary or advisable in order to
         have the claims of the Trustee (including any claim for reasonable
         compensation to the Trustee and each predecessor Trustee, and their
         respective agents, attorneys and counsel, and for reimbursement of all
         expenses and liabilities incurred, and all advances made, by the
         Trustee and each predecessor Trustee,) and of the Securityholders and
         the Holders of any Coupons appertaining thereto allowed in any judicial
         proceedings relative to the Company or other obligor upon all
         Securities of any Series, or to the creditors or property of the
         Company or such other obligor,

                  (b) unless prohibited by applicable law and regulations, to
         vote on behalf of the holders of the Securities of any Series in any
         election of a trustee or a standby trustee in arrangement,
         reorganization, liquidation or other bankruptcy or insolvency
         proceedings or Person performing similar functions in comparable
         proceedings, and

                  (c) to collect and receive any moneys or other property
         payable or deliverable on any such claims, and to distribute all
         amounts received with respect to the claims of the Securityholders and
         of the Trustee on their behalf; and any trustee, receiver, or

                                       35
<PAGE>

         liquidator, custodian or other similar official is hereby authorized by
         each of the Holders to make payments to the Trustee for the Securities
         of such Series, and, in the event that such Trustee shall consent to
         the making of payments directly to the Securityholders, to pay to such
         Trustee such amounts as shall be sufficient to cover reasonable
         compensation to such Trustee, each predecessor Trustee and their
         respective agents, attorneys and counsel, and all other expenses and
         liabilities incurred, and all advances made, by such Trustee and each
         predecessor Trustee and all other amounts due to such Trustee or any
         predecessor Trustee pursuant to Section 6.6.

         Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities of any Series or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Securityholder in any such proceeding except, as aforesaid, to vote for the
election of a trustee in bankruptcy or similar Person.

         All rights of action and of asserting claims under this Indenture, or
under any of the Securities or any Coupon appertaining thereto, may be enforced
by the Trustee for the Securities of such Series without the possession of any
of the Securities of such Series or any Coupon appertaining thereto or the
production thereof at any trial or other proceedings relative thereto, and any
such action or proceedings instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment, subject to
the payment of the expenses, disbursements and compensation of the Trustee, each
predecessor Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Securities and Holders of any Coupons in
respect of which such action was taken.

         In any proceedings brought by the Trustee for the Securities of such
Series (and also any proceedings involving the interpretation of any provision
of this Indenture to which the Trustee shall be a party), the Trustee shall be
held to represent all the Holders of the Securities and Coupons appertaining
thereto in respect to which such action was taken, and it shall not be necessary
to make any Holders of such Securities and Coupons appertaining thereto parties
to any such proceedings.

         SECTION 5.3 Application of Proceeds. Any moneys collected by the
Trustee for the Securities of such Series pursuant to this Article in respect of
the Securities of any Series shall be applied in the following order at the date
or dates fixed by such Trustee and, in case of the distribution of such moneys
on account of principal or interest, upon presentation of the several Securities
and any Coupons appertaining thereto in respect of which moneys have been
collected and stamping (or otherwise noting) thereon the payment, or issuing
Securities of such Series in reduced principal amounts in exchange for the
presented Securities of like Series if only partially paid, or upon surrender
thereof if fully paid:

                  FIRST: To the payment of costs and expenses applicable to such
         Series in respect of which moneys have been collected, including
         reasonable compensation to the Trustee and each predecessor Trustee and
         their respective agents and attorneys and of all expenses and
         liabilities incurred, and all advances made, by the Trustee and each

                                       36
<PAGE>

         predecessor Trustee and all other amounts due to the Trustee or any
         predecessor Trustee pursuant to Section 6.6;

                  SECOND: To the holders of Senior Indebtedness as provided in
         Article XIV;

                  THIRD: In case the principal of the Securities of such Series
         in respect of which moneys have been collected shall not have become
         and be then due and payable, to the payment of interest on the
         Securities of such Series in default in the order of the maturity of
         the installments of such interest, with interest (to the extent that
         such interest has been collected by the Trustee) upon the overdue
         installments of interest at the same rate as the rate of interest
         specified in such Securities, such payments to be made ratably to the
         Persons entitled thereto, without discrimination or preference;

                  FOURTH: In case the principal of the Securities of such Series
         in respect of which moneys have been collected shall have become and
         shall be then due and payable, to the payment of the whole amount then
         owing and unpaid upon all the Securities of such Series for principal
         and interest, with interest upon the overdue principal, and (to the
         extent that payment of such interest is permissible by law and that
         such interest has been collected by the Trustee) upon overdue
         installments of interest at the same rate as the rate of interest
         specified in the Securities of such Series; and in case such moneys
         shall be insufficient to pay in full the whole amount so due and unpaid
         upon the Securities of such Series, then to the payment of such
         principal and interest without preference or priority of principal over
         interest or of interest over principal, or of any installment of
         interest over any other installment of interest, or of any Security of
         such Series over any other Security of such Series, ratably to the
         aggregate of such principal and accrued and unpaid interest; and

                  FIFTH: To the payment of the remainder, if any, to the Company
         or any other Person lawfully entitled thereto.

         SECTION 5.4 Suits for Enforcement. In case an Event of Default has
occurred, has not been waived and is continuing, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this Indenture or in aid of the exercise
of any power granted in this Indenture or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or by law.

         SECTION 5.5 Restoration of Rights on Abandonment of Proceedings. In
case the Trustee for the Securities of any Series shall have proceeded to
enforce any right under this Indenture and such proceedings shall have been
discontinued or abandoned for any reason, or shall have been determined
adversely to the Trustee, then and in every such case the Company and the
Trustee shall be restored respectively to their former positions and rights
hereunder, and all rights, remedies and powers of the Company, the Trustee and
the Securityholders shall continue as though no such proceedings had been taken.

                                       37
<PAGE>
         SECTION 5.6 Limitations on Suits by Securityholders. No Holder of any
Security of any Series or Holder of any Coupon shall have any right by virtue or
by availing of any provision of this Indenture to institute any action or
proceeding at law or in equity or in bankruptcy or otherwise upon or under or
with respect to this Indenture, or for the appointment of a trustee, receiver,
liquidator, custodian or other similar official or for any other remedy
hereunder, unless such Holder previously shall have given to the Trustee written
notice of default and of the continuance thereof, as hereinbefore provided, and
unless also the Holders of not less than 25% in aggregate principal amount of
the Securities of such Series then Outstanding shall have made written request
upon the Trustee to institute such action or proceedings in its own name as
trustee hereunder and shall have offered to the Trustee such reasonable
indemnity, as it may require against the costs, expenses and liabilities to be
incurred therein or thereby and the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity shall have failed to institute any
such action or proceeding and no direction inconsistent with such written
request shall have been given to the Trustee pursuant to Section 5.9; it being
understood and intended, and being expressly covenanted by the taker and Holder
of every Security and by a Holder of each Coupon appertaining thereto with every
other taker and Holder of a Security or Holder of any Coupon appertaining
thereto and the Trustee, that no one or more Holders of Securities of any Series
or one or more Holders of any Coupons appertaining thereto shall have any right
in any manner whatever, by virtue or by availing of any provision of this
Indenture to affect, disturb or prejudice the rights of any other such Holder of
Securities or any other Holders of such Coupons, or to obtain or seek to obtain
priority over or preference to any other such Holder or to enforce any right
under this Indenture, except in the manner herein provided and for the equal,
ratable and common benefit of all Holders of Securities of the applicable Series
and all the Holders of Coupons appertaining thereto. For the protection and
enforcement of the provisions of this Section, each and every Securityholder and
the Trustee shall be entitled to such relief as can be given either at law or in
equity.

         SECTION 5.7 Unconditional Right of Securityholders to Institute Certain
Suits. Notwithstanding any provision in this Indenture and any provision of any
Security or Coupon, the right of any Holder of any Security and the right of any
Holder of any Coupon appertaining thereto to receive payment of the principal of
and interest on such Security at the respective rates, in the respective amount
and in the currency or currency unit therein prescribed on or after the
respective due dates expressed in such Security, or to institute suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.

         SECTION 5.8 Powers and Remedies Cumulative; Delay or Omission Not
Waiver of Default. Except as provided in Section 5.6, no right or remedy herein
conferred upon or reserved to the Trustee or to the Securityholders is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.

         No delay or omission of the Trustee or of any Securityholder to
exercise any right or power accruing upon any Event of Default occurring and
continuing as aforesaid shall impair any such right or power or shall be
construed to be a waiver of any such Event of Default or an

                                       38
<PAGE>

acquiescence therein; and, subject to Section 5.6, every power and remedy given
by this Indenture or by law to the Trustee, to the Securityholders or to the
Holder of any Coupon appertaining thereto may be exercised from time to time,
and as often as shall be deemed expedient, by the Trustee, the Securityholders
or Holders of any Coupon.

         SECTION 5.9 Control by Securityholders. The Holders of a majority in
aggregate principal amount of the Securities of each Series affected (with each
Series treated as a separate class) at the time Outstanding shall have the right
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee with respect to the Securities of such Series by this Indenture;
provided that such direction shall not be otherwise than in accordance with law
and the provisions of this Indenture and provided further that (subject to the
provisions of Section 6.1) the Trustee shall have the right to decline to follow
any such direction if the Trustee, being advised by counsel, shall determine
that the action or proceeding so directed may not lawfully be taken or if the
Trustee in good faith by its board of directors, the executive committee, or a
trust committee of directors or Responsible Officers of the Trustee shall
determine that the action or proceedings so directed would involve the Trustee
in personal liability or if the Trustee in good faith shall so determine that
the actions or forebearances specified in or pursuant to such direction would be
unduly prejudicial to the interests of Holders of the Securities of all Series
or of the Holders of any Coupons appertaining thereto so affected not joining in
the giving of said direction, it being understood that (subject to Section 6.1)
the Trustee shall have no duty to ascertain whether or not such actions or
forbearances are unduly prejudicial to such Holders.

         Nothing in this Indenture shall impair the right of the Trustee in its
discretion to take any action deemed proper by the Trustee and which is not
inconsistent with such direction or directions by Securityholders.

         SECTION 5.10 Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Securities of any Series as provided in
Section 5.1, the Holders of a majority in aggregate principal amount of the
Securities of such Series at the time Outstanding may on behalf of the Holders
of all the Securities of such Series and Holders of all Coupons, if any,
appertaining thereto waive any past default hereunder or its consequences,
except a default in the payment of the principal of or interest on any of the
Securities of such Series. In the case of any such waiver, the Company, the
Trustee, the Holders of the Securities of such Series and the Holder of any
Coupon appertaining thereto shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.

         Upon any such waiver, such default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.

         SECTION 5.11 Trustee to Give Notice of Default, But May Withhold in
Certain Circumstances. The Trustee shall transmit to the Securityholders of any
Series notice in the manner and to the extent provided in Section 11.4, of all
defaults which have occurred with

                                       39
<PAGE>

respect to such Series, such notice to be transmitted within 90 days after the
occurrence thereof, unless such defaults shall have been cured before the giving
of such notice (the term "default" or "defaults" for the purposes of this
Section being hereby defined to mean any event or condition which is, or with
notice or lapse of time or both would become, an Event of Default); provided
that, except in the case of default in the payment of the principal of or
interest on any of the Securities of such Series or any default in the payment
of any sinking fund installment or analogous obligation in respect of any of the
Securities of such Series, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee, or a
trust committee of directors or trustees or Responsible Officers of the Trustee
in good faith determines that the withholding of such notice is in the interests
of the Securityholders of such Series.

         SECTION 5.12 Right of Court to Require Filing of Undertaking to Pay
Costs. All parties to this Indenture agree, and each Holder of any Security and
each Holder of any Coupon, by his acceptance thereof, shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken, suffered or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant in
such suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of this Section shall
not apply to any suit instituted by the Trustee, to any suit instituted by any
Securityholder or group of Securityholders of any Series holding in the
aggregate more than 10% in aggregate principal amount of the Securities of such
Series, or, in the case of any suit relating to or arising under clause (d) of
Section 5.1 (if the suit relates to Securities of more than one but less than
all Series), 10% in aggregate principal amount of Securities Outstanding
affected thereby, or in the case of any suit relating to or arising under clause
(d) (if the suit under clause (d) relates to all the Securities then
Outstanding), (e), (f) or (g) of Section 5.1, 10% in aggregate principal amount
of all Securities Outstanding, or to any suit instituted by any Securityholder
for the enforcement of the payment of the principal of or interest on any
Security on or after the due date expressed in such Security.

                                  ARTICLE SIX

                             CONCERNING THE TRUSTEE

         SECTION 6.1 Duties and Responsibilities of the Trustee; During Default;
Prior to Default. With respect to the Holders of any Series of Securities issued
hereunder, the Trustee, prior to the occurrence of an Event of Default with
respect to the Securities of a particular Series and after the curing or waiving
of all Events of Default which may have occurred with respect to such Series,
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture. In case an Event of Default with respect to the
Securities of a Series has occurred (which has not been cured or waived) of
which a Responsible Officer has actual knowledge, the Trustee shall exercise
such of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise, as a prudent Person would exercise
or use under the circumstances in the conduct of such Person's own affairs.

                                       40
<PAGE>

         No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own wilful misconduct, except that:

                  (a) prior to the occurrence of an Event of Default with
         respect to the Securities of any Series and after the curing or waiving
         of all such Events of Default with respect to such Series which may
         have occurred:

                           (i) the duties and obligations of the Trustee with
                  respect to the Securities of any Series shall be determined
                  solely by the express provisions of this Indenture, and the
                  Trustee shall not be liable except for the performance of such
                  duties and obligations as are specifically set forth in this
                  Indenture, and no implied covenants or obligations shall be
                  read into this Indenture against the Trustee; and

                           (ii) in the absence of bad faith on the part of the
                  Trustee, the Trustee may conclusively rely, as to the truth of
                  the statements and the correctness of the opinions expressed
                  therein, upon any statements, certificates or opinions
                  furnished to the Trustee and conforming to the requirements of
                  this Indenture; but in the case of any such statements,
                  certificates or opinions which by any provision hereof are
                  specifically required to be furnished to the Trustee, the
                  Trustee shall be under a duty to examine the same to determine
                  whether or not they conform to the requirements of this
                  Indenture;

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

                  (c) the Trustee shall not be liable with respect to any action
         taken or omitted to be taken by it in good faith in accordance with the
         direction of the Holders pursuant to Section 5.9 relating to the time,
         method and place of conducting any proceeding for any remedy available
         to the Trustee, or exercising any trust or power conferred upon the
         Trustee, under this Indenture.

         None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there shall be reasonable ground for believing that the
repayment of such funds or adequate indemnity against such liability is not
reasonably assured to it.

         Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the conditions of this Section
6.1.

         SECTION 6.2 Certain Rights of the Trustee. Subject to Section 6.1:

                  (a) the Trustee may conclusively rely and shall be protected
in acting or refraining from acting upon any resolution, Officers' Certificate
or any other certificate,

                                       41
<PAGE>

statement, instrument, opinion, report, notice, request, consent, order, bond,
debenture, note, coupon, security or other paper or document believed by it to
be genuine and to have been signed or presented by the proper party or parties;

                  (b) any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by an Officers' Certificate
(unless other evidence in respect thereof be herein specifically prescribed);
and any resolution of the Board of Directors may be evidenced to the Trustee by
a copy thereof certified by the secretary or any assistant secretary of the
Company;

                  (c) the Trustee may consult with counsel of its selection and
any advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;

                  (d) the Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
security or indemnity satisfactory to it against the costs, expenses and
liabilities which might be incurred therein or thereby;

                  (e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture;

                  (f) prior to the occurrence of any Event of Default hereunder
and after the curing or waiving of all Events of Default, the Trustee shall not
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, appraisal, bond, debenture, note, coupon,
security, or other paper or document unless requested in writing to do so by the
Holders of not less than a majority in aggregate principal amount of the
Securities of all Series affected then Outstanding; provided that, if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such expenses or liabilities as a condition to
proceeding; the reasonable expenses of every such investigation shall be paid by
the Company or, if paid by the Trustee or any predecessor Trustee, shall be
repaid by the Company upon demand;

                  (g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys not regularly in its employ and the Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent or
attorney appointed with due care by it hereunder;

                  (h) the Trustee shall not be deemed to have notice of any
Default or Event of Default (other than any Event of Default under Section
5.1(a) or 5.1(b)) unless a Responsible

                                       42
<PAGE>

Officer of the Trustee has actual knowledge thereof or unless written notice of
such Default or Event of Default is received by the Trustee at the Corporate
Trust Office of the Trustee;

                  (i) the rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and each agent, custodian and other Person employed
to act hereunder; and

                  (j) the Trustee may request that the Company deliver an
Officers' Certificate setting forth the names of individuals and/or titles of
officers authorized at such time to take specified actions pursuant to this
Indenture, which Officers' Certificate may be signed by and Person authorized to
sign an Officers' Certificate, including any Person specified as so authorized
in any such certificate previously delivered and not superseded.

         SECTION 6.3 Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds Thereof. The recitals contained herein and
in the Securities, except the Trustee's certificate of authentication, shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representation as to the validity or sufficiency of this Indenture or of the
Securities or the Coupons. The Trustee represents that it is duly authorized to
execute and deliver this Indenture and perform its obligations hereunder. The
Trustee shall not be accountable for the use or application by the Company of
any of the Securities or of the proceeds thereof.

         SECTION 6.4 Trustee and Agents May Hold Securities; Collections, etc.
The Trustee, any Paying Agent, Security registrar, or any agent of the Company
or the Trustee, in its individual or any other capacity, may become the owner or
pledgee of Securities or Coupons with the same rights it would have if it were
not the Trustee or such agent and, subject to Sections 6.8 and 6.13, if
operative, may otherwise deal with the Company and receive, collect, hold and
retain collections from the Company with the same rights it would have if it
were not the Trustee or such agent.

         SECTION 6.5 Moneys Held by Trustee. Subject to the provisions of
Section 10.4 hereof, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law. Neither the Trustee nor any agent of
the Company or the Trustee shall be under any liability for interest on any
moneys received by it hereunder.

         SECTION 6.6 Compensation and Indemnification of Trustee and Its Prior
Claim. The Company covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, such compensation as shall be agreed in
writing between the Company and the Trustee in Dollars (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust) and the Company covenants and agrees to pay or reimburse the
Trustee and each predecessor Trustee upon its request in Dollars for all
reasonable expenses, disbursements and advances incurred or made by or on behalf
of it in accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all agents and other Persons not regularly in its employ)

                                       43
<PAGE>

except any such expense, disbursement or advance as may arise from its
negligence or bad faith. The Company also covenants to indemnify the Trustee and
each predecessor Trustee for, and to hold it harmless against, any and all loss,
liability, damage, claim or expense, including taxes (other than taxes based on
the income of the Trustee), incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
this Indenture or the trusts hereunder and its duties hereunder, including the
costs and expenses of defending itself against or investigating any claim
(whether asserted by the Company, a Holder or any other Person) of liability in
the premises. The obligations of the Company under this Section to compensate
and indemnify the Trustee and each predecessor Trustee and to pay or reimburse
the Trustee and each predecessor Trustee for expenses, disbursements and
advances shall constitute additional indebtedness hereunder and shall survive
the satisfaction and discharge of this Indenture. Such additional indebtedness
shall be a senior claim to that of the Securities upon all property and funds
held or collected by the Trustee as such, except funds held in trust for the
benefit of the Holders of particular Securities or the Holders of particular
Coupons, and the Securities are hereby subordinated to such senior claim.

         When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 5.1(d), the expenses (including the
reasonable charges and expenses of its counsel) and the compensation for the
services are intended to constitute expenses of administration under any
applicable Federal or state bankruptcy, insolvency or other similar law.

         SECTION 6.7 Right of Trustee to Rely on Officers' Certificate, etc.
Subject to Sections 6.1 and 6.2, whenever in the administration of the trusts of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or suffering or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or bad faith on the
part of the Trustee, be deemed to be conclusively proved and established by an
Officers' Certificate complying with Section 11.5 delivered to the Trustee, and
such certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken, suffered or
omitted by it or under the provisions of this Indenture upon the faith thereof.

         SECTION 6.8 Disqualification of Trustee; Conflicting Interests. If the
Trustee for the Securities of any Series has or shall acquire any conflicting
interest, as defined in the Trust Indenture Act, it shall, within 90 days after
ascertaining that it has such conflicting interest, and if the default (as
defined in the Trust Indenture Act) to which such conflicting interest relates
has not been cured or waived or otherwise eliminated before the end of such
90-day period, the Trustee shall, either eliminate such conflicting interest or
resign in the manner and with the effect specified in the Trust Indenture Act
and this Indenture.

         SECTION 6.9 Persons Eligible for Appointment as Trustee. The Trustee
for each Series of Securities hereunder shall at all times be a corporation
organized and doing business under the laws of the United States of America or
of any State or the District of Columbia having a combined capital and surplus
of at least $50,000,000, and which is authorized under such laws to exercise
corporate trust powers and is subject to supervision or examination by Federal,
State or District of Columbia authority. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining

                                       44
<PAGE>

authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 6.10.

         SECTION 6.10 Resignation and Removal; Appointment of Successor Trustee.

                  (a) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign with respect to one or more or all Series of
Securities by giving written notice of resignation to the Company and by mailing
notice thereof to the Holders in the manner and to the extent provided in
Section 11.4. Upon receiving such notice of resignation, the Company shall
promptly appoint a successor trustee or trustees with respect to the applicable
Series by written instrument in duplicate, executed by authority of the Board of
Directors, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee or trustees. If no successor
trustee shall have been so appointed with respect to any Series and have
accepted appointment within 30 days after the mailing of such notice of
resignation, the resigning trustee may petition, at the expense of the Company,
any court of competent jurisdiction for the appointment of a successor trustee,
or any Securityholder who has been a bona fide Holder of a Security or
Securities of the applicable Series for at least six months may, subject to the
provisions of Section 5.12, on behalf of himself and all others similarly
situated, petition any such court for the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.

                  (b) In case at any time any of the following shall occur:

                           (i) the Trustee shall fail to comply with the
         provisions of Section 6.8 with respect to any Series of Securities
         after written request therefor by the Company or by any Securityholder
         who has been a bona fide Holder of a Security or Securities of such
         Series for at least six months unless the Trustee's duty to resign is
         stayed in accordance with the provisions of Section 310(b) of the Trust
         Indenture Act; or

                           (ii) the Trustee shall cease to be eligible in
         accordance with the provisions of Section 6.9 and shall fail to resign
         after written request therefor by the Company or by any Securityholder;
         or

                           (iii) the Trustee shall become incapable of acting
         with respect to any Series of the Securities, or shall be adjudged a
         bankrupt or insolvent, or a receiver or liquidator of the Trustee or of
         its property shall be appointed, or any public officer shall take
         charge or control of the Trustee or of its property or affairs for the
         purpose of rehabilitation, conservation or liquidation;

then, in any such case, the Company may remove the Trustee with respect to the
applicable Series of Securities and appoint a successor trustee for such Series
by written instrument, in duplicate, executed by order of the Board of Directors
of the Company, one copy of which instrument shall be delivered to the Trustee
so removed and one copy to the successor trustee, or, subject to the provisions
of Section 5.12, any Securityholder who has been a bona fide Holder of

                                       45
<PAGE>

a Security or Securities of such Series for at least six months may on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
trustee with respect to such Series. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, remove the Trustee and
appoint a successor trustee.

                  (c) The Holders of a majority in aggregate principal amount of
the Securities of each Series at the time Outstanding may at any time remove the
Trustee with respect to Securities of such Series and appoint a successor
trustee with respect to the Securities of such Series by delivering to the
Trustee so removed, to the successor trustee so appointed and to the Company the
evidence provided for in Section 7.1 of the action in that regard taken by the
Securityholders.

         If no successor Trustee shall have been appointed with respect to such
series within 30 days after the mailing of such notice of removal, the Trustee
being removed may petition, at the expense of the Company, any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Securities of such series.

                  (d) Any resignation or removal of the Trustee with respect to
any Series and any appointment of a successor trustee with respect to such
Series pursuant to any of the provisions of this Section 6.10 shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 6.11.

         SECTION 6.11 Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 6.10 shall execute and
deliver to the Company and to its predecessor Trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee with respect to all or any applicable Series shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all rights, powers, duties and obligations
with respect to such Series of its predecessor hereunder, with like effect as if
originally named as trustee for such Series hereunder; but, nevertheless, on the
written request of the Company or of the successor trustee, upon payment of its
charges then unpaid, the trustee ceasing to act shall, subject to Section 10.4,
pay over to the successor trustee all moneys at the time held by it hereunder
and shall execute and deliver an instrument transferring to such successor
trustee all such rights, powers, duties and obligations. Upon request of any
such successor trustee, the Company shall execute any and all instruments in
writing for more fully and certainly vesting in and confirming to such successor
trustee all such rights and powers. Any trustee ceasing to act shall,
nevertheless, retain a prior claim upon all property or funds held or collected
by such trustee to secure any amounts then due it pursuant to the provisions of
Section 6.6.

         If a successor trustee is appointed with respect to the Securities of
one or more (but not all) Series, the Company, the predecessor Trustee and each
successor trustee with respect to the Securities of any applicable Series shall
execute and deliver an indenture supplemental hereto which shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the predecessor Trustee with respect to the
Securities of any Series as to which the predecessor Trustee is not retiring
shall continue to be vested in the predecessor Trustee, and shall add to or
change any of the provisions of this Indenture as shall be

                                       46
<PAGE>

necessary to provide for or facilitate the administration of the trusts
hereunder by more than one trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such trustees co-trustees of the
same trust and that each such trustee shall be trustee of a trust or trusts
under separate indentures.

         No successor trustee with respect to any Series of Securities shall
accept appointment as provided in this Section 6.11 unless at the time of such
acceptance such successor trustee shall be qualified under the provisions of
Section 6.8 and eligible under the provisions of Section 6.9.

         Upon acceptance of appointment by any successor trustee as provided in
this Section 6.11, the Company shall give notice in the manner and to the extent
provided in Section 11.4 to the Holders of Securities of any Series for which
such successor trustee is acting as trustee at their last addresses as they
shall appear in the Security register. If the acceptance of appointment is
substantially contemporaneous with the resignation, then the notice called for
by the preceding sentence may be combined with the notice called for by Section
6.10. If the Company fails to mail such notice within ten days after acceptance
of appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Company.

         SECTION 6.12 Merger, Conversion, Consolidation or Succession to
Business of Trustee. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be qualified under the provisions of
Section 6.8 and eligible under the provisions of Section 6.9, 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.

         In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities of any Series shall have
been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor Trustee and deliver
such Securities so authenticated; and, in case at that time any of the
Securities of any Series shall not have been authenticated, any successor to the
Trustee may authenticate such Securities either in the name of any predecessor
Trustee hereunder or in the name of the successor Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the
Securities of such Series or in this Indenture provided that the certificate of
the Trustee shall have; provided, that the right to adopt the certificate of
authentication of any predecessor Trustee or to authenticate Securities of any
Series in the name of any predecessor Trustee shall apply only to its successor
or successors by merger, conversion or consolidation.

         SECTION 6.13 Preferential Collection of Claims Against the Company. If
and when the Trustee shall be or become a creditor of the Company (or any other
obligor upon the Securities), the Trustee shall be subject to the provisions of
the Trust Indenture Act regarding the collection of claims against the Company
(or any such other obligor).

                                       47
<PAGE>

                                 ARTICLE SEVEN

                         CONCERNING THE SECURITYHOLDERS

         SECTION 7.1 Evidence of Action Taken by Securityholders.

                  (a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by a specified percentage in principal amount of the Securityholders of any or
all Series may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such specified percentage of
Securityholders in Person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee. Proof of execution
of any instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Sections 6.1 and 6.2)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Article.

                  (b) The ownership of Registered Securities shall be proved by
the Security register.

                  (c) The amount of Unregistered Securities held by any Person
executing any instrument or writing as a Securityholder, the numbers of such
Unregistered Securities, and the date of his holding the same may be proved by
the production of such Securities or by a certificate executed by any trust
company, bank, broker or member of a national securities exchange (wherever
situated), as depositary, if such certificate is in form satisfactory to the
Trustee, showing that at the date therein mentioned such Person had on deposit
with such depositary, or exhibited to it, the Unregistered Securities therein
described; or such facts may be proved by the certificate or affidavit of the
Person executing such instrument or writing as a Securityholder, if such
certificate or affidavit is in form satisfactory to the Trustee. The Trustee and
the Company may assume that such ownership of any Unregistered Security
continues until (i) another certificate or affidavit bearing a later date issued
in respect of the same Unregistered Security is produced, or (ii) such
Unregistered Security is produced by some other Person, or (iii) such
Unregistered Security is surrendered in exchange for a Registered Security, or
(iv) such Unregistered Security has been cancelled in accordance with Section
2.10.

         SECTION 7.2 Proof of Execution of Instruments. Subject to Sections 6.1
and 6.2, the execution of any instrument by a Securityholder or his agent or
proxy may be proved in accordance with such reasonable rules and regulations as
may be prescribed by the Trustee or in such manner as shall be satisfactory to
the Trustee.

         SECTION 7.3 Holders to Be Treated as Owners. The Company, the Trustee
and any agent of the Company or the Trustee may deem and treat the Person in
whose name any Security shall be registered upon the Security register for such
Series as the absolute owner of such Security (whether or not such Security
shall be overdue and notwithstanding any notation of ownership or other writing
thereon) for the purpose of receiving payment of or on account of the principal
of and interest on such Security and for all other purposes; and neither the
Company nor the Trustee nor any agent of the Company or the Trustee shall be
affected by any notice to

                                       48
<PAGE>

the contrary. All such payments so made to any such Person, or upon his order,
shall be valid, and, to the extent of the sum or sums so paid, effectual to
satisfy and discharge the liability for moneys payable upon any such Security.

         SECTION 7.4 Securities Owned by Company Deemed Not Outstanding. In
determining whether the Holders of the requisite aggregate principal amount of
Outstanding Securities of any or all Series have concurred in any direction,
consent or waiver under this Indenture or whether a quorum is present at a
meeting of Holders of Securities, Securities which are owned by the Company or
any other obligor on the Securities with respect to which such determination is
being made or by any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company or any other obligor
on the Securities with respect to which such determination is being made shall
be disregarded and deemed not to be Outstanding for the purpose of any such
determination, except that for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, consent or waiver, and for
purposes of determining the presence of a quorum, only Securities which a
Responsible Officer of the Trustee actually knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company or any other obligor on the Securities.
In case of a dispute as to such right, the advice of counsel shall be full
protection in respect of any decision made by the Trustee in accordance with
such advice. Upon request of the Trustee, the Company shall furnish to the
Trustee promptly an Officers' Certificate listing and identifying all
Securities, if any, known by the Company to be owned or held by or for the
account of any of the above-described Persons; and, subject to Sections 6.1 and
6.2, the Trustee shall be entitled to accept such Officers' Certificate as
conclusive evidence of the facts therein set forth and of the fact that all
Securities not listed therein are Outstanding for the purpose of any such
determination.

         SECTION 7.5 Right of Revocation of Action Taken. At any time prior to
(but not after) the evidencing to the Trustee, as provided in Section 7.1, of
the taking of any action by the Holders of the percentage in aggregate principal
amount of the Securities of any or all Series, as the case may be, specified in
this Indenture in connection with such action, any Holder of a Security the
serial number of which is shown by the evidence to be included among the serial
numbers of the Securities the Holders of which have consented to such action
may, by filing written notice at the corporate trust office and upon proof of
holding as provided in this Article, revoke such action so far as concerns such
Security. Except as aforesaid any such action taken by the Holder of any
Security shall be conclusive and binding upon such Holder and upon all future
Holders and owners of such Security and of any Securities issued in exchange or
substitution therefor, irrespective of whether or not any notation in regard
thereto is made upon any such Security. Any action taken by the Holders of the
percentage in aggregate principal amount of the Securities of any or all Series,
as the case may be, specified in this Indenture in connection with such action
shall be conclusively binding upon the Company, the Trustee and the Holders of
all the Securities affected by such action.

         SECTION 7.6 Record Date for Determination of Holders Entitled to Vote.
The Company may, in the circumstances permitted by the Trust Indenture Act, set
a record date for

                                       49
<PAGE>

the purpose of determining the Securityholders entitled to give or take any
request, demand, authorization, direction, notice, consent, waiver or other
action, or to vote on any action, authorized or permitted to be given or taken
by Securityholders. If not set by the Company prior to the first solicitation of
a Securityholder made by any Person in respect of any such action, or, in the
case of any such vote, prior to such vote, the record date for any such action
or vote shall be the 30th day (or, if later, the date of the most recent list of
Holders required to be provided pursuant to Section 4.1) prior to such first
solicitation or vote, as the case may be. With regard to any record date, only
the Holders on such date (or their duly appointed proxies) shall be entitled to
give or take, or vote on, the relevant action.

                                 ARTICLE EIGHT

                             SUPPLEMENTAL INDENTURES

         SECTION 8.1 Supplemental Indentures Without Consent of Securityholders.
The Company, when authorized by a resolution of its Board of Directors, and the
Trustee for the Securities of any and all Series may from time to time and at
any time enter into an indenture or indentures supplemental hereto (which shall
conform to the provisions of the Trust Indenture Act of 1939 as in force at the
date of the execution thereof), in form satisfactory to such Trustee, for one or
more of the following purposes:

                  (a) to convey, transfer, assign, mortgage or pledge to the
         Trustee as security for the Securities of one or more Series any
         property or assets;

                  (b) to evidence the succession of another corporation to the
         Company, or successive successions, and the assumption by the successor
         corporation of the covenants, agreements and obligations of the Company
         pursuant to Article Nine;

                  (c) to add to the covenants of the Company such further
         covenants, restrictions, conditions or provisions as its Board of
         Directors and the Trustee shall consider to be for the protection of
         the Holders of Securities of any or all Series and, if such additional
         covenants are to be for the benefit of less than all the Series of
         Securities stating that such covenants are being added solely for the
         benefit of such Series, and to make the occurrence, or the occurrence
         and continuance, of a default in any such additional covenants,
         restrictions, conditions or provisions an Event of Default permitting
         the enforcement of all or any of the several remedies provided in this
         Indenture as herein set forth (and if such additional Events of Default
         are to be for the benefit of less than all Series of the Securities
         stating that such Events of Default are being added solely for the
         benefit of such Series); provided, that in respect of any such
         additional covenant, restriction, condition or provision such
         supplemental indenture may provide for a particular period of grace
         after default (which period may be shorter or longer than that allowed
         in the case of other defaults) or may provide for an immediate
         enforcement upon such an Event of Default or may limit the remedies
         available to the Trustee upon such an Event of Default or may limit the
         right of the Holders of a majority in aggregate principal amount of the
         Securities of such Series to waive such an Event of Default;

                                       50
<PAGE>

                  (d) to cure any ambiguity or to correct or supplement any
         provision contained herein or in any supplemental indenture which may
         be defective or inconsistent with any other provision contained herein
         or in any supplemental indenture; or to make such other provisions in
         regard to matters or questions arising under this Indenture or under
         any supplemental indenture as the Board of Directors may deem necessary
         or desirable and which shall not materially and adversely affect the
         interests of the Holders of the Securities or the Holders of any
         Coupons;

                  (e) to establish the form or terms of Securities of any Series
         as permitted by Sections 2.1 and 2.3; or

                  (f) to evidence and provide for the acceptance of appointment
         hereunder by a successor Trustee with respect to the Securities of one
         or more Series and to add to or change any of the provisions of this
         Indenture as shall be necessary to provide for or facilitate the
         administration of the trusts hereunder by more than the one Trustee,
         pursuant to the requirements of Section 6.11.

         The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property thereunder,
but the Trustee shall not be obligated to enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.

         Any supplemental indenture authorized by the provisions of this Section
may be executed without the consent of the Holders of any of the Securities at
the time Outstanding, notwithstanding any of the provisions of Section 8.2.

         SECTION 8.2 Supplemental Indentures With Consent of Securityholders.
With the consent (evidenced as provided in Article Seven) of the Holders of not
less than a majority in aggregate principal amount of the Securities at the time
Outstanding of each Series affected by such supplemental indenture (treated as
one class), the Company, when authorized by a resolution of its Board of
Directors, and the Trustee for such Series of Securities may, from time to time
and at any time, enter into an indenture or indentures supplemental hereto
(which shall conform to the provisions of the Trust Indenture Act of 1939 as in
force at the date of execution thereof) for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this
Indenture or of any supplemental indenture or of modifying in any manner the
rights of the Holders of the Securities of each such Series; provided, that no
such supplemental indenture shall (a) extend the final maturity of any Security,
or reduce the principal amount thereof or any premium thereon, or reduce the
rate or extend the time of payment of interest thereon, or reduce any amount
payable on redemption thereof, or impair or affect the right of any
Securityholder to institute suit for payment thereof or, if the Securities
provide therefor, any right of repayment at the option of the Securityholder
without the consent of the Holder of each Security so affected, (b) make any
change in the terms of the subordination of the Securities in a manner adverse
to the Holders of any Series of outstanding Securities without the consent of
the Holders of each Security so affected; or (c) reduce the aforesaid percentage
of

                                       51
<PAGE>

Securities of any Series, the consent of the Holders of which is required for
any such supplemental indenture, without the consent of the Holders of each
Security so affected.

         Upon the request of the Company, accompanied by a copy of a resolution
of the Board of Directors certified by the secretary or an assistant secretary
of the Company authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee for such Series of Securities of evidence of
the consent of Securityholders as aforesaid and other documents, if any,
required by Section 7.1, the Trustee for such Series of Securities shall join
with the Company in the execution of such supplemental indenture unless such
supplemental indenture affects such Trustee's own rights, duties or immunities
under this Indenture or otherwise, in which case such Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.

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

         Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Company
shall give notice in the manner and to the extent provided in Section 11.4 to
the Holders of Securities of each Series affected thereby at their addresses as
they shall appear on the Securities register of the Company, setting forth in
general terms the substance of such supplemental indenture. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.

         For the purposes of this Section 8.2 only, if the Securities of any
Series are issuable upon the exercise of warrants, each holder of an unexercised
and unexpired warrant with respect to such series shall be deemed to be a Holder
of Outstanding Securities of such Series in the amount issuable upon the
exercise of such warrant. For such purposes, the ownership of any such warrant
shall be determined by the Company in a manner consistent with customary
commercial practices. The Trustee for such series shall be entitled to rely on
an Officers' Certificate as to the principal amount of Securities of such Series
in respect of which consents shall have been executed by holders of such
warrants.

         SECTION 8.3 Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith and the
respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Company and the Holders of Securities
of each Series and Holders of Coupons affected thereby shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.

         SECTION 8.4 Documents to Be Given to Trustee. The Trustee, subject to
the provisions of Sections 6.1 and 6.2, shall receive an Officers' Certificate
and an Opinion of Counsel as conclusive evidence that any supplemental indenture
executed pursuant to this Article Eight complies with the applicable provisions
of this Indenture.

                                       52
<PAGE>

         SECTION 8.5 Notation on Securities in Respect of Supplemental
Indentures. Securities of any Series (including any Coupons appertaining
thereto) authenticated and delivered after the execution of any supplemental
indenture pursuant to the provisions of this Article may bear, upon the
direction of the Company, a notation in form satisfactory to the Trustee for the
Securities of such Series as to any matter provided for by such supplemental
indenture or as to any action taken at any such meeting. If the Company or the
Trustee shall so determine, new Securities of any Series and any Coupons
appertaining thereto so modified as to conform, in the opinion of the Trustee
and the Board of Directors, to any modification of this Indenture contained in
any such supplemental indenture may be prepared by the Company, authenticated by
the Trustee and delivered in exchange for the Securities of such Series then
Outstanding and any Coupons appertaining thereto then Outstanding.

                                  ARTICLE NINE

                    CONSOLIDATION, MERGER, SALE OR CONVEYANCE

         SECTION 9.1 Company May Consolidate, etc., on Certain Terms. Nothing
contained in this Indenture or in any of the Securities shall prevent any
consolidation or merger of the Company with or into any other corporation or
corporations (whether or not affiliated with the Company), or successive
consolidations or mergers in which the Company or its successor or successors
shall be a party or parties, or shall prevent any sale, conveyance or lease of
all or substantially all the property of the Company to any other corporation
(whether or not affiliated with the Company) authorized to acquire and operate
the same; provided, however, and the Company hereby covenants and agrees, that
upon any such consolidation, merger, sale, conveyance or lease, other than a
merger in which the Company is the continuing corporation, the due and punctual
payment of the principal of and interest on all of the Securities, according to
their tenor, and the due and punctual performance and observance of all of the
covenants and conditions of this Indenture to be performed by the Company, shall
be expressly assumed, by supplemental indenture satisfactory in form to the
Trustee, executed and delivered to the Trustee by the corporation (if other than
the Company) formed by such consolidation, or into which the Company shall have
been merged, or by the corporation which shall have acquired or leased such
property.

         SECTION 9.2 Intentionally Omitted.

                                       53
<PAGE>

         SECTION 9.3 Successor Corporation Substituted. In case of any such
consolidation, merger, sale or conveyance, and following such an assumption by
the successor corporation, such successor corporation shall succeed to and be
substituted for the Company, with the same effect as if it had been named
herein. Such successor corporation may cause to be signed, and may issue either
in its own name or in the name of the Company prior to such succession any or
all of the Securities issuable hereunder which theretofore shall not have been
signed by the Company and delivered to the Trustee; and, upon the order of such
successor corporation instead of the Company and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Securities and Coupons, if any, appertaining
thereto, which previously shall have been signed and delivered by the officers
of the Company to the Trustee for authentication, and any Securities which such
successor corporation thereafter shall cause to be signed and delivered to the
Trustee for that purpose. All of the Securities and Coupons, if any,
appertaining thereto, so issued shall in all respects have the same legal rank
and benefit under this Indenture as the Securities and Coupons, if any,
appertaining thereto, theretofore or thereafter issued in accordance with the
terms of this Indenture as though all of such Securities and Coupons, if any,
appertaining thereto, had been issued at the date of the execution hereof. In
case of any such consolidation, merger, sale, lease or conveyance such changes
in phraseology and form (but not in substance) may be made in the Securities and
Coupons, if any, appertaining thereto, thereafter to be issued as may be
appropriate.

         In the event of any such sale or conveyance (other than a conveyance by
way of lease) the Company or any successor corporation which shall theretofore
have become such in the manner described in this Article shall be discharged
from all obligations and covenants under this Indenture and the Securities and
may be liquidated and dissolved.

         SECTION 9.4 Opinion of Counsel to Trustee. The Trustee, subject to the
provisions of Sections 6.1 and 6.2, shall receive an Opinion of Counsel,
prepared in accordance with Section 11.5, as conclusive evidence that any such
consolidation, merger, sale, lease or conveyance, and any such assumption, and
any such liquidation or dissolution, complies with the applicable provisions of
this Indenture.

                                  ARTICLE TEN

            SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

         SECTION 10.1 Satisfaction and Discharge of Indenture.

                  (a) If at any time (A) the Company shall have paid or caused
to be paid the principal of and interest on all the Securities of any Series and
Coupons, if any, appertaining thereto Outstanding hereunder (other than
Securities and Coupons which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 2.9) as and when the

                                       54
<PAGE>

same shall have become due and payable, or (B) the Company shall have delivered
to the Trustee for cancellation all Securities of any Series and Coupons
theretofore authenticated (other than any Securities of such Series and Coupons
which have been destroyed, lost or stolen and which shall have been replaced or
paid as provided in Section 2.9) or (c)(i) all the Securities of such Series and
Coupons not theretofore delivered to the Trustee for cancellation shall have
become due and payable, or are by their terms to become due and payable within
one year or are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption, and (ii) the
Company shall have irrevocably deposited or caused to be deposited with the
Trustee as trust funds the entire amount in the currency or currency unit
required (other than moneys repaid by the Trustee or any Paying Agent to the
Company in accordance with Section 10.4) or Government Obligations maturing as
to principal and interest in such amounts and at such times as will ensure the
availability of cash sufficient, in the opinion of a firm of independent
certified public accountants, to pay at maturity or upon redemption all
Securities of such Series and Coupons (other than any Securities of such Series
and Coupons which shall have been destroyed, lost or stolen and which shall have
been replaced or paid as provided in Section 2.9) not theretofore delivered to
the Trustee for cancellation, including principal and interest due or to become
due to such date of maturity as the case may be, and if, in any such case, the
Company shall also pay or cause to be paid all other sums payable hereunder by
the Company with respect to Securities of such Series and Coupons, then this
Indenture shall cease to be of further effect with respect to Securities of such
Series and Coupons (except as to (i) rights of registration of transfer and
exchange, and the Company's right of optional redemption, (ii) substitution of
mutilated, defaced, destroyed, lost or stolen Securities and Coupons, (iii)
rights of Holders to receive payments of principal thereof and interest thereon
upon the original stated due dates therefor (but not upon acceleration) and
remaining rights of the Holders to receive mandatory sinking fund payments, if
any, (iv) the rights, obligations and immunities of the Trustee hereunder and
(v) the rights of the Securityholders of such Series as beneficiaries hereof
with respect to the property so deposited with the Trustee payable to all or any
of them), and, subject to Section 10.5, the Trustee, on demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Company, shall execute proper instruments acknowledging
such satisfaction of and discharging this Indenture with respect to such Series;
provided, that the rights of Holders of the Securities and Holders of Coupons to
receive amounts in respect of principal of and interest on the Securities and
Coupons held by them shall not be delayed longer than required by
then-applicable mandatory rules or policies of any securities exchange upon
which the Securities are listed. The Company agrees to reimburse the Trustee for
any costs or expenses thereafter reasonably and properly incurred and to
compensate the Trustee for any services thereafter reasonably and properly
rendered by the Trustee in connection with this Indenture, the Securities of
such Series and Coupons.

                  (b) In addition to the provisions of Section 10.1(a), the
Company may terminate its obligations under the Securities of any Series and
this Indenture with respect to such Series, except those obligations referred to
in the penultimate paragraph of this Section 10.1, if the Company has
irrevocably deposited or caused to be deposited with the Trustee at its
Corporate Trust Office or such other office as the Trustee may designate, under
the terms of an irrevocable trust agreement in form and substance satisfactory
to the Trustee, as trust funds in trust solely for the benefit of the
Securityholders of such Series for that purpose, (i) cash in the currency or
currency unit required or, (ii) Government Obligations maturing as to principal
and

                                       55
<PAGE>

interest in such amounts and at such times as are sufficient, in the opinion of
a firm of independent certified public accountants, without consideration of any
reinvestment of such principal or interest, to pay the principal of and interest
on the outstanding Securities of such Series and Coupons to maturity or
redemption, as the case may be, provided that the Trustee shall have been
irrevocably instructed to apply such money or the proceeds of such Government
Obligations to the payment of said principal of and interest on the Outstanding
Securities and Coupons of such Series.

         Such irrevocable trust agreement shall include, among other things,
provision for (1) payment of the principal of and interest on the Securities of
such Series and Coupons when due (by redemption, sinking fund payments or
otherwise), (2) the payment of the expenses of the Trustee incurred or to be
incurred in connection with carrying out such trust provisions, (3) rights of
registration, transfer, substitution and exchange of Securities of such Series
and Coupons in accordance with the terms stated in this Indenture and (4)
continuation of the rights and obligations and immunities of the Trustee as
against the Securityholders of such Series as stated in this Indenture.

         Notwithstanding the first paragraph of this Section 10.1(b), the
Company's obligations in Sections 2.8, 2.9, 3.1, 3.2, 3.8, 5.1, 6.6, 6.10, 10.4
and 10.5 shall survive until the Securities of such Series and Coupons, if any,
are no longer Outstanding; provided, however, that the Company's obligations in
Section 5.1 shall survive only with respect to Events of Default as defined in
Sections 5.1(a), 5.1(b) and 5.1(c). Thereafter, the Company's obligations in
Sections 6.6, 10.4 and 10.5 shall survive.

         After any such irrevocable deposit, accompanied by an Officers'
Certificate which shall state that the provisions of the first two paragraphs of
this Section 10.1(b) have been complied with, and upon delivery by the Company
to the Trustee of (i) an Opinion of Counsel to the effect that either (a) as a
result of such deposit and the related exercise of the Company's option under
this Section 10.1(b) registration will not be required under the Investment
Company Act of 1940, as amended, by the Company, the trust funds representing
such deposit or the Trustee or (b) all necessary registrations under such Act
have been effected and (ii) an Opinion of Counsel to the effect that
Securityholders of such Series will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit and discharge and will
be subject to Federal income tax on the same amount and in the same manner and
at the same time as would have been the case if such deposit and discharge had
not occurred, then the Company shall be discharged of its obligations under the
Securities of such Series and this Indenture with respect to such Series except
for those surviving obligations specified above, and the Trustee upon request
shall acknowledge in writing such discharge. Prior to the delivery of such
acknowledgment, the Trustee may require the Company to deliver to it an
Officer's Certificate and Opinion of Counsel, each stating that all conditions
precedent provided for herein relating to the deposit and discharge contemplated
by this provision have been complied with, and the Trustee may also require that
the Opinion of Counsel referred to in clause (i) of this paragraph shall also
state that such deposit does not violate applicable law.

         SECTION 10.2 Application by Trustee of Funds Deposited for Payment of
Securities. Subject to Section 10.4, all moneys deposited with the Trustee
pursuant to Section 10.1 shall be held in trust and applied by it to the
payment, either directly or through any Paying Agent

                                       56
<PAGE>

(including the Company acting as its own Paying Agent), to the Holders of the
particular Securities of such Series and any Coupons appertaining thereto for
the payment or redemption of which such moneys have been deposited with the
Trustee, of all sums due and to become due thereon for principal and interest;
but such money need not be segregated from other funds except to the extent
required by law.

         SECTION 10.3 Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to Securities
of any Series or Coupons, all moneys then held by any Paying Agent under the
provisions of this Indenture with respect to such Series of Securities or
Coupons shall, upon demand of the Company, be repaid to it or paid to the
Trustee and thereupon such Paying Agent shall be released from all further
liability with respect to such moneys.

         SECTION 10.4 Return of Unclaimed Moneys Held by Trustee and Paying
Agent. Any moneys deposited with or paid to the Trustee or any Paying Agent for
the payment of the principal of or interest on any Security of any Series or
Coupons and not applied but remaining unclaimed for two years after the date
upon which such principal or interest shall have become due and payable, shall,
upon the written request of the Company and unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be repaid to the Company by the Trustee for such Series or such Paying
Agent, and the Holder of the Security of such Series or Holders of Coupons
appertaining thereto shall, unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property laws, thereafter look only
to the Company for any payment which such Holder may be entitled to collect, and
all liability of the Trustee or any Paying Agent with respect to such moneys
shall thereupon cease.

         SECTION 10.5 Reinstatement of Company's Obligations. If the Trustee is
unable to apply any funds or Government Obligations in accordance with Section
10.1 by reason of any legal proceeding or by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application or by reason of the Trustee's inability to convert
any such funds or Government Obligations into the currency or currency unit
required to be paid with respect to the Securities of such Series, the Company's
obligations under this Indenture and the Securities of any Series for which such
application is prohibited shall be revived and reinstated as if no deposit had
occurred pursuant to Section 10.1 until such time as the Trustee is permitted to
apply all such funds or Government Obligations in accordance with Section 10.1
or is able to convert all such funds or Government Obligations; provided,
however, that if the Company has made any payment of interest on or principal of
any of such Securities or Coupons because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the
Securityholders of such Securities to receive such payment from the funds or
Government Obligations held by the Trustee.

                                 ARTICLE ELEVEN

                            MISCELLANEOUS PROVISIONS

         SECTION 11.1 Incorporators, Stockholders, Officers and Directors of
Company Exempt from Individual Liability. No recourse under or upon any
obligation, covenant or

                                       57
<PAGE>

agreement contained in this Indenture, in any Security or Coupon appertaining
thereto, or because of any indebtedness evidenced thereby, shall be had against
any incorporator, as such or against any past, present or future stockholder,
officer or director, as such, of the Company or of any successor, either
directly or through the Company or any successor, under any rule of law, statute
or constitutional provision or by the enforcement of any assessment or by any
legal or equitable proceeding or otherwise, all such liability being expressly
waived and released by the acceptance of the Securities and Coupons, if any, by
the Holders thereof and as part of the consideration for the issue of the
Securities.

         SECTION 11.2 Provisions of Indenture for the Sole Benefit of Parties
and Securityholders. Nothing in this Indenture or in the Securities or Coupons,
expressed or implied, shall give or be construed to give to any Person, firm or
corporation, other than the parties hereto, any Paying Agent and their
successors hereunder and the Holders of the Securities and Coupons, if any, any
legal or equitable right, remedy or claim under this Indenture or under any
covenant or provision herein contained, all such covenants and provisions being
for the sole benefit of the parties hereto and their successors and of the
Holders of the Securities and Coupons.

         SECTION 11.3 Successors and Assigns of Company Bound by Indenture. All
the covenants, stipulations, promises and agreements in this Indenture contained
by or on behalf of the Company shall bind its successors and assigns, whether so
expressed or not.

         SECTION 11.4 Notices and Demands on Company, Trustee and
Securityholders. Any notice or demand which by any provision of this Indenture
is required or permitted to be given or served by the Trustee, by the Holders of
Securities, or by the Holders of Coupons to or on the Company may be given or
served by being deposited postage prepaid, first-class mail (except as otherwise
specifically provided herein) addressed (until another address of the Company is
filed by the Company with the Trustee) to Kellogg Company, One Kellogg Square,
Battle Creek, Michigan 49016 Attention: Secretary. Any notice, direction,
request or demand by the Company or any Securityholder to or upon the Trustee
shall be deemed to have been sufficiently given or made, for all purposes, if
given or made at the Corporate Trust Office.

         Where this Indenture provides for notice to Holders of any event, (1)
if any of the Securities affected by such event are Registered Securities, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed by first-class mail, postage prepaid to such Registered
Holders as their names and addresses appear in the Security register within the
time prescribed and (2) if any of the Securities affected by such event are
Unregistered Securities or Coupon Securities, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if published once in a
newspaper of general circulation in New York, New York and London, England
within the time prescribed. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed to any particular Holder shall affect the
sufficiency of such notice with

                                       58
<PAGE>

respect to other Holders, and any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given.

         In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Company and
Securityholders when such notice is required to be given pursuant to any
provision of this Indenture, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice.

         SECTION 11.5 Officers' Certificates and Opinions of Counsel; Statements
to Be Contained Therein. Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent have been complied with,
except that in the case of any such application or demand as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or demand, no additional
certificate or opinion need be furnished.

         Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include (a) a statement that the Person
making such certificate or opinion has read such covenant or condition, (b) a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based, (c) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with and (d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.

         Any certificate, statement or opinion of an officer of the Company may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of or representations by counsel, unless such officer knows that the certificate
or opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous. Any
certificate, statement or opinion of counsel may be based, insofar as it relates
to factual matters, information with respect to which is in the possession of
the Company, upon the certificate, statement or opinion of or representations by
an officer or officers of the Company, unless such counsel knows that the
certificate, statement or opinion or representations with respect to the matters
upon which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous.

         Any certificate, statement or opinion of an officer of the Company or
of counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Company, unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.

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         Any certificate or opinion of any independent firm of public
accountants filed with the Trustee shall contain a statement that such firm is
independent.

         SECTION 11.6 Payments Due on Saturdays, Sundays and Holidays. If the
date of maturity of interest on or principal of the Securities of any Series or
Coupons appertaining thereto or the date fixed for redemption or repayment of
any such Security or Coupon shall not be a Business Day, then payment of
interest, premium, if any, or principal need not be made on such date, but may
be made on the next succeeding Business Day with the same force and effect as if
made on the date of maturity or the date fixed for redemption, and no interest
shall accrue for the period after such date.

         SECTION 11.7 Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939. If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with another provision included in this Indenture
which is required to be included herein by any of Sections 310 to 317,
inclusive, of the Trust Indenture Act of 1939, such required provision shall
control.

         SECTION 11.8 New York Law to Govern. This Indenture and each Security
shall be deemed to be a contract under the laws of the State of New York, and
for all purposes shall be construed in accordance with the laws of such State.

         SECTION 11.9 Counterparts. This Indenture may be executed in any number
of counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.

         SECTION 11.10 Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.

         SECTION 11.11 Determination of Principal Amount. In determining whether
the Holders of the requisite principal amount of outstanding Securities of any
Series have given any request, demand, authorization, direction, notice, consent
or waiver hereunder, whether a quorum is present at a meeting of Holders of
Securities or whether sufficient funds are available for redemption or for any
other purpose, the principal amount of an Original Issue Discount Security that
shall be deemed to be outstanding for such purposes shall be the amount of the
principal thereof that would be due and payable as of the date of such
determination upon a declaration of acceleration of the maturity thereof
pursuant to Section 5.1 and the principal amount of any Securities denominated
in a Foreign Currency or Euro that shall be deemed to be outstanding for such
purposes shall be determined by converting the Foreign Currency or the Specified
Amount of each Component Currency into Dollars at the Market Exchange Rate as of
the date of such determination.

                                 ARTICLE TWELVE

                   REDEMPTION OF SECURITIES AND SINKING FUNDS

         SECTION 12.1 Applicability of Article. The provisions of this Article
shall be applicable to the Securities of any Series which are redeemable before
their maturity or to any

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sinking fund for the retirement of Securities of a Series except as otherwise
specified as contemplated by Section 2.3 for Securities of such Series.

         SECTION 12.2 Notice of Redemption; Partial Redemptions. Notice of
redemption to the Holders of Securities of any Series to be redeemed as a whole
or in part at the option of the Company shall be given by giving notice of such
redemption as provided in Section 11.4, at least 30 days and not more than 60
days prior to the date fixed for redemption to such Holders of Securities of
such Series. Failure to give notice by mail, or any defect in the notice to the
Holder of any Security of a Series designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of any
other Security of such Series.

         The notice of redemption to each such Holder shall identify the
Securities to be redeemed (including "CUSIP" or "ISIN" numbers), specify the
date fixed for redemption, the redemption price, the Place or Places of Payment,
that payment will be made upon presentation and surrender of such Securities,
and that, unless otherwise specified in such notice, Coupon Securities, if any,
surrendered for payment must be accompanied by all Coupons maturing subsequent
to the redemption date, failing which the amount of any such missing Coupon or
Coupons will be deducted from the sum due for payment, that such redemption is
pursuant to the mandatory or optional sinking fund, or both, if such be the
case, that interest accrued to the date fixed for redemption will be paid as
specified in such notice and that on and after said date interest thereon or on
the portions thereof to be redeemed will cease to accrue and that, if less than
all of the Outstanding Securities of a Series are to be redeemed, the
identification and principal amount of the Securities to be redeemed. If less
than all of the Securities of any Series and to be redeemed, the notice of
redemption shall specify the numbers of the Securities of such Series to be
redeemed, and, if only Unregistered Securities of any Series are to be redeemed,
and if such Unregistered Securities may be exchanged for Registered Securities,
the last date on which exchanges of Unregistered Securities for Registered
Securities not subject to redemption may be made. In case any Security of a
Series is to be redeemed in part, the notice of redemption shall state the
portion of the principal amount thereof to be redeemed and shall state that on
and after the date fixed for redemption, upon surrender of such Security and any
Coupons appertaining thereto, a new Security or Securities of such Series in
principal amount equal to the unredeemed portion thereof with appropriate
Coupons will be issued.

         The notice of redemption of Securities of any Series to be redeemed at
the option of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company. The
Company shall give the Trustee at least 45 days prior written notice of any
redemption hereunder.

         Not later than 9:00 a.m., Chicago time, on the redemption date
specified in the notice of redemption given as provided in this Section, the
Company will have on deposit with the Trustee or with one or more paying agents
(or, if the Company is acting as its own paying agent, set aside, segregate and
hold in trust as provided in Section 3.4) an amount of money in the currency or
currency unit in which the Securities of such Series and any Coupons
appertaining thereto are payable (except as otherwise specified pursuant to
Section 2.3 and except as provided in Sections 2.12(b), (e) and (f) of this
Indenture) sufficient to redeem on the redemption date all the Securities of
such Series so called for redemption at the appropriate redemption price,
together with accrued interest to the date fixed for redemption. If less than
all the Outstanding Securities

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<PAGE>

of a Series are to be redeemed, the Company will deliver to the Trustee at least
60 days prior to the date fixed for redemption an Officers' Certificate stating
the aggregate principal amount of Securities to be redeemed.

         If less than all the Securities of a Series are to be redeemed, the
Trustee shall select, in such manner as it shall deem appropriate and fair,
Securities of such Series to be redeemed in whole or in part. Securities may be
redeemed in part in multiples equal to the minimum authorized denomination for
Securities of such Series or any multiple thereof. The Trustee shall promptly
notify the Company in writing of the Securities of such Series selected for
redemption and, in the case of any Securities of such Series selected for
partial redemption, the principal amount thereof to be redeemed. For all
purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities of any Series shall relate,
in the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security which has been or is to be
redeemed.

         SECTION 12.3 Payment of Securities Called for Redemption. If notice of
redemption has been given as above provided, the Securities or portions of
Securities specified in such notice shall become due and payable on the date and
at the place stated in such notice at the applicable redemption price, together
with interest accrued to the date fixed for redemption, and on and after said
date (unless the Company shall default in the payment of such Securities at the
redemption price, together with interest accrued to said date) interest on the
Securities or portions of Securities so called for redemption shall cease to
accrue and, except as provided in Sections 6.5 and 10.4, such Securities shall
cease from and after the date fixed for redemption to be entitled to any benefit
or security under this Indenture, and the Holders thereof shall have no right in
respect of such Securities except the right to receive the redemption price
thereof and unpaid interest to the date fixed for redemption. On presentation
and surrender of such Securities at a place of payment specified in said notice,
said Securities or the specified portions thereof shall be paid and redeemed by
the Company at the applicable redemption price, together with interest accrued
thereon to the date fixed for redemption; provided that any semiannual payment
of interest on Registered Securities becoming due on the date fixed for
redemption shall be payable to the Holders of such Securities registered as such
on the relevant record date subject to the terms and provisions of Section 2.4
hereof.

         If any Coupon Security surrendered for redemption shall not be
accompanied by all appurtenant Coupons maturing on or after the date fixed for
redemption, such Security may be paid after deducting from the redemption price
an amount equal to the face amount of all such missing Coupons or the surrender
of such missing Coupon or Coupons may be waived by the Company and the Trustee,
if there be furnished to them such security or indemnity as they may require to
save each of them and any Paying Agent harmless. If thereafter the Holder of
such Security shall surrender to any Paying Agent any missing Coupon in respect
of which a deduction shall have been made from the redemption price, such Holder
shall be entitled to receive the amount so deducted; provided, however, that,
unless otherwise provided pursuant to Section 2.3, interest represented by
Coupons shall be payable only upon presentation and surrender of those Coupons
at an office or agency located outside of the United States.

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<PAGE>

         If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal shall, until paid or duly
provided for, bear interest from the date fixed for redemption at the rate of
interest borne by the Security.

         Upon presentation of any Security redeemed in part only and the Coupons
appertaining thereto, the Company shall execute and the Trustee shall
authenticate and deliver to or on the order of the Holder thereof, at the
expense of the Company, a new Security or Securities and the Coupons
appertaining thereto, of authorized denominations, in principal amount equal to
the unredeemed portion of the Security so presented.

         SECTION 12.4 Exclusion of Certain Securities from Eligibility for
Selection for Redemption. Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration and certificate
number in a written statement signed by an authorized officer of the Company and
delivered to the Trustee at least 40 days prior to the last date on which notice
of redemption may be given as being owned of record and beneficially by, and not
pledged or hypothecated by, either (a) the Company or (b) an entity specifically
identified in such written statement directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company.

         SECTION 12.5 Mandatory and Optional Sinking Funds. The minimum amount
of any sinking fund payment provided for by the terms of Securities of any
Series is herein referred to as a "mandatory sinking fund payment", and any
payment in excess of such minimum amount provided for by the terms of Securities
of any Series is herein referred to as an "optional sinking fund payment". The
date on which a sinking fund payment is to be made is herein referred to as the
"sinking fund payment date".

         In lieu of making all or any part of any mandatory sinking fund payment
with respect to any Series of Securities in cash, the Company may at its option
(a) deliver to the Trustee Securities of such Series (together with the
unmatured Coupons, if any, appertaining thereto) theretofore purchased or
otherwise acquired (except upon redemption pursuant to the mandatory sinking
fund) by the Company or receive credit for Securities of such Series (not
previously so credited) theretofore purchased or otherwise acquired (except as
aforesaid) by the Company and delivered to the Trustee for cancellation pursuant
to Section 2.10, (b) receive credit for optional sinking fund payments (not
previously so credited) made pursuant to this Section, or (c) receive credit for
Securities of such Series (not previously so credited) redeemed by the Company
through any optional redemption provision contained in the terms of such Series.
Securities so delivered or credited shall be received or credited by the Trustee
at the sinking fund redemption price specified in such Securities.

         On or before the sixtieth day next preceding each sinking fund payment
date for any Series of Securities, the Company will deliver to the Trustee a
written statement (which need not contain the statements required by Section
11.5) signed by an authorized officer of the Company (a) specifying the portion
of the mandatory sinking fund payment to be satisfied by payment of cash in the
currency or currency unit in which the Securities of such Series and Coupons, if
any, appertaining thereto are payable (except as otherwise specified pursuant to
Section 2.3 for the Securities of such Series and except as provided in Section
2.12(b), (e) and (f) hereof), and the portion to be satisfied by credit of
Securities

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<PAGE>

of such Series, (b) stating that none of the Securities of such Series has
theretofore been so credited, (c) stating that no defaults in the payment of
interest or Events of Default with respect to such Series have occurred (which
have not been waived or cured) and are continuing, (d) stating whether or not
the Company intends to exercise its right to make an optional sinking fund
payment with respect to such Series and, if so, specifying the amount of such
optional sinking fund payment which the Company intends to pay on or before the
next succeeding sinking fund payment date and (e) specifying such sinking fund
payment date. Any Securities of such Series to be credited and required to be
delivered to the Trustee in order for the Company to be entitled to credit
therefor as aforesaid which have not theretofore been delivered to the Trustee
shall be delivered for cancellation pursuant to Section 2.10 to the Trustee with
such written statement (or reasonably promptly thereafter if acceptable to the
Trustee). Such written statement shall be irrevocable and upon its receipt by
the Trustee the Company shall become unconditionally obligated to make all the
cash payments or payments therein referred to, if any, on or before the next
succeeding sinking fund payment date. Failure of the Company, on or before any
such sixtieth day, to deliver such written statement and Securities specified in
this paragraph, if any, shall not constitute a default but shall constitute, on
and as of such date, the irrevocable election of the Company (i) that the
mandatory sinking fund payment for such Series due on the next succeeding
sinking fund payment date shall be paid entirely in cash (in the currency or
currency unit described above) without the option to deliver or credit
Securities of such Series in respect thereof and (ii) that the Company will make
no optional sinking fund payment with respect to such Series as provided in this
Section.

         If the sinking fund payment or payments (mandatory or optional or both)
to be made in cash (in the currency or currency unit described above) on the
next succeeding sinking fund payment date plus any unused balance of any
preceding sinking fund payments made in cash shall exceed $100,000, or the
equivalent in the currency or currency unit in which the Securities of such
Series are payable (or a lesser sum if the Company shall so request) with
respect to the Securities of any particular Series, such cash shall be applied
on the next succeeding sinking fund payment date to the redemption of Securities
of such Series at the sinking fund redemption price together with accrued
interest to the date fixed for redemption. If such amount shall be $100,000, or
the equivalent in the currency or currency unit in which the Securities of such
Series are payable, or less and the Company makes no such request then it shall
be carried over until a sum in excess of $100,000, or the equivalent in the
currency or currency unit in which the Securities of such Series are payable, is
available. The Trustee shall select, in the manner provided in Section 12.2, for
redemption on such sinking fund payment date a sufficient principal amount of
Securities of such Series to absorb said cash, as nearly as may be possible, and
shall (if requested in writing by the Company) inform the Company of the serial
numbers of the Securities of such Series (or portions thereof) so selected.
Securities of any Series which are identified by registration and certificate
number in an Officers' Certificate at least 60 days prior to the sinking fund
payment date as being beneficially owned by, and not pledged or hypothecated by,
the Company or an entity directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company shall be excluded from
Securities of such Series eligible for selection for redemption. The Trustee, in
the name and at the expense of the Company (or the Company, if it shall so
notify the Trustee in writing) shall cause notice of redemption of the
Securities of such Series to be given in substantially the manner provided in
Section 12.2 (and with the effect provided in Section 12.3) for the redemption
of Securities of such Series in part at the option of the Company. The amount of
any sinking fund payments not so applied or allocated to the redemption of
Securities of such Series shall be added to the next

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<PAGE>

cash sinking fund payment for such Series and, together with such payment, shall
be applied in accordance with the provisions of this Section. Any and all
sinking fund moneys held on the stated maturity date of the Securities of any
particular Series (or earlier, if such maturity is accelerated), which are not
held for the payment or redemption of particular Securities of such Series shall
be applied, together with other moneys, if necessary, sufficient for the
purpose, to the payment of the principal of, and interest on, the Securities of
such Series at maturity.

         The Trustee shall not convert any currency or currency unit in which
the Securities of such Series are payable for the purposes of such sinking fund
application unless specifically requested to do so by the Company, and any such
conversion agreed to by the Trustee in response to such request shall be for the
account and at the expense of the Company and shall not affect the Company's
obligation to pay the Holders in the currency or currency unit to which such
Holder may be entitled.

         Not later than 9:00 a.m., Chicago time, on the sinking fund payment
date, the Company shall have paid to the Trustee in cash (in the currency or
currency unit described in the third paragraph of this Section 12.5) or shall
otherwise provide for the payment of all interest accrued to the date fixed for
redemption on Securities to be redeemed on the next following sinking fund
payment date.

         The Trustee shall not redeem or cause to be redeemed any Securities of
a Series with sinking fund moneys or mail or publish any notice of redemption of
Securities for such Series by operation of the sinking fund during the
continuance of a default in payment of interest on such Securities or of any
Event of Default except that, where the mailing or publication of notice of
redemption of any Securities shall theretofore have been made, the Trustee shall
redeem or cause to be redeemed such Securities, provided that it shall have
received from the Company a sum sufficient for such redemption. Except as
aforesaid, any moneys in the sinking fund for such Series at the time when any
such default or Event of Default shall occur, and any moneys thereafter paid
into the sinking fund, shall, during the continuance of such default or Event of
Default, be deemed to have been collected under Article Five and held for the
payment of all such Securities. In case such Event of Default shall have been
waived as provided in Section 5.10 or the default cured on or before the
sixtieth day preceding the sinking fund payment date in any year, such moneys
shall thereafter be applied on the next succeeding sinking fund payment date in
accordance with this Section to the redemption of such Securities.

         SECTION 12.6 Repayment at the Option of the Holders. Securities of any
Series which are repayable at the option of the Holders thereof before their
stated maturity shall be repaid in accordance with the terms of the Securities
of such Series.

         The repayment of any principal amount of Securities pursuant to such
option of the Holder to require repayment of Securities before their stated
maturity, for purposes of Section 10.1, shall not operate as a payment,
redemption or satisfaction of the indebtedness represented by such Securities
unless and until the Company, at its option, shall deliver or surrender the same
to the Trustee with a directive that such Securities be cancelled.

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                                ARTICLE THIRTEEN

                                HOLDERS' MEETINGS

         SECTION 13.1 Purposes of Meetings. A meeting of Holders of Securities
of any or all Series may be called at any time and from time to time pursuant to
the provisions of this Article Thirteen for any of the following purposes:

                  (a) to give any notice to the Company or to the Trustee for
         the Securities of such Series, or to give any directions to the Trustee
         for such Series, or to consent to the waiving of any default hereunder
         and its consequences, or to take any other action authorized to be
         taken by Holders pursuant to any of the provisions of Article Five;

                  (b) to remove the Trustee for such Series and nominate a
         successor Trustee pursuant to the provisions of Article Six;

                  (c) to consent to the execution of an indenture or indentures
         supplemental hereto pursuant to the provisions of Section 8.2; and

                  (d) to take any other action authorized to be taken by or on
         behalf of the Holders of any specified aggregate principal amount of
         the Securities of any one or more or all Series, as the case may be,
         under any provision of this Indenture or under applicable law.

         SECTION 13.2 Call of Meetings by Trustee. The Trustee for the
Securities of any Series may at any time call a meeting of Holders of Securities
of such Series to take any action specified in Section 13.1, to be held at such
time and at such place in the City of Chicago, or such other Place of Payment as
the Trustee for such Series shall determine. Notice of every meeting of the
Holders of Securities of any Series, setting forth the time and the place of
such meeting and in general terms the action proposed to be taken at such
meeting, shall be given to Holders of Securities of such Series in the manner
and to the extent provided in Section 11.4. Such notice shall be given not less
than 20 nor more than 90 days prior to the date fixed for the meeting.

         SECTION 13.3 Call of Meetings by Company or Holders. In case at any
time the Company, pursuant to a resolution of its Board of Directors, or the
Holders of at least 10% in aggregate principal amount of the Outstanding
Securities of any or all Series, as the case may be, shall have requested the
Trustee for such Series to call a meeting of Holders of Securities of any or all
Series, as the case may be, by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the Trustee for such
Series shall not have given the notice of such meeting within 20 days after
receipt of such request, then the Company or such Holders may determine the time
and the place in the City of Chicago or such other Place of Payment for such
meeting and may call such meeting to take any action authorized in Section 13.1,
by giving notice thereof as provided in Section 13.2.

         SECTION 13.4 Qualifications for Voting. To be entitled to vote at any
meeting of Holders, a Person shall be (a) a Holder of one or more Securities
with respect to which such meeting is being held or (b) a Person appointed by an
instrument in writing as proxy by such

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<PAGE>

Holder. The only Persons who shall be entitled to be present or to speak at any
meeting of Holders shall be the Persons entitled to vote at such meeting and
their counsel and any representatives of the Trustee for the Securities of the
Series with respect to which such meeting is being held and its counsel and any
representatives of the Company and its counsel.

         SECTION 13.5 Regulations. Notwithstanding any other provisions of this
Indenture, the Trustee for the Securities of any Series may make such reasonable
regulations as it may deem advisable for any meeting of Holders of the
Securities of such Series, in regard to proof of the holding of Securities of
such Series and of the appointment of proxies, and in regard to the appointment
and duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.

         The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders of the Securities of such Series as provided in Section
13.3, in which case the Company or the Holders calling the meeting, as the case
may be, shall in like manner appoint a temporary chairman. A permanent chairman
and a permanent secretary of the meeting shall be elected by majority vote of
the meeting.

         Subject to Section 7.4, at any meeting each Holder of Securities with
respect to which such meeting is being held or proxy therefor shall be entitled
to one vote for each $1,000 (or the equivalent in the currency or currency unit
in which such Securities are denominated, as determined pursuant to Section
11.11) principal amount (in the case of the Original Issue Discount Securities,
such principal amount to be determined as provided in Section 11.11) of
Securities held or represented by him. However, no vote shall be cast or counted
at any meeting in respect of any such Security challenged as not Outstanding and
ruled by the chairman of the meeting to be not Outstanding. The chairman of the
meeting shall have no right to vote other than by virtue of the Securities of
such Series held by him or instruments in writing aforesaid duly designating him
as the Person to vote on behalf of other Holders of such Series. At any meeting
of Holders, the presence of Persons holding or representing Securities with
respect to which such meeting is being held in an aggregate principal amount
sufficient to take action on the business for the transaction of which such
meeting was called shall constitute a quorum, but, if less than a quorum is
present, the Persons holding or representing a majority in aggregate principal
amount of such Securities represented at the meeting may adjourn such meeting
with the same effect, for all intents and purposes, as though a quorum had been
present. Any meeting of Holders of Securities with respect to which a meeting
was duly called pursuant to the provisions of Section 13.2 or Section 13.3 may
be adjourned from time to time by a majority of such Holders present, whether or
not constituting a quorum, and the meeting may be held as so adjourned without
further notice.

         SECTION 13.6 Voting. The vote upon any resolution submitted to any
meeting of Holders of Securities with respect to which such meeting is being
held shall be by written ballots on which shall be subscribed the signatures of
such Holders or of their representatives by proxy and the serial number or
numbers of the Securities held or represented by them. The permanent chairman of
the meeting shall appoint two inspectors of votes who shall count all votes cast
at the meeting for or against any resolution and who shall make and file with
the secretary of the

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<PAGE>

meeting their verified written reports in duplicate of all votes cast at the
meeting. A record in duplicate of the proceedings of each meeting of Holders
shall be prepared by the secretary of the meeting and there shall be attached to
such record the original reports of the inspectors of votes on any vote by
ballot taken thereat and affidavits by one or more Persons having knowledge of
the facts setting forth a copy of the notice of the meeting and showing that
such notice was given in the manner and to the extent provided in Section 11.4.
The record shall show the serial numbers of the Securities voting in favor of or
against any resolution. The record shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one of the
duplicates shall be delivered to the Company and the other to the Trustee to be
preserved by the Trustee.

         Any record so signed and verified shall be conclusive evidence of the
matters therein stated.

         SECTION 13.7 No Delay of Rights by Meeting. Nothing in this Article
Thirteen shall be deemed or construed to authorize or permit, by reason of any
call of a meeting of Holders or any rights expressly or impliedly conferred
hereunder to make such call, any hindrance or delay in the exercise of any right
or rights conferred upon or reserved to the Trustee or to the Holders under any
of the provisions of this Indenture or of the Securities of any Series.

                                ARTICLE FOURTEEN

                                  SUBORDINATION

         SECTION 14.1 Securities Subordinate to Senior Indebtedness. Unless
otherwise specified as contemplated by Section 2.3, the Securities shall be
subordinated to Senior Indebtedness as set forth in this Article XIV. The
Company covenants and agrees, and each Holder of a Security of any Series by
such Holder's acceptance thereof likewise covenants and agrees, that, to the
extent and in the manner hereinafter set forth in this Article XIV, the
indebtedness represented by the Securities and the payment of the principal
amount, interest and such other amounts as provided for in Section 2.3, if any,
in respect of each and all of the Securities are hereby expressly made
subordinate and subject in right of payment to the prior payment in full of all
Senior Indebtedness.

         "Senior Indebtedness" means the principal of (and premium, if any) and
interest on (including interest accruing after the filing of a petition
initiating any proceeding pursuant to any Bankruptcy Law, but only to the extent
allowed or permitted to the holder of such Debt of the Company against the
bankruptcy or any other insolvency estate of the Company in such proceeding) and
other amounts due on or in connection with any Debt of the Company incurred,
assumed or guaranteed by the Company, whether outstanding on the date of the
Indenture or thereafter incurred, assumed or guaranteed and all renewals,
extensions and refundings of any such Debt of the Company; provided, however,
that the following will not constitute Senior Indebtedness:

                  (a) any Debt of the Company, including other Series of the
Securities, as to which, in the instrument creating the same or evidencing the
same or pursuant to which the same is outstanding, it is expressly provided that
such Debt of the Company shall be subordinated to

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<PAGE>

any other Debt of the Company, unless such Debt of the Company expressly
provides that such Debt of the Company shall be senior in right of payment to
the Securities;

                  (b) any Debt of the Company which by its terms states that
such Debt of the Company shall not be senior in right of payment to the
Securities; and

                  (c) any Debt of the Company to any Affiliate of the Company or
a Subsidiary of the Company.

         SECTION 14.2 Payment Over of Proceeds Upon Dissolution, Etc. Upon any
distribution of assets of the Company in the event of:

                  (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or to its creditors, as such, or
to its assets, or

                  (b) any liquidation, dissolution or other winding up of the
Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or

                  (c) any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Company,

         then and in such event

                           (i) the holders of Senior Indebtedness shall be
         entitled to receive payment in full of all amounts due or to become due
         on or in respect of all Senior Indebtedness, or provision shall be made
         for such payment in cash, before the Holders of the Securities are
         entitled to receive any payment on account of the principal amount,
         interest or such other amounts as may be provided for in Section 2.3,
         if any, in respect of the Securities (except that Holders of the
         Securities may receive (A) Permitted Junior Securities and (B) payments
         and other distributions made from any trust created pursuant to Article
         X); and

                           (ii) any payment or distribution of assets of the
         Company of any kind or character, whether in cash, property or
         securities, by set-off or otherwise, to which the Holders or the
         Trustee would be entitled but for the provisions of this Article XIV,
         including any such payment or distribution which may be payable or
         deliverable by reason of the payment of any other Debt of the Company
         being subordinated to the payment of the Securities, shall be paid by
         the liquidating trustee or agent or other Person making such payment or
         distribution, whether a trustee in bankruptcy, a receiver or
         liquidating trustee or otherwise, directly to the holders of Senior
         Indebtedness or their representative or representatives or to the
         trustee or trustees under any indenture under which any instruments
         evidencing any of such Senior Indebtedness may have been issued,
         ratably according to the aggregate amounts remaining unpaid on account
         of the principal of, and premium, if any, and interest on the Senior
         Indebtedness held or represented by each, to the extent necessary to
         make payment in full of all Senior Indebtedness remaining unpaid, after
         giving effect to any concurrent payment or distribution to the holders
         of such Senior Indebtedness (except that Holders of the

                                       69
<PAGE>

         Securities may receive (A) Permitted Junior Securities and (B) payments
         and other distributions made from any trust created pursuant to Article
         X).

         In the event that, notwithstanding the foregoing provisions of this
Section 14.2, the Trustee or the Holder of any Security shall receive any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the payment of any
other Debt of the Company being subordinated to the payment of the Securities,
before all Senior Indebtedness is paid in full or payment thereof provided for,
and if such fact shall then have been made known to the Trustee as provided in
Section 14.10, or, as the case may be, such Holder, then and in such event such
payment or distribution shall be paid over or delivered forthwith to the trustee
in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or
other Person making payment or distribution of assets of the Company for
application to the payment of all Senior Indebtedness remaining unpaid, to the
extent necessary to pay all Senior Indebtedness in full, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Indebtedness (except that Holders of the Securities may receive (A) Permitted
Junior Securities and (B) payments and other distributions made from any trust
created pursuant to Article X).

         The consolidation of the Company with, or the merger of the Company
into, another corporation or the liquidation or dissolution of the Company
following the conveyance or transfer of all or substantially all of its assets
to another Person upon the terms and conditions set forth in Article IX shall
not be deemed a dissolution, winding up, liquidation, reorganization, assignment
for the benefit of creditors or marshalling of assets and liabilities of the
Company for the purposes of this Section 14.2 if the corporation formed by such
consolidation or into which the Company is merged or the Person which acquires
by conveyance or transfer all or substantially all of the assets of the Company,
as the case may be, shall, as a part of such consolidation, merger, conveyance
or transfer, comply with the conditions set forth in Article IX.

         SECTION 14.3 Acceleration of Securities. In the event that any
Securities are declared due and payable before their stated maturity, then and
in such event the holders of Senior Indebtedness outstanding at the time such
Securities become due and payable shall be entitled to receive payment in full
of all amounts due or to become due on or in respect of all Senior Indebtedness,
or provision shall be made for such payment in money or money's worth, before
the Holders of the Securities are entitled to receive any payment (including any
payment which may be payable by reason of the payment of any other indebtedness
of the Company being subordinated to the payment of the Securities) by the
Company on account of the principal of (or premium, if any) or interest on the
Securities or on account of the purchase or other acquisition of Securities
(except that Holders of the Securities may receive (A) Permitted Junior
Securities and (B) payments and other distributions made from any trust created
pursuant to Article X).

         In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Securities prohibited by
the foregoing provisions of this Section 14.3, and if such facts then shall have
been known or thereafter shall have been made known to the Trustee (as provided
in Section 14.10) or to such Holder, as the case may be, pursuant to the terms
of this Indenture, then and in such event such payment shall be paid over and
delivered forthwith to the Company by or on behalf of the Person holding such
payment for the benefit of the holders of Senior Indebtedness.

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<PAGE>

         The provisions of this Section 14.3 shall not apply to any payment with
respect to which Section 14.2 would be applicable.

         SECTION 14.4 Default in Senior Indebtedness. In the event and during
the continuation of any default in the payment of principal of (or premium, if
any) or interest on Senior Indebtedness beyond any applicable grace period with
respect thereto, or in the event that any event of default with respect to any
Senior Indebtedness shall have occurred and be continuing permitting the holders
of such Senior Indebtedness (or a trustee on behalf of the holders thereof) to
declare such Senior Indebtedness due and payable prior to the date on which it
would otherwise have become due and payable, unless and until such event of
default shall have been cured or waived or shall have ceased to exist and, if
any such Senior Indebtedness shall have been accelerated, such acceleration
shall have been rescinded or annulled, or (b) in the event any judicial
proceeding shall be pending with respect to any default in payment or event of
default, then no payment shall be made by the Company on account of principal of
(or premium, if any) or interest on the Securities or on account of the purchase
or other acquisition of Securities (except that Holders of the Securities may
receive (A) Permitted Junior Securities and (B) payments and other distributions
made from any trust created pursuant to Article X).

         In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section 14.4, and if such fact then shall have been
known or thereafter shall have been made known to the Trustee as provided in
Section 14.10 or such Holder, as the case may be, pursuant to the terms of this
Indenture, then and in such event such payment shall be paid over and delivered
forthwith to the Company by or on behalf of the Person holding such payment for
the benefit of the holders of the Senior Indebtedness.

         The provisions of this Section 14.4 shall not apply to any payment with
respect to which Section 14.2 would be applicable.

         SECTION 14.5 Payment Permitted if No Default. Nothing contained in this
Article XIV or elsewhere in this Indenture or in any of the Securities shall
prevent (a) the Company, at any time except during the pendency of any case,
proceeding, dissolution, liquidation or other winding up, assignment for the
benefit of creditors or other marshalling of assets and liabilities of the
Company referred to in Section 14.2 or under the conditions described in Section
14.3 or 14.4, from making payments at any time of the principal amount, interest
or such other amounts as may be provided for in Section 2.3, if any, as the case
may be, in respect of the Securities, or (b) the application by the Trustee or
the retention by any Holder of any money deposited with it hereunder to the
payment of or on account of the principal amount, interest or such other amounts
as may be provided for in Section 2.3, if any, as the case may be, in respect of
the Securities if the Trustee did not have, at the time provided in the proviso
to the first paragraph of Section 14.10, notice that such payment would have
been prohibited by the provisions of this Article XIV.

         SECTION 14.6 Subrogation Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holders of the
Securities shall be subrogated to the extent of the payments or distributions
made to the holders of such Senior Indebtedness pursuant to the provisions of
this Article XIV to the rights of the holders of such Senior

                                       71
<PAGE>

Indebtedness to receive payments or distributions of cash, property or
securities applicable to the Senior Indebtedness until the Principal Amount,
interest or such other amounts as provided for in Section 2.3, if any, as the
case may be, in respect of the Securities shall be paid in full. For purposes of
such subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of the
Securities or the Trustee would be entitled except for the provisions of this
Article XIV, and no payments pursuant to the provisions of this Article XIV to
the Company or to the holders of Senior Indebtedness by Holders of the
Securities or the Trustee, shall, as between the Company, its creditors other
than holders of Senior Indebtedness and the Holders of the Securities, be deemed
to be a payment or distribution by the Company to or on account of the Senior
Indebtedness.

         SECTION 14.7 Provision Solely to Define Relative Rights. The provisions
of this Article XIV are and are intended solely for the purpose of defining the
relative rights of the Holders of the Securities, on one hand, and the holders
of Senior Indebtedness, on the other hand. Nothing contained in this Article XIV
or elsewhere in this Indenture or in the Securities is intended to or shall:

                  (a) impair, as between the Company and the Holders of the
Securities, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Securities the principal amount, interest or such
other amounts as may be provided for in Section 2.3, if any, as the case may be,
in respect of the Securities as and when the same shall become due and payable
in accordance with the terms of the Securities and this Indenture and which,
subject to the rights under this Article XIV of the holders of Senior
Indebtedness, is intended to rank equally with all other general obligations of
the Company; or

                  (b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than holders of
Senior Indebtedness; or

                  (c) prevent the Trustee or the Holder of any Security from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article XIV of the
holders of Senior Indebtedness to receive cash, property or securities otherwise
payable or deliverable to the Trustee or such Holder.

         SECTION 14.8 Trustee to Effectuate Subordination. Each Holder of a
Security by such Holder's acceptance thereof authorizes and directs the Trustee
on such Holder's behalf to take such action as may be necessary or appropriate
to effectuate the subordination provided in this Article XIV and appoints the
Trustee such Holder's attorney-in-fact for any and all such purposes.

         SECTION 14.9 No Waiver of Subordination Provisions. No right of any
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged with.

                                       72
<PAGE>

         Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of, or notice to, the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
XIV or the obligations hereunder of the Holders of the Securities to the holders
of Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness, or otherwise amend or supplement in any manner
Senior Indebtedness or any instrument evidencing the same or any agreement under
which Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise dispose of any property pledged, mortgaged or otherwise securing
Senior Indebtedness; (iii) release any Person liable in any manner for the
collection of Senior Indebtedness and (iv) exercise or refrain from exercising
any rights against the Company or any other Person.

         SECTION 14.10 Notice to Trustee. The Company shall give prompt written
notice to the Trustee of any fact known to the Company which would prohibit the
making of any payment to or by the Trustee in respect of the Securities. Failure
to give such notice shall not affect the subordination of the Securities to
Senior Indebtedness. Notwithstanding the provisions of this Article XIV or any
other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts which would prohibit the making of any
payment to or by the Trustee in respect of the Securities, unless and until the
Trustee shall have received written notice thereof at the address specified in
Section 11.4 from the Company or a holder of Senior Indebtedness or from any
trustee or agent therefor; and, prior to the receipt of any such written notice,
the Trustee shall be entitled in all respects to assume that no such facts
exist; provided, however, that if a trust officer of the Trustee shall not have
received, at least three Business Days prior to the date upon which by the terms
hereof any such money may become payable for any purpose (including, without
limitation, the payment of the principal amount, interest or such other amounts
as may be provided for in Section 2.3, if any, as the case may be, in respect of
any Security), the notice with respect to such money provided for in this
Section 14.10, then, anything herein contained to the contrary notwithstanding,
the Trustee shall have full power and authority to receive such money and to
apply the same to the purpose for which such money was received and shall not be
affected by any notice to the contrary which may be received by it within three
Business Days prior to such date.

         The Trustee shall be entitled to rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness (or a trustee or agent on behalf of such holder) to establish that
such notice has been given by a holder of Senior Indebtedness (or a trustee or
agent on behalf of any such holder). In the event that the Trustee determines in
good faith that further evidence is required with respect to the right of any
Person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article XIV, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article XIV, and if such
evidence is not furnished, the Trustee may defer any payment which it may be
required to make for the benefit of such Person pursuant to the terms of this
Indenture pending judicial determination as to the right of such Person to
receive such payment.

                                       73
<PAGE>

         SECTION 14.11 Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets of the Company referred to in
this Article XIV, the Trustee and the Holders of the Securities shall be
entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, liquidating trustee,
custodian, receiver, assignee for the benefit of creditors, agent or other
Person making such payment or distribution, delivered to the Trustee or to the
Holders of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of Senior Indebtedness
and other indebtedness of the Company, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article XIV.

         SECTION 14.12 Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and shall not be liable to any such holders if the Trustee
shall in good faith mistakenly pay over or distribute to Holders of Securities
or to the Company or to any other Person cash, property or securities to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
XIV or otherwise. The Trustee shall not be charged with knowledge of the
existence of Senior Indebtedness or of any facts that would prohibit any payment
hereunder unless the Trustee shall have received notice to that effect at the
address of the Trustee set forth in Section 11.4. With respect to the holders of
Senior Indebtedness, the Trustee undertakes to perform or to observe only such
of its covenants or obligations as are specifically set forth in this Article
XIV and no implied covenants or obligations with respect to holders of Senior
Indebtedness shall be read into this Indenture against the Trustee.

         SECTION 14.13 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights. The Trustee in its individual capacity shall
be entitled to all the rights set forth in this Article XIV with respect to any
Senior Indebtedness which may at any time be held by it, to the same extent as
any other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.

         Nothing in this Article XIV shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 6.6.

         SECTION 14.14 Article XIV Applicable to Paying Agents. The term
"TRUSTEE" as used in this Article XIV shall (unless the context otherwise
requires) be construed as extending to and including the Paying Agent within its
meaning as fully for all intents and purposes as if the Paying Agent were named
in this Article XIV in addition to or in place of the Trustee; provided,
however, that Sections 14.10 and 14.12 shall not apply to the Company or any
Affiliate of the Company if it or such Affiliate acts as Paying Agent.

         SECTION 14.15 Certain Conversions or Exchanges Deemed Payments. For the
purposes of this Article XIV only, (a) the issue and delivery of Permitted
Junior Securities upon the conversion or exchange of the Securities of any
series in accordance with Section 2.3(15) shall not be deemed to constitute a
payment or distribution on account of the principal of or premium or interest on
the Securities or on account of the purchase or other acquisition of Securities,
and (b) the payment or delivery of cash, property or securities (other than
Permitted

                                       74
<PAGE>

Junior Securities) upon the conversion or exchange of a Security shall be deemed
to constitute payment on account of the principal of such Security. Nothing
contained in this Article XIV or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as among the Company, its creditors
other than holders of Senior Indebtedness and the Holders of the Securities, the
right, which is absolute and unconditional, of the Holder of any Security to
convert or exchange such Security in accordance with Section 2.3(15), if so
applicable.

                            [signature page follows]

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.

                                 KELLOGG COMPANY

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

                                 [                               ],
                                  -------------------------------
                                  as Trustee

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

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