Document:

EXHIBIT 4.1

                             FIXED RATE SENIOR NOTE

REGISTERED                                                 REGISTERED
No. FXR                                                    U.S. $
                                                           CUSIP:

     Unless this certificate is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New York) to the
issuer or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or such other name
as requested by an authorized representative of The Depository Trust Company
and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered
owner hereof, Cede & Co., has an interest herein.

                                      A-1
<PAGE>

                                 MORGAN STANLEY
                   SENIOR GLOBAL MEDIUM-TERM NOTES, SERIES C
                                  (Fixed Rate)

                         STOCK PARTICIPATION ACCRETING
                 REDEMPTION QUARTERLY-PAY SECURITIES ("SPARQS")

                           6% SPARQS DUE MAY 1, 2004
                            MANDATORILY EXCHANGEABLE
                         FOR SHARES OF COMMON STOCK OF
                               KOHL'S CORPORATION

<TABLE>
<S>                            <C>                                  <C>                                  <C>
-----------------------------------------------------------------------------------------------------------------------------------
ORIGINAL ISSUE DATE:           INITIAL REDEMPTION                   INTEREST RATE:     %                 MATURITY DATE:
                                 DATE: See "Morgan                    per annum (equivalent                See "Maturity Date"
                                 Stanley Call Right"                  to $       per annum per             below.
                                 below.                               SPARQS)
-----------------------------------------------------------------------------------------------------------------------------------
INTEREST ACCRUAL               INITIAL REDEMPTION                   INTEREST PAYMENT                     OPTIONAL
  DATE:                          PERCENTAGE: See                      DATES:                               REPAYMENT
                                 "Morgan Stanley Call                                                      DATE(S):  N/A
                                 Right" and "Call Price"
                                 below.
-----------------------------------------------------------------------------------------------------------------------------------
SPECIFIED CURRENCY:            ANNUAL REDEMPTION                    INTEREST PAYMENT                     APPLICABILITY OF
  U.S. dollars                   PERCENTAGE                           PERIOD: Quarterly                    MODIFIED
                                 REDUCTION: N/A                                                            PAYMENT UPON
                                                                                                           ACCELERATION: See
                                                                                                           "Alternate Exchange
                                                                                                           Calculation in Case of
                                                                                                           an Event of Default"
                                                                                                           below.
-----------------------------------------------------------------------------------------------------------------------------------
IF SPECIFIED                   REDEMPTION NOTICE                    APPLICABILITY OF                     If yes, state Issue Price:
  CURRENCY OTHER                 PERIOD: At least 10                  ANNUAL INTEREST                      N/A
  THAN U.S. DOLLARS,             days but no more than                PAYMENTS: N/A
  OPTION TO ELECT                30 days.  See "Morgan
  PAYMENT IN U.S.                Stanley Call Right" and
  DOLLARS: N/A                   "Morgan Stanley Notice
                                 Date" below.
-----------------------------------------------------------------------------------------------------------------------------------
EXCHANGE RATE                  TAX REDEMPTION                                                            ORIGINAL YIELD TO
  AGENT: N/A                     AND PAYMENT OF                                                            MATURITY: N/A
                                 ADDITIONAL
                                 AMOUNTS: N/A
-----------------------------------------------------------------------------------------------------------------------------------
OTHER PROVISIONS:              If yes, state Initial Offering
  See below                    Date: N/A
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Issue Price...........................  $      per each $       principal amount
                                        of this SPARQS

                                      A-2
<PAGE>

Maturity Date.........................  May 1, 2004, subject to acceleration
                                        as described below in "Price Event
                                        Acceleration," "Antidilution
                                        Adjustments" and "Alternate Exchange
                                        Calculation in case of an Event of
                                        Default," and subject to extension in
                                        accordance with the following paragraph
                                        in the event of a Market Disruption
                                        Event on May 1, 2004.

                                        If the Final Call Notice Date is
                                        postponed due to a Market Disruption
                                        Event or otherwise and the Issuer
                                        exercises the Morgan Stanley Call
                                        Right, the Maturity Date shall be
                                        postponed so that the Maturity Date
                                        will be the tenth calendar day
                                        following the Final Call Notice Date.
                                        See "Final Call Notice Date" below.

                                        In the event that the Final Call Notice
                                        Date is postponed due to a Market
                                        Disruption Event or otherwise, the
                                        Issuer shall give notice of such
                                        postponement as promptly as possible,
                                        and in no case later than two Business
                                        Days following the scheduled Final Call
                                        Notice Date, (i) to the holder of this
                                        SPARQS by mailing notice of such
                                        postponement by first class mail,
                                        postage prepaid, to the holder's last
                                        address as it shall appear upon the
                                        registry books, (ii) to the Trustee by
                                        telephone or facsimile confirmed by
                                        mailing such notice to the Trustee by
                                        first class mail, postage prepaid, at
                                        its New York office and (iii) to The
                                        Depository Trust Company (the
                                        "Depositary") by telephone or facsimile
                                        confirmed by mailing such notice to the
                                        Depositary by first class mail, postage
                                        prepaid. Any notice that is mailed in
                                        the manner herein provided shall be
                                        conclusively presumed to have been duly
                                        given, whether or not the holder of
                                        this SPARQS receives the notice. Notice
                                        of the date to which the Maturity Date
                                        has been rescheduled as a result of
                                        postponement of the Final Call Notice
                                        Date, if applicable, shall be included
                                        in the Issuer's notice of exercise of
                                        the Morgan Stanley Call Right.

Record Date...........................  Notwithstanding the definition of
                                        "Record Date" on page A-19 hereof, the
                                        Record Date for each Interest Payment
                                        Date, including the Interest Payment
                                        Date scheduled to occur on the Maturity
                                        Date, shall be the date 5 calendar days
                                        prior to such Interest Payment Date,
                                        whether or not that date is a Business
                                        Day; provided, however, that in the
                                        event that the Issuer exercises the
                                        Morgan Stanley Call Right, no Interest
                                        Payment Date shall occur after the

                                      A-3
<PAGE>

                                        Morgan Stanley Notice Date, except for
                                        any Interest Payment Date for which the
                                        Morgan Stanley Notice Date falls on or
                                        after the "ex-interest" date for the
                                        related interest payment, in which case
                                        the related interest payment shall be
                                        made on such Interest Payment Date; and
                                        provided, further, that accrued but
                                        unpaid interest payable on the Call
                                        Date, if any, shall be payable to the
                                        person to whom the Call Price is
                                        payable. The "ex- interest" date for
                                        any interest payment is the date on
                                        which purchase transactions in the
                                        SPARQS no longer carry the right to
                                        receive such interest payment.

                                        In the event that the Issuer exercises
                                        the Morgan Stanley Call Right and the
                                        Morgan Stanley Notice Date falls before
                                        the "ex-interest" date for an interest
                                        payment, so that as a result a
                                        scheduled Interest Payment Date will
                                        not occur, the Issuer shall cause the
                                        Calculation Agent to give notice to the
                                        Trustee and to the Depositary, in each
                                        case in the manner and at the time
                                        described in the second and third
                                        paragraphs under "Morgan Stanley Call
                                        Right" below, that no Interest Payment
                                        Date will occur after such Morgan
                                        Stanley Notice Date.

Denominations.........................  $        and integral multiples thereof

Morgan Stanley Call Right.............  On any scheduled Trading Day on or
                                        after October 28, 2003 or on the
                                        Maturity Date, the Issuer may call the
                                        SPARQS, in whole but not in part, for
                                        mandatory exchange for the Call Price
                                        paid in cash (together with accrued but
                                        unpaid interest) on the Call Date.

                                        On the Morgan Stanley Notice Date, the
                                        Issuer shall give notice of the
                                        Issuer's exercise of the Morgan Stanley
                                        Call Right (i) to the holder of this
                                        SPARQS by mailing notice of such
                                        exercise, specifying the Call Date on
                                        which the Issuer shall effect such
                                        exchange, by first class mail, postage
                                        prepaid, to the holder's last address
                                        as it shall appear upon the registry
                                        books, (ii) to the Trustee by telephone
                                        or facsimile confirmed by mailing such
                                        notice to the Trustee by first class
                                        mail, postage prepaid, at its New York
                                        office and (iii) to the Depositary in
                                        accordance with the applicable
                                        procedures set forth in the Letter of
                                        Representations related to this SPARQS.
                                        Any notice which is mailed in the
                                        manner herein provided shall be
                                        conclusively presumed to have been duly
                                        given, whether

                                      A-4
<PAGE>

                                        or not the holder of this SPARQS
                                        receives the notice. Failure to give
                                        notice by mail or any defect in the
                                        notice to the holder of any SPARQS
                                        shall not affect the validity of the
                                        proceedings for the exercise of the
                                        Morgan Stanley Call Right with respect
                                        to any other SPARQS.

                                        The notice of the Issuer's exercise of
                                        the Morgan Stanley Call Right shall
                                        specify (i) the Call Date, (ii) the
                                        Call Price payable per SPARQS, (iii)
                                        the amount of accrued but unpaid
                                        interest payable per SPARQS on the Call
                                        Date, (iv) whether any subsequently
                                        scheduled Interest Payment Date shall
                                        no longer be an Interest Payment Date
                                        as a result of the exercise of the
                                        Morgan Stanley Call Right, (v) the
                                        place or places of payment of such Call
                                        Price, (vi) that such delivery will be
                                        made upon presentation and surrender of
                                        this SPARQS, (vii) that such exchange
                                        is pursuant to the Morgan Stanley Call
                                        Right and (viii) if applicable, the
                                        date to which the Maturity Date has
                                        been extended due to a Market
                                        Disruption Event as described under
                                        "Maturity Date" above.

                                        The notice of the Issuer's exercise of
                                        the Morgan Stanley Call Right shall be
                                        given by the Issuer or, at the Issuer's
                                        request, by the Trustee in the name and
                                        at the expense of the Issuer.

                                        If this SPARQS is so called for
                                        mandatory exchange by the Issuer, then
                                        the cash Call Price and any accrued but
                                        unpaid interest on this SPARQS to be
                                        delivered to the holder of this SPARQS
                                        shall be delivered on the Call Date
                                        fixed by the Issuer and set forth in
                                        its notice of its exercise of the
                                        Morgan Stanley Call Right, upon
                                        delivery of the SPARQS to the Trustee.
                                        The Issuer shall, or shall cause the
                                        Calculation Agent to, deliver such cash
                                        to the Trustee for delivery to the
                                        holder of this SPARQS.

                                        If this SPARQS is not surrendered for
                                        exchange on the Call Date, it shall be
                                        deemed to be no longer Outstanding
                                        under, and as defined in, the Senior
                                        Indenture after the Call Date, except
                                        with respect to the holder's right to
                                        receive cash due in connection with the
                                        Morgan Stanley Call Right.

                                      A-5
<PAGE>

Morgan Stanley Notice Date............  The scheduled Trading Day on which the
                                        Issuer issues its notice of mandatory
                                        exchange, which must be at least 10 but
                                        not more than 30 days prior to the Call
                                        Date.

Final Call Notice Date................  April 21, 2004; provided that if April
                                        21, 2004 is not a Trading Day or if a
                                        Market Disruption Event occurs on such
                                        day, the Final Call Notice Date will be
                                        the immediately succeeding Trading Day
                                        on which no Market Disruption Event
                                        occurs.

Call Date.............................  The day specified in the Issuer's
                                        notice of mandatory exchange, on which
                                        the Issuer shall deliver cash to the
                                        holder of this SPARQS, for mandatory
                                        exchange, which day may be any
                                        scheduled Trading Day on or after
                                        October 28, 2003 or the Maturity Date
                                        (including the Maturity Date as it may
                                        be extended and regardless of whether
                                        the Maturity Date is a scheduled
                                        Trading Day). See "Maturity Date"
                                        above.

Call Price............................  The Call Price with respect to any Call
                                        Date is an amount of cash per each
                                        $         principal amount of this
                                        SPARQS, as calculated by the
                                        Calculation Agent, such that the sum of
                                        the present values of all cash flows on
                                        each $         principal amount of this
                                        SPARQS to and including the Call Date
                                        (i.e., the Call Price and all of the
                                        interest payments on each SPARQS),
                                        discounted to the Original Issue Date
                                        from the applicable payment date at the
                                        Yield to Call rate of 24% per annum
                                        computed on the basis of a 360-day year
                                        of twelve 30-day months, equals the
                                        Issue Price, as determined by the
                                        Calculation Agent.

Exchange at Maturity..................  At maturity, subject to a prior call of
                                        this SPARQS for cash in an amount equal
                                        to the Call Price by the Issuer as
                                        described under "Morgan Stanley Call
                                        Right" above or any acceleration of the
                                        SPARQS, upon delivery of this SPARQS to
                                        the Trustee, each $         principal
                                        amount of this SPARQS shall be applied
                                        by the Issuer as payment for a number
                                        of shares of the common stock of Kohl's
                                        Corporation ("Kohl's Stock") at the
                                        Exchange Ratio, and the Issuer shall
                                        deliver with respect to each $
                                        principal amount of this SPARQS an
                                        amount of Kohl's Stock equal to the
                                        Exchange Ratio.

                                        The amount of Kohl's Stock to be
                                        delivered at maturity shall be subject
                                        to any applicable adjustments (i) to
                                        the

                                      A-6
<PAGE>

                                        Exchange Ratio and (ii) in the Exchange
                                        Property, as defined in paragraph 5
                                        under "Antidilution Adjustments" below,
                                        to be delivered instead of, or in
                                        addition to, such Kohl's Stock as a
                                        result of any corporate event described
                                        under "Antidilution Adjustments" below,
                                        in each case, required to be made
                                        through the close of business on the
                                        third Trading Day prior to maturity.

                                        The Issuer shall, or shall cause the
                                        Calculation Agent to, provide written
                                        notice to the Trustee at its New York
                                        Office and to the Depositary, on which
                                        notice the Trustee and Depositary may
                                        conclusively rely, on or prior to 10:30
                                        a.m. on the Trading Day immediately
                                        prior to maturity of this SPARQS, of
                                        the amount of Kohl's Stock (or the
                                        amount of Exchange Property) or cash to
                                        be delivered with respect to each
                                        $         principal amount of this
                                        SPARQS and of the amount of any cash to
                                        be paid in lieu of any fractional share
                                        of Kohl's Stock (or of any other
                                        securities included in Exchange
                                        Property, if applicable); provided that
                                        if the maturity date of this SPARQS is
                                        accelerated (x) because of the
                                        consummation of a Reorganization Event
                                        Acceleration (as defined in paragraph 5
                                        of "Antidilution Adjustments" below) or
                                        (y) because of a Price Event
                                        Acceleration (as described under "Price
                                        Event Acceleration" below) or (z)
                                        because of an Event of Default
                                        Acceleration (as defined under
                                        "Alternate Exchange Calculation in Case
                                        of an Event of Default" below), the
                                        Issuer shall give notice of such
                                        acceleration as promptly as possible,
                                        and in no case later than (A) in the
                                        case of a Reorganization Event
                                        Acceleration or an Event of Default
                                        Acceleration, two Trading Days
                                        following such deemed maturity date or
                                        (B) in the case of a Price Event
                                        Acceleration, 10:30 a.m. on the Trading
                                        Day immediately prior to the date of
                                        acceleration (as defined under "Price
                                        Event Acceleration" below), (i) to the
                                        holder of this SPARQS by mailing notice
                                        of such acceleration by first class
                                        mail, postage prepaid, to the holder's
                                        last address as it shall appear upon
                                        the registry books, (ii) to the Trustee
                                        by telephone or facsimile confirmed by
                                        mailing such notice to the Trustee by
                                        first class mail, postage prepaid, at
                                        its New York office and (iii) to the
                                        Depositary by telephone or facsimile
                                        confirmed by mailing such notice to the
                                        Depositary by first class mail, postage
                                        prepaid. Any notice that is mailed in
                                        the manner herein provided shall

                                      A-7
<PAGE>

                                        be conclusively presumed to have been
                                        duly given, whether or not the holder
                                        of this SPARQS receives the notice. If
                                        the maturity of this SPARQS is
                                        accelerated, no interest on the amounts
                                        payable with respect to this SPARQS
                                        shall accrue for the period from and
                                        after such accelerated maturity date;
                                        provided that the Issuer has deposited
                                        with the Trustee the Kohl's Stock, the
                                        Exchange Property or any cash due with
                                        respect to such acceleration on the
                                        accelerated maturity date.

                                        The Issuer shall, or shall cause the
                                        Calculation Agent to, deliver any such
                                        shares of Kohl's Stock (or any Exchange
                                        Property) and cash in respect of
                                        interest and any fractional share of
                                        Kohl's Stock (or any Exchange Property)
                                        and cash otherwise due upon any
                                        acceleration described above to the
                                        Trustee for delivery to the holder of
                                        this Note. References to payment "per
                                        SPARQS" refer to each $
                                        principal amount of this SPARQS.

                                        If this SPARQS is not surrendered for
                                        exchange at maturity, it shall be
                                        deemed to be no longer Outstanding
                                        under, and as defined in, the Senior
                                        Indenture, except with respect to the
                                        holder's right to receive the Kohl's
                                        Stock (and, if applicable, any Exchange
                                        Property) or cash due at maturity.

Price Event Acceleration..............  If on any two consecutive Trading Days
                                        prior to or ending on the third
                                        Business Day immediately preceding the
                                        Maturity Date the product of the Market
                                        Price per share of Kohl's Stock and the
                                        Exchange Ratio is less than $1.00, the
                                        Maturity Date of this SPARQS shall be
                                        deemed to be accelerated to the third
                                        Business Day immediately following such
                                        second Trading Day (the "date of
                                        acceleration"). Upon such acceleration,
                                        the holder of this SPARQS shall receive
                                        per SPARQS on the date of acceleration:

                                            (i)   a number of shares of Kohl's
                                                  Stock at the then current
                                                  Exchange Ratio;

                                            (ii)  accrued but unpaid interest
                                                  on each $ principal amount of
                                                  this SPARQS to but excluding
                                                  the date of acceleration; and

                                      A-8
<PAGE>

                                            (iii) an amount of cash
                                                  representing the sum of the
                                                  present values of the
                                                  remaining scheduled payments
                                                  of interest on each $
                                                  principal amount of this
                                                  SPARQS (excluding the amounts
                                                  included in clause (ii)
                                                  above) discounted to the date
                                                  of acceleration. The present
                                                  value of each remaining
                                                  scheduled payment will be
                                                  based on the comparable yield
                                                  that the Issuer would pay on
                                                  a non-interest bearing,
                                                  senior unsecured debt
                                                  obligation of the Issuer
                                                  having a maturity equal to
                                                  the term of each such
                                                  remaining scheduled payment,
                                                  as determined by the
                                                  Calculation Agent.

No Fractional Shares..................  Upon delivery of this SPARQS to the
                                        Trustee at maturity, the Issuer shall
                                        deliver the aggregate number of shares
                                        of Kohl's Stock due with respect to
                                        this SPARQS, as described above, but
                                        the Issuer shall pay cash in lieu of
                                        delivering any fractional share of
                                        Kohl's Stock in an amount equal to the
                                        corresponding fractional Market Price
                                        of such fraction of a share of Kohl's
                                        Stock as determined by the Calculation
                                        Agent as of the second scheduled
                                        Trading Day prior to maturity of this
                                        SPARQS.

Exchange Ratio........................  .5, subject to adjustment for corporate
                                        events relating to Kohl's Corporation
                                        ("Kohl's") described under
                                        "Antidilution Adjustments" below.

Market Price..........................  If Kohl's Stock (or any other security
                                        for which a Market Price must be
                                        determined) is listed on a national
                                        securities exchange, is a security of
                                        the Nasdaq National Market or is
                                        included in the OTC Bulletin Board
                                        Service ("OTC Bulletin Board") operated
                                        by the National Association of
                                        Securities Dealers, Inc. (the "NASD"),
                                        the Market Price for one share of
                                        Kohl's Stock (or one unit of any such
                                        other security) on any Trading Day
                                        means (i) the last reported sale price,
                                        regular way, of the principal trading
                                        session on such day on the principal
                                        United States securities exchange
                                        registered under the Securities
                                        Exchange Act of 1934, as amended (the
                                        "Exchange Act"), on which Kohl's Stock
                                        is listed or admitted to trading (which
                                        may be the Nasdaq National Market if it
                                        is then a national securities exchange)
                                        or (ii) if not listed or admitted to
                                        trading on any such securities exchange
                                        or if such last reported sale price is
                                        not obtainable (even if Kohl's Stock is
                                        listed or admitted to trading on such
                                        securities exchange), the last reported
                                        sale price of the

                                      A-9
<PAGE>

                                        principal trading session on the
                                        over-the-counter market as reported on
                                        the Nasdaq National Market (if it is
                                        not then a national securities
                                        exchange) or OTC Bulletin Board on such
                                        day. If the last reported sale price of
                                        the principal trading session is not
                                        available pursuant to clause (i) or
                                        (ii) of the preceding sentence because
                                        of a Market Disruption Event or
                                        otherwise, the Market Price for any
                                        Trading Day shall be the mean, as
                                        determined by the Calculation Agent, of
                                        the bid prices for Kohl's Stock
                                        obtained from as many dealers in such
                                        security, but not exceeding three, as
                                        will make such bid prices available to
                                        the Calculation Agent. Bids of Morgan
                                        Stanley & Co. Incorporated ("MS & Co.")
                                        or any of its affiliates may be
                                        included in the calculation of such
                                        mean, but only to the extent that any
                                        such bid is the highest of the bids
                                        obtained. A "security of the Nasdaq
                                        National Market" shall include a
                                        security included in any successor to
                                        such system, and the term "OTC Bulletin
                                        Board Service" shall include any
                                        successor service thereto.

Trading Day...........................  A day, as determined by the Calculation
                                        Agent, on which trading is generally
                                        conducted on the New York Stock
                                        Exchange, Inc. ("NYSE"), the American
                                        Stock Exchange LLC, the Nasdaq National
                                        Market, the Chicago Mercantile Exchange
                                        and the Chicago Board of Options
                                        Exchange and in the over-the-counter
                                        market for equity securities in the
                                        United States.

Calculation Agent.....................  MS & Co. and its successors.

                                        All calculations with respect to the
                                        Exchange Ratio and Call Price for the
                                        SPARQS shall be rounded to the nearest
                                        one hundred-thousandth, with five
                                        one-millionths rounded upward (e.g.,
                                        .876545 would be rounded to .87655);
                                        all dollar amounts related to the Call
                                        Price resulting from such calculations
                                        shall be rounded to the nearest ten-
                                        thousandth, with five one
                                        hundred-thousandths rounded upward
                                        (e.g., .76545 would be rounded to
                                        .7655); and all dollar amounts paid
                                        with respect to the Call Price on the
                                        aggregate number of SPARQS shall be
                                        rounded to the nearest cent, with
                                        one-half cent rounded upward.

                                        All determinations made by the
                                        Calculation Agent will be at the sole
                                        discretion of the Calculation Agent and
                                        will, in the absence of manifest error,
                                        be conclusive for all

                                     A-10
<PAGE>

                                        purposes and binding on the holder of
                                        this SPARQS and the Issuer.

Antidilution Adjustments..............  The Exchange Ratio shall be adjusted as
                                        follows:

                                           1. If Kohl's Stock is subject to a
                                        stock split or reverse stock split,
                                        then once such split has become
                                        effective, the Exchange Ratio shall be
                                        adjusted to equal the product of the
                                        prior Exchange Ratio and the number of
                                        shares issued in such stock split or
                                        reverse stock split with respect to one
                                        share of Kohl's Stock.

                                           2. If Kohl's Stock is subject (i) to
                                        a stock dividend (issuance of
                                        additional shares of Kohl's Stock) that
                                        is given ratably to all holders of
                                        shares of Kohl's Stock or (ii) to a
                                        distribution of Kohl's Stock as a
                                        result of the triggering of any
                                        provision of the corporate charter of
                                        Kohl's, then once the dividend has
                                        become effective and Kohl's Stock is
                                        trading ex-dividend, the Exchange Ratio
                                        shall be adjusted so that the new
                                        Exchange Ratio shall equal the prior
                                        Exchange Ratio plus the product of (i)
                                        the number of shares issued with
                                        respect to one share of Kohl's Stock
                                        and (ii) the prior Exchange Ratio.

                                           3. There shall be no adjustments to
                                        the Exchange Ratio to reflect cash
                                        dividends or other distributions paid
                                        with respect to Kohl's Stock other than
                                        distributions described in clauses (i),
                                        (iv) and (v) of paragraph 5 below and
                                        Extraordinary Dividends as described
                                        below. A cash dividend or other
                                        distribution with respect to Kohl's
                                        Stock shall be deemed to be an
                                        "Extraordinary Dividend" if such
                                        dividend or other distribution exceeds
                                        the immediately preceding
                                        non-Extraordinary Dividend for Kohl's
                                        Stock by an amount equal to at least
                                        10% of the Market Price of Kohl's Stock
                                        (as adjusted for any subsequent
                                        corporate event requiring an adjustment
                                        hereunder, such as a stock split or
                                        reverse stock split) on the Trading Day
                                        preceding the ex-dividend date for the
                                        payment of such Extraordinary Dividend
                                        (the "ex- dividend date"). If an
                                        Extraordinary Dividend occurs with
                                        respect to Kohl's Stock, the Exchange
                                        Ratio with respect to Kohl's Stock
                                        shall be adjusted on the ex- dividend
                                        date with respect to such Extraordinary
                                        Dividend so that the new Exchange Ratio
                                        shall equal the product of (i) the then
                                        current Exchange Ratio and (ii) a

                                     A-11
<PAGE>

                                        fraction, the numerator of which is the
                                        Market Price on the Trading Day
                                        preceding the ex-dividend date, and the
                                        denominator of which is the amount by
                                        which the Market Price on the Trading
                                        Day preceding the ex-dividend date
                                        exceeds the Extraordinary Dividend
                                        Amount. The "Extraordinary Dividend
                                        Amount" with respect to an
                                        Extraordinary Dividend for Kohl's Stock
                                        shall equal (i) in the case of cash
                                        dividends or other distributions that
                                        constitute regular dividends, the
                                        amount per share of such Extraordinary
                                        Dividend minus the amount per share of
                                        the immediately preceding
                                        non-Extraordinary Dividend for Kohl's
                                        Stock or (ii) in the case of cash
                                        dividends or other distributions that
                                        do not constitute regular dividends,
                                        the amount per share of such
                                        Extraordinary Dividend. To the extent
                                        an Extraordinary Dividend is not paid
                                        in cash, the value of the non-cash
                                        component shall be determined by the
                                        Calculation Agent, whose determination
                                        shall be conclusive. A distribution on
                                        Kohl's Stock described in clause (i),
                                        (iv) or (v) of paragraph 5 below that
                                        also constitutes an Extraordinary
                                        Dividend shall cause an adjustment to
                                        the Exchange Ratio pursuant only to
                                        clause (i), (iv) or (v) of paragraph 5,
                                        as applicable.

                                           4. If Kohl's issues rights or
                                        warrants to all holders of Kohl's Stock
                                        to subscribe for or purchase Kohl's
                                        Stock at an exercise price per share
                                        less than the Market Price of Kohl's
                                        Stock on both (i) the date the exercise
                                        price of such rights or warrants is
                                        determined and (ii) the expiration date
                                        of such rights or warrants, and if the
                                        expiration date of such rights or
                                        warrants precedes the maturity of this
                                        SPARQS, then the Exchange Ratio shall
                                        be adjusted to equal the product of the
                                        prior Exchange Ratio and a fraction,
                                        the numerator of which shall be the
                                        number of shares of Kohl's Stock
                                        outstanding immediately prior to the
                                        issuance of such rights or warrants
                                        plus the number of additional shares of
                                        Kohl's Stock offered for subscription
                                        or purchase pursuant to such rights or
                                        warrants and the denominator of which
                                        shall be the number of shares of Kohl's
                                        Stock outstanding immediately prior to
                                        the issuance of such rights or warrants
                                        plus the number of additional shares of
                                        Kohl's Stock which the aggregate
                                        offering price of the total number of
                                        shares of Kohl's Stock so offered for
                                        subscription or purchase pursuant to
                                        such rights or

                                     A-12
<PAGE>

                                        warrants would purchase at the Market
                                        Price on the expiration date of such
                                        rights or warrants, which shall be
                                        determined by multiplying such total
                                        number of shares offered by the
                                        exercise price of such rights or
                                        warrants and dividing the product so
                                        obtained by such Market Price.

                                           5. If (i) there occurs any
                                        reclassification or change of Kohl's
                                        Stock, including, without limitation,
                                        as a result of the issuance of any
                                        tracking stock by Kohl's, (ii) Kohl's
                                        or any surviving entity or subsequent
                                        surviving entity of Kohl's (a "Kohl's
                                        Successor") has been subject to a
                                        merger, combination or consolidation
                                        and is not the surviving entity, (iii)
                                        any statutory exchange of securities of
                                        Kohl's or any Kohl's Successor with
                                        another corporation occurs (other than
                                        pursuant to clause (ii) above), (iv)
                                        Kohl's is liquidated, (v) Kohl's issues
                                        to all of its shareholders equity
                                        securities of an issuer other than
                                        Kohl's (other than in a transaction
                                        described in clause (ii), (iii) or (iv)
                                        above) (a "Spin-off Event") or (vi) a
                                        tender or exchange offer or
                                        going-private transaction is
                                        consummated for all the outstanding
                                        shares of Kohl's Stock (any such event
                                        in clauses (i) through (vi), a
                                        "Reorganization Event"), the method of
                                        determining the amount payable upon
                                        exchange at maturity for this SPARQS
                                        shall be adjusted to provide that the
                                        holder of this SPARQS shall be entitled
                                        to receive at maturity, in respect of
                                        each $         principal amount of this
                                        SPARQS, securities, cash or any other
                                        assets distributed to holders of Kohl's
                                        Stock in or as a result of any such
                                        Reorganization Event, including (i) in
                                        the case of the issuance of tracking
                                        stock, the reclassified share of Kohl's
                                        Stock, (ii) in the case of a Spin-off
                                        Event, the share of Kohl's Stock with
                                        respect to which the spun-off security
                                        was issued, and (iii) in the case of
                                        any other Reorganization Event where
                                        Kohl's Stock continues to be held by
                                        the holders receiving such
                                        distribution, the Kohl's Stock
                                        (collectively, the "Exchange
                                        Property"), in an amount with a value
                                        equal to the amount of Exchange
                                        Property delivered with respect to a
                                        number of shares of Kohl's Stock equal
                                        to the Exchange Ratio at the time of
                                        the Reorganization Event.
                                        Notwithstanding the above, if the
                                        Exchange Property received in any such
                                        Reorganization Event consists only of
                                        cash, the Maturity Date of this SPARQS
                                        shall be deemed to be accelerated

                                     A-13
<PAGE>

                                        (a "Reorganization Event Acceleration")
                                        to the third Business Day immediately
                                        following the date on which such cash
                                        is distributed to holders of Kohl's
                                        Stock (unless the Issuer exercises or
                                        has exercised the Morgan Stanley Call
                                        Right) and the holder of this SPARQS
                                        shall receive for each $
                                        principal amount of this SPARQS on such
                                        date of acceleration in lieu of any
                                        Kohl's Stock and as liquidated damages
                                        in full satisfaction of the Issuer's
                                        obligations under this SPARQS the
                                        lesser of (i) the product of (x) the
                                        amount of cash received per share of
                                        Kohl's Stock and (y) the then current
                                        Exchange Ratio and (ii) the Call Price
                                        calculated as though the date of
                                        acceleration were the Call Date (but in
                                        no event less than the Call Price for
                                        the first Call Date), in each case plus
                                        accrued but unpaid interest to but
                                        excluding the date of acceleration. If
                                        Exchange Property consists of more than
                                        one type of property, the holder of
                                        this SPARQS shall receive at maturity a
                                        pro rata share of each such type of
                                        Exchange Property. If Exchange Property
                                        includes a cash component, the holder
                                        of this SPARQS will not receive any
                                        interest accrued on such cash
                                        component. In the event Exchange
                                        Property consists of securities, those
                                        securities shall, in turn, be subject
                                        to the antidilution adjustments set
                                        forth in paragraphs 1 through 5.

                                        For purposes of paragraph 5 above, in
                                        the case of a consummated tender or
                                        exchange offer or going-private
                                        transaction involving Exchange Property
                                        of a particular type, Exchange Property
                                        shall be deemed to include the amount
                                        of cash or other property paid by the
                                        offeror in the tender or exchange offer
                                        with respect to such Exchange Property
                                        (in an amount determined on the basis
                                        of the rate of exchange in such tender
                                        or exchange offer or going- private
                                        transaction). In the event of a tender
                                        or exchange offer or a going-private
                                        transaction with respect to Exchange
                                        Property in which an offeree may elect
                                        to receive cash or other property,
                                        Exchange Property shall be deemed to
                                        include the kind and amount of cash and
                                        other property received by offerees who
                                        elect to receive cash.

                                        Following the occurrence of any
                                        Reorganization Event referred to in
                                        paragraph 5 above, (i) references to
                                        "Kohl's Stock" under "No Fractional
                                        Shares," "Market Price" and "Market
                                        Disruption Event" shall be deemed to
                                        also refer to any other security
                                        received by holders of Kohl's Stock

                                     A-14
<PAGE>

                                        in any such Reorganization Event, and
                                        (ii) all other references in this
                                        SPARQS to "Kohl's Stock" shall be
                                        deemed to refer to the Exchange
                                        Property into which this SPARQS is
                                        thereafter exchangeable and references
                                        to a "share" or "shares" of Kohl's
                                        Stock shall be deemed to refer to the
                                        applicable unit or units of such
                                        Exchange Property, unless the context
                                        otherwise requires.

                                        No adjustment to the Exchange Ratio
                                        shall be required unless such
                                        adjustment would require a change of at
                                        least 0.1% in the Exchange Ratio then
                                        in effect. The Exchange Ratio resulting
                                        from any of the adjustments specified
                                        above will be rounded to the nearest
                                        one hundred- thousandth, with five
                                        one-millionths rounded upward.
                                        Adjustments to the Exchange Ratio will
                                        be made up to the close of business on
                                        the third Trading Day prior to the
                                        Maturity Date.

                                        No adjustments to the Exchange Ratio or
                                        method of calculating the Exchange
                                        Ratio shall be made other than those
                                        specified above. The adjustments
                                        specified above do not cover all events
                                        that could affect the Market Price of
                                        Kohl's Stock, including, without
                                        limitation, a partial tender or
                                        exchange offer for Kohl's Stock.

                                        The Calculation Agent shall be solely
                                        responsible for the determination and
                                        calculation of any adjustments to the
                                        Exchange Ratio or method of calculating
                                        the Exchange Ratio and of any related
                                        determinations and calculations with
                                        respect to any distributions of stock,
                                        other securities or other property or
                                        assets (including cash) in connection
                                        with any corporate event described in
                                        paragraph 5 above, and its
                                        determinations and calculations with
                                        respect thereto shall be conclusive in
                                        the absence of manifest error.

                                        The Calculation Agent shall provide
                                        information as to any adjustments to
                                        the Exchange Ratio or to the method of
                                        calculating the amount payable upon
                                        exchange at maturity of the SPARQS in
                                        accordance with paragraph 5 above upon
                                        written request by any holder of this
                                        SPARQS.

Market Disruption Event...............  "Market Disruption Event" means, with
                                        respect to Kohl's Stock:

                                     A-15
<PAGE>

                                            (i) a suspension, absence or
                                            material limitation of trading of
                                            Kohl's Stock on the primary market
                                            for Kohl's Stock for more than two
                                            hours of trading or during the
                                            one-half hour period preceding the
                                            close of the principal trading
                                            session in such market; or a
                                            breakdown or failure in the price
                                            and trade reporting systems of the
                                            primary market for Kohl's Stock as
                                            a result of which the reported
                                            trading prices for Kohl's Stock
                                            during the last one-half hour
                                            preceding the close of the
                                            principal trading session in such
                                            market are materially inaccurate;
                                            or the suspension, absence or
                                            material limitation of trading on
                                            the primary market for trading in
                                            options contracts related to Kohl's
                                            Stock, if available, during the
                                            one-half hour period preceding the
                                            close of the principal trading
                                            session in the applicable market,
                                            in each case as determined by the
                                            Calculation Agent in its sole
                                            discretion; and

                                            (ii) a determination by the
                                            Calculation Agent in its sole
                                            discretion that any event described
                                            in clause (i) above materially
                                            interfered with the ability of the
                                            Issuer or any of its affiliates to
                                            unwind or adjust all or a material
                                            portion of the hedge with respect
                                            to the SPARQS.

                                        For purposes of determining whether a
                                        Market Disruption Event has occurred:
                                        (1) a limitation on the hours or number
                                        of days of trading shall not constitute
                                        a Market Disruption Event if it results
                                        from an announced change in the regular
                                        business hours of the relevant
                                        exchange, (2) a decision to permanently
                                        discontinue trading in the relevant
                                        options contract shall not constitute a
                                        Market Disruption Event, (3)
                                        limitations pursuant to NYSE Rule 80A
                                        (or any applicable rule or regulation
                                        enacted or promulgated by the NYSE, any
                                        other self-regulatory organization or
                                        the Securities and Exchange Commission
                                        of scope similar to NYSE Rule 80A as
                                        determined by the Calculation Agent) on
                                        trading during significant market
                                        fluctuations shall constitute a
                                        suspension, absence or material
                                        limitation of trading, (4) a suspension
                                        of trading in options contracts on
                                        Kohl's Stock by the primary securities
                                        market trading in such options, if
                                        available, by reason of (x) a price
                                        change exceeding limits set by such
                                        securities exchange or market, (y) an
                                        imbalance of orders

                                     A-16
<PAGE>

                                        relating to such contracts or (z) a
                                        disparity in bid and ask quotes
                                        relating to such contracts shall
                                        constitute a suspension, absence or
                                        material limitation of trading in
                                        options contracts related to Kohl's
                                        Stock and (5) a suspension, absence or
                                        material limitation of trading on the
                                        primary securities market on which
                                        options contracts related to Kohl's
                                        Stock are traded shall not include any
                                        time when such securities market is
                                        itself closed for trading under
                                        ordinary circumstances.

Alternate Exchange Calculation
in Case of an Event of Default........  In case an event of default with
                                        respect to the SPARQS shall have
                                        occurred and be continuing, the amount
                                        declared due and payable per each
                                        $         principal amount of this
                                        SPARQS upon any acceleration of this
                                        SPARQS (an "Event of Default
                                        Acceleration") shall be determined by
                                        the Calculation Agent and shall be an
                                        amount in cash equal to the lesser of
                                        (i) the product of (x) the Market Price
                                        of Kohl's Stock (and/or the value of
                                        any Exchange Property) as of the date
                                        of such acceleration and (y) the then
                                        current Exchange Ratio and (ii) the
                                        Call Price calculated as though the
                                        date of acceleration were the Call Date
                                        (but in no event less than the Call
                                        Price for the Call Date), in each case
                                        plus accrued but unpaid interest to but
                                        excluding the date of acceleration;
                                        provided that if the Issuer has called
                                        the SPARQS in accordance with the
                                        Morgan Stanley Call Right, the amount
                                        declared due and payable upon any such
                                        acceleration shall be an amount in cash
                                        for each $         principal amount of
                                        the SPARQS equal to the Call Price for
                                        the Call Date specified in the Issuer's
                                        notice of mandatory exchange, plus
                                        accrued but unpaid interest to but
                                        excluding the date of acceleration.

Treatment of SPARQS for
United States Federal
Income Tax Purposes...................  The Issuer, by its sale of this SPARQS,
                                        and the holder of this SPARQS (and any
                                        successor holder of this SPARQS), by
                                        its respective purchase hereof, agree
                                        (in the absence of an administrative
                                        determination or judicial ruling to the
                                        contrary) to characterize each
                                        $         principal amount of this
                                        SPARQS for all tax purposes as an
                                        investment unit consisting of (A) a
                                        terminable contract (the "Terminable
                                        Forward Contract") that (i) requires
                                        the holder of this SPARQS (subject to
                                        the Morgan Stanley

                                     A-17
<PAGE>

                                        Call Right) to purchase, and the Issuer
                                        to sell, for an amount equal to
                                        $         (the "Forward Price"), Kohl's
                                        Stock at maturity and (ii) allows the
                                        Issuer, upon exercise of the Morgan
                                        Stanley Call Right, to terminate the
                                        Terminable Forward Contract by
                                        returning to such holder the Deposit
                                        (as defined below) and paying to such
                                        holder an amount of cash equal to the
                                        difference between the Deposit and the
                                        Call Price and (B) a deposit with the
                                        Issuer of a fixed amount of cash, equal
                                        to the Issue Price per each $
                                        principal amount of this SPARQS, to
                                        secure the holder's obligation to
                                        purchase Kohl's Stock pursuant to the
                                        Terminable Forward Contract (the
                                        "Deposit"), which Deposit bears an
                                        annual yield of     % per annum.

                                     A-18
<PAGE>

     Morgan Stanley (formerly known as Morgan Stanley Dean Witter & Co.), a
Delaware corporation (together with its successors and assigns, the "Issuer"),
for value received, hereby promises to pay to CEDE & CO., or registered
assignees, the amount of Kohl's Stock (or other Exchange Property), as
determined in accordance with the provisions set forth under "Exchange at
Maturity" above, due with respect to the principal sum of U.S. $
(UNITED STATES DOLLARS                                 ) on the Maturity Date
specified above (except to the extent redeemed or repaid prior to maturity) and
to pay interest thereon at the Interest Rate per annum specified above, from
and including the Interest Accrual Date specified above until the principal
hereof is paid or duly made available for payment weekly, monthly, quarterly,
semiannually or annually in arrears as specified above as the Interest Payment
Period on each Interest Payment Date (as specified above), commencing on the
Interest Payment Date next succeeding the Interest Accrual Date specified
above, and at maturity (or on any redemption or repayment date); provided,
however, that if the Interest Accrual Date occurs between a Record Date, as
defined below, and the next succeeding Interest Payment Date, interest payments
will commence on the second Interest Payment Date succeeding the Interest
Accrual Date to the registered holder of this Note on the Record Date with
respect to such second Interest Payment Date; and provided, further, that if
this Note is subject to "Annual Interest Payments," interest payments shall be
made annually in arrears and the term "Interest Payment Date" shall be deemed
to mean the first day of March in each year.

     Interest on this Note will accrue from and including the most recent date
to which interest has been paid or duly provided for, or, if no interest has
been paid or duly provided for, from and including the Interest Accrual Date,
until, but excluding the date the principal hereof has been paid or duly made
available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, subject to certain exceptions
described herein, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the date 15
calendar days prior to such Interest Payment Date (whether or not a Business
Day (as defined below)) (each such date, a "Record Date"); provided, however,
that interest payable at maturity (or any redemption or repayment date) will be
payable to the person to whom the principal hereof shall be payable. As used
herein, "Business Day" means any day, other than a Saturday or Sunday, (a) that
is neither a legal holiday nor a day on which banking institutions are
authorized or required by law or regulation to close (x) in The City of New
York or (y) if this Note is denominated in a Specified Currency other than U.S.
dollars, euro or Australian dollars, in the principal financial center of the
country of the Specified Currency, or (z) if this Note is denominated in
Australian dollars, in Sydney and (b) if this Note is denominated in euro, that
is also a day on which the Trans-European Automated Real-time Gross Settlement
Express Transfer System ("TARGET") is operating (a "TARGET Settlement Day").

     Payment of the principal of this Note, any premium and the interest due at
maturity (or any redemption or repayment date), unless this Note is denominated
in a Specified Currency other than U.S. dollars and is to be paid in whole or
in part in such Specified Currency, will be made in immediately available funds
upon surrender of this Note at the office or agency of the Paying Agent, as
defined on the reverse hereof, maintained for that purpose in the Borough of
Manhattan, The City of New York, or at such other paying agency as the Issuer
may determine, in U.S. dollars. U.S. dollar payments of interest, other than
interest due at maturity or on any date of redemption or repayment, will be
made by U.S. dollar check mailed to the address of the person entitled thereto

                                     A-19
<PAGE>

as such address shall appear in the Note register. A holder of U.S. $10,000,000
(or the equivalent in a Specified Currency) or more in aggregate principal
amount of Notes having the same Interest Payment Date, the interest on which is
payable in U.S. dollars, shall be entitled to receive payments of interest,
other than interest due at maturity or on any date of redemption or repayment,
by wire transfer of immediately available funds if appropriate wire transfer
instructions have been received by the Paying Agent in writing not less than 15
calendar days prior to the applicable Interest Payment Date.

     If this Note is denominated in a Specified Currency other than U.S.
dollars, and the holder does not elect (in whole or in part) to receive payment
in U.S. dollars pursuant to the next succeeding paragraph, payments of
interest, principal or any premium with regard to this Note will be made by
wire transfer of immediately available funds to an account maintained by the
holder hereof with a bank located outside the United States if appropriate wire
transfer instructions have been received by the Paying Agent in writing, with
respect to payments of interest, on or prior to the fifth Business Day after
the applicable Record Date and, with respect to payments of principal or any
premium, at least ten Business Days prior to the Maturity Date or any
redemption or repayment date, as the case may be; provided that, if payment of
interest, principal or any premium with regard to this Note is payable in euro,
the account must be a euro account in a country for which the euro is the
lawful currency, provided, further, that if such wire transfer instructions are
not received, such payments will be made by check payable in such Specified
Currency mailed to the address of the person entitled thereto as such address
shall appear in the Note register; and provided, further, that payment of the
principal of this Note, any premium and the interest due at maturity (or on any
redemption or repayment date) will be made upon surrender of this Note at the
office or agency referred to in the preceding paragraph.

     If so indicated on the face hereof, the holder of this Note, if
denominated in a Specified Currency other than U.S. dollars, may elect to
receive all or a portion of payments on this Note in U.S. dollars by
transmitting a written request to the Paying Agent, on or prior to the fifth
Business Day after such Record Date or at least ten Business Days prior to the
Maturity Date or any redemption or repayment date, as the case may be. Such
election shall remain in effect unless such request is revoked by written
notice to the Paying Agent as to all or a portion of payments on this Note at
least five Business Days prior to such Record Date, for payments of interest,
or at least ten days prior to the Maturity Date or any redemption or repayment
date, for payments of principal, as the case may be.

     If the holder elects to receive all or a portion of payments of principal
of and any premium and interest on this Note, if denominated in a Specified
Currency other than U.S. dollars, in U.S. dollars, the Exchange Rate Agent (as
defined on the reverse hereof) will convert such payments into U.S. dollars. In
the event of such an election, payment in respect of this Note will be based
upon the exchange rate as determined by the Exchange Rate Agent based on the
highest bid quotation in The City of New York received by such Exchange Rate
Agent at approximately 11:00 a.m., New York City time, on the second Business
Day preceding the applicable payment date from three recognized foreign
exchange dealers (one of which may be the Exchange Rate Agent unless such
Exchange Rate Agent is an affiliate of the Issuer) for the purchase by the
quoting dealer of U.S. dollars for the Specified Currency for settlement on
such payment date in the amount of the

                                      A-20
<PAGE>

Specified Currency payable in the absence of such an election to such holder
and at which the applicable dealer commits to execute a contract. If such bid
quotations are not available, such payment will be made in the Specified
Currency. All currency exchange costs will be borne by the holder of this Note
by deductions from such payments.

     Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.

     Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Senior Indenture, as defined on the
reverse hereof, or be valid or obligatory for any purpose.

                                      A-21
<PAGE>

     IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed.

DATED:                                         MORGAN STANLEY

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

TRUSTEE'S CERTIFICATE
    OF AUTHENTICATION

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

JPMORGAN CHASE BANK,
    as Trustee

By:
   ----------------------------------
   Authorized Officer

                                      A-22
<PAGE>

                              REVERSE OF SECURITY

     This Note is one of a duly authorized issue of Senior Global Medium-Term
Notes, Series C, having maturities more than nine months from the date of issue
(the "Notes") of the Issuer. The Notes are issuable under an Amended and
Restated Senior Indenture, dated as of May 1, 1999, between the Issuer and
JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as Trustee
(the "Trustee," which term includes any successor trustee under the Senior
Indenture) (as may be amended or supplemented from time to time, the "Senior
Indenture"), to which Senior Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities of the Issuer, the Trustee and holders of the
Notes and the terms upon which the Notes are, and are to be, authenticated and
delivered. The Issuer has appointed JPMorgan Chase Bank at its corporate trust
office in The City of New York as the paying agent (the "Paying Agent," which
term includes any additional or successor Paying Agent appointed by the Issuer)
with respect to the Notes. The terms of individual Notes may vary with respect
to interest rates, interest rate formulas, issue dates, maturity dates, or
otherwise, all as provided in the Senior Indenture. To the extent not
inconsistent herewith, the terms of the Senior Indenture are hereby
incorporated by reference herein.

     Unless otherwise indicated on the face hereof, this Note will not be
subject to any sinking fund and, unless otherwise provided on the face hereof
in accordance with the provisions of the following two paragraphs, will not be
redeemable or subject to repayment at the option of the holder prior to
maturity.

     If so indicated on the face hereof, this Note may be redeemed in whole or
in part at the option of the Issuer on or after the Initial Redemption Date
specified on the face hereof on the terms set forth on the face hereof,
together with interest accrued and unpaid hereon to the date of redemption. If
this Note is subject to "Annual Redemption Percentage Reduction," the Initial
Redemption Percentage indicated on the face hereof will be reduced on each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction specified on the face hereof until the redemption price of this Note
is 100% of the principal amount hereof, together with interest accrued and
unpaid hereon to the date of redemption. Notice of redemption shall be mailed
to the registered holders of the Notes designated for redemption at their
addresses as the same shall appear on the Note register not less than 30 nor
more than 60 calendar days prior to the date fixed for redemption or within the
Redemption Notice Period specified on the face hereof, subject to all the
conditions and provisions of the Senior Indenture. In the event of redemption
of this Note in part only, a new Note or Notes for the amount of the unredeemed
portion hereof shall be issued in the name of the holder hereof upon the
cancellation hereof.

     If so indicated on the face of this Note, this Note will be subject to
repayment at the option of the holder on the Optional Repayment Date or Dates
specified on the face hereof on the terms set forth herein. On any Optional
Repayment Date, this Note will be repayable in whole or in part in increments
of $1,000 or, if this Note is denominated in a Specified Currency other than
U.S. dollars, in increments of 1,000 units of such Specified Currency (provided
that any remaining principal amount hereof shall not be less than the minimum
authorized denomination hereof) at the option of the holder hereof at a price
equal to 100% of the principal amount to be repaid, together with interest

                                      A-23
<PAGE>

accrued and unpaid hereon to the date of repayment. For this Note to be repaid
at the option of the holder hereof, the Paying Agent must receive at its
corporate trust office in the Borough of Manhattan, The City of New York, at
least 15 but not more than 30 calendar days prior to the date of repayment, (i)
this Note with the form entitled "Option to Elect Repayment" below duly
completed or (ii) a telegram, telex, facsimile transmission or a letter from a
member of a national securities exchange or the National Association of
Securities Dealers, Inc. or a commercial bank or a trust company in the United
States setting forth the name of the holder of this Note, the principal amount
hereof, the certificate number of this Note or a description of this Note's
tenor and terms, the principal amount hereof to be repaid, a statement that the
option to elect repayment is being exercised thereby and a guarantee that this
Note, together with the form entitled "Option to Elect Repayment" duly
completed, will be received by the Paying Agent not later than the fifth
Business Day after the date of such telegram, telex, facsimile transmission or
letter; provided, that such telegram, telex, facsimile transmission or letter
shall only be effective if this Note and form duly completed are received by
the Paying Agent by such fifth Business Day. Exercise of such repayment option
by the holder hereof shall be irrevocable. In the event of repayment of this
Note in part only, a new Note or Notes for the amount of the unpaid portion
hereof shall be issued in the name of the holder hereof upon the cancellation
hereof.

     Interest payments on this Note will include interest accrued to but
excluding the Interest Payment Dates or the Maturity Date (or any earlier
redemption or repayment date), as the case may be. Unless otherwise provided on
the face hereof, interest payments for this Note will be computed and paid on
the basis of a 360-day year of twelve 30-day months.

     In the case where the Interest Payment Date or the Maturity Date (or any
redemption or repayment date) does not fall on a Business Day, payment of
interest, premium, if any, or principal otherwise payable on such date 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 Interest Payment Date or on the
Maturity Date (or any redemption or repayment date), and no interest on such
payment shall accrue for the period from and after the Interest Payment Date or
the Maturity Date (or any redemption or repayment date) to such next succeeding
Business Day.

     This Note and all the obligations of the Issuer hereunder are direct,
unsecured obligations of the Issuer and rank without preference or priority
among themselves and pari passu with all other existing and future unsecured
and unsubordinated indebtedness of the Issuer, subject to certain statutory
exceptions in the event of liquidation upon insolvency.

     This Note, and any Note or Notes issued upon transfer or exchange hereof,
is issuable only in fully registered form, without coupons, and, if denominated
in U.S. dollars, unless otherwise stated above, is issuable only in
denominations of U.S. $1,000 and any integral multiple of U.S. $1,000 in excess
thereof. If this Note is denominated in a Specified Currency other than U.S.
dollars, then, unless a higher minimum denomination is required by applicable
law, it is issuable only in denominations of the equivalent of U.S. $1,000
(rounded to an integral multiple of 1,000 units of such Specified Currency), or
any amount in excess thereof which is an integral multiple of 1,000 units of
such Specified Currency, as determined by reference to the noon dollar buying
rate in The City of New York for cable transfers of such Specified Currency
published by the Federal

                                      A-24
<PAGE>

Reserve Bank of New York (the "Market Exchange Rate") on the Business Day
immediately preceding the date of issuance.

     The Trustee has been appointed registrar for the Notes, and the Trustee
will maintain at its office in The City of New York a register for the
registration and transfer of Notes. This Note may be transferred at the
aforesaid office of the Trustee by surrendering this Note for cancellation,
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and duly executed by the registered holder hereof in person or by the
holder's attorney duly authorized in writing, and thereupon the Trustee shall
issue in the name of the transferee or transferees, in exchange herefor, a new
Note or Notes having identical terms and provisions and having a like aggregate
principal amount in authorized denominations, subject to the terms and
conditions set forth herein; provided, however, that the Trustee will not be
required (i) to register the transfer of or exchange any Note that has been
called for redemption in whole or in part, except the unredeemed portion of
Notes being redeemed in part, (ii) to register the transfer of or exchange any
Note if the holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Note in whole or in part, except the portion of such
Note not required to be repurchased, or (iii) to register the transfer of or
exchange Notes to the extent and during the period so provided in the Senior
Indenture with respect to the redemption of Notes. Notes are exchangeable at
said office for other Notes of other authorized denominations of equal
aggregate principal amount having identical terms and provisions. All such
exchanges and transfers of Notes will be free of charge, but the Issuer may
require payment of a sum sufficient to cover any tax or other governmental
charge in connection therewith. All Notes surrendered for exchange shall be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and executed by the registered holder in person or by the holder's
attorney duly authorized in writing. The date of registration of any Note
delivered upon any exchange or transfer of Notes shall be such that no gain or
loss of interest results from such exchange or transfer.

     In case this Note shall at any time become mutilated, defaced or be
destroyed, lost or stolen and this Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Trustee, the Issuer in its discretion may execute a new Note
of like tenor in exchange for this Note, but, if this Note is destroyed, lost
or stolen, only upon receipt of evidence satisfactory to the Trustee and the
Issuer that this Note was destroyed or lost or stolen and, if required, upon
receipt also of indemnity satisfactory to each of them. All expenses and
reasonable charges associated with procuring such indemnity and with the
preparation, authentication and delivery of a new Note shall be borne by the
owner of the Note mutilated, defaced, destroyed, lost or stolen.

     The Senior Indenture provides that (a) if an Event of Default (as defined
in the Senior Indenture) due to the default in payment of principal of,
premium, if any, or interest on, any series of debt securities issued under the
Senior Indenture, including the series of Senior Medium-Term Notes of which
this Note forms a part, or due to the default in the performance or breach of
any other covenant or warranty of the Issuer applicable to the debt securities
of such series but not applicable to all outstanding debt securities issued
under the Senior Indenture shall have occurred and be continuing, either the
Trustee or the holders of not less than 25% in principal amount of the

                                      A-25
<PAGE>

debt securities of each affected series (voting as a single class) may then
declare the principal of all debt securities of all such series and interest
accrued thereon to be due and payable immediately and (b) if an Event of
Default due to a default in the performance of any other of the covenants or
agreements in the Senior Indenture applicable to all outstanding debt
securities issued thereunder, including this Note, or due to certain events of
bankruptcy or insolvency of the Issuer, shall have occurred and be continuing,
either the Trustee or the holders of not less than 25% in principal amount of
all debt securities issued under the Senior Indenture then outstanding (treated
as one class) may declare the principal of all such debt securities and
interest accrued thereon to be due and payable immediately, but upon certain
conditions such declarations may be annulled and past defaults may be waived
(except a continuing default in payment of principal (or premium, if any) or
interest on such debt securities) by the holders of a majority in principal
amount of the debt securities of all affected series then outstanding.

     If the face hereof indicates that this Note is subject to "Modified
Payment upon Acceleration," then (i) if the principal hereof is declared to be
due and payable as described in the preceding paragraph, the amount of
principal due and payable with respect to this Note shall be limited to the
aggregate principal amount hereof multiplied by the sum of the Issue Price
specified on the face hereof (expressed as a percentage of the aggregate
principal amount) plus the original issue discount amortized from the Interest
Accrual Date to the date of declaration, which amortization shall be calculated
using the "interest method" (computed in accordance with generally accepted
accounting principles in effect on the date of declaration), (ii) for the
purpose of any vote of securityholders taken pursuant to the Senior Indenture
prior to the acceleration of payment of this Note, the principal amount hereof
shall equal the amount that would be due and payable hereon, calculated as set
forth in clause (i) above, if this Note were declared to be due and payable on
the date of any such vote and (iii) for the purpose of any vote of
securityholders taken pursuant to the Senior Indenture following the
acceleration of payment of this Note, the principal amount hereof shall equal
the amount of principal due and payable with respect to this Note, calculated
as set forth in clause (i) above.

     If the face hereof indicates that this Note is subject to "Tax Redemption
and Payment of Additional Amounts," this Note may be redeemed, as a whole, at
the option of the Issuer at any time prior to maturity, upon the giving of a
notice of redemption as described below, at a redemption price equal to 100% of
the principal amount hereof, together with accrued interest to the date fixed
for redemption (except that if this Note is subject to "Modified Payment upon
Acceleration or Redemption," such redemption price would be limited to the
aggregate principal amount hereof multiplied by the sum of the Issue Price
specified on the face hereof (expressed as a percentage of the aggregate
principal amount) plus the original issue discount amortized from the Interest
Accrual Date to the date of redemption, which amortization shall be calculated
using the "interest method" (computed in accordance with generally accepted
accounting principles in effect on the date of redemption) (the "Amortized
Amount")), if the Issuer determines that, as a result of any change in or
amendment to the laws (or any regulations or rulings promulgated thereunder) of
the United States or of any political subdivision or taxing authority thereof
or therein affecting taxation, or any change in official position regarding the
application or interpretation of such laws, regulations or rulings, which
change or amendment becomes effective on or after the Initial Offering Date
hereof, the Issuer has or will become obligated to pay Additional Amounts (as
defined below) with respect

                                      A-26
<PAGE>

to this Note as described below. Prior to the giving of any notice of
redemption pursuant to this paragraph, the Issuer shall deliver to the Trustee
(i) a certificate stating that the Issuer is entitled to effect such redemption
and setting forth a statement of facts showing that the conditions precedent to
the right of the Issuer to so redeem have occurred, and (ii) an opinion of
independent counsel satisfactory to the Trustee to such effect based on such
statement of facts; provided that no such notice of redemption shall be given
earlier than 60 calendar days prior to the earliest date on which the Issuer
would be obligated to pay such Additional Amounts if a payment in respect of
this Note were then due.

     Notice of redemption will be given not less than 30 nor more than 60
calendar days prior to the date fixed for redemption or within the Redemption
Notice Period specified on face hereof, which date and the applicable
redemption price will be specified in the notice.

     If the face hereof indicates that this Note is subject to "Tax Redemption
and Payment of Additional Amounts," the Issuer will, subject to certain
exceptions and limitations set forth below, pay such additional amounts (the
"Additional Amounts") to the holder of this Note who is a United States Alien
as may be necessary in order that every net payment of the principal of and
interest on this Note and any other amounts payable on this Note, after
withholding for or on account of any present or future tax, assessment or
governmental charge imposed upon or as a result of such payment by the United
States (or any political subdivision or taxing authority thereof or therein),
will not be less than the amount provided for in this Note to be then due and
payable. The Issuer will not, however, be required to make any payment of
Additional Amounts to any such holder for or on account of:

          (a) any such tax, assessment or other governmental charge that would
     not have been so imposed but for (i) the existence of any present or
     former connection between such holder (or between a fiduciary, settlor,
     beneficiary, member or shareholder of such holder, if such holder is an
     estate, a trust, a partnership or a corporation) and the United States and
     its possessions, including, without limitation, such holder (or such
     fiduciary, settlor, beneficiary, member or shareholder) being or having
     been a citizen or resident thereof or being or having been engaged in a
     trade or business or present therein or having, or having had, a permanent
     establishment therein or (ii) the presentation by the holder of this Note
     for payment on a date more than 15 calendar days after the date on which
     such payment became due and payable or the date on which payment thereof
     is duly provided for, whichever occurs later;

          (b) any estate, inheritance, gift, sales, transfer or personal
     property tax or any similar tax, assessment or governmental charge;

          (c) any tax, assessment or other governmental charge imposed by
     reason of such holder's past or present status as a personal holding
     company or foreign personal holding company or controlled foreign
     corporation or passive foreign investment company with respect to the
     United States or as a corporation which accumulates earnings to avoid
     United States federal income tax or as a private foundation or other
     tax-exempt organization or a bank receiving interest under Section
     881(c)(3)(A) of the Internal Revenue Code of 1986, as amended;

                                      A-27
<PAGE>

          (d) any tax, assessment or other governmental charge that is payable
     otherwise than by withholding from payments on or in respect of this Note;

          (e) any tax, assessment or other governmental charge required to be
     withheld by any Paying Agent from any payment of principal of, or interest
     on, this Note, if such payment can be made without such withholding by any
     other Paying Agent in a city in Western Europe;

          (f) any tax, assessment or other governmental charge that would not
     have been imposed but for the failure to comply with certification,
     information or other reporting requirements concerning the nationality,
     residence or identity of the holder or beneficial owner of this Note, if
     such compliance is required by statute or by regulation of the United
     States or of any political subdivision or taxing authority thereof or
     therein as a precondition to relief or exemption from such tax, assessment
     or other governmental charge;

          (g) any tax, assessment or other governmental charge imposed by
     reason of such holder's past or present status as the actual or
     constructive owner of 10% or more of the total combined voting power of
     all classes of stock entitled to vote of the Issuer or as a direct or
     indirect subsidiary of the Issuer; or

          (h) any combination of items (a), (b), (c), (d), (e), (f) or (g).

In addition, the Issuer shall not be required to make any payment of Additional
Amounts (i) to any such holder where such withholding or deduction is imposed
on a payment to an individual and is required to be made pursuant to any
European Union Directive on the taxation of savings implementing the agreement
reached in the ECOFIN Council meeting of 13 December 2001 or any law
implementing or complying with, or introduced in order to conform to, such
Directive; or (ii) by or on behalf of a holder who would have been able to
avoid such withholding or deduction by presenting this Note or the relevant
coupon to another Paying Agent in a member state of the European Union. Nor
shall Additional Amounts be paid with respect to any payment on this Note to a
United States Alien who is a fiduciary or partnership or other than the sole
beneficial owner of such payment to the extent such payment would be required
by the laws of the United States (or any political subdivision thereof) to be
included in the income, for tax purposes, of a beneficiary or settlor with
respect to such fiduciary or a member of such partnership or a beneficial owner
who would not have been entitled to the Additional Amounts had such
beneficiary, settlor, member or beneficial owner been the holder of this Note.

     The Senior Indenture permits the Issuer and the Trustee, with the consent
of the holders of not less than a majority in aggregate principal amount of the
debt securities of all series issued under the Senior Indenture then
outstanding and affected (voting as one class), to execute supplemental
indentures adding any provisions to or changing in any manner the rights of the
holders of each series so affected; provided that the Issuer and the Trustee
may not, without the consent of the holder of each outstanding debt security
affected thereby, (a) extend the final maturity of any such debt security, or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any amount payable on redemption or
repayment thereof, or change the currency of payment thereof, or modify or
amend the provisions for conversion of any currency

                                      A-28
<PAGE>

into any other currency, or modify or amend the provisions for conversion or
exchange of the debt security for securities of the Issuer or other entities
(other than as provided in the antidilution provisions or other similar
adjustment provisions of the debt securities or otherwise in accordance with
the terms thereof), or impair or affect the rights of any holder to institute
suit for the payment thereof without the consent of the holder of each debt
security so affected or (b) reduce the aforesaid percentage in principal amount
of debt securities the consent of the holders of which is required for any such
supplemental indenture.

     Except as set forth below, if the principal of, premium, if any, or
interest on, this Note is payable in a Specified Currency other than U.S.
dollars and such Specified Currency is not available to the Issuer for making
payments hereon due to the imposition of exchange controls or other
circumstances beyond the control of the Issuer or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions within the international banking community,
then the Issuer will be entitled to satisfy its obligations to the holder of
this Note by making such payments in U.S. dollars on the basis of the Market
Exchange Rate on the date of such payment or, if the Market Exchange Rate is
not available on such date, as of the most recent practicable date; provided,
however, that if the euro has been substituted for such Specified Currency, the
Issuer may at its option (or shall, if so required by applicable law) without
the consent of the holder of this Note effect the payment of principal of,
premium, if any, or interest on, any Note denominated in such Specified
Currency in euro in lieu of such Specified Currency in conformity with legally
applicable measures taken pursuant to, or by virtue of, the treaty establishing
the European Community, as amended. Any payment made under such circumstances
in U.S. dollars or euro where the required payment is in an unavailable
Specified Currency will not constitute an Event of Default. If such Market
Exchange Rate is not then available to the Issuer or is not published for a
particular Specified Currency, the Market Exchange Rate will be based on the
highest bid quotation in The City of New York received by the Exchange Rate
Agent at approximately 11:00 a.m., New York City time, on the second Business
Day preceding the date of such payment from three recognized foreign exchange
dealers (the "Exchange Dealers") for the purchase by the quoting Exchange
Dealer of the Specified Currency for U.S. dollars for settlement on the payment
date, in the aggregate amount of the Specified Currency payable to those
holders or beneficial owners of Notes and at which the applicable Exchange
Dealer commits to execute a contract. One of the Exchange Dealers providing
quotations may be the Exchange Rate Agent unless the Exchange Rate Agent is an
affiliate of the Issuer. If those bid quotations are not available, the
Exchange Rate Agent shall determine the market exchange rate at its sole
discretion.

     The "Exchange Rate Agent" shall be Morgan Stanley & Co. Incorporated,
unless otherwise indicated on the face hereof.

     All determinations referred to above made by, or on behalf of, the Issuer
or by, or on behalf of, the Exchange Rate Agent shall be at such entity's sole
discretion and shall, in the absence of manifest error, be conclusive for all
purposes and binding on holders of Notes and coupons.

     So long as this Note shall be outstanding, the Issuer will cause to be
maintained an office or agency for the payment of the principal of and premium,
if any, and interest on this Note as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in said

                                      A-29
<PAGE>

Borough of Manhattan for the registration, transfer and exchange as aforesaid
of the Notes. The Issuer may designate other agencies for the payment of said
principal, premium and interest at such place or places (subject to applicable
laws and regulations) as the Issuer may decide. So long as there shall be such
an agency, the Issuer shall keep the Trustee advised of the names and locations
of such agencies, if any are so designated. If any European Union Directive on
the taxation of savings implementing the agreement reached in the ECOFIN
Council meeting of 13 December 2001 or any law implementing or complying with,
or introduced in order to conform to, such Directive is introduced and a Paying
Agent has been designated within the European Union, the Issuer will maintain a
Paying Agent in a member state of the European Union that will not be obligated
to withhold or deduct tax pursuant to any such Directive or law.

     With respect to moneys paid by the Issuer and held by the Trustee or any
Paying Agent for payment of the principal of or interest or premium, if any, on
any Notes that remain unclaimed at the end of two years after such principal,
interest or premium shall have become due and payable (whether at maturity or
upon call for redemption or otherwise), (i) the Trustee or such Paying Agent
shall notify the holders of such Notes that such moneys shall be repaid to the
Issuer and any person claiming such moneys shall thereafter look only to the
Issuer for payment thereof and (ii) such moneys shall be so repaid to the
Issuer. Upon such repayment all liability of the Trustee or such Paying Agent
with respect to such moneys shall thereupon cease, without, however, limiting
in any way any obligation that the Issuer may have to pay the principal of or
interest or premium, if any, on this Note as the same shall become due.

     No provision of this Note or of the Senior Indenture shall alter or impair
the obligation of the Issuer, which is absolute and unconditional, to pay the
principal of, premium, if any, and interest on this Note at the time, place,
and rate, and in the coin or currency, herein prescribed unless otherwise
agreed between the Issuer and the registered holder of this Note.

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

     No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Note, for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Senior Indenture or any
indenture supplemental thereto, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Issuer or of any
successor corporation, either directly or through the Issuer or any successor
corporation, whether by virtue of any constitution, statute or rule of law or
by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.

     This Note shall for all purposes be governed by, and construed in
accordance with, the laws of the State of New York.

                                      A-30
<PAGE>

     As used herein, the term "United States Alien" means any person who, for
United States federal income tax purposes, is a foreign corporation, a
non-resident alien individual, a non-resident alien fiduciary of a foreign
estate or trust, or a foreign partnership one or more of the members of which
is a foreign corporation, a non-resident alien individual or a non-resident
alien fiduciary of a foreign estate or trust.

     All terms used in this Note which are defined in the Senior Indenture and
not otherwise defined herein shall have the meanings assigned to them in the
Senior Indenture.

                                      A-31
<PAGE>

                                 ABBREVIATIONS

     The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

         TEN COM  -  as tenants in common
         TEN ENT  -  as tenants by the entireties
         JT TEN   -  as joint tenants with right of survivorship and not as
                     tenants in common

     UNIF GIFT MIN ACT - _____________________ Custodian ______________________
                                (Minor)                          (Cust)

     Under Uniform Gifts to Minors Act _______________________________
                                                   (State)

     Additional abbreviations may also be used though not in the above list.

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

                                      A-32
<PAGE>

     FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

----------------------------------------
[PLEASE INSERT SOCIAL SECURITY OR OTHER
   IDENTIFYING NUMBER OF ASSIGNEE]

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

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

-------------------------------------------------------------------------------
[PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]

the within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorney to transfer such note on the books of the
Issuer, with full power of substitution in the premises.

Dated:
      -----------------------

NOTICE:  The signature to this assignment must correspond with the name as
         written upon the face of the within Note in every particular without
         alteration or enlargement or any change whatsoever.

                                      A-33
<PAGE>

                           OPTION TO ELECT REPAYMENT

     The undersigned hereby irrevocably requests and instructs the Issuer to
repay the within Note (or portion thereof specified below) pursuant to its
terms at a price equal to the principal amount thereof, together with interest
to the Optional Repayment Date, to the undersigned at

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

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

-------------------------------------------------------------------------------
        (Please print or typewrite name and address of the undersigned)

     If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the holder elects to have repaid:
____________; and specify the denomination or denominations (which shall not be
less than the minimum authorized denomination) of the Notes to be issued to the
holder for the portion of the within Note not being repaid (in the absence of
any such specification, one such Note will be issued for the portion not being
repaid): ____________.

Dated:
      ------------------------          ---------------------------------------
                                        NOTICE: The signature on this Option to
                                        Elect Repayment must correspond with
                                        the name as written upon the face of
                                        the within instrument in every
                                        particular without alteration or
                                        enlargement.

                                      A-34<PAGE>

                                                                  EXECUTION COPY

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.
                                    Depositor

                            LITTON LOAN SERVICING LP,
                                    Servicer

                                       and

                WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
                                     Trustee

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

                         POOLING AND SERVICING AGREEMENT
                            Dated as of March 1, 2003

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

                     MERRILL LYNCH MORTGAGE INVESTORS TRUST
            MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2003-WMC2
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                         PAGE
<S>                                                                                                                      <C>
ARTICLE I             DEFINITIONS...............................................................................            1

ARTICLE II            CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES..............................           36

         SECTION 2.01.              Conveyance of Mortgage Loans................................................           36

         SECTION 2.02.              Acceptance by Trustee of the Mortgage Loans.................................           38

         SECTION 2.03.              Representations, Warranties and Covenants of the Depositor..................           40

         SECTION 2.04.              Representations and Warranties of the Servicer..............................           43

         SECTION 2.05.              Substitutions and Repurchases of Mortgage Loans which are not "Qualified
                                       Mortgages"...............................................................           44

         SECTION 2.06.              Authentication and Delivery of Certificates.................................           45

         SECTION 2.07.              REMIC Elections.............................................................           45

         SECTION 2.08.              Covenants of the Servicer...................................................           48

         SECTION 2.09.              [RESERVED]..................................................................           48

         SECTION 2.10.              [RESERVED]..................................................................           48

         SECTION 2.11.              Permitted Activities of the Trust...........................................           48

         SECTION 2.12.              Qualifying Special Purpose Entity...........................................           48

ARTICLE III           ADMINISTRATION AND SERVICING  OF MORTGAGE LOANS...........................................           48

         SECTION 3.01.              Servicer to Service Mortgage Loans..........................................           48

         SECTION 3.02.              Servicing and Subservicing; Enforcement of the Obligations of Servicer......           50

         SECTION 3.03.              Rights of the Depositor and the Trustee in Respect of the Servicer..........           50

         SECTION 3.04.              Trustee to Act as Servicer..................................................           50

         SECTION 3.05.              Collection of Mortgage Loan Payments; Collection Account; Certificate
                                      Account...................................................................           51

         SECTION 3.06.              Collection of Taxes, Assessments and Similar Items; Escrow Accounts.........           54

         SECTION 3.07.              Access to Certain Documentation and Information Regarding the Mortgage
                                      Loans.....................................................................           55

         SECTION 3.08.              Permitted Withdrawals from the Collection Account and Certificate Account...           55

         SECTION 3.09.              [RESERVED]..................................................................           57

         SECTION 3.10.              Maintenance of Hazard Insurance.............................................           57

         SECTION 3.11.              Enforcement of Due-On-Sale Clauses; Assumption Agreements...................           58
</TABLE>

                                       i
<PAGE>
                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                                         PAGE
<S>                                                                                                                      <C>
         SECTION 3.12.              Realization Upon Defaulted Mortgage Loans; Determination of Excess Proceeds.           59

         SECTION 3.13.              Trustee to Cooperate; Release of Mortgage Files.............................           61

         SECTION 3.14.              Documents, Records and Funds in Possession of Servicer to be Held for the
                                      Trustee...................................................................           62

         SECTION 3.15.              Servicing Compensation......................................................           62

         SECTION 3.16.              Access to Certain Documentation.............................................           63

         SECTION 3.17.              Annual Statement as to Compliance...........................................           63

         SECTION 3.18.              Annual Independent Public Accountants' Servicing Statement; Financial
                                      Statements................................................................           63

         SECTION 3.19.              Rights of the NIMs Insurer..................................................           63

         SECTION 3.20.              Periodic Filings............................................................           63

         SECTION 3.21.              Annual Certificate by Trustee...............................................           64

         SECTION 3.22.              Annual Certificate by Servicer..............................................           65

         SECTION 3.23.              Prepayment Penalty Reporting Requirements...................................           66

         SECTION 3.24.              Statements to Trustee.......................................................           66

         SECTION 3.25.              Indemnification.............................................................           66

         SECTION 3.26.              Nonsolicitation.............................................................           66

         SECTION 3.27.              Existing Servicing Agreement................................................           67

ARTICLE IV            DISTRIBUTIONS.............................................................................           67

         SECTION 4.01.              Advances....................................................................           67

         SECTION 4.02.              Reduction of Servicing Compensation in Connection with Prepayment Interest
                                      Shortfalls................................................................           68

         SECTION 4.03.              Distributions on the REMIC Interests........................................           68

         SECTION 4.04.              Distributions...............................................................           68

         SECTION 4.05.              Monthly Statements to Certificateholders....................................           72

ARTICLE V             THE CERTIFICATES..........................................................................           75

         SECTION 5.01.              The Certificates............................................................           75

         SECTION 5.02.              Certificate Register; Registration of Transfer and Exchange of Certificates.           75

         SECTION 5.03.              Mutilated, Destroyed, Lost or Stolen Certificates...........................           79

         SECTION 5.04.              Persons Deemed Owners.......................................................           79

         SECTION 5.05.              Access to List of Certificateholders' Names and Addresses...................           79

         SECTION 5.06.              Book-Entry Certificates.....................................................           80
</TABLE>

                                       ii
<PAGE>
                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                                         PAGE
<S>                                                                                                                      <C>
         SECTION 5.07.              Notices to Depository.......................................................           80

         SECTION 5.08.              Definitive Certificates.....................................................           81

         SECTION 5.09.              Maintenance of Office or Agency.............................................           81

         SECTION 5.10.              [RESERVED]..................................................................           81

ARTICLE VI            THE DEPOSITOR AND THE SERVICER............................................................           81

         SECTION 6.01.              Respective Liabilities of the Depositor and the Servicer....................           81

         SECTION 6.02.              Merger or Consolidation of the Depositor or the Servicer....................           81

         SECTION 6.03.              Limitation on Liability of the Depositor, the Servicer and Others...........           82

         SECTION 6.04.              Limitation on Resignation of Servicer.......................................           82

         SECTION 6.05.              Errors and Omissions Insurance; Fidelity Bonds..............................           83

ARTICLE VII           DEFAULT; TERMINATION OF SERVICER..........................................................           83

         SECTION 7.01.              Events of Default...........................................................           83

         SECTION 7.02.              Trustee to Act; Appointment of Successor....................................           85

         SECTION 7.03.              Notification to Certificateholders..........................................           85

ARTICLE VIII          CONCERNING THE TRUSTEE....................................................................           86

         SECTION 8.01.              Duties of Trustee...........................................................           86

         SECTION 8.02.              Certain Matters Affecting the Trustee.......................................           87

         SECTION 8.03.              Trustee Not Liable for Mortgage Loans.......................................           88

         SECTION 8.04.              Trustee May Own Certificates................................................           88

         SECTION 8.05.              Trustee's Fees..............................................................           88

         SECTION 8.06.              Indemnification of Trustee..................................................           89

         SECTION 8.07.              Eligibility Requirements for Trustee........................................           89

         SECTION 8.08.              Resignation and Removal of Trustee..........................................           90

         SECTION 8.09.              Successor Trustee...........................................................           91

         SECTION 8.10.              Merger or Consolidation of Trustee..........................................           91

         SECTION 8.11.              Appointment of Co-Trustee or Separate Trustee...............................           91

         SECTION 8.12.              Tax Matters.................................................................           92

ARTICLE IX            TERMINATION...............................................................................           95

         SECTION 9.01.              Termination upon Liquidation or Repurchase of all Mortgage Loans............           95

         SECTION 9.02.              Final Distribution on the Certificates......................................           96

         SECTION 9.03.              Additional Termination Requirements.........................................           97
</TABLE>

                                      iii
<PAGE>
                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                                         PAGE
<S>                                                                                                                      <C>

ARTICLE X             MISCELLANEOUS PROVISIONS..................................................................           98

         SECTION 10.01.             Amendment...................................................................           98

         SECTION 10.02.             Counterparts................................................................           99

         SECTION 10.03.             Governing Law...............................................................           99

         SECTION 10.04.             Intention of Parties........................................................           99

         SECTION 10.05.             Notices.....................................................................          100

         SECTION 10.06.             Severability of Provisions..................................................          101

         SECTION 10.07.             Assignment..................................................................          101

         SECTION 10.08.             Limitation on Rights of Certificateholders..................................          101

         SECTION 10.09.             Inspection and Audit Rights.................................................          102

         SECTION 10.10.             Certificates Nonassessable and Fully Paid...................................          102

         SECTION 10.11.             Third Party Rights..........................................................          102

         SECTION 10.12.             Additional Rights of the NIMs Insurer.......................................          102

         SECTION 10.13.             [Reserved]..................................................................          103

         SECTION 10.14.             Assignment; Sales; Advance Facilities.......................................          103
</TABLE>

<TABLE>
<S>                      <C>
EXHIBIT A                FORMS OF OFFERED CERTIFICATES
EXHIBIT B-1              MORTGAGE LOAN SCHEDULE
EXHIBIT B-2              GROUP A MORTGAGE LOAN SCHEDULE
EXHIBIT B-3              GROUP B MORTGAGE LOAN SCHEDULE
EXHIBIT C                SCHEDULE OF MORTGAGE LOANS WITH NO PREPAYMENT
                         ENFORCEMENT
EXHIBIT D                FORM OF TRUSTEE CERTIFICATION
EXHIBIT E-1              FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT
EXHIBIT E-2              FORM OF TRANSFEROR'S AFFIDAVIT
EXHIBIT F                FORM OF TRANSFEROR CERTIFICATE
EXHIBIT G                FORM OF INVESTMENT LETTER
EXHIBIT H                FORM OF RULE 144A LETTER
EXHIBIT I                REQUEST FOR RELEASE
EXHIBIT J                [RESERVED]
EXHIBIT K                FORM OF OFFICER'S CERTIFICATE OF TRUSTEE
EXHIBIT L                FORM OF OFFICER'S CERTIFICATE OF SERVICER
EXHIBIT M                [RESERVED]
EXHIBIT N                FORM OF CAP CONTRACT
</TABLE>

                                       iv
<PAGE>
      POOLING AND SERVICING AGREEMENT, dated as of March 1, 2003, among MERRILL
LYNCH MORTGAGE INVESTORS, INC., a Delaware corporation, as depositor (the
"Depositor"), LITTON LOAN SERVICING LP, a Delaware limited partnership, as
servicer (the "Servicer") and WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
a national banking association, as trustee (the "Trustee").

      The Depositor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates. It is intended that for federal
income tax purposes the Trust Fund will include (i) two real estate mortgage
investment conduits (the "Lower Tier REMIC" and the "Upper Tier REMIC"), (ii)
the Cap Contract and the Cap Contract Account, (iii) the regular interests in
the Lower Tier REMIC and the Upper Tier REMIC and (iv) the grantor trusts
described in Section 2.07 hereof. The Lower Tier REMIC will consist of all of
the assets constituting the Trust Fund (other than the assets described in
clauses (ii), (iii) and (iv) above) and will be evidenced by the Lower Tier
REMIC Regular Interests (which will be uncertificated and will represent the
"regular interests" in the Lower Tier REMIC) and the Class LTR Interest as the
single "residual interest" in the Lower Tier REMIC. The Trustee will hold the
Lower Tier REMIC Regular Interests. The Upper Tier REMIC will consist of the
Lower Tier REMIC Regular Interests and will be evidenced by the Upper Tier REMIC
Regular Interests and the Residual Interest as the single "residual interest" in
the Upper Tier REMIC. The Class R Certificate will represent beneficial
ownership of the Class LTR Interest and the Residual Interest. The "latest
possible maturity date" for federal income tax purposes of all interests created
hereby will be the Latest Possible Maturity Date.

      All covenants and agreements made by the Seller in the Sale Agreement and
by the Depositor and the Trustee herein with respect to the Mortgage Loans and
the other property constituting the Trust Fund are for the benefit of the
Holders from time to time of the Certificates and, to the extent provided
herein, the NIMs Insurer.

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

                                   ARTICLE I
                                  DEFINITIONS

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

      Accepted Servicing Practices: The Servicer's normal servicing practices,
which will conform to the mortgage servicing practices of prudent mortgage
lending institutions which service for their own account mortgage loans of the
same type as the Mortgages Loans in the jurisdictions in which the related
Mortgaged Properties are located.

      Accrual Period: With respect to the Certificates and any Distribution
Date, the period commencing on the immediately preceding Distribution Date (or,
in the case of the first Distribution Date, the Closing Date) and ending on the
day immediately preceding such Distribution Date. All calculations of interest
on the Certificates will be made on the basis of the actual number of days
elapsed in the related Accrual Period and a 360 day year.

      Adjustable Rate Certificate Carryover: With respect to each class of
Offered Certificates and each Distribution Date, the excess of (1) the sum of
(A) the excess of Current Interest for such class of Certificates on such
Distribution Date over the Adjusted Current Interest for such class of
Certificates on such Distribution Date and (B) the excess of Current Interest
for such class of Certificates for each prior Distribution Date over the
Adjusted Current Interest for such class of Certificates on each such
<PAGE>
Distribution Date over (2) any amounts previously distributed to such class of
Certificates in respect of Adjustable Rate Certificate Carryovers.

      Adjustable Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage
Loan Schedule as having a Mortgage Rate which is adjustable.

      Adjusted Available Funds Cap: With respect to any Distribution Date, the
per annum rate equal to 12 times the quotient of (A) the total scheduled
interest on the Mortgage Loans based on the Net Mortgage Rates in effect on the
related Due Date divided by (B) the aggregate principal balance of the Offered
Certificates as of the first day of the related Accrual Period multiplied by 30
and divided by the actual number of days in the related Accrual Period.

      Adjusted Current Interest: With respect to each class of Offered
Certificates and each Distribution Date, the interest accrued at the applicable
Pass-Through Rate (substituting "Adjusted Available Funds Cap" for "Available
Funds Cap" in the definition of Pass-Through Rate) for the applicable Accrual
Period on the Certificate Principal Balance of such class as of the first day of
such Accrual Period (after giving effect to all distributions of principal made
or deemed to be made as of such first day) plus any amount previously
distributed with respect to Adjusted Current Interest for such class that is
recovered as a voidable preference by a trustee in bankruptcy less any
Prepayment Interest Shortfalls allocated to such class on such Distribution
Date.

      Adjusted Interest Carryforward Amount: With respect to each Class of the
Offered Certificates and each Distribution Date, the sum of (1) the excess of
(A) Adjusted Current Interest for such class with respect to prior Distribution
Dates (excluding any Floating Rate Certificate Carryover for such class, if
applicable) over (B) the amount actually distributed to such class with respect
to Adjusted Current Interest and Adjusted Interest Carryforward Amounts on such
prior Distribution Dates and (2) interest on such excess (to the extent
permitted by applicable law) at the applicable Pass-Through Rate (substituting
"Adjusted Available Funds Cap" for "Available Funds Cap" in the definition of
Pass-Through Rate) for the related Accrual Period.

      Adjustment Date: As to each Adjustable Rate Mortgage Loan, each date on
which the related Mortgage Rate is subject to adjustment, as provided in the
related Mortgage Note.

      Advance: The aggregate of the advances required to be made by the Servicer
with respect to any Distribution Date pursuant to Section 4.01, the amount of
any such advances being equal to the sum of the aggregate of payments of
principal and interest (net of the Servicing Fee Rate) on the Mortgage Loans
that were due during the applicable Due Period and not received as of the close
of business on the related Determination Date, less the aggregate amount of any
such Delinquent payments that the Servicer has determined would constitute a
Non-Recoverable Advance were an advance to be made with respect thereto;
provided, however, that with respect to any Mortgage Loan that has been
converted to an REO Property, the obligation to make Advances shall only be to
payments of interest.

      Advance Facility: A financing or other facility as described in Section
10.14(a).

      Advance Facility Notice: As defined in Section 10.14(b).

      Advance Financing Person: As defined in Section 10.14(a).

      Advance Reimbursement Amounts: As defined in Section 10.14(b).

      Affiliate: With respect to any specified Person, any other Person
controlling, controlled by or under common control with such Person. For the
purposes of this definition, "control" means the power

                                      -2-
<PAGE>
to direct the management and policies of a Person, directly or indirectly,
whether through ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

      Aggregate Certificate Principal Balance: For any date of determination,
the sum of the Class A-1 Certificate Principal Balance, the Class A-2
Certificate Principal Balance, the Class R Certificate Principal Balance, the
Class M-1 Certificate Principal Balance, the Class M-2 Certificate Principal
Balance, Class B-1 Certificate Principal Balance and the Class B-2 Certificate
Principal Balance, in each case as of such date of determination.

      Agreement: This Pooling and Servicing Agreement and any and all amendments
or supplements hereto made in accordance with the terms herein.

      Applied Realized Loss Amount: With respect to any Distribution Date, the
amount, if any, by which, the Aggregate Certificate Principal Balance after
distributions of principal on such Distribution Date exceeds the aggregate
Stated Principal Balance of the Mortgage Loans as of such Distribution Date.

      Appraised Value: With respect to a Mortgage Loan the proceeds of which
were used to purchase the related Mortgaged Property, the "Appraised Value" of a
Mortgaged Property is the lesser of (1) the appraised value based on an
appraisal made for the Seller by an independent fee appraiser at the time of the
origination of the related Mortgage Loan, and (2) the sales price of such
Mortgaged Property at such time of origination. With respect to a Mortgage Loan
the proceeds of which were used to refinance an existing mortgage loan, the
"Appraised Value" is the appraised value of the Mortgaged Property based upon
the appraisal obtained at the time of refinancing.

      Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction where the related Mortgaged Property is located to reflect of
record the sale and assignment of the Mortgage Loan to the Trustee, which
assignment, notice of transfer or equivalent instrument may, if permitted by
law, be in the form of one or more blanket assignments covering Mortgages
secured by Mortgaged Properties located in the same county.

      Available Funds Cap: As of any Distribution Date with respect to the
Certificates, a per annum rate equal to 12 times the quotient of (i) the total
scheduled interest on the Mortgage Loans based on the Net Mortgage Rates as of
the related Due Date plus any amounts received on the Cap Contract divided by
(ii) the Aggregate Certificate Principal Balance as of the first day of the
applicable Accrual Period multiplied by 30 and divided by the actual number of
days in the related Accrual Period less.

      Balloon Loan: A Mortgage Loan having an original term to stated maturity
of approximately 15 years which provides for level monthly payments of principal
and interest based on a 30-year amortization schedule, with a balloon payment of
the remaining outstanding principal balance due on such Mortgage Loan at its
stated maturity.

      Book-Entry Certificates: Any of the Certificates that shall be registered
in the name of the Depository or its nominee, the ownership of which is
reflected on the books of the Depository or on the books of a Person maintaining
an account with the Depository (directly, as a "Depository Participant", or
indirectly, as an indirect participant in accordance with the rules of the
Depository and as described in Section 5.06). As of the Closing Date, each of
the Class A, Class M-1, Class M-2, Class B-1 and Class B-2 Certificates
constitutes a Class of Book-Entry Certificates.

                                      -3-
<PAGE>
      Business Day: Any day other than (1) a Saturday or a Sunday, or (2) a day
on which banking institutions in the State of Texas, State of Maryland, State of
Minnesota, and in the City of New York, New York are authorized or obligated by
law or executive order to be closed.

      Cap Contract: The amended confirmation and agreement and any related
confirmation thereto, between the Trust and Citibank, N.A. (in the form of
Exhibit N hereto).

      Cap Contract Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 4.04(k) in the name of the Trustee for the
benefit of the Trust Fund and designated "Wells Fargo Bank Minnesota, National
Association, as trustee, in trust for registered holders of Merrill Lynch
Mortgage Investors Trust, Mortgage Loan Asset-Backed Certificates, Series
2003-WMC2." Funds in the Cap Contract Account shall be held in trust for the
Trust Fund for the uses and purposes set forth in this Agreement.

                                      -4-
<PAGE>
      Cap Contract Notional Balance: With respect to any Distribution Date, the
Cap Contract Notional Balance set forth below for such Distribution Date:

                            ONE MONTH LIBOR CAP TABLE

<TABLE>
<CAPTION>
BEGINNING         ENDING       1ML SET      DISTRIBUTION       NOTIONAL          1ML LOWER        1ML UPPER
 ACCRUAL          ACCRUAL        DATE           DATE            BALANCE          COLLAR (1)         COLLAR
---------        --------      --------     ------------   ---------------       ----------       ---------
<S>              <C>           <C>          <C>            <C>                   <C>              <C>
 03/28/03        04/25/03      03/26/03       04/23/03     $756,897,316.33         7.635             8.850
 04/25/03        05/25/03      04/23/03       05/23/03     $739,096,096.50         7.109             8.850
 05/25/03        06/25/03      05/23/03       06/23/03     $721,474,628.74         6.875             8.850
 06/25/03        07/25/03      06/23/03       07/23/03     $704,022,074.89         7.127             8.850
 07/25/03        08/25/03      07/23/03       08/23/03     $686,729,421.22         6.894             8.850
 08/25/03        09/25/03      08/23/03       09/23/03     $669,589,451.56         6.902             8.850
 09/25/03        10/25/03      09/23/03       10/23/03     $652,596,599.08         7.154             8.850
 10/25/03        11/25/03      10/23/03       11/23/03     $635,752,121.11         6.918             8.850
 11/25/03        12/25/03      11/23/03       12/23/03     $619,333,344.82         7.171             8.850
 12/25/03        01/25/04      12/23/03       01/23/04     $603,343,355.32         6.935             8.850
 01/25/04        02/25/04      01/23/04       02/23/04     $587,770,875.41         6.945             8.850
 02/25/04        03/25/04      02/23/04       03/23/04     $572,604,931.07         7.460             8.850
 03/25/04        04/25/04      03/23/04       04/23/04     $557,834,732.90         6.962             8.850
 04/25/04        05/25/04      04/23/04       05/23/04     $543,449,849.30         7.217             8.850
 05/25/04        06/25/04      05/23/04       06/23/04     $529,440,125.85         6.981             8.850
 06/25/04        07/25/04      06/23/04       07/23/04     $515,795,677.84         7.237             8.850
 07/25/04        08/25/04      07/23/04       08/23/04     $502,506,906.96         7.001             8.850
 08/25/04        09/25/04      08/23/04       09/23/04     $489,564,472.21         7.011             8.850
 09/25/04        10/25/04      09/23/04       10/23/04     $476,959,202.48         7.269             8.850
 10/25/04        11/25/04      10/23/04       11/23/04     $464,682,222.04         7.032             8.850
 11/25/04        12/25/04      11/23/04       12/23/04     $452,724,890.73         7.290             8.850
 12/25/04        01/25/05      12/23/04       01/23/05     $441,078,797.70         7.945             8.850
 01/25/05        02/25/05      01/23/05       02/23/05     $429,788,978.66         7.978             8.850
 02/25/05        03/25/05      02/23/05       03/23/05     $418,792,760.61         8.894             8.894
 03/25/05        04/25/05      03/23/05       04/23/05     $408,081,465.06         8.005             8.850
 04/25/05        05/25/05      04/23/05       05/23/05     $397,647,322.83         8.297             8.850
 05/25/05        06/25/05      05/23/05       06/23/05     $387,483,082.07         8.028             8.850
 06/25/05        07/25/05      06/23/05       07/23/05     $377,581,682.40         8.929             8.929
 07/25/05        08/25/05      07/23/05       08/23/05     $367,961,097.75         8.654             8.850
 08/25/05        09/25/05      08/23/05       09/23/05     $358,589,138.58         8.671             8.850
 09/25/05        10/25/05      09/23/05       10/23/05     $349,458,869.63         8.986             8.986
 10/25/05        11/25/05      10/23/05       11/23/05     $340,563,816.21         8.696             8.850
 11/25/05        12/25/05      11/23/05       12/23/05     $331,897,847.15         9.013             9.013
</TABLE>

            (1)   With respect to any Distribution Date, if One-Month LIBOR
                  exceeds the lower collar, the Trust Fund will receive payments
                  pursuant to the Cap Contract.

      Cap Contract Termination Date: The Distribution Date in December 2005.

      Certificate: Any one of the certificates of any Class executed by the
Trustee and authenticated by the Trustee in substantially the forms attached
hereto as Exhibits A.

      Certificate Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 3.05(f) in the name of the Trustee for the
benefit of the Certificateholders and designated "Wells Fargo Bank Minnesota,
National Association, as trustee, in trust for registered holders of Merrill
Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed Certificates, Series
2003-

                                      -5-
<PAGE>
WMC2." Funds in the Certificate Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.

      Certificate Notional Balance: As to the Class N Certificates and as of any
Distribution Date, the Initial Certificate Notional Balance of such Certificate
less the sum of all amounts distributed with respect to such Certificate in
reduction of the Certificate Notional Balance thereof on previous Distribution
Date.

      Certificate Owner: With respect to a Book-Entry Certificate, the Person
that is the beneficial owner of such Book-Entry Certificate.

      Certificate Principal Balance: As to any Certificate (other than the Class
N and Class X Certificates) and as of any Distribution Date, the Initial
Certificate Principal Balance of such Certificate less the sum of (1) all
amounts distributed with respect to such Certificate in reduction of the
Certificate Principal Balance thereof on previous Distribution Dates pursuant to
Section 4.04, and (2) any Applied Realized Loss Amounts allocated to such
Certificate on previous Distribution Dates pursuant to Section 4.04(i).

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

      Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository) in the case of any Class of Regular Certificates or the Class R
Certificate, except that solely for the purpose of giving any consent pursuant
to this Agreement, any Certificate registered in the name of the Depositor or
any Affiliate of the Depositor shall be deemed not to be Outstanding and the
Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite amount of Percentage Interests necessary to
effect such consent has been obtained; provided, however, that if any such
Person (including the Depositor) owns 100% of the Percentage Interests evidenced
by a Class of Certificates, such Certificates shall be deemed to be Outstanding
for purposes of any provision hereof that requires the consent of the Holders of
Certificates of a particular Class as a condition to the taking of any action
hereunder. The Trustee and the NIMs Insurer are entitled to rely conclusively on
a certification of the Depositor or any Affiliate of the Depositor in
determining which Certificates are registered in the name of an Affiliate of the
Depositor.

      Class: All Certificates bearing the same Class designation as set forth in
Section 5.01 hereof.

      Class A Certificate Principal Balance: For any date of determination, the
sum of the Class A-1 Certificate Principal Balance, the Class R Certificate
Principal Balance and the Class A-2 Certificate Principal Balance.

      Class A Certificates: Any of the Class A-1 Certificates or Class A-2
Certificates.

      Class A Principal Distribution Amount: With respect to any Distribution
Date (1) prior to the Stepdown Date or any Distribution Date on which a Trigger
Event exists, 100% of the Principal Distribution Amount for such Distribution
Date and (2) on or after the Stepdown Date where a Trigger Event does not exist,
the excess of (A) the Class A Certificate Principal Balance immediately prior to
such Distribution Date over (B) the lesser of (i) 62.00% of the Stated Principal
Balance of the Mortgage Loans as of the end of the immediately preceding Due
Period and (ii) the excess of the Stated Principal Balance of the Mortgage Loans
as of the end of the immediately preceding Due Period over $3,784,487; provided,
however, that in no event will the Class A Principal Distribution Amount with
respect to any Distribution Date exceed the aggregate Certificate Principal
Balance of the Class A and Class R Certificates.

                                      -6-
<PAGE>
      Class A-1 Certificate: Any Certificate designated as a "Class A-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

      Class A-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-1 Certificates.

      Class A-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-1 Pass-Through Rate on
the Class A-1 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class A-1 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.

      Class A-1 Interest Carryforward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-1 Current Interest with respect to
prior Distribution Dates (excluding any Class A-1 Interest Carryover Amount)
over (B) the amount actually distributed to the Class A-1 Certificates with
respect to interest on such prior Distribution Dates and (2) interest on such
excess (to the extent permitted by applicable law) at the Class A-1 Pass-Through
Rate for the related Accrual Period.

      Class A-1 Interest Carryover Amount: As of any Distribution Date, the sum
of (1) if on such Distribution Date the Pass-Through Rate for the Class A-1
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class A-1 Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class A-1 Margin for such Distribution Date, up to the
Weighted Maximum Rate Cap, over (B) the amount of interest payable on the Class
A-1 Certificates at the Available Funds Cap, up to but not exceeding the
Weighted Maximum Rate Cap for such Distribution Date and (2) the Class A-1
Interest Carryover Amount for all previous Distribution Dates not previously
paid pursuant to Section 4.04(f)(v), together with interest thereon at a rate
equal to the sum of One-Month LIBOR and the applicable Class A-1 Margin for such
Distribution Date.

      Class A-1 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 0.40% per annum and, as of any
Distribution Date after the Optional Termination Date, 0.80% per annum.

      Class A-1 Pass-Through Rate: For the first Distribution Date, 1.7000% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-1 Margin, (2) the Weighted Maximum Rate Cap and (3) the
Available Funds Cap for such Distribution Date.

      Class A-2 Certificate: Any Certificate designated as a "Class A-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

      Class A-2 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2 Certificates.

      Class A-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2 Pass-Through Rate on
the Class A-2 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class A-2 Certificates. For purposes of
calculating interest,

                                      -7-
<PAGE>
principal distributions on a Distribution Date will be deemed to have been made
on the first day of the Accrual Period in which such Distribution Date occurs.

      Class A-2 Interest Carryforward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2 Current Interest with respect to
prior Distribution Dates (excluding any Class A-2 Interest Carryover Amount)
over (B) the amount actually distributed to the Class A-2 Certificates with
respect to interest on such prior Distribution Dates and (2) interest on such
excess (to the extent permitted by applicable law) at the Class A-2 Pass-Through
Rate for the related Accrual Period.

      Class A-2 Interest Carryover Amount: As of any Distribution Date, the sum
of (1) if on such Distribution Date the Pass-Through Rate for the Class A-2
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class A-2 Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class A-2 Margin for such Distribution Date, up to the
Weighted Maximum Rate Cap, over (B) the amount of interest payable on the Class
A-2 Certificates at the Available Funds Cap, up to but not exceeding the
Weighted Maximum Rate Cap for such Distribution Date and (2) the Class A-2
Interest Carryover Amount for all previous Distribution Dates not previously
paid pursuant to Section 4.04(f)(v), together with interest thereon at a rate
equal to the sum of One-Month LIBOR and the applicable Class A-2 Margin for such
Distribution Date.

      Class A-2 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 0.34% per annum and, as of any
Distribution Date after the Optional Termination Date, 0.68% per annum.

      Class A-2 Pass-Through Rate: For the first Distribution Date, 1.6400% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-2 Margin, (2) the Weighted Maximum Rate Cap and (3) the
Available Funds Cap for such Distribution Date.

      Class B-1 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-1 Certificates.

      Class B-1 Certificate: Any Certificate designated as a "Class B-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

      Class B-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-1 Certificates.

      Class B-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-1 Pass-Through Rate on
the Class B-1 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class B-1 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.

      Class B-1 Interest Carryforward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-1 Current Interest with respect to
prior Distribution Dates (excluding any Class B-1 Interest Carryover Amount)
over (B) the amount actually distributed to the Class B-1 Certificates with
respect to interest on such prior Distribution Dates and (2) interest on such
excess (to the extent permitted by applicable law) at the Class B-1 Pass-Through
Rate for the related Accrual Period.

                                      -8-
<PAGE>
      Class B-1 Interest Carryover Amount: As of any Distribution Date, the sum
of (1) if on such Distribution Date the Pass-Through Rate for the Class B-1
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class B-1 Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class B-1 Margin for such Distribution Date, up to the
Weighted Maximum Rate Cap, over (B) the amount of interest payable on the Class
B-1 Certificates at the Available Funds Cap, up to but not exceeding the
Weighted Maximum Rate Cap for such Distribution Date and (2) the Class B-1
Interest Carryover Amount for all previous Distribution Dates not previously
paid pursuant to Section 4.04(f)(v), together with interest thereon at a rate
equal to the sum of One-Month LIBOR and the applicable Class B-1 Margin for such
Distribution Date.

      Class B-1 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 2.85% per annum and, as of any
Distribution Date after the Optional Termination Date, 4.275% per annum.

      Class B-1 Pass-Through Rate: For the first Distribution Date, 4.1500% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-1 Margin, (2) the Weighted Maximum Rate Cap and (3) the
Available Funds Cap for such Distribution Date.

      Class B-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, the
Class M-1 Certificate Principal Balance and Class M-2 Certificate Principal
Balance have been reduced to zero and a Trigger Event exists, or as long as a
Trigger Event does not exist, the excess of (1) the sum of (A) the Class A
Certificate Principal Balance (after taking into account distributions of the
Class A Principal Distribution Amount on such Distribution Date), (B) the Class
M-1 Certificate Principal Balance (after taking into account distributions of
the Class M-1 Principal Distribution Amount on such Distribution Date), (C) the
Class M-2 Certificate Principal Balance (after taking into account distributions
of the Class M-2 Principal Distribution Amount on such Distribution Date), and
(D) the Class B-1 Certificate Principal Balance immediately prior to such
Distribution Date over (2) the lesser of (A) 92.00% of the Stated Principal
Balances of the Mortgage Loans as of the end of the immediately preceding Due
Period and (B) the excess of the Stated Principal Balances of the Mortgage Loans
as of the end of the immediately preceding Due Period over $3,784,487.
Notwithstanding the foregoing, (I) on any Distribution Date prior to the
Stepdown Date on which the Certificate Principal Balance of each Class of Class
A Certificates and the Class M Certificates has been reduced to zero, the Class
B-1 Principal Distribution Amount will equal the lesser of (x) the outstanding
Certificate Principal Balance of the Class B-1 Certificates and (y) 100% of the
Principal Distribution Amount remaining after any distributions on such Class A
and Class M Certificates and (II) in no event will the Class B-1 Principal
Distribution Amount with respect to any Distribution Date exceed the Class B-1
Certificate Principal Balance.

      Class B-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-1 Applied Realized Loss Amount over (2) the sum of all
distributions in reduction of the Class B-1 Applied Realized Loss Amounts on all
previous Distribution Dates.

      Class B-2 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-2 Certificates.

      Class B-2 Certificate: Any Certificate designated as a "Class B-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

                                      -9-
<PAGE>
      Class B-2 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-2 Certificates.

      Class B-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-2 Pass-Through Rate on
the Class B-2 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class B-2 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.

      Class B-2 Interest Carryforward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-2 Current Interest with respect to
prior Distribution Dates (excluding any Class B-2 Interest Carryover Amount)
over (B) the amount actually distributed to the Class B-2 Certificates with
respect to interest on such prior Distribution Dates and (2) interest on such
excess (to the extent permitted by applicable law) at the Class B-2 Pass-Through
Rate for the related Accrual Period.

      Class B-2 Interest Carryover Amount: As of any Distribution Date, the sum
of (1) if on such Distribution Date the Pass-Through Rate for the Class B-2
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class B-2 Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class B-2 Margin for such Distribution Date, up to the
Weighted Maximum Rate Cap, over (B) the amount of interest payable on the Class
B-1 Certificates at the Available Funds Cap, up to but not exceeding the
Weighted Maximum Rate Cap for such Distribution Date and (2) the Class B-2
Interest Carryover Amount for all previous Distribution Dates not previously
paid pursuant to Section 4.04(f)(v), together with interest thereon at a rate
equal to the sum of One-Month LIBOR and the applicable Class B-2 Margin for such
Distribution Date.

      Class B-2 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 3.00% per annum and, as of any
Distribution Date after the Optional Termination Date, 4.50% per annum.

      Class B-2 Pass-Through Rate: For the first Distribution Date, 4.3000% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-2 Margin, (2) the Weighted Maximum Rate Cap and (3) the
Available Funds Cap for such Distribution Date.

      Class B-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, the
Class M-1 Certificate Principal Balance, the Class M-2 Certificate Principal
Balance and the Class B-1 Certificate Principal Balance have been reduced to
zero and a Trigger Event exists, or as long as a Trigger Event does not exist,
the excess of (1) the sum of (A) the Class A Certificate Principal Balance
(after taking into account distributions of the Class A Principal Distribution
Amount on such Distribution Date), (B) the Class M-1 Certificate Principal
Balance (after taking into account distributions of the Class M-1 Principal
Distribution Amount on such Distribution Date), (C) the Class M-2 Certificate
Principal Balance (after taking into account distributions of the Class M-2
Principal Distribution Amount on such Distribution Date), (D) the Class B-1
Certificate Principal Balance (after taking into account distributions of the
Class B-1 Principal Distribution Amount on such Distribution Date) and (E) the
Class B-2 Certificate Principal Balance immediately prior to such Distribution
Date over (2) the lesser of (A) 95.00% of the Stated Principal Balances of the
Mortgage Loans as of the end of the immediately preceding Due Period and (B) the
excess of the Stated Principal Balances of the Mortgage Loans as of the end of
the immediately preceding Due Period over $3,784,487; the Class A

                                      -10-
<PAGE>
Certificate Principal Balance, the Class M-1 Certificate Principal Balance, the
Class M-2 Certificate Principal Balance and the Class B-1 Certificate Principal
Balance have been reduced to zero, the Class B-2 Principal Distribution Amount
for such Distribution Date will equal 100% of the Principal Distribution Amount
remaining after any distributions on such Class A, Class M-1, Class M-2 and
Class B-1 Certificates; and provided further, however, that in no event will the
Class B-2 Principal Distribution Amount with respect to any Distribution Date
exceed the Certificate Principal Balance of the Class B-2 Certificates.

      Class B-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-2 Applied Realized Loss Amount over (2) the sum of all
distributions in reduction of the Class B-2 Applied Realized Loss Amounts on all
previous Distribution Dates.

      Class LTA-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to -1/2 of the initial principal
balance of its Corresponding Upper Tier REMIC Interests and an interest rate
equal to the Net Rate.

      Class LTA-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to -1/2 of the initial principal
balance of its Corresponding Upper Tier REMIC Interest and an interest rate
equal to the Net Rate.

      Class LTB-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to -1/2 of the initial principal
balance of its Corresponding Upper Tier REMIC Interest and an interest rate
equal to the Net Rate.

      Class LTB-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to -1/2 of the initial principal
balance of its Corresponding Upper Tier REMIC Interest and an interest rate
equal to the Net Rate.

      Class LTM-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to -1/2 of the initial principal
balance of its Corresponding Upper Tier REMIC Interest and an interest rate
equal to the Net Rate.

      Class LTM-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to -1/2 of the initial principal
balance of its Corresponding Upper Tier REMIC Interest and an interest rate
equal to the Net Rate.

      Class LTR Interest: The sole class of "residual interest" in the Lower
Tier REMIC.

      Class LTX Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to the excess of (i) the aggregate
principal balances of the Mortgage Loans over (ii) the aggregate principal
balances of the Lower Tier REMIC Marker Classes and an interest rate equal to
the Net Rate. The Class LTX Interest shall also be entitled to all payments
received in respect of Prepayment Penalties on the Mortgage Loans and all
amounts payable by the Servicer in respect of Prepayment Penalties under the
Agreement.

      Class M-1 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-1 Certificates.

      Class M-1 Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

                                      -11-
<PAGE>
      Class M-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-1 Certificates.

      Class M-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-1 Pass-Through Rate on
the Class M-1 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class M-1 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.

      Class M-1 Interest Carryforward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-1 Current Interest with respect to
prior Distribution Dates (excluding any Class M-1 Interest Carryover Amount)
over (B) the amount actually distributed to the Class M-1 Certificates with
respect to interest on such prior Distribution Dates and (2) interest on such
excess (to the extent permitted by applicable law) at the Class M-1 Pass-Through
Rate for the related Accrual Period.

      Class M-1 Interest Carryover Amount: As of any Distribution Date, the sum
of (1) if on such Distribution Date the Pass-Through Rate for the Class M-1
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class M-1 Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class M-1 Margin for such Distribution Date, up to the
Weighted Maximum Rate Cap, over (B) the amount of interest payable on the Class
M-1 Certificates at the Available Funds Cap, up to but not exceeding the
Weighted Maximum Rate Cap for such Distribution Date and (2) the Class M-1
Interest Carryover Amount for all previous Distribution Dates not previously
paid pursuant to Section 4.04(f)(v), together with interest thereon at a rate
equal to the sum of One-Month LIBOR and the applicable Class M-1 Margin for such
Distribution Date.

      Class M-1 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 0.85% per annum and, as of any
Distribution Date after the Optional Termination Date, 1.275% per annum.

      Class M-1 Pass-Through Rate: For the first Distribution Date, 2.1500% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-1 Margin, (2) the Weighted Maximum Rate Cap and (3) the
Available Funds Cap for such Distribution Date.

      Class M-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance has been
reduced to zero and a Trigger Event exists, or as long as a Trigger Event does
not exist, the excess of (1) the sum of (A) the Class A Certificate Principal
Balance (after taking into account distributions of the Class A Principal
Distribution Amount on such Distribution Date) and (B) the Class M-1 Certificate
Principal Balance immediately prior to such Distribution Date over (2) the
lesser of (A) 76.50% of the Stated Principal Balances of the Mortgage Loans as
of the end of the immediately preceding Due Period and (B) the excess of the
Stated Principal Balances for the Mortgage Loans as of the end of the
immediately preceding Due Period over $3,784,487. Notwithstanding the foregoing,
(I) on any Distribution Date prior to the Stepdown Date on which the Certificate
Principal Balance of each Class of Class A Certificates has been reduced to
zero, the Class M-1 Principal Distribution Amount will equal the lesser of (x)
the outstanding Certificate Principal Balance of the Class M-1 Certificates and
(y) 100% of the Principal Distribution Amount remaining after any distributions
on such Class A Certificates and (II) in no event will the Class M-1 Principal
Distribution Amount with respect to any Distribution Date exceed the Class M-1
Certificate Principal Balance.

                                      -12-
<PAGE>
      Class M-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-1 Applied Realized Loss Amount over (2) the sum of all
distributions in reduction of the Class M-1 Applied Realized Loss Amounts on all
previous Distribution Dates.

      Class M-2 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-2 Certificates.

      Class M-2 Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein. Class M-2 Certificate Principal
Balance: As of any date of determination, the aggregate Certificate Principal
Balance of the Class M-2 Certificates.

      Class M-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-2 Pass-Through Rate on
the Class M-2 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class M-2 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.

      Class M-2 Interest Carryforward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-2 Current Interest with respect to
prior Distribution Dates (excluding any Class M-2 Interest Carryover Amount)
over (B) the amount actually distributed to the Class M-2 Certificates with
respect to interest on such prior Distribution Dates and (2) interest on such
excess (to the extent permitted by applicable law) at the Class M-2 Pass-Through
Rate for the related Accrual Period.

      Class M-2 Interest Carryover Amount: As of any Distribution Date, the sum
of (1) if on such Distribution Date the Pass-Through Rate for the Class M-2
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class M-2 Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class M-2 Margin for such Distribution Date, up to the
Weighted Maximum Rate Cap, over (B) the amount of interest payable on the Class
M-2 Certificates at the Available Funds Cap, up to but not exceeding the
Weighted Maximum Rate Cap for such Distribution Date and (2) the Class M-2
Interest Carryover Amount for all previous Distribution Dates not previously
paid pursuant to Section 4.04(f)(v), together with interest thereon at a rate
equal to the sum of One-Month LIBOR and the applicable Class M-2 Margin for such
Distribution Date.

      Class M-2 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 1.90% per annum and, as of any
Distribution Date after the Optional Termination Date, 2.85% per annum.

      Class M-2 Pass-Through Rate: For the first Distribution Date, 3.2000% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-2 Margin, (2) the Weighted Maximum Rate Cap and (3) the
Available Funds Cap for such Distribution Date.

      Class M-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance and the
Class M-1 Certificate Principal Balance have been reduced to zero and a Trigger
Event exists, or as long as a Trigger Event does not exist, the excess of (1)
the sum of (A)

                                      -13-
<PAGE>
the Class A Certificate Principal Balance (after taking into account
distributions of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class M-1 Certificate Principal Balance (after taking into
account distributions of the Class M-1 Principal Distribution Amount on such
Distribution Date) and (C) the Class M-2 Certificate Principal Balance
immediately prior to such Distribution Date over (2) the lesser of (A) 87.00% of
the Stated Principal Balances of the Mortgage Loans as of the end of the
immediately preceding Due Period and (B) the excess of the Stated Principal
Balances of the Mortgage Loans as of the end of the immediately preceding Due
Period over $3,784,487. Notwithstanding the foregoing, (I) on any Distribution
Date prior to the Stepdown Date on which the Certificate Principal Balance of
each Class of Class A Certificates and the Class M-1 Certificates has been
reduced to zero, the Class M-2 Principal Distribution Amount will equal the
lesser of (x) the outstanding Certificate Principal Balance of the Class M-2
Certificates and (y) 100% of the Principal Distribution Amount remaining after
any distributions on such Class A and Class M-1 Certificates and (II) in no
event will the Class M-2 Principal Distribution Amount with respect to any
Distribution Date exceed the Class M-2 Certificate Principal Balance.

      Class M-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-2 Applied Realized Loss Amount over (2) the sum of all
distributions in reduction of the Class M-2 Applied Realized Loss Amounts on all
previous Distribution Dates.

      Class N Certificate: Any Certificate designated as a "Class N Certificate"
on the face thereof, in the form of Exhibit A hereto, representing the right to
distributions as set forth herein.

      Class N Certificate Notional Balance: As of any date of determination, the
aggregate Certificate Notional Balance of the Class N Certificates.

      Class N Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class N Distributable Interest
Rate on the Class N Certificate Notional Balance, plus the interest portion of
any previous distributions on such Class that is recovered as a voidable
preference by a trustee in bankruptcy [, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class N Certificates.]

      Class N Distributable Interest Rate: For any Distribution Date, 8.50% per
annum.

      Class N Interest Carryforward Amount: As of any Distribution Date, the sum
of (1) the excess of (A) the Class N Current Interest with respect to prior
Distribution Dates over (B) the amount actually distributed to the Class N
Certificates with respect to interest on such prior Distribution Dates and (2)
interest on such excess (to the extent permitted by applicable law) at the Class
N Distributable Interest Rate.

      Class R Certificate: The Class R Certificate executed by the Trustee and
authenticated by the Trustee in substantially the form set forth in Exhibit A.

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

      Class R Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class R Pass-Through Rate on
the Class R Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class R Certificate. For purposes of calculating
interest,

                                      -14-
<PAGE>
principal distributions on a Distribution Date will be deemed to have been made
on the first day of the Accrual Period in which such Distribution Date occurs.

      Class R Interest Carryforward Amount: As of any Distribution Date, the sum
of (1) the excess of (A) the Class R Current Interest with respect to prior
Distribution Dates (excluding any Class R Interest Carryover Amount) over (B)
the amount actually distributed to the Class R Certificate with respect to
interest on such prior Distribution Dates and (2) interest on such excess (to
the extent permitted by applicable law) at the Class R Pass-Through Rate for the
related Accrual Period.

      Class R Interest Carryover Amount: As of any Distribution Date, the sum of
(1) if on such Distribution Date the Pass-Through Rate for the Class R
Certificate is based upon the Available Funds Cap, the excess of (1) the amount
of interest the Class R Certificate would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class R Margin for such Distribution Date, up to the
Weighted Maximum Rate Cap, over (2) the amount of interest payable on the Class
R Certificate at the Available Funds Cap, up to but not exceeding the Weighted
Maximum Rate Cap for such Distribution Date and (2) the Class R Interest
Carryover Amount for all previous Distribution Dates not previously paid
pursuant to Section 4.04(f)(v), together with interest thereon at a rate equal
to the sum of One-Month LIBOR and the applicable Class R Margin for such
Distribution Date.

      Class R Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 0.40% per annum and, as of any
Distribution Date after the Optional Termination Date, 0.80% per annum.

      Class R Pass-Through Rate: For the first Distribution Date, 1.7000% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class R Margin, (2) the Weighted Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.

      Class UTA-1 Interest: An uncertificated regular interest in the Upper Tier
REMIC with an initial principal balance equal to the initial principal balance
of the Related Certificates and bearing interest at the lesser of (i) One-Month
LIBOR plus the Class A-1 Margin and (ii) the Net Rate. For the first
Distribution Date, the percentage described in clause (i) of the preceding
sentence will equal 1.7000%.

      Class UTA-2 Interest: An uncertificated regular interest in the Upper Tier
REMIC with an initial principal balance equal to the initial principal balance
of the Related Certificates and bearing interest at the lesser of (i) One-Month
LIBOR plus the Class A-2 Margin and (ii) the Net Rate. For the first
Distribution Date, the percentage described in clause (i) of the preceding
sentence will equal 1.6400%.

      Class UTB-1 Interest: An uncertificated regular interest in the Upper Tier
REMIC with an initial principal balance equal to the initial principal balance
of the Related Certificates and bearing interest at the lesser of (i) One-Month
LIBOR plus the Class B-1 Margin and (ii) the Net Rate. For the first
Distribution Date, the percentage described in clause (i) of the preceding
sentence will equal 4.1500%.

      Class UTB-2 Interest: An uncertificated regular interest in the Upper Tier
REMIC with an initial principal balance equal to the initial principal balance
of the Related Certificates and bearing interest at the lesser of (i) One-Month
LIBOR plus the Class B-2 Margin and (ii) the Net Rate. For the first
Distribution Date, the percentage described in clause (i) of the preceding
sentence will equal 4.3000%.

      Class UTM-1 Interest: An uncertificated regular interest in the Upper Tier
REMIC with an initial principal balance equal to the initial principal balance
of the Related Certificates and bearing interest at the lesser of (i) One-Month
LIBOR plus the Class M-1 Margin and (ii) the Net Rate. For the first
Distribution Date, the percentage described in clause (i) of the preceding
sentence will equal 2.1500%.

                                      -15-
<PAGE>
      Class UTM-2 Interest: An uncertificated regular interest in the Upper Tier
REMIC with an initial principal balance equal to the initial principal balance
of the Related Certificates and bearing interest at the lesser of (i) One-Month
LIBOR plus the Class M-2 Margin and (ii) the Net Rate. For the first
Distribution Date, the percentage described in clause (i) of the preceding
sentence will equal 3.2000%.

      Class UTXN Interest: An uncertificated regular interest in the Upper Tier
REMIC with an initial principal balance equal to the excess of the principal
balance of the Mortgage Loans over the aggregate Certificate Principal Balance
of the Class A-1 Certificates, Class A-2 Certificates, Class B-1 Certificates,
Class B-2 Certificates, Class M-1 Certificates, Class M-2 Certificates and Class
R Certificates and bearing interest on a notional amount equal to the aggregate
of the Stated Principal Balances of the Mortgage Loans outstanding as of the
beginning of the related Accrual Period at a rate equal to the Class UTXN
Interest Rate. The Class UTXN Interest will also be treated as entitled to all
payments received on the Class LTX Interest in respect of Prepayment Penalties
on the Mortgage Loans and all amounts payable by the Servicer in respect of
Prepayment Penalties pursuant to this Agreement. The Class UTXN Interest will
not include any obligation to make any payments in respect of the interest rate
cap contracts described in Section 2.07.

      Class UTXN Interest Rate: The excess, if any, of (a) the weighted average
of the interest rates on the Lower Tier REMIC Regular Interests over (b) two
times the weighted average of the interest rates on the Lower Tier REMIC Regular
Interests (treating for purposes of this clause (b) the interest rate on each of
the Lower Tier REMIC Marker Classes as being capped at the interest rate on the
Corresponding Upper Tier REMIC Interest and treating the Class LTX Interest as
being capped at zero). The averages described in the preceding sentence shall be
weighted on the basis of the respective principal balances of the Lower Tier
REMIC Regular Interests immediately prior to any date of determination.

      Class X Certificates: The Class X Certificates executed by the Trustee and
authenticated by the Trustee in substantially the form set forth in Exhibit A.

      Class X Distributable Amount: The excess of (x) the sum of (i) the initial
Overcollateralization Amount, (ii) all payments accrued on the Class UTXN
Interest, including all prepayment charges in respect of the Mortgage Loans and
all amounts payable by the Servicer in respect of prepayment charges pursuant to
the Agreement, and (iii) all payments received on the Cap Contract over (y) the
sum of (i) all prior distributions to the Class X and Class N Certificates and
(ii) all payments treated as distributed by the Upper Tier REMIC to the Class
UTXN Interest and then paid to the holders of Offered Certificates pursuant to
an interest rate cap contract as described in Section 2.07(d).

      Closing Date: April 3, 2003.

      Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.

      Collection Account: The separate Eligible Account created and initially
maintained by the Servicer pursuant to Section 3.05(b) in the name of the
Trustee for the benefit of the Certificateholders and designated "Litton Loan
Servicing LP, in trust for registered holders of Merrill Lynch Mortgage
Investors Trust, Mortgage Loan Asset-Backed Certificates, Series 2003-WMC2".
Funds in the Collection Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.

      Combined Loan-to-Value Ratio: For any Mortgage Loan in a second lien
position, the fraction, expressed as a percentage, the numerator of which is the
sum of (1) the original principal balance of the related Mortgage Loan and (2)
any outstanding principal balances of Mortgage Loans the liens on which are
senior to the lien on such related Mortgage Loan (such sum calculated at the
date of origination of such related Mortgage Loan) and the denominator of which
is the lesser of (A) the Appraised Value of the

                                      -16-
<PAGE>
related Mortgaged Property and (B) the sales price of the related Mortgaged
Property at time of origination.

      Compensating Interest: With respect to any Mortgage Loan and any
Distribution Date, an amount equal to the portion of any Prepayment Interest
Shortfalls required to be deposited in the Collection Account by the Servicer
pursuant to Section 4.02 hereof.

      Corresponding Upper Tier REMIC Interests: With respect to the Class LTA-1
Interest, the Class UTA-1 Interest and the Residual Interest. With respect to
the Class LTA-2 Interest, the Class UTA-2 Interest. With respect to the Class
LTM-1 Interest, the Class UTM-1 Interest. With respect to the Class LTM-2
Interest, the Class UTM-2 Interest. With respect to the Class LTB-1 Interest,
the Class UTB-1 Interest. With respect to the Class LTB-2 Interest, the Class
UTB-2 Interest.

      Current Interest: Any of the Class A-1 Current Interest, the Class A-2
Current Interest, the Class R Current Interest, the Class M-1 Current Interest,
the Class M-2 Current Interest, Class B-1 Current Interest, the Class B-2
Current Interest and the Class N Current Interest.

      Cut-off Date: March 1, 2003.

      Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the calendar day
immediately preceding the Cut-off Date after application of all payments of
principal due on or prior to the Cut-off Date, whether or not received, and all
Principal Prepayments received prior to the Cut-off Date, but without giving
effect to any installments of principal received in respect of Due Dates on and
after the Cut-off Date.

      Definitive Certificates: As defined in Section 5.06.

      Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.

      Delinquent: A Mortgage Loan is "delinquent" if any payment due thereon is
not made pursuant to the terms of such Mortgage Loan by the close of business on
the day such payment is scheduled to be due. A Mortgage Loan is "30 days
delinquent" if such payment has not been received by the close of business on
the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month. With
respect to any Mortgage Loan due on any day other than the first day of the
month, such Mortgage Loan shall be deemed to be due on the first day of the
immediately succeeding month. Similarly for "60 days delinquent," "90 days
delinquent" and so on.

      Denomination: With respect to each Certificate, the amount set forth on
the face thereof as the "Initial Principal Balance of this Certificate."

      Depositor: Merrill Lynch Mortgage Investors, Inc., a Delaware corporation,
or its successor in interest.

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

                                      -17-
<PAGE>
      Depository Agreement: With respect to Classes of Book-Entry Certificates,
the agreement between the Trustee and the initial Depository.

      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.

      Designated Transaction: For Certificates transferred on or after August
23, 2000, a transaction in which the assets underlying the Certificates consist
of single-family residential, multi-family residential, home equity,
manufactured housing and/or commercial mortgage obligations that are secured by
single-family residential, multi-family residential, commercial real property or
leasehold interests therein.

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

      Disqualified Organization: (1) the United States, any state or political
subdivision thereof, any foreign government, any international organization, or
any agency or instrumentality of any of the foregoing, (2) any organization
(other than a cooperative described in Section 521 of the Code) which is exempt
from tax under Chapter 1 of Subtitle A of the Code unless such organization is
subject to the tax imposed by Section 511 of the Code and (3) any organization
described in Section 1381(a)(2)(C) of the Code.

      Distribution Date: The 25th day of each calendar month after the initial
issuance of the Certificates, or if such 25th day is not a Business Day, the
next succeeding Business Day, commencing in April 2003.

      Due Date: With respect to any Distribution Date and any Mortgage Loan, the
day during the related Due Period on which a Scheduled Payment is due.

      Due Period: With respect to any Distribution Date, the period beginning on
the second day of the calendar month preceding the calendar month in which such
Distribution Date occurs (or, in the case of the first Distribution Date,
beginning on the Cut-off Date) and ending on the first day of the month in which
such Distribution Date occurs.

      Eligible Account: An account that is (1) maintained with a depository
institution the long-term unsecured debt obligations of which are rated by each
Rating Agency in one of its two highest rating categories, or (2) maintained
with the corporate trust department of a bank which (A) has a rating of at least
Baa3 or P-3 by Moody's and (B) is either the Depositor or the corporate trust
department of a national bank or banking corporation which has a rating of at
least A-1 by S&P or F1 by Fitch, or (iii) an account or accounts the deposits in
which are fully insured by the FDIC, or (iv) an account or accounts, acceptable
to each Rating Agency without reduction or withdrawal of the rating of any Class
of Certificates, as evidenced in writing, by a depository institution in which
such accounts are insured by the FDIC (to the limit established by the FDIC),
the uninsured deposits in which accounts are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to and acceptable to the Trustee,
the NIMs Insurer and each Rating Agency, the Certificateholders have a claim
with respect to the funds in such account and a perfected first security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution with which such account is
maintained, or (v) maintained at an eligible institution whose commercial paper,
short-term debt or other short-term deposits are rated at least A-1+ by S&P and
F-1+ by Fitch, or (vi) maintained with a federal or state chartered depository
institution the deposits in which are insured by the FDIC to the applicable
limits and the short-term unsecured debt obligations of which (or, in the case
of a depository institution that is a subsidiary of a holding company,

                                      -18-
<PAGE>
the short-term unsecured debt obligations of such holding company) are rated A-1
by S&P or Prime-1 by Moody's at the time any deposits are held on deposit
therein, or (vii) otherwise acceptable to each Rating Agency, as evidenced by a
letter from each Rating Agency to the Trustee and the NIMs Insurer.

      ERISA: The Employee Retirement Income Security Act of 1974, including any
successor or amendatory provisions.

      ERISA Restricted Certificates: The Class N Certificates, Class X
Certificates and Class R Certificate and any other Certificate, unless such
other Certificate shall have received a rating from a Rating Agency at the time
of a transfer of such other Certificate that is in one of the three (or in the
case of Designated Transactions, four) highest generic rating categories.

      Event of Default: As defined in Section 7.01 hereof.

      Excess Interest: On any Distribution Date, all amounts received by any of
the Class A-1 Certificates, Class A-2 Certificates, Class R Certificate, Class
M-1 Certificates, Class M-2 Certificates, Class B-1 Certificates and Class B-2
Certificates attributable to Pass-Through Rates on such Certificates to the
extent that such Pass-Through Rates are in excess of the Net Rate.

      Excess Proceeds: With respect to any Liquidated Loan, any Liquidation
Proceeds that are in excess of the sum of (1) the unpaid principal balance of
such Liquidated Loan as of the date of such liquidation plus (2) interest at the
Mortgage Rate from the Due Date as to which interest was last paid or advanced
to Certificateholders (and not reimbursed to the Servicer) up to the Due Date in
the month in which such Liquidation Proceeds are required to be distributed on
the unpaid principal balance of such Liquidated Loan outstanding during each Due
Period as to which such interest was not paid or advanced.

      Exchange Act: The Securities Exchange Act of 1934, as amended. provisions.

      Existing Servicing Agreement: The Amended and Restated Sub-Servicing
Agreement between Merrill Lynch Mortgage Capital, Inc., as Owner, and Litton
Loan Servicing LP, as Servicer, dated as of November 1, 1998, as amended to and
including January 1, 2003, as of any time further amended and in effect.

      Extra Principal Distribution Amount: With respect to any Distribution
Date, (1) prior to the Stepdown Date, the excess of (A) the sum of (i) the
Aggregate Certificate Principal Balance immediately preceding such Distribution
Date reduced by the Principal Funds with respect to such Distribution Date and
(ii) $18,922,433 over (B) the Pool Stated Principal Balance of the Mortgage
Loans as of such Distribution Date and (2) on and after the Stepdown Date, (A)
the sum of (i) the Aggregate Certificate Principal Balance immediately preceding
such Distribution Date, reduced by the Principal Funds with respect to such
Distribution Date and (ii) the greater of (a) 5.00% of the Pool Stated Principal
Balances of the Mortgage Loans and (b) $3,784,487 less (B) the Pool Stated
Principal Balance of the Mortgage Loans as of such Distribution Date; provided,
however, that if on any Distribution Date a Trigger Event is in effect, the
Extra Principal Distribution Amount will not be reduced to the applicable
percentage of the then-current Pool Stated Principal Balance of the Mortgage
Loans as of the Due Date immediately prior to the Trigger Event) until the next
Distribution Date on which the Trigger Event is not in effect.

      Fannie Mae: A federally chartered and privately owned corporation
organized and existing under the Federal National Mortgage Association Charter
Act, or any successor thereto.

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

                                      -19-
<PAGE>
         Freddie Mac: A corporate instrumentality of the United States created
and existing under Title III of the Emergency Home Finance Act of 1970, as
amended, or any successor thereto.

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

         Fixed Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage
Loan Schedule as having a Mortgage Rate which is fixed.

         Grantor Trusts:  The grantor trusts described in Section 2.07 hereof.

         Gross Margin: The percentage set forth in the related Mortgage Note for
each of the Adjustable Rate Mortgage Loans which is to be added to the
applicable index for use in determining the Mortgage Rate on each Adjustment
Date, and which is set forth in the Mortgage Loan Schedule for each Adjustable
Rate Mortgage Loan.

         Group A Mortgage Loan: Any Mortgage Loan identified in the Group A
Mortgage Loan Schedule attached hereto as Exhibit B-2.

         Group A Principal Distribution Amount: As of any Distribution Date, the
amount equal to the lesser of (1) the sum of the Certificate Principal Balance
of the Class A-1 Certificates and the Certificate Principal Balance of the Class
R Certificate and (2) the Group A Principal Distribution Percentage of the Class
A Principal Distribution Amount; provided, however, that (I) with respect to the
Distribution Date on which the Class A-2 Certificate Principal Balance is
reduced to zero (so long as the Class A-1 Certificates are outstanding), the
Group B Principal Distribution Percentage of the Class A Principal Distribution
Amount in excess of the amount necessary to reduce the Certificate Principal
Balance of the Class A-2 Certificates to zero will be applied to increase the
Group A Principal Distribution Amount and (II) with respect to any Distribution
Date thereafter, the Group A Principal Distribution Amount shall equal the Class
A Principal Distribution Amount.

         Group A Principal Distribution Percentage: With respect to any
Distribution Date, a fraction expressed as a percentage, the numerator of which
is the amount of Principal Funds with respect to such Distribution Date received
with respect to Group A Mortgage Loans, and the denominator of which is the
amount of all Principal Funds with respect to such Distribution Date.

         Group B Mortgage Loan: Any Mortgage Loan identified in the Group B
Mortgage Loan Schedule attached hereto as Exhibit B-3.

         Group B Principal Distribution Amount: As of any Distribution Date, the
amount equal to the lesser of (1) the sum of the Certificate Principal Balance
of the Class A-2 Certificates and the and (2) the Group B Principal Distribution
Percentage of the Class A Principal Distribution Amount; provided, however, that
(A) with respect to the Distribution Date on which the Class A-1 Certificate
Principal Balance is reduced to zero (so long as the Class A-2 Certificates are
outstanding), the Group B Principal Distribution Percentage of the Class A
Principal Distribution Amount in excess of the amount necessary to reduce the
Certificate Principal Balance of the Class A-1 Certificates to zero will be
applied to increase the Group A Principal Distribution Amount and (II) with
respect to any Distribution Date thereafter, the Group B Principal Distribution
Amount shall equal the Class A Principal Distribution Amount.

         Group B Principal Distribution Percentage: With respect to any
Distribution Date, a fraction expressed as a percentage, the numerator of which
is the amount of Principal Funds with respect to such Distribution Date received
with respect to Group B Mortgage Loans, and the denominator of which is the
amount of all Principal Funds with respect to such Distribution Date.

                                      -20-
<PAGE>
         Indenture:  An indenture relating to the issuance of NIM Notes.

         Initial Adjustment Date: As to any Adjustable Rate Mortgage Loan, the
first Adjustment Date following the origination of such Mortgage Loan.

         Initial Certificate Notional Balance: With respect to the Class N
Certificates, the Certificate Notional Balance of such Certificates on the
Closing Date as set forth in Section 5.01 hereof.

         Initial Certificate Principal Balance: With respect to any Certificate,
the Certificate Principal Balance of such Certificate or any predecessor
Certificate on the Closing Date as set forth in Section 5.01 hereof.

         Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate in
effect prior to the Initial Adjustment Date.

         Insurance Policy: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including all riders and endorsements thereto
in effect with respect to such Mortgage Loan, including any replacement policy
or policies for any insurance policies.

         Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Insurance Policy or any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are payable to the mortgagee under
the Mortgage, the Servicer or the trustee under the deed of trust and are not
applied to the restoration of the related Mortgaged Property or released to the
Mortgagor in accordance with the procedures that the Servicer would follow in
servicing mortgage loans held for its own account, in each case other than any
amount included in such Insurance Proceeds in respect of Insured Expenses.

         Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.

         Interest Carryforward Amount: Any of the Class A-1 Interest
Carryforward Amount, the Class A-2 Interest Carryforward Amount, the Class R
Interest Carryforward Amount, the Class M-1 Interest Carryforward Amount, the
Class M-2 Interest Carryforward Amount, the Class B-1 Interest Carryforward
Amount or the Class B-2 Interest Carryforward Amount, as the case may be.

         Interest Carryover Amount: Any of the Class A-1 Interest Carryover
Amount, the Class A-2 Interest Carryover Amount, the Class R Interest Carryover
Amount, the Class M-1 Interest Carryover Amount, the Class M-2 Interest
Carryover Amount, the Class B-1 Interest Carryover Amount, the Class B-2
Interest Carryover Amount, as the case may be.

         Interest Determination Date: With respect to the Certificates, (i) for
any Accrual Period other than the first Accrual Period, the second LIBOR
Business Day preceding the commencement of such Accrual Period and (ii) for the
first Accrual Period, April 1, 2003.

         Interest Funds: With respect to any Distribution Date, the sum, without
duplication, of (1) all scheduled interest due during the related Due Period and
received before the related Servicer Remittance Date or advanced on or before
the related Servicer Remittance Date less the Servicing Fee and the Trustee Fee,
(2) all Advances relating to interest with respect to the Mortgage Loans, (3)
all Compensating Interest with respect to the Mortgage Loans, (4) Liquidation
Proceeds with respect to the Mortgage Loans (to the extent such Liquidation
Proceeds relate to interest) collected during the related Prepayment Period and
(5) proceeds of any purchase pursuant to Sections 2.02, 2.03 or 9.01 (to the
extent such proceeds relate to interest) less (A) all Non-Recoverable Advances
relating to interest and (B) other amounts reimbursable to the Servicer and the
Trustee pursuant to this Agreement and allocable to interest.

                                      -21-
<PAGE>
         Latest Possible Maturity Date: The first Distribution Date following
the third anniversary of the scheduled maturity date of the Mortgage Loan in the
Trust Fund having the latest scheduled maturity date as of the Cut-off Date.

         Lender:  As defined in Section 10.14(a).

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

         Liquidated Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that has been liquidated through deed-in-lieu of foreclosure,
foreclosure sale, trustee's sale or other realization as provided by applicable
law governing the real property subject to the related Mortgage and any security
agreements and as to which the Servicer has certified (in accordance with
Section 3.12) in the related Prepayment Period that it has received all amounts
it expects to receive in connection with such liquidation.

         Liquidation Proceeds: Amounts, including Insurance Proceeds, received
in connection with the partial or complete liquidation of Mortgage Loans,
whether through trustee's sale, foreclosure sale, sale by the Servicer pursuant
to this Agreement or otherwise or amounts received in connection with any
condemnation or partial release of a Mortgaged Property and any other proceeds
received in connection with an REO Property, less the sum of related
unreimbursed Advances, Servicing Fees, Servicing Advances and any other expenses
related to such Mortgage Loan.

         Loan-to-Value Ratio: With respect to any Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the original principal
balance of the related Mortgage Loan and the denominator of which is the lesser
of (X) the Appraised Value of the related Mortgaged Property and (Y) the sales
price of the related Mortgaged Property at the time of origination.

         Losses: Any losses, claims, damages, liabilities or expenses
collectively.

         Lower Tier REMIC: As described in the Preliminary Statement and Section
2.07.

         Lower Tier REMIC Interests: Each of the Class LTA-1 Interest, the Class
LTA-2 Interest, the Class LTM-1 Interest, the Class LTM-2 Interest, the Class
LTB-1 Interest, the Class LTB-2 Interest, the Class LTX Interest and the Class
LTR Interest.

         Lower Tier REMIC Marker Classes: Each of the classes of Lower Tier
REMIC Regular Interests other than the Class LTX Interests.

         Lower Tier REMIC Regular Interests: Each of the Lower Tier REMIC
Interests other than the Class LTR Interest.

         Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, the maximum rate of interest set forth as such in the related Mortgage
Note and with respect to each Fixed Rate Mortgage Loan, the rate of interest set
forth in the related Mortgage Note.

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

         MERS Loan: Any Mortgage Loan registered with MERS on the MERS System.

         MERS System: The system of recording transfers of mortgage
electronically maintained by MERS.

                                      -22-
<PAGE>
         MIN:  The loan number for any MERS Loan.

         Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, the minimum rate of interest set forth as such in the related Mortgage
Note.

         Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.05.

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

         MOM Loan: Any Mortgage Loan as to which MERS is acting as mortgagee,
solely as nominee for the originator of such Mortgage Loan and its successors
and assigns.

         Mortgage: With respect to a Mortgage Loan, the mortgage, deed of trust
or other instrument creating a first or second lien or a first or second
priority ownership interest in an estate in fee simple in real property securing
a Mortgage Note.

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

         Mortgage Loans: Such of the mortgage loans transferred and assigned to
the Trustee pursuant to the provisions hereof as from time to time are held as a
part of the Trust Fund (including any REO Property), the mortgage loans so held
being identified in the Mortgage Loan Schedule, notwithstanding foreclosure or
other acquisition of title of the related Mortgaged Property. Any mortgage loan
that was intended by the parties hereto to be transferred to the Trust Fund as
indicated by such Mortgage Loan Schedule which is in fact not so transferred for
any reason shall continue to be a Mortgage Loan hereunder until the Purchase
Price with respect thereto has been paid to the Trust Fund.

         Mortgage Loan Schedule: The lists of Mortgage Loans (as from time to
time amended by the Seller to reflect the deletion of Deleted Mortgage Loans and
the addition of Replacement Mortgage Loans pursuant to the provisions of this
Agreement) transferred to the Trustee as part of the Trust Fund and from time to
time subject to this Agreement, attached hereto as Exhibits B-2 and B-3, setting
forth the following information with respect to each Mortgage Loan:

         (i)      the loan number;

         (ii)     the unpaid principal balance of the Mortgage Loans;

         (iii)    the Initial Mortgage Rate;

         (iv)     the maturity date and the months remaining before maturity
                  date;

         (v)      the original principal balance;

         (vi)     the Cut-off Date Principal Balance;

         (vii)    the first payment date of the Mortgage Loan;

         (viii)   the Loan-to-Value Ratio at origination with respect to a first
                  lien Mortgage Loan, or the Combined Loan-to-Value Ratio with
                  respect to a second lien Mortgage Loan;

         (ix)     a code indicating whether the residential dwelling at the time
                  of origination was represented to be owner-occupied;

                                      -23-
<PAGE>
         (x)      a code indicating the property type;

         (xi)     with respect to each Adjustable Rate Mortgage Loan;

                  (a)      the frequency of each Adjustment Date;

                  (b)      the next Adjustment Date;

                  (c)      the Maximum Mortgage Rate;

                  (d)      the Minimum Mortgage Rate;

                  (e)      the Mortgage Rate as of the Cut-off Date;

                  (f)      the related Periodic Rate Cap;

                  (g)      the Gross Margin;

         (xii)    location of the related Mortgaged Property;

         (xiii)   a code indicating whether a prepayment penalty is applicable
                  and, if so, the term of such prepayment penalty; and

         (xiv)    the Credit Score and date obtained.

         Mortgage Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan
and all amendments, modifications and attachments thereto.

         Mortgage Pool: The aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule.

         Mortgage Rate: The annual rate of interest borne by a Mortgage Note
from time to time.

         Mortgaged Property:  The underlying property securing a Mortgage Loan.

         Mortgagor:  The obligor on a Mortgage Note.

         Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per
annum rate equal to the then current Mortgage Rate less the Servicing Fee Rate.

         Net Rate: With respect to any Distribution Date, the weighted average
Net Mortgage Rate for Mortgage Loans calculated based on the Net Mortgage Rates
and the Stated Principal Balance of such Mortgage Loans as of the related Due
Period.

         NIM Notes:  Any notes issued under an Indenture.

         NIMs Insurer: Any insurer that is guaranteeing certain payments under a
series of guaranteed NIM Notes.

         NIMs Insurer Default: A default by a NIMs Insurer as such default is
defined in the Indenture.

         Non-Recoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Servicer that, in the good faith judgment of the
Servicer, will not or, in the case of a current

                                      -24-
<PAGE>
delinquency, would not, be ultimately recoverable by the Servicer from the
related Mortgagor, related Liquidation Proceeds or otherwise related to the
Mortgage Loans.

         Non-Recoverable Servicing Advance: Any portion of a Servicing Advance
previously made or proposed to be made by the Servicer that, in the good faith
judgment of the Servicer, will not or, in the case of a current Servicing
Advance, would not, be ultimately recoverable by the Servicer from the related
Mortgagor, related Liquidation Proceeds or otherwise related to the Mortgage
Loans.

         Non-Supported Interest Shortfall:  As defined in Section 4.02.

         Offered Certificates: The Class A-1, Class A-2, Class M-1, Class M-2,
Class B-1, Class B-2 and Class R Certificate .

         Officer's Certificate: A certificate (1) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a vice president (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Depositor, the
Servicer (or any other officer customarily performing functions similar to those
performed by any of the above designated officers and also to whom, with respect
to a particular matter, such matter is referred because of such officer's
knowledge of and familiarity with a particular subject) or (2), if provided for
in this Agreement, signed by a Servicing Officer, as the case may be, and
delivered to the Depositor, the Servicer or the Trustee, as the case may be, as
required by this Agreement.

         One-Month LIBOR: With respect to any Accrual Period, the rate
determined by the Trustee on the related Interest Determination Date on the
basis of (a) the offered rates for one-month United States dollar deposits, as
such rates appear on Telerate page 3750, as of 11:00 a.m. (London time) on such
Interest Determination Date or (b) if such rate does not appear on Telerate Page
3750 as of 11:00 a.m. (London time), the offered rates of the Reference Banks
for one-month United States dollar deposits, as such rates appear on the Reuters
Screen LIBO Page, as of 11:00 a.m. (London time) on such Interest Determination
Date. If One-Month LIBOR is determined pursuant to clause (b) above, on each
Interest Determination Date, One-Month LIBOR for the related Accrual Period will
be established by the Trustee as follows:

                           (i)      If on such Interest Determination Date two
                                    or more Reference Banks provide such offered
                                    quotations, One-Month LIBOR for the related
                                    Accrual Period shall be the arithmetic mean
                                    of such offered quotations (rounded upwards
                                    if necessary to the nearest whole multiple
                                    of 0.03125%).

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

         Opinion of Counsel: A written opinion of counsel, who may be counsel
for the Depositor or the Servicer, reasonably acceptable to each addressee of
such opinion; provided, however, that with respect to Section 6.04 or 10.01, or
the interpretation or application of the REMIC Provisions, such counsel must (1)
in fact be independent of the Depositor and the Servicer, (2) not have any
direct financial interest in the Depositor or the Servicer or in any affiliate
of either, and (3) not be connected with the Depositor or the Servicer as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.

                                      -25-
<PAGE>
         Optional Termination: The termination of the trust hereunder pursuant
to clause (a) of Section 9.01 hereof.

         Optional Termination Amount: The repurchase price received by the
Trustee in connection with any repurchase of all of the Mortgage Loans pursuant
to Section 9.01.

         Optional Termination Date: The Distribution Date on which the aggregate
Stated Principal Balance of the Mortgage Loans is equal to or less than 10% of
the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off
Date.

         Optional Termination Price: (1) in the case of an Optional Termination
effected by the Servicer, as of any Distribution Date on or after the Optional
Termination Date, an amount equal to the sum of (A) aggregate Outstanding
Principal Balance of the Certificates, plus accrued interest thereon and (B) any
unreimbursed out-of-pocket costs and expenses owed to the Trustee or the
Servicer and any unreimbursed Servicing Fees, Advances, Servicing Advances and
Trustee Fees (including any costs and expenses incurred in connection with the
Optional Terminations), (2) in the case of an Optional Termination effected by
the NIMs Insurer, an amount equal to the greater of (A) aggregate Outstanding
Principal Balance of the Offered Certificates, plus accrued interest thereon,
any unreimbursed out-of-pocket costs and expenses owed to the Trustee (including
any costs and expenses incurred in connection with the Optional Termination) or
the Servicer and any unreimbursed Servicing Fees, Advances, Servicing Advances
and Trustee Fees and (B) 100% of the Stated Principal Balance of each Mortgage
Loan (other than in respect of REO Property), accrued interest thereon at the
applicable Mortgage Rate, the appraised value of any REO Property (up to the
Stated Principal Balance of the related Mortgage Loan), such appraisal to be
conducted by an appraiser mutually agreed upon by the Depositor and the NIMs
Insurer and any unreimbursed out-of-pocket costs and expenses owed to the
Servicer and the Trustee and any unreimbursed Servicing Fees, Advances,
Servicing Advances and Trustee Fees.

         OTS:  The Office of Thrift Supervision.

         Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except: (1) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and (2) Certificates in exchange for
which or in lieu of which other Certificates have been executed by the Trustee
and delivered by the Trustee pursuant to this Agreement.

         Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage Loan
with a Stated Principal Balance greater than zero that was not the subject of a
Principal Prepayment in full, and that did not become a Liquidated Loan, prior
to the end of the related Due Period.

         Overcollateralization Amount: As of any date of determination, the
excess of (1) the Stated Principal Balance of the Mortgage Loans over (2) the
Certificate Principal Balance of the Certificates (other than the Class N
Certificates and the Class X Certificates).

         Ownership Interest: As to any Certificate, any ownership 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.

         Pass-Through Rate: With respect to the Class A-1 Certificates, the
Class A-1 Pass-Through Rate; with respect to the Class A-2 Certificates, the
Class A-2 Pass-Through Rate; with respect to the Class M-1 Certificates, the
Class M-1 Pass-Through Rate; with respect to the Class M-2 Certificates, the
Class M-2 Pass-Through Rate, with respect to the Class B-1 Certificates, the
Class B-1 Pass-Through Rate; with

                                      -26-
<PAGE>
respect to the Class B-2 Certificates, the Class B-2 Pass-Through Rate and with
respect to the Class R Certificate, the Class R Pass-Through Rate.

         Percentage Interest:  With respect to:

                           (i)      any Class, the percentage interest in the
                                    undivided beneficial ownership interest
                                    evidenced by such Class which shall be equal
                                    to the Class Certificate Principal Balance
                                    of such Class divided by the Class Principal
                                    Balance of all Classes; and

                           (ii)     any Certificate, the Percentage Interest
                                    evidenced thereby of the related Class shall
                                    equal the percentage obtained by dividing
                                    the Denomination of such Certificate by the
                                    aggregate of the Denominations of all
                                    Certificates of such Class; except that in
                                    the case of any Class P Certificates, the
                                    Percentage Interest with respect to such
                                    Certificate shown on the face of such
                                    Certificate.

         Periodic Rate Cap: As to each Adjustable Rate Mortgage Loan and the
related Mortgage Note, the provision therein that limits permissible increases
and decreases in the Mortgage Rate on any Adjustment Date.

         Permitted Activities: The primary activities of the trust created
pursuant to this Agreement which shall be:

                           (i)      holding Mortgage Loans transferred from the
                                    Depositor and other assets of the Trust
                                    Fund, including the Cap Contract and any
                                    credit enhancement and passive derivative
                                    financial instruments that pertain to
                                    beneficial interests issued or sold to
                                    parties other than the Depositor, its
                                    Affiliates, or its agents;

                           (ii)     issuing Certificates and other interests in
                                    the assets of the Trust Fund;

                           (iii)    receiving collections on the Mortgage Loans
                                    and the Cap Contract and making payments on
                                    such Certificates and interests in
                                    accordance with the terms of this Agreement;
                                    and

                           (iv)     engaging in other activities that are
                                    necessary or incidental to accomplish these
                                    limited purposes, which activities cannot be
                                    contrary to the status of the Trust Fund as
                                    a qualified special purpose entity under
                                    existing accounting literature.

         Permitted Investments: At any time, any one or more of the following
obligations and securities:

                           (i)      obligations of the United States or any
                                    agency thereof, provided such obligations
                                    are backed by the full faith and credit of
                                    the United States;

                           (ii)     general obligations of or obligations
                                    guaranteed by any state of the United States
                                    or the District of Columbia receiving the
                                    highest long-term debt rating of each Rating
                                    Agency rating the Certificates;

                           (iii)    commercial or finance company paper, other
                                    than commercial or finance company paper
                                    issued by the Depositor, the Trustee or any
                                    of its

                                      -27-
<PAGE>
                                    Affiliates, which is then receiving the
                                    highest commercial or finance company paper
                                    rating of each such Rating Agency;

                           (iv)     certificates of deposit, demand or time
                                    deposits, or bankers' acceptances (other
                                    than banker's acceptances issued by the
                                    Trustee or any of its Affiliates) issued by
                                    any depository institution or trust company
                                    incorporated under the laws of the United
                                    States or of any state thereof and subject
                                    to supervision and examination by federal
                                    and/or state banking authorities, provided
                                    that the commercial paper and/or long term
                                    unsecured debt obligations of such
                                    depository institution or trust company are
                                    then rated one of the two highest long-term
                                    and the highest short-term ratings of each
                                    such Rating Agency for such securities;

                           (v)      demand or time deposits or certificates of
                                    deposit issued by any bank or trust company
                                    or savings institution to the extent that
                                    such deposits are fully insured by the FDIC;

                           (vi)     guaranteed reinvestment agreements issued by
                                    any bank, insurance company or other
                                    corporation rated in the two highest
                                    long-term or the highest short-term ratings
                                    of each Rating Agency containing, at the
                                    time of the issuance of such agreements,
                                    such terms and conditions as will not result
                                    in the downgrading or withdrawal of the
                                    rating then assigned to the Certificates by
                                    any such Rating Agency as evidenced by a
                                    letter from each Rating Agency;

                           (vii)    repurchase obligations with respect to any
                                    security described in clauses (i) and (ii)
                                    above, in either case entered into with a
                                    depository institution or trust company
                                    (acting as principal) described in clause
                                    (v) above;

                           (viii)   securities (other than stripped bonds,
                                    stripped coupons or instruments sold at a
                                    purchase price in excess of 115% of the face
                                    amount thereof) bearing interest or sold at
                                    a discount issued by any corporation, other
                                    than the Trustee or any of its Affiliates,
                                    incorporated under the laws of the United
                                    States or any state thereof which, at the
                                    time of such investment, have one of the two
                                    highest long term ratings of each Rating
                                    Agency;

                           (ix)     interests in any money market fund
                                    (including those managed or advised by the
                                    Trustee or its affiliates) which at the date
                                    of acquisition of the interests in such fund
                                    and throughout the time such interests are
                                    held in such fund has the highest applicable
                                    long term rating by each such Rating Agency;
                                    and

                           (x)      short term investment funds sponsored by any
                                    trust company or national banking
                                    association incorporated under the laws of
                                    the United States or any state thereof,
                                    other than the Trustee or any of its
                                    Affiliates, which on the date of acquisition
                                    has been rated by each such Rating Agency in
                                    their respective highest applicable rating
                                    category;

provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is

                                      -28-
<PAGE>
purchased at a premium or above par or (iii) is purchased at a deep discount;
provided, further, that no such instrument shall be a Permitted Investment (A)
if such instrument evidences principal and interest payments derived from
obligations underlying such instrument and the interest payments with respect to
such instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, or (B) if it may be redeemed at
a price below the purchase price (the foregoing clause (B) not to apply to
investments in units of money market funds pursuant to clause (ix) above); and
provided, further, (I) that no amount beneficially owned by any REMIC
(including, without limitation, any amounts collected by the Servicer but not
yet deposited in the Collection Account) may be invested in investments (other
than money market funds) treated as equity interests for Federal income tax
purposes, unless the Servicer shall receive an Opinion of Counsel, at the
expense of the party requesting that such investment be made, to the effect that
such investment will not adversely affect the status of the any REMIC provided
for herein as a REMIC under the Code or result in imposition of a tax on the
Trust Fund or any REMIC provided for herein and (II) any such investment must be
a "permitted investment" within the meaning of Section 860G(a)(5) of the Code.
Permitted Investments that are subject to prepayment or call may not be
purchased at a price in excess of par.

         Permitted Transferee: Any Person other than (i) the United States, any
State or 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
(except certain farmers' cooperatives described in section 521 of the Code) that
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) on any excess
inclusions (as defined in section 860E(c)(1) of the Code) with respect to a
Certificate, (iv) rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code, and (v) a Person that is not a citizen or resident of
the United States, a corporation or partnership (or other entity treated as a
corporation or partnership for United States federal income tax purposes)
created or organized in or under the laws of the United States or any State
thereof or the District of Columbia or an estate whose income from sources
without the United States is includable in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States persons have authority to control all
substantial decisions of the trust, unless, in the case of this clause (v), such
Person has furnished the transferor, the Trustee with a duly completed Internal
Revenue Service Form W-8ECI or applicable successor form. The terms "United
States," "State" and "International Organization" shall have the meanings set
forth in section 7701 of the Code. A corporation will not be treated as an
instrumentality of the United States or of any State thereof for these purposes
if all of its activities are subject to tax and, with the exception of the
Federal Home Loan Mortgage Corporation, a majority of its board of directors is
not selected by such government 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 Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances, as of such Distribution Date, of the
Mortgage Loans that were Outstanding Mortgage Loans as of such date.

         Prepayment Assumption: A rate of prepayment, as described in the
Prospectus Supplement in the definition of "Modeling Assumptions," relating to
the Certificates.

         Prepayment Interest Shortfall: With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a partial Principal Prepayment or
a Principal Prepayment in full (other than a

                                      -29-
<PAGE>
Principal Prepayment in full resulting from the purchase of a Mortgage Loan
pursuant to Section 2.02, 2.03 or 9.01 hereof), the amount, if any, by which (i)
one month's interest at the applicable Net Mortgage Rate on the Stated Principal
Balance of such Mortgage Loan as of the preceding Distribution Date or in the
case of a partial Principal Prepayment on the amount of such prepayment exceeds
(ii) the amount of interest paid or collected in connection with such Principal
Prepayment.

         Prepayment Penalties: Any prepayment premium, penalty or charge payable
by a Mortgagor in connection with any Principal Prepayment on a Mortgage Loan
pursuant to the terms of the related Mortgage Note.

         Prepayment Period: As to any Distribution Date, the period beginning
with the opening of business on the first day of the calendar month preceding
the month in which such Distribution Date occurs and ending on the close of
business on the last day of such month.

         Principal Distribution Amount: With respect to each Distribution Date,
the sum of (i) the Principal Funds for such Distribution Date and (ii) any Extra
Principal Distribution Amount for such Distribution Date.

         Principal Funds: With respect to the Mortgage Loans and any
Distribution Date, the sum, without duplication, of (1) the scheduled principal
due during the related Due Period and received before the related Servicer
Remittance Date or advanced on or before the related Servicer Remittance Date,
(2) prepayments collected in the related Prepayment Period, (3) the Stated
Principal Balance of each Mortgage Loan that was purchased by the Depositor or
the Servicer during the related Prepayment Period or, in the case of a purchase
pursuant to Section 9.01, on the Business Day prior to such Distribution Date,
(4) the amount, if any, by which the aggregate unpaid principal balance of any
Replacement Mortgage Loan is less than the aggregate unpaid principal of the
related Deleted Mortgage Loans delivered by the Seller in connection with a
substitution of a Mortgage Loan pursuant to Section 2.03(c), (5) all Liquidation
Proceeds collected during the related Prepayment Period (to the extent such
Liquidation Proceeds related to principal) and (6) all other collections and
recoveries in respect of principal during the related Prepayment Period less (A)
all Non-Recoverable Advances relating to principal with respect to the Mortgage
Loans and (B) other amounts reimbursable to the Servicer and the Trustee
pursuant to this Agreement and allocable to principal.

         Principal Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including Mortgage Loans
purchased or repurchased under Sections 2.02, 2.03, 3.12 and 9.01 hereof) that
is received in advance of its scheduled Due Date and is not accompanied by an
amount as to interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment. Partial Principal
Prepayments shall be applied by the Servicer in accordance with the terms of the
related Mortgage Note.

         Prospectus Supplement: The Prospectus Supplement dated April 1, 2003
relating to the public offering of the Class A-1, Class A-2, Class R, Class M-1,
Class M-2, Class B-1 and Class B-2 Certificates.

         PUD:  A Planned Unit Development.

         Purchase Price: With respect to any Mortgage Loan required to be
repurchased by the Seller or the applicable Transferor, pursuant to Section 2.02
or 2.03 hereof or purchased by the Servicer pursuant to Section 3.12(c) hereof,
an amount equal to the sum of (i) 100% of the unpaid principal balance of the
Mortgage Loan as of the date of such purchase together with any unreimbursed
Servicing Advances and (ii) accrued interest thereon at the applicable Mortgage
Rate from (a) the date through which interest was

                                      -30-
<PAGE>
last paid by the Mortgagor to (b) the Due Date in the month in which the
Purchase Price is to be distributed to Certificateholders.

         Rating Agency: Any of Moody's, S&P and Fitch. If any such organization
or its successor is no longer in existence, "Rating Agency" shall be a
nationally recognized statistical rating organization, or other comparable
Person, designated by the Depositor, notice of which designation shall be given
to the Trustee. References herein to a given rating category of a Rating Agency
shall mean such rating category without giving effect to any modifiers.

         Realized Loss: With respect to (1) a Liquidated Loan, the amount, if
any, by which the Stated Principal Balance and accrued interest thereon at the
Net Mortgage Rate exceeds the amount actually recovered by the Servicer with
respect thereto (net of reimbursement of Advances and Servicing Advances) at the
time such Mortgage Loan became a Liquidated Loan or (2) with respect to a
Mortgage Loan which is not a Liquidated Loan, any amount of principal that the
Mortgagor is no longer legally required to pay (except for the extinguishment of
debt that results from the exercise of remedies due to default by the
Mortgagor).

         Record Date: With respect to any Distribution Date, the close of
business on the last Business Day of the month preceding the month in which the
applicable Distribution Date occurs (or, in the case of the first Distribution
Date, April 24, 2003).

         Reference Banks: Barclays Bank PLC, JPMorgan Chase Bank, Citibank,
N.A., Wells Fargo Bank Minnesota, National Association and NatWest, N.A.;
provided that if any of the foregoing banks are not suitable to serve as a
Reference Bank, then any leading banks selected by the Trustee with the consent
of the NIMs Insurer which are engaged in transactions in Eurodollar deposits in
the international Eurocurrency market (i) with an established place of business
in London, England and (ii) whose quotations appear on the Reuters Screen LIBO
Page on the relevant Interest Determination Date.

         Regular Certificate: Any one of the Class A-1, Class A-2, Class M-1,
Class M-2, Class B-1 and Class B-2 Certificates.

         Related Certificates: With respect to the Class UTA-1 Interest, the
Class A-1 Certificates. With respect to the Class UTA-2 Interest, the Class A-2
Certificates. With respect to the Class UTB-1 Interest, the Class B-1
Certificates. With respect to the Class UTB-2 Interest, the Class B-2
Certificates. With respect to the Class UTM-1 Interest, the Class M-1
Certificates. With respect to the Class UTM-2 Interest, the Class M-2
Certificates.

         REMIC: A "real estate mortgage investment conduit" within the meaning
of section 860D of the Code. References herein to "the REMICs" or "a REMIC"
shall mean any of or, as the context requires, all of) the Lower Tier REMIC and
the Upper Tier REMIC.

         REMIC Pass-Through Rate: The Pass-Through Rate for a Class of Related
Certificates calculated by replacing "Available Funds Cap" in such definition
with "Net Rate."

         REMIC Regular Interests: (i) the rights under each of the Certificates
(other than the Class N Certificates, the Class X Certificates and the Class R
Certificate) other than the rights in interest rate cap contracts described in
Section 2.07, and (ii) the uncertificated Class UTXN Interest.

         REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
proposed, temporary and final regulations and published rulings,

                                      -31-
<PAGE>
notices and announcements promulgated thereunder, as the foregoing may be in
effect from time to time as well as provisions of applicable state laws.

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

         Replacement Mortgage Loan: A Mortgage Loan substituted by the Depositor
for a Deleted Mortgage Loan, which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form of Exhibit I (1)
have a Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
less than 90% of the Stated Principal Balance of the Deleted Mortgage Loan; (2)
with respect to any Fixed Rate Mortgage Loan, have a Mortgage Rate not less than
or no more than 1% per annum higher than the Mortgage Rate of the Deleted
Mortgage Loan and, with respect to any Adjustable Rate Mortgage Loan: (A) have a
Maximum Mortgage Rate no more than 1% per annum higher or lower than the Maximum
Mortgage Rate of the Deleted Mortgage Loan; (B) have a Minimum Mortgage Rate no
more than 1% per annum higher or lower than the Minimum Mortgage Rate of the
Deleted Mortgage Loan; (C) have the same index and Periodic Rate Cap as that of
the Deleted Mortgage Loan and a Gross Margin not more than 1% per annum higher
or lower than that of the Deleted Mortgage Loan; (D) not permit conversion of
the related Mortgage Rate to a fixed Mortgage Rate and (F) currently be accruing
interest at a rate not more than 1% per annum higher or lower than that of the
Deleted Mortgage Loan; (3) have a similar or higher FICO score or credit grade
than that of the Deleted Mortgage Loan; (4) have a Loan-to-Value Ratio (or
Combined Loan-to-Value Ratio, in the case of the Mortgage Loans in a second lien
position) no higher than that of the Deleted Mortgage Loan; (5) have a remaining
term to maturity no greater than (and not more than one year less than) that of
the Deleted Mortgage Loan; (6) provide for a prepayment charge on terms
substantially similar to those of the prepayment charge, if any, of the Deleted
Mortgage Loan; (7) have the same lien priority as the Deleted Mortgage Loan; (8)
constitute the same occupancy type as the Deleted Mortgage Loan; and (9) comply
with each representation and warranty set forth in Section 2.03 hereof.

         Request for Release: The Request for Release of Documents submitted by
the Servicer to the Trustee, substantially in the form of Exhibit I hereto.

         Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under this
Agreement including.

         Required Loss Percentage: For any Distribution Date, the applicable
percentage for such Distribution Date set forth in the following table:

DISTRIBUTION DATE OCCURRING IN         REQUIRED LOSS PERCENTAGE

April 2006 - March 2007                2.75% with respect to April 2006,
                                       plus an additional 1/12th  of
                                       1.75% for each month thereafter

April 2007 - March 2008                4.50% with respect to April
                                       2007, plus an additional 1/12th
                                       of 1.25% for each month thereafter

April 2008 - March 2009                5.75% with respect to April 2008,
                                       plus an additional 1/12th  of
                                       0.75% for each month thereafter

                                      -32-
<PAGE>
April 2009 - March 2010                6.50% with respect to April 2009,
                                       plus an additional 1/12th  of
                                       0.25% for each month thereafter

April 2010 and thereafter              6.75%

         Required Percentage: As of any Distribution Date following a Stepdown
Date, the quotient of (1) the excess of (A) the Stated Principal Balances of the
Mortgage Loans as of such Distribution Date, over (B) the Certificate Principal
Balance of the most senior Class of Certificates outstanding, prior to giving
effect to distributions to be made on such Distribution Date and (2) the Stated
Principal Balance of the Mortgage Loans as of such Distribution Date.

         Reserve Interest Rate: With respect to any Interest Determination Date,
the rate per annum that the Trustee determines to be (1) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 0.03125%) of the
one-month United States dollar lending rates which New York City banks selected
by the Trustee are quoting on the relevant Interest Determination Date to the
principal London offices of leading banks in the London interbank market or (2)
in the event that the Trustee can determine no such arithmetic mean, the lowest
one-month United States dollar lending rate which New York City banks selected
by the Trustee are quoting on such Interest Determination Date to leading
European banks.

         Residual Interest: An interest in the Upper Tier REMIC that is entitled
to all distributions on the Class R Certificate other than (i) distributions in
respect of the Class LTR Interest and (ii) all interest distributions on the
Class R Certificate attributable to an interest rate on the Class R Certificate
that exceeds the Net Rate.

         Responsible Officer: When used with respect to the Trustee or Servicer,
any officer of the Trustee or Servicer with direct responsibility for the
administration of this Agreement and also means any other officer to whom, with
respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.

         Reuters Screen LIBO Page: The display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace such LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks.

         S&P: Standard & Poor's, A Division of The McGraw-Hill Companies, Inc.,
or its successor in interest.

         Sale Agreement: The Mortgage Loan Sale and Assignment Agreement dated
as of April 3, 2003 between the Depositor and the Seller.

         Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due
on any Due Date allocable to principal and/or interest on such Mortgage Loan.

         Section 302 Requirements: Any rules or regulations promulgated pursuant
to the Sarbanes-Oxley Act of 2002 (as such may be amended from time to time).

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

         Seller: Merrill Lynch Mortgage Capital Inc., a Delaware corporation, or
its successor in interest.

         Servicer: Litton Loan Servicing LP, a Delaware limited partnership, or
its successor in interest.

                                      -33-
<PAGE>
         Servicer Advance Date: As to any Distribution Date, the related
Servicer Remittance Date.

         Servicer's Assignee: As defined in Section 10.14(a).

         Servicer Remittance Date: With respect to any Distribution Date, the
second Business Day immediately preceding such Distribution Date.

         Servicing Rights Pledgee: One or more lenders, selected by the
Servicer, to which the Servicer will pledge and assign all of its right, title
and interest in, to and under this Agreement, including Wachovia Bank, National
Association as the representative of certain lenders.

         Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Servicer of its
servicing obligations hereunder, including, but not limited to, the cost of (1)
the preservation, restoration and protection of a Mortgaged Property, including
without limitation advances in respect of real estate taxes and assessments, (2)
any collection, enforcement or judicial proceedings, including without
limitation foreclosures, collections and liquidations, (3) the conservation,
management, sale and liquidation of any REO Property and (4) compliance with the
obligations under Section 3.10.

         Servicing Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to one month's interest at the Servicing Fee Rate on the Stated
Principal Balance of such Mortgage Loan as of the preceding Distribution Date
or, in the event of any payment of interest that accompanies a Principal
Prepayment in full made by the Mortgagor, interest at the Servicing Fee Rate on
the Stated Principal Balance of such Mortgage Loan as of the preceding
Distribution Date for the period covered by such payment of interest.

         Servicing Fee Rate: 0.5000% 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 facsimile signature appear on a list of servicing officers furnished to
the Trustee by the Servicer on the Closing Date pursuant to this Agreement, as
such lists may from time to time be amended.

         Servicing Transfer Costs: In the event that the Servicer does not
reimburse the Trustee under the this Agreement, all costs associated with the
transfer of servicing from the predecessor Servicer, including, without
limitation, any costs or expenses associated with the termination of the
predecessor Servicer, the appointment of a successor servicer, the complete
transfer of all servicing data and the completion, correction or manipulation of
such servicing data as may be required by the Trustee or any successor servicer
to correct any errors or insufficiencies in the servicing data or otherwise to
enable the Trustee or successor servicer to service the Mortgage Loans property
and effectively.

         SFAS 140: Statement of Financial Accounting Standard No. 140,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities dated September 2000, published by the Financial Accounting
Standards Board of the Financial Accounting Foundation.

         SPV: As defined in Section 10.14(a).

         Startup Date:  As defined in Section 2.07 hereof.

         Stated Principal Balance: With respect to any Mortgage Loan or related
REO Property (1) as of the Cut-off Date, the Cut-off Date Principal Balance
thereof, and (2) as of any Distribution Date, such Cut-off Date Principal
Balance, minus the sum of (A) the principal portion of the Scheduled Payments
(x)

                                      -34-
<PAGE>
due with respect to such Mortgage Loan during each Due Period ending prior to
such Distribution Date and (y) that were received by the Servicer as of the
close of business on the Determination Date related to such Distribution Date or
with respect to which Advances were made on the Servicer Advance Date prior to
such Distribution Date and (B) all Principal Prepayments with respect to such
Mortgage Loan received on or prior to the last day of the related Prepayment
Period, and all Liquidation Proceeds to the extent applied by the Servicer as
recoveries of principal in accordance with Section 3.12 with respect to such
Mortgage Loan, that were received by the Servicer as of the close of business on
the last day of the related Due Period. Notwithstanding the foregoing, the
Stated Principal Balance of a Liquidated Loan shall be deemed to be zero.

         Stepdown Date: The later to occur of (1) the Distribution Date in April
2006 or (2) the first Distribution Date on which (A) the Class A Certificate
Principal Balance (reduced by the Principal Funds with respect to such
Distribution Date) is less than or equal to (B) 62.00% of the Stated Principal
Balances of the Mortgage Loans as of such Distribution Date.

         Subordinated Certificates: The Class M-1, Class M-2, Class B-1 and
Class B-2 Certificates.

         Subservicing Agreement: As defined in Section 3.02(a).

         Substitution Adjustment Amount: The meaning ascribed to such term
pursuant to Section 2.03(c).

         Tax Matters Person: The Person designated as "tax matters person" in
the manner provided under Treasury regulation Section 1.860F-4(d) and Treasury
regulation Section 301.6231(a)(7)-1.

         Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.

         Transfer Agreement: The Master Mortgage Loan Purchase and Interim
Servicing Agreement dated as of October 1, 2002 between Merrill Lynch Mortgage
Capital Inc., as purchaser and WMC Mortgage Corporation, as seller and interim
servicer, as supplemented by that certain letter agreement dated as of April 3,
2003.

         Transferor: WMC.

         Trigger Event: With respect to the Certificates after the Stepdown
Date, a Distribution Date on which (1) the quotient of (A) the aggregate Stated
Principal Balance of all Mortgage Loans which are 60 or more days Delinquent
(including, for the purposes of this calculation, Mortgage Loans in foreclosure
and REO Properties) measured on a rolling three month basis and (B) the Stated
Principal Balance of the Mortgage Loans as of the last day of the preceding
calendar month, equals or exceeds the product of (i) 40.00% and (ii) Required
Percentage or (2) the quotient (expressed as a percentage) of (A) the aggregate
Realized Losses incurred from the Cut-off Date through the last day of the
calendar month preceding such Distribution Date and (B) the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date exceeds the Required Loss
Percentage.

         Trust Fund: The corpus of the trust (the "Merrill Lynch Mortgage
Investors Trust, Series 2003-WMC2") created hereunder consisting of (i) the
Mortgage Loans and all interest and principal received on or with respect
thereto on and after the Cut-off Date to the extent not applied in computing the
Cut-off Date Principal Balance thereof, exclusive of interest not required to be
deposited in the Collection Account; (ii) the Collection Account and the
Certificate Account and all amounts deposited therein pursuant to the applicable
provisions of this Agreement; (iii) property that secured a Mortgage Loan and
has been acquired by foreclosure, deed in lieu of foreclosure or otherwise; (iv)
the mortgagee's rights under the Insurance Policies with respect to the Mortgage
Loans; (v) all proceeds of the conversion,

                                      -35-
<PAGE>
voluntary or involuntary, of any of the foregoing into cash or other liquid
property; and (vi) the Cap Contract and Cap Contract Account.

         Trustee: Wells Fargo Bank Minnesota, National Association, a national
banking association, not in its individual capacity, but solely in its capacity
as trustee for the benefit of the Certificateholders under this Agreement, and
any successor thereto, and any corporation or national banking association
resulting from or surviving any consolidation or merger to which it or its
successors may be a party and any successor trustee as may from time to time be
serving as successor trustee hereunder.

         Upper Tier REMIC: As described in the Preliminary Statement and Section
2.07.

         Upper Tier REMIC Interests: Each of the Class UTA-1 Interest, the Class
UTA-2 Interest, the Class UTM-1 Interest, the Class UTM-2 Interest, the Class
UTB-1 Interest, the Class UTB-2 Interest, the Class UTXN Interest and the
Residual Interest.

         Upper Tier REMIC Regular Interests: Each of the Upper Tier REMIC
Interests other than the Residual Interest.

         USAP Report: A report in compliance with the Uniform Single Attestation
Program for Mortgage Bankers delivered in accordance with Section 3.18.

         Voting Rights: The portion of the voting rights of all the Certificates
that is allocated to any of the Certificates for purposes of the voting
provisions hereunder. Voting Rights allocated to each Class of Certificates
shall be allocated 95% to the Offered Certificates, 5% to the Class N and Class
X Certificates, with the allocation among the Offered Certificates to be in
proportion to the Class Certificate Principal Balance of each Class relative to
the Class Certificate Principal Balance of all other Classes. Voting Rights will
be allocated among the Certificates of each such Class in accordance with their
respective Percentage Interests.

         Weighted Maximum Rate Cap: As of any Distribution Date, a rate equal to
(i) the weighted average of the Maximum Mortgage Rates on the Mortgage Loans
(calculated based upon the Stated Principal Balance of such Mortgage Loans as of
the preceding Distribution Date) on such Distribution Date minus and (ii) the
Servicing Fee Rate.

         WMC: WMC Mortgage Corporation, a New Jersey corporation, or its
successor in interest.

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                         REPRESENTATIONS AND WARRANTIES

         SECTION 2.01.     Conveyance of Mortgage Loans

         The Depositor, concurrently with the execution and delivery hereof,
does hereby sell, transfer, assign, set over and convey to the Trustee without
recourse all the right, title and interest of the Depositor in and to the assets
of the Trust Fund. Such assignment includes all interest and principal received
on or with respect to the Mortgage Loans on or after the Cut-off Date (other
than Scheduled Payments due on the Mortgage Loans on or before the Cut-off
Date).

         In connection with such assignment, the Depositor does hereby deliver
to, and deposit with, the Trustee the following documents or instruments with
respect to each Mortgage Loan:

                                      -36-
<PAGE>
                  (A) The Original Mortgage Note endorsed, "Pay to the order of
         Wells Fargo Bank Minnesota, National Association, as trustee, without
         recourse" together with all riders thereto. The Mortgage Note shall
         include all intervening endorsements showing a complete chain of the
         title from the originator to the Transferor.

                  (B) Except as provided below and for each Mortgage Loan that
         is not a MERS Loan, the original recorded Mortgage together with all
         riders thereto, with evidence of recording thereon, or, if the original
         Mortgage has not yet been returned from the recording office, a copy of
         the original Mortgage together with all riders thereto certified by the
         Transferor to be true copy of the original of the Mortgage that has
         been delivered for recording in the appropriate recording office of the
         jurisdiction in which the Mortgaged Property is located and in the case
         of each MERS Loan, the original Mortgage together with all riders
         thereto, noting the presence of the MIN of the Loan and either language
         indicating that the Mortgage Loan is a MOM Loan or if the Mortgage Loan
         was not a MOM Loan at origination, the original Mortgage and the
         assignment thereof to MERS, with evidence of recording indicated
         thereon, or a copy of the Mortgage certified by the public recording
         office in which such Mortgage has been recorded.

                  (C) In the case of each Mortgage Loan that is not a MERS Loan,
         the original Assignment of each Mortgage, to "Wells Fargo Bank
         Minnesota, National Association, as trustee."

                  (D) The original policy of title insurance (or a preliminary
         title report, commitment or binder if the original title insurance
         policy has not been received from the title insurance company).

                  (E) Originals of any intervening assignments of the Mortgage,
         with evidence of recording thereon or, if the original intervening
         assignment has not yet been returned from the recording office, a copy
         of such assignment certified to be a true copy of the original of the
         assignment which has been sent for recording in the appropriate
         jurisdiction in which the Mortgaged Property is located.

                  (F) Originals of all assumption and modification agreements,
         if any.

         If in connection with any Mortgage Loan, the Depositor cannot deliver
the Mortgage, Assignments of Mortgage or assumption, consolidation or
modification, as the case may be, with evidence of recording thereon, if
applicable, concurrently with the execution and delivery of this Agreement
solely because of a delay caused by the public recording office where such
Mortgage, Assignments of Mortgage or assumption, consolidation or modification,
as the case may be, has been delivered for recordation, the Depositor shall
deliver or cause to be delivered to the Trustee written notice stating that such
Mortgage or assumption, consolidation or modification, as the case may be, has
been delivered to the appropriate public recording office for recordation.
Thereafter, the Depositor shall deliver or cause to be delivered to the Trustee
such Mortgage, Assignments of Mortgage or assumption, consolidation or
modification, as the case may be, with evidence of recording indicated thereon,
if applicable, upon receipt thereof from the public recording office. To the
extent any required endorsement is not contained on a Mortgage Note or an
Assignment of Mortgage, the Depositor shall make or cause such endorsement to be
made.

         With respect to any Mortgage Loan, none of the Depositor, the Servicer
or the Trustee shall be obligated to cause to be recorded the Assignment of
Mortgage referred to in this Section 2.01. In the event an Assignment of
Mortgage is not recorded, the Servicer shall have no liability for its failure
to receive and act on notices related to such Assignment of Mortgage.

                                      -37-
<PAGE>
         The ownership of each Mortgage Note, the Mortgage and the contents of
the related Mortgage File is vested in the Trustee. Neither the Depositor nor
the Servicer shall take any action inconsistent with such ownership and shall
not claim any ownership interest therein. The Depositor and the Servicer shall
respond to any third party inquiries with respect to ownership of the Mortgage
Loans by stating that such ownership is held by the Trustee on behalf of the
Certificateholders. Mortgage documents relating to the Mortgage Loans not
delivered to the Trustee are and shall be held in trust by the Servicer, for the
benefit of the Trustee as the owner thereof, and the Servicer's possession of
the contents of each Mortgage File so retained is for the sole purpose of
servicing the related Mortgage Loan, and such retention and possession by the
Servicer is in a custodial capacity only. The Depositor agrees to take no action
inconsistent with the Trustee's ownership of the Mortgage Loans, to promptly
indicate to all inquiring parties that the Mortgage Loans have been sold and to
claim no ownership interest in the Mortgage Loans.

         It is the intention of this Agreement that the conveyance of the
Depositor's right, title and interest in and to the Trust Fund pursuant to this
Agreement shall constitute a purchase and sale and not a loan. If a conveyance
of Mortgage Loans from the Seller to the Depositor is characterized as a pledge
and not a sale, then the Depositor shall be deemed to have transferred to the
Trustee all of the Depositor's right, title and interest in, to and under the
obligations of the Seller deemed to be secured by said pledge; and it is the
intention of this Agreement that the Depositor shall also be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title, and interest in, to and under the obligations of the
Seller to the Depositor deemed to be secured by said pledge and that the Trustee
shall be deemed to be an independent custodian for purposes of perfection of the
security interest granted to the Depositor. If the conveyance of the Mortgage
Loans from the Depositor to the Trustee is characterized as a pledge, it is the
intention of this Agreement that this Agreement shall constitute a security
agreement under applicable law, and that the Depositor shall be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title and interest in, to and under the Mortgage Loans, all
payments of principal of or interest on such Mortgage Loans, all other rights
relating to and payments made in respect of the Trust Fund, and all proceeds of
any thereof. If the trust created by this Agreement terminates prior to the
satisfaction of the claims of any Person in any Certificates, the security
interest created hereby shall continue in full force and effect and the Trustee
shall be deemed to be the collateral agent for the benefit of such Person.

         In addition to the conveyance made in the first paragraph of this
Section 2.01, the Depositor does hereby convey, assign and set over to the
Trustee for the benefit of the Certificateholders its rights and interests under
the Sale Agreement, including the Depositor's right, title and interest in the
representations and warranties contained in the Sale Agreement and the benefit
of the repurchase obligations and the obligation of the Seller contained in the
Sale Agreement to take, at the request of the Depositor or the Trustee, all
action on its part which is reasonably necessary to ensure the enforceability of
a Mortgage Loan. The Trustee hereby accepts such assignment, and shall be
entitled to exercise all rights of the Depositor under the Sale Agreement as if,
for such purpose, it were the Depositor. The foregoing sale, transfer,
assignment, set-over, deposit and conveyance does not and is not intended to
result in creation or assumption by the Trustee of any obligation of the
Depositor, the Seller, or any other Person in connection with the Mortgage Loans
or any other agreement or instrument relating thereto.

         SECTION 2.02.     Acceptance by Trustee of the Mortgage Loans.

         Except as set forth in the Exception Report delivered contemporaneously
herewith (the "Exception Report"), the Trustee acknowledges receipt of the
Mortgage Note for each Mortgage Loan and delivery of a Mortgage File (but does
not acknowledge receipt of all documents required to be included in such
Mortgage File) with respect to each Mortgage Loan and declares that it holds and
will hold such documents and any other documents constituting a part of the
Mortgage Files delivered to it in

                                      -38-
<PAGE>
trust for the use and benefit of all present and future Certificateholders. The
Depositor will cause the Seller to repurchase any Mortgage Loan to which a
material exception was taken in the Exception Report unless such exception is
cured to the satisfaction of the Trustee within 45 Business Days of the Closing
Date.

         The Trustee acknowledges receipt of the Cap Contract (a form of which
is attached hereto), Transfer Agreement and the Sale Agreement.

         The Trustee agrees, for the benefit of Certificateholders, the NIMs
Insurer, to review each Mortgage File delivered to it within 60 days after the
Closing Date to ascertain and to certify, within 70 days of the Closing Date, to
the NIMs Insurer, the Depositor and the Servicer that all documents required by
Section 2.01 have been executed and received, and that such documents relate to
the Mortgage Loans identified in Exhibit B-1 that have been conveyed to it. If
the Trustee finds any document or documents constituting a part of a Mortgage
File to be missing or defective (that is, mutilated, damaged, defaced or
unexecuted) in any material respect, the Trustee shall promptly (and in any
event within no more than five Business Days) after such finding so notify the
Servicer, the Seller, the Depositor and the NIMs Insurer. In addition, the
Trustee shall also notify the Servicer, the Seller, the Depositor and the NIMs
Insurer, if the original Mortgage with evidence of recording thereon with
respect to a Mortgage Loan is not received within 70 days of the Closing Date;
if it has not been received because of a delay caused by the public recording
office where such Mortgage has been delivered for recordation, the Depositor
shall deliver or cause to be delivered to the Trustee written notice stating
that such Mortgage has been delivered to the appropriate public recording
officer for recordation and thereafter the Depositor shall deliver or cause to
be delivered such Mortgage with evidence of recording thereon upon receipt
thereof from the public recording office. The Trustee shall request that the
Seller correct or cure such omission, defect or other irregularity, or
substitute a Mortgage Loan pursuant to the provisions of Section 2.03(c), within
90 days from the date the Seller was notified of such omission or defect and, if
the Seller does not correct or cure such omission or defect within such period,
that the Seller purchase such Mortgage Loan from the Trust Fund within 90 days
from the date the Trustee notified the Seller of such omission, defect or other
irregularity at the Purchase Price of such Mortgage Loan. The Purchase Price for
any Mortgage Loan purchased pursuant to this Section 2.02 shall be paid to the
Servicer and deposited by the Servicer in the Collection Account promptly upon
receipt, and, upon receipt by the Trustee of written notification of such
deposit signed by a Servicing Officer, the Trustee, upon receipt of a Request
for Release, shall promptly release to the Seller the related Mortgage File and
the Trustee shall execute and deliver such instruments of transfer or
assignment, without recourse, as shall be necessary to vest in the Seller or its
designee, as the case may be, any Mortgage Loan released pursuant hereto, and
the Trustee shall have no further responsibility with regard to such Mortgage
Loan. It is understood and agreed that the obligation of the Seller to purchase,
cure or substitute any Mortgage Loan as to which a material defect in or
omission of a constituent document exists shall constitute the sole remedy
respecting such defect or omission available to the Trustee on behalf of
Certificateholders and the NIMs Insurer. The preceding sentence shall not,
however, limit any remedies available to the Certificateholders, the Depositor,
the Trustee or the NIMs Insurer pursuant to the Sale Agreement and the Transfer
Agreement. The Trustee shall be under no duty or obligation to inspect, review
and examine such documents, instruments, certificates or other papers to
determine that they are genuine, enforceable, recordable or appropriate to the
represented purpose, or that they have actually been recorded, or that they are
other than what they purport to be on their face. The Trustee shall keep
confidential the name of each Mortgagor and the Trustee shall not solicit any
such Mortgagor for the purpose of refinancing the related Mortgage Loan. It is
understood and agreed that all rights and benefits relating to the solicitation
of any Mortgagors and the attendant rights, title and interest in and to the
list of Mortgagors and data relating to their Mortgages shall be retained by the
Servicer.

                                      -39-
<PAGE>
         Within 70 days of the Closing Date, the Trustee shall deliver to the
Depositor, the Servicer and the NIMs Insurer the Trustee's Certification,
substantially in the form of Exhibit D attached hereto, evidencing the
completeness of the Mortgage Files, with any exceptions noted thereto.

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

         (a) The Depositor hereby represents and warrants to the Servicer, the
Trustee and the NIMs Insurer as follows, as of the date hereof:

                  (i) The Depositor is duly organized and is validly existing as
         a corporation in good standing under the laws of the State of Delaware
         and has full power and authority (corporate and other) necessary to own
         or hold its properties and to conduct its business as now conducted by
         it and to enter into and perform its obligations under this Agreement
         and the Sale Agreement.

                  (ii) The Depositor has the full corporate power and authority
         to execute, deliver and perform, and to enter into and consummate the
         transactions contemplated by, this Agreement and the Sale Agreement and
         has duly authorized, by all necessary corporate action on its part, the
         execution, delivery and performance of this Agreement and the Sale
         Agreement; and this Agreement and the Sale Agreement, assuming the due
         authorization, execution and delivery hereof by the other parties
         hereto, constitutes a legal, valid and binding obligation of the
         Depositor, enforceable against the Depositor in accordance with its
         terms, subject, as to enforceability, to (i) bankruptcy, insolvency,
         reorganization, moratorium and other similar laws affecting creditors'
         rights generally and (ii) general principles of equity, regardless of
         whether enforcement is sought in a proceeding in equity or at law.

                  (iii) The execution and delivery of this Agreement and the
         Sale Agreement by the Depositor, the consummation of the transactions
         contemplated by this Agreement and the Sale Agreement, and the
         fulfillment of or compliance with the terms hereof are in the ordinary
         course of business of the Depositor and will not (A) result in a
         material breach of any term or provision of the charter or by-laws of
         the Depositor or (B) materially conflict with, result in a violation or
         acceleration of, or result in a material default under, the terms of
         any other material agreement or instrument to which the Depositor is a
         party or by which it may be bound or (C) constitute a material
         violation of any statute, order or regulation applicable to the
         Depositor of any court, regulatory body, administrative agency or
         governmental body having jurisdiction over the Depositor; and the
         Depositor is not in breach or violation of any material indenture or
         other material agreement or instrument, or in violation of any statute,
         order or regulation of any court, regulatory body, administrative
         agency or governmental body having jurisdiction over it which breach or
         violation may materially impair the Depositor's ability to perform or
         meet any of its obligations under this Agreement.

                  (iv) No litigation is pending, or, to the best of the
         Depositor's knowledge, threatened, against the Depositor that would
         materially and adversely affect the execution, delivery or
         enforceability of this Agreement and the Sale Agreement or the ability
         of the Depositor to perform its obligations under this Agreement and
         the Sale Agreement in accordance with the terms hereof.

                  (v) No consent, approval, authorization or order of any court
         or governmental agency or body is required for the execution, delivery
         and performance by the Depositor of, or compliance by the Depositor
         with, this Agreement and the Sale Agreement or the consummation of the
         transactions contemplated hereby, or if any such consent, approval,
         authorization or order is required, the Depositor has obtained the
         same. The Depositor hereby represents and warrants to the Trustee with
         respect to each Mortgage Loan as of the Closing Date, and following the
         transfer

                                      -40-
<PAGE>
         of the Mortgage Loans to it by the Seller, the Depositor had good title
         to the Mortgage Loans and the Mortgage Notes were subject to no
         offsets, claims, liens, mortgage, pledge, charge, security interest,
         defenses or counterclaims.

         (b) The representations and warranties of each Transferor with respect
to the related Mortgage Loans in the applicable Transfer Agreement, which have
been assigned to the Trustee hereunder, were made as of the date specified in
the applicable Transfer Agreement (or underlying agreement, if such Transfer
Agreement is in the form of an assignment of a prior agreement). To the extent
that any fact, condition or event with respect to a Mortgage Loan constitutes a
breach of both (i) a representation or warranty of the applicable Transferor
under the applicable Transfer Agreement and (ii) a representation or warranty of
the Seller under the Sale Agreement, the only right or remedy of the Trustee,
the NIMs Insurer or of any Certificateholder shall be the Trustee's right to
enforce the obligations of the applicable Transferor under any applicable
representation or warranty made by it. The Trustee acknowledges that the Seller
shall have no obligation or liability with respect to any breach of a
representation or warranty made by it with respect to the Mortgage Loans if the
fact, condition or event constituting such breach also constitutes a breach of a
representation or warranty made by the applicable Transferor in the applicable
Transfer Agreement, without regard to whether such Transferor fulfills its
contractual obligations in respect of such representation or warranty. The
Trustee further acknowledges that the Depositor shall have no obligation or
liability with respect to any breach of any representation or warranty with
respect to the Mortgage Loans (except as set forth in Section 2.03(a)(v)) under
any circumstances.

         (c) Upon discovery by any of the Depositor, the Servicer, the NIMs
Insurer, or the Trustee of a breach of any of such representations and
warranties that adversely and materially affects the value of the related
Mortgage Loan, prepayment charges or the interests of the Certificateholders,
the party discovering such breach shall give prompt written notice to the other
parties. Within 90 days of the discovery of a breach of any representation or
warranty given to the Trustee by the Depositor, any Transferor, the Seller and
assigned to the Trustee, the Depositor, such Transferor or the Seller, as
applicable, shall either (a) cure such breach in all material respects, (b)
repurchase such Mortgage Loan or any property acquired in respect thereof from
the Trustee at the Purchase Price or (c) within the two year period following
the Closing Date, substitute a Replacement Mortgage Loan for the affected
Mortgage Loan. In the event of discovery of a breach of any representation and
warranty of any Transferor or the Depositor, the Trustee shall enforce its
rights under the applicable Transfer Agreement and the Sale Agreement for the
benefit of Certificateholders and the NIMs Insurer. If a breach of the
representations and warranties set forth in the Transfer Agreement hereof exists
solely due to the unenforceability of a prepayment charge, the Trustee shall
notify the NIMs Insurer thereof and not seek to enforce the repurchase remedy
provided for herein unless directed in writing to do so by the NIMs Insurer. In
the event of a breach of the representations and warranties with respect to the
Mortgage Loans set forth in a Transfer Agreement, the Trustee shall at the
request of the NIMs Insurer enforce the right of the Trust Fund and the NIMs
Insurer to be indemnified for such breach of representation and warranty. In the
event that such breach relates solely to the unenforceability of a prepayment
charge, amounts received in respect of such indemnity up to the amount of such
prepayment charge shall be distributed pursuant to Section 4.04(b)(i)(B). As
provided in the Sale Agreement, if the Transferor substitutes for a Mortgage
Loan for which there is a breach of any representations and warranties in the
related Transfer Agreement which adversely and materially affects the value of
such Mortgage Loan and such substitute mortgage loan is not a Replacement
Mortgage Loan, under the terms of the Sale Agreement, the Seller will, in
exchange for such substitute Mortgage Loan, (i) provide the applicable Purchase
Price for the affected Mortgage Loan or (ii) within two years of the Closing
Date, substitute such affected Mortgage Loan with a Replacement Mortgage Loan.
Any such substitution shall not be effected prior to the additional delivery to
the Trustee of a Request for Release substantially in the form of Exhibit I and
shall not be effected unless it is within two years of the Startup Date. The
Seller indemnifies and holds the Trust

                                      -41-
<PAGE>
Fund, the Trustee, the Depositor, the NIMs Insurer and each Certificateholder
harmless against any and all taxes, claims, losses, penalties, fines,
forfeitures, reasonable legal fees and related costs, judgments, and any other
costs, fees and expenses that the Trust Fund, the Trustee, the Depositor, the
NIMs Insurer and any Certificateholder may sustain in connection with any
actions of the Seller relating to a repurchase of a Mortgage Loan other than in
compliance with the terms of this Section 2.03 and the Sale Agreement, to the
extent that any such action causes (i) any federal or state tax to be imposed on
the Trust Fund or any REMIC provided for herein, including without limitation,
any federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of
the Code or on "contributions after the startup date" under Section 860(d)(1) of
the Code, or (ii) any REMIC created hereunder to fail to qualify as a REMIC at
any time that any Certificate is outstanding.

         With respect to any Mortgage Loan repurchased by the Depositor pursuant
to this Agreement, by the Seller pursuant to the Sale Agreement or by any
Transferor pursuant to the applicable Transfer Agreement, the principal portion
of the funds received by the Servicer in respect of such repurchase of a
Mortgage Loan will be considered a Principal Prepayment and shall be deposited
by the Servicer in the Collection Account pursuant to Section 3.05. The Trustee,
upon receipt of the full amount of the Purchase Price for a Deleted Mortgage
Loan, or upon receipt of the Mortgage File for a Replacement Mortgage Loan
substituted for a Deleted Mortgage Loan, shall release or cause to be released
and reassign to the Depositor, the Seller or the applicable Transferor, as
applicable, the related Mortgage File for the Deleted Mortgage Loan and shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, representation or warranty, as shall be necessary to vest in
such party or its designee or assignee title to any Deleted Mortgage Loan
released pursuant hereto, free and clear of all security interests, liens and
other encumbrances created by this Agreement, which instruments shall be
prepared by the Trustee, and the Trustee shall not have any further
responsibility with respect to the Mortgage File relating to such Deleted
Mortgage Loan.

         With respect to each Replacement Mortgage Loan to be delivered to the
Trustee pursuant to the terms of this Article II in exchange for a Deleted
Mortgage Loan: (i) the Depositor, the applicable Transferor or the Seller, as
applicable, must deliver to the Trustee the Mortgage File for the Replacement
Mortgage Loan containing the documents set forth in Section 2.01 along with a
written certification certifying as to the delivery of such Mortgage File and
containing the granting language set forth in Section 2.01; and (ii) the
Depositor will be deemed to have made, with respect to such Replacement Mortgage
Loan, each of the representations and warranties made by it with respect to the
related Deleted Mortgage Loan. The Trustee shall review the Mortgage File with
respect to each Replacement Mortgage Loan and certify to the NIMs Insurer and
the Depositor that all documents required by Section 2.01 have been executed and
received.

         For any month in which the Seller substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Seller will determine
the amount (if any) by which the aggregate principal balance of all such
Replacement Mortgage Loans as of the date of substitution and the aggregate
prepayment penalties with respect to such Replacement Mortgage Loans is less
than the aggregate Stated Principal Balance (after application of the principal
portion of the Scheduled Payment due in the month of substitution) and aggregate
prepayment penalties of all such Deleted Mortgage Loans. An amount equal to the
aggregate of the deficiencies described in the preceding sentence (such amount,
the "Substitution Adjustment Amount") shall be delivered by the Seller to the
Servicer for deposit into the Collection Account on the Determination Date for
the Distribution Date relating to the Prepayment Period during which the related
Mortgage Loan became required to be purchased or replaced hereunder.

         Notwithstanding any other provision of this Agreement, the right to
substitute Mortgage Loans pursuant to this Article II shall be subject to the
additional limitations that no substitution of a Replacement Mortgage Loan for a
Deleted Mortgage Loan shall be made unless the Trustee and the NIMs

                                      -42-
<PAGE>
Insurer have received an Opinion of Counsel (at the expense of the party seeking
to make the substitution) that, under current law, such substitution will not
(A) affect adversely the status of any REMIC established hereunder as a REMIC,
or of the related "regular interests" as "regular interests" in any such REMIC,
or (B) cause any such REMIC to engage in a "prohibited transaction" or
prohibited contribution pursuant to the REMIC Provisions.

         The Seller shall give or cause to be given written notice to the
Certificateholders and the NIMS Insurer that such substitution has taken place,
shall amend the Mortgage Loan Schedule to reflect the removal of such Deleted
Mortgage Loan from the terms of this Agreement and the substitution of the
Replacement Mortgage Loan or Replacement Mortgage Loans and shall deliver a copy
of such amended Mortgage Loan Schedule to the NIMS Insurer and the Trustee. Upon
such substitution by the Seller, such Replacement Mortgage Loan or Replacement
Mortgage Loans shall constitute part of the Mortgage Pool and shall be subject
in all respects to the terms of this Agreement and the Sale Agreement, including
all applicable representations and warranties thereof included in the Sale
Agreement as of the date of substitution.

         In addition, the Seller shall obtain at its own expense and deliver to
the Trustee and the NIMS Insurer an Opinion of Counsel to the effect that such
substitution will not (a) cause any federal tax to be imposed on the Trust Fund
or any REMIC provided for herein, including without limitation, any federal tax
imposed on "prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the Code or
(b) adversely affect the status of any REMIC provided for herein as a REMIC. If
any such Opinion of Counsel can not be delivered, then such substitution may
only be effected at such time as the required Opinion of Counsel can be given.

         (d) It is understood and agreed that the representations, warranties
and indemnification (i) set forth in Section 2.03, (ii) of the Seller and the
Depositor set forth in the Sale Agreement and assigned to the Trustee by the
Depositor hereunder and (iii) of each Transferor, assigned by the Seller to the
Depositor pursuant to the Sale Agreement and assigned to the Trustee by the
Depositor hereunder shall each survive delivery of the Mortgage Files and the
Assignment of Mortgage of each Mortgage Loan to the Trustee and shall continue
throughout the term of this Agreement.

         SECTION 2.04. Representations and Warranties of the Servicer.

         The Servicer hereby represents and warrants to the Depositor and the
Trustee as follows, as of the date hereof:

                  (i) The Servicer is a duly organized corporation and is
         validly existing and in good standing under the laws of the state of
         its incorporation and is duly authorized and qualified to transact any
         and all business contemplated by this Agreement to be conducted by the
         Servicer in any state in which a Mortgaged Property is located or is
         otherwise not required under applicable law to effect such
         qualification and, in any event, is in compliance with the doing
         business laws of any such state, to the extent necessary to ensure its
         ability to enforce each Mortgage Loan, to service the Mortgage Loans in
         accordance with the terms of this Agreement and to perform any of its
         other obligations under this Agreement in accordance with the terms
         hereof.

                  (ii) The Servicer has the corporate power and authority and to
         service each Mortgage Loan, and to execute, deliver and perform, and to
         enter into and consummate the transactions contemplated by this
         Agreement and has duly authorized by all necessary corporate action on
         the part of the Servicer the execution, delivery and performance of
         this Agreement; and this Agreement, assuming the due authorization,
         execution and delivery hereof by the other parties hereto, constitutes
         a legal, valid and binding obligation of the Servicer, enforceable
         against the Servicer in accordance with its terms, except that (a) the
         enforceability hereof may be limited by

                                      -43-
<PAGE>
         bankruptcy, insolvency, moratorium, receivership and other similar laws
         relating to creditors' rights generally and (b) the remedy of specific
         performance and injunctive and other forms of equitable relief may be
         subject to equitable defenses and to the discretion of the court before
         which any proceeding therefor may be brought.

                  (iii) The execution and delivery of this Agreement by the
         Servicer, the servicing of the Mortgage Loans under this Agreement, the
         consummation of any other of the transactions contemplated by this
         Agreement, and the fulfillment of or compliance with the terms hereof
         are in the ordinary course of business of the Servicer and will not (A)
         result in a material breach of any term or provision of the charter or
         by-laws of the Servicer or (B) materially conflict with, result in a
         material breach, violation or acceleration of, or result in a material
         default under, the terms of any other material agreement or instrument
         to which the Servicer is a party or by which it may be bound, or (C)
         constitute a material violation of any statute, order or regulation
         applicable to the Servicer of any court, regulatory body,
         administrative agency or governmental body having jurisdiction over the
         Servicer; and the Servicer is not in breach or violation of any
         material indenture or other material agreement or instrument, or in
         violation of any statute, order or regulation of any court, regulatory
         body, administrative agency or governmental body having jurisdiction
         over it which breach or violation may materially impair the Servicer's
         ability to perform or meet any of its obligations under this Agreement.

                  (iv) The Servicer is an approved servicer of mortgage loans
         for Fannie Mae and is an approved seller of seasoned mortgage loans and
         servicer of all types of mortgage loans for Freddie Mac.

                  (v) No litigation is pending or, to the best of the Servicer's
         knowledge, threatened, against the Servicer that would materially and
         adversely affect the execution, delivery or enforceability of this
         Agreement or the ability of the Servicer to service the Mortgage Loans
         or to perform any of its other obligations under this Agreement in
         accordance with the terms hereof.

                  (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 the consummation of the transactions contemplated
         hereby, or if any such consent, approval, authorization or order is
         required, the Servicer has obtained the same.

                  (vii) The Servicer has fully furnished and will fully furnish
         (for the period it serviced the Mortgage Loans), in accordance with the
         Fair Credit Reporting Act and its implementing regulations, accurate
         and complete information (e.g., favorable and unfavorable) on its
         borrower credit files to Equifax, Experian and Trans Union Credit
         Information Company on a monthly basis.

         SECTION 2.05. Substitutions and Repurchases of Mortgage Loans which are
not "Qualified Mortgages".

         Upon discovery by the Depositor, the Servicer or the Trustee that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning of
section 860G(a)(3) of the Code, the party discovering such fact shall promptly
(and in any event within 5 Business Days of discovery) give written notice
thereof to the other parties. In connection therewith, the Depositor shall, at
the Depositor's option, either (i) substitute, if the conditions in Section
2.03(c) with respect to substitutions are satisfied, a Replacement Mortgage Loan
for the affected Mortgage Loan, or (ii) repurchase the affected Mortgage Loan
within 90 days of such discovery in the same manner as it would a Mortgage Loan
for a breach of representation or warranty contained in Section 2.03. The
Trustee shall reconvey to the Depositor the

                                      -44-
<PAGE>
Mortgage Loan to be released pursuant hereto in the same manner, and on the same
terms and conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty contained in Section 2.03.

SECTION 2.06. Authentication and Delivery of Certificates.

         The Trustee acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer and assignment, the Trustee has caused
to be authenticated and delivered to or upon the order of the Depositor, in
exchange for the Mortgage Loans, Certificates duly authenticated by the Trustee
in authorized denominations evidencing ownership of the entire Trust Fund. The
Trustee agrees to hold the Trust Fund and exercise the rights referred to above
for the benefit of all present and future Holders of the Certificates and to
perform its duties set forth in this Agreement in accordance with the provisions
hereof.

SECTION 2.07. REMIC Elections.

         (a) The Depositor hereby instructs and authorizes the Trustee to make
an appropriate election to treat each of the Upper Tier REMIC and the Lower Tier
REMIC as a REMIC. The Trustee shall sign the returns providing for such
elections and such other tax or information returns which are required to be
signed by the Trustee under applicable law. This Agreement shall be construed so
as to carry out the intention of the parties that each of the Upper Tier REMIC
and the Lower Tier REMIC be treated as a REMIC at all times prior to the date on
which the Trust Fund is terminated.

         (b) The Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income tax purposes of all interests created
hereby. The "Startup Date" for purposes of the REMIC Provisions shall be the
Closing Date. Each REMIC's fiscal year shall be the calendar year.

         The Lower Tier REMIC shall consist of all of the assets of the Trust
Fund other than (i) the interests issued by the Lower Tier REMIC and the
interests issued by the Upper Tier REMIC, (ii) the Cap Contract and Cap Contract
Account and (iii) the grantor trusts described in Section 2.07 hereof. The Lower
Tier REMIC shall issue the Class LTA-1 Interest, Class LTA-2 Interest, Class
LTB-1 Interest, Class LTB-2 Interest, Class LTM-1 Interest, Class LTM-2 Interest
and Class LTX Interest which shall be designated as regular interests of such
REMIC and shall issue the Class LTR Interest that shall be designated as the
sole class of residual interest in the Lower Tier REMIC. Each of the Lower Tier
REMIC Regular Interests shall have the characteristics set forth in its
definition.

         The assets of the Upper Tier REMIC shall be the Lower Tier REMIC
Regular Interests. The Upper Tier REMIC Regular Interests shall be designated as
the regular interests in the Upper Tier REMIC and the Residual Interest shall be
designated as the sole class of residual interest in the Upper Tier REMIC. For
federal income tax purposes, the Pass-Through Rate on each Upper Tier REMIC
Regular Interest and on the sole class of Residual Interest shall be subject to
a cap equal to the Net Rate.

         The beneficial ownership of the Class LTR Interest and the Residual
Interest shall be represented by the Class R Certificate. The Class LTR Interest
shall not have a principal balance or bear interest.

         (c) The "tax matters person" with respect to each REMIC for purposes of
the REMIC Provisions shall be the beneficial owner of the Class R Certificate;
provided, however, that the Holder of a Class R Certificate, by its acceptance
thereof, irrevocably appoints the Trustee as its agent and attorney-in-fact to
act as "tax matters person" with respect to each REMIC for purposes of the REMIC
Provisions. If there is more than one beneficial owner of the Class R
Certificate, the "tax matters person" shall be the Person with the greatest
percentage interest in the Class R Certificate and, if there is more than one
such

                                      -45-
<PAGE>
Person, shall be determined under Treasury regulation Section 1.860F-4(d) and
Treasury regulation Section 301.6231(a)(7)-1.

         (d) It is intended that the rights of the Class A-1 Certificates, Class
A-2 Certificates, Class R Certificate, Class M-1 Certificates, Class M-2
Certificates, Class B-1 Certificates and Class B-2 Certificates to receive
payments in respect of Excess Interest, including all payments in respect of
Interest Carryover Amounts, shall be treated as a right in interest rate cap
contracts written in favor of the holders of the Class A-1 Certificates, Class
A-2 Certificates, Class R Certificate, Class M-1 Certificates, Class M-2
Certificates, Class B-1 Certificates and Class B-2 Certificates by the grantor
trust described below or a partnership between the holders of the Class N and
Class X Certificates, and such shall be accounted for as property held separate
and apart from the regular interests in the Upper Tier REMIC held by the holders
of the Class A-1 Certificates, Class A-2 Certificates, M-1 Certificates, Class
M-2 Certificates, Class B-1 Certificates and Class B-2 Certificates and the
residual interest in the Upper Tier REMIC held by the holder of the Class R
Certificate. This provision is intended to satisfy the requirements of Treasury
Regulations Section 1.860G-2(i) for the treatment of property rights coupled
with REMIC interests to be separately respected and shall be interpreted
consistently with such regulation. On each Distribution Date, to the extent that
any of the Class A-1 Certificates, Class A-2 Certificates, Class R Certificate,
M-1 Certificates, Class M-2 Certificates, Class B-1 Certificates and Class B-2
Certificates receive payments of Excess Interest, such amounts, to the extent
not derived from payments received on the Cap Contract, will be treated as
distributed by the Upper-Tier REMIC on the uncertificated Class UTXN Interest
and then paid to the relevant Class of Certificates pursuant to the related
interest rate cap contract.

         (e) For federal income tax purposes, the Class N and Class X
Certificates shall represent beneficial ownership of a grantor trust under
subpart E, Part I of subchapter J of the Code that holds the uncertificated
Class UTXN Interest, the Cap Contract and the Cap Contract Account and is
treated as obligated to make payments in respect of the interest rate cap
contracts described in this Section 2.07. If the Class N and Class X
Certificates are beneficially owned by more than one Person, and such Persons do
not hold both the Class N and Class X Certificates proportionately, then each
such Person shall be treated as owning an interest in a partnership that owns
the interests in such grantor trust. For federal income tax purposes the Trustee
shall treat the grantor trust as beneficially owned by the holder of the Class N
and Class X Certificates (or by a partnership, the beneficial owners of which
are the beneficial owners of the Class N and Class X Certificates, as the case
may be) and shall treat such portion of the Trust Fund as a grantor trust under
subpart E, Part I of subchapter J of the Code. The Trustee shall (i) file all
required tax and information returns with respect to the ownership of the Class
UTXN Interest, the Cap Contract and the Cap Contract Account (including
partnership returns if the Class N and Class X Certificates are beneficially
owned by more than one Person and such Persons do not hold both the Class N and
Class X Certificates proportionately), (ii) furnish or cause to be furnished to
the holders of the Class N and Class X Certificates information regarding their
allocable share, if any, of the income with respect to the Class UTXN Interest,
the Cap Contract and the Cap Contract Account, (iii) file or cause to be filed
with the Internal Revenue Service Form 1041 (together with any necessary
attachments) and such other forms as may be applicable with respect to the
grantor trust described herein and (iv) comply with such information reporting
obligations as may apply with respect to payments deemed to be in respect of the
interest rate cap contracts described in this Section 2.07.

         (f) All payments of principal and interest at the Net Mortgage Rate on
each of the Mortgage Loans received from the Mortgage Loans shall be paid to the
Lower Tier REMIC Regular Interests until the principal balance of all such
interests have been reduced to zero and any losses allocated to such interests
have been reimbursed. Any excess amounts shall be distributed to the Class LTR
Interest. On each Distribution Date, an amount equal to 50% of the increase in
the Overcollateralization Amount shall be payable as a reduction of the
principal amounts of the Lower Tier REMIC Marker Classes (with such amount
allocated among the Lower Tier REMIC Marker Classes so that each Lower Tier
REMIC Marker

                                      -46-
<PAGE>
Class will have its principal reduced by an amount equal to 50% of any increase
in the Overcollateralization Amount that results in a reduction in the principal
balance of its Corresponding Upper Tier REMIC Interests) and will be accrued and
added to the principal balance of the Class LTX Interest. All payments of
scheduled principal and prepayments of principal on the Mortgage Loans shall be
allocated 50% to the Class LTX Interest and 50% to the Lower Tier REMIC Marker
Classes (with principal payments allocated to each of the Lower Tier REMIC
Marker Classes in an amount equal to 50% of the principal amounts distributed to
the Corresponding Upper Tier REMIC Interests in reduction of their principal
amounts). Notwithstanding the preceding sentence, an amount equal to the
principal payments that result in a reduction in the Overcollateralization
Amount shall be treated as payable entirely to the Class LTX Interest. Realized
Losses shall be applied to the Lower Tier REMIC Marker Classes and the Class LTX
Interest so that after all distributions have been made on each Distribution
Date (i) the principal balance of each of the Lower Tier REMIC Marker Classes is
equal to 50% of the principal balance of the Corresponding Upper Tier REMIC
Interests and (ii) the principal balance of the Class LTX Interest is equal to
the sum of (x) 50% of the aggregate Stated Principal Balance of the Mortgage
Loans and (y) 50% of the Overcollateralization Amount. Each Lower Tier REMIC
Marker Class shall be entitled to receive an amount equal to 50% of all amounts
distributed to the Corresponding Upper Tier REMIC Interest in respect of
unreimbursed amounts of Realized Losses. The Class LTX Interest shall be
entitled to receive all other amounts distributed to the Certificates in respect
of unreimbursed amounts of Realized Losses.

         All payments of scheduled principal and prepayments on the Mortgage
Loans, and Realized Losses on the Mortgage Loans, shall be allocated among the
Upper Tier REMIC Regular Interests in the same manner as such payments or
Realized Losses are allocated to the Related Certificates (treating the Class N
Certificates and Class X Certificates as Related Certificates with respect to
the Class UTXN Interest). Each Upper Tier REMIC Regular Interest shall be
entitled to receive all amounts distributed to the Related Certificates in
respect of unreimbursed amounts of Realized Losses (treating the Class N
Certificates and the Class X Certificates as Related Certificates with respect
to the Class UTXN Interest).

         In the event that any REMIC provided for herein fails to qualify as a
REMIC, loses its status as a REMIC, or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Servicer of its duties and
obligations set forth herein, the Servicer shall indemnify the NIMS Insurer, the
Trustee and the Trust Fund against any and all Losses resulting from such
negligence; provided, however, that the Servicer shall not be liable for any
such Losses attributable to the action or inaction of the Trustee, the Depositor
or the Holder of such Class R Certificate, as applicable, nor for any such
Losses resulting from misinformation provided by the Holder of such Class R
Certificate on which the Servicer has relied. The foregoing shall not be deemed
to limit or restrict the rights and remedies of the Holder of such Class R
Certificate now or hereafter existing at law or in equity. Notwithstanding the
foregoing, however, in no event shall the Servicer have any liability (1) for
any action or omission that is taken in accordance with and in compliance with
the express terms of, or which is expressly permitted by the terms of, this
Agreement, (2) for any Losses other than arising out of a negligent performance
by the Servicer of its duties and obligations set forth herein, and (3) for any
special or consequential damages to Certificateholders (in addition to payment
of principal and interest on the Certificates).

         In the event that any REMIC provided for herein fails to qualify as a
REMIC, loses its status as a REMIC, or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Trustee of its duties and
obligations set forth herein, the Trustee shall indemnify the NIMS Insurer and
the Trust Fund against any and all Losses resulting from such negligence;
provided, however, that the Trustee shall not be liable for any such Losses
attributable to the action or inaction of the Servicer, the Depositor or the
Holder of such Class R Certificate, as applicable, nor for any such Losses
resulting from misinformation provided

                                      -47-
<PAGE>
by the Holder of such Class R Certificate on which the Trustee has relied. The
foregoing shall not be deemed to limit or restrict the rights and remedies of
the Holder of such Class R Certificate now or hereafter existing at law or in
equity. Notwithstanding the foregoing, however, in no event shall the Trustee
have any liability (1) for any action or omission that is taken in accordance
with and in compliance with the express terms of, or which is expressly
permitted by the terms of, this Agreement, (2) for any Losses other than arising
out of a negligent performance by the Trustee of its duties and obligations set
forth herein, and (3) for any special or consequential damages to
Certificateholders (in addition to payment of principal and interest on the
Certificates).

         SECTION 2.08. Covenants of the Servicer.

         The Servicer hereby covenants to each of the other parties to this
Agreement as follows:

         (a) the Servicer shall comply in the performance of its obligations
under this Agreement with all reasonable rules and requirements of the insurer
under each Required Insurance Policy;

         (b) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor, the Trustee
or the NIMs Insurer, any affiliate of the Depositor, the Trustee or the NIMs
Insurer and prepared by the Servicer pursuant to this Agreement will be
inaccurate in any material respect, provided, however, that the Servicer shall
not be responsible for inaccurate information provided to it by third parties.

         SECTION 2.09. [RESERVED]

         SECTION 2.10. [RESERVED]

         SECTION 2.11. Permitted Activities of the Trust. The Trust is created
for the object and purpose of engaging in the Permitted Activities. In
furtherance of the foregoing, the Trustee is hereby authorized and directed to
execute and deliver on behalf of the Trust, and to perform the duties and
obligations of the Trustee under, the Cap Contract, an insurance and indemnity
agreement with a NIMs Insurer and any other agreement or instrument related
thereto, in each case in such form as the Depositor shall direct or shall
approve, the execution and delivery of any such agreement by the Depositor to be
conclusive evidence of its approval thereof.

         SECTION 2.12. Qualifying Special Purpose Entity. For purposes of SFAS
140, the parties hereto intend that the Trust Fund shall be treated as a
"qualifying special purpose entity" as such term is used in SFAS 140 and any
successor rule thereto and its power and authority as stated in Section 2.11 of
this Agreement shall be limited in accordance with paragraph 35 or SFAS 140.

                                   ARTICLE III
                          ADMINISTRATION AND SERVICING
                                OF MORTGAGE LOANS

         SECTION 3.01. Servicer to Service Mortgage Loans.

                  For and on behalf of the Certificateholders, the Servicer
shall service and administer the Mortgage Loans in accordance with Accepted
Servicing Practices. In connection with such servicing and administration, the
Servicer shall have full power and authority, acting alone and/or through
subservicers as provided in Section 3.02 hereof, to do or cause to be done any
and all things that it may deem necessary or desirable in connection with such
servicing and administration, including but not limited to, the power and
authority, subject to the terms hereof (i) to execute and deliver, on behalf of
the

                                      -48-
<PAGE>
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds and other Liquidation Proceeds and (iv) subject to Section 3.12(a), to
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing any Mortgage Loan; provided that, subject to Section 6.03, the
Servicer shall not take any action that is inconsistent with or prejudices the
interests of the Trust Fund or the Certificateholders in any Mortgage Loan
serviced by it under this Agreement or the rights and interests of the other
parties to this Agreement except as otherwise required by this Agreement or by
law. The Servicer shall represent and protect the interest of the Trust Fund in
the same manner as it currently protects its own interest in mortgage loans in
its own portfolio in any claim, proceeding or litigation regarding a Mortgage
Loan and shall not make or permit any modification, waiver or amendment of any
term of any Mortgage Loan which would cause any of the REMICs provided for
herein to fail to qualify as a REMIC or result in the imposition of any tax
under Section 860G(a) or 860G(d) of the Code, but in any case not in any manner
that is a lesser standard than that provided in the first sentence of this
Section 3.01. Without limiting the generality of the foregoing, the Servicer, in
its own name or in the name of the Depositor and the Trustee, is hereby
authorized and empowered by the Depositor and the Trustee, when the Servicer
believes it appropriate in its reasonable judgment, to execute and deliver, on
behalf of the Trustee, the Depositor, the Certificateholders or any of them, any
and all instruments of satisfaction or cancellation, or of partial or full
release or discharge and all other comparable instruments, with respect to the
Mortgage Loans, and with respect to the Mortgaged Properties held for the
benefit of the Certificateholders. The Servicer shall prepare and deliver to the
Depositor and/or the Trustee such documents requiring execution and delivery by
any or all of them as are necessary or appropriate to enable the Servicer to
service and administer the Mortgage Loans, including without limitation, any
powers of attorney. Upon receipt of such documents, the Depositor and/or the
Trustee shall execute such documents and deliver them to the Servicer.

         In accordance with the standards of the preceding paragraph, the
Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.06, and further as
provided in Section 3.08. To the extent that a Mortgage does not provide for
escrow payments (i) the Servicer shall determine whether any such payments are
made by the Mortgagor in a manner and at a time that is necessary to avoid the
loss of the Mortgaged Property due to a tax sale or the foreclosure as a result
of a tax lien and (ii) ensure that all insurance required to be maintained on
the Mortgaged Property pursuant to this Agreement is maintained. If any such
payment has not been made and the Servicer receives notice of a tax lien with
respect to the Mortgage Loan being imposed, the Servicer will, promptly and to
the extent required to avoid loss of the Mortgaged Property, advance or cause to
be advanced funds necessary to discharge such lien on the Mortgaged Property.
All costs incurred by the Servicer, if any, in effecting the timely payments of
taxes and assessments on the Mortgaged Properties and related insurance premiums
shall not, for the purposes of calculating monthly distributions to the
Certificateholders, be added to the Stated Principal Balance under the related
Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so permit.

                                      -49-
<PAGE>
         The Servicer shall deliver a list of Servicing Officers to the Trustee
by the Closing Date.

         The Servicer will transmit full-file credit reporting data for each
Mortgage Loan pursuant to Fannie Mae Guide Announcement 97-02 and that for each
Mortgage Loan, the Servicer agrees that it shall report one of the following
statuses each month as follows: current, delinquent (30-, 60-, 90-days, etc.),
foreclosed or charged-off.

         SECTION 3.02. Servicing and Subservicing; Enforcement of the
Obligations of Servicer.

         (a) The Servicer may arrange for the subservicing of any Mortgage Loan
by a subservicer, which may be an affiliate (each, a "subservicer") pursuant to
a subservicing agreement (each, a "Subservicing Agreement"); provided, however,
that (i) such subservicing arrangement and the terms of the related subservicing
agreement must provide for the servicing of such Mortgage Loans in a manner
consistent with the servicing arrangements contemplated hereunder, (ii) that
such agreement would not result in a withdrawal or downgrading by any Rating
Agency of the ratings of any Certificates or any of the NIM Notes evidenced by a
letter to that effect delivered by each Rating Agency to the Depositor and the
NIMs Insurer and (iii) the NIMs Insurer shall have consented to such
subservicing agreement. Notwithstanding the provisions of any subservicing
agreement, 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 liable to the Depositor, the Trustee and the Certificateholders for the
servicing and administration 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. Every subservicing agreement entered into by the Servicer
shall contain a provision giving any successor servicer the option to terminate
such agreement with the consent of the NIMs Insurer in the event a successor
servicer is appointed. All actions of the each subservicer performed pursuant to
the related subservicing agreement shall be performed as an agent of the
Servicer with the same force and effect as if performed directly by the
Servicer. The Servicer shall deliver to the NIMs Insurer and the Trustee copies
of all subservicing agreements.

         (b) For purposes of this Agreement, the Servicer shall be deemed to
have received any collections, recoveries or payments with respect to the
Mortgage Loans that are received by a subservicer regardless of whether such
payments are remitted by the subservicer to the Servicer.

         SECTION 3.03. Rights of the Depositor and the Trustee in Respect of the
Servicer.

         Neither the Trustee nor the Depositor shall have any responsibility or
liability for any action or failure to act by the Servicer, and neither of them
is obligated to supervise the performance of the Servicer hereunder or
otherwise.

         SECTION 3.04. Trustee to Act as Servicer.

         In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of an Event of Default), the Trustee or
its designee shall, within a period of time not to exceed ninety (90) days from
the date of notice of termination or resignation, thereupon assume all of the
rights and obligations of the Servicer hereunder arising thereafter (except that
the Trustee shall not be (i) liable for losses of the Servicer pursuant to
Section 3.10 hereof or any acts or omissions of such predecessor Servicer
hereunder, (ii) obligated to make Advances or Servicing Advance if it is
prohibited from doing so by applicable law, (iii) obligated to effectuate
repurchases or substitutions of Mortgage Loans hereunder, including pursuant to
Section 2.02 or 2.03 hereof, (iv) responsible for any expenses of the Servicer
pursuant to Section 2.03 or (v) deemed to have made any representations and
warranties

                                      -50-
<PAGE>
hereunder, including pursuant to Section 2.04 or the first paragraph of Section
6.02 hereof; provided, however that the Trustee (subject to clause (ii) above)
or its designee, in its capacity as the successor servicer, shall immediately
assume the terminated or resigning Servicer's obligation to make Advances and
Servicing Advances. No such termination shall affect any obligation of the
Servicer to pay amounts owed under this Agreement and to perform its duties
under this Agreement until its successor assumes all of its rights and
obligations hereunder. If the Servicer shall for any reason no longer be the
Servicer (including by reason of any Event of Default), the Trustee (or any
other successor servicer) may, at its option, succeed to any rights and
obligations of the Servicer under any subservicing agreement in accordance with
the terms thereof; provided, however, that the Trustee (or any other successor
servicer) shall not incur any liability or have any obligations in its capacity
as servicer under a subservicing agreement arising prior to the date of such
succession unless it expressly elects to succeed to the rights and obligations
of the Servicer thereunder; and the Servicer shall not thereby be relieved of
any liability or obligations under the subservicing agreement arising prior to
the date of such succession. To the extent any costs or expenses, including
without limitation Servicing Transfer Costs incurred by the Trustee in
connection with this Section 3.04, are not paid by the Servicer pursuant to this
Agreement within 30 days of the date of the Trustee's invoice thereof, such
amounts shall be payable out of the Certificate Account; provided that the
terminated Servicer shall reimburse the Trust Fund for any such expense incurred
by the Trust Fund upon receipt of a reasonably detailed invoice evidencing such
expenses. If the Trustee is unwilling or unable to act as servicer, or if the
NIMs Insurer so directs the Trustee, the Trustee shall seek to appoint a
successor servicer that is eligible in accordance with the criteria specified
this Agreement and reasonably acceptable to the NIMs Insurer.

         The Servicer shall, upon request of the Trustee, but at the expense of
the Servicer, deliver to the assuming party all documents and records relating
to each subservicing agreement and the Mortgage Loans then being serviced and
otherwise use its best efforts to effect the orderly and efficient transfer of
the subservicing agreement to the assuming party.

         Unless an Event of Default exists, in the event that the Servicer shall
for any reason no longer be able to be the Servicer hereunder, notwithstanding
anything to the contrary above, the Trustee and the Depositor hereby agree that
within 10 Business Days of delivery to the Trustee by the Servicing Rights
Pledgee of a letter signed by the Servicer whereby the Servicer shall resign as
Servicer under this Agreement, the Servicing Rights Pledgee or its designee
shall be appointed as successor Servicer (provided that at the time of such
appointment the Servicing Rights Pledgee or such designee meets the requirements
of a successor Servicer set forth above) and the Servicing Rights Pledgee agrees
to be subject to the terms of this Agreement.

         SECTION 3.05. Collection of Mortgage Loan Payments; Collection Account;
Certificate Account.

         (a) The Servicer shall make reasonable efforts in accordance with
Accepted Servicing Practices to collect all payments called for under the terms
and provisions of the Mortgage Loans to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any related
Required Insurance Policy. Consistent with the foregoing, the Servicer may in
its discretion (i) waive any late payment charge or, if applicable, any penalty
interest, or (ii) extend the due dates for payments due on a Mortgage Note for a
period not greater than 180 days; provided, however, that any extension pursuant
to clause (ii) above shall not affect the amortization schedule of any Mortgage
Loan for purposes of any computation hereunder, except as provided below;
provided, further, that the NIMs Insurer's prior written consent shall be
required for any modification, waiver or amendment since the Cut-off Date if the
aggregate number of outstanding Mortgage Loans which have been modified, waived
or amended exceeds 5% of the number of Mortgage Loans as of the Cut-Off Date. In
the event of any such arrangement pursuant to clause (ii) above, subject to
Section 4.01, the Servicer shall make any Advances

                                      -51-
<PAGE>
on the related Mortgage Loan during the scheduled period in accordance with the
amortization schedule of such Mortgage Loan without modification thereof by
reason of such arrangements. Notwithstanding the foregoing, in the event that
any Mortgage Loan is in default or, in the judgment of the Servicer, such
default is reasonably foreseeable, the Servicer, consistent with the standards
set forth in Section 3.01, may also waive, modify or vary any term of such
Mortgage Loan (including modifications that would change the Mortgage Rate,
forgive the payment of principal or interest or extend the final maturity date
of such Mortgage Loan), accept payment from the related Mortgagor of an amount
less than the Stated Principal Balance in final satisfaction of such Mortgage
Loan, or consent to the postponement of strict compliance with any such term or
otherwise grant indulgence to any Mortgagor (any and all such waivers,
modifications, variances, forgiveness of principal or interest, postponements,
or indulgences collectively referred to herein as "forbearance"), provided,
however, that in determining which course of action permitted by this sentence
it shall pursue, the Servicer shall adhere to the standards of Section 3.01. The
Servicer's analysis supporting any forbearance and the conclusion that any
forbearance meets the standards of Section 3.01 shall be reflected in writing in
the Mortgage File.

         (b) The Servicer will not waive any Prepayment Penalty or portion
thereof unless, (i) the enforceability thereof shall have been limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws relating
to creditors' rights generally or is otherwise prohibited by law, or (ii) the
collectability thereof shall have been limited due to acceleration in connection
with a foreclosure or other involuntary payment, or (iii) the prepayment of the
Mortgage Loan is made in connection with the voluntary sale of the related
Mortgaged Property, or (iv) in the Servicer's reasonable judgment as described
in Section 3.01 hereof, (x) such waiver relates to a default or a reasonably
foreseeable default, (y) such waiver would maximize recovery of total proceeds
taking into account the value of such Prepayment Penalty and related Mortgage
Loan and (z) doing so is standard and customary in servicing similar Mortgage
Loans (including any waiver of a Prepayment Penalty in connection with a
refinancing of a Mortgage Loan that is related to a default or a reasonably
foreseeable default). Except as provided in the preceding sentence, in no event
will the Servicer waive a Prepayment Penalty in connection with a refinancing of
a Mortgage Loan that is not related to a default or a reasonably foreseeable
default. If the Servicer waives or does not collect all or a portion of a
Prepayment Penalty relating to a Principal Prepayment in full or in part due to
any action or omission of the Servicer, other than as provided above, the
Servicer shall deposit the amount of such Prepayment Penalty (or such portion
thereof as had been waived for deposit) into the Collection Account for
distribution in accordance with the terms of this Agreement. Notwithstanding the
foregoing, the Servicer will not enforce any Prepayment Penalty with respect to
the Mortgage Loans listed on Exhibit C hereto. For purposes of this Agreement,
the Mortgage Loans listed on Exhibit C hereto will be treated as not having
Prepayment Penalties.

         (c) The Servicer shall not be required to institute or join in
litigation with respect to collection of any payment (whether under a Mortgage,
Mortgage Note or otherwise or against any public or governmental authority with
respect to a taking or condemnation) if it reasonably believes that enforcing
the provision of the Mortgage or other instrument pursuant to which such payment
is required is prohibited by applicable law.

         (d) The Servicer shall establish and initially maintain, on behalf of
the Certificateholders, the Collection Account. The Servicer shall deposit into
the Collection Account daily, within two Business Days of receipt thereof, in
immediately available funds, the following payments and collections received or
made by it on and after the Cut-Off Date with respect to the Mortgage Loans:

                  (i) all payments on account of principal, including Principal
         Prepayments, on the Mortgage Loans, other than principal due on the
         Mortgage Loans on or prior to the Cut-off Date;

                                      -52-
<PAGE>
                  (ii) all payments on account of interest on the Mortgage Loans
         net of the related Servicing Fee permitted under Section 3.15, other
         than interest due on the Mortgage Loans on or prior to the Cut-off
         Date;

                  (iii) all Liquidation Proceeds, other than proceeds to be
         applied to the restoration or repair of the Mortgaged Property or
         released to the Mortgagor in accordance with the Servicer's normal
         servicing procedures;

                  (iv) all Compensating Interest;

                  (v) any amount required to be deposited by the Servicer
         pursuant to Section 3.05(g) in connection with any losses on Permitted
         Investments;

                  (vi) any amounts required to be deposited by the Servicer
         pursuant to Section 3.10 hereof;

                  (vii) the Purchase Price and any Substitution Adjustment
         Amount;

                  (viii) all Advances made by the Servicer pursuant to Section
         4.01;

                  (ix) all Prepayment Penalties; and

                  (x) any other amounts required to be deposited hereunder.

         The foregoing requirements for remittance by the Servicer into the
Collection Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, late payment charges,
insufficient funds charges and payments in the nature of assumption fees (i.e.
fees related to the assumption of a Mortgage Loan upon the purchase of the
related Mortgaged Property and other similar ancillary fees (other than
Prepayment Penalties) if collected, need not be remitted by the Servicer. In the
event that the Servicer shall remit any amount not required to be remitted and
not otherwise subject to withdrawal pursuant to Section 3.08 hereof, it may at
any time withdraw or direct the Trustee, or such other institution maintaining
the Collection Account, to withdraw such amount from the Collection Account, any
provision herein to the contrary notwithstanding. The Servicer shall maintain
adequate records with respect to all withdrawals made pursuant to this Section.
All funds deposited in the Collection Account shall be held in trust for the
Certificateholders until withdrawn in accordance with Section 3.08. In no event
shall the Trustee incur liability for withdrawals from the Collection Account at
the direction of the Servicer.

         The Servicer shall give notice to the NIMs Insurer and the Trustee of
the location of the Collection Account maintained by it when established and
prior to any change thereof. Not later than twenty days after each Distribution
Date, the Servicer shall forward to the NIMS Insurer and, upon request, to the
Trustee and the Depositor the most current available bank statement for the
Collection Account. Copies of such statement shall be provided by the Trustee to
any Certificateholder and to any Person identified to the Trustee as a
prospective transferee of a Certificate, upon request at the expense of the
requesting party, provided such statement is delivered by the Servicer to the
Trustee.

         (e) [RESERVED].

         (f) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Certificate Account. The Trustee shall, promptly upon
receipt, deposit or cause to be deposited in the Certificate Account and retain
therein the following:

                                      -53-
<PAGE>
                  (i) the aggregate amount withdrawn by the Servicer from the
         Collection Account and required to be deposited in the Certificate
         Account;

                  (ii) any amount required to be deposited by the Trustee
         pursuant to Section 3.05(g) in connection with any losses on Permitted
         Investments; and

                  (iii) the Optional Termination Amount paid by the Servicer or
         the NIMs Insurer pursuant to Section 9.01.

         Any amounts received by the Trustee prior to 3:00 p.m. New York City
time (or such earlier deadline for investment in the Permitted Investments
designated by the Trustee) which are required to be deposited in the Certificate
Account by the Servicer shall be invested in Permitted Investments on the
Business Day on which they were received. The foregoing requirements for
remittance by the Servicer and deposit by the Servicer into the Certificate
Account shall be exclusive. In the event that the Servicer shall remit any
amount not required to be remitted and not otherwise subject to withdrawal
pursuant to Section 3.08 hereof, it may at any time withdraw such amount from
the Certificate Account, any provision herein to the contrary notwithstanding.
All funds deposited in the Certificate Account shall be held by the Trustee in
trust for the Certificateholders until disbursed in accordance with this
Agreement or withdrawn in accordance with Section 3.08. In no event shall the
Trustee incur liability for withdrawals from the Certificate Account at the
direction of the Servicer. The Trustee shall give notice to the NIMs Insurer and
the Servicer of the location of the Certificate Account maintained by it when
established and prior to any change thereof.

         (g) Each institution that maintains the Collection Account or the
Certificate Account shall invest the funds in each such account, as directed by
the Servicer or the Trustee, as applicable, in writing, in Permitted
Investments, which shall mature not later than (i) in the case of the Collection
Account the Business Day preceding the related Servicer Remittance Date (except
that if such Permitted Investment is an obligation of the institution that
maintains such Collection Account or is otherwise immediately available, then
such Permitted Investment shall mature not later than the Servicer Remittance
Date) and (ii) in the case of the Certificate Account, the Business Day
immediately preceding the first Distribution Date that follows the date of such
investment (except that if such Permitted Investment is an obligation of the
institution that maintains such Certificate Account or is otherwise immediately
available, then such Permitted Investment shall mature not later than such
Distribution Date) and, in each case, shall not be sold or disposed of prior to
its maturity. All such Permitted Investments shall be made in the name of the
Servicer or the Trustee, as applicable, for the benefit of the
Certificateholders. All income and gain net of any losses realized from amounts
on deposit in the Collection Account shall be for the benefit of the Servicer as
servicing compensation and shall be remitted to it monthly as provided herein.
The amount of any losses incurred in the Collection Account in respect of any
such investments shall be deposited by the Servicer in the Collection Account
out of the Servicer's own funds immediately as realized. All income and gain net
of any losses realized from amounts on deposit in the Certificate Account shall
be for the benefit of the Trustee and shall be remitted to or withdrawn by it
monthly as provided herein. The amount of any losses incurred in the Certificate
Account in respect of any such investments shall be deposited by the Trustee, in
the Certificate Account out of the Trustee's own funds immediately as realized.

         SECTION 3.06. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts.

         To the extent required by the related Mortgage Note, the Servicer shall
establish and maintain one or more accounts (each, an "Escrow Account") and
deposit and retain therein all collections from the Mortgagors (or advances by
the Servicer) for the payment of taxes, assessments, hazard insurance premiums
or comparable items for the account of the Mortgagors. Nothing herein shall
require the Servicer to compel a Mortgagor to establish an Escrow Account in
violation of applicable law.

                                      -54-
<PAGE>
         Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums, condominium or PUD association dues, or comparable items, to reimburse
the Servicer out of related collections for any payments made pursuant to
Sections 3.01 hereof (with respect to taxes and assessments and insurance
premiums) and 3.10 hereof (with respect to hazard insurance), to refund to any
Mortgagors any sums as may be determined to be overages, to pay interest, if
required by law or the terms of the related Mortgage or Mortgage Note, to
Mortgagors on balances in the Escrow Account or to clear and terminate the
Escrow Account at the termination of this Agreement in accordance with Section
9.01 hereof. The Escrow Accounts shall not be a part of the Trust Fund.

         SECTION 3.07. Access to Certain Documentation and Information Regarding
the Mortgage Loans.

         Upon reasonable advance notice in writing if required by federal
regulation, the Servicer will provide to each Certificateholder that is a
savings and loan association, bank or insurance company certain reports and
reasonable access to information and documentation regarding the Mortgage Loans
sufficient to permit such Certificateholder to comply with applicable
regulations of the OTS or other regulatory authorities with respect to
investment in the Certificates; provided, that the Servicer shall be entitled to
be reimbursed by each such Certificateholder for actual expenses incurred by the
Servicer in providing such reports and access.

         SECTION 3.08. Permitted Withdrawals from the Collection Account and
Certificate Account.

         (a) The Servicer may from time to time, make withdrawals from the
Collection Account for the following purposes:

                  (i) to pay to the Servicer (to the extent not previously paid
         to or withheld by the Servicer), as servicing compensation in
         accordance with Section 3.15, that portion of any payment of interest
         that equals the Servicing Fee for the period with respect to which such
         interest payment was made, and, as additional servicing compensation,
         those other amounts set forth in Section 3.15;

                  (ii) to reimburse the Servicer for Advances made by it (or to
         reimburse the Advance Financing Person for Advances made by it) with
         respect to the Mortgage Loans, such right of reimbursement pursuant to
         this subclause (ii) being limited to amounts received on particular
         Mortgage Loan(s) (including, for this purpose, Liquidation Proceeds)
         that represent late recoveries of payments of principal and/or interest
         on such particular Mortgage Loan(s) in respect of which any such
         Advance was made;

                  (iii) to reimburse the Servicer for any Non-Recoverable
         Advance previously made and, to the extent that such Non-Recoverable
         Servicing Advances would constitute "unanticipated expenses" within the
         meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii) if paid by
         one of the REMICs provided for herein, any Non-Recoverable Servicing
         Advance;

                  (iv) to pay to the Servicer earnings on or investment income
         with respect to funds in or credited to the Collection Account;

                  (v) to reimburse the Servicer from Insurance Proceeds for
         Insured Expenses covered by the related Insurance Policy;

                  (vi) pay the Servicer any unpaid Servicing Fees and to
         reimburse it for any unreimbursed Servicing Advances, the Servicer's
         right to reimbursement of Servicing Advances

                                      -55-
<PAGE>
         pursuant to this subclause (vi) with respect to any Mortgage Loan being
         limited to amounts received on particular Mortgage Loan(s)(including,
         for this purpose, Liquidation Proceeds and purchase and repurchase
         proceeds) that represent late recoveries of the payments for which such
         advances were made pursuant to Section 3.01 or Section 3.06;

                  (vii) to pay to the Depositor or the Servicer, as applicable,
         with respect to each Mortgage Loan or property acquired in respect
         thereof that has been purchased pursuant to Section 2.02, 2.03 or 3.12,
         all amounts received thereon and not taken into account in determining
         the related Stated Principal Balance of such repurchased Mortgage Loan;

                  (viii) to reimburse the Servicer or the Depositor for expenses
         incurred by any of them in connection with the Mortgage Loans or
         Certificates and reimbursable pursuant to Section 3.25 or Section 6.03
         hereof;

                  (ix) to reimburse the Trustee for enforcement expenses
         reasonably incurred in respect of a breach of defect giving rise to the
         purchase obligation in Section 2.03 that were incurred in the Purchase
         Price of the Mortgage Loans including any expenses arising out of the
         enforcement of the purchase obligation; provided that any such expenses
         will be reimbursable under this subclause (ix) only to the that such
         expenses would constitute "unanticipated expenses" within the meaning
         of Treasury Regulation Section 1.860G-1(b)(3)(ii) if paid by one of the
         REMICs provided for herein;

                  (x) to withdraw pursuant to Section 3.05 any amount deposited
         in the Collection Account and not required to be deposited therein; and

                  (xi) to clear and terminate the Collection Account upon
         termination of this Agreement pursuant to Section 9.01 hereof.

         In addition, no later than 1:00 p.m. Eastern Time on the Servicer
Remittance Date, the Servicer shall cause to be withdrawn from the Collection
Account the Interest Funds and the Principal Funds, to the extent on deposit,
and such amount shall be deposited in the Certificate Account; provided,
however, if the Trustee does not receive such Interest Funds and Principal Funds
by 4:00 p.m. Eastern Time, such Interest Funds and Principal Funds shall be
deposited in the Certificate Account by 1:00 p.m. Eastern Time on the next
Business Day.

         The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Collection Account.

         The Servicer shall provide written notification to the Trustee and the
NIMs Insurer on or prior to the next succeeding Servicer Remittance Date upon
making any withdrawals from the Collection Account pursuant to subclauses (iii)
and (vii) above.

         In the event of any failure by the Servicer to remit to the Trustee for
deposit into the Certificate Account any amounts (including any P&I Advance)
required to be so remitted by the Servicer by 1:00 p.m. Eastern Time on the
Servicer Remittance Date, the Servicer shall pay to the Trustee, for its own
account, interest on such amounts at the "prime rate" (as specified in the New
York edition of the Wall Street Journal) until such failure is remedied
(provided that any amounts received after 1:00 p.m. Eastern Time on any day
shall be deemed to be received on the immediately following Business Day).

         Unless otherwise specified, any amounts reimbursable to the Servicer or
the Trustee from amounts on deposit in the Collection Account or the Certificate
Accounts shall be deemed to come from first, Interest Funds, and thereafter,
Principal Funds for the related Distribution Date.

                                      -56-
<PAGE>
         (b) The Trustee shall withdraw funds from the Certificate Account for
distribution to the Certificateholders in the manner specified in this Agreement
(and to withhold from the amounts so withdrawn, the amount of any taxes that it
is authorized to retain pursuant to this Agreement). In addition, the Trustee
may from time to time make withdrawals from the Certificate Account for the
following purposes:

                  (i) to withdraw pursuant to Section 3.05 any amount deposited
         in the Certificate Account and not required to be deposited therein;

                  (ii) to clear and terminate the Certificate Account upon
         termination of the Agreement pursuant to Section 9.01 hereof;

                  (iii) to reimburse the Trustee for expenses incurred by the
         Trustee and reimbursable pursuant to Section 8.06 hereof; and

                  (iv) to pay to the Trustee earnings on or investment income
         with respect to funds in or credited to the Certificate Account.

         SECTION 3.09. [RESERVED].

         SECTION 3.10. Maintenance of Hazard Insurance.

         The Servicer shall cause to be maintained, for each Mortgage Loan,
hazard insurance with extended coverage in an amount that is at least equal to
the lesser of (i) the replacement value of the improvements that are part of
such Mortgaged Property and (ii) the greater of (a) the outstanding principal
balance of the Mortgage Loan and (b) an amount such that the proceeds of such
policy shall be sufficient to prevent the related Mortgagor and/or mortgagee
from becoming a co-insurer. Each such policy of standard hazard insurance shall
contain, or have an accompanying endorsement that contains, a standard mortgagee
clause. The Servicer shall also cause flood insurance to be maintained on
property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan, to the extent required under the standards described below.
Pursuant to Section 3.05 hereof, any amounts collected by the Servicer under any
such policies (other than the amounts to be applied to the restoration or repair
of the related Mortgaged Property or property thus acquired or amounts released
to the Mortgagor in accordance with the Servicer's normal servicing procedures)
shall be deposited in the Collection Account. Any cost incurred by the Servicer
in maintaining any such insurance shall not, for the purpose of calculating
monthly distributions to the Certificateholders or remittances to the Trustee
for their benefit, be added to the principal balance of the Mortgage Loan,
notwithstanding that the terms of the Mortgage Loan so permit. Such costs shall
be recoverable by the Servicer out of late payments by the related Mortgagor or
out of Liquidation Proceeds to the extent and as otherwise permitted by Section
3.08 hereof. It is understood and agreed that no earthquake or other additional
insurance is to be required of any Mortgagor or maintained on property acquired
in respect of a Mortgage other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. If the Mortgaged Property is located at the time of
origination of the Mortgage Loan in a federally designated special flood hazard
area and such area is participating in the national flood insurance program, the
Servicer shall cause flood insurance to be maintained with respect to such
Mortgage Loan. Such flood insurance shall be in an amount equal to the lesser of
(i) the original principal balance of the related Mortgage Loan, (ii) the
replacement value of the improvements that are part of such Mortgaged Property,
or (iii) the maximum amount of such insurance available for the related
Mortgaged Property under the Flood Disaster Protection Act of 1973, as amended.

         In the event that the Servicer shall obtain and maintain a blanket
policy insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set

                                      -57-
<PAGE>
forth in the first sentence of this Section 3.10, it being understood and agreed
that such policy may contain a deductible clause on terms substantially
equivalent to those commercially available and maintained by comparable
servicers. If such policy contains a deductible clause, the Servicer shall, in
the event that there shall not have been maintained on the related Mortgaged
Property a policy complying with the first sentence of this Section 3.10, and
there shall have been a loss that would have been covered by such policy,
deposit in the Collection Account the amount not otherwise payable under the
blanket policy because of such deductible clause. In connection with its
activities as servicer of the Mortgage Loans, the Servicer agrees to present, on
behalf of itself, the Depositor and the Trustee for the benefit of the
Certificateholders, claims under any such blanket policy.

         SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.

         (a) Except as otherwise provided in this Section 3.11(a), when any
property subject to a Mortgage has been or is about to be conveyed by the
Mortgagor, the Servicer shall to the extent that it has knowledge of such
conveyance, enforce any due-on-sale clause contained in any Mortgage Note or
Mortgage, to the extent permitted under applicable law and governmental
regulations, but only to the extent that such enforcement will not adversely
affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing, the Servicer is not required to exercise such
rights with respect to a Mortgage Loan if the Person to whom the related
Mortgaged Property has been conveyed or is proposed to be conveyed satisfies the
terms and conditions contained in the Mortgage Note and Mortgage related thereto
and the consent of the mortgagee under such Mortgage Note or Mortgage is not
otherwise so required under such Mortgage Note or Mortgage as a condition to
such transfer. In the event that the Servicer is prohibited by law from
enforcing any such due-on-sale clause, or if coverage under any Required
Insurance Policy would be adversely affected, or if nonenforcement is otherwise
permitted hereunder, the Servicer is authorized, subject to Section 3.11(b), to
take or enter into an assumption and modification agreement from or with the
Person to whom such property has been or is about to be conveyed, pursuant to
which such Person becomes liable under the Mortgage Note and, unless prohibited
by applicable state law, the Mortgagor remains liable thereon, provided that the
Mortgage Loan shall continue to be covered (if so covered before the Servicer
enters such agreement) by the applicable Required Insurance Policies. The
Servicer, subject to Section 3.11(b), is also authorized with the prior approval
of the insurers under any Required Insurance Policies to enter into a
substitution of liability agreement with such Person, pursuant to which the
original Mortgagor is released from liability and such Person is substituted as
Mortgagor and becomes liable under the Mortgage Note. Notwithstanding the
foregoing, the Servicer shall not be deemed to be in default under this Section
3.11(a) by reason of any transfer or assumption that the Servicer reasonably
believes it is restricted by law from preventing.

         (b) Subject to the Servicer's duty to enforce any due-on-sale clause to
the extent set forth in Section 3.11(a) hereof, in any case in which a Mortgaged
Property has been conveyed to a Person by a Mortgagor, and such Person is to
enter into an assumption agreement or modification agreement or supplement to
the Mortgage Note or Mortgage that requires the signature of the Trustee, or if
an instrument of release signed by the Trustee is required releasing the
Mortgagor from liability on the Mortgage Loan, the Servicer shall prepare and
deliver or cause to be prepared and delivered to the Trustee for signature and
shall direct, in writing, the Trustee to execute the assumption agreement with
the Person to whom the Mortgaged Property is to be conveyed and such
modification agreement or supplement to the Mortgage Note or Mortgage or other
instruments as are reasonable or necessary to carry out the terms of the
Mortgage Note or Mortgage or otherwise to comply with any applicable laws
regarding assumptions or the transfer of the Mortgaged Property to such Person.
In connection with any such assumption, no material term of the Mortgage Note
(including, but not limited to, the Mortgage Rate, the amount of the Scheduled
Payment, the Maximum Rate, the Minimum Rate, the Gross Margin, the Periodic Rate
Cap, the Adjustment Date, any prepayment penalty and any other term affecting
the amount or timing of payment on the Mortgage Loan) may be changed. The
Servicer shall notify the Trustee and the NIMs

                                      -58-
<PAGE>
Insurer that any such substitution or assumption agreement has been completed by
forwarding to the Trustee (with a copy to the NIMs Insurer) the original of such
substitution or assumption agreement, which in the case of the original shall be
added to the related Mortgage File and shall, for all purposes, be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. Any fee collected by the Servicer for
entering into an assumption or substitution of liability agreement will be
retained by the Servicer as additional servicing compensation.

         SECTION 3.12. Realization Upon Defaulted Mortgage Loans; Determination
of Excess Proceeds.

         (a) The Servicer shall use reasonable efforts consistent with the
servicing standard set forth in Section 3.01 to foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Mortgage
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of Delinquent payments. In connection
with such foreclosure or other conversion, the Servicer shall follow such
practices and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general mortgage servicing activities and the
requirements of the insurer under any Required Insurance Policy; provided,
however, that the Servicer shall not be required to expend its own funds in
connection with the restoration of any property that shall have suffered damage
due to an uninsured cause unless it shall determine (i) that such restoration
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 Collection Account pursuant to Section 3.08
hereof). The Servicer shall be responsible for all other costs and expenses
incurred by it in any such proceedings; provided, however, that it shall be
entitled to reimbursement thereof from the proceeds of liquidation of the
related Mortgaged Property, as contemplated in Section 3.08 hereof. If the
Servicer has knowledge that a Mortgaged Property that 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, prior to acquiring the
Mortgaged Property, consider such risks and only take action in accordance with
Accepted Servicing Practices.

         With respect to any REO Property, the deed or certificate of sale shall
be taken in the name of the Trustee or its nominee. Pursuant to its efforts to
sell such REO Property, the Servicer shall either itself or through an agent
selected by the Servicer protect and conserve such REO Property in the same
manner and to such extent as is customary in the locality where such REO
Property is located and may, incident to its conservation and protection of the
interests of the Certificateholders, rent the same, or any part thereof, as the
Servicer deems to be in the best interest of the Servicer and the
Certificateholders for the period prior to the sale of such REO Property. The
Servicer or an affiliate may receive usual and customary real estate referral
fees for real estate brokers in connection with the listing and disposition of
REO Property. The Servicer shall prepare a statement with respect to each REO
Property that has been rented showing the aggregate rental income received and
all expenses incurred in connection with the management and maintenance of such
REO Property at such times as is necessary to enable the Servicer to comply with
the reporting requirements of the REMIC Provisions. The net monthly rental
income, if any, from such REO Property shall be deposited in the Collection
Account no later than the close of business on each Determination Date. The
Servicer shall perform the tax reporting and withholding related to
foreclosures, abandonments and cancellation of indebtedness income as specified
by Sections 1445, 6050J and 6050P of the Code by preparing and filing such tax
and information returns, as may be required.

         In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Servicer shall dispose of such Mortgaged Property prior to
the expiration of three years from the end of the year of its acquisition by the

                                      -59-
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Trust Fund or, at the expense of the Trust Fund, request, in accordance with
applicable procedures for obtaining an automatic extension of the grace period,
more than 60 days prior to the day on which such three-year period would
otherwise expire, an extension of the three-year grace period, in which case
such property must be disposed of prior to the end of such extension, unless the
Trustee and the NIMs Insurer shall have been supplied with an Opinion of Counsel
(such Opinion of Counsel not to be an expense of the Trustee or the NIMs
Insurer) to the effect that the holding by the Trust Fund of such Mortgaged
Property subsequent to such three-year period will not result in the imposition
of taxes on "prohibited transactions" of the Trust Fund or any of the REMICs
provided for herein as defined in section 860F of the Code or cause any of the
REMICs provided for herein to fail to qualify as a REMIC at any time that any
Certificates are outstanding, in which case the Trust Fund may continue to hold
such Mortgaged Property (subject to any conditions contained in such Opinion of
Counsel). Notwithstanding any other provision of this Agreement, no Mortgaged
acquired by the Trust Fund 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 Fund
in such a manner or pursuant to any terms that would (i) cause such Mortgaged
Property to fail to qualify as "foreclosure property" within the meaning of
section 860G(a)(8) of the Code or (ii) subject the Trust Fund or any REMIC
provided for herein to the imposition of any federal, state or local income
taxes on the income earned from such Mortgaged under section 860G(c) of the Code
or otherwise, unless the Servicer or the Depositor has agreed to indemnify and
hold harmless the Trust Fund with respect to the imposition of any such taxes.

         The decision of the Servicer to foreclose on a defaulted Mortgage Loan
shall be subject to a determination by the Servicer that the proceeds of such
foreclosure would exceed the costs and expenses of bringing such a proceeding.
The income earned from the management of any Mortgaged Properties acquired
through foreclosure or other judicial proceeding, net of reimbursement to the
Servicer for expenses incurred (including any property or other taxes) in
connection with such management and net of unreimbursed Servicing Fees,
Advances, Servicing Advances and any management fee paid or to be paid with
respect to the management of such Mortgaged Property, shall be applied to the
payment of principal of, and interest on, the related defaulted Mortgage Loans
(with interest accruing as though such Mortgage Loans were still current) and
all such income shall be deemed, for all purposes in this Agreement, to be
payments on account of principal and interest on the related Mortgage Notes and
shall be deposited into the Collection Account. To the extent the income
received during a Prepayment Period is in excess of the amount attributable to
amortizing principal and accrued interest at the related Mortgage Rate on the
related Mortgage Loan, such excess shall be considered to be a partial Principal
Prepayment for all purposes hereof.

         The Liquidation Proceeds from any liquidation of a Mortgage Loan, net
of any payment to the Servicer as provided above, shall be deposited in the
Collection Account on the next succeeding Determination Date following receipt
thereof for distribution on the related Distribution Date.

         The proceeds of any Liquidated Loan, as well as any recovery resulting
from a partial collection of Liquidation Proceeds or any income from an REO
Property, will be applied in the following order of priority: first, to
reimburse the Servicer for any related unreimbursed Servicing Advances and
Servicing Fees, pursuant to Section 3.08(a)(vi) or this Section 3.12; second, to
reimburse the Servicer for any unreimbursed Advances, pursuant to Section
3.08(a)(ii) or this Section 3.12; third, to any prepayment penalties and then to
accrued and unpaid interest (to the extent no Advance has been made for such
amount) on the Mortgage Loan or related REO Property, at the Net Mortgage Rate
to the Due Date occurring in the month in which such amounts are required to be
distributed; and fourth, as a recovery of principal of the Mortgage Loan.

         (b) On each Determination Date, the Servicer shall determine the
respective aggregate amounts of Excess Proceeds, if any, that occurred in the
related Prepayment Period.

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         (c) 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 Fund any Mortgage Loan that is 91 days or more Delinquent at a price equal
to the Purchase Price. The Purchase Price for any Mortgage Loan purchased
hereunder shall be delivered to the Trustee for deposit to the Certificate
Account and the Trustee, upon receipt of such confirmation of deposit and a
Request for Release from the Servicer in the form of Exhibit I hereto, shall
release or cause to be released to the Servicer the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment prepared by
the Servicer, in each case without recourse, as shall be necessary to vest in
the Servicer any Mortgage Loan released pursuant hereto and the Servicer 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 Servicer 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 3.13. Trustee 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 will promptly notify the Trustee or
its designee by delivering a Request for Release substantially in the form of
Exhibit I. Upon receipt of a copy of such request, the Trustee or its designee
shall promptly release the related Mortgage File to the Servicer, and the
Trustee or its designee shall at the Servicer's written direction execute and
deliver to the Servicer the request for reconveyance, deed of reconveyance or
release or satisfaction of mortgage or such instrument releasing the lien of the
Mortgage in each case provided by the Servicer, together with the Mortgage Note
with written evidence of cancellation thereon. No expenses incurred in
connection with any instrument of satisfaction or deed of reconveyance shall be
chargeable to the Collection Account, the Certificate Account or the related
subservicing account. From time to time and as shall be appropriate for the
servicing or foreclosure of any Mortgage Loan, including for such purpose,
collection under any policy of flood insurance, any fidelity bond or errors or
omissions policy, or for the purposes of effecting a partial release of any
Mortgaged Property from the lien of the Mortgage or the making of any
corrections to the Mortgage Note or the Mortgage or any of the other documents
included in the Mortgage File, the Trustee or its designee shall, upon delivery
to the Trustee or its designee of a Request for Release in the form of Exhibit I
signed by a Servicing Officer, release the Mortgage File to the Servicer.
Subject to the further limitations set forth below, the Servicer shall cause the
Mortgage File or documents so released to be returned to the Trustee or its
designee when the need therefor by the Servicer no longer exists, unless the
Mortgage Loan is liquidated and the proceeds thereof are deposited in the
Collection Account, in which case the Trustee or its designee shall deliver the
Request for Release to the Servicer.

         Each Request for Release may be delivered to the Trustee or its
designee (i) via mail or courier, (ii) via facsimile or (iii) by such other
means, including, without limitation, electronic or computer readable medium, as
the Servicer and the Trustee or its designee shall mutually agree. The Trustee
or its designee shall promptly release the related Mortgage File(s) within five
(5) Business Days of receipt of a properly completed Request for Release
pursuant to clauses (i), (ii) or (iii) above. Receipt of a properly completed
Request for Release shall be authorization to the Trustee or its designee to
release such Mortgage Files, provided the Trustee or its designee has determined
that such Request for Release has been executed, with respect to clauses (i) or
(ii) above, or approved, with respect to clause (iii) above, by an authorized
Servicing Officer of the Servicer, and so long as the Trustee or its designee
complies with its duties and obligations under the agreement. If the Trustee or
its designee is unable to release the Mortgage Files within the period
previously specified, the Trustee or its designee shall immediately notify the
Servicer indicating the reason for such delay. If the Servicer is required to
pay penalties or damages due to the Trustee or its designee's negligent failure
to release the related Mortgage File or the Trustee or

                                      -61-
<PAGE>
its designee's negligent failure to execute and release documents in a timely
manner, the Trustee or its designee, shall be liable for such penalties or
damages respectively caused by it.

         If the Servicer at any time seeks to initiate a foreclosure proceeding
in respect of any Mortgaged Property as authorized by this Agreement, the
Servicer shall deliver or cause to be delivered to the Trustee or its designee,
for signature, as appropriate, any court pleadings, requests for trustee's sale
or other documents necessary to effectuate such foreclosure or any legal action
brought to obtain judgment against the Mortgagor on the Mortgage Note or the
Mortgage or to obtain a deficiency judgment or to enforce any other remedies or
rights provided by the Mortgage Note or the Mortgage or otherwise available at
law or in equity. Notwithstanding the foregoing, the Servicer shall cause
possession of any Mortgage File or of the documents therein that shall have been
released by the Trustee or its designee to be returned to the Trustee promptly
after possession thereof shall have been released by the Trustee or its designee
unless (i) the Mortgage Loan has been liquidated and the Liquidation Proceeds
relating to the Mortgage Loan have been deposited in the Collection Account, and
the Servicer shall have delivered to the Trustee or its designee a Request for
Release in the form of Exhibit I or (ii) the Mortgage File or document shall
have 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 and the
Servicer shall have delivered to the Trustee or its designee an Officer's
Certificate of a Servicing Officer certifying as to the name and address of the
Person to which the Mortgage File or the documents therein were delivered and
the purpose or purposes of such delivery.

         SECTION 3.14. Documents, Records and Funds in Possession of Servicer to
be Held for the Trustee.

         All Mortgage Files and funds collected or held by, or under the control
of, the Servicer in respect of any Mortgage Loans, whether from the collection
of principal and interest payments or from Liquidation Proceeds, including but
not limited to, any funds on deposit in the Collection Account, shall be held by
the Servicer for and on behalf of the Trustee and shall be and remain the sole
and exclusive property of the Trustee, subject to the applicable provisions of
this Agreement. The Servicer also agrees that it shall not create, incur or
subject any Mortgage File or any funds that are deposited in the Collection
Account or Certificate Account or in any Escrow Account, or any funds that
otherwise are or may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy, writ
of attachment or other encumbrance, or assert by legal action or otherwise any
claim or right of set off against any Mortgage File or any funds collected on,
or in connection with, a Mortgage Loan, except, however, that the Servicer shall
be entitled to set off against and deduct from any such funds any amounts that
are properly due and payable to the Servicer under this Agreement.

         SECTION 3.15. Servicing Compensation.

         As compensation for its activities hereunder, the Servicer shall be
entitled to retain or withdraw from the Collection Account out of each payment
of interest on a Mortgage Loan included in the Trust Fund an amount equal to
interest at the applicable Servicing Fee Rate on the Stated Principal Balance of
the related Mortgage Loan as of the immediately preceding Distribution Date.

         Additional servicing compensation in the form of any Excess Proceeds,
late payment fees, assumption fees (i.e. fees related to the assumption of a
Mortgage Loan upon the purchase of the related Mortgaged Property) and similar
fees payable by the Mortgagor, and all income and gain net of any losses
realized from Permitted Investments in the Collection Account shall be retained
by the Servicer to the extent not required to be deposited in the Collection
Account pursuant to Sections 3.05, or 3.12(a) hereof. The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder (including payment of any premiums for hazard insurance, as
required by Section 3.10 hereof

                                      -62-
<PAGE>
and maintenance of the other forms of insurance coverage required by Section
3.10 hereof) and shall not be entitled to reimbursement therefor except as
specifically provided in Sections 3.08 and 3.12 hereof.

         SECTION 3.16. Access to Certain Documentation.

         The Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising Holders of the Certificates and the examiners
and supervisory agents of the OTS, the FDIC and such other authorities, access
to the documentation regarding the Mortgage Loans required by applicable
regulations of the OTS and the FDIC. Such access shall be afforded without
charge, but only upon reasonable and prior written request and during normal
business hours at the offices of the Servicer designated by it provided, that
the Servicer shall be entitled to be reimbursed by each such Certificateholder
for actual expenses incurred by the Servicer in providing such reports and
access. Nothing in this Section shall limit 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 as a result of such obligation shall not constitute a breach of this
Section.

         SECTION 3.17. Annual Statement as to Compliance.

         Pursuant to this Agreement, the Servicer shall deliver to the
Depositor, the Trustee and the NIMs Insurer on or before February 28 of each
year beginning in 2004, (or such other date that the Depositor gives the
Servicer at least 30 days prior notice of) in order to remain in compliance with
the Section 302 Requirements, an Officer's Certificate stating, as to each
signatory thereof, that (i) a review of the activities of the Servicer during
the preceding calendar year and of performance under this Agreement or a similar
agreement has been made under such officer's supervision, and (ii) to the best
of such officers' knowledge, based on such review, the Servicer has fulfilled
all of its obligations under this Agreement throughout such year, or, if there
has been a default in the fulfillment of any such obligation, specifying each
such default known to such officers and the nature and status thereof. The
Trustee shall forward a copy of each such statement received by it to each
Rating Agency. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon written request at the Certificateholder's expense,
provided such statement has been delivered by the Servicer to the Trustee.

         SECTION 3.18. Annual Independent Public Accountants' Servicing
Statement; Financial Statements.

         On or before March 15 of each year, beginning in 2004 or such other
date in order to remain in compliance with the Section 302 Requirements, the
Servicer at its expense shall cause a nationally recognized firm of independent
public accountants (who may also render other services to the Servicer or any
Affiliate thereof) that is a member of the American Institute of Certified
Public Accountants to furnish a USAP Report to the Trustee, the NIMS Insurer and
the Depositor. Copies of the USAP Report shall be provided by the Trustee to any
Certificateholder upon request at the Certificateholder's expense, provided such
report has been delivered by the Servicer to the Trustee. In addition, at the
NIMs Insurer's written request, the Servicer shall deliver copies of evidence of
the Servicer's fidelity bond or errors and omissions insurance coverage to the
NIMs Insurer.

         SECTION 3.19. Rights of the NIMs Insurer. Each of the rights of the
NIMs Insurer set forth in this agreement shall exist so long as the notes issued
pursuant to the Indenture remain outstanding or the NIMs Insurer is owed amounts
in respect of its guarantee of payment on such notes.

         SECTION 3.20. Periodic Filings.

         (a) Promptly upon receipt of any report of the independent public
accountants required pursuant to Section 3.18, the Trustee shall review such
report. As part of the Form 10-K required to be

                                      -63-
<PAGE>
filed pursuant to the terms of this Agreement, the Trustee shall include such
accountants report as well as the Officer's Certificate delivered by the
Servicer pursuant to Section 3.17 relating to the Servicer's performance of its
obligations under this Agreement and any significant deficiencies relating to
the Servicer's compliance set forth in the report of the Servicer's certified
independent accountants described above.

         (b) The Trustee shall prepare for filing, and execute (other than the
Form 10-Ks and the Certification), on behalf of the Trust Fund, and file with
the Securities and Exchange Commission, (i) within 15 days after each
Distribution Date in each month, each Monthly Statement on Form 8-K under the
Exchange Act executed by the Trustee, (ii) on or before March 31 of each year
beginning in 2004 or such other date in order to remain in compliance with the
Section 302 Requirements, a Form 10-K under the Exchange Act executed by the
Depositor, including any certification (the "Certification") required by the
Section 302 Requirements, and (iii) any and all reports, statements and
information respecting the Trust Fund and/or the Certificates required to be
filed on behalf of the Trust Fund under the Exchange Act executed by the
Trustee. The Certification shall be executed by a senior officer of the
Depositor. Upon such filing with the Securities and Exchange Commission, the
Trustee shall promptly deliver to the Depositor a copy of any such executed
report, statement or information. Prior to making any such filings and
certifications, the Trustee shall comply with the provisions set forth in this
Section. If permitted by applicable law and unless the Depositor otherwise
directs, the Trustee shall file a Form 15 under the Exchange Act on or before
January 30, 2004 as soon as it is able to do so pursuant to applicable law. The
Depositor hereby grants to the Trustee a limited power of attorney to execute
(other than the Form 10-Ks and the Certification) and file each such document on
behalf of the Depositor. Such power of attorney shall continue until either the
earlier of (i) receipt by the Trustee from the Depositor of written termination
of such power of attorney and (ii) the termination of the Trust Fund. The
Depositor agrees to promptly furnish to the Trustee, from time to time upon
request, such further information, reports, and financial statements within its
control related to this Agreement and the Mortgage Loans as the Trustee
reasonably deems appropriate to prepare and file all necessary reports with the
Commission. The Trustee shall have no responsibility to file any items other
than those specified in this section.

         (c) [Reserved].

         (d) The obligations set forth in paragraphs (a) through (c) of this
Section shall only apply with respect to periods for which the Trustee is
obligated to file Form 8-Ks and 10-Ks pursuant to paragraph (b) of this Section.
In the event a Form 15 is properly filed pursuant to paragraph (b) of this
Section, there shall be no further obligations under paragraphs (a) through (c)
of this Section commencing with the fiscal year in which the Form 15 is filed
(other than the obligations in paragraphs (a) and (b) of this Section to be
performed in such fiscal year that relate back to the prior fiscal year).

         SECTION 3.21. Annual Certificate by Trustee

         (a) Within 15 days prior to the date on which a Form 10-K is to be
filed with a Certification by the Depositor, an officer of the Trustee shall
execute and deliver an Officer's Certificate, signed by a Responsible Officer of
the Trustee or any officer to whom that officer reports, to the Depositor for
the benefit of such Depositor and its officers, directors and affiliates,
certifying as to the matters described in the Officer's Certificate attached
hereto as Exhibit K.

         (b) The Trustee shall indemnify and hold harmless the Depositor and its
officers, directors, agents and affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of or based upon a breach by
the Trustee or any of its officers, directors, agents or affiliates of its
obligations under this Section 3.21 any material misstatement or omission in the
Officer's Certificate required under this Section or the negligence, bad faith
or willful misconduct of the Trustee in connection therewith. If the
indemnification

                                      -64-
<PAGE>
provided for herein is unavailable or insufficient to hold harmless the
Depositor, then the Trustee agrees that it shall contribute to the amount paid
or payable by the Depositor as a result of the losses, claims, damages or
liabilities of the Depositor in such proportion as is appropriate to reflect the
relative fault of the Trustee on the one had and the Depositor on the other in
connection with a breach of the Trustee's obligations under this Section 3.21,
any material misstatement or omission in the Officer's Certificate required
under this Section or the Trustee's negligence, bad faith or willful misconduct
in connection therewith.

         SECTION 3.22. Annual Certificate by Servicer

         (a) Within 15 days prior to the date on which a Form 8-K is required to
be filed with a Certification by the Depositor, the Servicer shall execute and
deliver an Officer's Certificate in the form of Exhibit L attached hereto,
signed by the senior officer in charge of servicing of the Servicer or any
officer to whom that officer reports, to the Trustee, the NIMs Insurer and
Depositor for the benefit of the Trustee and Depositor and their respective
officers, directors and affiliates, certifying as to the following matters:

                  (i) I have reviewed the information required to be delivered
         to the Trustee pursuant to the Pooling and Servicing Agreement (the
         "Servicing Information").

                  (ii) Based on my knowledge, the information in the Annual
         Statement of Compliance, and all servicing reports, officer's
         certificates and other information relating to the servicing of the
         Mortgage Loans submitted to the Trustee by the Servicer taken as a
         whole, does not contain any untrue statement of a material fact or omit
         to state a material fact necessary to make any such reports,
         certificates or other information, in light of the circumstances under
         which such statements were made, not misleading as of the last day of
         the period covered by the Annual Statement of Compliance;

                  (iii) Based on my knowledge, the Servicing Information
         required to be provided to the Trustee by the Servicer under this
         Agreement has been provided to the Trustee; and

                  (iv) I am responsible for reviewing the activities performed
         by the Servicer under this Agreement and based upon the review required
         hereunder, and except as disclosed in the Annual Statement of
         Compliance, the Annual Independent Certified Public Accountant's
         Servicing Report and all servicing reports, officer's certificates and
         other information relating to the servicing of the Mortgage Loans
         submitted to the Trustee by the Servicer, the Servicer has, as of the
         last day of the period covered by the Annual Statement of Compliance
         fulfilled its obligations under this Agreement.

         (b) The Servicer shall indemnify and hold harmless the NIMs Insurer and
the Depositor and their respective officers, directors, agents and affiliates
from and against any losses, damages, penalties, fines, forfeitures, reasonable
legal fees and related costs, judgments and other costs and expenses arising out
of or based upon a breach by the Servicer or any of its officers, directors,
agents or affiliates of its obligations under this Section 3.22, any material
misstatement or omission in the Officer's Certificate required under this
Section or the negligence, bad faith or willful misconduct of the Servicer in
connection therewith. If the indemnification provided for herein is unavailable
or insufficient to hold harmless the NIMs Insurer and the Depositor, then the
Servicer agrees that it shall contribute to the amount paid or payable by the
Trustee and the Depositor as a result of the losses, claims, damages or
liabilities of the Depositor in such proportion as is appropriate to reflect the
relative fault of the Depositor on the one hand and the Servicer on the other in
connection with a breach of the Servicer's obligations under this Section 3.22,
any material misstatement or omission in the Officer's Certificate required
under this Section or the Servicer's negligence, bad faith or willful misconduct
in connection therewith.

                                      -65-
<PAGE>
         SECTION 3.23. Prepayment Penalty Reporting Requirements

         (a) Promptly after each Distribution Date, the Servicer shall provide
to the Depositor and the NIMs Insurer the following information with regard to
each Mortgage Loan that has prepaid during the related Prepayment Period:

                  (i) loan number;

                  (ii) current Mortgage Rate;

                  (iii) current principal balance;

                  (iv) original principal balance;

                  (v) Prepayment Penalty amount due;

                  (vi) Prepayment Penalty amount collected; and

                  (vii) reason why full Prepayment Penalty amount was not
         collected, if applicable.

         SECTION 3.24. Statements to Trustee

         (a) Not later than the tenth calendar day of each month, the Servicer
shall furnish to the Trustee and the NIMs Insurer an electronic file providing
loan level accounting data for the period ending on the last Business Day of the
preceding month in the format mutually agreed upon between the Servicer and the
Trustee, including but not limited to information described in Section 4.05(a).

         SECTION 3.25. Indemnification

         (a) The Servicer shall indemnify the Seller, the Trust Fund, Trustee,
the Depositor and the NIMs Insurer and hold each of them harmless against any
and all claims, losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgements, and any other costs, fees
and expenses that any of such parties may sustain in any way related to the
failure of the Servicer to perform its duties and service the Mortgage Loans in
compliance with the terms of this Agreement. The Servicer immediately shall
notify the Seller, the Trustee, the Depositor and the NIMs Insurer or any other
relevant party if a claim is made by a third party with respect to this
Agreement or the Mortgage Loans, assume (with the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld or delayed)
the defense of any such claim and pay all expenses in connection therewith,
including counsel fees, and promptly pay, discharge and satisfy any judgement or
decree which may be entered against it or any of such parties in respect of such
claim. The Servicer shall follow any written instructions received from the
Trustee and the NIMs Insurer in connection with such claim. The Servicer shall
provide the Trustee, the Depositor and the NIMs Insurer with a written report of
all expenses and advances incurred by the Servicer pursuant to this Section
3.25, and the Servicer from the assets of the Trust Fund in the Collection
Account promptly shall reimburse itself for all amounts advanced by it pursuant
to the preceding sentence except when the claim in any way relates to the
failure of the Servicer to service and administer the Mortgage Loans in material
compliance with the terms of this Agreement or the gross negligence, bad faith
or willful misconduct of the Servicer. The provisions of this paragraph shall
survive the termination of this Agreement and the payment of the outstanding
Certificates.

         SECTION 3.26. Nonsolicitation

         (a) For as long as the Servicer services the Mortgage Loans, the
Servicer covenants that it will not, and that it will ensure that its affiliates
and agents, will not, directly solicit or provide

                                      -66-
<PAGE>
information for any other party to solicit for prepayment or refinancing of any
of the Mortgage Loans by the related Mortgagors. It is understood that the
promotions undertaken by the Servicer which are directed to the general public
at large, or certain segments thereof, shall not constitute solicitation as that
term is used in this Section 3.26.

         SECTION 3.27. Existing Servicing Agreement

         (a) The Servicer acknowledges the transfer on the Closing Date of the
servicing of the Mortgage Loans from the Existing Servicing Agreement to this
Pooling and Servicing Agreement pursuant to Section 10.01 of the Existing
Servicing Agreement.

                                   ARTICLE IV

                                  DISTRIBUTIONS

         SECTION 4.01. Advances.

         Subject to the conditions of this Article IV, the Servicer, as required
below, shall make an Advance and deposit such Advance in the Collection Account.
Each such Advance shall be remitted to the Collection Account no later than 1:00
p.m. Eastern Standard time on the Servicer Advance Date in immediately available
funds. The Servicer shall be obligated to make any such Advance only to the
extent that such advance would not be a Non-Recoverable Advance. If the Servicer
shall have determined that it has made a Non-Recoverable Advance or that a
proposed Advance or a lesser portion of such Advance would constitute a
Non-Recoverable Advance, the Servicer shall deliver (i) to the Trustee for the
benefit of the Certificateholders funds constituting the remaining portion of
such Advance, if applicable, and (ii) to the Depositor, the NIMs Insurer, each
Rating Agency and the Trustee an Officer's Certificate setting forth the basis
for such determination. The Servicer may, in its sole discretion, make an
Advance with respect to the principal portion of the final Scheduled Payment on
a Balloon Loan, but the Servicer is under no obligation to do so; provided,
however, that nothing in this sentence shall affect the Servicer's obligation
under this Section 4.01 to Advance the interest portion of the final Scheduled
Payment with respect to a Balloon Loan as if such Balloon Loan were a fully
amortizing Mortgage Loan. If a Mortgagor does not pay its final Scheduled
Payment on a Balloon Loan when due, the Servicer shall Advance (unless it
determines in its good faith judgment that such amounts would constitute a
Non-Recoverable Advance) a full month of interest (net of the Servicing Fee) on
the Stated Principal Balance thereof each month until its Stated Principal
Balance is reduced to zero.

         In lieu of making all or a portion of such Advance from its own funds,
the Servicer may (i) cause to be made an appropriate entry in its records
relating to the Collection Account that any amount held for future distribution
has been used by the Servicer in discharge of its obligation to make any such
Advance and (ii) transfer such funds from the Collection Account to the
Certificate Account. In addition, the Servicer shall have the right to reimburse
itself for any such Advance from amounts held from time to time in the
Collection Account to the extent such amounts are not then required to be
distributed. Any funds so applied and transferred pursuant to the previous two
sentences shall be replaced by the Servicer by deposit in the Collection Account
no later than the close of business on the Servicer Advance Date on which such
funds are required to be distributed pursuant to this Agreement. The Servicer
shall be entitled to be reimbursed from the Collection Account for all Advances
of its own funds made pursuant to this Section as provided in Section 3.08. The
obligation to make Advances with respect to any Mortgage Loan shall continue
until such Mortgage Loan is paid in full or the related Mortgaged Property or
related REO Property has been liquidated or until the purchase or repurchase
thereof (or substitution therefor) from the Trust Fund pursuant to any
applicable provision of this Agreement, except as otherwise provided in this
Section 4.01.

                                      -67-
<PAGE>
         SECTION 4.02. Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls.

         In the event that any Mortgage Loan is the subject of a Prepayment
Interest Shortfall, the Servicer shall, from amounts in respect of the Servicing
Fee for such Distribution Date, deposit into the Collection Account, as a
reduction of the Servicing Fee for such Distribution Date, no later than the
Servicer Advance Date immediately preceding such Distribution Date, an amount up
to the Prepayment Interest Shortfall; provided that any such deposit in
reduction of the Servicing Fee shall be limited to the product of (x)
one-twelfth of 0.25% and (y) the aggregate Stated Principal Balance of the
Mortgage Loans with respect to the related Distribution Date. In case of such
deposit, the Servicer shall not be entitled to any recovery or reimbursement
from the Depositor, the Trustee, the Trust Fund or the Certificateholders. With
respect to any Distribution Date, to the extent that the Prepayment Interest
Shortfall exceeds Compensating Interest (such excess, a "Non-Supported Interest
Shortfall"), such Non-Supported Interest Shortfall shall reduce the Current
Interest with respect to each Class of Certificates, pro rata based upon the
amount of interest each such Class would otherwise be entitled to receive on
such Distribution Date.

         SECTION 4.03. Distributions on the REMIC Interests.

         On each Distribution Date, amounts on deposit in the Certificate
Account shall be treated for federal income tax purposes as applied to
distributions on the interests in both the Lower Tier REMIC and the Upper Tier
REMIC in an amount sufficient to make the distributions on the respective
Certificates on such Distribution Date in accordance with the provisions of
Section 4.04.

         SECTION 4.04. Distributions.

         (a) [Reserved].

         (b) On each Distribution Date, the Trustee shall make the following
distributions from the Certificate Account of an amount equal to the Interest
Funds in the following order of priority:

                  (i) [Reserved]

                  (ii) to each Class of R Certificate and Class A Certificates,
         the Adjusted Current Interest and any Adjusted Interest Carryforward
         Amount with respect to such Class; provided, however, if such amount is
         not sufficient to make a full distribution of the Adjusted Current
         Interest and any Adjusted Interest Carryforward Amount with respect to
         all the Class of R Certificate and Class A Certificates, such amount
         will be distributed pro rata among each Class of the Class of R
         Certificate and Class A Certificates based on the ratio of (x) the
         Adjusted Current Interest and Adjusted Interest Carryforward Amount for
         each Class of the Class of R Certificate and Class A Certificates to
         (y) the total amount of Adjusted Current Interest and any Adjusted
         Interest Carryforward Amount for the Class of R Certificate and Class A
         Certificates;

                  (iii) to the Class M-1 Certificates, the Class M-1 Adjusted
         Current Interest and any Class M-1 Adjusted Interest Carryforward
         Amount;

                  (iv) to the Class M-2 Certificates, the Class M-2 Adjusted
         Current Interest and any Class M-2 Adjusted Interest Carryforward
         Amount;

                  (v) to the Class B-1 Certificates, the Class B-1 Adjusted
         Current Interest and any Class B-1 Adjusted Interest Carryforward
         Amount;

                                      -68-
<PAGE>
                  (vi) to the Class B-2 Certificates, the Class B-2 Adjusted
         Current Interest and any Class B-2 Adjusted Interest Carryforward
         Amount; and

                  (vii) any remainder pursuant to Section 4.04(f) hereof.

         (c) [Reserved]

         (d) On each Distribution Date, the Trustee shall make the following
distributions from the Certificate Account of an amount equal to the Principal
Distribution Amount in the following order of priority, and each such
distribution shall be made only after all distributions pursuant to Section
4.04(b) above shall have been made until such amount shall have been fully
distributed for such Distribution Date:

                  (i) (A) to the Class R Certificate and the Class A-1
         Certificates, sequentially, the Group A Principal Distribution Amount
         and (B) to the Class A-2 Certificates, the Group B Principal
         Distribution Amount, until the Certificate Principal Balances thereof
         have been reduced to zero;

                  (ii) to the Class M-1 Certificates, the Class M-1 Principal
         Distribution Amount;

                  (iii) to the Class M-2 Certificates, the Class M-2 Principal
         Distribution Amount;

                  (iv) to the Class B-1 Certificates, the Class B-1 Principal
         Distribution Amount;

                  (v) to the Class B-2 Certificates, the Class B-2 Principal
         Distribution Amount; and

                  (vi) any remainder pursuant to Section 4.04(f) hereof.

         (e) [Reserved].

         (f) On each Distribution Date, the Trustee shall make the following
distributions up to the following amounts from the Certificate Account of the
remainders pursuant to Section 4.04(b)(vii) and (d)(vi) hereof and, to the
extent required to make the distributions set forth below in clauses (i) through
(iv) of this Section 4.04(f), and each such distribution shall be made only
after all distributions pursuant to Sections 4.04(b) and (d) above shall have
been made until such remainders shall have been fully distributed for such
Distribution Date:

                  (i) for distribution as part of the Principal Distribution
         Amount, the Extra Principal Distribution Amount;

                  (ii) to the Class M-1 Certificates, the Class M-1 Unpaid
         Realized Loss Amount;

                  (iii) to the Class M-2 Certificates, the Class M-2 Unpaid
         Realized Loss Amount;

                  (iv) to the Class B-1 Certificates, the Class B-1 Unpaid
         Realized Loss Amount;

                  (v) to the Class B-2 Certificates, the Class B-2 Unpaid
         Realized Loss Amount;

                  (vi) to the extent required to make the allocations set forth
         below, in the following order of priority (however, that to the extent
         the amounts to be allocated pursuant to clauses (A) and (B) are
         insufficient to make all payments of Current Interest and Interest
         Carryforward Amounts for such Class A Certificates and the Class R
         Certificate, the distributions made pursuant to clauses (A) and (B)
         shall be made on a pro rata basis and not sequentially):

                                      -69-
<PAGE>
                           (A)      to the Class A-1 Certificates, the Class A-1
                                    Adjusted Current Interest and the Class A-1
                                    Adjusted Interest Carryforward Amount, and
                                    to the Class R Certificate, the Class R
                                    Adjusted Current Interest and the Class R
                                    Adjusted Interest Carryforward Amount;

                           (B)      to the Class A-2 Certificates, the Class A-2
                                    Adjusted Current Interest and the Class A-2
                                    Adjusted Interest Carryforward Amount;

                           (C)      to the Class M-1 Certificates, the Class M-1
                                    Adjusted Current Interest, the Class M-1
                                    Adjusted Interest Carryforward Amount;

                           (D)      to the Class M-2 Certificates, the Class M-2
                                    Adjusted Current Interest, the Class M-2
                                    Adjusted Interest Carryforward Amount;

                           (E)      to the Class B-1 Certificates, the Class B-1
                                    Adjusted Current Interest, the Class B-1
                                    Adjusted Interest Carryforward Amount; and

                           (F)      to the Class B-2 Certificates, the Class B-2
                                    Adjusted Current Interest, the Class B-2
                                    Adjusted Interest Carryforward Amount;

                  (vii) the remainder pursuant to Section 4.04(g) hereof.

         (g) on each Distribution Date, the Trustee shall allocate the
remainders pursuant to Section 4.01(f)(vii) and all amounts representing
Prepayment Penalties and amounts payable by the Servicer in respect of
Prepayment Penalties pursuant to this Agreement as follows:

                  (i) to the Class N Certificates in the following order of
         priority, (I) the Class N Current Interest, (II) the Class N Interest
         Carryforward Amount, and (III) any other amounts remaining after
         application pursuant to clauses (I) and (II) , to reduce the Class N
         Certificate Notional Balance until the Class N Certificate Notional
         Balance has been reduced to zero.

                  (ii) to the Holders of the Class X Certificates, the Class X
         Distributable Amount, and

                  (iii) the remainder pursuant to Section 4.04(h) hereof.

         (h) On each Distribution Date, the Trustee shall allocate the remainder
pursuant to Section 4.04(g)(iii) hereof, (i) to the Trustee to reimburse amounts
or pay indemnification amounts owing to the Trustee from the Trust Fund pursuant
to Section 8.06 to the extent such amounts shall have exceeded the cap set forth
in Section 8.06(c), and (ii) thereafter, to the Class R Certificate and such
distributions shall be made only after all preceding distributions shall have
been made until such remainder shall have been fully distributed.

         (i) On each Distribution Date, after giving effect to distributions on
such Distribution Date, the Trustee shall allocate the Applied Realized Loss
Amount for the Certificates to reduce the Certificate Principal Balances of the
Subordinated Certificates in the following order of priority:

                  (i) to the Class B-2 Certificates until the Class B-2
         Certificate Principal Balance is reduced to zero;

                  (ii) to the Class B-1 Certificates until the Class B-1
         Certificate Principal Balance is reduced to zero

                  (iii) to the Class M-2 Certificates until the Class M-2
         Certificate Principal Balance is reduced to zero; and

                                      -70-
<PAGE>
                  (iv) to the Class M-1 Certificates until the Class M-1
         Certificate Principal Balance is reduced to zero.

         (j) Subject to Section 9.02 hereof respecting the final distribution,
on each Distribution Date the Trustee shall make distributions to each
Certificateholder of record on the preceding Record Date either by wire transfer
in immediately available funds to the account of such holder at a bank or other
entity having appropriate facilities therefor, if such Holder has so notified
the Trustee at least five (5) Business Days prior to the related Record Date or,
if not, by check mailed by first class mail to such Certificateholder at the
address of such holder appearing in the Certificate Register. Notwithstanding
the foregoing, but subject to Section 9.02 hereof respecting the final
distribution, distributions with respect to Certificates registered in the name
of a Depository shall be made to such Depository in immediately available funds.

         In accordance with this Agreement, the Servicer shall prepare and
deliver a report (the "Remittance Report") to the Trustee and the NIMs Insurer
in the form of a computer readable magnetic tape (or by such other means as the
Servicer, the Trustee and the NIMs Insurer may agree from time to time)
containing such data and information such as to permit the Trustee to prepare
the Monthly Statement to Certificateholders and make the required distributions
for the related Distribution Date.

         The Trustee shall promptly notify the NIMs 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
applicable bankruptcy, insolvency, receivership or similar law (a "Preference
Claim") of any distribution made with respect to the Class N Certificates. Each
Holder of the Class N Certificates, by its purchase of such Certificates and the
Trustee hereby agree that the NIMs Insurer 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, supersedes or performance bond pending any such
appeal. In addition and without limitation of the foregoing, the NIMs Insurer
shall be subrogated to the rights of the Trustee and each Holder of the Class N
Certificates in the conduct of any such Preference Claim, including, without
limitation, all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any such Preference Claim;
provided, however, that the NIMs Insurer will not have any rights with respect
to any Preference Claim set forth in this paragraph unless the indenture trustee
with respect to the NIM Notes or the holder of any NIMs Notes has been required
to relinquish a distribution made on the Class N Certificates or the NIM Notes,
as applicable, and the NIMs Insurer made a payment in respect of such
relinquished amount.

         (k) Any payments received under the terms of the Cap Contract will be
available to pay the holders of the Offered Certificates up to the amount of any
Adjustable Rate Certificate Carryover. Any amounts received under the terms of
the Cap Contract on a Distribution Date that are not used to pay the Adjustable
Rate Certificate Carryover will be distributed to the holders of the Class N and
Class X Certificates in accordance with the provisions of Section 4.01(g) hereof
(after all other distributions have been made thereunder on such Distribution
Date). Payments in respect of the Adjustable Rate Certificate Carryover shall be
paid to the Offered Certificates, pro rata based upon the Adjustable Rate
Certificate Carryover for each class of Offered Certificates.

                  (i) On or prior to the Cap Contract Termination Date, amounts,
         if any, received by the Trustee for the benefit of the Trust Fund in
         respect of the Cap Contract shall be deposited by the Trustee into the
         Cap Contract Account and will be used to pay Adjustable Rate
         Certificate Carryover on the Offered Certificates. With respect to any
         Distribution Date on or prior to the Cap Contract Termination Date, the
         amount, if any, payable by the Cap Contract Counterparty under the Cap
         Contract will equal the product of (i) the excess of (x) One-Month
         LIBOR (as

                                      -71-
<PAGE>
         determined by the Cap Contract Counterparty and subject to a cap equal
         to the rate with respect to such Distribution Date as shown under the
         heading "1ML Upper Collar" in the Cap Table), over (y) the rate with
         respect to such Distribution Date as shown under the heading "1ML Lower
         Collar" in the Cap Table, (ii) an amount equal to the Cap Contract
         Notional Balances and (iii) the number of days in such Accrual Period,
         divided by 360. If a payment is made to the Trust Fund under the Cap
         Contract and the Trustee intends to distribute excess amounts to the
         holders of the Class N and Class X Certificates as described above, the
         Trustee shall send a notice on the Business Day prior to the related
         Distribution Date stating the amount received on the Cap Contract, the
         amount paid with respect to Adjustable Rate Certificate Carryover and
         the amount due to the holders of the Class N and Class X Certificates.
         Such notice shall be sent by the Trustee via facsimile to the holders
         of the Class N and Class X Certificates.

                  (ii) Amounts on deposit in the Cap Contract Account will
         remain uninvested pending distribution to Certificateholders.

                  (iii) The Cap Contract is scheduled to remain in effect until
         the Cap Contract Termination Date and will be subject to early
         termination only in limited circumstances. Such circumstances include
         certain insolvency or bankruptcy events in relation to the Cap Contract
         Counterparty (after a grace period of three Local Business Days, as
         defined in the Cap Contract, after notice of such failure is received
         by the Cap Contract Counterparty) to make a payment due under the Cap
         Contract, the failure by the Cap Contract Counterparty or the Trustee
         (after a cure period of 20 days after notice of such failure is
         received) to perform any other agreement made by it under the Cap
         Contract, the termination of the Trust Fund and the Cap Contract
         becoming illegal or subject to certain kinds of taxation.

         SECTION 4.05.     Monthly Statements to Certificateholders.

         (a) Not later than each Distribution Date based on information provided
by the Servicer, the Trustee shall prepare and make available on its website
located at www.ctslink.com to each Holder of a Class of Certificates of the
Trust Fund, the Servicer, the NIMs Insurer, the Rating Agencies and the
Depositor a statement setting forth for the Certificates:

                  (i) the amount of the related distribution to Holders of each
         Class allocable to principal, separately identifying (A) the aggregate
         amount of any Principal Prepayments included therein, (B) the aggregate
         of all scheduled payments of principal included therein, (C) the Extra
         Principal Distribution Amount, if any, and (D) the aggregate amount of
         prepayment penalties, if any;

                  (ii) the amount of such distribution to Holders of each Class
         allocable to interest, together with any Non-Supported Interest
         Shortfalls allocated to each Class, in the aggregate and with respect
         to the Group A Mortgage Loans and the Group B Mortgage Loans;

                  (iii) any Interest Carryforward Amount and the Adjusted
         Interest Carryfoward Amount for each Class of the Offered Certificates;

                  (iv) the Class Certificate Principal Balance of each Class
         after giving effect (i) to all distributions allocable to principal on
         such Distribution Date and (ii) the allocation of any Applied Realized
         Loss Amounts for such Distribution Date;

                  (v) the Pool Stated Principal Balance for such Distribution
         Date;

                  (vi) the related amount of the Servicing Fee paid to or
         retained by the Servicer;

                                      -72-
<PAGE>
                  (vii) the Pass-Through Rate for each Class of Certificates for
         such Distribution Date;

                  (viii) the amount of Advances included in the distribution on
         such Distribution Date;

                  (ix) the cumulative amount of (A) Realized Losses and (B)
         Applied Realized Loss Amounts to date;

                  (x) the amount of (A) Realized Losses and (B) Applied Realized
         Loss Amounts with respect to such Distribution Date;

                  (xi) the number and aggregate principal amounts of Mortgage
         Loans (A) Delinquent (exclusive of Mortgage Loans in foreclosure) (1)
         31 to 60 days, (2) 61 to 90 days and (3) 91 or more days, and (B) in
         foreclosure and Delinquent (1) 31 to 60 days, (2) 61 to 90 days and (3)
         91 or more days, in each case as of the close of business on the last
         day of the calendar month preceding such Distribution Date;

                  (xii) with respect to any Mortgage Loan that became an REO
         Property during the preceding calendar month, the loan number and
         Stated Principal Balance of such Mortgage Loan as of the close of
         business on the last day of the calendar month preceding such
         Distribution Date and the date of acquisition thereof;

                  (xiii) the total number and principal balance of any REO
         Properties as of the close of business on the last day of the calendar
         month preceding such Distribution Date;

                  (xiv) the aggregate Stated Principal Balance of all Liquidated
         Loans as of the preceding Distribution Date;

                  (xv)     whether a Trigger Event has occurred;

                  (xvi) with respect to each Class of Certificates, any Interest
         Carryforward Amount with respect to such Distribution Date for each
         such Class, any Interest Carryforward Amount paid for each such Class
         and any remaining Interest Carryforward Amount for each such Class;

                  (xvii) with respect to each Class Certificates any Interest
         Carryover Amount with respect to such Distribution Date for each such
         Class, any Interest Carryover Amount paid for each such Class and any
         remaining Interest Carryover Amount for each such Class;

                  (xviii) the number and Stated Principal Balance (as of the
         preceding Distribution Date) of any Mortgage Loans which were purchased
         or repurchased during the preceding Due Period and since the Cut-off
         Date;

                  (xix) the number of Mortgage Loans for which prepayment
         penalties were received during the related Prepayment Period and, for
         each such Mortgage Loan, the amount of prepayment penalties received
         during the related Prepayment Period and in the aggregate of such
         amounts for all such Mortgage Loans since the Cut-off Date;

                  (xx) [Reserved];

                  (xxi) the amount and purpose of any withdrawal from the
         Collection Account pursuant to Section 3.08(a)(v);

                  (xxii) the amount of any payments to each Class of
         Certificates that are treated as payments received in respect of a
         REMIC Regular Interest and the amount of any payments to

                                      -73-
<PAGE>
         each Class of Certificates that are not treated as payments received in
         respect of a REMIC Regular Interest;

                  (xxiii) as of each Distribution Date, the amount, if any, to
         be deposited in the Certificate Account pursuant to the Cap Contract as
         described in Section 4.04(k) and the amount thereof to be paid to the
         Offered Certificates as described in Section 4.04(k) hereof.

         (b) The Servicer shall deliver to the NIMs Insurer a copy of any report
delivered by the Servicer to the Trustee.

         (c) Within a reasonable period of time after the end of each calendar
year, the Trustee shall cause to be furnished to the NIMs Insurer and each
Person who at any time during the calendar year was a Certificateholder, a
statement containing the information set forth in clauses (a)(i) and (a)(ii) of
this Section 4.02 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 provided by the Trustee pursuant to any
requirements of the Code as from time to time in effect.

         (d) Upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holders of the Class R Certificate and the NIMs Insurer the Form
1066 and each Form 1066Q and shall respond promptly to written requests made not
more frequently than quarterly by any Holder of Class R Certificate 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 the Prepayment
         Assumption;

                  (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 the Prepayment Assumption;

                  (iii) 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 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 the
         REMICs 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 the
         REMICs; and

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

         The information pursuant to clauses (i), (ii), (iii) and (iv) above
shall be provided by the Depositor pursuant to Section 8.11.

                                      -74-
<PAGE>
                                    ARTICLE V

                                THE CERTIFICATES

         SECTION 5.01. The Certificates.

         The Certificates shall be substantially in the forms attached hereto as
exhibits. The Certificates shall be issuable in registered form, in the minimum
dollar denominations, integral dollar multiples in excess thereof (except that
one Certificate of each Class may be issued in a different amount which must be
in excess of the applicable minimum dollar denomination) and aggregate dollar
denominations as set forth in the following table:

<TABLE>
<CAPTION>
                                                                                         Original Certificate
                                     Minimum              Integral Multiples in          Principal Balance or
        Class                      Denomination             Excess of Minimum              Notional Balance
        -----                      ------------             -----------------              ----------------
<S>                                <C>                    <C>                            <C>
         A-1                         $25,000.00                      $1.00                 $300,000,000.00
         A-2                         $25,000.00                      $1.00                 $313,083,000.00
         M-1                         $25,000.00                      $1.00                  $54,878,000.00
         M-2                         $25,000.00                      $1.00                  $39,737,000.00
         B-1                         $25,000.00                      $1.00                  $18,923,000.00
         B-2                         $25,000.00                      $1.00                  $11,353,000.00
         N                          $250,000.00                  $1,000.00                  $53,500,000.00
         R                            $100.00                      N/A                             $100.00
</TABLE>

         The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized 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 Fund, 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 authentication and
delivery. No Certificate shall be entitled to any benefit under this Agreement,
or be valid for any purpose, unless there appears on such Certificate a
certificate of authentication substantially in the form set forth as attached
hereto executed by the Trustee by manual signature, and such certificate of
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. On
the Closing Date, the Trustee shall authenticate the Certificates to be issued
at the written direction of the Depositor, or any Affiliate thereof.

         SECTION 5.02. Certificate Register; Registration of Transfer and
Exchange of Certificates.

         (a) The Trustee shall maintain, or cause to be maintained in accordance
with the provisions of Section 5.09 hereof, a Certificate Register for the Trust
Fund in which, subject to the provisions of subsections (b) and (c) below and to
such reasonable regulations as it may prescribe, the Trustee shall provide for
the registration of Certificates and of Transfers and exchanges of Certificates
as herein provided. Upon surrender for registration of Transfer of any
Certificate, the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Class and of like aggregate Percentage Interest.

         At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon

                                      -75-
<PAGE>
surrender of the Certificates to be exchanged at the office or agency of a
Trustee. Whenever any Certificates are so surrendered for exchange, the Trustee
shall execute and the Trustee shall authenticate and deliver the Certificates
that the Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for registration of Transfer or exchange
shall be accompanied by a written instrument of Transfer in form satisfactory to
a Trustee duly executed by the holder thereof or his attorney duly authorized in
writing.

         No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but 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 may be required. All
Certificates surrendered for registration of Transfer or exchange shall be
canceled and subsequently destroyed by a Trustee in accordance with such
Trustee's customary procedures.

         (b) No Transfer of a Class N or Class X Certificate 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 the Securities Act and such state
securities 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 (except
with respect to the initial transfer of a Class N or Class X Certificate by
Merrill Lynch & Co.) each certify to each Trustee in writing the facts
surrounding the Transfer in substantially the forms set forth in Exhibit F (the
"Transferor Certificate") and (i) deliver a letter in substantially the form of
either Exhibit G (the "Investment Letter") or Exhibit H (the "Rule 144A Letter")
or (ii) there shall be delivered to each 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 an expense of the Depositor or the Trustee. The
Depositor shall provide to any Holder of a Class N or Class X Certificate and
any prospective transferee designated by any such Holder, information regarding
the related Certificates and the Mortgage Loans and such other information as
shall be necessary to satisfy the condition to eligibility set forth in Rule
144A(d)(4) for Transfer of any such Certificate without registration thereof
under the Securities Act pursuant to the registration exemption provided by Rule
144A. The Trustee shall cooperate with the Depositor in providing the Rule 144A
information referenced in the preceding sentence, including providing to the
Depositor such information in the possession of the Trustee regarding the
Certificates, the Mortgage Loans and other matters regarding the Trust Fund as
the Depositor shall reasonably request to meet its obligation under the
preceding sentence. Each Holder of a Class N or Class X Certificate desiring to
effect such Transfer shall, and does hereby agree to, indemnify the Depositor
and 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 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 and the NIMs Insurer, to the effect that such transferee is not an
employee benefit plan subject to Title I of ERISA or a plan subject to Section
4975 of the Code or a plan subject to any applicable Federal, state or local law
materially similar to the foregoing provisions of ERISA and the Code ("Similar
Law"), or a Person acting on behalf of any such plan or using the assets of any
such plan, (ii) except in the case of a Class R Certificate which may not be
transferred to a transferee that does not provide the representation described
in clause (i), a representation that the transferee is an insurance company that
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, 60 Fed. Reg. 35925 (July 12, 1995) ("PTCE
95-60")) and that the purchase and holding of such Certificates is covered under
Sections I and III of PTCE 95-60, or (iii) in the case of any such ERISA
Restricted Certificate, other than a Class R Certificate, presented for
registration in the name of an

                                      -76-
<PAGE>
employee benefit plan subject to ERISA, a plan subject to Section 4975 of the
Code, or a plan subject to Similar Law (or comparable provisions of any
subsequent enactments), or a trustee of any such plan or any other person acting
on behalf of any such plan, an Opinion of Counsel satisfactory to the Trustee
and the NIMs Insurer to the effect that the purchase and holding of such ERISA
Restricted Certificate will not result in a prohibited transaction under ERISA
or the Code or Similar Law and will not subject the NIMs Insurer or the Trustee
to any obligation in addition to those expressly undertaken in this Agreement,
which Opinion of Counsel shall not be an expense of the NIMs Insurer or the
Trustee. For purposes of clause (i) of the preceding sentence, such
representation shall be deemed to have been made to the Trustee by the
transferee's acceptance of an ERISA Restricted Certificate (or the acceptance by
a Certificate Owner of the beneficial interest in any Class of ERISA Restricted
Certificates) unless the Trustee shall have received from the transferee an
alternative representation acceptable in form and substance to the Trustee.
Notwithstanding anything else to the contrary herein, any purported transfer of
an ERISA Restricted Certificate to or on behalf of an employee benefit plan
subject to Title I of ERISA, a plan subject to Section 4975 of the Code, or a
plan subject to Similar Law without the delivery to the Trustee and the NIMs
Insurer of an Opinion of Counsel satisfactory to the Trustee and the NIMS
Insurer as described above shall be void and of no effect. The Trustee shall be
under no liability to any Person for any registration of transfer of any ERISA
Restricted Certificate that is in fact not permitted by this Section 5.02(b) or
for making any payments due on such Certificate to the Holder thereof or taking
any other action with respect to such Holder under the provisions of this
Agreement so long as the transfer was registered by the Trustee in accordance
with the foregoing requirements. The Trustee shall be entitled, but not
obligated, to recover from any Holder of any ERISA Restricted Certificate that
was in fact an employee benefit plan subject to Title I of ERISA, a plan subject
to Section 4975 of the Code, or a plan subject to Similar Law or a Person acting
on behalf of any such plan at the time it became a Holder or, at such subsequent
time as it became such a plan or Person acting on behalf of such a plan, all
payments made on such ERISA Restricted Certificate at and after either such
time. Any such payments so recovered by the Trustee shall be paid and delivered
by the Trustee to the last preceding Holder of such Certificate that is not such
a plan or Person acting on behalf of a plan.

         (c) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Class R
Certificate are expressly subject to the following provisions:

                  (i) Each Person holding or acquiring any Ownership Interest in
         a Class R 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 Ownership Interest in a Class R Certificate may be
         purchased, transferred or sold, directly or indirectly, except in
         accordance with the provisions hereof. No Ownership Interest in a Class
         R Certificate may be registered on the Closing Date or thereafter
         transferred, and the Trustee shall not register the Transfer of any
         Class R Certificate unless, in addition to the certificates required to
         be delivered to the Trustee under subparagraph (b) above, the Trustee
         shall have been furnished with an affidavit (a "Transfer Affidavit") of
         the initial owner or the proposed transferee in the form attached
         hereto as Exhibit E-1 and an affidavit of the proposed transferor in
         the form attached hereto as Exhibit E-2. In the absence of a contrary
         instruction from the transferor of a Class R Certificate, declaration
         (11) in Appendix A of the Transfer Affidavit may be left blank. If the
         transferor requests by written notice to the Trustee prior to the date
         of the proposed transfer that one of the two other forms of declaration
         (11) in Appendix A of the Transfer Affidavit be used, then the
         requirements of this Section 5.02(c)(ii) shall not have been satisfied
         unless the Transfer Affidavit includes such other form of declaration.

                                      -77-
<PAGE>
                  (iii) Each Person holding or acquiring any Ownership Interest
         in a Class R Certificate shall agree (A) to obtain a Transfer Affidavit
         from any other Person to whom such Person attempts to Transfer its
         Ownership Interest in a Class R Certificate, (B) to obtain a Transfer
         Affidavit from any Person for whom such Person is acting as nominee,
         trustee or agent in connection with any Transfer of a Class R
         Certificate and (C) not to Transfer its Ownership Interest in a Class R
         Certificate or to cause the Transfer of an Ownership Interest in a
         Class R Certificate to any other Person if it has actual knowledge that
         such Person is not a Permitted Transferee. Further, no transfer, sale
         or other disposition of any Ownership Interest in a Class R Certificate
         may be made to a person who is not a U.S. Person (within the meaning of
         section 7701 of the Code) unless such person furnishes the transferor
         and the Trustee with a duly completed and effective Internal Revenue
         Service Form W-8ECI (or any successor thereto) and the Trustee consents
         to such transfer, sale or other disposition in writing.

                  (iv) Any attempted or purported Transfer of any Ownership
         Interest in a Class R Certificate in violation of the provisions of
         this Section 5.02(c) shall be absolutely null and void and shall vest
         no rights in the purported Transferee. If any purported transferee
         shall become a Holder of a Class R Certificate in violation of the
         provisions of this Section 5.02(c), then the last preceding Permitted
         Transferee shall be restored to all rights as Holder thereof
         retroactive to the date of registration of Transfer of such Class R
         Certificate. The Trustee shall be under no liability to any Person for
         any registration of Transfer of a Class R Certificate that is in fact
         not permitted by Section 5.02(b) and this Section 5.02(c) or for making
         any payments due on such Certificate to the Holder thereof or taking
         any other action with respect to such Holder under the provisions of
         this Agreement so long as the Transfer was registered after receipt of
         the related Transfer Affidavit. The Trustee shall be entitled but not
         obligated to recover from any Holder of a Class R Certificate that was
         in fact not a Permitted Transferee at the time it became a Holder or,
         at such subsequent time as it became other than a Permitted Transferee,
         all payments made on such Class R Certificate at and after either such
         time. Any such payments so recovered by the Trustee shall be paid and
         delivered by the Trustee to the last preceding Permitted Transferee of
         such Certificate.

                  (v) At the option of the Holder of the Class R Certificate,
         the Class LTR Interest and Residual Interest in the Upper Tier REMIC
         may be severed and represented by separate certificates (with the
         separate certificate that represents the Residual Interest also
         representing all rights of the Class R Certificate to distributions
         attributable to a Pass-Through Rate on the Class R Certificate in
         excess of the Net Rate); provided, however, that such separate
         certification may not occur until the NIMs Insurer and the Trustee
         receive an Opinion of Counsel to the effect that separate certification
         in the form and manner proposed would not result in the imposition of
         federal tax upon the Trust Fund or any of the REMICs provided for
         herein or cause any of the REMICs provided for herein to fail to
         qualify as a REMIC; and provided further, that the provisions of
         Sections 5.02(b) and (c) will apply to each such separate certificate
         as if the separate certificate were a Class R Certificate. If, as
         evidenced by an Opinion of Counsel, it is necessary to preserve the
         REMIC status of any of the REMICs provided for herein, the Class LTR
         Interest and the Residual Interest in the Upper Tier REMIC shall be
         severed and represented by separate certificates (with the separate
         certificate that represents the Residual Interest also representing all
         rights of the Class R Certificate to distributions attributable to a
         Pass-Through Rate on the Class R Certificate in excess of the Net
         Rate).

         The restrictions on Transfers of a Class R Certificate set forth in
this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Class R Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee and the NIMs Insurer of an Opinion of
Counsel, which Opinion of Counsel shall not be an expense of the Trustee or the
Depositor, to the effect that the

                                      -78-
<PAGE>
elimination of such restrictions will not cause any of the REMICs provided for
herein to fail to qualify as a REMIC at any time that the Certificates are
outstanding or result in the imposition of any tax on the Trust Fund, any REMIC
provided for herein, a Certificateholder or another Person. Each Person holding
or acquiring any Ownership Interest in a Class R Certificate hereby consents to
any amendment of this Agreement that, based on an Opinion of Counsel furnished
to the Trustee, is reasonably necessary (a) to ensure that the record ownership
of, or any beneficial interest in, a Class R Certificate is not transferred,
directly or indirectly, to a Person that is not a Permitted Transferee and (b)
to provide for a means to compel the Transfer of a Class R Certificate that is
held by a Person that is not a Permitted Transferee to a Holder that is a
Permitted Transferee.

         (d) The transferor of the Class R Certificate shall notify the Trustee
in writing upon the transfer of the Class R Certificate.

         (e) The preparation and delivery of all certificates, opinions and
other writings referred to above in this Section 5.02 shall not be an expense of
the Trust Fund, the Depositor or the Trustee.

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

         If (a) any mutilated Certificate is surrendered to the Trustee or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and of the ownership thereof and (b) there is delivered to
the Trustee and the NIMs Insurer 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 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 Class, tenor and Percentage Interest. In connection with the issuance of
any new Certificate under this Section 5.03, the Trustee may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith. Any replacement Certificate issued
pursuant to this Section 5.03 shall constitute complete and indefeasible
evidence of ownership in the Trust Fund, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time. All
Certificates surrendered to the Trustee under the terms of this Section 5.03
shall be canceled and destroyed by the Trustee in accordance with its standard
procedures without liability on its part.

         SECTION 5.04. Persons Deemed Owners.

         The NIMs Insurer, the Trustee and any agent of the NIMs Insurer or the
Trustee may treat the Person in whose name any Certificate is registered as the
owner of such Certificate for the purpose of receiving distributions as provided
in this Agreement and for all other purposes whatsoever, and neither the NIMs
Insurer nor the Trustee, nor any agent of the NIMs Insurer or the Trustee shall
be affected by any notice to the contrary.

         SECTION 5.05. Access to List of Certificateholders' Names and
Addresses.

         If three or more Certificateholders (a) request such information in
writing from the Trustee, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit or if the NIMs
Insurer or the Depositor shall request such information in writing from the
Trustee, then the Trustee shall, within ten Business Days after the receipt of
such request, provide the NIMs Insurer, the Depositor or such Certificateholders
at such recipients' expense the most recent list of the Certificateholders of
the Trust Fund held by the Trustee, if any. The Depositor and every
Certificateholder, by receiving and holding a Certificate, agree that the
Trustee shall

                                      -79-
<PAGE>
not be held accountable by reason of the disclosure of any such information as
to the list of the Certificateholders hereunder, regardless of the source from
which such information was derived.

         SECTION 5.06.     Book-Entry Certificates.

         The Regular Certificates, upon original issuance, shall be issued in
the form of one or more typewritten Certificates representing the Book-Entry
Certificates, to be delivered to the Depository by or on behalf of the
Depositor. The Class N, Class R and Class X Certificates shall be definitive
certificates. The Book-Entry Certificates shall initially be registered on the
Certificate Register in the name of the Depository or its nominee, and no
Certificate Owner of a Book-Entry Certificate will receive a definitive
certificate representing such Certificate Owner's interest in such Certificates,
except as provided in Section 5.08. Unless and until definitive, fully
registered Certificates ("Definitive Certificates") have been issued to the
Certificate Owners of the Book-Entry Certificates pursuant to Section 5.08:

         (a) the provisions of this Section shall be in full force and effect;

         (b) the Depositor, the Trustee and the NIMs Insurer may deal with the
Depository and the Depository Participants for all purposes (including the
making of distributions) as the authorized representative of the respective
Certificate Owners of the Book-Entry Certificates;

         (c) registration of the Book-Entry Certificates may not be transferred
by the Trustee except to another Depository;

         (d) the rights of the respective Certificate Owners of the Book-Entry
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of the Book-Entry Certificates and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless and until
Definitive Certificates are issued pursuant to Section 5.08, the Depository will
make book-entry transfers among the Depository Participants and receive and
transmit distributions of principal and interest on the related Certificates to
such Depository Participants;

         (e) the Depository may collect its usual and customary fees, charges
and expenses from its Depository Participants;

         (f) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants; and

         (g) to the extent that the provisions of this Section conflict with any
other provisions of this Agreement, the provisions of this Section shall
control.

         For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Certificateholders
evidencing a specified percentage of the aggregate unpaid principal amount of
any Class of Certificates, such direction or consent may be given by Certificate
Owners (acting through the Depository and the Depository Participants) owning
Book-Entry Certificates evidencing the requisite percentage of principal amount
of such Class of Certificates.

         SECTION 5.07.     Notices to Depository.

         Whenever any notice or other communication is required to be given to
Certificateholders of the Class with respect to which Book-Entry Certificates
have been issued, unless and until Definitive Certificates shall have been
issued to the related Certificate Owners and the Trustee shall give all such
notices and communications to the Depository.

                                      -80-
<PAGE>
         SECTION 5.08. Definitive Certificates.

         If, after Book-Entry Certificates have been issued with respect to any
Certificates, (a) the Depository or the Depositor advises the Trustee that the
Depository is no longer willing, qualified or able to discharge properly its
responsibilities under the Depository Agreement with respect to such
Certificates and the Trustee or the Depositor is unable to locate a qualified
successor, (b) the Depositor, at its sole option, advises the Trustee that it
elects to terminate the book-entry system with respect to such Certificates
through the Depository or (c) after the occurrence and continuation of an Event
of Default, Certificate Owners of such Book-Entry Certificates having not less
than 51% of the Voting Rights evidenced by any Class of Book-Entry Certificates
advise the Trustee and the Depository in writing through the Depository
Participants that the continuation of a book-entry system with respect to
Certificates of such Class through the Depository (or its successor) is no
longer in the best interests of the Certificate Owners of such Class, then the
Trustee shall notify all Certificate Owners of such Book-Entry Certificates and
the NIMs Insurer, through the Depository, of the occurrence of any such event
and of the availability of Definitive Certificates to Certificate Owners of such
Class requesting the same. The Depositor shall provide the Trustee with an
adequate inventory of certificates to facilitate the issuance and transfer of
Definitive Certificates. Upon surrender to the Trustee of any such Certificates
by the Depository, accompanied by registration instructions from the Depository
for registration, the Trustee shall authenticate and deliver such Definitive
Certificates. Neither the Depositor nor the Trustee shall be liable for any
delay in delivery of such instructions and each may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of such
Definitive Certificates, all references herein to obligations imposed upon or to
be performed by the Depository shall be deemed to be imposed upon and performed
by the Trustee, to the extent applicable with respect to such Definitive
Certificates and the Trustee shall recognize the Holders of such Definitive
Certificates as Certificateholders hereunder.

         SECTION 5.09. Maintenance of Office or Agency.

         The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies where Certificates may be surrendered
for registration of transfer or exchange. The Trustee initially designates its
offices at Sixth and Marquette Avenue, Minneapolis, Minnesota 55479, Attention:
Corporate Trust Services - Merrill Lynch Mortgage Investors Inc., Series
2003-WMC2 as offices for such purposes. The Trustee will give prompt written
notice to the Certificateholders of any change in such location of any such
office or agency.

         SECTION 5.10. [RESERVED]

                                   ARTICLE VI

                         THE DEPOSITOR AND THE SERVICER

         SECTION 6.01. Respective Liabilities of the Depositor and the Servicer.

         The Depositor and the Servicer shall each be liable in accordance
herewith only to the extent of the obligations specifically and respectively
imposed upon and undertaken by them herein.

         SECTION 6.02. Merger or Consolidation of the Depositor or the Servicer.

         Except as provided in the next paragraph, the Depositor and the
Servicer will each keep in full effect its existence, rights and franchises as a
corporation or banking association under the laws of the United States or under
the laws of one of the States thereof and will each obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or

                                      -81-
<PAGE>
shall be necessary to protect the validity and enforceability of this Agreement,
or any of the Mortgage Loans and to perform its respective duties under this
Agreement.

         Any Person into which the Depositor or Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or Servicer shall be a party, or any Person succeeding to the
business of the Depositor or Servicer, shall be the successor of the Depositor
or 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 (except for the execution of an
assumption agreement where such succession is not effected by operation of law);
provided, however, that the successor or surviving Person to a Servicer shall be
qualified to sell mortgage loans to, and to service mortgage loans on behalf of,
Fannie Mae or Freddie Mac.

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

         None of the Depositor, the Servicer nor any of the directors, officers,
employees or agents of the Depositor or the Servicer shall be under any
liability to the Trust Fund or the Certificateholders for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor, the Servicer or any such Person against any
breach of representations or warranties made by it herein or protect the
Depositor, the Servicer or any such Person from any liability that would
otherwise be imposed by reasons of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties hereunder. The Depositor, the Servicer and any director, officer,
employee or agent of the Depositor or the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor, the Servicer and any
director, officer, employee or agent of the Depositor or the Servicer shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
expense, incurred in connection with the performance of their duties under this
agreement or incurred in connection with any audit, controversy or judicial
proceeding relating to a governmental taxing authority or any legal action
relating to this Agreement or the Certificates, other than any loss, liability
or expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. None of the Depositor nor the Servicer shall
be under any obligation to appear in, prosecute or defend any legal action that
is not incidental to its respective duties hereunder and that in its opinion may
involve it in any expense or liability; provided, however, that any of the
Depositor or the Servicer may, in its discretion undertake any such action that
it may deem necessary or desirable in respect of this Agreement and the rights
and duties of the parties hereto and interests of the Servicer and the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be, expenses, costs and
liabilities of the Trust Fund, and the Depositor and the Servicer shall be
entitled to be reimbursed therefor out of the Collection Account as provided by
Section 3.08 hereof.

         SECTION 6.04.     Limitation on Resignation of Servicer.

         The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee and the NIMs Insurer. No such resignation shall
become effective until the Trustee or a successor servicer reasonably acceptable
to the Trustee and the NIMs Insurer is appointed and has assumed the Servicer's
responsibilities, duties, liabilities and obligations hereunder. Any such
resignation shall not relieve the Servicer of any of the obligations specified
in Section 7.01 and 7.02 as obligations that survive the resignation or
termination of the Servicer.

                                      -82-
<PAGE>
         The Trustee and the Depositor hereby specifically (i) consent to the
pledge and assignment by the Servicer of all the Servicer's right, title and
interest in, to and under this Agreement to the Servicing Rights Pledgee, for
the benefit of certain lenders, and (ii) provided that no Event of Default
exists, agree that upon delivery to the Trustee by the Servicing Rights Pledgee
of a letter signed by the Servicer whereby the Servicer shall resign as Servicer
under this Agreement, the Trustee shall appoint the Servicing Rights Pledgee or
its designee as successor Servicer, provided that at the time of such
appointment, the Servicing Rights Pledgee or such designee meets the
requirements of a successor Servicer as set forth herein and agrees to be
subject to the terms of this Agreement. If, pursuant to any provision hereof,
the duties of the Servicer are transferred to a successor Servicer, the entire
amount of the Servicing Fee and other compensation payable to the Servicer
pursuant hereto shall thereafter be payable to such successor Servicer.

         SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds.

         The Servicer shall, for so long as it acts as servicer under this
Agreement, obtain and maintain in force (a) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as servicer
hereunder, and (b) a fidelity bond in respect of its officers, employees and
agents. Each such policy or policies and bond shall, together, comply with the
requirements from time to time of Fannie Mae or Freddie Mac for Persons
performing servicing for mortgage loans purchased by Fannie Mae or Freddie Mac.
The Servicer shall provide the Trustee and the NIMs Insurer, upon request, with
copies of such policies and fidelity bond or a certification from the insurance
provider evidencing such policies and fidelity bond. In the event that any such
policy or bond ceases to be in effect, the Servicer shall use its reasonable
best efforts to obtain a comparable replacement policy or bond from an insurer
or issuer meeting the requirements set forth above as of the date of such
replacement. Any such policy or fidelity bond shall by its terms not be
cancelable without thirty days' prior written notice to the Trustee and the NIMs
Insurer.

                                   ARTICLE VII

                        DEFAULT; TERMINATION OF SERVICER

         SECTION 7.01. Events of Default.

         "Event of Default," wherever used herein, means any one of the
following events:

                  (i) any failure by the Servicer to make any Advance to deposit
         in the Collection Account or the Certificate Account or remit to the
         Trustee any payment (excluding a payment required to be made under
         Section 4.01 hereof) required to be made under the terms of this
         Agreement, which failure shall continue unremedied for three calendar
         days and, with respect to a payment required to be made under Section
         4.01 hereof, for one calendar day, after the date on which written
         notice of such failure shall have been given to the Servicer by the
         Trustee or the Depositor, or to the Trustee and the Servicer by the
         NIMs Insurer or the Holders of Certificates evidencing not less than
         25% of the Voting Rights evidenced by the Certificates; or

                  (ii) any failure by the Servicer to observe or perform in any
         material respect any other of the covenants or agreements on the part
         of the Servicer contained in this Agreement or any representation or
         warranty shall prove to be untrue, which failure or breach shall
         continue unremedied for a period of 60 days after the date on which
         written notice of such failure shall have been given to the Servicer by
         the Trustee or the Depositor, or to the Trustee by the NIMs Insurer or
         the Holders of Certificates evidencing not less than 25% of the Voting
         Rights evidenced by the Certificates; or

                                      -83-
<PAGE>
                  (iii) a decree or order of a court or agency or supervisory
         authority having jurisdiction for the appointment of a receiver or
         liquidator in any insolvency, readjustment of debt, marshaling of
         assets and liabilities or similar proceedings, or for the winding-up or
         liquidation of its affairs, shall have been entered against the
         Servicer and such decree or order shall have remained in force
         undischarged or unstayed for a period of 60 consecutive days; or

                  (iv) consent by the Servicer to the appointment of a receiver
         or liquidator in any insolvency, readjustment of debt, marshaling of
         assets and liabilities or similar proceedings of or relating to the
         Servicer or all or substantially all of the property of the Servicer;
         or

                  (v) admission by a Servicer in writing of its inability to pay
         its debts generally as they become due, file a petition to take
         advantage of, or commence a voluntary case under, any applicable
         insolvency or reorganization statute, make an assignment for the
         benefit of its creditors, or voluntarily suspend payment of its
         obligations.

         If an Event of Default shall occur with respect to the Servicer, then,
and in each and every such case, so long as such Event of Default shall not have
been remedied within the applicable grace period, or solely with respect to
clause (i) above by 5:00 p.m. on the Servicer Remittance Date, the Trustee may
(with the written consent of the NIMs Insurer, except after a NIMs Insurer
Default), or at the direction of the NIMs Insurer or the Holders of Certificates
evidencing not less than 25% of the Voting Rights evidenced by the Certificates
(with the written consent of the NIMs Insurer, except after a NIMs Insurer
Default), shall, by notice in writing to the Servicer (with a copy to each
Rating Agency), terminate all of the rights and obligations of the Servicer
under this Agreement and in and to the Mortgage Loans and the proceeds thereof,
other than its rights as a Certificateholder hereunder. On or after the receipt
by the Servicer of such written notice, all authority and power of the Servicer
hereunder, whether with respect to the Mortgage Loans or otherwise, shall pass
to and be vested in the Trustee. To the extent the Event of Default resulted
from the failure of the Servicer to make a required Advance, the Trustee shall
thereupon make any Advance described in Section 4.01 hereof subject to Section
3.04 hereof. The Trustee 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 or assignment of
the Mortgage Loans and related documents, or otherwise. Unless expressly
provided in such written notice, no such termination shall affect any obligation
of the Servicer to pay amounts owed pursuant to Article VIII. The Servicer
agrees to cooperate with the Trustee in effecting the termination of the
Servicer's responsibilities and rights hereunder, including, without limitation,
the transfer to the Trustee of all cash amounts which shall at the time be
credited to the Collection Account, or thereafter be received with respect to
the Mortgage Loans. The Servicer and the Trustee shall promptly notify the
Rating Agencies of the occurrence of an Event of Default or an event that, with
notice, passage of time, other action or any combination of the foregoing would
be an Event of Default, such notice to be provided in any event within two
Business Days of such occurrence.

         Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a Scheduled Payment on a Mortgage Loan that was due prior to the notice
terminating the Servicer's rights and obligations as Servicer hereunder and
received after such notice, that portion thereof to which the Servicer would
have been entitled pursuant to Sections 3.08(a)(i) through (viii), and any other
amounts payable to the Servicer hereunder the entitlement to which arose prior
to the termination of its activities hereunder. Notwithstanding anything herein
to the contrary, upon termination of the Servicer hereunder, any liabilities of
the Servicer which accrued prior to such termination shall survive such
termination.

                                      -84-
<PAGE>
         SECTION 7.02. Trustee to Act; Appointment of Successor.

         On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 hereof, the Trustee shall, to the extent provided in
Section 3.04, be the successor 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 and applicable law
including the obligation to make advances pursuant to Section 4.01. As
compensation therefor, subject to the last paragraph of Section 7.01, the
Trustee shall be entitled to all fees, compensation and reimbursement for costs
and expenses that the Servicer would have been entitled to hereunder if the
Servicer had continued to act hereunder. Notwithstanding the foregoing, if the
Trustee has become the successor to the Servicer in accordance with Section 7.01
hereof, the Trustee may, if it shall be unwilling to so act, or shall, if it is
prohibited by applicable law from making Advances pursuant to Section 4.01
hereof or if it is otherwise unable to so act, appoint, or petition a court of
competent jurisdiction to appoint, any established mortgage loan servicing
institution the appointment of which successor shall be approved by the NIMs
Insurer and which does not adversely affect the then current rating of the
Certificates by each Rating Agency 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. Any successor Servicer shall be an institution that
is acceptable to the NIMs Insurer and is a Fannie Mae and Freddie Mac approved
seller/servicer in good standing, that has a net worth of at least $15,000,000,
and that is willing to service the Mortgage Loans and executes and delivers to
the Depositor and the Trustee an agreement accepting such delegation and
assignment, that contains an assumption by such Person of the rights, powers,
duties, responsibilities, obligations and liabilities of the Servicer (other
than liabilities of the Servicer under Section 6.03 hereof incurred prior to
termination of the Servicer under Section 7.01), with like effect as if
originally named as a party to this Agreement; and provided further that each
Rating Agency acknowledges that its rating of the Certificates in effect
immediately prior to such assignment and delegation will not be qualified or
reduced as a result of such assignment and delegation. No appointment of a
successor to the Servicer hereunder shall be effective until the Trustee and the
NIMs Insurer shall have consented thereto, prior written consent of the NIMs
Insurer is obtained and written notice of such proposed appointment shall have
been provided by the Trustee to each Certificateholder. The Trustee shall not
resign as servicer until a successor servicer has been appointed and has
accepted such appointment. Pending appointment of a successor to the Servicer
hereunder, the Trustee, unless the Trustee is prohibited by law from so acting,
shall, subject to Section 3.04 hereof, act in such capacity as hereinabove
provided. In connection with such appointment and assumption, the Trustee may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree; provided, however, that no
such compensation shall be in excess of that permitted the Servicer hereunder.
The Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. Neither the
Trustee nor any other successor servicer shall be deemed to be in default
hereunder by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof or any failure to perform, or any
delay in performing, any duties or responsibilities hereunder, in either case
caused by the failure of the Servicer to deliver or provide, or any delay in
delivering or providing, any cash, information, documents or records to it.

         Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of servicer and shall, during the term of its service
as servicer maintain in force the policy or policies that the Servicer is
required to maintain pursuant to Section 6.05.

         SECTION 7.03. Notification to Certificateholders.

         (a) Upon any termination of or appointment of a successor to the
Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders, the NIMs Insurer and to each Rating Agency.

                                      -85-
<PAGE>
         (b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders and the NIMs Insurer
notice of each such Event of Default hereunder known to the Trustee, unless such
Event of Default shall have been cured or waived.

                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

         SECTION 8.01. Duties of Trustee.

         The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default that may have occurred, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred and remains uncured, 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 person would exercise or use under the circumstances in the conduct of
such person's own affairs. In case an Event of Default or other default by the
Servicer or the Depositor hereunder shall occur and be continuing, the Trustee,
shall, at the direction of the majority of the Certificateholders or the NIMS
Insurer, or may, proceed to protect and enforce its rights and the rights of the
Certificateholders or the NIMS Insurer 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, and subject to the foregoing, shall deem most effectual to protect and
enforce any of the rights of the Trustee, the NIMS Insurer and the
Certificateholders.

         The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of this Agreement shall examine them to determine whether they conform on their
face to the requirements of this Agreement. If any such instrument is found not
to conform on its face to the requirements of this Agreement in a material
manner, the Trustee shall notify the person providing such Agreement of such
non-conformance instrument corrected, and if the instrument is not corrected to
the Trustee's satisfaction, the Trustee will provide notice thereof to the NIMs
Insurer and the Certificateholders and take such further action as directed by
the NIMs Insurer and the Certificateholders.

         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, its negligent failure to perform its obligations
in compliance with this Agreement, or any liability that would be imposed by
reason of its willful misfeasance or bad faith; provided, however, that:

                  (i) prior to the occurrence of an Event of Default, and after
         the curing of all such Events of Default that 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,
         individually or as Trustee, 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 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 that it reasonably
         believed in good faith to be genuine and to have been duly executed by
         the proper authorities respecting any matters arising hereunder;

                                      -86-
<PAGE>
                  (ii) the Trustee shall not be liable, individually or as
         Trustee, for an error of judgment made in good faith by a Responsible
         Officer or Responsible Officers of the Trustee, unless the Trustee was
         negligent or acted in bad faith or with willful misfeasance;

                  (iii) the Trustee shall not be liable, individually or as
         Trustee, with respect to any action taken, suffered or omitted to be
         taken by it in good faith in accordance with the direction of the NIMs
         Insurer or the Holders of each Class of Certificates evidencing not
         less than 25% of the Voting Rights of such Class relating to the time,
         method and place of conducting any proceeding for any remedy available
         to the Trustee, or exercising any trust or power conferred upon the
         Trustee under this Agreement; and

                  (iv) except as otherwise expressly provided in this Agreement,
         if any default occurs in the making of a payment due under any
         Permitted Investment, or if a default occurs in any other performance
         required under any Permitted Investment, the Trustee may and, subject
         to Section 8.01 and Section 8.02, upon the request of the NIMs Insurer
         or the Holders of the Certificates representing more than 50% of the
         Voting Rights allocated to any Class of Certificates, shall take such
         action as may be appropriate to enforce such payment or performance,
         including the institution and prosecution of appropriate proceedings.

         SECTION 8.02. Certain Matters Affecting the Trustee.

         (a) Except as otherwise provided in Section 8.01:

                  (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 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 of its choice and
         any Opinion of Counsel shall be full and complete authorization and
         protection in respect of any action taken or suffered or omitted by it
         hereunder in good faith and in accordance with such Opinion of Counsel;

                  (iii) the Trustee shall not be liable, individually or as
         Trustee, 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;

                  (iv) prior to the occurrence of an Event of Default hereunder
         and after the curing of all Events of Default that 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 document, unless requested in writing so to do
         by the NIMs Insurer or the Holders of each Class of Certificates
         evidencing not less than 25% of the Voting Rights of such Class;

                  (v) the Trustee may execute any of the trusts or powers
         hereunder or perform any duties hereunder either directly or by or
         through agents, accountants or attorneys;

                  (vi) with respect to expenses that would be treated as
         "unanticipated expenses" within the meaning of Treasury Regulations
         Section 1.860G-1(b)(3)(ii) if paid by the Trust Fund or any of the
         REMICs provided for herein, the Trustee shall not be required to expend
         its own funds or otherwise incur any financial liability in the
         performance of any of its duties hereunder if it shall

                                      -87-
<PAGE>
         have reasonable grounds for believing that repayment of such funds or
         adequate indemnity against such liability is not assured to it;

                  (vii) the Trustee shall not be liable, individually or as
         Trustee, for any loss on any investment of funds pursuant to this
         Agreement (other than as issuer of the investment security);

                  (viii) the Trustee shall not be deemed to have knowledge of an
         Event of Default until a Responsible Officer of the Trustee shall have
         received written notice thereof;

                  (ix) the Trustee shall be under no obligation to exercise any
         of the trusts or powers vested in it by this Agreement or to make any
         investigation of matters arising hereunder or to institute, conduct or
         defend any litigation hereunder or in relation hereto at the request,
         order or direction of any of the NIMs Insurer or the
         Certificateholders, pursuant to the provisions of this Agreement,
         unless the NIMs Insurer or such Certificateholders shall have offered
         to the Trustee reasonable security or indemnity against the costs,
         expenses and liabilities that may be incurred therein or thereby; and

                  (x) if requested by the Servicer, the Trustee may appoint the
         Servicer as the trustee's attorney-in-fact in order to carry out and
         perform certain activities that are necessary or appropriate for the
         servicing and administration of the Mortgage Loans pursuant to this
         Agreement. Such appointment shall be evidenced by a power of attorney
         in such form as may be agreed to by the Trustee and the Servicer. The
         Trustee shall have no liability for any action or inaction of the
         Servicer in connection with such power of attorney and the Trustee
         shall be indemnified by the Servicer for all liabilities, costs and
         expenses incurred by the Trustee in connection with the Servicer's use
         or misuse of such powers of attorney.

         (b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by the Trustee without
the possession of any of the Certificates, or the production thereof at the
trial or other proceeding relating thereto, and any such suit, action or
proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the Holders of the Certificates, subject to the provisions of
this Agreement.

         SECTION 8.03. Trustee Not Liable for Mortgage Loans.

         The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Agreement, of any Mortgage Loan, of any
guarantee of a NIMs Insurer or related document other than with respect to the
Trustee's execution and authentication of the Certificates . The Trustee shall
not be accountable for the use or application by the Depositor or the Servicer
of any funds paid to the Depositor or the Servicer in respect of the Mortgage
Loans or deposited in or withdrawn from the Collection Account or Certificate
Account by the Depositor or the Servicer.

         SECTION 8.04. 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 the Trustee.

         SECTION 8.05. Trustee's Fees.

         The Trustee shall be entitled to earnings on or investment income with
         respect to funds in or credited to the Certificate Account.

                                      -88-
<PAGE>
         SECTION 8.06. Indemnification of Trustee.

         (a) The Trustee and its respective directors, officers, employees and
agents shall be entitled to indemnification from the Trust Fund for any loss,
liability or expense incurred in connection with any legal proceeding or
incurred without negligence or willful misconduct on their part, arising out of,
or in connection with, the acceptance or administration of the trusts created
hereunder or in connection with the performance of their duties hereunder,
including any applicable fees and expenses payable hereunder and the costs and
expenses of defending themselves against any claim in connection with the
exercise or performance of any of their powers or duties hereunder, provided
that:

                  (i) with respect to any such claim, the Trustee shall have
         given the Depositor and the Holders written notice thereof promptly
         after the Trustee shall have knowledge thereof; provided that failure
         to so notify shall not relieve the Trust Fund of the obligation to
         indemnify the Trustee; however, any reasonable delay by the Trustee to
         provide written notice to the Depositor and the Holders promptly after
         the Trustee shall have obtained knowledge of a claim shall not relieve
         the Trust Fund of the obligation to indemnify the Trustee under this
         Section 8.06;

                  (ii) while maintaining control over its own defense, the
         Trustee shall cooperate and consult fully with the Depositor in
         preparing such defense;

                  (iii) notwithstanding anything to the contrary in this Section
         8.06, the Trust Fund shall not be liable for settlement of any such
         claim by the Trustee entered into without the prior consent of the
         Depositor, which consent shall not be unreasonably withheld; and

                  (iv) any such loss, liability or expense to be indemnified by
         the Trust Fund must constitute an "unanticipated expense" of the Trust
         Fund within the meaning of Treasury Regulations Section
         1.860G-1(b)(3)(ii).

         The provisions of this Section 8.06 shall survive any termination of
this Agreement and the resignation or removal of the Trustee and shall be
construed to include, but not be limited to any loss, liability or expense under
any environmental law.

         (b) The Trustee shall be entitled to all reasonable expenses,
disbursements and advancements incurred or made by the Trustee in accordance
with this Agreement (including fees and expenses of its counsel and all persons
not regularly in its employment), except any such expenses, disbursements and
advancements that either (i) arise from its negligence, bad faith or willful
misconduct or (ii) do not constitute "unanticipated expenses" within the meaning
of Treasury Regulations Section 1.860G-1(b)(3)(ii).

         (c) The Trustee's right to indemnification and reimbursement shall be
subject to a cap of $300,000, excluding any Servicing Transfer Costs, in the
aggregate in any calendar year; provided, however, that such cap shall apply
only if NIM Notes have been issued and are outstanding and shall cease to apply
after the date on which any NIM Notes are paid in full and all amounts which the
NIMs Insurer is entitled to be paid or reimbursed shall have been paid or
reimbursed. Any amounts not in excess of this cap may be withdrawn by the
Trustee from the Certificate Account at any time.

         SECTION 8.07. Eligibility Requirements for Trustee.

         The Trustee hereunder shall, at all times, be a corporation or
association organized and doing business under the laws of a state or the United
States of America, authorized under such laws to exercise corporate trust powers
having a combined capital and surplus of at least $50,000,000, subject to
supervision or examination by federal or state authority and with a credit
rating that would not cause any

                                      -89-
<PAGE>
of the Rating Agencies to reduce their respective ratings of any Class of
Certificates below the ratings issued on the Closing Date (or having provided
such security from time to time as is sufficient to avoid such reduction) and
reasonably acceptable to the NIMs Insurer. If such corporation or association
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 8.07 the combined capital and surplus of such
corporation or association 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 8.07, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.08 hereof. The corporation or
national banking association serving as Trustee may have normal banking and
trust relationships with the Depositor and the NIMs Insurer and their respective
Affiliates; provided, however, that such corporation cannot be an Affiliate of
the Servicer other than the Trustee in its role as successor to the Servicer.

         SECTION 8.08. Resignation and Removal of Trustee.

         The Trustee may at any time resign and be discharged from the trusts
hereby created by (1) giving written notice of resignation to the Depositor and
the NIMs Insurer and by mailing notice of resignation by first class mail,
postage prepaid, to the Certificateholders at their addresses appearing on the
Certificate Register and each Rating Agency, not less than 60 days before the
date specified in such notice when, subject to Section 8.09, such resignation is
to take effect, and (2) acceptance of appointment by a successor trustee
acceptable to the NIMs Insurer in accordance with Section 8.09 and meeting the
qualifications set forth in Section 8.07. If no successor trustee shall have
been so appointed and have accepted appointment within 30 days after the giving
of such notice or resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee.

         If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.07 hereof and shall fail to resign after
written request thereto by the Depositor or the NIMs Insurer, (ii) the Trustee
shall become incapable of acting, or shall be adjudged as 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, or
(iii)(A) a tax is imposed with respect to the Trust Fund by any state in which
the Trustee or the Trust Fund is located, (B) the imposition of such tax would
be avoided by the appointment of a different trustee and (C) the Trustee fails
to indemnify the Trust Fund against such tax, then the Depositor or the NIMs
Insurer may remove the Trustee and the Depositor with the consent of the NIMs
Insurer shall promptly appoint a successor trustee by written instrument, in
triplicate, one copy of which instrument shall be delivered to the Trustee, one
copy of which shall be delivered to the Servicer and one copy of which shall be
delivered to the successor trustee.

         The Holders evidencing at least 51% of the Voting Rights of all Classes
of Certificates, with the consent of the NIMs Insurer, or the NIMs Insurer upon
failure of the Trustee to perform its obligations hereunder may at any time
remove the Trustee and the Depositor shall appoint a successor trustee by
written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized (or by the NIMs Insurer), one complete
set of which instruments shall be delivered by the successor Trustee to the
Servicer, one complete set to the Trustee so removed and one complete set to the
successor so appointed. Notice of any removal of the Trustee shall be given to
the NIMs Insurer and each Rating Agency by the Successor Trustee.

         Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.08 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.09 hereof.

                                      -90-
<PAGE>
         SECTION 8.09. Successor Trustee.

         Any successor trustee appointed as provided in Section 8.08 hereof
shall execute, acknowledge and deliver to the Depositor and to its predecessor
trustee, the NIMs Insurer and the Servicer an instrument accepting such
appointment hereunder and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with the
like effect as if originally named as trustee herein.

         No successor trustee shall accept appointment as provided in this
Section 8.09 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.07 hereof and its appointment
shall not adversely affect the then current rating of the Certificates.

         Upon acceptance of appointment by a successor trustee as provided in
this Section 8.09, the Depositor shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates. If the Depositor 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 Depositor.

         SECTION 8.10. 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 all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be eligible under the provisions of Section
8.07 hereof without the execution or filing of any paper or further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding (except for the execution of an assumption agreement where such
succession is not effected by operation of law).

         SECTION 8.11. 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 Fund or property securing any Mortgage Note 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 and the NIMs Insurer to act as co-trustee or
co-trustees jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of the Trust Fund, and to vest in such Person or Persons, in
such capacity and for the benefit of the Certificateholders, such title to the
Trust Fund or any part thereof, whichever is applicable, and, subject to the
other provisions of this Section 8.11, 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 and the NIMs Insurer. The Trustee shall not be liable for the
actions of any co-trustee appointed with due care; provided that the appointment
of a co-trustee shall not relieve the Trustee of its obligations hereunder. If
the Servicer and the NIMs Insurer shall not have joined in such appointment
within 15 days after the receipt by it of a request to do so, 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 8.07 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 8.09.

         Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:

                                      -91-
<PAGE>
                  (i) All rights, powers, duties and obligations conferred or
         imposed upon the Trustee, except for the obligation of the Trustee
         under this Agreement to advance funds on behalf of the Servicer, 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 Fund 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 Trustee with the consent of the NIMs Insurer may at
         any time accept the resignation of 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 VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer, the NIMs Insurer and the Depositor.

          Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.

         SECTION 8.12. Tax Matters.

         (a) It is intended that each of the REMICs provided for herein REMIC
shall constitute, and that the affairs of the Trust Fund shall be conducted so
as to allow each such REMIC to qualify as, a "real estate mortgage investment
conduit" as defined in and in accordance with the REMIC Provisions. It is also
intended that each of the grantor trusts provided for in Section 2.07 hereof
shall constitute, and that the affairs of the Trust Fund shall be conducted so
as to allow each such grantor trust to qualify as, a grantor trust under the
provisions of Subpart E, Part I of Subchapter J of the Code. In furtherance of
such intention, the Trustee covenants and agrees that it shall act as agent (and
the Trustee is hereby appointed to act as agent) on behalf of each of the REMICs
and grantor trusts provided for herein and that in such capacity it shall: (a)
prepare 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 or any
successor form adopted by the Internal Revenue Service) and prepare and file or
cause to be prepared and filed with the Internal Revenue Service and applicable
state or local tax authorities income tax or information returns for each
taxable year with respect to each of the REMICs and grantor trusts provided for
herein, containing such information and at the times and in the manner as may be
required by the Code or state or local tax laws, regulations, or rules, and
furnish or cause to be furnished to Certificateholders the schedules, statements

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or information at such times and in such manner as may be required thereby; (b)
within thirty days of the Closing Date, furnish or cause to be furnished to the
Internal Revenue Service, on Forms 8811 or as otherwise may be required by the
Code, the name, title, address, and telephone number of the person that the
holders of the Certificates may contact for tax information relating thereto,
together with such additional information as may be required by such Form, and
update such information at the time or times in the manner required by the Code
for each of the REMICs provided for herein; (c) make or cause to be made
elections, on behalf of each of the REMICs provided for herein to be treated as
a REMIC on the federal tax return of such REMICs for their first taxable years
(and, if necessary, under applicable state law); (d) prepare and forward, or
cause to be prepared and forwarded, to the Certificateholders and to the
Internal Revenue Service and, if necessary, state tax authorities, all
information returns and reports as and when required to be provided to them in
accordance with the REMIC Provisions or other applicable tax law or with respect
to the grantor trusts provided for herein, including without limitation, the
calculation of any original issue discount using the Prepayment Assumption; (e)
provide information necessary for the computation of tax imposed on the transfer
of a Class R Certificate to a Person that is not a Permitted Transferee, or an
agent (including a broker, nominee or other middleman) of a Person that is not a
Permitted Transferee, or a pass-through entity in which a Person that is not a
Permitted Transferee is the record holder of an interest (the reasonable cost of
computing and furnishing such information may be charged to the Person liable
for such tax); (f) to the extent that they are under its control conduct the
affairs of each of the REMICs and grantor trusts provided for herein at all
times that any Certificates are outstanding so as to maintain the status of each
of the REMICs provided for herein as a REMIC under the REMIC Provisions and the
status of each of the grantor trusts provided for herein as a grantor trust
under Subpart E, Part I of subchapter J of the Code; (g) not knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of any of the REMICs provided for herein or
result in the imposition of tax upon any such REMIC; (h) not knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the grantor trust status under Subpart E, Part I of Subchapter J
of the Code of any of the grantor trusts provided to herein or result in the
imposition of tax upon any such grantor trusts; (i) pay, from the sources
specified in the last paragraph of this Section 8.12, the amount of any federal,
state and local taxes, including prohibited transaction taxes as described
below, imposed on each of the REMICs or grantor trusts provided for herein prior
to the termination of the Trust Fund 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); (j) sign or cause to be signed
federal, state or local income tax or information returns; (k) maintain records
relating to each of the REMICs and grantor trusts provided for herein, including
but not limited to the income, expenses, assets and liabilities of each of the
REMICs and grantor trusts provided for herein, and the fair market value and
adjusted basis of the Trust Fund property determined at such intervals as may be
required by the Code, as may be necessary to prepare the foregoing returns,
schedules, statements or information; and (l) as and when necessary and
appropriate, represent each of the REMICs and grantor trusts provided for herein
in any administrative or judicial proceedings relating to an examination or
audit by any governmental taxing authority, request an administrative adjustment
as to any taxable year of any of the REMICs provided for herein, enter into
settlement agreements with any governmental taxing agency, extend any statute of
limitations relating to any tax item of any of the REMICs provided for herein,
and otherwise act on behalf of each of the REMICs and grantor trusts provided
for herein in relation to any tax matter involving any of such REMICs or any
controversy involving the Trust Fund.

         In order to enable the Trustee to perform its duties as set forth
herein, the Depositor shall provide, or cause to be provided, to the Trustee
within 10 days after the Closing Date all information or data that the Trustee
requests in writing and determines to be relevant for tax purposes to the
valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows of
the Certificates and the Mortgage Loans. Thereafter, the Depositor shall

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provide to the Trustee promptly upon written request therefor, any such
additional information or data that the Trustee may, from time to time, request
in order to enable the Trustee to perform its duties as set forth herein. The
Depositor hereby agrees to indemnify the Trustee for any losses, liabilities,
damages, claims or expenses of the Trustee arising from any errors or
miscalculations of the Trustee that result from any failure of the Depositor to
provide, or to cause to be provided, accurate information or data to the Trustee
on a timely basis.

         In the event that any tax is imposed on "prohibited transactions" of
any of the REMICs provided for herein as defined in Section 860F(a)(2) of the
Code, on the "net income from foreclosure property" of the any of such REMICs as
defined in Section 860G(c) of the Code, on any contribution to the Trust Fund
after the Startup Day pursuant to Section 860G(d) of the Code, or any other tax
is imposed, if not paid as otherwise provided for herein, such tax shall be paid
by (i) the Trustee, if any such other tax arises out of or results from a breach
by the Trustee of any of its obligations under this Agreement or as a result of
the location of the Trustee, (ii) any party hereto (other than the Trustee) to
the extent any such other tax arises out of or results from a breach by such
other party of any of its obligations under this Agreement or as a result of the
location of such other party or (iii) in all other cases, or in the event that
any liable party here fails to honor its obligations under the preceding clauses
(i) or (ii), any such tax will be paid first with amounts otherwise to be
distributed to the Class R Certificateholders (pro rata) pursuant to Section
4.04, and second with amounts (other than amounts derived by the Trust Fund from
a payment on the Cap Contract) otherwise to be distributed to all other
Certificateholders in the following order of priority: first, to the Class N
Certificates (pro rata), second to the Class B-2 Certificates (pro rata), third,
to the Class B-1 Certificates (pro rata), fourth to the Class M-2 Certificates
(pro rata), fifth, to the Class M-1 Certificates (pro rata) and sixth to the
Class A Certificates and Class R Certificate (pro rata). Notwithstanding
anything to the contrary contained herein, to the extent that such tax is
payable by the Class R Certificate, the Trustee is hereby authorized pursuant to
such instruction to retain on any Distribution Date, from the Holders of the
Class R Certificate (and, if necessary, from the Holders of all other
Certificates in the priority specified in the preceding sentence), funds
otherwise distributable to such Holders in an amount sufficient to pay such tax.
The Trustee agrees to promptly notify in writing the party liable for any such
tax of the amount thereof and the due date for the payment thereof.

         (b) Each of the Depositor and the Trustee agrees not to knowingly or
intentionally take any action or omit to take any action that would (i) cause
the termination of the REMIC status of any of the REMICs provided for herein or
result in the imposition of a tax upon any of the REMICs provided for herein or
(ii) cause the termination of the grantor trust status of any of the grantor
trusts provided for herein or result in the imposition of a tax upon any of the
grantor trusts provided for herein.

         (c) In the event that the beneficial ownership of the Class N and Class
X Certificates is held by a single Person for federal income tax purposes or
both such Certificates are held proportionately by more than a single Person for
federal income tax purposes, such Person(s) shall be treated as the direct or
indirect beneficial owner(s) of the Class UTXN Interest, the Cap Contract and
the Cap Contract Account. In the event that beneficial ownership of the Class N
and the Class X Certificates is held by two or more Persons for federal income
tax purposes and such Persons do not hold both the Class N and Class X
Certificates proportionately, the Trustee shall treat the Class N
Certificateholders and the Class X Certificateholders as partners in a
partnership that directly or indirectly holds the Class UTXN Interest, the Cap
Contract and the Cap Contract Account and shall not treat the Class N and Class
X Certificates as a direct interest in any REMIC hereunder. If the Class N
Certificateholders and the Class X Certificateholders are treated as partners in
a partnership immediately before the Class N Certificates are retired, then, so
long as there is and continues to be more than one beneficial owner of the Class
X Certificates, the Class X Certificateholders will be treated as partners in a
partnership that directly or indirectly holds the Class UTXN Interest, the Cap
Contract and the Cap Contract Account. If the Class N Certificateholders and the
Class X Certificateholders are not treated as partners in a partnership
immediately before the Class N Certificates are retired, or if there is only one
beneficial owner of the Class X Certificates following the retirement of the
Class N Certificates, then the Class X Certificateholders will be treated as
holding interests in a grantor trust that holds the Class UTXN Interest, the Cap
Contract and the Cap Contract Account. By acquiring the Class N and the Class X
Certificates, the respective Holders will agree to treat the Class N and Class X
Certificates in the manner described in the preceding sentences for federal
income tax purposes in the event that the beneficial ownership of the Class N
and Class X Certificates is separated in such a manner. In such event, (i) a
separate capital account shall be established and maintained for each Holder of
a Class N or Class X Certificate in accordance with Treasury Regulations Section
1.704-1(b)(2)(iv), which shall be credited with income or gain and

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debited by any expenses (including any payments deemed made to the Holders of
any of the Class A-1, Class A-2, Class M-1, Class M-2, Class B-1, Class B-2 or
Class R Certificates on interest rate cap agreements for federal income tax
purposes) or losses or distributions allocable to the assets deemed held by such
partnership, (ii) the Class N Certificates shall be allocated income in an
amount equal to interest at the Class N Distributable Interest Rate and any
original issue discount that would be reportable thereon if the Class N
Certificate were a debt instrument issued on the date ownership of the Class N
and Class X Certificates is separated, with a principal balance equal to the
Class N Notional Balance, (iii) the Class X Certificates shall be allocated any
income of the partnership in excess of the income allocated to the Class N
Certificates in clause (ii) above and (iv) expenses of the partnership shall be
allocated based on which one of the classes economically bears such expense, (v)
neither the Class N nor the Class X Certificates shall be responsible for
restoring any deficit to its capital account, (vi) upon termination of the Trust
Fund pursuant to Article IX, all amounts available for distribution to the Class
N and Class X Certificates shall be distributed in accordance with their
positive capital account balances, first to the Class N Certificates until their
Class N Notional Balance and any accrued but unpaid interest thereon are reduced
to zero, then to the Class X Certificates, and (viii) the Trustee shall maintain
books and records with respect to the partnership on a calendar year basis
(unless a different taxable year is required by the Code) and shall prepare or
cause to be prepared, and shall cause the Holder of the largest Percentage
Interest of the Class X Certificates to sign and file or cause to be filed all
federal and state tax and information returns for the partnership and shall
furnish or cause to be furnished Schedule K-1's to the Holders of the Class N
and Class X Certificates at the time required by the Code. Unless otherwise
directed by a majority of the Percentage Interests of the Class N and Class X
Certificates, the Trustee shall not make an election under Section 754 of the
Code. All costs and expenses incurred by the Trustee in connection with such
preparation and filing shall be paid by the Seller. In addition, as compensation
for preparing partnership tax and information returns, the Trustee shall be paid
(i) an up-front fee from the Seller with respect to partnership tax and
information returns to be filed through the year 2005 and (ii) an annual fee
from the Seller with respect to partnership tax and information returns to be
filed in any year thereafter, which annual fee shall be in an amount agreed upon
between the Seller and the Trustee and equal to the fair market value for the
Trustee's services. The Holder of the largest Percentage Interest of the Class X
Certificates, by acceptance of its Class X Certificate(s), agrees to act as "tax
matters partner" (within the meaning of Section 6231(a)(7) of the Code and to
sign and timely file all federal and state partnership tax and information
returns prepared by the Trustee pursuant to this Section 8.12(c).

                                   ARTICLE IX

                                   TERMINATION

         SECTION 9.01. Termination upon Liquidation or Repurchase of all
Mortgage Loans.

         Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Servicer and the Trustee created hereby with respect to the Trust
Fund shall terminate upon the earlier of (a) the exercise by the Servicer or the
NIMs Insurer of an Optional Termination; and (b) the later of (i) the maturity
or other liquidation (or any Advance with respect thereto) of the last Mortgage
Loan remaining in the Trust Fund and the disposition of all REO Property and
(ii) the distribution to Certificateholders of all amounts required to be
distributed to them pursuant to this Agreement, as applicable. In no event shall
the trusts created hereby continue beyond the earlier of (i) the expiration of
21 years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late Ambassador of the United States to the Court of St. James's,
living on the date hereof and (ii) the Latest Possible Maturity Date.

         Any termination pursuant to clause (a) above shall be effected by the
Servicer purchasing all Mortgage Loans and REO Properties at a price equal to
the amount described in clause (i) of the definition of Optional Termination
Price. If the Servicer elects not to exercise its right to effect an Optional
Termination, the NIMs Insurer may, at its option, terminate the Trust Fund by
purchasing all of the Mortgage Loans and REO Properties at the price equal to
the amount described in clause (ii) of the definition of "Optional Termination
Price." Notwithstanding anything to the contrary herein, the Optional
Termination Amount paid by either the Servicer or the NIMs Insurer shall be
deposited by the Trustee directly into the Certificate Account immediately upon
Optional Termination. Any Optional

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<PAGE>
Termination Amount to be paid by the NIMs Insurer may be paid by the NIMs
Insurer to the Trustee for deposit into the Certificate Account.

         The right of the Servicer or the NIMs Insurer to effect an Optional
Termination pursuant to clause (a) above shall be conditioned upon the aggregate
Stated Principal Balance of the Mortgage Loans, at the time of any such
repurchase, aggregating ten (10) percent or less of the Stated Principal Balance
of the Mortgage Loans as of the Cut-off Date.

         SECTION 9.02. Final Distribution on the Certificates.

         If on any Determination Date, (i) the Trustee determines that there are
no Outstanding Mortgage Loans and no other funds or assets in the Trust Fund
other than the funds in the Collection Account, the Trustee shall send a final
distribution notice promptly to each Certificateholder and the NIMs Insurer or
(ii) the Trustee determines that a Class of Certificates shall be retired after
a final distribution on such Class, the Trustee shall notify the
Certificateholders within seven (7) Business Days after such Determination Date
that the final distribution in retirement of such Class of Certificates is
scheduled to be made on the immediately following Distribution Date. Any final
distribution made pursuant to the immediately preceding sentence will be made
only upon presentation and surrender of the Certificates at the office of the
Trustee specified in such notice. If the Servicer or the NIMS Insurer elects to
terminate the Trust Fund pursuant to clause (a) of Section 9.01, at least 10
days prior to the date notice is to be mailed to the affected
Certificateholders, the Trustee shall notify the Depositor, the NIMS Insurer and
the Servicer of the date such electing party intends to terminate the Trust Fund
and of the applicable repurchase price of the Mortgage Loans and REO Properties.

         Notice of any termination of the Trust Fund, specifying the
Distribution Date on which Certificateholders may surrender their Certificates
for payment of the final distribution and cancellation, shall be given promptly
by the Trustee by letter to Certificateholders mailed not earlier than the 10th
day and no later than the 15th day of the month immediately preceding the month
of such final distribution. Any such notice shall specify (a) the Distribution
Date upon which final distribution on the Certificates will be made upon
presentation and surrender of Certificates at the office therein designated, (b)
the location of the office or agency at which such presentation and surrender
must be made, and (c) that the Record Date otherwise applicable to such
Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office therein specified.
The Trustee will give such notice to the NIMs Insurer and each Rating Agency at
the time such notice is given to Certificateholders.

         In the event such notice is given, the Servicer shall cause all funds
in the Collection Account to be deposited in the Certificate Account on the
Business Day prior to the applicable Distribution Date in an amount equal to the
final distribution in respect of the Certificates. Upon such final deposit with
respect to the Trust Fund and the receipt by the Trustee of a Request for
Release therefor, the Trustee shall promptly release to the Trustee or the NIMs
Insurer, as applicable, the Mortgage Files for the Mortgage Loans.

         Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class the amounts
allocable to such Certificates held in the Certificate Account in the order and
priority set forth in Section 4.04 hereof on the final Distribution Date and in
proportion to their respective Percentage Interests.

         In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee 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
six months after the second notice all the

                                      -96-
<PAGE>
applicable 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 and other
assets that remain a part of the Trust Fund. If within one year after the second
notice all Certificates shall not have been surrendered for cancellation, the
Class R Certificateholders shall be entitled to all unclaimed funds and other
assets of the Trust Fund that remain subject hereto. Upon payment to the Class R
Certificateholders of such funds and assets, the Trustee shall have no further
duties or obligations with respect thereto.

         SECTION 9.03. Additional Termination Requirements.

         (a) In the event the Servicer or the NIMs Insurer exercises its option
to effect an Optional Termination as provided in Section 9.01, the Trust Fund
shall be terminated in accordance with the following additional requirements,
unless the Trustee has been supplied with an Opinion of Counsel, at the expense
of the Servicer or the NIMs Insurer, as applicable, to the effect that the
failure of the Trust Fund to comply with the requirements of this Section 9.03
will not (i) result in the imposition of taxes on "prohibited transactions" of
any of the REMICs provided for herein as defined in section 860F of the Code, or
(ii) cause any of the REMICs provided for herein to fail to qualify as a REMIC
at any time that any Certificates are outstanding:

                  (i) The Depositor shall establish a 90-day liquidation period
         and notify the Trustee thereof, which shall in turn specify the first
         day of such period in a statement attached to the final tax returns of
         each of the REMICs provided for herein pursuant to Treasury Regulation
         Section 1.860F-1. The Depositor shall satisfy all the requirements of a
         qualified liquidation under Section 860F of the Code and any
         regulations thereunder, as evidenced by an Opinion of Counsel obtained
         at the expense of the Servicer or the NIMs Insurer, as applicable;

                  (ii) During such 90-day liquidation period, and at or prior to
         the time of making the final payment on the Certificates, the Depositor
         as agent of the Trustee shall sell all of the assets of the Trust Fund
         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, to the Class R Certificateholders all cash on
         hand (other than cash retained to meet outstanding claims known to the
         Trustee), and the Trust Fund shall terminate at that time, whereupon
         the Trustee shall have no further duties or obligations with respect to
         sums distributed or credited to the Class R Certificateholders.

         (b) By their acceptance of the Certificates, the Holders thereof hereby
authorize the Depositor to specify the 90-day liquidation period for the Trust
Fund, which authorization shall be binding upon all successor
Certificateholders.

         (c) The Trustee as agent for each REMIC hereby agrees to adopt and sign
such a plan of complete liquidation prepared and delivered to it by Depositor
upon the written request of the Depositor, and the receipt of the Opinion of
Counsel referred to in Section 9.03(b)(i) and to take such other action in
connection therewith as may be reasonably requested by the Depositor.

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                                    ARTICLE X

                            MISCELLANEOUS PROVISIONS

      SECTION 10.01. Amendment.

      This Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, with the consent of the NIMs Insurer and without the
consent of any of the Certificateholders to,

            (i) to cure any ambiguity or correct any mistake,

            (ii) to correct, modify or supplement any provision therein which
      may be inconsistent with any other provision herein,

            (iii) to add any other provisions with respect to matters or
      questions arising under this Agreement, or

            (iv) to modify, alter, amend, add to or rescind any of the terms or
      provisions contained in this Agreement, provided, however, that, in the
      case of clauses (iii) and (iv), such amendment will not, as evidenced by
      an Opinion of Counsel addressed to the Trustee to such effect, adversely
      effect in any material respect the interests of any Holder; provided,
      further, however, that such amendment will be deemed to not adversely
      affect in any material respect the interest of any Holder if the Person
      requesting such amendment obtains a letter from each Rating Agency stating
      that such amendment will not result in a reduction or withdrawal of its
      rating of any Class of the Certificates, it being understood and agreed
      that any such letter in and of itself will not represent a determination
      as to the materiality of any such amendment and will represent a
      determination only as to the credit issues affecting any such rating.

      Notwithstanding the foregoing, without the consent of the
Certificateholders, the Depositor, the Servicer and the Trustee may at any time
and from time to time amend this Agreement to modify, eliminate or add to any of
its provisions to such extent as shall be necessary or appropriate to maintain
the qualification of any of the REMICs provided for herein as REMICs under the
Code or to avoid or minimize the risk of the imposition of any tax on the Trust
Fund or any of the REMICs provided for herein pursuant to the Code that would be
a claim against the Trust Fund at any time prior to the final redemption of the
Certificates, provided that the Trustee and the NIMs Insurer have been provided
an Opinion of Counsel, which opinion shall be an expense of the party requesting
such amendment but in any case shall not be an expense of the Trustee, to the
effect that such action is necessary or appropriate to maintain such
qualification or to avoid or minimize the risk of the imposition of such a tax.

      This Agreement may also be amended from time to time by the Depositor, the
Servicer, the Trustee and the Holders of the Certificates affected thereby
evidencing not less than 66 2/3% of the Voting Rights, with the consent of the
NIMs Insurer, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Holders of Certificates; provided, however, that no
such amendment shall (i) reduce in any manner the amount of, or delay the timing
of, payments required to be distributed on any Certificate without the consent
of the Holder of such Certificate, (ii) adversely affect in any material respect
the interests of the Holders of any Class of Certificates in a manner other than
as described in (i), without the consent of the Holders of Certificates of such
Class evidencing 66 2/3% or more of the Voting Rights of such Class or (iii)
reduce the aforesaid percentages of Certificates the Holders of which are
required to consent to any such amendment without the consent of the Holders of
all such Certificates then outstanding.

                                      -98-
<PAGE>
      Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel, which opinion shall be an expense of the party
requesting such amendment but in any case shall not be an expense of the
Trustee, to the effect that such amendment will not cause the imposition of any
tax on the Trust Fund, any of the REMICs provided for herein or the
Certificateholders or cause any of the REMICs provided for herein to fail to
qualify as a REMIC at any time that any Certificates are outstanding. A copy of
such Opinion of Counsel shall be provided to the NIMs Insurer.

      Promptly after the execution of any amendment to this Agreement requiring
the consent of Certificateholders, the Trustee or upon the written request of
the Trustee to the Servicer, the Servicer shall furnish written notification of
the substance of such amendment to each Certificateholder, the NIMs Insurer and
each Rating Agency.

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

      Nothing in this Agreement shall require the Trustee or the Servicer to
enter into an amendment without receiving an Opinion of Counsel, satisfactory to
the Trustee or the Servicer that (i) such amendment is permitted and is not
prohibited by this Agreement and that all requirements for amending this
Agreement have been complied with; and (ii) either (A) the amendment does not
adversely affect in any material respect the interests of any Certificateholder
or (B) the conclusion set forth in the immediately preceding clause (A) is not
required to be reached pursuant to this Section 10.01.

      The Trustee may, but shall not be obligated to, enter into any supplement,
modification or waiver which affects its rights, duties or obligations
hereunder.

      SECTION 10.02. Counterparts.

      This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.

      SECTION 10.03. Governing Law.

      THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.

      SECTION 10.04. Intention of Parties.

      It is the express intent of the parties hereto that the conveyance of the
Mortgage Notes, Mortgages, assignments of Mortgages, title insurance policies
and any modifications, extensions and/or assumption agreements and private
mortgage insurance policies relating to the Mortgage Loans by the Depositor to
the Trustee be, and be construed as, an absolute sale thereof to the Trustee. It
is, further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Depositor to the Trustee. However, in the event that,
notwithstanding the intent of the parties, such assets are held to be

                                      -99-
<PAGE>
the property of the Depositor, or if for any other reason this Agreement is held
or deemed to create a security interest in such assets, then (i) this Agreement
shall be deemed to be a security agreement within the meaning of the Uniform
Commercial Code of the State of New York and (ii) the conveyance provided for in
this Agreement shall be deemed to be an assignment and a grant by the Depositor
to the Trustee, for the benefit of the Certificateholders, of a security
interest in all of the assets that constitute the Trust Fund, whether now owned
or hereafter acquired.

      The Depositor for the benefit of the Certificateholders 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
assets of the Trust Fund, 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. The Depositor shall
arrange for filing any Uniform Commercial Code continuation statements in
connection with any security interest granted or assigned to the Trustee for the
benefit of the Certificateholders.

      SECTION 10.05. Notices.

      (a) The Trustee shall use its best efforts to promptly provide notice to
each Rating Agency and the NIMs Insurer with respect to each of the following of
which it 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;

            (iii) The resignation or termination of the Trustee or the Servicer
      and the appointment of any successor;

            (iv) The repurchase or substitution of Mortgage Loans pursuant to
      Sections 2.02, 2.03 and 3.12;

            (v) The final payment to Certificateholders; and

            (vi) Any change in the location of the Certificate Account or the
      Certificate Account.

      The Trustee shall promptly furnish or make available to each Rating Agency
copies of the following:

            (i) Each report to Certificateholders described in Section 4.05;

            (ii) Each annual statement as to compliance described in Section
      3.17; and

            (iii) Each annual independent public accountants' servicing report
      described in Section 3.18.

      (b) All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when delivered to (a) in the case of the
Depositor, Merrill Lynch Mortgage Investors, Inc. 250 Vesey Street, 4 World
Financial Center, 10th Floor, New York, New York 10080, Attention: Asset-Backed
Finance; (b) in the case of the Trustee, Wells Fargo Bank Minnesota, National
Association, P.O. Box 98, Columbia, Maryland, 21046, Attention: Client Manger -
MLMI Series 2003-WMC2, with a copy to Wells Fargo Bank Minnesota, National
Association, 9062 Old Annapolis Road, Columbia, Maryland 21045, Attention:
Client Manager - MLMI Series 2003-WMC2; (c) in the case of the Rating Agencies,
(i) Standard & Poor's Ratings Services, A Division of The McGraw-Hill Companies,
Inc., 55 Water Street, New York, New York 10041; (ii) Fitch, Inc. 1 State Street
Plaza, New

                                     -100-
<PAGE>
York, New York 10004; (d) in the case of the Servicer, Litton Loan Servicing LP,
4282 Loop Central Drive, Houston, Texas 77018-2226; and in the case of any of
the foregoing persons, such other addresses as may hereafter be furnished by any
such persons to the other parties to this Agreement. Notices to
Certificateholders shall be deemed given when mailed, first class postage
prepaid, to their respective addresses appearing in the Certificate Register.

      SECTION 10.06. 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 10.07. Assignment.

      Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 6.02, this Agreement may not be assigned by the
Servicer without the prior written consent of the Trustee and Depositor.

      SECTION 10.08. Limitation on Rights of Certificateholders.

      The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representative or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a petition or winding up of the Trust
Fund, or 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
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth or contained in the terms of the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.

      No Certificateholder shall have any right by virtue 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 an Event
of Default and of the continuance thereof, as hereinbefore provided, the Holders
of Certificates evidencing not less than 25% of the Voting Rights evidenced by
the Certificates shall also have made written request to 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 and 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 and/or the NIMs
Insurer, or to obtain or seek to obtain priority over or preference to any other
such Holder and/or the NIMs Insurer or to enforce any right under this
Agreement, except in the manner herein provided and for the common benefit of
all Certificateholders. For the protection and enforcement of the provisions of
this Section 10.08, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.

                                     -101-
<PAGE>
      SECTION 10.09. Inspection and Audit Rights.

      The Servicer agrees that, on reasonable prior notice, it will permit any
representative of the NIMs Insurer, the Depositor or the Trustee during the
Servicer's normal business hours, to examine all the books of account, records,
reports and other papers of the Servicer relating to the Mortgage Loans, to make
copies and extracts therefrom, to cause such books to be audited by independent
certified public accountants selected by the NIMs Insurer, Depositor or the
Trustee and to discuss its affairs, finances and accounts relating to the
Mortgage Loans with its officers, employees, agents, counsel and independent
public accountants (and by this provision the Servicer hereby authorizes such
accountants to discuss with such representative such affairs, finances and
accounts), all at such reasonable times and as often as may be reasonably
requested. Any out-of-pocket expense incident to the exercise by the NIMs
Insurer, Depositor or the Trustee of any right under this Section 10.09 shall be
borne by the party requesting such inspection; all other such expenses shall be
borne by the Servicer.

      SECTION 10.10. Certificates Nonassessable and Fully Paid.

      It is the intention of the Depositor that Certificateholders shall not be
personally liable for obligations of the Trust Fund, that the interests in the
Trust Fund represented by the Certificates shall be nonassessable for any reason
whatsoever, and that the Certificates, upon due authentication thereof by the
Trustee pursuant to this Agreement, are and shall be deemed fully paid.

      SECTION 10.11. Third Party Rights.

      The NIMs Insurer shall be deemed a third-party beneficiary of this
Agreement to the same extent as if it were a party hereto, and shall have the
right to enforce the provisions of this Agreement.

      SECTION 10.12. Additional Rights of the NIMs Insurer.

      (a) Each party to this Agreement, any agent thereof and any successor
thereto shall furnish to the NIMs Insurer a copy of any notice, direction,
demand, opinion, schedule, list, certificate, report, statement, filing,
information, data or other communication provided by it or on its behalf to any
other Person pursuant to this Agreement at the same time, in the same form and
in the same manner as such communication is so provided and shall address or
cause such communication to be addressed to the NIMs Insurer in addition to any
other addressee thereof. The Servicer shall cause the NIMs Insurer to be an
addressee of any report furnished pursuant to this Agreement.

      (b) Wherever in this Agreement there shall be a requirement that there be
no downgrade, reduction, withdrawal or qualification of or other effect on the
rating of any Class of Certificates by any Rating Agency as of any date, there
also shall be deemed to be a requirement that there be no such effect on any
class of notes issued pursuant to the Indenture and guaranteed by the NIMs
Insurer as of such date. In addition, unless there exists a continuance of any
failure by the NIMs Insurer to make a required payment under the policy insuring
the NIM Notes (such event, a "NIMs Insurer Default"), wherever in this Agreement
there shall be a requirement that any Person or any communication, object or
other matter be acceptable or satisfactory to or otherwise receive the consent
or other approval of any other Person (whether as a condition to the eligibility
of such Person to act in any capacity, as a condition to any circumstance or
state of affairs related to such matter, or otherwise), there also shall be
deemed to be a requirement that such Person or matter be approved in writing by
the NIMs Insurer, which approval shall not be unreasonably withheld or delayed.

                                     -102-
<PAGE>
      SECTION 10.13. [Reserved]

      SECTION 10.14. Assignment; Sales; Advance Facilities.

      (a) The Servicer is hereby authorized to enter into a financing or other
facility (any such arrangement, an "Advance Facility"), the documentation for
which complies with Section 10.14(e) below, under which (1) the Servicer assigns
or pledges its rights under this Agreement to be reimbursed for any or all
Advances and/or Servicing Advances to (i) a Person, which may be a
special-purpose bankruptcy-remote entity (an "SPV"), (ii) a Person, which may
simultaneously assign or pledge such rights to an SPV or (iii) a lender (a
"Lender"), which, in the case of any Person or SPV of the type described in
either of the preceding clauses (i) or (ii), may directly or through other
assignees and/or pledgees, assign or pledge such rights to a Person, which may
include a trustee acting on behalf of holders of debt instruments (any such
Person or any such Lender, an "Advance Financing Person"), and/or (2) an Advance
Financing Person agrees to fund all the 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 shall be required before the
Servicer may enter into an Advance Facility nor shall the Trustee or the
Certificateholders be a third party beneficiary of any obligation of an Advance
Financing Person to the Servicer. Notwithstanding the existence of any Advance
Facility under which an Advance Financing Person agrees to fund Advances and/or
Servicing Advances, (A) the Servicer (i) shall remain obligated pursuant to this
Agreement to make Advances and/or Servicing Advances pursuant to and as required
by this Agreement and (ii) shall not be relieved of such obligations by virtue
of such Advance Facility and (B) neither the Advance Financing Person nor any
Servicer's Assignee (as hereinafter defined) shall have any right to proceed
against or otherwise contact any Mortgagor for the purpose of collecting any
payment that may be due with respect to any related Mortgage Loan or enforcing
any covenant of such Mortgagor under the related Mortgage Loan documents.

      (b) If the Servicer enters into an Advance Facility, the Servicer and the
related Advance Financing Person shall deliver to the Trustee at the address set
forth in Section 10.05 hereof a written notice (an "Advance Facility Notice"),
stating (a) the identity of the Advance Financing Person and (b) the identity of
the Person (the "Servicer's Assignee") that will, subject to Section 10.14(c)
hereof, have the right to receive amounts available from the Collection Account
pursuant to Section 3.08(a) hereof to reimburse previously unreimbursed Advances
and/or Servicing Advances ("Advance Reimbursement Amounts"). Advance
Reimbursement Amounts (i) shall consist solely of amounts in respect of Advances
and/or Servicing Advances for which the Servicer would be permitted to reimburse
itself in accordance with Section 3.08 hereof, assuming the Servicer had made
the related Advance(s) and/or Servicing Advance(s) and (ii) shall not consist of
amounts payable to a successor Servicer in accordance with Section 3.08 hereof
to the extent permitted under Section 10.14(e) below.

      (c) Notwithstanding the existence of an Advance Facility, the Servicer, on
behalf of the Advance Facility Person, shall be entitled to receive
reimbursements of Advances and/or Servicing Advances in accordance with Section
4.01 hereof, which entitlement may be terminated by the Advance Financing Person
pursuant to a written notice to the Trustee in the manner set forth in Section
10.05 hereof. Upon receipt of such written notice, the Servicer shall no longer
be entitled to receive reimbursement for any Advance Reimbursement Amounts and
the Servicer's Assignee shall immediately have the right to receive from the
Collection Account all Advance Reimbursement Amounts. Notwithstanding the
foregoing, an Advance Financing Person shall only be entitled to reimbursement
of Advance Reimbursement Amounts hereunder pursuant to Section 4.01 of this
Agreement and shall not otherwise be entitled to receive amounts designated for
distribution to Certificateholders. None of the Trustee or the
Certificateholders shall have any right to, or otherwise be entitled to, receive
any amounts which constitute Advance Reimbursement Amounts designated for
distribution to the Servicer pursuant to Section 4.01 hereof. An Advance
Facility may be terminated by the joint written direction of the Servicer

                                     -103-
<PAGE>
and the related Advance Financing Person. Written notice of such termination
shall be delivered to the Trustee in the manner set forth in Section 10.05
hereof. None of the Depositor or the Trustee shall, as a result of the existence
of any Advance Facility, have any additional duty or liability with respect to
the calculation or payment of any Advance Reimbursement Amount, nor, as a result
of the existence of any Advance Facility, shall the Depositor or the Trustee
have any additional responsibility to track or monitor the administration of the
Advance Facility or the payment of Advance Reimbursement Amounts to the
Servicer's Assignee. The Servicer shall indemnify the Depositor, the Trustee,
any successor Servicer and the Trust Fund resulting from any claim by the
related Advancing Financing 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 Depositor, the Trustee or any 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. The Servicer
shall maintain and provide to any successor Servicer and, upon request, the
Trustee a detailed accounting on a loan-by-loan basis as to amounts advanced by,
pledged or assigned to, and reimbursed to any Advancing Financing 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) [Reserved].

      (e) As between a predecessor Servicer and its Advance Financing Person, on
the one hand, and a successor Servicer and its Advance Financing Person, if any,
on the other hand, Advance Reimbursement Amounts on a loan-by-loan basis with
respect to each Mortgage Loan as to which an Advance and/or Servicing Advance
shall have been made and be outstanding shall be allocated on a "first-in, first
out" basis. In the event the Servicer's Assignee shall have received some or all
of an Advance Reimbursement Amount related to Advances and/or Servicing Advances
that were made by a Person other than such predecessor Servicer or its related
Advance Financing Person in error, then such Servicer's Assignee shall be
required to remit any portion of such Advance Reimbursement Amount to each
Person entitled to such portion of such Advance Reimbursement Amount. Without
limiting the generality of the foregoing, the Servicer shall remain entitled to
be reimbursed by the Advance Financing Person for all Advances and/or Servicing
Advances funded by the Servicer to the extent the related Advance Reimbursement
Amounts have not been assigned or pledged to such Advance Financing Person or
Servicer's Assignee.

      (f) For purposes of any Officer's Certificate of the Servicer made
pursuant to Section 4.01, any Non-Recoverable Advance referred to therein may
have been made by such Servicer or any predecessor Servicer. In making its
determination that any Advance or Servicing Advance theretofore made has become
a Non-Recoverable Advance, the Servicer shall apply the same criteria in making
such determination regardless of whether such Advance or Servicing Advance shall
have been made by the Servicer or any predecessor Servicer.

      (g) Any amendment to this Section 10.14 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 10.14, including amendments to
add provisions relating to a successor Servicer, may be entered into by the
Trustee, the Depositor and the Servicer without the consent of any
Certificateholder, provided such amendment complies with Section 10.01 hereof.
All reasonable costs and expenses (including attorneys' fees) of each party
hereto of any such amendment shall be borne solely by the Servicer. The parties
hereto hereby acknowledge and agree that: (a) the Advances and/or Servicing
Advances financed by and/or pledged to an Advance Financing Person under any
Advance Facility are obligations owed to the Servicer payable only from the cash
flows and proceeds received under this Agreement for

                                     -104-
<PAGE>
reimbursement of Advances and/or Servicing Advances only to the extent provided
herein, and the Trustee and the Trust are not, as a result of the existence of
any Advance Facility, obligated or liable to repay any Advances and/or Servicing
Advances financed by the Advance Financing Person; (b) the Servicer will be
responsible for remitting to the Advance Financing Person the applicable amounts
collected by it as reimbursement for Advances and/or Servicing Advances funded
by the Advance Financing Person, subject to the provisions of this Agreement;
and (c) the Trustee shall not have any responsibility to track or monitor the
administration of the financing arrangement between the Servicer and any Advance
Financing Person.

                                     -105-
<PAGE>
      IN WITNESS WHEREOF, the Depositor, the Servicer and the Trustee have
caused their names to be signed hereto by their respective officers thereunto
duly authorized as of the day and year first above written.

                                     MERRILL LYNCH MORTGAGE INVESTORS, INC.,
                                        as Depositor

                                     By:
                                        ---------------------------------------
                                     Name: Matthew Whalen
                                     Title: President

                                     LITTON LOAN SERVICING LP,
                                        as Servicer

                                     By:
                                        ---------------------------------------
                                     Name: Janice McClure
                                     Title:  Senior Vice President

                                     WELLS FARGO BANK MINNESOTA, NATIONAL
                                     ASSOCIATION,
                                        not in its individual capacity,
                                        but solely as Trustee

                                     By:
                                        ---------------------------------------
                                     Name: Amy Doyle
                                     Title: Vice President
<PAGE>
                                    EXHIBIT A

                          FORMS OF OFFERED CERTIFICATES

                             [INTENTIONALLY OMITTED]

                                       A-1
<PAGE>
                                   EXHIBIT B-1

                             MORTGAGE LOAN SCHEDULE

                             [INTENTIONALLY OMITTED]

                                      B-1-1
<PAGE>
                                   EXHIBIT B-2

                         GROUP A MORTGAGE LOAN SCHEDULE

                             [INTENTIONALLY OMITTED]

                                      B-2-1
<PAGE>
                                   EXHIBIT B-3

                         GROUP B MORTGAGE LOAN SCHEDULE

                             [INTENTIONALLY OMITTED]

                                      B-4-1
<PAGE>
                                    EXHIBIT C

            SCHEDULE OF MORTGAGE LOANS WITH NO PREPAYMENT ENFORCEMENT

                             [INTENTIONALLY OMITTED]

                                       C-1
<PAGE>
                                    EXHIBIT D

                          FORM OF TRUSTEE CERTIFICATION

                                     [DATE]

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

Litton Loan Servicing LP
4828 Loop Central Drive
Houston, Texas 77018-2226

Re:   Pooling and Servicing Agreement dated as of March 1, 2003 among Merrill
      Lynch Mortgage Investors, Inc., as depositor, Litton Loan Servicing LP, as
      servicer and Wells Fargo Bank Minnesota, National Association, as trustee,
      Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
      Certificates, Series 2003-WMC2

Ladies and Gentlemen:

      In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that [,
except as set forth in Schedule A hereto,] as to each Mortgage Loan listed in
the Mortgage Loan Schedule attached hereto (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has reviewed the Mortgage File and
the Mortgage Loan Schedule and has determined that:

      (i) All documents in the Mortgage File required to be delivered to the
Trustee pursuant to Section 2.01 of the Pooling and Servicing Agreement are in
its possession;

      (ii) In connection with each Mortgage Loan or Assignment thereof as to
which documentary evidence of recording was not received on the Closing Date, it
has received evidence of such recording; and

      (iii) Such documents have been reviewed by it and such documents do not
contain any material omissions or defects within the meaning of Section 2.01 or
2.02.

      The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond confirming (i) that the Mortgage Loan number and
the name of the Mortgagor in each Mortgage File conform to the respective
Mortgage Loan number and name listed on the Mortgage Loan Schedule and (ii) the
existence in each Mortgage File of each of the documents listed in subparagraphs
(i)(A) through (G), inclusive, of Section 2.01 in the Agreement. The Trustee
makes no representations or warranties as to the validity, legality,
recordability, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage Loan or the collectibility, insurability,
effectiveness or suitability of any such Mortgage Loan.

                                       D-1
<PAGE>
      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 Trustee

                                     By: __________________________________
                                     Name: ________________________________
                                     Title: _________________________________

                                       D-2
<PAGE>
                                   EXHIBIT E-1

                           FORM OF TRANSFEREE'S LETTER
        MERRILL LYNCH MORTGAGE INVESTORS, INC. MORTGAGE LOAN ASSET-BACKED
                         CERTIFICATES, SERIES 2003-WMC2

                                     [DATE]

Wells Fargo Bank Minnesota, National Association
9062 Old Annapolis Road
Columbia, Maryland   21045
Attention:  Corporate Trust Services - MLMI 2003-WMC2

Ladies and Gentlemen:

      We propose to purchase Merrill Lynch Mortgage Investors Trust, Mortgage
Loan Asset-Backed Certificates, Series 2003-WMC1, Class R, described in the
Prospectus Supplement, dated April 1, 2003, and Prospectus, dated March 21,
2003.

      1. We certify that (a) we are not a disqualified organization and (b) we
are not purchasing such Class R Certificate on behalf of a disqualified
organization; for this purpose the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code. We
understand that any breach by us of this certification may cause us to be liable
for an excise tax imposed upon transfers to disqualified organizations.

      2. We certify that (a) we have historically paid our debts as they became
due, (b) we intend, and believe that we will be able, to continue to pay our
debts as they become due in the future, (c) we understand that, as beneficial
owner of the Class R Certificate, we may incur tax liabilities in excess of any
cash flows generated by the Class R Certificate, and (d) we intend to pay any
taxes associated with holding the Class R Certificate as they become due and (e)
we will not cause income from the Class R Certificate to be attributable to a
foreign permanent establishment or fixed base (within the meaning of an
applicable income tax treaty) of ours or another U.S. taxpayer.

      3. We acknowledge that we will be the beneficial owner of the Class R
Certificate and:(1)

--------
1     Check appropriate box and if necessary fill in the name of the
      Transferee's nominee.
<PAGE>
      ______ The Class R Certificate will be registered in our name.

      ______ The Class R Certificate will be held in the name of our nominee,
            _________________, which is not a disqualified organization.

      4. We certify that we are not an employee benefit plan subject to Title I
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
a plan within the meaning of Section 4975 of the Code or a plan subject to
federal, state or local law materially similar to the foregoing provisions of
ERISA and the Code (each, a "Plan"), and are not directly or indirectly
purchasing the Class R Certificate on behalf of, as investment manager of, as
named fiduciary of, as trustee of or with the assets of a Plan or directly or
indirectly purchasing the Class R Certificate with the assets of any insurance
company separate account or general account containing any "plan assets" or of
any Plan.

      5. We certify that (i) we are a U.S. person or (ii) we will hold the Class
R Certificate in connection with the conduct of a trade or business within the
United States and have furnished the transferor, the Trustee and the Trustee
with a duly completed and effective Internal Revenue Service Form W-8ECI or
successor form at the time and in the manner required by the Code; for this
purpose the term "U.S. person" means a citizen or resident of the United States,
a corporation, or partnership (unless, in the case of a partnership, Treasury
regulations are adopted that provide otherwise) created or organized in or under
the laws of the United States, any State thereof or the District of Columbia,
including an entity treated as a corporation or partnership for federal income
tax purposes, an estate whose income is subject to United States federal income
tax regardless of the source of its income, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more such U.S. persons have the authority to control all
substantial decisions of the trust (or, to the extent provided in applicable
Treasury regulations, certain trusts in existence on August 20, 1996 which are
eligible to elect to be treated as U.S. Persons. We agree that any breach by us
of this certification shall render the transfer of any interest in the Class R
Certificate to us absolutely null and void and shall cause no rights in the
Class R Certificate to vest in us.

      6. We agree that in the event that at some future time we wish to transfer
any interest in the Class R Certificate, we will transfer such interest in the
Class R Certificate only (a) to a transferee that (i) is not a disqualified
organization and is not purchasing such interest in the Class R Certificate on
behalf of a disqualified organization, (ii) is a U.S. person or will hold the
Class R Certificate in connection with the conduct of a trade or business within
the United States and will furnish us, the Trustee and the Trustee with a duly
completed and effective Internal Revenue Service Form W-8ECI or successor form
at the time and in the manner required by the Code and (iii) has delivered to
the Trustee and the Trustee a letter in the form of this letter (including the
affidavit appended hereto) and, we will provide the Trustee and the Trustee a
written statement substantially in the form of Exhibit E-2 to the Agreement.

      7. We hereby designate _______________________ as our fiduciary to act as
the tax matters person for each of the REMICs provided for in the Agreement.

                                     E-1-2
<PAGE>
                                     Very truly yours,

                                     [PURCHASER]

                                     By:___________________________________
                                        Name:
                                        Title:

Accepted as of __________ __, 200__

MERRILL LYNCH MORTGAGE INVESTORS, INC.

By:_____________________________
   Name:
   Title:

                                     E-1-3
<PAGE>
                                   APPENDIX A

                                     Affidavit pursuant to (i) Section
                                     860E(e)(4) of the Internal Revenue Code of
                                     1986, as amended, and (ii) certain
                                     provisions of the Pooling and Servicing
                                     Agreement

Under penalties of perjury, the undersigned declares that the following is true:

(1)   He or she is an officer of _________________________ (the "Transferee"),

(2)   the Transferee's Employer Identification number is __________,

(3)   the Transferee is not a "disqualified organization" (as defined below),
      has no plan or intention of becoming a disqualified organization, and is
      not acquiring any of its interest in the Merrill Lynch Mortgage Investors
      Trust, Mortgage Loan Asset-Backed Certificates, Series 2003-WMC1, Class R
      on behalf of a disqualified organization or any other entity,

(4)   unless Merrill Lynch Mortgage Investors, ("MLMI") has consented to the
      transfer to the Transferee by executing the form of Consent affixed as
      Appendix B to the Transferee's Letter to which this Certificate is affixed
      as Appendix A, the Transferee is a "U.S. person" (as defined below),

(5)   that no purpose of the transfer is to avoid or impede the assessment or
      collection of tax,

(6)   the Transferee has historically paid its debts as they became due,

(7)   the Transferee intends, and believes that it will be able, to continue to
      pay its debts as they become due in the future,

(8)   the Transferee understands that, as beneficial owner of the Class R
      Certificate, it may incur tax liabilities in excess of any cash flows
      generated by the Class R Certificate,

(9)   the Transferee intends to pay any taxes associated with holding the Class
      R Certificate as they become due,

(10)  the Transferee consents to any amendment of the Pooling and Servicing
      Agreement that shall be deemed necessary by MLMI (upon advice of counsel)
      to constitute a reasonable arrangement to ensure that the Class R
      Certificate will not be owned directly or indirectly by a disqualified
      organization, and

(11)  IF BRACKETED, THE FOLLOWING CERTIFICATIONS ARE INAPPLICABLE [the transfer
      is not a direct or indirect transfer of the Class R Certificate to a
      foreign permanent establishment or fixed base (within the meaning of an
      applicable income tax treaty) of the Transferee, and as to each of the
      residual interests represented by the Class R Certificate, the present
      value of the anticipated tax liabilities associated with holding such
      residual interest does not exceed the sum of:

                                     E-1-4
<PAGE>
      (A)   the present value of any consideration given to the Transferee to
            acquire such residual interest;

      (B)   the present value of the expected future distributions on such
            residual interest; and

      (C)   the present value of the anticipated tax savings associated with
            holding such residual interest as the related REMIC generates
            losses.

      For purposes of this declaration, (i) the Transferee is assumed to pay tax
      at a rate equal to the highest rate of tax specified in Section 11(b)(1)
      of the Code, but the tax rate specified in Section 55(b)(1)(B) of the Code
      may be used in lieu of the highest rate specified in Section 11(b)(1) of
      the Code if the Transferee has been subject to the alternative minimum tax
      under Section 55 of the Code in the preceding two years and will compute
      its taxable income in the current taxable year using the alternative
      minimum tax rate, and (ii) present values are computed using a discount
      rate equal to the Federal short-term rate prescribed by Section 1274(d) of
      the Code for the month of the transfer and the compounding period used by
      the Transferee;]

[(11) (A)   at the time of the transfer, and at the close of each of the
            Transferee's two fiscal years preceding the Transferee's fiscal year
            of transfer, the Transferee's gross assets for financial reporting
            purposes exceed $100 million and its net assets for financial
            reporting purposes exceed $10 million; and

      (B)   the Transferee is an eligible corporation as defined in Treasury
            regulations Section 1.860E-1(c)(6)(i) and has agreed in writing that
            any subsequent transfer of the Class R Certificate will be to
            another eligible corporation in a transaction that satisfies
            Treasury regulation Sections 1.860E-1(c)(4)(i), 1.860E-1(c)(4)(ii),
            1.860E-1(c)(4)(iii) and 1.860E-1(c)(5) and such transfer will not be
            a direct or indirect transfer to a foreign permanent establishment
            (within the meaning of an applicable income tax treaty) of a
            domestic corporation.

For purposes of this declaration, the gross and net assets of the Transferee do
not include any obligation of any related person as defined in Treasury
regulation Section 1.860E-1(c)(6)(ii) or any other asset if a principal purpose
for holding or acquiring the other asset is to permit the Transferee to make
this declaration or to satisfy the requirements of Treasury regulation Section
1.860E-1(c)(5)(i).]

(12) The Transferee will not cause income from the Class R Certificate to be
attributable to a foreign permanent establishment or fixed base (within the
meaning of an applicable income tax treaty) of the Transferee or another U.S.
taxpayer.

For purpose of this affidavit, the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code and the term
"U.S. Person" means a citizen or resident of the United States, a corporation or
partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to Unites States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary

                                     E-1-5
<PAGE>
supervision over the administration of such trust, and one or more such U.S.
Persons have the authority to control all substantial decisions of such trust,
(or, to the extent provided in applicable Treasury regulations, certain trusts
in existence on August 20, 1996 which are eligible to elect to be treated as
U.S. Persons).

__________________________________

By: ______________________________

__________________________________

   Address of Investor for receipt of distribution:

   Address of Investor for receipt of tax information:

   (Corporate Seal)

   Attest:

__________________________________

__________________________________, Secretary

                                     E-1-6
<PAGE>
      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 Investor, and acknowledged to me that he
      executed the same as his free act and deed and the free act and deed of
      the Investor.

      Subscribed and sworn before me this ____ day of_________________, 200_ .

__________________________________
      Notary Public

      County of ___________________
      State of _____________________
      My commission expires the ________ day of ______________

                                     By:      __________________________
                                              Name:   __________________
                                              Title:  __________________

Dated: _____________

                                     E-1-7

<PAGE>

                                  EXHIBIT E - 2

                         FORM OF TRANSFEROR'S AFFIDAVIT
        MERRILL LYNCH MORTGAGE INVESTORS, INC. MORTGAGE LOAN ASSET-BACKED
                         CERTIFICATES, SERIES 2003-WMC2

                                     [DATE]

Wells Fargo Bank Minnesota, National Association
9062 Old Annapolis Road
Columbia, Maryland   21045
Attention:  Corporate Trust Services - MLMI 2003-WMC2

Re: Merrill Lynch Mortgage Investors Trust Mortgage Loan Asset-Backed
Certificates, Series 2003-WMC2

            _______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no actual
knowledge that such affidavit is not true, and has no reason to believe that the
Transferee has the intention to impede the assessment or collection of any
federal, state or local taxes legally required to be paid with respect to the
Class R Certificate referred to in the attached affidavit. In addition, the
Transferor has conducted a reasonable investigation at the time of the transfer
and found that the Transferee had historically paid its debts as they came due
and found no significant evidence to indicate that the Transferee will not
continue to pay its debts as they become due.

                                            Very truly yours,

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

                                            Name:
                                            Title:

                                     E-2-1
<PAGE>
                                    EXHIBIT F

                       FORM OF TRANSFEROR CERTIFICATE FOR
                        CLASS N AND CLASS X CERTIFICATES

Wells Fargo Bank Minnesota, National Association
9062 Old Annapolis Road
Columbia, Maryland   21045
Attention:  Corporate Trust Services - MLMI 2003-WMC2

RE:   Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
      Certificates, Series 2003-WMC2

Ladies and Gentlemen:

      In connection with our disposition of the Class [N or X] Certificate, 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 and (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 that would result in, a violation of Section 5 of the Act. All
capitalized terms used herein but not defined herein shall have the meanings
assigned to them in the Pooling and Servicing Agreement dated as of February 1,
2003, among Merrill Lynch Mortgage, Inc., as depositor, Litton Loan Servicing
LP, as servicer and Wells Fargo Bank Minnesota, National Association, as
trustee.

                                          Very truly yours,

                                          ------------------------------
                                          Name of Transferor

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

                                       F-1
<PAGE>
                                    EXHIBIT G

                            FORM OF INVESTMENT LETTER
                              (ACCREDITED INVESTOR)

                                     [DATE]

Wells Fargo Bank Minnesota, National Association
9062 Old Annapolis Road
Columbia, Maryland   21045
Attention:  Corporate Trust Services - MLMI 2003-WMC1

Re:   Pooling and Servicing Agreement dated as of February 1, 2003 among Merrill
      Lynch Mortgage Investors, Inc., as depositor, Litton Loan Servicing LP, as
      servicer and Wells Fargo Bank Minnesota, National Association, as trustee,
      Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
      Certificates, Series 2003-WMC1 [Class N or X]

Ladies and Gentlemen:

      ______________ (the "Purchaser") intends to purchase from ________________
(the "Transferor") $_______ by original principal balance (the "Transferred
Certificates") of Mortgage Loan Asset-Backed Certificates, Series 2003-WMC1,
[Class N or X] (the "Certificates"), issued pursuant to a Pooling and Servicing
Agreement, dated as of February 1, 2003 (the "Pooling and Servicing Agreement"),
among Merrill Lynch Mortgage Investors, Inc., as depositor (the "Depositor"),
Litton Loan Servicing LP, as servicer (the "Servicer") and Wells Fargo Bank
Minnesota, National Association, as trustee (the "Trustee"). [THE PURCHASER
INTENDS TO REGISTER THE TRANSFERRED CERTIFICATE IN THE NAME OF
____________________, AS NOMINEE FOR _________________.] All terms used and not
otherwise defined herein shall have the meanings set forth in the Pooling and
Servicing Agreement.

      For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:

      1. The Purchaser understands that (a) the Certificates have not been
registered or qualified under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, (b) neither the
Depositor nor the Trustee is required, and neither of them intends, to so
register or qualify the Certificates, (c) the Certificates cannot be resold
unless (i) they are registered and qualified under the Securities Act and the
applicable state securities laws or (ii) an exemption from registration and
qualification is available and (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates.

      2. The Certificates will bear a legend to the following effect:

      THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
      AS AMENDED (THE "ACT"), THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED
      (THE "1940 ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS, AND MAY NOT,
      DIRECTLY OR INDIRECTLY, BE SOLD OR OTHERWISE

                                      G-1
<PAGE>
      TRANSFERRED, OR OFFERED FOR SALE, UNLESS SUCH TRANSFER IS NOT SUBJECT TO
      REGISTRATION UNDER THE ACT, THE 1940 ACT AND ANY APPLICABLE STATE
      SECURITIES LAWS AND SUCH TRANSFER ALSO COMPLIES WITH THE OTHER PROVISIONS
      OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT. NO TRANSFER OF
      THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE RECEIVED, IN
      FORM AND SUBSTANCE SATISFACTORY TO THE SERVICER (A) AN INVESTMENT LETTER
      FROM THE PROSPECTIVE INVESTOR; AND (B) REPRESENTATIONS FROM THE TRANSFEROR
      REGARDING THE OFFERING AND SALE OF THE CERTIFICATES.

      NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL
      HAVE RECEIVED EITHER (I) A REPRESENTATION LETTER FROM THE TRANSFEREE OF
      THIS CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE EITHER (A) IS NOT AN
      EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
      SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE CODE OR
      ANY APPLICABLE FEDERAL, STATE OR LOCAL LAW ("SIMILAR LAW") (EACH, A
      "PLAN") MATERIALLY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA AND THE
      CODE, AND IS NOT DIRECTLY OR INDIRECTLY PURCHASING ANY CERTIFICATE ON
      BEHALF OF, AS INVESTMENT MANAGER OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF
      OR WITH ASSETS OF A PLAN OR, IN THE CASE OF AN INSURANCE COMPANY, THE
      ASSETS OF ANY SEPARATE ACCOUNTS CONTAINING ANY "PLAN ASSETS" PURSUANT TO
      THE DEPARTMENT OF LABOR REGULATIONS SET FORTH IN 29 CFR Section 2510.3-101
      TO EFFECT SUCH ACQUISITION OR (B) IF THE TRANSFEREE IS AN INSURANCE
      COMPANY, A REPRESENTATION LETTER THAT THE TRANSFEREE IS AN INSURANCE
      COMPANY THAT IS PURCHASING THE CERTIFICATE 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"), 60
      FED. REG. 35925 (JULY 12, 1995), AND THE PURCHASE AND HOLDING OF THE
      CERTIFICATE IS COVERED UNDER SECTIONS I AND III OF PTCE 95-60, OR (II) AN
      OPINION OF COUNSEL TO THE EFFECT THAT THE PURCHASE AND HOLDING OF THE
      CERTIFICATE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER ERISA, THE
      CODE OR SIMILAR LAW AND WILL NOT SUBJECT THE NIMS INSURER OR THE TRUSTEE
      TO ANY OBLIGATION IN ADDITION TO THOSE EXPRESSLY UNDERTAKEN IN THE POOLING
      AND SERVICING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE
      OF THE NIMS INSURER OR THE TRUSTEE.

      3. The Purchaser is acquiring the Transferred Certificates for its own
account [FOR INVESTMENT ONLY]**/ and not with a view to or for sale or other
transfer in connection with any distribution of the Transferred Certificates in
any manner that would violate the Securities Act or any applicable state
securities laws, subject, nevertheless, to the understanding that disposition of
the Purchaser's property shall at all times be and remain within its control.

      4. The Purchaser (a) is a substantial, sophisticated institutional
investor having such knowledge and experience in financial and business matters,
and in particular in such matters related to securities similar to the
Certificates, such that it is capable of evaluating the merits and risks of
investment in the Certificates, (b) is able to bear the economic risks of such
an investment and (c) is an "accredited investor" within the meaning of Rule
501(a) promulgated pursuant to the Securities Act.

                                      G-2
<PAGE>
      5. The Purchaser will not nor has it authorized nor will it authorize any
person to (a) offer, pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other similar security to
any person in any manner, (b) solicit any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
otherwise approach or negotiate with respect to any Certificate, any interest in
any Certificate or any other similar security with any person in any manner, (d)
make any general solicitation by means of general advertising or in any other
manner, or (e) take any other action, that would constitute a distribution of
any Certificate under the Securities Act or the Investment Company Act of 1940,
as amended (the "1940 Act"), that would render the disposition of any
Certificate a violation of Section 5 of the Securities Act or any state
securities law, or that would require registration or qualification pursuant
thereto. Neither the Purchaser nor anyone acting on its behalf has offered the
Certificates for sale or made any general solicitation by means of general
advertising or in any other manner with respect to the Certificates. The
Purchaser will not sell or otherwise transfer any of the Certificates, except in
compliance with the provisions of the Pooling and Servicing Agreement.

--------------------
**/   Not required of a broker/dealer purchaser.

                                      G-3
<PAGE>
      6. The Purchaser either (A) is not an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or a plan within the meaning of Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code") or a plan subject to federal state or
local law materially similar to the foregoing provisions of ERISA and the Code
("Similar Law") (each, a "Plan"), and is not directly or indirectly purchasing
any Certificate on behalf of, as investment manager of, as named fiduciary of,
as trustee of or with assets of a Plan or directly or indirectly purchasing any
certificates with the assets of any insurance company separate account
containing any "plan assets" or of any Plan, (B) is an insurance company that is
purchasing the Certificate 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"), 60 Fed. Reg. 35925 (July 12, 1995), and
the purchase and holding of the Certificate is covered under Sections I and III
of PTCE 95-60, or (C) herewith delivers to the Trustee an Opinion of Counsel
satisfactory to the Trustee, and upon which the Trustee shall be entitled to
rely, to the effect that the purchase and holding of the Certificate by the
Purchaser will not result in a prohibited transaction under ERISA, the Code or
Similar Law and will not subject the NIMs Insurer or the Trustee to any
obligation in addition to those expressly undertaken in the Pooling and
Servicing Agreement, which Opinion of Counsel shall not be an expense of the
NIMs Insurer or the Trustee.

      7. Prior to the sale or transfer by the Purchaser of any of the
Certificates, the Purchaser will obtain from any subsequent purchaser
substantially the same certifications, representations, warranties and covenants
contained in the foregoing paragraphs and in this letter or a letter
substantially in the form of Exhibit [H] to the Pooling and Servicing Agreement.

      8. The Purchaser agrees to indemnify the Trustee, the Servicer and the
Depositor against any liability that may result from any misrepresentation made
herein.

                                         Very truly yours,

                                         [PURCHASER]

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

                                      G-4
<PAGE>
                                    EXHIBIT H

                       FORM OF RULE 144A INVESTMENT LETTER
                         (QUALIFIED INSTITUTIONAL BUYER)

                                     [DATE]

Wells Fargo Bank Minnesota, National Association
9062 Old Annapolis Road
Columbia, Maryland   21045
Attention:  Corporate Trust Services - MLMI 2003-WMC1

Re:   Pooling and Servicing Agreement dated as of February 1, 2003 among Merrill
      Lynch Mortgage Investors, Inc., as depositor, Litton Loan Servicing LP, as
      servicer and Wells Fargo Bank Minnesota, National Association, as trustee,
      Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
      Certificates, Series 2003-WMC1 [Class N or X]

Ladies and Gentlemen:

      ______________ (the "Purchaser") intends to purchase from ________________
(the "Transferor") $_______ by original principal balance (the "Transferred
Certificates") of Mortgage Loan Asset-Backed Certificates, Series 2003-WMC1,
[Class N or X] (the "Certificates"), issued pursuant to a Pooling and Servicing
Agreement, dated as of February 1, 2003 (the "Pooling and Servicing Agreement"),
among Merrill Lynch Mortgage Investors, Inc., as depositor (the "Depositor"),
Litton Loan Servicing LP, as servicer (the "Servicer"), and Wells Fargo Bank
Minnesota, National Association, as trustee (the "Trustee"). [THE PURCHASER
INTENDS TO REGISTER THE TRANSFERRED CERTIFICATE IN THE NAME OF
____________________, AS NOMINEE FOR __________________.] All terms used and not
otherwise defined herein shall have the meanings set forth in the Pooling and
Servicing Agreement.

      For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:

      In connection with our acquisition of the above Transferred 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
such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Transferred Certificates and all
matters relating thereto or any additional information deemed necessary to our
decision to purchase the Transferred Certificates, (d) we either (i) are not an
employee benefit plan subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or a plan within the meaning of
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code") or a
plan subject to federal, state or local law materially similar to the foregoing
provisions of ERISA and the Code ("Similar Law") (each, a "Plan"), nor are we
directly or indirectly purchasing any Certificate on behalf of, as investment
manager of, as named fiduciary of, as

                                      H-1
<PAGE>
trustee of or with assets of a Plan or directly or indirectly purchasing any
certificates with the assets of any insurance company separate account
containing any "plan assets" or of any Plan, (ii) are an insurance company that
is purchasing the Transferred 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"), 60 Fed. Reg. 35925 (July 12,
1995), and the purchase and holding of the Certificates is covered under
Sections I and III of PTCE 95-60, or (iii) herewith have delivered to the
Trustee an Opinion of Counsel satisfactory to the Trustee, and upon which the
Trustee shall be entitled to rely, to the effect that the purchase and holding
of the Transferred Certificates by the Purchaser will not result in a prohibited
transaction under ERISA, the Code or Similar Law and will not subject the NIMs
Insurer or the Trustee to any obligation in addition to those expressly
undertaken in the Pooling and Servicing Agreement, which Opinion of Counsel
shall not be an expense of the NIMs Insurer or the Trustee, (e) we have not, nor
has anyone acting on our behalf offered, transferred, pledged, sold or otherwise
disposed of the Certificates, any interest in the Certificates or any other
similar security to, or solicited any offer to buy or accept a transfer, pledge
or other disposition of the Certificates, any interest in the Certificates or
any other similar security from, or otherwise approached or negotiated with
respect to the Certificates, any interest in the Certificates or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates under
the Securities Act or that would render the disposition of the Certificates a
violation of Section 5 of the Securities Act or require registration pursuant
thereto, nor will act, nor has authorized or will authorize any person to act,
in such manner with respect to the Certificates, (f) we are a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act and have completed one of the forms of certification to that effect attached
hereto as Annex 1 or Annex 2. We are aware that the sale of the Transferred
Certificates to us is being made in reliance on Rule 144A. We are acquiring the
Transferred Certificates for our own account or for resale pursuant to Rule 144A
and further understand that such Certificates may be resold, pledged or
transferred only (i) to a person reasonably believed by us, based upon
certifications of such purchaser or information we have in our possession, to be
a qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the Securities Act.

      We agree to indemnify the Trustee, the Servicer and the Depositor against
any liability that may result from any misrepresentation made herein.

                                           Very truly yours,

                                           [PURCHASER]

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

                                      H-2
<PAGE>
                                                                         ANNEX 1

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

          [FOR TRANSFEREES OTHER THAN REGISTERED INVESTMENT COMPANIES]

      The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:

      1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.

      2. In connection with the 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 $____________*/ 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 Federal, 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.

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

*     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.

            ____  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 such institution or is a foreign savings and
                  loan association or equivalent institution and (b) has an
                  audited net worth of at least $25,000,000 as demonstrated in
                  its latest annual financial statements, a copy of which is
                  attached hereto.

            ____  Broker-dealer. The Buyer is a dealer registered pursuant to
                  Section 15 of the Securities Exchange Act of 1934, as amended.

            ____  Insurance Company. The Buyer is an insurance company whose
                  primary and predominant business activity is the writing of
                  insurance or the reinsuring of risks

                                      H-3
<PAGE>
                  underwritten by insurance companies and which is subject to
                  supervision by the insurance commissioner or a similar
                  official or agency of the 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 subject to
                  Title I of the Employee Retirement Income Security Act of
                  1974, as amended.

            ____  Investment Advisor. The Buyer is an investment advisor
                  registered under the Investment Advisors Act of 1940, as
                  amended.

            ____  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, as amended.

            ____  Business Development Company. Buyer is a business development
                  company as defined in Section 202(a)(22) of the Investment
                  Advisors Act of 1940, as amended.

      3. The term "securities" as used for purposes of the calculation of the
dollar amount in paragraph 2 excludes: (i) securities of issuers that are
affiliated with the Buyer, (ii) securities that are part of an unsold allotment
to or subscription by the Buyer, if the Buyer is a dealer, (iii) securities
issued or guaranteed by the U.S. or any instrumentality thereof, (iv) bank
deposit notes and certificates of deposit, (v) loan participations, (vi)
repurchase agreements, (vii) securities owned but subject to a repurchase
agreement and (viii) currency, interest rate and commodity swaps.

      4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.

      5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.

      6. Until the date of purchase of the Rule 144A Securities, the Buyer will
notify each of the parties to which this certification is made of any changes in
the information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan as

                                      H-4
<PAGE>
provided above, the Buyer agrees that it will furnish to such parties updated
annual financial statements promptly after they become available.

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

                                               Date:
                                                    ---------------------------

                                      H-5
<PAGE>
                                                                         ANNEX 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:

      1. As indicated below, the undersigned is the President, Chief Financial
Officer or Senior Vice President of the Buyer or, if the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A"), because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.

      2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in 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.

            ____  The Buyer owned $___________ in securities (other than the
                  excluded securities referred to below) as of the end of the
                  Buyer's most recent fiscal year (such amount being calculated
                  in accordance with Rule 144A).

            ____  The Buyer is part of a Family of Investment Companies which
                  owned in the aggregate $__________ in securities (other than
                  the excluded securities referred to below) as of the end of
                  the Buyer's most recent fiscal year (such amount being
                  calculated in accordance with Rule 144A).

      3. The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

      4. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer's Family of
Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.

      5. The Buyer is familiar with Rule 144A and understands that the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer will be in reliance on Rule 144A. In
addition, the Buyer will only purchase for the Buyer's own account.

                                      H-6
<PAGE>
      6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.

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

                                         IF AN ADVISER:

                                         -------------------------------------
                                         Print Name of Buyer

                                         Date:
                                              --------------------------------

                                      H-7
<PAGE>

                                    EXHIBIT I

                        REQUEST FOR RELEASE OF DOCUMENTS

To:   Wells Fargo Bank Minnesota, National Association
      1015  10th Avenue S.E.
      Minneapolis, Minnesota  55414-0031
      Attention:  Inventory Control
      [and/or its designee]

Re:   Pooling and Servicing Agreement dated as of February 1, 2003 among Merrill
      Lynch Mortgage Investors, Inc., as depositor, Litton Loan Servicing LP, as
      servicer and Wells Fargo Bank Minnesota, National Association, as trustee,
      Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
      Certificates, Series 2003-WMC2

      In connection with the administration of the Mortgage Loans held by you,
as Trustee, pursuant to the above-captioned Pooling and Servicing Agreement, we
request the release, and hereby acknowledge receipt, of the 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 (Repurchases, etc.)

_______ 5.        Nonliquidation             Reason:  __________________________

Address to which the Trustee should deliver the Mortgage File:

                                             By:
                                                -------------------------------
                                                      (authorized signer)

                                             Address:
                                                     --------------------------
                                             Date:
                                                  -----------------------------

                                      I-1
<PAGE>
If box 1 or 2 above is checked, and if all or part of the Mortgage File was
previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above specified Mortgage Loan.

If box 3, 4, 5 or 6 above is checked, upon our return of all of the above
documents to you as Trustee, please acknowledge your receipt by signing in the
space indicated below, and returning this form.

Trustee

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 Trustee:

---------------------------------   ---------------------------------
Trustee                             Date

                                      I-2
<PAGE>
                                    EXHIBIT J

                                   [RESERVED]

                                      J-1
<PAGE>
                                    EXHIBIT K

                        OFFICER'S CERTIFICATE OF TRUSTEE

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

Re:   Pooling and Servicing Agreement (the "Agreement") dated as of February 1,
      2003 among Merrill Lynch Mortgage Investors, Inc., as depositor, Litton
      Loan Servicing LP, as servicer and Wells Fargo Bank Minnesota, National
      Association, as trustee, Merrill Lynch Mortgage Investors Trust, Mortgage
      Loan Asset-Backed Certificates, Series 2003-WMC2 [Class N or X]

I, [identify the certifying individual], a [title] of the Trustee hereby certify
to the Depositor, and its officers, directors and affiliates, and with the
knowledge and intent that they will rely upon this certification, that:

1.    I have reviewed the Monthly Statements delivered pursuant to the Agreement
      since the last Officer's Certificate executed pursuant to Section 4.02 of
      the Agreement [or in the case of the first certification, since the
      Cut-off Date] (the "Trustee Information").

2.    Based on my knowledge, the information in the Monthly Statement, taken as
      a whole, does not contain any untrue statement of a material fact or omit
      to state a material fact necessary to make the statements made, in light
      of the circumstances under which such statements were made, not misleading
      as of the date hereof;

3.    Based on my knowledge, the Monthly Statements required to be prepared by
      the Trustee under the Agreement has been prepared and provided in
      accordance with the Agreement; and

4.    I am responsible for reviewing the activities performed by the Trustee
      under the Agreement and the Trustee has, as of the date hereof fulfilled
      its obligations under the Agreement and there are no significant
      deficiencies relating to the Trustee's compliance with this Agreement.

Date:

                                           Wells Fargo Bank Minnesota, National
                                           Association, as Trustee

                                           By:
                                                    ----------------------------

                                           Name:
                                                    ----------------------------

                                           Title:
                                                    ----------------------------

                                      K-1
<PAGE>
                                    EXHIBIT L

                        OFFICER'S CERTIFICATE OF SERVICER

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

Wells Fargo Bank Minnesota, N.A.
9062 Old Annapolis Road, 47th Floor
Columbia, Maryland 21045
Attention: Client Manager - MLMI Series 2003-WMC1

Re:   Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
      Certificates, Series 2003-WMC2 [Class N or X]

Reference is made to the Pooling and Servicing Agreement, dated as of February
1, 2003 (the "Agreement"), by and among Merrill Lynch Mortgage Investors, Inc.,
as depositor, Litton Loan Servicing LP, as servicer (the "Servicer") and Wells
Fargo Bank Minnesota, National Association, as trustee. I, [identify the
certifying individual], an authorized representative of the Servicer hereby
certify to the Trustee and the Depositor, and its officers, directors and
affiliates, and with the knowledge and intent that they will rely upon this
certification, that:

1.    I have reviewed the information required to be delivered to the Trustee
      pursuant to the Servicing Agreement (the "Servicing Information").

2.    Based on my knowledge, the information in the Annual Statement of
      Compliance, and all servicing reports, officer's certificates and other
      information relating to the servicing of the Mortgage Loans submitted to
      the Trustee by the Servicer taken as a whole, does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading as of the last day of the period
      covered by the Annual Statement of Compliance;

3.    Based on my knowledge, the Servicing Information required to be provided
      to the Trustee by the Servicer under this Agreement has been provided to
      the Trustee; and

                                      L-1
<PAGE>
4.    I am responsible for reviewing the activities performed by the Servicer
      under this Agreement and based upon the review required hereunder, and
      except as disclosed in the Annual Statement of Compliance, the Annual
      Independent Certified Public Accountant's Servicing Report and all
      servicing reports, officer's certificates and other information relating
      to the servicing of the Mortgage Loans submitted to the Trustee by the
      Servicer, the Servicer has, as of the last day of the period covered by
      the Annual Statement of Compliance fulfilled its obligations under this
      Agreement.

Date:

                                           Litton Loan Servicing LP, as Servicer

                                           By:
                                                    ----------------------------

                                           Name:
                                                    ----------------------------

                                           Title:
                                                    ----------------------------

                                      L-2
<PAGE>
                                    EXHIBIT M

                                   [RESERVED]

                                      M-1
<PAGE>
                                    EXHIBIT N

                              FORM OF CAP CONTRACT

                             [INTENTIONALLY OMITTED]

                                      N-1

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