Document:

STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.,
                                    DEPOSITOR

                         U.S. BANK NATIONAL ASSOCIATION
                                     TRUSTEE

                     WELLS FARGO BANK, NATIONAL ASSOCIATION,
                  MASTER SERVICER AND SECURITIES ADMINISTRATOR

                                       and

                            EMC MORTGAGE CORPORATION
                               SELLER AND COMPANY

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

                         POOLING AND SERVICING AGREEMENT

                            Dated as of June 1, 2004

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

                  Structured Asset Mortgage Investments II Inc.
           Bear Stearns ARM Trust, Mortgage Pass-Through Certificates

                                  Series 2004-5

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                                                 TABLE OF CONTENTS
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                                                                                                               Page

                                                     ARTICLE I
                                                    Definitions

                                                    ARTICLE II
                                           Conveyance of Mortgage Loans;
                                         Original Issuance of Certificates
         Section 2.01      CONVEYANCE OF MORTGAGE LOANS TO TRUSTEE...............................................35
         Section 2.02      ACCEPTANCE OF MORTGAGE LOANS BY TRUSTEE...............................................37
         Section 2.03      ASSIGNMENT OF INTEREST IN THE MORTGAGE LOAN PURCHASE AGREEMENT........................39
         Section 2.04      SUBSTITUTION OF MORTGAGE LOANS........................................................40
         Section 2.05      ISSUANCE OF CERTIFICATES..............................................................41
         Section 2.06      REPRESENTATIONS AND WARRANTIES CONCERNING THE DEPOSITOR...............................41

                                                    ARTICLE III
                                  Administration and Servicing of Mortgage Loans
         Section 3.01      MASTER SERVICER.......................................................................43
         Section 3.02      REMIC-RELATED COVENANTS...............................................................43
         Section 3.03      MONITORING OF SERVICER................................................................44
         Section 3.04      FIDELITY BOND.........................................................................45
         Section 3.05      POWER TO ACT; PROCEDURES..............................................................45
         Section 3.06      DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS............................................46
         Section 3.07      RELEASE OF MORTGAGE FILES.............................................................46
         Section 3.08      DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF MASTER SERVICER TO BE HELD
FOR TRUSTEE......................................................................................................47
         Section 3.09      STANDARD HAZARD INSURANCE AND FLOOD INSURANCE POLICIES................................47
         Section 3.10      PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS......................................48
         Section 3.11      MAINTENANCE OF THE PRIMARY MORTGAGE INSURANCE POLICIES................................48
         Section 3.12      TRUSTEE TO RETAIN POSSESSION OF CERTAIN INSURANCE POLICIES AND DOCUMENTS
..................................................................................................................49
         Section 3.13      REALIZATION UPON DEFAULTED MORTGAGE LOANS.............................................49
         Section 3.14      COMPENSATION FOR THE MASTER SERVICER..................................................49
         Section 3.15      REO PROPERTY..........................................................................49
         Section 3.16      ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE.........................................50
         Section 3.17      ANNUAL INDEPENDENT ACCOUNTANT'S SERVICING REPORT......................................51
         Section 3.18      REPORTS FILED WITH SECURITIES AND EXCHANGE COMMISSION.................................51
         Section 3.19      THE COMPANY...........................................................................52
         Section 3.20      UCC...................................................................................52
         Section 3.21      OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS.........................................52

                                                    ARTICLE IV
                                                     Accounts
         Section 4.01      PROTECTED ACCOUNTS....................................................................54
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         Section 4.02      MASTER SERVICER COLLECTION ACCOUNT....................................................55

         Section 4.03      PERMITTED WITHDRAWALS AND TRANSFERS FROM THE MASTER SERVICER COLLECTION
ACCOUNT..........................................................................................................56
         Section 4.04      DISTRIBUTION ACCOUNT..................................................................57
         Section 4.05      PERMITTED WITHDRAWALS AND TRANSFERS FROM THE DISTRIBUTION ACCOUNT.....................57

                                                     ARTICLE V
                                                   Certificates
         Section 5.01      CERTIFICATES..........................................................................60
         Section 5.02      REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.................................66
         Section 5.03      MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.....................................69
         Section 5.04      PERSONS DEEMED OWNERS.................................................................70
         Section 5.05      TRANSFER RESTRICTIONS ON RESIDUAL CERTIFICATES........................................70
         Section 5.06      RESTRICTIONS ON TRANSFERABILITY OF CERTIFICATES.......................................71
         Section 5.07      ERISA RESTRICTIONS....................................................................71
         Section 5.08      RULE 144A INFORMATION.................................................................73

                                                    ARTICLE VI
                                          Payments to Certificateholders
         Section 6.01      DISTRIBUTIONS ON THE CERTIFICATES.....................................................74
         Section 6.02      ALLOCATION OF LOSSES..................................................................77
         Section 6.03      PAYMENTS..............................................................................79
         Section 6.04      STATEMENTS TO CERTIFICATEHOLDERS......................................................80
         Section 6.05      MONTHLY ADVANCES......................................................................82
         Section 6.06      COMPENSATING INTEREST PAYMENTS........................................................83

                                                    ARTICLE VII
                                                The Master Servicer
         Section 7.01      LIABILITIES OF THE MASTER SERVICER....................................................84
         Section 7.02      MERGER OR CONSOLIDATION OF THE MASTER SERVICER........................................84
         Section 7.03      INDEMNIFICATION OF THE TRUSTEE, THE MASTER SERVICER AND THE SECURITIES
ADMINISTRATOR....................................................................................................84
         Section 7.04      LIMITATIONS ON LIABILITY OF THE MASTER SERVICER AND OTHERS............................85
         Section 7.05      MASTER SERVICER NOT TO RESIGN.........................................................86
         Section 7.06      SUCCESSOR MASTER SERVICER.............................................................86
         Section 7.07      SALE AND ASSIGNMENT OF MASTER SERVICING...............................................86

                                                   ARTICLE VIII
                                                      Default
         Section 8.01      EVENTS OF DEFAULT.....................................................................88
         Section 8.02      TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR..............................................89
         Section 8.03      NOTIFICATION TO CERTIFICATEHOLDERS....................................................90
         Section 8.04      WAIVER OF DEFAULTS....................................................................90
         Section 8.05      LIST OF CERTIFICATEHOLDERS............................................................91
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                                                    ARTICLE IX
                              Concerning the Trustee and the Securities Administrator
         Section 9.01      DUTIES OF TRUSTEE.....................................................................92

         Section 9.02      CERTAIN MATTERS AFFECTING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
..................................................................................................................94
         Section 9.03      TRUSTEE AND SECURITIES ADMINISTRATOR NOT LIABLE FOR CERTIFICATES OR MORTGAGE
LOANS............................................................................................................95
         Section 9.04      TRUSTEE AND SECURITIES ADMINISTRATOR MAY OWN CERTIFICATES.............................96
         Section 9.05      TRUSTEE'S AND SECURITIES ADMINISTRATOR'S FEES AND EXPENSES............................96
         Section 9.06      ELIGIBILITY REQUIREMENTS FOR TRUSTEE AND SECURITIES ADMINISTRATOR.....................96
         Section 9.07      INSURANCE.............................................................................97
         Section 9.08      RESIGNATION AND REMOVAL OF THE TRUSTEE AND SECURITIES ADMINISTRATOR
..................................................................................................................97
         Section 9.09      SUCCESSOR TRUSTEE AND SUCCESSOR SECURITIES ADMINISTRATOR..............................98
         Section 9.10      MERGER OR CONSOLIDATION OF TRUSTEE OR SECURITIES ADMINISTRATOR........................99
         Section 9.11      APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.........................................99
         Section 9.12      FEDERAL INFORMATION RETURNS AND REPORTS TO CERTIFICATEHOLDERS; REMIC
ADMINISTRATION..................................................................................................100

                                                     ARTICLE X
                                                    Termination
         Section 10.01     TERMINATION UPON REPURCHASE BY THE DEPOSITOR OR ITS DESIGNEE OR
LIQUIDATION OF THE MORTGAGE LOANS...............................................................................102
         Section 10.02     ADDITIONAL TERMINATION REQUIREMENTS..................................................104

                                                    ARTICLE XI
                                             Miscellaneous Provisions
         Section 11.01     INTENT OF PARTIES....................................................................106
         Section 11.02     AMENDMENT............................................................................106
         Section 11.03     RECORDATION OF AGREEMENT.............................................................107
         Section 11.04     LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS...........................................107
         Section 11.05     ACTS OF CERTIFICATEHOLDERS...........................................................108
         Section 11.06     GOVERNING LAW........................................................................109
         Section 11.07     NOTICES..............................................................................109
         Section 11.08     SEVERABILITY OF PROVISIONS...........................................................109
         Section 11.09     SUCCESSORS AND ASSIGNS...............................................................109
         Section 11.10     ARTICLE AND SECTION HEADINGS.........................................................110
         Section 11.11     COUNTERPARTS.........................................................................110
         Section 11.12     NOTICE TO RATING AGENCIES............................................................110
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                                    EXHIBITS

Exhibit A-1               -    Form of Class A Certificates
Exhibit A-2               -    Form of Class B Certificates
Exhibit A-3               -    Form of Class R Certificates
Exhibit B                 -    Mortgage Loan Schedule
Exhibit C                 -    [Reserved]
Exhibit D                 -    Request for Release of Documents
Exhibit E                 -    Form of Affidavit pursuant to Section 860E(e)(4)
Exhibit F-1               -    Form of Investment Letter
Exhibit F-2               -    Form of Rule 144A and Related Matters Certificate
Exhibit G                 -    Form of Custodial Agreement
Exhibit H-1               -    Servicing Agreement
Exhibit I                 -    Assignment Agreement
Exhibit J                 -    Mortgage Loan Purchase Agreement

                                      -iv-

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                         POOLING AND SERVICING AGREEMENT

         Pooling and Servicing Agreement dated as of June 1, 2004, among
Structured Asset Mortgage Investments II Inc., a Delaware corporation, as
depositor (the "Depositor"), U.S. Bank National Association, a national banking
association, not in its individual capacity but solely as trustee (the
"Trustee"), Wells Fargo Bank, National Association, as master servicer (in such
capacity, the "Master Servicer") and as securities administrator (in such
capacity, the "Securities Administrator"), and EMC Mortgage Corporation, as
seller (in such capacity, the "Seller") and as company (in such capacity, the
"Company").

                              PRELIMINARY STATEMENT

         On or prior to the Closing Date, the Depositor acquired the Mortgage
Loans from the Seller. On the Closing Date, the Depositor will sell the Mortgage
Loans and certain other property to the Trust Fund and receive in consideration
therefor Certificates evidencing the entire beneficial ownership interest in the
Trust Fund.

         The Trustee on behalf of the Trust shall make an election for the
assets constituting REMIC I to be treated for federal income tax purposes as a
REMIC. On the Startup Day, the REMIC I Regular Interests will be designated
"regular interests" in such REMIC and the Class R-I Certificate will be
designated the "residual interest" in such REMIC.

         The Trustee on behalf of the Trust shall make an election for the
assets constituting REMIC II to be treated for federal income tax purposes as a
REMIC. On the Startup Day, the REMIC II Regular Interests will be designated
"regular interests" in such REMIC and the Class R-II Certificate will be
designated the "residual interest" in such REMIC.

         The Mortgage Loans will have an Outstanding Principal Balance as of the
Cut-off Date, after deducting all Scheduled Principal due on or before the
Cut-off Date, of $614,060,537.79. The initial principal amount of the
Certificates will not exceed such Outstanding Principal Balance. The Group I
Mortgage Loans will have an Outstanding Principal Balance as of the Cut-off
Date, after deducting all Scheduled Principal due on or before the Cut-off Date,
of $96,534,500.33. The Group II Mortgage Loans will have an Outstanding
Principal Balance as of the Cut-off Date, after deducting all Scheduled
Principal due on or before the Cut-off Date, of $432,329,945.28. The Group III
Mortgage Loans will have an Outstanding Principal Balance as of the Cut-off
Date, after deducting all Scheduled Principal due on or before the Cut-off Date,
of $50,877,278.61. The Group IV Mortgage Loans will have an Outstanding
Principal Balance as of the Cut-off Date, after deducting all Scheduled
Principal due on or before the Cut-off Date, of $34,318,813.57.

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

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                                    ARTICLE I
                                   Definitions

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

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

         ACCOUNT: The Master Servicer Collection Account and the Protected
Account as the context may require.

         ACCRUED CERTIFICATE INTEREST: For any Certificate for any Distribution
Date, the interest accrued during the related Interest Accrual Period at the
applicable Pass-Through Rate on the Current Principal Amount, of such
Certificate immediately prior to such Distribution Date, on the basis of a
360-day year consisting of twelve 30-day months, less (i) in the case of a
Senior Certificate, such Certificate's share of any Net Interest Shortfall from
the related Mortgage Loans and, after the Cross-Over Date, the interest portion
of any Realized Losses on the related Mortgage Loans allocated thereto in
accordance with Section 6.02(g) and (ii) in the case of a Subordinate
Certificate, such Certificate's share of any Net Interest Shortfall from the
related Mortgage Loans and the interest portion of any Realized Losses on the
related Mortgage Loans allocated thereto in accordance with Section 6.02(g).

         AFFILIATE: As to any Person, any other Person controlling, controlled
by or under common control with such Person. "Control" means the power to direct
the management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise. "Controlled" and
"Controlling" have meanings correlative to the foregoing. The Trustee may
conclusively presume that a Person is not an Affiliate of another Person unless
a Responsible Officer of the Trustee has actual knowledge to the contrary.

         AGGREGATE EXPENSE RATE: With respect to any Mortgage Loan, the sum of
the Servicing Fee Rate and the Lender-Paid PMI Rate (if applicable).

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

                                       -2-

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         ALLOCABLE SHARE: With respect to each Class of Subordinate
Certificates:

         (a) as to any Distribution Date and amounts distributable pursuant to
clauses (i) and (iv) of the definition of Subordinate Optimal Principal Amount,
the fraction, expressed as a percentage, the numerator of which is the Current
Principal Amount of such Class and the denominator of which is the aggregate
Current Principal Amount of all Classes of the Subordinate Certificates; and

         (b) as to any Distribution Date and amounts distributable pursuant to
clauses (ii), (iii) and (v) of the definition of Subordinate Optimal Principal
Amount, and as to each Class of Subordinate Certificates (other than the Class
of Subordinate Certificates having the lowest numerical designation as to which
the Class Prepayment Distribution Trigger shall not be applicable) for which (x)
the Class Prepayment Distribution Trigger has been satisfied on such
Distribution Date, the fraction, expressed as a percentage, the numerator of
which is the Current Principal Amount of such Class and the denominator of which
is the aggregate Current Principal Amount of all such Classes of Subordinate
Certificates and (y) the Class Prepayment Distribution Trigger has not been
satisfied on such Distribution Date, 0%; provided that if on a Distribution
Date, the Current Principal Amount of any Class of Subordinate Certificates for
which the Class Prepayment Distribution Trigger was satisfied on such
Distribution Date is reduced to zero, any amounts distributed pursuant to this
clause (b), to the extent of such Class's remaining Allocable Share, shall be
distributed to the remaining Classes of Subordinate Certificates which satisfy
the Class Prepayment Distribution Trigger and to the Class of Subordinate
Certificates having the lowest numerical Class designation in reduction of their
respective Current Principal Amounts in the order of their numerical Class
designations.

         APPLICABLE CREDIT RATING: For any long-term deposit or security, a
credit rating of AAA in the case of S&P or Aaa in the case of Moody's. For any
short-term deposit or security, or a rating of A-l+ in the case of S&P or P-1 in
the case of Moody's.

         APPLICABLE STATE LAW: For purposes of Section 9.12(d), the Applicable
State Law shall be (a) the law of the State of New York and (b) such other state
law whose applicability shall have been brought to the attention of the
Securities Administrator and the Trustee by either (i) an Opinion of Counsel
reasonably acceptable to the Securities Administrator and the Trustee delivered
to it by the Master Servicer or the Depositor, or (ii) written notice from the
appropriate taxing authority as to the applicability of such state law.

         APPRAISED VALUE: For any Mortgaged Property related to a Mortgage Loan,
the amount set forth as the appraised value of such Mortgaged Property in an
appraisal made for the mortgage originator in connection with its origination of
the related Mortgage Loan.

         ASSIGNMENT AGREEMENT: The agreement attached hereto as Exhibit I,
whereby the Servicing Agreement was assigned to the Trustee for the benefit of
the Certificateholders.

         ASSUMED FINAL DISTRIBUTION DATE: July 25, 2034, or if such day is not a
Business Day, the next succeeding Business Day.

         AVAILABLE FUNDS: With respect to any Distribution Date, the sum of the
Group I, Group II, Group III and Group IV Available Funds for such Distribution
Date.

                                       -3-

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         AVERAGE LOSS SEVERITY PERCENTAGE: With respect to any Distribution Date
and each Loan Group, the percentage equivalent of a fraction, the numerator of
which is the sum of the Loss Severity Percentages for each Mortgage Loan in such
Loan Group which had a Realized Loss and the denominator of which is the number
of Mortgage Loans in the related Loan Group which had Realized Losses.

         BANKRUPTCY CODE: The United States Bankruptcy Code, as amended as
codified in 11 U.S.C.
ss.ss. 101-1330.

         BANKRUPTCY LOSS: With respect to any Mortgage Loan, any Deficient
Valuation or Debt Service Reduction related to such Mortgage Loan as reported by
the Servicer to the Master Servicer.

         BOOK-ENTRY CERTIFICATES: Initially, all Classes of Certificates other
than the Private Certificates and the Residual Certificates.

         BUSINESS DAY: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which the New York Stock Exchange or Federal Reserve is closed or on
which banking institutions in the jurisdiction in which the Trustee, the Master
Servicer, the Servicer or the Securities Administrator is located are authorized
or obligated by law or executive order to be closed.

         CALENDAR QUARTER: January 1 to March 31, April 1 to June 30, July 1 to
September 30, or October 1 to December 31, as applicable.

         CERTIFICATE: Any mortgage pass-through certificate evidencing a
beneficial ownership interest in the Trust Fund signed and countersigned by the
Trustee in substantially the forms annexed hereto as Exhibits A-1, A-2 and A-3
with the blanks therein appropriately completed.

         CERTIFICATE GROUP: The Group I Senior Certificates, Group II Senior
Certificates, Group III Senior Certificates and Group IV Senior Certificates, as
applicable.

         CERTIFICATE OWNER: Any Person who is the beneficial owner of a
Certificate registered in the name of the Depository or its nominee.

         CERTIFICATE REGISTER: The register maintained pursuant to Section 5.02.

         CERTIFICATEHOLDER: A Holder of a Certificate.

         CLASS: with respect to the Certificates, I-A, II-A, III-A, IV-A, R-I,
R-II, B-1, B-2, B-3, B-4, B-5 and B-6.

         CLASS PREPAYMENT DISTRIBUTION TRIGGER: For a Class of Subordinate
Certificates for any Distribution Date, the Class Prepayment Distribution
Trigger is satisfied if the fraction (expressed as a percentage), the numerator
of which is the aggregate Current Principal Amount of such Class and each Class
of Subordinate Certificates subordinate thereto, if any, and the denominator of
which

                                      -4-

<PAGE>

 is the Scheduled Principal Balance of all of the Mortgage Loans as of the
related Due Date, equals or exceeds such percentage calculated as of the Closing
Date.

         CLASS R CERTIFICATES: The Class R-I Certificates and Class R-II
Certificates.

         CLOSING DATE: June 18, 2004.

         CODE: The Internal Revenue Code of 1986, as amended.

         COMPENSATING INTEREST PAYMENT: As defined in Section 6.06.

         CORPORATE TRUST OFFICE: The office of the Trustee at which at any
particular time its corporate trust business is administered, which office, at
the date of the execution of this Agreement, is located at U.S. Bank Corporate
Trust Services, One Federal Street, 3rd Floor, Boston, Massachusetts 02110,
Attention: Corporate Trust Services/BART Series 2004-5. For purposes of
registration and transfer and exchange only, the Corporate Trust Office shall be
located at U.S. Bank National Association, 60 Livingston Avenue, Bond Drop
Window, St. Paul, Minnesota 55107.

         CROSS-OVER DATE: The first Distribution Date on which the aggregate
Current Principal Amount of the Subordinate Certificates has been reduced to
zero (giving effect to all distributions on such Distribution Date).

         CURRENT PRINCIPAL AMOUNT: With respect to any Certificate as of any
Distribution Date, the initial principal amount of such Certificate plus any
Subsequent Recoveries added to the Current Principal Amount of such Certificate
pursuant to Section 6.02(h), and reduced by (i) all amounts distributed on
previous Distribution Dates on such Certificate with respect to principal, (ii)
the principal portion of all Realized Losses allocated prior to such
Distribution Date to such Certificate, taking account of the Loss Allocation
Limitation and (iii) in the case of a Subordinate Certificate, such
Certificate's pro rata share, if any, of the applicable Subordinate Certificate
Writedown Amount for previous Distribution Dates. With respect to any Class of
Certificates, the Current Principal Amount thereof will equal the sum of the
Current Principal Amounts of all Certificates in such Class. Notwithstanding the
foregoing, solely for purposes of giving consents, directions, waivers,
approvals, requests and notices, the Class R-I Certificates and Class R-II
Certificates after the Distribution Date on which they each receive the
distribution of the last dollar of their respective original principal amount
shall be deemed to have Current Principal Amounts equal to their respective
Current Principal Amounts on the day immediately preceding such Distribution
Date.

         CUSTODIAL AGREEMENT: An agreement, dated as of the Closing Date among
the Depositor, the Master Servicer, the Trustee and the Custodian in
substantially the form of Exhibit G hereto.

         CUSTODIAN: Wells Fargo Bank, National Association, or any successor
custodian appointed pursuant to the provisions hereof and of the Custodial
Agreement.

         CUT-OFF DATE: June 1, 2004.

         CUT-OFF DATE BALANCE: $614,060,537.79.

                                       -5-

<PAGE>

         DEBT SERVICE REDUCTION: Any reduction of the Scheduled Payments which a
Mortgagor is obligated to pay with respect to a Mortgage Loan as a result of any
proceeding under the Bankruptcy Code or any other similar state law or other
proceeding.

         DEFICIENT VALUATION: With respect to any Mortgage Loan, a valuation of
the Mortgaged Property by a court of competent jurisdiction in an amount less
than the then outstanding indebtedness under the Mortgage Loan, which valuation
results from a proceeding initiated under the Bankruptcy Code or any other
similar state law or other proceeding.

         DEPOSITOR: Structured Asset Mortgage Investments II Inc., a Delaware
corporation, or its successors in interest.

         DEPOSITORY: The Depository Trust Company, the nominee of which is Cede
& Co., or any successor thereto.

         DEPOSITORY AGREEMENT: The meaning specified in Subsection 5.01(a)
hereof.

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

         DESIGNATED DEPOSITORY INSTITUTION: A depository institution (commercial
bank, federal savings bank, mutual savings bank or savings and loan association)
or trust company (which may include the Trustee), the deposits of which are
fully insured by the FDIC to the extent provided by law.

         DETERMINATION DATE: With respect to each Mortgage Loan, the
Determination Date as defined in the Servicing Agreement.

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

                                      -6-

<PAGE>

         DISTRIBUTION ACCOUNT: The trust account or accounts created and
maintained pursuant to Section 4.04, which shall be denominated "U.S. Bank
National Association, as Trustee f/b/o holders of Structured Asset Mortgage
Investments II Inc., Bear Stearns ARM Trust, Mortgage Pass-Through Certificates,
Series 2004-5 - Distribution Account." The Distribution Account shall be an
Eligible Account.

         DISTRIBUTION ACCOUNT DEPOSIT DATE: The Business Day prior to each
Distribution Date.

         DISTRIBUTION DATE: The 25th day of any month, beginning in the month
immediately following the month of the Closing Date, or, if such 25th day is not
a Business Day, the Business Day immediately following.

         DTC CUSTODIAN: U.S. Bank National Association, or its successors in
interest as custodian for the Depository.

         DUE DATE: With respect to each Mortgage Loan, the date in each month on
which its Scheduled Payment is due if such due date is the first day of a month
and otherwise is deemed to be the first day of the following month or such other
date specified in the Servicing Agreement.

         DUE PERIOD: With respect to any Distribution Date and each Mortgage
Loan, the period commencing on the second day of the month preceding the month
in which the Distribution Date occurs and ending at the close of business on the
first day of the month in which the Distribution Date occurs.

         ELIGIBLE ACCOUNT: Any of (i) a segregated account maintained with a
federal or state chartered depository institution (A) the short-term obligations
of which are rated A-2 or better by S&P and P-1 by Moody's at the time of any
deposit therein or (B) insured by the FDIC (to the limits established by such
Corporation), the uninsured deposits in which account are otherwise secured such
that, as evidenced by an Opinion of Counsel (obtained by the Person requesting
that the account be held pursuant to this clause (i)) delivered to the Trustee
prior to the establishment of such account, the Certificateholders will have a
claim with respect to the funds in such account and a perfected first priority
security interest against any collateral (which shall be limited to Permitted
Investments, each of which shall mature not later than the Business Day
immediately preceding the Distribution Date next following the date of
investment in such collateral or the Distribution Date if such Permitted
Investment is an obligation of the institution that maintains the Distribution
Account) securing such funds that is superior to claims of any other depositors
or general creditors of the depository institution with which such account is
maintained, (ii) a segregated trust account or accounts maintained with a
federal or state chartered depository institution or trust company with trust
powers acting in its fiduciary capacity or (iii) a segregated account or
accounts of a depository institution acceptable to the Rating Agencies (as
evidenced in writing by the Rating Agencies that use of any such account as the
Distribution Account will not have an adverse effect on the then- current
ratings assigned to the Classes of Certificates then rated by the Rating
Agencies). Eligible Accounts may bear interest.

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

                                      -7-
<PAGE>

         EVENT OF DEFAULT: An event of default described in Section 8.01.

         EXCESS LIQUIDATION PROCEEDS: To the extent that such amount is not
required by law to be paid to the related Mortgagor, the amount, if any, by
which Liquidation Proceeds with respect to a Liquidated Mortgage Loan exceed the
sum of (i) the Outstanding Principal Balance of such Mortgage Loan and accrued
but unpaid interest at the related Mortgage Interest Rate through the last

day of the month in which the related Liquidation Date occurs, plus (ii) related
Liquidation Expenses.

         FANNIE MAE: Federal National Mortgage Association or any successor
thereto.

         FDIC: Federal Deposit Insurance Corporation or any successor thereto.

         FINAL CERTIFICATION: The certification substantially in the form of
Exhibit Three to the Custodial Agreement.

         FRACTIONAL UNDIVIDED INTEREST: With respect to any Class of
Certificates, the fractional undivided interest evidenced by any Certificate of
such Class the numerator of which is the Current Principal Amount of such
Certificate and the denominator of which is the Current Principal Amount of such
Class. With respect to the Certificates in the aggregate, the fractional
undivided interest evidenced by (i) each class of Residual Certificates will be
deemed to equal 0.25% and (ii) a Certificate of any other Class will be deemed
to equal 99.50% multiplied by a fraction, the numerator of which is the Current
Principal Amount of such Certificate and the denominator of which is the
aggregate Current Principal Amount of all the Certificates.

         FREDDIE MAC: Freddie Mac, formerly the Federal Home Loan Mortgage
Corporation, or any successor thereto.

         GLOBAL CERTIFICATE: Any Private Certificate registered in the name of
the Depository or its nominee, beneficial interests in which are reflected on
the books of the Depository or on the books of a Person maintaining an account
with such Depository (directly or as an indirect participant in accordance with
the rules of such depository).

         GMACM: GMAC Mortgage Corporation, or its successor in interest.

         GMACM SERVICING AGREEMENT: The Seller's Warranties and Servicing
Agreement, dated as of May 1, 2001, as amended by Amendment No. 1 on October 1,
2001 and Amendment No. 2 on July 31, 2002 between the Seller and GMACM, attached
hereto as Exhibit H-1, as modified by the related Assignment Agreement.

         GROSS MARGIN: As to each Mortgage Loan, the fixed percentage set forth
in the related Mortgage Note and indicated on the Mortgage Loan Schedule which
percentage is added to the related Index on each Interest Adjustment Date to
determine (subject to rounding, the minimum and maximum Mortgage Interest Rate
and the Periodic Rate Cap) the Mortgage Interest Rate until the next Interest
Adjustment Date.

                                      -8-

<PAGE>

         GROUP I AVAILABLE FUNDS, GROUP II AVAILABLE FUNDS, GROUP III AVAILABLE
FUNDS AND GROUP IV AVAILABLE FUNDS: With respect to any Distribution Date, an
amount equal to the aggregate of the following amounts with respect to the
Mortgage Loans in the related Loan Group: (a) all previously undistributed
payments on account of principal (including the principal portion of Scheduled
Payments, Principal Prepayments and the principal portion of Net Liquidation
Proceeds) and all previously undistributed payments on account of interest
received after the Cut-off Date and on or prior to the related Determination
Date, (b) any Monthly Advances and Compensating Interest

Payments by the Servicer or the Master Servicer with respect to such
Distribution Date and (c) any reimbursed amount in connection with losses on
investments of deposits in an account, except:

                  (i) all payments that were due on or before the Cut-off Date;

                  (ii) all Principal Prepayments and Liquidation Proceeds
received after the applicable Prepayment Period;

                  (iii) all payments, other than Principal Prepayments, that
represent early receipt of Scheduled Payments due on a date or dates subsequent
to the related Due Date;

                  (iv) amounts received on particular Mortgage Loans as late
payments of principal or interest and respecting which, and to the extent that,
there are any unreimbursed Monthly Advances;

                  (v) amounts representing Monthly Advances determined to be
Nonrecoverable Advances;

                  (vi) any investment earnings on amounts on deposit in the
Master Servicer Collection Account and the Distribution Account and amounts
permitted to be withdrawn from the Master Servicer Collection Account and the
Distribution Account pursuant to this Agreement;

                  (vii) amounts needed to pay the Servicing Fees or to reimburse
the Servicer or the Master Servicer for amounts due under the Servicing
Agreement and the Agreement to the extent such amounts have not been retained
by, or paid previously to, the Servicer or the Master Servicer;

                  (viii) any fees payable under any lender-paid primary mortgage
insurance policy; and

                  (ix) any expenses or other amounts reimbursable to the
Trustee, the Securities Administrator and the Custodian pursuant to Section
7.04(c) or Section 9.05.

         GROUP I MORTGAGE LOANS: The Mortgage Loans identified as such on the
Mortgage Loan Schedule.

         GROUP I SENIOR CERTIFICATES: The Class I-A, Class R-I and Class R-II
Certificates.

         GROUP I SENIOR OPTIMAL PRINCIPAL AMOUNT, GROUP II SENIOR OPTIMAL
PRINCIPAL AMOUNT, GROUP III SENIOR OPTIMAL PRINCIPAL AMOUNT AND GROUP IV SENIOR
OPTIMAL PRINCIPAL AMOUNT: With

                                      -9-

<PAGE>

 respect to each Distribution Date, an amount
equal to the sum, without duplication, of the following (but in no event greater
than the aggregate Current Principal Amount of the Group I, Group II, Group III
or Group IV Senior Certificates, as applicable, immediately prior to such
Distribution Date):

                  (i) the applicable Senior Percentage of the principal portion
of all Scheduled Payments due on each Outstanding Mortgage Loan in the related
Loan Group on the related Due Date as specified in the amortization schedule at
the time applicable thereto (after adjustments for

previous Principal Prepayments but before any adjustment to such amortization
schedule by reason of any bankruptcy or similar proceeding or any moratorium or
similar waiver or grace period);

                  (ii) the applicable Senior Prepayment Percentage of the
Scheduled Principal Balance of each Mortgage Loan in the related Loan Group
which was the subject of a Principal Prepayment in full received by the Master
Servicer during the related Prepayment Period;

                  (iii) the applicable Senior Prepayment Percentage of all
Principal Prepayments in part received by the Master Servicer during the related
Prepayment Period with respect to each Mortgage Loan in the related Loan Group;

                  (iv) the lesser of (a) the applicable Senior Prepayment
Percentage of the sum of (A) all Net Liquidation Proceeds allocable to principal
received in respect of each Mortgage Loan in the related Loan Group which became
a Liquidated Mortgage Loan during the related Prepayment Period (other than
Mortgage Loans described in the immediately following clause (B)) and all
Subsequent Recoveries received in respect of each Liquidated Mortgage Loan in
the related Loan Group during the related Due Period and (B) the Scheduled
Principal Balance of each such Mortgage Loan in the related Loan Group purchased
by an insurer from the Trustee during the related Prepayment Period pursuant to
the related Primary Mortgage Insurance Policy, if any, or otherwise; and (b) the
applicable Senior Percentage of the sum of (A) the Scheduled Principal Balance
of each Mortgage Loan in the related Loan Group which became a Liquidated
Mortgage Loan during the related Prepayment Period (other than the Mortgage
Loans described in the immediately following clause (B)) and (B) the Scheduled
Principal Balance of each such Mortgage Loan in the related Loan Group that was
purchased by an insurer from the Trust during the related Prepayment Period
pursuant to the related Primary Mortgage Insurance Policy, if any or otherwise;
and

                  (v) the applicable Senior Prepayment Percentage of the sum of
(a) the Scheduled Principal Balance of each Mortgage Loan in the related Loan
Group which was repurchased by the Seller in connection with such Distribution
Date and (b) the excess, if any, of the Scheduled Principal Balance of each
Mortgage Loan in the related Loan Group that has been replaced by the Seller
with a Substitute Mortgage Loan pursuant to the Mortgage Loan Purchase Agreement
in connection with such Distribution Date over the Scheduled Principal Balance
of each such Substitute Mortgage Loan.

         GROUP I SENIOR PERCENTAGE: Initially, 96.90%. On any Distribution Date,
the lesser of (i) 100% and (ii) the percentage (carried to six places rounded
up) obtained by dividing the aggregate Current Principal Amount of the Group I
Senior Certificates immediately preceding such Distribution Date by the
aggregate Scheduled Principal Balance of the Group I Mortgage Loans as of the
beginning of the related Due Period.

                                      -10-

<PAGE>

         GROUP I SENIOR PREPAYMENT PERCENTAGE: On any Distribution Date
occurring during the periods set forth below, as follows:

<TABLE>
<CAPTION>
<S>                                                     <C>
Period (dates inclusive)                              Group I Senior Prepayment Percentage
----------------------------------------------------- -----------------------------------------------
July 25, 2004 - June, 2011                            100%
July 25, 2011 - June, 2012                            Group I Senior Percentage plus 70% of the Group
                                                      I Subordinate Percentage
July 25, 2012 - June, 2013                            Group I Senior Percentage plus 60% of the Group
                                                      I Subordinate Percentage
July 25, 2013 - June, 2014                            Group I Senior Percentage plus 40% of the Group
                                                      I Subordinate Percentage
July 25, 2014 - June, 2015                            Group I Senior Percentage plus 20% of the Group
                                                      I Subordinate Percentage
July 25, 2015 and thereafter                          Group I Senior Percentage
</TABLE>

         In addition, no reduction of the Group I Senior Prepayment Percentage
shall occur on any Distribution Date unless, as of the last day of the month
preceding such Distribution Date, (A) the aggregate Scheduled Principal Balance
of the Mortgage Loans delinquent 60 days or more (including for this purpose any
such Mortgage Loans in foreclosure and bankruptcy and Mortgage Loans with
respect to which the related Mortgaged Property has been acquired by the Trust),
averaged over the last six months, as a percentage of the sum of the aggregate
Current Principal Amount of the Subordinate Certificates does not exceed 50%;
and (B) cumulative Realized Losses on the Mortgage Loans do not exceed (a) 30%
of the Original Subordinate Principal Balance if such Distribution Date occurs
between and including July 2011 and June 2012, (b) 35% of the Original
Subordinate Principal Balance if such Distribution Date occurs between and
including July 2012 and June 2013, (c) 40% of the Original Subordinate Principal
Balance if such Distribution Date occurs between and including July 2013 and
June 2014, (d) 45% of the Original Subordinate Principal Balance if such
Distribution Date occurs between and including July 2014 and June 2015, and (e)
50% of the Original Subordinate Principal Balance if such Distribution Date
occurs during or after July 2015.

         In addition, if on any Distribution Date the current weighted average
of the Subordinate Percentages is equal to or greater than two times the initial
weighted average of the Subordinate Percentages, and (a) the aggregate Scheduled
Principal Balance of the Mortgage Loans delinquent 60 days or more (including
for this purpose any such Mortgage Loans in foreclosure and bankruptcy and such
Mortgage Loans with respect to which the related Mortgaged Property has been
acquired by the Trust), averaged over the last six months, as a percentage of
the aggregate Current Principal Amount of the Subordinate Certificates does not
exceed 50% and (b)(i) on or prior to the Distribution Date in June 2007
cumulative Realized Losses on the Mortgage Loans as of the end of the related
Prepayment Period do not exceed 20% of the Original Subordinate Principal
Balance and (ii) after the Distribution Date in June 2007 cumulative Realized
Losses on the Mortgage Loans as of the end of the related Prepayment Period do
not exceed 30% of the Original Subordinate Principal Balance, then, the Group I
Senior Prepayment Percentage for such Distribution Date will equal the Group I
Senior Percentage; provided, however, if on such Distribution Date the current
weighted average of the Subordinate Percentages is equal to or greater than two
times the initial weighted

                                      -11-

<PAGE>

average of the Subordinate Percentages on or prior to the Distribution Date
occurring in June 2007 and the above delinquency and loss tests are met, then
the Group I Senior Prepayment Percentage for such Distribution Date will equal
the Group I Senior Percentage plus 50% of the Group I Subordinate Percentage.

         Notwithstanding the foregoing, if on any Distribution Date, the
percentage, the numerator which is the aggregate Current Principal Amount of the
Senior Certificates immediately preceding such Distribution Date, and the
denominator of which is the Scheduled Principal Balance of the Mortgage Loans as
of the beginning of the related Due Period, exceeds such percentage as of the
Cut-off Date, then the Group I Senior Prepayment Percentage for such
distribution date will equal 100%. On the Distribution Date on which the Current
Principal Amounts of the Group I Senior Certificates are reduced to zero, the
Group I Senior Prepayment Percentage shall be the minimum percentage sufficient
to effect such reduction and thereafter shall be zero.

         GROUP I SUBORDINATE PERCENTAGE: On any Distribution Date, 100% minus
the Group I Senior Percentage.

         GROUP I SUBORDINATE PREPAYMENT PERCENTAGE: With respect to the Group I
Mortgage Loans, on any Distribution Date, 100% minus the Group I Senior
Prepayment Percentage, except that on any Distribution Date after the Current
Principal Amounts of the Group I Senior Certificates have each been reduced to
zero, if (a) the weighted average of the Subordinate Percentages on such
Distribution Date equals or exceeds two times the initial weighted average of
the Subordinate Percentages and (b) the aggregate Scheduled Principal Balance of
the Mortgage Loans delinquent 60 days or more (including for this purpose any
such Mortgage Loans in foreclosure and Mortgage Loans with respect to which the
related Mortgaged Property has been acquired by the Trust), averaged over the
last six months, as a percentage of the sum of the aggregate Current Principal
Amount of the Subordinate Certificates does not exceed 100%, the Group I
Subordinate Prepayment Percentage will equal 100%. If the test set forth in the
preceding sentence is not satisfied on any Distribution Date after the Current
Principal Amount of the Group I Senior Certificates have each been reduced to
zero, then the Group I Subordinate Prepayment Percentage will equal zero for
such Distribution Date.

         GROUP II MORTGAGE LOANS: The Mortgage Loans identified as such on the
Mortgage Loan Schedule.

         GROUP II SENIOR CERTIFICATES: The Class II-A Certificates.

         GROUP II SENIOR PERCENTAGE: Initially, 96.90%. On any Distribution
Date, the lesser of (i) 100% and (ii) the percentage (carried to six places
rounded up) obtained by dividing the aggregate Current Principal Amount of the
Group II Senior Certificates immediately preceding such Distribution Date by the
aggregate Scheduled Principal Balance of the Group II Mortgage Loans as of the
beginning of the related Due Period.

                                      -12-

<PAGE>

         GROUP II SENIOR PREPAYMENT PERCENTAGE: On any Distribution Date
occurring during the periods set forth below, as follows:
<TABLE>
<CAPTION>
<S>                                                     <C>
Period (dates inclusive)                              Group II Senior Prepayment Percentage
----------------------------------------------------- ------------------------------------------------
July 25, 2004 - June, 2011                            100%
July 25, 2011 - June, 2012                            Group II Senior Percentage plus 70% of the Group
                                                      II Subordinate Percentage
July 25, 2012 - June, 2013                            Group II Senior Percentage plus 60% of the Group
                                                      II Subordinate Percentage
July 25, 2013 - June, 2014                            Group II Senior Percentage plus 40% of the Group
                                                      II Subordinate Percentage
July 25, 2014 - June, 2015                            Group II Senior Percentage plus 20% of the Group
                                                      II Subordinate Percentage
July 25, 2015 and thereafter                          Group II Senior Percentage
</TABLE>

         In addition, no reduction of the Group II Senior Prepayment Percentage
shall occur on any Distribution Date unless, as of the last day of the month
preceding such Distribution Date, (A) the aggregate Scheduled Principal Balance
of the Mortgage Loans delinquent 60 days or more (including for this purpose any
such Mortgage Loans in foreclosure and bankruptcy and Mortgage Loans with
respect to which the related Mortgaged Property has been acquired by the Trust),
averaged over the last six months, as a percentage of the sum of the aggregate
Current Principal Amount of the Subordinate Certificates does not exceed 50%;
and (B) cumulative Realized Losses on the Mortgage Loans do not exceed (a) 30%
of the Original Subordinate Principal Balance if such Distribution Date occurs
between and including July 2011 and June 2012, (b) 35% of the Original
Subordinate Principal Balance if such Distribution Date occurs between and
including July 2012 and June 2013, (c) 40% of the Original Subordinate Principal
Balance if such Distribution Date occurs between and including July 2013 and
June 2014, (d) 45% of the Original Subordinate Principal Balance if such
Distribution Date occurs between and including July 2014 and June 2015, and (e)
50% of the Original Subordinate Principal Balance if such Distribution Date
occurs during or after July 2015.

         In addition, if on any Distribution Date the current weighted average
of the Subordinate Percentages is equal to or greater than two times the initial
weighted average of the Subordinate Percentages, and (a) the aggregate Scheduled
Principal Balance of the Mortgage Loans delinquent 60 days or more (including
for this purpose any such Mortgage Loans in foreclosure and bankruptcy and such
Mortgage Loans with respect to which the related Mortgaged Property has been
acquired by the Trust), averaged over the last six months, as a percentage of
the aggregate Current Principal Amount of the Subordinate Certificates does not
exceed 50% and (b)(i) on or prior to the Distribution Date in June 2007
cumulative Realized Losses on the Mortgage Loans as of the end of the related
Prepayment Period do not exceed 20% of the Original Subordinate Principal
Balance and (ii) after the Distribution Date in June 2007 cumulative Realized
Losses on the Mortgage Loans as of the end of the related Prepayment Period do
not exceed 30% of the Original Subordinate Principal Balance, then, the Group II
Senior Prepayment Percentage for such Distribution Date will equal the Group II
Senior Percentage; provided, however, if on such Distribution Date the current
weighted average of the Subordinate Percentages is equal to or greater than two
times the initial weighted average of the Subordinate Percentages on or prior to
the Distribution Date occurring in June 2007

                                      -13-

<PAGE>

and the above delinquency and loss tests are met, then the Group II Senior
Prepayment Percentage for such Distribution Date will equal the Group II Senior
Percentage plus 50% of the Group II Subordinate Percentage.

         Notwithstanding the foregoing, if on any Distribution Date, the
percentage, the numerator which is the aggregate Current Principal Amount of the
Senior Certificates immediately preceding such Distribution Date, and the
denominator of which is the Scheduled Principal Balance of the Mortgage Loans as
of the beginning of the related Due Period, exceeds such percentage as of the
Cut-off Date, then the Group II Senior Prepayment Percentage for such
distribution date will equal 100%. On the Distribution Date on which the Current
Principal Amounts of the Group II Senior Certificates are reduced to zero, the
Group II Senior Prepayment Percentage shall be the minimum percentage sufficient
to effect such reduction and thereafter shall be zero.

         GROUP II SUBORDINATE PERCENTAGE: On any Distribution Date, 100% minus
the Group II Senior Percentage.

         GROUP II SUBORDINATE PREPAYMENT PERCENTAGE: With respect to the Group
II Mortgage Loans, on any Distribution Date, 100% minus the Group II Senior
Prepayment Percentage, except that on any Distribution Date after the Current
Principal Amounts of the Group II Senior Certificates have each been reduced to
zero, if (a) the weighted average of the Subordinate Percentages on such
Distribution Date equals or exceeds two times the initial weighted average of
the Subordinate Percentages and (b) the aggregate Scheduled Principal Balance of
the Mortgage Loans delinquent 60 days or more (including for this purpose any
such Mortgage Loans in foreclosure and Mortgage Loans with respect to which the
related Mortgaged Property has been acquired by the Trust), averaged over the
last six months, as a percentage of the sum of the aggregate Current Principal
Amount of the Subordinate Certificates does not exceed 100%, the Group II
Subordinate Prepayment Percentage will equal 100%. If the test set forth in the
preceding sentence is not satisfied on any Distribution Date after the Current
Principal Amount of the Group II Senior Certificates have each been reduced to
zero, then the Group II Subordinate Prepayment Percentage will equal zero for
such Distribution Date.

         GROUP III MORTGAGE LOANS: The Mortgage Loans identified as such on the
Mortgage Loan Schedule.

         GROUP III SENIOR CERTIFICATES: The Class III-A Certificates.

         GROUP III SENIOR PERCENTAGE: Initially, 96.90%. On any Distribution
Date, the lesser of (i) 100% and (ii) the percentage (carried to six places
rounded up) obtained by dividing the aggregate Current Principal Amount of the
Group III Senior Certificates immediately preceding such Distribution Date by
the aggregate Scheduled Principal Balance of the Group III Mortgage Loans as of
the beginning of the related Due Period.

                                      -14-

<PAGE>

         GROUP III SENIOR PREPAYMENT PERCENTAGE: On any Distribution Date
occurring during the periods set forth below, as follows:

<TABLE>
<CAPTION>
<S>                                                     <C>
Period (dates inclusive)                              Group III Senior Prepayment Percentage
----------------------------------------------------- -------------------------------------------
July 25, 2004 - June, 2011                            100%
July 25, 2011 - June, 2012                            Group III Senior Percentage plus 70% of the
                                                      Group III Subordinate Percentage
July 25, 2012 - June, 2013                            Group III Senior Percentage plus 60% of the
                                                      Group III Subordinate Percentage
July 25, 2013 - June, 2014                            Group III Senior Percentage plus 40% of the
                                                      Group III Subordinate Percentage
July 25, 2014 - June, 2015                            Group III Senior Percentage plus 20% of the
                                                      Group III Subordinate Percentage
July 25, 2015 and thereafter                          Group III Senior Percentage
</TABLE>

         In addition, no reduction of the Group III Senior Prepayment Percentage
shall occur on any Distribution Date unless, as of the last day of the month
preceding such Distribution Date, (A) the aggregate Scheduled Principal Balance
of the Mortgage Loans delinquent 60 days or more (including for this purpose any
such Mortgage Loans in foreclosure and bankruptcy and Mortgage Loans with
respect to which the related Mortgaged Property has been acquired by the Trust),
averaged over the last six months, as a percentage of the sum of the aggregate
Current Principal Amount of the Subordinate Certificates does not exceed 50%;
and (B) cumulative Realized Losses on the Mortgage Loans do not exceed (a) 30%
of the Original Subordinate Principal Balance if such Distribution Date occurs
between and including July 2011 and June 2012, (b) 35% of the Original
Subordinate Principal Balance if such Distribution Date occurs between and
including July 2012 and June 2013, (c) 40% of the Original Subordinate Principal
Balance if such Distribution Date occurs between and including July 2013 and
June 2014, (d) 45% of the Original Subordinate Principal Balance if such
Distribution Date occurs between and including July 2014 and June 2015, and (e)
50% of the Original Subordinate Principal Balance if such Distribution Date
occurs during or after July 2015.

         In addition, if on any Distribution Date the current weighted average
of the Subordinate Percentages is equal to or greater than two times the initial
weighted average of the Subordinate Percentages, and (a) the aggregate Scheduled
Principal Balance of the Mortgage Loans delinquent 60 days or more (including
for this purpose any such Mortgage Loans in foreclosure and bankruptcy and such
Mortgage Loans with respect to which the related Mortgaged Property has been
acquired by the Trust), averaged over the last six months, as a percentage of
the aggregate Current Principal Amount of the Subordinate Certificates does not
exceed 50% and (b)(i) on or prior to the Distribution Date in June 2007
cumulative Realized Losses on the Mortgage Loans as of the end of the related
Prepayment Period do not exceed 20% of the Original Subordinate Principal
Balance and (ii) after the Distribution Date in June 2007 cumulative Realized
Losses on the Mortgage Loans as of the end of the related Prepayment Period do
not exceed 30% of the Original Subordinate Principal Balance, then, the Group
III Senior Prepayment Percentage for such Distribution Date will equal the Group
III Senior Percentage; provided, however, if on such Distribution Date the
current weighted average of the Subordinate Percentages is equal to or greater
than two times the initial weighted average of the Subordinate Percentages on or
prior to the Distribution Date occurring in June 2007

                                      -15-

<PAGE>

and the above delinquency and loss tests are met, then the Group III Senior
Prepayment Percentage for such Distribution Date will equal the Group III Senior
Percentage plus 50% of the Group III Subordinate Percentage.

         Notwithstanding the foregoing, if on any Distribution Date, the
percentage, the numerator which is the aggregate Current Principal Amount of the
Senior Certificates immediately preceding such Distribution Date, and the
denominator of which is the Scheduled Principal Balance of the Mortgage Loans as
of the beginning of the related Due Period, exceeds such percentage as of the
Cut-off Date, then the Group III Senior Prepayment Percentage for such
distribution date will equal 100%. On the Distribution Date on which the Current
Principal Amounts of the Group III Senior Certificates are reduced to zero, the
Group III Senior Prepayment Percentage shall be the minimum percentage
sufficient to effect such reduction and thereafter shall be zero.

         GROUP III SUBORDINATE PERCENTAGE: On any Distribution Date, 100% minus
the Group III Senior Percentage.

         GROUP III SUBORDINATE PREPAYMENT PERCENTAGE: With respect to the Group
III Mortgage Loans, on any Distribution Date, 100% minus the Group III Senior
Prepayment Percentage, except that on any Distribution Date after the Current
Principal Amounts of the Group III Senior Certificates have each been reduced to
zero, if (a) the weighted average of the Subordinate Percentages on such
Distribution Date equals or exceeds two times the initial weighted average of
the Subordinate Percentages and (b) the aggregate Scheduled Principal Balance of
the Mortgage Loans delinquent 60 days or more (including for this purpose any
such Mortgage Loans in foreclosure and Mortgage Loans with respect to which the
related Mortgaged Property has been acquired by the Trust), averaged over the
last six months, as a percentage of the sum of the aggregate Current Principal
Amount of the Subordinate Certificates does not exceed 100%, the Group III
Subordinate Prepayment Percentage will equal 100%. If the test set forth in the
preceding sentence is not satisfied on any Distribution Date after the Current
Principal Amount of the Group III Senior Certificates have each been reduced to
zero, then the Group III Subordinate Prepayment Percentage will equal zero for
such Distribution Date.

         GROUP IV MORTGAGE LOANS: The Mortgage Loans identified as such on the
Mortgage Loan Schedule.

         GROUP IV SENIOR CERTIFICATES: The Class IV-A Certificates.

         GROUP IV SENIOR PERCENTAGE: Initially, 96.90%. On any Distribution
Date, the lesser of (i) 100% and (ii) the percentage (carried to six places
rounded up) obtained by dividing the aggregate Current Principal Amount of the
Group IV Senior Certificates immediately preceding such Distribution Date by the
aggregate Scheduled Principal Balance of the Group IV Mortgage Loans as of the
beginning of the related Due Period.

                                      -16-

<PAGE>

         GROUP IV SENIOR PREPAYMENT PERCENTAGE: On any Distribution Date
occurring during the periods set forth below, as follows:

<TABLE>
<CAPTION>
<S>                                                     <C>
Period (dates inclusive)                              Group IV Senior Prepayment Percentage
----------------------------------------------------- ------------------------------------------
July 25, 2004 - June, 2011                            100%
July 25, 2011 - June, 2012                            Group IV Senior Percentage plus 70% of the
                                                      Group IV Subordinate Percentage
July 25, 2012 - June, 2013                            Group IV Senior Percentage plus 60% of the
                                                      Group IV Subordinate Percentage
July 25, 2013 - June, 2014                            Group IV Senior Percentage plus 40% of the
                                                      Group IV Subordinate Percentage
July 25, 2014 - June, 2015                            Group IV Senior Percentage plus 20% of the
                                                      Group IV Subordinate Percentage
July 25, 2015 and thereafter                          Group IV Senior Percentage
</TABLE>

         In addition, no reduction of the Group IV Senior Prepayment Percentage
shall occur on any Distribution Date unless, as of the last day of the month
preceding such Distribution Date, (A) the aggregate Scheduled Principal Balance
of the Mortgage Loans delinquent 60 days or more (including for this purpose any
such Mortgage Loans in foreclosure and bankruptcy and Mortgage Loans with
respect to which the related Mortgaged Property has been acquired by the Trust),
averaged over the last six months, as a percentage of the sum of the aggregate
Current Principal Amount of the Subordinate Certificates does not exceed 50%;
and (B) cumulative Realized Losses on the Mortgage Loans do not exceed (a) 30%
of the Original Subordinate Principal Balance if such Distribution Date occurs
between and including July 2011 and June 2012, (b) 35% of the Original
Subordinate Principal Balance if such Distribution Date occurs between and
including July 2012 and June 2013, (c) 40% of the Original Subordinate Principal
Balance if such Distribution Date occurs between and including July 2013 and
June 2014, (d) 45% of the Original Subordinate Principal Balance if such
Distribution Date occurs between and including July 2014 and June 2015, and (e)
50% of the Original Subordinate Principal Balance if such Distribution Date
occurs during or after July 2015.

         In addition, if on any Distribution Date the current weighted average
of the Subordinate Percentages is equal to or greater than two times the initial
weighted average of the Subordinate Percentages, and (a) the aggregate Scheduled
Principal Balance of the Mortgage Loans delinquent 60 days or more (including
for this purpose any such Mortgage Loans in foreclosure and bankruptcy and such
Mortgage Loans with respect to which the related Mortgaged Property has been
acquired by the Trust), averaged over the last six months, as a percentage of
the aggregate Current Principal Amount of the Subordinate Certificates does not
exceed 50% and (b)(i) on or prior to the Distribution Date in June 2007
cumulative Realized Losses on the Mortgage Loans as of the end of the related
Prepayment Period do not exceed 20% of the Original Subordinate Principal
Balance and (ii) after the Distribution Date in June 2007 cumulative Realized
Losses on the Mortgage Loans as of the end of the related Prepayment Period do
not exceed 30% of the Original Subordinate Principal Balance, then, the Group IV
Senior Prepayment Percentage for such Distribution Date will equal the Group IV
Senior Percentage; provided, however, if on such Distribution Date the current
weighted average of the Subordinate Percentages is equal to or greater than two
times the initial weighted average of the Subordinate Percentages on or prior to
the Distribution Date occurring in June 2007

                                      -17-

<PAGE>

and the above delinquency and loss tests are met, then the Group IV Senior
Prepayment Percentage for such Distribution Date will equal the Group IV Senior
Percentage plus 50% of the Group IV Subordinate Percentage.

         Notwithstanding the foregoing, if on any Distribution Date, the
percentage, the numerator which is the aggregate Current Principal Amount of the
Senior Certificates immediately preceding such Distribution Date, and the
denominator of which is the Scheduled Principal Balance of the Mortgage Loans as
of the beginning of the related Due Period, exceeds such percentage as of the
Cut-off Date, then the Group IV Senior Prepayment Percentage for such
distribution date will equal 100%. On the Distribution Date on which the Current
Principal Amounts of the Group IV Senior Certificates are reduced to zero, the
Group IV Senior Prepayment Percentage shall be the minimum percentage sufficient
to effect such reduction and thereafter shall be zero.

         GROUP IV SUBORDINATE PERCENTAGE: On any Distribution Date, 100% minus
the Group IV Senior Percentage.

         GROUP IV SUBORDINATE PREPAYMENT PERCENTAGE: With respect to the Group
IV Mortgage Loans, on any Distribution Date, 100% minus the Group IV Senior
Prepayment Percentage, except that on any Distribution Date after the Current
Principal Amounts of the Group IV Senior Certificates have each been reduced to
zero, if (a) the weighted average of the Subordinate Percentages on such
Distribution Date equals or exceeds two times the initial weighted average of
the Subordinate Percentages and (b) the aggregate Scheduled Principal Balance of
the Mortgage Loans delinquent 60 days or more (including for this purpose any
such Mortgage Loans in foreclosure and Mortgage Loans with respect to which the
related Mortgaged Property has been acquired by the Trust), averaged over the
last six months, as a percentage of the sum of the aggregate Current Principal
Amount of the Subordinate Certificates does not exceed 100%, the Group IV
Subordinate Prepayment Percentage will equal 100%. If the test set forth in the
preceding sentence is not satisfied on any Distribution Date after the Current
Principal Amount of the Group IV Senior Certificates have each been reduced to
zero, then the Group IV Subordinate Prepayment Percentage will equal zero for
such Distribution Date.

         HOLDER: The Person in whose name a Certificate is registered in the
Certificate Register, except that, subject to Subsections 11.02(b) and 11.05(e),
solely for the purpose of giving any consent pursuant to this Agreement, any
Certificate registered in the name of the Depositor, the Master Servicer or the
Trustee or any Affiliate thereof shall be deemed not to be outstanding and the
Fractional Undivided Interest evidenced thereby shall not be taken into account
in determining whether the requisite percentage of Fractional Undivided
Interests necessary to effect any such consent has been obtained.

         INDEMNIFIED PERSONS: The Trustee, the Master Servicer, the Custodian
and the Securities Administrator and their officers, directors, agents and
employees and, with respect to the Trustee, any separate co-trustee and its
officers, directors, agents and employees.

         INDEPENDENT: When used with respect to any specified Person, this term
means that such Person (a) is in fact independent of the Depositor or the Master
Servicer and of any Affiliate of the Depositor or the Master Servicer, (b) does
not have any direct financial interest or any material

                                      -18-

<PAGE>

indirect financial interest in the Depositor or the Master Servicer or any
Affiliate of the Depositor or the Master Servicer and (c) is not connected with
the Depositor or the Master Servicer or any Affiliate as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions.

         INDEX: The index, if any, specified in a Mortgage Note by reference to
which the related Mortgage Interest Rate will be adjusted from time to time.

         INDIVIDUAL CERTIFICATE: Any Private Certificate registered in the name
of the Holder other than the Depository or its nominee.

         INITIAL CERTIFICATION: The certification substantially in the form of
Exhibit One to the Custodial Agreement.

         INSTITUTIONAL ACCREDITED INVESTOR: Any Person meeting the requirements
of Rule 501(a)(l), (2), (3) or (7) of Regulation D under the Securities Act or
any entity all of the equity holders in which come within such paragraphs.

         INSURANCE POLICY: With respect to any Mortgage Loan, any standard
hazard insurance policy, flood insurance policy or title insurance policy.

         INSURANCE PROCEEDS: Amounts paid by the insurer under any Insurance
Policy covering any Mortgage Loan or Mortgaged Property other than amounts
required to be paid over to the Mortgagor pursuant to law or the related
Mortgage Note or Security Instrument and other than amounts used to repair or
restore the Mortgaged Property or to reimburse insured expenses.

         INTEREST ACCRUAL PERIOD: With respect to each Distribution Date, for
each Class of Certificates, the calendar month preceding the month in which such
Distribution Date occurs.

         INTEREST ADJUSTMENT DATE: With respect to a Mortgage Loan, the date, if
any, specified in the related Mortgage Note on which the Mortgage Interest Rate
is subject to adjustment.

         INTEREST SHORTFALL: With respect to any Distribution Date and each
Mortgage Loan that during the related Prepayment Period was the subject of a
Principal Prepayment or constitutes a Relief Act Mortgage Loan, an amount
determined as follows:

         (a) Partial principal prepayments received during the relevant
Prepayment Period: The difference between (i) one month's interest at the
applicable Net Rate on the amount of such prepayment and (ii) the amount of
interest for the calendar month of such prepayment (adjusted to the applicable
Net Rate) received at the time of such prepayment;

         (b) Principal prepayments in full received during the relevant
Prepayment Period: The difference between (i) one month's interest at the
applicable Net Rate on the Scheduled Principal Balance of such Mortgage Loan
immediately prior to such prepayment and (ii) the amount of interest for the
calendar month of such prepayment (adjusted to the applicable Net Rate) received
at the time of such prepayment; and

                                      -19-

<PAGE>

         (c) Relief Act Mortgage Loans: As to any Relief Act Mortgage Loan, the
excess of (i) 30 days' interest (or, in the case of a principal prepayment in
full, interest to the date of prepayment) on the Scheduled Principal Balance
thereof (or, in the case of a principal prepayment in part, on the amount so
prepaid) at the related Net Rate over (ii) 30 days' interest (or, in the case of
a principal prepayment in full, interest to the date of prepayment) on such
Scheduled Principal Balance (or, in the case of a Principal Prepayment in part,
on the amount so prepaid) at the Net Rate required to be paid by the Mortgagor
as limited by application of the Relief Act.

         INTERIM CERTIFICATION: The certification substantially in the form of
Exhibit Two to the Custodial Agreement.

         INVESTMENT LETTER: The letter to be furnished by each Institutional
Accredited Investor which purchases any of the Private Certificates in
connection with such purchase, substantially in the form set forth as Exhibit
F-1 hereto.

         LENDER-PAID PMI RATE: With respect to each Mortgage Loan covered by a
lender-paid primary mortgage insurance policy, the amount payable to the related
insurer, as stated in the Mortgage Loan Schedule.

         LIQUIDATED MORTGAGE LOAN: Any defaulted Mortgage Loan as to which the
Servicer or the Master Servicer has determined that all amounts it expects to
recover from or on account of such Mortgage Loan have been recovered.

         LIQUIDATION DATE: With respect to any Liquidated Mortgage Loan, the
date on which the Master Servicer or the Servicer has certified that such
Mortgage Loan has become a Liquidated Mortgage Loan.

         LIQUIDATION EXPENSES: With respect to a Mortgage Loan in liquidation,
unreimbursed expenses paid or incurred by or for the account of the Master
Servicer or the Servicer in connection with the liquidation of such Mortgage
Loan and the related Mortgage Property, such expenses including (a) property
protection expenses, (b) property sales expenses, (c) foreclosure and sale
costs, including court costs and reasonable attorneys' fees, and (d) similar
expenses reasonably paid or incurred in connection with liquidation.

         LIQUIDATION PROCEEDS: Cash received in connection with the liquidation
of a defaulted Mortgage Loan, whether through trustee's sale, foreclosure sale,
Insurance Proceeds, condemnation proceeds or otherwise and any Subsequent
Recoveries.

         LOAN GROUP: Loan Group I, Loan Group II, Loan Group III or Loan Group
IV, as applicable.

         LOAN GROUP I: The group of Mortgage Loans designated as belonging to
Loan Group I on the Mortgage Loan Schedule.

         LOAN GROUP II: The group of Mortgage Loans designated as belonging to
Loan Group II on the Mortgage Loan Schedule.

                                      -20-

<PAGE>

         LOAN GROUP III: The group of Mortgage Loans designated as belonging to
Loan Group III on the Mortgage Loan Schedule.

         LOAN GROUP IV: The group of Mortgage Loans designated as belonging to
Loan Group IV on the Mortgage Loan Schedule.

         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
Original Value of the related Mortgaged Property.

         LOSS ALLOCATION LIMITATION: The meaning specified in Section 6.02(c)
hereof.

         LOSS SEVERITY PERCENTAGE: With respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the amount of
Realized Losses incurred on a Mortgage Loan and the denominator of which is the
Scheduled Principal Balance of such Mortgage Loan immediately prior to the
liquidation of such Mortgage Loan.

         LOST NOTES: The original Mortgage Notes that have been lost, as
indicated on the Mortgage Loan Schedule.

         MASTER SERVICER: As of the Closing Date, Wells Fargo Bank, National
Association and, thereafter, its respective successors in interest who meet the
qualifications of the Servicing Agreement and this Agreement.

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

         MASTER SERVICER COLLECTION ACCOUNT: The trust account or accounts
created and maintained pursuant to Section 4.02, which shall be denominated
"U.S. Bank National Association, as Trustee f/b/o holders of Structured Asset
Mortgage Investments II Inc., Bear Stearns ARM Trust, Mortgage Pass-Through
Certificates, Series 2004-5 - Master Servicer Collection Account." The Master
Servicer Collection Account shall be an Eligible Account.

                                      -21-

<PAGE>

         MASTER SERVICING COMPENSATION: The meaning specified in Section 3.14.

         MATERIAL DEFECT: The meaning specified in Section 2.02(a).

         MAXIMUM LIFETIME MORTGAGE RATE: The maximum level to which a Mortgage
Interest Rate can adjust in accordance with its terms, regardless of changes in
the applicable Index.

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

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

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

         MINIMUM LIFETIME MORTGAGE RATE: The minimum level to which a Mortgage
Interest Rate can adjust in accordance with its terms, regardless of changes in
the applicable Index.

         MOM LOAN: With respect to any Mortgage Loan, MERS acting as the
mortgagee of such Mortgage Loan, solely as nominee for the originator of such
Mortgage Loan and its successors and assigns, at the origination thereof, or as
nominee for any subsequent assignee of the originator pursuant to an assignment
of mortgage to MERS.

         MONTHLY ADVANCE: An advance of principal or interest required to be
made by the Servicer pursuant to the Servicing Agreement or the Master Servicer
pursuant to Section 6.05.

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

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

         MORTGAGE INTEREST RATE: The annual rate at which interest accrues from
time to time on any Mortgage Loan pursuant to the related Mortgage Note, which
rate is initially equal to the "Mortgage Interest Rate" set forth with respect
thereto on the Mortgage Loan Schedule.

         MORTGAGE LOAN: A mortgage loan transferred and assigned to the Trustee
pursuant to Section 2.01 or Section 2.04 and held as a part of the Trust Fund,
as identified in the Mortgage Loan Schedule (which shall include, without
limitation, each related Mortgage Note, Mortgage and Mortgage File and all
rights appertaining thereto), including a mortgage loan the property securing
which has become an REO Property.

         MORTGAGE LOAN PURCHASE AGREEMENT: The Mortgage Loan Purchase Agreement
dated as of

                                      -22-

<PAGE>

June 18, 2004, between EMC Mortgage Corporation, as seller, and Structured Asset
Mortgage Investments II Inc., as purchaser, and all amendments thereof and
supplements thereto, attached as Exhibit J.

         MORTGAGE LOAN SCHEDULE: The schedule, attached hereto as Exhibit B with
respect to the Mortgage Loans and as amended from time to time to reflect the
repurchase or substitution of Mortgage Loans pursuant to this Agreement.

         MORTGAGE NOTE: The originally executed note or other evidence of the
indebtedness of a Mortgagor under the related Mortgage Loan.

         MORTGAGED PROPERTY: Land and improvements securing the indebtedness of
a Mortgagor under the related Mortgage Loan or, in the case of REO Property,
such REO Property.

         MORTGAGOR: The obligor on a Mortgage Note.

         NET INTEREST SHORTFALL: With respect to any Distribution Date, the
Interest Shortfall, if any, for such Distribution Date net of Compensating
Interest Payments made with respect to such Distribution Date.

         NET LIQUIDATION PROCEEDS: As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of (i) Liquidation Expenses which are payable therefrom
to the Servicer or the Master Servicer in accordance with the Servicing
Agreement or this Agreement and (ii) unreimbursed advances by the Servicer or
the Master Servicer and Monthly Advances.

         NET RATE: With respect to each Mortgage Loan, the Mortgage Interest
Rate in effect from time to time less the Aggregate Expense Rate (expressed as a
per annum rate).

         NON-OFFERED SUBORDINATE CERTIFICATES: The Class B-4, Class B-5 and
Class B-6 Certificates.

         NONRECOVERABLE ADVANCE: Any advance or Monthly Advance (i) which was
previously made or is proposed to be made by the Master Servicer, the Trustee
(as successor Master Servicer) or the Servicer and (ii) which, in the good faith
judgment of the Master Servicer, the Trustee or the Servicer, will not or, in
the case of a proposed advance or Monthly Advance, would not, be ultimately
recoverable by the Master Servicer, the Trustee (as successor Master Servicer)
or the Servicer from Liquidation Proceeds, Insurance Proceeds or future payments
on the Mortgage Loan for which such advance or Monthly Advance was made or is
proposed to be made.

         OFFERED CERTIFICATES: The Class I-A, Class II-A, Class III-A, Class
IV-A, Class R-I, Class R- II, Class B-l, Class B-2 and Class B-3 Certificates.

         OFFERED SUBORDINATE CERTIFICATES: The Class B-l, Class B-2 and Class
B-3 Certificates.

         OFFICER'S CERTIFICATE: A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a Vice President or
Assistant Vice President or other authorized officer

                                      -23-

<PAGE>

of the Master Servicer or the Depositor, as applicable, and delivered to the
Trustee, as required by this Agreement.

         OPINION OF COUNSEL: A written opinion of counsel who is or are
acceptable to the Trustee and who, unless required to be Independent (an
"Opinion of Independent Counsel"), may be internal counsel for the Company, the
Master Servicer or the Depositor.

         ORIGINAL SUBORDINATE PRINCIPAL BALANCE: The sum of the aggregate
Current Principal Amounts of each Class of Subordinate Certificates as of the
Closing Date.

         ORIGINAL VALUE: The lesser of (i) the Appraised Value or (ii) the sales
price of a Mortgaged Property at the time of origination of a Mortgage Loan,
except in instances where either clauses (i) or (ii) is unavailable, the other
may be used to determine the Original Value, or if both clauses (i) and (ii) are
unavailable, Original Value may be determined from other sources reasonably
acceptable to the Depositor.

         OUTSTANDING MORTGAGE LOAN: With respect to any Due Date, a Mortgage
Loan which, prior to such Due Date, was not the subject of a Principal
Prepayment in full, did not become a Liquidated Mortgage Loan and was not
purchased or replaced.

         OUTSTANDING PRINCIPAL BALANCE: As of the time of any determination, the
principal balance of a Mortgage Loan remaining to be paid by the Mortgagor, or,
in the case of an REO Property, the principal balance of the related Mortgage
Loan remaining to be paid by the Mortgagor at the time such property was
acquired by the Trust Fund less any Net Liquidation Proceeds with respect
thereto to the extent applied to principal.

         PASS-THROUGH RATE: As to each Class of Certificates and the REMIC I
Regular Interests, the rate of interest determined as provided with respect
thereto, in Section 5.01(c). Any monthly calculation of interest at a stated
rate shall be based upon annual interest at such rate divided by twelve.

         PERIODIC RATE CAP: With respect to each Mortgage Loan, the maximum
adjustment that can be made to the Mortgage Interest Rate on each Interest
Adjustment Date in accordance with its terms, regardless of changes in the
applicable Index.

         PERMITTED INVESTMENTS: Any one or more of the following obligations or
securities held in the name of the Trustee for the benefit of the
Certificateholders:

                  (i) direct obligations of, and obligations the timely payment
of which are fully guaranteed by the United States of America or any agency or
instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America;

                  (ii) (a) demand or time deposits, federal funds or bankers'
acceptances issued by any depository institution or trust company incorporated
under the laws of the United States of America or any state thereof (including
the Trustee or the Master Servicer or its Affiliates acting in

                                      -24-

<PAGE>

its commercial banking capacity) and subject to supervision and examination by
federal and/or state banking authorities, provided that the commercial paper
and/or the short-term debt rating and/or the long-term unsecured debt
obligations of such depository institution or trust company at the time of such
investment or contractual commitment providing for such investment have the
Applicable Credit Rating or better from each Rating Agency and (b) any other
demand or time deposit or certificate of deposit that is fully insured by the
Federal Deposit Insurance Corporation;

                  (iii) repurchase obligations with respect to (a) any security
described in clause (i) above or (b) any other security issued or guaranteed by
an agency or instrumentality of the United States of America, the obligations of
which are backed by the full faith and credit of the United States of America,
in either case entered into with a depository institution or trust company
(acting as principal) described in clause (ii)(a) above where the Trustee holds
the security therefor;

                  (iv) securities bearing interest or sold at a discount issued
by any corporation (including the Trustee or the Master Servicer or its
Affiliates) incorporated under the laws of the United States of America or any
state thereof that have the Applicable Credit Rating or better from each Rating
Agency at the time of such investment or contractual commitment providing for
such investment; provided, however, that securities issued by any particular
corporation will not be Permitted Investments to the extent that investments
therein will cause the then outstanding principal amount of securities issued by
such corporation and held as part of the Trust to exceed 10% of the aggregate
Outstanding Principal Balances of all the Mortgage Loans and Permitted
Investments held as part of the Trust;

                  (v) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of issuance thereof) having
the Applicable Credit Rating or better from each Rating Agency at the time of
such investment;

                  (vi) a Reinvestment Agreement issued by any bank, insurance
company or other corporation or entity;

                  (vii) any other demand, money market or time deposit,
obligation, security or investment as may be acceptable to each Rating Agency as
evidenced in writing by each Rating Agency to the Trustee; and

                  (viii) any money market or common trust fund having the
Applicable Credit Rating or better from each Rating Agency, including any such
fund for which the Trustee or Master Servicer or any affiliate of the Trustee or
Master Servicer acts as a manager or an advisor; provided, however, that no
instrument or security shall be a Permitted Investment if such instrument or
security evidences a right to receive only interest payments with respect to the
obligations underlying such instrument or if such security provides for payment
of both principal and interest with a yield to maturity in excess of 120% of the
yield to maturity at par or if such instrument or security is purchased at a
price greater than par.

         PERMITTED TRANSFEREE: Any Person other than a Disqualified Organization
or an "electing large partnership" (as defined by Section 775 of the Code).

                                      -25-

<PAGE>

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

         PHYSICAL CERTIFICATES: The Residual Certificates and the Private
Certificates.

         PREPAYMENT CHARGE: With respect to any Mortgage Loan, the charges or
premiums, if any, due in connection with a full or partial prepayment of such
Mortgage Loan in accordance with the terms thereof.

         PREPAYMENT PERIOD: With respect to any Mortgage Loan and any
Distribution Date, the calendar month preceding the month in which such
Distribution Date occurs.

         PRIMARY MORTGAGE INSURANCE POLICY: Any primary mortgage guaranty
insurance policy issued in connection with a Mortgage Loan which provides
compensation to a Mortgage Note holder in the event of default by the obligor
under such Mortgage Note or the related Security Instrument, if any or any
replacement policy therefor through the related Interest Accrual Period for such
Class relating to a Distribution Date.

         PRINCIPAL PREPAYMENT: Any payment (whether partial or full) or other
recovery of principal on a Mortgage Loan which is received in advance of its
scheduled Due Date to the extent that it 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, including Insurance Proceeds
and Repurchase Proceeds, but excluding the principal portion of Net Liquidation
Proceeds.

         PRIVATE CERTIFICATES: The Class B-4, Class B-5 and Class B-6
Certificates.

         PROTECTED ACCOUNT: An account established and maintained for the
benefit of Certificateholders by the Servicer with respect to the Mortgage Loans
and with respect to REO Property pursuant to the Servicing Agreement.

         QIB: A Qualified Institutional Buyer as defined in Rule 144A
promulgated under the Securities Act.

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

         RATING AGENCIES: Moody's and S&P.

         REALIZED LOSS: Any (i) Bankruptcy Loss or (ii) as to any Liquidated
Mortgage Loan, (x) the Outstanding Principal Balance of such Liquidated Mortgage
Loan plus accrued and unpaid interest thereon at the Mortgage Interest Rate
through the last day of the month of such liquidation, less (y)

                                      -26-

<PAGE>

the related Net Liquidation Proceeds with respect to such Mortgage Loan and the
related Mortgaged Property. In addition, to the extent the Master Servicer
receives Subsequent Recoveries with respect to any Mortgage Loan, the amount of
the Realized Loss with respect to that Mortgage Loan will be reduced to the
extent such recoveries are applied to reduce the Current Principal Amount of any
Class of Certificates on any Distribution Date.

         RECORD DATE: With respect to any Distribution Date, the close of
business on the last Business Day of the month immediately preceding the month
of such Distribution Date.

         REINVESTMENT AGREEMENTS: One or more reinvestment agreements,
acceptable to the Rating Agencies, from a bank, insurance company or other
corporation or entity (including the Trustee).

         RELIEF ACT: The Servicemembers Civil Relief Act, or similar state law.

         RELIEF ACT MORTGAGE LOAN: Any Mortgage Loan as to which the Scheduled
Payment thereof has been reduced due to the application of the Relief Act.

         REMIC: A real estate mortgage investment conduit, as defined in the
Code.

         REMIC I: That group of assets contained in the Trust Fund designated as
a REMIC consisting of (i) the Mortgage Loans, (ii) the Master Servicer
Collection Account, (iii) any REO Property relating to the Mortgage Loans, (iv)
the rights with respect to the Servicing Agreement, (v) the rights with respect
to the Assignment Agreement and (vi) any proceeds of the foregoing.

         REMIC I INTERESTS: The REMIC I Regular Interests and the Class R-I
Certificates.

         REMIC I REGULAR INTERESTS: REMIC I Regular Interests I-A, I-B, II-A,
II-B, III-A, III-B, IV- A, IV-B and ZZZ.

         REMIC I SUBORDINATED BALANCE RATIO: The ratio among the Uncertificated
Principal Balances of each of the REMIC I Regular Interests ending with the
designation "A," equal to the ratio among, with respect to each such REMIC I
Regular Interest, the excess of (x) the aggregate Scheduled Principal Balance of
the Mortgage Loans in the related Loan Group over (y) the Current Principal
Amount of the Senior Certificates in the related Certificate Group.

         REMIC II: That group of assets contained in the Trust Fund designated
as a REMIC consisting of the REMIC I Regular Interests.

         REMIC II INTERESTS: The REMIC II Regular Certificates and the Class
R-II Certificates.

         REMIC OPINION: An Opinion of Independent Counsel, to the effect that
the proposed action described therein would not, under the REMIC Provisions, (i)
cause any REMIC to fail to qualify as a REMIC while any regular interest in such
REMIC is outstanding, (ii) result in a tax on prohibited transactions with
respect to any REMIC or (iii) constitute a taxable contribution to any REMIC
after the Startup Day.

                                      -27-

<PAGE>

         REMIC PROVISIONS: The provisions of the federal income tax law relating
to the REMIC, which appear at Sections 860A through 860G of the Code, and
related provisions and regulations promulgated thereunder, as the foregoing may
be in effect from time to time.

         REO PROPERTY: A Mortgaged Property acquired in the name of the Trustee,
for the benefit of Certificateholders, by foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.

         REPURCHASE PRICE: With respect to any Mortgage Loan (or any property
acquired with respect thereto) required to be repurchased by the Seller pursuant
to the Mortgage Loan Purchase Agreement or Article II of this Agreement, an
amount equal to the sum of (i)(a) 100% of the Outstanding Principal Balance of
such Mortgage Loan as of the date of repurchase (or if the related Mortgaged
Property was acquired with respect thereto, 100% of the Outstanding Principal
Balance at the date of the acquisition), plus (b) accrued but unpaid interest on
the Outstanding Principal Balance at the related Mortgage Interest Rate, through
and including the last day of the month of repurchase, plus (c) any unreimbursed
Monthly Advances and servicing advances payable to the Servicer of the Mortgage
Loan or to the Master Servicer and (ii) any costs and damages (if any) incurred
by the Trust in connection with any violation of such Mortgage Loan of any
predatory lending laws.

         REPURCHASE PROCEEDS: the Repurchase Price in connection with any
repurchase of a Mortgage Loan by the Seller and any cash deposit in connection
with the substitution of a Mortgage Loan.

         REQUEST FOR RELEASE: A request for release in the form attached hereto
as Exhibit D.

         REQUIRED INSURANCE POLICY: With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under this
Agreement with respect to such Mortgage Loan.

         RESIDUAL CERTIFICATES: Any of the Class R Certificates.

         RESPONSIBLE OFFICER: Any officer assigned to the Corporate Trust Office
(or any successor thereto), including any Vice President, Assistant Vice
President, Trust Officer, any Assistant Secretary, any trust officer or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Agreement, and any other officer
of the Trustee to whom a matter arising hereunder may be referred.

         RULE 144A CERTIFICATE: The certificate to be furnished by each
purchaser of a Private Certificate (which is also a Physical Certificate) which
is a Qualified Institutional Buyer as defined under Rule 144A promulgated under
the Securities Act, substantially in the form set forth as Exhibit F-2 hereto.

         S&P: Standard & Poor's, a division of The McGraw-Hill Companies, Inc.,
and its successors in interest.

                                      -28-

<PAGE>

         SCHEDULED PAYMENT: With respect to any Mortgage Loan and any month, the
scheduled payment or payments of principal and interest due during such month on
such Mortgage Loan which either is payable by a Mortgagor in such month under
the related Mortgage Note or, in the case of REO Property, would otherwise have
been payable under the related Mortgage Note.

         SCHEDULED PRINCIPAL: The principal portion of any Scheduled Payment.

         SCHEDULED PRINCIPAL BALANCE: With respect to any Mortgage Loan on any
Distribution Date, (i) the unpaid principal balance of such Mortgage Loan as of
the close of business on the related Due Date (i.e., taking account of the
principal payment to be made on such Due Date and irrespective of any
delinquency in its payment), as specified in the amortization schedule at the
time relating thereto (before any adjustment to such amortization schedule by
reason of any bankruptcy or similar proceeding occurring after the Cut-off Date
(other than a Deficient Valuation) or any moratorium or similar waiver or grace
period) and less (ii) any Principal Prepayments (including the principal portion
of Net Liquidation Proceeds) received during or prior to the related Prepayment
Period; provided that the Scheduled Principal Balance of a Liquidated Mortgage
Loan is zero.

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

         SECURITIES ADMINISTRATOR: Wells Fargo Bank, National Association, or
its successor in interest, or any successor securities administrator appointed
as herein provided.

         SECURITIES LEGEND: "THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS
CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"), PURCHASING FOR
ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER
HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3)
IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE
MEANING THEREOF IN RULE 501(a)(1), (2), (3) or (7) OF REGULATION D UNDER THE ACT
OR ANY ENTITY IN WHICH ALL OF THE EQUITY OWNERS COME WITHIN SUCH PARAGRAPHS
PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, SUBJECT TO
(A) THE RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN
THE AGREEMENT AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE
ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND ANY
OTHER APPLICABLE JURISDICTION. THIS

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<PAGE>

CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON BEHALF OF, AN
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS SUBJECT TO TITLE
I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR SECTION
4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED [in the case of a Residual
Certificate:] UNLESS THE PROPOSED TRANSFEREE PROVIDES THE TRUSTEE WITH AN
OPINION OF COUNSEL ADDRESSED TO THE DEPOSITOR, TRUSTEE, MASTER SERVICER AND
SECURITIES ADMINISTRATOR AND ON WHICH THEY MAY RELY THAT IS SATISFACTORY TO THE
TRUSTEE THAT THE PURCHASE OF CERTIFICATES ON BEHALF OF SUCH PERSON WILL NOT
RESULT IN OR CONSTITUTE A NONEXEMPT PROHIBITED TRANSACTION, IS PERMISSIBLE UNDER
APPLICABLE LAW AND WILL NOT GIVE RISE TO ANY ADDITIONAL OBLIGATIONS ON THE PART
OF THE DEPOSITOR, THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR OR THE
TRUSTEE [in the case of the Class B-4, Class B-5 and Class B-6 Certificates:],
UNLESS THE TRANSFEREE CERTIFIES OR REPRESENTS THAT THE PROPOSED TRANSFER AND
HOLDING OF A CERTIFICATE AND THE SERVICING, MANAGEMENT AND OPERATION OF THE
TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN ANY PROHIBITED TRANSACTION WHICH IS
NOT COVERED UNDER AN INDIVIDUAL OR CLASS PROHIBITED TRANSACTION EXEMPTION,
INCLUDING, BUT NOT LIMITED TO, PROHIBITED TRANSACTION EXEMPTION ("PTE") 84-14,
PTE 91-38, PTE 90-1, PTE 95-60 OR PTE 96-23 AND (II) WILL NOT GIVE RISE TO ANY
ADDITIONAL OBLIGATIONS ON THE PART OF THE DEPOSITOR, THE SECURITIES
ADMINISTRATOR, THE MASTER SERVICER, ANY SERVICER OR THE TRUSTEE, WHICH WILL BE
DEEMED REPRESENTED BY AN OWNER OF A BOOK-ENTRY CERTIFICATE OR A GLOBAL
CERTIFICATE OR UNLESS AN OPINION OF COUNSEL SPECIFIED IN SECTION 5.07 OF THE
AGREEMENT IS PROVIDED."

         SECURITY INSTRUMENT: A written instrument creating a valid first lien
on a Mortgaged Property securing a Mortgage Note, which may be any applicable
form of mortgage, deed of trust, deed to secure debt or security deed, including
any riders or addenda thereto.

         SELLER: EMC Mortgage Corporation, as mortgage loan seller under the
Mortgage Loan Purchase Agreement.

         SENIOR CERTIFICATES: The Class I-A, Class II-A, Class III-A, Class
IV-A, Class R-I and Class R-II Certificates.

         SENIOR OPTIMAL PRINCIPAL AMOUNT: The Group I Senior Optimal Principal
Amount, Group II Senior Optimal Principal Amount, Group III Senior Optimal
Principal Amount or Group IV Senior Optimal Principal Amount, as applicable.

         SENIOR PERCENTAGE: The Group I Senior Percentage, Group II Senior
Percentage, Group III Senior Percentage or Group IV Senior Percentage, as
applicable.

         SENIOR PREPAYMENT PERCENTAGE: The Group I Senior Prepayment Percentage,
Group II Senior Prepayment Percentage, Group III Senior Prepayment Percentage or
Group IV Senior Prepayment Percentage, as applicable.

                                      -30-

<PAGE>

         SERVICER: With respect to each Mortgage Loan, GMACM.

         SERVICER REMITTANCE DATE: With respect to each Mortgage Loan, the date
set forth in the Servicing Agreement.

         SERVICING AGREEMENT: The GMACM Servicing Agreement.

         SERVICING FEE: As to any Mortgage Loan and Distribution Date, an amount
equal to the product of (i) the Scheduled Principal Balance of such Mortgage
Loan as of the Due Date in the preceding calendar month and (ii) the applicable
Servicing Fee Rate.

         SERVICING FEE RATE: As to any Mortgage Loan, a per annum rate as set
forth in the Mortgage Loan Schedule.

         SERVICING OFFICER: Any officer of the Servicer or Master Servicer
involved in or responsible for the administration and servicing or master
servicing, as applicable, of the Mortgage Loans as to which officer evidence,
reasonably acceptable to the Trustee, of due authorization of such officer by
the Servicer or Master Servicer, has been furnished from time to time to the
Trustee.

         STARTUP DAY: June 18, 2004.

         SUBORDINATE CERTIFICATES: The Class B-1, Class B-2, Class B-3, Class
B-4, Class B-5 and Class B-6 Certificates.

         SUBORDINATE CERTIFICATE WRITEDOWN AMOUNT: As to any Distribution Date,
the amount by which (a) the sum of the Current Principal Amounts of all the
Certificates (after giving effect to the distribution of principal and the
allocation of applicable Realized Losses in reduction of the Current Principal
Amounts of the Certificates on such Distribution Date) exceeds (b) the aggregate
Scheduled Principal Balances of the Mortgage Loans on the Due Date related to
such Distribution Date.

         SUBORDINATE OPTIMAL PRINCIPAL AMOUNT: As to any Distribution Date, an
amount equal to the sum, without duplication, of the following for the Group I,
Group II, Group III and Group IV Mortgage Loans (but in no event greater than
the aggregate Current Principal Amount of the Subordinate Certificates
immediately prior to such Distribution Date):

                  (i) the applicable Subordinate Percentage of the principal
                  portion of all Scheduled Payments due on each Outstanding
                  Mortgage Loan in the related Loan Group on the related Due
                  Date as specified in the amortization schedule at the time
                  applicable thereto (after adjustment for previous Principal
                  Prepayments but before any adjustment to such amortization
                  schedule by reason of any bankruptcy or similar proceeding or
                  any moratorium or similar waiver or grace period);

                  (ii) the applicable Subordinate Prepayment Percentage of the
                  Scheduled Principal Balance of each Mortgage Loan in the
                  related Loan Group that was the subject of a

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<PAGE>

                  Principal Prepayment in full received by the Master Servicer
                  during the related Prepayment Period;

                  (iii) the applicable Subordinate Prepayment Percentage of each
                  Principal Prepayment in part received during the related
                  Prepayment Period with respect to each Mortgage Loan in the
                  related Loan Group;

                  (iv) the excess, if any, of (a) all Net Liquidation Proceeds
                  allocable to principal received during the related Prepayment
                  Period in respect of each Liquidated Mortgage Loan in the
                  related Loan Group and all Subsequent Recoveries received in
                  respect of each Liquidated Mortgage Loan in the related Loan
                  Group during the related Due Period over (b) the sum of the
                  amounts distributable to the related Senior Certificateholders
                  pursuant to clause (iv) of the related definition of Senior
                  Optimal Principal Amount on such Distribution Date;

                  (v) the applicable Subordinate Prepayment Percentage of the
                  sum of (a) the Scheduled Principal Balance of each Mortgage
                  Loan in the related Loan Group which was purchased with
                  respect to such Distribution Date and (b) the difference, if
                  any, between the Scheduled Principal Balance of each Mortgage
                  Loan in the related Loan Group that has been replaced by the
                  Seller with a Substitute Mortgage Loan pursuant to the
                  Mortgage Loan Purchase Agreement in connection with such
                  Distribution Date over the Scheduled Principal Balance of each
                  such Substitute Mortgage Loan; and

                  (vi) on the Distribution Date on which the Current Principal
                  Amounts of the Group I Senior Certificates, Group II Senior
                  Certificates, Group III Senior Certificates or Group IV Senior
                  Certificates, have all been reduced to zero, 100% of the
                  related Senior Optimal Principal Amount. After the aggregate
                  Current Principal Amount of the Subordinate Certificates has
                  been reduced to zero, the Subordinate Optimal Principal Amount
                  shall be zero.

         SUBORDINATE PERCENTAGE: The Group I Subordinate Percentage, Group II
Subordinate Percentage, Group III Subordinate Percentage or Group IV Subordinate
Percentage with respect to the Group I Mortgage Loans, Group II Mortgage Loans,
Group III Mortgage Loans and Group IV Mortgage Loans, respectively.

         SUBORDINATE PREPAYMENT PERCENTAGE: The Group I Subordinate Prepayment
Percentage, Group II Subordinate Prepayment Percentage, Group III Subordinate
Prepayment Percentage or Group IV Subordinate Prepayment Percentage with respect
to the Group I Mortgage Loans, Group II Mortgage Loans, Group III Mortgage Loans
and Group IV Mortgage Loans, respectively.

         SUBSEQUENT RECOVERIES: As of any Distribution Date, amounts received by
the Master Servicer during the related Due Period or surplus amounts held by the
Master Servicer to cover estimated expenses (including, but not limited to,
recoveries in respect of the representations and warranties made by the Seller
pursuant to the Mortgage Loan Purchase Agreement) specifically related to a
Liquidated Mortgage Loan or disposition of an REO Property prior to the related

                                      -32-

<PAGE>

Prepayment Period that resulted in a Realized Loss, after the liquidation or
disposition of such Mortgage Loan.

         SUBSTITUTE MORTGAGE LOAN: A mortgage loan tendered to the Trustee
pursuant to the Servicing Agreement, the Mortgage Loan Purchase Agreement or
Section 2.04 of this Agreement, as applicable, in each case, (i) which has an
Outstanding Principal Balance not greater nor materially less than the Mortgage
Loan for which it is to be substituted; (ii) which has a Mortgage Interest Rate
and Net Rate not less than, and not materially greater than, such Mortgage Loan;
(iii) which has a maturity date not materially earlier or later than such
Mortgage Loan and not later than the latest maturity date of any Mortgage Loan;
(iv) which is of the same property type and occupancy typeas such Mortgage Loan;
(v) which has a Loan-to-Value Ratio not greater than the Loan-to-Value Ratio of
such Mortgage Loan; (vi) which is current in payment of principal and interest
as of the date of substitution; (vii) as to which the payment terms do not vary
in any material respect from the payment terms of the Mortgage Loan for which it
is to be substituted and (viii) which has a Gross Margin, Periodic Rate Cap and
Maximum Lifetime Mortgage Rate no less than those of such Mortgage Loan, has the
same Index and interval between Interest Adjustment Dates as such Mortgage Loan,
and a Minimum Lifetime Mortgage Rate no lower than that of such Mortgage Loan.

         TAX ADMINISTRATION AND TAX MATTERS PERSON: The Securities Administrator
or any successor thereto or assignee thereof shall serve as tax administrator
hereunder and as agent for the Tax Matters Person. The Holder of each Class of
Residual Certificates shall be the Tax Matters Person for the related REMIC, as
more particularly set forth in Section 9.12 hereof.

         TERMINATION PURCHASE PRICE: The price, calculated as set forth in
Section 10.01, to be paid in connection with the repurchase of the Mortgage
Loans pursuant to Section 10.01.

         TRUST FUND OR TRUST: The corpus of the trust created by this Agreement,
consisting of the Mortgage Loans and the other assets described in Section
2.01(a).

         TRUSTEE: U.S. Bank National Association, or its successor in interest,
or any successor trustee appointed as herein provided.

         UNCERTIFICATED PRINCIPAL BALANCE: With respect to any REMIC I Regular
Interest as of any Distribution Date, the initial principal amount of such
Regular Interest, reduced by (i) all amounts distributed on previous
Distribution Dates on such Regular Interest with respect to principal, and (ii)
the principal portion of all Realized Losses allocated prior to such
Distribution Date to such Regular Interest, taking account of the Loss
Allocation Limitation.

         UNDERLYING SELLER: With respect to each Mortgage Loan, GMACM, as
indicated on the Mortgage Loan Schedule.

         UNINSURED CAUSE: Any cause of damage to a Mortgaged Property or related
REO Property such that the complete restoration of such Mortgaged Property or
related REO Property is not fully reimbursable by the hazard insurance policies
required to be maintained pursuant the Servicing Agreement, without regard to
whether or not such policy is maintained.

                                      -33-

<PAGE>

         UNITED STATES PERSON: A citizen or resident of the United States, a
corporation or partnership (including an entity treated as a corporation or
partnership for federal income tax purposes) created or organized in, or under
the laws of, the United States or any state thereof or the District of Columbia
(except, in the case of a partnership, to the extent provided in regulations),
provided that, for purposes solely of the Class R Certificates, no partnership
or other entity treated as a partnership for United States federal income tax
purposes shall be treated as a United States Person unless all persons that own
an interest in such partnership either directly or through any entity that is
not a corporation for United States federal income tax purposes are United
States Persons, or an estate whose income is subject to United States federal
income tax regardless of its source, or a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more such United States Persons have the authority to control
all substantial decisions of the trust. To the extent prescribed in regulations
by the Secretary of the Treasury, which have not yet been issued, a trust which
was in existence on August 20, 1996 (other than a trust treated as owned by the
grantor under subpart E of part I of subchapter J of chapter 1 of the Code), and
which was treated as a United States person on August 20, 1996 may elect to
continue to be treated as a United States person notwithstanding the previous
sentence.

                                      -34-

<PAGE>

                                   ARTICLE II
                          Conveyance of Mortgage Loans;
                        Original Issuance of Certificates

         Section 2.01 CONVEYANCE OF MORTGAGE LOANS TO TRUSTEE. (a) The Depositor
concurrently with the execution and delivery of this Agreement, sells, transfers
and assigns to the Trust without recourse all its right, title and interest in
and to (i) the Mortgage Loans identified in the Mortgage Loan Schedule,
including all interest and principal due with respect to the Mortgage Loans
after the Cut-off Date, but excluding any payments of principal and interest due
on or prior to the Cut-off Date; (ii) such assets as shall from time to time be
credited or are required by the terms of this Agreement to be credited to the
Master Servicer Collection Account, (iii) such assets relating to the Mortgage
Loans as from time to time may be held by the Servicer in Protected Accounts,
the Master Servicer in the Master Servicer Collection Account and the Trustee in
the Distribution Account, (iv) any REO Property, (v) the Required Insurance
Policies and any amounts paid or payable by the insurer under any Insurance
Policy (to the extent the mortgagee has a claim thereto), (vi) the Mortgage Loan
Purchase Agreement to the extent provided in Subsection 2.03(a), (vii) the
rights with respect to the Servicing Agreement as assigned to the Trustee on
behalf of the Certificateholders by the Assignment Agreement, and (viii) any
proceeds of the foregoing. Although it is the intent of the parties to this
Agreement that the conveyance of the Depositor's right, title and interest in
and to the Mortgage Loans and other assets in the Trust Fund pursuant to this
Agreement shall constitute a purchase and sale and not a loan, in the event that
such conveyance is deemed to be a loan, it is the intent of the parties to this
Agreement that the Depositor shall be deemed to have granted to the Trustee a
first priority perfected security interest in all of the Depositor's right,
title and interest in, to and under the Mortgage Loans and other assets in the
Trust Fund, and that this Agreement shall constitute a security agreement under
applicable law.

         (b) In connection with the above transfer and assignment, the Depositor
hereby delivers to the Custodian, as agent for the Trustee, with respect to each
Mortgage Loan:

                  (i) the original Mortgage Note, endorsed without recourse to
the order of the Trustee and showing an unbroken chain of endorsements from the
originator thereof to the Person endorsing it to the Trustee, or lost note
affidavit together with a copy of the related Mortgage Note;

                  (ii) the original Mortgage and, if the related Mortgage Loan
is a MOM Loan, noting the presence of the MIN and language indicating that such
Mortgage Loan is a MOM Loan, which shall have been recorded (or if the original
is not available, a copy), with evidence of such recording indicated thereon (or
if clause (w) in the proviso below applies, shall be in recordable form);

                  (iii) unless the Mortgage Loan is a MOM Loan, a certified copy
of the assignment (which may be in the form of a blanket assignment if permitted
in the jurisdiction in which the Mortgaged Property is located) to "U.S. Bank
National Association, as Trustee", with evidence of recording with respect to
each Mortgage Loan in the name of the Trustee thereon (or if clause (w) in the
proviso below applies or for Mortgage Loans with respect to which the related
Mortgaged Property is located in a state other than Maryland or an Opinion of
Counsel has been provided as set forth in this Section 2.01(b), shall be in
recordable form);

                                      -35-

<PAGE>

                  (iv) all intervening assignments of the Security Instrument,
if applicable and only to the extent available to the Depositor with evidence of
recording thereon;

                  (v) the original or a copy of the policy or certificate of
primary mortgage guaranty insurance, to the extent available, if any;

                  (vi) the original policy of title insurance or mortgagee's
certificate of title insurance or commitment or binder for title insurance; and

                  (vii) originals of all modification agreements, if applicable
and available;

PROVIDED, HOWEVER, that in lieu of the foregoing, the Depositor may deliver to
the Custodian, as agent of the Trustee, the following documents, under the
circumstances set forth below: (w) in lieu of the original Security Instrument,
assignments to the Trustee or intervening assignments thereof which have been
delivered, are being delivered or will, upon receipt of recording information
relating to the Security Instrument required to be included thereon, be
delivered to recording offices for recording and have not been returned to the
Depositor in time to permit their delivery as specified above, the Depositor may
deliver a true copy thereof with a certification by the Depositor, on the face
of such copy, substantially as follows: "Certified to be a true and correct copy
of the original, which has been transmitted for recording"; (x) in lieu of the
Security Instrument, assignment to the Trustee or intervening assignments
thereof, if the applicable jurisdiction retains the originals of such documents
(as evidenced by a certification from the Depositor to such effect) the
Depositor may deliver photocopies of such documents containing an original
certification by the judicial or other governmental authority of the
jurisdiction where such documents were recorded; (y) in lieu of the Mortgage
Notes relating to the Mortgage Loans identified on Exhibit 5 to the Mortgage
Loan Purchase Agreement, the Depositor may deliver lost note affidavits from the
Seller; and (z) the Depositor shall not be required to deliver intervening
assignments or Mortgage Note endorsements between the related Underlying Seller
and the Seller, between the Seller and the Depositor, and between the Depositor
and the Trustee; and provided, further, however, that in the case of Mortgage
Loans which have been prepaid in full after the Cut-off Date and prior to the
Closing Date, the Depositor, in lieu of delivering the above documents, may
deliver to the Trustee or the Custodian, as its agent, a certification to such
effect and shall deposit all amounts paid in respect of such Mortgage Loans in
the Master Servicer Collection Account on the Closing Date. The Depositor shall
deliver such original documents (including any original documents as to which
certified copies had previously been delivered) to the Trustee or the Custodian,
as its agent, promptly after they are received. The Depositor shall cause the
Seller, at its expense, to cause each assignment of the Security Instrument to
the Trustee to be recorded not later than 180 days after the Closing Date,
unless (a) such recordation is not required by the Rating Agencies or an Opinion
of Counsel addressed to the Trustee has been provided to the Trustee (with a
copy to the Custodian) which states that recordation of such Security Instrument
is not required to protect the interests of the Certificateholders in the
related Mortgage Loans or (b) MERS is identified on the Mortgage or on a
properly recorded assignment of the Mortgage as the mortgagee of record solely
as nominee for the Seller and its successor and assigns; provided, however,
notwithstanding the foregoing, each assignment shall be submitted for recording
by the Seller in the manner described above, at no expense to the Trust or the
Trustee or the Custodian, as its agent, upon the earliest to occur of: (i)

                                      -36-

<PAGE>

reasonable direction by the Holders of Certificates evidencing Fractional
Undivided Interests aggregating not less than 25% of the Trust, (ii) the
occurrence of an Event of Default, (iii) theoccurrence of a bankruptcy,
insolvency or foreclosure relating to the Seller and (iv) the occurrence of a
servicing transfer as described in Section 8.02 hereof. Notwithstanding the
foregoing, if the Seller fails to pay the cost of recording the assignments,
such expense will be paid by the Trustee and the Trustee shall be reimbursed for
such expenses by the Trust in accordance with Section 9.05.

         Section 2.02 ACCEPTANCE OF MORTGAGE LOANS BY TRUSTEE. (a) The Trustee
acknowledges the sale, transfer and assignment of the Trust Fund to it by the
Depositor and receipt of, subject to further review and the exceptions which may
be noted pursuant to the procedures described below, and declares that it holds,
the documents (or certified copies thereof) delivered to the Custodian, as its
agent, pursuant to Section 2.01, and declares that it will continue to hold
those documents and any amendments, replacements or supplements thereto and all
other assets of the Trust Fund delivered to it as Trustee in trust for the use
and benefit of all present and future Holders of the Certificates. On the
Closing Date, the Custodian, with respect to the Mortgage Loans, shall
acknowledge with respect to each Mortgage Loan by delivery to the Depositor and
the Trustee of an Initial Certification receipt of the Mortgage File, but
without review of such Mortgage File, except to the extent necessary to confirm
that such Mortgage File contains the related Mortgage Note or lost note
affidavit. No later than 90 days after the Closing Date (or, with respect to any
Substitute Mortgage Loan, within five Business Days after the receipt by the
Trustee or Custodian thereof), the Trustee agrees, for the benefit of the
Certificateholders, to review or cause to be reviewed by the Custodian on its
behalf (under the Custodial Agreement), each Mortgage File delivered to it and
to execute and deliver, or cause to be executed and delivered, to the Depositor
and the Trustee an Interim Certification. In conducting such review, the Trustee
or Custodian will ascertain whether all required documents have been executed
and received, and based on the Mortgage Loan Schedule, whether those documents
relate, determined on the basis of the Mortgagor name, original principal
balance and loan number, to the Mortgage Loans it has received, as identified in
the Mortgage Loan Schedule. In performing any such review, the Trustee or the
Custodian, as its agent, may conclusively rely on the purported due execution
and genuineness of any such document and on the purported genuineness of any
signature thereon. If the Trustee or the Custodian, as its agent, finds any
document constituting part of the Mortgage File has not been executed or
received, or to be unrelated, determined on the basis of the Mortgagor name,
original principal balance and loan number, to the Mortgage Loans identified in
Exhibit B or to appear defective on its face (a "Material Defect"), the Trustee
or the Custodian, as its agent, shall promptly notify the Seller. In accordance
with the Mortgage Loan Purchase Agreement, the Seller shall correct or cure any
such defect within ninety (90) days from the date of notice from the Trustee or
the Custodian, as its agent, of the defect and if the Seller fails to correct or
cure the defect within such period, and such defect materially and adversely
affects the interests of the Certificateholders in the related Mortgage Loan,
the Trustee shall enforce the Seller's obligation under the Mortgage Loan
Purchase Agreement to, within 90 days from the Trustee's or the Custodian's
notification, provide a Substitute Mortgage Loan (if within two years of the
Closing Date) or purchase such Mortgage Loan at the Repurchase Price; provided
that, if such defect would cause the Mortgage Loan to be other than a "qualified
mortgage" as defined in Section 860G(a)(3) of the Code, any such cure or
repurchase must occur within 90 days from the date such breach was discovered;
provided, however, that if such defect relates solely to the inability of the
Seller to deliver the original Security Instrument or intervening assignments
thereof, or a certified copy because the originals of such documents, or a
certified copy have not been returned

                                      -37-

<PAGE>

by the applicable jurisdiction, the Seller shall not be required to purchase
such Mortgage Loan if the Seller delivers such original documents or certified
copy promptly upon receipt, but in no event later than 360 days after the
Closing Date. Theforegoing repurchase obligation shall not apply in the event
that the Seller cannot deliver such original or copy of any document submitted
for recording to the appropriate recording office in the applicable jurisdiction
because such document has not been returned by such office; provided that the
Seller shall instead deliver a recording receipt of such recording office or, if
such receipt is not available, a certificate confirming that such documents have
been accepted for recording, and delivery to the Trustee or the Custodian, as
its agent, shall be effected by the Seller within thirty days of its receipt of
the original recorded document.

         (b) No later than 180 days after the Closing Date, the Trustee or the
Custodian, as its agent, will review, for the benefit of the Certificateholders,
the Mortgage Files delivered to it and will execute and deliver or cause to be
executed and delivered to the Depositor and the Trustee a Final Certification.
In conducting such review, the Trustee or the Custodian, as its agent, will
ascertain whether an original of each document required to be recorded has been
returned from the recording office with evidence of recording thereon or a
certified copy has been obtained from the recording office. If the Trustee or
the Custodian, as its agent, finds a Material Defect, the Trustee or the
Custodian, as its agent, shall promptly notify the Seller (provided, however,
that with respect to those documents described in subsections (b)(iv), (v) and
(vii) of Section 2.01, the Trustee's and Custodian's obligations shall extend
only to the documents actually delivered to the Custodian pursuant to such
subsections). In accordance with the Mortgage Loan Purchase Agreement, the
Seller shall correct or cure any such defect within 90 days from the date of
notice from the Trustee or the Custodian, as its agent, of the Material Defect
and if the Seller is unable to cure such defect within such period, and if such
defect materially and adversely affects the interests of the Certificateholders
in the related Mortgage Loan, the Trustee shall enforce the Seller's obligation
under the Mortgage Loan Purchase Agreement to, within 90 days from the Trustee's
or Custodian's notification, provide a Substitute Mortgage Loan (if within two
years of the Closing Date) or purchase such Mortgage Loan at the Repurchase
Price, provided that, if such defect would cause the Mortgage Loan to be other
than a "qualified mortgage" as defined in Section 860G(a)(3) of the Code, any
such cure, repurchase or substitution must occur within 90 days from the date
such breach was discovered, provided, however, that if such defect relates
solely to the inability of the Seller to deliver the original Security
Instrument or intervening assignments thereof, or a certified copy, because the
originals of such documents or a certified copy, have not been returned by the
applicable jurisdiction, the Seller shall not be required to purchase such
Mortgage Loan, if the Seller delivers such original documents or certified copy
promptly upon receipt, but in no event later than 360 days after the Closing
Date. The foregoing repurchase obligation shall not apply in the event that the
Seller cannot deliver such original or copy of any document submitted for
recording to the appropriate recording office in the applicable jurisdiction
because such document has not been returned by such office; provided that the
Seller shall instead deliver a recording receipt of such recording office or, if
such receipt is not available, a certificate confirming that such documents have
been accepted for recording, and delivery to the Trustee or the Custodian, as
its agent, shall be effected by the Seller within thirty days of its receipt of
the original recorded document.

         (c) In the event that a Mortgage Loan is purchased by the Seller in
accordance with Subsections 2.02(a) or (b) above, the Seller shall remit to the
Master Servicer the Repurchase Price for deposit in the Master Servicer
Collection Account and the Seller shall provide to the Securities

                                      -38-

<PAGE>

Administrator and the Trustee written notification detailing the components of
the Repurchase Price. Upon deposit of the Repurchase Price in the Master
Servicer Collection Account, the Depositor shall notify the Trustee and the
Custodian, as agent of the Trustee (upon receipt of a Request for Release in the
form of Exhibit D attached hereto with respect to such Mortgage Loan), shall
release to the Seller the related Mortgage File and the Trustee shall execute
and deliver all instruments of transfer or assignment, without recourse,
representation or warranty, furnished to it by the Seller, as are necessary to
vest in the Seller title to and rights under the Mortgage Loan. Such purchase
shall be deemed to have occurred on the date on which the Repurchase Price in
available funds is received by the Trustee. The Trustee shall amend the Mortgage
Loan Schedule, which was previously delivered to it by the Depositor in a form
agreed to between the Depositor and the Trustee, to reflect such repurchase and
shall promptly notify the Rating Agencies and the Master Servicer of such
amendment. The obligation of the Seller to repurchase or substitute for any
Mortgage Loan a Substitute Mortgage Loan as to which such a defect in a
constituent document exists shall be the sole remedy respecting such defect
available to the Certificateholders or to the Trustee on their behalf.

         Section 2.03 ASSIGNMENT OF INTEREST IN THE MORTGAGE LOAN PURCHASE
AGREEMENT. (a) The Depositor hereby assigns to the Trustee, on behalf of the
Certificateholders, all of its right, title and interest in the Mortgage Loan
Purchase Agreement, including but not limited to the Depositor's rights and
obligations pursuant to the Servicing Agreement (noting that the Seller has
retained the right in the event of breach of the representations, warranties and
covenants, if any, with respect to the Mortgage Loans of the Servicer under the
Servicing Agreement to enforce the provisions thereof and to seek all or any
available remedies). The obligations of the Seller to substitute or repurchase,
as applicable, a Mortgage Loan shall be the Trustee's and the
Certificateholders' sole remedy for any breach thereof. At the request of the
Trustee, the Depositor shall take such actions as may be necessary to enforce
the above right, title and interest on behalf of the Trustee and the
Certificateholders or shall execute such further documents as the Trustee may
reasonably require in order to enable the Trustee to carry out such enforcement.

         (b) If the Depositor, the Securities Administrator or the Trustee
discovers a breach of any of the representations and warranties set forth in the
Mortgage Loan Purchase Agreement, which breach materially and adversely affects
the value of the interests of Certificateholders or the Trustee in the related
Mortgage Loan, the party discovering the breach shall give prompt written notice
of the breach to the other parties. The Seller, within 90 days of its discovery
or receipt of notice that such breach has occurred (whichever occurs earlier),
shall cure the breach in all material respects or, subject to the Mortgage Loan
Purchase Agreement or Section 2.04 of this Agreement, as applicable, shall
purchase the Mortgage Loan or any property acquired with respect thereto from
the Trustee; provided, however, that if there is a breach of any representation
set forth in the Mortgage Loan Purchase Agreement or Section 2.04 of this
Agreement, as applicable, and the Mortgage Loan or the related property acquired
with respect thereto has been sold, then the Seller shall pay, in lieu of the
Repurchase Price, any excess of the Repurchase Price over the Net Liquidation
Proceeds received upon such sale. If the Net Liquidation Proceeds exceed the
Repurchase Price, any excess shall be paid to the Seller to the extent not
required by law to be paid to the borrower. Any such purchase by the Seller
shall be made by providing an amount equal to the Repurchase Price to the Master
Servicer for deposit in the Master Servicer Collection Account and written
notification detailing the components of such Repurchase Price. The Depositor
shall notify the Trustee and submit to the Custodian, as agent for the Trustee,
a Request for Release, and the Custodian shall release, or the

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<PAGE>

Trustee shall cause the Custodian to release, to the Seller the related Mortgage
File and the Trustee shall execute and deliver all instruments of transfer or
assignment furnished to it by the Seller, without recourse, representation or
warranty as are necessary to vest in the Seller title to and rights under the
Mortgage Loan or any property acquired with respect thereto. Such purchase shall
be deemed to have occurred on the date on which the Repurchase Price in
available funds is received by the Trustee. The Master Servicer shall amend the
Mortgage Loan Schedule to reflect such repurchase and shall promptly notify the
Trustee and the Rating Agencies of such amendment. Enforcement of the obligation
of the Seller to purchase (or substitute a Substitute Mortgage Loan for) any
Mortgage Loan or any property acquired with respect thereto (or pay the
Repurchase Price as set forth in the above proviso) as to which a breach has
occurred and is continuing shall constitute the sole remedy respecting such
breach available to the Certificateholders or the Trustee on their behalf.

         Section 2.04 SUBSTITUTION OF MORTGAGE LOANS. Notwithstanding anything
to the contrary in this Agreement, in lieu of purchasing a Mortgage Loan
pursuant to the Mortgage Loan Purchase Agreement or Sections 2.02 or 2.03 of
this Agreement, the Seller may, no later than the date by which such purchase by
the Seller would otherwise be required, tender to the Trustee a Substitute
Mortgage Loan accompanied by a certificate of an authorized officer of the
Seller that such Substitute Mortgage Loan conforms to the requirements set forth
in the definition of "Substitute Mortgage Loan" in this Agreement; provided,
however, that substitution pursuant to the Mortgage Loan Purchase Agreement or
Section 2.04 of this Agreement, as applicable, in lieu of purchase shall not be
permitted after the termination of the two-year period beginning on the Startup
Day; provided, further, that if the breach would cause the Mortgage Loan to be
other than a "qualified mortgage" as defined in Section 860G(a)(3) of the Code,
any such cure or substitution must occur within 90 days from the date the breach
was discovered. The Custodian, as agent for the Trustee, shall examine the
Mortgage File for any Substitute Mortgage Loan in the manner set forth in
Section 2.02(a) and the Trustee or the Custodian, as its agent, shall notify the
Seller, in writing, within five Business Days after receipt, whether or not the
documents relating to the Substitute Mortgage Loan satisfy the requirements of
the fifth sentence of Subsection 2.02(a). Within two Business Days after such
notification, the Seller shall provide to the Trustee for deposit in the
Distribution Account the amount, if any, by which the Outstanding Principal
Balance as of the next preceding Due Date of the Mortgage Loan for which
substitution is being made, after giving effect to the Scheduled Principal due
on such date, exceeds the Outstanding Principal Balance as of such date of the
Substitute Mortgage Loan, after giving effect to Scheduled Principal due on such
date, which amount shall be treated for the purposes of this Agreement as if it
were the payment by the Seller of the Repurchase Price for the purchase of a
Mortgage Loan by the Seller. After such notification to the Seller and, if any
such excess exists, upon receipt of such deposit, the Trustee shall accept such
Substitute Mortgage Loan which shall thereafter be deemed to be a Mortgage Loan
hereunder. In the event of such a substitution, accrued interest on the
Substitute Mortgage Loan for the month in which the substitution occurs and any
Principal Prepayments made thereon during such month shall be the property of
the Trust Fund and accrued interest for such month on the Mortgage Loan for
which the substitution is made and any Principal Prepayments made thereon during
such month shall be the property of the Seller. The Scheduled Principal on a
Substitute Mortgage Loan due on the Due Date in the month of substitution shall
be the property of the Seller and the Scheduled Principal on the Mortgage Loan
for which the substitution is made due on such Due Date shall be the property of
the Trust Fund. Upon acceptance of the Substitute Mortgage Loan (and delivery to
the Custodian of a

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<PAGE>

Request for Release for such Mortgage Loan), the Custodian, as agent for the
Trustee, shall release to the Seller the related Mortgage File related to any
Mortgage Loan released pursuant to the Mortgage Loan Purchase Agreement or
Section 2.04 of this Agreement, as applicable, and shall execute and deliver all
instruments of transfer or assignment, without recourse, representation or
warranty in form as provided to it as are necessary to vest in the Seller title
to and rights under any Mortgage Loan released pursuant to the Mortgage Loan
Purchase Agreement or Section 2.04 of this Agreement, as applicable. The Seller
shall deliver to the Custodian the documents related to the Substitute Mortgage
Loan in accordance with the provisions of the Mortgage Loan Purchase Agreement
or Subsections 2.01(b) and 2.02(b) of this Agreement, as applicable, with the
date of acceptance of the Substitute Mortgage Loan deemed to be the Closing Date
for purposes of the time periods set forth in those Subsections. The
representations and warranties set forth in the Mortgage Loan Purchase Agreement
shall be deemed to have been made by the Seller with respect to each Substitute
Mortgage Loan as of the date of acceptance of such Mortgage Loan by the Trustee.
The Master Servicer shall amend the Mortgage Loan Schedule to reflect such
substitution and shall provide a copy of such amended Mortgage Loan Schedule to
the Trustee and the Rating Agencies.

         Section 2.05      ISSUANCE OF CERTIFICATES.

         (a) The Trustee acknowledges the assignment to it of the Mortgage Loans
and the other assets comprising the Trust Fund and, concurrently therewith, has
signed, and countersigned and delivered to the Depositor, in exchange therefor,
Certificates in such authorized denominations representing such Fractional
Undivided Interests as the Depositor has requested. The Trustee agrees that it
will hold the Mortgage Loans and such other assets as may from time to time be
delivered to it segregated on the books of the Trustee in trust for the benefit
of the Certificateholders.

         (b) The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey in trust to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC I Regular Interests, and the other assets of REMIC II for the
benefit of the holders of the REMIC II Certificates. The Trustee acknowledges
receipt of the REMIC I Regular Interests (which are uncertificated) and the
other assets of REMIC II and declares that it holds and will hold the same in
trust for the exclusive use and benefit of the holders of the REMIC II
Certificates.

         Section 2.06 REPRESENTATIONS AND WARRANTIES CONCERNING THE DEPOSITOR.
The Depositor hereby represents and warrants to the Trustee, the Master Servicer
and the Securities Administrator as follows:

                  (i) the Depositor (a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and (b) is
qualified and in good standing as a foreign corporation to do business in each
jurisdiction where such qualification is necessary, except where the failure so
to qualify would not reasonably be expected to have a material adverse effect on
the Depositor's business as presently conducted or on the Depositor's ability to
enter into this Agreement and to consummate the transactions contemplated
hereby;

                  (ii) the Depositor has full corporate power to own its
property, to carry on its business as presently conducted and to enter into and
perform its obligations under this Agreement;

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<PAGE>

                  (iii) the execution and delivery by the Depositor of this
Agreement have been duly authorized by all necessary corporate action on the
part of the Depositor; and neither the execution and delivery of this Agreement,
nor the consummation of the transactions herein contemplated, nor compliance
with the provisions hereof, will conflict with or result in a breach of, or
constitute a default under, any of the provisions of any law, governmental rule,
regulation, judgment, decree or order binding on the Depositor or its properties
or the articles of incorporation or by-laws of the Depositor, except those
conflicts, breaches or defaults which would not reasonably be expected to have a
material adverse effect on the Depositor's ability to enter into this Agreement
and to consummate the transactions contemplated hereby;

                  (iv) the execution, delivery and performance by the Depositor
of this Agreement and the consummation of the transactions contemplated hereby
do not require the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any state,
federal or other governmental authority or agency, except those consents,
approvals, notices, registrations or other actions as have already been
obtained, given or made;

                  (v) this Agreement has been duly executed and delivered by the
Depositor and, assuming due authorization, execution and delivery by the other
parties hereto, constitutes a valid and binding obligation of the Depositor
enforceable against it in accordance with its terms (subject to applicable
bankruptcy and insolvency laws and other similar laws affecting the enforcement
of the rights of creditors generally);

                  (vi) there are no actions, suits or proceedings pending or, to
the knowledge of the Depositor, threatened against the Depositor, before or by
any court, administrative agency, arbitrator or governmental body (i) with
respect to any of the transactions contemplated by this Agreement or (ii) with
respect to any other matter which in the judgment of the Depositor will be
determined adversely to the Depositor and will if determined adversely to the
Depositor materially and adversely affect the Depositor's ability to enter into
this Agreement or perform its obligations under this Agreement; and the
Depositor is not in default with respect to any order of any court,
administrative agency, arbitrator or governmental body so as to materially and
adversely affect the transactions contemplated by this Agreement; and

                  (vii) immediately prior to the transfer and assignment to the
Trustee, each Mortgage Note and each Mortgage were not subject to an assignment
or pledge, and the Depositor had good and marketable title to and was the sole
owner thereof and had full right to transfer and sell such Mortgage Loan to the
Trustee free and clear of any encumbrance, equity, lien, pledge, charge, claim
or security interest.

                                      -42-

<PAGE>

                                   ARTICLE III
                 Administration and Servicing of Mortgage Loans

         Section 3.01 MASTER SERVICER. The Master Servicer shall supervise,
monitor and oversee the obligation of the Servicer to service and administer the
Mortgage Loans in accordance with the terms of the Servicing Agreement and shall
have full power and authority to do any and all things which it may deem
necessary or desirable in connection with such master servicing and
administration. In performing its obligations hereunder, the Master Servicer
shall act in a manner consistent with Accepted Master Servicing Practices.
Furthermore, the Master Servicer shall oversee and consult with the Servicer as
necessary from time-to-time to carry out the Master Servicer's obligations
hereunder, shall receive, review and evaluate all reports, information and other
data provided to the Master Servicer by the Servicer and shall cause the
Servicer to perform and observe the covenants, obligations and conditions to be
performed or observed by the Servicer under the Servicing Agreement. The Master
Servicer shall independently and separately monitor the Servicer's servicing
activities with respect to each related Mortgage Loan, reconcile the results of
such monitoring with such information provided in the previous sentence on a
monthly basis and coordinate corrective adjustments to the Servicer's and Master
Servicer's records, and based on such reconciled and corrected information, the
Master Servicer shall provide such information to the Securities Administrator
as shall be necessary in order for it to prepare the statements specified in
Section 6.04, and prepare any other information and statements required to be
forwarded by the Master Servicer hereunder. The Master Servicer shall reconcile
the results of its Mortgage Loan monitoring with the actual remittances of the
Servicer pursuant to the Servicing Agreement.

         The Trustee shall furnish the Servicer and the Master Servicer with any
powers of attorney and other documents in form as provided to it necessary or
appropriate to enable the Servicer and the Master Servicer to service and
administer the related Mortgage Loans and REO Property.

         The Trustee shall provide access to the records and documentation in
possession of the Trustee regarding the related Mortgage Loans and REO Property
and the servicing thereof to the Certificateholders, the FDIC, and the
supervisory agents and examiners of the FDIC, such access being afforded only
upon reasonable prior written request and during normal business hours at the
office of the Trustee; provided, however, that, unless otherwise required by
law, the Trustee shall not be required to provide access to such records and
documentation if the provision thereof would violate the legal right to privacy
of any Mortgagor. The Trustee shall allow representatives of the above entities
to photocopy any of the records and documentation and shall provide equipment
for that purpose at a charge that covers the Trustee's actual costs.

         The Trustee shall execute and deliver to the Servicer and the Master
Servicer any court pleadings, requests for trustee's sale or other documents
necessary or desirable to (i) the foreclosure or trustee's sale with respect to
a Mortgaged Property; (ii) any legal action brought to obtain judgment against
any Mortgagor on the Mortgage Note or Security Instrument; (iii) obtain a
deficiency judgment against the Mortgagor; or (iv) enforce any other rights or
remedies provided by the Mortgage Note or Security Instrument or otherwise
available at law or equity.

         Section 3.02 REMIC-RELATED COVENANTS. For as long as each REMIC shall
exist, the Trustee and the Securities Administrator shall act in accordance
herewith to assure continuing

                                      -43-

<PAGE>

treatment of such REMIC as a REMIC, and the Trustee and the Securities
Administrator shallcomply with any directions of the Depositor, the Servicer or
the Master Servicer to assure such continuing treatment. In particular, the
Trustee shall not (a) sell or permit the sale of all or any portion of the
Mortgage Loans or of any investment of deposits in an Account unless such sale
is as a result of a repurchase of the Mortgage Loans pursuant to this Agreement
or the Trustee has received a REMIC Opinion addressed to the Trustee prepared at
the expense of the Trust Fund; and (b) other than with respect to a substitution
pursuant to the Mortgage Loan Purchase Agreement or Section 2.04 of this
Agreement, as applicable, accept any contribution to any REMIC after the Startup
Day without receipt of a REMIC Opinion addressed to the Trustee .

         Section 3.03 MONITORING OF SERVICER. (a) The Master Servicer shall be
responsible for reporting to the Trustee and the Depositor the compliance by the
Servicer with its duties under the Servicing Agreement. In the review of the
Servicer's activities, the Master Servicer may rely upon an officer's
certificate of the Servicer (or similar document signed by an officer of the
Servicer) with regard to the Servicer's compliance with the terms of the
Servicing Agreement. In the event that the Master Servicer, in its judgment,
determines that the Servicer should be terminated in accordance with the
Servicing Agreement, or that a notice should be sent pursuant to the Servicing
Agreement with respect to the occurrence of an event that, unless cured, would
constitute grounds for such termination, the Master Servicer shall notify the
Depositor and the Trustee thereof and the Master Servicer shall issue such
notice or take such other action as it deems appropriate.

         (b) The Master Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the obligations of the Servicer under the
Servicing Agreement, and shall, in the event that the Servicer fails to perform
its obligations in accordance with the Servicing Agreement, subject to the
preceding paragraph, terminate the rights and obligations of the Servicer
thereunder and act as servicer of the related Mortgage Loans or to cause the
Trustee to enter in to a new Servicing Agreement with a successor Servicer
selected by the Master Servicer; provided, however, it is understood and
acknowledged by the parties hereto that there will be a period of transition
(not to exceed 90 days) before the actual servicing functions can be fully
transferred to such successor Servicer. Such enforcement, including, without
limitation, the legal prosecution of claims, the termination of the Servicing
Agreement and the pursuit of other appropriate remedies, shall be in such form
and carried out to such an extent and at such time as the Master Servicer, in
its good faith business judgment, would require were it the owner of the related
Mortgage Loans. The Master Servicer shall pay the costs of such enforcement at
its own expense, provided that the Master Servicer shall not be required to
prosecute or defend any legal action except to the extent that the Master
Servicer shall have received reasonable indemnity for its costs and expenses in
pursuing such action.

         (c) To the extent that the costs and expenses of the Master Servicer
related to any termination of the Servicer, appointment of a successor Servicer
or the transfer and assumption of servicing by the Master Servicer with respect
to the Servicing Agreement (including, without limitation, (i) all legal costs
and expenses and all due diligence costs and expenses associated with an
evaluation of the potential termination of the Servicer as a result of an event
of default by the Servicer and (ii) all costs and expenses associated with the
complete transfer of servicing, including all servicing files and all servicing
data and the completion, correction or manipulation of such servicing data as
may be required by the successor servicer to correct any errors or
insufficiencies

                                      -44-

<PAGE>

in the servicing data or otherwise to enable the successor service to service
the Mortgage Loans in accordance with the Servicing Agreement) are not fully and
timely reimbursed by the terminated Servicer, the Master Servicer shall be
entitled to reimbursement of such costs and expenses from the Master Servicer
Collection Account.

         (d) The Master Servicer shall require the Servicer to comply with the
remittance requirements and other obligations set forth in the Servicing
Agreement.

         (e) If the Master Servicer acts as Servicer, it will not assume
liability for the representations and warranties of the Servicer, if any, that
it replaces.

         Section 3.04 FIDELITY BOND. The Master Servicer, at its expense, shall
maintain in effect a blanket fidelity bond and an errors and omissions insurance
policy, affording coverage with respect to all directors, officers, employees
and other Persons acting on such Master Servicer's behalf, and covering errors
and omissions in the performance of the Master Servicer's obligations hereunder.
The errors and omissions insurance policy and the fidelity bond shall be in such
form and amount generally acceptable for entities serving as master servicers or
trustees.

         Section 3.05 POWER TO ACT; PROCEDURES. The Master Servicer shall master
service the Mortgage Loans and shall have full power and authority, subject to
the REMIC Provisions and the provisions of Article X hereof, to do any and all
things that it may deem necessary or desirable in connection with the master
servicing and administration of the Mortgage Loans, including but not limited to
the power and authority (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages, (iii) to
collect any Insurance Proceeds and Liquidation Proceeds, and (iv) to effectuate
foreclosure or other conversion of the ownership of the Mortgaged Property
securing any Mortgage Loan, in each case, in accordance with the provisions of
this Agreement and the Servicing Agreement, as applicable; provided, however,
that the Master Servicer shall not (and, consistent with its responsibilities
under Section 3.03, shall not permit the Servicer to) knowingly or intentionally
take any action, or fail to take (or fail to cause to be taken) any action
reasonably within its control and the scope of duties more specifically set
forth herein, that, under the REMIC Provisions, if taken or not taken, as the
case may be, would cause any REMIC to fail to qualify as a REMIC or result in
the imposition of a tax upon the Trust Fund (including but not limited to the
tax on prohibited transactions as defined in Section 860F(a)(2) of the Code and
the tax on contributions to a REMIC set forth in Section 860G(d) of the Code)
unless the Master Servicer has received an Opinion of Counsel (but not at the
expense of the Master Servicer) to the effect that the contemplated action would
not cause any REMIC to fail to qualify as a REMIC or result in the imposition of
a tax upon any REMIC. The Trustee shall furnish the Master Servicer, upon
written request from a Servicing Officer, with any powers of attorney empowering
the Master Servicer or the Servicer to execute and deliver instruments of
satisfaction or cancellation, or of partial or full release or discharge, and to
foreclose upon or otherwise liquidate Mortgaged Property, and to appeal,
prosecute or defend in any court action relating to the Mortgage Loans or the
Mortgaged Property, in accordance with the Servicing Agreement and this
Agreement, and the Trustee shall execute and deliver such other documents, as
the Master Servicer may request, to enable the Master Servicer to master service
and administer the Mortgage Loans and carry out its duties hereunder, in each
case in accordance with

                                      -45-

<PAGE>

Accepted Master Servicing Practices (and the Trustee shall have no liability for
misuse of any such powers of attorney by the Master Servicer or the Servicer).
If the Master Servicer or the Trustee has been advised that it is likely that
the laws of the state in which action is to be taken prohibit such action if
taken in the name of the Trustee or that the Trustee would be adversely affected
under the "doing business" or tax laws of such state if such action is taken in
its name, the Master Servicer shall join with the Trustee in the appointment of
a co-trustee pursuant to Section 9.11 hereof. In the performance of its duties
hereunder, the Master Servicer shall be an independent contractor and shall not,
except in those instances where it is taking action in the name of the Trustee,
be deemed to be the agent of the Trustee.

         Section 3.06 DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS. To the extent
provided in the Servicing Agreement, to the extent Mortgage Loans contain
enforceable due-on-sale clauses, the Master Servicer shall cause the Servicer to
enforce such clauses in accordance with the Servicing Agreement. If applicable
law prohibits the enforcement of a due-on-sale clause or such clause is
otherwise not enforced in accordance with the Servicing Agreement, and, as a
consequence, a Mortgage Loan is assumed, the original Mortgagor may be released
from liability in accordance with the Servicing Agreement.

         Section 3.07 RELEASE OF MORTGAGE FILES. (a) Upon becoming aware of the
payment in full of any Mortgage Loan, or the receipt by the Servicer of a
notification that payment in full has been escrowed in a manner customary for
such purposes for payment to Certificateholders on the next Distribution Date,
the Servicer will, if required under the Servicing Agreement (or if the Servicer
does not, the Master Servicer may), promptly furnish to the Custodian, on behalf
of the Trustee, two copies of a certification substantially in the form of
Exhibit D hereto signed by a Servicing Officer or in a mutually agreeable
electronic format which will, in lieu of a signature on its face, originate from
a Servicing Officer (which certification shall include a statement to the effect
that all amounts received in connection with such payment that are required to
be deposited in the Protected Account maintained by the Servicer pursuant to
Section 4.01 or by the Servicer pursuant to its Servicing Agreement have been or
will be so deposited) and shall request that the Custodian, on behalf of the
Trustee, deliver to the Servicer the related Mortgage File. Upon receipt of such
certification and request, the Custodian, on behalf of the Trustee, shall
promptly release the related Mortgage File to the Servicer and the Trustee and
Custodian shall have no further responsibility with regard to such Mortgage
File. Upon any such payment in full, the Servicer is authorized, to give, as
agent for the Trustee, as the mortgagee under the Mortgage that secured the
Mortgage Loan, an instrument of satisfaction (or assignment of mortgage without
recourse) regarding the Mortgaged Property subject to the Mortgage, which
instrument of satisfaction or assignment, as the case may be, shall be delivered
to the Person or Persons entitled thereto against receipt therefor of such
payment, it being understood and agreed that no expenses incurred in connection
with such instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Protected Account.

         (b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan and in accordance with the Servicing Agreement,
the Trustee shall execute such documents as shall be prepared and furnished to
the Trustee by the Servicer or the Master Servicer (in form reasonably
acceptable to the Trustee) and as are necessary to the prosecution of any such
proceedings. The Custodian, on behalf of the Trustee, shall, upon the request of
the Servicer or the Master Servicer, and delivery to the Custodian, on behalf of
the Trustee, of two copies of a request

                                      -46-

<PAGE>

for release signed by a Servicing Officer substantially in the form of Exhibit D
(or in a mutually agreeable electronic format which will, in lieu of a signature
on its face, originate from a Servicing Officer), release the related Mortgage
File held in its possession or control to the Servicer or the Master Servicer,
as applicable. Such trust receipt shall obligate the Servicer or the Master
Servicer to return the Mortgage File to the Custodian on behalf of the Trustee,
when the need therefor by the Servicer or the Master Servicer no longer exists
unless the Mortgage Loan shall be liquidated, in which case, upon receipt of a
certificate of a Servicing Officer similar to that hereinabove specified, the
Mortgage File shall be released by the Custodian, on behalf of the Trustee, to
the Servicer or the Master Servicer.

         Section 3.08 DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF MASTER
SERVICER TO BE HELD FOR TRUSTEE.

         (a) The Master Servicer shall transmit and the Servicer (to the extent
required by the Servicing Agreement) shall transmit to the Trustee or Custodian
such documents and instruments coming into the possession of the Master Servicer
or the Servicer from time to time as are required by the terms hereof, or in the
case of the Servicer, the Servicing Agreement, to be delivered to the Trustee or
Custodian. Any funds received by the Master Servicer or by the Servicer in
respect of any Mortgage Loan or which otherwise are collected by the Master
Servicer or by the Servicer as Liquidation Proceeds or Insurance Proceeds in
respect of any Mortgage Loan shall be held for the benefit of the Trustee and
the Certificateholders subject to the Master Servicer's right to retain or
withdraw from the Master Servicer Collection Account the Master Servicing
Compensation and other amounts provided in this Agreement, and to the right of
the Servicer to retain its Servicing Fee and other amounts as provided in the
Servicing Agreement. The Master Servicer shall, and (to the extent provided in
the Servicing Agreement) shall cause the Servicer to, provide access to
information and documentation regarding the Mortgage Loans to the Trustee, its
agents and accountants at any time upon reasonable request and during normal
business hours, and to Certificateholders that are savings and loan
associations, banks or insurance companies, the Office of Thrift Supervision,
the FDIC and the supervisory agents and examiners of such Office and Corporation
or examiners of any other federal or state banking or insurance regulatory
authority if so required by applicable regulations of the Office of Thrift
Supervision or other regulatory authority, such access to be afforded without
charge but only upon reasonable request in writing and during normal business
hours at the offices of the Master Servicer designated by it. In fulfilling such
a request the Master Servicer shall not be responsible for determining the
sufficiency of such information.

         (b) All Mortgage Files and funds collected or held by, or under the
control of, the Master Servicer, in respect of any Mortgage Loans, whether from
the collection of principal and interest payments or from Liquidation Proceeds
or Insurance Proceeds, shall be held by the Master Servicer for and on behalf of
the Trustee and the Certificateholders and shall be and remain the sole and
exclusive property of the Trustee; provided, however, that the Master Servicer
and the Servicer shall be entitled to setoff against, and deduct from, any such
funds any amounts that are properly due and payable to the Master Servicer or
the Servicer under this Agreement or the Servicing Agreement.

         Section 3.09 STANDARD HAZARD INSURANCE AND FLOOD INSURANCE POLICIES.

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         (a) For each Mortgage Loan, the Master Servicer shall enforce any
obligation of the Servicer under the Servicing Agreement to maintain or cause to
be maintained standard fire and casualty insurance and, where applicable, flood
insurance, all in accordance with the provisions of the Servicing Agreement. It
is understood and agreed that such insurance shall be with insurers meeting the
eligibility requirements set forth in the Servicing Agreement and that no
earthquake orother additional insurance is to be required of any Mortgagor or to
be maintained on property acquired in respect of a defaulted loan, other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance.

         (b) Pursuant to Section 4.01 and 4.02, any amounts collected by the
Servicer or the Master Servicer, or by the Servicer, under any insurance
policies (other than amounts to be applied to the restoration or repair of the
property subject to the related Mortgage or released to the Mortgagor in
accordance with the Servicing Agreement) shall be deposited into the Master
Servicer Collection Account, subject to withdrawal pursuant to Section 4.02 and
4.03. Any cost incurred by the Master Servicer or the Servicer in maintaining
any such insurance if the Mortgagor defaults in its obligation to do so shall be
added to the amount owing under the Mortgage Loan where the terms of the
Mortgage Loan so permit; provided, however, that the addition of any such cost
shall not be taken into account for purposes of calculating the distributions to
be made to Certificateholders and shall be recoverable by the Master Servicer or
the Servicer pursuant to Section 4.02 and 4.03.

         Section 3.10 PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS. The
Master Servicer shall (to the extent provided in the Servicing Agreement) cause
the Servicer to prepare and present on behalf of the Trustee and the
Certificateholders all claims under the Insurance Policies and take such actions
(including the negotiation, settlement, compromise or enforcement of the
insured's claim) as shall be necessary to realize recovery under such policies.
Any proceeds disbursed to the Master Servicer (or disbursed to the Servicer and
remitted to the Master Servicer) in respect of such policies, bonds or contracts
shall be promptly deposited in the Master Servicer Collection Account upon
receipt, except that any amounts realized that are to be applied to the repair
or restoration of the related Mortgaged Property as a condition precedent to the
presentation of claims on the related Mortgage Loan to the insurer under any
applicable Insurance Policy need not be so deposited (or remitted).

         Section 3.11 MAINTENANCE OF THE PRIMARY MORTGAGE INSURANCE POLICIES.

         (a) The Master Servicer shall not take, or permit the Servicer (to the
extent such action is prohibited under the Servicing Agreement) to take, any
action that would result in noncoverage under any applicable Primary Mortgage
Insurance Policy of any loss which, but for the actions of the Master Servicer
or the Servicer, would have been covered thereunder. The Master Servicer shall
use its best reasonable efforts to cause the Servicer (to the extent required
under the Servicing Agreement) to keep in force and effect (to the extent that
the Mortgage Loan requires the Mortgagor to maintain such insurance), primary
mortgage insurance applicable to each Mortgage Loan in accordance with the
provisions of this Agreement and the Servicing Agreement, as applicable. The
Master Servicer shall not, and shall not permit the Servicer (to the extent
required under the Servicing Agreement) to, cancel or refuse to renew any such
Primary Mortgage Insurance Policy that is in effect at the date of the initial
issuance of the Mortgage Note and is required to be kept in force

                                      -48-

<PAGE>

hereunder except in accordance with the provisions of this Agreement and the
Servicing Agreement, as applicable.

         (b) The Master Servicer agrees to present, or to cause the Servicer (to
the extent required under the Servicing Agreement) to present, on behalf of the
Trustee and the Certificateholders, claims to the insurer under any Primary
Mortgage Insurance Policies and, in this regard, to take such reasonable action
as shall be necessary to permit recovery under any Primary Mortgage Insurance
Policies respecting defaulted Mortgage Loans. Pursuant to Section 4.01 and 4.02,
any amounts collected by the Master Servicer or the Servicer under any Primary
Mortgage Insurance Policies shall be deposited in the Master Servicer Collection
Account, subject to withdrawal pursuant to Sections 4.02 and 4.03.

         Section 3.12 TRUSTEE TO RETAIN POSSESSION OF CERTAIN INSURANCE POLICIES
AND DOCUMENTS.

         The Trustee (or the Custodian, as directed by the Trustee), shall
retain possession and custody of the originals (to the extent available) of any
Primary Mortgage Insurance Policies, or certificate of insurance if applicable,
and any certificates of renewal as to the foregoing as may be issued from time
to time as contemplated by this Agreement. Until all amounts distributable in
respect of the Certificates have been distributed in full and the Master
Servicer otherwise has fulfilled its obligations under this Agreement, the
Trustee (or its Custodian, if any, as directed by the Trustee) shall also retain
possession and custody of each Mortgage File in accordance with and subject to
the terms and conditions of this Agreement. The Master Servicer shall promptly
deliver or cause to be delivered to the Trustee (or the Custodian, as directed
by the Trustee), upon the execution or receipt thereof the originals of any
Primary Mortgage Insurance Policies, any certificates of renewal, and such other
documents or instruments that constitute portions of the Mortgage File that come
into the possession of the Master Servicer from time to time.

         Section 3.13 REALIZATION UPON DEFAULTED MORTGAGE LOANS. The Master
Servicer shall cause the Servicer (to the extent required under the Servicing
Agreement) to foreclose upon, repossess or otherwise comparably convert the
ownership of Mortgaged 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, all in accordance with the Servicing
Agreement.

         Section 3.14      COMPENSATION FOR THE MASTER SERVICER.

         The Master Servicer will be entitled to all income and gain realized
from any investment of funds in the Distribution Account and the Master Servicer
Collection Account, pursuant to Article IV, for the performance of its
activities hereunder. Servicing compensation in the form of assumption fees, if
any, late payment charges, as collected, if any, or otherwise (but not including
any prepayment premium or penalty) shall be retained by the Servicer and shall
not be deposited in the Protected Account. The Master Servicer shall be required
to pay all expenses incurred by it in connection with its activities hereunder
and shall not be entitled to reimbursement therefor except as provided in this
Agreement.

         Section 3.15      REO PROPERTY.

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         (a) In the event the Trust Fund acquires ownership of any REO Property
in respect of any related Mortgage Loan, the deed or certificate of sale shall
be issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders. The Master Servicer shall, to the extent provided in the
Servicing Agreement, cause the Servicer to sell any REO Property as
expeditiously as possible and in accordance with the provisions of this
Agreement and the Servicing Agreement, as applicable. Pursuant to its efforts to
sell such REO Property, the Master Servicer shall cause the Servicer to protect
and conserve, such REO Property in the manner and to the extent required by the
Servicing Agreement, in accordance with the REMIC Provisions and in a manner
that does not result in a tax on "net income from foreclosure property" or cause
such REO Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code.

         (b) The Master Servicer shall, to the extent required by the Servicing
Agreement, cause the Servicer to deposit all funds collected and received in
connection with the operation of any REO Property in the Protected Account.

         (c) The Master Servicer and the Servicer, upon the final disposition of
any REO Property, shall be entitled to reimbursement for any related
unreimbursed Monthly Advances and other unreimbursed advances as well as any
unpaid Servicing Fees from Liquidation Proceeds received in connection with the
final disposition of such REO Property; provided, that any such unreimbursed
Monthly Advances as well as any unpaid Servicing Fees may be reimbursed or paid,
as the case may be, prior to final disposition, out of any net rental income or
other net amounts derived from such REO Property.

         (d) To the extent provided in the Servicing Agreement, the Liquidation
Proceeds from the final disposition of the REO Property, net of any payment to
the Master Servicer and the Servicer as provided above shall be deposited in the
Protected Account on or prior to the Determination Date in the month following
receipt thereof and be remitted by wire transfer in immediately available funds
to the Master Servicer for deposit into the related Master Servicer Collection
Account on the next succeeding Servicer Remittance Date.

         Section 3.16      ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE.

         (a) The Master Servicer shall deliver to the Trustee and the Rating
Agencies on or before March 1 of each year, commencing on March 1, 2005, an
Officer's Certificate, certifying that with respect to the period ending
December 31 of the prior year: (i) such Servicing Officer has reviewed the
activities of such Master Servicer during the preceding calendar year or portion
thereof and its performance under this Agreement, (ii) to the best of such
Servicing Officer's knowledge, based on such review, such Master Servicer has
performed and fulfilled its duties, responsibilities and obligations under this
Agreement in all material respects throughout such year, or, if there has been a
default in the fulfillment of any such duties, responsibilities or obligations,
specifying each such default known to such Servicing Officer and the nature and
status thereof, (iii) nothing has come to the attention of such Servicing
Officer to lead such Servicing Officer to believe that the Servicer has failed
to perform any of its duties, responsibilities and obligations under its
Servicing Agreement in all material respects throughout such year, or, if there
has been a material default in the performance or fulfillment of any such
duties, responsibilities or obligations, specifying each such default known to
such Servicing Officer and the nature and status thereof.

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<PAGE>

         (b) Copies of such statements shall be provided to any
Certificateholder upon request, by the Master Servicer or by the Trustee at the
Master Servicer's expense if the Master Servicer failed to provide such copies
(unless (i) the Master Servicer shall have failed to provide the Trustee with
such statement or (ii) the Trustee shall be unaware of the Master Servicer's
failure to provide such statement).

         Section 3.17 ANNUAL INDEPENDENT ACCOUNTANT'S SERVICING REPORT. If the
Master Servicer has, during the course of any fiscal year, directly serviced any
of the Mortgage Loans, then the Master Servicer at its expense shall cause a
nationally recognized firm of independent certified public accountants to
furnish a statement to the Trustee, the Rating Agencies and the Depositor on or
before March 1 of each year, commencing on March 1, 2005 to the effect that,
with respect to the most recently ended fiscal year, such firm has examined
certain records and documents relating to the Master Servicer's performance of
its servicing obligations under this Agreement and pooling and servicing and
trust agreements in material respects similar to this Agreement and to each
other and that, on the basis of such examination conducted substantially in
compliance with the audit program for mortgages serviced for Freddie Mac or the
Uniform Single Attestation Program for Mortgage Bankers, such firm is of the
opinion that the Master Servicer's activities have been conducted in compliance
with this Agreement, or that such examination has disclosed no material items of
noncompliance except for (i) such exceptions as such firm believes to be
immaterial, (ii) such other exceptions as are set forth in such statement and
(iii) such exceptions that the Uniform Single Attestation Program for Mortgage
Bankers or the Audit Program for Mortgages Serviced by Freddie Mac requires it
to report. Copies of such statements shall be provided to any Certificateholder
upon request by the Master Servicer, or by the Trustee at the expense of the
Master Servicer if the Master Servicer shall fail to provide such copies. If
such report discloses exceptions that are material, the Master Servicer shall
advise the Trustee whether such exceptions have been or are susceptible of cure,
and will take prompt action to do so.

         Section 3.18 REPORTS FILED WITH SECURITIES AND EXCHANGE COMMISSION.
Within 15 days after each Distribution Date, the Securities Administrator shall,
in accordance with industry standards, file with the Commission via the
Electronic Data Gathering and Retrieval System ("EDGAR"), a Form 8-K with a copy
of the statement to the Certificateholders for such Distribution Date as an
exhibit thereto. Prior to January 30 in any year, the Securities Administrator
shall, in accordance with industry standards and only if instructed by the
Depositor, file a Form 15 Suspension Notice with respect to the Trust Fund, if
applicable. Prior to (i) March 15, 2005 and (ii) unless and until a Form 15
Suspension Notice shall have been filed, prior to March 15 of each year
thereafter, the Master Servicer shall provide the Securities Administrator with
a Master Servicer Certification, together with a copy of the annual independent
accountant's servicing report and annual statement of compliance of each
Servicer, in each case, required to be delivered pursuant to the Servicing
Agreement, and, if applicable, the annual independent accountant's servicing
report and annual statement of compliance to be delivered by the Master Servicer
pursuant to Sections 3.16 and 3.17. Prior to (i) March 31, 2005, or such earlier
filing date as may be required by the Commission, and (ii) unless and until a
Form 15 Suspension Notice shall have been filed, March 31 of each year
thereafter, or such earlier filing date as may be required by the Commission,
the Securities Administrator shall file a Form 10-K, in substance conforming to
industry standards, with respect to the Trust. Such Form 10-K shall include the
Master Servicer Certification and other

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<PAGE>

documentation provided by the Master Servicer pursuant to the second preceding
sentence. The Depositor hereby grants to the Securities Administrator a limited
power of attorney to execute and file each such document on behalf of the
Depositor. Such power of attorney shall continue until either the earlier of (i)
receipt by the Securities Administrator from the Depositor of written
termination of such power of attorney and (ii) the termination of the Trust
Fund. The Depositor agrees to promptly furnish to the Securities Administrator,
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 Securities Administrator reasonably deems appropriate to prepare and file
all necessary reports with the Commission. The Securities Administrator shall
have no responsibility to file any items other than those specified in this
Section 3.18; provided, however, the Securities Administrator will cooperate
with the Depositor in connection with any additional filings with respect to the
Trust Fund as the Depositor deems necessary under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Fees and expenses incurred by the
Securities Administrator in connection with this Section 3.18 shall not be
reimbursable from the Trust Fund.

         Section 3.19 THE COMPANY. On the Closing Date, the Company will receive
from the Depositor a payment of $5,000.

         Section 3.20 UCC. The Depositor shall inform the Trustee in writing of
any Uniform Commercial Code financing statements that were filed on the Closing
Date in connection with the Trust with stamped recorded copies of such financing
statements to be delivered to the Trustee promptly upon receipt by the
Depositor. The Trustee agrees to monitor and notify the Depositor if any
continuation statements for such Uniform Commercial Code financing statements
need to be filed. If directed by the Depositor in writing, the Trustee will file
any such continuation statements solely at the expense of the Depositor. The
Depositor shall file any financing statements or amendments thereto required by
any change in the Uniform Commercial Code.

         Section 3.21      OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS.

         (a) With respect to any Mortgage Loan which as of the first day of a
Calendar Quarter is delinquent in payment by 90 days or more or is an REO
Property, the Company shall have the right to purchase such Mortgage Loan from
the Trust at a price equal to the Repurchase Price; provided however (i) that
such Mortgage Loan is still 90 days or more delinquent or is an REO Property as
of the date of such purchase and (ii) this purchase option, if not theretofore
exercised, shall terminate on the date prior to the last day of the related
Calendar Quarter. This purchase option, if not exercised, shall not be
thereafter reinstated unless the delinquency is cured and the Mortgage Loan
thereafter again becomes 90 days or more delinquent or becomes an REO Property,
in which case the option shall again become exercisable as of the first day of
the related Calendar Quarter.

         (b) If at any time the Company remits to the Master Servicer a payment
for deposit in the Master Servicer Collection Account covering the amount of the
Repurchase Price for such a Mortgage Loan, and the Company provides to the
Trustee a certification signed by a Servicing Officer stating that the amount of
such payment has been deposited in the Master Servicer Collection Account, then
the Trustee shall execute the assignment of such Mortgage Loan to the Company at
the request of the Company without recourse, representation or warranty and the
Company shall

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<PAGE>

succeed to all of the Trustee's right, title and interest in and to such
Mortgage Loan, and all security and documents relative thereto. Such assignment
shall be an assignment outright and not for security. The Company will thereupon
own such Mortgage, and all such security and documents, free of any further
obligation to the Trustee or the Certificateholders with respect thereto.

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                                   ARTICLE IV
                                    Accounts

         Section 4.01 PROTECTED ACCOUNTS. (a) The Master Servicer shall enforce
the obligation of the Servicer to establish and maintain a Protected Account in
accordance with the Servicing Agreement, with records to be kept with respect
thereto on a Mortgage Loan by Mortgage Loan basis, into which accounts shall be
deposited within 48 hours (or as of such other time specified in the Servicing
Agreement) of receipt, all collections of principal and interest on any Mortgage
Loan and any REO Property received by the Servicer, including Principal
Prepayments, Insurance Proceeds, Liquidation Proceeds, and advances made from
the Servicer's own funds (less servicing compensation as permitted by the
Servicing Agreement in the case of the Servicer) and all other amounts to be
deposited in the Protected Account. The Servicer is hereby authorized to make
withdrawals from and deposits to the related Protected Account for purposes
required or permitted by this Agreement. To the extent provided in the Servicing
Agreement, the Protected Account shall be held by a Designated Depository
Institution and segregated on the books of such institution in the name of the
Trustee for the benefit of Certificateholders.

         (b) To the extent provided in the Servicing Agreement, amounts on
deposit in a Protected Account may be invested in Permitted Investments in the
name of the Trustee for the benefit of Certificateholders and, except as
provided in the preceding paragraph, not commingled with any other funds. Such
Permitted Investments shall mature, or shall be subject to redemption or
withdrawal, no later than the date on which such funds are required to be
withdrawn for deposit in the Master Servicer Collection Account, and shall be
held until required for such deposit. The income earned from Permitted
Investments made pursuant to this Section 4.01 shall be paid to the Servicer
under the Servicing Agreement, and the risk of loss of moneys required to be
distributed to the Certificateholders resulting from such investments shall be
borne by and be the risk of the Servicer. The Servicer (to the extent provided
in the Servicing Agreement) shall deposit the amount of any such loss in the
Protected Account within two Business Days of receipt of notification of such
loss but not later than the second Business Day prior to the Distribution Date
on which the moneys so invested are required to be distributed to the
Certificateholders.

         (c) To the extent provided in the Servicing Agreement and subject to
this Article IV, on or before each Servicer Remittance Date, the Servicer shall
withdraw or shall cause to be withdrawn from its Protected Accounts and shall
immediately deposit or cause to be deposited in the Master Servicer Collection
Account amounts representing the following collections and payments (other than
with respect to principal of or interest on the Mortgage Loans due on or before
the Cut-off Date) with respect to each Loan Group:

                  (i) Scheduled Payments on the Mortgage Loans received or any
related portion thereof advanced by the Servicer pursuant to its Servicing
Agreement which were due on or before the related Due Date, net of the amount
thereof comprising its Servicing Fee or any fees with respect to any lender-paid
primary mortgage insurance policy;

                  (ii) Full Principal Prepayments and any Liquidation Proceeds
received by the Servicer with respect to the Mortgage Loans in the related
Prepayment Period, with interest to the date of prepayment or liquidation, net
of the amount thereof comprising its Servicing Fee;

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                  (iii) Partial Principal Prepayments received by the Servicer
for the Mortgage Loans in the related Prepayment Period; and

                  (iv) Any amount to be used as a Monthly Advance.

         (d) Withdrawals may be made from an Account only to make remittances as
provided in Section 4.01(c), 4.02 and 4.03; to reimburse the Master Servicer or
the Servicer for Monthly Advances which have been recovered by subsequent
collections from the related Mortgagor; to remove amounts deposited in error; to
remove fees, charges or other such amounts deposited on a temporary basis; or to
clear and terminate the account at the termination of this Agreement in
accordance with Section 10.01. As provided in Sections 4.01(a) and 4.02(b)
certain amounts otherwise due to the Servicer may be retained by it and need not
be deposited in the Master Servicer Collection Account.

         Section 4.02 MASTER SERVICER COLLECTION ACCOUNT. (a) The Master
Servicer shall establish and maintain in the name of the Trustee, for the
benefit of the Certificateholders, the Master Servicer Collection Account as a
segregated trust account or accounts. The Master Servicer Collection Account
shall be an Eligible Account. The Master Servicer will deposit in the Master
Servicer Collection Account as identified by the Master Servicer and as received
by the Master Servicer, the following amounts:

                  (i) Any amounts withdrawn from a Protected Account;

                  (ii) Any Monthly Advance and any Compensating Interest
Payments;

                  (iii) Any Insurance Proceeds or Net Liquidation Proceeds
received by or on behalf of the Master Servicer or which were not deposited in a
Protected Account;

                  (iv) The Repurchase Price with respect to any Mortgage Loans
purchased by the Seller pursuant to the Mortgage Loan Purchase Agreement or
Sections 2.02 or 2.03 hereof, any amounts which are to be treated pursuant to
Section 2.04 of this Agreement as the payment of a Repurchase Price in
connection with the tender of a Substitute Mortgage Loan by the Seller, the
Repurchase Price with respect to any Mortgage Loans purchased by the Company
pursuant to Section 3.21, and all proceeds of any Mortgage Loans or property
acquired with respect thereto repurchased by the Depositor or its designee
pursuant to Section 10.01;

                  (v) Any amounts required to be deposited with respect to
losses on investments of deposits in an Account; and

                  (vi) Any other amounts received by or on behalf of the Master
Servicer and required to be deposited in the Master Servicer Collection Account
pursuant to this Agreement.

         (b) All amounts deposited to the Master Servicer Collection Account
shall be held by the Master Servicer in the name of the Trustee in trust for the
benefit of the Certificateholders in accordance with the terms and provisions of
this Agreement. The requirements for crediting the

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Master Servicer Collection Account or the Distribution Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the natureof (i) prepayment or late payment
charges or assumption, tax service, statement account or payoff, substitution,
satisfaction, release and other like fees and charges and (ii) the items
enumerated in Subsections 4.05(a)(i), (ii), (iii), (iv), (vi), (vii), (viii),
(ix) and (x), need not be credited by the Master Servicer or the Servicer to the
Distribution Account or the Master Servicer Collection Account, as applicable.
In the event that the Master Servicer shall deposit or cause to be deposited to
the Distribution Account any amount not required to be credited thereto, the
Trustee, upon receipt of a written request therefor signed by a Servicing
Officer of the Master Servicer, shall promptly transfer such amount to the
Master Servicer, any provision herein to the contrary notwithstanding.

         (c) The amount at any time credited to the Master Servicer Collection
Account may be invested, in the name of the Trustee, or its nominee, for the
benefit of the Certificateholders, in Permitted Investments as directed by
Master Servicer. All Permitted Investments shall mature or be subject to
redemption or withdrawal on or before, and shall be held until, the next
succeeding Distribution Account Deposit Date. Any and all investment earnings on
amounts on deposit in the Master Servicer Collection Account from time to time
shall be for the account of the Master Servicer. The Master Servicer from time
to time shall be permitted to withdraw or receive distribution of any and all
investment earnings from the Master Servicer Account. The risk of loss of moneys
required to be distributed to the Certificateholders resulting from such
investments shall be borne by and be the risk of the Master Servicer. The Master
Servicer shall deposit the amount of any such loss in the Master Servicer
Collection Account within two Business Days of receipt of notification of such
loss but not later than the second Business Day prior to the Distribution Date
on which the moneys so invested are required to be distributed to the
Certificateholders.

         Section 4.03 PERMITTED WITHDRAWALS AND TRANSFERS FROM THE MASTER
SERVICER COLLECTION ACCOUNT. (a) The Master Servicer will, from time to time on
demand of the Servicer or the Securities Administrator, make or cause to be made
such withdrawals or transfers from the Master Servicer Collection Account as the
Master Servicer has designated for such transfer or withdrawal pursuant to this
Agreement and the Servicing Agreement. The Master Servicer may clear and
terminate the Master Servicer Collection Account pursuant to Section 10.01 and
remove amounts from time to time deposited in error.

         (b) On an ongoing basis, the Master Servicer shall withdraw from the
Master Servicer Collection Account (i) any expenses, costs and liabilities
recoverable by the Trustee, the Master Servicer or the Securities Administrator
or the Custodian pursuant to Sections 3.03, 7.04 and 9.05 and (ii) any amounts
payable to the Master Servicer as set forth in Section 3.14; provided, however,
that the Master Servicer shall be obligated to pay from its own funds any
amounts which it is required to pay under Section 7.03(a).

         (c) In addition, on or before each Distribution Account Deposit Date,
the Master Servicer shall deposit in the Distribution Account (or remit to the
Trustee for deposit therein) any Monthly Advances required to be made by the
Master Servicer with respect to the Mortgage Loans.

         (d) No later than 3:00 p.m. New York time on each Distribution Account
Deposit Date, the Master Servicer will transfer all Available Funds on deposit
in the Master Servicer Collection

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Account with respect to the related Distribution Date to the Trustee for deposit
in the Distribution Account.

         Section 4.04 DISTRIBUTION ACCOUNT. (a) The Trustee shall establish and
maintain in the name of the Trustee, for the benefit of the Certificateholders,
the Distribution Account as a segregated trust account or accounts.

         (b) All amounts deposited to the Distribution Account shall be held by
the Trustee in the name of the Trustee in trust for the benefit of the
Certificateholders in accordance with the terms and provisions of this
Agreement.

         (c) The Distribution Account shall constitute a trust account of the
Trust Fund segregated on the books of the Trustee and held by the Trustee in
trust in its Corporate Trust Office, and the Distribution Account and the funds
deposited therein shall not be subject to, and shall be protected from, all
claims, liens, and encumbrances of any creditors or depositors of the Trustee or
the Master Servicer (whether made directly, or indirectly through a liquidator
or receiver of the Trustee or the Master Servicer). The Distribution Account
shall be an Eligible Account. The amount at any time credited to the
Distribution Account shall be (i) held in cash and fully insured by the FDIC to
the maximum coverage provided thereby or (ii) invested in the name of the
Trustee, in such Permitted Investments as may be selected by the Master Servicer
or deposited in demand deposits with such depository institutions as may be
selected by the Master Servicer, provided that time deposits of such depository
institutions would be a Permitted Investment. All Permitted Investments shall
mature or be subject to redemption or withdrawal on or before, and shall be held
until, the next succeeding Distribution Date if the obligor for such Permitted
Investment is the Trustee or, if such obligor is any other Person, the Business
Day preceding such Distribution Date. All investment earnings on amounts on
deposit in the Distribution Account or benefit from funds uninvested therein
from time to time shall be for the account of the Master Servicer. The Master
Servicer shall be permitted to withdraw or receive distribution of any and all
investment earnings from the Distribution Account on each Distribution Date. If
there is any loss on a Permitted Investment or demand deposit, the Master
Servicer shall remit the amount of the loss to the Trustee who shall deposit
such amount in the Distribution Account. With respect to the Distribution
Account and the funds deposited therein, the Master Servicer shall take such
action as may be necessary to ensure that the Certificateholders shall be
entitled to the priorities afforded to such a trust account (in addition to a
claim against the estate of the Trustee) as provided by 12 U.S.C. ss. 92a(e),
and applicable regulations pursuant thereto, if applicable, or any applicable
comparable state statute applicable to state chartered banking corporations.

         Section 4.05 PERMITTED WITHDRAWALS AND TRANSFERS FROM THE DISTRIBUTION
ACCOUNT. (a) The Trustee will, from time to time on demand of the Master
Servicer or the Securities Administrator, make or cause to be made such
withdrawals or transfers from the Distribution Account as the Master Servicer
has designated for such transfer or withdrawal pursuant to this Agreement and
the Servicing Agreement or as the Securities Administrator has instructed
hereunder for the following purposes (limited in the case of amounts due the
Master Servicer to those not withdrawn from the Master Servicer Collection
Account in accordance with the terms of this Agreement):

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                  (i) to reimburse the Master Servicer or the Servicer for any
Monthly Advance of its own funds, the right of the Master Servicer or the
Servicer to reimbursement pursuant to this subclause (i) being limited to
amounts received on a particular Mortgage Loan (including, for this purpose, the
Repurchase Price therefor, Insurance Proceeds and Liquidation Proceeds) which
represent late payments or recoveries of the principal of or interest on such
Mortgage Loan respecting which such Monthly Advance was made;

                  (ii) to reimburse the Master Servicer or the Servicer from
Insurance Proceeds or Liquidation Proceeds relating to a particular Mortgage
Loan for amounts expended by the Master Servicer or the Servicer in good faith
in connection with the restoration of the related Mortgaged Property which was
damaged by an Uninsured Cause or in connection with the liquidation of such
Mortgage Loan;

                  (iii) to reimburse the Master Servicer or the Servicer from
Insurance Proceeds relating to a particular Mortgage Loan for insured expenses
incurred with respect to such Mortgage Loan and to reimburse the Master Servicer
or the Servicer from Liquidation Proceeds from a particular Mortgage Loan for
Liquidation Expenses incurred with respect to such Mortgage Loan; provided that
the Master Servicer shall not be entitled to reimbursement for Liquidation
Expenses with respect to a Mortgage Loan to the extent that (i) any amounts with
respect to such Mortgage Loan were paid as Excess Liquidation Proceeds pursuant
to clause (viii) of this Subsection 4.05 (a) to the Master Servicer; and (ii)
such Liquidation Expenses were not included in the computation of such Excess
Liquidation Proceeds;

                  (iv) to reimburse the Master Servicer or the Servicer for
advances of funds (other than Monthly Advances) made with respect to the
Mortgage Loans, and the right to reimbursement pursuant to this subclause being
limited to amounts received on the related Mortgage Loan (including, for this
purpose, the Repurchase Price therefor, Insurance Proceeds and Liquidation
Proceeds) which represent late recoveries of the payments for which such
advances were made;

                  (v) to reimburse the Master Servicer or the Servicer for any
Monthly Advance or advance, after a Realized Loss has been allocated with
respect to the related Mortgage Loan if the Monthly Advance or advance has not
been reimbursed pursuant to clauses (i) and (iv);

                  (vi) to pay the Master Servicer as set forth in Section 3.14;

                  (vii) to reimburse the Master Servicer for expenses, costs and
liabilities incurred by and reimbursable to it pursuant to Sections 3.03 and
7.04(c) and (d);

                  (viii) to pay to the Master Servicer, as additional servicing
compensation, any Excess Liquidation Proceeds to the extent not retained by the
Servicer;

                  (ix) to reimburse or pay the Servicer any such amounts as are
due thereto under the Servicing Agreement and have not been retained by or paid
to the Servicer, to the extent provided in the Servicing Agreement;

                  (x) to reimburse the Trustee, the Securities Administrator or
the Custodian for expenses, costs and liabilities incurred by or reimbursable to
it pursuant to this Agreement;

                                      -58-

<PAGE>

                  (xi) to remove amounts deposited in error; and

                  (xii) to clear and terminate the Distribution Account pursuant
to Section 10.01.

         (b) The Master Servicer shall keep and maintain separate accounting, on
a Mortgage Loan by Mortgage Loan basis, for the purpose of accounting for any
reimbursement from the Distribution Account pursuant to subclauses (i) through
(iv) or with respect to any such amounts which would have been covered by such
subclauses had the amounts not been retained by the Master Servicer without
being deposited in the Distribution Account under Section 4.02(b).

         (c) On each Distribution Date, the Trustee shall distribute the
Available Funds to the extent on deposit in the Distribution Account for each
Loan Group to the Holders of the Certificates in accordance with distribution
instructions provided to it by the Securities Administrator no later than two
Business Days prior to such Distribution Date and determined by the Securities
Administrator in accordance with Section 6.01.

                                      -59-

<PAGE>

                                    ARTICLE V
                                  Certificates

         Section 5.01 CERTIFICATES. (a) The Depository, the Depositor and the
Trustee have entered into a Depository Agreement dated as of the Closing Date
(the "Depository Agreement"). Except for the Residual Certificates, the Private
Certificates and the Individual Certificates and as provided in Subsection
5.01(b), the Certificates shall at all times remain registered in the name of
the Depository or its nominee and at all times: (i) registration of such
Certificates may not be transferred by the Trustee except to a successor to the
Depository; (ii) ownership and transfers of registration of such Certificates on
the books of the Depository shall be governed by applicable rules established by
the Depository; (iii) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants; (iv) the Trustee shall
deal with the Depository as representative of such Certificate Owners of the
respective Class of Certificates for purposes of exercising the rights of
Certificateholders under this Agreement, and requests and directions for and
votes of such representative shall not be deemed to be inconsistent if they are
made with respect to different Certificate Owners; and (v) the Trustee may rely
and shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants.

         The Residual Certificates and the Private Certificates are initially
Physical Certificates. If at any time the Holders of all of the Certificates of
one or more such Classes request that the Trustee cause such Class to become
Global Certificates, the Trustee and the Depositor will take such action as may
be reasonably required to cause the Depository to accept such Class or Classes
for trading if it may legally be so traded.

         All transfers by Certificate Owners of such respective Classes of
Book-Entry Certificates and any Global Certificates shall be made in accordance
with the procedures established by the Depository Participant or brokerage firm
representing such Certificate Owners. Each Depository Participant shall only
transfer Book-Entry Certificates of Certificate Owners it represents or of
brokerage firms for which it acts as agent in accordance with the Depository's
normal procedures.

         (b) If (i)(A) the Depositor advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Depositor is unable to locate a
qualified successor within 30 days or (ii) the Depositor at its option advises
the Trustee in writing that it elects to terminate the book-entry system through
the Depository, the Trustee shall request that the Depository notify all
Certificate Owners of the occurrence of any such event and of the availability
of definitive, fully registered Certificates to Certificate Owners requesting
the same. Upon surrender to the Trustee of the Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall issue the definitive Certificates. Neither the Depositor nor
the Trustee shall be liable for any delay in delivery of any instructions
required under this section and may conclusively rely on, and shall be protected
in relying on, such instructions.

         In addition, if an Event of Default has occurred and is continuing,
each Certificate Owner materially adversely affected thereby may at its option
request a definitive Certificate evidencing such Certificate Owner's Fractional
Undivided Interest in the related Class of Certificates. In order to make such
request, such Certificate Owner shall, subject to the rules and procedures of
the

                                      -60-

<PAGE>

Depository, provide the Depository or the related Depository Participant with
directions for the Trustee to exchange or cause the exchange of the Certificate
Owner's interest in such Class of Certificates for an equivalent Fractional
Undivided Interest in fully registered definitive form. Upon receipt by the
Trustee of instructions from the Depository directing the Trustee to effect such
exchange (such instructions to contain information regarding the Class of
Certificates and the Current Principal Amount being exchanged, the Depository
Participant account to be debited with the decrease, the registered holder of
and delivery instructions for the definitive Certificate, and any other
information reasonably required by the Trustee), (i) the Trustee shall instruct
the Depository to reduce the related Depository Participant's account by the
aggregate Current Principal Amount of the definitive Certificate, (ii) the
Trustee shall execute, authenticate and deliver, in accordance with the
registration and delivery instructions provided by the Depository, a definitive
Certificate evidencing such Certificate Owner's Fractional Undivided Interest in
such Class of Certificates and (iii) the Trustee shall execute and authenticate
a new Book-Entry Certificate reflecting the reduction in the Current Principal
Amount of such Class of Certificates by the amount of the definitive
Certificates.

         (c) (i) REMIC I will be evidenced by (x) the REMIC I Regular Interests
(designated below), which will be uncertificated and non-transferable and are
hereby designated as the "regular interests" in REMIC I and have the principal
balances and accrue interest at the Pass-Through Rates equal to those set forth
in this Section 5.01(c)(i) and (y) the Class R-I Certificates, which is hereby
designated as the single "residual interest" in REMIC I.

         The REMIC I Regular Interests and the Class R-I Certificate will have
the following designations, initial balances and pass-through rates:

<TABLE>
<CAPTION>
<S>                  <C>                        <C>                             <C>
  REMIC I Interest       Initial Balance        Pass-Through Rate               Related Group

         I-A         $              299.36             (1)                        Group I
         I-B         $            9,653.45             (2)                        Group I
        II-A         $            1,340.29             (1)                        Group II
        II-B         $           43,232.99             (3)                        Group II
        III-A        $              157.73             (1)                        Group III
        III-B        $            5,087.73             (4)                        Group III
        IV-A         $              106.48             (1)                        Group IV
        IV-B         $            3,431.88             (5)                        Group IV
         ZZZ         $      613,997,177.87             (1)                Group I through Group IV
      Class R-I      $               50.00             (2)                         Group I
</TABLE>

(1) The weighted average of the Net Rates of the Mortgage Loans, weighted on the
basis of the respective Scheduled Principal Balance of each such Mortgage Loan
as of the beginning of the Due Period immediately preceding the related
Distribution Date.

(2) The weighted average of the Net Rates of the Group I Mortgage Loans,
weighted on the basis of the respective Scheduled Principal Balance of each such
Mortgage Loan as of the beginning of the Due Period immediately preceding the
related Distribution Date.

(3) The weighted average of the Net Rates of the Group II Mortgage Loans,
weighted on the basis of the respective Scheduled Principal Balance of each such
Mortgage Loan as of the beginning of the Due Period immediately preceding the
related Distribution Date.

                                      -61-

<PAGE>

(4) The weighted average of the Net Rates of the Group III Mortgage Loans,
weighted on the basis of the respective Scheduled Principal Balance of each such
Mortgage Loan as of the beginning of the Due Period immediately preceding the
related Distribution Date.

(5) The weighted average of the Net Rates of the Group IV Mortgage Loans,
weighted on the basis of the respective Scheduled Principal Balance of each such
Mortgage Loan as of the beginning of the Due Period immediately preceding the
related Distribution Date.

         Distributions of principal shall be deemed to be made from amounts
received on the Mortgage Loans to REMIC I Regular Interests, first, so as to
keep the Uncertificated Principal Balance of each REMIC I Regular Interest
ending with the designation "B" equal to 0.01% of the aggregate Scheduled
Principal Balance of the Mortgage Loans in the related Loan Group; second, to
each REMIC I Regular Interest ending with the designation "A," so that the
Uncertificated Principal Balance of each such REMIC I Regular Interest is equal
to 0.01% of the excess of (x) the aggregate Scheduled Principal Balance of the
Mortgage Loans in the related Loan Group over (y) the Current Principal Amount
of the Senior Certificates in the related Certificate Group (except that if any
such excess is a larger number than in the preceding distribution period, the
least amount of principal shall be distributed to such REMIC I Regular Interests
such that the REMIC I Subordinated Balance Ratio is maintained); and third, any
remaining principal to REMIC I Regular Interest ZZZ. Realized Losses on the
Mortgage Loans shall be applied after all distributions have been made on each
Distribution Date first, so as to keep the Uncertificated Principal Balance of
each REMIC I Regular Interest ending with the designation "B" equal to 0.01% of
the aggregate Scheduled Principal Balance of the Mortgage Loans in the related
Loan Group; second, to each REMIC I Regular Interest ending with the designation
"A," so that the Uncertificated Principal Balance of each such REMIC I Regular
Interest is equal to 0.01% of the excess of (x) the aggregate Scheduled
Principal Balance of the Mortgage Loans in the related Loan Group over (y) the
Current Principal Amount of the Senior Certificates in the related Certificate
Group (except that if any such excess is a larger number than in the preceding
distribution period, the least amount of Realized Losses shall be applied to
such REMIC I Regular Interests such that the REMIC I Subordinated Balance Ratio
is maintained); and third, any remaining Realized Losses on the Mortgage Loans
shall be allocated to REMIC I Regular Interest ZZZ.

         (ii) The Classes of the Certificates shall have the following
designations, initial principal amounts and Pass-Through Rates:

<TABLE>
<CAPTION>
       <S>                           <C>                                     <C>
                                     Initial Principal
           DESIGNATION                    AMOUNT                            PASS-THROUGH RATE
           -----------                    -----                             -----------------

                I-A               $        93,540,900.00                             (1)
               II-A               $        418,927,000.00                            (2)
              III-A               $        49,300,000.00                             (3)
               IV-A               $        33,254,000.00                             (4)
               R-I                $        50.00                                     (1)
              R-II                $        50.00                                     (1)
               B-1                $        6,754,000.00                              (5)
               B-2                $        4,912,000.00                              (5)
               B-3                $        2,763,000.00                              (5)
               B-4                $        2,456,000.00                              (5)
               B-5                $        1,229,000.00                              (5)
</TABLE>

                                      -62-

<PAGE>

<TABLE>
<CAPTION>
           <S>                    <C>                                               <C>
               B-6                $        924,537.79                                (5)
</TABLE>

         (1) The Class I-A, Class R-I and Class R-II Certificates will each bear
interest at a variable pass-through rate equal to the weighted average of the
Net Rates of the Group I Mortgage Loans, weighted on the basis of the respective
Scheduled Principal Balances of each such Mortgage Loan as of the beginning of
the Due Period immediately preceding the related Distribution Date; provided
that, for federal income tax purposes the Class I-A Certificates will bear
interest at a rate equivalent to the foregoing, expressed as the weighted
average of the Pass-Through Rate on REMIC I Regular Interest I-B, weighted on
the basis of the Uncertificated Principal balance of such REMIC I Regular
Interest immediately preceding the related Distribution Date. The pass-through
rate with respect to the first Interest Accrual Period is approximately 3.454%
per annum.

         (2) The Class II-A Certificates will bear interest at a variable
pass-through rate equal to the weighted average of the Net Rates of the Group II
Mortgage Loans, weighted on the basis of the respective Scheduled Principal
Balances of each such Mortgage Loan as of the beginning of the Due Period
immediately preceding the related Distribution Date; provided that, for federal
income tax purposes the Class II-A Certificates will bear interest at a rate
equivalent to the foregoing, expressed as the weighted average of the
Pass-Through Rate on REMIC I Regular Interest II-B, weighted on the basis of the
Uncertificated Principal balance of such REMIC I Regular Interest immediately
preceding the related Distribution Date. The pass-through rate with respect to
the first Interest Accrual Period is approximately 4.051% per annum.

         (3) The Class III-A Certificates will bear interest at a variable
pass-through rate equal to the weighted average of the Net Rates of the Group
III Mortgage Loans, weighted on the basis of the respective Scheduled Principal
Balances of each such Mortgage Loan as of the beginning of the Due Period
immediately preceding the related Distribution Date; provided that, for federal
income tax purposes the Class III-A Certificates will bear interest at a rate
equivalent to the foregoing, expressed as the weighted average of the
Pass-Through Rate on REMIC I Regular Interest III-B, weighted on the basis of
the Uncertificated Principal balance of such REMIC I Regular Interest
immediately preceding the related Distribution Date. The pass-through rate with
respect to the first Interest Accrual Period is approximately 4.348% per annum.

         (4) The Class IV-A Certificates will bear interest at a variable
pass-through rate equal to the weighted average of the Net Rates of the Group IV
Mortgage Loans, weighted on the basis of the respective Scheduled Principal
Balances of each such Mortgage Loan as of the beginning of the Due Period
immediately preceding the related Distribution Date; provided that, for federal
income tax purposes the Class IV-A Certificates will bear interest at a rate
equivalent to the foregoing, expressed as the weighted average of the
Pass-Through Rate on REMIC I Regular Interest IV-B, weighted on the basis of the
Uncertificated Principal balance of such REMIC I Regular Interest immediately
preceding the related Distribution Date. The pass-through rate with respect to
the first Interest Accrual Period is approximately 5.063% per annum.

         (5) The Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class
B-6 Certificates will each bear interest at a variable pass-through rate equal
to the weighted average of the Net Rates of the Mortgage Loans in each Loan
Group, weighted in proportion to the results of subtracting from the aggregate
principal balance of the Mortgage Loans in each Loan Group, the Current
Principal Amount of the related Class or Classes of Senior Certificates;
provided that for federal income tax purposes such Certificates will bear
interest at a rate equivalent to the foregoing, expressed as the weighted
average of the Pass-Through Rates on REMIC I Regular Interests I-A, II-A, III-A,
IV-A, weighted on the basis of the Uncertificated Principal Balance of each such
REMIC I Regular Interest immediately preceding the related Distribution Date,
provided that for purposes of such weighted average, the Pass-Through Rate of
each such REMIC I Regular Interest shall be subject to a cap and a floor equal
to the Pass-Through Rate of the REMIC I Regular Interest from the related Group
ending with the designation "B". The pass-through rate with respect to the first
Interest Accrual Period is approximately 4.039% per annum.

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

                                      -63-

<PAGE>

         (e) With respect to each Distribution Date, each Class of Certificates
shall accrue interest during the related Interest Accrual Period. With respect
to each Distribution Date and each such Class of Certificates, interest shall be
calculated, on the basis of a 360-day year comprised of twelve 30-day months,
based upon the respective Pass-Through Rate set forth, or determined as
provided, above and the Current Principal Amount of such Class applicable to
such Distribution Date.

         (f) The Certificates shall be substantially in the forms set forth in
Exhibits A-1, A-2 and A-3. On original issuance, the Trustee shall sign,
countersign and shall deliver them at the direction of the Depositor. Pending
the preparation of definitive Certificates of any Class, the Trustee may sign
and countersign temporary Certificates that are printed, lithographed or
typewritten, in authorized denominations for Certificates of such Class,
substantially of the tenor of the definitive Certificates in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers or authorized signatories executing such
Certificates may determine, as evidenced by their execution of such
Certificates. If temporary Certificates are issued, the Depositor will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office of the Trustee, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Certificates, the
Trustee shall sign and countersign and deliver in exchange therefor a like
aggregate principal amount, in authorized denominations for such Class, of
definitive Certificates of the same Class. Until so exchanged, such temporary
Certificates shall in all respects be entitled to the same benefits as
definitive Certificates.

         (g) Each Class of Book-Entry Certificates will be registered as a
single Certificate of such Class held by a nominee of the Depository or the DTC
Custodian, and beneficial interests will be held by investors through the
book-entry facilities of the Depository in minimum denominations of (i) in the
case of the Senior Certificates (other than the Residual Certificates), $1,000
and in each case increments of $1.00 in excess thereof, and (ii) in the case of
the Offered Subordinate Certificates, $25,000 and increments of $1.00 in excess
thereof, except that one Certificate of each such Class may be issued in a
different amount so that the sum of the denominations of all outstanding
Certificates of such Class shall equal the Current Principal Amount of such
Class on the Closing Date. On the Closing Date, the Trustee shall execute and
countersign Physical Certificates all in an aggregate principal amount that
shall equal the Current Principal Amount of such Class on the Closing Date. The
Private Certificates shall be issued in certificated fully-registered form in
minimum dollar denominations of $25,000 and integral multiples of $1.00 in
excess thereof, except that one Private Certificate of each Class may be issued
in a different amount so that the sum of the denominations of all outstanding
Private Certificates of such Class shall equal the Current Principal Amount of
such Class on the Closing Date. The Residual Certificates shall each be issued
in certificated fully-registered form, each, in the denomination of $50. Each
Class of Global Certificates, if any, shall be issued in fully registered form
in minimum dollar denominations of $50,000 and integral multiples of $1.00 in
excess thereof, except that one Certificate of each Class may be in a different
denomination so that the sum of the denominations of all outstanding
Certificates of such Class shall equal the Current Principal Amount of such
Class on the Closing Date. On the Closing Date, the Trustee shall execute and
countersign (i) in the case of each Class of Offered Certificates, the
Certificate in the entire Current Principal Amount of the respective Class

                                      -65-

<PAGE>

and (ii) in the case of each Class of Private Certificates, Individual
Certificates all in an aggregate principal amount that shall equal the Current
Principal Amount of each such respective Class on the Closing Date. The
Certificates referred to in clause (i) and if at any time there are to be Global
Certificates, the Global Certificates shall be delivered by the Depositor to the
Depository or pursuant to the Depository's instructions, shall be delivered by
the Depositor on behalf of the Depository to and deposited with the DTC
Custodian. The Trustee shall sign the Certificates by facsimile or manual
signature and countersign them by manual signature on behalf of the Trustee by
one or more authorized signatories, each of whom shall be Responsible Officers
of the Trustee or its agent. A Certificate bearing the manual and facsimile
signatures of individuals who were the authorized signatories of the Trustee or
its agent at the time of issuance shall bind the Trustee, notwithstanding that
such individuals or any of them have ceased to hold such positions prior to the
delivery of such Certificate.

         (h) No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such Certificate
the manually executed countersignature of the Trustee or its agent, and such
countersignature upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly executed and delivered hereunder.
All Certificates issued on the Closing Date shall be dated the Closing Date. All
Certificates issued thereafter shall be dated the date of their
countersignature.

         (i) The Closing Date is hereby designated as the "startup" day of each
REMIC within the meaning of Section 860G(a)(9) of the Code.

         (j) For federal income tax purposes, each REMIC shall have a tax year
that is a calendar year and shall report income on an accrual basis.

         (k) The Trustee on behalf of the Trust shall cause each REMIC to timely
elect to be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of any
Trust established hereby shall be resolved in a manner that preserves the
validity of such elections.

         (l) The following legend shall be placed on the Residual Certificates,
whether upon original issuance or upon issuance of any other Certificate of any
such Class in exchange therefor or upon transfer thereof:

                  THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY
         BY, OR ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
         ARRANGEMENT WHICH IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
         INCOME SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE
         INTERNAL REVENUE CODE OF 1986, AS AMENDED, UNLESS THE PROPOSED
         TRANSFEREE PROVIDES THE TRUSTEE WITH AN OPINION OF COUNSEL ADDRESSED TO
         THE DEPOSITOR, TRUSTEE, MASTER SERVICER AND SECURITIES ADMINISTRATOR
         AND ON WHICH THEY MAY RELY THAT IS SATISFACTORY TO THE TRUSTEE THAT THE
         PURCHASE OF CERTIFICATES ON BEHALF OF SUCH PERSON WILL NOT RESULT IN OR

                                      -65-

<PAGE>

         CONSTITUTE A NONEXEMPT PROHIBITED TRANSACTION, IS PERMISSIBLE UNDER
         APPLICABLE LAW AND WILL NOT GIVE RISE TO ANY ADDITIONAL OBLIGATIONS ON
         THE PART OF THE DEPOSITOR, THE MASTER SERVICER, THE SECURITIES
         ADMINISTRATOR OR THE TRUSTEE.

 The following legend shall be placed upon the Private Certificates, whether
upon original issuance or upon issuance of any other Certificate of any such
Class in exchange therefor or upon transfer thereof:

         THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON
BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS
SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
UNLESS THE TRANSFEREE CERTIFIES OR REPRESENTS THAT THE PROPOSED TRANSFER AND
HOLDING OF A CERTIFICATE AND THE SERVICING, MANAGEMENT AND OPERATION OF THE
TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN ANY PROHIBITED TRANSACTION WHICH IS
NOT COVERED UNDER AN INDIVIDUAL OR CLASS PROHIBITED TRANSACTION EXEMPTION,
INCLUDING, BUT NOT LIMITED TO, PROHIBITED TRANSACTION EXEMPTION ("PTE") 84-14,
PTE 91-38, PTE 90-1, PTE 95-60 OR PTE 96-23 AND (II) WILL NOT GIVE RISE TO ANY
ADDITIONAL OBLIGATIONS ON THE PART OF THE DEPOSITOR, THE SECURITIES
ADMINISTRATOR, THE MASTER SERVICER OR THE TRUSTEE, WHICH WILL BE DEEMED
REPRESENTED BY AN OWNER OF A BOOK- ENTRY CERTIFICATE OR A GLOBAL CERTIFICATE OR
UNLESS THE OPINION SPECIFIED IN SECTION 5.07 OF THE AGREEMENT IS PROVIDED.

         Section 5.02 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES. (a)
The Trustee shall maintain at its Corporate Trust Office a Certificate Register
in which, subject 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.

         (b) Subject to Subsection 5.01(a) and, in the case of any Global
Certificate or Physical Certificate upon the satisfaction of the conditions set
forth below, upon surrender for registration of transfer of any Certificate at
any office or agency of the Trustee maintained for such purpose, the Trustee
shall sign, countersign and shall deliver, in the name of the designated
transferee or transferees, a new Certificate of a like Class and aggregate
Fractional Undivided Interest, but bearing a different number.

         (c) By acceptance of an Individual Certificate, whether upon original
issuance or subsequent transfer, each holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth in the Securities
Legend and agrees that it will transfer such a Certificate only as provided
herein. In addition to the provisions of Subsection 5.02(h), the following
restrictions shall apply with respect to the transfer and registration of
transfer of an Individual Certificate to a transferee that takes delivery in the
form of an Individual Certificate:

                                      -66-

<PAGE>

                  (i) The Trustee shall register the transfer of an Individual
Certificate if the requested transfer is being made to a transferee who has
provided the Trustee with a Rule 144A Certificate or comparable evidence as to
its QIB status.

                  (ii) The Trustee shall register the transfer of any Individual
Certificate if (x) the transferor has advised the Trustee in writing that the
Certificate is being transferred to an Institutional Accredited Investor; and
(y) prior to the transfer the transferee furnishes to the Trustee an Investment
Letter (and the Trustee shall be fully protected in so doing), provided that, if
based upon an Opinion of Counsel addressed to the Trustee to the effect that the
delivery of (x) and (y) above are not sufficient to confirm that the proposed
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and other
applicable laws, the Trustee shall as a condition of the registration of any
such transfer require the transferor to furnish such other certifications, legal
opinions or other information prior to registering the transfer of an Individual
Certificate as shall be set forth in such Opinion of Counsel.

         (d) Subject to Subsection 5.02(h), so long as a Global Certificate of
such Class is outstanding and is held by or on behalf of the Depository,
transfers of beneficial interests in such Global Certificate, or transfers by
holders of Individual Certificates of such Class to transferees that take
delivery in the form of beneficial interests in the Global Certificate, may be
made only in accordance with this Subsection 5.02(d) and in accordance with the
rules of the Depository:

                  (i) In the case of a beneficial interest in the Global
Certificate being transferred to an Institutional Accredited Investor, such
transferee shall be required to take delivery in the form of an Individual
Certificate or Certificates and the Trustee shall register such transfer only
upon compliance with the provisions of Subsection 5.02(c)(ii).

                  (ii) In the case of a beneficial interest in a Class of Global
Certificates being transferred to a transferee that takes delivery in the form
of an Individual Certificate or Certificates of such Class, except as set forth
in clause (i) above, the Trustee shall register such transfer only upon
compliance with the provisions of Subsection 5.02(c)(i).

                  (iii) In the case of an Individual Certificate of a Class
being transferred to a transferee that takes delivery in the form of a
beneficial interest in a Global Certificate of such Class, the Trustee shall
register such transfer if the transferee has provided the Trustee with a Rule
144A Certificate or comparable evidence as to its QIB status.

                  (iv) No restrictions shall apply with respect to the transfer
or registration of transfer of a beneficial interest in the Global Certificate
of a Class to a transferee that takes delivery in the form of a beneficial
interest in the Global Certificate of such Class; provided that each such
transferee shall be deemed to have made such representations and warranties
contained in the Rule 144A Certificate as are sufficient to establish that it is
a QIB.

         (e) Subject to Subsection 5.02(h), an exchange of a beneficial interest
in a Global Certificate of a Class for an Individual Certificate or Certificates
of such Class, an exchange of an Individual Certificate or Certificates of a
Class for a beneficial interest in the Global Certificate of such Class and an
exchange of an Individual Certificate or Certificates of a Class for another

                                      -67-

<PAGE>

Individual Certificate or Certificates of such Class (in each case, whether or
not such exchange is made in anticipation of subsequent transfer, and, in the
case of the Global Certificate of such Class, so long as such Certificate is
outstanding and is held by or on behalf of the Depository) may be made only in
accordance with this Subsection 5.02(e) and in accordance with the rules of the
Depository:

                  (i) A holder of a beneficial interest in a Global Certificate
of a Class may at any time exchange such beneficial interest for an Individual
Certificate or Certificates of such Class.

                  (ii) A holder of an Individual Certificate or Certificates of
a Class may exchange such Certificate or Certificates for a beneficial interest
in the Global Certificate of such Class if such holder furnishes to the Trustee
a Rule 144A Certificate or comparable evidence as to its QIB status.

                  (iii) A holder of an Individual Certificate of a Class may
exchange such Certificate for an equal aggregate principal amount of Individual
Certificates of such Class in different authorized denominations without any
certification.

         (f) (i) Upon acceptance for exchange or transfer of an Individual
Certificate of a Class for a beneficial interest in a Global Certificate of such
Class as provided herein, the Trustee shall cancel such Individual Certificate
and shall (or shall request the Depository to) endorse on the schedule affixed
to the applicable Global Certificate (or on a continuation of such schedule
affixed to the Global Certificate and made a part thereof) or otherwise make in
its books and records an appropriate notation evidencing the date of such
exchange or transfer and an increase in the certificate balance of the Global
Certificate equal to the certificate balance of such Individual Certificate
exchanged or transferred therefor.

                  (ii) Upon acceptance for exchange or transfer of a beneficial
interest in a Global Certificate of a Class for an Individual Certificate of
such Class as provided herein, the Trustee shall (or shall request the
Depository to) endorse on the schedule affixed to such Global Certificate (or on
a continuation of such schedule affixed to such Global Certificate and made a
part thereof) or otherwise make in its books and records an appropriate notation
evidencing the date of such exchange or transfer and a decrease in the
certificate balance of such Global Certificate equal to the certificate balance
of such Individual Certificate issued in exchange therefor or upon transfer
thereof.

         (g) The Securities Legend shall be placed on any Individual Certificate
issued in exchange for or upon transfer of another Individual Certificate or of
a beneficial interest in a Global Certificate.

         (h) Subject to the restrictions on transfer and exchange set forth in
this Section 5.02, the holder of any Individual Certificate may transfer or
exchange the same in whole or in part (in an initial certificate balance equal
to the minimum authorized denomination set forth in Section 5.01(g) above or any
integral multiple of $1.00 in excess thereof) by surrendering such Certificate
at the Corporate Trust Office, or at the office of any transfer agent, together
with an executed instrument of assignment and transfer satisfactory in form and
substance to the Trustee in the case of transfer and a written request for
exchange in the case of exchange. The holder of a beneficial interest in a
Global Certificate may, subject to the rules and procedures of the Depository,
cause the Depository (or its nominee) to notify the Trustee in writing of a
request for transfer or exchange of such

                                      -68-

<PAGE>

beneficial interest for an Individual Certificate or Certificates. Following a
proper request for transfer or exchange, the Trustee shall, within five Business
Days of such request made at the Corporate Trust Office, sign, countersign and
deliver at the Corporate Trust Office, to the transferee (in the case of
transfer) or holder (in the case of exchange) or send by first class mail at the
risk of the transferee (in the case of transfer) or holder (in the case of
exchange) to such address as the transferee or holder, as applicable, may
request, an Individual Certificate or Certificates, as the case may require, for
a like aggregate Fractional Undivided Interest and in such authorized
denomination or denominations as may be requested. The presentation for transfer
or exchange of any Individual Certificate shall not be valid unless made at the
Corporate Trust Office by the registered holder in person, or by a duly
authorized attorney-in-fact.

         (i) At the option of the Certificateholders, Certificates may be
exchanged for other Certificates of authorized denominations of a like Class and
aggregate Fractional Undivided Interest, upon surrender of the Certificates to
be exchanged at the Corporate Trust Office; provided, however, that no
Certificate may be exchanged for new Certificates unless the original Fractional
Undivided Interest represented by each such new Certificate (i) is at least
equal to the minimum authorized denomination or (ii) is acceptable to the
Depositor as indicated to the Trustee in writing. Whenever any Certificates are
so surrendered for exchange, the Trustee shall sign and countersign and the
Trustee shall deliver the Certificates which the Certificateholder making the
exchange is entitled to receive.

         (j) If the Trustee so requires, every Certificate presented or
surrendered for transfer or exchange shall be duly endorsed by, or be
accompanied by a written instrument of transfer, with a signature guarantee, in
form satisfactory to the Trustee, duly executed by the holder thereof or his or
her attorney duly authorized in writing.

         (k) No service charge shall be made for any transfer or exchange of
Certificates, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Certificates.

         (l) The Trustee shall cancel all Certificates surrendered for transfer
or exchange but shall retain such Certificates in accordance with its standard
retention policy or for such further time as is required by the record retention
requirements of the Securities Exchange Act of 1934, as amended, and thereafter
may destroy such Certificates.

         Section 5.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. (a) If
(i) 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 (ii) there is delivered to the Trustee such security or
indemnity as it may require to save it harmless, and (iii) the Trustee has not
received notice that such Certificate has been acquired by a third Person, the
Trustee shall sign, countersign and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and Fractional Undivided Interest but in each case bearing a different
number. The mutilated, destroyed, lost or stolen Certificate shall thereupon be
canceled of record by the Trustee and shall be of no further effect and evidence
no rights.

                                      -69-

<PAGE>

         (b) Upon 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 duplicate 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.

         Section 5.04 PERSONS DEEMED OWNERS. Prior to due presentation of a
Certificate for registration of transfer, the Depositor, the Trustee and any
agent of the Depositor 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 pursuant to Section 6.01 and for all other purposes
whatsoever. Neither the Depositor, the Trustee nor any agent of the Depositor or
the Trustee shall be affected by notice to the contrary. No Certificate shall be
deemed duly presented for a transfer effective on any Record Date unless the
Certificate to be transferred is presented no later than the close of business
on the third Business Day preceding such Record Date.

         Section 5.05 TRANSFER RESTRICTIONS ON RESIDUAL CERTIFICATES. (a)
Residual Certificates, or interests therein, may not be transferred without the
prior express written consent of the Tax Matters Person and the Depositor. As a
prerequisite to such consent, the proposed transferee must provide the Tax
Matters Person, the Depositor and the Trustee with an affidavit that the
proposed transferee is a Permitted Transferee (and an affidavit that it is a
U.S. Person) as provided in Subsection 5.05(b).

         (b) No transfer, sale or other disposition of a Residual Certificate
(including a beneficial interest therein) may be made unless, prior to the
transfer, sale or other disposition of a Residual Certificate, the proposed
transferee (including the initial purchasers thereof) delivers to the Tax
Matters Person, the Trustee and the Depositor an affidavit in the form attached
hereto as Exhibit E stating, among other things, that as of the date of such
transfer (i) such transferee is a Permitted Transferee and that (ii) such
transferee is not acquiring such Residual Certificate for the account of any
person who is not a Permitted Transferee. The Tax Matters Person shall not
consent to a transfer of a Residual Certificate if it has actual knowledge that
any statement made in the affidavit issued pursuant to the preceding sentence is
not true. Notwithstanding any transfer, sale or other disposition of a Residual
Certificate to any Person who is not a Permitted Transferee, such transfer, sale
or other disposition shall be deemed to be of no legal force or effect
whatsoever and such Person shall not be deemed to be a Holder of a Residual
Certificate for any purpose hereunder, including, but not limited to, the
receipt of distributions thereon. If any purported transfer shall be in
violation of the provisions of this Subsection 5.05(b), then the prior Holder
thereof shall, upon discovery that the transfer of such Residual Certificate was
not in fact permitted by this Subsection 5.05(b), be restored to all rights as a
Holder thereof retroactive to the date of the purported transfer. None of the
Trustee, the Tax Matters Person or the Depositor shall be under any liability to
any Person for any registration or transfer of a Residual Certificate that is
not permitted by this Subsection 5.05(b) or for making payments due on such
Residual Certificate to the purported Holder thereof or taking any other action
with respect to such purported Holder under the provisions of this Agreement so
long as the written affidavit referred to above was received with respect to
such transfer, and the Tax Matters Person, the Trustee and the Depositor, as
applicable, had no knowledge that it was untrue. The prior Holder shall be
entitled to recover from any purported Holder of a Residual Certificate that was
in fact not a permitted transferee under this Subsection 5.05(b) at the time it
became a Holder all payments

                                      -70-

<PAGE>

made on such Residual Certificate. Each Holder of a Residual Certificate, by
acceptance thereof, shall be deemed for all purposes to have consented to the
provisions of this Subsection 5.05(b) and to any amendment of this Agreement
deemed necessary (whether as a result of new legislation or otherwise) by
counsel of the Tax Matters Person or the Depositor to ensure that the Residual
Certificates are not transferred to any Person who is not a Permitted Transferee
and that any transfer of such Residual Certificates will not cause the
imposition of a tax upon the Trust or cause any REMIC to fail to qualify as a
REMIC.

         (c) The Residual Certificates (including a beneficial interest therein)
may not be purchased by or transferred to any person who is not a United States
Person.

         (d) By accepting a Residual Certificate, the purchaser thereof agrees
to be a Tax Matters Person, and appoints the Securities Administrator to act as
its agent with respect to all matters concerning the tax obligations of the
Trust.

         Section 5.06 RESTRICTIONS ON TRANSFERABILITY OF CERTIFICATES. (a) No
offer, sale, transfer or other disposition (including pledge) of any Certificate
shall be made by any Holder thereof unless registered under the Securities Act,
or an exemption from the registration requirements of the Securities Act and any
applicable state securities or "Blue Sky" laws is available and the prospective
transferee (other than the Depositor) of such Certificate signs and delivers to
the Trustee an Investment Letter, if the transferee is an Institutional
Accredited Investor, in the form set forth as Exhibit F-l hereto, or a Rule 144A
Certificate, if the transferee is a QIB, in the form set forth as Exhibit F-2
hereto. Notwithstanding the provisions of the immediately preceding sentence, no
restrictions shall apply with respect to the transfer or registration of
transfer of a beneficial interest in any Certificate that is a Global
Certificate of a Class to a transferee that takes delivery in the form of a
beneficial interest in the Global Certificate of such Class provided that each
such transferee shall be deemed to have made such representations and warranties
contained in the Rule 144A Certificate as are sufficient to establish that it is
a QIB. In the case of a proposed transfer of any Certificate to a transferee
other than a QIB, the Trustee may require an Opinion of Counsel addressed to the
Trustee that such transaction is exempt from the registration requirements of
the Securities Act. The cost of such opinion shall not be an expense of the
Trustee or the Trust Fund.

         (b) The Private Certificates shall each bear a Securities Legend.

         Section 5.07 ERISA RESTRICTIONS. (a) Subject to the provisions of
subsection (b), no Residual Certificates or Private Certificates may be acquired
directly or indirectly by, or on behalf of, an employee benefit plan or other
retirement arrangement which is subject to Title I of ERISA or Section 4975 of
the Code, unless the proposed transferee provides either (i) the Trustee, with
an Opinion of Counsel addressed to the Depositor, the Trustee, the Master
Servicer and the Securities Administrator (upon which they may rely) which is
satisfactory to the Trustee, which opinion will not be at the expense of the
Depositor, the Trustee, the Master Servicer or the Securities Administrator,
that the purchase of such Certificates by or on behalf of such Plan is
permissible under applicable law, will not constitute or result in a nonexempt
prohibited transaction under ERISA or Section 4975 of the Code and will not
subject the Depositor, the Master Servicer, the Securities Administrator or the
Trustee to any obligation in addition to those undertaken in the Agreement or
(ii) in the case of the Class B-4, Class B-5 and Class B-6 Certificates, a
representation

                                      -71-

<PAGE>

or certification to the Trustee (upon which the Trustee is authorized to rely)
to the effect that the proposed transfer and holding of such a Certificate and
the servicing, management and operation of the Trust: (I) will not result in a
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code
which is not covered under an individual or class prohibited transaction
exemption including but not limited to Department of Labor Prohibited
Transaction Exemption ("PTE") 84-14 (Class Exemption for Plan Asset Transactions
Determined by Independent Qualified Professional Asset Managers); PTE 91-38
(Class Exemption for Certain Transactions Involving Bank Collective Investment
Funds); PTE 90-1 (Class Exemption for Certain Transactions Involving Insurance
Company Pooled Separate Accounts), PTE 95-60 (Class Exemption for Certain
Transactions Involving Insurance Company General Accounts), and PTCE 96-23
(Class Exemption for Plan Asset Transactions Determined by In-House Asset
Managers and (II) will not subject the Depositor, the Securities Administrator,
the Master Servicer or the Trustee to any obligation in addition to those
undertaken in the Agreement.

         (b) Any Person acquiring an interest in a Global Certificate which is a
Private Certificate, by acquisition of such Certificate, shall be deemed to have
represented to the Trustee that in the case of the Class B-4, Class B-5 and
Class B-6 Certificates, either: (i) it is not acquiring an interest in such
Certificate directly or indirectly by, or on behalf of, an employee benefit plan
or other retirement arrangement which is subject to Title I of ERISA or Section
4975 of the Code, or (ii) the transfer and holding of an interest in such
Certificate to that Person and the subsequent servicing, management and
operation of the Trust and its assets: (I) will not result in any prohibited
transaction which is not covered under an individual or class prohibited
transaction exemption, including, but not limited to, PTE 84-14, PTE 91-38, PTE
90-1, PTE 95-60 or PTE 96-23 and (II) will not subject the Depositor, the
Securities Administrator, the Master Servicer or the Trustee to any obligation
in addition to those undertaken in the Agreement.

         (c) Each beneficial owner of a Class B-1, Class B-2 or Class B-3
Certificate or any interest therein shall be deemed to have represented, by
virtue of its acquisition or holding of that certificate or interest therein,
that either (i) it is not a Plan or investing with "Plan Assets", (ii) it has
acquired and is holding such certificate in reliance on Prohibited Transaction
Exemption 90-30, as amended from time to time (the "Exemption"), and that it
understands that there are certain conditions to the availability of the
Exemption, including that the certificate must be rated, at the time of
purchase, not lower than "BBB-" (or its equivalent) by S&P or Moody's Investors
Service, Inc., and the certificate is so rated or (iii) (1) it is an insurance
company, (2) the source of funds used to acquire or hold the certificate or
interest therein is an "insurance company general account," as such term is
defined in Prohibited Transaction Class Exemption ("PTCE") 95-60, and (3) the
conditions in Sections I and III of PTCE 95-60 have been satisfied.

         (d) Neither the Trustee, the Master Servicer nor the Securities
Administrator will be required to monitor, determine or inquire as to compliance
with the transfer restrictions with respect to the Global Certificates. Any
attempted or purported transfer of any Certificate in violation of the
provisions of Subsections (a) or (b) above shall be void ab initio and such
Certificate shall be considered to have been held continuously by the prior
permitted Certificateholder. Any transferor of any Certificate in violation of
such provisions, shall indemnify and hold harmless the Trustee, the Securities
Administrator and the Master Servicer from and against any and all liabilities,
claims, costs or expenses incurred by the Trustee, the Securities Administrator
or the Master Servicer as a

                                      -72-

<PAGE>

result of such attempted or purported transfer. The Trustee shall have no
liability for transfer of any such Global Certificates in or through book-entry
facilities of any Depository or between or among Depository Participants or
Certificate Owners made in violation of the transfer restrictions set forth
herein.

         Section 5.08 RULE 144A INFORMATION. For so long as any Certificates are
outstanding and are "restricted securities" within the meaning of Rule 144(a)(3)
of the Securities Act, (1) the Depositor will provide or cause to be provided to
any holder of such Certificates and any prospective purchaser thereof designated
by such a holder, upon the request of such holder or prospective purchaser, the
information required to be provided to such holder or prospective purchaser by
Rule 144A(d)(4) under the Securities Act; and (2) the Depositor shall update
such information from time to time in order to prevent such information from
becoming false and misleading and will take such other actions as are necessary
to ensure that the safe harbor exemption from the registration requirements of
the Securities Act under Rule 144A is and will be available for resales of such
Certificates conducted in accordance with Rule 144A.

                                      -73-

<PAGE>

                                   ARTICLE VI
                         Payments to Certificateholders

         Section 6.01 DISTRIBUTIONS ON THE CERTIFICATES. (a) Interest and
principal (as applicable) on the Certificates will be distributed monthly on
each Distribution Date, commencing in July 2004, in an amount equal to the
Available Funds on deposit in the Distribution Account for such Distribution
Date. On each Distribution Date, the Available Funds on deposit in the
Distribution Account shall be distributed as follows:

                  (i) on each Distribution Date, the Group I Available Funds
will be distributed to the Group I Senior Certificates as follows:

                  FIRST, to the Class R-I, Class R-II and Class I-A
                  Certificates, on a pro rata basis, the Accrued Certificate
                  Interest on such Classes for such Distribution Date. As
                  described below, Accrued Certificate Interest on the Class
                  R-I, Class R-II and Class I-A Certificates is subject to
                  reduction in the event of certain Net Interest Shortfalls
                  allocable thereto;

                  SECOND, to the Class R-I, Class R-II and Class I-A
                  Certificates, on a pro rata basis, any Accrued Certificate
                  Interest thereon remaining undistributed from previous
                  Distribution Dates, to the extent of remaining Group I
                  Available Funds;

                  THIRD, to the Class R-I Certificates and Class R-II
                  Certificates, on a pro rata basis, in reduction of the Current
                  Principal Amounts thereof, the Group I Senior Optimal
                  Principal Amount for such Distribution Date to the extent of
                  remaining Group I Available Funds, until the Current Principal
                  Amount of each such Class has been reduced to zero; and

                  FOURTH, to the Class I-A Certificates, on a pro rata basis, in
                  reduction of the Current Principal Amount thereof, the
                  remaining Group I Senior Optimal Principal Amount for such
                  Distribution Date to the extent of remaining Group I Available
                  Funds, until the Current Principal Amount of such Class has
                  been reduced to zero.

                  (ii) on each Distribution Date, the Group II Available Funds
will be distributed to the Group II Senior Certificates as follows:

                  FIRST, to the Class II-A Certificates, the Accrued Certificate
                  Interest on such Class for such Distribution Date. As
                  described below, Accrued Certificate Interest on the Class
                  II-A Certificates is subject to reduction in the event of
                  certain Net Interest Shortfalls allocable thereto;

                  SECOND, to the Class II-A Certificates, any Accrued
                  Certificate Interest thereon remaining undistributed from
                  previous Distribution Dates, to the extent of remaining Group
                  II Available Funds; and

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<PAGE>

                  THIRD, to the Class II-A Certificates, in reduction of the
                  Current Principal Amount thereof, the Group II Senior Optimal
                  Principal Amount for such Distribution Date

                  to the extent of remaining Group II Available Funds, until the
                  Current Principal Amount of such Class has been reduced to
                  zero.

                  (iii) on each Distribution Date, the Group III Available Funds
will be distributed to the Group III Senior Certificates as follows:

                  FIRST, to the Class III-A Certificates, the Accrued
                  Certificate Interest on such Class for such Distribution Date.
                  As described below, Accrued Certificate Interest on the Class
                  III-A Certificates is subject to reduction in the event of
                  certain Net Interest Shortfalls allocable thereto;

                  SECOND, to the Class III-A Certificates, any Accrued
                  Certificate Interest thereon remaining undistributed from
                  previous Distribution Dates, to the extent of remaining Group
                  III Available Funds; and

                  THIRD, to the Class III-A Certificates, in reduction of the
                  Current Principal Amount thereof, the Group III Senior Optimal
                  Principal Amount for such Distribution Date to the extent of
                  remaining Group III Available Funds, until the Current
                  Principal Amount of such Class has been reduced to zero.

                  (iv) on each Distribution Date, the Group IV Available Funds
will be distributed to the Group IV Senior Certificates as follows:

                  FIRST, to the Class IV-A Certificates, the Accrued Certificate
                  Interest on such Class for such Distribution Date. As
                  described below, Accrued Certificate Interest on the Class
                  IV-A Certificates is subject to reduction in the event of
                  certain Net Interest Shortfalls allocable thereto;

                  SECOND, to the Class IV-A Certificates, any Accrued
                  Certificate Interest thereon remaining undistributed from
                  previous Distribution Dates, to the extent of remaining Group
                  IV Available Funds; and

                  THIRD, to the Class IV-A Certificates, in reduction of the
                  Current Principal Amount thereof, the Group IV Senior Optimal
                  Principal Amount for such Distribution Date to the extent of
                  remaining Group IV Available Funds, until the Current
                  Principal Amount of such Class has been reduced to zero.

                  (v) Except as provided in clauses (vi) and (vii) below, on
each Distribution Date on or prior to the Cross-Over Date, an amount equal to
the sum of any remaining Group I, Group II, Group III and Group IV Available
Funds after the distributions in clauses (i), (ii), (iii) and (iv) above will be
distributed sequentially, in the following order, to the Class B-1, Class B-2,
Class B-3, Class B-4, Class B-5 and Class B-6 Certificates, in each case up to
an amount equal to and in the following order: (A) the Accrued Certificate
Interest thereon for such Distribution Date, (B) any Accrued Certificate
Interest thereon remaining undistributed from previous Distribution Dates and
(C) such

                                      -75-

<PAGE>

Class's Allocable Share for such Distribution Date, in each case, to the extent
of remaining Group I, Group II, Group III and Group IV Available Funds.

                  (vi) On each Distribution Date prior to the Cross-Over Date
but after the reduction of the Current Principal Amount of all of the Senior
Certificates of a Certificate Group to zero, the remaining Class or Classes of
Senior Certificates in the remaining Certificate Groups will be entitled to
receive in reduction of their Current Principal Amounts, pro rata based upon
their Current Principal Amounts immediately prior to such Distribution Date, in
addition to any Principal Prepayments related to such remaining Senior
Certificates' respective Loan Group allocated to such Senior Certificates, 100%
of the Principal Prepayments on any Mortgage Loan in the Loan Group relating to
the Class or Classes of Senior Certificates of the fully repaid Certificate
Group; provided, however, that if (A) the weighted average of the Subordinate
Percentages on such Distribution Date equals or exceeds two times the initial
weighted average of the Subordinate Percentages and (B) the aggregate Scheduled
Principal Balance of the Mortgage Loans delinquent 60 days or more (including
for this purpose any such Mortgage Loans in foreclosure and bankruptcy and
Mortgage Loans with respect to which the related Mortgaged Property has been
acquired by the Trust), averaged over the last six months, as a percentage of
the aggregate Current Principal Amount of the Subordinate Certificates does not
exceed 100%, then the additional allocation of Principal Prepayments to the
Senior Certificates in accordance with this clause (vi) will not be made and
100% of the Principal Prepayments on any Mortgage Loan in the Loan Group
relating to the fully repaid Class or Classes of Senior Certificates will be
allocated to the Subordinate Certificates.

                  (vii) If on any Distribution Date on which the aggregate
Current Principal Amount of any Class or Classes of Senior Certificates would be
greater than the aggregate Scheduled Principal Balance of the Mortgage Loans in
the related Loan Group and any Subordinate Certificates are still outstanding,
in each case after giving effect to distributions to be made on such
Distribution Date, (A) 100% of amounts otherwise allocable to the Subordinate
Certificates in respect of principal will be distributed to such Class or
Classes of Senior Certificates in reduction of the Current Principal Amounts
thereof, until the aggregate Current Principal Amount of such Class or Classes
of Senior Certificates is an amount equal to the aggregate Scheduled Principal
Balance of the Mortgage Loans in the related Loan Group, and (B) the Accrued
Certificate Interest otherwise allocable to the Subordinate Certificates on such
Distribution Date will be reduced, if necessary, and distributed to such Class
or Classes of Senior Certificates in an amount equal to the Accrued Certificate
Interest for such Distribution Date on the excess of (x) the aggregate Current
Principal Amount of such Class or Classes of Senior Certificates over (y) the
aggregate Scheduled Principal Balance of the Mortgage Loans in the related Loan
Group. Any such reduction in the Accrued Certificate Interest on the Subordinate
Certificates will be allocated in reverse order of the Subordinate Certificates
numerical designations, commencing with the Class B-6 Certificates.

         (b) If, after distributions have been made pursuant to priorities FIRST
and SECOND of clauses (a)(i), (ii), (iii) and (iv) above on any Distribution
Date, the remaining Group I, Group II, Group III or Group IV Available Funds are
less than the Group I, Group II, Group III and Group IV Senior Optimal Principal
Amounts, respectively, the Senior Optimal Principal Amount for such Loan Group
shall be reduced, and such remaining Available Funds will be distributed on the
related Senior Certificates, on a pro rata basis, on the basis of such reduced
amount.

                                      -76-

<PAGE>

         (c) On each Distribution Date, any Available Funds remaining after
payment of interest and principal to the Classes of Certificates entitled
thereto, as described above, will be distributed to the Class R-II Certificates;
provided that if on any Distribution Date there are any Group I, Group II, Group
III or Group IV Available Funds remaining after payment of interest and
principal to a Class or Classes of Certificates entitled thereto, such amounts
will be distributed to the other Classes of Senior Certificates, pro rata, based
upon their Current Principal Amounts, until all amounts due to all Classes of
Senior Certificates have been paid in full, before any amounts are distributed
to the Class R-II Certificates.

         (d) For any Distribution Date, "pro rata" distributions among Classes
of Certificates in respect of Accrued Certificate Interest or unpaid Accrued
Certificate Interest will be made in proportion to the amount of Accrued
Certificate Interest or unpaid Accrued Certificate Interest, respectively, due
on such Classes for such Distribution Date. For any Distribution Date, "pro
rata" distributions among Classes of Certificates in respect of principal will
be made in proportion to the Current Principal Amount of such Classes
immediately prior to such Distribution Date.

         (e) No Accrued Certificate Interest will be payable with respect to any
Class of Certificates after the Distribution Date on which the Current Principal
Amount of such Certificate has been reduced to zero.

         (f) If on any Distribution Date the Available Funds for the Senior
Certificates in any Certificate Group is less than the Accrued Certificate
Interest on the related Senior Certificates for such Distribution Date prior to
reduction for Net Interest Shortfalls and the interest portion of Realized
Losses, the shortfall will be allocated among the holders of each Class of
Senior Certificates in such Certificate Group in proportion to the respective
amounts of Accrued Certificate Interest that would have been allocated thereto
in the absence of such Net Interest Shortfalls and/or Realized Losses for such
Distribution Date. In addition, the amount of any interest shortfalls will
constitute unpaid Accrued Certificate Interest and will be distributable to
holders of the Certificates of the related Classes entitled to such amounts on
subsequent Distribution Dates, to the extent of the applicable Available Funds
after current interest distributions as required herein. Any such amounts so
carried forward will not bear interest. Shortfalls in interest payments will not
be offset by a reduction in the servicing compensation of the Master Servicer or
otherwise, except to the extent of applicable Compensating Interest Payments.

         (g) The expenses and fees of the Trust shall be paid by each of the
REMICs, to the extent that such expenses relate to the assets of each of such
respective REMICs, and all other expenses and fees of the Trust shall be paid
pro rata by each of the REMICs.

         Section 6.02 ALLOCATION OF LOSSES. (a) On or prior to each
Determination Date, the Master Servicer shall determine the amount of any
Realized Loss in respect of each Mortgage Loan that occurred during the
immediately preceding calendar month, based on information provided by the
Servicer.

         (b) With respect to any Certificates on any Distribution Date, the
principal portion of each Realized Loss on a Mortgage Loan shall be allocated as
follows:

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<PAGE>

                  FIRST, to the Class B-6 Certificates until the Current
         Principal Amount thereof has been reduced to zero;

                  SECOND, to the Class B-5 Certificates until the Current
         Principal Amount thereof has been reduced to zero;

                  THIRD, to the Class B-4 Certificates until the Current
         Principal Amount thereof has been reduced to zero;

                  FOURTH, to the Class B-3 Certificates until the Current
         Principal Amount thereof has been reduced to zero;

                  FIFTH, to the Class B-2 Certificates until the Current
         Principal Amount thereof has been reduced to zero;

                  SIXTH, to the Class B-1 Certificates until the Current
         Principal Amount thereof has been reduced to zero;

                  SEVENTH, if such loss is on a Group I, Group II, Group III or
         Group IV Mortgage Loan, to the Senior Certificates of the related
         Certificate Group, until the Current Principal Amounts thereof have
         been reduced to zero; and

                  EIGHTH, to the Senior Certificates, on a pro rata basis.

         (c) Notwithstanding the foregoing clause (b), no such allocation of any
Realized Loss shall be made on a Distribution Date to any Class of Certificates
to the extent that such allocation would result in the reduction of the
aggregate Current Principal Amounts of all the Certificates as of such
Distribution Date, after giving effect to all distributions and prior
allocations of Realized Losses on the Mortgage Loans on such date, to an amount
less than the aggregate Scheduled Principal Balance of all of the Mortgage Loans
as of the first day of the month of such Distribution Date (such limitation, the
"Loss Allocation Limitation").

         (d) Any Realized Losses allocated to a Class of Certificates shall be
allocated among the Certificates of such Class in proportion to their respective
Current Principal Amounts. Any allocation of Realized Losses shall be
accomplished by reducing the Current Principal Amount of the related
Certificates on the related Distribution Date.

         (e) Realized Losses shall be allocated on the Distribution Date in the
month following the month in which such loss was incurred and, in the case of
the principal portion thereof, after giving effect to distributions made on such
Distribution Date.

         (f) On each Distribution Date, the Securities Administrator shall
determine and notify the Trustee of the Subordinate Certificate Writedown
Amount. Any Subordinate Certificate Writedown Amount shall effect a
corresponding reduction in the Current Principal Amount of (i) if prior to the
Cross-Over Date, the Current Principal Amounts of the Subordinate Certificates,
in the reverse order of their numerical Class designations and (ii) from and
after the Cross-Over Date,

                                      -78-

<PAGE>

the Senior Certificates, in accordance with priorities set forth in clause (b)
above, which reduction shall occur on such Distribution Date after giving effect
to distributions made on such Distribution Date.

         (g) Any Net Interest Shortfall will be allocated among the Classes of
Certificates in proportion to the respective amounts of Accrued Certificate
Interest that would have been allocated thereto in the absence of such Net
Interest Shortfall for such Distribution Date. The interest portion of any
Realized Losses with respect to the Mortgage Loans occurring on or prior to the
Cross-Over Date will not be allocated among any Certificates, but will reduce
the amount of Available Funds on the related Distribution Date. As a result of
the subordination of the Subordinate Certificates in right of distribution, such
Realized Losses on the Mortgage Loans will be borne by the Subordinate
Certificates, in inverse order of their numerical Class designations. Following
the Cross- Over Date, the interest portion of Realized Losses on the Mortgage
Loans will be allocated to the Senior Certificates in the manner described in
the first sentence of this clause (g).

         (h) In addition, in the event that the Master Servicer receives any
Subsequent Recoveries from the Servicer, the Master Servicer shall deposit such
funds into the Master Servicer Collection Account pursuant to Section 4.02. If,
after taking into account such Subsequent Recoveries, the amount of a Realized
Loss is reduced, the amount of such Subsequent Recoveries will be applied to
increase the Current Principal Amount of the Class of Subordinate Certificates
with the highest payment priority to which Realized Losses have been allocated,
but not by more than the amount of Realized Losses previously allocated to that
Class of Subordinate Certificates pursuant to this Section 6.02. The amount of
any remaining Subsequent Recoveries will be applied to sequentially increase the
Current Principal Amount of the Subordinate Certificates, beginning with the
Class of Subordinate Certificates with the next highest payment priority, up to
the amount of such Realized Losses previously allocated to such Class of
Certificates pursuant to this Section 6.02. Holders of such Certificates will
not be entitled to any payment in respect of current interest on the amount of
such increases for any Interest Accrual Period preceding the Distribution Date
on which such increase occurs. Any such increases shall be applied to the
Current Principal Amount of each Subordinate Certificate of such Class in
accordance with its respective Fractional Undivided Interest.
         Section 6.03 PAYMENTS. (a) On each Distribution Date, other than the
final Distribution Date, the Trustee shall distribute to each Certificateholder
of record as of the immediately preceding Record Date the Certificateholder's
pro rata share of its Class (based on the aggregate Fractional Undivided
Interest represented by such Holder's Certificates) of all amounts required to
be distributed on such Distribution Date to such Class, based on information
provided to the Trustee by the Securities Administrator. The Securities
Administrator shall calculate the amount to be distributed to each Class and,
based on such amounts, the Securities Administrator shall determine the amount
to be distributed to each Certificateholder. All of the Securities
Administrator's calculations of payments shall be based solely on information
provided to the Securities Administrator by the Master Servicer. Neither the
Securities Administrator nor the Trustee shall be required to confirm, verify or
recompute any such information but shall be entitled to rely conclusively on
such information.

         (b) Payment of the above amounts to each Certificateholder shall be
made (i) by check mailed to each Certificateholder entitled thereto at the
address appearing in the Certificate Register

                                      -79-

<PAGE>

or (ii) upon receipt by the Trustee on or before the fifth Business Day
preceding the Record Date of written instructions from a Certificateholder by
wire transfer to a United States dollar account maintained by the payee at any
United States depository institution with appropriate facilities for receiving
such a wire transfer; provided, however, that the final payment in respect of
each Class of Certificates will be made only upon presentation and surrender of
such respective Certificates at the office or agency of the Trustee specified in
the notice to Certificateholders of such final payment.

         Section 6.04 STATEMENTS TO CERTIFICATEHOLDERS. (a) Concurrently with
each distribution to Certificateholders, the Securities Administrator shall make
available to the parties hereto and each Certificateholder via the Securities
Administrator's internet website as set forth below, the following information,
expressed with respect to clauses (i) through (vii) in the aggregate and as a
Fractional Undivided Interest representing an initial Current Principal Amount
of $1,000, or in the case of the Residual Certificates, an initial Current
Principal Amount of $50:

                  (i) the Current Principal Amount of each Class of Certificates
immediately prior to such Distribution Date;

                  (ii) the amount of the distribution allocable to principal on
each applicable Class of Certificates;

                  (iii) the aggregate amount of interest accrued at the related
Pass-Through Rate with respect to each Class during the related Interest Accrual
Period;

                  (iv) the Net Interest Shortfall and any other adjustments to
interest at the related Pass-Through Rate necessary to account for any
difference between interest accrued and aggregate interest distributed with
respect to each Class of Certificates;

                  (v) the amount of the distribution allocable to interest on
each Class of Certificates;

                  (vi) the Pass-Through Rates for each Class of Certificates
with respect to such Distribution Date;

                  (vii) the Current Principal Amount of each Class of
Certificates after such Distribution Date;

                  (viii) the amount of any Monthly Advances, Compensating
Interest Payments and outstanding unreimbursed advances by the Master Servicer
or the Servicer included in such distribution separately stated for each Loan
Group;

                  (ix) the aggregate amount of any Realized Losses (listed
separately for each category of Realized Loss and for each Loan Group) during
the related Prepayment Period and cumulatively since the Cut-off Date and the
amount and source (separately identified) of any distribution in respect thereof
included in such distribution;

                                      -80-

<PAGE>

                  (x) with respect to each Mortgage Loan which incurred a
Realized Loss during the related Prepayment Period, (i) the loan number, (ii)
the Scheduled Principal Balance of such Mortgage Loan as of the Cut-off Date,
(ii) the Scheduled Principal Balance of such Mortgage Loan as of the beginning
of the related Due Period, (iii) the Net Liquidation Proceeds with respect to
such Mortgage Loan and (iv) the amount of the Realized Loss with respect to such
Mortgage Loan;

                  (xi) with respect to each Loan Group, the amount of Scheduled
Principal and Principal Prepayments, (including but separately identifying the
principal amount of Principal Prepayments, Insurance Proceeds, the purchase
price in connection with the purchase of Mortgage Loans, cash deposits in
connection with substitutions of Mortgage Loans and Net Liquidation Proceeds)
and the number and principal balance of Mortgage Loans purchased or substituted
for during the relevant period and cumulatively since the Cut-off Date;

                  (xii) the number of Mortgage Loans (excluding REO Property) in
each Loan Group remaining in the Trust Fund as of the end of the related
Prepayment Period;

                  (xiii) information for each Loan Group and in the aggregate
regarding any Mortgage Loan delinquencies as of the end of the related
Prepayment Period, including the aggregate number and aggregate Outstanding
Principal Balance of Mortgage Loans (a) delinquent 30 to 59 days on a
contractual basis, (b) delinquent 60 to 89 days on a contractual basis, and (c)
delinquent 90 or more days on a contractual basis, in each case as of the close
of business on the last Business Day of the immediately preceding month;

                  (xiv) for each Loan Group, the number of Mortgage Loans in the
foreclosure process as of the end of the related Due Period and the aggregate
Outstanding Principal Balance of such Mortgage Loans;

                  (xv) for each Loan Group, the number and aggregate Outstanding
Principal Balance of all Mortgage Loans as to which the Mortgaged Property was
REO Property as of the end of the related Due Period;

                  (xvi) the book value (the sum of (A) the Outstanding Principal
Balance of the Mortgage Loan, (B) accrued interest through the date of
foreclosure and (C) foreclosure expenses) of any REO Property in each Loan
Group; provided that, in the event that such information is not available to the
Securities Administrator on the Distribution Date, such information shall be
furnished promptly after it becomes available;

                  (xvii) the amount of Realized Losses allocated to each Class
of Certificates since the prior Distribution Date and in the aggregate for all
prior Distribution Dates; and

                  (xviii) the Average Loss Severity Percentage for each Loan
Group; and

                  (xix) the then applicable Group I, Group II, Group III and
Group IV Senior Percentage, Group I, Group II, Group III and Group IV Senior
Prepayment Percentage, Group I, Group II, Group III and Group IV Subordinate
Percentage and Group I, Group II, Group III and Group IV Subordinate Prepayment
Percentage.

                                      -81-

<PAGE>

         The information set forth above shall be calculated or reported, as the
case may be, by the Securities Administrator, based solely on, and to the extent
of, information provided to the Securities Administrator by the Master Servicer.
The Securities Administrator may conclusively rely on such information and shall
not be required to confirm, verify or recalculate any such information.

         The Securities Administrator may make available each month, to any
interested party, the monthly statement to Certificateholders via the Securities
Administrator's website initially located at "www.ctslink.com." Assistance in
using the website can be obtained by calling the Securities Administrator's
customer service desk at (301) 815-6600. Parties that are unable to use the
abovedistribution option are entitled to have a paper copy mailed to them via
first class mail by calling the Securities Administrator's customer service desk
and indicating such. The Securities Administrator shall have the right to change
the way such reports are distributed in order to make such distribution more
convenient and/or more accessible to the parties, and the Securities
Administrator shall provide timely and adequate notification to all parties
regarding any such change.

         To the extent timely received from the Securities Administrator, the
Trustee will also make monthly statements available each month to
Certificateholders via the Trustee's internet website. The Trustee's internet
website will initially be located at
"https://trustinvestorreporting.usbank.com". Assistance in using the Trustee's
website service can be obtained by calling the Trustee's customer service desk
at (800) 934-6802.

         (b) By April 30 of each year beginning in 2005, the Trustee will
furnish such report to each Holder of the Certificates of record at any time
during the prior calendar year as to the aggregate of amounts reported pursuant
to subclauses (a)(ii) and (a)(v) above with respect to the Certificates, plus
information with respect to the amount of servicing compensation and such other
customary information as the Securities Administrator may determine and advises
the Trustee to be necessary and/or to be required by the Internal Revenue
Service or by a federal or state law or rules or regulations to enable such
Holders to prepare their tax returns for such calendar year. Such obligations
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Securities Administrator or the
Trustee pursuant to the requirements of the Code.

         Section 6.05 MONTHLY ADVANCES. If the Scheduled Payment on a Mortgage
Loan that was due on a related Due Date is delinquent other than as a result of
application of the Relief Act and for which the Servicer was required to make an
advance pursuant to the Servicing Agreement exceeds the amount deposited in the
Master Servicer Collection Account which will be used for an advance with
respect to such Mortgage Loan, the Master Servicer will deposit in the Master
Servicer Collection Account not later than the Distribution Account Deposit Date
immediately preceding the related Distribution Date an amount equal to such
deficiency, net of the Servicing Fee for such Mortgage Loan except to the extent
the Master Servicer determines any such advance to be a Nonrecoverable Advance.
Subject to the foregoing, the Master Servicer shall continue to make such
advances through the date that the Servicer is required to do so under its
Servicing Agreement. If the Master Servicer deems an advance to be a
Nonrecoverable Advance, on the Distribution Account Deposit Date, the Master
Servicer shall present an Officer's Certificate to the Trustee (i) stating that

                                      -82-

<PAGE>

the Master Servicer elects not to make a Monthly Advance in a stated amount and
(ii) detailing the reason it deems the advance to be a Nonrecoverable Advance.

         Section 6.06 COMPENSATING INTEREST PAYMENTS. The Master Servicer shall
deposit in the Master Servicer Collection Account not later than each
Distribution Account Deposit Date an amount equal to the lesser of (i) the sum
of the aggregate amounts required to be paid by the Servicer under the Servicing
Agreement with respect to subclauses (a) and (b) of the definition of Interest
Shortfall with respect to the Mortgage Loans for the related Distribution Date,
and not so paid by the Servicer and (ii) the Master Servicer Compensation for
such Distribution Date (such amount, the "Compensating Interest Payment"). The
Master Servicer shall not be entitled to any reimbursement of any Compensating
Interest Payment.

                                      -83-

<PAGE>

                                   ARTICLE VII
                               The Master Servicer

         Section 7.01 LIABILITIES OF THE MASTER SERVICER. The Master Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by it herein.

         Section 7.02      MERGER OR CONSOLIDATION OF THE MASTER SERVICER.

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

         (b) Any Person into which the Master Servicer may be merged or
consolidated, or any corporation resulting from any merger or consolidation to
which the Master Servicer shall be a party, or any Person succeeding to the
business of the Master Servicer, shall be the successor of the Master Servicer
hereunder, 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.

         Section 7.03 INDEMNIFICATION OF THE TRUSTEE, THE MASTER SERVICER AND
THE SECURITIES ADMINISTRATOR. (a) The Master Servicer agrees to indemnify the
Indemnified Persons for, and to hold them harmless against, any loss, liability
or expense (including reasonable legal fees and disbursements of counsel)
incurred on their part that may be sustained in connection with, arising out of,
or relating to, any claim or legal action (including any pending or threatened
claim or legal action) relating to this Agreement, the Servicing Agreement, the
Assignment Agreement or the Certificates or the powers of attorney delivered by
the Trustee hereunder (i) related to the Master Servicer's failure to perform
its duties in compliance with this Agreement (except as any such loss, liability
or expense shall be otherwise reimbursable pursuant to this Agreement) or (ii)
incurred by reason of the Master Servicer's willful misfeasance, bad faith or
gross negligence in the performance of its duties hereunder or by reason of
reckless disregard of its obligations and duties hereunder, provided, in each
case, that with respect to any such claim or legal action (or pending or
threatened claim or legal action), the Trustee shall have given the Master
Servicer and the Depositor written notice thereof promptly after the Trustee
shall have with respect to such claim or legal action knowledge thereof. The
Master Servicer's failure to receive any such notice shall not affect the
Trustee's right to indemnification hereunder, except to the extent the Master
Servicer is materially prejudiced by such failure to give notice. This indemnity
shall survive the resignation or removal of the Trustee, Master Servicer or the
Securities Administrator and the termination of this Agreement.

         (b) The Depositor will indemnify any Indemnified Person for any loss,
liability or expense of any Indemnified Person not otherwise covered by the
Master Servicer's indemnification pursuant to Subsection (a) above.

                                      -84-

<PAGE>

         Section 7.04 LIMITATIONS ON LIABILITY OF THE MASTER SERVICER AND
OTHERS. Subject to the obligation of the Master Servicer to indemnify the
Indemnified Persons pursuant to Section 7.03:

         (a) Neither the Master Servicer nor any of the directors, officers,
employees or agents of the Master Servicer shall be under any liability to the
Indemnified Persons, the Depositor, the Trust Fund or the Certificateholders for
taking any action or for refraining from taking any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Master Servicer or any such Person against
any breach of warranties or representations made herein or any liability which
would otherwise be imposed by reason of such Person's willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder.

         (b) The Master Servicer and any director, officer, employee or agent of
the Master Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder.

         (c) The Master Servicer, the Custodian and any director, officer,
employee or agent of the Master Servicer or the Custodian shall be indemnified
by the Trust and held harmless thereby against any loss, liability or expense
(including reasonable legal fees and disbursements of counsel) incurred on their
part that may be sustained in connection with, arising out of, or related to,
any claim or legal action (including any pending or threatened claim or legal
action) relating to this Agreement, the Certificates or any Servicing Agreement
(except to the extent that the Master Servicer is indemnified by the Servicer
thereunder), other than (i) any such loss, liability or expense related to the
Master Servicer's failure to perform its duties in compliance with this
Agreement (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement), or to the Custodian's failure to
perform its duties under the Custodial Agreement, respectively, or (ii) any such
loss, liability or expense incurred by reason of the Master Servicer's or the
Custodian's willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or under the Custodial Agreement, as applicable,
or by reason of reckless disregard of obligations and duties hereunder or under
the Custodial Agreement, as applicable.

         (d) The Master Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its duties under
this Agreement and that in its opinion may involve it in any expense or
liability; provided, however, the Master Servicer may in its discretion, with
the consent of the Trustee (which consent shall not be unreasonably withheld),
undertake any such action which it may deem necessary or desirable with respect
to this Agreement and the rights and duties of the parties hereto and the
interests of the Certificateholders hereunder. In such event, the legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust Fund, and the Master Servicer shall
be entitled to be reimbursed therefor out of the Master Servicer Collection
Account as provided by Section 4.03. Nothing in this Subsection 7.04(d) shall
affect the Master Servicer's obligation to supervise, or to take such actions as
are necessary to ensure, the servicing and administration of the Mortgage Loans
pursuant to Subsection 3.01(a).

         (e) In taking or recommending any course of action pursuant to this
Agreement, unless specifically required to do so pursuant to this Agreement, the
Master Servicer shall not be required

                                      -85-

<PAGE>

to investigate or make recommendations concerning potential liabilities which
the Trust might incur as a result of such course of action by reason of the
condition of the Mortgaged Properties but shall give notice to the Trustee if it
has notice of such potential liabilities.

         (f) The Master Servicer shall not be liable for any acts or omissions
of the Servicer, except as otherwise expressly provided herein.

         Section 7.05 MASTER SERVICER NOT TO RESIGN. Except as provided in
Section 7.07, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except upon a determination that any such duties
hereunder are no longer permissible under applicable law and such
impermissibility cannot be cured. Any such determination permitting the
resignation of the Master Servicer shall be evidenced by an Opinion of
Independent Counsel addressed to the Trustee to such effect delivered to the
Trustee. No such resignation by the Master Servicer shall become effective until
the Company or the Trustee or a successor to the Master Servicer reasonably
satisfactory to the Trustee shall have assumed the responsibilities and
obligations of the Master Servicer in accordance with Section 8.02 hereof. The
Trustee shall notify the Rating Agencies of the resignation of the Master
Servicer.

         Section 7.06 SUCCESSOR MASTER SERVICER. In connection with the
appointment of any successor master servicer or the assumption of the duties of
the Master Servicer, the Company or the Trustee may make such arrangements for
the compensation of such successor master servicer out of payments on the
Mortgage Loans as the Company or the Trustee and such successor master servicer
shall agree. If the successor master servicer does not agree that such market
value is a fair price, such successor master servicer shall obtain two
quotations of market value from third parties actively engaged in the servicing
of single-family mortgage loans. Notwithstanding the foregoing, the compensation
payable to a successor master servicer may not exceed the compensation which the
Master Servicer would have been entitled to retain if the Master Servicer had
continued to act as Master Servicer hereunder.

         Section 7.07 SALE AND ASSIGNMENT OF MASTER SERVICING. The Master
Servicer may sell and assign its rights and delegate its duties and obligations
in its entirety as Master Servicer under this Agreement and the Company may
terminate the Master Servicer without cause and select a new Master Servicer;
provided, however, that: (i) the purchaser or transferee accepting such
assignment and delegation (a) shall be a Person which shall be qualified to
service mortgage loans for Fannie Mae or Freddie Mac; (b) shall have a net worth
of not less than $10,000,000 (unless otherwise approved by each Rating Agency
pursuant to clause (ii) below); (c) shall be reasonably satisfactory to the
Trustee (as evidenced in a writing signed by the Trustee); and (d) shall execute
and deliver to the Trustee an agreement, in form and substance reasonably
satisfactory to the Trustee, which contains an assumption by such Person of the
due and punctual performance and observance of each covenant and condition to be
performed or observed by it as master servicer under this Agreement, any
custodial agreement from and after the effective date of such agreement; (ii)
each Rating Agency shall be given prior written notice of the identity of the
proposed successor to the Master Servicer and each Rating Agency's rating of the
Certificates in effect immediately prior to such assignment, sale and delegation
will not be downgraded, qualified or withdrawn as a result of such assignment,
sale and delegation, as evidenced by a letter to such effect delivered to the
Master Servicer and the Trustee; (iii) the Master Servicer assigning and selling
the master servicing shall deliver to the

                                      -86-

<PAGE>

Trustee an Officer's Certificate and an Opinion of Independent Counsel addressed
to the Trustee, each stating that all conditions precedent to such action under
this Agreement have been completed and such action is permitted by and complies
with the terms of this Agreement; and (iv) in the event the Master Servicer is
terminated without cause by the Company, the Company shall pay the terminated
Master Servicer a termination fee equal to 0.25% of the aggregate Scheduled
Principal Balance of the Mortgage Loans at the time the master servicing of the
Mortgage Loans is transferred to the successor Master Servicer. No such
assignment or delegation shall affect any liability of the Master Servicer
arising prior to the effective date thereof.

                                      -87-

<PAGE>

                                  ARTICLE VIII
                                     Default

         Section 8.01 EVENTS OF DEFAULT. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body) and
only with respect to the defaulting Master Servicer:

                  (i) The Master Servicer fails to cause to be deposited in the
Distribution Account any amount so required to be deposited pursuant to this
Agreement (other than a Monthly Advance), and such failure continues unremedied
for a period of three Business Days after the date upon which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Master Servicer; or

                  (ii) The Master Servicer fails to observe or perform in any
material respect any other material covenants and agreements set forth in this
Agreement to be performed by it, which covenants and agreements materially
affect the rights of Certificateholders, and such failure continues unremedied
for a period of 60 days after the date on which written notice of such failure,
properly requiring the same to be remedied, shall have been given to the Master
Servicer by the Trustee or to the Master Servicer and the Trustee by the Holders
of Certificates evidencing Fractional Undivided Interests aggregating not less
than 25% of the Trust Fund; or

                  (iii) There is entered against the Master Servicer a decree or
order by a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, 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, and
the continuance of any such decree or order is unstayed and in effect for a
period of 60 consecutive days, or an involuntary case is commenced against the
Master Servicer under any applicable insolvency or reorganization statute and
the petition is not dismissed within 60 days after the commencement of the case;
or

                  (iv) The Master Servicer consents to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating to
the Master Servicer or substantially all of its property; or the Master Servicer
admits in writing its inability to pay its debts generally as they become due,
files a petition to take advantage of any applicable insolvency or
reorganization statute, makes an assignment for the benefit of its creditors, or
voluntarily suspends payment of its obligations;

                  (v) The Master Servicer assigns or delegates its duties or
rights under this Agreement in contravention of the provisions permitting such
assignment or delegation under Sections 7.05 or 7.07; or

                  (vi) The Master Servicer fails to deposit, or cause to be
deposited, in the Distribution Account any Monthly Advance (other than a
Nonrecoverable Advance) by 5:00 p.m. New York City time on the Distribution
Account Deposit Date.

                                      -88-

<PAGE>

In each and every such case, so long as such Event of Default with respect to
the Master Servicer shall not have been remedied, either the Trustee or the
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 51% of the principal of the Trust Fund, by notice in writing to
the Master Servicer (and to the Trustee if given by such Certificateholders),
with a copy to the Rating Agencies, and with the consent of the Company, may
terminate all of the rights and obligations (but not the liabilities) of the
Master Servicer under this Agreement and in and to the Mortgage Loans and/or the
REO Property serviced by the Master Servicer and the proceeds thereof. Upon the
receipt by the Master Servicer of the written notice, all authority and power of
the Master Servicer under this Agreement, whether with respect to the
Certificates, the Mortgage Loans, REO Property or under any other related
agreements (but only to the extent that such other agreements relate to the
Mortgage Loans or related REO Property) shall, subject to Section 8.02,
automatically and without further action pass to and be vested in the Trustee
pursuant to this Section 8.01; and, without limitation, the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Master Servicer agrees to cooperate with
the Trustee in effecting the termination of the Master Servicer's rights and
obligations hereunder, including, without limitation, the transfer to the
Trustee of (i) the property and amounts which are then or should be part of the
Trust or which thereafter become part of the Trust; and (ii) originals or copies
of all documents of the Master Servicer reasonably requested by the Trustee to
enable it to assume the Master Servicer's duties thereunder. In addition to any
other amounts which are then, or, notwithstanding the termination of its
activities under this Agreement, may become payable to the Master Servicer under
this Agreement, the Master Servicer shall be entitled to receive, out of any
amount received on account of a Mortgage Loan or related REO Property, that
portion of such payments which it would have received as reimbursement under
this Agreement if notice of termination had not been given. The termination of
the rights and obligations of the Master Servicer shall not affect any
obligations incurred by the Master Servicer prior to such termination.

         Notwithstanding the foregoing, if an Event of Default described in
clause (vi) of this Section 8.01 shall occur, the Trustee shall, by notice in
writing to the Master Servicer, which may be delivered by telecopy, immediately
terminate all of the rights and obligations of the Master Servicer thereafter
arising under this Agreement, but without prejudice to any rights it may have as
a Certificateholder or to reimbursement of Monthly Advances and other advances
of its own funds, and the Trustee shall act as provided in Section 8.02 to carry
out the duties of the Master Servicer, including the obligation to make any
Monthly Advance the nonpayment of which was an Event of Default described in
clause (vi) of this Section 8.01. Any such action taken by the Trustee must be
prior to the distribution on the relevant Distribution Date.

         Section 8.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR. (a) Upon the
receipt by the Master Servicer of a notice of termination pursuant to Section
8.01 or an Opinion of Independent Counsel pursuant to Section 7.05 to the effect
that the Master Servicer is legally unable to act or to delegate its duties to a
Person which is legally able to act, the Trustee shall automatically become the
successor in all respects to the Master Servicer in its capacity under this
Agreement and the transactions set forth or provided for herein and shall
thereafter be subject to all the responsibilities,

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<PAGE>

duties, liabilities and limitations on liabilities relating thereto placed on
the Master Servicer by the terms and provisions hereof; provided, however, that
the Company shall have the right to either (a) immediately assume the duties of
the Master Servicer or (b) select a successor Master Servicer; provided further,
however, that the Trustee shall have no obligation whatsoever with respect to
any liability (other than advances deemed recoverable and not previously made)
incurred by the Master Servicer at or prior to the time of termination. As
compensation therefor, but subject to Section 7.06, the Trustee shall be
entitled to compensation which the Master Servicer would have been entitled to
retain if the Master Servicer had continued to act hereunder, except for those
amounts due the Master Servicer as reimbursement permitted under this Agreement
for advances previously made or expenses previously incurred. Notwithstanding
the above, the Trustee may, if it shall be unwilling so to act, or shall, if it
is legally unable so to act, appoint or petition a court of competent
jurisdiction to appoint, any established housing and home finance institution
which is a Fannie Mae- or Freddie Mac-approved servicer, and with respect to a
successor to the Master Servicer only, having a net worth of not less than
$10,000,000, as the successor to the Master Servicer hereunder in the assumption
of all or any part of the responsibilities, duties or liabilities of the Master
Servicer hereunder; provided, that the Trustee shall obtain a letter from each
Rating Agency that the ratings, if any, on each of the Certificates will not be
lowered as a result of the selection of the successor to the Master Servicer.
Pending appointment of a successor to the Master Servicer hereunder, the Trustee
shall 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 the Mortgage Loans as it and
such successor shall agree; provided, however, that the provisions of Section
7.06 shall apply, the compensation shall not be in excess of that which the
Master Servicer would have been entitled to if the Master Servicer had continued
to act hereunder, and that such successor shall undertake and assume the
obligations of the Trustee to pay compensation to any third Person acting as an
agent or independent contractor in the performance of master servicing
responsibilities hereunder. The Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession.

         (b) If the Trustee shall succeed to any duties of the Master Servicer
respecting the Mortgage Loans as provided herein, it shall do so in a separate
capacity and not in its capacity as Trustee and, accordingly, the provisions of
Article IX shall be inapplicable to the Trustee in its duties as the successor
to the Master Servicer in the servicing of the Mortgage Loans (although such
provisions shall continue to apply to the Trustee in its capacity as Trustee);
the provisions of Article VII, however, shall apply to it in its capacity as
successor master servicer.

         Section 8.03 NOTIFICATION TO CERTIFICATEHOLDERS. Upon any termination
or appointment of a successor to the Master Servicer, the Trustee shall give
prompt written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register and to the Rating Agencies.

         Section 8.04 WAIVER OF DEFAULTS. The Trustee shall transmit by mail to
all Certificateholders, within 60 days after the occurrence of any Event of
Default actually known to a Responsible Officer of the Trustee, unless such
Event of Default shall have been cured, notice of each such Event of Default.
The Holders of Certificates evidencing Fractional Undivided Interests
aggregating not less than 51% of the Trust Fund may, on behalf of all
Certificateholders, waive any default by the Master Servicer in the performance
of its obligations hereunder and the consequences

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<PAGE>

thereof, except a default in the making of or the causing to be made any
required distribution on the Certificates, which default may only be waived by
Holders of Certificates evidencing Fractional Undivided Interests aggregating
100% of the Trust Fund. Upon any such waiver of a past default, such default
shall be deemed to cease to exist, and any Event of Default arising therefrom
shall be deemed to have been timely remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived.
The Trustee shall give notice of any such waiver to the Rating Agencies.

         Section 8.05 LIST OF CERTIFICATEHOLDERS. Upon written request of three
or more Certificateholders of record, for purposes of communicating with other
Certificateholders with respect to their rights under this Agreement, the
Trustee will afford such Certificateholders access during business hours to the
most recent list of Certificateholders held by the Trustee.

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<PAGE>

                                   ARTICLE IX
             Concerning the Trustee and the Securities Administrator

         Section 9.01 DUTIES OF TRUSTEE. (a) The Trustee, prior to the
occurrence of an Event of Default and after the curing or waiver of all Events
of Default which may have occurred, and the Securities Administrator each
undertake to perform such duties and only such duties as are specifically set
forth in this Agreement as duties of the Trustee and the Securities
Administrator, respectively. If an Event of Default has occurred and has not
been cured or waived, the Trustee shall exercise such of the rights and powers
vested in it by this Agreement, and subject to Section 8.02(b) use the same
degree of care and skill in their exercise, as a prudent person would exercise
under the circumstances in the conduct of his own affairs.

         (b) Upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments which are specifically
required to be furnished to the Trustee and the Securities Administrator
pursuant to any provision of this Agreement, the Trustee and the Securities
Administrator, respectively, shall examine them to determine whether they are in
the form required by this Agreement; provided, however, that neither the Trustee
nor the Securities Administrator shall be responsible for the accuracy or
content of any resolution, certificate, statement, opinion, report, document,
order or other instrument furnished hereunder; provided, further, that neither
the Trustee nor the Securities Administrator shall be responsible for the
accuracy or verification of any calculation provided to it pursuant to this
Agreement.

         (c) On each Distribution Date, the Trustee shall make monthly
distributions and the final distribution to the Certificateholders from funds in
the Distribution Account as provided in Sections 6.01 and 10.01 herein based
solely on the report of the Securities Administrator.

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

                  (i) Prior to the occurrence of an Event of Default, and after
the curing or waiver of all such Events of Default which may have occurred, the
duties and obligations of the Trustee and the Securities Administrator shall be
determined solely by the express provisions of this Agreement, neither the
Trustee nor the Securities Administrator shall be liable except for the
performance of their respective duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall be read into
this Agreement against the Trustee or the Securities Administrator and, in the
absence of bad faith on the part of the Trustee or the Securities Administrator,
respectively, the Trustee or the Securities Administrator, respectively, may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions furnished to the
Trustee or the Securities Administrator, respectively, and conforming to the
requirements of this Agreement;

                  (ii) Neither the Trustee nor the Securities Administrator
shall be liable in its individual capacity for an error of judgment made in good
faith by a Responsible Officer or Responsible Officers of the Trustee or an
officer of the Securities Administrator, respectively, unless

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<PAGE>

it shall be proved that the Trustee or the Securities Administrator,
respectively, was negligent in ascertaining the pertinent facts;

                  (iii) Neither the Trustee nor the Securities Administrator
shall be liable with respect to any action taken, suffered or omitted to be
taken by it in good faith in accordance with the directions of the Holders of
Certificates evidencing Fractional Undivided Interests aggregating not less than
25% of the Trust Fund, if such action or non-action relates to the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or the Securities Administrator, respectively, or exercising any trust or other
power conferred upon the Trustee or the Securities Administrator, respectively,
under this Agreement;

                  (iv) The Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any default or Event of Default unless a
Responsible Officer of the Trustee's Corporate Trust Office shall have actual
knowledge thereof. In the absence of such notice, the Trustee may conclusively
assume there is no such default or Event of Default;

                  (v) The Trustee shall not in any way be liable by reason of
any insufficiency in any Account held by or in the name of Trustee unless it is
determined by a court of competent jurisdiction that the Trustee's gross
negligence or willful misconduct was the primary cause of such insufficiency
(except to the extent that the Trustee is obligor and has defaulted thereon);

                  (vi) Anything in this Agreement to the contrary
notwithstanding, in no event shall the Trustee or the Securities Administrator
be liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Trustee or
the Securities Administrator, respectively, has been advised of the likelihood
of such loss or damage and regardless of the form of action;

                  (vii) None of the Securities Administrator, the Depositor, the
Company or the Trustee shall be responsible for the acts or omissions of the
other, it being understood that this Agreement shall not be construed to render
them partners, joint venturers or agents of one another and

                  (viii) Neither the Trustee nor the Securities Administrator
shall be required to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if there is reasonable ground for believing that
the repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it, and none of the provisions contained in this
Agreement shall in any event require the Trustee or the Securities Administrator
to perform, or be responsible for the manner of performance of, any of the
obligations of the Master Servicer under the Servicing Agreement, except during
such time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers and privileges of, the Master Servicer in accordance
with the terms of this Agreement.

         (e) All funds received by the Master Servicer and the Trustee and
required to be deposited in the Master Servicer Collection Account or
Distribution Account pursuant to this Agreement will be promptly so deposited by
the Master Servicer and the Trustee.

                                      -93-

<PAGE>

         (f) Except for those actions that the Trustee or the Securities
Administrator is required to take hereunder, neither the Trustee nor the
Securities Administrator shall have any obligation or liability to take any
action or to refrain from taking any action hereunder in the absence of written
direction as provided hereunder.

         Section 9.02 CERTAIN MATTERS AFFECTING THE TRUSTEE AND THE SECURITIES
ADMINISTRATOR. Except as otherwise provided in Section 9.01:

                  (i) The Trustee and the Securities Administrator may rely and
shall be protected in acting or refraining from acting in reliance on any
resolution, certificate of the Depositor, the Master Servicer or the Servicer,
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 and the Securities Administrator may consult
with counsel and any advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection with respect to any action taken
or suffered or omitted by it hereunder in good faith and in accordance with such
advice or Opinion of Counsel:

                  (iii) Neither the Trustee nor the Securities Administrator
shall be under any obligation to exercise any of the trusts or powers vested in
it by this Agreement, other than its obligation to give notices pursuant to this
Agreement, or to institute, conduct or defend any litigation hereunder or in
relation hereto at the request, order or direction of any of the
Certificateholders pursuant to the provisions of this Agreement, unless such
Certificateholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby. Nothing contained herein shall, however, relieve the Trustee
of the obligation, upon the occurrence of an Event of Default of which a
Responsible Officer of the Trustee has actual knowledge (which has not been
cured or waived), to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in their exercise, as a
prudent person would exercise under the circumstances in the conduct of his own
affairs;

                  (iv) Prior to the occurrence of an Event of Default hereunder
and after the curing or waiver of all Events of Default which may have occurred,
neither the Trustee nor the Securities Administrator shall be liable in its
individual capacity for any action taken, suffered or omitted by it in good
faith and believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement;

                  (v) Neither the Trustee nor the Securities Administrator shall
be bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing to do so by Holders of Certificates evidencing Fractional
Undivided Interests aggregating not less than 25% of the Trust Fund and provided
that the payment within a reasonable time to the Trustee or the Securities
Administrator, as applicable, of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of the
Trustee or the Securities Administrator, as applicable, reasonably assured to
the Trustee or the Securities Administrator, as applicable, by the security
afforded to it by the terms of this Agreement.

                                      -94-

<PAGE>

The Trustee or the Securities Administrator may require reasonable indemnity
against such expense or liability as a condition to taking any such action. The
reasonable expense of every such examination shall be paid by the
Certificateholders requesting the investigation;

                  (vi) The Trustee and the Securities Administrator may execute
any of the trusts or powers hereunder or perform any duties hereunder either
directly or through Affiliates, agents or attorneys; provided, however, that the
Trustee may not appoint any agent to perform its custodial functions with
respect to the Mortgage Files or paying agent functions under this Agreement
without the express written consent of the Master Servicer, which consent will
not be unreasonably withheld. Neither the Trustee nor the Securities
Administrator shall be liable or responsible for the misconduct or negligence of
any of the Trustee's or the Securities Administrator's agents or attorneys or a
custodian or paying agent appointed hereunder by the Trustee or the Securities
Administrator with due care and, when required, with the consent of the Master
Servicer;

                  (vii) Should the Trustee or the Securities Administrator deem
the nature of any action required on its part, other than a payment or transfer
under Subsection 4.01(b) or Section 4.02, to be unclear, the Trustee or the
Securities Administrator, respectively, may require prior to such action that it
be provided by the Depositor with reasonable further instructions;

                  (viii) The right of the Trustee or the Securities
Administrator to perform any discretionary act enumerated in this Agreement
shall not be construed as a duty, and neither the Trustee nor the Securities
Administrator shall be accountable for other than its negligence or willful
misconduct in the performance of any such act;

                  (ix) Neither the Trustee nor the Securities Administrator
shall be required to give any bond or surety with respect to the execution of
the trust created hereby or the powers granted hereunder, except as provided in
Subsection 9.07; and

                  (x) Neither the Trustee nor the Securities Administrator shall
have any duty to conduct any affirmative investigation as to the occurrence of
any condition requiring the repurchase of any Mortgage Loan by the Seller
pursuant to this Agreement or the Mortgage Loan Purchase Agreement, as
applicable, or the eligibility of any Mortgage Loan for purposes of this
Agreement.

         Section 9.03 TRUSTEE AND SECURITIES ADMINISTRATOR NOT LIABLE FOR
CERTIFICATES OR MORTGAGE LOANS. The recitals contained herein and in the
Certificates (other than the signature and countersignature of the Trustee on
the Certificates) shall be taken as the statements of the Depositor, and neither
the Trustee, or the Custodian on its behalf, nor the Securities Administrator
shall have any responsibility for their correctness. Neither the Trustee nor the
Securities Administrator makes any representation as to the validity or
sufficiency of the Certificates (other than the signature and countersignature
of the Trustee on the Certificates) or of any Mortgage Loan except as expressly
provided in Sections 2.02 and 2.05 hereof; provided, however, that the foregoing
shall not relieve the Trustee, or the Custodian on its behalf, of the obligation
to review the Mortgage Files pursuant to Sections 2.02 and 2.04. The Trustee's
signature and countersignature (or countersignature of its agent) on the
Certificates shall be solely in its capacity as Trustee and shall not constitute
the Certificates an obligation of the Trustee in any other capacity. Neither the
Trustee or the Securities Administrator shall be accountable for the use or
application by the Depositor of any of the

                                      -95-

<PAGE>

Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor with respect to the Mortgage
Loans. Subject to the provisions of Section 2.05, neither the Trustee nor the
Securities Administrator shall be responsible for the legality or validity of
this Agreement or any document or instrument relating to this Agreement, the
validity of theexecution of this Agreement or of any supplement hereto or
instrument of further assurance, or the validity, priority, perfection or
sufficiency of the security for the Certificates issued hereunder or intended to
be issued hereunder. Neither the Trustee nor the Securities Administrator shall
at any time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Mortgage or any Mortgage Loan, or
the perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
Fund or its ability to generate the payments to be distributed to
Certificateholders, under this Agreement. Neither the Trustee nor the Securities
Administrator shall have any responsibility for filing any financing statement
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to record this Agreement.

         Section 9.04 TRUSTEE AND SECURITIES ADMINISTRATOR MAY OWN CERTIFICATES.
The Trustee and the Securities Administrator in its individual capacity or in
any capacity other than as Trustee hereunder may become the owner or pledgee of
any Certificates with the same rights it would have if it were not Trustee or
the Securities Administrator, as applicable, and may otherwise deal with the
parties hereto.

         Section 9.05 TRUSTEE'S AND SECURITIES ADMINISTRATOR'S FEES AND
EXPENSES. The fees and expenses of the Trustee and the Securities Administrator
shall be paid in accordance with a side letter agreement between the Trustee and
the Master Servicer. In addition, the Trustee and the Securities Administrator
will be entitled to recover from the Master Servicer Collection Account pursuant
to Section 4.03(b) all reasonable out-of-pocket expenses, disbursements and
advances and the expenses of the Trustee and the Securities Administrator,
respectively, in connection with any Event of Default, any breach of this
Agreement or any claim or legal action (including any pending or threatened
claim or legal action) incurred or made by the Trustee or the Securities
Administrator, respectively, in the administration of the trusts hereunder
(including the reasonable compensation, expenses and disbursements of its
counsel) except any such expense, disbursement or advance as may arise from its
negligence or intentional misconduct or which is the responsibility of the
Certificateholders. If funds in the Master Servicer Collection Account are
insufficient therefor, the Trustee and the Securities Administrator shall
recover such expenses from the Depositor and the Depositor hereby agrees to pay
such expenses, disbursements or advances upon demand. Such compensation and
reimbursement obligation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust.

         Section 9.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE AND SECURITIES
ADMINISTRATOR. The Trustee and any successor Trustee and the Securities
Administrator and any successor Securities Administrator shall during the entire
duration of this Agreement be a state bank or trust company or a national
banking association organized and doing business under the laws of such state or
the United States of America, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus and undivided profits of at
least $40,000,000 or, in the case of a successor Trustee, $50,000,000, subject
to supervision or examination by federal or state authority

                                      -96-

<PAGE>

and, in the case of the Trustee, rated "BBB" or higher by S&P with respect to
their long-term rating and rated "BBB" or higher by S&P and "Baa2" or higher by
Moody's with respect to any outstanding long-term unsecured unsubordinated debt,
and, in the case of a successor Trustee or successor Securities Administrator
other than pursuant to Section 9.10, rated in one of the two highest long-term
debt categories of, or otherwise acceptable to, each of the Rating Agencies. If
the Trustee publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section 9.06 the combined capital and surplus of such
corporation shall be deemed to be its total equity capital (combined capital and
surplus) as set forth in its most recent report of condition so published. In
case at any time the Trustee or the Securities Administrator shall cease to be
eligible in accordance with the provisions of this Section 9.06, the Trustee or
the Securities Administrator shall resign immediately in the manner and with the
effect specified in Section 9.08.

         Section 9.07 INSURANCE. The Trustee and the Securities Administrator,
at their own expense, shall at all times maintain and keep in full force and
effect: (i) fidelity insurance, (ii) theft of documents insurance and (iii)
forgery insurance (which may be collectively satisfied by a "Financial
Institution Bond" and/or a "Bankers' Blanket Bond"). All such insurance shall be
in amounts, with standard coverage and subject to deductibles, as are customary
for insurance typically maintained by banks or their affiliates which act as
custodians for investor-owned mortgage pools. A certificate of an officer of the
Trustee or the Securities Administrator as to the Trustee's or the Securities
Administrator's, respectively, compliance with this Section 9.07 shall be
furnished to any Certificateholder upon reasonable written request.

         Section 9.08 RESIGNATION AND REMOVAL OF THE TRUSTEE AND SECURITIES
ADMINISTRATOR. (a) The Trustee and the Securities Administrator may at any time
resign and be discharged from the Trust hereby created by giving written notice
thereof to the Depositor and the Master Servicer, with a copy to the Rating
Agencies. Upon receiving such notice of resignation, the Depositor shall
promptly appoint a successor Trustee or successor Securities Administrator, as
applicable, by written instrument, in triplicate, one copy of which instrument
shall be delivered to each of the resigning Trustee or Securities Administrator,
as applicable, the successor Trustee or Securities Administrator, as applicable.
If no successor Trustee or Securities Administrator shall have been so appointed
and have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee or Securities Administrator may petition any
court of competent jurisdiction for the appointment of a successor Trustee or
Securities Administrator.

         (b) If at any time the Trustee or the Securities Administrator shall
cease to be eligible in accordance with the provisions of Section 9.06 and shall
fail to resign after written request therefor by the Depositor or if at any time
the Trustee or the Securities Administrator shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or the
Securities Administrator, as applicable, or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or the
Securities Administrator, as applicable, or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Depositor shall
promptly remove the Trustee, or shall be entitled to remove the Securities
Administrator, as applicable, and appoint a successor Trustee or Securities
Administrator, as applicable, by written instrument, in triplicate, one copy of
which instrument shall be delivered to each of the Trustee or

                                      -97-

<PAGE>

Securities Administrator, as applicable, so removed, the successor Trustee or
Securities Administrator, as applicable.

         (c) The Holders of Certificates evidencing Fractional Undivided
Interests aggregating not less than 51% of the Trust Fund may at any time remove
the Trustee or the Securities Administrator and appoint a successor Trustee or
Securities Administrator by written instrument or instruments, in quadruplicate,
signed by such Holders or their attorneys-in-fact duly authorized, one complete
set of which instruments shall be delivered to the Depositor, the Master
Servicer, the Securities Administrator (if the Trustee is removed), the Trustee
(if the Securities Administrator is removed), and the Trustee or Securities
Administrator so removed and the successor so appointed. In the event that the
Trustee or Securities Administrator is removed by the Holders of Certificates in
accordance with this Section 9.08(c), the Holders of such Certificates shall be
responsible for paying any compensation payable to a successor Trustee or
successor Securities Administrator, in excess of the amount paid to the
predecessor Trustee or predecessor Securities Administrator, as applicable.

         (d) No resignation or removal of the Trustee or the Securities
Administrator and appointment of a successor Trustee or Securities Administrator
pursuant to any of the provisions of this Section 9.08 shall become effective
except upon appointment of and acceptance of such appointment by the successor
Trustee or Securities Administrator as provided in Section 9.09.

         Section 9.09 SUCCESSOR TRUSTEE AND SUCCESSOR SECURITIES ADMINISTRATOR.
(a) Any successor Trustee or Securities Administrator appointed as provided in
Section 9.08 shall execute, acknowledge and deliver to the Depositor and to its
predecessor Trustee or Securities Administrator an instrument accepting such
appointment hereunder. The resignation or removal of the predecessor Trustee or
Securities Administrator shall then become effective and such successor Trustee
or Securities Administrator, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as Trustee or
Securities Administrator herein. The predecessor Trustee or Securities
Administrator shall after payment of its outstanding fees and expenses promptly
deliver to the successor Trustee or Securities Administrator, as applicable, all
assets and records of the Trust held by it hereunder, and the Depositor and the
predecessor Trustee or Securities Administrator, as applicable, shall execute
and deliver such instruments and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in the successor
Trustee or Securities Administrator, as applicable, all such rights, powers,
duties and obligations.

         (b) No successor Trustee or Securities Administrator shall accept
appointment as provided in this Section 9.09 unless at the time of such
acceptance such successor Trustee or Securities Administrator shall be eligible
under the provisions of Section 9.06.

         (c) Upon acceptance of appointment by a successor Trustee or Securities
Administrator as provided in this Section 9.09, the successor Trustee or
Securities Administrator shall mail notice of the succession of such Trustee or
Securities Administrator hereunder to all Certificateholders at their addresses
as shown in the Certificate Register and to the Rating Agencies. The Company
shall pay the cost of any mailing by the successor Trustee or Securities
Administrator.

                                      -98-

<PAGE>

         Section 9.10 MERGER OR CONSOLIDATION OF TRUSTEE OR SECURITIES
ADMINISTRATOR. Any state bank or trust company or national banking association
into which the Trustee or the Securities Administrator may be merged or
converted or with which it may be consolidated or any state bank or trust
company or national banking association resulting from any merger, conversion or
consolidation to which the Trustee or the Securities Administrator,
respectively, shall be a party, or any state bank or trust company or national
banking association succeeding to all or substantially all of the corporate
trust business of the Trustee or the Securities Administrator, respectively,
shall be the successor of the Trustee or the Securities Administrator,
respectively, hereunder, provided such state bank or trust company or national
banking association shall be eligible under the provisions of Section 9.06. Such
succession shall be valid without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.

         Section 9.11 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a)
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust or property constituting the same may at the time be located, the
Depositor and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and the Depositor to act as co-trustee or co-trustees, jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person or Persons, in such capacity, such title to
the Trust, or any part thereof, and, subject to the other provisions of this
Section 9.11, such powers, duties, obligations, rights and trusts as the
Depositor and the Trustee may consider necessary or desirable.

         (b) If the Depositor shall not have joined in such appointment within
15 days after the receipt by it of a written request so to do, the Trustee shall
have the power to make such appointment without the Depositor.

         (c) No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor Trustee under Section 9.06
hereunder and no notice to Certificateholders of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 9.08
hereof.

         (d) In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.11, all rights, powers, duties and obligations
conferred or imposed upon the Trustee and required to be conferred on such
co-trustee shall be conferred or imposed upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly, except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed (whether as Trustee hereunder or as successor to the Master
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.

         (e) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts

                                      -99-

<PAGE>

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.

         (f) To the extent not prohibited by law, any separate trustee or
co-trustee may, at any time, request the Trustee, its agent or attorney-in-fact,
with full power and authority, to do any lawful act under or with respect to
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.

         (g) No trustee under this Agreement shall be personally liable by
reason of any act or omission of another trustee under this Agreement. The
Depositor and the Trustee acting jointly may at any time accept the resignation
of or remove any separate trustee or co-trustee.

         Section 9.12 FEDERAL INFORMATION RETURNS AND REPORTS TO
CERTIFICATEHOLDERS; REMIC ADMINISTRATION. (a) For federal income tax purposes,
the taxable year of each REMIC shall be a calendar year and the Securities
Administrator shall maintain or cause the maintenance of the books of each such
REMIC on the accrual method of accounting.

         (b) The Securities Administrator shall prepare and file or cause to be
filed with the Internal Revenue Service, and the Trustee shall sign, Federal tax
information returns or elections required to be made hereunder with respect to
each REMIC, the Trust Fund, if applicable, and the Certificates containing such
information and at the times and in the manner as may be required by the Code or
applicable Treasury regulations, and shall furnish to each Holder of
Certificates at any time during the calendar year for which such returns or
reports are made such statements or information at the times and in the manner
as may be required thereby, including, without limitation, reports relating to
interest, original issue discount and market discount or premium (using a
constant prepayment assumption of 20% CPR). The Securities Administrator will
apply for an Employee Identification Number from the IRS under Form SS-4 or any
other acceptable method for all tax entities. In connection with the foregoing,
the Securities Administrator shall timely prepare and file, and the Trustee
shall sign, IRS Form 8811, which shall provide the name and address of the
person who can be contacted to obtain information required to be reported to the
holders of regular interests in each REMIC (the "REMIC Reporting Agent"). The
Trustee shall make elections to treat each REMIC as a REMIC (which elections
shall apply to the taxable period ending December 31, 2004 and each calendar
year thereafter) in such manner as the Code or applicable Treasury regulations
may prescribe, and as described by the Securities Administrator. The Trustee
shall sign all tax information returns filed pursuant to this Section and any
other returns as may be required by the Code. The Holder of the Class R-I
Certificate is hereby designated as the "Tax Matters Person" (within the meaning
of Treas. Reg. ss.ss.1.860F-4(d)) for REMIC I and the Holder of the Class R-II
Certificate is hereby designated as the "Tax Matters Person" for REMIC II. The
Securities Administrator is hereby designated and appointed as the agent of each
such Tax Matters Person. Any Holder of a Residual Certificate will by acceptance
thereof appoint the Securities Administrator as agent and attorney-in-fact for
the purpose of acting as Tax Matters Person for each REMIC during such time as
the

                                     -100-

<PAGE>

Securities Administrator does not own any such Residual Certificate. In the
event that the Code or applicable Treasury regulations prohibit the Trustee from
signing tax or information returns or other statements, or the Securities
Administrator from acting as agent for the Tax Matters Person, the Trustee and
the Securities Administrator shall take whatever action that in its sole good
faith judgment is necessary for the proper filing of such information returns or
for the provision of a tax matters person, including designation of the Holder
of a Residual Certificate to sign such returns or act as tax matters person.
Each Holder of a Residual Certificate shall be bound by this Section.

         (c) The Securities Administrator shall provide upon request and receipt
of reasonable compensation, such information as required in Section
860D(a)(6)(B) of the Code to the Internal Revenue Service, to any Person
purporting to transfer a Residual Certificate to a Person other than a
transferee permitted by Section 5.05(b), and to any regulated investment
company, real estate investment trust, common trust fund, partnership, trust,
estate, organization described in Section 1381 of the Code, or nominee holding
an interest in a pass-through entity described in Section 860E(e)(6) of the
Code, any record holder of which is not a transferee permitted by Section
5.05(b) (or which is deemed by statute to be an entity with a disqualified
member).

         (d) The Securities Administrator shall prepare and file or cause to be
filed, and the Trustee shall sign, any state income tax returns required under
Applicable State Law with respect to each REMIC or the Trust Fund.

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

         (f) The Trustee and the Securities Administrator agree to indemnify the
Trust Fund and the Depositor for any taxes and costs including, without
limitation, any reasonable attorneys fees imposed on or incurred by the Trust
Fund, the Depositor or the Master Servicer, as a result of a breach of the
Trustee's covenants and the Securities Administrator's covenants, respectively,
set forth in this Section 9.12; provided, however, such liability and obligation
to indemnify in this paragraph shall not be joint and several and neither the
Trustee nor the Securities Administrator shall be liable or be obligated to
indemnify the Trust Fund for the failure by the other to perform any duty under
this Agreement or the breach by the other of any covenant in this Agreement.

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<PAGE>

                                    ARTICLE X
                                   Termination

         Section 10.01 TERMINATION UPON REPURCHASE BY THE DEPOSITOR OR ITS
DESIGNEE OR LIQUIDATION OF THE MORTGAGE LOANS.

         (a) Subject to Section 10.02, the respective obligations and
responsibilities of the Depositor, the Trustee, the Master Servicer and the
Securities Administrator created hereby, other than the obligation of the
Trustee to make payments to Certificateholders as hereinafter set forth shall
terminate upon:

                  (i) the repurchase by or at the direction of the Depositor or
its designee of all of the Mortgage Loans and all related REO Property remaining
in the Trust at a price (in each case, the "Termination Purchase Price") equal
to the sum of (a) 100% of the Outstanding Principal Balance of each Mortgage
Loan (other than a Mortgage Loan related to REO Property) as of the date of
repurchase, net of the principal portion of any unreimbursed Monthly Advances
made by the purchaser, together with interest at the applicable Mortgage
Interest Rate accrued but unpaid to, but not including, the first day of the
month of repurchase, (b) the appraised value of any related REO Property, less
the good faith estimate of the Depositor of liquidation expenses to be incurred
in connection with its disposal thereof (but not more than the Outstanding
Principal Balance of the related Mortgage Loan, together with interest at the
applicable Mortgage Interest Rate accrued on that balance but unpaid to, but not
including, the first day of the month of repurchase), such appraisal to be
calculated by an appraiser mutually agreed upon by the Depositor and the Trustee
at the expense of the Depositor, (c) unreimbursed out-of pocket costs of the
Master Servicer, including unreimbursed servicing advances and the principal
portion of any unreimbursed Monthly Advances, made on the Mortgage Loans prior
to the exercise of such repurchase right and (d) any unreimbursed costs and
expenses of the Trustee and the Securities Administrator payable pursuant to
Section 9.05; or

                  (ii) the later of the making of the final payment or other
liquidation, or any advance with respect thereto, of the last Mortgage Loan
remaining in the Trust Fund or the disposition of all property acquired with
respect to any Mortgage Loan; provided, however, that in the event that an
advance has been made, but not yet recovered, at the time of such termination,
the Person having made such advance shall be entitled to receive,
notwithstanding such termination, any payments received subsequent thereto with
respect to which such advance was made; or

                  (iii) the payment to the Certificateholders of all amounts
required to be paid to them pursuant to this Agreement.

         (b) In no event, however, shall the Trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James's, living on the date of this Agreement.

         (c) The right of the Depositor or its designee to repurchase all the
assets of the Trust Fund as described in Subsection 10.01(a)(i) above shall be
exercisable only if (i) the aggregate Scheduled Principal Balance of the
Mortgage Loans at the time of any such repurchase is less than

                                     -102-

<PAGE>

10% of the Cut-Off Date Balance, or (ii) the Depositor, based upon an Opinion of
Counsel addressed to the Depositor, the Trustee and the Securities
Administrator, has determined that the REMIC status of REMIC I or REMIC II has
been lost or that a substantial risk exists that such REMIC status will be lost
for the then-current taxable year. At any time thereafter, in the case of (i) or
(ii) above, the Depositor may elect to terminate REMIC I and REMIC II at any
time, and upon such election, the Depositor or its designee, shall repurchase
all the assets of the Trust Fund described in Subsection 10.01(a)(i) above.

         (d) The Trustee shall give notice of any termination to the
Certificateholders, with a copy to the Master Servicer, the Securities
Administrator and the Rating Agencies, upon which the Certificateholders shall
surrender their Certificates to the Trustee for payment of the final
distribution and cancellation. Such notice shall be given by letter, mailed not
earlier than the l5th day and not later than the 25th day of the month next
preceding the month of such final distribution, and shall specify (i) the
Distribution Date upon which final payment of the Certificates will be made upon
presentation and surrender of the Certificates at the office of the Trustee
therein designated, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Certificates at
the office of the Trustee therein specified.

         (e) If the option of the Depositor to repurchase or cause the
repurchase of all the assets in the Trust Fund as described in Subsection
10.01(a)(i) above, is exercised, the Depositor and/or its designee shall deliver
to the Trustee for deposit in the Distribution Account, by the Business Day
prior to the applicable Distribution Date, an amount equal to the Termination
Purchase Price. Upon presentation and surrender of the Certificates by the
Certificateholders, the Trustee shall distribute to such Certificateholders as
directed by the Securities Administrator in writing an amount determined as
follows: with respect to each Certificate (other than the Class R Certificates),
the outstanding Current Principal Amount, plus with respect to each Certificate
(other than the Class R Certificates), one month's interest thereon at the
applicable Pass-Through Rate; and with respect to the Class R Certificates, the
percentage interest evidenced thereby multiplied by the difference, if any,
between the above described repurchase price and the aggregate amount to be
distributed to the Holders of the Certificates in such Certificate Group (other
than the Class R Certificates). If the proceeds with respect to the Mortgage
Loans of a Loan Group are not sufficient to pay all of the Senior Certificates
of the related Certificate Group in full, any such deficiency shall be allocated
first, to the Subordinate Certificates, in inverse order of their numerical
designation and then to the Senior Certificates of the related Certificate Group
on a pro rata basis. Upon deposit of the Termination Purchase Price and
following such final Distribution Date, the Trustee shall release promptly to
the Depositor and/or its designee the Mortgage Files for the remaining Mortgage
Loans, and the Accounts with respect thereto shall terminate, subject to the
Trustee's obligation to hold any amounts payable to the Certificateholders in
trust without interest pending final distributions pursuant to Subsection
10.01(g). Any other amounts remaining in the Accounts will belong to the
Depositor.

         (f) In the event that this Agreement is terminated by reason of the
payment or liquidation of all Mortgage Loans or the disposition of all property
acquired with respect to all Mortgage Loans under Subsection 10.01(a)(ii) above,
the Master Servicer shall deliver to the Trustee for deposit in the Distribution
Account all distributable amounts remaining in the Master Servicer Collection

                                     -103-

<PAGE>

Account. Upon the presentation and surrender of the Certificates, the Trustee
shall distribute to the remaining Certificateholders, pursuant to the written
direction of the Securities Administrator and in accordance with their
respective interests, all distributable amounts remaining in the Distribution
Account. Upon deposit by the Master Servicer of such distributable amounts, and
following such final Distribution Date, the Trustee shall release promptly to
the Depositor or its designee the Mortgage Files for the remaining Mortgage
Loans, and the Master Servicer Collection Account and the Distribution Account
shall terminate, subject to the Trustee's obligation to hold any amounts payable
to the Certificateholders in trust without interest pending final distributions
pursuant to this Subsection 10.01(f).

         (g) If not all of the Certificateholders shall surrender their
Certificates for cancellation within six months after the time 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, not all the Certificates shall have been
surrendered for cancellation, the Trustee may take appropriate steps, or appoint
any 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 which remain subject to this Agreement.

         Section 10.02 ADDITIONAL TERMINATION REQUIREMENTS. (a) If the option of
the Depositor to repurchase all of the Mortgage Loans under Subsection
10.01(a)(i) above is exercised, the Trust Fund and each REMIC shall be
terminated in accordance with the following additional requirements, unless the
Trustee has been furnished with an Opinion of Counsel addressed to the Trustee
to the effect that the failure of the Trust to comply with the requirements of
this Section 10.02 will not (i) result in the imposition of taxes on "prohibited
transactions" as defined in Section 860F of the Code on any REMIC or (ii) cause
any REMIC to fail to qualify as a REMIC at any time that any Regular
Certificates are outstanding:

                  (i) within 90 days prior to the final Distribution Date, at
the written direction of the Depositor, the Trustee, as agent for the respective
Tax Matters Persons, shall adopt a plan of complete liquidation of each REMIC in
the case of a termination under Subsection 10.01(a)(i), provided to it by the
Depositor, which meets the requirements of a "qualified liquidation" under
Section 860F of the Code and any regulations thereunder;

                  (ii) the Depositor shall notify the Trustee at the
commencement of such 90-day liquidation period and, at or prior to the time of
making of the final payment on the Certificates, the Trustee shall sell or
otherwise dispose of all of the remaining assets of the Trust Fund in accordance
with the terms hereof; and

                  (iii) at or after the time of adoption of such a plan of
complete liquidation of each REMIC, and at or prior to the final Distribution
Date relating thereto, the Trustee shall sell for cash all of the assets of the
Trust to or at the direction of the Depositor, and each REMIC shall terminate at
such time.

         (b) By their acceptance of the Residual Certificates, the Holders
thereof hereby (i) agree to adopt such a plan of complete liquidation of the
related REMIC upon the written request of the Depositor, and to take such action
in connection therewith as may be reasonably requested by the Depositor and (ii)
appoint the Depositor as their attorney-in-fact, with full power of
substitution, for purposes of adopting such a plan of complete liquidation. The
Trustee shall adopt such plan of

                                      -104-

<PAGE>

liquidation by filing the appropriate statement on the final tax return of each
REMIC. Upon complete liquidation or final distribution of all of the assets of
the Trust Fund, the Trust Fund and each REMIC shall terminate.

                                      -105-

<PAGE>

                                   ARTICLE XI
                            Miscellaneous Provisions

         Section 11.01 INTENT OF PARTIES. The parties intend that each of REMIC
I and REMIC II shall be treated as a REMIC for federal income tax purposes and
that the provisions of this Agreement should be construed in furtherance of this
intent.

         Section 11.02 AMENDMENT. (a) This Agreement may be amended from time to
time by the Company, the Depositor, the Master Servicer, the Securities
Administrator and the Trustee, without notice to or the consent of any of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions herein or therein that may be defective or inconsistent with any
other provisions herein or therein, to comply with any changes in the Code or to
make any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
Agreement; provided, however, that such action shall not, as evidenced by an
Opinion of Independent Counsel, addressed to the Trustee, adversely affect in
any material respect the interests of any Certificateholder.

         (b) This Agreement may also be amended from time to time by the
Company, the Master Servicer, the Depositor, the Securities Administrator and
the Trustee, with the consent of the Holders of Certificates evidencing
Fractional Undivided Interests aggregating not less than 51% of the Trust Fund
or of the applicable Class or Classes, if such amendment affects only such Class
or Classes, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Certificateholders; provided, however, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
payments received on Mortgage Loans which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate, (ii) reduce
the aforesaid percentage of Certificates the Holders of which are required to
consent to any such amendment, without the consent of the Holders of all
Certificates then outstanding, or (iii) cause any REMIC to fail to qualify as a
REMIC for federal income tax purposes, as evidenced by an Opinion of Independent
Counsel addressed to the Trustee which shall be provided to the Trustee other
than at the Trustee's expense. Notwithstanding any other provision of this
Agreement, for purposes of the giving or withholding of consents pursuant to
this Section 11.02(b), Certificates registered in the name of or held for the
benefit of the Depositor, the Securities Administrator, the Master Servicer, or
the Trustee or any Affiliate thereof shall be entitled to vote their Fractional
Undivided Interests with respect to matters affecting such Certificates.

         (c) Promptly after the execution of any such amendment, the Trustee
shall furnish a copy of such amendment or written notification of the substance
of such amendment to each Certificateholder, with a copy to the Rating Agencies.

         (d) In the case of an amendment under Subsection 11.02(b) above, it
shall not be necessary for the Certificateholders to approve the particular form
of such an amendment. Rather, it shall be sufficient if the Certificateholders
approve the substance of the amendment. 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.

                                      -106-

<PAGE>

         (e) Prior to the execution of any amendment to this Agreement, the
Trustee shall be entitled to receive and rely upon an Opinion of Counsel
addressed to the Trustee stating that the execution of such amendment is
authorized or permitted by this Agreement. The Trustee and the Securities
Administrator may, but shall not be obligated to, enter into any such amendment
which affects the Trustee's or the Securities Administrator's own respective
rights, duties or immunities under this Agreement.

         Section 11.03 RECORDATION OF AGREEMENT. To the extent permitted by
applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere. The Depositor
shall effect such recordation, at the expense of the Trust upon the request in
writing of a Certificateholder, but only if such direction is accompanied by an
Opinion of Counsel (provided at the expense of the Certificateholder requesting
recordation) to the effect that such recordation would materially and
beneficially affect the interests of the Certificateholders or is required by
law.

         Section 11.04 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. (a) The death
or incapacity of any Certificateholder shall not terminate this Agreement or the
Trust, nor entitle such Certificateholder's legal representatives or heirs to
claim an accounting or to take any action or proceeding in any court for a
partition or winding up of the Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.

         (b) Except as expressly provided in this Agreement, no
Certificateholders shall have any right to vote or in any manner otherwise
control the operation and management of the Trust, or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Certificates, be construed so as to establish the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholders be under any liability to any third Person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.

         (c) No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon, under or with respect to this Agreement against the
Depositor, the Securities Administrator, the Master Servicer or any successor to
any such parties unless (i) such Certificateholder previously shall have given
to the Trustee a written notice of a continuing default, as herein provided,
(ii) the Holders of Certificates evidencing Fractional Undivided Interests
aggregating not less than 51% of the Trust Fund shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs and expenses and liabilities to be
incurred therein or thereby, and (iii) 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.

         (d) No one or more Certificateholders shall have any right by virtue of
any provision of this Agreement to affect the rights of any other
Certificateholders or to obtain or seek to obtain priority or preference over
any other such Certificateholder, or to enforce any right under this Agreement,
except in the manner herein provided and for the equal, ratable and common
benefit of all Certificateholders. For the protection and enforcement of the
provisions of this Section 11.04,

                                      -107-

<PAGE>

each and every Certificateholder and the Trustee shall be entitled to such
relief as can be given either at law or in equity.

         Section 11.05 ACTS OF CERTIFICATEHOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Certificateholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders in person or by an agent duly appointed in writing.
Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is expressly required, to the Depositor. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the
Depositor, if made in the manner provided in this Section 11.05.

         (b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his or her individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his or her authority. The fact and date of the execution of any such
instrument or writing, or the authority of the individual executing the same,
may also be proved in any other manner which the Trustee deems sufficient.

         (c) The ownership of Certificates (notwithstanding any notation of
ownership or other writing on such Certificates, except an endorsement in
accordance with Section 5.02 made on a Certificate presented in accordance with
Section 5.04) shall be proved by the Certificate Register, and neither the
Trustee, the Securities Administrator, the Depositor, the Master Servicer nor
any successor to any such parties shall be affected by any notice to the
contrary.

         (d) Any request, demand, authorization, direction, notice, consent,
waiver or other action of the holder of any Certificate shall bind every future
holder of the same Certificate and the holder of every Certificate issued upon
the registration of transfer or exchange thereof, if applicable, or in lieu
thereof with respect to anything done, omitted or suffered to be done by the
Trustee, the Securities Administrator, the Depositor, the Master Servicer or any
successor to any such party in reliance thereon, whether or not notation of such
action is made upon such Certificates.

         (e) In determining whether the Holders of the requisite percentage of
Certificates evidencing Fractional Undivided Interests have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Certificates owned by the Trustee, the Securities Administrator, the Depositor,
the Master Servicer or any Affiliate thereof shall be disregarded, except as
otherwise provided in Section 11.02(b) and except that, in determining whether
the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Certificates which a
Responsible Officer of the Trustee actually knows to be so owned shall be so
disregarded. Certificates which have been pledged in good faith to the Trustee,
the Securities Administrator, the Depositor, the Master Servicer or any
Affiliate thereof may be regarded as outstanding if the pledgor establishes to
the satisfaction of the Trustee the pledgor's right to act with

                                      -108-

<PAGE>

respect to such Certificates and that the pledgor is not an Affiliate of the
Trustee, the Securities Administrator, the Depositor, or the Master Servicer, as
the case may be.

         Section 11.06 GOVERNING LAW. THIS AGREEMENT AND THE CERTIFICATES SHALL
BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CONFLICT OF LAWS RULES (OTHER THAN SECTION 5- 1401 OF THE
GENERAL OBLIGATIONS LAW, WHICH THE PARTIES HERETO EXPRESSLY RELY UPON IN THE
CHOICE OF SUCH LAW AS THE GOVERNING LAW HEREUNDER) AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.

         Section 11.07 NOTICES. All demands and notices hereunder shall be in
writing and shall be deemed given when delivered at (including delivery by
facsimile) or mailed by registered mail, return receipt requested, postage
prepaid, or by recognized overnight courier, to (i) in the case of the
Depositor, 383 Madison Avenue, New York, New York 10179, Attention: Vice
President-Servicing, telecopier number: (212) 272-5591, or to such other address
as may hereafter be furnished to the other parties hereto in writing; (ii) in
the case of the Trustee, at its Corporate Trust Office, or such other address as
may hereafter be furnished to the other parties hereto in writing; (iii) in the
case of the Company, 383 Madison Avenue, New York, New York 10179, Attention:
Vice President- Servicing, telecopier number: (212) 272-5591, or to such other
address as may hereafter be furnished to the other parties hereto in writing;
(iv) in the case of the Master Servicer or Securities Administrator, Wells Fargo
Bank, National Association, P.O. Box 98, Columbia Maryland 21046 (or, in the
case of overnight deliveries, 9062 Old Annapolis Road, Columbia, Maryland 21045)
(Attention: Corporate Trust Services - BART 2004-5), facsimile no.: (410)
715-2380, or such other address as may hereafter be furnished to the other
parties hereto in writing; or (v) in the case of the Rating Agencies, Moody's
Investors Service, Inc., 99 Church Street, New York, New York 10007 and Standard
& Poor's, a division of The McGraw-Hill Companies, Inc., 55 Water Street, New
York, New York 10041. Any notice delivered to the Depositor, the Master
Servicer, the Securities Administrator or the Trustee under this Agreement shall
be effective only upon receipt. Any notice required or permitted to be mailed to
a Certificateholder, unless otherwise provided herein, shall be given by
first-class mail, postage prepaid, at the address of such Certificateholder as
shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given when mailed, whether or not the Certificateholder receives such notice.

         Section 11.08 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 severed from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the holders thereof.

         Section 11.09 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the respective successors and
assigns of the parties hereto.

         Section 11.10 ARTICLE AND SECTION HEADINGS. The article and section
headings herein are for convenience of reference only, and shall not limit or
otherwise affect the meaning hereof.

                                      -109-

<PAGE>

         Section 11.11 COUNTERPARTS. This Agreement may be executed in two or
more counterparts each of which when so executed and delivered shall be an
original but all of which together shall constitute one and the same instrument.

         Section 11.12 NOTICE TO RATING AGENCIES. The article and section
headings herein are for convenience of reference only, and shall not limited or
otherwise affect the meaning hereof. The Trustee shall promptly provide notice
to each Rating Agency with respect to each of the following of which a
Responsible Officer of the Trustee has actual knowledge:

                  1. Any material change or amendment to this Agreement or the
         Servicing Agreement;

                  2. The occurrence of any Event of Default that has not been
         cured;

                  3. The resignation or termination of the Master Servicer, the
         Trustee or the Securities Administrator;

                  4. The repurchase or substitution of Mortgage Loans;

                  5. The final payment to Certificateholders; and

                  6. Any change in the location of the Master Servicer
         Collection Account or the Distribution Account.

                                      -110-

<PAGE>

         IN WITNESS WHEREOF, the Depositor, the Trustee, the Master Servicer and
the Securities Administrator have caused their names to be signed hereto by
their respective officers thereunto duly authorized as of the day and year first
above written.

                                      STRUCTURED ASSET MORTGAGE
                                      INVESTMENTS II INC., as Depositor

                                      By: --------------------------------------
                                      Name: Baron Silverstein
                                      Title:   Vice President

                                      U.S. BANK NATIONAL ASSOCIATION, as Trustee

                                      By:  -------------------------------------
                                      Name: Vaneta I. Bernard
                                      Title: Vice President

                                      WELLS FARGO BANK, NATIONAL
                                      ASSOCIATION, as Master Servicer

                                      By:  -------------------------------------
                                      Name: Stacey Taylor
                                      Title: Assistant Vice President

                                      WELLS FARGO BANK, NATIONAL
                                      ASSOCIATION, as Securities Administrator

                                      By:  ____________________________________
                                      Name: Stacey Taylor
                                      Title: Assistant Vice President

<PAGE>

                                      EMC MORTGAGE CORPORATION

                                      By:  ____________________________________
                                      Name: Sue Stepanek
                                      Title: Executive Vice President

Accepted and Agreed as to
Sections 2.01, 2.02, 2.03, 2.04 and 9.09(c)
in its capacity as Seller

EMC MORTGAGE CORPORATION

By:________________________________________
Name: Sue Stepanek
Title: Executive Vice President

<PAGE>

STATE OF NEW YORK                   )
                                    ) ss.:
COUNTY OF NEW YORK                  )

         On the 18th day of June, 2004 before me, a notary public in and for
said State, personally appeared Baron Silverstein, known to me to be a(n) Vice
President of Structured Asset Mortgage Investments II Inc., the corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                                       _________________________
                                                       Notary Public

[Notarial Seal]

<PAGE>

STATE OF MASSACHUSETTS                      )
                                            ) ss.:
COUNTY OF SUFFOLK                           )

         On the 18th day of June, 2004 before me, a notary public in and for
said State, personally appeared Vaneta I. Bernard, known to me to be a Vice
President of U.S. Bank National Association, the entity that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said entity, and acknowledged to me that such entity executed the within
instrument.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                                       _________________________
                                                       Notary Public

[Notarial Seal]

<PAGE>

STATE OF MARYLAND                   )
                                    ) ss.:
COUNTY OF         HOWARD            )

         On the 18th day of June, 2004 before me, a notary public in and for
said State, personally appeared Stacey Taylor, known to me to be an Assistant
Vice President of Wells Fargo Bank, National Association, the entity that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said entity, and acknowledged to me that such entity
executed the within instrument.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                                       _________________________
                                                       Notary Public

[Notarial Seal]

<PAGE>

STATE OF MARYLAND                   )
                                    ) ss.:
COUNTY OF         HOWARD            )

         On the 18th day of June, 2004 before me, a notary public in and for
said State, personally appeared Stacey Taylor, known to me to be a(n) Assistant
Vice President of Wells Fargo Bank, National Association, the entity that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said entity, and acknowledged to me that such entity
executed the within instrument.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                                       _________________________
                                                       Notary Public

[Notarial Seal]

<PAGE>

STATE OF TEXAS                      )
                                    ) ss.:
COUNTY OF DALLAS                    )

         On the 18th day of June, 2004 before me, a notary public in and for
said State, personally appeared Sue Stepanek, known to me to be Executive Vice
President of EMC Mortgage Corporation, the corporation that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                                       _________________________
                                                       Notary Public

[Notarial Seal]

<PAGE>

STATE OF TEXAS                      )
                                    ) ss.:
COUNTY OF DALLAS                    )

         On the 18th day of June, 2004 before me, a notary public in and for
said State, personally appeared Sue Stepanek, known to me to be Executive Vice
President of EMC Mortgage Corporation, the corporation that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                                       _________________________
                                                       Notary Public

[Notarial Seal]

<PAGE>

                                                                    EXHIBIT A-1

                        FORM OF CLASS [_-[A] CERTIFICATE

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

                  THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE
DECREASED BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO.
ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CURRENT
PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION
SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT
PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.

                  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE TRUSTEE OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED WILL
BE 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 WILL
BE 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.

<PAGE>

<TABLE>
<CAPTION>
<S>                                                         <C>
Certificate No.1                                           [Variable] Pass-Through Rate

Class [_-[A] Senior

Date of Pooling and Servicing Agreement and Cut-off Date:  Aggregate  Initial  Current  Principal  Amount  of  this
June 1, 2004                                               Senior Certificate as of the Cut-off Date:
                                                           $[_____________]

First Distribution Date:                                   Initial   Current   Principal   Amount  of  this  Senior
July 26, 2004                                              Certificate as of the Cut-off Date: $[_____________]

Master Servicer:                                           CUSIP: [____________]
Wells Fargo Bank, National Association

Assumed Final Distribution Date:
July 25, 2034
</TABLE>

                          BEAR STEARNS ARM TRUST 2004-5
                        MORTGAGE PASS-THROUGH CERTIFICATE
                                  SERIES 2004-5

         evidencing a fractional undivided interest in the distributions
         allocable to the Class [_-[A] Certificates with respect to a Trust Fund
         consisting primarily of a pool of adjustable rate mortgage loans
         secured by first liens on one-to-four family residential properties
         sold by STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.

                  This Certificate is payable solely from the assets of the
Trust Fund, and does not represent an obligation of or interest in Structured
Asset Mortgage Investments II Inc., the Master Servicer or the Trustee referred
to below or any of their affiliates or any other person. Neither this
Certificate nor the underlying Mortgage Loans are guaranteed or insured by any
governmental entity or by Structured Asset Mortgage Investments II Inc., the
Master Servicer or the Trustee or any of their affiliates or any other person.
None of Structured Asset Mortgage Investments II Inc., the Master Servicer or
any of their affiliates will have any obligation with respect to any certificate
or other obligation secured by or payable from payments on the Certificates.

                  This certifies that Cede & Co. is the registered owner of the
Fractional Undivided Interest evidenced hereby in the beneficial ownership
interest of Certificates of the same Class as this Certificate in a trust (the
"Trust Fund") primarily consisting of adjustable rate mortgage loans secured by
first liens on one- to four- family residential properties (collectively, the
"Mortgage Loans") sold by Structured Asset Mortgage Investments II Inc. ("SAMI
II"). The

                                     A-1-2

<PAGE>

Mortgage Loans were sold by EMC Mortgage Corporation ("EMC") to SAMI II. Wells
Fargo Bank, National Association ("Wells Fargo") will act as master servicer of
the Mortgage Loans (the "Master Servicer", which term includes any successors
thereto under the Agreement referred to below). The Trust Fund was created
pursuant to the Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the "Agreement"), among EMC Mortgage Corporation, as seller and
company (the "Seller"), SAMI II, as depositor (the "Depositor"), Wells Fargo
Bank, National Association as master servicer and securities administrator (in
such capacity, the "Securities Administrator") and U.S. Bank National
Association, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein shall have the meaning ascribed to them in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.

                  Interest on this Certificate will accrue during the month
prior to the month in which a Distribution Date (as hereinafter defined) occurs
on the Current Principal Amount hereof at a per annum rate equal to the
Pass-Through Rate set forth above and as further described in the Agreement. The
Trustee will distribute on the 25th day of each month, or, if such 25th day is
not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided Interest evidenced by this Certificate and the amount (of interest and
principal, if any) required to be distributed to the Holders of Certificates of
the same Class as this Certificate. The Assumed Final Distribution Date is the
Distribution Date in the month immediately following the month of the latest
scheduled maturity date of any Mortgage Loan and is not likely to be the date on
which the Current Principal Amount of this Class of Certificates will be reduced
to zero.

                  Distributions on this Certificate will be made by the Trustee
by check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests
by notifying the Trustee in writing as specified in the Agreement by wire
transfer. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose and designated in
such notice. The Initial Current Principal Amount of this Certificate is set
forth above. The Current Principal Amount hereof will be reduced to the extent
of distributions allocable to principal hereon and any Realized Losses allocable
hereto.

                  This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates"),
issued in ten Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.

                  The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust Fund for payment hereunder and that
the Trustee is not liable to the

                                     A-1-3

<PAGE>

Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.

                  This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Certificateholders under the Agreement from time to time by the parties
thereto with the consent of the Holders of Certificates, evidencing Fractional
Undivided Interests aggregating not less than 51% of the Trust Fund (or in
certain cases, Holders of Certificates of affected Classes evidencing such
percentage of the Fractional Undivided Interests thereof). Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
with the Trustee upon surrender of this Certificate for registration of transfer
at the offices or agencies maintained by the Trustee for such purposes, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
in authorized denominations representing a like aggregate Fractional Undivided
Interest will be issued to the designated transferee.

                  The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Fractional Undivided Interest, as requested
by the Holder surrendering the same.

                  No service charge will be made to the Certificateholders for
any such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Depositor, the Master Servicer, the Trustee and any agent of any
of them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Depositor, the Master Servicer,
the Trustee or any such agent shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby (other than the obligations to make payments to
Certificateholders with respect to the termination of the Agreement) shall
terminate upon the earlier of (i) the later of the (A) final payment or other
liquidation (or Advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund and (B) disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due under the Agreement, or (ii) the optional repurchase
by the party named in the Agreement of all the Mortgage Loans and

                                     A-1-4

<PAGE>

other assets of the Trust Fund in accordance with the terms of the Agreement.
Such optional repurchase may be made only on or after the Distribution Date on
which the aggregate unpaid principal balance of the Mortgage Loans is less than
the percentage of the aggregate Outstanding Principal Balance specified in the
Agreement of the Mortgage Loans at the Cut-off Date. The exercise of such right
will effect the early retirement of the Certificates. In no event, however, will
the Trust Fund created by the Agreement continue beyond the expiration of 21
years after the death of certain persons identified in the Agreement.

                  Unless this Certificate has been countersigned by an
authorized signatory of the Trustee by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement, or be valid for any purpose.

                                     A-1-5

<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated: __________, 20__                          U.S. BANK NATIONAL ASSOCIATION
                                                 Not in its individual capacity
                                                 but solely as Trustee

                                                 By:____________________________
                                                 Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

                  This is one of the Class [_-[A] Certificates referred to in
the within-mentioned Agreement.

                                                  U.S. BANK NATIONAL ASSOCIATION
                                                  Authorized signatory of U.S.
                                                  Bank National Association, not
                                                  in its individual capacity
                                                  but solely as Trustee

                                                  By:___________________________
                                                  Authorized Signatory

<PAGE>

                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________ (Please print or
typewrite name and address including postal zip code of assignee) a Fractional
Undivided Interest evidenced by the within Mortgage Pass-Through Certificate and
hereby authorizes the transfer of registration of such interest to assignee on
the Certificate Register of the Trust Fund.

                  I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

Dated:                                    -------------------------------------
                                          Signature by or on behalf of assignor

                                          --------------------------------------
                                                   Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to
_____________________________________________.

                  This information is provided by    __________________, the
assignee named above, or ________________________, as its agent.

                                     A-1-7

<PAGE>

                                                                     EXHIBIT A-2
                         FORM OF CLASS[B-_] CERTIFICATE

                  THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
SENIOR CERTIFICATES, [AND THE CLASS [B-[_] CERTIFICATES] , AS DESCRIBED IN THE
AGREEMENT (AS DEFINED BELOW).

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

                  THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE
DECREASED BY THE PRINCIPAL PAYMENTS HEREON AND ANY REALIZED LOSSES ALLOCABLE
HERETO. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE
CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE
DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS
CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.

                  [FOR CLASS B-1, CLASS B-2,CLASS AND CLASS B-3] [UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, ANY CERTIFICATE ISSUED WILL BE 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 WILL BE 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.]

                  [FOR CLASS B-1, CLASS B-2,CLASS AND CLASS B-3][EACH BENEFICIAL
OWNER OF THIS CERTIFICATE OR ANY INTEREST HEREIN SHALL BE DEEMED TO HAVE
REPRESENTED, BY VIRTUE OF ITS ACQUISITION OR HOLDING OF THIS CERTIFICATE OR
INTEREST HEREIN, THAT EITHER (I) IT IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED OR SECTION 4975
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED ("PLAN"), OR INVESTING WITH
ASSETS OF A PLAN OR (II) IT HAS ACQUIRED AND IS HOLDING SUCH CERTIFICATE IN
RELIANCE ON PROHIBITED TRANSACTION EXEMPTION 90-30, AS AMENDED FROM TIME TO TIME
("EXEMPTION"), AND THAT IT UNDERSTANDS THAT THERE ARE CERTAIN CONDITIONS TO THE
AVAILABILITY OF THE EXEMPTION, INCLUDING THAT THE CERTIFICATE MUST BE RATED, AT
THE TIME OF PURCHASE, NOT LOWER THAN "BBB-" (OR ITS EQUIVALENT) BY STANDARD &
POOR'S, FITCH, INC. OR MOODY'S

                                     A-2-1

<PAGE>

INVESTORS SERVICE, INC., AND THE CERTIFICATE IS SO RATED OR (III) (1) IT IS AN
INSURANCE COMPANY, (2) THE SOURCE OF FUNDS USED TO ACQUIRE OR HOLD THE
CERTIFICATE OR INTEREST HEREIN IS AN "INSURANCE COMPANY GENERAL ACCOUNT", AS
SUCH TERM IS DEFINED IN PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 95-60,
AND (3) THE CONDITIONS IN SECTIONS I AND III OF PTCE 95-60 HAVE BEEN SATISFIED.]

         [FOR CLASS B-4, CLASS B-5 AND CLASS B-6][THIS CERTIFICATE HAS NOT BEEN
AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY
PURCHASING THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE REOFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES
ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"),
PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB,
WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO AN
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR"
WITHIN THE MEANING THEREOF IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE ACT OR ANY ENTITY IN WHICH ALL OF THE EQUITY OWNERS COME WITHIN SUCH
PARAGRAPHS PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,
SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM
PROVIDED IN THE AGREEMENT AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER
EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER
IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH
CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND
ANY OTHER APPLICABLE JURISDICTION.]

         [FOR CLASS B-4, CLASS B-5 AND CLASS B-6] [THIS CERTIFICATE MAY NOT BE
ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT WHICH IS SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED, UNLESS THE TRANSFEREE CERTIFIES OR
REPRESENTS THAT THE PROPOSED TRANSFER AND HOLDING OF A CERTIFICATE AND THE
SERVICING, MANAGEMENT AND OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT
RESULT IN ANY PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR
CLASS PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO,
PROHIBITED TRANSACTION EXEMPTION ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60
OR PTE 96-23 AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL OBLIGATIONS ON THE
PART OF

                                     A-2-2

THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE MASTER SERVICER OR THE TRUSTEE,
WHICH WILL BE DEEMED REPRESENTED BY AN OWNER OF A BOOK-ENTRY CERTIFICATE OR A
GLOBAL CERTIFICATE OR UNLESS THE OPINION SPECIFIED IN SECTION 5.07 OF THE
AGREEMENT IS PROVIDED.]

                                     A-2-3

<PAGE>

<TABLE>
<CAPTION>
<S>                                                         <C>
Certificate No.1                                           Variable Pass-Through Rate

Class [B-_] Subordinate

Date of Pooling and Servicing Agreement and Cut-off Date:  Aggregate  Initial  Current  Principal  Amount  of  this
June 1, 2004                                               Subordinate   Certificate   as  of  the  Cut-off   Date:
                                                           $[_________]

First Distribution Date:                                   Initial  Current  Principal  Amount of this  Subordinate
July 26, 2004                                              Certificate as of the Cut-off Date: $[_________]

Master Servicer:                                           CUSIP: [____________]
Wells Fargo Bank, National Association

Assumed Final Distribution Date:
July 25, 2034
</TABLE>

                          BEAR STEARNS ARM TRUST 2004-5
                        MORTGAGE PASS-THROUGH CERTIFICATE
                                  SERIES 2004-5

         evidencing a fractional undivided interest in the distributions
         allocable to the Class [B-_] Certificates with respect to a Trust Fund
         consisting primarily of a pool of adjustable rate mortgage loans
         secured by first liens on one-to-four family residential properties
         sold by STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.

                  This Certificate is payable solely from the assets of the
Trust Fund, and does not represent an obligation of or interest in Structured
Asset Mortgage Investments II Inc., the Master Servicer or the Trustee referred
to below or any of their affiliates or any other person. Neither this
Certificate nor the underlying Mortgage Loans are guaranteed or insured by any
governmental entity or by Structured Asset Mortgage Investments II Inc., the
Master Servicer or the Trustee or any of their affiliates or any other person.
None of Structured Asset Mortgage Investments II Inc., the Master Servicer or
any of their affiliates will have any obligation with respect to any certificate
or other obligation secured by or payable from payments on the Certificates.

                  This certifies that [_______] is the registered owner of the
Fractional Undivided Interest evidenced hereby in the beneficial ownership
interest of Certificates of the same Class as this Certificate in a trust (the
"Trust Fund") primarily consisting of adjustable rate mortgage loans secured by
first liens on one- to four- family residential properties (collectively, the
"Mortgage Loans") sold by Structured Asset Mortgage Investments II Inc. ("SAMI
II"). The

                                     A-2-4

<PAGE>

Mortgage Loans were sold by EMC Mortgage Corporation ("EMC") to SAMI II. Wells
Fargo Bank, National Association ("Wells Fargo") will act as master servicer of
the Mortgage Loans (the "Master Servicer", which term includes any successors
thereto under the Agreement referred to below). The Trust Fund was created
pursuant to the Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the "Agreement"), among EMC as seller and company (the
"Seller"), SAMI II, as depositor (the "Depositor"), Wells Fargo Bank, National
Association as master servicer and securities administrator (in such capacity,
the "Securities Administrator") and U.S. Bank National Association, as trustee
(the "Trustee") , a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, capitalized terms used
herein shall have the meaning ascribed to them in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of its acceptance hereof assents and by which such Holder is bound.

                  Interest on this Certificate will accrue during the month
prior to the month in which a Distribution Date (as hereinafter defined) occurs
on the Current Principal Amount hereof at a per annum rate equal to the
Pass-Through Rate set forth above and as further described in the Agreement. The
Trustee will distribute on the 25th day of each month, or, if such 25th day is
not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided Interest evidenced by this Certificate and the amount (of interest and
principal, if any) required to be distributed to the Holders of Certificates of
the same Class as this Certificate. The Assumed Final Distribution Date is the
Distribution Date in the month immediately following the month of the latest
scheduled maturity date of any Mortgage Loan and is not likely to be the date on
which the Current Principal Amount of this Class of Certificates will be reduced
to zero.

                  Distributions on this Certificate will be made by the Trustee
by check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests
by notifying the Trustee in writing as specified in the Agreement by wire
transfer. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose and designated in
such notice. The Initial Current Principal Amount of this Certificate is set
forth above. The Current Principal Amount hereof will be reduced to the extent
of distributions allocable to principal hereon and any Realized Losses allocable
hereto.

                  [For Class B-4, Class B-5 and Class][No transfer of this Class
[B-_] Certificate will be made unless such transfer is (i) exempt from the
registration requirements of the Securities act of 1933, as amended, and any
applicable state securities laws or is made in accordance with said Act and laws
and (ii) made in accordance with Section 5.02 of the Agreement. In the event
that such transfer is to be made the Trustee shall register such transfer if,
(i) made to a transferee who has provided the Trustee with evidence as to its
QIB status; or (ii) (A) the transferor has advised the Trustee in writing that
the Certificate is being transferred to an Institutional Accredited Investor and
(B) prior to such transfer the transferee furnishes to the

                                     A-2-5

<PAGE>

Trustee an Investment Letter; provided that if based upon an Opinion of Counsel
to the effect that (A) and (B) above are not sufficient to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and other
applicable laws, the Trustee shall as a condition of the registration of any
such transfer require the transferor to furnish such other certifications, legal
opinions or other information prior to registering the transfer of this
Certificate as shall be set forth in such Opinion of Counsel.]

                  [For Class B-1, Class B-2 and Class B-3] [Each beneficial
owner of this Certificate or any interest herein shall be deemed to have
represented, by virtue of its acquisition or holding of this certificate or
interest herein, that either (i) it is not an employee benefit plan subject to
the Employee Retirement Income Security Act of 1974, as amended or section 4975
of the Internal Revenue Code of 1986, as amended ("Plan"), or investing with
assets of a Plan or (ii) it has acquired and is holding such certificate in
reliance on Prohibited Transaction Exemption 90-30, as amended from time to time
("Exemption"), and that it understands that there are certain conditions to the
availability of the Exemption, including that the certificate must be rated, at
the time of purchase, not lower than "BBB-" (or its equivalent) by Standard &
Poor's, Fitch, Inc. or Moody's Investors Service, Inc., and the certificate is
so rated or (iii) (1) it is an insurance company, (2) the source of funds used
to acquire or hold the certificate or interest therein is an "insurance company
general account", as such term is defined in Prohibited Transaction Class
Exemption ("PTCE") 95-60, and (3) the conditions in Sections I and III of PTCE
95-60 have been satisfied.]

         [For Class B-4, Class B-5 and Class B-6] [This Certificate may not be
acquired directly or indirectly by, or on behalf of, an employee benefit plan or
other retirement arrangement which is subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended, or Section 4975 of the
Internal Revenue Code of 1986, as amended, unless the transferee certifies or
represents that the proposed transfer and holding of a Certificate and the
servicing, management and operation of the trust and its assets: (i) will not
result in any prohibited transaction which is not covered under an individual or
class prohibited transaction exemption, including, but not limited to,
Prohibited Transaction Exemption ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60
or PTE 96-23 and (ii) will not give rise to any additional obligations on the
part of the Depositor, the Securities Administrator, the Master Servicer or the
Trustee, which will be deemed represented by an owner of a Book-Entry
Certificate or a Global Certificate or unless the opinion specified in section
5.07 of the Agreement is provided.]

                  This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates"),
issued in ten Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.

                  The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust Fund for payment hereunder and that
the Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.

                                     A-2-6

<PAGE>

                  This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Certificateholders under the Agreement from time to time by the parties
thereto with the consent of the Holders of Certificates, evidencing Fractional
Undivided Interests aggregating not less than 51% of the Trust Fund (or in
certain cases, Holders of Certificates of affected Classes evidencing such
percentage of the Fractional Undivided Interests thereof). Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
with the Trustee upon surrender of this Certificate for registration of transfer
at the offices or agencies maintained by the Trustee for such purposes, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
in authorized denominations representing a like aggregate Fractional Undivided
Interest will be issued to the designated transferee.

                  The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Fractional Undivided Interest, as requested
by the Holder surrendering the same.

                  No service charge will be made to the Certificateholders for
any such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Depositor, the Master Servicer, the Trustee and any agent of any
of them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Depositor, the Master Servicer,
the Trustee or any such agent shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby (other than the obligations to make payments to
Certificateholders with respect to the termination of the Agreement) shall
terminate upon the earlier of (i) the later of the (A) final payment or other
liquidation (or Advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund and (B) disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due under the Agreement, or (ii) the optional repurchase
by the party named in the Agreement of all the Mortgage Loans and other assets
of the Trust Fund in accordance with the terms of the Agreement. Such optional
repurchase may be made only on or after the Distribution Date on which the
aggregate unpaid principal balance of the Mortgage Loans is less than the
percentage of the aggregate Outstanding

                                     A-2-7

<PAGE>

Principal Balance specified in the Agreement of the Mortgage Loans at the
Cut-off Date. The exercise of such right will effect the early retirement of the
Certificates. In no event, however, will the Trust Fund created by the Agreement
continue beyond the expiration of 21 years after the death of certain persons
identified in the Agreement.

                  Unless this Certificate has been countersigned by an
authorized signatory of the Trustee by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement, or be valid for any purpose.

                                     A-2-8

<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated: _________, 20__                            U.S. BANK NATIONAL ASSOCIATION
                                                  Not in its individual capacity
                                                  but solely as Trustee

                                                  By:__________________________
                                                  Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

                  This is one of the Class [B-_] Certificates referred to in the
within-mentioned Agreement.

                                     U.S. BANK NATIONAL ASSOCIATION
                                     Authorized signatory of U.S. Bank National
                                     Association, not in its individual capacity
                                     but solely as Trustee

                                     By: _______________________________________
                                         Authorized Signatory

                                     A-2-9

<PAGE>

                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________ (Please print or
typewrite name and address including postal zip code of assignee) a Fractional
Undivided Interest evidenced by the within Mortgage Pass-Through Certificate and
hereby authorizes the transfer of registration of such interest to assignee on
the Certificate Register of the Trust Fund.

                  I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

Dated:                      ____________________________________________________
                                     Signature by or on behalf of assignor

                            ____________________________________________________
                                     Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to
______________________________________________.

                  This information is provided by __________________, the
assignee named above, or ________________________, as its agent.

                                     A-2-10

<PAGE>

                                                                     EXHIBIT A-3

                         FORM OF CLASS R-[_] CERTIFICATE

                  THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A
NON-UNITED STATES PERSON, A PUBLICLY TRADED PARTNERSHIP OR A DISQUALIFIED
ORGANIZATION (AS DEFINED BELOW).

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

                  THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY
BY, OR ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT
WHICH IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED, UNLESS THE PROPOSED TRANSFEREE PROVIDES THE TRUSTEE WITH AN OPINION OF
COUNSEL ADDRESSED TO THE DEPOSITOR, TRUSTEE, THE DEPOSITOR, MASTER SERVICER AND
SECURITIES ADMINISTRATOR AND ON WHICH THEY MAY RELY THAT IS SATISFACTORY TO THE
TRUSTEE THAT THE PURCHASE OF CERTIFICATES ON BEHALF OF SUCH PERSON WILL NOT
RESULT IN OR CONSTITUTE A NONEXEMPT PROHIBITED TRANSACTION, IS PERMISSIBLE UNDER
APPLICABLE LAW AND WILL NOT GIVE RISE TO ANY ADDITIONAL OBLIGATIONS ON THE PART
OF THE DEPOSITOR, THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR OR THE
TRUSTEE.

                  ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE
MAY BE MADE ONLY IF THE PROPOSED TRANSFEREE OBTAINS THE PRIOR WRITTEN CONSENT OF
STRUCTURED ASSET MORTGAGE INVESTMENTS II INC. AND THE SECURITIES ADMINISTRATOR
AND PROVIDES A TRANSFER AFFIDAVIT TO STRUCTURED ASSET MORTGAGE INVESTMENTS II
INC., THE SECURITIES ADMINISTRATOR AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS
NOT (A) THE UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY
FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR
INSTRUMENTALITY OF ANY OF THE FOREGOING, (B) ANY ORGANIZATION (OTHER THAN A
COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX
IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX
IMPOSED BY SECTION 511 OF THE CODE, (C) ANY ORGANIZATION DESCRIBED IN SECTION
1381(A)(2)(C) OF THE CODE, (ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES
(A), (B) OR (C) BEING HEREIN REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR
(D) AN AGENT OF A DISQUALIFIED ORGANIZATION, (2) NO PURPOSE OF SUCH TRANSFER IS
TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX AND (3)

                                     A-3-1

<PAGE>

SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE
FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION
IN THE CERTIFICATE REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS
CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED
ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE
OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS
PARAGRAPH.

                                     A-3-2

<PAGE>

<TABLE>
<CAPTION>
<S>                                                         <C>
Certificate No.1

Class R-[_]

Date of Pooling and Servicing Agreement and Cut-off Date:  Aggregate  Initial  Current  Principal  Amount  of  this
June 1, 2004                                               Certificate as of the Cut-off Date:
                                                           $___________

First Distribution Date:                                   Initial Current  Principal Amount of this Certificate as
July 26, 2004                                              of the Cut-off Date: $_________

Master Servicer:                                           CUSIP: [_____________]
Wells Fargo Bank, National Association

Assumed Final Distribution Date:
July 25, 2034
</TABLE>

                          BEAR STEARNS ARM TRUST 2004-5
                        MORTGAGE PASS-THROUGH CERTIFICATE
                                  SERIES 2004-5

         evidencing a fractional undivided interest in the distributions
         allocable to the Class R-[_] Certificates with respect to a Trust Fund
         consisting primarily of a pool of adjustable rate mortgage loans
         secured by first liens on one-to-four family residential properties
         sold by STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.

                  This Certificate is payable solely from the assets of the
Trust Fund, and does not represent an obligation of or interest in Structured
Asset Mortgage Investments II Inc., the Master Servicer or the Trustee referred
to below or any of their affiliates or any other person. Neither this
Certificate nor the underlying Mortgage Loans are guaranteed or insured by any
governmental entity or by Structured Asset Mortgage Investments II Inc., the
Master Servicer or the Trustee or any of their affiliates or any other person.
None of Structured Asset Mortgage Investments II Inc., the Master Servicer or
any of their affiliates will have any obligation with respect to any certificate
or other obligation secured by or payable from payments on the Certificates.

                  This certifies that Bear, Stearns Securities Corp. is the
registered owner of the Fractional Undivided Interest evidenced hereby in the
beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust Fund") primarily consisting of adjustable
rate mortgages loans secured by first liens on one- to four- family residential
properties (collectively, the "Mortgage Loans") sold by Structured Asset
Mortgage Investments II Inc. ("SAMI II"). The Mortgage Loans were sold by EMC
Mortgage Corporation ("EMC") to

                                     A-3-3

<PAGE>

SAMI II. Wells Fargo Bank, National Association ("Wells Fargo") will act as
master servicer of the Mortgage Loans (the "Master Servicer", which term
includes any successors thereto under the Agreement referred to below). The
Trust Fund was created pursuant to the Pooling and Servicing Agreement dated as
of the Cut-off Date specified above (the "Agreement'), among EMC Mortgage
Corporation as seller and company (the "Seller"), SAMI II, as depositor(the
"Depositor"), Wells Fargo Bank, National Association as master servicer and
securities administrator (in such capacity, the "Securities Administrator") and
U.S. Bank National Association, as trustee (the "Trustee"), a summary of certain
of the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, capitalized terms used herein shall have the meaning ascribed to
them in the Agreement. This Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.

                  The Trustee will distribute on the 25th day of each month, or,
if such 25th day is not a Business Day, the immediately following Business Day
(each, a "Distribution Date"), commencing on the First Distribution Date
specified above, to the Person in whose name this Certificate is registered at
the close of business on the last Business Day of the calendar month preceding
the month of such Distribution Date, an amount equal to the product of the
Fractional Undivided Interest evidenced by this Certificate and the amount (of
principal, if any) required to be distributed to the Holders of Certificates of
the same Class as this Certificate. The Assumed Final Distribution Date is the
Distribution Date in the month immediately following the month of the latest
scheduled maturity date of any Mortgage Loan and is not likely to be the date on
which the Current Principal Amount of this Class of Certificates will be reduced
to zero.

                  Distributions on this Certificate will be made by the Trustee
by check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register, or if such Person so requests
by notifying the Trustee in writing as specified in the Agreement by wire
transfer. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose and designated in
such notice. The Initial Current Principal Amount of this Certificate is set
forth above. The Current Principal Amount hereof will be reduced to the extent
of distributions allocable to principal hereon and any Realized Losses allocable
hereto.

                  Each Holder of this Certificate will be deemed to have agreed
to be bound by the restrictions set forth in the Agreement to the effect that
(i) each person holding or acquiring any Ownership Interest in this Certificate
must be a United States Person and a Permitted Transferee, (ii) the transfer of
any Ownership Interest in this Certificate will be conditioned upon the delivery
to SAMI II, the Trustee and the Securities Administrator of, among other things,
an affidavit to the effect that it is a United States Person and Permitted
Transferee, (iii) any attempted or purported transfer of any Ownership Interest
in this Certificate in violation of such restrictions will be absolutely null
and void and will vest no rights in the purported transferee, and (iv) if any
person other than a United States Person and a Permitted Transferee acquires any
Ownership Interest in this Certificate in violation of such restrictions, then
the Depositor will have the right, in its sole discretion and without notice to
the Holder of this Certificate, to sell this Certificate to a purchaser selected
by the Depositor, which purchaser may be the Depositor, or any affiliate of the
Depositor, on such terms and conditions as the Depositor may choose.

                                     A-3-4

<PAGE>

                  This certificate may not be acquired directly or indirectly
by, or on behalf of, an employee benefit plan or other retirement arrangement
which is subject to title I of the Employee Retirement Income Security Act of
1974, as amended, and/or section 4975 of the Internal Revenue Code of 1986, as
amended, unless the proposed transferee provides the Trustee with an opinion of
counsel addressed to the Trustee, the Depositor, Master Servicer and the
Securities Administrator and on which they may rely (which shall not be at the
expense of the Trustee, the Depositor, the Master Servicer or the Securities
Administrator) which is acceptable to the Trustee, that the purchase of this
Certificate will not result in or constitute a nonexempt prohibited transaction,
is permissible under applicable law and will not give rise to any additional
fiduciary obligations on the part of the Depositor, the Master Servicer or the
Trustee.

                  This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates"),
issued in ten Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.

                  The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust Fund for payment hereunder and that
the Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.

                  This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Certificateholders under the Agreement from time to time by the parties
thereto with the consent of the Holders of Certificates, evidencing Fractional
Undivided Interests aggregating not less than 51% of the Trust Fund (or in
certain cases, Holders of Certificates of affected Classes evidencing such
percentage of the Fractional Undivided Interests thereof). Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
with the Trustee upon surrender of this Certificate for registration of transfer
at the offices or agencies maintained by the Trustee for such purposes, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
in authorized denominations representing a like aggregate Fractional Undivided
Interest will be issued to the designated transferee.

                  The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and

                                     A-3-5

<PAGE>

subject to certain limitations therein set forth, this Certificate is
exchangeable for one or more new Certificates evidencing the same Class and in
the same aggregate Fractional Undivided Interest, as requested by the Holder
surrendering the same.

                  No service charge will be made to the Certificateholders for
any such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Depositor, the Master Servicer, the Trustee and any agent of any
of them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Depositor, the Master Servicer,
the Trustee or any such agent shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby (other than the obligations to make payments to
Certificateholders with respect to the termination of the Agreement) shall
terminate upon the earlier of (i) the later of the (A) final payment or other
liquidation (or Advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund and (B) disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due under the Agreement, or (ii) the optional repurchase
by the party named in the Agreement of all the Mortgage Loans and other assets
of the Trust Fund in accordance with the terms of the Agreement. Such optional
repurchase may be made only on or after the Distribution Date on which the
aggregate unpaid principal balance of the Mortgage Loans is less than the
percentage of the aggregate Outstanding Principal Balance specified in the
Agreement of the Mortgage Loans at the Cut-off Date. The exercise of such right
will effect the early retirement of the Certificates. In no event, however, will
the Trust Fund created by the Agreement continue beyond the expiration of 21
years after the death of certain persons identified in the Agreement.

                  Unless this Certificate has been countersigned by an
authorized signatory of the Trustee by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement, or be valid for any purpose.

                                     A-3-6

<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated: _________, 20__                          U.S. BANK NATIONAL ASSOCIATION
                                                Not in its individual capacity
                                                but solely as Trustee

                                                By:_____________________________
                                                      Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

                  This is one of the Class R-[_] Certificates referred to in the
within-mentioned Agreement.

                                               U.S. BANK NATIONAL ASSOCIATION
                                               Authorized signatory of U.S. Bank
                                               National Association, not in its
                                               individual capacity but solely as
                                               Trustee

                                               By:______________________________
                                                        Authorized Signatory

                                     A-3-7

<PAGE>

                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________ (Please print or
typewrite name and address including postal zip code of assignee) a Fractional
Undivided Interest evidenced by the within Mortgage Pass-Through Certificate and
hereby authorizes the transfer of registration of such interest to assignee on
the Certificate Register of the Trust Fund.

                  I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

Dated:                         _________________________________________________
                                     Signature by or on behalf of assignor

                               _________________________________________________
                                     Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to
_____________________________________________.

                  This information is provided by __________________, the
assignee named above, or ________________________, as its agent.

                                     A-3-8

<PAGE>

                                                                       EXHIBIT B

                             MORTGAGE LOAN SCHEDULE

                  The Preliminary and Final Mortgage Loan Schedules shall set
forth the following information with respect to each Mortgage Loan:

(a) the loan number;

(b) the Mortgagor's name;

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

(d) the property type;

(e) the Mortgage Rate;

(f) the Servicer;

(g) the Servicing Rate;

(h) the Net Rate;

(i) the original term;

(j) the maturity date;

(k) the stated remaining term to maturity;

(l) the original principal balance;

(m) the first payment date;

(n) the principal and interest payment in effect as of the Cut-off Date;

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

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

(q) paid-through date;

(r) the insurer of any Primary Mortgage Insurance Policy;

(s) the Gross Margin, if applicable;

(t) the Maximum Lifetime Mortgage Rate, if applicable;

(u) the Minimum Lifetime Mortgage Rate, if applicable;

(v) the Periodic Rate Cap, if applicable;

                                      B-1

<PAGE>

(w) the number of days delinquent, if any;

(x) which Mortgage Loans adjust after an initial fixed-rate period of three,
five, seven or ten years;

(y) The Loan Group; and

(z)      The Prepayment Charge Loans.

Such schedule also shall set forth for all of the Mortgage Loans, the total
number of Mortgage Loans, the total of each of the amounts described under (k)
and (n) above, the weighted average by principal balance as of the Cut-off Date
of each of the rates described under (e), (f) and (g) above, and the weighted
average remaining term to maturity by unpaid principal balance as of the Cut-off
Date.

                                      B-2

<PAGE>

                                                                       EXHIBIT C
                                   [RESERVED]

                                      C-1

<PAGE>

                                                                       EXHIBIT D

                        REQUEST FOR RELEASE OF DOCUMENTS

To:      U.S. Bank National Association
         One Federal Street, 3rd Floor
         Boston, Massachusetts 02110

RE:      Pooling and Servicing Agreement, dated as of
         June 1, 2004, among SAMI II,
         Wells Fargo Bank,
         National Association, as Master Servicer
          and Securities Administrator,
         EMC Mortgage Corporation, as Seller
         and company and U.S. Bank National Association, as Trustee

         In connection with the administration of the Mortgage Loans held by you
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 and proceeds have been
                           deposited into the Custodial Account

_____             2.       Foreclosure

_____             3.       Substitution

_____             4.       Other Liquidation

_____             5.       Nonliquidation                   Reason:_____________

_____             6.       California Mortgage Loan paid in full

                                                      By:_______________________
                                                           (authorized signer)

                                                      Issuer:___________________
                                                      Address:__________________
                                                      Date:_____________________

                                      D-1

<PAGE>

                                                                       EXHIBIT E

                                FORM OF AFFIDAVIT

                                                      Affidavit pursuant to
                                                      Section 860E(e)(4) of the
                                                      Internal Revenue Code of
                                                      1986, as amended, and for
                                                      other purposes

STATE OF          )
                           ) ss:
COUNTY OF                  )

         [NAME OF OFFICER], being first duly sworn, deposes and says:

         1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of ] [the United States], on behalf of which he
makes this affidavit.

         2. That (i) the Investor is not a "disqualified organization" as
defined in Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code"), and will not be a disqualified organization as of [Closing Date]
[date of purchase]; (ii) it is not acquiring the Structured Asset Mortgage
Investments II Inc., Bear Stearns ARM Trust, Mortgage Pass-Through Certificates,
Series 2004-5 Class R-I and Class R-II Certificates (the "Residual
Certificates") for the account of a disqualified organization; (iii) it consents
to any amendment of the Pooling and Servicing Agreement that shall be deemed
necessary by Structured Asset Mortgage Investments II Inc. (upon advice of
counsel) to constitute a reasonable arrangement to ensure that the Residual
Certificates will not be owned directly or indirectly by a disqualified
organization; and (iv) it will not transfer such Residual Certificates unless
(a) it has received from the transferee an affidavit in substantially the same
form as this affidavit containing these same four representations and (b) as of
the time of the transfer, it does not have actual knowledge that such affidavit
is false.

         3. That the Investor is one of the following: (i) a citizen or resident
of the United States, (ii) a corporation or partnership (including an entity
treated as a corporation or partnership for federal income tax purposes) created
or organized in, or under the laws of, the United States or any state thereof or
the District of Columbia (except, in the case of a partnership, to the extent
provided in regulations), provided that no partnership or other entity treated
as a partnership for United States federal income tax purposes shall be treated
as a United States Person unless all persons that own an interest in such
partnership either directly or through any entity that is not a corporation for
United States federal income tax purposes are United States Persons, (iii) an
estate whose income is subject to United States federal income tax regardless of
its source, or (iv) a trust other than a "foreign trust," as defined in Section
7701 (a)(31) of the Code.

         4. That the Investor's taxpayer identification number is
______________________.

                                      E-1

<PAGE>

         5. That no purpose of the acquisition of the Residual Certificates is
to avoid or impede the assessment or collection of tax.

         6. That the Investor understands that, as the holder of the Residual
Certificates, the Investor may incur tax liabilities in excess of any cash flows
generated by such Residual Certificates.

         7. That the Investor intends to pay taxes associated with holding the
Residual Certificates as they become due.

         IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] this ____ day of _________, 20__.

                                             [NAME OF INVESTOR]

                                              By:________________________
                                                [Name of Officer]
                                                [Title of Officer]
                                                [Address of Investor for receipt
                                                 of distributions]

                                                 Address of Investor for receipt
                                                 of tax information:

                                      E-2

<PAGE>

         Personally appeared before me the above-named [Name of Officer], known
or proved to me to be the same person who executed the foregoing instrument and
to be the [Title of Officer] of the 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 _________, 20___.

NOTARY PUBLIC

COUNTY OF

STATE OF

My commission expires the ___ day of ___________________, 20___.

                                      E-3

<PAGE>

                                                                     EXHIBIT F-1

                            FORM OF INVESTMENT LETTER

                                                                          [Date]
[SELLER]

U.S. Bank National Association
One Federal Street, 3rd Floor
Boston, Massachusetts 02110

Structured Asset Mortgage Investments II Inc.
383 Madison Avenue
New York, New York 10179

          Re:  Structured Asset Mortgage Investments II Inc., Bear Stearns ARM
               Trust, Series 2004-5 Mortgage Pass-Through Certificates (the
               "Certificates"), including the Class B-4, Class B-5 and Class B-6
               Certificates (the "Privately Offered Certificates")

Dear Ladies and Gentlemen:

         In connection with our purchase of Privately Offered Certificates, we
confirm that:

                  (i)      we understand that the Privately Offered Certificates
                           are not being registered under the Securities Act of
                           1933, as amended (the "Act") or any applicable state
                           securities or "Blue Sky" laws, and are being sold to
                           us in a transaction that is exempt from the
                           registration requirements of such laws;

                  (ii)     any information we desired concerning the
                           Certificates, including the Privately Offered
                           Certificates, the trust in which the Certificates
                           represent the entire beneficial ownership interest
                           (the "Trust") or any other matter we deemed relevant
                           to our decision to purchase Privately Offered
                           Certificates has been made available to us;

                  (iii)    we are able to bear the economic risk of investment
                           in Privately Offered Certificates; we are an
                           institutional "accredited investor" as defined in
                           Section 501(a) of Regulation D promulgated under the
                           Act and a sophisticated institutional investor;

                  (iv)     we are acquiring Privately Offered Certificates for
                           our own account, not as nominee for any other person,
                           and not with a present view to any distribution or
                           other disposition of the Privately Offered
                           Certificates;

                  (v)      we agree the Privately Offered Certificates must be
                           held indefinitely by us (and may not be sold,
                           pledged, hypothecated or in any way disposed of)
                           unless subsequently registered under the Act and any
                           applicable state

                                     F-1-1

<PAGE>

                           securities or "Blue Sky" laws or an exemption from
                           the registration requirements of the Act and any
                           applicable state securities or "Blue Sky" laws is
                           available;

                  (vi)     we agree that in the event that at some future time
                           we wish to dispose of or exchange any of the
                           Privately Offered Certificates (such disposition or
                           exchange not being currently foreseen or
                           contemplated), we will not transfer or exchange any
                           of the Privately Offered Certificates unless:

                                    (A) (1) the sale is to an Eligible Purchaser
                           (as defined below), (2) if required by the Pooling
                           and Servicing Agreement (as defined below) a letter
                           to substantially the same effect as either this
                           letter or, if the Eligible Purchaser is a Qualified
                           Institutional Buyer as defined under Rule 144A of the
                           Act, the Rule 144A and Related Matters Certificate in
                           the form attached to the Pooling and Servicing
                           Agreement (as defined below) (or such other
                           documentation as may be acceptable to the Trustee) is
                           executed promptly by the purchaser and delivered to
                           the addressees hereof and (3) all offers or
                           solicitations in connection with the sale, whether
                           directly or through any agent acting on our behalf,
                           are limited only to Eligible Purchasers and are not
                           made by means of any form of general solicitation or
                           general advertising whatsoever; and

                                    (B) if the Privately Offered Certificate is
                           not registered under the Act (as to which we
                           acknowledge you have no obligation), the Privately
                           Offered Certificate is sold in a transaction that
                           does not require registration under the Act and any
                           applicable state securities or "blue sky" laws and,
                           if U.S. Bank National Association(the "Trustee") so
                           requests, a satisfactory Opinion of Counsel is
                           furnished to such effect, which Opinion of Counsel
                           shall be an expense of the transferor or the
                           transferee;

                  (vii)    we agree to be bound by all of the terms (including
                           those relating to restrictions on transfer) of the
                           Pooling and Servicing, pursuant to which the Trust
                           was formed; we have reviewed carefully and understand
                           the terms of the Pooling and Servicing Agreement;

                  (viii)   we either: (i) are not acquiring the Privately
                           Offered Certificate directly or indirectly by, or on
                           behalf of, an employee benefit plan or other
                           retirement arrangement which is subject to Title I of
                           the Employee Retirement Income Security Act of 1974,
                           as amended, or section 4975 of the Internal Revenue
                           Code of 1986, as amended, or (ii) are providing a
                           representation to the effect that the proposed
                           transfer and holding of a Privately Offered
                           Certificate and the servicing, management and
                           operation of the Trust and its assets: (I) will not
                           result in any prohibited transaction which is not
                           covered under an individual or class prohibited
                           transaction exemption, including, but not limited to,
                           Prohibited Transaction Exemption ("PTE") 84-14, PTE
                           91-38, PTE 90-1, PTE 95-60, or PTE 96-23 and (II)
                           will not give rise to any additional obligations on
                           the part of the Depositor, the

                                     F-1-2

<PAGE>

                           Master Servicer, the Securities Administrator or the
                           Trustee or (iii) have attached hereto the opinion
                           specified in Section 5.07 of the Agreement.

                  (ix)     We understand that each of the Privately Offered
                           Certificates bears, and will continue to bear, a
                           legend to substantiate the following effect: "THIS
                           CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
                           UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
                           "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES
                           LAWS. THE HOLDER HEREOF, BY PURCHASING THIS
                           CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE
                           REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED
                           ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
                           APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A
                           UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON
                           THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
                           INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
                           (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB
                           PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER
                           HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE,
                           PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
                           RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM
                           REGISTRATION PROVIDED BY RULE 144 UNDER THE
                           SECURITIES ACT (IF AVAILABLE) OR (3) IN CERTIFICATED
                           FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN
                           THE MEANING THEREOF IN RULE 501(a)(1), (2), (3) or
                           (7) OF REGULATION D UNDER THE ACT OR ANY ENTITY IN
                           WHICH ALL OF THE EQUITY OWNERS COME WITHIN SUCH
                           PARAGRAPHS PURCHASING NOT FOR DISTRIBUTION IN
                           VIOLATION OF THE SECURITIES ACT, SUBJECT TO (A) THE
                           RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN
                           THE FORM PROVIDED IN THE AGREEMENT AND (B) THE
                           RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE
                           ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE,
                           PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
                           SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH
                           CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
                           LAWS OF THE UNITED STATES AND ANY OTHER APPLICABLE
                           JURISDICTION. THIS CERTIFICATE MAY NOT BE ACQUIRED
                           DIRECTLY OR INDIRECTLY BY, OR ON BEHALF OF, AN
                           EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT
                           WHICH IS SUBJECT TO TITLE I OF THE EMPLOYEE
                           RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED,
                           OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986,
                           AS AMENDED, UNLESS THE PROPOSED TRANSFER AND HOLDING
                           OF A CERTIFICATE AND THE SERVICING, MANAGEMENT AND
                           OPERATION OF THE TRUST AND ITS ASSETS: (1) WILL NOT
                           RESULT IN ANY PROHIBITED

                                     F-1-3

<PAGE>

                           TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL
                           OR CLASS PROHIBITED TRANSACTION EXEMPTION, INCLUDING,
                           BUT NOT LIMITED TO, PROHIBITED TRANSACTION EXEMPTION
                           ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60 OR PTE
                           96-23 AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL
                           OBLIGATIONS ON THE PART OF THE DEPOSITOR, THE MASTER
                           SERVICER, THE SECURITIES ADMINISTRATOR OR THE
                           TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN OWNER
                           OF A BOOK-ENTRY CERTIFICATE OR A GLOBAL CERTIFICATE
                           OR UNLESS THE OPINION PROVIDED IN SECTION 5.07 OF THE
                           AGREEMENT IS PROVIDED."

         "Eligible Purchaser" means a corporation, partnership or other entity
which we have reasonable grounds to believe and do believe (i) can make
representations with respect to itself to substantially the same effect as the
representations set forth herein, and (ii) is either a Qualified Institutional
Buyer as defined under Rule 144A of the Act or an institutional "Accredited
Investor" as defined under Rule 501 of the Act.

         Terms not otherwise defined herein shall have the meanings assigned to
them in the Pooling and Servicing Agreement, dated as of June 1, 2004, among
Structured Asset Mortgage Investments II Inc., Wells Fargo Bank, National
Association as master servicer and securities administrator, EMC Mortgage
Corporation, as seller and company and U.S. Bank National Association, as
Trustee (the "Pooling and Servicing Agreement').

         If the Purchaser proposes that its Certificates be registered in the
name of a nominee on its behalf, the Purchaser has identified such nominee
below, and has caused such nominee to complete the Nominee Acknowledgment at the
end of this letter.

Name of Nominee (if any):_________________________

                                     F-1-4

<PAGE>

         IN WITNESS  WHEREOF,  this document has been executed by the
undersigned  who is duly authorized to do so on behalf of the undersigned
Eligible Purchaser on the ___ day of ________, 20___.

                                        Very truly yours,

                                        [PURCHASER]

                                        By:  __________________________________
                                                 (Authorized Officer)

                                        [By:     ______________________________
                                                 Attorney-in-fact]

                                     F-1-5

<PAGE>

                             Nominee Acknowledgment

         The undersigned hereby acknowledges and agrees that as to the
Certificates being registered in its name, the sole beneficial owner thereof is
and shall be the Purchaser identified above, for whom the undersigned is acting
as nominee.

                                               [NAME OF NOMINEE]

                                               By:______________________________
                                                    (Authorized Officer)

                                               [By:_____________________________
                                                     Attorney-in-fact]

                                     F-1-6

<PAGE>

                                                                     EXHIBIT F-2

                  FORM OF RULE 144A AND RELATED MATTERS CERTIFICATE

[SELLER] [Date]

U.S. Bank National Association

One Federal Street, 3rd Floor
Boston, Massachusetts 02110

Structured Asset Mortgage Investments II Inc.
383 Madison Avenue
New York, New York 10179

         Re:      Structured Asset Mortgage Investments II Inc., Bear Stearns
                  ARM Trust, Series 2004-5 Mortgage Pass-Through Certificates,
                  Class B-4, Class B-5, Class B-6 Certificates (the "Privately
                  Offered Certificates")

Dear Ladies and Gentlemen:

         In connection with our purchase of Privately Offered Certificates, the
undersigned certifies to each of the parties to whom this letter is addressed
that it is a qualified institutional buyer (as defined in Rule 144A under the
Securities Act of 1933, as amended (the "Act")) as follows:

1. It owned and/or invested on a discretionary basis eligible securities
(excluding affiliate's securities, bank deposit notes and CD's, loan
participations, repurchase agreements, securities owned but subject to a
repurchase agreement and swaps), as described below:

         Date: ______________, 20__ (must be on or after the close of its most
recent fiscal year)

         Amount: $ _____________________; and

2. The dollar amount set forth above is:

         a. greater than $100 million and the undersigned is one of the
following entities:

                  (x)  [_] an insurance company as defined in Section 2(13) of
                           the Act1; or

                                     F-2-1
-----------------------
   1     A purchase by an insurance company for one or more of its separate
         accounts, as defined by Section 2(a)(37) of the Investment Company Act
         of 1940, which are neither registered nor required to be registered
         thereunder, shall be deemed to be a purchase for the account of such
         insurance company.

                                     F-2-1

<PAGE>

                  (y)  [_] an investment company registered under the
                           Investment Company Act or any business development
                           company as defined in Section 2(a)(48) of the
                           Investment Company Act of 1940; or

                  (z)  [_] 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; or

                  (aa) [_] a plan (i) established and maintained by a state,
                           its political subdivisions, or any agency or
                           instrumentality of a state or its political
                           subdivisions, the laws of which permit the purchase
                           of securities of this type, for the benefit of its
                           employees and (ii) the governing investment
                           guidelines of which permit the purchase of securities
                           of this type; or

                  (bb) [_] a business development company as defined in
                           Section 202(a)(22) of the Investment Advisers Act of
                           1940; or

                  (cc) [_] a corporation (other than a U.S. bank, savings and
                           loan association or equivalent foreign institution),
                           partnership, Massachusetts or similar business trust,
                           or an organization described in Section 501(c)(3) of
                           the Internal Revenue Code; or

                  (dd) [_] a U.S. bank, savings and loan association or
                           equivalent foreign institution, which has an audited
                           net worth of at least $25 million as demonstrated in
                           its latest annual financial statements; or

                  (ee) [_]  an investment adviser registered under the
                           Investment Advisers Act; or

         b.  [_]  greater than $10 million, and the undersigned is a
                  broker-dealer registered with the SEC; or

         c.  [_]  less than $ 10 million, and the undersigned is a
                  broker-dealer registered with the SEC and will only purchase
                  Rule 144A securities in transactions in which it acts as a
                  riskless principal (as defined in Rule 144A); or

         d.  [_]  less than $100 million, and the undersigned is an investment
                  company registered under the Investment Company Act of 1940,
                  which, together with one or more registered investment
                  companies having the same or an affiliated investment adviser,
                  owns at least $100 million of eligible securities; or

         e.  [_]  less than $100 million, and the undersigned is an entity,
                  all the equity owners of which are qualified institutional
                  buyers.

         The undersigned further certifies that it is purchasing a Privately
Offered Certificate for its own account or for the account of others that
independently qualify as "Qualified Institutional

                                     F-2-2

<PAGE>

Buyers" as defined in Rule 144A. It is aware that the sale of the Privately
Offered Certificates is being made in reliance on its continued compliance with
Rule 144A. It is aware that the transferor may rely on the exemption from the
provisions of Section 5 of the Act provided by Rule 144A. The undersigned
understands that the Privately Offered Certificates may be resold, pledged or
transferred only to (i) a person reasonably believed to be a Qualified
Institutional Buyer that purchases for its own account or for the account of a
Qualified Institutional Buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance in Rule 144A, or (ii) an institutional
"accredited investor," as such term is defined under Rule 501 of the Act in a
transaction that otherwise does not constitute a public offering.

         The undersigned agrees that if at some future time it wishes to dispose
of or exchange any of the Privately Offered Certificates, it will not transfer
or exchange any of the Privately Offered Certificates to a Qualified
Institutional Buyer without first obtaining a Rule 144A and Related Matters
Certificate in the form hereof from the transferee and delivering such
certificate to the addressees hereof. Prior to making any transfer of Privately
Offered Certificates, if the proposed Transferee is an institutional "accredited
investor," the transferor shall obtain from the transferee and deliver to the
addressees hereof an Investment Letter in the form attached to the Pooling and
Servicing Agreement, dated as of June 1, 2004, among Structured Asset Mortgage
Investments II Inc., Wells Fargo Bank, National Association, EMC Mortgage
Corporation and U.S. Bank National Association, as Trustee, pursuant to
Certificates were issued.

         The undersigned certifies that it either: (i) is not acquiring the
Privately Offered Certificate directly or indirectly by, or on behalf of, an
employee benefit plan or other retirement arrangement which is subject to Title
I of the Employee Retirement Income Security Act of 1974, as amended, or section
4975 of the Internal Revenue Code of 1986, as amended, or (ii) is providing a
representation or an opinion of counsel to the effect that the proposed transfer
and holding of a Privately Offered Certificate and the servicing, management and
operation of the Trust and its assets: (I) will not result in any prohibited
transaction which is not covered under a prohibited transaction exemption,
including, but not limited to, Prohibited Transaction Exemption ("PTE") 84-14,
PTE 91-38, PTE 90-1, PTE 95-60, PTE 96-23 and (II) will not give rise to any
additional obligations on the part of the Depositor, the Master Servicer, the
Securities Administrator or the Trustee or (iii) has attached hereto the opinion
specified in Section 5.07 of the Agreement.

         If the Purchaser proposes that its Certificates be registered in the
name of a nominee on its behalf, the Purchaser has identified such nominee
below, and has caused such nominee to complete the Nominee Acknowledgment at the
end of this letter.

                                     F-2-3

<PAGE>

Name of Nominee (if any):

IN WITNESS WHEREOF, this document has been executed by the undersigned who is
duly authorized to do so on behalf of the undersigned Eligible Purchaser on the
____ day of ___________, 20___.

                                            Very truly yours,

                                            [PURCHASER]

                                            By:________________________________
                                                     (Authorized Officer)

                                            [By:_______________________________
                                                     Attorney-in-fact]

                                     F-2-4

<PAGE>

                             Nominee Acknowledgment

         The undersigned hereby acknowledges and agrees that as to the
Certificates being registered in its name, the sole beneficial owner thereof is
and shall be the Purchaser identified above, for whom the undersigned is acting
as nominee.

                                            [NAME OF NOMINEE]

                                            By:________________________________
                                                  (Authorized Officer)

                                            [By:_______________________________
                                                    Attorney-in-fact]

                                     F-2-5

<PAGE>

                                                                       EXHIBIT G

                           FORM OF CUSTODIAL AGREEMENT

                  THIS CUSTODIAL AGREEMENT (as amended and supplemented from
time to time, the "Agreement'), dated as of June 18, 2004, by and among U.S.
BANK NATIONAL ASSOCIATION, not individually but solely as trustee under the
Pooling and Servicing Agreement defined below (including its successors under
the Pooling and Servicing Agreement defined below, the "Trustee"), STRUCTURED
ASSET MORTGAGE INVESTMENTS II INC., as depositor (together with any successor in
interest, the "Depositor"), WELLS FARGO BANK, NATIONAL ASSOCIATION, as master
servicer and securities administrator (together with any successor in interest
or successor under the Pooling and Servicing Agreement referred to below, the
"Master Servicer") and WELLS FARGO BANK, NATIONAL ASSOCIATION, as custodian
(together with any successor in interest or any successor appointed hereunder,
the "Custodian").

                                WITNESSETH THAT:

                  WHEREAS, the Depositor, the Master Servicer, the Trustee and
EMC Mortgage Corporation (the "Seller") have entered into a Pooling and
Servicing Agreement, dated as of June 1, 2004, relating to the issuance of Bear
Stearns ARM Trust 2004-5, Mortgage Pass-Through Certificates, Series 2004-5 (as
in effect on the date of this agreement, the "Original Pooling and Servicing
Agreement," and as amended and supplemented from time to time, the "Pooling and
Servicing Agreement'); and

                  WHEREAS, the Custodian has agreed to act as agent for the
Trustee for the purposes of receiving and holding certain documents and other
instruments delivered by the Depositor or the Master Servicer under the Pooling
and Servicing Agreement and the Servicers under their respective Servicing
Agreements, all upon the terms and conditions and subject to the limitations
hereinafter set forth;

                  NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, the Trustee, the
Depositor, the Master Servicer and the Custodian hereby agree as follows:

                  ARTICLE I.        DEFINITIONS

                  Capitalized terms used in this Agreement and not defined
herein shall have the meanings assigned in the Original Pooling and Servicing
Agreement, unless otherwise required by the context herein.

                  ARTICLE  II.      CUSTODY OF MORTGAGE DOCUMENTS

                  2.1. Custodian to Act as Agent: Acceptance of Mortgage Files.
The Custodian, as the duly appointed custodial agent of the Trustee for these
purposes, acknowledges (subject to any exceptions noted in the Initial
Certification referred to in Section 2.3(a)), receipt of the Mortgage Files
relating to the Mortgage Loans identified on the schedule

                                      G-1

<PAGE>

attached hereto (the "Mortgage Files") and declares that it holds and will hold
such Mortgage Files as agent for the Trustee, in trust, for the use and benefit
of all present and future Certificateholders.

                  2.2. Recordation of Assignments. If any Mortgage File includes
one or more assignments of Mortgage to the Trustee in a state which is
specifically excluded from the Opinion of Counsel delivered by the Seller to the
Trustee and the Custodian pursuant to the provisions of Section 2.01 of the
Pooling and Servicing Agreement, each such assignment shall be delivered by the
Custodian to the Depositor for the purpose of recording it in the appropriate
public office for real property records, and the Depositor, at no expense to the
Custodian, shall promptly cause to be recorded in the appropriate public office
for real property records each such assignment of Mortgage and, upon receipt
thereof from such public office, shall return each such assignment of Mortgage
to the Custodian.

                  2.3. Review of Mortgage Files.

         (A) On or prior to the Closing Date, in accordance with Section 2.02 of
the Pooling and Servicing Agreement, the Custodian shall deliver to the Trustee
an Initial Certification in the form annexed hereto as Exhibit One evidencing
receipt (subject to any exceptions noted therein) of a Mortgage File for each of
the Mortgage Loans listed on the Schedule attached hereto (the "Mortgage Loan
Schedule").

         (B) Within 90 days of the Closing Date, the Custodian agrees, for the
benefit of Certificateholders, to review, in accordance with the provisions of
Section 2.02 of the Pooling and Servicing Agreement, each such document, and
shall deliver to the Depositor and the Trustee an Interim Certification in the
form annexed hereto as Exhibit Two to the effect that all such documents have
been executed and received and that such documents relate to the Mortgage Loans
identified on the Mortgage Loan Schedule, except for any exceptions listed on
Schedule A attached to such Interim Certification. The Custodian shall be under
no duty or obligation to inspect, review or examine said documents, instruments,
certificates or other papers to determine that the same are genuine,
enforceable, or appropriate for the represented purpose or that they have
actually been recorded or that they are other than what they purport to be on
their face.

         (C) Not later than 180 days after the Closing Date, the Custodian shall
review the Mortgage Files as provided in Section 2.02 of the Pooling and
Servicing Agreement and deliver to the Depositor and the Trustee a Final
Certification in the form annexed hereto as Exhibit Three evidencing the
completeness of the Mortgage Files.

         (D) In reviewing the Mortgage Files as provided herein and in the
Pooling and Servicing Agreement, the Custodian shall make no representation as
to and shall not be responsible to verify (i) the validity, legality,
enforceability, due authorization, recordability, sufficiency or genuineness of
any of the documents included in any Mortgage File or (ii) the collectibility,
insurability, effectiveness or suitability of any of the documents in any
Mortgage File.

                                      G-2

<PAGE>

         Upon receipt of written request from the Trustee, the Custodian shall
as soon as practicable supply the Trustee with a list of all of the documents
relating to the Mortgage Loans missing from the Mortgage Files.

                  2.4. Notification of Breaches of Representations and
Warranties. Upon discovery by the Custodian of a breach of any representation or
warranty made by the Depositor as set forth in the Pooling and Servicing
Agreement with respect to a Mortgage Loan relating to a Mortgage File, the
Custodian shall give prompt written notice to the Depositor, the related
Servicer and the Trustee.

                  2.5. Custodian to Cooperate: Release of Mortgage Files. Upon
receipt of written notice from the Trustee that the Seller has repurchased a
Mortgage Loan pursuant to Article II of the Pooling and Servicing Agreement, and
that the purchase price therefore has been deposited in the Master Servicer
Collection Account or the Distribution Account, then the Custodian agrees to
promptly release to the Seller the related Mortgage File.

                  Upon the Custodian's receipt of a request for release (a
"Request for Release") substantially in the form of Exhibit D to the Pooling and
Servicing Agreement signed by a Servicing Officer of the related Servicer
stating that it has received payment in full of a Mortgage Loan or that payment
in full will be escrowed in a manner customary for such purposes, the Custodian
agrees promptly to release to the related Servicer the related Mortgage File.
The Depositor shall deliver to the Custodian and the Custodian agrees to accept
the Mortgage Note and other documents constituting the Mortgage File with
respect to any Substitute Mortgage Loan.

                  From time to time as is appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any Primary Insurance Policy, the related Servicer (or if the Servicer does not,
the Master Servicer) shall deliver to the Custodian a Request for Release signed
by a Servicing Officer requesting that possession of all of the Mortgage File be
released to the related Servicer and certifying as to the reason for such
release and that such release will not invalidate any insurance coverage
provided in respect of the Mortgage Loan under any of the Insurance Policies.
Upon receipt of the foregoing, the Custodian shall deliver the Mortgage File to
the related Servicer. The related Servicer shall cause each Mortgage File or any
document therein so released to be returned to the Custodian when the need
therefore by the related Servicer no longer exists, unless (i) the Mortgage Loan
has been liquidated and the Liquidation Proceeds relating to the Mortgage Loan
have been deposited in the Master Servicer Collection Account or the
Distribution Account or (ii) the Mortgage File or such document has been
delivered to an attorney, or to a public trustee or other public official as
required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the related Servicer has delivered to the Custodian a
certificate of a Servicing Officer certifying as to the name and address of the
Person to which such Mortgage File or such document was delivered and the
purpose or purposes of such delivery.

                  At any time that a Servicer is required to deliver to the
Custodian a Request for Release, the Servicer shall deliver two copies of the
Request for Release if delivered in hard copy or the Servicer may furnish such
Request for Release electronically to the Custodian, in\

                                      G-2

<PAGE>

which event the Servicing Officer transmitting the same shall be deemed to have
signed the Request for Release. In connection with any Request for Release of a
Mortgage File because of a repurchase of a Mortgage Loan, such Request for
Release shall be followed by an assignment of mortgage, without recourse,
representation or warranty from the Trustee to the Seller and the related
Mortgage Note shall be endorsed without recourse by the Trustee and be returned
to the Seller. In connection with any Request for Release of a Mortgage File
because of the payment in full of a Mortgage Loan, such Request for Release
shall be accompanied by a certificate of satisfaction or other similar
instrument to be executed by or on behalf of the Trustee and returned to the
related Servicer.

                  2.6. Assumption Agreements. In the event that any assumption
agreement, substitution of liability agreement or sale of servicing agreement is
entered into with respect to any Mortgage Loan subject to this Agreement in
accordance with the terms and provisions of the Pooling and Servicing Agreement,
the Master Servicer, to the extent provided in the related Servicing Agreement,
shall cause the related Servicer to notify the Custodian that such assumption or
substitution agreement has been completed by forwarding to the Custodian the
original of such assumption or substitution agreement, which shall be added to
the related Mortgage File and, for all purposes, shall be considered a part of
such Mortgage File to the same extent as all other documents and instruments
constituting parts thereof.

                  ARTICLE III.      CONCERNING THE CUSTODIAN

                  3.1. Custodian as Bailee and Agent of the Trustee. With
respect to each Mortgage Note, Mortgage and other documents constituting each
Mortgage File which are delivered to the Custodian, the Custodian is exclusively
the bailee and custodial agent of the Trustee and has no instructions to hold
any Mortgage Note or Mortgage for the benefit of any person other than the
Trustee and the Certificateholders and undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement and in the
Pooling and Servicing Agreement. Except upon compliance with the provisions of
Section 2.5 of this Agreement, no Mortgage Note, Mortgage or Mortgage File shall
be delivered by the Custodian to the Depositor, the Servicers or the Master
Servicer or otherwise released from the possession of the Custodian.

                  3.2. Reserved.

                  3.3. Custodian May Own Certificates. The Custodian in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights it would have if it were not Custodian.

                  3.4. Master Servicer to Pay Custodian's Fees and Expenses. The
Master Servicer covenants and agrees to pay to the Custodian from time to time,
and the Custodian shall be entitled to, reasonable compensation for all services
rendered by it in the exercise and performance of any of the powers and duties
hereunder of the Custodian, and the Master Servicer will pay or reimburse the
Custodian upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Custodian in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ), except any such expense, disbursement

                                      G-4

<PAGE>

or advance as may arise from its negligence or bad faith or to the extent that
such cost or expense is indemnified by the Depositor pursuant to the Pooling and
Servicing Agreement.

                  3.5. Custodian May Resign Trustee May Remove Custodian. The
Custodian may resign from the obligations and duties hereby imposed upon it as
such obligations and duties relate to its acting as Custodian of the Mortgage
Loans. Upon receiving such written notice of resignation, the Trustee shall
either take custody of the Mortgage Files itself and give prompt written notice
thereof to the Depositor, the Master Servicer and the Custodian, or promptly
appoint a successor Custodian by written instrument, in duplicate, one copy of
which instrument shall be delivered to the resigning Custodian and one copy to
the successor Custodian. If the Trustee shall not have taken custody of the
Mortgage Files and no successor Custodian shall have been so appointed and have
accepted appointment within 30 days after the giving of such written notice of
resignation, the resigning Custodian may petition any court of competent
jurisdiction for the appointment of a successor Custodian.

                  The Trustee may remove the Custodian at any time with the
consent of the Master Servicer. In such event, the Trustee shall appoint, or
petition a court of competent jurisdiction to appoint, a successor Custodian
hereunder. Any successor Custodian shall be a depository institution subject to
supervision or examination by federal or state authority, shall be able to
satisfy the other requirements contained in Section 3.7 and shall be
unaffiliated with the Servicer or the Depositor.

                  Any resignation or removal of the Custodian and appointment of
a successor Custodian pursuant to any of the provisions of this Section 3.5
shall become effective upon acceptance of appointment by the successor
Custodian. The Trustee shall give prompt notice to the Depositor and the Master
Servicer of the appointment of any successor Custodian. No successor Custodian
shall be appointed by the Trustee without the prior approval of the Depositor
and the Master Servicer.

                  3.6. Merger or Consolidation of Custodian. Any Person into
which the Custodian may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Custodian shall be a party, or any Person succeeding
to the business of the Custodian, shall be the successor of the Custodian
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.

                  3.7. Representations of the Custodian. The Custodian hereby
represents that it is a depository institution subject to supervision or
examination by a federal or state authority, has a combined capital and surplus
of at least $15,000,000 and is qualified to do business in the jurisdictions in
which it will hold any Mortgage File.

                  ARTICLE IV.       MISCELLANEOUS PROVISIONS

                  4.1. Notices. All notices, requests, consents and demands and
other communications required under this Agreement or pursuant to any other
instrument or document delivered hereunder shall be in writing and, unless
otherwise specifically provided, may be delivered personally, by telegram or
telex, or by registered or certified mail, postage prepaid,

                                      G-5

<PAGE>

return receipt requested, at the addresses specified on the signature page
hereof (unless changed by the particular party whose address is stated herein by
similar notice in writing), in which case the notice will be deemed delivered
when received.

                  4.2. Amendments. No modification or amendment of or supplement
to this Agreement shall be valid or effective unless the same is in writing and
signed by all parties hereto, and neither the Depositor, the Master Servicer nor
the Trustee shall enter into any amendment hereof except as permitted by the
Pooling and Servicing Agreement. The Trustee shall give prompt notice to the
Custodian of any amendment or supplement to the Pooling and Servicing Agreement
and furnish the Custodian with written copies thereof.

                  4.3. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED A CONTRACT
MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

                  4.4. Recordation of Agreement. To the extent permitted by
applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Depositor and at the Trust's expense, but
only upon direction accompanied by an Opinion of Counsel reasonably satisfactory
to the Depositor to the effect that the failure to effect such recordation is
likely to materially and adversely affect the interests of the
Certificateholders.

                  For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.

                  4.5. 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.

                                      G-6

<PAGE>

                  IN WITNESS WHEREOF, this Agreement is executed as of the date
first above written.

<TABLE>
<CAPTION>
<S>                                        <C>
Address:                                   U.S. BANK NATIONAL  ASSOCIATION,  not  individually but
                                           solely as Trustee
One Federal Street
3rd Floor
Boston, Massachusetts 02110                By:
                                           Name: Vaneta I. Bernard
Attention:                                 Title:   Vice President
Telecopy:
Confirmation:
Address:                                   STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.

383 Madison Avenue
New York, New York 10179                   By:
                                           Name:    Baron Silverstein
                                           Title:   Vice President

Address:                                   WELLS FARGO BANK,
                                           NATIONAL ASSOCIATION, as Master Servicer
9062 Old Annapolis Road
Columbia, Maryland 21045
                                           By:
                                           Name:  Stacey Taylor
                                           Title:   Assistant Vice President

Address:                                   WELLS FARGO BANK,
                                           NATIONAL ASSOCIATION, as Custodian
1015 10th Avenue, S.E.
Minneapolis, Minnesota 55414               By:
                                           Name:    Stacey Taylor
                                           Title:   Assistant Vice President
</TABLE>

                                      G-7

<PAGE>

STATE OF MASSACHUSETTS     )
                           )ss.:
COUNTY OF BOSTON           )

                  On the 18th day of June 2004 before me, a notary public in and
for said State, personally appeared Vaneta I. Bernard, known to me to be a Vice
President of U.S. Bank National Association, a national banking association that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation and acknowledged to me that such
corporation executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                                  ______________________________
                                                           Notary Public

[SEAL]

                                      G-8

<PAGE>

STATE OF MARYLAND          )
                           ) ss.:
COUNTY OF HOWARD           )

                  On the 18th day of June 2004 before me, a notary public in and
for said State, personally appeared Stacey Taylor, known to me to be an
Assistant Vice President of Wells Fargo Bank, National Association, a national
banking association that executed the within instrument, and also known to me to
be the person who executed it on behalf of said national banking association,
and acknowledged to me that such national banking association executed the
within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                           ____________________________________
                                                        Notary Public

[SEAL]

                                      G-9

<PAGE>

STATE OF NEW YORK          )
                           )ss.:
COUNTY OF NEW YORK         )

                  On the 18th day of June 2004 before me, a notary public in and
for said State, personally appeared Baron Silverstein, known to me to be a Vice
President of Structured Asset Mortgage Investments II Inc., one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                            ____________________________________
                                                   Notary Public

[Notarial Seal]

                                      G-10

<PAGE>

STATE OF MARYLAND                  )
                                   )ss.:
 COUNTY OF HOWARD                  )

                  On the 18th day of June 2004 before me, a notary public in and
for said State, personally appeared Stacey Taylor, known to me to be an
Assistant Vice President of Wells Fargo Bank, National Association, one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                                 ______________________________
                                                         Notary Public

[Notarial Seal]

                                      G-11

<PAGE>

                                   EXHIBIT ONE

                     FORM OF CUSTODIAN INITIAL CERTIFICATION

                                                                 June  __, 2004

U.S. Bank National Association     Structured Asset Mortgage Investments II Inc.
One Federal Street, 3rd Floor      383 Madison Avenue
Boston, Massachusetts 02110        New York, New York 10179

Attention: Structured Asset Mortgage Investments II Inc.
Bear Stearns ARM Trust 2004-5, Mortgage Pass-Through Certificates, Series 2004-5

                  Re:      Custodial Agreement, dated as of June 18, 2004, by
                           and among U.S. Bank National Association, Structured
                           Asset Mortgage Investments II Inc. and Wells Fargo
                           Bank , National Association relating to Bear Stearns
                           ARM Trust 2004-5, Mortgage Pass-Through Certificates,
                           Series
                           2004-5__________________________________________

Ladies and Gentlemen:

                  In accordance with Section 2.3(a) of the above-captioned
Custodial Agreement and, subject to Section 2.02(a) of the Pooling and Servicing
Agreement, the undersigned, as Custodian, hereby certifies that it has received
a Mortgage File (which contains an original Mortgage Note or lost note
affidavit) to the extent required in Section 2.01 of the Pooling and Servicing
Agreement with respect to each Mortgage Loan listed in the Mortgage Loan
Schedule, with any exceptions listed on Schedule A attached hereto.

                  Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement.

                                                     WELLS FARGO BANK, NATIONAL
                                                     ASSOCIATION

                                                     By:_______________________
                                                     Name:
                                                     Title:

<PAGE>

                                   EXHIBIT TWO

                     FORM OF CUSTODIAN INTERIM CERTIFICATION

                                                               ___________, 20__

U.S. Bank National Association     Structured Asset Mortgage Investments II Inc.
One Federal Street, 3rd Floor      383 Madison Avenue
Boston, Massachusetts 02110        New York, New York 10179

Attention:  Structured Asset Mortgage Investments II Inc.
Bear Stearns ARM Trust 2004-5, Mortgage Pass-Through Certificates, Series 2004-5

                  Re:      Custodial Agreement, dated as of June 18, 2004, by
                           and among U.S. Bank National Association, Structured
                           Asset Mortgage Investments II Inc. and Wells Fargo
                           Bank , National Association relating to Bear Stearns
                           ARM Trust 2004-5, Mortgage Pass-Through Certificates,
                           Series 2004-5

Ladies and Gentlemen:

                  In accordance with Section 2.3(b) of the above-captioned
Custodial Agreement and, subject to Section 2.02(a) of the Pooling and Servicing
Agreement, the undersigned, as Custodian, hereby certifies that it has received
a Mortgage File to the extent required pursuant to Section 2.01 of the Pooling
and Servicing Agreement with respect to each Mortgage Loan listed in the
Mortgage Loan Schedule, and it has reviewed the Mortgage File and the Mortgage
Loan Schedule and has determined that: all required documents have been executed
and received and that such documents relate to the Mortgage Loans identified on
the Mortgage Loan Schedule, with any exceptions listed on Schedule A attached
hereto.

                  Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement.

                                                      WELLS FARGO BANK, NATIONAL
                                                      ASSOCIATION

                                                     By:_______________________
                                                     Name:_____________________
                                                     Title:____________________

<PAGE>

                                  EXHIBIT THREE

                      FORM OF CUSTODIAN FINAL CERTIFICATION

                                                                   _______, 20__

U.S. Bank National Association     Structured Asset Mortgage Investments II Inc.
One Federal Street, 3rd Floor      383 Madison Avenue
Boston, Massachusetts 02110        New York, New York 10179

Attention: Structured Asset Mortgage Investments II Inc.
Bear Stearns ARM Trust 2004-5, Mortgage Pass-Through Certificates, Series 2004-5

                  Re:      Custodial Agreement, dated as of June 18, 2004, by
                           and among U.S. Bank National Association, Structured
                           Asset Mortgage Investments II Inc. and Wells Fargo
                           Bank , National Association relating to Bear Stearns
                           ARM Trust 2004-5, Mortgage Pass-Through Certificates,
                           Series 2004-5

Ladies and Gentlemen:

                  In accordance with Section 2.3(c) of the above-captioned
Custodial Agreement and, subject to Section 2.02(b) of the Pooling and Servicing
Agreement, the undersigned, as Custodian, hereby certifies that it has received
a Mortgage File to the extent required pursuant to Section 2.01 of the Pooling
and Servicing Agreement with respect to each Mortgage Loan listed in the
Mortgage Loan Schedule, and it has reviewed the Mortgage File and the Mortgage
Loan Schedule and has determined that: all required documents have been executed
and received and that such documents relate to the Mortgage Loans identified on
the Mortgage Loan Schedule, with any exceptions listed on Schedule A attached
hereto.

                  Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement
or in the Pooling and Servicing Agreement, as applicable.

                                      WELLS FARGO BANK, NATIONAL ASSOCIATION

                                      By:_______________________________________
                                      Name:_____________________________________
                                      Title:____________________________________

<PAGE>

                                                                     EXHIBIT H-1

                               SERVICING AGREEMENT

                                      GMAC
                             [provided upon request]

                                     H-1-1

<PAGE>

                                                                       EXHIBIT I

                              ASSIGNMENT AGREEMENTS

                             [provided upon request]

                                      I-1

<PAGE>

                                                                       EXHIBIT J

                    FORM OF MORTGAGE LOAN PURCHASE AGREEMENT

                  MORTGAGE LOAN PURCHASE AGREEMENT, dated as of June 18, 2004,
as amended and supplemented by any and all amendments hereto (collectively, the
"Agreement"), by and between EMC MORTGAGE CORPORATION, a Delaware corporation
(the "Mortgage Loan Seller") and STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.,
a Delaware corporation (the "Purchaser").

                  Upon the terms and subject to the conditions of this
Agreement, the Mortgage Loan Seller agrees to sell, and the Purchaser agrees to
purchase, certain conventional, first lien mortgage loans secured primarily by
one- to four-family residential properties and individual condominium units
(collectively, the "Mortgage Loans") as described herein. The Purchaser intends
to deposit the Mortgage Loans into a trust fund (the "Trust Fund") and create
Bear Stearns ARM Trust 2004-5, Mortgage Pass-Through Certificates, Series 2004-5
(the "Certificates"), under a pooling and servicing agreement, to be dated as of
June 1, 2004 (the "Pooling and Servicing Agreement"), among the Purchaser, as
depositor, Wells Fargo Bank, National Association, as master servicer and
securities administrator, U.S. Bank National Association, as trustee (the
"Trustee") and EMC Mortgage Corporation, as seller and company.

                  The Purchaser has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (Number
333-106323) relating to its Mortgage Pass-Through Certificates and the offering
of certain series thereof (including certain classes of the Certificates) from
time to time in accordance with Rule 415 under the Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated thereunder
(the "Securities Act"). Such registration statement, when it became effective
under the Securities Act, and the prospectus relating to the public offering of
certain classes of the Certificates by the Purchaser (the "Public Offering"), as
each may be amended or supplemented from time to time pursuant to the Securities
Act or otherwise, are referred to herein as the "Registration Statement" and the
"Prospectus," respectively. The "Prospectus Supplement" shall mean that
supplement, dated June __, 2004, to the Prospectus, dated May 14, 2004, relating
to certain classes of the Certificates. With respect to the Public Offering of
certain classes of the Certificates, the Purchaser and Bear, Stearns & Co. Inc.
("Bear Stearns") have entered into a terms agreement dated as of June __, 2004
to an underwriting agreement dated July 29, 2003, between the Purchaser and Bear
Stearns (collectively, the "Underwriting Agreement").

                  Now, therefore, in consideration of the premises and the
mutual agreements set forth herein, the parties hereto agree as follows:

SECTION 1. Definitions. Certain terms are defined herein. Capitalized terms used
herein but not defined herein shall have the meanings specified in the Pooling
and Servicing Agreement. The following other terms are defined as follows:

<PAGE>

                  Acquisition Price: Cash in an amount equal to $______ (plus
$______ in accrued interest)2.

                  Bear Stearns: Bear, Stearns & Co. Inc.

                  Closing Date: June 18, 2004.

                  Cut-off Date: June 1, 2004.

                  Cut-off Date Balance: $614,060,538.

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

                  Due Date: With respect to each Mortgage Loan, the date in each
month on which its scheduled payment is due if such due date is the first day of
a month and otherwise is deemed to be the first day of the following month or
such other date specified in the related Servicing Agreement.

                  Master Servicer: Wells Fargo Bank, National Association.

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

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

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

                  Mortgage:  The  mortgage or deed of trust  creating a first
lien on an interest in real  property securing a Mortgage Note.

                  Mortgage File: The items referred to in Exhibit 1 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to such documents pursuant to this Agreement.

                  Mortgage Interest Rate: The annual rate of interest borne by a
Mortgage Note as stated therein.

                  Mortgagor: The obligor(s) on a Mortgage Note.

                  Net Rate: For each Mortgage Loan, the Mortgage Interest Rate
for such Mortgage Loan less the Servicing Fee Rate and the Lender-Paid PMI Rate
(if applicable).

                  Opinion of Counsel: A written opinion of counsel, who may be
counsel for the Mortgage Loan Seller or the Purchaser, reasonably acceptable to
the Trustee.

-------------
    2 Please contact Bear, Stearns & Co. Inc. for Purchase Price.

                                       2

<PAGE>

                  Person: Any legal person, including any individual,
corporation, partnership, joint venture, association, joint stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.

                  Purchase Price: With respect to any Mortgage Loan (or any
property acquired with respect thereto) required to be repurchased by the
Mortgage Loan Seller pursuant to this Agreement or Article II of the Pooling and
Servicing Agreement, an amount equal to the sum of (i)(a) 100% of the
Outstanding Principal Balance of such Mortgage Loan as of the date of repurchase
(or if the related Mortgaged Property was acquired with respect thereto, 100% of
the Outstanding Principal Balance at the date of the acquisition), plus (b)
accrued but unpaid interest on the Outstanding Principal Balance at the related
Mortgage Interest Rate, through and including the last day of the month of
repurchase, plus (c) any unreimbursed Monthly Advances and servicing advances
payable to the Servicer of the Mortgage Loan and (ii) any costs and damages (if
any) incurred by the Trust in connection with any violation of such Mortgage
Loan of any predatory lending laws.

                  Rating Agencies: Standard & Poor's and Moody's, each a
"Rating Agency."

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

                  Security Instrument: A written instrument creating a valid
first lien on a Mortgaged Property securing a Mortgage Note, which may be any
applicable form of mortgage, deed of trust, deed to secure debt or security
deed, including any riders or addenda thereto.

                  Servicing Agreements: Shall have the meaning assigned to such
term in the Pooling and Servicing Agreement.

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

                  Substitute Mortgage Loan: A mortgage loan substituted for a
Deleted Mortgage Loan which must meet on the date of such substitution the
requirements stated herein and in the Pooling and Servicing Agreement; upon such
substitution, such mortgage loan shall be a "Mortgage Loan" hereunder.

                  Value: The value of the Mortgaged Property at the time of
origination of the related Mortgage Loan, such value being the lesser of (i) the
value of such property set forth in an appraisal accepted by the applicable
originator of the Mortgage Loan or (ii) the sales price of such property at the
time of origination.

                  SECTION 2. Purchase and Sale of the Mortgage Loans and Related
Rights. (a) Upon satisfaction of the conditions set forth in Section 10 hereof,
the Mortgage Loan Seller agrees to sell, and the Purchaser agrees to purchase
Mortgage Loans having an aggregate outstanding principal balance as of the
Cut-off Date equal to the Cut-off Date Balance.

                  (b) The closing for the purchase and sale of the Mortgage
Loans and the closing for the issuance of the Certificates will take place on
the Closing Date at the office of the Purchaser's counsel in New York, New York
or such other place as the parties shall agree.

                                       3

<PAGE>

         (c) Upon the satisfaction of the conditions set forth in Section 10
hereof, on the Closing Date, the Purchaser shall pay to the Mortgage Loan Seller
the Acquisition Price for the Mortgage Loans in immediately available funds by
wire transfer to such account or accounts as shall be designated by the Mortgage
Loan Seller.

         (d) In addition to the foregoing, on the Closing Date the Mortgage Loan
Seller assigns to the Purchaser all of its right, title and interest in the
Servicing Agreements (other than its right to enforce the representations and
warranties set forth therein).

                  SECTION 3. Mortgage Loan Schedules. The Mortgage Loan Seller
agrees to provide to the Purchaser as of the date hereof a preliminary listing
of the Mortgage Loans (the "Preliminary Mortgage Loan Schedule") setting forth
the information listed on Exhibit 2 to this Agreement with respect to each of
the Mortgage Loans being sold by the Mortgage Loan Seller. If there are changes
to the Preliminary Mortgage Loan Schedule, the Mortgage Loan Seller shall
provide to the Purchaser as of the Closing Date a final schedule (the "Final
Mortgage Loan Schedule") setting forth the information listed on Exhibit 2 to
this Agreement with respect to each of the Mortgage Loans being sold by the
Mortgage Loan Seller to the Purchaser. The Final Mortgage Loan Schedule shall be
delivered to the Purchaser on the Closing Date, shall be attached to an
amendment to this Agreement to be executed on the Closing Date by the parties
hereto and shall be in form and substance mutually agreed to by the Mortgage
Loan Seller and the Purchaser (the "Amendment"). If there are no changes to the
Preliminary Mortgage Loan Schedule, the Preliminary Mortgage Loan Schedule shall
be the Final Mortgage Loan Schedule for all purposes hereof.

                  SECTION 4. Mortgage Loan Transfer.

                  (a) The Purchaser will be entitled to all scheduled payments
of principal and interest on the Mortgage Loans due after the Cut-off Date
(regardless of when actually collected) and all payments thereon, other than
scheduled principal and interest due on or before the Cut-off Date but received
after the Cut-off Date. The Mortgage Loan Seller will be entitled to all
scheduled payments of principal and interest on the Mortgage Loans due on or
before the Cut-off Date (including payments collected after the Cut-off Date)
and all payments thereon, other than scheduled principal and interest due after
the Cut-off Date but received on or before the Cut-off Date. Such principal
amounts and any interest thereon belonging to the Mortgage Loan Seller as
described above will not be included in the aggregate outstanding principal
balance of the Mortgage Loans as of the Cut-off Date as set forth on the Final
Mortgage Loan Schedule.

                  (b) Pursuant to various conveyancing documents to be executed
on the Closing Date and pursuant to the Pooling and Servicing Agreement, the
Purchaser will assign on the Closing Date all of its right, title and interest
in and to the Mortgage Loans to the Trustee for the benefit of the
Certificateholders. In connection with the transfer and assignment of the
Mortgage Loans, the Mortgage Loan Seller has delivered or will deliver or cause
to be delivered to the Trustee by the Closing Date or such later date as is
agreed to by the Purchaser and the Mortgage Loan Seller (each of the Closing
Date and such later date is referred to as a "Mortgage File Delivery Date"), the
items of each Mortgage File, provided, however, that in lieu of the foregoing,
the Mortgage Loan Seller may deliver the following documents, under the
circumstances set forth below: (w) in lieu of the original Security Instrument,
assignments to the Trustee or intervening assignments thereof which have been
delivered, are being delivered or will, upon receipt of recording information
relating to the Security Instrument required to be included thereon, be
delivered to recording offices for recording and have not been returned to the
Mortgage Loan Seller in time to permit their delivery as specified above, the
Mortgage Loan Seller may deliver a true copy thereof with a certification by the
Mortgage Loan Seller, on the face of such copy, substantially as follows:
"Certified to be a true and correct copy of the original, which has been
transmitted for recording"; (x) in lieu of the Security Instrument, assignments
to the Trustee or intervening assignments thereof, if the applicable
jurisdiction retains the originals of such documents (as evidenced by a
certification from the Mortgage Loan Seller to such effect) the Mortgage Loan
Seller may deliver photocopies of such documents containing an original
certification by the judicial or other governmental authority of the
jurisdiction where such documents were recorded; (y) in lieu of the Mortgage
Notes relating to the Mortgage Loans, each identified in the list delivered by
the Purchaser to the Trustee on the Closing Date and attached hereto as Exhibit
5, the Mortgage Loan Seller may deliver lost note affidavits and indemnities of
the Mortgage Loan Seller; and (z) the Mortgage Loan Seller shall not be required
to deliver intervening assignments or Mortgage Note endorsements between the
related Underlying Seller and the Mortgage Loan Seller, between the Mortgage
Loan Seller and the Depositor, and between the Depositor and the Trustee; and
provided further, however, that in the case of Mortgage Loans which have been
prepaid in full after the Cut-off Date and prior to the Closing Date, the
Mortgage Loan Seller, in lieu of delivering the above documents, may deliver to
the Trustee a certification by the Mortgage Loan Seller or the Master Servicer
to such effect and shall deposit all amounts paid in respect of such Mortgage
Loans in the Master Servicer Collection Account on the Closing Date. The
Mortgage Loan Seller shall deliver such original documents (including any
original documents as to which certified copies had previously been delivered)
or such certified copies to the Trustee promptly after they are received. The
Mortgage Loan Seller shall cause the Mortgage and intervening assignments, if
any, and the assignment of the Security Instrument to be recorded not later than
180 days after the Closing Date, unless such assignment is not required to be
recorded under the terms set forth in Section 6(a) hereof.

                                       5

<PAGE>

                  (c) In connection with the assignment of any Mortgage Loan
registered on the MERS(R) System, the Mortgage Loan Seller further agrees that
it will cause, at the Mortgage Loan Seller's own expense, within 30 days after
the Closing Date, the MERS(R) System to indicate that such Mortgage Loans have
been assigned by the Mortgage Loan Seller to the Purchaser and by the Purchaser
to the Trustee in accordance with this Agreement for the benefit of the
Certificateholders by including (or deleting, in the case of Mortgage Loans
which are repurchased in accordance with this Agreement) in such computer files
(a) the code in the field which identifies the specific Trustee and (b) the code
in the field "Pool Field" which identifies the series of the Certificates issued
in connection with such Mortgage Loans. The Mortgage Loan Seller further agrees
that it will not, and will not permit any Servicer or the Master Servicer to,
and the Master Servicer agrees that it will not, alter the codes referenced in
this paragraph with respect to any Mortgage Loan during the term of the Pooling
and Servicing Agreement unless and until such Mortgage Loan is repurchased in
accordance with the terms of the Pooling and Servicing Agreement.

                                       5

                  (d) The Mortgage Loan Seller and the Purchaser acknowledge
hereunder that all of the Mortgage Loans and the related servicing will
ultimately be assigned to U.S. Bank National Association, as Trustee for the
Certificateholders, on the date hereof.

                  SECTION 5. Examination of Mortgage Files.

                  (a) On or before the Mortgage File Delivery Date, the Mortgage
Loan Seller will have made the Mortgage Files available to the Purchaser or its
agent for examination which may be at the offices of the Trustee or the Mortgage
Loan Seller and/or the Mortgage Loan Seller's custodian. The fact that the
Purchaser or its agent has conducted or has failed to conduct any partial or
complete examination of the Mortgage Files shall not affect the Purchaser's
rights to demand cure, repurchase, substitution or other relief as provided in
this Agreement. In furtherance of the foregoing, the Mortgage Loan Seller shall
make the Mortgage Files available to the Purchaser or its agent from time to
time so as to permit the Purchaser to confirm the Mortgage Loan Seller's
compliance with the delivery and recordation requirements of this Agreement and
the Pooling and Servicing Agreement. In addition, upon request of the Purchaser,
the Mortgage Loan Seller agrees to provide to the Purchaser, Bear Stearns and to
any investors or prospective investors in the Certificates information regarding
the Mortgage Loans and their servicing, to make the Mortgage Files available to
the Purchaser, Bear Stearns and to such investors or prospective investors
(which may be at the offices of the Mortgage Loan Seller and/or the Mortgage
Loan Seller's custodian) and to make available personnel knowledgeable about the
Mortgage Loans for discussions with the Purchaser, Bear Stearns and such
investors or prospective investors, upon reasonable request during regular
business hours, sufficient to permit the Purchaser, Bear Stearns and such
investors or potential investors to conduct such due diligence as any such party
reasonably believes is appropriate.

                  (b) Pursuant to the Pooling and Servicing Agreement, on the
Closing Date the Custodian, on behalf of the Trustee, for the benefit of the
Certificateholders, will acknowledge receipt of each Mortgage Loan, by delivery
to the Mortgage Loan Seller, the Purchaser and the Trustee of an initial
certification in the form attached as Exhibit One to the Custodial Agreement.

                  (c) Pursuant to the Pooling and Servicing Agreement, within 90
days of the Closing Date (or, with respect to any Substitute Mortgage Loan,
within five Business Days after the receipt by the Trustee or Custodian
thereof), the Trustee will review or shall cause the Custodian to review items
of the Mortgage Files as set forth on Exhibit 1 and will deliver to the Mortgage
Loan Seller, the Purchaser and the Trustee an interim certification
substantially in the form of Exhibit Two to the Custodial Agreement. If the
Trustee or Custodian, as its agent, finds any document listed on Exhibit 1 not
to have been executed or received, or to be unrelated, determined on the basis
of the Mortgagor name, original principal balance and loan number, to the
Mortgage Loans identified in the Final Mortgage Loan Schedule or to appear
defective on its face (a "Material Defect"), the Trustee or the Custodian, as
its agent, shall promptly notify the Mortgage Loan Seller of such Material
Defect. The Mortgage Loan Seller shall correct or cure any such Material Defect
within 90 days from the date of notice from the Trustee or the Custodian, as its
agent, of the Material Defect and if the Mortgage Loan Seller fails to correct
or cure such Material Defect within such period and such defect materially and
adversely affects the interests of the Certificateholders in the related
Mortgage Loan, the Mortgage Loan Seller will, in accordance with the terms of
the Pooling and Servicing Agreement, within 90 days of the date

                                       6

<PAGE>

of notice, provide the Trustee with a Substitute Mortgage Loan (if within two
years of the Closing Date) or purchase the related Mortgage Loan at the
applicable Purchase Price; provided that, if such defect would cause the
Mortgage Loan to be other than a "qualified mortgage" as defined in Section
860G(a)(3) of the Code, any such cure, repurchase or substitution must occur
within 90 days from the date such breach was discovered; provided, however, that
if such defect relates solely to the inability of the Mortgage Loan Seller to
deliver the original Security Instrument or intervening assignments thereof, or
a certified copy because the originals of such documents, or a certified copy,
have not been returned by the applicable jurisdiction, the Mortgage Loan Seller
shall not be required to purchase such Mortgage Loan if the Mortgage Loan Seller
delivers such original documents or certified copy promptly upon receipt, but in
no event later than 360 days after the Closing Date. The foregoing repurchase
obligation shall not apply in the event that the Mortgage Loan Seller cannot
deliver such original or copy of any document submitted for recording to the
appropriate recording office in the applicable jurisdiction because such
document has not been returned by such office; provided that the Mortgage Loan
Seller shall instead deliver a recording receipt of such recording office or, if
such receipt is not available, a certificate confirming that such documents have
been accepted for recording, and delivery to the Trustee or the Custodian, as
its agent, shall be effected by the Mortgage Loan Seller within thirty days of
its receipt of the original recorded document.

                  (d) Pursuant to the Pooling and Servicing Agreement, within
180 days of the Closing Date (or, with respect to any Substitute Mortgage Loan,
within five Business Days after the receipt by the Trustee or Custodian thereof)
the Trustee will review or cause the Custodian to review items of the Mortgage
Files as set forth on Exhibit 1 and will deliver to the Mortgage Loan Seller,
the Purchaser and the Trustee a final certification substantially in the form of
Exhibit Three to the Custodial Agreement. If the Trustee or Custodian, as its
agent, finds a Material Defect, the Trustee or the Custodian, as its agent,
shall promptly notify the Mortgage Loan Seller of such Material Defect. The
Mortgage Loan Seller shall correct or cure any such Material Defect within 90
days from the date of notice from the Trustee or the Custodian, as its agent, of
the Material Defect and if the Mortgage Loan Seller fails to correct or cure
such Material Defect within such period and such defect materially and adversely
affects the interests of the Certificateholders in the related Mortgage Loan,
the Mortgage Loan Seller will, in accordance with the terms of the Pooling and
Servicing Agreement, within 90 days of the date of notice, provide the Trustee
with a Substitute Mortgage Loan (if within two years of the Closing Date) or
purchase the related Mortgage Loan at the applicable Purchase Price; provided
that, if such defect would cause the Mortgage Loan to be other than a "qualified
mortgage" as defined in Section 860G(a)(3) of the Code, any such cure,
repurchase or substitution must occur within 90 days from the date such breach
was discovered; provided, however, that if such defect relates solely to the
inability of the Mortgage Loan Seller to deliver the original Security
Instrument or intervening assignments thereof, or a certified copy because the
originals of such documents, or a certified copy, have not been returned by the
applicable jurisdiction, the Mortgage Loan Seller shall not be required to
purchase such Mortgage Loan if the Mortgage Loan Seller delivers such original
documents or certified copy promptly upon receipt, but in no event later than
360 days after the Closing Date. The foregoing repurchase obligation shall not
apply in the event that the Mortgage Loan Seller cannot deliver such original or
copy of any document submitted for recording to the appropriate recording office
in the applicable jurisdiction because such document has not been returned by
such office; provided that the Mortgage Loan Seller shall instead deliver a
recording receipt of such recording office or, if such receipt is not available,
a

                                       7

<PAGE>

certificate confirming that such documents have been accepted for recording,
and delivery to the Trustee or the Custodian, as its agent, shall be effected by
the Mortgage Loan Seller within thirty days of its receipt of the original
recorded document.

                  (e) At the time of any substitution, the Mortgage Loan Seller
shall deliver or cause to be delivered the Substitute Mortgage Loan, the related
Mortgage File and any other documents and payments required to be delivered in
connection with a substitution pursuant to the Pooling and Servicing Agreement.
At the time of any purchase or substitution, the Trustee in accordance with the
terms of the Pooling and Servicing Agreement shall (i) assign to the Mortgage
Loan Seller and cause the Custodian to release the documents (including, but not
limited to, the Mortgage, Mortgage Note and other contents of the Mortgage File)
in the possession of the Custodian relating to the Deleted Mortgage Loan and
(ii) execute and deliver such instruments of transfer or assignment, in each
case without recourse, as shall be necessary to vest in the Mortgage Loan Seller
title to such Deleted Mortgage Loan.

                  SECTION 6. Recordation of Assignments of Mortgage.

                  (a) The Mortgage Loan Seller shall cause each assignment of
the Security Instrument from the Mortgage Loan Seller to the Trustee to be
recorded not later than 180 days after the Closing Date, unless (a) such
recordation is not required by the Rating Agencies or an Opinion of Counsel has
been provided to the Trustee (with a copy to the Custodian) which states that
the recordation of such assignments is not necessary to protect the interests of
the Certificateholders in the related Mortgage Loans or (b) MERS is identified
on the Mortgage or a properly recorded assignment of the Mortgage, as the
Mortgagee of record solely as nominee for the Mortgage Loan Seller and its
successors and assigns; provided, however, notwithstanding the foregoing, each
assignment shall be submitted for recording by the Mortgage Loan Seller in the
manner described above, at no expense to the Trust or Trustee, upon the earliest
to occur of (i) reasonable direction by the Holders of Certificates evidencing
Fractional Undivided Interests aggregating not less than 25% of the Trust, (ii)
the occurrence of a Event of Default, (iii) the occurrence of a bankruptcy,
insolvency or foreclosure relating to the Mortgage Loan Seller and (iv) the
occurrence of a servicing transfer as described in Section 8.02 of the Pooling
and Servicing Agreement.

                  While each such Mortgage or assignment is being recorded, if
necessary, the Mortgage Loan Seller shall leave or cause to be left with the
Trustee a certified copy of such Mortgage or assignment. All customary recording
fees and reasonable expenses relating to the recordation of the assignments of
mortgage to the Trustee or the Opinion of Counsel, as the case may be, shall be
borne by the Mortgage Loan Seller.

(b) It is the express intent of the parties hereto that the conveyance of the
Mortgage Loans by the Mortgage Loan Seller to the Purchaser, as contemplated by
this Agreement be, and be treated as, a sale. It is, further, not the intention
of the parties that such conveyance be deemed a pledge of the Mortgage Loans by
the Mortgage Loan Seller to the Purchaser to secure a debt or other obligation
of the Mortgage Loan Seller. However, in the event that, notwithstanding the
intent of the parties, the Mortgage Loans are held by a court to continue to be
property of the Mortgage Loan Seller, then (a) this Agreement shall also be
deemed to be a security agreement within the meaning of Articles 8 and 9 of the
applicable

                                       8

<PAGE>

Uniform Commercial Code; (b) the transfer of the Mortgage Loans provided for
herein shall be deemed to be a grant by the Mortgage Loan Seller to the
Purchaser of a security interest in all of the Mortgage Loan Seller's right,
title and interest in and to the Mortgage Loans and all amounts payable to the
holders of the Mortgage Loans in accordance with the terms thereof and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, to the extent the Purchaser
would otherwise be entitled to own such Mortgage Loans and proceeds pursuant to
Section 4 hereof, including all amounts, other than investment earnings, from
time to time held or invested in any accounts created pursuant to the Pooling
and Servicing Agreement, whether in the form of cash, instruments, securities or
other property; (c) the possession by the Purchaser or the Trustee of Mortgage
Notes and such other items of property as constitute instruments, money,
negotiable documents or chattel paper shall be deemed to be "possession by the
secured party" for purposes of perfecting the security interest pursuant to
Section 9-313 (or comparable provision) of the applicable Uniform Commercial
Code; and (d) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the
Purchaser for the purpose of perfecting such security interest under applicable
law. Any assignment of the interest of the Purchaser pursuant to any provision
hereof or pursuant to the Pooling and Servicing Agreement shall also be deemed
to be an assignment of any security interest created hereby. The Mortgage Loan
Seller and the Purchaser shall, to the extent consistent with this Agreement,
take such actions as may be reasonably necessary to ensure that, if this
Agreement were deemed to create a security interest in the Mortgage Loans, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of the Pooling and Servicing Agreement.

                  SECTION 7. Representations and Warranties of Mortgage Loan
Seller Concerning the Mortgage Loans. The Mortgage Loan Seller hereby represents
and warrants to the Purchaser as of the Closing Date or such other date as may
be specified below with respect to each Mortgage Loan being sold by it:

                           (i) the information set forth in the Mortgage Loan
                  Schedule hereto is true and correct in all material respects
                  and the information provided to the Rating Agencies, including
                  the Mortgage Loan level detail, is true and correct according
                  to the Rating Agency requirements;

                           (ii) immediately prior to the transfer to the
                  Purchaser, the Mortgage Loan Seller was the sole owner of
                  beneficial title and holder of each Mortgage and Mortgage Note
                  relating to the Mortgage Loans and is conveying the same free
                  and clear of any and all liens, claims, encumbrances,
                  participation interests, equities, pledges, charges or
                  security interests of any nature and the Mortgage Loan Seller
                  has full right and authority to sell or assign the same
                  pursuant to this Agreement;

                           (iii) Each Mortgage Loan at the time it was made
                  complied in all material respects with all applicable laws and
                  regulations, including, without limitation, usury, equal
                  credit opportunity, disclosure and recording laws and all
                  predatory lending laws; and each Mortgage Loan has been
                  serviced in all material respects in accordance with all
                  applicable laws and regulations, including, without
                  limitation, usury, equal credit

                                       9

<PAGE>

                  opportunity, disclosure and recording laws and all predatory
                  lending laws and the terms of the related Mortgage Note, the
                  Mortgage and other loan documents;

                           (iv) there is no monetary default existing under any
                  Mortgage or the related Mortgage Note and there is no material
                  event which, with the passage of time or with notice and the
                  expiration of any grace or cure period, would constitute a
                  default, breach or event of acceleration; and neither the
                  Mortgage Loan Seller, any of its affiliates nor any servicer
                  of any related Mortgage Loan has taken any action to waive any
                  default, breach or event of acceleration; no foreclosure
                  action is threatened or has been commenced with respect to the
                  Mortgage Loan;

                           (v) the terms of the Mortgage Note and the Mortgage
                  have not been impaired, waived, altered or modified in any
                  respect, except by written instruments, (i) if required by law
                  in the jurisdiction where the Mortgaged Property is located,
                  or (ii) to protect the interests of the Trustee on behalf of
                  the Certificateholders;

                           (vi) no selection procedure reasonably believed by
                  the Mortgage Loan Seller to be adverse to the interests of the
                  Certificateholders was utilized in selecting the Mortgage
                  Loans;

                           (vii) each Mortgage is a valid and enforceable first
                  lien on the property securing the related Mortgage Note and
                  each Mortgaged Property is owned by the Mortgagor in fee
                  simple (except with respect to common areas in the case of
                  condominiums, PUDs and de minimis PUDs) or by leasehold for a
                  term longer than the term of the related Mortgage, subject
                  only to (i) the lien of current real property taxes and
                  assessments, (ii) covenants, conditions and restrictions,
                  rights of way, easements and other matters of public record as
                  of the date of recording of such Mortgage, such exceptions
                  being acceptable to mortgage lending institutions generally or
                  specifically reflected in the appraisal obtained in connection
                  with the origination of the related Mortgage Loan or referred
                  to in the lender's title insurance policy delivered to the
                  originator of the related Mortgage Loan and (iii) other
                  matters to which like properties are commonly subject which do
                  not materially interfere with the benefits of the security
                  intended to be provided by such Mortgage;

                           (viii) there is no mechanics' lien or claim for work,
                  labor or material affecting the premises subject to any
                  Mortgage which is or may be a lien prior to, or equal with,
                  the lien of such Mortgage except those which are insured
                  against by the title insurance policy referred to in (xiiii)
                  below;

                           (ix) as of the Cut-off Date, to the best of the
                  Mortgage Loan Seller's knowledge, there was no delinquent tax
                  or assessment lien against the property subject to any
                  Mortgage, except where such lien was being contested in good
                  faith and a stay had been granted against levying on the
                  property;

                           (x) there is no valid offset, defense or counterclaim
                  to any Mortgage Note or Mortgage, including the obligation of
                  the Mortgagor to pay the unpaid principal and interest on such
                  Mortgage Note;

                                       10

<PAGE>

                           (xi) to the best of the Mortgage Loan Seller's
                  knowledge, except to the extent insurance is in place which
                  will cover such damage, the physical property subject to any
                  Mortgage is free of material damage and is in good repair and
                  there is no proceeding pending or threatened for the total or
                  partial condemnation of any Mortgaged Property;

                           (xii) to the best of the Mortgage Loan Seller's
                  knowledge, the Mortgaged Property and all improvements thereon
                  comply with all requirements of any applicable zoning and
                  subdivision laws and ordinances;

                           (xiii) a lender's title insurance policy (on an ALTA
                  or CLTA form) or binder, or other assurance of title customary
                  in the relevant jurisdiction therefor in a form acceptable to
                  Fannie Mae or Freddie Mac, was issued on the date that each
                  Mortgage Loan was created by a title insurance company which,
                  to the best of the Mortgage Loan Seller's knowledge, was
                  qualified to do business in the jurisdiction where the related
                  Mortgaged Property is located, insuring the Mortgage Loan
                  Seller and its successors and assigns that the Mortgage is a
                  first priority lien on the related Mortgaged Property in the
                  original principal amount of the Mortgage Loan. The Mortgage
                  Loan Seller is the sole insured under such lender's title
                  insurance policy, and such policy, binder or assurance is
                  valid and remains in full force and effect, and each such
                  policy, binder or assurance shall contain all applicable
                  endorsements including a negative amortization endorsement, if
                  applicable;

                           (xiv) at the time of origination, each Mortgaged
                  Property was the subject of an appraisal which conformed to
                  the underwriting requirements of the originator of the
                  Mortgage Loan and, the appraisal is in a form acceptable to
                  Fannie Mae or FHLMC;

                           (xv) as of the Closing Date, the improvements on each
                  Mortgaged Property securing a Mortgage Loan is insured (by an
                  insurer which is acceptable to the Mortgage Loan Seller)
                  against loss by fire and such hazards as are covered under a
                  standard extended coverage endorsement in the locale in which
                  the Mortgaged Property is located, in an amount which is not
                  less than the lesser of the maximum insurable value of the
                  improvements securing such Mortgage Loan or the outstanding
                  principal balance of the Mortgage Loan, but in no event in an
                  amount less than an amount that is required to prevent the
                  Mortgagor from being deemed to be a co-insurer thereunder; if
                  the improvement on the Mortgaged Property is a condominium
                  unit, it is included under the coverage afforded by a blanket
                  policy for the condominium project; if upon origination of the
                  related Mortgage Loan, the improvements on the Mortgaged
                  Property were in an area identified as a federally designated
                  flood area, a flood insurance policy is in effect in an amount
                  representing coverage not less than the least of (i) the
                  outstanding principal balance of the Mortgage Loan, (ii) the
                  restorable cost of improvements located on such Mortgaged
                  Property or (iii) the maximum coverage available under federal
                  law; and each Mortgage obligates the Mortgagor thereunder to
                  maintain the insurance referred to above at the Mortgagor's
                  cost and expense;

                           (xvi) each Mortgage Loan constitutes a "qualified
                  mortgage" under Section 860G(a)(3)(A) of the Code and Treasury
                  Regulation Section 1.860G-2(a)(1);

                                       11

<PAGE>

                           (xvii) each Mortgage Loan was originated or funded by
                  (a) a savings and loan association, savings bank, commercial
                  bank, credit union, insurance company or similar institution
                  which is supervised and examined by a federal or state
                  authority (or originated by (i) a subsidiary of any of the
                  foregoing institutions which subsidiary is actually supervised
                  and examined by applicable regulatory authorities or (ii) a
                  mortgage loan correspondent of any of the foregoing and that
                  was originated pursuant to the criteria established by any of
                  the foregoing) or (b) a mortgagee approved by the Secretary of
                  Housing and Urban Development pursuant to sections 203 and 211
                  of the National Housing Act, as amended;

                           (xviii) none of the Mortgage Loans are (a) loans
                  subject to 12 CFR Part 226.31, 12 CFR Part 226.32 or 12 CFR
                  Part 226.34 of Regulation Z, the regulation implementing TILA,
                  which implements the Home Ownership and Equity Protection Act
                  of 1994, as amended or (b) classified and/or defined as a
                  "high cost home loan" under any federal, state or local law,
                  including, but not limited to, the States of Georgia or North
                  Carolina;

                           (xix) the information set forth in Schedule A of the
                  Prospectus Supplement with respect to the Mortgage Loans is
                  true and correct in all material respects; and

                           (xx) no Mortgage Loan is a High Cost Loan or Covered
                  Loan, as applicable (as such terms are defined in Standard &
                  Poor's LEVELS(R) Glossary, Version 5.6 Revised, Appendix E,
                  attached hereto as Exhibit 6) and no Mortgage Loan originated
                  on or after October 1, 2002 through March 6, 2003 is governed
                  by the "Georgia Fair Lending Act."

                  It is understood and agreed that the representations and
warranties set forth in this Section 7 will inure to the benefit of the
Purchaser, its successors and assigns, notwithstanding any restrictive or
qualified endorsement on any Mortgage Note or assignment of Mortgage or the
examination of any Mortgage File. Upon any substitution for a Mortgage Loan, the
representations and warranties set forth above shall be deemed to be made by the
Mortgage Loan Seller as to any Substitute Mortgage Loan as of the date of
substitution.

                  Upon discovery or receipt of notice by the Mortgage Loan
Seller, the Purchaser or the Trustee of a breach of any representation or
warranty of the Mortgage Loan Seller set forth in this Section 7 which
materially and adversely affects the value of the interests of the Purchaser,
the Certificateholders or the Trustee in any of the Mortgage Loans delivered to
the Purchaser pursuant to this Agreement, the party discovering or receiving
notice of such breach shall give prompt written notice to the others. In the
case of any such breach of a representation or warranty set forth in this
Section 7, within 90 days from the date of discovery by the Mortgage Loan
Seller, or the date the Mortgage Loan Seller is notified by the party
discovering or receiving notice of such breach (whichever occurs earlier), the
Mortgage Loan Seller will (i) cure such breach in all material respects, (ii)
purchase the affected Mortgage Loan at the applicable Purchase Price or (iii) if
within two years of the Closing Date, substitute a qualifying Substitute
Mortgage Loan in exchange for such Mortgage Loan. The obligations of the
Mortgage Loan Seller to cure, purchase or substitute a qualifying Substitute
Mortgage Loan shall constitute the

                                       12

<PAGE>

Purchaser's, the Trustee's and the Certificateholder's sole and exclusive remedy
under this Agreement or otherwise respecting a breach of representations or
warranties hereunder with respect to the Mortgage Loans, except for the
obligation of the Mortgage Loan Seller to indemnify the Purchaser for such
breach as set forth in and limited by Section 13 hereof.

                  Any cause of action against the Mortgage Loan Seller or
relating to or arising out of a breach by the Mortgage Loan Seller of any
representations and warranties made in this Section 7 shall accrue as to any
Mortgage Loan upon (i) discovery of such breach by the Mortgage Loan Seller or
notice thereof by the party discovering such breach and (ii) failure by the
Mortgage Loan Seller to cure such breach, purchase such Mortgage Loan or
substitute a qualifying Substitute Mortgage Loan pursuant to the terms hereof.

         SECTION 8. Representations and Warranties Concerning the Mortgage Loan
Seller. As of the date hereof and as of the Closing Date, the Mortgage Loan
Seller represents and warrants to the Purchaser as to itself in the capacity
indicated as follows:

         (a) the Mortgage Loan Seller (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and (ii) is qualified and in good standing to do business in each jurisdiction
where such qualification is necessary, except where the failure so to qualify
would not reasonably be expected to have a material adverse effect on the
Mortgage Loan Seller's business as presently conducted or on the Mortgage Loan
Sellers ability to enter into this Agreement and to consummate the transactions
contemplated hereby;

         (b) the Mortgage Loan Seller has full power to own its property, to
carry on its business as presently conducted and to enter into and perform its
obligations under this Agreement;

         (c) the execution and delivery by the Mortgage Loan Seller of this
Agreement have been duly authorized by all necessary action on the part of the
Mortgage Loan Seller; and neither the execution and delivery of this Agreement,
nor the consummation of the transactions herein contemplated, nor compliance
with the provisions hereof, will conflict with or result in a breach of, or
constitute a default under, any of the provisions of any law, governmental rule,
regulation, judgment, decree or order binding on the Mortgage Loan Seller or its
properties or the charter or by-laws of the Mortgage Loan Seller, except those
conflicts, breaches or defaults which would not reasonably be expected to have a
material adverse effect on the Mortgage Loan Seller's ability to enter into this
Agreement and to consummate the transactions contemplated hereby;

         (d) the execution, delivery and performance by the Mortgage Loan Seller
of this Agreement and the consummation of the transactions contemplated hereby
do not require the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any state,
federal or other governmental authority or agency, except those consents,
approvals, notices, registrations or other actions as have already been
obtained, given or made and, in connection with the recordation of the
Mortgages, powers of attorney or assignments of Mortgages not yet completed;

                                       13

<PAGE>

         (e) this Agreement has been duly executed and delivered by the Mortgage
Loan Seller and, assuming due authorization, execution and delivery by the
Purchaser, constitutes a valid and binding obligation of the Mortgage Loan
Seller enforceable against it in accordance with its terms (subject to
applicable bankruptcy and insolvency laws and other similar laws affecting the
enforcement of the rights of creditors generally);

         (f) there are no actions, suits or proceedings pending or, to the
knowledge of the Mortgage Loan Seller, threatened against the Mortgage Loan
Seller, before or by any court, administrative agency, arbitrator or
governmental body (i) with respect to any of the transactions contemplated by
this Agreement or (ii) with respect to any other matter which in the judgment of
the Mortgage Loan Seller will be determined adversely to the Mortgage Loan
Seller and will if determined adversely to the Mortgage Loan Seller materially
and adversely affect the Mortgage Loan Seller's ability to perform its
obligations under this Agreement; and the Mortgage Loan Seller is not in default
with respect to any order of any court, administrative agency, arbitrator or
governmental body so as to materially and adversely affect the transactions
contemplated by this Agreement; and

         (g) the Mortgage Loan Seller's Information (as defined in Section 13(a)
hereof) does not include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made, in light
of the circumstances under which they were made, not misleading.

         SECTION 9. Representations and Warranties Concerning the Purchaser. As
of the date hereof and as of the Closing Date, the Purchaser represents and
warrants to the Mortgage Loan Seller as follows:

         (a) the Purchaser (i) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and (ii) is
qualified and in good standing as a foreign corporation to do business in each
jurisdiction where such qualification is necessary, except where the failure so
to qualify would not reasonably be expected to have a material adverse effect on
the Purchaser's business as presently conducted or on the Purchaser's ability to
enter into this Agreement and to consummate the transactions contemplated
hereby;

         (b) the Purchaser has full corporate power to own its property, to
carry on its business as presently conducted and to enter into and perform its
obligations under this Agreement;

         (c) the execution and delivery by the Purchaser of this Agreement have
been duly authorized by all necessary corporate action on the part of the
Purchaser; and neither the execution and delivery of this Agreement, nor the
consummation of the transactions herein contemplated, nor compliance with the
provisions hereof, will conflict with or result in a breach of, or constitute a
default under, any of the provisions of any law, governmental rule, regulation,
judgment, decree or order binding on the Purchaser or its properties or the
articles of incorporation or by-laws of the Purchaser, except those conflicts,
breaches or defaults which would not reasonably be expected to have a material
adverse effect on the Purchaser's ability to enter into this Agreement and to
consummate the transactions contemplated hereby;

                                       14

<PAGE>

         (d) the execution, delivery and performance by the Purchaser of this
Agreement and the consummation of the transactions contemplated hereby do not
require the consent or approval of, the giving of notice to, the registration
with, or the taking of any other action in respect of, any state, federal or
other governmental authority or agency, except those consents, approvals,
notices, registrations or other actions as have already been obtained, given or
made;

         (e) this Agreement has been duly executed and delivered by the
Purchaser and, assuming due authorization, execution and delivery by the
Mortgage Loan Seller, constitutes a valid and binding obligation of the
Purchaser enforceable against it in accordance with its terms (subject to
applicable bankruptcy and insolvency laws and other similar laws affecting the
enforcement of the rights of creditors generally);

         (f) there are no actions, suits or proceedings pending or, to the
knowledge of the Purchaser, threatened against the Purchaser, before or by any
court, administrative agency, arbitrator or governmental body (i) with respect
to any of the transactions contemplated by this Agreement or (ii) with respect
to any other matter which in the judgment of the Purchaser will be determined
adversely to the Purchaser and will if determined adversely to the Purchaser
materially and adversely affect the Purchaser's ability to perform its
obligations under this Agreement; and the Purchaser is not in default with
respect to any order of any court, administrative agency, arbitrator or
governmental body so as to materially and adversely affect the transactions
contemplated by this Agreement; and

         (g) the Purchaser's Information (as defined in Section 13(b) hereof)
does not include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.

         SECTION 10. Conditions to Closing.

         (a) The obligations of the Purchaser under this Agreement will be
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions:

                  (i) Each of the obligations of the Mortgage Loan Seller
         required to be performed at or prior to the Closing Date pursuant to
         the terms of this Agreement shall have been duly performed and complied
         with in all material respects; all of the representations and
         warranties of the Mortgage Loan Seller under this Agreement shall be
         true and correct as of the date or dates specified in all material
         respects; and no event shall have occurred which, with notice or the
         passage of time, would constitute a default under this Agreement, or
         the Pooling and Servicing Agreement; and the Purchaser shall have
         received certificates to that effect signed by authorized officers of
         the Mortgage Loan Seller.

                  (ii) The Purchaser shall have received all of the following
         closing documents, in such forms as are agreed upon and reasonably
         acceptable to the Purchaser, duly executed by all signatories (other
         than the Purchaser) as required pursuant to the respective terms
         thereof:

                                       15

<PAGE>

                  (1)      If required pursuant to Section 3 hereof, the
                           Amendment dated as of the Closing Date and any
                           documents referred to therein;

                  (2)      If required pursuant to Section 3 hereof, the Final
                           Mortgage Loan Schedule containing the information set
                           forth on Exhibit 2 hereto, one copy to be attached to
                           each counterpart of the Amendment;

                  (3)      The Pooling and Servicing Agreement, in form and
                           substance reasonably satisfactory to the Trustee and
                           the Purchaser, and all documents required thereby
                           duly executed by all signatories;

                  (4)      A certificate of an officer of the Mortgage Loan
                           Seller dated as of the Closing Date, in a form
                           reasonably acceptable to the Purchaser, and attached
                           thereto the resolutions of the Mortgage Loan Seller
                           authorizing the transactions contemplated by this
                           Agreement, together with copies of the charter and
                           by-laws of the Mortgage Loan Seller;

                  (5)      One or more opinions of counsel from the Mortgage
                           Loan Seller's counsel otherwise in form and substance
                           reasonably satisfactory to the Purchaser, the Trustee
                           and each Rating Agency;

                  (6)      A letter from each of the Rating Agencies giving each
                           Class of Certificates set forth on Schedule A the
                           rating set forth on Schedule A; and

                  (7)      Such other documents, certificates (including
                           additional representations and warranties) and
                           opinions as may be reasonably necessary to secure the
                           intended ratings from each Rating Agency for the
                           Certificates.

                  (iii) The Certificates to be sold to Bear Stearns pursuant to
         the Underwriting Agreement and the Purchase Agreement shall have been
         issued and sold to Bear Stearns.

                  (iv) The Mortgage Loan Seller shall have furnished to the
         Purchaser such other certificates of its officers or others and such
         other documents and opinions of counsel to evidence fulfillment of the
         conditions set forth in this Agreement and the transactions
         contemplated hereby as the Purchaser and its counsel may reasonably
         request.

         (b) The obligations of the Mortgage Loan Seller under this Agreement
shall be subject to the satisfaction, on or prior to the Closing Date, of the
following conditions:

                  (i) The obligations of the Purchaser required to be performed
         by it on or prior to the Closing Date pursuant to the terms of this
         Agreement shall have been duly performed and complied with in all
         material respects, and all of the representations and warranties of the
         Purchaser under this Agreement shall be true and correct in all
         material

                                       16

<PAGE>

         respects as of the date hereof and as of the Closing Date, and no event
         shall have occurred which would constitute a breach by it of the terms
         of this Agreement, and the Mortgage Loan Seller shall have received a
         certificate to that effect signed by an authorized officer of the
         Purchaser.

                  (ii) The Mortgage Loan Seller shall have received copies of
         all of the following closing documents, in such forms as are agreed
         upon and reasonably acceptable to the Mortgage Loan Seller, duly
         executed by all signatories other than the Mortgage Loan Seller as
         required pursuant to the respective terms thereof:

                  (1)      If required pursuant to Section 3 hereof, the
                           Amendment dated as of the Closing Date and any
                           documents referred to therein;

                  (2)      The Pooling and Servicing Agreement, in form and
                           substance reasonably satisfactory to the Mortgage
                           Loan Seller, and all documents required thereby duly
                           executed by all signatories;

                  (3)      A certificate of an officer of the Purchaser dated as
                           of the Closing Date, in a form reasonably acceptable
                           to the Mortgage Loan Seller, and attached thereto the
                           resolutions of the Purchaser authorizing the
                           transactions contemplated by this Agreement and the
                           Pooling and Servicing Agreement, together with copies
                           of the Purchaser's articles of incorporation, and
                           evidence as to the good standing of the Purchaser
                           dated as of a recent date;

                  (4)      One or more opinions of counsel from the Purchaser's
                           counsel in form and substance reasonably satisfactory
                           to the Mortgage Loan Seller;

                  (5)      Such other documents, certificates (including
                           additional representations and warranties) and
                           opinions as may be reasonably necessary to secure the
                           intended rating from each Rating Agency for the
                           Certificates;

         SECTION 11. Fees and Expenses. Subject to Section 16 hereof, the
Mortgage Loan Seller shall pay on the Closing Date or such later date as may be
agreed to by the Purchaser (i) the fees and expenses of the Mortgage Loan
Seller's attorneys and the reasonable fees and expenses of the Purchaser's
attorneys, (ii) the fees and expenses of Deloitte & Touche LLP, (iii) the fee
for the use of Purchaser's Registration Statement based on the aggregate
original principal amount of the Certificates and the filing fee of the
Commission as in effect on the date on which the Registration Statement was
declared effective, (iv) the fees and expenses including counsel's fees and
expenses in connection with any "blue sky" and legal investment matters, (v) the
fees and expenses of the Trustee which shall include without limitation the fees
and expenses of the Trustee (and the fees and disbursements of its counsel) with
respect to (A) legal and document review of this Agreement, the Pooling and
Servicing Agreement, the Certificates and related agreements, (B) attendance at
the Closing and (C) review of the Mortgage Loans to be performed by the
Custodian, (vi) the expenses for printing or otherwise reproducing the

                                       17

<PAGE>

Certificates, the Prospectus and the Prospectus Supplement, (vii) the fees and
expenses of each Rating Agency (both initial and ongoing), (viii) the fees and
expenses relating to the preparation and recordation of mortgage assignments
(including intervening assignments, if any and if available, to evidence a
complete chain of title from the originator to the Trustee) from the Mortgage
Loan Seller to the Trustee or the expenses relating to the Opinion of Counsel
referred to in Section 6(a) hereof, as the case may be, and (ix) Mortgage File
due diligence expenses and other out-of-pocket expenses incurred by the
Purchaser in connection with the purchase of the Mortgage Loans and by Bear
Stearns in connection with the sale of the Certificates. The Mortgage Loan
Seller additionally agrees to pay directly to any third party on a timely basis
the fees provided for above which are charged by such third party and which are
billed periodically.

         SECTION 12. Accountants' Letters.

         (a) Deloitte & Touche LLP will review the characteristics of a sample
of the Mortgage Loans described in the Final Mortgage Loan Schedule and will
compare those characteristics to the description of the Mortgage Loans contained
in the Prospectus Supplement under the captions "Summary of Prospectus
Supplement--The Mortgage Loans" and "The Mortgage Pool" and in Schedule A
thereto. The Mortgage Loan Seller will cooperate with the Purchaser in making
available all information and taking all steps reasonably necessary to permit
such accountants to complete the review and to deliver the letters required of
them under the Underwriting Agreement. Deloitte & Touche LLP will also confirm
certain calculations as set forth under the caption "Yield On The Certificates"
in the Prospectus Supplement.

         (b) To the extent statistical information with respect to the Master
Servicer's or a Servicer's servicing portfolio is included in the Prospectus
Supplement under the caption "The Master Servicer and the Servicers," a letter
from the certified public accountant for the Master Servicer and such Servicer
or Servicers will be delivered to the Purchaser dated the date of the Prospectus
Supplement, in the form previously agreed to by the Mortgage Loan Seller and the
Purchaser, with respect to such statistical information.

         SECTION 13. Indemnification.

         (a) The Mortgage Loan Seller shall indemnify and hold harmless the
Purchaser and its directors, officers and controlling persons (as defined in
Section 15 of the Securities Act) from and against any loss, claim, damage or
liability or action in respect thereof, to which they or any of them may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon (i) any untrue
statement of a material fact contained in the Mortgage Loan Seller's Information
as identified in Exhibit 3, the omission to state in the Prospectus Supplement
or Prospectus (or any amendment thereof or supplement thereto approved by the
Mortgage Loan Seller and in which additional Mortgage Loan Seller's Information
is identified), in reliance upon and in conformity with Mortgage Loan Seller's
Information a material fact required to be stated therein or necessary to make
the statements therein in light of the circumstances in which they were made,
not misleading, (ii) any representation or warranty assigned or made by the
Mortgage Loan Seller in Section 7 or Section 8 hereof being, or alleged to be,
untrue or incorrect, or (iii) any failure by the Mortgage Loan Seller to perform
its obligations under this Agreement; and the Mortgage Loan Seller shall
reimburse the Purchaser and each other indemnified party for any legal

                                       18

<PAGE>

and other expenses reasonably incurred by them in connection with investigating
or defending or preparing to defend against any such loss, claim, damage,
liability or action.

         The foregoing indemnity agreement is in addition to any liability which
the Mortgage Loan Seller otherwise may have to the Purchaser or any other such
indemnified party.

         (b) The Purchaser shall indemnify and hold harmless the Mortgage Loan
Seller and its respective directors, officers and controlling persons (as
defined in Section 15 of the Securities Act) from and against any loss, claim,
damage or liability or action in respect thereof, to which they or any of them
may become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon (i) any
untrue statement of a material fact contained in the Purchaser's Information as
identified in Exhibit 4, the omission to state in the Prospectus Supplement or
Prospectus (or any amendment thereof or supplement thereto approved by the
Purchaser and in which additional Purchaser's Information is identified), in
reliance upon and in conformity with the Purchaser's Information, a material
fact required to be stated therein or necessary to make the statements therein
in light of the circumstances in which they were made, not misleading, (ii) any
representation or warranty made by the Purchaser in Section 9 hereof being, or
alleged to be, untrue or incorrect, or (iii) any failure by the Purchaser to
perform its obligations under this Agreement; and the Purchaser shall reimburse
the Mortgage Loan Seller, and each other indemnified party for any legal and
other expenses reasonably incurred by them in connection with investigating or
defending or preparing to defend any such loss, claim, damage, liability or
action. The foregoing indemnity agreement is in addition to any liability which
the Purchaser otherwise may have to the Mortgage Loan Seller, or any other such
indemnified party,

         (c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the failure so to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 13 except to the extent that it has been prejudiced
in any material respect by such failure or from any liability which it may have
otherwise). In case any such action is brought against any indemnified party,
and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent it
may elect by written notice delivered to the indemnified party promptly (but, in
any event, within 30 days) after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such indemnified party or parties shall have reasonably concluded that
there is a conflict of interest between itself or themselves and the
indemnifying party in the conduct of the defense of any claim or that the
interests of the indemnified party or parties are not substantially co-extensive
with those of the indemnifying party (in which case the indemnifying

                                       19

<PAGE>

parties shall not have the right to direct the defense of such action on behalf
of the indemnified party or parties), in any of which events such fees and
expenses shall be borne by the indemnifying parties (provided, however, that the
indemnifying party shall be liable only for the fees and expenses of one counsel
in addition to one local counsel in the jurisdiction involved. Anything in this
subsection to the contrary notwithstanding, an indemnifying party shall not be
liable for any settlement or any claim or action effected without its written
consent; provided, however, that such consent was not unreasonably withheld.

         (d) If the indemnification provided for in paragraphs (a) and (b) of
this Section 13 shall for any reason be unavailable to an indemnified party in
respect of any loss, claim, damage or liability, or any action in respect
thereof, referred to in Section 13, then the indemnifying party shall in lieu of
indemnifying the indemnified party contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, in such proportion as shall be appropriate to reflect
the relative benefits received by the Mortgage Loan Seller on the one hand and
the Purchaser on the other from the purchase and sale of the Mortgage Loans, the
offering of the Certificates and the other transactions contemplated hereunder.
No person found liable for a fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who is not also found liable for such fraudulent misrepresentation.

         (e) The parties hereto agree that reliance by an indemnified party on
any publicly available information or any information or directions furnished by
an indemnifying party shall not constitute negligence, bad faith or willful
misconduct by such indemnified party.

         SECTION 14. Notices. All demands, notices and communications hereunder
shall be in writing but may be delivered by facsimile transmission subsequently
confirmed in writing. Notices to the Mortgage Loan Seller shall be directed to
EMC Mortgage Corporation, Mac Arthur Ridge II, 909 Hidden Ridge Drive, Suite
200, Irving, Texas 75038 (Telecopy: (972-444-2880)), and notices to the
Purchaser shall be directed to Structured Asset Mortgage Investments II Inc.,
383 Madison Avenue, New York, New York 10179 (Telecopy: (212-272-7206)),
Attention: Baron Silverstein; or to any other address as may hereafter be
furnished by one party to the other party by like notice. Any such demand,
notice or communication hereunder shall be deemed to have been received on the
date received at the premises of the addressee (as evidenced, in the case of
registered or certified mail, by the date noted on the return receipt) provided
that it is received on a business day during normal business hours and, if
received after normal business hours, then it shall be deemed to be received on
the next business day.

         SECTION 15. Transfer of Mortgage Loans. The Purchaser retains the right
to assign the Mortgage Loans and any or all of its interest under this Agreement
to the Trustee without the consent of the Mortgage Loan Seller, and, upon such
assignment, the Trustee shall succeed to the applicable rights and obligations
of the Purchaser hereunder; provided, however, the Purchaser shall remain
entitled to the benefits set forth in Sections 11, 13 and 17 hereto and as
provided in Section 2(a). Notwithstanding the foregoing, the sole and exclusive
right and remedy of the Trustee with respect to a breach of representation or
warranty of the Mortgage Loan Seller shall be the purchase or substitution
obligations of the Mortgage Loan Seller contained in Sections 5 and 7 hereof.

                                       20

<PAGE>

         SECTION 16. Termination. This Agreement may be terminated (a) by the
mutual consent of the parties hereto prior to the Closing Date, (b) by the
Purchaser, if the conditions to the Purchaser's obligation to close set forth
under Section 10(a) hereof are not fulfilled as and when required to be
fulfilled or (c) by the Mortgage Loan Seller, if the conditions to the Mortgage
Loan Seller's obligation to close set forth under Section 10(b) hereof are not
fulfilled as and when required to be fulfilled. In the event of termination
pursuant to clause (b), the Mortgage Loan Seller shall pay, and in the event of
termination pursuant to clause (c), the Purchaser shall pay, all reasonable
out-of-pocket expenses incurred by the other in connection with the transactions
contemplated by this Agreement. In the event of a termination pursuant to clause
(a), each party shall be responsible for its own expenses.

         SECTION 17. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Mortgage Loan Seller
submitted pursuant hereto, shall remain operative and in full force and effect
and shall survive delivery of the Mortgage Loans to the Purchaser (and by the
Purchaser to the Trustee). Subsequent to the delivery of the Mortgage Loans to
the Purchaser, the Mortgage Loan Seller's representations and warranties
contained herein with respect to the Mortgage Loans shall be deemed to relate to
the Mortgage Loans actually delivered to the Purchaser and included in the Final
Mortgage Loan Schedule and any Substitute Mortgage Loan and not to those
Mortgage Loans deleted from the Preliminary Mortgage Loan Schedule pursuant to
Section 3 hereof prior to the Closing.

         SECTION 18. Severability. If any provision of this Agreement shall be
prohibited or invalid under applicable law, the Agreement shall be ineffective
only to such extent, without invalidating the remainder of this Agreement.

         SECTION 19. Counterparts. This Agreement may be executed in
counterparts, each of which will be an original, but which together shall
constitute one and the same agreement.

         SECTION 20. Amendment. This Agreement cannot be amended or modified in
any manner without the prior written consent of each party.

         SECTION 21. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN
MADE AND PERFORMED IN THE STATE OF NEW YORK AND SHALL BE INTERPRETED IN
ACCORDANCE WITH THE LAWS OF SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES OF SUCH STATE.

         SECTION 22. Further Assurances. Each of the parties agrees to execute
and deliver such instruments and take such actions as another party may, from
time to time, reasonably request in order to effectuate the purpose and to carry
out the terms of this Agreement including any amendments hereto which may be
required by either Rating Agency.

         SECTION 23. Successors and Assigns.

         This Agreement shall bind and inure to the benefit of and be
enforceable by the Mortgage Loan Seller and the Purchaser and their permitted
successors and assigns and, to the extent

                                       21

<PAGE>

specified in Section 13 hereof, Bear Stearns, and their directors, officers and
controlling persons (within the meaning of federal securities laws). The
Mortgage Loan Seller acknowledges and agrees that the Purchaser may assign its
rights under this Agreement (including, without limitation, with respect to the
Mortgage Loan Seller's representations and warranties respecting the Mortgage
Loans) to the Trustee. Any person into which the Mortgage Loan Seller may be
merged or consolidated (or any person resulting from any merger or consolidation
involving the Mortgage Loan Seller), any person resulting from a change in form
of the Mortgage Loan Seller or any person succeeding to the business of the
Mortgage Loan Seller, shall be considered the "successor" of the Mortgage Loan
Seller hereunder and shall be considered a party hereto without the execution or
filing of any paper or any further act or consent on the part of any party
hereto. Except as provided in the two preceding sentences, this Agreement cannot
be assigned, pledged or hypothecated by either party hereto without the written
consent of the other parties to this Agreement and any such assignment or
purported assignment shall be deemed null and void.

         SECTION 24. The Mortgage Loan Seller. The Mortgage Loan Seller will
keep in full effect all rights as are necessary to perform their respective
obligations under this Agreement.

         SECTION 25. Entire Agreement. This Agreement contains the entire
agreement and understanding between the parties with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter hereof.

         SECTION 26. No Partnership. Nothing herein contained shall be deemed or
construed to create a partnership or joint venture between the parties hereto.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective duly authorized officers as of the date first
above written.

                                    EMC MORTGAGE CORPORATION

                                    By: ________________________________________
                                        Name:    Sue Stepanek
                                        Title:   Executive Vice President

                                    STRUCTURED ASSET MORTGAGE
                                    INVESTMENTS II INC.

                                    By: ________________________________________
                                        Name: Baron Silverstein
                                        Title:   Vice President

<PAGE>

                                    EXHIBIT 1

                            CONTENTS OF MORTGAGE FILE

         With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, which shall be available for inspection by the
Purchaser or its designee, and which shall be delivered to the Purchaser or its
designee pursuant to the terms of the Agreement.

         (a) with respect to each Mortgage Loan:

                  (i) The original Mortgage Note, endorsed without recourse to
         the order of the Trustee and showing an unbroken chain of endorsements
         from the originator thereof to the Person endorsing it to the Trustee,
         or a lost note affidavit together with a copy of the related Mortgage
         Note;

                  (ii) The original Mortgage and, if the related Mortgage Loan
         is a MOM Loan, noting the presence of the MIN and language indicating
         that such Mortgage Loan is a MOM Loan, which shall have been recorded
         (or if the original is not available, a copy), with evidence of such
         recording indicated thereon (or if the original is not available, a
         copy), with evidence of such recording indicated thereon (or if the
         original Security Instrument, assignments to the Trustee or intervening
         assignments thereof which have been delivered, are being delivered or
         will, upon receipt of recording information relating to the Security
         Instrument required to be included thereon, be delivered to recording
         offices for recording and have not been returned to the Seller in time
         to permit their recording as specified in Section 2.01(b) of the
         Pooling and Servicing Agreement, shall be in recordable form);

                  (iii) unless the Mortgage Loan is a MOM Loan, a certified copy
         of the assignment (which may be in the form of a blanket assignment if
         permitted in the jurisdiction in which the Mortgaged Property is
         located) to "U.S. Bank National Association, as Trustee", with evidence
         of recording with respect to each Mortgage Loan in the name of the
         Trustee thereon (or if (A) the original Security Instrument,
         assignments to the Trustee or intervening assignments thereof which
         have been delivered, are being delivered or will, upon receipt of
         recording information relating to the Security Instrument required to
         be included thereon, be delivered to recording offices for recording
         and have not been returned to the Seller in time to permit their
         delivery as specified in Section 2.01(b) of the Pooling and Servicing
         Agreement, the Seller may deliver a true copy thereof with a
         certification by the Seller, on the face of such copy, substantially as
         follows: "Certified to be a true and correct copy of the original,
         which has been transmitted for recording" or (B) the related Mortgaged
         Property is located in a state other than Maryland and an Opinion of
         Counsel has been provided as set forth in Section 2.01(b) of the
         Pooling and Servicing Agreement, shall be in recordable form);

                  (iv) all intervening assignments of the Security Instrument,
         if applicable and only to the extent available to the Mortgage Loan
         Seller with evidence of recording thereon;

                                     E-2-1

<PAGE>

                  (v) the original or a copy of the policy or certificate of
         primary mortgage guaranty insurance, to the extent available, if any;

                  (vi) the original policy of title insurance or mortgagee's
         certificate of title insurance or commitment or binder for title
         insurance; and

                  (vii) originals of all modification agreements, if applicable
         and available.

                                     E-2-2

<PAGE>

                                    EXHIBIT 2

                       MORTGAGE LOAN SCHEDULE INFORMATION

         The Preliminary and Final Mortgage Loan Schedules shall set forth the
following information with respect to each Mortgage Loan:

(a) the loan number;

(b) the Mortgagor's name;

(c) the city, state and zip code of the Mortgaged Property;

(d) the property type;

(e) the Mortgage Interest Rate;

(f) the Servicing Rate;

(g) the Net Rate;

(h) the original term;

(i) the maturity date;

(j) the stated remaining term to maturity;

(k) the original principal balance;

(1) the first payment date;

(m) the principal and interest payment in effect as of the Cut-off Date;

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

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

(p) paid-through date;

(q) the insurer of any Primary Mortgage Insurance Policy;

(r) the Gross Margin, if applicable;

(s) the Maximum Lifetime Mortgage Rate, if applicable;

(t) the Minimum Lifetime Mortgage Rate, if applicable;

(u) the Periodic Rate Cap, if applicable;

                                     E-2-1

<PAGE>

(v) the number of days delinquent, if any;

(w) which Mortgage Loans adjust after an initial fixed-rate period of three,
five, seven or ten years;

(x) the Loan Group;

(y) the Prepayment Charge Loans; and

(z) the Servicer.

Such schedule also shall set forth for all of the Mortgage Loans, the total
number of Mortgage Loans, the total of each of the amounts described under (k)
and (n) above, the weighted average by principal balance as of the Cut-off Date
of each of the rates described under (e), (f) and (g) above, and the weighted
average remaining term to maturity by unpaid principal balance as of the Cut-off
Date.

                                     E-2-2

<PAGE>

                                    EXHIBIT 3

                       MORTGAGE LOAN SELLER'S INFORMATION

         All information in the Prospectus Supplement described under the
following Sections: "SUMMARY OF PROSPECTUS SUPPLEMENT -- The Mortgage Loans,"
"THE MORTGAGE POOL" and "SCHEDULE A -- CERTAIN CHARACTERISTICS OF THE MORTGAGE
LOANS."

                                     E-3-1

<PAGE>

                                    EXHIBIT 4

                             PURCHASER'S INFORMATION

         All information in the Prospectus Supplement and the Prospectus, except
the Mortgage Loan Seller's Information.

                                     E-4-1

<PAGE>

                                    EXHIBIT 5

                             SCHEDULE OF LOST NOTES

                             Available Upon Request

                                      A-1

<PAGE>

                                    EXHIBIT 6

         APPENDIX E: Standard & Poor's Predatory Lending Categorization

         Standard & Poor's has categorized loans governed by anti-predatory
lending laws in the Jurisdictions listed below into three categories based upon
a combination of factors that include (a) the risk exposure associated with the
assignee liability and (b) the tests and thresholds set forth in those laws.
Note that certain loans classified by the relevant statute as Covered are
included in Standard & Poor's High Cost Loan Category because they included
thresholds and tests that are typical of what is generally considered High Cost
by the industry.

<TABLE>
<CAPTION>
<S>                                                     <C>
------------------------------------------------------------------------------------------------------------------------
                        STANDARD & POOR'S HIGH-COST LOAN CATEGORIZATION

----------------------------------------------------- ------------------------------------------------------------------
STATE/JURISDICTION                                    CATEGORY UNDER APPLICABLE ANTI-PREDATORY LENDING LAW
----------------------------------------------------- ------------------------------------------------------------------
Arkansas                                              High Cost Home Loan
----------------------------------------------------- ------------------------------------------------------------------
Cleveland Heights, Ohio                               Covered Loan
----------------------------------------------------- ------------------------------------------------------------------
Colorado                                              Covered Loan
----------------------------------------------------- ------------------------------------------------------------------
Connecticut                                           High Cost Home Loan
----------------------------------------------------- ------------------------------------------------------------------
District of Columbia                                  Covered Loan
----------------------------------------------------- ------------------------------------------------------------------
Florida                                               High Cost Home Loan
----------------------------------------------------- ------------------------------------------------------------------
Georgia (Oct. 1, 2002 - March 6, 2003)                High Cost Home Loan
----------------------------------------------------- ------------------------------------------------------------------
Georgia as amended (March 7, 2003 - current)          High Cost Home Loan
----------------------------------------------------- ------------------------------------------------------------------
HOEPA Section 32                                      High Cost Loan
----------------------------------------------------- ------------------------------------------------------------------
Illinois                                              High Risk Home Loan
----------------------------------------------------- ------------------------------------------------------------------
Kansas                                                High Loan-to-Value Consumer Loans and High APR Consumer Loans
----------------------------------------------------- ------------------------------------------------------------------
Kentucky                                              High Cost Home Loan
----------------------------------------------------- ------------------------------------------------------------------
Los Angeles, Calif.                                   High Cost Refinance Home Loan
----------------------------------------------------- ------------------------------------------------------------------
Maine                                                 High Rate High Fee Mortgage
----------------------------------------------------- ------------------------------------------------------------------
Massachusetts                                         High Cost Home Loan
----------------------------------------------------- ------------------------------------------------------------------
Nevada                                                Home Loan
----------------------------------------------------- ------------------------------------------------------------------
New Jersey                                            High Cost Home Loan
----------------------------------------------------- ------------------------------------------------------------------
New York                                              High Cost Home Loan
----------------------------------------------------- ------------------------------------------------------------------
New Mexico                                            High Cost Home Loan
----------------------------------------------------- ------------------------------------------------------------------
North Carolina                                        High Cost Home Loan
----------------------------------------------------- ------------------------------------------------------------------
Oakland, Calif.                                       High Cost Home Loan
----------------------------------------------------- ------------------------------------------------------------------
Ohio                                                  Covered Loan
----------------------------------------------------- ------------------------------------------------------------------
Oklahoma                                              Subsection 10 Mortgage
----------------------------------------------------- ------------------------------------------------------------------
South Carolina                                        High Cost Home Loan
----------------------------------------------------- ------------------------------------------------------------------
West Virginia                                         West Virginia Mortgage Loan Act Loan
----------------------------------------------------- ------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------
                        STANDARD & POOR'S COVERED LOAN CATEGORIZATION

----------------------------------------------------- ------------------------------------------------------------------
STATE/JURISDICTION                                    CATEGORY UNDER APPLICABLE ANTI-PREDATORY LENDING LAW
----------------------------------------------------- ------------------------------------------------------------------
Georgia (Oct. 1, 2002-March 6, 2003)                  Covered Loan
</TABLE>

                                      A-2

<PAGE>

<TABLE>
<CAPTION>
<S>                                                     <C>
----------------------------------------------------- ------------------------------------------------------------------
New Jersey                                            Covered Home Loan
----------------------------------------------------- ------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
                                        STANDARD & POOR'S HOME LOAN CATEGORIZATION
----------------------------------------------------- ------------------------------------------------------------------
STATE/JURISDICTION                                    CATEGORY UNDER APPLICABLE ANTI-PREDATORY LENDING LAW
----------------------------------------------------- ------------------------------------------------------------------
Georgia (Oct. 1, 2002-March 6, 2003)                  Home Loan
----------------------------------------------------- ------------------------------------------------------------------
New Jersey                                            Home Loan
----------------------------------------------------- ------------------------------------------------------------------
New Mexico                                            Home Loan
----------------------------------------------------- ------------------------------------------------------------------
North Carolina                                        Consumer Home Loan
----------------------------------------------------- ------------------------------------------------------------------
Oakland, Calif.                                       Home Loan
----------------------------------------------------- ------------------------------------------------------------------
South Carolina                                        Consumer Home Loan
----------------------------------------------------- ------------------------------------------------------------------
</TABLE>

                                      A-3

<PAGE>

                                   SCHEDULE A

                 REQUIRED RATINGS FOR EACH CLASS OF CERTIFICATES

                               Public Certificates

                 Class                        S&P                Moody's
-------------------------------------    ----------------    ------------------
Class I-A............................         AAA                  Aaa
Class II-A...........................         AAA                  Aaa
Class III-A..........................         AAA                  Aaa
Class IV-A...........................         AAA                  Aaa
Class R-I............................         AAA                   NR
Class R-II...........................         AAA                   NR
Class B-1............................         AA                   Aa2
Class B-2............................          A                    A2
Class B-3............................         BBB                  Baa2

None of the above ratings has been lowered since the respective dates of such
letters.

                                      A-4

<PAGE>

                              Private Certificates
                              ---------------------

                 Class                        S&P                Moody's
-------------------------------------    ----------------    ------------------
Class B-4............................         BB                   NR
Class B-5............................         B                    NR
Class B-6............................         NR                   NR

None of the above ratings has been lowered since the respective dates of such
letters.

                                      A-5

<PAGE>

                                   SCHEDULE B

                             MORTGAGE LOAN SCHEDULE

                             [Provided upon request]Exhibit 4.9

AMENDMENT  AGREEMENT TO THE SIMPLE CREDIT AGREEMENT MADE AND ENTERED INTO BY AND
BETWEEN SCOTIABANK  INVERLAT,  SOCIEDAD ANONIMA,  INSTITUCION DE BANCA MULTIPLE,
GRUPO FINANCIERO SCOTIABANK INVERLAT [SCOTIABANK INVERLAT CORPORATION,  MULTIPLE
BANKING  INSTITUTION,  SCOTIABANK INVERLAT FINANCIAL GROUP],  HEREINAFTER CALLED
THE "LENDER",  REPRESENTED BY ALVARO AYALA MARGAIN, ESQ. AND GRUPO RADIO CENTRO,
S.A. DE C.V. [S.A. DE C.V. = VARIABLE CAPITAL  CORPORATION],  HEREINAFTER CALLED
THE  "BORROWER",  REPRESENTED BY MESSRS.  JOSE MANUEL  AGUIRRE GOMEZ,  CARLOS DE
JESUS  AGUIRRE  GOMEZ,  ANA MARIA  AGUIRRE  GOMEZ AND FRANCISCO DE JESUS AGUIRRE
GOMEZ,  WITH THE APPEARANCE OF GRC  PUBLICIDAD  S.A. DE C.V., GRC MEDIOS S.A. DE
C.V., AND PROMO RED S.A. DE C.V. AS CO-DEBTORS;  DESARROLLOS EMPRESARIALES, S.A.
DE C.V., AND ENLACES TRONCALES, S.A. DE C.V., REPRESENTED BY MESSRS. JOSE MANUEL
AGUIRRE  GOMEZ,  CARLOS DE JESUS  AGUIRRE  GOMEZ,  ANA MARIA  AGUIRRE  GOMEZ AND
FRANCISCO  DE  JESUS  AGUIRRE  GOMEZ,   IN  THEIR  CAPACITY  AS  GUARANTORS  AND
CO-DEBTORS,  IN  ACCORDANCE  WITH  THE  BACKGROUND,  STATEMENTS  AND  SUBSEQUENT
CLAUSES,
                              WITNESSETH WHEREAS,

                                   BACKGROUND

1. On October 30, 2000, the parties  signed a simple Credit  Agreement for up to
an  amount  of USD  35,000,000.00  (Thirty-five  million  dollars  in the  legal
currency of the United States of America). Also appearing in this agreement were
the companies  Desarrollos  Empresariales,  S.A. de C.V., and Radiodifusion Red,
S.A. de C.V., which provided guarantee for the loan based on the stocks of their
subsidiaries  which  they  own,  and which are  listed  in  Exhibit  "A" of this
instrument,  as security for  compliance  of the  obligations  undertaken by the
Borrower towards the Lender. The Credit agreement was certified by Esther Garcia
Alvarez, Notary Public, holding commission number 4 of the Federal District; for
the purposes of this amendment agreement,  it shall be identified as the "Credit
Agreement", including the amendments which have been made thereto up to the date
this document was signed.

2. On February 20, 2001, the parties signed an amendment agreement to modify the
Credit  Agreement cited in the paragraph  above, in which the Lender allowed the
Borrower  to take on  liabilities  with  third  parties  up to the amount of USD
3,500,000.00  (Three million five hundred thousand dollars in the legal currency
of the United States of America) in addition to the amount originally authorized
in the Credit Agreement.

3. On April 17, 2001 the parties  signed an  amendment  agreement  to modify the
Credit  Agreement  cited in paragraph  one here, in which it was agreed that the
interest rate applicable would be equivalent to the LIBOR rate plus 3.00 (three)
percentage  points.  In addition,  the parties agreed to reset the timetable for
the loan payments, each payment

                                       1
<PAGE>

being for the amount of USD  3,900,000.00  (Three million nine hundred  thousand
dollars in the legal  currency of the United States of America) with the last of
the  payments to be made on October 31, 2005 for the amount of USD  3,800,000.00
(Three  million  eight  hundred  thousand  dollars in the legal  currency of the
United States of America).

4. On July  13,  2001  the  Borrower  asked  the  Lender  permission  to take on
liabilities with third parties up to the amount of USD 2,500,000.00 (Two million
five  hundred  thousand  dollars in the legal  currency of the United  States of
America) in addition to the amount originally authorized in the Credit Agreement
to fund the renewal of the Operating Agreement for a radio station of the Group.

5. On November  15, 2001 the  Borrower  notified  the Lender that it had begun a
corporate  restructuring  process  for the purpose of  improving  control of the
group,  centralize  the  stockholdings,  make  administrative  supervision  more
efficient, and increase the equity of Grupo Radio Centro S.A. de C.V.

6. On December 10, 2000 the parties signed an Amendment  Agreement to the Credit
Agreement which was certified by Esther Garcia Alvarez,  Notary Public,  holding
commission number 4 of the Federal District.  In said amendment  agreement,  the
Borrower  acknowledged  the debt and  agreed to pay the Lender the amount of USD
23,300,000.00  (Twenty-three million three hundred thousand dollars in the legal
currency of the United States of America) and the parties agreed to convert 100%
of the acknowledged amount into pesos,  National Currency,  and consequently the
Borrower agreed to pay the Lender the amount of  MXP238,242,500.00  (Two hundred
thirty eight  million two hundred  forty two thousand  five hundred pesos 00/100
National Currency).

7. In the Amendment Agreement cited in the paragraph directly above, the parties
also agreed to change the payment dates,  the sums of  corresponding  repayments
and how to  determine  the  manner in which  interest  would be  applied  to the
acknowledged  Debt  Amount  converted  to  National   Currency.   The  financial
indicators were changed and a number of affirmative and negative  covenants were
added, along with justifications for early termination.  As a consequence of the
corporate restructuring process of the Borrower, Desarrollos Empresariales, S.A.
de C.V.,  and  Enlaces  Troncales,  S.A.  de C.V.  appeared  for this  Amendment
Agreement,  posting  security  for  the  Lender  based  on  the  stocks  of  its
proprietary subsidiaries.

8. On July 27,  2003 the parties  signed an  Amendment  Agreement  to the Credit
Agreement which was certified by Esther Garcia Alvarez,  Notary Public,  holding
commission  number 4 of the Federal  District,  by act number  44151 of the same
date. In said amendment agreement the Borrower  acknowledged the debt and agreed
to pay the Lender the amount of MXP198,532,500.00  (One hundred and ninety-eight
million five hundred and thirty-two  thousand five hundred pesos 00/100 National
Currency).  In  addition,  the  Borrower  and the Loan  Guarantors  ratified and
extended the Security Guarantee posted for the Lender.

                                       2
<PAGE>

9. In the Amendment Agreement described in paragraph directly above, the parties
agreed  likewise to change the payment dates,  the amounts of the  corresponding
repayments  and to  modify  some  of the  affirmative  and  negative  covenants.
Likewise,  Desarrollos Empresariales,  S.A. de C.V., and Enlaces Troncales, S.A.
de C.V.  acknowledged  the debt and  acknowledged  they were co-debtors with the
Borrower to the Lender.

                                   STATEMENTS:

I. The  representative  of the "Lender" states that the party he represents is a
subsidiary  credit  institution  formed in accordance with the relevant laws and
which is authorized to sign this agreement.

II. The representatives of the "BORROWER" state that:

a) The party they represent is a trading company of Mexican nationality governed
by its articles of  incorporation,  by the General Law of Trading  Companies and
other applicable legal provisions.

b) The party they represent owns the property comprising its business.

c) Notwithstanding,  the arbitration  proceeding  initiated by Infored,  S.A. de
C.V.  against the  Borrower,  now taking place in the  International  Chamber of
Commerce,  Mexico section;  the ordinary civil actions  initiated by Desarrollos
Empresariales,  S.A. de C.V. and the other four legal entities  against  Messrs.
Jose Elias and Maria Ivonne,  both with last name Guitierrez Vivo, and the order
to pay by  cross-litigation  initiated  by  Infored,  S.A.  de C.V.,  all  being
conducted  right now in the Civil Courts of this City, do not  adversely  affect
the  financial  situation,  operations,  property or its own legal  existence in
detriment to the legality,  validity or  enforceability  of this agreement,  and
they have no official knowledge of any legal proceeding which has been initiated
against  the  party  they  represent  which  affects   adversely  the  financial
situation,  operations, property or its own legal existence, in detriment to the
legality, validity or enforceability of this agreement.

d) The financial and  accounting  information  which was submitted to the Lender
accurately  and  reliably  reflects  the  economic  situation  of the party they
represent,  and therefore they are not in violation of article 112 of the Law of
Credit Institutions,  the text and legal scope of which has been explained,  for
which reason its transcription here is considered unnecessary.

e) To comply with the provisions of a general nature cited in article 115 of the
Law of Credit  Institutions  issued by the  Secretary of the Treasury and Public
Credit,  and published in the Official  Gazette of the Federation on the 10th of
March of the year  1997,  and its  amendments  and under the terms of the Second
provision, the Lender has been shown copies of the represented party's documents
as cited below:

      1.    Federal Tax Registration and Tax Identification.

                                       3
<PAGE>

      2.    Certified copy of represented  party's duly  registered  Certificate
            and  modifications  thereof  if  applicable  as well as the power of
            attorney granting the authority to represent the party.

      3.    Documents proving legal address (property tax receipt, utility bill,
            telephone  bill etc.).

      4.    Copy of the official  identification of their legal representatives,
            if applicable.

f)    He is  willingly  appearing  to sign this  agreement  to amend the  Credit
      Agreement cited in paragraph one of the background section.

g)   In relation to the credit cited in the first  paragraph  of the  background
     section,  on the date this  instrument was signed,  the party he represents
     acknowledges  the debt and  agrees  to pay to the  Lender  the  outstanding
     balance which amounts to MXP  176,473,333.00  (One hundred and  seventy-six
     million, four hundred and seventy-three thousand,  three hundred and thirty
     three pesos 00/100 National Currency).

h)   The party he represents  has requested  that the Lender change the dates of
     repayment of capital, the amounts of these payments and the interest rate.

III. The representatives of the guarantors and co-debtors state the following:

a)    That the party they represent are trading companies of Mexican nationality
      governed  by their  articles  of  incorporation  and by the General Law of
      Trading Companies and other applicable legal provisions;

b)    They are full and legitimate  owners of the stocks posted for security and
      the stocks have been subscribed and are wholly paid-up.

c)    Notwithstanding the arbitration  proceeding initiated by Infored,  S.A. de
      C.V.  against  Grupo Radio Centro,  S.A. de C.V.,  now taking place in the
      International  Chamber of Commerce,  Mexico  section;  the ordinary  civil
      actions initiated by Desarrollos Empresariales, S.A. de C.V. and the other
      four legal entities against Messrs. Jose Elias and Maria Ivonne, both with
      last  name  Guitierrez  Vivo,  and the  order  to pay by  cross-litigation
      initiated by Infored,  S.A. de C.V., all being  conducted right now in the
      Civil  Courts  of  this  City,  do  not  adversely  affect  the  financial
      situation, operations, property or its own legal existence in detriment to
      the legality,  validity or enforceability of this agreement, and they have
      no official  knowledge  of any legal  proceeding  that has been  initiated
      against the party they  represent  which  affects  adversely the financial
      situation,  operations,  property or its own legal existence, in detriment
      to the legality, validity or enforceability of this agreement.

d)    The financial and accounting information which was submitted to the Lender
      accurately  and reliably  reflects  the economic  situation of the parties
      they  represent,  and  therefore  they are not in violation of article one
      hundred and twelve of the Law of Credit  Institutions,  the text and legal
      scope of which has been explained, for which reason its transcription here
      is considered unnecessary.

                                       4
<PAGE>

e)    To comply with the  provisions  of a general  nature  cited in article one
      hundred  and  fifteen  of the Law of  Credit  Institutions  issued  by the
      Secretary of the Treasury and Public Credit, and published in the Official
      Gazette  of the  Federation  on the  tenth of  March of the year  nineteen
      hundred and ninety seven, and its amendments and with regard to the Second
      provision,  the Lender has been shown copies of the  represented  parties'
      documents as cited below:

      1.    Federal Tax Registration and Tax Identification.
      2.    Certified copy of represented  party's duly  registered  Certificate
            and  modifications  thereof  if  applicable  as well as the power of
            attorney granting him the authority to represent the party.
      3.    Documents proving legal address (property tax receipt, utility bill,
            telephone bill etc.).
      4.    Copy of the official  identification of their legal representatives,
            if applicable.

f)    Within the company object the  represented  parties have the power to post
      guarantees and assume any form of obligation for third parties.

g)    He is willingly  appearing to formalize this agreement to amend the Credit
      Agreement cited in paragraph one of the background section.

IV. The Parties state via their legal  representatives  that they  recognize the
legal  status  and  powers  demonstrated  for the  purposes  of  this  amendment
agreement,  as  described  in the  attached  document,  which is  considered  an
integral part of this amendment agreement.

Now therefore the parties do hereby agree as follows:

                                    CLAUSES:

FIRST.  Acknowledgment.  The Borrower acknowledges the debt and agrees to pay to
the Lender the amount of MXP176,473,333.00  (one hundred and seventy-six million
four hundred and seventy-three  thousand,  three hundred and thirty-three  pesos
00/100 National Currency).

This amount includes none of the interest,  fees and expenses which the Borrower
owes.

SECOND.  Extension of credit. The Lender shall give the Borrower an extension of
the Simple Credit granted in the Credit Agreement up to the additional amount of
MXP50,000,000.00  (fifty million pesos 00/100  National  Currency)  (hereinafter
referred  to as the  "Additional  Credit").  This  amount  includes  none of the
interest, fees and expenses which the Borrower owes.

                                       5
<PAGE>

This amount added to the amount  described in the first clause of this Amendment
Agreement  comes to a total of  MXP226,473,333.00  (two  hundred and  twenty-six
million four hundred and  seventy-three  thousand three hundred and thirty-three
pesos 00/100  National  Currency)  (hereinafter  the "Debt  Amount") this amount
being the total amount of the credit not including  interest,  fees and expenses
which the Borrower must pay.

THIRD.  Use. The Borrower agrees to use the amount of MXP  50,000,000.00  (fifty
million pesos 00/100 National  Currency) to pay the short-term debt it owes BBVA
Bancomer S.A., Multiple Banking Institution, Grupo Financiero BBVA Bancomer.

FOURTH.  Draw.  The Borrower  shall be able to draw the  additional  credit in a
single  installment  on the day  this  amendment  agreement  is  signed  without
exceeding the amount of additional credit.

The Borrower shall be able to draw the credit if and only if there are resources
available in the Lender's Treasury and this agreement,  if applicable,  shall be
certified by the public official designated for this purpose by the Lender.

FIFTH.  Timetable of repayments.  The Borrower agrees to pay the sum of the Debt
Amount within a period of four (4) years  counted from the date this  instrument
is signed in accordance with the following payment timetable:

-------------------------------------------------------------------------
           PAYMENT DATES                                 SUM
-------------------------------------------------------------------------

-------------------------------------------------------------------------
           April 30, 2004                           28,309,166.63
-------------------------------------------------------------------------
          October 31, 2004                          28,309,166.63
-------------------------------------------------------------------------
           April 30, 2005                           28,309,166.63
-------------------------------------------------------------------------
          October 31, 2005                          28,309,166.63
-------------------------------------------------------------------------
           April 30, 2006                           28,309,166.63
-------------------------------------------------------------------------
          October 31, 2006                          28,309,166.63
-------------------------------------------------------------------------
           April 30, 2007                           28,309,166.63
-------------------------------------------------------------------------
          October 31, 2007                          28,309,166.59
-------------------------------------------------------------------------

-------------------------------------------------------------------------
               TOTAL                              MXP 226,473,333.00
-------------------------------------------------------------------------

For the purposes of this  amendment  agreement,  the payments which the Borrower
makes  to the  Lender  shall  be  applied  to the  payment  of his  debts in the
following order:

i)    Legal expenses or collection, securities or other write-down items, if any

ii)   Value-added tax on Contractual Penalty, if incurred

iii)  Contractual Penalty, if incurred

iv)   Value-added tax on penalty interest, if incurred

v)    Penalty interest, if incurred

vi)   Value-added tax on ordinary interest

vii)  Ordinary Interest

                                       6
<PAGE>

viii) Past due capital if applicable

ix)   Present capital

The  Borrower  shall  make  the  payments  due the  Lender  on the  working  day
immediately  following each of the payment days, if any of these latter were not
working days.

SIXTH.  Interest. The Borrower shall pay the Lender ordinary interest as accrued
quarterly.  For this purpose the parties agree that the interest rate applicable
to the Debt Amount shall be determined by taking the financial  indicator of the
total liability over EBITDA (Earnings Before Interest,  Taxes,  Depreciation and
Amortization)  (hereinafter "total  liability"/EBITDA)  which is reported in the
financial  information  delivered  quarterly  by the  Borrower  to the Lender in
accordance with the table given below (hereinafter the "Fixed Interest Rate").

As a consequence thereof the parties agree the following:

For the Debt Amount the  Borrower  shall pay  interest on the unpaid  balance in
accordance with the following table:

--------------------------------------------------------------------------------
Total liability/EBITDA                                             Fixed
                                                                   Interest
                                                                   Rate
--------------------------------------------------------------------------------
Greater than or equal to 5.20                                      11.55%
--------------------------------------------------------------------------------
Greater than 4.50 but less than 5.20                               11.30%
--------------------------------------------------------------------------------
Greater than 3.50 but less than or equal to 4.50                   11.05%
--------------------------------------------------------------------------------
Greater than 3.00 but less than or equal to 3.50                   10.80%
--------------------------------------------------------------------------------
Less than or equal to 3.00                                         10.30%
--------------------------------------------------------------------------------

The  applicable  interest  in  accordance  with  the  aforementioned   shall  be
determined by the Lender on the basis of the financial  information  supplied by
the Borrower  quarterly,  and shall as a consequence  be applicable for the next
quarterly period counted from the date the financial information was supplied.

The Borrower  expressly agrees that while this amendment  agreement is in force,
the  Fixed  Interest  Rate  with  respect  to all or  part of the  Debt  Amount,
whichever applies, shall cease to be applied under the following assumptions and
terms:

A) If the  parties  so  agree,  it  being  necessary  in this  case to sign  the
corresponding  amendment  agreement which will be part of the Credit  Agreement,
without requiring renewal of this instrument or of the Credit Agreement, and the
Variable Interest Rate shall then be applied (as defined later).

B) If the payments  which the Borrower  makes are not  sufficient to pay off the
amounts  corresponding  to accrued interest and repayments of capital which were
agreed upon.

                                       7
<PAGE>

The Borrower  shall then have a period of three (3) working days to rectify this
noncompliance.

If the noncompliance is not rectified with a period of three (3) working days as
cited above,  the interest rate  applicable  from this moment on with respect to
the Debt Amount shall be the Variable  Interest Rate (as defined later),  and if
the  noncompliance  continues  and until it is rectified,  the Variable  Penalty
Interest  Rate (as defined  later) shall be applied and the Fixed  Interest Rate
shall cease to be applied from this moment on without  detriment to the Lender's
right  to  prematurely   terminate  the  Credit  Agreement  and  this  amendment
agreement.

If the Borrower is late on the agreed-upon  repayments,  or any other obligation
for which he is responsible,  the Lender may apply a Fixed Penalty Interest Rate
equal to the sum which results from  multiplying the Fixed Interest Rate by two,
during the period of three (3) working days cited above, until  noncompliance is
rectified  (hereinafter  the Fixed  Penalty  Interest  Rate).  The Fixed Penalty
Interest  Rate  shall be  calculated  a) on any past due  balance  not paid in a
timely manner by the Borrower and b) on the amount of other economic obligations
for which the Borrower is responsible which are not capital or interest if these
were not paid per the terms of this amendment agreement.

C) If the Borrower makes advance payments on the Debt Amount, this shall be done
under the terms of the  Seventh  Clause of this  amendment  agreement.  Once the
Lender  receives  payment of the Contractual  Penalty (as defined  later),  with
respect to the amount of the  advance  payment,  the Fixed  Interest  Rate shall
continue to be applied to the unpaid balance of the Debt Amount, if it exists.

D)  If  the  Borrower  by  his  actions  provides  justification  for  premature
termination  as  established  in the  Credit  Agreement  or  issuing  from  this
amendment agreement, and the Lender demands payment of the unpaid balance of the
loan  (including  the Debt  Amount) in  accordance  with the  provisions  of the
Sixteenth  Clause of the Credit  Agreement,  the Variable  Penalty Interest Rate
will be applied until the unpaid balance of the loan (including the Debt Amount)
is settled.

If any of the  scenarios  indicated  in  sections  A), B), C) or D) above  takes
place,  the  Borrower  must  pay the  Lender  a  Contractual  Penalty.  The term
"Contractual Penalty" means the amount equal to the Replacement Cost (as defined
later) for the Lender  corresponding to a swap or operation of exchange of flows
of  fixed-variable   interest  rates  (hereinafter,   "Swap")  under  the  terms
established  hereafter.  This amount shall be  determined  by the Lender in good
faith and in  accordance  with the market  practices  in force,  the working day
after the  "Termination  Date".  The term  "Termination  Date" means the date on
which any of the scenarios cited in sections A), B), C) or D) above occurs.

For the purposes of  determining  the Swap  operation,  this would be equal to a
hypothetical  exchange in Mexican  pesos for a  theoretical  amount equal to the
Debt Amount to be paid or prepaid,  with the interest  payment dates in the Swap
being the same

                                       8
<PAGE>

ones  established in the Sixth Clause of this  amendment  agreement for the Debt
Amount. Assuming in addition that repayment dates and amounts applicable for the
Swap are equal to the  interest and  repayment  dates  established  in the Fifth
Clause of this agreement pending to begin as of the Termination  Date.  However,
in the  event  that any  partial  prepayment  of the Debt  Amount  is made,  the
repayment  amounts  applicable to the Swap will be the ones remaining after this
advance payment has been made per the stipulations of the Seventh Clause of this
amendment  agreement.   Under  this  Swap,  the  Lender  will  collect  interest
calculated at a Fixed Annual  Interest Rate equal to 8.30% and payable  interest
will be calculated at an annual Variable  Interest Rate equal to T.I.I.E.  [Tasa
de  Interes  Interbancaria  de  Equilibrio,  or  Mexican  Interbank  Equilibrium
Interest  Rate] (as defined  later).  The Swap  period will be the period  which
begins  on and  including  the  Termination  Date and ends on and  includes  the
Termination Date of the Agreement.

For the purposes of calculating the Contractual  Penalty,  in the event that the
T.I.I.E. rate no longer exists, the rate set by the Bank of Mexico to replace it
shall be applied or, if there is no replacement,  the parties shall agree on the
new applicable interest rate; with the understanding that if an agreement is not
reached with respect to the  replacement  rate,  the CETES  [Certificados  de la
Tesoreria de la Federacion,  or Mexican Treasury Bill] rate or the CPP [Costo de
Captacion a Plazo de Pasivos, or Cost of Taking Term Deposits] rate cited in the
"Definitions"  section  included  later  in this  amendment  agreement  shall be
applied.

In all the scenarios cited above, the Lender shall give written  notification to
the  Borrower as to the amount of the  Contractual  Penalty.  The payment of the
Contractual  Penalty  shall be made on the working day  following  the date that
notification of the amount of the  Contractual  Penalty has been received by the
Borrower.

If,  from the moment  application  of the  Variable  Interest  Rate begins to be
applied, the Borrower falls behind on payment of the agreed-upon repayments,  or
on payment of any other  obligation  for which he is  responsible in relation to
the Debt Amount,  this  amendment  agreement  and/or the Credit  Agreement,  the
Lender shall apply the Variable Penalty Interest Rate.

The parties  agree that all the  interest  rates agreed upon shall be applied on
the basis of 360 days per year and for the days which have  actually  elapsed in
the period for which interest is calculated.

Definitions:

For the purposes of the definition of Contractual Penalty, the term "Replacement
Value" means the amount  which the Lender  determines,  in good faith,  based on
market quotations of institutions actively participating in the relevant market,
to be the cost or profit which the Lender would pay or receive  respectively  to
replace the economic effect of the  outstanding  payments which he would receive
from the Borrower if the Debt Amount or part thereof were not to be paid or were
paid in advance.

                                       9
<PAGE>

"Variable  Interest  Rate" means the quarterly  interest rate  applicable to the
Debt Amount  which is  determined  (i) at the  beginning of the period for which
interest  is  computed  and  updated  quarterly  and (ii)  using  the  financial
indicator  of  total  liabilities/EBITDA  which  is  reported  in the  financial
information  supplied quarterly by the Borrower to the Lender in accordance with
the following table:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
              Total liability/EBITDA                               Variable Interest Rate
--------------------------------------------------------------------------------------------------
<S>                                                          <C>
 Greater than or equal to 5.20                               T.I.E.E plus 3.25 percentage points
--------------------------------------------------------------------------------------------------
 Greater than 4.50 but less than 5.20                        T.I.E.E plus 3.00 percentage points
--------------------------------------------------------------------------------------------------
 Greater than 3.50 but less than or equal to 4.50            T.I.E.E plus 2.75 percentage points
--------------------------------------------------------------------------------------------------
 Greater than 3.00 but less than or equal to 3.50            T.I.E.E plus 2.50 percentage points
--------------------------------------------------------------------------------------------------
 Less than or equal to 3.00                                  T.I.E.E plus 2.00 percentage points
--------------------------------------------------------------------------------------------------
</TABLE>

The  applicable  interest  in  accordance  with  the  aforementioned   shall  be
determined by the Lender on the basis of the financial  information  supplied by
the Borrower  quarterly  and as a consequence  shall be applicable  for the next
quarterly period counted from the date the financial information was supplied.

"T.I.I.E." means the 28-day Mexican Interbank Equilibrium Interest Rate which is
published  every  day by the  Bank of  Mexico  in the  Official  Gazette  of the
Federation  on the first day of each  period  for  which  the  interest  rate is
determined and for the purposes of its calculation the 28-day T.I.I.E.  shall be
equivalent to periods of thirty (30) days. If this rate is not  published,  then
the  reference  rate shall be the one published on the date  immediately  before
that and so on in  succession  and till the  twenty-second  day of this interest
calculation period.

The parties agree that the applicable Variable Penalty Interest Rate if required
shall be the result of  multiplying  the Variable  Interest Rate by two (2). The
Variable  Penalty  Interest  Rate shall be calculated a) on any past due balance
not  paid in a timely  manner  by the  Borrower  and b) on the  amount  of other
economic obligations for which the Borrower is responsible which are not capital
or interest if these were not paid per the terms of this amendment agreement.

The parties  agree that only for the purposes of the Variable  Interest Rate and
the Variable  Penalty  Interest Rate and not for the purpose of calculating  the
Contractual Penalty, if the T.I.I.E.  rate is no longer in existence at the time
interest is calculated in accordance with the table which shows the relationship
total  liability/EBITDA  and  Variable  Interest  Rate (the  "Variable  Interest
Table"), or its value is not known, then the replacement  reference rate will be
the Mexican Treasury Bill rate (CETES);  the percentage  points which correspond
thereto shall be added to this  reference  rate in accordance  with the Variable
Interest Table, thus determining the replacement interest rate.

In the event that the  T.I.I.E.  and CETES  rates no longer  exist,  or if their
value  is not  known  at  the  time  interest  is  being  calculated,  then  the
replacement  reference rate shall be the Cost of Taking Term Deposits  (C.C.P.);
added to this reference rate shall be the

                                       10
<PAGE>

percentage  points  which  correspond  thereto in  accordance  with the Variable
Interest  Table,  and  that  is how  the  replacement  interest  rate  shall  be
determined.

CETES  means the 28-day  Mexican  Treasury  Bill rate  published  by the Bank of
Mexico  through the Official  Gazette of the  Federation on the most recent date
before  the  initial  date  of  each  period  for  which  the  interest  rate is
determined.

The Cost of Taking Term Deposits (C.C.P.) means the cost of taking term deposits
in national  currency with a term of 30 days which the Bank of Mexico decides is
representative of the entire group of Multiple Banking Institutions and which it
publishes in the  Official  Gazette of the  Federation  on the first day of each
period for which the rate is determined.

SEVENTH.  Advance  payment.  The  parties  agree to amend the 14th clause of the
Credit Agreement to read as follows:

      "If the Borrower is current on his payment  obligations  he can make total
      or  partial  advance  payments  on the  unpaid  balance  as long as  these
      payments are made on the dates for which  interest falls due. The Borrower
      agrees to give written notification to the Lender 30 days beforehand as to
      the amount of the advance payment he is going to make.

      These advance payments shall be applied to the unpaid balance, by reducing
      the  repayments  yet to be  made  in a  manner  proportional  (this  being
      understood as retaining the original proportion between the amount of each
      repayment  with  respect  to  the  Debt  Amount)  to  the  amounts  of the
      repayments  established in the Fifth Clause of this  amendment  agreement,
      thereby  modifying the amount of each  repayment  beginning on the date of
      the advance payment concerned.

      Without detriment to the aforementioned, the Borrower shall pay the Lender
      the  Contractual  Penalty  vis-a-vis the amount which  corresponds  to the
      advance  payment and additional  costs which may be incurred as the result
      of having to change the Fixed  Interest  Rate,  or by any other  cause set
      forth in the Sixth Clause of this amendment agreement."

EIGHTH. Termination.  The parties agree to modify the ninth clause of the Credit
Agreement relating to the termination, to indicate as a new termination date for
the Credit Agreement and this amendment agreement the 31st (thirty first) day of
October 2007 (two thousand and seven) (the "Termination Date of the Agreement").

NINTH.  Promissory  note.  In order to document the sum of the Debt Amount,  the
Borrower  shall  obtain and  prepare in the name of the Lender a new  promissory
note to replace those signed previously to document the amount of the Credit and
the Amendment Agreements and Debt Recognition cited in the background section of
this instrument,  as well as the extension of credit contained in this amendment
agreement.  The  due  date  of the new  promissory  note  cannot  be  after  the
termination date of this

                                       11
<PAGE>

instrument and shall include the requirements, terms and conditions cited in the
General Act on Negotiable Instruments.

TENTH.  Affirmative  and  negative  covenants.  The  parties  agree to amend the
Fifteenth Clause of the Credit Agreement in background  section one and to amend
subsection e) and add a section j) of Roman numeral one to read as follows:

I - Affirmative covenants

e) To be complied  with  during the period the Credit  Agreement  and  amendment
agreements are in force, with the following financial indicators,  which will be
calculated based on the consolidated financial information of the Borrower:

- maximum total liabilities/stockholders' equity of 0.65 (zero point sixty-five)

-  maximum  total   liabilities/EBITDA   (Earnings   Before   Interest,   Taxes,
Depreciation, and Amortization) in accordance with the following:

For the September and December 2003 quarters, a maximum of 4.00 (four point zero
zero).

Beginning in 2004, a maximum of 3.00 (three point zero zero).

This  financial  indicator  shall be  calculated  taking the last 12 months as a
reference.

- A minimum tangible  capital of  MXP75,000,000.00  (seventy-five  million pesos
00/100 National  Currency) for 2002. For subsequent  years the minimum  tangible
capital  shall be the minimum  tangible  capital of the prior fiscal period plus
30% (thirty percent) of the earnings of the financial period underway.  Tangible
capital  shall  mean  stockholders'  equity  minus  deferred  taxes,   guarantee
deposits, advance payments, investment in subsidiaries, accounts receivable from
affiliates and subsidiaries, and deferred charges and intangible assets.

- A minimum debt  coverage of 1.50 (one point fifty).  Debt Coverage  shall mean
Earnings before Interest,  Taxes,  Depreciation and Amortization over the sum of
the circulating part of the long-term bank debt plus financial expenses.

j) The Borrower  agrees that the  subsidiary  companies  of the Borrower  become
jointly   responsible  with  respect  to  the  Credit  Agreement  and  amendment
agreements when these companies  represent an EBITDA  (Earnings Before Interest,
Taxes,  Depreciation,  and  Amortization)  equivalent  at least  to 90%  (ninety
percent) in the Borrower's consolidated accounting.

k) The Borrower  agrees to give the Lender,  within a period not to exceed sixty
days after the closure of each one of the months of March,  June,  September and
December,  and while this loan is in force,  a letter  signed by the  Borrower's
Finance in which he certifies that the companies  which  guarantee this loan and
represent  an  EBITDA  (Earnings  Before  Interest,  Taxes,  Depreciation,   and
Amortization) equivalent at least to ninety percent

                                       12
<PAGE>

(90%) in the Borrower's  consolidated  accounting.  In this  certification,  the
EBITDAs  of the  cited  companies  must be broken  down in a clear  and  concise
manner.

l) The  co-debtors  agree  to  supply  the  Lender  with the  audited  financial
statements within one hundred and twenty days after closure of the fiscal period
corresponding  thereto and internal  statements  every quarter within sixty days
after closure of the quarter.

ELEVENTH.  The Borrower  and the Loan  Guarantors  shall  endorse and extend the
Security Guarantee which is made out to the Lender in a particular,  express and
distinct  fashion  under  the  terms of the  Amendment  Agreements  cited in the
background  section of this agreement,  and consequently shall guarantee all the
obligations of this Borrower for which he has contracted with the Lender,  until
the Debt Amount has been settled in its entirety.

TWELFTH.  Commission.  The Borrower  agrees to pay the Lender,  on the date this
Amendment  Agreement is signed,  a commission for amending the Credit  Agreement
indicated in the background section one of this instrument,  to be equivalent to
1.00% (one point zero zero percent) of the amount of the Additional Credit.

THIRTEENTH.  Non-renewal. Signature of this Amendment Agreement shall not entail
renewal of the Credit  Agreement  and its  Amendment  Agreements as cited in the
background  section of this instrument and therefore  unless there is an express
amendment to this end, the other terms,  conditions and obligations shall retain
all their legal force and tenor.

FOURTEENTH.  Account statements. Per the terms of article sixty eight of the Law
of Credit  Institutions,  this  amendment  agreement  together  with the account
statement certified by the Accountant empowered to do so by the Lender, shall be
considered  an  executive  instrument  without  the need for  authentication  by
signature or any other requirement.

FIFTEENTH. Additional Costs. If during the period this amendment agreement is in
force,  the competent  authorities  issue legal  provisions of a general  nature
applicable  to this type of  amendment  agreement  entailing  an increase in the
costs of the loan,  the Lender  shall give written  notification  thereof to the
Borrower so that within a period of thirty  days  counting  from the date of the
notification,  the parties can negotiate the corresponding  payment to cover the
costs which result from application of these  provisions or requirements  during
the time they are in force per the terms of paragraph  four of number  M.21.2 of
Circular  2019/95 of the Bank of Mexico,  the text of which is given here: "With
regard to  credits  whose cost for the  lending  institution  comprises  in part
commissions   which  a  third  party  charges  this   institution  and  are  not
acknowledged by the latter at the time the credit instrument is given, or on the
other hand modified by that third party himself afterwards, the institutions can
agree  with  their  Borrower  that  the  latter  will  pay the  amount  of these
commissions.

                                       13
<PAGE>

SIXTEENTH.  Fee for noncompliance.  The Borrower shall report in a timely manner
to the  Lender  any  possible  noncompliance  when the  Borrower  himself  knows
beforehand  that he will  not be able to  comply  in a  timely  manner  with his
affirmative  and  negative  covenants,  for  which  reason  he  must  ask for an
extension  so that he may comply with them.  In this event he must  indicate the
causes of these failures to comply, the actions and time he will take to rectify
them,  with the  understanding  that the Lender  reserves the right to grant the
Borrower the aforementioned extension.

If the Lender  becomes  aware of some  noncompliance  with the  affirmative  and
negative  covenants,  he shall  give  notice  thereof  to the  Borrower  for the
purposes  of  obtaining   information  on  the  causes  of  these  instances  of
noncompliance,  and the  actions and time the latter is going to take to rectify
them.

In both  scenarios,  if there is  noncompliance  with any of his  affirmative or
negative  covenants  set  forth  in  the  Credit  Agreement  and  its  amendment
agreements,  the  Borrower  shall  authorize  the  Lender to charge a fee of USD
$18,000.00  (eighteen thousand dollars in legal currency of the United States of
America 00/100).

Without  detriment to the above, the Lender reserves the right to terminate this
agreement prematurely in the case of noncompliance.

SEVENTEENTH.   Consent.   DESARROLLOS  EMPRESARIALES,   S.A.  DE  C.V.,  ENLACES
TRONCALES, S.A. DE C.V., GRC PUBLICIDAD,  S.A. DE C.V., GRC MEDIOS, S.A. DE C.V.
AND PROMO RED, S.A. DE C.V. give their express consent with  acknowledgement  of
indebtedness by this  instrument,  agreeing to be jointly  responsible  with the
Borrower to the Lender under the terms of articles nineteen hundred eighty seven
and  nineteen  hundred  eighty  eight of the Civil Code in force for the Federal
District.

EIGHTEENTH.  Fees, charges and expenses.  The fees, charges and other reasonable
expenses  incurred by virtue of signing this instrument,  having a Notary Public
certify this amendment  agreement,  registering it in the  corresponding  Public
Registry of Property  and Trade,  and ensuring  that the document is  officially
stamped,  shall be paid by the Borrower, who agrees to pay them at the time this
instrument is signed.

NINETEENTH.  Jurisdiction.  For all matters relating to the  interpretation  of,
compliance with and execution of this amendment agreement,  the parties agree to
submit to the  jurisdiction  of the Courts of the  Federal  District,  expressly
waiving  the right to any  jurisdiction  to which they could  have  recourse  by
reason of any legal address which they have now or may have in future.

Signed in three  copies in Mexico  City,  Federal  District  on the third day of
December two thousand and three.

                                       14
<PAGE>

                                   The Lender
                                   ----------
                            SCOTIABANK INVERLAT, S.A.
                          MULTIPLE BANKING INSTITUTION
                       SCOTIABANK INVERLAT FINANCIAL GROUP

                            /s/ Alvaro Ayala Margain
                            ------------------------
                            Mr. Alvaro Ayala Margain

                                  The Borrower
                                  ------------
                        Grupo Radio Centro, S.A. de C.V.

 /s/ Jose Manuel Aguirre Gomez              /s/ Ana Maria Aguirre Gomez
 -----------------------------              ---------------------------
 Mr. Jose Manuel Aguirre Gomez              Ms. Ana Maria Aguirre Gomez

/s/ Carlos de Jesus Aguirre Gomez           /s/ Francisco de Jesus Aguirre Gomez
---------------------------------           ------------------------------------
Mr. Carlos de Jesus Aguirre Gomez           Mr. Francisco de Jesus Aguirre Gomez

                        "The Guarantors" and "Co-Debtors"
                        ---------------------------------
                     DESARROLLOS EMPRESARIALES, S.A. DE C.V.
                         ENLACES TRONCALES, S.A. DE C.V.
                          GRC PUBLICIDAD, S.A. DE C.V.
                          GRC MEDIOS, S.A. DE C.V. AND
                             PROMO RED, S.A. DE C.V.

/s/ Jose Manuel Aguirre Gomez                  /s/ Ana Maria Aguirre Gomez
-----------------------------                  ---------------------------
Mr. Jose Manuel Aguirre Gomez                  Ms. Ana Maria Aguirre Gomez

/s/ Carlos de Jesus Aguirre Gomez              /s/ Francisco de Jesus Aguirre
---------------------------------              ------------------------------
Mr. Carlos de Jesus Aguirre Gomez              Mr. Francisco de Jesus Aguirre

                                    WITNESSES

/s/  Marcela Castillo Nogueron                 /s/  Efrain de Tuya Graciano
---  -------------------------                 ---  -----------------------
Ms. Marcela Castillo Nogueron                  Mr. Efrain de Tuya Graciano

                                       15
<PAGE>

ACT NO.  45432--------------------------.  In Mexico City, Federal District,  on
the fourth day of the month of December of the year two thousand  and three,  I,
Maria Esther Garcia  Alvarez,  Notary  Public no. four of the Federal  District,
bear witness that:

FIRST.  Appearing  before  me  are  Messrs.  Mr.  Alvaro  Ayala  Margain,  Esq.,
representing  SCOTIABANK INVERLAT  CORPORATION,  A MULTIPLE BANKING INSTITUTION,
SCOTIABANK  INVERLAT  FINANCIAL GROUP, in its capacity as Lender;  Messrs.  Jose
Manuel Aguirre Gomez, Carlos de Jesus Aguirre Gomez, Ana Maria Aguirre Gomez and
Francisco de Jesus  Aguirre Gomez of the GRUPO RADIO  CENTRO,  VARIABLE  CAPITAL
CORPORATION, in its capacity as Borrower; as well as Messrs. Jose Manuel Aguirre
Gomez,  Carlos de Jesus Aguirre Gomez,  Ana Maria Aguirre Gomez and Francisco de
Jesus Aguirre Gomez representing the companies DESARROLLOS  EMPRESARIALES,  S.A.
DE C.V.,  ENLACES  TRONCALES,  S.A. DE C.V., GRC  PUBLICIDAD,  S.A. DE C.V., GRC
MEDIOS, S.A. DE C.V. AND PROMO RED, VARIABLE CAPITAL CORPORATION for the purpose
of ratifying  in each and every one of its parts the  contents of the  amendment
agreement foregoing to this instrument.

SECOND.  The parties  state before me, the Notary  Public,  that the text of the
amendment  agreement  is the  actual  expression  of  their  will  and  that the
signatures  appearing at the bottom are their  authentic  signatures  written in
their  own hand and are the same  they use on all acts and  documents  and state
under oath that they are  telling  the whole truth and nothing but the truth and
there has been nor do they  expect to be any  restraint  action that would limit
their  abilities  to do so, a  statement  which they make under  oath,  evidence
thereof being given with their signature of this act with me and in my presence.

THIRD. The legal  representative of SCOTIABANK  INVERLAT  CORPORATION,  MULTIPLE
BANKING  INSTITUTION,  SCOTIABANK INVERLAT FINANCIAL GROUP,  provided me with no
identification, as I know him personally to be legally empowered to act herein.

FOURTH. The other parties appearing have provided proof of their identification,
photocopies of which are attached to the copy of this  instrument  which will be
placed on public  record under my  responsibility,  and in my judgment  they are
also legally empowered to act herein.

FIFTH.   That  I  myself  duly   authenticated  the  legal  status  and  general
information, which are reproduced and attached hereto.

SIXTH.  That those  acting as  representatives  state  under oath that the legal
powers conferred upon them have not been revoked, modified or limited in any way
as of this date. IN WITNESS  WHEREOF.  In Mexico City,  Federal  District on the
..........th day of the month of ........... of the year two thousand and three.

                                       16
<PAGE>

                                   The Lender
                                   ----------
                            SCOTIABANK INVERLAT, S.A.
                          MULTIPLE BANKING INSTITUTION
                       SCOTIABANK INVERLAT FINANCIAL GROUP

                            /s/ Alvaro Ayala Margain
                            ------------------------
                            Mr. Alvaro Ayala Margain

                                  The Borrower
                                  ------------
                        Grupo Radio Centro, S.A. de C.V.

/s/ Jose Manuel Aguirre Gomez               /s/ Ana Maria Aguirre Gomez
-----------------------------               ---------------------------
Mr. Jose Manuel Aguirre Gomez               Ms. Ana Maria Aguirre Gomez

/s/ Carlos de Jesus Aguirre Gomez           /s/ Francisco de Jesus Aguirre Gomez
---------------------------------           ------------------------------------
Mr. Carlos de Jesus Aguirre Gomez           Mr. Francisco de Jesus Aguirre Gomez

                                       17
<PAGE>

                         "THE GUARANTORS AND CO-DEBTORS"
                     DESARROLLOS EMPRESARIALES, S.A. DE C.V.
                         ENLACES TRONCALES, S.A. DE C.V.
                          GRC PUBLICIDAD, S.A. DE C.V.
                          GRC MEDIOS, S.A. DE C.V. AND
                             PROMO RED, S.A. DE C.V.

/s/ Jose Manuel Aguirre Gomez               /s/ Ana Maria Aguirre Gomez
-----------------------------               ---------------------------
Mr. Jose Manuel Aguirre Gomez               Ms. Ana Maria Aguirre Gomez

/s/ Carlos de Jesus Aguirre Gomez           /s/ Francisco de Jesus Aguirre Gomez
---------------------------------           ------------------------------------
Mr. Carlos de Jesus Aguirre Gomez           Mr. Francisco de Jesus Aguirre Gomez

                                    WITNESSES

/s/ Marcela Castillo Nogueron               /s/ Efrain de Tuya Graciano
-----------------------------               ---------------------------
Ms. Marcela Castillo Nogueron               Mr. Efrain de Tuya Graciano

                                       18
<PAGE>

                                    APPENDIX
                      LEGAL STATUS AND GENERAL INFORMATION

SCOTIABANK  INVERLAT  CORPORATION,  MULTIPLE  BANKING  INSTITUTION,   SCOTIABANK
INVERLAT  FINANCIAL  GROUP,  is an institution  formed under Mexican law, as set
down in record no.  three  hundred and ten dated  January  thirtieth of the year
nineteen hundred and thirty four, certified by Notary Public number seven of the
City of Chihuahua,  Chihuahua,  Jose Mena Castillo;  the first copy of this deed
was  registered on the  twenty-fourth  of May of the year  nineteen  hundred and
thirty  four under  number  forty  two,  in folios  two  hundred  eighty two and
subsequent  of book  seventeen  of the  Trade  Section  of the  Public  Property
Register of the District of Morelos Chihuahua,  with the name of Banco Comercial
Mexicano [Mexican Commercial Bank].

The  company  has  changed  a number  of times,  as shown in deed  number  three
thousand two hundred and fifty four,  dated December second of the year nineteen
hundred and ninety four,  certified by Ana Patricia  Bandala  Tolantino,  Notary
number  one  hundred  and  ninety  five  of  the  Federal  District,  the  first
authenticated  copy of  which  was  recorded  in the  Public  Commerce  Trade of
Chihuahua,  State of  Chihuahua  under  number  two  thousand  two  hundred  and
twenty-one,  folios ninety-one,  book number six hundred and sixty-six,  on June
first of the year nineteen  hundred and  ninety-five  and in the Public Commerce
Trade  Register of the Federal  District in mercantile  folio number one hundred
and ninety eight thousand eight hundred and sixty seven,  on June seventh of the
year nineteen  hundred and ninety five,  where the minutes of the  Extraordinary
General  Assembly of  Stockholders  were put on public record and in which among
other  things  resolutions  were  passed to change  the name to Banco  Inverlat,
Sociedad Anonima,  Institucion de Banca Multiple,  Grupo Financiero Inverlat and
to change  their legal  address  from the City of  Chihuahua in the state of the
same name to Mexico City,  Federal  District,  amending to this end articles one
and five of their bylaws.

In record number twenty three thousand three hundred and ninety five, on January
twelfth of the year two thousand and one, Notary Ana Patricia Bandala  Tolentino
certified and registered in the Public Trade Register of the Federal District in
mercantile  folio number one hundred and ninety eight thousand eight hundred and
seventy  seven dated the thirty  first of January of the year two  thousand  and
one, the minutes of the Ordinary,  Extraordinary and Special General Assembly of
Stockholders  of  Inverlat  Bank  Corporation,   Multiple  Banking  Institution,
Inverlat  Financial Group in which its conversion into a subsidiary  company was
resolved and its bylaws were amended to change its name to Scotiabank  Inverlat,
Sociedad  Anonima,  Institucion de Banca Multiple,  Grupo Financiero  Scotiabank
Inverlat.

ALVARO AYALA  MARGAIN,  participating  in the signing of this agreement as legal
representative of Inverlat Bank, Sociedad Anomina, Multiple Banking Institution,
Inverlat Financial Group (now Scotiabank Inverlat Corporation,  Multiple Banking
Institution,  Scotiabank  Inverlat  Financial  Group)  provided  evidence of his
identity and legal powers conferred for this act per record number 128,195 dated
November 3, 2003

                                       19
<PAGE>

(November third two thousand and three),  certified by Homero Diaz Rodriguez and
Ricardo  Cuevas  Miguel  registered  with the  college of Notary  Publics  under
numbers fifty four and two hundred ten of the Federal District.  In terms of his
general  information,  he states  that he is Mexican by birth,  originally  from
Mexico City Federal  District,  born on January 21,  nineteen  hundred  seventy,
single, employed and domiciled in Bosque de Ciruelos 120 1st Floor, Development,
Bosques de las Lomas, 11700, Mexico, Federal District, current on his income tax
payments,  and  likewise the party he  represents,  without  providing  evidence
thereof, stating that the power of attorney of which proof was submitted has not
to date been revoked, modified or limited in any way;

GRUPO  RADIOCENTRO  Sociedad  Anonima  de  Capital  Variable  [Variable  Capital
Corporation].  In deed number one hundred  and five  thousand  and one dated the
twenty-first of June of the year nineteen hundred and ninety nine,  certified by
Ignacio R. Morales Lechuga,  Notary Public number one hundred and sixteen of the
Federal  District,  duly registered in the Public Trade Register in folio 20694,
record was made of the legal power and  appointment  of the members of the Board
of Operations  with the related  companies of Grupo Radio Centro,  S.A. de C.V.;
this deed certified the incorporation and legal existence of the company and the
following  resolutions were made, among others: that powers of attorney would be
granted to Messrs.  Francisco  Aguirre Gomez,  Maria Esther  Aguirre Gomez,  Ana
Maria Aguirre  Gomez,  Francisco de Jesus Aguirre  Gomez,  Carlos Aguirre Gomez,
Rafael Aguirre Gomez and Jose Manuel  Aguirre Gomez for the  following:  acts of
ownership, and drawing, issuing,  granting,  signing,  guaranteeing,  accepting,
endorsing and  negotiating  credit  instruments,  with the limitation that there
needed to be four of these attorneys-in-fact acting together.

DESARROLLOS  EMPRESARIALES,  Sociedad  Anonima  de  Capital  Variable  [Variable
Capital Corporation].  In deed number one hundred and six thousand seven hundred
and twenty nine dated the third of January of the year two  thousand,  certified
by Ignacio R. Morales  Lechuga,  Notary Public number one hundred and sixteen of
the Federal  District,  duly  registered  in the Public Trade  Register in folio
number 135677, the company's  resolution to revoke and confer powers of attorney
was put on record. In this same instrument the incorporation and legal existence
of the  company  was  certified  and the  following  agreements  were made among
others:  that power of attorney  would be granted to Messrs.  Francisco  Aguirre
Gomez,  Maria Esther Aguirre Gomez, Ana Maria Aguirre Gomez,  Francisco de Jesus
Aguirre  Gomez,  Carlos  Aguirre  Gomez,  Rafael  Aguirre  Gomez and Jose Manuel
Aguirre  Gomez,  for  the  following:  acts  of  ownership  and  signing  credit
instruments,   with  the   limitation   that   there   must  be  four  of  these
attorneys-in-fact acting together.

In deed number one hundred thirteen thousand one hundred and five dated December
11, 2001,  certified by Ignacio R. Morales Lechuga,  Notary Public number 116 of
the Federal  District,  duly  registered in the Public Trade  Register in record
number  134251,  135677 and  175926,  the minutes of the  Extraordinary  General
Assemblies of stockholders of the companies Desarrollos  Empresariales,  S.A. de
C.V., Industrial Telecentro,  S.A. de C.V. and Mensajes Digitales,  S.A. de C.V.
dated October first of the year two thousand and one were placed on record, with
the resolution that these companies would subsequently

                                       20
<PAGE>

be merged into one, to be called Desarrollos Empresariales,  S.A. de C.V., which
would be the merger company.

ENLACES  TRONCALES,  Sociedad  Anonima de  Capital  Variable  [Variable  Capital
Corporation]. In deed number ten thousand five hundred and fifty two dated March
fourth of the year  nineteen  hundred and ninety two,  certified  by Sara Cuevas
Villalobos,  Notary  Public  number  197  of the  Federal  District,  the  first
authenticated  copy of which was  incorporated  in the Public Trade  Register in
mercantile  folio number one hundred fifty eight thousand six hundred and eighty
two, Enlaces  Troncales SA de C.V. was incorporated with legal address in Mexico
City,  Federal  District,  with a term of 99 years,  its company object being to
install,  operate,  use,  import  and  export  all  sorts of  telecommunications
equipment and services, to offer public telecommunications services, outsourced,
licensed or authorized by the Secretary of Communications and Transport.

In deed number one hundred  thirty  thousand one hundred and four dated December
11, 2001,  certified by Ignacio R. Morales  Lechuga,  Notary  Public  number one
hundred  sixteen of the Federal  District,  duly  registered in the Public Trade
Register in folios 158682, 261313, 249590, 249589 and 249588, the minutes of the
Extraordinary   General  Assemblies  of  stockholders  of  the  companies  Palco
Deportivo.Com, SA de C.V., Palco Shop, S.A. de C.V., Palco Deportivo Multimedia,
SA de C.V. and Enlaces  Troncales,  SA de C.V.  were placed on record and it was
resolved that these  companies would  subsequently  merge into one, to be called
Enlaces Troncales, S.A. de C.V., which is the merged company.

GRC MEDIOS Sociedad Anonima de Capital Variable [Variable Capital  Corporation].
In deed number  110,540 dated April 2 of the year 2001,  certified by Ignacio R.
Morales Lechuga,  Notary Public number 116 of the Federal District,  the minutes
of the Extraordinary General Assembly of Stockholders dated March 19 of the year
2001 were  incorporated,  it being resolved among other things that: the company
To2 Mexico S.A. de C.V. would be split, to create GRC Medios S.A. de C.V.

In deed no.  110,541  dated  April 2 of the year 2001  certified  by  Ignacio R.
Morales Lechuga, Notary Public number 116 of the Federal District and registered
in the Public Trade  Register  with folio number 276685 under section 6433 dated
June 20, 2001, the  incorporation of GRC Medios,  Variable Capital  Corporation,
was incorporated with domicile in Mexico City, Federal District,  with a term of
99 years,  with company  object of  conducting  domestic  and foreign  publicity
operations by any means suitable to it, within and outside of Mexico, and having
the ability to make  guarantees and serve as co-debtors  for third  parties,  as
well as security for third parties. The Sole Administrator or Board of Directors
has the following legal powers: general power for legal actions and collections,
acts of  administration,  acts of  ownership,  and drawing,  issuing,  granting,
signing, guaranteeing,  accepting, endorsing and negotiating credit instruments,
to manage and obtain all sorts of financing,  credit and loans which the company
might require, with the ability to put up guarantees and serve as co-debtors for
third  parties  outside of the  company,  as well as put up  security  for third
parties.  In this same  instrument,  power of  attorney  was  granted to Messrs.
Francisco Aguirre Gomez, Maria Esther Aguirre Gomez,

                                       21
<PAGE>

Ana Maria Aguirre  Gomez,  Maria Adriana  Aguirre  Gomez,  Carlos Aguirre Gomez,
Rafael Aguirre Gomez and Jose Manuel  Aguirre Gomez for the  following:  general
power  for  acts  of  ownership,  and  drawing,  issuing,   granting,   signing,
guaranteeing,  accepting, endorsing and negotiating credit instruments, with the
limitation that there must be four of the attorneys-in-fact acting together. Mr.
Carlos  Aguirre  Gomez was granted  power of attorney for the  following:  legal
actions and  collections,  acts of  administration,  granting general or special
powers and revoking any thereof, and conferring,  delegating or substituting for
third parties in whole or in part any of the powers cited above.

GRC  PUBLICIDAD   Sociedad  Anonima  de  Capital  Variable   [Variable   Capital
Corporation]. In deed number 21,049 dated May 12, of the year 2000, certified by
Ana de Jesus Jimenez Montanez,  Notary Public number 46 of the Federal District,
registered in the Public Trade Register in mercantile  folio number 260591,  the
incorporation  of the company called "GRC Publicidad" S.A. de C.V. was placed on
record, with its bylaws,  domiciled in Mexico, Federal District,  with a term of
99 years,  and with the object of:  conducting  domestic  and foreign  publicity
operations  by any means  suitable to it,  commercially  representing  radio and
television  stations,   contracting  for  technicians,   artists  and  personnel
specialized in the work necessary to ensure the  development  and success of the
company's  object,  granting  guarantees  and  serving  as  co-debtor  for third
parties, as well as granting security for third parties, with a clause excluding
foreigners.   The  management  and   administration   of  the  company  are  the
responsibility of a Sole Administrator or Board of Directors made up of no fewer
than seven members and no more than eleven, in accordance with the resolution of
the ordinary General  Assembly of stockholders.  Powers of attorney were granted
to Messrs.  Francisco  Aguirre  Gomez,  Maria Esther  Aguirre  Gomez,  Ana Maria
Aguirre Gomez, Maria Adriana Aguirre Gomez, Carlos Aguirre Gomez, Rafael Aguirre
Gomez and Jose Manuel  Aguirre  Gomez for:  general power for acts of ownership,
with  the  understanding  that  any four of the  aforementioned  agents  parties
together  are needed to exercise  this power,  and power for  drawing,  issuing,
granting,  signing,  guaranteeing,  accepting,  endorsing and negotiating credit
instruments  in the  name  of  the  represented  party,  exercising  this  right
separately or together,  as well as the legal power to replace or delegate their
mandate.  Mr. Carlos  Aguirre  Gomez was granted power of attorney for:  general
power  for  legal  actions  and  collections,  receiving  payments,  and acts of
administration.

PROMO RED, Sociedad Anonima de Capital Variable [Variable Capital  Corporation].
In deed  number  140,784  dated May 22, of the year  1985,  certified  by Notary
Public  no.  122 of the  Federal  District,  Eugenio  Ibarrola  Santoyo,  in the
notarial books of Notary Public no. 31,  registered in the Public Trade Register
of the Federal  District,  on mercantile folio no. 82,945,  the incorporation of
the Variable Capital Corporation called Videas was placed on record, with a term
of 99 years,  domiciled  in the Federal  District,  with the  following  company
object, among others: developing, preparing and producing television programs of
any type as well as marketing, importing and exporting them.

In deed number 7082 dated July 13 of the year 1995,  certified by Notary  Public
no.  202 of the  Federal  District,  Juan  Jose del  Valle  Alvarado,  of Public
notary's office no. 5,

                                       22
<PAGE>

recorded in the Public Trade Register as above, in mercantile  folio no. 82,945,
the minutes of the  Extraordinary  General  Assembly of Stockholders on June 19,
1995 were placed on record, in which it was resolved among other things that the
name of the  company  would be  changed  to Promo  Red,  S.A.  de C.V.  and as a
consequence the first clause of the bylaws was amended.

In deed no.  21,030  dated  September  18 of the year 1995,  certified by Notary
Public no. 184 of the Federal  District,  Mario  Garciadiego  Gonzalez  Cos, the
minutes of the  Extraordinary  General  Assembly of Stockholders  dated July 11,
1995 were  placed on record,  in which it was  resolved  among  other  things to
change the company's object to the following: providing of all sorts of services
involving  accounting,   legal,  financial,   auditing,  personnel  contracting,
appointments,  collections,  personnel  training,  public relations,  computing,
sales  and any  other  activity  requiring  third  parties,  as  well as  expert
appraisal  and  consulting  in  relation  to the  activities  cited  above,  and
consequently clause four of the company bylaws was amended.

In deed no.  106,783  dated  January  18 of the year 2000,  certified  by Notary
Public 116 of the Federal  District,  Ignacio R. Morales Lechuga,  registered in
the Public Trade  Register on mercantile  folio number 82945,  dated February 3,
2000, the minutes of the Ordinary General Assembly of Stockholders of Promo Red,
S.A. de C.V., dated May 25, 1995,  wherein  resolutions were made in relation to
the  resignation,  appointment  and  ratification  of  members  of the  Board of
Directors,  ratification of the  commissioner and agreeing to the revocation and
granting of powers of attorney by "Promo Red", Variable Capital Corporation.

Power of attorney was given to Messrs.  Francisco  Aguirre  Gomez,  Maria Esther
Aguirre Gomez,  Ana Maria Aguirre  Gomez,  Maria Adriana  Aguirre Gomez,  Carlos
Aguirre  Gomez,  Rafael  Aguirre  Gomez and Jose  Manuel  Aguirre  Gomez for the
following:  general  power  for  acts of  ownership  and for  drawing,  issuing,
granting,  signing,  guaranteeing,  accepting,  endorsing and negotiating credit
instruments in the name of the represented party, with the limitation that there
must be four of the attorneys-in-fact acting together.

Mr. Carlos  Aguirre  Gomez was granted power of attorney for:  general power for
legal actions and collections, with special powers per article 2587 of the Civil
Code of the Federal District, general power for acts of administration,  as well
as conferring,  delegating or substituting in whole or in part for third parties
any of the powers cited above and to revoke  those he has granted,  delegated or
substituted, at any time.

In deed number  29,052,  dated  November  11, 2003,  certified by Notary  Public
Alberto T.  Sanchez  Colin,  Notary  Public no. 83 of the Federal  District,  an
amendment  to the  company  object and to clause Four of the bylaws of Promo Red
S.A.  de C.V.  was placed on  record,  establishing,  among  other  things,  the
possibility of granting  guarantees and become co-debtors for third parties,  as
well as putting up security for third parties.

In terms of  general  information,  the  companies'  attorneys-in-fact  state as
follows:

                                       23
<PAGE>

Jose Manuel Aguirre Gomez,  Mexican by birth,  originally  from Mexico City, the
Federal  District,  where he was born on December  ninth,  nineteen  hundred and
sixty one,  single,  businessman and domiciled at Av.  Constituyentes  No. 1154,
Col. Lomas Altas, C.P. 11950, in Mexico City, Federal District.

Carlos de Jesus  Aguirre  Gomez,  by birth,  originally  from Mexico  City,  the
Federal District, where he was born on February nineteenth, nineteen hundred and
fifty-five,  single,  businessman and domiciled at Av.  Constituyentes No. 1154,
Col. Lomas Altas, C.P. 11950, in Mexico City, Federal District.

Ana Maria Aguirre  Gomez,  Mexican by birth,  originally  from Mexico City,  the
Federal District, where she was born on November twentieth, nineteen hundred and
forty-three, married with separation of property, businesswoman and domiciled at
Av.  Constituyentes  No. 1154,  Col. Lomas Altas,  C.P.  11950,  in Mexico City,
Federal District.

Francisco de Jesus Aguirre Gomez, Mexican by birth, originally from Mexico City,
the Federal  District,  where he was born on October eighth nineteen hundred and
forty-one,  single,  businessman and domiciled at Av.  Constituyentes  No. 1154,
Col. Lomas Altas, C.P. 11950, in Mexico City, Federal District.

For their own general information, the Witnesses state the following:

Efrain de Tuya Graciano,  Mexican by birth, originally from Mexico City, Federal
District,  born on October 4, nineteen hundred and sixty-nine,  married,  a bank
official by profession,  with domicile at Boulevard  Manuel Avila Camacho number
one, floor 8, Colonia Lomas de Chapultepec,  Delegacion Miguel Hidalgo, zip code
eleven thousand nine, Federal District.

Marcela  Castillo  Nogueron,  Mexican  by  birth,  originally  from  Cuernavaca,
Morelos,  born on December fifth  nineteen  hundred and sixty five,  married,  a
lawyer and bank  official by  profession,  domiciled at  Boulevard  Manuel Avila
Camacho number one,  floor 8, Colonia Lomas de  Chapultepec,  Delegacion  Miguel
Hidalgo, zip code eleven thousand nine. Federal District.

                                       24

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